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Digital Economy Act faces further scrutiny

13/10/2011

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United Kingdom

Digital Economy Act faces further scrutiny

BT and Talk Talk, the two largest Internet Service providers (ISPs) in the UK have been granted permission to appeal against the outcome of a judicial review of the Digital Economy Act 2010 (DEA). This is a real set back for the government and copyright owners who will now have to wait for the Court of Appeal to determine whether certain contested anti-piracy provisions of the DEA will be implemented.

What is the Digital Economy Act 2010?

The DEA was passed, or rather rushed through Parliament in the 'wash-up' procedure before the last General Election in April 2010. Many of its provisions have proved highly controversial and are still awaiting final implementation.

The aim of the DEA is to regulate digital media and to set out a framework to clamp down on online piracy. The DEA places ‘initial obligations’ on ISPs to tackle online copyright infringement. These include sending out warning letters to subscribers who have been reported by copyright owners for infringing their copyright and providing copyright owners with lists of infringing subscribers.

The DEA confers a duty on regulator Ofcom to create a code of practice to underpin the initial obligations imposed on ISPs. This is still in draft form, not yet approved and progress is likely to be stalled while the appeal proceedings are afoot.

Further, if the initial obligations are less effective than anticipated, under the DEA, the Secretary of State has the power to require ISPs to enforce ‘technical measures’ to deter further copyright infringement. Technical measures may include limiting the speed of the service provided to the subscriber, preventing a subscriber from using the service to access certain material, or suspending the service entirely.

Opposition to the DEA and Judicial Review

The DEA has been the subject of much controversial debate and heavily criticized by digital rights campaigners from its early stages. ISPs have argued that they should not have to police their customers’ online activities and that the legislation breaches internet users’ privacy. It has also created a rift in the government between the Conservative Party and the Liberal Democrats – the latter pledging to repeal certain provisions.

In July 2010, Talk Talk and BT sought a judicial review of the DEA on the grounds that it had received "insufficient scrutiny" and had the potential to "harm citizens and impact both businesses". They argued that the provisions of the DEA were:

  • in breach of the Technical Standards Directive because the DEA should have been notified to the European Commission before it was passed (a requirement for any laws that impose technical standards on goods/services);
  • in breach of the “mere conduit” exemption for ISPs under the E-Commerce Directive;
  • in breach of the processing of ‘personal data’ and ‘traffic data’ provisions contained in Data Protection and E-Privacy Directives;
  • in breach of the Authorisation Directive by imposing onerous costs obligations on ISPs; and
  • disproportionate.

The court rejected all of the grounds on which BT and Talk Talk sought judicial review, (although they won a minor point on costs). They then applied for, but were refused, leave to appeal. Not content to leave it at that, they applied for an oral-permission hearing seeking leave to appeal and have now been successful. The hearing is likely to take place in early 2012 given its importance and the implications it will have in the digital arena. The appeal will be based on the first four grounds that were raised at the initial judicial review proceedings.

What are the implications of the BT and Talk Talk appeal?

In its statement published in August 2011, the government set out the next steps for implementation of the DEA, notably the ‘initial obligations’ on IPS to notify subscribers of suspected copyright infringement, which it indicated would come into effect towards the end of 2012. It is likely that these next steps will have to be put on hold pending the outcome of the appeal in 2012. This will come as a real blow to some members of the government whose plans have been interrupted and also to copyright owners who are desperate for effective measures to be put in place to combat online piracy.

It will come as a welcome decision, however, to many digital rights campaigners, including ISPs, who have expressed grave concerns that such important legislation, with such significant implications, was rushed through so quickly. It is hoped that the appeal process will provide much needed clarification of the DEA and the associated European directives. It will be interesting to see if the Court of Appeal comes to a decision on its own or whether it will defer to the CJEU for further guidance.


Website-blocking provisions

As a general comment, there has also been much criticism around sections 17 and 18 of the DEA which gives the Secretary of State the power to introduce regulations to obtain a court order to block an internet location being used in connection with infringing content. There were concerns that innocent web users could be cut off by mistake. However, the government has recently confirmed that for the time being, no such site-blocking regulations will be introduced, based on Ofcom’s finding that the court procedure envisaged by the provisions was too cumbersome and would be too slow and ineffective to tackle illicit file sharing websites. There would be nothing to prevent website operators from moving the site to a different URL before an injunction had been issued.

It should be noted that in the Newzbin2 judgment (Twentieth Century Fox v BT), brought under section 97A of the Copyright Designs and Patents Act 1988, the High Court issued an injunction requiring BT to block its subscribers from accessing infringing online content. Copyright owners can therefore take some comfort from this alternative route available to them to facilitate the removal or blocking of infringing content (provided they can prove that the ISP has actual knowledge of infringing activities).

For more information on the Digital Economy Act 2010, please contact Rebecca Swindells or Rebecca Pakenham-Walsh at Fieldfisher

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