Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Ltd (No 5)
[2022] FCA 837
•19 July 2022
FEDERAL COURT OF AUSTRALIA
Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Ltd (No 5) [2022] FCA 837
File number(s): QUD 403 of 2020 Judgment of: GREENWOOD J Date of judgment: 19 July 2022 Catchwords: TRADE MARKS – consideration of an application by Hells Angels Motorcycle Corporation (Australia) Pty Limited (“HAMC AU”) for declarations, injunctions and damages in relation to 11 examples of contended infringement of registered trade marks owned by Hells Angels Motor Cycle Corporation (“HAMC US”) – consideration of whether each example gives rise to an act of infringement – consideration of the terms of any declaration and injunction – consideration of the basis upon which the applicant claims to have suffered loss or injury measured as an award of damages under s 126(1)(b) of the Trade Marks Act 1995 (Cth) (the “Act”) – consideration of whether an award of damages under s 126(1)(b) ought to include an additional amount in that assessment having regard to the considerations at s 126(2)(a) to (e) of the Act – consideration of the functionality and operation of the Redbubble digital platform and the steps taken by Redbubble to seek to moderate or mitigate the potential for the uploading to its website of images substantially identical with, or deceptively similar to, each of the relevant trade marks in suit having regard to each example of the particular uploaded image Legislation: Trade Marks Act 1995 (Cth), ss 7(3), 7(4), 20(1), 20(2), 21, 26(1), 26(2), 120(1), 126(1), 126(2), 127 Cases cited: Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2009) 81 IPR 378
General Tyre and Rubber Co v Firestone Tyre and Rubber Co [1975] 1 W.L.R. 819 (HL)
Geneva Laboratories Limited v Prestige Premium Deals Pty Ltd (No 5) [2017] FCA 63
Gerber Garment Technology Inc v Lectra Systems Ltd [1995] R.P.C. 383
GM Holden Ltd v Paine (2011) 281 ALR 406
Halal Certification Authority Pty Limited v Scadilone Pty Limited [2014] FCA 614
Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited [2019] FCA 355
Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited (No 4) [2022] FCA 190
Milpurrurru v Indofurn Pty Ltd (1994) 130 ALR 659
National Guild of Removers & Storers Ltd v Jones [2011] EWPCC 4
Nichols Advanced Vehicle Systems Inc v Rees Oliver and Others [1979] RPC 127
Nokia Corporation v Liu (2009) 80 IPR 286
Seafolly Pty Ltd v Fewstone Pty Ltd (2014) 313 ALR 41
Williams v Settle [1960] 1 WLR 1072
Division: General Division Registry: Queensland National Practice Area: Intellectual Property Sub-area: Trade Marks Number of paragraphs: 233 Date of hearing: 12 July and 13 July 2021; 7 April and 8 April 2022 Counsel for the Applicant: Dr D Eliades Solicitor for the Applicant: Broadley Rees Hogan Counsel for the First Respondent: Mr R Cobden SC with Ms E Bathurst Solicitor for the First Respondent: Allens Linklaters ORDERS
QUD 403 of 2020 BETWEEN: HELLS ANGELS MOTORCYCLE CORPORATION (AUSTRALIA) PTY LIMITED ACN 123 059 745
Applicant
AND: REDBUBBLE LTD ACN 119 200 592
First Respondent
HELLS ANGELS MOTOR CYCLE CORPORATION
Second Respondent
ORDER MADE BY:
GREENWOOD J
DATE OF ORDER:
19 JULY 2022
THE COURT DECLARES THAT:
1.The use by Redbubble Ltd (“Redbubble”) of the sign “Hells Angels” as depicted in Examples 1, 2, 3, 5, 6 and 7 of Attachment C to the reasons for judgment (the “reasons”) published today and as depicted in Examples 8, 9, 10 and 11 of Attachment D to the reasons published today, constitutes infringing use of such signs for the purposes of s 120(1) of the Trade Marks Act 1995 (Cth) (the “Act”), of the relevant trade marks in suit in the proceeding relevant to that sign.
2.The use by Redbubble of the sign consisting of a device or design described as the side or profile view of the winged death head (the “device”) as depicted in Examples 1, 3, 4, 5, 6 and 7 of Attachment C to the reasons and as depicted in Examples 8, 9, 10 and 11 of Attachment D to the reasons, constitutes infringing use of the device for the purposes of s 120(1) of the Act, of the relevant trade marks in suit in the proceeding relevant to the device.
THE COURT ORDERS THAT:
1.Redbubble is restrained whether by itself, its officers, servants or agents or otherwise howsoever, from using the sign “Hells Angels” as depicted in Examples 1, 2, 3, 5, 6 and 7 of Attachment C to the reasons and as depicted in Examples 8, 9, 10 and 11 of Attachment D to the reasons, or any sign substantially identical with, or deceptively similar to, a sign bearing the words “Hells Angels”, on the website operated by Redbubble in relation to trade in goods to which the sign can be applied, where such goods are goods in respect of which Trade Mark No. 526530, Trade Mark No. 723219 and Trade Mark No. 1257992 is registered.
2.Redbubble is restrained whether by itself, its officers, servants or agents or otherwise howsoever, from using the sign being the device described in Declaration 2 of these declarations and orders as depicted in Examples 1, 3, 4, 5, 6 and 7 of Attachment C to the reasons and as depicted in Examples 8, 9, 10 and 11 of Attachment D to the reasons, or any sign substantially identical with, or deceptively similar to, a sign consisting of the device, on the website operated by Redbubble in relation to trade in goods to which the sign can be applied, where such goods are goods in respect of which Trade Mark No. 526530, Trade Mark No. 723463 and Trade Mark No. 1257993 is registered.
3.Redbubble pay damages to the applicant pursuant to s 126 of the Act in an amount of $78,250.
4.Redbubble pay the costs of the applicant of and incidental to the proceeding.
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 the question of whether the first respondent, Redbubble Ltd (“Redbubble”) infringed the trade marks, registered in Australia under the provisions of the Trade Marks Act 1995 (Cth) (the “Act”), of the second respondent, Hells Angels Motor Cycle Corporation (a United States Corporation, “HAMC US”), having regard to seven examples of conduct at various times in 2020 (mostly in October 2020), by using, as a trade mark, a sign substantially identical with, or deceptively similar to, one or more of HAMC US’s registered trade marks, for the purposes of s 120(1) of the Act.
The matters in controversy relevant to that question were the subject of a hearing on 12 July and 13 July 2021. Judgment was reserved on 13 July 2021.
The applicant, Hells Angels Motorcycle Corporation (Australia) Pty Limited (“HAMC AU”) is an authorised user under the Act of each of the trade marks in suit.
In late August and early September 2021, the applicant sought to agitate with the Court its concern that four further examples of contended infringing conduct by Redbubble had been identified: Examples 8, 9, 10 and 11. The conduct is said to have occurred in August 2021. The applicant sought to rely upon these additional examples of contended infringement as a further basis for relief (being relief claimed in respect of all 11 examples) in the form of declarations as to infringing conduct, injunctions under s 126(1)(a) of the Act, damages under s 126(1)(b) of the Act and additional damages under s 126(2) of the Act.
On 8 September 2021, leave was granted to the applicant to re‑open its case to include Examples 8, 9, 10 and 11 being the subject of the matters set out in an affidavit of Mr Hansen sworn 21 August 2021. Leave to re‑open the case was not opposed by Redbubble.
On 8 September 2021, a number of programming orders were made which provided for amendments to be made to the originating application, the statement of claim, the defence by Redbubble and other consequential matters in order to enable a hearing to take place so as to determine whether Examples 8, 9, 10 and 11 involved infringing conduct on the part of Redbubble and, if so, the nature and scope of the remedies to be granted in relation to that conduct.
Redbubble, apart from amending its defence to address specifically the matters of fact and law raised by the pleading of Examples 8, 9, 10 and 11, also sought to amend its defence to plead a particular settlement agreement between HAMC US and an entity described as “TP Apparel Inc” which had an effective date of 24 May 2021. Redbubble Inc had acquired all of the equity interests in TP Apparel and a related entity and the contention was that the terms of the settlement agreement had the effect of also settling all issues in controversy in these proceedings as to Examples 1 to 7.
The question of whether the settlement agreement had the effect of compromising the matters in issue between the parties in these proceedings as to Examples 1 to 7 was the subject of a separate question which was determined by Jagot J in Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited (No 4) [2022] FCA 190. That question was determined adversely to Redbubble. There being no utility in multiple appeals, orders were made extending the time within which an appeal might be filed from the orders and judgment of Jagot J to a period within 28 days of the date of publication of final orders on the substantive matters in issue in the proceeding.
That matter having been determined, hearing dates were allocated for the determination of the issues alive in the re‑opened case.
The further hearing took place on 7 April and 8 April 2022.
These proceedings in relation to Examples 1 to 11 are not the first occasion on which the present parties have been in controversy on a range of intellectual property questions. The applicant previously brought proceedings against Redbubble in which it asserted infringement of the trade marks in suit in these proceedings. The applicant also asserted in the earlier proceedings infringement of copyright in particular works and relief in respect of some consumer questions. The applicant was unsuccessful as to those latter matters but was successful in respect of particular trade mark infringements mentioned shortly.
The trade marks in suit in the earlier proceeding and in this proceeding are set out as Attachment “A” to these reasons. The attachment identifies the trade marks in suit and the goods in respect of which each mark is registered.
Although it will be necessary to have regard to aspects of the judgment in the earlier proceeding and, in particular, in relation to the examination of the Redbubble business model and the protocols governing proactive moderation of Redbubble’s website, it is sufficient for present purposes to note that the applicant established infringements of its trade marks in respect of three examples (Examples 1, 3 and 4 in the earlier suit) arising out of the offering for sale and supply of goods the subject of the trade mark registrations by reference to the “signs” then in issue in that proceeding: Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited [2019] FCA 355 (the “2019 judgment).
Judgment was given in that matter on 15 March 2019. Examples 1, 3 and 4 from the earlier proceeding are set out as Attachment “B” to these reasons. The final orders in that proceeding included an injunction restraining Redbubble from infringing the applicant’s trade marks, in particular terms, and an award of damages of $5,000 and an order for costs.
As to the seven examples relied upon by the applicant in this proceeding, colour copies of each of the seven examples are Attachment “C” to these reasons. In this proceeding, the applicant contends that Redbubble has infringed and is continuing to infringe the trade marks in suit and that it threatens, intends and will, unless restrained, continue to engage in infringing conduct. The applicant says that Redbubble has profited from the infringing conduct. It says that it has sustained loss and damage by reason of the infringing conduct and will continue to suffer damage unless Redbubble is restrained. It seeks additional damages based on the number of infringements and the circumstance that it was successful against Redbubble in the earlier proceedings. It contends that Redbubble has not taken proper steps to recognise and protect the interests of the applicant in terms of the applicant’s rights under the Act. Redbubble contests each of these propositions.
As to Examples 8, 9, 10 and 11, Exhibit 2 in the proceeding illustrates the images and/or words (or both) uploaded to the Redbubble website which, having regard to the evidence of Mr Hansen, is said to have given rise to infringing conduct in respect of those examples. Exhibit 2 is Attachment D to these reasons.
Because the proceeding was re‑opened, the trial of the proceeding necessarily became bifurcated.
