The liability of internet intermediaries for copyright infringement is a hot topic of conversation at the moment, both in Australia and overseas. Sweeping reforms have just been passed by the EU Parliament, and Australian copyright legislation in this area has been the subject of significant judicial consideration in recent years.

In this article, we consider the outcome of two recent copyright infringement cases brought against the Australian online marketplace Redbubble, which may help (somewhat) clarify the extent to which such platforms are likely to be held liable for the actions of their users, what this liability means in practice, and how they can operate to minimise these risks.

Whose infringement is it anyway?

Currently, online content platforms in Australia can be held liable for copyright infringement in user-generated content in a number of ways. These include:

  • direct infringement, for example, if the platform is “reproducing” infringing content or “communicating” it to the public, under section 36 of the Copyright Act 1928 (Cth) (the Act). Section 22(6) of the Act states that “a communication…is taken to be made by the person responsible for determining the content of the communication”;
  • for taking certain action in respect of infringing copies (such as exhibiting them in public commercially or offering them for sale or hire) under Part V, Division 5, Subdivision C of the Act. These provisions may apply to online marketplaces displaying consumer goods like t-shirts or mugs bearing infringing content; and
  • indirect infringement, if the platform is deemed to have “authorised” the infringing conduct of its users. Authorisation will depend on factors such as the platform’s ability to prevent infringement, the contractual relationship between the platform and its users, and whether the platform takes reasonable steps to prevent infringing conduct.

There are ‘safe harbour’ provisions in Part V Division 2AA of the Act. However, these only apply to carriage service providers, and not internet service providers (ISPs) more generally, so cannot be relied upon by online content platforms to avoid liability. Further, the Court’s broad interpretation of both direct and authorisation liability in recent years (as indicated by the two cases discussed below) has increased the risks for ISPs who cannot avail themselves of the safe harbour provisions.

Gotta catch ‘em all: Pokémon v Redbubble

Pokémon Company International, Inc. v Redbubble Ltd involved an action by the owners of various Pokémon characters against the online marketplace Redbubble. Redbubble works by allowing artists to upload images that can be printed onto consumer products such as t-shirts by third party fulfillers upon receipt of orders from customers.

In this instance, users had uploaded unauthorised derivative images of the famous Pikachu character in various poses and costumes.  The Pokémon Company sued Redbubble both for copyright infringement, and under the Australian Consumer Law, for making misleading representations that the images in question were authorised by the Pokémon Company.

In addition to finding against Redbubble on the consumer law question, the Court found that Redbubble engaged in three forms of copyright infringement, as follows:

  • direct infringement under section 36 of the Act, by communicating the infringing works to the public;
  • knowingly exhibiting infringing articles in public commercially, under section 132AG of the Act; and
  • indirect infringement by authorising the reproduction of copyright material through the manufacture and sale of infringing articles by the fulfillers.

At the time, Redbubble already had in place a number of measures to minimise the risks of copyright infringement. These included requiring that the users agree that they owned (or had permission to use) the copyright in any works uploaded to the site, systems allowing copyright owners to notify Redbubble of infringing content then promptly removing such content, a content team monitoring the accounts of users who had been flagged in the past, and blocking certain keywords as search terms.

However, these measures were insufficient to shield Redbubble from liability. In particular, the Court noted that Redbubble had not taken all the avenues available to it to prevent the uploading of infringing conduct. For example, Redbubble had chosen not to implement blanket keyword blocks on trade mark terms (such as “Pikachu”), for fear that this would also block legitimate content such as parodies, which would fall within the fair dealing defence to copyright infringement.

Ultimately though, it was something of a pyrrhic victory for the Pokémon Company, as the Court awarded only nominal damages of AU$1. This was because the Pokémon Company failed to demonstrate any actual harm (the Court found that the relevant products would not, but for the infringing actions, have been sold by the Pokémon Company itself) and Redbubble’s actions were not in flagrant disregard of the Pokémon Company’s rights, so additional damages were not appropriate. The Court also declined to award an injunction, as Redbubble had already blocked the trade marks as search terms.

Nevertheless, presumably in view of the potentially more wide-reaching consequences of the decision, Redbubble filed an appeal in early 2018 and the Pokémon Company cross-appealed. However, the appeal was stayed until the decision in the Hells Angels case, discussed further below, was handed down.

Come hell or high water: Hells Angels v Redbubble

The case of Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited, in which a decision was handed down just last month, revolved around the alleged misuse of the Hells Angels’ well-known and fiercely guarded “death head” symbol on the Redbubble site. Hells Angels sued on various grounds, including trade mark infringement, copyright infringement and misleading and deceptive conduct under the Australian Consumer Law (although the latter ground was not ultimately pursued).

The copyright infringement claim failed, but not for the reason Redbubble hoped: Hells Angels could not prove ownership in the relevant works. However, the Court noted that if Hells Angels had been able to establish title to copyright, Redbubble would have been found liable for infringement.

In coming to this conclusion, the Court noted that while the users (many of whom are outside Australia) were responsible for uploading the infringing images, Redbubble was also a primary infringer. The Court found that Redbubble “communicated” the infringing content to the public, because it determined the content of the communication by facilitating the upload of content to its site, the review of that content by consumers, and the fulfilment of orders made through the site. The Court also noted, without providing detailed reasons, that it would also have found Redbubble liable for authorising the infringing conduct of users. These comments carry no precedential weight because of the threshold finding on copyright ownership, but are a useful indication of the Court’s broad interpretation of liability for infringement by online platforms.

Hells Angels were only marginally more successful on the trade marks front. Although the Court found three instances of trade mark infringement, again, only nominal damages of AU$5,000 were awarded.  This reflected the fact that only a handful of products bearing the infringing marks were ever sold. Again, the Court declined to award exemplary damages. This may indicate that Redbubble’s existing policies, which allow it to relatively quickly identify and remove infringing content, while not shielding it from liability altogether, may assist in limiting the likelihood of further damages being awarded against it, even where infringement is found.

 Where to from here?

Once the Hells Angels matter is completed, the appeal of the Pokémon case will resume.

Should the trial judge’s decision be upheld on appeal, this may have serious consequences for the way that Redbubble (and other online marketplaces and content distribution platforms more generally) conduct their businesses. For both rights holders and online platforms, it’s a case of watch this space!