G.R. No.

108946 January 28, 1999 practically an exact copy of complainant's "RHODA AND ME" because of substantial similarities as
FRANCISCO G. JOAQUIN, JR., and BJ PRODUCTIONS, INC., petitioners, follows, to wit:
vs.
HONORABLE FRANKLIN DRILON, GABRIEL ZOSA, WILLIAM ESPOSO, FELIPE MEDINA, JR., and CASEY RHODA AND ME "IT'S A DATE"
FRANCISCO, respondents. a. Unmarried participant of one gender (searcher) appears on one same
MENDOZA, J.: side of a divider, while three (3) unmarried participants of the other
Petitioner BJ Productions, Inc. (BJPI) is the holder/grantee of Certificate of Copyright No. M922, gender are on the other side of the divider. This arrangement is done
dated January 28, 1971, of Rhoda and Me, a dating game show aired from 1970 to 1977. On June 28, 1973, to ensure that the searcher does not see the searchees.
petitioner BJPI submitted to the National Library an addendum to its certificate of copyright specifying the b. Searcher asks a question to be answered by each of the searchees. same
show's format and style of presentation. The purpose is to determine who among the searchees is the most
On July 14, 1991, while watching television, petitioner Francisco Joaquin, Jr., president of BJPI, saw compatible with the searcher.
on RPN Channel 9 an episode of It's a Date, which was produced by IXL Productions, Inc. (IXL). On July 18, c. Searcher speculates on the match to the searchee. same
1991, he wrote a letter to private respondent Gabriel M. Zosa, president and general manager of IXL,
informing Zosa that BJPI had a copyright to Rhoda and Me and demanding that IXL discontinue airing It's a d. Selection is made by the use of compute (sic) methods, or by the Selection is based on
Date. way questions are answered, or similar methods. the answer of the
In a letter, dated July 19, 1991, private respondent Zosa apologized to petitioner Joaquin and Searchees.
requested a meeting to discuss a possible settlement. IXL, however, continued airing It's a Date, prompting
petitioner Joaquin to send a second letter on July 25, 1991 in which he reiterated his demand and warned that,
if IXL did not comply, he would endorse the matter to his attorneys for proper legal action.
Petitioners assert that the format of Rhoda and Me is a product of ingenuity and skill and is thus entitled to
Meanwhile, private respondent Zosa sought to register IXL's copyright to the first episode of It's a
copyright protection. It is their position that the presentation of a point-by-point comparison of the formats of
Date for which it was issued by the National Library a certificate of copyright August 14, 1991.
the two shows clearly demonstrates the nexus between the shows and hence establishes the existence of
Upon complaint of petitioners, an information for violation of P.D. No. 49 was filed against private
probable cause for copyright infringement. Such being the case, they did not have to produce the master tape.
respondent Zosa together with certain officers of RPN Channel 9, namely, William Esposo, Felipe Medina, and
To begin with the format of a show is not copyrightable. Section 2 of P.D. No. 49, otherwise known
Casey Francisco, in the RTC. However, private respondent Zosa sought a review of the resolution of the Assistant
as the DECREE ON INTELLECTUAL PROPERTY, enumerates the classes of work entitled to copyright protection,
City Prosecutor before the Department of Justice. On August 12, 1992, respondent Secretary of Justice Franklin
to wit:
M. Drilon reversed the Assistant City Prosecutor's findings and directed him to move for the dismissal of the
Sec. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to
case against private respondents. Hence, this petition.
any of the following classes of works:
a. Books, including composite and cyclopedic works, manuscripts, directories, and gazetteers:
ISSUE
b. Periodicals, including pamphlets and newspapers;
Is the format or mechanics of a show entitled to copyright protection?
c. Lectures, sermons, addresses, dissertations prepared for oral delivery;
d. Letters;
RULING
e. Dramatic or dramatico-musical compositions; choreographic works and entertainments in dumb
The essence of a copyright infringement is the similarity or at least substantial similarity of the
shows, the acting form of which is fixed in writing or otherwise;
purported pirated works to the copyrighted work. Hence, the applicant must present to the court the
f. Musical compositions, with or without words;
copyrighted films to compare them with the purchased evidence of the video tapes allegedly pirated to
g. Works of drawing, painting, architecture, sculpture, engraving, lithography, and other works of
determine whether the latter is an unauthorized reproduction of the former. This linkage of the copyrighted
art; models or designs for works of art;
films to the pirated films must be established to satisfy the requirements of probable cause. Mere allegations as
h. Reproductions of a work of art;
to the existence of the copyrighted films cannot serve as basis for the issuance of a search warrant.
i. Original ornamental designs or models for articles of manufacture, whether or not patentable,
In the case at bar during the preliminary investigation, petitioners and private respondents presented
and other works of applied art;
written descriptions of the formats of their respective televisions shows, on the basis of which the investigating
j. Maps, plans, sketches, and charts;
prosecutor ruled:
k. Drawings or plastic works of a scientific or technical character;
As may [be] gleaned from the evidence on record, the substance of the television productions
l. Photographic works and works produced by a process analogous to photography lantern slides;
complainant's "RHODA AND ME" and Zosa's "IT'S A DATE" is that two matches are made between a
m. Cinematographic works and works produced by a process analogous to cinematography or any
male and a female, both single, and the two couples are treated to a night or two of dining and/or
process for making audio-visual recordings;
dancing at the expense of the show. The major concepts of both shows is the same. Any difference
n. Computer programs;
appear mere variations of the major concepts.
o. Prints, pictorial illustrations advertising copies, labels tags, and box wraps;
That there is an infringement on the copyright of the show "RHODA AND ME" both in content and in
the execution of the video presentation are established because respondent's "IT'S A DATE" is
 p. Dramatizations, translations, adaptations, abridgements, arrangements and other alterations of
literary, musical or artistic works or of works of the Philippine government as herein defined,
which shall be protected as provided in Section 8 of this Decree.
q. Collections of literary, scholarly, or artistic works or of works referred to in Section 9 of this
Decree which by reason of the selection and arrangement of their contents constitute intellectual
creations, the same to be protected as such in accordance with Section 8 of this Decree.
r. Other literary, scholarly, scientific and artistic works.
This provision is substantially the same as 172 of the INTELLECTUAL PROPERTY CODE OF PHILIPPINES (R.A. No.
8293). The format or mechanics of a television show is not included in the list of protected works in 2 of P.D.
No. 49. For this reason, the protection afforded by the law cannot be extended to cover them.
Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent right
granted by the statute, and not simply a pre-existing right regulated by the statute. Being a statutory grant, the
rights are 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.
Since . . . copyright in published works is purely a statutory creation, a copyright may be obtained only
for a work falling within the statutory enumeration or description. Regardless of the historical viewpoint, it is
authoritatively settled in the United States that there is no copyright except that which is both created and
secured by act of Congress . . . . .
P.D. No. 49, 2, 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 work. Thus, the new INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES provides:
Sec. 175. Unprotected Subject Matter. Notwithstanding the provisions of Sections 172 and 173, no
protection shall extend, under this law, 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 work; news of the day and other miscellaneous facts having the character of mere
items of press information; or any official text of a legislative, administrative or legal nature, as well
as any official translation thereof.
What then is the subject matter of petitioners' copyright? This Court is of the opinion that petitioner
BJPI's copyright covers audio-visual recordings of each episode of Rhoda and Me, as falling within the class of
works mentioned in P.D. 49, 2(M), to wit:
Cinematographic works and works produced by a process analogous to cinematography or any
process for making audio-visual recordings;
The copyright does not extend to the general concept or format of its dating game show.
Accordingly, by the very nature of the subject of petitioner BJPI's copyright, the investigating prosecutor should
have the opportunity to compare the videotapes of the two shows.
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.
WHEREFORE, the petition is hereby DISMISSED
G.R. No. 148222 August 15, 2003
PEARL & DEAN (PHIL.), INCORPORATED, Petitioner,
vs.
SHOEMART, INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED, Respondents.
CORONA, J.:
Petitioner Pearl & Dean (Phil.) Inc. (P & D)
Private respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI)
FACTS
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of
advertising display units simply referred to as light boxes. These units utilize specially printed posters
sandwiched between plastic sheets and illuminated with back lights. Pearl and Dean was able to secure a
Certificate of Copyright Registration dated January 20, 1981 over these illuminated display units. The
advertising light boxes were marketed under the trademark "Poster Ads". The application for registration of
the trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but
was approved only on September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and
Dean employed the services of Metro Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the
lease and installation of the light boxes in SM City North Edsa. Since SM City North Edsa was under
construction at that time, SMI offered as an alternative, SM Makati and SM Cubao, to which Pearl and Dean
agreed. On September 11, 1985, Pearl and Deans General Manager, Rodolfo Vergara, submitted for signature
the contracts covering SM Cubao and SM Makati to SMIs Advertising Promotions and Publicity Division
Manager, Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On October 4,
1985, Vergara wrote Abano inquiring about the other contract and reminding him that their agreement for
installation of light boxes was not only for its SM Makati branch, but also for SM Cubao. SMI did not bother to
reply.
Instead, in a letter dated January 14, 1986, SMIs house counsel informed Pearl and Dean that it was
rescinding the contract for SM Makati due to non-performance of the terms thereof. In his reply dated
February 17, 1986, Vergara protested the unilateral action of SMI, saying it was without basis. In the same
letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to
fabricate its display units, offered to construct light boxes for Shoemarts chain of stores. SMI approved the
proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial for SMI. After its contract
with Metro Industrial was terminated, SMI engaged the services of EYD Rainbow Advertising Corporation to
make the light boxes. Some 300 units were fabricated in 1991. These were delivered on a staggered basis and
installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed
at SM City and in the fastfood section of SM Cubao. Upon investigation, Pearl and Dean found out that aside
from the two (2) reported SM branches, light boxes similar to those it manufactures were also installed in two
(2) other SM stores. It further discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through
its marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising space in lighted
display units located in SMIs different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and
NEMI enjoining them to cease using the subject light boxes and to remove the same from SMIs
establishments. It also demanded the discontinued use of the trademark "Poster Ads," and the payment to
Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos (P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light
boxes and NEMI took down its advertisements for "Poster Ads" from the lighted display units in SMIs stores.
Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed this instant case for
infringement of trademark and copyright, unfair competition and damages.
In denying the charges hurled against it, SMI maintained that it independently developed its poster
panels using commonly known techniques and available technology, without notice of or reference to Pearl and
Deans copyright. SMI noted that the registration of the mark "Poster Ads" was only for stationeries such as
letterheads, envelopes, and the like. Besides, according to SMI, the word "Poster Ads" is a generic term which
cannot be appropriated as a trademark, and, as such, registration of such mark is invalid. It also stressed that
Pearl and Dean is not entitled to the reliefs prayed for in its complaint since its advertising display units
contained no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause
of action against it and that the suit was purely intended to malign SMIs good name.
The RTC decided in favor of P & D and ruled that SMI was liable for infringement of copyright and
trademark. On appeal, however, the Court of Appeals reversed the trial court.
RULING OF THE CA
Since the light boxes cannot, by any stretch of the imagination, be considered as either prints,
pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly classified as a copyrightable
class "O" work, we have to agree with SMI when it posited that what was copyrighted were the technical
drawings only, and not the light boxes themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings like
plaintiff-appellants will not extend to the actual object. It has so been held under jurisprudence, of
which the leading case is Baker vs. Selden (101 U.S. 841 (1879). In that case, Selden had obtained a
copyright protection for a book entitled "Seldens Condensed Ledger or Bookkeeping Simplified" which
purported to explain a new system of bookkeeping. Included as part of the book were blank forms and
illustrations consisting of ruled lines and headings, specially designed for use in connection with the
system explained in the work. These forms showed the entire operation of a day or a week or a month
on a single page, or on two pages following each other. The defendant Baker then produced forms
which were similar to the forms illustrated in Seldens copyrighted books. The Court held that
exclusivity to the actual forms is not extended by a copyright. The reason was that "to grant a
monopoly in the underlying art when no examination of its novelty has ever been made would be a
surprise and a fraud upon the public; that is the province of letters patent, not of copyright." And that
is precisely the point. No doubt aware that its alleged original design would never pass the rigorous
examination of a patent application, plaintiff-appellant fought to foist a fraudulent monopoly on the
public by conveniently resorting to a copyright registration which merely employs a recordal system
without the benefit of an in-depth examination of novelty.
The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate Court that the
protective mantle of the Trademark Law extends only to the goods used by the first user as specified in the
certificate of registration, following the clear mandate conveyed by Section 20 of Republic Act 166, as amended,
otherwise known as the Trademark Law, which reads:
SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of registration of a
mark or trade-name shall be prima facie evidence of the validity of the registration, the registrants
ownership of the mark or trade-name, and of the registrants exclusive right to use the same in
connection with the goods, business or services specified in the certificate, subject to any conditions
and limitations stated therein." (underscoring supplied)
xxx
The records show that on June 20, 1983, Pearl and Dean applied for the registration of the trademark "Poster
Ads" with the Bureau of Patents, Trademarks, and Technology Transfer. Said trademark was recorded in the
Principal Register on September 12, 1988 under Registration No. 41165 covering the following products:
stationeries such as letterheads, envelopes and calling cards and newsletters.
With this as factual backdrop, we see no legal basis to the finding of liability on the part of the defendants-
appellants for their use of the words "Poster Ads", in the advertising display units in suit. Jurisprudence has
interpreted Section 20 of the Trademark Law as "an implicit permission to a manufacturer to venture into the
production of goods and allow that producer to appropriate the brand name of the senior registrant on goods
other than those stated in the certificate of registration."
While we do not discount the striking similarity between Pearl and Deans registered trademark and
defendants-appellants "Poster Ads" design, as well as the parallel use by which said words were used in the
parties respective advertising copies, we cannot find defendants-appellants liable for infringement of
trademark. "Poster Ads" was registered by Pearl and Dean for specific use in its stationeries, in contrast to
defendants-appellants who used the same words in their advertising display units. Why Pearl and Dean
limited the use of its trademark to stationeries is simply beyond us. But, having already done so, it must stand
by the consequence of the registration which it had caused.
xxx xxx xxx
We are constrained to adopt the view of defendants-appellants that the words "Poster Ads" are a simple
contraction of the generic term poster advertising. In the absence of any convincing proof that "Poster Ads" has
acquired a secondary meaning in this jurisdiction, we find that Pearl and Deans exclusive right to the use of
"Poster Ads" is limited to what is written in its certificate of registration, namely, stationeries. Defendants-
appellants cannot thus be held liable for infringement of the trademark "Poster Ads".
ISSUES
1. if the engineering or technical drawings of an advertising display unit (light box) are granted copyright
protection (copyright certificate of registration) by the National Library, is the light box depicted in
such engineering drawings ipso facto also protected by such copyright?
2. or should the light box be registered separately and protected by a patent issued by the Bureau of
Patents Trademarks and Technology Transfer (now Intellectual Property Office) in addition to the
copyright of the engineering drawings?
3. can the owner of a registered trademark legally prevent others from using such trademark if it is a
mere abbreviation of a term descriptive of his goods, services or business?
RULING
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & Ds complaint was that SMI infringed on its copyright over the light boxes when SMI
had the units manufactured by Metro and EYD Rainbow Advertising for its own account. Obviously, petitioners
position was premised on its belief that its copyright over the engineering drawings extended ipso facto to the
light boxes depicted or illustrated in said drawings. In ruling that there was no copyright infringement, the
Court of Appeals held that the copyright was limited to the drawings alone and not to the light box itself. We
agree with the appellate court.
 First, petitioners application for a copyright certificate clearly stated that it was for a class "O" work
under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the statute then prevailing. Said
Section 2 expressly enumerated the works subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with
respect to any of the following works:
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant,
the rights are limited to what the statute confers. It may be obtained and enjoyed only with respect to the
subjects and by the persons, and on terms and conditions specified in the statute.7 Accordingly, it can cover only
the works falling within the statutory enumeration or description.
P & D secured its copyright under the classification class "O" work. This being so, petitioners
copyright protection extended only to the technical drawings and not to the light box itself because the latter
was not at all in the category of "prints, pictorial illustrations, advertising copies, labels, tags and box wraps."
Stated otherwise, even as we find that P & D indeed owned a valid copyright, the same could have referred only
to the technical drawings within the category of "pictorial illustrations." It could not have possibly stretched out
to include the underlying light box. The strict application of the laws enumeration in Section 2 prevents us from
giving petitioner even a little leeway, that is, even if its copyright certificate was entitled "Advertising Display
Units." What the law does not include, it excludes, and for the good reason: the light box was not a literary or
artistic piece which could be copyrighted under the copyright law. And no less clearly, neither could the lack of
statutory authority to make the light box copyrightable be remedied by the simplistic act of entitling the
copyright certificate issued by the National Library as "Advertising Display Units."
In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale to the public without license
from P & D, then no doubt they would have been guilty of copyright infringement. But this was not the case.
SMIs and NEMIs acts complained of by P & D were to have units similar or identical to the light box illustrated in
the technical drawings manufactured by Metro and EYD Rainbow Advertising, for leasing out to different
advertisers. Was this an infringement of petitioners copyright over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was neither a literary not
an artistic work but an "engineering or marketing invention." Obviously, there appeared to be some confusion
regarding what ought or ought not to be the proper subjects of copyrights, patents and trademarks. In the
leading case of Kho vs. Court of Appeals,11 we ruled that these three legal rights are completely distinct and
separate from one another, and the protection afforded by one cannot be used interchangeably to cover items
or works that exclusively pertain to the others:
Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked
container of goods. In relation thereto, a trade name means the name or designation identifying or
distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to literary and artistic
works which are original intellectual creations in the literary and artistic domain protected from the
moment of their creation. Patentable inventions, on the other hand, refer to any technical solution of
a problem in any field of human activity which is new, involves an inventive step and is industrially
applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
This brings us to the next point: if, despite its manufacture and commercial use of the light
boxes without license from petitioner, private respondents cannot be held legally liable for infringement of P &
Ds copyright over its technical drawings of the said light boxes, should they be liable instead for infringement of
patent? We do not think so either.
For some reason or another, petitioner never secured a patent for the light boxes. It therefore
acquired no patent rights which could have protected its invention, if in fact it really was. And because it had
no patent, petitioner could not legally prevent anyone from manufacturing or commercially using the
contraption. In Creser Precision Systems, Inc. vs. Court of Appeals, we held that "there can be no infringement
of a patent until a patent has been issued, since whatever right one has to the invention covered by the patent
arises alone from the grant of patent. An inventor has no common law right to a monopoly of his invention. He
has the right to make use of and vend his invention, but if he voluntarily discloses it, such as by offering it for
sale, the world is free to copy and use it with impunity. A patent, however, gives the inventor the right to
exclude all others. As a patentee, he has the exclusive right of making, selling or using the invention. On the
assumption that petitioners advertising units were patentable inventions, petitioner revealed them fully to the
public by submitting the engineering drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from the invention, a
patent is a primordial requirement. No patent, no protection. The ultimate goal of a patent system is to bring
new designs and technologies into the public domain through disclosure. Ideas, once disclosed to the public
without the protection of a valid patent, are subject to appropriation without significant restraint.
On one side of the coin is the public which will benefit from new ideas; on the other are the
inventors who must be protected.
The law attempts to strike an ideal balance between the two interests:
"The patent system thus embodies a carefully crafted bargain for encouraging the creation and
disclosure of new useful and non-obvious advances in technology and design, in return for the exclusive
right to practice the invention for a number of years. The inventor may keep his invention secret and
reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to the
community, the patent is granted. An exclusive enjoyment is guaranteed him for 17 years, but upon the
expiration of that period, the knowledge of the invention inures to the people, who are thus enabled to
practice it and profit by its use."
The patent law has a three-fold purpose:
1. patent law seeks to foster and reward invention;
2. it promotes disclosures of inventions to stimulate further innovation and to permit the public to
practice the invention once the patent expires;
3. the stringent requirements for patent protection seek to ensure that ideas in the public domain remain
there for the free use of the public.
It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-depth
investigation is required because "in rewarding a useful invention, the rights and welfare of the community
must be fairly dealt with and effectively guarded. To that end, the prerequisites to obtaining a patent are
strictly observed and when a patent is issued, the limitations on its exercise are equally strictly enforced. To
begin with, a genuine invention or discovery must be demonstrated lest in the constant demand for new
appliances, the heavy hand of tribute be laid on each slight technological advance in art."
There is no such scrutiny in the case of copyrights nor any notice published before its grant to the effect that a
person is claiming the creation of a work. The law confers the copyright from the moment of creation and the
copyright certificate is issued upon registration with the National Library of a sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the petitioner cannot exclude
others from the manufacture, sale or commercial use of the light boxes on the sole basis of its copyright
certificate over the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office (IPO) to
scrutinize the light boxs eligibility as a patentable invention. The irony here is that, had petitioner secured a
patent instead, its exclusivity would have been for 17 years only. But through the simplified procedure of
copyright-registration with the National Library without undergoing the rigor of defending the patentability
of its invention before the IPO and the public the petitioner would be protected for 50 years. This situation
could not have been the intention of the law.
In the oft-cited case of Baker vs. Selden , the United States Supreme Court held that only the expression of an
idea is protected by copyright, not the idea itself.
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark "Poster Ads" which petitioners president said
was a contraction of "poster advertising." P & D was able to secure a trademark certificate for it, but one
where the goods specified were "stationeries such as letterheads, envelopes, calling cards and newsletters."
Petitioner admitted it did not commercially engage in or market these goods. On the contrary, it dealt in
electrically operated backlit advertising units and the sale of advertising spaces thereon, which, however, were
not at all specified in the trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate
Court,23where we, invoking Section 20 of the old Trademark Law, ruled that "the certificate of registration
issued by the Director of Patents can confer (upon petitioner) the exclusive right to use its own symbol only to
those goods specified in the certificate, subject to any conditions and limitations specified in the certificate. One
who has adopted and used a trademark on his goods does not prevent the adoption and use of the same
trademark by others for products which are of a different description." Faberge, Inc. was correct and was in fact
recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.
Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to
secure a trademark registration for specific use on the light boxes meant that there could not have been any
trademark infringement since registration was an essential element thereof.1wphi1
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition, a situation which was possible
even if P & D had no registration. However, while the petitioners complaint in the RTC also cited unfair
competition, the trial court did not find private respondents liable therefor. Petitioner did not appeal this
particular point; hence, it cannot now revive its claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair
competition.
By the nature of things, there can be no unfair competition under the law on copyrights although it is
applicable to disputes over the use of trademarks. Even a name or phrase incapable of appropriation as a
trademark or tradename may, by long and exclusive use by a business (such that the name or phrase becomes
associated with the business or product in the mind of the purchasing public), be entitled to protection against
unfair competition. In this case, there was no evidence that P & Ds use of "Poster Ads" was distinctive or well-
known. As noted by the Court of Appeals, petitioners expert witnesses himself had testified that " Poster
Ads was too generic a name. So it was difficult to identify it with any company, honestly speaking." 28 This
crucial admission by its own expert witness that "Poster Ads" could not be associated with P & D showed that,
in the mind of the public, the goods and services carrying the trademark "Poster Ads" could not be
distinguished from the goods and services of other entities.
This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was
generic and incapable of being used as a trademark because it was used in the field of poster advertising, the
very business engaged in by petitioner. "Secondary meaning" means that a word or phrase originally
incapable of exclusive appropriation with reference to an article in the market (because it is geographically or
otherwise descriptive) might nevertheless have been used for so long and so exclusively by one producer with
reference to his article that, in the trade and to that branch of the purchasing public, the word or phrase has
come to mean that the article was his property.29 The admission by petitioners own expert witness that he
himself could not associate "Poster Ads" with petitioner P & D because it was "too generic" definitely precluded
the application of this exception.