I propose to examine the state of the evidence and the contentions as they emerged at the conclusion of the first part of the hearing dealing with Examples 1 to 7 and then address the state of the evidence in relation to Examples 8, 9, 10 and 11 and the extent to which evidence adduced in the resumed hearing bears on questions in issue in relation to Examples 1 to 7.
Although it will be necessary to examine the evidence of Mr Hansen, it is sufficient to note for present purposes that the applicant’s claim is based upon the appearance on Redbubble’s website of the seven uploaded words and images referred to in the pleadings as earlier mentioned and depicted in the attachments. It is also sufficient to note for present purposes that the evidence shows that Mr Hansen, the applicant’s trade mark officer, ordered goods to which the relevant images could be applied for purchase, sale, payment and delivery, through Redbubble’s website consistent with its functionality and business model described in the 2019 judgment and affirmed in evidence in these proceedings. It is sufficient to note for present purposes that Mr Hansen ordered coasters, a canvas‑mounted print, an acrylic block, a sticker, t‑shirts and facemasks.
Redbubble makes a preliminary point in relation to the trade marks in suit and observes that it has now emerged, since the previous proceeding, that particular assignments were required to be lodged to, in effect, regularise the state of the Trade Mark Register and that at the time of the previous proceeding, HAMC US was actually not the registered owner of two of the trade marks at that time. That point is developed with a little more force in later submissions coupled with the proposition that the untidy or inappropriate state of the Register reflects badly upon both the applicant and HAMC US.
As to the trade marks, Redbubble accepts that having regard to the registrations and the articles or goods in issue as purchased by Mr Hansen, the fact that there are different registrations is “largely immaterial”. Redbubble accepts that to the extent that the coasters, canvas‑mounted print, acrylic block and stickers have on them the words “Hells Angels” (or a sign substantially identical with, or deceptively similar to, those words), use of such a sign will infringe Trade Marks 723219 and 1257992 in Class 16. To the extent that those goods have a “winged skull device” or a sign substantially identical with, or susceptibly similar to that device, infringements will arise in relation to Trade Marks 723463 and 1257993. Redbubble accepts that the same position applies for t‑shirts in Class 25.
Example 2 is a facemask with the words “hell’s angel”. Example 4 is a sticker with a winged skull device. Redbubble accepts that each of Examples 1, 3 and 5 to 7 had at least the words “Hells Angels” and a winged skull device on them.
Redbubble accepts (and pleads), for the purposes of this proceeding only, that each of Examples 1 to 7 bear a sign that is “substantially identical with or deceptively similar to the Trade Marks” in suit.
In the applicant’s submissions, emphasis is placed upon the finding of infringement in the 2019 proceeding in relation to the example described as “Hells Angels Virginia”. That particular example was Example 1 in the previous proceeding and it can be seen as Example 1 in Attachment B to these reasons. The point of the emphasis attached to this example from the 2019 proceeding is the contention that any person looking at, for example, the coasters in Example 1 of the seven examples in issue in the first part of this proceeding, or looking at the canvas‑mounted print or the t‑shirt or the acrylic block in Example 1, would see the words “Hells Angels” in what is called the “upper rocker”, and would see the winged skull device, in strikingly identical terms to the so‑called upper rocker and device depicted in Example 1 of the 2019 judgment. The same proposition is said to emerge in relation to the facemask and classic t‑shirt forming part of Example 3, the sticker and classic t‑shirt forming part of Example 4, the classic t‑shirt, facemask and sticker of Example 5, the sticker and classic t‑shirt of Example 6 and the classic t‑shirt and poster of Example 7. The applicant contends that it is a material matter to keep in mind that in circumstances where a finding of infringement was made in the 2019 judgment of 15 March 2019 on the basis of the elements apparent in Example 1 in the 2019 proceeding, the applicant would not expect to find in May, October and November 2020 in Examples 1 to 7, features of words and a device in substantially identical terms (or for that matter, in deceptively similar terms) to the features in Example 1 in the 2019 judgment giving rise to a conclusion of infringement. The applicant’s proposition is that Redbubble might be expected to have taken steps to ensure that further examples of that kind would not emerge in Redbubble’s transactional conduct, through its website, exhibiting the same particular features the subject of the previous finding and order. There are a number of considerations relevant to the question of detection, identification of uploaded works and proactive moderation which go to that matter. They are discussed later in these reasons.
Redbubble observes that the comparison emphasised by the applicant is irrelevant for trade mark purposes. It is undoubtedly true that the question to be answered in reaching a conclusion about infringement in all the relevant circumstances of the particular case is a comparison between the trade mark as registered and the impugned sign.
However, it remains accurate to say that the exact words and the exact device (but for the geographic description adopted in the so‑called “lower rocker”, in that case “Virginia”) as found in the infringing article in Example 1 from the 2019 judgment appear in Examples 1, 3, 4, 5, 6 and 7 in suit in this proceeding.
Redbubble accepts that the impugned images the subject of the seven examples in suit appeared on its website. Redbubble also accepts that the website and its associated activities continue to operate substantially as they did, as found in the 2019 judgment, and as described at [2]‑[5], [164]‑[169] and [198]‑[247] of the 2019 judgment.
It is not necessary in these reasons to quote those paragraphs. However, those paragraphs should be read in conjunction with these reasons. Those paragraphs are Attachment “E” to these reasons.
Redbubble observes that, in general, any changes to the method of operation of the website represents an overall increase in the automation of particular functions and the “constant improvement of processes designed to discourage, prevent and penalise infringements and contraventions of IP rights”.
Mr James Toy is the assistant general counsel for the Redbubble group of companies including the applicant. Mr Toy has given extensive evidence about the operation of the website and steps taken by Redbubble to improve measures to discourage and prevent infringements of the intellectual property rights of others. In particular, he identifies a range of matters at para 71(a) to (h) of his affidavit of 13 May 2021 as a summary, in part, of the earlier paragraphs of that affidavit describing those matters. I will return to those matters later in these reasons.
In the 2019 judgment, the Court examined the operation and functionality of the Redbubble website. I understand that apart from evidence about contended improvements to that method, Redbubble accepts that the description of the functionality of the website remains entirely correct at the date of these proceedings. That proposition is consistent with Mr Toy’s evidence subject to the matters mentioned above. In the 2019 judgment, the Court came to a view about conduct characterised as infringing conduct on the part of Redbubble by reference to particular examples in the context of the analysis of the functionality of the website and the business model adopted by Redbubble to further its business interests.
Redbubble, in its submissions, identifies a number of paragraphs from the 2019 judgment which reflect, in part, that analysis, and it then postulates a formulation of what would amount to infringement having regard to the analysis in the 2019 judgment. The following paragraphs from the 2019 judgment can usefully be set out here in that context. The opening paragraph ([456]) returns to the device and words at Example 1 in suit in the earlier proceeding:
456The image at Example 1 contains the words “Hells Angels” with the addition of the device of the side view of the Death Head. I am satisfied that the image engages a “use” of the identical Trade Marks 723219 and 1257992 with an addition, and the addition, in any event, is the device represented by Trade Marks 723463 and 1257993. Thus, the use is use of a sign substantially identical with those registered trade marks. I am also satisfied that it is use “in relation to” goods (clothing) in respect of which each trade mark is registered.
457Whose use is it? Is it use by Redbubble? If so, is it use, as a trade mark, by Redbubble, that is, use as a badge of origin of the goods for which the marks are registered, or services “closely related” to the “registered goods”, in the sense contemplated by s 120(2)(b) of the Trade Marks Act? Is it use “in Australia”?
458Redbubble says that an artist, De Ann Troen, has acted, in Virginia, to upload the image at Example 1 to the website. The “work” of the artist is offered by her for application to goods, including clothing. The purchase by Mr Hansen concerned application of the work to a T‑shirt. There is, no doubt, that Ms Troen was, by uploading the work, seeking to engage consumers, commercially, (that is, in trade) with the commercially attractive force of the recognised name and image (the side view Death Head) of Hells Angels. That livery is the subject, as a matter of law, of the registered word marks and registered device marks of the Hells Angels special purpose vehicle, HAMC US.
459I accept that Ms Troen is using the registered trade marks (as earlier identified) as a trade mark in the sense of a badge of origin of her work and inviting consumers to apply the work in physical relation to goods for which the relevant marks are registered.
460As to Redbubble, that company is “in the business” of facilitating the supply of products bearing the uploaded image of Ms Troen (in this example) or, put another way, Redbubble is in the business of facilitating the supply of clothing bearing, put simply, the registered trade marks of HAMC US (in this example). Redbubble is not the “seller” of artwork. However, it is the supplier, in the sense that it is responsible for all of the transactional supply‑side elements of a transaction for the supply of goods bearing the applied works.
461Redbubble has created a business model designed to enable users, in Australia (and, for that matter users in all jurisdictions in which the website is accessible), to find images through the website comprised of, in this example, Ms Troen’s image made up of the identified trade marks of HAMC US. Redbubble enables images containing the relevant trade marks to be presented to buyers of particular goods (nominated by the artists from the website categories of those goods to which the work can be applied) expressly for the purpose of facilitating the supply of goods (clothing, in this example) to which the marks are applied. It does so by and through the functions and protocols of the website engaged by Mr Hansen (and other potential viewers of the image), in Australia.
462Redbubble is the supplier of the goods (clothing) bearing the trade marks because it enables the sale and purchase transaction, confirms the order, takes payment, receives revenue for itself and facilitates revenue payable to the artist, instructs the fulfiller, arranges delivery and places its own name and logo on the goods in the form of swing tags as part of its set of procedures for the supply of the goods. The artist makes the work available for selection by consumers for application to selected goods. Redbubble is directly engaged in all facets of the transaction for the supply of goods bearing the works, to the consumer. That is the way the Redbubble business model works, and the way that it is designed to work.
…
465It seems to me that in that sense, Redbubble is also “using” the trade marks, in Australia, within its own business model, to generate revenue from the supply of goods (clothing) bearing marks or signs substantially identical with the relevant registered trade marks as earlier identified. Redbubble is using the relevant registered HAMC US trade marks for the purpose of indicating, or so as to indicate, a connection in the course of its trade between clothing bearing the marks, and Redbubble, as a source of supply of those goods.
466Moreover, Redbubble, as an aspect of the indicia of the depth of Redbubble’s engagement in the supply‑side set of steps relating to goods bearing the relevant image, has registered its own name as a trade mark in Class 25 of Schedule 1 to the Regulations for some items of clothing and the Redbubble name and logo are registered in many classes of goods. At [172] of these reasons, the field of goods and services of Redbubble’s registrations is set out. These “goods registrations” suggest that Redbubble necessarily sees itself as using, or intending to use, its word mark and logo so as to distinguish “goods” (so far as the goods classes are concerned) dealt with or provided, in the course of its trade, from goods so dealt with “by any other person”: s 17 of the Trade Marks Act.
467Redbubble also says that it provides: printing services (T‑shirt printing, textile printing, photographic printing (Class 40)); clothing and fashion design services (Class 42); clothing design services (Class 42); and business services to facilitate creative expression (Class 35). The services of T‑shirt printing, textile printing and business services to facilitate creative expression, seem to be services, having regard to the elements of the Redbubble business model deployed by Redbubble, falling within the description of services “closely related” to “registered goods”, that is, goods in respect of which the HAMC US trade marks relevant to Example 1 are registered.
