Intellectual Property and Technology

Defamation law and not-for-profits: getting to the truth of the matter

12 May, 2016

One would assume that people would think twice before using Pokémon’s jealously guarded characters without Pokémon’s permission. However, as seen in the recent case of Pokémon Company International, Inc v Redbubble Ltd [2017] FCA 1541, some still try their luck.

How do you get images of Pikachu and Bulbasaur onto a t-shirt? You Pokém-on of course! Terrible jokes aside, it is difficult to name a more iconic pop-media brand than Pokémon. Characters like Pikachu, Squirtle, and Bulbasaur have long entertained us through TV shows, games, movies, toys, trading cards, and even bed linen. Such is the renown of Pokémon, that the net worth of The Pokémon Company International, Inc (Pokémon) was recently estimated to be more than $3.5 billion.

With this in mind, one would assume that people would think twice before using Pokémon’s jealously guarded characters without Pokémon’s permission. However, as seen in the recent case of Pokémon Company International, Inc v Redbubble Ltd [2017] FCA 1541, some still try their luck.

Prepare for trouble, make it double

Redbubble Pty Ltd (Redbubble) is an Australian company that provides a “print-on-demand” personalisation service for customers who want to purchase a product customised with an image or word created by an artist or designer. Redbubble’s website allows users to upload artworks, which customers can then order on goods like t-shirts and mugs. Third party manufacturers and suppliers then make and ship the goods to those consumers.

Amongst the many user-created artworks made available by users of the Redbubble website, a small number featured Pikachu, including – Pikachu as Princess Leia, Pikachu as Homer Simpson, and even Pikachu as Ziggy Stardust (the Infringing Material).

Once Pokémon got wind of the Infringing Material on the Redbubble website, it commenced proceedings on two grounds: misleading and deceptive conduct and copyright infringement.

Pokémon argues Misleading and Deceptive Conduct: “It’s super effective”

Pokémon alleged that Redbubble contravened various sections of the Australian Consumer Law (ACL) concerned with misleading and deceptive conduct.

On this issue, Pagone J found in favour of Pokémon. His Honour held that an ordinary or reasonable consumer looking at the Infringing Material on Redbubble’s website or a Google sponsored link would likely be misled or deceived into believing that Infringing Material sold on its website were sponsored or approved by Pokémon.

In reaching this conclusion, Pagone J considered the following:

  • Pokémon had established a significant reputation in the Australian marketplace through its TV shows, trading cards and video games.
  • The price of official Pokémon products was comparable with the products containing the Infringing Material that appeared on Redbubble’s website. This lack of price discrepancy meant consumers would be less suspicious about whether the products featuring the Infringing Material were from an unauthorised dealer.
  • Crucially, there was nothing on the Redbubble website that suggested, let alone informed potential customers, that Redbubble was not an authorised retailer of Pokémon products.

Pokémon argues Copyright Infringement: “Critical hit!”

Pokémon’s claim for breach of copyright hinged on the Infringing Material’s unauthorised use of a number of their iconic characters, but in particular, everyone’s favourite electrified mouse – Pikachu. The Court found Redbubble to be liable for copyright infringement for three reasons:

  • despite not actually having uploaded the Infringing Materials itself, Redbubble was responsible for “communicating” the Infringing Materials to the public, by virtue of its explicit intellectual property policies, and dedicated intellectual property infringement team;
  • Redbubble had actual (or constructive) knowledge of the infringement as Pokémon had written to Redbubble several times about the copyright infringement; and
  • despite the fact that Redbubble took some reasonable steps to prevent the infringement, the fact that it had the ability to do more, but made a commercial decision not to, meant that Redbubble was constructively authorising copyright infringement.

Historically, (see for example Roadshow Films Pty Ltd v iiNet Ltd (2011) 194 FCR 285 and Roadshow Films Pty Ltd v iiNet Ltd (No 2) (2012) 248 CLR 42) internet service providers (ISPs) have been found not to be liable for copyright infringement by their users, because they are not ultimately responsible for the content uploaded through their services. Redbubble is of course a website host, rather than an ISP. The additional control Redbubble was able to exert over the content of its website meant that Redbubble was ultimately found to be the “person responsible for determining the content” of the infringing communications on the Redbubble website.

Interestingly, the key determining factor in finding Redbubble responsible for the Infringing Material was that Redbubble’s infringement prevention systems were so advanced, for example, Redbubble had:

  • a stringent IP policy dealing with the possibility and prevention of copyright infringement;
  • a dedicated team dealing with “impermissible” content uploaded to the Redbubble website; and
  • a requirement that all its users agree to terms and conditions prohibiting users from uploading infringing material, and indemnifying Redbubble against claims of copyright infringement.

