INTELLECTUAL PROPERTY LAW
Atty. Roderick Vera
GENERAL PRINCIPLES OF INTELLECTUAL
PROPERTY
1) Natural Rights Perspective (Labor Theory) –
John Locke
a. Property originally comes about by the
exertion of labor upon natural resources.
The theory has been used to justify the
homestead principle, which holds that one
may gain whole permanent ownership of an
unowned natural resource by performing an
act of original appropriation.
b. A person who labors upon resources that are
either unowned or “held in common” has a
natural property right to the fruits of his or
her efforts – and that the state has a duty to
respect and enforce that natural right.
These ideas, originating in the writings of
John Locke, are widely thought to be
especially applicable to the field of
intellectual property, where the pertinent
raw materials (facts and concepts) do seem
in some sense to be “held in common” and
where labor seems to contribute so
importantly to the value of finished
products.
c. Locke’s property theory was originally and
primarily concerned with ownership of land,
water, and natural resources, but over time
his interpreters have extended it to include
all physical and tangible objects.
d. Locke arrives at the conclusion that people
are responsible for their labor, they own
their labor, and they “have a natural right of
entitlement to the fruits of their labor”.
“Theory of the commons” – everything is owned by
everybody; State owns everything; Government
appropriate it through TCT/title
John Locke’s theory – when you put blood, sweat and
tears or work on it, that piece is yours
2) Personhood Perspective – Margaret Jane
Radin (34 Stan. L. Rev. 957, 1982)
a. Most people possess certain objects they
feel are almost part of themselves. These
objects are closely bound up with
personhood because they are part of the
way we constitute ourselves as continuing
personal entities in the world. They may be
as different as people are different, but
some common examples might be a
wedding ring, a portrait, an heirloom, or a
house.
b. The intuitive view of property for
personhood just stated is wholly subjective:
self-identification through objects varies
from person to person.
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 c. Personal not fungible
The concept of wedding ring
Certain objects are attached to the persona of a person;
when a person puts value on to something
3) Economic Incentive Theory
a. The social value of utilitarian works lies
principally if not exclusively in their ability to
perform tasks (for example, a better
mousetrap) or satisfy desires more
effectively or at lower costs. It is logical,
therefore, that society would seek to protect
such works within a governance regime that
itself is based upon utilitarian precepts.
Furthermore, inventions – new processes,
machines, manufactures, or compositions of
matter – unlike artistic or literary expression
do not generally implicate personal interests
of the creator.
b. The utilitarian perspective has relevance to
other forms of intellectual property. Trade
secret law often protects utilitarian works
(MMLJ, 1997, pp. 34-36; Scheppele, 1988).
Trademark law is principally concerned with
ensuring that consumers are not misled in
the marketplace and hence is particularly
amenable to economic analysis
(Economides, 1988). Even copyright law,
which implicates a broader array of personal
interests of the creator than patent law,
may benefit from the application of the
utilitarian framework to the extent that
society seeks the production and diffusion of
literary and artistic works.
c. This theory claims that governments should
assign strong, artificial intellectual property
rights to creators, inventors, and
discoverers and intensely enforce these
rights against violators. This practice of
assigning and enforcing strong intellectual
property rights is believed to maximize the
incentive to create, innovate, and discover.
It is assumed that by maximizing these
incentives, we will maximize the quality and
quantity of social goods generated. In turn,
maximizing the quality and quantity of
social goods is believed to be a necessary
condition for satisfying the principle of
utility.
IP Code is a legal framework given by the government
for the protection of IP rights, so that more people will
create and reap more benefits
Intellectual Property has no physical manifestation; you
cannot exclude it from others and it’s out there in the
open
INTELLECTUAL PROPERTY CODE (R.A. No. 8293)
Section 1. Title. - This Act shall be known as the
"Intellectual Property Code of the Philippines."
Section 2. Declaration of State Policy. - The State
recognizes that an effective intellectual and industrial
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property system is vital to the development of domestic
and creative activity, facilitates transfer of technology,
attracts foreign investments, and ensures market
access for our products. It shall protect and secure the
exclusive rights of scientists, inventors, artists and other
gifted citizens to their intellectual property and
creations, particularly when beneficial to the people, for
such periods as provided in this Act.
The use of intellectual property bears a social function.
To this end, the State shall promote the diffusion of
knowledge and information for the promotion of national
development and progress and the common good.
It is also the policy of the State to streamline
administrative procedures of registering patents,
trademarks and copyright, to liberalize the registration
on the transfer of technology, and to enhance the
enforcement of intellectual property rights in the
Philippines. (n)
Section 3. International Conventions and Reciprocity. -
Any person who is a national or who is domiciled or has
a real and effective industrial establishment in a country
which is a party to any convention, treaty or agreement
relating to intellectual property rights or the repression
of unfair competition, to which the Philippines is also a
party, or extends reciprocal rights to nationals of the
Philippines by law, shall be entitled to benefits to the
extent necessary to give effect to any provision of such
convention, treaty or reciprocal law, in addition to the
rights to which any owner of an intellectual property
right is otherwise entitled by this Act. (n)
Copyrights
Trademark
Patents
PART I. GENERAL PRINCIPLES OF COPYRIGHT
GENERAL PRINCIPLES OF COPYRIGHT
1) U.S. Constitution, Article 1, Section 8 - 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
Because IP rights were more important than Bill of
Rights (first 10 amendments of the US Constitution)
2) 1987 Constitution, Article XIV, Section 13 -
The State shall protect and secure the exclusive
rights of scientists, inventors, artists, and other
gifted citizens to their intellectual property and
creations, particularly when beneficial to the
people, for such period as may be provided by
law.
DEFINITIONS
1) Copyright Act of 1976, 17 U.S. §102(a) –
(a) Copyright protection subsists, in accordance
with this title, in original works of
authorship(original to one author)fixed in any
tangible medium of expression, now known or
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 later developed, from which they can be
perceived, reproduced, or otherwise 171.3. "Communication to the public" or
communicated, either directly or with the aid of "communicate to the public" means the
a machine or device. Works of authorship making of a work available to the public by
include the following categories: wire or wireless means in such a way that
members of the public may access these
(1) literary works; works from a place and time individually
(2) musical works, including any chosen by them;
accompanying words; 171.4. A "computer" is an electronic or similar
(3) dramatic works, including any device having information processing
accompanying music; capabilities, and a "computer program" is a
(4) pantomimes and choreographic works; set of instructions expressed in words, codes,
(5) pictorial, graphic, and sculptural works; schemes or in any other form, which is
(6) motion pictures and other audiovisual capable when incorporated in a medium that
works; the computer can read, of causing the
(7) sound recordings; and
computer to perform or achieve a particular
(8) architectural works.
task or result;
2) IP Code of the Philippines (Original Works) 171.5. "Public lending" is the transfer of
possession of the original or a copy of a work
Section 171. Definitions. — For the purpose of
or sound recording for a limited period, for
this Act, the following termshave the following
non-profit purposes, by an institution the
meaning:
services of which are available to the public,
171.1. "Author" is the natural person who has such as public library or archive;
created the work;
171.6. "Public performance", in the case of a
171.2. A "collective work" is a work which has work other than an audiovisual work, is the
been created by two (2) or more natural recitation, playing, dancing, acting or
persons at the initiative and under the otherwise performing the work, either directly
direction ofanother with the or by means of any device or process; in the
understanding that it will be disclosed by case of an audiovisual work, the showing of its
the latterunder his own name and that images in sequence and the making of the
contributing natural persons will not sounds accompanying it audible; and, in the
beidentified; case of a sound recording, making the
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recorded sounds audible at a place or at
places where persons outside the normal
circle of a family and that family's closest
social acquaintances are or can be present,
irrespective of whether they are or can be
present at the same place and at the same
time, or at different places and/or at different
times, and where the performance can be
perceived without the need for communication
within the meaning of Subsection 171.3;
171.7. "Published works" means works, which,
with the consent of the authors, are made
available to the public by wire or wireless
means in such a way that members of the
public may access these works from a place
and time individually chosen by them:
Provided, That availability of such copies has
been such, as to satisfy the reasonable
requirements of the public, having regard to
the nature of the work;
171.8. "Rental" is the transfer of the
possession of the original or a copy of a work
or a sound recording for a limited period of
time, for profitmaking purposes;
171.9. "Reproduction" is the making of one (1)
or more copies of a work ora sound recording
in any manner or form (Sec. 41 (E), P.D. No.
49a);
171.10.A "work of applied art" is an artistic
creation with utilitarian functions or
incorporated in a useful article, whether made
by hand or produced on an industrial scale;
171.11.A "work of the Government of the
Philippines" is a work created by an officer or
employee of the Philippine Government or any
of its subdivisions and instrumentalities,
including government-owned or controlled
corporations as a part of his regularly
prescribed official duties.
Section 172.1. Literary and artistic works,
hereinafter referred to as "works", are original
intellectual creations in the literary and artistic
domain protected from the moment of their
creation and shall include in particular:
a) Books, pamphlets, articles and other
writings;
b) Periodicals and newspapers;
c) Lectures, sermons, addresses,
dissertations prepared for oral delivery,
whether or not reduced in writing or
other material form;
d) Letters;
e) Dramatic or dramatico-musical
compositions; choreographic works or
entertainment in dumb shows;
f) Musical compositions, with or without
words;
g) Works of drawing, painting, architecture,
sculpture, engraving, lithography or
other works of art; models or designs for
works of art;
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 h) Original ornamental designs or models
for articles of manufacture, whether or
not registrable as an industrial design,
and other works of applied art;
i) Illustrations, maps, plans, sketches,
charts and three-dimensional works
relative to geography, topography,
architecture or science;
j) Drawings or plastic works of a scientific
or technical character;
k) Photographic works including works
produced by a process analogous to
photography; lantern slides;
l) Audiovisual works and cinematographic
works and works produced by a process
analogous to cinematography or any
process for making audio-visual
recordings;
m) Pictorial illustrations and advertisements;
n) Computer programs; and,
o) Other literary, scholarly, scientific and
artistic works(other works now known or
later developed – from the US
Constitution).
Express inclusion is an implied exclusion
Section 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. (Sec. 2, P.D. No. 49a)
When does the moment start in terms of “creation” as
to copyrights? From that ‘Whitney Houston moment”
which is that one moment in time… Now, how do you
prove time? (1) You need a date or time;
(2) “Poor man’s copyright” – you send a letter to
yourself; in an envelope with a seal which is an official
government date/timestamp which is a presumptive
evidence; (3) Do not open the envelope
CASES
1) Santos v. McCullough Printing Company,
G.R. No. L-19439, October 31, 1964
Plaintiff and the work, defendant and its defense;
reasons behind the decisions
Defense of McCullough was it was not copyrighted
does it is not protected by law and thus no cause
of action
Re: Christmas Card using an art of another – In the
case at bar, even as of this moment, there is no
copyright for the design in question. As a general
proposition, there can be no dispute that the artist
acquires ownership of the product of his art. At
the time of its creation, he has the absolute
dominion over it.
In intellectual creations, a distinction must be
made between two classes of property rights; the
fact of authorship and the right to publish
and/or distribute copies of the creation. With
regard to the first, i.e. the fact of authorship, the
artist cannot be divested of the same. In other
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words, he may sell the right to print hundred of
his work yet the purchaser of said right can never
be the author of the creation.
2) Filipino Society of Composers v. Tan, G.R.
It is the second right, i.e., the right to publish,
republish, multiply and/or distribute copies of the
intellectual creation which the state, through the
enactment of the copyright law, seeks to protect.
The author or his assigns or heirs may have the
work copyrighted and once this is legally
accomplished any infringement of the copyright
will render the infringer liable to the owner of the
copyright.
The plaintiff in this case did not choose to protect
his intellectual creation by a copyright. The fact
that the design was used in the Christmas card of
Ambassador Neri who distributed eight hundred
copies thereof among his friends during the
Christmas season of 1959, shows that the, same
was published. When Ambassador Neri distributed
800 copies of the design in controversy, the
plaintiff lost control of his design and the
necessary implication was that there had been a
general publication, there having been no showing
of a clear indication that a limited publication was
intended. The author of a literary composition has
a light to the first publication thereof. He has a
right to determine whether it shall be published at
all, and if published, when, where, by whom, and
in what form. This exclusive right is confined to
the first publication. When once published, it is
dedicated to the public, and the author loses the
exclusive right to control subsequent publication
by others, unless the work is placed under the
protection of the copyright law.
No. L-36402, March 16, 1987
Affirmative defense – self defense
Re: Musical Compositions sang in a restaurant –
The word "perform" as used in the Act has been
applied to "One who plays a musical composition
on a piano, thereby producing in the air sound
waves which are heard as music ... and if the
instrument he plays on is a piano plus a
broadcasting apparatus, so that waves are thrown
out, not only upon the air, but upon the other,
then also he is performing the musical
composition."
In relation thereto, it has been held that "The
playing of music in dine and dance establishment
which was paid for by the public in purchases of
food and drink constituted "performance for
profit" within a Copyright Law." Thus, it has been
explained that while it is possible in such
establishments for the patrons to purchase their
food and drinks and at the same time dance to
the music of the orchestra, the music is furnished
and used by the orchestra for the purpose of
inducing the public to patronize the establishment
and pay for the entertainment in the purchase of
food and drinks. In the case at bar, it is admitted
that the patrons of the restaurant in question pay
only for the food and drinks and apparently not for
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 listening to the music. A careful study of the
records reveals that the song "Dahil Sa Iyo" which
was registered on April 20, 1956 became popular
in radios, juke boxes, etc. long before registration.
The musical compositions in question had long
become public property, and are therefore beyond
the protection of the Copyright Law.
3) Bayanihan v. BMG, G.R. No. 166337, March
7, 2005
Art. 1625 – Assignment of credits in relation
Article 1475
Transfer of rights/assignment = sale
Resolutory condition
When IP right is transferred, the owner can still
get it back upon the failure of the fulfillment of
----------------
resolutory condition
No laptop or electronic device
“Crossroads contract”
Re: JMChan sold his rights to Bayanihan;
Bayanihan applied copyright; Chan authorized
BMG to use the song in Lea Salonga’s new album
-- 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.
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.
4) Kho v. CA, 379 SCRA 410, G.R. No. 115758.
March 19, 2002
Re: Chin Chun Su Oval Container -- 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
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 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.
Petitioner has no right to support her claim for the
exclusive use of the subject trade name and its
container. The name and container of a beauty
cream product are proper subjects of a trademark
inasmuch as the same falls squarely within its
definition. In order to be entitled to exclusively
use the same in the sale of the beauty cream
product, the user must sufficiently prove that she
registered or used it before anybody else did. The
petitioners copyright and patent registration of
the name and container would not guarantee her
the right to the exclusive use of the same for the
reason that they are not appropriate subjects of
the said intellectual rights. Consequently, a
preliminary injunction order cannot be issued for
the reason that the petitioner has not proven that
she has a clear right over the said name and
container to the exclusion of others, not having
proven that she has registered a trademark
thereto or used the same before anyone did.
5) Unilever v. Proctor and Gamble, G.R. No.
119280, August 8, 2006
Re: P&G sues Unilever for using same
advertisements –Petitioner does not deny that the
questioned TV advertisements are substantially
similar to P&G’s double tug or tac-tac key visual.
However, it submits that P&G is not entitled to the
relief demanded, which is to enjoin petitioner from
airing said TV advertisements, for the reason that
petitioner has Certificates of Copyright
Registration for which advertisements while P&GP
has none with respect to its double-tug or tac-tac
key visual. In other words, it is petitioners
contention that P&GP is not entitled to any
protection because it has not registered with the
National Library the very TV commercials which it
claims have been infringed by petitioner.
We disagree. Section 2 of PD 49 stipulates that
the copyright for a work or intellectual creation
subsists from the moment of its creation.
Accordingly, the creator acquires copyright for his
work right upon its creation. Contrary to
petitioner’s contention, the intellectual creators
exercise and enjoyment of copyright for his work
and the protection given by law to him is not
contingent or dependent on any formality or
registration. Therefore, it cannot be seriously
doubted that at least, for purposes of determining
whether preliminary injunction should issue during
the pendency of the case, P&GP is entitled to the
injunctive relief prayed for in its Complaint.
Idea-Expression Dichotomy
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Baker v. Selden, 101 U.S. 99
Doctrine:
1. A claim to the exclusive property in a peculiar system of
bookkeeping cannot, under the law of copyright, be
maintained by the author of a treatise in which that system is
exhibited and explained.
2. The difference between a copyright and letters patent
stated and illustrated.
Facts: Charles Selden, the testator of the complainant
in this case, in the year 1859 took the requisite steps for
obtaining the copyrightof a book, entitled "Selden's
Condensed Ledger, or Bookkeeping Simplified," the object of
which was to exhibit and explain a peculiar system of
bookkeeping. In 1860 and 1861, he took the copyright of
several other books, containing additions to and
improvements upon the said system. The bill of complaint
was filed against the defendant, Baker, for an alleged
infringement of these copyrights. The latter, in his answer,
denied that Selden was the author or designer of the books,
and denied the infringement charged, and contends on the
argument that the matter alleged to be infringed is not a
lawful subject of copyright.
The parties went into proofs, and the various books of
the complainant, as well as those sold and used by the
defendant, were exhibited before the examiner, and
witnesses were examined to both sides. A decree was
rendered for the complainant, and the defendant
appealed.
The book or series of books of which the complainant
claims the copyright consists of an introductory essay
explaining the system of bookkeeping referred to, to
which are annexed certain forms or banks, consisting of
ruled lines, and headings, illustrating the system and
showing how it is to be used and carried out in practice.
This system effects the same results as bookkeeping by
double entry, but, by a peculiar arrangement of columns
and headings, presents the entire operation, of a day, a
week, or a month on a single page or on two pages
facing each other, in an account book. The defendant
uses a similar plan so far as results are concerned, but
makes a different arrangement of the columns, and uses
different headings. If the complainant's testator had the
exclusive right to the use of the system explained in his
book, it would be difficult to contend that the defendant
does not infringe it, notwithstanding the difference in his
form of arrangement; but if it be assumed that the
system is open to public use, it seems to be equally
difficult to contend that the books made and sold by the
defendant are a violation of the copyright of the
complainant's book considered merely as a book
explanatory of the system. Where the truths of a
science or the methods of an art are the common
property of the whole world, any author has the right to
express the one, or explain and use the other, in his own
way. As an author, Selden explained the system in a
particular way. It may be conceded that Baker makes and
uses account books arranged on substantially the same
system, but the proof fails to show that he has violated the
copyright of Selden's book, regarding the latter merely as an
explanatory work, or that he has infringed Selden's right in
any way, unless the latter became entitled to an exclusive
right in the system.
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The evidence of the complainant is principally directed
to the object of showing that Baker uses the same
system as that which is explained and illustrated in
Selden's books.It is contended that he has secured such
exclusive right because no one can use the system
without using substantially the same ruled lines and
headings which he was appended to his books in
illustration of it. In other words, it is contended that the
ruled lines and headings, given to illustrate the system,
are a part of the book, and as such are secured by the
copyright, and that no one can make or use similar
ruled lines and headings, or ruled lines and headings
made and arranged on substantially the same system,
without violating the copyright. And this is really the
question to be decided in this case. Stated in another
form, the question is whether the exclusive property in a
system of bookkeeping can be claimed under the law or
copyright by means of a book in which that system is
explained? The complainant's bill, and the case made
under it, are based on the hypothesis that it can be.
Issue: Whether, in obtaining the copyright of his books,
he secured the exclusive right to the use of the system
or method of bookkeeping which the said books are
intended to illustrate and explain
Held: The conclusion to which we have come is that
blank account books are not the subject of copyright,
and that the mere copyright of Selden's book did not
confer upon him the exclusive right to make and use
account books, ruled and arranged as designated by
him and described and illustrated in said book.
It cannot be pretended, and indeed it is not seriously
urged, that the ruled lines of the complainant's account
book can be claimed under any special class of objects,
other than books, named in the law of copyright existing
in 1859. The law then in force was that of 1831, and
specified only books, maps, charts, musical
compositions, prints, and engravings. An account book,
consisting of ruled lines and blank columns, cannot be
called by any of these names unless by that of a book.
There is no doubt that a work on the subject of
bookkeeping, though only explanatory of well known
systems, may be the subject of a copyright, but then it
is claimed only as a book. Such a book may be
explanatory either of old systems or of an entirely new
system, and, considered as a book, as the work of an
author, conveying information on the subject of
bookkeeping, and containing detailed explanations of
the art, it may be a very valuable acquisition to the
practical knowledge of the community. But there is a
clear distinction between the book as such and the art
which it is intended to illustrate. The mere statement of
the proposition is so evident that it requires hardly any
argument to support it. The same distinction may be
predicated of every other art as well as that of
bookkeeping. A treatise on the composition and use of
medicines, be they old or new; on the construction and
use of ploughs, or watches, or churns; or on the mixture
and application of colors for painting or dyeing; or on
the mode of drawing lines to produce the effect of
perspective -- would be the subject of copyright; but no
one would contend that the copyright of the treatise
would give the exclusive right to the art or manufacture
described therein. The copyright of the book, if not
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pirated from other works, would be valid without regard
to the novelty, or want of novelty, of its subject matter.
The novelty of the art or thing described or explained
has nothing to do with the validity of the copyright. To
give to the author of the book an exclusive property in
the art described therein when no examination of its
novelty has ever been officially made would be a
surprise and a fraud upon the public. That is the
province of letters patent, not of copyright. The claim to
an invention or discovery of an art or manufacture must
be subjected to the examination of the Patent Office
before an exclusive right therein can be obtained, and it
can only be secured by a patent from the government.
The difference between the two things, letters patent
and copyright, may be illustrated by reference to the
subjects just enumerated. Take the case of medicines.
Certain mixtures are found to be of great value in the
healing art. If the discoverer writes and publishes a
book on the subject (as regular physicians generally do),
he gains no exclusive right to the manufacture and sale
of the medicine; he gives that to the public. If he desires
to acquire such exclusive right, he must obtain a patent
for the mixture as a new art, manufacture, or
composition of matter. He may copyright his book if he
pleases, but that only secures to him the exclusive right
of printing and publishing his book. So of all other
inventions or discoveries.
The copyright of a book on perspective, no matter how
many drawings and illustrations it may contain, gives no
exclusive right to the modes of drawing described,
though they may never have been known or used
before. By publishing the book without getting a patent
for the art, the latter is given to the public. The fact that
the art described in the book by illustrations of lines and
figures which are reproduced in practice in the
application of the art makes no difference. Those
illustrations are the mere language employed by the
author to convey his ideas more clearly. Had he used
words of description instead of diagrams (which merely
stand in the place of words), there could not be the
slightest doubt that others, applying the art to practical
use, might lawfully draw the lines and diagrams which
were in the author's mind, and which he thus described
by words in his book.
The copyright of a work on mathematical science
cannot give to the author an exclusive right to the
methods of operation which he propounds, or to the
diagrams which he employs to explain them, so as to
prevent an engineer from using them whenever
occasion requires. The very object of publishing a book
on science or the useful arts is to communicate to the
world the useful knowledge which it contains. But this
object would be frustrated if the knowledge could not be
used without incurring the guilt of piracy of the book.
And where the art it teaches cannot be used without
employing the methods and diagrams used to illustrate
the book, or such as are similar to them, such methods
and diagrams are to be considered as necessary
incidents to the art, and given therewith to the public --
not given for the purpose of publication in other works
explanatory of the art, but for the purpose of practical
application.
Of course these observations are not intended to apply
to ornamental designs or pictorial illustrations
Page 12 of 307
addressed to the taste. Of these it may be said that
their form is their essence, and their object, the
production of pleasure in their contemplation. This is
their final end. They are as much the product of genius
and the result of composition as are the lines of the poet
or the historian's period. On the other hand, the
teachings of science and the rules and methods of
useful art have their final end in application and use,
and this application and use are what the public derive
from the publication of a book which teaches them. But
as embodied and taught in a literary composition or
book, their essence consists only in their statement.
This alone is what is secured by the copyright. The use
by another of the same methods of statement, whether
in words or illustrations, in a book published for teaching
the art would undoubtedly be an infringement of the
copyright.
Recurring to the case before us, we observe that
Charles Selden, by his books, explained and described a
peculiar system of bookkeeping, and illustrated his
method by means of ruled lines and blank columns, with
proper headings on a page or on successive pages. Now
whilst no one has a right to print or publish his book, or
any material part thereof, as a book intended to convey
instruction in the art, any person may practice and use
the art itself which he has described and illustrated
therein. The use of the art is a totally different thing
from a publication of the book explaining it. The
copyright of a book on bookkeeping cannot secure the
exclusive right to make, sell, and use account books
prepared upon the plan set forth in such book. Whether
the art might or might not have been patented is a
question which is not before us. It was not patented,
and is open and free to the use of the public. And of
course, in using the art, the ruled lines and headings of
accounts must necessarily be used as incident to it.
The plausibility of the claim put forward by the
complainant in this case arises from a confusion of ideas
produced by the peculiar nature of the art described in
the books which have been made the subject of
copyright. In describing the art, the illustrations and
diagrams employed happen to correspond more closely
than usual with the actual work performed by the
operator who uses the art. Those illustrations and
diagrams consist of ruled lines and headings of
accounts, and it is similar ruled lines and headings of
accounts which, in the application of the art, the
bookkeeper makes with his pen, or the stationer with his
press, whilst in most other cases the diagrams and
illustrations can only be represented in concrete forms
of wood, metal, stone, or some other physical
embodiment. But the principle is the same in all. The
description of the art in a book, though entitled to the
benefit of copyright, lays no foundation for an exclusive
claim to the art itself. The object of the one is
explanation; the object of the other is use. The former
may be secured by copyright. The latter can only be
secured, if it can be secured at all, by letters patent.
The remarks of Mr. Justice Thompson in the circuit court
in Clayton v. Stone & Hall, 2 Paine 392, in which
copyright was claimed in a daily price-current, are
apposite and instructive. He says:
"In determining the true construction to be given to the
act of Congress, it is proper to look at the Constitution of
Page 13 of 307
the United States to aid us in ascertaining the nature of
the property intended to be protected. '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 writings and
discoveries.' The act in question was passed in
execution of the power here given, and the object,
therefore, was the promotion of science; and it would
certainly be a pretty extraordinary view of the sciences
to consider a daily or weekly publication of the state of
the market as falling within any class of them. They are
of a more fixed, permanent, and durable character. The
term 'science' cannot with any propriety be applied to a
work of so fluctuating and fugitive a form as that of a
newspaper or price-current, the subject matter of which
is daily changing, and is of mere temporary use.
Although great praise may be due to the plaintiffs for
their industry and enterprise in publishing this paper,
yet the law does not contemplate their being rewarded
in this way; it must seek patronage and protection from
its utility to the public, and not a work of science. The
title of the act of Congress is, 'for the encouragement of
learning,' and was not intended for the encouragement
of mere industry, unconnected with learning and the
sciences. . . . We are accordingly of opinion that the
paper in question is nota book the copyright to which
can be secured under the act of Congress."
The case of Cobbett v. Woodward, Law Rep. 14 Eq. 407,
was a claim to copyright in a catalogue of furniture
which the publisher had on sale in his establishment,
illustrated with many drawings of furniture and
decorations. The defendants, being dealers in the same
business, published a similar book, and copied many of
the plaintiff's drawings, though it was shown that they
had for sale the articles represented thereby.
The court held that these drawings were not subjects of
copyright. Lord Romilly, M.R., said:
"This is a mere advertisement for the sale of particular
articles which any one might imitate, and any one might
advertise for sale. If a man not being a vendor of any of
the articles in question were to publish a work for the
purpose of informing the public of what was the most
convenient species of articles for household furniture, or
the most graceful species of decorations for articles of
home furniture, what they ought to cost, and where
they might be bought, and were to illustrate his work
with designs of each article he described -- such a work
as this could not be pirated with impunity, and the
attempt to do so would be stopped by the injunction of
the Court of Chancery; yet if it were done with no such
object, but solely for the purpose of advertising
particular articles for sale, and promoting the private
trade of the publisher by the sale of articles which any
other person might sell as well as the first advertiser,
and if in fact it contained little more than an illustrated
inventory of the contents of a warehouse, I know of no
law which, while it would not prevent the second
advertiser from selling the same articles, would prevent
him from using the same advertisement, provided he
did not in such advertisement by any device suggest
that he was selling the works and designs of the first
advertiser."
Another case, that of Page v. Wisden, 20 L.T.N.S. 435,
which came before Vice-Chancellor Malins in 1869, has
Page 14 of 307
some resemblance to the present. There, a copyright
was claimed in a cricket scoring sheet, and the Vice-
Chancellor held that it was not a fit subject for
copyright, partly because it was not new, but also
because "to say that a particularmode of ruling a book
constituted an object for a copyright is absurd."
These cases, if not precisely in point, come near to the
matter in hand, and, in our view, corroborate the
general proposition which we have laid down.
In Drury v. Ewing, 1 Bond, 540, which is much relied on
by the complainant, a copyright was claimed in a chart
of patterns for cutting dresses and basques for ladies,
and coats, jackets, &c., for boys. It is obvious that such
designs could only be printed and published for
information, and not for use in themselves. Their
practical use could only be exemplified in cloth on the
tailor's board and under his shears -- in other words, by
the application of a mechanical operation to the cutting
of cloth in certain patterns and forms. Surely the
exclusive right to this practical use was not reserved to
the publisher by his copyright of the chart. Without
undertaking to say whether we should or should not
concur in the decision in that case, we think it cannot
control the present.
Feist Publications v. Rural Telephone, 499 U.S.
340
Facts: Respondent Rural Telephone Service Company is
a certified public utility providing telephone service to
several communities in Kansas. Pursuant to state
regulation, Rural publishes a typical telephone directory,
consisting of white pages and yellow pages. It obtains
data for the directory from subscribers, who must
provide their names and addresses to obtain telephone
service. Petitioner Feist Publications, Inc., is a publishing
company that specializes in area-wide telephone
directories covering a much larger geographic range
than directories such as Rural's. When Rural refused to
license its white pages listings to Feist for a directory
covering 11 different telephone service areas, Feist
extracted the listings it needed from Rural's directory
without Rural's consent. Although Feist altered many of
Rural's listings, several were identical to listings in
Rural's white pages. The District Court granted
summary judgment to Rural in its copyright
infringement suit, holding that telephone directories are
copyrightable. The Court of Appeals affirmed.
Held: Rural's white pages are not entitled to copyright,
and therefore Feist's use of them does not constitute
infringement.
(a) Article I, § 8, cl. 8, of the Constitution mandates
originality as a prerequisite for copyright protection. The
constitutional requirement necessitates independent
creation plus a modicum of creativity. Since facts do not
owe their origin to an act of authorship, they are not
original, and thus are not copyrightable. Although a
compilation of facts may possess the requisite
originality because the author typically chooses which
facts to include, in what order to place them, and how to
arrange the data so that readers may use them
effectively, copyright protection extends only to those
components of the work that are original to the author,
not to the facts themselves. This fact/expression
Page 15 of 307
dichotomy severely limits the scope of protection in
fact-based works.
