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NBI, Microsoft Corporation vs Hwang


on February 12, 2012

Intellectual Property Law on Copyright Copyright Infringement


In May 1993, Microsoft and Beltron Computer Philippines, Inc. entered into a Licensing Agreement. Under Section 2(a) of the Agreement Microsoft authorized Beltron, for a fee, to: 1. 2. Reproduce and install no more than one copy of Windows on each Customer System hard disk; Distribute directly or indirectly and license copies of Windows (reproduced as per Section 2 of the Agreement and/or acquired from an Authorized Replicator or Authorized Distributor. Their agreement allowed either party to terminate if one fails to comply with their respective obligations. Microsoft terminated the Agreement in June 1995 by reason of Beltrons non -payment of royalties. Later, Microsoft learned that Beltron was illegally copying and selling copies of Windows. Microsoft then sought the assistance of the National Bureau of Investigation. NBI agents made some purchase from Beltron where they acquired a computer unit pre-installed with Windows, 12 windows installer CDs packed as Microsoft products. The agents were not given the end-user license agreements, user manuals, and certificates of authenticity for the products purchased. They were given a receipt which has a header of T.M.T.C. (Phils) Inc. BELTRON COMPUTER. TMTC stands for Taiwan Machinery Display and Trade Center. A search warrant was subsequently issued where 2,831 CDs of Windows installers, among others, were seized. Based on the items seized from Beltron, Microsoft filed a case of copyright infringement against Beltron and TMTC as well as their officers (Hwang et al) before the Department of Justice (DOJ). Beltron, in its counter-affidavit, argued the following: 1. That Microsofts issue with Beltron was really just to have leverage in forcing Beltron to pay the unpaid royalties; and that Microsoft should have filed a collection suit. 2. That the computer unit allegedly purchased by the NBI agents from them cannot be decisively traced as coming from Beltron because the receipt issued to the agents did not list the computer unit as one of the items bought. 3. That the 12 installers purchased by the agents which are actually listed in the receipt were not manufactured by Beltron but rather they were genuine copies purchased by TMTC from an authorized Microsoft seller in Singapore. 4. That the 2,831 installers seized from them were not a property of Beltron but rather they were left to them by someone for safekeeping.

The DOJ secretary agreed with Beltron and dismissed the case. The Secretary ruled that the issue of the authority of Beltron to copy and sell Microsoft products should first be resolved in a civil suit. Microsoft appealed the decision of the DOJ secretary before the Supreme Court. Meanwhile, Beltron filed a motion to quash the search warrant before the RTC that issued the same. The RTC partially granted the quashal. The Court of Appeals reversed the RTC. Hwang et al did not appeal the CA decision. ISSUE: Whether or not the DOJ Secretary is correct. HELD: No. Section 5 of Presidential Decree 49 enumerates the rights vested exclusively on the copyright owner. Contrary to the DOJs ruling, the gravamen of copyright infringement is not merely the unauthorized manufacturing of intellectual works but rather the unauthorized performance of any of the acts covered by Section 5. Hence, any person who performs any of the acts under Section 5 without obtaining the copyright owners prior consent renders himself civilly and criminally liable for copyri ght infringement. 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 which is conferred by statute on the owner of the copyright. Being the copyright and trademark owner of Microsoft software, Microsoft acted well within its rights in filing the complaint before DOJ on the incriminating evidence obtained from Beltron. Hence, it was highly irregular for the DOJ to hold that Microsoft sought the issuance of the search warrants and the filing of the complaint merely to pressure Beltron to pay its overdue royalties to Microsoft. There is no basis for the DOJ to rule that Microsoft must await a prior resolution from the proper court of whether or not the Agreement is still binding between the parties. Beltron has not filed any suit to question Microsofts termination of the Agreement. Microsoft can neither be expected nor compelled to wait until Beltron decides to sue before Microsoft can seek remedies for violation of its intellectual property rights. Furthermore, the articles seized from Beltron are counterfeit per se because Microsoft does not (and could not have authorized anyone to) produce such CD installers The copying of the genuine Microsoft software to produce these fake CDs and their distribution are illegal even if the copier or distributor is a Microsoft licensee. As far as these installer CD-ROMs are concerned, the Agreement (and the alleged question on the validity of its termination) is immaterial to the determination of Beltrons liability for

copyright infringement and unfair competition. Beltrons defense that the box of CD installers found in their possession was only left to them for safekeeping is not tenable.

