When can injunctive relief be obtained against an online intermediary that is not itself liable for infringement of an intellectual property right? This is a question that has gained currency in the ongoing tussle between rights-owners and online intermediaries about who should bear responsibility for tackling online infringements. Following the ECJ’s guidance in L’Oreal SA & Others v eBay International AG & Others and the High Court’s application of this guidance in Twentieth Century Fox Film & Others v BT plc the landscape may now be just a little clearer.
The legal regime in context
Online intermediaries are, understandably, a little wary about having to assume responsibility for the activities of users of their services. On the other side of the coin, rights-owners are keen that online intermediaries should shoulder some of the burden of dealing with infringements of their rights. There are three main reasons for this. First, the intermediary will often have a contractual relationship with the infringing user and will be able to enforce those terms, which may preclude any use of its service which infringes third-party rights. Secondly, the intermediary may be in a position to ‘pull the plug on’ or ‘take down’ infringing content or even terminate the service of the infringing user. Thirdly, it may be more cost-effective to pursue a single intermediary rather than a multitude of its users. So what does the law require?
(1) The E-Commerce Directive 2000/31
The E-commerce Directive includes provisions which attempt to strike a balance between these two sides of the coin. They do so by focusing on when an intermediary is not liable for unlawful activity rather than attempting to define its underlying liability, a much more complicated and politically sensitive undertaking which remains a matter of national law unless already harmonised in other EU instruments. So an intermediary (or to use the language of the Directive, a provider of ‘an information society service’) is not liable, provided certain conditions obtain, where it acts as a mere conduit or it caches or hosts content. Added to the bargain, an intermediary cannot be required to generally monitor information which it transmits or stores or to actively seek out information indicating unlawful activity.
In November 2010, the European Commission concluded a consultation on the E-Commerce Directive in which it invited comments on, among other matters, the interpretation of the provisions concerning intermediary liability. This consultation elicited a wide range of responses and the Commission has indicated that it intends to publish a communication on e-commerce, including the impact of the E-Commerce Directive, in September.
(2) The InfoSoc Directive 2001/29
The InfoSoc Directive addresses only copyright law. Article 8(3) provides that ‘Member States shall ensure that right holders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right.‘ The rationale behind this provision is explained in Recital 59 of the Directive which appears to reflect the rightholder’s favoured view that, in many cases in the digital environment, intermediaries are best placed to stop third party infringing activities on their services, even where the intermediary is exempt from liability itself under Article 5 of the Directive. Recital 59 rather cautiously concludes that ‘The conditions and modalities relating to such injunctions should be left to the national law of the Member States.’
(3) The Enforcement Directive 2004/48
The Enforcement Directive addresses ‘intellectual property rights’ although the precise scope of this term is not particularly clear. The third sentence of Article 11 of the Directive provides that ‘Member States shall also ensure 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, without prejudice to Article 8(3) of Directive 2001/29/EC.‘ Article 9 of the Directive provides an equivalent provision for interlocutory injunctions.
Article 3 of the Directive requires, among other things, that remedies (which includes injunctions) ‘ …shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays.’ and ‘ …shall also be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse.’
The recitals to the Directive provide further information. Recital 23 states that the conditions and procedures relating to such injunctions should be left to the national law of the Member States, as is the case with the InfoSoc Directive. However, Recital 24 goes on to state that these may include ‘prohibitory measures’ aimed at preventing further infringements of intellectual property rights and ‘corrective measures’ such as recalling, removing from distribution or destroying infringing goods and materials used to create them.
Article 2(3) of the Directive makes it clear that it ‘shall not affect’ the provisions of the E-commerce Directive. Thus, for example, any injunction granted must not affect the provision in Article 15 of the latter which precludes Member States from imposing a general obligation to monitor on intermediaries.
In July 2011, the European Commission published comments that it had received on its earlier report on the impact of the Enforcement Directive which specifically addressed intermediaries and the workability of injunctions. The comments clearly illustrate the broad range of views on the issue which need to be reconciled.
