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Written by Daniel Geey, first appeared in Entertainment Law Review on 1 Dec 11.
Live Premier League Football Broadcasting Rights: The CJEU judgment
On 4 October 2011, the Court of Justice of the European Union (“CJEU”) upheld Karen Murphy’s right to import and use a foreign decoding device to screen live Premier League (“PL”) matches. The Court ruled that a licence which prohibits the broadcasting of football matches outside the Member State in which the license was granted was contrary to EU law[1].
The judgment leaves certain questions unanswered, but this much is clear: it is likely to have wide implications for copyright owners as well as broadcasters and users of copyrighted works, possibly beyond the field of satellite broadcasting. Many companies will need to rethink how territorial restrictions in their licensing agreements operate and how these may be enforced in light of the clarifications given in this case by the CJEU.
Background
In 2008, the High Court sought two Preliminary References (requests for legal interpretation) following separate actions against (1) a supplier of Greek decoder cards to pubs in the UK (QC Leisure) and (2) Karen Murphy, a pub landlady from Portsmouth who was prosecuted for screening live PL football matches using a subscription from Greece rather than the authorised UK broadcaster (BSkyB).
Both of these cases concern the use of foreign decoder cards to watch live PL football in the UK. The PL licenses exclusive territorial rights to broadcast the matches on a three year term in the UK. It appoints exclusively licensed broadcasters in each Member State, in exchange for each licensee agreeing to prevent the public from receiving its broadcasts outside the territory for which it holds the license.
The Advocate General’s Opinion
Advocate General (“AG”) Kokott’s Opinion was published on 3rd February 2011 in relation to the above two cases. The AG sided with Mrs Murphy and decoder supplier QC Leisure.
The AG did not mince her words. She described such territorial restrictions as a "serious impairment on the freedom to provide services"[2] and branded the territorial exclusivity granted by the PL to BSkyB (“Sky”) as "tantamount to profiting from the elimination of the internal market"[3]. Moreover, she was unable to see any countervailing justification for such restrictions. Economic considerations were brushed aside with the statement that “there is no specific right to charge different prices for a work in each Member State. Rather it formed part of the logic of the internal market that price differences should be offset by trade”[4]. Similarly, protection of the intellectual property rights in live football transmissions was given short shrift: “a partitioning of the internal market for the reception of satellite broadcasts is not necessary in order to protect the specific subject-matter of the rights to live football broadcasts”[5] .
The AG did, however, recognise the right of broadcast rights holders to apply different charging models and licensing terms as between domestic users and pubs, provided that this does not involve territorial restrictions.
The AG’s Opinion was not, of course, binding but, as will be explained below, the CJEU, whilst taking a slightly different approach in its judgment, upheld the same fundamental free movement principles as the AG. From February this year until the CJEU ruling was published consumers were unsure whether they were able to lawfully purchase the cheapest authorised EU channel broadcasting PL matches without the threat of prosecution. The result of the CJEU ruling, as will be set out below, meant that both sides claimed a victory of sorts.
The CJEU Judgment
The Court was asked to answer a number of questions posed by the English national court. A selection of the most significant issues are summarised below.
Freedom to provide services
Article 56 of the Treaty on the Functioning of the European Union (the “TFEU”) requires the abolition of all restrictions on the freedom to provide services. The CJEU held that national legislation prohibiting foreign decoding devices, which give access to satellite broadcasting services from another Member State, from being imported into, sold and used in the UK, was a disproportionate restriction on the freedom to provide services. According to the CJEU, it was immaterial that the foreign decoding devices were procured or enabled by the provision of a false identity and were in breach of contractual provisions limiting their use to private, domestic use. This was because the decoder cards and decoder boxes had been manufactured and placed on the market with the authorisation of the rights holder and did not allow access to the protected services free of charge (within the meaning of the Conditional Access Directive)[6].
The Court explained that, in principle, national legislation providing protection for sporting events is capable of justifying a restriction on the free movement of services. However, such a restriction must not go beyond what is necessary in order to attain the objective of protecting the intellectual property at issue[7]. In particular, the specific subject-matter of the intellectual property does not guarantee the rights holders concerned the opportunity to demand the highest possible remuneration[8]. To this extent, the CJEU held that the restriction on the free movement of services could not be objectively justified on the grounds of protecting intellectual property rights. This was because the premium paid to the rights holders to secure territorial exclusivity, which resulted in artificial price differences between partitioned national markets, went beyond what was necessary to ensure appropriate remuneration of such rights holders[10]. Interestingly, the Court also ruled that the restriction could not be objectively justified on the grounds of encouraging the public to watch football matches at 3pm[10].
Competition
On the competition law aspects, the CJEU held that the mere granting of a license on an exclusive territorial basis to broadcast protected works was not a competition law infringement per se[11]. However, an agreement containing the additional obligation on the broadcaster to refrain from supplying decoding devices that enable access to the protected works with a view to using them outside the territory covered by the licence agreement was in breach of Article 101(1) TFEU. This was because it had the object of prohibiting broadcasters from effecting any cross-border provision of services relating to matches and ensuring broadcasters’ absolute territorial exclusivity in the areas covered by their licence[12].