Having discussed the most important and critical issues, we see no need to belabor the rest.
All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the
Regional Trial Court of Makati City.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22, 2001 is
AFFIRMED in toto.
SO ORDERED.
U.S. Supreme Court
Sony Corp. v. Universal City Studios, 464 U.S. 417 (1984)
Sony Corporation of America v. Universal City Studios, Inc.
Decided: January 17, 1984, 464 U.S. 417
Syllabus
Petitioner Sony Corp. manufactures home videotape recorders (VTR's), and markets them through
retail establishments, some of which are also petitioners. Respondents, Universal Studios, own the copyrights
on some of the television programs that are broadcast on the public airwaves. Respondents brought an action
against petitioners in Federal District Court, alleging that VTR consumers had been recording some of
respondents' copyrighted works that had been exhibited on commercially sponsored television, and thereby
infringed respondents' copyrights, and further that petitioners were liable for such copyright infringement
because of their marketing of the VTR's. Respondents sought money damages, an equitable accounting of
profits, and an injunction against the manufacture and marketing of the VTR's. The District Court denied
respondents all relief, holding that noncommercial home use recording of material broadcast over the public
airwaves was a fair use of copyrighted works, and did not constitute copyright infringement, and that
petitioners could not be held liable as contributory infringers even if the home use of a VTR was considered an
infringing use. The Court of Appeals reversed, holding petitioners liable for contributory infringement and
ordering the District Court to fashion appropriate relief.
Held:
The sale of the VTR's to the general public does not constitute contributory infringement of respondents'
copyrights.
a. The protection given to copyrights is wholly statutory, and, in a case like this, in which Congress has not
plainly marked the course to be followed by the judiciary, this Court must be circumspect in construing
the scope of rights created by a statute that never contemplated such a calculus of interests. Any
individual may reproduce a copyrighted work for a "fair use"; the copyright owner does not possess
the exclusive right to such a use.
b. Kalem Co. v. Harper Brothers, 222 U. S. 55, does not support respondents' novel theory that supplying
the "means" to accomplish an infringing activity and encouraging that activity through advertisement
 are sufficient to establish liability for copyright infringement. This case does not fall in the category of
those in which it is manifestly just to impose vicarious liability because the "contributory" infringer was
in a position to control the use of copyrighted works by others and had authorized the use without
permission from the copyright owner. Here, the only contact between petitioners and the users of the
VTR's occurred at the moment of sale. And there is no precedent for imposing vicarious liability on the
theory that petitioners sold the VTR's with constructive knowledge that their customers might use the
equipment to make unauthorized copies of copyrighted material. The sale of copying equipment, like
the sale of other articles of commerce, does not constitute contributory infringement if the product is
widely used for legitimate, unobjectionable purposes, or, indeed, is merely capable of substantial
noninfringing uses.
c. The record and the District Court's findings show (1) that there is a significant likelihood that
substantial numbers of copyright holders who license their works for broadcast on free television
would not object to having their broadcast time-shifted by private viewers (i.e., recorded at a time
when the VTR owner cannot view the broadcast so that it can be watched at a later time); and (2) that
there is no likelihood that time-shifting would cause nonminimal harm to the potential market for, or
the value of, respondents' copyrighted works. The VTR's are therefore capable of substantial
noninfringing uses. Private, noncommercial time-shifting in the home satisfies this standard of
noninfringing uses both because respondents have no right to prevent other copyright holders from
authorizing such time-shifting for their programs and because the District Court's findings reveal that
even the unauthorized home time-shifting of respondents' programs is legitimate fair use.
STEVENS, J.,
FACTS
Petitioners manufacture and sell home videotape 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 videotape 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 videotape 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.
After a lengthy trial, the District Court denied respondents all the relief they sought and entered
judgment for petitioners.The United States Court of Appeals for the Ninth Circuit reversed the District Court's
judgment on respondents' copyright claim, holding petitioners liable for contributory infringement and ordering
the District Court to fashion appropriate relief.
ISSUE
The question presented is whether the sale of petitioners' copying equipment to the general public violates any
of the rights conferred upon respondents by the Copyright Act.
RULING
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. 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. The Court of Appeals' holding that respondents are entitled to enjoin the distribution of VTR's, to collect
royalties on the sale of such equipment, or to obtain other relief, if affirmed, would enlarge the scope of
respondents' statutory monopolies to encompass control over an article of commerce that is not the subject of
copyright protection. Such an expansion of the copyright privilege is beyond the limits of the grants authorized
by Congress.
I
The two respondents in this action, Universal City Studios, Inc., and Walt Disney Productions, produce and hold
the copyrights on a substantial number of motion pictures and other audiovisual works. In the current
marketplace, they can exploit their rights in these works in a number of ways:
1. by authorizing theatrical exhibitions,
2. by licensing limited showings on cable and network television,
3. by selling syndication rights for repeated airings on local television stations, and
4. by marketing programs on prerecorded videotapes or videodiscs. Some works are suitable for
exploitation through all of these avenues, while the market for other works is more limited.
Petitioner Sony manufactures millions of Betamax videotape recorders and markets these devices through
numerous retail establishments, some of which are also petitioners in this action. Sony's Betamax VTR is a
mechanism consisting of three basic components: (1) a tuner, which receives electromagnetic signals
transmitted over the television band of the public airwaves and separates them into audio and visual signals; (2)
a recorder, which records such signals on a magnetic tape; and (3) an adapter, which converts the audio and
visual signals on the tape into a composite signal that can be received by a television set.
Several capabilities of the machine are noteworthy. The separate tuner in the Betamax enables it to record a
broadcast off one station while the television set is tuned to another channel, permitting the viewer, for
example, to watch two simultaneous news broadcasts by watching one "live" and recording the other for later
viewing. Tapes may be reused, and programs that have been recorded may be erased either before or after
viewing. A timer in the Betamax can be used to activate and deactivate the equipment at predetermined times,
enabling an intended viewer to record programs that are transmitted when he or she is not at home. Thus a
person may watch a program at home in the evening even though it was broadcast while the viewer was at work
during the afternoon. The Betamax is also equipped with a pause button and a fast-forward control. The pause
button, when depressed, deactivates the recorder until it is released, thus enabling a viewer to omit a
commercial advertisement from the recording, provided, of course, that the viewer is present when the program
is recorded. The fast-forward control enables the viewer of a previously recorded program to run the tape
rapidly when a segment he or she does not desire to see is being played back on the television screen.
The respondents and Sony both conducted surveys of the way the Betamax machine was used by several
hundred owners during a sample period in 1978. Although there were some differences in the surveys, they both
showed that the primary use of the machine for most owners was "time-shifting" -- the practice of recording a
program to view it once at a later time, and thereafter erasing it. Time-shifting enables viewers to see programs
they otherwise would miss because they are not at home, are occupied with other tasks, or are viewing a
program on another station at the time of a broadcast that they desire to watch. Both surveys also showed,
however, that a substantial number of interviewees had accumulated libraries of tapes. Sony's survey indicated
that over 80% of the interviewees watched at least as much regular television as they had before owning a
Betamax. Respondents offered no evidence of decreased television viewing by Betamax owners.
Sony introduced considerable evidence describing television programs that could be copied without objection
from any copyright holder, with special emphasis on sports, religious, and educational programming. For
example, their survey indicated that 7.3% of all Betamax use is to record sports events, and representatives of
professional baseball, football, basketball, and hockey testified that they had no objection to the recording of
their televised events for home use.
Respondents offered opinion evidence concerning the future impact of the unrestricted sale of VTR's on the
commercial value of their copyrights. The District Court found, however, that they had failed to prove any
likelihood of future harm from the use of VTR's for time-shifting. 480 F.Supp. at 469.
The District Court's Decision
The lengthy trial of the case in the District Court concerned the private, home use of VTR's for recording
programs broadcast on the public airwaves without charge to the viewer. No issue concerning the transfer of
tapes to other persons, the use of home-recorded tapes for public performances, or the copying of programs
transmitted on pay or cable television systems was raised.
The District Court concluded that noncommercial home use recording of material broadcast over the public
airwaves was a fair use of copyrighted works, and did not constitute copyright infringement. It emphasized the
fact that the material was broadcast free to the public at large, the noncommercial character of the use, and the
private character of the activity conducted entirely within the home. Moreover, the court found that the
purpose of this use served the public interest in increasing access to television programming, an interest that "is
consistent with the First Amendment policy of providing the fullest possible access to information through the
public airwaves. Columbia Broadcasting System, Inc. v. Democratic National Committee
Even when an entire copyrighted work was recorded, the District Court regarded the copying as fair use
"because there is no accompanying reduction in the market for plaintiff's original work.'"
As an independent ground of decision, the District Court also concluded that Sony could not be held liable as a
contributory infringer even if the home use of a VTR was considered an infringing use. The District Court noted
that Sony had no direct involvement with any Betamax purchasers who recorded copyrighted works off the air.
Sony's advertising was silent on the subject of possible copyright infringement, but its instruction booklet
contained the following statement:
"Television programs, films, videotapes and other materials may be copyrighted. Unauthorized
recording of such material may be contrary to the provisions of the United States copyright laws."
The District Court assumed that Sony had constructive knowledge of the probability that the Betamax machine
would be used to record copyrighted programs, but found that Sony merely sold a "product capable of a variety
of uses, some of them allegedly infringing." It reasoned:
"Selling a staple article of commerce -- e.g., a typewriter, a recorder, a camera, a photocopying
machine -- technically contributes to any infringing use subsequently made thereof, but this kind of
'contribution,' if deemed sufficient as a basis for liability, would expand the theory beyond precedent,
and arguably beyond judicial management."
". . . Commerce would indeed be hampered if manufacturers of staple items were held liable as
contributory infringers whenever they 'constructively' knew that some purchasers on some occasions
would use their product for a purpose which a court later deemed, as a matter of first impression, to
be an infringement."
Finally, the District Court discussed the respondents' prayer for injunctive relief, noting that they had asked for
an injunction either preventing the future sale of Betamax machines or requiring that the machines be rendered
incapable of recording copyrighted works off the air. The court stated that it had "found no case in which the
manufacturers, distributors, retailers and advertisers of the instrument enabling the infringement were sued by
the copyright holders," and that the request for relief in this case "is unique."
It concluded that an injunction was wholly inappropriate because any possible harm to respondents was
outweighed by the fact that "the Betamax could still legally be used to record noncopyrighted material or
material whose owners consented to the copying. An injunction would deprive the public of the ability to use the
Betamax for this noninfringing off-the-air recording."
The Court of Appeals' Decision
The Court of Appeals reversed the District Court's judgment on respondents' copyright claim. It did not set aside
any of the District Court's findings of fact. Rather, it concluded as a matter of law that the home use of a VTR was
not a fair use, because it was not a "productive use." [Footnote 9] It therefore held that it was unnecessary for
plaintiffs to prove any harm to the potential market for the copyrighted works, but then observed that it seemed
clear that the cumulative effect of mass reproduction made possible by VTR's would tend to diminish the
potential market for respondents' works.
On the issue of contributory infringement, the Court of Appeals first rejected the analogy to staple articles of
commerce such as tape recorders or photocopying machines. It noted that such machines "may have substantial
benefit for some purposes" and do not "even remotely raise copyright problems." VTR's, however, are sold "for
the primary purpose of reproducing television programming," and "virtually all" such programming is
copyrighted material. The Court of Appeals concluded, therefore, that VTR's were not suitable for any
substantial noninfringing use even if some copyright owners elect not to enforce their rights.
The Court of Appeals also rejected the District Court's reliance on Sony's lack of knowledge that home use
constituted infringement. Assuming that the statutory provisions defining the remedies for infringement applied
also to the nonstatutory tort of contributory infringement, the court stated that a defendant's good faith would
merely reduce his damages liability, but would not excuse the infringing conduct. It held that Sony was
chargeable with knowledge of the homeowner's infringing activity because the reproduction of copyrighted
materials was either "the most conspicuous use" or "the major use" of the Betamax product.
On the matter of relief, the Court of Appeals concluded that "statutory damages may be appropriate" and that
the District Court should reconsider its determination that an injunction would not be an appropriate remedy;
and, referring to "the analogous photocopying area," suggested that a continuing royalty pursuant to a judicially
created compulsory license may very well be an acceptable resolution of the relief issue. Id. at 976.
II
Article I, 8, of the Constitution provides:
"The Congress shall have Power . . . To Promote the Progress of Science and useful Arts, by securing for
limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.
"
The monopoly privileges that Congress may authorize are neither unlimited nor primarily designed to provide a
special private benefit. Rather, the limited grant is a means by which an important public purpose may be
achieved. It is intended to motivate the creative activity of authors and inventors by the provision of a special
reward, and to allow the public access to the products of their genius after the limited period of exclusive control
has expired.
"The copyright law, like the patent statutes, makes reward to the owner a secondary consideration. In Fox Film
Corp. v. Doyal, Chief Justice Hughes spoke as follows respecting the copyright monopoly granted by Congress,"
"The sole interest of the United States and the primary object in conferring the monopoly lie in the general
benefits derived by the public from the labors of authors."
"It is said that reward to the author or artist serves to induce release to the public of the products of his creative
genius." United States v. Paramount Pictures, Inc.
As the text of the Constitution makes plain, it is Congress that has been assigned the task of defining the scope of
the limited monopoly that should be granted to authors or to inventors in order to give the public appropriate
access to their work product. Because this task involves a difficult balance between the interests of authors and
inventors in the control and exploitation of their writings and discoveries on the one hand, and society's
competing interest in the free flow of ideas, information, and commerce on the other hand, our patent and
copyright statutes have been amended repeatedly.
From its beginning, the law of copyright has developed in response to significant changes in technology.
[Footnote 11] Indeed, it was the invention of a new form of copying equipment -- the printing press -- that gave
rise to the original need for copyright protection. Repeatedly, as new developments have occurred in this
country, it has been the Congress that has fashioned the new rules that new technology made necessary. Thus,
long before the enactment of the Copyright Act of 1909, 35 Stat. 1075, it was settled that the protection given to
copyrights is wholly statutory. Wheaton v. Peters, 8 Pet. 591, 33 U. S. 661-662 (1834). The remedies for
infringement "are only those prescribed by Congress." Thompson v. Hubbard, 131 U. S. 123, 131 U. S. 151 (1889).
The judiciary's reluctance to expand the protections afforded by the copyright without explicit legislative
guidance is a recurring theme. Sound policy, as well as history, supports our consistent deference to Congress
when major technological innovations alter the market for copyrighted materials. Congress has the
constitutional authority and the institutional ability to accommodate fully the varied permutations of competing
interests that are inevitably implicated by such new technology.
In a case like this, in which Congress has not plainly marked our course, we must be circumspect in construing
the scope of rights created by a legislative enactment which never contemplated such a calculus of interests. In
doing so, we are guided by Justice Stewart's exposition of the correct approach to ambiguities in the law of
copyright:
"The limited scope of the copyright holder's statutory monopoly, like the limited copyright duration required by
the Constitution, reflects a balance of competing claims upon the public interest: creative work is to be
encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public
availability of literature, music, and the other arts. The immediate effect of our copyright law is to secure a fair
return for an 'author's' creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for
the general public good. 'The sole interest of the United States and the primary object in conferring the
monopoly,' this Court has said, 'lie in the general benefits derived by the public from the labors of authors.' Fox
Film Corp. v. Doyal, 286 U. S. 123, 286 U. S. 127. When technological change has rendered its literal terms
ambiguous, the Copyright Act must be construed in light of this basic purpose." Copyright protection "subsists . .
. in original works of authorship fixed in any tangible medium of expression." 17 U.S.C. 102(a) (1982 ed.). This
protection has never accorded the copyright owner complete control over all possible uses of his work. Rather,
the Copyright Act grants the copyright holder "exclusive" rights to use and to authorize the use of his work in five
qualified ways, including reproduction of the copyrighted work in copies. 106. All reproductions of the work,
however, are not within the exclusive domain of the copyright owner; some are in the public domain. Any
individual may reproduce a copyrighted work for a "fair use"; the copyright owner does not possess the exclusive
right to such a use. Compare 106 with 107.
"Anyone who violates any of the exclusive rights of the copyright owner," that is, anyone who trespasses into his
exclusive domain by using or authorizing the use of the copyrighted work in one of the five ways set forth in the
statute, "is an infringer of the copyright." 501(a). Conversely, anyone who is authorized by the copyright owner
to use the copyrighted work in a way specified in the statute or who makes a fair use of the work is not an
infringer of the copyright with respect to such use.
The Copyright Act provides the owner of a copyright with a potent arsenal of remedies against an infringer of his
work, including an injunction to restrain the infringer from violating his rights, the impoundment and destruction
of all reproductions of his work made in violation of his rights, a recovery of his actual damages and any
additional profits realized by the infringer or a recovery of statutory damages, and attorney's fees. 502-505.
The two respondents in this case do not seek relief against the Betamax users who have allegedly infringed their
copyrights. Moreover, this is not a class action on behalf of all copyright owners who license their works for
television broadcast, and respondents have no right to invoke whatever rights other copyright holders may have
to bring infringement actions based on Betamax copying of their works. As was made clear by their own
evidence, the copying of the respondents' programs represents a small portion of the total use of VTR's. It is,
however, the taping of respondents' own copyrighted programs that provides them with standing to charge Sony
with contributory infringement. To prevail, they have the burden of proving that users of the Betamax have
infringed their copyrights, and that Sony should be held responsible for that infringement.
III
The Copyright Act does not expressly render anyone liable for infringement committed by another. In contrast,
the Patent Act expressly brands anyone who "actively induces infringement of a patent" as an infringer, 35 U.S.C.
271(b), and further imposes liability on certain individuals labeled "contributory" infringers, 271(c). The
absence of such express language in the copyright statute does not preclude the imposition of liability for
copyright infringements on certain parties who have not themselves engaged in the infringing activity. For
vicarious liability is imposed in virtually all areas of the law, and the concept of contributory infringement is
merely a species of the broader problem of identifying the circumstances in which it is just to hold one individual
accountable for the actions of another.
Such circumstances were plainly present in Kalem Co. v. Harper Brothers, 222 U. S. 55 (1911), the copyright
decision of this Court on which respondents place their principal reliance. In Kalem, the Court held that the
producer of an unauthorized film dramatization of the copyrighted book Ben Hur was liable for his sale of the
motion picture to jobbers, who in turn arranged for the commercial exhibition of the film. Justice Holmes,
writing for the Court, explained:
"The defendant not only expected but invoked by advertisement the use of its films for dramatic
reproduction of the story. That was the most conspicuous purpose for which they could be used, and
the one for which especially they were made. If the defendant did not contribute to the infringement it
is impossible to do so except by taking part in the final act. It is liable on principles recognized in every
part of the law."
The use for which the item sold in Kalem had been "especially" made was, of course, to display the performance
that had already been recorded upon it. The producer had personally appropriated the copyright owner's
protected work and, as the owner of the tangible medium of expression upon which the protected work was
recorded, authorized that use by his sale of the film to jobbers. But that use of the film was not his to authorize:
the copyright owner possessed the exclusive right to authorize public performances of his work. Further, the
producer personally advertised the unauthorized public performances, dispelling any possible doubt as to the
use of the film which he had authorized.
Respondents argue that Kalem stands for the proposition that supplying the "means" to accomplish an infringing
activity and encouraging that activity through advertisement are sufficient to establish liability for copyright
infringement. This argument rests on a gross generalization that cannot withstand scrutiny. The producer
in Kalem did not merely provide the "means" to accomplish an infringing activity; the producer supplied the work
itself, albeit in a new medium of expression. Sony in the instant case does not supply Betamax consumers with
respondents' works; respondents do. Sony supplies a piece of equipment that is generally capable of copying the
entire range of programs that may be televised: those that are uncopyrighted, those that are copyrighted but
may be copied without objection from the copyright holder, and those that the copyright holder would prefer
not to have copied. The Betamax can be used to make authorized or unauthorized uses of copyrighted works,
but the range of its potential use is much broader than the particular infringing use of the film Ben Hur involved
in Kalem. Kalem does not support respondents' novel theory of liability.
Justice Holmes stated that the producer had "contributed" to the infringement of the copyright, and the label
"contributory infringement" has been applied in a number of lower court copyright cases involving an ongoing
relationship between the direct infringer and the contributory infringer at the time the infringing conduct
occurred. In such cases, as in other situations in which the imposition of vicarious liability is manifestly just, the
"contributory" infringer was in a position to control the use of copyrighted works by others, and had authorized
the use without permission from the copyright owner. This case, however, plainly does not fall in that category.
The only contact between Sony and the users of the Betamax that is disclosed by this record occurred at the
moment of sale. The District Court expressly found that "no employee of Sony, Sonam or DDBI had either direct
involvement with the allegedly infringing activity or direct contact with purchasers of Betamax who recorded
copyrighted works off the air."
And it further found that "there was no evidence that any of the copies made by Griffiths or the other individual
witnesses in this suit were influenced or encouraged by [Sony's] advertisements." If vicarious liability is to be
imposed on Sony in this case, it must rest on the fact that it has sold equipment with constructive knowledge of
the fact that its customers may use that equipment to make unauthorized copies of copyrighted material. There
is no precedent in the law of copyright for the imposition of vicarious liability on such a theory. The closest
analogy is provided by the patent law cases to which it is appropriate to refer because of the historic kinship
between patent law and copyright law.
In the Patent Act, both the concept of infringement and the concept of contributory infringement are expressly
defined by statute. The prohibition against contributory infringement is confined to the knowing sale of a
component especially made for use in connection with a particular patent. There is no suggestion in the statute
that one patentee may object to the sale of a product that might be used in connection with other patents.
Moreover, the Act expressly provides that the sale of a "staple article or commodity of commerce suitable for
substantial noninfringing use" is not contributory infringement.
When a charge of contributory infringement is predicated entirely on the sale of an article of commerce that is
used by the purchaser to infringe a patent, the public interest in access to that article of commerce is necessarily
implicated. A finding of contributory infringement does not, of course, remove the article from the market
altogether; it does, however, give the patentee effective control over the sale of that item. Indeed, a finding of
contributory infringement is normally the functional equivalent of holding that the disputed article is within the
monopoly granted to the patentee.
For that reason, in contributory infringement cases arising under the patent laws, the Court has always
recognized the critical importance of not allowing the patentee to extend his monopoly beyond the limits of his
specific grant. These cases deny the patentee any right to control the distribution of unpatented articles unless
they are "unsuited for any commercial noninfringing use." Dawson Chemical Co. v. Rohm & Hass Co., 448 U. S.
176, 448 U. S. 198 (1980). Unless a commodity "has no use except through practice of the patented
method," id. at 448 U. S. 199, the patentee has no right to claim that its distribution constitutes contributory
infringement. "To form the basis for contributory infringement, the item must almost be uniquely suited as a
component of the patented invention." P. Rosenberg, Patent Law Fundamentals 17.02[2] (2d ed.1982).
"A sale of an article which though adapted to an infringing use is also adapted to other and lawful uses, is not
enough to make the seller a contributory infringer. Such a rule would block the wheels of commerce."
We recognize there are substantial differences between the patent and copyright laws. But in both areas, the
contributory infringement doctrine is grounded on the recognition that adequate protection of a monopoly may
require the courts to look beyond actual duplication of a device or publication to the products or activities that
make such duplication possible. The staple article of commerce doctrine must strike a balance between a
copyright holder's legitimate demand for effective -- not merely symbolic -- protection of the statutory
monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce. Accordingly,
the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory
infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be
capable of substantial noninfringing uses.
