OPYWRONG:

The Digital Economy Act 2010: Is the legislation compliant with EU law? Its effects proportionate?

M.R. Leiser Honours Dissertation 200825718 Supervisor: Konstantinos Komaitis Word Count: 11,000

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ACKN

I wish to acknowl dg two of my f llow st d nts Stephen Murphy for acting as a so nding board for my id as and Ashley McCann for h lping to proofr ad. Francis Davey also h lp d clarify som of th t chnicaliti s of opyright law.

Konstantinos Komaitis

y ar p rsonally and prof ssionally and whos

cyb rspac has instill d a passion for prot cting th cr ati

Thanks to Aunt Helen for r ading almost f dback in a tim ly mann r.

Finally to my girls at hom

good spirits. Witho t th ir fo ndations and ability to mak m la gh I wo ld not ha abl to p rs this dr am.

G M NTS

my diss rtation s p r isor who I ha

gott n to know o r th past

x b ranc to p rs ing fairn ss and q ality in in m .

ry law ssay I ha

writt n and pro iding critical

Angela & Brogan thank yo for p tting p with my law chat in b n

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T b e o Co te ts
ACKNOWLEDGEMENTS .............................................................................................................................2 . . . . ABSTRACT...................................................................................................................................................4 . . . . METHODOLOGY.........................................................................................................................................4 . . . . Objectives ..........................................................................................................................................4 . . . . Development of Question .................................................................................................................4 . . . Research Strategy .............................................................................................................................5 . . . . Literature Arrangement.....................................................................................................................6 . . . Limitations .........................................................................................................................................6 . . . . . . . . F rth r R s arch .............................................................................................................................7 ACRONYMS ................................................................................................................................................7 . . . . CHAPTER ONE The Act and its Effects....................................................................................................8 . . . 1.0 Background .................................................................................................................................8 . . . . 1.1 An Overview ................................................................................................................................8 . . . . 1.2 Technical Concerns ....................................................................................................................10 . . . 1.3 Privacy .......................................................................................................................................11 . . . . 1.4 ISP Effects ..................................................................................................................................12 . . . . 1.5 Wi-Fi Effects ..............................................................................................................................14 . . . . CHAPTER 2 Analysis of the Law ...............................................................................................................16 . . . 2.0 Introduction ..............................................................................................................................16 . . . . 2.1 EU Law .......................................................................................................................................16 . . . . 2.2 Directives ...................................................................................................................................16 . . . . 2.3 The Internet Freedom .............................................................................................................18 . . . 2.4 Ofcom s IOC...............................................................................................................................19 . . . . 2.5 Graduated Response .................................................................................................................21 . . . CHAPTER 3 Changing Norms ................................................................................................................22 . . . 3.0 Introduction ..............................................................................................................................22 . . . . 3.1 LiveNation Entertainment .........................................................................................................22 . . . 3.2 International Obligations ..........................................................................................................23 . . . 3.3 Legal Enforceability....................................................................................................................25 . . . 3.4 Practically Unenforceable .........................................................................................................26 . . . Chapter 4 Conclusion ............................................................................................................................. 8 . . . 2

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ABST ACT

Lord Mand lson claim d Th Unit d

igital Economy Act

ingdom s l gal and physical digital landscap

cont nt to pdat o r copyright r gim for a world in which w n w ways. This n w l gislati m as r

larg ly s pport d by th British Phonographic

Ind stry shifts th prot ct old m dia

mphasis towards r g latory mod ls that nforc old laws d sign d to and s bs q ntly p naliz s thos who download copyright d digital

cont nt. Go rnm nt and int rn t s r ic pro id rs (ISPs) ar now in disp t o r wh th r th s pro isions impos an obligation to monitor and control th ir c stom rs This will arg ably cr at s of mat rial.

conf sion for b sin ss s r lying on fr -acc ss Wi-Fi to draw lop

c stom rs to th ir traditional b sin ss s. Ofcom is now nd r a stat tory obligation to d

a r g latory syst m that p nish s b ha io r damaging to old b sin ss mod ls witho t prot cting copyright own rs in th achi radically n w way Lord Mand lson claims th act will of th igital Economy Act highlighting th

. Th pap r critically analys s ss3-

shortcomings of both th l gislation and th r q ir m nts plac d on Ofcom and will chall ng th nd rlying ass mption that l gislation can always sol th probl m of nforc m nt of high

d mand m dia in a mod rn information-bas d digital U .

M TH bjectives Th obj cti

of this diss rtation is to critically analys ss3-

Act

. Th r aft r th diss rtation will xamin th pot ntial ff cts on ISPs and own rs of ir cti s by
Comment [WU1]: Act s

Wi-Fi hotspots. Th pap r mo s toward an analysis of th Acts r lation to EU

asking wh th r th Act is l gally nforc abl in light of Ofcom s initial draft obligations. Th pap r th n concl d s th norms of copyright ha EA is l gally nforc abl b t practically n nforc abl b ca s th chang d drastically; and that th only satisfactory sol tion is for rightsth ir p rc i d probl m of ill gal fil -sharing.

own rs to adopt n w b sin ss mod ls to sol eve opme t o Questio Th th w

igital Economy Act

had j st pass d in th

ks b for th Glastonb ry F sti al for Music and Arts. As an a id fan of th music and

digital arts Glastonbury off r d a titillating display of how a on -siz -fits-all copyright law
1 Lord Mad lson Hansard c 9 olumn 44 A ailabl onlin at http //www.publications.parliam nt.uk/pa/ld 910/ldhansrd/t xt/912020002.htm#0912023 000332 2 ibid

 

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was n d d to pgrad th

and r garding copyright of digital s digital cont nt in radically

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of th

igital Economy

wash p p riod of Parliam nt in

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r gim struggl s in th digital world. Although famous for its music p rformanc s Glastonbury also showcas s impr ssi cr ati displays of digital p rformanc . In th cont xt of copyright

law this pr s nt d a digital dil mma. How can th hard law of copyright co r th pl thora of cont nt I was witn ssing at Glastonbury? Would r strictions on acc ss to cr ati a n gati xp ri nc ff ct on artists who ha cont nt ha

historically built on th work of anoth r? My Glastonbury arts

stimulat d th id a that th Act with its nobl aims of prot cting th cr ati

could pot ntially ha

far r aching and unint nd d cons quences on society actually harming

the industries it aims to protect. I began to del e into copyright before developing a plan to explore possible consequences of the Act. Whilst consideration was duly given to the claims of rights-owners and to the conceptual need to protect and monetize some creative industries I feel that the chosen question allows for a critical analysis of the Act allowing for further debate on the more abstract theories of copyright in the digital age. Rese rch Str tegy Research commenced after receiving reading recommendations from my dissertation supervisor. The EA 2010 was not yet in force, and as an appreciation of the wider issues
Comment [WU2]: Don t need the comma when you have a conjunction ie and

regarding copyright was required, I began by trying to gain a greater grasp of the theories behind this area of law. As I was analysing the act at such an early stage, I found the journal articles featured on LexisNexis and Westlaw - as well as the media coverage - to be vague and rather repetitive, containing the same recycled quotes and references. Forced to think outside the box, I decided to utilize blogs and social-networking sites as a means of following the discussions and arguments of prominent commentators on the EA. Twitter allowed me to

contextualize and categorize the various sides of the argument between prominent commentators on the EA. Searching the Houses of Parliament s website for records for the Hansard record of parliamentary debate proved difficult by way of specific keyword searching, but achievable through open-ended search terminology. I used keyword searching of online databases to gain access to academic sources, utilising terms such as igital Economy Act , e-commerce

directive , and, copyright infringement an expansive approach which surprisingly allowed for a narrower focus area to be identified. Although I did not undertake empirical research, I reviewed several studies on validity of copyright-owners complaints. I also attempted interviews with Andrew Liversage of the BPI, with permission granted but only after the Judicial Review. I also contacted and interviewed

LiveNation s CEO and was granted an interview with a senior executive.