(b) The Copyright Act of 1976 and its predecessor, the
Copyright Act of 1909, leave no doubt that originality is
the touchstone of copyright protection in directories and
other fact-based works. The 1976 Act explains that
copyright extends to "original works of authorship," 17
U.S.C. § 102(a), and that there can be no copyright in
facts, § 102(b).
A compilation is not copyrightable per se, but is
copyrightable only if its facts have been "selected,
coordinated, or arranged in such a way that the
resulting work as a whole constitutes an original work of
authorship." § 101 (emphasis added). Thus, the statute
envisions that some ways of selecting, coordinating, and
arranging data are not sufficiently original to trigger
copyright protection. Even a compilation that is
copyrightable receives only limited protection, for the
copyright does not extend to facts contained in the
compilation. § 103(b). Lower courts that adopted a
"sweat of the brow" or "industrious collection" test --
which extended a compilation's copyright protection
beyond selection and arrangement to the facts
themselves -- misconstrued the 1909 Act and eschewed
the fundamental axiom of copyright law that no one
may copyright facts or ideas.
(c) Rural's white pages do not meet the constitutional or
statutory requirements for copyright protection. While
Rural has a valid copyright in the directory as a whole
because it contains some forward text and some
original material in the yellow pages, there is nothing
original in Rural's white pages. The raw data are
uncopyrightable facts, and the way in which Rural
selected, coordinated, and arranged those facts is not
original in any way. Rural's selection of listings --
subscribers' names, towns, and telephone numbers --
could not be more obvious, and lacks the modicum of
creativity necessary to transform mere selection into
copyrightable expression. In fact, it is plausible to
conclude that Rural did not truly "select" to publish its
subscribers' names and telephone numbers, since it was
required to do so by state law. Moreover, there is
nothing remotely creative about arranging names
alphabetically in a white pages directory. It is an age-old
practice, firmly rooted in tradition and so commonplace
that it has come to be expected as a matter of course.
Original:
Rural Telephone Service Company is a certified public
utility that provides telephone service to several
communities in northwest Kansas. It is subject to a state
regulation that requires all telephone companies
operating in Kansas to issue annually an updated
telephone directory. Accordingly, as a condition of its
monopoly franchise, Rural publishes a typicaltelephone
directory, consisting of white pages and yellow pages.
The white pages list in alphabetical order the names of
Rural's subscribers, together with their towns and
telephone numbers. The yellow pages list Rural's
business subscribers alphabetically by category, and
feature classified advertisements of various sizes. Rural
distributes its directory free of charge to its subscribers,
but earns revenue by selling yellow pages
advertisements.
Page 16 of 307

Feist Publications, Inc., is a publishing company that
specializes in area-wide telephone directories. Unlike a
typical directory, which covers only a particular calling
area, Feist's area-wide directories cover a much larger
geographical range, reducing the need to call directory
assistance or consult multiple directories. The Feist
directory that is the subject of this litigation covers 11
different telephone service areas in 15 counties and
contains 46,878 white pages listings -- compared to
Rural's approximately 7,700 listings. Like Rural's
directory, Feist's is distributed free of charge and
includes both white pages and yellow pages. Feist and
Rural compete vigorously for yellow pages advertising.
As the sole provider of telephone service in its service
area, Rural obtains subscriber information quite easily.
Persons desiring telephone service must apply to Rural
and provide their names and addresses; Rural then
assigns them a telephone number. Feist is not a
telephone company, let alone one with monopoly
status, and therefore lacks independent access to any
subscriber information. To obtain white pages listings for
its area-wide directory, Feist approached each of the 11
telephone companies operating in northwest Kansas
and offered to pay for the right to use its white pages
listings.
Of the 11 telephone companies, only Rural refused to
license its listings to Feist. Rural's refusal created a
problem for Feist, as omitting these listings would have
left a gaping hole in its area-wide directory, rendering it
less attractive to potential yellow pages advertisers. In a
decision subsequent to that which we review here, the
District Court determined that this was precisely the
reason Rural refused to license its listings. The refusal
was motivated by an unlawful purpose "to extend its
monopoly in telephone service to a monopoly in yellow
pages advertising." Rural Telephone Service Co. v. Feist
Publications, Inc., 737 F.Supp. 610, 622 (Kan.1990).
Unable to license Rural's white pages listings, Feist used
them without Rural's consent. Feist began by removing
several thousand listings that fell outside the
geographic range of its area-wide directory, then hired
personnel to investigate the 4,935 that remained. These
employees verifiedthe data reported by Rural and
sought to obtain additional information. As a result, a
typical Feist listing includes the individual's street
address; most of Rural's listings do not. Notwithstanding
these additions, however, 1,309 of the 46,878 listings in
Feist's 1983 directory were identical to listings in Rural's
1982-1983 white pages. App. 54 (15-16), 57. Four of
these were fictitious listings that Rural had inserted into
its directory to detect copying.
Rural sued for copyright infringement in the District
Court for the District of Kansas, taking the position that
Feist, in compiling its own directory, could not use the
information contained in Rural's white pages. Rural
asserted that Feist's employees were obliged to travel
door-to-door or conduct a telephone survey to discover
the same information for themselves. Feist responded
that such efforts were economically impractical and, in
any event, unnecessary, because the information copied
was beyond the scope of copyright protection. The
District Court granted summary judgment to Rural,
explaining that "[c]ourts have consistently held that
Page 17 of 307
telephone directories are copyrightable" and citing a
string of lower court decisions. 663 F.Supp. 214, 218
(1987). In an unpublished opinion, the Court of Appeals
for the Tenth Circuit affirmed "for substantially the
reasons given by the district court." App. to Pet. for
Cert. 4a, judgt. order reported at 916 F.2d 718 (1990).
We granted certiorari, 498 U.S. 808 (1990), to
determine whether the copyright in Rural's directory
protects the names, towns, and telephone numbers
copied by Feist.
II – A
This case concerns the interaction of two well-
established propositions. The first is that facts are not
copyrightable; the other, that compilations of facts
generally are. Each of these propositions possesses an
impeccable pedigree. That there can be no valid
copyright in facts is universally understood. The most
fundamental axiom of copyright law is that"[n]o author
may copyright his ideas or the facts he
narrates." Harper & Row, Publishers, Inc. v. Nation
Enterprises, (1985). Rural wisely concedes this point,
noting in its brief that "[f]acts and discoveries, of
course, are not themselves subject to copyright
protection." Brief for Respondent 24. At the same time,
however, it is beyond dispute that compilations of facts
are within the subject matter of copyright. Compilations
were expressly mentioned in the Copyright Act of 1909,
and again in the Copyright Act of 1976.
There is an undeniable tension between these two
propositions. Many compilations consist of nothing but
raw data -- i.e.,wholly factual information not
accompanied by any original written expression. On
what basis may one claim a copyright in such a work?
Common sense tells us that 100 uncopyrightable facts
do not magically change their status when gathered
together in one place. Yet copyright law seems to
contemplate that compilations that consist exclusively
of facts are potentially within its scope.
The key to resolving the tension lies in understanding
why facts are not copyrightable. The sine qua non of
copyright is originality. To qualify for copyright
protection, a work must be original to the author.
Original, as the term is used in copyright, means only
that the work was independently created by the author
(as opposed to copied from other works), and that it
possesses at least some minimal degree of creativity. 1
M. Nimmer & D. Nimmer, Copyright §§ 2.01[A], [B]
(1990) (hereinafter Nimmer). To be sure, the requisite
level of creativity is extremely low; even a slight amount
will suffice. The vast majority of works make the grade
quite easily, as they possess some creative spark, "no
matter how crude, humble or obvious" it might be. Id. §
1.08[C][1]. Originality does not signify novelty; a work
may be original even though it closely resembles other
works, so long as the similarity is fortuitous, not the
result of copying. To illustrate,assume that two poets,
each ignorant of the other, compose identical poems.
Neither work is novel, yet both are original and, hence,
copyrightable.
Originality is a constitutional requirement. The source of
Congress' power to enact copyright laws is Article I, § 8,
cl. 8, of the Constitution, which authorizes Congress to
"secur[e] for limited Times to Authors . . . the exclusive
Page 18 of 307
Right to their respective Writings." In two decisions from
the late 19th Century -- The Trade-Mark Cases, 100 U. S.
82 (1879); and Burrow-Giles Lithographic Co. v.
Sarony, 111 U. S. 53 (1884) -- this Court defined the
crucial terms "authors" and "writings." In so doing, the
Court made it unmistakably clear that these terms
presuppose a degree of originality.
In The Trade-Mark Cases, the Court addressed the
constitutional scope of "writings." For a particular work
to be classified "under the head of writings of authors,"
the Court determined, "originality is required." 100 U.S.
at 100 U. S. 94. The Court explained that originality
requires independent creation plus a modicum of
creativity:
"[W]hile the word writings may be liberally construed,
as it has been, to include original designs for engraving,
prints, &c., it is only such as are original, and are
founded in the creative powers of the mind. The writings
which are to be protected are the fruits of intellectual
labor, embodied in the form of books, prints,
engravings, and the like."Ibid. (emphasis in original).
In Burrow-Giles, the Court distilled the same
requirement from the Constitution's use of the word
"authors." The Court defined "author," in a distinction is one between creation and discovery: the
constitutional sense, to mean "he to whom anything
owes its origin; originator; maker." 111 U.S. at111 U. S.
58 (internal quotations omitted). As in The Trade-Mark
Cases, the Court emphasized the creative component of
originality. It described copyright as being limited to
"original intellectual conceptions of the
author," ibid., and stressed the importance of requiring
an author who accuses another of infringement to prove
"the existenceof those facts of originality, of intellectual
production, of thought, and conception."
The originality requirement articulated in The Trade-
Mark Cases and Burrow-Giles remains the touchstone of
copyright protection today. It is the very "premise of
copyright law." Miller v. Universal City Studios, Inc., 650
F.2d 1365, 1368 (CA5 1981). Leading scholars agree on
this point. As one pair of commentators succinctly puts
it: "The originality requirement is constitutionally
mandated for all works." Patterson & Joyce,
Monopolizing the Law: The Scope of Copyright
Protection for Law Reports and Statutory Compilations,
36 UCLA L.Rev. 719, 763, n. 155 (1989) (emphasis in
original) (hereinafter Patterson & Joyce). Accord, id. at
759-760, and n. 140; Nimmer § 1.06[A] ("originality is a
statutory as well as a constitutional requirement"); id. §
1.08[C][1] ("a modicum of intellectual labor . . . clearly
constitutes an essential constitutional element").
It is this bedrock principle of copyright that mandates
the law's seemingly disparate treatment of facts and
factual compilations. "No one may claim originality as to
facts." Id. § 2.11[A], p. 2-157. This is because facts do
not owe their origin to an act of authorship. The
first person to find and report a particular fact has not
created the fact; he or she has merely discovered its
existence. To borrow from Burrow-Giles, one who
discovers a fact is not its "maker" or "originator." "The
discoverer merely finds and records." Nimmer § 2.03[E].
Census-takers, for example, do not "create" the
population figures that emerge from their efforts; in a
sense, they copy these figures from the world around
Page 19 of 307
them. Denicola, Copyright in Collections of Facts: A
Theory for the Protection of Nonfiction Literary Works,
81 Colum.L.Rev. 516, 525 (1981) (hereinafter Denicola).
Census data therefore do not trigger copyright, because
these data are not "original" in the constitutional sense.
Nimmer§ 2.03[E]. The same is true of all facts --
scientific, historical, biographical, and news of the day.
"[T]hey may not be copyrighted, and are part of the
public domain available to every person."
Miller, supra, at 1369.
Factual compilations, on the other hand, may possess
the requisite originality. The compilation author typically
chooses which facts to include, in what order to place
them, and how to arrange the collected data so that
they may be used effectively by readers. These choices
as to selection and arrangement, so long as they are
made independently by the compiler and entail a
minimal degree of creativity, are sufficiently original
that Congress may protect such compilations through
the copyright laws. Nimmer §§ 2.11[D], 3.03; Denicola
523, n. 38. Thus, even a directory that contains
absolutely no protectible written expression, only facts,
meets the constitutional minimum for copyright
protection if it features an original selection or
arrangement.
This protection is subject to an important limitation. The
mere fact that a work is copyrighted does not mean that
every element of the work may be protected. Originality
remains the sine qua non of copyright; accordingly,
copyright protection may extend only to those
components of a work that are original to the author.
Patterson & Joyce 800-802; Ginsburg, Creation and
Commercial Value: Copyright Protection of Works of
Information, 90 Colum.L.Rev. 1865, 1868, and n. 12
(1990) (hereinafter Ginsburg). Thus, if the compilation
author clothes facts with an original collocation of
words, he or she may be able to claim a copyright in
this written expression. Others may copy the underlying
facts from the publication, but not the precise words
used to present them. In Harper & Row, for example, we
explained that President Ford could not prevent others
from copying bare historical facts from his
autobiography, see 471 U.S. at 471 U. S. 556-557, but
that he could prevent others from copying his
"subjective descriptions and portraits of public figures."
Where the compilation author adds no written
expression, but rather lets the facts speak for
themselves, the expressive element is more elusive.
The only conceivable expression is the manner in which
the compiler has selected and arranged the facts. Thus,
if the selection and arrangement are original, these
elements of the work are eligible for copyright
protection. See Patry, Copyright in Compilations of Facts
(or Why the "White Pages" Are Not Copyrightable), 12
Com. & Law 37, 64 (Dec.1990) (hereinafter Patry). No
matter how original the format, however, the facts
themselves do not become original through association.
This inevitably means that the copyright in a factual
compilation is thin. Notwithstanding a valid copyright, a
subsequent compiler remains free to use the facts
contained in another's publication to aid in preparing a
competing work, so long as the competing work does
not feature the same selection and arrangement. As one
commentator explains it:
Page 20 of 307

"[N]o matter how much original authorship the work
displays, the facts and ideas it exposes are free for the
taking. . . . [T]he very same facts and ideas may be
divorced from the context imposed by the author, and
restated or reshuffled by second comers, even if the
author was the first to discover the facts or to propose
the ideas."
It may seem unfair that much of the fruit of the
compiler's labor may be used by others without
compensation. As Justice Brennan has correctly
observed, however, this is not "some unforeseen
byproduct of a statutory scheme." It is, rather, "the
essence of copyright," ibid. and a constitutional
requirement. The primary objective of copyright is not
to reward the labor of authors, but "[t]o promote the
Progress of Science and useful Arts." To this end,
copyright assures authors the right to their
originalexpression, but encourages others to build freely
upon the ideas and information conveyed by a work.
This principle, known as the idea/expression or
fact/expression dichotomy, applies to all works of
authorship. As applied to a factual compilation,
assuming the absence of original written expression,
only the compiler's selection and arrangement may be
protected; the raw facts may be copied at will. This
result is neither unfair nor unfortunate. It is the means
by which copyright advances the progress of science
and art.
This Court has long recognized that the fact/expression
dichotomy limits severely the scope of protection in
fact-based works. More than a century ago, the Court
observed:
"The very object of publishing a book on science or the
useful arts is to communicate to the world the useful
knowledge which it contains. But this object would be
frustrated if the knowledge could not be used without
incurring the guilt of piracy of the book."
Baker v. Selden, 101 U. S. 99, 101 U. S. 103 (1880). We
reiterated this point in Harper & Row:"[N]o author may
copyright facts or ideas. The copyright is limited to
those aspects of the work -- termed 'expression' -- that
display the stamp of the author's originality."
"[C]opyright does not prevent subsequent users from
copying from a prior author's work those constituent
elements that are not original -- for example . . . facts,
or materials in the public domain -- as long as such use
does not unfairly appropriate. The author's original
contributions."
This, then, resolves the doctrinal tension: Copyright
treats facts and factual compilations in a wholly
consistent manner. Facts, whether alone or as part of a
compilation, are not original, and therefore may not be
copyrighted. A factual compilation is eligible for
copyright if it features an original selection or
arrangement of facts, but the copyright is limited tothe
particular selection or arrangement. In no event may
copyright extend to the facts themselves.
B
Page 21 of 307
As we have explained, originality is a constitutionally
mandated prerequisite for copyright protection. The
Court's decisions announcing this rule predate the
Copyright Act of 1909, but ambiguous language in the
1909 Act caused some lower courts temporarily to lose
sight of this requirement.
The 1909 Act embodied the originality requirement, but
not as clearly as it might have. The subject matter of
copyright was set out in § 3 and § 4 of the Act. Section 4
stated that copyright was available to "all the writings of
an author." 35 Stat. 1076. By using the words "writings"
and "author" -- the same words used in Article I, § 8 of
the Constitution and defined by the Court in The Trade-
Mark Cases and Burrow-Giles -- the statute necessarily
incorporated the originality requirement articulated in
the Court's decisions. It did so implicitly, however,
thereby leaving room for error.
Section 3 was similarly ambiguous. It stated that the
copyright in a work protected only "the copyrightable
component parts of the work." It thus stated an
important copyright principle, but failed to identify the
specific characteristic -- originality -- that determined
which component parts of a work were copyrightable
and which were not.
Most courts construed the 1909 Act correctly,
notwithstanding the less-than-perfect statutory
language. They understood from this Court's decisions
that there could be no copyright without
originality. See Patterson & Joyce 760-761. As explained
in the Nimmer treatise:
"The 1909 Act neither defined originality nor even
expressly required that a work be 'original' in order to
command protection. However, the courts uniformly
inferred the requirement from the fact that copyright
protection may only be claimed by 'authors.' . . . It was
reasoned that, since an author is 'the . . .creator,
originator,' it follows that a work is not the product of an
author unless the work is original."
But some courts misunderstood the statute. These
courts ignored § 3 and § 4, focusing their attention
instead on § 5 of the Act. Section 5, however, was purely
technical in nature: it provided that a person seeking to
register a work should indicate on the application the
type of work, and it listed 14 categories under which the
work might fall. One of these categories was "[b]ooks,
including composite and cyclopoedic works, directories,
gazetteers, and other compilations." § 5(a). Section 5
did not purport to say that all compilations were
automatically copyrightable. Indeed, it expressly
disclaimed any such function, pointing out that "the
subject matter of copyright [i]s defined in section four."
Nevertheless, the fact that factual compilations were
mentioned specifically in § 5 led some courts to infer
erroneously that directories and the like were
copyrightable per se, "without any further or precise
showing of original -- personal -- authorship." Ginsburg
1895.
Making matters worse, these courts developed a new
theory to justify the protection of factual compilations.
Known alternatively as "sweat of the brow" or
"industrious collection," the underlying notion was that
copyright was a reward for the hard work that went into
Page 22 of 307
compiling facts. The classic formulation of the doctrine
appeared in Jeweler's Circular Publishing Co., 281 F. at
88:
"The right to copyright a book upon which one has
expended labor in its preparation does not depend upon
whether the materials which he has collected consist or
not of matters which are publici juris, or whether such
materials show literary skill or originality, either in
thought or in language, or anything more than
industriouscollection. The man who goes through the
streets of a town and puts down the names of each of
the inhabitants, with their occupations and their street
number acquires material of which he is the
author."(Emphasis added).
The "sweat of the brow" doctrine had numerous flaws,
the most glaring being that it extended copyright
protection in a compilation beyond selection and
arrangement -- the compiler's original contributions -- to
the facts themselves. Under the doctrine, the only
defense to infringement was independent creation. A
subsequent compiler was "not entitled to take one word
of information previously published," but rather had to
"independently wor[k] out the matter for himself, so as
to arrive at the same result from the same common
sources of information." Id. at 88-89 (internal quotations
omitted). "Sweat of the brow" courts thereby eschewed
the most fundamental axiom of copyright law -- that no
one may copyright facts or ideas. See Miller v. Universal
City Studios, Inc., 650 F.2d at 1372 (criticizing "sweat of
the brow" courts because "ensur[ing] that later writers
obtain the facts independently . . . is precisely the scope
of protection given . . . copyrighted matter, and the law
is clear that facts are not entitled to such protection").
Decisions of this Court applying the 1909 Act make clear
that the statute did not permit the "sweat of the brow"
approach. The best example is International News
Service v. Associated Press, 248 U. S. 215 (1918). In
that decision, the Court stated unambiguously that the
1909 Act conferred copyright protection only on those
elements of a work that were original to the author.
International News Service had conceded taking news
reported by Associated Press and publishing it in its own
newspapers. Recognizing that § 5 of the Act specifically
mentioned "[p]eriodicals, including newspapers," § 5(b),
the Court acknowledged that news articles were
copyrightable. Id. at 248 U. S. 234. It flatly rejected,
however, the notion that the copyright in an article
extended tothe factual information it contained:
"[T]he news element -- the information respecting
current events contained in the literary production -- is
not the creation of the writer, but is a report of matters
that ordinarily are publici juris; it is the history of the
day."
Without a doubt, the "sweat of the brow" doctrine
flouted basic copyright principles. Throughout history,
copyright law has "recognize[d] a greater need to
disseminate factual works than works of fiction or
fantasy." Harper & Row, 471 U.S. at471 U. S.
563. Accord, Gorman, Fact or Fancy: The Implications for
Copyright, 29 J.Copyright Soc. 560, 563 (1982). But
"sweat of the brow" courts took a contrary view; they
handed out proprietary interests in facts and declared
Page 23 of 307
that authors are absolutely precluded from saving time
and effort by relying upon the facts contained in prior
works. In truth, "[i]t is just such wasted effort that the
proscription against the copyright of ideas and facts . . .
[is] designed to prevent."
"Protection for the fruits of such research . . . may, in
certain circumstances, be available under a theory of
unfair competition. But to accord copyright protection
on this basis alone distorts basic copyright principles in
that it creates a monopoly in public domain materials
without the necessary justification of protecting and
encouraging the creation of 'writings' by 'authors.'"
C This sentiment was echoed by the Copyright Office:
"Sweat of the brow" decisions did not escape the
attention of the Copyright Office. When Congress
decided to overhaul the copyright statute and asked the
Copyright Office to study existing problems, the
Copyright Office promptly recommendedthat Congress
clear up the confusion in the lower courts as to the basic
standards of copyrightability. The Register of Copyrights
explained in his first report to Congress that "originality"
was a "basic requisit[e]" of copyright under the 1909
Act, but that "the absence of any reference to
[originality] in the statute seems to have led to
misconceptions as to what is copyrightable matter."
Report of the Register of Copyrights on the General
Revision of the U.S. Copyright Law, 87th Cong., 1st
Sess., p. 9 (H. Judiciary Comm. Print 1961). The Register
suggested making the originality requirement
explicit. Ibid.
Congress took the Register's advice. In enacting the
Copyright Act of 1976, Congress dropped the reference
to "all the writings of an author" and replaced it with the
phrase "original works of authorship." 17 U.S.C. §
102(a). In making explicit the originality requirement,
Congress announced that it was merely clarifying
existing law:
"The two fundamental criteria of copyright protection
[are] originality and fixation in tangible form. . . . The
phrase 'original works of authorship,' which is purposely
left undefined, is intended to incorporate without
change the standard of originality established by the
courts under the present [1909] copyright statute."
"Our intention here is to maintain the established
standards of originality. . . ." Supplementary Report of
the Register of Copyrights on the General Revision of
U.S. Copyright Law, 89th Cong., 1st Sess., Part 6, p. 3
(H. Judiciary Comm. Print 1965) (emphasis added).
To ensure that the mistakes of the "sweat of the brow"
courts would not be repeated, Congress took additional
measures. For example, § 3 of the 1909 Act had stated
that copyright protected only the "copyrightable
component parts" of a work, but had not identified
originality as the basis for distinguishingthose
component parts that were copyrightable from those
that were not. The 1976 Act deleted this section and
replaced it with § 102(b), which identifies specifically
those elements of a work for which copyright is not
available:
Page 24 of 307
"In no case does copyright protection for an original
work of authorship extend to any 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."
§ 102(b) is universally understood to prohibit any
copyright in facts. Harper Row, supra, at 471 U. S.
547, 471 U. S. 556.Accord, Nimmer § 2.03[E] (equating
facts with "discoveries"). As with § 102(a), Congress
emphasized that § 102(b) did not change the law, but
merely clarified it:
"Section 102(b) in no way enlarges or contracts the
scope of copyright protection under the present law. Its
purpose is to restate . . . that the basic dichotomy
between expression and idea remains unchanged."
Congress took another step to minimize confusion by
deleting the specific mention of "directories . . . and
other compilations" in § 5 of the 1909 Act. As
mentioned, this section had led some courts to conclude
that directories were copyrightable per se, and that
every element of a directory was protected. In its place,
Congress enacted two new provisions. First, to make
clear that compilations were not copyrightable per
se, Congress provided a definition of the term
"compilation." Second, to make clear that the copyright
in a compilation did not extend to the facts themselves,
Congress enacted 17 U.S.C. § 103.
The definition of "compilation" is found in § 101 of the
1976 Act. It defines a "compilation" in the copyright
sense as"a work formed by the collection and assembly
of preexisting materials or of data that are selected,
coordinated, or arranged in such a way that the
resulting work, as a whole, constitutes an original work
of authorship."(Emphasis added.)
The purpose of the statutory definition is to emphasize
that collections of facts are not copyrightable per se. It
conveys this message through its tripartite structure, as
emphasized above by the italics. The statute identifies
three distinct elements, and requires each to be met for
a work to qualify as a copyrightable compilation: (1) the
collection and assembly of preexisting material, facts, or
data; (2) the selection, coordination, or arrangement of
those materials; and (3) the creation, by virtue of the
particular selection, coordination, or arrangement, of an
"original" work of authorship. "[T]his tripartite
conjunctive structure is self-evident, and should be
assumed to accurately express the legislative
purpose.'"
At first glance, the first requirement does not seem to
tell us much. It merely describes what one normally
thinks of as a compilation -- a collection of preexisting
material, facts, or data. What makes it significant is that
it is not the solerequirement. It is not enough for
copyright purposes that an author collects and
assembles facts. To satisfy the statutory definition, the
work must get over two additional hurdles. In this way,
the plain language indicates that not every collection of
facts receives copyright protection. Otherwise, there
would be a period after "data."
The third requirement is also illuminating. It emphasizes
that a compilation, like any other work, is copyrightable
Page 25 of 307
only if it satisfies the originality requirement
("an original work of authorship"). Although § 102 states
plainly that the originality requirement applies to all
works, the point was emphasized with regard to
compilations to ensure that courts would not repeat the
mistake of the "sweat of the brow" courts by concluding
that fact-based works are treated differently and
measured by some other standard. As Congress
explained it, the goal was to"make plain that the criteria
of copyrightable subject matter stated in section 102
apply with full force to works . . . containing preexisting
material."
The key to the statutory definition is the second
requirement. It instructs courts that, in determining
whether a fact-based work is an original work of
authorship, they should focus on the manner in which
the collected facts have been selected, coordinated, and
arranged. This is a straightforward application of the
originality requirement. Facts are never original, so the
compilation author can claim originality, if at all, only in
the way the facts are presented. To that end, the statute
dictates that the principal focus should be on whether
the selection, coordination, and arrangement are
sufficiently original to merit protection.
Not every selection, coordination, or arrangement will
pass muster. This is plain from the statute. It states that,
to merit protection, the facts must be selected,
coordinated, or arranged "in such a way" as to render
the work as a whole original. This implies that some
"ways" will trigger copyright, but that others will
not. See Patry 57, and n. 76. Otherwise, the phrase "in
such a way" is meaningless, and Congress should have
defined "compilation" simply as "a work formed by the
collection and assembly of preexisting materials or data
that are selected, coordinated, or arranged." That
Congress did not do so is dispositive. In accordance with
"the established principle that a court should give
effect, if possible, to every clause and word of a
statute," Moskal v. United States, 498 U. S. 103, 498 U.
S. 109-110 (1990) (internal quotations omitted), we
conclude that the statute envisions that there will be
some fact-based works in which the selection,
coordination, and arrangement are not sufficiently
original to trigger copyright protection.
As discussed earlier, however, the originality
requirement is not particularly stringent. A compiler
may settle upon a selection or arrangement that others
have used; novelty is not required. Originality requires
only that the author make the selection or arrangement
independently (i.e., without copying that selection or
arrangement from another work), and that it display
some minimal level of creativity. Presumably,the vast
majority of compilations will pass this test, but not all
will. There remains a narrow category of works in which
the creative spark is utterly lacking or so trivial as to be
virtually nonexistent. See generally Bleistein v.
Donaldson Lithographing Co., 188 U. S. 239, 188 U. S.
251 (1903) (referring to "the narrowest and most
obvious limits"). Such works are incapable of sustaining
a valid copyright. Nimmer § 2.01[B].
Even if a work qualifies as a copyrightable compilation,
it receives only limited protection. This is the point of §
103 of the Act. Section 103 explains that "[t]he subject
matter of copyright . . . includes compilations," § 103(a),
Page 26 of 307
but that copyright protects only the author's original
contributions -- not the facts or information conveyed:
"The copyright in a compilation . . . extends only to the
material contributed by the author of such work, as
distinguished from the preexisting material employed in
the work, and does not imply any exclusive right in the
preexisting material."§ 103(b).
As § 103 makes clear, copyright is not a tool by which a
compilation author may keep others from using the
facts or data he or she has collected.
"The most important point here is one that is commonly
misunderstood today: copyright . . . has no effect one
way or the other on the copyright or public domain
status of the preexisting material."
The 1909 Act did not require, as "sweat of the brow"
courts mistakenly assumed, that each subsequent
compiler must start from scratch, and is precluded from
relying on research undertaken by another. See, e.g.,
Jeweler's Circular publishing Co., 281 F., at 88-89.
Rather, the facts contained in existing works may be
freely copied, because copyright protects only the
elements that owe their origin to the compiler -- the
selection, coordination, and arrangement of facts.
In summary, the 1976 revisions to the Copyright Act
leave no doubt that originality, not "sweat of the brow,"
is thetouchstone of copyright protection in directories
and other fact-based works. Nor is there any doubt that
the same was true under the 1909 Act. The 1976
revisions were a direct response to the Copyright
Office's concern that many lower courts had
misconstrued this basic principle, and Congress
emphasized repeatedly that the purpose of the revisions
was to clarify, not change, existing law. The revisions
explain with painstaking clarity that copyright requires
originality, § 102(a); that facts are never original, §
102(b); that the copyright in a compilation does not
extend to the facts it contains, § 103(b); and that a
compilation is copyrightable only to the extent that it
features an original selection, coordination, or
arrangement, § 101.
The 1976 revisions have proven largely successful in
steering courts in the right direction. A good example
is Miller v. Universal City Studios, Inc., 650 F.2d at 1369-
1370:
"A copyright in a directory . . . is properly viewed as
resting on the originality of the selection and
arrangement of the factual material, rather than on the
industriousness of the efforts to develop the
information. Copyright protection does not extend to the
facts themselves, and the mere use of information
contained in a directory without a substantial copying of
the format does not constitute infringement."
Additionally, the Second Circuit, which almost 70 years
ago issued the classic formulation of the "sweat of the
brow" doctrine in Jeweler's Circular Publishing Co., has
now fully repudiated the reasoning of that decision. See,
e.g., Financial Information, Inc. v. Moody's Investors
Service, Inc., 808 F.2d 204, 207 (CA2 1986), cert.
denied, 484 U.S. 820 (1987);Financial Information, Inc.
v. Moody's Investors Service, Inc., 751 F.2d 501, 510
(CA2 1984) (Newman, J., concurring); Hoehling v.
