SONY CORP. v. UNIVERSAL CITY STUDIOS, INC.

464 U.S. 417 (1984)

Petitioners manufacture and sell home video tape recorders. Respondents own the
copyrights on some of the television programs that are broadcast on the public
airwaves. Some members of the general public use video tape recorders sold by
petitioners to record some of these broadcasts, as well as a large number of other
broadcasts. Respondents commenced this copyright infringement action against
petitioners in the United States District Court for the Central District of California in
1976. Respondents alleged that some individuals had used Betamax video tape
recorders (VTR's) to record some of respondents' copyrighted works which had
been exhibited on commercially sponsored television and contended that these
individuals had thereby infringed respondents' copyrights. Respondents further
maintained that petitioners were liable for the copyright infringement allegedly
committed by Betamax consumers because of petitioners' marketing of the
Betamax VTR's. Respondents sought no relief against any Betamax consumer.
Instead, they sought money damages and an equitable accounting of profits from
petitioners, as well as an injunction against the manufacture and marketing of
Betamax VTR's.

An explanation of our rejection of respondents' unprecedented attempt to impose

copyright liability upon the distributors of copying equipment requires a quite
detailed recitation of the findings of the District Court. In summary, those findings
reveal that the average member of the public uses a VTR principally to record a
program he cannot view as it is being televised and then to watch it once at a later
time. This practice, known as "time-shifting," enlarges the television viewing
audience. For that reason, a significant amount of television programming may be
used in this manner without objection from the owners of the copyrights on the
programs. For the same reason, even the two respondents in this case, who do
assert objections to time-shifting in this litigation, were unable to prove that the
practice has impaired the commercial value of their copyrights or has created any
likelihood of future harm.

Held: Given these findings, there is no basis in the Copyright Act upon which
respondents can hold petitioners liable for distributing VTR's to the general public.
Each of the respondents owns a large inventory of valuable copyrights, but in the
total spectrum of television programming their combined market share is small. The
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exact percentage is not specified, but it is well below 10%. If they were to prevail,
the outcome of this litigation would have a significant impact on both the producers
and the viewers of the remaining 90% of the programming in the Nation. No doubt,
many other producers share respondents' concern about the possible
consequences of unrestricted copying. Nevertheless the findings of the District
Court make it clear that time-shifting may enlarge the total viewing audience and
that many producers are willing to allow private time-shifting to continue, at least
for an experimental time period.
Die Another Day
I'm gonna wake up, yes and no
I'm gonna kiss some part of
I'm gonna keep this secret
I'm gonna close my body now

I guess, die another day

I guess, die another day
I guess, die another day
I guess, die another day

I guess I'll die another day

(Another day)
I guess I'll die another day
(Another day)
I guess I'll die another day
(Another day)
I guess I'll die another day

Sigmund Freud
Analyze this
Analyze this
Analyze this

I'm gonna break the cycle

I'm gonna shake up the system
I'm gonna destroy my ego
I'm gonna close my body now

Uh, uh

I think I'll find another way

There's so much more to know
I guess I'll die another day
It's not my time to go

For every sin, I'll have to pay

2|Page
 I've come to work, I've come to play
I think I'll find another way
It's not my time to go

I'm gonna avoid the cliche

I'm gonna suspend my senses
I'm gonna delay my pleasure
I'm gonna close my body now

I guess, die another day

I guess I'll die another day

I guess, die another day
I guess I'll die another day
2
I think I'll find another way
There's so much more to know
I guess I'll die another day
It's not my time to go

Uh, uh

I guess, die another day

I guess I'll die another day
I guess, die another day
I guess I'll die another day

Another day [x6]

If there are millions of owners of VTR's who make copies of televised sports events,
religious broadcasts, and educational programs such as Mister Rogers'
Neighborhood, and if the proprietors of those programs welcome the practice, the
business of supplying the equipment that makes such copying feasible should not
be stifled simply because the equipment is used by some individuals to make
unauthorized reproductions of respondents' works. The respondents do not
represent a class composed of all copyright holders. Yet a finding of contributory
infringement would inevitably frustrate the interests of broadcasters in reaching the
portion of their audience that is available only through time-shifting.

Of course, the fact that other copyright holders may welcome the practice of time-
shifting does not mean that respondents should be deemed to have granted a
license to copy their programs. Third-party conduct would be wholly irrelevant in an
action for direct infringement of respondents' copyrights. But in an action for
contributory infringement against the seller of copying equipment, the copyright
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holder may not prevail unless the relief that he seeks affects only his programs, or
unless he speaks for virtually all copyright holders with an interest in the outcome.
In this case, the record makes it perfectly clear that there are many important
producers of national and local television programs who find nothing objectionable
about the enlargement in the size of the television audience that results from the
practice of time-shifting for private home use. The seller of the equipment that
expands those producers' audiences cannot be a contributory infringer if, as is true
in this case, it has had no direct involvement with any infringing activity.

Even unauthorized uses of a copyrighted work are not necessarily infringing. An

unlicensed use of the copyright is not an infringement unless it conflicts with one of
the specific exclusive rights conferred by the copyright statute. Moreover, the
definition of exclusive rights in 106 of the present Act is prefaced by the words
"subject to sections 107 through 118." Those sections describe a variety of uses of
copyrighted material that "are not infringements of copyright" "notwithstanding
the provisions of section 106." The most pertinent in this case is 107, the legislative
endorsement of the doctrine of "fair use."

That section identifies various factors that enable a court to apply an "equitable rule
of reason" analysis to particular claims of infringement. Although not conclusive, the
first factor requires that "the commercial or nonprofit character of an activity" be
weighed in any fair use decision. If the Betamax were used to make copies for a
commercial or profitmaking purpose, such use would presumptively be unfair. The
contrary presumption is appropriate here, however, because the District Court's
findings plainly establish that time-shifting for private home use must be
characterized as a noncommercial, nonprofit activity. Moreover, when one
considers the nature of a televised copyrighted audiovisual work, and that time-
shifting merely enables a viewer to see such a work which he had been invited to
witness in its entirety free of charge, the fact that the entire work is reproduced,
see 107(3), does not have its ordinary effect of militating against a finding of fair
use.

This is not, however, the end of the inquiry because Congress has also directed us
to consider "the effect of the use upon the potential market for or value of the
copyrighted work." 107(4). The purpose of copyright is to create incentives for
creative effort. Even copying for noncommercial purposes may impair the copyright
holder's ability to obtain the rewards that Congress intended him to have. But a use
that has no demonstrable effect upon the potential market for, or the value of, the
4|Page
copyrighted work need not be prohibited in order to protect the author's incentive
to create. The prohibition of such noncommercial uses would merely inhibit access
to ideas without any countervailing benefit.

Thus, although every commercial use of copyrighted material is presumptively an

unfair exploitation of the monopoly privilege that belongs to the owner of the
copyright, noncommercial uses are a different matter. A challenge to a
noncommercial use of a copyrighted work requires proof either that the particular
use is harmful, or that if it should become widespread, it would adversely affect the
potential market for the copyrighted work. Actual present harm need not be shown;
such a requirement would leave the copyright holder with no defense against
predictable damage. Nor is it necessary to show with certainty that future harm will
result. What is necessary is a showing by a preponderance of the evidence that some
meaningful likelihood of future harm exists. If the intended use is for commercial
gain, that likelihood may be presumed. But if it is for a noncommercial purpose, the
likelihood must be demonstrated.

When these factors are all weighed in the "equitable rule of reason" balance, we
must conclude that this record amply supports the District Court's conclusion that
home time-shifting is fair use. In light of the findings of the District Court regarding
the state of the empirical data, it is clear that the Court of Appeals erred in holding
that the statute as presently written bars such conduct.

