Digital Economy Act 2010: summary of main provisions

Practical Law UK Legal Update 9-502-0116 (Approx. 14 pages)

Digital Economy Act 2010: summary of main provisions

Background

Digital Britain Report

In June 2009, the Department for Business Innovation & Skills and the Department for Culture, Media and Sport (DCMS) published the Digital Britain final report on the future of the digital and communication industries. Among other measures, the report recommended various ways of reducing online copyright infringement (see Legal update, Government publishes Digital Britain report: content issues). In addition the report proposed licensing the use of orphan copyright works (that is, works whose copyright owners cannot be identified), increasing the maximum fine for copyright infringement offences, and extending public lending rights to non-traditional book formats such as e-books.

In the report the government also proposed taking action to ensure universal access to broadband at two megabits per second (Mbps) by 2012. It also set a target of rolling out "next-generation access" (NGA) networks, which are generally understood to provide speeds of 50 to 100 Mbps to 90% of the population by 2017. The government thought that the market would only achieve roll-out of NGA to about two thirds of the population, and therefore proposed a "Final-Third Project" to support delivery to most of the remaining population. It proposed that this would be funded by a 50-pence-per-month levy on all fixed lines from October 2010.

For more information see the following Legal updates:

Digital Economy Bill

In the autumn of 2009, the government introduced the Digital Economy Bill, which had its first reading in the House of Lords on 19 November 2009, its second reading on 2 December 2009 and its third reading on 15 March 2010 (see Legal update, Digital Economy Bill passes third reading in House of Lords). The Bill implemented many aspects of the Digital Britain report and covered a wide range of areas including online infringement of copyright; public-service broadcasting and content; network infrastructure; and digital safety (see Legal update, Government publishes Digital Economy Bill).

On 7 April 2010, the House of Commons passed the Bill with amendments as part of the parliamentary "wash-up" procedure (the period of a few days during which the government seeks agreement to bills going through the House of Commons before Parliament is dissolved). For more information, see Legal updates, House of Commons passes copyright provisions of Digital Economy Bill with amendments and Government drops provision for wider Ofcom powers and replacement regional TV news providers from Digital Economy Bill.

Facts

The Digital Economy Act received Royal Assent on 8 April 2010, in the form passed by the House of Commons the day before. The main provisions of the Act are summarised below, followed by analysis and comment on some of the more important provisions.

Measures contained in the Act

The measures contained in the Act are:

New duties for Ofcom to report, every three years, on the UK's communications infrastructure, internet domain name registration and how media content contributes to the public service objectives (sections 1 and 2).
Obligations on internet service providers (ISPs) aimed at the reduction of online infringement of copyright (sections 3-16).
Power for the Secretary of State to obtain a court order to block an internet location that is being used in connection with copyright infringement (sections 17-18).
Powers of intervention in relation to internet domain registries (sections 19-21).
The extension of Channel Four Television Corporation's (C4C) functions to encompass public-service content online as well as on television, and to include film financing (sections 22-23).
New flexibility for licensing commercially funded public-service television broadcasters (sections 24-29).
Changes to the licensing regime for independent radio services to facilitate digital switchover (sections 30-36).
Change to conditions of public-service provision that Ofcom must include in Channel 3 and 5 licences (section 37).
Provisions relating to the reallocation of spectrum currently used by mobile-network operators, relating to fees and enforcement (sections 38-39).
Extension of the range of video games subject to classification requirement (sections 40-41).
Increased penalties for copyright infringement (section 42).
Changes to the public lending right (section 43).