Universal City Studios, Inc., 618 F.2d 972, 979 (CA2
Page 27 of 307
1980). Even those scholars who believe that
"industrious collection" should be rewarded seem to
recognize that this is beyond the scope of existing
copyright law. See Denicola 516 ("the very vocabulary
of copyright is ill-suitedto analyzing property rights in
works of nonfiction"); id. at 520-521, 525; Ginsburg
1867, 1870.
III
There is no doubt that Feist took from the white pages
of Rural's directory a substantial amount of factual
information. At a minimum, Feist copied the names,
towns, and telephone numbers of 1,309 of Rural's
subscribers. Not all copying, however, is copyright
infringement. To establish infringement, two elements
must be proven: (1) ownership of a valid copyright, and
(2) copying of constituent elements of the work that are
original. See Harper & Row, 471 U.S. at 471 U. S. 548.
The first element is not at issue here; Feist appears to
concede that Rural's directory, considered as a whole, is
subject to a valid copyright because it contains some
foreword text, as well as original material in its yellow
pages advertisements.
The question is whether Rural has proved the second
element. In other words, did Feist, by taking 1,309
names, towns, and telephone numbers from Rural's
white pages, copy anything that was "original" to Rural?
Certainly, the raw data does not satisfy the originality
requirement. Rural may have been the first to discover
and report the names, towns, and telephone numbers of
its subscribers, but this data does not "ow[e] its origin'"
to Rural. Burrow-Giles, 111 U.S. at 111 U. S. 58. Rather,
these bits of information are uncopyrightable facts; they
existed before Rural reported them, and would have
continued to exist if Rural had never published a
telephone directory. The originality requirement"rule[s]
out protecting . . . names, addresses, and telephone
numbers of which the plaintiff, by no stretch of the
imagination, could be called the author."
Rural essentially concedes the point by referring to the
names, towns, and telephone numbers as "preexisting
material." Brief for Respondent 17. Section 103(b)
states explicitlythat the copyright in a compilation does
not extend to "the preexisting material employed in the
work."
The question that remains is whether Rural selected,
coordinated, or arranged these uncopyrightable facts in
an original way. As mentioned, originality is not a
stringent standard; it does not require that facts be
presented in an innovative or surprising way. It is
equally true, however, that the selection and
arrangement of facts cannot be so mechanical or
routine as to require no creativity whatsoever. The
standard of originality is low, but it does
exist. See Patterson & Joyce 760, n. 144 ("While this
requirement is sometimes characterized as modest, or a
low threshold, it is not without effect") (internal
quotations omitted; citations omitted). As this Court has
explained, the Constitution mandates some minimal
degree of creativity, see The Trade-Mark Cases, 100 U.S.
at 100 U. S. 94, and an author who claims infringement
must prove "the existence of . . . intellectual production,
of thought, and conception."
Page 28 of 307
The selection, coordination, and arrangement of Rural's
white pages do not satisfy the minimum constitutional
standards for copyright protection. As mentioned at the
outset, Rural's white pages are entirely typical. Persons
desiring telephone service in Rural's service area fill out
an application, and Rural issues them a telephone
number. In preparing its white pages, Rural simply takes
the data provided by its subscribers and lists it
alphabetically by surname. The end product is a garden-
variety white pages directory, devoid of even the
slightest trace of creativity.
Rural's selection of listings could not be more obvious: it
publishes the most basic information -- name, town, and
telephone number -- about each person who applies to
it for telephone service. This is "selection" of a sort, but
it lacks the modicum of creativity necessary to
transform mere selection into copyrightable expression.
Rural expended sufficient effortto make the white pages
directory useful, but insufficient creativity to make it
original.
We note in passing that the selection featured in Rural's
white pages may also fail the originality requirement for
another reason. Feist points out that Rural did not truly
"select" to publish the names and telephone numbers of
its subscribers; rather, it was required to do so by the
Kansas Corporation Commission as part of its monopoly
franchise.Accordingly, one could plausibly conclude that
this selection was dictated by state law, not by Rural.
Nor can Rural claim originality in its coordination and
arrangement of facts. The white pages do nothing more
than list Rural's subscribers in alphabetical order. This
arrangement may, technically speaking, owe its origin
to Rural; no one disputes that Rural undertook the task
of alphabetizing the names itself. But there is nothing
remotely creative about arranging names alphabetically
in a white pages directory. It is an age-old practice,
firmly rooted in tradition and so commonplace that it
has come to be expected as a matter of
course. See Brief for Information Industry Association et
al.as Amici Curiae 10 (alphabetical arrangement "is
universally observed in directories published by local
exchange telephone companies"). It is not only
unoriginal, it is practically inevitable. This time-honored
tradition does not possess the minimal creative spark
required by the Copyright Act and the Constitution.
We conclude that the names, towns, and telephone
numbers copied by Feist were not original to Rural, and
therefore were not protected by the copyright in Rural's
combined white and yellow pages directory. As a
constitutional matter, copyright protects only those
constituent elements of a work that possess more than
a de minimis quantum of creativity. Rural's white pages,
limited to basic subscriber information and arranged
alphabetically, fall short of the mark. As a statutory
matter, 17 U.S.C. § 101 does not afford protectionfrom
copying to a collection of facts that are selected,
coordinated, and arranged in a way that utterly lacks
originality. Given that some works must fail, we cannot
imagine a more likely candidate. Indeed, were we to
hold that Rural's white pages pass muster, it is hard to
believe that any collection of facts could fail.
Because Rural's white pages lack the requisite
originality, Feist's use of the listings cannot constitute
infringement. This decision should not be construed as
Page 29 of 307
demeaning Rural's efforts in compiling its directory, but
rather as making clear that copyright rewards
originality, not effort. As this Court noted more than a
century ago,"'great praise may be due to the plaintiffs
for their industry and enterprise in publishing this paper,
yet the law does not contemplate their being rewarded
in this way.'"
Derivative Works
Sections 173 & 174
CHAPTER III
DERIVATIVE WORKS
Section 173. Derivative Works. - 173.1. The following
derivative works shall also be protected by copyright:
(a) Dramatizations, translations, adaptations,
abridgments, arrangements, and other alterations of
literary or artistic works; and
(b) Collections of literary, scholarly or artistic works, and
compilations of data and other materials which are
original by reason of the selection or coordination or
arrangement of their contents. (Sec. 2, [P] and [Q], P.D.
No. 49)
173.2. The works referred to in paragraphs (a) and (b) of
Subsection 173.1 shall be protected as new works:
Provided however, That such new work shall not affect
the force of any subsisting copyright upon the original
works employed or any part thereof, or be construed to
imply any right to such use of the original works, or to
secure or extend copyright in such original works. (Sec.
8, P.D. 49; Art. 10, TRIPS)
Section 174. Published Edition of Work. - In addition to
the right to publish granted by the author, his heirs, or
assigns, the publisher shall have a copyright consisting
merely of the right of reproduction of the typographical
arrangement of the published edition of the work. (n)
Works not subject to Protection
Section 175 & 176
CHAPTER IV
WORKS NOT PROTECTED
Section 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
(n)
Section 176. Works of the Government. - 176.1. No
copyright shall subsist in any work of the Government of
the Philippines. However, prior approval of the
government agency or office wherein the work is
created shall be necessary for exploitation of such work
for profit. Such agency or office may, among other
Page 30 of 307
things, impose as a condition the payment of royalties.
No prior approval or conditions shall be required for the
use of any purpose of statutes, rules and regulations,
and speeches, lectures, sermons, addresses, and
dissertations, pronounced, read or rendered in courts of
justice, before administrative agencies, in deliberative
assemblies and in meetings of public character. (Sec. 9,
first par., P.D. No. 49)
176.2. The author of speeches, lectures, sermons,
addresses, and dissertations mentioned in the
preceding paragraphs shall have the exclusive right of
making a collection of his works. (n)
176.3. Notwithstanding the foregoing provisions, the
Government is not precluded from receiving and holding
copyrights transferred to it by assignment, bequest or
otherwise; nor shall publication or republication by the
Government in a public document of any work in which
copyright is subsisting be taken to cause any
abridgment or annulment of the copyright or to
authorize any use or appropriation of such work without
the consent of the copyright owner. (Sec. 9, third par.,
P.D. No. 49)
Cases:
1. Morrissey v. Procter & Gamble, 379 F.2d 367
[1] This is an appeal from a summary judgment for the
defendant. The plaintiff, Morrissey, is the copyright
owner of a set of rules for a sales promotional contest of
the "sweepstakes" type involving the social security
numbers of the participants. Plaintiff alleges that the
defendant, Procter & Gamble Company, infringed, by
copying, almost precisely, Rule 1. In its motion for
summary judgment, based upon affidavits and
depositions, defendant denies that plaintiff's Rule I is
copyrightable material, and denies access. The district
court held for the defendant on both grounds.
[2] Taking the second ground first, the defendant offered
affidavits or depositions of all of its allegedly pertinent
employees, all of whom denied having seen plaintiff's
rules. Although the plaintiff, by deposition, flatly
testified that prior to the time the defendant conducted
its contest he had mailed to the defendant his
copyrighted rules with an offer to sell, the court ruled
that the defendant had "proved" non-access, and stated
that it was "satisfied that no material issue as to access
* * * lurks * * * [in the record.]"
[3] The court did not explain whether it considered
defendant's showing to have constituted proof
overcoming the presumption of receipt arising from
plaintiff's testimony of mailing, or whether it felt there
was an unsatisfied burden on the plaintiff to show that
the particularly responsible employees of the defendant
had received his communication. Either view would
have been error. A notice to the defendant at its
principal office, as this one assertedly was, is proper
notice. There is at least an inference that the letter
reached its proper destination. Even if we assume that
if, at the trial of the case, it should be found that the
particular employees of the defendant responsible for
the contest were in fact without knowledge of plaintiff's
rules, defendant would be free of a charge of
copying, cf. Pinci v. Twentieth Century-Fox Film Corp.,
S.D. N.Y., 1951, 95 F.Supp. 884; Dezendorf v. Twentieth
Page 31 of 307
Century-Fox Film Corp., S.D.Cal., 1940, 32 F.Supp.
359, aff'd, 9 Cir., 118 F.2d 561, on a motion for summary
judgment a plaintiff should not have to go to the point
of showing that every employee of a corporate
defendant received his notification. Nor can it be said
that no issue of fact as to access "lurks" merely because
it seems to the court that plaintiff's own proof has been
satisfactorily contradicted. Nothing is clearer than this
on a motion for summary judgment; if a party has made
an evidentiary showing warranting a favorable
inference, contradiction cannot eliminate it. Summary
judgment may not be granted where there is the
"slightest doubt as to the facts." Peckham v. Ronrico
Corp., 1 Cir., 1948, 171 F.2d 653, 657; Arnstein v. Porter,
2 Cir., 1946, 154 F.2d 464, 468. Defendant's argument
misreads Dressler v. MV Sandpiper, 2 Cir., 1964, 331
F.2d 130. The presumption arising from mailing
remained in the case.[n1]
[4] It is true that we have, on rare occasion, held that
even though there is some slight evidence favoring a
plaintiff, the evidence contrary may be so overpowering
that a verdict for the plaintiff cannot be permitted, and
judgment must be ordered for the
defendant. Dehydrating Process Co. v. A. O. Smith Corp.,
1 Cir., 1961, 292 F.2d 653, cert. den. 368 U.S. 931, 82
S.Ct. 368, 7 L.Ed.2d 194; see Magnat Corp. v. B & B
Electroplating Co., 1 Cir., 1966, 358 F.2d 794. We have
never suggested that such a principle is applicable to a
motion for summary judgment, and we do not now. [n2]
[5] Cf. Robbins v. Milner Enterprises, Inc., 5 Cir., 1960,
278 F.2d 492, 496-497. The second aspect of the case
raises a more difficult question.
[6] Before discussing it we recite plaintiff's Rule 1, and
defendant's Rule 1, the italicizing in the latter being
ours to note the defendant's variations or changes.
"1. Entrants should print name, address and social
security number on a boxtop, or a plain paper. Entries
must be accompanied by * * * boxtop or by plain paper
on which the name * * * is copied f rom any source.
Official rules are explained on * * * packages or leaflets
obtained from dealer. If you do not have a social
security number you may use the name and number of
any member of your immediate family living with you.
Only the person named on the entry will be deemed an
entrant and may qualify for prize.
"Use the correct social security number belonging to the
person named on entry * * * wrong number will be
disqualified."
(Plaintiff's Rule)
"1. Entrants should print name, address and Social
Security number on a Tide boxtop, or on [a] plain paper.
Entries must be accompanied by Tide boxtop (any size)
or by plain paper on which the name 'Tide' is copied
from any source. Official rules are available on Tide
Sweepstakes packages, or on leaflets at Tide dealers, or
you can send a stamped, self-addressed envelope to:
Tide 'Shopping Fling' Sweepstakes, P.O. Box 4459,
Chicago 77, Illinois.
"If you do not have a Social Security number, you may
use the name and number of any member of your
immediate family living with you. Only the person
named on the entry will be deemed an entrant and may
Page 32 of 307
qualify for a prize. "Use the correct Social Security
number, belonging to the person named on the entry
wrong numbers will be disqualified."
(Defendant's Rule)
[7] The district court, following an earlier decision, Gaye
v. Gillis, D.Mass., 1958, 167 F.Supp. 416, took the
position that since the substance of the contest was not
copyrightable, which is unquestionably correct, Baker v.
Selden, 1879, 101 U.S. 99, 25 L.Ed. 841; Affiliated
Enterprises v. Gruber, 1 Cir., 1936, 86 F.2d
958; Chamberlin v. Uris Sales Corp., 2 Cir., 1945, 150
F.2d 512, and the substance was relatively simple, it
must follow that plaintiff's rule sprung directly from the
substance and "contains no original creative
authorship." 262 F.Supp. at 738. This does not follow.
Copyright attaches to form of expression, and
defendant's own proof, introduced to deluge the court
on the issue of access, itself established that there was
more than one way of expressing even this simple
substance. Nor, in view of the almost precise similarity
of the two rules, could defendant successfully invoke
the principle of a stringent standard for showing
infringement which some courts apply when the subject
matter involved admits of little variation in form of
expression. E. g., Dorsey v. Old Surety Life Ins. Co., 10
Cir., 1938, 98 F.2d 872, 874, 119 A.L.R. 1250 ("a
showing of appropriation in the exact form or
substantially so.") ;Continental Casualty Co. v.
Beardsley, 2 Cir., 1958, 253 F.2d 702, 705, cert. denied,
358 U.S. 816, 79 S.Ct. 25, 3 L.Ed.2d 58 ("a stiff standard
for proof of infringement.").
[8] Nonetheless, we must hold for the defendant. When
the uncopyrightable subject matter is very narrow, so
that "the topic necessarily requires," Sampson &
Murdock Co. v. Seaver-Radford Co., 1 Cir., 1905, 140 F.
539, 541; cf. Kaplan, An Unhurried View of Copyright,
64-65 (1967), if not only one form of expression, at best
only a limited number, to permit copyrighting would
mean that a party or parties, by copyrighting a mere
handful of forms, could exhaust all possibilities of future
use of the substance. In such circumstances it does not
seem accurate to say that any particular form of
expression comes from the subject matter. However, it
is necessary to say that the subject matter would be
appropriated by permitting the copyrighting of its
expression. We cannot recognize copyright as a game of
chess in which the public can be checkmated.
[9] Upon examination the matters embraced in Rule 1
are so straightforward and simple that we find this
limiting principle to be applicable. Furthermore, its
operation need not await an attempt to copyright all
possible forms. It cannot be only the last form of
expression which is to be condemned, as completing
defendant's exclusion from the substance. Rather, in
these circumstances, we hold that copyright does not
extend to the subject matter at all, and plaintiff cannot
complain even if his particular expression was
deliberately adopted.
2. Brandir International v. Cascade Pacific
Lumber, 834 F.2d 1142
In passing the Copyright Act of 1976 Congress
attempted to distinguish between protectable "works of
Page 33 of 307
applied art" and "industrial designs not subject to
copyright protection." See H.R.Rep. No. 1476, 94th
Cong., 2d Sess. 54, reprinted in 1976 U.S.Code Cong. &
Admin.News 5659, 5667 (hereinafter H.R.Rep. No.
1476). The courts, however, have had difficulty framing
tests by which the fine line establishing what is and
what is not copyrightable can be drawn. Once again we
are called upon to draw such a line, this time in a case
involving the "RIBBON Rack," a bicycle rack made of
bent tubing that is said to have originated from a wire
sculpture. (A photograph of the rack is contained in the
appendix to this opinion.) We are also called upon to
determine whether there is any trademark protection
available to the manufacturer of the bicycle rack,
appellant Brandir International, Inc. The Register of
Copyright, named as a third-party defendant under the
statute, 17 U.S.C. Sec. 411, but electing not to appear,
denied copyrightability. In the subsequent suit brought
in the United States District Court for the Southern
District of New York, Charles S. Haight, Jr., Judge, the
district court granted summary judgment on both the
copyright and trademark claims to defendant Cascade
Pacific Lumber Co., d/b/a Columbia Cascade Co.,
manufacturer of a similar bicycle rack. We affirm as to
the copyright claim, but reverse and remand as to the
trademark claim.
Against the history of copyright protection well set out
in the majority opinion in Carol Barnhart Inc. v. Economy
Cover Corp., 773 F.2d 411, 415-18 (2d Cir.1985), and in
Denicola, Applied Art and Industrial Design: A
Suggested Approach to Copyright in Useful Articles, 67
Minn.L.Rev. 707, 709-17 (1983), Congress adopted the
Copyright Act of 1976. The "works of art" classification
of the Copyright Act of 1909 was omitted and replaced
by reference to "pictorial, graphic, and sculptural
works," 17 U.S.C. Sec. 102(a)(5). According to the House
Report, the new category was intended to supply "as
clear a line as possible between copyrightable works of
applied art and uncopyrighted works of industrial
design." H.R.Rep. No. 1476, at 55, U.S.Code Cong. &
Admin.News 1976, p. 5668. The statutory definition of
"pictorial, graphic, and sculptural works" states that
"the design of a useful article, as defined in this section,
shall be considered a pictorial, graphic, or sculptural
work only if, and only to the extent that, such design
incorporates pictorial, graphic, or sculptural features
that can be identified separately from, and are capable
of existing independently of, the utilitarian aspects of
the article." 17 U.S.C. Sec. 101.1 The legislative history
added gloss on the criteria of separate identity and
independent existence in saying:
On the other hand, although the shape of an industrial
product may be aesthetically satisfying and valuable,
the Committee's intention is not to offer it copyright
protection under the bill. Unless the shape of an
automobile, airplane, ladies' dress, food processor,
television set, or any other industrial product contains
some element that, physically or conceptually, can be
identified as separable from the utilitarian aspects of
1The statute also defines "useful article" as one "having an intrinsic
utilitarian function that is not merely to portray the appearance of
the article or to convey information. An article that is normally a
part of a useful article is considered a 'useful article.' " 17 U.S.C.
Sec. 101
Page 34 of 307
that article, the design would not be copyrighted under
the bill.
As courts and commentators have come to realize,
however, the line Congress attempted to draw between
copyrightable art and noncopyrightable design "was
neither clear nor new." Denicola, supra, 67 Minn.L.Rev.
at 720. One aspect of the distinction that has drawn
considerable attention is the reference in the House
Report to "physically or conceptually " (emphasis
added) separable elements. The District of Columbia
Circuit in Esquire, Inc. v. Ringer, 591 F.2d 796, 803-04
(D.C.Cir.1978) (holding outdoor lighting fixtures
ineligible for copyright), cert. denied, 440 U.S. 908, 99
S.Ct. 1217, 59 L.Ed.2d 456 (1979), called this an
"isolated reference" and gave it no significance.
Professor Nimmer, however, seemed to favor the
observations of Judge Harold Leventhal in his
concurrence in Esquire, who stated that "the overall
legislative policy ... sustains the Copyright Office in its
effort to distinguish between the instances where the
aesthetic element is conceptually severable and the
instances where the aesthetic element is inextricably
interwoven with the utilitarian aspect of the article." 591
F.2d at 807; see 1 Nimmer on Copyright Sec. 2.08[B] at
2-93 to 2-96.2 (1986). But see Gerber, Book Review, 26
U.C.L.A.L.Rev. 925, 938-43 (1979) (criticizing Professor
Nimmer's view on conceptual separability). Looking to
the section 101 definition of works of artistic
craftsmanship requiring that artistic features be
"capable of existing independently of the utilitarian
aspects," Professor Nimmer queries whether that
requires physical as distinguished from conceptual
separability, but answers his query by saying "[t]here is
reason to conclude that it does not." See 1 Nimmer on
Copyright Sec. 2.08[B] at 2-96.1. In any event, in
Kieselstein-Cord v. Accessories by Pearl, Inc., 632 F.2d
989, 993 (2d Cir.1980), this court accepted the idea that
copyrightability can adhere in the "conceptual"
separation of an artistic element. Indeed, the court went
on to find such conceptual separation in reference to
ornate belt buckles that could be and were worn
separately as jewelry. Kieselstein-Cord was followed in
Norris Industries, Inc. v. International Telephone &
Telegraph Corp., 696 F.2d 918, 923-24 (11th Cir.), cert.
denied, 464 U.S. 818, 104 S.Ct. 78, 78 L.Ed.2d 89
(1983), although there the court upheld the Register's
refusal to register automobile wire wheel covers, finding
no "conceptually separable" work of art. See also
Transworld Mfg. Corp. v. Al Nyman & Sons, Inc., 95 F.R.D.
95 (D.Del.1982) (finding conceptual separability
sufficient to support copyright in denying summary
judgment on copyrightability of eyeglass display cases).
In Carol Barnhart Inc. v. Economy Cover Corp., 773 F.2d
411 (2d Cir.1985), a divided panel of this circuit affirmed
a district court grant of summary judgment of
noncopyrightability of four life-sized, anatomically
correct human torso forms. Carol Barnhart distinguished
Kieselstein-Cord, but it surely did not overrule it. The
distinction made was that the ornamented surfaces of
the Kieselstein-Cord belt buckles "were not in any
respect required by their utilitarian functions," but the
features claimed to be aesthetic or artistic in the Carol
Barnhart forms were "inextricably intertwined with the
utilitarian feature, the display of clothes." 773 F.2d at
419. But cf. Animal Fair, Inc. v. Amfesco Indus., Inc., 620
F.Supp. 175, 186-88 (D.Minn.1985) (holding bear-paw
Page 35 of 307
design conceptually separable from the utilitarian
features of a slipper), aff'd mem., 794 F.2d 678 (8th
Cir.1986). As Judge Newman's dissent made clear, the
Carol Barnhart majority did not dispute "that
'conceptual separability' is distinct from 'physical
separability' and, when present, entitles the creator of a
useful article to a copyright on its design." 773 F.2d at
420.
"Conceptual separability" is thus alive and well, at least
in this circuit. The problem, however, is determining
exactly what it is and how it is to be applied. Judge
Newman's illuminating discussion in dissent in Carol
Barnhart, see 773 F.2d at 419-24, proposed a test that
aesthetic features are conceptually separable if "the
article ... stimulate[s] in the mind of the beholder a
concept that is separate from the concept evoked by its
utilitarian function." Id. at 422. This approach has
received favorable endorsement by at least one
commentator, W. Patry, Latman's The Copyright Law 43-
45 (6th ed. 1986), who calls Judge Newman's test the
"temporal displacement" test. It is to be distinguished
from other possible ways in which conceptual
separability can be tested, including whether the
primary use is as a utilitarian article as opposed to an
artistic work, whether the aesthetic aspects of the work
can be said to be "primary," and whether the article is
marketable as art, none of which is very satisfactory.
But Judge Newman's test was rejected outright by the
majority as "a standard so ethereal as to amount to a
'nontest' that would be extremely difficult, if not
impossible, to administer or apply." 773 F.2d at 419 n. 5.
Perhaps the differences between the majority and the
dissent in Carol Barnhart might have been resolved had
they had before them the Denicola article on Applied Art
and Industrial Design: A Suggested Approach to
Copyright in Useful Articles, supra. There, Professor
Denicola points out that although the Copyright Act of
1976 was an effort " 'to draw as clear a line as possible,'
" in truth "there is no line, but merely a spectrum of
forms and shapes responsive in varying degrees to
utilitarian concerns." 67 Minn.L.Rev. at 741. Denicola
argues that "the statutory directive requires a
distinction between works of industrial design and works
whose origins lie outside the design process, despite the
utilitarian environment in which they appear." He views
the statutory limitation of copyrightability as "an
attempt to identify elements whose form and
appearance reflect the unconstrained perspective of the
artist," such features not being the product of industrial
design. Id. at 742. "Copyrightability, therefore, should
turn on the relationship between the proffered work and
the process of industrial design." Id. at 741. He suggests
that "the dominant characteristic of industrial design is
the influence of nonaesthetic, utilitarian concerns" and
hence concludes that copyrightability "ultimately should
depend on the extent to which the work reflects artistic
expression uninhibited by functional
Page 36 of 307
considerations."2 Id. To state the Denicola test in the
language of conceptual separability, if design elements
reflect a merger of aesthetic and functional
considerations, the artistic aspects of a work cannot be
said to be conceptually separable from the utilitarian
elements. Conversely, where design elements can be
identified as reflecting the designer's artistic judgment
exercised independently of functional influences,
conceptual separability exists.
We believe that Professor Denicola's approach provides
the best test for conceptual separability and,
accordingly, adopt it here for several reasons. First, the
approach is consistent with the holdings of our previous
cases. In Kieselstein-Cord, for example, the artistic
aspects of the belt buckles reflected purely aesthetic
choices, independent of the buckles' function, while in
Carol Barnhart the distinctive features of the torsos--the
accurate anatomical design and the sculpted shirts and
collars--showed clearly the influence of functional
concerns. Though the torsos bore artistic features, it
was evident that the designer incorporated those
features to further the usefulness of the torsos as
mannequins. Second, the test's emphasis on the
influence of utilitarian concerns in the design process
2Professor Denicola rejects the exclusion of all works created with
some utilitarian application in view, for that would not only overturn
Mazer v. Stein, 347 U.S. 201, 74 S.Ct. 460, 98 L.Ed. 630 (1954), on
which much of the legislation is based, but also "a host of other
eminently sensible decisions, in favor of an intractable factual
inquiry of questionable relevance." 67 Minn.L.Rev. at 741. He adds
that "[a]ny such categorical approach would also undermine the
legislative determination to preserve an artist's ability to exploit
utilitarian markets." Id. (citing 17 U.S.C. Sec. 113(a) (1976))
may help, as Denicola notes, to "alleviate the de facto
discrimination against nonrepresentational art that has
regrettably accompanied much of the current analysis."
Id. at 745.3 Finally, and perhaps most importantly, we
think Denicola's test will not be too difficult to
administer in practice. The work itself will continue to
give "mute testimony" of its origins. In addition, the
parties will be required to present evidence relating to
the design process and the nature of the work, with the
trier of fact making the determination whether the
aesthetic design elements are significantly influenced
by functional considerations.
Turning now to the facts of this case, we note first that
Brandir contends, and its chief owner David Levine
testified, that the original design of the RIBBON Rack
stemmed from wire sculptures that Levine had created,
each formed from one continuous undulating piece of
wire. These sculptures were, he said, created and
displayed in his home as a means of personal
expression, but apparently were never sold or displayed
3We are reminded not only by Judge Gesell in the district court in
Esquire, 414 F.Supp. 939, 941 (D.D.C.1976), but by Holmes in
Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 251-52, 23
S.Ct. 298, 300-01, 47 L.Ed. 460 (1903), by Mazer v. Stein, 347 U.S.
at 214, 74 S.Ct. at 468, and by numerous other opinions, that we
judges should not let our own view of styles of art interfere with the
decisionmaking process in this area. Denicola suggests that the
shape of a Mickey Mouse telephone is copyrightable because its
form is independent of function, and "[a] telephone shape owing
more to Arp, Brancusi, or Moore than Disney may be equally
divorced from utilitarian influence." 67 Minn.L.Rev. at 746. This is
true, of course, of the artist Christo's "Running Fence," approved
(following Professor Nimmer) as an example of conceptual
separability in Keiselstein-Cord, 632 F.2d at 993
Page 37 of 307
elsewhere. He also created a wire sculpture in the shape
of a bicycle and states that he did not give any thought
to the utilitarian application of any of his sculptures until
he accidentally juxtaposed the bicycle sculpture with
one of the self-standing wire sculptures. It was not until
November 1978 that Levine seriously began pursuing
the utilitarian application of his sculptures, when a
friend, G. Duff Bailey, a bicycle buff and author of
numerous articles about urban cycling, was at Levine's
home and informed him that the sculptures would make
excellent bicycle racks, permitting bicycles to be parked
under the overloops as well as on top of the underloops.
Following this meeting, Levine met several times with
Bailey and others, completing the designs for the
RIBBON Rack by the use of a vacuum cleaner hose, and
submitting his drawings to a fabricator complete with
dimensions. The Brandir RIBBON Rack began being
nationally advertised and promoted for sale in
September 1979.
In November 1982 Levine discovered that another
company, Cascade Pacific Lumber Co., was selling a
similar product. Thereafter, beginning in December
1982, a copyright notice was placed on all RIBBON
Racks before shipment and on December 10, 1982, five
copyright applications for registration were submitted to
the Copyright Office. The Copyright Office refused
registration by letter, stating that the RIBBON Rack did
not contain any element that was "capable of
independent existence as a copyrightable pictorial,
graphic or sculptural work apart from the shape of the
useful article." An appeal to the Copyright Office was
denied by letter dated March 23, 1983, refusing
registration on the above ground and alternatively on
the ground that the design lacked originality, consisting
of "nothing more than a familiar public domain symbol."
In February 1984, after the denial of the second appeal
of the examiner's decision, Brandir sent letters to
customers enclosing copyright notices to be placed on
racks sold prior to December 1982.
Between September 1979 and August 1982 Brandir
spent some $38,500 for advertising and promoting the
RIBBON Rack, including some 85,000 pieces of
promotional literature to architects and landscape
architects. Additionally, since October 1982 Brandir has
spent some $66,000, including full-, half-, and quarter-
page advertisements in architectural magazines such as
Landscape Architecture, Progressive Architecture, and
Architectural Record, indeed winning an advertising
award from Progressive Architecture in January 1983.
The RIBBON Rack has been featured in Popular Science,
Art and Architecture, and Design 384 magazines, and it
won an Industrial Designers Society of America design
award in the spring of 1980. In the spring of 1984 the
RIBBON Rack was selected from 200 designs to be
included among 77 of the designs exhibited at the
Katonah Gallery in an exhibition entitled "The Product of
Design: An Exploration of the Industrial Design Process,"
an exhibition that was written up in the New York Times.
Sales of the RIBBON Rack from September 1979 through
January 1985 were in excess of $1,367,000. Prior to the
time Cascade Pacific began offering for sale its bicycle
rack in August 1982, Brandir's sales were $436,000. The
price of the RIBBON Rack ranges from $395 up to
$2,025 for a stainless steel model and generally
Page 38 of 307
depends on the size of the rack, one of the most popular
being the RB-7, selling for $485.
