At the beginning of this month
the Court of Justice of the European Union (CJEU) handed down its judgment on
the long-awaited ‘Premier League rights’ case.
The legal dispute arose in the UK involving exclusive broadcasting licenses for
the live transmission of Premier League soccer games that prohibit the use of
decoder cards bought from foreign broadcasters. The FA Premier League (FAPL),
the licensor of Premier League live matches, licenses these transmission rights
on a country-by-country basis under terms and conditions that vary widely
across the EU. By engaging in simple price arbitrage some pubs obtained cheaper
decoder cards from abroad circumventing the exclusive licensing structure
operational on UK territory.
By trying to protect its
licensing practices based on territorial exclusivity, the FAPL wanted to stop
individuals from seeking cheaper sports subscriptions in other Member States. The
CJEU first reconfirmed that national laws, which ban the import, sale or use of
foreign decoding devices, restrict the freedom to provide services. Importantly,
this restriction cannot be justified by the protection of intellectual property
rights. The Court stressed that sporting events themselves cannot be protected
by copyright because they cannot be classified as ‘works’ within the meaning of
the Copyright
Directive. Even if national jurisdictions confer intellectual property
rights on sports events, the ban on foreign decoding devices still fails the
proportionality test because it goes beyond what is necessary to ensure adequate
remuneration to the rights holders.
The CJEU also tested the disputed
licensing system for their compatibility with EU competition law. The Court
stated that the grant of exclusive licenses for the broadcasting of soccer
games to a licensee in a Member State is not prohibited as such. However,
clauses in such licenses which oblige broadcasters to not supply decoding
devices outside the territory covered by the license agreement restricts
competition and, hence, falls foul of EU competition rules. As each broadcaster
enjoys territorial exclusivity, all competition between them is eliminated.
The importance of this judgment
and its possible implications cannot be underestimated. By stating that
intellectual property rights cannot be relied on to partition the EU market
along national lines with varying prices for the same content, the CJEU is effectively
pushing for a single market in content distribution. A lot of licensing
agreements could fall under legal scrutiny after the judgment affecting not
only the transmission of sports events but also distribution models for books,
films, and music.
In the long term the judgment could
accelerate the process of finding new business models for the distribution of
content, particularly via the Internet. One could argue that the case deals
with licensing models that in a way predate the Internet era – involving
licenses that are negotiated with each broadcasting in every single Member
State. There is nothing to be criticized about this but the trend as well as
new opportunities lie surely somewhere else: making content available online.
The Internet constitutes a medium that has huge potential to address the
Court’s misgivings about content distribution in the EU because it does not
know, and should continue to not know, borders. This fact is particularly
relevant for the creative industries that have struggled to take full advantage
of the Internet and a digital single market.
In this context, the CJEU
judgment comes at a very timely moment. In its endeavor to create a functioning
digital single market, the Commission is in the process
of revising the EU’s intellectual property rights regime that will include
a proposal on the collective management of rights. Furthermore, it has recently
published a Green
Paper on the online distribution of audiovisual works in the EU. The
Commission should take this opportunity and provide the EU with a necessary
regulatory framework that is conducive to new business models aiming to legally
make available content online on a pan-European scale. At least Neelie Kroes’,
the Commissioner responsible for the Digital Agenda, first reaction to the
Premier League case was quite promising. She said that the judgment was ‘music’
to her ears.