IV
The question is thus whether the Betamax is capable of commercially significant noninfringing uses. In order to
resolve that question, we need not explore all the different potential uses of the machine and determine
whether or not they would constitute infringement. Rather, we need only consider whether, on the basis of the
facts as found by the District Court, a significant number of them would be noninfringing. Moreover, in order to
resolve this case, we need not give precise content to the question of how much use is commercially significant.
For one potential use of the Betamax plainly satisfies this standard, however it is understood: private,
noncommercial time-shifting in the home. It does so both (A) because respondents have no right to prevent
other copyright holders from authorizing it for their programs, and (B) because the District Court's factual
findings reveal that even the unauthorized home time-shifting of respondents' programs is legitimate fair use.
A. Authorized Time-Shifting
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 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. The District Court
found:
"Even if it were deemed that home-use recording of copyrighted material constituted infringement,
the Betamax could still legally be used to record noncopyrighted material or material whose owners
 consented to the copying. An injunction would deprive the public of the ability to use the Betamax for
this noninfringing off-the-air recording. "
"Defendants introduced considerable testimony at trial about the potential for such copying of sports,
religious, educational and other programming. This included testimony from representatives of the
Offices of the Commissioners of the National Football, Basketball, Baseball and Hockey Leagues and
Associations, the Executive Director of National Religious Broadcasters, and various educational
communications agencies. Plaintiffs attack the weight of the testimony offered, and also contend that
an injunction is warranted because infringing uses outweigh noninfringing uses."
"Whatever the future percentage of legal versus illegal home-use recording might be, an injunction
which seeks to deprive the public of the very tool or article of commerce capable of some
noninfringing use would be an extremely harsh remedy, as well as one unprecedented in copyright
law."
Although the District Court made these statements in the context of considering the propriety of injunctive
relief, the statements constitute a finding that the evidence concerning "sports, religious, educational and other
programming" was sufficient to establish a significant quantity of broadcasting whose copying is now authorized,
and a significant potential for future authorized copying. That finding is amply supported by the record. In
addition to the religious and sports officials identified explicitly by the District Court, [Footnote 24] two items in
the record deserve specific mention.
First is the testimony of John Kenaston, the station manager of Channel 58, an educational station in Los Angeles
affiliated with the Public Broadcasting Service. He explained and authenticated the station's published guide to
its programs. For each program, the guide tells whether unlimited home taping is authorized, home taping is
authorized subject to certain restrictions (such as erasure within seven days), or home taping is not authorized at
all. The Spring, 1978, edition of the guide described 107 programs. Sixty-two of those programs or 58% authorize
some home taping. Twenty-one of them, or almost 20%, authorize unrestricted home taping.
Second is the testimony of Fred Rogers, president of the corporation that produces and owns the copyright on
Mister Rogers' Neighborhood. The program is carried by more public television stations than any other program.
Its audience numbers over 3,000,000 families a day. He testified that he had absolutely no objection to home
taping for noncommercial use, and expressed the opinion that it is a real service to families to be able to record
children's programs and to show them at appropriate times.
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 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.
B. Unauthorized Time-Shifting
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. Twentieth Century Music Corp. v. Aiken, 422 U.S. at 422 U. S. 154-155. 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, see 17 U.S.C. 107(2) (1982 ed.), 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 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.
In this case, respondents failed to carry their burden with regard to home time-shifting. The District Court
described respondents' evidence as follows:
"Plaintiffs' experts admitted at several points in the trial that the time-shifting without librarying would
result in 'not a great deal of harm.' Plaintiffs' greatest concern about time-shifting is with 'a point of
 important philosophy that transcends even commercial judgment.' They fear that, with any Betamax
usage, 'invisible boundaries' are passed: 'the copyright owner has lost control over his program.'"
Later in its opinion, the District Court observed:
"Most of plaintiffs' predictions of harm hinge on speculation about audience viewing patterns and
ratings, a measurement system which Sidney Sheinberg, MCA's president, calls a 'black art' because of
the significant level of imprecision involved in the calculations."
There was no need for the District Court to say much about past harm. "Plaintiffs have admitted that no actual
harm to their copyrights has occurred to date."
On the question of potential future harm from time-shifting, the District Court offered a more detailed analysis
of the evidence. It rejected respondents' "fear that persons 'watching' the original telecast of a program will not
be measured in the live audience, and the ratings and revenues will decrease" by observing that current
measurement technology allows the Betamax audience to be reflected. Id. at 466. It rejected respondents'
prediction "that live television or movie audiences will decrease as more people watch Betamax tapes as an
alternative," with the observation that "there is no factual basis for [the underlying] assumption." It rejected
respondents' "fear that time-shifting will reduce audiences for telecast reruns," and concluded instead that
"given current market practices, this should aid plaintiffs, rather than harm them." And it declared that
respondents' suggestion that "theater or film rental exhibition of a program will suffer because of time-shift
recording of that program" "lacks merit."
After completing that review, the District Court restated its overall conclusion several times, in several different
ways. "Harm from time-shifting is speculative and, at best, minimal."
"The audience benefits from the time-shifting capability have already been discussed. It is not implausible that
benefits could also accrue to plaintiffs, broadcasters, and advertisers, as the Betamax makes it possible for more
persons to view their broadcasts." "No likelihood of harm was shown at trial, and plaintiffs admitted that there
had been no actual harm to date."
"Testimony at trial suggested that Betamax may require adjustments in marketing strategy, but it did not
establish even a likelihood of harm."
"Television production by plaintiffs today is more profitable than it has ever been, and, in five weeks of trial,
there was no concrete evidence to suggest that the Betamax will change the studios' financial picture."
The District Court's conclusions are buttressed by the fact that to the extent time-shifting expands public access
to freely broadcast television programs, it yields societal benefits. In Community Television of Southern California
v. Gottfried, 459 U. S. 498, 459 U. S. 508, n. 12 (1983), we acknowledged the public interest in making television
broadcasting more available. Concededly, that interest is not unlimited. But it supports an interpretation of the
concept of "fair use" that requires the copyright holder to demonstrate some likelihood of harm before he may
condemn a private act of time-shifting as a violation of federal law.
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.
V
"The direction of Art. I is that Congress shall have the power to promote the progress of science and the useful
arts. When, as here, the Constitution is permissive, the sign of how far Congress has chosen to go can come only
from Congress." Deepsouth Packing Co. v. Laitram Corp., 406 U. S. 518, 406 U. S. 530 (1972).
One may search the Copyright Act in vain for any sign that the elected representatives of the millions of people
who watch television every day have made it unlawful to copy a program for later viewing at home, or have
enacted a flat prohibition against the sale of machines that make such copying possible.
It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other
innovations in the past. But it is not our job to apply laws that have not yet been written. Applying the copyright
statute, as it now reads, to the facts as they have been developed in this case, the judgment of the Court of
Appeals must be reversed.
It is so ordered.
No. 04480
METRO-GOLDWYN-MAYER STUDIOS INC., et al., PETITIONERS v. GROKSTER, LTD., et al.
June 27, 2005
Justice Souter delivered the opinion of the Court.
The question is under what circumstances the distributor of a product capable of both lawful and unlawful use
is liable for acts of copyright infringement by third parties using the product. We hold that one who distributes a
device with the object of promoting its use to infringe copyright, as shown by clear expression or other
affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.
I
A
Respondents, Grokster, Ltd., and StreamCast Networks, Inc., defendants in the trial court, distribute free
software products that allow computer users to share electronic files through peer-to-peer networks, so called
because users computers communicate directly with each other, not through central servers. The advantage of
peer-to-peer networks over information networks of other types shows up in their substantial and growing
popularity. Because they need no central computer server to mediate the exchange of information or files
among users, the high-bandwidth communications capacity for a server may be dispensed with, and the need for
costly server storage space is eliminated. Since copies of a file (particularly a popular one) are available on many
users computers, file requests and retrievals may be faster than on other types of networks, and since file
exchanges do not travel through a server, communications can take place between any computers that remain
connected to the network without risk that a glitch in the server will disable the network in its entirety. Given
these benefits in security, cost, and efficiency, peer-to-peer networks are employed to store and distribute
electronic files by universities, government agencies, corporations, and libraries, among others.1
Other users of peer-to-peer networks include individual recipients of Groksters and StreamCasts software,
and although the networks that they enjoy through using the software can be used to share any type of digital
file, they have prominently employed those networks in sharing copyrighted music and video files without
authorization. A group of copyright holders (MGM for short, but including motion picture studios, recording
companies, songwriters, and music publishers) sued Grokster and StreamCast for their users copyright
infringements, alleging that they knowingly and intentionally distributed their software to enable users to
reproduce and distribute the copyrighted works in violation of the Copyright Act, 17 U.S.C. 101 et seq. (2000
ed. and Supp. II).2 MGM sought damages and an injunction.
Discovery during the litigation revealed the way the software worked, the business aims of each defendant
company, and the predilections of the users. Groksters eponymous software employs what is known as
FastTrack technology, a protocol developed by others and licensed to Grokster. StreamCast distributes a very
similar product except that its software, called Morpheus, relies on what is known as Gnutella technology. 3 A
user who downloads and installs either software possesses the protocol to send requests for files directly to the
computers of others using software compatible with FastTrack or Gnutella. On the FastTrack network opened by
the Grokster software, the users request goes to a computer given an indexing capacity by the software and
designated a supernode, or to some other computer with comparable power and capacity to collect temporary
indexes of the files available on the computers of users connected to it. The supernode (or indexing computer)
searches its own index and may communicate the search request to other supernodes. If the file is found, the
supernode discloses its location to the computer requesting it, and the requesting user can download the file
directly from the computer located. The copied file is placed in a designated sharing folder on the requesting
users computer, where it is available for other users to download in turn, along with any other file in that folder.
In the Gnutella network made available by Morpheus, the process is mostly the same, except that in some
versions of the Gnutella protocol there are no supernodes. In these versions, peer computers using the protocol
communicate directly with each other. When a user enters a search request into the Morpheus software, it
sends the request to computers connected with it, which in turn pass the request along to other connected
peers. The search results are communicated to the requesting computer, and the user can download desired
files directly from peers computers. As this description indicates, Grokster and StreamCast use no servers to
intercept the content of the search requests or to mediate the file transfers conducted by users of the software,
there being no central point through which the substance of the communications passes in either direction.4
Although Grokster and StreamCast do not therefore know when particular files are copied, a few searches using
their software would show what is available on the networks the software reaches. MGM commissioned a
statistician to conduct a systematic search, and his study showed that nearly 90% of the files available for
download on the FastTrack system were copyrighted works.5 Grokster and StreamCast dispute this figure, raising
methodological problems and arguing that free copying even of copyrighted works may be authorized by the
rightholders. They also argue that potential noninfringing uses of their software are significant in kind, even if
infrequent in practice. Some musical performers, for example, have gained new audiences by distributing their
copyrighted works for free across peer-to-peer networks, and some distributors of unprotected content have
used peer-to-peer networks to disseminate files, Shakespeare being an example. Indeed, StreamCast has given
Morpheus users the opportunity to download the briefs in this very case, though their popularity has not been
quantified.
As for quantification, the parties anecdotal and statistical evidence entered thus far to show the content
available on the FastTrack and Gnutella networks does not say much about which files are actually downloaded
by users, and no one can say how often the software is used to obtain copies of unprotected material. But
MGMs evidence gives reason to think that the vast majority of users downloads are acts of infringement, and
because well over 100 million copies of the software in question are known to have been downloaded, and
billions of files are shared across the FastTrack and Gnutella networks each month, the probable scope of
copyright infringement is staggering.
Grokster and StreamCast concede the infringement in most downloads, Brief for Respondents 10, n. 6, and it is
uncontested that they are aware that users employ their software primarily to download copyrighted files, even
if the decentralized FastTrack and Gnutella networks fail to reveal which files are being copied, and when. From
time to time, moreover, the companies have learned about their users infringement directly, as from users who
have sent e-mail to each company with questions about playing copyrighted movies they had downloaded, to
whom the companies have responded with guidance.6 App. 559563, 808816, 939954. And MGM notified
the companies of 8 million copyrighted files that could be obtained using their software.
Grokster and StreamCast are not, however, merely passive recipients of information about infringing use. The
record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free
software, each one clearly voiced the objective that recipients use it to download copyrighted works, and each
took active steps to encourage infringement.
After the notorious file-sharing service, Napster, was sued by copyright holders for facilitation of copyright
infringement, A & M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896 (ND Cal. 2000), affd in part, revd in part,
239 F.3d 1004 (CA9 2001), StreamCast gave away a software program of a kind known as OpenNap, designed as
compatible with the Napster program and open to Napster users for downloading files from other Napster and
OpenNap users computers. Evidence indicates that [i]t was always [StreamCasts] intent to use [its OpenNap
network] to be able to capture email addresses of [its] initial target market so that [it] could promote [its]
StreamCast Morpheus interface to them, App. 861; indeed, the OpenNap program was engineered to
leverage Napsters 50 million user base, id., at 746.
StreamCast monitored both the number of users downloading its OpenNap program and the number of music
files they downloaded. Id., at 859, 863, 866. It also used the resulting OpenNap network to distribute copies of
the Morpheus software and to encourage users to adopt it. Id., at 861, 867, 1039. Internal company documents
indicate that StreamCast hoped to attract large numbers of former Napster users if that company was shut down
by court order or otherwise, and that StreamCast planned to be the next Napster. Id., at 861. A kit developed by
StreamCast to be delivered to advertisers, for example, contained press articles about StreamCasts potential to
capture former Napster users, id., at 568572, and it introduced itself to some potential advertisers as a
company which is similar to what Napster was, id., at 884. It broadcast banner advertisements to users of
other Napster-compatible software, urging them to adopt its OpenNap. Id., at 586. An internal e-mail from a
company executive stated: We have put this network in place so that when Napster pulls the plug on their free
service or if the Court orders them shut down prior to that we will be positioned to capture the flood of
their 32 million users that will be actively looking for an alternative. Id., at 588589, 861.
Thus, StreamCast developed promotional materials to market its service as the best Napster alternative. One
proposed advertisement read: Napster Inc. has announced that it will soon begin charging you a fee. Thats if
the courts dont order it shut down first. What will you do to get around it? Id., at 897. Another proposed ad
touted StreamCasts software as the #1 alternative to Napster and asked [w]hen the lights went off at
Napster where did the users go? Id., at 836 (ellipsis in original).7 StreamCast even planned to flaunt the illegal
uses of its software; when it launched the OpenNap network, the chief technology officer of the company
averred that [t]he goal is to get in trouble with the law and get sued. Its the best way to get in the new[s]. Id.,
at 916.
The evidence that Grokster sought to capture the market of former Napster users is sparser but revealing, for
Grokster launched its own OpenNap system called Swaptor and inserted digital codes into its Web site so that
computer users using Web search engines to look for Napster or [f]ree filesharing would be directed to the
Grokster Web site, where they could download the Grokster software. Id., at 992993. And Groksters name is
an apparent derivative of Napster.
StreamCasts executives monitored the number of songs by certain commercial artists available on
their networks, and an internal communication indicates they aimed to have a larger number of copyrighted
songs available on their networks than other file-sharing networks. Id., at 868. The point, of course, would be to
attract users of a mind to infringe, just as it would be with their promotional materials developed showing
copyrighted songs as examples of the kinds of files available through Morpheus. Id., at 848. Morpheus in fact
allowed users to search specifically for Top 40 songs, id., at 735, which were inevitably copyrighted. Similarly,
Grokster sent users a newsletter promoting its ability to provide particular, popular copyrighted materials. Brief
for Motion Picture Studio and Recording Company Petitioners 78.
In addition to this evidence of express promotion, marketing, and intent to promote further, the business
models employed by Grokster and StreamCast confirm that their principal object was use of their software to
download copyrighted works. Grokster and StreamCast receive no revenue from users, who obtain the software
itself for nothing. Instead, both companies generate income by selling advertising space, and they stream the
advertising to Grokster and Morpheus users while they are employing the programs. As the number of users of
each program increases, advertising opportunities become worth more. Cf. App. 539, 804. While there is
doubtless some demand for free Shakespeare, the evidence shows that substantive volume is a function of free
access to copyrighted work. Users seeking Top 40 songs, for example, or the latest release by Modest Mouse, are
certain to be far more numerous than those seeking a free Decameron, and Grokster and StreamCast translated
that demand into dollars.
Finally, there is no evidence that either company made an effort to filter copyrighted material from users
downloads or otherwise impede the sharing of copyrighted files. Although Grokster appears to have sent e-mails
warning users about infringing content when it received threatening notice from the copyright holders, it never
blocked anyone from continuing to use its software to share copyrighted files. Id., at 7576. StreamCast not
only rejected another companys offer of help to monitor infringement, id., at 928929, but blocked the
Internet Protocol addresses of entities it believed were trying to engage in such monitoring on its networks, id.,
at 917922.
B potential for unlawful use, could limit further development of beneficial technologies. See, e.g., Lemley & Reese,
After discovery, the parties on each side of the case cross-moved for summary judgment. The District Court
limited its consideration to the asserted liability of Grokster and StreamCast for distributing the current versions
of their software, leaving aside whether either was liable for damages arising from past versions of their
software, or from other past activities. 259 F. Supp. 2d 1029, 1033 (CD Cal. 2003). The District Court held that
those who used the Grokster and Morpheus software to download copyrighted media files directly infringed
MGMs copyrights, a conclusion not contested on appeal, but the court nonetheless granted summary judgment
in favor of Grokster and StreamCast as to any liability arising from distribution of the then current versions of
their software. Distributing that software gave rise to no liability in the courts view, because its use did not
provide the distributors with actual knowledge of specific acts of infringement. Case No. CV 01 08541 SVW
(PJWx) (CD Cal., June 18, 2003), App. 1213.
The Court of Appeals affirmed. 380 F.3d 1154 (CA9 2004). In the courts analysis, a defendant was liable as a
contributory infringer when it had knowledge of direct infringement and materially contributed to the
infringement. But the court read Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), as
holding that distribution of a commercial product capable of substantial noninfringing uses could not give rise to
contributory liability for infringement unless the distributor had actual knowledge of specific instances of
infringement and failed to act on that knowledge. The fact that the software was capable of substantial
noninfringing uses in the Ninth Circuits view meant that Grokster and StreamCast were not liable, because they
had no such actual knowledge, owing to the decentralized architecture of their software. The court also held that
Grokster and StreamCast did not materially contribute to their users infringement because it was the users
themselves who searched for, retrieved, and stored the infringing files, with no involvement by the defendants
beyond providing the software in the first place.
The Ninth Circuit also considered whether Grokster and StreamCast could be liable under a theory of vicarious
infringement. The court held against liability because the defendants did not monitor or control the use of the
software, had no agreed-upon right or current ability to supervise its use, and had no independent duty to police
infringement. We granted certiorari. 543 U.S. ___ (2004).
II
A
MGM and many of the amici fault the Court of Appealss holding for upsetting a sound balance between the
respective values of supporting creative pursuits through copyright protection and promoting innovation in new
communication technologies by limiting the incidence of liability for copyright infringement. The more artistic
protection is favored, the more technological innovation may be discouraged; the administration of copyright
law is an exercise in managing the trade-off. See Sony Corp. v. Universal City Studios, supra, at 442; see generally
Ginsburg, Copyright and Control Over New Technologies of Dissemination, 101 Colum. L. Rev. 1613 (2001);
Lichtman & Landes, Indirect Liability for Copyright Infringement: An Economic Perspective, 16 Harv. J. L. & Tech.
395 (2003).
The tension between the two values is the subject of this case, with its claim that digital distribution of
copyrighted material threatens copyright holders as never before, because every copy is identical to the original,
copying is easy, and many people (especially the young) use file-sharing software to download copyrighted
works. This very breadth of the softwares use may well draw the public directly into the debate over copyright
policy, Peters, Brace Memorial Lecture: Copyright Enters the Public Domain, 51 J. Copyright Soc. 701, 705717
(2004) (address by Register of Copyrights), and the indications are that the ease of copying songs or movies using
software like Groksters and Napsters is fostering disdain for copyright protection, Wu, When Code Isnt Law, 89
Va. L. Rev. 679, 724726 (2003). As the case has been presented to us, these fears are said to be offset by the
different concern that imposing liability, not only on infringers but on distributors of software based on its
Reducing Digital Copyright Infringement Without Restricting Innovation, 56 Stan. L. Rev. 1345, 13861390
(2004); Brief for Innovation Scholars and Economists as Amici Curiae 1520; Brief for Emerging Technology
Companies as Amici Curiae 1925; Brief for Intel Corporation as Amicus Curiae 2022.8
The argument for imposing indirect liability in this case is, however, a powerful one, given the number of
infringing downloads that occur every day using StreamCasts and Groksters software. When a widely shared
service or product is used to commit infringement, it may be impossible to enforce rights in the protected work
effectively against all direct infringers, the only practical alternative being to go against the distributor of the
copying device for secondary liability on a theory of contributory or vicarious infringement. See In re Aimster
Copyright Litigation, 334 F.3d 643, 645646 (CA7 2003).
One infringes contributorily by intentionally inducing or encouraging direct infringement, see Gershwin Pub.
Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (CA2 1971), and infringes vicariously by
profiting from direct infringement while declining to exercise a right to stop or limit it, Shapiro, Bernstein &
Co. v. H. L. Green Co., 316 F.2d 304, 307 (CA2 1963).9 Although [t]he Copyright Act does not expressly render
anyone liable for infringement committed by another, Sony Corp. v. Universal City Studios, 464 U.S., at 434,
these doctrines of secondary liability emerged from common law principles and are well established in the
law, id., at 486 (Blackmun, J., dissenting); Kalem Co. v. Harper Brothers, 222 U.S. 55, 6263 (1911); Gershwin
Pub. Corp. v. Columbia Artists Management, supra, at 1162; 3 M. Nimmer & D. Nimmer, Copyright, 12.04[A]
(2005).
B
Despite the currency of these principles of secondary liability, this Court has dealt with secondary copyright
infringement in only one recent case, and because MGM has tailored its principal claim to our opinion there, a
look at our earlier holding is in order. In Sony Corp. v. Universal City Studios, supra, this Court addressed a claim
that secondary liability for infringement can arise from the very distribution of a commercial product. There, the
product, novel at the time, was what we know today as the videocassette recorder or VCR. Copyright holders
sued Sony as the manufacturer, claiming it was contributorily liable for infringement that occurred when VCR
owners taped copyrighted programs because it supplied the means used to infringe, and it had constructive
knowledge that infringement would occur. At the trial on the merits, the evidence showed that the principal use
of the VCR was for time-shifting, or taping a program for later viewing at a more convenient time, which the
Court found to be a fair, not an infringing, use. Id., at 423424. There was no evidence that Sony had expressed
an object of bringing about taping in violation of copyright or had taken active steps to increase its profits from
unlawful taping. Id., at 438. Although Sonys advertisements urged consumers to buy the VCR to record
favorite shows or build a library of recorded programs, id., at 459 (Blackmun, J., dissenting), neither of when an actual purpose to cause infringing use is shown by evidence independent of design and distribution of
these uses was necessarily infringing, id., at 424, 454455.
On those facts, with no evidence of stated or indicated intent to promote infringing uses, the only conceivable
basis for imposing liability was on a theory of contributory infringement arising from its sale of VCRs to
consumers with knowledge that some would use them to infringe. Id., at 439. But because the VCR was capable
of commercially significant noninfringing uses, we held the manufacturer could not be faulted solely on the
basis of its distribution. Id., at 442.
