The key question in this Supreme Court case was summarised by Lord Sumption in his leading judgment (with which the other judges agreed) as:
"When an injunction is obtained against an innocent intermediary to prevent the use of his facilities by wrongdoers for unlawful purposes, who should pay the cost of complying with the order?"
The Supreme Court has overturned the decisions of the lower courts and held that the costs associated with the implementation of a website-blocking order should be borne by the person who obtained the injunction i.e. the rights-holder.
By way of a very brief reminder of the underlying decision on the facts which led to the grant of the blocking injunctions: a number of well-known entities offering luxury goods (including Cartier and Richemont brands) obtained website-blocking injunctions requiring internet service providers (ISPs) (including BT and EE) to block or attempt to block access to specific websites offering goods that infringed the formers' trade marks.
Supreme Court decision
Key take-away points
There are various heads of costs involved in implementing a website-blocking order and some costs will be incurred by the ISP for other reasons (e.g. blocking access to child abuse images).
The appeal was only concerned with those costs specifically incurred in the implementation of a website-blocking order.
Lord Sumption conducted a thorough review of the legal basis on which website-blocking injunctions are made (being partly founded on EU law and partly on domestic law) and concluded that:
- None of the relevant EU Directives deal with the position on costs associated with judicial remedies as between the rights-holder and an ISP;
- The issue of 'compliance costs' is a matter for English law, "within the broad limits set by the relevant EU principles of effectiveness and equivalence, and the requirement that any remedy should be fair, proportionate and not unnecessarily costly"; and
- That applying the ordinary principle of English law, unless there are good reasons for a different order, an ISP (being an innocent intermediary as a "mere conduit") is entitled to be indemnified by the rights-holder against the costs of complying with a website-blocking order.
Further points to note
- Lord Sumption placed heavy emphasis on the ISP's position as a "mere conduit". If an ISP's action can be characterised is "hosting" or "caching" for example, then the position would likely be different.
- No line was drawn between the different IP rights. Lord Sumption noted that the practice in the previous website-blocking cases, which have all been based on copyright, has been to leave the ISPs to bear the costs of implementing the orders. He analysed and rejected the grounds upon which this practice was based. It appears therefore that the Supreme Court decision applies regardless of which intellectual property right is relied on.
- Lord Sumption did agree that the High Court had been entitled to order the ISPs to pay the costs of the litigation because, unusually, they had made the litigation a test case and had strenuously resisted the application.
Unsurprisingly, this decision will not be pleasantly received by rights-holders. In general, the applicant will be responsible for its own costs of applying for a website-blocking injunction (note that in the Cartier case, the ISPs were responsible for their own costs but only because they had made it a test case). This expense, plus the compliance costs for ISPs may well be too high or indeed too uncertain at the time of applying such that many rights-holders will be discouraged from seeking an injunction.
Rights-holders could as a first step contact the relevant ISP, notify them of the infringement and request details of the associated costs of compliance. Theoretically, at that point the rights-holder can decide whether to seek an injunction. However the expected costs proposed by those ISP's is only subject to the principle of "reasonableness"– one that has not yet been tested in this context.
It will remain to be seen how rights-holders and indeed ISPs react to the Supreme Court's decision in practice. If you are concerned that this decision impacts on your business and/or your brand, please contact our Intellectual Property team.