The Digital Economy Act has been surrounded by controversy since it was first announced, enraging both pressure groups and internet service providers (“ISPs”) by the obligations imposed to report potential copyright infringers.

The Act being passed in 2010 using the accelerated and truncated Parliamentary process called the “wash up” procedure only served to increase the controversy surrounding it. The wash up procedure is used when a general election has been announced in order to rush legislation through before the break up of Parliament and can only be used for unopposed legislation.

The Digital Economy Act was introduced to implement the Digital Britain final report’s recommendations on the future of the digital and communication industries. The provisions that have caused most concern for pressure groups and ISPs concern the measures introduced to reduce online infringement.

In order to reduce online infringement, the Digital Economy Act requires ISPs to notify their subscribers if the internet protocol addresses associated with them are reported by copyright owners as being used to infringe copyright. ISPs must also provide, on an anonymous basis, copyright infringement lists to copyright owners in relation to subscribers about whom the number of copyright infringement reports has exceeded a certain threshold.

If these provisions are not as effective as envisaged, sections 17 and 18 of the Act permit the Secretary of State to make regulations to grant the courts the power to make blocking injunctions in respect of internet locations that are being used in connection with copyright infringement. This can lead to households being disconnected from the internet on accusations of file-sharing and websites being blocked because they are accused of copyright infringement.

The High Court has agreed to an application for judicial review concerned the Digital Economy Act 2010 brought by BT and TalkTalk on the basis that the obligations on ISPs:

• Constitute a technical regulation or a rule on services within the meaning of the Technical Standards Directive and should therefore have been notified to the European Commission before enactment; at they have not bee, the provisions are unenforceable.
• Are incompatible with the E-Commerce Directive and the E-Privacy Directive;
•  Are disproportionate in their effect, in that they unduly restrict the ability of ISPs established in other EU member states to provide internet services in the UK and/or infringe Articles 8 and 10 of the European Covnentino on Human Rights and equivalent provisions found in the EU Charter on Fundamental Rights.

Charles Dunstone, the Chairman of TalkTalk explained the need for a judicial review in July 2010, stating that “Innocent broadband customers will suffer and citizens will have their privacy invaded. We think the previous Government’s rushed approach resulted in flawed legislation…That’s why we need a judicial review by the High Court as quickly as possible before lots of money is spent on implementation.”
The High Court found that each ground of challenge was arguable and a hearing is due to take place as soon as possible after 7 February 2011.

This is an important issue, not just for ISPs and consumers, but for brand owners as it will affect the ISPs obligations to brand owners. Although brand owners need protection from copyright infringement the measures in the Digital Economy Act do not adequately meet these needs and also lead to dangers of damage to the brand reputation if brand-owners are seen to use such opposed legislation to enforce their rights.

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