In summary, the record and findings of the District Court lead us to two conclusions.
First, Sony demonstrated a significant likelihood that substantial numbers of
copyright holders who license their works for broadcast on free television would not
object to having their broadcasts time-shifted by private viewers. And second,
respondents failed to demonstrate that time-shifting would cause any likelihood of
nonminimal harm to the potential market for, or the value of, their copyrighted
works. The Betamax is, therefore, capable of substantial noninfringing uses. Sony's
sale of such equipment to the general public does not constitute contributory
infringement of respondents' copyrights.

STEWART v. ABEND, 495 U.S. 207 (1990)

Cornell Woolrich authored the story "It Had to Be Murder," which was first
published in February 1942 in Dime Detective Magazine. The magazine's publisher,
Popular Publications, Inc., obtained the rights to magazine publication of the story
and Woolrich retained all other rights. Popular Publications obtained a blanket
5|Page
copyright for the issue of Dime Detective Magazine in which "It Had to Be Murder"
was published.

The Copyright Act of 1909 provided authors a 28-year initial term of copyright
protection plus a 28-year renewal term. In 1945, Woolrich agreed to assign the
rights to make motion picture versions of six of his stories, including "It Had to Be
Murder," to B. G. De Sylva Productions for $9,250. He also agreed to renew the
copyrights in the stories at the appropriate time and to assign the same motion
picture rights to De Sylva Productions for the 28-year renewal term. In 1953, actor
Jimmy Stewart and director Alfred Hitchcock formed a production company, Patron,
Inc., which obtained the motion picture rights in "It Had to Be Murder" from De
Sylva's successors in interest for $10,000.

In 1954, Patron, Inc., along with Paramount Pictures, produced and distributed
"Rear Window," the motion picture version of Woolrich's story "It Had to Be
Murder." Woolrich died in 1968 before he could obtain the rights in the renewal
term for petitioners as promised and without a surviving spouse or child. He left his
property to a trust administered by his executor, Chase Manhattan Bank, for the
benefit of Columbia University. On December 29, 1969, Chase Manhattan Bank
renewed the copyright in the "It Had to Be Murder" story. Chase Manhattan
assigned the renewal rights to respondent Abend for $650 plus 10% of all proceeds
from exploitation of the story.

"Rear Window" was broadcast on the ABC television network in 1971. Respondent
then notified petitioners Hitchcock (now represented by cotrustees of his will),
Stewart, and MCA Inc., the owners of the "Rear Window" motion picture and
renewal rights in the motion picture, that he owned the renewal rights in the
copyright and that their distribution of the motion picture without his permission
infringed his copyright in the story. Hitchcock, Stewart, and MCA nonetheless
entered into a second license with ABC to rebroadcast

Petitioners assert that even if their use of "It Had to Be Murder" is unauthorized, it
is a fair use and, therefore, not infringing. At common law, "the property of the
author . . . in his intellectual creation [was] absolute until he voluntarily part[ed]
with the same. The fair use doctrine, which is incorporated into the 1976 Act,
evolved in response to this absolute rule.

Held: The Court of Appeals determined that the use of Woolrich's story in
petitioners' motion picture was not fair use. We agree. The motion picture neither
6|Page
falls into any of the categories enumerated in 107 nor meets the four criteria set
forth in 107. "[E]very [unauthorized] commercial use of copyrighted material is
presumptively an unfair exploitation of the monopoly privilege that belongs to the
owner of the copyright." Petitioners received $12 million from the re-release of the
motion picture during the renewal term. Petitioners asserted before the Court of
Appeals that their use was educational rather than commercial. The Court of
Appeals found nothing in the record to support this assertion, nor do we.

Applying the second factor, the Court of Appeals pointed out that "[a] use is less
likely to be deemed fair when the copyrighted work is a creative product." In
general, fair use is more likely to be found in factual works than in fictional works.
The law generally recognizes a greater need to disseminate factual works than
works of fiction or fantasy. A motion picture based on a fictional short story
obviously falls into the latter category.

Examining the third factor, the Court of Appeals determined that the story was a
substantial portion of the motion picture. The motion picture expressly uses the
story's unique setting, characters, plot, and sequence of events. Petitioners argue
that the story constituted only 20% of the motion picture's story line, but that does
not mean that a substantial portion of the story was not used in the motion picture.
"[A] taking may not be excused merely because it is insubstantial with respect to the
infringing work."

The fourth factor is the "most important, and indeed, central fair use factor." The
record supports the Court of Appeals' conclusion that re-release of the film
impinged on the ability to market new versions of the story. Common sense would
yield the same conclusion. Thus, all four factors point to unfair use. "This case
presents a classic example of an unfair use: a commercial use of a fictional story that
adversely affects the story owner's adaptation rights."

PLAYBOY ENTERPRISES, INC., Plaintiff, v. George FRENA

George Frena operates a subscription computer bulletin board service, Techs

Warehouse BBS ("BBS"), that distributed unauthorized copies of Plaintiff Playboy
Enterprises, Inc.'s copyrighted photographs. BBS is accessible via telephone modem
to customers. For a fee, or to those who purchase certain products from Defendant
Frena, anyone with an appropriately equipped computer can log onto BBS. Once
logged on subscribers may browse through different BBS directories to look at the
pictures and customers may also download the high quality computerized copies of
7|Page
the photographs and then store the copied image from Frena's computer onto their
home computer. Many of the images found on BBS include adult subject matter.
One hundred and seventy of the images that were available on BBS were copies of
photographs taken from PEI's copyrighted materials.

Defendant Frena admits that (1) these materials were displayed on his BBS, (2) that
he never obtained authorization or consent from PEI, and (3) that each of the
accused computer graphic files on BBS is substantially similar to copyrighted PEI
photographs and (4) that each of the files in question has been downloaded by one
of his customers.

Subscribers can upload material onto the bulletin board so that any other
subscriber, by accessing their computer, can see that material. Defendant Frena
states that he never uploaded any of PEI's photographs onto BBS and that
subscribers to BBS uploaded the photographs. Defendant Frena states that as soon
as he was served with a summons and made aware of this matter, he removed the
photographs from BBS and has since that time monitored BBS to prevent additional
photographs of PEI from being uploaded. Defendant Frena argues that the
affirmative defense of fair use precludes a finding of copyright infringement.

Held: The question of fair use constitutes a mixed issue of law and fact. The
Copyright Act mandates four nonexclusive factors which courts shall consider case
by case in determining fair use. Section 107 does not attempt to define "fair use." It
merely lists the factors to be considered in determining whether a use made of a
work in a particular case is fair.

FIRST: every commercial use of copyrighted material is presumptively an unfair

exploitation of the monopoly privilege that belongs to the owner of the copyright
...,"

Defendant Frena's use was clearly commercial. BBS was provided to those paying
twenty-five dollars ($25) per month or to those who purchased products from
Defendant Frena. One who distributes copyrighted material for profit is engaged in
a commercial use even if the customers supplied with such material themselves use
it for personal use. Implicit in the presumption that every commercial use is
presumptively unfair is "some meaningful likelihood that future market harm
exists." It is clear that future market harm exists to PEI due to Frena's activities

8|Page
SECOND: the "nature of the copyrighted work." "Copyright protection is narrower,
and the corresponding application of fair use defense greater, in the case of factual
works than in the case of works of fiction or fantasy." If a work is more appropriately
characterized as entertainment, it is less likely that a claim of fair use will be
accepted. The copyrighted works involved in this case are in the category of fantasy
and entertainment. Therefore, the second factor works against Frena's fair use
defense.

