Counterstrike

UK copyright owners have a new weapon in the fight against the growing problem of online copyright infringement. The Digital Economy Act 2010 (“DEA”) represents the biggest change to copyright law since the Copyright Designs & Patents Act 1988. While welcomed by copyright owners (“COs”), the DEA has met with a furious reaction from the public, and a lukewarm response from internet access service providers.

This article will explore:

• the background to the DEA;
• current options for COs in respect of online infringement; and
• the impact of the DEA online copyright infringement provisions.

Background

The 1988 Act sets out the UK copyright regime. Essentially, COs have the exclusive right to make and distribute copies of their works.

The ease of making infringing copies of music and film has been an issue ever since the creation of tape and video recorders in the 1980s. Cassette recorders caused great concern in the music industry in the 1980s and the BPI ran a famous campaign with the slogan “Home taping is killing music”. The battle was fought in court too – CBS brought an action against Amstrad, alleging that their supply of cassette recorders with a recording facility rendered them liable for copyright infringement. Ultimately, this argument was rejected by the House of Lords in CBS Songs v Amstrad Consumer Electronics [1988] RPC 567. Despite these concerns, the industry continued to grow.

When the 1988 Act was passed, the internet and digital media were a distant dream. The focus was on preventing physical infringement such as making copies of tapes, CDs and videos. Since then, the technology has changed beyond recognition. The ready availability of digital copies of films, music and computer games, and the ease of uploading and sharing copies online, makes it far easier for copyright infringement to take place, and on a large scale.

The creative industries argue that the sheer scale of online copyright infringement is seriously harming their business. The IFPI Digital Music Report 2010 found that global music sales fell by around 30% between 2004 and 2009, with the music industry estimating that in the top five European markets around 21% of the population regularly engage in unauthorised music-sharing.

Some argue that the rise of online copyright infringement is no more likely to result in an end to the creative industries than was home taping in the 1980s. However, the ease with which infringing copies can now be created and shared, seems to carry more potential for harm to the creative industries than could ever have been posed by home taping.

In recent years the creative sector has searched for ways to clamp down on online infringement. Many argue it is too late to do so because of the sheer scale of infringement and its cultural acceptance – an entire generation has grown used to free downloads. Instead the focus should be on adapting business models to suit the new digital reality.

However, the Government concluded in the June 2009 Digital Britain report that legislation was needed to tackle the increasing scale of online infringement. This resulted in the DEA.

Existing laws

The 1988 Act provides COs with a number of options for tackling online infringement:

Action against infringers

COs can raise court actions seeking interdicts, damages, additional damages and delivery up. There are also criminal penalties. However, the vast majority of online infringement is by individuals who can only be picked off one by one, in the hope that making examples will act as a deterrent. Also, the scale of infringement and the relatively impecunious nature of infringers mean that it is rarely cost-effective for owners to take action against individual infringers. It can also make for bad PR!

Nevertheless, some COs have obtained court orders forcing the disclosure of infringers’ names and addresses from their internet service providers (ISPs), and then sending letters before action. Some cases of mistaken identity led to considerable negative press for the COs.

Action against hosting websites

Owners have on occasion succeeded in copyright infringement actions against websites hosting infringing material, even where individual users, rather than the website operators, have uploaded the infringing content, as the recent case of Twentieth Century Fox v Newzbin Ltd [2010] EWHC 608 (Ch) demonstrates. Newzbin operated a website which indexed and provided easy access to infringing copies of films which had been uploaded by users. It also provided an easy way for its subscribers to download the films. Newzbin argued that its service was a simple websearch tool. It did not infringe copyright or facilitate copyright infringement; rather, its actions were analogous to those of Amstrad in the home taping case (above). However the High Court rejected this and Twentieth Century Fox obtained an injunction preventing Newzbin from infringing their copyright works.

Though Newzbin took an active role in infringement, many websites simply host content which is uploaded by users. A classic example is YouTube. There is an exemption from liability in law for “service providers” who merely host infringing content. The Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013, implementing EC Council Directive 2000/31/EC) provide in reg 19 that where a website provides mere hosting services, it will not be liable for damages or any other pecuniary remedy where (i) it does not have actual knowledge of unlawful activity, or information which would make the unlawful activity apparent; and (ii) on receiving such knowledge it acts expeditiously to remove or disable access to the information.

In addition, once the website has actual knowledge of infringement, the CO can obtain an interdict against the website preventing further infringement by it: 1988 Act, s 97A.

In order to remain within the scope of this exception, most websites do not proactively monitor content posted to their site, but have a system allowing others to report infringements. Typically, websites will take down allegedly infringing material when requested, without investigating whether it does in fact infringe. But the material may have been downloaded many times by then and the damage is done.

As a result of this exception, the CO’s main remedy to date has often been against the individual infringers rather than websites.

Provisions of the DEA

The DEA introduces a regime in terms of which new legal obligations are placed on internet access service providers (IASPs), such as Virgin, Sky and TalkTalk, to assist COs in taking action against online infringers. The DEA contains only a framework for the new regime, with the detail to be provided by secondary legislation.

