Does the Digital Economy Act 2010 Have a Future?

This article by Francis Davey was written to accompany his talk at SCL’s 6th Annual Policy Forum held in September 2011. The article includes some updates but was written before the outcome of the appeal on the refusal of judicial review relating to the Act was known.

At the time of writing, the Court of Appeal was considering an appeal against a judicial review of the Digital Economy Act 2010.[1] That appeal might end the short life of the DEA but, assuming that it does not, what sort of future does the DEA have? 

I think everyone agrees that the use of the Initial Obligations Code (IOC) of the DEA will have some effect and no one thinks that it will eliminate all piracy. What we do not know is what effect it will have and whether that is worth the price. 

Following the trend of much recent legislation, the Digital Economy Act leaves a great deal to secondary legislation. So much so that many of the most important details are still unknown. As will be clear, this ensures that any effort to decide whether the DEA will be effective (and, if so, what that effect might be) is really just crystal ball gazing. The best I can do is highlight things that might make a difference. 

One thing we do know is that web blocking under s 17 of the DEA is off the agenda in favour of a voluntary code on the lines of the Internet Watch Foundation,[2] although it is now clear that existing law[3] does permit reasonably flexible orders to be made blocking web sites.[4] 

The most important things we do not know are the following.

Timing

The draft Online Infringement of Copyright (Initial Obligations) (Sharing of Costs) Order 2011 was notified to the European Commission under the Technical Standards Directive[5] on 8 August 2011.[6] That means that the standstill period ended on 9 November 2011 – the earliest date on which the order may be laid before Parliament.[7] In 2011, the government's target was that it would be laid 'at the beginning of next year'.[8] 

A final draft of the Initial Obligations Code has yet to be published;[9] that in turn is likely to be delayed by notification to the European Commission. 

An order for technical measures may not be made less than 12 months after the IOC obligations come into force[10] and must be preceded by an assessment by OFCOM.[11] So technical measures could not be implemented before the Summer of 2013 at the earliest (allowing for time to bring the IOC into effect and any technical measures order). No more detailed timetable has been offered by the government.

Cost

How much will it cost to use the IOC? As things stand costs are shared: 

  • costs of OFCOM setting up, administering and enforcing the provisions of the DEA: 100% copyright owners
  • cost to the ISPs: notionally shared 75% (copyright owners) and 25% (ISPs)
  • case fees of the appeals body: £20 (subscribers), of the rest: 75% (copyright owners) and 25% (ISPs). 

The actual numbers in all these cases will be decided by OFCOM. As I understand it, OFCOM will develop a model that will predict the amount an efficient ISP ought to charge for notification. Copyright owners will then be required to pay 75% of that sum. The thinking being that ISPs will have an incentive to be more efficient. 

The government's impact assessment[12] assumed a cost of £400 per appeal for the appeals body, along with one-off costs of £7.6 million and fixed running costs of £0.7 million. The £20 fee for subscribers was introduced in the second draft. Its intention was to deter casual or vexatious appeals. The government's impact assessment – which suggested a fee of £10 – assumes a reduction of appeals/CIR (copyright infringement reports) of a factor of 10.

Quality control

The quality of evidence on which the IOC is based will be critical. If the evidential basis for a CIR or the identification of a subscriber from their IP address is poor: 

  • we may see more appeals as angry subscribers feel moved to protest their innocence – driving up costs.
  • the process risks negative publicity, which may in turn hamper its effectiveness.  

What OFCOM do not appear to want to do is to lay down any standards for the collection of evidence, either for ISPs or for copyright owners. The approach offered in their draft Initial Obligations Code[13] is for copyright owners to set their own standards subject to a scheme of quality assurance.[14] My view is that this may be unlawful – appearing to contradict the obligation on OFCOM to specify the 'standard of evidence that must be included'.[15] 

OFCOM do appear to intend that ISPs collect and maintain better evidence than they do at present.

Technical Measures

The IOC on its own is not much better than a very complicated way to send letters to subscribers. It is likely to require more stringent data retention on behalf of ISPs and so may make identification of subscribers easier, but it does little else. 

That may be sufficient, but the extent to which a notification under the IOC matters to copyright owners and subscribers will depend on the nature of technical measures and the basis on which they will be imposed. 

