UK Digital Economy Act – Will it ever come to life?

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After several industry studies and consultation processes launched during 2009 and 2010, the Digital Economy Act (DEA) was approved in April 2010 (a few days before the general elections) amid many controversies. Several months later, still a long way from taking full effect, the implementation process is being postponed and many question whether the new coalition government will want to take a different approach to online piracy.

The DEA aims to introduce a “three strikes and you’re out” system whereby authors would signal IP addresses of alleged copyright infringers to ISPs who would have an obligation to notify the alleged infringement to the corresponding subscribers. For those IP addresses that receive 3 notifications, copyright owners would have the right to request the disclosure of the infringers’ identity through a court order and obtain restrictive measures against them, which would range from slowing down to suspension of their Internet connection.

The implementation of the DEA has started, although it is unclear whether the measures taken so far will ever become effective.

OFCOM, the UK regulator for the Communications Industry, was given the task of adopting the necessary measures implementing the DEA and in May 2010 issued a draft Code of Practice setting out the three stage notification process in detail. Under the draft code, subscribers would have the right to challenge the allegations through an appeal process before an independent tribunal. Curiously, the draft OFCOM code would initially restrict the application of the DEA to fixed line ISPs with more than 400,000 subscribers.  Only seven UK ISPs would therefore be caught under the DEA: BT, O2, Orange, Post Office, Sky, Talk Talk and Virgin Media. Consultation on the OFCOM Code closed in July 2010 but OFCOM has not adopted any final code (which was at first scheduled to happen in September 2010). Definitive adoption and implementation of the Code is now not expected before the second quarter of 2011 (if at all).

In September 2010, the government has decided that the costs related to the notification process should be split 75:25 between the right holders and the ISPs (respectively), while infringers’ appeal process should be free of charge. This decision was understandably received with much discontent by both the ISPs (who claimed that all costs should be borne by the authors) and authors’ societies (who wanted a more favourable cost sharing arrangement). Consumers’ groups have instead accepted the decision of a free appeal process favourably, although they have perhaps not considered that the costs arising from the regulation will very likely be passed onto the common (non-infringing) internet user (for example through higher broadband charges).

While OFCOM and the government have taken the actions required under the DEA, two of the affected ISPs, BT and Talk Talk, filed an application for a judicial review of the DEA. Depending on the judge’s ruling (which is expected not earlier than February 2011), the government may be forced to change or even scrap the DEA. The judge will conduct a full review of the DEA and the legislative process followed for its adoption, although the main grounds of the ISPs’ application are understood to be the following:

  1. The government should have notified the DEA to the European Commission in accordance with the Technical Standards Directive
  2. Provisions of the DEA are incompatible with the e-commerce directive and the ‘mere conduit’ principle
  3. The DEA requires ISPs to deal with data that is not specifically permitted under the data protection and the e-privacy directives
  4. Measures provided for in the DEA, namely the Internet restrictions that infringers may face, are disproportionate.

The UK government is reported to have argued that the judicial review application is groundless, but (to complicate things further) on 10 November, the Parliament’s Culture, Media and Sport Committee issued a new Call for Evidence “on the Protection of Intellectual Property Rights Online”. The Committee is inviting written submissions on the “implementation, practicality and likely effectiveness of the measures contained in the DEA”. This opens the floodgates for a further full open discussion on the DEA with all stakeholders. The Committee has raised issues that seem to mirror the doubts proposed by the ISPs in their application for judicial review, namely:

  1. Whether the DEA captures the right balance between supporting creative work online and the rights of subscribers and ISPs
  2. Whether the notification process is fair and proportionate
  3. The extent to which the associated costs might hinder the operation of the DEA
  4. At what point, if at all, consideration should be given to introducing the additional technical measures allowed for under the DEA.

What next?

There is a general feeling that the DEA was rushed into Parliament in the days immediately prior to elections last May, under lobbying pressure, without taking enough time to consider all complex technological, social, legal and economic implications of it and the interests of all stakeholders involved. Its approach to online piracy is now being re-assessed and the implementation of the Act is being delayed. The outcome of the judicial review and of the Parliament Committee’s consultation will be carefully watched, as it may shed more light (or cause more confusion?) on the labyrinth of conflicting legislation and interests on this topic. Watch this space…

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