A consultation paper has been launched on legislation designed to incentivise and unite the regulator, content owners and internet service providers together to reduce illegal peer-to-peer (p2p) file sharing by more than 70%. The proposals call for cooperation between ISPs and content owners, with the regulator, OFCOM, to have powers to require ISPs to respond to notices of infringements from content owners and to provide those owners with information in respect of serial offenders. If such cooperation fails to produce results, the proposed legislation would also enable OFCOM to require ISPs to implement technical measures against infringers, restricting their activities. There are, however, no proposals to require ISPs ultimately to cut-off offenders or bar them from using the internet.

Business Impact

  • New legislation is on its way to empower OFCOM to require ISPs to notify subscribers of their infringing activity, upon the request of, and provision of satisfactory evidence from, rights holders.
  • ISPs will need to maintain a record of their notifications, so as to assist rights holders in identifying serial offenders, against which the rights holders can take further action (although court orders will still be required before ISPs must give up personal details of offenders).  
  • The aim of the above is to reduce file sharing by some 70% – but if that fails, OFCOM will be able to impose technical measures on ISPs, such as bandwidth shaping and capping, or protocol blocking, so as to impede or prevent offending subscribers from accessing file sharing services.
  • The government appears keen to get the notification regime moving quickly, but is far more cautious about introducing technical measures, with these unlikely to come into play for more than two years after the legislation comes into force, and only if the notification regime proves unsuccessful.  
  • The government wants the industry to quickly agree its own code for the operation of the new ISP obligations, but OFCOM will agree one for it if it is not done quickly enough.  
  • It is proposed that the costs associated with the new obligations are to be shared equitably between rights holders and ISPs, although precisely how is up for consultation.  
  • The consultation does not examine commercial piracy, non p2p infringement, or format-shifting – these topics will be addressed elsewhere.  
  • Separately, the IP Office proposes to increase the penalty for online and physical infringements to a maximum of £50,000.  

Background

The Department for Business, Innovation and Skills' "Digital Britain" Final Report was released with much media fanfare on 17 June 2009. The report is a major policy document setting out the government's plans to push forward the development of the digital communications sector, faster than it would otherwise do so by market forces alone, with a focus on upgrading the UK's communications infrastructure and broadening its accessibility. It proposes legislative change to help it reach its goals, including changes to the radio licensing regime, legislation concerning broadband availability and measures designed to drastically reduce the amount of unlawful file sharing of copyrighted material over the internet. This newsflash addresses the proposals in respect of this last issue.

The detail of the legislative proposals on file sharing are contained within their own separate consultation paper – the Department for Business, Innovation and Skills' "Consultation on Legislation to Address Illicit Peer-to-Peer (P2P) File-Sharing" of 16 June 2009 (the "Consultation"). The deadline for responses is 15 September 2009.

The Consultation

The Consultation follows on from recommendations in the Gowers Review of Intellectual Property in 2006, a consultation on legislative options in July 2008 and the Digital Britain Interim Report released at the beginning of this year. It also follows the industry's agreement of a Memorandum of Understanding in July 2008 (the "MOU"). As such, the proposals in the Consultation are well-developed and the government is not consulting on whether or not legislation is needed (which it has already done), but rather on particular details of that legislation.

The Consultation states that new legislation will be introduced empowering the telecommunications regulator, OFCOM, to impose upon ISPs a number of obligations. They split into two categories – a light-touch notification regime to encourage file sharers to change their unlawful behaviour, to be followed by a technical sanction-based regime to punish them, if they continue to infringe.

The first stage - notification

Accordingly new legislation will impose a general duty on OFCOM to take steps aimed at reducing online copyright infringement. Specifically OFCOM will be required to impose obligations on ISPs to:

  • Require ISPs to send notifications (on receipt of appropriate evidence) to subscribers who have been identified in relation to alleged infringements of copyright; and
  • Require ISPs to maintain anonymised records of the number of times an individual subscriber has been so identified and to maintain lists of those most frequently identified, and to make the information available to rights holders.  

OFCOM will also be required to draw up a code to support the ISP's obligations – although the industry will be asked to put together their own code in the first instance, and the Government is keen that such code is agreed urgently.

Neither of the above obligations will come as much of a surprise – foreshadowed as they have been in the earlier documents referred to above – with the notification obligation closely mirroring the trials that arose out of the MOU (although its contents were voluntary and only the major ISPs signed it). The record-keeping obligation does not appear to be too onerous – indeed it seems little more than a requirement to keep a log of notifications and to make it available to rights holders to help them decide which infringers to pursue formally by bringing civil proceedings (a court order would still be required to obtain the personal details of the infringer).

