Background: Gotta sell 'em all!

In December 2017, the Federal Court of Australia handed down its decision in Pokémon Company International, Inc v Redbubble Ltd.

This case is of particular interest to the copyright sector and to brands operating in online marketplaces. MinterEllison recently hosted the joint Copyright Society of Australia and IPSANZ seminar Bursting the (red) bubble: Intellectual Property liability in online marketplaces – Copyright Society of Australia on 7 June 2018. 

Pokémon Company International (Pokémon) is a media franchise managed by The Pokémon Company, a Japanese consortium between Nintendo, Game Freak, and Creatures. As at the date of this article, Pokémon has created over 800 Pokémon, the most famous of which is (arguably) Pikachu, i.e., this little guy: 

(Image source: [2017] FCA 1541)

Redbubble Ltd (RB) is the operator of an online marketplace at the website https://www.redbubble.com/ (Website) for print on demand products based on artwork submitted by independent artists. RB operates by allowing artwork to be uploaded to its servers and displayed on the Website. Consumers then place orders for products to which the artwork has been applied. The products are manufactured and supplied to consumers by third party suppliers via the Website.

Summary of issues

Pokémon issued proceedings against RB over designs for clothing, stickers and other merchandise that displayed approximately 29 of the 800 Pokémon characters and associated logos of them on the RB Website. These designs had been uploaded by RB users to the Website since 2006.

Pokémon alleged that RB had infringed copyright in its Pikachu artistic work and contravened Australian Consumer Law by misleading consumers and making representations that the Pokémon 'works' were authorised by Pokémon.

The Federal Court ultimately upheld these claims. Set out below are the key aspects of the copyright and consumer law allegations, and the findings by His Honour, Justice Pagone.

I choose you: Copyright

Pokémon submitted that RB had infringed its copyright by:

• making the infringing works available on the Website and communicating them to the public;
• offering or exposing, or exhibiting the infringing works in public by way of trade through the Website; and
• authorising reproduction in Australia of the infringing works (Para 3).

The Court ultimately found that copyright subsisted in the relevant artistic works and that Pokémon was the owner of copyright those artistic works. By basing their ownership on a United States copyright registration certificate, Pokémon successfully relied on statutory presumptions relating to subsistence and ownership.

The Court rejected RB's argument that the presumption relating to ownership (as set out in section 126 of the Australian Copyright Act 1968) could not apply to United States certificates because the certificates do not state in express words that the person claiming to be the owner was in fact the owner of copyright in the work. Pagone J observed that, given the purpose of the presumption in establishing rebuttable evidence of ownership, it could not have been the intention to exclude its application to United States copyright registration certificates (Para 40).

Pokémon was successful in making out the infringement claims listed above. Importantly, Pagone J observed that 'Redbubble’s position is not like that of an internet provider' (Para 48) in that RB was responsible for determining the content of its website, through its processes, and arrangements with the artists. RB hosted the Website containing the infringing material and consequently made it available online, and communicated it to the public. Even though the individuals responsible for uploading the artworks were involved in the making of the communication, this did not preclude the Court's finding that RB was liable for communicating those works to the public.

I choose you: Australian Consumer Law

In the final knockout blow to RB's case, Pagone J held that RB's conduct was in contravention of sections 18(1), 29(g) and (h) of the Australian Consumer Law. This contravention encompassed the Website and RB's sponsored advertising on Google, and comprised the misleading representations that products available on the Website – bearing Pokémon related words, characters, and images – were sponsored or approved by Pokémon.

His Honour was particularly critical of the fact that there was nothing on the Website to inform or even suggest that there was no connection, authorised or otherwise, between RB and Pokémon (or any other entity authorised to exploit Pokémon products) (Para 28).

Damages

Pokémon sought over $44,000 in damages, and for an injunction in relation to similar infringements.

The Court rejected this claim, awarding Pokémon $1 and 70% of its court costs. This was on the basis that most of the infringing items were in fact 'mash ups' for which Pokémon would not have received royalties, and no loss or damage had actually occurred.

Key takeaways

The Court commented on the inherent commercial risk that RB took in conducting its business in the tall grass without adequate IP policies in place, including in its findings that it had authorised copyright infringement.

While incurring this risk resulted in a finding of copyright infringement by authorisation, it did not ultimately lead to any significant monetary relief being awarded in respect of RB's conduct. As such, the judgment may do little to dissuade similar online marketplaces.

Interestingly, Pagone J observed that the processes RB had in place - including its intellectual property policy, a team devoted to ensuring that products on sale on the RB Website were not in breach of copyright law, and its takedown process - meant that RB's infringement was not considered 'flagrant'. This may encourage platforms such as RB to ensure that they retain a "Master Ball" up their sleeves - in the form of clear and effective intellectual property policies and takedown procedures.