UK: Exclusive Country By Country Agreements For The Broadcast Of Premier League Football Matches Under Threat Following CJEU And High Court Rulings?

Football Association Premier League Ltd and others v QC Leisure and others; Karen Murphy v Media Protection Services Ltd, Joined cases C-403/08 and C-429/08, 4 October 2011

AND

Football Association Premier League Ltd & Ors v QC Leisure &; Ors [2012] EWHC 108 (Ch), 3 February 2012 and Karen Murphy v Media Protection Services Ltd [2012] EWHC 466, 24 February 2012

Following recent rulings from the Court of Justice of the European Union ("CJEU") in two conjoined cases concerning the broadcasting of Premier League football matches in the UK using foreign satellite decoder devices, the High Court has overturned the criminal conviction of a pub landlord, Karen Murphy, and ruled on the compatibility of territorial exclusivity agreements with European Union ("EU") law.

The recent decisions, while disappointing for the Football Association Premier League ("FAPL") and BSkyB, (FAPL's exclusive licensee in the UK), are not unexpected following the CJEU's ruling that the use of foreign satellite decoder devices to broadcast live Premier League football is legitimate and not contrary to EU law. However, pub landlords may still be liable for copyright infringement if they broadcast on their premises football matches which include works of copyright such as pre-recorded match highlights, performances of anthems, logos and graphics.

THE FACTS

FAPL organises the filming of Premier League football matches and grants licences to broadcast the matches, on an exclusive territorial basis. The licence agreements between the FAPL and each licensee require the licensee to prevent their broadcast from being viewed outside of the licensee's territory. In order to do this, the licensees encrypt their broadcasts and supply decoder cards to their customers in their territory, thus allowing customers to view the matches only within their territory.

At the relevant time, BSkyB Ltd had exclusive rights to broadcast Premier League football matches in the UK. This meant that anyone wishing to view the Premier League games had to take out a subscription with BSkyB. However, in the UK, a number of restaurants and pubs had obtained foreign decoder devices, which allowed them to receive broadcasts from another Member State at a cheaper price.

The CJEU's ruling dealt with two sets of proceedings. The first proceeding was an action by FAPL against individuals and companies that supplied foreign decoder devices to pubs and restaurants. The second was an action brought by FAPL against several publicans, who had obtained the foreign decoder devices and used them to broadcast the matches to the public. One of these publicans, Ms Murphy, had received broadcasts of Premier League matches transmitted in Greece by a company called NOVA. She had been convicted of two offences under s.297(1) of the Copyright, Designs and Patents Act ("CDPA") in Portsmouth Crown Court on the ground that she had dishonestly received a programme included in a broadcasting service provided from a place in the UK with intent to avoid payment of a charge applicable to the reception of the programme. Ms Murphy appealed her conviction.

In both sets of proceedings, the High Court referred a number of questions to the CJEU and awaited a response before ruling in the UK cases.

THE ECJ RULING ON THE QUESTIONS

1. Illicit devices under the conditional access directive

Articles 3 and 4 of the Conditional Access Directive provide that Member States must take measures to prohibit "the manufacture, import, distribution, sale, rental or possession for commercial purposes of illicit devices". Illicit devices are defined in Article 2(e) as meaning "any 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 CJEU concluded that foreign decoding devices are not "illicit devices" within the meaning of the Conditional Access Directive. The CJEU reasoned that as the foreign decoding devices were not "designed" or "adapted" without the service provider's authorisation, they did not fit within the meaning of Article 2(e). The devices were manufactured with the service provider's authorisation, Article 2(e) does not cover the use of these devices.

Consequently, the Conditional Access Directive does not prevent the importation of foreign decoding devices. Further, any national legislation prohibiting these devices would also not fall within the ambit of the Conditional Access Directive.

2. The UK national law and the TFEU

Article 56 of the Treaty on the Functioning of the European Union ("TFEU") states that "...restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended."

The CJEU considered whether the provisions of the TFEU preclude legislation of a Member State which makes it unlawful to import into and sell and use foreign decoding devices which give access to encrypted broadcasts from another Member State.

The national legislation at issue was sections 297(1) and 298 of the CDPA, the legislation under which Ms Murphy was convicted. s.297(1) provides that "a person commits an offence where they dishonestly receive 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". s.298 gives rights and remedies to those who make charges for the reception of those programmes. This legislation therefore effectively creates criminal sanctions for use of foreign decoding devices to access Premier League matches broadcast in other Member States.

The CJEU concluded that the national legislation was a restriction on the freedom to provide services contrary to Article 56 of the TFEU, unless it could be objectively justified. This was because it prohibited foreign decoding devices from being imported into, sold and used in the national territory and so prevented residents of one Member State from gaining access to services provided in other Member States. It was acknowledged that it was the territorial restriction clauses in the licence agreements themselves that were the obstacle to the reception of these services, but because the national law conferred legal protection on those restrictions, the law itself restricted freedom to provide those services.

3. Objective justification: intellectual property rights

The court then went on to consider whether the objective of protecting intellectual property rights was sufficient justification for the national legislation. It was argued by the FAPL and the UK Government (amongst others) that the legislation was necessary to ensure that IP rights holders remain properly remunerated for the use of their works.

The CJEU stated that the FAPL could not claim copyright in the Premier League matches themselves as they would have to be original in the sense that they are the author's own intellectual creation. Sporting events therefore could not be classified as intellectual creations within the meaning of the Copyright Directive. There is no other means of intellectual property protection recognised under European Union law to protect sporting events. However, since sporting events do have a unique and original character the court determined that it was permissible for national legislation to protect them. Where appropriate, the court said this should be done by virtue of intellectual property or alternatively by recognising protection conferred upon sporting events by agreements concluded between those who make the audiovisual content available to the public.

In principle then, the CJEU determined that such legislation is capable of justifying a restriction on free movement of services. However, it noted that such a restriction should not go beyond what is necessary to protect the intellectual property at issue. It was acknowledged that the rights holders should be allowed to exploit the protected subject-matter by granting licences in order to receive remuneration. However, in these circumstances a premium is paid so as to guarantee territorial exclusivity and this results in artificial price differences between partitioned markets, which is irreconcilable with the fundamental aim of the TFEU. In those circumstances, the court considered that the premium could not be regarded as forming part of the appropriate remuneration which rights holders are entitled to. The restriction therefore could not be justified on the basis of the protection of IP rights.

4. The licence agreements and article 101(1) of the TFEU

Article 101(1) of the TFEU prohibits agreements between undertakings, decisions by associations of undertakings and concerted practices which affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market.

The CJEU ruled that the territorial restrictions in the licensing agreements were inconsistent with Article 101(1) TFEU and were a restriction by object. The provisions of Article 101(1) may be declared inapplicable however, if certain criteria are satisfied under Article 101(3). Article 101(3) states that Article 101(1) may be inapplicable if the agreement/decision or concerted practice:

"contributed to improving the production or distribution of goods or to promoting technical or economic progress, while allowing customers a fair share of the resulting benefit..."

The agreements did not satisfy this criteria and so did not benefit from this exception. This conclusion was reached using the same reasoning in paragraph 3 above.

5. Authorisation of reproductions of copyrighted works

Despite the fact that copyright could not exist in the football match itself, it was common ground that copyright did exist in other elements of a Premier League broadcast, namely, the Premier League anthem, pre-recorded films showing highlights and various graphics. The CJEU therefore examined whether the broadcast of Premier League games was subject to restrictions set out in the Copyright Directive.

Article 2 of the Copyright Directive states that: "Member States shall provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part... for authors, of their works".

However, Article 5(1) provides that "Temporary acts of reproduction referred to in Article 2, which are transient or incidental [and] an integral and essential part of a technological process and whose sole purpose is to enable: (a) a transmission in a network between third parties by an intermediary, or (b) a lawful use; of a work or other subject-matter to be made, and which have no independent economic significance, shall be exempted from the reproduction right provided for in Article 2."

In principle, it was acknowledged that the FAPL could not restrict access to the matches themselves (as they are not copyright protected). However, in relation to copyright protected elements of a Premier League broadcast, the CJEU found that "reproduction" (under Article 2) does extend to the creation of transient sequential fragments of works within the memory of a satellite decoder and on a television screen which are immediately effaced and replaced by the next fragments.

However, the CJEU found that the exemption under Article 5(1) of the Directive was applicable to the temporary acts of reproduction performed within the memory of a satellite decoder and on a television screen. Thus these acts could be carried out without the authorisation of the copyright holder. This was on the basis that the temporary acts of reproduction were not capable of generating an additional economic advantage going beyond the advantage derived from the reception of the broadcasts.

6. Communication to the public

Article 3(1) states that: "Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that member of the public may access them from a place and at a time individually chosen by them."

The CJEU considered whether showing football matches in pubs represented a communication to the public with the meaning of Article 3(1), which would give the FAPL a right to authorise or prevent showing Premier League matches in public. On this point, the CJEU parted from the Advocate General's opinion and reasoned that transmission of a broadcast via a television and via speakers to customers in a pub did constitute a "communication to the public" within the meaning of Article 3(1). This was on the basis that firstly, the court considered that those customers in a public house constituted an additional public which was not considered by the authors of the copyright works when they authorised the broadcasting of their works and, secondly, because broadcasting Premier League matches at a public house was clearly of a profit-making nature and so FAPL should have an additional right to authorise and charge an additional fee to publicans in that regard. Thus, broadcasting these matches would require authorisation of FAPL in accordance with Article 3(1).

THE HIGH COURT RULINGS

In the proceedings concerning Karen Murphy, the High Court ruled that Ms Murphy had been wrongly convicted and quashed her conviction. Ms Murphy had paid for the foreign decoder card used to broadcast football matches in her public house, had not avoided any charge applicable to the use of the card and had not acted dishonestly. The card in question was not an illicit device within the meaning of the Conditional Access Directive and section 297(1) of the CDPA could not be applied to Ms Murphy's use of the card by virtue of Article 56 of TFEU.

In the other set of proceedings against QC Leisure and others, the High Court was persuaded that the defendants did have a legitimate interest in securing, in the form of a formal declaration, a clear statement of the High Court's findings in the light of the CJEU ruling and that justice would be achieved by the grant of a declaration that the relevant obligations in the licence agreements in issue constituted a restriction on competition prohibited by Article 101 of the TFEU and were void under Article 101(2) of the TFEU to the extent that such obligations prohibited Netmed (the Greek licensee in this case) from supplying for use in the UK satellite decoder cards which were capable of permitting any person to view the relevant transmissions in an intelligible form. The High Court added the statement that the declaration was given without prejudice to any rights of FAPL in respect of copyright infringement. In addition, publicans would be entitled to broadcast football matches provided that they did not charge customers for admission to the premises and subject to non-infringement of copyright owned by rights-holders (referring to the anthems, logos, highlights and graphics usually associated with such broadcasts).

CONCLUSION

The High Court's decisions are as expected following the ruling of the CJEU. On the face of it, the decisions appear favourable to pub landlords, although the risk of copyright infringement remains. Landlords have the option of either broadcasting clean feeds of the matches (stripped of copyright works) or trying to stay within the exemptions by switching off the broadcast at half time and reducing volume (thus avoiding recorded highlights, graphics and anthems), all of which may prove difficult in practice. Further, we expect that licensing models may change in the future in reaction to the Court's decisions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Catherine Richardson
 
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