The Pokémon Company International Inc (TPC) is a company set up as a subsidiary of The Pokémon Company in Japan to oversee the brand management, licensing and marketing of merchandise related to the Pokémon computer and video games published and distributed by Nintendo. Recently, it successfully obtained an injunction against Pokemon Pty Ltd, a company which is in no way related to TPC or the popular game series, under section 232 of the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL)).
The full Federal Court judgment is The Pokémon Company International, Inc v Pokemon Pty Ltd [2022] FCA 1561.
In November 2022, TPC became aware of a website located at the domain name https://pokeworld/game/ (PokeWorld Website). A WHOIS search of the PokeWorld Website domain name revealed that the domain name was registered on 16 August 2022, and that the registrant was Xiaoyan Liu, the sole director and secretary of a company called Pokemon Pty Ltd and the second respondent to the proceedings.
The PokeWorld Website advertised a new game “brought to you by The Pokémon Company International and Kotiota”. Kotiota refers to Kotiota Studios (Kotiota) a related entity to Pokemon Pty Ltd.
The PokeWorld Website contained a timeline for the launch of a game called "PokeWorld" and the release of non-fungible tokens (NFTs) of a number of existing Pokémon characters. It also contained a link to a "white paper" outlining in depth the details of PokeWorld.
The PokeWorld Website represented that TPC owned part of the Pokemon Pty Ltd business and had a role in the creation of the PokeWorld game. Neither of which were true.
The respondents also threatened to produce NFTs of one of the best-known Pokémon character, Pikachu, which is central to TPC's branding. TPC carefully controls the licensing and use of its characters and its intellectual property rights more generally, and has made the deliberate decision not to produce any NFTs associated with Pokémon.
A PokeWorld Twitter Account had also been established and as at 18 December 2022 had approximately 13,500 followers. It had posted five promotional videos for PokeWorld with the first post published on 18 October 2022. A video posted on that day had received more than 31,000 views.
The evidence from TPC was that it was concerned that the respondents would launch PokeWorld to the general public, and/or sell Pokémon NFTs, all without its consent. It was very concerned about the irreparable and long-term impact of the misrepresentations by the respondents and the damage that TPC, The Pokémon Company, Nintendo of America, Inc, the Nintendo Co. Ltd, and each of their licensees and consumers would suffer if the respondents made the PokeWorld game available and/or issued Pokémon NFTs. In particular, TPC gave evidence that it had spent significant time, resources and money to develop the Pokémon brand and reputation in Australia and globally.
It argued that the continuation of the respondents' misrepresentations had the capacity to seriously damage and erode the investments made by TPC and the very significant goodwill enjoyed by TPC in respect of its brand in Australia. The investments made by TPC in its goodwill includes its tightly controlled management of its games, product channels, and all forms (including digital forms) of representations of the Pokémon Characters.
The judgment affirmed the decision in Reckitt Benckiser (Australia) Pty Limited v Procter & Gamble Australia Pty Ltd [2015] FCA 753 [31]-[33] [43]-[49] in relation to the interpretation of sections 18(1) and 29(1) of the ACL, as well as the application of sections 232 and 234 of the ACL in granting relief under such sections.
Collier J noted that the evidence from TPC was not rebutted by any material filed by the respondents, and her Honour was prepared to accept it at this interlocutory time. Her Honour further accept it, noting the level of detail of the evidence provided, and the authority of the deponents for TPC.
Her Honour considered that there was a strong prima facie case that the ACL had been contravened by the respondents. In particular, Her Honour considered that the conduct of the respondents, both historical and proposed, was "designed to mislead consumers and other businesses […] into erroneously believing" that the respondents were affiliated or sponsored by TPC, The Pokémon Company or Nintendo, and were licensed or authorised by them to:
- design and develop Pokémon Games and PokeWorld;
- operate the PokeWorld website;
- issue, offer for sale and sell NFTs under the name Pokémon; or
- use the words "Pokemon", Pokémon or PokeWorld.
Her Honour considered that there was a significant proportion of consumers who would be misled or deceived by the conduct, which would bring a real prospect of reputation damage to TPC, as well as other damage to its interests.
Given the strength of TPC's prima facie case of misleading conduct on the part of the respondents, the submitted difficulty they would experience in obtaining information from anyone other than the respondents, and the desirability of disclosure being made early in the proceedings, her Honour was also prepared to grant interlocutory relief for discovery against the respondents to help determine its claims for substantial relief.
The respondents did not appear at the hearing. TPC attempted to serve the respondents by email, by direct message to the believed Twitter account of the respondents, and by personal service to the known addresses of the respondents. The court was ultimately satisfied that genuine and meaningful attempts had been made to serve the documents on the respondents and that the proceedings had been brought to the attention of the respondents.
While this was not a copyright infringement case, it is another example of the threatened use of new technologies such as web 3.0, NFTs and artificial intelligence by individuals seeking to monetise the copyright works of third parties. While we grapple with how Australia's copyright laws apply to these emerging technologies, this case serves as a timely reminder to copyright owners to remain on the lookout for people seeking to exploit their copyright and to consider the ACL as a means by which to prevent them from doing so.
Despite this, at the end of the day, unauthorised users should heed the experience of Team Rocket and realise that it's pretty unlikely that they will ever get their hands on Pikachu.
