Murphy v Media Protection Services Ltd [2008] EWHC 1666 (Admin)

[2008] EWHC 1666 (Admin)

Case No CO/7295/2007

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 16/07/2008

Before

LORD JUSTICE STANLEY BURNTON

MR JUSTICE BARLING

Between

KAREN MURPHYAppellant

MEDIA PROTECTION SERVICES LIMITEDRespondent

Mr M Howe QC, Mr W Hunter QC and Mr S Vousden (instructed by Molesworths Bright Clegg) for Appellant

Mr N Green QC, Mr E Jenkins QC and Mr A Robertson and Miss C May (instructed by Russell-Cooke LLP) for Respondent

Hearing Hearing dates: 25, 26 June 2008

Judgment

Introduction

[1]This is the judgment of the Court. It relates to the second part of an appeal by way of case stated against the dismissal by the Crown Court at Portsmouth of the Appellant’s appeal against her conviction by Portsmouth Magistrates of two offences under s.297(1) of the Copyright, Design and Patents Act 1988 (“the CDPA”). Those convictions were to the effect that on 19th August 2006 and 25th September 2006 she:

“dishonestly received a programme included in a broadcasting service provided from a place in the United Kingdom with intent to avoid payment of any charge applicable to the reception of the programme.”

The Crown Court reduced the sentence imposed by the Magistrates so that the Appellant was fined £1,000 for each offence, and confirmed the order that the Appellant pay £5,000 towards the cost of the prosecution.

[2]The first part of the present appeal was heard by a differently constituted Divisional Court which gave judgment on 21st December 2007. In that judgment the Court answered a number of questions posed by the Crown Court in the case stated whilst leaving it open to the Appellant to restore the appeal in order to argue certain further points of defence based on the free movement and competition rules of the EC Treaty (Articles 28 to 30, 49 and 81). The Court stated at the end of its judgment that its conclusions were subject to those issues of EC law.

[3]The Appellant having indicated that she wished to pursue the EC law points, the Court gave directions for skeleton arguments dealing with the issues to be served in January 2008. At a CMC on 17March 2008 Stanley Burnton LJ ordered that supplemental skeleton arguments be prepared to take account of the anticipated judgment of the High Court, Chancery Division, in FA Premier League v QC Leisure & Ors. (“the FAPL case”). That case was then due to be heard in a trial commencing on 14th April 2008, and it was at that time common ground between the parties that the same or similar issues would fall to be decided in that case as were to be determined in this part of the present appeal.

[4]The trial of that case was heard by Kitchin J over 13 days. The learned Judge gave judgment on 24 June 2008, the day before the present appeal was due to begin. Kitchin J indicated in that judgment that he proposed to refer a number of questions relating to the interpretation of EC law to the European Court of Justice (“ECJ”) for a preliminary ruling under Article 234 of the EC Treaty. On 11 July 2008 a further hearing was held and the learned judge finalised those questions for reference, and he has agreed to make a formal request to the ECJ to expedite the determination of those questions, in view of the considerable importance of the issues to those concerned in the exploitation of the intellectual property rights in broadcast material of this kind throughout the EU, and to their customers and consumers.

[5]Mr Howe QC, who represents the Appellant, submits that the judgment of Kitchin J strongly supports the arguments of EC law which he relies upon in this appeal, and reinforces the Appellant’s request that this Court should itself make a parallel reference to the ECJ. Such a reference would, he submits, be likely to enable the two cases to be dealt with as joined cases before the same chamber of that Court with a single oral hearing, and would thus enable the ECJ compositely to resolve the same issues in both civil and criminal contexts.

[6]Mr Green QC, who appears for the Respondent in the appeal, formally opposes any reference to the ECJ by this Court on the basis that a reference should only be made if there is a firm evidential footing, and that in the present case the evidential context is deficient in certain respects because the EC law issues now relied upon by the Appellant were not raised before the Magistrates’ Court or the Crown Court. Had they been so raised, he says, the Respondent would have sought to widen the scope of the factual investigation to cover certain matters which he submits are relevant to those EC issues. However, as the argument developed before us Mr Green, whilst still formally opposing a reference to the ECJ, identified in a helpful note certain findings made by Kitchin J and certain other material which he said was also relevant in the present case. Mr Green put this material forward as providing a workable evidential basis which would enable the issues which the Respondent would wish to raise to be reflected in the questions sent to the ECJ on the assumption that we were minded to refer under Article 234. Mr Howe did not object to the introduction of the material for that purpose and we are satisfied that it is appropriate to frame questions which reflect this factual material in order to ensure that this appeal can be determined fairly, and also to avoid the risk of multiple references.

[7]At the end of the hearing, in the course of which both parties addressed us relatively briefly on the substantive issues of EC law involved, we were told that it would assist the parties and their advisers if we were able to give an indication of whether we had decided to refer questions to the ECJ or not. We therefore indicated that we did propose to make a reference, and that we would provide our reasons in this judgment.

