March 08, 2012 | Peter Bradwell

Speculative invoicing is back...and why it matters more than ever

A court decision tomorrow may have a big impact on how the Digital Economy Act works. At issue is the strength of the evidence required against alleged copyright infringers facing possible civil action. It should help focus attention on the need for Ofcom to demand that water-tight standards of evidence are required for rights holder chasing alleged infringers through the Digital Economy Act.

What's happening tomorrow?

Tomorrow a firm called Golden Eye International (no, really) will be in court seeking a 'Norwich Pharmacal Order' against Telefonica UK Ltd, which could see them handed the details of many thousands of individuals who they allege have downloaded adult films from unlicensed peer-to-peer services. The case will be heard in the Rolls Building in Court 6 at ten tomorrow (Friday, 9th March - and not half ten as listed in the link). 

Why should you care? The process involved here is called 'speculative invoicing'. It involves a company getting the details of subscribers from ISPs via a court order, then writing to them en masse threatening court action unless they settle for a reasonably large sum of money (for example, £700).

You may remember last year that a company called ACS:Law had a similar case thrown out by Judge Birss. The person behind ACS:Law, Andrew Crossley, was subsequently suspended for two years by the Solicitor's Regulation Authority (The SRA judgment is available here). ACS:Law tended to 'materially overstate their case', according to the judge, and relied on problematic evidence to connect apparent instances of infringement with subscribers.

Golden Eye have done this before - and had similar problems to ACS:Law. 

There are a number of problems. Here's three of the bigger ones:

1. The letters to people accused of infringement tend to be worded in such a way that they would believe the case against them is stronger than it is, and that their options are limited. For example, the letters from ACS:Law implied that a user was liable infringing on their account in all circumstances. The point is to make them pay, for fear of complicated, expensive and intimidating court case against them. 

2. The ISPs don't always challenge the 'Norwich Pharmacal Order'. Given what happened with ACS:Law, the ISPs have a responsibility to protect users by challenging requests for their users data.

3. The evidence against alleged infringers is often not robust. What kind of evidence should be required before an ISP is forced to hand over details of your account to a rights holder wishing to take legal action against you? For example, not only is the process of linking IP addresses to subscribers problematic, but that process identifies the owner of the connection and not the person who committed the infringement (these kind of problems were outlined by security expert Richard Clayton here).

Unless there is very robust evidence that the internet connections in question have been used to infringe copyright, then Norwich Pharmacal Orders should be refused.

When the information is given out too easily, with weak evidence and a hands-off ISP, often innocent people will face letters effectively strong-arming them into settling the case for not small sums. ACS:Law case clearly wasn't the end of this nefarious practice. The practice has seen people put through huge amounts of stress and inconvenience and financial harm. Not in the service of promoting creators' interests, but for cheap money making schemes.

Friday's decision and the Digital Economy Act

Under the Digital Economy Act, copyright owners would submit copyright infringement reports (CIRs) to ISPs (these are basically cases where rights holders think a particular IP address is responsible for an instance of infringement), and the ISP then match IP addresses with customer records. They then pass on notifications to that user. If a user gets a certain number of notifications (a number to be set in the initial obligations code, and which was set at 3 in the draft) then subscribers get placed on “copyright infringement lists”.

In advance of 'technical measures' being introduced, copyright owners would be able to apply for these Norwich Pharmacal Orders for personal data of those who are on the copyright infringement list, and then take them to court for civil copyright infringement.

Ofcom are required to define the standards of evidence required against alleged infringers through the Initial Obligations Code (see Consumer Focus' guide to the 'IOC' here).  The revised version of this is due out soon. Without stringent standards, there is a risk that people are wrongly placed on infringement lists and are subject to the civil action in the initial phases of the Act. Once the technical measure come into force, anyone on the blacklists can have technical measures imposed on their connection, which may include speed-bumping or disconnection. We're concerned that Ofcom will not have done enough to set that standard of evidence.

There's an interesting problem for the Act itself as well - if Ofcom's standards of evidence are not high enough, then they may face a situation in which Norwich Pharmacal Orders are turned down, undermining a key purpose of the Act - to make it easier for rights holders to take civil action against repeat alleged infringers. It would also leave potentially thousands of internet subscribers blacklisted on the basis of evidence that is not even strong enough to obtain a Norwich Pharmacal order.

We'll be reporting from the court tomorrow morning on what happens.