Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited
[2020] FCA 239
•28 February 2020
FEDERAL COURT OF AUSTRALIA
Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited [2020] FCA 239
File number(s): QUD 902 of 2015 Judge(s): GREENWOOD J Date of judgment: 28 February 2020 Catchwords: INTELLECTUAL PROPERTY – consideration of an application for the release of an amount of security provided by the applicant in relation to the costs of the respondent in relation to the principal proceeding Legislation: Federal Court of Australia Act 1976 (Cth), s 43 Date of hearing: 28 February 2020 Date of last submissions: 17 January 2020 Registry: Queensland Division: General Division National Practice Area: Intellectual Property Sub-area: Copyright and Industrial Designs Category: Catchwords Number of paragraphs: 11 Counsel for the Applicant/Cross Respondent: Mr D Eliades Solicitor for the Applicant/Cross Respondent: Solus IP Pty Ltd Counsel for the First Respondent/Cross Claimant: Mr R Cobden SC with Ms E Bathurst Solicitor for the First Respondent/Cross Claimant: Allens ORDERS
QUD 902 of 2015 BETWEEN: HELLS ANGELS MOTORCYCLE CORPORATION (AUSTRALIA) PTY LIMITED ACN 123 059 745
Applicant
AND: REDBUBBLE LIMITED ACN 119 200 592
First Respondent
HELLS ANGELS MOTORCYCLE CORPORATION
Second Respondent
AND BETWEEN: REDBUBBLE LIMITED ACN 119 200 592
Cross-Claimant
AND: HELLS ANGELS MOTORCYCLE CORPORATION
Cross-Respondent
HELLS ANGELS MOTORCYCLE CORPORATION (AUSTRALIA) PTY LTD ACN 123 059 745
Other
JUDGE:
GREENWOOD J
DATE OF ORDER:
28 FEBRUARY 2020
THE COURT ORDERS THAT:
1.Within seven days from the date of this order, Redbubble Limited pay Hells Angels Motorcycle Corporation (Australia) Pty Ltd the sum of $5,000 as damages awarded to the applicant in the reasons for judgment of the Court published on 15 March 2019, at [540].
2.The amount of security of $50,000 given by Hells Angels Motorcycle Corporation (Australia) Pty Ltd pursuant to the orders of the Court made on 16 May 2016 be released to the applicant’s solicitors.
3.Order 2 of these orders releases the applicant, as contemplated by Order 1 of the orders of 16 May 2016, from continuing to provide security as described in the orders made on 16 May 2016.
4.Pursuant to s 23 and s 37P of the Federal Court of Australia Act 1976 (Cth), rule 1.32 and rule 1.36 of the Federal Court Rules 2011, these orders and the reasons for judgment in support of these orders are made and published from Chambers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
GREENWOOD J:
These proceedings are concerned with an application by the applicant in the principal proceeding (“HAMC”) in which HAMC seeks an order for the release of security in the sum of $50,000 for costs to which the respondent (“Redbubble”) was exposed in connection with the conduct of Redbubble’s defence to the principal proceeding. The security was provided by HAMC pursuant to orders made on 16 May 2016.
As to that matter, these observations were made at [61] and [67] of the reasons published on 16 May 2016:
61It is common ground between the parties that HAMC (Aust) is an entity that might properly be described as a special purpose vehicle. It discharges the role described by Mr Bolam at [17] of these reasons. In simple terms, it conducts the commercialisation aspects of exercising the intellectual property rights it enjoys either by ownership or as a function of the exclusive licence it has from HAMC (US). HAMC (Aust) accepts, as a matter of principle, that there is a proper basis for believing that it will be unable to pay Redbubble’s costs should an order for costs be made in favour of Redbubble upon the trial of the action. HAMC (Aust) has a share capital of $100. Mr Nelms is its sole director, secretary and shareholder. Mr Nelms accepts that HAMC (Aust) does not have any assets of any “substantial value, save for the copyright in the drawings known as the ¾ death head which were assigned to it”. I accept that that asset is intrinsically unlikely to be of any commercial value to Redbubble due to four considerations. First, the particular work is more particularly adapted to be of value to members of the charters. Second, there are statutory arrangements which constrain the commercial utility of the use of some of the images and titles. Third, how would the bundle of rights comprising the copyright be realised and converted into money? Fourth, what is the value of the copyright in any event?
