UK: Government Endorses Hargreaves Recommendations And Pushes Ahead With DEA

The Digital Economy Act – DEA

The DEA was passed into law in April 2010 and sets out a number of measures to prevent online copyright infringement. The first of these are:

  • an obligation on Internet Service Providers (ISPs) to notify subscribers that their accounts have been associated with copyright infringement; and
  • an obligation on ISPs to compile and keep anonymised lists of those subscribers associated with copyright infringement; these may be provided to rights holders on request. Personal details will only be handed over on receipt of a court order.

Together these are known as the 'Initial Obligations'.

In addition to the Initial Obligations, the DEA also includes controversial further powers allowing the Secretary of State to require ISPs to impose 'technical measures' against subscribers identified as repeat infringers, which may include disconnection.

The DEA also reserved powers that enable the Secretary of State to draft new regulations to enable Courts to grant injunctions to block access to websites associated with copyright infringement ("Site Blocking Measures").

So What Has Changed?

The Government is pressing ahead with plans to implement the Initial Obligations, with Ofcom's Initial Obligations Code due to be published shortly. Once published it will be notified to the European Commission and then laid before Parliament for approval. The new system, enabling rights holders to require ISPs to send letters and keep lists of infringers, is intended to deter casual infringers while avoiding the costs of litigating. Controversially the DEA includes a framework for the later implementation of 'technical measures' which still remain on the table.

Last year the Government commissioned Ofcom to report on the practical workability of the Site Blocking Measures which has also been published recently. Ofcom concludes that the blocking of infringing sites could potentially play a role in tackling online copyright infringement, but that the approach set out in the DEA is unlikely to be effective because of the slow speed that would be expected from a full court process. This would provide site operators with the opportunity to change the location of the site long before any injunction could come into force.

Site Blocking Measures Shelved

The Government has announced that it will not bring forward regulations on the Site Blocking Measures under the DEA at this time. However, this is not as significant as it sounds for a number of reasons.

The Site Blocking Measures provisions still remain in the legislation as reserve powers which the Government could bring into force in future. Furthermore, there is a growing awareness that the Site Blocking Measures provisions in the DEA are neither groundbreaking nor necessary following the recent case of Twentieth Century Fox v British Telecommunications Plc, in which the High Court ruled that it was willing to grant an injunction requiring an ISP to block access to a third party website (in this case, 'Newzbin') providing the means for large-scale infringement of copyright. The claim was brought under s97A of the Copyright, Designs and Patents Act 1988, and the finding hinged on the Court concluding that the service provider had, or could be deemed to have, "actual knowledge" of another person using their service to infringe copyright, despite the ISP not being responsible for the infringing activities. This test case is now likely to be enforced against other significant ISPs. Although the judgment sends a clear message to websites facilitating copyright infringement, such as Newzbin, that such 'blocking' injunctions are available, Mr Justice Arnold made it clear that substantial evidence would be required to do so and that he did not expect that rights holders would undertake such future actions lightly. With such a remedy available, the case for additional Site Blocking Measures under the DEA is less pressing.

Although the judgment in Twentieth Century Fox v British Telecommunications Plc concluded that the ISP should block access to the website responsible for large scale copyright infringement, Ofcom's views on the futility of the Site Blocking Measures do somewhat undermine the practical utility of such injunctions. Although the decision has been made that an Order should be granted, the precise wording of the Order, the aim of which is require the ISP to block access to the infringing website, and all the inherent technical complexity that that entails, is yet to be agreed.

The Government's recent policy announcement is limited to Site Blocking Measures and does not impact on the Government's plans in respect of the Initial Obligations or the more controversial provisions (yet to be brought into force) relating to 'technical measures', whereby ISPs may be required to disconnect the accounts of subscribers whose accounts have been identified as being associated with copyright infringement.

