In the recent case of Cartier International AG & Ors v British Telecommunications Plc & Anor [2018] UKSC 28 the Supreme Court has said that trademark holders must indemnify Internet Service Providers (ISPs) for the implementation costs connected with complying with website blocking-injunctions.

Background

The Internet is used as a platform for individuals or groups of cybercriminals aka “pirates” to distribute music, printed material, films, and counterfeit goods. Their distribution network is worldwide and transactions are carried out anonymously, via illegal websites, some of which are accessed through the impenetrable “dark web”.

Whilst anti-cybercrime agencies continue to fight an ever growing and sophisticated network of cybercriminals, the Court Injunctions are being obtained by high-profile companies to prevent access to websites that infringe upon copyright and trademarks.

Website-Blocking Injunctions

In recent years, the Court has developed a type of injunction requiring ISPs to block access to websites that breach intellectual property rights. Website-blocking injunctions require ISPs to block access to targeted websites. These injunctions originate from a well-established tradition of English Law, namely that an innocent party can be compelled to assist a victim whose rights have been infringed by a wrongdoer. For example, the innocent parties may be compelled to assist in blocking bank accounts or by providing information.  In practice, an intermediary (such as an ISP) ordered to assist is entitled to be indemnified for his costs in complying with such an order.

Judgment

The Supreme Court considered the above principle in the context of website-blocking injunctions and EU Law relating to the protection and enforcement of intellectual property rights.

The question asked of the Supreme Court was:-

“When an injunction is obtained against an innocent intermediary to prevent the use of his facilities by wrongdoers for unlawful purposes, who should pay the cost of complying with the order”.

The leading Judgment was given by Lord Sumption and the Supreme Court held that, in principle, trademark holders should indemnify ISPs for complying with a website-blocking injunction. This was the first case concerning an order to protect a trademark.

The Respondents were three German or Swiss companies belonging to the Richemont Group. They design, manufacture and sell luxury goods such as pens, jewellery and watches under registered brand names that include Cartier, Montblanc and IWC.  The Appellants were the five largest ISPs servicing the UK.

In arriving at its Judgment, the Court considered the following:-

  1. ISPs are not themselves guilty of any infringement of trademark. ISPs provide an interconnection service but have no editorial control over material on websites and, due to strict EU Laws, do not monitor content. They are “innocent intermediaries” whose facilities have been used by pirates to pursue an illegal trade without any active involvement on their part. Innocent parties are often required to assist victims in relation to wrongful conduct by others, but are not expected to do so at their own expense. The Court found that there was no principled reason to depart from that position when it came to website-blocking injunctions.
  2. The ISPs costs of complying with the website-blocking order were relatively modest, so as not to offend the broad EU Law the requirement that any remedy should be fair, proportionate and not unnecessarily costly. Importantly, the Court held that requiring rights-holders to indemnify ISPs would not act as a bar to them enforcing their trademark rights.
  3. The Respondents tried to argue that ISPs indirectly benefit from the pirate trade because it boosted the volume of internet traffic due to the appeal of the websites subject to the Injunction. The Respondents identified approximately 46,000 websites selling unauthorised copies of their branded goods products. But the Supreme Court rejected this argument and held that the Respondents, as trademark holders, obtained the Website Blocking Injunction for the sole purpose of defending their own commercial interests against internet pirates. ISPs have no legal responsibility to bear the trademark holder’s costs of defending its rights, or to pay a contribution to these costs, which should be borne by the infringers themselves.

Summary and Conclusion

The Appellants were allowed their disputed implementation costs connected with the website-blocking injunction. They were ordered to pay the Respondents’ litigation costs because they had made the litigation a test case and had strongly resisted the Respondents’ application.

An important feature of the Supreme Court’s decision was that the ISPs were legally innocent. However, the decision may have been different if the ISPs were found to have participated in the infringement either through hosting or caching the illegal websites.

The implications of this Judgment affect both ISPs and rights-holders. The latter may avail themselves of a website-blocking injunction to protect their trademark however they must bear the implementation costs of the injunction where the ISP merely provides a network and is therefore legally innocent as opposed to actively participating in the infringement.   

At Myerson, our expert Dispute Resolution team can advise on claims such as trademark infringement and other types of intellectual property claims such as breach of copyright, registered designs and patents.  Our expert Corporate Commercial team can advise on non-contentious aspects of intellectual property so you can consider how best to protect your rights.  If you would like to speak to one of our specialist IP solicitors, please contact us on 0161 941 4000 or email us at lawyers@myerson.co.uk

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