Who pays the costs of implementing a website-blocking order in the context of trade mark infringement?

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Introduction

As a follow up our previous articles, “Website Blocking Order – a Possible Remedy against Trade Mark Infringement on the Internet?“ and “English Court of Appeal Affirms Injunctions Against ISPs for Website Selling Counterfeits“, we now revisit the topic as the UK Supreme Court handed down its long-awaited judgement in Cartier International AG and others (Respondents) v British Telecommunications Plc and Another (Appellants) on 13 June 2018. The UK Supreme Court has overturned the decisions of the lower courts and unanimously ruled that the costs of implementing a website-blocking order in the context of trade mark infringement should be borne by the right-holders, i.e. trade mark proprietors instead of internet service providers (“ISPs”), which are considered as innocent intermediaries merely providing a network which has been abused by others.

Background

By way of a brief reminder of the facts which led to the UK’s Supreme Court’s ruling, the respondents are three companies belonging to the same group designing, manufacturing and selling luxury goods such as jewellery, watches and pens under and by reference to well-known trade marks including Cartier, Montblanc and IWC. The two appellants and the three other defendants in the proceedings below are the five largest ISPs serving the UK.

The respondents sought injunctions requiring the ISPs to block or attempt to block access to specified target websites (the “Target Websites”), their domains and subdomains and any other IP address or URL notified to them which enable access to a Target Website. These Target Websites were advertising and selling counterfeit products of the respondents’ goods. It has not been disputed that the relevant ISPs provide networks by which subscribers access content but they do not provide or store content and thus they do not infringe the trade marks themselves as “mere conduit” ISPs.

The lower courts granted the injunction and ordered the ISPs to pay the costs, including the costs of implementing the website-blocking order. This is the first case in which a website-blocking injunction has been granted to protect a trade mark proprietor. Unlike copyrights where there is an express statutory power to allow such orders to protect copyrights under section 97A of the Copyright, Designs and Patents Act 1988, there is no such provision for trade marks. The issue in the present appeal is whether the ISPs as innocent intermediaries should have been required to bear the costs of implementing the order for preventing the use of their facilities by wrongdoers for unlawful purposes.

Judgment

The Supreme Court unanimously allowed the appeal concerning the costs of complying with such order. In another word, the respondents are ordered to indemnify the ISPs for complying with such orders.

Lord Sumption conducted a comprehensive review of the legal basis on which website-blocking injunctions are made and concluded that:-

  1. The English courts have long history in ordering innocent parties to assist in situations where wrongdoers are infringing the rights of others, for example, the Norwich Pharmacal order that requires innocent intermediaries to provide information to assist the fact-finding.
  2. The incidence of compliance costs is a matter for English law, while also bound by the broad limits set by the EU law on the power to grant relief that any remedy shall be fair, equitable, proportionate, effective and not be unnecessarily complicated or costly. There is nothing in current case to suggest the compliance costs are excessive, disproportionate or such as to impair the respondents’ practical ability to enforce their trade marks.
  3. While the respondents argue that since ISPs benefit financially from the content available on the internet including those infringing intellectual property rights, it is fair to make them contribute to the cost of enforcement. This argument assumes a degree of responsibility on the part of the intermediary which does not correspond to any legal standard. The English law is not generally concerned with moral or commercial responsibilities except as an arguable basis for legal ones, especially in this case where website-blocking injunctions were sought by right-holders for their own commercial interests. It is not justified for the rights-holder to have anyone other than the infringers to contribute to the cost of defending his rights. There is thus no legal basis to require a party to shoulder the burden of remedying an injustice in which he has no legal responsibility and the remedial action was ordered by court.
  4. If the ISPs’ position is more than “mere conduits” and their action can be characterised as “hosting” or “cashing”, then the position on the costs associated with the implementation of a website-blocking order would likely be different. That should depend on the precise facts of each case and relevant provisions of the domestic laws.

Conclusion

Website-blocking injunctions have become a more familiar and useful tool in the battle between the intellectual property right-holders and infringers. Intermediaries such as ISPs may not resist these website-blocking orders, although they usually insist that an order from court is in place in order to safeguard themselves such as complaints by third parties. The UK Supreme Court has clarified that intellectual property right-holders must take into account the costs of such enforcement into their own budget and cannot seek to shift part of it to the legally innocent ISPs.

Given that it will become more costly for right-holders to seek such injunctions against ISPs, in case of sighting of websites selling counterfeit products, right-holders could firstly contact the relevant ISP, notify them of the infringement and request details of the associated costs of compliance. This may help them to decide whether to seek an injunction though it may be open to dispute whether the compliance costs to be charged by ISPs are reasonable or not.

 

For enquiries, please contact our Intellectual Property & Technology Department:

E: ip@onc.hk                                                                        T: (852) 2810 1212

W: www.onc.hk                                                                    F: (852) 2804 6311

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Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.
Published by ONC Lawyers © 2018