England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURTS OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY

		Royal Courts of Justice Strand London WC2A 2LL
		16th April 2010

MR JUSTICE KITCHIN:

Introduction

1. I have before me an application by the claimant, UEFA, for an order that various questions identified in the schedule to the application be referred to the Court of Justice of the European Union ("the Court of Justice") for a preliminary ruling pursuant to Article 267 of the Treaty on the Functioning of the European Union ("the TFEU") and that these proceedings be stayed pending its response. The questions are, for the most part, the same as the questions referred to the Court of Justice by this court in joined cases C-403/08 and C-429-08, Football Association Premier League Ltd and Ors v QC Leisure and Ors on 11 July 2008.
2. The defendant, Euroview, resists the application for a reference, but invites me to stay these proceedings until the Court of Justice has responded to the questions referred to it in the Premier League cases.

Background

3. The Premier League cases concern the use of foreign decoder cards in the UK to access foreign transmissions of live Premier League football matches. The claimants, including Football Association Premier League ("FAPL"), contend that the practice of licensing sports broadcasting on a territorial basis is both justifiable and well established. However, it is, they say, seriously threatened by those who deal in foreign decoder cards. If a publican in the UK wishes to screen English Premier League football the publican can either take out a commercial subscription from Sky costing several thousand pounds per year or he can buy a cheaper foreign decoder card and decoder box, possibly intended for domestic use, from an unauthorised dealer. The claimants contend the effect of these activities is extremely serious because they undermine the exclusivity and hence the value of the rights licensed in any particular territory. Whichever broadcaster sells the cheapest decoder cards has the potential to become, in practice, the EU-wide broadcaster, with the result that broadcasting rights in the EU will have to be licensed on an EU-wide basis. This, they say, will result in a serious loss of revenue to FAPL and other broadcasters and so undermine the viability of the services they provide.
4. Accordingly, the claimants brought a series of test cases against suppliers of satellite decoder cards and ancillary equipment to pubs and bars (which decoder cards and equipment enable the reception of non-Sky satellite channels that carry live Premier League matches) and against the licensees or operators of pubs that have shown live Premier League matches using such decoder cards and equipment. In these cases the claimants have alleged the defendants have infringed their rights under s.298 of the Copyright, Designs and Patents Act 1988, as amended, (the "CDPA"), which implements Directive 98/84/EC - the Conditional Access Directive - and their copyrights under ss.17 and 20 CDPA, so raising issues as to the proper interpretation of Directive 2001/29/EC - the Copyright and Information Society Directive.
5. The defendants respond that the claims are wholly misconceived. They contend that the cases are not about pirate decoder cards because all the cards complained of have been issued and placed on the market by the relevant satellite broadcasters. Rather, they say, the case is about cross-border trade in lawful decoder cards issued by the relevant satellite broadcasters and the cross-border reception of broadcasting services within the EU. They argue that broadcasters and programme content providers have no right to interfere with cross-border reception in an effort to divide the single market into differently priced zones and to restrict competition between FAPL's licensees.
6. The Premier League cases came on for trial in 2008. In my judgment [2008] EWHC 1411 (Ch) I made various findings of fact, but concluded that a ruling by the Court of Justice on what I described as important and difficult questions of law was necessary for this court to deliver a final decision on the various claims advanced by the claimants. It was therefore open to me to make a reference to the Court of Justice. I then proceeded to consider whether to make a reference at that stage. After taking into account all relevant matters, I decided that I should make a reference. As I said in paragraphs [371] and [372] of my judgment:

"371. In my judgment this case raises very serious questions which, as both parties have urged upon me, are of the greatest importance to the European single market. The claimants submit the defendants' case is effectively a challenge to the way in which sports (and indeed virtually all) broadcast rights are licensed in the EU. The defendants say there are millions of expatriate workers in Member States who want to watch satellite television from their own country and that the claimants are seeking to bolster a system of barriers against the free circulation of decoder cards between Member States to the commercial advantage of programme providers and broadcasters who want to maintain price differentials between the markets in different Member States, to the serious detriment of consumers as regards both price and choice. Moreover, they continue, the whole trend of EC Directives in this field has been to try and create a single audiovisual area - a process which the claimants are trying to frustrate. These rival arguments raise serious policy issues and I believe it to be highly desirable they should be authoritatively decided by the Court of Justice as soon as possible.