Ofcom's duties: digital infrastructure and content (sections 1-2)

Ofcom has the following new reporting duties:

It must report to the Secretary of State on various infrastructure matters in the first year after the provision comes into force, and then at three-yearly intervals (as opposed to two-yearly, as proposed in the Bill) (sections 134A and 134B, Communications Act 2003 (Communications Act)). The matters on which Ofcom must report include, among other things:
- the types of network available;
- geographic and population coverage;
- network unavailability;
- the extent to which networks are shared; and
- the standard of UK networks compared to those in other countries.
If required by the Secretary of State, Ofcom must report on matters relating to internet domain names, such as their management and distribution, their misuse, or the use of unfair practices by registries, end-users or registrars (section 134C, Communications Act).
When Ofcom conducts its reports on the fulfilment of the public-service remit, under section 264 of the Communications Act, it will now have to carry out a review of the extent to which television and radio services, on-demand services and other edited internet services contribute to the public-service objectives, which have until now only applied to specified television broadcasters (section 264A, Communications Act).

Ofcom's existing information-gathering powers have been extended to require communications providers and others to supply the information it will need to write its reports.

Comment

The original draft Bill also required Ofcom to consider the need to promote appropriate levels of investment in electronic-communications networks and in public-service media content, but these provisions have been removed. The Digital Britain project was prompted in part by a concern that the UK was falling behind other countries (such as France and some East-Asian countries) in establishing next-generation networks, and giving Ofcom duties to promote investment in infrastructure could have helped improve networks in the UK. However, industry has been against the move to build new networks, preferring instead to work with the existing infrastructure.

Online copyright infringement: notification system and technical sanctions (sections 3-16)

Background

The government issued a consultation paper on proposed legislation to tackle online infringement of copyright, such as unlawful file-sharing, on the same day that it published the final Digital Britain report. In June 2009, the government took the unusual step of amending its proposals midway through the consultation. Under the revised proposals (among other things) the Secretary of State (rather than Ofcom) would have powers to direct the introduction of technical measures by ISPs, and the suspension of an infringer's internet connection was added to the list of technical sanctions (see Legal update, Government consults on revised proposals for legislation on illicit file-sharing).

The government's revised proposals were reflected in clauses 4 to 17 of the original Bill.

Provisions of the Act

Sections 3 to 16 of the Act impose various obligations on ISPs, aimed at the reduction of online infringement of copyright by introducing new sections 124A to 124M in the Communications Act.

Notification system: initial ISP obligations (sections 3-8)

The Act requires ISPs to:

Notify their subscribers if the internet protocol (IP) addresses associated with them are reported by copyright owners as being used to infringe copyright (section 124A, Communications Act). The new legislation prescribes the information that a copyright owner should put in a copyright infringement report (CIR).
To provide, on an anonymous basis, copyright infringement lists to copyright owners (section 124B, Communications Act). This provision will only apply to subscribers about whom the number of CIRs has exceeded a threshold (such as 50), which is to be set in an initial obligations code (see below). On the basis of this information, a copyright owner could apply to the courts for a Norwich Pharmacal order to obtain the names and addresses of those subscribers on the list.

These obligations are to subject to and underpinned by an "initial obligations" code of practice. The code may be made by industry and approved by Ofcom (subject to the Secretary of State's consent) or, if no industry code is put forward, made by Ofcom (with the Secretary of State's consent) . Sections 5 to 7 deal with the making of the code and its contents. For example, the code must contain enforcement procedures that Ofcom may employ in the event of a failure to comply with the code, and it must also specify the rights of subscribers to challenge actions by ISPs and copyright owners.

On 13 April 2010, Ofcom published terms of reference in which it discussed the steps it would take to introduce a code of practice and how it would engage stakeholders in this process (see Ofcom, Measures to Tackle Online Copyright Infringement: Terms of Reference). It said that its first task would be to establish the feasibility of an industry-drafted code, failing which it would move to draft an appropriate code. Ofcom said that it would also begin work immediately on establishing a robust subscriber-appeals mechanism (see Subscriber appeals (section 13)), and a framework for handling disputes. Ofcom said that to comply with the timetable in the Act, it would need to publish a draft code for consultation no later than May 2010, and publish a draft statutory instrument embodying code for European Commission approval by September 2010.

