TV rights in Japan.

Ohara, Yoshimi ; Watanabe, Eriko

1. What Are TV Broadcasting Rights And How Are They Protected In Japan

Japan is no exception when it comes to the increasingly lucrative and expensive nature of the business of granting rights to film live sports events and broadcast such events live or delayed (commonly referred to as TV broadcasting rights). The expectation of the audience that it have access to live footage, and the popularity of sports events in the modern era, has made sponsorship of and advertising during broadcasting of such sports events very attractive. Free to air television companies have been able to sell advertising time at premiums that would have previously been unfathomable. Paid TV companies that are able to secure exclusive rights to live broadcasts of such sports events are also able to lure a greater number of subscribers. The potential money to be made from TV broadcasting rights has thus resulted in an exponential increase in the consideration paid for these TV broadcasting rights over the last few decades. For example, the 18 million Japanese Yen paid for the right to broadcast the Rome Olympics throughout Japan in 1960 pales in comparison with the 12 billion Japanese Yen paid by Japanese broadcasters alone for the TV broadcasting rights for the Sydney Olympics in 2000 and the 5 billion Japanese Yen paid in 2002 for the rights to broadcast the Salt Lake City Winter Olympics. (1) It was the Los Angeles Olympics that saw the first real surge in the price paid for TV broadcasting rights and triggered the formation of Japan consortium, a media consortium between NHK and a number of commercial broad-casting stations aimed at collectively purchasing TV broadcasting rights from the organizers of large international sports events. (2)

1.1 TV broadcasting rights

So, what are TV broadcasting rights from the perspective of Japanese law? Sports athletes, teams and leagues own various intellectual property rights with respect to their activities, such as trademark in the team's logo, and control other aspects of the team's image such as publicity and likeness of players. (3) However, the sports event itself is not protected by copyright in Japan unless there is some special feature, such as the copyright in the choreography of a figure skater's routine. (4) Granting of TV broadcasting rights is therefore different to granting a license under copyright or other intellectual property rights. Rather, the right to exclusively broadcast a sports event is actually only a contractual right granted by the owner of the right to the broadcaster.

As there is no sui generis statutory protection regime for TV broad-casting rights, such right is secured by the owners of such rights by controlling who is allowed to bring broad-casting equipment into the stadium or other location of such sports event. The exclusivity of these rights is protected by contractual arrangements between TV broadcasters and the sports team itself, the whole league, or association for that sport, depending on TV broad-casting rights arrangements made between the athlete, team, or league, as the case may be.

1.2 Copyright protection for distribution of international TV images via satellite

Although the sporting event itself is not protected under copyright, once such event is filmed, such footage can be protected under copyright. In the case of a large sports event, particularly an international one, an organizer of such sports event commonly appoints a host broadcaster that is responsible for preparing so called 'international TV images'. This footage is usually unedited and without commentary and is transmitted via satellite so that authorized broadcasters can edit and add their own commentary and broadcast the sports event, either live or delayed. The organizer will usually require that copyright in the footage be assigned to the organizer by such host broad-caster so that under such copyright the organizer can control which broadcasters have access to the international TV images transmitted by the host broadcasters. Copyright protection of such international TV images was made clear following a decision of the Tokyo High Court. (5) The facts of this case-centered on the failure of the defendant to pay withholding tax to the Japanese tax authorities in connection with fees the defendant paid to a sales agent for footage of sports events, such as the US Open golf championship. The issue was whether the fees paid by the defendant to broadcast a live sporting event were regarded as copyright royalties. If so, withholding tax would be payable. However, if the payment was consideration for the granting of a contractual right, no withholding tax would be payable. It was held in this case that international TV images are protected under copyright, provided that such images are simultaneously recorded as they are transmitted via satellite. The court's reasoning was that such filming involves creative activities, such as sophisticated camera work and positioning of the camera, and meets the criteria of fixation by being simultaneously recorded as it is transmitted via satellite, which is one of the requirements for copyrightable film work. The finding of the court was, therefore, that fees paid by the defendant for use of the international TV images were subject to withholding tax.

