September 16, 2014

Response to survey on raising maximum penalty for breaching online copyright to 10 years in prison

ORG has been asked to participate in a survey carried out by Inngot for the Intellectual Property Office on changes to prison penalties for online copyright infringement.

The survey by Inngot centred around the following question:

Today, there is a significant difference between the penalties for offline and online copyright infringement. If convicted, criminals can serve up to ten years for the first — but only a maximum of two years for the second. Do you think the law should be changed?

We do not support this consultation taking place and here we set out why:

1. These proposals have already been rejected

The Gowers Review of Copyright already proposed these changes in 2006:

5.81 The Review proposes that the penalty for online commercial infringement should be increased to ten years imprisonment to bring parity with commercially dealing (but not showing) in pirated works. It proposes that the penalty for consumers infringing online to an extent that prejudicially affects the rights holder should also be extended to ten years, again to bring parity with physical infringement. 

Industry groups were disappointed when the government at the time said no to Gowers’s calls for “parity” for online and physical infringements and we cannot see why this debate should be reopened now. The IPO put it very clearly in their report on the outcome of consultation on penalties for copyright infringement, following the review:

However, it is Government policy that prison should be used mainly for serious and dangerous offenders and that sentences should only be as long as necessary for punishment and public protection. It is worth noting that the Crown Courts already deal with the more serious IP cases under general law such as the Fraud Act 2006.

2. This consultation is flawed

It is very hard to establish the effects of stronger sentences on crime reduction with as many opinions in support as against. Any survey like this risks generating large numbers of superficial responses based on anecdotal experience of infringement. Even well-informed anecdotal experience does not usually make a good penal policy. But in this case, as we’ll see below, there are some very complex issues to unravel.

The survey is not a good consultation process because it does not reach all affected groups of stakeholders — and we would take issue with its use in policymaking. It is not addressed to ordinary internet users and it assumes that all respondents “generate income” from the copyright in their works. The survey asks respondents if they have been affected by copying of their works, but not whether they have been affected by copyright law in any other way.

Inngot have strong credentials in advising organisations on how to extract the maximum economic value out of their intangible assets, but respectfully we are not sure they have a demonstrable record of work in the field of criminal justice and sentencing. The Sentencing Council research shows the complexities of deterrence, proportionality, culpability involved in determining custodial sentences. While here we are looking at setting out maximum penalties, the underlying issues are similar.

3. Online infringement is the wrong terminology

The idea of parity of online and physical infringements is misleading. The issue is framed in deceptively simple terms that could even strike a chord with much of what we argue in our daily work: why should online be different? ORG is against internet exceptionalism in many areas from surveillance to defamation, and as one of our members put it, in many ways…

a different penalty for “online infringement” makes as much sense as a “copyright infringement involving the use of a car” or “copyright infringement using a tape recorder”.

So why are we opposed in this instance? Because in fact we are talking about very different things. The IPO explained “online infringement” at the time of the Gower’s Review:

It should be  noted that while the Gowers Review  spoke of these offences in terms of  ‘physical’ and ‘online’ offences the  distinction in actual fact relates to the  fact that the criminal implications that  arise from infringing an exclusive  right of a copyright owner varies  according to the type of right that has  been infringed rather than whether the  work is in physical or online form as  such.

For example section 107(2A)  of the Copyright, Designs and Patents  Act 1988 which relates to the act of  communicating to the public (one of  the key rights relevant to the online  world) has a lower sentence than the  act of distributing copies of a work  under section 107(1). 

The “infringement by communication to the public” was introduced in UK law by the Copyright and Related Rights Regulations 2003, which transposed the so-called Infosoc or Copyright Directive 2001/29/EC. This new concept was created to deal with online infringement and superseded a previous “infringement by broadcasting or inclusion in a cable programme”. Communication to the public incorporates the older infringement of broadcasting, albeit slightly modified, and

the making available to the public of the work by electronic transmission in such a way that members of the public may access it from a place and at a time individually chosen by them.

4. Communication to the public is not copying and distribution

Criminal infringement by communication to the public is defined in section 107 (2A) of the Copyright Act, and includes two main types of infringement: in the course of a business and otherwise than in the course of a business to such an extent as to affect prejudicially the owner of the copyright.

It is worth reiterating that the Court of Appeal has established that digital assets — data — cannot be “owned” under the same property rights regime as physical objects. But tangibility is not simply a philosophical matter, it has very practical implications.

Communication to the public – which includes broadcasting – is fundamentally different from the kinds of criminal infringement involved in the physical word. There are several criminal offences involved in non-commercial copyright infringement in the physical world. There is no need for profits to be made in any of these cases for the offence to take place.These include making for sale or hire infringing articles or importing these for non-domestic use. The distribution of large numbers of infringing articles to such an extent as to affect prejudicially the owner of the copyright is also a criminal offence. The maximum prison sentence here is ten years.

