Between its October 2010 launch and December 2011, Hadopi, the body charged by government with overseeing the scheme, sent first written warnings to 755,015 ISP subscribers. Upon receipt, 95 percent did not require a second warning, ie. they stopped, according to a data report published by Hadopi.

Did that have an impact on actual P2P traffic? Hadopi has published data obtained from four traffic research agencies that vary wildly, but all suggest a dip in P2P use.

• Nielsen, for IFPI, reports French P2P use is 17 percent down.
• Médiamétrie//NetRatings says it is 29 percent down.

• Peer Media Technologies says illegal P2P use has fallen 43 percent.
• ALPA says it has fallen by 66 percent.

But the data presented by Hadopi is partial only to the period for which Hadopi has been operating. Looking back farther, it is clear that global P2P use had been declining for some years before Hadopi was established.

That is likely because many old-guard P2P services have been shut by courts and because P2P users were switching to download websites like Megaupload. Has Hadopi merely claimed this trend as its own victory?

In the wake of P2P’s fall, Hadopi claims: “There is no indication that there has been a massive transfer in forms of use to streaming technologies or direct downloads.”

But Megaupload was shut in January. Earlier in March, Hadopi was forthcoming enough to publish Médiamétrie//NetRatings data that showed a subsequent 25.7 percent traffic increase to legal VOD and catch-up TV websites in France.

Can Hadopi have it both ways? It is claiming Megaupload’s closure has resulted in more users going to legal services but not to illegal alternatives.

Hadopi says its systems will start accounting for non-P2P channels like direct download from this Q2.

• When Sweden implemented IPRED, a law allowing rights holders to unmask alleged file sharers, in 2009, P2P traffic quickly fell by 40 percent, but bounced back within six months.
• New Zealand saw a slight dip in P2P traffic within a week of implementing three-strikes measures in late 2011, Billboard reported.
• The UK is in the process of implementing a written-warning scheme that will stop short of wielding technical measures like disconnections and legal action until communications regulator Ofcom can assess whether letter-writing and legal service adoption can reduce piracy.

Hadopi is currently preparing prosecution cases against those alleged offenders whose behaviour did not change after a third warning.

Under the Digital Economy Act, passed controversially in mid-2010, copyright holders could send a “copyright infringement report” to ISPs with evidence of unauthorised downloading on their network. ISPs must notify subscribers against whom the allegations are made, providing education about legal alternatives, evidence and guidance on an appeal pathway.

But the scheme remains unimplemented because BT (NYSE: BT) and TalkTalk were granted a judicial review of the act in March 2011. They were ruled against a month later and appealed to the Court Of Appeal, which ruled against them once more on Tuesday in what may have been their final avenue (full ruling).

But the court did give ISPs one small concession – they will no longer be forced to foot 25 percent of the costs when alleged infringers appeal to an appeal body that will be established.

That means the UK government will need to amend the previously-published Draft Statutory Instrument outlining the sharing of costs.

Ofcom, too, will need to amend the draft code under which it will govern the scheme – a spokesperson tells paidContent it cannot finalise the code until the government’s amendment is made.

“Government will seek to make this change as soon as possible,” the UK government’s Department for Culture, Media & Sport tells paidContent. “We are pleased the Appeal Court has upheld the original ruling that the Digital Economy Act is a lawful and proportionate response to the threat posed by online piracy.”

BT tells paidContent: “We have been seeking clarification from the courts that the DEA is consistent with European law, and legally robust in the UK, so that everyone can be confident in how it is implemented. Now that the Court has made its decision, we will look at the judgment carefully to understand its implications and consider our next steps”.

Effectively, it is considering whether it can appeal to the European Court of Justice.

Keep calm and carry on

Many digital libertarians will now protest vociferously about digital rights and internet disconnection. But today’s news stops actually at letter-writing…

Although the Digital Economy Act made provision for ISPs to level technical measures against repeat offenders – like bandwidth shaping and speed throttling – the UK government would only compel Ofcom to order such measures of ISPs if Ofcom’s later research finds that latter-writing has no effect.

In fact, one of the bluntest of proposed measures, blocking of infringing websites themselves, was discarded after Ofcom’s advice that it would be unworkable.