The Facts

[8]Before turning to the issues of EC law and our reasons for deciding to seek a preliminary ruling on them, it is necessary to refer to the facts which gave rise to the case stated by the Crown Court. These were set out in the first judgment in this appeal, and we set them out again for convenience here. “The Premier League (referred to as FAPL in the papers from time to time) owns the intellectual property rights in relation to the screening of live Premier League football matches. It grants exclusive licences to licensees to screen live Premier League matches in the licensees' respective territories. In the United Kingdom and Ireland at all relevant times the sole licensee was BSkyB. The programmes received by Ms Murphy had been uplinked to a satellite, the NOVA [i.e., the Hotbird] satellite, by a Greek television programme provider called NOVA. NOVA is the licensee for Greece for the football league's material. It provides viewers with a satellite dish, decoder and decoder card. NOVA viewers watching live Premier League games will see a special logo, the "Live S7" logo, on their screen. NOVA uses conditional access technology (CAT) via satellite, which means that the viewer needs a decoder card to watch the live Premier League games. These cards are authorised by the licence for use in the territory of the licensee. BSkyB also uses CAT via satellite. It provides decoder cards in return for subscriptions paid by the viewer (whether domestic or non-domestic) and retains ownership of the cards. Without such a card a viewer is not entitled to watch BSkyB Premier League games, and he is not entitled to use the card outside the territory for which BSkyB is licensed. Both the BSkyB satellite and the NOVA satellite have a "footprint" extending beyond the territorial limit of the licences they enjoy from the Premier League. Any person within a broadcaster's "footprint" who has the appropriate satellite dish, decoder box and decryption card is technically capable of viewing the programmes provided by that broadcaster as part of its broadcasting service. On 19th August 2006 and 25th September 2006, two matches, Bolton Wanderers v. Tottenham Hotspur and Portsmouth v. Bolton Wanderers, were screened on television sets at Ms Murphy's Public House, the Red White and Blue at Southsea in Hampshire. So far as the making of the programmes was concerned, BSkyB had provided the crew, cameras and other equipment at the grounds of both games for the purpose of capturing the visual images and ambient sound from the grounds and its onward transmission to the viewers. The visual images and ambient sound from the grounds were seen at the same time wherever in the world the live Premier League games were being screened. The director chose the visual images to be screened by selecting the visual images captured by specific cameras. The sequence of images accompanied by ambient sound was sent to the BT Tower, from where feeds were sent to BSkyB and to the Premier League at Chiswick. At BSkyB, additional material (including a commentary) and the BSkyB live logo were added in real time to the feed and sent on to the satellite ground station at Chilworth in Hampshire, from where it was uploaded to the Astra satellite from which it was transmitted to BSkyB's subscribers for live Premier League matches. At Chiswick, the Premier League adds an English commentary to the feed, which is then encrypted and sent to NOVA in Greece by a satellite link. NOVA add material to the feed (including an optional Greek commentary and their "Live S7" logo) and from time to time other material such as advertisements. The material assembled in this way is then uplinked to the NOVA satellite with a view to its ultimate reception by subscribers to the NOVA satellite service. The visual images and ambient sound captured at the grounds are thus identical in the uplinks from BSkyB and from NOVA to their respective satellites, save that the visual images will have the broadcaster's logo added. The additional material (advertisements and the like) is different, as are the respective English commentaries, BSkyB's originating in-house and NOVA's originating with the Premier League. When the two premiership matches to which we have referred were transmitted and received, Ms Murphy did not have a subscription with BSkyB. She had cancelled that subscription on the grounds of expense on becoming licensee of the Red White and Blue. She did have a satellite dish, a decoder box and a NOVA viewing card that enabled her to receive and view programmes originating with the NOVA satellite. The television pictures of the two matches both carried the "Live S7" logo, confirming that the signals had come via NOVA.” BSkyB also uses CAT via satellite. It provides decoder cards in return for subscriptions paid by the viewer (whether domestic or non-domestic) and retains ownership of the cards. Without such a card a viewer is not entitled to watch BSkyB Premier League games, and he is not entitled to use the card outside the territory for which BSkyB is licensed. Both the BSkyB satellite and the NOVA satellite have a "footprint" extending beyond the territorial limit of the licences they enjoy from the Premier League. Any person within a broadcaster's "footprint" who has the appropriate satellite dish, decoder box and decryption card is technically capable of viewing the programmes provided by that broadcaster as part of its broadcasting service. On 19th August 2006 and 25th September 2006, two matches, Bolton Wanderers v. Tottenham Hotspur and Portsmouth v. Bolton Wanderers, were screened on television sets at Ms Murphy's Public House, the Red White and Blue at Southsea in Hampshire. So far as the making of the programmes was concerned, BSkyB had provided the crew, cameras and other equipment at the grounds of both games for the purpose of capturing the visual images and ambient sound from the grounds and its onward transmission to the viewers. The visual images and ambient sound from the grounds were seen at the same time wherever in the world the live Premier League games were being screened. The director chose the visual images to be screened by selecting the visual images captured by specific cameras. The sequence of images accompanied by ambient sound was sent to the BT Tower, from where feeds were sent to BSkyB and to the Premier League at Chiswick. At BSkyB, additional material (including a commentary) and the BSkyB live logo were added in real time to the feed and sent on to the satellite ground station at Chilworth in Hampshire, from where it was uploaded to the Astra satellite from which it was transmitted to BSkyB's subscribers for live Premier League matches. At Chiswick, the Premier League adds an English commentary to the feed, which is then encrypted and sent to NOVA in Greece by a satellite link. NOVA add material to the feed (including an optional Greek commentary and their "Live S7" logo) and from time to time other material such as advertisements. The material assembled in this way is then uplinked to the NOVA satellite with a view to its ultimate reception by subscribers to the NOVA satellite service. The visual images and ambient sound captured at the grounds are thus identical in the uplinks from BSkyB and from NOVA to their respective satellites, save that the visual images will have the broadcaster's logo added. The additional material (advertisements and the like) is different, as are the respective English commentaries, BSkyB's originating in-house and NOVA's originating with the Premier League. When the two premiership matches to which we have referred were transmitted and received, Ms Murphy did not have a subscription with BSkyB. She had cancelled that subscription on the grounds of expense on becoming licensee of the Red White and Blue. She did have a satellite dish, a decoder box and a NOVA viewing card that enabled her to receive and view programmes originating with the NOVA satellite. The television pictures of the two matches both carried the "Live S7" logo, confirming that the signals had come via NOVA.”

