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Online Infringement of Copyright and the Digital Economy Act 2010 Notice of Ofcom’S Proposal to Make by Order a Code for Regulating the Initial Obligations

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Online Infringement of Copyright and the Digital Economy Act 2010 Notice of Ofcom’S Proposal to Make by Order a Code for Regulating the Initial Obligations Online Infringement of Copyright and the Digital Economy Act 2010 Notice of Ofcom’s proposal to make by order a code for regulating the initial obligations Interim statement and notice of a proposal to make an order Publication date: 26 June 2012 Closing date for responses: 26 July 2012 Online Infringement of Copyright and the Digital Economy Act 2010 Contents Section Page Purpose of this document 1 1 Executive summary 2 2 Introduction 8 3 Application of the Code 14 4 Copyright infringement reports 37 5 Identifying subscribers and making notifications 48 6 Copyright infringement lists 62 7 Subscriber appeals 68 8 Sharing of costs 78 9 Administration, enforcement, disputes and information gathering 81 10 Next steps 86 Annex Page 1 Responding to this consultation 88 2 Consultation response cover sheet 90 3 The Initial Obligations Code 92 4 The notification process 93 5 Interpretation of key statutory definitions in the DEA provisions 94 6 List of selected abbreviations 103 0 Online Infringement of Copyright and the Digital Economy Act 2010 Purpose of this document In this interim statement and notice under section 403 of the Communications Act 2003 (“CA03”),1 Ofcom sets out its proposed conclusions in relation to its obligation to make by order a code for the purpose of regulating the initial obligations. These are measures introduced by the Digital Economy Act 2010 (“DEA”), aimed at reducing online copyright infringement. Specifically, we set out the general effect of the provisions of the draft Online Infringement of Copyright (Initial Obligations Code) Order (“the Code”), (which is included at Annex 3 of this statement) and explain our reasoning for them. 1 See section 1.11 below. 1 Online Infringement of Copyright and the Digital Economy Act 2010 Section 1 1 Executive summary Background and introduction 1.1 The DEA received Royal Assent in April 2010. It followed a number of policy developments related to online copyright enforcement including the Gowers Review of the UK Intellectual Property Framework (2006), the industry-led Memorandum of Understanding process to trial subscriber notifications (2008), and the Government’s Digital Britain reports (2009). 1.2 The provisions in the DEA impose new responsibilities on Ofcom to implement and administer measures aimed at significantly reducing online copyright infringement. These measures form part of a multi-pronged approach by Government aimed at reducing online copyright infringement through a complementary mix of enforcement, consumer education and encouragement to industry to develop and promote online services offering lawful access to copyright works. 1.3 The DEA provisions insert amendments to the Communications Act 2003 (“CA03”) to create two new obligations for internet service providers. These are referred to as the “initial obligations”. They are to: • Notify their subscribers if the internet protocol (“IP”) addresses associated with them are reported by copyright owners as being used to infringe copyright; and • Keep track of the number of reports about each subscriber, and compile, on an anonymous basis, a list of those subscribers who are reported on above a threshold to be set in the Initial Obligations Code. This list is referred to as a “Copyright Infringement List” (“CIL”). After obtaining a court order to obtain personal details, copyright owners will be able to take action against those included in the list.2 1.4 The DEA provides that the implementation and regulation of the initial obligations must be set out in a code. In the absence of an approved code drawn up and agreed by industry, it falls to Ofcom to make a code in accordance with the requirements of the DEA provisions. 1.5 Consequently, on 28 May 2010 we published a consultation document – Online Infringement of Copyright and the Digital Economy Act 2010: Draft Initial Obligations Code – in which we set out our proposals for the Code. In this interim statement we refer to this consultation as “the May 2010 consultation”.3 1.6 This interim statement and notice details our proposed conclusions on the May 2010 consultation. It also sets out the general effect of the draft Code which is included at Annex 3, which we are proposing to make. Publication of this interim statement has been delayed due to a number of factors, including a judicial review of the DEA provisions, a subsequent appeal to the Court of Appeal and the revision by Government of secondary legislation in relation to the cost sharing arrangements as a result of that litigation. 2 http://www.opsi.gov.uk/acts/acts2010/en/ukpgaen_20100024_en_1 at paragraph 31. 