HERNANDO, J.:
For lounges/ Bars/ Pubs (Where Dancing is not allowed)Similarly, Ferdinand Gorospe (Gorospe), then the Licensing Manager of FILSCAP, explained in his Judicial Affidavit[29] that the "license" that FILSCAP issues to the users of the music is basically a written authorization, given that FILSCAP controls the performance rights over the copyrighted musical works of its members and affiliate performing rights of societies abroad.[30]
Maximum Accommodation Capacity Live & Mechanical Royalty Rate / Day Mechanical Only Royalty Rate / Day 100 persons or less [P] 100.00 [P] 45.00 More than 100 persons, but less than 300 persons [P] 120.00 [P] 65.00 300 persons or more, but less than 500 persons [P] 145.00 [P] 90.00 500 persons or more [P] 170.00 [P] 105.00[28]
Gorospe averred that without an authorization or "license," the public performance of the copyrighted work is illegal.[34] During his cross-examination, Gorospe asserted that if an establishment allows the singing or playing of copyrighted songs in its venue, then it also allows the "public performance" of the songs.[35]
Q: To whom do you issue this practice of issuing licenses? A: We issue it to the users of music. Q: You mean to the public? A: Well, to the users. Q: To the public? A: To those who want to use the music, but not to everybody. Q: Who want to use? A: Who [wants] to use the music. Q: When you said "who [wants] to use," you are referring to singers? A: Well, if they are to use it, yes it could be to singers. If they want to produce a record, then, a license also is issued to them by the parties, but not FILSCAP. Q: For example, Mr. Witness, myself, I want to sing a song assigned by the composer to FILSCAP. If I want to use it, I have to get a license from you? A: Technically, singing, no. We need not issue license because singing is not really – It depends on where you'll sing it, like, for example, if you want to sing it privately in your bathroom, then why would we issue a license because that is – Q: How about a band? They want to sing it in a restaurant. To whom [shall they] secure a license? A: Technically it is the establishment. We'll go after the establishment, the owner of the establishment. Q: Why the establishment? Why not the singer, Mr. Witness? Or why not the band? A: Because if the establishment allows the singing of the songs, then, the corporation or the establishment allows public performance. Q: Why? Is there a control on the establishment over the band to sing what they should sing? A: No, not on the particular song but on the act of singing. The bar can say, You are not allowed to sing because you are not licensed by the establishment, something like that. Q: All kinds of songs, Mr. Witness? A: No, only – well, yes, for copyrighted songs. Q: Do you have singers or bands who secure licenses from you? A: As of – x x x x Q: Were there other establishments that secure your license? A: Yes. x x x x A: Well, we have Shoemart, we have GMA 7, Channel 2, Channel 5. We also have bars like, well, we have, before it was the Embassy. We also have Jollibee, we have McDonald's, Starbucks, et cetera, et cetera.[33]
1. IgnitionThereafter, these songs were mechanically played as background music for its customers:
2. If I Ain't Got You
3. Falling In Love With You
4. Tattooed On My Mind
5. If I Was The One[40]
1. Don't Miss You At AllIn like manner, on January 13, 2006, the following musical works were performed by a live band:
2. All I Wanna Do
3. Strong Enough
4. Don't Know Why
5. Run Baby Run
6. Saturday Night
7. Anything But Down
8. My All
9. Turn The Beat Around
10. Conga
11. Get On Your Feet
12. You're Still The One[41]
1. Officially Missing YouAfterwards, the following songs were mechanically played as background music:
2. Angel
3. At Your Best (You Are Love)
4. Knocks Me Off My Feet
5. Emotion[42]
1. Everybody's ChangingMichelle Flor (Flor), a Copyright Examiner from the National Library, mentioned in her Judicial Affidavit[44] that FILSCAP regularly files and deposits with the National Library's Copyright Office the deeds of assignment of performing rights over copyrighted musical works as well as reciprocal representation agreements with other societies abroad.[45] She clarified that their office's certification applies to the entire document even if they only stamp the first page of a multi-page document, in order to certify that the said file is a faithful reproduction or photocopy of the original one deposited with the Copyright Office.[46] On cross-examination, Flor confirmed that her office records the application for copyright of an individual or company[47] as well as the transfer and assignment of rights to the copyright to a society like FILSCAP.[48]
2. She Will Be Loved
3. Let's Get Retarded[43]
[T]he unrebutted evidence on record shows that the foreign composers of the 25 musical works performed live or mechanically played in [COSAC's Off the Grill Bar and Restaurant], through their foreign societies, had authorized [FILSCAP] also as assignee of their musical works to file this case for infringement of copyright and damages against [COSAC] which allowed such live performance or mechanical playing of the musical works in its x x x establishment for the benefit of its customers without the requisite performance license from FILSCAP or without the payment of the license fees/royalties to FILSCAP.[54]Moreover, the RTC held that under Section 182 of the Intellectual Property Code (IPC), the filing of the deeds of assignment and the reciprocal representation agreements with the National Library and its non-publication in the Intellectual Property Office (IPO) Gazette did not render the said deeds and agreements void. The trial court declared that if this were the intent of Congress, then it should have expressly provided in the IPC that such assignments and/or agreements which were not published in the IPO Gazette shall be void.[55]
WHEREFORE, judgment is rendered ordering the defendant (COSAC] to pay to the plaintiff [FILSCAP] the following sums of money, to wit: a) Php317,050.00 as damages for unpaid license fees/royalties and Php5,778.17 as damages for monitoring expenses, both with interest at the rate of six percent (6%) per annum reckoned from the date of the filing of the complaint, February 13, 2006, until the same is fully paid; and b) Php52,003.47 as reasonable attorney's fees and litigation expenses plus costs of suit. All other claims, including the counterclaims, are dismissed for lack of legal and/or factual basis.Aggrieved, COSAC filed a motion for reconsideration.[59] Likewise, it filed a motion for inhibition[60] resulting in the inhibition of the presiding judge[61] and the re-assignment of the case. Nevertheless, the RTC, in an Order[62] dated July 22, 2013, denied COSAC's motion for reconsideration of the RTC's October 24, 2012 Decision. COSAC appealed[63] to the CA insisting that the documents which FILSCAP relied on to assert its authority were not published in the IPO Gazette as allegedly required by Section 182 of the IPC.[64]
SO ORDERED.[58]
Under Section 177 of the Intellectual Property Code of the Philippines, a copyright owner has the exclusive right to carry out, authorize or prevent the public performance of a work and other communication to the public of the work. To enforce this right, the copyright may be assigned in whole or in part and the assignee is entitled to all the rights and remedies which the assignor has with respect to the copyright. Particularly, copyright owners or their heirs may designate a society of artists, writers or composers to enforce their economic rights and moral rights on their behalf.[67]The CA found that the copyright owners assigned their rights and remedies to FILSCAP through deeds of assignment and reciprocal representation agreements. As such, FILSCAP is authorized to regulate the public performance, mechanical reproduction, and synchronization rights granted by law to the creators and owners of original musical works.[68] Significantly, the CA held that registration or publication in the IPO Gazette of the deeds of assignment and reciprocal representation agreements is not required.
FOR THESE REASONS, the October 24, 2012 Decision of the Regional Trial Court of Quezon City, Branch 90 is MODIFIED in that the award for monitoring expenses is deleted.COSAC moved for reconsideration[73] which the CA denied in its January 14, 2016 Resolution.[74]
SO ORDERED.[72]
Thus, the issues in this petition are whether COSAC committed copyright infringement and if so, whether it should be held liable to pay fees and damages for the said violation.I
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT HOLDING THE NECESSITY OF PUBLICATION IN THE IPO GAZETTE OF THE ALLEGED DEED OF ASSIGNMENT/AUTHORITY OF THE RESPONDENT.II
THE COURT OF APPEALS ERRED IN ORDERING THE PETITIONER TO PAY LICENSE FEES/ROYALTIES TO RESPONDENT IN THE AMOUNT OF [P]317,050.00 AND MONITORING EXPENSE OF [P]5,778.17.III
THE COURT OF APPEALS ERRED IN ORDERING THE PETITIONER TO PAY ATTORNEY'S FEES IN THE AMOUNT OF [P]52,003.47.IV
THE COURT OF APPEALS ERRED IN NOT GRANTING THE COUNTERCLAIMS OF THE PETITIONER.[75]
it [is] clear that the word 'may' pertains to the filing of an assignment or exclusive license with the National Library. From the wording of the law, this portion of the provision is clearly permissive. On the other hand, the word 'shall' pertains to the publication in the IPO Gazette of exclusive licenses or deeds of assignment which have optionally been filed with the National Library. [COSAC's] interpretation would render the IP Code provision absurd as it would appear that it wants this Honorable Court to disregard the portion of the provision with the permissive term 'may' in favor of the portion which has the mandatory term 'shall,' when clearly each word pertains to a separate and distinct object.[82]FILSCAP adds that Section 172.1 of the IPC provides that literary and artistic works are original intellectual creations which are protected from the moment of their creation. Similarly, Section 172.2 of the IPC states that works are protected by the sole fact of their creation, irrespective of their form of expression, as well as their content, quality, and purpose. Hence, musical works are protected by copyright without need of any other act including registration with any government agency or publication.[83]
[I]ntellectual property protection is merely a means towards the end of making society benefit from the creation of its men and women of talent and genius. This is the essence of intellectual property laws, and it explains why certain products of ingenuity that are concealed from the public are outside the pale of protection afforded by the law. It also explains why the author or the creator enjoys no more rights than are consistent with public welfare.[95]Included in the category of copyright are musical works, which is the main subject of the case at bench.
SECTION 172. Literary and Artistic Works. – 172.1. Literary and artistic works, hereinafter referred to as "works", are original intellectual creations in the literary and artistic domain protected from the moment of their creation and shall include in particular:Derivative works are likewise protected by copyright, to wit:
x x x x
(f) Musical compositions, with or without words;
x x x x
SECTION 178. Rules of Copyright Ownership. – Copyright ownership shall be governed by the following rules:
178.1 Subject to the provisions of this section, in the case of original literary and artistic works, copyright shall belong to the author of the work;
x x x x[96]
SECTION 173. Derivative Works. – 173.1. The following derivative works shall also be protected by copyright:A musical composition[98] is an intangible work of art composed of a combination of sounds perceptible to the senses. It is separate and distinct from the tangible object that embodies it, such as a sheet music,[99] as described by Section 181 of the IPC:
(a) Dramatizations, translations, adaptations, abridgments, arrangements, and other alterations of literary or artistic works; and
(b) Collections of literary, scholarly or artistic works, and compilations of data and other materials which are original by reason of the selection or coordination or arrangement of their contents.
173.2. The works referred to in paragraphs (a) and (b) of Subsection 173.1 shall be protected as new works: Provided, however, That such new work shall not affect the force of any subsisting copyright upon the original works employed or any part thereof, or be construed to imply any right to such use of the original works, or to secure or extend copyright in such original works.[97]
SECTION 181. Copyright and Material Object. – The copyright is distinct from the property in the material object subject to it. Consequently, the transfer or assignment of the copyright shall not itself constitute a transfer of the material object. Nor shall a transfer or assignment of the sole copy or of one or several copies of the work imply transfer or assignment of the copyright.[100]As pointed out by Senior Associate Justice Marvic Mario Victor F. Leonen during deliberations, the IPC also introduces the concept of "fixation" of a performance of a musical composition in a "sound recording,"[101] as follows:
SECTION 202. Definitions. – For the purpose of this Act, the following terms shall have the following meanings:Chapters XII[103] and XIII[104] of the IPC govern the fixations of sounds in the form of sound recordings. These chapters provide for the moral rights of the performers, the rights of producers of sound recordings, and the limitations[105] on the said rights.
