Premier League strike blocked by competition law defence

On 18 January 2008, the High Court issued a decision rejecting the Football Association Premier League Ltd’s (“FAPL”) attempt to strike out a defence based on competition law by way of summary judgment. The parties seeking to assert the defence are QC Leisure and AV Station PLC (importers and suppliers of foreign satellite decoder equipment) and various publicans who had purchased and used the equipment for use in their pubs to view foreign broadcasts of live Premier League football matches (collectively, the “Defendants”). The FAPL holds the copyright to the filming of Premier League matches (“PL Matches”), and licences it for broadcast on behalf of the teams participating in the Premier League. The broadcast rights are licensed by the FAPL on a territory-by-territory basis, with each broadcaster having exclusive rights within its territory. In England, the current licensees are Sky and Setanta. Each licensed broadcaster is bound by a term in its licence agreement which obliges them to ensure that their encrypted devices (e.g. decoders and cards) are not used to view transmissions outside their particular territory. The FAPL issued proceedings against the Defendants on the grounds that, by supplying and using the foreign decoder equipment to watch foreign broadcasts of PL matches in the UK, the Defendants have breached the FAPL’s copyright and contravened Sections 298 and 299 of the Copyright Designs and Patents Act, 1988 (“CDPA ‘88”) (the sale or use, without permission, of equipment which enables people to access encrypted transmissions). In response, the Defendants have claimed that they are entitled to act as they have done, without obtaining permission, by virtue of the CDPA ’88 and the EC Treaty provisions relating to the freedom of movement of goods and services. Furthermore, the Defendants allege that the licence agreement provisions restricting foreign broadcasters from selling decoders, etc., for use outside their territory, is an illegal restriction of competition contrary to Article 81 of the EC Treaty. This aspect of the defence was challenged by the FAPL on the premise that it had no realistic chance of succeeding. The FAPL relied on what FAPL is claiming to be well established EU case law, in particular a 1982 decision of the European Court of Justice (“ECJ”), commonly referred to as Coditel, concerning the interaction between competition law and copyright through the exhaustion of rights doctrine. The Judge in FAPL’s case was, however, firm in dismissing the FAPL’s application to strike the defence. The Judge commented that the Defendant’s arguments that Coditel is distinguishable on the facts, and outdated by virtue of technological and regulatory innovations over the last 25 years, were forceful and worthy of consideration. It now appears likely that these issues, and those relating to the free movement of goods, will be dealt with by way of a reference to the ECJ.

This case is the latest skirmish in a long running campaign by the FAPL and Sky to prevent the use of foreign decoders as a means for English pubs to bypass the need to subscribe to Sky. The foreign service, for which publicans still (well, in most cases) pay a subscription charge, is invariably significantly cheaper than Sky’s commercial rates. It also allows those pubs to circumvent the UEFA/FA restrictions preventing the televisation of football in England between 3-5pm on a Saturday. To date, cases have typically been brought against individual publicans under Section 297 of the CDPA ’88 (the dishonest receipt of a broadcast from the UK with the intent not to pay). Having met with mixed results, the move against the decoder importers by FAPL is the logical escalation. The FAPL, however, has lost the first battle which, as all hardened litigators know, is never a good sign. The case on which the FAPL predominantly relies as its “knock-out blow”, Coditel, held that exclusive territorial licences of copyright in broadcasts do not offend Article 81 by virtue of their exclusivity. That represented a departure from the well-established doctrine that, for most types of copyright, the rights of the copyright holder over the end product are exhausted once the initial right to exploit the copyrighted product has been granted. The copyright holder should not, therefore, be able to dictate how those products are distributed by the licensee, and any attempt to do so will be seen as a breach of Article 81. Coditel, therefore, represents an important exception to what is the general rule. The FAPL’s reliance on that exception when orchestrating its licensing arrangements now looks somewhat over-confident. Inevitably, the ensuing war will be long and drawn out but, should the Defendants prove successful, the implications for future licensing of PL Matches and other broadcasts will last longer still. Throw into the mix the political, social and cultural factors which have always coloured the intervention of competition law into this area, and the battleground becomes muddier still. Only time will tell whether the FAPL’s early strike might, ultimately, be declared offside.