Last October, the Court of Justice of the European Union (the “CJEU”) found that a ban on the use of foreign decoders to watch live broadcasts of English Premier League football matches is unlawful. This judgment, in what is commonly referred to as the “pub football case”, represents welcome news for consumers wishing to watch foreign pay-TV since they cannot be prevented from purchasing decoding equipment sourced from abroad. Moreover, the CJEU’s decision has important consequences for the licensing of digital content on a Member State by Member State basis.
Sale of exclusive rights to show Premier League football
Football Association Premier League Limited (“FAPL”) runs the Premier League, the leading domestic competition for English and Welsh-based professional football clubs. The company’s activities include organising TV coverage of Premier League matches including adding on-screen graphics, music and commentary. FAPL also exercises the relevant broadcast rights to make games available to viewers while maximising revenues for the participating clubs. The rights are awarded following an open tender process where broadcasters are invited to submit bids based on a global, regional or territorial basis. FAPL usually licences its broadcast rights on a national basis since there is limited demand for pan-European rights.
When a bidder wins a tender for a particular region or country, FAPL awards this broadcaster the exclusive right to show live Premier League games in that area. The company believes that this approach allows it to optimise the value of its broadcast rights since TV stations are prepared to pay a premium to acquire exclusivity. In order to protect this exclusivity, FAPL requires each licensee to ‘scramble the picture’ provided to its subscribers who, in turn, require decoders to decrypt the signal. In addition, FAPL seeks to prevent the circulation of decoders outside the territory of the relevant licensee.
FAPL awarded a company called NetMed Hellas SA the licence to show live Premier League games in Greece. These matches are broadcast via satellite on the NOVA package. Commercial or private subscribers must provide both a Greek address and telephone number to avail of this service. At the relevant time, the UK licensee for live TV coverage of Premier League matches was BSkyB Limited. In general, subscribers to NOVA pay less than BSkyB’s customers. Accordingly, certain UK pubs and restaurants purchased a card and decoding box allowing them to receive the NOVA package and show live Premier League games to their customers. This contravenes NetMed Hellas’s stipulation that this decoding equipment should not be used outside Greece.
Court proceedings referred to the CJEU
FAPL was concerned that the pubs/restaurants showing matches on NOVA were undermining BSkyB’s UK exclusivity and thus diminishing the value of the underlying TV rights. Consequently, FAPL brought a series of ‘test cases’ in the High Court of Justice of England and Wales alleging that UK-based suppliers of foreign decoders and UK pubs showing the Premier League matches on NOVA are each in breach of domestic copyright legislation. In a separate case, Media Protection Services Limited (“MPS”), a company hired by FAPL to prosecute pubs using foreign decoders, issued proceedings before Portsmouth Magistrates’ Court against Karen Murphy, the manager of a pub that acquired a NOVA decoder card with the purpose of showing live Premier League matches to her pub’s customers. Ms. Murphy was convicted under UK copyright legislation but eventually appealed, by way of case stated, to the High Court. Each case was referred to the CJEU for preliminary ruling under what is now Article 267 of the Treaty on the Functioning of the European Union or TFEU. All told, the High Court’s questions address key issues under EU rules regarding freedom to provide services, competition and intellectual property.
Infringement of the EU free movement of services principle
Article 56 of the TFEU seeks to abolish any restrictions on the freedom to provide services, irrespective of whether these apply in the absence of any discrimination based on the ground of nationality, where they adversely affect the business activities of a service provider based in another EU Member State. The relevant UK copyright legislation confers legal protection both on the absolute territorial restriction clauses included in the agreements between FAPL and NetMed Hellas, on the one hand, and the contracts between the latter and its Greek subscribers, on the other. Since access to NOVA’s broadcasts outside Greece requires a decoder whose use is prevented, this ban constitutes an infringement on the freedom to provide services unless it is capable of objective justification. FAPL and MPS thus argued that this restriction might be justified in light of the necessity of ensuring appropriate payment for the intellectual property rights holder.
The CJEU held that a restriction of a fundamental TFEU freedom can only be justified if it serves an overriding public interest. FAPL argued that the protection of intellectual property rights was one such public interest. However, the Court found that the FAPL cannot claim copyright in the actual Premier League matches since they are not the original work of an author’s own intellectual creation. That said, the CJEU recognises the right of Member States to adopt laws safeguarding certain intellectual property rights with the ultimate aim of protecting sporting events.