Section 8 (section 124F of the Communications Act) places an obligation on Ofcom to prepare full progress reports every 12 months, and interim reports every 3 months, about the infringement of copyright by subscribers to internet access services once the code of practice has been in force for over 12 months. These reports will help the Secretary of State to monitor trends in online copyright infringement and to ascertain the effectiveness of the obligations on ISPs. Ofcom said in its terms of reference (see above) that it would establish a methodology for estimating levels of unlawful file sharing, against which the impact of the initial obligations will be assessed in these reports.

Technical sanctions (sections 10-12)

Section 10 (section 124H of the Communications Act) gives the Secretary of State the power to make an order imposing a technical obligation on ISPs to take a range of technical measures against those subscribers who have had more than a prescribed threshold number of copyright infringement reports made against them. Before doing so, the Minister has to take into account a formal Ofcom assessment of the need for such measures (section 9) and Ofcom reports on infringing activity (section 8). Such technical measures include limiting internet connection speed and suspending the subscriber's service.

The original provision in the Bill was amended so that the relevant order must be subjected to a so-called super-affirmative procedure, requiring a 60-day consultation period and approval by both Houses of Parliament. (That procedure itself was created by section 18 of the Legislative and Regulatory Reform Act 2006, which was intended to be used only for the uncontroversial reform of legislation.) The section also provides that there can be no such order before the initial obligations code of practice has been in force for at least 12 months.

Ofcom is required under section 11 (section 124I, Commmunications Act) to adopt a code underpinning the technical obligations, the contents for which are set out in section 12, such as enforcement, appeals and the apportionment of costs.

Subscriber appeals (section 13)

Section 13, which was inserted by a House of Lords' amendment, sets out an appeals procedure for subscribers which is to be included in the initial obligations and technical obligations codes. The procedure will operate as follows:

Appeals will be to an independent body set up for the purpose of hearing them, and further appeals may be made to the first-tier tribunal in relation to the imposition of technical sanctions.
Subscribers will be able to appeal on grounds that the apparent infringement alleged by the copyright owner is not, in fact, an infringement, and/or that the infringement report does not relate to the subscriber's IP address at the relevant time, and/or that the copyright owner or the ISP failed to comply with the regulatory codes.
The burden of proof in relation to infringement and the accuracy of the IP address will fall on the copyright owner and the ISP.
The subscriber will succeed in the appeal under the above grounds if he can show that he did not commit the allegedly infringing act, and took reasonable steps to prevent others from infringing via his internet connection.

Penalties and sharing of costs (sections 14 and 15)

Section 14 (inserting section 124L of the Communications Act) sets out the penalties that may be imposed on an ISP for, among other things, the contravention of their initial obligations or obligations to impose technical measures. The maximum penalty is £250,000, although the Secretary of State can increase this amount by order.

Section 15 (inserting section 124M of the Communications Act) deals with the allocation of costs in relation to ISPs' new obligations, for example the costs associated with issuing subscriber notifications. The Secretary of State is to specify by order how costs are to be apportioned between copyright owners, ISPs and, in the case of subscriber appeals, the subscriber concerned. This must be done by an order approved by both Houses of Parliament.

Online copyright infringement: blocking injunctions (sections 17 and 18)

Background

As originally drafted, the Bill gave the Secretary of State the power to amend the CDPA to prevent or reduce online copyright infringement if it was appropriate to do so because of technological developments that had occurred or were likely to occur.

The House of Lords, at their third reading, rejected the clause because of concerns that it placed too much power in the hands of the government of the day, enabling it to make sweeping changes to copyright law without proper parliamentary scrutiny (see Legal update, Internet companies oppose copyright powers under Digital Economy Bill). The Lords tabled an amendment to introduce a new provision which set out the circumstances in which specific internet locations could be blocked by court order. However, this amendment was withdrawn when the government indicated that it would subsequently introduce revised proposals in this regard (see Legal update, Digital Economy Bill passes third reading in House of Lords).