468I am satisfied that Redbubble is “using” the HAMC US registered trade marks relevant to Example 1, within its own business and revenue model, in the course of its supply‑side transactional trade effected through the Redbubble website, in relation to the supply of goods (T‑shirts) bearing the marks, in respect of which the HAMC US trade marks, relevant to Example 1, are registered. Redbubble is, in that sense, “using” the HAMC US registered trade marks as a badge of origin of supply and distribution within its trading activity as the source or origin of supply of goods bearing those particular marks. In other words, put simply, Redbubble is saying, by its business model, in effect: “If you come to Redbubble you can get this T‑shirt online from us bearing the Hells Angels trade marks”.
469The capacity to engage, in Australia, through the website, as Mr Hansen did, constitutes use in Australia by Redbubble.
Redbubble observes that it did not challenge, by appeal, any aspect of the 2019 judgment.
Redbubble accepts, in these proceedings, that where a website hosted on a server located anywhere in the world is accessible from Australia on which an image (device or text or both) is displayed which can be searched for by keyword search terms and from which goods can be ordered bearing the image/device/text (the subject of which, for example, might be a registered trade mark in Australia), a trader operating such a website will infringe an Australian registered trade mark if the image or device so applied to the relevant goods is substantially identical with, or deceptively similar to, the Australian registered trade mark; and, the goods to which the impugned device or sign is applied are goods falling within the registration for the trade mark; and, the trader’s system (in this case, through the particular functionality of the website), arranges for the production and dispatch of the goods so ordered.
Apart from these accepted integers of infringement, Redbubble says that it would add the qualifying “rider”, “unless the image was placed on the website by, or with the authority (express, implied or ostensible) of the trade mark owner”.
Redbubble also contends and thus accepts that the following matters of principle can be isolated from the 2019 judgment:
[I]nfringement will still be made out:
Ÿeven if the images are placed on the website by third parties,
Ÿincluding if those third parties are outside Australia,
Ÿin breach of their agreement with the website owner,
Ÿeven if the entire process – from uploading through searching by the customer through ordering the goods from a manufacturer and their dispatch to the customer – is entirely automated;
Ÿeven if the manufacturer of the goods is in a place other than Australia (or any other place where Redbubble has any presence); and
Ÿregardless of whether any goods are actually ordered.
In the 2019 judgment, the Court reached a conclusion about infringement having regard to the findings of fact concerning the method of operation of the Redbubble website and all of the features of the business model reflected in that modality and the application of the law to the facts as found. The Court concluded that Redbubble had engaged in infringing conduct as to Examples 1, 3 and 4. Although matters of principle might usefully be distilled from the reasoning in the 2019 judgment, it should be remembered that the analysis in that proceeding was necessarily a fact‑intensive one having regard to the very particular methodology adopted by Redbubble in the conduct and operation of its website and business model deployed through the website. It is sufficient to note for present purposes that so far as this proceeding is concerned, nothing about the conduct and operation of the website and the elements of the transactional business model deployed by operation of that website has changed. As mentioned earlier, Mr Toy and others describe measures adopted by Redbubble to enhance detection and protection of the rights of others, which are described later in these reasons.
Having regard to Redbubble’s analysis described at [32] to [36] of these reasons (and the quoted paragraphs), Redbubble admits infringement of HAMC US’s trade marks in suit in the case of the seven examples in issue by reason of the appearance on the website of the substantially identical or deceptively similar signs, in the context of the functionality of the website. That admission is subject to the pleading. By its amended defence, Redbubble denies at para 44 that the conduct (otherwise said to constitute the infringing conduct) was engaged in without the licence or authority of HAMC US or the applicant, and says that in so far as any pleaded conduct of Redbubble was “prompted by” Mr Hansen, Ms Lyhne or any person “interacting” with the Redbubble website “with the authority” (actual implied or ostensible) of the applicant or HAMC US, the otherwise infringing conduct was “licensed, authorised or otherwise permitted” by the applicant or HAMC US, and is thus non‑infringing conduct.
Thus, Redbubble says that to the extent that the applicant or HAMC US (or both) has caused Mr Hansen to engage with the Redbubble website and to cause the trap transactions to occur, Redbubble’s impugned conduct has occurred expressly with the authority of the rights owner and cannot constitute infringing conduct, as the very essence of infringement is engaging in conduct falling within s 120(1) of the Act without the licence or authority of the trade mark owner.
As to trap purchases, the very essence of a trap purchase is to identify by reference to objectively verifiable events and documents, probative evidence of whether a person is engaging in the conduct of using, as a trade mark, a sign that is substantially identical with, or deceptively similar to, the trade mark in suit, in relation to goods or services in respect of which the trade mark is registered. The point of any trap purchase is to put a rights’ owner in a position to be able to say to a court exercising the relevant jurisdiction: “This is what the respondent is doing”. Often, there is no other immediate disciplined, accurate and precisely documented probative way of demonstrating that a respondent is transgressing, in the statutory sense contemplated by s 120(1) of the Act, upon the exclusive rights of the trade mark owner or the rights enjoyed under the Act by an authorised user. The trap purchase normally occurs with the express or implied authority of the trade mark owner (or authorised user) because those parties have the relevant direct statutory interest in seeking to understand and ultimately prove the conduct of a trader occurring in the ordinary course of that trader’s business without the authority of the rights owner. One way of seeking to establish what is occurring in the conduct of a trader in the ordinary course of that trader’s business is for the rights owner to engage in a transaction which is said to characterise conduct which, if occurring in the ordinary course of that trader’s business in goods or services for which the trade mark is registered, amounts to infringing conduct on the part of the relevant trader.
Steps of this kind would be taken by rights owners every day in Australia in seeking to understand whether a trader is infringing the intellectual property rights of the rights owner. The evidence of the relevant transaction is relied upon as evidence of what occurs in the relevant marketplace in the ordinary course of the trader’s business in the relevant goods or services.
In this case, the relevant transactional forum is Redbubble’s website with its very particular features of transactional engagement as described extensively in the 2019 judgment and as accepted as the elements of the enduring transactional business model relevant to these proceedings. No trap purchase could ever be evidence of conduct constituting infringing use if that evidence was habitually displaced or ignored by courts on the footing that it necessarily occurred with the authority of the rights owner. A trap purchase is, functionally, evidence of whether a party is “using”, as a trade mark, a “sign” exhibiting the features described in s 120(1) of the Act in relation to goods or services for which the mark is registered, on the footing that what is reflected in the trap purchase is conduct which is occurring in the relevant marketplace. By reference to that evidence, the Court is put in a position where it can see by disciplined and accurate probative evidence, the emblematic character of conduct occurring on the part of the relevant trader in the course of its business so as to be in a position where it can reach a conclusion about whether all of the integers of s 120(1) of the Act are satisfied (if that is what is occurring).
Redbubble contends that the Court ought not to rely on the evidence of Mr Hansen as evidence probative of transactions said to constitute infringement of the trade marks in suit because on each and every occasion, Mr Hansen, as the trade mark officer of the authorised user, was acting with the authority of the trade mark owner and thus the transactions on the part of Redbubble were prompted, permitted and authorised by either or both of HAMC US or HAMC AU.
Redbubble, by its defence, called into question the title of HAMC US to the trade marks in suit. That defence was not pressed. However, Redbubble makes submissions concerning an analysis it conducted in relation to the state of the Australian registrations of the trade marks (by particular companies incorporated in different States of the United States and assignments from those entities) ultimately leading to registrations in HAMC US. It observes that as a result of that analysis it is “tolerably clear” that all five trade marks in suit have been registered since 14 March 2020 in HAMC US. Nevertheless, Redbubble makes the observation that it ought to be noted that the effect of what it describes as the “irregular and haphazard manner” in which the official records have been updated means that HAMC US was not the entity recorded as the registered owner of Trade Marks 1257992 and 1257993 at the time of the determination of the previous proceedings and thus as to those trade marks, HAMC AU was not an authorised user of those particular marks at that particular time.
Having regard to all of these matters, Redbubble contends that, as to this part of the proceeding, five questions arise and they are these:
(a)Were the trade marks infringed by Redbubble in respect of the specific purchases of products by Mr Hansen bearing the artworks reflected in the seven examples?
(b)Did HAMC AU sustain any loss and damage by reason of Redbubble’s conduct and, if so, what quantum, if any, ought to be awarded to HAMC AU?
(c)If HAMC AU has sustained any loss and damage, is it entitled to any additional damages under s 126(2) of the Act?
(d)Is HAMC AU entitled to any injunctive relief and, more particularly, the injunctive relief sought in the amended originating application?
(e)Finally, is HAMC AU entitled to the declarations it seeks?
The applicant contends that there is a further question of whether an issue estoppel arises on the footing that Redbubble sought to agitate in the 2019 proceedings (between the same parties in respect of the same trade marks based on evidence of purchases by Mr Hansen) the proposition that no infringement arises in circumstances where the evidence relied upon by the applicant is evidence of transactions made by Mr Hansen through the Redbubble website and thus, the transactions were “prompted by” and made with the permission, approval and authority of the applicant.
Redbubble accepts that by reason of the concessions it has made as described above, the Court will find that it has infringed the trade marks in suit in the manner identified by the Court in the 2019 judgment at [468]. However, as emphasised above, Redbubble also contends that to the extent that the evidence of infringement relied upon to make good the applicant’s claims is the trap purchases by Mr Hansen and the receipt of goods in Australia, no infringement arises for the reasons already mentioned.
As to the seven examples relied upon by the applicant, the evidence of Mr Hansen is this.
Mr Hansen observes that in the first proceeding leading to the 2019 judgment, he gave evidence about the steps he took to make searches on the Redbubble website and purchase particular goods through the website resulting in the completion of the relevant transaction and the delivery and receipt of the goods relating to the various examples including Example 1 and Example 3 in that proceeding. He says that in 2020, as the trade mark officer for HAMC AU, his duties included monitoring, predominantly online, and identifying uses of designs or words which might be considered to be use of trade marks HAMC AU is entitled to use in Australia as an authorised user of HAMC US. Mr Hansen says that although Mr Mark Nelms, the director of the applicant, has lived overseas for some years, he and Mr Hansen have been in regular telephone and email communication regarding any designs which potentially infringe the trade marks the applicant is entitled to use under its arrangements with HAMC US. He also says that his communications with Mr Nelms involved whether to secure evidence of use of images or designs said to infringe the relevant trade marks, by purchasing products bearing the potentially infringing designs. He says that this was particularly the case with the search and purchase procedures he undertook in relation to Examples 1 to 7 on the Redbubble website.
Mr Hansen says that in 2020 between the months of May and November, in relation to each of the “designs” (signs) in Examples 1 to 7 in suit, his searches of the Redbubble website were prompted by Mr Nelms contacting him and asking him to search the Redbubble website from Australia to see if each of those examples appeared on the website to a person conducting a search from Australia and, if so, to purchase goods bearing those images.
Mr Hansen says that before he conducted the first search of what is Example 1, he did not expect that design (see Attachment C; comprising the upper rocker bearing the words “Hells Angels”, the winged death head profile and the letters “MC”, and the geographic lower rocker showing “Brazil”) to appear in Australia because of the trade mark infringement found in the first proceeding (which included all of those elements except that the lower rocker recited the geographical name “Virginia”). Mr Hansen says that as a result of his searches in relation to each of the seven examples, he was able to access all of them on the Redbubble website from his computer in Australia. He says that in relation to Example 5, he did not purchase goods bearing that design but did take screenshots of a t‑shirt, a facemask and a sticker being offered for sale on the Redbubble website bearing the image depicted as Example 5 in Attachment C.
