Friday, 29 July 2016

Costs of ISP blocking injunctions: is there really an EU rule?

Yesterday the stunning London offices of Simmons & Simmons hosted a panel discussion on the implications of the recent Court of Appeal judgment in Cartier [here]

The debate also included the question of who should bear the costs of a blocking injunction: should it be intermediaries or rightholders?

The Cartier decision and the dissent on costs

In its ruling the Court of Appeal upheld the decision of Arnold J at first instance [noted here and here] and confirmed that blocking injunctions can be also sought in online trade mark cases, even lacking an express implementation into UK law of the third sentence of Article 11 of the Enforcement Directive ("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 [the InfoSoc Directive].")

Similarly to Arnold J, Kitchin LJ confirmed that internet service providers (ISPs) are to bear the costs of implementing a blocking order, while rightholders have to pay the costs of the relevant application. In his dissent Briggs LJ stated to agree with the analysis of Kitchin LJ, except on the issue of costs. 

The appeal in Cartier was the first time that ISPs had ever appealed a blocking order (including those made pursuant to s97A of the Copyright, Designs and Patents Act), also in relation to costs.

Adding the costs of blocking injunctions
The Newzbin2 reasons

Since the landmark decision in Newzbin2 [the first copyright blocking order issued in the UK], ISPs have been regarded as those having to bear the costs of implementing a blocking injunction. 

At that time Arnold J noted how ISPs (in that particular case, BT) are commercial enterprises that make a profit from the provision of services which the operators and users of infringing sites (in that particular case, Newzbin2) use to infringe the rightholders's rights. As such, the costs of implementing the order could be regarded as a cost of carrying on their own business.

This conclusion was said to be reinforced to some extent - albeit implicitly - by EU law, in particular:

  • Recital 59 of the InfoSoc Directive ("In the digital environment, in particular, the services of intermediaries may increasingly be used by third parties for infringing activities. In many cases such intermediaries are best placed to bring such infringing activities to an end. Therefore, without prejudice to any other sanctions and remedies available, rightholders should have the possibility of applying for an injunction against an intermediary who carries a third party's infringement of a protected work or other subject-matter in a network. This possibility should be available even where the acts carried out by the intermediary are exempted under Article 5. The conditions and modalities relating to such injunctions should be left to the national law of the Member States.");
  • The decision of the Court of Justice of the European Union (CJEU) in L'Oréal [para 139], in which - pursuant to Article 3 of the Enforcement Directive - it was clarified that enforcement measures "must not be excessively costly".
This said, however, in my opinion the hints derived from EU law are, indeed, just ... hints.

Is there an EU framework?

The EU law framework  is pretty much silent regarding who should bear the costs of injunctions against intermediaries. Even the ambiguous wording of Article 14 of the Enforcement Directive ("Member States shall ensure that reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party, unless equity does not allow this.") does not seem to relate directly to injunctions. 

Substantially 'costs of injunctions' is therefore an area of the law that has been left unharmonised at the EU level. This is also because, as Recital 59 of the InfoSoc Directive eloquently puts, "[t]he conditions and modalities relating to such injunctions should be left to the national law of the Member States."

Although the majority of national legal systems envisages that intermediaries are those responsible for bearing the costs of an injunction against them for third-party infringements, Member States are therefore ultimately free to choose the solution they prefer.

As such, any discussion as to whether the solution indicated by Arnold J and subsequently followed in other cases is the one to prefer is a legitimate one.

Will the CJEU provide yet another de facto harmonisation? The Mc Fadden case

This being the state of the art, ie a formally unharmonised framework, things might change - as a matter of fact - soon. More specifically, things may change when the CJEU decides the pending reference in Mc Fadden, C-484/14.

This is a reference for a preliminary ruling from the Regional Court, Munich I (Germany), and was made in the context of proceedings between Sony and a person (Tobias Mc Fadden) who operates a business selling and renting lighting and sound systems for various events.

Mc Fadden owns a Wi-Fi connection that is open to anyone to use as it not protected by any password. In 2010 that connection was used by someone other than Mc Fadden to download unlawfully a musical work to which Sony owns the copyright. Following Sony’s formal notice, Mc Fadden sought a negative declaration from the referring court. This dismissed it and upheld Sony’s counterclaim, granting an injunction against Mc Fadden on the ground of his direct liability for the infringement at issue and ordering him to pay damages, the costs of the formal notice, and costs. Mc Fadden appealed that decision, arguing that the provisions of German law transposing Article 12(1) of the ECommerce Directive would shield him from liability for third-party infringements. The Regional Court held the view that Mc Fadden would not be directly liable, but rather indirectly liable according to the German doctrine of Störerhaftung, on the ground that his Wi-Fi network had not been made secure. This court decided nonetheless to stay the proceedings and seek guidance from the CJEU on a number of issues.