Website-blocking injunctions provision (sections 17 and 18)

Section 17 of the Act is the redraft of the website-blocking provision, which was tabled by the government on 29 March 2010, and which was passed by the House of Commons, together with a further clause (section 18) establishing a consultation procedure.

Section 17 provides that the Secretary of State may, by regulations, make provision about the granting by a court of a blocking injunction in respect of a location on the internet which the court is satisfied has been, is being, or is likely to be used for, or in connection with, an activity that infringes copyright. However, the Minister can only make such regulations if satisfied that:

The use of the internet for activities that infringe copyright is having a serious adverse effect on businesses or consumers.
Making the regulations is a proportionate way to address that effect.
Making the regulations would not prejudice national security or the prevention or detection of crime.

The sections also contain the following safeguards, among others, to answer some of the concerns that were expressed about previous incarnations of the provisions:

The regulations must provide that a court cannot order a blocking injunction unless it is satisfied that a substantial amount of material has been, is being, or is likely to be, obtained from (or made available at) the location in infringement of copyright, or has been, is being, or is likely to be, used to facilitate access to such an infringing location.
The regulations must also ensure that prior notice of the injunction application is given to the ISP and the website operator.
The court must take into account certain matters when deciding whether to grant an injunction. These include evidence of any steps taken by the ISP or the website operator to prevent infringement, and evidence of measures taken by the copyright owner or licensee to give people lawful access to the material. The importance of freedom of expression is also a relevant factor.
The court must also consider (section 17(5)(d), Communications Act) whether the blocking of the location is likely to have a disproportionate effect on any person's legitimate interests. (This would make it less likely that very popular sites such as YouTube would be the subject of a blocking injunction.)
ISPs cannot be ordered to bear the costs of obtaining a blocking order.
The proposed regulations will be laid before Parliament in a 60-day period of consultation during which the draft will be considered in both Houses of Parliament under the super-affirmative procedure.

Comment on online copyright infringement provisions

From a copyright owner's point of view, legislation to curb peer-to-peer file-sharing cannot come soon enough, and many commentators believe that it is strong lobbying by bodies such as the BPI that has led to the government's determination to push the Bill through, despite the evident lack of parliamentary time. Court proceedings against individuals suspected of persistently infringing copyright are a disproportionately time consuming and expensive way of tackling the problem of file-sharing. Similarly, letter campaigns by ISPs run the risk of alienating their subscribers (see Legal update, Virgin Media and BPI send letters to customers about illegal downloads).

The Liberal Democrats raised concerns (in debate at the Bill's third reading) that the website blocking provisions (section 17) penalise sites that facilitate access, or that are "used for or in connection with an activity that infringes copyright", saying that this was too wide-ranging and could even (at least in theory) put sites such as Google at risk.

Another area of concern has been the prospect that cafés, libraries and other places that offer a free WiFi connection may fall within the definition of "internet service provider" referred to in the Act (that is, any person providing a service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services). The type of service offered and the contractual relationship with users of the service will determine whether or not the provider is classified as a subscriber or as an ISP. The government has pointed out in an advisory note that few such services would offer sufficient bandwidth to enable file-sharing by users, but this situation may change with advances in technology. Although such providers should be able to appeal on the grounds set out in section 124K of the Communications Act (as inserted by section 13 of the Act), this will inevitably be time-consuming and costly.

The debate over the most controversial aspects of the Bill may, in any event, be academic. Both the regulations to create the new blocking injunctions and the order imposing technical measures on ISPs need to overcome various obstacles before they can be made, and there is still plenty of opportunity for them to be blocked by either House of Parliament during the course of the super-affirmative procedure. In addition, if and when a court is asked to grant a blocking injunction, it is likely to tread very carefully in view of the controversial and draconian nature of the provision.

