Filipino Society of Composers, Authors and Publishers, Inc. vs. Anrey, Inc.

Factual Background

FILSCAP is a collective management organization accredited to license public performances of musical works assigned to it by member composers, authors and publishers, and by reciprocal agreements with foreign societies. FILSCAP monitored three Sizzling Plate restaurants operated by Anrey, Inc. in Baguio City and reported the playing of identified musical works on specific dates in 2008. FILSCAP sent demand letters asking the establishments to secure licenses but received no compliance, and consequently filed a complaint for copyright infringement seeking damages and attorney’s fees.

Procedural History

FILSCAP filed an Amended Complaint for Copyright Infringement in the RTC, which conducted trial and rendered judgment dismissing the complaint for lack of merit and applying Sec. 184(i) of the IP Code on an exemption for charitable or educational institutions that do not charge admission. FILSCAP’s motions for reconsideration were denied by the RTC. The Court of Appeals affirmed the RTC decision, applying doctrines and exemptions developed in United States jurisprudence for small business uses of broadcasts. FILSCAP then filed a petition for review on certiorari under Rule 45, which the Supreme Court granted and resolved.

Issue

The controlling legal question was whether the unlicensed playing in dining areas of restaurants of radio broadcasts containing copyrighted musical works, played over loudspeakers as background music, constituted an infringement of the copyright owner’s economic rights under Sec. 177.6 (public performance) and related provisions of the Intellectual Property Code.

Parties’ Contentions

FILSCAP urged that it, as assignee and accredited Collective Management Organization, had authority to license public performances and to sue for infringement and that radio reception amplified into public spaces without license creates a separate public performance or communication to the public for which license fees are due. Anrey, Inc. denied playing copyrighted music for the public, contended that any music heard came from radio broadcasts already licensed by broadcasters, argued that such passive reception should not be treated as a public performance and relied on doctrines protecting small business uses of radio/television in foreign law, and alternatively claimed the reception was for staff benefit not customers.

Trial Court and Court of Appeals Rulings

The RTC dismissed FILSCAP’s complaint and counterclaims, relying on the exemption in Sec. 184(i) of RA 8293 for non-profit charitable or educational institutions where no admission fee is charged. The Court of Appeals affirmed and applied analogies to U.S. homestyle and business exemptions, holding that many small commercial establishments could use broadcasts without separate licenses under specified equipment and size conditions. FILSCAP’s motions for reconsideration before the CA were denied, prompting the present petition.

Ruling of the Supreme Court

The Supreme Court, En Banc, granted the petition, reversed and set aside the Court of Appeals and RTC rulings, and held that the unlicensed playing of radio broadcasts via loudspeakers in commercial dining areas constituted an infringement of FILSCAP’s protected rights. The Court ordered Anrey, Inc. to pay P10,000.00 as temperate damages and P50,000.00 as attorney’s fees, with the specific computation of legal interest: 12% per annum from September 8, 2009 until June 30, 2013, and thereafter 6% per annum from July 1, 2013 until finality, and 6% per annum from finality until full satisfaction. Costs were taxed against Anrey, Inc. The Court directed that the Decision be furnished to the Intellectual Property Office and Congress as reference for possible statutory amendments.

Legal Basis — Elements of Copyright Infringement and FILSCAP’s Authority

The Court reiterated that economic rights under Sec. 177 of the IP Code include public performance and other communication to the public, and that a claimant must prove ownership of a valid copyright and violation of at least one economic right, subject to limitations in Sec. 184 and the fair use doctrine in Sec. 185. The Court found FILSCAP’s authority unimpeached: FILSCAP is the assignee of public performing rights from its members and has reciprocal agreements with foreign societies that expressly confer the authority to authorize public performances, collect fees, and sue for unauthorized uses. The deeds of assignment and reciprocal contracts on record established FILSCAP’s legal standing and entitlement to enforce economic rights.

Legal Reasoning — Radio Reception, Multiple Performances, and the Doctrine of a New Public

The Court concluded that reception of a radio broadcast and subsequent reproduction of the audible sound through loudspeakers in an establishment is itself a protectable act, drawing on analogous reasoning in foreign jurisprudence and international guidance. It accepted the doctrine of multiple performances, under which a broadcaster’s transmission and a separate making-audible of that transmission to a public by a third party may constitute distinct exploitations that require separate authorization. The Court adopted the WIPO and Berne Convention guidance on the creation of a “new public” when a broadcast is made perceptible by loudspeaker or retransmission in public places, so that the author’s original license to a broadcaster does not automatically authorize subsequent public communication by other entities.

Legal Reasoning — Public Performance v. Other Communication to the Public

The Court parsed Sec. 171.6 and Sec. 171.3 and related provisions, holding that public performance includes making recorded sounds audible at places where persons outside the normal family circle may be present, and that other communication to the public covers modes of making works available by wire or wireless means. The Court construed Sec. 177.6 to include public performances effected by making broadcasts audible to a new public, and treated radio-over-loudspeakers in commercial dining areas as an unauthorized communication or performance distinct from the broadcaster’s initial act. It placed the public performance holding in harmony with the Berne Convention and WIPO guidance, concluding that further communication of a broadcast to a commercial audience creates an additional right for the author to control and license that use.

Limitations, Fair Use, and Exemptions

The Court examined claimed exemptions and limitations. It determined that the RTC’s reliance on Sec. 184(i) was misplaced because that provision applies to charitable or educational clubs and institutions whose aim is not profit making. The Court rejected reliance on U.S. homestyle or business exemptions as inconsistent with Philippine law and international obligations under TRIPS and the Berne Convention. The Court applied the four-factor fair use test under Sec. 185 and found the factors weighed against Anrey: the use was commercial and non-transformative; the works were creative; whole songs were played rather than insubstantial excerpts; and widespread allowance of such use would substantially harm the market for licensed public performances. The Court warned that policy choices about narrow exemptions are for Congress, subject to international obligations and the three-step test under WTO jurisprudence.

Damages and Remedies

Addressing remedies under Sec. 216, the Court found FILSCAP entitled to damages and costs but tempered the award. The Court accepted that FILSCAP established that unlicensed public performances occurred, but also recognized the limited monitoring evidence showing performances on specific dates and locations. The Court declined to award the full annual license fees demanded and instead awarded temperate damages of P10,000.00 as just and reasonable under the circumstances, plus P50,000.00 attorney’s fees, and directed statutory interest as specified. The Court explained that temperate damages were appropriate where annual license fees would be inequitable given the proven number of instances and the nature of the evidence.

International and Comparative Considerations

The Court surveyed foreign jurisprudence and international instruments. It cited U.S. cases illustrating competing lines of authority, the evolution of U.S. statutory definitions, and the WT