UK Digital Economy Bill Becomes Law April 21, 2010

Contrary to our expectations, the UK’s Digital Economy Bill made it on to the British statute book! It received Royal Assent on April 8 – the Bill is now an Act of Parliament (a/k/a law).  I and many others were wrong in our belief that there wasn’t enough time to get it through parliament prior to the imminent election.

It emerged after a bizarre (but apparently legal) process, including the so-called “wash up”, where opposition parties allow the government to get its outstanding legislation on to the statute books prior to an election, having been through a rapid barter and trade of the contentious elements.

A significant outcome of this was the dropping of the “graduated response” (a/k/a “three strikes”) provision, in which repeat online copyright infringers would have their ISP accounts suspended or terminated.

It’s a wide ranging Act. Most of the provisions of this Act in relation to copyright appear to constitute amendments of other statutes and are to be found in Clause 17.

The Act implements some but not all of the recommendations in the Digital Britain report. In that respect, it’s the legal manifestation of a political report, drafted with insufficient scrutiny in the parliamentary process. It is 60 pages long, although only a minor part relates to intellectual property.

The relevant parts cover continuingly controversial provisions giving a Minister the power to order internet service providers (ISP’s) to take technical measures against subscribers – the most obvious being suspension of online access – in order to tackle online copyright infringement. The Minister is also empowered to make regulations giving the courts the power to order blocking injunctions on specific websites. Maximum fines for copyright infringements are standardised and increased. The public lending right is extended to cover publications in non-traditional formats such as e-books.

The Act gives ISPs the responsibility of notifying subscribers of any copyright infringement, initially identified by rights holders.  ISPs will be obliged to react to copyright infringement reports from rights holders – containing evidence that a user has engaged in some form of piracy – by notifying the relevant users of these reports. ISPs will effectively have to pass on warnings to their customers in writing encouraging them to lawfully access material rather than break the law. The courts will clearly have a significant amount of interpretation to do. Some provisions are aimed at gathering data, which facilitates the UK government’s intention to ensure that any legal changes have bases in evidence. This comes at a time when many are questioning the validity of the evidence (e.g., loss of revenue) used to persuade Members of Parliament that action was initially required.

The ISPs are required to maintain anonymous user-specific records of their notifications, so as to assist rights holders in identifying the serial offenders, against which the rights holders can take further action (once they have obtained a court order for a particular user’s identity). The instigator of the action is the rights holder and not the ISP. In that respect the ISP is an agent.

The anti-piracy measures that impose these obligations on ISPs are unworkable and unenforceable until private industry or Ofcom, the UK communications regulator and main regulatory agent for this bill, draws up a new code that will dictate how they work in practice. This process will not commence until after the General Election – and may not finish until the end of this year 2010, or early next year in 2011.

The Minister also has the power to intervene in the operation of internet domain registries.

This may result in the development of later sanctions against internet users. This could involve an order for ISPs to impose technical measures on rogue users, such as throttling their bandwidth or, in the extreme, suspending a user’s service. While these sanctions are some of the more controversial aspects of this Act, the earliest they would be seen is over 12 months from when the Code comes into force – which would be around the first quarter of 2012 at the earliest, and even that is not certain. Ofcom must also initially assess whether such measures are required, although the final decision rests with the Minister, which is subject to approval by both Houses.

Users will have the usual rights of appeal to a tribunal against both copyright infringement reports and any technical measures imposed upon them. Should an ISP fail to comply with a technical measure, it could be fined up to £250,000. ISPs are not happy about this, to say the least.

Blocking injunctions are a further possibility. These uncertain and significantly opposed provisions in the Act give the Minister powers to request a court to issue a blocking injunction, which would require ISPs to block access to websites used in connection with the infringement of copyright. These provisions appear widely drafted and it remains unclear what effect will be given to them – it appears to be a catch-all backstop should other provisions prove inadequate or unworkable.

Although any provision will require approval of Parliament and a 60 day review period before it comes into force, a full scrutiny of such provision (as is usually the case with primary legislation) will not be required. This appears a move away from traditional law making and again towards the use of executive powers.

Further measures in the Act include enforcement tariffs such as fines. The penalty for online and physical copyright infringements under the Copyright, Designs and Patents Act has been increased from £5,000 to a maximum of £50,000.

The Act has ducked the issue of orphan works.

Rights holders will naturally be happier now that there is a new scheme on the statute book for combating online piracy. This is a significant achievement for them.

Whether it has the effect of changing behaviour and being effective in addressing copyright theft remains to be seen. That copyright theft is a crime has been reinforced and that is an important statement.

What the Act is unlikely to do is to have a huge effect on dedicated internet pirates, who will be innovative in bypassing the technical measures and hiding their identities. The UK Courts are prepared to find internet service providers liable for the infringements of copyright committed by their users.  Should blocking injunctions emerge, they may go a little further to solving that problem.

