This article explores the recent judgment handed down by the Federal Court concerning infringement of intellectual property rights subsisting in the Hells Angels' insignia.

Key takeouts

Platform businesses which intend to act only as an agent or a marketplace may still be liable as infringers of IP rights for the actions of their users. 

Two important factors in determining whether these platform business will be liable are the functionality of their platform and the control they have over users' content.

Establishing a chain of title in copyright is paramount to any claim for infringement and there must be clear evidence demonstrating how title has passed between the chain.

In mid-March this year, the Federal Court of Australia decided a claim initiated by Hells Angels Motorcycle Corporation (Australia) Pty Limited (HAA) against Redbubble Pty Ltd (Redbubble) for copyright and trade mark infringement, and contravention of Australian Consumer Law (ACL). The allegations concerned Redbubble's use of certain HAA club images.

Background

Redbubble provides a platform for artists and designers to upload their creative works to Redbubble's website for sale. Customers are able to select a creative work and order a print of the works on t-shirts, mugs, stationery and phone cases, among other articles.

The subject of this claim related to images of the Hells Angels membership card, depicted below, which bears an image of one of the club's 'Fuki' death-head designs (the Works).

(Image source: [17] of [2019] FCA 355)

The Hells Angels Motorcycle Corporation in the US (HAMC US) (a related company to HAA) owns a variety of trade marks in Australia in relation to the 'Fuki' death-head designs and the words "HELLS ANGELS". HAA alleged copyright infringement and trade mark infringement in relation to the following four examples of items made available through Redbubble's website:

Example 1 – a t-shirt Hells Angels MC Virginia

Example 2 – a poster described as “Angel with Angel”

Example 3 – a t-shirt described as 1st Hells Angel T November 2015

Example 4 – a t-shirt identified as Hells Angels – Death before Dishonour design

(Images source: [44] and [45] of [2019] FCA 355)

HAA argued it had standing to bring proceedings as it was the exclusive licensee of the copyright material in Australia and was an "authorised user" of the trade marks. 

Redbubble’s conduct

HAA alleged Redbubble engaged in direct infringement of the copyright in the Works by communicating the examples above to the public by making them available online. Alternatively, if Redbubble’s conduct did not amount to direct infringement, HAA argued Redbubble was responsible for the authorisation of copyright infringement by the artists, or Redbubble was jointly liable with the artist responsible (a 'joint tortfeasor') for uploading the infringing works to the platform in the first instance.

Similarly, HAA alleged Redbubble authorised trade mark infringement by the artists, and that Redbubble and the artists were joint tortfeasors in the trade mark infringements. Finally, HAA asserted Redbubble's conduct breached certain provisions of the ACL.

Redbubble’s position was that it acts as only an agent for artists, enabling a transaction to occur between artists and buyers in an electronic marketplace. In the event copyright infringement did occur, it asserted that all conduct was extraterritorial, due to its servers being located in the US. Redbubble also filed a cross claim based on alleged non-use of the registered trade marks owned by HAMC US, requesting an order for the removal of the registered trade marks from the trade mark register.

Redbubble, the copyright angel

Copyright ownership in the membership card image was a key issue. HAA’s position was that it was the exclusive licensee of the Works in Australia, which was granted under an exclusive licence it entered into with HAMC US. After examining the chain of title in the membership card image, the Court held that Redbubble did not infringe HAA’s copyright as it could not be established that HAMC US was indeed the copyright owner and therefore could not have granted a licence to HAA. The Court observed that, in the event that HAA could have established ownership by HAMC US, Redbubble would have been liable as a primary infringer of copyright.

Copyright subsistence in the 'Fuki' death-head design was another issue considered by the Court. The Court held copyright did not separately subsist in the death-head design as it was a derivative work of the earlier membership card image, and no skill, effort, or work was exerted by Mr Fukushima (the artist) to produce the 'Fuki' death-head design.

Final orders have not yet been made, however on the basis of the above, the Court considered the copyright claim ought to be dismissed.

Redbubble, in trade mark hell

Of the four example works above, the Court held Redbubble infringed certain trade marks owned by HMAC US in respect of examples 1, 3 and 4. In coming to this conclusion, the Court examined the concept of 'use' and Redbubble’s business model. It held that Redbubble was the supplier of the relevant goods as it exercised management, control and power over the chain of supply, enabling the transaction to occur. In this sense, the Court was satisfied that Redbubble was 'using' the relevant trade marks as trade marks in Australia (that is, using the relevant marks as a 'badge of origin'). His Honour indicated that he would award $5000 in damages in relation to these examples which infringed trade marks owned by HMAC US (with no exemplary damages awarded). However, in respect of example 2, the Court held that neither the artist nor Redbubble could be considered to be 'using' that image, as the material in that image was a 'parodic composition' made up of a child (an angel) with an adult (a 'Hells Angel').

In dealing with Redbubble's cross claim for non-use of the relevant trade marks, the Court was clear that Redbubble was barking up the wrong tree. HAA was able to establish sufficient use during the relevant period as an 'authorised user' in 'virtually' all classes of goods and services specified in the registered trade marks. Where HAA did not establish 'use' in a registered class, the Court held that it would not exercise its discretion to remove the relevant trade mark from the register in respect of those categories as use of the registered trade marks was considerable across almost all registered classes both during the relevant statutory period, as well as before and after this period. In these circumstances, the Court considered it would be unfair to remove the trade marks in respect of these classes.

Finally, the Court briefly considered the ACL claims in respect of the four examples above and held that, given the small amount of evidence and submissions available, it was not in a position to properly assess whether the ACL claims were made out and they therefore must be dismissed.

A cautionary tale

Other platform businesses should take note of this decision. Redbubble’s business model was key to the outcome, including the structure, functionality and operation of Redbubble's website. It was not a defence to its infringements that the business was merely a marketplace acting as agent for the artists. The Court considered that the business model went beyond a relationship of agent and principal, rather it considered Redbubble to have acted as an 'independent contractor'. Redbubble was therefore liable for trade mark infringement, and the copyright claim only failed because the applicant could not prove copyright ownership.

Finally, the Court's reasoning in relation to the copyright infringement case will likely be significant for the Redbubble v Pokémon proceedings which are currently on appeal and have been stayed pending the final outcome of these proceedings.