On 6 March, the Court of Appeal rejected the appeal by BT and TalkTalk in their judicial review of the Digital Economy Act 2010 (see R (British Telecommunications plc and TalkTalk Telecom Group plc) v Secretary of State for Culture, Olympics, Media and Sport and others [2012] EWCA Civ 232).

The Digital Economy Act 2010 (DEA), which came into force on 8 April 2010, introduced several major policies designed to regulate and stimulate the UK digital economy. The provisions aimed at curbing file-sharing have been the primary focus of attention. For rights holders, the DEA is a welcome piece of legislation that sets out the legal obligations of Internet Service Providers (ISPs), rights holders and end-users in the bid to stem online piracy. BT and TalkTalk sought to challenge a number of provisions of the DEA which pave the way for the introduction of a notification and enforcement regime for online IP infringement. The regime would assist rights holders in enforcing their rights against infringers, in part by obliging ISPs and other service providers to co-operate with rights holders in the policing of infringement amongst their subscribers. BT's and TalkTalk's principal concern was that such a regime would create a new regulatory burden that would disproportionately impact ISPs and service providers, both administratively and financially.

Under the DEA ISPs will be required to (1) send warning notifications and (2) potentially cut off alleged illegal file downloader's services, which raise concerns regarding privacy and the costs of this obligation on the providers. However, the Court stated that ISPs would not be liable for case fees in relation to subscriber appeals. They will now have to consider how to deal with the implementation of the DEA and its provisions and the effect it may have on their business model and customers. If the ISPs do not adhere to the legislation they face a maximum penalty of £250,000 (although the Secretary of State has reserved the right to increase this amount).

Most practical details of the DEA's provisions regarding online IP infringement are not set out in the DEA, but will be expressed in a series of regulatory codes produced by the Office of Communication (Ofcom), the UK's independent regulator and competition authority for the communications industries.

It is likely that the parties will seek leave to appeal the decision and flowing from this OfCom's promised Initial Obligations Code for ISPs will probably suffer further delays while this matter plays out.

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