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Digital Economy Bill [HL]

My Lords, Amendments 126 and 192 propose the same change in relation to both the initial obligations code and the technical obligations code. Proposed new Section 124E(5) in Clause 8 and proposed new Section 124J(4) in Clause 13 allow the code to make provision for financial penalties when an ISP or a copyright owner fails to comply with one of the obligations or the provisions under the codes that put those provisions into practice. It might help if I explain the Government’s thinking. Failure on the part of either a copyright owner or an internet service provider to comply with the obligations or the code could have a damaging effect on a subscriber, a copyright owner or an ISP. In that situation it is appropriate that there should be some deterrent to ensure that the obligations and the code are complied with. We have suggested two different types of deterrent, because the harm could occur in different ways, as the noble Lord, Lord Howard, identified. For example, if an ISP fails properly to process the copyright infringement notices, the notifications will not be issued and the resultant anticipated impact on the subscriber’s infringement will not materialise. This is a generic failure causing generic rather than specific harm and, because it is generic, is appropriately dealt with through a fine. However, if a copyright owner makes a mistake in transcribing the time and date of an alleged infringement, an ISP might issue a notification to the wrong subscriber. If technical measures are in place, an ISP might even impose a technical measure on the wrong subscriber. This could cause real financial or other harm to the subscriber, who might then choose to take action against the ISP in relation to any loss suffered. If the subscriber were to win damages from the ISP in these circumstances, it seems only reasonable that the copyright owner responsible for the error should indemnify the ISP for any loss or damage resulting from the error. We have put these two different mechanisms into the Bill not as alternatives but as complementary tools, because different types of harm could be suffered dependent on where the error or omission occurred. That is not to say that both would be used in any individual case, but the code should be able to contain both and apply them as appropriate. I hope that that has clarified the matter for the noble Lord. The noble Lord asked whether, where an ISP was charged with a penalty, the money would go to the copyright holder or to Ofcom. The penalty would be paid to Ofcom and subsequently to the Consolidated Fund. I am sure that that response gives the noble Lord great pleasure.