Redbubble Ltd v Hells Angels Motorcycle Corp (Australia) Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Redbubble Ltd v Hells Angels Motorcycle Corporation (Australia) Pty Limited [2022] FCA 1039

File number: QUD 282 of 2022
Judgment of: DERRINGTON J
Date of judgment: 6 September 2022
Catchwords: PRACTICE AND PROCEDURE – stay pending appeal – alleged infringement of trade marks – whether substantive grounds of appeal – balance of convenience – appellant’s offer of consent injunctions – whether sufficient to provide an adequate level of protection pending appeal – stay granted
Legislation:

Civil Dispute Resolution Act 2011 (Cth)

Corporations Act 2001 (Cth)

Trade Marks Act1995 (Cth)

Federal Court Rules 2011 (Cth)
Cases cited:

Ali v Australian Competition and Consumer Commission [2020] FCA 860

Australian Competition and Consumer Commission v BMW (Australia) Limited (No 2) [2003] FCA 864

Calidad Pty Ltd v Seiko Epson Corporation (No 2) (2019) 147 IPR 386

Christian v Societe Des Produits Nestle SA (No 2) (2015) 327 ALR 630

Esco Corporation v PAC Mining Pty Ltd [2008] FCA 1018

Hells Angels Motorcycle Corp (Australia) Pty Ltd v Redbubble Ltd (2019) 369 ALR 408

Hells Angels Motorcycle Corporation (Australia) Pty Ltd v Redbubble Ltd (No 4) (2022) 166 IPR 144

Hells Angels Motorcycle Corporation (Australia) Pty Ltd v Redbubble Limited (No 5) [2022] FCA 837

Redbubble Ltd v Hells Angels Motorcycle Corp (Australia) Pty Ltd (2021) 163 IPR 491

Stefanovski v Digital Central Australia (Assets) Pty Ltd [2017] FCA 1121

Universal Music Australia Pty Ltd v Sharman Networks Ltd (2006) 150 FCR 110

Viagogo AG v Australian Competition and Consumer Commission [2021] FCA 175
Division: General Division
Registry: Queensland
National Practice Area: Intellectual Property
Sub-area: Trade Marks
Number of paragraphs: 70
Date of hearing: 2 September 2022
Counsel for the Appellant: Mr R Cobden SC
Solicitor for the Appellant: Allens
Counsel for the Respondent: Mr DG Eliades
Solicitor for the Respondent: BRH Lawyers

ORDERS

QUD 282 of 2022
BETWEEN:

REDBUBBLE LTD ACN 119 200 592

Appellant
AND:

HELLS ANGELS MOTORCYCLE CORPORATION (AUSTRALIA) PTY LIMITED ACN 123 059 745

First Respondent
HELLS ANGELS MOTORCYCLE CORPORATION
Second Respondent
AND BETWEEN:

HELLS ANGELS MOTORCYCLE CORPORATION (AUSTRALIA) PTY LIMITED ACN 123 059 745

Cross-Appellant
AND:

REDBUBBLE LTD ACN 119 200 592

Cross-Respondent

order made by:

DERRINGTON J

DATE OF ORDER:

6 september 2022

THE COURT ORDERS THAT:

1.The following orders in Federal Court of Australia Proceeding No QUD 403 of 2020 be stayed pending determination of this appeal or until further order:

(a)orders 1 and 2 made by Greenwood J on 19 July 2022;

(b)order 3 made by Greenwood J on 19 July 2022, subject to the following conditions:

(i)The Court notes that Redbubble has paid $78,250 into the trust account of the solicitors for the Appellant, Allens.

(ii)Subject to any further order of the Court, Allens is not to release those funds from its trust account before 5pm on the day of the delivery of the judgment in this appeal.