Applying Professor Denicola's test to the RIBBON Rack,
we find that the rack is not copyrightable. It seems clear
that the form of the rack is influenced in significant
measure by utilitarian concerns and thus any aesthetic
elements cannot be said to be conceptually separable
from the utilitarian elements. This is true even though
the sculptures which inspired the RIBBON Rack may well
have been--the issue of originality aside--copyrightable.
Brandir argues correctly that a copyrighted work of art
does not lose its protected status merely because it
subsequently is put to a functional use. The Supreme
Court so held in Mazer v. Stein, 347 U.S. 201, 74 S.Ct.
460, 98 L.Ed. 630 (1954), and Congress specifically
intended to accept and codify Mazer in section 101 of
the Copyright Act of 1976. See H.R.Rep. No. 1476 at 54-
55. The district court thus erred in ruling that, whatever
the RIBBON Rack's origins, Brandir's commercialization
of the rack disposed of the issue of its copyrightability.
Had Brandir merely adopted one of the existing
sculptures as a bicycle rack, neither the application to a
utilitarian end nor commercialization of that use would
have caused the object to forfeit its copyrighted status.
Comparison of the RIBBON Rack with the earlier
sculptures, however, reveals that while the rack may
have been derived in part from one of more "works of
art," it is in its final form essentially a product of
industrial design. In creating the RIBBON Rack, the
designer has clearly adapted the original aesthetic
elements to accommodate and further a utilitarian
purpose. These altered design features of the RIBBON
Rack, including the spacesaving, open design achieved
by widening the upper loops to permit parking under as
well as over the rack's curves, the straightened vertical
elements that allow in- and above-ground installation of
the rack, the ability to fit all types of bicycles and
mopeds, and the heavy-gauged tubular construction of
rustproof galvanized steel, are all features that combine
to make for a safe, secure, and maintenance-free
system of parking bicycles and mopeds. Its undulating
shape is said in Progressive Architecture, January 1982,
to permit double the storage of conventional bicycle
racks. Moreover, the rack is manufactured from 2 3/8-
inch standard steam pipe that is bent into form, the six-
inch radius of the bends evidently resulting from
bending the pipe according to a standard formula that
yields bends having a radius equal to three times the
nominal internal diameter of the pipe.
Brandir argues that its RIBBON Rack can and should be
characterized as a sculptural work of art within the
minimalist art movement. Minimalist sculpture's most
outstanding feature is said to be its clarity and
simplicity, in that it often takes the form of geometric
shapes, lines, and forms that are pure and free of
ornamentation and void of association. As Brandir's
expert put it, "The meaning is to be found in, within,
around and outside the work of art, allowing the artistic
sensation to be experienced as well as intellectualized."
People who use Foley Square in New York City see in the
form of minimalist art the "Tilted Arc," which is on the
plaza at 26 Federal Plaza. Numerous museums have had
exhibitions of such art, and the school of minimalist art
has many admirers.
Page 39 of 307

It is unnecessary to determine whether to the art world
the RIBBON Rack properly would be considered an
example of minimalist sculpture. The result under the
copyright statute is not changed. Using the test we have
adopted, it is not enough that, to paraphrase Judge
Newman, the rack may stimulate in the mind of the
reasonable observer a concept separate from the
bicycle rack concept. While the RIBBON Rack may be
worthy of admiration for its aesthetic qualities alone, it
remains nonetheless the product of industrial design.
Form and function are inextricably intertwined in the
rack, its ultimate design being as much the result of
utilitarian pressures as aesthetic choices. Indeed, the
visually pleasing proportions and symmetricality of the
rack represent design changes made in response to
functional concerns. Judging from the awards the rack
has received, it would seem in fact that Brandir has
achieved with the RIBBON Rack the highest goal of
modern industrial design, that is, the harmonious fusion
of function and aesthetics. Thus there remains no
artistic element of the RIBBON Rack that can be
identified as separate and "capable of existing
independently, of, the utilitarian aspects of the article."
Accordingly, we must affirm on the copyright claim.
As to whether the configuration of Brandir's bicycle rack
can be protected under either section 43(a) of the
Lanham Act, 15 U.S.C. Sec. 1125(a), or New York State
unfair competition law, we are reminded that the design
of a product itself may function as its packaging or
protectable trade dress. See LeSportsac, Inc. v. K mart
Corp., 754 F.2d 71, 75 (2d Cir.1985). The district court
dismissed Brandir's claims, saying that its analysis of
the copyright issue was sufficient to dispose of the
Lanham Act and common law claims. The court stated
"the design feature of the Ribbon Racks is clearly
dictated by the function to be performed, namely,
holding up bicycles. If the steam pipes were not bent
into the design, but instead remained flat, the bicycles
would not stand up, they would fall down." But as Judge
Newman noted in his dissent in Carol Barnhart, 773 F.2d
at 420 n. 1, the principle of conceptual separability of
functional design elements in copyright law is different
from the somewhat similar principle of functionality as
developed in trademark law. For trademark purposes,
he pointed out, a design feature "has been said to be
functional if it is 'essential to the use or purpose of the
article' or 'affects the cost or quality of the article.' " Id.
(quoting Inwood Laboratories, Inc. v. Ives Laboratories,
Inc., 456 U.S. 844, 850 n. 10, 102 S.Ct. 2182, 2187 n.
10, 72 L.Ed.2d 606 (1982)); see LeSportsac, Inc. v. K
mart Corp., 754 F.2d at 75-76 (trade dress of a product
is eligible for protection if it has acquired a secondary
meaning and is nonfunctional).4
Here, the district court limited its inquiry to determining
whether portions of the RIBBON Rack performed the
function of a bicycle rack. But the fact that a design
feature performs a function does not make it essential
to the performance of that function; it is instead the
absence of alternative constructions performing the
same function that renders the feature functional. Thus,
4Because the district court viewed the rack as entirely functional, it
therefore did not reach the next step of determining whether
Brandir's RIBBON Rack had acquired secondary meaning by the
time Cascade started to manufacture its bicycle rack
Page 40 of 307
the true test of functionality is not whether the feature
in question performs a function, but whether the feature
"is dictated by the functions to be performed," Warner
Bros. Inc. v. Gay Toys, Inc., 724 F.2d 327, 331 (2d
Cir.1983) (quoted in LeSportsac, Inc. v. K mart Corp.,
754 F.2d at 76), as evidenced by available alternative
constructions. See Metro Kane Imports, Ltd. v. Rowoco,
Inc., 618 F.Supp. 273, 275-76 (S.D.N.Y.1985), aff'd mem.,
800 F.2d 1128 (2d Cir.1986) (finding high-tech design of
orange juice squeezer not dictated by function to be
performed as there was no evidence that design
permitted juicer to be manufactured at lower price or
with altered performance). There are numerous
alternative bicycle rack constructions. The nature, price,
and utility of these constructions are material issues of
fact not suitable for determination by summary
judgment.5 For example, while it is true that the
materials used by Brandir are standard-size pipes, we
have no way of knowing whether the particular size and
weight of the pipes used is the best, the most
economical, or the only available size and weight pipe in
the marketplace. We would rather think the opposite
might be the case. So, too, with the dimension of the
bends being dictated by a standard formula
corresponding to the pipe size; it could be that there are
many standard radii and that the particular radius of
Brandir's RIBBON Rack actually required new tooling.
This issue of functionality on remand should be viewed
in terms of bicycle racks generally and not one-piece
5Indeed, in addition to the numerous bicycle racks on the market,
one may observe trees, awning supports, parking meters, signs,
fire plugs, and many other objects used as bicycle racks
undulating bicycle racks specifically. See id. at 330-32;
see also In re DC Comics, Inc., 689 F.2d 1042, 1045
(C.C.P.A.1982) (dolls generally and not Superman dolls
are the class by which functionality is determined). We
reverse and remand as to the trademark and unfair
competition claims.
Concurring and Dissenting:
Although I concur in the reversal of the district court's
grant of summary judgment on the trademark and
unfair competition claims, I respectfully dissent from the
majority's discussion and disposition of the copyright
claim.
My colleagues, applying an adaptation of Professor
Denicola's test, hold that the aesthetic elements of the
design of a useful article are not conceptually separable
from its utilitarian aspects if "[f]orm and function are
inextricably intertwined" in the article, and "its ultimate
design [is] as much the result of utilitarian pressures as
aesthetic choices." Applying that test to the instant
matter, they observe that the dispositive fact is that "in
creating the Ribbon Rack, [Levine] has clearly adapted
the original aesthetic elements to accommodate and
further a utilitarian purpose." (emphasis added). The
grounds of my disagreement are that: (1) my
colleagues' adaptation of Professor Denicola's test
diminishes the statutory concept of "conceptual
separability" to the vanishing point; and (2) their focus
on the process or sequence followed by the particular
designer makes copyright protection depend upon
largely fortuitous circumstances concerning the creation
of the design in issue.
Page 41 of 307

With regard to "conceptual separability," my colleagues
deserve considerable credit for their efforts to reconcile
Carol Barnhart Inc. v. Economy Cover Corp., 773 F.2d
411 (2d Cir.1985) with Kieselstein-Cord v. Accessories by
Pearl, Inc., 632 F.2d 989 (2d Cir.1980). In my view, these
cases are not reconcilable. Carol Barnhart paid only lip
service to the fact that the "conceptual separability" of
an article's aesthetic utilitarian aspects may render the
design of a "useful article" a copyrightable "sculptural
work." 17 U.S.C. Sec. 101 (1982). Actually, the Carol
Barnhart majority applied a test of physical separability.
They thus stated:
What distinguishes [the Kieselstein Cord ] buckles from
the Barnhart forms is that the ornamented surfaces of
the buckles were not in any respect required by their
utilitarian functions; the artistic and aesthetic features
could thus be conceived of as having been added to, or
superimposed upon, an otherwise utilitarian article. The
unique artistic design was wholly unnecessary to
performance of the utilitarian function. In the case of
the Barnhart forms, on the other hand, the features
claimed to be aesthetic or artistic, e.g., the life-size
configuration of the breasts and the width of the
shoulders are inextricably intertwined with the
utilitarian feature, the display of clothes.
In contrast, Kieselstein-Cord focused on the fact that the
belt buckles at issue could be perceived as objects other
than belt buckles:
We see in appellant's belt buckles conceptually
separable sculptural elements, as apparently have the
buckles' wearers who have used them as ornamentation
for parts of the body other than the waist.
My colleagues' adaptation of the Denicola test tracks
the Carol Barnhart approach, whereas I would adopt
that taken in Kieselstein-Cord, which allows for the
copyrightability of the aesthetic elements of useful
articles even if those elements simultaneously perform
utilitarian functions.6 The latter approach received its
fullest elaboration in Judge Newman's dissent in Carol
Barnhart, where he explained that "[f]or the [artistic]
design features to be 'conceptually separate' from the
utilitarian aspects of the useful article that embodies
the design, the article must stimulate in the mind of the
beholder a concept that is separate from the concept
evoked by its utilitarian function."
In other words, the relevant question is whether the
design of a useful article, however intertwined with the
article's utilitarian aspects, causes an ordinary
reasonable observer to perceive an aesthetic concept
not related to the article's use. The answer to this
question is clear in the instant case because any
reasonable observer would easily view the Ribbon Rack
6Indeed, Kieselstein-Cord approved Professor Nimmer's
example of Christo's "Running Fence" as an object whose
sculptural features were conceptually, but not physically,
separable from its utilitarian aspects. 632 F.2d at 993; see 1
Nimmer on Copyright Sec. 2.08[B] at 2-96.1 & n. 112.2
(1987). The fact that the Running Fence's aesthetic features
were "inextricably intertwined" with its functional aspects,
however, creates doubt as to whether it is a copyrightable
"sculptural work" under Carol Barnhart or the instant decision
Page 42 of 307
as an ornamental sculpture.7 Indeed, there is evidence
of actual confusion over whether it is strictly ornamental
in the refusal of a building manager to accept delivery
until assured by the buyer that the Ribbon Rack was in
fact a bicycle rack. Moreover, Brandir has received a
request to use the Ribbon Rack as environmental
sculpture, and has offered testimony of art experts who
claim that the Ribbon Rack may be valued solely for its
artistic features. As one of those experts observed: "If
one were to place a Ribbon Rack on an island without
access, or in a park and surround the work with a
barrier, ... its status as a work of art would be beyond
dispute."8
My colleagues also allow too much to turn upon the
process or sequence of design followed by the designer
of the Ribbon Rack. They thus suggest that copyright
protection would have been accorded "had Brandir
merely adopted ... as a bicycle rack" an enlarged
version of one of David Levine's original sculptures
rather than one that had wider upper loops and
straightened vertical elements. I cannot agree that
copyright protection for the Ribbon Rack turns on
7The reasonable observer may be forgiven, however, if he or
she does not recognize the Ribbon Rack as an example of
minimalist art
8The Copyright Office held that the Ribbon Rack was not
copyrightable because it lacked originality. There may be some
merit in that view in light of the Ribbon Rack's use of standard radii.
This issue, however, was not raised in defendant's motion for
summary judgment, was not addressed by the district court, and is
not implicated here
whether Levine serendipitously chose the final design of
the Ribbon Rack during his initial sculptural musings or
whether the original design had to be slightly modified
to accommodate bicycles. Copyright protection, which is
intended to generate incentives for designers by
according property rights in their creations, should not
turn on purely fortuitous events. For that reason, the
Copyright Act expressly states that the legal test is how
the final article is perceived, not how it was developed
through various stages. It thus states in pertinent part:
the design of a useful article ... shall be considered a ...
sculptural work only if, and only to the extent that, such
design incorporates ... sculptural features that can be
identified separately from, and are capable of existing
independently of, the utilitarian aspects of the article.
3. Pearl & Dean vs. Shoemart, 409 SCRA 231
Facts: Pearl and Dean, 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
Page 43 of 307
Industrial Services to manufacture its advertising
displays.
Sometime in 1985, Pearl and Dean negotiated with
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
Page 44 of 307
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.
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?
Held:(1) ON THE ISSUE OF COPYRIGHT INFRINGEMENT
First, petitioners application for a copyright certificate as
well as Copyright Certificate No. PD-R2588 issued by the
National Library on January 20, 1981 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:
xxxxxxxxx
(O) Prints, pictorial illustrations, advertising copies,
labels, tags, and box wraps;
xxxxxxxxx
Although petitioners copyright certificate was entitled
Advertising Display Units (which depicted the box-type
electrical devices), its claim of copyright infringement
cannot be sustained.
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.[8]
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
Page 45 of 307

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[9] 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.
[10]
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.
(2) 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
Page 46 of 307
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,[12] 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. x x x (A)n
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.
[13]
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.[14] Ideas, once disclosed to
the public without the protection of a valid patent, are
subject to appropriation without significant restraint.[15]
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. As held in Bauer & Cie vs. ODonnel,
[16]
The act secured to the inventor the exclusive right to
make use, and vend the thing patented, and
consequently to prevent others from exercising like
privileges without the consent of the patentee. It was
passed for the purpose of encouraging useful invention
and promoting new and useful inventions by the
protection and stimulation given to inventive genius,
and was intended to secure to the public, after the lapse
of the exclusive privileges granted the benefit of such
inventions and improvements.
The law attempts to strike an ideal balance between the
two interests:
(The p)atent 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.[17]
The patent law has a three-fold purpose: first, patent
law seeks to foster and reward invention; second, it
promotes disclosures of inventions to stimulate further
Page 47 of 307
innovation and to permit the public to practice the
invention once the patent expires; third, the stringent
requirements for patent protection seek to ensure that
ideas in the public domain remain there for the free use
of the public.[18]
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.[19]
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
[20]
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 boxes 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[21], the United
States Supreme Court held that only the expression of
an idea is protected by copyright, not the idea itself. In
that case, the plaintiff held the copyright of a book
which expounded on a new accounting system he had
developed. The publication illustrated blank forms of
ledgers utilized in such a system. The defendant
reproduced forms similar to those illustrated in the
plaintiffs copyrighted book. The US Supreme Court ruled
that:
There is no doubt that a work on the subject of book-
keeping, though only explanatory of well known
systems, may be the subject of a copyright; but, then, it
is claimed only as a book. x x x. But there is a clear
distinction between the books, as such, and the art,
which it is, intended to illustrate. The mere statement of
the proposition is so evident that it requires hardly any
argument to support it. The same distinction may be
predicated of every other art as well as that of
bookkeeping. A treatise on the composition and use of
medicines, be they old or new; on the construction and
use of ploughs or watches or churns; or on the mixture
Page 48 of 307
and application of colors for painting or dyeing; or on
the mode of drawing lines to produce the effect of
perspective, would be the subject of copyright; but no
one would contend that the copyright of the treatise
would give the exclusive right to the art or manufacture
described therein. The copyright of the book, if not
pirated from other works, would be valid without regard
to the novelty or want of novelty of its subject
matter. The novelty of the art or thing described or
explained has nothing to do with the validity of the
copyright. To give to the author of the book an
exclusive property in the art described therein,
when no examination of its novelty has ever been
officially made, would be a surprise and a fraud
upon the public. That is the province of letters
patent, not of copyright. The claim to an
invention of discovery of an art or manufacture
must be subjected to the examination of the
Patent Office before an exclusive right therein
can be obtained; and a patent from the
government can only secure it.
The difference between the two things, letters patent
and copyright, may be illustrated by reference to the
subjects just enumerated. Take the case of
medicines. Certain mixtures are found to be of great
value in the healing art. If the discoverer writes and
publishes a book on the subject (as regular
physicians generally do), he gains no exclusive
right to the manufacture and sale of the
medicine; he gives that to the public. If he desires
to acquire such exclusive right, he must obtain a
patent for the mixture as a new art, manufacture
or composition of matter. He may copyright his
book, if he pleases; but that only secures to him
the exclusive right of printing and publishing his
book. So of all other inventions or discoveries.
The copyright of a book on perspective, no matter how
many drawings and illustrations it may contain, gives no
exclusive right to the modes of drawing described,
though they may never have been known or used
before. By publishing the book without getting a patent
for the art, the latter is given to the public.
xxx
Now, whilst no one has a right to print or publish his
book, or any material part thereof, as a book intended
to convey instruction in the art, any person may
practice and use the art itself which he has described
and illustrated therein. The use of the art is a totally
different thing from a publication of the book
explaining it. The copyright of a book on bookkeeping
cannot secure the exclusive right to make, sell and use
account books prepared upon the plan set forth in such
book. Whether the art might or might not have been
patented, is a question, which is not before us. It was
not patented, and is open and free to the use of the
public. And, of course, in using the art, the ruled lines
and headings of accounts must necessarily be used as
incident to it.
The plausibility of the claim put forward by the
complainant in this case arises from a confusion of ideas
produced by the peculiar nature of the art described in
the books, which have been made the subject of
copyright. In describing the art, the illustrations and
diagrams employed happened to correspond more
closely than usual with the actual work performed by
Page 49 of 307
the operator who uses the art. x x x The description
of the art in a book, though entitled to the benefit
of copyright, lays no foundation for an exclusive
claim to the art itself. The object of the one is
explanation; the object of the other is use. The
former may be secured by copyright. The latter
can only be secured, if it can be secured at all, by
letters patent. (underscoring supplied)
(3) 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. [22] 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,
[23]
where 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 x x
x. 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.[24] Faberge, Inc. was correct and
was in fact recently reiterated in Canon Kabushiki
Kaisha vs. Court of Appeals.[25]
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.
4. Unilever vs. CA, 498 SCRA 334
Facts: The antecedents show that on August 24, 1994,
private respondent Procter and Gamble Phils., Inc. filed
a complaint for injunction with damages and a prayer
for temporary restraining order and/or writ of
preliminary injunction against petitioner Unilever,
alleging that:
1.5. As early as 1982, a P&G subsidiary in Italy
used a key visual in the advertisement of its laundry
detergent and bleaching products. This key visual
known as the double-tug or tac-tac demonstration
shows the fabric being held by both hands and
stretched sideways.
1.6. The tac-tac was conceptualized for P&G by
the advertising agency Milano and Gray of Italy in
1982. The tac-tac was used in the same year in an
advertisement entitled All aperto to demonstrate the
effect on fabrics of one of P&GPs products, a liquid
bleach called Ace.
Page 50 of 307
1.7. Since then, P&G has used the tac-tac key
visual in the advertisement of its products. In fact, in
1986, in Italy, the tac-tac key visual was used in the
television commercial for Ace entitled Kite.
1.8. P&G has used the same distinctive tac-
tac key visual to local consumers in the Philippines.
1.10. Substantially and materially imitating the
aforesaid tac-tac key visual of P&GP and in blatant
disregard of P&GPs intellectual property rights, Unilever
on 24 July 1993 started airing a 60 second television
commercial TVC of its Breeze Powerwhite laundry
product called Porky. The said TVC included a stretching
visual presentation and sound effects almost [identical]
or substantially similar to P&GPs tac-tac key visual.
1.14. On July 15, 1994, P&GP aired in the
Philippines, the same Kite television advertisement it
used in Italy in 1986, merely dubbing the Italian
language with Filipino for the same produce Ace
bleaching liquid which P&GP now markets in the
Philippines.
1.15. On August 1, 1994, Unilever filed a Complaint
with the Advertising Board of the Philippines to prevent
P&GP from airing the Kite television advertisement.
On August 26, 1994, Judge Gorospe issued an order
granting a temporary restraining order and setting it for
hearing on September 2, 1994 for Unilever to show
cause why the writ of preliminary injunction should not
issue. During the hearing on September 2, 1994, P&GP
received Unilevers answer with opposition to
preliminary injunction. P&GP filed its reply to Unilevers
opposition to a preliminary injunction on September 6,
1994.
During the hearing on September 9, 1994,
Judge Gorospe ordered petitioner to submit a sur-
rejoinder. P&GP received Unilevers rejoinder to reply on
September 13, 1994. The following day, on September
14, 1994, P&GP filed its sur-reply to Unilevers rejoinder.
On September 19, 1994, P&GP received a copy of the
order dated September 16, 1994 ordering the issuance
of a writ of preliminary injunction and fixing a bond
of P100,000. On the same date, P&GP filed the required
bond issued by Prudential Guarantee and Assurance,
Inc.
Issue:Whether Judge Gorospe committed grave abuse
of discretion in issuing a writ of preliminary junction
Held:No. After a careful perusal of the records, we
agree with the CA and affirm its decision in toto:
Petitioner does not deny that the questioned TV
advertisements are substantially similar
to P&GPs double tug or tac-tac key visual. However, it
submits that P&GP is not entitled to the relief
demanded, which is to enjoin petitioner from airing said
TV advertisements, for the reason that petitioner has
Certificates of Copyright Registration for which
advertisements while P&GP has none with respect to its
double-tug or tac-tac key visual. In other words, it is
petitioners contention that P&GP is not entitled to any
protection because it has not registered with the
Page 51 of 307
National Library the very TV commercials which it
claims have been infringed by petitioner.
We disagree. Section 2 of PD 49 stipulates that the
copyright for a work or intellectual creation subsists
from the moment of its creation. Accordingly, the
creator acquires copyright for his work right upon its
creation. Contrary to petitioners contention, the
intellectual creators exercise and enjoyment of
copyright for his work and the protection given by law to
him is not contingent or dependent on any formality or
registration. Therefore, taking the material allegations
of paragraphs 1.3 to 1.5 of P&GPsverified Complaint in
the context of PD 49, it cannot be seriously doubted
that at least, for purposes of determining whether
preliminary injunction should issue during
thependency of the case, P&GP is entitled to the
injunctive relief prayed for in its Complaint.
The second ground is likewise not well-taken. As
adverted to earlier, the provisional remedy of
preliminary injunction will not issue unless it is shown in
the verified complaint that plaintiff is probably entitled
to the relief demanded, which consists in whole or in
part in restraining the commission or continuance of the
acts complained of. In view of such requirement, the
court has to make a tentative determination if the right
sought to be protected exists and whether the act
against which the writ is to be directed is violative of
such right. Certainly, the courts determination as to the
propriety of issuing the writ cannot be taken as a
prejudgment of the merits of the case because it is
tentative in nature and the writ may be dissolved during
or after the trial if the court finds that plaintiff was not
entitled to it.
Obviously, the determination made by the court a quo
was only for purposes of preliminary injunction, without
passing upon the merits of the case, which cannot be
done until after a full-blown hearing is conducted.
The third ground is patently unmeritorious. As alleged in
the Complaint P&GP is a subsidiary of Procter and
Gamble Company (P&G) for which the double tug or tac-
tackey visual was conceptualized or created. In that
capacity, P&GP used the said TV advertisement in the
Philippines to promote its products. As such subsidiary,
P&GP is definitely within the protective mantle of the
statute (Sec. 6, PD 49).
5. Joaquin vs. Drilon, G.R. No. 108946, January 28,
1999
Facts: BJ Productions, Inc. (BJPI) is the holder/grantee of
Certificate of Copyright No. M922 dated January 28,
1971 of Rhoda and Me, a dating game show aired from
1970 to 1977. In 1973, petitioner BJPI submitted to the
National Library an addendum to its certificate of
copyright specifying the shows format and style
presentation. In 1991, petitioner Francisco Joaquin, Jr.,
president of BJPI, saw on RPN 9 an episode of Its a
Date. He immediately protested the airing of the show
through a letter sent to Grabriel M. Zosa, president and
general manager of IXL Productions, Inc., the producer
of Its a Date. Petitioner Joaquin informed respondent
Zosa of a copyright to Rhoda and Me and demanded
that IXL discontinue airing Its a Date. Respondent Zosa
Page 52 of 307
apologized to Joaquin, but continued airing the show.
Zosa also sought to register IXLs copyright to the first
episode of Its a Date for which a certificate of copyright
was issued by the National Library on August 14, 1991.
With these developments, petitioners herein filed a
complaint against Zosa and other RPN Channel 9
officers as a result of which an information for violation
of P.D. No. 49 was filed before the Regional Trial Court
of Quezon City. Zosa appealed to the Department of
Justice. The Secretary of Justice reversed the
prosecutors findings and directed the dismissal of the
case. Petitioner Joaquin filed a motion for
reconsideration, but it was denied by the Secretary of
Justice. Hence, this petition. Both public and private
respondents maintained that petitioners failed to
establish the existence of probable cause due to their
failure to present the copyrighted master videotape
of Rhoda and Me. They contended that BJPIs copyright
covers only a specific episode of Rhosa and Me and that
the formats or concepts of dating game shows were not
covered by the copyright protection under P.D: No. 49.
Held: The Supreme Court ruled that BJPIs copyright
covered audio-visual recordings of every episode
of Rhoda and Me, as falling within the class of works
mentioned in P.D. No. 49. The copyright, however, does
not extend to the general concept or format of its dating
game show. Accordingly, by the very nature of the
subject of petitioner BJPIs copyright, the investigating
prosecutor should have been given 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.
The petition was therefore dismissed.
Ratio: INTELLECTUAL PROPERTY LAW; COPYRIGHT;
CONSTRUED.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, Section 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
Page 53 of 307
information; or any official text of a legislative,
administrative or legal nature, as well as any official
translation thereof.
FORMAT OR MECHANICS OF A TELEVISION SHOW
IS NOT INCLUDED IN THE LIST OF PROTECTED
WORKS. To begin with, the format of a show is not
copyrightable. Section 2 of P.D. No. 49, otherwise
known as the DECREE ON INTELLECTUAL PROPERTY,
enumerates the classes of work entitled to copyright
protection, to wit: 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: (A)
Books, including composite and cyclopedic works,
manuscripts, directories, and gazetteers; (B) Periodicals,
including pamphlets and newspaper. (C) Lectures,
sermons, addresses, dissertations prepared for oral
delivery; (D) Letters; (E) Dramatic or dramatico-musical
compositions; choreographic works and entertainments
in dumb shows, the acting form of which is fixed in
writing or otherwise; (F) Musical compositions, with or
without words; (G) Works of drawing, painting,
architecture, sculpture, engraving, lithography, and
other works of art; models or designs for works of art;
(H) Reproductions of work of art; (I) Original ornamental
designs or models for articles of manufacture, whether
or not patentable, and other works of applied art; (J)
Maps, plans, sketches, and charts; (K) Drawings or
plastic works of a scientific or technical character; (L)
Photographic works and works produced by a process
analogous to photography; lantern slides; (M)
Cinematographic works and works produced by a
process analogous to cinematography or any process for
making audio-visual recordings; (N) Computer
programs; (O) Prints, pictorial illustrations advertising
copies, labels, tags, and box wraps; (P) Dramatizations,
translations, adaptions, 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 Section 172 of the
INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES
(R.A. No. 8293). The format or mechanics of a television
show is not included in the list of protected works in
Section 2 of P.D. No. 49. For this reason, the protection
afforded by the law cannot be extended to cover them.
6. Sambar vs. Levi Strauss, G.R. No. 132604,
March 06, 2002
Facts: On September 28, 1987, private respondents,
through a letter from their legal officer, demanded that
CVS Garment Enterprises (CVSGE) desist from using
their stitched arcuate design on the Europress jeans
which CVSGE advertised in the Manila Bulletin.
Atty. Benjamin Gruba, counsel of CVSGE, replied that
the arcuate design on the back pockets of Europress
jeans was different from the design on the back pockets
of Levis jeans. He further asserted that his client had a
copyright on the design it was using.
Page 54 of 307

Thereafter, private respondents filed a complaint
against Sambar, doing business under the name and
style of CVSGE. Private respondents also impleaded the
Director of the National Library.
Private respondents alleged in their complaint that Levi
Strauss and Co. (LS&Co.), an internationally known
clothing manufacturer, owns the arcuate design
trademark which was registered under U.S. Trademark
Registration No. 404, 248 on November 16, 1943, and in
the Principal Register of trademarks with the Philippine
Patent Office under Certificate of Registration No. 20240
issued on October 8, 1973; that through a Trademark
Technical Data and Technical Assistance Agreement with
Levi Strauss (Phil.) Inc. (LSPI) in 1972, LS&Co. granted
LSPI a non-exclusive license to use the arcuate
trademark in its manufacture and sale of Levis pants,
jackets and shirts in the Philippines; that in 1983,
LS&Co. also appointed LSPI as its agent and attorney-in-
fact to protect its trademark in the Philippines; and that
sometime in 1987, CVSGIC and Venancio Sambar,
without the consent and authority of private
respondents and in infringement and unfair competition,
sold and advertised, and despite demands to cease and
desist, continued to manufacture, sell and advertise
denim pants under the brand name Europress with back
pockets bearing a design similar to the arcuate
trademark of private respondents, thereby causing
confusion on the buying public, prejudicial to private
respondents goodwill and property right.
In its answer, CVSGIC admitted it manufactured, sold
and advertised and was still manufacturing and selling
denim pants under the brand name of Europress,
bearing a back pocket design of two double arcs
meeting in the middle. However, it denied that there
was infringement or unfair competition because the
display rooms of department stores where Levis and
Europress jeans were sold, were distinctively segregated
by billboards and other modes of
advertisement. CVSGIC avers that the public would not
be confused on the ownership of such known trademark
as Levis, Jag, Europress, etc.. Also, CVSGIC claimed that
it had its own original arcuate design, as evidenced by
Copyright Registration No. 1-1998, which was very
different and distinct from Levis design.
