The Pokémon Battle: A Guide to Interlocutory Injunctions

Recently, Nintendo Co. Ltd's (Nintendo) The Pokémon Company International (TPCI) successfully obtained an interlocutory injunction against an Australian company, Pokemon Pty Ltd (PPL), and its sole director and secretary, Xiaoyan Lui.¹

BACKGROUND

TPCI (incorporated in the United States of America) is and was a wholly owned subsidiary of The Pokémon Company (incorporated in Japan), registered to oversee the brand management, licensing and marketing of merchandise related to the Pokémon computer and video games distributed by Nintendo.

Australian company PPL was registered in 2016 and in August 2022, registered a domain name where the website attempted to convey that it was a legitimate Pokémon website, and even included a white paper on the introduction of “PokeWorld”.

TPCI alleged that PPL planned to release a range of Pokémon-themed Non-Fungible Tokens (NFTs) without its permission, being a deliberate strategy to mislead consumers.

Accordingly, TPCI sought an interlocutory injunctive order preventing PPL from operating a game under the name PokeWorld or selling Pokémon NFTs.

The evidence on behalf of TPCI was that:

• the Pokémon video games were first released in Japan in 1996, and in Australia later in 1998;
• the Pokémon Trading Card Game had launched in Australia in 1999 and was extensively distributed internationally;
• 23 animated Pokémon movies had been released worldwide since 1999, including in Australia; further, the Pokémon animated television series was broadcast worldwide, including in Australia;
• TPCI licensed partners to use Pokémon intellectual property, including images of the Pokémon characters on products (including apparel, drinkware, stationery, accessories, trading card game accessories, toys and Manchester) in Australia, usually in return for a royalty payment on sales of the branded items;
• PPL and its associates were not licensed or authorised to use the names and images of any of the Pokémon characters, and “PokeWorld” was not the official Pokémon P2E NFT collection;
• it had made a deliberate decision not to launch Pokémon NFTs; and
• it was very concerned to protect key Pokémon characters, including Pikachu (as set out below),² and was concerned about the irreparable and long-term impact of the alleged misrepresentations by PPL.

The Court’s Decision

The Federal Court of Australia granted TPCI’s interlocutory injunction, ordering PPL to immediately stop using the Pokémon name and branding.

In the reasons for decision, Her Honour Justice Collier stated:

I am satisfied that the applicant [TPCI] has demonstrated a strong prima facie case of contravention by the respondents of a provision of the Australian Consumer Law. Specifically, the evidence of the applicant [TPCI] strongly suggests conduct by the respondents, both historical and proposed conduct, which is designed to mislead consumers and other businesses ... [in respect of its apparent license, authorisation or affiliation with TPCI, Pokémon or Nintendo].³

Further, the court confirmed that the balance of convenience favoured the grant of the interlocutory relief sought by TPCI.

Relevant Principles to the Grant of an Interlocutory Injunction

An interlocutory injunction is an order made by a court before the commencement of any trial, in an effort to preserve the current position of the parties until a final decision is made. 

For the court to exercise its power to grant an interlocutory injunction, it must be able to answer in the positive to the following two questions:

1. Has the applicant made out a sufficiently arguable case?  It is sufficient that the applicant shows a sufficient likelihood of success in its case to justify, in the circumstances, the preservation of the current position, or the status quo, pending the trial in the matter.  The applicant does not need to prove that it is more likely than not that it will succeed at trial.
2. Does the balance of convenience favour the grant of the injunction?  This question considers whether the inconvenience or injury which the applicant would likely suffer if an injunction were refused, outweighs, or is outweighed by, the injury which the respondent would suffer if an injunction were granted.

In addition, the applicant must also provide in favour of the respondent and any third parties an undertaking as to damages.  Such an undertaking is a commitment by the applicant to pay damages to the respondent and relevant third parties for any loss sustained by reason of the injunction, if the matter is ultimately decided against the applicant at the trial.

Lavan Comment

This case is another example of the court’s approach when deciding whether to grant interlocutory injunctive relief and highlights the issues that the court will take into consideration when exercising its discretionary powers in this respect.

Interlocutory injunctive relief can be a critical tool used to protect your position in a dispute pending the resolution of all the issues in dispute.  Alternatively, you may find yourself in a position where you need to defend such an application for an injunction.  In both situations, there are serious associated risks which need to be considered before such an application is made or defended.

The Litigation and Dispute Resolution team at Lavan has extensive experience in making, and defending, applications for interlocutory injunctions.  If you need legal advice in relation to an interlocutory injunction, please contact Senior Associate, Ms Stephanie Tan, and Partner, Ms Cinzia Donald to discuss the matter.