Even if Ofcom’s research suggests a few years of letter-writing has had no effect, a spokesperson for the regulator tells paidContent the proposal for the technical measures would have to clear both European lawmakers and UK scrutiny committees. The European Commission and many parliamentarians are committed believers in internet connections as a universal right.

Cable recently agreed with Professor Ian Hargreaves’ suggestion, in his Review Of Intellectual Property And Growth, that a body be created that lists copyrighted works.

“This will make it easier for rights owners, small and large, to sell licences in their work and for others to buy them,” said the review, which set out to update IP legislation for the digital age. “It will make market transactions faster, more automated and cheaper. The result will be a UK market in digital copyright which is better informed and more readily capable of resolving disputes without costly litigation.”

The UK government’s Intellectual Property Office says (release): “A DCE has the potential to boost economic growth in the creative sector by lowering the costs of licensing and giving businesses and consumers easier access to copyrighted material.

“An exchange could give rights holders the ability to determine the terms on which their works can be made available for others to use. It would also allow consumers to identify rights holders quickly to secure any potential licensing or investment deals.”

Cable says: “A Digital Copyright Exchange would be a global first and could unlock significant growth potential in the creative sector benefiting consumers and businesses alike.

“This is an exciting project which could really open up the UK’s intellectual property systems. But the solutions are not straightforward and there are a number of issues that need to be worked through to establish its feasibility, so I am delighted to have someone of Richard Hooper’s stature to lead this important work.”

As well as being deputy chair of Ofcom from 2002 to 2005, Hooper had chaired the last, Labour government’s selection panel for Independently-Funded News Consortia and previously was a director at United News & Media. He is also chair of the Broadband Stakeholder Group.

The proposals will be voted on by the party at its autumn conference in Birmingham in September.

The working group’s paper, Preparing The Ground: Stimulating Growth In The Digital Economy, advocates repealing sections three to 18, which would compel ISPs to level graduated-response action against infringing customers at rightsholders’ behest, or merely sections 17 and 18, which would allow rightsholders to obtain injunctions compelling ISPs to block access to services hosting content without authorisation.

Right after coming to power in May 2010, culture secretary Jeremy Hunt told paidContent:UK the new government would not repeal the act.

The paper, written by 17 members of the party’s information technology working group, calls the act “backward-facing legislation”, “supporting obsolete standards and business models that cannot capitalise on the future opportunities that the internet promises”. And yet: ” We take the clear view that digital piracy is a form of theft, and to be repudiated.”

In some ways, the paper comes after several horses have bolted. Not only is the act now in place and ISPs’ judicial review been dismissed – a Commons committee has already planned to review the likely success of the act, and the government has already accepted all of Professor Ian Hargreaves’ recommendations for streamlining IP law in order to make digital content business models more efficient.

And the paper is highly ideological, more than practical, and perhaps contradictory. “The government should prioritise freedom of speech over the regulation of material,” it says, but: “We believe that rights holders should be able to issue take-down notices in a simple and automated manner, so long as these actions do not cause legitimate material to be removed.”

Hunt is expected to announce how the money, diverted from the BBC to create a digital Britain, will be shared among 40 areas including English councils, Scotland and Northern Ireland. A further £300 ($489.48)m has been promised after 2015.

The government wants all 25 million UK homes to have access to a minimum speed of 2Mbps (megabits per second), which would mean that reading web pages, making Skype phone calls or watching TV catch-up services, such as the BBC’s iPlayer, will all be possible from the most remote cottage. If all goes to plan, 90 percent of homes will be able to get even faster speeds of over 24Mbps, enough for several computers to download video simultaneously on a single line.

The BT Group has already promised to spend its own money getting superfast, fibre-optic broadband to two thirds of households by 2015, without government help. This will cover the towns and cities, where BT can quickly recoup its £2.5 ($4.08) billion investment. Getting broadband to those villages and valleys will be less economical, however, with lines having to stretch longer distances to reach fewer people. So will the two tranches of public subsidy, totalling £830 ($1354.22)m, be enough to reach the final third?

Where BT wins council contracts backed by the government, it is offering to match the money and it expects councils to as well, by securing other subsidies, so that just under £2.5 ($4.08) billion should be available for the final third. The BT executive responsible for leading 19,000 engineers in building what will be the UK’s largest fibre network is Olivia Garfield, chief executive of its Openreach division, which rents out BT’s network to other internet providers such as BSkyB (NYSE: BSY) and TalkTalk. She believes universal broadband access can be achieved, but only if a mix of technologies and every available resource is used, from telegraph poles to mobile phone masts and Virgin Media’s cable network – which unlike BT’s infrastructure is currently off-limits to rival companies.