As to Example 1 described as “Hells Angels Brazil”, he says that the process was this.
On or about 11 May 2020, he conducted a search using the Google search engine and entered in the search field the term “Redbubble”. The search results returned as the top ranking item, the Redbubble website. He selected that site and was taken to the Homepage for the site. The site revealed the Redbubble logo. He then went to the search box and the field described as “Search designs and products” with a magnifying glass symbol. He entered into the search field the words “Hells Angels” and a separate search using the words “Motorcycle Clubs” and then clicked the search symbol. The results of the search produced many different images over a number of pages many of which did not appear to him to have any apparent connection with HAMC US or HAMC AU. However, amongst the search results was the design or image depicted under Example 1 in Attachment C. He says that based on his own experience and training as the applicant’s trade mark officer, he understood that Redbubble did not have any licence or authority to use “Hells Angels” on any product or a side view (profile view) of the winged death head device on any product or the words “Hells Angels” within the characteristic semi‑circle shape otherwise known as the upper rocker sitting above the winged death head device. He says that using functions available on the website, he purchased one classic t‑shirt bearing the Example 1 image for $37.46; one set of coasters bearing that image for $19.03; and one canvas‑mounted print bearing the Example 1 image for $37.10. Mr Hansen then describes all of the various consequential functions of the website relating to such a transaction, none of which are in controversy. They included steps taken by Mr Hansen to insert all of his contact details, shipping and billing address and facility for making payment; the confirmatory email from Redbubble setting out the order number, estimated delivery date, shipping and billing address, a summary of the articles purchased, the price, a link to check progress of the order and details of the artist. It is not necessary in these reasons to set out every aspect of the engagement between Redbubble and Mr Hansen in relation to the purchase and the various emails generated by Redbubble concerning his purchase of the items and their ultimate delivery.
Mr Hansen says that he made a second purchase in relation to Example 1 by undertaking the same online searching procedure as described earlier and by making the same observations described earlier. He did so on 11 October 2020 which resulted in Image 1 being found on the site and a purchase being made of one acrylic block bearing Example 1 for $64.82. All of the same consequential processes were triggered and engaged by the purchase. Again, it is not necessary to set out the detail of those matters.
On 13 October 2020, Mr Hansen undertook the same online searching procedure as described at the outset in relation to Example 1 and made the same observations about the image as mentioned earlier. The range of possible products to which the design might be applied included a t‑shirt. Mr Hansen proceeded to purchase one classic t‑shirt bearing the design for $39.24. That transaction occurred on 13 October 2020. Again, all of the consequential steps otherwise described were triggered and engaged by the purchase.
Example 2 consists of the words “Hell’s Angel” with no device. Mr Hansen says that on or about 4 October and 13 October 2020 he conducted searches of the Redbubble website and on this occasion he used, again, the search terms “Hells Angels” and “Motorcycle Clubs”. The result of the search produced many different images over a number of pages many of which had no apparent connection with the images or designs or words connected with the applicant or HAMC US. However, among the field of results was what is Example 2, as capable of being applied to particular goods. Using the functions available, Mr Hansen purchased one facemask bearing Example 2 for $19.85 on 4 October 2020 and, on 13 October 2020, one t‑shirt bearing the words depicted in Example 2 for $23.55. Again, all of the consequential steps relevant to such a transaction were triggered and engaged by those purchases.
On 4 October and 13 October 2020, Mr Hansen undertook precisely the same process using the same search terms. The result of the search produced many different images which Mr Hansen understood to have no connection with either the applicant or HAMC US. However, within the field of searches, the image depicted in Example 3 emerged. It took the form of a composite image showing the upper rocker bearing the words “Hells Angels”, the side view of the winged death head and the letters “MC” with a lower rocker containing the word “Brotherhood”. Mr Hansen purchased a facemask bearing the composite image on 4 October 2020 for $22.33 and a classic t‑shirt bearing the side view of the singed death head for $25.51.
Again, all of the consequential steps relating to such a purchase were triggered and engaged by the purchases.
The same steps were taken on 4 October and 13 October 2020 in relation to what is Example 4. That example consists solely of a side view of the winged death head. On 4 October 2020, Mr Hansen purchased one sticker bearing the Example 4 image for $5.10. On 13 October 2020, Mr Hansen purchased one classic t‑shirt bearing the Example 4 image for $26.68.
Again, all of the consequential steps were invoked and triggered by the two purchases.
On 6 October 2020, Mr Hansen undertook the same process using the same search terms which produced a field of search results which included the image depicted at Example 5 comprising the side view of the winged death head, an upper rocker bearing the words “Hells Angels” and the letters “MC”. Mr Hansen did not make a purchase of any items but took screenshots of product offerings using the image described as Example 5 as he had found it on the Redbubble website.
On 13 October 2020, Mr Hansen undertook the same search process using the same search terms which produced a field of searches including a composite image made up of a side view of the winged death head, the letters “MC”, an upper rocker bearing the words “Hells Angels” and a lower rocker bearing the word “Forever”. On 13 October 2020, Mr Hansen purchased a t‑shirt bearing the Example 6 image for $29.43. Again, the purchase triggered the transactional processes of the website in relation to that purchase.
On 25 November 2020, Mr Hansen undertook the same process involving the same search terms which resulted in a field of images within which was the image depicted as Example 7 comprised of a side view of the winged death head, the letters “MC”, an upper rocker bearing the words “Hell’s Angels” and a lower rocker bearing the word “Brotherhood”. On 25 November 2020, Mr Hansen purchased a t‑shirt bearing the Example 7 image for $25.51 and a poster bearing the Example 7 image for $18.31. Again, all of the consequential steps associated with such a purchase were engaged by the purchase.
Each purchase resulted in the goods being delivered to Mr Hansen’s Queensland address through the processes engaged through the Redbubble website.
As to these seven examples, Redbubble makes a number of observations about the scope of engagement with the images the subject of each example.
First, none of the third party uploaders of the relevant image to the site seeking to make the image available for application to a field of goods, provided an Australian address when registering his or her account on the website.
Second, of the seven examples, Redbubble “proactively moderated” three of them several months before the proceedings were commenced by the applicant.
Third, of the seven third party uploaders to the website, Redbubble had terminated the accounts of two of them several months before the applicant commenced the proceedings.
Fourth, only two users of the site who provided an Australian address purchased products bearing the images through the Redbubble website. They were Mr Hansen and Ms Lyhne. Redbubble observes that for one of her purchases, Ms Lyhne provided a residential and shipping address outside Australia in Slovenia and for the other she provided an Australian address even though she was based in Slovenia.
Fifth, the total gross revenue derived by Redbubble from Australian sales of the products was AU$133.65 and the total gross revenue Redbubble obtained from sales to users of the website in relation to any one or all of the seven images in other countries was AU$344.51.
As to Ms Lyhne, the applicant says that it does not rely upon any evidence, in relation to any of the seven examples, other than the evidence of Mr Hansen.
As to the seven examples, Mr Toy has provided the following information about them.
The proceeding was commenced by the applicant on 31 December 2020 and the originating application was served on 4 January 2021. The third party uploader of the image comprising Example 1, uploaded the image to the website on 15 January 2020 and provided an address in Brazil when registering his or her account on the website. On 5 January 2021, Redbubble’s “Content Operations Team” (the “COT”) moderated the image. Moderation is a term which means to remove or disable access to the webpage on the Redbubble website where the artwork of the uploader is listed and through which products bearing the artwork could be purchased through the functions of the website. The artwork comprising Example 1 was never reinstated to the website.
Mr Toy explains that the Redbubble COT had not captured the Example 1 artwork as part of the proactive moderation process as neither the “title” of the artwork nor its “tags” contained the words “Hells Angels” or something similar. The title was “Outlaw Motorcycle Clubs” and the tags were “Outlaw”, “Motorcycle” and “Clubs”. It should be noted that the term “Motorcycle” forms part of the name of the applicant and the words “Motor” and “Cycle” form part of the name of HAMC US and thus they might be thought to be tags which had some relevance or connection with the applicant and HAMC US.
Mr Toy observes that although the artwork was on the website from 15 January 2020 to 5 January 2021, only two users who provided an Australian address purchased products through the website bearing the artwork. One user was Mr Hansen who purchased goods on 10 May 2020 (two t‑shirts, a canvas‑mounted print and a set of coasters), 10 October 2020 (an acrylic block) and 12 October 2020 (another t‑shirt). The second user is a purchaser described by Mr Toy as a “Purported Australian Purchaser” who was using an internet protocol address located outside Australia when placing an order for a t‑shirt on 10 May 2020. This description is a reference to Ms Lyhne, the wife of Mr Nelms. Ms Lyhne also made another purchase on 16 October 2020 (an Example 2 purchase). Mr Nelms and Ms Lyhne live in Slovenia. When Ms Lyhne engaged with the website, she did so (and placed the two orders) from an IP address outside Australia, hence the reference by Mr Toy to the “Purported Australian Purchaser”.
The applicant says that it relies on the purchases made by Mr Hansen. It says that there is nothing “sinister” about the two purchases by Ms Lyhne as they were undertaken as nothing more than a means of alerting Mr Hansen as the applicant’s trade mark officer to the image now described as Example 1 so as to enable Mr Hansen to see if the image could be accessed from Australia and, if so, to make a purchase of goods, through the website, bearing the image, as a matter of evidence.
The account of the third party uploader was terminated by Redbubble on 5 January 2021 in accordance with Redbubble’s policies governing approaches to repeat offenders and scaled abusers who violate the “User Agreement”.
It should also be noted that the image now described as Example 1 (like all of the seven images) is described by Mr Toy as the “artwork” of the third party uploader. As a generic description, the reference to “artwork” is understandable but it is apt to understate the scope of the real problem in issue. It needs to be kept in mind that the “artwork” so enabled by the website is nothing more than the out‑and‑out flagrant usurpation (perhaps by a repeat and scaled abuser having regard to Mr Toy’s references to those terms in his affidavit when describing the cancellation of the relevant account holder) of another party’s stylised device and badges of identification which, in this case, are the registered trade marks. There is nothing “artistic” about the conduct of the Brazil uploader which engages delicate and perhaps subtly argumentative questions of whether the image may or may not be substantially identical with or deceptively similar to the subject matter in which the rights subsist. Put anecdotally, the images are in every sense a taking of the trade marks in issue, expressed formally, of course, in the language of s 120(1) of the Act.
The term “Hells Angels” and the profile “device” of the winged death head of Example 1 were on the website for, essentially, 12 months.
As to Example 2, “hell’s angel”, it was uploaded on 27 June 2020 with the third party providing an address in South Africa when registering. The COT moderated the image on 4 January 2021 as a result of being served with the originating application that day. The image has never been reinstated to the website. This example is the first of four other examples within the seven examples in suit where proactive moderation failed to adequately engage in a protective way. As Mr Toy explains, Redbubble, since January 2018, has used, through the COT, a tool described as “Suspend for Review” (“SFR”). The tool is a software tool that automatically suspends from public view newly created listings to which the third party uploader has applied a title or tag that comprises certain search terms. Once suspended by the tool, users are not able to view the listing or purchase goods bearing the uploaded image unless and until a member of COT manually reviews the image and decides whether it should be proactively moderated (removed or disabled), “based on guidance from the rights owners”. In this example, the uploaded image is “hell’s angels”.