[9]In relation to the facts we should also say that it was ultimately common ground between the parties that for the purposes of this appeal the Court should proceed on the basis that the decoder card used by the Appellant to receive the NOVA broadcasts in question was not a “pirate” card in the sense of being a card which was manufactured and marketed without the authorisation of the NOVA card issuer. In other words it was a genuine NOVA card, albeit that it was, according to the Respondent, being used outside the area for which it was authorised (i.e. outside Greece). It seems to us that this is implicit in the case stated (see for example paragraphs 3.3, 3.19, 14.2 and 17.5(5)). Moreover, it does not appear that any contrary suggestion was made by the prosecution either below or during the hearing of the first part of this appeal. The distinction between a “pirate” card and a genuine card is one which has assumed some importance both before Kitchin J and before us, for the reasons explained below.

[10]We have already referred to certain additional material which Mr Green wished to introduce and which was set out in a note provided to us by the Respondent (see paragraph 6 above). We should record the essence of this material.

[11]The Respondent’s note referred to the following finding of Kitchin J at para.42 of his judgment:

“Members of the public are able to watch SuperSport channels by subscribing to the relevant NOVA bouquet of channels. These subscriptions are available, together with NOVA decoder cards, set top decoder boxes and other associated hardware, from about 1600 retail outlets in Greece. They may be taken out for up to 12 months and the subscriber must provide a name, local Greek address, and a local Greek telephone number. Subscriptions can be taken out for private or commercial purposes. In the case of a private subscription the subscription agreement provides the subscriber is only permitted to view the NOVA bouquet of channels for his and his family’s personal use and only at his home or workplace.”

[12]The Respondent’s note then referred to the first witness statement of Mr Papastathopoulos, who appeared as a witness for the claimants at the trial before Kitchin J. At paragraph 30 of that statement the witness referred to clause 5.1 of the NOVA residential subscriber agreement for 2006-7 which provided:

“The Subscriber is obliged to use the access card for access to the Subscriber Services, exclusively and solely in his residence or his workplace for use exclusively and solely by himself and his family. The usage in coffee shops, hotels, specific recreation places and in every place and for any usage which is not agreed herein, as well as the temporary or systematic commercial exploitation of the Subscription Services, is indicatively prohibited. The Subscriber assumes the obligation to notify to [Multichoice Hellas] any change in the address of his residence or his workplace, which has been reported in the signing hereof.”

[13]We were provided with a copy of that witness statement and exhibit together with a translation of the NOVA residential subscriber agreement for 2005 to 2006 imposing the same restriction in clause 5.1.

[14]The Respondent’s note also included a finding by Kitchin J at para.66 of his judgment as follows:

“... the fact that the NOVA cards were procured and activated by providing false names and addresses.” “... the NOVA Greece smartcard flow to the UK has been determined to be as follows: 18.1. In respect of each card, a person establishes a legitimate subscription account (generally on a pre-paid 12 month basis) in Greece using false data identifying that person as being a resident of Greece. 18.2. This person either directly or via a middleman establishes a sales point in the UK, either via a website, local kiosk or word of mouth to solicit persons or pubs etc who wish to illegally view the NOVA Greece service in the UK. 18.3. Once a person, pub or other establishment (i.e. ‘client’) in the UK agrees to purchase such a smartcard, the smartcard associated with a new account is activated by a local caller in Greece based upon the previously provided false or misleading subscription data. 18.4. The smartcard is taken out of Greece and delivered to the client for use in a compatible set top box and satellite system that is set up to receive NOVA Greece satellite signals.”

[15]The Respondent’s note refers to another matter, again relating to a finding of Kitchin J at para. 144 of his judgment:

“Overall, and having heard Mr Papastathopoulos, I do not accept that NOVA has consented explicitly or implicitly, to the sale or use of NOVA cards outside Greece. Nor do I accept it has turned a ‘blind eye’ to such activities or encouraged them or created any expectation they are acceptable.”

[16]Finally, the Respondent’s note refers to Kitchin J’s findings at paras. 145 to 146 of his judgment where he referred to an issue whether the NOVA cards supplied by QC and AV were issued to domestic or commercial subscribers, and recorded that the evidence before him was to the effect that a private subscription for a NOVA card cost at least €676.8 annually if paid on a monthly basis or €684 annually with one bonus month free if pre-paid. On the other hand, the price for a commercial subscription was said to be based on the number of seats in the relevant bar or pub with a minimum cost of €1,080 per annum. The learned Judge also recorded that the price paid by Mr Chamberlain (who is accepted to be the alter ego of the company AV, which sold the Appellant her NOVA decoder equipment) was between €657 and €682 per NOVA card.

[17]Section 297(1) of the CDPA under which the Appellant was convicted provides as follows:

“A person who dishonestly receives a programme included in a broadcasting service provided from a place in the United Kingdom with intent to avoid payment of any charge applicable to the reception of the programme commits an offence and is liable on summary conviction to a fine not exceeding level 5 on the standard scale.”

The case stated

[18]Question 5 posed in the case stated by the Crown Court is as follows:

“Does the requisite intent to avoid any charge applicable to the reception of the programme within s.297(1) apply to circumstances where the Appellant paid a charge to AV Station and then receives the programme from NOVA, a foreign broadcaster, does not pay any other fee to any other broadcaster, in this case BSkyB as the domestic broadcaster in question?”

[19]This Court in its first judgment answered that question in the affirmative stating, at para.42, that:

“The requisite intent to avoid a charge is proved if it is shown that the defendant knows that the broadcaster has the exclusive right in this country and makes a charge for reception of its broadcasts, and he or she makes arrangements to receive its broadcasts without paying that charge. The fact that a charge is paid to a broadcaster who the defendant knows does not have the right to broadcast in this country is not inconsistent with an intent to avoid the UK broadcaster’s charge.”

[20]However, as already stated, the Court’s conclusions, including the above, were expressly subject to the points of EC law relied upon by the Appellant.