AG Szpunar
For the sake of this blog post, what is particularly interesting is Question 4:

"Is … Article 12(1) of [the ECommerce Directive] to be interpreted as meaning that the expression ‘not liable for the information transmitted’ precludes as a matter of principle, or in any event in relation to a first established copyright infringement, any claims for injunctive relief, damages or the payment of the costs of giving formal notice or court costs which a person affected by a copyright infringement might make against the access provider?"

What is possibly even more interesting is the answer that Advocate General (AG) Szpunar provided in his Opinion [here] on 16 March last.

The AG held that an intermediary cannot be held liable for an IP infringement committed by a user of its services and, as a result, cannot be asked to bear pre-litigation and court costs. Holding otherwise "could potentially have the same punitive effect as an order to pay damages and could in the same way hinder the development of the intermediary services in question." [para 77]

AG Szpunar however did not stop here.

He noted [paras 78-79] how injunctions can be imposed on innocent intermediaries to repress third-party infringements. However, he concluded that the safe harbour regime [Article 12 of the Ecommerce Directive in this specific case] "precludes the making of orders against intermediary service providers not only for the payment of damages, but also for the payment of the costs of giving formal notice or other costs relating to copyright infringements committed by third parties as a result of the information transmitted." [para 80, emphasis added].

In my own opinion, the phrase “other costs” might include the costs of implementing an injunction, including a blocking injunction.

This means that, should the CJEU confirm the AG analysis on this point, then Briggs LJ might have well been right ... Stay tuned!

[Originally published on The IPKat on 29 July 2016]

Friday, 22 July 2016

Paris Tribunal de Grande Instance rejects request to filter 'torrent' searches on Bing

... possibly true
Can search engines be ordered to filter all results containing certain keywords or a combination of certain keywords?

In a nutshell, this was the issue that the Tribunal de Grande Instance de Paris (TGI) addressed in the context of litigation between SNEP [the French Syndicate of Phonographic Publishing] and Microsoft. In its decision on 8 July 2016 [this post has been written relying on the original French version of the judgment] the TGI answered the question above in the negative.

Background

Claiming that through Microsoft’s search engine Bing users could access infringing copies of phonograms or video recordings, SNEP sought an injunction against Microsoft to implement filters on Bing (under all top level domains) to prevent – for a period of 12 months – the display of results containing in their domain name the word ‘torrent’ and provided when conducting the following queries: Kendji Girac/Shy’m/Christopher Willem [these being among the most popular French artists of the moment] + torrent. 

According to SNEP, in fact, in relation to these artists, among the first 20 results displayed further to a query of this kind on bing.fr, the vast majority (70%) related to unlicensed sources.

SNEP’s action was based on Article L336-2 of the French Intellectual Property Code (IPC), by which France transposed Article 8(3) of the InfoSoc Directive into its own national law. This provision of EU law mandates upon Member States to “ensure that rightholders 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.”

Microsoft claimed that SNEP’s action should be dismissed on grounds that – among other things -  SNEP, instead of seeking a filtering injunction of this kind, should have first used Bing’s free reporting and removal tool and requested to have relevant results (identified by means of appropriate URLs) [for a different approach to the need for URLs, see here and here] de-indexed.  

Kendji Girac:
not much to celebrate this time
The decision

Injunctions are independent from a finding of intermediary liability

The TGI noted at the outset how injunctions pursuant to Article L336-2 IPC/Article 8(3) InfoSoc Directive can be sought independently from a finding of liability of the online intermediary at hand [this conclusion is not surprising also in light of the Ecommerce Directive and has been recently confirmed by Advocate General Szpunar at para 83 of his Opinion in Mc Fadden, on which see here]. 

No need for notice-and-takedown first

This said, the court rejected Microsoft’s argument that SNEP should have first reverted to the submission of notice-and-takedown requests. There is nothing in Article L336-2 ICP that suggests the contrary.

Yet, one cannot seek to de-index all ‘torrent’ queries

However, the TGI dismissed SNEP’s action, on grounds that injunctions pursuant to Article L336-2 ICP can be granted in relation to specific, identifiable contents, and the measures sought must be determined, proportionate, efficient and specific in relation to each listed site. This was not the case of SNEP’s request.