There is also the issue of drawing up the codes of practice and sharing the costs of the new measures to be determined. On 30 March 2010, the government published, for consultation purposes, a set of proposals for the sharing of costs that would arise under the new legislation, proposing that notification costs should be shared between copyright owners and ISPs in the ratio 75:25. (For more information, see Legal update, Government consults on costs-sharing under Digital Economy Bill online copyright infringement notification obligations.)

The Act in the form now passed appears not to provide future-proofing against the most recent technological developments. A growing number of websites offer encrypted "cyberlocker" facilities (allowing people to swap files without their contents being publicly visible), and virtual private networks which can conceal a subscriber's activities from the ISP. Furthermore, proxy servers can be used to hide the identity of file-sharers by making it appear as though they are operating from a different location. At the moment it may only be the few large-scale file-sharers who take the trouble to use these ways of disguising their identity and/or activities, but these methods may come into common usage as a way of eluding the reach of the Act.

Powers in relation to internet domain names (sections 19-21)

Section 19 of the Act (section 124N of the Communications Act), provides that the Secretary of State can intervene in the operation of domain name registries where:

There has been misuse of domain names, or the use of unfair practices by registries, registrars and end-users of domain names, or where registries have failed adequately to deal with complaints according to prescribed requirements.
The above failures have adversely affected, or are likely to adversely affect:
- the reputation or availability of electronic communications services or networks in the UK; or
- the interests of UK consumers or members of the public.

Possible examples of misuse of domain names include registering intentionally misleading domain names and spamming. Possible examples of unfair practices include cybersquatting and pressure sales tactics. The Secretary of State is required to consult before making regulations prescribing the unfair practices and misuse of domain names, or the prescribed complaints requirements. (This requirement was added to the original wording of the clause.)

The powers are only exercisable in relation to top and second-level domain name registries where the domain is UK-related. In such situations, the Secretary of State must notify the registry, specifying the failure and a period within which the registry may make representations. Once the period has expired, the Secretary of State can exercise his powers under sections 20 and 21 (sections 124P to R of the Communications Act) to appoint by order a manager of the registry, or to apply to court to intervene in relation to the registry's constitution so that it remedies the failures. Section 124Q sets out the functions and powers of the manager. The Secretary of State can seek directions from the court in this regard. This might be done in order to counter obstruction of the manager by a registry or its officers, since disobeying the court's directions would amount to contempt.

Comment on powers in relation to domain registries

The reserve powers set out these clauses, enabling the Secretary of State to intervene in the operation of domain name registries, demonstrate how far the government is prepared to go in improving the regulation of the internet, although it emphasised in the Digital Britain report that it supported self-regulation of the .uk domain name registry. Few amendments were made to these clauses during the passage of the Bill, highlighting the overall parliamentary support for its provisions.

Channel 4 Corporation (sections 22 to 23)

C4C has been given new functions to create media content on platforms other than television, in new section 198A of the Communications Act (inserted by section 22 of the Act). As well as being required to create content for a range of delivery platforms, it is also required to participate in making high-quality films for cinema, by investing in or otherwise procuring content. C4C must also make news and current-affairs content, and content for older children and young adults. Section 23 inserts new clauses into the Communications Act to require C4C to prepare an annual statement of media content policy, and gives Ofcom monitoring and enforcement duties in relation to C4C's media content duties.

The only change in these provisions from the Bill (apart from the section numbering) is the addition of a requirement for C4C to provide access to information and views from around the world (section 198A (4)(b), Communications Act).

