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I declare my chairmanship of Consumer Focus. My concern here is for the consumers of digital services and the process that this whole part of the Bill will put them through. My noble friend will know that I fundamentally disagree with the approach that the Government are taking in this respect. If the issue of the user abusing the system were classified as theft under the criminal law, the user would have to be taken to court and normal court procedures would apply. If it were a civil wrong, as indeed this is under copyright law, the proper process of righting that wrong against the abuse by a user would be through the civil courts.

My main reason for tabling these amendments is that they would effectively delete the right of the system administrator to require ISPs to impose technical measures, subject to an appeals process, and substitute something that is closer to the normal process when a wrong is alleged through our legal system. That is to say that technical measures-sanctions-would not be applied until the courts system had agreed that they should be applied.

I have never denied that there are rights accruing to the rights holders and that some process is needed in order that those rights are recognised. What I object to is the process, where it is only once the sanction has been agreed to be applied that there is an appeals

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process. I recognise that these clauses say that, if the appeals process is triggered, the sanction should not be applied, but that is a second-stage process as compared with the normal law.

What I really want on record from the Government, and what I still do not understand about the attitude of the Government and the industry, is why the normal rule of law cannot apply to this form of copyright infringement, whereas it does apply to all other forms of copyright infringement. If somebody is complaining about a breach of patent, for example, they go to the courts. I want a clearer explanation from the Government of why that should not apply in this case. If we are to take this forward, we need that on the record and we need to know whether public opinion is prepared to accept it. There are serious problems at the point where this comes to be imposed, particularly if it is imposed against individuals rather than, as I would accept was necessary, against people who are making serious commercial money out of this process. I think that the Government will be faced with a serious backlash. I say to the opposition Bench that that may be an alternative Government, so all three Front Benches should take note of the politics of this. Part of the backlash will be about the fact that due or normal process has not been observed.

I have no hope that my noble friend the Minister will accept my amendments, but they raise a fundamental principle, on which I find it difficult to defend the Government's position and which I think the Government, certainly at the point of application, are going to find difficult to explain to the British people once these measures are put into place and enforced. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I strongly support the amendment tabled by the noble Lord, Lord Whitty. He has eloquently explained it and asked the Minister why there is not due process in the case of the digital economy approach that this Bill sets out. Everything that the noble Lord, Lord Whitty, has said underlines the glaring omission from this Bill of any rights given to users of the digital economy-the citizens. The Government could have chosen to draft a clause setting out the rights of internet users, because the digital economy should bring lots of rights to those who use it. Among those would be the right to have all the ways that fraud can take place on the internet explained. We have discussed that issue in the context of cybersecurity: people are not given good guidance about online security. Starting from that, there should be a whole hierarchy of rights that people should be given in this Bill but which are missing from it. It would be helpful if the Government were able to draft a clause like that, ready for Report, to insert the rights of citizens using the internet. Some of that would encapsulate the points made by the noble Lord, Lord Whitty.

5.15 pm

Lord Howard of Rising: My Lords, some of these amendments mirror the discussion that we had on a similar point on the earlier provisions. Others go a little further into the form of the appeals system. I

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sympathise with the noble Lord's attempts to ensure that appeals against technical measures are sent into the courts system. They are, after all, potentially of a completely different order from infringement lists and notifications. I shall be particularly interested to hear the Minister's response to the points made by the noble Lord, Lord Whitty.

Lord Young of Norwood Green: These amendments essentially propose that there should be a judicial ruling before any action under the technical obligations is taken. We of course accept the need to ensure that people's rights are protected, but we believe that the appeals arrangements in the Bill do this. In practice, this means ensuring that the process is based on very firm evidence-I have previously stressed the point about having a clear audit trail-and that there is a clear and accessible way for subscribers to appeal, should they feel that they have been identified wrongly.

