The High Court1 has recently granted Richemont a blocking order requiring the five largest ISPs in the UK to prevent access to various third party websites from advertising and selling goods which infringe Richemont's trade mark rights. This was the first time that such a blocking order had been sought against ISPs on the basis of trade mark infringement anywhere in the EU (other than, perhaps, in the Danish case of Home v Telenor).
The decision also recognises that counterfeiting is a very serious problem, and in effect, prefers the rights of trade mark owners to combat the issue over the rights of the ISPs (and, to an extent, internet users).
Counterfeiting is extremely prevalent and so effective measures to restrict the supply of counterfeits are to be welcomed. In 2014, the European Commission published its Report on EU Customs Enforcement of Intellectual Property Rights: Results at the EU Border which recorded that in 2012 customs authorities at the external borders of the EU seized a total of over 39.9 million articles, representing a market value of almost €900 million. The corresponding figures for 2013 were 35.9 million articles and €768 million.
ISP blocking orders now provide trade mark owners with another option, but other effective measures still need to be developed and deployed to try and stem the tide of counterfeits and related websites.
The Claimants (collectively, "Richemont") own (and have registered trade marks for) a large number of luxury brands, including CARTIER, MONTBLANC and IWC.
Richemont became aware of certain third party websites, includingwww.cartierloveonline.com, www.iwcwatchtop.comand, and www.montblancopensonlineuk.com ("Target Websites") advertising and selling counterfeit goods.
Richemont made an application to the High Court seeking an order requiring the five main retail internet service providers ("ISPs") in the UK, namely Sky, BT, EE, Talk Talk and Virgin, who between them have a market share of 95% of UK broadband users, to block, or at least impede, access by their respective subscribers to the Target Websites, all of which had infringed Richemont's trade mark rights.
Legal basis for the blocking order
Blocking orders, such as the one sought by Richemont, have been made by the Court over the last three years pursuant to section 97A of the Copyright, Designs and Patents Act 1988 ("CDPA"), which implements Article 8(3) of the Information Society Directive. Section 97A expressly states that the High Court shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright.
Blocking orders of this type have been successfully obtained by film studios, record companies and the FA Premier League.
As there is no analogous provision under UK trade mark law, Richemont asked the Court to rely on its inherent jurisdiction to grant an injunction where it is "just and convenient to do so", as recognised by section 37(1) of the Senior Courts Act 1981.
This was because the UK had not in fact implemented Article 11 of the IP Enforcement Directive and in particular the provision that "Members States shall also ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right…".
The Judge noted that there are certain "threshold conditions" that must first be satisfied in order for a blocking order to be granted in a trade mark case:
- The ISPs must be 'intermediaries' within the meaning of the third sentence of Article 11 of the Enforcement Directive - this was not in dispute in this case.
- Either the users and/or the operators of the website must be infringing the claimant's trade marks - again, this was not in dispute in this case.
- The users and/or the operators of the website must use the ISP's services to do that. The Judge said that the operators of the Target Websites had been infringing Richemont's trade marks by placing on the internet advertisements and offers for sale which were targeted at UK consumers. In this respect, the Judge contended that the ISPs had an essential role, since it is via the ISP's services that the advertisements and offers for sale were communicated to 95% of broadband users in the UK. The Judge also made it clear that it was immaterial that there was no contractual link between the ISPs and the operators of the Target Websites.
- The ISPs must have actual knowledge of this. Richemont had sent the ISPs emails attaching two schedules, one containing information about its trade marks and the other information about the test purchases from each of the Target Websites. So knowledge of the infringement was not in dispute; in any case, the ISPs had the requisite knowledge as a result of having been served with the evidence in support of the blocking order injunction application itself.
