The High Court has said that it will review the law to see if it is in conflict with EU laws on privacy and ISPs' liabilities for users' behaviour.
The review was demanded in July by BT and TalkTalk, who said that they wanted clarity and certainty on the law before spending massive sums on systems to implement it.
The Digital Economy Act (DEA) allows for the passing of regulations which could, for the first time, force ISPs to disconnect users if rights holders believed that the account was used for copyright violating activity.
"The companies share a concern that obligations imposed by the Act may not be compatible with important European rules that are designed to ensure that national laws are proportionate, protect users’ privacy, restrict the role of ISPs in policing the Internet and maintain a single market," said a statement from the ISPs in July.
ISPs generally are not responsible for the actions of their users unless they are informed about them and fail to take action quickly to stop illegal activity. The DEA proposals would more closely involve ISPs in copyright law enforcement which many, and particularly TalkTalk, have resisted.
European Union laws control how organisations gather, process and use information online and what can be gathered and stored from the use of telecoms networks.
"Innocent broadband customers will suffer and citizens will have their privacy invaded. We think the previous Government's rushed approach resulted in flawed legislation," said TalkTalk chairman Charles Dunstone in July. "That’s why we need a judicial review by the High Court as quickly as possible before lots of money is spent on implementation."
TalkTalk's executive director of strategy and regulation Andrew Heaney said today that the company welcomed the High Court's move.
“We are very pleased that the Court has recognised that our concerns about the copyright infringement provisions in the Digital Economy Act should be considered in a full hearing," he said. "The Act was rushed through Parliament ... and has very serious flaws. The provisions to try to reduce illegal filesharing are unfair, won’t work and will potentially result in millions of innocent customers who have broken no law suffering and having their privacy invaded."
"We look forward to the hearing to properly assess whether the Act is legal and justifiable and so ensure that all parties have certainty on the law before proceeding," he said.
The review was also welcomed by digital rights advocacy body the Open Rights Group.
"We are extremely glad that judges will be taking a look at the Digital Economy Act, which we believe breaches people’s rights to freedom of expression and privacy," said its executive director Jim Killock. "The Act is a mess and badly needs repealing. Judicial Review may give the Government the chance to drop this heavy-handed approach to copyright enforcement."
Separately, the Culture, Media and Sport Committee of Parliament has announced an Inquiry into the DEA and whether it is the right mechanism to protect copyright on the internet.
"The Committee will consider the new framework for the protection of intellectual property rights online that is being established under the Digital Economy Act, and the extent to which it is a reasonable and sufficient response to the challenges facing creative industries and individuals in digital markets," said a statement from the Committee.
It said that it would seek the public's comments on whether or not the law balances properly the rights of copyright holders and users; whether the systems needed to comply with the law would be too expensive; and whether users are well enough notified of suspect breaches of the law under the proposals.
Telecoms regulator Ofcom is currently consulting on the exact processes to be put in place to inform users that they have been accused of breaking copyright laws.