3 http://stakeholders.ofcom.org.uk/binaries/consultations/copyright-infringement/summary/condoc.pdf 2 Online Infringement of Copyright and the Digital Economy Act 2010 1.7 Below, we set out the key proposals that we made in the May 2010 consultation and then set out the amendments we have subsequently made to them. Our May 2010 consultation proposals 1.8 In summary, our May 2010 consultation proposed that: • Initially the Code should only apply to fixed ISPs with more than 400,000 subscribers; • The accuracy of copyright owners’ evidence-gathering systems and ISPs’ internet protocol (IP) address-matching systems should be managed using a self- certification approach; • Copyright owners would have ten working days from gathering evidence within which to submit it to ISPs, who would then have ten working days to identify the subscriber and send a notification (if appropriate); • There should be a three-stage notification process with at least one month between each notification, which should be written in plain English and contain sufficient information to inform subscribers about their situation. The first two notifications could be sent by post or email, the third by recorded delivery post; • Subscribers should be placed on the CIL if they had received a first, second and third notification within a 12 month period; • Copyright owners could ask for the list every three months and ISPs would have five working days in which to provide it; and • There should be an independent appeals process through which subscribers could appeal on the grounds specified in the DEA provisions. We also reflected the fact that the grounds for appeal specified were non-exhaustive by proposing that subscribers could appeal on any other ground as to why an act or omission should not have occurred. Amendments to our previous proposals 1.9 The key proposals that we made in the May 2010 consultation are unchanged as set out later in this document. However, we have made the following amendments to the proposal contained in our May 2010 consultation. These amendments, and our reasons for them, are detailed in this statement and reflect stakeholder responses to our consultation and instructions we have been given by Government in accordance with the approvals process set out in the DEA. • We have amended the definition of the internet access services and internet access providers that are within scope of the Code to clarify that only providers of fixed internet access supplying services over more than 400,000 broadband- enabled lines will be subject to the initial obligations. Internet access providers which do not meet these criteria (for example, mobile network operators and providers of Wi-Fi services) are outside the scope of the Code. This is on the basis that costs of participation would be disproportionately high compared to the expected low reduction in overall levels of online copyright infringement that participation would bring; 3 Online Infringement of Copyright and the Digital Economy Act 2010 • We have added in paragraph 2 of the Code a further qualification provision, that where all fixed ISPs within a Group (as defined in section 1261 of the Companies Act 2006) provide internet access services over more than 400,000 broadband- enabled lines in aggregate, they will each be qualifying ISPs. This removes ISPs’ ability to avoid the application of the Code by making changes to their corporate structure; • The Code now specifies that, in the event a qualifying ISP falls below the qualification threshold (for example as a result of customer churn), it will remain subject to the initial obligations for the duration of the notification period in which it ceases to meet the threshold and for the notification period which immediately follows. This is so that copyright owners which have funded ISP investment in CIR processing systems have a reasonable period during which they can benefit from this investment. We consider this reasonably balances the interests of the copyright owner and ISP; • In the May 2010 consultation we said that copyright owners must detail to Ofcom the processes that they have put in place to audit their evidence-gathering systems. We have now specified that copyright owners will be required to have their procedures approved by Ofcom before they can send any reports of apparent copyright infringement to ISPs. We expect that a copyright owner will be well placed to secure approval from Ofcom if it adopts evidence-gathering procedures that comply with a publicly-available specification which Ofcom is prepared to sponsor. ISPs are not required to have their subscriber identification processes approved by Ofcom, though failure to comply with the requirement for accurate address matching is likely to be considered a material breach of the Code, triggering enforcement action and a fine where appropriate. We believe that ISPs have clear incentives to ensure their processes are robust in
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