THIRD: the amount and substantiality of the portion of the copyrighted work used,
the Supreme Court has directed a qualitative evaluation of the copying of the
copyrighted work. That is, "a small degree of taking is sufficient to transgress fair
use if the copying is the essential part of the copyrighted work." There is no doubt
that the photographs in Playboy magazine are an essential part of the copyrighted
work. The Court is not implying that people do not read the articles in PEI's magazine.
However, a major factor to PEI's success is the photographs in its magazine. By
pirating the photographs for which PEI has become famous, Defendant Frena has
taken a very important part of PEI's copyrighted publications.

FOURTH: the "effect of the use upon the potential market for or value of the
copyrighted work," is "undoubtedly the single most important element of fair use,
since a proper application of fair use does not impair materially the marketability of
the copied work." This factor poses the issue of "whether unrestricted and
widespread conduct of the sort engaged in by the defendant (whether in fact
engaged in by the defendant or others) would result in a substantially adverse
impact on the potential market for or value of the plaintiff's present work.”
[P]otential market means either an immediate or delayed market, and includes
harm to derivative works. Obviously, if this type of conduct became widespread, it
would adversely affect the potential market for the copyrighted work. Such conduct
would deny PEI considerable revenue to which it is entitled for the service it
provides.

There is irrefutable evidence of direct copyright infringement in this case. It does

not matter that Defendant Frena may have been unaware of the copyright
infringement. Intent to infringe is not needed to find copyright infringement. Intent
or knowledge is not an element of infringement, and thus even an innocent infringer
is liable for infringement; rather, innocence is significant to a trial court when it fixes
statutory damages, which is a remedy equitable in nature.

9|Page
SEGA ENTERPRISES LTD. v. MAPHIA

Sega is a major manufacturer and distributor of computer video game systems and
computer video games which are sold under the SEGA trademark. The Sega game
system consists of two major components sold by Sega: the game console and
software programs stored on video game cartridges which are inserted into the base
unit. Each cartridge contains a single game program. The base unit contains a
microcomputer which, when connected to a television, permits individuals to play
the video game stored on the inserted cartridge. The computer programs for the
Sega video games are stored on a cartridge in a Read-Only Memory ("ROM") chip.
Sega's video games cannot be copied using the game console. However, as noted
below, running devices, called "copiers," are designed to copy the video game
programs from a Sega game cartridge onto other magnetic media such as hard and
floppy disks.

An electronic bulletin board consists of electronic storage media, such as computer

memories or hard disks, which is attached to telephone lines via modem devices,
and controlled by a computer. Third parties, known as "users," of electronic bulletin
boards can transfer information over the telephone lines from their own computers
to the storage media on the bulletin board by a process known as "uploading."
Defendants MAPHIA and Chad Scherman operate an electronic bulletin board called
MAPHIA (hereinafter "the MAPHIA bulletin board"). The MAPHIA bulletin board is
open to the public and, according to Defendant Scherman's Opposition
Memorandum, has approximately 400 users. The evidence establishes that Sega's
copyrighted video games are available on and transferred to and from the MAPHIA
bulletin board by users who upload and download games. Once a game is uploaded
to the MAPHIA bulletin board it may be downloaded in its entirety by an unlimited
number of users. It appears that the copies of Sega's video game programs on
Defendants' bulletin board are unauthorized copies of Sega's copyrighted video
games, having been uploaded there by users of Defendant's bulletin board. There is
evidence that MAPHIA directly or through an affiliate sometimes charges a direct
fee for downloading privileges, or barters for the privilege of downloading Sega's
games. Information on the MAPHIA bulletin board includes the following passage:
Thank you for purchasing a Console Back Up Unit [copier] from PARSEC TRADING.
As a free bonus for ordering from Dark Age, you receive a COMPLEMENTARY Free
Download Ratio on our Customer Support BBS. Defendant thus provides
downloading privileges for Sega games to users in exchange for the uploading of
10 | P a g e
Sega games or other programs or information or in exchange for payment for other
goods, such as copiers, or services, such as the provision of credit card numbers to
users.

Held: Sega has established that unauthorized copies of these games are also made
when they are downloaded to make additional copies by users, which copying is
facilitated and encouraged by the MAPHIA bulletin board. "[O]ne who, with
knowledge of the infringing activity, induces, causes or materially contributes to the
infringing conduct of another," may be held liable as a contributory infringer. Even
if Defendants do not know exactly when games will be uploaded to or downloaded
from the MAPHIA bulletin board, their role in the copying, including provision of
facilities, direction, knowledge and encouragement, amounts to contributory
copyright infringement.

Defendants raise fair use as a defense to copyright infringement. However, to invoke

the fair use exception, an individual must possess an authorized copy of a literary
work." Defendant Scherman has stated that he does not own any Sega game
cartridges. When copying is for the purpose of making multiple copies of the
original, and thereby saving users the expense of purchasing additional authorized
copies, this militates against a finding of fair use under the purpose of the use factor.
Because users of the MAPHIA bulletin board are likely and encouraged to download
Sega games therefrom to avoid having to buy video game cartridges from Sega, by
which avoidance such users and Defendants both profit, the commercial purpose
and character of the unauthorized copying weighs against a finding of fair use.

Because Sega video game programs are for entertainment uses and involve fiction
and fantasy, consideration of the nature of the copyrighted work weighs against a
finding of fair use. Because it appears that the entire game programs are copied
when Sega video game programs are transferred over the MAPHIA bulletin board,
consideration of the amount and substantiality of the portion copied weighs against
a finding of fair use. "The fourth factor, the effect of the use upon the market for or
value of the copyrighted work, 'is undoubtedly the single most important element
of fair use.'" "[T]o negate fair use one need only show that if the challenged use
'should become widespread, it would adversely affect the potential market for the
copyrighted work.' Based on Defendants' own statement that 45,000 bulletin
boards like MAPHIA operate in this country, it is obvious that should the
unauthorized copying of Sega's video games by Defendants and others become
widespread, there would be a substantial and immeasurable adverse effect on the
11 | P a g e
market for Sega's copyrighted video game programs. Consideration of the effect on
the market for Sega's copyrighted works weighs heavily against a finding of fair use.

Q. You can’t play pirated games in Playstation. Someone invents a chip to allow you
to use it. Is this infringement?

A. No. Violates no moral rights. However, WIPO treaty provides that there should
be legislatioin against anti-circumvention devices. This is such a devise. Another
example of an ACD is a devise which disables visitor-counting devices in websites.

Q. Is viewing (such as when you play a program or view a tape) infringement?

A. No. It’s private use. If you view it yourself, it’s okay. Even if you share it with
barangay. But if you sell the chips to video stores which has 100 consoles, it may be
considered contributory infringement.

NOTE: There is a difference between a infringing copy and a non-infringing copy.

NOTE: Software is reproduced when you use it. It is reproduced in your Random
Access Memory.

RELIGIOUS TECHNOLOGY CENTER v. NETCOM ON-LINE COMMUNICATION

SERVICES

Plaintiffs Religious Technology Center ("RTC") and Bridge Publications, Inc. ("BPI")
hold copyrights in the unpublished and published works of L. Ron Hubbard, the late
founder of the Church of Scientology ("the Church"). Defendant Dennis Erlich is a
former minister of Scientology turned vocal critic of the Church, whose pulpit is now
the Usenet newsgroup alt.religion.scientology ("a.r.s."), an on-line forum for
discussion and criticism of Scientology. Plaintiffs maintain that Erlich infringed their
copyrights when he posted portions of their works on a.r.s. Erlich gained his access
to the Internet through defendant Thomas Klemesrud's ("Klemesrud's") BBS
"support.com." Klemesrud is the operator of the BBS, which is run out of his home
and has approximately 500 paying users. Klemesrud's BBS is not directly linked to
the Internet, but gains its connection through the facilities of defendant Netcom On-
Line Communications, Inc. ("Netcom"), one of the largest providers of Internet
access in the United States.

