Red bubble

The recent decision in Hells Angels v Redbubble considered various copyright and trade mark infringement aspects in Australia. 

This article considers the implications arising from the Hells Angels v Redbubble1 decision for Australian companies seeking to enforce intellectual property rights as exclusive licensees or authorised users of overseas companies.

Background

The Hells Angels are an infamous international motorcycle club.  Redbubble on the other hand, is a website that allows artists to upload a variety of creative works, including images, drawings and design - which can then be applied to products (such as T-shirts) and sold to consumers.

Hells Angels Motorcycle Corporation (Australia) Pty Limited (HAMC Aust) commenced proceedings against Redbubble alleging copyright and trade mark infringement in relation to logos owned by the Hell’s Angels, including the image below:


HELLS ANGELS

Proving ownership of overseas copyright

HAMC Aust, as exclusive licensee of Hells Angels Motorcycle Corporation (HAMC US), alleged Redbubble had infringed the copyright in the membership card image. To establish copyright infringement, HAMC Aust first had to prove HAMC US was the owner of the copyright in the Membership Card image for the purposes of Australian law.

Section 239 of the Copyright Act 1968 (Cth) requires that an assignment of copyright must be in writing. There was no assignment in writing vesting the ownership of the copyright (originating in the creator of the Membership Card image) in the entity HAMC US in evidence. Accordingly, his Honour held that HAMC US was not the owner of copyright subsisting in the Membership Card image for the purposes of Australian copyright law and the copyright infringement proceedings must fail on that basis.

An interesting point arises because HAMC Aust did not seek to rely on, as proof of ownership of the copyright in Australia, the registration by HAMC US of the image entitled “Hells Angels Membership Card (1954)” with the United States Copyright Office.2

Section 126B(3) of the Copyright Act creates a presumption of ownership of copyright in Australia where a certificate or other document issued in a qualifying country (including the US) “states that a person was the owner of copyright in the work”. Copyright registration certificates issued in the US do not expressly state that a person is the owner of copyright. However, the Federal Court has previously held that US copyright registration certificates fall within the meaning of s 126B(3).3

It is likely that, had HAMC Aust sought to rely on the US copyright registration certificate for the Membership Card image as proof of ownership of the copyright in Australia, Greenwood J would have applied s126B(3) and presumed that HAMC US was the owner of the copyright, subject to evidence to the contrary.

Proving an exclusive licence of copyright

His Honour proceeded to consider whether, assuming HAMC US was the owner of the Membership Card image, HAMC Aust was an exclusive licensee of the copyright in Australia. Only owners or exclusive licensees can commence an action for copyright infringement in Australia.

The term “exclusive licence” is defined in s 10 of the Copyright Act to mean, relevantly, a licence in writing and to the exclusion of all other persons. The phrase “to the exclusion of all other persons” includes the exclusion of the owner of the copyright.

Redbubble argued that HAMC US continued to be engaged in decision making about the exercise of the copyrights by HAMC Aust in Australia and the licence could not therefore be said to be to the exclusion of HAMC US.

However, Greenwood J held at [374] that:

“A particular isolated act or acts across the life of the agreement, with the acquiescence of the grantee, does not render what would otherwise be an exclusive licence, an agreement characterised as one in which the grantor is to be understood, in the working operation of the document, as reserving to itself the right to undertake “acts” in the exercise of the exclusive rights vested in the owner, so as to bring about the result that the “authority” conferred on the licensee is not “to the exclusion of all other persons”.”

Greenwood J was satisfied that HAMC Aust would have been the exclusive licensee.

Proving authorised use of trade marks

His Honour then considered whether HAMC Aust had standing to commence trade mark infringement proceedings as an “authorised user” pursuant to s 26 of Trade Marks Act 1995 (Cth) of various Australian trade mark registrations owned by HAMC US. An authorised user must demonstrate that it uses the marks in Australia under the control of the trade mark owner. 4

In Lodestar Anstalt v Campari America5 the Full Court held that “control” means actual control as a matter of substance, which involves a question of fact and degree. Applying the Lodestar decision, Greenwood J stated at [385] that there:

“can be no doubt that the mere fact that HAMC Aust has entered into a Licence Agreement with the owner of the trade marks conferring a right to use them is insufficient to establish control.”

The evidence relied on by HAMC Aust in relation to the actual control exercised by HAMC US was somewhat limited. For example, the evidence did not show the content of any regular reporting as to the use of the trade marks in Australia, any financial reporting of revenue from memberships or from the sale of goods bearing the trade marks or any written documents or guidelines governing use of the trade marks on T-shirts or other similar goods.

However, his Honour stated the importance of carefully taking context into account. In this case, the following matters were considered relevant:

a. neither HAMC US or HAMC Aust is a major commercial undertakings dedicated to producing products with a commercial network of national and international distributors and licensees;

b. the core undertaking of HAMC US and HAMC Aust is supporting members of the Hells Angels motorcycle club; and

c. the relationship between HAMC US and HAMC Aust was one where obedience to the trade mark owner was so intuitive and so complete that no formal instruction was necessary.

His Honour held that HAMC Aust was an authorised user and had standing to sue Redbubble for trade mark infringement.

Practical considerations

Australian companies seeking to protect and enforce intellectual property rights as exclusive licensees or authorised users of overseas companies should:

1. ensure all assignments of copyright are in writing. Confirmatory assignment documents can be prepared vesting ownership in the relevant entity;

2. check if a relevant qualifying country has a system for registering copyright and, if so, consider obtaining registration of the copyright in the qualifying country. Given the presumption of ownership in section 126B(3), obtaining a registration certificate in a qualifying country is likely to minimise the time and costs enforcing the copyright in Australia;

3. ensure an agreement purporting to be an exclusive license grants the licensee rights “to the exclusion of all others” in Australia and that there is no ambiguity in the rights of owner and exclusive licensee; and

4. ensure that any purported authorised use is under the actual control of the trade mark owner. While context is important, it is prudent for all companies to put in place guidelines and reporting responsibilities demonstrating actual control of the trade mark.

 

1 Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited [2019] FCA 355.
2 Ibid at [73].
3 Pokémon Company International, Inc. v Redbubble Ltd [2017] FCA 1541 at [43].
4 Trade Marks Act 1995 (Cth) s 8
5 Lodestar Anstalt v Campari America LLC (2016) 244 FCR 557, Besanko J at [97], Allsop CJ at [1]; Greenwood J at [3] and [21]; Nicholas J at [112].

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