x x x x
202.2. "Sound recording" means the fixation of the sounds of a performance or of other sounds, or representation of sound, other than in the form of a fixation incorporated in a cinematographic or other audiovisual work;
x x x x
202.4. "Fixation" means the embodiment of sounds, or of the representations thereof, from which they can be perceived, reproduced or communicated through a device;[102]
SECTION 202.9. "Communication to the public of a performance or a sound recording" means the transmission to the public, by any medium, otherwise than by broadcasting, of sounds of a performance or the representations of sounds fixed in a sound recording. For purposes of Section 209, "communication to the public" includes making the sounds or representations of sounds fixed in a sound recording audible to the public.[109]Insofar as sound recordings are concerned however, it would be premature to make a distinction on the type of performance considering that this was never put into issue in the proceedings before the RTC until it reached this Court. Stated differently, FILSCAP, in its pleadings, did not differentiate the modes of playing the sound recordings. It merely alleged that COSAC committed copyright infringement when it played copyrighted songs in its establishment through live performance and sound recordings. Additionally, both the RTC and the CA focused on the finding of copyright infringement, and did not delve into the methods of playing the sound recordings. Given this restriction, it would be more judicious to say, specifically for this case, that COSAC infringed the performing rights of the copyright owners.[112]
SECTION 209. Communication to the Public. – If a sound recording published for commercial purposes, or a reproduction of such sound recording, is used directly for broadcasting or for other communication to the public, or is publicly performed with the intention of making and enhancing profit, a single equitable remuneration for the performer or performers, and the producer of the sound recording shall be paid by the user to both the performers and the producer, who, in the absence of any agreement shall share equally.[110]
SECTION 206. Additional Remuneration/or Subsequent Communications or Broadcasts. – Unless otherwise provided in the contract, in every communication to the public or broadcast of a performance subsequent to the first communication or broadcast thereof by the broadcasting organization, the performer shall be entitled to an additional remuneration equivalent to at least five percent (5%) of the original compensation he or she received for the first communication or broadcast.[111]
Hence, FILSCAP contended that "by hiring bands and other performers, [COSAC] made music audible at the Off the Grill Bar and Restaurant, which is a place where persons outside the normal circle of a family and that family's closest social acquaintances are or can be present. Furthermore, [COSAC] likewise played, apart from live music[,] background music and music through monitor or projector. These are clearly acts of infringement upon the public performing rights owned by FILSCAP committed by [COSAC] as the public performances were done without the consent of or license from FILSCAP."[120]
Q: You mentioned and I'm curious, because you stated in your Affidavit that you are an Accountant but you are in-charge of the monitoring operations of the restaurant? A: The same. Q: Which aspect of the operations of the restaurant are you monitoring? A: The entertainment every night and the payment. Q: And the payment to? A: To the entertainers. Q: So you can confirm to me that music is regularly being played? A: Every night, sir. Q: At Off the Grill? A: Yes, sir.[116] x x x x Q: So every night, you play live music for the entertainment? A: Yes, sir. Q: But during the day and even during the night, you also play recorded music, cd music as background before the band plays? A: We have a monitor, MTV. Q: You play? Please say that again? A: MTV. Q: You do not play cd music? A: No, projector, sir.[117] x x x x Q: Earlier, you said, you confirmed to me that music is being played at the restaurant? A: Yes, sir. Q: Will you give me examples of the songs that were played inside the restaurant? A: Acoustic songs, sir. Q: Can you give me the title of the songs that were played that you can remember has been played inside the restaurant? A: Somewhere Down the Road, sir. Q: What else? A: Through the Fire.[118] x x x x Q: In your Judicial Affidavit, paragraph 4, you mentioned that once music is played at the airwaves, it already became a public property. What is your basis for saying this? A: May kumakanta sa radio so hindi na natin hawak yung kinakanta nila so sa entertainment po, hindi namin alam kung ano iyong mga kinakanta ng mga bawat entertainer. Q: So, that is just your opinion? A: Actually hindi po opinion, kasi po iyong sa mga band namin, they have their own songs na pina-practice so hindi po namin alam kung ano iyong mga kinakanta nila dahil hindi naman po pinapaalam sa amin for the night.[119]
In the case at bar, it is admitted that the patrons of the restaurant in question pay only for the food and drinks and apparently not for listening to the music. As found by the trial court, the music provided is for the purpose of entertaining and amusing the customers in order to make the establishment more attractive and desirable. It will be noted that for the playing and singing the musical compositions involved, the combo was paid as independent contractors by the appellant. It is therefore obvious that the expenses entailed thereby are added to the overhead of the restaurant which are either eventually charged in the price of the food and drinks or to the overall total of additional income produced by the bigger volume of business which the entertainment was programmed to attract. Consequently, it is beyond question that the playing and singing of the combo in defendant-appellee's restaurant constituted performance for profit contemplated by the Copyright Law. (Act 3134 as amended by P.D. No. 49, as amended).[130] (Citations omitted).The IPC, before its amendment in 2013, did not distinguish if the public performance was conducted or made possible by the owners of the establishment, the performers, or other individuals and entities. Undeniably, however, the performance in public of the copyrighted works, either directly or by means of any device or process, reached persons outside the normal circle of a family and that family's closest social acquaintances. This is how Off the Grill "performed"[131] the copyrighted musical works under FILSCAP's repertoire, even with the knowledge that the music is protected by copyright with the corresponding exclusive economic rights pursuant to Section 177 of the IPC, viz.:
SECTION 177. Copyright or Economic Rights. – Subject to the provisions of Chapter VIII, copyright or economic rights shall consist of the exclusive right to carry out, authorize or prevent the following acts:Sections 174 and 178 of the IPC similarly provide:
177.1. Reproduction of the work or substantial portion of the work;
177.2. Dramatization, translation, adaptation, abridgment, arrangement or other transformation of the work;
177.3. The first public distribution of the original and each copy of the work by sale or other forms of transfer of ownership;
177.4. Rental of the original or a copy of an audiovisual or cinematographic work, a work embodied in a sound recording, a computer program, a compilation of data and other materials or a musical work in graphic form, irrespective of the ownership of the original or the copy which is the subject of the rental;
177.5. Public display of the original or a copy of the work;
177.6 Public performance of the work; and
177.7 Other communication to the public of the work.[132] (Emphases and underscoring supplied).
SECTION 174. Published Edition of Work. – In addition to the right to publish granted by the author, his heirs, or assigns, the publisher shall have a copyright consisting merely of the right of reproduction of the typographical arrangement of the published edition of the work.[133]Copyright Infringement
SECTION 178. Rules on Copyright Ownership. – Copyright ownership shall be governed by the following rules:
178.1. Subject to the provisions of this section, in the case of original literary and artistic works, copyright shall belong to the author of the work;
x x x x
178.5. In the case of audiovisual work, the copyright shall belong to the producer, the author of the scenario, the composer of the music, the film director, and the author of the work so adapted. However, subject to contrary or other stipulations among the creators, the producer shall exercise the copyright to an extent required for the exhibition of the work in any manner, except for the right to collect performing license fees for the performance of musical compositions, with or without words, which are incorporated into the work;[134]
Infringement of a copyright is a trespass on a private domain owned and occupied by the owner [or assignee] of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a synonymous term in this connection, consists in the doing by any person, without the consent of the owner [or assignee] of the copyright, of anything the sole right to do which is conferred by statute on the owner [or assignee] of the copyright.[135]The gravamen of copyright infringement,' according to NBI-Microsoft Corporation v. Hwang,[136]
[I]s not merely the unauthorized 'manufacturing' of intellectual works but rather the unauthorized performance of any of the acts covered by Section 5. Hence, any person who performs any of the acts under Section 5 without obtaining the copyright owner's prior consent renders himself civilly[137] and criminally[138] liable for copyright infringement.[139]To successfully claim that copyright infringement was committed, the evidence must show the "(1) ownership of a validly copyrighted material by the complainant; and (2) infringement of the copyright by the respondent."[140]
SECTION 184. Limitations on Copyright. – 184.1. Notwithstanding the provisions of Chapter V, the following acts shall not constitute infringement of copyright:It can thus be inferred that the copyright owners do not have the unlimited and absolute right to limit, restrict, authorize or permit the performances of their works, based on Sections 184 and 185 of the IPC. Nonetheless, the parties in this case did not raise as issues the application of limitations on copyright and the concept of fair use. Even so, a brief yet necessary discussion on these two fundamental concepts is useful.
(a) The recitation or performance of a work, once it has been lawfully made accessible to the public, if done privately and free of charge or if made strictly for a charitable or religious institution or society;
(b) The making of quotations from a published work if they are compatible with fair use and only to the extent justified for the purpose, including quotations from newspaper articles and periodicals in the form of press summaries: Provided, That the source and the name of the author, if appearing on the work, are mentioned;
(c) The reproduction or communication to the public by mass media of articles on current political, social, economic, scientific or religious topic, lectures, addresses and other works of the same nature, which are delivered in public if such use is for information purposes and has not been expressly reserved: Provided, That the source is clearly indicated;
(d) The reproduction and communication to the public of literary, scientific or artistic works as part of reports of current events by means of photography, cinematography or broadcasting to the extent necessary for the purpose;
(e) The inclusion of a work in a publication, broadcast, or other communication to the public, sound recording or film, if such inclusion is made by way of illustration for teaching purposes and is compatible with fair use: Provided, That the source and the name of the author, if appearing in the work, are mentioned;
(f) The recording made in schools, universities, or educational institutions of a work included in a broadcast for the use of such schools, universities or educational institutions: Provided, That such recording must be deleted within a reasonable period after they were first broadcast: Provided, further, That such recording may not be made from audiovisual works which are part of the general cinema repertoire of feature films except for brief excerpts of the work;
(g) The making of ephemeral recordings by a broadcasting organization by means of its own facilities and for use in its own broadcast;
(h) The use made of a work by or under the direction or control of the Government, by the National Library or by educational, scientific or professional institutions where such use is in the public interest and is compatible with fair use;
(i) The public performance or the communication to the public of a work, in a place where no admission fee is charged in respect of such public performance or communication, by a club or institution for charitable or educational purpose only, whose aim is not profit making, subject to such other limitations as may be provided in the Regulations; (n)
(j) Public display of the original or a copy of the work not made by means of a film, slide, television image or otherwise on screen or by means of any other device or process: Provided, That either the work has been published, or, that the original or the copy displayed has been sold, given away or otherwise transferred to another person by the author or his successor in title; and
(k) Any use made of a work for the purpose of any judicial proceedings or for the giving of professional advice by a legal practitioner. (Citations omitted).
184.2. The provisions of this section shall be interpreted in such a way as to allow the work to be used in a manner which does not conflict with the normal exploitation of the work and does not unreasonably prejudice the right holder's legitimate interests.[142]
SECTION 185. Fair Use of a Copyrighted Work. – 185.1. The fair use of a copyrighted work for criticism, comment, news reporting, teaching including multiple copies for classroom use, scholarship, research, and similar purposes is not an infringement of copyright. Decompilation, which is understood here to be the reproduction of the code and translation of the forms of the computer program to achieve the inter-operability of an independently created computer program with other programs may also constitute fair use. In determining whether the use made of a work in any particular case is fair use, the factors to be considered shall include:
(a) The purpose and character of the use, including whether such use is of a commercial nature or is for non-profit educational purposes;
(b) The nature of the copyrighted work;
(c) The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(d) The effect of the use upon the potential market for or value of the copyrighted work.
185.2. The fact that a work is unpublished shall not by itself bar a finding of fair use if such finding is made upon consideration of all the above factors.[143] (Emphasis supplied).
For the first requisite, charging an admission fee does not automatically remove the playing of copyrighted music from this exemption. But if the admission fee is "charged in respect of such performance" then it would not be covered by the exemption. Otherwise stated, charging an admission fee for some other purpose not in connection with the playing of the work could still be exempt under this provision.[145]
(i) The place where the performance is made does not charge any admission fee in respect of such performance or communication; (ii) The performance is made by a club or institution: (a) for charitable or educational purpose only; and (b) whose aim is not profit making; and (iii) Such other requirements that may be prescribed under the implementing rules and regulations promulgated by the Director General of the [IPO].
Determining fair use requires application of the four-factor test. Section 185 of the Intellectual Property Code lists four (4) factors to determine if there was fair use of a copyrighted work:These four factors should be considered together in establishing a case hinged on fair use, as these are not individually conclusive.[155]
a. The purpose and character of the use, including whether such use is of a commercial nature or is for non-profit educational purposes;
b. The nature of the copyrighted work;
c. The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
d. The effect of the use upon the potential market for or value of the copyrighted work.
First, the purpose and character of the use of the copyrighted material must fall under those listed in Section 185, thus: 'criticism, comment, news reporting, teaching including multiple copies for classroom use, scholarship, research, and similar purposes.' The purpose and character requirement is important in view of copyright's goal to promote creativity and encourage creation of works. Hence, commercial use of the copyrighted work can be weighed against fair use.
The 'transformative test' is generally used in reviewing the purpose and character of the usage of the copyrighted work. This court must look into whether the copy of the work adds 'new expression, meaning or message' to transform it into something else. 'Meta-use' can also occur without necessarily transforming the copyrighted work used.
Second, the nature of the copyrighted work is significant in deciding whether its use was fair. If the nature of the work is more factual than creative then fair use will be weighed in favor of the user.
Third, the amount and substantiality of the portion used is important to determine whether usage falls under fair use. An exact reproduction of a copyrighted work, compared to a small portion of it, can result in the conclusion that its use is not fair. There may also be cases where, though the entirety of the copyrighted work is used without consent, its purpose determines that the usage is still fair. For example, a parody using a substantial amount of copyrighted work may be permissible as fair use as opposed to a copy of a work produced purely for economic gain.
Lastly, the effect of the use on the copyrighted work's market is also weighed for or against the user. If this court finds that the use had or will have a negative impact on the copyrighted work's market, then the use is deemed unfair.[154] (Emphases supplied, citations omitted)
In [Hustler Magazine v. Moral Majority, Inc.], the US Court held that in order to determine the potential harm to a copyrighted work, the courts should focus on whether the infringing use: (1) 'tends to diminish or prejudice the potential sale of the work; (2) tends to interfere with its marketability of the work; or (3) fulfill the demand for the original work.'[166] In this case, the US Court considered the following factors in concluding that the impact of defendant's use of plaintiff's work was nil: (a) the plaintiff's work was first issued or released long before defendant's mailings went out; (b) 'the effect on the marketability of back issues of the magazine is de minimis because it is only one page of a publication'; and (c) defendant's uses did not cause plaintiff any competitive injury since defendant was not selling or distributing copies of the ad parodies to plaintiff's followers.[167]Thus,"[w]here the profit generated by the alleged infringement substitutes for what the owner or creator could make, this bars the concept of fair use. But where the benefits are complementary or incidental, then fair use may be properly considered."[168]
The limited scope of the copyright holder's statutory monopoly, like the limited copyright duration required by the Constitution, reflects a balance of competing claims upon the public interest: creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts. The immediate effect of our copyright law is to secure a fair return for an 'author's' creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good. 'The sole interest of the United States and the primary object in conferring the monopoly,' this Court has said, 'lie in the general benefits derived by the public from the labors of authors.'[175]With these considerations, it appears that, as noted by then Senior Associate Justice Estela M. Perlas-Bernabe[176] (SAJ Bernabe, Ret.) during the deliberations prior to her retirement, there is a balancing of interests between the copyright owners (or their assignees) and the public who benefit from the use of copyrighted materials. As can be gleaned from Sections 184 and 185 of the IPC, the "unauthorized use" of copyrighted works may be allowed and not characterized as infringement. Notably, such permitted "use" of copyrighted works has a non-profit aspect, such as for educational, charitable, judicial, scientific, or other recognized purposes under the law.[177] The "use" in the said fields will not significantly or unfavorably impact the copyright holders' exclusive economic rights, but will be in consonance with the policy that copyright laws should promote creativity and knowledge for the good of the public.
