Brexit Could Have Broad Impact On UK Audiovisual Sector

It is too soon to say precisely what impact the United Kingdom’s departure from the European Union might have on Britain’s audiovisual sector, but among other things, Brexit could bring changes to the scope of copyright law and protections, rights clearance, online AV services and content creation, lawyers said.

The transition from an EU trading platform to an international one isn’t lightly made, and nowhere will it be tougher than in the audiovisual (AV) sector, Baker & McKenzie (London) competition and antitrust attorney Bill Batchelor said at an 18 July webinar on Brexit’s implications for the sector. The UK employs more people in the AV sector than any other EU member state, and around 75 percent of Office of Communications-licensed broadcasters in Britain serve non-UK territories, he said.

Of all the industry sectors, AV tends to be one of the trade areas where governments are less likely to cede control, Batchelor said. He predicted the area will be a “heavily fought-over part” of any trade talks between the UK and EU.

Copyright Scope, Exhaustion, Rights Clearance Major Issues

Brexit brings three core intellectual property issues for the UK’s AV sector, with copyright issues featuring most strongly, said Baker & McKenzie (London) technology and media attorney Ben Allgrove.

One issue is the status of European Court of Justice (ECJ) case law pre-Brexit, he said at the webinar. The EU high court has ruled on the scope of the communication-to-the-public right, various exceptions and intermediary liability, he said. All of these cases deal with the scope of copyright and its protections.

The ECJ case law has been enacted into UK law and will remain precedential on IP questions after Brexit as long as UK legislation is not amended, said Allgrove. But there have been attempts to revise the law to allow a private copying exception, which failed, as well as calls for Britain to adopt a US-like “fair use” exception, and Brexit could open up opportunities for such changes, he said. The biggest concern is that after the UK leaves Europe, its voice in the copyright regime will be undermined, he said.

Another IP issue is the scope of “exhaustion” post-Brexit, Allgrove said. Under current EU copyright and trademark law, the IP right is generally exhausted once it is put on the market in a European Economic Area (EEA) member state, he said in an email later. That means that a rights holder can’t use its IP rights to stop products from moving within the single market, but can use them to prevent the products from moving outside of the single market, he said.

The position is “nuanced” in the AV sector because the communication to the public copyright (that is, broadcast and video-on-demand transmissions) can’t be exhausted, but the copyright on physical media can, said Allgrove. In addition, the ECJ has also “opened the door to recognising exhaustion in respect of non-physical media files” such as software, although to date the court hasn’t extended to AV content, he emailed.

If the UK leaves the EU and the EEA, there are two potential consequences, said Allgrove. One is that putting a product on the market in the UK would not exhaust the rights in the EEA. The second is that there will be room for the UK to take a different approach to exhaustion by recognising, as some countries do, international exhaustion. Under that scenario, he said, once a copyright owner has exercised its rights regarding a product anywhere in the world, it cannot then use those rights to stop the movement of those products (of AV files, if the ECJ ruling is extended to cover them).

Rights clearance could also change after Brexit, Allgrove said at the webinar. Currently, broadcasters are allowed to clear rights at satellite uplinks, but once the UK is out of Europe, and if it also exits the EEA, broadcasters relying on that rule will have to find alternatives, he said.

But Brexit will likely not change the trend toward pan-EU licensing, said Allgrove. On the label side, most deals are already global or multi-territorial, and they include EU and non-EU countries, he said later. There is no need for that to change, he said. Publishing rights organisations are also now beginning to offer multi-territorial licences, some of which include non-EU nations, he said.

“You already need to licence-in the UK rights if you want to run a service which exploits them,” he said. “Brexit doesn’t change that.”

Content Production Questions

Abandoning the EU could result in the withdrawal of direct European funding for content, such as through the Creative Europe MEDIA Programme, said Agapi Patsa, of Baker & McKenzie’s European and competition law practice. It could also indirectly affect such funds because the UK would no longer be subject to EU “state aid” rules and could have more flexibility to finance content creation, she said.

Under the EU Audiovisual Media Services Directive, broadcasters licensed in one member state must be able to broadcast in other member states with no further rules (country-of-origin principle), said Patsa. But the directive won’t apply to the UK after Brexit, and whether British broadcasters will need licences in all EU countries where they provide services will depend on whether the licences are for linear or non-linear services, she said. Non-linear (video on demand) services are subject to local regulation, while licensing for linear transmissions may be required in member states that have not signed the Council of Europe Transfrontier Television Convention, Patsa said.

Brexit will have a significant impact on providers of online AV services, she said. A draft European Commission proposal allows subscribers to access and use online content when they travel in the EU, but after Brexit, the UK will have no underlying legislation to permit portability, she said.

Nor will Europe’s net neutrality rules, which prevent blocking or throttling of online content subject to certain exceptions, apply post-Brexit, and it is unclear whether the UK will adopt its own rules, she said. In any case, the industry is likely to face uncertainty and regulatory gaps, Patsa noted.

Options for Commercial TV Broadcasters Not Good

Brexit raises major issues of market access and the future of the AV sector, Association of Commercial Television in Europe Director General Grégoire Polad said in an interview.

The UK has a limited set of options on the table for creating a new relationship with Europe, he said. The World Trade Organization fall-back won’t allow for the same market access as the EU single market does. Market access would be better if the UK (re)joins the EEA, but it won’t be able to participate in rule-making. Another option is a bilateral agreement with the EU bloc, but this would take a long time to put in place, create less privileged access and probably require financial contributions, he said.

The AV industry is scurrying to determine whether, and how, Brexit will affect the country-of-origin principle, Polad added. The Transfrontier Television Convention has never really been tested as an alternative, he noted. None of the options are “great for the sector,” he said.

Another murky area is the 26 July EC antitrust communication in a case involving Paramount film studio and Sky UK, said Polad. Paramount barred Sky from allowing EU consumers outside the UK and Ireland to access films via satellite or online, the EC said. The studio has now agreed that it will not enforce those provisions in existing licences for pay-TV with any broadcaster in the EEA, it said. It is unclear whether this case makes sense in light of the UK’s withdrawal from the EU, Polad noted.

The European Broadcasting Union, which represents public service broadcasters, currently isn’t commenting on Brexit, a spokesman said.