The ECJ’s guidance in L’Oreal v eBay
L’Oreal took action against eBay because users of eBay were selling counterfeit products, tester products, and products sourced from outside the European Economic Area, all of which L’Oreal claimed infringed its trade mark rights. In proceedings before Arnold J in the UK High Court, it was necessary to determine (1) the extent of eBay’s liability (if any) for this conduct and (2) the availability and extent of any remedies against it, in particular injunctive relief. This article is concerned only with the second of these two issues.
The UK has not taken any specific action to implement the third sentence of Article 11 of the Enforcement Directive. Instead, the legislators appear to have taken the view that existing UK law already made adequate provision for the remedies envisaged. Section 37(1) of the Senior Courts Act 1981 states ‘The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to be just and convenient to do so.‘ Whilst Arnold J was satisfied that the court had the power under s 37(1) and its equitable jurisdiction to grant an injunction against an intermediary that was not itself liable, he noted that it was unclear whether Article 11 itself actually required this and, in particular, what the scope of the obligation on Member States was. He therefore referred the issue to the ECJ for clarification.
The ECJ’s analysis can be summarised under three headings.
(1) Injunctions to prevent future infringements of intellectual property rights
First, the ECJ considered whether the third sentence of Article 11 required injunctions to prevent future infringements of intellectual property rights, rather than just bringing to an end specific existing infringements. It concluded that it did.
In particular, the ECJ cited Article 18 of the E-commerce Directive according to which Member States are required to adopt ‘measures designed to terminate any alleged infringement and to prevent any further impairment of the interests involved.‘ [emphasis added]. The ECJ stated that, if the third sentence of Article 11 was interpreted in a manner that meant injunctions were not available to prevent ‘further impairment’, this would effectively narrow the scope of the obligation in Article 18 of the E-commerce Directive. That would be contrary to Article 2(3) of the Enforcement Directive. The ECJ also cited Recital 24 of the E-commerce Directive, which explicitly refers to measures aimed at preventing further infringements.
What, then, are ‘future’ infringements or ‘further impairments’ of intellectual property rights? The ECJ did not really elaborate on this, but the Advocate General’s view, whose non-binding opinion preceded the ECJ ruling, provides some insights.
First, he said that the third sentence of Article 11 does not provide for an injunction against an intermediary to prevent any further infringement of that type (which in this case was trade mark infringement) as this would be inconsistent with the principle of proportionality. This seems rather obvious.
Second, he said that an injunction may be available against an intermediary to prevent not only the continuation of a specific act of infringement – the usual injunction available against the infringer – but also the repetition of the same or a similar infringement in the future, where such injunctions are available under national law. This begs the question – what is a ‘similar’ infringement? One can envisage rightholders seeking to push the meaning of this to its limits in order to widen the scope of any injunction. Furthermore, the Advocate General’s curious qualification of ‘where such injunctions are available under national law’ is a bit like asking the tail to wag the dog. The High Court was seeking guidance on this very issue and to determine the scope of Article 11 by reference to national law would invite inconsistency and uncertainty.
Finally, the Advocate General went on to tentatively suggest that an appropriate limit may be to impose a ‘double requirement of identity’; essentially meaning that the future infringements would have to be committed by the same third party and in respect of the same trade mark – a point which the ECJ appears to have acknowledged but which rather pours cold water on the notion of an injunction for a ‘similar’ infringement. The EU Commission has described such a requirement as a ‘Notice and stay down’ obligation.
(2) Measures that can be imposed on online intermediaries
This is a difficult issue and one which the ECJ side-stepped. The ‘conditions and procedures’ for such injunctions (and therefore, in effect, the measures) are the responsibility of the national courts of Member States. The measures that need to be imposed will be determined by the scope of the injunction required. But, similarly, the scope of the injunction will also be determined by the feasibility, cost, proportionality and so on of the measures that might be taken. So the assessment is not one that should (or even could) be conducted in two separate stages; it is an overall assessment taking into consideration the relevant ground rules that the ECJ has attempted to set down.
