It’s another website blocking injunction, but not as we know it….
On 17 October 2014, Mr Justice Arnold delivered his landmark judgment (spanning 266 paragraphs) in the case of (1) Cartier International AG (2) Montblanc-Simplo GMBH; and (3) Richemont International SA v. (1) British Sky Broadcasting Limited (2) British Telecommunications PLC (3) EE Limited (4) TalkTalk Teleco Limited (5) Virgin Media Limited and Open Rights Group . The Defendants (collectively “the ISPs”) were ordered to block, or at least impede, access to particular websites which advertised and offered counterfeit goods bearing the Claimants’ (collectively known as “Richemont”) marks.
This is arguably the first occasion where an application for a website-blocking order against internet service providers has been granted in order to combat trade mark infringement (as opposed to previous successful applications in relation to copyright) and as a test case, the detailed reasoning listed within the judgment is likely to be followed by other applications by trade mark owners within the EU.
The Richemont group are producers and retailers of luxury goods and they own a number of well-known brands, including Cartier, Montblanc and IWC. Cartier is well-known for its jewellery and watches, Montblanc for its writing instruments and IWC for its Swiss watches. To exploit their brands, the Richemont group owns a considerable number of registered trade marks, such as the word mark CARTIER, ‘Cartier’ in cursive script, the IWC word mark and the Montblanc device mark as shown below:
The infringing websites
The following websites (referred to in the judgment as the ‘Target Websites’) www.cartierloveonline.com, www.iwcwatchtop.com, www.montblancpensonlineuk.com, www.hotcartierwatch.com (this website however, went offline during proceedings), www.replicawatchesiwc.com, www.1iwc.com and www.ukmontblancoutlet.co.uk all advertised and sold counterfeit goods in the form of replicas. Some websites made it clear that they sold replicas, others did not. In each case, the Target Websites incorporated the brand name in its domain name and the home pages and other linked webpages displayed registered trade marks and images. The websites were targeted at (among others) UK consumers as evidenced by the use of sterling currency and the English language.
Richemont sought website-blocking orders against each of the ISPs, in order to block, or at least impede access by their respective subscribers to the six infringing Target Websites. The orders were essentially in the same format as the orders previously granted by the Court in previous copyright cases (such as Twentieth Century Fox v BT (Newzbin), Dramatico Entertainment v BskyB (Pirate Bay) and Football Association Premier League v BskyB) by virtue of section 97A of the Copyright Designs and Patents Act 1988 (CDPA 1988). The wording, however, was tailored to take into account the specific technologies employed by each ISP.
The High Court had to consider five key questions in determining the status of the application:
- Did the Court have jurisdiction to make an order of the kind sought (i.e. dealing with trade mark infringement as opposed to copyright)?
- If so, what are the threshold conditions which must be satisfied before making such an order?
- Are these conditions satisfied in the present case?
- If so, what are the principles to be applied in deciding whether or not to make such an order?
- When applying those principles, should such an order be made in the present case?
Jurisdiction and legislation
Since 2011, a series of orders have been made in the UK (as referred to above) requiring ISPs to block or impede access to websites infringing copyright pursuant to section 97A of the CDPA 1988. Section 97A (which implements Article 8(3) of The Information Society Directive (2001/29/EC)) states,
“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”.
The present case is unusual in that the application sought by Richemont was in order to combat trade mark infringement and not copyright infringement. However, there is no specific provision under UK trade mark law which allows trade mark owners to seek and obtain an injunction against ISPs as there is under the CDPA 1988 for copyright. The ISPs therefore argued that, as a consequence of this lack of specific legislation, the Court had no jurisdiction to make orders of the kind sought by Richemont.
Richemont however contended that despite the lack of a specific provision for seeking and obtaining injunctions relating to trade mark infringements, the Court did have jurisdiction to make such orders pursuant to a domestic interpretation of section 37(1) of the Senior Courts Act 1981 (SCA 1981) which provides,
“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 the alternative, Richmont argued that this section could and should be construed consistently with the third sentence of Article 11 of the Enforcement Directive on injunctions which states,
“…Member States shall also ensure that rightsholders 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 added complication that arose in respect of the third sentence of Article 11 (above) was that while most of the Enforcement Directive was transposed into national law primarily through the Intellectual Property (Enforcement, etc.) Regulations 2006 (SI 2006/1028), the UK did not take any specific steps to implement the third sentence above of Article 11 of the Enforcement Directive (even though the effect of this sentence is to extend the requirement imposed on member states by Article 8(3) of the Information Society Directive in relation to copyright to all forms of intellectual property rights). However, Richemont argued that section 37(1) of the SCA 1981 should be construed consistently with the third sentence above in accordance with the Marleasing principle i.e. the duty to interpret national legislation in a way to give effect to unimplemented EU law.
