Cartier and the Court of Appeal: we like blocking injunctions!

The UK’s world-leading blocking injunction jurisdiction has been given a thumbs up by the Court of Appeal, paving the way for further efforts by rights owners to block UK consumers’ access to copyright and trade mark infringing websites, including websites selling counterfeits.

Context

In a relatively rare show of judicial activism, since 2011 the UK courts have been at the forefront of developing a jurisdiction by which IP rights holders can force ISPs, that is those who provide the public with internet access, to block access to websites which infringe copyright (eg, The Pirate Bay) or trade marks (eg, sites selling counterfeit luxury goods).

In 2014, Richemont, owner of Cartier and other luxury brands, sought for the first time blocking injunctions against websites infringing its trade mark rights by selling counterfeit products into the UK. Mr Justice Arnold granted the injunctions, notwithstanding that there was no specific power in English law to do so, only a general power of the courts to grant injunctions where it was just to do so.

Court of Appeal upholds blocking injunctions

The Court of Appeal (Cartier v BSkyB [2016] EWCA Civ 658) has today applauded and upheld Arnold J’s judgment on all its points. The Court accepted that ISPs were not wrongdoers, but held that “Justice requires they must co-operate in righting the wrong if they unwittingly facilitated its perpetration” which, by providing internet access through which their users could buy counterfeit Cartier (and other Richemont branded) products online, they did.

Kitchin LJ, giving the leading judgment, noted that although old authorities might have suggested that the court’s jurisdiction to grant injunctions was constrained to specific categories, things had moved on and the court was able to grant injunctions in new categories when this course appeared appropriate.

The ISPs were “inevitable and essential actors in [the] infringing activities” of the operators of the websites selling counterfeit goods. Kitchin LJ held that Article 11 of the Enforcement Directive, which provides for injunctions to be granted against intermediaries in respect of infringements of all IP rights, but which was not expressly enacted into English law, provided a “principled basis for extending the practice of the court in relation to the grant of injunctions” to the present case.

Having established that such injunctions could be granted, the Court of Appeal essentially confirmed Arnold J’s analysis of both the conditions to be satisfied for such an injunction and the various principles to be taken into account when deciding whether blocks should be granted in a particular case. The conditions included whether it was right to say that the infringers behind the counterfeit websites were “using” the ISPs’ services to infringe, a question the ISPs urged the Court of Appeal to refer to the Court of Justice of the EU. The Court felt the Court of Justice jurisprudence was clear, and answered the question in the affirmative without a reference.

The principles included that the blocks were necessary, effective, dissuasive, not unnecessarily complicated or costly, were not barriers to trade, were a fair balance of competing rights and were proportionate. On effectiveness, the court rejected the argument that Richemont was obliged to show that blocks would lead to an overall reduction in the level of infringement of their trade marks, considering the body of infringements as a whole.

The important question of costs: who pays?

One of the most hotly contested questions was, if blocking injunctions for trade mark infringement are lawful, who should pay for the cost of implementing them?

Both the High Court and Court of Appeal drew an analogy with the Norwich Pharmacal jurisdiction in concluding that blocking injunctions were lawful. A Norwich Pharmacal order is a form of disclosure order against a non-wrongdoing third party by which a potential claimant can obtain documents and information it needs to identify or otherwise pursue action against the wrongdoer. The standard costs position in such orders is that the applicant for the order covers the costs of the third party in complying with it.

Although the ISPs advanced “powerful” submissions in support of a costs award in their favour, the Court of Appeal disagreed by a majority of two to one. Both Kitchin and Jackson LJJ felt that the implementation costs were a quid pro quo for ISPs in return for the immunities from infringement claims and exception from monitoring they enjoy under the E-Commerce Directive. They were a cost of carrying on the internet access business. Briggs LJ dissented on this point, preferring the approach used for Norwich Pharmacal orders as well as Bankers Trust orders (orders requiring a bank to disclose the state of a customer’s account). He felt that costs orders in favour of the non-wrongdoer were “an obvious condition” of these types of injunction and that a cost order would be “well justified by the typical facts of a blocking order case”. However, majority rule prevailed, of course.

May battle commence?

This judgment provides a clear approval of the use of blocking injunctions to combat the infringement of any IP rights online, especially where traditional methods like notice and takedown prove inadequate because of the “whack-a-mole” nature of infringing sites. Indeed, there is an implicit acceptance in the judgment that this method, central to policing of the internet for several decades, is ineffective, and the approval of blocking injunctions signals a shift towards putting a greater burden on the internet gatekeepers, of whom only four companies now serve the vast majority of the fixed-line broadband market in the UK.

There are already more than 120 blocking injunctions in place, most of them against copyright infringers and brought by record and film companies, but the FA Premier League and book publishers have got in on the action. The number extends to more than 500 once proxies and mirror sites are factored in.

New opportunities will now arise, with other types of infringing website perhaps next in line for a block. Certainly more brand owners will look to them. The jurisdiction is not limited just to ISPs either, but in theory to all types of service provider, and they too may now be the recipients of blocking injunction applications.

It is possible that the ISPs will now appeal to the UK Supreme Court, and potentially make a further effort to have one or more questions referred to the Court of Justice.

Rapid response event

To discuss the implications of the judgment in more detail, Simmons & Simmons is teaming up with IPKat for a rapid response event to take place in the evening of Thursday, 28 July.

Speakers will include: Simon Malynicz QC (3 New Square), Lauri Rechardt (IFPI), Darren Meale (Simmons & Simmons) and Eleonora Rosati (IPKat).

The event will take place at our London office. More details to follow soon: save the date!

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