One would assume that people would think twice before using Pokémon’s jealously guarded characters without Pokémon’s permission. However, as seen in the recent case of Pokémon Company International, Inc v Redbubble Ltd [2017] FCA 1541, some still try their luck.

How do you get images of Pikachu and Bulbasaur onto a t-shirt? You Pokém-on of course! Terrible jokes aside, it is difficult to name a more iconic pop-media brand than Pokémon. Characters like Pikachu, Squirtle, and Bulbasaur have long entertained us through TV shows, games, movies, toys, trading cards, and even bed linen. Such is the renown of Pokémon, that the net worth of The Pokémon Company International, Inc (Pokémon) was recently estimated to be more than $3.5 billion.

With this in mind, one would assume that people would think twice before using Pokémon’s jealously guarded characters without Pokémon’s permission. However, as seen in the recent case of Pokémon Company International, Inc v Redbubble Ltd [2017] FCA 1541, some still try their luck.

Prepare for trouble, make it double

Redbubble Pty Ltd (Redbubble) is an Australian company that provides a “print-on-demand” personalisation service for customers who want to purchase a product customised with an image or word created by an artist or designer. Redbubble’s website allows users to upload artworks, which customers can then order on goods like t-shirts and mugs. Third party manufacturers and suppliers then make and ship the goods to those consumers.

Amongst the many user-created artworks made available by users of the Redbubble website, a small number featured Pikachu, including – Pikachu as Princess Leia, Pikachu as Homer Simpson, and even Pikachu as Ziggy Stardust (the Infringing Material).

Once Pokémon got wind of the Infringing Material on the Redbubble website, it commenced proceedings on two grounds: misleading and deceptive conduct and copyright infringement.

Pokémon argues Misleading and Deceptive Conduct: “It’s super effective”

Pokémon alleged that Redbubble contravened various sections of the Australian Consumer Law (ACL) concerned with misleading and deceptive conduct.

On this issue, Pagone J found in favour of Pokémon. His Honour held that an ordinary or reasonable consumer looking at the Infringing Material on Redbubble’s website or a Google sponsored link would likely be misled or deceived into believing that Infringing Material sold on its website were sponsored or approved by Pokémon.

In reaching this conclusion, Pagone J considered the following:

  • Pokémon had established a significant reputation in the Australian marketplace through its TV shows, trading cards and video games.
  • The price of official Pokémon products was comparable with the products containing the Infringing Material that appeared on Redbubble’s website. This lack of price discrepancy meant consumers would be less suspicious about whether the products featuring the Infringing Material were from an unauthorised dealer.
  • Crucially, there was nothing on the Redbubble website that suggested, let alone informed potential customers, that Redbubble was not an authorised retailer of Pokémon products.

Pokémon argues Copyright Infringement: “Critical hit!”

Pokémon’s claim for breach of copyright hinged on the Infringing Material’s unauthorised use of a number of their iconic characters, but in particular, everyone’s favourite electrified mouse - Pikachu. The Court found Redbubble to be liable for copyright infringement for three reasons:

  • despite not actually having uploaded the Infringing Materials itself, Redbubble was responsible for “communicating” the Infringing Materials to the public, by virtue of its explicit intellectual property policies, and dedicated intellectual property infringement team;
  • Redbubble had actual (or constructive) knowledge of the infringement as Pokémon had written to Redbubble several times about the copyright infringement; and
  • despite the fact that Redbubble took some reasonable steps to prevent the infringement, the fact that it had the ability to do more, but made a commercial decision not to, meant that Redbubble was constructively authorising copyright infringement.

Historically, (see for example Roadshow Films Pty Ltd v iiNet Ltd (2011) 194 FCR 285 and Roadshow Films Pty Ltd v iiNet Ltd (No 2) (2012) 248 CLR 42) internet service providers (ISPs) have been found not to be liable for copyright infringement by their users, because they are not ultimately responsible for the content uploaded through their services. Redbubble is of course a website host, rather than an ISP. The additional control Redbubble was able to exert over the content of its website meant that Redbubble was ultimately found to be the “person responsible for determining the content” of the infringing communications on the Redbubble website.

Interestingly, the key determining factor in finding Redbubble responsible for the Infringing Material was that Redbubble’s infringement prevention systems were so advanced, for example, Redbubble had:

  • a stringent IP policy dealing with the possibility and prevention of copyright infringement;
  • a dedicated team dealing with “impermissible” content uploaded to the Redbubble website; and
  • a requirement that all its users agree to terms and conditions prohibiting users from uploading infringing material, and indemnifying Redbubble against claims of copyright infringement.

These preventative measures arguably disadvantaged Redbubble in the proceedings; the Court took the view that they showed Redbubble had identified copyright infringement as an inherent risk of Redbubble’s business. Because of this inherent risk, despite the fact, that Redbubble, according to Pagone J, “did not expressly authorise any infringement” and in fact “took conscious, considered and reasonable steps, both proactively and responsively, to prevent infringements and to prevent the continuation of infringements”, Redbubble could have done more, and had therefore authorised the infringement.

As well as seeking to refute its responsibility for infringement, Redbubble relied on the defence of “fair dealing”, arguing that the use of Pokémon’s copyrighted images was for the purpose of parody or satire. The Court rejected this argument finding that although some of the Infringing Material was comical and maybe even satirical, there was not enough evidence to convince the Court that the underlying purpose of the use of the Infringing Material was not in fact primarily commercial exploitation.

Pokémon seeks remedies: “It’s not very effective”

In a surprise twist, notwithstanding the fact that Pokémon was successful on both of its arguments, the Court only awarded Pokémon $1 in damages.

This is because Pokémon were unable to establish that the use of the Infringing Material had actually caused any financial loss to Pokémon.

Pokémon also sought an injunction to prevent future infringements but was unsuccessful, as the Court was satisfied that because Redbubble had changed its policies, the risk of further infringement was low.

The small wins for Pokémon were that the court ordered Redbubble to pay 70% of Pokémon’s costs, and the litigation was at least successful in getting Redbubble to change its takedown and infringement practices. All in all however, it was a hollow victory for Pokémon.

The case is a reminder that just because a cause of action exists at law, this does not necessarily mean that damages will flow as a result. From a copyright law perspective, is also a timely reminder for businesses that it may not be enough to rely on even strong policies and terms and conditions, if in the circumstances of an alleged infringement your business could do more to prevent the infringement.