Notwithstanding the ECJ’s understandable reluctance to spell out measures in any detail, it is clear that in the online environment the use of technology has a major role to play in this area. Technical measures that could be taken might including blocking a particular infringing user’s access to a service (thereby replicating the same, inoperative and somewhat controversial, measure in the Digital Economy Act 2010) or utilising content filtering applications and web proxy servers to fish out infringing content (for example, BT’s ‘CleanFeed’ system).
(3) General considerations for grant of injunction
The ECJ set out some general ground rules which national courts need to take into account when determining the scope of an injunction and the measures to be imposed to give it efficacy.
(a) Injunctions must be effective, proportionate and dissuasive
Article 2(3) of the Enforcement Directive requires measures to be ‘effective, proportionate and dissuasive’. In the UK, granting an injunction that is effective, proportionate and dissuasive to bring to an end an existing infringement is bread and butter work for the courts. This is because it relates to precise and identifiable subject matter and the injunction can be worded to address that subject matter. In doing so, it is, arguably, effective and proportionate and, given that the consequence of failing to comply would constitute a contempt of court with the possibility of imprisonment, it is also dissuasive. Injunctions directed towards future infringements are not as straightforward. The court will need to consider the lengths and expense to which it will require an online intermediary to go to comply with the injunction. This is at the heart of the battleground between rights-owners and online intermediaries.
(b) Injunctions must be fair and equitable
This stems from Article 3 of the Enforcement Directive requiring measures to be fair and equitable, not unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays. There is a degree of overlap with the concept of proportionality here. In the UK, s 37(1) of the Senior Courts Act 1981 allows the High Court to grant injunctions where it is ‘just and convenient’ to do so and it is unlikely to exercise its equitable jurisdiction to grant an injunction in a manner inconsistent with the principles in Article 3.
(c) There can be no general obligation to monitor
The measures required of an online intermediary must not amount to an obligation to actively monitor all customer data to prevent future infringements, which would be incompatible with Article 15 of the E-commerce Directive. So an injunction must not overstep the mark.
(d) Injunctions must not create barriers to legitimate trade
This also stems from Article 3 of the Enforcement Directive as well as being a fundamental tenet of EU law on the free movement of goods and services. So the injunction against an online intermediary cannot have as its object or effect a general and permanent prohibition on selling, for example, all goods bearing a particular trade mark.
(e) Injunctions must strike a fair balance
The ECJ stated that the application of these criteria must strike a fair balance between the rights and interests of rights-owners and online intermediaries. This overarching criterion is based upon an analogy with the principle in Productores de Música de España (Promusicae) v Telefónica de España SAU which requires Member States to balance competing interests, namely the right of the rightowner to property (including intellectual property) and effective judicial protection on the one hand, and the right of the alleged infringer to the protection of personal data on the other hand.
The ‘take-home’ point from all of this guidance is that the national courts of Member States have got their work cut out. The guidance is helpful insofar as it provides some ground rules (although arguably these ground rules are likely to reflect existing practices of the national courts of many Member States). It does not, however, provided a very clear steer on what a ‘future’ infringement is, to which an injunction might apply. Neither does it identify any specific measures which might be taken to implement the injunction, although one can understand why not since the Enforcement Directive appears to place that responsibility on national courts. Arnold J will of course need to apply this guidance in L’Oreal v eBay. In the meantime, however, he has already done so in another case.
The High Court’ s decision in Twentieth Century Fox Film & Others v BT plc
In March 2010 the High Court granted an injunction against Newzbin Ltd, which operated the Newzbin web site that enabled users to file-share copyright infringing content including films and TV programmes. The injunction effectively signalled the end of Newzbin but it reappeared as Newzbin2, using servers located in Sweden (ie beyond the jurisdiction of the UK). This prompted a number of film studios to seek an injunction forcing BT to block access to the whole of the Newzbin2 site. It was a test case and thus the arguments and the judgment explored the issues in some detail.
The injunction sought was based on s 97A(1) of the Copyright, Design and Patents Act 1988 (‘CDPA’) which gives the court the ‘ …power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright.’ This section is the UK’s implementation of Article 8(3) of the InfoSoc Directive.
(1) The court’s jurisdiction to grant such injunctions
BT accepted that it was a ‘service provider’ but disputed that the High Court had jurisdiction to grant the injunction sought for a number of reasons which can be summarised under three headings.
