The Premier League Case – Opportunities For The Single Digital Market

BY CCIA Staff
October 27, 2011

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.

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