Having provided an in-depth analysis of the relevant legislation and examining further case law, Mr Justice Arnold concluded that not only did the High Court have jurisdiction in accordance with s37(1) of the 1981 Act to grant an injunction in this manner, but that the Court also had jurisdiction to grant a website blocking injunction against an ISP in a trade mark case. In the alternative, Mr Justice Arnold stated that if the Court did not have such a power through a purely domestic interpretation of s37(1) of the 1981 Act, then the section should be interpreted instead in accordance with Article 11 of the Enforcement Directive so as to confer such a power. Overall, the orders sought by Richemont were “prescribed by law” and “provided for by law”.
The High Court declared that similar threshold conditions must be satisfied for a website blocking injunction to be granted in a trade mark case as those that had been satisfied in the previous copyright cases. The conditions to be satisfied were: (a) the defendant ISPs must be intermediaries within the third sentence of Article 11 (above); (b) the users and/or operators of the Target Websites must be infringing the claimants’ trade marks; (c) the users and/or operators of the website must use the ISPs’ services to do that; and (d) the ISPs must have actual knowledge of this infringement.
Mr Justice Arnold confirmed that all these conditions had been satisfied: “the operators of the Target Websites are infringing the Trade Marks by placing on the internet advertisements and offers for sale which are targeted at UK consumers. The ISPs have an essential role in these infringements, since it is via the ISPs’ services that the advertisements and offers for sale are communicated to 95% of broadband users in the UK. It is immaterial that there is no contractual link between the ISPs and the operators of the Target Websites".
Mr Justice Arnold also considered seven principles proposed by the ISPs to be satisfied before granting the blocking-orders: (i) the relief must be necessary; (ii) the relief must be effective; (iii) the relief must be dissuasive; (iv) the relief must not be unnecessarily complicated or costly; (v) the relief must avoid barriers to legitimate trade; (vi) the relief must be fair and equitable and strike a “fair balance” between the applicable fundamental rights; and (vii) the relief must be proportionate.
In terms of proportionality, Mr Justice Arnold considered the following to be of particular importance: (i) the comparative importance of the rights that are engaged and the justifications for interfering with those rights; (ii) the availability of alternative measures which are less onerous; (iii) 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 Target Websites; (iv) the costs associated with those measures, and in particular the costs of implementing the measures; (v) the dissuasiveness of those measures; and (vi) the impact of those measures on lawful users of the internet.
The comparative importance of the rights engaged and the justifications for interfering with those rights
Mr Justice Arnold stated that Richemont had a legitimate interest in curtailing the websites’ infringing activity and that there was also a public interest in preventing trade mark infringement, particularly where counterfeit goods were involved. Mr Justice Arnold also confirmed that the ISPs’ freedom to carry on business would not be impaired by the orders sought by Richemont and that the orders would not interfere with the provision by the ISPs of their services to their customers. He went on to say that as for the freedom of internet users to receive information, this did not extend to a right to engage in trade mark infringement, particularly where it involved counterfeit goods.
Availability of alternative measures
It is Mr Justice Arnold’s in-depth analysis of potential alternative measures available to combat infringement, (instead of applying for a blocking order) which will be of great interest to many ISPs and rights holders alike in future cases. One of the ISPs’ main arguments was that Richemont had not done enough itself to combat the online infringement e.g. by taking direct action against the website operators themselves, and that there was a risk of overblocking i.e. that legitimate traders would have their access blocked. Mr Justice Arnold pointed out that Richemont had sent cease and desist letters to the named registrants of the domain names as identified by a WHOIS search. Unsurprisingly, however, the letters had been ignored. Mr Justice Arnold commented that since the registrants all had addresses outside the UK, many in China, “Richemont faced obvious difficulties of jurisdiction and/or enforcement if they were to attempt to bring proceedings against the registrants”. Also, registrants were not necessarily the actual operators of the Target Websites. Mr Justice Arnold went on to say that, “experience in the copyright context shows that it is frequently difficult to identify the real operators of offending websites and that attempts to bring proceedings against the operators are rarely effective”.
