ISPs ordered to block access to counterfeiting websites in landmark decision
In Cartier International AG v British Sky Broadcasting Ltd ( EWHC 3354 (Ch), October 17 2014), the High Court has granted orders requiring internet service providers Sky, BT, EE, Talk Talk and Virgin (collectively, the ISPs) to block access to a number of counterfeiting websites. The decision marks an important development in the protection of brands online as, while there are specific UK statutory provisions dealing with blocking orders for copyright infringement, there is no such legislation concerning trademarks. The judgment will please right holders and is likely to lead to numerous similar applications.
Article 8(3) of the Information Society Directive (2001/29/EC) - right holders may apply for injunctions against intermediaries whose services are used by a third party to infringe copyright or a related right.
Article 11 of the IP Rights Enforcement Directive (2004/48/EC), transposed into UK law by the Intellectual Property (Enforcement, etc) Regulations 2006, SI 2006/1028): right holders may apply for injunctions against intermediaries whose services are used by a third party to infringe an IP right generally.
Section 37(1) of the Senior Courts Act 1981 - the High Court may grant an injunction when it appears just and convenient to do so.
The court also considered the Trademarks Directive (2008/95/EC), Articles 5(1)(a) and (3), which were implemented in the United Kingdom by Sections 10(1) and (4) of the Trademarks Act 1994; the Directive on Electronic Commerce (2000/31/EC), which was transposed into UK law by the Electronic Commerce (EC Directive) Regulations 2002, SI 2002/2013; and the Charter of Fundamental Rights of the European Union.
The claimants (collectively, Richemont) own a large number of UK registered trademarks, including CARTIER, MONTBLANC and IWC. Richemont sought orders from the High Court requiring the ISPs to block access to six websites that infringed its trademarks by advertising and selling counterfeit goods (the 'target websites'). The target websites (eg, 'cartierloveonline.com'), each targeted UK customers offering for sale replicas of products bearing one of Richemont's trademarks.
In his judgment, Mr Justice Arnold considered, in relation to making such orders:
- the court’s jurisdiction;
- the threshold conditions; and
- the principles that should be applied.
With regard to the first point, the key EU provisions which allow right holders to apply for injunctions against intermediaries are Article 8(3) of the Information Society Directive and Article 11 of the IP Rights Enforcement Directive, respectively. While the United Kingdom implemented Article 8(3) concerning copyright infringement by inserting Section 97(A) into the Copyright, Designs and Patents Act 1988, the government did not think it necessary to implement the relevant sentence within Article 11, therefore providing no specific statutory provision equivalent to Section 97(A) in relation to trademarks.
However, Mr Justice Arnold held that the court had the power to grant an injunction in the present case under Section 37(1) of the Senior Courts Act as it was just and convenient to do so.
With regard to the second point, case law provides four conditions which must be met in order for website blocking injunctions to be granted. Applying these to the present case, the court found as follows:
ISPs are intermediaries;
The target websites infringed Richemont's trademarks (the trademarks were adversely affected even where the websites stated that the goods were replicas, as this could still lead to post-sale confusion);
The target websites’ operators used the ISPs’ services to infringe the trademarks. Mr Justice Arnold stated that "the ISPs have an essential role in these infringements, since it is via the ISPs’ services that the advertisements and offers for sale are communicated to 95% of broadband users in the UK".
The ISPs had actual knowledge of the infringement, as a result of having been directly informed by Richemont and as a result of seeing the evidence in these proceedings.
With regard to the third point, Mr Justice Arnold, when assessing whether granting the orders was proportionate in this case, found as follows:
Richemont had a legitimate interest in preventing infringement of its trademarks. The orders sought would "not impair the substance of the ISPs’ freedom of their right to carry on business".
Alternative measures were not as effective and no less onerous. A variety of other measures were considered, including action against website operators, hosts, payment processors and domain name or customs seizure.
Richemont was not required to show that blocking measures would lead to a reduction in the overall level of infringement of the trademarks. Mr Justice Arnold considered the effectiveness of previous Section 97(A) orders for copyright infringement, concluding that the "blocking of targeted websites has proved reasonably effective in reducing use of those websites in the UK" and that, despite a few incidents involving overblocking and cyber-attacks resulting from implementing these orders, they have generally been a success.
The costs of implementing the orders should be broadly the same as when implementing Section 97(A) orders. Right holders should bear the costs of making unopposed applications and monitoring the targeted websites after implementation, while the ISPs should cover the costs of implementing orders and subsequent updates. The court acknowledged that ISP costs may be significant if applications grow rapidly in number; and
Blocking should be targeted so that lawful internet users are not adversely affected. For example, if a target website shares an IP address with a legitimate website, the order should only require DNS blocking (which makes it difficult for users to locate specific domains or websites).
The decision is good news for right holders. In recent years, film studios, record companies and the FA Premier League have obtained orders requiring ISPs to block access to websites that infringe copyright pursuant to Section 97(A) of the 1988 act. However, this is probably the first case in the European Union to consider trademark infringement in this context. Mr Justice Arnold granted the orders, finding the likely costs burden on the ISPs was justified and the orders were proportionate. To safeguard against abuse, the orders were modified to (i) allow the ISPs and operators to apply to the court to discharge/vary the orders following a change in circumstances, and (ii) introduce a "sunset clause" whereby "the orders will cease to have effect at the end of a defined period unless either the ISPs consent to the orders being continued or the court orders that they should be continued". This was provisionally set at two years.
Mark Lubbock and Danica Barley, Ashurst, London
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