Rights Holders to Shoulder More of the Costs, Appeals will not be Free

The Government has also revised its plans for allocating the costs of implementing the Initial Obligations. Following the recent Judicial Review of the DEA the Government has had to accept that it cannot require ISPs to contribute towards Ofcom's costs in overseeing the scheme or the costs of an independent appeals body, a development which will be welcomed by service providers.

In addition the Government has decided that it should introduce a £20 fee for allowing subscribers to appeal notifications or inclusion on infringer lists, such fee being refundable in the event that the subscriber is successful. The grounds for appeal, considered in Ofcom's draft Initial Obligations Code, are expected not to include a defence that the acts complained of were perpetrated by someone other than the account holder or without his approval or knowledge, (an "it wasn't me" defence), although such a defence, if accepted by the Court, would normally be sufficient to defeat a conventional claim for copyright infringement.

Spot On, Professor

Professor Ian Hargreaves' report of May 2011 entitled " Digital Opportunity – A Review of Intellectual Property and Growth" (the "Report") was recently commissioned by the Prime Minister to address the risk that the current intellectual property framework might not be sufficiently well designed to promote innovation and growth in the UK. Professor Hargreaves concluded that that current IP laws obstruct innovation and economic growth, and outlined a number of proposals to improve IP policy within the UK.

The Government published its response to the Hargreaves Report on 3 August 2011 (the "Response"), with a White Paper planned for Spring 2012, and for the most part it agrees with all of them.

One of the key outcomes of the Response is that the Government agrees that format-shifting of legally obtained copyright protected works for personal use should be allowed. This means that individuals will be able to copy music and videos they have legitimately paid for onto other devices for their own personal use. The announcement is sensible, and in accordance with most people's approach to their own legally obtained music collections. The Government takes the view that such a narrow private copying extension would not damage the underlying aims of copyright, would cause minimal harm to rights holders and would not require the introduction of a copyright levy system, something which the Government is opposed to.

Other proposed copyright exceptions include parodies and works created via inspiration from existing works, text mining and data analysis for non-commercial research, and allowing library archiving to include sound recordings and audio visual works. The Government also acknowledges the need for any changes to IP laws to be flexible enough to adapt to future changes in technology, so that new exceptions need not be sought as technology advances. The Government also plans to commission a review into how the UK's complex design laws can be simplified.

The Government also seeks to implement a Digital Copyright Exchange in order to enable a functioning digital market in rights clearance and to act as a source of information about rights ownership. The Government seems to recognise the challenges of developing a framework to bring together interested parties and developing viable financial models but seems undeterred nevertheless.

Going Global

The Government is keen to set its stall out as very much driving change and modernity in the field of Intellectual Property. It has also recently set out its international vision for UK's International Intellectual Property Strategy in a new report. Many of the Government's aims in it, such as establishing a European Patent Court and Unitary European Patent and seeking international reform of copyright laws are laudable but not new; nevertheless the Government is right in as much as if the status quo is ever to be successfully overhauled, it needs to be done at an international level.

Crime Fighting Superheroes

At the same time as publishing its plan for the DEA, its response to the Hargreaves Report, and its international strategy, it has also published a " UK IP Crime Strategy 2011" which sets out an action plan for Government to tackle counterfeiting and criminal policy. It includes strategies to tackle websites that are predominantly used for digital piracy and sets out plans to work with other states to develop international responses to these issues. Together with industry and law enforcement bodies, the Government is exploring measures which target the revenue streams of websites dedicated to infringing copyright, such as banning advertising on these sites and withdrawing payment facilities. The Government wishes to work with search engines to investigate how it could be ensured that unlawful sites do not appear higher up in search rankings than legitimate sources of digital content, without distorting legitimate online business or harming fair competition.

Next Steps

We await Ofcom's publication of the Initial Obligations Code with a view to the Initial Obligations coming into effect in 2012. The Government will consult on how it should proceed to implement Professor Hargreaves' recommendations and will set out its plans in a White Paper to be published in Spring 2012.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 10/08/2011.

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