Comment on the changes to C4C's function

It has been widely accepted that C4C's current commercial model is not sustainable in the long term, in particular following a financial review by Ofcom in June 2007 (see Legal update, Ofcom statement on implications of Channel 4 financial review for PSB remit). Ofcom, in its second public-service review, concluded that Channel 4 should be maintained as a strong, alternative public-service broadcasting voice to the BBC (see Legal update, Ofcom publishes final statement in public service broadcasting reviewOfcom publishes final statement in public service broadcasting review). Attempts at creating partnerships with BBC Worldwide, the commercial arm of the BBC, or with Five, have not been successful. The focus in the Digital Britain report was on positioning C4C as a multi-media public-service counterpoint to the BBC. Channel 4 already funds films, but the creation of an obligation to participate in the making of "high quality" films will be reassuring to the film industry.

Independent television services (sections 24-29)

Sections 24 to 29 make amendments to the Broadcasting Act 1990 and the Communications Act to introduce flexibility into the licence processes for the commercially funded public-service television broadcasters. Section 24 gives Ofcom more flexibility in structuring the Channel 3 licence map from a geographical point of view by removing the restriction on single franchise areas for both England and Scotland. Section 25 allows different expiry dates to be set for Channel 3 licences, the Channel 5 licence and the licence to provide the public teletext service, and allows the Secretary of State more flexibility to extend the duration of licences where appropriate.

Comment on changes in relation to independent television services and regional news

The introduction of increased licence flexibility is an acknowledgement that the value of the existing public-service broadcasting Channel 3 licences will decline further between now and the completion of digital switchover, due to the increased competition from alternative media platforms.

The significant change to this section compared with the Bill is that the proposed new section 287A of the Communications Act, which gave Ofcom power to appoint and fund providers of regional or local news (or both), has been removed from the Act. ITV Plc reduced its regional news programmes in England and Wales earlier in 2009, and there is now a gap in regional and local news provision. The government has been supportive of the idea that local news should, in the future, be provided by news consortia and, in the Digital Britain report, suggested establishing a contestable part of the television licence fee from 2013 of about 3.5%, which could be used to fund local news, but this controversial issue was not resolved and the project has been shelved for the time being.

Independent radio services (sections 30-36)

The Secretary of State is given the power to nominate a date for the switch from analogue to digital radio broadcasting, and there are changes to the licensing regime to take into account radio digital switchover.

Comment on changes for independent radio services

The amendments to the radio-licensing regime are intended to enable digital coverage to be extended, and to encourage investment in new digital content by the commercial sector, alongside the BBC. Digital radio has not so far taken off in the UK and, in February 2008, GCAP withdrew from digital radio broadcasting on the grounds that it was not economically viable. In the Digital Britain report, the government suggested that digital switchover should take place by 2015, although in a report published in December 2008, the Digital Radio Working Group suggested that the earliest data for switchover for most national and local services should be 2017, and radio broadcasters are sceptical that the 2015 target is achievable. There is no commitment to a particular date in the Act.

Public-service broadcasting (section 37)

Section 263(4) of the Communications Act gives the Secretary of State the power to cease including certain obligations in the licence of any service. Section 37 of the Act amends this provision to allow the Secretary of State to remove obligations for a limited period, or reintroduce them if appropriate.

Comment on public-service broadcasting obligation

This amendment is targeted at allowing the Secretary of State to alter the conditions of public-service provision that Ofcom must include in Channel 3 and 5 licences, and then to change them back at a later date. This is intended to ease the public-service burden on Channel 3 and 5 licensees, which has been seen as making it difficult for them to compete against digital channels and content providers on other media platforms who do not have public-service obligations.

Access to electromagnetic spectrum (sections 38-39)