Even then this new law would have to be understood, respected and obeyed by every citizen and employee in the land – that’s a tall order!

The UK Digital Economy Act is an inelegant and incomplete piece of work, whatever your views are on the substance and provisions; it may be a case of acting in political haste to repent at leisure amid the bureaucracy. It’s been a controversial journey on a route to who knows where.

I anticipate a significant stream of clarifications and interpretations as enforcement takes hold.  Moreover, should the opposition party win the imminent election, then Ofcom is due for a major shakeup and significant downsizing, which will limit its ability to give effect to the provisions of the Act. Nevertheless, the opposition party supports the need to reduce piracy; it’s a question of how.

The government has clearly listened to the rights holders and decided to accept the relevant recommendations contained in the various reports that have been published (Gowers, Digital Britain). The rights holders are happy; the ISPs and various other stakeholders are disappointed.

The new component dealing with British intellectual property legislation has comparatively few friends other than rights holders, judging by public comment. Most people remain understandably ignorant and confused. Significant education will be required.

It has achieved the unstable and uncomfortable position of having one part of the IPR value chain pitched against another on issues of legality and enforcement, with citizens’/human rights possibly caught in the middle. Concerns remain over its impact on consumers and ability to cut piracy.

It’s a step into the unknown.

Bill Jones is CEO of Global Village Ltd.

UK Digital Economy Bill Progresses with Haste February 9, 2010

The UK government’s Digital Economy Bill is proceeding at some pace through the legislative process – somewhat contrary to my previous comments and general expectations.  The main driver is the upcoming obligatory general election, with May 6^th openly blurted by ministers as the probable day, although no official date has been set.

The Bill (which unusually started in the upper House of Lords) has moved through its committee stage after two readings, whilst it also has to negotiate the lower House of Commons. It has many other stages to negotiate: two in the upper house and 5 in the lower house, with significant line by line, word by word scrutiny and votes on amendments – all very time-consuming.

Progressive response was keenly debated, with more questions raised than answers provided.  Of concern were issues such as: is it the right mechanism to deal with copyright infringement; how do we implement it practically, fairly and firmly; unintended consequences; and possible adverse reactions and responses by citizens and companies.

At this stage no firm decisions have been made, but clearly the government is intent on getting this bill into legislation.  It is using a range of devices to accelerate it through the processes, apparently brushing aside some of the concerns regarding progressive response, but the detail will come back to slow the process down.

These developments are taking place against the backdrop of more than 80 other bills competing for legislative time, and new initiatives being announced on the fly and inserted into existing bills – all demanding the institutions’ time.  Furthermore, more members of Parliament are announcing that they are standing down at the next election, switching off, and increasingly not turning up to vote, making the passage of the bill less certain.

Whilst I had previously indicated that it was unlikely to come into law, and the balance of probabilities continue to indicate that, one can’t deny the governments’ intent to complete the process in time.

The key areas being legislated on include:

• Extending the role of the UK telecoms regulator OFCOM to include reporting on communications infrastructure and media content
• Imposing obligations on internet service providers to reduce online copyright infringement, and allowing the Secretary of State to amend copyright legislation to the same end
• Allowing the Secretary of State to intervene in Internet domain name registration
• Requiring Channel Four TV to provide public service content on a range of media
• Providing more flexibility over the licensing of Channel 3 and Channel 5 TV services, and allowing OFCOM to appoint providers of regional and local news
• Modifying the broadcasting licensing regime to facilitate switchover to digital radio
• Allowing variation of the public service provision in Channel 3 and 5 TV licences
• Providing OFCOM with additional powers over electromagnetic spectrum access
• Extending the range of video games that are subject to age-related classification
• Providing for the regulation of copyright licensing
• Including non-print formats in the public lending right payment scheme

All in all, this is a weighty and pervasive bill.

Progressive response might fall into the “too difficult” legislative tray whilst the government concentrates on the more substantive items in this wide ranging bill to get it through in time.

Bill Jones is CEO of Global Village Ltd.

Progressive Response in the UK? November 19, 2009

Many observers of copyright developments in the UK expect Parliament to pass legislation instituting a so-called progressive response program for thwarting illegal uploading of content, in which repeat offenders would have their Internet connections suspended or even eventually revoked.  Such schemes are the law in Taiwan, South Korea, and (in attenuated form) France.

Even the Economist recently predicted that such legislation is forthcoming in the UK.  We advise against holding your breath.

Yesterday’s Queen’s Speech set out the legislative agenda for the next parliamentary session; it contained a piece on copyright in the Digital Economy Bill.  This essentially codified what’s emerged in the reports that have been published so far:

“The plans for tackling illegal file-sharing, detailed earlier this year, will be a two-stage process. Initially the government will aim to educate consumers and, those identified as downloading illegal content, will be sent letters.  If this proves insufficient, technical measures which will include the powers to disconnect persistent pirates, will be introduced in the spring of 2011.”

