In October 2009, the France’ high court approved “Loi favorisant la diffusion et la protection de la création sur Internet”, or “HADOPI” (see our previous post: Three Strikes and You’re…OUTTTT! (Of French Cyberspace)).  Now almost one year into the life of the law, results have been mixed. The French government has said that it is prepared to begin issuing warnings and sanctions under the law, but no action has been taken yet. Commentators have questioned the feasibility of the law (e.g., the ease with which offenders can regain access to the Internet), and some original supporters of the legislation have qualified their original support of the law in response to adverse political reaction.

The U.K.’s Digital Economy Act  was enacted on June 8, 2010. Aimed at regulating the access of copyrighted material by end-users, one controversial section of the law establishes a system for identifying users who access illegal materials and for gradually increasing technical restrictions on their Internet access. These restrictions involve initially downgrading the quality of a user’s connection (the hope being that slower upload and download speeds will act as a deterrent to piracy) and culminate in a complete denial of Internet access.

Since the enactment of the DEA, the Office of Communication (Ofcom), an independent regulator and competition authority for the UK communications industries, has developed a protocol/obligations codefor implementing the legislation (but has said that plans to disconnect end-users from the Internet would not come into force until next year). ISPs are tasked with identifying and compiling a list of those end-users believed to be engaging in infringing conduct via a three-stage notification process, which includes sending letters to such end-users (which must include certain “standardized” information in connection with the allegations made against the end-user and what actions such end-user can take both to challenge the allegation and to protect their network). Rights’ holders can also request the ISP to identify those end-users who have breached an Ofcom-defined threshold for continued violation of access to information (i.e., following the third notification to a particular end-user), after which the rights’ holder may petition a court for identification of the user for purposes of initiating litigation.

Not surprisingly, the DEA has been subject to criticism from many perspectives.  Certain commentators have claimed that the complete denial of Internet service may violate existing European Union principles and regulations intended to preserve EU residents’ “basic rights and freedoms”, one of which is the right to access and use the Internet, and say that even worse is the manner in which the act was passed into law (which ISPs claim was rushed through Parliament with insufficient scrutiny). Further criticism focuses on the fact that the DEA provides only for an independent, limited appeals process for end-users who believe they have been wrongly accused of copyright infringement (as opposed to due process in a judicial proceeding). Consumer rights groups have raised concerns that an innocent user who has not encrypted her wireless network may be sanctioned if others access the network to engage in authorized conduct.  In addition, some have predicted that the threat of disconnection may alienate the most avid legalbuyers of entertainment content, encouraging them to switch to anonymized, encrypted alternatives so as not to reveal their identity.  Lastly, because the DEA only applies to ISPs with more than 400,000 customers, one consequenceof the law could be a flight of consumers to smaller ISPs, placing the larger ISPs at a commercial disadvantage.

Many major ISPs have recently spoken out against the DEA.  TalkTalk and British Telecom (the UK’s largest providers of broadband to homes) have initiated legal challenges, with their core claim being that the DEA conflicts with existing European Union regulations relating to individual privacy and electronics communications directives, as well as e-commerce directives.  They have also raised concerns about the role of ISPs in policing the Internet (i.e., that ISP’s are mere conduits of content and should not be held responsible for traffic on their services). 

Many reporters and commentators have also started to speculate about the practical ramifications of the DEA.  These include concerns that the increased costs borne by ISPs in identifying and notifying infringing users may be passed onto subscribers, raising access costs across the board.  Additionally, there is speculation that additional taxesmay be imposed on ISPs for transmission of pirated content by their subscribers.  Finally, the potential ramifications of long-term end-user tracking (e.g., data retention issues) have raised additional privacy concerns.

Reception of the three-strikes legislation, or graduated response, has been mixed elsewhere in the European Union and around the world.  In some countries, such as Belgium and Singapore, active or proposed legislation has tried to establish administrative oversight of illegal access to copyrighted material. In others, such as Germany, the government has taken a more laissez-faire approach by asking individual ISPs to handle content regulation and restriction without active government intervention.  

The point of restriction of content access varies as well. Graduated response, such as the process promulgated by HADOPI, puts the onus upon the individual end-user (i.e., if the end-user infringes upon copyright and accesses copyrighted material, she suffers the potential sanction of denial of Internet service). In other proposals, this remedy is rejected in favor of putting the burden on ISPs: the service provider must actively block websites known to provide copyrighted material illegally. Yet other proposed regulations include targeting the website itself and have imposed (or have tried to impose) sanctions against individual websites for their presence within a certain country.

