The European Court of Justice has recently issued a landmark decision regarding the licensing of exclusive territorial broadcasting rights.
The Football Association Premier League (the FAPL) runs the Premier League in the UK. Currently, the rights to broadcast matches on TV are licensed as exclusive rights in a particular territory (normally a single country). As well as giving the broadcaster exclusive rights to broadcast within that territory, the licence requires them to encrypt their satellite signal so that it cannot be accessed by consumers outside that territory.
In the UK, the rights to broadcast Premier League football matches are held by BSkyB. In an effort to reduce the cost of receiving broadcasts, a number of pubs bought foreign set-top box decoders from a Greek broadcaster which enabled them to receive Premier League matches for a much cheaper price, bypassing BSkyB.
The FAPL took action against these pubs, arguing that the value of their TV broadcasting rights was being undermined. The High Court of Justice of England and Wales, which dealt with the case, then referred a number of questions concerning the interpretation of EU law to the Court of Justice of the European Union.
In the EU, competition laws prevent partitioning of the EU-wide single market. In particular, it is not permissible to impose quantitative restrictions on the import or export of goods between EU Member States, except on certain grounds (including the protection of intellectual property rights).
The Court of Justice has now ruled that national legislation prohibiting the import, sale or use of foreign decoder cards cannot be justified under EU law. While EU law does not, in principle, prevent a right holder from granting an exclusive licence to broadcast certain subject matter from a specific territory, it does prohibit the use of the licence to prevent cross border provision of services. Such action eliminates all competition between broadcasters in that field and thus partitions the market.
The Court went on to say that the Premier League matches themselves are not entitled to copyright protection, so there is no justification for the prohibition on the grounds of protection of intellectual property.
However, there is copyright in parts of the broadcast, specifically in the opening sequence, any graphics displayed, and in the Premier League anthem. The broadcast, in public, of these features without permission from the FAPL would therefore infringe their copyright.
The upshot of this is that pubs cannot use foreign decoder cards in order to show matches to their clientele as, being a communication to the public, it would infringe the copyright in various aspects of the broadcast. However, it is not illegal for individuals to buy set-top box decoder cards from foreign broadcasters for domestic use; such use is not classed as communication to the public and therefore would not infringe copyright.
The High Court will now apply the judgement of the Court of Justice to the cases brought by the FAPL. However, the application of this case is much wider than just to the Premier League, and it will be some time before we see the full effect of this judgement and what impact, if any, it has on how broadcasting rights are sold and licensed throughout the EU.
There is some concern that it will devalue the rights, thereby reducing the funding received by the Premier League and other licensors affected by the ruling. However, it could also be argued that the rights are merely being given their true value, rather than an inflated value produced by a partitioned market with little or no competition.
14 October 2011