I sue you, Pikachu! Pokémon Company International, Inc v Redbubble Ltd
30 January 2018
In December 2017, the Federal Court of Australia handed down its decision in Pokémon Company International, Inc v Redbubble Ltd regarding copyright infringement and authorisation.
Pokémon Company International, Inc. is the media franchise consortium between Nintendo, Game Freak, and Creatures. It controls, amongst other things, the various copyrights associated with the Pokémon video games, anime, manga, trading cards, and other merchandise. Its most recognisable character and mascot is the yellow electricity-controlling rodent Pikachu.
Redbubble Pty Ltd is an online market place for print on demand products, with offices in Melbourne and San Francisco. Redbubble users upload artworks to the Redbubble site for customers to browse and then place orders for products (eg., T-shirts, bags, phone covers) to which the artwork is then applied. Third-party manufacturers and suppliers then make and ship the goods to those customers.
Amongst all the original artworks made available on Redbubble, there was a number of user-created fan- and mash-up artworks featuring Pikachu. Examples include Pikachu in various poses, Pikachu wearing Ziggy Stardust makeup, Pikachu as Harley Quinn from DC Comics, and Pikachu as Thor from Marvel Comics. The Pokémon Company alleged that by making such derivative artworks available on its website, Redbubble infringed its copyright and also contravened the Australian Consumer Law by making misleading representations that the Pokémon works were authorised by the Pokémon Company.
The consumer law question
The court had no problem finding that Pokémon had a significant reputation in Australia. From there, it found that Redbubble had control over its sponsored links on Google, that the prices for the Redbubble products were in the same range of prices for authorised Pokémon products, and that an ordinary reasonable consumer looking at the Google-sponsored links or the Redbubble website would find repeated representations that the services offered by Redbubble were authorised or sponsored by the Pokémon Company.
Crucially, the court noted that the Redbubble website contained nothing to inform or even suggest to consumers that Redbubble had no connection with the Pokémon Company. The court was unconvinced by Redbubble’s argument that the average consumer would have enough knowledge of Pokémon merchandising not to be misled or deceived.
On this basis, the court held that Redbubble’s website and sponsored Google advertising contained misleading representations that the various Redbubble products bearing Pokémon-related images, characters and words were sponsored or approved by the Pokémon Company.
The copyright question
The Pokémon Company centred its copyright infringement argument on an image of Pikachu and supplied a certificate of copyright registration from the United States Copyright Office as proof of ownership. It submitted that Redbubble had infringed its copyright in the Pikachu artwork by:
infringing artworks available on the Redbubble website and communicating those
artworks to the public online;
exposing, or exhibiting the infringing works in public by way of trade through
the Redbubble website; and
the reproduction of infringing works.
The court accepted that copyright subsisted in the Pikachu artwork and rejected Redbubble’s argument that the presumption of ownership under Australian copyright law could not apply to the US certificate.
The court held that each of Pokémon’s infringement claims were made out, observing that Redbubble was not the same as an internet service provider since Redbubble hosted the infringing content, that Redbubble had both a user agreement with artists as well as an intellectual property policy, and also had a team dedicated to dealing with impermissible content. Although the infringing artworks were made by and uploaded to Redbubble by artist users, this did not preclude a finding that Redbubble was also liable for communicating the infringing works to the public.
The court did note that Redbubble did have a notice and takedown system in place on its website, modelled after the notice and takedown system required of US-based websites under the US Digital Millennium Copyright Act (DMCA). These measures, however, were not enough as Redbubble could have removed infringing content or prevented artist users from using certain tags or keywords. Such measures were implemented on the Redbubble website after legal proceedings had commenced.
Finally, the court dismissed Redbubble’s claim to the defence of fair dealing for the purpose of parody and satire, on the basis that the infringements in the matter were purely for commercial exploitation.
The court rejected Pokémon’s claim to some $44,555 in damages for lost sales, on the basis that most of the infringing items were mash-ups for which Pokémon would not have received any royalties, and thus the Pokémon Company had not suffered any loss or damage as a result of Redbubble’s misleading conduct or false representations.
With regards to copyright infringement, the court awarded Pokémon nominal damages of $1. The court also declined to award additional damages for flagrancy, on the basis that Redbubble did have a notice and takedown system in place on its website.
Under the US DMCA, websites such as Facebook, Twitter, Instagram and Tumblr are not liable for hosting copyright infringing content so long as they have a notice and takedown system in place. Australia does not have similar legislation, and proposed reforms would only extend safe harbour provisions to certain organisations (eg., libraries, educational institutions, organisations assisting persons with a disabilities), not to websites. Given the number of print-on-demand T-shirt and merchandise websites that operate on the internet, it is worth noting the judge’s comments regarding Redbubble:
The business established by Redbubble carried the inherent risk of infringement of copyright of the kind complained of by [Pokémon]. It is true that Redbubble sought to mitigate the risk, but it was an inevitable incident of the business, as Redbubble chose to conduct it, that there were likely to be infringements. It could have prevented them by taking other steps but for business reasons Redbubble chose to deal with the risk of infringement by a process that enabled the infringements to occur. Such infringements were embedded in the system which was created for, and adopted by, Redbubble. There may have been a sound commercial basis for Redbubble to manage the risks of infringement as it did, but in doing so it authorised the infringements which occurred.
More information: Characters & Copyright
Link to decision: Pokèmon Company International, Inc. v Redbubble Ltd  FCA 1541