NBI-Microsoft Corporation & Lotus Development Corporation v. Judy C. Hwang, Benito Keh & Yvonne K. Chua/Beltron Computer Philippines Inc., Jonathan K. Chua, Emily K. Chua, Benito T. Sanchez, Nancy I. Velasco, Alfonso Chua, Alberto Chua, Sophia Ong, Deanna Chua/Taiwan Machinery Display & Trade Center, Inc., and The Secretary of Justice (G.R. No. 147043, 21 June 2005) Microsoft Corp. and Beltron Computer Phils., Inc. entered into a Licensing Agreement where Beltron was authorized to reproduce and install no more than one copy of Microsoft software on each customer system hard disk. Microsoft Corp. terminated the agreement for non-payment of royalties. Upon learning that Beltron was illegally copying and selling Microsoft software, Microsoft Corp. secured search warrants leading to the search of Beltrons premises which resulted in the seizure of counterfeit Microsoft software. Microsoft filed a complaint for copyright infringement and unfair competition with the Department of Justice. The DOJ dismissed the complaint on the ground that Beltron had no intent to defraud the public as the software products seized came from an alleged Microsoft licensee in Singapore, and that it did not manufacture the seized software products.

The Supreme Court ruled in favor of Microsoft Corp. and held that copyright infringement under the Presidential decree 49 (the Old Copyright Law) is not confined to the unauthorized manufacturing of intellectual works but covers the unauthorized performance of any of the acts covered by Section 05 of the said Law (i.e., copying, distributing, multiplying and selling), which acts were done by Beltron to the prejudice and damage of Microsoft Corp. Moreover, the Supreme Court held that the counterfeit cd-roms bought from Beltron suffice to support a finding of probable cause for unfair competition under Article 189 (1) of the Revised Penal Code (now repealed by the IP Code) considering that the packaging of these products could not be distinguished from those of authentic Microsoft software. Such replication, together with the similarity in the content of the counterfeit cd-roms, implies an intent to deceive the public.

8. JOAQUIN V. DRILON
Facts: BJ Productions, Inc (BJPI) is a holder of a Certificate of Copyright no. M922 issued on January 28, 1971 of Rhoda and Me which is a dating show aired from 1970 to 1977. It submitted to the National Library an addendum its certificate of copyright specifying the shows format and style of presentation. While watching the television, its President, Francisco Joaquin saw on RPN Channel 9 the episode on Its a Date pr oduced by IXL Productions. He wrote a letter to IXLs president Gabriel Zosa informing him that BJPI has a copyright of the same format as shown on their Its a Date show in their Rhoda and Me show. Zosa sought to register IXLs copyright to theirfirst episode of Its a Date to the National Library. Petitioner filed a complaint in violation of PD No. 49 against the respondent before the RTC of Quezon City. Respondent sought a review of the resolution from the Asst. City Prosecutor before the Department of Justice. Sec. of Justice Franklin Drilon directed to move for dismissal of the case against the respondents and denied the petitioners motion for reconsideration hence this petition before the Supreme Court. Issue: Whether or not the format or mechanics of the petitioners television show is entitled to a copyright protection. Ruling: The Supreme Court held that the format of a show is not copyrightable as provided by Section 2 of PD no. 49 otherwise known as the Decree on Intellectual Property which enumerates the classes of work that are covered by the copyright protection. Similarly, RA 8293, the Intellectual Property Code of the Philippines provides that format or mechanics of a television show is not included in the list of the protected work by the copyright law of the Philippines. PD 49 enumerates the works subject to copyright protection which refers to finished works and not on concepts. It does not extend to an idea, procedure, process, system, method or operation, concept, principles or discovery regardless of the form to which it is described, explained, and illustrated or embodied in the work.

Joaquin vs Drilon
on February 9, 2012

Intellectual Property Law on Copyright Game Show Ideas and Concepts Not Covered by Copyright
BJ Productions Inc. (BJPI) was the holder of copyright over the show Rhoda and Me. It holds rights over the shows format and style of presentation. In 1991, BJPIs president Francisco Joaquin saw on TV RPN 9s show Its a Date, which is basically the same as Rhoda and Me. He eventually sued Gabriel Zosa, the manager of the show Its a Date. Zosa later sought a review of the prosecutors resolution before the Secretary of Justice (Drilon). Drilon reversed the findings of the fiscal and directed him to dismiss the case against Zosa. ISSUE: Whether or not the decision of Drilon is valid. HELD: Yes. The essence of copyright infringement is the copying, in whole or in part, of copyrightable materials as defined and enumerated in Section 2 of PD. No. 49 (Copyright Law). Apart from the manner in which it is actually expressed, however, the idea of a dating game show is a non-copyrightable material. Ideas, concepts, formats, or schemes in their abstract form clearly do not fall within the class of

works or materials susceptible of copyright registration as provided in PD. No. 49. What is covered by BJPIs copyright is the specific episodes of the show Rhoda and Me. Further, BJPI should have presented the master videotape of the show in order to show the linkage between the copyright show (Rhoda and Me) and the infringing show (Its a Date). This is based on the ruling in 20th Century Fox vs CA (though this has been qualified by Columbia Pictures vs CA, this is still good law). Though BJPI did provide a lot of written evidence and description to show the linkage between the shows, the same were not enough. 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.