The High Court has granted orders requiring several internet service providers to block access by their subscribers to certain websites that advertise and sell counterfeit goods, a development that will be welcomed by owners of intellectual property rights.

What?

Cartier International AG and others v British Sky Broadcasting Ltd and others [2014] EWHC 3354 (Ch).

The claimants in this matter are the owners of a large number of UK registered trade marks, including ‘Cartier’, ‘Montblanc’ and ‘IWC’. The defendants comprised the following internet service providers (“ISPs”): Sky, BT, EE, TalkTalk and Virgin; who between them have a market share of 95% of UK broadband users. The claimants sought orders requiring the ISPs to block, or at least impede, access by their subscribers to six websites that advertised and sold replica goods, on the basis that the operators of the websites infringed the claimants’ trade marks.

The court granted website-blocking orders (the “Orders”) that were substantially in the form both sought by the claimants and has been granted in relation to copyright-infringing websites. This is an important development, as discussed below.

However, in light of this development, the court imposed certain safeguards against abuse. The Orders were granted subject to a safeguard permitting affected ISP subscribers to apply to the court to vary or discharge the Orders, and stipulated that this right was to be stated on the web page displayed to users trying to access the blocked websites, along with details of the parties that had obtained the relevant Order. In addition, the court stated that the Orders should contain a sunset clause, setting a period after which the Orders would cease to have effect, unless either the ISPs consent to them continuing, or the court orders that they continue.

So what?

The judgment has been considered by some to be a landmark ruling, as there is no specific domestic legislation that allows trade mark owners to seek website-blocking orders against ISPs that have knowledge of trade mark-infringing websites.

This avenue has been available for copyright owners, due to s97A of the Copyright Designs and Patents Act 1988, which implemented Article 8(3) of the Copyright Directive (2001/29/EC). In contrast, the UK has not passed any legislation to implement the third sentence of Article 11 of the Enforcement Directive (2004/48/EC), which extended the requirement of Article 8(3) of the Copyright Directive to all forms of intellectual property rights. This had been justified by the government by reference to section 37(1) of the Supreme Court Act 1981 (“SCA”), which they believed gave the court jurisdiction to grant the type of orders sought. Despite this justification, it was felt that there was a statutory gap leaving trade mark rights holders unable to seek and obtain website-blocking orders against ISPs.

In this case, the court considered whether or not it had jurisdiction to grant the orders sought, and decided that there was “no difficulty” in interpreting section 37(1) SCA as empowering the court to grant an injunction against an intermediary (such as an ISP) whose services are being used to infringe an intellectual property right, in this case numerous trade marks.

As well as deciding that they did indeed have jurisdiction to impose blocking orders, the court concluded that the claimants had a legitimate interest in preventing the infringing activity, that there was a public interest in preventing trade mark infringement, and that the imposition of an order would not impair the ISPs’ freedom to carry on business. The decision also considered in detail the alternative measures available to deal with trade mark infringement, and considered that, while blocking orders did not completely prevent the infringing activity, the decrease in the overall level of infringement in the UK as a result of these orders meant that it was a proportionate and effective measure.

Therefore this ruling would appear to herald the beginning of the end for infringers selling counterfeit goods via the internet, as well as providing a compelling assessment as to the efficacy of blocking orders in general, in order to protect all intellectual property rights holders.

However, the judgment contains an interesting discussion as to the potential costs for ISPs in implementing these blocking orders, and notes that the number of websites infringing trade marks far exceeds the number infringing copyright. The claimants themselves had identified 239,000 websites containing trade mark-infringing activity. Although the court considered that the implementation costs of blocking orders imposed on ISPs were small compared to the ISPs’ operating costs, it acknowledged that there was a risk that these implementation costs would now increase to much higher levels. The concerns raised in the judgment by the court in relation to costs hint that there may still be scope for ISPs to resist blocking orders in relation to trade mark infringement in the future.

Therefore, while this ruling is an important development for IP rights holders, it will be interesting to see how this judgment is applied in future cases.