As some readers know, one of this Kat's research interests is in the ins and outs of digital copyright. Accordingly, she has been keenly following the judicial review application by British Telecommunications Plc and TalkTalk Telecom Group Plc to test the compatibility of the new online infringement of copyright provisions of the Digital Economy Act 2010 ('the DEA 2010') and the draft Copyright (Initial Obligations) (Sharing of Costs) Order 2011 ('the draft Costs Order') against a number of EU directives. In April 2011, Kenneth Parker J largely disallowed BT's and TalkTalk's multifaceted challenge (see Katpost here). Yesterday the Court of Appeal (Arden, Richards and Patten LJJ) unanimously dismissed most of BT's and TalkTalk's appeal from the order of Kenneth Parker J.
The DEA 2010 was passed during the 2010 Parliamentary 'wash-up' (an accelerated parliamentary process used after the general election was called by Labour Leader Gordon Brown to rush pending legislation through Parliament before dissolution). In response to the growing problem of unauthorised uploading and downloading of copyright material online, sections 3 to 16 of the DEA 2010 inserted new sections 125A to 125N into the Communications Act 2003 ('the Contested Provisions'). In general, the contested provisions imposed 'initial obligations' on internet service providers ('ISPs') to notify subscribers of copyright infringement reports ('CIRs') received from copyright owners, and to provide copyright infringement lists ('CILs') to copyright owners, if an initial obligations code ('the Code') is in force. The Contested Provisions allow for the approval and content of the Code and empower the Secretary of State to specify provisions relating to the payment of contributions towards costs incurred.
Permission to appeal to the Court of Appeal from Kenneth Parker J's order was granted on four grounds.
Ground 1: the Technical Standards Directive
BT and TalkTalk's case on this ground was that the Contested Provisions should have been notified in draft to the EU Commission pursuant to the Technical Standards Directive (Directive 98/34 laying down a procedure for the provision of information in the field of technical standards and regulations, as amended by Directive 98/48). It is common ground that they were not in fact notified and that, if there was a requirement to notify them, the failure to notify renders them unenforceable. In contrast, the Secretary of State's position, upheld by Kenneth Parker J, was that there was no requirement to notify the provisions by themselves; it was the Code which needed to be notified in draft.
Richards LJ was not persuaded (at [39]) by any additional submissions by BT and TalkTalk. In his Lordship's judgment, Kenneth Parker J 'reached the correct conclusion on this issue for the reasons he gave, and there is no force to the appellants' criticisms of those reasons'.
Ground 2: the Electronic Commerce Directive
BT and TalkTalk's case on this ground was a twofold case of breach of the Electronic Commerce Directive (Directive 2000/31 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market): (1) that the effect of the Contested Provisions was to render ISPs potentially 'liable for the information transmitted' contrary to Article 12 ('liability for mere conduits'); and (2) that the Contested Provisions amounted to restrictions on the freedom to provide information society services from other Member States 'for reasons falling within the co-ordinated field' contrary to Article 3.
On the Article 12 case, the issue was whether responsibilities imposed on BT and TalkTalk by the Contested Provisions with regard to notification of copyright infringement reports and the provision of copyright infringement lists, together with the related financial burden and exposure to liability for costs, compensation and penalties, rendered them 'liable for the information transmitted' within the meaning of Article 12(1). BT and TalkTalk submitted that the Contested Provisions did make them so liable and therefore were incompatible with Article 12. Kenneth Parker J disagreed and was 'not able to extract such an extended meaning from the language of Article 12 without doing violence to that language and thereby upsetting the careful balance represented by the text'. On appeal, BT and TalkTalk submitted that Kenneth Parker J was wrong to give Article 12 an unduly narrow construction.
Richards LJ stated (at [53]) that Kenneth Parker J's construction of Article 12 gave effect to 'the natural meaning of the language used' and was 'the correct one'. In comparison, BT and TalkTalk's construction placed 'at the very least, a severe strain on the language used'.
