There has been an important decision in relation to the anti-counterfeiting case Cartier & Others v. BskyB & Others, which was covered at the Trade Mark Updater session. The brand owner Claimants succeeded in obtaining a blocking injunction against the Defendant Internet Service Providers (“ISPs”). We set out the main important points, in case of interest.
What is the headline point?
Brand owners (the Claimants: Cartier, Montblanc & Richemont) were successful in obtaining an order against the ISPs (the Defendants: BskyB, BT, EE, Talktalk & Virgin Media) to block access to specified illegal websites selling counterfeit goods.
Why is this decision important?
The decision is noteworthy because it is the first time that the Court (High Court of England & Wales) has granted an order of this kind. The order requires the blocking of access not only to the Target Websites, but also to their domains, sub-domains and any other IP address or URL notified to the Defendants. In this way, the rightholders are able to respond to circumvention measures adopted by the operators of the Target Websites which involve changing IP addresses or URLs. The Court considered that the injunction should be in place for a limited period – provisionally, two years.
In making this decision, the Court concluded that, once an ISP becomes aware that its services are being used by third parties to infringe an intellectual property right, it becomes subject to a duty to take proportionate measures to prevent or reduce such infringements even though it is not itself liable for infringement.
The Court stated that anybody affected by the injunction (be it the Defendants or a subscriber to the ISPs) may make an application to discharge or vary the order.
What is the legal basis for the application?
The Court gave the order pursuant to Section 37(1) of the Senior Courts Act 1981 which provides the following:
“The High Court may by order (whether interlocutory or final) grant an injunction…in all cases in which it appears to be just and convenient to do so”.
In doing so, the Court considered that the blocking order sought could be made under this provision to stop trade mark infringement in compliance with Article 11 of the Enforcement Directive which provides the following:
“…Member 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…”
According to CJEU case law, Article 11 was not limited to bringing infringements to an end but extended to preventing further infringements. However, the Court must be satisfied that any injunction to prevent infringement is proportionate and that it strikes a fair balance between the protection of intellectual property rights and protection of the fundamental rights of individuals who are affected by the injunction (emphasis added).
Why did the Court consider that a blocking measure would be appropriate?
The ISPs argued that there were alternative measures which should have been pursued before making the application. Upon careful consideration of each of these measures, the Court concluded that there was no equally effective but less burdensome measure available. The effectiveness of a number of these measures were considered and the Court’s finding on the viability of these is summarised in an addendum below. The Court also had the benefit of reviewing evidence showing that blocking orders in copyright cases had been effective.
Overall, the Court ruled that a blocking order was proportionate, having balanced the likely costs burden on the ISPs against the likely efficacy of the blocking measures and the consequent benefit to the Claimants.
Who bears the Costs?
The Court considered that the applicant (usually the brand owner) for such an order should pay for the costs of any unopposed application, and the costs for monitoring infringing activity.
The ISPs should generally bear the costs of implementing the blocking measures including updates, but in some cases it may be appropriate for the applicant to make a contribution.
- A blocking order is potentially available against ISPs particularly where the websites in question deal in counterfeit goods. Such blocking order is powerful because it can tackle future attempts by operators to shift their business over to another domain.
- Brand owners should carry out reasonable measures to stop counterfeiting activity before resorting to Court for a blocking order. The Court in this case criticised the brand owners to some degree for not implementing some of the alternative measures which was likely to materially reduce infringing activity.
- The order was relatively easily made in this case because the Target Websites were selling only counterfeit goods. If the websites had also offered lawful goods/grey goods/otherwise TM infringing goods then the order is likely to have been more difficult to obtain. In such cases, it would be imperative to show that those alternative measures were taken but had not yielded a satisfactory outcome.
- Before making an application to the Court for an order against ISPs, the ISPs must be put on notice (the Court seems to accept that a notice by way of an email was sufficient, but this ought to be caveated with the precaution that the email needs to have been sent to the correct personnel within the ISP entity in question).
Read the judgment. This decision may be appealed.
There were a number of alternative measures available to the Claimants, some of which the Court considered to be worth pursuing and some criticism was levelled against the Claimants for not attempting those. The Court’s view on these measures are summarised below.
- Action against the operators behind Target Websites: The Court remarked that it is usually difficult to identify the real operators of such websites and that attempts to restrict their activities are rarely effective. Accordingly, in the circumstances of the case, this route was not a realistic alternative measure.
- Notice and Takedown by hosts – The Court considered that making enquiries with the hosts (which, in this case were reputable hosts) may have been effective in the first instance. However, it accepted that the “almost invariable response” to a successful takedown would be for the operator to move the website to a different host, possibly offshore or in a non-Western jurisdiction. Accordingly, this route was unlikely to provide the answer to the problem.
- Payment freezing – It may have been possible for the Claimant to ask the payment processors to freeze the accounts used by the operators, which may have had the added advantage of having cross-border effect. Although this measure may help disrupt the Target Websites’ business to some extent, the Court accepted that the infringing business could still continue, for example by shifting to other payment methods such as bank transfer. Furthermore, such a measure would have no effect on the Target Websites which would be allowed to remain.
- Domain name seizure – This measure was not effective as the operator could simply create a new domain name to resume its business.
- De-indexing – The de-indexing of Target Websites from search engines was likely to be effective, as consumers customarily identified sites of this nature by using search engines. However the Court accepted that search engine providers (such as Google) would be generally unwilling to de-index websites without a court order. In any event, the availability of de-indexing orders on the basis of websites perpetrating intellectual property infringements was at present uncertain. Furthermore, consumers would still be able to access sites if the relevant URLS were shared via social media or spam emails.
- Customs seizure – The effectiveness of this measure was limited given that it had no effect on the Target Websites themselves, and that many of the counterfeit items were delivered to customers direct in small parcels. This point was demonstrated by the fact that the Claimants were able to successfully obtain test purchases despite putting in place notices with Customs.