Ofcom Consults on Measures to Prevent Online Copyright Infringement

The Digital Economy Act 2010 (“DEA”) was passed into law in April 2010 and includes controversial provisions to punish and prevent copyright infringement, including peer-to-peer (P2P) file-sharing.

The DEA sets out a number of measures to prevent online copyright infringement. The first of these are:

• an obligation on Internet Service Providers (ISPs) to notify subscribers that their accounts have been associated with copyright infringement; and
• an obligation on ISPs to compile and keep anonymised lists of those subscribers associated with copyright infringement to be provided to rights holders at their request. Personal details will only be handed over on receipt of a court order

Together these are known as the ‘Initial Obligations’. On 28 May 2010, Ofcom launched a public consultation (the “Consultation”) including a draft code of practice (called “the Online Copyright Infringement Initial Obligations Code”, or the “Code”) governing how these Initial Obligations will work in practice.

If the Initial Obligations prove ineffective at significantly reducing online copyright infringement, the DEA contains further powers allowing the Secretary of State to require ISPs to impose ‘technical measures’ against subscribers identified as repeat infringers – these powers have not yet been exercised and fall outside the scope of the current Consultation.

Copyright Infringement Requests (CIRs)

Under the Code, copyright owners will be able to file Copyright Infringement Requests (“CIRs”) with ISPs. These will provide evidence that a subscriber has infringed copyright and require the ISP in question to send a warning letter to the subscriber. A copyright owner must send a CIR to the ISP within 10 days of the evidence being gathered for it to be effective.

The Code stipulates that only a copyright owner who has given an advance estimate of the number of copyright infringement reports it intends to make in a notification period (a year) may use the system. The copyright holder must also pay costs in advance at the start of the notification period.

While such an approach makes it easier to predict the numbers of likely CIRs that will be issued in a year, it may make the system inaccessible to those who are not in a position to estimate future enforcement requirements.

Copyright owners wishing to use the system will also need to provide Ofcom with a ‘Quality Assurance Report’ detailing the processes and systems used to gather evidence, steps taken to ensure its accuracy and details of audit processes. In addition copyright owners will have to certify that, in their reasonable opinion, the processes and systems described are effective in gathering robust and accurate evidence and must provide a statement of compliance with relevant data protection laws.

Such ‘self-certification’ is a novel approach to the problem of ensuring that evidence of infringements is of a high quality. It will not satisfy those who consider evidence should be independently verified before being passed to ISPs. Nevertheless such a system does shift the responsibility for ensuring best practice in evidence collection onto rights holders while providing Ofcom with oversight. The Code stipulates that Ofcom can direct copyright owners to take specified steps in relation to their procedures for gathering evidence and may require that such systems and processes be subject to audit by a third party.

ISPs – The Magnificent Seven

Ofcom has proposed that at this stage, the Code should only apply to fixed (as opposed to mobile) ISPs, who provide an internet service to more than 400,000 subscribers. Currently there are seven fixed ISPs that meet this criterion: BT, O2, Orange, Post Office, Sky, Talk Talk Group and Virgin Media.

While Ofcom recognises that it may seem unusual to identify particular service providers in this way, they consider they are justified in doing so as the seven ISPs together account for over 96% of the residential and SME business broadband market, and such a selection is consistent with the government’s anticipation that most small and medium sized ISPs and mobile networks would initially fall outside the threshold. Ofcom will review the scope of the application of the Code if in practice it results in many infringers simply changing service provider to one not covered by the Code.

ISPs will be required to self-certify the quality of the systems that they use to match IP addresses in CIRs to subscriber accounts.

You Have Been Warned

ISPs are required to process the CIRs received promptly by sending customers notifications (unless the CIRs are in some way incomplete). The Code includes the proposed content of notifications and includes a draft notification letter, although the final content of the notifications is still to be determined. One point of discussion is whether ISPs should be able to personalise notifications or whether they should all be in standard form.

The first CIR received by an ISP in response to a notification would trigger a requirement to send a first notification to the subscriber. Another notification would be sent if another CIR is received in respect of that account after one month has elapsed from the date of the first notification. A third notification would be sent if another CIR is received in respect of that account after another month from the date of the second notification. The notification letters would escalate in tone and on receipt of a third notification, the subscriber would be added to the copyright infringement list.