I stress for the benefit of my noble friend Lord Whitty, whom I am pleased to see back in the Chamber, that I have already confirmed that it is our intention that the full appeals process should be exhausted before any technical measures are imposed on a subscriber-that was one of his major concerns, and I give him an explicit assurance on it. That means that, if a subscriber considers that the measure should not be applied and chooses to appeal, they will have the opportunity to have the appeal heard by a First-tier Tribunal, which is a judicial body, before a technical measure is imposed. Given those rights that we have identified, the fact that the appeals process has to be exhausted before any measure is applied and the fact that the appeal will be heard by a First-tier Tribunal, which is a judicial body, I do not believe that there will be a backlash. I say to my noble friend that the whole process is about ensuring that we educate and change behaviour before we arrive at that point. We have talked about the initial letters bringing people's attention to obligations of which they may not be aware.

I shall see what I can do to assuage the concerns of the noble Baroness, Lady Miller, in relation to explaining online security measures to subscribers. I do not think that that is captured in the code at present, but it is clear that we want it to be part of what accompanies the initial obligations in the first letter. As regards the point that my noble friend Lord Whitty made about a court hearing, there is a real danger of moving more people into the courts system than we need to if we take that road. We want a fair, open and transparent process. We do not want to impose any technical measures until we know whether the initial obligations about which we have talked will succeed or fail. In the event that they fail, we want to ensure that, as I said, we exhaust the appeals procedure and keep people out of the courts.

I know that this is a measure that my noble friend Lord Whitty considers to be fundamental, but I do not think that it is appropriate or practical. On the surface, requiring a court to make the decision whether or not to apply technical measures may seem a reasonable safeguard for consumer interests; certainly we have a duty to ensure that the position of the ordinary subscriber is properly protected. However, in practice, we believe that this would be slow, cumbersome and expensive,

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causing unacceptable delay when speed is needed, and probably causing additional stress to subscribers-after all, a court ruling is no small thing. It would also risk putting a burden on the courts. We believe that we have established a procedure that is open, transparent and fair. It ensures that the full appeals process is exhausted before any technical measures are imposed on a subscriber and that, when they make their appeal, it is heard by a First-tier Tribunal, which is a judicial body, before any technical measure is imposed. Although we may not agree on this, I trust that, in the light of my explanation, my noble friend will feel able to withdraw the amendment.

Baroness Howe of Idlicote: Can the Minister explain a little more about the costs involved? He referred to the costs of going to a court of law being expensive, which I would have thought is a very accurate comment. Are we right to assume that, before that point is reached, the Bill provides for an adequate place where a defendant, if you like, can raise the whole issue and have what he has to say taken into consideration without having to pay vast amounts? That is important at that stage.

Lord Young of Norwood Green: I thank the noble Baroness for that question. We have been down this road before but it is worthy of a quick repetition. We have said that we do not want to deter people from making an appeal. There should be a fee but it should not be a deterrent fee. It should deter frivolous appeals. If appeals are successful, the fee should be refundable. It would be a lot less in our view than involving the courts in the process.

Lord Lucas: Can the Minister confirm my understanding of how the process will work once we are in the technical measures regime? My understanding is that we will still have the first stage of the old regime. In other words, when a subscriber first trips over the threshold, they will receive the explanatory warning letter, which is contained in the first sections. It is only when they commit a subsequent infringement that they will be into the technical measures section. Technical measures are not part of the first notice that a subscriber receives.

The noble Lord talks about the appeal process being exhausted. Does that mean that, if the appeal has failed, technical measures will be imposed or that, from that point on, technical measures can be imposed? As I understand it, it is the first of those. I also want to ask whether the Minister has thought any further about what assistance will be given to citizens in terms of the technical aspects of their defence in front of a tribunal. How will they be assisted to show that their computer contains no infringing material or that their network has not been used in ways that are inappropriate? I will understand if the Minister has nothing further to say, but if he has something further to say, it would be helpful.

Lord Young of Norwood Green: I am just trying to see what detail I have. The initial obligations procedure has to be gone through, so there may be a first, second or even third letter before we reach the technical

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measures. We are clear about that. In those initial letters, we will be advising people of the security measures that they can take. We have debated whether it would be a reasonable defence in an appeal if they validate that they have taken those measures. In our view it would be. I do not think that I can give a more detailed explanation at this juncture. I hope that, in the light of my explanation, the amendment can be withdrawn.

