Harmonizing rights of musicians, entrepreneurs

As we flocked to the malls during the holidays, we were once again exposed to familiar songs that warm our Christmas-loving hearts. From Jose Mari Chan’s “Christmas in our Hearts,” to Mariah Carey’s “All I Want for Christmas Is You,” the stores came prepared with their holiday playlists to welcome Christmas shoppers. This practice of playing songs to attract visitors is nothing new. After all, studies have shown that listening to certain songs could affect purchasing behavior. A recent ruling by the Supreme Court, however, could force entrepreneurs to be more mindful of what is playing inside their stores.

The Intellectual Property Code (IP Code) treats a musical composition as an original intellectual creation that is protected by copyright from the moment of creation. To illustrate, a copyright holder, such as a song composer, holds exclusive rights to public performances of her composition. Therefore, anyone who wishes to play her copyrighted song in public must secure a license or pay royalties to do so. Failure to do this may result in a finding of infringement which could entail imprisonment for one to three years, and payment of a fine ranging from P50,000 to P150,000 for the first offense alone. The exception to this is when the performance is covered by what is referred to as the fair use exception—that is, performance is made only for research, teaching, criticism, and the like.

Playing a song for profit, however, removes the act from the ambit of fair use. For example, the Supreme Court once ruled that a restaurant that hires a band to play copyrighted music is engaging in an act of public performance for profit and is liable to pay royalties since music, in this case, induces the public to patronize the restaurant. In the more recent case of Filscap v. Anrey, the Court gives an even broader interpretation of the term “performance” under the IP Code. It ruled that the act of playing radio broadcasts that contain copyrighted music using loudspeakers is in itself a performance, for which an establishment is liable to pay fees.

In said case, The Filipino Society of Composers, Authors and Publishers, Inc., also known as Filscap, a nonprofit society of composers, authors, and publishers that owns public performance rights over the copyrighted musical works of its members, filed a copyright infringement case against Anrey, an owner of restaurants who allegedly played copyrighted music owned by Filscap without the latter’s consent. One of Anrey’s defenses was that its establishments only played whatever was being broadcasted on the radio station upon which they were tuned in, and that it was exempt from securing a license since the station that broadcasted the copyrighted music already secured one from Filscap. The Court did not agree. It ruled that Anrey was still liable to pay fees. It did not matter that the radio station itself already paid Filscap for the songs. Presumably, neither did it matter that the store owner was unable to handpick the songs that the radio station played.

The decision appears to be an outright win for copyright holders in the music industry. This development made it clear that they could gain earnings not only from a radio station that plays their songs, but also from an establishment that plays their songs from the same radio station. Solo artist Daniel Paringit echoes this sentiment. He believes that the decision is one that would benefit artists in the music industry. To him, it is vital for artists to gain a better understanding of the business side of music. For some creators, however, the effects of the decision are not as clear-cut. Composer Len Calvo shares that although she is all for paying artists for their work, she also feels that the decision could lead to less exposure for artists who may need it. She feels that the recent ruling could discourage entrepreneurs from playing songs altogether, thereby reducing the airtime for up-and-coming artists.

The decision also has a huge effect on entrepreneurs, particularly restaurant owners—a sector that often uses songs as background music for customers. A restaurant owner in Quezon City laments the decision, saying that it only imposes even more burdens on business owners who, as is, already find it difficult to comply with countless government requirements.

As with many landmark decisions, the recent ruling comes with pros and cons. On the one hand, it accords due respect to talented artists whose works have become increasingly susceptible to infringement in recent years with the rise of online streaming. This decision could reverse the trend of inaction toward our artists’ woes.

On the other hand, the decision also exposes an increased number of stakeholders to liability—potentially, even those who do not stand to profit from playing unlicensed music. It bears noting that the IP Code provides for potential criminal sanctions not only to the principal in a copyright infringement case, but also to one who aids and abets such infringement. Bearing this in mind, what do we make of the liability of the friendly receptionist who directs the TV to a music channel to distract anxious patients who are awaiting their turn for a medical checkup? How about the jeepney driver, who, during his long shift, finds comfort in listening to his favorite songs on the radio?

The Supreme Court, itself, appears to have acknowledged this dilemma. In a press release on the case of Filscap v. Anrey, the Court stated that the full decision, which has yet to be released as of writing, hints at possible amendments to the IP Code. The decision also notes that the very broad definition of a public performance is a cause for concern, since by mere definition of what a public performance is, listeners of a radio station, to some extent, risks committing copyright infringement.

As we wait for amendments to our IP laws, should we take the recent developments to mean that entrepreneurs must always pay licensing fees to play music in their establishments? Not necessarily. It is important to note that not all songs are protected by copyright. The Supreme Court has held that there can be no copyright infringement where the song played already belongs to the public domain. In the Philippines, copyright protection over a work generally extends until 50 years after the author’s death. Once this period expires, copyright protection also ceases, and the song moves to the public domain. This means that the song can be played in public for free.

So, if you are an entrepreneur and you wish to play music for your customers, take a minute before pressing that play button. Make sure to ask yourself if you secured the necessary license. If not, it would be wise to choose a song that is already part of the public domain. Better yet, why not strike a deal with your favorite local musicians, and support their lovely music?

Mario C. Cerilles, Jr. is cofounder and managing partner of Cerilles and Fernan Intellectual Property Law. He is also a senior lecturer at the UP College of Law, where he teaches property law.