Despite the seeming lack of recognition of the dichotomy between primary and secondary infringers under the original Sections 216 and 216.1 [of RA 8293], it is nevertheless submitted that the phrase '[a]ny person infringing a right protected under this law shall be liable x x x' may be interpreted to be broad enough to include all those who had a part with the infringing activity, whether directly (primary infringers) or indirectly (secondary infringers) – and that the RA 10372 amendments should be considered as a mere refinement of the phraseology of the coverage of copyright infringement meant only to explicitly codify what was already implied in the old law in order to further strengthen the enforcement of copyright-related rights.[181]She adds that this view is supported by copyright law and related jurisprudence in the United States (US), which hold persuasive value in the Philippine jurisdiction given that our country's copyright laws trace its roots from the US.[182] For instance, the Copyright Act of 1976 of the US is now reflected as Title 17 of the US Code (17 USC). 17 USC § 501 (a),[183] just like Sections 216 and 216.1 of the IPC, does not enumerate the different types of infringers, as it merely states "anyone who violates" the rights of the copyright owner or author. Simply put, the said provisions do not expressly provide for liability characterized as secondary infringement. Even so, US jurisprudence,[184] based on common law principles, recognizes that liability characterized as secondary infringement should be penalized. Relevantly, in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.[185] (MGM), the US Supreme Court ruled that "[a]lthough '[t]he Copyright Act does not expressly render anyone liable for infringement committed by another,' these doctrines of secondary liability emerged from common law principles and are well established in the law." Thus, as opined by SAJ Bernabe, Ret., since the legal system of the Philippines is "a blend of customary usage, and Roman (civil law) and Anglo-American (common law) systems,"[186] We can adopt the view regarding common law principles related to secondary infringement. Thus, secondary infringers may be recognized and penalized, given the persuasive nature of US law in connection with Philippine law and in order to complement the old Sections 216 and 216.1 of the IPC.
1. DEFINITIONSIn like manner, the reciprocal representation agreements executed by the foreign societies in favor of FILSCAP essentially stipulated the following:
a) "Copyright work" shall mean and include –
x x x x
b) "right of public performance" shall, as provided in Section 171.6 of [the IPC] x x x
c) "right of communication to the public" shall mean the right... per Section 171.3 of [the IPC]
d) The expression "public performing rights" shall mean (b) [right of public performance] and (c) [right of communication to the public] above.
2. ASSIGNMENT OF PUBLIC PERFORMING RIGHTS
a. ASSIGNOR assigns to FILSCAP, the PUBLIC PERFORMING RIGHTS in ALL copyright works x x x, together with all interests and shares of the ASSIGNOR x x x
b. FILSCAP shall own, hold, control, administer and enforce said public performing rights on an exclusive basis x x x.
c. ASSIGNOR shall x x x make, constitute and appoint FILSCAP as his/her true and lawful attorney, with full power and authority to execute all documents and do all acts, including licensing of the rights herein assigned, that may be necessary, proper or expedient to effectively administer/enforce the public performing rights of ASSIGNOR in all his/her copyright works.
x x x x
5. DISTRIBUTION OF ROYALTIES
a. FILSCAP shall from time to time pay ASSIGNOR such sums of money out of the royalties FILSCAP has collected from the exercise or licensing of the rights herein assigned in accordance with the distribution guidelines set by the FILSCAP Board of Trustees.
x x x x[197]
[They] assign to FILSCAP the performing right x x x, in the territories in which this latter Society operates x x x, and the right to authorize all public performances x x x of musical works, with or without lyrics, which are protected under the terms of national laws, bilateral treaties and multilateral international conventions relating to the author's right (copyright, intellectual property, etc.) x x x.It should be mentioned that "at most, an assignee can only acquire rights duplicating those which his assignor is entitled by law to exercise."[199] Necessarily, FILSCAP's scope of authority is limited by what the deeds or agreements specifically provide. Relevantly, too, FILSCAP alleged that it represents "composers, lyricists/authors, and music publishers." As additional information, since FILSCAP is currently recognized and accredited by the IPO[200] as a Collective Management Organization (CMO),[201] it essentially has the personality to step in to protect the rights of copyright owners, specifically composers, lyricists, music publishers, and other music copyright owners,[202] as long as the copyrighted songs are under FILSCAP's catalogue.
The assignment of the performing right as referred to x x x entitles each of the contracting Societies, x x x
a) to permit or prohibit x x x public performance of works in the repertoire of the other Society and to issue the necessary authorizations for such performances;
b) to collect all royalties required in return for the authorizations issued by it x x x;
c) to receive all sums due as indemnification or damages for unauthorized performances of the works in question;
d) to commence and pursue x x x any legal action against any person or corporate body and any administrative or other authority responsible for illegal performance of the works in question;
e) to transact, compromise, submit to arbitration, refer to any Court of Law special or administrative tribunal;
f) to take other action for the purpose of ensuring the protection of the public performance right in the works covered by the present contract.[198]
SECTION 216. Remedies for Infringement. 216.1. Any person infringing a right protected under this law shall be liable:COSAC failed to rebut FILSCAP's claim that Off the Grill played copyrighted music either through a live band or sound recordings without any license from the Society. As the assignee, FILSCAP rightly sought to protect the copyrighted musical works by requiring COSAC, through demand letters, to procure the authorization to play the songs and also to pay the corresponding fees. Since COSAC refused to comply, FILSCAP properly resorted to filing a complaint before the trial court to compel COSAC to secure a license and pay the fees before conducting or allowing any further performance of the copyrighted songs at Off the Grill.
(a) To an injunction restraining such infringement. The court may also order the defendant to desist from an infringement, among others, to prevent the entry into the channels of commerce of imported goods that involve an infringement, immediately after customs clearance of such goods.
(b) Pay to the copyright proprietor or his assigns or heirs such actual damages, including legal costs and other expenses, as he may have incurred due to the infringement as well as the profits the infringer may have made due to such infringement, and in proving profits the plaintiff shall be required to prove sales only and the defendant shall be required to prove every element of cost which he claims, or, in lieu of actual damages and profits, such damages which to the court shall appear to be just and shall not be regarded as penalty.
x x x x
(e) Such other terms and conditions, including the payment of moral and exemplary damages, which the court may deem proper, wise and equitable and the destruction of infringing copies of the work even in the event of acquittal in a criminal case.
x x x x[204] (Emphasis Supplied).
Section 182. Filing of Assignment or License. – An assignment or exclusive license may be filed in duplicate with the National Library upon payment of the prescribed fee for registration in books and records kept for the purpose. Upon recording, a copy of the instrument shall be returned to the sender with a notation of the fact of record. Notice of the record shall be published in the IPO Gazette.[208]Thus, if the author or assignee opts to file a duplicate of the deed or agreement, a record of the said filing will be kept by the National Library. A notation of the fact of record shall be given to the sender or the filer. Thereafter, a notice of the said record shall be published in the IPO Gazette. Withal, the provision suggests that filing a duplicate of the document assigning the rights to copyrighted musical works is permissive and not mandatory upon the author or the assignee.
85. Furthermore, an analysis of the legislative history of Section 182 of the IP Code, as well as a comparison of the said provision with the other provisions of the IP Code will confirm that there is no question that the filing of copyright assignment instruments with the National Library is not mandatory and that the failure to file the said instruments will not render the instrument void as to third persons.Simply put, if the legislative intent was to void the deeds or agreements in case of non-publication in the IPO Gazette, then a provision requiring said publication should have been expressly stated in the IPC. Absent such a provision, there is no basis to conclude that non-publication in the IPO Gazette of copies of the deeds or agreements would automatically render void these documents.
86. Prior to Section 182 of the IP Code, Presidential Decree No. 49, promulgated on 14 November 1972, mandated the filing of the assignment of a copyright with the National Library and provided a penalty for non-compliance, to wit:
'SECTION 19. Every assignment, license or other instrument relating to any right, title or interest in a copyright and to the work subject to it shall be filed in duplicate with the National Library upon payment of the prescribed fee for registration in books and records kept for the purpose. Upon recording, a copy of the instrument shall be returned to the sender with a notation of the fact of record. Notice of the record shall be published in the Official Gazette.
Such [instrumentalities][210] shall be void as against any subsequent purchaser or mortgagee for valuable consideration and without notice unless it is recorded in the library prior to the subsequent purchase or mortgage.'
87. Obviously, if it were the intention of the Philippine Congress to make it mandatory to file the assignment of copyright with the National Library, the second paragraph in Section 19 of PD No. 49 as quoted above should have been retained in Section 182 of the IP Code. It was not.
88. The permissive character of registration of assignment of copyright is likewise highlighted by a comparison of the provisions of the IP Code on registration of an assignment of copyright as against the IP Code provisions on registration of trademark assignment and patent assignment.
88.1 Registration with IPO is required for assignments, licenses and other instruments relating to the transmission of any right, title or interest in and to inventions, and patents or application for patents or inventions within three (3) months from the date of the instrument, or prior to a purchase or mortgage. If the instrument is not registered, it is void as against a subsequent purchaser or mortgagee for valuable consideration and without notice.
88.2 The IP Code likewise requires IPO recording of assignments and transfers of trademark application or registration for the same to be effective against third parties. The rule is likewise the same for license contracts involving a trademark application or registration.[211]
Article 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be provided with certainty.[230]In the same way, jurisprudence teaches that "[w]hen the court finds that some pecuniary loss has been suffered but the amount cannot, from the nature of the case, be proved with certainty, temperate damages may be recovered. Temperate damages may be allowed in cases where from the nature of the case, definite proof of pecuniary loss cannot be adduced, although the court is convinced that the aggrieved party suffered some pecuniary loss."[231] Nonetheless, "[i]t must be stressed that the grant of temperate damages, albeit subject to the discretion of the court,[232] must always be reasonable[233] and based on the facts and circumstances of each case.[234] Indeed, this Court's discretion is subject to the condition that the award for damages is not excessive under the attendant facts and circumstance of the case."[235] To stress, even if FILSCAP specifically asked for actual damages, temperate damages should be awarded instead. This is because due to lack of evidence, the amount of actual damages cannot be quantified with reasonable certainty even if it is evident that FILSCAP indeed suffered losses.
[91] Kensonic, Inc. v. Uni-line Multi-Resources, Inc. (Phil.), 832 Phil. 495, 505 (2018), citing Black's Law Dictionary, Centennial Edition, 6th ed. West Group, St. Paul Minnesota, USA, 1990, p. 336.
(a) Directly commit an infringement; (b) Benefits from the infringing activity of another person who commits an infringement if the person benefiting has been given notice or the infringing activity and has the right and ability to control the activities of the other person; (c) With knowledge of infringing activity, induces, causes or materially contributes to the infringing conduct of another. x x x x
203.1. | As regards their performances, the right of authorizing: |
(a) The broadcasting and other communication to the public of their performance; and | |
(b) The fixation of their unfixed performance. | |
203.2. | The right of authorizing the direct or indirect reproduction of their performances fixed in sound recordings, in any manner or form; |
203.3. | Subject to the provisions of Section 206, the right of authorizing the first public distribution of the original and copies of their performance fixed in the sound recording through sale or rental or other forms of transfer of ownership; |
203.4. | The right of authorizing the commercial rental to the public of the original and copies of their performances fixed in sound recordings, even after distribution of them by, or pursuant to the authorization by the performer; and |
203.5. | The right of authorizing the making available to the public of their performances fixed in sound recordings, by wire or wireless means, in such a way that members of the public may access them from a place and time individually chosen by them. |
x x x x | |
204.2. | The rights granted to a performer in accordance with Subsection 203.1 shall be maintained and exercised fifty (50) years after his death, by his heirs, and in default of heirs, the government, where protection is claimed. |
x x x x |
208.1. | The right to authorize the direct or indirect reproduction of their sound recordings, in any manner or form; the placing of these reproductions in the market and the right of rental or lending; |
208.2. | The right to authorize the first public distribution of the original and copies of their sound recordings through sale or rental or other forms of transferring ownership; and |
208.3. | The right to authorize the commercial rental to the public of the original and copies of their sound recordings, even after distribution by them by or pursuant to authorization by the producer. |
212.1. The use by a natural person exclusively for his own personal purposes;[106] Joaquin v. Drilon, 361 Phil. 900, 914 (1999).
212.2. Using short excerpts for reporting current events;
212.3. Use solely for the purpose of teaching or for scientific research; and
212.4. Fair use of the broadcast subject to the conditions under Section 185.
§ 107. Limitations on exclusive rights: Fair use[151] ABS-CBN Corporation v. Gozon, 755 Phil. 709, 757 (2015), citing Habana v. Robles, 369 Phil. 764 (1999), which cited 18 AM JUR 2D § 109, in turn citing Toksvig v. Bruce Pub. Co., (CA7 Wis) 181 F2d 664 [1950]; Bradbury v. Columbia Broadcasting System, Inc., (CA9 Cal) 287 F2d 478, cert den 368 US 801, 7 L ed 2d 15, 82 S Ct 19 [1961]; Shipman v. R.K.O. Radio Pictures, Inc., (CA2 NY) 100 F2d 533 [1938].
Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include —
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.
(a) Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 122 or of the author as provided in section 106A(a), or who imports copies or phonorecords into the United States in violation of section 602, is an infringer or the copyright of right of the author, as the case may be. For purposes of this chapter (other than section 506), any reference to copyright shall be deemed to include the rights conferred by section 106A(a). As used in this subsection, the term 'anyone' includes any State, any instrumentality of a State, and any officer or employee of a State or instrumentality of a State acting in his or her official capacity. Any State, and any such instrumentality, officer, or employee, shall be subject to the provisions of this title in the same manner and to the same extent as any nongovernmental entity. (Emphases and underscoring supplied).[184] See Sony Corp. v. Universal City Studios, 464 U.S. 417 (1984).
