In this blog we review a decision highlighting that online marketplaces may be vulnerable to legal risks if their vendors or third parties breach the IP rights of others.
On 15 March 2019, the Federal Court of Australia delivered its decision in the copyright, trade mark and consumer law proceedings brought in September 2015 by Hells Angels Motorcycle Corporation (Australia) Ltd (Hells Angels) against Redbubble Limited (ASX: RBL) (Redbubble). We introduced these proceedings in a blog post in 2015 remarking that it would be “a hell of a story” and we have certainly not been disappointed.
Redbubble enables an artist to upload images to its website and select goods to which the image can be applied. Consumers can then order goods through Redbubble’s website.
The Court held that Hells Angels’ trade marks had been infringed by Redbubble. However, it dismissed all of Hells Angels’ claims in relation to the copyright and consumer law causes of action. Redbubble’s conduct allegedly caused “anger, hurt feelings and personal distress” for the club. It follows that this decision with an award of $5000 nominal damages was likely a hollow win, if a win at all.
For clients and their advisors the decision shows that a marketplace for independent creators can be held liable for disputed copyright and trade mark claims, and should cause online retailers such as Redbubble to reassess their business practices in the future.
What was copyright?
Hells Angels Australia made copyright infringement allegations against Redbubble relating to the Membership Card image (left) originally drawn by tattoo artist ‘Sundown’, and the current “Death Head” design (right).
Membership Card image drawn by Sundown Current Death Head design
Notably the court held that there was no copyright subsisting in the ‘Death Head’ design as it was completely derived from the original Membership Card image designed by Sundown and no skill, effort or work was exerted by Mr Fukushima to produce it for Hells Angels (US).
Therefore, the case turned on the membership card. Hells Angels claimed that four works (the designs) infringed the membership card copyright owned by Hells Angels (US) and licensed to Hells Angels (Aus) as exclusive licensee.
Who owned copyright?
Under s196(3) of the Copyright Act 1968 (Cth), the author of a copyright work, subject to certain exceptions, is the owner of the copyright, and any assignment must be in writing and signed.
There was no evidence in this case that these requirements had been complied with and ‘Sundown’ was still the legal owner. Therefore, because Hells Angels (US) did not own the copyright, Hells Angels (Aus) was not exclusive licensee and did not have standing.
The Court observed that, in the event that Hells Angels could have established ownership, Redbubble would have been liable as a primary infringer of copyright.
In the only big win for Hells Angels, Greenwood J found Redbubble liable for infringement of the registered trade marks on works such as t-shirt designs featuring the death head logo.
Greenwood J established that as an ‘authorised user’ of Hells Angels US’ trade marks, Hells Angels Aus had the requisite standing to bring the action. Greenwood J then looked at Redbubble’s business model and confirmed that each artist uploaded the image as a badge of origin of his/her work, therefore the works were using the trade mark as a trade mark. This use of the trade marks extended to Redbubble as suppliers of the goods – in that they enabled and facilitated sale and purchase and placed own name on goods and tags.
Outcome for Online Marketplaces
This is the second time that Redbubble has been found by the Australian courts to have infringed a third party’s IP and it has again escaped by paying only nominal damages (in 2018, Pokemon was successful in its copyright infringement case against the online platform but was awarded only $1 in damages). As stated by Redbubble in a notification to the ASX neither case ‘resulted in material financial or operational impact on Redbubble’, ultimately leading to a sigh of relief from all online marketplaces.
However, these cases have aroused substantial legal discussion of the role and liability of online intermediaries, essentially marketplaces.
These proceedings show that online marketplaces may be vulnerable to legal risks if their vendors or third parties breach the intellectual property rights of others. Therefore, it is important that marketplaces such as Redbubble have clear terms and conditions for users to agree to and have an effective ‘notify and take down’ policy where infringing content can be removed.
If you wish to discuss any aspect of this article, please contact a member of Thomson Geer’s Intellectual Property team.
Tana Dryden-Strong | Summer Clerk
 Hells Angels Motorcycle Corporation (Australia) Pty Ltd v Redbubble Ltd  FCA 355
 Pokemon Company International Inc v Redbubble Ltd  FCA 1541.