Lord Whitty: My Lords, I will in a minute withdraw the amendment, which I did not have any great hope of the Government accepting. There are some principles involved here. The Government have to take on board the fact that the users have no rights under this Bill. If the Government were prepared to engage and alter copyright law, possibly even using Clause 17, which we shall be debating in a minute, to create a fair-use clause in copyright law in this country-such a defence exists, albeit not in an entirely satisfactory form, in United States law-the consumer would clearly have some protection. At the moment, all the rights are on the part of the copyright holder. The obligations are on the ISP, with some protections, and there are no rights for the user. Normally, those rights would have been protected by the courts, but instead we are inventing a new tribunal system, which my noble friend says is judicial. In almost all other circumstances, the court would be used for that process; enforcers go to a court to obtain a sanction for their moves to be imposed. I still do not believe that there is a clear case for having a judicial process separate to what applies in all other forms of copyright law.

I accept where the Government are, but essentially the balance in the Bill does not give any rights to the user. As the noble Earl, Lord Erroll, said, the Bill does not even indicate how subscribers can protect themselves with what would be regarded as a reasonable defence. The balance is almost entirely on the side of the copyright holder. I am not convinced that this is the right approach, as my noble friend knows. If the Government persist in their approach, they need to explain it better and much more clearly.

My noble friend denies that there would be a backlash. Without a more balanced Bill, there will be a backlash. I remind leaders of political parties, so far as they are represented in this House, that in the Swedish elections after the piracy case nearly a quarter of all voters under 25 voted for the Pirate Party. Their votes were completely wasted, but the mainstream parties had alienated those voters. There are bigger social and political issues involved in this than the Government are facing up to.

We want to alter behaviour. The aim must be to get the majority of people on to legal systems, but to do that will require time and investment in developing those systems, making them more appropriate and getting rights holders to work through them, rather than resorting to an abnormal method of imposing sanctions.

I shall return to this issue at a later stage, perhaps in a more comprehensive way, taking on board some of what my noble friend the Minister said about the Government's determination to set up a separate tribunal system. At the moment, even with that tribunal system

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and even accepting what the Minister said about the processes of that system being equivalent to those of a court, I do not think that the balance is right. It would be appropriate to return to this matter at a later stage. In the mean time, I beg leave to withdraw the amendment.

Amendment 186 withdrawn.

Amendments 187 to 193 not moved.

Amendment 194

Moved by Lord Clement-Jones

194: Clause 13, page 15, line 36, at end insert-

"( ) provision requiring a copyright owner to indemnify an internet service provider for any loss or damage resulting from the owner wrongly accusing a subscriber of an infringement of copyright;"

Lord Clement-Jones: My Lords, this amendment could easily have been grouped with an earlier amendment to Clause 8, because it is similar in form. At the moment, there is a requirement for a provision for such an indemnification resulting from the owner's,

This greater injustice would need to be rectified. The technical measures would have been more drastic than anything envisaged in the initial obligations code. This is more vital in the technical measures code than it would have been in the initial obligations code. I hope that the Minister will consider this very carefully because it seems to us to be something which would prevent trigger-happy behaviour by copyright owners. They would have to think quite carefully in those circumstances as fairly drastic action-particularly temporary account suspension-would be available to them through the technical measures code. I beg to move.

5.30 pm

Lord Young of Norwood Green: My Lords, the amendment would provide for indemnification of internet service providers against any damage they might suffer from a wrongful accusation made against a subscriber by a copyright owner. We understand and share the concern of the noble Lord, Lord Clement-Jones, in relation to this. I would suggest, however, that this is already properly catered for within the Bill, and indeed within the preceding text. This allows the code to provide for indemnification for an internet service provider for loss or damage from a breach or error by the copyright owner in relation to the code or the Bill's provisions. In my view this would cover an error in relation to the identity of an infringer. To reinforce this further, the code allows for copyright owners to be made to indemnify ISPs in the event that the ISPs suffer loss as a result of a failure by the copyright owner. In producing the code it would be an option for stakeholders to require other undertakings by copyright owners if it was deemed appropriate.

I share the concern of the noble Lord but I hope that in the light of my explanation and assurances he will feel able to withdraw the amendment.