The relevant UK legislation/contractual provisions may be capable of justifying a restriction on the freedom to provide services provided it allows a rights holder to exploit the protected subject-matter commercially. However, this does not mean an organisation like FAPL is entitled to demand the highest possible earnings. Indeed, the relevant remuneration must be reasonable vis-à-vis the scope of the relevant broadcast including the actual/potential audience. For starters, NetMed Hellas won an-FAPL organised auction for the right to broadcast Premier League games to a Greek audience. This obviously gives FAPL the opportunity to request an amount of money that both reflects the actual/ potential audience and includes a premium for territorial exclusivity. However the payment of a premium in order to guarantee absolute territorial protection resulting in price differences between partitioned national markets runs counter to the aim of a single market. Accordingly, the payment of such a premium goes beyond what is necessary to ensure appropriate remuneration. Therefore, the ban on the use of foreign decoders for the purposes of protecting intellectual property rights relating to a sporting event is not justified and thus infringes Article 56.
Object breach of Article 101 TFEU
Article 101 of the TFEU generally prohibits agreements between companies, decisions by associations of undertakings and concerted practices that have the object or effect of restricting competition in the EU. However, restrictive agreements may be exempted where their overall effect is to promote competition.
In order to determine whether an agreement is an object breach of Article 101, the CJEU will examine its content and purpose as well as the relevant legal/economic context. Relying on previous case-law, the Court found that the fact that FAPL grants a licensee the exclusive right to broadcast Premier League games is not, in itself, sufficient to establish that this agreement is anti-competitive by object.
The CJEU focussed not on the grant of exclusive licences to broadcast the Premier League matches but on the ancillary provisions aimed at the prevention of the sale of decoders outside the relevant territory. The Court held that any arrangement aimed at eliminating trade between EU Member States frustrates the establishment of a single market and therefore results in an object breach of Article 101. The ban on the sale of decoders means that each licensee is granted absolute territorial exclusivity and thus competition from broadcasters based in other countries is prevented. Accordingly, these provisions result in an object infringement of Article 101. The CJEU also found that such clauses do not qualify for an exemption because they go beyond what is necessary to protect the underlying intellectual property rights.
EU intellectual property rules
Article 2(a) of the EU Copyright Directive (OJ L 167/10, 22 June 2001) provides that authors shall have the exclusive right to approve or prevent the reproduction of their original works. The CJEU found that FAPL may assert copyright regarding various works contained in the broadcasts such as the opening video sequence, the Premier League anthem, pre-recorded footage showing highlights of recent Premier League games and certain graphics. For the reasons explained above, FAPL cannot claim copyright over live broadcasts of the matches themselves.
Article 3 of this Directive states that authors have the exclusive right to authorise or prohibit any communication to the public of their works including the making available of their works in such a way that members of the public may access them from a place and at a time individually chosen by them. The CJEU found that the main aim of the Copyright Directive was to establish a high level of protection for authors by allowing them to obtain appropriate reward for use of their works. Accordingly, the notion of ‘communication to the public’ must be construed broadly.
The Court held that a publican carries out a ‘communication’ within the meaning of the Directive where he intentionally shows works, using a television screen and speakers, to customers on his premises. The CJEU also stated that for this communication to be made ‘to the public’, it must be shown to a public not considered by the FAPL when it authorised the broadcast of the various works contained in the TV coverage of the Premier League. Since customers of the public houses were not considered at the relevant time, the transmission of the NOVA broadcasts in the UK pubs is a ‘communication to the public’ within the meaning of the Copyright Directive and thus requires FAPL’s permission.
Wider implications
Ironically, the “pub football” case might not be entirely welcomed by UK publicans and restaurant owners. By including copyright elements throughout the broadcast such as the Premier League logo/footage of previous matches, FAPL is in a position to make it very difficult for live matches shown on Greek TV to be shown in UK or Irish pubs. The CJEU’s decision does, however, represent good news for football fans and other consumers wishing to watch foreign pay-TV in their homes since they cannot be prevented from purchasing decoders sourced from abroad (albeit the broadcast may be the language normally used in the country for which the broadcaster has been granted exclusive rights). Moreover, this judgment clearly undermines FAPL’s current model of selling exclusive broadcast rights to live games on a country by country basis. Accordingly, future licences for the broadcasting of Premier League games may be packaged on a pan-European basis with broadcasters selling packages to subscribers at a single price across the EU. Alternatively, FAPL might only sell rights to the Premier League in the UK, Ireland and/or other lucrative markets in order to optimise value. Finally, any business model for the distribution of other forms of digital content such as books, films and music that attempts to use ‘territorial exclusivity’ should be re-evaluated.
Contributed by Cormac Little.
This appears in the current issue (March 2012) of the Law Society Gazette – although the title is different (‘Pub football’ and the distribution of digital content).
