Supreme Court win for ISPs in web-blocking costs case

Supreme Court unanimously allows appeal, holding that applicant rightsholders should pay compliance costs of web-blocking injunctions

On Wednesday, 13 June 2018, the UK Supreme Court handed down its decision in Cartier International AG & ors v British Telecommunications plc & anor [2018] UKSC 28.

In late 2014, several companies who own the trade marks in luxury goods (“the applicants”) sought injunctions in the Chancery Division against the major UK internet service providers (“ISPs”), requiring them to block UK access to websites selling counterfeit goods in breach of trade mark. Such orders are available to copyright holders under s.97A Copyright Designs & Patents Act 1988. Trade marks are not within s.97A, so the applicants asked for the injunction under the general injunctive power of the High Court under s.37(1) Senior Courts Act 1981, notwithstanding that there was no cause of action alleged against the ISPs.

The orders were made by Arnold J on the basis both of a purely domestic construction of s.37(1), but also construing s.37(1) in light of the EU Enforcement Directive. He also ordered the ISPs to bear the costs of compliance with the orders, and ordered them to pay the applicant’s legal costs.

The ISPs appealed, saying that the Court had no jurisdiction to make such an order against a party who was not even alleged to be a wrongdoer, and on the compliance and legal costs. The Court of Appeal (Jackson, Kitchen & Briggs LJJ) dismissed the appeal ([2016] EWCA Civ 658: see 5RB case report here) unanimously in respect of the jurisdictional argument, but only dismissed the appeal on compliance and legal costs by a majority (Briggs LJ dissenting).

Two of the five ISPs sought permission to appeal from the UK Supreme Court, and were granted it in respect of the compliance costs argument. The hearing took place on 30 January 2018 before Lords Mance, Kerr, Sumption, Reed and Hodge JJSC. Various parties intervened by way of written submissions.

In a judgment by Lord Sumption, with whom all other members of the Supreme Court agreed, the appeal was allowed in respect of the disputed compliance costs, such that the orders of Arnold J are varied to provide that the applicants shall indemnify the ISPs in respect of the reasonable costs of implementing the orders (with some uncontentious exceptions). However, the ISPs having resisted the application and made this a ‘test case’, the order for legal costs against the ISPs was within Arnold J’s discretion and would not be disturbed.

5RB’s Greg Callus (instructed by Preiskel & Co LLP) acted for the Open Rights Group, which intervened in the High Court (Chancery Division), the Court of Appeal, and in the Supreme Court.