The EC law arguments

[21]In this part of the appeal the Appellant raises arguments under a number of heads of EC law. Success in any one of these is said to be sufficient to remove the basis for the Appellant’s conviction under s. 297(1).

Directive 98/84

[22]The first relates to Directive 98/84/EC, the Conditional Access Directive. The scope of the Directive is stated in Article 1:

“The objective of this Directive is to approximate provisions in the Member States concerning measures against illicit devices which give unauthorised access to protected services.”

[23]Article 4, headed “Infringing activities” imposes obligations on Member States:

“Member States shall prohibit on their territory all of the following activities: (a) the manufacture, import, distribution, sale, rental or possession for commercial purposes of illicit devices; (b) the installation, maintenance or replacement for commercial purposes of an illicit device; (c) the use of commercial communications to promote illicit devices.”

[24]Article 3 is as follows:

“Internal market principles 1. Each Member State shall take the measures necessary to prohibit on its territory the activities listed in Article 4, and to provide for the sanctions and remedies laid down in Article 5. 2. Without prejudice to paragraph 1, Member States may not: (a) restrict the provision of protected services, or associated services, which originate in another Member State; or (b) restrict the free movement of conditional access devices; for reasons falling within the field coordinated by this Directive.” for reasons falling within the field coordinated by this Directive.”

[25]“Illicit device” is defined in Article 2(e):

“illicit device shall mean any equipment or software designed or adapted to give access to a protected service in an intelligible form without the authorisation of the service provider.”

[26]It is the Appellant’s contention that the reference to “illicit devices” in that Directive is restricted to what have been called “pirate” devices i.e. devices which have been manufactured and marketed without the authority of the broadcaster in question but which are technically able to decode the broadcaster’s encrypted transmission. Such devices are, in the Appellant’s submission, to be distinguished from devices which have been manufactured and marketed with the authority of the broadcaster, but which are used in an unauthorised manner, for example in another Member State contrary to the wishes of the issuing broadcaster. The Appellant submits that if that interpretation of the Directive is right, then the domestic measure under which the Appellant was prosecuted and convicted, namely s.297(1), cannot be applied to cases such as this where the decoder card in question is not claimed by the prosecution to be a “pirate” (and therefore ex hypothesi an “illicit”) device. The reason why the national measure cannot be applied in such a case is, submits Mr Howe, that such an application would infringe Article 3(2)(a) and/or (b) of the Directive. In other words, to prosecute someone in the Appellant’s position who has purchased a card which is genuine (i.e. not “illicit”) and which has been imported from another Member State where it has been marketed with the consent of the issuer would be to restrict the free movement of conditional access devices and/or the provision of protected services, contrary to both Article 3(2) and the underlying free movement provisions of the EC Treaty itself. Mr Howe goes on to argue that if, as the Respondent submits, “illicit” device is to be interpreted as referring not just to “pirate” devices, but also to devices which are genuine in origin but are used in contravention of contractual or other stipulations, then this would fly in the face of the definition of “illicit device” in Article 2(e) of the Directive. This provision, in referring to equipment or software “designed or adapted to give access to a protected service”, is clearly identifying the inherent nature of the equipment in question – i.e. its design or adaptation – rather than the use to which it is put. Further, such an interpretation would all but empty Article 3(2) of effect, as the scope of the prohibition which Member States would on that interpretation be obliged to impose by virtue of Article 3(1) and Article 4 of the Directive would be so wide. The Appellant points to the “internal market” and free movement legal bases of the Directive in the first ‘Having regard’ paragraph before the recitals and to the stated objective of the Directive in recitals 11 and 12, namely to assist free movement by removing the disparities between national measures in respect of the legal protection to be given to services based on conditional access, which have created obstacles to the free movement of services and goods. These aims are hardly consistent with the Directive being a means of preventing the cross border use of devices lawfully in circulation in a Member State.

[27]The Respondent, on the other hand, while accepting that “illicit device” includes “pirate” devices, submits that it cannot be restricted to such devices. In support of this submission the Respondent prays in aid, amongst other arguments, that the essential purpose of the Directive as appears from its recitals is to outlaw unauthorised access and to protect the remuneration of the service provider. The remuneration of the service provider is just as much affected by parallel imports as by imports of “pirate” cards. In particular, the Respondent emphasises recital 13 and the words “without authority” therein as indicating that the illicitness of a card is closely connected to the unauthorised use of it, which deprives the issuer of legitimate remuneration.

(e) and the words:

“without the authorisation of the service provider.”

Further, it is inherent in the concept of authorisation that this can be granted on a territorial basis. In addition the Respondent argues that the distinction between pirate and non-pirate cards is not to be found in the Directive.

[28]At the hearing the Respondent raised a further point which was explained more fully in a note sent to the Court at our request. In essence the Respondent attributes the following argument to the Appellant: i) “Illicit device” is limited to “pirate” devices and ii) Article 3(2)(b) prohibits Member States from restricting the free movement of any conditional access device which is not an illicit device.

[29]The Respondent then submits that this would call into question the validity of Article 3(2)(b). For it would mean that Member States could not restrict the movement of a genuine conditional access device which, for example, had been stolen or which was dangerous. The Respondent contends that such a situation would conflict with principles of EC law, including the principle of proportionality. It would also set Article 3(2)(b) at odds with the Treaty itself and with the ECJ case law on the permissibility of certain exceptions to and derogations from the principles of free movement. Mr Green indicated that the Respondent would wish the proposed reference to the ECJ to include a question relating to this issue of validity of the Directive.

[30]We are not entirely sure that the Respondent has correctly characterised the Appellant’s submission. The latter is certainly contending that “illicit device” is synonymous with “pirate device”, but we did not understand the Appellant necessarily to be submitting that the effect of Article 3(2)(b) was to prohibit restrictions in any circumstances upon the free movement of all other conditional access devices. We understood the Appellant to be contending that the application of s.297(1) to a non-pirate conditional access device in the circumstances of this case would infringe Article 3(2)(b), as well as the free movement principles of EC law. (See for example paragraphs 39 and 40 of the Appellant’s skeleton dated 11th January 2008.) There is no suggestion that the Appellant’s card was stolen or dangerous.