On the Article 3 case, the issue was whether Contested Provisions were contrary to Article 3(2) because they did not relate to 'copyright'. The Annex provided inter alia that Article 3 did not apply to 'copyright, neighbouring rights, rights referred to in Directive 87/54 and Directive 96/9 as well as industrial property rights'. The term 'copyright' is not defined. The Secretary of State's contention, accepted by Kenneth Parker J, was that it has its normal meaning (encompassing all aspects of the law of copyright under national laws), that the Contested Provisions were taken for reasons falling within the field of copyright in that sense, and that Article 3(2) therefore did not apply to them. BT and TalkTalk submitted that 'copyright' in the Annex had a more limited meaning, referring only to the substantive law of copyright under national laws and to such measures for the protection of copyright as have been introduced by Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society ('the Copyright Directive'). Accordingly, BT and TalkTalk argued that the Contested Provisions did not relate to copyright in that sense and so they were incompatible with Article 3(2). Kenneth Parker J rejected BT and TalkTalk's submissions. In general this was because (a) there was no authority for the central premise that the law of copyright has been completely or sufficiently harmonised so that the rationale for the exclusion could no longer be supported and (b) BT and TalkTalk's interpretation 'would create intolerable legal uncertainty'.
Richards LJ stated (at [69]) that he would adopt a 'similar approach in relation to the meaning of the relevant exlcusion' as Kenneth Parker J. This was because (at [70]) 'at the time when the Electronic Commerce Directive was adopted, "copyright" in the Annex to the directive must in my view have had its normal meaning, encompassing all aspects of the law of copyright under national laws, and cannot have had the elaborate meaning attributed to it by the appellants. At that time there was no harmonising directive at the Community level in the field of copyright protection. It would be unrealistic to impute to the Community legislature, at least in the absence of clear, express language to this effect, an intention to give "copyright" a meaning related to provisions of a copyright directive that had not yet been adopted'.
Ground 3: the Data Protection Directive and the Privacy and Electronic Communications Directive
On the data protection point, the issue was whether the data processing in question would fall within the exception of Article 8(2)(e) of the Data Protection Directive (Directive 95/46 on the protection of individuals with regard to the processing of personal data and on the free movement of such data) which had the effect that Member States did not have to prohibit the processing of personal data when such processing was necessary for the establishment, exercise or defence of legal claims. Kenneth Parker J held that such processing by copyright owners to compile copyright infringement reports would fall within the exception in Article 8(2)(e). For his Honour, 'this would appear to be the precise purpose of the contested provisions of the DEA: the copyright owner will be able, through the procedures under the DEA, to establish not only that there has been an infringement of copyright but also who is responsible for the infringement'. On appeal, BT and TalkTalk argued that Kenneth Parker J had 'lost sight' of the fact that in a substantial proportion of cases the scheme established by the DEA 2010 was not intended to involve legal claims at all (following the assumption in the Government's impact assessment for the statute that 70% of infringers would stop once and for all upon receiving a single notification from their ISP). Accordingly, for BT and TalkTalk, the DEA 2010 scheme would operate for the most part as an extra-judicial curtailment of copyright infringement in which the processing could not be said to be necessary for the establishment, exercise or defence of legal claims and could not therefore fall within the exemption in Article 8(2)(e).
Richards LJ rejected this submission (at [77]). In His Lordship's view, 'the processing is plainly necessary for the establishment, exercise or defence of legal claims even if the beneficial consequence of the sending of a notification by the ISP pursuant to a copyright information request will be that in the majority of cases the infringing activity ceases and no further action is required'.