'torrent' is not just 
a copyright-related term though
According to the court, SNEP’s request was:
  • Indeterminate, in that it was not limited to the existing phonograms of Kendji Girac, Shy’m, and Christopher Willem, but also future works yet to be created and released;
  • General (as opposed to specific) in that it did not concern an identified site, but rather all sites made available through Bing in response to users’ queries for [artist’s name] + torrent;
  • Ineffective and not strictly necessary, since it would obtain a limited result and it could be easily circumvented by users.
According to the TGI, ‘torrent’ is not necessarily associated with infringing content [indeed, 'torrent' also mean "a strong and fast-moving stream of water or other liquid", although Urban Dictionary defines it as "The RIAA's worst Nightmare"], but is rather a neutral term referring to a communication protocol developed by BitTorrent. 

According to the TGI, the measure sought by SNEP, ie de-indexing of queries for artists associated with ‘torrent’, would amount to a general surveillance measure and could unduly cause the blocking of legitimate sites.


[Originally published on The IPKat on 21 July 2016]

Rome Court of First instance confirms once again that takedown requests do not need to include URLs

Puzzling level of aggressiveness
in guy's expression
The Tribunale di Roma (Rome Court of First Instance) is back with yet another decision on the liability of online intermediaries (ISPs) for third-party copyright infringements.

After the decisions against video sharing platforms Break [noted here] and Kewego [noted here], this time it was the turn of streaming platform Megavideo [shut down in Italy since 2012] to be found ineligible for safe harbour protection pursuant to Article 16 of Decreto Legislativo 70/2003 [by which Italy implemented Article 14 of the Ecommerce Directive into its own national law]

The case is: Tribunale di Roma, Reti Televisive Italiane spa v Megavideo Ltd, decision 14279/2016, published 15/07/2016.

Background

In a decision published last Friday and made available and commented on very useful Italian IP resource Marchi&Brevetti, the Rome Court of First Instance put the word 'end' [at least for the time being] to yet another set of proceedings brought by RTI - Reti Televisive Italiane (owned by broadcasting company Mediaset) against a number of online intermediaries over the unauthorised making available of TV programmes it produces.

RTI had sued Megavideo before the Rome court seeking among other things: (1) a declaration that the latter, by allowing third parties to make available its own TV programmes, had infringed its broadcasting rights and committed acts of unfair competition [the latter claim was eventually dismissed]; (2) an order to remove and disable access to all TV programmes made available without its authorisation; (3) and damages for at least EUR 100m.

The defendant decided not to take part in the proceedings.

Why Megavideo is not a passive host

Further to a number of preliminary remarks, the court considered whether Megavideo's activity could be regarded as akin to that of a hosting provider within Article 16 of Decreto Legislativo 70/2003, so to benefit from the exemption from liability envisaged therein. 

The court ruled out that Megavideo could enjoy such protection, and did so for a number of reasons:

  • The files available on its platform could be streamed by an indeterminate and potentially high number of persons;
  • The contents available on its platform were organised in categories;
  • Megavideo engaged in an intensive advertising activity through banners of different types and formats, available within the home page and internal pages alike;
  • The advertising content varied depending on the geographic location of the user of the platform;
  • The platform allowed a limited viewing of the various contents: limitations could be however overcome by purchasing subscriptions advertised on the platform itself.
In particular [WARNING: Kat-translation from Italian and, yes, sentences in the judgment are this long]:

"It is clear, therefore, that the market of users, partly paid-for, and the market of advertising were a source of conspicuous revenues, which were closely connected to the content of the videos made available, as these served to attract clients with the intention of selling subscriptions and generating revenues through advertising and, ultimately, ensure the economic success of the platform. 
Hence, not a mere sharing platform, but rather a portal that allows easy and diversified choices, thanks to a simple consultation, of several videos and/or extracts of videos that are not casually uploaded by users, but are rather categorised and organised and linked to advertising messages, and are regulated by a series of rules through the "Terms of Service" [these made it clear that only users are responsible for the content they make available on its streaming platform].

The court concluded that Megavideo's activities could not be considered that of a passive host, but rather those of a "complex organisation of advertising and economic exploitation of [third-party] contents".

Nonetheless, no general monitoring obligation

This said, the court observed that even 'active' hosts are not subject to a general monitoring obligation. According to the court, this is in line with the decision of the Court of Justice of the European Union (CJEU) in Scarlet. Holding otherwise would result in an unacceptable restriction of freedom of information and expression and would prejudice the necessary balance that must subsist between copyright protection and freedom to conduct a business within Article 16 of the Charter of Fundamental Rights of the European Union.