These preventative measures arguably disadvantaged Redbubble in the proceedings; the Court took the view that they showed Redbubble had identified copyright infringement as an inherent risk of Redbubble’s business. Because of this inherent risk, despite the fact, that Redbubble, according to Pagone J, “did not expressly authorise any infringement” and in fact “took conscious, considered and reasonable steps, both proactively and responsively, to prevent infringements and to prevent the continuation of infringements”, Redbubble could have done more, and had therefore authorised the infringement.

As well as seeking to refute its responsibility for infringement, Redbubble relied on the defence of “fair dealing”, arguing that the use of Pokémon’s copyrighted images was for the purpose of parody or satire. The Court rejected this argument finding that although some of the Infringing Material was comical and maybe even satirical, there was not enough evidence to convince the Court that the underlying purpose of the use of the Infringing Material was not in fact primarily commercial exploitation.

Pokémon seeks remedies: “It’s not very effective”

In a surprise twist, notwithstanding the fact that Pokémon was successful on both of its arguments, the Court only awarded Pokémon $1 in damages.

This is because Pokémon were unable to establish that the use of the Infringing Material had actually caused any financial loss to Pokémon.

Pokémon also sought an injunction to prevent future infringements but was unsuccessful, as the Court was satisfied that because Redbubble had changed its policies, the risk of further infringement was low.

The small wins for Pokémon were that the court ordered Redbubble to pay 70% of Pokémon’s costs, and the litigation was at least successful in getting Redbubble to change its takedown and infringement practices. All in all however, it was a hollow victory for Pokémon.

The case is a reminder that just because a cause of action exists at law, this does not necessarily mean that damages will flow as a result. From a copyright law perspective, is also a timely reminder for businesses that it may not be enough to rely on even strong policies and terms and conditions, if in the circumstances of an alleged infringement your business could do more to prevent the infringement.

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Canadian Court elevates thumbs-up emoji to signature status

In June 2023, a Canadian Court in South-West Terminal Ltd v Achter Land and Cattle Ltd, 2023 SKKB 116, held that the "thumbs-up" emoji carried enough weight to constitute acceptance of contractual terms, analogous to that of a "signature", to establish a legally binding contract.   Facts This case involved a contractual dispute between two parties namely South-West Terminal ("SWT"), a grain and crop inputs company; and Achter Land & Cattle Ltd ("ALC"), a farming corporation. SWT sought to purchase several tonnes of flax at a price of $17 per bushel, and in March 2021, Mr Mickleborough, SWT's Farm Marketing Representative, sent a "blast" text message to several sellers indicating this intention. Following this text message, Mr Mickleborough spoke with Mr Achter, owner of ALC, whereby both parties verbally agreed by phone that ALC would supply 86 metric tonnes of flax to SWT at a price of $17 per bushel, in November 2021. After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed.   Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph [18], Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)."   Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and   The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. Mr Mickleborough stated, "I have done approximately fifteen to twenty contracts with Achter"; and   The fact that the parties had both clearly understood responses by Mr Achter such as "looks good", "ok" or "yup" to mean confirmation of the contract and "not a mere acknowledgment of the receipt of the contract" by Mr Achter.   Judgment At paragraph [36], Keene J said: "I am satisfied on the balance of probabilities that Chris okayed or approved the contract just like he had done before except this time he used a thumbs-up emoji. In my opinion, when considering all of the circumstances that meant approval of the flax contract and not simply that he had received the contract and was going to think about it. In my view a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad item – a meeting of the minds – just like they had done on numerous other occasions." The court satisfied that the use of the thumbs-up emoji paralleled the prior abbreviated texts that the parties had used to confirm agreement ("looks good", "yup" and "ok"). This approach had become the established way the parties conducted their business relationship.   Significance of the Thumbs-Up Emoji Justice Keene acknowledged the significance of a thumbs-up emoji as something analogous to a signature at paragraph [63]: "This court readily acknowledges that a thumbs-up emoji is a non-traditional means to "sign" a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a "signature" – to identify the signator… and… to convey Achter's acceptance of the flax contract." In support of this, Justice Keene cited the definition of the thumbs-up emoji: "used to express assent, approval or encouragement in digital communications, especially in western cultures", confirming that the thumbs-up emoji is an "action in an electronic form" that can be used to allow express acceptance as contemplated under the Canadian Electronic Information and Documents Act 2000. Justice Keene dismissed the concerns raised by the defence that accepting the thumbs up emoji as a sign of agreement would "open the flood gates" to new interpretations of other emojis, such as the 'fist bump' and 'handshake'. Significantly, the Court held, "I agree this case is novel (at least in Skatchewan), but nevertheless this Court cannot (nor should it) attempt to stem the tide of technology and common usage." Ultimately the Court found in favour of SWT, holding that there was a valid contract between the parties and that the defendant breached by failing to deliver the flax. Keene J made a judgment against ALC for damages in the amount of $82,200.21 payable to SWT plus interest.   What does this mean for Australia? This is a Canadian decision meaning that it is not precedent in Australia. However, an Australian court is well within its rights to consider this judgment when dealing with matters that come before it with similar circumstances. This judgment is a reminder that the common law of contract has and will continue to evolve to meet the everchanging realities and challenges of our day-to-day lives. As time has progressed, we have seen the courts transition from sole acceptance of the traditional "wet ink" signature, to electronic signatures. Electronic signatures are legally recognised in Australia and are provided for by the Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2020. Companies are also now able to execute certain documents via electronic means under s 127 of the Corporations Act. We have also seen the rise of electronic platforms such as "DocuSign" used in commercial relationships to facilitate the efficient signing of contracts. Furthermore, this case highlights how courts will interpret the element of "intention" when determining whether a valid contract has been formed, confirming the long-standing principle that it is to be assessed objectively from the perspective of a reasonable and objective bystander who is aware of all the relevant facts. Overall, this is an interesting development for parties engaging in commerce via electronic means and an important reminder to all to be conscious of the fact that contracts have the potential to be agreed to by use of an emoji in today's digital age.

