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Wednesday, 6 July 2016

BREAKING: Court of Appeal of England and Wales confirms availability of blocking injunctions in online trade mark cases

A nice surprise
for Cartier and friends
Can injunctions (particularly: blocking injunctions) be issued against intermediaries in trade mark cases, even lacking in the UK a specific implementation of the third sentence in Article 11 of the Enforcement Directive?

The High Court judgment

Back in 2014 the High Court of Justice of England and Wales (Arnold J) answered this question in the affirmative in its judgment in Cartier and Others v BSkyB and Others [noted here and here].

Unlike copyright [in relation to which the possibility of injunctions against intermediaries is expressly envisaged by s97A of the Copyright Designs and Patents Act 1988 (CDPA), through which the UK implemented Article 8(3) of the InfoSoc Directive into its own national law], at the time of transposing the Enforcement Directive into its own law UK Government thought that it did not need to take any action to transpose the third sentence in Article 11. 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"

UK Government justified its decision not to take any action to implement this more general rule by referring to s37(1) of the Senior Courts 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 the High Court had jurisdiction to issue blocking orders also in respect of websites selling and advertising goods infringing third-party trade marks. Thus, the High Court ordered five major UK internet access providers (ISPs) to block access to certain websites which were advertising and selling counterfeit copies of the claimant's goods.

Today's judgment

Further to an appeal brought by the ISPs, this morning the Court of Appeal of England and Wales handed down its much-awaited 214-paragraph judgment. The Court upheld the "entirely correct" [para 35] decision of Arnold J, thus confirming that injunctions against intermediaries can be sought also in IP cases other than copyright [this is a huge relief for rightholders, also in the aftermath of Brexit, ie at a time when it is unclear what relevance EU legislation - especially the bits not expressly transposed into UK law - will eventually have in this country].

Kitchin LJ delivered the judgment (with which Briggs and Jackson LLJJ agreed), addressing each of the submissions advanced by the ISPs using "the clear and logical structure" of Arnold J. 

Kitchin LJ
Jurisdiction to issue a blocking injunction

Further to a review of relevant authorities, Kitching LJ recognised [para 54] that "the ISPs are not guilty of any wrongdoing. They have not infringed Richemont’s [this is how collectively the rightholders - including Cartier, Montblanc and others - are referred to] trade marks, nor have they engaged in a common design with the operators of the websites offering counterfeit goods for sale." 

The judge also noted [still at para 54] how, in light of the decision of the House of Lords in CBS Songs v Amstrad, the ISPs do not owe a common law duty of care [readers who follow the current EU policy debate will note that, while this may be true under common law, the same may be less so or become increasingly less so at the EU level] to Richemont to take reasonable care to ensure that their services are not used by the operators of the offending websites. 

This said, however, Kitchin LJ observed [para 56] that the operators of the infringing websites need the services of the ISPs in order to offer for sale and sell their counterfeit goods to UK consumers. It follows that "the ISPs are therefore inevitable and essential actors in those infringing activities." 

In addition, the effect of Article 11 of the Enforcement Directive should be considered. What this provision requires was clarified [as recalled at para 59] by the Court of Justice of the European Union in its 2011 decision in L'Oréal:

1.    The jurisdiction conferred in accordance with the third sentence of Article 11 on national courts must allow those courts to order an online service provider, such as the provider of an online marketplace, to take measures that contribute not only to bringing to an end the actual infringements committed through that marketplace, but also to preventing further infringement;
2.    The rules for the operation of the injunctions for which the Member States must provide are a matter for national law, but those measures must be effective and dissuasive;
3.    In light of the fact that the UK had taken no specific steps to implement Article 11, national law must be applied, so far as possible, in light of the wording and purpose of the third sentence of Article 11 [this is so in light of the Marleasing principle].;
4.    The rules laid down by Member States and their application by national laws must observe the limitations arising from the Enforcement Directive and from the other sources of law to which that directive refers, including Article 15 in the Ecommerce Directive [no obligation to monitor]. Overall the measures imposed must be fair and proportionate, must not be excessively costly and must not create barriers to legitimate trade.

In light of these considerations, Kitchin LJ concluded that [paras 65-66]:

"It seems ... clear from this guidance that Article 11 does indeed provide a principled basis for extending the practice of the court in relation to the grant of injunctions to encompass, where appropriate, the services of an intermediary, such as one of the ISPs, which have been used by a third party to infringe a registered trade mark. There is no dispute that the ISPs are intermediaries within the meaning of Article 11 and accordingly, subject to the threshold conditions to which I shall shortly come, I believe that this court must now recognise pursuant to general equitable principles that this is one of those new categories of case in which the court may grant an injunction when it is satisfied that it is just and convenient to do so. I therefore believe that court had jurisdiction to make the orders the subject of this appeal."

Kitchin LJ also rejected the argument that the orders sought by the rightholders would unduly compress the fundamental freedoms of ISPs (to conduct business) and users (to access information), as granted under the Charter of Fundamental Rights of the European Union.