After failing to convince Erlich to stop his postings, plaintiffs contacted defendants
Klemesrud and Netcom. Klemesrud responded to plaintiffs' demands that Erlich be

12 | P a g e
kept off his system by asking plaintiffs to prove that they owned the copyrights to
the works posted by Erlich. However, plaintiffs refused Klemesrud's request as
unreasonable. Netcom similarly refused plaintiffs' request that Erlich not be allowed
to gain access to the Internet through its system. Netcom contended that it would
be impossible to prescreen Erlich's postings and that to kick Erlich off the Internet
meant kicking off the hundreds of users of Klemesrud's BBS. Consequently, plaintiffs
named Klemesrud and Netcom in their suit against Erlich, although only on the
copyright infringement claims.

Unlike some other large on-line service providers, such as CompuServe, America
Online, and Prodigy, Netcom does not create or control the content of the
information available to its subscribers. It also does not monitor messages as they
are posted. It has, however, suspended the accounts of subscribers who violated its
terms and conditions, such as where they had commercial software in their posted
files. Netcom admits that, although not currently configured to do this, it may be
possible to reprogram its system to screen postings containing particular words or
coming from particular individuals. Netcom, however, took no action after it was
told by plaintiffs that Erlich had posted messages through Netcom's system that
violated plaintiffs' copyrights, instead claiming that it could not shut out Erlich
without shutting out all of the users of Klemesrud's BBS.

Held: FIRST the purpose and character of the defendant's use. Netcom's use of
plaintiffs' work is to carry out its commercial function as an Internet access provider.
Such a use, regardless of the underlying uses made by Netcom's subscribers, is
clearly commercial. Netcom's use, though commercial, also benefits the public in
allowing for the functioning of the Internet and the dissemination of other creative
works, a goal of the Copyright Act. Although Netcom gains financially from its
distribution of messages to the Internet, its financial incentive is unrelated to the
infringing activity and the defendant receives no direct financial benefit from the
acts of infringement. Therefore, the commercial nature of the defendant's activity
should not be dispositive. Moreover, there is no easy way for a defendant like
Netcom to secure a license for carrying every possible type of copyrighted work onto
the Internet. Thus, it should not be seen as "profit[ing] from the exploitation of the
copyrighted work without paying the customary prices." Because Netcom's use of
copyrighted materials served a completely different function than that of the
plaintiffs, this factor weighs in Netcom's favor.

13 | P a g e
SECOND: whether it is published or unpublished and whether it is informational or
creative. Plaintiffs rely on the fact that some of the works transmitted by Netcom
were unpublished and some were arguably highly creative and original. However,
because Netcom's use of the works was merely to facilitate their posting to the
Usenet, which is an entirely different purpose than plaintiffs' use (or, for the matter,
Erlich's use), the precise nature of whose works is not important to the fair use
determination.

THIRD concerns both the percentage of the original work that was copied and
whether that portion constitutes the "heart" of the copyrighted work. Generally, no
more of a work may be copied than is necessary for the particular use. The copying
of an entire work will ordinarily militate against a finding of fair use, although this is
not a per se rule. Plaintiffs have shown that Erlich's posting copied substantial
amounts of the originals or, in some cases, the entire works. Netcom, of course,
made available to the Usenet exactly what was posted by Erlich. As the court found
in Sony, the mere fact that all of a work is copied is not determinative of the fair use
question, where such total copying is essential given the purpose of the copying. Id.
(allowing total copying in context of time-shifting copyrighted television shows by
home viewers). Here, Netcom copied no more of plaintiffs' works than necessary to
function as a Usenet server. Accordingly, this factor should not defeat an otherwise
valid defense.

FOURTH "the extent of market harm caused by the particular actions of the alleged
infringer" and "whether unrestricted and widespread conduct of the sort engaged
in by the defendant . . . would result in a substantially adverse impact on the
potential market' for the original." Netcom argues that there is no evidence that
making accessible plaintiffs' works, which consist of religious scriptures and policy
letters, will harm the market for these works by preventing someone from
participating in the Scientology religion because they can view the works on the
Internet instead. Further, Netcom notes that the relevant question is whether the
posting fulfill the demand of an individual who seeks to follow the religion's
teachings, and not whether they suppress the desire of an individual who is affected
by the criticism posted by Erlich. Netcom argues that the court must focus on the
"normal market" for the copyrighted work, which in this case is through a
Scientology-based organization. Plaintiffs respond that the Internet's extremely
widespread distribution--where more than 25 million people worldwide have
access--multiplies the effects of market substitution. In support of its motion for a
14 | P a g e
preliminary injunction against Erlich, plaintiffs submitted declarations regarding the
potential effect of making the Church's secret scriptures available over the Internet.
Plaintiffs pointed out that, although the Church currently faces no competition,
groups in the past have used stolen copies of the Church's scriptures in charging for
Scientology-like religious training. This evidence raises a genuine issue as to the
possibility that Erlich's postings, made available over the Internet by Netcom, could
hurt the market for plaintiffs' works.

In balancing the various factors, the court finds that there is a question of fact as to
whether there is a valid fair use defense. Netcom has not justified its copying
plaintiffs' works to the extent necessary to establish entitlement to summary
judgment in light of evidence that it knew that Erlich's use was infringing and had
the ability to prevent its further distribution. While copying all or most of a work will
often preclude fair use, courts have recognized the fair use defense where the
purpose of the use is beneficial to society, complete copying is necessary given the
type of use, the purpose of the use is completely different than the purpose of the
original, and there is no evidence that the use will significantly harm the market for
the original. This case is distinguishable from those cases recognizing fair use despite
total copying. In Sony, the home viewers' use was not commercial and the viewers
were allowed to watch the entire shows for free. Here, plaintiffs never gave either
Erlich or Netcom permission to view or copy their works. Netcom's use has some
commercial aspects. Further, Netcom's copying is not for the purpose of getting to
the unprotected idea behind plaintiffs' works. Although plaintiffs may ultimately
lose on their infringement claims if, among other things, they cannot prove that
posting their copyrighted works will harm the market for these works. Fair use
presents a factual question on which plaintiffs have at least raised a genuine issue
of fact. Accordingly, the court does not find that Netcom's use was fair as a matter
of law.

NOTE: Digital works – the moment you post materials on the site (internet site) it is
considered non-copyrightable unless you place the fact of its being copyrighted in a
conspicuous place in the site.

Joaquin v. Drilon

Petitioner BJ Productions, Inc. was the holder/grantee of a Certificate of Copyright

of Rhoda and Me, a dating game show aired from 1970 to 1977. On 1973, BJ
Productions, Inc. submitted to the National Library an addendum to its Certificate
15 | P a g e
of Copyright specifying the show's format and style of presentation. Sometime in
1991, BJ Productions, Inc. discovered that another television show, It's a Date, with
a similar format to Rhoda and Me was being aired on RPN Channel 9. It's a Date was
produced by IXL Productions, Inc. BJ Productions, Inc. then wrote a letter to the
president of IXL Productions, Inc. Informing them that BJ Productions, Inc. had a
copyright to Rhoda and Me and demanding that IXL Productions, Inc. discontinue
airing It's a Date. IXL Productions, Inc. sought a meeting with BJ Productions, but
nevertheless continued airing It's a Date. Meanwhile, IXL Productions, Inc. sought
to register IXL's copyright to the first episode of It's a Date for which it was issued
by the National Library a Certificate of Copyright on 14 August 1991.