1.3 Rights held by the league/team and 'licensees'

As noted above, TV broadcasting rights are protected by the owners of such rights by limiting who can bring broadcasting equipment into the stadium. While the technology advances have made broadcasting easier and cheaper, this has also increased the ability for the general spectators to record, upload and publish footage and images taken by such individuals at a sporting event. One approach that has been discussed to limit such general spectator recording is to provide on the entry ticket that filming and photo taking are prohibited and enforcing such prohibition against spectators. (6) However, some scholars have questioned the enforceability of such prohibition and this issue has not yet been examined by the courts in Japan.

The 'licensees' of these exclusive contractual rights have even more limited recourse against those unauthorized to obtain footage and images of the relevant sports event, as the right to broadcast is purely contractual in nature and is only enforceable against the other parties to the contract. A licensee will not have any right to seek an injunction at all and even damages against an unauthorized broadcaster of the sports event, who is not a party to the TV broadcasting rights contract, can only be granted in limited circumstances, such as where there is tortuous interference of contract arising from an unauthorized broad-caster knowingly interfering with the licensee's exclusive right to broadcast the event. In the case of interference of an exclusive license to TV broadcasting rights, unlike other tortuous interference of contract cases, it may be relatively easy for an exclusive licensee to assert and prove the tort claims as the identity of the holder of an exclusive TV broad-casting right would be relatively widely known; however, proving damage sustained by such licensee remains a challenge. As noted above, injunctive relief, which is critical in these kinds of disputes, is not available even when an exclusive licensee successfully makes a tortuous interference case as generally speaking Japanese law does not afford injunctive relief in tort cases.

2. Who Owns TV Broadcasting Rights and How Are They Exploited in Japan

The ownership of TV broadcasting rights in Japan varies depending on the sport.

2.1 J-League (football)

Japan's professional football association, J-League, provides in its code of conduct that a right to public transmission, including but not limited to television and radio/audio broad-casting rights and Internet rights, of all official J-League games are owned and controlled by J-League. It is therefore J-League that will be a party to the contract with the broad-caster.

2.2 Japanese baseball

Japan's baseball league, Nippon Professional Baseball, provides in its Professional Baseball Protocol that each team has the right to grant broadcasting rights by television, cable or Internet with respect to that team's home games. (7) In this way, each baseball team retains the TV broadcasting rights. In most cases, therefore, each team enters into a separate contract with a TV broadcaster. (8)

3. Collective Selling

In Japan, collective sales of broadcasting rights under antimonopoly law has rarely been discussed among scholars and there are no judicial precedents or previous administrative determinations. The following provides a general explanation of the Antimonopoly Law of Japan and likely antimonopoly implications of collective sales in Japan.

3.1 Applicable regulation

3.1.1 Prohibitions under the Antimonopoly Law

The Antimonopoly Law, the competition legislation in Japan, prohibits, in essence, three general types of activities: private monopolization, unreasonable restraints of trade, and unfair trade practices. Moreover, business concentration that may substantially restrain competition in a particular field of trade (i.e., the relevant market) in Japan or that involves unfair trade practices is prohibited under the Antimonopoly Law.

3.1.2 Private monopolization

Engaging in conduct which excludes or controls the business activities of other entrepreneurs and which substantially restrains competition in a particular field of trade (i.e., the relevant market) constitutes private monopolization prohibited under the Antimonopoly Law (Art. 3, earlier part). In short, private monopolization means the abuse of economic power by a powerful entrepreneur which excludes or controls the business activities of other entrepreneurs.

3.1.3 Unreasonable restraint of trade

Under the Antimonopoly Law, an agreement or understanding among competitors that substantially restrains competition in a particular field of trade (i.e., the relevant market) is prohibited as an unreasonable restraint of trade (Art. 3, latter part).

3.1.4 Unfair trade practices

Article 19 of the Antimonopoly Law also prohibits unfair trade practices, i.e., conduct which is designated by the Fair Trade Commission of Japan (JFTC), the competition authority of Japan, in its notification ('Designation of Unfair Trade Practices' dated June 18, 1982; 'General Designation') as those that tend to impede fair competition. Unfair trade practices include, among other things, collective boycotts, exclusive dealing arrangements and tie-in sales.

