On 4 October 2011, the Court of Justice of the European Union (CJEU) handed down its judgment on the legality of the licensing agreements entered into by the Football Association’s Premier League (FAPL) for the broadcast of live matches. The CJEU also clarified how the Copyright, Designs and Patents Act 1988 (CDPA, the UK’s national legislation implementing, amongst others, the Conditional Access and Copyright Directives), should be interpreted to ensure consistency with EU law, including the competition rules contained at Article 101 and the freedom to provide services contained at Article 56 of the Treaty on the Functioning of the European Union (TFEU).

The cases concerned both civil actions brought by FAPL against suppliers of decoder cards and equipment that enable the reception of foreign broadcasts of FAPL matches (and a number of pubs who have screened matches in this way) and a criminal action brought against Portsmouth landlady Karen Murphy, who screened FAPL matches using a Greek decoder.

The judgment has resulted in a predictable array of views, but whilst most commentary has stopped short of concluding Armageddon for sports rights holders such as FAPL, most have portrayed this as a victory for Portsmouth landlady Karen Murphy and any publicans wishing to find a cheaper alternative to a commercial BSkyB subscription. But there is a sting in the tail of the judgment insofar as it relates to copyright which might yet lead to FAPL prevailing on the judicial equivalent of the away goals rule.

Competition Law and Freedom to Provide Services

FAPL entered into exclusive licence agreements with a number of broadcasters for the rights to live transmission of FAPL matches. To enforce territorial exclusivity, the agreements required the broadcasters not to distribute their decoding devices in such a manner as to permit their use outside the territory covered by their particular licence agreement.

The CJEU took a dim view of such restrictions, finding that the clauses were intended to eliminate all competition between broadcasters and hence had as their object the restriction of competition contrary to Article 101(1) of the TFEU. The Court went further by stating that there was no prospect of such restrictions qualifying for individual exemption under Article 101(3).

The CJEU also held that the prohibition on foreign decoding devices contained in the CDPA was not compatible with EU law insofar as it infringed the freedom to provide services (Article 56 TFEU). The absolute restrictions which were implemented in the UK through a combination of the restrictions in the licence agreements and the prohibition on imports contained in the CDPA, went beyond what was necessary to ensure appropriate remuneration. The Court noted that appropriate remuneration did not mean the highest possible remuneration. Indeed, the price premium itself was only possible as a result of artificial price differences which existed only because of a system of absolute territorial protection. Such a system was irreconcilable with completion of the internal market (a fundamental aim of the TFEU).

Furthermore, the CJEU rejected the notion that the prohibition in the CDPA could be objectively justified or that the restrictions contained in the licence agreements were capable of individual exemption under Article 101(3), as in both cases the restrictions went further than was necessary to achieve the objective of protecting the intellectual property at issue, or of encouraging attendances at live matches.

So far so good for Karen Murphy and others like her who were hoping for access not only to cheaper options than those on offer from Sky (with reported savings of as much as £1,000 a month for commercial premises), but also the ability to watch matches at 3pm on a Saturday during the so-called ‘closed period’ (UK broadcasts are restricted at this time to encourage matchday attendances).

Copyright

The second half of the judgment focussed on the rules applicable once the broadcasts had been received – the key issue for pub landlords was whether FAPL or broadcasters could prevent them showing the broadcasts (which the CJEU had now concluded they could legally receive from foreign decoders) to punters in their pubs. Here the position is more nuanced and the implications for FAPL, pubs and football fans alike consequently less clear.

In a departure from the views of Advocate General Kokott (whose Opinion in February 2011 was otherwise largely upheld in the judgment), the ECJ concluded that the screening of football matches to customers on television screens in a pub constituted a ‘communication to the public’.

This is likely to be the key point of the judgment – the small acts of reproduction inherent in the way satellite television is received and transmitted, were held by the CJEU to satisfy the conditions laid down in Article 5(1) of the Copyright Directive (2001/29) and hence could be carried out without the authorisation of the copyright licence holder.

However, the act of screening the broadcast in a pub, as a communication to the public, would require authorisation from the author of the protected works. Central to this was the Court’s finding that a screening in a pub would be to an additional public audience, which was not considered by the authors when they initially authorised broadcast of the protected works. In other words, consent would be required by the rights holders to show any protected works to the public in this way. And as FAPL have already made clear, the only broadcasters currently authorised in this way in the UK are BSkyB and ESPN.

Finally, the CJEU has clarified that only images which contain elements expressing the author’s own intellectual creation are capable of protection under copyright laws: in short, the opening video sequence, the FAPL anthem, pre-recorded films showing highlights of FAPL matches and certain graphics. But crucially not the live sport itself.

What does the future hold?

Much has been made of the possibility of a shake-up in the way FAPL will market its rights. For example, there has been talk of the prospect of a single European licensee, of FAPL no longer seeking to exploit its rights in particular EU countries (i.e. those where the value of the rights is likely to give rise to the greatest likelihood of price arbitrage) or even of FAPL launching its own channel.

Yet the final analysis may be far less sensational. The integration of FAPL branding, perhaps via an unobtrusive watermark, may even be sufficient to ensure that any public showing of FAPL matches in the UK other than via a BSkyB or ESPN broadcast feed, would be a breach of copyright (absent express authorisation, which is unlikely to be forthcoming)

So for Karen Murphy, the comfort of having her fine and conviction overturned and her Greek decoder returned. But perhaps her enjoyment of FAPL matches with Greek commentary will in future be restricted to her private living room.