The SFR tool has limitations as it is keyword‑based and does not utilise image matching or optical character recognition. In any event, in the case of Example 2, the SFR tool did detect and suspend the image on 27 June 2020, the day of the uploading. It was then manually reviewed by a member of the COT. The member of the COT that manually reviewed the uploaded image was a member of an outsourced group called the “Third Party Service Provider” (“TPSP”) based in Jamaica (called “TPSP Jamaica”), and overseen by Redbubble. Mr Toy says that a member of TPSP Jamaica manually reviewed the listing and erroneously released it rather than remove or disable it. The listing was ultimately disabled on 5 January 2021. Mr Toy explains at para 74 of his affidavit that Redbubble has ceased using TPSP Jamaica “as a result of such errors” and since August 2020, Redbubble has been using an outsourced team in Colombia subject to Redbubble’s oversight arrangements as described at para 72(a) to (e) of Mr Toy’s affidavit. In the period from 27 June 2020 to 5 January 2021, one user with an Australian address, Mr Hansen, purchased products on 3 October 2020 and 12 October 2020 bearing the image.
As to Example 3 (which comprises the words “Hells Angels” in the upper rocker, the profile, the profile “device” of the winged death head, “MC” and the word “Brotherhood” in the lower rocker), it was uploaded to the website on 5 September 2020. The third party uploader provided an address in the United Kingdom when registering his or her account. The image was removed from the website on 13 October 2020 (well before service of the originating application on 4 January 2021). However, although the SFR tool also identified and suspended this image (no doubt due to the keyword search term “Hells Angels”), the manual review of the image by a member of the TPSP Jamaica team resulted in this image also being erroneously released to the website. That occurred on 7 September 2020 where it remained until 13 October 2020. In the period between 5 September 2020 and 13 October 2020, Mr Hansen purchased the products bearing the image on 3 October and 12 October 2020 as earlier described. The account of the third party uploader was cancelled on 12 November 2020.
As to Example 4 (which is the device alone), it was uploaded to the website on 29 September 2020 by a person who provided an address in the United Kingdom. The image was removed from the website on 13 October 2020 (again, well before service of the originating application) and has never been reinstated to the website. It too was identified by the SFR tool (on 29 September 2020) and manually reviewed by TPSP Jamaica on 30 September 2020. The image was erroneously released to the site on 30 September 2020. It ought to have been moderated on manual review. In the period from 29 September 2020 to 13 October 2020, Mr Hansen purchased goods bearing the image on 3 October and 12 October 2020 as earlier described. The account of the third party uploader was terminated on 4 January 2021.
As to Example 5 (which comprises the words “Hells Angels” in the upper rocker, the device of the winged death head and “MC”), the image was uploaded to the website on 26 September 2020. The uploader provided an address in Turkey when registering his or her account. The image was removed from the site on 8 October 2020. The image was detected by the SFR tool. It was manually reviewed on 28 September 2020 by a member of the TPSP Jamaica team and erroneously released to the site on 28 September 2020. Although Mr Hansen examined the site and identified the image now called Example 5, he chose not to purchase any articles as physical examples of goods to which the image could be applied consistent with the methodology of the website, and simply took screenshots of the image. The account of the third party uploader was terminated on 4 January 2021.
As to Example 6 (which comprises the words “Hells Angels” in the upper rocker, the profile device of the winged death head and the word “Forever” in the bottom rocker), the image was uploaded to the site on 11 October 2020 by a person nominating an address in the United States. It was detected by the SFR tool, manually reviewed by a member of the TPSP Jamaica team on 12 October 2020 and erroneously returned to the site on 12 October 2020 where it was thought to have remained until 6 January 2021 when it was removed. However, Mr Toy has reviewed that chronology and says that it was removed on 13 October 2020; was on the site from 11 October to 13 October 2020; and only 10 views of it occurred. The account of the uploader was terminated on 13 October 2020. In the period from 11 October 2020 to 13 October 2021, Mr Hansen purchased goods bearing the image as earlier described.
As to Example 7 (which comprises “Hells Angels” in the upper rocker, the device, “MC” and “Brotherhood” in the lower rocker), the image was uploaded on 22 November 2020. The image was removed on 4 January 2021 upon service of the originating application. It was never reinstated to the site. It was not detected by the SFR tool and was not subject to manual review (as it would have been had the tool identified the image). However, the manual review in that event might have produced the same result as occurred in relation to Examples 2, 3, 4, 5 and 6. In any event, in the period between 11 October 2020 and 4 January 2021, Mr Hansen ordered a poster and a t‑shirt bearing the image.
As to the operation of the Redbubble website and all the functional steps representing the business model, Redbubble affirms all of the elements described in the 2019 judgment (see Attachment “E”. Also, Mr Vydra, Redbubble’s Chief Technology Officer, put on an affidavit repeating large parts of the text in the 2019 judgment in his affidavit which set out and described the elements of Mr Kovalev’s earlier evidence. Mr Kovalev was Redbubble’s former Chief Technology Officer. Although Mr Vydra is criticised by the applicant for slavishly repeating text from the 2019 judgment, I proceed on the basis that Mr Vydra, for his own part, is simply affirming the currency of the earlier description. There are many ways, no doubt, that that could have been done.
As mentioned earlier, Mr Toy has provided extensive evidence concerning the procedures and practices adopted by Redbubble to seek to identify and address unauthorised use on its website of the intellectual property of others. It is fair to say that there are two dominant or broad features of the approach by Redbubble and they are said to have an important inter‑relationship.
The first concerns the steps, practices and procedures adopted by Redbubble to identify and address an uploader’s use of another person’s intellectual property, and the notices and counter‑notices those processes engage and other proactive moderation processes Redbubble seeks to use. The second broad theme concerns the working relationship and degree of engagement between Redbubble and the relevant rights owner. An important aspect of the second feature is said to be the extent to which the rights owner collaborates with Redbubble to settle and agree upon the search terms to be deployed in seeking to identify potentially problematic images uploaded to the website that may be thought to infringe the intellectual property rights of a party and, in this case, the applicant or HAMC US, and the frequency of conducting searches according to particular protocols and agreed search terms.
Redbubble contends that the applicant has failed to engage with it in settling and revising search terms and it says that notwithstanding that failure to engage, Redbubble has conducted “site sweeps” of the website regularly to seek to isolate images that infringe upon the rights of the applicant and HAMC US.
Redbubble also says that had the applicant notified it of the presence of images on the site of concern to the applicant, immediately on discovering those images on Redbubble’s website, Redbubble could (and would, it says) have taken steps to remove access to the webpages displaying the images.
I accept that Redbubble has adopted over time a range of practices and procedures as described in the 2019 judgment and described in the evidence of Mr Toy (and, necessarily, Mr Vydra, given his adoption of the text of the earlier judgment). I also note these matters:
(1)Although the COT had comprised 10 to 12 members as at 27 July 2017, it had grown (as at 13 May 2021) to 50 members made up of 20 Redbubble employees and 30 agents as part of the outsourcing of COT functions to what is now TPSP Colombia but formerly was TPCP Jamaica.
(2)Since first engaging with TPSP Jamaica, Redbubble has made the improvements to its quality control processes in supervising outsourced TPSP functions described at para 76 of Mr Toy’s affidavit.
(3)Redbubble has an IP Policy which sets out a procedure that a rights owner can invoke if it considers that an “artwork” has been uploaded to the website which infringes its rights. Thus, it can complete an online “Notice and Takedown Report” by providing Redbubble with information comprising a description of the intellectual property in issue; identification of the artworks said to infringe; confirmation that the complainant is the rights owner; confirmation that the complainant has a “good faith belief” that the artworks infringe its rights; and an email address for the complainant for communication about the complaint.
(4)Although all of these matters are very reasonable in themselves as a method of addressing, from time to time, a particular transactional image uploaded to the website, Redbubble well knows, so far as the applicant is concerned, the precise intellectual property in issue; the source of the rights in the registered trade marks that the applicant and HAMC US enjoy under the Act; and, the precise content of the trade marks and the classes of goods in respect of which each of them is registered. Moreover, all of this has already been tested in litigation and has been the subject of previous orders. One issue is the extent to which Redbubble is itself vigilant (without the need for the applicant and HAMC US to be constantly monitoring Redbubble’s website for infringements) of images uploaded to its site that are properly described as substantially identical with, or deceptively similar to, the trade marks in issue and with which Redbubble is very familiar both as to its COT and its Legal Team.
(5)I accept that Redbubble has a proactive moderation process that operates without the need for a rights owner to engage with the Takedown Notice and Counter‑Notice procedures especially where the rights owner has “legitimate difficulties” with the procedure; where the rights owner is “becoming increasingly frustrated” with that process; or where “legal action” might be “imminent”. The proactive moderation process involves Redbubble engaging with the rights owner to agree a set of “Proactive Moderation Guidelines” (the “Guidelines”) which “depict” the “content” in which the rights owner “claims, in good faith” to have “enforceable rights” (otherwise called the “Reference Content”) and it involves Redbubble obtaining “guidance” from the rights owner of the “nature and degree of similarity that needs to exist between the Reference Content and an uploaded artwork before the uploaded work is considered to be infringing”. As to these matters, see Mr Toy’s affidavit.
(6)In the case of the applicant and HAMC US, the position is as clear as it can be on these issues. The “Reference Content” is each and every one of the trade marks now ultimately in suit again in these proceedings. The Reference Content is not subject matter in which the applicant and the second respondent “claim”, “in good faith”, to have “enforceable rights”, but rather, subject matter in which they have demonstrated and uncontested rights. As to “guidance” from the rights owner on the degree of similarity that needs to exist between the trade marks and the image, that matter is well‑known and well understood and is expressed as whether the sign (image) is substantially identical with or deceptive similar to any one or more of the trade marks in issue (as is presently admitted in the case of the seven examples). This test of the degree of similarity would be well‑known to the COT and Redbubble’s Legal Team. Thus, the applicant suggests that there are two questions arising out of Mr Toy’s evidence of proactive moderation. First, why is it the position that Redbubble was not able to quickly identify and deal with all of the seven examples uploaded to its website having regard to its state of knowledge of the matters just described? Second, having identified through the use of the SFR tool, the images at Examples 2, 3, 4, 5 and 6 and subjected those images to proactive manual moderation, why was each image returned to the website even though each image failed the test (and demonstrably so) of being substantially identical with, or deceptively similar to, the subject matter of the rights, having regard to all of the steps described by Mr Toy about proactive moderation? As to the latter matter, Redbubble deposes to the errors on the part of the outsourced TPSP Jamaica team. Errors of judgment were made. Nevertheless, they were errors of judgment in the context of Redbubble’s performance of its proactive moderation program so far as it affected the rights of the applicant and HAMC US. In a real sense, the failings on the part of TPSP Jamaica are an explanation, but from the perspective of a rights owner, not an answer, to failing to properly protect the rights of the trade mark owner and, more relevantly, for present purposes, the authorised user. It reflects a failure of quality control in the supervision of an outsourced group and resulted in the replacement of that group with the TPSP Colombia group.