The provisions in sections 38 and 39 are focused on improving the availability of "next-generation" or "high-speed" mobile-broadband services. The 2.6 GHz and 800 MHz bands are suitable for these services, and the government plans to run a combined auction of these bands, and has laid Directions to Ofcom to do so in Parliament (see Legal update, BIS publishes response to consultation on spectrum modernisation and makes directions to Ofcom). Sections 38 and 39 have been drafted with this auction in mind. Section 38 allows Ofcom to make regulations under section 12(1)(b) of the Wireless Telegraphy Act 2006 (2006 Act), which apply charges payable during the term of the licence to specified cases of wireless telegraphy licences allocated by auction (there is currently no power to impose charges to a licence allocated through auction). In the context of the proposed auction it is likely that some mobile-network operators will be required to relinquish some of the spectrum they currently use. Section 38 allows Ofcom to make regulations under section 14(1) of the 2006 Act to permit or require licences to provide for payments for relinquished spectrum to be made to the operator who relinquished it, rather than to Ofcom, on the basis that the operator bought this at auction in 2000. Section 39 adjusts the provisions on enforcement on licence terms.

Comment on universal access

It is worth mentioning that the government has also dropped its scheme for charging a supplement of 50 pence per month on all fixed copper lines to make up the expected financial shortfall for providing universal next-generation (high-speed) broadband coverage, which was not included in the Digital Economy Bill, but was included in the Finance Bill. Stephen Timms, Under-Secretary of State for Business, Innovation and Skills, has said that it will be reintroduced in the Finance Bill following the election (if Labour wins), although the Conservative party has been opposed to the levy and has talked about using the BBC licence fee instead. The government has said it is still committed to universal broadband at 2 Mbps.

Video recordings (sections 40 and 41)

Background

In the Digital Britain report the government announced that it would adopt a new system of classification for video games, incorporating the newly enhanced Pan-European Game Information system (PEGI), the details of which it set out in chapter 7 and the accompanying DCMS press release (see Legal update, New classification system for UK video games). The need for a new classification system was highlighted by Professor Tanya Byron's report, Safer Children in a Digital World (known as the Byron Report) (see Legal update, Byron Report on children's safety in digital environment published).

Classification of video games and designated authority (sections 41 and 42)

Section 41 of the Act follows the recommendations of the Byron Report by extending the statutory classification requirement to video games that are only suitable for viewing by persons aged 12 years and above, as set out in the Digital Britain report. It sets out the conditions that must be satisfied for the game to be an exempted work under the Video Recordings Act 1984 (1984 Act). The existing statutory exemptions for video games will continue to apply (such as those concerned with sport and music), but in addition a video game will be exempted if it satisfies one or more of the new conditions set out in the new section 2A. The first condition is that the game does not contain anything listed in section 2A(2), which is based on the criteria used by the PEGI. The Secretary of State has the power to amend this criteria.

Section 42 of the Act allows the Secretary of State to designate two different authorities under the 1984 Act, separating out the regulatory responsibility for video games from video works. It also contains provisions enabling the authorities to transfer work between them.

Schedule 1 of the Bill contains various supplementary provisions relating to the classification of video games. It includes an amendment to section 4 of the 1984 Act, so that a person seeking a classification certificate for a video work may be required to comply with a code of practice, such as the PEGI code.

Comment on video-recordings provisions

The long-awaited introduction of the PEGI classification system for video games is to be welcomed. However, the need for further secondary legislation to set up the regulatory system and give, as anticipated, the UK Video Standards Council statutory responsibility for video games, means that further delays are inevitable.

Orphan works

Provision in the Bill

Clause 42 of the original Bill introduced a number of new sections into the CDPA to legislate for orphan works as anticipated in the Digital Britain report. This included section 116A, which would have allowed the Secretary of State to make regulations providing for the authorisation of a licensing body or other person to use, or to license the use of, orphan works. The regulations would have also covered the treatment of royalties and other sums paid for authorisation of the use of orphan works, and what would happen if a work ceased to be an orphan work.

However, these provisions were dropped from the Bill during its final reading in the House of Commons largely because there was insufficient time to debate them in the parliamentary wash-up process.

