BT’s initial response has been that it would need to be ordered by a court before taking action, in the same way that a court order was needed before Newzbin2 was blocked. Those downloading copyright content illegally may not be paying for the service they receive, but it is certainly costing the ISPs and industry bodies huge amounts in legal fees to try to prevent it.

BT estimated that the cost of implementing the court order was approximately £5,000, so it is unlikely that it would be worth the ISPs putting up a legal fight against any forthcoming court order. Indeed, the ISPs seem to have indicated that they would comply with any court order they receive. However, there is some doubt as to whether they have agreed to the width of the MPA’s requests for their consent to a court order. The move will only add fuel to the fire stoked up by critics of website blocking – the speed with which the pressure to block Newzbin2 has spread to other ISPs may also spread to other websites (such as The Pirate Bay) and lead to more argument, perhaps in court.

The initial ruling was given in favour of the film studios (whose copyright material had been copied) under section 97A of the Copyright, Designs and Patents Act 1988 (the Act), which provides that an injunction may be granted against an Internet service provider (ISP) that has “actual knowledge” of the use of its service to infringe copyright. The case will be of interest to ISPs and rights-holders, particularly since this is believed to be the first time that an order under section 97A has been made against an ISP.

BT has been ordered to use its Cleanfeed filtering system, which is currently used to block access to websites featuring images of child abuse, to block the website. Controversially, BT was also told to pay for the cost of implementing the court order. The judge said that since BT made money out of its users, it was right that it should foot the bill as part of the cost of doing business, and in any event the costs were proportionate. It left open the possibility of whether the costs would always be paid for by the ISP but in this case it would make sense.

BT and the film studios agreed that as software had been developed and was likely to be circulated by copyright infringers that could circumvent BT’s Cleanfeed system, BT’s blocking measures may have limited effect. However, the High Court judge said that the court order would still be justified if it meant that access to Newzbin 2 was prevented for only a minority of users.

This is the first time an order has been granted against an ISP under section 97A of the Act, but it is also interesting to note that the judge stated that he thought it unlikely that, following the implementation of the block, a BT user would be able to bring a claim against BT for breach of their Internet service contract with the ISP. However, that might be little consolation for BT, which merely thanked the High Court for providing ‘clarity’ on the issue.

No doubt, BT would have felt a bit aggrieved that the Court had refused to accept its argument that the order should be set aside or varied if the film studios did not apply within a reasonable time for the same injunction against other UK ISPs. The Court said that there was nothing in the law that made the injunction conditional on this action being taken. It was for the studios to decide on which remedies they would pursue and against whom.

BT would also no doubt have been unhappy at the refusal of the judge to give it permission to shut down Cleanfeed temporarily if it needed to. The judge said that it would only do that if the studios consented or BT obtained a court order.

So, all in all, a great result for the creative industries, but not a particularly good day in court for innocent ISPs.

The ISPs have now been granted permission to appeal by the Court of Appeal. It seemed that the Digital Economy Act was safe following the Court of Appeal’s initial decision to refuse permission to appeal, but this long-running saga now seems to have some more time left to run.

Newzbin has now threatened to break BT’s Cleanfeed filtering system if BT attempts to block the site. BT has hit back and said that it would be appalled if that happened as Cleanfeed helped protect innocent from highly offensive and illegal content such as child pornography.

The MPA said BT was being targeted as it is the largest ISP in the UK. It may also be because BT uses the website-blocking software Cleanfeed to stop access to child sex abuse images, so it clearly has filtering technology available. The MPA hopes the injunction will force BT to block access to Newzbin in the same way it blocks access to websites hosting child porn , and this should then have a knock-on effect on other ISPs and website blocking.

This is a really interesting development and tactic by the entertainment industry in its long-standing cat-and-mouse battle against online copyright infringers. The MPA took action against Newzbin in 2010 in the UK, where Newzbin had been based, and the High Court ordered that Newzbin removed copyright-infringing material from the website. However, the company behind the website folder and a new version of the website set up by a phoenix company has since appeared operated out of the Seychelles. Due to the difficulties in taking action against that site there, the MPA is trying this new tactic. It will be interesting to see the outcome.

