Blocking access to counterfeit sites

In a landmark ruling the High Court of England and Wales has granted an injunction against an internet service provider to prevent access to websites selling counterfeits. While this is good news for rights holders, it is unlikely to be the final word on the matter

The High Court of England and Wales ruled in Cartier v BskyB ([2014] EWHC 3354 (Ch) Arnold) that it had jurisdiction to grant an injunction against internet service providers (ISPs) to prevent access to websites that were selling counterfeit goods. Such counterfeit goods infringed the trademark rights of Richemont, the owner of well-known luxury brands such as Cartier and Mont Blanc. Richemont’s claim was the first in the United Kingdom to seek relief against ISPs for trademark infringement performed by users of their services. The decision builds on recent UK cases blocking access to copyright-infringing websites and will be a welcome addition to the steps that rights holders can take to battle counterfeiters.

The trade in counterfeit products is estimated to be worth billions of pounds and affects all industries, but in particular luxury brands. The main problem which rights holders face when confronting online infringement is how to stop infringing websites which, when shut down, can simply start up another site. Further, websites which sell counterfeit goods and/or pirated films and music tend to be located outside the jurisdiction in question, which means that even if the culprit can be identified, pursuing infringers can be time consuming and expensive – and even then may not achieve the desired results.

Richemont selected a few websites which wholly infringed its trademarks as examples of the types of website targeting UK consumers and sought orders against the main broadband providers in the United Kingdom to block users from accessing those selected counterfeit websites.

Legal argument

The two main issues were whether the court had jurisdiction to grant the injunction sought and whether an injunction should be awarded.

The jurisdiction to make injunctions against ISPs which provide a service and have actual knowledge of another person using their service to infringe copyright is contained within Section 97A of the Copyright, Designs and Patents Act 1988. This implements Article 8(3) of the EU Information Society Directive (2001/29/EC).

However, Article 11 of the EU Enforcement Directive (Directive 2004/48/EC) is not directly implemented in English legislation in relation to other IP rights (including trademarks).

Accordingly, the ISPs argued that there was no jurisdiction in the United Kingdom to grant the injunction sought in a trademark context. However, the court found that it had jurisdiction under domestic legislation in the form of Section 37(1) of the Supreme Court Act, which grants the courts jurisdiction to grant an injunction in all kinds of cases. Further, the court found that Section 37(1) could be interpreted in compliance with Article 11 as a result of the Marleasing principle, which requires a member state’s legislation to be construed in conformance with an EU directive.

In considering whether an injunction should be granted, the court applied the principles developed in the Section 97A copyright cases and considered whether the relief sought was necessary, effective, dissuasive, uncomplicated and inexpensive, avoided barriers to trade, struck a fair balance to fundamental rights and was proportionate. The European Court of Justice (ECJ) has found in previous cases involving copyright and intermediary injunctions that the principle of proportionality must strike a fair balance between IP rights and the fundamental rights of those affected by such measures.

In looking at the comparative rights, the judge said that the order would not require the ISPs to acquire new technology, as they already had it in place. The main effect would be to impose additional operating costs on ISPs. In terms of the rights of users and operators, given that the sites were exclusively selling counterfeit products and thus had no lawful component, the judge found that the operators and users had no rights requiring protection.

An interesting part of the assessment concerned the alternative methods available to Richemont. The judge acknowledged the difficulties in stopping operators abroad, as well as in taking action against website hosts. He also recognised the advantages in blocking over takedowns. The judge also considered the prospect of de-indexing the offending websites by having search engines remove them from their search results, thereby preventing access – although found that it is unclear whether de-indexing can be ordered on the basis of IP infringement. Overall, the judge was not persuaded that alternative measures would be as effective as a blocking order.

The cost burden was a significant part of the proportionality assessment and the judge was mindful of the fact there could be a flood of future applications, given the volume of sites which Richemont claimed were potentially infringing, as well as complaints from other trademark owners. This made it hard to predict any increase in implementation costs. However, the judge felt that the implementation costs themselves were insufficient reason to refuse the order. The key question on proportionality was whether the cost burden on ISPs was justified by the efficacy of the blocking measures. The judge found, after some hesitation, that the order was justified, but did direct a sunset clause which gave the order a finite time period.

Implications

Website blocking is an effective tool and this decision represents a development in favour of trademark holders in the fight against counterfeiters. It is likely that many rights holders will wish to take action and ISPs are bound to receive numerous requests to block certain sites.

However, this decision might not signify the end of the matter regarding the scope of blocking orders. Two main issues are likely to arise in the future – how they are approached will probably depend on the relationship between the parties. The first is proportionality, because it is likely – as was envisioned in the judgment – that ISPs will be inundated with requests from other brand owners to block websites in the near future. While a rights holder is likely to want as many infringing websites blocked as possible, an ISP may find a high volume of requests uneconomic and, from its perspective, disproportionate. Second, although Cartier involved wholly infringing websites, it will be interesting to see how rights holders and ISPs approach mixed websites (eg, that sell both counterfeit and legitimate goods).

As always in these types of case, the court has tried to balance the rights of the parties. In this instance the court found that the potential downside to the ISPs did not outweigh the benefits of a blocking order to rights holders.

Jeremy Blum  ([email protected]) is a partner at Bristows

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