Judgment in the Digital Economy Act Judicial Review

[Cross-posted from pirateparty.org.uk.]

After only three weeks, Mr Justice Kenneth Parker has handed down his judgment in the Judicial Review of the Digital Economy Act. In summarising thousands of pages of evidence and submissions and the four-day hearing, the judge rejected nearly all of the grounds for the review, only allowing the challenge to part of the allocation of costs. The full text of the judgment can be found here and summaries of the hearings here.

The first point to note is the number of parties. While the case was between BT, TalkTalk and the government, there were thirteen interested parties involved, including six notorious pro-copyright lobby groups and four unions. This gives an indication of the intense lobbying pressure behind the Digital Economy Act, and why the previous government felt compelled to act the way they did.

Rejecting the ISPs Claims

As far as the ruling goes, the judge refused to strike out any parts of the Digital Economy Act, dismissing all the claims brought by the ISPs in this regard. He did, however, declare that parts of the Costs Order were unlawful. The Costs Order (a draft of which is before Parliament at the moment) sets out how the various costs of the DEA process must be met. The costs are split into three types (laid out in 186-189 of the judgment);

  • “qualifying costs”, incurred by Ofcom or the appeals body in setting up and running the DEA process,
  • “relevant costs”, incurred by ISPs in doing the same (such as setting up databases, sending out letters), and
  • “case fees” set by the appeals body in determining individual subscriber appeals.

Under the Costs Order, each of these costs is to be split between the qualifying copyright owners and ISPs (i.e. copyright owners who wish to use the DEA process, and the ISPs forced to implement it by Ofcom), with ISPs covering a quarter of them. When this order was notified to the European Commission, it seems that the Commission had some concerns that this was in conflict with the Authorisation Directive (officially the “Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorisation of electronic communications networks and services”) and the judge has agreed with this. He declared that while the ISPs could be made to pay the second and third types of costs (and do so entirely themselves), requiring them to pay any of “qualifying costs” is unlawful (at 200).

The other grounds for the review were all rejected, for various reasons, including that the DEA does not yet have any real legal effect on ISPs and can be amended if needed, ISPs do not need to do any monitoring, processing personal data is acceptable in the context of enforcing copyright and that deference must be given to Parliament. While there may well be issues in the justification for the DEA (with numerical errors, various ‘costs’ ignored and so on) it was accepted that file sharing is displacing sales (based on the Government’s figures) and as Parliament decided to deal with this issue in the way it did, it is not the place of the court to challenge its reasoning.

Where to go from here

The judge rejected, at 262, the idea of a reference to the European Court of Justice so it would seem unlikely that this case will end up there any time soon. However, there is a chance that the ISPs will be able to appeal this hearing to the Supreme Court, and there is the possibility of a cross-appeal by the copyright lobby on the matter of costs. If this happens, a final answer may take several months. In any case, while this challenge may have failed, the DEA itself is only the first part of the process; further legal challenges may be brought against Ofcom’s Initial Obligations Code (due in October), and the first accusations of copyright infringement under it.

However, the main place to be fighting the DEA is in Parliament. This Act was rushed through the House of Commons in a matter of hours, based on flawed figures and reasoning. Parliament will have easy opportunities to overturn or repeal this Act (most easily by not approving the Costs Order and Ofcom’s code).

Some Interesting Points

The judge made some general observations throughout the judgment which may be of some interest:

While discussing the principles and history of P2P software (which he seemed to understand quite well on some level), he emphasised (at 11) that there were legitimate uses for it, but gave the examples of “sharing photographs between family and friends and transferring digital media files between a desk top and a lap top computer owned by the same individual or family”, suggesting that he may not have quite grasped the finer points of the issue.

In discussing the history of the DEA, he noted that evidence presented to him showed that the ISPs had “in principle, … supported a system of notifying subscribers of copyright infringement” (at 20). It seems that the ISPs were supporting (and possibly even recommending) DEA-style legislation back in 2009 and only started opposing this when it became clear they would be paying for some of it. The judgment makes it clear that the courts are not the place to fight primary legislation and that if the DEA is to be stopped, the place to fight it is Parliament, not the courts.