This case comes against the backdrop of the Digital Economy Act, which, when its provisions are fully implemented, would require ISPs to pass details of users who infringe copyright material to copyright holders so that they can take action against the infringers. ISPs would also have to suspend Internet access of the infringers.

The Act has been controversial ever since it was passed in early 2010, when it was rushed through Parliament so that it would become law before the General Election. BT and TalkTalk initially took action as they believed the Act did not comply with European Union Directives on e-commerce and privacy, and that it lacked proportionality. They have argued that the law would require them to restrict or suspend a customer’s Internet access even if someone else from outside that customer’s household, for whom the customer was not responsible, was using that customer’s Internet connection for file-sharing.

The next step is for the case to proceed to the court to decide. The Advocate Generals’ opinions are usually followed by the court, but not always.

The Digital Economy Act requires Ofcom to introduce a system to reduce web piracy by ensuring co-operation between rights holders, such as record labels, and Internet service providers (ISPs).

Under the proposals put before Parliament, ISPs would need to warn a subscriber three times that they are breaking the law by file-sharing, after which, if the subscriber continues to be active in file-sharing, the ISPs must pass the details of the subscriber to the rights holder to allow them to enforce their rights.

The proposals split the cost of the system between copyright holders, who must pay 75% of the costs, and ISPs, who must pay the remaining 25%. The reasoning for this seems to be that it is copyright holders that benefit and therefore they should pay for the system, but ISPs are critical of the cost split as they do not benefit at all – they argue the rights holders should be responsible for the full cost of the system.

The proposals seem to be a step in the right direction for the Digital Economy Act. However, at the same time as the proposals have been laid before Parliament, the Culture Secretary Jeremy Hunt has asked Ofcom to review whether such a clampdown on file-sharing by blocking access to file-sharing, copyright infringing websites, or part of those websites, is practicable. Many critics of the Digital Economy Act argue that blocking websites is not workable and extremely expensive.

This Government seems to be doing what the last government should have done before passing the Digital Economy Act in a rush before dissolving Parliament – seeing if the law is actually viable. However, there is confusion at the way in which it is pressing on regardless, especially as there is a judicial review in play too.

For the full BPI press release click here.

The domain names in question are no longer accessible, and users are instead diverted to a webpage detailing that the domain name had been taken over by the government and listing the United States laws on copyright and counterfeit goods. It is believed that many of the websites are attempting to continue trading by moving to new domain names.

To see the full text of the proposal click here.

The Pirate Bay website had continued to function throughout the trial and respective appeals, but the pressure from governments, copyright owners and Internet service providers to lead to closure of the site is set to increase now that the verdict has been confirmed.

The law is not automatically unfair, but the High Court may decide that it is when it undertakes the judicial review.

The decision of the court was not, however, based on any support for file-sharing. The judge was actually clear in his condemnation of unlawful sharing of copyright material. The decision was made due to the fact that the Irish Copyright and Related Rights Act 2000 is applicable to file-sharing in Ireland. The judge stated that the legislation made “no proper provision for the blocking, diverting or interrupting of Internet communications intent on breaching copyright”. As such, the powers of the court did not extend to obligating an ISP to block access to file-sharing sites. Instead, the courts’ only powers under Irish law was to require Internet hosting services to remove material that infringed copyright.

The judge maintained that the position in Ireland was not in line with relevant European law, but that it would need to be dealt with by the legislature rather than the courts.

Things have now got a lot worse for the firm. Due to its notoriety, it became the target of a denial of service attack to bring its website down. As the firm was getting its website back up again, a large amount of person data – some of it sensitive personal data – was accessible through its public-facing site. The data then appeared on The Pirate Bay file-sharing site. The data involved over 10,000 people’s names, addresses, Internet addresses, credit card details and what they had been accused of accessing, including adult entertainment material. It also contained correspondence involving or relating to the accused people, including how much compensation had been paid.

