Andrew Pike offers an update on the copyright-focused provisions of the DEA and an assessment of its likely impact
After a long delay Ofcom has confirmed that it is now pressing ahead with proposals to implement some of the controversial elements of the Digital Economy Act 2010, which was rushed through Parliament in the dying days of the last Labour Government.
Key provisions of the Act were designed to curtail the illegal downloading of copyright materials from the Internet – mainly music and films – in order to protect Britain's creative industries. In simple terms, ISPs were required to take an active role in policing the downloading activities of their customers by issuing warnings to those subscribers who appeared to be copying materials illegally. If subscribers ignored such warnings, it could ultimately result in copyright owners obtaining the identities of possible offenders via their ISP with the threat of legal action as a result. In addition, under the original proposals, an ISP might have been required to suspend or restrict an individual's Internet connection for a period of time as a further penalty for persistent copyright abuse.
The provisions of the Act caused considerable debate about the relative merits of protecting copyright owners on the one hand and the danger of restricting the development of the Internet industry on the other. The debate was brought to a head when BT and Talk Talk applied for, and were granted, a judicial review which delayed the implementation of the relevant parts of the Act. In March of this year the results of the judicial review were announced and, with minor exceptions, BT and Talk Talk's arguments were rejected. That opened the door for Ofcom to move forward and in June Ofcom confirmed how it proposed to implement the terms of the Act. It expects its proposals to be implemented in early 2014.
Ofcom had already published draft proposals as far back as May 2010 and, with one exception, very little of significance has changed since that time. The 'three strikes and you're out' approach remains – in other words, a subscriber will need to get three infringement letters in a 12-month period before a copyright owner can move to the next level and apply to court for the subscriber's identity to be disclosed to them by their ISP. There will be a right of appeal – someone wishing to dispute the suggestion that they have infringed another's copyright will have 20 days to do so and must pay a fee of £20 which will be refunded if their appeal is successful.
Ofcom has clarified that its plan is to limit the service providers who will initially be bound by its Code of Practice to the 'big six' – those who provide at least 400,000 fixed Internet access connections to subscribers – being BT, Virgin Media, Talk Talk, Sky, O2 and Everything Everywhere. Fixed Internet access is defined by Ofcom as 'an Internet access service which is conveyed by wire, cable, fibre or other physical substance to the subscriber's address.' This means that, at least initially, suppliers who provide 'mobile' Internet access through 'hotspots' or similar arrangements are in most cases excluded from the Code.
Ofcom's reasoning is that the level of copyright infringement through mobile services is much lower than through fixed line services. It is very important to note that an employer, the local pub, Internet café, library or other similar entity which provides Wi-Fi to its employees or customers / users but which receives its broadband service via a fixed line will potentially be deemed to be a subscriber to a service which is then caught by the Ofcom Code of Practice. They could therefore be targeted with infringement letters where people have used their service as a means of downloading copyright material from illegal sites.
One thing which has changed however since 2010 is the potential for individuals' Internet connections to be suspended as a result of copyright infringements. The Act included provisions which anticipated that possibility and it was a particularly controversial element of the legislation. What if, the argument ran, you were a self-employed person working from home running an Internet-based business and a member of your family was persistently downloading copyright materials from an infringing site without your permission. Would the suspension of your Internet service for a month and the subsequent failure of your business be a proportionate penalty for not watching what your children were doing at 2 am? That opens up a whole new debate on parenting skills which is outside the scope of this article. In practice however that issue has been resolved as Ofcom were asked by the Government in February 2011 to review whether the relevant sections of the Act (ss 17 and 18) on website blocking were 'technically workable'. Ofcom's review led the Government to announce on 3rd of August 2011 that ss 17 and 18 were to be dropped as they were not practically enforceable.
One of the factors supporting the repealing of ss 17 and 18 appears to have been that copyright owners have had some success in recent times in dealing with infringing web sites by other means. Copyright owners have successfully targeted web sites involved in copyright piracy using existing provisions within the Copyright, Designs and Patents Act 1988. They have for example, forced major broadband providers to restrict access to 'The Pirate Bay' which was among the most popular file sharing web sites. The difficulty of course is that one site is shut down and another springs up; that reflects the current nature of the Internet.
What to expect and how to cope
So how does this all affect individuals, businesses and organisations in practical terms? The truth is that no-one really knows as it will depend on how copyright owners decide to enforce their new rights. As an individual downloading material for your own personal use then, as the old saying goes, 'you pays your money (or, in this case, possibly you don't) and you takes your choice.' Unless copyright owners decide to try to make an example of a few individuals, it is unlikely that there will be a mass purge on subscribers who download the odd track here and there without paying for them.
People who provide Internet and Wi-Fi services to their employees or customers via a fixed link however are likely to be concerned. Clearly it would be counter-productive to have a situation where Internet availability was withdrawn because of such concerns and the latest Ofcom proposals offer some comfort in that respect. One ground for appealing against a claim that a party has infringed a copyright owner's rights is that 'the act constituting the apparent infringement to which a copyright infringement report relates was not done by the subscriber and the subscriber took reasonable steps to prevent other persons infringing copyright by means of the Internet access service.'
What is 'reasonable' is not specifically defined but it would be important, for example, for an employer to have included something in their employment contracts or staff handbook which prohibits the unauthorised downloading of copyright materials and establishes that it is a disciplinary offence to do so and confirming the reason why. Likewise, a hotel owner making Wi-Fi available to its guests should have terms and conditions relating to the use of its Wi-Fi system which prohibit downloading illegal content. Having things in writing is all very well but that may not be sufficient if there is no evidence that an organisation is prepared to enforce its rules. As a minimum, for example, employee terms should confirm that the employer reserves the right to monitor Internet activity if the employer has reasonable grounds to suspect improper activity. This right should extend to monitoring an individual who is working from home but using a business server. The employer needs to show that they are actively aware of the risk and that they are monitoring activity where there are grounds for suspicion.
In practice it is easy to find weaknesses in the current proposals but hard to find solutions. It has been argued for example that limiting the Ofcom Code of Practice to the six main suppliers might encourage subscribers to move to smaller providers who are not regulated. It is a fair point, although Ofcom have said that they will keep their terms of reference under review and reserve the right to include additional suppliers within the Code where they believe a particular risk exists.
The truth is that there has to be a reasonable balance between the rights of entrepreneurs and copyright holders. Copyright holders will be encouraged however by the fact that a number of key players in the music industry have, just prior to the time of writing, written to David Cameron supporting the rights of copyright holders. Lord Andrew Lloyd-Webber, Sir Elton John and Simon Cowell are among those who have supported copyright holders' rights saying, amongst other things, 'Illegal activity online must be pushed to the margins. This will benefit consumers, giving confidence they are buying safely online from legal web sites.' It seems that interested parties are positioning themselves for an ongoing debate.
Andrew Pike is a Partner at Burlingtons Legal LLP
Neil Brown, 18:52:46 04/09/2012