The Soaring Financial Cost of Blocking Pirate Sites

How much does it cost copyright holders and ISPs when pirate sites are blocked in the UK? Until now the sums involved have remained largely in the dark but a High Court order has shone some unexpected light on the process. The figures make uncomfortable reading, and could be about to get much worse.

On Friday news broke that luxury brand company Richemont had succeeded in its quest to have several sites selling counterfeit products blocked by the UK’s largest ISPs.

The landmark ruling, which opens the floodgates for perhaps tens of thousands of other sites to be blocked at the ISP level, contained some surprise information on the costs involved in blocking infringing websites. The amounts cited by Justice Arnold all involve previous actions undertaken by the movie and music industry against sites such as The Pirate Bay and KickassTorrents.

The applications themselves

The solicitor acting for Richemont, Simon Baggs of Wiggin LLP, also acted for the movie studios in their website blocking applications. Information Baggs provided to the court reveals that an unopposed application for a section 97A blocking order works out at around £14,000 per website.

The record labels’ costs aren’t revealed but Justice Arnold said “it is safe to assume that they are of a similar magnitude to the costs incurred by the film studios.”

In copyright cases, 47 sites have been blocked at the ISP level = £658,000

Keeping blocked sites blocked

When blocking orders are issued in the UK they contain provisions for rightsholders to add additional IP addresses and URLs to thwart anti-blocking countermeasures employed by sites such as The Pirate Bay. It is the responsibility of the rightsholders to “accurately identify IP addresses and URLs which are to be notified to ISPs in this way.”

It transpires that in order to monitor the server locations and domain names used by targeted websites, the film studios have hired a company called Incopro, which happens to be directed by Simon Baggs of Wiggins.

In addition to maintaining a database of 10,000 ‘pirate’ domains, Incopro also operates ‘BlockWatch’. This system continuously monitors the IP addresses and domains of blocked sites and uses the information to notify ISPs of new IPs and URLs to be blocked.

“Incopro charges a fee to enter a site into the BlockWatch system. It also charges an ongoing monthly fee,” Justice Arnold reveals. “In addition, the rightholders incur legal costs in collating, checking and sending notifications to the ISPs. Mr Baggs’ evidence is that, together, these costs work out at around £3,600 per website per year.”

If we assume that the music industry’s costs are similar, for 47 sites these monitoring costs amount to around £169,200 per year, every year.

Costs to ISPs for implementing blocking orders

The ISPs involved in blocking orders have been less precise as to the costs involved, but they are still being incurred on an ongoing basis. All incur ongoing costs when filtering websites such as those on the Internet Watch List, but copyright injunctions only add to the load.

Sky

The cost of implementing a new copyright blocking order is reported as a “mid three figure sum” by Sky, with an update to an order (adding new IP addresses, for example) amounts to half of that. Ongoing monitoring of blocked domains costs the ISP a “low four figure sum per month.”

BT

According to the court, BT says that it expends 60 days of employee time per year implementing section 97A orders via its Cleanfeed system and a further 12 days employee time elsewhere.

Each new order takes up 8 hours of in-house lawyers’ time plus 13 hours of general staff time. Updates to orders accrue an hour of costs in the legal department plus another 13 hours of blocking staff time.

EE

For each new order EE expends 30 minutes of staff time and a further three hours of time at BT whose staff it utilizes. Updates cost the same amount of time.

EE pays BT a “near four figure sum” for each update and expends 36 hours employee time each year on maintenance and management.

TalkTalk

TalkTalk’s legal team expends two hours implementing each new order while its engineers spend around around two and a half. Updates are believed to amount to the same. The company’s senior engineers burn through 60 hours each year dealing with blocking orders amounting to “a low six figure sum” per annum.

Virgin

Virgin estimates that Internet security staff costs amount to a “low five figure sum” per year. Interestingly the ISP said it spent more on blocking this year than last, partly due to its staff having to respond to comments about blocking on social media.

And the bills are only set to increase

According to Justice Arnold several additional blocking orders are currently pending. They are:

– An application by Paramount Home Entertainment Ltd and other film studios relating to seven websites said to be “substantially focused” on infringement of copyright in movies and TV shows

– An application by 1967 Ltd and other record companies in respect of 21 torrent sites

– An application by Twentieth Century Fox Film Corp and other film studios in respect of eight websites said to be “substantially focused” on infringement of copyright in movies and TV shows

But these 36 new sites to be blocked on copyright grounds are potentially just the tip of a quite enormous iceberg now that blocking on trademark grounds is being permitted.

Richemont has identified approximately 239,000 sites potentially infringing on their trademarks, 46,000 of which have been confirmed as infringing and are waiting for enforcement action.

So who will pick up the bill?

“It is obvious that ISPs faced with the costs of implementing website orders have a choice. They may either absorb these costs themselves, resulting in slightly lower profit margins, or they may pass these costs on to their subscribers in the form of higher subscription charges,” Justice Arnold writes.

Since all ISPs will have to bear similar costs, it seems likely that the former will prove most attractive to them, as usual.

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