The ECJ judgment has been widely reported by the scoreline ‘Pub Landlady 2 – FAPL 0’. However, the reality is more likely to be the judicial equivalent of FAPL sneaking through on the away goals rule.

For many it’s now just a matter of the High Court delivering the coup de grâce to the FA Premier League’s (FAPL) current system of licensing FAPL broadcasting rights in Europe, as the Court of Justice has ruled on 4 October that the obligations the FAPL imposes on foreign broadcasters to adopt measures aimed at preventing viewers outside the licensed territory from watching the broadcasts breach EU competition law. There is nothing in the Conditional Access Directive (98/84/EC) to help the FAPL either as the Greek decoders and set top boxes bought or supplied by the defendants – several publicans and their suppliers – are not “illicit” devices for the purposes of that legislation. What’s more, the Court held that national laws that purport to prohibit the import, sale or use of foreign decoder cards are 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 matches.

As for copyright, however, the Court of Justice of the European Union (CJEU) accepted that transmission in a pub of the broadcasts containing copyright works constitutes a “communication to the public” within the meaning of the Copyright Directive (2001/29/EC), although the protected “works” did not include the actual matches, only the opening video sequence, the Premier League anthem, pre-recorded highlights of recent matches and graphics. The Court also had some interesting things to say about what constitutes “reproduction in part” and the application of the transient copying defence. All in all a mixed bag with FAPL appearing to come off second best, but in time the practical impact of the judgment on FAPL may prove to have been overstated.

Background

FAPL grants licences in respect of Premier League broadcasting rights for live transmission, on a territorial basis and for three-year terms. To protect territorial exclusivity, each broadcaster is required under the licence to prevent the public from receiving their broadcasts outside the licensed territory. In particular, they are prohibited from supplying decoders that allow their broadcasts to be decrypted for the purpose of being used outside the territory. FAPL is also responsible for organising the filming of Premier League matches and transmission of the signal to the broadcasters. For this purpose, the images and ambient sound captured at the match are transmitted to a production facility which adds logos, video sequences, on-screen graphics, music and English commentary. The signal is sent, by satellite, to a broadcaster which adds its own logo and possibly some commentary. The signal is then compressed and encrypted before being transmitted by satellite to subscribers, who receive the signal using a satellite dish. Finally, the signal is decrypted and decompressed in a satellite decoder which requires a decoding device such as a decoder card for its operation.

In Greece, the holder of the sub-licence to broadcast Premier League matches is NetMed Hellas. The matches are broadcast via satellite on SuperSport channels on the NOVA platform. The UK licensees for live Premier League broadcasting are BSkyB and ESPN. Anyone wishing to screen Premier League matches in the UK can take out a commercial subscription from either or both of these broadcasters. However, certain pubs in the UK have been using foreign decoder cards to access Premier League matches. The pubs buy a card and a decoder box from a dealer at significant discounts (the savings are reported to be as much as £1,000 on a BSkyB commercial subscription).

The first of the current cases concerns a civil action brought by FAPL against pubs that have screened Premier League matches by using foreign decoder cards and against the suppliers of such decoder cards to those pubs. FAPL’s case is that the defendants infringed their rights protected by s 298 of the Copyright, Designs and Patents Act 1988 by trading in, or being in possession for commercial purposes of, foreign decoding devices designed or adapted to give access to the services of FAPL and others without authorisation. FAPL also claim that the pubs have infringed copyright by creating copies of the works in the internal operation of the satellite decoder and by displaying the works on screen, as well as by performing, playing or showing the works in public and communicating them to the public.

The second case is a criminal case against Karen Murphy, the pub landlady from Southsea, who screened Premier League matches using a Greek decoder card. Ms Murphy was convicted of two offences under s 297(1) CDPA of dishonestly receiving a programme included in a broadcasting service provided from a place in the UK with intent to avoid payment of any charge applicable to the reception of the programme. Ms Murphy appealed to the High Court which decided to refer both cases to the Court of Justice for guidance on the legality of FAPL’s licensing system and the application of the Conditional Access and Copyright Directives.

Conditional Access Directive

The Conditional Access Directive proscribes dealing and commercial possession of “illicit” devices. These are defined in Article 2(e) as “equipment or software designed or adapted to give access to a protected service in an intelligible form without the authorisation of the service provider”. The question was whether that covered foreign decoders (as opposed to pirate devices). The CJEU ruled that it didn’t. All the devices in this case were manufactured and placed on the market with the authorisation of the service provider, they did not allow access free of charge to protected services and they did not enable or facilitate the circumvention of a technological measure designed to protect the remuneration of those services, given that remuneration had been paid in the Member State where they had been placed on the market.

