Government consultation promotes regulation to prevent illegal file sharing

On 24 July 2008, the Government released a consultation document on the various legislative options open to it to combat illegal file sharing on the Internet. The Department for Business Enterprise and Regulatory Reform (BERR) is canvassing views and seeking to build a consensus on the best way for Internet Service Providers, rights holders and other interested parties to work together to stop illicit peer to peer (P2P) file sharing. Such P2P file sharing is widespread, and is claimed to represent a significant loss to creative industries in the UK. Current enforcement procedures are recognised as being inefficient and not well suited to prevent online piracy. The consultation presents a detailed review of the problem, including the current legal landscape and various alternative means by which the enforcement framework could be improved. Its preferred option is a ‘co-regulatory approach’ striking a balance between the interests of rights holders, ISPs and consumers and overseen by the independent regulatory body Ofcom.

Share and share alike

Peer to peer (P2P) technology enables participants to form adhoc networks with other users, each providing bandwith, storage space and computing power to enable file sharing. However file-sharing software is often used to share files subject to copyright restrictions which users are not entitled to share. A key feature of P2P software commonly used in illicit file-sharing is that, in order to participate in such a network, a user’s own files must be made available for others to copy. This practice is claimed to have a significant negative effect on creative industries, particularly the music industry, costing rights holders and distributors millions of pounds.

The need for affordable enforcement

It is currently not straightforward for rights holders to enforce their rights. Firstly, rights holders need to identify infringers, and this requires at least a degree of cooperation from Internet Service Providers (ISPs). ISPs currently benefit from protection from liability under the E-Commerce Directive (2000/31/EC) whereby those who host or cache information as ‘mere conduits’ and those who provide storage space on servers as ‘hosts’ are not held to be legally responsible for illegal file sharing. However if they have ‘actual knowledge’ of illegal activity they must act expeditiously to remove or to disable access to the information.

ISPs are unwilling to divulge the personal data of their customers, due to contractual obligations, data protection legislation and also because they do not wish to alienate their own customers. ISPs will therefore generally take no action unless compelled to do so by a court order (known as a Norwich Pharmacal order) requiring them to divulge relevant details such as the name and address of a person or the relevant IP address. Even where ISPs do not contest the grant of such an order, the process can be costly and does not enable high numbers of infringements to be dealt with expeditiously. The BERR consultation document recognises that the enforcement framework needs to change so as to act as a deterrent but without becoming prohibitively expensive.

Preferred solution - this time it is regulatory

The Gowers Review of Intellectual Property, published in 2005, reviewed the state of the intellectual property framework in the UK. It highlighted P2P file-sharing as an area of increasing concern and suggested that a voluntary agreement between ISPs and rights holders would be the preferred solution.

The Government’s new consultation paper considers it highly unlikely that all ISPs would willingly sign up to such an agreement. Instead it proposes a regulatory solution to create a framework within which the detailed practical and commercial issues can be resolved, including issues of costs, action to tackle persistent infringement, appeals routes and proportionality. Codes of practice should be agreed between ISPs and bodies representing rights holders. The Office of Communications (OFCOM, the independent regulator and competition authority for communication industries in the UK) should approve any such codes, and would provide a regulatory oversight role. Ofcom involvement should ensure that any self-regulatory mechanism is effective, proportionate and fair to consumers. As part of the consultation it also presents alternative options, such as legislation to require ISPs to divulge personal information to rights holders, or legislation to require ISPs to take action against individuals, or requiring ISPs to use filtering equipment.

Spread the word - legally of course

Meanwhile, a voluntary Memorandum of Understanding, which has reportedly been signed by the government, the BPI (representing the music industry), the six biggest UK ISPs and the Motion Picture Association, sets out an agreement to work on drawing up codes of practice and improve consumers’ access to legitimate downloads of material. According to a government press release, all signatories will strive to engage with and educate users about unlawful file sharing, make material legally available online in a wide range of user-friendly formats, and create a self-regulatory environment, with the involvement of Ofcom. The approach will pilot letters to be sent to the registered user of an Internet account when their account has been identified as having been used to unlawfully share copyrighted material.

Creative Britain

The developments are part of a Government drive aimed at keeping Britain a creative force. Culture, Media and Sport Secretary Andy Burnham said in a press release:

"today’s announcement…holds out hope of a sustainable future for music and our other creative industries, whilst ensuring that consumers continue to get the full benefits that new technology can offer".

Still work to do

This upbeat message has been slightly undermined by reports in the press that Carphone Warehouse, one of the six ISP signatories, has been quoted as distancing itself from any agreement on enforcement strategies and as stating that it had merely agreed to send out letters of notification on behalf of rights holders.

The consultation is open until 30 October 2008, and it is likely that ISPs will need incentivisation or legal coercion to bear the cost and commercial consequences of asserting the rights of those in the creative industries. The Government has made its position clear: one way or another, the IP enforcement framework relating to P2P file sharing must be restructured in favour of rights holders.