UK Supreme Court gives judgment in ISP costs-bearing dispute

The UK Supreme Court ("UKSC") has given judgment in a significant appeal concerning who should bear the costs of implementation of injunctions to block access to websites participating in the sale of goods infringing trade marks.

At first instance Mr Justice Arnold required the internet service provider ("ISP") to bear the cost of implementing the injunction (by blocking access to the website concerned), and the trade mark's owners should bear the costs of the application for the injunction.

This was upheld by the Court of Appeal in a judgment given by Lord Justice Kitchin (with whom Lord Justice Briggs (as he then was) disagreed.

The UKSC has overturned the first instance and appeal decisions, and agreed with Briggs LJ's dissenting opinion. The judgment, given by Lord Sumption, explained that:-

"As a matter of English law, the ordinary principle is that unless there are good reasons for a different order an innocent intermediary is entitled to be indemnified by the rights-holder against the costs of complying with a website-blocking order. The position in relation to website-blocking orders is no different in principle from the established position in domestic law in the case of Norwich Pharmacal orders, freezing orders and other injunctions granted to require an innocent party to assist the claimant in the assertion of its rights against a wrongdoer".

This is a departure from the approach taken by the High Court and the Court of Appeal, that applied the principles accepted in copyright cases (as explained by Arnold J, above) to trade mark cases.

This creates an interesting paradox: a rights holder whose copyright is infringed and succeeds in an application for an injunction disabling access to the infringing material may not be liable for the ISP's costs of so disabling. A rights holder whose trade mark is infringed will be liable for those costs.

It remains to be seen whether the lower courts will now actually apply this case to future copyright cases, or whether advocates for ISPs will in fact argue that it is binding on all cases of intellectual property infringement.

If you have any questions on the above, please do not hesitate to contact the team at McDaniel & Co. on 0191 281 4000 or legal@mcdanielslaw.com.