It is relatively easy to distribute large numbers of digital copies of a work online, while doing the same in the physical world would involve infrastructure clearly beyond the reach of ordinary citizens. The risk of members of the public being caught unwittingly in criminal online infringement is a lot higher. There is no need for profits to be made in any of these cases for the offence to take place.

The legislation rightly reflects this difference in the sanctions in relation to so called physical world offences. Bringing the same sentences for “communicating to the public” as for selling hard copies could mean that ordinary people end up with very long sentences that would never take place in relation to the physical world. So the proposal is not exactly bringing ”parity", as in the stated aim.

The main focus of our concerns are the ordinary internet users that may be caught under the provisions, but the proposals are also very problematic for innovators.

In addition, the formulation used in both EU and UK law -making available to the public - does not require that any actual copy is obtained by a member of the public, only that it is possible to obtain a copy. So one infringement involves an actual distribution, and the other a potential distribution of copyrighted goods. Most people would agree that these are not the same offences.

To make matters worse the Court of Justice of the EU has ruled that simple hyperlinks are a “communication to the public”:

As is apparent from Article 3(1) of Directive 2001/29, for there to be an ‘act of communication’, it is sufficient, in particular, that a work is made available to a public in such a way that the persons forming that public may access it, irrespective of whether they avail themselves of that opportunity.

It follows that, in circumstances such as those in the case in the main proceedings, the provision of clickable links to protected works must be considered to be ‘making available’ and, therefore, an ‘act of communication’, within the meaning of that provision.

An act of communication such as that made by the manager of a website by means of clickable links is aimed at all potential users of the site managed by that person, that is to say, an indeterminate and fairly large number of recipients.

Everyone will agree that criminals can use both online and physical means, but this does not mean that the crimes are exactly the same. For example, armed robbery and credit card fraud can both have devastating consequences for victims. But each should have its own custodial logic.

5. Current sentencing options are tough enough already

The Inngot questionnaire starts from the erroneous premise that copyright infringement is only prosecuted by way of statutory offences in the Copyright Designs and Patents Act. The IPO’s own submission on enforcement in the UK to the World Intellectual Property Organisation makes clear that infringement is tackled by other avenues:

There are other offences that may be committed in relation to copyright infringement, including offences under the Fraud Act 2006, and the common law offence of conspiracy to defraud (knowingly enter into a fraudulent transaction — e.g. downloading music tracks known to be illegally obtained).

The majority of prosecutions for online file-sharing in the UK are private prosecutions by the Federation Against Copyright Theft, using Common Law Conspiracy to Defraud, which pursuant to section 12(3) of the Criminal Justice Act 1987 carries a maximum sentence of 10 years in jail. This suggests that major copyright infringers can be prosecuted to a similar extent as in physical infringement. This would also suggest that any change to the maximum sentence for online infringement would have little effect as a deterrent for these, as they are already facing decade-long sentences.

Convictions are not particularly difficult to obtain for conspiracy to defraud, which is a very loose offence that does not even require an intent to deceive. Fraud, as expressed in the Fraud Act 2006 involves false representation, failure to disclose information or abuse of position. But here it is sufficient for there to be a “dishonest agreement to expose the proposed victim to some form of economic risk or disadvantage” (Blackstones’ Criminal Practice).

Serious online infringement can inflict serious economic harms, and it is rightly pursued, but given that it is successfully prosecuted with existing laws, we cannot see the advantages in changing the upper limit for communication to the public.

6. Sentencing in practice may be harsher for online infringement

If any changes to sentencing were to take place, it would be expected for the courts to take a sensible approach where small acts of infringement, such as linking a video in a Twitter post, would not receive a disproportionate punishment. For example, theft carries a maximum sentence of 7 years, but only 20% of those convicted of shoplifting are sent to prison, with an average sentence of around 8 weeks.

We would hope that government and courts agreed on very clear guidelines for what constitutes serious infringement, to avoid legal insecurity for ordinary internet users. But there are no guarantees that the proposed changes wouldn’t have far reaching consequences for many internet users. The difficulty in making evidence based assessments of the actual values involved in online infringement tends to generate estimates of very high economic harms, easily in the millions. This could make non commercial online infringers end up with much higher sentences than hardened criminals dealing with physical goods.

Simon Bradshaw, a barrister affiliated with ORG, has produced a list of example sentences as set out in the current edition of Current Sentencing Practice, section B13–7, which sets out recent sentences for prosecutions under offences of commercial copyright and trade mark infringement or counterfeiting:

  • R v Manders (2013) - 32,000 counterfeit DVDs, sophisticated operation. Late guilty plea. 2 years’ imprisonment upheld on appeal.

  • R v Nimley (2011) - 4 counts of possessing article in connection with fraud, for using mobile phone to record movie and then uploading. Guilty pleas. 6 months’ imprisonment upheld on appeal.

  • R v Brayford (2011). Imported 25 tons of low-grade washing powder and nearly 3,000 counterfeit Persil boxes. Estimated that profit would have been about £20,000. 2 years’ imprisonment upheld on appeal.

