Blocking Orders and ISP Costs

June 12, 2018

 The Supreme Court has given judgment in Cartier
International AG and others v British Telecommunications Plc and another


Three companies which design, manufacture and sell luxury
goods under well-known trade marks had sought injunctions requiring the five
largest UK ISPs to block or attempt to block access to specified “target
websites”, which were advertising and selling counterfeit copies of their
luxury trade-marked goods, in addition to various other internet addresses
whose purpose is to enable access to a target website. The ISPs provide
networks by which subscribers access content, but they neither provide nor store
content. They do not themselves infringe the relevant trade marks.

The injunctions were granted and the judge ordered the ISPs
to pay the costs, including the costs of implementing the website-blocking
order. The Court of Appeal dismissed the ISPs’ appeal. The appeal to the
Supreme Court was concerned only with costs – the main issue being whether the
respondents should have been required to bear various costs of implementing the
website-blocking order.


The Supreme Court unanimously allowed the appeal, so far as
concerns the cost of complying with the injunction. The respondents will be
ordered to indemnify the ISPs for the disputed implementation costs, but the
Supreme Court held that the judge was entitled to order the ISPs to pay the
litigation costs.

Lord Sumption gave the judgment, with which the other
Justices agreed. His reasons were as follows.

  • The English courts have long had jurisdiction in certain
    circumstances to order innocent parties to assist those whose rights have been
    invaded by a wrongdoer. That includes the jurisdiction exercised in Norwich Pharmacal Co v Customs and Excise
    [1974] AC 133 which is commonly exercised for the purpose of assisting
    claimants to bring or maintain proceedings against wrongdoers, generally by
    ordering innocent intermediaries to provide information. The ordinary rule is
    that the intermediary is entitled to the costs of compliance with a
    Norwich Pharmacal order. Orders for the
    disclosure of information are only one category of order which can be made against
    a third party to prevent the use of his facilities for wrongdoing (at
  • National laws concerning intellectual property rights are
    partially harmonised by a series of EU Directives, of which three are relevant:
    the E-Commerce Directive 2000/31/EC, the Information Security Directive
    2001/29/EC and the Enforcement Directive 2004/48/EC. The E-Commerce Directive
    requires Member States to introduce limitations of liability (“safe harbours”)
    in respect of certain activities undertaken by “information society services”,
    which include ISPs (at [16]-[17]). None of the Directives deals expressly with
    the costs of enforcing a judicial remedy, as between the rightsholder and an
    information society service (at [28]). In the Court of Appeal, Kitchen LJ viewed
    the recitals to the E-Commerce Directive as implicitly supporting an order for
    the intermediary to bear the implementation costs. He suggested that, under the
    Directives, liability for the costs of compliance was the quid pro quo of the
    immunities and the absence of any general obligation owed by ISPs to monitor
    information which they transmit or store. Kitchen LJ found support for his
    analysis in the reasons of the CJEU in L’Oréal
    SA v eBay International AG
    (Case C-324/09) [2012] Bus LR 1369 and UPC Telekabel Wien GmbH v Constantin Film
    Verleigh GmbH
    (Case C-314/12) [2014] Bus LR 541 . But the Supreme Court
    disagrees with that view. First, the recitals refer the terms of an injunction
    against an intermediary to national law, without any further guidance. Second,
    the quid pro quo argument assumes what it seeks to prove: the Directives do not
    deal at all with the costs of complying with an injunction against an
    intermediary, so there is nothing from which such an inference could be drawn.
    Third, the rationale of the immunities, as explained in the recitals, is that
    disparities between national laws on liability can distort the functioning of
    the single market, and that the intermediaries have little or no control over
    content. It has nothing to do with the incidence of compliance costs when an
    injunction is granted. Fourth, the CJEU authorities say nothing about the
    incidence of compliance costs but only that, so far as they are to be borne by
    the intermediary, they must not be excessive (at [29]-[30]).
  • The incidence of compliance costs is a matter for English
    law, within the broad limits set by the EU principles of effectiveness and
    equivalence, and the requirement that any remedy should be fair proportionate
    and not unnecessarily costly. In English law, the incidence of costs generally
    depends on the legal distribution of risk as found by the court. An innocent
    intermediary is ordinarily entitled to be indemnified by the rights-holder
    against the costs of complying with a website-blocking order. That is no
    different in principle from the established position in domestic law in the
    case of other orders granted to require an innocent party to assist the
    claimant against a wrongdoer. An ISP serving as a mere conduit would not incur
    liability for trade mark infringement under English law even in the absence of
    the safe harbour provisions. There is no legal basis for requiring a party to
    shoulder the burden of remedying an injustice if he has no legal responsibility
    and is acting under the compulsion of an order of the court (at [31]-[33]).
  • It has sometimes been suggested that because ISPs benefit
    financially from the volume and appeal of the content available on the
    internet, including content which infringes intellectual property rights, it is
    fair to make them contribute to the cost of enforcement. That assumes a degree
    of responsibility on the part of the intermediary which does not correspond to
    any legal standard. The law is not generally concerned with moral or commercial
    responsibilities except as an arguable basis for legal ones. Even if a moral or
    commercial responsibility were relevant, it would be hard to discern one in a
    case like this. Website-blocking injunctions are sought by rights-holders in
    their own commercial interest. There is no reason why the rights-holder should
    be entitled to look for a contribution to the cost of defending his rights from
    anyone other than the infringers (at [34]-[35]).

It follows that in principle the rights-holders should
indemnify the ISPs for the compliance costs, subject to the limits on relief
set by EU law. There is no reason to believe that such an indemnity, which must
be limited to reasonable costs, would exceed those limits. The costs are not
excessive, disproportionate or such as to impair the respondents’ ability to
enforce their rights. Critically, the intermediary in this case is legally
innocent. Different considerations may apply to those engaging in caching or
hosting, which involve greater participation in the infringement and which are
more likely to infringe national intellectual property laws if “safe harbour”
immunity is unavailable (at [36]-[37]).

As to the costs of the litigation, the judge awarded them
against the ISPs because, unusually, they had made the litigation a test case
and had strenuously resisted the application. He was plainly entitled to do so
(at [38]).