The Future of the Digital Economy Act

Will Tovey's picture

This is one of a set of posts detailing the main arguments made in Court during the Judicial Review of the Digital Economy Act - R (on the application of BT and TalkTalk) v Secretary of State for Business, Innovation and Skills. This post covers the fourth day. A summary of day one can be found here, and day three here.

The final hearing of the Digital Economy Act Judicial Review took place this morning, with the absence of the government's lead barrister. However, the defence was continued by the barrister representing the copyright industry (both copyright owners and other parties).

The copyright industry started by affirming that copyright was a "fundamental human right" under the European Convention itself and in European Union law, and this was accepted by the Court. It was claimed that as the case concerns balancing this fundamental right with the rights of ISPs under European Law, a "wide margin of appreciation" must be given when testing proportionality. The defence therefore argued that the measures in the DEA were within that margin.

On the facts, the copyright industry argued that the notification process (the first stage of the DEA), far from making things worse, actually "facilitates judicial protection", as while there is no direct judicial involvement (which they were forced to accept), by enabling copyright owners to target only those subscribers whose connections have repeatedly been accused of infringing copyright, the consumers are better protected than under the existing system where any allegation can lead directly to court action.

In addition to this, unlike with the existing system (using Norwich Pharmacal Orders, as used in the "speculative invoicing" systems) there is a mandatory warning and education step before any subscriber finds their way onto a Copyright Infringement List. Finally, it was suggested that receiving a letter from an ISP would have a far smaller "chilling effect" on subscribers than receiving the standard "threatening letter" (or pre-action letter) from lawyers.

The copyright industry also presented evidence on the effectiveness of the DEA notification process by referring to various government consultation documents and the Digital Britain Report which stated evidence existed. They also pointed out that in their own responses to the various consultations, BT, TalkTalk and Consumer Focus (all parties to the case) seemed to indicate their approval of the notification system proposed in the DEA, with BT calling it "the way forward", TalkTalk "a useful step" and Consumer Focus recommended implementing the process noting that it respected "consumers' rights to privacy and due process." These were not challenged by the Court or the ISPs.

In addition to this evidence, a witness statement from an organisation employed by some copyright owners to gather IP addresses of alleged infringers was presented, which suggested that only 0.1%-0.2% of those using P2P systems for sharing copyrighted material without permission were using any sort of proxy service, so there was little risk of file-shares circumventing the DEA system.

The argument about the DEA having a "chilling effect" on subscribers was rejected as the BPI had noted that while this process was trialled by the six major ISPs before, and nearly 50,000 notifications were sent to subscribers, no evidence was presented of complaints from consumers. In any case, subscribers to most major ISPs are apparently already warned that they may be disconnected if their accounts are used for unlawful activity, allegedly a stronger effect than mere legal action.

When discussing the flaws in the cost-benefit analysis done prior to the Act passing, the Judge accepted that it would have opened Parliament "to ridicule" had it considered the "consumer welfare" of infringers, and that this review was not the place for any debate on whether the current copyright law "strikes a fair balance". Concerns were raised over whether or not Libraries and other providers of open wi-fi would be affected, but these were dismissed by the copyright industry on the grounds that this would be dealt with by Ofcom in the code.

Comparisons were then drawn with the French 'Hadopi' scheme, with evidence from the MPA suggesting that while Hadopi was "more aggressive" than the DEA, the European Commission's objections to it had apparently been resolved; the argument being that if Hadopi was acceptable to the EC, so must the (allegedly weaker) DEA.

At midday, the defence rested, and White QC for the ISPs responded to some of their points. With regard to the Technical Standards Directive (first raised on Wednesday), it was pointed out that the DEA already has had an effect on ISPs as Ofcom had served a request for information on them, with BT etc. being under a legal obligation to respond. In addition to this, it was noted that the cost-sharing order (which was notified to the EC, and is currently before Parliament) requires that ISPs cover some of the costs "prior to the start of the first notification period", i.e. the ISPs are "already liable for the work Ofcom is doing".

In any case, whether or not the DEA already has a legal effect on ISPs, it was argued that the Technical Standards Directive requires notification of any process that has an effect, whether or not it is a current effect, and that notification must occur before the measures are adopted or enacted.

Further submissions were made on the E-commerce, PEC and Authorisation Directives - highlighting that the situation under all of these is "at least unclear" and alleging that the defence had failed to address many of the points made. In addition, it was argued that the entire DEA regime for dealing with the online infringement of copyright was "predicated on a misunderstanding" over the existing law, and the Court should consider this.

There was a brief discussion on whether or not some of these issues should be referred to the European Courts of Justice. The ISPs suggested that if there was any lack of clarity (which they argued there was), the case should be referred now, rather than during the process of a subscriber appeal in a few years, "after ISPs have spent £50million" implementing the DEA. The copyright industry responded by pointing out that before any appeals can be made, the Initial Obligations Code will have been notified to the European Commission and so any possible issues could be picked up then (although there was a disagreement between the parties as to whether or not the Act itself could now be notified at all).

The hearing ended at 1pm, after an estimated 17 hours of debate (considerably longer than the time the DEA spent in the House of Commons) with the judge noting that he will hand down his judgment "as soon as is reasonably practicable." It is possible that the judgment may involve a reference to the ECJ, or if not, may be appealed to the Supreme Court. It is unlikely that there will be any certainty over the fate of the Digital Economy Act in the near future.

Update: The judgment has now been given and is available here. A summary of it can be found here.

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