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Liter ture Arr

geme t EA and attempts to illustrate what its provisions do in

Chapter one introduces the

practice. The aim was to set the scene for the reader in the most general terms. The chapter concludes by focusing on two elements of the direct effects of the Act open Wi-Fi networks

and ISPs. Furthermore, a brief technical discussion was necessary to show how reports of infringements are evidentially weak; therefore likely to cause significant legal issues for those accused of infringement. Chapter Two seeks to analyse the research and claims of the Digital Britain report in comparison to the EU legislation that governs ISP s and e-commerce. By discussing the EU s aim of an open Internet and implementation of policies that protect harmonization and privacy, this allowed an analysis of the EA s mandates in relation to both U and EU law. Chapter Three further expands on the Act s perceived shortcomings, while highlighting how alternative business models have changed copyright. It suggests that our international obligations complement our national law rather than mandate any significant change. To

achieve this, I address how these norms through the use of new business models and innovative technology have changed in the digital era. I conclude that whilst the Act will not have a drastic effect on society, it is disproportionate on ISPs and furthermore, will fail to stop serious infringers of copyrighted material. Limit tio s On 28/05/2010 Ofcom released its initial draft obligations code. Shortly after, two ISPs BT and TalkTalk, petitioned the Court for Judicial Review (JR) of the Act. The consequence for me was that academic commentary on the effects of the EA ceased almost immediately.

Furthermore, to date Ofcom s regulations have not been released resulting in commentary on likely, rather than actual, law. At the time I set my research question, there were no legal disputes pending. The JR caused me to change my approach midway through writing. Rather than focusing on the legal dispute, I decided to switch tactics to writing about what may happen in any event, irrespective of whether the JR succeeded or failed. This resulted in a broad analysis of several topics, rather than an in-depth analysis of a few. Unlike most dissertations, I had to gain a solid understanding of several topics like EU Law, Copyright, Technical Issues, and statutory drafting before commencing writing.
Comment [WU3]: Required maybe slightly better?



 

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Further Rese rch It will be necessary to carry out further research on the effects of the EA and whether illegal file-sharing has subsided, or infringers just been forced to go dark . The Judicial Review has limited any empirical research about the effectiveness of the Act or its possible consequences. This research has inspired me to analyse how different countries have responded to the crisis of copyright infringement and how different stakeholders have handled internet governance. I have been motivated to submit a Ph proposal inquiring about the need for
Comment [WU4]: Doesn t really make sense to me. Ah well it kind of does (returning to this comment half an hour later) but an extra word or two could make it more immediately clear.

dispute resolution mechanisms to be made available to the stakeholders of internet governance, and how to advance the fundamental right of internet access, while leaving narrow exceptions to this right to governments.

ACRONYMS
EA - igital Economy Act 2010 EB - igital Economy Bill JR Judicial Review P2P peer to peer file-sharing ISP Internet Service Provider CIR Copyright Infringement Report CIL Copyright Infringement List BPI British Phonographic Industry WTO World Trade Organization TRIPS Trade-related Agreement on Intellectual Property ACTA Anti-Counterfeiting Trade Agreement BIS epartment of Business, Industry and Skills OCC - Official Chart Company IOC raft Initial Obligations Code

y y y y y y y y y y y y y y

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CHA T R ON
. B ckgrou d In 2009 the

The Act

d its

epartment of Business, Innovation, and Skills published a paper entitled

Digital Britain: Interim Report3 that proposed to enact legislation requiring ISPs to notify alleged infringers of copyright as to the illegality of their conduct. Furthermore, it recommended that ISPs collect anonymised information on serious repeat infringers which could be made available upon production of a court order. This was followed by a series of proposals by the BIS with the ostensible purpose of moving the U to the forefront of the global move towards a digital economy . 4 The resulting igital Economy Act5 was passed by the last Parliament

during the wash-up period with minimal scrutiny from the Houses of Parliament and received royal assent on 8th April 2010. 1.1 A Overview o the igit

co omy Act

For the purpose of this dissertation, the controversial provisions of the igital Economy Act 2010 ( EA) are found in ss3-17. Strictly speaking, ss3-15 amends the Communications Act 2003 to add new sections 124A to 124M, while s16 amends the CA by adding definitions to s124N. S17 does not contain Henry VIII powers to the Secretary of State to modify substantive copyright law; but the Secretary may use Statutory Instruments, positive, negative or procedural to legislate on enforcement arrangements. The explanatory notes of the EB state

that these provisions impose obligations on Internet Service Providers. As stakeholders were unable to reach a consensus to an industry code, Ofcom drafted an initial obligations regime for ISPs. The resulting code will require ISPs to receive and process copyright infringement reports prepared by copyright owners. This process involves an owner of a right sending a Copyright Infringement Report (CIR) to the ISP that hosts the IP address alongside evidence of alleged copyright infringement, and the time of the alleged infringement. ISPs may send their account holder a notice of alleged infringement6, and additional information on the purpose of copyright to either their

registered email or their postal address 7. The Act does not require a notification for each CIR, so notifications may be based on multiple CIRs. The Act also allows for a rights-owner to notify an

Cm 7548 igital Britain Final Report (Cm 7650) 5 2010 CHAPTER 24 6 S124A(4) 7 Ss124A(6)&(8)

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ISP of an infringement if it appears to the rights-owner that the subscriber allowed another person to use the service and that other person has infringed.
8

Section 124G, together with 124H and 124J allows for repeat offenders, already on a CIR, to be placed on a Copyright Infringement List (CIL), and given to rights-owners.9 Rights-owners will then be able to cross-reference users for repeat infringement. After matching repeat offenders, the Rights-owners can apply for Norwich Pharmacal10 orders to learn the alleged infringer s identity with "evidence and information from an innocent third party that is connected to the wrong"11. Alleged infringers would not be able to rely on the PA for

protection, as s. 35 allows disclosure of personal data without consent where disclosure is required by any rule of law or by order of court. The result of this is that the copyright owner has a list of subscribers accused of repeatedly infringing copyright. In order to take any action against them the rights-owner still needs to take the ISP to court to obtain the subscriber's details and identity12. If this phase does not sufficiently stop infringement, a second phase of the Act allows for the Secretary of State to force ISPs to operate in conjunction with a technical obligations code .13 A technical obligation14 is defined as a measure imposed on an ISP to take a technical measure against some or all relevant subscribers to its service for the purpose of preventing or reducing infringement of copyright by means of the internet.
15

Comment [WU5]: Double use of technical , describing something by itself, is that not circular?

The decision to impose technical measures is left to the discretion of the Secretary of State under s124 (h). The SoS may make an Order if "he considers it appropriate" in view of an assessment carried out or steps taken by Ofcom under section 124G; or consideration
16

any other

Internet traffic restriction, bandwidth restriction and suspension of the

service to a subscriber17 have been described as measures available. The common perception that three incidents of infringement against any one user would result in disconnection (three strikes) is inaccurate. There is nothing in the Act that states it will take a specific amount of CIRs before resulting in the imposition of technical measures Secretary of State and Ofcom s code . discretion rests solely with the

S124 (1)(b) S124B 10 Norwich Pharmacal Co. & Others v Customs and Excise Commissioners [1974] AC 133 11 Christopher, William; Sheeley, Alan (17 July 2009). "Show me your cards! New Law Journal 1026 10 12 IOC S7.3 13 s124J 14 S124(I) 15 S124G(2) 16 S124G (3) 17 S124G(3)
8 9

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This regime has legitimately caused great concerns about the reliability of the technical data that rights-owners will use to allege infringement through an ISP. Under the Act, there are no standards of evidence placed on rights-owners to authenticate their evidence, despite serious concerns expressed in the Parliamentary debate before passing of the Bill.18 A mere allegation of infringement is sufficient, in most circumstances, to generate a CIR. As noted below, several experts claim that the methods the rights-owners are using to make allegations of infringement are unreliable; therefore, there is a chance that innocent people may have technical measures imposed. 1.2 Tech ic Co cer s

Consumer advocates have expressed concern that the contested provisions, once enforced, will catch innocent internet users whose connection has been used for illicit purposes by third parties19. It is crucial, they argue, that any system which gathers evidence to generate copyright infringement warnings must be robust, accurate and transparent technical audit.
21 20

Submissions from the Government suggested that rights-owners rely heavily

on technology that tracks files on peer-to-peer file-sharing systems. Investigators are targeting those who make available infringing material. P2P systems have a multitude of legal uses other than transferring files that infringe copyright. The most popular system of file-sharing, BitTorrent, was developed in response to the risk of vicarious liability for owners of client/server architecture. Rather than

downloading a file from a single source, the BitTorrent protocol allows users to join a "swarm" of hosts to download and upload from each other simultaneously. Some research has shown the methods used by investigators working on behalf of rights-owners to track torrents are unreliable 22. Initially, P2P were managed systems with key features centralized while

externalizing distribution costs. This centralized architecture of a client/server system became unsuitable for file-sharing, after legal action was used to shut down the Napster file-sharing service23. Prior to the forced closure of Napster, programmers had already developed this structure that had circumvented the legal outcome of the case.