Upon complaint of BJ Productions, Inc., an information for violation of P.D. No.49

was filed against the officers of IXL Productions, Inc. and RPN Channel 9. However,
upon the petition of IXL Productions, Inc., the complaint was eventually dismissed
Secretary of Justice Franklin Drilon. BJ Productions, Inc. then filed a petition with the
Supreme Court questioning this decision of Secretary Drilon. Respondents
dismissed the case on the ground that petitioners had failed to establish probable
cause because of their failure to present the copyrighted master tapes of Rhoda and
Me. Petitioners, on the other hand, claim that the presentation of the master tapes
was not necessary, since written descriptions of the formats of the two television
shows were presented during the preliminary investigation. It was also from these
descriptions that the investigating prosecutor found substantial similarities and
ruled that there was indeed infringement of copyright, as the two shows were
practically exact copies of the other. Respondents in this case also contend that BJ
Production, Inc.'s copyright covers only a specific episode of Rhoda and Me and that
the formats or concepts of dating game shows are not covered by copyright
protection under P .D. No.49. Petitioners, on the other hand, asserted that the
format of Rhoda and Me is a product of ingenuity and skill and is thus entitled to
copyright protection.

Held: The format of a show is not copyrightable. Section 2 of P.D. No.49 enumerates
the classes of work entitled to copyright protection. Notably, the format or
mechanics of a television show is not included in this list of protected works.
Copyright, being a statutory right, the right is 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. For this reason, the protection
afforded by the law cannot be extended to cover them.
16 | P a g e
Section 2 of P.D. No.49, in enumerating what are subject to copyright, refers to
finished works and not to concepts. The copyright does not extend to an idea,
procedure, process, system, method of operation, concept, principle, or discovery,
regardless of the form in which it is described, explained, illustrated, or embodied
in such work48. No protection shall extend to any idea, procedure, system, method
or operation, concept, principle, discovery or mere data, as such, even if they are
expressed, explained, illustrated or embodied in a work49. It is therefore clear that
under law, the format of a dating game show falls under what is referred to as
"unprotected subject matter".

BJ Production, Inc.'s copyright covers only the audio-visual recordings of each

episode of Rhoda and Me, as falling within the class of works mentioned in Section
2 of P.D. No.49, to wit: cinematographic works and works produced by a process
analogous to cinematography or any process for making audio-visual recordings.
This being th8' case, the Court ruled that the master tape should have been
presented to provide the investigating prosecutor the opportunity to compare the
videotapes of the two shows. The Court held that

Mere description by words of the general format of the two dating game shows is
insufficient; the presentation of the master videotape in evidence was indispensable
to the determination of the existence of probable cause. As aptly observed by
respondent Secretary of Justice: A television show includes more than mere words
can describe because it involves a whole spectrum of visuals and effects, video and
audio, such that no similarity or dissimilarity may be found by merely describing the
general copyright! format of both dating game shows.

Joaquin v. Drilon – It is very difficult to prove reproduction of plays and shows unless
there is EXACT copying.

Habana v. Robles

This case involves the question of plagiarism and the possible infringement of
copyrighted materials in a textbook. Petitioners Pacita Habana, Alicia Cinco and
Jovita Fernando are the authors and copyright owner.s of duly issued certificates of
copyright registration covering their published works, College English for Today,
Books 1 and 2, and Workbook for College Freshman English, Series 1. Respondents
Felicidad Robles and Goodwill Trading Co., Inc. are the author/publisher and
distributor/seller of another published work entitled "Developing English
Proficiency", Books 1 and 2, which book was covered by copyrights issued to them.
17 | P a g e
In the course of revising their published works, petitioners discovered that
respondent's books were strikingly to the contents, scheme or presentation,
illustrations and illustrative examples in their own book. Petitioners found that
several pages of the respondent's book are similar, if not all together a copy of
petitioner's book, which is a case of plagiarism and copyright infringement. After
their demand that respondent pay damages and cease and desist from selling the
infringing copies of respondent's book went unheeded, petitioners filed a compliant
for infringement and unfair competition against the respondent.

Held: Respondent's act of lifting from the book of petitioners substantial portions of
discussions and examples, and her failure to acknowledge the same in her book is
an infringement of petitioner's copyright. As to substantial reproduction of a book,
it does not necessarily require that the entire copyrighted work, or even a large
portion of it, be copied. If so much is taken that the value of the original work is
substantially diminished, there is an infringement of copyright and to an injurious
extent, the work is appropriated.

In determining the question of infringement, the amount of matter copied from the
copyrighted work, is an important consideration. To constitute infringement, it is
not necessary that the whole or even a large portion of the work shall have been
copied. If so much is taken that the value of the original is sensibly diminished, or
the labours of the original author are substantially and to an injurious extent
appropriated by another, that is sufficient in point of law to constitute piracy.

The essence of intellectual piracy should be essayed in conceptual terms in order to

underscore its gravity by an appropriate understanding thereof. Infringement of a
copyright is a trespass on a private domain owned and occupied by the owner 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 of the copyright, of anything the sole right
to do [is conferred by statute on the owner of the copyright On the respondent's
claim that the copied portions of the book do not constitute copyright infringement
since these are also found in foreign books and other grammar books and that the
similarity between their styles can not be avoided since they come from the same
background and orientation, the Supreme Court held that this would be true had
the respondent mentioned the source and the name of the author in her book.

18 | P a g e
Thus, a copy of a piracy is an infringement of the original, and it is no defense that
the pirate, in such cases, did not know whether or not he was infringing any
copyright; he at least knew that what he was copying was not his, and he copied at
his peril52. Nevertheless, one who copies or quotes from a published work will not
be held to be guilty of copyright infringement where he mentions the source and
the name of the author of the published work.

To what extent can copying be injurious to the author of the book being copied? In
this case, the Court held that the fact that the numerous pages that the petitioners
presented showing similarity in the style and the manner the books were presented
and the identical examples is a mark of copying and cannot pass as similarities. Also,
even if the petitioners and the respondent were of the same background in terms
of teaching and orientation, the Court held that it was not an excuse for them to be
identical even in the examples contained in their books.

Lastly, the Court found indicia of guilt on the part of the respondent. In this case,
the Court found

that the respondent had pulled out from Goodwill bookstores her book upon
learning of petitioners' complaint while denying petitioners' demand. The Court
further noted that when the respondent's book was re-issued as a revised version,
all the pages cited by petitioners to contain portion of their book were
conspicuously eliminated.

In cases of infringement, copying alone is not what is prohibited. The copying must
produce an "injurious effect". Here the injury consists in that respondent Robles
lifted from petitioners' book materials that were the result of the latter's research
work and compilation and misrepresented them as her own. She circulated the book
DEP for commercial use and did not acknowledge petitioners as her source.

Hence, there is a clear case of appropriation of copyrighted work for her benefit that
respondent Robles committed. Petitioner's work as authors is the product of their
long and assiduous research and for another to represent it as her own is injury
enough. In copyrighting books the purpose is to give protection to the intellectual
product of an author. This is precisely what the law on copyright protected.

Q. Habana – civil case; Joaquin – criminal case; Why?

19 | P a g e
A. In computer CD crimes – you need immediate relief, that is, seizure of products
so you can stop sales and your loss of profits. In TV shows, civil case maybe because
it’s harder to prove anyway and no immediate relief can be obtained. Injunction is
all that you can get.

Q. A provincial cable company without license to broadcast Star Channels picked

out the signal and broadcasted. What action would you recommend?

A. Criminal, so you can seize broadcast equipment. If you file civil case and get an
injunction, by the time you get it, equipment would have been moved and they
would be broadcasting from a different office. You need to get the equipment fast.

Administrative cases

Filed against manufacturers AND retailers.

Q. Jurisdiction?

A. 200K above – Intellectual Property Office

200K below – DTI’s Bureau of Trade Regulation and Consumer Protection.

Q. Could you give me the basic provisions governing administrative cases?

A. (In the immortal words of Johnbee Sison) Certainly.

RULES AND REGULATIONS ON ADMINISTRATIVE COMPLAINTS FOR VIOLATION OF

LAWS INVOLVING INTELLECTUAL PROPERTY RIGHTS

Rule 1

DEFINITIONS, INTERPRETATION, RULES OF COURT

Sec. 2. Interpretation. — These Regulations shall be liberally construed to carry out

the objectives of the IP Code and IP Laws and to assist the parties in obtaining just
and expeditious settlement or disposition of administrative cases filed before the
Office.