[31]However, we will not seek to exclude a question on validity of the Directive if it reflects an issue in the appeal. In this regard it occurs to us that validity of the Directive might also be put in question by the interpretation favoured by the Respondent: if the term “illicit device” includes devices which have been manufactured and marketed by the service provider, but which are being used in breach of a contractual stipulation, then the prohibition in Article 3(1) and 4 may fall foul of the free movement provisions in the Treaty which form part of the legal basis of the Directive.

[32]In the civil claim Kitchin J heard extensive argument as to the meaning of the term “illicit device” and he regarded it as one of the key issues in that case. He also regarded the arguments on both sides as “powerful” (see paragraph 78 of his judgment) and had decided that the answer to the question was not clear and ought to be referred to the ECJ. He expressed a provisional preference for the defendant’s submission that “illicit” means “pirate” (see paragraphs 79 to 99 of his judgment).

[33]In relation to the appeal before us it is necessary to determine whether the application of s. 297(1) to the Appellant in the circumstances of this case is incompatible with EC law and in particular with the Directive, as alleged by the Appellant. The meaning of “illicit device” clearly has a bearing on this issue and also therefore needs to be determined in these proceedings. We propose to refer these issues of interpretation to the ECJ, along with any related questions as to the validity of the Directive, as discussed earlier.

[34]As to the meaning of “illicit device”, we share the provisional view of Kitchin J that it refers to a device which is “pirated” in the sense that it has not been manufactured and marketed by or on behalf of the relevant service provider, and of which the inherent physical nature has been adapted or designed to bypass the charging arrangements put in place by the service provider. We also agree with Kitchin J’s reasons for taking that provisional view.

[35]In very general terms we consider, subject always to the ECJ’s answers to the questions which we propose to send, that the purpose and effect of the Directive are as follows: i) The perceived “mischief” to which the Directive is directed are the disparities between national measures designed to protect services based on conditional access devices. ii) Such disparities create obstacles to free movement and therefore to the creation of the internal market which require to be addressed by approximation of national rules relating to the marketing of “illicit devices”. iii) To this end Member States are required to take certain measures against the manufacture, marketing, possession etc of “illicit devices” (Articles 3.1 and 4). iv) These measures, albeit clearly capable of affecting cross-border provision and reception of goods and services, are considered by the Community legislature to be justified and proportionate as a matter of EC law (see for example recitals 11 to 15 and 21). v) Article 3(2) appears to be doing no more than making clear what would otherwise be implicit, namely, that save as provided by Article 3(1) the Directive is not to be taken as requiring or authorising restrictions on cross-border trade in protected services and conditional access devices (including at least theoretically) illicit devices. vi) In other words, the Directive provides for some limited derogations from the application of the free movement principle, in the case of “illicit devices” only, with the aim of removing the existing disparities between national measures which themselves create obstacles to the internal market.

[36]If this analysis is correct then two results may follow. First, any restriction imposed by a Member State which goes beyond those specifically required by Article 3(1) must be tested separately against the basic Treaty provisions on free movement of goods and services. Secondly, in the context of this appeal and assuming that the Appellant’s card was not an “illicit device”, the prohibition in Article 3(2) may not provide the Appellant with much more assistance than is already provided by the prohibitions contained in the basic Treaty provisions on free movement.

Free movement of goods and services – Articles 28 to 30 and 49 EC Treaty

[37]Under this head Mr Howe contends that the prosecution of the Appellant under s.297(1) is a measure having equivalent effect to a quantitative restriction on imports of decoder cards under Article 28 EC and also that it is a restriction on the Appellant’s ability to receive a service from another Member State within the meaning of Article 49 EC. He contends that the real issue is whether or not those restrictions are justified and proportionate. His arguments in this regard are set out at paragraphs 4 to 51 of his skeleton argument dated 11th January 2008.

[38]In essence, so far as the initial restrictions are concerned, the Appellant submits that the prosecution under s.297(1) clearly impacts on the importation of decoder cards marketed in another Member State, namely Greece, by deterring if not preventing their importation and use in the United Kingdom. Similarly the prosecution deters and prevents the Appellant from receiving in the United Kingdom satellite broadcasts made by NOVA from Greece.

[39]The Appellant prays in aid a number of authorities as supporting the submission that national measures restricting cross-border trade in respect of decoder cards originally put on the market in another Member State with the consent of the service provider are restrictions on free movement which cannot be justified under EC law. In particular the Appellant relies upon the European Commission’s Green Paper on Encrypted Services (COM(96) 76 final) as distinguishing between pirate cards and cards marketed in a Member State with the consent of the encryptor, and as regarding restrictions on the free movement of the former but not the latter as justifiable under the ECJ’s case law. The Appellant also relies upon Joined Cases 55/80 and 75/80 Musik-Vertrieb Membran GmbH v. GEMA

[1981] 2 CMLR 44

. In that case the ECJ ruled that sound recordings, even if incorporating copyright musical works, are products to which free movement principles apply, and that national measures on industrial or commercial property rights cannot be used to prevent the import of a product lawfully marketed in another Member State by the owner of the right in question or with his consent. To permit the copyright owner to impede such importation would go beyond the “specific subject matter” of the copyright. Mr Howe submits that this principle applies here: a decoder card is analogous to the circulation of, for example, DVDs containing recordings of matches. Like a DVD the movement of a pre-paid decoder card from one Member State to another does not increase the audience for a broadcast since the broadcaster is remunerated for each card sold. Accordingly, the ECJ case law on free movement of goods applies to decoder cards. It does not matter for this purpose that the criminal law rather than industrial property rights is in issue, as the criminal law is being invoked in aid of the protection of substantive intellectual property rights.

