1. High Court orders BT to block its customers from accessing Newzbin

The High Court has upheld an application by a consortium of movie studios forcing BT, as an Internet Service Provider, to block its customers from accessing an unlawful file sharing site on the basis that BT had actual knowledge of its customers using the service to infringe copyright.

Background

The recent decision follows an earlier ruling in Twentieth Century Fox Film Corporation & Anor v Newzbin Ltd [2010] EWHC 608 (Ch) in which Newzbin, a website which used "Usenet" technology to allow users to upload and view DVD films, CDs and software, was found liable for copyright infringement on the basis that it had authorised the copying of films by its users. Following that ruling, Newzbin went into voluntary liquidation and the original website ceased operating. However, a successor website of the same name soon began operating from the same web address, albeit that its operators were not known, and they may have been operating from offshore, outside the Court's jurisdiction.

The claimants (Twentieth Century Fox, Universal, Warner Bros, Paramount, Disney and Columbia, together, the "Studios") therefore sought an injunction requiring BT to block its subscribers from accessing www.newzbin.com, and produced evidence which indicated that the overwhelming majority of the files on the website were likely to be protected by copyright.

The Studios sought the injunction under s97A of the Copyright, Designs and Patents Act 1988 ("CDPA"), which provides that "The High Court…shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright".

This section was inserted into the CDPA as a result of Article 8(3) of the Information Society Directive (2001/29/EC), which obliges Member States to ensure that injunctions can be granted "against intermediaries whose services are used by a third party to infringe a copyright or related right".

The Decision.

In granting the injunction, the High Court agreed with the Studios that, under section 97A of the CDPA, BT had "actual knowledge of another person using their service to infringe copyright" because BT knew that their service was being used to infringe copyright in general. It rejected BT's argument that the actual knowledge required had to be knowledge of a specific person using its service to infringe a specific copyright work.

The Implications

As a result of the High Court's decision, BT must now adopt technical measures to block subscriber access to the Newzbin website.

This is an important decision that is being welcomed by many in the creative industry. Following the decision, Chris Marcich, president and managing director of Motion Picture Association Europe announced that it was "a victory for millions of people working in the UK creative industries and demonstrates that the law of the land must apply online".

For ISPs there is now some guidance over their role in blocking illegal file sharing sites. However, they will not welcome the additional burden of implementing site blocking or the further ramifications in the event that legitimate sites are accidentally blocked.

The decision also raises concerns regarding the implications for future governance of web content. The Open Rights Group called website blocking "pointless and dangerous" and noted that "there are serious risks of legitimate content being blocked and service slowdown".

It is also interesting to note the announcements of the Government on 3 August 2011, which accompanied the recent Ofcom report into site blocking and the powers granted to the Secretary of State under sections 17 and 18 of the Digital Economy Act 2010. The Ofcom report concluded that none of the currently available techniques to block access to internet sites were completely effective, since there are various means to circumvent them and the techniques can sometimes result in legitimate content being blocked. The report also noted that, to provide any real advantage over the section 97A CDPA route (which formed the basis of the Newzbin case), the procedure under the Digital Economy Act would have to be low cost, result in blocks being put in place quickly, and have a predictable outcome. In the light of this report, the Department for Culture, Media and Sport has announced that it will not "bring forward regulations on site-blocking" and will instead focus on alternative measures to tackle online copyright infringement.

The Government is not, however, abandoning the notification scheme set up under the Digital Economy Act, pursuant to which, subscribers of ISPs who infringe copyright will be sent warning letters at the request of the copyright owners. The Government hopes that the first such notification letters will be sent to subscribers by the end of 2012.

The full judgment of the Newzbin case is available to read here.

News

2. Licence transfer from Orange to Everything Everywhere was void and unenforceable

The High Court has ruled that Ofcom did not have the power to vary Orange's 2G and 3G wireless telegraphy licences so that they could be reissued in the name of Everything Everywhere following the merger between T-Mobile and Orange.

The case was brought by Arqiva, the communications infrastructure and media services company, which had in place a number of commercial agreements with both Orange and T-Mobile permitting the operators to use Arqiva's infrastructure. The agreements, entered into prior to the Everything Everywhere merger, contained restrictions on the use of Arqiva's systems by other operators. In March 2011, Arqiva commenced proceedings seeking interlocutory injunctions given the possibility that the merger and shared use of Arqiva's infrastructure by Everything Everywhere could lead to the decommissioning of other Arqiva sites.

The main issue considered by the court was whether Orange still held its own wireless telegraphy licences to use radio spectrum. As a result of the merger, Ofcom had replaced the 2G and 3G licences held by Orange with licences in the name of Everything Everywhere. During the case, the court considered whether or not Ofcom had the power under the Wireless Telegraphy Act 2006 (the "WTA") and other legislation, to make such a transfer.

The court considered three main issues:

(i) Whether or not the re-issue of the licence by Ofcom was something it was permitted to do under paragraph 6 of Schedule 1 to the WTA.

Paragraph 6 gives Ofcom the right to vary the terms, provisions or limitations of a wireless telegraphy licence. However, the court concluded that the name of a licence holder could not be described as a term of the contract, or a provision or limitation of the contract. As such, a change in the identity of the holder of a wireless telegraphy licence would require an additional express power rather than falling within the ambit of paragraph 6.

(ii) Whether or not the provisions relating to spectrum trading set out in section 30 to the WTA applied to intra-group transfers.