This is all that the Consultation suggests comes into law immediately. It is portrayed as a "legislative baseline" from which the Government clearly hopes that industry will move forward by itself to tackle infringers. It is hoped that by notifying file sharers and educating them of their unlawful activity, they will be gently migrated onto one of the increasing number of legal content services. We can expect announcements about new commercial content models from the content providers and major ISPs.

The second stage - sanction

If that does not work, then the Consultation also proposes the second stage – the introduction of sanctions against file sharers, to be imposed by ISPs. There is no proposal – unlike with France's controversial Loi HADOPI – for file sharers to be cut off. Instead, a range of technical measures are proposed which fall into three broad categories:

  • Wholesale blocking of content – either particular websites or protocol blocking to deny access to particular services, eg, p2p;
  • Limiting the speed or volume of data downloaded – by bandwidth capping and shaping, impacting either on the user's service in general or his or her access to particular services;  
  • Content identification and filtering.  

OFCOM would be given power to require by means of Statutory Instrument that ISPs put these measures in place. The Government is clearly cautious here – not only is any exercise of OFCOM's power in this regard subject to consultation with stakeholders and subject to annulment by resolution of Parliament – it is also not intended that any of the measures be introduced until a significant amount of time has passed, while the effects of the notification obligations are monitored. Only if those obligations fail to impact on file sharing does the government envisage OFCOM imposing the technical measures. On the Consultation's estimated timetable, the earliest we would see such measures is two years from royal assent of the legislation.

Although the intention is that the technical measures will be specified in the legislation, the Consultation provides little technical details of the measures ("content identification and filtering" is a particularly broad description). It acknowledges that technology changes – and that may have a profound effect over time on any particular technical measures enshrined in legislation. It is likely to be a significant challenge for the government to decide upon which measures it should implement and then to describe those with sufficient specificity, whilst leaving enough flexibility such that they may evolve along with technology (including technologies by which infringers may seek to circumvent the measures).

Small businesses likely exempted

The government recognises that the costs of the above obligations could be disproportionate to small ISPs, particularly where only a small number of their subscribers are infringers. It therefore proposes to exempt small businesses (which service about 10% of the residential broadband market) from the new obligations.

The role of a rights agency

As the government is keen on the industry getting on with things itself, it hopes that the 'rights agency', an industry body discussed in the Digital Britain Interim Report, will come into being and lead the creation of a code governing the implementation of the new ISP obligations. The Interim Report also envisages the rights agency having a broader role of bringing the industry together to promote legal alternatives to file sharing, whilst working together on stopping infringers, perhaps using the MOU as a springboard for further debate and agreement. The Consultation also envisages the rights agency taking action against serial infringers, identified as a consequence of the new notification and logging obligations.

Costs and fines

Who pays for what – OFCOM, ISPs or content owners – is intended to be worked out as part of the code, but the Consultation indicates that it is looking for rights holders and ISPs to split the cost of notifications, and the legislation is to include a power permitting OFCOM to require the industry to jointly contribute to certain of its costs. As for the logging of notifications, it is proposed that ISPs bear the costs of this and that content owners bear their costs, so far as they chose to deploy the information to sue serious infringers.

To keep participants on their toes OFCOM are to have power to fine both ISPs and rights holders for failing to comply with the code. For example, an ISP might be fined for failure to notify, a rights holder for providing incorrect evidence of infringement. In the latter example, the rights holder will also be required to indemnify the ISP in respect of any remedy granted to the consumer flowing from wrongful accusations.

What is up for consultation?

While the above account may read as a statement of what the law is going to be, the Consultation does seek responses from interested parties on a number of details, asking, amongst other things:

  1. Should parties other than rights holders, their representatives or the 'rights agency' be able to request that an ISP send out a notification?
  1. What details should a notification contain (eg, details of legitimate alternatives to file sharing)?Should there only be one notification, or an escalating series of letters sent out?  
  1. Should there be limits on the number of notifications ISPs can be asked to send out, so that they are not overwhelmed by requests?  
  1. How are costs to be handled and split between the participants, and how much flexibility should the legislation leave the participants to decide this themselves?  
  1. Are the technical measures listed the right ones?  
  1. Should small businesses be exempted, and if so how?