Copyright Infringement Lists

A copyright owner will be able to request copyright infringement lists containing anonymised information about repeat infringers. The list would only contain information directly related to CIRs made by the requesting copyright owner in the previous 12 months.
The Code also proposes that copyright owners may not make more than one request for a copyright infringement list to each ISP within any period of 3 months and ISPs should provide the list within 5 days.

It Wasn’t Me

Subscribers will be able to appeal allegations made in a notification letter and/or their inclusion on a copyright infringement list. The Code includes the following specified grounds of appeal:

• that the apparent infringement to which the CIR relates was not an infringement of copyright;
• that the CIR does not relate to the Subscriber’s IP address at the time of the apparent infringement;
• that the act constituting the apparent infringement to which a CIR relates was not done by the Subscriber and the Subscriber took reasonable steps to prevent other persons infringing copyright by means of his/her internet access service;
• that an act or omission by a Qualifying ISP or Qualifying Copyright Owner amounts to a contravention of the Code or of an obligation regulated by the Code; or
• any other ground on which a Subscriber chooses to rely as to why the act or omission should not have occurred.

It is interesting to note that subscribers will not be able to appeal merely on the basis that the act was not done by the subscriber (an ‘it wasn’t me’ defence), rather to rely on such a defence they would also have to show that they took reasonable steps to prevent other persons infringing copyright by means of their internet access service. Quite what ‘reasonable steps’ would be in practice remains to be seen. This approach differs from the determination of conventional copyright infringement where in general, it would be sufficient to avoid liability to show that the acts complained of could not have been done by you.

An appeals body will have the power to order a compensation payment to be made by either the copyright owner or the ISP to a subscriber, where that subscriber is deemed to have been ‘prejudiced’ by an act or omission by either.

Enforcement

Ofcom has retained wide enforcement powers in respect of parties who are found to be in breach of the Code. Its powers include the option to impose a financial penalty of up to £250,000 on any person, to make whatever costs or compensation orders it thinks appropriate, and it also has powers to resolve any dispute referred to it by any of the interested parties in a dispute.

Costs

At present, the current form of the Code does not contain any detail as to how the costs of implementing the Code (for example, those arising from the notification procedures, the appeals process nor other associated costs) will be paid, and by whom. The consultation document states that such detail will be included in an order to be made by the Secretary of State later this year, following the outcome of a separate consultation (which has now closed) on how costs should be shared as between the copyright owner, the ISP and, where appropriate, the subscriber.

A Frenzy of Consultation

Ofcom reveals that this Consultation is the first in a series of three consultations. In addition to the current Consultation Ofcom will consult on:

• Enforcement of the code and the handling of industry disputes – scheduled for later in July;
• Tariff setting and sharing costs - scheduled for September but in part dependent on the results on the government’s recent consultation on costs.

The current Consultation ends on 30 July 2010. The Code would need to be approved by the European Union and will then need final approval by Parliament. If all goes smoothly, the plan is to bring the Code into force early in 2011, although this may be optimistic.

Comment

The Code is still in draft form but the Consultation reads as an admirable attempt to strike a difficult balance between the different interests of rights holders, ISPs and subscribers. If successful, the new Code could provide a significant deterrent to prevent casual infringers of online copyright infringement.

Nevertheless the success of the system may rest heavily on the effectiveness of the technology used by rights holders and ISPs. The system could lose credibility if subscribers are regularly falsely accused of copyright infringement and also have to pay for the pleasure of clearing their names.

In addition the current system proposes that only those copyright holders who can predict their likely use of the system will be able to use it, raising concerns that the system will operate largely for the benefit of larger content providers rather than smaller organisations with less predictable enforcement requirements.

Although the Code is framed as being part of a wider exercise of education and as an opportunity to re-educate consumers and also to provide attractive legal alternatives to copyright infringement, the Consultation provides little evidence of other initiatives.

Finally the costs and practicality of the proposed system are still to be determined; if it proves particularly costly and labour intensive to implement, we can expect further vigorous debates on who should pay the bill and why.