Thursday, June 20, 2024

SC: Establishments must pay royalties for radio songs played via speakers

The Supreme Court (SC) has ruled that business establishments should pay royalties for playing radio broadcasts containing copyrighted music through the use of loudspeakers.

The new ruling emanated from a case filed by the Filipino Society of Composers, Authors and Publishers, Inc. (FILSCAP), which went to the High Court to reverse and set aside the rulings of the lower courts denying its right to collect license fees or royalties over copyrighted works of its member artists.

In a decision penned by SC justice Rodil V. Zalameda, the court en banc ordered respondent Anrey Inc. to pay P10,000.00 to FILSCAP as temperate damages for the unlicensed public performance of the copyrighted songs on FILSCAP’s repertoire and P50,000.00 as attorney’s fees.

The court also ordered that a copy of the decision be furnished the Intellectual Property Office of the Philippines for their guidance and information, as well as the House of Representatives and the Senate as reference for possible statutory amendments on the Intellectual Property Code without violating the State’s commitments under the Berne Convention and the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

The Berne Convention provides that authors of musical works shall enjoy the exclusive right of authorizing the public performance of their works including the “public performance by any means or process” and “any communication to the public of the performance of the works.” On the other hand, TRIPS Agreement incorporates by reference the provisions on copyright from the Berne Convention.

In its petition for review on certiorari under Rule 45 of the Rules of Court, FILSCAP sought to reverse and set aside the Court of Appeals (CA) rulings which affirmed the decision of the Baguio City Regional Trial Court (RTC) dismissing the complaint filed by FILSCAP.

FILSCAP is a non-profit society of composer, authors, and publishers that owns public performance rights over the copyrighted musical works of its members. It also owns the right to license public performances in the Philippines of copyrighted foreign musical works of its members and affiliate performing rights societies abroad.

It is deputized to enforce and protect the copyrighted works of its members or affiliates by issuing licenses and collecting royalties and/or license fees from anyone who publicly exhibits or performs music belonging to FILSCAP’s worldwide repertoire.

The case started when a FILSCAP representative monitored between July and September 2008 that the branches of Sizzling Plate Restaurant along Session Road and along Abanao Extension in Baguio City, both of which were owned by respondent Anrey, played copyrighted music owned by FILSCAP.

FILSCAP wrote the restaurants several letters informing them that the unauthorized public performance of copyrighted music amounts to infringement and urging them to secure licenses from FILSCAP to avoid prosecution. FILSCAP then filed a complaint for copyright infringement against Anrey before the RTC.

In its answer, Anrey denied playing any copyrighted music within its establishments and claimed that its establishments played whatever was being broadcasted on the radio they were tuned in.

The RTC dismissed FILSCAP’s complaint for lack of merit. The RTC cited of RA 8293, or the Intellectual Property Code of the Philippines, which exempts public performances by a club or institution for charitable or educational purposes provided, they are not profit making and they do not charge admission fees.

FILSCAP filed a Motion for Reconsideration but the same was denied by the RTC. On appeal, the CA affirmed the RTC rulings and denied FILSCAP’s subsequent Motion for Reconsideration.

But the SC found merit in FILSCAP’s petition for review.

The court upheld FILSCAP’s legal standing to sue for copyright infringement. FILSCAP, it noted, is accredited by the Intellectual Property of the Philippines to perform the role of a collective management organization and a member of the Paris-based International Confederation of Societies of Authors and Composers, the umbrella organization of all composer societies worldwide.

The court said it was evident that the first element of copyright infringement has been satisfied: that FILSCAP has the authority to collect royalties and/or license fees and sue for copyright infringement. As an assignee of copyright, it is entitled to all the rights and remedies which the assignor had with respect to the copyright.

Citing US jurisprudence, the SC held that the act of playing radio broadcasts containing copyrighted music through the use of loudspeakers (radio-over-loudspeakers) is, in itself, a performance.

The court was also not persuaded by Anrey’s contention that it is exempt from securing a license since the radio station that broadcasted the copyrighted music already secured one from FILSCAP.

It held that a radio reception creates a performance separate from the broadcast, which is otherwise known as the doctrine of multiple performances which provides that a radio (or television) transmission or broadcast can create multiple performances at once.

Thus, on whether the reception of a broadcast may be publicly performed, it is immaterial if the broadcasting station has been licensed by the copyright owner because the reception becomes a new public performance requiring separate protection.

Further, the SC held that radio reception transmitted through loudspeakers to enhance profit does not constitute, and is not analogous to, fair use.

In the case at bar, the reception was transmitted through loudspeakers within Anrey’s restaurants. While Anrey does not directly charge a fee for playing radio broadcasts over its speakers, such reception is clearly done to enhance profit by providing entertainment to the public, particularly its customers, who pay for the dining experience in Anrey’s restaurants.

The court held that the free use by commercial establishments of radio broadcasts is beyond the normal exploitation of the copyright holder’s creative work. Denying the petition would gravely affect the copyright holder’s market where instead of paying royalties, they use free radio reception, according to SC.

The court said applying this exception to restaurants will also affect other uses in similar establishments like malls, department stores, retail stores, lounges and the like, causing a huge economic impact on the music industry in general.

The court found that the right of FILSCAP to license public performance of the subject copyrighted musical works, the public performance of such works in Anrey’s restaurants without license from FILSCAP, and the refusal of Anrey to pay the annual license fees for said works were duly established.

The SC stressed that FILSCAP was deprived license fees due to Anrey’s acts of infringement as it failed to receive the benefit of license fees from Anrey, which publicly performed without license or authority the subject copyrighted works in its restaurants for the benefit of its customers and to enhance its profit.

The court hinted of possible amendments under the Intellectual Property Code, noting that the very broad definition of a public performance in the Code is a cause for concern.

The Court said that by the mere definition of what a public performance is, listeners of a radio station, to some extent, risks copyright infringement. It noted that foreign jurisdictions have recognized this dilemma, with some having already taken steps to address the situation.

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