Pikachu-se your fights carefully against copyright infringers

In mid 2016, the Pokémon Go augmented reality game was the talk of the town with children to adults roaming the streets, phone in hand, trying to “catch’em all”. Pikachu, a central character in the series, is recognisable by most. One would assume that copying the famous Pikachu image would be fraught with danger. Right?

In a recent case, The Pokémon Company International, Inc. (TPCI) commenced Federal Court proceedings against Redbubble Ltd (Redbubble) claiming copyright infringement of TPCI’s Pikachu image (among others). While the court found in favour of TPCI, TPCI was awarded 70% of its legal costs and nominal damages of only AU$1.

So why the low damages claim?

Background

Redbubble is an internet marketplace for ‘print on demand’ personalised products. The website allows independent artists to upload their art works to an online shop, where consumers select and purchase works to print on t-shirts, phone cases or similar products. In return, the artist receives payment for the purchase of their work.

Redbubble as host of the website recognised the risk of artists uploading infringing works for sale. Redbubble sought to mitigate this risk through their user terms and conditions which provided users could not upload copyright infringing materials.

Redbubble implemented other policies and procedures such as a publicly available IP policy, a content team which monitored the site, and a process whereby intellectual property owners could notify Redbubble of infringing works and ask for them to be removed. Redbubble could also block users from using certain keywords and trade marks. Redbubble also did not manufacture, warehouse, dispatch, receive or distribute any physical products ordered through the site; third party fulfillers would manufacture the products (fulfillers were selected by Redbubble software based on a purchaser’s email address).

TPCI’s claims

Certain images uploaded by artists to Redbubble’s website were similar to the Pokémon character Pikachu and also contained the Pokémon’s name.

TPCI successfully claimed that Redbubble had:

• engaged in misleading and deceptive conduct by representing that TPCI was permitted to sell Pokémon merchandise (by Redbubble’s sponsored links on Google and its website), and
• infringed TPCI’s copyright in images of the Pikachu Pokémon character by:
  • making the infringing works available online or electronically transmitting the infringing works
  • offering the infringing works for sale, and
  • authorising a reproduction of an infringing work.

The Decision

TPCI sought approximately $44,000 in damages. However, only nominal damages of $1 were awarded to TPCI because the court found that:

• TPCI would not have been entitled to a royalty in respect of many (if not all) of the infringing products sold
• most of the sales were not the kind of items available for sale and commercialisation within ‘the Pokémon universe’, and
• many of the items involved a ‘mash up’ of images (such as an image of Pickachu with Homer Simpson).

In these circumstances, the court determined that TPCI could not show it suffered loss or damage, and just because the items were sold, did not mean TPCI or its licensees would have sold them.
TPCI also claimed discretionary damages for breach of copyright (often awarded if the infringer’s conduct is ‘flagrant’). However, the court found that Redbubble had implemented processes to prevent and mitigate breaches which were ‘reasonable and defensible’. Flagrancy was not established merely because copyright was infringed.

Lessons

Redbubble’s awareness of the risks associated with their business, their approach to mitigate the risks they had identified, and the many reasonable steps they took when notified of the infringement ultimately led to the low damages claim in this instance.

Businesses, particularly those hosting websites where the risk of intellectual property infringement is high, should take all reasonable steps to manage and mitigate risk through good terms and conditions and policies regarding IP infringement. Complaints from intellectual property owners should also be taken seriously and actioned swiftly.

Copyright owners should be careful to identify the damages they have suffered, or may suffer from a particular copyright infringement. This will inform a cost-risk analysis for infringement claims. In respect of copyright infringers, unfortunately you can’t “catch ’em all”.

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.