The DEA allows almost anything – except ironically permanent disconnection – to be imposed as a technical measure and does not specify any specific rules for imposition of technical measures. No flesh has been added to these bare bones by the government. We are therefore left to speculate. 

I suspect that technical measures may turn out to have little value as sanctions. The scheme of the DEA does not allow for aggregating sanctions across ISPs and/or across connected subscribers. Someone who is seriously inconvenienced by a technical measure can simply pass the subscription to another member of their household or friend, or move ISP. 

These uncertainties will impact on the behaviour of two members of the copyright owner/ISP/subscriber troika – ISPs being caught in the middle with little wriggle room.

Copyright Owners

Is there any point using the IOC? If all that is required is a means of sending a message to subscribers, using a Norwich Pharmacal order (NPO) and doing it for oneself has a number of advantages: 

  • you pay only the ISP's costs and pay nothing to OFCOM
  • the cost of an NPO will be controlled by the court, not based on a model by OFCOM
  • you get to filter out subscribers you do not want to target
  • you decide how many times to write to each subscriber – the costs sharing order requires payment per CIR but only a fraction of these need trigger letters under the draft IOC
  • there are no subscriber appeals (and hence no costs arising from them)
  • you get to send a letter drafted by your advertising or legal departments (or both) to say what you want, not what an ISP thinks (with OFCOM approval) you ought to say
  • if you want to take legal action you will need an NPO anyway, so why not start now? 

On the other hand: 

  • it has been suggested that judges might be more reluctant to grant NPOs to copyright owners who have not used the IOC
  • an agent or collecting society (unless they hold a substantive licence) cannot do the job on your behalf[16]
  • it might be politically embarrassing not to use a system that appears to be designed to help you. 

On the last point copyright owners might (rightly I think) complain that the DEA is a pig's ear and a long way from being what they wanted.

Subscribers 

If there are no technical measures, why should a subscriber care? A CIR merely results in a nasty letter. Only if that nasty letter will have consequences later will it be important to appeal. 

Sadly – for subscribers – there's no indication of how the IOC will feed into the technical measures. Will a failure to raise a matter now, mean that it cannot be raised in defence later? That would hardly be fair, but fairness and logic have been conspicuously absent from much of the DEA so it may be that way.

For subscribers it will therefore be a lottery. For £20 they can take a punt at avoiding a negative consequence of which they as yet have no clear picture.  

Will subscribers change their ways? Almost certainly some will, but some will not. 

A further point of difficulty that is too complex to explore in this article is the extent to which subscribers understand what sources are legal or not. For example, the single site YouTube is responsible for 54% of reported usage of music sites, but many videos on YouTube infringe copyright. Even the BPI's own report treats this as a 'legal' source of content. The point being that subscribers will often assume that because something is available on a reputable seeming site, it is fine for them to access it. 

Similarly, the web, being international, supports sites, such as Project Gutenberg, which make a great deal of material available that is in the public domain in the USA but infringes copyright in the UK. I suspect that sort of problem will only increase. 

Francis Davey is a barrister in independent practice: contact@francisdavey.co.uk



[1] R (BT) v Secretary of State for Business Information and Skills, permission given in [2011] EWCA Civ 1229

[2] DCMS, Next steps for implementation of the Digital Economy Act, August 2011

[3] Copyright, Designs and Patents Act 1988, s 97A

[4] Twentieth Century Fox Limited v British Telecommunications plc [2011] EWHC 1981 (Ch)

[5] Directive 98/34/EC

[6] Notification 2011/418/UK

[7] Article 9(1), 98/34/EC

[8] see note 3 above

[9] According to the DCMS it will be published 'shortly'. ibid.

[10] Communications Act 2003, s 124H(2)

[11] ibid, s 124G

[12] Impact Assessment of draft SI 'The online infringement of copyright (Initial Obligations)(Sharing of Costs) order 2011' IA No: DCMS032, 29 June 2011.

[13] OFCOM, Online Infringement of Copyright and the Digital Economy Act 2010, Draft Initial Obligations Code, 28 May 2010.

[14] ibid, pp 18-19

[15] Communications Act 2003, s 124E(2)

[16] Only the owner of the copyright or someone with a substantive right to enforce such as a licensee would have standing.

Published: 2012-01-23T23:34:00

    0 comments

      Please wait...