Online counterfeits blocked: test case paves the way | Practical Law

Online counterfeits blocked: test case paves the way | Practical Law

In a test case that may be followed in other EU member states, the High Court has made its first ever website-blocking order to combat trade mark infringement and the sale of counterfeit goods. Now that the law has been tested, future actions of this nature should be more straightforward. However, it remains to be seen how readily the court will grant website-blocking orders to restrain trade mark infringement without evidence of counterfeiting.

Online counterfeits blocked: test case paves the way

Practical Law UK Articles 9-589-4735 (Approx. 4 pages)

Online counterfeits blocked: test case paves the way

by George Sevier, Wragge Lawrence Graham & Co LLP
Published on 27 Nov 2014 • United Kingdom
In a test case that may be followed in other EU member states, the High Court has made its first ever website-blocking order to combat trade mark infringement and the sale of counterfeit goods. Now that the law has been tested, future actions of this nature should be more straightforward. However, it remains to be seen how readily the court will grant website-blocking orders to restrain trade mark infringement without evidence of counterfeiting.
In a test case that may be followed in other EU member states, the High Court has made its first ever website-blocking order to combat trade mark infringement and the sale of counterfeit goods (Cartier International AG and others v British Sky Broadcasting Ltd and others [2014] EWHC 3354 (Ch)).
Over the last couple of years, several website-blocking orders have been obtained by music and film copyright owners under section 97A of the Copyright, Designs and Patents Act 1988 (section 97A) (see box "Injunctions based on section 97A"). However, there is no equivalent legislative provision for trade mark infringement and, until Cartier, website-blocking orders have not been used in respect of counterfeit goods or other trade mark infringement.

The application

Richemont International SA owns a large number of UK registered trade marks, including the luxury brands Cartier and Montblanc. Richemont applied for orders requiring five internet service providers (ISPs) to block access to six websites that advertised and sold counterfeit goods targeted at UK consumers. The court was satisfied that this was a clear case of trade mark infringement, but it needed to determine whether it had jurisdiction to order the ISPs to block access to those websites.

The legislation

Three EU directives provide the backdrop to website-blocking injunctions in respect of intellectual property infringement:
  • The E-Commerce Directive (2000/31/EC), which provides that ISPs, as mere conduits, are not liable for information transmitted by them, but does not exclude courts or administrative authorities, in accordance with EU member states' legal systems, from requiring ISPs to terminate or prevent an infringement (Article 12).
  • The Copyright Directive (2001/29/EC), which provides that rights holders should be able to apply for injunctions against ISPs whose services are being used to infringe copyright (Article 8(3)). This was implemented in the UK by section 97A.
  • The Intellectual Property Rights Enforcement Directive (2004/48/EC) (Enforcement Directive), which obliges member states to make remedies available to enforce the intellectual property rights that it covers, including copyright and trade marks. Article 11 provides for the availability of injunctions against infringers, but in the last sentence it says that member states must ensure that rights holders 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 the Copyright Directive. This apparently broadens the scope for injunctions against ISPs, so that they may be sought in respect of more than just copyright infringement.

The decision

The ISP defendants argued that while the Enforcement Directive has been transposed into domestic law, the UK did not pass any legislation specifically to implement the last sentence of Article 11 and so it has no effect in the UK.
However, the court was satisfied that it had the necessary jurisdiction under section 37(1) of the Senior Courts Act 1981, which provides that the High Court can grant an injunction in all cases in which it appears to be just and convenient to do so. The court considered that this applies not only to injunctions against infringers, but also to website-blocking injunctions against intermediaries. In any case, legislation that is specifically enacted or amended to implement a directive must be construed as far as is possible in conformity with, and to achieve the result intended by, that directive (Marleasing SA v La Comercial Internacional de Alimentación SA C-106/89).
In a subsequent judgment, the High Court has made clear that the jurisdiction is available in respect of infringement of any intellectual property right, not limited to copyright and trade marks, or to rights owned by the applicant (Cartier International AG and others v British Sky Broadcasting Ltd and others [2014] EWHC 3765 (Ch)).