18 Hansard, HL eb, 20 January 2010, c1026 [Online] Available at http //tinyurl.com/6jvvkkt Accessed 06/07/2010 19 Application by BT plc and Talk Talk Telecoms Group v Secretary of State for BIS, Statement of fact and grounds [Online]Available at http //www.talktalkblog.co.uk/download/sfg-final.pdf [Accessed 01/03/2011] 20 HL eb, 20 January 2010, c1028 21 HL eb, 20 January 2010, c1026 22 Michael Piatek, Tadayoshi ohno, Arvind rishnamurthy, Challenges and Directions for Monitoring P2P File Sharing Networks [Online] http //dmca.cs.washington.edu/dmca_hotsec08.pdf [Accessed 05/03/2011] 23 A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (2001 ]

87 6

open to expert

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P2P systems are entirely ignorant of what kind of data is being sent and without knowing the precise identity of the files involved, it is impo ssible to determine whether the use of these systems is evidence of copyright infringement. Even data that resembles music files can be lawfully shared over P2P systems. Since file sharing systems generally use the TCP/IP system, the IP address of the infringer can be reliably established and given to the relevant ISP, which can verify the account holder who was allocated the address at the relevant time. Using this method if intelligence gathering has been proven to be unreliable as researchers running specialist BitTorrent programs that appeared to be doing file-sharing received cease-and-desist letters from copyright owners who were under the impression that because the tracker machine had registered their interest in a particular file they were transferring the file.
24

Using IP addresses based on tracking of BitTorrent raises two separate issues. First, mobile operators were unable to obtain the millions of addresses needed to give every handset an IP address, so the technology was developed to allow thousands of subscribers to share one IP address making it is impossible to identify the account holder,25; Secondly, standard technology in all home routers allows for the account holder to be identified but not the individual machine or user. The EA s drafting relies solely on the use of IP addresses as part of the evidence used to allege infringement, but does not acknowledge there can be multiple individuals allocated at a single IP address. 1.3 riv cy The use of IP addresses as evidence of infringement raise significant issues of privacy as rights-owners may effectively be able to track personal downloading tastes. The issue raised is whether an IP address is personal data
26

current U law, an IP address isn t personal data as IP packets contains only the destination IP address and a source IP address. The U s Information Commissioner has stated that an IP address, in isolation, is not personal data , because it is focused on a computer and not an individual.27 However, the European approach has moved toward viewing IP addresses as personal data , in response to the need for wider interpretations of the European Privacy irective28. According to Lord Hope s comments in Common Services Agency 29, the law seems to interpret personal data by asking in whose hands is the information. Therefore, it can be

Op. Cit 19 r Richard Clayton, Expert Report regarding the Judicial Review of the Digital Economy Act 2010 [Online] Accessed 01/03/2011, Available at http //www.openrightsgroup.org/assets/J 1RC.pdf 26 Part I, S1 (1) PA 1998 27 Data Protection Good Practice Note [Online] Available at http //www.ico.gov.uk/upload/documents/library/data_protection/practical_application/collecting_per sonal_information_from_websites_v1.0.pdf [Accessed 21/03/2011] 28 The Privacy and Electronic Communications (EC irective) Regulations 2003 (SI 2003/2426) 29 Common Services Agency v Scottish Information Commissioner [2008] U HL 47 at
24 25

@ 9

within the wording of the ata Protection Act. Under

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argued that once the ISP transfers the data to a rights-owner, it may become personal data and should be treated accordingly. The ECJ stated in Promusicae v Telefonica30 that copyright, while enforceable under EU law, did not overrule the right-to-privacy of alleged file-sharers, and instead a balance was required against other fundamental rights like privacy and property. Generally, ISP's process IP addresses lawfully under the PA and the Privacy irective 31. Because the EA changes the manner in which data is processed, ISPs may have to process user data as traffic data 32 in accordance to Article 6(1)of the PECD33, which has a much narrower meaning as data must be erased or made anonymous when it is no longer required unless saved by derogation under Article 14(1). 1.4 S

maintain the notification and monitoring program, limiting these obligations to ISP s with more than 400,000 subscribers. To justify this approach Ofcom claimed this focuses the obligations on the major ISPs who provide internet access to more than 96% of the U market, it is

consistent with the Government s intentions and, based on evidence received from rightsowners, the vast majority of alleged infrin gement is amongst subscribers of those ISPs.
34

Shortly after, two ISPs, BT and TalkTalk, were granted permission to apply for judicial review. Permission was granted on four grounds First, the EC was not notified of the Act and since parts of the Act constitute a "technical regulation" within the meaning of the Technical Standards Directive35; therefore, have been notified to the European Commission before enactment; Second, parts are not compatible with the E-Commerce Directive 36; Third, parts are not compatible with the E-Privacy Directive37; Fourth, the Act will unduly affect the ability of ISPs in other member states to offer services in the U , leading to possible infringement of Articles 8 and 10 of the European Convention on Human Rights. It should not come as a surprise that there has been a legal move to ensure ISP s pay part of the cost of infringement occurring on their networks. The Gower s Review 38

recommended legislation if ISPs and rights-owners failed to reach a voluntary agreement of best

Productores de Musica de Espana (Promusicae) v Telefonica de Espana SAU [2007] ECDR CN 1, C-275/06 Op. Cit 25 32 S2The Privacy and Electornic Communications (EC Directive) Regulations 2003 SI 2003/2426 33 Privacy and Electronic Communications Directive 2002/58/EC ("PECD"), transposed into U law by the Privacy and Electronic Communications (EC Directive) Regulations 2003 ("PECRegs"). 34 S1.6 DIOC 35 98/34/EC 36 2001/31/EC 37 2002/58/EC 38 Gowers Review of Intellectual Property [Online] Accessed 05/03/2011 Available at http //www.official-documents.gov.uk/document/other/0118404830/0118404830.pdf
30 31

D DC B A

ects

Ofcom released Draft Obligations mandating that ISPs pay 25% of the cost to setup and

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practice for the most appropriate way to share data and stop infringement39. However, was any voluntary agreement actually necessary? There are remedies available to those who have suffered alleged infringement and ISPs already operate filtering mechanisms to block illegal activity. Historically governments have given ISPs immunity loosely based on their innocent dissemination of information, so long as the ISP reacts to notifications of identified and illegal content. ISPs are given blanket immunity, subject to certain conditions. ISPs may be guilty of primary infringement40 if it gave
Comment [WU6]: Have you split your sentences correctly here? I m sure you have. It s just because I don t know precisely what you re talking about that it might seem a little clumsy/imprecise. Just give it a little thought maybe

permission/authorisation for the unlawful act. Furthermore, if an ISP had actual knowledge 41 of the unlawful act, it would be guilty of secondary infringement, but because of the mere conduit defence42, would not be liable for damages. Additionally, under U law, general

knowledge that some copies may be infringing does not constitute sufficient knowledge for secondary copyright infringement.43 A remedy is already provided under S24 (2) CPDA which states secondary infringement occurs when knowing or having reason to believe infringing transmission will be received in the U . Despite the availability of these types of injunctions, the previous Government has legislated that ISPs pay 25% of the costs of implementing Ofcom s plan. This imposes a penalty on ISPs by implying they have actual knowledge their server is being used for copyright infringement due to the vast quantity of files transferred over their networks. However, actual knowledge has a specific meaning limited only to the caching 44and hosting 45 functionality of ISPs. Furthermore, the Act ignores the fact that an ISP that sends allegations to an operator of a free or open network, may no longer claim it is a mere conduit 46; therefore, unable to rely on protection afforded under the EC Directive. Because ISPs are obligated to give advice about the protection of electronic communications networks that use wireless telegraphy47 (Wi-Fi), this may violate the regime of Directives that recognizes the passive 48 and neutral conduit role that ISPs play. This passive role has been recognized at common law as an ISP is hosting that

