In a very recent decision handed down only last month, the High Court has refused to grant a judicial review of the provisions of the Digital Economy Act 2010 ruling that the Act is not in breach of EU Law.
Background
In the autumn of 2009 the Government introduced the Digital Economy Bill. The primary purpose of this new piece of legislation was to implement many of the recommendations that had been made in the Digital Britain Report. It was decided that legislation needed to be established in order to tackle a wide range of issues affecting digital media including problems created by the online infringement of copyright and illegal file sharing as well as issues regarding the limitations of existing network infrastructure and digital safety. Although there had been some speculation that the Bill would not make it through Parliament in time, in fact it received royal ascent on 8 April 2010 as part of the Parliamentary wash up procedure of the previous Government and thereafter was transformed into what then became the Digital Economy Act 2010 (“the Act”).
While the Act had the overwhelming support of the previous Government, there were many who remained critical of is implementation and who felt that this legislation was ill thought out and had been pushed through at the very last minute without sufficient or adequate Parliamentary scrutiny.
Two bodies who were particularly troubled by the provisions of the Act were the well known internet service providers BT and Talk Talk. In fact, they were so concerned about the Act and its potential implications that in a joint move in July 2010, they applied to the High Court for a judicial review of the Act, citing as their principle objection that the Act was incompatible with EU law. They also contested that the provisions of the Act were disproportionate in their effect and were unenforceable in any event since the Act had not been notified to the European Commission before enactment.
In November 2010, the application for judicial review was granted by the Court on the basis that BT and Talk Talk’s grounds for review were arguable. However, this temporary advancement has proven to be somewhat short lived.
Court action
As reported above, the Court has now rejected all of the grounds submitted by BT and Talk Talk for judicial review. It has found that the provisions of the Act are not in breach of EU law and should therefore be upheld. The challenge on the grounds of proportionality has also been rejected. Instead, the Court recognised that the provisions of the Act had been legislated for by Parliament as a result of which it has been determined that any Court should be cautious before interfering.
So, what will be the impact of the Court’s decision?
This latest decision now gives the Government the green light to go ahead with its plans as set out under the Act. These include controversial measures which enable the networks of internet service providers to be monitored and for warning letters to be issued to alleged illegal and/or excessive downloaders, who may find that their internet connections are suspended in the event that they exceed a certain threshold of use. Anyone believed to be using an IP address to infringe copyright may also be reported by an aggrieved copyright owner through the filing of a copyright infringement report.
However, not all of the Act’s proposals are to be implemented. BT and Talk Talk did have some success in one particular aspect of their challenge. As part of their application for judicial review, BT and Talk Talk included a reference questioning the legality of the Statutory Order which accompanies the Act and which is designed to regulate the costs to be imposed on internet service providers of meeting their initial obligations. In the draft Order, it had been proposed that internet service providers should be required to bear 25% of the costs incurred by Ofcom or the appeals body in carrying out the functions required under the Act to handle copyright infringement (identified in the Act as the “qualifying costs”). However, this proposal has not found favour with the Court, which has now held that such a provision would be unlawful under EU law. Consequently the Costs Order as drafted by the Government to govern the allocation of costs associated with the implementation of the initial obligations under the Act will need to be redrafted and a different mechanism for allocating costs will need to be established. However, it is not anticipated that this should prove to be any significant obstacle to the Government’s proposals.
On the other hand, it has been reported that Talk Talk is now considering its options which may include an appeal to the Court of Appeal or a reference to the European Court of Justice. Therefore, while the Government has won this particular battle, the outcome of the war over the measures in the Act has yet to be decided.
If you would like any further information about the issues raised in this newsletter, or any other aspect of employment law, please contact Deborah Rider on 0207 404 0606, Partner of Goodman Derrick LLP's Intellectual Property Department.
This guide is for general information and interest only and should not be relied upon as providing specific legal advice.
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