House of Commons passes copyright provisions of Digital Economy Bill with amendments

Practical Law UK Legal Update 5-501-9365 (Approx. 7 pages)

House of Commons passes copyright provisions of Digital Economy Bill with amendments

by PLC IPIT & Communications

Background

Digital Britain Report

In June 2009, the Department for Business Innovation & Skills (BIS) and the Department for Culture, Media and Sport (DCMS) published the Digital Britain final report on the future of the digital and communication industries. Among other measures, the report recommended various ways of reducing online copyright infringement (see Legal update, Government publishes Digital Britain report: content issues). It also proposed licensing the use of orphan copyright works (that is, works whose copyright owners cannot be identified), increasing the maximum fine for copyright infringement offences, and extending public lending rights to non-traditional book formats such as e-books.

Digital Economy Bill

In the autumn of 2009, the government introduced the Digital Economy Bill, which had its first reading in the House of Lords on 19 November 2009, its second reading on 2 December 2009 and its third reading on 15 March 2010 (see Legal update, Digital Economy Bill passes third reading in House of Lords). The Bill implements many aspects of the Digital Britain report and covers a wide range of areas including online infringement of copyright, public-service broadcasting and content, network infrastructure and digital safety (see Legal update, Government publishes Digital Economy Bill). This legal update deals with the copyright-related aspects of the Bill. For an update on other aspects of the Bill, see Legal update, Government drops provision for wider Ofcom powers and replacement regional TV news providers from Digital Economy Bill.

This update refers to the clause numbering used in the most recently published complete version of the Bill, dated 17 March 2010.

Copyright infringement: proposed notification system

On the day the Digital Britain report was published, the government also issued a consultation paper on proposed legislation to address illicit peer-to-peer file-sharing, including proposals that would allow for technical measures (such as site-blocking, bandwidth-capping, bandwidth-shaping, and content identification and filtering) to be taken against those deemed to have allowed multiple copyright infringement after warnings from their ISPs (who would be required to maintain "copyright infringement reports" on users on a no-names basis). The government took the unusual step part-way through the consultation period of revising these initial proposals to speed up the process by which rights-holders could seek redress by shifting power from Ofcom to the government, and to add suspension of internet accounts to the list of measures available to rights-holders (see Legal update, Government consults on revised proposals for legislation on illicit file-sharing).

The Bill requires the regulator Ofcom to impose two obligations on internet service providers (ISPs) aimed at preventing the online infringement of copyright:

To notify subscribers of reports they have received from copyright owners that they appear to have infringed their copyright. The Bill lists the information that would have to be included in such reports, such as evidence and a description of the apparent infringement and information about copyright law.
To maintain anonymised data of the number of times an individual subscriber has been the subject of such allegations.
To maintain lists of those most frequently identified in such allegations.
To provide copyright owners with such lists on request.

These obligations would be underpinned by a code drawn up by stakeholders and approved (or imposed in the absence of a suitable agreement) by Ofcom. For more details on how the notification system will operate, see Legal update, Government publishes Digital Economy Bill: Facts: Online infringement of copyright.

Clause 11 of the Bill gives the Secretary of State the power to make an order requiring ISPs to take technical measures against those subscribers against whom more than a prescribed threshold number of copyright infringement reports has been made. Before doing so, the Minister would have to take into account a formal Ofcom assessment of the need for such measures (clause 10) and Ofcom reports on infringing activity (clause 9).

On 30 March 2010 the government published for consultation purposes a set of proposals for the sharing of costs that would arise under the new legislation, proposing that notification costs should be shared between copyright owners and ISPs in the ratio 75:25. The issue of who will bear the costs of the notification system is an important one because of because of the potential "chilling" effect on freedom of expression if ISPs are automatically expected to bear the costs of the new system. For more information, see Legal update, Government consults on costs-sharing under Digital Economy Bill online copyright infringement notification obligations.

Copyright infringement: proposals for blocking of websites

The suspension of access to particular pages or sites on the internet is another measure that has proved highly controversial and has been the subject of a great deal of negotiation and amendment as it has made its way through the parliamentary process.

As originally drafted, the Bill gave the Secretary of State the power to amend the Copyright, Designs and Patents Act 1988 (CDPA) for the purpose of preventing or reducing online copyright infringement, if it was appropriate to do so because of technological developments that had occurred or were likely to occur. The House of Lords rejected the clause because of concerns that it placed too much power in the hands of the government of the day, enabling it to make sweeping changes to copyright law without proper parliamentary scrutiny (see Legal update, Internet companies oppose copyright powers under Digital Economy Bill). The Lords tabled an amendment to introduce a new provision which set out the circumstances in which specific internet locations could be blocked by court order; however, this amendment was withdrawn when the government promised to redraft the clause in question.

