Reed Smith Client Alert

Authors: Nick Swimer Stephen Edwards

On 7 March 2013, the Court of Justice of the European Union (CJEU) delivered a surprisingly short and succinct judgment following a reference from the UK High Court regarding the legality of an internet live streaming site which transmitted unauthorised TV channel signals.

TVCatchup Limited (TVC) is an internet television service, which launched in 2007. Its online platform uses a number of servers (acquisition, encoding, origin and edge) to capture free-to-air television signals and retransmit these over the internet to its registered users. The free service is funded by pre-roll advertising preceding the live channel streams and "in-skin" advertising (i.e., outside of the frame of the picture).

In 2011, ITV, Channel 4 and Channel 5 brought an action in the High Court against TVC for copyright infringement. This action was brought largely pursuant to section 20 of the Copyright, Designs and Patents Act 1988 (CDPA); infringement by "communication to the public." Section 20 implements Article 3 of Directive 2001/29 (InfoSoc Directive), which provides authors with the exclusive right to authorise or prohibit any communication to the public of their work by wire or wireless means. TVC initially filed for summary judgment on the basis that section 20, as transposed into UK law, only refers to communication to the public by way of broadcasting works or making works available by electronic transmission on demand. TVC’s summary judgment application was however unsuccessful as the High Court confirmed that the two particular acts did not represent an exhaustive list, but were rather examples of the types of communications intended to be caught by the provision.

The claim therefore proceeded to full trial. As regards live streaming of the claimant broadcasters’ public service channels (i.e., ITV1, Channel 4 and Channel 5), TVC successfully argued that, to the extent it was communicating these to the public, it came within the meaning of a cable service pursuant to section 73 CDPA. TVC was therefore entitled to the benefit of the exception which allows cable operators to retransmit "qualifying services" (i.e., the claimants’ public service channels and the BBC channels) without licence. As regards live streaming of the broadcasters’ suite of digital channels (for example, ITV2, E4, Film4, 5USA, etc.), TVC argued that it was not communicating these channels to the public; rather, it was simply providing the technical means to maintain or improve the quality of the reception of a pre-existing transmission. In addition, it argued that CJEU case law made it clear that the "public" to whom the communication is made, has to be a "new public," i.e., a different public to that which the broadcasters were already targeting (which TVC argued included anyone with a TV licence). TVC also suggested that the "one-to-one" technical nature of its service inferred a private rather than a public communication.

The High Court took the view that CJEU authorities which have looked at the meaning of "communication to the public" - notably in SGAE v Rafael Hoteles SA (2006) and in joined cases Airfield NV v Agicoa Belgium BVBA (2011) and Airfield NV and another v Belgische Vereniging van Auteurs, Componisten en Uitgevers CVBA (Sabam) (2011) – did not provide enough clarity regarding the present dispute and therefore referred the questions to the CJEU, the essence of which the CJEU summarised as follows:

1. Does the right to authorise or prohibit a "communication to the public of their works by wire or wireless means" extend to a case where:

a.) Authors authorise the inclusion of their works in a terrestrial free-to-air television broadcast which is intended for reception either throughout the territory of a Member State or within a geographical area within a Member State; and

b.) A third party organisation provides a service whereby individual subscribers within the intended area of reception of the broadcast, who could lawfully receive the broadcast on a television receiver in their own homes, may log on to the third party’s server and receive the same content by means of an internet stream?

2. Does it make a difference if the third party’s server allows only "one-to-one" connection for each subscriber, whereby each subscriber establishes his or her internet connection to the server and every data packet sent by the server onto the internet is addressed to only one individual subscriber?

3. Whether the position is influenced by the fact that the retransmission is funded by advertising and is therefore of a profit-making nature;

4. Whether the position is influenced by the fact that the retransmission is made by an organisation which is acting in direct competition with the original broadcaster (in this case, in relation to the sale of advertising inventory around the same content sold by the broadcasters).

Meaning of "communication" The CJEU confirmed that the principal objective of the InfoSoc Directive was to establish a high level of protection of authors and therefore "‘communication to the public’ must be interpreted broadly." This objective was emphasised in Recital 23 of the InfoSoc Directive and in previous CJEU decisions including Football Association Premier League Ltd and others v QC Leisure and others (2012) and SGAE v Rafael Hoteles SA (2006). The CJEU held that:

  • "Communication" means any "transmission or retransmission of a work to the public, not present at the place whether the communication originates, by wire or wireless means, including broadcasting"
  • Article 3(3) of the InfoSoc Directive makes it clear that an initial authorisation of protected works in a communication to the public does not exhaust the right to authorise or prohibit other communications of those works. Accordingly, when content is put to multiple uses, each transmission of that content by a technical means that is different to the primary means requires fresh authorisation, even if it is transmitted to the same catchment area

The CJEU gave short shrift to TVC’s argument that its service operates so as to maintain and improve the quality of reception of the broadcasters’ transmissions. TVC, the court said, conducted a clear technical intervention in the pre-existing transmission, retransmitted it in a way that was different from the broadcasters’ transmission and "in no way intended to maintain or improve the quality of the [broadcasters’] transmission…."

Meaning of "public" "Public," the CJEU said, denotes an indeterminate number of potential recipients and implies a fairly large number of persons. As the retransmission is aimed at all persons resident in the UK with internet connections and TV licences, the CJEU had no problem in finding that this target audience constituted an indeterminate and fairly large number of persons. Moreover, in the context of "live streaming," where the recipients had access to the same work at the same time, it was held to be irrelevant that each user streamed the content individually (i.e., on a "one-to-one" basis).

Requirement for a "new public" In the CJEU decisions in SGAE v Rafael Hoteles SA (2006), Football Association Premier League and Others (2011) and Airfield NV v Agicoa Belgium BVBA (2011), detailed consideration was given to the meaning of "communication to the public." It was held in these cases that Article 3 of the InfoSoc Directive was only engaged were the public was a "new public," i.e., different to the one targeted in the original communication. This position was however distinguished by the CJEU from the facts in the present case on the basis that in those cases, the rights owners had not contemplated the new public to whom the broadcasts were being retransmitted when they granted their rights for the making of the original communications. In the present case, the group of persons in question had been in the contemplation of the broadcasters when they broadcast the channels. The CJEU held that this made no difference: there was communication to the public when the works were re-transmitted over the internet.

Does the profit making nature of the activity influence the finding? The CJEU seems to have chosen its words carefully in this regard; whilst it acknowledged that a profit-making element is not an essential condition for the existence of a communication to the public, it appears to suggest that this could be borne in mind, as an influencing factor, when considering whether or not a separate communication is taking place.

By contrast, the CJEU held that whether or not the communicator is acting in direct competition with the original broadcaster is irrelevant.

High Court proceedings The matter will now go back to the High Court for final judgment with the benefit of the CJEU’s decision.

Despite the decision in the broadcasters’ favour, TVC still claims an overall victory given its continued ability, pursuant to section 73 CDPA, to transmit the main public service channels, which it says account for more than 70% of the viewing on its service. In that regard, our view is that the High Court’s position, that TVC qualifies as a cable operator, is questionable since internet delivery does not always and only involve the use of cable; wireless communication links are frequently used within the internet transmission chain. Given that the previous government, in its Digital Britain report, defended the retention of section 73 on the grounds that it was only applicable to "traditional" cable operators such as Virgin Media, it will be interesting to see if the present government can be persuaded otherwise.


Client Alert 2013-066