Two recent cases highlight the increasingly active role ISPs are being forced to play in global responses to online IP infringement.
The cases are consistent with a broader trend that is seeing ISPs face increasing pressure to assist rights holders in their efforts to curb widespread instances of IP infringement in the online environment.
Earlier this year Australian ISPs publically declared their willingness to join the fight against online copyright infringement, by announcing that they “stand ready to engage in good faith discussions with rights holders on a potential industry-agreed scheme to combat infringement”.
Despite such public assurances, it would seem many ISPs are reluctant to truly “join the cause” in assisting rights holders.
While legislative changes are on the agenda, progress is slow and, in the meantime, rights holders have forged ahead by asking courts to intervene to compel greater ISP participation. The two cases below are recent examples of this movement.
Case 1: UK court orders ISPs to block access to websites selling counterfeit goods
What happened and why is it important?
The first case concerns a UK High Court decision in October 2014 where a luxury brand owner obtained an injunction requiring ISPs to block access to websites advertising and selling counterfeit luxury goods (Cartier International AG & Ors v British Sky Broadcasting Ltd & Ors  EWHC 3354).
This “blocking-injunction” is the first of its kind in the UK and paves the way for similar such orders to be sought by brand owners to force ISPs to play an active part in preventing online trade mark infringement.
The case involved the owners of the Cartier, Montblanc and IWC brands (collectively “Richemont”) taking court action against the five main UK ISPs, which between them have a 95% share of the UK retail broadband market.
While the Richemont case is ground breaking from a trade mark perspective, UK courts have been granting blocking-injunctions in copyright infringement cases for a number of years. This has resulted in UK ISPs already blocking access to websites used by UK consumers to download pirated films, TV shows and music.
The availability of blocking-injunctions for copyright infringement cases in the UK stems from legislative provisions introduced in 2011, which give UK courts explicit powers to grant blocking-injunctions against ISPs that have actual knowledge of another person using their service to infringe copyright (see section 97A of the Copyright, Designs and Patents Act 1988 (UK)). In contrast, UK trade mark legislation does not provide courts any powers to grant blocking-injunctions.
So how was Richemont able to obtain one in the recent UK High Court case?
The basis for blocking-injunctions in UK trade mark infringement cases
Richemont argued that the UK High Court had the power to order a blocking-injunction against the ISPs based on the court’s general powers to grant injunctions in cases where it is “just and convenient” to do so.
Agreeing with Richemont on this point, the High Court held that it indeed had a general power to grant blocking-injunctions in trade mark infringement cases, despite the absence of any such powers under UK trade mark legislation.
The court also found that it had a principled basis upon which it could exercise this general power in the manner sought by Richemont. The court referred to an earlier UK case in which a differently constituted court had exercised its general power to make “publicity orders”.
Significantly, the publicity orders had been granted without any finding of infringement being made. This led the court in Richemont to reject a key argument advanced by the ISPs, where they submitted that a blocking-injunction should not be ordered since the ISPs themselves had not infringed any of Richemont’s legal or equitable rights.
Could blocking-injunctions happen in Australia?
Australian courts have no specific powers to grant blocking-injunctions to force law-abiding ISPs to block access to websites used by third parties to commit online IP infringement.
The Australian Federal Government has flagged legislative changes which, if enacted, would give courts such powers in copyright infringement cases. In a discussion paper on online copyright infringement released in July 2014, the Australian Government referred to the existing UK copyright legislation on blocking-injunctions before concluding that:
“[a] similar provision in Australian law could enable rights holders to take action to block access to a website offering infringing material without the need to establish that a particular ISP has authorised an infringement. If adopted, any proposed amendment would be limited to websites operated outside Australia as rights holders are not prevented from taking direct action against websites operated within Australia.”
Regardless of future statutory reforms, Australian rights holders could potentially rely on existing laws to seek blocking-injunctions in much the same way as Richemont did in the UK.
Like the UK High Court, some Australian courts are invested with general powers to grant injunctions in cases where it is “just and convenient” to do so. For example, the Supreme Court of the State of Victoria has statutory powers to this effect under section 37(1) of the Supreme Court Act 1986 (Vic).
However, it is doubtful whether an Australian court would exercise its discretion to grant a blocking-injunction given the unique landscape in which Australian ISPs operate.
For example, an Australian court would be reluctant to grant a blocking-injunction where this would place a significant financial and operational burden on ISPs given that they would invariably need to implement new systems and processes to comply with blocking-injunctions.
This can be contrasted with the Richemont case which was decided at a time when UK ISPs already had systems in place to enable them to comply with blocking-injunctions due to the earlier UK copyright cases.
It remains to be seen whether any rights holders will seek blocking-injunctions in Australia on the back of the Richemont decision.
The UK High Court has said that its decision “is likely to be followed by other applications by Richemont and other trade mark owners, both [in the UK] and in other countries”. If these prophetic words are anything to go by, it may only be a matter of time before Australian courts are asked to look at the issue.
Case 2: Film makers take action against Australian ISPs to obtain details of customers accused of infringing copyright
What happened and why is it important?
The second case involves an Australian Federal Court action commenced in October 2014 by the makers of the award-winning Hollywood film Dallas Buyers Club (“DBC”) against a number of Australian ISPs.
The case is ongoing with a final hearing looking likely for early next year.
DBC has applied to the court for orders that would require the ISPs to hand over details about their customers through a process known as “preliminary discovery”. The customers in question are said by DBC to have illegally downloaded pirated copies of Dallas Buyer Club using the popular Bit Torrent file sharing platform.
DBC is claiming that it needs the ISPs’ customers’ details (noting it only has raw IP addresses at this stage) to enable it to take legal action against those customers directly.
In response to DBC’s application, the largest ISP involved, iiNet, has come out swinging issuing a public statement that it intends to defend the case.
On one view iiNet’s position hardly seems surprising given its impressive track record for fending off court action by Hollywood film makers (it won a High Court case in 2012 against the major Hollywood movie studios).
From a legal perspective however, it is doubtful that iiNet will be able to succeed in opposing DBC’s application for preliminary discovery.
iiNet’s apparent basis for opposing DBC’s application
iiNet has said it is defending the case due to “serious concerns” about DBC’s intentions. These concerns focus on the questionable practices DBC has employed overseas in previous dealings with consumers accused of illegally downloading its film.
These practices – dubbed “speculative invoicing” – are said by iiNet to involve DBC sending intimidating letters of demand to subscribers seeking significant sums for an alleged infringement, and threatening court action and high monetary penalties if those sums are not paid.
It seems likely iiNet will argue that DBC’s preliminary discovery application should be refused on discretionary grounds, in light of DBC’s questionable practices overseas.
DBC will no doubt argue that it has a strong prima facie case for copyright infringement against each of the relevant ISP customers. Assuming DBC has sound evidence to support a prima facie case (or cases), it is unlikely the court will be quick to deny DBC the opportunity to legitimately enforce its rights. It seems more likely than not that the court will order the ISPs to provide DBC at least some of the customer details DBC is seeking.
For the ISP industry generally, this is certainly a case to watch.