In summary, the European Court of Justice (ECJ) decided that while exclusive licensing can be justified as supporting a public interest objective, it must not go beyond what is necessary in order to attain that objective. In this particular case, it means that a prohibition on viewers using decoder cards from other Member States goes too far.
Background
The Football Association Premier League (FAPL) owns and markets television broadcasting rights for English Premier League matches and grants exclusive rights for these live matches to broadcasters on a territory-by-territory basis (one which generally coincides with EU Member States). Broadcasters, in turn, undertake to encrypt the signal to ensure that viewers are only able to watch matches transmitted by broadcasters established in their (the viewers') Member State. In addition, the relevant licence agreements prohibit broadcasters from supplying decoding devices that would allow viewers to watch broadcasts outside the Member State for which the licence is awarded. The result is each broadcaster is granted absolute territorial exclusivity and is effectively insulated from any broadcast competition originating outside a given Member State.
In 2007 Karen Murphy, the landlady of the Red, White and Blue pub in Southsea was convicted of fraudulently receiving Greek transmissions of Premier League football matches. Ms Murphy had used a Greek decoder card to show transmissions of live football to her pub customers to avoid paying the higher fees charged by Sky and ESPN - the current broadcast rights holders in the UK.
After a refused appeal to the Crown Court, Karen Murphy brought an appeal by way of case stated before the High Court. The High Court decided to stay proceedings and referred a number of issues raised in the appeal to the ECJ. The issues referred involved similar internal market and competition question as that of a corresponding case of Football Association Premier League Ltd & Ors v QC Leisure & Ors, the defendants of which were the importers and suppliers of such foreign decoder cards.
Judgment
Ms Murphy argued that use of foreign decoder cards to show football matches was legitimate and that restricting her choice of broadcast provider is contrary to EU principles - namely in relation to the free movement of goods and services and competition law. On 4 October 2011, the ECJ rendered a judgment more or less in favour of Ms Murphy stating that a "system of licences for the broadcasting of football matches which grants broadcasters territorial exclusivity on a Member State basis and which prohibits television viewers from watching the broadcasts with a decoder card in other Member States is contrary to EU law".
In terms of the free movement dimension, the ECJ held that restrictions on free movement of services can be justified if:
"it serves overriding reasons in the public interest, is suitable for securing the attainment of the public interest objective which it pursues and does not go beyond what is necessary in order to attain it".
In this context, the ECJ stated that the obligation in the exclusive licences between the rights-holders and the broadcasters requiring broadcasters not to supply decoding devices enabling access to the football matches went beyond what was necessary and could not "be justified either in light of the objective of protecting intellectual property rights or by the objective of encouraging the public to attend football stadiums."
In terms of EU competition law considerations, the ECJ confirmed that an exclusive licence concluded between rights holder and broadcaster is not, in-and-of-itself, necessarily problematic. However, a system of exclusive licences will fall foul of the law when subject to "additional obligations" - namely (and in this case), where there is a prohibition on the supply of decoder equipment to viewers who otherwise wish to watch broadcasts outside the Member State for which the licence is granted. Exclusivity combined with such additional contractual restrictions aims to provide each broadcaster "absolute territorial exclusivity in the area covered by its licence" which, in turn, leads to the elimination of competition "between broadcasters in the field of those services."
So who are the victors?
At first sight one might assume that publicans like Ms Murphy were victorious in what has been described as a David vs. Goliath piece of litigation. Yet the Premier League itself issued the following contrasting statement:
"We are pleased that the judgment makes it clear that the screening in a pub of football-match broadcasts containing protected works requires the Premier League's authorisation".
Indeed, the potential repercussions of the ECJ's ruling are far from clear, not least how the High Court will determine the case based on the ECJ's answers going forward. In particular (and despite the personal victory for Ms Murphy insofar as she should now have her conviction and fines overturned), pubs in the UK still will not be able to show live Premier League matches using a non-UK decoder card. This is because they would be communicating copyright-protected segments of the broadcast to the public.
Although live transmissions of matches are not protected by copyright, other elements are (such as the opening video sequence, the Premier League anthem, highlights and graphics). This means that the only way publicans could show the live matches would be to strip out all the copyrighted works - something which will be hard to do with complete success (although is done in part with BBC coverage of the US Masters Golf (which fills advertising breaks from US channels)).
While this is not quite the resounding victory for the pub landlords that was initially suggested, members of the public (in the UK and ultimately in other Member States) will be able to obtain satellite decoder cards for their own private (domestic) use without infringing copyright (albeit for transmissions in the language of the Member State streaming the footage). This is because they are not communicating the copyright-protected elements to the public and they also benefit from further exemptions to copyright law under the Copyright Directive.
Wider impact
While it is unclear whether this ruling will significantly impact broadcaster and Premier League revenues (though unenforceable exclusivity will clearly carry less financial value), it may reshape how such intellectual property rights are packaged and sold, perhaps leading to EU-wide licences - an outcome which might not necessarily be favourable to UK or EU customers in the long run. Furthermore, while it is the high premium Premier League service that has understandably made the headlines, it could be TV internet services that feel the most significant impact. The Premier League case involved Ms. Murphy having to purchase equipment and enter into a subscription service, a process which involves administrative burdens. Online TV content such as BBC iPlayer and other on-demand services do not involve such burdens but yet access to such services is often subject to user locations. This is achieved by licensee's requiring content blocking based on geographic locations. Following on from the ECJ's judgment, such territorially-limited licences may be more difficult to enforce (particularly where it has the potential to partition the Community market along Member State lines).
Overall, the case has echoes of other attempts to overextend monopolies by using devices such as tie-in clauses. Intellectual property rights must be licensed in harmony with the internal market objectives and rights-holders will need to make sure that any restrictions added to exclusive licence agreements are objectively justifiable. This will be important for any territorial licensing, not just for high profile sports coverage, but also for the licensing of general merchandise such as books (paper or electronic), music, TV, film and other audio-visual content within the EU.