Australia: Perhaps a landmark case for interlink services incorporating IP

Last Updated: 7 September 2016
Article by Kim Leontiev and Daniel O'Brien

As first published in the Lexis Nexis Australian Intellectual Property Bulletin 2016 Vol. 29 No. 8 Page 190 – 192

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

This Federal Court decision1 is instructive in relation to awards for security of costs. In particular it highlights the following matters:

  • the determination as to the award of security for costs involves a balancing exercise between the competing interests of the litigants, namely, not burdening or prejudicing the applicant from pursuing its claim while protecting the respondent against the risk of loss in the event that the claim is successfully defended and costs are awarded;
  • the merits of the parties' respective substantive cases is a material consideration in the determination of an application for security for costs. The court will be less willing to award security for costs to a respondent where the applicant's substantive case is starkly meritorious and largely unanswered by the respondent's defence, although a reduction on the amount of the security for costs is still more likely than an outright dismissal of the application; and
  • the financial position of the applicant will be critical to the decision of the court such that regardless of the imbalance of the merits of the parties' substantive claims, the evidence of an applicant's financial inability to satisfy an adverse costs order forcefully calls for a security for costs order to prevent the respondent from a prejudicial risk of significant costs exposure.


Redbubble made an application seeking an order for security for costs against HAMCA, but HAMCA argued that the application seeking security for costs should be refused given the "irresistibly meritorious causes of action... against Redbubble" weighing against the need for security of costs to be provided to Redbubble.2

Orders for security for costs were granted by Greenwood J, but the amount sought by Redbubble was heavily reduced, from $270,000 to $50,000, highlighting that while HAMCA's appeal to substantive matters was not determinative on the question of security for costs, it was certainly relevant and significant.

Background facts and intellectual property (IP) merits

HAMCA was incorporated in 2006 but founded much earlier by motorcycle enthusiasts with informal links to the Hells Angels Motorcycle Club in the US (USHAMC). The formal association between HAMCA and USHAMC was arranged by a charter under which the Sydney and Melbourne branches of HAMCA began operating with the "approval" and under the "auspices" of USHAMC. It is through this process that HAMCA acquired licences in respect of the five registered trade marks and five foreign registered trade marks of USHAMC (2010 Licence).3 Under the 2010 Licence, the USHAMC remained the owner of the licensed trade marks (TMs), with all copyright subsisting in the TMs with cooperation between HAMCA and USHAMC with respect to enforcement of the TMs and copyright rights (collectively, IP rights) granted under the 2010 Licence.

Redbubble is a popular online marketplace through which users can submit artworks and other users can print on demand products incorporating the submitted artwork. Among the artworks submitted to the Redbubble catalogue were artworks that HAMCA claimed were infringing its IP rights under the 2010 Licence.

The fact that HAMCA brought the claim against Redbubble is of some significance given that for its part, Redbubble sees its operation as an agent between users who hold liability for the IP rights in the works submitted to Redbubble. Redbubble allows artists to upload their works by entering into a licence agreement with Redbubble, vesting the rights to use and archive the works in Redbubble. Users can then browse the Redbubble website and place orders for a product which Redbubble will automatically forward to a manufacturer to be produced and directly sent from the manufacturer to the customer. In other words, as Redbubble states in its user agreement, it is acting as "agent" between artist and 190 intellectual property law bulletin August 2016 customer. The user agreement also requires users (artists) to agree that by uploading their work, they are the true copyright owner(s) of the work.

The case brought by HAMCA is an important alert to other online hubs connecting users or facilitating trade in products incorporating IP. We are yet to see the final judgment on the merits of HAMCA's claims, but if they are indeed "meritorious" as described in this interlocutory hearing, there may be cause for a close look at the processes, terms and conditions, and user agreements such as used by Redbubble and other online businesses of this nature.

Factors to be taken into account when making an application for security for costs

In exercising its power to award security for costs, a court will give consideration to the particular facts of a case and will give varying weight to the relevant factors. Some of the factors which a court may take into account were considered by Beazley J in KP Cable Investments Pty Ltd v Meltglow Pty Ltd.4 The factors considered were:5

  • whether the application for security for costs has been brought promptly;
  • that regard is to be had to the strength and bona fides of the applicant's case;
  • whether the applicant's impecuniosity was caused by the respondent's conduct, the subject of the claim;
  • whether the respondent's application for security for costs is oppressive in the sense that it is being used merely to deny an impecunious applicant a right to litigate;
  • whether there are any persons standing behind the applicant who are likely to benefit from the litigation and who are willing to provide the necessary security;
  • whether persons standing behind the applicant have offered any personal undertaking to be liable for the costs and if so, the form of any such undertaking; and
  • whether the party seeking security for costs is in substance an applicant in the substantive proceeding, or a party who is defending themselves and thus forced to litigate.