3.1.5 Approach of analysis under the Antimonopoly Law

3.1.5.1 Applicable prohibitions under the Antimonopoly Law Collective sales/joint sales of broadcasting rights (i.e., broadcasting programs) involves two major aspects from the Antimonopoly Law perspective. One is the antitrust analysis of private monopolization or unreasonable restraint of trade. Namely, if a single entity such as an association or a company in charge of a license and/or management of the broadcasting rights of sport teams has significant market power through the control of such rights, the issue is likely to be examined under the Antimonopoly Law as a private monopolization. (9) Moreover, if multiple significant entrepreneurs (e.g., sport teams), which have market power over the relevant market desire to conduct collective/joint sales on a contract basis, such conduct is likely to be examined as an unreasonable restraint of trade.

The other aspect is tie-in sales (i.e., unfair trade practices) where multiple broadcasting programs are sold as a package rather than making each program available individually.

3.1.5.2 Article 21 of the Antimonopoly Law

While Article 21 of the Antimonopoly Law provides that the provisions of the Antimonopoly Law do not apply to activities recognized as an exercise of rights under the Patent Law, Utility Model Law, Design Law, or Trademark Law, according to the Guidelines for the Use of Intellectual Property under the Antimonopoly Law, the JFTC explicitly confirms its interpretation of Article 21 of the Antimonopoly Law that those activities that are not deemed to be a proper exercise of such rights, taking account of the purpose and effects thereof, may contravene the provisions relating to private monopolization, unreasonable restraints of trade, or unfair business practices. (10) The JFTC has repeatedly stated at every opportunity, based on this interpretation, that Article 21 may not be an excuse where intended anticompetitive effects are foreseeable. Moreover, it seems that there are no strong objections by academic scholars against this interpretation of Article 21 of the Antimonopoly Law by the JFTC.

The issue of broadcasting rights will therefore be analyzed and determined under the applicable provisions of the Antimonopoly Law, while the nature and practices of the 'broadcasting rights' should be taken into account at each step and each aspect of the antitrust analysis.

3.1.5.3 Market definitions

The Merger Guidelines take an approach in defining the relevant market (both product market and geographic market) and analyzing that market which is similar to (but not identical to) the merger guidelines and practices of other jurisdictions, in using the SNIP test or a variation thereof (i.e., interchangeability of products/services such as function, purpose of use, and price of the products/services from the customers' view point). (11)

While, to our knowledge, there are no determinations made public by the JFTC nor court precedents addressing the definition of the relevant market for broadcasting rights in Japan, the product/service market may be defined according to the category of programs primarily focusing on the users' perceptions, such as sport game programs or possibly even narrower categories, such as baseball or football based on the perception of the audience.

3.1.6 Collective/joint sales by a single entity

If a single entity, such as an association (or a company in charge of a license and/or management of the broadcasting rights to be held by sport teams, if no right allocation arrangement is made), has significant market power through the control of such rights, the issue is likely to be examined under the Antimonopoly Law as a private monopolization. Namely, if collective sales of broadcasting rights 'excludes' or 'controls' others' businesses, which is determined by examining the purposes and effects of the conduct on a case-by-case basis, such collective sales are prohibited as a private monopolization. (12) However, a detailed analysis on a case-by-case basis is required with regard to both the anti-competitive effects and the pro-competitive effects, such as creation of 'a new packaged product', which is able to become available to the public because, for example, contracts and negotiations with each team individually is too troublesome and time consuming and such arrangement is essential to make those TV rights practically accessible by companies which desires to seek the license of such rights.

While, to our knowledge, there have been no precedents involving the collective sales of broadcasting rights in Japan to date, the JFTC has held that collective sales in a case involving a patent license may violate the Antimonopoly Law. In the given case, Company

X and nine other companies engaged in the manufacture of pachinko game machines and Association Y had a patent and other rights relating to the manufacture of pachinko machines. In the given circumstances, it was difficult to manufacture any such machines without obtaining a license from such companies and the Association. The ten firms entrusted the management of such patent and other rights to Association Y, and Association Y managed such entrusted rights and its own rights and accordingly made it difficult for any other entity to enter the market by refusing to grant licenses. The JFTC condemned such scheme as a private monopolization prohibited under Article 3 (earlier part) of the Antimonopoly Law. (13) Moreover, the JFTC determined that such refusal to grant a license is not exempted from the application of Antimonopoly Law irrespective of Article 21 of the Antimonopoly Law.

