Case Summary (G.R. No. 256091)
Background and Factual Summary
From 2010 to 2014, FILSCAP monitored various Icebergs restaurant branches and discovered unauthorized public performances of approximately 324 copyrighted musical works under FILSCAP’s musical repertoire without securing the necessary licenses. Multiple demand letters requesting payment and licensing were ignored by Icebergs and Young. FILSCAP consequently filed a copyright infringement complaint before the Regional Trial Court (RTC) of Quezon City.
RTC Findings and Ruling
The RTC found FILSCAP to be the rightful licensee of the public performance rights based on Deeds of Assignment from its members and reciprocal agreements with foreign affiliates. The Court ruled that Icebergs’ act of playing the copyrighted music, even as background music through devices such as radio speakers, amounted to public performance. The Court held Icebergs liable for copyright infringement and ordered payment of actual damages (license fees), moral and exemplary damages, attorney’s fees, costs of litigation, and issued an injunction against continuing unauthorized public performance without a license.
Court of Appeals’ Decision
The Court of Appeals (CA) affirmed the RTC’s decision, emphasizing that under Section 171.6 of the Intellectual Property Code, playing a sound recording so that it is audible in a place accessible to the public constitutes public performance, regardless of whether the entity controls the playlists or profits directly from the performance. The CA rejected petitioner’s reliance on foreign cases like Twentieth Century Music Corp. v. Aiken, noting these were not properly pleaded or proven. The CA also found that the petitioners invoked an incorrect appellate remedy (Rule 43 instead of Rule 41).
Issues on Appeal
The central issue was whether Icebergs committed copyright infringement by playing copyrighted music through radio broadcasts in its restaurants without a license from FILSCAP.
Petitioners’ Arguments
Icebergs claimed that merely “switching on a radio transmitter” was a mechanical act, not equivalent to “playing a sound recording” under the law, as it involved no active selection or control of musical content. They argued that domestic jurisprudence was lacking and foreign law and reciprocity principles (from U.S. copyright law, particularly Section 110 exceptions) should exempt them. They also challenged the damages awarded as excessive and baseless.
Respondent’s Position
FILSCAP maintained that the law’s definition of public performance clearly includes making sound recordings audible in public places and therefore playing radio broadcasts to customers fell within this scope. FILSCAP asserted there was no ambiguity in the law, and that the petitioners’ defenses lacked merit.
Supreme Court Ruling on Appealability and Merits
The Court ruled the petitioners availed of the wrong remedy at the CA; but proceeding nevertheless, it affirmed the lower courts’ rulings on the merits.
Governing Law and Jurisprudential Approach
The 1987 Constitution governs as the case decision is post-1990. The Philippine Intellectual Property Code, along with international treaties like the Berne Convention, applies. Though Philippine copyright law was patterned after U.S. law, domestic law governs enforcement; foreign jurisprudence can only guide interpretation and is non-binding.
Copyright Infringement Definition and Application
The Court reaffirmed that copyright infringement consists of unauthorized exercise of the exclusive rights granted to copyright owners, including the exclusive economic right of public performance (Section 177.6 of the IP Code). The exclusive right extends to authorizing or preventing performance of their works publicly.
In this case, Icebergs was found to have infringed because it publicly performed FILSCAP’s copyrighted musical works without consent. Monitoring reports and affidavits confirmed the number of unauthorized performances.
Public Performance and Radio Broadcasts
The Court clarified that “public performance” encompasses the playing of copyrighted music audible in public places regardless of the means used, including radio broadcast transmissions played through loudspeakers.
The Court cited its recent decision in FILSCAP v. Anrey, which followed the reasoning in Broadcast Music, Inc. v. Claire’s Boutiques (U.S.) that playing radio broadcasts over loudspeakers constitutes public performance. The Court rejected the narrower Aiken doctrine that passive reception of radio broadcasts does not amount to performance.
Section 171.6 of the IP Code explicitly includes “making the recorded sounds audible” where persons outside the normal family circle are present, “without the need for communication within the meaning of subsection 171.3,” distinguishing “public performance” from “communication to the public.”
Public Performance vs. Communication to the Public
The Court, consistent with Associate Justice Caguioa’s concurring opinion, stressed that the IP Code separates the rights of “public performance” and “communication to the public.” Public performance covers performing works directly or via devices where communicative transmission is unnecessary. Communication to the public involves broadcasting or wired/wireless transmission where the public can access the work remotely and individually.
In the case at bar, the act of playing copyrighted music through radio frequencies in restaurants amounted to public performance by making the sounds audible in a public venue.