Petitioner Venancio Sambar filed a separate answer. He
denied he was connected with CVSGIC. He admitted
that Copyright Registration No. 1-1998 was issued to
him, but he denied using it. He also said he did not
authorize anyone to use the copyrighted design.
Issues:(1) Did petitioner infringe on private
respondents arcuate design?
(2) Must we hold petitioner solidarily liable with CVS
Garments Industrial Corporation?
(3) Are private respondents entitled to nominal,
temperate and exemplary damages and cancellation of
petitioners copyright?
Held:(1) On the first issue, petitioner claims that he did
not infringe on private respondents arcuate design
because there was no colorable imitation which
deceived or confused the public. He cites Emerald
Garment Manufacturing Corporation vs. Court of
Appeals, G.R. No. 100098, 251 SCRA 600 (1995), as
Page 55 of 307
authority. He disagreed with the Court of Appeals that
there were confusing similarities between Levis and
Europress arcuate designs, despite the trial courts
observation of differences in them. Petitioner maintains
that although the backpocket designs had similarities,
the public was not confused because Levis jeans had
other marks not found in Europress jeans. Further, he
says Levis long history and popularity made its
trademark easily identifiable by the public.
In its comment, private respondents aver that the Court
of Appeals did not err in ruling that there was
infringement in this case. The backpocket design of
Europress jeans, a double arc intersecting in the middle
was the same as Levis mark, also a double arc
intersecting at the center. Although the trial court found
differences in the two designs, these differences were
not noticeable. Further, private respondents said,
infringement of trademark did not require exact
similarity. Colorable imitation enough to cause confusion
among the public, was sufficient for a trademark to be
infringed. Private respondents explained that in a
market research they conducted with 600 respondents,
the result showed that the public was confused by
Europress trademark vis the Levis trademark.
We find that the first issue raised by petitioner is
factual. The basic rule is that factual questions are
beyond the province of this Court in a petition for
review. Although there are exceptions to this rule, this
case is not one of them. [5] Hence, we find no reason to
disturb the findings of the Court of Appeals that
Europress use of the arcuate design was an
infringement of the Levis design.
(2) On the second issue, petitioner claims that private
respondents did not show that he was connected with
CVSGIC, nor did they prove his specific acts of
infringement to make him liable for damages.Again, this
is a factual matter and factual findings of the trial court,
concurred in by the Court of Appeals, are final and
binding on this Court.[6] Both the courts below found that
petitioner had a copyright over Europress arcuate
design and that he consented to the use of said design
by CVSGIC. We are bound by this finding, especially in
the absence of a showing that it was tainted with
arbitrariness or palpable error. [7] It must be stressed that
it was immaterial whether or not petitioner was
connected with CVSGIC. What is relevant is that
petitioner had a copyright over the design and that he
allowed the use of the same by CVSGIC.
Petitioner also contends that the Court of Appeals erred
when it said that he had the burden to prove that he
was not connected with CVSGIC and that he did not
authorize anyone to use his copyrighted
design. According to petitioner, these are important
elements of private respondents cause of action against
him, hence, private respondents had the ultimate
burden of proof.
(3) Petitioner insists that he had not infringed on the
arcuate trademark, hence, there was no basis for
nominal and temperate damages. Also, an award of
nominal damages precludes an award of temperate
damages. He cites Ventanilla vs. Centeno, G.R. No. L-
14333, 1 SCRA 215 (1961) on this. Thus, he contends,
assuming arguendo that there was infringement, the
Page 56 of 307
Court of Appeals still erred in awarding both nominal
and temperate damages.
Petitioner likewise said that the grant of exemplary
damages was inconsistent with the trial courts finding
that the design of Europress jeans was not similar to
Levis design and that no pecuniary loss was suffered by
respondents to entitle them to such damages.
Lastly, petitioner maintains that as Europress arcuate
design is not a copy of that of Levis, citing the trial
courts findings that although there are similarities, there
are also differences in the two designs, cancellation of
his copyright was not justified.
On this matter, private respondents assert that the
lower courts found that there was infringement and
Levis was entitled to damages based on Sections 22 and
23 of RA No. 166 otherwise known as the Trade Mark
Law,[10] as amended, which was the law then
governing. Said sections define infringement and
prescribe the remedies therefor. Further, private
respondents aver it was misleading for petitioner to
claim that the trial court ruled that private respondents
did not suffer pecuniary loss, suggesting that the award
of damages was improper. According to the private
respondents, the trial court did not make any such
ruling. It simply stated that there was no evidence that
Levis had suffered decline in its sales because of the
use of the arcuate design by Europress jeans. They offer
that while there may be no direct proof that they
suffered a decline in sales, damages may still be
measured based on a reasonable percentage of the
gross sales of the respondents, pursuant to Section 23
of the Trademark law.[11]
Finally, regarding the cancellation of petitioners
copyright, private respondents deny that the trial court
ruled that the arcuate design of Europress jeans was not
the same as Levis arcuate design jeans. On the
contrary, the trial court expressly ruled that there was
similarity. The cancellation of petitioners copyright was
justified because petitioners copyright can not prevail
over respondents registration in the Principal Register of
Bureau of Patents, Trademarks, and Technology
Transfer. According to private respondents, the essence
of copyright registration is originality and a copied
design is inherently non-copyrightable. They insist that
registration does not confer originality upon a copycat
version of a prior design.
From the foregoing discussion, it is clear that the
matters raised by petitioner in relation to the last issue
are purely factual, except the matter of nominal and
temperate damages. Petitioner claims that damages are
not due private respondents and his copyright should
not be cancelled because he had not infringed on Levis
trademark. Both the trial court and the Court of Appeals
found there was infringement. Thus, the award of
damages and cancellation of petitioners copyright are
appropriate.[12] Award of damages is clearly provided in
Section 23,[13] while cancellation of petitioners copyright
finds basis on the fact that the design was a mere copy
of that of private respondents trademark. To be entitled
to copyright, the thing being copyrighted must be
original, created by the author through his own skill,
Page 57 of 307
labor and judgment, without directly copying
evasively imitating the work of another.[14]
However, we agree with petitioner that it was error for
the Court of Appeals to affirm the award of nominal
damages combined with temperate damages [15] by the
Regional Trial Court of Makati. What respondents are
entitled to is an award for temperate damages, not
nominal damages. For although the exact amount of
damage or loss can not be determined with reasonable
certainty, the fact that there was infringement means
they suffered losses for which they are entitled to
moderate damages.[16] We find that the award
of P50,000.00 as temperate damages fair and
reasonable, considering the circumstances herein as
well as the global coverage and reputation of private
respondents Levi Strauss & Company and Levi Strauss
(Phil.), Inc
7. Ching vs. Salinas, G.R. No. 161295 , June 29,
2005
Facts:Jessie G. Ching is the owner and general manager
of Jeshicris Manufacturing Co., the maker and
manufacturer of a Utility Model, described as Leaf
Spring Eye Bushing for Automobile made up of plastic.
On September 4, 2001, Ching and Joseph Yu were issued
by the National Library Certificates of Copyright
Registration and Deposit of the said work described
therein as Leaf Spring Eye Bushing for Automobile.[4]
On September 20, 2001, Ching requested the National
Bureau of Investigation (NBI) for police/investigative
or assistance for the apprehension and prosecution of
illegal manufacturers, producers and/or distributors of
the works.[5]
After due investigation, the NBI filed applications for
search warrants in the RTC of Manila against William
Salinas, Sr. and the officers and members of the Board
of Directors of Wilaware Product Corporation. It was
alleged that the respondents therein reproduced and
distributed the said models penalized under Sections
177.1 and 177.3 of Republic Act (R.A.) No. 8293. The
applications sought the seizure of the following:
a.) Undetermined quantity of Leaf spring eye bushing
for automobile that are made up of plastic
polypropylene;
b.) Undetermined quantity of Leaf spring eye bushing
for automobile that are made up of polyvinyl chloride
plastic;
c.) Undetermined quantity of Vehicle bearing cushion
that is made up of polyvinyl chloride plastic;
d.) Undetermined quantity of Dies and jigs, patterns and
flasks used in the manufacture/fabrication of items a to
d;
e.) Evidences of sale which include delivery receipts,
invoices and official receipts.[6]
The RTC granted the application and issued Search
Warrant Nos. 01-2401 and 01-2402 for the seizure of the
aforecited articles.[7] In the inventory submitted by the
NBI agent, it appears that the following articles/items
were seized based on the search warrants.
Page 58 of 307
The respondents filed a motion to quash the search
warrants on the following grounds:
2. The copyright registrations were issued in violation of
the Intellectual Property Code on the ground that:
a) the subject matter of the registrations are not artistic
or literary;
b) the subject matter of the registrations are spare parts
of automobiles meaning there (sic) are original parts
that they are designed to replace. Hence, they are not
original.[9]
The respondents averred that the works covered by the
certificates issued by the National Library are not
artistic in nature; they are considered automotive spare
parts and pertain to technology. They aver that the
models are not original, and as such are the proper
subject of a patent, not copyright.
Issue:Whether the crime for infringement under R.A.
No. 8293 as alleged in an application is committed
Held:No. For the RTC to determine whether the crime
for infringement under R.A. No. 8293 as alleged in an
application is committed, the petitioner-applicant was
burdened to prove that (a) respondents Jessie Ching and
Joseph Yu were the owners of copyrighted material; and
(b) the copyrighted material was being copied and
distributed by the respondents. Thus, the ownership of a
valid copyright is essential.[22]
Ownership of copyrighted material is shown by proof of
originality and copyrightability. By originality is meant
that the material was not copied, and evidences at least
minimal creativity; that it was independently created by
the author and that it possesses at least same minimal
degree of creativity.[23] Copying is shown by proof of
access to copyrighted material and substantial similarity
between the two works.[24] The applicant must thus
demonstrate the existence and the validity of his
copyright because in the absence of copyright
protection, even original creation may be freely copied.
[25]
By requesting the NBI to investigate and, if feasible, file
an application for a search warrant for infringement
under R.A. No. 8293 against the respondents, the
petitioner thereby authorized the RTC (in resolving the
application), to delve into and determine the validity of
the copyright which he claimed he had over the utility
models. The petitioner cannot seek relief from the RTC
based on his claim that he was the copyright owner
over the utility models and, at the same time, repudiate
the courts jurisdiction to ascertain the validity of his
claim without running afoul to the doctrine of estoppel.
To discharge his burden, the applicant may present the
certificate of registration covering the work or, in its
absence, other evidence.[26] A copyright certificate
provides prima facieevidence of originality which is one
element of copyright validity. It constitutes prima
facie evidence of both validity and ownership[27] and the
validity of the facts stated in the certificate.[28]The
presumption of validity to a certificate of copyright
registration merely orders the burden of proof. The
applicant should not ordinarily be forced, in the first
instance, to prove all the multiple facts that underline
Page 59 of 307
the validity of the copyright unless the respondent,
effectively challenging them, shifts the burden of doing
so to the applicant.[29] Indeed, Section 218.2 of R.A. No.
8293 provides:
218.2. In an action under this Chapter:
(a) Copyright shall be presumed to subsist in the work
or other subject matter to which the action relates if the
defendant does not put in issue the question whether
copyright subsists in the work or other subject matter;
and
(b) Where the subsistence of the copyright is
established, the plaintiff shall be presumed to be the
owner of the copyright if he claims to be the owner of
the copyright and the defendant does not put in issue
the question of his ownership.
A certificate of registration creates no rebuttable
presumption of copyright validity where other evidence
in the record casts doubt on the question. In such a
case, validity will not be presumed.[30]
To discharge his burden of probable cause for the
issuance of a search warrant for violation of R.A. No.
8293, the petitioner-applicant submitted to the RTC
Certificate of Copyright Registration Nos. 2001-197 and
2001-204 dated September 3, 2001 and September 4,
2001, respectively, issued by the National Library
covering work identified as Leaf Spring Eye Bushing for
Automobile and Vehicle Bearing Cushion both classified
under Section 172.1(h) of R.A. No. 8293, to wit:
SEC. 172. Literary and Artistic Works. 172.1. Literary
and artistic works, hereinafter referred to as works, are
original intellectual creations in the literary and artistic
domain protected from the moment of their creation
and shall include in particular:
...
(h) Original ornamental designs or models for articles of
manufacture, whether or not registrable as an industrial
design, and other works of applied art.
Related to the provision is Section 171.10, which
provides that a work of applied art is an artistic creation
with utilitarian functions or incorporated in a useful
article, whether made by hand or produced on an
industrial scale.
But, as gleaned from the specifications appended to the
application for a copyright certificate filed by the
petitioner, the said Leaf Spring Eye Bushing for
Automobile is merely a utility model described as
comprising a generally cylindrical body having a co-
axial bore that is centrally located and provided with a
perpendicular flange on one of its ends and a cylindrical
metal jacket surrounding the peripheral walls of said
body, with the bushing made of plastic that is either
polyvinyl chloride or polypropylene.[31] Likewise, the
Vehicle Bearing Cushion is illustrated as a bearing
cushion comprising a generally semi-circular body
having a central hole to secure a conventional bearing
and a plurality of ridges provided therefore, with said
cushion bearing being made of the same plastic
materials.[32] Plainly, these are not literary or artistic
works. They are not intellectual creations in the literary
and artistic domain, or works of applied art. They are
certainly not ornamental designs or one having
decorative quality or value.
Page 60 of 307
It bears stressing that the focus of copyright is the
usefulness of the artistic design, and not its
marketability. The central inquiry is whether the article
is a work of art.[33] Works for applied art include all
original pictorials, graphics, and sculptural works that
are intended to be or have been embodied in useful
article regardless of factors such as mass production,
commercial exploitation, and the potential availability of
design patent protection.[34]
As gleaned from the description of the models and their
objectives, these articles are useful articles which are
defined as one having an intrinsic utilitarian function
that is not merely to portray the appearance of the
article or to convey information. Indeed, while works of
applied art, original intellectual, literary and artistic
works are copyrightable, useful articles and works of
industrial design are not.[35] A useful article may be
copyrightable only if and only to the extent that such
design incorporates pictorial, graphic, or sculptural
features that can be identified separately from, and are
capable of existing independently of the utilitarian
aspects of the article.
We agree with the contention of the petitioner (citing
Section 171.10 of R.A. No. 8293), that the authors
intellectual creation, regardless of whether it is a
creation with utilitarian functions or incorporated in a
useful article produced on an industrial scale, is
protected by copyright law. However, the law refers to a
work of applied art which is an artistic creation. It bears
stressing that there is no copyright protection for works
of applied art or industrial design which have aesthetic
or artistic features that cannot be identified separately
from the utilitarian aspects of the article. [36] Functional
components of useful articles, no matter how artistically
designed, have generally been denied copyright
protection unless they are separable from the useful
article.[37]
In this case, the petitioners models are not works of
applied art, nor artistic works. They are utility models,
useful articles, albeit with no artistic design or value.
Thus, the petitioner described the utility model as
follows:
LEAF SPRING EYE BUSHING FOR AUTOMOBILE
Known bushings inserted to leaf-spring eye to hold leaf-
springs of automobile are made of hard rubber. These
rubber bushings after a time, upon subjecting them to
so much or intermittent pressure would eventually wore
(sic) out that would cause the wobbling of the leaf
spring.
The primary object of this utility model, therefore, is to
provide a leaf-spring eye bushing for automobile that is
made up of plastic.
Another object of this utility model is to provide a leaf-
spring eye bushing for automobiles made of polyvinyl
chloride, an oil resistant soft texture plastic or
polypropylene, a hard plastic, yet both causes cushion
to the leaf spring, yet strong enough to endure pressure
brought about by the up and down movement of said
leaf spring.
Yet, an object of this utility model is to provide a leaf-
spring eye bushing for automobiles that has a much
longer life span than the rubber bushings.
Page 61 of 307
Still an object of this utility model is to provide a leaf-
spring eye bushing for automobiles that has a very
simple construction and can be made using simple and
ordinary molding equipment.
A further object of this utility model is to provide a leaf-
spring eye bushing for automobile that is supplied with
a metal jacket to reinforce the plastic eye bushing when
in engaged with the steel material of the leaf spring.
These and other objects and advantages will come to
view and be understood upon a reading of the detailed
description when taken in conjunction with the
accompanying drawings.
Figure 1 is an exploded perspective of a leaf-spring eye
bushing according to the present utility model;
Figure 2 is a sectional view taken along line 2-2 of Fig. 1;
Figure 3 is a longitudinal sectional view of another
embodiment of this utility model;
Figure 4 is a perspective view of a third embodiment;
and
Figure 5 is a sectional view thereof.
Referring now to the several views of the drawings
wherein like reference numerals designated same parts
throughout, there is shown a utility model for a leaf-
spring eye bushing for automobile generally designated
as reference numeral 10.
Said leaf-spring eye bushing 10 comprises a generally
cylindrical body 11 having a co-axial bore 12 centrally
provided thereof.
As shown in Figs. 1 and 2, said leaf-spring eye bushing
10 is provided with a perpendicular flange 13 on one of
its ends and a cylindrical metal jacket 14 surrounding
the peripheral walls 15 of said body 11. When said leaf-
spring bushing 10 is installed, the metal jacket 14 acts
with the leaf-spring eye (not shown), which is also made
of steel or cast steel. In effect, the bushing 10 will not
be directly in contact with steel, but rather the metal
jacket, making the life of the bushing 10 longer than
those without the metal jacket.
In Figure 2, the bushing 10 as shown is made of plastic,
preferably polyvinyl chloride, an oil resistant soft texture
plastic or a hard polypropylene plastic, both are capable
to endure the pressure applied thereto, and, in effect,
would lengthen the life and replacement therefor.
Figure 3, on the other hand, shows the walls 16 of the
co-axial bore 12 of said bushing 10 is insertably
provided with a steel tube 17 to reinforce the inner
portion thereof. This steel tube 17 accommodates or
engages with the leaf-spring bolt (not shown)
connecting the leaf spring and the automobiles chassis.
Figures 4 and 5 show another embodiment wherein the
leaf eye bushing 10 is elongated and cylindrical as to its
construction. Said another embodiment is also made of
polypropylene or polyvinyl chloride plastic material. The
steel tube 17 and metal jacket 14 may also be applied
to this embodiment as an option thereof.[38]
VEHICLE BEARING CUSHION
Known bearing cushions inserted to bearing housings
for vehicle propeller shafts are made of hard rubber.
Page 62 of 307
These rubber bushings after a time, upon subjecting
them to so much or intermittent pressure would
eventually be worn out that would cause the wobbling
of the center bearing.
The primary object of this utility model therefore is to
provide a vehicle-bearing cushion that is made up of
plastic.
Another object of this utility model is to provide a
vehicle bearing cushion made of polyvinyl chloride, an
oil resistant soft texture plastic material which causes
cushion to the propellers center bearing, yet strong
enough to endure pressure brought about by the
vibration of the center bearing.
Yet, an object of this utility model is to provide a vehicle-
bearing cushion that has a much longer life span than
rubber bushings.
Still an object of this utility model is to provide a vehicle
bearing cushion that has a very simple construction and
can be made using simple and ordinary molding
equipment.
These and other objects and advantages will come to
view and be understood upon a reading of the detailed
description when taken in conjunction with the
accompanying drawings.
Figure 1 is a perspective view of the present utility
model for a vehicle-bearing cushion; and
Figure 2 is a sectional view thereof.
Referring now to the several views of the drawing,
wherein like reference numeral designate same parts
throughout, there is shown a utility model for a vehicle-
bearing cushion generally designated as reference
numeral 10.
Said bearing cushion 10 comprises of a generally semi-
circular body 11, having central hole 12 to house a
conventional bearing (not shown). As shown in Figure 1,
said body 11 is provided with a plurality of ridges 13
which serves reinforcing means thereof.
The subject bearing cushion 10 is made of polyvinyl
chloride, a soft texture oil and chemical resistant plastic
material which is strong, durable and capable of
enduring severe pressure from the center bearing
brought about by the rotating movement of the
propeller shaft of the vehicle.[39]
A utility model is a technical solution to a problem in
any field of human activity which is new and industrially
applicable. It may be, or may relate to, a product, or
process, or an improvement of any of the aforesaid.
[40]
Essentially, a utility model refers to an invention in
the mechanical field. This is the reason why its object is
sometimes described as a device or useful object. [41] A
utility model varies from an invention, for which a
patent for invention is, likewise, available, on at least
three aspects: first, the requisite of inventive step [42] in a
patent for invention is not required; second, the
maximum term of protection is only seven
[43]
years compared to a patent which is twenty years,
[44]
both reckoned from the date of the application; and
third, the provisions on utility model dispense with its
substantive examination[45] and prefer for a less
complicated system.
Page 63 of 307

Being plain automotive spare parts that must conform
to the original structural design of the components they
seek to replace, the Leaf Spring Eye Bushing and
Vehicle Bearing Cushion are not ornamental. They lack
the decorative quality or value that must characterize
authentic works of applied art. They are not even
artistic creations with incidental utilitarian functions or
works incorporated in a useful article. In actuality, the
personal properties described in the search warrants are
mechanical works, the principal function of which is
utility sansany aesthetic embellishment.
Neither are we to regard the Leaf Spring Eye Bushing
and Vehicle Bearing Cushion as included in the catch-all
phrase other literary, scholarly, scientific and artistic
works in Section 172.1(a) of R.A. No. 8293. Applying the
principle of ejusdem generis which states that where a
statute describes things of a particular class or kind
accompanied by words of a generic character, the
generic word will usually be limited to things of a similar
nature with those particularly enumerated, unless there
be something in the context of the state which would
repel such inference,[46] the Leaf Spring Eye Bushing and
Vehicle Bearing Cushion are not copyrightable, being
not of the same kind and nature as the works
enumerated in Section 172 of R.A. No. 8293.
No copyright granted by law can be said to arise in favor
of the petitioner despite the issuance of the certificates
of copyright registration and the deposit of the Leaf
Spring Eye Bushing and Vehicle Bearing Cushion.
Indeed, in Joaquin, Jr. v. Drilon[47] and Pearl & Dean
(Phil.), Incorporated v. Shoemart, Incorporated,[48] the
Court ruled that:
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 it. 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. Accordingly, it can cover only the works
falling within the statutory enumeration or description.
That the works of the petitioner may be the proper
subject of a patent does not entitle him to the issuance
of a search warrant for violation of copyright laws.
In Kho v. Court of Appeals[49] and Pearl & Dean (Phil.),
Incorporated v. Shoemart, Incorporated,[50] the Court
ruled that these copyright and patent 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. The Court
expounded further, thus:
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
Page 64 of 307
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.
The petitioner cannot find solace in the ruling of the
United States Supreme Court in Mazer v. Stein[51] to
buttress his petition. In that case, the artifacts involved
in that case were statuettes of dancing male and female
figures made of semi-vitreous china. The controversy
therein centered on the fact that although copyrighted
as works of art, the statuettes were intended for use
and used as bases for table lamps, with electric wiring,
sockets and lampshades attached. The issue raised was
whether the statuettes were copyright protected in the
United States, considering that the copyright applicant
intended primarily to use them as lamp bases to be
made and sold in quantity, and carried such intentions
into effect. At that time, the Copyright Office interpreted
the 1909 Copyright Act to cover works of artistic
craftsmanship insofar as their form, but not the
utilitarian aspects, were concerned. After reviewing the
history and intent of the US Congress on its copyright
legislation and the interpretation of the copyright office,
the US Supreme Court declared that the statuettes were
held copyrightable works of art or models or designs for
works of art. The High Court ruled that:
Works of art (Class G) (a) In General. This class includes
works of artistic craftsmanship, in so far as their form
but not their mechanical or utilitarian aspects are
concerned, such as artistic jewelry, enamels, glassware,
and tapestries, as well as all works belonging to the fine
arts, such as paintings, drawings and sculpture.
So we have a contemporaneous and long-continued
construction of the statutes by the agency charged to
administer them that would allow the registration of
such a statuette as is in question here.[52]
The High Court went on to state that [t]he dichotomy of
protection for the aesthetic is not beauty and utility but
art for the copyright and the invention of original and
ornamental design for design patents. Significantly, the
copyright office promulgated a rule to implement Mazer
to wit:
[I]f the sole intrinsic function of an article is its utility,
the fact that the work is unique and attractively shaped
will not qualify it as a work of art.
In this case, the bushing and cushion are not works of
art. They are, as the petitioner himself admitted, utility
models which may be the subject of a patent.
Ownership
Sec. 178 & 179
CHAPTER VI
OWNERSHIP OF COPYRIGHT
Section 178. Rules on Copyright Ownership. -
Copyright ownership shall be governed by the following
rules:
Page 65 of 307
178.1 Subject to the provisions of this section, in the
case of original literary and artistic works, copyright
shall belong to the author of the work;
178.2. In the case of works of joint authorship, the co-
authors shall be the original owners of the copyright and
in the absence of agreement, their rights shall be
governed by the rules on co-ownership. If, however, a
work of joint authorship consists of parts that can be
used separately and the author of each part can be
identified, the author of each part shall be the original
owner of the copyright in the part that he has created;
178.3. In the case of work created by an author during
and in the course of his employment, the copyright shall
belong to:
(a) The employee, if the creation of the object of
copyright is not a part of his regular duties even if the
employee uses the time, facilities and materials of the
employer.
(b) The employer, if the work is the result of the
performance of his regularly-assigned duties, unless
there is an agreement, express or implied, to the
contrary.
178.4. In the case of a work commissioned by a person
other than an employer of the author and who pays for
it and the work is made in pursuance of the commission,
the person who so commissioned the work shall have
ownership of the work, but the copyright thereto shall
remain with the creator, unless there is a written
stipulation to the contrary;
178.5. In the case of audiovisual work, the copyright
shall belong to the producer, the author of the scenario,
the composer of the music, the film director, and the
author of the work so adapted. However, subject to
contrary or other stipulations among the creators, the
producer shall exercise the copyright to an extent
required for the exhibition of the work in any manner,
except for the right to collect performing license fees for
the performance of musical compositions, with or
without words, which are incorporated into the work;
and
178.6. In respect of letters, the copyright shall belong to
the writer subject to the provisions of Article 723 of the
Civil Code. (Sec. 6, P.D. No. 49a)
Section 179. Anonymous and Pseudonymous Works. -
For purposes of this Act, the publishers shall be deemed
to represent the authors of articles and other writings
published without the names of the authors or under
pseudonyms, unless the contrary appears, or the
pseudonyms or adopted name leaves no doubt as to the
author's identity, or if the author of the anonymous
works discloses his identity. (Sec. 7, P.D. 49)
1. Community vs. Reid, 490 U.S 730 (1989)
[1] In this case, an artist and the organization that hired
him to produce a sculpture contest the ownership of the
copyright in that work. To resolve this dispute, we must
construe the "work made for hire" provisions of the
Copyright Act of 1976 (Act or 1976 Act), 17 U.S.C. ��
101 and 201(b), and in particular, the provision in �
Page 66 of 307
101, which defines as a "work made for hire" a "work
prepared by an employee within the scope of his or her
employment".
[2] Petitioners are the Community for Creative Non-
Violence (CCNV), a nonprofit unincorporated association
dedicated to eliminating homelessness in America, and
Mitch Snyder, a member and trustee of CCNV. In the fall
of 1985, CCNV decided to participate in the annual
Christmastime Pageant of Peace in Washington, D.C., by
sponsoring a display to dramatize the plight of the
homeless. As the District Court recounted:
Snyder and fellow CCNV members conceived the idea
for the nature of the display: a sculpture of a modern
Nativity scene in which, in lieu of the traditional Holy
Family, the two adult figures and the infant would
appear as contemporary homeless people huddled on a
streetside steam grate. The family was to be black
(most of the homeless in Washington being black); the
figures were to be life-sized, and the steam grate would
be positioned atop a platform "pedestal," or base, within
which special effects equipment would be enclosed to
emit simulated "steam" through the grid to swirl about
the figures. They also settled upon a title for the work --
"Third World America" -- and a legend for the pedestal:
"and still there is no room at the inn."
[3] Snyder made inquiries to locate an artist to produce
the sculpture. He was referred to respondent James Earl
Reid, a Baltimore, Maryland, sculptor. In the course of
two telephone calls, Reid agreed to sculpt the three
human figures. CCNV agreed to make the steam grate
and pedestal for the statue. Reid proposed that the work
be cast in bronze, at a total cost of approximately
$100,000 and taking six to eight months to complete.
Snyder rejected that proposal because CCNV did not
have sufficient funds, and because the statue had to be
completed by December 12 to be included in the
pageant. Reid then suggested, and Snyder agreed, that
the sculpture would be made of a material known as
"Design Cast 62," a synthetic substance that could meet
CCNV's monetary and time constraints, could be tinted
to resemble bronze, and could withstand the elements.
The parties agreed that the project would cost no more
than $15,000, not including Reid's services, which he
offered to donate. The parties did not sign a written
agreement. Neither party mentioned copyright.
[4] After Reid received an advance of $3,000, he made
several sketches of figures in various poses. At Snyder's
request, Reid sent CCNV a sketch of a proposed
sculpture showing the family in a creche-like setting: the
mother seated, cradling a baby in her lap; the father
standing behind her, bending over her shoulder to touch
the baby's foot. Reid testified that Snyder asked for the
sketch to use in raising funds for the sculpture. Snyder
testified that it was also for his approval. Reid sought a
black family to serve as a model for the sculpture. Upon
Snyder's suggestion, Reid visited a family living at
CCNV's Washington shelter, but decided that only their
newly born child was a suitable model. While Reid was
in Washington, Snyder took him to see homeless people
living on the streets. Snyder pointed out that they
tended to recline on steam grates, rather than sit or
stand, in order to warm their bodies. From that time on,
Reid's sketches contained only reclining figures.
Page 67 of 307
[5] Throughout November and the first two weeks of
December, 1985, Reid worked exclusively on the statue,
assisted at various times by a dozen different people
who were paid with funds provided in installments by
CCNV. On a number of occasions, CCNV members
visited Reid to check on his progress and to coordinate
CCNV's construction of the base. CCNV rejected Reid's
proposal to use suitcases or shopping bags to hold the
family's personal belongings, insisting instead on a
shopping cart. Reid and CCNV members did not discuss
copyright ownership on any of these visits.
[6] On December 24, 1985, 12 days after the agreed-
upon date, Reid delivered the completed statue to
Washington. There it was joined to the steam grate and
pedestal prepared by CCNV, and placed on display near
the site of the pageant. Snyder paid Reid the final
installment of the $15,000. The statue remained on
display for a month. In late January, 1986, CCNV
members returned it to Reid's studio in Baltimore for
minor repairs. Several weeks later, Snyder began
making plans to take the statue on a tour of several
cities to raise money for the homeless. Reid objected,
contending that the Design Cast 62 material was not
strong enough to withstand the ambitious itinerary. He
urged CCNV to cast the statue in bronze at a cost of
$35,000, or to create a master mold at a cost of $5,000.
Snyder declined to spend more of CCNV's money on the
project.
[7] In March, 1986, Snyder asked Reid to return the
sculpture. Reid refused. He then filed a certificate of
copyright registration for "Third World America" in his
name, and announced plans to take the sculpture on a
more modest tour than the one CCNV had proposed.
