The Supreme Court of the Philippines ruled that a restaurant playing copyrighted music via a radio broadcast for its customers without a license infringes on the copyright holder’s right to communicate the work to the public. This decision clarifies that businesses cannot freely use copyrighted music to enhance their commercial environment without compensating artists and copyright holders. It underscores the importance of obtaining proper licenses for public performances, safeguarding the creative industry’s economic rights while setting a precedent for balancing commercial interests with artistic property rights.

Sounding Off: When Restaurant Radio Becomes Copyright Infringement

The Filipino Society of Composers, Authors and Publishers, Inc. (FILSCAP), representing music creators, sued Anrey, Inc., which operates Sizzling Plate restaurants in Baguio City, for playing copyrighted music via radio broadcasts without a license. The Regional Trial Court (RTC) and Court of Appeals (CA) initially sided with Anrey, citing exemptions for non-profit entities and small businesses. However, the Supreme Court reversed these decisions, finding Anrey liable for copyright infringement.

At the heart of the matter was the interpretation of copyright law, specifically whether playing radio broadcasts in a commercial setting constitutes a “public performance” or “communication to the public.” The IP Code protects the economic rights of copyright owners, including the right to control how their work is publicly performed or communicated.

The Supreme Court clarified that even if a radio station has a license to broadcast music, a separate act of ‘communication to the public’ occurs when a business plays that broadcast through loudspeakers, creating a ‘new public’ audience. This act falls under Section 177.7 of the IP Code, requiring a separate license from the copyright holder.

To arrive at its decision, the court examined the nature of Anrey’s business, its commercial purpose, and the extent to which it used FILSCAP’s copyrighted material. This analysis led the Court to assert that Anrey was exploiting intellectual property to improve the dining experience and draw in clientele thereby necessitating compensation.

The Court discussed that the social function of property, including intellectual property, is not absolute and must be balanced with the rights of copyright owners. The decision underscored the purpose of copyright law: to incentivize creative work while securing the public benefit from such creations. The Court explicitly rejected any suggestion that extending copyright exemptions would befit both the right holders’ market and the economy by creating multiple license payers.

Anrey’s defense relied heavily on the argument that since the radio station had already paid royalties, FILSCAP would be unjustly enriched by collecting twice for the same music. In its decision, the Court clarified that broadcasting a work created a new public performance which, in turn, gives rise to a new claim of copyright infringement.

Despite finding Anrey guilty of infringement, the Court awarded temperate damages of P10,000 and attorney’s fees of P50,000, plus interest, to FILSCAP. This decision highlights the importance of businesses securing appropriate licenses for playing copyrighted music, even through seemingly passive means like radio broadcasts.

The Court also addressed whether Anrey’s actions constituted fair use, ultimately concluding that they did not. The decision to set aside an overly simplistic balance between the right of creators and the common good was made in the interest of protecting composers and artists to produce works with assurance of their protection under the IPC. As a result, the IP Code was implemented to avoid violating State’s commitments under both the Berne Convention and the TRIPS Agreement.

Ultimately, this ruling strengthens the enforcement of copyright laws in the Philippines and sends a clear signal to businesses about the need to respect intellectual property rights. It serves as a reminder that music, even when accessed via public broadcasts, holds commercial value and deserves to be compensated accordingly. This landmark decision thus impacts not only restaurants but any establishment using copyrighted music in a commercial context.

It’s critical to note that the present framework on copyright enables copyright owners to license the public performance or further communication to the public of sound recordings played over the radio as part of their economic rights, unless it is fair use. The Court recognized that while the Berne Convention nor the TRIPS Agreement prohibit States from the introduction of limitations or exceptions on copyright, such limitations or exceptions cannot exceed a de minimis threshold or limitations that are of minimal significance to copyright owners.

To ensure businesses remain compliant with Philippine copyright law, it is vital for entrepreneurs to secure the necessary licenses from FILSCAP or other relevant collecting societies. Moreover, the State is put on notice that the balance between the rights of artists and the access of the public must be carefully managed in order to not cause undue harm to either. In addition, local artists and composers have been assured that their works have economic value and that their work must be respected and compensated for, while protecting the public’s use of copyrighted material under specified parameters.

FAQs

What was the central legal question?	Does playing radio broadcasts as background music in a restaurant, without a license, constitute copyright infringement?
Who is FILSCAP?	The Filipino Society of Composers, Authors and Publishers, Inc., a non-profit organization that owns public performance rights for its members’ copyrighted music.
What did Anrey, Inc. do?	Anrey played radio broadcasts, which included copyrighted music, as background music in their Sizzling Plate restaurants in Baguio City.
What does the court say about broadcasting?	While the original broadcasting station may have a license, the Supreme Court said its transmission can create multiple performances. Anrey was found to have engaged in another public performance by playing the radio in the restaurant.
What are the economic rights provided in the IP Code?	Economic rights inlude the exclusive right to reproduction, dramatization, public distribution, rental, public display, public performance, and other communication to the public of the work.
What did the lower courts rule?	The Regional Trial Court dismissed the complaint, citing an exemption for non-profit institutions. The Court of Appeals affirmed, applying a U.S. law exemption for small businesses.
What are some limitations on copyright?	Some limitations on the economic rights of artists include the use of a work for teaching, for judicial proceedings, or other limitations prescribed by law.
What is fair use?	Fair use is a doctrine that allows limited use of copyrighted material without permission from the copyright holder for purposes such as criticism, comment, news reporting, teaching, scholarship, and research.
Why didn’t the fair use doctrine apply here?	The restaurants’ use was commercial, the music was played in its entirety, and it impacted the potential market for the copyrighted songs.

The Supreme Court’s decision reaffirms the value of intellectual property in the Philippines, especially in the music industry, while setting an appropriate balance between competing interests. By securing proper licenses, businesses contribute to the economic well-being of artists and foster a thriving creative environment. In turn, a clear message has been delivered that Philippine businesses operating in public spaces that benefit from radio-played and publicly amplified music shall ensure to respect the rights of the composers behind their entertainment.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: FILSCAP vs. Anrey, Inc., G.R. No. 233918, August 09, 2022