20 | P a g e
Rule 2

COMMENCEMENT OF ACTION

Section 1. Complaint, When and to Whom Filed. — All administrative complaints for
violation of the IP Code or IP Laws shall be commenced by filing a verified complaint
with the Bureau within four (4) years from the date of commission of the violation,
or if the date be unknown, from the date of discovery of the violation.

The complaint shall include a certification that the party commencing the action has
not filed any other action or proceeding involving the same issue or issues before
any tribunal or agency nor such action or proceeding is pending in other quasi-
judicial bodies: Provided, however, that if any such action is pending, the status of
the same must be stated, and should knowledge thereof be acquired after the filing
of the complaint…. Failure to comply with the foregoing requirements shall not be
curable by mere amendment of the complaint or other initiatory pleading but shall
be cause for dismissal of the case without prejudice.

Sec. 2. Original Jurisdiction. — (a) The Bureau shall have original jurisdiction in
administrative actions for violations of laws involving intellectual property rights
where the total damages claimed are not less than two hundred thousand pesos
(P200,000.00); Provided however, that availment of the provisional remedies may
be granted in accordance with these Regulations and the provisions of the Rules of
Court; The Director shall coordinate with local enforcement agencies for the strict
and effective implementation and enforcement of these Regulations.

The commencement of the action under these Rules and Regulations is independent
and without prejudice to the filing of any action with the regular courts.

Rule 3

POWERS OF HEARING OFFICERS

Section 1. Powers of Hearing Officers. — (a) A Hearing Officer conducting the

hearing and investigating shall be empowered to administer oaths and affirmations;
issue subpoena and subpoena duces tecum to compel attendance of parties and
witnesses and the production of any book, paper, document, correspondence and
21 | P a g e
other records which are material to the case; grant provisional remedies in
accordance with these Regulations and the Rules of Court; and make preliminary
rulings on questions raised at the hearings, with the ultimate decision on the merits
of all the issues involved being left to the Director.

Rule 4

PRELIMINARY ATTACHMENT

Rule 5

PRELIMINARY INJUNCTION

Rule 6

CONTEMPT

Rule 7

CALENDAR AND ADJOURNMENTS

Rule 8

DEPOSITIONS AND DISCOVERIES

Rule 9

HEARING

Rule 10

22 | P a g e
EVIDENCE

Section 1. Evidence Required. — Substantial evidence shall be sufficient to support

decision or order. A fact may be deemed established if it is supported by substantial
evidence. It means such relevant evidence which a reasonable mind might accept
as adequate to support or justify a conclusion.

Rule 11

DECISIONS AND ORDERS

Section 1. Rendition of Decision. — (a) The case is deemed submitted for resolution
upon termination of the period for reception of evidence provided in Section 1 of
Rule 9 and the evidence formally offered. Whether or not the parties submit a final
pleading such as memorandum, the case shall be decided by the Bureau within
thirty (30) calendar days from submission as provided herein.

All decisions determining the merits of cases shall be in writing, stating clearly and
distinctly the facts and law on which they are based and signed by the Director.

(b) Decisions and final orders shall be saved by mail, personal service or publication
as the case may require.

Rule 12

ADMINISTRATIVE PENALTIES AND SANCTIONS

Section 1. Administrative Penalties Imposable. — After formal investigation, the

Director, may impose one (1) or more of the following administrative penalties:

(a) Issuance of a cease and desist order which shall specify the acts that the
respondent shall cease and desist from and shall require him to submit a compliance
report.…

23 | P a g e
(b) The acceptance of a voluntary assurance of compliance or discontinuance as may
be imposed.

(c) The condemnation or seizure of products which are subject of the offense.

(d) The forfeiture of paraphernalia and all real and personal properties which have
been used in the commission of the offense.

(e) The imposition of administrative fines in such amount as deemed reasonable by

the Director, which shall in no case be less than P5,000.00

(f) The cancellation of any permit, license, authority, or registration which may have
been granted by the Office, or the suspension of the validity thereof not exceeding
one (1) year.

(g) The withholding of any permit, license, authority or registration which is being
secured by the respondent from the Office;

(h) The assessment and award of damages;

(i) Censure

Rule 13

JUDGMENTS, FINAL ORDERS AND ENTRY THEREOF

Section 1. Rendition of Judgment and Final Orders. — A judgment or final order

determining the merits of the case shall be in writing, stating clearly and distinctly
the facts and the law on which it is based, signed by the Director, and filed with the
appropriate Register of the Office.

Sec. 2. Entry of judgments and Final Orders. — If no appeal is filed within the time
provided in these Regulations, the Director shall forthwith cause the entry of the
judgment or final order in the appropriate Register of the Office. The date of finality
of the judgment or final order shall be deemed to be the date of its entry. The record
shall contain the dispositive part of the judgment or final order and shall be signed
by the Director, with a certificate that such judgment or final order has become final
and executory.

24 | P a g e
Rule 14

APPEAL

Section 1. Finality of Decision and Order. — (a) The decision and order of the Director
shall become final and executory fifteen (15) days after the receipt of a copy thereof
by the party affected unless within the said period an appeal to the Director General
has been perfected.

(b) Decisions of the Director-General shall be final and executory unless an appeal
to the Court of Appeals or Supreme Court is perfected in accordance with the Rules
of Court applicable to appeals from decision of Regional Trial Courts.

(d) No motion for reconsideration of the decision of the Director General shall be
allowed.

Sec. 2. Appeal, How Perfected. — Appeal may be perfected by filing a Notice of

Appeal with the Director General and the Director and a copy thereof served upon
the adverse party within fifteen (15) days from receipt of the order or Decision and
upon payment of the corresponding docket fee.

Q. Can administrative agencies impose damages?

A. Yes. There is no limit as to the amount of damages it may award. But it may not
impose imprisonment.

Q. What kind of determination does the agency make, does it determine guilt?

A. Yes! Without a determination of guilt (or at least, violation), it can’t impose

penalties.

Q. Describe the appeals process.

A. Administrative Agency  CA  SC

Q. Is there any disadvantage in filing the case with an administrative agency?

A. Yes. Administrative agencies are hesitant to award large amounts of damages,

since this is the court’s job, and also because the losing party can file an
administrative case against him in the Sandiganbayan for malfeasance. In this case,

25 | P a g e
the government does not defend him. So he is hesitant even to grant temporary
relief like injunctions.

Q. Why would you file a case with an administrative agency rather than regular
courts?

A. to make sure that the IP issues are appreciated. But if case is clear cut, go to RTC.
Decisions of the RTC have more weight because administrative cases are summary
and is not bound by the technical rules on evidence. There is more chance that the
IPO case will be reversed on appeal.

Q. What kind of cases does the IPO hear?

A. IP code cases. But RTC hears all sorts of cases, so they have lesser competence
as to IP laws. Note that in major cities though, there are some courts assigned to
hear only IP cases.

Summary of Crim/Civ/Admi Pros and Cons

Criminal Civil Administrative

 Hardest to prove –  File this when you  File this only when
requires proof beyond have to prove your case is against
reasonable doubt. substantial copying retailers and you don’t
(case is not 100% expect to obtain
- Note that in
copying) and when substantial damages.
software
there is possibility that
piracy, this is
fair use will be raised
easier
as a defense
because there
is an actual  It takes VERY long to
100% get an injunction so if
reproduction you need immediate
relief, don’t file this.
 Immediate relief is
needed by seizure of  Not as expensive for
means of production. the client.
So even if case goes on
 The entire battle is
for 20 years, he can’t
fought at the getting of
manufacture fakes
the injunction. Bulk of
26 | P a g e
 the evidence is
 Most expensive for
presented here. If no
the client because you
injunction is obtained,
pay trademark
it will be simple matter
investigators to do the
for the other party to
test purchases, so
keep extending the
police will file for SW.
case (and keep selling
At the Prelim Inves
pirated stuff while case
stage, accused will
is pending)
quash SW to claim that
evidence obtained is
inadmissible. Will also
question finding of
probable cause by
fiscal to DOJ

 Important to pay for

storage so evidence
seized will not be lost.

