In the aftermath of the iiNet case, as we wait to see whether content industries will pursue a legislative response, we thought it would be worthwhile to look at some examples of graduated response schemes (also known as ‘three-strike policies’), one of the proposed methods of dealing with unauthorised file sharing.

A graduated response scheme is a system of sending warning notices to users who are identified by copyright owners, or a third party, as having illegally downloaded or shared content. Because the users can only be identified online by their IP addresses, these systems rely on ISPs to identify the users by their IP addresses and to send on the warnings. Usually, if these warnings are ignored and the identified user continues to share content without authorisation, then the next stage of the scheme kicks in, and the user may be fined, or potentially have their internet connection suspended.    

Four jurisdictions that have put this type of scheme in place are France, New Zealand, the US and the UK. I’ll briefly deal with each.

France: HADOPI

In 2010, the French HADOPI legislation came into effect, creating the body set up to administer the regime, which is also called HADOPI. Copyright holders notify HADOPI that they suspect an IP address of unauthorised file sharing, and an email is sent to the subscriber. This email lets the subscriber know there is a claim against them, and the time of this claim, but does not give any information about the object of the claim or who is making the claim against them. If the user offends again within 6 months a certified letter is sent to the subscriber. If infringements continue within a year after this letter is sent, the third phase of the HADOPI law allows for internet access to be suspended and fines to be levied against the subscriber.

In December last year, 822, 014 users had been sent an initial warning email, 68,343 a second letter, and 165 users had been placed under investigation for continued infringement. In February this year, the French Director of Public Prosecutions received the first batch of files for prosecution of repeat offenders. No word yet on how many cases they intend to prosecute.

The HADOPI law was championed by French President Nicolas Sarkozy, but has come under fire from rival presidential candidate François Hollande and may face an uncertain future in the wake of this year’s election.

New Zealand: Copyright (Infringing File Sharing) Amendment Act 2011

New Zealand implemented a three-strike notice regime in 2011. Under the scheme copyright owners notify ISPs that a user is using file sharing to share or download unauthorised material. The ISPs then review the user’s internet records before sending first a detection notice, then, if the user continues to infringe, a warning notice, and finally, if the warning notice is not complied with, an enforcement notice. If the final enforcement notice is sent, the copyright owner may decide to take the user to the Copyright Tribunal, which can fine the user up to $15,000. In extreme cases, a user’s internet access can be disconnected for up to six months. This measure requires the Minister for Justice to refer the Governor General to make a specific order.

An interesting twist New Zealand’s regime is that an ISP may charge copyright owners up to $25 for each follow up on a notification of infringement. It seems that as a result of this fee, there have been relatively few requests on ISPs, with most of them coming from a single body representing recording artists. So far, there have been no requests issued from representatives of the movie industry (perhaps too busy suing iiNet?). Certainly, the fee and detailed requirements for notices sent by content owners make it much more difficult to send masses of automated notices to ISPs. The legislation provides for review of the fee within six months of enactment. Submissions for the review close at the end of April.

US: Voluntary Agreement

The graduated response system adopted in the United States is referred to as the ‘Copyright Alert System’ (CAS), and was agreed to by a group of content owners and ISPs in July 2011. CAS is a voluntary system where ISPs agree to respond to notifications by copyright holders of particular infringements by an IP address. The ISPs can send up to six ‘alerts’ to a subscriber, and may implement ‘mitigation measures’ after the 5th alert, such as capping internet speed. Under CAS, no ISP is forced to apply mitigation measures. In particular, there is no requirement that internet access be terminated. After a 5th alert, a user may apply for independent review.

The system is expected to begin to be implemented later this year.

UK: Digital Economy Act 2010

Sections 3 – 16 of the Digital Economy Act 2010 (which amend the Communications Act 2003) govern online infringement of copyright. When notified or an infringement by copyright owners, an ISP is required to notify subscribers that they have been flagged through a system of ‘copyright infringement reports’ (CIRs). The CIR explains the infringement, provides some supporting evidence, noting the IP address and time of the unlawful file sharing. After the IP address is matched to the subscriber, and a letter is sent notifying the subscriber of the CIR, an anonymous list is compiled of each of the CIRs made against a subscriber. A copyright owner can request to see this list, and may seek to obtain a court order to force the ISP to reveal the details of the subscriber, so that the copyright owner may bring a court action against them.

Implementation of the DEA was put on hold when ISPs BT and TalkTalk challenged the legislation. Their final appeal, however, was rejected last month so users in the UK can expect to see the system of warning notices roll out in the not too distant future.

Concluding Remarks

As you have probably gathered, each of these systems is still in its very earliest stages, so we are yet to have any way of determining whether they actually work to reduce online piracy. An HADOPI claim that the French laws have cut unauthorised file sharing by up to 50% seems to fail under scrutiny.

The most significant area of controversy surrounding these schemes is the threat of ISPs being forced to suspend or terminate a user’s access to the internet. A UN report has singled out the UK and French regimes in commenting that restricting access to the internet breaches our right to freedom of speech. Surprisingly, even though New Zealand’s scheme includes provisions for terminating a subscriber’s access, they have joined Sweden and a number of other UN states in supporting this report. It is important to note that in each of these jurisdictions, the ability to suspend a user’s access to the internet is not treated lightly; in the US it is expressly excluded from and ISPs obligations, and in France, the UK and New Zealand the decision to suspend is subject to further oversight, either by a court, or in New Zealand’s case, the Minister for Justice and the Governor General. Nevertheless, even with curial oversight, legislation providing for termination of a user’s ability to access the internet must be considered with caution.

The Australian Government has expressed support for an industry response to the problem of illegal file sharing, which we fully support. As we’ve discussed, there isn’t really any evidence yet that graduated response schemes are effective to reduce unauthorised file sharing, and an unbalanced scheme can place heavy burdens on ISPs. Thus far, only New Zealand’s system seems to have recognised this, by allowing ISPs to recoup at least some of the administrative cost in a notice fee. Should the Australian Government start considering a graduated response scheme in the same vein as the four listed above, it will need to carefully consider the costs and benefits for all involved. The High Court challenge was essentially seeking to state that ISPs already had a duty to respond in the same way to infringement notices sent by content owners. In the wake of iiNet’s success in the High Court however, it is arguable that ISPs have a much stronger bargaining position than many of their overseas counterparts had when HADOPI etc were being negotiated. We can only hope they will use this advantage to ensure that any legislative or industry response is fair to all parties; the content owners, the ISPs and the consumers.