In Cartier International AG v British Telecommunications, the Supreme Court decided that Internet Service Providers (“ISPs”) should not have to bear the cost of complying with website blocking injunctions to block access to websites infringing a rights-holder’s trade marks. Interestingly, this decision is the first one confirming the availability of blocking orders against websites infringing trade marks, as previous cases had only dealt with blocking orders sought against websites infringing copyright pursuant to section 97A of the Copyright, Designs and Patents Act 1988.
This was a simple trade mark infringement case. The respondents, three well-known Swiss or German luxury goods companies, sought injunctions against the appellants, five large ISPs serving the UK, to block access to specific websites advertising counterfeit goods bearing the respondents’ brands Cartier, Montblanc and IWC. In first instance, the respondents obtained injunctions requiring the ISPs to block (or attempt to block) access to the infringing websites. The appellant ISPs were ordered to pay the costs of implementing such website-blocking measures. The Supreme Court had to decide whether ISPs, as innocent parties, should be required to bear the costs of website-blocking orders.
The appellant ISPs argued that they should not be liable to pay certain heads of costs, such as the cost of processing the application and configuring the ISP’s blocking systems, updating the block over the lifetime of the orders in response to notifications from the rights-holders, and liabilities that may be incurred from blocking malfunctions through no fault of the ISP. They appealed to the Supreme Court after being unsuccessful in the first and second instance.
Lord Sumption gave the leading judgment, to which the other judges agreed, and decided that it is not justifiable that the appellant ISPs should be liable to pay the costs of complying with website-blocking orders. Lord Sumption gave three reasons for his conclusion:
- ISPs are not themselves guilty of any trade mark infringement: they merely provide a communications network, as well as other services such as web hosting, internet search engines, portals and internet payment systems. They have no editorial control over the content of the website, and are merely “innocent intermediaries” whose website is being used by third parties to advertise and sell infringing goods.
- Although national intellectual property laws have been partially harmonised across the EU through EU Directives, questions of costs remain a matter for national law and are not covered by the relevant Directives. There is nothing in English law requiring an innocent intermediary to pay the costs for complying with a website-blocking injunction.
- Contrary to the respondents’ arguments in the lower instances, ISPs do not benefit from pirate trade to increase the volume of traffic to the Internet. Rather, it is actually the rights-holders who have a commercial interest in protecting their trade marks, and ISPs have no business in this. Protection of intellectual property is a cost that should be borne by the rights-holders, and not by ISPs as “innocent intermediaries”.
As a result, the respondent trade mark owners were to indemnify the ISPs for the costs of implementing website-blocking measures.