Additional satisfying criteria
After deciding that the threshold conditions had been satisfied, the Judge went on to consider that the relief must:
- be necessary, but this did not mean that a brand owner has to show that a blocking order is indispensable for enforcing its trade mark rights;
- be effective, but this did not mean that a brand owner has to establish that the relief it seeks is likely to reduce the overall level of infringement of its rights;
- be dissuasive (ie the remedies granted against the defendant should dissuade third parties from infringing in the future);
- not be unnecessarily complicated or costly;
- avoid barriers to legitimate trade: the measures targeted by the ISP must be strictly targeted so that they do not affect users who are using the ISP's services in order lawfully to access information;
- be fair and equitable and strike a "fair balance" between the applicable fundamental rights;
- be proportionate: the Judge specifically noted the following factors when considering proportionality:
- The comparative importance of the rights that are engaged and the justifications for interfering with those rights. As the Target Websites were exclusively engaged in infringing activity, the operators had no right which required protection. So the key consideration was the impact on the lawful internet users. On this point the Judge said that if the Order was properly targeted, and had sufficient safeguards built in, then that should mean that such users would be unaffected;
- The availability of alternative measures which are less onerous: other options (some of which Richemont had exhausted) include notice and takedown by hosts, payment freezing, domain name seizure, de-indexing and customs seizure. However, the Judge was not persuaded that any of these measures would be equally effective as a blocking injunction, but less burdensome with the effect that Richemont's application should be rejected on that ground alone, albeit it was one of the factors to be considered for proportionality;
- The efficacy of the measures which the Orders require to be adopted by the ISPs, and in particular whether they will seriously discourage the ISPs' subscribers from accessing the infringing websites;
- The costs associated with those measures, and in particular the costs of implementing the measures;
- The dissuasiveness of those measures (ie the threat of a blocking order injunction);
- The impact of those measures on lawful users of the internet: the Judge considered that it should be possible to target the blocking so that lawful users are not adversely affected; and
- The substitutability of other websites for the infringing websites (ie there is nothing to stop the operators of the Target Websites from setting up new infringing sites).
The Judge considered that proportionality was a key issue, in particular whether the likely costs burden on the ISPs is justified by the likely efficacy of the blocking measures and the benefit to the trade mark owner, compared against the other options available. In reaching his decision that a blocking order injunction should be granted, the Judge noted that: "the Orders are proportionate and strike a fair balance between the respective rights that are engaged, including the rights of individuals who may be affected by the orders but who are not before the Court". The Judge also built in a number of safeguards (largely following submissions made by the Open Rights Group which had acted as an intervener in the case on behalf of potential third parties affected by the order) such as (i) users can apply to vary or discharge the blocking orders; and (ii) more information should be provided as to the blocking orders on the relevant holding webpage. We can expect to see such safeguards in future blocking orders, whether for trade mark or copyright infringement reasons.
Likely impact on future blocking orders
There is no doubt that more brand owners will now apply for these types of blocking orders, both before the English courts and other EU courts. The blocking orders will most likely be sought in relation to high profile or high volume counterfeit websites, or where websites are hosted outside of the EU, the US and other countries where notice and take down requests are usually complied with. The costs to brand owners of obtaining such blocking orders will likely provide a potential control on the number of such applications and resulting blocking orders. Trade mark owners will still continue to use other methods of combatting counterfeits and associated websites, including notice and take down requests, domain name recovery, contacting registrants, de-indexing requests, custom seizures, etc, but blocking orders provide a useful, additional option.
Likely impact on ISPs
There will be additional administrative and costs burdens on ISPs resulting from the decision. As well as copyright infringement, ISPs can now be put on notice of websites infringing a party's trade marks (or other IP) and ultimately be required to block access to them. ISPs can therefore expect that a large number of notices will be sent by trade mark owners putting them on notice of infringing websites. The costs of making the Court applications to block the websites will be borne by the trade mark owners but the costs of implementing the blocking orders will be borne by the ISPs. As the decision recognises, the ISPs have already invested in sophisticated technology that allows them to block access to websites and so the incremental cost per website is unlikely to be significant. The aggregate cost burden across a large number of websites, with which the ISPs were particularly concerned, could however be substantial over time - Richemont alone had identified a very large number of potentially infringing websites, though not all will be addressed through blocking orders (the legal costs alone would be prohibitive). Whilst this concern was acknowledged, the Court took comfort from the fact that large numbers of copyright blocking orders had not been sought over the preceding 3 years.
This decision is a great outcome for brand owners, which provides them with a significant new weapon in their fight against websites that advertise and sell counterfeits. Whilst the sheer volume of online counterfeit activity means that requiring ISPs to block specific websites cannot eradicate the problem, brand owners can use blocking orders to target the worst offending sites.
For ISPs, this decision requires them to further restrict what can be accessed by users of their services. Whilst it was recognised that this does place additional burdens on ISPs, the decision sets the standard that (at least currently) such burdens are proportionate and strike a fair balance between the rights of the brand owners, the ISPs and internet users.
This article was first published in the December 2014 issue of E-Commerce Law & Policy