Favourable Supreme Court decision for ISPs finding they do not have to bear costs of complying with blocking orders.

Historically, internet service providers (ISPs) that have been ordered to block access to websites have had to bear their own costs of compliance on the basis that it was seen as being part of the cost of carrying out their business. That position has now changed due to the Supreme Court decision in Cartier International AG & ors v BT plc & anor [2018] UKSC 28 on 13 June 2018.

The previous rationale for ISPs bearing their costs was that, whilst they are not wrong-doers, they benefit financially from the content on the internet — including content that infringes intellectual property rights. Therefore, it is fair that they should bear costs of ensuring content infringing intellectual property rights is not accessible as part of the general costs of carrying on their business.

It is worth noting that the ISPs did not contest that they have to bear the costs of acquiring and updating hardware and software necessary to block websites, nor the costs of managing blocking systems. The ISPs were simply objecting to having to bear the following:

• The costs of implementing specific blocking orders
• The costs of updating blocks over the lifetime of such orders at the request of rights-holders
• The costs and liabilities that may be incurred if blocking malfunctions occur through no fault of the ISPs

In the judgment (which unanimously allowed the appeal against the Court of Appeal’s decision), Lord Sumption considered that the historic position in respect of compliance costs with a blocking order had assumed some degree of responsibility on the part of the ISPs, which was not justified. He compared a blocking order to a Norwich Pharmacal order or freezing injunction, for which the costs burden was different. Lord Sumption found 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 compliance with a website blocking order”. This leaves open the possibility that if an ISP is shown to have some degree of legal culpability, it might be appropriate for the court to require the ISP to bear its costs of compliance.

Lord Sumption justified the position on the basis that blocking orders such as these are “wholly directed to the protection of the claimant’s legal rights, and the entire benefit of compliance with the order inures to the rights-holder”. He compared that to the business of ISPs, which has nothing to do with the rights in question, but is merely providing a network that others have abused. The Court found that there was therefore no reason why the rights-holder should be entitled to seek a contribution to the costs of defending its rights from anyone other than the infringers.

The decision is a significant win for ISPs, especially in an age in which blocking orders are relatively commonly sought: English courts reportedly have granted injunctions blocking access to more than 500 websites since Twentieth Century Fox Film Corp & ors v Newzbin Ltd [2010] EWHC 608 (Ch) (which firmly established the availability of this type of injunction). However, website-blocking injunctions will likely remain a valuable tool for rights-holders against online infringers and counterfeiters. Having to pay the relatively minimal costs of ISPs in this regard presumably will not prove a significant bar if weighed against the benefits of obtaining such injunctions directly against ISPs, as opposed to the difficulties of enforcing against the infringers themselves.