“It’s whether you believe that the most important thing is to roll out fibre at speed in the UK to help recover from economic recession,” says Garfield.

The problem is that even in neighbourhoods where BT does not have to dig up the road to lay fibre, because it already has ducts carrying its copper wires, many of those ducts are blocked or broken. If those ducts happen to serve one of the 12 million homes where Virgin Media (NSDQ: VMED) has cables, Garfield says BT will not lay its own fibre. This means many homes will have only one choice of high-speed internet supplier, which in turn threatens higher bills.

Allaying fears that Hunt’s announcement will not go far enough, some regions are ensuring that government subsidy will not have to cover every rural area in the UK. Cornwall has already raised £132 ($215.36) million to reach up to 90 percent of homes by 2014. BT is building the network and providing £79 ($128.9) million of the funding, the rest is coming from Europe. Northern Ireland is well on its way, also with BT (NYSE: BT). Some smaller areas, such as the Angus Glens, have attempted to go it alone (see box).

But there are dangers for those who decide to build without BT. Hull is one of the few areas in the UK where the phone network has always been owned by the council, not BT, and broadband penetration there is lower than the national average.

For an internet service provider such as TalkTalk or BSkyB to link in to the local network requires an outlay for equipment and software, and a separate negotiation over price. Many prefer the simplicity of dealing with one network nationally, which means BT.

Of the government’s £530 ($864.74) million pot, around £150 ($244.74) million has already been committed to Wales and a number of English counties including Wiltshire, Norfolk, North Yorkshire and Cumbria. A further 40 areas, as well as Northern Ireland and Scotland, are likely to hear this week how much they will be allocated.

BT is not guaranteed to win all the new contracts. Fujitsu, the Japanese electronics firm, has offered to reach 5m homes in three to five years, if it beats BT to secure around £500 ($815.8)m in government subsidy. Both BT and Fujitsu will be hoping that councils club together to appoint one main contractor, allowing for economies of scale. Declaring his interest earlier this year, Fujitsu managing director of network solutions Andy Stevenson said: “We don’t want to end up with 40 fragmented networks so it makes sense for regions to come together.” However, fibre cannot reach everywhere. Tim Watkins, head of sales for western Europe at Chinese telecoms firm Huawei, which would like to supply equipment for the network, says the final 10 percent will be reached by a combination of satellite and mobile phone masts. “If you want to deliver high-speed broadband services to rural areas with six farmers, it’s never going to be achieved with just fibre.”

But carriers will have to take a mature approach and agree to share equipment in remote locations. Broadband expert Ian Watt at Enders Analysis believes the government funds will only get broadband to three-quarters of homes. “It’s more likely that high-speed broadband will be available to the centre of the village, for example to a school, library or post office. We don’t see the subsidy being enough to get it to everyone.”

Garfield doesn’t claim to know what will trigger demand, but believes it will come. “There is evidence that once you have access to it, the minute you’ve seen the new world, you would never go back. So, I don’t believe there is a lack of desire, but it is a premium product, it will never be the de facto normal product,” she says. Speed can be addictive. It is also of the essence if the government’s dream of creating Europe’s first extensive fibre network by 2015 is to become a reality.

Case study: going it alone

Nestling at the foot of the Cairngorm mountains on the east coast of Scotland, the inhabitants of the Angus Glens tend to make their living from hill farming and gamekeeping. But some commute to Dundee, where hi-tech industries, like biotechnology and computer games, are among the biggest employers. With 2,400 properties across a 500 mile area, and the more remote telephone exchanges serving fewer than 100 lines, there is little likelihood of BT or another major carrier building a fibre broadband network.

When lecturer Geoff Hobson moved to the area in 2007, he concluded that if the Glens wanted a fibre network, they would have to install it themselves. The Angus Broadband Co-operative was created to raise money and provide a community ownership model. The need for better broadband infrastructure is acute. A survey last year showed that 9 percent of properties had no internet connection at all, while 5 percent had only a dial-up service. Three quarters had fixed-line broadband but of those 67 percent reported speeds lower than 2Mbps, the minimum needed to allow quality home working. Meanwhile, a third of local homes are used for some form of business activity.Hobson says: “If you try watching a programme online it can just give up, particularly when it’s busy in the evening.” With two school age children, the family’s need for bandwidth will only increase.

