Injunctions against ISPs: The Cartier Appeal
Creative Commons Licence
Cartier International AG and Others v British Sky Broadcasting Ltd and Others  EWCA Civ 658 (6 July 2016)
In Cartier International AG and Others v British Sky Broadcasting Ltd and Others  ETMR 1,  1 All ER 949,  EWHC 3354 (Ch),  RPC 7,  WLR(D) 464,  1 All ER (Comm) 641,  BUS LR 298,  EMLR 10 Mr Justice Arnold ordered the five leading internet service providers to block access to certain websites that offered counterfeit Cartier goods for sale under s.37 (1) of the Senior Courts Act 1981. I discussed the case in Injunctions against ISPs Part VIII: Cartier International AG and Others v British Sky Broadcasting Ltd and Others 6 Jan 2015. This was not the first time a court had ordered an ISP to block access to a website that infringed a claimant's intellectual property rights. A number of earlier cases had already been brought under s.97A of the Copyright, Designs and Patents Act 1988. The significance of this case is that it had been brought under s.37 (1) because there is no equivalent to s.97A in the Trade Marks Act 1994 or any of the other IP statute.
In my case note I observed:
"None of the orders made by Mr Justice Arnold or other judges in the earlier cases has ever been appealed successfully and it is unlikely that anyone will appeal or apply to vary this order."Contrary to my expectations the ISPs did appeal. Their appeal came on before Lords Justices Jackson, Kitchin and Bruggs in Cartier International AG and Others v British Sky Broadcasting Ltd and Others  EWCA Civ 658 (6 July 2016). The appeal was unsuccessful. All three Lord Justices found against the ISPs though Lord Justice Briggs would have ordered the rights holders to bear the costs of "obtaining valuable injunctive relief for the better exploitation of its intellectual property."
The ISPs' grounds of appeal were summarized by Lord Justice Kitchin at paragraph  of his judgment:
"They contend, in broad outline, that they are wholly innocent parties and are not alleged to be wrongdoers; that the court had no jurisdiction to make any such order; that if the court did have jurisdiction, the jurisdictional threshold requirements were not satisfied in the circumstances of these cases; that the judge failed properly to identify the correct principles that should be applied in deciding whether or not to make an order; that the orders made were disproportionate having regard to the evidence before the court; and that the judge fell into error in making the orders that he did in relation to costs."The Open Rights Group also made written submissions on the position of third parties who are potentially affected by website blocking orders which Lord Justice Kitchin said he found very helpful.
As to jurisdiction, the ISPs argued that they were entirely innocent of any wrongdoing, they do not owe any duty to prevent trade mark infringement committed by third parties, including those who operate websites offering counterfeit goods for sale, either under the Trade Marks Act 1994 or at common law, that s.37 (1) gave the courts no power to grant injunctions where none existed before the Act was passed, that it is a fundamental feature of the court's practice that it is not generally possible to obtain injunctive relief against a party without a substantive cause of action against it and that the Norwich Pharmacal exception should not be extended. The Court of Appeal accepted that the ISPs were not guilty of any wrongdoing and that they did not owe a common law duty of care to take reasonable care to ensure that their services are not used by the operators of the offending websites but rejected the rest of their argument.
All three Lord Justices agreed that Mr Justice Arnold had been right to hold that he had power to grant blocking orders under s.37 (1). That power arose upon a proper construction of the statute even without reference to art art 11 of the Enforcement Directive (Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (L195/16 2.6.2004)) but art 11 reinforced the position in national law. That article requires EU member states to ensure inter alia that:
"rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right, without prejudice to Article 8(3) of Directive 2001/29/EC."The scope of that provision had been referred to the Court of Justice of the European Union in Case C-324/09 L'Oreal SA and Others v eBay International AG and Others  Bus LR 1369,  RPC 27,  ETMR 52,  All ER (EC) 501, ECLI:EU:C:2011:474,  ECR I-6011,  EMLR 6,  EUECJ C-324/09, EU:C:2011:474. The CJEU held that:
"art.11 of Directive 2004/48 must be interpreted as requiring the Member States to ensure that the national courts with jurisdiction in relation to the protection of intellectual property rights are able to order the operator of an online marketplace to take measures which contribute, not only to bringing to an end infringements of those rights by users of that marketplace, but also to preventing further infringements of that kind. Those injunctions must be effective, proportionate, dissuasive and must not create barriers to legitimate trade."Accordingly Lord Justice Kitchin concluded at para  of his judgment:
"It seems to me to be clear from this guidance that Article 11 does indeed provide a 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 one of the ISPs, which have been used by a third party to infringe a registered trade mark. There is no dispute that the ISPs are intermediaries within the meaning of Article 11 and accordingly, subject to the threshold conditions to which I shall shortly come, I believe that this court must now recognise pursuant to general equitable principles that this is one of those new categories of case in which the court may grant an injunction when it is satisfied that it is just and convenient to do so."Having decided that the court did have jurisdiction to make the orders appealed against, the Lord Justices considered whether Mr Justice Arnold had exercised his jurisdiction correctly.