Too shy to include URLs?
The (lack of) content of takedown requests

RTI submitted a number of takedown requests to Megavideo in July 2010 [apparently only indicating the titles of the TV programmes to be removed, but not also the relevant URLs]

According to the court, that moment signalled the beginning of the unlawful behaviour of Megavideo, "considering that the information included in those takedown requests was sufficient [really?] to allow the defendant to take action to prevent the continuation of the infringement of [RTI's] rights and also considering that, even without those takedowns, the defendant could easily and independently acquire knoweldge of such infringements, both because of the notoriety of the TV programmes in question and the relevant broadcasting chanels and, in particular, the presence RTI's distinctive signs on all TV programmes' extracts." 

Comment
After a thorough discussion of damages and their determination, the court found Megavideo liable of infringing RTI's rights (but not of unfair competition), and ordered it to pay damages for EUR 12.1m [slightly lower amount than what the claimant had requested].
There is not much new in this judgment of the Rome Court of First Instance: the court appears to have reinforced its approach to defining and determining ISP liability.
With regard to the absence of a duty of rightholders to indicate relevant URLs in their takedown, in its previous judgment in Break.com, the Rome court had gone as far as suggesting that envisaging such requirement would mean going beyond the requirements set under EU law. 
While it may be true that the Ecommerce Directive is silent in this respect, one may wonder whether the same is true with regard to CJEU case law. In its seminal decision in L'Oréal, in fact, that the CJEU suggested [para 122] that safe harbour protections cannot be trumped by "notifications of allegedly illegal activities or information [that are] insufficiently precise or inadequately substantiated". 
It is therefore questionable whether a request to remove 'all' TV programmes could be considered sufficiently precise and adequately substantiated. 
But what do readers think?


[Originally published on The IPKat on 18 July 2016]

AG Wathelet advises CJEU to hold French law on out-of-print books incompatible with EU law

AG Melchior Wathelet
Amidst all the madness hectic legislative activity surrounding orphan works and out-of-print books that took place in Europe in the first half of 2010s (also as a reflection and echo of the unfolding Google Books saga in the US), in 2012 France adopted a loi (Law No 2012-287 of 1 March 2012) to allow and regulate the digital exploitation of out-of-print 20th century books.

This piece of legislation amended the French Code de la propriété intellectuelle by adding a new chapter (Chapter IV - Articles L 134-1 to L 134-9, subsequently amended) to Title III of Book I therein. 

Among other things, this French law gives approved collecting societies the right to authorise the reproduction and the representation in digital form of out-of-print books, while allowing the authors of those books, or their successors in title, to oppose or put an end to that practice subject to certain conditions. 

More specifically, the relevant implementing decree has established a legal framework intended to encourage the digital exploitation of works reproduced in books published in France before 1 January 2001 which are no longer commercially distributed by a publisher and are not published in print or digital format. In that case the right to authorise the reproduction or performance of those books in digital format is exercised, six months after their registration in a publicly accessible database for which the National Library of France is responsible, by collecting societies approved to do so by the Minister responsible for culture.

But is an arrangement of this kind compatible with EU law, notably the InfoSoc Directive? Among other things, Article 2(a) and 3(1) of that directive, in fact, provide authors - not collecting societies - with the right to authorise the reproduction and communication to the public of their works.

This is the question at the core of the reference for a preliminary ruling lodged by the French Conseil d’État and currently pending before the Court of Justice of the European Union (CJEU). This is Marc Soulier C-301/15.

Yesterday Advocate General Wathelet issued his Opinion in this case, advising the Court [not really surprisingly, also considering recent CJEU decisions like Reprobel, noted here] to rule in the sense of the incompatibility of French law with EU law.

Background

The applicants in the national proceedings have lodged an application with the Conseil d’État. They seek the annulment for misuse of powers of Law No 2012-287 implementing decree, on grounds that the Law on out-of-print books is not compatible with the limitations and exceptions to the right to authorise the reproduction of a copyright work which are exhaustively set out in the InfoSoc Directive.

Further to a reference to the Conseil constitutionnel in 2013 regarding the compatibility of Law No 2012-287 with the French Constitution [in 2014 the Conseil constitutionnel responded in the sense of its compatibility], the Conseil d’État decided to stay the proceedings and refer the following question to the CJEU:

Do [Articles 2 and 5] of [the InfoSoc Directive] … preclude legislation, such as that [established in Articles L. 134-1 to L. 134-9 of the Intellectual Property Code], that gives approved collecting societies the right to authorise the reproduction and the representation in digital form of “out-of-print books”, while allowing the authors of those books, or their successors in title, to oppose or put an end to that practice, on the conditions that it lays down?’