Protecting broadcasts and associated works under the Copyright Directive
The Court held that the live transmission of a PL match was not itself protected by copyright (since sporting events, including football matches, could not be regarded as intellectual creations classifiable as works within the meaning of the Copyright Directive). However, the associated works, including the opening video sequence, the PL anthem, pre-recorded films showing highlights of recent PL matches, or various graphics, were protected by copyright[13].
Furthermore, the reproduction within the memory of a satellite decoder and on a television screen to enable the broadcasts to be transmitted and received constituted ‘reproduction’ within the meaning of Article 5 of the Copyright Directive, but did not require authorisation from the copyright holder because the reproduction was temporary and transient and had no independent economic significance[14].
The sting in the tail for Mrs Murphy and QC Leisure was the CJEU’s interpretation of what was a ‘Communication to the public’ within the meaning of Article 3(1) of the Copyright Directive. The CJEU ruled that the transmission of broadcast works, to a new public that was different from the original public contemplated by the rights holders when they authorised the communication of their works, was a new communication to the public. According to the Court, the transmission of the copyrighted works to a pub audience (i.e. in a commercial setting) constituted a communication to the public which required additional authorisation from the PL[15].
Thus, if the Greek broadcaster in this case had acquired the PL’s consent to communicate the works to domestic users but not to the public in a pub, then the judgment suggests that Mrs Murphy requires further consent from the PL to communicate the works to the new public in her pub. The question that remains unanswered is whether further authorisation by the PL would have been required if Mrs Murphy had been able to purchase a commercial decoder card from Greece. This may have potentially meant further authorisation from the PL would not have been required.
Practical Implications
This judgment appears to uphold both EU rules relating to the freedom to provide services and the protection of intellectual property rights. The showing of PL matches in a pub where a residential Greek license was used appears to require further PL consent.
No doubt the PL will have various contingency plans in place for a number of eventualities. Many commentators believe that any High Court ruling may pave the way for the PL to sell its rights on a pan-EU basis. It could, however, lead to licenses being granted to only a few powerful buyers, which could potentially run counter to the interests of subscribers who would have to purchase numerous live packages. There may also be the opportunity for the PL to begin to market its own subscription channel, effectively by-passing Sky and other broadcasters.
Insofar as users of copyright works are concerned, the judgment is good news at least for domestic, residential users. Anyone in the EU should be able to use decoder cards from within the EU to access broadcasts from outside of their country, if they are using them for private, domestic use. In practice, the number of residential Sky and ESPN subscribers that will decide to buy a new decoder card and decoder and pay an additional subscription may be relatively limited.
Consequences and Conclusion
Mrs Murphy, QC Leisure, the PL and the wider sports and media industry now await the High Court ruling which will, in part, be based on the answers provided by the CJEU. Those answers will go a long way to shaping how the PL will have to model its live broadcasting EU tender process. The CJEU seems resolute in its belief that the PL, restriction on the resale of decoder cards outside of allotted Member State territories is contrary to EU law. That on its own may push the PL to change the way it retenders its rights because broadcasters have, in the past, benefited from a captive audience who have paid subscriptions which justify the rights outlay. If UK broadcasters Sky and ESPN are unhappy at the amounts they will have to pay for such rights, then that may effectively force the PL to change its auction process. Whatever model the PL ultimately chooses, it appears likely to be based on how best to extract that value from the UK market.
The focus now shifts to the English High Court to interpret some of the difficult answers provided by the CJEU, particularly on copyright issues. Such interpretation, based on a final ruling, may have the effect of providing comfort to Mrs Murphy that she can broadcast live PL football in her pub.
From a practical perspective the High Court may not even come to a decision in this PL season. Whilst Mrs Murphy thinks she may have won her case with the last kick of the game, injury time still beckons. The High Court needs to have its final say before the final whistle can be blown.
Jessica Burns, Solicitor and Mitsuko Akiyama, Trainee Solicitor at Fieldfisher
[1] Judgment in Cases C-403/08 and C-429/08 Football Association Premier League and Others v QC Leisure and Others and Karen Murphy v Media Protection Services Ltd
[2] Para 176, Opinion of AG Kokott of 3 Feb 2011, Cases C-403/08 and C-429/08 Football Association Premier League Ltd and Others v QC Leisure and Others and Karen Murphy v Media Protection Services Ltd
[3] Ibid, para 192
[4] Ibid
[5] Ibid Para 200,
[6] Ibid, para 74 and 125
[7] Ibid, paras 104-105
[8] Ibid, para 108
[9] Ibid, paras 115-117
[10] Ibid, para 124
[11] Ibid, para 137
[12] Ibid, para 146
[13] Ibid, paras 96 and 149
[14] Ibid, paras 176-178
[15] Ibid, paras 197 and 207