The Purpose of the Digital Economy Act

Please note that much of this post is comment or opinion and should be treated as such. While effort has been taken to verify the facts included (and sources are given in most cases) many of the conclusions reached or suggestions given are pure speculation.

The Digital Economy Act received Royal Assent over a year ago. The most controversial features of this Act were the measures dealing with the online infringement of copyright. It has been suggested that this Act was the most heavily lobbied piece of legislation in UK Parliamentary history, with a large amount of pressure being placed on the government to force through these measures. Most of this pressure seems to have originated from certain parts of the UK and international recorded music and film production businesses, although this was quickly reinforced by support from a variety of interested groups. Given this high level of interest, it is worth considering the possible reasons for this pressure. This post will attempt to examine first the official reasons behind the Act, and will consider the legal and social effects of it (were it to be implemented) to highlight possible motives.

Stopping Piracy to Save the Music Industry

Officially, the aim of the Digital Economy Act measures is to “significantly reduce online infringement of copyright” (according to the explanatory notes provided to the House of Commons). The popular figured given is that the DEA should reduce online infringement of copyright by around 70%. According to the BPI, all online copyright infringement costs the UK music sector £200 million a year (although from what I recall, the figure given by the report was £180m, which was rounded up). At face value, removing £140 million in costs would seem to be a fairly good motivation for this level of lobbying, but these figures may be misleading.

The most obvious criticism of these figures is the glaring assumption underpinning them; that a reduction of n% in online infringement of copyright would lead to a corresponding n% (or even any) reduction in the “costs” to the various businesses – or rather, would lead to any corresponding increase in revenue. There is (to my knowledge) very little evidence to quantify what the effects of such a reduction in file-sharing would be. Some evidence may be available shortly once details of the effects of the supposed, recent significant decrease in unlawful file-sharing in the US are investigated, however a full picture may take some months to emerge.

Even if these numbers and assumptions are accepted, there is still a significant flaw. It was mentioned in Court during the DEA’s Judicial Review that the type of online file-sharing targeted by the DEA (using peer-to-peer networks) accounts for less than 40% of all online copyright infringement. Thus the actual “recovered costs” of reducing this type of file-sharing by 70% will be more in the region of £50m, than £140m – although this would still make it a worthwhile investment.”1 Of course, it is worth noting that given online copyright infringement “can perhaps explain as much as one fifth of the recent decline in [music] industry sales” (Oberholzer-Gee and Strumpf, 2009) it would seem that the there are other issues that the recorded music businesses should be investigating.

Given these issues with the official reasoning for the DEA, it would suggest that either those lobbying for it are either ignorant of or unable to comprehend the flaws in their arguments and the uncertainty surrounding this area, they are not interested in supporting any industry and are merely after their pay-cheque, or they have a different purpose in mind. Given these options, I would hope the third is the case; assuming the best of the lobbyists. In order to work out what these motives might be, it is necessary to consider the legal and social effects of the DEA, and see what outcomes may be desirable for the major forces within the UK’s recorded music (or film) industries.

Legal Effects

The most obvious effects of the DEA are the legal effects, and these can be seen directly from the Act itself. A more detailed analysis of this will be done at a later date, as it raises issues of evidence, the burden of proof and liability, but a brief summary will be given here.

In terms of these measures alone (and not used in conjunction with existing law), the Act can be used to circumvent the three important checks on copyright lawsuits that exist in English law at the moment; limited liability, burden of proof and punishment:

  • Under existing copyright law, in order for a person to be liable for an infringement, the individual either has to be actively involved, or have “authorised” that infringement (s16(2), CDPA 1988). However, the appeals process defined in the DEA makes it clear that a subscriber must take “reasonable steps” to ensure that no one else can use their Internet account to infringe copyright (s124K (6)(b), Communications Act 2003, as amended by the DEA), and if they fail to prove they have, and if an infringement occurs, they will be punished (whether by receiving a notification, being added to a list to be given to copyright owners or receiving technical measures). This significantly expands the scope of liability for infringement as an entire household (or community) could be punished due to the actions of one individual, even if they were unaware of it.
  • In addition, while a copyright owner must still prove that an infringement of (their) copyright occurred, it is up to the subscriber to prove that they did not do it, rather than for the copyright owner to prove they did (s124K (6)(a), CA 2003 as amended). This should make it considerably easier for a subscriber to be punished than under existing law.
  • Finally, under existing law, any damages awarded must be based on the actual loss sustained (i.e. if a copyright owner sues an individual for an infringement, claiming £n in damages, they must prove that they have suffered a comparable loss due to that infringement alone), whereas the DEA offers blanket punishments that are provably disproportionate (as they will affect different people in different ways) and not quantifiable in the standard way.

At this point, it may be worth recalling what the Advocate General, J Kokott, in the ECJ case of Promusicae noted; that “The holders of copyright will … have no interest in clarifying [whether or not the infringements were] carried out by the subscriber…” 2 While the facts there were not exactly the same – dealing with trying to start lawsuits, it is something to bear in mind as it is likely to be just as applicable to the education and fear campaign (described below).

In addition to the legal effects of the Act alone, this act is also designed to be used in conjunction with existing laws (particularly the CDPA). The CILs produced are designed to be used alongside Norwich Pharmacal Orders with the aim of identifying and suing individual subscribers. While it has been suggested that “no rights holder will ever [ask for money]” (a representative of the Publishers’ Association at a DEAPPG event, from what I recall), this method is open to them. There is a chance that such actions (using NPOs) will fail, due to the heavy criticism they have received (particularly in MediaCAT Ltd v Adams & Ors [2011] EWPCC 6), a court may be convinced into giving an NPO and allowing a claim on the grounds (however misleading) that the claim has already passed through the scrutiny of the processes in the DEA (i.e. the ISP, Ofcom and appeals body; even if none of these have actually looked at the evidence involved). One legal effect of the DEA could be a substantial increase in the number of “threatening letters” sent to individuals.

Of course, the civil courts are not the only way copyright infringement is actionable. Under s107 (2A)(b) CDPA, an individual commits a criminal offence if he communicates a work to the public (i.e. uploads a song via a file-sharing network) “to such an extent as to affect prejudicially the owner of the copyright”. To my knowledge this provision has never been used, however arrests and prosecutions were made in 2008 under s107(1)(e) (a similar provision; it has been suggested that this was the wrong subsection to use and (2A) should have been used instead) and four individuals were convicted; their “crime” (to my knowledge; little information is publicly available) was to upload between one and four songs to the OiNK file-sharing network. A fifth defendant pleaded not guilty and the charges were dropped shortly before the trial in 2010 (allegedly as this would have exposed the BPI’s and IFPI’s evidence-gathering methods to judicial and public scrutiny). Given that the CILs will give evidence of “repeat infringers”, there will be a good case for those subscribers being involved in copyright infringement on a prejudicial scale (certainly the scale that led to the above arrests). Because of this, it may be the case that copyright owners, upon receiving CILs will not bother with the civil courts and simply hand the details over to the police and ask them to carry out the investigation themselves. The DEA could lead to a number of arrests across the country and maybe some prosecutions although. as with all previous cases, there is a good chance that if challenged, any trial will collapse or be dropped. It is likely there will be few, if any convictions – particularly of well-defended individuals.

In summary, the DEA will make it easier for copyright owners to spread fear over online copyright infringement using the legal system (through lawsuits or arrests). We will not know if this is their motivation until the various Codes are in force – by which time it will likely be too late to stop them.

Social Effects

The lobbyists in favour of the DEA will point out (and do) that the DEA process is not about legal remedies but about education. In many ways, this leads to the most worrying effects; the effects on society. The idea is that the notification letters received by subscribers accused of infringing copyright will be educational. According to the draft code produced by Ofcom these notifications will include, among other things “information about copyright and its purpose” and “advice … about how to obtain lawful access to copyright works” (s 5.11 (e) and (f), page 52). The code does not, however, specify who must provide this advice and when I brought this up with Ofcom last year it was implied that it would be down to ISPs, working with copyright owners, to provide this information. This is of particular concern.

