RETROMARK: A year of trade marks – Part 1: Costs after Cartier

Challenges in the world of online intellectual property infringement are growing. The increasing difficulty to identify and police the exploitation of brands has led to litigation where heels have dug in and enforcement costs have soared. We are currently waiting for a decision from the Supreme Court in Cartier International AG & Ors v British Telecommunications Plc & Anor (Cartier v Sky) that will provide clarity on the enforcement process and responsibility for costs. 

The outstanding questions are:
(i) What are the threshold conditions for the imposition of a blocking order requiring Internet Service Providers (ISPs) to block or attempt to block access to websites infringing trade marks?
(ii) Who should bear the costs of such blocking orders? 

A panel chaired by Eleonora Rosati (Associate Professor in IP Law at the University of Southampton and JIPLP Co-Editor) and composed of James Mellor QC (Barrister, 8 New Square), Cam Gatta (Attorney, Trademarks, Microsoft), Catherine Palmer (Legal Director at Joseph) and Mark Cruickshank (IP Legal Counsel at The Royal Bank of Scotland Group) discussed the question of costs. 

The problem for brand owners is less the fact and more the cost of enforcement. The practical reality is that many brands are simply overwhelmed by the challenge of dealing with online infringement. Catherine Palmer highlighted the difficulties that brand owners face, in particular issues around the speed of infringement detection, the complex world of supply chains, and the fact that many consumers are often too embarrassed to notify brands when they have been a victim of intellectual property fraud. 

It was unsurprising therefore that the previous instances of Cartier – in line with the practice of blocking injunctions in the area of copyright – looked at ISPs to shoulder the responsibility and cost for enforcement of their brand rights. James Mellor QC reminded the panel that this is not about who can afford to pay, but it is rather a matter of legal principle. He referred to a patent case from the 1970s in which a rightsholder was required to pay as indication that the responsibility may ultimately lie in that directly.  Whether parallels can be drawn with Cartier v Sky is a question we will leave to the Supreme Court. 

Cam Gatta queried whether an answer from the Supreme Court will necessarily resolve the problem. Whilst the ruling will shut one door, there are others that remain open. The definitions of “ISP” and “illegal content” in this context are as yet undefined, and without a better understanding of to whom this costs ruling would apply, and how this would play out globally, a satisfactory answer is still beyond the horizon. 

Mark Cruickshank identified some practical solutions, and discussed the involvement of Payment Service Providers (PSPs). He proposed that PSPs take a more active role and, for example, consider more effective means of blocking  payments to illegal websites, advertising payments and counterfeiting websites.

Should the Supreme Court decide that rightsholders have to pay for blocking injunctions, the battle for brand owners will get harder. In any event, ISPs may face a different challenge: recovering the costs from disgruntled brands.