(7)As to the first question, there are a number of practical matters. In order to find an uploaded image that either may, or simply does, infringe the rights of another and, in particular, the applicant and HAMC US, the image has to be searched for and found. That step involves selecting search terms that are likely to isolate an image that contains the “Reference Content”. Thus, the search terms must be, as Mr Toy says, encompassing but also focused. Mr Toy describes the issue and some of the problems at para 55 of his affidavit. He also emphasises the desirability of the rights owner engaging with Redbubble to agree about the most appropriate search terms.
(8)There are a number of difficulties concerning search terms at least in the context of this case. The first is that the applicant is an entity that is the embodiment of a group of like‑minded motorcycle club members. Redbubble, on the other hand, is in the digital platform business. It has significant resources and corresponding platform expertise. It has experts in the management and organisation of digital content within its ranks. Some of them very helpfully have given evidence in these proceedings and they are impressive people. They are familiar with, as one would expect, the intimate detail of the functionality of platform and they are required to watch, manage and maintain it. They are intimately familiar with the hierarchy of protocols it engages when isolating content and they are familiar with or capable of selecting the most useful and adapted search terms that would likely optimise results on the platform in looking for content having regards to the fields and hierarchy of protocols that isolate content according to search criteria. No doubt, members of a motorcycle club could help and so too perhaps Mr Hansen, but the skills sets required to optimise the interrogation of the platform for relevant content are very likely to reside within Redbubble, its COT and its Legal Team.
(9)Another aspect or difficulty concerning the issue of isolating content is that Mr Hansen says that he put the terms “Hells Angels” into the Redbubble search box and separately entered another search for the term “Motorcycle Club”. He then describes the seven examples he found as he did each of those searches when he did them. The applicant says that one question then is, independently of any engagement with the applicant or HAMC US, Redbubble, knowing that the applicant and HAMC US enjoy the rights in the subject matter of the particular trade marks (with which Redbubble and COT were well familiar), either separately for “Hells Angels” and the “device” (or in combination), and knowing that neither those trade marks, nor signs substantially identical with or deceptively similar to them, could be used (in Australia and in many other jurisdictions) through the website, how was Redbubble, by its regular sweeps of the site, unable to quickly find each and every example that Mr Hansen found when undertaking the steps he says he took? Aspects of the answer to that question are to be found in the evidence of Mr Toy mentioned shortly.
As to Mr Toy, I have already described aspects of proactive moderation described by him at paras 51 to 54 of his affidavit. These paragraphs describe the desirability of a rights owner engaging with Redbubble to establish the “Guidelines” and “Reference Content” and the “guidance” sought from the rights owner about what the rights owner believes to be infringing content.
As mentioned earlier, however, the generality of those processes had already descended to the specific in the case of the applicant and HAMC US so far as the trade marks are concerned. The question of importance was one concerning the “Search Terms”. Mr Toy says that the COT in consultation with the “Legal Team” formulates a “list of search terms and other filtering criteria that they consider would be most effective for finding artworks on the Redbubble website that might comprise or contain any of the reference content”. Unsurprisingly, the COT together with the Legal Team would be likely to enjoy the greatest facility for isolating search terms that would usefully engage with the website, avoid false positives as much as possible and focus upon the particular content or combination of content (words, variations on spelling, combinations of words, devices, stylised text and so forth). Mr Toy gives some examples at para 55(a)‑(c).
As to searches of the website, Mr Toy says that if the rights owner has requested Redbubble to conduct a “site sweep” of the website, the COT will perform a sweep in the date range 2006 to the present. If the rights owner has requested Redbubble to conduct “regular policing”, the COT will perform a single “site sweep” and then, on a “regular basis” perform further searches starting from the date of the last search. As to what is meant by “on a regular basis”, Mr Toy says that before 10 December 2017, the frequency of “regular policing” was either “daily, weekly or monthly or somewhere in between”, but only during normal business hours in San Francisco. The COT, together with the Legal Team, decide the frequency of searching necessary for a particular rights owner based on factors such as the volume of allegedly infringing material uploaded to the site together with feedback from the rights owner. Since 10 December 2017, however, Redbubble conducts proactive moderation for “all” rights owners “every business day” during normal San Francisco business hours. Mr Toy says that since October 2019, outsourced proactive moderation also occurs (the first being the TPSP Jamaica team and then, at the date of the hearing, the TPSP Colombia team) which enables moderation to be conducted outside normal San Francisco business hours. Mr Toy says that sometimes a rights owner refuses to engage with Redbubble in “developing proactive moderation” in which case Redbubble may perform a “site sweep” or “regular policing” even though the rights owner has not requested it.
These other aspects of the approach should be noted.
The COT arranges for search terms to be entered into a software tool that automatically and continuously monitors for changes in a dynamic database of titles, tags and descriptions for images uploaded to the website. The search results will include images on the site for which an uploader has created a title, tag or description that comprises or contains a search term. The software tool organises and presents the search results by rights owner and content, on an online list, which enables COT to manually review the relevant image. If COT believes the image to be “similar enough” to any Reference Content, COT will moderate the image. COT sometimes chooses not to moderate the image if a COT member considers the image not to be similar enough to any of the Reference Content. This may occur because the search has thrown up a “false positive”, but more usually occurs where the image contains an element that seems to resemble Reference Content, but which has been “significantly transformed” by the uploader. If COT decides not to moderate, the image will remain on the site, but it remains open to the rights owner to invoke the Takedown Notice processes. In the case of the seven examples and the trade marks, there is no judgmental question to be made so far as the seven examples are concerned about whether an artist uploader has “significantly transformed” the works in which the intellectual property rights reside. They have been simply taken without authority.
Mr Toy says that from time to time, COT and the Legal Team will perform one‑off manual sweeps of the site.
Mr Toy says that in his experience at Redbubble, there is a level of collaboration between a rights owner and Redbubble which is optimal to ensure that Redbubble is able to “effectively assist” the rights owner to enforce its rights. Mr Toy says that Redbubble and the rights owner “both benefit from Redbubble knowing what Reference Content to include in the Proactive Moderation Guidelines” and “understanding” from the rights owner “what it considers to be infringing material”. Mr Toy says that once “that level of collaboration is reached”, Redbubble can “usually handle” proactive moderation “on its own”, although Redbubble relies upon rights owners to inform it of new Reference Content. Mr Toy gives an example of new content as “new movies or games that are released after the Proactive Moderation Guidelines were created”.
Again, these observations are not focused upon the particular circumstances of the current problem. Redbubble knows precisely what the content of the Reference Content is and it understands the nature and scope of that which would be considered to be material infringing upon the trade mark rights. No level of collaboration with the rights owner is necessary for Redbubble to understand the content of the Reference Content or the conception of the rights owner as to what amounts to infringing material because that conception is well understood as a matter of law by both the Legal Team and, no doubt, COT. Mr Toy accepts the point that once Redbubble understands the content of the Reference Content and understands the legal obligations in relation to that which would be infringing content, Redbubble can “usually handle” a proactive moderation “on its own”. To the extent that Redbubble relies upon consistent updating of the Reference Content such as when a new film or new game is released, those examples have no application here.
Mr Toy gives some evidence of scale. He says that Redbubble conducts proactive moderation for approximately 477 rights owners including rights owners for whom Redbubble has established “Proactive Moderation Guidelines” and commenced moderation activities “without input or guidance” from rights owners “such as Hells Angels”. Mr Toy says that in the vast majority of cases proactive moderation occurs in collaboration with rights owners. Mr Toy says that at the time of his first affidavit of 27 July 2017, Redbubble was conducting proactive moderation for approximately 200 rights owners. Mr Toy says that Redbubble has proactively moderated approximately two million artworks since 1 January 2017 and of those approximately 1.2 million were moderated since 1 January 2020. Mr Toy says that Redbubble has terminated over one million uploader accounts since 1 January 2017 of which 200,000 were terminated in the last four months alone.
Much of the evidence of Mr Toy is directed to the extent to which Redbubble and the rights owner benefit from collaboration about Reference Content and the conception of the rights owner as to what constitutes infringing material. For the reasons already mentioned, those questions are much more focused in the case of the applicant and the answers to them are well understood by Redbubble.
Mr Kovalev says that artists engaging with the Redbubble website may be located anywhere in the world.
Only once an artist has created an account on the site and accepted the terms of the Redbubble User Agreement, is the artist able to upload an artwork to the site through the enabling functionality of the site. As to uploading an artwork, an artist must click the “Add New Work” button located at the bottom right‑hand corner of the “account landing page”. The artist must then click the “UPLOAD TO ALL PRODUCTS” button on the “upload page”. The artist must then “browse their computer through the pop‑up window on the Redbubble Website and select a high resolution image for the upload”. Mr Kovalev says that the pop‑up window is presented to the artist after the artist has pressed the “upload to all products” button: T, p 209, lns 1‑3. Having pressed that button and having engaged the pop‑up window, the words “open” appear. The pop‑up window, in Mr Kovalev’s example in evidence, is generated by the user’s browser (internet explorer) which presents the “open” button. Once the user clicks “open”, that step commences the process for uploading an image. However, Mr Kovalev accepts that “you only get to that point of the browser by going through the Redbubble [website] pages [as described earlier]”: T, p 209, lns 15‑28.
The website enables artists to upload images to the site in a number of different ways depending upon the device they are using. Artists can upload images from a computer, laptop, tablet or smart phone.
Mr Kovalev says that even though an artist may be located in Australia, the images selected by the artist for uploading to the site “may be stored outside of Australia, for example on a cloud storage service”. When the artist clicks “open” and takes the step to upload the artwork, the image is uploaded to one of Redbubble’s servers. Mr Kovalev says that “cloud services” allow artists to store data in third party data centres that may be located far from the artist. As to the term “cloud computing”, Mr Kovalev attaches 20 pages drawn from a Wikipedia entry for “cloud computing” which he says explains the elements of that term. Thus, Mr Kovalev embraces the Wikipedia description of the elements of that term.
In simple terms, cloud computing is a shorthand description for a sequence of links between computers, networks of computers and servers which enable storage and access to data. Every device so linked has a unique number which identifies the device, computer, server etc. It is sufficient to simply quote this section of the Wikipedia entry embraced by Mr Kovalev:
Cloud computing is a new form of Internet‑based computing that provides shared computer processing resources and data to computers and other devices on demand. It is a model for enabling ubiquitous, on‑demand access to a shared pool of configurable computing resources (e.g., computer networks, servers, storage, applications and services), which can be rapidly provisioned and released with minimal management effort. Basically, Cloud computing allows the users and enterprises with various capabilities to store and process their data in either privately owned cloud, or on a third‑party server in order to make data accessing mechanisms much more easy and reliable. Data centres … may be located far from the user – ranging in distance from access to a city to across the world. Cloud computing relies on sharing of resources to achieve coherence and economy of scale, similar to a utility (like the electricity grid) over an electricity network.
Mr Kovalev gives an example of cloud computing in these terms:
Example: A Sydney‑based artist could upload an image of their artwork from their Cloud service. The image is stored by the Cloud service on a server located in California.
Mr Kovalev says that Redbubble USA does not have “any visibility over where images uploaded by Artists have been sourced from”. By this I assume that Mr Kovalev means that staff of Redbubble USA do not know the source of an image uploaded by a user, wherever that user may be located in the world.