A secondary issue arose as to whether BT and TalkTalk could derive any further assistance from the the Privacy and Electronic Communications Directive (Directive 2002/58 concerning the processing of personal data and the protection of privacy in the electronic communications sector) which imposed obligations to maintain the confidentiality of traffic data, subject to the derogation in Article 15(1). Article 15(1) did not refer expressly to restrictions necessary for the protection of property rights, including copyright, there is authority from the Court of Justice of the European Union as having that extended scope (Case C-275/06, Productores de Musica de España v Telefonica de España SAU [2008] ECR I-271). BT and TalkTalk argued that the Promusicae decision only related to civil proceedings and that no wider derogation was to be read into Article 15(1) so as to apply to the DEA 2010. Kenneth Parker J rejected this argument.
Richards LJ also rejected this argument (at [81]). In His Lordship's view it was 'clear that the court in Promusicae interpreted Article 15(1) as extending to the protection of the rights and freedoms of others, including the protection of the right to property, and that this was not intended to be limited to the context of civil proceedings'.
Ground 4: the Authorisation Directive
In order to implement an internal market in electronic communications networks and services, the Authorisation Directive (Directive 2002/20 on the authorisation of electronic communications networks and services, as amended by Directive 2009/140) provided in part for schemes of 'general authorisation' which allowed any person who wished to provide electronic communications networks and services to do so in accordance with a publicly available set of conditions. The issue under this ground was whether the contested provisions were required to form part of a general authorisation and, if so, whether they imposed conditions permitted within a general authorisation.
At first instance, BT and TalkTalk argued that the Contested Provisions fell within the definition of 'general authorisation' in Article 2(2) and therefore should have been included in the general authorisation rather than being the subject of separate legislation. They also argued that if they had been so included they would have had no legal force because they were not conditions of a kind permitted by Article 6(3) and the Annex. Kenneth Parker J rejected both of these arguments.
Richards LJ agreed. On the first limb, his Lordship stated (at [95]) that Article 1(3) of the Framework Directive was apt to permit the Contested Provisions by way of derogation from the Authorisation Directive, as measures taken at national level to pursue general interest objectives.
On the second limb, the issue was whether the draft Costs Order breached Article 12 of the Authorisation Directive which provided that any administrative charges should only cover administrative costs which would be incurred in the management, control and enforcement of the general authorisation scheme. The draft Costs Order refers to three kinds of costs: (a) 'qualifying costs', namely the costs incurred by Ofcom or the appeals body in carrying out functions under the copyright infringement provisions, including costs incurred by Ofcom under those provisions in appointing the appeals body or in establishing a body corporate to be the appeals body; (b) 'relevant costs', namely costs which would be reasonably and efficiently incurred by a notional qualifying ISP in carrying out its obligations under the provisions; and (c) 'case fees' charged by the appeals body in respect of each subscriber appeal which it receives (in relation to each appeal, the appealing subscriber's ISP would be required to meet 25% of the fee, with the other 75% being recovered from the relevant copyright owner). Kenneth Parker J found that: (a) 'qualifying costs' were 'administrative charges'; (b) 'relevant costs' were not 'administrative charges'; and (c) 'case fees' were not 'administrative charges'. BT and TalkTalk objected to his Honour's decision on 'relevant costs' and 'case fees'.
As to 'relevant costs', Richards LJ was not persuaded by BT and TalkTalk's submissions (at [104]). This was because the case cited by counsel in support of the appeal Case C-296/06, Telecom Italia SpA v Ministero dell'Economia e delle Finanze [2008] ECR I-801 provided no support for the proposition that 'relevant costs' were 'administrative charges'. As to 'case fees', Richards LJ respectfully disagreed (at [106]) with with Kenneth Parker J 'on this one small point'. This was because if 'qualifying costs' are 'administrative charges' within Article 12, His Lordship could see no sensible reason why 'case fees' should not be treated in the same way.
No use making a reference
BT and TalkTalk said that, if there was any doubt about any of the issues raised in the appeal, a reference should be made to the Court of Justice. Kenneth Parker J declined to make a reference, stating that 'the questions of European Union law raised by this judicial review admit of clear answers, and I do not believe that any useful purpose would be served by my making a reference'. Richards LJ was of the same view (at [112]). Accordingly, the appeal was dismissed, save in relation to the issue of 'case fees' under the Costs Order.