The situation has drawn in Internet service providers such as BT and Sky, as much of the data had been supplied by them to ACS:Law. However, those ISPs claim that they had merely been supplying the data to the law firm in order to comply with their own legal obligations and the data that they had supplied was encrypted and secure.

The Information Commissioner is sharpening his tools as he looks for a high profile case to show off his new powers as a deterrent to others. Data controllers must take adequate steps to keep data secure. A serious breach of the Data Protection Act can now lead to fines of up to £500,000. Although no investigation has been undertaken yet, the Commissioner certainly sees that serious questions need to be answered, such as how secure the information was and how private information could have been accessed through the publicly facing website. The Commissioner will also be looking carefully at any encryption used, firewalls and staff training. The Commissioner said he could issue fines of up to £500,000 and although he would not put the firm out of business a company hit with a half a million fine would suffer real reputational damage. Ouch!

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, told the Trusted Reviews web site at www.trustedreviews.com the following:

‘If music is shared without the copyright owner’s permission, the copyright owner has the right to ask people who have distributed or obtained the music without their authorisation for money to cover their losses, costs and expenses. Even if the copyright owner is mistaken about some of the alleged infringement activity, there is nothing to stop them sending the letters. Copyright is different from some other intellectual property in this regard, such as trade marks and patents, where people have to take greater care before making claims.

‘Equally, there is nothing to stop anyone receiving these letters from simply ignoring them. It is up to them what they decide to do, as few, if any, of these sorts of actions have actually reached the courts to date. However, if their case does get to court, any person found to have done wrong may have to pay more, which is why some people simply pay up to take away the worry.

‘As frightening as it may be to receive these letters, especially for people who have done nothing wrong, they do not simply have to pay up. It is for the person making the claim to be able to prove what has happened. A recipient of the letter could deny it and question the evidence alleging the infringement. If the case is contested, recipients of the letter may wonder how likely it would be that the person sending them the letter would be prepared to obtain sufficient evidence and attend a trial, considering the relatively small sums involved in fighting each contested case. To be able to feel confident of winning their case, the claimant would either want to be in possession of a written admission of wrongdoing or the hard drive of the computer. 

‘The implementation of the recently passed Digital Economy Act could make the position more concerning for households. The Act allows for the Government to introduce new laws that would put the onus on people with an Internet connection if it can be shown that copyright infringement had occurred through that connection, regardless of who actually did the infringement. This could affect people sharing a home or people whose Internet connections have been used by cybercriminals. Those new laws have not been introduced yet and would have to undergo Parliamentary scrutiny first, but there could well be pressure to do so if the music industry continues to suffer lost revenues as a result of continued peer-to-peer file-sharing.’

To go to the Trusted Reviews article, click here: http://www.trustedreviews.com/multimedia/news/2010/07/19/Ministry-of-Sound-Gets-Legal-on-Downloaders/p1

According to the Voltage Pictures website, the business made $150 million through film sales and acquisitions over the last three years.

• notify a subscriber (i.e. an internet user) if an internet protocol (IP) address associated with that subscriber (i.e. a person’s ‘address’ on the Internet) is reported by a copyright owner as being used to infringe copyright;
• keep track of the number of reports about each subscriber; and
• on request by a copyright owner, compile – on an anonymous basis – a list of those subscribers who are reported to be copying - if a subscriber passes a certain threshold level to be set in that initial obligations code.

A copyright owner can then, after obtaining a court order to obtain personal details of who a subscriber is in the real world, take action against anyone included in that list.

