The Digital Economy Act On Trial

This is a compilation of posts written for the Pirate Party summarising the main arguments made during the hearings for the Digital Economy Act Judicial Review – otherwise known as R (on the application of BT and TalkTalk) v Secretary of State for Business, Innovation and Skills. It covers the details of the first, third and fourth day of the oral submissions, I was unable to make the second day but summaries can be found elsewhere.

Day One: The Trial Begins

Wednesday, 23rd March saw lawyers from BT and TalkTalk (with  written submissions from Consumer Focus and the ORG) going before the High Court to argue that sections 3 to 18 of the Act (concerning online infringement of copyright) were illegal and should be struck out. Present to defend the Act were a legal team from the Department of Business, Innovation and Skills, and lawyers representing certain parts of the copyright industry (including PACT and the BPI).

The arguments presented during the day (on behalf of the ISPs) suggested that the Act was in conflict with various aspects of European Union Law, including the Technical Standards and Regulations Directive 98/34/EC (which requires that the government give the European Commission notification before creating any potential technical barriers for trade in the EU), the Electronic Commerce Directive 2000/31/EC (which gives ISPs some protection from liability for their users’ actions under the “mere conduit” principle), the Privacy and Electronic Communications Directive 2002/58/EC (which involves various data protection and handling issues) and the Authorisation Directive 2002/20/EC.

While, on the whole, the arguments were all particularly technical (from a legal point of view), discussing the finer points of European Law (and in some cases, having to examine the wording in other languages), of particular note was a discussion of whether or not an IP address alone counts as “personal data” (bringing it under the protection of data protection legislation). It will be interesting to see if a definitive answer on this question emerges from the case.

Day Three: Defending the Digital Economy Act

On Friday the judicial review of the Digital Economy Act resumed with the Department of Business, Innovation and Skills defending the Digital Economy Act. Before the arguments got underway, it was agreed that the hearing would spill over to Monday, with the final matters being dealt with then.

The government’s arguments included assertions that while the DEA is already in force, it does not yet have any legal effect on individuals or ISPs, and so until it does have an effect, there is little point in reviewing it. Much was made of the claim that the DEA is about protecting the “fundamental human rights” of copyright owners, how the enforcement of copyright was a “core aim” of the European Community, and how copyright itself (as it is today) is “in the public interest.”

It was also suggested that if some of the ISPs’ claims were true, any scheme like the DEA would necessarily be illegal in the EU, with the consequence that the ISPs must be interpreting EU law incorrectly. There was even a suggestion that if the ISPs were right on one count, this would seriously impact national security and could make it easier for Al-qaeda to “blow up an atomic bomb in London.”

On the matter of the proportionality of the DEA (which most of yesterday and a large part of the afternoon was spent on), it was argued that the various Codes established by the Act must be proportional because the Act says they must be. In addition, the government suggested that the ISPs were assuming that the Codes “will be disproportionate” before the Codes had been produced, and so this is the wrong time to test for proportionality.

The Court also discussed (in less detail than on day 2) the justification for the DEA. The judge noted there may have been “elementary howlers in the impact assessment” of the code (discussed by the ISPs on Thursday, and including the assertion that it could lead to a 70% reduction in online infringement of copyright, despite only 37% of infringement occurring through the methods targeted, i.e. P2P protocols) and that there were “different views about the extend of lost sales”. To counter this, the government suggested that the legal impact of the Act itself was on trial, not Parliament or their reasons for voting. In any case, it was noted that approving the Act was a “carefully considered and crafted decision” of Parliament, and the Courts should be very cautious when challenging primary legislation, particularly on social and macro-economic issues.

The rest of the afternoon was spent by the government rebutting the claim (raised on day 1) about the EC Authorisation Directive, and the day ended with a brief discussion of the possibility of referring the case to the European Courts of Justice.

Day Four: The Copyright Industry’s Side

The final hearing of the Digital Economy Act Judicial Review took place on the following Monday, as there was not enough time on the Friday, 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 Future

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.

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