67I have taken into account all of the affidavit material put on by the parties and the written and oral submissions. I am not satisfied that security for costs in the order of magnitude contended for by Ms Stiel ought to be ordered. The members of Hells Angels Motorcycle Club, in Australia, ought to bear some of the burden or at least be at risk of bearing some of the burden of the costs Redbubble might be entitled to recover should it be successful in the proceeding. I weigh in the balance the views I have formed about Redbubble’s overt transactional engagement through its own website in enabling and facilitating reproduction and communication of the relevant artworks and use of the trade marks in connection with trade products, as earlier described, by reason of its business model. To the extent that a compelling answer is sought to be found for Redbubble’s conduct (assuming the rights relied upon subsist) in the iiNet decision, I can find no such answer in that case having regard to Redbubble’s business model. I regard the causes of action as having “strength” for the purposes of the exercise of the discretion, going beyond mere neutrality. I take the view that the amount of security ought to be discounted having regard to those considerations. Nevertheless, an order ought to be made because the applicant is truly a special purpose vehicle and those persons standing behind it for whom the bell ultimately tolls (which includes the members of the 14 charters of HAMC (US)) ought to be exposed to some proportion of the burden that might arise in the form of a costs order that might be made against HAMC (Aust) as remote as that possibility may seem in the eyes of HAMC (Aust).
HAMC also seeks an order for the payment of $5,000 as damages awarded to HAMC arising out of the judgment in the principal proceeding. Redbubble consents to an order for the payment of the damages amount but opposes any order for the release of the security.
In the principal proceeding, the applicant was successful in relation to a range of claims but unsuccessful in relation to other claims. The extent to which the applicant was successful (and to the extent that a range of factors were taken into account in determining orders for costs arising out of the principal proceeding), those considerations resulted in an order as to costs, made on 21 August 2019, in the following terms (supported by the reasons published on 21 August 2019):
1.Subject to Order 2, the first respondent pay 65% of the applicant’s costs of and incidental to the proceeding.
2.The first respondent pay the costs of the applicant of and incidental to the cross‑claim by the first respondent.
3.The applicant pay the costs of the first respondent of and incidental to the applicant’s application for summary judgment, limited to those costs thrown away by reason of the application.
4.There be no order as to costs in relation to the application by the first respondent for an order for security for costs.
As can be seen from the orders, Redbubble was ordered to pay 65% of HAMC’s costs of and incidental to the principal proceeding. In addition, Redbubble was ordered to pay HAMC’s costs of and incidental to Redbubble’s cross‑claim.
HAMC, however, was ordered to pay Redbubble’s costs of and incidental to HAMC’s application for summary judgment limited to those costs thrown away by reason of the application. As to those costs, the Court made this observation at [46] of the reasons published on 21 August 2019 in relation to the costs questions:
46As to the application for summary judgment, the questions in controversy and the matrix of fact which needed to be examined to resolve the rights of the parties meant that an application for a judgment summarily would be unlikely to succeed. As to that application, Redbubble should have its costs limited to the costs thrown away by reason of that application. I assume that some of the costs involved in analysing the claims of the applicant were not wasted (such as reading affidavits ultimately relied upon at trial etc).
As to the summary judgment application, the application was ultimately vacated. Nevertheless, Redbubble incurred costs in relation to it and the order in its favour reflects the circumstance that the recoverable costs are confined to those costs thrown away by reason of the application.
It is perfectly clear that the costs orders in favour of HAMC reflected at Orders 1 and 2 of the orders made on 21 August 2019 will significantly exceed the costs payable to Redbubble pursuant to Order 3. Those latter costs are likely to be the subject of a set‑off against the costs payable by Redbubble to HAMC to the extent of the quantification of the costs payable pursuant to Order 3.
Redbubble says that the amount of the security for costs provided by HAMC as a result of the orders of 16 May 2016 ought not to be released until Redbubble is paid the costs payable to it pursuant to Order 3 of 21 August 2019. That is an unreasonable position to take having regard to the burden of the costs orders Redbubble must discharge in favour of HAMC.
I am satisfied that HAMC ought to be released from its obligation in relation to security. The sum of $50,000 is presently held in the Trust Account of the firm Solus IP Pty Ltd and those monies are to be released to HAMC.
Redbubble does not object to an order for the payment of the amount of damages of $5,000 and that order will also be made.
I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate:
Dated: 28 February 2020
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