This analysis reflected patent laws traditional staple article of commerce doctrine, now codified, that
distribution of a component of a patented device will not violate the patent if it is suitable for use in other
ways. 35 U.S.C. 271(c); Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 485 (1964) (noting
codification of cases); id., at 486, n. 6 (same). The doctrine was devised to identify instances in which it may be
presumed from distribution of an article in commerce that the distributor intended the article to be used to
infringe anothers patent, and so may justly be held liable for that infringement. One who makes and sells
articles which are only adapted to be used in a patented combination will be presumed to intend the natural
consequences of his acts; he will be presumed to intend that they shall be used in the combination of the
patent. New York Scaffolding Co. v. Whitney, 224 F. 452, 459 (CA8 1915); see also James Heekin Co. v. Baker,
138 F. 63, 66 (CA8 1905); Canda v. Michigan Malleable Iron Co., 124 F. 486, 489 (CA6 1903); Thomson-Houston
Electric Co. v. Ohio Brass Co., 80 F. 712, 720721 (CA6 1897); Red Jacket Mfg. Co. v. Davis, 82 F. 432, 439 (CA7
1897); Holly v. Vergennes Machine Co., 4 F. 74, 82 (CC Vt. 1880); Renwick v. Pond, 20 F. Cas. 536, 541 (No.
11,702) (CC SDNY 1872).
In sum, where an article is good for nothing else but infringement, Canda v. Michigan Malleable Iron
Co.,supra, at 489, there is no legitimate public interest in its unlicensed availability, and there is no injustice in
presuming or imputing an intent to infringe, see Henry v. A. B. Dick Co., 224 U.S. 1, 48 (1912), overruled on other
grounds, Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502 (1917). Conversely, the doctrine
absolves the equivocal conduct of selling an item with substantial lawful as well as unlawful uses, and limits
liability to instances of more acute fault than the mere understanding that some of ones products will be
misused. It leaves breathing room for innovation and a vigorous commerce. See Sony Corp. v. Universal City
Studios, supra, at 442; Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176, 221 (1980); Henry v. A. B. Dick
Co., supra, at 48.
The parties and many of the amici in this case think the key to resolving it is the Sony rule and, in particular,
what it means for a product to be capable of commercially significant noninfringing uses. Sony
Corp. v. Universal City Studios, supra, at 442. MGM advances the argument that granting summary judgment to
Grokster and StreamCast as to their current activities gave too much weight to the value of innovative
technology, and too little to the copyrights infringed by users of their software, given that 90% of works available
on one of the networks was shown to be copyrighted. Assuming the remaining 10% to be its noninfringing use,
MGM says this should not qualify as substantial, and the Court should quantify Sony to the extent of holding
that a product used principally for infringement does not qualify. See Brief for Motion Picture Studio and
Recording Company Petitioners 31. As mentioned before, Grokster and StreamCast reply by citing evidence that
their software can be used to reproduce public domain works, and they point to copyright holders who actually
encourage copying. Even if infringement is the principal practice with their software today, they argue, the
noninfringing uses are significant and will grow.
We agree with MGM that the Court of Appeals misapplied Sony, which it read as limiting secondary liability
quite beyond the circumstances to which the case applied. Sony barred secondary liability based on presuming
or imputing intent to cause infringement solely from the design or distribution of a product capable of
substantial lawful use, which the distributor knows is in fact used for infringement. The Ninth Circuit has
read Sonys limitation to mean that whenever a product is capable of substantial lawful use, the producer can
never be held contributorily liable for third parties infringing use of it; it read the rule as being this broad, even
the product, unless the distributors had specific knowledge of infringement at a time at which they contributed
to the infringement, and failed to act upon that information. 380 F.3d, at 1162 (internal quotation marks and
alterations omitted). Because the Circuit found the StreamCast and Grokster software capable of substantial
lawful use, it concluded on the basis of its reading of Sony that neither company could be held liable, since there
was no showing that their software, being without any central server, afforded them knowledge of specific
unlawful uses.
This view of Sony, however, was error, converting the case from one about liability resting on imputed intent
to one about liability on any theory. Because Sony did not displace other theories of secondary liability, and
because we find below that it was error to grant summary judgment to the companies on MGMs inducement
claim, we do not revisit Sony further, as MGM requests, to add a more quantified description of the point of
balance between protection and commerce when liability rests solely on distribution with knowledge that
unlawful use will occur. It is enough to note that the Ninth Circuits judgment rested on an erroneous
understanding of Sony and to leave further consideration of the Sony rule for a day when that may be required.
C
Sonys rule limits imputing culpable intent as a matter of law from the characteristics or uses of a distributed
product. But nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case
was never meant to foreclose rules of fault-based liability derived from the common law.10 Sony
Corp. v. Universal City Studios, 464 U.S., at 439 (If vicarious liability is to be imposed on Sony in this case, it must
rest on the fact that it has sold equipment with constructive knowledge of the potential for infringement). Thus,
where evidence goes beyond a products characteristics or the knowledge that it may be put to infringing uses,
and shows statements or actions directed to promoting infringement, Sonys staple-article rule will not preclude
liability.
The classic case of direct evidence of unlawful purpose occurs when one induces commission of infringement
by another, or entic[es] or persuad[es] another to infringe, Blacks Law Dictionary 790 (8th ed. 2004), as by
advertising. Thus at common law a copyright or patent defendant who not only expected but invoked
[infringing use] by advertisement was liable for infringement on principles recognized in every part of the law.
Kalem Co. v. Harper Brothers, 222 U.S., at 6263 (copyright infringement). See also Henry v. A. B. Dick Co., 224
U.S., at 4849 (contributory liability for patent infringement may be found where a goods most conspicuous
use is one which will coperate in an infringement when sale to such user is invoked by advertisement of the
infringing use); Thomson-Houston Electric Co. v. Kelsey Electric R. Specialty Co., 75 F. 1005, 10071008 (CA2
1896) (relying on advertisements and displays to find defendants willingness to aid other persons in any
attempts which they may be disposed to make towards [patent] infringement); Rumford Chemical
Works v. Hecker, 20 F. Cas. 1342, 1346 (No. 12,133) (CC N. J. 1876) (demonstrations of infringing activity along
with avowals of the [infringing] purpose and use for which it was made supported liability for patent
infringement).
The rule on inducement of infringement as developed in the early cases is no different today.11 Evidence of
active steps taken to encourage direct infringement, Oak Industries, Inc. v. Zenith Electronics Corp., 697
F. Supp. 988, 992 (ND Ill. 1988), such as advertising an infringing use or instructing how to engage in an infringing
use, show an affirmative intent that the product be used to infringe, and a showing that infringement was
encouraged overcomes the laws reluctance to find liability when a defendant merely sells a commercial product
suitable for some lawful use, see, e.g., Water Technologies Corp. v. Calco, Ltd., 850 F.2d 660, 668 (CA Fed. 1988)
(liability for inducement where one actively and knowingly aid[s] and abet[s] anothers direct infringement
(emphasis omitted)); Fromberg, Inc. v. Thornhill, 315 F.2d 407, 412413 (CA5 1963) (demonstrations by sales
staff of infringing uses supported liability for inducement); Haworth Inc. v.Herman Miller Inc., 37 USPQ 2d 1080,
1090 (WD Mich. 1994) (evidence that defendant demonstrate[d] and recommend[ed] infringing configurations
of its product could support inducement liability); Sims v. Mack Trucks, Inc., 459 F. Supp. 1198, 1215 (ED Pa.
1978) (finding inducement where the use depicted by the defendant in its promotional film and brochures
infringes the patent), overruled on other grounds, 608 F.2d 87 (CA3 1979). Cf. W. Keeton, D. Dobbs, R.
Keeton, & D. Owen, Prosser and Keeton on Law of Torts 37 (5th ed. 1984) (There is a definite tendency to
impose greater responsibility upon a defendant whose conduct was intended to do harm, or was morally
wrong).
For the same reasons that Sony took the staple-article doctrine of patent law as a model for its copyright safe-
harbor rule, the inducement rule, too, is a sensible one for copyright. We adopt it here, holding that one who
distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or
other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third
parties. We are, of course, mindful of the need to keep from trenching on regular commerce or discouraging the
development of technologies with lawful and unlawful potential. Accordingly, just as Sony did not find
intentional inducement despite the knowledge of the VCR manufacturer that its device could be used to infringe,
464 U.S., at 439, n. 19, mere knowledge of infringing potential or of actual infringing uses would not be enough
here to subject a distributor to liability. Nor would ordinary acts incident to product distribution, such as offering
customers technical support or product updates, support liability in themselves. The inducement rule, instead,
premises liability on purposeful, culpable expression and conduct, and thus does nothing to compromise
legitimate commerce or discourage innovation having a lawful promise.
III
A the entire record its import is clear.
The only apparent question about treating MGMs evidence as sufficient to withstand summary judgment
under the theory of inducement goes to the need on MGMs part to adduce evidence that StreamCast and
Grokster communicated an inducing message to their software users. The classic instance of inducement is by
advertisement or solicitation that broadcasts a message designed to stimulate others to commit violations. MGM
claims that such a message is shown here. It is undisputed that StreamCast beamed onto the computer screens
of users of Napster-compatible programs ads urging the adoption of its OpenNap program, which was designed,
as its name implied, to invite the custom of patrons of Napster, then under attack in the courts for facilitating
massive infringement. Those who accepted StreamCasts OpenNap program were offered software to perform
the same services, which a factfinder could conclude would readily have been understood in the Napster market
as the ability to download copyrighted music files. Grokster distributed an electronic newsletter containing links
to articles promoting its softwares ability to access popular copyrighted music. And anyone whose Napster or
free file-sharing searches turned up a link to Grokster would have understood Grokster to be offering the same
file-sharing ability as Napster, and to the same people who probably used Napster for infringing downloads; that
would also have been the understanding of anyone offered Groksters suggestively named Swaptor software, its
version of OpenNap. And both companies communicated a clear message by responding affirmatively to
requests for help in locating and playing copyrighted materials.
In StreamCasts case, of course, the evidence just described was supplemented by other unequivocal
indications of unlawful purpose in the internal communications and advertising designs aimed at Napster users
(When the lights went off at Napster where did the users go? App. 836 (ellipsis in original)). Whether the
messages were communicated is not to the point on this record. The function of the message in the theory of
inducement is to prove by a defendants own statements that his unlawful purpose disqualifies him from
claiming protection (and incidentally to point to actual violators likely to be found among those who hear or read
the message). See supra, at 1719. Proving that a message was sent out, then, is the preeminent but not
exclusive way of showing that active steps were taken with the purpose of bringing about infringing acts, and of
showing that infringing acts took place by using the device distributed. Here, the summary judgment record is
replete with other evidence that Grokster and StreamCast, unlike the manufacturer and distributor in Sony,
acted with a purpose to cause copyright violations by use of software suitable for illegal use. See supra, at 69.
Three features of this evidence of intent are particularly notable. First, each company showed itself to be
aiming to satisfy a known source of demand for copyright infringement, the market comprising former Napster
users. StreamCasts internal documents made constant reference to Napster, it initially distributed its Morpheus
software through an OpenNap program compatible with Napster, it advertised its OpenNap program to Napster
users, and its Morpheus software functions as Napster did except that it could be used to distribute more kinds
of files, including copyrighted movies and software programs. Groksters name is apparently derived from
Napster, it too initially offered an OpenNap program, its softwares function is likewise comparable to Napsters,
and it attempted to divert queries for Napster onto its own Web site. Grokster and StreamCasts efforts to supply
services to former Napster users, deprived of a mechanism to copy and distribute what were overwhelmingly
infringing files, indicate a principal, if not exclusive, intent on the part of each to bring about infringement.
Second, this evidence of unlawful objective is given added significance by MGMs showing that neither
company attempted to develop filtering tools or other mechanisms to diminish the infringing activity using their
software. While the Ninth Circuit treated the defendants failure to develop such tools as irrelevant because they
lacked an independent duty to monitor their users activity, we think this evidence underscores Groksters and
StreamCasts intentional facilitation of their users infringement. 12
Third, there is a further complement to the direct evidence of unlawful objective. It is useful to recall that
StreamCast and Grokster make money by selling advertising space, by directing ads to the screens of computers
employing their software. As the record shows, the more the software is used, the more ads are sent out and the
greater the advertising revenue becomes. Since the extent of the softwares use determines the gain to the
distributors, the commercial sense of their enterprise turns on high-volume use, which the record shows is
infringing.13 This evidence alone would not justify an inference of unlawful intent, but viewed in the context of
The unlawful objective is unmistakable.
B
In addition to intent to bring about infringement and distribution of a device suitable for infringing use, the
inducement theory of course requires evidence of actual infringement by recipients of the device, the software
in this case. As the account of the facts indicates, there is evidence of infringement on a gigantic scale, and there
is no serious issue of the adequacy of MGMs showing on this point in order to survive the companies summary
judgment requests. Although an exact calculation of infringing use, as a basis for a claim of damages, is subject to
dispute, there is no question that the summary judgment evidence is at least adequate to entitle MGM to go
forward with claims for damages and equitable relief.
***
In sum, this case is significantly different from Sony and reliance on that case to rule in favor of StreamCast and
Grokster was error. Sony dealt with a claim of liability based solely on distributing a product with alternative
lawful and unlawful uses, with knowledge that some users would follow the unlawful course. The case struck a
balance between the interests of protection and innovation by holding that the products capability of
substantial lawful employment should bar the imputation of fault and consequent secondary liability for the
unlawful acts of others.
MGMs evidence in this case most obviously addresses a different basis of liability for distributing a product
open to alternative uses. Here, evidence of the distributors words and deeds going beyond distribution as such
shows a purpose to cause and profit from third-party acts of copyright infringement. If liability for inducing
infringement is ultimately found, it will not be on the basis of presuming or imputing fault, but from inferring a
patently illegal objective from statements and actions showing what that objective was.
There is substantial evidence in MGMs favor on all elements of inducement, and summary judgment in favor
of Grokster and StreamCast was error. On remand, reconsideration of MGMs motion for summary judgment will
be in order.
 The judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent
with this opinion.
It is so ordered.
LOTUS DEVELOPMENT CORPORATION, Plaintiff, Appellee, v. BORLAND INTERNATIONAL, INC., Defendant,
Appellant.
Nos. 97-1399, 97-1857.
Decided: May 15, 1998
Before STAHL, Circuit Judge, CAMPBELL, Senior Circuit Judge, and LYNCH, Circuit Judge.Gary L. Reback, with
whom Michael Barclay, Colleen Bal, Wilson Sonsini Goodrich & Rosati, Palo Alto, CA, Peter E. Gelhaar, Katherine
L. Parks, Donnelly, Conroy & Gelhaar, LLP, Boston, MA, Steven Brower, and Ginsburg, Stephan, Oringher &
Richman, Costa Mesa, CA, were on brief, for appellant. Henry B. Gutman with whom Simpson Thacher & Bartlett,
Kerry L. Konrad, and Lori E. Lesser, New York City, were on brief, for appellee.
Defendant-appellant Borland International, Inc. (Borland) appeals from the district court's order denying its
motion for attorney's fees and costs incurred during extended litigation concerning its alleged infringement of
plaintiff-appellee Lotus Development Corporation's (Lotus) copyright in a computer program, Lotus 1-2-3.
Borland, the prevailing party in this copyright infringement action, now claims that the district court abused its
discretion in declining to award fees. We affirm.
I.
Background
Lotus 1-2-3 is a spreadsheet computer program that enables users to perform various functions and calculations.
In 1987, Borland released spreadsheet programs Quattro and Quattro Pro, which competed with Lotus 1-2-3 and
contained virtually identical copies of the 1-2-3 menu command hierarchy. The inclusion of this so-called
menu tree from Lotus 1-2-3 prompted the instant litigation in 1990, the substance of which is set forth in our
prior opinion. See Lotus Dev. Corp. v. Borland Int'l, Inc., 49 F.3d 807, 810-811 (1st Cir.1995). Here we recite
only the facts pertinent to the present appeal.
The hard-fought litigation below resulted in four separate district court opinions (Keeton, U.S.D.J.), culminating
in the district court's conclusion that the 1-2-3 menu tree contained copyrightable expression and that Borland
had thus infringed Lotus's copyrights in Lotus 1-2-3.1 On March 9, 1995, we reversed, holding as a matter of first
impression that the 1-2-3 menu command hierarchy was an uncopyrightable method of operation under 17
U.S.C. 102(b). See 49 F.3d at 813-18. Subsequently, the Supreme Court granted Lotus's petition for
certiorari but deadlocked on the merits, resulting in an affirmance by an equally divided Court. See 516 U.S.
233, 116 S.Ct. 804, 133 L.Ed.2d 610 (1996).
After the Supreme Court proceedings, Borland filed a motion for attorney's fees and full costs as the prevailing
party pursuant to 17 U.S.C. 505. Borland claimed that, as a result of Lotus's suit, it had incurred over $11
million in attorney's fees, $7.5 million in expert fees, and $1.6 million in other costs. It sought reimbursement
for all of these expenses. Following oral argument, the district court (Woodlock, U.S.D.J.) denied Borland's
motion.2 As we explicate below, the district court reasoned, in essence, that Lotus and Borland had litigated a
novel and unsettled question of copyright law in order to protect their own economic interests, and thus under
Fogerty v. Fantasy, Inc., 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994)(interpreting 17 U.S.C. 505), an
award of fees was not warranted. Borland now appeals this ruling.
II.
Discussion
Pursuant to 17 U.S.C. 505, the district court in its discretion may allow the recovery of full costs by or
against any party The court may also award a reasonable attorney's fee to the prevailing party as part of the
costs. We will disturb a ruling under section 505 only if the record persuades us that the trial court indulged a
serious lapse in judgment. Texaco P.R., Inc. v. Department of Consumer Affairs, 60 F.3d 867, 875 (1st
Cir.1995).
In Fogerty, the Supreme Court rejected the dual standard for the award of fees, then in effect in many circuits,
which allowed prevailing plaintiffs to recover attorney's fees almost automatically under section 505, but which
required prevailing defendants to demonstrate that the plaintiff's claims were frivolous or brought in bad faith.
See 510 U.S. at 534, 114 S.Ct. at 1033. Finding no basis for the disparate treatment of plaintiffs and defendants
in the text of section 505, the Fogerty Court held that district courts should exercise their equitable discretion to
award fees in an even-handed manner, and with the goal of vindicating the overriding purpose of the Copyright
Act: to encourage the production of original literary, artistic, and musical expression for the public good. See
id. at 524, 534, 114 S.Ct. at 1028, 1033. Rather than formulate a specific standard for district courts to apply,
the Court identified a list of nonexclusive factors that district courts may consider, such as frivolousness,
motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in
some cases to advance considerations of compensation and deterrence. Id. at 534 n. 19, 114 S.Ct. at 1033 n.
19 (citing Lieb v. Topstone Indus., Inc. 788 F.2d 151, 156 (3d Cir.1986)). Notably, the Fogerty Court eschewed
arguments that courts should employ the so-called British rule, which mandates the award of attorney's fees
to prevailing parties. See id. at 534, 114 S.Ct. at 1033.
In denying Borland's fee application, the district court reasoned, in part, as follows:
Fogerty opened the possibility of the shifting of attorney's fees, but it did not embrace a regime of the automatic
award of attorney's fees. Rather it recognized that there is to be undertaken an exercise of equitable discretion
for which there is no precise formula.
. . . . .
What we dealt with here is a case dealing with what I call the open-textured dimensions of the copyright law in
which the interstices were quite broad and in which judges attempted to knit a fabric that maintained the
integrity of copyright law itself [T]here was merit on both sides, and [the court of appeals was] dealing with an
area that was moving copyright law into a relatively uncharted area that would benefit from further directions
from Congress and in which both parties had an important economic interest.
I find that the claims made by Lotus were meritorious. I also find that this is a case in which the various judges
had different views
. . . . .
And so, while I find that this was not frivolous, [and that] the claims were objectively reasonable that we deal
with a quite unique set of circumstances as to which the larger directions of Fogerty are not to make an award of
attorney's fees
The district court then considered whether an award was warranted in light of the other factors mentioned in
Fogerty: motivation, compensation, and deterrence. Finding that these factors did not militate in favor of an
award, the court denied fees.
Borland mounts both legal and factual challenges to the district court's decision. We turn first to Borland's
claims of legal error. Borland asserts that the court applied the Fogerty standard incorrectly because it placed
two factors, the non-frivolous nature of the plaintiff's claims and their objective reasonableness, above all other
considerations. Borland contends that when corporate giants litigate important copyright questions of first
impression, the resulting lack of frivolousness and objective unreasonableness will invariably preclude a
prevailing defendant from obtaining attorney's fees. This reasoning, Borland concludes, is no different from the
dual standard rejected in Fogerty, and thus, under Fogerty and Edwards v. Red Farm Studio Co., 109 F.3d 80
(1st Cir.1997), the district court's analysis is legally erroneous.
Although we agree with Borland that defendants are no longer required as a matter of law to demonstrate
culpable behavior on the plaintiff's part, see Fantasy v. Fogerty, 94 F.3d 553, 558 (9th Cir.1996), we disagree with
Borland's characterization of the district court's reasoning. Had the district court taken such a hard line,
Borland would have a strong argument. In Edwards, we reversed the denial of attorney's fees to a prevailing
defendant because the district court had required a showing of bad faith or frivolousness. See 109 F.3d at 82.
The district court here, however, committed no such error. Rather, it is evident that the court recognized that
under Fogerty a showing of culpability is not a prerequisite for awarding fees: after concluding that Lotus's
claims were neither frivolous nor objectively unreasonable, the court went on to consider the remaining Lieb
factors. The district court merely reasoned, in part, that when a plaintiff prosecutes an action in good faith, in
an unsettled area of law, and with a reasonable likelihood of success, against a party with similar financial
resources, the prevailing party's case for attorney's fees is weaker, whether it be a plaintiff or a defendant. This
view has a long history in copyright law, see, e.g., McCulloch v. Albert E. Price, Inc., 823 F.2d 316, 322 (9th
Cir.1987); Official Aviation Guide Co. v. American Aviation Assocs., 162 F.2d 541, 542 (7th Cir.1947), and in no
way conflicts with Fogerty's command to treat prevailing plaintiffs and defendants even-handedly. As a result,
we see no basis for concluding that the district court applied an incorrect legal standard.
Borland next contends that the district court committed legal error by relying on the Supreme Court's
affirmance by an equally divided court to buttress its conclusion that Borland narrowly prevailed on the merits.
Borland argues that the inference made by the court, that four Justices of the Supreme Court were ready to
reverse our opinion on the merits, is legally incorrect because there is no way to ascertain the position of the
Justices on the merits of the litigation.
The relevance of this objection to our present analysis is not obvious to us. At points, the court did refer to the
split on the Supreme Court as some evidence that Lotus's claims had merit and thus were objectively reasonable.
To the extent that Borland challenges this finding, its challenge is unpersuasive. The fact remains that Lotus
filed this action only after prevailing on a virtually identical claim that was never appealed against a different
software company. See Lotus Dev. Corp. v. Paperback Software Int'l, 740 F.Supp. 37 (D.Mass.1990) (Keeton,
U.S.D.J.). Although we ultimately held to the contrary, we cannot say that Lotus's initial decision to rely on
Paperback was objectively unreasonable. Regardless of the meaning of the Supreme Court's narrow
affirmance, the district court's conclusion that Lotus's chief claim was objectively reasonable is certainly a
permissible one.
