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Supreme Court decides ISPs should not pay implementation costs of website blocking orders

Posted on 13 June 2018

Supreme Court decides ISPs should not pay implementation costs of website blocking orders

Website blocking orders, under which Internet Service Providers (ISPs) are ordered to prevent access to websites containing copyright-infringing material (such as pirated music and films) and, more recently, counterfeit goods, have proven to be a significant weapon for rights owners since they were first granted in the UK in 2011.

Until a decision issued by the Supreme Court on 13 June 2018, the ISPs bore the costs of implementing this orders. However, following this decision, rights owners will have to indemnify ISPs for their reasonable implementation costs, which may impact on their attractiveness in some cases going forward. For rights owners, covering the ISP's costs of implementing a website blocking order should now be seen as the 'cost of doing business' in relation to protection of their rights online, with such orders forming part of an overall package of measures that are available to deal with online infringement.

Background

We discussed the case in our Inside IP article in July 2016. In 2014, following an application by companies in the Richemont group, Arnold J made a website blocking order against the five main ISPs requiring them to block their customers' access to six target websites, all of which offered for sale counterfeit goods exclusively of Richemont brands, such as Cartier and Mont Blanc. The scale of the problem for Richemont was not limited to these six sites – at the outset of the case, it had identified some 46,000 websites selling infringing copies of its branded goods.

The single issue before the Supreme Court was who should pay the costs of implementing the website blocking order – the ISPs or the rights owners. A majority of the Court of Appeal had decided that the ISPs should pay, effectively as the 'cost of doing business' in return for the immunity they enjoy under the E-Commerce Directive from being liable themselves for the infringement.

Supreme Court decision

The Supreme Court reversed the Court of Appeal's decision, deciding that rights owners should indemnify ISPs for their reasonable costs in implementing website blocking orders. The ISPs were innocent intermediaries – they were 'mere conduits', with no means of knowing what use was being made of their network by third parties to distribute illegal content. They had no legal responsibility for the infringement, and, in blocking their customers' access to the infringing websites, were simply acting in accordance with a court order.

The Supreme Court rejected the argument that, because ISPs benefit financially from the amount of content available online, including infringing content, it would be fair to make them contribute to the cost of enforcement, pointing out that rights-holders seek such orders to protect their own commercial interests.

The Court stressed that the indemnity would be for the ISPs' reasonable costs, albeit it noted that the compliance costs resulting from any one order are modest. It also indicated that the indemnity may not be available for intermediaries carrying out hosting or caching activities, as opposed to being a mere conduit, as those activities could involve a greater degree of participation in the infringement.

Website blocking orders have been particularly attractive to copyright owners in the entertainment and sports industries, whose works are routinely infringed on file-sharing websites. Last year, the power of such orders was further extended, when the High Court ordered ISPs to block access to servers used for websites offering infringing streams of English Premier League football matches.

The Supreme Court's decision will not be welcomed by rights owners, and could give rise to arguments between them and ISPs over whether the ISPs' claimed costs of implementing a blocking order are "reasonable". However, it should be remembered that a website blocking order is just one tool available in the fight against online infringement, and remains an attractive remedy in appropriate cases.

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