Ibid, Recommendation 39 Ibid, Para 8-16 to 8-20 41 Garnett , Davies G and Harbottle G, Copinger and Skone James on Copyright Volume One (15th Edition, London, Sweet and Maxwell, 2005) Para 8-08 to 8-10 42 Article 12, EC-Directive 43 Columbia Picture Industries v Robinson [1987] ChD 3 44 SI/2002/2013 S18(b)(v) 45 SI 2002/2013 S19(a)(i) 46 Article 12(1) E-Commerce Directive 47 S124A(5)(f) 48 Article 14.1(a) and Recital 42 of the Directive
39 40

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defamatory material is not liable until it has actual knowledge .49 Eady J stated, that an Internet intermediary, if undertaking no more than the role of a passive medium of communication, cannot be characterised as a publisher at common law and would not, therefore, need to turn to any defence.
50

Although immune for infringing materials passing over their networks, ISPs still face potential liability and ill-will from their customers for accusing them directly of infringement or disconnecting someone because of erroneous evidence or under breach of contract with their customer. 1.5 i-Fi

Because of the DEA s potential to impact negatively the various groups51 and business associations that offer Wi-Fi as an added value to their primary service, several organizations have suggested that they will have to withdraw Wi-Fi facilities from their offerings of service retrograde step given the age we live in.
52

cannot be held criminally liable for those who themselves do not carry out an infringing act53, unless they authorize the act54. S124(5)(f) obligates ISPs to send guidance on how to secure one s Wi-Fi, in an attempt to nullify the someone-must-have-used-my-Wi-Fi defence. Although the Code states that one can appeal if the subscriber has secured their network, this can be seen as indirectly attempting to regulate behaviour through direct regulation. Yet, under copyright law, if a third-party does manage to use the internet connection of a subscriber without the account holders consent to infringe copyright, the subscriber will not be liable for copyright infringement.55 The subscriber could be liable if they knew that a third party intended to infringe copyright and consented to a third party using their equipment to carry out that intention. However, mere negligence in failing to take precautions to prevent such use is not actionable. Irrespective of legality, the consequences of withdrawal of unsecured networks may have far-reaching effects. The understanding of open Wi-Fi has been confused in the debate. Unsecured Wi-Fi, the type likely found in libraries, coffee -shops, and cafes is exactly that free.

49 Metropolitan International Schools v Designtechnika Corporation and Google UK [2009] EWHC 1765 (QB) 50 Ibid at Para 36 citing Bunt v Tilley [2006] EWHC 407 (QB) at 22-23 51 Response of the British Hospitality Association, British Beer, and Pub Association, and British Holiday Home and Parks Association to the Draft Initial Obligations Code [Online] http //stakeholders.ofcom.org.uk/binaries/consultations/copyright-infringement/responses/MLA.pdf [Accessed 27-02-2011] 52 Ibid 53 S16(2) CPDA 54 CBS Songs v Amstrad [1988] A.C. 1013 55 S24(2) CPDA

GG F

ects

Yet, under the U common law, a domestic user

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A user can sit down, usually for a short, specified period of time and surf for free, without any submission to security at login. Open Wi-Fi allows users, generally for a small time specific amount, internet access in public locations. Because the use of open Wi-Fi is highly popular, providers are able to charge high prices; for example, BT s shortest Open Wi-Fi package is 5.99 for 90 minutes56 -an effective broadband rate of 2875.20 a month. It allows network operators to control editorially what content is presented on a user s internet screen at log-in, presenting opportunities for lucrative advertising revenue. Lord Mandelson stated that the DEA took steps to ensure that the infrastructure was in place before innovation and growth can happen.
57

Thus, as some have suggested, the end of open Wi-Fi 58 is an over simplification. As the Act stands alone, it may hamper the growth of free Wi-Fi replacing with a monetized and controlled open Wi-Fi . As Lord Mandelson stated, the DEA is more about creating wider legal frameworks that modernise our entire infrastructure of an entire knowledge economy. 59 As a result of this provision, ISPs have already begun to reduce the risk of piggyback infringers by suspending people for running unsecured networks, without a single allegation of infringement by the subscriber .60 Ofcom s lack of consideration of digital inclusion as a social good, may lead to an unintended prohibition on unsecured Wi-Fi .

BT Price plan, [Online] http //www.btopenzone.com/buy/index.jsp [Accessed 15-02-2011] Citation HL Deb, 2 December 2009, c743 58 illock, Jim, Government Admits Cafes And Open Wifi Providers Will Face Disconnection But Can Appeal , http //www.openrightsgroup.org/blog/2010/the-death-of-open-wifi 59 Mandelson, House of Lords Hansard, 2 DEC 2009 Column 744 60 ISP Disconnects Customers with Open Wi-Fi , [Online] Available at http //torrentfreak.com/ispdisconnects-customers-with-open-wifi-081102 [Accessed 10/03/2011]
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CHA T R 2 A
2.0 troductio

ysis o the L w

Both the Information Society and E-Commerce Directives speci cally provide safe harbour protection for ISPs which pass infringing materials over their networks. Furthermore, the Copyright Directive protects temporary acts of reproduction if they are part of the technical process and purpose is to enable the a transmission in a network between third parties by an intermediary
61

. If an ISP is acting as a conduit and pass infringing information over their

networks, they are not liable provided that they do not modify the information, comply with conditions on access to it and any rules regarding its updating, and do not interfere with lawful use of technology used by industry to obtain data on the use of the information. 62 The Digital Economy Act imposes obligations on ISPs and, prima facie, raises questions of compliance with EU law; however, by issuing guidelines about the practical application of the Act, Of com s draft initial obligations attempt to improve the DEA s inadequacies. 2.1

L w Regulatory measures passed by Member States to comply with European Directives are

deemed disproportionate when the measure extends further than necessary to achieve its means. When interferences with a protected right are permitted, the principle of

proportionality offers redress to those affected to a greater extent than is necessary for the attainment of its objective. National courts have applied European Directives broadly, and interferences narrowly with the onus on the State to demonstrate that the proposed interference is a justifiable and proportionate response to the objective. A series of directives make up a legal framework that collectively addresses the interplay between the harmonization of the internal market and how ISPs limited indemnity was envisaged. 2.2 irectives The E-Commerce Directive was designed to protect ISP s from liability for innocent infringements of copyright encouraging electronic commerce through the harmonization of national laws focussing on internal market considerations. The U cannot restrict incoming services, because of the internal market clause63, the core of the e-commerce directive
64

protects the free movement of information. ISPs were given mere conduit status for this very reason, effectively meaning that ISPs are not liable in damages for any copyright infringement flowing over its network, subject to the condition of actual knowledge . Rights-owners can only
61 62

European Copyright Directive (2001/29/EC). Art 5.1 Article 5(1) Copyright Directive 63 Lilian Edwards, Law and the Internet 3rd Ed. Hart Publishing (2009) p 64 Niamh Nic Shuibhne, Regulating the Internal Market Edward Elgar Publishing Ltd (2006)

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Comment [WU7]: Take it a

which

rely on the argument that ISPs have must have actual knowledge due to the vast amount of traffic flowing over their networks. In Sabam v Tiscali65, a Belgium district court imposed a

requirement on an ISP to use filtering software to prevent copyright infringement over its network, this was referred to the ECJ on the basis that this judgement was likely to contradict Article 15 undecided. The Authorisation Directive66 authorises all electronic communication networks and services, subject to narrow exceptions allowing for interference by Member States. The goal of harmonization of the internal market limits interference to administrative charges
67

