Blocking orders against ISPs to combat trade-mark infringement legal says Court of Appeal in Cartier

July 12th, 2016 by Barry Sookman Leave a reply »

The English Court of Appeal released an important decision last week confirming that courts’ equitable jurisdiction to grant injunctions where “just and convenient” is broad enough to order internet Service Providers (ISPs) to block web sites from selling trade-mark infringing goods. The Court in Cartier International AG & Ors v British Sky Broadcasting Ltd & Ors [2016] EWCA Civ 658 (06 July 2016) confirmed the correctness of the prior comprehensive decision of Arnold J. in Cartier International AG & Ors v British Sky Broadcasting Ltd & Ors [2014] EWHC 3354 (Ch) (17 October 2014).

The jurisdiction to grant web blocking orders against ISPs who are aware that their services are being used by third parties to infringe copyrights is well established in the European Union. The jurisdiction is mandated by Article 8(3) of The Information Society Directive which was transposed into English law pursuant to Section 97A of the UK Copyright Act. The jurisdiction to make these orders has been confirmed on numerous occasions. See, Barry Sookman, Blocking orders against ISPs legal in the EU: UPC Telekabel Wien, Keeping The Pirate Bays at Bay: using blocking orders to curtail infringements, The Pirate Bay blocked in France.

Article 11 of the EU Enforcement Directive also requires that Member States ensure that rightsholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe their trade-marks. This obligation had never been transposed into UK law, as the UK government believed that existing law already complied with this obligation and nothing further needed to be done. The central question in Cartier was whether that belief was right. The Court confirmed it was.

In giving reasons for decision, the Court canvassed the breadth of the courts’ equitable jurisdiction and explained why it was broad enough to grants blocking orders against ISPs who were not themselves infringers.

First, the powers of courts with equitable jurisdiction to grant injunctions are, subject to any relevant statutory restrictions, unlimited. The categories in which injunctions have historically been granted are not closed. New categories can be added in light of today’s conditions and standards. They are not frozen to those of yester-year.

Second, injunctive relief can be ordered against a third party that is not himself or herself an infringer.

Third, equity has long recognized the existence of an “equitable protective duty” that prohibits an otherwise innocent party from dealing with goods in a manner that would aid infringement by third parties. This duty, which equity will enforce with an injunction, was described in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133 as follows:

” If a man has in his possession or control goods the dissemination of which, whether in the way of trade or, possibly, merely by way of gifts (see Upmann v. Forester, 24 Ch.D. 231 ) will infringe another’s patent or trade mark, he becomes, as soon as he is aware of this fact, subject to a duty, an equitable duty, not to allow those goods to pass out of his possession or control at any rate in circumstances in which the proprietor of the patent or mark might be injured by infringement ensuing. The man having the goods in his possession or control must not aid the infringement by letting the goods get into the hands of those who may use them or deal with them in a way which will invade the proprietor’s rights. Even though by doing so he might not himself infringe the patent or trade mark, he would be in dereliction of his duty to the proprietor. This duty is one which will, if necessary, be enforced in equity by way of injunction: see Upmann v. Elkan, L.R. 12 Eq. 140; 7 Ch.App 130. “

The Court also adverted to the related application of the principle recognized by the House of Lords in the Norwich Pharmacal case that if “through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrong-doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers.” This duty is also not premised on any act of infringement by the person required to make disclosure of information. “Justice requires they must co-operate in righting the wrong if they unwittingly facilitated its perpetration”.

In Cartier, both levels of court accepted that the equitable protective duty applied to ISPs to take proportionate measures to prevent or reduce infringements carried out using their services. The Court described this duty as follows:

As the judge observed, this principle is not directly applicable in the present case. Nevertheless, he continued, it was not a long step from this to conclude that, once an ISP became aware that its services were being used by third parties to infringe an intellectual property right, it became subject to a duty to take proportionate measures to prevent or reduce such infringements even though it was not itself liable for them. I agree, subject to the qualification that the duty is more precisely characterised, I think, as a duty to take these steps to assist the person wronged when requested to do so.

Justice Kitchin writing for the Court on this issue summarized the Court’s reasons for affirming the equitable jurisdiction to grant web blocking orders against ISPs who are aware that their services are being used by third parties to infringe trade-mark rights.

I come therefore to consider whether there exists a principled basis for making website blocking injunctions against the ISPs who are aware that their services are being used by third parties to infringe registered trade marks and other intellectual property rights. The judge considered that there was indeed a principled basis upon which such orders could be made and he relied in that connection upon three linked points. First, Dr Spry’s formulation of the first category of case in which an injunction might be granted is not restricted to injunctions against infringers of the right in question. Secondly, if, which the judge did not appear disposed to accept, there must at minimum be a prior legal or equitable or public law duty upon the defendant which the grant of an injunction would enforce, an analogy can be drawn with the equitable protective duty described in the Norwich Pharmacal case. Thirdly, the breadth of the court’s jurisdiction under s.37(1) and the fact that the jurisdiction can be exercised in new ways has been confirmed by the decision in the Samsung case.

In my judgment each of these three points is well made. The operators of the target websites need the services of the ISPs in order to offer for sale and sell their counterfeit goods to consumers in the United Kingdom, and the ISPs are therefore inevitable and essential actors in those infringing activities…

The Court also concluded that Article 11 of the Enforcement Directive provided a further 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 ISPs, which have been used by a third party to infringe a registered trade mark.

The Court also affirmed other holdings made by Arnold J. about web site blocking orders including the order issued in the case:

  • Web site blocking orders have proved to be effective in reducing online infringements of copyrights and have a dissuasive (discouraging) effect on preventing further infringements.
  • The remedy was necessary to combat infringement of intellectual property rights.
  • The order did not violate rights and freedoms guaranteed by Article 11 of the Charter of Fundamental Rights of the European Union which protects freedom of expression.
  • The order was fair and equitable and struck a fair balance between the applicable rights to protect intellectual property rights and freedom of expression.
  • The order was not unnecessarily complicated or costly and did not create barriers to legitimate trade.
  • The order was proportionate in that it did not exceed the limits of what is appropriate and necessary in order to attain the objective of reducing infringements.
  • There was no need to proceed directly against the operators of the infringing web sites or their hosting providers or other intermediaries before seeking the order. The experience with notice and takedown remedies is that as soon as the web site is taken down by one host, the website moves to a new hosting provider.
  • The costs if implementing the order should be borne by the ISPs.

The Cartier decision is a clear vindication of the position taken by rightsholders that website blocking order orders are a necessary judicial means of combatting the sale of infringing products using the Internet. The decision, taken together with the recent decision of the CJEU in the Tommy Hilfiger Licensing case which interpreted the Enforcement Directive to require landlords of physical market halls to take measures to prevent the sale of counterfeit goods at such venues, provides potent means for combatting the sale of counterfeit goods in virtual and physical marketplaces.  

The decision of Arnrold J. in Cartier was followed by the British Columbia Court of Appeal in Equustek Solutions Inc. v. Google Inc., 2015 BCCA 265 in which the court granted a world-wide de-indexing order against Google to prevent access to websites that had been found to violate orders of a BC court in a case in which the defendants were selling and offering for sale products which Equustek claimed, among other things, misappropriated its trade secrets, infringed its registered and unregistered trade-marks, passed-off its products for those of Equustek, infringed its copyrights, and breached the terms of a distribution agreement. Google was successful in having the Supreme Court grant leave to appeal from the decision of the BC Court of Appeal. The case has yet to be heard by the court,

 

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