The AG characterised the FAPL’s attempts to delimit national markets as a serious restriction of the freedom to provide services (the sale of decoder cards amounting to sale of “services”, not “goods”), a basic principle of the rules establishing the internal EU market within which services can be freely traded. This meant rejecting FAPL’s argument that the partitioning of the internal market for live football broadcasts was justified in order to protect the value of FAPL’s rights. FAPL argued that copyright law allowed the licensing of its rights on a territory-by-territory basis and conferred the ability to prevent third parties from showing broadcasts in member states other than those intended by the rights holders. The AG objected that enforcement of copyright law on this basis would prevent access to services (i.e. satellite broadcasting) between member states, and that the granting of exclusive licences in distinct national markets would illegally partition the EU-wide internal market. In doing so, she distinguished the FAPL case from the Coditel cases where the allocation of television rights on a territory-by-territory basis had been enforced by the Court as compatible with internal market rules and competition law.8
The AG considered possible justifications for the partitioning of the internal market:
The protection of industrial and commercial property
The AG considered whether the principle of exhaustion of intellectual property rights was relevant in relation to satellite broadcasts of football matches, i.e. the principle that once something has been lawfully sold in a member state with the consent of the rights holder, the right to its commercial exploitation has been exhausted, enabling third parties to purchase the good in one member state and import it into other member states. While this principle has been readily applied in the context of sale of goods (for example CDs and DVDs), its application to distribution of services (in this case the viewing of a broadcast using a satellite decoder card) is novel. This view implies that once a charge has been paid for a decoder card, the right to its commercial exploitation has been exhausted, leaving the purchaser free to use and sell the decoder card in a different member state from the state in which it was purchased, creating a market for the resale of “foreign” decoder cards within the EU. The AG stated that:
“there is no specific right to charge different prices for a work in each Member State. Rather it forms part of the logic of the internal market that price differences between member states should be offset by trade. The possibility, demanded by the FAPL, of marketing the broadcasting rights on a territorially exclusive basis amounts to profiting from the elimination of the internal market.”
The AG considered that the question of exhaustion of rights in the free movement of services was of fundamental importance, as it included music, film and book downloads. Without the concept of exhaustion of rights, she considered that it would be very easy for right holders to divide the internal market along national lines. For example, she noted that in autumn 2010 dealers from the United Kingdom announced that they could not sell e-books outside the UK owing to copyright restrictions (a position that could be open to review if the Court follows the AG’s opinion).
This approach, if followed, would therefore have consequences far beyond the world of football. If adopted by the Court, it could force right holders to exploit their most valuable rights in the most lucrative territory before looking to do so in other member states. Alternatively, right holders may prefer to grant a single pan-European licence, rather than looking to exploit rights on a territory-by-territory basis. It is questionable whether this would lead to consumers across the EU gaining access to content - even in relation to a pan-European licence. For example, granting an exclusive pan-European licence to a UK broadcaster would not guarantee that the broadcaster sub-licences broadcasters in other member states.
FAPL claimed that, as a matter of principle, it must be able to restrict access to foreign decoder cards to protect closed periods (i.e. the need to delay the broadcast of most Premier League matches to protect local attendance at matches). Although she said that evidence could be presented in the English court to show otherwise, the AG doubted whether closed periods can achieve this purpose, and concluded that this could not justify a restriction on freedom to provide services.
Potential restriction to domestic or private use?
The AG also considered the legitimacy of contractual rules between rights holders and licensees which regulate the distribution of decoder cards for commercial, as opposed to domestic, use (i.e. for a higher subscription charge). Her conclusion on this point offered hope for FAPL in relation to its concerns that it might not be able to prevent decoder cards intended for domestic use in other markets being imported and used in commercial premises in the UK. The concern here is that such cards would be even cheaper and would further erode the value of FAPL’s broadcast rights in the UK.
The AG’s view was that, although a contractual restriction on using a decoder card in the licensed territory only for domestic use could not justify a restriction on those cards being used in other territories, where an applicable national law provision entitles a right holder to prevent the commercial use of domestic cards, this could constitute a justified restriction of the freedom to provide services.
- For example, Case 62/79 Coditel I  ECR 881.