|Digital Economy Bill [HL] - continued||House of Commons|
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51. The obligations provided for in new sections 124A and 124B would not have effect until there was a complementary code in force that had been approved or made by OFCOM.
52. Clause 6 inserts new section 124C in the 2003 Act. This section sets out the requirements for OFCOMs approval of a code regulating matters in connection with the initial obligations. The process by which infringements are detected, the standard of evidence that the copyright owner must meet before an ISP must send a notification, the format of CIRs, and the routes of appeal for consumers are all issues of detail that section 124C would require the code to deal with. The government hopes that all stakeholders (ISPs, copyright owners and consumers) will contribute to the development of an industry code. Other criteria that an approved industry code may specify include setting in advance the number of CIRs the ISPs will be expected to process in a given period (say, six months).
53. Without these criteria, there would be no obligation for copyright owners to provide infringement information in a standard format and no protection for ISPs in the event that copyright owners set extremely high levels of expected CIRs.
54. The government also envisages that any approved code would also set out the time a copyright owner has to submit a CIR (so that a CIR must relate to a recent infringement) and the time the ISP has to act on the CIR and send a notification to the subscriber (for example, 5 working days) within the outer limits of one month set by the legislation.
55. The governments intention is for the obligations to fall on all ISPs except those who are demonstrated to have a very low level of online infringement. This is on the basis that it would be disproportionate (in cost terms) to require an ISP to incur significant costs to counter a problem that does not exist to any significant degree on its network. The proposal is therefore for the code to set out qualifying threshold criteria, based on the number of CIRs an ISP receives in a set period of time. The government anticipates that most small and medium (SME) ISPs and, possibly, the mobile networks would fall under the threshold. However, this exemption would not be a one-off exercise and the qualifying period would be a rolling one (for example, x number of CIRs received in a rolling 3 month period). ISPs would need to ensure online infringement of copyright remained at a low level or else face the prospect of passing the qualifying threshold. Once in scope, ISPs would have to comply with the obligations and to continue to do so even if the number of CIRs later fell below the threshold.
56. In order to ensure that the code covered all the necessary areas and to a sufficient standard, OFCOMs approval would be needed before it could come into force and the Secretary of State would need to consent to the approval.
57. Before approving a code, OFCOM would have to carry out consultation. Under section 124C and section 124E (which is inserted by clause 8), OFCOM would also need to satisfy themselves that the code was objectively justifiable, proportionate and transparent.
58. Clause 7 inserts new section 124D in the 2003 Act. The new section provides for the making by OFCOM of a code regulating the initial obligations if there is no industry code. The government hopes industry can devise a satisfactory code which OFCOM approves. However, if that does not happen, OFCOM must develop a code themselves for adoption by order. It is possible that stakeholders may be able to reach agreement on parts of the code, which OFCOM can then consider, and, if appropriate, include as part of OFCOMs code. Again, the consent of the Secretary of State would be required for the making of the code.
59. Clause 8 inserts new section 124E in the 2003 Act. This sets out what the code underpinning the initial obligations (whether an industry code or OFCOMs own code) must contain. The reason for including the underpinning material in a code, rather than directly in the 2003 Act, is that it is likely to be detailed and to have to be adapted and refined over time.
60. The code must set out the process by which the initial obligations will operate and the procedures that copyright owners and ISPs must follow in relation to them. It must set out the criteria, evidence and standards of evidence required in a CIR and the required format and content of a notification letter sent to a subscriber. It must not permit any CIR more than 12 months old to be taken into account for the purposes of a notification.
61. The code must also set the threshold applying for the purposes of determining who is a relevant subscriber under section 124B (and may therefore be the subject of a copyright infringement list). CIRs which are more than 12 months old must not be taken into account to determine whether the threshold is met and a copyright infringement list under s134B must not take into account any such CIR.
62. The code must also take into account circumstances whereby injunctions as specified under clause 18 may be brought. It must provide for OFCOM to administer the code and to enforce it in the event of a failure to comply with the code, and it must meet the requirements concerning subscriber appeals (as set out in new section 124K of the 2003 Act, inserted by clause 14).
