Background

The Digital Economy Bill had its second reading in the House of Lords this month.. The bill follows the Government's investigation into the communications sector, Digital Britain, which culminated in the Digital Britain White Paper, published in June 2009.

The bill contains controversial provisions relating to online copyright infringement. An online petition opposing it, set up by TalkTalk's executive director of strategy and regulation, has attracted more than 29,000 signatures. Facebook, Google, Yahoo and eBay have also written a joint letter to Lord Mandelson highlighting their 'grave concerns' about its Clause 17.

The bill is unlikely to become law before next year's general election, so may ultimately fall to a different Government to consider further. Reaction from the other parties to the bill has been mixed. Despite acknowledging the need to tackle illegal file-sharing, the Conservatives' and Liberal Democrats' shadow Culture, Media and Sport ministers have both heavily criticised the bill, respectively describing its proposals to improve the country's digital infrastructure as 'a colossal disappointment' and the broad powers which it grants allowing primary legislation to be amended by statutory instrument as 'utterly shameless'.

Online infringement of copyright provisions

Clauses 4 to 17 of the bill deal with online infringement of copyright and provide for the following, in particular:

  • New obligations on internet service providers to confront subscribers accused of online copyright infringement.
  • The creation of a general enabling power for the Secretary of State to amend the Copyright, Designs and Patents Act 1988 in the future, to reduce online copyright infringement, if appropriate in the light of technological developments.

What are the Internet Service Providers' (ISP) obligations?

Initial obligations

The bill will, if enacted in its present form, impose two principal initial obligations on ISPs:

  1. a reporting obligation, which will be triggered if a copyright owner alerts the ISP to any alleged infringements: the ISP will then have to notify the relevant subscriber of the complaint, i.e. by sending them a warning letter; and
  2. a record keeping obligation: to maintain a copyright infringement list, keeping track of the reports made about each subscriber, copies of which will be available in certain circumstances to the copyright owners.

The detail relating to these initial obligations will be governed by a code of practice, which the Government would prefer be drafted by the ISP industry and approved by Ofcom, but which, if not forthcoming from the industry, will be drafted from scratch by Ofcom.

Further 'technical' obligations to be imposed

The Government hopes that the above measures will result in a reduction in online copyright infringement. However if this does not prove to be the case, if enacted in its present form the bill will give the Secretary of State a reserve power to direct Ofcom to assess whether ISPs should be subject to further 'technical' obligations.

Lord Mandelson, speaking at the Government's digital creative industries conference in October, said that if illegal file-sharing was not reduced by 70% by April 2011, such further technical measures would be introduced from July 2011 (although this specific target has not formed part of the bill).

These obligations will require ISPs to take measures to limit internet access to persistent infringers, for example by capping/shaping the bandwidth available to them or by cutting off their broadband connection temporarily altogether.

BT and TalkTalk, the UK's two largest ISPs, are reported as suggesting that the lack of legal protection for accused individuals may be contrary to human rights legislation.

The European Court of Justice (ECJ) has held it is open for national courts to oblige ISPs to disclose details of suspected file-sharers - although not required under Community law - but it also indicated that member states must interpret the various directives dealing with e-privacy and intellectual property to allow a fair balance between all fundamental Community rights at play, including rights to effective judicial protection - Productores de Música de España (Promusicae) v Telefónica de España SAU, 29 January 2008.

Whether the bill provides such effective judicial protection to alleged infringers is being debated. Some, for example, have highlighted the risk of innocent subscribers being disconnected after their connection has been hijacked by illegal file-sharers - an acknowledged vulnerability of many wireless connections.

What if an ISP fails to comply?

It is proposed in the bill that an ISP may be fined up to £250,000 (or more if ordered by the Secretary of State) if it fails to comply with either its initial obligations or its obligations to impose technical measures.

Who will pay for the costs of complying?

The Government identifies various costs for the ISPs which will arise in satisfying these obligations: costs in processing copyright infringement reports, in issuing subscriber notifications, and in imposing technical measures.

The intention is that these costs will be shared between the copyright owner and the ISPs. The Secretary of State will be given the power to order exactly how these costs will be apportioned.

Secretary of State's proposed power to amend the 1988 Act

Clause 17 of the bill grants a broad power to the Secretary of State to amend the Copyright, Designs and Patents Act 1988 in the future, to prevent or reduce online copyright infringement, if appropriate in light of technological developments that have occurred or are likely to occur.

Facebook, Google, eBay and Yahoo have written an open letter to Lord Mandelson, urging him to remove this clause from the bill, explaining that while they appreciate that a respect for copyright is key to unlocking the potential for Digital Britain, this clause 'gives any future Secretary of State unprecedented and sweeping powers to amend the Copyright, Design and Patent Act [and] opens the way for arbitrary measures. This power could be used, for example, toincrease monitoring of user data even where no illegal practice has taken place [and] could put at risk legitimate consumer use of current technology as well as future developments'.

The Department for Business, Innovation and Skills has however defended the clause, saying that 'the law must keep pace with technology, so that the Government can act if new ways of seriously infringing copyright develop in the future'.

Analysis

It has taken the Government some time to take steps to address online copyright infringement.

Until now the UK courts have struggled to apply existing laws to the online environment, which is not always as anonymous as many assume. They have done so by balancing the fundamental rights involved in accordance with the ECJ's ruling in Productores de Música de España (Promusicae) v Telefónica de España SAU, 29 January 2008.

Several times the English courts have balanced such fundamental rights in favour of disclosure to enable civil actions to be taken against the individuals concerned. A recent analogous example would be the case of G & G v Wikimedia Foundation Inc [2009] EWHC 3148 (QB) (02 December 2009). The High Court ordered the Wikimedia Foundation to disclose the Internet Protocol (IP) address of the person who made an amendment to a Wikipedia entry concerning the claimant and her child which the claimant alleged contained sensitive private information and amounted to a breach of confidentiality.

However, once infringers have been identified, taking court action to stifle each and every infringement can be a costly and time consuming process. The lobbying from rights owners for the use of the sort of technical measures which have been mooted in this bill is therefore unsurprising; their availability will however mean that the court will no longer have such a clear role to play in balancing the fundamental rights of the individuals concerned.

Clause 17 appears to be an attempt to ensure that the Government - or any future Government - isn't left out in the cold again in the future by technological advance this draft bill provides the executive with a number of powers in reserve, to be engaged promptly if future technology renders them necessary.

But as a result, Parliament will not have the opportunity to scrutinise, discuss or challenge such further measures. Some may argue that this is inappropriate in an area involving such a careful balancing of rights and - as shown by the reaction to this draft bill - which is of great interest to so many.