Tech, Media & Telecoms

Digital Economy Act - the calm after the storm

In June 2009 the Government published the Digital Britain Report stating:

“The Digital World is a reality in all of our lives. In this report we underscore the importance of understanding, appreciating and planning for this reality and we seek to achieve the following:

• An analysis of the levels of digital participation, skills and access needed for the digital future, with a plan for increasing participation, and more coherent public structures to deal with it.
• An analysis of our communications infrastructure capabilities, an identification of the gaps and recommendations on how to fill them.
• A statement of ambition for the future growth of our creative industries, proposals for a legal and regulatory framework for intellectual property in a digital world, proposals on skills and a recognition of the need for investment support and innovation.
• A restatement of the need for specific market intervention in the UK content market, and what that will demand of the BBC and its role in Digital Britain. What that means for the future of the C4 Corporation. An analysis of the importance of other forms of independent and suitably funded news, and what clarification and changes are needed to the existing framework.
• An analysis of the skills, research and training markets, and what supply side issues need addressing for a fully functioning digital economy.
• A framework for digital security and digital safety at international and national levels and recognition that in a world of high speed connectivity we need a digital framework not an analogue one.
• A review of what all of this means for the Government and how digital governance in the information age demands new structures, new safeguards, and new data management, access and transparency rules.”

Whether the Government has effectively planned for our digital reality remains to be seen, but late at night on the 7th of April, in the last few functional days of Parliament with barely any MPs in the House, the House of Commons passed its attempt to do so, in the form of the  Digital Economy Bill.  On the 8th April, sandwiched between the Bribery Act and the Constitutional Reform and Governance Act, the Digital Economy Act (“DEA”) quietly received its Royal Assent to become law.  The passage of the Digital Economy Bill has been procedurally fraught and has ignited strong emotional responses from all involved. 

If you would be interested in attending a workshop on what the Digital Economy Act means for your business, please contact Vanessa Barnett at vanessa.barnett@blplaw.com for more information.

1  Ofcom reports on the state of digital Britain

Ofcom’s role as communications regulator was left largely unchanged, subject to some additional review and reporting requirements.

Ofcom is obliged to report to the Secretary of State within 12 months, and then every three years thereafter, on the UK’s electronic communications networks/wireless spectrum (types of network, coverage, proportion of population covered, capacity, and more). 

Ofcom must also report to the Secretary of State on domain names, in particular the allocation and registration of domain names and the misuse of domain names. 

Reporting obligations are also placed on Ofcom to report to the Secretary of State on the extent to which material included in television and radio services, and in on-demand programme services, contributes to the fulfilment of the public service objectives.

In connection with dealing with online copyright infringement Ofcom must also provide the Secretary of State with progress reports.

Regulation of Gaelic programming is now outside of Ofcom’s remit.

2  Dealing with online copyright infringement: reports, technical measures and site blocking

This was by far the most contentious area of the DEA and grabbed most of the press attention, with the Open Rights Group being David to the various industry Goliaths like the BPI.  ISPA was very much stuck in the middle getting shots from both sides, with Talk Talk being its most vociferous member.

The end result of this particular skirmish is that rights holders and Internet service providers (“ISPs”) will have a formal notification regime whereby a rights holder can report to an ISP if a subscriber “appears” to have infringed its intellectual property rights.

The provision applies if it appears to the rights holder that a subscriber to an “internet access service” (i.e. an ISP) has infringed copyright by means of the service or “has allowed another person to use the service, and that other person has infringed the [rights holder’s] copyright by means of the service”.

Rights holders will trace alleged infringers by internet protocol (IP) address, which is easy to disguise - so it will remain the case that professional/high volume infringers are unlikely to be caught (however many otherwise law abiding citizens probably will be).

Owners of unsecured wifi connections (coffee shops, libraries, unsuspecting home users) are also at risk of being subject to infringement reports because of third party use.  Even in single households, there will be difficulties identifying which individual allegedly committed the infringement, because reports are based on an IP address rather than any personally identifiable data.  The ISP Talk Talk has recently estimated that everyone in the UK securing their wifi to protect themselves from inadvertent breach of this provision of the DEA will cost hundreds of millions of £s.

If an ISP receives an infringement report from a rights holder, it must send notification to the subscriber alerting them to this within a month (with amongst other things, evidence of the apparent infringement and information about how to legally obtain digital content).  There are likely to be difficulties for ISPs meeting this as not all contact information will be kept current by subscribers, particularly email addresses.

ISPs will also be required to maintain (anonymous) intelligence about subscribers who are the subject of infringement allegations and rights holders can ask for copies of this.

