On October 4, 2011, the European Court of Justice (Court) gave its ruling in a long running legal case concerning the use of foreign satellite decoder cards for broadcasts of Football Association Premier League (FAPL) matches. The case raises difficult issues of broadcasting rights, copyrights in the broadcast of football matches and the principle of the freedom to provide services, as well as the interface with EU competition law.

The Court has held that a system of licences for the broadcasting of football matches, which grants broadcasters territorial exclusivity on an EU Member State basis and which prohibits television viewers from watching the broadcasts with decoder equipment in other Member States, is contrary to EU law.

Background

FAPL operates the Premier League, the main professional football league in England and markets television broadcasting rights for Premier League matches. FAPL grants broadcasters an exclusive live broadcasting right for Premier League matches on a territory-by-territory basis, which generally corresponds with an EU Member State.

Each broadcaster undertakes in their licence agreement with FAPL to encrypt its satellite signal and to transmit the encrypted signal by satellite solely to subscribers in the territory which it has been granted. The licence agreement prohibits broadcasters from supplying decoder equipment to persons who desire to watch broadcasts outside the particular Member State for which the licence is awarded.

The disputes at issue relate to the use of foreign decoder cards issued to Greek resident subscribers to access Premier League matches. One case relates to a civil action brought by FAPL against pubs that screen the Premier League matches using Greek decoder cards and the suppliers of the decoder equipment to those pubs. The second case arose from criminal prosecution against Karen Murphy, the landlady of a pub that screened the Premier League matches using a Greek decoder. About six years ago, publican Karen Murphy of the Red, White and Blue pub was fined for showing Premier League football matches in her pub using an unauthorised satellite TV provider. By using a foreign satellite subscription card, publicans like Ms. Murphy are alleged to be in breach of UK copyright law because the means by which they screen football is not via the authorised broadcaster - Sky Sports/ ESPN. Ms. Murphy claims that by restricting her choice of satellite TV providers to a particular broadcaster, the Premier League contravenes EU principles of competition and free movement of goods and services.

In both cases, which raised similar issues, the England and Wales High Court referred a number of questions to the Court.

The Court Judgment

The cases raise the complex issue and tension between the claim of the rightholder to protect its investment and, therefore, control transmission of its encrypted broadcasts against the goals of the EU single market and open competition.

According to the Court and in answer to the questions referred by the national court the Court ruled as follows:

  • Freedom to provide services: 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.
  • Protecting intellectual property rights: FAPL cannot claim copyright in the Premier League matches themselves, as such 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 EU. The Court observes that, 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 equipment would go beyond what is necessary to ensure appropriate remuneration for the holders of the rights concerned.
  • Exclusive licences: a system of exclusive licences is contrary to EU competition law if the licence agreements prohibit the supply of decoder equipment to television viewers who wish to watch the broadcasts outside the Member State for which the licence is granted (i.e., ‘absolute territorial protection’).
  • Scope of the Copyright Directive and authorisation by the rightholder: only the opening video sequence, the Premier League anthem, pre-recorded films showing highlights of recent Premier League matches and various associated graphics can be regarded as ‘works’ and are therefore protected by copyright in the EU. The matches themselves are not considered works enjoying such protection. However, the Court considers 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’ for which the authorisation of the author of the works is necessary.

Implications

The judgment is underpinned by single market goals, the Court referring specifically to the development of EU law that has resulted, in particular, from the adoption of the Television without Frontiers Directive and the Satellite Broadcasting Directive, which are intended to ensure the transition from national markets to a single programme production and distribution market in the EU.

It is now for the High Court to apply the ruling in the cases before it. On the basis of the ruling, doubts have been raised about the compatibility under EU competition law of restrictions in exclusive broadcasting licences that provide for absolute territorial protection.

However, it should be noted that while the judgment takes a hard line on absolute territorial protection as being restrictive by “object”, it notes that FAPL had not put forward any argument falling within the “economic and legal context” that would justify a finding that, despite the fact that the clauses prohibit broadcasters from effecting any crossborder provision of services, the clauses are not liable to impair competition and therefore do not have an anticompetitive object. The Court notes that such exclusive licence agreements that are caught by Article 101(1) Treaty on the Functioning of the EU (TFEU) may nevertheless escape prohibition if they fulfil the legal exception criteria of Article 101(3) TFEU but that the clauses at issue did not meet such requirements. The upshot appears to be that clauses of an exclusive licence between a rightholder and a broadcaster constitute a restriction on competition where they oblige the broadcaster not to supply decoding devices enabling access to that rightholder’s protected subject matter with a view to their use outside the territory covered by the licence. However, the possibility that such clauses might in appropriate circumstances and with supporting evidence meet the conditions laid down in Article 101(3) TFEU may provide a future fertile area for dispute.

The Court’s judgment in relation to the Copyright Directive appears to suggest that so long as there is sufficient copyright material in the match coverage (i.e., elements such as the opening video sequence, the Premier League anthem, and pre-recorded films showing highlights of recent Premier League matches) pubs would not be permitted to show foreign broadcasts without FAPL’s consent. In contrast, it would appear that individual viewers in the comfort of their own home would, in principle, be able to purchase foreign decoders in order to obtain access to any cheaper Premier League packages available in other Member States.

While the judgment will not affect the current arrangements, it will be relevant to the next round of negotiations and licensing of European broadcasting rights expected next year. It has been suggested that one implication at least may be a possible price reduction for UK subscribers if one pan-European price is set for Premier League packages. While the facts of the case are very specific to sports rights (and football in particular), the judgment has conceivable ramifications for the wider audio-visual sector, including film, television and music. Whether interested parties seek to argue by analogy or distinguish the facts of their situation, licensors and distributors who have invested in contracts on the basis of exclusive revenue sources in the past will need to reassess the way in which they license and distribute in the future in light of the judgment.