(a) Use of BT’s service to infringe copyright
It was common ground that BT acts as a mere conduit within the meaning of Article 12 of the E-commerce Directive and therefore would not be liable for the acts of its users. But BT also refuted the claim by the studios that its service was being used (by BT subscribers and the operators of Newzbin2) to infringe copyright.
First, said BT, its subscribers were using the Newzbin2 service, rather than BT’s service, to commit the infringements. Arnold J disagreed, referring to this as ‘a false dichotomy’. The issue, he said, turned on the construction of the word ‘intermediaries whose services are used by a third party to infringe a copyright or related right’ in Article 8(3) of the InfoSoc Directive. Following the authority in LSG-Gesellschaft zur Wahrnehmung von Leistungsschutzrechten GmbH v Tele2 Telecommunication GmbH, establishing that access providers must be regarded as ‘intermediaries’ within the meaning of Article 8(3), and having regard to the nature of the infringing acts and their relationship with BT’s service, Arnold J concluded that BT subscribers do use BT’s service to infringe copyright.
Secondly, in relation to the operators of the Newzbin2 web site, Arnold J relied on the fact that, in the first High Court action, Newzbin had been found to have authorised user’s infringements, was jointly liable for them, and had made infringing content available. Thus he appears to equate acts of infringement of copyright (moreover, acts of infringement from the first case where the servers were not located in Sweden) with use of BT’s service.
What these findings suggest is that a fairly wide meaning will be attributed to the concept of ‘use’, with the obvious consequence that it is more likely that an injunction will be available against an intermediary such as BT (as there is more ‘use’ to which Article 8(3) can apply).
(b) Actual knowledge
Section 97A of the CDPA requires that the service provider has actual knowledge of another person using their service to infringe copyright. This is one of the ‘conditions and modalities’ referred to in Recital 59 of the InfoSoc Directive that the UK decided to impose. BT made a number of arguments as to why it should not be found to have actual knowledge and Arnold J considered this issue at length.
What was decisive, said the judge, is the context, purpose and wording of s 97A. He noted the legislative context. The purpose could be derived from Recital 59 of the InfoSoc Directive (ie to enable an injunction to be granted against a service provider as service providers are best placed to bring infringing activities to an end). From this, Arnold J concluded that actual knowledge should not be interpreted too restrictively although it is difficult to discern from his judgment precisely why this should be the case. On the wording, s 97A requires actual knowledge of ‘use of the service to infringe’, rather than actual knowledge of a specific infringement of a specific copyright by a specific person. Actual knowledge may be given to the service provider by receipt of a ‘sufficiently detailed notice and a reasonable opportunity to investigate the position’ and the reality is that in many cases such notices are likely to include details about or samples of specific infringements of specific copyrights (even if the identity of the specific person is not known). This is, in effect, a rights-owners’ charter for ‘notice and takedown’.
On the facts, Arnold J found that BT had actual knowledge that its service was being used to infringe copyright because it had accepted knowledge of the facts and matters in the High Court’s earlier judgment in the case against Newzbin, it had not disputed that it had actual knowledge of the facts and matters revealed by the film studios’ evidence, and it had knowledge regarding individual subscribers who used Newzbin2 following receipt of a solicitor’s letter sent on behalf of the film studios.
(c) Other reasons
There were three other reasons why BT contended that the court did not have jurisdiction to grant the injunction sought by the film studios.
The first related to Article 12(1) of the E-commerce Directive (the ‘mere conduit’ provision) and whether that precluded the grant of the injunction sought. Arnold J gave this argument short shrift, finding that it did not.
The second related to Article 15(1) of the E-commerce Directive (the ‘no general obligation to monitor’ provision). Here Arnold J found, having regard to the guidance in L’Oreal v eBay, that what was required of BT under the proposed order was not tantamount to a general monitoring obligation: it simply required BT to block access to Newzbin2 and without detailed inspection of any customer data.
