The single European market: ahead at half time

The opinion of Advocate General Kokott in Football Association Premier League Limited v QC Leisure

The Advocate General has said that the English Premier League and Sky cannot stop UK pubs showing broadcasts of Premier League matches sourced from other European countries. Broadcasters and providers of digital music, books and film may be forced to compete on a pan-European basis. 

Background

Advocate General Kokott has given her highly anticipated opinion on the rights of satellite broadcasters to include territorial restrictions in broadcasting agreements. Broadcasting licences for English Premier League matches are granted on a country-by-country basis in the EU and around the world. The licences contain a series of restrictions that are intended to prevent consumers accessing foreign broadcasts and taking advantage of lower subscription fees. The case was referred to the ECJ by the English High Court for a ruling on the scope of broadcasters' copyright and whether these territorial restrictions breach the EU principle of freedom to provide services and competition law.

The Opinion

The Advocate General's opinion is that the territorial restrictions breach both the principle of freedom to provide services and competition law. The opinion:

• confines the frequently-cited Coditel decision to its facts and confirms that the principle of exhaustion of rights is not merely restricted to the free movement of goods, but also applies to the provision of services such as the broadcasting of football matches;
• states that the territorial restrictions, which allow the broadcasters to "profit from the elimination of the internal market", amount to an unjustified partitioning of the single market and are incompatible with EU law; and
• extends the principle beyond broadcasting to other services, for example the sale of computer software, musical works, e-books or films via the internet.

The broadcasters and Premier League cannot use European copyright to prevent pubs showing and consumers watching the live broadcasts themselves (although the position may be different under national law in relation to copyright works included in the broadcasts, such as music).  The opinion found that:

• the four frames of a broadcast which appeared in the memory buffer of the satellite receivers were a reproduction because they represented the author’s own intellectual creation (following Infopaq).  However, the exception for temporary acts of reproduction (Information Society Directive) applied;  
• the viewing of the broadcast on a TV screen was a reproduction of the broadcast and the temporary acts exception did not apply to it; 
• as the initial broadcast had been authorised in Greece, so was the receipt and viewing of the broadcast.  This was regardless of the fact that the receipt happened in a different country from the initial broadcast; and 
• the copyright works contained in the broadcast and the broadcast itself were not communicated to the public when the broadcast was shown in the pubs; that act had already occurred when the broadcast was initially communicated to the public in Greece by the rightsholders.  

Implications

The Advocate-General's opinion is not binding on the ECJ; however, opinions are followed in the majority of cases.  The final decision is expected by the end of this year. If the ECJ does reach a similar conclusion, the territorial restrictions imposed by broadcasters will be considered void and unenforceable.

The ECJ's decision on the legality of these broadcasting restrictions will be equally applicable to any territorial restrictions placed on the sale of digital music, films or books. If the ECJ agrees that such territorial restrictions are unlawful, this will require a wholesale revision of the distribution model for on-line services. European collecting societies, for example, may now be encouraged to develop pan-European licensing, as it may no longer be possible for national collecting societies to charge and enforce pricing for their digital end-users that is different to that which is applicable in other Member States. Providers of digital media would in effect be competing on a pan-European playing field, and that is likely to lead to a reduction in price for consumers.

Curiously, Advocate General Kokott also hinted at some practical ways to mitigate the impact of her opinion. For example, in relation to the broadcasting of football matches, "restricting the commentary to certain language versions might create a sufficiently effective practical delimitation of the markets in order to continue to serve the different national markets at different prices."

From a copyright perspective, this opinion confirms the wide-ranging influence the ECJ has over the national copyright law of Member States.  The application of the new test for infringement introduced by Infopaq suggests a potential increase in the number of circumstances where copyright infringement may be established.  For example, transient copies of scenes of films (whether on hard-drives, a TV or computer screen) could now be infringements of the copyright in those films.  This may be helpful when seeking to challenge websites which stream live transmissions.  It remains to be seen how the opinion might apply to broadcasts of other types of copyright work.

This opinion is likely to trigger heated debate in the media and the legal world, given the huge commercial interests at stake. In this case, this may devalue the broadcasting rights and reduce the amount that Sky is willing to pay the Premier League if territorial exclusivity cannot be guaranteed.  Similar adjustments are likely to occur in other markets, if the legal principle is applied in the same manner in other digital spheres.

Lawyers Robert Vidal, Louisa Penny, Adam Rendle