Section 10. Section 183 of Republic Act No. 8293 is hereby amended to read as follows:[201] Concept introduced by RA 10372; see: Collective Management Organizations "[manages] the bundle of copyrights that their members own, by providing the legal platform to efficiently enforce their intellectual property (IP) rights," available at https://www.ipophil.gov.ph/news/ipophl-highlights-relevance-of-collective-management-organizations/ (last accessed Nov. 26, 2021).; See also "List of Accredited Collective Management Organizations (CMO)" available at: https://www.ipophil.gov.ph/collective-management-organizations/ (last accessed Nov. 24, 2021); and "Why do you need a License?" available at: https://filscap.org/licensing (last accessed Nov. 24, 2021)."SEC. 183. Designation of Society. – the owners of copyright and related rights or their heirs may designate a society of artists, writers, composers and other right-holders to collectively manage their economic or moral rights on their behalf. For the said societies to enforce the rights of their members, they shall first secure the necessary accreditation from the Intellectual Property Office. (Sec. 32, P.D. No. 49a)"
[213] See "Berne Convention for the Protection of Literary and Artistic Works," available at: https://wipolex.wipo.int/en/text/283698 (last accessed Nov. 25, 2021).
Act No. 3134, Section 11 Presidential Decree No. 49, Section 26 SECTION 11. Copyright for a work may be secured by the registration of the claim to such copyright in accordance with the provisions of this Act and by publication thereof with the required notice of copyright upon the front part or title-page of each copy thereof published or offered for sale by authority of the copyright proprietor and by depositing with the Director of the Philippine Library and Museum by personal delivery or by registered mail two complete copies of the copyrighted work or one copy of the issue or issues containing the work if it be a contribution to a periodical. No copyright in any work is considered as existing until the provisions of this Act with respect to the deposit of copies and registration of claim to copyright shall have been complied with. Section 26. After the first public dissemination or performance by authority of the copyright owner of a work falling under subsections (A), (B), (C) and (D) of Section 2 of this Decree, there shall, within three weeks, be registered and deposited with the National Library, by personal delivery or by registered mail, two complete copies or reproductions of the work in such form as the Director of said library may prescribe. A certificate of registration and deposit for which the prescribed fee shall be collected. If, within three weeks after receipt by the copyright owner of a written demand from the director for such deposit, the required copies or reproductions are not delivered and the fee is not paid, the copyright owner shall be liable to pay to the National Library the amount of the retail price of the best edition of the work.
With or without a demand from the director, a copyright owner who has not made such deposit shall not be entitled to recover damages in an infringement suit and shall be limited to the other remedies specified in Section 23 of this Decree.
The copyright owner may elect, at any time before final judgment is rendered, to recover instead of actual damages and profits, an award of statutory damages for all infringements involved in an action in a sum equivalent to the filing fee of the infringement action but not less than Fifty thousand pesos (Php50,000.00). In awarding statutory damages, the court may consider the following factors:[242] TSN, April 3, 2012, p. 17.
(1) The nature and purpose of the infringing act; (2) The flagrancy of the infringement; (3) Whether the defendant acted in bad faith; (4) The need for deterrence; (5) Any loss that the plaintiff has suffered or is likely to suffer by reason of the infringement, and (6) Any benefit shown to have accrued to the defendant by reason of the infringement. x x x
SEC. 3. The proprietor of a copyright or his heirs or assigns shall have the exclusive right:As astutely pointed out in the ponencia, what the factor of profit—or more accurately, the absence of a profit-making aim—can do is to exclude certain acts from a finding of infringement, such as when the act was committed in accordance with those enumerated in Section 184 of the Intellectual Property Code.[2] Particularly, when raising the defense of fair use, several factors—not just the alleged infringer's profit purpose—must be considered:...
(c) To exhibit, perform, represent, produce, or reproduce the copyrighted work in any manner or by any method whatever for profit or otherwise; if not reproduced in copies for sale, to sell any manuscripts or any record whatsoever thereof; ... (Emphasis supplied)
The determination of what constitutes fair use depends on several factors. Section 185 of the Intellectual Property Code states:There is no question that petitioner's employees playing copyrighted music through the radio, speakers, or music videos constituted an exercise of respondent's public performance rights, and that to do so without securing a license from respondent constitutes copyright infringement for which the petitioner can be made liable. That much has been settled in Filscap v. Anrey.[4]
SECTION 185. Fair Use of a Copyrighted Work. —
185.1. The fair use of a copyrighted work for criticism, comment, news reporting, teaching including multiple copies for classroom use, scholarship, research, and similar purposes is not an infringement of copyright. . . . In determining whether the use made of a work in any particular case is fair use, the factors to be considered shall include:a. The purpose and character of the use, including whether such use is of a commercial nature or is for non-profit educational purposes;Respondents allege that the news footage was only five (5) seconds long, thus falling under fair use. ABS-CBN belies this contention and argues that the footage aired for two (2) minutes and 40 seconds. 113 According to the Court of Appeals, the parties admitted that only five (5) seconds of the news footage was broadcasted by GMA-7.
b. The nature of the copyrighted work;
c. The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
d. The effect of the use upon the potential market for or value of the copyrighted work.
This court defined fair use as "a privilege to use the copyrighted material in a reasonable manner without the consent of the copyright owner or as copying the theme or ideas rather than their expression." Fair use is an exception to the copyright owner's monopoly of the use of the work to avoid stifling "the very creativity which that law is designed to foster."
Determining fair use requires application of the four-factor test. Section 185 of the Intellectual Property Code lists four (4) factors to determine if there was fair use of a copyrighted work:a. The purpose and character of the use, including whether such use is of a commercial nature or is for non-profit educational purposes;First, the purpose and character of the use of the copyrighted material must fall under those listed in Section 185, thus: "criticism, comment, news reporting, teaching including multiple copies for classroom use, scholarship, research, and similar purposes." The purpose and character requirement is important in view of copyright's goal to promote creativity and encourage creation of works. Hence, commercial use of the copyrighted work can be weighed against fair use.
b. The nature of the copyrighted work;
c. The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
d. The effect of the use upon the potential market for or value of the copyrighted work.
The "transformative test" is generally used in reviewing the purpose and character of the usage of the copyrighted work. This court must look into whether the copy of the work adds "new expression, meaning or message" to transform it into something else. "Meta-use" can also occur without necessarily transforming the copyrighted work used.
Second, the nature of the copyrighted work is significant in deciding whether its use was fair. If the nature of the work is more factual than creative then fair use will be weighed in favor of the user.
Third, the amount and substantiality of the portion used is important to determine whether usage falls under fair use. An exact reproduction of a copyrighted work, compared to a small portion of it, can result in the conclusion that its use is not fair. There may also be cases where, though the entirety of the copyrighted work is used without consent, its purpose determines that the usage is still fair. For example, a parody using a substantial amount of copyrighted work may be permissible as fair use as opposed to a copy of a work produced purely for economic gain.
Lastly the effect of the use on the copyrighted work's market is also weighed for or against the user. If this court finds that the use had or will have a negative impact on the copyrighted work's market, then the use is deemed unfair.[3]
An important aspect of intellectual property rights is that their protection subsists only "for such period as may be provided by law." As with other intellectual property rights, the metes and bounds of protection for works covered by copyright are defined and governed by existing law. In Joaquin v. Drilon:At the time the infringing acts were committed in this case, Republic Act No. 8293 only punished the direct infringer: the person who, without authority or consent, exercises a right that was exclusively granted to the copyright holder, or author of the work in case of moral rights, or the performer, producer of sound recordings or broadcasting organization for rights defined in Chapter XII of the Intellectual Property Code, among others. Persons who benefit from the infringing activity of another, or knowingly and materially contribute to another's infringing activity, were not liable under Section 216 of Republic Act No. 8293. Thus, in the strictest understanding of liability for infringement under Republic Act No. 8293, to impute infringement, it must be shown that the unauthorized exercise of copyright or related right must have been done by the alleged infringer. The only exception was persons who knowingly possess infringing copies of the work, penalized under Section 217.3:Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent right granted by the statute, and not simply a pre-existing right regulated by the statute. Being a statutory grant, the rights are only such as the statute confers, and may be obtained and enjoyed only with respect to the subjects and by the persons, and on terms and conditions specified in the statute.[8]
SECTION 217. Criminal Penalties. — ...It was only in Republic Act No. 10372 that acts constituting copyright infringement were expanded to contemplate those done by persons other than the direct infringers:
217.3. Any person who at the time when copyright subsists in a work has in his possession an article which he knows, or ought to know, to be an infringing copy of the work for the purpose of:(a) Selling, letting for hire, or by way of trade offering or exposing for sale, or hire, the article;
(b) Distributing the article for purpose of trade, or for any other purpose to an extent that will prejudice the rights of the copyright owner in the work; or
(c) Trade exhibit of the article in public, shall be guilty of an offense and shall be liable on conviction to imprisonment and fine as above mentioned.
SEC. 216. Infringement. — Any person infringes a right protected under this Act when one:I respectfully put forward that, if this Court must impute liability to persons other than the direct infringers absent a specific provision in copyright law, then it is inappropriate to find its basis on the common law principles of another jurisdiction.[9] "Otherwise, our laws, and by extension, our courts, will be beholden to interpretations made of foreign laws, by foreign bodies, ignoring the real and material divergences in the legal, political, social, and cultural developments unique to each jurisdiction."[10] For those infringing acts allegedly committed and yet responsibility is imputed to another, prior to the effectivity of Republic Act No. 10372, it is more appropriate that Philippine law and jurisprudence's existing formulations of the concept of vicarious liability be applied. In Cangco v. Manila Railroad Co.:[11](a) Directly commits an infringement;
(b) Benefits from the infringing activity of another person who commits an infringement if the person benefiting has been given notice of the infringing activity and has the right and ability to control the activities of the other person;
(c) With knowledge of infringing activity, induces, causes or materially contributes to the infringing conduct of another.
On the other hand, the liability of masters and employers for the negligent acts or omissions of their servants or agents, when such acts or omissions cause damages which amount to the breach of a contract, is not based upon a mere presumption of the master's negligence in their selection or control, and proof of exercise of the utmost diligence and care in this regard does not relieve the master of his liability for the breach of his contract.In particular, when an employer is being made liable for their employees' acts, this Court's jurisprudence on vicarious liability of employers can be adapted and refined as the foundation for vicarious liability in copyright infringement cases. For example, in the preliminary determination of an employer's vicarious liability, there must be proof that an employer-employee relationship exists between the two parties.[13] It must then be shown that the employer was negligent in some capacity, failing to exercise the diligence of a good parent of a family in the selection of employees and supervision of performance of their duties. As stated in Victory Liner, Inc. v. Heirs of Malecdan:[14]
Every legal obligation must of necessity be extra-contractual or contractual. Extra-contractual obligation has its source in the breach or omission of those mutual duties which civilized society imposes upon its members, or which arise from these relations, other than contractual, of certain members of society to others, generally embraced in the concept of status. The legal rights of each member of society constitute the measure of the corresponding legal duties, mainly negative in character, which the existence of those rights imposes upon all other members of society. The breach of these general duties whether due to willful intent or to mere inattention, if productive of injury, gives rise to an obligation to indemnify the injured party. The fundamental distinction between obligations of this character and those which arise from contract, rests upon the fact that in cases of non-contractual obligation it is the wrongful or negligent act or omission itself which creates the vinculum juris, whereas in contractual relations the vinculum exists independently of the breach of the voluntary duty assumed by the parties when entering into the contractual relation.
With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is competent for the legislature to elect — and our Legislature has so elected — to limit such liability to cases in which the person upon whom such an obligation is imposed is morally culpable or, on the contrary, for reasons of public policy, to extend that liability, without regard to the lack of moral culpability, so as to include responsibility for the negligence of those persons whose acts or omissions are imputable, by a legal fiction, to others who are in a position to exercise an absolute or limited control over them. The legislature which adopted our Civil Code has elected to limit extra contractual liability — with certain well-defined exceptions — to cases in which moral culpability can be directly imputed to the persons to be charged. This moral responsibility may consist in having failed to exercise due care in one's own acts, or in having failed to exercise due care in the selection and control of one's agents or servants, or in the control of persons who, by reason of their status, occupy a position of dependency with respect to the person made liable for their conduct.[12]
Employers may be relieved of responsibility for the negligent acts of their employees acting within the scope of their assigned task only if they can show that "they observed all the diligence of a good father of a family to prevent damage." For this purpose, they have the burden of proving that they have indeed exercised such diligence, both in the selection of the employee and in the supervision of the performance of his duties.Thus, recovery from the proprietor of the establishment under the theory of vicarious liability may hinge upon a finding that the proprietor has control or supervision over the acts of the primary and direct infringer. This likewise presupposes that the proprietor knows or has been informed of the primary infringer's act, much in the same way that Section 216 of the Intellectual Property Code, as amended, requires notice or knowledge for liable persons who are not the direct infringers.
In the selection of prospective employees, employers are required to examine them as to their qualifications, experience and service records. With respect to the supervision of employees, employers must formulate standard operating procedures, monitor their implementation and impose disciplinary measures for breaches thereof. These facts must be shown by concrete proof, including documentary evidence.[15]
FILSCAP's evidence is lacking in terms of the "actual" damage it sustained. It did not offer other receipts or documentation, except for what Lejano presented when he visited Off the Grill, as well as the matrix of fees submitted by FILSCAP's employees. There is no effective way to ascertain how much pecuniary loss FILSCAP incurred with respect to license fees as well as monitoring expenses. For this reason, the RTC and CA's award to FILSCAP for license fees/royalties should also be removed, in addition to the monitoring expenses which the CA already deleted. FILSCAP's evidence, unfortunately, is insufficient to properly calculate its entitlement to royalties, as well as other actual damages, assuming it further prayed for the same, apart from the license fees and monitoring expenses.[16]Accordingly, I vote to DENY the Petition for Review on Certiorari.
x x x [FILSCAP] x x x is a "non-stock, non-profit association of composers, lyricists, and music publishers" accredited by the [Intellectual Property Office of the Philippines (IPOPHL)] to perform the role of a [Collective Management Organization (CMO)], and is a member of the Paris-based International Confederation of Societies of Authors and Composers (Confédération Internationale des Sociétés d'Auteurs et Compositeurs or CISAC), the umbrella organization of all composer societies worldwide. Being the designated CMO of composers, lyricists, and music publishers, FILSCAP assists in "protecting the intellectual property rights of its members by licensing performances of their copyright music." For this purpose, FILSCAP gets assigned the copyright by its members, and, as assignee, then collects royalties which come in the form of license fees from end-users who intend to "publicly play, broadcast, stream, and to a certain extent (reproduce) any copyrighted local and international music of its members."[2]The controversy in the instant case started when a representative from FILSCAP monitored Off the Grill Bar and Restaurant (Off the Grill), a commercial establishment in Quezon City owned and operated by petitioner COSAC, Inc. (COSAC). These monitoring activities led to the discovery that COSAC was playing copyrighted music in its establishment without obtaining from FILSCAP the necessary license or paying the corresponding fees.[3]
- COSAC exercised without authority the authors' exclusive rights under Section 177 (Copyright or Economic Rights).
