In cases of copyright infringement, the priority of the copyright owner or holder is to pursue the individual or entity directly engaged in the infringing activity. However, infringement often occurs on a broader scale, and it becomes imperative for copyright holders to not only address direct infringers but also to hold accountable those who indirectly participate in or who enable the infringement, to fully safeguard their rights.
In the case of COSAC Inc v FILSCAP (28 February 2023), the Supreme Court explained that sections 216 and 216.1 of the Intellectual Property Code (RA No.8392), as amended by RA No.10372, contemplate two kinds of copyright infringers, specifically: (1) primary infringers, or those who directly commit the infringing acts; and (2) secondary infringers, or those who induce, materially contribute to or benefit from an infringing act of another.
In 2006, the Filipino Society of Composers, Authors and Publishers (FILSCAP) filed a complaint for copyright infringement and damages against COSAC Inc, alleging the unauthorised public performance of copyrighted songs through live band performances at its Off the Grill restaurant in Quezon City.
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Section 216 of RA No.10372 provides that a person commits copyright infringement when he or she: (1) directly commits an infringement; (2) with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another; or (3) benefits from the infringing activity of another person who commits an infringement if the person benefiting has been given notice of the infringing activity and has the right and ability to control the activities of the other person.
COSAC argued that it was not liable for copyright infringement as it had no knowledge about what the band members would sing as part of their performance.
The court explained that, since RA NO.10372 was enacted in 2013, or after COSAC committed the infringing acts, the original provisions of RA No.8293 are controlling in this case. Nonetheless, the court stated that the phrase “any person infringing a right protected under this law shall be liable” may be interpreted to be broad enough to include all those who had a part in the infringing activity, whether directly or indirectly, and that the RA No.10372 amendments should be considered as a mere refinement of the phraseology of the coverage of copyright infringement.
COSAC Inc v FILSCAP states that the above-mentioned view finds support in copyright law and jurisprudence in the US, which are persuasive in the Philippines because Philippine copyright laws originated from the US system. The US Copyright Act of 1976, codified as title 17 of the US Code, similarly to sections 216 and 216.1 of the Philippine Intellectual Property Code, does not specify particular categories of infringers but broadly holds liable “anyone who violates” a copyright holder’s rights.
The US case law sub-classifies secondary liability in copyright infringement as: (1) inducement theory; (2) contributory infringement; and (3) vicarious infringement.
Under the inducement theory, a person (indirect infringer) encourages or persuades another to engage in an act of infringement. On the other hand, contributory infringement happens when a person, aware of the infringing activity, induces, causes or materially contributes to the infringing act of another.
In vicarious infringement, the infringer possesses the right and ability to supervise the infringing act, and must derive an obvious and direct financial benefit from the unauthorised use of the copyrighted material. Whether or not the defendant had knowledge of the infringement is irrelevant in the determination of liability.
In COSAC Inc v FILSCAP, the Supreme Court held that COSAC was both a direct (primary) and indirect (secondary) infringer. It played sound recordings as background music without first procuring the necessary licence from the copyright holders (direct infringer) and, as the owner of the restaurant, it allowed the commission of infringing acts when it permitted the bands to perform copyrighted music (indirect infringer). COSAC was vicariously liable as it unjustly enriched itself and increased its profits without the required licences.
With the ease of content sharing through social media and e-commerce platforms, compounded by the emergence of generative AI capable of producing literary, artistic and musical works, the risks of copyright infringement – both direct and indirect – have intensified. Copyright holders and the consuming public must understand the relevant provisions of the law, such as the forms of liability that may arise.
Ernest Luigi A Manzanares is an associate at Federis & Associates Law Offices
FEDERIS & ASSOCIATES LAW OFFICESSuites 2002 to 2006
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