Brand owners can now seek injunctions against ISPs requiring them to block access to websites selling counterfeit goods
At a time where global trade in counterfeit and pirated goods is worth nearly half a trillion dollars a year (according to a 2016 report by the OECD and EUIPO), it has never been more important for brand owners to have effective means by which to enforce their rights. This is particularly so for brand owners in the fashion and luxury brands sector, where (according to the EUIPO) almost 10% of lost sales in the EU marketplace are attributable to counterfeit clothing, footwear and accessories.
The relative decline of the high street and rise in e-commerce means that counterfeiting is now a problem that is particularly prevalent in an online context. Brand owners have a range of online anti-counterfeiting methods at their disposal, and retail platforms such as eBay have well-established online notice and takedown procedures. However, these methods have their limitations and it can be more difficult to enforce rights against independent counterfeit websites. For example, brand owners can use domain name proceedings (including Nominet's DRP for .uk websites or WIPO's UDRP for .com and other sites), but the ability to carry out such action relies on the website using a domain name that itself infringes the brand owners trade mark; it cannot rely on the content of the website alone. Brand owners can also request the third party host of a counterfeit product website to deactivate it – but this does not prevent the counterfeiter from then reactivating the site consecutively with any number of other hosts.
Of increasing interest to brand owners is a new method of UK enforcement which requires ISPs (Iinternet service providers) to block access by online consumers to counterfeit product websites that infringe their trade marks – known as website blocking injunctions.
Blocking injunctions against ISPs are not a new phenomenon and have been awarded in the past in the UK, but specifically in relation to copyright infringement for pirated goods like movie and music downloads. There is an express provision in the Copyright, Designs and Patents Act 1988 providing statutory authority for UK Courts to grant injunctions against service providers where a provider has actual knowledge of another person using their service to infringe copyright. Following the first UK case to be brought in 2011 by a group of US movie studios against BT to block access to the Newzbin website, a recent example is the Pirate Bay case, where the High Court granted injunctions against the five main UK ISPs requiring them to block access to the notorious movie file-sharing website.
There is no equivalent statutory provision for such injunctions in the context of counterfeit products websites, which generally amount to trade mark – not copyright – infringement. However, following the Richemont case, such injunctions are now also available to brand owners.
Richemont v. Sky, BT, EE, TalkTalk and Virgin
This case concerns an application made by the Richemont group (owner of the Cartier and Montblanc brands, among others) for an injunction against the five main English ISPs (Sky, BT, EE, TalkTalk and Virgin) requiring them to block access by their customers to certain websites which were advertising and selling counterfeit Cartier and Montblanc goods.
Although there is no express statutory provision allowing the UK Courts to grant such an injunction in relation to trade mark infringements, the High Court – and, on appeal by the ISPs, the Court of Appeal - relied on the discretion in section 37(1) of the Senior Courts Act 1981, to grant an injunction where it appears "just and convenient to do so". The Courts awarded the blocking injunction and the ISPs have been required to block access by their customers to the infringing websites.
The case confirmed that blocking injunctions are available in relation to trade mark infringement. It confirmed that UK Courts have the power to grant blocking injunctions in the context of trade mark infringement, provided that certain threshold conditions are met:
- the ISPs must be intermediaries;
- the operators of the target websites must be infringing the brand owner's trade marks;
- the operators of the target websites must use the ISPs' services to infringe; and
- the ISPs must have knowledge of this.
If these thresholds are met, various principles must then be taken into account when considering whether to grant the blocking injunction. In particular, the injunction must be necessary, effective, proportionate, dissuasive and not unnecessarily complicated or costly. It must also avoid barriers to legitimate trade and be fair and equitable.
In the Richemont case, it was held that the criteria had been met and the blocking injunction was granted. In addition, the Court of Appeal upheld the High Court's finding that the ISPs, rather than the brand owners, should generally be responsible for the costs of implementing the blocking order. The Court held this was part of the costs of carrying out the ISPs' internet access businesses, noting that ISPs are commercial enterprises which make a profit from the provision of the services which the counterfeit website operators use to infringe brand owners' rights.
The Court also took into account that the number of blocking order applications that had been filed in relation to copyright infringement following the first Newzbin case was lower than had been envisaged, and there has not been a flood of applications. However, the Court acknowledged that the position on costs should be kept under review. If the number of applications significantly increased, the Court held it might be less inclined to require the ISPs to be fully responsible for the implementation costs.
Following the Court of Appeal's decision, the ISPs have reportedly been granted permission to appeal the case to the UK Supreme Court, but only in relation to the question of whether the ISPs or brand owners should bear the implementation costs. That issue, therefore, remains to be decided.
Following the Court of Appeal's decision, brand owners will generally have to bear the costs of the Court application itself, if it is unopposed. However, if the ISPs do not take a neutral position and contest such applications, they may be ordered to pay the brand owner's costs.
Will blocking injunctions become fashionable?
While this development is good news for brand owners, a blocking injunction also has its limitations, in addition to the potential costs liabilities above.
The injunction only blocks access to the websites by online consumers who rely on the ISPs' broadband services - it does not eliminate the website altogether, (although the five main ISPs have a market share of around 95% of UK broadband users.) Further, it only blocks access to the website in the UK, whereas internet coverage and access is worldwide. A more globally effective anti-counterfeiting strategy may, therefore, require brand owners to seek similar injunctions in other jurisdictions, to the extent that other countries catch on and provide brand owners with similar enforcement mechanisms. In this respect, the French Supreme Court has recently held that ISPs and browsers in France can be legally bound to block infringing content and pay for the costs of such injunctions. The extent to which this remedy will become available in other jurisdictions remains to be seen.
A further limitation is that a blocking injunction involves the additional time and cost of contacting the ISPs and, if necessary, applying to the Court for an injunction. It will be interesting to see whether ISPs will start looking to help brand owners proactively, by acting on blocking requests without the need for Court orders and adopting procedures which will allow brand owners to flag counterfeit sites for blocking more quickly and efficiently.
Despite its limitations, in appropriate cases, the blocking injunction is likely to become an increasingly important tool in the brand owner's growing armoury in its fight against counterfeits.