63. Clause 9 inserts new section 124F in the 2003 Act. Section 124F places an obligation on OFCOM to prepare full reports (every 12 months) and, subject to any direction by the Secretary of State that they are no longer required, interim reports (every 3 months) about the infringement of copyright by subscribers to internet access services. Each report must be sent to the Secretary of State as soon as practicable after the end of the period for which is prepared. OFCOM will have to publish their reports but may exclude information they consider they could refuse to disclose under the Freedom of Information Act 2000.
64. 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. As part of the reports OFCOM will, for the first time, be required to produce assessments of the level of online infringement of copyright. The reports will also take account of various factors which might affect the level of online copyright infringement, such as the steps taken by copyright owners to enable subscribers to obtain lawful access to copyright works, and the extent to which copyright owners are making CIRs and following up with legal action against subscribers. They will be a source of information that the Secretary of State will take into account when taking decisions about whether to impose additional obligations on ISPs.
65. New section 124G of the 2003 Act, inserted by clause 10, confers a power on the Secretary of State to direct OFCOM to assess whether ISPs should be obliged to take technical measures against certain subscribers, or direct OFCOM to take steps to prepare for technical obligations. In particular, OFCOM may be required to carry out a consultation or assess the likely efficacy of different kinds of technical measure, and to report back to the Secretary of State. Technology used for the purposes of online infringement of copyright is changing fast and it is not possible at this stage to know which technical measures would be effective. OFCOM will have to publish their reports under this section but may exclude information they consider they could refuse to disclose under the Freedom of Information Act 2000.
66. The governments aim is for the initial obligations in new sections 124A and 124B to significantly reduce online infringement of copyright. However, in case the initial obligations prove not as effective as expected, new section 124H gives the Secretary of State the power to introduce further obligations, should that prove appropriate.
67. OFCOM would be required to set out supporting provision in a technical obligations code under section 124I (which is inserted by clause 12).
68. New section 124H of the 2003 Act is inserted by clause 11 and gives the Secretary of State power to order ISPs to impose technical measures on internet access service subscribers meeting certain criteria. This power can only be used if the initial obligations code has been in force for at least 12 months, and OFCOM have assessed whether technical obligations should be imposed on ISPs. The order would be subject to the draft affirmative procedure.
69. A technical measure may only be applied against a relevant subscriber, that is a subscriber who has been linked to sufficient CIRs to make them eligible for inclusion in a copyright infringement list.
70. If the Secretary of State makes an order under section 124H requiring ISPs to take technical measures against subscribers, OFCOM will be under an obligation to adopt (by order) a code underpinning the technical obligations. This is provided for in new section 124I of the 2003 Act, inserted by clause 12.
71. Section 124I sets out the procedure for the making by OFCOM of the code on technical obligations. It also provides that the Secretary of States approval of the code is required before it can be made, and specifies that the statutory instrument containing the OFCOM order is subject to the draft affirmative Parliamentary procedure.
72. Clause 13 inserts new section 124J in the 2003 Act. Section 124J sets out a list of matters which are to be included in the technical obligations code. Thus the code must, for example, include provision in relation to enforcement and meet the requirements concerning subscriber appeals (as set out in new section 124K, inserted by clause 14). The person hearing appeals from subscribers must be independent, and OFCOM may set up a body for that purpose.
73. The government envisages that the code would also set out the process by which a technical measure would be taken, and the information that would have to be sent to a subscriber facing such a measure. It would also address how any costs might be apportioned, and set out the dispute mechanism in the event of disagreement between an ISP and a copyright owner.
74. Clause 14 inserts new section 124K in the 2003 Act. Section 124K sets out how the mechanism for subscriber appeals will work. It requires that the initial obligations code and any technical obligations code provide a route for appeals and sets out grounds for appeal. It also requires that the codes must provide for an appeal to succeed unless the copyright owner or ISP shows, in relation to each relevant CIR, that there has been an infringement of copyright and that this has been correctly linked to the subscribers internet account. A subscriber appeal must also succeed where the subscriber shows that the infringement was not carried out by the subscriber and that the subscriber had taken reasonable steps to prevent an infringement.
75. Where an appeal is successful, the codes must allow compensation to be paid to the subscriber and also any reasonable costs.
76. In the event of technical measures being introduced, the person hearing subscriber appeals must be able to confirm, overturn or modify the imposition of a technical measure, including in cases where the appeal is unsuccessful but there are exceptional circumstances. The code must also provide for an appeal from the first appeal bodys decision to a First-tier Tribunal.
