Ownership vs. License: How an English Pub highlights copyright ownership shifts

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.

  1. It should be noted some will argue that such a change is a good thing.  That sort of question is not in the scope of this post. []
  2. See iTunes User Agreement. []

6 Comments

  • aparadekto wrote:

    Hey, I can’t view your site properly within Opera, I actually hope you look into fixing this.

  • I checked the site using Opera and there does not appear to be any problems. More specifics would be helpful. I hope you continue to find the website interesting!

  • It seems that you got a little sloppy toward the end of this article, and wound up introducing what looks like errors. For instance you wrote, “your [sic] own a license to *use* your copy of Microsoft Office.” How can this be? The right to “use” a copyrighted work is not an exclusive right granted to copyright holders. They cannot license the right to “use” their works any more than a shopkeeper could try to force people to purchase licenses if they wish to walk on the public sidewalk in front of his store (he doesn’t have the exclusive right to walk on that sidewalk and can therefore not license that right to others).

    Even worse, you stated, “You don’t own copies of your iTunes music …” This is very hard to believe. In the U.S. section 101 of the Copyright Act defines copies as “material objects” in which works of authorship are “fixed”. For iTunes music, that material object would be the purchaser’s hard drive (or whatever device/disc it was saved to). To say that the user doesn’t own the copy is to say that the user doesn’t own their own hard drive.

    Then you go on to write, “Rather, the copyrighted work is unmoored from the physical …” A copy isn’t being made if it isn’t “fixed”, right? But if what you say is true, that iTunes songs and Kindle e-books are “unmoored from the physical” (in other words, they are not “fixed” in a “material object”), then they can be “copied” with impunity by anyone without infringing anyone’s copyright because the resulting “copies” would likewise be “unmoored from the physical” and therefore would not actually be copies. Clearly this is wrong. It’s wrong because, again, the hard drive, flash memory device, CD-R/W or whatever media the purchaser saves the iTunes song or e-book to is the copy. It is real. It is physical. It is the “material object” in which the work is “fixed”. It meets the definition of “copy” in the Copyright Act. Clearly, I own my hard drive even after I buy a song from Apple’s iTunes store. I therefore own the copy of the song.

    I believe this notion you have (and it seems to be a common one, I’ve seen it other places before) stems from a fundamental misunderstanding that somehow “digital” content is different from “analog” content. But it isn’t. Consider, for instance a novel. A novel is distinct from a book. A novel is a story. A novel by itself doesn’t have a physical embodiment. A novel only becomes physical once it is fixed in, say, a book. The book is a material object. It has pages you can touch and feel. You can’t see or touch the novel (the words themselves), but you *can* touch the “material object” (the book) in which the novel is “fixed”. The novel is not the copy. The book is the copy. Now consider the “digital” equivalent. A PDF file containing a novel is not a “material object”. You can’t see or touch the PDF file, but you *can* touch the disk in which the PDF file is “fixed”. The PDF file is not the copy. The disk is the copy. Digital content is exactly the same as “analog” content. PDF file is to disk as novel is to book. I don’t believe one can understand copyright in the face of computers and digital content if one doesn’t have a firm grasp of this concept.

    The last part of this article notwithstanding, I have found your other articles useful and informative and have bookmarked your website. Thank you for doing writing these articles. I plan to visit often! Cheers.

  • Dan,

    I appreciate the feedback. Let me explain my points: they are a bit nuanced, so it might be easy to get sidetracked on technicalities and miss the over-arching themes.

    First, you do not own a copy of Microsoft Office. You own a license to make a copy for the purpose of using the software. This license is based upon the copyright owner’s ability to deny or grant you the right to copy their work. From this right the copyright owner can create a license to copy based on conditions of use. For example, Microsoft has an education license that restricts use of Microsoft Office, Education Edition, to educational uses. Therefore, using your copy of the Office Education Excel to run the books for your business would violate the license you have from Microsoft. Such a violation, per the license, revokes your right to copy Microsoft Office.

    The shopkeeper analogy does not work when you understand the right to license use is derived from Microsoft’s right to allow or prohibit the copying of their copyrighted work. Here, Microsoft does have the exclusive right to allow or deny you the right to copy Office, therefore they also have the right to condition their allowance, through contract law, on specific uses for the product.

    This conditional use allowance is not only used in the realm of software. If you read the copyright notice at the beginning of the DVD movie it specifically restricts the viewing of the movie to home audiences. You cannot use the DVD you purchase at a retailer to show a movie for a large audience at, say, a school dorm. This is a license of a copyright, in the DVD example it is the display right, based upon specific types of uses. The Microsoft Office example is a license of the right to copy a work based upon how that work is later used.

    Second, you do not own copies of your iTunes music in a way similar to how you own copies of the music on your CDs. If you own a music CD then you own a copy of a copyrighted work. You do not own a copyright, however. At best you may claim to have the right to publicly perform the music on the CD when you play it, but that is a right based on fair use exceptions and implied licenses. Ask a jukebox owner how far that right extends to the physical copies of music they have in their jukeboxes — each jukebox owner must pay performance agencies for the right to play their music. Similarly, restaurants and even dentist waiting rooms must do the same. (There was a big to-do in Canada regarding dentist offices.)

    You are right that the copyrighted embodied in an iTunes download is fixed under the definition of U.S. Copyright laws. (Copyright Act of 1976 § 101.) Yet, the user does not own a copy in the same way they own a copy of the CD. iTunes restricts your rights as to the downloaded music through license. You agree to this license before you ever pay for and download an iTunes song. This license restricts how you can use the copy of the song, how you can distribute, whether you can resell it, and whether you can copy it. (Apple allows up to 5 copies.)

    This is more restrictive than with the CD. The work on a CD is a copy merged with a physical medium — they are more-or-less inseparable. This allows consumer-friendly rights such as a the First Sale Doctrine to apply more readily. Even so, there are theoretical arguments that record companies could restrict your rights as to that copy similar to how they restrict how you can use DVD movies. Courts have tended to apply the first-sale doctrine to these situations as license/copy/media mergers (the merger of a copy of a work, the license to use it, and the medium it is recorded on) . Therefore, the license to use a work is merged with the medium upon which the work is recorded; therefore, if you have the right to display the work in a home setting, but not a commercial or large group setting, that right is transferred along with the physical medium after First Sale.

    Here is where the problem of digital copies comes in. Technically, as you pointed out, these works are copies in tangible medium. They certainly meet the fixation requirement of U.S. copyright law. Yet, they shatter the presumptive barriers of copying that helped prop up the enforceability of copyright law. Whereas it used to be difficult to copy a CD, and even earlier copies to cassettes resulting in degradation of the work, it is not as easy as a click of a button to copy a digital work.

    This website is an example of this ease: it used to be I’d have to print this on paper and mail it out as a newsletter, but now I can just post it online. Whereas before you would need to take a tangible set of papers of this article (and its comments), put it in a copy machine, and then copy it, now you can just use Ctrl-A to block all the text and then hit Ctrl-C to copy it. With a hit of Ctrl-V, you can copy it into your own text file to do with as you wish.

    This is where the over-arching theme comes in: digital content disrupts existing barriers to copying. These older, physical barriers made enforcing copyright law easier. It has become harder and harder to enforce copyright now that digital content has smashed these barriers.

    So the question is where does copyright law go from here? Many argue (and I am one of them) that the current system is untenable. Some further argue that there should then be no copyright altogether. Others argue for some form of copyright, but a change from our current system.

    A whole other set argue that there is nothing wrong with our current system per se, but rather that enforcement needs to be given more teeth. (These teeth being bigger monetary damages and more criminal sanctions.)

    So no, I do not think it is so much sloppiness (except for the typo you pointed out), but rather a shallower look at the depths of macro-copyright theory. Ultimately, though, I hoped to get people thinking. Given your lengthy and well-argued comment, I at least succeeded on that front.

    Thanks again for the comment. Comments help keep me sharp.

  • If you define “copy” as a “material object”, as the Copyright Act does, then you own your copy of Microsoft Office if you own the physical plastic disc. That is just plain simple logic and isn’t debatable. Furthermore, you don’t need a license to copy the software in order to use it, despite Microsoft’s claims to the contrary. At least in the U.S, that is, where section 117 of the Copyright Act gives you the right to use software (and make any necessary copies for that use) without the copyright owner’s authorization.

    Currently in the U.S. there is a legal battle raging over who owns the copy (i.e. the physical disc) when software is purchased (see e.g. Vernor v. Autodesk, and Blizzard v. MDY). There are a lot of reasons why I believe the consumer usually owns the disc, I won’t go into detail here, but you seem to generally agree on that point (that the physical object is owned by the user, not the software company).

    Similarly, I’d argue you don’t need a license to download Apple’s music, because in Apple’s offer of making the music available over the Internet, there is an implied license to make your local copy (which you would then own for the obvious reasons stated in my previous comment). Apple even actively participates in making the downloaded copy, so any claim that the downloader could be held liable for copyright infringement for making that copy (if they violate some license somewhere) is highly dubious. Any so-called “license” they would purport to extend that would restrict your rights, isn’t really a license at all, anyway. Licenses are specifically defined as legal instruments that *grant* rights, not instruments that take rights away. At best, the so-called “license” would be regarded as a contract. I’ve also been told (though I admit I don’t know this as a fact) that any contract in which either party is waiving any of their rights must be signed to be valid. I don’t think Apple asks customers to sign anything before downloading iTunes music.

    Regarding the tenability of the system, I just saw the other day that Apple updated their iTunes user agreement. The new agreement is 33 pages long and contains nearly 15,000 words. The average reading speed of most adults is in the 200-250 word per minute range. For a legal document, that rate would probably need to be lower in order to have full comprehension. It’s fair to assume that it would take the average adult somewhere between one and two hours to read that 15,000 word agreement. Most people don’t even spend that much time reading their mortgage documents. It’s unreasonable to expect people to take that time for a 99 cent song. These types of agreements are pervasive today. A consumer might encounter a dozen new ones in a single day. There isn’t enough time in one day for the consumer to read them all (much less keep track of changes that could be made to them at any time without notice). Any system that expects reasonable consumers to read (and fully understand!) all those agreements is untenable.

  • Dan,

    You only own the copy of Microsoft Office embodied on the CD or DVD you bought. You do not own a right to make a copy of that program. Yet, you must make a copy to install it on your hard disk. Therefore, you must submit to any license provided by the software developer or you are violating their copyright.

    A program that ran off the disk you bought would be different. That’s where § 117 comes into play: it allows you to make a copy necessary for the running of the program. This means the copy loaded into RAM for the sole purpose of running the program does not violate copyright.

    MDY/Glider ran into problems because it was intercepting and altering World of Warcraft before it entered RAM. This means MDY was arguably violating Blizzard’s copyright by altering its program. Section 117 does not save MDY/Glider in this case; even if it did apply (which is does not), it would only benefit the user, not MDY.

    As for Apple’s iTunes music, there is no implied license. Apple has a very explicit license that is entered into prior to any songs being downloaded on iTunes. Even if an implied license might exist (which it could), the explicit license a user agrees to replaces this implied license.

    As for contract law: There are contracts that must be signed, but whoever told you that contracts where you waive rights must be signed is wrong. Generally speaking, contracts that must be signed fall under the Statute of Frauds. There are other types of agreements that must be signed, and this is a very general overview.

    Licenses do tend to be primarily about granting rights, but this does not have to be the case. A license can both grant and take away rights as part of the contract. Perhaps it might be argued that such licenses are more correctly called simply agreements or contracts, but that doesn’t change the fact that they are valid.

    Further, Apple does require you to agree to a license prior to purchasing and downloading music on iTunes. I know this because I keep having to agree each time they change it, which happens with each new iTunes version and sometimes even before a new version comes out. And yes, I have had occasion to read these licenses, although I have not read the most recent.

    I do agree generally with you over the ridiculousness of contractual agreements and licenses these days. The system may be untenable. Contract law does provide some remedies for unreasonable contracts: Contracts of adhesion may be viewed as unconscionable and therefore void in whole or in part.

    We’ll see what happens in the future.

    Thanks again for your comments!

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