Further references to various factors which may be taken into account can be found in other case law including:

  • whether the respondent will be unable to pay the applicant's costs if the applicant is ultimately successful in the proceedings;6
  • whether the applicant is suing for the benefit of other persons who would be immune from the risk and burden of an adverse costs order if it is unsuccessful in the proceedings;7 and
  • where an applicant has no assets in the jurisdiction.8

Decision of Greenwood J

HAMCA argued against the making of an order for security for costs on the basis that its IP rights infringement case was especially strong so as to make an order for security for costs unnecessary.

In the substantive proceeding, Redbubble had not put forward an affirmative case by pleading any material facts in relation to the copyright in the relevant works. Redbubble had pleaded that it did not know and could not admit any of the material facts pleaded in relation to the copyright of the relevant works. The effect of this was that Redbubble had put all things in issue and therefore put HAMCA to proof of the matters pleaded by HAMCA. This position was taken despite HAMCA's contentions in relation to the source of the rights being reasonably well-developed, as was observed by Greenwood J.

In support of its application seeking an order for security for costs, and in particular to support its opposition to HAMCA's argument regarding the strength of its case, Redbubble questioned the subsistence of copyright in the relevant works and sought to rely on its business model and the Roadshow Films Pty Ltd v iiNet Ltd9 (iiNet Decision) decision to deny infringement. In alluding to the iiNet Decision, Redbubble sought to draw parallels between its business model and that of iiNet Ltd (iiNet) as an internet service provider (ISP) found by the High Court not to be liable for infringement by users who illegally downloaded copyright-protected content from BitTorrent file-sharing portals via their iiNet internet service accounts. Redbubble therefore sought to portray its service as a removed "interlink" service whereby liability for infringement falls squarely on users without secondary liability for knowledge or facilitation.

Greenwood J noted that the arguments advanced by Redbubble were not particularly persuasive in detracting from the merits of HAMCA's case. In the first place, Redbubble's business model is so removed from the IP infringement as alleged since Redbubble is engaged at every sequence of the transactions between its users, earns a fee on the transactions, causes the relevant work to be reproduced on the manufactured products, and facilitates the transactions. Further, in relation to the reliance on the iiNet Decision, Greenwood J observed that there were material differences between the business of iiNet and Redbubble. Of particular relevance was iiNet's limited knowledge as to the infringement, and limited power to control the infringement apart from the indirect (and legally consequential) power to terminate the internet service of the infringing users. As noted earlier, Redbubble's business model was considerably less remote from the infringement.

Three main factors were taken into consideration by his Honour in the exercise of the discretionary judgment to be made under s 56 of the Federal Court of Australia Act 1976 (Cth), which is the relevant provision relating to an order being made for security for costs:

  1. the strength of HAMCA's claim and the bona fides of that claim is a material consideration in exercising the broadly based and unfettered discretion to make an order for security for costs;
  2. would HAMCA be able to meet an order for costs if an order for costs was made; and
  3. whether HAMCA was a special purpose vehicle suing for the benefit of other persons who would be immune from the risk and burden of an adverse costs order if it is unsuccessful in the proceedings.

In relation to factor 1 above, Greenwood J regarded HAMCA's claim as having strength for the purposes of the exercise of the discretion to order security for costs.

In relation to the second factor, however, it was accepted by HAMCA that there was a proper basis for believing that it would not be able to satisfy an adverse costs order in the event that Redbubble was successful in the proceedings and it did not have any assets of substantial value. Further, HAMCA accepted that if an order for security for costs was made in the amount sought by Redbubble, HAMCA did not have the means to satisfy such an order and would be unable to proceed with the prosecution of the proceedings.

In relation to factor 3, Greenwood J observed that HAMCA was a special purpose vehicle operating to advance the interest of its members.

In consideration of the above, his Honour held that an order for security for costs should be made, despite the causes of action having strength. His Honour stated that an order for security for costs was necessary given that HAMCA was a special purpose vehicle, and the persons standing behind it who had a beneficial interest in the proceedings ought to be exposed to some proportion of the burden that may arise if an adverse costs order was made against HAMCA even though that may be a remote possibility in the eyes of HAMCA.

The decision provided Redbubble with a measure of protection, however, the amount of security ordered by his Honour was discounted having regard to the apparent strength of the proceedings.


1 Hells Angels Motorcycle Corp (Australia) Pty Ltd v Redbubble Ltd [2016] FCA 530; BC201603599.

2 Above n 1, at [2].

3 Above n 1, at [7].

4 KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189; (1995) 13 ACLC 437; BC9507833.

5 Above n 4.

6 See Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744; BC200105623 at [47].

7 See above n 6, at [31].

8 See Cheng XI Shipyard v Ship 'Falcon Trident' [2006] FCA 759; BC200604530 at [9].

9 Roadshow Films Pty Ltd v iiNet Ltd (2012) 286 ALR 466; (2012) 95 IPR 29; [2012] HCA 16; BC201202230.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Kim Leontiev
Daniel O'Brien
Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions