EU law 2 FA Premier League 0

by Carl Gardner on October 4, 2011

Today the Grand Chamber of the ECJ gave its preliminary ruling in two joined cases, FA Premier League v QC Leisure and others and Murphy v Media Protection Services. The ruling isn’t on BAILII yet; but it is available on the ECJ’s own website. [Update: here’s the BAILII version].

The case is rightly being reported as a victory for the pub landlady Karen Murphy, whose criminal conviction under section 297(1) of the Copyright, Designs and Patents Act for dishonestly receiving a broadcast with intent to avoid payment, although technically still good in law until her case returns to the High Court, will surely now be quashed, since the ECJ has ruled that it’s contrary to internal market law, specifically the freedom to provide services under article 56 of the Treaty on the Functioning of the EU (TFEU). Rather than buying a Sky subscription for her pub, she’d obtained a decoder for a cheaper Greek satellite service from a firm called NOVA. It was this that Portsmouth Magistrates’ Court saw as dishonest, Ms. Murphy having been privately prosecuted by Media Protection Services, a company used by the Premier League, in the ECJ’s words to

to conduct a campaign of prosecutions against public house managers using foreign decoding devices

The background to this is the FA Premier League’s practice of selling rights to show its matches on a territorial basis within Europe. Perhaps no one wants the buy the right to broadcast them across the whole of Europe; I don’t know. In any case, in addition to the right to broadcast live matches within the UK, the Premier League sells the right to broadcast matches in other countries, like Greece – subject to the condition that the foreign broadcasters such as NOVA encrypt their broadcasts so that they can’t be received outside Greece. What the Premier League have objected to is the sale by firms like QC Leisure of decoding equipment enabling British viewers to see NOVA’s matches; and the use of those decoders by people like Ms. Murphy to circumvent the Premier League’s deal with Sky, and show matches in their pubs more cheaply. The Premier League started civil copyright proceedings against QC Leisure; in Ms. Murphy’s case, they chose to use the criminal law, and to give her a criminal record.

It’s clear from the questions referred to the ECJ by the High Court in these two cases that complex arguments have been deployed by the Premier League to defend its commercial practice in terms of various Directives, or a combination of them. But the preliminary ruling seems to me an example of the ECJ at its lucid best. The entire purpose of internal market law is to tear down the artificial walls states might erect between their national markets, and create one single internal market in the EU. Firms who attempt unilaterally to maintain partitioned national markets by legal action will always “need a miracle” if that action is challenged in EU law. The ECJ’s played a blinder here, realising the Premier League dived, and Ms. Murphy never touched them.

Discussing the legitimacy of selling exclusive national right at a premium, the ECJ (at para. 115 of the ruling) cuts through the Premier League’s tactical defences with a simple long ball over the top:

such a premium is paid to the right holders concerned in order to guarantee absolute territorial exclusivity which is such as to result in artificial price differences between the partitioned national markets. Such partitioning and such an artificial price difference to which it gives rise are irreconcilable with the fundamental aim of the Treaty, which is completion of the internal market.

The reason I say the result was 2-0 is that the ruling is a double whammy. Not only does the ECJ rule that UK legislation protecting the Premier League’s revenue is contrary to internal market rules. It also says that the Premier League’s contracts with foreign licensees such as NOVA breach EU competition law, specifically article 101 TFEU, since it’s an agreement whose object is the prevention, restriction or distortion of competition (para. 139 of the ruling):

an agreement which might tend to restore the divisions between national markets is liable to frustrate the Treaty’s objective of achieving the integration of those markets through the establishment of a single market. Thus, agreements which are aimed at partitioning national markets according to national borders or make the interpenetration of national markets more difficult must be regarded, in principle, as agreements whose object is to restrict competition within the meaning of Article 101(1) TFEU

In early reaction I’ve seen and heard this morning, journalists are keen to stress the complexity of the judgment and that the Premier League may take some comfort from what the ECJ said about its having copyright in certain elements of broadcasts (para. 149):

FAPL can assert copyright in various works contained in the broadcasts, that is to say, in particular, the opening video sequence, the Premier League anthem, pre-recorded films showing highlights of recent Premier League matches, or various graphics.

I don’t think that comfort is real, though. The ECJ goes on (para. 182) to rule that technical reproduction of these graphics etc. within decoders and receivers falls within an exception

laid down in Article 5(1) of the Copyright Directive and may therefore be carried out without the authorisation of the copyright holders concerned.

As far as the actual showing of the graphics etc. to the pub audience is concerned, it’s true that the ECJ rules (para. 207) that

‘communication to the public’ within the meaning of Article 3(1) of the Copyright Directive must be interpreted as covering transmission of the broadcast works, via a television screen and speakers, to the customers present in a public house.

That appears at first blush to concede to the Premier League the right to sue pubs for breach of copyright for showing their customers copyright elements (the anthem etc.) as part of match broadcasts.

I doubt even that can work for them, though. Article 5.3(i) of the Copyright Directive provides that

Member States may provide for exceptions or limitations to the rights provided for in Articles 2 and 3 in the following cases: …

(i) incidental inclusion of a work or other subject-matter in other material

and section 31(2) of the Copyright, Designs and Patents Act 1988 is an example of just such an exception, making it lawful for Ms. Murphy to communicate to the public those copyright works lawfully included by NOVA in its broadcast. The one tiny crumb remaining might be the right to sue her for breach of copyright for allowing her customers hear the Premier League “anthem”; that’s because of the special position regarding musical works under section 31(3).

But even if the Premier League can prove Ms. Murphy doesn’t show matches with the volume turned down, I doubt they can seriously frustrate the entire purpose of EU internal market law based on attempts to enforce copyright in the anthem alone – however often they decide to play it. Its lawyers may well write letters trying to convince firms and consumers that they’re still taking legal risks by using foreign decoders, and many people may be convinced for a time at least. That time will be very commercially valuable for the Premier League. But I expect it to last only as long as it takes the ECJ to rule on the matter again.

{ 12 comments… read them below or add one }

1 Kelvyn Gardner October 4, 2011 at 15:58

The ‘incidental useage’ argument failed when companies have distributed collector cards of footballers where the club and Premier League logos were reproduced on the shirts the players were wearing. However, this judgment appears to be more about the free movement of goods and services than about copyright. Presumably the Greek satellite operator has a license from the Premier League so they are covered in regard to copyright material that appears within the match broadcasts. I guess the license is limited to the territory of Greece. In the merchandise licensing business there are usually clauses in agreements signed in individual EU territories allowing the licensee ( if licensed just for the UK, for instance ) to accept ‘unsolicited orders’ but prohibiting the licensee from actively persuing sales in other EU countries outside the UK. Does this stand up to scrutiny after this judgement? Maybe, as the Greek satellite operator presumably does not market its services outside Greece, but has QC leisure in the middle selling decoders and NOVA accepts these ‘unsolicited orders’ from QC.

What’s also interesting here is that it’s the world worst kept secret that tens of thousands – maybe hundreds of thousands – of ex-pat Brits have Sky systems all over Europe ( the Sky satellite ‘footprint’ covers a far wider area than the UK ) and no-one seems to be questioning the legality of these (perhaps ‘unsolicited’?) sales.

2 Carl Gardner October 4, 2011 at 16:47

Good points.

The key with any EU internal market law issue here is to step back from the detail, and see the big picture. What EU law is aiming at is making Europe one single market; anything that tries to maintain purely national markets is likely to run into legal problems at some stage.

What tends to happen for a while is that everyone simply assumes existing “custom and practice” is legal, so it’s not challenged – that was the case with the rules about football transfers for example, which crumbled as soon as they were challenged in the Bosman case.

So a lot depends (in the real commercial world I mean, not in the courts) on the credibility of the PL’s arguments about copyright. I don’t credit them at all, really, and I think they’d fail if tested.

As for the unsolicited sales clauses in licensing agreements, I think these will be routinely included so as to comply with competition law – specifically article 101 prohibiting anti-competitive agreements. I think that does still withstand scrutiny in competition law terms – but I don’t see how any “link” to copyright works as a trick to get round free movement law.

What I mean is, I don’t think you can say (a) we’ve licensed use of copyright to exclusive national broadcasters (b) therefore only pubs who get their “feed” from the sources we want them to are complying with copyright (c) therefore we can stop Karen Murphy showing our matches. As I explain in my next post, once you get away from IP “trees” and look at the internal market “wood”, you realise that’s just another market-partitioning device.