[40]The Appellant makes a similar argument in relation to the Treaty provisions relating to freedom to provide and receive cross-border services. While the protection of intellectual property can justify the imposition of measures which may restrict freedom to provide and receive services, Community law provides for limits. We were referred to

Case C-55/94

Gebhard [1995] ECR 1-4165 in which the ECJ stated at para.37 of the judgment:

“It follows, however, from the Court' s case-law that national measures liable to hinder or make less attractive the exercise of fundamental freedoms guaranteed by the Treaty must fulfil four conditions: (i) they must be applied in a non-discriminatory manner; (ii) they must be justified by imperative requirements in the general interest; (iii) they must be suitable for securing the attainment of the objective which they pursue; and (iv) they must not go beyond what is necessary in order to attain it.”

[41]Mr Howe submitted that in relation to a prosecution of the Appellant under s.297(1) these conditions could not be satisfied, not least because the sub-section discriminates against non-UK providers of satellite broadcasting services. We will refer to this point further below.

[42]For the Respondent Mr Green rejected the Appellant’s arguments based on the Treaty’s free movement provisions. In short, the Respondent relies upon the decision of the ECJ in Coditel ( No.1) Case 62/79 [1980] ECR 881 as being directly in point. In that case the ECJ held that copyright in performances such as the showing of a film may be validly licensed and exploited on a national territorial basis without falling foul of the Treaty’s free movement rules. This was because copyright in films was not to be analysed in the same way as copyright in such works as books and sound recordings. The film belonged to the category of literary or artistic work which could be infinitely repeated by way of performance, and was not to be treated as a work the placing of which at the disposal of the public is inseparable from the circulation of the material form of the work, such as, for example, a book (paragraph 12 of the judgment). Thus, said the ECJ, the right to receive a fee for each showing of a film was “part of the essential function of copyright” in that category of artistic work. It followed from this that the rules of the Treaty on free movement did not in principle create an obstacle to the rights holder and his licensees agreeing geographical limits within which the rights holder would be entitled to performance fees, even if those limits coincided with national frontiers, where TV was organised in Member States largely on the basis of broadcasting monopolies (see paragraph 16 of the judgment).

[43]The Respondent says that the satellite broadcast in this case is indistinguishable in material terms from the broadcast of the film in question in Coditel (No.1), with the result that the Premier League’s copyright protection for broadcast coverage of its football matches gave it the right to license that coverage to different broadcasters in different Member States and to do so on terms which ensure that the geographical limits in each of those licences can be enforced. The Respondent further argues that it is immaterial that in Coditel (No.1) there was a cable re-diffusion within Belgium of the broadcast in question, which extended it beyond its normal area of reception and that in the present case the offending broadcast was received by means of a decoder card for which the service provider had been remunerated.

[44]The Respondent argues amongst other points that as the right in issue is a performance right the doctrine of exhaustion of rights is inapplicable for the reasons set out in

Case C-200/96

Metronome Musik [1998] ECR 1-1953 in which the ECJ distinguished between the sale of a video cassette and its rental. The latter form of exploitation was not rendered unprotected by the exhaustion doctrine by reason of exploitation by sale having also taken place. The sale of decoder cards is not analogous to the sale of video cassettes or DVDs as they do not contain the copyright protected broadcasts. The issue in the present case relates to services, not goods.

[45]Very similar arguments and counter arguments have been put by the parties to Kitchin J in the FAPL case, where the defendants also rely upon Articles 28 to 30 and 49 as defences to the claimants’ claim both under s.298 of the CPDA and for breach of copyright. Whilst again stating his provisional views on the arguments presented to him, Kitchin J decided to refer the questions of EC law which the parties raised for a preliminary ruling by the ECJ (see paragraphs 299-344 of his judgment). We propose to do the same.

Section 297(1) is discriminatory

[46]We have already referred to the Appellant’s contention that s. 297(1) is discriminatory and that this factor among others precludes its restrictive effects on the free movement of cross-border goods and services being treated as justified under the relevant principles set out in the ECJ case law (see paragraph 41 above).

[47]The Appellant argues that the difference of treatment enshrined in the sub-section explicitly confers protection (by enabling criminal prosecutions to take place) on broadcasting services provided from the United Kingdom but denies equivalent protection to such services provided from other Member States, thereby creating a situation where services which are domestic in origin receive favourable treatment which renders a corresponding disadvantage to services which are transfrontier. In this respect the Appellant points to the fact that s. 298(1), which in its original form contained a similar territorial bias, was amended to remove that bias, whereas s. 297(1) retains it. The Appellant also submits that the discrimination inherent in the measure in question is exacerbated by the fact that it is being invoked in this prosecution in order to impede the Appellant’s access to a service provided by a provider in Greece in order to shield from competition a United Kingdom-based service provider.

[48]According to the Appellant such discrimination cannot be justified and so the application of s. 297(1) in a case such as the present which concerns cross-border supply of services and cards is incompatible with the free movement rules in the Treaty, with the result that s. 297(1) must here be disapplied.

[49]Mr Green, in response, submitted that s. 297(1) does not operate to create an obstacle to free movement of goods or services. It renders criminal the dishonest reception of programmes broadcast from a place in the United Kingdom. It does not impede broadcasts of programmes provided from elsewhere. Thus, if the programme broadcast and received by the Appellant consisted only of a broadcast from another Member State (and not also one from the United Kingdom) the Appellant could receive it untrammelled by s. 297(1).

[50]Neither side developed these arguments very fully. Nevertheless we have come to the conclusion that if there is to be a reference, this issue too should be reflected in the questions sent to the ECJ.

Competition Rules

[51]Finally, the Appellant relied upon Article 81 EC. The argument, put simply, appears to be as follows.