The AG Opinion

First: what needs to be considered?

The AG noted at the outset that, although the question referred by the Conseil d’État relates to Article 2 of the InfoSoc Directive, the digitisation and making available of a book also calls into consideration Article 3(1) [right of communication to the public]. This is because [para 26] the digital exploitation of copyright books constitutes ‘reproduction’ and ‘communication to the public’ of a work, which require individual and separate authorisation by the author, unless those acts are covered by an exception or a limitation provided for in Article 5 of that directive.

According to the AG, to answer the question posed by the French court, consideration of Article 5 of the InfoSoc Directive is unnecessary. This is because [para 28] legislation such as that at issue in the case in the main proceedings is not included in the detailed and exhaustive list of exceptions and limitations in Article 5. 

The scope of exclusive rights

Having clarified what provisions need to be considered and recalled the rationale [high protection of authors] and interpretation of InfoSoc provisions ['autonomous' and 'uniform' where no express reference is made to Member States' laws], the AG turned to the consideration of the scope of relevant exclusive rights.

He held [paras 38-39] that: 

"Article 2(a) and Article 3(1) of Directive 2001/29 require the prior express consent of the author for any reproduction or communication to the public of his work, including in digital format. That consent constitutes an essential prerogative of authors.
In the absence of any derogating EU legislation, the author’s express and prior consent for the reproduction or communication to the public of his work cannot be eliminated, assumed or limited by substituting it with tacit consent or a presumed transfer which the author must oppose within a fixed time limit and in accordance with conditions laid down by national law. It follows that national legislation like the decree at issue, which replaces the author’s express and prior consent with tacit consent or a presumption of consent, deprives the author of an essential element of his intellectual property rights."

The AG added that none of the following characteristics of the French law alter such finding, ie: the possibility of opposition and withdrawal; the right to remuneration, and the absence of commercial distribution of the work to the public. 

The scope of EU preemption

The AG also rejected the argument that the legislation at issue would not affect the protection of copyright because it simply constitutes an arrangement for managing certain rights which Article 2(a) and Article 3(1) of Directive 2001/29 do not preclude. According to the AG [paras 55-57]

"such a view of copyright runs counter to Article (2)(a) and Article 3(1) of [the InfoSoc] Directive. In providing for the author’s exclusive right to authorise or prohibit the reproduction and communication to the public of his works, those provisions also concern the way in which those rights are exercised by the author.
While it is true that [the InfoSoc] Directive 2001/29 neither harmonises nor prejudices the arrangements concerning the management of copyright which exist in Member States, the EU legislature, in providing that authors enjoy, in principle, exclusive rights to authorise or prohibit the reproduction of their work and its communication to the public, exercised its competence in the field of intellectual property.
In those circumstances, the Member States can no longer adopt management arrangements which compromise EU legislation, even if this is done with the intention of furthering a public interest objective. Before management of the rights of reproduction and communication to the public can be taken into consideration, the holder of those exclusive rights must have authorised a management organisation to manage his rights."

Comment
Gentle reminder

This is yet another thoughtful Opinion by AG Wathelet, which in my view is entirely correct. Let's see if the CJEU agrees.

Two further points worth raising are the following.

First, it seems to me that lately AGs have taken protection of 'authors' [rather than - more generically - rightholders] particularly at heart. Besides yesterday's Opinion of AG Wathelet, another recent example that comes to mind is the Opinion of AG Szpunar in Vereniging Openbare Bibliotheken v Stichting Leenrecht, C-174/15 [the 'e-lending case', currently in progress and noted here], in which he clearly stated [para 34] that "the principal objective of copyright is to safeguard the interests of authors".

Secondly, should the CJEU follow the Opinion of AG Wathelet [which seems natural, considering recent jurisprudence] the French law on out-of-print books may not be the only piece of legislation incompatible with EU law. 