Delivery under oath – can be done even in civil cases, so no need to get seizure in
civil case

- to get documents evidencing a) sourcing of goods (to get the big cat)

b) sales (to prove amount of actual damages)

Civil ex parte searches and seizures – provided for in the TRIPS Agreement

- did not specify if for civil, criminal, or administrative suits

- purposes 1) to prevent evidence from disappearing

2) to prevent infringed goods from entering the commerce of man

Developing Countries – criminal cases already allow ex parte searches

- should be available in civil cases also

- called the “Anton Pillar” order – allows goods to be searched and seized
which are subject of criminal action without need of filing criminal case

27 | P a g e
 - apply for it in customs and go there (port) and seize

Q. Is possession of copyrighted goods punishable?

A. No. But it is criminally punished when it falls under Sec. 217.3 and possessor
knows or ought to know that such is copyrighted. Note thought that it is hard to
overcome presumption of this knowledge that work is copyrighted.

Q. Does the doctrine of exhaustion of administrative relief apply? Do you have to

file administrative case before you file civil/criminal case?

A. No. You can file any case, civil, administrative or criminal.

Chapter XVIII

SCOPE OF APPLICATION

Sec. 221. Points of Attachment for Works under Sections 172 and 173. -

221.1. The protection afforded by this Act to copyrightable works under Sections
172 and 173 shall apply to:

(a) Works of authors who are nationals of, or have their habitual residence in the
Philippines;

(b) Audio-visual works the producer of which has his headquarters or habitual
residence in the Philippines;

(c) Works of architecture erected in the Philippines or other artistic works

incorporated in a building or other structure located in the Philippines;

(d) Works first published in the Philippines; and

(e) Works first published in another country but also published in the Philippines
within thirty days, irrespective of the nationality or residence of the authors.

221.2. The provisions of this Act shall also apply to works that are to be protected
by virtue of and in accordance with any international convention or other
international agreement to which the Philippines is a party. (n)

Q. Should the author be the one to cause the publication of the work for his work
to obtain protection?
28 | P a g e
A. No. The law does not make a distinction.

Q. A book is published in China by a Chinese. Is it possible for him to obtain

protection in RP?

A. Yes. He should publish in RP within 30 days. He does not need to be a Filipino or

a resident of RP to obtain the protection.

Q. What if you are not able to publish within the 30 day window, can you ever obtain
protection?

A. Yes. If you are a national of a country which ratified the TRIPS or the Berne
Convention, the treaty provisions require that protection be extended to all citizens
of signatory countries. Therefore, if you publish in Japan, you are automatically
given protection in RP.

Q. What if you publish in a non-member country like China, and you miss the 30 day
window in the Philippines? How can you obtain copyright protection in TRIPS or
Berne Convention signatory countries?

A. Simply publish in a country which ratified the TRIPS but allows for longer period
for publication than 30 days.

Sec. 222. Points of Attachment for Performers. - The provisions of this Act on the
protection of performers shall apply to:

222.1. Performers who are nationals of the Philippines;

222.2. Performers who are not nationals of the Philippines but whose
performances:

(a) Take place in the Philippines; or

(b) Are incorporated in sound recordings that are protected under this Act; or

(c) Which has not been fixed in sound recording but are carried by broadcast
qualifying for protection under this Act. (n)

Sec. 223. Points of Attachment for Sound Recordings. - The provisions of this Act on
the protection of sound recordings shall apply to:

223.1. sound recordings the producers of which are nationals of the Philippines; and

29 | P a g e
223.2. Sound recordings that were first published in the Philippines. (n)

Sec. 224. Points of Attachment for Broadcasts. -

224.1. The provisions of this Act on the protection of broadcasts shall apply to:

(a) Broadcasts of broadcasting organizations the headquarters of which are situated

in the Philippines; and

(b) Broadcasts transmitted from transmitters situated in the Philippines.

224.2. The provisions of this Act shall also apply to performers who, and to
producers of sound recordings and broadcasting organizations which, are to be
protected by virtue of and in accordance with any international convention or other
international agreement to which the Philippines is a party. (n)

N. B. United States is a first to register jurisdiction. You obtain copyright by

registration.

RP is a first to create jurisdiction. You obtain copyright by virtue of creation.

The Berne Convention reinforces the first to create doctrine. US is not a

signatory of the Berne.

Chapter XIX

INSTITUTION OF ACTIONS

Sec. 225. Jurisdiction. - Without prejudice to the provisions of Subsection 7.1(c),

actions under this Act shall be cognizable by the courts with appropriate jurisdiction
under existing law.

Sec. 226. Damages. - No damages may be recovered under this Act after four (4)
years from the time the cause of action arose.

Prescriptive periods:

Civil case – 4 years

30 | P a g e
Criminal case – follow the RPC based on penalty (i.e., length of imprisonment,
amount of fine)

Chapter XX

MISCELLANEOUS PROVISIONS

Sec. 227. Ownership of Deposit and Instruments. - All copies deposited and
instruments in writing filed with the National Library and the Supreme Court Library
in accordance with the provisions of this Act shall become the property of the
Government.

Sec. 228. Public Records. - The section or division of the National Library and the
Supreme Court Library charged with receiving copies and instruments deposited
and with keeping records required under this Act and everything in it shall be
opened to public inspection. The Director of the National Library is empowered to
issue such safeguards and regulations as may be necessary to implement this
Section and other provisions of this Act.

Sec. 229. Copyright Division Fees. - The Copyright Section of the National Library
shall be classified as a Division upon the effectivity of this Act. The National Library
shall have the power to collect, for the discharge of its services under this Act, such
fees as may be promulgated by it from time to time subject to the approval of the
Department Head.

Q. What is SB 1704 by Ople?

A. It is on proposed amendments on the copyright portion of the IP Code. Since the

Senate has already ratified the WiPO, SB 1704 may be passed. Some relevant
provisions of the SB 1704 are:

1. Anti-circumvention measures to beimplemented

- Sony and the chip

- would penalize the sale, manufacture and use of the anti-circumvention devices

2. Broader reproduction rights

- broader reproduction rights, temporary and permanent reproduction; internet;

right to

31 | P a g e
 make work available

3. Terms of Protection extended (from 50 years to 75 years)

4. Enforcement – making the IP Code easier to enforce with stiffer penalties

Q. What are some issues on fair use in the internet?

A. Internet gives (or requires) a new way of looking at copyright. It makes it more
difficult to enforce the right to control access, disclosure and to prevent alteration
(it is easier to make alterations over the internet). Also, there may be several
copyright owners in the internet setting. Content maybe owned by the author, the
website control the access, etc.

Q. What is the significance of the E-Commerce Act on copyright infringement?

A. The ISP is made liable under the ECA during instances where it allows for the
hosting of websites which carries or is the source of infringing materials. So you can
go after the website owner and the ISP and the source of their liability would be the
violation of the ECA.

Q. When is it possible to use digital works (found over the internet) without
infringement?

A. 1. Implied license – when the website where the material is found contains no
restrictions on copying

2. Fair use

3. Information posted is part of public domain or is not copyrightable

Q. What is contributory infringement?

A. It is when you allow others to make copies. There is no specific provision for
contributory infringement in the IP Code. But you can still bring a case for this under
a criminal action, making the person who allowed the making of copies an accessory
or accomplice. It may not be possible to file a civil case. Note however that SB 1740
provides for contributory infringement.