Comment [WU8]: New sentence

member states may not impose a general obligation to monitor. This issue remains

that

cover only the administrative costs in implementing and enforcing with the narrowest of exceptions under Article 6(2). Furthermore, it provides for the strict separation between conditions under general law which are applicable to ISPs, and conditions under the general authorisation. In particular, it points out that the general authorisation should contain only conditions which are specific to the electronic communications sector (limited to those set out in Annex A of the Authorisation Directive). The aim of this provision is to increase transparency and promote a lighter regime by not duplicating conditions which are already applicable by virtue of other existing national laws68. The conditions imposed on the operator of a public communications network, can only be imposed by Member States if they meet one of the conditions found in Annex A of the Directive. Annex A suggests there are two conditions that would allow Ofcom to impose an obligation on ISP s to pay for the operation of the scheme to catch Copyright infringers First, Article 12(1)(a) allows for administrative charges limited to the minimum necessary, covering only the actual administrative costs for these activities. Furthermore, it provides that administrative charges should be imposed upon the undertakings in an objective, transparent and proportionate manner which minimises additional administrative costs and attendant charges.69And secondly, Annex A(9) makes reference to illegal content as it relates to Directive 2000/31/EC. The E-Commerce Directive defines illegal content , as it relates to infringing material, but again limits ISPs liability on the basis that they are mere conduits . Therefore, applying restrictions on the transmission of illegal content is significantly different in the context of Articles 13-15 of the Authorisation Directive from obliging ISPs to pay 25% of the costs to rights-owners of enforcing their rights. The European Commission has agreed partly with this analysis stating it did not have access to
Hughes, Justin, Mady, Fran and Bourrouilhou, Julien, English Translation of Sabam v. S.A. Tiscali (Scarlet), District Court of Brussels, 29 June 2007 (2007). [Online] Available at SSRN http //ssrn.com/abstract=1027954 [Accessed 15/03/2011] 66 Directive 2002/20/EC 67 Article 12 68 Op. Cit 59 at (18) 69 Article 12 Para 1(b)
65

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sufficient elements to conclude that the costs ISPs were meant to pay satisfied the definition of administrative costs under Article 1270. Furthermore, the Commission asked for clarification under Article 12 as the qualifying ISPs do not appear to benefit in any way from the planned online copyright measures. 2.3 The
71

The Internet Freedom

by May, 2011. It is designed to guarantee end-users access to or use of service with reference to the European Convention for the Protection of Human Rights. The provision seeks to clarify whether internet access falls to be considered under the law about fundamental rights and freedoms and if so, what protections are accorded to it.
73

across the globe and a strong signal that the EU takes fundamental rights seriously, in particular when it comes to the Information Society 74. Both the right to impart information and to receive it are protected and may only be restricted to achieve certain aims, and then only as far as is necessary and proportionate to the aim. It is submitted that the Internet Freedom establishes that continued access to the internet is effectively to be treated as a fundamental right under European law it doesn t mandate that
Comment [WU10]: Mooting agogo!! Love it!! Sorry that has nothing to do with your dissertation really

States provide universal internet access. Access may only be withdrawn under specific circumstances the stringent test found in the Authorisation Directive. When Member States do take measures, they must be subject to adequate procedural safeguards and effective judicial protection and due process . 75 However, these measure may only be taken with due respect to the principle of presumption of innocence and the right to privacy76. A prior fair and impartial procedure must be guaranteed, including the right to be heard of the person or persons concerned77. Furthermore, the provision guarantees the right to an effective and timely judicial review . The DEA on its own would not satisfy these conditions. However, Amendment 112 of the Universal Access Directive 78 specifies that regulators shall promote "co-operation" between right-owners and Internet Service Providers. This "co-

Document in Authors Possession at Para 6 Ibid 72 Article 1(3)a of the Framework Directive 73 Dods, Brisby, Hubbard, Ollerenshaw, Ingram Reform of European electronic communications law: a special briefing on the radical changes of 2009 , C.T.L.R. 102 74 [Online] Commission proposes a single European Telecoms Market for 500 million consumers Available at http //tinyurl.com/dmattm[Accessed 21/03/2011] 75 European Telecoms Reform, Annex 1, [Online] , Available at http //europa.eu/rapid/pressReleasesAction.do?reference=MEMO/09/491, [Accessed 07/03/2010] 76 Article 8 77 Article 6 78 Article 33 (2a)
70 71

a a`

ter et Freedom
72

provision must be transposed into Member States legislation

Comment [WU9]: No need

It was hailed as unprecedented

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operation" amendment to the UAD is arguably the legal basis for the DEA s graduated response mechanism. France has implemented similar legislation to the DEA. . The French HADOPI 79 law 80 in part, implements the Olivennes Report81 which recommends severe civil penalties for certain amounts of copyright infringement. French MEP Ruth Hieronymi, supporter of adapting the French Olivennes model (HADOPI) into European law, admitted that the adding of the graduated response and copyright enforcement measures into the Harbour report was deliberate 82 and provides that the legal framework is there, to fashion a model like Olivennes that is compatible with European law.83 If the question is raised, it is submitted that the High Court will find the DEA does not offend against the principles of the Internet Freedom and accordingly may pass its obligations. 2.4 Ofcom s OC Under s124D of the CA 2003, as inserted by the DEA, Ofcom has a duty to make a code for the purpose of regulating the initial obligations of ISPs to send notifications and provide copyright infringement lists to copyright owners on request. Although at the time of writing, Ofcom has not released its final Code , it has released draft initial obligations it refers to as the Code . Ofcom emphasizes that it is limited by the DEA, but where discretion is allowed, The interests of citizens and consumers are central to Ofcom s approach. 84 Under the current regime, the DEA dictates rights-owners requirements as to the

means of obtaining evidence of infringement of copyright for inclusion in a report , and the standard of evidence that must be included rules
85

an audit trail, a validated evidence base, not incomplete information. No system is

infallible, but we are talking about serious evidence that can be technically validated and proved and that has to be chronologically correct. 86 Lord Young raised this point as an issue of fairness; when evidence of infringement is passed to the ISP, the evidential and persuasive burden is placed onto the subscriber . It was envisaged that the evidence of infringement was to be technically robust ; however, the Code obliges that a right-owners only self-certify that in the reasonable opinion of the qualifying copyright owner, the process and systems described (in
Haute Autorit pour la Diffusion des uvres et la Protection des Droits sur Internet. at http //www.senat.fr/dossier-legislatif/pjl07-405.html [Accessed 12/03/2011] 81[Online]Available at http //www.armt.fr/spip.php?article70 [Accessed 12/03/2011] 82Ruth Hieronymi Speech delivered 15-10-2008 [Online] http //www.netzpolitik.org/2008/internetsperrungen-telekom-paket-und-das-urheberrecht/#more6653 [Accessed 07/03/2011] 83 Ibid. 84 DIOC Para 1.3 85 S7/124E(2) 86 Citation HL Deb, 20 January 2010, c1026
79 80[Online]Available

. The Government intended a stringent set of

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the quality assurance report) are effective in gathering robust and accurate evidence 87. ISPs don t need to process a CIR if the Subscriber using the IP address at the time of the alleged infringement cannot be reliably identified
88

, without defining this term. Ofcom has not

promulgated any standards of proof for rights-owners regarding the nature or context of the infringement and under the current regime there is no evidence required that the rights-owner actually owns the copyright. The DEA s requirement that Ofcom develop standards of evidence for both ISPs and rights-owners89 is arguably illegal. Without any guidance regarding the evidential requirements90, rights-owners have used tactics that circumvent due process. ACS Law sent thousands of letters on behalf of MEDIA CAT91 to subscribers claiming that they have infringed copyright by downloading adult films, with demands to settle out of court for 495 per infringement., ACS LAW was accused by Birss J of using speculative billing in effect taking advantage of the embarrassing nature of the accusation in an attempt to escape judicial scrutiny.92 For subscribers that wish to challenge the accusation of infringement, Ofcom has amended its appeal process. Lord Mandelson promised the HoL that there would be a clear and independent route of appeal, including a first-tier tribunal.
93

If the infringement was not done

by the subscriber, and he took reasonable steps to prevent it, the ISP must remove him from any notifications or CIL s.94 In response to Article 3a of the Telecoms Package, Ofcom added a
95

provision that subscribers may advance any other ground they consider appropriate

. The

subscriber may appeal against any addition to a CIL and any measures imposed by the Secretary of State96 most likely by appealing to the Copyright Tribunal defined by Chapter VIII CPDA. However, in neither of these cases is there a direct right to appeal to a Court. The Secretary of State has had his discretionary powers tempered, as both Houses of Parliament must approve any imposition of technical measures97.