Staying in France, only yesterday Loi No 2016-925 on la liberté de la création, l'architecture et patrimoine (freedom of creation, architecture and cultural heritage) was published in the Journal officiel de la République française [this blog reported on this legislative initiative when it was at the draft stage]

Among other things, Article 30 of Loi No 2016-925 introduces new provisions into the Code de la propriété intellectuelle to regulate the publication of a plastic, graphic or photographic work by an online communication service. In particular, new Article 136-2(1) states the following:

"La publication d'une œuvre d'art plastique, graphique ou photographique à partir d'un service de communication au public en ligne emporte la mise en gestion, au profit d'une ou plusieurs sociétés régies par le titre II du livre III de la présente partie et agréées à cet effet par le ministre chargé de la culture, du droit de reproduire et de représenter cette œuvre dans le cadre de services automatisés de référencement d'images. A défaut de désignation par l'auteur ou par son ayant droit à la date de publication de l'œuvre, une des sociétés agréées est réputée gestionnaire de ce droit." 

This means that the publication of a plastic artwork, graphic or photographic work by an online communication service is subject to the consent, not of authors, but rather ... one or more collecting societies appointed to this end by the French Ministry of Culture. 

I look forward to reading further commentaries on this new piece of French legislation but, in light of AG Wathelet's analysis and previous CJEU case law, it does not seem that Loi No 2016-925 is entirely compatible with EU law. 

But what do readers (especially French) think? 

[Originally published on The IPKat on 8 July 2016]

BREAKING: CJEU says that operators of physical marketplaces may be forced to stop trade mark infringements of market-traders

Can operators of physical marketplaces be considered "intermediaries whose services are used by a third party to infringe an intellectual property right", so that "rightholders are in a position to apply for an injunction" against them, pursuant to the third sentence in Article 11 of the Enforcement Directive? Put it otherwise: how does the landmark decision of the Court of Justice of the European Union (CJEU) in L'Oréal v eBay [noted here, here, and here] apply in an offline context?

This - in a nutshell - were the issues on which the Nejvyšší soud České rep (Czech Supreme Court) had sought guidance from the CJEU in its reference for a preliminary ruling in Tommy Hilfiger Licensing and Others, C-494/15.

This morning the CJEU delivered its judgment [without a prior Opinion of the Advocate General in this case (Melchior Wathelet)], holding that the operator of a physical marketplace may be forced to put an end to trade mark infringements committed by market-traders.

The judgment is not yet available on Curia, but this is what the press release states:

"The company Delta Center is the tenant of the marketplace ‘Pražská tržnice’ (Prague market halls). It sublets to market-traders the various sales areas in that marketplace.

Manufacturers and distributers of branded products discovered that counterfeits of their goods were regularly in Prague market halls. On that basis, they asked the Czech courts to order Delta Center to stop renting sales areas in those halls to people who committed such infringements. The [Enforcement] Directive allows trademark holders to bring an action against intermediaries whose services are used by a third party to infringe their trademarks.

The trademark holders consider that, like the operators of online marketplaces covered by the judgment in L’Oréal, the operator of a physical marketplace may, pursuant to the directive, be forced in law to bring trade mark infringements committed by market-traders to an end and to take measures in order to prevent new infringements.

The Nejvyšší soud (Supreme Court, Czech Republic), before which the case is now pending, asks the [CJEU] whether it is actually possible to order the operator of a physical marketplace to put an end to trademark related infringements committed by market-traders and to take measures seeking to prevent new infringements.

Looking for some counterfeit
food to confiscate ...
for the sake of IP protection
In today’s judgment, the Court finds that an operator which provides a service to third parties relating to the letting or subletting of pitches in a marketplace, and which thus offers the possibility to those third parties of selling counterfeit products in that marketplace, must be classified as an ‘intermediary’ within the meaning of the directive. 

The Court states that whether the provision of a sales point is within an online marketplace or a physical marketplace is irrelevant because the scope of the directive is not limited to electronic commerce [in my opinion this conclusion is correct, as nothing in the Enforcement Directive (and similarly in the InfoSoc Directive) suggests that injunctions are limited to 'online' intermediaries].

Consequently, the operator of a physical marketplace may itself also be forced to put an end to the trade mark infringements by market-traders and to take measures to prevent new infringements.

Similarly, the Court states that the conditions for an injunction issued by a judicial authority against an intermediary who provides a service of letting sales points in market halls are identical to those applicable to injunctions addressed to intermediaries in an online marketplace.

Thus, not only must those injunctions be effective and dissuasive, but they must also be equitable and proportionate. They must not therefore be excessively expensive and must not create barriers to legitimate trade. Nor can the intermediary be required to exercise general and permanent oversight over its customers. By contrast, the intermediary may be forced to take measures which contribute to avoiding new infringements of the same nature by the same market-trader. In addition, the injunctions must ensure a fair balance between the protection of intellectual property and the absence of obstacles to legitimate trade."

