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Time Running Out for Counterfeit Websites

Date: 27 September 2018

 

The respondents in Cartier International AG v British Telecommunications PLC [2018] UKSC 28, including Cartier International AG (“Cartier”), are members of the Richemont Group, which is known for selling luxury goods, including jewellery.

 

The appellants, BT, are two of the five largest internet service providers (“ISPs”) in the UK, who were subject to the original action (three of those ISPs choosing not to appeal). BT provides networks to enable subscribers to access content on the internet. The ISPs are not responsible for content. They have no contractual relationship with the operators of websites, which are accessed via their telecommunications networks. Nevertheless, their services enable consumers to visit websites selling counterfeit copies of branded luxury goods.

 

In 2014, Cartier were granted blocking injunctions requiring the ISPs in the action to block access to specified websites, their domains and any other IP addresses or URLs notified to them whose purpose was to allow customers to access certain “target” websites, i.e. those advertising infringing product. Such injunctions under the CDPA 1988 have been granted a number of times in recent years to prevent copyright infringement. However, there is no equivalent statutory provision under the TMA 1994, corresponding to that enactment. However, in this particular case the Court of Appeal decided that the first instance judge, Arnold J, was correct in finding the courts would have jurisdiction to grant such injunctions under a general power in the Supreme Courts Act 1981, s 37(1).

 

Accordingly, the current appeal was concerned with the issue of costs to the ISPs of implementing website-blocking orders. These costs could include: (i) that of hardware/software needed to carry out the action; (ii) managing the blocking system, including customer service; (iii) initial implementation costs; (iv) updating sites following liaison with rights holders; and (v) liabilities incurred by malfunctions. The issues were concentrated on those anticipated under heads (iii) to (v). The main guidance from the E-Commerce Directive and earlier relevant decisions was that, insofar as an intermediary such as an ISP may be liable, costs should not be excessive.

 

According to the tradition of our national courts, an innocent party would be expected to be indemnified against the costs of complying with an injunction (applying the principles of Norwich Pharmacal orders). Thus an innocent intermediary, such as an ISP, should be indemnified against a website blocking order. Otherwise, it would be unjust to expect ISPs to contribute to key costs when they were mere conduits, who were legally innocent (presuming for example, this was under circumstances where they could not be expected to review the content and offerings of every website accessed via their services). Accordingly, it was held that ISPs could expect to recover costs (iii) to (v) where they were legally innocent, and such costs should be reasonable compliance costs which should be modest in the context.

 

Copyright holders have long enjoyed the right to obtain website blocking injunctions and, as this decision reminds us, this remedy is also available for brand owners. Whether against a website that facilitates copyright infringement or a website that sells counterfeit goods, the end goal is the same, namely to prevent access to the site.

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