Revealed: the Costs of the Digital Economy Act Judicial Review

Royal Courts of Justice
Image courtesy Carl D. Patterson

The Digital Economy Act 2010 was signed into law on 8 April 2010 following just two hours of debate in the House of Commons.

Including such provisions as the notification scheme commonly known as ‘three strikes’ and website blocking, the Digital Economy Act has been very widely criticised as an ill-developed piece of legislation pushed through during a parliamentary wash-up as the result of extensive lobbying of parliamentarians and with no genuine evidential basis of any economic benefit (the plans said to cost more for ISPs to implement than the total financial damages the music industry claims to suffer from piracy in the UK).

In particular there was disapproval of the twice-forced-to-resign Lord Peter Mandelson, at the time the Secretary of State for Business, Innovation and Skills – who pushed the Bill following dinner with copyright lobbyist and DreamWorks billionaire David Geffen.

It has also since become apparent that the public ‘consultation’ on the then Digital Economy Bill was a sham, Mandelson having decided to approve the Act before the consultation was complete.

In fact, as early as November 2009 BIS was receiving emails from an individual that had responded to the consultation, pointing out the disparity between the consultation replies and Mandelson’s public comments:

15 November 2009

Dear Michael Klym / Adrian Brazier,

I, along with many others, wrote to you in September replying to the department's public consultation on legislation to address illicit peer-to-peer file-sharing.

I note that last month Lord Peter Mandelson made some public announcements regarding planned legislation in this area. For example see: http://news.bbc.co.uk/1/hi/8328820.stm

Can you please confirm if Peter Mandelson has yet seen the complete consultation and the relationship between his statements and the responses to this consultation.

Can you please additionally confirm when the official government response to this consultation and the replies to the consultation document will be published.

and

20 November 2009

Dear Michael Klym / Adrian Brazier

I see that the responses to your department's consultation on legislation to address illicit peer-to-peer file sharing have today been published.

I have reviewed these. It now occurs to me why you did not comment in your previous email replies to my questions, as to the relationship between Peter Mandelson's public statements and the responses to this consultation. His, and your department's, announcements appear not to have been shaped, influenced or informed on any level by the public's responses to this consultation.

I note that there are 116 files consisting of replies from the public most of which are exceptionally salient, and a very significant number of which have been provided by very well informed and intelligent individuals arguing excellent points. A good number could be considered experts. There are 77 files related to responses from companies and organisations - a significant number of these are ISPs and Consumer Rights Groups and these replies do not correlate at all to the stance made clear in the response your department has chosen to publish. A fair portion, but probably less than 50 of the 'corporate' responses are from the Creative Industries which stand to gain increased powers and profit from the legislation proposed. They are far in the minority of the responses and yet appear to have carried disproportionate sway with the outcome of the consultation.

It has now also become clear that of two of the most controversial measures in the Act, neither is likely to be effective. It has been realised that one - website blocking – would have been likely to have little, if any, effect. The ease of circumvention of website blocking is known to the Department for Culture, Media and Sport (the Government department now responsible for the DEA); in fact, this week they inadvertently published instructions for doing so. Website blocking has therefore been ditched.

The lack of efficacy of ‘three strikes’ can be seen in France’s implementation of the similarly flawed ‘Hadopi’ – their own flavour of the scheme.

But - to business. In November 2010 two UK ISPs, BT and TalkTalk, were granted a judicial review of the Digital Economy Act by the High Court. The review found in favour of the Government on the majority of the issues raised.

The Government’s use of five defence barristers was commented on by several of those that attended the review and I thought it might be interesting to see just how much public money the Government was prepared to wager on defending this flawed, unjustifiable and likely to be largely ineffectual Act.

A few days ago I got the answer to the FoI request I made to BIS (which was subsequently answered by DCMS). Their response is below:

The information you sought is given below. Please note that some of these are “best estimates”, particularly relating to time of civil servants spent on the work, as it is not possible to provide accurate and definitive answers to some of the information you requested.

The total expenditure by the Department for Business, Innovation and Skills in the period 1 July 2010 until the current date [14 May 2011], including any outstanding invoices or other liabilities yet to be met, on legal counsel and other costs directly incurred in defence of the Government’s position in the judicial review of the Digital Economy Act 2010.