A more detailed analysis will be provided when the judgment is made available: stay tuned!


[Originally published on The IPKat on 7 July 2016]

BREAKING: Court of Appeal of England and Wales confirms availability of blocking injunctions in online trade mark cases

A nice surprise
for Cartier and friends
Can injunctions (particularly: blocking injunctions) be issued against intermediaries in trade mark cases, even lacking in the UK a specific implementation of the third sentence in Article 11 of the Enforcement Directive?

The High Court judgment

Back in 2014 the High Court of Justice of England and Wales (Arnold J) answered this question in the affirmative in its judgment in Cartier and Others v BSkyB and Others [noted here and here].

Unlike copyright [in relation to which the possibility of injunctions against intermediaries is expressly envisaged by s97A of the Copyright Designs and Patents Act 1988 (CDPA), through which the UK implemented Article 8(3) of the InfoSoc Directive into its own national law], at the time of transposing the Enforcement Directive into its own law UK Government thought that it did not need to take any action to transpose the third sentence in Article 11. This provision states 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 [the InfoSoc] Directive"

UK Government justified its decision not to take any action to implement this more general rule by referring to s37(1) of the Senior Courts Act 1981. This provision states that “[t]he High Court may by order (whether interlocutory or final) grant an injunction … in all cases in which it appears to be just and convenient to do so.”

This (together with - of course - other considerations) led Arnold J to conclude that the High Court had jurisdiction to issue blocking orders also in respect of websites selling and advertising goods infringing third-party trade marks. Thus, the High Court ordered five major UK internet access providers (ISPs) to block access to certain websites which were advertising and selling counterfeit copies of the claimant's goods.

Today's judgment

Further to an appeal brought by the ISPs, this morning the Court of Appeal of England and Wales handed down its much-awaited 214-paragraph judgment. The Court upheld the "entirely correct" [para 35] decision of Arnold J, thus confirming that injunctions against intermediaries can be sought also in IP cases other than copyright [this is a huge relief for rightholders, also in the aftermath of Brexit, ie at a time when it is unclear what relevance EU legislation - especially the bits not expressly transposed into UK law - will eventually have in this country].

Kitchin LJ delivered the judgment (with which Briggs and Jackson LLJJ agreed), addressing each of the submissions advanced by the ISPs using "the clear and logical structure" of Arnold J. 

Kitchin LJ
Jurisdiction to issue a blocking injunction

Further to a review of relevant authorities, Kitching LJ recognised [para 54] that "the ISPs are not guilty of any wrongdoing. They have not infringed Richemont’s [this is how collectively the rightholders - including Cartier, Montblanc and others - are referred to] trade marks, nor have they engaged in a common design with the operators of the websites offering counterfeit goods for sale." 

The judge also noted [still at para 54] how, in light of the decision of the House of Lords in CBS Songs v Amstrad, the ISPs do not owe a common law duty of care [readers who follow the current EU policy debate will note that, while this may be true under common law, the same may be less so or become increasingly less so at the EU level] to Richemont to take reasonable care to ensure that their services are not used by the operators of the offending websites. 

This said, however, Kitchin LJ observed [para 56] that the operators of the infringing websites need the services of the ISPs in order to offer for sale and sell their counterfeit goods to UK consumers. It follows that "the ISPs are therefore inevitable and essential actors in those infringing activities." 

In addition, the effect of Article 11 of the Enforcement Directive should be considered. What this provision requires was clarified [as recalled at para 59] by the Court of Justice of the European Union in its 2011 decision in L'Oréal:

1.    The jurisdiction conferred in accordance with the third sentence of Article 11 on national courts must allow those courts to order an online service provider, such as the provider of an online marketplace, to take measures that contribute not only to bringing to an end the actual infringements committed through that marketplace, but also to preventing further infringement;
2.    The rules for the operation of the injunctions for which the Member States must provide are a matter for national law, but those measures must be effective and dissuasive;
3.    In light of the fact that the UK had taken no specific steps to implement Article 11, national law must be applied, so far as possible, in light of the wording and purpose of the third sentence of Article 11 [this is so in light of the Marleasing principle].;
4.    The rules laid down by Member States and their application by national laws must observe the limitations arising from the Enforcement Directive and from the other sources of law to which that directive refers, including Article 15 in the Ecommerce Directive [no obligation to monitor]. Overall the measures imposed must be fair and proportionate, must not be excessively costly and must not create barriers to legitimate trade.