Borland also contends that the district court's application of the various Lieb factors was clearly erroneous.
See Lieb, 788 F.2d at 156. The court found that neither party had an improper motivation in litigating the case,
reasoning that both parties had important economic interests in the litigation and that there were no clear signs
for judicial determination. The court also held that the need to advance considerations of compensation and
deterrence did not militate in favor of a fee award. The court found no oppression by one party over the other
in the ability to use their financial wherewithal to affect the litigation and concluded that when the parties are
litigating a matter of some importance to the copyright laws, there is no need for deterrence.
Borland now contends that the district court erred by ignoring Lotus's alleged anti-competitive purposes in
bringing the litigation, relying impermissibly on Borland's refusal to settle the case, and discounting the
importance of encouraging copyright defendants to assert meritorious defenses. Borland notes that it
advanced the interests of copyright law by litigating this case all the way through the Supreme Court against an
unusually wealthy plaintiff. It also contends that the vindication of its own copyright in Quattro Pro increased
the availability of copyrighted works. Borland concludes that if ever there were a situation where the
assertion of meritorious defenses should be encouraged, it is a case involving issues of first impression.
None of these contentions provides a basis for overriding the denial of fees and costs. Both sides proffered
evidence on the issue of whether Lotus had intended to use this litigation to bankrupt Borland and thus maintain
its dominant position in the spreadsheet market.3 We cannot say, on the record before us, that the presence of
an impermissible motive on Lotus's part is so clear that a contrary conclusion could not reasonably be reached.
After all, copyright law often delineates the boundaries of economic competition. See, e.g., Feist Publications,
Inc. v. Rural Tel. Service, 499 U.S. 340, 349, 111 S.Ct. 1282, 1289-90, 113 L.Ed.2d 358 (1991) (holding that the
plaintiff's telephone directory lacked originality and thus copyright law did not bar defendant from copying the
information to create a competing product). Arguably, there is nothing inherently improper about bringing a
claim that is well-founded in law and fact against one's competitors, even when legal action, if successful, will
inflict severe economic consequences upon them.
As for the district court's consideration of the parties' settlement negotiations, the court did note in its
discussion of the motivation factor that more careful evaluators of the expense of litigation might have chosen
not to spend the money to litigate the case. This statement does give us some concern. Copyright
defendants with strong legal or factual defenses should not be deterred from litigation by the possibility that
their refusal to settle an invalid claim will be held against them after they prevail. Such reasoning would conflict
with Fogerty's direction that the award of fees should encourage copyright defendants to assert meritorious
defenses. See 510 U.S. at 527, 114 S.Ct. at 1029-30. We are confident, however, that the court's casual
observation regarding the costs of litigation was not material to its ultimate determination. Rather, the court
relied squarely on the parties' clear economic interests in pursuing the litigation, about which there is little to
dispute.
Turning to the need to encourage meritorious defenses, a copyright defendant's success on the merits in a
case of first impression may militate in favor of a fee award, but we are unwilling to hold that a successful
defense in an important case necessarily mandates an award of attorney's fees. When close infringement cases
are litigated, copyright law benefits from the resulting clarification of the doctrine's boundaries. But because
novel cases require a plaintiff to sue in the first place, the need to encourage meritorious defenses is a factor
that a district court may balance against the potentially chilling effect of imposing a large fee award on a plaintiff,
who, in a particular case, may have advanced a reasonable, albeit unsuccessful, claim. Fogerty made clear that
courts are to evaluate cases on an individualized basis, with the primary responsibility resting on the shoulders of
the district judge. Regardless of whether we would have approached the matter similarly, we are unable to say
that the district court's analysis strikes us as an abuse of that discretion.
Borland's final contentions-that the district court erred by ignoring Borland's vindication of its own
copyrighted computer program and Lotus's unusual wealth-are unpersuasive. As a basis for awarding fees, we
see no meaningful distinction between Borland's vindication of its own copyrighted work and its assertion of a
meritorious defense. The latter necessarily implies the former. In addition, the district court supportably
found that both parties were financially able to litigate this important case. Lotus's unusual wealth in no way
alters this conclusion.
As an alternative to its argument for all its fees and costs, Borland claims that the district court erred by not
awarding Borland fees and costs attributable to those portions of the case in which Lotus's conduct was
objectively unreasonable. Specifically, Borland claims it was objectively unreasonable for Lotus (1) to litigate
the functional constraints issue, see Borland II, 799 F.Supp. at 221; Borland III, 831 F.Supp. at 207; (2) to add
the Key Reader claim in the midst of the case, see Borland IV, 831 F.Supp. at 230-31; and (3) to prosecute a
trial on damages during the pendency of Borland's successful appeal.
The district court denied Borland's motion for full costs covering the entire litigation, but did not explicitly rule
on Borland's alternative request for partial fees and costs. The issue of awarding partial fees was, however,
argued at some length during the hearing on Borland's motion, which indicates that the district court considered
Borland's arguments.4 Although the district court's silence is troubling, we think it implicit that his decision that
no fees are warranted for the entirety of the case necessarily encompasses Borland's request for fees resulting
from individual parts of the litigation. In addition, there is no suggestion in the district court's opinion that it
was under the legally erroneous impression that an award of partial fees was not allowable under section 505.5
This case is close, particularly in the lack of analysis on Borland's partial fee request.6 If the district court had
decided to award at least some fees, it is difficult to see how that decision would have been an abuse of
discretion either. But the decision to award fees is not a decision committed to the appellate court in the first
instance. We are thus limited to saying only that the district court did not abuse its discretion in its decision.
Affirmed. No costs to either party.
G.R. Nos. 175769-70, January 19, 2009
ABS-CBN BROADCASTING CORPORATION, Petitioner - versus - PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR
G. REYES, FRANCIS CHUA (ANG BIAO), MANUEL F.
ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M. COLAYCO,
YNARES-SANTIAGO, J.:
FACTS
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed under the laws of the Republic of the
Philippines to engage in television and radio broadcasting.[4]It broadcasts television programs by wireless means
to Metro Manila and nearby provinces, and by satellite to provincial stations through Channel 2 on Very High
Frequency (VHF) and Channel 23 on Ultra High Frequency (UHF). The programs aired over Channels 2 and 23 are
either produced by ABS-CBN or purchased from or licensed by other producers. ABS-CBN also owns regional
television stations which pattern their programming in accordance with perceived demands of the region. Thus,
television programs shown in Metro Manila and nearby provinces are not necessarily shown in other provinces.
Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream Broadcasting System. It delivers
digital direct-to-home (DTH) television via satellite to its subscribers all over the Philippines. Herein individual
respondents, Cesar G. Reyes, Francis Chua, Manuel F. Abellada, Raul B. De Mesa, and Aloysius M. Colayco, are
members of PMSIs Board of Directors.
PMSI was granted a legislative franchise under Republic Act No. 8630 on May 7, 1998 and was given a Provisional
Authority by the National Telecommunications Commission (NTC) on February 1, 2000 to install, operate and
maintain a nationwide DTH satellite service. When it commenced operations, it offered as part of its program
line-up ABS-CBN Channels 2 and 23, NBN, Channel 4, ABC Channel 5, GMA Channel 7, RPN Channel 9, and IBC
Channel 13, together with other paid premium program channels.
However, ABS-CBN demanded for PMSI to cease and desist from rebroadcasting Channels 2 and 23. PMSI
replied that the rebroadcasting was in accordance with the authority granted it by NTC and its obligation under
NTC Memorandum Circular No. 4-08-88, Section 6.2 of which requires all cable television system operators
operating in a community within Grade A or B contours to carry the television signals of the authorized television
broadcast stations.
Thereafter, negotiations ensued between the parties in an effort to reach a settlement; however, the
negotiations were terminated on April 4, 2002 by ABS-CBN allegedly due to PMSIs inability to ensure the
prevention of illegal retransmission and further rebroadcast of its signals, as well as the adverse effect of the
rebroadcasts on the business operations of its regional television stations.
On May 13, 2002, ABS-CBN filed with the IPO a complaint for Violation of Laws Involving Property Rights, with
Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction, which was
docketed as IPV No. 10-2002-0004. It alleged that PMSIs unauthorized rebroadcasting of Channels 2 and 23
infringed on its broadcasting rights and copyright.
The Bureau of Legal Affairs (BLA) of the IPO issued a TRO against PMSI. PMSI suspended its retransmission of
Channels 2 and 23 and likewise filed a petition for certiorari with the Court of Appeals.
Meanwhile, on October 10, 2003, the NTC issued Memorandum Circular No. 10-10-2003, entitled Implementing
Rules and Regulations Governing Community Antenna/Cable Television (CATV) and Direct Broadcast Satellite
(DBS) Services to Promote Competition in the Sector. Article 6, Section 8 thereof states:
As a general rule, the reception, distribution and/or transmission by any CATV/DBS operator of any television
signals without any agreement with or authorization from program/content providers are prohibited.
On whether Memorandum Circular No. 10-10-2003 amended Memorandum Circular No. 04-08-88, the NTC
explained to PMSI in a letter dated November 3, 2003 that:
To address your query on whether or not the provisions of MC 10-10-2003 would have the effect of amending
the provisions of MC 4-08-88 on mandatory carriage of television signals, the answer is in the negative.
xxxx
The Commission maintains that, MC 4-08-88 remains valid, subsisting and enforceable.
Please be advised, therefore, that as duly licensed direct-to-home satellite television service provider authorized
by this Commission, your company continues to be bound by the guidelines provided for under MC 04-08-88,
specifically your obligation under its mandatory carriage provisions, in addition to your obligations under MC 10-
10-2003. (Emphasis added)
Please be guided accordingly.
DECISIONS OF THE LOWER COURTS
The BLA rendered a decision finding that PMSI infringed the broadcasting rights and copyright of ABS-CBN and
ordering it to permanently cease and desist from rebroadcasting Channels 2 and 23.
PMSI filed an appeal with the Office of the Director-General of the IPO. The Director-General of the IPO granted
PMSIs appeal.
Thus, ABS-CBN filed a petition for review with the Court of Appeals. The Court of Appeals issued a temporary
restraining order. Thereafter, ABS-CBN filed a petition for contempt against PMSI for continuing to rebroadcast
Channels 2 and 23 despite the restraining order.
The Court of Appeals sustained the findings of the Director-General of the IPO and dismissed both petitions filed
by ABS-CBN.
ABS-CBNs motion for reconsideration was denied, hence, this petition.
ISSUE
Does PMSI infringe on the copyright of ABS-CBN by rebroadcasting Channels 2 and 23?
ARGUMENTS RELEVANT
ABS-CBN contends
that PMSIs unauthorized rebroadcasting of Channels 2 and 23 is an infringement of its broadcasting
rights and copyright under the Intellectual Property Code (IP Code);
PMSI argues
that its rebroadcasting of Channels 2 and 23 is sanctioned by Memorandum Circular No. 04-08-88;
that the must-carry rule under the Memorandum Circular is a valid exercise of police power;
HELD
After a careful review of the facts and records of this case, we affirm the findings of the Director-General of the
IPO and the Court of Appeals.
There is no merit in ABS-CBNs contention that PMSI violated its broadcasters rights under Section 211 of the IP
Code which provides in part:
Chapter XIV
BROADCASTING ORGANIZATIONS
Sec. 211. Scope of Right. - Subject to the provisions of Section 212, broadcasting organizations shall enjoy the
exclusive right to carry out, authorize or prevent any of the following acts:
211.1. The rebroadcasting of their broadcasts;
xxxx
Neither is PMSI guilty of infringement of ABS-CBNs copyright under Section 177 of the IP Code which states that
copyright or economic rights shall consist of the exclusive right to carry out, authorize or prevent the public
performance of the work (Section 177.6), and other communication to the public of the work (Section 177.7).
RATIO
Section 202.7 of the IP Code defines broadcasting as the transmission by wireless means for the public reception
of sounds or of images or of representations thereof; such transmission by satellite is also broadcasting where
the means for decrypting are provided to the public by the broadcasting organization or with its consent.
On the other hand, rebroadcasting as defined in Article 3(g) of the International Convention for the Protection of
Performers, Producers of Phonograms and Broadcasting Organizations, otherwise known as the 1961 Rome
Convention, of which the Republic of the Philippines is a signatory, is the simultaneous broadcasting by one
broadcasting organization of the broadcast of another broadcasting organization.
The Director-General of the IPO correctly found that PMSI is not engaged in rebroadcasting and thus cannot be
considered to have infringed ABS-CBNs broadcasting rights and copyright, thus:
That the Appellants [herein respondent PMSI] subscribers are able to view Appellees [herein petitioner ABS-CBN]
programs (Channels 2 and 23) at the same time that the latter is broadcasting the same is undisputed. The
question however is, would the Appellant in doing so be considered engaged in broadcasting. Section 202.7 of
the IP Code states that broadcasting means the transmission by wireless means for the public reception of
sounds or of images or of representations thereof; such transmission by satellite is also broadcasting where the
means for decrypting are provided to the public by the broadcasting organization or with its consent.
Section 202.7 of the IP Code, thus, provides two instances wherein there is broadcasting, to wit:
1. The transmission by wireless means for the public reception of sounds or of images or of
representations thereof; and
2. The transmission by satellite for the public reception of sounds or of images or of representations
thereof where the means for decrypting are provided to the public by the broadcasting organization or with its
consent.
It is under the second category that Appellants DTH satellite television service must be examined since it is
satellite-based. The elements of such category are as follows:
1. There is transmission of sounds or images or of representations thereof;
2. The transmission is through satellite;
3. The transmission is for public reception; and
4. The means for decrypting are provided to the public by the broadcasting organization or with its
consent.
It is only the presence of all the above elements can a determination that the DTH is broadcasting and
consequently, rebroadcasting Appellees signals in violation of Sections 211 and 177 of the IP Code, may be
arrived at.
Accordingly, this Office is of the view that the transmission contemplated under Section 202.7 of the IP Code
presupposes that the origin of the signals is the broadcaster. Hence, a program that is broadcasted is attributed
to the broadcaster. In the same manner, the rebroadcasted program is attributed to the rebroadcaster.
In the case at hand, Appellant is not the origin nor does it claim to be the origin of the programs broadcasted by
the Appellee. Appellant did not make and transmit on its own but merely carried the existing signals of the
Appellee. When Appellants subscribers view Appellees programs in Channels 2 and 23, they know that the origin
thereof was the Appellee.
Nature of Broadcasting
Aptly, it is imperative to discern the nature of broadcasting. When a broadcaster transmits, the signals are
scattered or dispersed in the air. Anybody may pick-up these signals. There is no restriction as to its number,
type or class of recipients. To receive the signals, one is not required to subscribe or to pay any fee. One only has
to have a receiver, and in case of television signals, a television set, and to tune-in to the right
channel/frequency. The definition of broadcasting, wherein it is required that the transmission is wireless, all the
more supports this discussion. Apparently, the undiscriminating dispersal of signals in the air is possible only
through wireless means. The use of wire in transmitting signals, such as cable television, limits the recipients to
those who are connected. Unlike wireless transmissions, in wire-based transmissions, it is not enough that one
wants to be connected and possesses the equipment. The service provider, such as cable television companies
may choose its subscribers.
The only limitation to such dispersal of signals in the air is the technical capacity of the transmitters and other
equipment employed by the broadcaster. While the broadcaster may use a less powerful transmitter to limit its
coverage, this is merely a business strategy or decision and not an inherent limitation when transmission is
through cable.
Accordingly, the nature of broadcasting is to scatter the signals in its widest area of coverage as possible. On this
score, it may be said that making public means that accessibility is undiscriminating as long as it [is] within the
range of the transmitter and equipment of the broadcaster. That the medium through which the Appellant
carries the Appellees signal, that is via satellite, does not diminish the fact that it operates and functions as a
cable television. It remains that the Appellants transmission of signals via its DTH satellite television service
cannot be considered within the purview of broadcasting. x x x
xxxx
This Office also finds no evidence on record showing that the Appellant has provided decrypting means to the
public indiscriminately. Considering the nature of this case, which is punitive in fact, the burden of proving the
existence of the elements constituting the acts punishable rests on the shoulder of the complainant.
Accordingly, this Office finds that there is no rebroadcasting on the part of the Appellant of the Appellees
programs on Channels 2 and 23, as defined under the Rome Convention.[22]
Under the Rome Convention, rebroadcasting is the simultaneous broadcasting by one broadcasting organization
of the broadcast of another broadcasting organization. The Working Paper[23] prepared by the Secretariat of the
Standing Committee on Copyright and Related Rights defines broadcasting organizations as entities that take the
financial and editorial responsibility for the selection and arrangement of, and investment in, the transmitted
content. Evidently, PMSI would not qualify as a broadcasting organization because it does not have the
aforementioned responsibilities imposed upon broadcasting organizations, such as ABS-CBN.
ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the viewers receive in its
unaltered form. PMSI does not produce, select, or determine the programs to be shown in Channels 2 and 23.
Likewise, it does not pass itself off as the origin or author of such programs. Insofar as Channels 2 and 23 are
concerned, PMSI merely retransmits the same in accordance with Memorandum Circular 04-08-88. With regard
to its premium channels, it buys the channels from content providers and transmits on an as-is basis to its
viewers. Clearly, PMSI does not perform the functions of a broadcasting organization; thus, it cannot be said that
it is engaged in rebroadcasting Channels 2 and 23.
The Director-General of the IPO and the Court of Appeals also correctly found that PMSIs services are similar to a
cable television system because the services it renders fall under cable retransmission, as described in the
Working Paper, to wit:
(G) Cable Retransmission
47. When a radio or television program is being broadcast, it can be retransmitted to new audiences by means of
cable or wire. In the early days of cable television, it was mainly used to improve signal reception, particularly in
so-called shadow zones, or to distribute the signals in large buildings or building complexes. With improvements
in technology, cable operators now often receive signals from satellites before retransmitting them in an
unaltered form to their subscribers through cable.
48. In principle, cable retransmission can be either simultaneous with the broadcast over-the-air or delayed
(deferred transmission) on the basis of a fixation or a reproduction of a fixation. Furthermore, they might be
unaltered or altered, for example through replacement of commercials, etc. In general, however, the term
retransmission seems to be reserved for such transmissions which are both simultaneous and unaltered.
49. The Rome Convention does not grant rights against unauthorized cable retransmission. Without such a right,
cable operators can retransmit both domestic and foreign over the air broadcasts simultaneously to their
subscribers without permission from the broadcasting organizations or other rightholders and without obligation
to pay remuneration.[25](Emphasis added)
Thus, while the Rome Convention gives broadcasting organizations the right to authorize or prohibit the
rebroadcasting of its broadcast, however, this protection does not extend to cable retransmission. The
retransmission of ABS-CBNs signals by PMSI which functions essentially as a cable television does not therefore
constitute rebroadcasting in violation of the formers intellectual property rights under the IP Code.
It must be emphasized that the law on copyright is not absolute. The IP Code provides that:
Sec. 184. Limitations on Copyright. -
184.1. Notwithstanding the provisions of Chapter V, the following acts shall not constitute infringement of
copyright:
xxxx
(h) The use made of a work by or under the direction or control of the Government, by the National Library or by
educational, scientific or professional institutions where such use is in the public interest and is compatible with
fair use;
The carriage of ABS-CBNs signals by virtue of the must-carry rule in Memorandum Circular No. 04-08-88 is under
the direction and control of the government though the NTC which is vested with exclusive jurisdiction to
supervise, regulate and control telecommunications and broadcast services/facilities in the Philippines. The
imposition of the must-carry rule is within the NTCs power to promulgate rules and regulations, as public safety
and interest may require, to encourage a larger and more effective use of communications, radio and television
broadcasting facilities, and to maintain effective competition among private entities in these activities whenever
the Commission finds it reasonably feasible.
The Filipino people must be given wider access to more sources of news, information, education, sports event
and entertainment programs other than those provided for by mass media and afforded television programs to
attain a well informed, well-versed and culturally refined citizenry and enhance their socio-economic growth.
The Court of Appeals likewise correctly observed that:
The very intent and spirit of the NTC Circular will prevent a situation whereby station owners and a few networks
would have unfettered power to make time available only to the highest bidders, to communicate only their own
views on public issues, people, and to permit on the air only those with whom they agreed contrary to the state
policy that the (franchise) grantee like the petitioner, private respondent and other TV station owners, shall
provide at all times sound and balanced programming and assist in the functions of public information and
education.
This is for the first time that we have a structure that works to accomplish explicit state policy goals.
Indeed, intellectual property protection is merely a means towards the end of making society benefit from the
creation of its men and women of talent and genius. This is the essence of intellectual property laws, and it
explains why certain products of ingenuity that are concealed from the public are outside the pale of protection
afforded by the law. It also explains why the author or the creator enjoys no more rights than are consistent with
public welfare.
Further, as correctly observed by the Court of Appeals, the must-carry rule as well as the legislative franchises
granted to both ABS-CBN and PMSI are in consonance with state policies enshrined in the Constitution,
specifically Sections 9, 17, and 24 of Article II on the Declaration of Principles and State Policies.
ABS-CBN was granted a legislative franchise under Republic Act No. 7966, Section 1 of which authorizes it to
construct, operate and maintain, for commercial purposes and in the public interest, television and radio
broadcasting in and throughout the Philippines x x x. Section 4 thereof mandates that it shall provide adequate
public service time to enable the government, through the said broadcasting stations, to reach the population on
important public issues; provide at all times sound and balanced programming; promote public participation
such as in community programming; assist in the functions of public information and education x x x.
PMSI was likewise granted a legislative franchise under Republic Act No. 8630, Section 4 of which similarly states
that it shall provide adequate public service time to enable the government, through the said broadcasting
stations, to reach the population on important public issues; provide at all times sound and balanced
programming; promote public participation such as in community programming; assist in the functions of public
information and education x x x. Section 5, paragraph 2 of the same law provides that the radio spectrum is a
finite resource that is a part of the national patrimony and the use thereof is a privilege conferred upon the
grantee by the State and may be withdrawn anytime, after due process.
In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC, the Court held that a franchise is a mere privilege
which may be reasonably burdened with some form of public service. Thus:
All broadcasting, whether by radio or by television stations, is licensed by the government. Airwave frequencies
have to be allocated as there are more individuals who want to broadcast than there are frequencies to assign. A
franchise is thus a privilege subject, among other things, to amendment by Congress in accordance with the
constitutional provision that any such franchise or right granted . . . shall be subject to amendment, alteration or
repeal by the Congress when the common good so requires.
xxxx
Indeed, provisions for COMELEC Time have been made by amendment of the franchises of radio and television
broadcast stations and, until the present case was brought, such provisions had not been thought of as taking
property without just compensation. Art. XII, 11 of the Constitution authorizes the amendment of franchises for
the common good. What better measure can be conceived for the common good than one for free air time for
the benefit not only of candidates but even more of the public, particularly the voters, so that they will be fully
informed of the issues in an election? [I]t is the right of the viewers and listeners, not the right of the
broadcasters, which is paramount.
Nor indeed can there be any constitutional objection to the requirement that broadcast stations give free air
time. Even in the United States, there are responsible scholars who believe that government controls on
broadcast media can constitutionally be instituted to ensure diversity of views and attention to public affairs to
further the system of free expression. For this purpose, broadcast stations may be required to give free air time
to candidates in an election.
xxxx
In truth, radio and television broadcasting companies, which are given franchises, do not own the airwaves and
frequencies through which they transmit broadcast signals and images.They are merely given the temporary
privilege of using them. Since a franchise is a mere privilege, the exercise of the privilege may reasonably be
burdened with the performance by the grantee of some form of public service.