The details of the regime will be consolidated in a code to be drawn up by stakeholders and approved by Ofcom.  This code is also to set out an appeals procedure to an independent body for subscribers, who can appeal on grounds that the apparent infringement is not in fact an infringement, that it does not relate to their IP address or the rights holder did not comply with the code.

Whilst each of these provisions is crafted to seek to prevent online copyright infringement, there will undoubtedly be a costs burden on ISPs (which will, as these things are, be passed down to consumers).  The Department of Business, Innovation and Skills (“BIS”) is alive to this and there is an open consultation on how costs should be allocated between rights holders and ISPs (75:25 is the suggestion).

The DEA also gives the Secretary of State powers to impose technical obligations (disconnection, bandwidth throttling, etc) against subscribers who reach a certain threshold of infringement reports.  Before this can be done the Secretary of State will need to consider Ofcom’s assessment of the need for technical measures and its reports on infringing activity.  ISPs who fail to comply with these could be fined.

The DEA also allows the Secretary of State to make provisions allowing courts to grant blocking injunctions for individual websites if they are being used for infringing activities.  For an injunction to be granted the court must be satisfied that a substantial amount of material has been, or is likely to be, obtained from the website and ISPs must have been given prior notice. 

When considering when to grant the injunction, the court has to take into account evidence of steps taken to prevent infringement of copyright, evidence of steps taken by rights holder to facilitate lawful access to the material, any representations made by a Minister, whether the injunction would be likely to have a disproportionate effect on any person’s legitimate interests and the importance of freedom of expression.

The blocking provisions were considered particularly controversial during the debate in the House of Commons and as such will still be subject to a 60 day Parliamentary “super-affirmative” consultation procedure (requiring approval by the House of Lords and the House of Commons).

There remains a risk that sites which are mostly used lawfully (particularly for user generated content) can be blocked because they may still host substantial amount of infringing material.  During the consultation period there will be some key issues to consider, including whether ISPs should face costs consequences for failing to voluntarily block websites in respect of which injunctions were subsequently granted.

Ofcom must prepare regular reports on copyright infringement, including an assessment of current level of subscriber’s use of ISPs to infringe copyright.  These reports will also focus on rights holders and what steps they have taken to make material available lawfully and to “inform, and change the attitude of members of the public in relation to the infringement of copyright”.  There will also be an assessment of how the reporting process has been used and the extent to which legal proceedings have been brought.

To give all the of the copyright infringement provisions some extra bite, the DEA amends the Copyright, Designs and Patents Act 1988 to put in place a criminal penalty of up to £50,000 for making, using or dealing with illicit recordings.

3  Domain name registries

To ensure the reputation of UK electronic communications networks/services, provisions in the DEA empower the Secretary of State to deal with failures in domain name registries, including appointing a manager of the registry.  Such failures include the registry - or its registrars or end-users - engaging in practices which are unfair.

4  Computer games

The DEA extends provisions of the Video Recording Act 1984 to cover games which contain violence (whether to a “human or animal character” or other character), criminal activity, sexual content, encourage drinking, smoking or drug use, or are likely to cause offence (whether on the grounds of race, gender, disability, religion, belief or sexual orientation or otherwise).   In relation to “human or animal characters” stick characters are excluded.

5 Public lending right

Provisions are included in the DEA to amend the Public Lending Right Act 1979 to allow the lending of e-books and audio books. 

Unlike physical media (CDs, DVDs, etc) which is device neutral, e-books are mostly device specific.  Implementing this right may therefore make it operationally difficult for libraries to actually lend e-books.

6  Broadcasting

The DEA revises Channel 4’s functions with regard to production and distribution of media content across television programmes, on-demand services and other services provided via the internet.  Channel 4 is tasked, amongst other things, with delivering  content that “appeals to the tastes of a culturally diverse society” especially teens and young adults.  Channel 4’s compliance will be monitored by Ofcom.

Arrangements are put in place to allow for single franchise areas for both England and Scotland for Channel 3 as well as determine the expiry date for Channel 3, 5 and teletext licences as December 2014.

In relation to teletext, Ofcom are required to report on teletext licences and whether they can be provided at a commercially sustainable cost. In doing so, Ofcom must consider alternative uses for the capacity that would be available if the public teletext service were not provided.

7  Radio licences

The DEA contains various provisions designed to better manage the radio spectrum, including giving Ofcom the power to renew radio licences for 7 year terms, make variations to them and conditions for "content and character" of local radio services. Ofcom can also impose sanctions for breach of licence.

8  Digital Switchover

The Secretary of State is given the power to specify the date for digital switchover; in doing so, regard must be had for any advice from Ofcom or the BBC.

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