What is described above is the initial obligations on ISPs. However, if the initial obligations on ISPs prove insufficient to reduce significantly the level of online copyright infringement, under the Act, the government is allowed to impose further technical obligations on ISPs. These would be imposed on the basis of reports from OFCOM no sooner than 12 months after the code about ISPs’ initial obligations enters into force. These technical obligations would require ISPs to take measures to limit internet access to certain subscribers – but these technical measures can only be used against subscribers who meet the threshold for inclusion in a copyright infringement list under the initial obligations. (Technical measures would be likely to include bandwidth ‘capping’ or ‘shaping’ that would make it difficult for subscribers to continue file-sharing, but other measures may also be considered. If appropriate, temporary suspension of broadband connections could be considered too.)

To safeguard the interests of consumers, the provisions also require appeal processes to be set up as part of the underpinning codes. These include the right to appeal decisions of ISPs to impose technical measures. Appeals are required to be to a person independent of OFCOM, with a further right of appeal to what is known as a “First-tier Tribunal” in the case of technical obligations. No technical measure can be imposed if an appeal is in the process of being considered.

Watch this space…

The Bill contains these provisions:

• To allow the Government to make laws that could require Internet service providers to cut off the Internet connections of suspected copyright infringers and impose other technical measures on them. The burden of proof would be on the copyright owner to prove that the Internet user’s connection had been used for copyright infringement, and the Internet user would then have a right to appeal, but he would then have to show that he did not commit the infringing act or he took reasonable steps to prevent other people from committing the infringement via his Internet connection. Any introduction of this provision into law would require further scrutiny from Parliament first. The effects would be severe, particularly for whole households who would suffer because of the actions of one teenager or another person living there. People may also suffer if other people use their Internet connection for unlawful activity without their knowledge.
• The courts to have the power to grant orders to ensure that certain web sites are blocked if they satisfied that the sites have been used or are likely to be used in connection with copyright infringement. However, this new measure can only be introduced if Parliament has approved it and if the Government is satisfied that using the Internet for copyright infringement activities has a serious adverse effect on businesses or consumers and the sanctions are not a disproportionate measure. Blocking a particular site would be reserved for the most serious offenders.
• The right for copyright owners to notify ISPs if they suspect that copyright material has been infringed, and to have the right to receive anonymised lists of the Internet Protocol addresses (ie the web addresses) of the computers at the centre of the notifications.

Interestingly, this long-awaited measure for the benefit of the entertainment industry may be a matter of shutting the door after the horse has bolted. In this cat and mouse game, the copyright infringers are already ahead of the game. They may become ever more immune to the measures in this new legislation by increasingly using private networks that do not need a public web site in order to facilitate the file-sharing, and by the use of so-called proxy servers that hide the real identities in order to avoid detection.

Newzbin provided indexing and search services for the Usenet Internet discussion system. Usenet enables people to upload and view messages on a public bulletin board. Usenet was not designed for big files such as films, which need to be split into thousands of small parts. Any user who wants to see the film needs to piece all those bits together. Newzbin made that process much easier for users. They compiled an index of films, had 250 editors who compiled reports of the films and links to other information about the films, and provided a one-click mechanism that enabled premium paying members to readily assemble the work from its component parts without having to spend days doing so. Newzbin claimed that it was ‘content agnostic’ by indexing the entire content of Usenet with providing links where possible and any unlawful activity was done by a user of the hyperlinks.

The High Court had little time for Newzbin’s arguments. It described terms and conditions saying that its editors must not do any act to enable, incite or encourage any unlawful acts and similar terms and conditions for its users as being ‘entirely cosmetic’ and a ‘superficial attempt’ to conceal Newzbin’s purpose. Newzbin’s functionality and categorisation of content and encouragement given to editors to report films meant it had been aware for many years that copyright in the vast majority of films accessed through Newzbin were being infringed.

Newzbin had authorised the infringement. Authorisation went beyond mere enablement, assistance or even encouragement. It meant purporting to grant a right to do something, and that could be express or implied from the relevant circumstances. The circumstances included the nature of the relationship with the primary infringer, whether material supplied was used for the infringement, whether infringement was inevitable, the degree of control retained by the supplier, and whether any steps had been taken to stop infringement. Newzbin fell foul of all of those criteria. A reasonable member would have concluded that Newzbin purported to have the authority to grant the required permission and had sanctioned, approved and countenanced the copying. Newzbin provided a searchable and user-friendly facility for premium paying members, it must have known what users were doing and took no steps to stop it; instead, any contractual restrictions were window dressing.