[52]The existing prosecution under s.297(1) charges the Appellant with dishonest reception of “a programme ... with intent to avoid payment of any charge applicable to the reception of the programme ...”.

[53]Thus the satisfaction of this element of the alleged offence requires that the payment which is intended to be avoided should be “applicable” to the reception of the programme by a defendant. In the present case the Respondent contends that the “applicable” payment is the subscription which would be payable to BSkyB if the Appellant had contracted to receive BSkyB’s service rather than the NOVA service from Greece. Why is BSkyB’s payment said to be “applicable”? Because it is argued that BSkyB has the exclusive right to broadcast the football matches in question for reception within the United Kingdom. Correspondingly it is alleged that a licensee for the territory of Greece does not have any right to enable the football matches in question to be screened in the United Kingdom.

[54]BSkyB’s exclusive right to broadcast in the United Kingdom as well as the corresponding prohibition on the NOVA service, are based on contractual provisions in the licences granted by the Premier League to its various licensees in the various territories. In particular it is based on the contractual export restriction relating to decoder cards to which we have made reference earlier in this judgment. It is this export restriction which prohibits the licensee from Greece supplying decoder cards for use in the United Kingdom.

[55]The Appellant contends that this export ban falls within the prohibition in Article 81(1) of the EC Treaty as being an agreement which is liable to affect trade between Member States and which has as its object or effect the prevention, restriction or distortion of competition within the Common Market. As such the Appellant submits that it is prohibited and automatically void by virtue of Article 81(2).

[56]If the contractual export ban is unlawful and unenforceable then absolute territorial protection, upon which the Respondent relies in order to establish that within the United Kingdom BSkyB has the exclusive right in question, does not in fact exist. In those circumstances that exclusive right itself does not exist, with the result that the subscription charge exacted by BSkyB would not be “applicable” to the programme screened by the Appellant, and the offence of which she has been convicted would fall away.

[57]The Respondent disputes that Article 81 is engaged at all. For this the Respondent relies upon Coditel (No.2) (Coditel SA and Ors v Ciné-Vog Films SA and Others, Case 262/81 [1982] ECR 3381) as a complete answer to this point. In that case it was held by the ECJ that:

“... the mere fact that the owner of the copyright in a film has granted to a sole licensee the exclusive right to exhibit that film in the territory of a Member State and, consequently, to prohibit during a specified period, its showing by others, is not sufficient to justify the finding that such a contract must be regarded as the purpose, the means or the result of an agreement, decision or concerted practice prohibited by the Treaty.”

[58]In response, the Appellant submits that the situation here is wholly distinct from that which applied in Coditel (No.2), and that the present situation is governed by different case law of the ECJ, and in particular its decision in Case 258/78 Nungesser v Commission [1982] ECR 2015 where the Court distinguished between open and closed exclusive licences and held that:

“The court has consistently held (CF. joined cases 56 and 58/64 Consten & Grundig v Commission [1966] ECR 299) that absolute territorial protection granted to a licensee in order to enable parallel imports to be controlled and prevented results in the artificial maintenance of separate national markets, contrary to the Treaty .”

It should be noted that in the Coditel cases the licence was open, not closed.

[59]Again, the issues relating to Article 81 were not developed at great length before us. On the other hand, the same issue relating to the application and effect of Article 81 to the same contractual provisions was raised in the civil proceedings between Kitchin J and he heard extensive argument on the point. In his judgment he commented on the parties’ respective arguments as follows:

“It is apparent from the foregoing that the parties are approaching the issue from fundamentally different perspectives as to the correct legal approach. The defendants say that Community policy as to cross border broadcasting is evident from the series of legislative measures to which I have referred and, in the event the interpretation of Directive 98/84/EC for which they contend is correct, it may be presumed that the export restriction has, as its object, the restriction and distortion of competition and it is enough to show there is a danger that trade between Member States will be appreciably affected. The claimants, on the other hand, say that it is inherent in the specific subject matter and essential function of copyright for broadcasts that rights may be licensed to exclusive licensees in particular Member States. In short, exclusive licenses of performing rights do not per se infringe Article 81, even though they confer absolute territorial protection and might prevent transmission into a neighbouring state. This, it seems to me, is a question which is so intimately tied to the other issues of interpretation I have discussed that I believe it too should be referred to the Court of Justice. I would ask the Court what legal test the national court should apply and the circumstances it should take into consideration in deciding whether the export restriction engages Article 81.”

[60]We digress at this stage to voice our unease about the bringing of a prosecution under s. 297(1) in circumstances where the establishment of an essential element in the offence, namely “intent to avoid payment of any charge applicable to the reception of the programme”, depends upon the compatibility with EC law of an export ban imposed in a licence agreement between two companies who are legally strangers to the purchaser and user of the decoder card in question who is the defendant to the criminal charge. Our unease at this use of s. 297(1) exists notwithstanding the additional requirement of dishonesty, and regardless of whether the export restriction and resultant absolute territorial protection are ultimately held to be enforceable. It seems to us unlikely that the legislature would have envisaged that the applicability of the avoided charge to the programme received by a defendant would be dependent upon something so remote from that defendant’s own knowledge.

[61]It would, in our judgment, be quite wrong for the Appellant’s conviction to stand if it is indeed based upon a misunderstanding of EC law, and notwithstanding that the issues of EC law were not raised below. Moreover, if those issues are not determined in these proceedings, they will be raised and have to be decided in some other case, involving further costs and additional judicial and court resources. It follows that a decision upon the issues of EC law under each of the heads relied upon by the Appellant is necessary in order for this Court to dispose of this appeal. We therefore have discretion to seek a preliminary ruling from the ECJ. As already indicated earlier in this judgment, we propose to exercise that discretion and refer those questions of EC law to the ECJ.