- The law itself distinguishes the right of "public performance" from the right of "communication to the public," either right being enforceable through FILSCAP.
- COSAC's acts are not covered by Sections 184 (Limitations on Copyright) and 185 (Fair Use of a Copyrighted Work).
- The Court is called upon not to simply discuss the provisions on copyright protection, but to extensively delve into its existing limitations.
- Limitations on copyright
- Fair Use
- Fair Use Doctrine
- Fair Use in the Philippines
- The Four Fair Use Factors
- First Factor: Purpose and Character of Use
- Second Factor: Nature of Copyrighted Work
- Third Factor: Amount and Substantiality of the Portion Used
- Fourth Factor: Effect of the Use Upon the Potential Market for or Value of the Copyrighted Work
- Why COSAC is not exempted from liability for copyright infringement
- There must be reasonable considerations for quantifying the damages awarded in copyright infringement cases.
I. COSAC EXERCISED WITHOUT AUTHORITY THE AUTHORS' EXCLUSIVE RIGHTS UNDER SECTION 177 (COPYRIGHT OR ECONOMIC RIGHTS) |
COSAC's Acts Infringed Right of the Authors Hiring a live band to perform copyrighted musical compositions
(N.B.: The fact that COSAC had directly caused the musical compositions to be played — as opposed to being a mere passive party that happened to reap unexpected rewards due to having strangers/bands playing music in its establishment — is evidenced by COSAC's witness' own admission under oath that it regularly hires and pays entertainers to play live music.[12]) Section 177. Copyright or Economic Rights. — Subject to the provisions of Chapter VIII, copyright or economic rights shall consist of the exclusive right to carry out, authorize or prevent the following acts:x x x x
177.6. Public performance of the work;
x x x
-----
Section 171.6 of the IP Code.
"Public Performance" x x x is x x x otherwise performing the work x x x by means of any x x x process x x x at a place or at places where persons outside the normal circle of a family and that family's closest social acquaintances are or can be present, irrespective of whether they are or can be present at the same place and at the same time, or at different places and/or at different times x x x. Playing of copyrighted musical compositions contained in sound recordings
(N.B.: As admitted under oath by COSAC's witness, COSAC uses a projector to display "MTV."[13] There is no indication whether this is a broadcast of the channel or whether COSAC is merely projecting a recorded footage thereof.) Section 177. Copyright or Economic Rights. — Subject to the provisions of Chapter VIII, copyright or economic rights shall consist of the exclusive right to carry out, authorize or prevent the following acts:
x x x x
177.6. Public performance of the work; and
177.7. Other communication to the public of the work. (Sec. 5, P.D. No. 49a)----- Section 171.6 of the IP Code. "Public Performance" x x x is x x x in the case of a sound recording, making the recorded sounds audible at a place or at places where persons outside the normal circle of a family and that family's closest social acquaintances are or can be present, irrespective of whether they are or can be present at the same place and at the same time, or at different places and/or at different times x x x.
AND/OR Section 171.3 of the IP Code. "Communication to the public" or "communicate to the public" means the making of a work available to the public by wire or wireless means in such a way that members of the public may access these works from a place and time individually chosen by them[.]
The law itself distinguishes the right of "public performance" from the right of "communication to the public," either right being enforceable through FILSCAPAs will be elaborated below, I agree with the ponencia that "it would be more judicious to say, specifically for this case, that COSAC infringed the [public] performing rights of the copyright owners."[14] Notably, this expression encompasses both "right of public performance" and "right of communication to the public," as can be seen in FILSCAP's deeds of assignment, viz.:
1. DEFINITIONSDespite having a collective term to refer to both these rights, the Court must still take pains to proactively distinguish them lest these exclusive rights be conflated with one another. While not raised as an issue, it is important to dispel the misconception that only the right of public performance is generally involved when "[a] copyrighted musical work is 'played or performed live through [the] performer or mechanically through any audio or audiovisual player or device such as a CD player, VCD player, DVD player, cassette player, television set or radio player.'"[16]
a) "Copyright work" shall mean and include — x x x x b) "right of public performance" shall, as provided in Section 171.6 of [the IP Code) x x x c) "right of communication to the public" shall mean the right x x x per Section 171.3 o[f] [the IP Code] d) The expression "public performing rights" shall mean (b) [right of public performance] and (c) [right of communication to the public] above.[15] (Emphasis and underscoring in the original)
The foregoing provisions suggest that the public performance right and the right to communicate to the public are separate and distinct rights which are available to, and may separately be exploited by the author. This is clear from first, the separate designation of these rights under the "menu" of economic rights under Section 177 of the IP Code, and second, the "exclusionary" definition of "public performance" in Section 171.6, which expressly requires that "the performance x x x be perceived without the need for communication [to the public] within the meaning of Subsection 171.3 [of the IP Code]."Thus, in the case at bar, considering that COSAC had hired bands to play live music and played MTV in its establishment (but it is not sure whether this was a broadcast or a recorded footage), the ponencia is therefore correct in saying that COSAC had infringed the public performing rights of the copyright owners, i.e., their right of public performance and/or their right of communication to the public.
x x x [This] is likewise supported by the following provisions of the IP Code involving the rights of performers, producers of sound recordings, and broadcasting organizations. x x x
x x x x
Notably, under Section 209 of the IP Code, performers and producers of sound recordings are entitled to remuneration whenever (i) a sound recording is published for commercial purposes, or (ii) when reproductions of such sound recordings are (a) "used directly for broadcasting or for other communication to the public" (i.e., right to communicate to the public), or (b) "publicly performed with the intention of making and enhancing profit" (i.e., right of public performance). In other words, performers and producers would be entitled to remuneration for three distinct activities, which is clear from the use of the conjunction "or." Otherwise stated, if the intention was to only entitle the performers and producers to one remuneration for all of these activities combined, then the conjunction "and" should have been used. This further underscores that Sections 177.6 and 177.7 in relation to Sections 171.3 and 171.6 of the IP Code actually recognize two separate and distinct rights that may independently be exploited by an author or copyright owner.
x x x x
x x x [I]t must further be underscored that the public performance right and right to communicate to the public are not only separate and distinct — they are also ingeniously delineated or segregated by the IP Code based on the means of transmission or making available of the work, i.e., whether the performance or communication is made by "wire or wireless means." x x x
I expound.
First, it should be stressed at the onset that the definition of public performance under Section 171.6 is exclusionary in relation to Section 171.3, i.e., in order to constitute "public performance," the performance must be "perceive[able] without the need for communication within the meaning of Subsection 171.3." Conversely, if an aspect of a performance can be perceived by the public by means of "communication" as defined under Section 171.3, i.e., "by wire or wireless means in such a way that members of the public may access these works from a place and time individually chosen by them," then this aspect of the performance would only be a "communication to the public" and would not therefore constitute a "public performance."
Second, the foregoing conclusion is also supported by the text of The Berne Convention for the Protection of Literary and Artistic Works (Berne Convention), to which the Philippines is a signatory. x x x
x x x x
x x x [U]nder the Berne Convention, public performance and any communication of such performance is covered by Article 11 thereof. However, similar to how the IP Code is worded, if the public communication is via a specific mode or means of transmission, i.e., by means of broadcasting or other "wireless diffusion," by wire or rebroadcasting (if the communication is made by an organization other than the original one), or by loudspeaker or any other analogous instrument of the broadcast of the work, then the same will fall under Article 11bis.
In fact, the foregoing stance is made clear by the WIPO in its explanatory guide to the Berne Convention (WIPO Guide). Anent the difference of Article 11 from Article 11bis of the Berne Convention, the WIPO remarked as follows:11.4. However, [Article 11] goes on to speak of "including such public performance by any means or process", and this covers performance by means of recordings; there is no difference for this purpose between a dance hall with an orchestra playing the latest tune and the next-door discotheque where the customers use coins to choose their own music. In both, public performance takes place. The inclusion is general and covers all recordings (discs, cassettes, tapes, videograms, etc.) though public performance by means of cinematographic works 1s separately covered — see Article 14(l)(ii).Furthermore, the WIPO Guide also states that Article 11bis which covers the author's right to communicate one's work by means of broadcasting, is "the fourth of the author's exclusive rights x x x, the other three being those of translation, reproduction and public performance." Anent the "broadcasting right," the WIPO elucidates that this right includes one primary right to authorize the broadcast of one's work via wireless means, and two [secondary] rights to authorize (i) the subsequent communication of said broadcast, by wire or rebroadcast, by an organization other than the one which originally made the broadcast, and (ii) the communication of the same broadcast via loudspeaker or a television screen to a "new public." x x x
11.5. The second leg of this right is the communication to the public of a performance of the work. It covers all public communication except broadcasting which is dealt with in Article 11bis. For example, a broadcasting organisation broadcasts a chamber concert. Article 11bis applies. But if it or some other body diffuses the music by landline to subscribers, this is a matter for Article 11. x x x
x x x x
Parsed, while the communication of a "performance" may fall under Article 11 of the Berne Convention (governing public performance), this is only true if the performance can be perceived without the need for communication within the meaning of Article 11bis — very much like how Section 171.6 of the IP Code is worded. On the other hand, under the Berne Convention, if the communication to the public is made either (i) via broadcast or by any other means of wireless diffusion, (ii) whether by wire or not, by an organization other than the one who originally made the broadcast, or (iii) through a broadcast of the work through a loudspeaker, television screen, or other analogous instrument, then Article 11bis applies. Put simply, one clear similarity between the structure of the Berne Convention and the IP Code is that both categorically separate the concept of "public performance" from "broadcasting," such that a work that is conveyed to the public solely via radio broadcast does not constitute an exercise of the author's right of "public performance," but rather of the author's right of "[b]roadcasting and other wireless communications, public communication of broadcast by wire or rebroadcast, public communication of broadcast by loudspeaker or analogous instruments[,]" or, as referred to under the IP Code, the author's right to "communicate to the public."
Applying the foregoing principles to our jurisdiction, this means that under the IP Code, as under the Berne Convention, the single act of broadcasting of musical compositions contained in sound[/audiovisual] recordings, either by the original broadcaster or "by an organization other than the original one[,]" or by other business establishments solely "by loudspeaker[, television,] or any other analogous instrument" (as worded in Article 11bis of the Berne Convention), is actually an exercise of the author's right to "communicate to the public" his or her work under Section 171.3 of the IP Code. This is clear from the wording of Section 171.3 of the IP Code which specifically defines "communication to the public" as the "making of a work available to the public by wire or wireless means x x x," and from the wording of Section 202.7 of the IP Code which defines "broadcasting" as a mode of "transmission by wireless means for the public reception of sounds[.]" As well, by the wording of Section 171.6 of the IP Code, this may also mean that such act does not constitute an exercise of an author's public performance right.
In other words, based on the IP Code's definition of these two rights, as further clarified by the Berne Convention, broadcasting a musical composition over the [television or] radio or communicating the same in some other "wire or wireless means x x x" would simply constitute an exercise of the right to "communicate to the public." On the other hand, playing a sound recording of a musical composition to an audience through other dissimilar or "non-broadcast" means, i.e., through a jukebox or CD player, even if the same is ultimately perceived by the audience through a loudspeaker or other analogous instrument, would only constitute "public performance." After all, the sound recording in this situation can be perceived by the public without the need of communication by "wire or wireless means in such a way that members of the public may access these works from a place and time individually chosen by them."
x x x x
To be sure, there are cases where a single performance could constitute both public performance and communication to the public. For instance, if a band performs a musical composition live before a studio audience, and the same performance is either simultaneously or subsequently broadcasted over the radio by a broadcasting station, then the band's performance results in both a public performance and communication to the public. In this example, the act of directly performing the musical composition before the audience is itself a public performance, while the act of broadcasting the performance (not the actual performance itself) is a communication to the public. Thus, while there is only one performance, there are actually two acts which respectively result in the exercise of two separate economic rights.
In other words, unless there is a showing that the music being played via radio[/television] is not simply a x x x recording [of a musical composition] but rather, being played live before a studio audience, then the playing of a radio[/television] broadcast as background music would only constitute a "communication to the public."[17] (Emphasis and underscoring supplied)
II. COSAC'S ACTS ARE NOT COVERED BY SECTIONS 184 (LIMITATIONS ON COPYRIGHT) AND 185 (FAIR USE OF A COPYRIGHTED WORK) |
The Court is called upon not to simply discuss the provisions on copyright protection, but to extensively delve into its existing limitationsAs mentioned, to determine whether copyright infringement has been committed, the acts in question "x x x must not be covered by Sections 184 (Limitations on Copyright) and 185 (Fair Use [of a Copyrighted Work])."[18] Clearly, therefore, in resolving the main issue of copyright infringement, the Court is called upon to consider and delve into the exceptions to copyright infringement (i.e., the Limitations on Copyright under Section 184 of the IP Code and Fair Use of a Copyrighted Work under Section 185 of the IP Code) because they are crucial in determining whether copyright infringement exists.
In the first place, Spouses Campos v. Republic explains that the Court may consider issues not raised by the parties if these are necessary at arriving at a just decision, serve the interest of justice, and necessary to rule on the questions properly assigned as errors:To further make apparent this dividing line between infringement and allowable use or reproduction, therefore, it is imperative to emphasize why COSAC's acts neither fall under Section 184 (Limitations on Copyright) nor Section 185 (Fair use of a Copyrighted Work).
x x x x
Secondly, for the immediate protection of the general public against an overly expansive interpretation of the coverage of music copyright protection, the Court's verdict must also x x x expound on and construe more definitively the guardrails already recognized under the law. This is part and parcel of the Court's function not only to adjudicate the rights of the parties but also, or more so, to interpret the law for the guidance of all. x x x
x x x x
Lastly, the discussion of the exceptions to copyright infringement is necessary — especially for this landmark case — for the Court to balance the competing interests involved in copyright protection. x x x Section 2 of the IP Code underscores that the ultimate objective of having an intellectual property system, which includes the means of protecting copyrights, is to benefit society[.] x x x
x x x x
Section 177 of the IP Code makes it clear that a copyright over protected works is a bundle of exclusive economic rights in favor of the author. Generally speaking, these comprehensively encompass the several means by which copyrighted material may be used[.] x x x
x x x x
Section 217 of the IP Code, in turn, provides penal sanctions for copyright infringement:
x x x x
Based on the foregoing, it may be readily concluded that these penal sanctions pertain to wide-ranging conduct, including acts involving copyrighted material which are arguably commonplace in today's world. This, in effect, further narrows the already thin line dividing infringement and allowable use or reproduction.[19] x x x (Emphasis supplied)
Section 184 of the IP Code reads:
SECTION 184. Limitations on Copyright. — 184.1. Notwithstanding the provisions of Chapter V, the following acts shall not constitute infringement of copyright:This Section expressly provides for specific situations involving the use of copyrighted material which do not constitute infringement.
(a) The recitation or performance of a work, once it has been lawfully made accessible to the public, if done privately and free of charge or if made strictly for a charitable or religious institution or society; (Sec. 10(I), P.D. No. 49) x x x x (i) The public performance or the communication to the public of a work, in a place where no admission fee is charged in respect of such public performance or communication, by a club or institution for charitable or educational purpose only, whose aim is not profit making, subject to such other limitations as may be provided in the Regulations[.]
In this regard, particularly relevant to x x x the issue in this case — are paragraphs (a) and (i) of Section 184.1, which respectively involve (i) "the recitation or performance" of a work in private places, and (ii) the "public performance" and/or "communication to the public" of copyrighted works in public or publicly accessible places. Under these paragraphs, in order for a recitation, performance and/or communication of a work to be exempt, the following requisites should be present:
Under Section 184.1 (a):Under Section 184.1 (i):
(i) The recitation or performance is done (a) privately and free of charge or (b) made strictly for a charitable or religious institution or society; and (ii) The work has been lawfully made accessible to the public prior to the recitation or performance[.]Regarding the first requisite of Section 184.1 (a), for this exemption to apply, the recitation or performance should be done privately and completely free of charge — unless the same is made strictly for a charitable or religious institution or society. Corollarily, a person could avail of the exemption under Section 184.1(a) even if the recitation or performance were to be done publicly and/or for compensation, provided that the same is made strictly for a charitable or religious institution or society.
(i) The place where the public performance and/or communication to the public is made does not charge any admission fee in respect of such performance or communication; (ii) The public performance and/or communication to the public is made by a club or institution: (a) for charitable or educational purpose only; and (b) whose aim is not profit making; and (iii) Such other requirements that may be prescribed under the implementing rules and regulations promulgated by the Director General of the IPO[PHL].
Notably, the IP Code does not specifically define the term "privately." Since Congress did not assign a statutory definition to the term "privately," this term should thus be understood in its plain and ordinary sense, i.e., "relating or belonging to an individual, as opposed to the public or the government"[.] Considering, however, that the term "public," the commonly accepted antonym of "private," is given a technical meaning elsewhere in the IP Code, then resort could also be made to this definition in order to construe what "privately" as contemplated under Section 184.1(a) means. In this regard, Section 171.6 of the IP Code provides that a performance of a sound recording will be deemed as "public" if it would entail "making the recorded sounds audible at a place or at places where persons outside the normal circle of a family and that family's closest social acquaintances are or can be present, irrespective of whether they are or can be present at the same place and at the same time, or at different places and/or at different times."
In other words, construing "privately" in its ordinary sense (i.e., as the opposite of "publicly"), and coupled with the definition of "public" under Section 171.6, then this term should simply be understood to refer to situations where the work is not made "audible at a place or at places where persons outside the normal circle of a family and that family's closest social acquaintances are or can be present." After all, it is a settled principle of statutory construction that "words used in x x x [a] statute must be given their ordinary meaning except where technical terms are employed." As well, the law must not be read in truncated parts, and "the whole and every part thereof must be considered in fixing the meaning of any of its parts in order to produce a harmonious whole."
Meanwhile, regarding the first requisite of Section 184.1(i), in contrast with the first requisite of Section 184.1 (a), it should be clarified that based on the plain text of paragraph (i) of Section 184, charging an admission fee, per se, does not take out an otherwise allowable "performance" or "communication" from this exemption. Rather, the admission fee must specifically be "charged in respect of such performance or communication." Thus, if an admission fee is charged for some other purpose not otherwise related to the performance or communication, then the latter could still be exempt under this paragraph.
Anent the second requisite of Section 184.1(i), it must be underscored that not only must the club or institution be for a "charitable or educational purpose," but it must also be "non-profit." Thus, to be exempt, the club or institution must not only first qualify as either a charitable institution, i.e., it "provide[s] for free goods and services to the public which would otherwise fall on the shoulders of government," or an educational institution, i.e., it must be a school, seminary, college or similar educational establishment under the formal school system; but also, said club or institution must likewise be "non-profit," such that "no net income or asset accrues to or benefits any member or specific person, with all [its] net income or asset[s] devoted to the institution's purposes and all its activities conducted not for profit."[20] (Emphasis in the original)
i. Fair Use Doctrine
Aside from the specific exceptions and limitations contemplated under Section 184 of the IP Code, the law also provides a statutory framework that may be used as a guide in determining whether an unlicensed use of a copyrighted work falls within fair use and consequently, outside the scope of copyright infringement. Specifically, Section 185 provides as follows:SECTION 185. Fair Use of a Copyrighted Work. — 185.1. The fair use of a copyrighted work for criticism, comment, news reporting, teaching including multiple copies for classroom use, scholarship, research, and similar purposes is not an infringement of copyright x x x. In determining whether the use made of a work in any particular case is fair use, the factors to be considered shall include:Before delving into the relevant judicial interpretations made by the US Courts, it should first be emphasized that the four fair use factors set out in Section 185 of our IP Code are an exact reproduction of the factors listed in the counterpart provision of the US Copyright Act of 1976, to wit:x x x x
(a) The purpose and character of the use, including whether such use is of a commercial nature or is for non-profit educational purposes; (b) The nature of the copyrighted work; (c) The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (d) The effect of the use upon the potential market for or value of the copyrighted work.Section 107. Limitations on the exclusive rights: Fair useAccordingly, reference to US cases is not only proper, but also imperative.
Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include —The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors. x x x
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.
[Second] it should be pointed out that, as held in the case of Campbell, each of the four factors is not individually conclusive and should be weighed along with the other factors for purposes of establishing a case of fair use.
1. First Factor: The Purpose and Character of Use
The first factor to consider in determining whether an unlicensed use or reproduction of a copyrighted work is in accordance with fair use is the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes. In Campbell, the SCOTUS clarified the core value behind an enquiry as to the purpose and character of the new work:x x x The central purpose of this investigation is to see, in Justice Story's words, whether the new work merely "supersede[s] the objects" of the original creation x x x, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is 'transformative.' Although such transformative use is not absolutely necessary for a finding of fair use, the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works. Such works thus lie at the heart of the fair use doctrine's guarantee of breathing space within the confines of copyright, x x x and the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use. x x xSpeaking of commercial purpose, the SCOTUS also clarified [their] ruling in Sony Corp. of America v. Universal Studios, Inc., and further elucidated that the commercial character of a work does not per se make it unfair. At the same time, "the mere fact that a use is educational and not for profit does not insulate it from a finding of infringement." In shedding this light, the Court stated, as follows:The language of the statute makes clear that the commercial or nonprofit educational purpose of a work is only one element of the first factor enquiry into its purpose and character. Section 107(1) uses the term "including" to begin the dependent clause referring to commercial use, and the main clause speaks of a broader investigation into "purpose and character." As we explained in Harper & Row, Congress resisted attempts to narrow the ambit of this traditional enquiry by adopting categories of presumptively fair use, and it urged courts to preserve the breadth of their traditionally ample view of the universe of relevant evidence x x x If, indeed, commerciality carried presumptive force against a finding of fairness, the presumption would swallow nearly all of the illustrative uses listed in the preamble paragraph of § 107, including news reporting, comment, criticism, teaching, scholarship, and research, since these activities "are generally conducted for profit in this country." Congress could not have intended such a rule, which certainly is not inferable from the common-law cases, arising as they did from the world of letters in which Samuel Johnson could pronounce that "no man but a blockhead ever wrote, except for money." x x xIn Harper & Row, x x x the SCOTUS explained that "the crux of the profit/nonprofit distinction is not whether the sole motive of the use is monetary gain, but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price."
In other words, if the new work clearly has transformative use and value, a finding of fair use is more likely even if the user stands to profit from his or her new work. Conversely, if the new work merely supplants the object of the original work, i.e., it has no transformative value, and is commercial in nature, the first factor will most likely be weighed against a finding of fair use. Needless to state, if the new work has transformative use and value, and was created for a noncommercial purpose or use, the scale will highly likely be swayed in favor of fair use.
Applying the ruling of the SCOTUS in Campbell, we may use as illustrative, not limitative, examples of transformative use those listed in the preamble of Section 185 of the IP Code, i.e., for criticism, comment, news reporting, teaching, scholarship, research, and similar purposes.
In Campbell, the [US Court] held that parodies which are "less ostensibly humorous forms of criticism[s]," have transformative value and served an entirely different function. The x x x Court x x x in Hustler Magazine, Inc., v. Moral Majority, Inc. x x x held that defendants reproduced and distributed copies of a single page from Hustler Magazine, Inc.'s magazine for a different purpose — "to defend himself (Jerry Falwell) against such derogatory personal attacks" Similarly, the x x x Court x x x in The Author's Guild, Inc. v. Hathitrust x x x ruled that the creation of a full-text searchable database of books is "a quintessentially transformative use" and the same should not be considered as a substitute for the books searched. In the same line, the x x x Court x x x in Kelly v. Arriba-Soft x x x ruled that the reproduction of plaintiff's photos as thumbnail images served an entirely different purpose — "as a tool to help index and improve access to images on the internet and their related web sites." In the seminal case of Field v. Google, Inc. x x x, the x x x Court x x x also ruled that Google's use of "cached" links has transformative use such as: (1) it enables the users to temporarily access an inaccessible page; (2) it allows users to identify changes made to a particular website; and (3) it "allows users to understand why a page was responsive to their original query."
On the other hand, in Harper & Row, the [US Court] ruled that the respondent's intended purpose for the unauthorized use of the unpublished manuscripts was simply to "[supplant] the copyright holders' commercially valuable right of first publication," and thus, without any transformative use or value. In Twin Peaks Productions, Inc. v. Publications International Ltd. x x x, the US Court x x x held that a book which simply summarizes the plots of plaintiff's teleplay has no transformative value.
Taking into consideration the other fair use factors, [the] US Courts sustained the user's claim of fair use in Campbell, Hustler Magazine, The Author's Guild, Kelly, and Field, but denied the same in Harper & Row and Twin Peaks.
2. Second Factor: Nature of Copyrighted Work
The second fair use factor involves the assessment of the nature of the copyrighted work. "This factor calls for recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied."
In the case of Stewart v. Abend x x x, the SCOTUS ruled that there is a higher probability for the fair use defense to fly in case of factual works than works of fiction and fantasy, since the law generally recognizes a greater need to disseminate the former than the latter. Considering that a motion picture based on a fictional short story is more creative than factual, the fair use defense was given less weight. This ruling is affirmed in Twin Peaks, which involved a televised work of fiction.
In addition, in Harper & Row, the [US Court] stated that the fact that the copied work is unpublished is a significant element of its "nature," since "the scope of fair use is narrower with respect to unpublished works."While even substantial quotations might qualify as fair use in a review of a published work or a news account of a speech that had been delivered to the public or disseminated to the press, x x x the author's right to control the first public appearance of his expression weighs against such use of the work before its release. The right of first publication encompasses not only the choice whether to publish at all, but also the choices of when, where, and in what form first to publish a work. (Emphasis in the original)This ruling was affirmed by the US Courts in Salinger v. Random House, Inc. and Love v. Kwitny, where defendants' unauthorized reproduction of unpublished letters and manuscripts were weighed against fair use.
In the recent case of Google LLC v. Oracle America, Inc. x x x, the SCOTUS placed the copied "declaring code" farther from the core of copyright compared to other computer programs. Given this, the application of fair use was held to "[unlikely undermine] the general copyright protection that Congress provided for computer programs."
The foregoing judicial interpretations may be applied by analogy in similar cases or used as guide when this Court or the public is confronted with copyright infringement and fair use cases. As a rule, the closer the work is to the core of copyright protection — i.e., the more creative, imaginative, or original the copied work is, the more likely will fair use be rejected as a defense against infringement.
