Following the successful defence of the Digital Economy Act provisions in judicial review, we are moving forward with the DEA initial obligations. The claimants have so far been refused permission to appeal against the judgment, but have applied for an oral permission hearing in the Court of Appeal to overturn this refusal. The hearing is scheduled for the autumn. However, the Government remains confident that the judgment will stand, and is pushing ahead with implementation.
There are two key steps to implementation. The first is the approval by Parliament of the Sharing of Costs statutory instrument (SI), which sets out how the scheme will be paid for. The second is the approval by Parliament of Ofcom’s Initial Obligations Code, which sets out how the details of the scheme will work. Both need to be notified in draft to the European Commission under the Technical Standards Directive, before being laid in Parliament.
The Sharing of Costs SI was notified in draft to the European Commission in September 2010 and subsequently laid before Parliament in January 2011. However, the judicial review ruling requires us to make a change to the SI in relation to “qualifying costs”. At the same time we have concluded that subscribers should be required to pay a fee to make an appeal, which will be refundable if the appeal is successful. We also need to make a technical correction to the drafting of the SI, which does not reflect any change of policy.
Amendment to responsibility for “qualifying costs” The judicial review ruling stated that ISPs cannot be made responsible for the costs incurred by Ofcom or the independent appeals body in setting up, administering and enforcing the provisions of the DEA (“qualifying costs”). This does not apply to the costs incurred by ISPs in performing their own duties under the DEA, or to appeals case fees. Therefore, we have amended the Sharing of Costs Order to require participating copyright owners to pay 100% of the qualifying costs. We do not intend to revisit the sharing of other costs between copyright owners (75%) and ISPs (25%).
Introduction of a subscriber fee for appeals Notification letters sent under the DEA will not be a direct precursor to legal action being taken against the subscriber. The notifications are intended to tell subscribers when their account has been identified as infringing copyright and to provide appropriate information and advice, including suitable warning that the copyright owner might take legal action in the event of repeated infringement as they currently can. However, subscribers will nevertheless be able to appeal against every notification letter received from their ISP, and against every instance of infringement identified.
Ofcom has given us further advice on the potential costs of the appeals system and the possible options for keeping these costs to a reasonable minimum. We are publishing that report alongside this document.
It is clear that a large volume of vexatious or non bona fide appeals claims could drive up the cost of the appeals system by a substantial degree. Naturally, it would be undesirable for these costs to be driven so high that the system becomes unworkable.
Therefore, we have concluded that subscribers should be required to pay a £20 fee to make an appeal. If the appeal is successful, the fee will be refunded. We believe that setting the fee at £20 will serve the purpose of deterring vexatious appeals intended to disrupt the system, but will not have a disproportionate effect on those with legitimate reasons to appeal. We will consider the level of the fee after one year of the notifications being in place, to make sure that it is still appropriate.
Correction of Schedule 3(3)a We have also corrected a drafting error in schedule 3(3)a of the original published draft of the Sharing of Costs SI. The wording should have referred to the total amount of the qualifying costs to be incurred in the notification period, rather than the total “annual” amount of qualifying costs. This is not a change in policy.