The total expenditure on legal counsel and other costs directly incurred in the defence of the Government’s position in the Judicial Review of the Digital Economy Act 2010, from 1 July 2010 to 14 May 2011, as far as we are able at this point in time to calculate it, was £115,482 (excluding VAT) on legal fees on matters involved in the judicial review.

Please note that these are our best estimates and consequently merely indicative figures. They should not be regarded as definitive, as not all costs have yet been calculated, but we are not currently aware of any particular costs that would fall within this definition that are not included here.

The breakdown of actual legal costs to date (being the date of this letter) is set out below:

Counsel’s fees (ex VAT)                     £71,548

Law stationer’s fees (ex VAT)             £ 1,934

To date, we estimate that the costs payable to Treasury Solicitors (TSol) for their services to be approximately £42,000 (ex VAT).

Consequently, based on the information we have located to date, we estimate that BIS has paid at least £115,482 (ex VAT) on legal fees and other costs directly incurred in R (on the application of British Telecom and TalkTalk Telecom Group) v the Secretary of State for Business, Innovation and Skills [2011] EWHC 1021 (Admin).

It is important to note that this figure merely reflects external costs and does not include the internal cost of BIS staff’s time spent on work surrounding the judicial review.

We estimate that the time spent by internal BIS staff from 1 July 2010 to 14 July 2011 on all the work involved in the Digital Economy Act, including the Judicial review to be as follows:

Legal staff                                 0.5 full time employee

Policy staff                                1.5 full time employees

Communications staff                Less than 0.1 full time employee

These are estimated figures, given in good faith and should not be regarded as definitive or binding.

July 2011: A Busy Month for a Bankrupt Solicitor

ISPAs 2011
Andrew Crossley: Internet Villain

You’d think that once a solicitor had closed down his business and been declared bankrupt he’d probably enjoy a fairly quiet life, right? Wrong.

July has been an unusually busy month for Andrew Crossley.

In 2010 Crossley as ACS:Law was nominated in the Internet Service Provider Association Awards’ (ISPAs) for ‘Internet Villain’. On that occasion he made it to the finals but was pipped at the post by the thoroughly deserving Peter Mandelson who completely ignored a public consultation and, supported by a lot of other people who also ought to have known better, forced through the ill-formed, ineffectual and costly Digital Economy Act** apparently because he was mug enough to believe the unsupportable claims of the media industry.

Not many people get nominated two years running for an ISPA, but Crossley went one better and in 2011 made it again to the finalists. But this year, at the ISPAs dinner (where, incidentally, HHJ Colin Birss – the judicial superhero who annihilated the Crossley-led MediaCAT copyright claims - was a finalist for Internet Hero) Crossley triumphed over his adversaries (a first time for everything then) and was announced the recipient of the award for Internet Villain 2011.

Crossley wasn’t present in person to collect the award - probably wise as the dinner reportedly included fruit kebabs that were served on devastatingly sharp skewers – but it was collected on his behalf by BeingThreatened, the grassroots support group that has been among those leading the campaign against speculative invoicing.

James Bench of the group made light of the occasion. He quipped that he’d heard about ‘a copyright lawyer joke’…

…‘Andrew Crossley’ – badum tish, and went on to comment that he fully expected Crossley to be promoting himself the next day as an ‘award winning solicitor’.

The attendees – largely senior managers from ISPs – seemed amused, some them perhaps forgetting their own industry’s role in speculative invoicing. While it’s easy to joke about the demise of speculative invoicing in the UK and Crossley’s ungracious downfall it’s important that the very real impact of speculative invoicing is not forgotten. The tens of thousands of members of the public that were harassed by Crossley will not quickly forget the episode. His pursuit of innocent individuals for his own financial gain is something which was far from amusing and while the Digital Economy Act still lives on the harassment of innocent members of the public on the whim of the copyright lobby is a likelihood which remains a great concern.

Writing of Crossley’s own financial gain (and his bankruptcy) it’s also worth mentioning, in case anyone missed it, the report from the day prior to the ISPAs, which made public the Information Commissioners Office’s doubts that Crossley would pay the £1000 monetary penalty issued in respect of his staggering September 2010 DPA breach. This was the breach that the ICO saw fit to reduce to 0.5% of the intended penalty of £200,000 since Crossley was in some financial difficulty (later revealed to be his bankruptcy).