87

88

3.5.5 DIOC S4.3 DIOC 89 S124E(2)(b) 90 3.5.2 DIOC 91 [2010] EWPCC 017 92 Ibid at 47 93 HL Deb, 2 December 2009, c743 94 7.12.3 DIOC 95 7.24.2 DIOC 96 S124 /S8.12 DIOC 97 S17(11)(b)

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2.5 Gr du ted Respo se Following the lead of the orean/American ORUS Free trade Agreement98 and France s HADOPI, the Government have adopted what is commonly referred to as a graduated response , an enforcement regime which allows for the imposition of tougher measures if earlier warnings are ignored. Graduated response is often confused or referred to as three strikes , although Parliament never intended to have a three strikes regime. The DEA requires that Ofcom's code sets a threshold of notifications attributed to a single subscriber in relation to a specific copyright owner.99 The Code does not require a notification for each CIR so many CIR's may only result in one notification. Its only relevance is that after hitting the threshold, the 'relevant' subscriber 100 details may be added to a CIL. For any single notification, there may have been a much larger number of individual CIRs. This is problematic. The Code sets a threshold for determining relevant subscribers in relation to notifications sent by ISPs and not CIRs received by ISPs, without ever defining the meaning of relevant subscribers . Secondly the Code doesn t contain requirements as to the means by which the ISP identify the subscriber
101

instead only requires that the qualifying ISP complies with the process outlined in their own quality assurance report. The Code instead suggests a scheme by which, after three notifications from the ISP, they are placed on a list of CIL . Three notifications is arguably not a threshold and this method continues the practice of relying on IP addresses to track infringers. In practice, a hotel that offers an internet connection may be one subscriber , but over time, its customers may generate thousands of CIRs by downloading infringing material, subsequently ending up on a CIL, without the named subscriber actually downloading infringing material. Therefore, the U has adopted a loose implementation of the graduated response,

despite other options available to the Government. Other jurisdictions have refused102, or scrapped103 plans to implement 3 strikes , usually on the basis of public opposition. This may be why Lord Mandelson pushed the Bill through during the wash-up period and furthermore, why Ofcom has not released its final code.
Comment [WU11]: I know everyone hates Mandelson (although I have a certain respect for him) but it just sounds maybe slightly likely a cynical, personal attack against him

Article 18.10 orus FTA S7/124E(1)(c) 100 Para 6.4 DIOC 101 Para 4 DIOC 102 Three-Strikes' Off Anti-Piracy Agenda In Spain , June 22, 2009 [Online] Available at http //tinyurl.com/n7ak6o [Accessed 28/02/2011] 103 New Zealand Copyright Act 1994, ss92A and B as amended in 2009 [Online] Available at http //www.nbr.co.nz/article/entire-copyright-act-be-scrapped-101820 [Accessed 15/01/2011]
98 99

c c

, but

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CHA T R 3

Ch

"A decade's worth of music file sharing and swiping has made clear the people it hurts are the creators...to the benefit of rich service providers, whose swollen profits perfectly mirror the lost receipts of the music business." Bono, U2104 3.0 troductio

There is a common misperception that any music and video found online that doesn t come from an authorized vendor must be illegal. As more creative content is accessible online, clarity of copyright protection may be clouded by confusion over when and how copyright applies. The current method used by investigators searching for infringement does not prove any infringement, as it makes an allegation against the account holder of the IP address. Nor does the regime take into consideration the relationship between the account holder and the owner of the copyrighted material. Copyright is a property right and the owner of the property is the copyright owner, no-one else105. A licensee has the statutory right to initiate proceedings for infringement, but do not have any property rights. Unlike real property rights, copying another intellectual creation does not end the right to make use of the original. As it is no

longer a radical notion that artists upload their material for free online in order to boost their profile, the DEA doesn t recognize how prevalent the practice of offering creative content for free has become as part of new business models. The business model of LiveNation Entertainment Plc, one of the largest entertainment companies in the world, has led their CEO, Michael Rapino, to claim emphatically, I am the worst enemy of the labels. 3.1 LiveN tio tert i me t
106

LiveNation s vertically integrated business model stands in significant contrast to the record labels traditional model. The old model operates as follows artists sign to record labels > record an album -> promote with a video ->tour ->release an album after 6-9 months. LiveNation operates a business model that invests in concert facilities first and artist promotion second. Their proprietary avid fan database contains the personal data of 25M customers that LiveNation uses to cross promote merchandising, ticketing, and live recordings by using online

104[Online] Available at http //www.gq-magazine.co.uk/entertainment/articles/2010-08/13/gq-musicpaul-mcguinness-on-music-piracy/file-sharing-on-spotify-and-piracy [Accessed 09/08/2010] 105 S1 (1) CPDA 1988 106 [Online] Available at http //www.independent.co.uk/news/business/analysis-and-features/the-riseof-concert-promoter-live-nation-804620.html [Accessed 10/11/2010]

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fan clubs107. These fan clubs are part of a digital brand that LiveNation manages on behalf of the artists. On occasion fans pay for the privilege or simply hand over personal details to access special edition and unreleased music or watch streaming videos for free; thus, helping to build up potential audiences for LiveNation concerts. The results have been impressive. In 2009 over 64M people attended over 22,000 LiveNation108 concerts and events held in one of LiveNation s 155 venues in 19 Global Markets upon entry with a ticket provided by Ticketmaster, which is owned by LiveNation109. LiveNation s Avid Fan program is based on release of music in advance for free and through outlets of streaming video in order to promote the digital brand of over 1500 artists under management. This model has resulted in LiveNation signing several high profile acts including signing a ten year deal in excess of $100M to handle the merchandising, digital and branding rights with none other than - U2. The LiveNation story is an example of how traditional business models have been marginalized in the new Digital Britain. Adding to the problem of illegal file-sharing are new business models that promote platforms with free content distribution and these platforms

result in copyrighted music being released on various P2P file-sharing platforms. The DEA does not recognize that a collection society is not a copyright holder, but rather the exclusive licensee able to collect on behalf of the artist. Even then, the fact remains that the most, prima facie, reliable indication of what constitutes copyright infringement is the allegation of the copyright owner himself - not a collection society, whether or not the new creative product is infringing on an objective basis. This is particularly so when the copyrighted material in question has been posted with permission. A collection society could likely pursue artists under breach of contract for the value of the loss under a contract likely established through arm s length bargaining. Considering that civil actions are available to collection societies and the existing balance of protection under the domestic legislation found in s97 CPDA, one must ask why Government has chosen this method of enforcing copyright. Is the U under any

international pressure to implement graduated response or is this the result of internal pressures by collection societies? 3.2 ter tio Ob ig tio s

The Anti-Counterfeiting Trade Agreement (ACTA) is a proposed plurilateral agreement for the purpose of establishing international standards for IP rights enforcement.110 The EU joined on a voluntary basis supporting ACTA by claiming it was "a key instrument for their

in the Authors Possession Ibid 109 Ibid 110 "Fact Sheet: Anti-Counterfeiting Trade Agreement", European Commission. [Online] Available at http //trade.ec.europa.eu/doclib/docs/2008/october/tradoc_140836.11.08.pdf Accessed 15/03/2011
107Documents 108

u v w

wvu vu ut

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development and innovation policies"111. The Agreement, designed as a free-standing freetrade-agreement purposely to avoid oversight of national legislatures112, contains obligations to impose adequate and effective legal remedies for rights-owners.113 After a draft text of the Treaty was leaked, the EU released a statement supporting the negotiations but only so far as they were "accomplished in a manner that does not impede innovation or competition, undermine IPR limitations and personal data protection, restrict the free flow of information or unduly burden legitimate trade
114

