Cartier ‘must foot the bill to block fraudulent websites’

Brands will now be forced to cough up the cash to block dodgy websites selling counterfeits, following a landmark court ruling in the UK.

Luxury brands Cartier, Montblanc and IWC lost their four-year battle against BT and other internet service providers (ISPs) after the UK Supreme Court rowed back on previous court rulings that had ordered ISPs to cover the costs of blocking fraudulent websites.

The Supreme Court declared the ISPs were “legally innocent”, endorsing protections given by European Union law to ISPs, saying that it was up to intellectual property rights holders to pay “reasonable costs” to ISPs for blocking injunctions.

Michael Skrein, partner at UK-based Reed Smith who led the appeal team for BT, said: “Lord Sumption, whose judgement was supported by the four other Supreme Court justices on the panel, analysed the deep roots of the relevant principles of English law against the background of the EU directives and declared that ‘there is no legal basis for requiring a party to shoulder the burden of remedying an injustice if he has no legal responsibility for the infringement and is not a volunteer but is acting under the compulsion of an order of the court’.”

The ruling follows four-years of court disputes.

The initial case was brought in April 2014 when luxury giant Richemont, which owns Cartier, Montblanc and IWC, claimed that operators of certain websites were infringing the brands’ registered trademarks by selling counterfeit goods and were using the services of the ISPs to do this.

Historically ISPs have picked up the bill for blocking websites that infringe on copyright material such as music but Richemont argued that this should also be the case for trademarks.

Through the courts, orders were granted to block consumer access to fraudulent websites. 

But five ISPs – BT, Sky, EE, TalkTalk and Virgin – took exception to this and appealed, claiming they were wholly innocent parties and were not alleged to be wrongdoers, and that the court had no jurisdiction to make such an order.

In a significant win for brand owners, the Court of Appeal disagreed and upheld the High Court ruling granting the blocking orders, further adding that the ISPs must also bear the costs for implementing the order.

The court concluded that the activities of websites selling counterfeit goods caused significant damage to brands and that the blocking of such sites would probably be highly effective.

But earlier this year, BT and EE took the case to the Supreme Court to appeal that ruling.

The Supreme Court decision in favour of ISPs is a blow to brands, which will now have to foot the bill to block consumer access to websites that sell counterfeits of their products.

Karen Fong, of Keystone Law, told Retail Gazette: “The Court took the view that website blocking injunctions were made by brand owners to further their own commercial interests and they should not be entitled to seek contribution of such costs from any party other than the infringers.”

The ruling now has the potential to impact all brands that are seeking to crackdown on fraudulent websites selling knock-offs of their products.

In response to the verdict, Louise Popple and Michael Yates from law firm Taylor Wessing told City A.M that despite the extra costs, making the choice to pay to block a website could be in the best interests of many companies and brands. “Securing the right to block access to sites offering counterfeit goods is a significant step forward. While brand owners will still have to pay court costs and the cost of implementing any injunction granted, which could be significant in some cases, there will be many situations where these should not outweigh the benefits of obtaining a blocking order.”

However, the ruling now raises questions whether the principle could now be applied to copyrighted material where ISPs, which have traditionally picked up the bill to block copyright infringing sites, could argue these costs should be passed on to copyright holders.