Summary
Competition law and freedom to provide services
Copyright
Comment


Summary

On October 4 2011 the Court of Justice of the European Union handed down its judgment on the legality of the licensing agreements entered into by the Football Association Premier League (FAPL) for the broadcast of live matches. The court also clarified how the Copyright, Designs and Patents Act 1988(1) should be interpreted to ensure consistency with EU law, including the competition rules in Article 101 and the freedom to provide services in Article 56 of the Treaty on the Functioning of the European Union.

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

The judgment has resulted in a predictable range of views. Although most comments have stopped short of prophesying disaster for sports rights holders, many have portrayed the judgment as a victory for Murphy and any publicans looking for a cheaper alternative to a commercial BSkyB subscription. However, a sting in the tail of the judgment in relation to copyright may yet lead to the FAPL prevailing on the judicial equivalent of the away goals rule.

Competition law and freedom to provide services

The FAPL entered into exclusive licence agreements with a number of broadcasters for the rights to live transmission of Premier League matches. In order to enforce territorial exclusivity, the agreements required the broadcasters not to distribute their decoding devices in a manner that would permit their use outside the territory covered by their particular licence agreement.

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

Moreover, the court held that the prohibition on foreign decoding devices in the Copyright, Designs and Patents Act was incompatible with EU law insofar as it infringed the freedom to provide services under Article 56 of the treaty. The absolute restrictions that were implemented in the United Kingdom, through a combination of the restrictions in the licence agreements and the prohibition on imports contained in the act, went beyond what was necessary to ensure appropriate remuneration. The court noted that 'appropriate remuneration' did not mean the highest remuneration possible. The price premium itself was possible only as a result of artificial price differences, which in turn existed only because of a system of absolute territorial protection. Such a system was irreconcilable with the completion of the internal market, which is a fundamental aim of the treaty.

Furthermore, the court rejected the notion that the prohibition in the act could be objectively justified or that the restrictions contained in the licence agreements were capable of individual exemption under Article 101(3) of the treaty. In both cases the restrictions went further than was necessary to protect the intellectual property at issue or to encourage attendance at live matches.

These findings were positive for Karen Murphy and others like her, who were hoping not only to access cheaper options than those offered by BSkyB (with reported savings of up to £1,000 a month for commercial premises), but also to watch matches at 3pm on Saturdays during the so-called 'closed period', when UK broadcasts are restricted to encourage matchday attendance.

Copyright

The second half of the judgment focused on the rules that apply once the broadcasts have been received. The key issue for publicans was whether the FAPL or broadcasters could prevent them from showing the broadcasts to their customers, the court having concluded that publicans could legally receive such broadcasts using foreign decoders. The position on this point is more nuanced and the implications for the FAPL, pubs and football fans are consequently less clear.

In a departure from the views of Advocate General Kokott (whose opinion in February 2011 was otherwise largely upheld), the court 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 which are inherent in the way that satellite television is received and transmitted were held to satisfy the conditions laid down in Article 5(1) of the Copyright Directive and hence cannot be carried out without the authorisation of the copyright licence holder.

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 point was the court's finding that a screening in a pub is shown to an additional public audience that was not considered by the authors when they initially authorised the broadcast of the protected works. In other words, the rights holders' consent would be required in order to show protected works to the public in this way. As the FAPL has already made clear, the only broadcasters that are authorised in this way in the United Kingdom are BSkyB and ESPN.

The court also clarified that only images which contain elements expressing the author's own intellectual creation are capable of protection under copyright law. This includes the opening video sequence, the Premier League anthem, pre-recorded films showing highlights of Premier League matches and certain graphics - but, crucially, not the live sport itself.

Comment

Much has been made of the possibility of a shake-up in the way that the FAPL will market its rights - there has been talk of a single European licensee, of the FAPL no longer seeking to exploit its rights in particular EU countries (ie, those where the value of the rights is most likely to give rise to price arbitrage), and even of the FAPL launching its own channel. However, the final analysis may be far less sensational. The integration of FAPL branding, perhaps through an unobtrusive watermark, may be sufficient to ensure that a public showing of Premier League matches in the United Kingdom other than through a BSkyB or ESPN broadcast feed would be a breach of copyright (without express authorisation, which is unlikely to be given). So while Murphy has the comfort of having her fine and conviction overturned and her Greek decoder returned, in future her enjoyment of Premier League matches with Greek commentary may be restricted to her private living room.

For further information on this topic please contact Stephen Smith or Jeremy Drew at RPC by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email (stephen.smith@rpc.co.uk or jeremy.drew@rpc.co.uk).

Endnotes

(1) The United Kingdom's national legislation which implements, among other things, the EU Conditional Access Directive (98/84/EC) and the EU Copyright Directive (2001/29/EC).