Mr Kovalev says that images uploaded to the Redbubble website by artists in the way he describes are automatically saved to a server operated by “Amazon Web Services” called the “S3 Service”. The server, so operated, is located physically in North Virginia in the United States of America (the “AWS Server”).
AWS Server
Mr Kovalev explains that the “Redbubble Software” (Mr Kovalev’s term as earlier mentioned) consisting of the suite of programs executing on servers located in the US, causes copies of the original image stored on the AWS Server to be “displayed” on the Redbubble website in “different sizes”. Mr Kovalev says that the “original image” uploaded by the artist according to the process earlier explained is “never displayed on the Redbubble website”. The Redbubble Software used to create a copy of an image is source code written by employees of the respondent Redbubble and is “executed” on servers located in the United States. Mr Kovalev accepts that before an artist’s “original image” is automatically saved to the AWS Server, the “process [of uploading] requires the artist to interact with the features of the Redbubble website [that is], with the buttons on the Redbubble website”: T, p 210, lns 1‑5.
Mr Kovalev accepts that if an artist engages with the Redbubble website (redbubble.com) so as to upload a work, the artist will be confronted with buttons to click (or not) located on the Redbubble website and unless the artist goes through that process (of responding to those buttons), the artist “cannot get [his or her] artwork displayed on the Redbubble website”: T, p 210, lns 38‑46; T, p 211, lns 1‑2.
Further steps by artists
Mr Kovalev says that at any time after an artist has uploaded his or her artwork or image, the artist is able to select which products he or she would like to offer to consumers for sale and purchase as products to which the artwork or image might be applied, by selecting possible products from a list of available products as determined by Redbubble. The artist makes a selection by “enabling” or “disabling” products from the list of available products. An artist can also edit the way in which an artwork is applied to each product by, for example, altering the orientation of the image or selecting a background colour for the image. If an artist does not specify any products to which their artwork might be applied for sale, users will not be able to purchase a product bearing that artwork and the artwork will not “show up” in response to searches of the Redbubble website by consumer users. Mr Kovalev says that the sale of any artwork applied to any particular product is entirely at the discretion of the artist.
Once an artist has uploaded an artwork to the site, the artist may also select a title for the artwork; write a description of the artwork; select one or more “tags” for the artwork; and select the relevant “media category” (or categories) which accurately describes their work. The categories are photography; design and illustration; painting and mixed media; drawing; and digital art. The artist may also select a “default view” of the artwork which can either be the artwork alone or an image of the artwork as applied to any one of the available products (as an illustration); decide if the artwork is available to be viewed by the public; and specify whether the artwork contains any “mature content”.
As to the selection of one or more “tags”, tags are key words to which searches of the Redbubble website will respond. For example, if the artwork is an image of an “ocean pool”, the artist might create tags for that work consisting of “ocean”, “pool” and “water”.
Once the artist has uploaded their artwork and worked through all of the things described at [215] to [219] of these reasons, the artist can make the artwork available for sale by clicking the button “Save Changes” on the “artwork landing page” and by entering their payment details. Immediately above that button is a disclaimer in these terms:
When a product is sold through the website the sale is between you and the customer – Redbubble acts as your agent in this process. In order to act as your agent, we need your explicit permission.
[emphasis added]
Just below the disclaimer, there is a “check box” next to the words: “Yes and I agree to the Redbubble User Agreement”. The words “User Agreement” are hyperlinked to a full text copy of the User Agreement. Artists must agree to the Redbubble User Agreement before they can complete their profile. They cannot deselect the check box.
If an artist experiences technical difficulty in uploading an artwork to the Redbubble website, they can find solutions on the “Common Uploader Problems” page found in the “Help Centre” of the website. If problems persist other steps are suggested on the website. Alternatively, an artist can contact Redbubble’s “Artist Experience team” by taking steps through the website by clicking particular prompts and buttons. The Artist Experience team established by Redbubble consists of four people located in the San Francisco office and one person in the Melbourne office. In engaging with an artist in addressing any such problems the Artist Experience team seeks an explanation from the artist of the problem; asks for details about the web browser used by the artist when uploading and details of firewalls; details of the artist’s ISP; the method of connection; the country from which the artist is seeking to upload the artwork; and the artist’s internet protocol address (“IP address”).
In all of these things, Redbubble’s team seeks to help and facilitate the successful uploading of the work to the site.
The terms
As to the terms upon which artists make their work available for sale, Mr Kovalev says this.
The retail price charged to customers for the physical product featuring an artwork uploaded by an artist is made up of a Fulfiller Fee; a Redbubble Fee; a Creator Margin; and any relevant sales tax. The Fulfiller Fee and the Redbubble Fee are referred to in this methodology as the Base Amount. These terms are central to the pricing methodology about which Mr Kovalev gave evidence. The Creator Margin is the artist’s selected margin being a percentage mark‑up of the Base Amount. The website contains a default Creator Margin of 20% but artists can choose any percentage mark‑up of the Base Amount in the range 0% to 100%.
As to the Base Amount for each product type on the website, it is made up of the Redbubble Fee and the Fulfiller Fee. Mr Kovalev says that the Redbubble Fee is a service fee that Redbubble charges for “hosting” the marketplace and “facilitating the transaction” between the artist and the buyer of the product bearing the work. The phrase “facilitating the transaction” includes putting orders through to fulfillers (and Mr Kovalev accepts that artists do not organise the fulfillers): T, p 215, lns 27‑33. The Redbubble Fee includes the cost of delivery to the customer’s nominated address: T, 215, lns 45‑47. As to the relationship between the artist and Redbubble, Mr Kovalev does not agree that the artist provides the artwork and Redbubble provides the products and services although he does accept that the artist certainly provides the artwork and then the fulfiller manufacturers the product, and that is the product sold to the customer: T, p 216, lns 7‑25. The Fulfiller Fee is the “manufacturing fee” charged by the relevant third party fulfiller whose job is to apply the artwork to the relevant product. The retail price charged to a customer is the Base Amount made up, as described, plus the Creator Margin selected by the consumer.
Consumers as users and customers
Mr Kovalev gives the following evidence concerning the mechanisms by which a consumer might become a customer of a product bearing an artist’s artwork, through the website.
Customers can purchase products through the Redbubble website with or without creating an account. If a customer wishes to create an account, he or she can do so by clicking the “Sign Up For Free” button and then signing up for an account much in the same manner as artists do as earlier described. When a customer signs up, the customer must also agree to the Redbubble User Agreement.
When a customer performs a search on the Redbubble website, the Redbubble Software will “trawl the Redbubble Website for tags and titles that match the search terms”. The Redbubble Software creates an “inverted index” which Mr Kovalev explains as operating in this way: “instead of storing information as ‘artwork [that] has these keywords’, it stores information as ‘keyword matches [to] these artworks’”. The inverted index enables “fast lookups”. The “keywords” are generated from the “tags” and “titles” chosen by the artists. The description an artist provides when uploading their artwork is not used to generate results in response to keyword searches. Mr Kovalev says that Redbubble does not select or generate any of its own keywords. The Redbubble Software will only match tags or titles containing the exact word or words which are used in the search term entered by a customer. Mr Kovalev gives this example:
Example: A customer searches the tag “elephant”. The software will return results for all artworks that have the tag “elephant”, or contain the word “elephant” in their title.
As the Redbubble Software matches tags or titles as determined by the customer, results are displayed in order of relevance to the search terms used. The Redbubble Software determines the “Most Relevant” works by producing a sorted list of artworks which matches the search terms. The sorted list is then “re‑ranked” based on “business metrics” such as “sales, homepage feature and product compatibility”. For example, if a user performs a search for “elephant T‑shirts”, the software will only display works if they are available for application to a T‑shirt. Mr Kovalev illustrates this general principle of re‑ranking in this way:
Example: If two items in the initial list of results have the same score in terms of their match with the search term, but the second ranked item has had more sales than the first ranked item, the items will be re‑ranked, and the second ranked item will move to first position in the results set.
Mr Kovalev says that customers also have the option of sorting the results by “Top Selling” which will rank the products in order of the most recent sales, or sorting by “Recent” which will rank the artworks in descending order based on the date of upload by the artist. The Redbubble Software can also generate “related searches” that might be relevant to the customer on the basis of the keyword they have selected in their search. For example, if a user enters the keyword “bulldog” in a search, the Redbubble Software will return all artworks where an artist has used the word “bulldog” in the title or as a tag, but also identify other tags used by other artists who have chosen the word “bulldog” as a tag for their artwork and list the most commonly used other keywords in order of frequency as a related search. Mr Kovalev gives the following example:
High quality Bulldog inspired T‑Shirts, Posters, Mugs and more by independent artists as designers from around the world.
Related searches: French Bulldog, Pet, Puppy, Cute, Animal, Dogs, Frenchie, Funny, French, Pets, and Love Gifts & Merchandise.
All orders are custom made and most ship worldwide within 24 hours.
Search results and related search terms are automatically generated from information provided by users.
Placing an order
As to placing an order through the Redbubble website, Mr Kovalev says this.
If a customer wants to purchase a product featuring an artwork uploaded by an artist, the customer must: select an artwork/product featuring an artwork from the search results page; select the size and/or type of the product and click “Add To Cart”; click “View Cart” and confirm the quantity of the product; select their “Shipping Option” and then click “Checkout”; choose to pay by PayPal or credit card; enter the shipping address and PayPal or credit card details; and then click “Pay”. Immediately above the “Pay” button is a disclaimer that reads:
By clicking pay, I agree to Redbubble’s User Agreement.
The words “User Agreement” are hyperlinked to a full copy of the User Agreement.
Upon clicking “Pay”, the customer will be redirected to a confirmation page setting out the details of the customer’s order, including an estimated delivery date. Shortly after clicking “Pay”, the customer will receive a confirmation email from [[email protected]], setting out the details of the order and providing an order tracking number. Mr Kovalev says that this is an automatically generated email sent from the AWS Server to the customer via a third party email service called Sendgrid. Just as in the case of the artists, buyers must interact with features of the Redbubble website before their order is processed (T, p 211, lns 20‑23) ultimately clicking the “Pay” button feature on the Redbubble website to go through the process of buying the product to which the artwork is applied: T, p 211, lns 32‑45.
Fulfilling an order
Mr Kovalev says that the mechanism by which a customer’s order is fulfilled, is this.
Customer payments are processed by third party payment processors on servers that are not owned or otherwise used by the Redbubble group. Upon confirmation of a customer payment, a job is created on the AWS Server which generates what Mr Kovalev calls the “digital assets” required to fulfil the customer’s order. The digital assets include the customer’s address; the order number; the product type and style; the quantity ordered; the shipping method; and a “content file” containing “a copy of the image file for the artwork uploaded by the Artist, or a URL link to that file”. Mr Kovalev says that the Redbubble Software sends “a special URL” to third party fulfillers which the fulfiller uses to download the “digital assets”. For a small number of fulfillers, the digital asset files are sent by the Redbubble Software to the fulfillers “FTP server”. The term “FTP” stands for “File Transfer Protocol” which is a standard network protocol used for the transfer of computer files from a server to a client.
No company within the Redbubble group manufactures, warehouses, despatches, receives or distributes any physical products ordered using the process just described. Third party fulfillers receive orders placed by customers through the Redbubble website. They are responsible for the production and delivery of products to customers. The customer’s address might be anywhere in the world. There are, presently, 15 third party fulfillers filling orders placed through the Redbubble website and those fulfillers are located in: the United States of America; United Kingdom; Australia; Belgium; Hong Kong; and the Netherlands.