There is likewise no merit to ABS-CBNs claim that PMSIs carriage of its signals is for a commercial purpose; that
its being the countrys top broadcasting company, the availability of its signals allegedly enhances PMSIs
attractiveness to potential customers; or that the unauthorized carriage of its signals by PMSI has created
competition between its Metro Manila and regional stations.
ABS-CBN presented no substantial evidence to prove that PMSI carried its signals for profit; or that such carriage
adversely affected the business operations of its regional stations. Except for the testimonies of its witnesses, no
studies, statistical data or information have been submitted in evidence.
Administrative charges cannot be based on mere speculation or conjecture. The complainant has the burden of
proving by substantial evidence the allegations in the complaint. Mere allegation is not evidence, and is not
equivalent to proof.
Anyone in the country who owns a television set and antenna can receive ABS-CBNs signals for free. Other
broadcasting organizations with free-to-air signals such as GMA-7, RPN-9, ABC-5, and IBC-13 can likewise be
accessed for free. No payment is required to view the said channels because these broadcasting networks do not
generate revenue from subscription from their viewers but from airtime revenue from contracts with
commercial advertisers and producers, as well as from direct sales.
In contrast, cable and DTH television earn revenues from viewer subscription. In the case of PMSI, it offers its
customers premium paid channels from content providers like Star Movies, Star World, Jack TV, and AXN, among
others, thus allowing its customers to go beyond the limits of Free TV and Cable TV. It does not advertise itself as
a local channel carrier because these local channels can be viewed with or without DTH television.
Relevantly, PMSIs carriage of Channels 2 and 23 is material in arriving at the ratings and audience share of ABS-
CBN and its programs. These ratings help commercial advertisers and producers decide whether to buy airtime
from the network. Thus, the must-carry rule is actually advantageous to the broadcasting networks because it
provides them with increased viewership which attracts commercial advertisers and producers.
On the other hand, the carriage of free-to-air signals imposes a burden to cable and DTH television providers
such as PMSI. PMSI uses none of ABS-CBNs resources or equipment and carries the signals and shoulders the
costs without any recourse of charging. Moreover, such carriage of signals takes up channel space which can
otherwise be utilized for other premium paid channels.
There is no merit to ABS-CBNs argument that PMSIs carriage of Channels 2 and 23 resulted in competition
between its Metro Manila and regional stations. ABS-CBN is free to decide to pattern its regional programming in
accordance with perceived demands of the region; however, it cannot impose this kind of programming on the
regional viewers who are also entitled to the free-to-air channels. It must be emphasized that, as a national
broadcasting organization, one of ABS-CBNs responsibilities is to scatter its signals to the widest area of coverage
as possible. That it should not limit its signal reach for the sole purpose of gaining profit for its regional stations
undermines public interest and deprives the viewers of their right to access to information.
Indeed, television is a business; however, the welfare of the people must not be sacrificed in the pursuit of
profit. The right of the viewers and listeners to the most diverse choice of programs available is paramount. The
Director-General correctly observed, thus:
The Must-Carry Rule favors both broadcasting organizations and the public. It prevents cable television
companies from excluding broadcasting organization especially in those places not reached by signal. Also, the
rule prevents cable television companies from depriving viewers in far-flung areas the enjoyment of programs
available to city viewers. In fact, this Office finds the rule more burdensome on the part of the cable television
companies. The latter carries the television signals and shoulders the costs without any recourse of charging. On
the other hand, the signals that are carried by cable television companies are dispersed and scattered by the
television stations and anybody with a television set is free to pick them up.
With its enormous resources and vaunted technological capabilities, Appellees [herein petitioner ABS-CBN]
broadcast signals can reach almost every corner of the archipelago. That in spite of such capacity, it chooses to
maintain regional stations, is a business decision. That the Must-Carry Rule adversely affects the profitability of
maintaining such regional stations since there will be competition between them and its Metro Manila station is
speculative and an attempt to extrapolate the effects of the rule. As discussed above, Appellants DTH satellite
television services is of limited subscription. There was not even a showing on part of the Appellee the number
of Appellants subscribers in one region as compared to non-subscribing television owners. In any event, if this
Office is to engage in conjecture, such competition between the regional stations and the Metro Manila station
will benefit the public as such competition will most likely result in the production of better television
programs.[46]
All told, we find that the Court of Appeals correctly upheld the decision of the IPO Director-General that PMSI did
not infringe on ABS-CBNs intellectual property rights under the IP Code. The findings of facts of administrative
bodies charged with their specific field of expertise, are afforded great weight by the courts, and in the absence
of substantial showing that such findings are made from an erroneous estimation of the evidence presented,
they are conclusive, and in the interest of stability of the governmental structure, should not be disturbed.
There is likewise no merit to ABS-CBNs contention that the Memorandum Circular excludes from its coverage
DTH television services such as those provided by PMSI.Section 6.2 of the Memorandum Circular requires all
cable television system operators operating in a community within Grade A or B contours to carry the television
signals of the authorized television broadcast stations. The rationale behind its issuance can be found in the
whereas clauses which state:
Whereas, Cable Television Systems or Community Antenna Television (CATV) have shown their ability to offer
additional programming and to carry much improved broadcast signals in the remote areas, thereby enriching
the lives of the rest of the population through the dissemination of social, economic, educational information
and cultural programs;
Whereas, the national government supports the promotes the orderly growth of the Cable Television industry
within the framework of a regulated fee enterprise, which is a hallmark of a democratic society;
Whereas, public interest so requires that monopolies in commercial mass media shall be regulated or prohibited,
hence, to achieve the same, the cable TV industry is made part of the broadcast media;
Whereas, pursuant to Act 3846 as amended and Executive Order 205 granting the National Telecommunications
Commission the authority to set down rules and regulations in order to protect the public and promote the
general welfare, the National Telecommunications Commission hereby promulgates the following rules and
regulations on Cable Television Systems;
The policy of the Memorandum Circular is to carry improved signals in remote areas for the good of the general
public and to promote dissemination of information. In line with this policy, it is clear that DTH television should
be deemed covered by the Memorandum Circular. Notwithstanding the different technologies employed, both
DTH and cable television have the ability to carry improved signals and promote dissemination of information
because they operate and function in the same way.
In its December 20, 2002 letter,[50] the NTC explained that both DTH and cable television services are of a
similar nature, the only difference being the medium of delivering such services. They can carry broadcast signals
to the remote areas and possess the capability to enrich the lives of the residents thereof through the
dissemination of social, economic, educational information and cultural programs. Consequently, while the
Memorandum Circular refers to cable television, it should be understood as to include DTH television which
provides essentially the same services.
In Eastern Telecommunications Philippines, Inc. v. International Communication Corporation,[51] we held:
The NTC, being the government agency entrusted with the regulation of activities coming under its special and
technical forte, and possessing the necessary rule-making power to implement its objectives, is in the best
position to interpret its own rules, regulations and guidelines. The Court has consistently yielded and accorded
great respect to the interpretation by administrative agencies of their own rules unless there is an error of law,
abuse of power, lack of jurisdiction or grave abuse of discretion clearly conflicting with the letter and spirit of the
law.[52]
With regard to the issue of the constitutionality of the must-carry rule, the Court finds that its resolution is not
necessary in the disposition of the instant case. One of the essential requisites for a successful judicial inquiry
into constitutional questions is that the resolution of the constitutional question must be necessary in deciding
the case.[53] In Spouses Mirasol v. Court of Appeals,[54] we held:
As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be settled on other
grounds. The policy of the courts is to avoid ruling on constitutional questions and to presume that the acts of
the political departments are valid, absent a clear and unmistakable showing to the contrary. To doubt is to
sustain. This presumption is based on the doctrine of separation of powers. This means that the measure had
first been carefully studied by the legislative and executive departments and found to be in accord with the
Constitution before it was finally enacted and approved.[55]
The instant case was instituted for violation of the IP Code and infringement of ABS-CBNs broadcasting rights and
copyright, which can be resolved without going into the constitutionality of Memorandum Circular No. 04-08-88.
As held by the Court of Appeals, the only relevance of the circular in this case is whether or not compliance
therewith should be considered manifestation of lack of intent to commit infringement, and if it is, whether such
lack of intent is a valid defense against the complaint of petitioner.[56]
The records show that petitioner assailed the constitutionality of Memorandum Circular No. 04-08-88 by way of
a collateral attack before the Court of Appeals. In Philippine National Bank v. Palma,[57] we ruled that for
reasons of public policy, the constitutionality of a law cannot be collaterally attacked. A law is deemed valid
unless declared null and void by a competent court; more so when the issue has not been duly pleaded in the
trial court.[58]
As a general rule, the question of constitutionality must be raised at the earliest opportunity so that if not raised
in the pleadings, ordinarily it may not be raised in the trial, and if not raised in the trial court, it will not be
considered on appeal.
Finally, we find that the dismissal of the petition for contempt filed by ABS-CBN is in order.
Indirect contempt may either be initiated (1) motu proprio by the court by issuing an order or any other formal
charge requiring the respondent to show cause why he should not be punished for contempt or (2) by the filing
of a verified petition, complying with the requirements for filing initiatory pleadings.[62]
ABS-CBN filed a verified petition before the Court of Appeals, which was docketed CA G.R. SP No. 90762, for
PMSIs alleged disobedience to the Resolution and Temporary Restraining Order, both dated July 18, 2005, issued
in CA-G.R. SP No. 88092. However, after the cases were consolidated, the Court of Appeals did not require PMSI
to comment on the petition for contempt. It ruled on the merits of CA-G.R. SP No. 88092 and ordered the
dismissal of both petitions.
ABS-CBN argues that the Court of Appeals erred in dismissing the petition for contempt without having ordered
respondents to comment on the same. Consequently, it would have us reinstate CA-G.R. No. 90762 and order
respondents to show cause why they should not be held in contempt.
It bears stressing that the proceedings for punishment of indirect contempt are criminal in nature. The modes of
procedure and rules of evidence adopted in contempt proceedings are similar in nature to those used in criminal
prosecutions. [63] While it may be argued that the Court of Appeals should have ordered respondents to
comment, the issue has been rendered moot in light of our ruling on the merits. To order respondents to
comment and have the Court of Appeals conduct a hearing on the contempt charge when the main case has
already been disposed of in favor of PMSI would be circuitous. Where the issues have become moot, there is no
justiciable controversy, thereby rendering the resolution of the same of no practical use or value.[64]
WHEREFORE, the petition is DENIED. The July 12, 2006 Decision of the Court of Appeals in CA-G.R. SP Nos. 88092
and 90762, sustaining the findings of the Director-General of the Intellectual Property Office and dismissing the
petitions filed by ABS-CBN Broadcasting Corporation, and the December 11, 2006 Resolution denying the motion
for reconsideration, are AFFIRMED.
SO ORDERED.
[G.R. No. 166337. March 7, 2005]
BAYANIHAN MUSIC vs. BMG
Gentlemen:
Quoted hereunder, for your information, is a resolution of this Court dated MAR 7 2005.
G.R. No. 166337 (Bayanihan Music Philippines, Inc. vs. BMG Records (Pilipinas) and Jose Mari Chan, et al.)
Subject of this petition for review on certiorari is the Decision dated December 14, 2004[1] of the Court of
Appeals in CA-G.R. SP No. 69626, upholding the Order dated August 24, 2001 of the Regional Trial Court at
Quezon City, Branch 90, which found no merit in petitioner's application for the issuance of a writ of preliminary
injunction, along with the Order dated January 10, 2002, which denied petitioner's motion for reconsideration.
FACTS
Private respondent Jose Mari Chan (Chan) entered into a contract with petitioner Bayanihan Music Philippines,
Inc. (Bayanihan). Chan assigned to Bayanihan all his rights, interests and participation over his musical
composition "Can We Just Stop and Talk A While". Subsequently, the parties entered into a similar contract over
Chan's other musical composition entitled "Afraid For Love To Fade".
On the strength of the abovementioned contracts, Bayanihan applied for and was granted by the National
Library a Certificate of Copyright Registration for each of the two musical compositions, thus: November 19,
1973, for the song "Can We Just Stop and Talk A While" and on May 21, 1980, for the song "Afraid for Love To
Fade."
Apparently, without the knowledge and consent of petitioner Bayanihan, Chan authorized his co-respondent
BMG Records (Pilipinas) [BMG] to record and distribute the aforementioned musical compositions in a then
recently released album of singer Lea Salonga.
In separate letters both dated December 7, 1999, petitioner Bayanihan informed respondents Chan and BMG of
its existing copyrights over the subject musical compositions and the alleged violation of such right by the two.
Demands were made on both to settle the matter with Bayanihan. However no settlement was reached by the
parties.
Hence, on August 8, 2000, Bayanihan filed with the RTC at Quezon City a complaint against Chan and BMG for
violation of Section 216 of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the
Philippines, with a prayer for the issuance of Temporary Restraining Order (TRO) and/or writ of preliminary
injunction, enjoining respondent BMG from further recording and distributing the subject musical compositions
in whatever form of musical products, and Chan from further granting any authority to record and distribute the
same musical compositions.
In its answer, BMG contended, among others, that:
1. the acts of recording and publication sought to be enjoined had already been consummated, thereby
rendering moot Bayanihan's prayer for TRO and/or preliminary injunction; and
2. there is no clear showing that petitioner Bayanihan would be greatly damaged by the refusal of the
prayed for TRO and/or preliminary injunction. BMG also pleaded a cross-claim against its co-respondent Chan for
violation of his warranty that his musical compositions are free from claims of third persons, and a counterclaim
for damages against petitioner Bayanihan.
Chan, for his part, filed his own answer to the complaint, thereunder alleging that:
1. it was never his intention to divest himself of all his rights and interest over the musical compositions
in question;
2. the contracts he entered into with Bayanihan are mere music publication agreements giving
Bayanihan, as assignee, the power to administer his copyright over his two songs and to act as the exclusive
publisher thereof;
3. he was not cognizant of the application made by and the subsequent grant of copyrights to Bayanihan;
and
4. Bayanihan was remissed in its obligations under the contracts because it failed to effectively advertise
his musical compositions for almost twenty (20) years, hence, he caused the rescission of said contracts in 1997.
Chan also included in his answer a counterclaim for damages against Bayanihan.
After hearing the parties, the lower court came out with an order denying Bayanihan's prayer for TRO, saying,
thus:
After carefully considering the arguments and evaluating the evidence presented by counsels, this Court finds
that the plaintiff has not been able to show its entitlement to the relief of TRO as prayed for in its verified
complaint (see Section 4, Rule 58 of the 1997 Rules of Civil Procedure, as amended), hence, this Court is of the
considered and humble view that the ends of justice shall be served better if the aforecited application is denied.
Thereafter, the same court, in its subsequent Order dated August 24, 2001, likewise denied Bayanihan's prayer
for a writ of preliminary injunction, to wit:
After carefully going over the pleadings and the pertinent portions of the records insofar as they are pertinent to
the issue under consideration, this Court finds that the plaintiff has not been able to show its entitlement to the
relief of preliminary injunction as prayed for in its verified complaint (see Section 4, Rule 58 of the 1997 Rules of
Civil Procedure, as amended), hence, this Court is of the considered and humble view that the ends of justice
shall be served better if the aforecited application is denied, (see also Order dated July 16, 2001).
Its motion for a reconsideration of the same order having been likewise denied by the trial court in its next Order
of January 10, 2002, petitioner Bayanihan then went to the Court of Appeals on a petition for certiorari imputing
grave abuse of discretion on the part of the trial court in issuing the Orders of August 24, 2001 and January 10,
2001, denying its prayers for a writ of preliminary injunction and motion for reconsideration, respectively.
In the herein assailed Decision dated December 14, 2004, the Court of Appeals upheld the challenged orders of
the trial court and accordingly dismissed Bayanihan petition.
Hence, Bayanihan's present recourse.
ISSUE
Did BMG Records and Jose Mari Chan infringe on the copyright of Bayanihan Records?
RULING
NO.
Petitioner insists that as assignee of the copyrights over the musical compositions in question, it has a clear legal
right to a writ of preliminary injunction; that respondents BMG and Chan violated its copyrights over the same
musical compositions; that despite knowledge by respondent BMG of petitioner's copyrights over the said
musical compositions, BMG continues to record and distribute the same, to petitioner's great and irreparable
injury.
We DENY.
For a writ of injunction to be issued, the following requisites must be present:
1. there must be a right in esse or the existence of a right to be protected; and
2. the act against which the injunction is to be directed is a violation of such right.
For, such a writ should only be granted if a party is clearly entitled thereto.
Of course, while a clear showing of the right to an injunctive writ is necessary albeit its existence need not be
conclusively established, as the evidence required therefor need not be conclusive or complete, still, for an
applicant, like petitioner Bayanihan, to be entitled to the writ, he is required to show that he has the ostensible
right to the final relief prayed for in its complaint. Here, the trial court did not find ample justifications for the
issuance of the writ prayed for by petitioner.
Unquestionably, respondent Chan, being undeniably the composer and author of the lyrics of the two (2) songs,
is protected by the mere fact alone that he is the creator thereof, conformably with Republic Act No. 8293,
otherwise known as the Intellectual Property Code, Section 172.2 of which reads:
172.2. Works are protected by the sole fact of their creation, irrespective of their mode or form of expression, as
well as of their content, quality and purpose.
An examination of petitioner's verified complaint in light of the two (2) contracts sued upon and the evidence it
adduced during the hearing on the application for preliminary injunction, yields not the existence of the requisite
right protectable by the provisional relief but rather a lingering doubt on whether there is or there is no such
right. The two contracts between petitioner and Chan relative to the musical compositions subject of the suit
contain the following identical stipulations:
7. It is also hereby agreed to by the parties herein that in the event the PUBLISHER [petitioner herein] fails to
use in any manner whatsoever within two (2) years any of the compositions covered by this contract, then such
composition may be released in favor of the WRITER and excluded from this contract and the PUBLISHER shall
execute the necessary release in writing in favor of the WRITER upon request of the WRITER;
xxx xxx xxx
9. This contract may be renewed for a period of two-and-one-half (2 1/2) years at the option of the
PUBLISHER. Renewal may be made by the PUBLISHER by advising the WRITER of such renewal in writing at least
five (5) days before the expiration of this contract.
It would thus appear that the two (2) contracts expired on October 1, 1975 and March 11, 1978, respectively,
there being neither an allegation, much less proof, that petitioner Bayanihan ever made use of the compositions
within the two-year period agreed upon by the parties.
Anent the copyrights obtained by petitioner on the basis of the selfsame two (2) contracts, suffice it to say 'that
such purported copyrights are not presumed to subsist in accordance with Section 218[a] and [b], of the
Intellectual Property Code, because respondent Chan had put in issue the existence thereof.
It is noted that Chan revoked and terminated said contracts, along with others, on July 30, 1997, or almost two
years before petitioner Bayanihan wrote its sort of complaint/demand letter dated December 7, 1999 regarding
the recent "use/recording of the songs 'Can We Just Stop and Talk A While' and 'Afraid for Love to Fade,'" or
almost three (3) years before petitioner filed its complaint on August 8, 2000, therein praying, inter alia, for
injunctive relief. By then, it would appear that petitioner had no more right that is protectable by injunction.
WHEREFORE, petition is hereby DENIED.
SO ORDERED.
Where strong considerations of substantial justice are manifest in the petition, this Court may relax the stringent
application of technical rules in the exercise of equity jurisdiction. In addition to the basic merits of the main
case, such petition usually embodies justifying circumstances which warrant our heeding the petitioner's cry for
justice, inspite of the earlier negligence of counsel (Serrano v. Court of Appeals et al., 139 SCRA 179 [1985]).

G.R. No. 76193 November 9, 1989
UNITED FEATURE SYNDICATE, INC., petitioner,
vs.
MUNSINGWEAR CREATION MANUFACTURING COMPANY, respondent.
PARAS, J.:
FACTS
United Features moved for the cancellation of the registration of trademark CHARLIE BROWN (Registration No.
SR. 4224) in the name of respondent MUNSINGWEAR with the Philippine Patent Office. United Features alleged
that it is damaged by the registration of the trademark CHARLIE BROWN of T-Shirts under Class 25 in the name
of Munsingwear Creation Manufacturing Co., Inc., on the following grounds:
1. that respondent was not entitled to the registration of the mark CHARLIE BROWN, & DEVICE at the
time of application for registration;
2. that CHARLIE BROWN is a character creation or a pictorial illustration, the copyright to which is
exclusively owned worldwide by the petitioner;
3. that as the owner of the pictorial illustration CHARLIE BROWN, petitioner has since 1950 and
continuously up to the present, used and reproduced the same to the exclusion of others;
4. that the respondent-registrant has no bona fide use of the trademark in commerce in the Philippines
prior to its application for registration.
On October 2, 1984 the Director of the Philippine Patent Office rendered a decision in this case holding that a
copyright registration like that of the name and likeness of CHARLIE BROWN may not provide a cause of action
for the cancellation of a trademark registration.
Petitioner filed a motion for reconsideration of the decision rendered by the Philippine Patent Office which was
denied by the Director of said office on the ground that the Decision No. 84-83 was already final and executory.
From this decision, petitioner-appellant appealed to the Court of Appeals and respondent court in its resolution
dated September 16, 1986 denied the appeal. While the Motion for Reconsideration was filed on time, that is,
on the last day within which to appeal, still it is a mere scrap of paper because there was no, date, of hearing
stated therein.
Subsequently, petitioner-appellant filed a motion for reconsideration which public respondent denied for lack of
merit.
Hence this petition for review on certiorari.
In a number of cases, this Court in the exercise of equity jurisdiction decided to disregard technicalities in order
to resolve the case on its merits based on the evidence.
This case was brought before this Court for the resolution of the dismissal of the appeal filed by petitioner-
appellant from the decision of the Director of the Philippines Patent Office for being filed out of time. The
normal action to take thereafter, would be to remand this case to the Court of Appeals for further proceedings.
However, in line with jurisprudence, such time consuming procedure may be properly dispensed with to resolve
the issue where there is enough basis to end the basic controversy between the parties here and now. In the
case at bar dispensing with such procedural steps would not anyway affect substantially the merits of their
respective claims as held in Velasco v. Court of Appeals, hence the need for this Court to broaden its inquiry in
this case and decide the same on the merits rather than merely resolve the procedural question raised.
Petitioner contends that it will be damaged by the registration of the trademark CHARLIE BROWN & DEVICE in
favor of private respondent and that it has a better right to CHARLIE BROWN & DEVICE since the likeness of
CHARLIE BROWN appeared in periodicals having worldwide distribution and covered by copyright registration in
its name which antedates the certificate of registration of respondent issued only on September 12, 1979.
The Court of Appeals in reversing the Director of Patent's decision in Touch of Class, Inc. succintly said:
The Patents Office ruled that a trademark, unlike a label, cannot be copyrighted. The "Cookie Monster" is not,
however, a trademark. It is a character in a TV series entitled "Sesame Street." It was respondent which
appropriated the "Cookie Monster" as a trademark, after it has been copyrighted. We hold that the exclusive
right secured by PD 49 to the petitioner precludes the appropriation of the "Cookie Monster" by the respondent.
Section 2 of Presidential Decree No. 49, otherwise known as the "Decree on Intellectual Property", provides:
Section 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of
the following classes of works:
xxx xxx xxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags and box wraps. ...
Therefore, since the name "CHARLIE BROWN" and its pictorial representation were covered by a copyright
registration way back in 1950 the same are entitled to protection under PD No. 49.
