updated on 10 January 2012
QuestionWhat effect will the decision in FAPL v QC Leisure have on how rights owners license their products in the EU?
You may have recently seen stories on the back (and, sometimes, the front) pages of the national newspapers, featuring a pub landlady grinning from ear to ear and holding a celebratory pint. This, the mass media reported, was the winner in one of the most important competition and IP cases of recent years; the David who slew Goliath (in this case the corporate megaliths of Sky and the FA Premier League); the champion of consumer rights; and the woman who had enabled the whole of the United Kingdom to pay far less money for watching football on satellite TV than it had previously.
Well, not quite. As will be explained, there is much in the judgment of the Court of Justice of the European Union (CJEU) in FAPL v QC Leisure Ltd & Ors to make rights holders and broadcasters think very carefully about how they license their products in future. Unfortunately, at least for Mrs Murphy and her fellow publicans, part of the judgment means that football will, for the time being, still be the preserve of Sky and ESPN.
The Football Association Premier League Limited (FAPL) runs the Premier League, the foremost professional football league in England. FAPL currently licenses the rights to show Premier League football matches on a country-by-country basis - ie, each individual country will have designated licensees which pay for the exclusive right to screen games. In the United Kingdom this is currently Sky and ESPN, which pay a combined sum of £594 million per year for the rights.
Karen Murphy is the landlady of the Red, White and Blue pub in Portsmouth, which shows live Premier League football to its customers. Murphy decided against paying £6,000 per year to Sky for her subscription to show live games, and instead bought a satellite dish, decoder and decoder card which allowed her to screen broadcasts of the same games from Greek television channels for just £800 per year. FAPL brought an action against Murphy and she was convicted of dishonestly receiving a programme with intent to avoid payment of any applicable charge contrary to section 297(1) of the Copyright, Designs and Patents Act 1988. Murphy appealed this decision, and argued that as a citizen of a member state she should not be prevented from shopping around the European Union to find the best deal. The Premier League argued that EU precedent supported the notion of exclusive licensing. The High Court ultimately referred several questions to the CJEU.
The CJEU ruled that the way in which the Premier League licensed its rights, by prohibiting viewers from watching broadcasts using decoder cards bought from other member states, was contrary to EU law; in particular, it fell foul of Article 101(1) of the Treaty of the Functioning of the European Union (TFEU), which prohibits agreements that have as their object or effect the prevention, restriction or distortion of competition within the European Union. The court found that the agreements in place unfairly partitioned national markets, and that individuals such as Murphy should have the right to shop around within the European Union for the best deal.
However, the part of the decision that dealt with copyright was more favourable to the rights holders. The court ruled that when broadcasting the live games "to the public", a pub would need the permission of the rights holder in order to show anything that would attract copyright. This would not be the game itself (the court held that a broadcast of a live sporting event would not attract copyright in itself as there was no independent "intellectual creation" in live sport), but it would be anything additional to bare footage of the game, for example graphics, anthems or in-game highlights, which would be copyright protected. A consumer purchasing a decoder could legitimately use this for personal use but, in order to show a game to others in a place such as a pub, the permission of the rights holder (in this case the Premier League) would be required.
On first glance, the decision appears to be a resounding victory for Murphy, with the effect that the FAPL cannot force consumers to buy their sports packages from one broadcaster. However, the ruling on the copyright point appears to be not so much a chink of light as a ray of sunshine for the Premier League, and effectively means that, although publicans such as Murphy are allowed to buy decoders from whichever country they wish, in order to use them for broadcasts to the public (and thus to generate revenue), she will need permission from the Premier League.
The decision of the CJEU is still to be interpreted by the English courts, and much will depend on how they apply the decision to the facts. But this does not reduce its potential importance; legal commentators have been quick to hypothesise the practical effects of the decision, and there is much debate about the possible consequences. Some believe that rights holders in areas such as TV, film and music, that currently negotiate their licenses on a state-by-state basis, will now have to license on a pan-European basis, resulting in lower prices for consumers. Others think that this decision may well lead to the death of the Premier League as we know it, with less TV revenue meaning wage cuts for our beloved Premier League superstars and resulting in the world's best players plying their trade elsewhere. This writer believes that the proliferation of unlicensed file-sharing websites, offering free access to live sports broadcasts, could be an even bigger problem for the Premier League to deal with, and is one which may result in a massive loss of revenue if it is left unchecked.
The future of sports broadcasting and EU-wide licensing in general is currently unclear; however what is clear is that, for the foreseeable future at least, publicans such as Karen Murphy will find that Sky (or ESPN) is still the limit when it comes to broadcasting what is rather immodestly promoted as "The Greatest Show on Earth".
Nicholas Buckland is a second-year trainee in the IP enforcement and litigation department at Field Fisher Waterhouse LLP.