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Competition Law

Analysis - debate - current awareness

06 OCT 2011

Red card for FA Premier League exclusive broadcasting rights

The European Court of Justice (ECJ) has in the last few days handed down its judgment in the long-running pub broadcasting cases. In what will undoubtedly be seen as a blow to the FA Premier League (FAPL), the ECJ found that restrictions on the import, use and sale of foreign decoder cards giving access to FAPL matches were contrary to the EU rules on freedom to provide services and competition.
In its ruling the ECJ holds that national law which prohibits the import, use or sale of foreign decoder cards is contrary to the fundamental EU freedom to provide services and cannot be justified by the objective either of protecting intellectual property rights or of encouraging the public to attend football stadiums.
The ECJ noted that the FAPL cannot claim copyright in the Premier League matches themselves as they cannot be classified as the intellectual creation of the FAPL. They can however claim copyright in logos, graphics, pre-recorded films of previous match highlights and anthems. The ECJ said that even if national law conferred something similar to copyright protection on sporting events, this would not justify the restriction on the free movement in question. It noted that whilst rights holders were entitled to remuneration for the exploitation of their intellectual property, that did not guarantee the rights holder the opportunity to demand the highest possible remuneration through territorial partitioning. The court found that the absolute territorial exclusivity that had been created by the FAPL and the artificial price difference to which it gives rise are irreconcilable with the fundamental aim of the EU Treaty.
However, the ECJ did accept that price differentials according to whether access to the service is for commercial or domestic purposes was justified.
In relation to the agreements between FAPL and the broadcasters, the ECJ did not question the grant of exclusive licence per se but it did hold that the additional obligations in those agreements that were designed to ensure compliance with the territorial limitations, namely the obligation on broadcasters not to supply decoders outside the territory covered by the licence agreement, infringed the competition rules of the EU Treaty. 
Various copyright and related issues also arose in the case. The FAPL alleged that the publicans had infringed their copyright by creating copies of the works in the internal operation of the satellite decoder and by displaying the works on the television screen, as well as by performing, playing or showing the works in public and communicating them to the public.
The ECJ ruled that while the live matches are not protected by copyright (because they are not the Premier League’s own intellectual creation), the opening video sequence, the Premier League anthem, any pre-recorded films showing highlights of recent matches and Premier League graphics and logos would be protected under copyright law. In practice this means that if a pub shows a broadcast which includes any of these protected copyright elements, they would need permission from the Premier League.
The ECJ's reasoning was that a transmission in a pub of a broadcast containing protected works via a television screen and speakers, to customers present in that establishment, did constitute a communication to the public under Art 3(1) of the Copyright Directive (Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society(2001) OJ L 167/10) for which authorisation by the author of the works is necessary. This was because when a pub transmits the copyright works to the customers in a pub, the works are transmitted to an additional ‘new public’ that was not considered by the authors when they authorised the broadcasting of their works. This element of the ECJ’s ruling ties in with its finding in relation to the free movement rules that a rights holder can distinguish between domestic and commercial use.
The ECJ also held that while the rights holder’s reproduction right in Art 2(a) of the Copyright Directive did cover the transient fragments of the works within both the memory of a satellite decoder and on a television screen (provided those fragments contained elements which were the expression of the author’s own intellectual creation), the exception in Art 5(1) relating to transient or incidental copying applied. The acts of reproduction of the copyright works in the broadcasts within the memory of a satellite decoder and television screen may therefore be carried out without the authorisation of the copyright holders concerned.
The biggest impact of the ruling will undoubtedly be on the FAPL itself and its licensees such as BSkyB. Neither it nor its licensees will be able to prevent the free circulation across borders of decoder cards giving access to Premier League matches. This could lead to pan-EU licensing of the rights. The FAPL will however be able to maintain a distinction between commercial and domestic users. This may well mean that that those publicans who obtained Greek decoder cards intended for domestic use may be found liable for copyright infringement when the case returns to the national court.
For the media industry generally, the effects of the ruling are more uncertain. Unlike the opinion of the Advocate-General in February 2011, the ECJ focuses closely on the issue of decoder cards and their use in pubs. It avoids sweeping statements about the impact of the case on territorial exclusivity in other areas such as music, films and books. It also upholds the principle of ‘open’ exclusive licensing although it throws into question the validity of contractual obligations designed to support and enforce that exclusivity. Fundamentally, the ruling does not undermine the right of intellectual property owners to remuneration for the exploitation of their works in the manner prescribed under copyright law. However, it is clear EU rules will not permit rights holders to extract the maximum remuneration possible from their rights on the basis of absolute territorial exclusivity.

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