In March 2011 a court dispute between a Ukrainian satellite TV operator and content owner was finally resolved over IP infringement caused by unauthorized broadcast of the content. The dispute lasted nearly 2 years, was twice reviewed by Ukrainian commercial courts and involved multi-million damages requested by the content owner. Finally the court confirmed that the infringement indeed took place, and reduced damages significantly making an award in the region of EUR11,000. Ukraine’s satellite TV broadcasting market is still young and numbers a couple of rapidly developing players. This court decision was the first of such kind and most probably becomes a benchmark for further practices.

In 2007 a new satellite TV operator entered the Ukrainian market and obtained the necessary state license. According to the license it was authorized to rebroadcast TV channels via satellite to Ukrainian viewers. The license and the Ukrainian telecom laws also obliged the satellite TV operator to rebroadcast Ukrainian channels. In 2007-2008 the satellite TV operator signed agreements with several Ukrainian channels for rebroadcasting of its content via satellite. Under the agreements the channels guaranteed that they have all proper IP rights for the content and its satellite broadcasting should not infringe third party rights.

In 2008-2009 the satellite TV operator rebroadcasted about 100 football matches on the TV channels. At the beginning of 2009 the owner of IP rights for the football matches informed the satellite TV operator that it allowed only air broadcasting of the matches by TV channels and never authorized satellite broadcasting. The content owner requested that the satellite TV operator ceases further rebroadcasting and compensates damages caused.

As an agreement was not reached, the content owner filed a court action against the satellite TV operator, requesting nearly EUR3 million in damages for non-authorized broadcast of 4 football matches. Given that total number of the matches at issue was about 100, confirmation of such calculation could result in about EUR75 million in damages.
Having reviewed the case the first instance court decided that IP rights were infringed and EUR800,000 of damages for 4 matches should be repaid.

The court of appeal cancelled the above decision. It decided that there was no infringement, since the license and the Ukrainian law obliged the satellite TV operator to rebroadcast the TV channels and these overcomes provisions of IP laws requiring authorization from the content owner.

The court of second appeal made no changes to the previous decision. However the court of the final appeal overruled the appeal decisions and confirmed the decision of the first instance court awarding EUR800,000 in damages.
In 2010 the satellite TV operator applied for another review of the court case, due to new significant circumstances unknown during the initial review of the case. The first instance court confirmed that the price actually paid to the content owner for the matches is new circumstance significant for the case review, since it was much lower than damages awarded for similar broadcasting by the satellite TV operator. Taking this into account the court made a new decision confirming the infringement and awarding EUR11,000 of damages. The Court of appeal confirmed this decision and it became final in February 2011.

As a next step the satellite TV operator may file a recourse action against the air TV channels, which failed to honor its guarantee on clearance of IP rights for the matches. However given comparatively low amount at issue and complicated court procedures involved, it will be unlikely to proceed.

Satellite TV operators in Ukraine should keep in mind that it is necessary to double check clearance of IP rights for the content especially when rebroadcasting air TV channels. Neither state license and telecom laws, nor guarantees by the TV channels on clearance of IP rights will indemnify the satellite TV operator from damages caused to a content owner who did not authorize the satellite broadcast.

The satellite TV operator was represented by Magisters law firm. The content owner was represented by in-house lawyers.

By Taras Kyslyy
Senior Associate
Head of IP practice at Magisters