Digital Economy Act - Draft Code

2 July 2010

By Ben Evans

According to a draft code published by Ofcom small ISPs, some Wi-Fi providers and mobile operators will be exempt from the notification and blacklisting process under the Digital Economy Act.

The proposal under the 'Initial Obligations Code' is that it should only apply to ISPs which have more than 400,000 subscribers, this will however be under review in order to prevent infingers merely moving over to smaller ISPs in order to circumvent the Act.

Under the Code: "The seven ISPs with more than 400,000 subscribers together account for 96.5% of the residential and SME business broadband market...there is a broad correlation between the number of subscribers an ISP has and the level of alleged copyright infringement activity on their service". Initially the Code will apply to BT, Post Office, Sky, Talk Talk Group, Virgin Media as well as O2 and Orange. Mobile ISPs on the otherhand will not be covered because they "are less conducive to online copyright infringement due to speed and capacity constraints (e.g. caps on uploading and downloading) and pricing relative to fixed". Also because of the way mobile ISPs assign IP addresses multiple individual subscribers may use the same IP address within a short time thus making it difficult to verify the actual infringer. This does not however give users of mobile ISPs a free reign to download infringing material as the Ofcom have made it clear that they will alter the ISP criteria if it finds "widespread evasion of the effects of the code, resulting from migration of online copyright infringers to ISPs not covered by the Code"

Wireless networks have their own rules, simply if a Wi-Fi operator has an agreement with the subscriber then their services would fall within the definition of internet service provider. Such agreements can be in writing, oral or even implied but they do not "apply to open access Wi-Fi networks where there is no payment from, and no agreement with, those making use of them...in those circumstances, the person making open access Wi-Fi available would themselves be a subscriber". It goes on: "Where a Wi-Fi network is provided in conjunction with other goods or services to a customer, such as a coffee shop or a hotel, our presumption is that the provider is within the definition of internet service provider...we recognise, however, that there may be circumstances where there is an issue as to whether the agreement for goods or services extends to the use of the internet access service...nevertheless, Ofcom’s proposal for the threshold for determining a Qualifying ISP would initially exclude those operators since the number of subscribers would not meet the required threshold."

The upshot of all of this is that hotels, coffee shops etc are likely to be considered ISPs under the Code, however it is likely that they will not be Qualifying ISPs. As a result of this they will not be subject to the infringement notification regime.

The Code also sets out exactly who can file a Copyright Infringement Report (CIR) with an ISP, the information required, at the time limits with which to provide it. Where the first CIR is received the ISP must notify the subscriber, a second notification will be sent on receipt of a CIR within one month of the first notification, a third notification will be sent on receipt of a CIR within one month of the second notification. Should the third notification be reached then the subsciber will be added to the Copyright Infringement List. One point to be aware of is that only CIRs within a 12 month period can be taken into account.

Copyright Infringement Lists are an important part of the Code. "ISPs will have to keep a record of the CIRs linked to each subscriber along with a record of which Copyright Owner sent the report. A Copyright Owner can request an ISP to provide them with relevant parts of those records on request, but in an anonymised form to comply with data protection legislation. This is called a Copyright Infringement List...the information in the Copyright Infringement List is intended to help Copyright Owners to target any litigation against those subscribers that appear to have infringed against them to the greatest degree."

Should the copyright owner wish to take action against a subscriber they will need to obtain a court order in order to identify the subscriber. This will force the ISP to disclose their copyright infringement list, copyright owners can make only one request for the copyright infringement list of each ISP every 3 months.

The Code itself doesn't provide for any new remedies against file-sharers but what it does do is create the copyright infringement list which will assist copyright owners in bringing proceedings against infringers. If the Code does not work and copyright infringement does not dramatically reduce then the Secretary of State can order Ofcom to require the ISPs to introduce technical measures on infringers for example limiting a subscriber's broadband speed or even suspending their service.

The draft Code is due for a second consultation at the end of July with a third scheduled for September.

Ben Evans is a trainee solicitor at Lawdit.