Later in the month ACS:Law’s name again surfaced in the news. What transpired to be a scam, operating with apparently mischievous but no financial motive, involved sending emails to Greeks accusing them of copyright infringement – in much the same manner as ACS:Law’s own speculative invoicing operation – and indeed using ACS:Law’s letterhead (which leaked, along with everything else, in his September 2010 data mishap).

Crossley was quick to respond to the reports telling PC Pro, “This is obviously a scam. ...it is not a demand made by me and it is quite clear from the way it was written that it was not.”

Crossley appears to have forgotten surprisingly quickly how readily a legal operation with serious intent can appear to be a scam – including his own (didn’t he shut down a website because he didn’t like his operation being thought of as a scam?). The only give away clue from the letters that they aren’t indeed from the bankrupt closed-down solicitor is that they request payment to an address which doesn’t exist. Assuredly Crossley would never fail to supply a valid address to which payments should be sent.

You might think, after such a month, that it might start to dawn on Crossley the error of his ways. And you’d be sorely mistaken. But you didn’t really expect him to see the error of his ways; if you’ve followed this nonsense for any period of time, you’d know that that part of Crossley’s brain just ain’t wired that way.

No, instead Crossley recently contacted V3, despite being slated by HHJ Colin Birss in the court cases he foolishly started, despite facing numerous charges at a disciplinary hearing later this year (charges which, at the hearing of his predecessors at Davenport Lyons, were upheld), despite being named Internet Villian 2011… and stated "I still maintain the work I did was compliant, lawful, measured, appropriate and needed.”

Compliant: no – that’s why the ICO fined him. Lawful: no – that’ll be why his indemnity insurers had to settle in the claims he took to court. Measured, appropriate and needed: just pfft! His half-baked scheme was needed like blowtorch to the eyeball.

He also said, “I no longer read what is out there about me anymore. Life is too short." Does that mean that I can write here that I think he’s an unprincipled, unethical idiot* and he won’t whine about it?

(* I toned that down, in the interests of a family audience)

(** I recently found out, via an FIOA request, just how much the Government spent defending this monstrosity of a waste of space in the judicial review. I might share that with you at some point in the near future, if you're interested.)

ACS:Law's Andrew Crossley Tells Tribunal 'I Will Fight This Tooth and Nail'

Friday was expected to see the MediaCAT v Adams & Ors cases back at the Patents County Court. Otherwise known as the ACS:Law cases, lead by Andrew Crossley - the solicitor that has since been forced to close down his law firm and been declared bankrupt, the cases have been ongoing since January this year.

However, despite on Thursday evening and during Friday the court’s cause list showing the hearing as taking place, it was evident on the internet elsewhere (primarily Twitter) that the hearing was cancelled, possibly to be rescheduled.

The primary source of the information that the hearing on Friday was cancelled was Ralli - the firm solicitors leading the case for the defendants (MediaCAT being, in case of any doubt, the prosecution). It’s not yet apparent as to the cause of the cancellation or if it is likely to be rescheduled.

For those of you that have thus been denied your expected ACS:Law news I thought I’d write a short post.

I was picking through my notes from the short appearance of Andrew Crossley before the Solicitor’s Disciplinary Tribunal a couple of weeks back (prior to his hearing proper, expected in October), and found a few bits I’d not previously blogged that I thought I’d share.

Here they are:

In discussions around his requests to the tribunal Crossley stated that while he inherited the ‘processes and procedures’ of his speculative invoicing scheme from Davenport Lyons he had adapted and improved upon them. Crossley told the tribunal that his operation was ‘far superior’ to that of David Gore and Brian Miller at Davenport Lyons. Evidently his recent experiences (ie. the collapse of the claims he started, the failure of his firm and his own bankruptcy) have failed to have any impact on his lack of humility.

Crossley also said that the allegations of the Solicitors’ Regulation Authority (SRA) ‘verge on implying criminality’ and observed that ‘it would appear that my practising certificate is on the line’.