A nearby hill farmer, whose wife is disabled, has to shop online, and her husband needs the internet to fill in government forms. But they have only dial-up access, which means no phone calls while they are using the web.

Another neighbour, a games developer who works from home, has to shuttle to and from the office with CD-Roms because he cannot send material online.

“We decided to going for a fibre network because it would be future-proof. We got some funding and drew up a plan for how to lay the cables: £9.5 ($15.5) million is the lowest quote so far. We weren’t expecting such a large figure,” says Hobson. The Co-operative has approached BT about sharing its ducts, which would bring down the cost. “They appear very helpful when you have meetings and run out to be very unhelpful when they send a written response.”

Hobson is waiting to hear whether his area will be included in an east of Scotland bid for government subsidy.

This article originally appeared in Guardian.co.uk.

Outlining the government’s response to the Hargreaves report on the future of UK copyright law, Cable is also expected to announce legislation to sweep away restrictive rules on file copying and parody works.

In a speech at the British Library on Wednesday, the Liberal Democrat will outline the next steps for the introduction of the delayed Digital Economy Act.

Cable will row back on one of the act’s most contentious measures – introducing legislation to block access to copyright-infringing websites – and instead say that the existing Copyrights, Design and Patents Act is powerful enough.

That follows last week’s landmark high court ruling, which forced BT (NYSE: BT) to cut off access to Newzbin2, a site found to be infringing copyright “on a grand scale”.

Cable’s intervention comes as ministers struggle to implement anti-piracy measures outlined by the Digital Economy Act rushed through by the Labour party at the end of their time in office.

Cutting off the internet connections of serial pirates was one of the measures that was due to have been implemented by the second half of 2011, but a series of legal challenges and administrative delays have meant that is unlikely to begin untili 2013 at the earliest.

The first cease-and-desist warning letters to be sent to Britons accused of illegal filesharing are now not due until in the second half of 2012 – more than a year later than originally planned. On the third warning a connection will be cut.

Cable is also expected to announce a “scoping review” into the viability of a setting up a digital copyright exchange, one of the key proposals of the Hargreaves report published in May – in effect kicking the idea into the long grass.

The rights exchange, which would effectively be a one-stop shop to make lawful use of copyrighted material easier, received “serious pushback” from media companies, according to one industry source. Film and music companies and broadcasters are understood to have raised a number of issues about the proposed exchange, including fears that it may contravene various European regulations by forcing all rights holders to participate. One industry source said that if it was a full “stock exchange” trading platform it may not be generate as much revenue as selling rights directly.

The government is anticipated to legislate to sweep away many of the UK’s archaic intellectual property restrictions that make it technically illegal to transfer content from CDs or DVDs to other formats, such as iPods. The reforms will also make it legal for Britons to burn copies of music and video files for family members to use, and give legal protection to spoof works.

Cable has previously said that private copying is carried out by millions of people who are “astonished” that it is technically illegal. He said: “We need to bring copyright into line with people’s expectations and update it for the modern digital world. This will free up innovative British businesses to develop new consumer technology and help boost economic growth.”

The Lib Dem MP is expected to outline further changes to the DEA, including how costs are aportioned between rights holders and ISPs. The judicial review ruled in April that ISPs should not foot the bill of maintaining an appeals body.

Ed Vaizey, the communications minister, is understood to have set a date of mid-September to get ISPs and rights holders to another roundtable meeting aimed at curbing infringing sites voluntarily.

However, many rights holders are dismayed at the delays in implementing the Digital Economy Act. “What we would very much like is the government to get on drafting and writing the code that goes with the DEA and to fast-track the legal process so it doesn’t take hundreds of thousands of pounds and a long time to sort these things out,” said Lavinia Carey, director general of the British Video Association.

This article originally appeared in MediaGuardian.

Cameron’s officials stressed they believed there were many hurdles and mechanisms before anyone could regulate the net internationally. “We will not be regulating the internet any time soon,” said a Downing Street official.

Sarkozy convened a conference in Paris attended by 1,000 digital executives. He warned them against monopoly control, copyright breaches and intrusions into personal privacy.

