Nick's piece comments on a recent Opinion of one of the Advocates General of the Court of Justice of the European Union. If it were submitted for publication in the normal manner, there would be no chance of it being published before the likely date of the Court of Justice ruling. It therefore seemed a good idea to air it now. Readers are invited to raise any issues and make comments of which the author might wish to take note before preparing a fuller piece which will be submitted for publication after the Court’s ruling. If you'd like to make any such comment, please feel free to use the Comment facility at the end of this posting.
"European Court Case could threaten Cultural and Sporting Diversity
Like many others, the Sports Rights Owners Coalition (SROC) was alarmed to read the Opinion of Advocate General Kokott (of the Court of Justice of the European Union (CJEU)) relating to two cases (C-429/08 and C-403/08 Football Association Premier League and Others v QC Leisure and others) which could have far reaching and serious implications for European cultural and sporting diversity, as well as for rights owners, broadcasters and consumers.
The forthcoming judgment of the European Court of Justice, if it follows the Opinion of the Advocate General (AG), could dramatically change the way in which sporting organisations but also more generally content creators, particularly audiovisual ones, are able to sell and distribute their material across Europe. The broadcasting market as we now know it, could potentially become unrecognisable.
Indeed in an attempt at whitening the so-called “grey market” for satellite transmissions of live football matches, the AG recommended in her Opinion quasi compulsory pan-European licences for transfrontier pay TV-services. This would be a total shift from constant jurisprudence and international agreements which have always recognised contractual freedom and territorial dimension of copyright. Some might argue that the AG showed an inherent misunderstanding of the functionality in Europe of the broadcasting market and how rights are sold.
The cases (now joined at the CJEU) were brought by the Premier League and its official broadcast licensee in Greece (Nova) against two companies (QC Leisure and AV Station) which exported Greek decoder cards into the UK and sold them to publicans. There is also an action against the Publican who bought the Greek card to show Greek Broadcasts of live Premier League football to evade paying the legitimate UK commercial subscription.
Numerous issues were referred by the English National Courts and ultimately the long established principles of Copyright Law and Intellectual Property Rights are now being called into question. Many within the creative industries believe these cases strike at the heart of the European Union’s audio-visual, broadcasting and broadband industries and those, like sport but also the film sector and others audio-visual products, which supply them.
Consumers currently enjoy sports, films, TV programming and other audio-visual products tailored to their specific needs and languages. This case could radically alter all that, should the CJEU follow the AG’s conclusions.
The quite “revolutionary” AG Opinion
To highlight (non-exhaustively) some discrepancies in the AG’s Opinion, firstly she misapplied and/or misunderstood pre-existing jurisprudence and gives a new definition of the right of “communication to the public”. According to her, in a pub with one single TV, the communication to the public of the works included in a broadcast is not actually a communication to the public. The AG does not follow the CJEU jurisprudence in the Rafael Hoteles Case (C-306/05 SGAE v Rafael Hoteles SA) on the grounds that the signal was communicated to only one receiver in the pub! This argument appears to be rather weak when plenty of pubs have actually more than one screen, and there seems to be no justification for her differentiation.
Secondly, the AG ignores the landmark case of Coditel and opines that the long established territorial scope of copyright licensing should no longer exist (or, if it does, there can be no territorial protection). The AG considers that the principle of freedom to provide services enshrined in the EU Treaties precludes any prohibition to use decoder cards in other Member States than the one covered by the licence. She considers irrelevant the fact that such devices were procured and/or enabled by providing false names and/or false addresses.
Moreover, the AG applies the exhaustion principle (of goods) to services and by so doing negates the contractual freedom of rights holders. The AG challenges the essential content of exclusivity rights i.e. the territorial principle in virtue of which it is up to the right holder to decide on the geographic scope of the licence, as enshrined in international and European Copyright law and confirmed by the CJEU.
The AG recommends the granting of pan-European licences not only for live football matches or other sports but also for the trade of music, films and even E-books. However, it is worth mentioning that rights owners can and sometimes do license on a multi territorial basis. Actually the key factor here is the market demand which is based on cultural and linguistic diversity.
This is a common theme, as throughout her Opinion, her analysis seems to be on the basis of the Premier League partitioning the market in order to maximise profit. This is a completely false premise upon which to base a legal Opinion. Like other rights holders, packages of rights are offered to broadcasters to suit their demand, and ultimately those of consumers. Broadcasters want to recoup the revenue laid out for the rights they purchased, and therefore know what their consumer wants.
The fact that the Premier League never received a single bid for a pan European rights package which was offered to the market demonstrates that there is absolutely no homogenous market demand at the European level. No operator (be it a broadcaster or an internet company) was interested in acquiring pan European Premier League rights because there is no demand for it. This applies to all sports.
What if the ECJ follows the AG Opinion?
Not only could the case pre-empt ongoing democratic debate on copyright and authors’ rights at national and EU level and prevent Member States, citizens, industries and trades unions from playing their legitimate institutional role within the usual consultative EU decision making process; but there could be a lot of adverse effects if the CJEU were to decide that the selling of sport, films, and other creative goods nation by nation contravenes EU law:
• As advanced by the AG herself, the Premier League could offer pan- European rights to a broadcaster who will then either sell/sub-license only in the most lucrative markets or offer the Premier League games in any market in the EU but at the price level of the UK (in order to protect the value of the core market). This could render access by consumers in Greece and other small countries very difficult and the only beneficiaries would be the British expats who live outside of the UK;
• To threaten the value of audio-visual content would also affect investment, innovation and redistribution mechanisms. At present a film producer sells the rights to a film, territory by territory talking to individual broadcasters and nationally based distributors discussing how they will promote the film specifically in their own countries and thus benefit from exclusivity in that country. In future it could be possible to only license on an EU wide basis which would overthrow that whole business model. What kind of difficulties are going to ensue for independent producers and distributors?
• This could also mean the end of the territoriality principle which accommodates the different viewing preferences within the EU because it enables audio-visual products to be sold in a way which meets differentiated cultural and linguistic demand, would ultimately threaten the cultural diversity, one of the EU fundamental principles. A recent report by KEA for the EU Commission highlights the need for European film to be sold, distributed and promoted specifically in individual territories to maximize their appeal to local audiences; and
• Following the AG Opinion would also reduce competition as only substantial operators could exploit pan-European rights, thus discriminating against small and local national broadcasters and also inhibiting new entrants into the broadcasting markets.
The EU is thus faced again with tensions where its fundamental principles of free movement of services, competition and cultural diversity cannot necessarily be reconciled.
When referring to access to cultural goods (books, music, sports, films), the AG fails to look beyond purely economical or consumer-driven factors. She disregards cultural habits and languages which have an impact on the contractual relationship between rights holders and broadcasters and subsequently on the business model.
The AG’s Opinion interprets the legal framework in a manner which jeopardises existing business models in the audiovisual sector. In a somewhat rather political as opposed to legal opinion she has opened the Pandora’s box and dramatically threatened the territorial principle which has long governed copyright. Hopefully the CJEU will not follow its AG and will confirm that contractual freedom and exclusivity are actually good for European businesses and European consumers".