There is an interesting comment on the impact assessment. At 29, the judge notes that the impact assessment “assumed that 70 per cent of infringers would stop downloading illegally following receipt of a notification letter from an ISP. The figures behind this assumption were derived from the Digital Entertainment Survey, conducted by representatives of the rights holders.” This would seem to confirm that a large part of the justification of the DEA came from unchallenged statistics provided by the copyright lobby.

At 115, the judge makes it clear that, under his interpretation of the Act, nothing in it “requires ISPs to inspect or examine the information transmitted for any purpose.” ISPs are given lists of IP addresses and times, and they link them up with names. They are not required to look into the evidence for the accusation of copyright infringement in any way.

There is an interesting discussion of IP addresses and whether or not they constitute “personal data” (which is protected by various laws) around 155-157. While there is some uncertainty, it seems that the judge accepts (or at least, assumes) that IP addresses count as personal data. This issue has been debated in courts across Europe, with different jurisdictions ruling different ways. It may be that we get a ‘final’ answer for the UK if this case goes to a higher court.

At 166, the judgment references a European Union case of Promusicae (full judgment here ) in discussing proportionality of using personal data in this way. The judgment clearly accepts the ECJ’s ruling that copyright is covered by the “right to property” included in the Charter of Fundamental Rights of the EU, giving copyright protection the same weight as the protection of freedom of expression, privacy, and the freedom from torture (among other things). This was also mentioned at 215 where the judge notes that the copyright lobby groups asserted that copyright was protected not only by Article 17 of the charter, but also Article 1 Protocol 1 of the European Convention of Human Rights. The ISPs did not challenge this.

In the discussion of proportionality, the judge has an interesting description of the issues the DEA attempts to deal with (at 211):

In this case Parliament has addressed a major problem of social and economic policy, where important and conflicting interests are in play. On the one hand, there is evidence to suggest that the media industry, broadly interpreted, is sustaining substantial economic damage as a result of unlawful activity on the internet; and there is concern that such damage may significantly affect creativity and productivity in an economic area of national importance where, at least historically, the UK has tended to enjoy some comparative advantage in international markets.

It would seem that much of this is assumed, while there is evidence as to the damage, it is often controversial (in content, methodology and source), and easily challenged if presented.

There are also slightly worrying assertions (in 228) that the copyright infringement lists produced by the DEA process “in practically every case, will accurately identify the subscriber/infringer and the extent of copyright infringement”. This would suggest that the evidence gathered by copyright owners (which, at the moment, will not be available to the general public or the accused) is assumed to be near-perfect, and the linking of subscribers and infringers would seem to be unhelpful. Later in the paragraph, the judge notes that “from the point of view of both copyright owner and subscriber, the DEA represents a more efficient, focussed and fair system than the current arrangements.” Again, this could be slightly misleading, as while the DEA may seem to represent a fairer system for subscribers, this is only the case if the subscriber (and the general public) fully understands the finer points of copyright law, and the legal process, i.e. they are aware of issues with burden of proof, evidence and liability, which are significantly different under the DEA process – sending letters – than under copyright law.

At 233;

The DEA proceeds on the premise, first, that a significant number of infringers do not at the moment fully appreciate that what they are doing seriously infringes the legal and moral rights of others and that, although individual behaviour of this kind may seem trivial and excusable, the general effect may well be very damaging to the creative industries, a notorious example of what is sometimes called the tyranny of small decisions that have ruinous economic consequences.

It is likely, in fact, that most infringers do know that what they are doing infringers rights (after all, more than enough money has been spent on advertising campaigns, whether covering “stealing cars” or less dramatic examples), but the question is whether or not this action is damaging, in any way, to the (poorly defined) ‘creative industries’. Perhaps the “small decisions” that are causing tyranny are those being taken by senior figures and executives in various companies, lobbyists, and Parliament. It is these decisions that may have “ruinous consequences”.

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