Facts

The Bill received its final reading in the House of Commons on 8 April 2010 as part of the "wash-up" process (the period of a few days during which the government seeks agreement to bills going through the House of Commons before Parliament is dissolved).

The Bill is expected to be approved by the House of Lords without further amendment, and subsequently to receive Royal Assent.

The main copyright-related changes that have been made to the Bill since it was first introduced to the House of Lords are as follows.

Notification system and technical sanctions against infringers

Clauses 4 to 17 were voted through by the House of Commons.

Amendments made to the Bill by the Lords have provided for an appeals procedure for subscribers (clause 14), to be included in the new regulatory code. The procedure will operate as follows:

Appeals will be to an independent body set up for the purpose of hearing them, and further appeals may be made to a tribunal in relation to account suspension.
Subscribers will be able to appeal on grounds that the apparent infringement alleged by the copyright owner is not in fact an infringement, and/or that the infringement report does not relate to the subscriber's internet protocol (IP) address at the relevant time, and/or that the copyright owner or the ISP failed to comply with the regulatory code.
The burden of proof in relation to infringement and accuracy of IP address will fall on the copyright owner and ISP.
The subscriber will succeed in the appeal if he can show that he did not commit the allegedly infringing act, and took reasonable steps to prevent others from infringing via his internet connection. (The latter provision may prove of particular help to public wi-fi providers.)

The Bill has also been amended to ensure that any order made pursuant to clause 11 (requiring ISPs to impose technical sanctions on those suspected of persistent infringement) must be subjected to a so-called "super-affirmative" procedure requiring a 60-day consultation period and approval by both Houses of Parliament. The details of this procedure are set out in a separate new clause.

Blocking injunctions

The government published its proposed redraft of the provision on website-blocking injunctions on 29 March 2010, when it tabled an amendment to introduce a new clause 18. The new clause provides that the Secretary of State may by regulations make provision about the granting by a court of a blocking injunction in respect of a location on the internet which the court is satisfied has been, is being or is likely to be used for, or in connection with, an activity that infringes copyright. However, he or she can only do so if satisfied that:

The use of the internet for activities that infringe copyright is having a serious adverse effect on businesses or consumers; and
Making the regulations is a proportionate way to address that effect.

The clause also contains the following safeguards to answer some of the concerns that were expressed about previous incarnations of the provision:

The regulations must provide that a court cannot order the blocking of a location unless it is satisfied that a substantial amount of material has been, is being or is likely to be obtained from (or made available at) the location in infringement of copyright, or has been, is being or is likely to be used to facilitate access so such infringing location.
The regulations must also ensure that prior notice of the injunction application is given to the ISP and the website operator.
The court must take into account certain matters when deciding whether to make an order. These include evidence of any steps taken by the ISP or the website owner to prevent infringement and of measures taken by the copyright owner or licensee to give people lawful access to the material.
The court must also consider whether the blocking of the location is likely to have a disproportionate effect on any person's legitimate interests. (This would make it less likely that very popular sites such as Youtube would be the subject of a blocking injunction.)
ISPs cannot be ordered to bear the costs of obtaining a blocking order.
The proposed regulations will be laid before Parliament in a 60-day period of consultation during which the draft will be considered in both houses of parliament under the so-called "super-affirmative procedure".

On 7 April 2010 the House of Commons voted through the clause, together with a further clause establishing a consultation procedure for any regulations that might be made under it. The text of both clauses can be seen here.

Copyright and performers' property rights: licensing and penalties

Clause 43 of the Bill, which provided for a new licensing system for orphan copyright works, has been dropped from the Bill, largely because there was insufficient time to debate it at the second reading.

Clause 44 amends section 107 and section 198 of the CDPA, which deal with infringing articles and illicit recordings, respectively, to increase the maximum fine that may be imposed for these offences from the statutory maximum (£5000 in England and Wales and £10,000 in Scotland) to £50,000.

Public lending right

As anticipated in the Digital Britain report, the Bill will update the Public Lending Right Act 1979 (1979 Act) to reflect the changing nature of book publishing and the increasing demand for the loan of books from public libraries in formats other than print. The main changes are as follows:

Clause 45 of the Bill amends the definition of "book" in the 1979 Act by extending the definition to audio and e-books, provided they consist mainly of written or spoken words or still pictures.
The clause also amends the definitions of "lending", "loan" and "borrowed" in the 1979 Act, with the aim of capturing almost all cases in which a public library makes a book available to a member of the public for use away from the library for a limited period of time.
Finally, the clause extends the definition of "author" in the 1979 Act to include producers and narrators of audio-books. The clause makes consequential amendments to the CDPA to reflect the extended definitions of "book", "author" and "lending" in the 1979 Act.

