The High Court has recently confirmed that BT and TalkTalk's
application for a judicial review of the Digital Economy Act will
proceed to a full hearing early next year. BT and TalkTalk are
seeking a judicial review of the parts of the Act relating to
obligations on Internet Service Providers to require them to take
steps to reduce copyright infringement online, on the grounds that
aspects of the Act are illegal. A further ground of challenge based
on proportionality was admitted this week by the High Court.
Meanwhile the new Coalition Government has launched a new inquiry
into the "Protection of Intellectual Property Rights
Online", which will consider the implementation, practicality
and likely effectiveness of the applicable measures contained in
the Digital Economy Act.
The latest inquiry, which solicits submissions and so is akin to a
consultation, may provide further justification for modifying the
law next year should BT and TalkTalk's application for judicial
review be successful in whole or in part.
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Background - The Digital Economy Act
The DEA was passed into law in April 2010 and includes
controversial provisions to prevent and penalise various electronic
means of copyright infringement, notably peer-to-peer (P2P)
file-sharing.
The DEA sets out a number of measures to prevent online copyright
infringement. The first of these are:
- an obligation on Internet Service Providers (ISPs) to notify subscribers that their accounts have been associated with copyright infringement; and
- an obligation on ISPs to compile and keep anonymised lists of those subscribers associated with copyright infringement; these may be provided to rights holders on request. Personal details will only be handed over on receipt of a court order.
Together these are known as the 'Initial
Obligations'.
On 28 May 2010, Ofcom launched a public
consultation including a draft code of practice (called
"the Online Copyright Infringement Initial Obligations
Code", or the "Code") governing how these Initial
Obligations are intended to work in practice.
In Ofcom's consultation document, it proposed that the Initial
Obligations Code should only apply to fixed (as opposed to mobile)
ISPs, who provide an internet service to more than 400,000
subscribers. Currently there are seven fixed ISPs that meet this
criterion: BT, O2, Orange, Post Office, Sky, TalkTalk Group and
Virgin Media.
Following its consultation, Ofcom is due to publish its Initial
Obligations Code, but as yet, no final form of that code has been
forthcoming.
In addition to the Initial Obligations, the DEA also includes
controversial further powers allowing the Secretary of State to
require ISPs to impose 'technical measures' against
subscribers identified as repeat infringers, which may include
disconnection, and to enable the Secretary of State to draft new
regulations to govern the Court's powers to grant injunctions
against websites associated with copyright infringement.
Judicial Review
BT and TalkTalk's application for a judicial review of the
Digital Economy Act ("DEA") cleared the first obstacle in
its path last week when Mr Justice Wyn Williams decided to grant
the request for the application to be heard in the High Court. The
Government is reported to have argued, unsuccessfully, that the
application was groundless. The application is expected to be heard
early in 2011.
The review is expected to subject the DEA to considerable scrutiny
on the basis that it is inconsistent with European law. In a recent
twist, it has been reported that BT has successfully included an
objection on the grounds that the obligations contained in the Act
are disproportionate in any event.
The press have reported (for example see
ISP Review) that the four grounds on which the DEA is
being challenged are that:
- The Government should have notified the European Commission under the Technical Standards Directive which they failed to do.
- Provisions of the DEA are not compatible with the E-Commerce Directive which provides that ISPs cannot be held liable for data going though their networks.
- The DEA requires ISPs to deal with data that is not specifically permitted under the Privacy and Electronic Communications Directive.
- Measures contained in the DEA are disproportionate
While the approval of the application does not provide insight into
whether BT and TalkTalk will ultimately be successful, it does
signal that they will have their day in Court and that the Court
will have to consider fully the arguments put before it.
The case should evaluate the force of such arguments (which are
increasingly developing UK constitutional law) and the
judiciary's willingness to challenge the legality of
legislation passed by both Houses of Parliament. It is well
established that proportionality is a fundamental tenet of European
Law; nevertheless the extent to which the Courts are prepared to
fetter the legislature's discretion deploying this principle,
which necessarily involves an element of subjectivity, remains to
be seen.
Not Another Consultation
In recent years the previous Government and its associated
organisations have embarked upon a great number of consultations
into the effectiveness of the current IP framework, its ability to
enable rights holders to enforce their intellectual property rights
in the digital world and proposals for reform. These include the
Gowers Review, the
Digital Britain market reviews, and
consultations on legislative options to address
Peer-to-Peer File-sharing. The culmination of all of this
consultation was the
Digital Economy Bill. It was criticised by many as being
a strange hybrid of proposals cherry-picked from the final
Digital Britain Report, and seen as having been rushed
through Parliament prior to the last general election. Once passed,
The
Digital Economy Act was seen as worryingly lacking in
detail, requiring the Government to consult on who should
foot the bill and Ofcom to
consult further on how its Initial Obligations should be
implemented in practice.
On 10 November, The Culture, Media and Sport Parliamentary
Committee issued a call for evidence on the Protection of
Intellectual Property Rights Online
The Committee will consider the new framework for the protection of
intellectual property rights online that is being established under
the Digital Economy Act, and the extent to which it is a reasonable
and sufficient response to the challenges facing creative
industries and individuals in digital markets.
Issues the Committee will be considering include the
implementation, practicality and likely effectiveness of the
relevant measures contained in the DEA. In particular:
- Whether the new framework has captured the right balance between supporting creative work online and the rights of subscribers and ISPs.
- Whether the notification process is fair and proportionate.
- The extent to which the associated costs might hinder the operation of the DEA.
- At what point, if at all, consideration should be given to introducing the additional technical measures allowed for under the DEA.
More broadly, the Committee will be reviewing the scope for additional activity and new approaches to ensure that original work is appropriately rewarded in the online environment, including the issues raised by the Government's review of the intellectual property framework. In particular:
- Intellectual Property and barriers to new internet-based business models, including information access, the costs of obtaining permissions from existing rights-holders, and "fair use."
The Committee is inviting written submission on the above to be received by Wednesday 5 January 2011.
Not Worth the Paper it's Written On?
After years of consultations in the run up to the DEA, to launch another consultation so soon after the DEA has been enacted and prior to its implementation suggests that the Government has serious concerns about the new legislative framework and may be planning a change in direction. The latest consultation may provide further justification for modifying the law next year should BT and TalkTalk's application for judicial review be successful in whole or in part.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 18/11/2010.