Snyder, acting in his capacity as CCNV's trustee,
immediately filed a competing certificate of copyright
registration.
[8] Snyder and CCNV then commenced this action
against Reid and his photographer, Ronald
[n1]
Purtee, seeking return of the sculpture and a
determination of copyright ownership. The District Court
granted a preliminary injunction, ordering the
sculpture's return. After a 2-day bench trial, the District
Court declared that "Third World America" was a "work
made for hire" under � 101 of the Copyright Act, and
that Snyder, as trustee for CCNV, was the exclusive
owner of the copyright in the sculpture. 652 F.Supp. at
1457. The court reasoned that Reid had been an
"employee" of CCNV within the meaning of � 101(1)
because CCNV was the motivating force in the statue's
production. Snyder and [p*736] other CCNV members,
the court explained, "conceived the idea of a
contemporary Nativity scene to contrast with the
national celebration of the season," and "directed
enough of [Reid's] effort to assure that, in the end, he
had produced what they, not he, wanted."
[9] The Court of Appeals for the District of Columbia
Circuit reversed and remanded, holding that Reid owned
the copyright because "Third World America" was not a
work for hire. Adopting what it termed the "literal
interpretation" of the Act as articulated by the Fifth
Circuit in Easter Seal Society for Crippled Children and
Adults of Louisiana, Inc. v. Playboy Enterprises, 815 F.2d
323, 329 (1987), cert. denied, 485 U.S. 981 (1988), the
court read � 101 as creating "a simple dichotomy in
fact between employees and independent contractors."
Page 68 of 307
270 U.S.App.D.C. at 33, 846 F.2d at 1492. Because,
under agency law, Reid was an independent contractor,
the court concluded that the work was not "prepared by
an employee" under � 101(1). Id. at 35, 846 F.2d at
1494. Nor was the sculpture a "work made for hire"
under the second subsection of � 101 (hereinafter �
101(2)): sculpture is not one of the nine categories of
works enumerated in that subsection, and the parties
had not agreed in writing that the sculpture would be a
work for hire. Ibid. The court suggested that the
sculpture nevertheless may have been jointly authored
by CCNV and Reid, id. at 36, 846 F.2d at 1495, and
remanded for a determination whether the sculpture is
indeed a joint work under the Act, id. at 39-40, 846 F.2d
at 1498-1499.
[10] We granted certiorari to resolve a conflict among
the Courts of Appeals over the proper construction of
the "work made for hire" provisions of the Act. [n2] 488
U.S. 940 (1988). We now affirm.
[11] The Copyright Act of 1976 provides that copyright
ownership "vests initially in the author or authors of the
work." 17 U.S.C. � 201(a). As a general rule, the author
is the party who actually creates the work, that is, the
person who translates an idea into a fixed, tangible
expression entitled to copyright protection. � 102. The
Act carves out an important exception, however, for
"works made for hire." [n3] If the work is for hire, "the
employer or other person for whom the work was
prepared is considered the author," and owns the
copyright, unless there is a written agreement to the
contrary. � 201(b). Classifying a work as "made for
hire" determines not only the initial ownership of its
copyright, but also the copyright's duration, � 302(c),
and the owners' renewal rights, � 304(a), termination
rights, � 203(a), and right to import certain goods
bearing the copyright, � 601(b)(1). See 1 M. Nimmer &
D. Nimmer, Nimmer on Copyright � 5.03 [A], pp. 5-10
(1988). The contours of the work for hire doctrine
therefore carry profound significance for freelance
creators -- including artists, writers, photographers,
designers, composers, and computer programmers --
and for the publishing, advertising, music, and other
industries which commission their works. [n4]
[12] Section 101 of the 1976 Act provides that a work is
"for hire" under two sets of circumstances:
(1) a work prepared by an employee within the scope of
his or her employment; or
(2) a work specially ordered or commissioned for use as
a contribution to a collective work, as a part of a motion
picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, as an
instructional text, as a test, as answer material for a
test, or as an atlas, if the parties expressly agree in a
written instrument signed by them that the work shall
be considered a work made for hire. [n5]
[13] Petitioners do not claim that the statue satisfies the
terms of � 101(2). Quite clearly, it does not. Sculpture
does not fit within any of the nine categories of
"specially ordered or commissioned" works enumerated
in that subsection, and no written agreement between
the parties establishes "Third World America" as a work
for hire.
Page 69 of 307
[14] The dispositive inquiry in this case therefore is
whether "Third World America" is "a work prepared by
an employee within the scope of his or her
employment" under � 101(1). The Act does not define
these terms. In the absence of such guidance, four
interpretations have emerged. The first holds that a
work is prepared by an employee whenever the hiring
party [n6]retains the right to control the product.
Petitioners take this view. Brief for Petitioners 15; Tr. of
Oral. Arg. 12. A second, and closely related, view is that
a work is prepared by an employee under � 101(1)
when the hiring party has actually wielded control with
respect to the creation of a particular work. This
approach was formulated by the Court of Appeals for
the Second Circuit, Aldon Accessories Ltd. v. Spiegel,
Inc., 738 F.2d 548, cert. denied, 469 U.S. 982 (1984),
and adopted by the Fourth Circuit, Brunswick Beacon,
Inc. v. Schock-Hopchas Publishing Co., 810 F.2d 410
(1987), the Seventh Circuit, Evans Newton, Inc. v.
Chicago Systems Software, 793 F.2d 889, cert.
denied, 479 U.S. 949 (1986), and, at times, by
petitioners, Brief for Petitioners 17. A third view is that
the term "employee" within � 101(1) carries its
common law agency law meaning. This view was
endorsed by the Fifth Circuit in Easter Seal Society for
Crippled Children and Adults of Louisiana, Inc. v.
Playboy Enterprises, 815 F.2d 323 (1987), and by the
Court of Appeals below. Finally, respondent and
numerous amici curiae contend that the term
"employee" only refers to "formal, salaried"
employees. See, e.g., Brief for Respondent 23-24; Brief
for Register of Copyrights as Amicus Curiae 7. The Court
of Appeals for the Ninth Circuit recently adopted this
view.
[15] The starting point for our interpretation of a statute
is always its language. Consumer Product Safety
Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980).
The Act nowhere defines the terms "employee" or
"scope of employment." It is, however, well established
that[w]here Congress uses terms that have
accumulated settled meaning under . . . the common
law, a court must infer, unless the statute otherwise
dictates, that Congress means to incorporate the
established meaning of these terms.
In the past, when Congress has used the term
"employee" without defining it, [p*740] we have
concluded that Congress intended to describe the
conventional master-servant relationship as understood
by common law agency doctrine. Nothing in the text of
the work for hire provisions indicates that Congress
used the words "employee" and "employment" to
describe anything other than "`the conventional relation
of employer and employe.'" Kelley, supra, at 323,
quoting Robinson, supra, at 94; compare NLRB v. Hearst
Publications, Inc., 322 U.S. 111, 124-132 (1944)
(rejecting agency law conception of employee for
purposes of the National Labor Relations Act where
structure and context of statute indicated broader
definition). On the contrary, Congress' intent to
incorporate the agency law definition is suggested by �
101(1)'s use of the term, "scope of employment," a
widely used term of art in agency law.
[16] In past cases of statutory interpretation, when we
have concluded that Congress intended terms such as
"employee," "employer," and "scope of employment" to
Page 70 of 307
be understood in light of agency law, we have relied on
the general common law of agency, rather than on the
law of any particular State, to give meaning to these
terms. This practice reflects the fact that "federal
statutes are generally intended to have uniform
nationwide application." Mississippi Band of Choctaw
Indians v. Holyfield, ante at 43. Establishment of a
federal rule of agency, rather than reliance on state
agency law, is particularly appropriate here, given the
Act's express objective of creating national, uniform
copyright law by broadly preempting state statutory and
common law copyright regulation. See 17 U.S.C. �
301(a). We thus [p*741] agree with the Court of Appeals
that the term "employee" should be understood in light
of the general common law of agency.
[17] In contrast, neither test proposed by petitioners is
consistent with the text of the Act. The exclusive focus
of the right to control the product test on the
relationship between the hiring party and the product
clashes with the language of � 101(1), which focuses
on the relationship between the hired and hiring parties.
The right to control the product test also would distort
the meaning of the ensuing subsection, � 101(2).
Section 101 plainly creates two distinct ways in which a
work can be deemed for hire: one for works prepared by
employees, the other for those specially ordered or
commissioned works which fall within one of the nine
enumerated categories and are the subject of a written
agreement. The right to control the product test ignores
this dichotomy by transforming into a work for hire
under � 101(1) any "specially ordered or
commissioned" work that is subject to the supervision
and control of the hiring party. Because a party who
hires a "specially ordered or commissioned" work by
definition has a right to specify the characteristics of the
product desired, at the time the commission is
accepted, and frequently until it is completed, the right
to control the product test would mean that many works
that could satisfy � 101(2) would already have been
deemed works for hire under � 101(1). Petitioners'
interpretation is particularly hard to square with �
101(2)'s enumeration of the nine specific categories of
specially ordered or commissioned works eligible to be
works for hire, e.g., "a contribution to a collective work,"
"a part of a motion picture," and "answer material for a
test." The unifying feature of these works is that they
are usually prepared at the instance, direction, and risk
of a publisher or producer. [n7] By their very nature,
therefore, these types of [p*742] works would be works
by an employee under petitioners' right to control the
product test.
[18] The actual control test, articulated by the Second
Circuit in Aldon Accessories, fares only marginally better
when measured against the language and structure of
� 101. Under this test, independent contractors who
are so controlled and supervised in the creation of a
particular work are deemed "employees" under �
101(1). Thus, work for hire status under � 101(1)
depends on a hiring party's actual control of, rather
than right to control, the product. Aldon
Accessories, 738 F.2d at 552. Under the actual control
test, a work for hire could arise under � 101(2), but not
under � 101(1), where a party commissions, but does
not actually control, a product which falls into one of the
nine enumerated categories. Nonetheless, we agree
with the Fifth Circuit Court of Appeals that "[t]here is
Page 71 of 307
simply no way to milk the `actual control' test of Aldon
Accessories from the language of the statute." Section
101 clearly delineates between works prepared by an
employee and commissioned works. Sound though
other distinctions might be as a matter of copyright
policy, there is no statutory support for an additional
dichotomy between commissioned works that are
actually controlled and supervised by the hiring party
and those that are not.
[19] We therefore conclude that the language and
structure of � 101 of the Act do not support either the
right to control the product or the actual control
approaches. [n8] The structure of [p*743] � 101 indicates
that a work for hire can arise through one of two
mutually exclusive means, one for employees and one
for independent contractors, and ordinary canons of
statutory interpretation indicate that the classification of
a particular hired party should be made with reference
to agency law.
[20] This reading of the undefined statutory terms finds
considerable support in the Act's legislative history. The
Act, which almost completely revised existing copyright
law, was the product of two decades of negotiation by
representatives of creators and copyright-using
industries, supervised by the Copyright Office and, to a
lesser extent, by Congress. Despite the lengthy history
of negotiation and compromise which ultimately
produced the Act, two things remained constant. First,
interested parties and Congress at all times viewed
works by employees and commissioned works by
independent contractors as separate entities. Second, in
using the term "employee," the parties and Congress
meant to refer to a hired party in a conventional
employment relationship. These factors militate in favor
of the reading we have found appropriate.
[21] In 1955, when Congress decided to overhaul
copyright law, the existing work for hire provision was �
62 of the 1909 Copyright Act, 17 U.S.C. � 26 (1976 ed.)
(1909 Act). It provided that "the word `author' shall
include an employer in the case of works made for
hire." [n9] Because the 1909 Act did not define
"employer" or "works made for hire," the task of
shaping these terms fell to the courts. They concluded
that the work for hire doctrine codified in � 62 referred
only to works made by employees in the regular course
of their employment. As for commissioned works, the
courts generally presumed that the commissioned party
had impliedly agreed to convey the copyright, along
with the work itself, to the hiring party. [n10]
[22] In 1961, the Copyright Office's first legislative
proposal retained the distinction between works by
employees and works by independent
contractors. See Report of the Register of Copyrights on
the General Revision of the U.S. Copyright Law, 87th
Cong., 1st Sess., Copyright Law Revision 86-87 (H.
Judiciary Comm. Print 1961). After numerous meetings
with representatives of the affected parties, the
Copyright Office issued a preliminary draft bill in 1963.
Adopting the Register's recommendation, it defined
"work made for hire" asa work prepared by an employee
within the scope of the duties of his employment, but
not including a work made on special order or
commission.
Page 72 of 307
[23] In response to objections by book publishers that
the preliminary draft bill limited the work for hire
doctrine to "employees," [n11] the 1964 revision bill
expanded the scope of the work for hire classification to
reach, for the first time, commissioned works. The bill's
language, proposed initially by representatives of the
publishing industry, retained the definition of work for
hire insofar as it referred to "employees," but added a
separate clause covering commissioned works, without
regard to the subject matter, "if the parties so agree in
writing." S. 3008, H.R. 11947, H.R. 12354, 88th Cong.,
2d Sess., � 54 (1964), reproduced in 1964 Revision Bill
with Discussions and Comments, 89th Cong., 1st Sess.,
Copyright Law Revision, pt. 5, p. 31 (H.R. Judiciary
Comm. Print 1965). Those representing authors
objected that the added provision would allow
publishers to use their superior bargaining position to
force authors to sign work for hire agreements, [p*746]
thereby relinquishing all copyright rights as a condition
of getting their books published. See Supplementary
Report, at 67.
[24] In 1965, the competing interests reached an
historic compromise, which was embodied in a joint
memorandum submitted to Congress and the Copyright
Office, [n12] incorporated into the 1965 revision bill, and
ultimately enacted in the same form and nearly the
same terms 11 years later, as � 101 of the 1976 Act.
The compromise retained as subsection (1) the
language referring to "a work prepared by an employee
within the scope of his employment." However, in
exchange for concessions from publishers on provisions
relating to the termination of transfer rights, the authors
consented to a second subsection which classified four
categories of commissioned works as works for hire if
the parties expressly so agreed in writing: works for use
"as a contribution to a collective work, as a part of a
motion picture, as a translation, or as supplementary
work." S. 1006, H.R. 4347, H.R. 5680, H.R. 6835, 89th
Cong., 1st Sess., � 101 (1965). The interested parties
selected these categories because they concluded that
these commissioned works, although not prepared by
employees, and thus not covered by the first
subsection, nevertheless should be treated as works for
hire because they were ordinarily prepared "at the
instance, direction, and risk of a publisher or producer."
Supplementary Report, at 67. The Supplementary
Report emphasized that only the "four special cases
specifically mentioned" could qualify as works made for
hire; "[o]ther works made on special order or
commission would not come within the definition."
[25] In 1966, the House Committee on the Judiciary
endorsed this compromise in the first legislative report
on the revision bills. See H.R.Rep. No. 2237, 89th Cong.,
2d Sess., 114, 116 (1966). Retaining the distinction
between works by employees and commissioned works,
the House Committee focused instead on
how to draw a statutory line between those works
written on special order or commission that should be
considered as works made for hire, and those that
should not.
The House Committee added four other enumerated
categories of commissioned works that could be treated
as works for hire: compilations, instructional texts, tests,
and atlases. Id. at 116. With the single addition of
"answer material for a test," the 1976 Act, as enacted,
Page 73 of 307
contained the same definition of works made for hire as
did the 1966 revision bill, and had the same structure
and nearly the same terms as the 1966 bill. [n13] Indeed,
much of the language of the 1976 House and Senate
Reports was borrowed from the Reports accompanying
the earlier drafts. See, e.g., H.R.Rep. No. 94-1476, p.
121 (1976); S.Rep. No. 94-473, p. 105 (1975).
[26] Thus, the legislative history of the Act is significant
for several reasons. First, the enactment of the 1965
compromise with only minor modifications
demonstrates that Congress intended to provide two
mutually exclusive ways for works to acquire work for
hire status: one for employees and [p*748] the other for
independent contractors. Second, the legislative history
underscores the clear import of the statutory language:
only enumerated categories of commissioned works
may be accorded work for hire status. The hiring party's
right to control the product simply is not determinative.
Indeed, importing a test based on a hiring party's right
to control, or actual control of, a product would unravel
the "`carefully worked-out compromise aimed at
balancing legitimate interests on both sides.'" H.R.Rep.
No. 2237, supra, at 114, quoting Supplemental Report,
at 66. [n14]
[27] We do not find convincing petitioners' contrary
interpretation of the history of the Act. They contend
that Congress, in enacting the Act, meant to incorporate
a line of cases decided under the 1909 Act holding that
an employment relationship exists sufficient to give the
hiring party copyright ownership whenever that party
has the right to control or supervise the artist's work. In
support of this position, petitioners note:
Nowhere in the 1976 Act or in the Act's legislative
history does Congress state that it intended to jettison
the control standard or otherwise to reject the pre-Act
judicial approach to identifying a work for hire
employment relationship.
[28] We are unpersuaded. Ordinarily, "Congress' silence
is just that -- silence." Petitioners' reliance on legislative
silence is particularly misplaced here, because the text
and structure of � 101 counsel otherwise.
[n15]
Furthermore, the structure of the work for hire
provisions was fully developed in 1965, and the text was
agreed upon in essentially final form by 1966. At that
time, however, the courts had applied the work for hire
doctrine under the 1909 Act exclusively to traditional
employees. Indeed, it was not until after the 1965
compromise was forged and adopted by
[n16]
Congress that a federal court for the first time
applied the work for hire doctrine to commissioned
works. Congress certainly could not have "jettisoned" a
line of cases that had not yet been decided.
[29] Finally, petitioners' construction of the work for hire
provisions would impede Congress' paramount goal in
revising the 1976 Act of enhancing predictability and
certainty of copyright ownership. In a "copyright
marketplace," the parties negotiate with an expectation
that one of them will own the copyright in the
completed work. With that expectation, the parties at
the outset can settle on relevant contractual terms,
such as the price for the work and the ownership of
reproduction rights.
Page 74 of 307
[30] To the extent that petitioners endorse an actual
control test, [n17] CCNV's construction of the work for hire
provisions prevents such planning. Because that test
turns on whether the hiring party has closely monitored
the production process, the parties would not know until
late in the process, if not until the work is completed,
whether a work will ultimately fall within � 101(1).
Under petitioners' approach, therefore, parties would
have to predict in advance whether the hiring party will
sufficiently control a given work to make it the author.
If they guess incorrectly, their reliance on "work for hire"
or an assignment may give them a copyright interest
that they did not bargain for.
This understanding of the work for hire provisions
clearly thwarts Congress' goal of ensuring predictability
through advance planning. Moreover, petitioners'
interpretationleaves the door open for hiring parties,
who have failed to get a full assignment of copyright
rights from independent contractors falling outside the
subdivision (2) guidelines, to unilaterally obtain work-
made-for-hire rights years after the work has been
completed as long as they directed or supervised the
work, a standard that is hard not to meet when one is a
hiring party.
[31] In sum, we must reject petitioners' argument.
Transforming a commissioned work into a work by an
employee on the basis of the hiring party's right to
control, or actual control of, the work is inconsistent
with the language, structure, and legislative history of
the work for hire provisions. To [p*751] determine
whether a work is for hire under the Act, a court first
should ascertain, using principles of general common
law of agency, whether the work was prepared by an
employee or an independent contractor. After making
this determination, the court can apply the appropriate
subsection of � 101.
[32] We turn, finally, to an application of � 101 to Reid's
production of "Third World America." In determining
whether a hired party is an employee under the general
common law of agency, we consider the hiring party's
right to control the manner and means by which the
product is accomplished. [n18] Among the other factors
relevant to this inquiry are the skill required; [n19] the
source of the instrumentalities and tools; [n20] the
location of the work; [n21] the duration of the relationship
between the parties; [n22] whether the hiring party has
the right to assign additional projects to the hired
party; [n23] the extent of the hired party's discretion over
when and how long to work; [n24] the method of
payment; [n25] the hired party's role in hiring and paying
assistants; [n26] whether the work is part of the regular
business of the hiring party; [n27] whether the hiring party
is in business; [n28] the provision of employee
[n29]
benefits; and the tax treatment of the hired
[n30]
party. See Restatement � 220(2) (setting forth a
nonexhaustive list of factors relevant to determining
whether a hired party is an employee). [n31] No one of
these factors is determinative.
[33] Examining the circumstances of this case in light of
these factors, we agree with the Court of Appeals that
Reid was not an employee of CCNV, but an independent
contractor. True, CCNV members directed enough of
Reid's work to ensure that he produced a sculpture that
Page 75 of 307
met their specifications. But the extent of control the
hiring party exercises over the details of the product is
not dispositive. Indeed, all the other circumstances
weigh heavily against finding an employment
relationship. Reid is a sculptor, a skilled occupation. Reid
supplied his own tools. He worked in his own studio in
Baltimore, making daily supervision of his activities from
Washington practicably impossible. Reid was retained
for less than two months, a relatively short period of
time. During and after this time, CCNV had no right to
assign additional projects to Reid. Apart from the
deadline for completing the sculpture, Reid had absolute
freedom to decide when and how long to work. CCNV
paid Reid $15,000, a sum dependent on "completion of
a specific job, a method by which independent
contractors are often compensated." Reid had total
discretion in hiring and paying assistants. "Creating
sculptures was hardly `regular business' for CCNV."
Indeed, CCNV is not a business at all. Finally, CCNV did
not pay payroll or Social Security taxes, provide any
employee benefits, or contribute to unemployment
insurance or workers' compensation funds.
[34] Because Reid was an independent contractor,
whether "Third World America" is a work for hire
depends on whether it satisfies the terms of � 101(2).
This petitioners concede it cannot do. Thus, CCNV is not
the author of "Third World America" by virtue of the
work for hire provisions of the Act. However, as the
Court of Appeals made clear, CCNV nevertheless may
be a joint author of the sculpture if, on remand, the
District Court determines that CCNV and Reid prepared
the work "with the intention that their contributions be
merged into inseparable or interdependent parts of a
unitary whole." 17 U.S.C. � 101. [n32] In that case, CCNV
and Reid would be co-owners of the copyright in the
work. See � 201(a).
Transfer of Copyright Ownership
Secs. 180 to 183, 200 & 201
CHAPTER VII
TRANSFER OR ASSIGNMENT OF COPYRIGHT
Section 180. Rights of Assignee. –
180.1. The copyright may be assigned in whole or in
part. Within the scope of the assignment, the assignee
is entitled to all the rights and remedies which the
assignor had with respect to the copyright.
180.2. The copyright is not deemed assigned inter
vivos in whole or in part unless there is a written
indication of such intention.
180.3. The submission of a literary, photographic or
artistic work to a newspaper, magazine or periodical for
publication shall constitute only a license to make a
single publication unless a greater right is expressly
granted. If two (2) or more persons jointly own a
copyright or any part thereof, neither of the owners
shall be entitled to grant licenses without the prior
written consent of the other owner or owners. (Sec. 15,
P.D. No. 49a)
Section 181. Copyright and Material Object. - The
copyright is distinct from the property in the material
Page 76 of 307
object subject to it. Consequently, the transfer or
assignment of the copyright shall not itself constitute a
transfer of the material object. Nor shall a transfer or
assignment of the sole copy or of one or several copies
of the work imply transfer or assignment of the
copyright. (Sec. 16, P.D. No. 49)
Section 182. Filing of Assignment or License. - An
assignment or exclusive license may be filed in
duplicate with the National Library upon payment of the
prescribed fee for registration in books and records kept
for the purpose. Upon recording, a copy of the
instrument shall be returned to the sender with a
notation of the fact of record. Notice of the record shall
be published in the IPO Gazette. (Sec. 19, P.D. No. 49a)
Section 183. Designation of Society. - The
copyright owners or their heirs may designate a society
of artists, writers or composers to enforce their
economic rights and moral rights on their behalf. (Sec.
32, P.D. No. 49a)
CHAPTER XI
RIGHTS TO PROCEEDS IN SUBSEQUENT
TRANSFERS
Section 200. Sale or Lease of Work. - In every sale
or lease of an original work of painting or sculpture or of
the original manuscript of a writer or composer,
subsequent to the first disposition thereof by the author,
the author or his heirs shall have an inalienable right to
participate in the gross proceeds of the sale or lease to
the extent of five percent (5%). This right shall exist
during the lifetime of the author and for fifty (50) years
after his death. (Sec. 31, P.D. No. 49)
Section 201. Works Not Covered. - The provisions of
this Chapter shall not apply to prints, etchings,
engravings, works of applied art, or works of similar kind
wherein the author primarily derives gain from the
proceeds of reproductions. (Sec. 33, P.D. No. 49)
First Sale Doctrine
1. Bobbs-Merill vs. Strauss, 210 U.S. 339
Doctrine: There are differences between the patent and
the copyright statutes in the extent of the protection granted
by them, and the rights of a patentee are not necessarily to
be applied by analogy to those claiming under copyright.
At common law, an author had a property in his
manuscript, and might have redress against anyone
undertaking to publish it without his authority.
Copyright property under the federal law is wholly
statutory, and depends upon the rights created under
acts of Congress passed in pursuance of authority
conferred by § 8 of Art. I of the federal Constitution.
The copyright statutes are to be reasonably construed.
They will not by judicial construction either be unduly
extended to include privileges not intended to be
conferred nor so narrowed as to exclude those benefits
that Congress did intend to confer.
Page 77 of 307
The sole right to vend granted by § 4952, Rev.Stat.,
does not secure to the owner of the copyright the right
to qualify future sales by his vendee or to limit or
restrict such future sales at a specified price, and a
notice in the book that a sale at a different price will be
treated as an infringement is ineffectual as against one
not bound by contract or license agreement.
Original:
The complainant in the circuit court, appellant here, the
Bobbs-Merrill Company, brought suit against the
respondents, appellees here, Isidor Straus and Nathan
Straus, partners as R. H. Macy & Company, in the Circuit
Court of the United States for the Southern District of
New York to restrain the sale of a copyrighted novel,
entitled "The Castaway," at retail at less than $1 for
each copy. The circuit court dismissed the bill on final
hearing. 139 F. 155. The decree of the circuit court was
affirmed on appeal by the circuit court of appeals, 147 F.
15.
The appellant is the owner of the copyright upon "The
Castaway," obtained on the eighteenth day of May,
1904, in conformity to the copyright statutes of the
United States. Printed immediately below the copyright
notice, on the page in the book following the title page,
is inserted the following notice:
"The price of this book at retail is one dollar net. No
dealer is licensed to sell it at a less price, and a sale at a
less price will be treated as an infringement of the
copyright."
"The Bobbs-Merrill Company"
Macy & Company, before the commencement of the
action, purchased copies of the book for the purpose of
selling the same at retail. Ninety percent of such copies
were purchased by them at wholesale at a price below
the retail price by aboutforty percent, and ten percent of
the books purchased by them were purchased at retail,
and the full price paid therefor.
It is stipulated in the record:
Defendants at the time of their purchase of copies of
the book, knew that it was a copyrighted book, and
were familiar with the terms of the notice printed in
each copy thereof, as above set forth, and knew that
this notice was printed in every copy of the book
purchased by them.
The wholesale dealers from whom defendants
purchased copies of the book obtained the same either
directly from the complainant or from other wholesale
dealers at a discount from the net retail price, and at
the time of their purchase knew that the book was a
copyrighted book, and were familiar with the terms of
the notice printed in each copy thereof, as described
above, and such knowledge was in all wholesale dealers
through whom the books passed from the complainants
to defendants. But the wholesale dealers were under no
agreement or obligation to enforce the observance of
the terms of the notice by retail dealers, or to restrict
their sales to retail dealers who would agree to observe
the terms stated in the notice.
Page 78 of 307
The defendants have sold copies of the book at retail at
the uniform price of eighty-nine cents a copy, and are
still selling, exposing for sale, and offering copies of the
book at retail at the price of eighty-nine cents per copy,
without the consent of the complainant.
Much of the argument on behalf of the appellant is
based upon the alleged analogy between the statutes of
the United States securing patent rights to inventors,
and the copyright acts, securing rights and privileges to
authors and others. And this analogy, it is contended, is
so complete that decisions under the patent statutes in
respect to the rights claimed in this suit under the
copyright act are necessarily controlling.
In the main brief submitted by the learned counsel for
the appellant, it is said:
"All of the argument has been upon the assumption
thatthe very numerous decisions of the circuit courts
and circuit courts of appeals, such as the Heaton-
Peninsular case [Button-Fastener case], 77 F. 288,
the Victor Talking Machine case, 123 F. 424, and others
along the same line, as well as the Cotton Tie case in
this Court, upholding this restriction, with reference to
sales of patented articles, express the law, and we have
been especially confident that such must be the case,
for the reason that this Court, in Bement v. National
Harrow Company, 186 U. S. 70, has given its sanction to
the broad doctrines laid down in the Heaton-
Peninsular case, 77 F. 288."
The present case involves rights under the copyright
act. The facts disclose a sale of a book at wholesale by
the owners of the copyright at a satisfactory price, and
this without agreement between the parties to such sale
obligating the purchaser to control future sales, and
where the alleged right springs from the protection of
the copyright law alone. It is contended that this power
to control further sales is given by statute to the owner
of such a copyright in conferring the sole right to "vend"
a copyrighted book.
A case such as the present one, concerning inventions
protected by letters patent of the United States, has not
been decided in this Court, so far as we are able to
discover. In the so-called "Cotton Tie case" (Cotton Tie
Co. v. Simmons, 106 U. S. 89), the complainant
company owned patents for improvements in metallic
cotton-bale ties, and these cotton-bale ties were
manufactured by the patentee, and stamped in the
buckles were the words: "Licensed to use once only."
After the bands had been severed at the cotton mill, the
respondent bought them and the buckles as scrap iron,
rolled and straightened the pieces of the bands, and
riveted their ends together. He then cut them into
proper lengths and sold them, with the buckles, to be
used as ties.
The report of this case in the Circuit Court for the
District of Rhode Island is found in 3 Banning & Arden
320, 1 Fed.Cas. No. 293, p. 623. The report shows that
JudgeShepley dismissed the bill on the ground that the
attempted restriction to a single use by the words
stamped on the buckle was not one which the patentee
was entitled to impose, as the sale of the patented
article, as an ordinary article of commerce, had taken it
outside of the limits of the patent monopoly, and that
Page 79 of 307
the purchaser took unrestricted title to the buckle,
without any reservation in the vendor. This Court
reversed that decision, holding that the reconstructed
ties were not a repair of the old article, but a recreation
of the subject of the patent, and therefore an
infringement. Mr. Justice Blatchford, in delivering the
opinion of the court, said:
"Whatever right the defendants could acquire to the use
of the old buckle, they acquired no right to combine it
with a substantially new band, to make a cotton-bale
tie. They so combined it when they combined it with a
band made of the pieces of the old band in the way
described. What the defendants did in piecing together
the pieces of the old band was not a repair of the band
or the tie, in any proper sense. The band was voluntarily
severed by the consumer at the cotton mill, because the
tie had performed its function of confining the bale of
cotton in its transit from the plantation or the press to
the mill. Its capacity for use as a tie was voluntarily
destroyed. As it left the bale, it could not be used again
as a tie. As a tie the defendants reconstructed it,
although they used the old buckle without repairing
that."