Referring to the British case in which Ryan Giggs was named on Twitter in defiance of a high court injunction, the French finance minister, Christine Lagarde, admitted the difficulties involved in striking a balance between freedom and regulation. She said: “We are exploring, we are stumbling, we are trying to identify what will be the right tools [and] legal principles.”

Nick Clegg criticised the Liberal Democrat MP who named Giggs in the commons, making clear he did not support John Hemming’s action: “I do not think that anyone should be above the rule of law. If we do not like the law in this place, we should act as legislators to change the law, not flout it.”

Lord Carlile, the Lib Dem peer, suggested those journalists who had broken the injunctions by naming Giggs on Twitter “can and possibly should” be brought before a court for contempt while human rights lawyer Lord Lester suggested MPs had now become “part of the crisis”.

Sarkozy stressed that “if technology is neutral and should remain so, the uses are not,” pointing out that the protection of children and respect for privacy were universal principles. “Do not let the revolution you started undermine basic rights of individuals to privacy and to full autonomy,” he warned.

Five of the participants at Sarkozy’s eG8 meeting in Paris are due to deliver a report to the G8 world leaders. But judging by Cameron’s officials’ response, Sarkozy’s efforts will struggle to gain traction with world leaders.

Sarkozy described the internet as the third globalisation and praised it for creating tens of thousands of jobs, but also called for greater social responsibility.

He warned: “Your work can be considered historic and impacts on civilisation. With this in mind, your level of responsibility is undoubtedly the highest ever given to individuals who do not work in the public sector or as state representatives.

“Now that the internet is an integral part of most people’s lives, it would be contradictory to exclude governments from this huge forum,” said Sarkozy.

“Nobody could, nor should, forget that these governments are the only legitimate representatives of the will of the people in our democracies,” he added.

“To forget this is to take the risk of democratic chaos and hence anarchy.”

He reminded the industry of its responsibilities in the fields of piracy, drawing a parallel between intellectual property on which many web companies are built and the copyright that artists seek to protect.

“These algorithms that constitute your power … this technology that is changing the world, are your property and nobody can contest that,” he said. “Writers, directors or actors can have the same rights.”

The eG8 guests included the executive chairman of Google (NSDQ: GOOG), Eric Schmidt, the founder of Facebook, Mark Zuckerberg, the News International chairman, Rupert Murdoch, and Jeff Bezos, the founder of Amazon.

Cameron, whose aides are close to Google, support what they see as the beneficial impact of the web on growth, society and government.

They are suspicious of international regulation. But Cameron is under pressure from social conservatives to do more to control the effect of the web on children.

Cameron’s officials tried to play down Sarkozy’s move, saying they intended to make sure nothing newsworthy emerged from the G8 over the initiative. They also stressed that they saw the internet as beneficial and said the discussion at the G8 should be forward-looking.

Lord Lester, the Liberal Democrat peer, said regulation of the web was currently internationally difficult. He pointed out that the US president, Barack Obama, had signed a law last year which prevents English judgments relating to defamation being enforceable in the States..

Sarkozy’s effort to look at the governance of the web is also being resisted by digital executives. Schmidt asked governments to look first at technological solutions before legislating.

He said governments were struggling to understand the way the internet was empowering individuals. “We will move faster than the public sector,” said Schmidt. He urged governments to “tread lightly”, saying “Clearly you need some level of regulation for the evil stuff. But I would be careful about over-regulating.”

This article originally appeared in MediaGuardian.

The recommendations are made in the report, Digital Opportunity, which was commissioned from Prof. Ian Hargreaves by the UK government in November to advise it how UK’s current intellectual property regime might be impeding digital business development. Intellectual property minister Baroness Wilcox says: “we will be giving the review’s recommendations serious consideration and providing a full response soon.”

Google’s submission had argued: “The law must not create a culture of ‘permission first, innovation later’ for technology innovators.” But content owners had argued for specific exceptions to restrictions on re-use of material, rather than a blanket fair-use exception.

Disclosure: Hargreaves’ review panel consulted me informally during research.

