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By: MarkJ - 29 January, 2011 (12:25 AM)
UK DCMS internet copyrightp2p copyright uk ISP file sharing lawAn independent barrister based in London, Francis Davey, has analysed the UK governments recently proposed secondary legislation on sharing the costs of the controversial Digital Economy Act 2010 (DEA) and concluded that it has been "misdrafted" and "may also be unlawful".

The legislation, which was announced earlier this week (full summary), is a crucial part of plans to tackle "illegal" (unlawful) internet copyright infringement by customers of broadband ISPs. It proposes that the cost of sending warning (notification) letters to end users should be split between ISPs (25%) and Rights Holders (75%).

Francis Davey said:

"Paragraph 2 of the Order's schedule requires the copyright owner to notify in advance any ISP to which it intends to submit CIR's and give an estimate of the number of CIR's it expects to be submitting. Before the start of each notification period, the copyright owner must submit another estimate for the coming notification period and then pay the rate set by OFCOM multiplied by:
(a)the number of copyright infringement reports which the qualifying copyright owner estimates it will make to the qualifying internet service provider under the Code during the notification period; less
(b)the difference between the number of copyright infringement reports which that qualifying copyright owner estimated it would make to that qualifying internet service provider under the Code in the previous notification period and the number it actually made to that qualifying internet service provider in that period, if lower.
Read that carefully. It means that if the copyright owner systematically under estimates the number of CIR's, it will never have to pay the difference. Indeed there is nothing to stop the copyright owner giving an estimate of "1" in each year and paying the fee for exactly one report.

The proportion of fees payable by any copyright owner (or ISP for that matter) to OFCOM are also based on the copyright owner's estimates. The actual number of CIR's submitted never enters into the calculation. This amounts to a zero-sum game between all copyright owners. Each will have an incentive to submit the lowest estimates possible."

Davey believes that, unless he has completely misread the Order, it must be "the result of a misdraft". In addition he also points to a potential incompatibility with Europe's Authorisation Directive (2002/20/EC), which stipulates that the government may only impose conditions on operators of public communications networks under certain situations. Apparently only two of which could apply and they both have problems.

Davey explains:

"First, which is what is being referred to in James's post, the UK (via OFCOM) could require ISP's to pay "administrative charges" in order to be authorised to operate a public communications network. Article 12 of the Directive makes it quite clear that "administrative charges" must be just that — charges for the administration of the general authorisation scheme for public communication networks. That does not include an obligation to pay for an appeals body to hear subscriber appeals or money to OFCOM to monitor and run a scheme for assisting copyright owners enforce their rights.

Second, it is permissible to impose a condition restricting the transmission of "illegal content" (such as content which infringes copyright) and "harmful content" (such as indecent images of children). It seems to me that the CIR/initial obligations scheme of the Digital Economy Act 2010 is not a "restriction" on the transmission of illegal content, but something quite different. What is more, a requirement to pay fees cannot be a "restriction" even on a fairly relaxed reading of the Directive."

It's very important to stress that the new secondary legislation has only just been laid in parliament and will now be debated in both houses, as a result the text could still change but it would have to be withdrawn and resubmitted first.
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