November 19, 2014

Luxury brand blocks website selling fakes

By Stephen Welfare

Some 10 years or so ago when defending an allegation being made by Richemont Group of Intellectual Property Rights infringement against a watch and jewellery client, never did I envisage that the client and I would ever have cause to be thankful of Richemont/Cartier’s aggressive anti-infringement policy.  However, that has proved to be the case.

Last month, the High Court granted injunctions upon the application of Cartier (part of the Richemont Group) requiring several internet service providers (“ISPs”) to block access by their subscribers to certain websites that advertised and sold goods infringing Richemont/Cartier registered Trade Marks.  Ten years ago, a measure was introduced to assist copyright owners in the fight against online copyright infringement.  Section 97A Copyright Designs and Patents Act was enacted that gave the court the power to grant an injunction against an ISP where that ISP had actual knowledge of another person using their service to infringe copyright.  The Orders that the High Court can make under Section 97A are that the ISP block access to the target websites.

Whilst there has existed this statutory power in respect of copyright, there has been no corresponding legislation providing for website-blocking Orders in the context of Trade Marks.  The Judgment of the High Court is therefore a welcome development of the law.

The Claimants, the Richemont Group, are the owners of several UK Registered Trade Marks e.g. Cartier.  They have been plagued with counterfeit goods being offered on the internet.  As many Intellectual Property Rights owners know, the internet is a very fertile ground for the sale of knock-offs and otherwise the infringement of Intellectual Property Rights.  No sooner is an infringer identified and legal proceedings prepared to go after the website owner, than the site either closes down or the offending products are removed only to reappear on another website.  This is expensive and frustrating in equal measure to the Intellectual Property Rights owner.

The Richemont Group applied to the High Court for Orders against the five major UK internet service providers; Sky, BT, EE, Talk Talk and Virgin.  They asked the court to make Orders requiring the ISPs to block, or at least impede, access, by their subscribers to six websites which advertised and sold goods infringing their Trade Marks.  The Claimants sought to invoke the court’s inherent jurisdiction and in effect, extend the laws on copyright to Trade Mark.

The High Court made the Orders sought.  However, the court did express some concern regarding the cost consequences for ISPs and so made the Blocking Orders subject to the following 3 safeguards:-

  1. The Orders (and similar future Orders) should permit affected ISP subscribers to apply to the court to discharge or vary the Orders.
  2. The internet page displayed to users who attempted to access the blocked websites, should state not only that access has been blocked by Court Order, but should also identify the parties that obtained the Order and state that affected users have the right to apply to the court to discharge or vary the Order.
  3. The Orders should incorporate a Sunset Clause such that the Orders would cease to have effect at the end of a defined period, unless either the ISPs consented to the Orders being continued or the court ordered that they be continued, with the court’s provisional view that the defined period should be two years.

It is to be hoped that the threat of an Application to the court for such an Injunction will prompt ISPs to impose a block on those websites that trade in disregard to Intellectual Property Rights.  In the course of hearing the Application for the Injunction, the court heard that there were no alternative measures available to the Claimants, which would be equally effective but less burdensome.  In particular:-

  • Action against the operators would not be realistic because the difficulties in identifying them and bringing proceedings against them in the jurisdictions in which they were located (very often outside the UK).
  • Notice and take down would be ineffective because the inevitable response of the operator (the nefarious internet vendor) was to move the website to a different host.  Whilst the Claimants could be criticised for not having attempted the measure, it was likely that it would achieve only short term disruption of the websites.
  • Making Applications to payment processors, such as Mastercard, to suspend the operators merchant accounts, would achieve only limited disruption to the websites.
  • It is argued that domain name seizure was not realistic, since the operator could simply pick a new domain name and start again.
  • Asking search engine providers to de-index the websites (the temporary or permanent removal of sites from an ISP’s index and search results) was not realistic since:-
    • search engines were willing to de-index websites only with a Court Order;
    • the policy of some search engines to de-index copyright infringers did not extend to Trade Marks; and
    • even after de-indexing, the websites remained accessible on the internet.
  • Customs seizure did not affect the websites and intercepted only a small fraction of purchases of counterfeit goods.

None of the above alternative measures have proven to be anything like adequate in dealing with persistent and determined counterfeiters.

Costs Warning

Whilst this development in the law is welcomed, it should be noted, certainly by SMEs and luxury goods brands that do not have the spending power of the Richemont Group that, just as with Section 97A cases, it is the Applicant who bears the costs of the Application.  If an ISP resists the Application so that, as in the Richemont Group case there is a contested hearing, then ordinarily the Trade Mark owning Applicant pays all the costs.  The problem of internet infringement is extensive and affects sole traders, small businesses and SMEs, just as much as the major luxury brands.  The Richemont Group identified 239,000 sites that infringed Trade Marks.  There is therefore a balance to be had between the harm being done to the market in the sale of legitimate Trade Mark goods and the cost in terms of legal costs of applying for Website Blocking Injunction Orders.  Research has suggested that since the coming into force of these Website Blocking Orders, there has been a decrease in the overall level of infringement in the website sector in the UK.

The Case

Cartier International AG and Others –v- British Sky Broadcasting Limited & Others [2014] EWHC 3354 (Ch), 17 October 2014.

At Royds we understand the value and importance people place on protecting their Intellectual Property (IP) rights. We focus on safeguarding IP rights to deter infringement and to ensure that our clients are able to maximise the full value of their IP assets.

For more information on IP, please visit our IP sectionLuxury Goods & Jewellery section or contact Stephen Welfare.

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