Cosac v. Filipino Society of Composers
REITERATIONFacts
The Antecedents: The Filipino Society of Composers, Authors and Publishers, Inc. (FILSCAP), a non-stock, non-profit corporation tasked with protecting the performing rights of copyright owners, monitored Off the Grill Bar and Restaurant, owned by COSAC, Inc. (COSAC), on February 3, 2005, and January 13, 2006. During these visits, FILSCAP's representative discovered that the restaurant played copyrighted music, both through live band performances and mechanical means (background music), without obtaining the required license from FILSCAP or paying royalties. Despite several demand letters sent in 2004 and 2005, COSAC refused to comply. Procedural History: On February 13, 2006, FILSCAP filed a complaint for copyright infringement and damages against COSAC with the Regional Trial Court (RTC) of Quezon City. COSAC argued that FILSCAP was not a real party-in-interest and denied infringement, claiming songs become public property once aired. The RTC found COSAC guilty of infringement, ordering it to pay P317,050.00 in unpaid license fees/royalties, monitoring expenses, and attorney's fees. COSAC appealed to the Court of Appeals (CA), which affirmed the RTC's decision on October 24, 2012, but deleted the award for monitoring expenses for lack of substantiation. The CA denied COSAC's motion for reconsideration in a Resolution dated January 14, The Petition: COSAC filed a Petition for Review on Certiorari under Rule 45 before the Supreme Court. COSAC principally argued that: (1) FILSCAP's authority was defective because the deeds of assignment from copyright owners were not published in the Intellectual Property Office (IPO) Gazette, which it claimed was a requirement under Section 182 of the Intellectual Property Code (IPC); (2) it was not liable for license fees, damages, and attorney's fees because it had no control over the songs performed by the bands; and (3) its counterclaims should have been granted because music played on the airwaves becomes public property.
Issue(s)
Whether the publication of deeds of assignment in the IPO Gazette is a mandatory requirement for an assignee like FILSCAP to enforce copyright. Whether COSAC committed copyright infringement by allowing the public performance of copyrighted music in its establishment without a license. Whether COSAC is liable for damages, and if so, in what form and amount.
Ruling
The Petition for Review on Certiorari is DENIED. The assailed May 28, 2015 Decision and January 14, 2016 Resolution of the Court of Appeals are AFFIRMED with MODIFICATIONS. The monetary award of P317,050.00 as damages for unpaid license fees/royalties is DELETED. Instead, petitioner COSAC, Inc., is ORDERED to indemnify FILSCAP temperate damages in the amount of P300,000.00, subject to legal interest as specified in the decision.
Ratio Decidendi
On the issue of publication: The Supreme Court held that the publication of deeds of assignment in the IPO Gazette is not mandatory. Section 182 of the Intellectual Property Code uses the permissive term 'may' regarding the filing of an assignment with the National Library, making the act discretionary. The Court reasoned that if Congress intended for non-publication to void the assignment, it would have explicitly stated so, as it did in the previous law (P.D. No. 49) and in other sections of the IPC concerning patents and trademarks. Citing the Berne Convention, the Court reiterated that copyright protection is conferred from the moment of creation and is not subject to any formality. Thus, FILSCAP, as a valid assignee, had the legal standing to enforce the rights of the copyright owners. On the issue of copyright infringement: The Court affirmed that COSAC committed copyright infringement. The two essential elements were established: (1) FILSCAP proved its authority as the assignee of validly copyrighted musical works through deeds of assignment and reciprocal agreements; and (2) COSAC infringed these rights by allowing their 'public performance' without a license. The playing of music in Off the Grill, a commercial establishment open to the public, falls squarely within the definition of 'public performance' under Section 177.6 of the IPC. COSAC's acts were not covered by the limitations on copyright (Section 184) or the fair use doctrine (Section 185) because the use was commercial in nature, intended to enhance the customer experience and generate profit, rather than for charitable, educational, or other exempt purposes. The Court classified COSAC as both a primary infringer (for playing sound recordings) and a secondary infringer under the concept of vicarious infringement (for benefiting from and having the ability to control the live bands' performances). On the issue of damages: The Court modified the award of damages. It found that while FILSCAP undoubtedly suffered pecuniary loss due to the non-payment of license fees, it failed to prove the actual amount of damages with the certainty required by law. The evidence, based on monitoring on only two specific dates, was deemed insufficient to substantiate the RTC's award of P317,050.00 for unpaid royalties. Therefore, the award for actual damages was deleted. However, invoking Section 216.1(b) of the IPC, which allows for 'just damages' in lieu of actual damages, the Court awarded P300,000.00 as temperate damages. This amount was considered a fair and reasonable compensation for the loss suffered by FILSCAP and a vindication of the copyright owners' rights, without being excessive.
Main Doctrine
The public performance of copyrighted musical works in a commercial establishment, whether by live band or mechanical means, without a license from the copyright owner or their designated collective management organization, constitutes copyright infringement. The Intellectual Property Code does not require the deeds of assignment of copyright to be published in the IPO Gazette to be enforceable, as registration is permissive, not mandatory. In cases where actual damages for unpaid royalties cannot be proven with certainty, temperate or 'just' damages may be awarded to compensate the copyright holder for the pecuniary loss suffered, based on the circumstances of the case.