More competition for Europe's football industry

Now drinkers can enjoy the IPKat's football prowess via Greek decoders

Breathlessly back on the blog after this morning's envigorating copyright and trade mark law training session with a bright and bushy-tailed batch of trainees, this Kat now turns to the main news of the moment, today's momentous ruling of the Court of Justice in Joined Cases C-403/08 Football Association Premier League Ltd, NetMed Hellas SA, Multichoice Hellas SA v QC Leisure, David Richardson, AV Station plc, Malcolm Chamberlain, Michael Madden, SR Leisure Ltd, Philip George Charles Houghton and Derek Owen and C-429/08 Karen Murphy v Media Protection Services Ltd [and if you think that's a long name for a case, just wait till you read the judgment, which runs to 211 paragraphs, adds Merpel]. According to this morning's press release from Curia:

"A system of licences for the broadcasting of football matches which grants broadcasters territorial exclusivity on a Member State basis and which prohibits television viewers from watching the broadcasts with a decoder card in other Member States is contrary to EU law

The screening in a pub of football-match broadcasts containing protected works requires the authorisation of the author of those works

The Football Association Premier League (‘the FAPL’) runs the Premier League, the leading professional football league competition in England, and markets the television broadcasting rights for Premier League matches. It grants broadcasters, under an open competitive tender procedure, an exclusive live broadcasting right for Premier League matches on a territorial basis. As the territorial basis generally corresponds to a single Member State, television viewers can watch only the matches transmitted by the broadcasters established in the Member State where they reside.

In order to protect such territorial exclusivity and to prevent the public from receiving broadcasts outside the relevant Member State, each broadcaster undertakes, in the licence agreement concluded with the FAPL, to encrypt its satellite signal and to transmit the signal, so encrypted, by satellite solely to subscribers in the territory which it has been awarded. Consequently, the licence agreement prohibits the broadcasters from supplying decoder cards to persons who wish to watch their broadcasts outside the Member State for which the licence is granted.

The disputes giving rise to the present cases concern attempts to circumvent that exclusivity. Certain pubs in the United Kingdom have begun to use foreign decoder cards, issued by a Greek broadcaster to subscribers resident in Greece, to access Premier League matches. The pubs buy a card and a decoder box from a dealer at prices lower than those of Sky, the holder of the broadcasting rights in the United Kingdom.

Since the FAPL takes the view that such activities undermine the exclusivity of the television broadcasting rights and the value of those rights, it is seeking to bring them to an end by means of legal proceedings. The first case (C-403/08) concerns a civil action brought by the FAPL against pubs that have screened Premier League matches by using Greek decoder cards and against the suppliers of such decoder cards to those pubs. The second case (C-429/08) has arisen from criminal proceedings against Karen Murphy, the landlady of a pub that screened Premier League matches using a Greek decoder card. In those two cases, the High Court of Justice of England and Wales has referred a number of questions concerning the interpretation of European Union law to the Court of Justice.

In its judgment delivered today, the Court of Justice holds that national legislation which prohibits the import, sale or use of foreign decoder cards is contrary to the freedom to provide services and cannot be justified either in light of the objective of protecting intellectual property rights or by the objective of encouraging the public to attend football stadiums [says the IPKat, given the fact that IP protection is always subject to the overriding pro-competitive objectives of the European Union's competition policy, this was a foregone conclusion].

So far as concerns the possibility of justifying that restriction in light of the objective of protecting intellectual property rights, the Court observes that the FAPL cannot claim copyright in the Premier League matches themselves, as those sporting events cannot be considered to be an author’s own intellectual creation and, therefore, to be ‘works’ for the purposes of copyright in the European Union [Not so fast, says the Kat: cannot specific "set pieces" which are practised to perfection in training and then executed on-field be regarded as choreographed dramatic works which are entitled to protection?  Merpel agrees, pointing out that some of the most spectacular penalty-area dives are quite magnificant performances which it would be sad if the the law failed to protect them. But this is only a side issue, as the next paragraph explains].

Also, even if national law were to confer comparable protection upon sporting events – which would, in principle, be compatible with EU law – a prohibition on using foreign decoder cards would go beyond what is necessary to ensure appropriate remuneration for the holders of the rights concerned.

In this regard, the Court observes, first, that when calculating such appropriate remuneration it is possible to take account of the actual and potential audience both in the Member State of broadcast and in any other Member State where the broadcasts are received, and that it is thus not necessary to limit the free movement of services within the European Union. Second, payment by the television stations of a premium in order to ensure themselves absolute territorial exclusivity goes beyond what is necessary to ensure the right holders appropriate remuneration, because such a practice may result in artificial price differences between the partitioned national markets. Such partitioning and such an artificial price difference are irreconcilable with the fundamental aim of the Treaty, which is completion of the internal market.

