July 29, 2016
The UK Court of Appeal this month handed down its long-awaited decision in Cartier International AG and others v British Sky Broadcasting Limited and others  EWCA Civ 658, effectively paving the way for trade mark right-holders to bring website blocking injunction actions against internet providers who host infringing content.
Website blocking orders are now a familiar remedy sought in court, but until recently had only been done so in relation to copyright infringements – used in particular by film studios and record companies. Such blocking orders in relation to copyright are specifically provided for by statute, in particular s.97A of the Copyright, Designs and Patents Act 1988 (the “CDPA”) which implements article 8(3) of (EC) 2001/29 (the “InfoSoc Directive).
Cartier and others sought an order to require internet service providers (namely Sky, BT, EE, TalkTalk and Virgin Media, together the “ISPs”) to block their customers from accessing certain websites known to be advertising and selling counterfeits. This raised issues unfamiliar in trade mark matters, in particular because there is no statutory equivalent to s.97A in relation to trade mark infringements.
Nevertheless, in December 2014, Mr Justice Arnold at first instance held that the Court did have jurisdiction to make such orders, and further held that the ISPs should bear the cost of implementation and gave costs of the trial to the Claimants.
Does the court have jurisdiction?
The argument focussed principally around the decision of UK legislators not to implement the third sentence of Art 11 of (EC) 2004/98 (the “Enforcement Directive”) into national law which, if it had been implemented, would have given IP right-holders a general right to seek injunction against intermediaries used by third parties to infringe an intellectual property right. By contrast, UK legislators did do this for copyright owners, through implementing Art. 8(3) of the InfoSoc Directive into national law by amending s.97A of the CDPA. Therefore, to make the equivalent order for trade marks, Mr Justice Arnold instead relied upon the Court’s general discretion pursuant to s.37(1) of the Senior Courts Act, in which he held (regardless of whether under domestic interpretation, or interpreted in accordance with Art 11 of the Enforcement Directive) the court had such jurisdiction.
On appeal, the ISPs argued that the judge fell into error as he did not have a principled basis for making the order, as the ISPs are innocent of wrongdoing, they did not owe a duty to Cartier to prevent infringements and that s.37(1) does not confer a power to the courts to grant injunctions where none existed before.
Kitchen LJ, who gave the leading judgment, agreed that the ISPs were innocent of wrongdoing, but, as the operators require the services of the ISPs to sell their counterfeit goods, the ISPs are inevitable and essential actors in those infringing activities. Further, he thought it was clear that Article 11 of the Enforcement Directive does provide a principled basis for such injunctions, as it is established that national courts are required to construe national law in light of the wording and purpose of the EU directive (sometimes referred to as the Marleasing Principle).
Kitchen LJ held, and in doing so agreed with the judge, that the threshold conditions to make the order were satisfied in this case: 1) the ISPs were intermediaries; 2) the operators of the target website were infringing trade mark rights; 3) the operators were using the ISPs’ services to infringe; and 4) the ISPs had requisite knowledge.
Had the trial judge fallen into error when considering the key principles to be applied when making such orders? The Court of Appeal confirmed that several key principles must be satisfied to make such an order, including that the order must (i) be necessary, (ii) be effective, (iii) be dissuasive, (iv) not be unnecessarily complicated or costly, (v) avoid barriers to trade, (vi) be fair and strike a fair balance between fundamental rights, and (vii) be proportionate.
Considering whether this order will be effective, Kitchen LJ agreed with the trial judge that a right-holder does not need to show that blocking access to one website is likely to reduce the overall level of infringement, but it must at least have the effect of making access difficult and seriously discourage users from accessing it. However, proportionality may be at issue if there are many alternative websites.
Costs of implementation was a key factor in considering whether this order is proportionate, and Kitchen LJ largely agreed with the trial judge that the ISPs should bear the costs (with Lord Justice Briggs dissenting). The ISPs made several attacks on this point on appeal, but none were persuasive enough to sway the Court.
The courts must adapt as technology moves forward. In the case of trade marks, the legislators had left a gap, meaning there was one less enforcement tool available to proprietors who had identified that their rights were being infringed online. What makes this case interesting is that the court has found a way bridge the gap, principally using its own inherent jurisdiction. As Kitchen LJ said (referring to a previous case) “the courts have shown themselves ready to adapt to new circumstances to grant injunctions where it is necessary and appropriate to avoid injustice”.
Although the door is open for trade mark owners to seek website blocking orders, the remedy will not be appropriate in every circumstance. Ensuring the order will be effective and proportionate in the circumstances will be key considerations before applying. Further, there is still scope for the costs of implementation to be placed on the applicant in the future, which is something applicants should bear in mind. However, this is great news for trade mark owners looking to add an enforcement tool to their toolbox.
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