The Court ruled that football associations or other rights holders cannot force broadcasters to restrict the sale of decoders abroad because this would breach EU free trade laws. It also ruled that countries in the EU could not introduce new laws banning the use of foreign decoders.
The case will be sent back to the High Court, which had previously ruled that if the ECJ said that pubs' use of foreign decoders did not contravene EU rules on free movement of services the use could continue.
The UK High Court asked the ECJ to rule on a number of questions on EU law in a case involving pub landlady Karen Murphy. Murphy bought a Greek decoder to show live English Premier League football matches in her pub because the subscription to the service was cheaper than the UK service operated by BSkyB.
The Premier League licensed the right to show live games to BSkyB in the UK and sub-licensed the right for other European broadcasters to show games. Murphy bought a decoder that gave her access to Greek channels' coverage of the games.
The Premier League and BSkyB claimed that this was prohibited because broadcaster agreements prevented customers from using the decoders "outside the national territory concerned" and that the activity was in breach of copyright law.
Media Protection Services, which takes action against pubs which show football in contravention of Sky's conditions, took Murphy to court over her use of the decoder.
Murphy claimed that her use of the Greek decoder to show the games was legitimate and that to rule that it could not be used in the UK would be contrary to EU free trade rules.
High Court judge Lord Justice Burton had said that, if the ECJ agreed with Murphy, there would be no offence that she will be deemed to have committed.
The ECJ said that EU member states could "in principle" confer a form of copyright protection on sporting events but that the countries cannot pass new laws that would ban foreign decoders in order to protect those rights. Laws to that effect would breach EU free trade laws, the ECJ said.
It said that even rules set by foreign broadcasters that only customers in their countries could use the services would not affect the right of users to buy services abroad to use in the UK.
"[The Treaty on the Functioning of the European Union (TFEU)] precludes legislation of a member state which makes it unlawful to import into and sell and use in that state foreign decoding devices which give access to an encrypted satellite broadcasting service from another member state that includes subject-matter protected by the legislation of that first state," the ECJ ruling said.
"This conclusion is affected neither by the fact that the foreign decoding device has been procured or enabled by the giving of a false identity and a false address, with the intention of circumventing the territorial restriction in question, nor by the fact that it is used for commercial purposes although it was restricted to private use," it said.
Restrictions on free trade rights can be justified if "it serves overriding reasons in the public interest, is suitable for securing the attainment of the public interest objective which it pursues and does not go beyond what is necessary in order to attain it," the ruling said.
The Premier League in England had argued that it is necessary to prohibit live football being shown at certain times in order to encourage fans to attend matches rather than watch games on TV, but the ECJ said that it is "indisputable" that football fans not attending matches would "have a lesser adverse effect on the fundamental freedoms than application of the restriction [of free trade]".
The ECJ said that broadcasters and other rights holders cannot create licences for broadcasters that stop them selling their services to other EU countries because that is a breach of EU competition laws.
"The clauses of an exclusive licence agreement concluded between a holder of intellectual property rights and a broadcaster constitute a restriction on competition ... where they oblige the broadcaster not to supply decoding devices enabling access to that right holder’s protected subject-matter with a view to their use outside the territory covered by that licence agreement," the ECJ ruling said.
The ECJ ruled that functions of decoders in copying "transient fragments of the works" for reproduction purposes on TV is exempt from liability copyright infringement, but said that the broadcast itself was copyright protected under EU law.
The ECJ ruled that showing matches in pubs was "communication to the public" under EU copyright laws and said that whilst sporting events themselves are not protected by copyright, graphics, music and other features included within a broadcast are.
The Premier League has claimed that Murphy breached the UK's Copyright, Designs and Patents Act (CDPA). Under the CDPA "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".
Under the Act a person is entitled to assert the same rights as a copyright owner "in respect of an infringement of copyright" if they send encrypted transmissions that another person uses "any apparatus designed or adapted to enable or assist persons to access the programmes or other transmissions or circumvent conditional access technology related to the programmes or other transmissions when they are not entitled to do so" for commercial purposes.
Under the EU's Conditional Access Directive member states must "prohibit on their territory ... the manufacture, import, distribution, sale, rental or possession for commercial purposes of illicit devices; the installation, maintenance or replacement for commercial purposes of an illicit device; the use of commercial communications to promote illicit devices".
In its ruling the ECJ said that decoder devices could not be considered an "illicit device" because of how the term is defined under the Directive.
"‘Illicit device’ ... must be interpreted as not covering foreign decoding devices (devices which give access to the satellite broadcasting services of a broadcaster, are manufactured and marketed with that broadcaster’s authorisation, but are used, in disregard of its will, outside the geographical area for which they have been issued), foreign decoding devices procured or enabled by the provision of a false name and address or foreign decoding devices which have been used in breach of a contractual limitation permitting their use only for private purposes," the ECJ ruling said.
"The Conditional Access Directive defines ‘illicit device’ as 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. This wording is thus limited solely to equipment which has been the subject of manual or automated operations prior to commencement of its use and enables protected services to be received without the consent of providers of those services. Consequently, the wording refers only to equipment that has been manufactured, manipulated, adapted or readjusted without the authorisation of the service provider, and it does not cover the use of foreign decoding devices," it said.
"The case is significant for the Premier League and content providers," said James Sweeting, an intellectual property law specialist at Pinsent Masons, the law firm behind Out-Law.com. "Once existing licences expire, the FAPL will have to look again at its licensing structure and revenue model. This does not necessarily mean that the FAPL will lose revenue but will have to look at ways of circumventing any shortfall caused by this ruling. This could mean a pan-European licensing model."