That the case was not decided as one of restricted
license, because of the words stamped on the buckle, is
shown by the language of Mr. Justice Blatchford, in
concluding his opinion:
"We do not decide that they are liable as infringers of
either of the three patents merely because they have
sold the buckle considered apart from the band or from
the entire structure as a tie."
We cannot agree that any different view of the Cotton
Tie case was indicated in the comments of the learned
justice, speaking for this Court, in Morgan Envelope Co.
v. Albany Paper Co., 152 U. S. 425, 152 U. S. 433. What
was there said in connectionwith the quotation from the
opinion of Mr. Justice Blatchford in the Cotton Tie case
enforces the view that the case was one of infringement
because of the reconstruction of the patented device.
In Bement v. National Harrow Co., 186 U. S. 70, the suit
was between the owners of the letters patent as
licensor and licensees, seeking to enforce a contract as
to the price and terms on which the patented article
might be dealt with by the licensee. The case did not
involve facts such as in the case now before us, and
concerned a contract of license sued upon in the state
court, and, of course, does not dispose of the questions
to be decided in this case.
The question was supposed to be involved in the recent
case of Cortelyou v. Johnson, 207 U. S. 196, where a
patented machine, known as the Neostyle, was sold
with a license, printed on the baseboard of the machine,
limiting the use thereof to certain paper, ink, and other
supplies, made by the Neostyle company. While the
question as to the validity of such license restriction was
fully and ably argued by counsel, the case went off upon
the finding that notice of the license restriction was not
brought home to the defendant company.
If we were to follow the course taken in the argument,
and discuss the rights of a patentee, under letters
patent, and then, by analogy, apply the conclusions to
Page 80 of 307
copyrights, we might greatly embarrass the
consideration of a case under letters patent, when one
of that character shall be presented to this Court.
We may say in passing, disclaiming any intention to
indicate our views as to what would be the rights of
parties in circumstances similar to the present case
under the patent laws, that there are differences
between the patent and copyright statutes in the extent
of the protection granted by them. This was recognized
by Judge Lurton, who wrote a leading case on the
subject in the federal courts (The Button Fastener case,
supra), for he said in the subsequent case ofPark &
Sons Co. v. Hartman, 153 F. 24:
"There are such wide differences between the right of
multiplying and vending copies of a production
protected by the copyright statute and the rights
secured to an inventor under the patent statutes that
the cases which relate to the one subject are not
altogether controlling as to the other."
We therefore approach the consideration of this
question as a new one in this Court, and one that
involves the extent of the protection which is given by
the copyright statutes of the United States to the owner
of a copyright under the facts disclosed in this record.
Recent cases in this Court have affirmed the proposition
that copyright property under the federal law is wholly
statutory, and depends upon the right created under the
acts of Congress passed in pursuance of the authority
conferred under Article I, § 8, of the federal Constitution:
"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 learned counsel for the appellant in this case, in the
argument at bar, disclaims relief because of any
contract, and relies solely upon the copyright statutes,
and rights therein conferred. The copyright statutes
ought to be reasonably construed with a view to
effecting the purposes intended by Congress. They
ought not to be unduly extended by judicial construction
to include privileges not intended to be conferred, nor
so narrowly construed as to deprive those entitled to
their benefit of the rights Congress intended to grant.
At common law, an author had a property in his
manuscript, and might have redress against anyone
who undertook to realize a profit from its publication
without authority of the author. Wheaton v. Peters, 8
Pet. 591, 33 U. S. 659.
In Drone on Copyright, that author says, page 100:
"As the law is now expounded, there are important
differencesbetween the statutory and the common law
light. The former exists only in works which have been
published within the meaning of the statute, and the
latter only in works which have not been so published.
In the former case, ownership is limited to a term of
years; in the latter, it is perpetual. The rights do not
coexist in the same composition; when the statutory
right begins, the common law right ends. Both may be
defeated by publication. Thus, when a work is published
Page 81 of 307
in print, the owner's common law rights are lost, and,
unless the publication be in accordance with the
requirements of the statute, the statutory right is not
secured."
While the nature of the property and the protection
intended to be given the inventor or author as the
reward of genius or intellect in the production of his
book or work of art is to be considered in construing the
act of Congress, it is evident that to secure the author
the right to multiply copies of his work may be said to
have been the main purpose of the copyright statutes.
Speaking for this Court in Stephens v. Cady, 14 How.
528, 55 U. S. 530, Mr. Justice Nelson said:
"The copyright is an exclusive right to the multiplication
of the copies, for the benefit of the author or his
assigns, disconnected from the plate, or any other
physical existence. It is an incorporeal right to print and
publish the map, or, as said by Lord Mansfield in Millar
v. Taylor, 4 Burr. 2396, 'a property in notion, and has no
corporeal, tangible substance.'"
This fact is emphasized when we note the title to the act
of Congress, passed at its first session:
"An Act for the Encouragement of Learning, by Securing
the Copies of Maps, Charts, and Books, to the Authors
and Proprietors of Such Copies, during the Times
Therein Mentioned."
In order to secure this right, it was provided in that
statute, as it has been in subsequent ones, that the
authors of books, their executors, administrators, or
assigns, shall have the "sole right and liberty of printing,
reprinting, publishing, and vending" such book for a
term of years, upon complying with thestatutory
conditions set forth in the act as essential to the
acquiring of a valid copyright. Each and all of these
statutory rights should be given such protection as the
act of Congress requires, in order to secure the rights
conferred upon authors and others entitled to the
benefit of the act. Let us see more specifically what are
the statutory rights, in this behalf, secured to one who
has complied with the provisions of the law and become
the owner of a copyright. They may be found in §§ 4952,
4965, and 4970 of the Revised Statutes of the United
States, and are as follows:
"SEC. 4952. Any citizen of the United States or resident
therein, who shall be the author, inventor, designer, or
proprietor of any book, map, chart, dramatic or musical
composition, engraving, cut, print, or photograph or
negative thereof, or of a painting, drawing, chromo,
statute, statuary, and of models or designs intended to
be perfected as works of the fine arts, and the
executors, administrators, or assigns of any such
person, shall, upon complying with the provisions of this
chapter, have the sole liberty of printing, reprinting,
publishing, completing, copying, executing, finishing,
and vending the same."
"SEC. 4965. If any person, after the recording of the title
of any map, chart, musical composition, print, cut,
engraving, or photograph, or chromo, or of the
description of any painting, drawing, statue, statuary, or
model or design intended to be perfected and executed
as a work of the fine arts, as provided by this chapter,
Page 82 of 307
shall, within the term limited, and without the consent
of the proprietor of the copyright first obtained in
writing, signed in presence of two or more witnesses,
engrave, etch, work, copy, print, publish, or import,
either in whole or in part, or by varying the main design
with intent to evade the law, or, knowing the same to be
so printed, published, or imported, shall sell or expose
to sale any copy of such map or other article, as
aforesaid, he shall forfeit to the proprietor all the plates
on which the same shall be copied, and every sheet
thereof, either copied or printed, and shall further
forfeitone dollar for every sheet of the same found in his
possession, either printing, printed, copied, published,
imported, or exposed for sale, and in case of a painting,
statute, or statuary, he shall forfeit ten dollars for every
copy of the same in his possession, or by him sold or
exposed for sale, one-half thereof to the proprietor and
the other half to the use of the United States."
Section 4970 is as follows:
"The circuit courts, and district courts having the
jurisdiction of circuit courts, shall have power, upon bill
in equity filed by any party aggrieved, to grant
injunctions to prevent the violation of any right secured
by the laws respecting copyrights, according to the
course and principles of courts of equity, on such terms
as the court may deem reasonable."
Section 4965 undertakes to work a forfeiture of
copyrighted articles, and confers a right of action for a
penalty. Relief is given in a single suit, one-half of the
money recovered going to the United States.
As this is a suit in equity for relief under § 4970 of the
U.S. Revised Statutes, giving to the circuit and district
courts of the United States the right to grant relief by
injunctions to prevent the violation of rights secured by
the copyright statutes, we are not concerned with rights
and remedies under § 4965.
It is the contention of the appellant that the circuit court
erred in failing to give effect to the provision of § 4952,
protecting the owners of the copyright in the sole right
of vending the copyrighted book or other article, and
the argument is that the statute vested the whole field
of the right of exclusive sale in the copyright owner;
that he can part with it to another to the extent that he
sees fit, and may withhold to himself, by proper
reservations, so much of the right as he pleases.
What does the statute mean in granting "the sole right
of vending the same?" Was it intended to create a right
which would permit the holder of the copyright to
fasten, by noticein a book or upon one of the articles
mentioned within the statute, a restriction upon the
subsequent alienation of the subject matter of copyright
after the owner had parted with the title to one who had
acquired full dominion over it and had given a
satisfactory price for it? It is not denied that one who
has sold a copyrighted article, without restriction, has
parted with all right to control the sale of it. The
purchaser of a book, once sold by authority of the owner
of the copyright, may sell it again, although he could not
publish a new edition of it.
In this case, the stipulated facts show that the books
sold by the appellant were sold at wholesale, and
purchased by those who made no agreement as to the
Page 83 of 307
control of future sales of the book, and took upon
themselves no obligation to enforce the notice printed
in the book, undertaking to restrict retail sales to a price
of one dollar per copy.
The precise question therefore in this case is, does the
sole right to vend (named in § 4952) secure to the
owner of the copyright the right, after a sale of the book
to a purchaser, to restrict future sales of the book at
retail, to the right to sell it at a certain price per copy,
because of a notice in the book that a sale at a different
price will be treated as an infringement, which notice
has been brought home to one undertaking to sell for
less than the named sum? We do not think the statute
can be given such a construction, and it is to be
remembered that this is purely a question of statutory
construction. There is no claim in this case of contract
limitation, nor license agreement controlling the
subsequent sales of the book.
In our view, the copyright statutes, while protecting the
owner of the copyright in his right to multiply and sell
his production, do not create the right to impose, by
notice, such as is disclosed in this case, a limitation at
which the book shall be sold at retail by future
purchasers, with whom there is no privity of contract.
This conclusion is reached in view of the language of the
statute, read in the light of its main purposeto secure
the right of multiplying copies of the work -- a right
which is the special creation of the statute. True, the
statute also secures, to make this right of multiplication
effectual, the sole right to vend copies of the book, the
production of the author's thought and conception. The
owner of the copyright in this case did sell copies of the
book in quantities and at a price satisfactory to it. It has
exercised the right to vend. What the complainant
contends for embraces not only the right to sell the
copies, but to qualify the title of a future purchaser by
the reservation of the right to have the remedies of the
statute against an infringer because of the printed
notice of its purpose so to do unless the purchaser sells
at a price fixed in the notice. To add to the right of
exclusive sale the authority to control all future retail
sales by a notice that such sales must be made at a
fixed sum would give a right not included in the terms of
the statute, and, in our view, extend its operation, by
construction, beyond its meaning, when interpreted with
a view to ascertaining the legislative intent in its
enactment.
This conclusion renders it unnecessary to discuss other
questions noticed in the opinion in the circuit court of
appeals, or to examine into the validity of the
publisher's agreements, alleged to be in violation of the
acts to restrain combinations creating a monopoly or
directly tending to the restraint of trade.
-----------------
26 August 2016
Ownership
Sec. 178 & 179
Section 178. Rules on Copyright Ownership. - Copyright
ownership shall be governed by the following rules:
Page 84 of 307
178.1 Subject to the provisions of this section, in the
case of original literary and artistic works, copyright
shall belong to the author of the work;
178.2. In the case of works of joint authorship, the co-
authors shall be the original owners of the copyright and
in the absence of agreement, their rights shall be
governed by the rules on co-ownership. If, however, a
work of joint authorship consists of parts that can be
used separately and the author of each part can be
identified, the author of each part shall be the original
owner of the copyright in the part that he has created;
178.3. In the case of work created by an author during
and in the course of his employment, the copyright shall
belong to:
(a) The employee, if the creation of the object of
copyright is not a part of his regular duties even if the
employee uses the time, facilities and materials of the
employer.
(b) The employer, if the work is the result of the
performance of his regularly-assigned duties, unless
there is an agreement, express or implied, to the
contrary.
178.4. In the case of a work commissioned by a person
other than an employer of the author and who pays for
it and the work is made in pursuance of the commission,
the person who so commissioned the work shall have
ownership of the work, but the copyright thereto shall
remain with the creator, unless there is a written
stipulation to the contrary;
178.5. In the case of audiovisual work, the copyright
shall belong to the producer, the author of the scenario,
the composer of the music, the film director, and the
author of the work so adapted. However, subject to
contrary or other stipulations among the creators, the
producer shall exercise the copyright to an extent
required for the exhibition of the work in any manner,
except for the right to collect performing license fees for
the performance of musical compositions, with or
without words, which are incorporated into the work;
and
178.6. In respect of letters, the copyright shall belong to
the writer subject to the provisions of Article 723 of the
Civil Code. (Sec. 6, P.D. No. 49a)
Section 179. Anonymous and Pseudonymous Works. -
For purposes of this Act, the publishers shall be deemed
to represent the authors of articles and other writings
published without the names of the authors or under
pseudonyms, unless the contrary appears, or the
pseudonyms or adopted name leaves no doubt as to the
author's identity, or if the author of the anonymous
works discloses his identity. (Sec. 7, P.D. 49)
1. Community vs. Reid, 490 U.S 730 (1989)
Case Digest9:
Facts: The Community for Creative Non-Violence
(CCNV) made an oral agreement with James Reid,
9"Community for Creative Non-Violence v. Reid." Oyez. Chicago-Kent College of Law
at Illinois Tech, n.d. Aug 24, 2016. <https://www.oyez.org/cases/1988/88-293>
Page 85 of 307
a sculptor, to produce a statue depicting the
plight of the homeless for display at a 1985
Washington D.C. Christmas pageant. Upon
completion, delivery, and joining of the work to a
base that it prepared separately, CCNV paid Reid
the final installment of the agreed-upon price.
Shortly thereafter, the parties filed competing
copyright claims over the sculpture. Holding, in
accordance with the Copyright Act of 1976 (the
"Act"), that the statue was a "work made for hire,"
a district court ruled in favor of CCNV. On appeal,
the Court of Appeals reversed and the Supreme
Court granted CCNV certiorari.
Issue: Is the making of a sculpture for an
organization, by someone who contracts with the
organization but is not its employee, a "work
made for hire" as defined by the Copyright Act of
1976, 17 U.S.C. Section 101?
Held: No. In a unanimous opinion, the Court held
that the statue's preparation was not a "work for
hire" as defined by the Act because Reid was not a
CCNV employee. Instead, CCNV hired Reid as an
independent contractor. Reid's independent status
was evident because he supplied his own tools,
worked in his own studio in another city, was
retained for less than two months, decided his
own work schedule, received salary that was
contingent on the sculpture's completion, and had
sole discretion over hiring and paying assistants.
Moreover, CCNV did not pay social security taxes
for Reid nor did it provide him any employee
benefits.
Original:
[1] In this case, an artist and the organization that hired
him to produce a sculpture contest the ownership of the
copyright in that work. To resolve this dispute, we must
construe the "work made for hire" provisions of the
Copyright Act of 1976 (Act or 1976 Act), 17 U.S.C. ��
101 and 201(b), and in particular, the provision in �
101, which defines as a "work made for hire" a "work
prepared by an employee within the scope of his or her
employment" (hereinafter � 101(1)). [p*733]
I
[2] Petitioners are the Community for Creative Non-
Violence (CCNV), a nonprofit unincorporated association
dedicated to eliminating homelessness in America, and
Mitch Snyder, a member and trustee of CCNV. In the fall
of 1985, CCNV decided to participate in the annual
Christmastime Pageant of Peace in Washington, D.C., by
sponsoring a display to dramatize the plight of the
homeless. As the District Court recounted:
Snyder and fellow CCNV members conceived the idea
for the nature of the display: a sculpture of a modern
Nativity scene in which, in lieu of the traditional Holy
Family, the two adult figures and the infant would
appear as contemporary homeless people huddled on a
streetside steam grate. The family was to be black
(most of the homeless in Washington being black); the
figures were to be life-sized, and the steam grate would
be positioned atop a platform "pedestal," or base, within
which special effects equipment would be enclosed to
emit simulated "steam" through the grid to swirl about
Page 86 of 307
the figures. They also settled upon a title for the work --
"Third World America" -- and a legend for the pedestal:
"and still there is no room at the inn."
[3] Snyder made inquiries to locate an artist to produce
the sculpture. He was referred to respondent James Earl
Reid, a Baltimore, Maryland, sculptor. In the course of
two telephone calls, Reid agreed to sculpt the three
human figures. CCNV agreed to make the steam grate
and pedestal for the statue. Reid proposed that the work
be cast in bronze, at a total cost of approximately
$100,000 and taking six to eight months to complete.
Snyder rejected that proposal because CCNV did not
have sufficient funds, and because the statue had to be
completed by December 12 to be included in the
pageant. Reid then suggested, and Snyder agreed, that
the [p*734] sculpture would be made of a material
known as "Design Cast 62," a synthetic substance that
could meet CCNV's monetary and time constraints,
could be tinted to resemble bronze, and could withstand
the elements. The parties agreed that the project would
cost no more than $15,000, not including Reid's
services, which he offered to donate. The parties did not
sign a written agreement. Neither party mentioned
copyright.
[4] After Reid received an advance of $3,000, he made
several sketches of figures in various poses. At Snyder's
request, Reid sent CCNV a sketch of a proposed
sculpture showing the family in a creche-like setting: the
mother seated, cradling a baby in her lap; the father
standing behind her, bending over her shoulder to touch
the baby's foot. Reid testified that Snyder asked for the
sketch to use in raising funds for the sculpture. Snyder
testified that it was also for his approval. Reid sought a
black family to serve as a model for the sculpture. Upon
Snyder's suggestion, Reid visited a family living at
CCNV's Washington shelter, but decided that only their
newly born child was a suitable model. While Reid was
in Washington, Snyder took him to see homeless people
living on the streets. Snyder pointed out that they
tended to recline on steam grates, rather than sit or
stand, in order to warm their bodies. From that time on,
Reid's sketches contained only reclining figures.
[5] Throughout November and the first two weeks of
December, 1985, Reid worked exclusively on the statue,
assisted at various times by a dozen different people
who were paid with funds provided in installments by
CCNV. On a number of occasions, CCNV members
visited Reid to check on his progress and to coordinate
CCNV's construction of the base. CCNV rejected Reid's
proposal to use suitcases or shopping bags to hold the
family's personal belongings, insisting instead on a
shopping cart. Reid and CCNV members did not discuss
copyright ownership on any of these visits.
[6] On December 24, 1985, 12 days after the agreed-
upon date, Reid delivered the completed statue to
Washington. There it was joined to the steam grate and
pedestal prepared by CCNV, and placed on display near
the site of the pageant. Snyder paid Reid the final
installment of the $15,000. The statue remained on
display for a month. In late January, 1986, CCNV
members returned it to Reid's studio in Baltimore for
minor repairs. Several weeks later, Snyder began
making plans to take the statue on a tour of several
cities to raise money for the homeless. Reid objected,
Page 87 of 307
contending that the Design Cast 62 material was not
strong enough to withstand the ambitious itinerary. He
urged CCNV to cast the statue in bronze at a cost of
$35,000, or to create a master mold at a cost of $5,000.
Snyder declined to spend more of CCNV's money on the
project.
[7] In March, 1986, Snyder asked Reid to return the
sculpture. Reid refused. He then filed a certificate of
copyright registration for "Third World America" in his
name, and announced plans to take the sculpture on a
more modest tour than the one CCNV had proposed.
Snyder, acting in his capacity as CCNV's trustee,
immediately filed a competing certificate of copyright
registration.
[8] Snyder and CCNV then commenced this action
against Reid and his photographer, Ronald
Purtee, [n1] seeking return of the sculpture and a
determination of copyright ownership. The District Court
granted a preliminary injunction, ordering the
sculpture's return. After a 2-day bench trial, the District
Court declared that "Third World America" was a "work
made for hire" under � 101 of the Copyright Act, and
that Snyder, as trustee for CCNV, was the exclusive
owner of the copyright in the sculpture. 652 F.Supp. at
1457. The court reasoned that Reid had been an
"employee" of CCNV within the meaning of � 101(1)
because CCNV was the motivating force in the statue's
production. Snyder and [p*736] other CCNV members,
the court explained, "conceived the idea of a
contemporary Nativity scene to contrast with the
national celebration of the season," and "directed
enough of [Reid's] effort to assure that, in the end, he
had produced what they, not he, wanted."
[9] The Court of Appeals for the District of Columbia
Circuit reversed and remanded, holding that Reid owned
the copyright because "Third World America" was not a
work for hire. 270 U.S.App.D.C. 26, 35, 846 F.2d 1485,
1494 (1988). Adopting what it termed the "literal
interpretation" of the Act as articulated by the Fifth
Circuit in Easter Seal Society for Crippled Children and
Adults of Louisiana, Inc. v. Playboy Enterprises, 815 F.2d
323, 329 (1987), cert. denied, 485 U.S. 981 (1988), the
court read � 101 as creating "a simple dichotomy in
fact between employees and independent contractors."
270 U.S.App.D.C. at 33, 846 F.2d at 1492. Because,
under agency law, Reid was an independent contractor,
the court concluded that the work was not "prepared by
an employee" under � 101(1). Id. at 35, 846 F.2d at
1494. Nor was the sculpture a "work made for hire"
under the second subsection of � 101 (hereinafter �
101(2)): sculpture is not one of the nine categories of
works enumerated in that subsection, and the parties
had not agreed in writing that the sculpture would be a
work for hire. Ibid. The court suggested that the
sculpture nevertheless may have been jointly authored
by CCNV and Reid, id. at 36, 846 F.2d at 1495, and
remanded for a determination whether the sculpture is
indeed a joint work under the Act, id. at 39-40, 846 F.2d
at 1498-1499.
[10] We granted certiorari to resolve a conflict among
the Courts of Appeals over the proper construction of
the "work made for hire" provisions of the Act. [n2] 488
U.S. 940 (1988). We now affirm.
Page 88 of 307

II
A picture or other audiovisual work, as a translation, as a
[11] The Copyright Act of 1976 provides that copyright
ownership "vests initially in the author or authors of the
work." 17 U.S.C. � 201(a). As a general rule, the author
is the party who actually creates the work, that is, the
person who translates an idea into a fixed, tangible
expression entitled to copyright protection. � 102. The
Act carves out an important exception, however, for
"works made for hire." [n3] If the work is for hire, "the
employer or other person for whom the work was
prepared is considered the author," and owns the
copyright, unless there is a written agreement to the
contrary. � 201(b). Classifying a work as "made for
hire" determines not only the initial ownership of its
copyright, but also the copyright's duration, � 302(c),
and the owners' renewal rights, � 304(a), termination
rights, � 203(a), and right to import certain goods
bearing the copyright, � 601(b)(1). See 1 M. Nimmer &
D. Nimmer, Nimmer on Copyright � 5.03 [A], pp. 5-10
(1988). The contours of the work for hire doctrine
therefore carry profound significance for freelance
creators -- including artists, writers, photographers,
designers, composers, and computer programmers --
and for the publishing, advertising, music, and other
industries which commission their works. [n4]
[12] Section 101 of the 1976 Act provides that a work is
"for hire" under two sets of circumstances:
(1) a work prepared by an employee within the scope of
his or her employment; or
(2) a work specially ordered or commissioned for use as
a contribution to a collective work, as a part of a motion
supplementary work, as a compilation, as an
instructional text, as a test, as answer material for a
test, or as an atlas, if the parties expressly agree in a
written instrument signed by them that the work shall
be considered a work made for hire. [n5]
[13] Petitioners do not claim that the statue satisfies the
terms of � 101(2). Quite clearly, it does not. Sculpture
does not fit within any of the nine categories of
"specially ordered or commissioned" works enumerated
in that subsection, and no written agreement between
the parties establishes "Third World America" as a work
for hire.
[14] The dispositive inquiry in this case therefore is
whether "Third World America" is "a work prepared by
an employee within the scope of his or her
employment" under � 101(1). The Act does not define
these terms. In the absence of such guidance, four
interpretations have emerged. The first holds that a
work is prepared by an employee whenever the hiring
party [n6] retains the right to control the product.See
Peregrine v. Lauren Corp., 601 F.Supp. 828, 829
(Colo.1985); Clarkstown v. Reeder, 566 F.Supp. 137, 142
(SDNY 1983). [p*739] Petitioners take this view. Brief for
Petitioners 15; Tr. of Oral. Arg. 12. A second, and closely
related, view is that a work is prepared by an employee
under � 101(1) when the hiring party has actually
wielded control with respect to the creation of a
particular work. This approach was formulated by the
Court of Appeals for the Second Circuit, Aldon
Page 89 of 307
Accessories Ltd. v. Spiegel, Inc., 738 F.2d 548, cert.
denied, 469 U.S. 982 (1984), and adopted by the Fourth
Circuit, Brunswick Beacon, Inc. v. Schock-Hopchas
Publishing Co., 810 F.2d 410 (1987), the Seventh
Circuit, Evans Newton, Inc. v. Chicago Systems
Software, 793 F.2d 889, cert. denied, 479 U.S. 949
(1986), and, at times, by petitioners, Brief for Petitioners
17. A third view is that the term "employee" within �
101(1) carries its common law agency law meaning.
This view was endorsed by the Fifth Circuit in Easter
Seal Society for Crippled Children and Adults of
Louisiana, Inc. v. Playboy Enterprises, 815 F.2d 323
(1987), and by the Court of Appeals below. Finally,
respondent and numerous amici curiae contend that the
term "employee" only refers to "formal, salaried"
employees. See, e.g., Brief for Respondent 23-24; Brief
for Register of Copyrights as Amicus Curiae 7. The Court
of Appeals for the Ninth Circuit recently adopted this
view. See Dumas v. Gommerman, 865 F.2d 1093 (1989).
[15] The starting point for our interpretation of a statute
is always its language. Consumer Product Safety
Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980).
The Act nowhere defines the terms "employee" or
"scope of employment." It is, however, well established
that[w]here Congress uses terms that have
accumulated settled meaning under . . . the common
law, a court must infer, unless the statute otherwise
dictates, that Congress means to incorporate the
established meaning of these terms.NLRB v. Amax Coal
Co., 453 U.S. 322, 329 (1981); see also Perrin v. United
States, 444 U.S. 37, 42 (1979). In the past, when
Congress has used the term "employee" without
defining it, [p*740] we have concluded that Congress
intended to describe the conventional master-servant
relationship as understood by common law agency
doctrine. See, e.g., Kelley v. Southern Pacific Co., 419
U.S. 318, 322-323 (1974); Baker v. Texas & Pacific R.
Co., 359 U.S. 227, 228 (1959) (per curiam); Robinson v.
Baltimore & Ohio R. Co., 237 U.S. 84, 94 (1915). Nothing
in the text of the work for hire provisions indicates that
Congress used the words "employee" and
"employment" to describe anything other than "`the
conventional relation of employer and employe.'" Kelley,
supra, at 323, quoting Robinson, supra, at 94; compare
NLRB v. Hearst Publications, Inc., 322 U.S. 111, 124-132
(1944) (rejecting agency law conception of employee for
purposes of the National Labor Relations Act where
structure and context of statute indicated broader
definition). On the contrary, Congress' intent to
incorporate the agency law definition is suggested by �
101(1)'s use of the term, "scope of employment," a
widely used term of art in agency law. See Restatement
(Second) of Agency � 228 (1958) (hereinafter
Restatement).
[16] In past cases of statutory interpretation, when we
have concluded that Congress intended terms such as
"employee," "employer," and "scope of employment" to
be understood in light of agency law, we have relied on
the general common law of agency, rather than on the
law of any particular State, to give meaning to these
terms. See, e.g., Kelley, 419 U.S. at 323-324, and n.
5; id. at 332 (Stewart, J., concurring in judgment); Ward
v. Atlantic Coast Line R. Co., 362 U.S. 396, 400
(1960); Baker, supra, at 228. This practice reflects the
fact that "federal statutes are generally intended to
have uniform nationwide application." Mississippi Band
Page 90 of 307
of Choctaw Indians v. Holyfield, ante at 43.
Establishment of a federal rule of agency, rather than
reliance on state agency law, is particularly appropriate
here, given the Act's express objective of creating
national, uniform copyright law by broadly preempting
state statutory and common law copyright
regulation. See 17 U.S.C. � 301(a). We thus [p*741]
agree with the Court of Appeals that the term
"employee" should be understood in light of the general
common law of agency.
[17] In contrast, neither test proposed by petitioners is
consistent with the text of the Act. The exclusive focus
of the right to control the product test on the
relationship between the hiring party and the product
clashes with the language of � 101(1), which focuses
on the relationship between the hired and hiring parties.
The right to control the product test also would distort
the meaning of the ensuing subsection, � 101(2).
Section 101 plainly creates two distinct ways in which a
work can be deemed for hire: one for works prepared by
employees, the other for those specially ordered or
commissioned works which fall within one of the nine
enumerated categories and are the subject of a written
agreement. The right to control the product test ignores
this dichotomy by transforming into a work for hire
under � 101(1) any "specially ordered or
commissioned" work that is subject to the supervision
and control of the hiring party. Because a party who
hires a "specially ordered or commissioned" work by
definition has a right to specify the characteristics of the
product desired, at the time the commission is
accepted, and frequently until it is completed, the right
to control the product test would mean that many works
that could satisfy � 101(2) would already have been
deemed works for hire under � 101(1). Petitioners'
interpretation is particularly hard to square with �
101(2)'s enumeration of the nine specific categories of
specially ordered or commissioned works eligible to be
works for hire, e.g., "a contribution to a collective work,"
"a part of a motion picture," and "answer material for a
test." The unifying feature of these works is that they
are usually prepared at the instance, direction, and risk
of a publisher or producer. [n7] By their very nature,
therefore, these types of [p*742] works would be works
by an employee under petitioners' right to control the
product test.
[18] The actual control test, articulated by the Second
Circuit in Aldon Accessories, fares only marginally better
when measured against the language and structure of
� 101. Under this test, independent contractors who
are so controlled and supervised in the creation of a
particular work are deemed "employees" under �
101(1). Thus, work for hire status under � 101(1)
depends on a hiring party's actualcontrol of, rather
than right to control, the product. Aldon
Accessories, 738 F.2d at 552. Under the actual control
test, a work for hire could arise under � 101(2), but not
under � 101(1), where a party commissions, but does
not actually control, a product which falls into one of the
nine enumerated categories. Nonetheless, we agree
with the Fifth Circuit Court of Appeals that "[t]here is
simply no way to milk the `actual control' test of Aldon
Accessories from the language of the statute." Easter
Seal Society, 815 F.2d at 334. Section 101 clearly
delineates between works prepared by an employee
and commissioned works. Sound though other
Page 91 of 307
distinctions might be as a matter of copyright policy,
there is no statutory support for an additional dichotomy
between commissioned works that are actually
controlled and supervised by the hiring party and those
that are not.
