The team is joined by Guest Kats Rosie Burbidge, Stephen Jones, Mathilde Parvis, and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Hayleigh Bosher, Tian Lu and Cecilia Sbrolli.

Monday, 20 October 2014

Online enforcement "has a colour and a name": blocking injunctions - A closer look at the Cartier judgment

Typical moment outside
the Rolls Building last Friday
As Jeremy announced with a breaking news post, last Friday Arnold J issued his 266-paragraph judgment in Cartier and Others v BskyB and Others, a case concerning the possibility of requiring internet service providers (ISPs) to block, or at least impede, access by their subscribers to websites that advertise and sell counterfeit goods.

Why everybody was waiting for this judgment?

The reason why this judgment was keenly awaited is that there is no specific provision under UK law which allows holders of trade mark rights to seek and obtain an injunction against ISPs that have actual knowledge of another person using their services to infringe their rights. 

As readers will promptly recall, such possibility is instead expressly available to copyright owners thanks to s97A of the Copyright Designs and Patents Act 1988 (CDPA), by which the UK implemented Article 8(3) of the InfoSoc Directive into its own national law.

What is the reason behind this 'omission'? It is has of course to do with UK implementation of EU directives, in particular the Enforcement Directive

What happened at the time of transposing this directive into UK law is that UK Government thought that it did not need to take any action to transpose the third sentence in Article 11 into its own law [see para 116 of the judgment]. This provision states that "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, without prejudice to Article 8(3) of [the InfoSoc] Directive"

While UK Government had deemed necessary [despite an earlier view to the contrary expressed by the Government itself: see para 113 of the judgment] to give express implementation to Article 8(3) of the InfoSoc Directive [see para 115], it did not do the same with regard to the third sentence in Article 11 of the Enforcement Directive. UK Government justified its [somehow contradictory?] decision not to take any action to implement this more general rule by referring to s37(1) of the Supreme Court Act 1981. This provision states that “[t]he 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.”

This (together with - of course - other considerations) led Arnold J to conclude that blocking orders may be sought also in respect of websites selling and advertising counterfeit goods.

Be honest: wouldn't you rather 
prefer finding a blocking order
inside the little red box?
Beyond trade marks: online IPR enforcement law (and policy)

This is not the only good news for rightholders though, as this judgment also contains a very thorough assessment of the effectiveness of blocking injunctions, the conditions under which they may be granted, as well as a comprehensive overview of the jurisprudence of the Court of Justice of the European Union (CJEU) in both (online) copyright and trade mark cases.

This Kat suspects that we will see many references to the Cartier judgment not just in future applications for blocking injunctions in the UK (and other Member States), but also in forthcoming policy briefs. 

This is because this ruling deals with most - if not all - the arguments employed by rightholders and ISPs when advocating in favour or against the availability of blocking orders.

A few examples are given below.

Freezing? Not really disruptive
1) There are no real alternatives to blocking orders, not even notice-and-takedown and payment freezing

Paragraph 197 ff contains a must-read assessment of blocking orders and availability of alternative measures, including: (1) action against the operators of the websites where the allegedly infringing works/counterfeit goods are hosted; (2) notice-and-takedown by hosts; (3) payment freezing; (4) de-indexing from search engines; (5) custom seizure.

Basically the conclusion of Arnold J was that none of these alternatives is as effective as blocking orders [para 217]. Incidentally, the "risk of reputational damage to the ISPs, particularly in the event of overblocking" is not a "significant one" in Arnold J's opinion [para 195].  

It is particularly interesting to note what the judge stated in respect of (2), (3) and (4) mentioned above.

With regard to notice-and-takedown, Arnold J accepted "that website blocking has advantages over notice-and-takedown" [para 204], also confirming a concern often raised by rightholders, ie that "as soon as an offending website is taken down by one host, the almost invariable response of the operator is to move the website to a different host." [para 201]

Turning to payment freezing [advocated by many, including the EU Commission, as the ultimate solution to online IPR infringement], Arnold J was somehow skeptical as to its actual effectiveness. The judge was "not persuaded that this is a realistic alternative measure in general, although there may be particular cases where it has some value." [para 208]

Finally, with regard to de-indexing, while "this is potentially an important weapon" [para 211], "it is not a realistic alternative measure" [para 215], also because "search engines are not willing to de-index entire websites ... without a court order" and - following Google Spain - "it is not clear at present that any EU court would would have power to order de-indexing on the basis of intellectual property infringement." [para 212]

2) It is not up to the rightholder to show efficacy of blocking measures

In light of the reasons given for stating that there are no real general alternatives to blocking orders, the judge also did "not accept that it is incumbent on [the rightholder] to show that the blocking measures would lead to a reduction in the overall level of infringement." [para 281]

But are blocking orders effective?

Website blocking works fine on Gregory
3) Blocking orders reduce infringements

Contrary to a Dutch study extensively criticised by Arnold J [see paras 229 ff], "in the section 97A context [that was the only available context until last week], blocking of targeted websites has proved reasonably effective in reducing use of those websites in the UK [but not worldwide: see para 228]. No doubt it is the casual, inexperienced or lazy users who stop visiting those websites, whereas the experienced and determined users circumvent the blocking measures; but that does not mean that it is not a worthwhile outcome." [para 236]

Ever thought of filtering?
4) ISPs should bear implementation costs ... and may think of preventative filtering as a cheaper solution

Similarly to what stated in his earlier judgment in 20C Fox v BT (No 2), Arnold J took the view that "the rightholders should pay the costs of an unopposed application ... [and] the ISPs should generally bear the costs of implementation as part of the costs of carrying on business in this sector". However the judge did "not rule out the possibility of ordering the rightholder to pay some or all of the implementation costs in an appropriate case." [para 240]  

A very interesting part of the judgment is paragraph 250 and following. Given ISPs' objection that future implementation costs are likely to increase if a substantial number of orders are granted, Arnold J noted that neither the claimants nor the defendants had addressed the economic dimension of this problem. 

Although the Ecommerce Directive prohibits imposing a general obligation to monitor on ISPs, according to the judge "it is economically more efficient to require intermediaries to take action to prevent infringement occurring via their services than is to require rightholders to take action directly against infringers." [para 251] Is this something for ISPs to think about? 

5) Safeguards against abuse: users' rights and blocking duration

It will be intriguing to see how the final part of the judgment will be applied and developed in future orders. 

In particular, in line with what the CJEU ruled in Telekabel [here], at paragraph 263 Arnold J stated that "in future orders should expressly permit affected subscribers to apply to the [High] Court to discharge or vary the order." [para 264]

And finally: how long should blocking orders last? Not indefinitely: a "sunset clause" should be incorporated. In the present case it is yet to be decided, but last Friday Arnold J's view was that "it should be two years." [para 265]

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