In light of these considerations, Kitchin LJ concluded that [paras 65-66]:

"It seems ... clear from this guidance that Article 11 does indeed provide a principled basis for extending the practice of the court in relation to the grant of injunctions to encompass, where appropriate, the services of an intermediary, such as one of the ISPs, which have been used by a third party to infringe a registered trade mark. There is no dispute that the ISPs are intermediaries within the meaning of Article 11 and accordingly, subject to the threshold conditions to which I shall shortly come, I believe that this court must now recognise pursuant to general equitable principles that this is one of those new categories of case in which the court may grant an injunction when it is satisfied that it is just and convenient to do so. I therefore believe that court had jurisdiction to make the orders the subject of this appeal."

Kitchin LJ also rejected the argument that the orders sought by the rightholders would unduly compress the fundamental freedoms of ISPs (to conduct business) and users (to access information), as granted under the Charter of Fundamental Rights of the European Union.

Threshold conditions

In any case, in line with the judgment of Arnold J, [paras 80-81] 

"the court’s discretion under s.37(1) [of the Senior Courts Act] to grant website blocking orders is not unlimited and that it must be exercised consistently with the terms of the Enforcement Directive, including, in particular, Articles 3 and 11, and with the terms of the E-Commerce Directive, including, in particular, Articles 12 to 15 ... [T]he following threshold conditions ... must be satisfied before a website blocking order is made. First, the ISPs must be intermediaries within the meaning of the third sentence of Article 11. Secondly, either the users or the operators of the website must be infringing the claimant’s trade marks. Thirdly, the users or the operators of the website must use the services of the ISPs. Fourthly, the ISPs must have actual knowledge of this. As [Arnold J] observed, each of the first three conditions follows from the wording of Article 11 itself. The fourth follows from the E-Commerce Directive, for if ISPs could be required to block websites without having knowledge of the infringing activity then this would effectively impose on them an obligation to monitor. The ISPs have made no specific criticism of any of these four threshold conditions and I would endorse them."

Kitchin LJ concluded that all threshold conditions were satisfied in this case.

Principles and ... costs

Turning then to the principles to be applied in considering whether to make a website blocking order, namely the relief must: (i) be necessary; (ii) be effective; (iii) be dissuasive; (iv) not be unnecessarily complicated or costly; (v) avoid barriers to legitimate trade; (vi) be fair and equitable and strike a “fair balance” between the applicable fundamental rights; and (vii) be proportionate.

Kitchin LJ addressed each and every of these. Among other things, he confirmed [para 150 - but see dissent of Briggs LJ at paras 198 ff] that Arnold J "was entitled to require the ISPs to bear the costs of the implementation of the orders in issue." He also approved [para 169] of Arnold J's proper consideration of the economic impact of website blocking orders upon the businesses of the ISPs, and that these could either bear these costs themselves or pass them on to their subscribers in the form of higher subscription charges.

Alternatives to blocking

Kitchin LJ also addressed [paras 177-178] ISPs' point that Arnold J allegedly failed to carry out a fair evaluation of the relative merits of alternative measures to blocking: 

"I reject these contentions. The judge’s conclusion was amply supported by the evidence before him and he was in my judgment entitled to find as he did that notice and takedown would be unlikely to achieve anything more than short-term disruption of the target websites.  He recognised that website blocking orders impose compliance costs on the ISPs whereas notice and take down requests do not but rightly found that, for the rightholders, website blocking had advantages. The key question was therefore whether these benefits justified the costs burden imposed on the ISPs. That was a matter he considered in carrying out his overall proportionality assessment. I am satisfied that the ISPs’ criticisms of the judge’s assessment of the other alternative measures are equally unmeritorious. In each case the judge made findings which were open to him on the evidence before him and in doing so he took proper account of the experience of the rightholders. The judge has made no error of principle and I am wholly unpersuaded it would be appropriate for this court now to interfere with the conclusions to which he came."

Milly has already
taken note in her diary:
what are you waiting for?
Rapid response event

A more detailed analysis of today's judgment will be provided in due course.

In the meantime, to discuss the implications of the judgment in more detail, the IPKat is teaming up with Simmons & Simmons for a rapid response event to take place in the evening of Thursday, 28 July

Speakers will include: Simon Malynicz QC (3 New Square), Lauri Rechardt (IFPI), Darren Meale (Simmons & Simmons) and myself. 

The event will take place at Simmons & Simmons. More details to follow soon: save the date!

[Originally published on The IPKat on 6 July 2016]