Life after Cartier: The future of blocking injunctions – Simmons & Simmons Rapid Response Event

On 28 July last, the IPKat and Simmons & Simmons co-hosted a panel discussion between Simon Malynicz QC (3 New Square), Lauri Rechardt (IFPI's Director of Licensing and Legal Policy) and Eleonora Rosati (IPKat), chaired by Darren Meale (Simmons & Simmons), on the implications of the recent Court of Appeal judgment in Cartier [noted here].

The following is a review of the event by Jonathan Sharples, a trainee solicitor at Simmons & Simmons. 

Jonathan explains:

"An audience of well over 100 solicitors, barristers, academics, rightholders, ISPs and other industry figures came together for a lively discussion of the Court of Appeal’s decision to uphold Mr Justice Arnold’s first instance decision in favour of ordering UK ISPs to block access to websites which infringe trade marks. Although it seemed that the audience was united in approval of the principle of that decision, there was plenty for discussion in the detail of precisely what was ordered, why, how and who was to pay for it.

What is the role of EU law?

First up, perhaps unsurprisingly in the near aftermath of the Brexit vote, was the vexed question of what role EU law has to play in the availability of blocking injunctions in the UK. Simon Malynicz QC began by setting out the approaches adopted by Arnold J in the High Court and Kitchin LJ, noting that while both undertook a survey of the ancient powers of the Court of Chancery to grant injunctive remedies, whereas Arnold J maintained a clear distinction between domestic and EU law, Kitchin LJ’s judgment involved blending the two together in arriving at his “principled basis” for making website blocking injunctions against ISPs who are aware that their services are being used by third parties to infringe registered trade marks and other intellectual property rights.

The panel reflected on the fact that in “normal times” this muddying of the water would not be a matter of much import, but, with Brexit and a possible UK withdrawal from EU jurisprudence on the horizon, the question of whether the court’s jurisdiction to make these orders can be made out on the basis of English law alone is more than merely academic. Simon Malynicz QC suggested that, on the basis of Arnold J’s judgment, the injunction jurisdiction would survive Brexit relatively easily, but that Kitchin LJ has now made that considerably less clear-cut.

The panel then considered the reason the issue arose in the first place, namely the UK Government’s decision not to implement Article 11 of the Enforcement Directive expressly into national law, in the way that it had Article 8(3) of the InfoSoc Directive in relation to copyright. The panel’s explanations for this ranged from the fact that copyright owners enjoy a much stronger and more coordinated lobby, to the idea that the problem is instinctively clearer in relation to copyright, where the ISP is directly involved in “piping” the copyright-protected material to the end user, unlike with physical branded goods whose actual delivery the ISP merely facilitates.

The panel discussion at Simmons & Simmons
(photo courtesy of Nedim Malovic)

Eleonora Rosati rounded off this segment by pointing out that, had the Court of Appeal upheld the ISPs’ appeal, there would have been clear case for the state liability of the UK under the Francovich principle, for failure to implement Article 11 of the Enforcement Directive adequately.

After us, the deluge?

Next, the panel considered whether this decision would open the floodgates for applications for website-blocking orders in the UK. Lauri Rechardt got the ball rolling by suggesting that the time and money required to make such applications would mean that this did not happen, and in the copyright context, the record industry still regards these applications as being cases they cannot afford to lose, and so its battles are picked carefully and the work is done meticulously to ensure the result.

Eleonora Rosati pointed out that Cartier is the first occasion on which an application for a website-blocking order against ISPs in order to combat trade mark infringement has been made anywhere in the EU, with the possible exception of the Danish case of Home A/S v Telenor A/S (Retten på Frederiksberg, 14 December 2012) which Arnold J refers to in his judgment, despite the implementation of Article 11 of the Enforcement Directive throughout the rest of the EU. However, Eleonora did say that the possibility is there for the practice of applying for injunctions to spread incrementally to other kinds of brand owners, and not just luxury fashion houses, in much the same way in which the first to make the copyright applications were the film studios, followed by the record companies, then the Premier League, and then finally publishers.

