In a decision handed down today, 13 June, the Supreme Court has unanimously overturned the decisions of the High Court and the Court of Appeal and held that Internet Service Providers (“ISPs”), as innocent parties, should not be required to bear the reasonable costs of implementing orders that they block access to websites on which there is infringement of registered trade marks.
The dispute between Cartier, Montblanc and Richemont, as claimants, and 6 major ISP providers, as defendants, is the first in which the Courts have been asked to make website blocking orders where there is trade mark infringement. Such actions had been previously available only in the context of copyright infringement (pursuant to s.97A of the Copyright, Designs and Patents Act 1988).
The claimants, and owners of the infringed trade marks, sought orders requiring ISPs to block access to websites selling and advertising counterfeit goods. In a landmark decision in 2014, Cartier International v BSkyB and others  EWHC 3354 (Ch), Arnold J granted the orders and held that the rights-holders should pay the costs of the application, however the ISPs should pay the costs of implementing the blocking order. This was, he held, one of the costs of operating in this business sector.
On appeal Kitchin LJ, with whom Jackson LJ agreed, held that this decision was “entirely correct” (Cartier International AG and another v British Sky Broadcasting Ltd and another  EWCA Civ 658, 06 July 2016). Whilst recognising that there had been no wrongdoing on the part of the ISPs, he concurred that the ISPs should bear the costs, so long as the measures that they had to take to carry out the order were not unduly costly or difficult. Briggs LJ dissented on this view, arguing that the implementation costs should be borne by the applicant.
Appeal to the Supreme Court
The ISPs were granted leave to appeal to the Supreme Court. That appeal was heard on 30 January 2018 and asked that the Court consider whether ISPs, as innocent parties, should be required to bear the costs of such blocking orders.
The SC held that, as a matter of English law, unless there are good reasons for a different order, an innocent intermediary is entitled to be indemnified by the rights holder against the reasonable costs of complying with a website-blocking order.
The Court reasoned that website-blocking injunctions are sought by rights-holders to protect their own commercial interests, and that the protection of IP rights are an ordinary cost of a business owning those rights. In contrast, it is not an ordinary or natural cost of the business of an ISP, which is merely providing a network that is abused by others.
A critical fact however will be whether the intermediary is legally innocent. Where they are acting as “mere conduits”, they will be found to be so. However, the Court cautioned that different considerations may apply to intermediaries engaging in caching or hosting activities involving a greater degree of participation in the infringement.
This decision will be welcomed by ISPs and brings the position in line with that where there is an application for a search order at the premises of an innocent party. In such circumstances, the reasonable cost of the order is borne by the applicant.
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