The French government has given the green light to the controversial "Internet and creation" law, which is designed to control online piracy.

The development this week closes the first step of an adoption process that will now go through France's two Houses of Parliament.

The law is designed to fight online piracy, chiefly through the implementation of the so-called "three-strikes" scheme. A newly-created independent authority, entitled HADOPI, is to be in charge of issuing warnings and potentially cutting infringers' Internet subscription.

HADOPI will act on the request of rights holders, and will be entitled to demand from Internet service providers the identity of copyright-infringing computer users.

The authority will then follow a three-step process. They will first send a warning by email, and if infringements persist, via a registered letter. For the third infringement, HADOPI will be entitled to cut the Internet access of the user for three to 12 months, which can be lowered to one to three months if the infringer commits to stop illicit downloading.

"This is an innovative framework to solve a problem that is particularly important in France," said French ministry of Culture Christine Albanel in a press conference yesterday.

Albanel noted that the digital business accounted for just 7% of the French recorded market in 2007. "We hope that by 2009 or 2010, the illicit download rate will allow the music industry to foresee its future with confidence," she added, foreseeing a piracy rate reduced by 70% to 80%.

Albanel expects thousands of warnings to be sent weekly by HADOPI, which will have a budget of €15 million ($23 million).

Rights holders will still have the opportunity to sue infringers before a tribunal. According to French law, illicit file-sharing can lead up to a penalty up to €300,000 ($468,000) and 3-year in prison.

The project of law was the brainchild of Denis Olivennes, former CEO of France's leading music retailer Fnac, who led a three-month mission last fall.

In order to be adopted in French law, the text needs to be approved by France's two houses of Parliament. Debates should take place this fall, explained Albanel, acknowledging a delay with the initial plan, with first debates expected before the summer. This could lead to a law effective from early 2009.