The Federation Against Software Theft (FAST) has attacked the High Court's decision this week to grant a judicial review of the Digital Economy Act after successful petitions from ISPs BT and TalkTalk.
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BT's director of group industry policy, Simon Milner said that the law, introduced in June after being rushed through parliament just before the election, was now "in limbo" until at least February 2011.
"We are concerned that obligations imposed by the Act may not be compatible with important European rules that are designed to ensure that national laws protect users' privacy, restrict the role of ISPs in policing the internet and maintain a single market," added TalkTalk chairman Charles Dunstone.
But FAST chief executive John Lovelock has dismissed the case as "a last ditch attempt by the ISPs to ensure they are not hit financially."
"What we are now seeing is a rearguard action by some as a potential move to undermine its credibility and legal framework," he added.
Lovelock cited independent research that suggested 70% of file-sharers would cease their activities if warned, and said that FAST had always hoped to change people's behaviour and drive them towards legitimate downloads without recourse to legal sanctions.
"The provisions of the Act must be allowed to have a chance to work for benefits to be seen," he said. "More legitimate sales will mean more tax revenue and more workers in employment."