For similar reasons, a system of exclusive licences is also contrary to European Union competition law if the licence agreements prohibit the supply of decoder cards to television viewers who wish to watch the broadcasts outside the Member State for which the licence is granted.

It is true that European Union competition law does not, in principle, preclude a right holder from granting to a sole licensee the exclusive right to broadcast protected subject-matter by satellite, during a specified period, from a single Member State of broadcast or from a number of Member States of broadcast. However, the licence agreements must not prohibit the broadcasters from effecting any cross-border provision of services that relates to the sporting events concerned, because such an agreement would enable each broadcaster to be granted absolute territorial exclusivity in the area covered by its licence, would therefore eliminate all competition between broadcasters in the field of those services and would thus partition the national markets in accordance with national borders.

Finally, as regards the questions asked concerning the interpretation of the Copyright Directive, the Court notes first of all that only the opening video sequence, the Premier League anthem, pre-recorded films showing highlights of recent Premier League matches and various graphics can be regarded as ‘works’ and are therefore protected by copyright. By contrast, the matches themselves are not works enjoying such protection [One wonders whether future broadcasts will be split-screen affairs, with copyright-protected items being constantly on view, to be on the safe side ...].

That being so, the Court decides that transmission in a pub of the broadcasts containing those protected works, such as the opening video sequence or the Premier League anthem, constitutes a ‘communication to the public’ within the meaning of the copyright directive, for which the authorisation of the author of the works is necessary, because when a pub transmits those works to the customers present on the premises the works are transmitted to an additional public which was not considered by the authors when they authorised the broadcasting of their works.".

The full ruling of the Court of Justice looks like this:

"1. ‘Illicit device’ within the meaning of Article 2(e) of Directive 98/84 ... on the legal protection of services based on, or consisting of, conditional access must be interpreted as not covering foreign decoding devices (devices which give access to the satellite broadcasting services of a broadcaster, are manufactured and marketed with that broadcaster’s authorisation, but are used, in disregard of its will, outside the geographical area for which they have been issued), foreign decoding devices procured or enabled by the provision of a false name and address or foreign decoding devices which have been used in breach of a contractual limitation permitting their use only for private purposes.

2. Article 3(2) of Directive 98/84 does not preclude national legislation which prevents the use of foreign decoding devices, including those procured or enabled by the provision of a false name and address or those used in breach of a contractual limitation permitting their use only for private purposes, since such legislation does not fall within the field coordinated by that directive.

3. On a proper construction of Article 56 TFEU:

– that article precludes legislation of a Member State which makes it unlawful to import into and sell and use in that State foreign decoding devices which give access to an encrypted satellite broadcasting service from another Member State that includes subject-matter protected by the legislation of that first State;

– this conclusion is affected neither by the fact that the foreign decoding device has been procured or enabled by the giving of a false identity and a false address, with the intention of circumventing the territorial restriction in question, nor by the fact that it is used for commercial purposes although it was restricted to private use.

4. The clauses of an exclusive licence agreement concluded between a holder of intellectual property rights and a broadcaster constitute a restriction on competition prohibited by Article 101 TFEU where they oblige the broadcaster not to supply decoding devices enabling access to that right holder’s protected subject-matter with a view to their use outside the territory covered by that licence agreement.

5. Article 2(a) of Directive 2001/29 ... on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that the reproduction right extends to transient fragments of the works within the memory of a satellite decoder and on a television screen, provided that those fragments contain elements which are the expression of the authors’ own intellectual creation, and the unit composed of the fragments reproduced simultaneously must be examined in order to determine whether it contains such elements.

6. Acts of reproduction such as those at issue in Case C-403/08, which are performed within the memory of a satellite decoder and on a television screen, fulfil the conditions laid down in Article 5(1) of Directive 2001/29 and may therefore be carried out without the authorisation of the copyright holders concerned.

7. ‘Communication to the public’ within the meaning of Article 3(1) of Directive 2001/29 must be interpreted as covering transmission of the broadcast works, via a television screen and speakers, to the customers present in a public house.

8. Council Directive 93/83 ... on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission must be interpreted as not having a bearing on the lawfulness of the acts of reproduction performed within the memory of a satellite decoder and on a television screen".

This Kat was expecting this very result for the reasons given, as he told Mrs Kat yesterday evening, but this really wasn't a difficult result to predict.  What is more difficult to predict is how the football broadcasting establishment will respond. One thing is crystal clear, though: whatever FAPL and its colleagues do will have to be palpably compatible with the aims of European competition policy or it will never get off the ground.

More coverage can be found on the Guardian, Sky News and BBC.

Great acting by footballers here, here and here

For a critique of the Advocate General's Opinion in this case and a perspective on the possible commercial impact of a ruling adverse to the plaintiffs, see Nick Bitel, "European Court Case could threaten Cultural and Sporting Diversity", here.