3.1.7 Collective/joint sales by multiple entrepreneurs

Collective/joint sales by a newly incorporated company to be jointly owned are subject to the prohibitions of the Antimonopoly Law as a business concentration at the time of incorporation thereof. Namely, if such joint ownership by a newly incorporated company leads to a business concentration such as a voting right acquisition or business transfer to an entity from multiple entrepreneurs, the issue here is, in principle, whether the incorporation of such company and the collective/joint sales through such a company may substantially restrain competition in the relevant market, and will be examined under the provisions for business concentration (e.g., Art. 10 or 16 of the Antimonopoly Law). If the answer is yes, the given collective/joint sales are prohibited under the Antimonopoly Law.

The analysis with respect to business concentrations is to be made in accordance with the 'Guidelines to application of the Antimonopoly Law concerning review of business combinations' published on March 28, 2007 (the 'Merger Guidelines'). The purpose and effects (e.g., efficiencies to be achieved through collective sales such as the increased coverage of games) will be taken into account when conducting the antitrust analysis.

On the other hand, if a collective/joint sale is made as a business alliance on a contract basis, the analysis should be made under Article 3 of the Antimonopoly Law as an unreasonable restraint of trade. Namely, a business alliance among competitors (e.g., broadcasting companies or sport teams) that substantially restrains competition in a particular field of trade (i.e., the relevant market) is prohibited under Article 3 of the Antimonopoly Law. Such business alliance is subject to the 'rule of reason' analysis, and the factors provided in the Merger Guidelines (14) should also be used for the analysis of such a business alliance, so long as such alliance does not fall under the definition of a cartel and such alliance results in the concentration of business to some extent.

In any event, as with the discussion for private monopolization, detailed analysis on a case-by-case basis with regard to both of the anti-competitive effects and pro-competitive effects is essential.

3.1.8 Collective/joint sales as a package

3.1.8.1 Tie-in sales under the Antimonopoly Law

Tie-in sales are defined, in general, as a practice in which a party unjustly causes a counterparty of a transaction to purchase a product/service from itself or from another party, by tying such product/service to the supply of another product/service, and is considered a typical unfair trade practice in Japan. The key components of tie-in sales prohibited under the Antimonopoly Law are namely: (i) the practice must be carried out for separate products/services, (ii) the counterparty of the transaction must be 'caused (forced)' to purchase separate products/services, (iii) two (or more) products/services must be tied, and (iv) such practice must be unjustifiable.

3.1.8.2 Packaged sales and tie-in sales

Assuming that each program in the package is a separate product and that each program of the package includes at least one product with market power and at least one program without market power, problems may arise with respect to whether the customers who desire to purchase the program with respect to which the selling party has market power would be caused or forced, as a matter of practice, to purchase the package including the other program in which the selling party does not have market power. (15)

Generally speaking, however, if the purchaser has a chance to purchase the product separately, such packaged sale does not, in principle, constitute a tie-in sale prohibited under the Antimonopoly Law. However, even if each stand alone program is not available to customers for separate purchase, it should not be easily concluded that the sales of such suites cause/force customers to purchase certain programs included in the package, thereby constituting tie-in sales defined under the General Designation.

Namely, every packaged sale does not necessarily equate to an illegal tie-in. It can be understood that the packaged programs are convenient and beneficial to a customer, as packaged programs allow customers to purchase 'new products' which are closely related. Further, it is possible to conclude that the packaged sale creates a new product market if only a bulk sale, as a matter of practice, makes sales and purchases actually possible given the combination of a wide range of programs.

(1.) Nikkei Business, p. 134, February 11, 2002.

(2.) In 1996, the Japan Consortium purchased from the IOC TV broadcasting rights for the Olympic games from 2000 till 2008 for USD 545 million. Prof. Osamu Kasai of Chuo University Law School 'Legal issues of Professional Sports', Japan Sports Law Association Annual, No. 14 (2007) p. 173.