Freedom to provide services

The next question was essentially whether the rules of the Treaty on the Functioning of the European Union (TFEU) concerning free movement of goods and services precluded the UK from having legislation which prohibits the import, sale or use of foreign decoder cards in the UK. Since such devices gave access to satellite broadcasting services from another Member State, their prohibition clearly prevented those services from being received by persons resident outside the Member State of broadcast. Consequently, unless there was an objective justification, the legislation would constitute a restriction on the freedom to provide services contrary to Article 56 TFEU.

FAPL, supported by the UK, French and Italian Governments, submitted that the restriction in the UK legislation could be justified in light of the rights of holders of intellectual property rights, because it was necessary to ensure that those holders remain appropriately remunerated. The Court disagreed. First, FAPL could not claim copyright in the matches themselves, as the matches could not be considered to be an author’s own intellectual creation and, therefore, to be “works” for the purposes of copyright. Second, even though in principle EU law did not preclude national legislation that was designed to confer protection on sporting events, the restriction must not go beyond what was necessary to protect the intellectual property at issue.

In the Court’s view, the prohibition on using foreign decoder cards went beyond what was necessary to ensure appropriate remuneration for the rights holders. Appropriate remuneration did not mean “the highest possible remuneration”. With regard to television broadcasting, such remuneration must be reasonable in relation to parameters of the broadcasts concerned, such as their actual audience, their potential audience and the language version (see Case C-192/04 Lagardère Active Broadcast [2005] ECR I 7199). Here, the Court said, the premium paid to the right holders in order to guarantee absolute territorial exclusivity resulted in artificial price differences between the partitioned national markets. Such partitioning and such an artificial price difference to which it gave rise was irreconcilable with the fundamental aim of the TFEU, which was completion of the internal market. The Court distinguished Coditel I [1980] ECR 881 on the basis that, in the current case, because decoders were required, account could be taken, indeed with a “high degree of precision”, of the actual audience and the potential audience both in the Member State of broadcast and in any other Member State in which the broadcasts were also received.

Nor could the restriction be justified on the basis that it was necessary in order to ensure compliance with the “closed period” rule which prohibits the broadcasting in the UK of football matches at 3.00pm on Saturday afternoons. The Court said that even if the rule, which is designed to encourage the public to attend stadiums to watch football matches, were capable of justifying a restriction on the fundamental freedoms, “compliance with the aforementioned rule can be ensured, in any event, by incorporating a contractual limitation in the licence agreements between the right holders and the broadcasters, under which the latter would be required not to broadcast those Premier League matches during closed periods”.

A law prohibiting the import, sale or use of foreign decoder cards was therefore an unjustified breach of Article 56 and that conclusion was affected neither by the fact that the card had been procured or enabled by the giving of a false name and address, with the intention of circumventing the territorial restriction, nor by the fact that it was used for commercial purposes although it was restricted to private use.

Article 101

For similar reasons, the CJEU also held that FAPL’s licence agreements constituted a restriction on competition prohibited by Article 101 TFEU insofar as they prohibited the supply of decoder cards to viewers outside the Member State for which the licence was granted. The Court accepted that, in principle, a right holder may grant 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. However, in this case, the licence terms prohibited the broadcasters from effecting any cross-border provision of services that related to Premier League matches. Their effect was to grant each broadcaster absolute territorial exclusivity in the area covered by its licence. The agreements 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. No exemption was possible under Article 101(3) as the restrictions clearly went further than was necessary to protect the intellectual property at issue for the same reasons as discussed above in respect of the breach of Article 56 TFEU.

Reproduction

As for copyright, the Court had already stated that FAPL could not claim copyright in the Premier League matches themselves, as they could not be classified as original works in the sense that they were their author’s own intellectual creation (see Case C-5/08 Infopaq International [2009] ECR I-6569). Only the opening video sequence, the Premier League anthem, pre-recorded films showing highlights of recent Premier League matches and various graphics could be regarded as “works” and therefore protected by copyright.

The first question here was whether the reproduction right for authors under Article 2(a) of the Copyright Directive extended to the creation of transient sequential fragments of those works within the memory of a satellite decoder and on a television screen which were immediately effaced and replaced by the next fragments. In particular, the Court was asked to consider whether this should be assessed by reference to all the fragments as a whole or only by reference to those which existed at a given moment.