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Lord Clement-Jones: My Lords, I thank the Minister for that reply and I am delighted that he shares my concerns. His clarification was very helpful and is on the record. I hope that the code and the provisions of the Bill will be interpreted accordingly. I beg leave to withdraw the amendment.

Amendment 194 withdrawn.

Amendments 195 to 197 not moved.

Clause 13 agreed.

Clause 14 : Enforcement of obligations

Amendment 197A

Moved by Lord Clement-Jones

197A: Clause 14, page 16, line 9, leave out "£250,000" and insert "£10,000"

Lord Clement-Jones: My Lords, this amendment is designed to probe and clarify the basis for and the amount of the penalty under Clause 14. The wording of the Bill appears to be based on the enforcement regime currently in place for regulation of premium rate services. This is not a relevant or appropriate basis for enforcement in relation to Clauses 4 to 17. The initial penalties provided in the Communications Act for premium rate services regulation were much lower and have been changed following evidence-based consultation justifying the rationale for increasing the amount. It is wrong to set penalties relating to this entirely new and different purpose by reference to what may now be appropriate for premium rate services regulation following bedding in and operation of that regulation over many years.

It would be wrong also for internet service providers to be subject to such massive fines given that their involvement in any copyright disputes can be only as bystanders to actions between copyright owners and subscribers. We have had that debate about ISPs and their duties as a communications channel.

This amendment is also designed to probe for information from the Government as to how Ofcom is to be able to apply the Communications Act powers invoked here-and throughout the Bill-to copyright owners who are not themselves communications service providers and so not obviously subject to Ofcom's jurisdiction. We understand that the provisions relating to enforcement obligations in this clause are not relevant to copyright holders but wish to highlight the absence of any powers for Ofcom to regulate copyright owners within this whole process. I beg to move.

Baroness Howe of Idlicote: My Lords, the sum in the Bill seems to be an enormous amount of money. I think that the £10,000 set out in the amendment is more proportionate. It would be helpful if the Minister could say in his reply how this sum was arrived at-it may be there is some justification for it. I will await his reply before coming to any conclusion.

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The Earl of Erroll: My Lords, this is an enormous sum for small internet service providers. The market has some very big players and I am quite sure that £250,000 will be neither here nor there to them. They will just pass it on to their people. However, there are some very small people in this market who are very dedicated and who provide very select services and this will just wipe them out. The Minister may say that Ofcom would not dream of levying that scale of fine, in which case we should make it conditional that fines must be proportionate to turnover. Given the power, people end up bullying people and that would be very dangerous. If we leave this enormous sum in the Bill, it will be misused.

Lord Howard of Rising: My Lords, my amendment in this group removes the power of the Secretary of State to raise the maximum penalty by statutory instrument. As has been said, £250,000 is a great deal of money. It is hard to imagine that this sum will not be a sufficient deterrent against an internet service provider breaching the obligations of the code. If such a sum turns out to be inadequate in enforcing compliance, the priority should be to examine what is so hard to follow in the code. For an internet service provider to take a £250,000 hit rather than implement technical measures or send notification letters suggests there is something very wrong with the process. That is where the Government should seek a solution.

Lord Faulkner of Worcester: My Lords, I thank those noble Lords who have taken part in this debate but I am afraid we do not agree with any of the points that have been made. We do not think that Amendment 197A would be regarded by anyone as one which reinforces the seriousness of what this legislation is trying to achieve including, I suspect, most internet service suppliers if they were being frank. We must take into account the sheer scale of the companies involved. They will range from medium-sized companies to some multinational corporate giants.

A point to be borne in mind is that this is the maximum penalty. We would not expect it to be applied too often-perhaps not at all-to any smaller bodies which find themselves in contravention. The text makes it clear that this has to be both appropriate and proportionate to the contravention. However, it must be right to retain the deterrent effect of a significant sum.

Amendment 198 would effectively set the maximum penalty in stone for all time. We do not believe that it would be appropriate to do that either. The maximum penalty is a significant one of £250,000, but against that must be set the huge scale of the bodies being regulated and the need to provide a route through which such maximum penalties will remain an appropriate deterrent into the future. What is certainly a hefty figure now may not seem so in 10 or 20 years and we should take care when a specific sum is mentioned to allow that sum to be changed as circumstances change.

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