Accordingly, Mr Justice Arnold did not consider that to be a realistic alternative measure, nor did he consider other alternative methods explored to be effective, such as notice and take down by hosts, and payment freezing methods. Mr Justice Arnold shared Richemont’s concern that as soon as an offending website is taken down by one host, it is likely to pop up on another host. Likewise with payment freezing, the websites are likely to shift to alternative payment methods. None of the alternative measures discussed were persuasive enough to allow Mr Justice Arnold to reject granting the blocking orders.
Mr Justice Arnold said he had no reason to believe that the blocking would be less effective in reducing UK traffic to the Target Websites than the blocking of the websites targeted by the section 97A orders and if anything, he thought it would be more effective.
The ISPs expressed legitimate concerns that it was not the cost of implementing a single order, but the cumulative cost of implementing all website blocking orders. The overall costs burden imposed by implementing section 97A orders was already significant and was growing rapidly, only to be exacerbated if the Court allowed the granting of website blocking orders on the grounds of trade mark infringement. Dodging a bullet, Mr Justice Arnold concluded that while the likely cost to the ISPs of implementing website blocking orders was an important factor in assessing the proportionality of the orders sought, he was not persuaded that the implementation costs on their own led to the conclusion that the orders should be refused.
Mr Justice Arnold considered that the orders sought by Richemont would have some dissuasive value, because not only would they result in consumers who attempted to access the Target Websites being blocked (unless they and/or the operators undertook circumvention measures), but also they would be informed of the reason for this.
Impact on lawful users
While there had been situations in the copyright cases with overblocking, Mr Justice Arnold thought that it ought to be possible to target the blocking so that lawful users were not adversely affected by it.
Safeguards against abuse
The judgment ends with a useful analysis of effective safeguards against abuse that the court orders should contain (as required by Article 3(2) of the Enforcement Directive) . The orders sought by Richemont contained a number of safeguards, such as allowing the ISPs to apply to the Court to discharge or vary the orders in the event of any material change of circumstances and also allowing the operators of the Target Websites to apply to the Court to discharge or vary the orders.
Mr Justice Arnold agreed that these safeguards should stand but should be supplemented by three other safeguards (two of which had been put forward by the intervener ORG): (i) that affected subscribers should be permitted to apply to the Court to discharge or vary orders; (ii) that the blocked websites should provide more information than simply that access had been blocked – they should identify the party/parties who obtained the order and notify the affected users they have a right to apply to discharge or vary the order; and (iii) the inclusion of a “sunset clause” such that the orders will cease to have effect at the end of a defined period (unless either the ISPs or the Court consent to the orders continuing). Mr Justice Arnold invited the parties to submit argument on the appropriate period, but offered his provisional view that it should be two years.
It seems a sensible and logical development to extend website-blocking orders to trade marks, especially considering the obligations directed at members states under the Enforcement Directive. As a test case, this judgment includes a huge depth of legal analysis and details both European and domestic case law and legislation. It also includes an extremely robust assessment of the effectiveness of blocking injunctions and the conditions under which they may be granted and indeed the effectiveness (or not) of alternative methods to combat infringing websites. The reasoning contained within the judgment will be useful in aiding applicants when evaluating and structuring their applications to request a website- blocking injunction against internet service providers in order to combat intellectual property infringement by a third party within the EU.
It will be interesting to see if this judgment opens the flood gates to a barrage of applications by trade mark owners seeking to obtain blocking orders for infringing websites. This was of huge concern to ISPs in Twentieth Century Fox, as in this case, for fear of the escalating implementation costs, but Mr Justice Arnold reiterated his reasoning from Twentieth Century Fox, stating, “I think it is clear that rightholders will not undertake future applications lightly. On the contrary, I consider it probable that they will concentrate their resources on seeking relief in respect of the more egregious infringers. I therefore do not anticipate a flood of such applications”. Only time will tell….