3 Carl Gardner October 4, 2011 at 16:58

Oh, and I think anthems and so on are clearly more “incidental” to the broadcast of a match than an official shirt is to a collectible football sticker.

As I say, though, we mislead ourselves if when burrowing into the details of IP law we lose sight of the bigger internal market picture.

4 Lawrence October 5, 2011 at 08:06

Where you say

“…It also says that the Premier League’s contracts with foreign licensees such as NOVA breach EU competition law, specifically article 101 TFEU, since it’s an agreement whose object is the prevention, restriction or distortion of competition ”

Does this give the PL an opportunity to therefore announce those contracts null and void, and renegotiate them tomorrow on a pan-european basis, or simply cancel them?

5 Richard Gadsden October 5, 2011 at 09:06

In re: Carl’s 3, one approach to “incidental” is to ask what the impact would be if it were removed.

A broadcast of a football match without the anthem would still be the football match; a sticker of the player in street clothes rather than the team’s official shirt would not be a football sticker any more.

6 Carl Gardner October 5, 2011 at 09:26

I’m afraid not, Lawrence. I didn’t mean to imply that the whole contract was unlawful or voidable. The ECJ is simply saying that the clauses purporting to prevent NOVA from selling decoders outside Greece are in breach of competition law. That means they’re unenforceable to that extent.

I imagine the FAPL will try to renegotiate to replace them with clauses prohibiting NOVA from soliciting sales outside Greece, but permitting them to meet unsolicited orders.

7 Kelvyn Gardner October 5, 2011 at 10:40

Companies have in the past and still do market football stickers/trading cards with all official insignia removed from the images – even erasing the design of the footballers’ shirts for instance. However, this clearly devalues the product severely.

8 Oliver October 5, 2011 at 11:21

Although not central to the judgement, the comments about copyright do have potentially far-reaching consequences. Is the ECJ really saying that there is no copyright in the broadcast of the match itself? They refer to the game but are silent on the actual broadcast. Between the two, there is a lot of work involved – some would argue creative work. If there is no copyright, would that not mean that any online pirate who can get hold of a signal can then rebroadcast it with impunity? That would be bad news for the league and the broadcast rights holders.

9 Carl Gardner October 5, 2011 at 11:38

They appear to be saying there’s no copyright in the game – I’m not sure they go so far as saying there’s none in the whole broadcast.

But I really think this ruling can be misunderstood if people focus on the IP trees and not on the free movement wood. I don’t think it matters whether you see the broadcast as a copyright work or not. The point is, the PL do not go around threatening pubs that show Sky broadcasts (that they’ve authorised) with copyright actions, or say they need “authorisation”. In those circumstances I don’t think they can maintain a legal argument that they’re entitled to threaten pubs showing other broadcasts that they’ve authorised, simply because those broadcasts originate elsewhere in the EU. I don’t think it makes any difference whether the underlying copyright is there or not.

I think this is a case of the devil not being in the detail, but in the fundamental internal market principle. Whatever cunning copyright argument the PL may come up with is, I suspect, just a way of “not getting it” (with a big lawyers’ fee attached).

10 Lawrence October 5, 2011 at 19:29

So, without going too far off topic I hope, how might this affect someone like the BBC with their new global iPlayer. iPlayer content is free in the UK, but 9.99 Euro elsewhere in Europe. Are they not therefore trying to segment the market along national boundaries too?

11 Master Steve Hamilton October 5, 2011 at 21:38

One has to look closely – very closely into the ever so ‘cosy relationship’ between the Premier League and Sky. One has to look back at the likes of Richard Scudamore and also Allan Leighton and Adam Crozier and a good place to start is the Book By Neil Chenoweth “Virtual Murdoch” – where Chenoweth coloured in a lot (not all – and I mena it) of the dubiousness and uncertainty surrounding Sky’s £1.11 Billion bid for the rights back in 2000 [See page 336 of the book – if you can find a copy of it!] Bullying is indeed a tactic of many in all forms of Business Warfare.

12 Kelvyn Gardner October 17, 2011 at 11:09

Although from experience I can tell you that compared to some other major sporting bodies the FAPL is a model of transparency where rights are concerned.

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