In Infopaq the CJEU found that various parts of a work enjoy protection under Article 2(a) where they contain elements which are the expression of the intellectual creation of the author of the work. Here the Court said that this meant that the unit composed of the fragments reproduced simultaneously – and therefore existing at a given moment – should be examined in order to determine whether it contains such elements. If it did, it must be classified as partial reproduction for the purposes of Article 2(a). In this regard, the Court said it was not relevant that a work was reproduced by means of linear fragments which might have an ephemeral existence because they were immediately effaced in the course of a technical process.

The transient copying defence

However, in relation to reproduction the Court held that the acts of reproduction as part of that process fell within the transient copying exception under Article 5(1) of the Copyright Directive. The first three conditions of that provision were satisfied in that they were temporary, transient and formed an integral part of a technological process carried out by means of a satellite decoder and a television set in order to enable the broadcasts transmitted to be received. They also satisfied the other Article 5(1) conditions. While the acts were not “intended to enable transmission in a network between third parties by an intermediary”, in the Court’s view, they did alternatively have the sole purpose of enabling “lawful use” of the works inasmuch as they enabled the broadcasts containing protected works to be received. Mere reception of those broadcasts was not an act restricted by law. Moreover, following its findings on free movement of services, such broadcast brought about by the use of foreign decoding devices had to be considered lawful. And, finally, these temporary acts of reproduction were not capable of generating an additional economic advantage going beyond the advantage derived from mere reception of the broadcasts at issue. As such they could not be regarded as having independent economic significance, thus satisfying the fifth and final condition of Article 5(1).

Communication to the public

Last but not least, the Court dealt with FAPL’s right of communication to the public under Article 3(1) of the Copyright Directive. Considering what had gone before, the Court’s ruling on this was a major bit of good news for FAPL and licence holders such as BSkyB. The Court held that transmission in a pub of broadcasts containing the works found to be protected (the opening video sequence etc) did constitute a “communication to the public”, for which the authorisation of the author of the works was necessary. The key issue here was whether the works were communicated to a new public, ie a public which was not taken into account by the authors of the protected works when they authorised their use by the communication to the original public (see Case C-306/05 SGAE [2006] ECR I-11519). In the Court’s view, customers in a pub did constitute an additional public not contemplated by the authors. When those authors authorised a broadcast of their works, the Court said, “they consider, in principle, only the owners of television sets who, either personally or within their own private or family circles, receive the signal and follow the broadcasts”.

The Court acknowledged that “communication to the public” did not envisage direct public representation and performance. Recital 23 to the Directive made clear that the concept covered communication to a public not present at the place where the communication originated. Here, however, the public was present at the place of that transmission, ie the pub, not at the place where communication originated, which was “the place of the representation or performance which is broadcast” (see SGAE).

Comment

And the winner is? Well, Karen Murphy for one as the criminal case against her now falls away. But the ruling doesn’t mean that pubs the length and breadth of the land can now show Premier League matches using NOVA smartcards with impunity. The Court found for FAPL on the issue of communication to the public on account of the music and other copyright works added to the feed and that means that publicans need a licence from the FAPL, probably through BSkyB or ESPN, to screen games à la grecque. Plus, FAPL can continue to license in Europe on an exclusive basis provided it doesn’t impose obligations on broadcasters that protect territorial exclusivity.

Consumers might well be able to buy NOVA decoders but how many would really want to? And suppliers can import foreign decoders but their main customers can’t lawfully screen the matches without that copyright licence. All depends, ultimately, on how FAPL perceives the risk now posed by licensing Greek and other broadcasters in terms of eating into UK revenues (any more than they already do) or pushing down prices to UK subscribers and therefore what FAPL can charge suppliers such as BSkyB for the rights in the first place. FAPL may yet consider the safer option to be to license on a pan- European basis, or to broadcasters in Member States more selectively, or even (although this is considered unlikely) to run its own European channel.

But as the dust settles and the implications of the ruling on copyright sink in, FAPL may decide not to do much at all (other than drop the contractual territorial protections). Whilst giving short shrift to arguments that absolute territorial protection could be justified under either competition law or protection of the freedom to provide services, the CJEU’s ruling on the copyright aspects should ensure that FAPL is able to strengthen its midfield and avoid the trickle of pubs showing FAPL matches with foreign commentary turning into a rush. Indeed, following the logic of the ECJ, live feeds transmitted to all foreign broadcasters replete with FAPL branding may be sufficient to ensure that additional copyright authorisation would be required in the UK before hosting any form of public showing of a foreign feed.

Indeed the ruling on Article 3(1) and communication to the public, specifically that the right is infringed by communication to any “public not contemplated by the authors”, could prove a powerful weapon against a potentially more difficult adversary; namely unauthorised online distributors of live Premier League matches.