The third concerned Article 10 of the ECHR, which gives individuals (such as BT subscribers) the right to ‘receive and impart information’ under Article 10(1). That right is qualified by Article 10(2) under which it may be subject to ‘such formalities, conditions, restrictions or penalties as are prescribed by law’. BT claimed that the order sought by the studios was not ‘prescribed by law’, citing a recent Advocate General’s opinion in another case in support of this proposition. Arnold J took the view that the order sought by the studios was clearly distinguishable from that in the other case and was well within the range of orders against ISPs anticipated under s 97A of the CDPA and Article 8(3) of the InfoSoc Directive (ie it was prescribed by law).
(2) The exercise of the Court’s equitable jurisdiction
In the UK an injunction is an equitable remedy which the court has a discretion to grant. BT argued that, even if the court found that it had jurisdiction, it should decline to exercise it in this instance.
First, BT argued that the studios were not concerned with the whole of the Newzbin2 web site; just parts of it, namely the films and TV programmes in which they owned copyright, meaning that an injunction against the whole web site was inappropriate. However, Arnold J found that the studios rights were being infringed on a massive scale and thus they had a sufficient interest to justify a blocking injunction. On the evidence, non-infringing uses of Newzbin2 were de minimis. In other cases with different facts, there may a stronger argument against an injunction blocking an entire web site. Later on in his judgment, Arnold J hinted that, in cases where a web site has a substantial proportion of non-infringing content, it may be appropriate for rights-owners to identify individual URLs where infringing content is located (with the inference that access to the individual URL should be blocked rather than the whole web site).
Secondly, BT argued that granting the injunction would lead to a flood of similar applications against BT. Arnold J disagreed, stating that the cost of establishing the evidence required and the fact that those costs may not be recovered suggested that it was unlikely. (This overlooks the possibility that a rightowner could seek an injunction from the Patents County Court under the new streamlined procedure which is intended to reduce cost exposure in litigation.) In any event though, Arnold J found that it was simply not in itself a sufficient reason to refuse the injunction in this case.
Thirdly, BT argued that the injunction would be ineffective as it would be possible for BT subscribers to circumvent the blocking technology. Arnold J was not persuaded for a number of reasons, most relating to the small likelihood that subscribers would actually be bothered or able to utilise circumvention technology.
Finally, Arnold J commented on proportionality in the context of the Article 10 of the ECHR. Was it proportionate to interfere with the BT subscribers’ Article 10(1) rights having regard to the studios rights protected by Article 1 of the First Protocol? He concluded that the injunction sought was proportionate as the studios rights under Article 1 of the Convention (the right to peaceful enjoyment of their possessions, which includes copyright) outweighed those of the Newzbin2 users, and certainly those of its operators, under Article 10. The order was, he said, narrow, targeted and had safeguards in the event of a change in circumstances – and the cost of implementation to BT would be modest and proportionate.
(3) Technological solutions
Injunctions requiring online intermediaries to block or filter web sites will only be effective if they are technologically feasible. Moreover, the cost and implementation of the technological solution will need to be proportionate. Arnold J summarised three of the methods that ISPs can utilise to block access to web sites.
First, DNS name blocking which entails the ISP redirecting a user to an IP address other than the one underlying the domain name requested by the user. Secondly, IP address blocking which entails the ISP using routers which are configured to either discard the user’s request for an IP address or route it to a different IP address. Thirdly, deep packet inspection-based URL blocking, using access control lists on network management systems, which entails the ISP monitoring traffic by deep packet inspection and resetting or blocking the user’s connection to a particular URL defined in the network management systems access control lists. This enables the ISP to effectively block part of a web site such as a particular page.
BT has employed CleanFeed technology since 2004 to block access to certain web sites. Arnold J noted that CleanFeed utilises both IP address blocking and deep packet inspection based URL blocking but stated that it was not necessary or appropriate to elaborate further.
The extent to which other online intermediaries (such as online marketplaces) will be required to employ technological solutions is yet to be addressed, although Arnold J will no doubt clarify this further when he gives his judgment in L’Oreal v eBay in the High Court, having now received the ECJ’s guidance.