Simon Malynicz QC offered the view that although these cases are very expensive now – as evidenced by the £600,000 of costs racked up by the defendants in Cartier – there is the potential for them to become routine and perhaps even ‘cookie cutter’, prompting a wistful trip down memory lane to the start of his career when he used to take Phonographic Performance Limited (PPL) briefs, half a dozen at time, for a fee of £70 each!

Might we have pan-European injunctions?

The panel briefly allowed themselves to indulge in the fantasy of the possibility of injunctions effective throughout the EU.

Lauri Rechardt explained that, while such a thing, in a digital single market, is clearly desirable from rightholders’ perspective, it is beset with practical difficulties, not the least of which is that ISPs work mostly on an intra-national basis, and there is currently no framework for them to work together across the EU. A range of helpful shortcut measures was mooted, including expedited recognition of judgments and an EU-wide register of infringing sites.

Simon Malynicz QC raised the related and familiar issue that in the copyright sphere, there is scope for much more harmonisation of substantive rights in copyright, but that there does not appear to be the political will to take this step.

A question from the floor raised the point that the Dutch ISP case of BREIN v ZIGGO and XS4ALL and the CJEU reference in that case which is still pending, illustrates the potential for national courts to interpret Article 8(3) of the InfoSoc Directive and Article 11 of the Enforcement Directive in different ways. Indeed, said the questioner, given the potential of that reference to the CJEU to undermine Kitchin LJ’s “free-flowing” analysis in Cartier it was surprising that Kitchin LJ made no mention of it in his judgment.

All these costs ... who covers them?

Who pays?

A large chunk of the evening’s proceedings was devoted to discussing costs and in particular whether there is an EU rule, a subject on which Eleonora Rosati posted an excellent piece on this blog before the start of business the morning after the evening event at Simmons & Simmons!

As to some broader points of principle, the chair Darren Meale offered up for discussion the suggestion that the Cartier outcome that has the ISPs bearing the costs of implementing a blocking order does not sit comfortably with the fact that they are supposed to enjoy the privilege of a safe harbour when remaining passive in transmitting information, or with explicit recognition that they are not wrongdoers in these cases, the latter being the thrust of Briggs LJ’s dissent on costs and advocacy for a Bankers Trust/Norwich Pharmacal outcome in which the cost reasonably incurred by the innocent respondent should be reimbursed by the applicant.

All panellists agreed that there is more to come on the costs point, which would be especially tested if implementation costs increase significantly from the relatively low level they are currently at, perhaps because of changes in technology. One of the seven requirements to be met before a court should grant a blocking injunction, as set out by Arnold J and endorsed by Kitchin LJ, is that “the relief must not be unnecessarily complicated or costly”, wording that comes directly from the Enforcement Directive.

Simon Malynicz QC wondered whether either the Bankers Trust position or the “not unnecessarily costly” requirement could ever be a bright line, in view of the fact that a clever claimant could always start by offering to pay the implementation costs. Darren Meale pointed out that that while this is not necessarily a live issue for time being, while the cost of implementing blocks is low and their efficacy is high, this might not be the case if the technology used to circumvent blocks, such as mobile apps, browser plug-ins apps and proxy internet access, becomes more sophisticated and/or more widely adopted by consumers.

Comments on costs from the floor included the question “Who cares who pays, given that ultimately it’s ‘the consumer’ who pays whether it’s the rightholder or the ISP?”, although it might be said that the services provided by ISPs are akin to a utility regarded as a basic necessity by the vast majority of the population, whereas the group of consumers buying the luxury wares of Cartier are a much smaller and, on average, better-resourced crowd!

Another comment from the audience was that it is healthy for both parties to share a fear of having to pay some costs, as this encourages the sort of collaborative attempts to work together to address counterfeiting issues that emerged from the L’Oreal v eBay case.

Conclusions

Even against the background of a high degree of consensus that the Court should be able to issue injunctions against intermediaries in trade mark cases, Cartier is likely not to be the last word on the issue, especially in relation to costs and particularly if there is a significant shift in technology affecting the efficacy and costs of blocks.

Many thanks to the panel of speakers who provided such an engaging discussion, and to the audience for enthusiastically taking up the invitation to make it as interactive as possible. With the ‘formal’ proceedings concluded, interesting conversations continued, at increasing volumes, over drinks and canapés."

Many thanks Jonathan for this accurate report!