MAI SYSTEMS CORP. v. PEAK COMPUTER, INC., 991 F.2d 511 (9th Cir. 1993)

MAI Systems Corp., until recently, manufactured computers and designed software
to run those computers. The company continues to service its computers and the
32 | P a g e
software necessary to operate the computers. MAI software includes operating
system software, which is necessary to run any other program on the computer.
Peak Computer, Inc. is a company organized in 1990 that maintains computer
systems for its clients. Peak maintains MAI computers for more than one hundred
clients in Southern California. This accounts for between fifty and seventy percent
of Peak's business. Peak's service of MAI computers includes routine maintenance
and emergency repairs. Malfunctions often are related to the failure of circuit
boards inside the computers, and it may be necessary for a Peak technician to
operate the computer and its operating system software in order to service the
machine.

In August, 1991, Eric Francis left his job as customer service manager at MAI and
joined Peak. Three other MAI employees joined Peak a short time later. Some
businesses that had been using MAI to service their computers switched to Peak
after learning of Francis's move. On March 17, 1992, MAI filed suit in the district
court against Peak, Peak's president Vincent Chiechi, and Francis. The complaint
includes counts alleging copyright infringement, misappropriation of trade secrets,
trademark infringement, false advertising, and unfair competition. The district
court granted summary judgment in favor of MAI on its claims of copyright
infringement and issued a permanent injunction against Peak on these claims. The
alleged copyright violations include: (1) Peak's running of MAI software licensed to
Peak customers; (2) Peak's use of unlicensed software at its headquarters; and, (3)
Peak's loaning of MAI computers and software to its customers. Each of these
alleged violations must be considered separately.

Held: To prevail on a claim of copyright infringement, a plaintiff must prove

ownership of a copyright and a "`copying' of protectable expression" beyond the
scope of a license. MAI software licenses allow MAI customers to use the software
for their own internal information processing.[n3] This allowed use necessarily
includes the loading of the software into the computer's random access memory
("RAM") by a MAI customer. However, MAI software licenses do not allow for the
use or copying of MAI software by third parties such as Peak. Therefore, any
"copying" done by Peak is "beyond the scope" of the license.

It is not disputed that MAI owns the copyright to the software at issue here,
however, Peak vigorously disputes the district court's conclusion that a "copying"
occurred under the Copyright Act. The Copyright Act then explains, “A work is
"fixed" in a tangible medium of expression when its embodiment in a copy or
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phonorecord, by or under the authority of the author, is sufficiently permanent or
stable to permit it to be perceived, reproduced, or otherwise communicated for a
period of more than transitory duration.”

The district court's grant of summary judgment on MAI's claims of copyright

infringement reflects its conclusion that a "copying" for purposes of copyright law
occurs when a computer program is transferred from a permanent storage device
to a computer's RAM. This conclusion is consistent with its finding, in granting the
preliminary injunction, that: "the loading of copyrighted computer software from a
storage medium (hard disk, floppy disk, or read only memory) into the memory of a
central processing unit ("CPU") causes a copy to be made. In the absence of
ownership of the copyright or express permission by license, such acts constitute
copyright infringement." We find that this conclusion is supported by the record and
by the law.

Peak concedes that in maintaining its customer's computers, it uses MAI operating
software "to the extent that the repair and maintenance process necessarily
involves turning on the computer to make sure it is functional and thereby running
the operating system." It is also uncontroverted that when the computer is turned
on the operating system is loaded into the computer's RAM. As part of diagnosing a
computer problem at the customer site, the Peak technician runs the computer's
operating system software, allowing the technician to view the systems error log,
which is part of the operating system, thereby enabling the technician to diagnose
the problem. Peak argues that this loading of copyrighted software does not
constitute a copyright violation because the "copy" created in RAM is not "fixed."
However, by showing that Peak loads the software into the RAM and is then able to
view the system error log and diagnose the problem with the computer. MAI has
adequately shown that the representation created in the RAM is "sufficiently
permanent or stable to permit it to be perceived, reproduced, or otherwise
communicated for a period of more than transitory duration.

The law also supports the conclusion that Peak's loading of copyrighted software
into RAM creates a "copy" of that software in violation of the Copyright Act.

Q. What is the Berne Convention?

A. The Berne Convention for the protection of literary and artistic works is the Paris
Act of July 24, 1971.
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Q. What are the pertinent provisions on 1) national treatment, 2) principle of
automatic protection and 3) principle of independence of protection?

A.

1. National Treatment

(1)Authors shall enjoy, in respect of works for which they are protected under this
convention, in countries of the Union other than the country of origin, the rights
which their respective laws do now or may hereafter grant to their nationals, as
well as the rights specially granted by this Convention.

2. Principle of automatic protection

(2)The enjoyment and the exercise of these rights shall not be subject to any
formality; such enjoyment and such exercise shall be independent of the
existence of protection in the country of origin of the work. Consequently, apart
from the provisions of this convention, the extent of protection, as well as the
means of redress afforded to the author to protect his rights, shall be governed
exclusively by the laws of the country where protection is claimed.

3. Principle of Independence of Protection.

(3)Protection in the country of origin is governed by domestic law. However, when

the author is not a national of the country of origin of the work for which is
protected under this Convention, he shall enjoy in that country the same rights
as national authors.

Q. What is the TRIPS Agreement?

A. The TRIPS is the agreement on the trade related aspects of rights, including trade
in counterfeit goods.

Q. What are the pertinent provisions of the TRIPS concerning 1) National Treatment,
and 2) Most Favored Nation Principle?

A. They are:

1. National Treatment:

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 1. Each Member shall accord to the nationals of other Members treatment no
less favourable than that it accords to its own nationals with regard to the
protection (3) of intellectual property, subject to the exceptions already
provided in, respectively, the Paris Convention (1967), the Berne
Convention (1971), the Rome Convention or the Treaty on Intellectual
Property in Respect of Integrated Circuits. In respect of performers,
producers of phonograms and broadcasting organizations, this obligation
only applies in respect of the rights provided under this Agreement. Any
Member availing itself of the possibilities provided in Article 6 of the Berne
Convention (1971) or paragraph 1(b) of Article 16 of the Rome Convention
shall make a notification as foreseen in those provisions to the Council for
TRIPS.

2. Members may avail themselves of the exceptions permitted under

paragraph 1 in relation to judicial and administrative procedures, including
the designation of an address for service or the appointment of an agent
within the jurisdiction of a Member, only where such exceptions are
necessary to secure compliance with laws and regulations which are not
inconsistent with the provisions of this Agreement and where such
practices are not applied in a manner which would constitute a disguised
restriction on trade.

2. Most Favored Nation Treatment

With regard to the protection of intellectual property, any advantage, favour,

privilege or immunity granted by a Member to the nationals of any other country
shall be accorded immediately and unconditionally to the nationals of all other
Members. Exempted from this obligation are any advantage, favour, privilege or
immunity accorded by a Member:

(a) deriving from international agreements on judicial assistance or law

enforcement of a general nature and not particularly confined to the protection of
intellectual property;

(b) granted in accordance with the provisions of the Berne Convention (1971) or the
Rome Convention authorizing that the treatment accorded be a function not of
national treatment but of the treatment accorded in another country;

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(c) in respect of the rights of performers, producers of phonograms and
broadcasting organizations not provided under this Agreement;

(d) deriving from international agreements related to the protection of intellectual

property which entered into force prior to the entry into force of the WTO
Agreement, provided that such agreements are notified to the Council for TRIPS and
do not constitute an arbitrary or unjustifiable discrimination against nationals of
other Members.

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