3. Third Factor: Amount and Substantiality of the Portion Used
The third fair use factor asks whether the amount and substantiality of the portion used in relation to the copyrighted work as a whole is reasonable. The SCOTUS, in Google LLC, ruled that the "substantiality" factor "will generally weigh in favor of fair use where x x x the amount of copying was tethered to a valid, and [transformative purpose]." Thus,this factor calls for thought not only about the quantity of the materials used, but about their quality and importance, too. In Harper & Row, for example, the Nation had taken only some 300 words out of President Ford's memoirs, but we signaled the significance of the quotations in finding them to amount to "the heart of the book," the part most likely to be newsworthy and important in licensing serialization. We also agree with the Court of Appeals that whether "a substantial portion of the infringing work was copied verbatim" from the copyrighted work is a relevant question, for it may reveal a dearth of transformative character or purpose under the first factor, or a greater likelihood of market harm under the fourth; a work composed primarily of an original, particularly its heart, with little added or changed, is more likely to be a merely, superseding use, fulfilling demand for the original. x x xIn Campbell, the SCOTUS also clarified that the third fair use factor must be examined in relation to the first factor, which is the purpose and character of use. Thus, in this case, the Court held that a parody, which should necessarily "conjure up" at least enough of that original "to make the object of its critical wit recognizable," is fair use. This is consistent with the US Court's statement in Field that "even copying of entire works should not weigh against a fair use finding where the new use serves a different function from the original." Thus, the x x x Court x x x further stated:x x x Google's use of entire Web pages in its Cached links serves multiple transformative and socially valuable purposes. These purposes could not be effectively accomplished by using only portions of the Web pages. Without allowing access to the whole of a Web page, the Google Cached link cannot assist Web users (and content owners) by offering access to pages that are otherwise unavailable. Nor could use of less than the whole page assist in the archival or comparative purposes of Google's "Cached" links. Finally, Google's offering of highlighted search terms in cached copies of Web pages would not allow users to understand why a Web page was deemed germane if less than the whole Web page were provided x x x. Because Google uses no more of the works than is necessary in allowing access to them through "Cached" links, the third fair use factor is neutral, despite the fact that Google allowed access to the entirety of Field's works. (Emphasis and underscoring in the original)4. Fourth Factor: The Effect of the Use Upon the Potential Market for or Value of the Copyrighted Work
The last factor, according to the case of Harper & Row, is "undoubtedly the single most important element of fair use." "It requires courts to consider not only the extent of market harm caused by the particular actions of the alleged infringer, but also whether unrestricted and widespread conduct of the sort engaged in by the defendant x x x would result in a substantially adverse impact on the potential market' for the original" and derivative works.
The [Court], in Campbell stated that "when a commercial use amounts to mere duplication of the entirety of the original, it clearly supersedes the object of the original and serves as a market replacement for it, making it likely that cognizable market harm to the original will occur."
In Hustler Magazine, the US Court x x x held that in order to determine the potential harm to a copyrighted work, the courts should focus on whether the infringing use: (1) "tends to diminish or prejudice the potential sale of the work; (2) tends to interfere with its marketability of the work; or (3) fulfill the demand for the original work." In this case, the US Court considered the following factors in concluding that the impact of defendant's use of plaintiff's work was nil: (a) the plaintiff's work was first issued or released long before defendant's mailings went out; (b) "the effect on the marketability of back issues of the magazine is de minimis because it is only one page of a publication"; and (c) defendant's uses did not cause plaintiff any competitive injury since defendant was not selling or distributing copies of the ad parodies to plaintiff's followers.
In Google LLC, the SCOTUS found that Google's new smartphone platform is not a market substitute for Java SE, and accordingly, weighed the fourth factor in favor of fair use.
On the other hand, in the case of Harper & Row, the [Court] held that "if the defendant's work adversely affects the value of any of the rights in the copyrighted work (in this case the adaptation and serialization right) the use is not fair." Similarly, in Stewart, the [Court] ruled that the rerelease of a film based on a story impinged on respondent's ability to market new versions of the story, and consequently, caused market harm to respondent.
In Twin Peaks, the x x x Court x x x weighed the fourth factor against fair use and held that:x x x It is a safe generalization that copyright holders, as a class, wish to continue to sell the copyrighted work and may also wish to prepare or license such derivative works as book versions or films. In this case, the Book may interfere with the primary market for the copyrighted works and almost certainly interferes with legitimate markets for derivative works. It is possible that a person who had missed an episode of "Twin Peaks" would find reading the Book an adequate substitute, and would not need to rent the videotape of that episode in order to enjoy the next one x x x. A copyright holder's protection of its market for derivative works of course cannot enable it to bar publication of works of comment, criticism, or news reporting whose commercial success is enhanced by the wide appeal of the copyrighted work. The author of "Twin Peaks" cannot preserve for itself the entire field of publishable works that wish to cash in on the "Twin Peaks" phenomenon. But it may rightfully claim a favorable weighting of the fourth fair use factor with respect to a book that reports the plot in such extraordinary detail as to risk impairment of the market for the copyrighted works themselves or derivative works that the author is entitled to license.[21] (Emphasis in the original)
III. THERE MUST BE REASONABLE CONSIDERATIONS FOR QUANTIFYING THE DAMAGES AWARDED IN COPYRIGHT INFRINGEMENT CASES |
Section 216 of the IP Code enumerates the remedies for infringement. Specifically, paragraph (b) provides how the award to be paid should be computed, viz.:Here, the decretal portion of the ponencia orders the award of the following amounts to FILSCAP, viz.:SECTION 216. Remedies for Infringement. — 216.1. Any person infringing a right protected under this law shall be liable:As seen in the provision, there are two alternative awards that courts may order the infringer to pay to the copyright proprietor or his assigns, namely:x x x x
(b) Pay to the copyright proprietor or his assigns or heirs such actual damages, including legal costs and other expenses, as he may have incurred due to the infringement as well as the profits the infringer may have made due to such infringement, and in proving profits the plaintiff shall be required to prove sales only and the defendant shall be required to prove every element of cost which he claims, or, in lieu of actual damages and profits, such damages which to the court shall appear to be just and shall not be regarded as penalty.Notably, Section 216 of the IP Code mirrors the rules on awarding actual damages prescribed under the Civil Code. Thus, if the Court were to award a copyright owner actual damages, such damages "must not only be capable of proof, but must actually be proved with reasonable degree of certainty." Further, to be recoverable, the Court "cannot simply rely on speculation, conjecture or guesswork in determining the amount of damages[,]" such that there must be "competent proof" of the actual amount of loss incurred. Otherwise, in the absence of such "competent proof", or if the amount of such loss "cannot be proved with certainty[,]" temperate damages which must be "reasonable under the circumstances" should instead be awarded.[25] (Emphasis in the original)
(i) actual damages, including legal costs and other expenses, as he may have incurred due to the infringement as well as the profits the infringer may have made due to such infringement, and in proving profits the plaintiff shall be required to prove sales only and the defendant shall be required to prove every element of cost which he claims; or, in lieu of actual damages and profits, (ii) damages which to the court shall appear to be just and shall not be regarded as penalty. x x x
WHEREFORE, the Petition for Review on Certiorari is hereby DENIED. The assailed May 28, 2015 Decision and January 14, 2016 Resolution of the Court of Appeals in CA-G.R. CV No. 101415 are AFFIRMED with MODIFICATIONS. The monetary award in the amount of P317,050.00 as damages for unpaid license fees/royalties in favor of the Filipino Society of Composers, Authors and Publishers, Inc. is DELETED. Instead, petitioner COSAC, Inc., is ORDERED to indemnify the Filipino Society of Composers, Authors and Publishers, Inc. temperate damages in the amount of P300,000.00. This amount shall be subject to interest at the rate of 12% per annum from February 13, 2006 until June 30, 2013, and at the rate of 6% per annum from July 1, 2013 until the date of finality of this judgment. Thereafter, all the monetary amounts shall be subject to interest at the rate of 6% per annum from the date of finality of this judgment until full satisfaction of the same.[26]The ponencia justifies the amount of the award as follows:
Thence, the amount which should be awarded to FILSCAP should be based on the following considerations: (1) the 500-seating capacity of Off the Grill; (2) based on FILSCAP's matrix, the royalty fee of P170.00/day for lounges/bars/pubs which play copyrighted songs live and mechanically; (3) FILSCAP's assertion that it demanded from COSAC to pay license fees since October 2003, until the filing of the complaint on February 13, 2006 (although it is unclear when FILSCAP first discovered COSAC's acts of infringement); (4) FILSCAP's monitoring agent identified only 25 copyrighted songs which were played at Off the Grill without the requisite license and payment of fees; (5) to acknowledge FILSCAP's members who are copyright owners, and FILSCAP's authority to enforce their rights; and, (6) to balance the interests between copyright owners and the society, in that the award of just damages is "[a] not too excessive as to scare away other people from carrying out legitimate acts involving copyrighted music, BUT [b] not too minimal as to give the wrong impression that the State accords little value to copyrighted musical work and that creators do not deserve to be compensated with reasonable economic rewards for sharing their creations to the society."[27]I fully concur with the amount awarded and the considerations enumerated by the ponencia for the following reasons:
In view of the foregoing reasons, I vote to DENY the petition.
1) It is proper to delete the award of P317,050.00 as actual damages for unpaid license fees/royalties. Apart from a lack of competent evidence, a closer look at the royalty fees being charged by FILSCAP hardly justifies awarding this amount. If FILSCAP'S royalty fees for lounges/bars/pubs that play copyrighted songs live and mechanically for 500 persons or more is pegged at the daily rate of P170.00,[28] the award of P317,050.00 as "unpaid damages/royalties" amounts to awarding 1,865 days' worth of royalty fees or more than five years' worth of royalties. There is no indication in the complaint as to when FILSCAP first discovered COSAC's acts of infringement. There is only an allegation that as early as 2003,[29] FILSCAP had formally advised COSAC of its obligations under the IP Code. The complaint for copyright infringement was then filed on February 13, 2006. In effect, the filing of the complaint was made around three years (more or less 1,095 days) after COSAC was informed of its obligation to pay license fees. Assuming that there is clear proof that COSAC continuously played music in its establishment every day for three years, despite being informed of its obligation to pay license fees, it should have paid roughly around P186,150.00 maximum in royalties to FILSCAP. As discussed, however, awarding unpaid license fees/royalties would be inappropriate due to the lack of competent proof to substantiate actual/compensatory damages. Thus, I agree with the ponencia's deletion of the award of P317,050.00 and its award of temperate damages instead. 2) As found by the Regional Trial Court, "FILSCAP is a [non stock and] non-profit corporation because everything it collect[s] is distributed back to its members and affiliate performing rights societies abroad less only the administrative expenses which cannot exceed 30% of total collection, withholding tax and 5% deduction for the sociocultural fund of its members."[30] As it stands, FILSCAP is the only CMO accredited by the IPO to "collectively administer, license, and enforce the reproduction right (Sec. 177.1, IP Code), the transformation right (Sec. 177.2, IP Code), the first public distribution right (Sec. 177.3, IP Code), the public performance right (Sec. 177.6, IP Code), and the communication to the public right (Sec. 177.7, IP Code) of composers, lyricists, music publishers and other music copyright owners."[31] Put simply, its members who are music copyright owners — including those who cannot afford to enforce their own copyrights and collect royalties — rely on FILSCAP to secure royalties and enforce their rights. 3) In keeping with the goal of balancing competing interests between the copyright owners and the society at large, the Court should endeavor to ensure that the award of temperate damages is not too excessive as to scare away other people from carrying out legitimate acts involving copyrighted music BUT not too minimal as to give the wrong impression that the State accords little value to copyrighted musical work and that creators do not deserve to be compensated with reasonable economic rewards for sharing their creations to the society.
Since Off the Grill is considered as a bar, Gaite stated that the royalty fees should be computed as follows:The specific amounts of damages are not so categorized, to wit:
For lounges/ Bars/ Pubs (Where Dancing is not allowed) Live & Mechanical Royalty Rate / Day Mechanical Only Royalty Rate / DayMaximum Accommodation Capacity 100 persons or less P 100.00 P 45.00More than 100 persons, but less than 300 persons P 120.00 P 65.00300 persons or more, but less than 500 persons P 145.00 P 90.00500 persons or more P 170.00 P 105.00
a) Php317,050.00 as damages for unpaid license fees/royalties... with interest at the rate of six percent (6%) per annum reckoned from the date of the filing of the complaint, February 13, 2006, until the same is fully paid; and b) Php52,003.47 as reasonable attorney's fees and litigation expenses plus costs of suit....I assume, however, that these damages are actual damages under the Civil Code based on respondent's matrix.
Similarly, a copyright owner cannot recover both his own lost profits on sales the owner would have made to the infringer and also the value to the infringer of the use of the copyright by the infringer, even though they are both measures of actual damages, since this recovery would double-count the same economic transaction. Normally the owner recovers the larger of the two amounts, or all of one and so much of the other as is not included in the one.[2]This secondary source clarifies that a "copyright owner's actual damages are usually calculated by assessing lost profits." The same secondary source intuitively cautions that "[t]he court recognized that in cases of this kind, lost sales and their resultant lost profit may be based upon opinion and probable estimate, but it added that a finding that the infringer has unlawfully taken sales from the copyright owner has to be based upon something other than conjecture." This source also states that "[e]vidence offered to prove the value of a copyrighted item must be both material and relevant." I think this statement echoes an analogous ring to our own statement of the law on actual damages.