Comment on removal of orphan works from the Act's provisions

Clause 43 on the licensing of orphan copyright works had been the subject of much opposition, from photographers in particular, who argued that it would create a free-for-all in which anyone would be able to use works in ways that the owner would not necessarily agree to, claiming that they could not trace the copyright owner. There were also complaints about the fact that the proposed licence fee for such use would have gone to a regulatory body rather than the copyright owner. The dropping of this clause will, therefore, be welcome news for copyright owners, particularly photographers, whose photographs might well appear on the internet without copyright attribution.

However, publishers have expressed disappointment at the removal of these provisions and the fact that Parliament was unable to agree amendments to the clause to accommodate the concerns of photographers.

Increase penalties for copyright infringement (section 42)

Section 42 of the Act amends sections 107 and 198 of the CDPA, which deal with infringing articles and illicit recordings respectively, to increase the maximum fine that may be imposed for these offences from the statutory maximum (£5,000 in England and Wales and £10,000 in Scotland) to £50,000.

This follows the recommendation of the Gowers Review that penalties for online and physical copyright infringement should match, and the results of the subsequent Intellectual Property Office consultation (see Legal update, Response to consultation on copyright penalties favours maximum fine for all IP offences).

Public lending right (section 43)

As anticipated in the Digital Britain report, section 43 of the Act updates the Public Lending Right Act 1979 (1979 Act) to reflect the changing nature of book publishing and the increasing demand for the loan of books from public libraries in formats other than print. The main changes introduced by the section are as follows:

It amends the definition of "book" in the 1979 Act by extending it to audio and e-books, provided they consist mainly of written or spoken words or still pictures.
It also amends the definitions of "lending", "loan" and "borrowed" in the 1979 Act, with the aim of capturing almost all cases in which a public library makes a book available to a member of the public for use away from the library for a limited period of time.
It extends the definition of "author" in the 1979 Act to include producers and narrators of audio-books.
It makes consequential amendments to the CDPA to reflect the extended definitions of "book", "author" and "lending" in the 1979 Act.

Comment

Digital Britain sought to achieve two goals: firstly, it was about creating a policy for maximising the benefits of the digital revolution; second, it sought to address the issue of online copyright infringement. Improving Britain's communications structure was seen as both necessary to avoid Britain falling behind the rest of the world in this field, and a way of improving the economy particularly in the recession. In the end, this vision has not really been delivered. There has not been the appetite for pushing the move towards super-fast broadband, and the provisions requiring Ofcom to encourage investment in new networks and the levy to fund super-fast networks have, therefore, fallen by the wayside. In terms of creating an infrastructure for super-fast broadband access, the Act is therefore not as forward-looking as the Digital Britain report, or the original draft of the Bill.

There has been strong condemnation from opposition parties and pressure groups of the way that the Digital Economy Bill was passed into law as part of the wash-up procedure, rather than under normal parliamentary procedure. This meant that there was very limited debate of the Bill in the Commons (a fact that was emphasised by the live coverage of Commons debates on television and the internet). However, the government has given assurances that the precise workings of the more controversial copyright aspects of the Act will be given further thought after the general election if Labour are re-elected, and the Conservatives have promised that, if they win the election, they will change any aspects of the legislation that are flawed or turn out to have unintended consequences. In addition, the planned regulations on website blocking, and the order imposing technical measures on ISPs, will be subject to the parliamentary super-affirmative procedure, which requires that they be subject to a 60-day consultation period, to run simultaneously in both Houses of Parliament.

Although the Labour Party manifesto for the 2010 general election includes a proposal to update the intellectual property framework on which the creative industries depend and taking further action to tackle online piracy, neither of the main political parties has committed to the idea that there needs to be a wholesale and radical review of copyright law. The purpose of any such review would be to provide a balance between the legitimate expectations of rights-owners, new business models which the internet offers, and the expectation of consumers that they might enjoy content in the formats they prefer, rather than as dictated by content-providers. A challenge for the next government will be to provide a framework for fair dissemination and use of creative product.

Source: Digital Economy Act 2010.

Digital Economy Act 2010: summary of main provisions | Practical Law