Karen Murphy, the landlord of a British Pub, wanted to provide her customers the ability to watch British Premiere League football (soccer). The commercial licenses offered by the exclusive UK broadcaster of BPL football – Sky — became too expensive. Murphy turned to a Greek broadcaster, NOVA, to supply her the broadcasts for a tenth of the cost of Sky.
To get the NOVA broadcasts, Murphy purchases a digital satellite card from NOVA and replaced her Sky card. Licensing enforcers for the FAPL, or Football Association Premier League Limited, filed suit and Murphy was ordered to pay around £8,000 in court costs, fines, and fees.
Murphy has now filed suit against the FAPL in the European Court of Justice. The new case is not an appeal of the UK court’s ruling against Murphy, but rather it’s an attack on FAPL’s licensing regime. Murphy bases her case on the EU’s freedom of trade principles. Mrs. Murphy believes the FAPL’s licensing schemes, such as the Sky TV one that limits BPL football broadcasts to one company in the UK, violate EU principles allowing the free trade of goods and services across EU member-state borders.
Mrs. Murphy reasons that if she can buy a car in France, but drive it to and keep it in the UK, then why can’t she purchase a digital satellite card legal in Greece, pay the Greek broadcaster the required licensing fees, and then transport said card across EU member-state borders, keeping and using the card in the UK?
The answer licensing.
Goods, Services, and Licenses
A car is a good. Broadcast TV is not. Paying for the broadcast of a football match boils down to licenses — you are paying for the license to display and watch the copyrighted broadcast. Yes, it might be considered a service, but only if you have the legal right to procure that service to begin with. You don’t have that right without a license.
Consider a situation where you hire a French company to cross the channel to help you build your home in Dover. This is a procurement of a service. Similarly, paying Sky TV or NOVA to watch their broadcast of BPL football is the procurement of a service.
The difference is whether the servicor — the one performing the service — has the legal right to do so. It is quite likely the French workers building the Dover home do have that right, but what if we consider a more highly regulated industry, such as law or medicine? A French lawyer will not be permitted to represent a client as a Barrister in a UK court absent his becoming a barrister himself.
Copyright, it can be said, is a highly-regulated industry. There are a number of laws specific to copyright that limit how, what, and when you can use or copy a copyrighted work. Some of those laws allow FAPL to enter into exclusive licensing deals with companies such as Sky TV. What’s more, these laws are nation-specific, although they are required to conform to a basic EU legal framework for copyright.
Therefore, NOVA does not have the right, under UK law, to sell licenses to view BPL football games in the UK. By a licensing contract with the FAPL, and through the various copyright laws of the UK and Greece, NOVA can only issue licenses for BPL football games within a limited geographic area. Nevertheless, satellite TV allows anyone with a dish and the proper digital decoding card to watch a broadcast almost anywhere in the world. NOVA is no longer tethered to broadcast areas dependent upon where it’s towers are located and how strong of a radio signal they pump out, their broadcasts can be viewed world — or EU — wide. With the absence of the older physical restrictions on broadcast range, the only restriction on NOVA is the broadcasting license from FAPL.
A License is only effective if it can be enforced
Think of the earlier example of Frenchmen helping build a house in Dover. The Frenchmen might be prohibited, by contract, from performing the work. The question is whether that contract is valid under EU law and UK or French law. Can a contract prohibit someone from working where they please?
In the U.S. the question would be whether this is the result of collusion in the marketplace or anti-competitive acts. Absent these findings, there are a number of states that have found portions of non-compete clauses to be valid. The end result, however, is a contractual-based fine in the form of damages. Mrs. Murphy’s case, however, has national laws enforcing FAPL’s contractual licensing scheme.
UK licensing laws cut through questions of whether FAPL can specify geographic licensing rights by explicitly allowing it. Typical UK anti-competition laws regarding collusion or anti-competitive acts are likely superseded by UK licensing laws. Further, these licensing laws often provide standard damage amounts that do not require a plaintiff to prove specific damages.
Does this violate EU law?
