This post is mainly crowd-sourced as details emerged. Check back later for updates.
The ruling in now online here
Background and summary
All four initial grounds brought by ISPs Talk Talk and BT were dismissed by MR Justice Kenneth Parker, however the review was partially successful on a fifth ground that was added to the scope of the review last month - a draft parliamentary order that requiring ISPs to pay 25% of the costs of running the scheme.
The initial four grounds covered compatibility with EU law and basic human rights such as proportionality in law, respect of privacy and were brought in relation to the main Digital Economy Act (known as primary legislation):
- The EC was not notified of the Act and since parts of the Act constitute a "technical regulation" within the meaning of the Technical Standards Directive (98/34/EC) it should therefore have been notified to the European Commission before enactment.
- Parts of the Act are not compatible with the E-Commerce Directive (2001/31/EC)
- Parts of the Act are not compatible with the E-Privacy Directive (2002/58/EC)
- Parts of the Act will unduly affect the ability of ISPs in other member states to offer services in the UK, leading to possible infringement of Articles 8 and 10 of the European Convention on Human Rights.
I was the first person to reveal publicly that The EC raised official concerns about the Costs Order; and, more recently, that the EC remained unsatisfied with the UK's response to the order.
Jason Clifford said...If the tweets I'm seeing are accurate, campaigners against the Digital Economy Act
"I think you are wrong on the costs aspect. Although the Judgement does hold that it is unlawful to require ISPs to pay for OFCOMs costs in setting up and running the Code it also holds that ISPs can lawfully be required to pay 25% of the costs of the actual implementation - ie processing the notices and of the appeals processed.
That is the substantive part of the costs matter and it is a total loss for the ISPs. Essentially the copyright holders and their agents can now pass 25% of the costs of policing their copyrights onto ISPs who in turn will pass it into consumers."
Thanks to Jason's comment it's clear from pp 193 and 194 of the ruling that the judge believes only the portion of costs paid by the ISPs to cover the government's costs in running the scheme (ie Ofcom's costs) are covered by the EC Authorisation Directive.
Essentially the judge describes the costs shouldered by ISPs as falling into 3 categories:
- Qualifying costs, which should be seen as Administrative Charges and therefore not allowed under the EC Authorisation Directive [pp 195]
- Relevant costs, the "internal" charges that ISPs incur to satisfy the provisions of the act, which the judge ruled are ok [pp 193]
- Case fees - the cost of handling appeals under the act, again are allowed [pp 194]
193. ... ... The DEA could have left ISPs to bear such costs entirely and have provided no mechanism for recovering any part of such costs. However, Parliament provided that in fairness copyright owners should reimburse ISPs for a substantial part of the costs incurred by ISPs in discharging their obligations under the DEA.To add insult to this injury, the judge ruled that ISPs could be asked to bear a proportion of appeals costs:
194. Similarly, it does not seem to me that "case fees" can be regarded as "administrative charges" under Article 12 AD. The fees arise because a subscriber has brought a specific appeal, involving a relevant ISP and a relevant copyright owner. The fees are intended to do no more than ensure that the judicial vehicle for resolving disputes under the DEA is adequately funded.
Your privacy and freedom of expression is only on a par with the rights of Big Music!
@Copyrightgirl points out pp 166 of the ruling.
In a further blow to campaigners, the ruling draws an analogy between copyrights and ordinary property rights, citing relevant case law to conclude:
166. ... ... However, the Court's ruling, at  cited above, goes beyond protection in the context of civil proceedings and includes "the protection of the right to property" within the scope of the "protection of the rights and freedoms of others" under Article 15(1). It is indisputable that the contested provisions are intended to promote the protection of the right to property, namely, copyright, and therefore, fall within Article 15(1) as interpreted by the Court.I find this astounding, since I feel strongly that it is not possible to draw any analogy between the completely arbitrary scarcity of resource where intellectual property is concerned, and the corresponding "paper loss" suffered when copyright is infringed; and the very real physical loss suffered when ordinary property is stolen by way of theft.
UPDATE: check comments below from Will Tovey on this and data protection issues
Reasons to take heart
To win the case on the first four grounds was always going to be a challenge. The court had to be satisfied that UK law was in clear breach of EU law before overruling the will of the elected parliament.
I've yet to see the judgement, but the first ground (1, above) was already argued as the bill passed parliament - that the primary legislation itself did not need to be notified under the Technical Standards Directive, only the two orders that define how the measures would run need to be notified - the Costs Order and the Initial Obligations Code.
Again any compatibility issues with EU law on privacy or free trade grounds would mainly be determined on how the anti-file sharing measures would operate; again defined in the Costs Order and the Initial Obligations Code.
In addition sections 114-116 of the ruling draw a clear line between the current proposals - a mechanism to allow copyright holders to trace and punish alleged perpetrators of infringement - and any obligation on an ISP to conduct surveillance of traffic on their network in order to detect and tackle copyright infringement. This is significant, and appears to re-enforce so-called "mere conduit" status of ISPs - they are just pipes carrying data, and cannot be expected to be liable for that data.
Despite the very limited scope on which the review succeeded, the costs order needs to go back to the drawing board. The updated legislation will presumably need to go back to Europe for comment (3 months), and so is unlikely to be passed into law until late into the year.
Additionally, the Initial Obligations Code still needs to be finalised, released to the EC for comment under the Technical Standards Directive (a 3-month period) then laid before parliament, and passed by parliament. All this will happen under immense public scrutiny and could be open to further judicial challenge.
This legislative process must also happen in the shadow of a ruling by the European Court of Justice Advocate General Cruz Villalón (pdf) that an order on a Belgium ISP to monitor content on its network and block potentially copyright-infringing content is not compatible with EC law on privacy grounds, as it constitutes a general obligation to monitor contrary to Article 15 of the directive on electronic commerce (Directive 2000/31/EC) and also infringing on data protection and privacy guaranteed under the European Charter of Fundamental Rights.
Depending on what is contained in the initial obligations code, the above general monitoring obligation is unlikely to affect the Digital Economy Act as no monitoring obligation is likely to be placed on ISPs, however as second aspect of AG Villalón's ruling is interesting as it discusses the legal problems associated with determining whether copyright has actually been infringed (not an easy case in law, and needs to be handled on a case-by-case basis as needs also to deal with people who are licensed users of copyrighted works).
The AG's ruling also discusses other complexities in EU law such as predictability, and notes that law must be open to challenge and have adequate safeguards.
An appeal may follow. Computer Active reports ISPs complaining the ruling lacked the "clarity" they hoped for. TalkTalk is reportedly considering its options:
"Though we may have lost this particular battle, we will continue fighting to defend our customers' rights against this ill-judged legislation"Despite the review judgement, Ofcom and the Department for Media, Culture and Sport still have a mountain to climb before the measures of the Digital Economy Act take hold.
The ISPs who brought this judicial review may instead of appealing wait until the Initial Obligations Code is published as in my view this will offer a better chance to challenge on much of the same grounds.