EVEN BEFORE its DVD release, this year’s highest-grossing Irish movie, The Guard, could be downloaded from the internet for free.

Higher bandwidths and more capacity mean films and games are being increasingly downloaded for free.

Andrew Lowe, head of Element Pictures, which produced and distributed The Guard, says he was recently complimented on the film by two people who had unintentionally watched a pirated version.

He says the problem is potentially “disastrous” for the industry here, which the Government funds directly through its support of the Irish Film Board, and indirectly through section 481 tax reliefs.

“The film industry sustains a lot of livelihoods, and illegal downloads will make it harder to retain that,” he says. “They are cannibalising sales, which also means that there is no VAT being collected, so the State is also losing out.”

The Government plans to tackle the problem of illegal downloading by enacting a statutory instrument that will plug a gap in the existing Copyright Act identified by Mr Justice Peter Charleton in a High Court case in October 2010.

The loophole means copyright holders cannot ask the courts to order internet service providers (ISPs) to block access to sites that allow illegal downloading.

EMI Ireland sought an injunction ordering internet service provider UPC to prevent illegal downloading from websites accessed via its service. UPC was not directly involved; it only provided the internet access.

Justice Charleton agreed that EMI’s intellectual property rights were being infringed, but said that he could not make the order, as the Copyright Act did not allow it. However, he pointed out that the legislation should include such a provision in order to bring it into line with EU law, which the Republic is obliged to follow.

The remedy was the statutory instrument, or ministerial order, adding to the act in order to update it. The original order, put forward by the last government, got lost in the pre-election chaos.

The Coalition published its own draft in July, and then, unusually for a ministerial order, sought submissions from interested parties. It received almost 60, some of whom had got their own legal advice, and so the order made a number of return trips to the Attorney General’s office.

Seán Sherlock, Minister of State for Enterprise, Innovation and Jobs, has responsibility for this area and last week told the Dáil that he hoped to make progress in January. The department has written to Willie Kavanagh, chief executive of EMI Ireland, telling him that the order would be enacted in January and it should meet his industry’s requirements.

Mr Kavanagh says his company recently wrote to the Government threatening legal action against the State if action was not taken. He has not ruled this out if the statutory instrument does not give companies such as his the right to get injunctions against ISPs.

EMI has lost €60 million in revenues over the last six years, and its boss says illegal downloading is to blame for a significant chunk of this. Industry figures show that the value of music sales has shrunk from €145 million in 2006 to €56 million last year.

Not everybody agrees that the approach sought by EMI is going to work, or is right in the first place. Lawyer TJ McIntyre, chairman of the Digital Rights organisation, says that what the music and film industries are seeking is completely disproportionate.

He argues that they already have a remedy against the websites that are providing the pirated material, and they simply want carte blanche to control all online operators. He also points out that EU law requires internet users’ privacy to be protected. “Is the statutory instrument going to address that?” he asks.

However, Peter O’Grady Walshe of Birchall Investments, the main shareholder in home-entertainment chain Xtravision, whose business is also suffering, says that what rights holders want is a solution that is proportionate and reasonable.

Xtravision has no direct rights over the films it rents, as it is a distributor, and so it has been watching developments from the sidelines. He points out that if a high-street retailer were told that they were inadvertently distributing material that breached copyright, they would simply stop stocking it. The same rules, he says, should apply to the internet.