The report is 130 pages, but here are the main recommendations and highlights…

• Create a Digital Copyright Exchange
• Enable automatic licensing of orphan works
• Decriminalise format shifting
• No U.S.-style Fair Use
• Back EU’s cross-border licensing drive
• Use EU copyright exceptions on format shifting, parody, non-commercial research, and library archiving.
• Build flexibility in to the system

Digital Copyright Exchange

• “Government (should) bring together rights holders and other business interests to create in the UK the world’s first Digital Copyright Exchange … a network of interoperable databases to provide a common platform for licensing transactions.”
   
• “This will make it easier for rights owners, small and large, to sell licences in their work and for others to buy them. It will make market transactions faster, more automated and cheaper. The result will be a UK market in digital copyright which is better informed and more readily capable of resolving disputes without costly litigation.”
   
• The Intellectual Property Office or Ofcom should oversee the exchange, which should provide linkages between the several existing licensing bodies as well as copyright holders and users. A chief should be in place by end of 2012.
   
• “The Government has a severely time limited opportunity to bring about in the UK the best copyright licensing system in the world.”
   

Automatic licensing of orphan works

• “(Government) should begin by legislating to release for use the vast treasure trove of copyright works which are effectively unavailable – “orphan works” – to which access is in practice barred because the copyright holder cannot be traced. This is a move with no economic downside.”
   

Finally legalising format-shifting

• “The UK has chosen not to exercise all of its rights under EU law to permit individuals to shift the format of a piece of music or video for personal use and to make use of copyright material in parody.” Format-shifting had also been advocated by the UK government’s last big IP review, by Andrew Gowers in 2006, but never implemented in law, and later rejected in the Digital Economy Bill.
   
• “The copyright regime cannot be considered fit for the digital age when millions of citizens are in daily breach of copyright, simply for shifting a piece of music or video from one device to another.
   

Backing EU IP harmonisation

• Hargreaves urges the UK to back European Commission efforts to make a single continental market for copyright licensing and digital content retail, something currently beset by fragmented, nationalistic structures.
   
• “Nor does the UK allow its great libraries to archive all digital copyright material, with the result that much of it is rotting away. Taking advantage of these EU sanctioned exceptions will bring important cultural as well as economic benefits to the UK. Together, they will help to make copyright law better understood and more acceptable to the public.”
   

U.S.-style ‘Fair Use’ rejected

• “The economic benefits imputed to the availability of Fair Use in the US have sometimes been over stated … The success of high technology companies in Silicon Valley owes more to attitudes to business risk and investor culture, not to mention other complex issues of economic geography, than it does to the shape of IP law.”
   
• “We concluded that importing Fair Use wholesale was unlikely to be legally feasible in Europe and that the UK could achieve many of its benefits by taking up copyright exceptions already permitted under EU law and arguing for an additional exception, designed to enable EU copyright law to accommodate future technological change where it does not threaten copyright owners. This would permit copying where it does not trade on the underlying creative and expressive purpose on which traditional rights holders in music, publishing, film and television rely.”
   

IPO role beefed up

• “A new role for the Intellectual Property Office (IPO) in issuing formal opinions to help clarify the law where it is not understood or where new developments in technology and markets create fresh uncertainties.”
   

Also…

• “Measurable impacts (from piracy) are not as stark as is sometimes suggested … we should be wary of expecting tougher enforcement alone to solve the problem of copyright infringement. On copyright issues, lobbying on behalf of rights owners has been more persuasive to Ministers than economic impact assessment.”
   
• “Of the 54 recommendations advanced by Gowers, only 25 have been implemented.”
   

The controversial Digital Economy Act obliges fixed-line ISPs with more than 400,000 subscribers to notify customers whom rightsholders say have downloaded content without authorisation. If this does not significantly reduce the problem, ISPs may have to impose technical measures like bandwidth capping, protocol blocking or temporary account suspension. ISPs would have to pay 25 percent of associated costs; rightsholders, the rest.

The ISPs BT (NYSE: BT) and TalkTalk had lodged a judicial review at the High Court, arguing that the obligations disproportionately impact them and their consumers, and that it is incompatible with European Commission directives. This has delayed production by media regulator Ofcom of the code under which the whole process would be managed.

But on Wednesday a judge rejected four of their five claims, saying ISPs’ assertion that “a determined infringer has … several means of avoiding detection” is problematic because “it rests upon assumptions about human behaviour”. But he sided with the ISPs on their complaint about incurring costs only associated with creating a body to hear aggrieved customers’ appeals.

