Supreme Court rules ISPs not responsible for costs in Cartier

Earlier this month, the UK Supreme Court handed down its decision in the ongoing saga of website blocking orders in relation to trade marks in Cartier International AG (and others) v British Telecommunications Plc (and others) [2018] UKSC 28.

We previously wrote on the Court of Appeal decision here in which it was held that website blocking orders can be upheld against ‘intermediaries’ (in this case, 5 of the UK’s largest internet service providers or “ISPs”) in relation to trade mark infringements, which until that point was a remedy only available in copyright infringement matters.

The only question for the Supreme Court, however, was on costs of implementation – who should be responsible for the costs of implementing the Order? At the Court of Appeal (and the first instance decision), the Court held (with Briggs LJ dissenting) that the costs of implementing the injunction should be borne by the ISPs.  The ISPs appealed.

The context to the question is quite important: Before this case, website blocking orders were only available in relation to copyright cases, of which there have been now 17 successful occasions (the Supreme Court believed there to be 17 at the time of judgment).  Generally, the practice has been that the right-holder bears the costs of obtaining the order, and the ISP bears the costs of implementation. This is, in part, due to the ‘commercial equity’ of ISPs making a profit from proving services with the operator of the infringing site uses to infringe, but also importantly because it is implicit in the relevant EU law that member states make the injunction available. No such provisions in law exists in relation to trade mark cases.

The foundation to the appeal was the recognition that ISPs are innocent of wrongdoing. This is, in part, established by EU law (and recognised by national law) as it provides ‘safe harbours’ for intermediaries where in the provision of their services should not be seen as an infringer merely in the act of providing the technical processes of operating a telecommunications network.

However, the Supreme Court found that none of the relevant EU law made any reference to the responsibility for the expense of enforcing a judicial remedy except the EU Enforcement Directive, which says it should be ‘at the expense of the infringer’.

As a result, the Supreme Court held that this was a matter for English law. The principle, said the court, is that unless there are good reasons otherwise, an innocent intermediary is entitled to be indemnified by the rights-holder, which is no different than the established legal principles where an order is made innocent parties, such as Norwich Pharmacal orders.

There was some consideration about whether there was a moral or commercially responsibility on the ISPs, which was quickly dismissed as there is no legal foundation to either. The Supreme Court recognised that protection of intellectual property rights is ‘ordinarily and naturally’ a cost of business of the rights-holder, and not ordinally a cost for an ISP except in relation to their own rights.

In the end, the Supreme Court held that ISPs should be indemnified by the rights-holders for costs of implementing a website blocking injunction.

Comment

The Supreme Court has confirmed that the responsibility for costs falls on the rights-holder in trade mark website blocking injunctions (and arguably, the responsibility for costs of applying a website blocking injunction in relation to copyright infringements is now in limbo as a consequence). However, what is clear is that there is no question that the door remains open for trade mark proprietors to seek an injunction, but they must factor in the costs of doing so.