[62]In reaching that decision we have had regard to a number of factors: i) Both sides have emphasised the importance of the questions of EC law which are raised. We are told that a good many prosecutions are awaiting the outcome of the current appeal. These are cases in respect of which the EC law issues are material. (There will of course also be prosecutions under s. 297(1) which do not involve any issues of EC law. We refer again to these below.) Moreover the EC law issues in this case are clearly such that their resolution may well have a substantial impact on the way in which programmes of the kind with which this case is concerned are licensed and broadcast throughout the EU, and on the ways in which the intellectual property rights in question are remunerated and in which competition takes place in the relevant markets. This possible impact would clearly also have consequences for consumers throughout the EU, and in particular for the variety and availability of the relevant services to the public and the prices charged for them. ii) The answers to the questions of EC law raised are not clear. In each case there are respectable arguments on both sides. Nor are any of the issues so clearly governed by existing ECJ case law as to render a reference empty of purpose. The issues are neither acte claire nor acte éclairé. They are of such a nature that in our view authoritative guidance on them from the ECJ is required. iii) As explained earlier, the facts relevant to this case have been ascertained to the extent necessary in order to formulate appropriate questions for the ECJ, the answers to which will enable this Court to resolve this appeal. iv) It is possible that it will appear from the judgment of the ECJ that insufficient inquiry into the facts was made in the court below. However, it is clearly important to obtain the comprehensive opinion of the Court on the legal issues that we now see do arise. Whether there should be any further factual inquiry may be determined after the Court has given its judgment. Against that, it would be quite wrong for this appeal to fail on the basis of what was subsequently found to be an incorrect application of EC law. v) We have also taken account of the desirability of resolving this appeal, including the issues of EC law which arise, as expeditiously as possible given the importance of the case. If we were not to make a reference and had decided these issues ourselves it is highly likely that a petition would be lodged with the Appeal Committee of the House of Lords along with an incidental petition for a preliminary reference. In those circumstances the Appeal Committee would be subject to Article 234(3) of the Treaty with the result that a reference to the ECJ at that stage would be a very real possibility. Such a situation would prolong both the delay and the legal uncertainty. Referring the issue at the present stage avoids the risk of such additional delay with all the additional expense which it would entail. vi) A reference at the present stage has a further advantage. It means that it can be sent to the ECJ at about the same time as the reference which is being made by Kitchin J in the FAPL case. This opens the possibility, if not of formal joinder of the cases in the ECJ, of at least informal co-ordination of written and oral pleadings before the same chamber of that Court. Such co-ordination can bring obvious benefits to the parties, any interveners and the ECJ itself. While there is not complete commonality of issues as between this appeal and the FAPL case, there is sufficient overlap of issues raised to make co-ordination of the references highly desirable.

Other prosecutions under s. 297(1)

[63]The effect of EC law as implemented into United Kingdom law by sections 2 and 3 of European Communities Act 1972 is that any national measure, including primary legislation, the application of which irreconcilably conflicts with a directly effective rule of EC law, must be disapplied to the extent necessary to remove the conflict. Thus, if the prosecution and conviction of the Appellant under s.297(1) is ultimately held to be incompatible with such a directly effective provision of Community law the result would be that this appeal would be allowed and the Appellant’s convictions would be quashed.

[64]However, it is important to emphasise that even in the event of such a conflict United Kingdom primary legislation is not rendered invalid – it remains in force and enforceable save to the extent that it may fall to be disapplied in order to give effect to the overriding requirements of EC law. The position was recently clearly set out by Lord Walker of Gestingthorpe in his speech in Fleming v HMRC

[2008] UKHL 2

at paragraph 24:

“It is a fundamental principle of the law of the European Union ... recognised in s.2(1) of the European Communities Act 1972, that if national legislation infringes directly enforceable Community rights, the national court is obliged to disapply the offending provision. The provision is not made void but it must be treated as being (as Lord Bridge of Harwich put it in R v Secretary of State for Transport, ex parte Factortame [1990] 2 AC 85, 140): ‘without prejudice to the directly enforceable Community rights of nationals of any Member State of the EEC.’”

[65]It follows from this that even if the Appellant is right in her contentions based on EC law, in other circumstances where EC law is not engaged there is no impediment to prosecutions and convictions under s.297(1). The ECJ itself made this clear in ICI v Colmer

[1998] ECR I-04695

when it said at paragraph 34:

“... when deciding an issue concerning a situation which lies outside the scope of Community law, the national court is not required, under Community law, either to interpret its legislation in a way conforming with Community law or to disapply that legislation. Where a particular provision must be disapplied in a situation covered by Community law but that same provision could remain applicable to a situation not so covered, it is for the competent body of the state concerned to remove that legal uncertainty insofar as it might affect rights deriving from Community rules.”

By way of example, the issues of EC law raised in the present case do not affect prosecutions resulting from the dishonest use of decoder cards which are “pirate” or counterfeit or which have been stolen.

Conclusion

[66]For the reasons set out above, we shall make a reference to the European Court of Justice. We shall determine the questions for the reference after consideration of the drafts to be put forward by the parties, but we hope that the questions can be agreed.

[67]The finding of dishonesty on the part of the Appellant related to the allegation that she was aware of, and deliberately infringed, a lawful geographical restriction on the use of her NOVA card. If that geographical restriction is held to be unlawful and therefore ineffective, the Respondent has conceded that that finding will have to be set aside. Whether it is open to the Respondent to seek a finding of dishonesty on any other basis is not an issue we have to consider at this stage, and we express no view on it. Similarly, if the geographical restriction is held to be unlawful, it may be difficult to see why the subscription charge exacted by BSkyB for its service (to which the Appellant did not subscribe) should be treated as “applicable” to the NOVA programme screened by the Appellant. If it is not so applicable then the offence under s. 297(1) would not be established. This may need to be the subject of further argument depending on the outcome of the reference which we propose to make.