27 June 2018

In an unexpected turn of events, the jeweller Cartier has failed to convince the Supreme Court that Internet Service Providers (ISPs) should have to bear the costs of implementing website-blocking injunctions. Instead, these costs will fall to rights holders who seek to protect their intellectual property rights as ordinary and natural cost of the business.

The Facts

At both first instance and at the Court of Appeal, it was ruled that the ISPs should have to pay to block websites from their server in order to comply with injunctions. In the Court of Appeal LJ Kitchin acknowledged that, despite a lack of wrongdoing on the part of the ISPs, websites used the services of ISPs to sell their infringing products. As a result, ISPs were ‘essential actors’ in the process and should pay for the implementation of website-blocking injunctions on their platforms (although the brand owners themselves would still pay for the initial injunction application).

In the Supreme Court, it was held that there was no European law dictating cost allocation in this context and as such national courts could decide their own stance. Lord Sumption neatly summarised the position as follows:

‘In my opinion the incidence of compliance costs is a matter for English law, within the broad limits set by the EU principles of effectiveness and equivalence, and the requirement that any remedy should be fair, proportionate and not unnecessarily costly. As a matter of English law, the ordinary principle is that unless there are good reasons for a different order an innocent intermediary is entitled to be indemnified by the rights-holder against the costs of complying with a website-blocking order.The position in relation to website-blocking orders is no different in principle from the established position in domestic law in the case of Norwich Pharmacal orders, freezing orders and other injunctions granted to require an innocent party to assist the claimant in the assertion of its rights against a wrongdoer.’

The Supreme Court ruled that a blameless intermediary, namely an ISP, should be protected against the costs by the rights-holder, whose commercial objectives were ultimately receiving the protection of the injunction. The Supreme Court was of the view that website-blocking injunctions are wholly directed to the protection of the claimant’s legal rights and the protection of intellectual property rights is ‘ ordinarily and naturally’ a cost of the business; whereas it is not ‘ ordinarily or naturally’ a cost of the business of an ISP.

What does this mean for brand owners?

The ruling will have cost implications for those wishing to pursue website-blocking injunctions in order to protect their trade mark rights, as they now must bear the burden of the costs of implementing the injunction as well as the initial outlay of applying for the injunction.

While it is not entirely clear whether the decision extends to website-blocking orders made in the context of copyright claims, the decision seems likely to have broader application and suggests a shift in favour of ISPs.

How can Burges Salmon help?

Please contact Jeremy Dickerson, Emily Roberts or your usual intellectual property team contact if you would like to know more.

Key contact

Jeremy Dickerson

Jeremy Dickerson Partner

  • Head of International 
  • Head of Intellectual Property, Media and Sport
  • Defamation and Reputation Management

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