In the case of Redbubble Ltd v Hells Angels Motorcycle Corporation (Australia) Pty Ltd [2024] FCAFC 15 (Perram, Nicholas, Burley, Rofe and Downes JJ) , the Full Federal Court of Australia reviewed the applicability of a US based trade mark infringement settlement agreement between the Hells Angels US entity and a US entity (TP Apparel) that was acquired by Redbubble. The issue arose out of trade mark infringement claims by Hells Angels in which, Redbubble and its US entity allowed third party customers to seek to have trade marks owned by Hells Angels added to clothing items and related goods, without the consent/license of Hells Angles, or its Australian subsidiary.
On 24 May 2021, a settlement agreement had been entered into between TP Apparel ‘and its corporate parent and affiliates’ and Hells Angels USA, whereby Hells Angels USA released TP Apparel from trade mark infringement claims by itself and its licensees. The dispute that made it to the Federal Court in Australia, centred around whether the settlement agreement, actually released Hells Angels Australia’s rights in a dispute involving Redbubble for trade mark infringement agreement.
[Single Judge(s) Decision(s)]
A single judge of the Federal Court Australia decided that the settlement agreement did not release Hells Angels Australia’s rights against Redbubble, with another judge going on to find in favour of Redbubble in infringement proceedings. Redbubble appealed to the Full Federal Court.
[Full Federal Court]
In February 2024, the Full Federal Court, in dismissing the appeal, discussed that ‘there is a prima facie presumption at common law that general words in a release are construed as being limited to the matters which were specifically in the contemplation of the parties at the time the release was given’. Similarly, in equity, a party could not rely on a release if it would be unconscientious to do so by reference to the ‘true purpose of the transaction as ascertained from the nature of the instrument and the surrounding circumstances including the state of knowledge of the respective parties concerning the existence, character and extent of the liability in question and the actual intention of the releasor’ (Grant v John Grant & Sons Pty Ltd [1954] HCA 23; 91 CLR 112 at 129-130). The Court went on to conclude that as of May 2021, evidence showed that the Australian based dispute was not in the minds of the parties that executed the settlement agreement in the US – indeed, the Court said that the settlement agreement itself made no reference to the Australian based dispute at all, with the recitals referring only to the US related dispute:
“The correspondence referred to in the recitals was in evidence before Jagot J. It was evident from that correspondence that the dispute the parties were resolving in the settlement agreement related to two cease and desist letters sent by Hells Angels US to TP Apparel. The first letter alleged that there were at least 38 items for sale at www.teepublic.com which infringed Hells Angels US’s rights. The second letter alleged that there were at least a further 315 such items on the website. TP Apparel’s response related to these items. Further correspondence between the parties likewise only concerned the operation of the online marketplace at www.teepublic.com." "The terms of the settlement agreement also indicate that the dispute between the parties concerned the operation of that website. Thus cl 3 dealt with proactive moderation by TP Apparel of that website, and by cl 4 Hells Angels US promised to notify TP Apparel if it became aware of any unauthorised use of its intellectual property on the same website."
"[The single judge] Justice Jagot concluded that the dispute between Redbubble and Hells Angels Australia about the presence of Examples 1 to 7 on Redbubble’s website at www.redbubble.com was not in the contemplation of the parties at the time of the settlement agreement.”
[Comment]
Legal advisors and their clients need to keep the terms of the Full Federal Court’s decision in mind when crafting intellectual property infringement settlement agreements and releases, as it is clear that best practices require express reference to the disputes that are to be covered by an agreement, including the parties to those disputes and geographical locations. The Full Federal Court’s decision has confirmed that the terms of a release in a settlement agreement or deed of release are to be construed objectively and of prime importance, is evidence as to the minds of the parties at the time that a settlement agreement or release is executed.