It is a victory for big creative-industries organisations, which had long lobbied government for this legislation, having argued their sector is a key UK economic contributor.

The defence case had been supported by the British Phonographic Industry, British Video Association, Broadcasting Entertainment Cinematograph and Theatre Union, Equity, the Film Distributors’ Association, the Premier League, America’s Motion Picture Association, the Musicians’ Union, the Producers Alliance for Cinema and Television, and the Unite trade union. They jointly issued a triumphant statement…

• BPI CEO Geoff Taylor: “This judgment gives the green light for action to tackle illegal downloading in the UK.”
   
• Trades Union Congress CEO Brendan Barber: “The sector supports nearly two million jobs, with piracy depriving businesses of up to 20 percent of revenues. Rather than individuals being hauled into court, the (Digital Economy Act) makes it possible to conduct a mass consumer education programme to give people the information they need to avoid using illegal sites in the future. The industry will finally be able to start repairing the damage wreaked by piracy.”
   
• Film Distributors Alliance president Lord Puttnam: “I am confident this will help to repair the serious damage online copyright infringement has caused, and continues to cause to the UK’s creative industries.”
   
• British Video Association direct general Lavinia Carey: “Several other countries are adopting this measure and it would be bad for Britain’s creative industries to be left behind more forward thinking nations who are supporting their creative economies at this difficult time of transition towards increased digital consumption during this period of recession.”

But don’t expect this to be the end of the story. There are several other ways in which the UK is still considering its approach to digital intellectual property. The government has commissioned a review of how intellectual property law should change to better encourage innovation. And two parliamentary committees are conducting inquiries in to the likely effectiveness of the Digital Economy Act regardless.

The UK’s two biggest internet service providers, BT (NYSE: BT) and TalkTalk, will on Wednesday challenge the Digital Economy Act in a judicial review, on the basis that its proposals to tackle illicit filesharing infringe users’ “basic rights and freedoms” and received insufficient parliamentary scrutiny. The two companies together have 8.4 million subscribers, and have repeatedly expressed opposition to elements of the act.

The high court is expected to rule on whether the challenge can go ahead on Friday. If it agrees, the process of review could take until spring 2012, delaying implementation of the act even further, while content companies assert that illicit filesharing is costing UK businesses £400m annually in lost sales.

The act was due to come into force in January, but has been delayed by a series of regulatory hurdles and now by the legal challenge.

The outcome of the challenge is “critical” to the future of the act, a senior television executive told the Guardian. TV companies are increasingly concerned at the volume of their content being swapped over filesharing networks.

Under the act, rights holders will collect data about people believed to be downloading film and music from filesharing sites. Internet providers will then match the rights holders’ data against their customer database and send warning letters to those accused.

Repeat copyright infringers could have their internet access slowed or even blocked under secondary measures in the act. However, this second phase is understood to be about 18 months away from being considered as part of the measures.

“Since the DEA passed into law there has been a considerable amount of work to do to implement the mass notification system,” said a spokesman for the Department for Culture, Media and Sport. “Secondary legislation setting out how the system will be paid for and how it will work has to be passed by parliament. Ofcom also has to set up an appeals process.”

Jeremy Hunt, the culture secretary, last month passed one of the act’s most contentious measures – blocking access to websites accused of enabling filesharing – to Ofcom to review whether it is workable. The communications regulator is expected to report back in the summer.

Copyright owners, largely represented by the Motion Picture Association and the British Phonographic Industry, support the act’s attempt to crack down on piracy but have become discouraged at its protracted and slow progress.

The act’s cost-sharing arrangements also burden film and music bodies with 75% of the costs of the “mass notification system”, with internet providers footing 25% of the bill.

Film bodies are more interested in forcing internet providers to block access to allegedly infringing sites, and are understood to have drawn up a blacklist of around 90 so-called “cyberlocker” sites.

The high court’s judicial review judgment is likely to be appealed by whichever side loses, further delaying its implementation.

“The impact of online copyright infringement on the creative industries is huge,” said Christine Payne, general secretary of the creative industries trade union Equity.

“The DEA is the result of many years of discussion between government, industry and trade unions to try to provide a framework to legislate against online copyright infringement. We believe we had no choice to intervene to give the government support for this case.”

This article originally appeared in MediaGuardian.