FAPL and Murphy return to the High Court

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Cases C-403/08 and C-429/08: Football Association Premier League Ltd & others vs QC Leisure & Others / Karen Murphy vs Media Protection Services Ltd

In October 2011, we reported the European Court of Justice (ECJ) decision in two joined cases. In that decision, the ECJ was answering questions referred to it by the High Court in two UK cases. The cases related to pubs in the UK which, in order to screen Football Association Premier League ("FAPL") football matches, were purchasing foreign decoder cards rather than buying the more expensive authorised BSkyB subscription. The foreign decoder cards also enabled the pubs to show the Saturday 3pm matches, which no UK broadcaster is permitted to show live.

Following the ECJ decision, the two original cases have returned to the English court, in order that it can apply the ECJ findings to the facts of each of the cases.

Summary of UK Court Findings

The broad conclusions of the two recent cases are as follows:

Football Association Premier League Ltd & others vs QC Leisure & Others

1. The publicans were communicating FAPL's copyright works to the public (i.e. their customers) via the television screen and speakers in the pub. Communication to the public is an act which is infringing without the copyright owner's consent.
2. However, Section 72(1) Copyright Designs and Patents Act 1988 ("CDPA"), provides that where someone plays or shows a broadcast in public, to an audience which has not paid for admission to his premises, he does not infringe any copyright in the broadcast or any film included in the broadcast. The Court found that the pubs could rely on the s.72(1) defence in relation to the broadcast and to the films included in it. However, this defence does not apply in relation to other protectable works incorporated in it, such as the rights-holders' logo and anthem.
3. The supply of decoder cards constituted an "authorisation to use the decoder cards for the purpose for which they were supplied". Therefore, the decoder card suppliers such as QC Leisure were found to have authorised the infringing acts of the publicans to whom they supplied decoder cards.

The Court:

1. granted a formal declaration as to the impact of Article 101 of the Treaty on the Functioning of the European Union ("TFEU"). The ECJ had found that licence terms which prohibited broadcasters from supplying decoder cards outside of their territory contravened this Article. Therefore, at the defendants' request, the High Court agreed to grant a declaration that the relevant obligations in the defendants' agreements were void (to the extent a foreign licensee was prevented supplying decoder cards into the UK). This was without prejudice to FAPL's rights in respect of copyright infringement;
2. granted a declaration addressing precisely the scope of any infringing acts which had taken place;
3. refused to grant an injunction to prevent infringement of FAPL's anthem, on the basis that the defendants had undertaken not to play the anthem aloud;
4. refused to make any order for an inquiry as to damages or an account of profits, instead transferring the case for costs to be dealt with by the Patents County Court (a cheaper court for low value IP matters ).

Karen Murphy vs Media Protection Services Ltd

1. Karen Murphy had previously been convicted of an offence under section 297(1) CDPA. This establishes an offence where a person dishonestly receives a programme included in a broadcasting service provided from a place in the UK with intent to avoid payment of any charge applicable to the reception of the programme.
2. Following the ECJ's judgment, the High Court allowed Karen Murphy's appeal against her conviction.

Their reasoning was as follows:

1. The ECJ had held that territorial restrictions preventing use of foreign decoder cards contravened Article 56 TFEU. Article 56 has direct effect in the UK.
2. Since territorial restrictions preventing use of foreign decoder cards had been prohibited by the ECJ, the offences under the CDPA could not be used to prevent Karen Murphy screening football matches using her foreign decoder card.

Impact of the cases

The real significance of these series of cases was the impact of the October decision on rights-holders who sell rights to broadcast events on a country-by-country basis. Our analysis of that decision and its impact appears here.

Following the ECJ judgment in October 2011, the successful appeal by Karen Murphy against her conviction is no surprise. The Respondent had already conceded prior to the reference that such an adverse ruling would result in a successful quashing of the conviction. Before referring this case to the ECJ, the UK Court had said:

"We digress at this stage to voice our unease about the bringing of a prosecution under [section 297 of the Copyright, Designs and Patents Act] in circumstances where the establishment of an essential element in the offence, namely "intent to avoid payment of any charge applicable to the reception of the programme", depends upon the compatibility with EC law of an export ban imposed in a licence agreement between two companies who are legally strangers to the purchaser and user of the decoder card in question who is the defendant to the criminal charge".

As such, the Court had already expressed a preliminary view that the bringing of criminal proceedings as opposed to civil proceedings was not an appropriate process.

The FAPL decision is far more complex and contains a lengthy examination of the availability of the s.72(1) CDPA defence to acts of communication to the public. The judgment contains positives for both sides. Having established that publicans were communicating their broadcasts, films and other copyright works to the public, FAPL will be disappointed that the UK defence has been held to override the ECJ's view of the infringing acts. However, the significant positive for FAPL is that there is no defence available to pubs who communicate FAPL's logos, anthems or indeed any other copyright works to the public. Pubs may seek to avoid future liability by muting their broadcasts during the anthems or obscuring logos. However, FAPL are therefore likely to either adopt practices which render such activities difficult or may simply change future overseas packages of rights such that the UK and other "precious" markets are not undermined.

On the question of s.72(1) CDPA, the Copyright and Related Rights Regulations 2003 had explicitly removed "excepted sound recordings" from its scope. The Court therefore inferred that, contrary to FAPL's submissions, s.72 was intended to apply to film copyright. Our view is that, as a consequence of this finding, FAPL and other rights holders may now seek to challenge s.72(1) on the basis that it goes beyond what is permitted the relevant Directive and, in particular, the "Berne three step test" in Article 5(5) of the InfoSoc Directive. The reason certain sound recordings had been excluded was a consequence of a successful challenge by the record industry, and therefore there may well be scope for a similar challenge in the context of this case.

It is also significant that the Court granted a declaration making void contractual provisions which prevent licensees selling decoder cards outside of their territories. The defendants (namely, distributors of decoder cards) had been concerned that, where they had agreed to contractual terms which contravened Article 101 TFEU, then they might assume some civil or criminal liability from those provisions. They were also concerned that FAPL would put pressure on its licensees not to sell decoder cards to these particular defendants, for fear that the defendants would distribute the decoder cards outside the territory. The Court agreed to grant a narrow declaration on this point.

Where a rights-holder grants an exclusive licence into a territory, they will not be able to impose conditions in contracts requiring third parties to restrict importation of decoder cards, thereby undermining the exclusivity of those contracts. It is now clear from this case that the English Court is willing to issue declarations that such provisions are void.

Our article in October discussed that many rights holders will rely on the long-standing distinction between preventing active sales and marketing and banning passive, unsolicited sales, the former being generally considered acceptable under EU competition law. Other contractual mechanisms may also be employed. Overall, the latest decisions do not affect our previous analysis, and leave open the potentially wide-ranging impact of the FAPL series of cases on the licensing of content, whether via broadcast or online.

For further information contact Joel Vertes, Paul Stevens, David Zeffman or John Enser.