Counterfeit websites will be blocked, but there is a cost!

[Archiee]

Blocking orders against ISPs have become a hot topic in the IP world in recent times; though usually in the context of broadcast copyright and anti-piracy (see here).

The Supreme Court has today handed down its highly anticipated judgment in the Cartier case, concerning blocking injunctions in the UK, aimed at protecting trade marks.

Background

The action was brought by Cartier International AG (and other owners of trade marks for luxury goods) against British Telecommunications PLC (and the other four largest Internet Service Providers (“ISPs”) in the UK).

The claimants asked the court to order the ISPs to block various sites that were infringing their trade marks and selling counterfeit goods.

All parties accepted that the ISPs were innocent. Whilst they provide and store this content, they are not in a position to monitor it, they have no contractual relationship with the infringing websites and are rarely even in a position to identify them. However, they do facilitate access to the sites for their customers, the internet users.

The High Court judge found that it was within the court’s powers to grant the requested injunctions.

Court of Appeal

None of the ISPs had a substantial objection to the injunctions; however, they took issue with the High Court’s ruling that, whilst the Trade Mark owners should pay for the applications, the ISP should bear costs of implementing them.

The Court of Appeal (albeit with one dissenting Judge) disagreed, reasoning that this is simply a cost of carrying out the business of the ISPs.

Supreme Court Judgment

In today’s ruling, the Supreme Court overturned the Court of Appeal decision. Unless there is a good reason otherwise, an innocent intermediary (such as an ISP) should be indemnified by a rights holder against the costs involved in complying with a blocking order. This indemnity must be limited to reasonable compliance costs. Whilst meeting ISP costs is a matter of English Law, in accordance with EU principles, any remedy must be fair, proportionate and not unnecessarily costly.

The judgment focuses strongly on the fact that the ISPs have done, and are doing, nothing wrong. Of course if the ISPs had been participating in the infringement in any way, these principles will not apply.

Comment

Whilst the granting of blocking injunctions is relatively commonplace in copyright cases, this is the first case granting injunctions to protect a trade mark. This issue, decided at first instance and upheld by the Court of Appeal, was not challenged in the Supreme Court. It should be welcomed by rights holders that this mechanism to protect trade mark rights exists and is generally supported (and complied with) by ISPs.

The appeal was about costs, and how to the balance the protection offered to rights holders, against the duties and costs imposed on the innocent intermediaries. Whilst brand owners might have welcomed the ability to utilise this form of protection without cost, this decisions should not be seen as a defeat.

The judgment is very clear that the indemnity must be limited to reasonable compliance costs. The Supreme Court points out that there is nothing to suggest that these costs will be excessive or will impair the respondents’ practical ability to enforce their trade marks.

The bigger picture, that ISPs can now be compelled to block access to sites that infringe trade marks and sell counterfeit goods, is a victory for brand owners. Whilst slightly more expensive in light of this ruling, these injunctions will no doubt continue to form an integral part of any online brand protection toolkit.

The fight against the counterfeiters continues…