On 13 June 2018 the Supreme Court handed down its highly anticipated decision in the Cartier International AG and others v BT Plc appeal. Lord Sumption, who gave the leading judgment and with whom all four other judges agreed (Mance, Kerr, Reed and Hodge), overturned the Court of Appeal’s earlier judgment and ruled that internet service providers (ISPs) should not have to pay the costs of implementing mechanisms to prevent access to websites selling counterfeit products (i.e., ‘blocking injunctions’).
Cartier and other manufacturers of luxury goods had been successful in obtaining an injunction requiring BT and other ISPs to put measures in place to block access to certain websites which were promoting and selling counterfeit copies of their products and infringing their trade marks. The ISPs were not directly responsible for the existence of these websites, nor were they managing or storing content on those websites. The judges in the High Court, and later in the Court of Appeal, held that the ISPs should be responsible for paying the costs of implementing the website-blocking order.
The Supreme Court allowed the ISPs’ appeal, departing from the decisions made by the High Court and the Court of Appeal for a number of reasons, including the following:
• The issue of the costs of complying with a website blocking order was a matter for English law; none of the relevant EU Directives expressly addressed the costs of enforcing judicial remedies as between a right holder and an ISP.
• In English law, the starting point is the intermediary’s legal innocence. An intermediary will be legally innocent where it is a ‘mere conduit’ which has no means of knowing what use is being made of its network by third parties to distribute illegal content. The general rule where that is the case is that the right holder should indemnify an innocent intermediary for the compliance costs.
• There was no legal basis for requiring the ISPs to pay the compliance costs as, under English law, a party should not be forced to shoulder the burden of remedying an injustice if that party has no legal responsibility for the infringement and is only acting to comply with a court order.
• It was not the case that, because ISPs benefit financially from the infringing content being available online, they should be required quid pro quo to make a contribution to the costs of enforcement. There was no legal standard of responsibility on ISPs to support this. The argument assumed that ISPs bore some form of moral or commercial responsibility with which the law does not concern itself and in any event blocking injunctions are sought by right holders for their own commercial interest and the benefit of compliance accrues solely to the right holder.
While allowing the appeal, the Supreme Court speculated that the position may be different for intermediaries involved in ‘caching’ or ‘hosting’ – rather than being a ‘mere conduit’ – due to their potential elevated involvement in the infringing activities (assuming they do not fall within the relevant safe-harbours for those activities within Articles 13 or 14 of the E-Commerce Directive).