Authorisation the infringement was sufficient to have liability to the film industry, but the High Court went further and said that Newzbin had also procured the infringement or had a common design to infringe. It went beyond mere facilitation and extended to being so involved with the infringement as to be jointly responsible. The Court said that Newzbin operated a web site designed and intended to make infringing copies of films readily available to premium members, the service was structured so as to promote infringement and inevitably did so, editors had been encouraged and induced to make reports of films, it had encouraged its members to give advice to each other about how to do it, and it had profited from the infringements.

The Court ruled that there had been a third form of copyright infringement. The facility had enabled Newzbin’s premium members to download the films from a place and at a time individually chosen by them, and when doing so the way in which Newzbin’s service worked meant that it had been actively involved with communicating the copyright work to the public by electronic transmission without permission

It was certainly a happy ending for Twentieth Century Fox and the other film makers and distributors in this case, and they will be hoping that there is no twist in the plot in the appeal courts.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘This result is not particularly surprising. If Newzbin had been able to get away with what they did, it would have been open season for everyone. The case does not alter the best practice advice for genuine service providers on the Internet who do not wish to profit or encourage intellectual property infringement. They should have a good system in place to enable the reporting and rapid takedown of infringing material, and act on it.

‘There is still no reported UK case on whether web sites simply providing hyperlinks to other sites where infringing material can be found but without doing more or otherwise benefiting would be doing anything wrong. However, I’d be surprised if such a service provider was pulled up if they were simply facilitating a service to users and had no control or intention over what their users do.’

As with English law, Australian copyright law forbids the doing or authorise of doing anything which infringes someone else’s copyright. The two legal systems have common roots, and the decision may therefore be persuasive (although not binding) on similar English court cases.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.upload-it.com, comments: ‘It’s understandable that the music and entertainment industries want to take action against people who allow their people to lose royalty monies. However, that’s not fair on the ISPs. It would be the equivalent of taking action against the Post Office because they don’t intercept pirated material sent in the post and stop it being delivered.’

The Government is introducing new laws through the Digital Economy Bill, which (if passed) would involve file-sharers being identified, warned and ultimately stopped from having full Internet access. Virgin Media claims that CView will not help with that. It said the software does not actually identify anyone.

Under the Bill, the rights holder would submit a copyright infringement report with evidence to the infringer’s Internet service provider. The ISP would then inform the user of this and provide details of how to lawfully obtain copyright material. The ISP may also need to tell the infringer that his details can be revealed and that this may lead to legal proceedings being taken against him. The ISP would also need to provide a serious infringers list to the rights holder so that the rights holder could obtain a court order for the user’s details if necessary. Meanwhile, the rights holder cannot require the ISP to take technical measures against the infringer to slow down their Internet access speed (so as to make it hard to be involved with peer-to-peer file-sharing), but instead the Government could require ISPs following advice from Ofcom (the communications regulator) to take technical measures against serious offenders.

Meanwhile, the Bill imposes various obligations on Ofcom:

• To approve a code of practice made by ISPs.
• To deal with infringement disputes involving ISPs, subscribers and rights holders.
• To provide reports to the Government on the amount of copyright infringement and actions taken by rights holders.
• To create a code of practice dealing with ISPs’ obligations to impose technical measures against serious offenders.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘This Bill, if passed, would give some serious teeth to the entertainment industry to try to enable them to boost their revenue streams once more. However, whether or not it will work in practice remains to be seen. It may also prove to be controversial if innocent people’s Internet access will be cut off (which could happen when the unlawful use may have been by one householder and the rest are collectively punished, or when people’s Internet connections are used by third parties without their knowledge), especially as Internet access is becoming thought of as a fundamental human right.’