Canada: Great News For Brand Owners - Access To Websites Selling Fake Goods Can Be Blocked

Last Updated: July 20 2016
Article by George Sevier and Kate Swaine

The Court of Appeal has confirmed that the English High Court can order internet service providers (ISPs) to block access to websites advertising counterfeit goods.

Website blocking orders in respect of copyright infringement have been available in the UK since 2011. In a 2014 test case brought by Richemont, the owner of luxury brands such as Cartier, Mr Justice Arnold concluded that the English High Court also has jurisdiction to order ISPs to prevent their customers from accessing websites advertising counterfeit (trade mark infringing) goods. That decision was appealed, and on 6 July 2016 the Court of Appeal overwhelmingly upheld Arnold J's judgment.

The court's jurisdiction

Article 3(1) of Directive 2004/48/EC (the Enforcement Directive) requires EU Member States to make remedies available to rightholders, necessary to combat infringement of intellectual property rights, and Article 11 includes a requirement 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". The Enforcement Directive was transposed into domestic law, but there was no specific implementation of this aspect of Article 11.

At first instance, Arnold J had found that specific implementation (into the Trade Marks Act 1994, for example) was not necessary, since the court has jurisdiction to grant such injunctions by virtue of section 37(1) of the Senior Courts Act 1981. Section 37(1) provides that "The High Court may by order (whether interlocutory or final) grant an injunction ... in all cases in which it appears to be just and convenient to do so."

On appeal, the ISPs disputed this, including on the basis that the ISPs had not invaded any legal or equitable right vested in Richemont, nor had they behaved in an unconscionable manner, or threatened to do so (as required by old caselaw). Lord Justice Kitchin, giving the leading judgment in the Court of Appeal, disagreed, saying "that would impose a straightjacket on the court and its ability to exercise its equitable powers which is not warranted by principle".

The ISPs also appealed the judge's decision that the ISPs should bear the cost of implementing blocking orders. The Court of Appeal (Briggs LJ dissenting) dismissed the ISPs' appeal, so brand owners need only bear their own costs of seeking the order, and of monitoring the website for changes following implementation of the block. The cost of implementation is to be met by the ISPs.

What is needed in order to get a blocking injunction?

It is now established that the High Court has jurisdiction to order ISPs to block websites offering counterfeit goods. The ISPs are unlikely to defend future cases, which could be brought using the simplified CPR Part 8 procedure.

Brand owners will need to demonstrate that:

  1. The users or operators of the website are infringing the brand owner's trade mark (e.g. by advertising counterfeit goods).
  2. The users or operators of the website are using the ISP's services. Showing this in respect of one ISP is likely to be enough - there is an inference that the other main ISPs would be similarly involved, given that together they cover 95% of UK broadband users.
  3. All the concerned ISPs have been put on notice of their services being used to infringe the trade mark. This is as straightforward as sending a letter.

Assuming those threshold conditions are met, the court then needs to be satisfied that a blocking injunction would: (i) be necessary; (ii) be effective; (iii) be dissuasive; (iv) not be unnecessarily complicated or costly; (v) avoid barriers to legitimate trade; (vi) be fair and equitable and strike a "fair balance" between the applicable fundamental rights; (vii) be proportionate; and (viii) be applied in such a manner as to provide safeguards against their abuse.

Both Arnold J and the Court of Appeal found all of those conditions to be satisfied on the basis of the case brought by Richemont. The regime which has been adopted by rightholders, the courts and the ISPs in relation to blocking injunctions has paved the way for many of these conditions to be satisfied - for instance, the ISPs have systems which can block access to individual websites, and it has been shown that blocking injunctions are very effective and dissuasive. With the exception of proportionality, they are likely to be relatively easy to satisfy in future cases.

Evidencing proportionality

While there are a number of factors which impact the proportionality of granting a blocking injunction, Arnold J considered the key question to be whether the likely costs burden on the ISPs is justified by the likely efficacy of the blocking order and the consequent benefit to the brand owner, having regard to the alternative measures available (such as making domain name complaints, or asking hosting registrars to take down the websites).

It would assist with showing that a blocking order is proportionate if it can be shown that the activities of counterfeiters cause significant damage to the brand owner, and that the websites concerned are highly visited. The costs burden on the ISPs is relatively small - in Twentieth Century Fox v BT (No 2), BT estimated its costs of implementing a blocking order to be in the region of £5,000 per website. However, if a brand owner seeks an order which requires the ISPs to implement the blocks in a way which could increase the burden on the ISPs, this could be enough tip the balance away from an order being proportionate.

Practical implications for brand owners

The availability of website blocking orders is now confirmed. They provide another tool in the box in the fight against counterfeiters, and can dramatically cut the number of visitors to websites touting counterfeit goods. Since future applications are unlikely to be defended by the ISPs, blocking orders need not be expensive to obtain.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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