Digital Economy Act

The controversial Digital Economy Bill was enacted in the run up the the general election, a fact which in itself drew the ire of some. The matter is not closed, however, as some ISPs are mounting a judicial review challenge to the act, or at least some of its provisions. It was initially unclear the basis on which this challenge is being mounted partly because the main source of information on this are press releases, a well-know resource for accurate summaries of the law! BT’s press release starts off by telling us that they’re challenging because BT believes “it wasn’t scrutinised enough by MPs before the last General Election”. I’m not convinced that constitutes a cause of action though the TalkTalk press release is a little more specific, stating that it had “asked the High Court to look at whether the Act was passed into law without going through the correct parliamentary procedures”. Fortunately TalkTalk’s press release gives us a link to the Statement of Facts and Grounds for the action. This tells us that the action is mainly based in EU law, specifically those “designed to make sure national laws are proportionate, protect users’ privacy and restrict the role of internet service providers in policing the internet” in BT’s words. Whilst the obvious candidate to rely on is the Directive on Privacy on Electronic Communications (Directive 2002/58), other grounds are put forward. Two arguments relate to other directives:

  • the Technical Standards Directive (Directive 98/34/EC); and
  • the e-Commerce Directive (Directive 2000/31/EC).

There is also a claim made on more general principles of proportionality infrining not just the directives but the right to provide services, general principles protected by the EU (Article 6(3) TEU and general principles) as well as Articles 8 and/10 ECHR, equivalent provisions of the Charter and the Human Rights Act.

Quashing or declaratory relief is sought.

The technical standards directive requires Member States to notify the Commission when they introduced, inter alia, rules and regulations relating to the provision of information society services. The revised technical standards directive provides a definition of ‘rules on services’ which are the functional equivalent to a technical regulation for the purposes of the original Technical Standards Directive (Directive 98/34/EC). It is case law on this directive from CIA Security International (C-194/94) onwards that makes it clear that non-notified national requirements cannot be relied upon in national courts. Of course, this argument depends on whether the rules fall within the definition of a rule on services in the 98/34 version of the directive. The claimants rely on Liga Portuguesa (C-42/07) to say that they do.

The claimants’ argument on the e-Commerce directive is based on the fact that the e-Commerce directive limits liability for ‘mere conduits’ which in the words of the ECJ in Google France (C-236-8/08) are ‘technical, automatic and passive’. The liability that from which they claim exemption is that constituted by the combination of the initial obligations to receive and process copyright infringement reports prepared by copyright owners and to provide owners, when so requested, with a copyright infringement list, the technical obligations to limit access to the Internet and the penalty provisions. Further there are penalties of up to £250,000 for non-compliance. This argument then brings into question the scope as Article 12 of the e-Commerce Directive; the Secretary of State seems to be of the opinion that Article 12 is concerned with vicarious liability in relation to copyright infringement. The monitoring obligation (the obligation to maintain lists of infringers) is in the view of the claimants inconsistent with Article 15 of the e-Commerce Directive. The claimants also refer to the pending references before the ECJ on Articles 12 and 14 of the e-Commerce Directive and the possibility of suspending internet services in intellectual propoerty actions, two of which are from the High Court: Interflora v. Marks & Spencer (C-323/09) and L’Oreal SA v eBay International (C-324/09). See also Scarlet Extended SA v SABAM (C-70/10).

Perhaps the most obvious ground to rely on is that listed third, that based on the Directive on Privacy and Electronic Communications, given the existing case law in this area starting with Productores de Música de España (Promusicae) v Telefónica de España (C-275/06) in the background. To refresh your memories on that one, Promusicae brought an action against Spanish ISP Telefónica in order to obtain the identity of users sharing music through KaZaA. The matter was referred to the ECJ on the tension between the Directive on Privacy on Electronic Communications (2002/58) and and that on Copyright (2000/31). The ECJ held that “when implementing the measures transposing those directives, the authorities and courts of the Member States must not only interpret their national law in a manner consistent with the directives but also make sure that they do not rely on an interpretation of them which would be in conflict with those fundamental rights or with the other general principles of Community law, such as the principle of proportionality”. Information passed to copyright owners by ISPs complying with the DEA 2010 constitute personal data, which is protected under the PEC directive. It seems that the Secretary of State also relies on Promusicae in that that judgment held that personal data may be disclosed to ensure ‘the effective protection of copyright in civil proceedings’. Of course the problem with the DEA is that there is no judicial oversight of the disclosure process at all.

The final ground the claimants have termed ‘proportionality’, but it actually a catach all argument saying that the DEA infringes various rights for reasons which may be justified were they not disproportionate to the aim in each case. We therefore have taken together the freedom to provide services under Art 56 TFEU (ex-49 EC), the “principles” enshrined in the ECHR and the EU Charter which are part of EU law due to Art 6(3) TEU and the case law of the ECJ on general principles of EU law. The statement focusses on the issue of proportionality and not the scope of the rights they claim are violated – though they are probably right that those rights are engaged.

This case raises many interesting issues and given the length of this post already there is not space to do justice to them just now. I will close by flagging up some comment in other blogs about the remedies sought. EDRI cite Struan Robertson of Pinsent Masons as saying “All the court can do is make a declaration that a law is in breach of other obligations. That declaration would put pressure on Parliament to revisit the act.” Clearly the courts cannot make or re-make acts of Parliament and if we want a procedure in place that does something like this, then yes, we will have to wait for an act of Parliament. I think BT and TalkTalk would be happy with the court taking the view that the relevant provisions are incompatible with EU because -following the House of Lords in Factortame and of course the ECJ’s case law on supremacy – that law would be disapplied and the ISPs would not have to implement the scheme.

One Response to “Digital Economy Act”
  1. Mark H says:

    the legal problems of this act are interesting as clearly stated above… it is also going to be interesting to see the commercial effect of such a potentially damaging piece of legislation. ISPs are likely to be coerced by bodies (think BPI) into taking pre-emptive action against account holders to avoid liability – such limitation of internet access in a society increasingly tied to e Commerce is not useful for economic development

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