IASP obligations

Sections 5 and 6 of the DEA provide that IASPs and COs will be required to sign up to an Initial Obligations Code, to be prepared by industry, or if they cannot agree a code, then by OFCOM. Under s 7 the code will regulate, among other things, what information IASPs must keep on alleged infringing subscribers.

Where an owner obtains the IP address of an infringer, it can send a copyright infringement notice to the infringer’s IASP containing evidence of the infringement: s 3. The IASP will then be obliged to send a notification to the infringer with evidence of the infringement, and information on how to obtain lawful copies, how to secure their home internet network to prevent others hacking into it, and how to appeal.

IASPs will have to keep a list of copyright infringers, showing which infringement reports relate to each infringer, and supply them to COs on request: s 4.

At this point, the identity of the infringer will not automatically be disclosed to the CO. However, it will be open to COs to apply to the court to have the identities disclosed, so they can take action under the 1988 Act regime.

Progress reports

OFCOM must prepare a progress report to the Secretary of State within 12 months of the first code coming into force, assessing whether the notification system has resulted in a reduction of online copyright infringement (DEA, s 8).

If the first year’s report indicates that the system is proving insufficient to tackle infringement, under ss 9 and 10 the Secretary of State can bring in secondary legislation requiring IASPs to take action to limit or suspend the internet access of persistent infringers. IASPs may be ordered to impose technical measures which:

• limit the speed or other capacity of the service provided to a subscriber;
• prevent the subscriber using the service to gain access to particular material, or limit such use;
• suspend the service provided to a subscriber;
• or limit the service provided to the subscriber in another way.

OFCOM will be required to draw up a technical obligations code (TOC) which will define the obligations of IASPs and owners in this respect. By s 13 these technical measures cannot take effect until all appeal avenues have been exhausted or time limits expired.

Subscriber appeals

Under s 6 OFCOM will be obliged to set up an independent appeals body to hear subscriber appeals against infringement notifications or technical measures.

The subscriber appeal provisions in s 13 again provide a framework rather than detail. Subscribers will be able to appeal on the grounds that (i) the infringing acts do not amount to copyright infringement, or (ii) the infringing acts were not committed from their IP address. In that event the burden of proof will be on the owners/IASPs to prove copyright infringement, and that it took place from the subscriber’s IP address.

Another key appeal ground will be that the subscriber did not carry out the infringing act, and took all reasonable steps to prevent others infringing from their internet service. The burden of proof will then be on the subscriber.

In appeals against technical measures, the independent appeals body will be able to (a) confirm the measure; (b) require it not to be taken, or withdrawn; or (c) substitute another measure.

If dissatisfied with the decision of the independent appeals body regarding technical measures, the infringer can further appeal to the First-tier Tribunal (a judicial body), but this right does not apply to appeals against infringement notices. It is not clear whether there will be any further appeal to the court.

Blocking interdicts

The DEA contains a controversial provision (s 17) which would permit secondary legislation to be passed allowing courts to grant interdicts against IASPs “in respect of a location on the internet which the court is satisfied has been, is being or is likely to be used for or in connection with an activity that infringes copyright”.

If a CO was successful in obtaining an interdict, the IASP would have to prevent its subscribers from accessing the website in its entirety.

Comments and concerns COs have, understandably, welcomed the passing of the DEA, as it provides easier ways for them to enforce their rights. If successful, these measures may well change the existing culture of online infringement.

Some IASPs have reacted less favourably. The responsibilities and workload of IASPs are set to increase under the new regime, with administrative and costs implications. The Department for Business Innovation and Skills has a consultation currently underway regarding the appropriate division of costs between owners and IASPs.

Widespread concerns have been voiced about the DEA including:

• subscribers may have to pay costs if unsuccessful at appeal;
• it is fairly simple for third parties to hack into home internet connections and use them for infringement purposes. It may be difficult for subscribers to prove this is what has happened;
• companies who offer free WiFi access, such as libraries and universities, may be deterred from doing so, thus reducing public internet access;
• the appeal process does not seem to allow for any appeal to the court beyond the appeal to the First-tier Tribunal;
• subscribers could lose their internet access without any court having established infringement. However, the Government has pointed out that the intention is to suspend, rather than permanently cut off, subscribers’ internet access, and the access will only be suspended by the subscriber’s current IASP. The subscriber can regain access through another IASP;
• the blocking provisions and the suspension or limitation of internet access amount to a breach of the human right to freedom of expression; and
• the blocking interdict provisions could be used to block entire websites and so will block access to non-infringing as well as infringing content.

As ever with laws relating to the internet, the biggest difficulty for the new regime may be the advance of technology. There are already various technical measures which can be employed to effectively hide an infringer’s IP address, and without this crucial identifying information, the DEA regime may not make the major difference to online infringement culture hoped for by the creative industries.

• Susan Snedden is an associate in the IP & Technology Department, Maclay Murray & Spens LLP