(iii)If the appeal proceeding:

A.is resolved such that order 3 made by Greenwood J on 19 July 2022 is affirmed, the funds…

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Details
Case
[2022] FCA 1039
Decision Date

CaseChat Overview and Summary

The case of Redbubble Ltd v Hells Angels Motorcycle Corp (Australia) Pty Ltd concerns an application by Redbubble to stay the enforcement of certain orders made by Greenwood J in Federal Court of Australia Proceeding No QUD 403 of 2020. The primary dispute between the parties involves alleged infringement of trade marks by Redbubble. The primary legal issues that the Court was required to decide included whether there were substantive grounds of appeal, the balance of convenience, and the adequacy of the appellant's offer of consent injunctions to provide protection pending appeal. The Court held that there were sufficient grounds to justify a stay of the orders, including the balance of convenience which favoured the granting of the stay. The Court also concluded that Redbubble's offer of consent injunctions was sufficient to provide an adequate level of protection pending appeal. The Court further found that Redbubble's offer to pay the disputed damages into the trust account of its solicitor was a sufficient safeguard to protect the interests of the respondents.

The final orders of the Court were that the orders in Federal Court of Australia Proceeding No QUD 403 of 2020 be stayed pending the determination of the appeal or until further order. The Court also restrained Redbubble from using certain images as trade marks in Australia in relation to the goods or services in which trade marks 526530, 723219, 1257992, 723463 and 1257993 are registered, and insofar as those trade marks remain registered. The Court further directed Redbubble to maintain a system for the surveillance of its website and the removal of images that might infringe the marks referred to in the orders. The Court also ordered Redbubble to prosecute the appeal expeditiously. The costs of the application for a stay were reserved.

Orders

Orders of the court

1. The following orders in Federal Court of Australia Proceeding No QUD 403 of 2020 be stayed pending determination of this appeal or until further order:

(a) orders 1 and 2 made by Greenwood J on 19 July 2022;

(b) order 3 made by Greenwood J on 19 July 2022, subject to the following conditions:

(i) The Court notes that Redbubble has paid $78,250 into the trust account of the solicitors for the Appellant, Allens.

(ii) Subject to any further order of the Court, Allens is not to release those funds from its trust account before 5pm on the day of the delivery of the judgment in this appeal.

(iii) If the appeal proceeding:

A. is resolved such that order 3 made by Greenwood J on 19 July 2022 is affirmed, the funds are to be paid to, or at the direction of, the First Respondent within 48 hours of the time to which paragraph (ii) above refers;

B. is resolved such that order 3 made by Greenwood J on 19 July 2022 is overturned, the funds may be paid to, or at the direction of, the Appellant; or

C. does not resolve the question of damages wholly in favour of any of the parties, the funds are to be paid or released in accordance with the orders of the Court or as agreed between the parties; and

(c) order 4 made by Greenwood J on 19 July 2022.

2. Subject to Orders 3 and 4 hereof, pending determination of this appeal or further order, the Appellant, by itself, its servants or agents, and without the licence of the First Respondent or the Second Respondent, be restrained from:

(a) using the following image, or an image that is substantially identical with or deceptively similar to the following image, as a trade mark in Australia in relation to the goods or services in which trade marks 526530, 723219, 1257992, 723463 and 1257993 are registered, and insofar as those trade marks remain registered;

(b) using the following image, or an image that is substantially identical with or deceptively similar to the following image, as a trade mark in Australia in relation to the goods or services in which trade marks 723219 and 1257992 are registered, and insofar as those trade marks remain registered;

(c) using the following image, or an image that is substantially identical with or deceptively similar to the following image, as a trade mark in Australia in relation to the goods or services in which trade marks 723463 and 1257993 are registered, and insofar as those trade marks remain registered;

(d) using the following image, or an image that is substantially identical with or deceptively similar to the following image, as a trade mark in Australia in relation to the goods or services in which trade marks 526530, 723219, 1257992, 723463 and 1257993 are registered, and insofar as those trade marks remain registered;