Aside from its copyright registration, petitioner is also the owner of several trademark registrations and
application for the name and likeness of "CHARLIE BROWN" which is the duly registered trademark and copyright
of petitioner United Feature Syndicate Inc. as early as 1957 and additionally also as TV SPECIALS featuring the
"PEANUTS" characters "CHARLIE BROWN".

ISSUE An examination of the records show that the only appreciable defense of respondent-registrant is embodied in
1. Is the character Charlie Brown a proper subject of copyright or trademark? (YES) its answer, which reads:
2. Was there an infringement in the copyright of United Features by Munsingwares use of the character It uses, the trademark "CHARLIE BROWN" & "DEVICE" on children's wear such as T-shirts, undershirts, sweaters,
Charlie Brown? (YES) brief and sandos, in class 25; whereas "CHARLIE BROWN" is used only by petitioner as character, in a pictorial
illustration used in a comic strip appearing in newspapers and magazines. It has no trademark significance and
RULING
therefore respondent-registrant's use of "CHARLIE BROWN" & "DEVICE" is not in conflict with the petitioner's
use of "CHARLIE BROWN"
It is undeniable from the records that petitioner is the actual owner of said trademark due to its prior
registration with the Patent's Office.
Finally, in La Chemise Lacoste S.A. v. Hon. Oscar Fernandez & Gobindram Hemandas Sujanani v. Hon. Roberto V.
Ongpin, et al. 129 SCRA 373 [1984]), the Court declared.
In upholding the right of the petitioner to maintain the present suit before our courts for unfair competition or
infringement of trademarks of a foreign corporation, we are moreover recognizing our duties and the rights of
foregoing states under the Paris Convention for the Protection of Industrial Property to which the Philippines and
(France) U.S. are parties. We are simply interpreting a solemn international commitment of the Philippines
embodied in a multilateral treaty to which we are a party and which we entered into because it is in our national
interest to do so.
PREMISES CONSIDERED, the Resolutions of the Court of Appeals dated September 16, 1985 and October 14,
1986 dismissing petitioner's appeal are hereby SET ASIDE and Certificate of Registration no. SR-424 issued to
private respondent dated September 12, 1979 is hereby CANCELLED.
SO ORDERED.
A.M. No. 10-7-17-SC October 12, 2010
IN THE MATTER OF THE CHARGES A.M. No. 10-7-17-SC OF PLAGIARISM, ETC., AGAINST
ASSOCIATE JUSTICE MARIANO C. DEL CASTILLO.
PER CURIAM:
FACTS
Petitioners Isabelita C. Vinuya and about 70 other elderly women, all members of the Malaya Lolas
Organization, filed with the Court in G.R. No. 162230 a special civil action of certiorari with application for
preliminary mandatory injunction against the Executive Secretary, the Secretary of Foreign Affairs, the
Secretary of Justice, and the Office of the Solicitor General.
Petitioners claimed that in destroying villages in the Philippines during World War II, the Japanese army
systematically raped them and a number of other women, seizing them and holding them in houses or cells
where soldiers repeatedly ravished and abused them.
Petitioners alleged that they have since 1998 been approaching the Executive Department, represented by the
respondent public officials, requesting assistance in filing claims against the Japanese military officers who
established the comfort women stations. But that Department declined, saying that petitioners individual claims
had already been fully satisfied under the Peace Treaty between the Philippines and Japan.
Petitioners wanted the Court to render judgment, compelling the Executive Department to espouse their claims
for official apology and other forms of reparations against Japan before the International Court of Justice and
other international tribunals.
On April 28, 2010, the Court rendered judgment dismissing petitioners action. Justice Mariano C. del Castillo
wrote the decision for the Court. The Court essentially gave two reasons for its decision: it cannot grant the
petition because:
first, the Executive Department has the exclusive prerogative under the Constitution and the law to
determine whether to espouse petitioners claim against Japan; and,
second, the Philippines is not under any obligation in international law to espouse their claims.
Petitioners filed a motion for reconsideration of the Courts decision. More than a month later, counsel for
petitioners, Atty. Herminio Harry Roque, Jr., announced in his online blog that his clients would file a
supplemental petition detailing plagiarism committed by the court under the second reason it gave for
dismissing the petition and that these stolen passages were also twisted to support the courts erroneous
conclusions that the Filipino comfort women of World War Two have no further legal remedies. The media
gave publicity to Atty. Roques announcement.
On July 19, 2010, petitioners filed the supplemental motion for reconsideration that Atty. Roque announced. It
accused Justice Del Castillo of manifest intellectual theft and outright plagiarism when he wrote the decision
for the Court and of twisting the true intents of the plagiarized sources to suit the arguments of the assailed
Judgment. They charged Justice Del Castillo of copying without acknowledgement certain passages from three
foreign articles:
a. A Fiduciary Theory of Jus Cogens by Evan J. Criddle and Evan Fox-Descent, Yale Journal of International
Law (2009);
b. Breaking the Silence: Rape as an International Crime by Mark Ellis, Case Western Reserve Journal of
International Law (2006); and
c. Enforcing Erga Omnes Obligations by Christian J. Tams, Cambridge University Press (2005).
Petitioners claim that the integrity of the Courts deliberations in the case has been put into question by Justice
Del Castillos fraud. The Court should thus address and disclose to the public the truth about the manifest
intellectual theft and outright plagiarism that resulted in gross prejudice to the petitioners.
Because of the publicity that the supplemental motion for reconsideration generated, Justice Del Castillo
circulated a letter to his colleagues, subsequently verified, stating that when he wrote the decision for the
Court he had the intent to attribute all sources used in it. He said in the pertinent part:
It must be emphasized that there was every intention to attribute all sources, whenever due. At no
point was there ever any malicious intent to appropriate anothers work as our own. We recall that
this ponencia was thrice included in the Agenda of the Court en banc. It was deliberated upon during
the Baguio session on April 13, 2010, April 20, 2010 and in Manila on April 27, 2010. Each time,
suggestions were made which necessitated major revisions in the draft. Sources were re-studied,
discussions modified, passages added or deleted. The resulting decision comprises 34 pages with 78
footnotes.
xxxx
As regards the claim of the petitioners that the concepts as contained in the above foreign materials
were twisted, the same remains their opinion which we do not necessarily share.
The Court En Banc referred the charges against Justice Del Castillo to its Committee on Ethics and Ethical
Standards, chaired by the Chief Justice, for investigation and recommendation. The Chief Justice designated
retired Justice Jose C. Vitug to serve as consultant of the Committee. He graciously accepted. The Committee
directed petitioners to comment on Justice Del Castillos verified letter. When this was done, it set the matter for
hearing.
In the meantime, Evan Criddle wrote on his blog that he and his co-author Evan Fox-Descent (referred to jointly as
Criddle-Descent) learned of alleged plagiarism involving their work but Criddles concern, after reading the
supplemental motion for reconsideration, was the Courts conclusion that prohibitions against sexual slavery are
not jus cogens or internationally binding norms that treaties cannot diminish.
On July 23, 2010, Dr. Mark Ellis wrote the Court expressing concern that in mentioning his work, the Court may
have misread the argument he made in the article and employed them for cross purposes. Dr. Ellis said that he
wrote the article precisely to argue for appropriate legal remedy for victims of war crimes.
After the referral of the matter to the Committee for investigation, the Dean of the University of the Philippines
(U.P.) College of Law publicized a Statement from his faculty, claiming that the Vinuya decision was an
extraordinary act of injustice and a singularly reprehensible act of dishonesty and misrepresentation by the
Highest Court of the land. The statement said that Justice Del Castillo had a deliberate intention to appropriate
the original authors work, and that the Courts decision amounted to an act of intellectual fraud by copying works
in order to mislead and deceive.
Mr. Christian J. Tams wrote Chief Justice Renato C. Corona that, although relevant sentences in the Courts
decision were taken from his work, he was given generic reference only in the footnote and in connection with a
citation from another author (Bruno Simma) rather than with respect to the passages taken from his work. He
thought that the form of referencing was inappropriate. Mr. Tams was also concerned that the decision may
have used his work to support an approach to erga omnes concept (obligations owed by individual States to the
community of nations) that is not consistent with what he advocated.
After consulting Justice Del Castillo, his counsels requested the Committee to hear the Justices court
researcher, whose name need not be mentioned here, explain the research work that went into the making of
the decision in the Vinuya case. The Committee granted the request.
The researcher demonstrated by Power Point presentation how the attribution of the lifted passages to the
writings of Criddle-Descent and Ellis, found in the beginning drafts of her report to Justice Del Castillo, were
unintentionally deleted. She tearfully expressed remorse at her grievous mistake and grief for having caused
an enormous amount of suffering for Justice Del Castillo and his family.
On the other hand, addressing the Committee in reaction to the researchers explanation, counsel for petitioners
insisted that lack of intent is not a defense in plagiarism since all that is required is for a writer to acknowledge
that certain words or language in his work were taken from anothers work. Counsel invoked the Courts ruling
in University of the Philippines Board of Regents v. Court of Appeals and Arokiaswamy William Margaret Celine,
arguing that standards on plagiarism in the academe should apply with more force to the judiciary.
After the hearing, the Committee gave the parties ten days to file their respective memoranda. They filed their
memoranda in due course. Subsequently after deliberation, the Committee submitted its unanimous findings
and recommendations to the Court.
ISSUE
This case presents two issues:
1. Whether or not, in writing the opinion for the Court in the Vinuya case, Justice Del Castillo plagiarized
the published works of authors Tams, Criddle-Descent, and Ellis.
2. Whether or not Justice Del Castillo twisted the works of these authors to make it appear that such
works supported the Courts position in the Vinuya decision.
RULING
At its most basic, plagiarism means the theft of another persons language, thoughts, or ideas. To plagiarize, as
it is commonly understood according to Webster, is to take (ideas, writings, etc.) from (another) and pass them
off as ones own. The passing off of the work of another as ones own is thus an indispensable element of
plagiarism.
The Passages from Tams
Petitioners point out that the Vinuya decision lifted passages from Tams book, Enforcing Erga Omnes
Obligations in International Law (2006) and used them in Footnote 69 with what the author thought
was a mere generic reference. But, although Tams himself may have believed that the footnoting in
this case was not an appropriate form of referencing, he and petitioners cannot deny that the
decision did attribute the source or sources of such passages. Justice Del Castillo did not pass off
Tams work as his own. The Justice primarily attributed the ideas embodied in the passages to Bruno
Simma, whom Tams himself credited for them. Still, Footnote 69 mentioned, apart from Simma,
Tams article as another source of those ideas.
The Court believes that whether or not the footnote is sufficiently detailed, so as to satisfy the
footnoting standards of counsel for petitioners is not an ethical matter but one concerning clarity of
writing. The statement See Tams, Enforcing Obligations Erga Omnes in International Law (2005) in
the Vinuya decision is an attribution no matter if Tams thought that it gave him somewhat less credit
than he deserved. Such attribution altogether negates the idea that Justice Del Castillo passed off
the challenged passages as his own.
That it would have been better had Justice Del Castillo used the introductory phrase cited in rather
than the phrase See would make a case of mere inadvertent slip in attribution rather than a case
of manifest intellectual theft and outright plagiarism. If the Justices citations were imprecise, it would
just be a case of bad footnoting rather than one of theft or deceit. If it were otherwise, many would be
target of abuse for every editorial error, for every mistake in citing pagination, and for every technical
detail of form.
The Passages from Ellis and Criddle-Descent
Petitioners also attack the Courts decision for lifting and using as footnotes, without attribution to the author,
passages from the published work of Ellis. The Court made the following statement on page 27 of its decision,
marked with Footnote 65 at the end:
We fully agree that rape, sexual slavery, torture, and sexual violence are morally reprehensible as well as legally
prohibited under contemporary international law. 65 xxx
Footnote 65 appears down the bottom of the page. Since the lengthy passages in that footnote came almost
verbatim from Ellis article, such passages ought to have been introduced by an acknowledgement that they are
from that article.
But, as it happened, the acknowledgment above or a similar introduction was missing from Footnote 65.
Next, petitioners also point out that the following eight sentences and their accompanying footnotes appear in
text on pages 30-32 of the Vinuya decision:
 xxx In international law, the term jus cogens (literally, compelling law) refers to norms that command
peremptory authority, superseding conflicting treaties and custom. Jus cogens norms are considered
peremptory in the sense that they are mandatory, do not admit derogation, and can be modified only
by general international norms of equivalent authority.71
Early strains of the jus cogens doctrine have existed since the 1700s,72 but peremptory norms began to attract
greater scholarly attention with the publication of Alfred von Verdross's influential 1937 article, Forbidden Treaties
in International Law.73 The recognition of jus cogens gained even more force in the 1950s and 1960s with the ILCs
preparation of the Vienna Convention on the Law of Treaties (VCLT).74 Though there was a consensus that certain
international norms had attained the status of jus cogens,75 the ILC was unable to reach a consensus on the proper
criteria for identifying peremptory norms.
After an extended debate over these and other theories of jus cogens, the ILC concluded ruefully in
1963 that there is not as yet any generally accepted criterion by which to identify a general rule of
international law as having the character of jus cogens.76 In a commentary accompanying the draft
convention, the ILC indicated that the prudent course seems to be to x x x leave the full content of this
rule to be worked out in State practice and in the jurisprudence of international tribunals.77 Thus,
while the existence of jus cogens in international law is undisputed, no consensus exists on its
substance,77 beyond a tiny core of principles and rules.78
Admittedly, the Vinuya decision lifted the above, including their footnotes, from Criddle-Descents article, A
Fiduciary Theory of Jus Cogens. Criddle-Descents footnotes were carried into the Vinuya decisions own
footnotes but no attributions were made to the two authors in those footnotes.
The Explanation
Unless amply explained, the above lifting from the works of Ellis and Criddle-Descent could be construed as
plagiarism. But one of Justice Del Castillos researchers, a court-employed attorney, explained how she
accidentally deleted the attributions, originally planted in the beginning drafts of her report to him, which
report eventually became the working draft of the decision. She said that, for most parts, she did her research
electronically. For international materials, she sourced these mainly from Westlaw, an online research service for
legal and law-related materials to which the Court subscribes.
In the old days, the common practice was that after a Justice would have assigned a case for study and report,
the researcher would source his materials mostly from available law books and published articles on print. When
he found a relevant item in a book, whether for one side of the issue or for the other, he would place a strip of
paper marker on the appropriate page, pencil mark the item, and place the book on his desk where other relevant
books would have piled up. He would later paraphrase or copy the marked out passages from some of these
books as he typed his manuscript on a manual typewriter. This occasion would give him a clear opportunity to
attribute the materials used to their authors or sources.
With the advent of computers, however, as Justice Del Castillos researcher also explained, most legal references,
including the collection of decisions of the Court, are found in electronic diskettes or in internet websites that
offer virtual libraries of books and articles. Here, as the researcher found items that were relevant to her
assignment, she downloaded or copied them into her main manuscript, a smorgasbord plate of materials that she
thought she might need. The researchers technique in this case is not too far different from that employed by a
carpenter. The carpenter first gets the pieces of lumber he would need, choosing the kinds and sizes suitable to
the object he has in mind, say a table. When ready, he would measure out the portions he needs, cut them out
of the pieces of lumber he had collected, and construct his table. He would get rid of the scraps.
Here, Justice Del Castillos researcher did just that. She electronically cut relevant materials from books and
journals in the Westlaw website and pasted these to a main manuscript in her computer that contained the issues
for discussion in her proposed report to the Justice. She used the Microsoft Word program. Later, after she
decided on the general shape that her report would take, she began pruning from that manuscript those
materials that did not fit, changing the positions in the general scheme of those that remained, and adding and
deleting paragraphs, sentences, and words as her continuing discussions with Justice Del Castillo, her chief editor,
demanded. Parenthetically, this is the standard scheme that computer-literate court researchers use everyday in
their work.
Justice Del Castillos researcher showed the Committee the early drafts of her report in the Vinuya case and
these included the passages lifted from the separate articles of Criddle-Descent and of Ellis with proper
attributions to these authors. But, as it happened, in the course of editing and cleaning up her draft, the
researcher accidentally deleted the attributions.
First Finding
The Court adopts the Committees finding that the researchers explanation regarding the accidental removal of
proper attributions to the three authors is credible. Given the operational properties of the Microsoft program
in use by the Court, the accidental decapitation of attributions to sources of research materials is not remote.
For most senior lawyers and judges who are not computer literate, a familiar example similar to the
circumstances of the present case would probably help illustrate the likelihood of such an accident
happening.
The mistake of Justice Del Castillos researcher is that, after the Justice had decided what texts, passages, and
citations were to be retained including those from Criddle-Descent and Ellis, and when she was already cleaning
up her work and deleting all subject tags, she unintentionally deleted the footnotes that went with such tagswith
disastrous effect.
As it happened, the Microsoft word program does not have a function that raises an alarm when original
materials are cut up or pruned. The portions that remain simply blend in with the rest of the manuscript,
adjusting the footnote number and removing any clue that what should stick together had just been severed.
This was what happened in the attributions to Ellis and Criddle-Descent. The researcher deleted the subject tags
and, accidentally, their accompanying footnotes that served as reminder of the sources of the lifted
passages. With 119 sources cited in the decision, the loss of the 2 of them was not easily detectable.
Petitioners point out, however, that Justice Del Castillos verified letter of July 22, 2010 is inconsistent with his
researchers claim that the omissions were mere errors in attribution. They cite the fact that the Justice did not
disclose his researchers error in that letter despite the latters confession regarding her mistake even before the
Justice sent his letter to the Chief Justice. By denying plagiarism in his letter, Justice Del Castillo allegedly
perjured himself and sought to whitewash the case.[13]
But nothing in the July 22 letter supports the charge of false testimony. Justice Del Castillo merely explained that
there was every intention to attribute all sources whenever due and that there was never any malicious intent to
appropriate anothers work as our own, which as it turns out is a true statement. He recalled how the Court
deliberated upon the case more than once, prompting major revisions in the draft of the decision. In the process,
(s)ources were re-studied, discussions modified, passages added or deleted.Nothing in the letter suggests a
cover-up. Indeed, it did not preclude a researchers inadvertent error.
And it is understandable that Justice Del Castillo did not initially disclose his researchers error. He wrote the
decision for the Court and was expected to take full responsibility for any lapse arising from its
preparation. What is more, the process of drafting a particular decision for the Court is confidential, which
explained his initial request to be heard on the matter without the attendance of the other parties.
Notably, neither Justice Del Castillo nor his researcher had a motive or reason for omitting attribution for the
lifted passages to Criddle-Descent or to Ellis. The latter authors are highly respected professors of international
law. The law journals that published their works have exceptional reputations. It did not make sense to
intentionally omit attribution to these authors when the decision cites an abundance of other sources. Citing
these authors as the sources of the lifted passages would enhance rather than diminish their informative
value. Both Justice Del Castillo and his researcher gain nothing from the omission. Thus, the failure to mention
the works of Criddle-Decent and Ellis was unquestionably due to inadvertence or pure oversight.
Petitioners of course insist that intent is not material in committing plagiarism since all that a writer has to do,
to avoid the charge, is to enclose lifted portions with quotation marks and acknowledge the sources from which
these were taken. Petitioners point out that the Court should apply to this case the ruling in University of the
Philippines Board of Regents v. Court of Appeals and Arokiaswamy William Margaret Celine. They argue that
standards on plagiarism in the academe should apply with more force to the judiciary.
But petitioners theory ignores the fact that plagiarism is essentially a form of fraud where intent to deceive is
inherent. Their theory provides no room for errors in research, an unrealistic position considering that there is
hardly any substantial written work in any field of discipline that is free of any mistake. The theory places an
automatic universal curse even on errors that, as in this case, have reasonable and logical explanations.
Second Finding
The Court also adopts the Committees finding that the omission of attributions to Criddle-Descent and Ellis did
not bring about an impression that Justice Del Castillo himself created the passages that he lifted from their
published articles. That he merely got those passages from others remains self-evident, despite the accidental
deletion. The fact is that he still imputed the passages to the sources from which Criddle-Descent and Ellis
borrowed them in the first place.
This is best illustrated in the familiar example above. After the deletion of the subject tag and, accidentally, its
footnote which connects to the source, the lifted passage would appear like this:
xxx Both juridical capacity and capacity to act are not rights, but qualities of persons; hence, they cannot be
alienated or renounced.43
_____________________________
43 3 Von Tuhr 296; 1 Valverde 291.
Although the unintended deletion severed the passages link to Tolentino, the passage remains to be attributed
to Von Tuhr and Valverde, the original sources that Tolentino himself cites. The text and its footnote reference
cancel out any impression that the passage is a creation of researcher X. It is the same with the passages from
Criddle-Descent and Ellis. Because such passages remained attributed by the footnotes to the authors original
sources, the omission of attributions to Criddle-Descent and Ellis gave no impression that the passages were
the creations of Justice Del Castillo. This wholly negates the idea that he was passing them off as his own
thoughts.
True the subject passages in this case were reproduced in the Vinuya decision without placing them in quotation
marks. But such passages are much unlike the creative line from Robert Frost, The woods are lovely, dark, and
deep, but I have promises to keep, and miles to go before I sleep, and miles to go before I sleep. The passages
here consisted of common definitions and terms, abridged history of certain principles of law, and similar
frequently repeated phrases that, in the world of legal literature, already belong to the public realm.
To paraphrase Bast and Samuels, while the academic publishing model is based on the originality of the writers
thesis, the judicial system is based on the doctrine of stare decisis, which encourages courts to cite historical
legal data, precedents, and related studies in their decisions. The judge is not expected to produce original
scholarship in every respect. The strength of a decision lies in the soundness and general acceptance of the
precedents and long held legal opinions it draws from.
Third Finding
Petitioners allege that the decision twisted the passages from Tams, Criddle-Descent, and Ellis. The Court
adopts the Committees finding that this is not so. Indeed, this allegation of twisting or misrepresentation
remains a mystery to the Court. To twist means to distort or pervert the meaning of. For example, if one lifts
the lyrics of the National Anthem, uses it in his work, and declares that Jose Palma who wrote it did not love his
country, then there is twisting or misrepresentation of what the anthems lyrics said. Here, nothing in
the Vinuya decision said or implied that, based on the lifted passages, authors Tams, Criddle-Descent, and Ellis
supported the Courts conclusion that the Philippines is not under any obligation in international law to espouse
Vinuya et al.s claims.
The fact is that, first, since the attributions to Criddle-Descent and Ellis were accidentally deleted, it is
impossible for any person reading the decision to connect the same to the works of those authors as to
conclude that in writing the decision Justice Del Castillo twisted their intended messages. And, second, the
lifted passages provided mere background facts that established the state of international law at various
stages of its development. These are neutral data that could support conflicting theories regarding whether or
not the judiciary has the power today to order the Executive Department to sue another country or whether the
duty to prosecute violators of international crimes has attained the status of jus cogens.
Considering how it was impossible for Justice Del Castillo to have twisted the meaning of the passages he lifted
from the works of Tams, Criddle-Descent, and Ellis, the charge of twisting or misrepresentation against him is to
say the least, unkind. To be more accurate, however, the charge is reckless and obtuse.
No Misconduct
On occasions judges and justices have mistakenly cited the wrong sources, failed to use quotation marks,
inadvertently omitted necessary information from footnotes or endnotes. But these do not, in every case,
amount to misconduct. Only errors that are tainted with fraud, corruption, or malice are subject of disciplinary
action. This is not the case here. Justice Del Castillos acts or omissions were not shown to have been impelled by
any of such disreputable motives.[21] If the rule were otherwise, no judge or justice, however competent, honest,
or dedicated he may be, can ever hope to retire from the judiciary with an unblemished record.