However while arguing that he would struggle to fight the case given the ‘inequality in arms’ of his resources versus those of the SRA he came out with a turn of phrase which gives every indication of an interesting hearing in October, declaring of the case against him: ‘I would fight this tooth and nail’.

As he might’ve said in a website statement in the past, ‘exciting times ahead’.

ACS:Law Data Breach: How the ICO Took Eight Months to Reach a Conclusion

In September 2010 ACS:Law published a backup of its email system to its public-facing website. The emails were subsequently downloaded and made widely available on the internet. Contained in the emails were a massive amount of confidential information. Most seriously the emails contained the names and addresses of many thousands of individuals that ACS:Law alleged had made unlawfully copyright works (often including pornography) available on peer-to-peer networks.

It has since been heard in court that the evidence upon which these accusations were based was extraordinarily unreliable and often simply wrong. Exactly how prone to failure these systems were is unknown but suffice to say that for a single law firm to generate in excess of five hundred complaints to its regulatory body in under two years indicates quite some significant degree of error.

The data leak was the singular most serious breach of personal data ever seen in the UK. The Information Commissioner’s Office began investigating the breach on Monday 27th September 2010, shortly after it took place. It was on 9th May 2011 that the ICO issued a Monetary Penalty Notice to Andrew Crossley, the sole solicitor, owner and data controller of ACS:Law. The amount of the penalty had initially been determined at £200,000 – to have been the largest ever issued, determining Crossley’s number-one spot in the list of unlawful breaches of the Data Protection Act. This was subsequently reduced by the ICO to just £1000; it transpires that a petition was filed for Andrew Crossley’s bankrupty by HM Revenue & Customs in December 2010 and the bankruptcy order was granted in May 2011.

Some, though, have questioned the delay the ICO took in reaching their determination. Following a series of requests of the ICO under the Freedom of Information Act there is some light to be shed.

What follows is a timeline of the events between the breach and the issue to Andrew Crossley of the Monetary Penalty Notice:

27/09/10                first ICO case file created (COM0351377)

28 & 29/09/10        ICO to ACS Law - initial enquiries asking for response by 12/10/10

08/10/10                response from ACS Law to ICO

13/10/10                ICO to ACS Law requesting more information

13/10/10                response from ACS Law

20/10/10                ICO internal meeting – establishing further information required

29/10/10                ICO to ACS Law requesting more information

09/11/10                ACS Law to ICO – response to further enquiries

01/12/10                ICO site visit to ACS Law offices

21/12/10                Internal meeting to discuss decision and amount of any CMP

23/12/10                Enforcement case created (ENF0366446)

19/01/11                Notice of Intent sent by ICO to ACS Law

28/01/11                ICO to ACS Law agreeing extension of time to make representations until 01/03/11

01/03/11                ACS Law to ICO – representations in response to Notice of Intent

09/03/11                internal ICO meeting to discuss representations

21/03/11                ICO to ACS Law asking for further financial information and enclosing blank form to be completed

07/04/11                ACS Law to ICO returning financial information

14/04/11                ICO Internal meeting to discuss CMP

20/04/11                ICO to ACS Law – advising will reduce penalty but requiring sworn affidavit

03/05/11                ACS Law to ICO sending affidavit

09/05/11                ICO to ACS Law sending Monetary Penalty Notice (MPN) (dated 09/05/11)

06/06/11                Any appeal to the MPN should be lodged by this date as stated at the end of the MPN. Any extension of time to appeal is the decision of the Tribunal. The ICO will likely be informed of any appeal directly by the Tribunal.

I have carried out a little statistical analysis (download the spreadsheet here - feel free to add comments) of the periods of delay / waiting in this timeline in order to determine which parties are accountable for the time taken in reaching a conclusion. It is evident that both Andrew Crossley and the ICO have dragged their heels on this case.

The ICO unnecessarily delayed matters by, among other issues, agreeing (at Andrew Crossley’s suggestion) on the 11th November not to visit ACS:Law’s offices to progress the matter until the 1st December and extending the 21-day period for written representation in response to the Notice of Intent (to issue an MPN) by an additional 18 days; almost doubling the period laid down in statute.

A pie chart sets out where the delays happened. You can draw your own conclusions on this one: