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We do not want to apply technical measures to anyone. We want them to stop infringing copyright. We also do not want to drag people before the courts, which is always a stressful experience for anyone, unless there is a genuine need to do so. The appeals route we have set out should offer a less stressful, less expensive route for the first appeal, as we have already discussed and given assurances on, but it does require the final appeal to be heard by a judicial body, ensuring that the subscriber does have the equivalent of the protection of a court. We believe that that is right.
Finally, the question of multiple IP addresses is so technical in nature that we will reply to the noble Earl in writing. On the question of the EU provisions, we do not believe that anything we are proposing will conflict with them. We have checked the position carefully and we adhere to our view in that respect. I am afraid that we cannot support the amendment and I urge the noble Lord, in taking into account the points I have made, to withdraw it.
Lord Whitty: I am most disappointed with that response. The first part of what the noble Lord said is quite right. I agree that the evidence needs to be subject to appeal and that there should be an appeals tribunal to check the process, the evidence, and the association of various offences under one address, and the title. All that can be dealt with by an administrative tribunal. However, my understanding of sanctions at this level is that the term "judicial tribunal" would not apply to the tribunal that is set up indirectly by the Bill. It is important that the Minister should let us know, before the Bill completes its passage through the House-or, if necessary, in another place-quite how the tribunal is to be constituted. Would it have legal representation? If, as the Minister said at the end of his remarks, it is genuinely equivalent to a court, I
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The noble Lord referred to this as a "graduated approach". It is a one-step graduated approach-from warning through to second and third warnings, but straight from there to imposing sanctions which could be very detrimental to the subscriber-and, as I said, it will operate regardless of whether the subscriber is the actual perpetrator. The only suggested equivalent to this is the driving licence. If you get three points on your licence, you do not have a genuinely graduated penalty because that is two or three steps of penalty, and at the last knockings, you can appeal to a court.
I do not think that in any of the sanctions regime operating in our legal system, either civil or criminal, there is an exact equivalent to this. It therefore has wider implications than the providence of this Bill. If there are equivalents and if the nature of the tribunal is such that it is genuinely the equal of a court, will my noble friend spell that out to me and to other noble Lords before Third Reading? If he can manage to convince me, that is fine, but I have seen nothing which would do that at this point. If he cannot convince me, I will want to return to this issue at Third Reading-even if I bring nothing else back. I hope that other noble Lords will themselves consider the implications of this-in particular, as the noble Baroness, Lady Miller, has said, the Front-Benchers and Ministers. In my judgment, we are taking quite a significant step here. I hope that the noble Lord can convince me in the interim, but at this point I certainly have not been convinced. I shall withdraw the amendment so that we can proceed with the Bill, but I am deeply worried about these provisions as they stand.
"( ) payment by an internet service provider of a contribution towards the costs that a copyright owner incurs in generating copyright infringement reports"
Baroness Howe of Idlicote: My Lords, the intention of this amendment is to ensure that the costs incurred by rights holders in generating copyright infringement reports under the provisions of the initial obligations code are taken into account when framing the provision on the sharing of costs. Currently, the Bill makes reference only to the costs that will be incurred by internet service providers and Ofcom. There is a clear lacuna. The copyright owners' costs are nowhere to be seen in the Bill, yet they are and they will be considerable and therefore deserve to be recognised and reflected in these provisions.
Copyright owners' costs are incurred at the very first step of the notification process. In order to detect copyright infringement within peer-to-peer networks, rights holders have to spend considerable sums, usually with third party providers, to defend infringements, generate the copyright infringement reports and send these to internet service providers. In short, none of the Bill's measures on reducing online infringement works unless copyright owners first spend money. It is sometimes suggested that these costs are optional and that rights holders are under no obligation to incur them. That may be strictly true in the sense that they are not being imposed by statute, but the harsh practical reality is that it is an economic imperative for rights holders to spend money on detecting infringement.
As has been mentioned in earlier debates on the Bill, the music industry alone stands to lose £200 million of revenue to online copyright infringement this year alone. The cumulative loss between 2007 and 2012 will be £1.2 billion. The figures for the film industry are similar. No industry losing that level of revenue can afford not to invest in combating it. If there is a choice to incurring those costs, it is a Hobson's choice. Rights holders already invest in infringement detection, but currently much of that activity is to no avail. Internet service providers are under no obligation to process the copyright infringement reports and, indeed, currently none does so. The initial obligations code will change that. It will require ISPs to call on the CIRs. That will make it possible and viable for copyright owners to up the level of detection activity. The Bill means that the ISPs have to process the CIRs, their capacity for dealing with them will increase and there will be meaningful levels of engagement with copyright owners.