No Inexcusable Negligence
Finally, petitioners assert that, even if they were to concede that the omission was the result of plain error,
Justice Del Castillo is nonetheless guilty of gross inexcusable negligence. They point out that he has full control
and supervision over his researcher and should not have surrendered the writing of the decision to the latter.
But this assumes that Justice Del Castillo abdicated the writing of the Vinuya decision to his researcher, which is
contrary to the evidence adduced during the hearing. As his researcher testified, the Justice set the direction
that the research and study were to take by discussing the issues with her, setting forth his position on those
issues, and reviewing and commenting on the study that she was putting together until he was completely
satisfied with it. In every sense, Justice Del Castillo was in control of the writing of the report to the Court,
which report eventually became the basis for the decision, and determined its final outcome.
Assigning cases for study and research to a court attorney, the equivalent of a law clerk in the United States
Supreme Court, is standard practice in the high courts of all nations. This is dictated by necessity. With about 80
to 100 cases assigned to a Justice in our Court each month, it would be truly senseless for him to do all the
studies and research, going to the library, searching the internet, checking footnotes, and watching the
punctuations. If he does all these by himself, he would have to allocate at least one to two weeks of work for
each case that has been submitted for decision. The wheels of justice in the Supreme Court will grind to a halt
under such a proposition.
What is important is that, in this case, Justice Del Castillo retained control over the writing of the decision in
the Vinuya case without, however, having to look over his researchers shoulder as she cleaned up her draft
report to ensure that she hit the right computer keys. The Justices researcher was after all competent in the
field of assignment given her. She finished law from a leading law school, graduated third in her class, served as
Editor-in Chief of her schools Law Journal, and placed fourth in the bar examinations when she took it. She
earned a masters degree in International Law and Human Rights from a prestigious university in the United
States under the Global-Hauser program, which counsel for petitioners concedes to be one of the top post
graduate programs on International Law in the world. Justice Del Castillo did not exercise bad judgment in
assigning the research work in the Vinuya case to her.
Can errors in preparing decisions be prevented? Not until computers cease to be operated by human beings
who are vulnerable to human errors. They are hypocrites who believe that the courts should be as error-free as
they themselves are.
SO ORDERED.
G.R. No. 131522. July 19, 1999
PACITA I. HABANA, ALICIA L. CINCO and JOVITA N. FERNANDO, petitioners, vs. FELICIDAD C. ROBLES and
GOODWILL TRADING CO., INC., respondents.
PARDO, J.:
FACTS
Petitioners (Pacita Habana, Alicia Cinco and Jovita N. Fernando) are authors and copyright owners of duly
issued certificates of copyright registration covering their published works, produced through their combined
resources and efforts, entitled COLLEGE ENGLISH FOR TODAY (CET for brevity), Books 1 and 2, and WORKBOOK
FOR COLLEGE FRESHMAN ENGLISH, Series 1.
Respondent Felicidad Robles and Goodwill Trading Co., Inc. are the author/publisher and distributor/seller of
another published work entitled DEVELOPING ENGLISH PROFICIENCY (DEP for brevity), Books 1 and 2 (1985
edition) which book was covered by copyrights issued to them.
In the course of revising their published works, petitioners scouted and looked around various bookstores to
check on other textbooks dealing with the same subject matter. By chance they came upon the book of
respondent Robles and upon perusal of said book they were surprised to see that the book was strikingly
similar to the contents, scheme of presentation, illustrations and illustrative examples in their own book, CET.
After an itemized examination and comparison of the two books (CET and DEP), petitioners found that several
pages of the respondents book are similar, if not all together a copy of petitioners book, which is a case of
plagiarism and copyright infringement.
Petitioners then made demands for damages against respondents and also demanded that they cease and
desist from further selling and distributing to the general public the infringed copies of respondent Robles
works.
However, respondents ignored the demands, hence, on July 7, 1988, petitioners filed with the Regional Trial
Court, Makati, a complaint for Infringement and/or unfair competition with damages against private
respondents.
In the complaint, petitioners alleged that in 1985, respondent Felicidad C. Robles being substantially familiar with
the contents of petitioners works, and without securing their permission, lifted, copied, plagiarized and/or
transposed certain portions of their book CET. The textual contents and illustrations of CET were literally
reproduced in the book DEP. The plagiarism, incorporation and reproduction of particular portions of the book
CET in the book DEP, without the authority or consent of petitioners, and the misrepresentations of respondent
Robles that the same was her original work and concept adversely affected and substantially diminished the sale
of the petitioners book and caused them actual damages by way of unrealized income.
Despite the demands of the petitioners for respondents to desist from committing further acts of infringement
and for respondent to recall DEP from the market, respondents refused. Petitioners asked the court to order the
submission of all copies of the book DEP, together with the molds, plates and films and other materials used in
its printing destroyed, and for respondents to render an accounting of the proceeds of all sales and profits since
the time of its publication and sale.
Respondent Robles was impleaded in the suit because she authored and directly committed the acts of
infringement complained of, while respondent Goodwill Trading Co., Inc. was impleaded as the publisher and
joint co-owner of the copyright certificates of registration covering the two books authored and caused to be
published by respondent Robles with obvious connivance with one another.
Respondent Goodwill Trading Co., Inc. filed its answer to the complaint and alleged that petitioners had no cause
of action against Goodwill Trading Co., Inc. since it was not privy to the misrepresentation, plagiarism,
incorporation and reproduction of the portions of the book of petitioners; that there was an agreement between
Goodwill and the respondent Robles that Robles guaranteed Goodwill that the materials utilized in the
manuscript were her own or that she had secured the necessary permission from contributors and sources; that
the author assumed sole responsibility and held the publisher without any liability.
Respondent Robles filed her answer, and denied the allegations of plagiarism and copying that petitioners
claimed. Respondent stressed that (1) the book DEP is the product of her independent researches, studies and
experiences, and was not a copy of any existing valid copyrighted book; (2) DEP followed the scope and sequence
or syllabus which are common to all English grammar writers as recommended by the Association of Philippine
Colleges of Arts and Sciences (APCAS), so any similarity between the respondents book and that of the
petitioners was due to the orientation of the authors to both works and standards and syllabus; and (3) the
similarities may be due to the authors exercise of the right to fair use of copyrigthed materials, as guides.
Respondent interposed a counterclaim for damages on the ground that bad faith and malice attended the filing
of the complaint, because petitioner Habana was professionally jealous and the book DEP replaced CET as the
official textbook of the graduate studies department of the Far Eastern University.
The trial court ruled in favor of Robles and dismissed the complaint. The CA affirmed the RTC ruling in favor of
Robles. Hence, this petition.
ISSUE
whether or not, despite the apparent textual, thematic and sequential similarity between DEP and CET,
respondents committed no copyright infringement;
whether or not there was animus furandi on the part of respondent when they refused to withdraw
the copies of CET (RTC) from the market despite notice to withdraw the same; and
whether or not respondent Robles abused a writers right to fair use, in violation of Section 11 of
Presidential Decree No. 49.
RULING
We find the petition impressed with merit.
The complaint for copyright infringement was filed at the time that Presidential Decree No. 49 was in force. At
present, all laws dealing with the protection of intellectual property rights have been consolidated and as the law
now stands, the protection of copyrights is governed by Republic Act No. 8293. Notwithstanding the change in
the law, the same principles are reiterated in the new law under Section 177. It provides for the copy or
economic rights of an owner of a copyright as follows:
Sec.177. Copy or Economic rights. Subject to the provisions of chapter VIII, copyright or economic
rights shall consist of the exclusive right to carry out, authorize or prevent the following acts:
177.1 Reproduction of the work or substantial portion of the work;
177.2 Dramatization, translation, adaptation, abridgement, arrangement or other
transformation of the work;
177.3 The first public distribution of the original and each copy of the work by sale or other
forms of transfer of ownership;
177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a work
embodied in a sound recording, a computer program, a compilation of data and other
materials or a musical work in graphic form, irrespective of the ownership of the original or
the copy which is the subject of the rental; (n)
177.5 Public display of the original or copy of the work;
177.6 Public performance of the work; and
177.7 Other communication to the public of the work[19]
The law also provided for the limitations on copyright, thus:
Sec. 184.1 Limitations on copyright.-- Notwithstanding the provisions of Chapter V, the following acts
shall not constitute infringement of copyright:
a. the recitation or performance of a work, once it has been lawfully made accessible to the public, if
done privately and free of charge or if made strictly for a charitable or religious institution or
society; [Sec. 10(1), P.D. No. 49]
b. The making of quotations from a published work if they are compatible with fair use and only to
the extent justified for the purpose, including quotations from newspaper articles and periodicals
in the form of press summaries; Provided, that the source and the name of the author, if
appearing on the work are mentioned; (Sec. 11 third par. P.D.49)
xxxxxxxxxxxx
e. The inclusion of a work in a publication, broadcast, or other communication to the public, sound
recording of film, if such inclusion is made by way of illustration for teaching purposes and is
compatible with fair use: Provided, That the source and the name of the author, if appearing in
the work is mentioned;
In the above quoted provisions, work has reference to literary and artistic creations and this includes books
and other literary, scholarly and scientific works.
A perusal of the records yields several pages of the book DEP that are similar if not identical with the text of
CET.
On page 404 of petitioners Book 1 of College English for Today, the authors wrote:
Items in dates and addresses:
He died on Monday, April 15, 1975.
Miss Reyes lives in 214 Taft Avenue, Manila
On page 73 of respondents Book 1 Developing English Today, they wrote:
He died on Monday, April 25, 1975.
Miss Reyes address is 214 Taft Avenue Manila
On Page 250 of CET, there is this example on parallelism or repetition of sentence structures, thus:
The proposition is peace. Not peace through the medium of war; not peace to be hunted through the
labyrinth of intricate and endless negotiations; not peace to arise out of universal discord, fomented
from principle, in all parts of the empire; not peace to depend on the juridical determination of
perplexing questions, or the precise marking of the boundary of a complex government. It is simple
peace; sought in its natural course, and in its ordinary haunts. It is peace sought in the spirit of peace,
and laid in principles purely pacific.
--- Edmund Burke, Speech on Criticism.
On page 100 of the book DEP, also in the topic of parallel structure and repetition, the same example is
found in toto. The only difference is that petitioners acknowledged the author Edmund Burke, and
respondents did not.
In several other pages the treatment and manner of presentation of the topics of DEP are similar if not a
rehash of that contained in CET.
We believe that respondent Robles 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
petitioners copyrights.
When is there a 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 labors 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 which is conferred by statute on the owner of the
copyright.
The respondents claim that the copied portions of the book CET are also found in foreign books and other
grammar books, and that the similarity between her style and that of petitioners can not be avoided since
they come from the same background and orientation may be true. However, in this jurisdiction under Sec 184
of Republic Act 8293 it is provided that:
Limitations on Copyright. Notwithstanding the provisions of Chapter V, the following shall not
constitute infringement of copyright:
xxxxxxxxxxxx
(c) The making of quotations from a published work if they are compatible with fair use
and only to the extent justified for the purpose, including quotations from newspaper articles
and periodicals in the form of press summaries: Provided, That the source and the name of
the author, if appearing on the work, are mentioned.
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 peril.
The next question to resolve is to what extent can copying be injurious to the author of the book being copied.
Is it enough that there are similarities in some sections of the books or large segments of the books are the
same?
I
n the case at bar, there is no question that petitioners presented several pages of the books CET and DEP that
more or less had the same contents. It may be correct that the books being grammar books may contain
materials similar as to some technical contents with other grammar books, such as the segment about the
Author Card. However, the numerous pages that the petitioners presented showing similarity in the style and
the manner the books were presented and the identical examples can not pass as similarities merely because
of technical consideration.
The respondents claim that their similarity in style can be attributed to the fact that both of them were exposed
to the APCAS syllabus and their respective academic experience, teaching approach and methodology are almost
identical because they were of the same background.
However, we believe that even if petitioners and respondent Robles were of the same background in terms of
teaching experience and orientation, it is not an excuse for them to be identical even in examples contained in
their books. The similarities in examples and material contents are so obviously present in this case. How
can similar/identical examples not be considered as a mark of copying?
We consider as an indicia of guilt or wrongdoing the act of respondent Robles of pulling out from Goodwill
bookstores the book DEP upon learning of petitioners complaint while pharisaically denying petitioners
demand. It was further noted that when the book DEP was re-issued as a revised version, all the pages cited by
petitioners to contain portion of their book College English for Today were 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 latters 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. Petitioners 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, under Section 184.1
(b). Quotations from a published work if they are compatible with fair use and only to the extent justified by
the purpose, including quotations from newspaper articles and periodicals in the form of press summaries are
allowed provided that the source and the name of the author, if appearing on the work, are mentioned.
In the case at bar, the least that respondent Robles could have done was to acknowledge petitioners Habana
et. al. as the source of the portions of DEP. The final product of an authors toil is her book. To allow another to
copy the book without appropriate acknowledgment is injury enough.
WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of Appeals in CA-G. R. CV
No. 44053 are SET ASIDE. The case is ordered remanded to the trial court for further proceedings to receive
evidence of the parties to ascertain the damages caused and sustained by petitioners and to render decision in
accordance with the evidence submitted to it.
SO ORDERED.
[G.R. Nos. 96597-99. October 6, 1994.]
COLUMBIA PICTURES, INC., ORION PICTURES CORP., PARAMOUNT PICTURES CORP., TWENTIETH CENTURY FOX
FILM CORP., UNITED ARTISTS CORP., UNIVERSAL CITY STUDIOS, INC., WALT DISNEY COMPANY and WARNER
BROS., INC., Petitioners, v. HON. COURT OF APPEALS, TUBE VIDEO ENTERPRISES and EDWARD CHAM,
BLOOMING ROSE TAPE CENTER and MA. JAJORIE T. UY, and VIDEO CHANNEL and LYDIA
NABONG, Respondents.
SYLLABUS
1. REMEDIAL LAW; CRIMINAL PROCEDURE; SEARCH AND SEIZURE; RULE FOR ISSUANCE OF WARRANT IN CASES
OF VIOLATION OF SECTION 56 OF THE DEGREE ON THE PROTECTION OF INTELLECTUAL PROPERTY (P.D. NO. 49
AS AMENDED BY P.D. NO. 1988). This Court, in 20th Century Fox Film Corp. v. Court of Appeals (164 SCRA 655)
has already laid down the rule that a basic requirement for the validity of search warrants, in cases of this
nature, is the presentation of the master tapes of the copyrighted films from which pirated films are supposed to
have been copied.
VITUG, J.:
On 07 April 1988, the National Bureau of Investigation ("NBI"), through its Agent Lauro C. Reyes, filed with the
Regional Trial Court of Pasig (Branch 159) three applications for search warrant against private respondents
Tube Video Enterprises and Edward C. Cham (ASW No. 95), the Blooming Rose Tape Center and Ma. Jajorie T.
Uy (ASW No. 96), and the Video Channel and Lydia Nabong (ASW No. 97), charging said respondents with
violation of Section 56 of Presidential Decree ("P.D.") No. 49, otherwise known as the Decree on the Protection
of Intellectual Property, as amended by P.D. No. 1988.
In the three applications for search warrant, NBI Agent Reyes stated under oath that the respondents had in
their possession and control
1. pirated video tapes of the copyrighted motion pictures/films the titles of which are mentioned in the
. attached list;
2. posters, advertising leaflets, flyers, brochures, invoices, journals, ledgers, job order slips, delivery slips,
stickers and books of account bearing and/or mentioned the pirated films with titles . . ., or otherwise
used in the videogram business or activities of the defendants; sold, leased, distributed or possessed
for the purpose of sale, lease, distribution, circulation or public exhibition, journals, ledgers, job order
slips, delivery slips, stickers and books of accounts used in the unlawful videogram business or
activities of the defendants; (and)
3. television sets, video cassette and/or laser disc recorders, dubbing machines, rewinders, film
projectors, U-matic machines, image enhancers, dubbing machines, tape head cleaners, converters,
accessories, equipment and other machines and paraphernalia, materials or empty/erasable video
tapes and master copies used or intended to be used in the unlawful exhibition, showing,
reproduction, sale lease or disposition of videograms they are keeping and concealing in the premises
abovedescribed.
Acting on the applications, then Regional Trial Court Judge Maria Alicia M. Austria conducted a joint hearing
during which she made a personal examination of the applicant and his witnesses. Finding just and probable
cause for granting the application at the time, Judge Austria issued the corresponding Search Warrants ("SW")
numbered 95, 96, and 97.
Private respondents filed their respective motions to quash the three search warrants, citing as grounds
therefor the following:
In SW No. 95
1. There is no probable cause nor the existence of a satisfactory fact upon which the search warrant
is based;
2. The National Bureau of Investigation has no authority nor the jurisdiction to initiate the filing of
suit against the defendants;
3. The confiscation of defendants seized articles based on the questioned search warrant violated
the latters constitutional right against deprivation of properties without due process.
4. The films in question are not protected by Pres. Decree No. 1988 in that they were never
registered in the National Library as a condition precedent to the availment of the protection
secured by that decree. The complaint has acquired no right under the same.
5. The mere publication by complaint of its alleged ownership over the films in question does not
ipso facto vest in the right to proceed under P.D. No. 49 as that law requires official registration.
Moreover, the said publication took place only after the application for the questioned search
warrant." 2
In SW No. 96
1. The complainants, one Rico V. Domingo and one Rene C. Baltazar, in representation of the Motion
Picture Association of America, Inc., have not proven nor established their ownership over the
films listed in Annex A of the search warrant issued by this Honorable Court against the
defendants herein.
2. The information provided by the National Bureau of Investigation agents and the representatives
of the MPAA, Inc. are replete with generalities insofar as the description of the items to be
concerned in violation of the provisions of Sec. 3 of Rule 126 of the Rules of Court. Their
allegations as to the offense are presumptuous and speculative in violation of the same section of
the Rules of Court.
Private respondents in SW No. 97 adopted the motions filed for the quashal of both SW No. 95 and SW No. 96.
Herein petitioners (the private complainants in the three cases), namely, Columbia Pictures Entertainment, Inc.,
Orion Pictures Corporation, Twentieth Century Fox Film Corporation, MGM/UA Communications Company,
Universal City Studios, Inc., Walt Disney Company and Warner Bros., Inc., submitted their oppositions to the
motions to quash. The movants, herein private respondents, filed their replies to the oppositions and sought,
simultaneously, the release of the items seized. After a rejoinder was filed, the court a quo considered all the
incidents submitted for resolution.
In a Joint Order, issued on 09 December 1988, Judge Austria defined the issues raised in the motions to quash
thusly:
1. Whether or not the NBI had authority to file the application for search warrant; whether or not it is the
Videogram Regulatory Board under P.D. No. 1987 which has exclusive jurisdiction to file suits against
violators of said law.
2. Whether or not this Court observed due process of law before issuing the search warrants in question.
3. Whether or not search warrants Nos. 95, 96 and 97 are general warrants and therefore void.
4. Whether or not there was probable cause in the issuance of the search warrants pursuant to Section
3, Rule 126 of the 1985 Rules on Criminal Procedure and Section 2, Article III of the 1987 Constitution
of the Republic of the Philippines.
5. Whether or not private complainants who are members of the Motion Picture Association of America,
Inc. (MPAA for brevity) through their counsel, Atty. Rico Domingo, have sufficiently proven their
ownership over the alleged pirated video tapes of the copyrighted motion pictures/films.
6. Whether or not the items seized by the NBI agents by virtue of SW Nos. 95, 96 and 97 may be ordered
released to defendants.
Anent the first three issues, Judge Austria ruled that the NBI had the authority to apply for the search
warrants; that in the issuance of the search warrants, due process of law was duly observed; and that the
questioned search warrants were not general in character since the provision of law violated, i.e., Sec. 56 of
P.D. No. 49, as amended by P.D. No. 1988, was clearly specified. Judge Austria, nonetheless, reversed her
former stand initially finding probable cause for the issuance of the search warrants and ordered the quashal
of the search warrants giving the following reasons:
1. Private complainants were uncertain of their ownership of the titles subject of the seized video tapes;
2. Complainants did not comply with the requirement that the master tapes should be presented
during the application for search warrants; and
 3. Private complainants cannot seek the protection of Philippine laws as they failed to comply with the P.D. No. 49 as amended by P.D. No. 1988. This included not only the sale, lease or distribution of
deposit and registration requirements of P.D. No. 49 as amended by P.D. No. 1988. pirated tapes but also the transfer or causing to be transferred of any sound recording or motion
Judge Austria thus ordered the return of all the items seized by virtue of the warrants. picture or other audio visual work.

Petitioners appealed the order of Judge Austria to the Court of Appeals. The Court of Appeals, through Justice
Salome A. Montoya, rendered its decision sustaining petitioners first and third assignment of errors but
rejecting petitioners second assignment of error. It, therefore, still affirmed the quashal of the search warrants.
Hence, this petition (G.R. No. 96597-99). Another decision rendered by the Court of Appeals in another case
(CA-G.R. No. 20617), involving the same petitioners on substantially identical facts and issues, was also
brought before this court (G.R. No. 97156). In a Resolution, dated 06 March 1991, this Court consolidated the
two petitions.
"But even assuming, as appellants argue, that only the sale, lease, or distribution of pirated video
tapes is involved, the fact remains that there is need to establish probable cause that the tapes being
sold, leased or distributed are pirated tapes, hence the issue reverts back to the question of whether
there was unauthorized transfer, directly or indirectly, of a sound recording or motion picture or
other audio visual work that has been recorded."
With due respect to petitioners, the Court does not see a compelling reason to reexamine its previous position
on the issue.
WHEREFORE, in view of the foregoing, the instant petitions are hereby DENIED for lack of merit.

RULING SO ORDERED.
We affirm the decisions of the Court of Appeals.

This Court, in 20th Century Fox Film Corp. v. Court of Appeals (164 SCRA 655) has already laid down the rule
that a basic requirement for the validity of search warrants, in cases of this nature, is the presentation of the
master tapes of the copyrighted films from which pirated films are supposed to have been copied. We quote:

"The presentation of the master tapes of the copyrighted films from which the pirated films were
allegedly copied, was necessary for the validity of search warrants against those who have in their
possession the pirated films. The petitioners argument to the effect that the presentation of the
master tapes at the time of application may not be necessary as these would be merely evidentiary in
nature and not determinative of whether or not a probable cause exists to justify the issuance of the
search warrants is not meritorious. The court cannot presume that duplicate or copied tapes were
necessarily reproduced from master tapes that it owns.

"The application for search warrants was directed against video tape outlets which allegedly were
engaged in the unauthorized sale and renting out of copyrighted films belonging to the petitioner
pursuant to P.D. 49.

"The essence of a copyright infringement is the similarity or at least substantial similarity of the
purported pirated works to the copyrighted work. Hence, the applicant must present to the court
the copyrighted films to compare them with the purchased evidence of the video tapes allegedly
pirated to determine whether the latter is an unauthorized reproduction of the former. This linkage
of the copyrighted films to the pirated films must be established to satisfy the requirements of
probable cause. Mere allegations as to the existence of the copyrighted films cannot serve as basis
for the issuance of a search warrant."

We also fully concur with the Court of Appeals when, in resolving petitioners motion for reconsideration in CA-
G.R. CV No. 22133-35, it ratiocinated thusly:

"It is not correct to say that the basic fact to be proven to establish probable cause in the instant
cases is not the unauthorized transfer of a motion picture that has been recorded but the sale, lease,
or distribution of pirated video tapes of copyrighted films.

"In applying for the search warrants the NBI charged violation of the entire provisions of Section 56 of