Analysis: Three Strikes Coming In?

This is the text of our guest editorial just published on

Fight the Good Fight

A battle is underway throughout Europe regarding the protection of online content (including videogames), in which governments, rights holders, ISPs and consumers are all weighing in and the resolution of which will have great importance for the games industry.

The genesis of this battle lies in the dissatisfaction of rights holders (from music and film companies to games developers and publishers) at the legal regime on which they must currently rely upon to protect their content. With court proceedings slow, lengthy and expensive, rights holders have been lobbying for legislation to compel ISPs to take ‘technical measures’ to curb online piracy/copyright infringement over their networks.

One well-known proposal has been to introduce a ‘graduated response’ (known rather better as ‘three strikes’), under which rights holders would work together with ISPs to identify individuals who are suspected of committing online copyright infringement/piracy, to serve them with warning notices and, if they do not cease their illegal activity, to take ‘technical measures’ against them including suspending their internet access.

This is a contentious proposal and ISPs in particular have resisted it, claiming that they are not responsible for policing the actions of their users or enforcing copyright. Furthermore, many consumers – particularly gamers – have also been hostile to the possibility of having their internet access suspended for any reason.

Most recently, there has been press coverage regarding a battle within the European Union over these proposals. In a nutshell, the EU is in the process of preparing new telecoms legislation (known as the Telecoms Package), as part of which it has been debating whether EU law should permit EU Member States to introduce into their domestic legal systems the ability to use technical measures to fight online copyright infringement/piracy – including games piracy. This proposal was championed by the Council of Ministers (the body which represents Member State governments) but was opposed principally by the European Parliament (the democratically elected body of the EU).

The battle coalesced around a controversial amendment to the Telecoms Package known as Amendment 138. This amendment was put forward by the European Parliament and would have required that any attempt to take technical measures against an EU citizen’s internet access could only be carried out pursuant to a Court order – which would make attempts by rights holders/ISPs to take direct unilateral action against suspected online pirates/copyright infringers very difficult.

So, for example, action against a suspected repeat illegal downloader of games would have to be approved at a court hearing in which the individual could defend him/herself. The European Parliament proposed Amendment 138 twice and twice it was rejected by the Council of Ministers in controversial circumstances. There seemed to be a deadlock.
With All Thy Might

But it looks like that deadlock has been broken this month, with the European Parliament reportedly dropping Amendment 138 in favour of a compromise text. This seems to remove one obstacle to the EU adopting a regime which is friendlier to the kinds of action which rights holders would like to take against suspected online pirates/copyright infringers.
Of course, that is by no means the end of the story. Even if and when the Telecoms Package is finalised, it cannot on its own introduce a three strikes system into the EU. Rather, it will still be up to national governments to decide exactly what their own laws should say about any technical measures to be taken against suspected online pirates/copyright infringers. These national governments – two leading examples being France and the UK – are therefore pushing ahead with their own proposals to fight online piracy/copyright infringement independently of the EU debate.
In France, the French legislature famously passed ‘la loi Hadopi’ (albeit on a second attempt, the first having failed), which has implemented a graduated response system into French law. That law quickly became the subject of a legal constitutional challenge, although it now seems that that challenge may have fallen away with the announcement earlier this week that the French Constitutional Council has in principle approved la loi Hadopi.

Implications for the UK?

In the UK, the government’s final Digital Britain report (published in June 2009) set out several proposals intended to reduce unlawful file sharing. The key proposal would impose a legal duty on Ofcom to secure a significant reduction in unlawful file sharing (the government suggested this should be a 70 per cent reduction) by requiring ISPs to notify the holders of accounts suspected to have been used for copyright infringement and making available to rights holders (on the basis of a court order) data to enable serious repeat infringers to be identified and court action taken.
However, the government also proposed that if such significant reduction was not forthcoming within 12 months of that system coming into force, then Ofcom should be provided with backstop powers including the ability to compel ISPs to impose technical measures to reduce copyright infringement (such as protocol blocking, bandwidth restrictions and content filtering). The report stopped short of proposing a full ‘graduated response’ system.
Then in August 2009 the UK government issued a statement that it is now considering providing for Ofcom to be given the power to suspend the accounts of serious repeat infringers. Most recently, Lord Mandelson has made comments about the need to implement something like the French Hadopi system. All of this suggests the government may be somewhat closer now to proposing the introduction of a graduated response system, or at least something like it, into the UK.
That said, a key point about both the French law and British proposals (as well as the proposals of other governments) is that it remains to be seen what and when concrete technical arrangements will actually be put in place to combat online piracy/copyright infringement, how successfully they will work and, crucially, what consumers’ reactions to them will be.
And Implications for the Games Industry?

The games industry will be at the forefront of these developments. If governments adopt legal regimes which permit technical measures to be taken against suspected online pirates/copyright infringers, it would give the games industry a powerful weapon to deploy against games piracy/copyright infringement – which is of course often said to be the single greatest threat that the industry faces. So, in principle it would be possible to deploy technical measures against individuals who repeatedly download and distribute illegal copies of games – which could prevent a repeat of Spore, said to be one of the most pirated games in history.

But it may cover rather more than that – in principle, it may in the future be possible to take technical measures against all forms of online copyright infringement relating to a game, including individuals who distribute unauthorised game modifications (eg additional game levels or a total conversion mod) and/or who create user-generated content relating to games (eg unauthorised in-game footage posted on YouTube).
So the person who distributes a brilliant but unauthorised mod of a defunct but well-loved game, or the person who repeatedly posts unauthorised footage of upcoming or released games online, could potentially face technical measures against his/her internet access in the future. Obviously, the devil would be in the (legal) detail but, clearly, if this kind of action was possible it could transform the games industry.

On the other hand, time and again gamers have shown themselves to be hostile to what can be seen as attempts by the games industry to impose limitations on the way in which they can play and interact with games (as seen recently for example the DRM debacle or the reactions to the recent Pirate Bay case).
The games industry would likely have to tread a fine line between relying on technical measures to protect their games but, at the same time, not alienating their customers or stifling the enjoyment and innovation derived from the creation and use of mods and other post-release user generated content. In an industry which depends heavily on the loyalty and enthusiasm of its customers, this is likely to become an issue of great importance in the future.
Ultimately, the question for the games industry may not be whether they can legally deploy these strategies to defend their games, but whether commercially they can risk it.

Jas Purewal is an associate as Olswang LLP.

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