The IPKat is left breathless by all of this. Whoever said it was good to Talk ...?
The DEA 2010 was passed during the 2010 Parliamentary 'wash-up' (an accelerated parliamentary process used after the general election was called by Labour Leader Gordon Brown to rush pending legislation through Parliament before dissolution). In response to the growing problem of unauthorised uploading and downloading of copyright material online, sections 3 to 16 of the DEA 2010 inserted new sections 125A to 125N into the Communications Act 2003 ('the Contested Provisions'). In general, the contested provisions imposed 'initial obligations' on internet service providers ('ISPs') to notify subscribers of copyright infringement reports ('CIRs') received from copyright owners, and to provide copyright infringement lists ('CILs') to copyright owners, if an initial obligations code ('the Code') is in force. The Contested Provisions allow for the approval and content of the Code and empower the Secretary of State to specify provisions relating to the payment of contributions towards costs incurred.Permission to appeal to the Court of Appeal from Kenneth Parker J's order was granted on four grounds.
Ground 1: the Technical Standards DirectiveBT and TalkTalk's case on this ground was that the Contested Provisions should have been notified in draft to the EU Commission pursuant to the Technical Standards Directive (Directive 98/34 laying down a procedure for the provision of information in the field of technical standards and regulations, as amended by Directive 98/48). It is common ground that they were not in fact notified and that, if there was a requirement to notify them, the failure to notify renders them unenforceable. In contrast, the Secretary of State's position, upheld by Kenneth Parker J, was that there was no requirement to notify the provisions by themselves; it was the Code which needed to be notified in draft.
Richards LJ was not persuaded (at [39]) by any additional submissions by BT and TalkTalk. In his Lordship's judgment, Kenneth Parker J 'reached the correct conclusion on this issue for the reasons he gave, and there is no force to the appellants' criticisms of those reasons'.
Ground 2: the Electronic Commerce Directive
BT and TalkTalk's case on this ground was a twofold case of breach of the Electronic Commerce Directive (Directive 2000/31 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market): (1) that the effect of the Contested Provisions was to render ISPs potentially 'liable for the information transmitted' contrary to Article 12 ('liability for mere conduits'); and (2) that the Contested Provisions amounted to restrictions on the freedom to provide information society services from other Member States 'for reasons falling within the co-ordinated field' contrary to Article 3.
On the Article 12 case, the issue was whether responsibilities imposed on BT and TalkTalk by the Contested Provisions with regard to notification of copyright infringement reports and the provision of copyright infringement lists, together with the related financial burden and exposure to liability for costs, compensation and penalties, rendered them 'liable for the information transmitted' within the meaning of Article 12(1). BT and TalkTalk submitted that the Contested Provisions did make them so liable and therefore were incompatible with Article 12. Kenneth Parker J disagreed and was 'not able to extract such an extended meaning from the language of Article 12 without doing violence to that language and thereby upsetting the careful balance represented by the text'. On appeal, BT and TalkTalk submitted that Kenneth Parker J was wrong to give Article 12 an unduly narrow construction.
Richards LJ stated (at [53]) that Kenneth Parker J's construction of Article 12 gave effect to 'the natural meaning of the language used' and was 'the correct one'. In comparison, BT and TalkTalk's construction placed 'at the very least, a severe strain on the language used'.
