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The Court has rejected claims made by BT and TalkTalk that the Digital Economy Act (DEA) violates EU laws. The ruling has been welcomed by the Government and representatives of the creative industries, but may yet be appealed by the ISPs to the UK Supreme Court.

We are pleased the Appeal Court has upheld the original ruling that the Digital Economy Act is a lawful and proportionate response to the threat posed by online piracy," a spokesperson for the Department for Culture, Media and Sport (DCMS) said in a statement.

The DEA is a controversial law that includes provisions aimed at combating online copyright infringement.

In a judicial review ruling in April last year the High Court rejected claims by the ISPs that the DEA violated EU laws.

According to a summary of the Court of Appeal judgment by a coalition of creative industry bodies, the ISPs argued that the DEA breached EU laws on data protection and privacy. BT and TalkTalk also failed to convince the Court that the Act was "incompatible" with provisions set out in the E-Commerce Directive. The Court also rejected claims made by the ISPs that the DEA was unlawful because the Government had failed to give the European Commission enough time to scrutinise parts of the legislation, according to the bodies.

However, the ISPs did successfully argue that they should not be required to pay 25% of the "case fees" that would stem from ISP customers bringing appeals against warning letters they could receive for allegedly infringing copyright under measures allowed for by the DEA. The ISPs will still have to pay 25% of the costs they incur to comply with their obligations under the Act after the Court ruled that it was lawful to impose the charge on them, according to the creative industry bodies' summary.

The measures were always going to have to strike a balance between ISPs and rights holders and the court has decided that the balance struck by the Digital Economy Act is about right, said copyright law expert Iain Connor of Pinsent Masons, the law firm behind Out-Law.com. How this will operate in practice remains to be seen.

"Some may argue that BTs and Talk Talks public stance on the issue left the legislators no room to negotiate and so arguably a more conciliatory approach during the Bills passage through Parliament might have been better or at least so it seems with the benefit of hindsight, Connor said.

Both ISPs said they would consider what action, if any, to take next in light of the ruling.

We have been seeking clarification from the courts that the DEA is consistent with European law, and legally robust in the UK, so that everyone can be confident in how it is implemented," BT said in a statement. Now that the Court has made its decision, we will look at the judgment carefully to understand its implications and consider our next steps."

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Digital Economy Act not in breach of EU laws, Court of Appeal rules