To establish the amount of lost profits, the copyright owner may present evidence of what the estimated sales of the copyrighted item would have been in the absence of the infringement. Attempting to estimate what sales the copyright owner would have made in the absence of an infringement, however, is inherently speculative. In addition, if a copyright owner is claiming actual damages based on lost profits, the owner will have to provide more than proof of the estimated lost sales revenue, since a loss of revenue is not the same thing as a loss of profits. If the copyright owner contends that lost sales revenue would have been all profit, the contention is sufficiently improbable to require substantiating evidence, for it implies that the owner could have made all the lost sales at zero cost. Also, if the copyright owner's actual sales were reduced because of the infringement, then the copyright owner's costs may have been reduced as well; in the computation of the copyright owner's lost profits, this cost savings is a gain that has to be offset against the loss of revenues.[3]The process of arriving at the amount of damages suffered gets even more complicated. For instance:
The amount of the infringer's actual sales of the infringing item may be indicative of the amount of sales the copyright owner would have made in the absence of the infringement. When a copyright owner seeks to prove the amount of his lost profits by presenting evidence of the infringer's actual sales of the infringing item, the owner's claim is often challenged as too speculative on the ground that the copyright owner might not have sold copyrighted items to every customer who purchased an infringing item, perhaps because the copyright owner's price for the item was higher than the infringer's price. To show that if there had been no infringement the copyright owner would have made the same volume of sales as the infringer actually made, so as to constitute a permissible basis for an award of damages, the copyright owner must show that the items were of substantially similar quality, sold at substantially similar prices, and sold in a substantially similar market.[4]The secondary source I have copiously referenced is 88-page long in letter size, in Times New Roman, font size 10, and with .75-inch margins. My point is that the legal concept of actual damages and profits is so complicated to be left undiscussed at all. Indeed, if the award of damages is based on respondent's matrix, we could be doing injustice to the scheme in Republic Act No. 8293 which lays down what can and cannot be awarded. In fine, there is a need to operationalize and explain in actual cases the provisions on damages that may be awarded to copyright owners. In short, we cannot take for granted the basis for setting in exact pesos and centavos what petitioner owes to respondent, without first articulating the clear basis for this award.
Indeed, the award of actual damages is not the only relief which the courts may grant in cases of copyright infringement. The relevant provisions of Republic Act No. 8293, as amended read:
(1) the expenses saved and profits reaped by the defendant in connection with the infringements; (2) the revenues lost by plaintiff's as a result of the defendant's conduct; and (3) the infringers' state of mind, that is, whether willful, knowing, or merely innocent.
SECTION 216. Infringement. — A person infringes a right protected under this Act when one:Verily, the complications of proving actual damages and profits are avoided altogether by seeking just damages (thus, RA 8293 states "in lieu of actual damages and profits") or statutory damages (only if, as RA 8293 clearly imposes, the copyright owner "elect[s], at any time before final judgment is rendered, to recover instead of actual damages and profits, an award of statutory damages"). The learned ponente has painstakingly explored the grant of "just damages" akin to temperate damages. Indeed, even if FILSCAP failed to substantiate its entitlement to actual damages, damages which appear to be just may be awarded to address a claim of pecuniary loss. As it was, FILSCAP suffered pecuniary loss when COSAC did not pay the license fees before it allowed the public performance of copyrighted music at Off the Grill. I, therefore, agree with the award of temperate damages in the amount of PHP 300,000.00 pursuant to Section 216.1 (b) of Republic Act No. 8293.
....
(b) Benefits from the infringing activity of another person who commits an infringement if the person benefiting has been given notice of the infringing activity and has the right and ability to control the activities of the other person;
(c) With knowledge of infringing activity, induces, causes or materially contributes to the infringing conduct of another.
SECTION 216.1 Remedies for Infringement. — Any person infringing a right protected under this law shall be liable:
....
(b) To pay to the copyright proprietor or his assigns or heirs such actual damages, including legal costs and other expenses, as he may have incurred due to the infringement as well as the profits the infringer may have made due to such infringement, and in proving profits the plaintiff shall be required to prove sales only and the defendant shall be required to prove every element of cost which he claims, or, in lieu of actual damages and profits, such damages which to the court shall appear to be just and shall not be regarded as penalty: Provided, That the amount of damages to be awarded shall be doubled against any person who:(i) Circumvents effective technological measures; or....
(ii) Having reasonable grounds to know that it will induce, enable, facilitate or conceal the infringement, remove or alter any electronic rights management information from a copy of a work, sound recording, or fixation of a performance, or distribute, import for distribution, broadcast, or communicate to the public works or copies of works without authority, knowing that electronic rights management information has been removed or altered without authority.
(e) Such other terms and conditions, including the payment of moral and exemplary damages, which the court may deem proper, wise and equitable and the destruction of infringing copies of the work even in the event of acquittal in a criminal case.
The copyright owner may elect, at any time before final judgment is rendered, to recover instead of actual damages and profits, an award of statutory damages for all infringements involved in an action in a sum equivalent to the filing fee of the infringement action but not less than Fifty thousand pesos (Php50,000.00). In awarding statutory damages, the court may consider the following factors:(1) The nature and purpose of the infringing act;In case the infringer was not aware and had no reason to believe that his acts constitute an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not more than Ten thousand pesos (Php10,000.00): Provided, That the amount of damages to be awarded shall be doubled against any person who:
(2) The flagrancy of the infringement;
(3) Whether the defendant acted in bad faith;
(4) The need for deterrence;
(5) Any loss that the plaintiff has suffered or is likely to suffer by reason of the infringement; and
(6) Any benefit shown to have accrued to the defendant by reason of the infringement.(i) Circumvents effective technological measures; or
(ii) Having reasonable grounds to know that it will induce, enable, facilitate or conceal the infringement, remove or alter any electronic rights management information from a copy of a work, sound recording, or fixation of a performance, or distribute, import for distribution, broadcast, or communicate to the public works or copies of works without authority, knowing that electronic rights management information has been removed or altered without authority.
....
Distinction between public performance and other communication to the public |
177.6. Public performance of the work; andA "public performance" means:
177.7. Other communication to the public of the work (Emphasis supplied.)
171.6. "Public performance," in the case of a work other than an audiovisual work, is the recitation, playing, dancing, acting or otherwise performing the work, either directly or by means of any device or process; in the case of an audiovisual work, the showing of its images in sequence and the making of the sounds accompanying it audible, and, in the case of a sound recording, making the recorded sounds audible at a place or at places where persons outside the normal circle of a family and that family's closest social acquaintance are or can be present, (e.g. radio broadcast as background music in dining areas) irrespective of whether they are or can be present at the same place and at the same time, or at different places and/or at different times, and where the performance can be perceived without the need for communication within the meaning of Subsection 171.3. (Emphasis supplied)On the other hand, the term "communication to the public" or "communicate to the public bear the following meaning:
171.3. "Communication to the public" or "communicate to the public" means the making of a work available to the public by wire or wireless means in such a way that members of the public may access these works from a place and time individually chosen by them. (Emphasis supplied.)In Anrey, We made an exhaustive discussion on the subject but to summarize, there is an overlap between the right to public performance and the right to communicate to the public, with the right to public performance being the broader of these rights. This conclusion was made on a collective and harmonized approach: by reviewing treaties, jurisprudence of foreign countries, legislative history, and other secondary sources.
The Berne Convention and the Paris Act |
The Berne Convention did not mention public communication as an independent economic right. Instead, it is enumerated as part of the right to public performance. This logic was confirmed when in 1978, the World Intellectual Property Organization (WIPO) commissioned a subject matter expert to draft a written guide to the provisions of the Berne Convention. The result was the 1978 WIPO Guide to the Berne Convention (WIPO Guide) which states that the author's right to public performance is split into two: 1) the right to authorize the public performance of his work; and 2) the right to communication to the public of a performance of the work, thus:ARTICLE 11
Right of Public Performance
Article 11, paragraph (1)
Scope of the Right
(1) Authors of dramatic, dramatico-musical and musical works shall enjoy the exclusive right of authorizing:(i) the public performance of their works, including such public performance by any means or process;
(ii) any communication to the public of the performance of their works.ARTICLE 11bis
Right of Broadcasting
Article 11bis, paragraph (1)
Scope of the Right
(1) Authors of literary and artistic works shall enjoy the exclusive right of authorizing:(i) the broadcasting of their works or the communication thereof to the public by any other means of wireless diffusion of signs, sounds or images;
(ii) any communication to the public by wire or by rebroadcasting of the broadcast of the work, when this communication is made by an organization other than the original one;
(iii) the public communication by loudspeaker or any other analogous instrument transmitting, by signs, sounds or images, the broadcast of the work.
11.3. The paragraph splits the right into two. The author has the exclusive right to authorise public performance of his work. x x xThe WIPO Guide also contained a discussion about radio-over-loudspeakers and considered it as a new and separate public performance from the original transmission of the copyrighted work, thus:
11.4. However, it goes on to speak of "including such public performance by any means or process", and this covers performance by means of recordings; there is no difference for this purpose between a dance hall with an orchestra playing the latest tune and the next-door discotheque where the customers use coins to choose their own music. In both, public performance takes place. The inclusion is general and covers all recordings (discs, cassettes, tapes, videograms, etc.) though public performance by means of cinematographic works is separately covered—see Article 14(1) (ii)." (Underscoring supplied.)
11.5. The second leg of this right is the communication to the public of a performance of the work. It covers all public communication except broadcasting which is dealt with in Article 116/5. For example, a broadcasting organisation broadcasts a chamber concert. Article 116/5 applies. But if it or some other body diffuses the music by landline to subscribers this is a matter for Article 11.[11]
11bis.11. Finally, the third case dealt with in this paragraph is that in which the work which has been broadcast is publicly communicated e.g., by loudspeaker or otherwise, to the public. This case is becoming more common. In places where people gather (cafés, restaurants, tea-rooms, hotels, large shops, trains, aircraft, etc.) the practice is growing of providing broadcast programmes. There is also an increasing use of copyright works for advertising purposes in public places. The question is whether the licence given by the author to the broadcasting station covers, in addition, all the use made of the broadcast, which may or may not be for commercial ends.This is the basis why the Court in Anrey held that the license given to the radio station to broadcast the copyrighted works does not extend to establishments that tune in and play the radio broadcasts using loudspeakers in their establishments. The radio reception creates a new public performance that is separate and distinct from the broadcast. The act of playing radio broadcasts containing copyrighted music through the use of loudspeakers is in itself another performance.
11bis.12. The Convention's answer is "no". Just as, in the case of a relay of a broadcast by wire, an additional audience is created (paragraph (1) (ii)), so, in this case too, the work is made perceptible to listeners (and perhaps viewers) other than those contemplated by the author when his permission was given. Although, by definition, the number of people receiving a broadcast cannot be ascertained with any certainty, the author thinks of his licence to broadcast as covering only the direct audience receiving the signal within the family circle. Once this reception is done in order to entertain a wider circle, often for profit, an additional section of the public is enabled to enjoy the work and it ceases to be merely a matter of broadcasting. The author is given control over this new public performance of his work.[12] (Emphasis supplied.)
The distinct "MakingAvailable to the Public Right" and the so-called Internet Treaties |
Sec. 171. Definitions. - For the purpose of this Act, the following terms have the following meaning:This definition, however, was lifted directly from the [WIPO] Copyright Treaty (Copyright Treaty) of 1996. Article 8 of the Copyright Treaty[14] reads:
x x x x
171.3. "Communication to the public" or "communicate to the public" means the making of a work available to the public by wire or wireless means in such a way that members of the public may access these works from a place and time individually chosen by them;
The Internet was a game-changer and authorities may not have anticipated Internet as a medium to broadcast copyrighted works. Thus the WCT introduced the right to "communication to the public." But as explained in the quoted text, this right finds particular application to advanced forms or medium of communication such as the Internet.Article 8
Right of Communication to the Public
Without prejudice to the provisions of Articles 11(1)(ii), 11bis(1)(i) and (ii), 11ter(1)(ii), 14(1)(ii) and 14bis(1) of the Berne Convention, authors of literary and artistic works shall enjoy the exclusive right of authorizing any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them. (Underscoring supplied.)
The WIPO Copyright Treaty (WCT) is a special agreement under the Berne Convention that deals with the protection of works and the rights of their authors in the digital environment."In 2013, Sec. 171.3 of the IPC (RA 8293) was amended by RA 10372[16] (An Act Amending Certain Provisions of the IPC) to expand its scope and coverage, thus:
"As to the rights granted to authors, apart from the rights recognized by the Berne Convention, the Treaty also grants: (i) the right of distribution; (ii) the right of rental; and (iii) a broader right of communication to the public.
"The right of communication to the public is the right to authorize any communication to the public, by wire or wireless means, including "the making available to the public of works in a way that the members of the public may access the work from a place and at a time individually chosen by them". The quoted expression covers, in particular, on-demand, interactive communication through the Internet.[15] (Underscoring supplied.)
171.3. 'Communication to the public' or 'communicate to the public' means any communication to the public, including broadcasting, rebroadcasting, retransmitting by cable, broadcasting and retransmitting by satellite, and includes the making of a work available to the public by wire or wireless means in such a way that members of the public may access these works from a place and time individually chosen by them.The amendment led to two formulations of the "communication to the public" right. The first is the formulation under the IPC (RA 8293) which exclusively contains the "making available right". On the other hand, the modern formulation created by the amendment in RA 10372 has a broader scope and now consists of five variations in which the expanded "communication to the public" may be infringed: 1) broadcasting; 2) rebroadcasting; 3) retransmitting by cable; 4) broadcasting and retransmitting by satellite; and 5) the making available right.
(24) The right to make available to the public subject-matter referred to in Article 3(2) should be understood as covering all acts of making available such subject-matter to members of the public not present at the place where the act of making available originates, and as not covering any other acts.Even if We disregard the explanations provided by secondary sources, it is still my firm point of view that the making available right is an umbrella clause, not for any type of public communication, but only to those situations which may not have been contemplated with the advent of Internet.
(25) The legal uncertainty regarding the nature and the level of protection of acts of on-demand transmission of copyright works and subject-matter protected by related rights over networks should be overcome by providing for harmonised protection at Community level. It should be made clear that all rightholders recognised by this Directive should have an exclusive right to make available to the public copyright works or any other subject-matter by way of interactive on-demand transmissions. Such interactive ondemand transmissions are characterised by the fact that members of the public may access them from a place and at a time individually chosen by them.
(26) With regard to the making available in on-demand services by broadcasters of their radio or television productions incorporating music from commercial phonograms as an integral part thereof, collective licensing arrangements are to be encouraged in order to facilitate the clearance of the rights concerned.
(27) The mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Directive. (Emphasis supplied.)