372. Secondly, it seems to me a reference now is likely to produce a definitive answer not only more quickly but also more cheaply than if I leave the matter over for consideration by an appellate court. The claimants have indicated that if I were to find in the defendants' favour but decline to make a reference then they would appeal. The defendants are understandably very anxious about the costs of such an appeal at which the arguments advanced before me would have to be considered all over again with a very substantial prospect of a reference thereafter. On the other hand, if I make a reference now and the Court of Justice rules in the claimants' favour it is not easy to see what the defendants could hope to gain from an appeal. Alternatively, if the Court rules in the defendants' favour, any scope for an appeal by the claimants would be limited if not removed entirely."

7. On 11 July 2008, I referred 10 questions to the Court of Justice, which are set out in the schedule to my order. Questions 1 to 3 concern the proper interpretation of Directive 98/84/EC. Specifically, question 1 seeks to ascertain whether the foreign decoder cards are illicit devices within the meaning of the directive; in particular, whether the directive only applies to pirated decoder cards or whether it extends to lawfully made decoder cards used to gain access in an unauthorised manner.
8. Question 2 seeks to ascertain whether the FAPL has a cause of action to prevent the importation and sale of foreign decoder cards, assuming that they are illicit devices; and whether the FAPL provides a relevant protected service.
9. Question 3 seeks to ascertain whether publicans have in their possession illicit devices for "commercial purposes" and whether this relates only to possession for the purposes of commercial dealings in illicit devices, or whether it extends to possession of devices by a user in the course of a business of any kind.
10. Questions 4 and 5 concern whether the defendants have infringed copyright by unlawfully reproducing the whole or a substantial part of a protected work contrary to s.7 CDPA and Article 2 of Directive 2001/29/EC. Specifically, question 4 seeks to ascertain whether there is a sufficient reproduction of a film, musical work or sound recording (but not an artistic work) either in the decoder box or, in the case of the film, on the television screen to amount to an infringement. This depends on whether only small fragments of each work reproduced at any point in time should be considered, as the defendants contend, or whether, as FAPL contends, the fragments should be viewed as a whole. This concerns the proper interpretation of Article 2 of the directive.
11. Question 5 seeks to ascertain whether the defendants can rely on the defence afforded by s.28A CDPA, which implements Article 5 of Directive 2001/29/EC. The defence relates to certain temporary acts of reproduction which are transient and which have "no independent economic significance of their own".
12. Question 6 concerns whether the defendants have infringed FAPL's copyright by communicating certain works to the public contrary to s.20 CDPA and Article 3 of Directive 2001/29/EC. This raises the issue of whether there is a communication of the copyright works by their transmission from the pub's satellite dish to the public bar area, or by displaying the visual works on the screen and the playing of the audio works on the television speakers, or whether the publicans have simply received the signal and displayed it, with sound, on a television.
13. Question 7 seeks to ascertain whether the defendants have a general defence to the copyright claim. The defendants argue that on the proper interpretation of Directive 93/83/EEC - the Satellites and Copyright Directive - no infringement of UK copyright is involved merely by receiving satellite broadcasts from other Member States.
14. Question 8 seeks to ascertain where the prohibition on the importation of a decoder card which is being used without permission is compatible with the free movement rules.
15. Similarly, question 9 seeks to ascertain whether the free movement rules preclude a national prohibition on the performance in public of a musical work where that work is included in a service that is accessed by the use of a decoder card issued only for use in another Member State.
16. Finally, question 10 seeks to ascertain the extent to which competition rules apply to FAPL's exclusive licences and, in particular, to the obligation upon the licensee broadcasters to encrypt their signals and prevent their decoder cards from being used outside their licensed territories.

Joinder

17. In November 2008, I heard applications by UEFA, Sky and others to be joined as claimants to the Premier League cases pursuant to CPR 19.2(2) for the purpose of enabling them to make submissions to the Court of Justice on the questions referred by me on 11 July 2008. The applicants all made clear that they wished to be added as claimants not to participate in the actions before this court, but solely in order to take part in the reference to the Court of Justice. They also made clear that they did not seek additional relief to that sought by the existing claimants and did not envisage playing any active part in the proceedings once the referred questions had been answered.
18. In my judgment of 13 November 2008 [2008] EWHC 2897 (Ch), I decided that I did have jurisdiction to join UEFA, Sky and the other applicants as parties. As I explained at paragraph [14]:

"14. In the light of this review I have reached the conclusion that it is desirable to add each of the applicants to these proceedings as claimants because it will assist the court to resolve the fundamental law and policy questions to which the reference gives rise. Each of the applicants does, I believe, offer a perspective on those questions which is different from that of the other applicants and the existing parties. In my judgment the applicants do satisfy the jurisdictional requirement imposed by CPR 19.2(2)."

19. For reasons which I then proceeded to elaborate, I also decided that it was appropriate to join UEFA, Sky and the other applicants in the exercise of my discretion and, in doing so, I had well in mind and sought to act in accordance with the duty of sincere cooperation and the overriding objective.
20. Despite my order joining UEFA, Sky and the other applicants as parties, the President of the Court of Justice has, by a reasoned order of 16 December 2009, rejected their applications to participate in the proceedings before the Court by submitting observations on the referred questions. Paragraphs [5] and [6] of the order say:

"5. In that regard, it should be borne in mind that participation in cases of the kind referred to in Article 267 TFEU is governed by Article 23 of the Statute of the Court of Justice of the European Union, which limits the right to submit statements of case or observations to the Court to: (i) the parties; (ii) the Member States; (iii) the European Commission and, where appropriate, the institution, body, office or agency of the European Union which adopted the act the validity or interpretation of which is in dispute; (iv) the States, other than the Member States, which are parties to the Agreement on the European Economic Area; (v) the EFTA Surveillance Authority; and (vi) the non-member States concerned. Article 23 of the Statute of the Court does not leave the Court with any discretion to extend that right to natural or legal persons in respect of whom express provision has not been made. By the term 'parties', Article 23 of the Statute of the Court refers only to the parties to the action before the national court (see, to that effect, Case 62/72/Bollmann [1973] ECR 269, paragraph 4).

6. Subsequent to its reference for a preliminary ruling and in accordance with its own rules of procedure, the High Court of Justice of England and Wales, Chancery Division, accepted the five legal persons referred to in paragraph 3 above as interveners in the proceedings. The Court has stated in that regard that a person who has not sought and been granted leave to intervene before the national court is not entitled to submit observations to the Court under Article 23 of the Statute of the Court (see, to that effect, the order of the President of the Court of 26^th February 1996 in Case C-181/95 Biogen [1996] ECR I-717, paragraph 6), under which, a contrario, any person who has been granted leave to intervene before the national court is entitled to submit observations to this Court."

21. Then at paragraphs [9] and [10] the order continues:

"9. In the present case, it is obvious that the five legal persons in question were not parties to the action at the time when the High Court of Justice of England and Wales, Chancery Division, made its order for reference which, under the first paragraph of Article 23 of the Statute of the Court, stays proceedings before it. Furthermore, it is apparent from the separate order of that court of 25 November 2008 that the applications had been made only with a view to participating in the proceedings before the Court and that the applicants do not intend to play an active part in the proceedings before the national court after delivery of the judgment giving a preliminary ruling.

10. Although the five legal persons in question have a definite interest in the answers to be given by the Court to the questions referred by the national court, that does not mean that they are to be accorded the status of parties for the purposes of Article 23 of the Statute of the Court. Such a provision would moreover be pointless if any party having an interest were recognised as having the right to participate in the proceedings provided for under Article 267 TFEU (see, to that effect, the order in Biogen, paragraph 6)."

These proceedings

22. UEFA says that, following that order of the President, it had no option but to commence its own action to protect its rights and it duly did so on 11 February 2010. Accordingly, in these proceedings UEFA seeks to prevent Euroview from selling, hiring out or otherwise engaging in commercial activities in relation to decoder cards imported into the UK which provide access to foreign encrypted transmissions of live UEFA matches.
23. As I recorded in my judgment of 13 November 2008, UEFA is the governing body of European football and has 53 members throughout Europe. It is the organiser of many international football competitions, including the UEFA Champions League and the UEFA Europa League. It is particularly concerned that success for the defendants in the Premier League cases will adversely affect the application of Article 48 of the UEFA Statutes and the effective operation of the EUFA Broadcasting Regulations which provide for the closed period during which no live football is shown on television, a concept which, it says, was cleared by the European Commission in 2001.
24. In the UK, UEFA has sold the media rights for live UEFA Champions League matches to Sky and ITV for the seasons 2009/2010, 2010/2011 and 2011/2012. Sky has the exclusive right to broadcast certain live UEFA Champions League matches in the UK and ITV has the exclusive right to broadcast other live UEFA Champions League matches. ITV broadcasts UEFA Champions League matches on free-to-air television. On the other hand, UEFA Champions League matches shown by Sky are only available on pay-television. In each match week, ITV has the first pick of the matches on Wednesday and the remaining matches on Tuesday and Wednesday are shown on Sky.
25. Similarly, UEFA has sold the media rights in the UK for live UEFA Europa League matches for the seasons 2009/2010, 2010/2011 and 2011/1012 on an exclusive basis to Channel 5, ITV and ESPN. UEFA Europa League matches are broadcast free-to-air on Channel 5 and ITV, while the matches on ESPN are on pay-television. In each match week, Channel 5 has the first pick of live matches and ITV and ESPN broadcast the rest.
26. UEFA claims that each of its matches is filmed on its behalf by a broadcaster. The resulting feed (referred to as the "Multi-lateral Feed") is delivered to a transmission point, encrypted and uplinked to a satellite for transmission to UEFA's various foreign broadcasters. Those broadcasters then decrypt the Multi-lateral Feed, add their own logos and commentaries and then, in the case of pay-television, broadcast the re-encrypted modified feed to their subscribers.
27. Access to coverage of UEFA Champions League matches and UEFA Europa League matches broadcast on pay-television is restricted to those who have entered into a subscription agreement with the relevant satellite broadcaster. For example, access to UEFA Champions League matches on pay-television in the UK is restricted to those who have entered into a subscription agreement with Sky. The subscriber is provided by Sky with a decoder card which must be inserted into a Sky box. Once this card has been activated, the signal is decrypted, so allowing the viewer to see the matches for which he has subscribed.
28. UEFA also claims that it is the owner of the copyrights subsisting in a range of works relating to its broadcast matches. These include artistic, music and literary works, sound recordings, films and various compilations.
29. UEFA contends that Euroview's customers include commercial undertakings, such as pubs, who allow, without authorisation, their customers to watch UEFA matches on their commercial premises. Indeed, UEFA says that one of its agents purchased from Euroview a decoder card which provides access in the UK to sports content broadcast by Sky Deutschland, including UEFA matches. It further says that Euroview supplied to UEFA's same agent the decoder box for which the card had been activated for use under the terms of a domestic subscription in Germany.
30. Euroview accepts that it carries on business importing into and selling in the UK foreign decoder cards, decoder boxes and related equipment. It also accepts that it is aware that a purchaser of its decoder cards and other equipment could use them for accessing a wide variety of television programs, including UEFA Champions League and Europa League matches, and that it advertises the suitability of its equipment for use in pubs.
31. In all these circumstances UEFA claims that Euroview has infringed its rights under s.298 CDPA and has infringed its copyrights. It also claims that encryption constitutes an effective technological measure that has been applied to all its copyright works and that Euroview has distributed decoder cards, decoder boxes and other equipment for the purposes of circumventing those effective technological measures contrary to s.296ZD CDPA, implementing Article 6 of the Directive 2001/29/EC and has unlawfully interfered with UEFA's business.
32. I should also say that at the outset of this hearing I made an order joining Sky to these proceedings as an additional claimant, because it claims to be the exclusive licensee of certain copyright works owned by UEFA which are the subject of at least some of the claims of copyright infringement asserted by UEFA against Euroview. This order was not opposed by Euroview.

Relevant principles

33. I come now to the principles I must apply in deciding whether to make the reference to the Court of Justice now sought by UEFA. A national court has a discretion to refer a question to the Court of Justice on the interpretation of a rule of European Union law if it considers it necessary to do so in order to resolve the dispute before it. It is for the national court to explain why the interpretation sought is necessary to enable it to give judgment. Such an order may be made at any stage of the proceedings provided the court has found that a ruling on the point is necessary for it to give judgment. It is desirable that a decision to seek a preliminary ruling should be taken when the national proceedings have reached a stage at which the national court is able to define the factual or legal context of the question. However, it is clear this may be at a preliminary stage of the proceedings, as Advocate General Mischo explained in paragraphs [12] to [14] of his opinion in case C-453/99 Courage v. Crehan [2001] ECR 1 - 6297 at 6302:

"12. It is clear from the order for reference that, for the purposes of the main proceedings and in an endeavour to settle first of all the issues of law, the Court of Appeal makes two assumptions. First, it assumes that the exclusive purchase obligations for certain types of beer laid down in the lease for a public house concluded by Mr Crehan is contrary to Article 81 EC. Second, it assumes that Mr Crehan was damaged 'by actions taken under the agreement by the other party'.

13. It follows that this Court must rule in the abstract on a situation where a breach of Article 81 EC has caused loss to one of the parties to the agreement. The question whether this abstract situation corresponds to the facts in this case is a question to be decided later by the referring court and does not concern this Court.

14. However, I do not consider that the Court must refuse to answer the questions raised because they are hypothetical questions. It should be borne in mind that, according to settled case-law, 'it is for the national courts alone, before which the proceedings are pending and which must assume responsibility for the judgment to be given, to determine, having regard to the particular features of each case, both the need for a preliminary ruling to enable them to give judgment and the relevance of the questions which they refer to the Court. A request for a preliminary ruling from a national court may be rejected only if it is quite obvious that the interpretation of Community law sought by that court bears no relation to the actual nature of the case or the subject-matter of the main action'."