Options for brand owners

Luxury brands have long been the target of counterfeiters, and sales are increasingly made online. Sales of counterfeit products on third-party websites, such as eBay and Alibaba, can be tackled relatively easily and quickly, using takedown processes such as eBay's Verified Rights Owner (VeRO) programme. However, counterfeiters often sell infringing products through their own websites, many of which are designed to look just like the brand owner's website. They also use domain names such as montblancoutletonline.co.uk, which might suggest that the website is a legitimate online outlet.
There are various ways in which brand owners can try to stifle sales, but they all have drawbacks:
Tackling website operators. Website operators whose purpose is to make money from counterfeiting tend to mask their identities, and even if they can be identified, cease and desist letters are rarely effective. Formal legal action may also be ineffective; for example, in Twentieth Century Fox Film Corporation and others v Newzbin Ltd, Twentieth Century Fox was granted an injunction against Newzbin Ltd, the operator of the Newzbin website that facilitated copyright infringement ([2010] EWHC 608 (Ch)). However, a few days after the judgment, the website relaunched as Newzbin2, hosted in the Seychelles.
Domain name complaints. Brand owners might be able to bring domain name complaints, which can result in the domain name being cancelled or transferred, but the website can quickly be moved to a new domain.
Hosting provider takedowns. Article 14 of the E-Commerce Directive provides that hosting providers are not liable for the information that they store, on the condition that if they are made aware of illegal activity or information, they act expeditiously to remove or disable access to the information. While many hosting providers act on takedown requests, the operators of rogue websites are adept at moving to new hosts, including those hosts (typically based outside Western jurisdictions) that are known not to pay heed to takedown notices.
Payment method blocks. Payment providers, such as Visa, can be asked to suspend the accounts of the website operators, but the websites will still be able to accept payment by other means, such as bank transfer.
Search engine de-indexing. Some search providers, including Google, are prepared to de-index links to webpages that infringe copyright. However, they do not generally do so in respect of trade mark infringement without a court order. Also, while removing these webpages from search results can reduce the number of people accessing infringing content, weblinks to these sites are often disseminated by spam email or through social media.

A new tool in the box

Website-blocking injunctions against ISPs are another tool in the box for brand owners tackling counterfeits. They are not a complete solution, since they do not extinguish the website altogether or result in any direct action against the culprits. However, website-blocking injunctions are effective, and an action against the five main ISPs could cover 95% of UK broadband users. While ISP blocks can be circumvented, section 97A website-blocking injunctions have been shown to result in a marked reduction in infringing activity in the UK.
Now that the law has been tested in Cartier, future actions of this nature should be more straightforward. Future cases are likely to be brought using the simplified Civil Procedure Rule Part 8 procedure and are unlikely to be defended by ISPs.
Subject to agreeing the wording of the orders, the court's principal role will be in determining that the webpages concerned are being used to infringe the claimant's trade marks. However, it remains to be seen how readily the court will grant website-blocking orders to restrain trade mark infringement without evidence of counterfeiting.
George Sevier is an associate and IP specialist at Wragge Lawrence Graham & Co LLP.

Injunctions based on section 97A

Since it was first used in Newzbin2, section 97A of the Copyright, Designs and Patents Act 1988 has been used by music and film copyright owners to obtain website-blocking injunctions in respect of numerous websites (Twentieth Century Fox Film Corporation and others v British Telecommunications plc [2011] EWHC 1981 (Ch) (known as Newzbin2); www.practicallaw.com/0-507-8791). For example:
  • In Dramatico Entertainment Ltd and others v British Sky Broadcasting Ltd and others, the High Court granted injunctions against five UK internet service providers (ISPs) requiring them to block access to The Pirate Bay, a peer-to-peer file-sharing website ([2012] EWHC 1152 (Ch); www.practicallaw.com/7-519-6277).
  • In EMI Records Ltd and others v British Sky Broadcasting Ltd and others, the High Court approved an order agreed between the UK's major ISPs and owners of music content to block internet users from accessing websites that facilitated the transmission of copyright infringing material ([2013] EWHC 379 (Ch); see News brief "Infringing torrent websites: another battle won").
  • In Paramount Home Entertainment International Ltd and others v British Sky Broadcasting Ltd and others, the High Court ordered the six main UK ISPs to block access to two television and film streaming websites ([2013] EWHC 3479). In Paramount Home Entertainment International Ltd and others v British Sky Broadcasting Ltd and others, the High Court ordered those same ISPs to block access to a further four websites ([2014] EWHC 937 (Ch); www.practicallaw.com/0-572-1367).