In truth, Twentieth Century Fox Film & Others v BT plc was not a difficult case for a blocking injunction. Newzbin2 was used almost exclusively for file-sharing copyright infringing content. A large portion of that content was films and television programmes in which the studios owned copyright. The High Court had already granted an injunction against the original Newzbin web site. In particular, the blocking injunction should not be unnecessarily complicated or costly for BT to implement because it already has a pre-existing solution in its CleanFeed technology.
Other cases may not be so straightforward and are likely to require calibrated filtering of parts of web sites rather than simply blocking the whole web site. The courts will need to give further consideration to technological solutions, proportionality and the other criteria in L’Oreal v eBay.
The real impact of these cases though is that they provide rights-owners (certainly in the UK) with an incentive to send notices to online intermediaries seeking to provide them with actual notice of any infringing activity on their platforms, coupled with a request to block access to or take down infringing material and backed up with the threat of an injunction application if the intermediary does not comply. Online intermediaries are going to have to think very carefully about how to address these notices.
Toby Headdon is a Senior Associate in Berwin Leighton Paisner LLP’s Intellectual Property Group
 Case C-324/09.
  EWHC 1981 (Ch).
 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, OJ L 178, 17.7.2000, p. 1–16
 A definition of ‘information society services’ is included in Article 1 the ‘Technical Standards and Regulations Directive’ (98/34/EC): ‘any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services’.
 Articles 12, 13 and 14 respectively.
 Article 15.
 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167 , 22/06/2001 P. 0010 – 0019.
 Article 5 of the InfoSoc Directive sets out copyright exceptions.
 Corrigendum to Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, Official Journal L 195 , 02/06/2004 P. 0016 – 0025.
 Recital 6 and Article 1 of the Enforcement Directive offer a limited explanation of what is covered. More recently, in paragraph 2.2 of its ‘Synthesis of Comments on the Commission Report on the Application of [the Enforcement Directive]’ the Commission reported on feedback it had received regarding the introduction of a pre-defined list of intellectual property rights covered by the Directive.
 Synthesis of Comments on the Commission Report on the Application of Directive 2004/48/EC of the European Parliament and the Council of 29 April 2004 to the Enforcement of Intellectual Property Rights.
 See section 2.3(3) of Synthesis of Comments on the Commission Report on the Application of Directive 2004/48/EC of the European Parliament and the Council of 29 April 2004 o the Enforcement of Intellectual Property Rights.
 Case C-275/06.
 Twentieth Century Fox Film Corp & Others v Newzbin Ltd  EWHC 608 (Ch).
 Implemented by Regulation 17 of the Electronic Commerce (EC Directive) Regulations 2002 SI 2002/2013.
 Under the principle of interpretation in C-106/89 Marleasing SA v La Comercial Internacional de AAlimentacios SA  ECR I-4135, section 97A of the Copyright, Designs and Patents Act 1988 must be construed so far as possible in conformity with and achieve the result intended by Article 8(3) of the InfoSoc Directive.
  ECR I-1227.
 Arnold J provided a succinct explanation in paragraph 103 of his judgment, ‘In the present case, the infringing acts by the users consist of making digital copies of the Studios’ films and television programmes on their computers. Each of those digital copies is made by assembling thousands of packets received via BT’s service. No complete copy is necessarily made on BT network equipment at any single point in time, but transient copies of all the packets that in aggregate make up a complete copy will be made on BT network equipment.’
 Opinion of Advocate General Villalon dated 14 April 2011 in Case C-70/10 Scarlet Extended SA v Societe belge des auteurs compositeurs et editeurs (SABAM).
 See paragraph 201.
 Other research suggests that CleanFeed operates in two stages. It examines traffic flowing from customers. If that traffic is from a web site which is of concern (e.g. Newzbin), then it is redirected to a web proxy for filtering. Filtering systems are generally capable of blocking entire web sites, particular web pages or even individual images. For a much more comprehensive and qualified consideration of BT’s CleanFeed technology, see Richard Clayton ‘Anonymity and traceability in cyberspace’ (November 2005) retrieved on 26 July 2010 http://www.cl.cam.ac.uk/techreports/UCAM-CL-TR-653.pdf.