Application of the principles

34. Applying these principles in the context of this case, I am entirely satisfied that rulings on 10 of the 12 questions identified in the schedule to the application are necessary for this court to give judgment.
35. The first 10 questions are substantially the same as those referred by me in the Premier League cases. Questions 1 and 2 concern the proper interpretation of Directive 93/83/EC, the meaning of illicit devices and whether UEFA is providing a protected service. A ruling is necessary because Euroview denies that the foreign decoder cards in which it is dealing are illicit devices and that UEFA has a cause of action.
36. Question 3 is not relevant to the present case, as UEFA has not brought a claim against any publican. I consider I have no jurisdiction to refer it.
37. Questions 4 to 9 all concern the claims for infringement of copyright. Question 4 concerns the issue of reproduction and the meaning of Article 2 of Directive 2001/29/EC and a ruling is necessary because Euroview contends that a fragment of a work created in the memory of a decoder or on a television screen does not amount to a substantial part. This question differs from question 4 in the Premier League case in that UEFA relies upon broadcasts and literary works in addition to films, sound recordings and musical works. In so far as the question concerns broadcasts, it also raises an issue as to the proper interpretation of Article 7 of Directive 2006/115/EC.
38. Question 5 concerns the issue of transient copies created in a decoder box or on a television screen and whether they are to be regarded as having an independent economic significance within the meaning of Article 5 of Directive 2001/29/EC. A ruling is necessary because this issue is specifically raised as a defence by Euroview.
39. Question 6 arises from another defence raised by Euroview, namely whether any communication to the public of a copyright work takes place solely in the Member State of transmission of a broadcast and requires a ruling as to the proper interpretation of Article 3 of Directive 2001/29/EC.
40. Question 7 concerns a defence raised by Euroview which requires a ruling as to whether any national law purporting to confer any additional right on the owner of copyright works included in a broadcast to control reception is compatible with Directive 93/83/EEC.
41. Question 8 concerns a defence raised by Euroview based on the free movement rules and which requires a ruling as to the inter-relationship between the free movement rules and Directive 98/84/EC.
42. Question 9 concerns a defence that the free movement rules preclude enforcement of national law concerning the protection of musical or literary works in circumstances such as those in the present case and a ruling is again required. The question is broader than that referred in the Premier League cases in that it refers to literary works in addition to musical works.
43. Question 10 is of fundamental importance and requires a ruling because Euroview has put in issue the validity of UEFA's licensing agreements and whether they contravene the prohibition imposed by Article 101 of the TFEU.
44. Question 11 concerns the additional claim raised by EUFA that Euroview has acted in breach of s.296ZD CDPA which implements Article 6 of Directive 2001/29/EC. Euroview denies that any such claim exists in the circumstances of this case, so raising an issue as to the proper interpretation of Article 6, the scope of the expression, "technological measures", and the inter-relationship of this Directive and Directive 98/84/EC.
45. Finally, question 12 concerns the effect of obtaining or activating decoder cards as a result of a misrepresentation. In the light of the objections raised in the course of this hearing, it has not been pursued and I need say no more about it.

The exercise of discretion

46. That brings me to the exercise of my discretion and whether I should make a reference at this relatively early stage of the proceedings.
47. I have come to the firm conclusion that I should make a reference for the following reasons. First, the 10 questions currently being considered by the Court of Justice in the Premier League cases lie at the heart of the present claim. As the parties are all agreed, the answers given by the Court may result in the disposal of a large part of UEFA's case. Indeed, this is the basis of Euroview's request that I should stay these proceedings until the Court has answered those questions. In my judgment it follows that the request for a reference is not premature, because the essential facts necessary to determine the questions of law I have identified are either accepted or can be assumed.
48. Second, I expressed the view in my decision of 13 November 2008 allowing UEFA and Sky to intervene in the Premier League cases that UEFA is able to offer a perspective on the questions I have referred which is different from that of the original parties to those proceedings. That is a view to which I adhere. To refuse a reference to UEFA may well be to deny it any possibility of persuading the Court of Justice that the importation of foreign decoder cards in the context of this case is unlawful.
49. Third, I do not believe Euroview would suffer any real prejudice if I make the reference requested by UEFA. As I have said, it has requested a stay of these proceedings pending the decision of the Court of Justice in the Premier League cases and it may participate in the reference requested by UEFA or not, as it chooses.
50. Fourth, I am conscious of the need for national courts to exercise appropriate self restraint and to act in accordance with the duty of sincere co-operation and the overriding objective. I have also given careful consideration to the order of the President of the Court of 16 December 2009 to which I have referred. That order is founded upon three strands of reasoning. First, the applicants seeking to intervene, including UEFA, were not parties to the action at the time the order for the reference was made. Second, the applicants made no allegation of infringement of their rights and third, the applicants did not intend to play any active part in the proceedings after delivery of the judgment of the Court of Justice giving the preliminary ruling. None of those reasons applies to the present case.
51. In conclusion, I have decided that I have jurisdiction to refer the questions I have identified to the Court of Justice because it is necessary to do so in order to resolve the present dispute and that it is appropriate to make a reference now. I also propose to invite the Court of Justice to consider whether this reference should proceed with joined cases C-403/08 and C-429/08 having regard to the similar legal and factual issues which they raise.