(3.) In the case of baseball, a provision in the Professional Baseball Protocol, which provides that each team acquires the rights with respect to likeness of players for the purpose of advertising, has been broadly interpreted so as to include a right to grant a license to a game creator to use the likeness of players that belong to such team. Tokyo District Court, August 1, 2006, Vol. 1957 Hanrei Jiho pp. 116-15 1. In the case of football, the J. League Code of Conduct of 2007 states that each athlete does not have a right with respect to likeness, name or images that are broadcasted or reported on the news. It further provides that each athlete is required to cooperate with J. League in its promotional activities for J Club, a J. League association (Art. 97)

(4.) Copyright law protects work in which thoughts and sentiments are expressed in a creative way and which fall within the literary, scientific, artistic or musical domain (Article 2, paragraph 1, item 1 of Japan's Copyright Law) and therefore sports in general do not fall within copyrightable work.

(5.) Tokyo High Court, September 25, 1997, 1631 Hanrei Jiho (1997) pp. 118-140.

(6.) J. League prohibits spectators from (i) taking photos or video footage of the games for commercial use and (ii) uploading via the internet or transmitting via other media photos, video, or audio of the games.

(7.) Professional Baseball Protocol 2007, Art. 44.

(8.) In the case of the most popular baseball team in Japan, Yomiuri Newspaper Inc. acquired exclusive broadcasting rights from the 'Yomiuri' Giants team and therefore TV broadcasters enter into TV broadcasting license contracts with Yomiuri Newspaper Inc. directly.

(9.) Such conduct by multiple firms may also constitute private monopolization under the Antimonopoly Law.

(10.) The Guidelines for the Use of Intellectual Property provide that certain restrictions by a right holder placed on a technology such as refusal to grant a license or the filing of a lawsuit to seek an inj unction against any unlicensed firm using the technology are usually considered proper exercise of rights and should not be problematic under the Antimonopoly Law. However, if any such restriction is found to deviate from the legitimate purposes of the intellectual property law regime and has an adverse impact on competition, it will not be recognized as a proper exercise of rights, and may constitute a private monopolization if it substantially restrains competition in a particular field of trade.

(11.) As with the antitrust laws/competition laws in other jurisdictions, the Merger Guidelines provide, and the JFTC takes the approach that, in general, the relevant market should be defined on a case-by-case basis. However, the Merger Guidelines explicitly provide that the relevant product/service market is determined from the standpoint that the products in question are the same in terms of their function and purpose of use from the customers' viewpoint; and the factors to be primarily taken into account are (a) the purpose of use (application), (b) movements of price and volume, and (c) customers' perception and behavior.

(12.) Essential facilities doctrine has been discussed in Japan but not yet discussed in court decisions or previous JFTC determinations. We are of the impression that if broadcasting rights are collectively sold with no available alternatives, the essential facility doctrine may also be relevant to the discussion under the Antimonopoly Law, if the licensing arrangement is likely to create a bottleneck for a given business.

(13.) Fair Trade Commission of Japan, Recommendation Decision No. 5 of 1997 on August 6, 1997.

(14.) While the JFTC stated in its report on the economic survey of February 6, 2002, that the JFTC would make public the guidelines for business alliance, no guidelines with regard thereto have been published to date.

(15.) In Microsoft Co., Ltd., 45 Shinketsushu 153 (JFTC, December 14, 1998), JFTC issued a cease and desist order against Microsoft Co., Ltd. (a Japanese subsidiary of Microsoft; 'Microsoft Japan') for its sales activities regarding packaged software products. At that time in Japan, Microsoft's Excel had market power, while Word and Outlook did not. Major manufacturers of personal computers wanted to pre-install Excel onto their PCs. When Microsoft Japan sells its Excel license to these PC manufacturers for pre-installment, Microsoft Japan caused the PC manufacturers to pre-install Word and Outlook, too. As a result of this practice, Microsoft Japan could obtain the largest market share in the word-processing/scheduling software markets. JFTC held this practice to be an illegal tie-in sale.

by Yoshimi Ohara and Eriko Watanabe *

* Nagashima Ohno & Tsunematsu Law Firm, Tokyo, Japan.