These alternate approaches clearly reveal the competing, deeply-rooted political philosophies and interests engaged in the debate.  Is digital piracy something that should be primarily policed by the government through stringent regulatory schemes?  Or should the responsibility fall to commercial stakeholders, such as content owners and ISPs?  How does one resolve the competing interests between content owners (who seek the most stringent protections available) and ISPs (who may view themselves as a passive provider of a basic service, not an active enforcement agency)?  And will innocent end-users find that they are adversely impacted by the actions of true infringers?

While there may be universal agreement that infringing activity must be inhibited, it is unlikely that a single, unified approach to the problem will emerge any time soon.  However, through trial and error and the experience of “early adapter” nations such as France and the UK, it is possible that a consensus will emerge on a scheme that achieves a balance among the concerns and interests of the various stakeholders.

We will obviously keep an eye on future developments in this area of the law and relevant industry practices.

• While we haven’t quite figured out if there is a direct link, as the economic news got worse at the end of 2008, online video activity increased.  According to comScore, online viewing reached a record high with U.S. Internet users watching 14.3 billion videos in December.  This was a 13% increase from November.  comScore found that 150 million U.S. users watched an average of 96 videos each and spent more than five hours watching online video during the month.  Read here about how the big video sites split the market.
• While there is little public information available about the negotiations over the Anti-Counterfeiting Trade Agreement, the proposed multi-national treaty to assist in the enforcement of global IP rights, some leaked language is causing concern.  More information here.  
• The GOP appears to be following in the White House’s footsteps by overhauling its website to be more open and accessible to its Internet-using citizens.  The new site makes it easy to get the latest news, contact representatives through e-mail and even has an API in which developers can create applications that pull data from the site and format it in a number of ways.  Read more here.
• The watchdog group Privacy International has raised concerns about Google’s new phone tracking system, Latitude, which was unveiled this week.  The system allows users to track other people via smartphone.  And while it does have some built-in privacy protections, there are some potential gaps, including the possibility that the phone’s tracking settings could be changed without its owner’s knowledge.  More here.
• In a closely-watched case, defunct BitTorrent search site TorrentSpy has asked a federal appellate court to reverse a judge’s decision ordering the site to pay movie studios $111 million for copyright infringement in which they were trying to protect users’ privacy by purging the records of visitors’ IP addresses.  Read here for more on the ruling and TorrentSpy’s appeal.

The Act is actually not a new stand-alone law, but amends several existing intellectual property laws in an effort enhance current enforcement and remedy provisions.  For example, the Act authorizes the government, in connection with a criminal copyright proceeding, to seize any article that may be used to commit or facilitate copyright infringement.   The Act also amends the Lanham (Trademark) Act by doubling statutory damages for counterfeiting to a minimum of $1,000 and a maximum of $200,000 per counterfeit mark, with the willful damage figure doubled to $2,000,000 per mark.  In addition, the Act amends the Computer Crime Enforcement Act to allow expand the scope of grants made by the federal government for computer crimes to also be used for training, prevention, enforcement and prosecution of IP theft and infringement crimes.  

Perhaps the most groundbreaking element of the Act was the creation of new, cabinet-level position, the Intellectual Property Enforcement Coordinator.  This IP Czar is charged with heading an interagency intellectual property enforcement advisory committee (also newly-created by the Act) and coordinating the development and implementation of a “Joint Strategic Plan” against counterfeiting and piracy, which will focus on, among other things, reducing counterfeit and infringing goods in the domestic and international supply chain and disrupting and eliminating domestic and international counterfeiting networks.  The first IP Czar will likely not be appointed until the next administration takes office in January 2009, thus it is too early to determine precisely how he/she might implement the newly created enforcement role and what shape the Joint Strategic Plan might take. 

The Pro-IP Act is certainly a victory for the many groups that lobbied for its passage, including the entertainment/film industry, the recording industry, and major media companies fighting against the pervasiveness of digital piracy.    However, some public advocacy groups opposed the new law, stating that its penalties are far too harsh and that it does not balance consumers’ rights and concerns over those of major media and software companies. In addition, critics of the Pro-IP Act have argued that the bill risks punishing people who have not committed copyright infringement, citing provisions in the Act that authorize the seizure of all computers and compatible devices from a home if a single, pirated MP3 was discovered on just one of the devices.
Ultimately, the passage of this bill sends the U.S. and the world a message that intellectual property infringement and piracy is at the forefront of the U.S. federal government’s focus and will be heavily scrutinized going forward.  And while the focus of the Act was enhancing IP criminal law enforcement and crime prevention, it is clear that content owners and other stakeholders in the digital media industry will be closely eyeing the government’s initiatives in order to ensure that their own efforts to protect and secure their digital assets are done in a manner to best leverage the newly-expanded protections provided in the Act.