We’ll keep the Red White & Blue Flag flying here

A personal view from a Pompey fan.

If you are ever at a match at Fratton Park, Portsmouth, take a short detour on your way back to Fratton railway station to drop in on the Red White & Blue pub on Fawcett Road (in the absence of a licensable picture to embed in this post, look up 150 Fawcett Rd on Google Street View or the Portsmouth News story and picture).  When you are there, raise your glass to the pub landlady, Karen Murphy because:

  • if you are passionate about the state of professional football in England, she may have saved the soul of the English game;
  • if you are also a pro-European lawyer, her case may mark the watershed for the use of territorial intellectual property and similar rights to create artificial barriers to the internal market and the free movement of goods and services; or
  • if, like me, you harbour Pirate Party sympathies, this case is another example of rights holders abusing the original purpose of copyright to use in debates about reform of copyright law.

This is why.

Background

Karen Murphy wanted to show Premiership football in her pub.  She was unwilling to pay the high fees for a BSkyB commercial use licence to show the games in a public place, so she used a decoder card imported from Greece to obtain a feed from a Greek broadcaster. Her Greek-sourced Premiership live games licence fee was around £800 per year, as opposed to the BSkyB fee that can be over £1,000 per month (BSkyB currently makes around £200m a year just from pub licences).  She was prosecuted for a breach of copyright law in the Portsmouth Crown Court for showing 2 matches (19th August 2006 Bolton Wanderers v. Tottenham Hotspur and 25th September 2006 Portsmouth v. Bolton Wanderers (Pompey lost 0-1)), and appealed by way of case stated to the High Court. In contrast, the pub landlords of the Hatch Inn Gate in Reading were fined £2,500 each plus costs for a similar offence in respect of one Reading game (note the involvement of the Federation Against Copyright Theft) and did not appeal.

The High Court made a reference to the Court of Justice of the European Union (“CJEU”) on a number of questions, but noted that on its own interpretation of English law, it would dismiss the appeal. On 3 February 2011 the Advocate General for the case, Case C-429/08, Juliane Kokott (who is a bit of a legal superwoman), gave her opinion on the legal point of the case to the CJEU. If the CJEU upholds her view, Mrs Murphy’s appeal should be allowed when her case reverts back to the High Court.

Saving the Soul of English Football

All the Premiership clubs’ copyright in television coverage of football matches are collected into one legal entity, Football Association Premier League Ltd (“FAPL”).  Each of the Premiership clubs is an equal shareholder in FAPL.  As a rights holder, FAPL can auction whole Premiership packages of rights at the best price for all the clubs (this is in contrast to, say, La Liga in Spain, where the clubs individually negotiate TV rights deals).  The most valuable package of rights is the rights to live transmissions of football matches in the UK. This package of rights has been held since the FAPL began auctioning these rights by BSkyB. FAPL currently earns £1.8bn for its three-year UK rights licence to BSkyB. The revenue from exploiting TV rights generates around half Premiership clubs’ income. This has had many consequences for the English game: hyper-inflation of players’ wages, lack of development of national football talent and the massive over-leveraging of clubs desperate to buy players in order to avoid the financially ruinous drop out of the Premiership, or for the top teams, the disastrous consequences of not qualifying for the UEFA Champions’ League. Arguably the emphasis on Premiership football has also seriously damaged football in all the other professional leagues and has ruined top-flight football as a working-class, spectator sport (prawn sandwich, anyone?).  The way TV rights money is distributed to the Premiership clubs has also arguably created a league-within-a-league to the detriment of the sporting nature of the league itself, as the money from the UK rights’ deals is not distributed evenly to all clubs.  With the exception of Blackburn Rover’s title in 1994/5, all Premiership titles have been won by one of Manchester United, Chelsea or Arsenal.

If the CJEU upholds the principle of the free movement of goods and services across the EU internal market, then it will be open for every consumer of satellite TV to source a decoder from any other member state in the EU to view live Premiership football. At a stroke the value of UK rights will be diminished.  Many would argue that the reduction in the amount of revenue in the game will force it to redress its structure and priorities.

Limits of Intellectual Property Rights and Territorial Restrictions

Intellectual property rights, being creations of statute, are by their nature territorial.  However, one of the founding principles of the European Economic Community, leading to the European Union, was to create a free trade market area, where goods and services would be able to move across international boundaries without any restriction in custom duties or any other national restrictions.  There has always been a tension between the proper use of intellectual property rights to protect national markets and the principle of the free movement of goods and services.

The intellectual property rights at issue in this case concern the sub-divisions of copyright known as the right of reproduction and right of communications to the public, which are set out in Directive 2001/29/EC, and the right to communicate to the public by satellite copyright works, as set out in Directive 93/83/EEC.  There were other territorial restrictions to consider, being those provided for under Directive 98/84/EC, which provides for the legal protection of conditional access services.  Conditional access service is the term used to describe the service that permits a consumer of satellite TV to receive, decrypt and view satellite broadcasts by use of a set-top box and decoder card.

On the other side of these territorial rights and restrictions are the “free movement” treaty provisions that prevent quantitative or other restrictions being placed upon the import of goods or provision of services (at Articles 34, 52 and 56 TFEU (formerly Articles 28, 30 and 49 EC)). 

As might be expected, these Treaty provisions are qualified both within the Treaty and by case-law, so that, in the example of this case, measures to protect industrial and commercial property may be justified.  The CJEU has developed over the years, in particular with respect to trademark cases, a general principle of the exhaustion of rights for the free movement of goods.  Put simply, the principle provides that when goods are lawfully placed on any EU internal market,  the exclusive rights of the intellectual property rights owner are exhausted so that the goods can be purchased in that market and resold anywhere else in the EU. 

Juliane Kokott argued in her opinion that the exhaustion of rights principle should apply equally to the free movement of services.  She found that there was no protection of industrial or commercial property justification for the principle not applying in this case.  In particular, she noted that any intellectual property rights restriction should not be considered to include a “right to charge different prices for a work in each Member State.”   She was not persuaded by the FAPL argument that there needed to be a restriction on rights in order to protect the so-called “closed period” in the UK, being a period in which no live transmissions are possible in order to protect the gates of the clubs.  She noted that the lack of closed periods in France, Germany, Italy, Spain and Northern Ireland had not affected attendance at matches in those territories.

Proper Exploitation of Rights

The Advocate General also considered the application of competition law to the FAPL method of granting licences throughout the EU, as this could be in breach of Article 101(1) TFEU (formerly Article 81(1) EU), being the prohibition on anti-competitive agreements between undertakings that have as their object the prevention, restriction or distortion of competition.  She noted that the series of licences imposed contractual obligations on the licensees to prevent their decoder cards being exported outside of the licensed territories.  She considered that unless a justification under Article 101(3) existed, this arrangement of licences could be incompatible with Article 101(1) TFEU. 

The Advocate General’s opinion therefore argues that FAPL may be using intellectual property rights improperly.  This is a core argument of the Pirate Party, that the development of copyright has gone too far.  To put it in simple UK terms, the Statute of Anne of 1709 granted publishers of a book 14 years copyright protection, with a further term of 14 years if the author was still alive after expiry of the first term.  This was to provide printers with sufficient time to recover their investment in setting the type and printing the book and to incentivize authors to publish.  One of the Pirate Party arguments is that the extension of this term to life of the author plus 70 years has gone way further than is necessary to incentivize authorship and to allow publishers in whatever medium to recover their investment in the distribution and production infrastructure required for that medium.

It will be interesting to see where the CJEU goes with this case, given the view of the Advocate General that free movement of services should have priority here over any intellectual property rights restrictions.

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