A good question better left to someone more knowledgeable on EU law than myself. However, it is clear that the arguments boil down to whether Copyright licensing laws run afoul of EU free-trade principles on the grounds that, by enforcing geographic licensing regions, it limits the movement of services across national boundaries.
In this we have a conflict between the contractual rights granted by the license and EU trade law. Does the UK copyright law’s allowance for the types of licenses issued by FAPL run afoul of EU anti-competitive, anti-collusion, or anti-trade barrier law? It is not enough to argue that Mrs. Murphy should be allowed to transport the digital decoding card across member-state lines; she must also be allowed to transfer the license to use that card and receive BPL football broadcasts.
In this case, the EU Court of Justice must balance its free-trade laws against the EU copyright scheme. That copyright scheme has basic ‘default,’ minimum copyright requirements for member states but allows each member-state to dictate their own specifics. This, in itself, is regional. Removing the ability to locally enforce a licensing regime might remove the effectiveness of regional copyright law. 1
Ownership versus license
Mrs. Murphy’s case highlights how we’ve changed the ways we consume copyrighted material. Contrast the trade/licensing issues surrounding the digital satellite decoder card with a Frenchmen bringing a CD he owns to London while on holiday. The license to listen to the copyrighted work in essence merges with the physical medium in the case of the CD. Therefore, EU free trade laws involving goods are applicable because the copyrighted work, and its license, is tied to a physical good.
Broadcasts of BPL football games are different, however. They are not tied to a physical good. The closest physical good in this case is the decoder card from NOVA; but this does not contain a copy of the copyrighted broadcasts, it merely decodes a satellite transmission.
This illustrates the ownership/licensing conundrum. People’s concepts of ownership are often tied to physical objects. If you own the CD then you can play it wherever you want. You can listen to it on any CD player you want. You own that copy of the song. You can resell that copy to anyone you want. The First Sale Doctrine applies to that copy.
Licenses restrict these rights. The first rise in these restrictions was in computer software. Purchasing a copy of Microsoft Office in a computer shop is not the same as purchasing a CD in a music shop. You have physical medium; it comes in a box, the software is recorded on a CD or DVD, and you have physical instruction manuals. Nevertheless, to operate the software you must copy it to your computer. This is where the software companies get you; in order to have permission to copy the copy you physically own on the disk, you must agree to an End User License Agreement (or EULA). Failure to agree to such a license, or failure to abide by such a license, cancels your license and removes your right to use the copy you made on your computer.
In this sense, you don’t own your copyright of Microsoft Office — your own a license to use your copy of Microsoft Office. This allows Microsoft to restrict how you can use it in many often unanticipated ways. Want to resell your copy? You probably can’t. While you might have a legal right to sell the physical medium, you are often prohibited from transferring your license to another person. Still using that old education version of Microsoft Office to write your business letters and reports? You’re likely violating the EULA; if you want to not violate the license, you have to upgrade to a business program.
This licensing trend has increased as digital music, movies, and books have become more popular. You don’t own copies of your iTunes music; you own a license to use the music. That license restricts how you can use that music. (For example, you can only burn a music playlist to a CD up to 7 times.) You can’t resell the songs you downloaded.2 The same thing goes with movies you download from Apple; all you own is a license to use a copy of that movie, not the copy itself.
These licenses weaken the First Sale Doctrine. No longer is the license merged with a physical medium. Rather, the copyrighted work is unmoored from the physical, allowing only the terms of the license to apply. Limitations on the First Sale Doctrine also limit our ability to share copyrighted works with others. Our favorite iTunes songs or Kindle ebooks can’t be loaned out to friends as our CDs and paperbacks could.
There are positives, however, to a more licensed-based approach. Kindle ebooks are an example: You can buy a Kindle ebook and have it show up on your Kindle device, your iPad, your iPhone, and your computer. Additionally, Kindle software remembers the last page you read across each device. This obviates the need to either carry your book around with you everywhere, or own multiple copies of a book in each location where you might end up.
The question, as it always is with trade-offs, is whether these benefits outweigh the disadvantages. What is important is to understand and remember what we lose when we move from ownership rights to licensing rights so we can better weigh the cons against the pros of what we gain.