77. Finally, the code must ensure that no technical measure is imposed until the appeals process has been exhausted, or the subscriber has decided not to proceed further with an appeal, or the time limit for appeals has expired.
78. Clause 15 inserts new section 124L in the 2003 Act. Section 124L sets out the penalties which may be imposed on an ISP for the contravention of the initial obligations or obligations to impose technical measures, or of the obligation to provide assistance to OFCOM under section 124G.
79. The maximum penalty is specified as the sum of £250,000. However, the Secretary of State has a power to increase this amount by order. The order would be subject to the affirmative resolution Parliamentary procedure.
80. The initial obligations and any later technical obligations will give rise to costs. These will include the cost to ISPs of processing copyright infringement reports and issuing subscriber notifications, the costs to ISPs associated with the imposition of any technical measures, OFCOMs costs in approving or preparing the codes, the cost of enforcing them, and the funding of any subscriber appeals to an independent appeals body or the First-tier Tribunal.
81. New section 124M of the 2003 Act, inserted by clause 16, confers a power on the Secretary of State to specify by order provision which must be included in the codes and which sets out how costs are to be apportioned between copyright owners, ISPs and, in the case of subscriber appeals, the subscriber concerned. This must be done through the affirmative resolution Parliamentary procedure. The costs are those incurred under the copyright infringement provisions. The purpose of the section is to help ensure that the parties carry out their obligations in an efficient and effective manner and that both ISPs and copyright owners have economic incentives to take action to reduce online infringement of copyright through commercial agreements.
82. The government believes that most of the costs of subscriber appeals to an independent person determining appeals or to the First-tier Tribunal should be funded by industry, so that a subscriber does not face significant costs in making an appeal.
83. Clause 18 inserts a new section 97B into the Copyright Designs and Patents Act 1988. The new section confers jurisdiction on the High Court or Court of Session to grant an injunction requiring service providers to block access to sites, for the purpose of preventing online infringement of copyright. When deciding whether to grant an injunction the court would need to consider whether a substantial proportion of material that was either hosted by the particular site in question or accessed through the particular site infringes copyright. The injunction would be granted only where rights holders had first given notice to the service providers and the site operator. The court would take into account the extent to which the operator of the site had taken reasonable steps to prevent the content in question being accessed, and the steps the internet service provider had itself taken to prevent access to the specified online location. It would also consider the extent to which the copyright owner had made reasonable efforts to facilitate legal access to content.
84. The court would be required to take into account any issues of national security raised by the Secretary of State and the importance of human rights, including freedom of expression and the right to property.
85. The new section provides that its provisions will not come into effect until after they have been notified to the European Commission under Directive 98/34/EC of 22 June 1998 (the Technical Standards Directive) and the waiting period specified under the Directive has expired.
86. In the view of the government, as presently drafted the clause (which was inserted by opposition amendment at report stage in the House of Lords) presents a number of difficulties. At Third Reading in the House of Lords, the government stated that it intends to propose replacing this clause in the Commons.
87. The Bill gives powers to the Secretary of State to intervene in the operation of domain name registries. Such registries allocate internet domain names to end users. Internet domain names (such as ) underpin the addressing system for the internet.
88. The Bill confers powers exercisable in circumstances 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. The powers are only exercisable where those failures have adversely affected or are likely adversely to affect (a) the reputation or availability of electronic communications services or networks in the UK and/or (b) the interests of consumers or members of the public in the UK. The provisions only affect registries which take the form of companies formed and registered under the Companies Act 2006 or limited liability partnerships.
89. The powers are only exercisable in relation to top and second level internet domain name registries (which respectively hold the registers of second and third level internet domains) where the domain is UK-related (see the definitions of "relevant register of internet domain names" and "UK related" in new section 124O(7) and (8)). An example of a top level domain registry is one which registers second level domain names ending in .uk, and an example of a second level domain registry is one which registers third level domain names ending in .co.uk.
90. The powers allow the Secretary of State to appoint a manager of a registry or to apply to court to intervene in relation to a registrys constitution in order to secure that the registry remedies specified serious failures.