To my knowledge, in English law copyright does not have a “purpose”, it merely exists. Any purpose given will therefore be entirely subjective and there is a good chance that no two individuals or groups will provide the same purpose or information about copyright. Certainly the views of myself or the Pirate Party will be radically different from what may be suggested by copyright lobby groups. There is a good chance that the information included here could be materially inaccurate or at least misleading, but (given that the information will be provided under the authority of Parliament) there is a good chance it will be accepted by the general public. The code also notes (again at 5.11 (e), p52) that the information could include a warning of the “ability of a … Copyright Owner to bring a legal action for damages in relation to an infringement”. Again, this could well be misleading; as discussed elsewhere, bringing a legal action for damages will be highly problematic for a number of reasons – but the average subscriber will not be aware of these. While a copyright owner can bring legal action (anyone can bring an action, after all), they are likely to fail or not be of significant impact if suitably defended. This information is likely to only increase the fear and uncertainty surrounding copyright and its legal effects.

To examine this further, one must consider the effect receiving a letter will have on different types of individuals. If someone is actively engaged in unlawful copyright infringement, there is a good chance they are aware what they are doing is against the law. It is hard to consume any sort of content (websites, books, films on DVD, posters, pictures) without seeing copyright symbols or warnings. Being told that what they are doing is unlawful is unlikely to change their behaviour, and the threat of litigation or prosecution (or even technical measures) may simply drive them to any of the easy ways to avoid detection.

However, now consider the effects of receiving a notification letter on someone not familiar with these issues. There is a good chance (in my opinion) that the impression they will get is that any sort of acquisition of music (or film) via the Internet (whether for free or paid for) is illegal and that the consequences of such acts could be severe; either civil cases, technical measures or criminal prosecutions. This may lead to a general fear, spreading across society, of any sort of online content service, whether legal or not as it is hard enough for lawyers and copyright owners to work out what services are legal; the average citizen will certainly struggle (both iTunes and Amazon have been found to be making available works without permission). There is a chance that this notification system (with letters being sent, potentially, to millions of families) will create a presumption that any website offering music, film etc., whether for free or at a price, is illegal.

And this is where the “advice” in 5.11 (f) kicks in; the notification letters may contain advice on “how to obtain lawful access to copyright works”, which is likely to take the form of a list of sites, provided by the copyright lobby groups. Given the climate of fear as to online locations, this effectively means that certain copyright lobby groups will be able to use the authority of Parliament to advertise their own sites (or sites they have an interest in) and channel (through fear) music and film fans to them. This could have a serious impact on those artists who currently provide their content independently and directly on their own websites (either for free or at a price). It may help the industry trade groups go some way to regaining their monopoly on the distribution of content; since the development of the World Wide Web, the key companies in the “creative industries” (particularly music) have been rapidly losing their control of the distribution of content, potentially enabling much greater competition and, through it, better deals for both consumers and artists. By passing the Digital Economy Act Parliament may well have given these companies a chance to tighten their grip on distribution methods; squeezing out independent channels and cutting off consumers not just from the Internet, but from their favourite artists.

Of course, this is mostly speculation; only time will tell what effects the DEA will have on our society (aside from the millions of pounds already spent by ISPs, the government and copyright lobby groups on lawyers and PR managers), but it would seem that none of the possible effects given above will be of much benefit to consumers and artists.

1 – This would not take into account the copyright owners’ costs of running the scheme. If the BPI’s estimated costs for ISPs is approximately £16m in the first year, and ISPs are only covering at most a quarter of the costs of the scheme (not including monitoring costs), this £50m in “recovered costs” may only start to appear within a few years.
2 – Productores de Musica de Espana (Promusicae) v Telefonica de Espana SAU, Case C-275/06 reported at [2008] All ER (EC) 809. See 115-116.


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