On the Article 3 case, the issue was whether Contested Provisions were contrary to Article 3(2) because they did not relate to 'copyright'. The Annex provided inter alia that Article 3 did not apply to 'copyright, neighbouring rights, rights referred to in Directive 87/54 and Directive 96/9 as well as industrial property rights'. The term 'copyright' is not defined. The Secretary of State's contention, accepted by Kenneth Parker J, was that it has its normal meaning (encompassing all aspects of the law of copyright under national laws), that the Contested Provisions were taken for reasons falling within the field of copyright in that sense, and that Article 3(2) therefore did not apply to them. BT and TalkTalk submitted that 'copyright' in the Annex had a more limited meaning, referring only to the substantive law of copyright under national laws and to such measures for the protection of copyright as have been introduced by Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society ('the Copyright Directive'). Accordingly, BT and TalkTalk argued that the Contested Provisions did not relate to copyright in that sense and so they were incompatible with Article 3(2). Kenneth Parker J rejected BT and TalkTalk's submissions. In general this was because (a) there was no authority for the central premise that the law of copyright has been completely or sufficiently harmonised so that the rationale for the exclusion could no longer be supported and (b) BT and TalkTalk's interpretation 'would create intolerable legal uncertainty'.
Richards LJ stated (at [69]) that he would adopt a 'similar approach in relation to the meaning of the relevant exlcusion' as Kenneth Parker J. This was because (at [70]) 'at the time when the Electronic Commerce Directive was adopted, "copyright" in the Annex to the directive must in my view have had its normal meaning, encompassing all aspects of the law of copyright under national laws, and cannot have had the elaborate meaning attributed to it by the appellants. At that time there was no harmonising directive at the Community level in the field of copyright protection. It would be unrealistic to impute to the Community legislature, at least in the absence of clear, express language to this effect, an intention to give "copyright" a meaning related to provisions of a copyright directive that had not yet been adopted'.
Ground 3: the Data Protection Directive and the Privacy and Electronic Communications Directive
On the data protection point, the issue was whether the data processing in question would fall within the exception of Article 8(2)(e) of the Data Protection Directive (Directive 95/46 on the protection of individuals with regard to the processing of personal data and on the free movement of such data) which had the effect that Member States did not have to prohibit the processing of personal data when such processing was necessary for the establishment, exercise or defence of legal claims. Kenneth Parker J held that such processing by copyright owners to compile copyright infringement reports would fall within the exception in Article 8(2)(e). For his Honour, 'this would appear to be the precise purpose of the contested provisions of the DEA: the copyright owner will be able, through the procedures under the DEA, to establish not only that there has been an infringement of copyright but also who is responsible for the infringement'. On appeal, BT and TalkTalk argued that Kenneth Parker J had 'lost sight' of the fact that in a substantial proportion of cases the scheme established by the DEA 2010 was not intended to involve legal claims at all (following the assumption in the Government's impact assessment for the statute that 70% of infringers would stop once and for all upon receiving a single notification from their ISP). Accordingly, for BT and TalkTalk, the DEA 2010 scheme would operate for the most part as an extra-judicial curtailment of copyright infringement in which the processing could not be said to be necessary for the establishment, exercise or defence of legal claims and could not therefore fall within the exemption in Article 8(2)(e).
Richards LJ rejected this submission (at [77]). In His Lordship's view, 'the processing is plainly necessary for the establishment, exercise or defence of legal claims even if the beneficial consequence of the sending of a notification by the ISP pursuant to a copyright information request will be that in the majority of cases the infringing activity ceases and no further action is required'.
A secondary issue arose as to whether BT and TalkTalk could derive any further assistance from the the Privacy and Electronic Communications Directive (Directive 2002/58 concerning the processing of personal data and the protection of privacy in the electronic communications sector) which imposed obligations to maintain the confidentiality of traffic data, subject to the derogation in Article 15(1). Article 15(1) did not refer expressly to restrictions necessary for the protection of property rights, including copyright, there is authority from the Court of Justice of the European Union as having that extended scope (Case C-275/06, Productores de Musica de España v Telefonica de España SAU [2008] ECR I-271). BT and TalkTalk argued that the Promusicae decision only related to civil proceedings and that no wider derogation was to be read into Article 15(1) so as to apply to the DEA 2010. Kenneth Parker J rejected this argument.