There will be scant more detail than this, since all the Queen and Government do is to get the headline intent into the process for detail to be worked out later. The Queen would only have read out “my government intends to pass legislation on…”  But the Digital Economy Bill will be much broader than this and contain many other contentious issues.  Copyright will be only be a minor component of the Bill.

The trouble is that the coming parliamentary session is now only 70 days in length for the House of Commons and 30 days for the House of Lords , because an election must be held by June 6th of next year.  The perception is that very little of the substance of this Queen’s Speech will make it through to legislation, because there isn’t enough time left.  The government (executive arm) will have to determine the priority that this bill will have within its apparently overburdened legislative program. Additionally, the House of Lords is likely to delay politically contentious issues to thwart the incumbent Labour party, which according to opinion polls and commentators is destined to be replaced by the Conservatives.”

Thus it’s unlikely that any progressive response legislation will pass in the UK until at least 2011.  By that time we should have enough data from countries with progressive response laws on the books to determine the effectiveness of such a scheme.

Bill Jones is CEO of Global Village Ltd.

UK Government Releases Digital Britain Report June 19, 2009

The UK Government yesterday launched its long-awaited Lord Carter’s Digital Britain Report.  It spans a wide industrial cluster, from media to broadband, mobility, etc.

Minister Ben Bradshaw, in the launch statement to the House of Commons, said that theft of intellectual property is nevertheless theft, and is not to be condoned. The report has a robust legal and regulatory framework to combat Digital Piracy, and it indicates that the government will do all it can to protect Intellectual Property as a cornerstone of a strong economy.

The report itself states that “unlawful downloading or uploading, whether via peer-to-peer sites or other means, is effectively a civil form of theft. This is not something that we can condone or to which we can fail to respond. We are therefore setting out … a clear path to addressing this problem.”

The report is 245 pages long, is ambitious and is detailed. Yet many say it is not detailed enough. It tacitly acknowledges that it is building on prior reports, that the economic circumstances have changed since those reports, and that we now know more since the Caio and Gowers Reviews were published.

And whilst the devil is in the details, the report outlines further work that must be done before primary legislation can be brought forward. (The UK government’s normal process is to undertake “consultations” and “analysis” to guide it towards policy recommendations, initiatives, and drafting of primary legislation.)  The Recommendations section of the report includes six on further analysis and one for further review. The interim report recommended 8 consultations, whilst this report introduces 12 consultations, including one on P2P.  Nevertheless, the report contains 72 action points.  In that sense, it’s not a finished piece of work. It also falls short, in many instances, of indentifying who will pick up the costs of these interventions. It wills the end but not the means.

The huge amount of detail in the report indicates how difficult and challenging it is for governments to deal with this whole area. It is creating a new industrial sector, in which most parties, including consumers, are to some extent legally illiterate.  That is, the government has to create new laws and conditions on behalf of its citizens, within which the newer economy can thrive and for which the instruments of orderly commerce are known, understood, have respect and are obeyed; in the meantime, government also does all it can to create the conditions for the UK to be a global leader in the digital industries.

The significance of this report is not in the detail, rather it is in the way in which it has emerged, the audience that it will have, and the ramifications beyond the shores of the UK.

One should not underestimate the international significance of this report.  Governmental financial intervention is controlled by European Union “state aid” rules.  In this report, state aid components have been cleared with the EU, the IPR components have been discussed at length and therefore probably tacitly endorsed by the relevant international IPR agencies.  The UK’s approach to regulatory and legal developments are copied internationally.  In short, the UK has not produced this report in isolation.

As the EU’s Lisbon agenda, which includes aspects of Information Communications and Telecoms (ICT), moves towards its 2010 conclusion, the EU can be viewed as “in stasis” on these topics, until it develops a new agenda. Sweden and Spain will hold the next presidencies of the EU; both have taken a keen interest in the report’s development and may view it as an opportunity to create a new agenda. The Digital Britain report may be a basis of such an agenda.

At the same time, one should be aware of the EU’s “water bed effect,” i.e., that initiatives by one nation may bring countervailing movements or initiatives in other parts of the EU.  For example, some nations are developing new or alternative proposals on P2p following the French moves in that area.

Many view the implementation and delivery plan detailed in Chapter 9 as the key section of the Digital Britain report. That a government report (white paper) focuses on detailed implementation is interesting on a number of levels. It indicates a government willing to move from macro economic policy to micro economic policy to deliver economic outcomes — i.e. it’s more interventionist than is customary in these areas. It also recognises that detailed intervention is required to ensure law and order and balance among the various stakeholders.

In effect, the government is creating a new economic sector comprised of old industrial silos which it will now nurture and govern in the round. It is creating a new government agency to do this. Media, telecoms, content, IT, etc., are being addressed as a single industrial sector. This may make it easier to address copyright and technology issues. But of course the laws and regulations have to move on to the statute books, and in that sense it’s an uncertain path forward.  Nevertheless, the ambition is clear.