91. This clause amends the Communications Act 2003 (the 2003 Act) by inserting a new section 124O. The section applies where the Secretary of State wishes to use the new powers set out in clauses 20 and 21 and is satisfied that there has been a serious failure of a registry because:
92. Possible examples of unfair practices would be cyber-squatting (that is, registering domain names which are of economic value to other people and then charging those people high prices to buy them or use them for their own purposes); drop-catching (that is, waiting until the expiry date for an existing registered domain name, snatching it and then charging the previous owner to buy it back); or pressure sales tactics.
93. Possible examples of the misuse of internet domain names would be registering intentionally misleading domain names, perhaps using them for phishing (a form of internet fraud); distributing malware or spyware, which are computer viruses; spamming; intentionally misleading the public into believing there is a connection between the domain name owner and other organisations (or that another organisation owns or authorises the use of the domain name).
94. The Secretary of State is required to consult before making regulations prescribing the unfair practices and misuse of domain names or the requirements in relation to arrangements for dealing with complaints.
95. The section provides that such a failure will be serious where it has adversely affected or is likely adversely to affect the reputation or availability of electronic communications networks or services provided in the UK, or the interests of consumers or the public in the UK.
96. Where the section applies, the Secretary of State must notify the registry specifying the failure and a period within which the registry may make representations to the Secretary of State. In practice, the Secretary of State may (if he considers it appropriate in the circumstances) require OFCOM to prepare a report on the allocation, registration and/or misuse of internet domain names by UK-based registries under section 134C (inserted by clause 2(1)) before exercising his powers.
97. This clause amends the 2003 Act by inserting new sections 124P and 124Q. If the Secretary of State has served a notice under new section 124O, the period allowed for making representations has expired and the Secretary of State is satisfied that the registry has not taken appropriate steps to remedy the failure or its consequences, the Secretary of State may appoint a manager in respect of the property and affairs of the registry to secure that appropriate steps are taken to remedy the failure.
98. New section 124Q makes provision about the powers and functions of the manager so appointed. In particular, the Secretary of State may provide for the manager to take over any or all specified functions of the directors in order to ensure that the registry remedies the failure, and may also prevent the registrys directors from carrying out those functions (subsection (2)). The Secretary of State may also provide for the remuneration of the manager, which may be payable by the registry itself (subsection (3)). In order to ensure that this power does not affect the rights of third parties or the insolvency process, section 124P(4) provides that the appointment does not affect the rights of any third party to appoint a receiver or manager, or the rights of any receiver or manager appointed by a third party. For similar reasons, section 124P(6) provides that if certain office holders under insolvency legislation are appointed in respect of the registry, the Secretary of State must discharge the order appointing a manager. The Secretary of State must also keep the order under review and discharge it if appropriate, for example if the registry has remedied the failure (section 124P(5)). The order has a time limit of two years but the Secretary of State can, if necessary, make a further order in the same or similar terms.
99. Section 124Q(5) to (7) allow the Secretary of State to seek directions from a court in connection with the managers functions. This might be done in order to counter obstruction of the manager by a registry or its officers, since disobeying the courts directions would amount to contempt.
100. Section 124Q(8) applies all the provisions to limited liability partnerships as if the references to a director were to a member of the limited liability partnership.
101. Subsection (2) of clause 20 inserts a reference to an order under section 124P into section 192(1)(d) of the 2003 Act. The effect of this is that the registry has a right of appeal on both the facts and the law to the Competition Appeal Tribunal (and thence to the Court of Appeal on a point of law) in respect of a decision to appoint a manager.
102. This clause amends the 2003 Act by inserting a new section 124R. This gives the Secretary of State the power to apply to the court for an order to alter the constitution of a registry and to limit the registrys ability to amend its constitution itself without the leave of the court. The provision only applies where the Secretary of State has served a notice under new section 124O, the period allowed for making representations has expired and the Secretary of State is satisfied that the registry has not taken the appropriate steps to remedy the failure. The court may only make an order if the court considers it is appropriate in order to secure that the registry remedies the failure specified in the section 124O notification.
103. Section 124R(5) provides that, in the case of a company, the constitution means the articles of association, and in the case of a limited liability partnership, it means the limited liability partnership agreement (as defined).
104. The Secretary of State may exercise his power under this section to apply to court to alter the constitution and the power under new section 124P to appoint a manager concurrently (if he considers it appropriate).
|© Parliamentary copyright 2010||Prepared: 17 March 2010|