BT and ISPs Win UK Court Battle Over Website Blocking Costs

[Len]

BT and three other broadband and mobile operators have today won their battle in the Supreme Court with Cartier, which challenged whether it was right for them to suffer the costs of implementing blocks against websites that were found to be selling counterfeit goods (i.e. abuse of Trade Mark).

Until recently ISPs like BT, EE, Virgin Media, Sky Broadband and TalkTalk could only be forced, via a court order, to block websites if they were found to facilitate internet copyright infringement (piracy) under Section 97A of the Copyright, Designs and Patents Act. But in 2014 the High Court extended this to include sites that sell counterfeit goods and thus abuse company trademarks (logos).

The providers initially appealed this decision, not least by stating that Cartier and Montblanc (they were responsible for the original case) had provided “no evidence” that their networks were being abused to infringe Trade Marks and that the UK Trade Mark Act did not include a provision for website blocking. Not to mention the unlikely risk that such a law could be applied in an overzealous way (e.g. eBay being blocked due to a dodgy seller).

On top of that the ISPs also noted that such sites weren’t heavily used, unlike the major piracy havens that have already been restricted, and thus they felt as if it would not be proportionate for them to suffer the costs. As we’ve previously reported, website blocking is anything but cheap and that often goes for both the ISPs and Rights Holders (here).

In April 2016 this case went to the Court of Appeal (London) and the ISPs lost. At the time the judge held that although the ISPs were not guilty of any wrongdoing, they were inevitable and essential actors in the infringing activities of the websites in question. The ISPs were also required to bear the costs of implementing the orders. The Court of Appeal dismissed the appeals of the ISPs in their entirety.

However the ISPs didn’t completely give up and in early 2018 the Supreme Court began hearing a new appeal from BT (EE), Three UK, O2 and Vodafone (Case ID: UKSC 2016/0159), which focused on both the threshold conditions for imposing blocks against websites that infringe registered trademarks and challenged whether ISPs, as innocent parties, should be required to bear the costs of such blocking orders.

Today the Supreme Court ruled that Rights Holders, not ISPs, should pay the costs for website blocking orders (full judgement).

Supreme Court Statement

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

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.

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.

The ruling caveats that the outcome may be different if the ISPs are “engaging in caching or hosting” of the content that is intended to be blocked, which raises a question about what happens when ISPs try to save bandwidth by caching websites via a Content Delivery Network (CDN) on their platform. But CDN’s could easily be tweaked to avoid caching such sites and the measure is thus more likely to hit website hosts etc.

Otherwise the outcome means that Rights Holders will now face even higher costs than they did before to get websites blocked, which may hinder their ability to impose mass restrictions in the future. The case also reinforced the long held position that internet access providers are only “mere conduits” of online data.

Jim Killock, Executive Director of Open Rights Group, said:

“This case is important because if ISPs paid the costs of blocking websites, the result would be an increasing number of blocks for relatively trivial reasons and the costs would be passed to customers. While rights holders may want websites blocked, it needs to be economically rational to ask for this.”

Meanwhile Cartier International AG and their supporters could still conceivably escalate their case to the Court of Justice of the European Union, although this might face complications from Brexit and they may still lose. We also expect that ISPs may in the future argue that the judgement should be extended to existing copyright based blocking orders, not only those related to trade mark abuse.