Fair Use Doctrine Applicability
Though not raised by parties, the Court discussed fair use under Section 185 of the IP Code and found Icebergs’ use excluded. Playing radio background music in a commercial setting for customer entertainment is a commercial use that does not transform or add new meaning to the works; it also affects the copyright holders’ potential market. The four-factor test (purpose and character, nature of work, amount used, and market effect) collectively negate fair use in this scenario.
Small Business Exemption Consideration
The Court acknowledged the absence of a small business exemption in Philippine law akin to Section 110(5) of the U.S. Copyright Act (the “Fairness in Music Licensing Act of 1998”) that exempts certain small establishments under strict size and usage criteria.
Recognizing the social and economic importance of protecting “Mom and Pop” businesses from undue liability, the Court urged Congress to consider adopting a similar exemption consistent with international obligations, particularly following the internationally accepted “three-step test” under the Berne Convention and TRIPS Agreement:
- Limit exceptions to certain special cases,
- Ensure exceptions do not conflict with normal exploitation of the work,
- Ensure exceptions do not unreasonably prejudice the copyright holder’s legitimate interests.
The Court emphasized balancing
Case Syllabus (G.R. No. 256091)
Parties and Procedural Posture
- Petitioners Icebergs Food Concepts, Inc. (Icebergs), a Philippine corporation operating multiple restaurants, and Allan John T. Young (Young), its President and General Supervisor, challenged a decision of the Court of Appeals (CA), which affirmed the Regional Trial Court (RTC) of Quezon City’s finding of liability for copyright infringement.
- Respondent is the Filipino Society of Composers, Authors, and Publishers, Inc. (FILSCAP), a government-accredited Collective Management Organization (CMO), authorized to license and enforce public performance rights of copyrighted musical works of its members and affiliated foreign societies under reciprocal agreements.
- FILSCAP sued Icebergs and Young for playing approximately 324 copyrighted songs in Icebergs’ restaurants without obtaining the required public performance license or paying royalties.
- The RTC found Icebergs and Young guilty of copyright infringement, ordering them to pay actual, moral, exemplary damages, attorney’s fees, and monitoring expenses, and enjoined them from further unauthorized public performances.
- Icebergs appealed to the CA via an improper Rule 43 Petition for Review, which the CA denied, affirming the RTC decision.
- Icebergs filed a Petition for Review on Certiorari under Rule 45 before the Supreme Court, raising primarily the issue of whether playing radio broadcasts as background music constitutes copyright infringement.
Factual Background
- Icebergs operates several restaurants where copyrighted music from FILSCAP’s repertoire was publicly played from 2010 to 2014 without obtaining a license.
- FILSCAP detected unauthorized playing of about 324 copyrighted songs in Icebergs’ establishments.
- FILSCAP repeatedly sent demand letters to Icebergs and Young from 2009 to 2014 to obtain licenses and pay royalties, all ignored by Icebergs.
- FILSCAP filed a complaint for copyright infringement under the Intellectual Property Code (IP Code), seeking compensation for unpaid license fees and damages.
- Icebergs denied liability and questioned FILSCAP’s authority and status as the real party in interest.
- During trial, Young testified that no public musical performances occurred; rather, background sound came from tuning into the local FM radio broadcast available to the public.
- Icebergs argued they did not consciously "play" music and that their use did not constitute public performance for commercial gain.
Legal Issues
- Whether Icebergs committed copyright infringement by playing radio broadcasts containing copyrighted music as background music in its restaurants without a public performance license from FILSCAP.
- Whether reliance on U.S. copyright law and jurisprudence, particularly Section 110 and cases like Twentieth Century Music Corp. v. Aiken, is valid in interpreting Philippine copyright law.
- Whether the application of exceptions such as fair use or small business exemptions could absolve Icebergs.
- The proper remedies available to FILSCAP and appropriateness of awarded damages.
Court’s Analysis: Remedy Availment and Jurisdiction
- The Supreme Court held Icebergs availed the wrong remedy by filing a Rule 43 petition before the CA instead of an ordinary appeal under Rule 41.
- The right to appeal is a statutory privilege that must be properly invoked according to procedure.
- Despite the procedural defect, the Court proceeded to decide on the merits given the significance of the issues involved.
Authority of FILSCAP to Sue and Collect Royalties
- FILSCAP is endowed with authority to license and collect royalties via:
- Deeds of Assignment executed by its Filipino members, legally transferring the public performance rights.
- Reciprocal agreements with international affiliates, granting FILSCAP rights to administer foreign repertoires in the Philippines.
- These documents are registered with the Copyright Office.
- As an assignee, FILSCAP is entitled to enforce copyright and collect damages for infringement of assigned rights.