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ISPs will pay quarter of copyright notification costs, says Government

Out-Law News | 16 Sep 2010 | 2:35 pm | 2 min. read

Internet service providers (ISPs) will have to bear a quarter of the costs of the copyright protection systems to be set up under the Digital Economy Act (DEA), the Government has said. ISPs have objected to the decision.

The DEA demanded that telecoms regulator Ofcom set up a system through which rights holders could notify ISPs that subscribers were engaging in copyright infringing activity. After a third warning to subscribers, ISPs make details of those subscribers available to rights holders to be used as the basis of legal action.

Ofcom outlined the workings of its system in July of this year. The Government has published its decision on how the costs of the notification system will be split.

"The notification costs of ISPs and Ofcom as regulator are to be split 75:25 between copyright owners and ISPs," said a Government response to a consultation on the issue published by the Department for Business, Innovation and Skills. "The regulator costs also include the costs related to the appeals system."

The payment of costs by rights holders and ISPs means that individuals will not directly fund the anti-infringement activity. The Government also addressed fears that users would not be able to appeal notifications without paying a fee.

"There should be no fee for subscribers to appeal against a notification letter," it said. "However the Government retains the power to introduce one at a later date should it become clear that a large number of vexatious appeals result."

Trade body the ISP Association (ISPA) has attacked the decision, arguing that copyright owners should be the ones to pay for the defence of their own economic interests.

"ISPA has consistently argued for the beneficiary pays principle and is disappointed with today's announcement," said the body's general secretary Nicholas Lansman. "Full cost recovery for serious law enforcement cases is an established rule and ISPA sees no reason why it should not be the case here."

The Government said, though, that ISPs should share the costs as an incentive to drive them to make their infringement processes as efficient as possible.

"Calls by ISPs and consumer groups for all costs to fall to copyright owners were ... rejected," the Government said. "Placing part of the costs on ISPs mean they have a real incentive to ensure they adopt the most effective and efficient process in processing CIRs (copyright infringement reports) and issuing notifications."

"The arguments for the apportionment of Ofcom and appeal body costs are less clear cut," the Government said. "ISPs argue that the regulations are to benefit copyright owners and they should therefore pay all these costs; set against this is the principle that those who are regulated should cover the cost of the regulator."

"The argument that appeals would only result from errors made in identifying infringements was rejected as it remains entirely possible that the ISPs could make processing errors," the Government said. "Again sharing appeal costs between ISPs and copyright owners provides a further incentive to ensure the processes are as robust as possible."

The Government also rejected calls by copyright owners for ISPs to share the costs of detecting infringement in the first place.

"Copyright owners repeatedly called for their detection costs to be included," said the Government's statement. "This argument was rejected as the initial proposal to share costs 75:25 was made in the full knowledge that copyright owners did have these separate costs to bear. At the level of the individual copyright owner the level of detection activity (and any legal action) is a matter for them. It was considered these were largely 'business as usual' costs that copyright owners would face as part of protecting their own copyright material."

"The decision will now be notified to the European Commission before being introduced in Parliament as a Statutory Order," said a Government statement. "Ofcom’s Online Copyright Infringement Initial Obligations Code will implement the notifications process and will also reflect the decision on costs. This will come into force in the first half of 2011."