Your Business and the Digital Economy Act

July 19, 2010

In view of the controversy surrounding not only its contents, but the way in which it was passed, we had written on the recent Digital Economy Act in an earlier post. In this post I would like to focus not on the broader policy considerations that have been dominating discussion, but on some of the implications for businesses.

Those businesses likely to be hardest hit by the changes are Internet Service Providers (ISPs), who now face the challenge of implementing procedures to comply with requirements set out in the Act to combat online piracy. It will be some time before the effects of the Act are well enough understood to offer clear and comprehensive advice on the steps ISPs must take, and a thorough treatment of these is outside the scope of this article, but it is essential that businesses providing customers with internet access take legal advice early on, or they risk facing fines of up to £250,000.

For any business operating a website, an important element of the new legislation is the power granted by the Act in relation to injunctions blocking access to infringing websites. The Act allows the Secretary of State to set out regulations providing injunctive relief where a website “has been, is being or is likely to be used for or in connection with an activity that infringes copyright”. Until this power is used in practice it is difficult to predict the impact it will have, but businesses who depend on an online presence would be well advised to establish auditing procedures to determine whether their websites fall within the scope of the provision. Sites that allow visitors to freely share documents or links without careful moderation are most vulnerable.

 The Act also provides for the blocking, or limiting, of an internet connection in response to its use in connection with copyright infringement. While this has been more widely discussed so far as it relates to domestic internet use, it is of the utmost importance to business owners. If employees use the internet while at work to access or share infringing material, the provisions may just as easily be used to block or limit that connection. Such a sanction has the potential to cripple a modern business venture, and it is not only the activity of those in your employ which may constitute cause for concern. If your internet connection is shared over an unsecured wireless network, then infringing use of the connection by a passerby can have similar consequences.

The best way to manage some of the risks outlined in this post is to take measures early on. Some steps you might take include:

• Have a clear policy for use of the internet by employees, you might also consider blocking certain high-risk websites
• Audit your own business websites to ensure that you are not offering copyright material for download
• Ensure that any user-generated content on your sites is carefully moderated
• If you use one, secure your wireless network to the fullest extent that is practical given your circumstances

For further information on developments surrounding the Digital Economy Act,  you might be interested in reading the following:

• TalkTalk and BT launch challenge to Digital Economy Act
  Read the Guardian’s analysis of the activities of two of the largest ISPs in the UK, who are seeking judicial review of the Act.
• Ofcom: Draft Initial Obligations Code
  The Independent regulator for the UK communications industries recently published a draft code, intended to give substance to some of the provisions of the Act.