Television decoder cards from any country in the European Union can be sold and used in any other EU country, following an EU Court of Justice ruling issued this morning. This decision could wreak havoc on exclusive – and lucrative – territorial license agreements, particularly in regard to sporting events.

The case arose when the Football Association Premier League sued a pub owner in Portsmouth, England for showing televised soccer games to her customers by using a less expensive Greek decoder card and set-top box instead of acquiring them from Sky, the holder of the broadcasting rights in the United Kingdom. The pub owner lost and had to pay nearly £8,000 (about $12,000) in fines and costs, but she filed an appeal with the Court of Justice.

The FA Premier League argued that Karen Murphy, the pub owner, violated its intellectual property rights and infringed on its business objective of blacking out television broadcasts in order to encourage fans to attend live games.

Both contentions were dismissed by the court. As to the copyright violation argument, the court determined that the games cannot be considered to be the intellectual property of FA Premier League, since the association didn’t create them. In contrast, the court did rule that elements created for the broadcast, like the opening video sequence, graphics and highlight reels, were in fact protected intellectual property.

Additionally, the court determined that the prohibition on using foreign decoder cards violated European Union competition laws. For one, licensing deals could be priced taking into account that some viewers would be from elsewhere in the EU. More significantly, the court said the existing exclusivity system “may result in artificial price differences” between member nations.

“License agreements must not prohibit the broadcasters from effecting any cross-border provision of services that relates to the sporting events concerned, because such an agreement would enable each broadcaster to be granted absolute territorial exclusivity in the area covered by its license, would therefore eliminate all competition between broadcasters in the field of those services and would thus partition the national markets in accordance with national borders,” the ruling read.

Related link:

Judgment in Cases C-403/08 and C-429/08 – Football Association Premier League and Others v QC Leisure and Others Karen Murphy v Media Protection Services Ltd