Thursday, 29 December 2016

Intermediary IP injunctions: what are the EU implications of the UK experience?

Is there gift more memorable
than a blocking injunction?
What has been the most significant IP development in the UK this year? 

From a policy standpoint (and in the aftermath of the Brexit referendum) the answer is probably the decision of UK Government to ratify the Unified Patent Court Agreement [here]

From a practical perspective, however, also considering the increasing number of IP infringements occurring online [this is a general trend: see here, at p 33] the most significant domestic development in my opinion has been the judgment of the Court of Appeal of England and Wales in Cartier [hereherehere], which upheld the 2014 decision of Arnold J [here and here], and confirmed that  owners of IP rights other than copyright can seek injunctions against intermediaries to block access to website where counterfeits are available.

The UK framework

UK Government implemented Article 8(3) of the InfoSoc Directive into UK law by inserting s97A into the Copyright, Designs and Patents Act 1988 (CDPA). Since the landmark decision of Arnold J in Newzbin 2 [here] - the High Court of England and Wales has ordered to block access to more than five hundred website [here], with applications being filed by an increasingly diverse group of copyright owners, including film studios, record labels record, publishers, and the Football Association Premier League.

Unlike Article 8(3) of the InfoSoc Directive, UK Government did not take any specific steps to transpose the third sentence of Article 11 of the Enforcement Directive into its own national law. 

In his 2009 decision in L’Oréal Arnold J concluded that, despite lack of an express implementation, the High Court of England and Wales had power under s37(1) of the Senior Courts Act 1981 (SCA, formerly known as the Supreme Court Act 1981) to grant an injunction against an intermediary whose services had been used by third parties to infringe an IP right (specifically: a registered trade mark), to the extent that this is what the third sentence in Article 11 of the Enforcement Directive requires.

In the aftermath of the UK decision in L’Oréal it remained however unclear whether s37(1) SCA could be used to obtain a particular type of injunction, ie an injunction against an intermediary to block access to a website where content that infringes IP rights other than copyright can be found.

The Cartier decisions

Possibly unsurprisingly (considering the previous stance of Arnold J in L’Oréal), the High Court of England and Wales (again, Arnold J) answered this question in the affirmative in its 2014 decision in Cartier.

The "entirely correct" [para 35] decision of Arnold J was confirmed in appeal. The Court of Appeal judgment contains however the dissent of Briggs LJ on the issue of costs [since the Newzbin 2 decision, the practice in the UK has been that rightholders bear the costs of application of an injunction, while the ISPs to which the resulting injunction is addressed are responsible for the implementation costs]. In particular, the cost burden attributable to the implementation of a particular blocking order should fall upon the rightholder making the application for it. 

According to Briggs LJ, the reason is a domestic one. It is true that both the Enforcement Directive and the InfoSoc directives provide that rightholders should have the possibility of applying for an injunction against an intermediary who either carries a third party's infringement of a protected work in a network (in copyright cases) or whose services are being used by a third party to infringe the rightholder's industrial property right (in relation to trade marks). In both cases the conditions and modalities relating to such injunctions, or the conditions and procedures relating to such injunctions should be left to the national law of the Member States. 

In the UK, however, courts have jurisdiction as per s37(1) SCA, and this in substance reflects an originally unfettered jurisdiction exercised by the Court of Chancery on equitable principles. In the case of orders against innocent third parties, the law has evolved so to ensure that a standard condition or 'modality' for the grant of an injunction is that the cost reasonably incurred by the innocent respondent should be reimbursed by the applicant.  

Ehm ...
A new article

Overall, the decisions of the High Court and the Court of Appeal of England and Wales in Cartier prompt a more thorough discussion around the role of intermediaries in an online context, including with regard to the effectiveness of remedies other than blocking orders and responsibility for bearing the costs of injunctions. 

These issues are also currently under discussion at the EU level, both in the context of the EU Commission’s Digital Single Market Strategy (DSMS) as first unveiled in mid-2015 and case law of the Court of Justice of the European Union (CJEU).

If you are interested in all these topics, you can find a more detailed discussion in this article [a pre-edited version is available on SSRN herethat I have derived from a presentation at a recent conference held in Berlin, and that is going to be published soon in GRUR International.

My contribution intends to provide an overview of EU and UK experiences, and highlight certain trends that have emerged from relevant case law. The article is composed of four parts. The first part reviews CJEU case law in the area of intermediary injunctions, and attempts to sum up the resulting key findings. The second part considers relevant case law of UK courts in the area of blocking injunctions, and reviews the approaches taken in respect of copyright and trade marks. The third part discusses two principal issues emerged from the UK experience (the possible expansion of blocking injunctions to different areas and intermediaries, and the responsibility for the costs of injunctions), and considers whether – lacking an unambiguous legislative framework – the parallel evolution at the CJEU level may provide interpretative guidance. The fourth part highlights the terms of the current EU policy debate: notwithstanding EU harmonization efforts in the area of IP enforcement, the main finding is that there are significant gaps in the resulting framework. This prompts the question whether, under the DSMS umbrella, the EU should merely reform the current enforcement framework or, together with this, also push the boundaries of harmonization further.

What are the main implications of the UK experience?

Overall, from the discussion of the UK scenario, three main threads emerge.

First, the availability of injunctions against intermediaries has proved a successful remedy in the hands of rightholders. Even more so, according to Arnold J a particular type of intermediary injunction, ie blocking injunctions, does not current have any alternatives that are more effective. In this sense, the relevance of two major developments is self-apparent: first, the CJEU confirming the compatibility of this measure with the EU legal order (UPC Telekabel) and, secondly, the Court of Appeal of England and Wales upholding the analysis of Arnold J that also trade mark owners can avail themselves of this tool.

Secondly, the UK experience demonstrates how – despite the EU harmonization efforts in the area of IP enforcement – there remain significant lacunae in the resulting framework (the issue of costs being an example), not to mention the fact that certain key provisions, eg the third sentence in Article 11 of the Enforcement Directive, have not been transposed fully or tout court into certain national IP regimes.

All this leads to a third, final point: should the EU merely reform the existing EU enforcement framework without pushing the boundaries of harmonization further, or should – instead – more harmonization be provided?

Consultation after consultation,
what does the future hold?
The DSMS debate

In light of the responses to the consultation on the review of the enforcement framework, as well as dissenting views on key aspects like costs, it is submitted that this question should be addressed at the EU level, even before any specific proposals are tabled [note that a review of the IP enforcement framework is expected in the first half of 2017].

This is particularly – albeit not only – so in a cross-border context. Although cross-border injunctions are currently said to be more frequent in respect to direct infringers rather than intermediaries, one of the principal obstacles that rightholders have flagged is the diverging substantive scope of injunctions in different Member States, as well as costs of injunctions.  Intermediaries have instead expressed the view that the implementation of injunctions impacts on their operations primarily in terms of additional costs, staff and technical infrastructure but might also result in adjusting the service offer.

At the time of adopting the Enforcement Directive, EU legislature stressed how disparities between the systems of the Member States as regards the means of enforcing IP rights are prejudicial to the proper functioning of the internal market, make it impossible to ensure that IP rights enjoy an equivalent level of protection throughout the EU, and also lead to a weakening of substantive IP law.

Overall, if the rationale underlying the Enforcement Directive still holds valid today, then any reform discourse should start from the awareness of how, despite harmonizing efforts, the current legislative framework has significant shortcomings that courts – whether at the EU or UK levels – have been called to overcome.

[Originally published on The IPKat on 29 December 2016]

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