  • R v Hatton (2008). Production of 20,000 counterfeit DVDs, defendant admitted selling for £2 to £5 each to resellers. 18 months’ imprisonment upheld on appeal.

  • R v Kirkwood (2006). About 2,500 DVDs with films, games and music seized. Some of the films were unrated pornography. Estimated equivalent retail value of material was £17,000. 30 months’ imprisonment reduced to 21 months on appeal.

  • R v Gleeson (2002). About 3–4000 counterfeit DVDs admitted to have been produced, defendant admitted aiming to produce 2,000 per week. Court was sceptical of asserted loss to business of £1.5M but accepted ‘substantial’ losses. 30 months’ imprisonment upheld on appeal.

  • R v Ansari and others (2000). Production and distribution of counterfeit fashion clothing worth some £800k. Sentences of 2 and 3 years’ imprisonment upheld on appeal.

  • R v Lewis (1997). Operated BBS through which 934 computer games downloaded. Estimated retail value approx. £37k. Guilty plea. 27 months’ imprisonment reduced to 12 months on appeal.

The assessment of the value of online copyright infringement can quickly spiral into much larger sums. If we look at the sentences for copyright infringement in the physical world presented in the list above, and the figures alleged by the prosecution in trials for online infringement we can see that the latter tend to be much larger.

Anton Vickerman was sentenced to four years imprisonment — longer than the average sentence for burglary — under conspiracy to defraud by facilitating copyright infringement while running the website SurfTheChannel. Industry prosecutors claimed huge losses, and while the sentencing judge took a more conservative view, he still accepted a prejudice in the millions:

The Prosecution estimate the loss at running into hundreds of millions of pounds. That estimate is based on the loss of revenue from STC’s provision of the means to access the top 50 films during the period covered by the indictment. It is put at between £52 and £198 million. Those figures are based on their research suggesting that 55% of those who accessed the films for free would, had they been unable to watch them for free, have paid either through the box office to watch the film or rented a DVD. Others would have purchased the film on the High Street and others would have viewed it on pay TV or downloaded it from an official site.

I accept that any assessment of the loss to the industry is highly speculative and while I do not deal with you on the basis of the figures advanced by the prosecution, there is no doubt in my judgement but that the industry has suffered a loss running into millions.

Leaving aside the loss to the industry I am bound to take account of the gain which you personally made from running STC.

In a recent case, Philip Danks gained notoriety for allegedly costing the film industry £2.3 million by filming and uploading to the peer to peer Bittorrent network an early copy Fast and Furious 6, and then boasting about it in social media. Danks was also accused of distributing some £1,000 worth of DVDs via his Facebook account. He pleaded guilty to distribution of pirate films and was eventually jailed for 33 months.

The legal details of the sentence have not been made widely available. Given that the sentence is longer than two years it cannot simply involve “communication to the public”. But we do not know whether conspiracy to defraud was brought in or it was a criminal copyright conviction on account of the distribution of physical DVDs. In any case, we can see the disparity of the numbers involved in each type of infringement, which are in completely different scales.

Parity of sentences for distribution and communication to the public could make it more likely that online infringers end up with longer sentences than offline, where the value of DVDs can produce more sober calculations than an alleged prejudice based on large numbers of downloads.

The case of Anne Muir gives some indication of the dangers of the proposed parity for ordinary people who do not act in the course of a business or a criminal conspiracy. Ms Muir was found in possession of some 32,000 audio files estimated to be worth £54,000. She pleaded guilty to infringement under section 107(1)(e) of the CDPA, by making them available to others via a peer-to-peer network. This was clearly incorrect, as that section of the act applies to physical infringements, not to making available, but nevertheless the Scottish nurse was sentenced to three years probation.

Her case under the proper infringement of communication to the public would have entailed a maximum of two years in the current regime. But had the maximum penalty been raised to ten years, the outcome could have been very different. In her case the prejudice was calculated on the basis of the market value of the files she possessed. But a prejudice based on the value of the same files after they had been made available to millions of users could be deemed to be much higher. This could have triggered a much longer sentence.

The examples above show that online infringements tend to involve allegations of very high economic harms, although we would dispute the accuracy of many such assessments.


The impacts of the proposed changes on hardened criminals may be small, given they already can be sent to prison for ten years under fraud laws. There is a risk that ordinary internet users may end up with excessive penalties under the proposed regime. But the proposals could have a larger effect on specific groups that operate at the limits of current copyright legislation, but are not mass infringers and would not be prosecuted under fraud. Many internet innovators, prosumers, online creative communities that create non-profit derivative works, fandom producers, etc. All these people – many of whom technically breach copyright in their activities – could find themselves facing prison sentences if making available carried a maximum sentence of ten years.

The concept of “parity” for online and physical infringement may look reasonable at a very superficial level, but it is deeply misleading. For all the reasons above we do not believe it is worth considering as a policy option.

Any such changes require a discussion about the nature of "communication to the public" and "making available". But such review of fundamental concepts in international copyright law should be broader and deeper than a quick survey on changes to maximum sentencing.