Published by Foez Dewan
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Venues NSW ats Kerri Kane: Venues NSW successful in overturning a District Court decision

The McCabes Government team are pleased to have assisted Venues NSW in successfully overturning a District Court decision holding it liable in negligence for injuries sustained by a patron who slipped and fell down a set of steps at a sports stadium; Venues NSW v Kane [2023] NSWCA 192 Principles The NSW Court of Appeal has reaffirmed the principles regarding the interpretation of the matters to be considered under sections5B of the Civil Liability Act 2002 (NSW). There is no obligation in negligence for an occupier to ensure that handrails are applied to all sets of steps in its premises. An occupier will not automatically be liable in negligence if its premises are not compliant with the Building Code of Australia (BCA). Background The plaintiff commenced proceedings in the District Court of NSW against Venues NSW (VNSW) alleging she suffered injuries when she fell down a set of steps at McDonald Jones Stadium in Newcastle on 6 July 2019. The plaintiff attended the Stadium with her husband and friend to watch an NRL rugby league match. It was raining heavily on the day. The plaintiff alleged she slipped and fell while descending a stepped aisle which comprised of concrete steps between rows of seating. The plaintiff sued VNSW in negligence alleging the stepped aisle constituted a "stairwell" under the BCA and therefore ought to have had a handrail. The plaintiff also alleged that the chamfered edge of the steps exceeded the allowed tolerance of 5mm. The Decision at Trial In finding in favour of the plaintiff, Norton DCJ found that: the steps constituted a "stairwell" and therefore were in breach of the BCA due to the absence of a handrail and the presence of a chamfered edge exceeding 5mm in length. even if handrails were not required, the use of them would have been good and reasonable practice given the stadium was open during periods of darkness, inclement weather, and used by a persons of varying levels of physical agility. VNSW ought to have arranged a risk assessment of the entire stadium, particularly the areas which provided access along stepped surfaces. installation of a handrail (or building stairs with the required chamfered edge) would not impose a serious burden on VNSW, even if required on other similar steps. Issues on Appeal VNSW appealed the decision of Norton DCJ. The primary challenge was to the trial judge's finding that VNSW was in breach of its duty of care in failing to install a handrail. In addition, VNSW challenged the findings that the steps met the definition of a 'stairwell' under the BCA as well as the trial judge's assessment of damages. Decision on Appeal The Court of Appeal found that primary judge's finding of breach of duty on the part of VNSW could not stand for multiple reasons, including that it proceeded on an erroneous construction of s5B of the Civil Liability Act 2002 and the obvious nature of the danger presented by the steps. As to the determination of breach of duty, the Court stressed that the trial judge was wrong to proceed on the basis that the Court simply has regard to each of the seven matters raised in ss 5B and 5C of the CLA and then express a conclusion as to breach. Instead, the Court emphasised that s 5B(1)(c) is a gateway, such that a plaintiff who fails to satisfy that provision cannot succeed, with the matters raised in s 5B(2) being mandatory considerations to be borne in mind when determining s 5B(1)(c). 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