The entire logic behind the measures in the Bill is to reduce unlawful file-sharing by about 70 per cent. That represents a considerable sum. One of the main ways to achieve that is through notification having a deterrent effect on infringements. We have had lots of discussions, and I am sure that we will have even more, on that. That is estimated to involve about 7.3 million people. The more notifications that can be sent to as large a number of infringers as possible, the more marked that effect will be and the better off the creative industries and the whole economy will be. To this end, the Bill must be structured so as to optimise the ability of copyright owners to use the system, not lumber them with the undue burden of all of its costs. Otherwise, we are just creating an elaborate structure that will never be used and, by extension, just will not work.
There is also a question of fairness to be addressed. We see from the draft statutory instrument on costs that the department has published that rights holders will be expected to meet some of the ISPs' costs of sending notifications. The ratio in square brackets in that document is a 75:25 split. We are told that that is an indicative level, but it has achieved the status of a working assumption. That means that rights holders will have to pay three-quarters of the costs that ISPs incur in meeting their statutory obligations under the Bill. Let us bear in mind, again, that rights holders will have already met 100 per cent of their costs in raising copyright infringement reports.
Furthermore, it must be borne in mind that it is the copyright owners and the creative sector that has been losing money to infringement over the past decade. The ISPs have not lost any revenue as a result of piracy. Indeed, it is argued by some-although, I agree, not by all-that their businesses have actually prospered in part because of the growth in consumers keen to get online so that they can download music and films, often unlawfully. Again, the amendment is an attempt to bring some fairness and balance to the equation of costs.
To conclude, the amendment would allow the Secretary of State to take account of the costs necessarily incurred by copyright owners in using the notification system. I hope that it will find favour with the Minister, and I beg to move.
Lord Clement-Jones: My Lords, the noble Baroness introduced the amendment very cogently. I do not want to say much more other than I believe that the way that the clause is drafted is rather strange in the lack of balance between the different stakeholders involved. I very much hope that the Minister will address that in his usual thorough fashion.
The Earl of Erroll: I see that this is an attempt to introduce balance, but if it were to be adopted, we would have to include some exemptions and exceptions. As I mentioned earlier, Queen Mary, University of London, effectively qualifies as an internet service provider because it issues addresses to students, and such things. As I mentioned, it currently has three security people in charge of 20,000 connections. It would have to take on considerably more staff if it were to issue a lot of these reports. I hope that the Minister will consult the education department and other people who are budget holders about giving a considerably greater allocation of money to some
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Lord Whitty: My Lords, I do not want to be seen as the defender of the ISPs' interests, but the point about them is that whatever costs they incur will be passed on to consumers-all consumers, including those who have never unlawfully file-shared or made any other infringement of copyright. It is therefore in the interest of consumers to ensure that the ISPs do not incur excessive costs. It would be helpful to know whether 75:25 is more or less set in concrete. We could argue that that is a bit of a compromise. I would oppose anything that implied a heavier payment by the ISPs towards the rights holders covering their costs, because all that will end up on the millions of individual consumers, most of whom are not the problem.
Lord Young of Norwood Green: My Lords, we made it clear. We think that the bulk of the cost of the process should fall to copyright owners. They are the main beneficiaries from a change in consumer behaviour from unlawful to legal sources of content. However, we feel that ISPs should share some of the burden to ensure that they carry out their obligations in an efficient and economic manner and have an incentive both to reduce infringement and to participate in business models-points made during our debate. New Section 124L(2) does not specify the costs that ISPs may be required to share under the cost-sharing order. That is a matter to be consulted on prior to the order being made. In principle, therefore, the order could make the provision in the amendment. However, we do not intend such provision to be made, so we do not think that it would be right to suggest that it might be done by particularising it in subsection (3), as the amendment does. It does not seem right to require ISPs to subsidise copyright owners acting to defend their copyright. In fact, that would impose a double cost on ISPs: they would subsidise copyright owners in detecting infringements but have no control over the level of detection activity and cost.