(e) using the following image, or an image that is substantially identical with or deceptively similar to the following image, as a trade mark in Australia in relation to the goods or services in which trade marks 723219, 1257992, 723463 and 1257993 are registered, and insofar as those trade marks remain registered;

(f) using the following image, or an image that is substantially identical with or deceptively similar to the following image, as a trade mark in Australia in relation to the goods or services in which trade marks 526530, 723219, 1257992, 723463 and 1257993 are registered, and insofar as those trade marks remain registered;

(g) using the following image, or an image that is substantially identical with or deceptively similar to the following image, as a trade mark in Australia in relation to the goods or services in which trade marks 526530, 723219, 1257992, 723463 and 1257993 are registered, and insofar as those trade marks remain registered;

(h) using the following image, or an image that is substantially identical with or deceptively similar to the following image, as a trade mark in Australia in relation to the goods or services in which trade marks 526530, 723219, 1257992, 723463 and 1257993 are registered, and insofar as those trade marks remain registered;

(i) using the following image, or an image that is substantially identical with or deceptively similar to the following image, as a trade mark in Australia in relation to the goods or services in which trade marks 526530, 723219, 1257992, 723463 and 1257993 are registered, and insofar as those trade marks remain registered;

(j) using the following image, or an image that is substantially identical with or deceptively similar to the following image, as a trade mark in Australia in relation to the goods or services in which trade marks 526530, 723219, 1257992, 723463 and 1257993 are registered, and insofar as those trade marks remain registered.

3. The appellant will not be in breach of order 2 if:

(a) it maintains a system involving the surveillance of its website at www.redbubble.com (the Website) and the removal of images or other writing that might infringe the marks referred to in order 2 hereof which is no less rigorous than that which it had in place as at 24 August 2022 and is referred to in the affidavit of Mr Joel Barrett of that date as “Proactive Moderation”; and

(b) within seven days of an image to which order 2 refers being identified on the website by the Appellants or its servants or agents, the Appellant removes the image from the Website.

4. Notwithstanding Order 3, the Appellant will be in breach of Order 2 if on the First Respondent or the Second Respondent or both of them becoming aware of an image to which Order 2 refers being available on the Website, notifying the Appellant of the image by sending an email to dmca@redbubble.com (or such other email address as notified by Appellant in writing from time to time):

(a) with the subject field ‘Hells Angels Complaint’;

(b) identifying the image by reference to the location of the image on the Website in the form http://www.redbubble.com/people/[username]/works/[work number and name]; and

(c) stating that the First Respondent and/or the Second Respondent considers that the image would breach order 2,

the Appellant fails to remove the image or images from the Website within seven days of such email.

5. The Appellant is to prosecute the appeal expeditiously.

6. The costs of the application for a stay are reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

It may well have been the result of the urgency with which this matter was brought on that the submissions made to the Court were advanced at a high degree of generality. There is nothing pejorative in that statement which is merely a description of how the application unfolded. Nevertheless, it was somewhat difficult to ascertain from the submissions whether they were directed to the veracity of the decision from which the appeal has been made or the issue of the balance of convenience. That said, the written submissions of Mr Eliades for HAMC AU focused almost entirely on the latter and it will be assumed that they were directed to that issue.Background The appeals raised by Redbubble arise in the context of historic disputation between it and the respondents, HAMC AU and HAMC. In broad terms, Redbubble operates an online platform through which goods are provided. It is not, however, a traditional supplier of goods. It and its related entities operate what is called an “online marketplace” at the web address of That website operates by bringing together parties (referred to as “the Sellers”), who can upload and commercialise their artwork, and other persons who wish to acquire it. The Sellers are able to choose the artwork which they upload to the platform, the products to which the artworks might be printed or applied, and the titles, description and “tags” for the artwork on the website. Persons (referred to as “Purchasers”) interested in acquiring products with the artwork can choose the design or picture of their choice and the item to which it is applied and place an order for it. It appears that Redbubble facilitates that transaction including payment. Through a process, which was not entirely pellucid, the order is filled by a third party (referred to as a “Fulfiller”) and another third party (referred to as “the Shipper”) causes the package to be delivered. There are, apparently, a number of other websites which supply similar services. The evidence before the Court disclosed that there are some 49,200,000 pieces of artwork on the Redbubble website, and that number increases by about an average of 97,900 per day. This is relevant to the level of control which Redbubble might have with respect to the images which are displayed on its website, as it seems that it is not an infrequent occurrence that third parties, acting as Sellers, upload images or designs which infringe the intellectual property rights of others. This has occurred in relation to designs or artworks in which HAMC AU and HAMC have an interest, and that conduct has been the source of the disputation between them and Redbubble. The sale and purchase transactions are automated and brought into effect by various software systems on Redbubble’s servers located in the United States of America. There is no substantial human intervention on the part of Redbubble although it charges a fixed service fee for each sale which occurs from the platform. The evidence discloses that the packages delivered by the Shippers are decorated with Redbubble’s livery and designs. Prevention of copyright and trademark infringements