Comment

There has been strong condemnation from opposition parties and pressure groups of the way that the Digital Economy Bill is being passed into law, as part of the wash-up procedure rather than under normal parliamentary procedure. This has meant that there has been very limited debate of the Bill in the Commons (a fact which has been emphasised by the live coverage of Commons debates now available on television and the internet). However, the government has given assurances that the precise workings of the more controversial copyright aspects of the Act will be given further thought after the general election if Labour are re-elected, and the Conservatives have promised that if they win the election, they will change any aspects of the legislation that are flawed or turn out to have unintended consequences. In addition, the government has said that the planned regulations on website-blocking will be subject to the parliamentary "super-affirmative" procedure which requires that they be subject to a 60-day consultation period, to run simultaneously in both Houses of Parliament.

Clause 43 on the licensing of orphan copyright works had been the subject of much opposition, from photographers in particular, who argued that it would create a free-for-all in which anyone would be able to use works in ways that the owner would not necessarily agree to, claiming that they could not trace the copyright owner. There were also complaints about the fact that the proposed licence fee for such use would have gone to a regulatory body rather than the copyright owner. The dropping of this clause will therefore be welcome news for copyright owners, particularly photographers, whose photographs might well appear on the internet without copyright attribution.

From copyright owners' point of view, legislation to curb peer-to-peer file-sharing cannot come soon enough, and many commentators believe that it is strong lobbying by bodies such as the BPI that has led to the government's determination to push the Bill through despite the evident lack of parliamentary time. Court proceedings against individuals suspected of persistently infringing copyright are a disproportionately time-consuming and expensive way of tackling the problem of file-sharing, and letter campaigns such as the one conducted by Virgin Media and the BPI (see Legal update, Virgin Media and BPI send letters to customers about illegal downloads) are unpopular with ISPs because they risk alienating their customers and also because, if ISPs co-operate with rights-holders in suspending the internet connections of suspected file-sharers, they open themselves to claims for breach of contract. A better solution has, therefore, long been demanded by rights-holders. Hence the perceived need for a way of tackling specific webpages or sites, rather than users, by means of the new blocking injunctions.

In debate at the third reading of the Bill, the Liberal Democrats raised concerns that the clause penalises sites that facilitate access, or that are "used for or in connection with an activity that infringes copyright", saying that this was too wide-ranging and could even (at least in theory) put sites such as Google at risk. In addition, they criticised the fact that the injunctions could be used not only against sites that were currently infringing, but also against those that had done so in the past or that were likely to do so, especially since the injunctions appear to be indefinite in duration.

Another area of concern has been the prospect that cafés, libraries and other places that offer a free wi-fi connection may fall within the definition of "internet service provider" referred to in the Bill (that is, any person providing a service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services).The type of service offered and the contractual relationship with users of the service will determine whether or not the provider is classified as a subscriber or as an ISP; the government has pointed out in an advisory note that few such services would offer sufficient bandwidth to enable file-sharing by users. This situation may, however, change with advances in technology. Such providers will be able to appeal on the grounds set out in clause 14(6) of the Bill (see above), but they will still have to spend time and money on defending court proceedings in order to get to that point.

The debate over the most controversial aspects of the Bill may in any event be academic. Both the regulations to create the new blocking injunctions and the order imposing technical measures on ISPs need to overcome various obstacles before they can be made, and there is still plenty of opportunity for them to be blocked by either House of Parliament during the course of the super-affirmative procedure. (That procedure itself was created by section 18 of the Legislative and Regulatory Reform Act 2006, which was intended to be used only for the uncontroversial reform of legislation.)

The Bill in the form now passed appears not to provide future-proofing against the most recent technological developments. A growing number of websites offer encrypted "cyberlocker" facilities, (allowing people to swap files without their contents being publicly visible) and virtual private networks which can conceal a subscriber's activities from the ISP. Furthermore, proxy servers can be used to hide the identity of file-sharers by making it appear as though they are operating from a different location. At the moment it may only be the few large-scale file-sharers who take the trouble to use these ways of disguising their identity and/or activities, but these methods may come into common usage as a way of eluding the reach of the Digital Economy Act.

Source: Hansard, 7 April 2010, Column 1106.

House of Commons passes copyright provisions of Digital Economy Bill with amendments | Practical Law