When a third party fulfiller is notified of a new order, the third party fulfiller will proceed to manufacture the ordered product. This involves printing the relevant artwork onto the product or otherwise producing or manufacturing the product. The third party fulfiller is automatically chosen by the Redbubble Software based on the product type and the customer’s nominated delivery address. Once the product has been manufactured, the software used by the third party fulfiller will send an “API request” to the Redbubble Software when the order is ready for shipment. The term “API” stands for “Application Programming Interface” and is a set of “protocols and tools for building software and applications”. An API request is a request to a “resource” on a server which is “exposed via an API”. Mr Kovalev gives this example:
Example: When an individual downloads an application to their smart phone, enters their registration details on the application and presses “Register”, this is usually executed via an API request.
When the Redbubble Software receives the API request, it will automatically generate an email containing order details as well as the shipping details. This email is then sent to the customer via Sendgrid. Once the customer receives the final product, the transaction is then regarded as “concluded”.
The process of fulfilling an order commences on the Redbubble website by the customer completing a purchase by clicking the “Pay” button on the website. When that button is clicked, either an image of the artist’s work is sent to the fulfiller or a link to the image, stored on the AWS Server, is sent to the fulfiller enabling access to the image: T, p 212, lns 13‑23. The mechanism is put this way by Mr Kovalev: software running on the Redbubble server, that is, on the AWS Server, causes the image or a link to the image to be sent to the fulfiller and that result is brought about by software commands executing on the Redbubble website which tell the software executing on the AWS Server to now send an image or a link: T, p 212, lns 25‑37. He says that clicking the button “Pay” activates “the rest of the chain”: T, p 217, lns 6‑7. As to the process or mechanism by which an artist’s original image is automatically stored on the AWS Server, Mr Kovalev says that software operating on the Redbubble website (upon the relevant commands or clicks) “initiates a process” of engaging with software on the AWS Server so as to save, automatically, the images to the AWS Server. A “copy” of the original image is displayed on the website: T, p 217, lns 23‑45. That copy is made possible by the Redbubble software executed on servers in the United States: T, p 218, lns 9, 20‑36. However, Mr Kovalev also says that the image (which is a copy of the original image), displayed on the Redbubble website, is “stored” on a “back end server” for the website “as is the case with any image on a website”, and storage on that “back end server” is part of the Amazon Web Services provided in the United States: T, p 220, lns 21‑33.
Redbubble’s relationship with fulfillers
As to the relationship between Redbubble and the third party fulfillers, Mr Kovalev says this.
Third party fulfillers issue invoices to Redbubble USA on a monthly basis. Those invoices relate to the entire month’s volume of products manufactured by that fulfiller. The Fulfiller Fee charged by third party fulfillers varies depending upon the types of products provided. The Fulfiller Fee is comprised of: a product cost (which is described as a “blank” product cost of the relevant item pre‑printing); printing costs; fulfilment costs (including packaging); and the margin set by the third party fulfiller. Redbubble USA arranges for “tags, stickers and other promotional material” to be provided to third party fulfillers to “deliver with shipments to customers”. Mr Kovalev describes these tags, stickers and other promotional material as the “packaging materials”. Mr Kovalev says that Redbubble USA does not manufacture the packaging materials or deliver the packaging materials to third party fulfillers. The packaging materials are manufactured by packaging companies in China and the United States of America and are delivered directly by those manufacturers to the third party fulfillers in large batches. Nevertheless, these “packaging materials” are attached to the products as an essential element of the business model, at the direction of Redbubble. The packaging materials, typically, are those illustrated at Annexure VK‑22 of Mr Kovalev’s affidavit of 28 July 2017 and they are set out below.
Confidential statistics
Mr Kovalev also gives evidence of statistics as at 26 July 2017 relating to the number of artworks displayed on the Redbubble website; the number of artists who have accounts on the Redbubble website; the approximate number of new artworks uploaded each day; the approximate number of orders placed by customers each day; the approximate number of new artists who sign up to the Redbubble website each day; and the number of sales made to date by the top selling artist. All of this information is described as confidential. Accordingly, the relevant statistics are set out in a redacted schedule to these reasons. It is not necessary to publish an un‑redacted version of the Schedule to the parties because they already have the information available to them.
The Redbubble User Agreement
It now necessary to note the following provisions from the User Agreement.
Introduction
…
To make this online destination for creativity available, it is essential all Redbubble users respect the intellectual property rights of others, including copyright and trademarks. You must only upload content you have created yourself and have permission to use and authorize others to use. If you are a customer or browser, please respect the copyright and trademarks of all the works you see or buy on Redbubble. Respecting other people’s intellectual property is an essential principle of Redbubble’s community.
…
Our service
Redbubble provides a range of services (the “Redbubble service”) which, amongst other things, enable you to publish, sell, discuss and purchase art; interact with other members; and receive the benefits of Redbubble’s facilitation of product fulfilment, including payment processing, customer services, third party product manufacturing. In addition, Redbubble will arrange for the deliver[y] of the physical product to your customer. …
Any [artist’s] content that you upload into the portfolio section of your account is described as your “art”. Your art may be viewed by all users of the website once you elect to publish it. You may order a physical product based on your own art or you may offer your art for sale as part of the sale of a physical product. If you or a customer decide to place an order, then Redbubble will forward your instructions to third parties who will manufacture and ship the physical product in the form specified by you or the customer (“the product”).
Members
You can become a registered member (“member”) of the website by setting up a password protected account. You will be required to select a username and password when registering to become a member. You must become a member before placing any content on the website, including writing any comments in forums or reviews. In its sole discretion, Redbubble may refuse any username that it decides is inappropriate and/or refuse any person from becoming a member.
Putting content on the Redbubble site
You keep the copyright in any content you submit or upload to the website. In order to receive the Redbubble services you grant Redbubble a non‑exclusive royalty free licence to use and archive the content in accordance with or as reasonably contemplated by this agreement.
When you submit or upload content on the website you represent and warrant that:
Ÿyou own all copyright in the content, or if you are not the owner, that you have permission to use the content, and that you have all of the rights required to display, reproduce and sell the content;
Ÿthe content you upload will not infringe the intellectual property rights or other rights of any person or entity, including copyright, moral rights, trade mark, patent or rights of privacy or publicity;
Ÿyour use of the website will comply with all applicable law, rules and regulations;
Ÿthe content does not contain material that defames or vilifies any person, people, races, religion or religious group and is not obscene, or pornographic, indecent, harassing, threatening, harmful, invasive of privacy or publicity rights, abusive, inflammatory or otherwise objectionable;
Ÿthe content does not include malicious code, including but not limited to viruses, trojan horses [and a range of synonyms for those things], or other computer programming routines that may damage [and other synonyms] any system, program, data or personal information; and
Ÿthe content is not misleading and deceptive and does not offer or disseminate fraudulent goods, services, schemes or promotions.
Redbubble reserves the right to review and if in its sole discretion deemed necessary, remove any content from the website and/or cancel your account, because that content breaches your agreement with us and/or any applicable laws or otherwise. You agree to indemnify Redbubble in respect of any direct or indirect damage caused due to your breach of one or more of these warranties.
Offering your art for sale on a physical product
Any member may offer their art for sale on a physical product on the website by appointing Redbubble to facilitate the transaction on the terms set out in the Services Agreement in Appendix A. By agreeing to the terms of this user agreement you expressly agree to the terms of the Services Agreement in Appendix A, which will apply from the date on which you offer your first art for sale on a physical product and your continued use of the website will constitute ongoing agreement to the terms therein as updated from time to time.
Intellectual Property Rights and license
By submitting listings to Redbubble, you grant Redbubble a non‑exclusive, worldwide, royalty free, sublicense able and transferable license to use, reproduce, distribute, prepare derivative works of and display the content of such listings in connection with Redbubble’s (and its successors’ and affiliates’) services and business in facilitating the sale of your product, including without limitation for promoting and redistributing part or all of the Redbubble site (and derivative works thereof) in any media formats through any media channels. You also hereby grant each user of the Redbubble site a non‑exclusive license to access your content through the site, and to use, reproduce, distribute, and display such content as permitted through the functionality of the site and under this User Agreement. The above licenses terminate within a commercially reasonable time after you remove or delete your listings from the Redbubble site.
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Indemnity
You agree to indemnify, defend and hold us, our officers, directors, employees, agents and representatives harmless, as well as, all third parties [undertaking all fulfilling activities] … harmless, from and against any and all claims, damages, losses, liabilities … or other expenses that arise directly or indirectly out of or from: your breach of any clause of this agreement; any allegation that any materials that you submit to us or transmit to the website infringe or otherwise violate the copyright, trademark, trade secret or other intellectual property or other rights of any third party; and/or your activities in connection with the website.
[emphasis added]
Appendix A to the Services Agreement contains these provisions which should be noted:
You wish to use Redbubble’s services to facilitate marketing and sale of your art on a physical product and to arrange for manufacture of the physical product (your product) once an order has been made through [.redbubble.com] (“the website”). Redbubble will provide these services on the terms set out in this Services Agreement. Additionally, Redbubble will provide for delivery of such products to the customer.
1.Services
1.1Redbubble, acting as independent contractor under your instructions will market to and obtain orders from customers for the purchase of your products over the website and on instruction from you, Redbubble will arrange for third parties to fulfil those orders by facilitating payment for and manufacture of your products (“Services”). Redbubble will then arrange for the delivery of your products as per the customer’s instructions.
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2.License and standing instructions
2.1You grant Redbubble a non‑exclusive royalty free license to use your intellectual property relating to your products for the purpose of enabling us to carry out the Services.
2.2You hereby instruct Redbubble to facilitate the sale of your product which includes payment, processing and arranging for manufacturing your product(s) in respect of the orders placed by the customers via the website and Redbubble will facilitate such payment, and manufacturing in accordance with reasonable business practices unless you otherwise instruct prior to the placement of that order by a customer.
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3. Sale of your products
3.1The retail price charged to customers who purchase your product is made up of the manufacturing fee charged by the third party manufacturer, Redbubble’s fee for hosting the marketplace and facilitating the transaction (the manufacturing fee and Redbubble’s fee are referred to collectively and inclusive of tax, as the “base amount”), your creator margin (“your margin”), and any relevant sales tax (such as Sales Tax, GST, VAT, etc) that Redbubble and/or you (as the case may be) are liable to account for to the appropriate tax authorities. Shipping charges will also be added to the retail price. When making each individual work available for sale you are able to select any percentage markup you wish, greater than or equal to zero, above the base amount but below the automated upper limit set by Redbubble (subject to change from time to time). The percentage markup selected by you on the website for each of your products is used to calculate the dollar value of your margin for each sale.
6. Indemnity
6.1You hereby indemnify and will Redbubble indemnified from and against all claims [synonyms] … of any nature whatsoever … arising from … any breach or non‑performance of your obligations under this Services Agreement or arising out of your wilful act, neglect or default in the performance of such obligations.
[emphasis added]
As to Mr Kovalev’s evidence, I generally accept his evidence concerning the functionality of the Redbubble website again subject to the observations later in these reasons from [405] concerning the proper characterisation of Redbubble’s engaged role in the transactional features of the activities enabled by and through the website.
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