Article 9(3) of the Framework Directive makes provision for undertakings to transfer rights among one another under domestic law, and Article 9(4) makes such transfer subject to Ofcom's supervision. Counsel for Everything Everywhere contended that, because the concept of an undertaking under the Framework Directive (and EU law in general) was wider than the concept of a company under English law, section 30 of the WTA (relating to spectrum trading) should be read consistently with the Directive, meaning that it should not be applied to trading between companies within the same group. However, the court did not agree that the concept of an undertaking under EU law should affect the meaning of effect of section 30 of the WTA.

(iii) Whether what had occurred amounted to spectrum trading under section 30 of the WTA so could only take place in accordance with sections 30(1) or (5) of the WTA.

In considering this issue, the court examined the detail and structure of the merger and concluded that what had happened fell fairly and squarely within the definition of spectrum trading. As there were, at the time, no operative provisions under section 30(1) to authorise the transfer, and section 30(5) did not apply, the purported transfer was therefore void.

For Everything Everywhere, the case means that the company must now act on the basis that Orange still holds the licences in question. However, it is now possible for Orange to trade those licences under the Wireless Telegraphy (Mobile Spectrum Trading) Regulations which came into effect on 4 July 2011.

For other mobile operators, the case shows that care must be taken in relation to variation and trading of licences, as the operators cannot always rely on Ofcom to get it right.

The full judgement of the case is available here.

3. European Commission announces proposed changes to the Roaming Regulation

The European Commission has proposed a new binding Regulation introducing structural market intervention measures to try and reduce the differential between national and roaming tariffs to zero by 2015.

The European Commission's agenda on roaming has been adopted as part of the wider "Digital Agenda". As part of that agenda, the Commission has published a new Roaming Regulation which introduces, for the first time, measures which directly intervene in the roaming market, as well as providing for the continued use of price cap mechanisms.

The structural measures proposed would allow customers to sign up for a mobile roaming contract that is separate from their contract for national mobile services. Each time the customer then travelled abroad and roamed, the retail roaming service would automatically switch to the alternative contract and provider. The customer would however be able to keep their original phone number and would not need to change SIM card.

The proposed measures would also introduce an obligation on network operators to meet all reasonable requests for wholesale access for the provision of roaming services. The Commission believes that this would facilitate the development of alternative mobile roaming offers by allowing market entry for new operators wishing to provide, for example, cross-border roaming services.

However, the Commission recognises that these new measures are long-term solutions and may not deliver in the short-term. As a result, the Commission is also proposing to:

  • introduce a new retail price cap for data roaming which would remain in force until mid-2016 (the Commission proposes no more than EUR 0.90 per Megabyte from 1 July 2012, falling to no more than EUR 0.50 per Megabyte by July 2014);
  • keep retail price caps for roaming voice and text messages;
  • keep in place data roaming "bill shock" protections (i.e. where a EUR 50 limit is placed on monthly bills unless the customer explicitly agrees otherwise); and
  • retain caps on wholesale prices between operators for all roaming services until 2022.

The UK Government has welcomed the move "as part of measures which will enable the creation of a fully functioning digital single market in Europe" and the Commission will now work with the European Parliament and the Council to reach an agreement on its proposals.

The proposal is unlikely to be welcomed by mobile network operators who are already facing increased pressure on revenues and competition from, for example, "over the top" services.

For MVNOs, the regulation, if implemented as proposed, would be a double-edged sword. The new transitory retail data roaming cap would apply equally to mobile virtual network operators as to mobile network operators. Wholesale access regulation, however, would provide the potential to develop alternative and innovative roaming services and offers to customers.

The European Commission's proposal can be found here.

4. Ofcom moves forward with White Space Technology

Ofcom has published a statement regarding its plans for the introduction of white space technology in the UK, the first country in Europe to launch such technologies.

White space technology works by searching for unused areas of the airwaves or gaps called ‘White Spaces’ that exist in frequency bands that have been reserved for TV broadcasts. Since at these frequencies, signals can travel large distances and easily through walls, the technology is suitable for a wide range of new consumer applications that could include Wi-Fi with up to twice the range of today’s technology, rural broadband and M2M applications.

White Space technology will work in a similar way to Wi-Fi, which uses a wireless router to send and receive information to other wireless devices. The main difference is that the White Space device ("WSD") first has to consult a database, notify it of its location and the database then comes back with details of the radio-frequencies and power levels it is allowed to use. This ensures the WSDs don't interfere with the existing licensed users of the spectrum, including the digital terrestrial TV broadcasters and wireless microphone users.

Ofcom is the first regulator in Europe making a real push to introduce the use of White Spaces. Last November, Ofcom consulted on its proposal to enable the use of WSDs, and has now published a statement which sets out its detailed plans on the issue. Ofcom has firstly decided to make WSDs licence exempt. This means that they will be allowed to operate without the need for a wireless telegraphy licence, on condition that they do not cause harmful interference to existing users of the spectrum. Ofcom has also decided to allow multiple third-party providers to develop databases, which will create a competitive marketplace and incentivise operators to provide the best database service to consumers. A number of organisations are likely to look to operate as database providers (to varying degrees and timescales), many by leveraging existing, similar work for other administrations (such as in the USA) to develop a prototype database.

Ofcom now plans to consult on a draft Statutory Instrument to make WSDs licence exempt and to specify and potentially consult further on the database requirements. The expectation is that white space technology could be launched in the UK without waiting for European standards on the technology, as early as in 2013.

Ofcom's statement can be read here.