Ofcom have published their proposed rules to implement legislative measures aimed at reducing online copyright infringement.

The Digital Economy Act requires that the rules are implemented no later than eight months from Royal Assent, including approval from the European Commission.

Subject to consultation and approval, Ofcom expects the code to come into force in early 2011.

The draft code of practice sets out how and when Internet Service Providers (ISPs) covered by the code will send notifications to their subscribers to inform them of allegations that their accounts have been used for copyright infringement.

In passing the Act, Parliament's intention was that Ofcom should apply the obligations in a proportionate way, with the code initially covering only the larger fixed-line ISPs, but with the clear message that, should levels of copyright infringement on other networks, including mobile, increase then those ISPs will similarly be required to comply with the obligations.

Ofcom proposes, therefore, that fixed-line ISPs with over 400,000 subscribers will be covered initially. This would mean that the seven largest ISPs – BT, Talk Talk, Virgin Media, Sky, Orange, O2 and Post Office – will be covered by the code from the outset.

The code also sets out the threshold for including subscribers on a copyright infringers list which must be compiled by ISPs. ISPs will have to record the number of notifications sent to their subscribers and maintain an anonymised list of alleged serial copyright infringers. Copyright holders can then request information on this list and pursue a court order to identify serial infringers and take legal action against them.

Ofcom is proposing a three stage notification process for ISPs to inform subscribers of copyright infringements and proposes that subscribers which have received three notifications within a year may be included in a list requested by a copyright owner.

Ofcom will establish an independent, robust subscriber appeals mechanism for consumers who believe they have received incorrect notifications, arrangements for enforcement and dealing with industry disputes, as well as sharing the costs arising from the code.

Ofcom have opened a consultation on these proposals which closes on 30 July 2010.

Ofcom has said that anyone accused of file-sharing under the government's new legislation must get access to a robust appeals process before their web connections are blocked.

The new Digital Economy Act includes new powers to powers to enforce copyright protection. Under the system, which is being handled by Ofcom, ISPs will be expected to cut off persistent file sharers as the most severe punishment in a three strikes approach to the problem.

However, the new powers have been widely criticised by ISPs on grounds that they will unfairly punish innocent web users and increase instances of hacking as pirates shift activity to other internet connections.

Ofcom has therefore attempted to soothe the controversy by stipulating that copyright holders will need to obtain a court order before demanding information from ISPs on suspected file-sharers. Anyone accused of piracy must also get access to an effective appeals process to defend themselves against being cut-off from the internet.

Ofcom explained also that: Subscribers must be provided with sufficient information in any notification such that they can challenge the basis under which the notification has been sent. They must also have access to a robust and effective appeals mechanism.

The regulator added: Subscribers on those lists may have their details passed to relevant copyright owners who may pursue legal action, though any such transfer of personal information will require a court order. Any processing of subscriber data must be in compliance with the relevant data protection laws.

Under the timetable set by government, Ofcom will need to publish a draft file-sharing code for consultation by no later than May, and then release a further statement in September.

Due to the legislation's controversial reception, Ofcom plans to fully engage with industry stakeholders on the provisional code's formation and subsequent consultation. When a draft statutory instrument embodying the approved code is finalised, it will also need to be submitted to the European Commission for consideration.