File-sharers to get warning letters soon? BT and TalkTalk lose challenge against Digital Economy Act

07/03/2012

BT and Talk Talk have lost an appeal over controversial measures to tackle copyright infringement online. The move gives a green light to the UK Governement to push through a set of new digital piracy laws. The internet service providers (ISPs) had argued the UK's Digital Economy Act was incompatible with EU law.

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The Act will mean that warning letters from ISPs will be sent to thousands of people who illegally download music and films. In some cases, users could also be cut off from their ISP.

Many ISPs argue that the measures will place additional costs upon them and restrict the basic rights of customers.

The legislation requires ISPs to warn widespread file-sharers that complaints have been made against them and to provide lists of alleged infringements to music and film companies.

ISPs are also required to contribute to the costs of identifying illegal downloaders, raising fears that the burden of “policing” the web will be passed on to customers.

Web users who feel they have been wrongly placed on a copyright infringement list will have to pay £20 to appeal against the notification.

The creative industry argues that piracy costs £400m a year in lost revenue.

End of a two-year case

Three senior judges at the court of appeal ruled that the government could not make ISPs pay a proportion of the case fees attached to the act.

The ruling brings to an end almost two years of legal challenges against the legislation by the ISPs. The government is now able to begin sending out warning letters to UK internet users accused of illegal filesharing.

Tuesday's court of appeal ruling found that the Digital Economy Act is legal and compatible with European law.

Geoff Taylor, chief executive of the British Phonographic Industry, welcomed the ruling, saying: "The ISPs' failed legal challenge has meant yet another year of harm to British musicians and creators from illegal filesharing."

BT and TalkTalk had complained that the legislation was incompatible with European law and put an unfair burden on them to pay the costs of the rights-holders' crackdown on illicit downloading.

However, the court of appeal judges – Lady Justice Arden, Lord Justice Richards and Lord Justice Patten – agreed with an earlier high court ruling that the legislation is lawful.

They said that ISPs will have to pay 25% of the qualifying costs incurred by media regulator Ofcom in running and setting up an appeals body for alleged illicit filesharers.

They confirmed that the ISPs should pay 25% of relevant costs, which are operating fees incurred when identifying which subscribers are accused of illegal downloading.

The judges overturned a previous high court ruling which said that the ISPs have to pay 25% of case fees that are charged by the proposed appeals body.

Rights holders have agreed to foot 75% of the costs in each of the three fees.

The court of appeal also ruled that BT and TalkTalk must pay 93% of the costs of the legal challenge, a figure understood to have run into six figures.

The firms' lawyers said the stricter measures could result in an invasion of privacy and run up disproportionate costs for both ISPs and consumers.

In a statement, Talk Talk said it was now "considering our options".

"We're disappointed that our appeal was unsuccessful though we welcome the additional legal clarity that has been provided for all parties," the company said.

"Though we have lost this appeal, we will continue fighting to defend our customers' rights against this ill-judged legislation."

A spokesman for BT said: "We have been seeking clarification from the courts that the DEA is consistent with European law, and legally robust in the UK, so that everyone can be confident in how it is implemented.

"Now that the court has made its decision, we will look at the judgment carefully to understand its implications and consider our next steps."

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