Internet service-cum-telephony providers BT and TalkTalk have failed in their attempt to block the system of warnings and technical measures against copyright infringing filesharers, enshrined in the Digital Economy Act (DEA) that became law in April 2010.

For recollection, under the DEA, ISPs must “notify their subscribers if the internet protocol addresses associated with them are reported by Copyright Owners as being used to infringe copyright” and “keep track of the number of reports about each subscriber, and compile, on an anonymous basis, a list of those (‘relevant subscribers’) who are reported on above a threshold to be set in the initial obligations code.”

After obtaining a court order to obtain personal details, copyright owners will be able to take action against those included on the list.
 The law delegated to the Office of Communications (Ofcom) the administration of the law and Ofcom issued proposed Initial Obligations Code at the end of May.

Under the draft, after receipt of the third notification, subscribers may be included in a “copyright infringement list” requested by a copyright owner, which has made at least one report against the subscriber. Small and medium-sized ISPs will not be included (i.e., less than 400,000 subscribers) as well as mobile operators. Finally, the draft code includes a subscriber appeal mechanism as well as cost sharing, which could include a fee for copyright owners.

High Court Justice Kenneth Parker dismissed all claims in the judicial review initiated by the ISPs in November of last year. BT and TalkTalk had argued the DEA’s crackdown provisions were disproportionate and incompatible with EU laws on privacy, freedom of information and the responsibilities of ISPs. They wanted to have these provisions overturned on five grounds. All but one of their objections were overruled in London’s high court, and the ISPs have said they will appeal.

Technical Standards Directive. The claimants argued that the DEA was allegedly unlawful because it should have been (but was not) notified in draft to the European Commission under the Technical Standards Directive. Justice Parker found that, because the DEA was not currently legally enforceable against individuals or ISPs, it was perfectly acceptable for the government to notify the DEA to the European Commission at the same time that it notifies the forthcoming draft Initial Obligations Code.

E-Commerce Directive. The claimants argued that the DEA was allegedly unlawful because it removed ISPs’ ability to avail themselves of the so-called ‘mere conduit’ defence (which excludes ISPs from liability in damages for copyright infringements in certain circumstances). The claimants also alleged that the DEA imposed a general obligation on them to monitor copyright infringement. Justice Parker found that the DEA did not make ISPs liable in damages for copyright infringement, nor did it impose on them a general obligation to monitor.

Data Protection Directive/Privacy & Electronic Communications Directive. The claimants argued that the DEA was allegedly unlawful because it breached data protection laws and required the ISPs to process data in infringement of the Privacy & Electronic Communications Directive. Justice Parker found that the processing of data by ISPs (and by copyright holders) under the DEA was appropriate and lawful. It helped to protect copyright and helped to establish whether or not any further copyright infringement action could be taken.

Authorisation Directive. The claimants argued that the draft Costs Order (which determines who pays what costs under the DEA) was allegedly unlawful in requiring the ISPs to pay:
(1) 25% of Ofcom’s costs and the costs of establishing an appeals body (Qualifying Costs), with copyright holders paying 75%.
(2) 25% of the ISPs’ costs of receiving information from copyright holders about infringements and sending notifications to subscribers (Relevant Costs), with copyright holders paying 75%.
(3) 25% of the costs of any appeals by subscribers to the appeals body (Case Fees), with copyright holders paying 75%.

Justice Parker found that it was lawful for the claimants to pay 25% of their Relevant Costs and 25% of the Case Fees; but that ISPs could not be required by the government to pay 25% of the Qualifying Costs. Nothing in the DEA will be overturned as a result of this, but Government will need to consider how to amend the draft Costs Order.

Proportionality. The claimants argued that the DEA was allegedly unlawful because it was a disproportionate response to online copyright infringement; that the government had introduced it based on inadequate evidence about the scale of online copyright infringement; and that the government had failed to consider the rights of others.

Justice Parker found that the DEA represents an efficient, focussed and fair system to help reduce online copyright infringement and to help educate consumers. The judge held that Government, not the judge, was best placed to assess the evidence about the scale of online copyright infringement and that the government had made its assessment lawfully. The judge highlighted the number of economic experts that the claimants had employed to try and undermine Government’s assessment and remarked that the claimants had lost sight of what they needed to prove.

Justice Parker found that copyright is a fundamental property right which must be balanced with other fundamental rights, such as freedom of expression. He held that copyright laws have already evaluated those different rights and, together with the DEA, have struck a fair balance.

Copyright owners in the UK were in celebratory moods. They were represented collectively as Interested Parties. Membership included the unions: Equity, the Musicians Union, BECTU and Unite, the Producers Alliance for Cinema and TV, the British Video Association, the Film Distributors’ Association, the Motion Picture Association, the British Recorded Music Industry and the Premier League (football rights).

“The British Video Association, whose members are blighted by the endemic use of illegal P2P file-sharing to avoid paying for video content, is delighted that the ISPs have failed in their attempt to overturn the 2010 Digital Economy Act," says Lavinia Carey, Director General of the BVA. “That Mr Justice Parker has ruled in favour of copyright owners demonstrates that the DEA offers a fair, proportionate and entirely reasonable way to help promote a change in behaviour and point people to the legal sources of video entertainment through the notice sending process.”

“Several other countries are adopting this measure and it would be bad for Britain’s creative industries to be left behind other more forward thinking nations who are supporting their creative economies at this difficult time of transition towards increased digital consumption during this period of recession,” adds Carey.

The coersive measures contained in the DEA are essentially a variation of the more stringent so-called "three-strike" policy implemented by France’s Internet anti-piracy body HADOPI. Under the law, HADOPI issues two warnings – by email and then recorded delivery post. Details of repeat offenders are then passed to a judge, who would have an armoury of sanctions available including cutting Internet access, heavy fines and even prison sentences.

Story filed 20.04.11