In our March update, we reported to you that a judicial review of key sections of the Digital Economy Act ('the Act') was due to take place.

The Act aims to tackle online copyright infringement by giving copyright owners the right to report suspected infringements to Internet Service Providers (ISPs), and requiring ISPs to police online copyright.

BT and Talk Talk applied for the review. They claimed the legislation breached European laws on privacy, data protection and e-commerce and would have a disproportionate impact on ISPs, businesses and consumers. The High Court has now dismissed most of these legal challenges.

The only objection which the court agreed was justified concerned the draft costs sharing order proposed by Ofcom, which provided that ISPs will bear 25% of the costs associated with the new regime. The court held that ISPs should pay for the costs incurred in fulfilling their own obligations under the Act, as well as those set by the appeals body in determining subscriber appeals. However, it would be unlawful to require ISPs to also pay any administrative costs incurred by OFCOM or the appeals body in fulfilling their obligations under the Act, including Ofcom’s costs of appointing or establishing the appeals body.

The Government will now re-examine the issue of costs sharing, but it is likely to further delay the implementation of the Act. It is expected that this will come into force in 2012.