Threshold conditions

In any case, in line with the judgment of Arnold J, [paras 80-81] 

"the court’s discretion under s.37(1) [of the Senior Courts Act] to grant website blocking orders is not unlimited and that it must be exercised consistently with the terms of the Enforcement Directive, including, in particular, Articles 3 and 11, and with the terms of the E-Commerce Directive, including, in particular, Articles 12 to 15 ... [T]he following threshold conditions ... must be satisfied before a website blocking order is made. First, the ISPs must be intermediaries within the meaning of the third sentence of Article 11. Secondly, either the users or the operators of the website must be infringing the claimant’s trade marks. Thirdly, the users or the operators of the website must use the services of the ISPs. Fourthly, the ISPs must have actual knowledge of this. As [Arnold J] observed, each of the first three conditions follows from the wording of Article 11 itself. The fourth follows from the E-Commerce Directive, for if ISPs could be required to block websites without having knowledge of the infringing activity then this would effectively impose on them an obligation to monitor. The ISPs have made no specific criticism of any of these four threshold conditions and I would endorse them."

Kitchin LJ concluded that all threshold conditions were satisfied in this case.

Principles and ... costs

Turning then to the principles to be applied in considering whether to make a website blocking order, namely the relief must: (i) be necessary; (ii) be effective; (iii) be dissuasive; (iv) not be unnecessarily complicated or costly; (v) avoid barriers to legitimate trade; (vi) be fair and equitable and strike a “fair balance” between the applicable fundamental rights; and (vii) be proportionate.

Kitchin LJ addressed each and every of these. Among other things, he confirmed [para 150 - but see dissent of Briggs LJ at paras 198 ff] that Arnold J "was entitled to require the ISPs to bear the costs of the implementation of the orders in issue." He also approved [para 169] of Arnold J's proper consideration of the economic impact of website blocking orders upon the businesses of the ISPs, and that these could either bear these costs themselves or pass them on to their subscribers in the form of higher subscription charges.

Alternatives to blocking

Kitchin LJ also addressed [paras 177-178] ISPs' point that Arnold J allegedly failed to carry out a fair evaluation of the relative merits of alternative measures to blocking: 

"I reject these contentions. The judge’s conclusion was amply supported by the evidence before him and he was in my judgment entitled to find as he did that notice and takedown would be unlikely to achieve anything more than short-term disruption of the target websites.  He recognised that website blocking orders impose compliance costs on the ISPs whereas notice and take down requests do not but rightly found that, for the rightholders, website blocking had advantages. The key question was therefore whether these benefits justified the costs burden imposed on the ISPs. That was a matter he considered in carrying out his overall proportionality assessment. I am satisfied that the ISPs’ criticisms of the judge’s assessment of the other alternative measures are equally unmeritorious. In each case the judge made findings which were open to him on the evidence before him and in doing so he took proper account of the experience of the rightholders. The judge has made no error of principle and I am wholly unpersuaded it would be appropriate for this court now to interfere with the conclusions to which he came."

Milly has already
taken note in her diary:
what are you waiting for?
Rapid response event

A more detailed analysis of today's judgment will be provided in due course.

In the meantime, to discuss the implications of the judgment in more detail, the IPKat is teaming up with Simmons & Simmons for a rapid response event to take place in the evening of Thursday, 28 July

Speakers will include: Simon Malynicz QC (3 New Square), Lauri Rechardt (IFPI), Darren Meale (Simmons & Simmons) and myself. 

The event will take place at Simmons & Simmons. More details to follow soon: save the date!

3 comments:

Anonymous said...

Not sure the English translation of the UPC judgment of this paragraph is on par with the French and here I think Kitchin . Miss May had a small correct point here but it would not have gone far anyway:

"le cas échéant, à un arrêt total des atteintes portées au droit de propriété intellectuelle, ... des objets protégés et de décourager sérieusement les utilisateurs d’Internet ayant recours aux services du destinataire de cette injonction de consulter ces objets mis à leur disposition en violation du droit de propriété intellectuelle.

I also think the dissenting judge was correct on costs.Very generous to say it is part of the trade off on "immunity".It is odd to describe the safe harbour provisions in E-Commerce as "immunity" as that implies something else.It also seems to go against Scarlet Extended. It shows the extent to which there is a battering ram at the door of the safe harbour provisions by rightholders in general.They keep trying. The FT had an editorial about "Big Music's misguided assault on YouTube which is another issue altogether for sure (in case anyone had any doubt).

More generally though, it seems pretty obvious to this commentator that had an injunction for these rightholders (the reach and scope are debatable) not been available, the UK would have been in breach of its obligations. It is true that introducing it specifically for copyright but not elsewhere is odd but that is the choice of the national legislator -not sure how they have explained that away to the Commission so far. It is equally odd to assert that the availability of the injunction depends on how the particular right is infringed.

And finally by the way, have you not got the memo that EU law continues to apply fully -including negotiation,implementation and application obligations for the forseeable future.

Anonymous said...

This is a good result for all those that seek to enforce their rights.

In the near future it will be patent owners seeking to block data flows to IoT devices which constitute patent infringement.

Later it may be human rights defenders seeking to injunct intermediaries to prevent data flows of services or indeed physical goods that are built on human rights violations.

As this judgement is made under domestic law, albeit under Marleasing, it is good to know any of the possible Brexits would mean this is an available remedy.

THE US anon said...

Anonymous @ 16:05,

To your statement of "In the near future it will be patent owners seeking to block data flows to IoT devices which constitute patent infringement." - the rejoinder has already come (there was a "denture" case"):

There is no blocking in the US on that basis.

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