Richards LJ also rejected this argument (at [81]). In His Lordship's view it was 'clear that the court in Promusicae interpreted Article 15(1) as extending to the protection of the rights and freedoms of others, including the protection of the right to property, and that this was not intended to be limited to the context of civil proceedings'.
Ground 4: the Authorisation Directive
In order to implement an internal market in electronic communications networks and services, the Authorisation Directive (Directive 2002/20 on the authorisation of electronic communications networks and services, as amended by Directive 2009/140) provided in part for schemes of 'general authorisation' which allowed any person who wished to provide electronic communications networks and services to do so in accordance with a publicly available set of conditions. The issue under this ground was whether the contested provisions were required to form part of a general authorisation and, if so, whether they imposed conditions permitted within a general authorisation.
At first instance, BT and TalkTalk argued that the Contested Provisions fell within the definition of 'general authorisation' in Article 2(2) and therefore should have been included in the general authorisation rather than being the subject of separate legislation. They also argued that if they had been so included they would have had no legal force because they were not conditions of a kind permitted by Article 6(3) and the Annex. Kenneth Parker J rejected both of these arguments.
Richards LJ agreed. On the first limb, his Lordship stated (at [95]) that Article 1(3) of the Framework Directive was apt to permit the Contested Provisions by way of derogation from the Authorisation Directive, as measures taken at national level to pursue general interest objectives.
On the second limb, the issue was whether the draft Costs Order breached Article 12 of the Authorisation Directive which provided that any administrative charges should only cover administrative costs which would be incurred in the management, control and enforcement of the general authorisation scheme. The draft Costs Order refers to three kinds of costs: (a) 'qualifying costs', namely the costs incurred by Ofcom or the appeals body in carrying out functions under the copyright infringement provisions, including costs incurred by Ofcom under those provisions in appointing the appeals body or in establishing a body corporate to be the appeals body; (b) 'relevant costs', namely costs which would be reasonably and efficiently incurred by a notional qualifying ISP in carrying out its obligations under the provisions; and (c) 'case fees' charged by the appeals body in respect of each subscriber appeal which it receives (in relation to each appeal, the appealing subscriber's ISP would be required to meet 25% of the fee, with the other 75% being recovered from the relevant copyright owner). Kenneth Parker J found that: (a) 'qualifying costs' were 'administrative charges'; (b) 'relevant costs' were not 'administrative charges'; and (c) 'case fees' were not 'administrative charges'. BT and TalkTalk objected to his Honour's decision on 'relevant costs' and 'case fees'.
As to 'relevant costs', Richards LJ was not persuaded by BT and TalkTalk's submissions (at [104]). This was because the case cited by counsel in support of the appeal Case C-296/06, Telecom Italia SpA v Ministero dell'Economia e delle Finanze [2008] ECR I-801 provided no support for the proposition that 'relevant costs' were 'administrative charges'. As to 'case fees', Richards LJ respectfully disagreed (at [106]) with with Kenneth Parker J 'on this one small point'. This was because if 'qualifying costs' are 'administrative charges' within Article 12, His Lordship could see no sensible reason why 'case fees' should not be treated in the same way.
No use making a reference
BT and TalkTalk said that, if there was any doubt about any of the issues raised in the appeal, a reference should be made to the Court of Justice. Kenneth Parker J declined to make a reference, stating that 'the questions of European Union law raised by this judicial review admit of clear answers, and I do not believe that any useful purpose would be served by my making a reference'. Richards LJ was of the same view (at [112]). Accordingly, the appeal was dismissed, save in relation to the issue of 'case fees' under the Costs Order.
The IPKat is left breathless by all of this. Whoever said it was good to Talk ...?
It may not be elegant but at least it's legal: appeal court rules on wash-up Act
Reviewed by Catherine Lee
on
Thursday, March 08, 2012
Rating:
Reviewed by Catherine Lee
on
Thursday, March 08, 2012
Rating:
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