Cartier win battle against counterfeit websites
Counterfeiters beware - a recent court decision was good news for luxury companies.
In a decision which should be well received by the luxury goods sector, the Court of Appeal recently upheld the High Court’s landmark 2014 decisions in Cartier which force ISPs such as broadband providers to block access to certain websites which sell counterfeit goods. All too often, rights holders have a never ending battle of trying to identify the owner of the website who is often outside of the jurisdiction. Even if action is taken, the infringer simply starts a new website and the whole court process must be performed again.
Though not the complete answer, site blocking injunctions does provide an important tool to rights holders in the battle against counterfeiters and the judgement confirms that tool can be continued to be used. Such measures have become common in relation to copyright infringing websites in recent years, with applications for these orders now not opposed by the ISPs, but Cartier was the first time that such an order had been granted to a trade mark owner. In further positive news for rights holders, the Court confirmed that it is the ISPs who must bear the costs of implementing the blocking orders.
The Court of Appeal agreed that the High Court had jurisdiction to make a blocking order under section 37(1) of the Senior Courts Act, as interpreted in light of Article 11 of the Enforcement Directive (which provides that member states shall ensure that rights holders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an IP right). The court recognised that the ISPs are not guilty of any wrongdoing, and it rejected a submission that the power of the court is limited in certain circumstances. The decision demonstrates the UK’s flexible approach to granting injunctions to adapt to a changing online world.
The Court of Appeal was also satisfied that the threshold conditions for making such a blocking order were satisfied here. Those threshold conditions are that the ISPs must be intermediaries within the meaning of Article 11; that either the users or the operators of the website must be infringing the claimant’s trade marks; that the users or the operators of the website must use the services of the ISPs; and that the ISPs must have actual knowledge of this. The Court of Appeal was satisfied that the threshold conditions were satisfied because: (i) each of the target websites was directed to consumers in the UK; and (ii) the ISPs were “essential actors” in all of the communications between the consumers and the operators of the websites selling counterfeit goods.
Proportionality: who bears the cost?
The Court of Appeal then went on to consider whether it was proportionate to grant the injunction sought by Cartier, bearing in mind the requirements identified by the High Court that the relief must be necessary, effective, dissuasive, not unnecessarily complicated or costly, avoid barriers to legitimate trade, be fair and equitable and strike a fair balance between the applicable fundamental rights, and be proportionate.
The focus of much of the ISPs’ argument before the Court of Appeal was whether they should have to bear the costs of implementing the blocking order, rather than the rights holders who benefitted from it. Those costs include both the marginal costs of implementing any particular order, and also a proportion of the capital costs of the existing technical systems which are needed. The Court of Appeal decided, by a majority of two to one, that those costs should be borne by the ISPs.
This judgment is clearly good news for brand owners, and blocking orders against ISPs should become a useful tool in the armoury of rights holders in the luxury goods sector who grapple with counterfeit selling websites which are often based out of the jurisdiction and prove difficult to counter. Importantly, it is possible for blocking orders to include a provision which allows them to be updated (e.g., to designate a new domain name or IP address), which means that rights holders do not need to return to court each time a counterfeit website moves to a new location. Flexibility helps to avoid the game of whack-a-mole which often develops when taking enforcement action against disreputable websites based overseas.
Jeremy Blum, Partner at Bristows, is an IP specialist and has advised on many contentious matters involving trade marks, copyright, designs, patents and confidential information. Sean Ibbetson is an associate in Bristows’ IP litigation department. Sean was involved in Thomas Pink’s recent trade mark dispute with Victoria’s Secret in relation. to its use of “Pink”.