Without any explicit reference of graduated response, there is arguably an implicit reference. The Agreement calls for enforcement measures that contain, expeditious remedies to prevent infringement and remedies which constitute a deterrent to further infringement.
115

This may be a positive inference to a graduated response regime. Subtle phrasing including unlawful use of means of widespread distribution for infringing purposes , may be seen as a way to impose measures that attacks P2P platforms.116 Another principle of graduated response may be found in point 4 which mandates online service providers to disclose expeditiously to right-holder information sufficient to identify a subscriber". Furthermore, ACTA as drafted appears not to respect the fact that per, the Internet Freedom , access to the Internet has become a fundamental right under EU law; it downgrades this to a fundamental principle', without clarifying how these rights shall be preserved under the various protections given to EU citizens under various privacy directives. However, expeditious remedies to prevent infringement" doesn t necessarily mean graduated response . A graduated response regime is not necessarily expeditious . In fact, it may take years before someone makes it onto a CIL. Interim injunctions under s97A seem to satisfy this requirement under ACTA. It they aren't enough, some kind of remedy akin to an injunction may satisfy these requirements. Graduated response may satisfy the "deterrent" aspect, but it is not the only option available to satisfy this provision. For example, final orders and having "additional damages" available are financial sanctions intended to have a deterrent effect. Graduated response is just one of many options available to signatories ACTA s section 2.18.
Comment [WU12]: Comma splice again

"The Anti-Counterfeiting Trade Agreement Summary of Key Elements under Discussion" [Online] Transparency paper [Online] Available at https //www.ige.ch/fileadmin/user_upload/Juristische_Infos/e/transparency_paper.pdf [Accessed 15/02/2011] 112 [Online] Available at http://wikileaks.ch/cable/2006/06/06TOKYO3567.html [Accessed 21/03/2011] 113 Section 1, ACTA Final 114 Anti-Counterfeiting Trade Agreement (ACTA) P7_TA-PROV(2010)0058 European Parliament resolution of 10 March 2010 on the transparency and state of play of the ACTA negotiations 115 S5, Article 2.18 (1) 116 Ibid at (2)
111

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The Agreement maintains that this satisfies the balance between the interests of ISP s and rights-owners and therefore, is a safe-harbour for liability of ISPs. The mandate to disclose information regarding infringement has been balanced by the Agreement s obligation that its signatories adopt or maintain, A regime providing for limitations on the liability of, or on the remedies available against, online service providers while preserving the legitimate interests of right holders.
117

The ACTA Agreement is the latest in a long line of agreements and treaties that

seek to protect, monetize, and enforce IP rights on behalf of their owners. By taking this approach, in the digital era, it is surprising that collecting societies have not sought to look for other routes of protection. By embracing the digital-era and adjusting copyright norms, there may have been less questions of how to enforce copyright. 3.3 Leg force bi ity

The Digital Economy Act reacts to the demands of analogue industries and was not drafted to be proportional to the actual losses of the creative industry, but is illogically responsive to the perceived losses of the industry. By looking to other jurisdictions and reviewing empirical evidence about how subscribers have responded to notice-and-notice and notice-and-takedown approaches, the Government could have followed the US s DMCA model and imposed on ISPs a mandate to self-regulate, while protecting ISP liability under the E-commerce Directive. Rights-owners, who estimate their own losses at 400M118, are obliged to pay for 75% (estimated at initially costing 20 to 65 million with average annual costs of 7.5 to 24.5 million119) will recoup part of these losses by taking mass civil action against infringers. The empirical evidence presented, with regards to the dangers of evidence relating to IP addresses, shows that allegations of infringement will most likely be made against innocent people. Although the appeals process from Ofcom will satisfy the adequate procedural

safeguards and effective judicial protection and due process requirements, it does not address the harm and effects on individuals who have wrongly been accused of infringement. The final Ofcom regulations should be drafted to toughen the standards of evidence and make clear the burden of proof required is stringent. If the final Ofcom Code satisfies these

requirements, then the graduated enforcement regime appears to be acceptable in the EU s legal framework.

118

Article 2.18 (footnote 13) BT and TalkTalk challenge Digital Economy Act [Online] Available at http //www.bbc.co.uk/news/10542400 Accessed on 04/03/2011 119 Op. Cit 19 at Para 45
117

y x

yx

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3.4 r ctic

e force b e

Questions remain as to whether the DEA will succeed at stopping illegal file-sharing. The number of internet users and the increased availability of digital music are growing exponentially. According to statistics taken from the Official Chart Company in 2004, 5.8M songs were legally downloaded in the U . This number grew to 149.7M songs in 2009 representing 98% of total singles sold. By September 2010, 500M digital singles and 50M digital albums were sold in the U . The BPI adds that in 2009, the retail value of the U digital music market reached 280.5M accounting for more than 20 per cent of the 1.4billion U recorded music market. For the year ending September 2010 digital revenue rose even further accounting for 24.5% of all industry revenue120. Protecting the industry and furthering its monetization are noble aims of the DBIS. However, the French Olivennes Report and Digital Britain makes the presumption that every single illegal download is a direct loss of income for the copyright-owner by assuming that the person downloading the file would pay for the privilege. This presumption is questionable, and indeed has been refuted by a variety of empirical research.121
122 123 124

Act is meant to target the serious infringer , but Ofcom s draft Code applies only to ISPs with over 400,000 subscribers (although subject to change at Ofcom s discretion), possibly manifesting for serious infringers to go dark by transferring to smaller ISPs. Secondly, although the value of digital content is growing exponentially, serious infringers are already circumventing infringement investigators by encrypting and editing files to fool software like Audible Magic which uses content identification technology to protect copyrights. Another foreseeable outcome for circumvention of the Act may occur if ISPs begin to apply the Salomon principle to restructure their business so that subsidiaries get the serious infringers transferred to subsidiary ISPs with less than 400,000 subscribers. Infringement would continue, and ISPs continue to receive subscription fees from the infringer. Under the code, the rights-owners have to pay for 75% of enforcement process, so it would be in ISPs best

120 Digital Music Nation 2010: The UK s legal and illegal digital music landscape , BPI [Online] Available at http //www.bpi.co.uk/assets/files/Digital%20Music%20Nation%202010.pdf [Accessed 21/03/2011] 121 Oberholzer, F. & Strumpf, ., The Effect of File Sharing on Record Sales An Empirical Analysis [Online] Accessed 01/03/2010, [Available at http //www.unc.edu/~cigar/papers/FileSharing_March2004.pdf] 122 The Impact of Music Downloads and P2P File -Sharing: Summary of findings [Online] Accessed 01/02/2011 Available at http //www.ic.gc.ca/eic/site/ippd-dppi.nsf/eng/ip01461.html 123 Annelies Huygen, et al., Ups And Downs The Economic And Cultural Effects Of File Sharing On Music, Film And Games [Online] Available at http //www.tno.nl/content.cfm?context=thema&content=inno_publicatie&laag1=897&laag2=918&item_i d=473 Accessed 15/01/2011, 124 OECD Report on Digital Music: Opportunities and Challenges (STI Digital Economy Paper 100)[Online] Available at http //www.oecd.org/document/46/0,3343,en_2649_34223_34994926_1_1_1_1,00.html Accessed 23/02/2011

The

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interest to transfer subscribers to small subsidiaries, and let rights-owners absorb all the costs. Secondly, as subscribers don t pay for appeals under the Code , there is an orchestrated denial of service attack by infringers all appealing to Ofcom at once. The Code currently is exploitable in its current form and won t successfully stop illegal file-sharing. Furthermore, the Act doesn t address why people file-share infringing material. The answer isn t just economics. Rights-owners can t adequately tackle file-sharing until they recognize immediacy and accessibility are two viable reasons that people commit copyright infringement. Software giants have developed systems that sell software via the internet download on demand. E-Books have been made available on various retailers. Amazon.com sells on demand via their
125

indle platform with sales of e-books on now surpassing dead-tree

books . Film studios have begun to address this by adopting their business models to shorten time gaps between cinema release and DVD availability. Why have they not gone further and made the film available for stream at the same time as the picture is released in the cinema? The teenager that can t access the cinema can access the download via P2P systems on demand. The economics aside, the lack of portable content on demand is contributory to the problem of filesharing. Although platforms like Spotify and YouTube all offer content on demand, the media isn t portable. Although WIPO has suggested limiting the access to creative content by creating a Global File Registry, this is not the solution 126. Recently, new research has shown that tough regulation on digital media restricts young peoples ability to transform copyrighted material for their own personal and, more importantly, educational uses127.