We tried to be helpful about this in the code. We gave a split of the costs which was indicative-it was not set in stone by any means. People asked us to give them an idea, so we suggested an indicative split. It will be the subject of consultation, and surely that is the right way forward. I cannot see how it can be reasonable, proportionate or fair for copyright owners to have their cake and eat it in the manner suggested. As I said at the outset, they are the main beneficiaries. It is right and proportionate that they should bear most of the costs. I end by saying that the ratio that we suggested was indicative will be subject to consultation. In the light of my comments, I hope that the noble Baroness will feel able to withdraw the amendment.
Baroness Howe of Idlicote: My Lords, I am grateful to the Minister for his reply, even though I am not exactly pleased with what he said. I am most grateful to the noble Lord, Lord Clement-Jones, for his support. I am also grateful to the noble Lord, Lord Whitty, and the noble Earl, Lord Erroll, for the points they made, even though they were not in support of the amendment.
We ought to bear in mind that many rights holders do not have vast sums of money. This creative industry creates huge numbers of jobs and is hugely productive to our economy. If we do not take a proper, balanced and fair look at the costs proposed in the Bill-which I support in many ways-the damage this will do to the industry when it comes into effect will be to our peril.
I shall bear in mind what the Minister said and read it carefully. However, I am not entirely convinced and I may want to come back with an amendment at Third Reading. In the mean time, I beg leave to withdraw the amendment.
(a) in relation to an initial obligations code, an appeal by a subscriber on grounds specified in the code in relation to-
(i) the making of a copyright infringement report;
(ii) notification under section 124A(4);
(iii) the inclusion or proposed inclusion of an entry in a copyright infringement list; or
(iv) any other act or omission in relation to an initial obligation or an initial obligations code;
(b) in relation to a technical obligations code, an appeal by a subscriber on grounds specified in the code in relation to-
(i) the proposed taking of a technical measure; or
(ii) any other act or omission in relation to a technical obligation or a technical obligations code;"
(1) The High Court (in Scotland, the Court of Session) shall have power to grant an injunction against a service provider, requiring it to prevent access to online locations specified in the order of the Court for the prevention of online copyright infringement.
(a) whether a substantial proportion of the content accessible at or via each specified online location infringes copyright,
(b) the extent to which the operator of each specified online location has taken reasonable steps to prevent copyright infringement content being accessed at or via that online location or taken reasonable steps to remove copyright infringing content from that online location (or both),
(c) whether the service provider has itself taken reasonable steps to prevent access to the specified online location,
(d) any issues of national security raised by the Secretary of State.
(e) the extent to which the copyright owner has made reasonable efforts to facilitate legal access to content,
(f) the importance of preserving human rights, including freedom of expression, and the right to property, and
(g) any other matters which appear to the Court to be relevant.
(3) An application for an injunction under subsection (1) shall be made on notice to the service provider and to the operator of each specified online location in relation to which an injunction is sought and to the Secretary of State.
(a) the Court grants an injunction under subsection (1) upon the application of an owner of copyright whose copyright is infringed by the content accessible at or via each specified online location in the injunction, and
(b) the owner of copyright before making the application made a written request to the service provider giving it a reasonable period of time to take measures to prevent its service being used to access the specified online location in the injunction, and no steps were taken,
the Court shall order the service provider to pay the copyright owner's costs of the application unless there were exceptional circumstances justifying the service provider's failure to prevent access despite notification by the copyright owner.
(6) Subsections (1) to (5) shall come into force on such day as the Secretary of State may by order appoint not less than 3 months and not more than 12 months after subsections (1) to (5) have been notified to the Commission of the European Communities ("the Commission") in accordance with the obligations of notification imposed by Directive 98/34/EC.
(7) If any comments are received from Member States of the European Union or the Commission after subsection (1) to (5) have been so notified and the Secretary of State reasonably considers amendments are necessary to give effect to such comments, he may make the necessary regulations within the period referred to in subsection (6)(a), to amend subsections (1) to (5).""
"( ) the failure is an issue reasonably within the responsibility of the registry and the registry has not taken reasonable steps to respond to this failure"
The Earl of Erroll: My Lords, I raised this issue previously. It is a simple matter and I hope that the reason the Minister has not tabled an equivalent amendment is because he is going to accept mine.
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