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Finally, as is discussed below, Redbubble has agreed to pay into the trust account of its solicitor the sum of $78,250 to be paid at the direction of the Court. This secures the receipt of compensation by HAMC AU should the appeal not be successful. Conclusion on the balance of convenience in relation to the injunctive relief For the foregoing reasons the balance of convenience obviously favours the granting of the stay subject to the form of injunctive relief to which reference has been made. The steps required of Redbubble are likely to substantially protect the interests of HAMC AU and HAMC which are not concerned with the economic exploitation of their marks and will not suffer economic loss were some infringements to occur. That is not to diminish their entitlement to protect the marks in respect of which they have an interest, but it is relevant to the consequences of the orders presently sought. Stay of payment of damages Redbubble also seeks a stay of the order requiring it to pay damages in the amount of $78,250. It was submitted that if that amount was paid to HAMC AU there is a real risk that Redbubble would be unable to recover that sum if the damages award is ultimately overturned or reduced on appeal. In the circumstances there are sufficient grounds to justify a stay of the award of damages. They are:(a)That there is sufficient doubt as to the foundation of the conclusion that Redbubble infringed the interests of HAMC AU in the relevant trade marks;(b)The award of damages by Greenwood J was not made on the basis of any economic loss sustained by HAMC AU but pursuant to s 126(1)(b) of the Act as a mark of the Court’s disapproval of the infringements. In that sense, if the stay is ordered HAMC AU will not be out of pocket in respect of funds which it would otherwise have earned from its marks;(c)Redbubble has taken steps to secure the sum of $78,250 for HAMC AU by paying that amount into the trust account of its solicitors to be applied at the direction of the Court. Whilst HAMC AU submitted that the funds should be paid into its own solicitor’s trust account there is no real difference between the two repositories of the funds; (d)HAMC AU has a share capital of only $100;(e)In the 2015 Proceeding, HAMC AU made submissions to the Court to the effect that it would be unable to provide security for costs of more than $30,000 and it therefore appears to be relatively impecunious; (f)As part of that security for costs dispute, HAMC AU relied upon evidence in which Mr Mark Nelms, who was its sole director and secretary at the time and who remains a director, represented that HAMC AU had no “real estate in Australia or outside Australia or … any others assets of substantial value” (apart from the copyright in a particular image of a skull, which HAMC AU had not valued); and(g)ASIC proposed to deregister HAMC AU, on 6 March 2018 and again on 23 February 2021, under sections 601AB(1) or (1A) of the Corporations Act 2001 (Cth). There was a suggestion that HAMC AU was intending to use the receipt of damages for the purposes of meeting its costs of litigation with its own legal representatives, but there was very little evidence that it requires these funds for that purpose. It has been an active litigator against Redbubble over a number of years and there is nothing to suggest that it is unable to pay its legal representatives as and when it needs. Costs orders

Ratio Decidendi

Legal Principle Established

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