125 [Online]Available at http //www.wired.com/gadgetlab/2009/12/amazon-kindle-books-outsold-realbooks-this-christmas/ [Accessed 25/02/2011] 126[Online] Available at http //www.wipo.int/about-wipo/en/dgo/speeches/dg_blueskyconf_11.html [Accessed 15/03/2011 127[Online] Available at http //www2.le.ac.uk/ebulletin/news/press-releases/20102019/2010/06/nparticle.2010-06-23.5326013417

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Ch pter 4 Co c usio

Copyright law, in its entirety, does not enjoy popular support as its boundaries are routinely broken. Advances in digital tools such as cut-and-paste , streaming , and remixing have stretched those boundaries even further. The ease of copying and re -distribution of digital information has brought the digital era into significant conflict with the analogue world of labels and studios. The battle lines have been set with one side claiming, copyright is at war with technology"128 and the other claiming that copyright-owners are instituting a prohibition that is profoundly corrupting .129 Under European jurisprudence, a regulation will be disproportionate when it is manifestly inappropriate in terms of the objective which the competent institution is seeking to pursue .130 However, the ECJ rarely looks at the effectiveness of a regulatory measure, concentrating on the facts and circumstances of each case. When the ECJ is obliged to assess the future effects of rules to be adopted and those effects cannot be accurately foreseen, its assessment is open to criticism only if it appears manifestly incorrect in the light of the information available to it at the time of the adoption of the rules in question.
131

worked to ensure common principles apply to all communications infrastructure and associated services, irrespective of the types of services carried over them. In other words, networks should be governed by a single set of technologically neutral rules.132 This objective of a horizontal approach to networks has been achieved by introducing several Directives, in particular, the Authorisation Directive which applies to all electronic communications networks and services 133. This has strengthened the internal market by stimulating competition resulting in further investment and commercial initiative in the telecoms and multimedia sectors.
134

If the ISPs appeal to the ECJ, it may look more kindly on

their submission than the national courts on the basis that the measures possibly contravene the European aim of harmonization through a regulatory framework for electronic communication providers.

128 Maja Bogataj Jancic, Possible Solutions For Remunerating Content Creators In The Digital Era [Online] Available at http //www.edri.org/edrigram/number8.12/financing-culture-digital-era [Accessed 15/03/2010] 129 Lawrence Lessig, Prosecuting Online File Sharing Turns a Generation Criminal [Online] Available at http //www.usnews.com/opinion/articles/2008/12/22/prosecuting-online-file-sharing-turns-ageneration-criminal [Accessed 15/03/2011] 130 Case C-189/01, Jippes (2001) ECR I-5689, Para 82 131 Case C-504/04, Agrarproduktion Staebelow GmbH (2006) ECR I -679, Para 38 132 DG Information Society A common regulatory framework for electronic communications networks and services , April 27, 2000, Ch.I, at p.5. 133 Authorisation Directive, Art.1, Para 2 134 Nikolinakos & Nikiforaki The new EU Authorisation Directive for electronic communications networks and services C.T.L.R. 152 (2003)

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The EU has

However, the same harmonization cannot be said for copyright norms. The nature of the challenges presented by cross-border provision of creative content via the internet means that responses to most of these challenges will have to be joint European ones, instead of bein g the result of separate or even contradictory national initiatives.
135

The EU has attempted to

harmonize the law of copyright without managing to produce a balanced, transparent, and consistent legal framework in which the knowledge economy can prosper. This harmonisation agenda has largely failed to live up to its promise of creating uniform norms of copyright across the European Union.
136

Absent any re-examination of norms in the digital era, has resulted in

shifting the burdens on proof onto the alleged infringer, as a torrent cannot currently contextualize the nature of the use of the material. As more artists may (and do) release works for free using P2P networks, using technology to determine the context of the material being made available for download cannot take into account if there has actually been any infringement or if the infringement is subject to any fair-dealing defence. The U s law is sufficient at dealing with infringement, and the DEA appears to be unnecessary legislation. While CIL s may make rights-owners investigations into infringement more efficient, the DEA actually doesn t do anything more than impose costs of Ofcom s monitoring onto ISPs. Whilst it is true that file-sharing is affecting the entertainment industry, the level of harm is disputable. Empirical evidence shows that illegal downloading may stimulate the sales of future work. ISPs face disproportionately higher costs in complying with the initial obligations, as more extensive use of dynamic IP addresses shared between subscribers increases the cost of identifying the alleged infringer137. Furthermore, it may have a negative impact on society by altering the way we collectively use wireless. Although one, who does not authorize infringement through their Wi Fi, can appeal against any measures, the DEA mandates ISPs send guidance on how to secure our networks. An unintended effect may be that those less fortunate who piggyback on another s unsecured network may be disengaged from the medium and important resources. While this may close a loophole that serious infringers take advantage of, copyright protection should not harm society by going to war with technology. As WIPO s Director General stated,

135 Studying Online Copyright Enforcement , [Online] Available at http //ec.europa.eu/internal_market/iprenforcement/docs/study-online-enforcement_042010_en.pdf Accessed 15/02/2011 136 M. Van Eechound, P.B. Hugenholtz, Lucie M.C.R, Harmonizing European Copyright Law: The Challenges of Better Law-making Comms. L. 2011, 16(1), 43-44 137 Nick Eziefula, Getting in on the Act - Ofcom publishes draft code on Digital Economy Act , Ent. L.R. 2010, 21(7), 253-256

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The purpose of copyright is not to influence technological possibilities for creative expression or the business models built on those technological possibilities.
138

It is difficult to accept the DEA s approach as proportionate when obligating ISPs to pay for someone else s losses. Rights-owners already have a variety of processes for enforcing their rights against ISPs which host infringing material. S97(a) of CPDA, provides that the High Court has power to grant an injunction or interdict against a service provider with actual knowledge of another person using their service to infringe copyright. This provision was added a direct response to rights-owners who raised concerns that Article 8.3 of the Copyright Directive did not specifically allow for rights-owners to apply for injunctions. If evidence of infringing material is presented to ISPs, immunity is no longer an option and injunctions may be imposed on them under S97A. It is also a criminal offence to communicate a work to the public in the course of a business. P2P providers or ISPs will infringe if they can be found to authorise their users downloads under the doctrine in CBS Songs v Amstrad,139 or if seen to be reproducing or communicating the works themselves. S28A CPDA may allow for temporary copies made during transmission in a network, or for lawful uses of a work, but only provided that they have no independent economic signi cance , but one making a copy of a webpage will not have a defence under S28A simply because of browsing. One must show that it was lawful for him to have made the copy
140

Therefore, rights-owners already have a plethora of remedies that they can rely on under U and EU law to at least, tackle serious infringement. The DEA ss3-17 are actually a statutory imposed partial bailout of an industry rather than the necessary forward-thinking legislation that encourages access in a technology-neutral manner to creative products that benefits creative growth while addressing how digital content producers might be compensated for their efforts. The creative industries should work toward business models that encourage cross-platform licensing agreements, while ensuring Internet access for everyone, rather than pushing for legislation that could impose access restrictions on innocent people. To ensure this balance in the digital era, copyright law should be overhauled to broaden the principles of fairdealing and restrict the 'reduce' the present period of statutory copyright protections. Because any single infringement is nothing more than only one lost sale of one copy of a work, ISPs are now mandated to pay a disproportionate cost of rights-owners losses.
Comment [WU13]: Is there meant to be two the

138[Online] Available at http //www.wipo.int/about-wipo/en/dgo/speeches/dg_blueskyconf_11.html Accessed 21/03/2011 139[1988] A.C. 1013 140 Newspaper Licensing Agency Ltd v Meltwater Holding BV [2010] EWHC 3099 (Ch)

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