Come hell or high water | The Brand Protection Blog

Back in 2019, we reported on the outcomes of two separate intellectual property infringement cases brought against global online marketplace Redbubble, one by Pokémon Company International and another by Hells Angels Motorcycle Corporation.

Although Redbubble was found to infringe Pokémon’s copyright and Hells Angels’ trade marks in those earlier cases, only nominal damages were awarded.

In December 2020, apparently unperturbed by its limited financial success in the earlier proceedings, Hells Angels filed fresh proceedings against Redbubble, alleging fresh instances of trade mark infringement. And this time, in a judgement handed down by Justice Greenwood earlier this year, they got more bang for their buck.

Redbubble promptly appealed the decision to the Full Federal Court, and sought orders staying the injunctions, damages awards and costs orders, among other things. In the meantime, Hells Angels sought orders that Redbubble be punished for contempt of the injunctions.

Redbubble’s position

In large part, the factual substrata of the case was not in dispute. Redbubble essentially accepted that a trader operating a website as described in the 2019 judgment (which was essentially unchanged, aside from improvements to its moderation, as discussed below) would engage in trade mark infringement if the images uploaded were relevantly similar to the trade mark registration in question and the goods onto which those images could be or were applied were covered by that registration, subject to the following qualifying caveat: “unless the image was placed on the website by, or with the authority (express, implied or ostensible) of the trade mark owner”.[1]

This caveat was relevant to an interesting defence relied upon by Redbubble, that the allegedly infringing conduct was engaged in with the licence of Hells Angels, because the goods in question bearing the impugned signs were purchased by representatives of Hells Angels as ‘trap purchases’ for the purpose of establishing trade mark infringement.[2] Perhaps unsurprisingly, Greenwood J did not look favourably upon this line of argument, noting that trap purchases are a commonly used and often necessary means of demonstrating and documenting the allegedly infringing conduct for the purpose of establishing infringement.[3]

Relief awarded

Greenwood J found that Redbubble’s post-2019 improvements to its moderation system were plainly insufficient to promptly detect and remove all infringing material, given that the Hells Angels’ representatives were able to purchases of products bearing the impugned images.[4]

Greenwood J did not accept that a party otherwise establishing infringing conduct should be denied a remedy on the basis that it ought to be required to draw the infringing conduct to the infringer’s attention so that it can be addressed.[5] Rather, “the applicant is entitled to expect Redbubble not to engage in the conduct”.[6] As such, he was satisfied that an injunction ought to be granted.[7]

Greenwood J acknowledged the difficulty in quantifying Hells Angels’ financial damage, given it would not have exploited the trade marks in suit commercially,[8] ultimately assessing damages on the “largely nominal basis” of $8,250.[9]

More notable though was Greenwood J’s analysis of the question of additional damages. He noted that (emphasis in original):

“the fact is that its business model enables the conduct. Redbubble seeks to address the conduct within the limits of its business model, but its business model brings about the conduct the subject of this proceeding. The applicant […] is entitled to expect and have Redbubble act according to law.”[10]

Greenwood J had specific regard to the fact that the infringing conduct had occurred following the earlier 2019 finding of infringement in respect of similar conduct, which (perhaps in view of the minimal damages awarded) plainly had not had the desired deterrent effect. He assessed additional damages in the order of $70,000.[11]

The next round

As noted above, Redbubble sought to appeal the decision, and in the interim sought orders that the injunctions, damages and costs orders be stayed pending the determination of the appeal.[12] At the same time, Hells Angels argued Redbubble ought to be punished for contempt of the injunctions as it had discovered yet further allegedly infringing images on the Redbubble website since the injunction was ordered.[13]

The approach taken by Derrington J in dealing with these issues (Greenwood J having retired the day he handed down his own decision) was, interestingly, quite different to Greenwood J, and hinted at the potential for the substantive decision to be overturned on appeal.[14] Derrington J was content to stay the damages and costs awards pending the outcome of the appeal.[15] He was also content to make an interim injunction in different and much narrower terms to the original broad injunctive relief, which effectively dealt with the contempt claim.

The revised orders now specify the exact images Redbubble be restrained from using, and further specify that there will be no breach if Redbubble continues to maintain its existing proactive moderation protocols and removes any images identified as a result of those protocols or otherwise alerted by Hells Angels.[16]

Takeaways

Although the additional damages award is by no measure so large as to cripple Redbubble, if it is ultimately upheld on appeal, it will nevertheless be significant in that instances of infringement should no longer be seen merely as “a cost of doing business”.[17]

If upheld, the award should also send a strong message to other businesses operating similar models to Redbubble’s, that merely having proactive moderation protocols in place will not be sufficient to avoid potentially significant financial liability, unless those protocols are actually successful in preventing infringing conduct.

[1] Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Ltd (No 5) at [35].

[2] Ibid at [39].

[3] Ibid at [40]-[43].

[4] Ibid at [182].

[5] Ibid at [135].

[6] Ibid at [136].

[7] Ibid at [139].

[8] Ibid at [194].

[9] Ibid at [206].

[10] Ibid at [213].

[11] Ibid at [232].

[12] Redbubble Ltd v Hells Angels Motorcycle Corporation (Australia) Pty Limited [2022] FCA 1039 at [1]-[2].