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UPDATE2 UK ISPs BT and TalkTalk Lose Second Digital Economy Act Appeal

Tuesday, Mar 6th, 2012 (12:46 pm) - Score 757

Broadband ISPs BT and the TalkTalk Group have officially lost a second appeal against their demands for a Judicial Review (JR) of the controversial 2010 Digital Economy Act (DEA). The UK providers had claimed that significant chunks of the act, which seeks to identify, warn (letters) and possibly even disconnect (“suspend“) those suspected of “illegalinternet piracy (copyright infringement) from their ISP, were incompatible with EU law.

The initial April 2011 challenge was unsuccessful (here) after Judge Justice Parker dismissed all but one of the five grounds (challenges). However the ISPs finally “won permission to appeal” again through the Court of Appeal in October 2011, where Lord Justice Lewison took the view that the ISPs now had a “real prospect of success” (here). That appeal finally got underway in January 2012 (here) and concluded this week with another rejection.

TalkTalk Statement (BBC)

We’re disappointed that our appeal was unsuccessful though we welcome the additional legal clarity that has been provided for all parties,” the company said.

Though we have lost this appeal, we will continue fighting to defend our customers’ rights against this ill-judged legislation.”

BT Statement

We have been seeking clarification from the courts that the DEA is consistent with European law, and legally robust in the UK, so that everyone can be confident in how it is implemented.

Now that the court has made its decision, we will look at the judgment carefully to understand its implications and consider our next steps.”

Peter Bradwell of Open Rights Group (ORG) said:

There is one thing the court cannot tell us: that this is a good law. The Department for Culture, Media and Sport had no evidence when they wrote this Act, except for the numbers they were given by a couple of industry trade bodies. This is a policy made on hearsay and assumptions, not proper facts or analysis.

So significant problems remain. Publicly available wifi will be put at risk. Weak evidence could be used to penalise people accused of copyright infringement. And people will have to pay £20 for the privilege of defending themselves against these accusations.

The Government needs to correct these errors with a proper, evidence-based review of the law.”

According to TalkTalk, both ISPs are now “considering our options” and could conceivably push their appeal up to the country’s Supreme Court, although the detail of this judgement (linked at the bottom) suggest that their prospect of success might not improve but it could conceivably trigger a further delay to the acts implementation.

Meanwhile Rights Holders, many of whom still think that the controversial act does not go far enough, will welcome today’s news and push for the DEAct to be introduced ASAP.

Court of Appeal (Civil Division) Decision (PDF)

UPDATE 12:53pm

Some more comments coming in.

Adam Rendle, Copyright Lawyer at Taylor Wessing, said:

The government and rights owners will view this as a significant victory in the fight against unlawful online file sharing. Parliament’s view on who should carry the burden of policing and preventing online copyright infringement has been upheld.

ISPs now have a role to play, as well as rights owners, in identifying the wrongdoer. But it is the rights owners who have to identify and prove the infringement.

We now have to wait for the Ofcom Initial Obligations Code to be published and approved before the warning letters start arriving on file sharers’ doormats. The Code will contain the detail on how the process will work.

The government had already announced that the more controversial website blocking measures in the Digital Economy Act would not be introduced, but it would not be surprising to see public outcry at the warning letters process similar to that which greeted ACTA, SOPA etc.”

Julian Heathcote Hobbins, General Counsel at the Federation Against Software Theft (FAST), said:

The ISPs originally challenged the Act on the grounds of ‘basic rights and freedoms’ and that the legislation did not receive sufficient scrutiny in the wash-up period before the General Election. A review then led in turn to rights holders being blocked from using the anti piracy provisions of the DEA. However, this decision means both BT and TalkTalk have lost their appeal, which is a step forward in stakeholders taking on board to some degree some responsibility the fight against piracy. We must not erode the perception of value in digital product to where all online product is considered ‘free’,” stated Julian Heathcote Hobbins, General Counsel, at FAST.

Under the terms of the Digital Economy Act all ISPs will now have to get ready to send warning letters to alleged illegal file downloaders, and to keep lists of repeat infringers which can be requested under established legal procedures. OFCOM will publish the Code on the practical application. As a matter of principle, this is a tremendous step forward and one that puts the provisions of the Digital Economy Act beyond this dog fight, dispelling legal confusion moving forward,” he added.

Those suffering from runaway Internet piracy were receptive of the Act after years of work battling with other solutions which failed to make it a matter for more than simply the rights holders, who were swamped by the march of technology. Traditionally, ISPs have held the view that such infringement online is simply not their issue,” he continued.

There still is the risk that the Act faces ongoing technical challenges as pirates are ingenious in adopting new methods of distribution. However, we must remember that it is about maintaining a choice of which business model is employed in taking product to market,” added Julian.

The news means effectively that no longer does the Act reside in the hands of the court and that means the intellectual property rights of a great many businesses, the fruits of labour, now have the option to benefit from the DEA mechanism if required. The central issue is growth and prosperity at this time.”

UPDATE 1:38pm

James Firth (SROC) has pointed to one potential positive from the ruling, which is that Case Fees were also found to amount to an administrative charge, and “therefore under EU law ISPs cannot be forced to pay of portion of these either“. Readers might recall that the first appeal judge dismissed all but one of the five grounds (challenges) to the Act, except for a finding relating to the Draft Costs Order.

At the time Mr Justice Parker found that it was lawful for ISPs to pay 25% of their Relevant Costs and 25% of the Case Fees. However, he ruled that ISPs could not be required by Government to pay 25% of the Qualifying Costs (as such costs amounted to an administrative charge). Today’s ruling thus suggests that Rights Holders could end up having to pay 100% of the costs of running the “three-strikes” letter notification system and appeals (except the £20 subscriber appeals fee).

Of course that is by no means a done deal and there could be other ways to rebalance the costing. Ultimately we’ll have to wait and see what Ofcom’s final code of practice looks like.

By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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