The first objection was that the orders limited the ISPs freedom to conduct their business under art 16 of the Charter of Fundamental Rights of the European Union and their customers' freedom of expression under art 11. Art 52 (1) of the Charter provides:
"Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others."The ISPs had argued that the limitations were not provided for by law and that Mr Justice Arnold's orders allowed the claimants to require the ISPs to extend the scope of those orders without reference to the court. The argument that the limitations were not provided for by law fell with the Court's decision on jurisdiction. As for the second, Lord Justice Kitchin said at :
"I accept that the orders were likely to have the effect of blocking access to the websites of third parties. But this was a matter of which the judge was acutely conscious and his orders were carefully framed to deal with it. Specifically, the orders provide that where a server hosting a target website also hosts another website, then an ISP which is required to adopt IP address blocking measures is only required to block the target website's IP address where Richemont or its agents certify that the third party site is engaged in unlawful activity and that, if the website has disclosed a means of contact, appropriate notice has been sent to the operator of that site informing it of, inter alia, the order, why it is appropriate for the website to be blocked and that it may move the website to a different server. In my judgment this is a regime which deals in an entirely proportionate and appropriate way with the necessary mechanics of making a blocking order effective without interfering with the legitimate interests of other operators. It does not involve any activity which is not provided for by law."The Court of Appeal endorsed Mr Justice Arnold's finding that the following threshold conditions which must be satisfied before a website blocking order is made.
"First, the ISPs must be intermediaries within the meaning of the third sentence of Article 11. Secondly, either the users or the operators of the website must be infringing the claimant's trade marks. Thirdly, the users or the operators of the website must use the services of the ISPs. Fourthly, the ISPs must have actual knowledge of this."The Court held that all four conditions had been satisfied.
It finally addressed the principles to be applied in considering whether to make a website blocking order which Mr Justice Arnold had listed as follows:
- The relief must be necessary;
- It must be effective;
- It must be dissuasive;
- It must not be unnecessarily complicated or costly;
- It must avoid barriers to legitimate trade;
- It must be fair and equitable and strike a "fair balance" between the applicable fundamental rights; a
- It must be proportionate;
- It must have regard for the substitutability of other websites for the target websites; and
- Remedies should be applied in such a manner as to provide safeguards against their abuse.
The Court of Appeal endorsed all those principles, considered whether the judge below had applied them correctly and considered that he had.
Between paragraphs  and  of his judgment Lord Justice Kitchin set out the legislation that he had to apply which included the E-Commerce Directive (Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market L 178 , 17/07/2000 P. 1 - 16) as well as the Enforcement Directive and Charter which have been mentioned above. The Charter will fall away altogether and Parliament will cease to be bound by the Directives when the UK leaves the EU. It is therefore worth considering whether the decision will continue to be good law after our departure. In my view it probably will because the Senior Courts Act will not be affected by Brexit. Art 11 merely reinforced the Court's power under s.37 (1). Future cases will probably be decided purely on the balance of convenience with which the threshold conditions and applicable principles will be completely compatible. The absence of a European dimensions should simplify judicial decision making as it will no longer be necessary to refer to the Charter or underlying directives.
If anyone wishes to discuss this article or applications against ISPs generally, he or she should call me on 0202 7404 5252 during office hours or send me a message through my contact form.