[19] We therefore conclude that the language and
structure of � 101 of the Act do not support either the
right to control the product or the actual control
approaches. [n8] The structure of [p*743] � 101
indicates that a work for hire can arise through one of
two mutually exclusive means, one for employees and
one for independent contractors, and ordinary canons of
statutory interpretation indicate that the classification of
a particular hired party should be made with reference
to agency law.
[20] This reading of the undefined statutory terms finds
considerable support in the Act's legislative history. Cf.
Diamond v. Chakrabarty, 447 U.S. 303, 315 (1980). The
Act, which almost completely revised existing copyright
law, was the product of two decades of negotiation by
representatives of creators and copyright-using
industries, supervised by the Copyright Office and, to a
lesser extent, by Congress. See Mills Music, Inc. v.
Snyder, 469 U.S. 153, 159 (1985); Litman, Copyright,
Compromise, and Legislative History, 72 Cornell L.Rev.
857, 862 (1987). Despite the lengthy history of
negotiation and compromise which ultimately produced
the Act, two things remained constant. First, interested
parties and Congress at all times viewed works by
employees and commissioned works by independent
contractors as separate entities. Second, in using the
term "employee," the parties and Congress meant to
refer to a hired party in a conventional employment
relationship. These factors militate in favor of the
reading we have found appropriate.
[21] In 1955, when Congress decided to overhaul
copyright law, the existing work for hire provision was �
62 of the 1909 Copyright Act, 17 U.S.C. � 26 (1976 ed.)
(1909 Act). It provided that "the word `author' shall
include an employer in [p*744] the case of works made
for hire." [n9] Because the 1909 Act did not define
"employer" or "works made for hire," the task of
shaping these terms fell to the courts. They concluded
that the work for hire doctrine codified in � 62 referred
only to works made by employees in the regular course
of their employment. As for commissioned works, the
courts generally presumed that the commissioned party
had impliedly agreed to convey the copyright, along
with the work itself, to the hiring party. See, e.g.,
Shapiro, Bernstein & Co. v. Jerry Vogel Music Co., 221
F.2d 569, 570, aff'd, 223 F.2d 252 (CA2 1955); Yardley v.
Houghton Mifflin Co., 108 F.2d 28, 31 (CA2 1939), cert.
denied, 309 U.S. 686 (1940). [n10]
[22] In 1961, the Copyright Office's first legislative
proposal retained the distinction between works by
employees and works by independent
contractors. See Report of the Register of Copyrights on
the General Revision of the U.S. Copyright Law, 87th
Cong., 1st Sess., Copyright Law Revision 86-87 (H.
Judiciary Comm. Print 1961). After numerous meetings
with representatives of the affected parties, the
Copyright Office issued a preliminary draft bill in 1963.
Adopting the Register's recommendation, it defined
"work [p*745] made for hire" asa work prepared by an
Page 92 of 307
employee within the scope of the duties of his
employment, but not including a work made on special
order or commission.
[23] In response to objections by book publishers that
the preliminary draft bill limited the work for hire
doctrine to "employees," [n11] the 1964 revision bill
expanded the scope of the work for hire classification to
reach, for the first time, commissioned works. The bill's
language, proposed initially by representatives of the
publishing industry, retained the definition of work for
hire insofar as it referred to "employees," but added a
separate clause covering commissioned works, without
regard to the subject matter, "if the parties so agree in
writing." S. 3008, H.R. 11947, H.R. 12354, 88th Cong.,
2d Sess., � 54 (1964), reproduced in 1964 Revision Bill
with Discussions and Comments, 89th Cong., 1st Sess.,
Copyright Law Revision, pt. 5, p. 31 (H.R. Judiciary
Comm. Print 1965). Those representing authors
objected that the added provision would allow
publishers to use their superior bargaining position to
force authors to sign work for hire agreements, [p*746]
thereby relinquishing all copyright rights as a condition
of getting their books published. See Supplementary
Report, at 67.
[24] In 1965, the competing interests reached an
historic compromise, which was embodied in a joint
memorandum submitted to Congress and the Copyright
Office, [n12] incorporated into the 1965 revision bill,
and ultimately enacted in the same form and nearly the
same terms 11 years later, as � 101 of the 1976 Act.
The compromise retained as subsection (1) the
language referring to "a work prepared by an employee
within the scope of his employment." However, in
exchange for concessions from publishers on provisions
relating to the termination of transfer rights, the authors
consented to a second subsection which classified four
categories of commissioned works as works for hire if
the parties expressly so agreed in writing: works for use
"as a contribution to a collective work, as a part of a
motion picture, as a translation, or as supplementary
work." S. 1006, H.R. 4347, H.R. 5680, H.R. 6835, 89th
Cong., 1st Sess., � 101 (1965). The interested parties
selected these categories because they concluded that
these commissioned works, although not prepared by
employees, and thus not covered by the first
subsection, nevertheless should be treated as works for
hire because they were ordinarily prepared "at the
instance, direction, and risk of a publisher or producer."
Supplementary Report, at 67. The Supplementary
Report emphasized that only the "four special cases
specifically mentioned" could qualify as works made for
hire; "[o]ther works made on special order or
commission would not come within the definition." Id. at
67-68. [p*747]
[25] In 1966, the House Committee on the Judiciary
endorsed this compromise in the first legislative report
on the revision bills. See H.R.Rep. No. 2237, 89th Cong.,
2d Sess., 114, 116 (1966). Retaining the distinction
between works by employees and commissioned works,
the House Committee focused instead on
how to draw a statutory line between those works
written on special order or commission that should be
considered as works made for hire, and those that
should not.Id. at 115. The House Committee added four
other enumerated categories of commissioned works
Page 93 of 307
that could be treated as works for hire: compilations,
instructional texts, tests, and atlases. Id. at 116. With
the single addition of "answer material for a test," the
1976 Act, as enacted, contained the same definition of
works made for hire as did the 1966 revision bill, and
had the same structure and nearly the same terms as
the 1966 bill. [n13] Indeed, much of the language of the
1976 House and Senate Reports was borrowed from the
Reports accompanying the earlier drafts. See,
e.g., H.R.Rep. No. 94-1476, p. 121 (1976); S.Rep. No. 94-
473, p. 105 (1975).
[26] Thus, the legislative history of the Act is significant
for several reasons. First, the enactment of the 1965
compromise with only minor modifications
demonstrates that Congress intended to provide two
mutually exclusive ways for works to acquire work for
hire status: one for employees and [p*748] the other for
independent contractors. Second, the legislative history
underscores the clear import of the statutory language:
only enumerated categories of commissioned works
may be accorded work for hire status. The hiring party's
right to control the product simply is not
determinative. See Note, The Creative Commissioner:
Commissioned Works Under the Copyright Act of 1976,
62 N.Y.U.L.Rev. 373, 388 (1987). Indeed, importing a
test based on a hiring party's right to control, or actual
control of, a product would unravel the "`carefully
worked-out compromise aimed at balancing legitimate
interests on both sides.'" H.R.Rep. No. 2237, supra, at
114, quoting Supplemental Report, at 66. [n14]
[27] We do not find convincing petitioners' contrary
interpretation of the history of the Act. They contend
that Congress, in enacting the Act, meant to incorporate
a line of cases decided under the 1909 Act holding that
an employment relationship exists sufficient to give the
hiring party copyright ownership whenever that party
has the right to control or supervise the artist's
work. See, e.g., Siegel v. National Periodical
Publications, Inc., 508 F.2d 909, 914 (CA2 1974); Picture
Music, Inc. v. Bourne, Inc., 457 F.2d 1213, 1216
(CA2), cert. denied, 409 U.S. 997 (1972); Scherr v.
Universal Match Corp., 417 F.2d 497, 500 (CA2
1969), cert. denied, 397 U.S. 936 (1970); Brattleboro
Publishing Co. v. Winmill Publishing Corp., 369 F.2d 565,
567-568 (CA2 1966). In support of this position,
petitioners note:
Nowhere in the 1976 Act or in the Act's legislative
history does Congress state that it intended to jettison
the control standard or otherwise to reject the pre-Act
judicial approach to identifying a [p*749] work for hire
employment relationship.
[28] We are unpersuaded. Ordinarily, "Congress' silence
is just that -- silence." Alaska Airlines, Inc. v. Brock, 480
U.S. 678, 686 (1987). Petitioners' reliance on legislative
silence is particularly misplaced here, because the text
and structure of � 101 counsel otherwise. See Bourjaily
v. United States, 483 U.S. 171, 178 (1987); Harrison v.
PPG Industries, Inc., 446 U.S. 578, 592
(1980). [n15] Furthermore, the structure of the work for
hire provisions was fully developed in 1965, and the text
was agreed upon in essentially final form by 1966. At
that time, however, the courts had applied the work for
hire doctrine under the 1909 Act exclusively to
traditional employees. Indeed, it was not until after the
Page 94 of 307
1965 compromise was forged and adopted by
Congress [n16] that a federal court for the first time
applied the work for hire doctrine to commissioned
works. See, e.g., Brattleboro Publishing Co., supra, at
567-568. Congress certainly could not have "jettisoned"
a line of cases that had not yet been decided.
[29] Finally, petitioners' construction of the work for hire
provisions would impede Congress' paramount goal in
revising the 1976 Act of enhancing predictability and
certainty of copyright ownership. SeeH.R.Rep. No. 94-
1476, supra, at 129. In a "copyright marketplace," the
parties negotiate with an expectation that one of them
will own the copyright in the completed
work. Dumas, 865 F.2d at 1104-1105, [p*750] n. 18.
With that expectation, the parties at the outset can
settle on relevant contractual terms, such as the price
for the work and the ownership of reproduction rights.
[30] To the extent that petitioners endorse an actual
control test, [n17] CCNV's construction of the work for
hire provisions prevents such planning. Because that
test turns on whether the hiring party has closely
monitored the production process, the parties would not
know until late in the process, if not until the work is
completed, whether a work will ultimately fall within �
101(1). Under petitioners' approach, therefore, parties
would have to predict in advance whether the hiring
party will sufficiently control a given work to make it the
author.If they guess incorrectly, their reliance on "work
for hire" or an assignment may give them a copyright
interest that they did not bargain for.Easter Seal
Society, 815 F.2d at 333; accord, Dumas, 865 F.2d at
1103. This understanding of the work for hire provisions
clearly thwarts Congress' goal of ensuring predictability
through advance planning. Moreover, petitioners'
interpretationleaves the door open for hiring parties,
who have failed to get a full assignment of copyright
rights from independent contractors falling outside the
subdivision (2) guidelines, to unilaterally obtain work-
made-for-hire rights years after the work has been
completed as long as they directed or supervised the
work, a standard that is hard not to meet when one is a
hiring party.
[31] In sum, we must reject petitioners' argument.
Transforming a commissioned work into a work by an
employee on the basis of the hiring party's right to
control, or actual control of, the work is inconsistent
with the language, structure, and legislative history of
the work for hire provisions. To [p*751] determine
whether a work is for hire under the Act, a court first
should ascertain, using principles of general common
law of agency, whether the work was prepared by an
employee or an independent contractor. After making
this determination, the court can apply the appropriate
subsection of � 101.
B
[32] We turn, finally, to an application of � 101 to Reid's
production of "Third World America." In determining
whether a hired party is an employee under the general
common law of agency, we consider the hiring party's
right to control the manner and means by which the
product is accomplished. [n18] Among the other factors
relevant to this inquiry are the skill required; [n19] the
source of the instrumentalities and tools; [n20] the
Page 95 of 307
location of the work; [n21] the duration of the
relationship between the parties; [n22] whether the
hiring party has the right to assign additional projects to
the hired party;[n23] the extent of the hired party's
discretion over when and how long to work; [n24] the
method of payment; [n25] the hired party's role in hiring
and [p*752] paying assistants; [n26] whether the work
is part of the regular business of the hiring
party; [n27] whether the hiring party is in
business; [n28] the provision of employee
benefits; [n29] and the tax treatment of the hired
party. [n30] See Restatement � 220(2) (setting forth a
nonexhaustive list of factors relevant to determining
whether a hired party is an employee). [n31] No one of
these factors is determinative. See Ward, 362 U.S. at
400; Hilton Int'l Co. v. NLRB, 690 F.2d 318, 321 (CA2
1982).
[33] Examining the circumstances of this case in light of
these factors, we agree with the Court of Appeals that
Reid was not an employee of CCNV, but an independent
contractor. 270 U.S.App.D.C. at 35, n. 11, 846 F.2d at
1494, n. 11. True, CCNV members directed enough of
Reid's work to ensure that he produced a sculpture that
met their specifications. 652 F.Supp. at 1456. But the
extent of control the hiring party exercises over the
details of the product is not dispositive. Indeed, all the
other circumstances weigh heavily against finding an
employment relationship. Reid is a sculptor, a skilled
occupation. Reid supplied his own tools. He worked in
his own studio in Baltimore, making daily supervision of
his activities from Washington practicably impossible.
Reid was retained for less than two months, a relatively
[p*753] short period of time. During and after this time,
CCNV had no right to assign additional projects to Reid.
Apart from the deadline for completing the sculpture,
Reid had absolute freedom to decide when and how
long to work. CCNV paid Reid $15,000, a sum
dependent on "completion of a specific job, a method by
which independent contractors are often
compensated." Holt v. Winpisinger, 258 U.S.App.D.C.
343, 351, 811 F.2d 1532, 1540 (1987). Reid had total
discretion in hiring and paying assistants. "Creating
sculptures was hardly `regular business' for CCNV." 270
U.S.App.D.C. at 35, n. 11, 846 F.2d at 1494, n. 11.
Indeed, CCNV is not a business at all. Finally, CCNV did
not pay payroll or Social Security taxes, provide any
employee benefits, or contribute to unemployment
insurance or workers' compensation funds.
[34] Because Reid was an independent contractor,
whether "Third World America" is a work for hire
depends on whether it satisfies the terms of � 101(2).
This petitioners concede it cannot do. Thus, CCNV is not
the author of "Third World America" by virtue of the
work for hire provisions of the Act. However, as the
Court of Appeals made clear, CCNV nevertheless may
be a joint author of the sculpture if, on remand, the
District Court determines that CCNV and Reid prepared
the work "with the intention that their contributions be
merged into inseparable or interdependent parts of a
unitary whole." 17 U.S.C. � 101. [n32] In that case,
CCNV and Reid would be co-owners of the copyright in
the work. See � 201(a).
[35] For the aforestated reasons, we affirm the
judgment of the Court of Appeals for the District of
Columbia Circuit.
Page 96 of 307

[36] It is so ordered.
Transfer of Copyright Ownership
Secs. 180 to 183, 200 & 201
Section 180. Rights of Assignee. - 180.1. The copyright
may be assigned in whole or in part. Within the scope of
the assignment, the assignee is entitled to all the rights
and remedies which the assignor had with respect to
the copyright.
180.2. The copyright is not deemed assigned inter vivos
in whole or in part unless there is a written indication of
such intention.
180.3. The submission of a literary, photographic or
artistic work to a newspaper, magazine or periodical for
publication shall constitute only a license to make a
single publication unless a greater right is expressly
granted. If two (2) or more persons jointly own a
copyright or any part thereof, neither of the owners
shall be entitled to grant licenses without the prior
written consent of the other owner or owners. (Sec. 15,
P.D. No. 49a)
Section 181. Copyright and Material Object. - The
copyright is distinct from the property in the material
object subject to it. Consequently, the transfer or
assignment of the copyright shall not itself constitute a
transfer of the material object. Nor shall a transfer or
assignment of the sole copy or of one or several copies
of the work imply transfer or assignment of the
copyright. (Sec. 16, P.D. No. 49)
Section 182. Filing of Assignment or License. - An
assignment or exclusive license may be filed in
duplicate with the National Library upon payment of the
prescribed fee for registration in books and records kept
for the purpose. Upon recording, a copy of the
instrument shall be returned to the sender with a
notation of the fact of record. Notice of the record shall
be published in the IPO Gazette. (Sec. 19, P.D. No. 49a)
Section 183. Designation of Society. - The copyright
owners or their heirs may designate a society of artists,
writers or composers to enforce their economic rights
and moral rights on their behalf. (Sec. 32, P.D. No. 49a)
Section 200. Sale or Lease of Work. - In every sale or
lease of an original work of painting or sculpture or of
the original manuscript of a writer or composer,
subsequent to the first disposition thereof by the author,
the author or his heirs shall have an inalienable right to
participate in the gross proceeds of the sale or lease to
the extent of five percent (5%). This right shall exist
during the lifetime of the author and for fifty (50) years
after his death. (Sec. 31, P.D. No. 49)
Section 201. Works Not Covered. - The provisions of this
Chapter shall not apply to prints, etchings, engravings,
works of applied art, or works of similar kind wherein
the author primarily derives gain from the proceeds of
reproductions. (Sec. 33, P.D. No. 49)
First Sale Doctrine
Page 97 of 307
 1. Bobbs-Merill vs. Strauss, 210 U.S. 339
Doctrine: There are differences between the patent and
the copyright statutes in the extent of the protection granted
by them, and the rights of a patentee are not necessarily to
be applied by analogy to those claiming under copyright.
At common law, an author had a property in his
manuscript, and might have redress against anyone
undertaking to publish it without his authority.
Copyright property under the federal law is wholly
statutory, and depends upon the rights created under
acts of Congress passed in pursuance of authority
conferred by § 8 of Art. I of the federal Constitution.
The copyright statutes are to be reasonably construed.
They will not by judicial construction either be unduly
extended to include privileges not intended to be
conferred nor so narrowed as to exclude those benefits
that Congress did intend to confer.
The sole right to vend granted by § 4952, Rev.Stat.,
does not secure to the owner of the copyright the right
to qualify future sales by his vendee or to limit or
restrict such future sales at a specified price, and a
notice in the book that a sale at a different price will be
treated as an infringement is ineffectual as against one
not bound by contract or license agreement.
Original:
The complainant in the circuit court, appellant here, the
Bobbs-Merrill Company, brought suit against the
respondents, appellees here, Isidor Straus and Nathan
Straus, partners as R. H. Macy & Company, in the Circuit
Court of the United States for the Southern District of
New York to restrain the sale of a copyrighted novel,
entitled "The Castaway," at retail at less than $1 for
each copy. The circuit court dismissed the bill on final
hearing. 139 F. 155. The decree of the circuit court was
affirmed on appeal by the circuit court of appeals, 147 F.
15.
The appellant is the owner of the copyright upon "The
Castaway," obtained on the eighteenth day of May,
1904, in conformity to the copyright statutes of the
United States. Printed immediately below the copyright
notice, on the page in the book following the title page,
is inserted the following notice:
"The price of this book at retail is one dollar net. No
dealer is licensed to sell it at a less price, and a sale at a
less price will be treated as an infringement of the
copyright."
"The Bobbs-Merrill Company"
Macy & Company, before the commencement of the
action, purchased copies of the book for the purpose of
selling the same at retail. Ninety percent of such copies
were purchased by them at wholesale at a price below
the retail price by about forty percent, and ten percent
of the books purchased by them were purchased at
retail, and the full price paid therefor.
It is stipulated in the record:
Page 98 of 307
Defendants at the time of their purchase of copies of
the book, knew that it was a copyrighted book, and
were familiar with the terms of the notice printed in
each copy thereof, as above set forth, and knew that
this notice was printed in every copy of the book
purchased by them.
The wholesale dealers from whom defendants
purchased copies of the book obtained the same either
directly from the complainant or from other wholesale
dealers at a discount from the net retail price, and at
the time of their purchase knew that the book was a
copyrighted book, and were familiar with the terms of
the notice printed in each copy thereof, as described
above, and such knowledge was in all wholesale dealers
through whom the books passed from the complainants
to defendants. But the wholesale dealers were under no
agreement or obligation to enforce the observance of
the terms of the notice by retail dealers, or to restrict
their sales to retail dealers who would agree to observe
the terms stated in the notice.
The defendants have sold copies of the book at retail at
the uniform price of eighty-nine cents a copy, and are
still selling, exposing for sale, and offering copies of the
book at retail at the price of eighty-nine cents per copy,
without the consent of the complainant.
Much of the argument on behalf of the appellant is
based upon the alleged analogy between the statutes of
the United States securing patent rights to inventors,
and the copyright acts, securing rights and privileges to
authors and others. And this analogy, it is contended, is
so complete that decisions under the patent statutes in
respect to the rights claimed in this suit under the
copyright act are necessarily controlling.
In the main brief submitted by the learned counsel for
the appellant, it is said:
"All of the argument has been upon the assumption that
the very numerous decisions of the circuit courts and
circuit courts of appeals, such as the Heaton-
Peninsular case [Button-Fastener case], 77 F. 288,
the Victor Talking Machine case, 123 F. 424, and others
along the same line, as well as the Cotton Tie case in
this Court, upholding this restriction, with reference to
sales of patented articles, express the law, and we have
been especially confident that such must be the case,
for the reason that this Court, in Bement v. National
Harrow Company, 186 U. S. 70, has given its sanction to
the broad doctrines laid down in the Heaton-
Peninsular case, 77 F. 288."
The present case involves rights under the copyright
act. The facts disclose a sale of a book at wholesale by
the owners of the copyright at a satisfactory price, and
this without agreement between the parties to such sale
obligating the purchaser to control future sales, and
where the alleged right springs from the protection of
the copyright law alone. It is contended that this power
to control further sales is given by statute to the owner
of such a copyright in conferring the sole right to "vend"
a copyrighted book.
A case such as the present one, concerning inventions
protected by letters patent of the United States, has not
been decided in this Court, so far as we are able to
Page 99 of 307
discover. In the so-called "Cotton Tie case" (Cotton Tie
Co. v. Simmons, 106 U. S. 89), the complainant
company owned patents for improvements in metallic
cotton-bale ties, and these cotton-bale ties were
manufactured by the patentee, and stamped in the
buckles were the words: "Licensed to use once only."
After the bands had been severed at the cotton mill, the
respondent bought them and the buckles as scrap iron,
rolled and straightened the pieces of the bands, and
riveted their ends together. He then cut them into
proper lengths and sold them, with the buckles, to be
used as ties.
The report of this case in the Circuit Court for the
District of Rhode Island is found in 3 Banning & Arden
320, 1 Fed.Cas. No. 293, p. 623. The report shows that
Judge Shepley dismissed the bill on the ground that the
attempted restriction to a single use by the words
stamped on the buckle was not one which the patentee
was entitled to impose, as the sale of the patented
article, as an ordinary article of commerce, had taken it
outside of the limits of the patent monopoly, and that
the purchaser took unrestricted title to the buckle,
without any reservation in the vendor. This Court
reversed that decision, holding that the reconstructed
ties were not a repair of the old article, but a recreation
of the subject of the patent, and therefore an
infringement. Mr. Justice Blatchford, in delivering the
opinion of the court, said:
"Whatever right the defendants could acquire to the use
of the old buckle, they acquired no right to combine it
with a substantially new band, to make a cotton-bale
tie. They so combined it when they combined it with a
band made of the pieces of the old band in the way
described. What the defendants did in piecing together
the pieces of the old band was not a repair of the band
or the tie, in any proper sense. The band was voluntarily
severed by the consumer at the cotton mill, because the
tie had performed its function of confining the bale of
cotton in its transit from the plantation or the press to
the mill. Its capacity for use as a tie was voluntarily
destroyed. As it left the bale, it could not be used again
as a tie. As a tie the defendants reconstructed it,
although they used the old buckle without repairing
that."
That the case was not decided as one of restricted
license, because of the words stamped on the buckle, is
shown by the language of Mr. Justice Blatchford, in
concluding his opinion:
"We do not decide that they are liable as infringers of
either of the three patents merely because they have
sold the buckle considered apart from the band or from
the entire structure as a tie."
We cannot agree that any different view of the Cotton
Tie case was indicated in the comments of the learned
justice, speaking for this Court, in Morgan Envelope Co.
v. Albany Paper Co., 152 U. S. 425, 152 U. S. 433. What
was there said in connection with the quotation from the
opinion of Mr. Justice Blatchford in the Cotton Tie case
enforces the view that the case was one of infringement
because of the reconstruction of the patented device.
In Bement v. National Harrow Co., 186 U. S. 70, the suit
was between the owners of the letters patent as
Page 100 of 307
licensor and licensees, seeking to enforce a contract as
to the price and terms on which the patented article
might be dealt with by the licensee. The case did not
involve facts such as in the case now before us, and
concerned a contract of license sued upon in the state
court, and, of course, does not dispose of the questions
to be decided in this case.
The question was supposed to be involved in the recent
case of Cortelyou v. Johnson, 207 U. S. 196, where a
patented machine, known as the Neostyle, was sold
with a license, printed on the baseboard of the machine,
limiting the use thereof to certain paper, ink, and other
supplies, made by the Neostyle company. While the
question as to the validity of such license restriction was
fully and ably argued by counsel, the case went off upon
the finding that notice of the license restriction was not
brought home to the defendant company.
If we were to follow the course taken in the argument,
and discuss the rights of a patentee, under letters
patent, and then, by analogy, apply the conclusions to
copyrights, we might greatly embarrass the
consideration of a case under letters patent, when one
of that character shall be presented to this Court.
We may say in passing, disclaiming any intention to
indicate our views as to what would be the rights of
parties in circumstances similar to the present case
under the patent laws, that there are differences
between the patent and copyright statutes in the extent
of the protection granted by them. This was recognized
by Judge Lurton, who wrote a leading case on the
subject in the federal courts (The Button Fastener case,
supra), for he said in the subsequent case ofPark &
Sons Co. v. Hartman, 153 F. 24:
"There are such wide differences between the right of
multiplying and vending copies of a production
protected by the copyright statute and the rights
secured to an inventor under the patent statutes that
the cases which relate to the one subject are not
altogether controlling as to the other."
We therefore approach the consideration of this
question as a new one in this Court, and one that
involves the extent of the protection which is given by
the copyright statutes of the United States to the owner
of a copyright under the facts disclosed in this record.
Recent cases in this Court have affirmed the proposition
that copyright property under the federal law is wholly
statutory, and depends upon the right created under the
acts of Congress passed in pursuance of the authority
conferred under Article I, § 8, of the federal Constitution:
"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 learned counsel for the appellant in this case, in the
argument at bar, disclaims relief because of any
contract, and relies solely upon the copyright statutes,
and rights therein conferred. The copyright statutes
ought to be reasonably construed with a view to
effecting the purposes intended by Congress. They
ought not to be unduly extended by judicial construction
to include privileges not intended to be conferred, nor
Page 101 of 307
so narrowly construed as to deprive those entitled to
their benefit of the rights Congress intended to grant.
At common law, an author had a property in his
manuscript, and might have redress against anyone
who undertook to realize a profit from its publication
without authority of the author. Wheaton v. Peters, 8
Pet. 591, 33 U. S. 659.
In Drone on Copyright, that author says, page 100:
"As the law is now expounded, there are important
differencesbetween the statutory and the common law
light. The former exists only in works which have been
published within the meaning of the statute, and the
latter only in works which have not been so published.
In the former case, ownership is limited to a term of
years; in the latter, it is perpetual. The rights do not
coexist in the same composition; when the statutory
right begins, the common law right ends. Both may be
defeated by publication. Thus, when a work is published
in print, the owner's common law rights are lost, and,
unless the publication be in accordance with the
requirements of the statute, the statutory right is not
secured."
While the nature of the property and the protection
intended to be given the inventor or author as the
reward of genius or intellect in the production of his
book or work of art is to be considered in construing the
act of Congress, it is evident that to secure the author
the right to multiply copies of his work may be said to
have been the main purpose of the copyright statutes.
Speaking for this Court in Stephens v. Cady, 14 How.
528, 55 U. S. 530, Mr. Justice Nelson said:
"The copyright is an exclusive right to the multiplication
of the copies, for the benefit of the author or his
assigns, disconnected from the plate, or any other
physical existence. It is an incorporeal right to print and
publish the map, or, as said by Lord Mansfield in Millar
v. Taylor, 4 Burr. 2396, 'a property in notion, and has no
corporeal, tangible substance.'"
This fact is emphasized when we note the title to the act
of Congress, passed at its first session:
"An Act for the Encouragement of Learning, by Securing
the Copies of Maps, Charts, and Books, to the Authors
and Proprietors of Such Copies, during the Times
Therein Mentioned."
In order to secure this right, it was provided in that
statute, as it has been in subsequent ones, that the
authors of books, their executors, administrators, or
assigns, shall have the "sole right and liberty of printing,
reprinting, publishing, and vending" such book for a
term of years, upon complying with the statutory
conditions set forth in the act as essential to the
acquiring of a valid copyright. Each and all of these
statutory rights should be given such protection as the
act of Congress requires, in order to secure the rights
conferred upon authors and others entitled to the
benefit of the act. Let us see more specifically what are
the statutory rights, in this behalf, secured to one who
has complied with the provisions of the law and become
the owner of a copyright. They may be found in §§ 4952,
Page 102 of 307
4965, and 4970 of the Revised Statutes of the United
States, and are as follows:
"SEC. 4952. Any citizen of the United States or resident
therein, who shall be the author, inventor, designer, or
proprietor of any book, map, chart, dramatic or musical
composition, engraving, cut, print, or photograph or
negative thereof, or of a painting, drawing, chromo,
statute, statuary, and of models or designs intended to
be perfected as works of the fine arts, and the
executors, administrators, or assigns of any such
person, shall, upon complying with the provisions of this
chapter, have the sole liberty of printing, reprinting,
publishing, completing, copying, executing, finishing,
and vending the same."
"SEC. 4965. If any person, after the recording of the title
of any map, chart, musical composition, print, cut,
engraving, or photograph, or chromo, or of the
description of any painting, drawing, statue, statuary, or
model or design intended to be perfected and executed
as a work of the fine arts, as provided by this chapter,
shall, within the term limited, and without the consent
of the proprietor of the copyright first obtained in
writing, signed in presence of two or more witnesses,
engrave, etch, work, copy, print, publish, or import,
either in whole or in part, or by varying the main design
with intent to evade the law, or, knowing the same to be
so printed, published, or imported, shall sell or expose
to sale any copy of such map or other article, as
aforesaid, he shall forfeit to the proprietor all the plates
on which the same shall be copied, and every sheet
thereof, either copied or printed, and shall further
forfeitone dollar for every sheet of the same found in his
possession, either printing, printed, copied, published,
imported, or exposed for sale, and in case of a painting,
statute, or statuary, he shall forfeit ten dollars for every
copy of the same in his possession, or by him sold or
exposed for sale, one-half thereof to the proprietor and
the other half to the use of the United States."
Section 4970 is as follows:
"The circuit courts, and district courts having the
jurisdiction of circuit courts, shall have power, upon bill
in equity filed by any party aggrieved, to grant
injunctions to prevent the violation of any right secured
by the laws respecting copyrights, according to the
course and principles of courts of equity, on such terms
as the court may deem reasonable."
Section 4965 undertakes to work a forfeiture of
copyrighted articles, and confers a right of action for a
penalty. Relief is given in a single suit, one-half of the
money recovered going to the United
States. Werckmeister v. American Tobacco Co.,207 U. S.
375.
As this is a suit in equity for relief under § 4970 of the
U.S. Revised Statutes, giving to the circuit and district
courts of the United States the right to grant relief by
injunctions to prevent the violation of rights secured by
the copyright statutes, we are not concerned with rights
and remedies under § 4965.
It is the contention of the appellant that the circuit court
erred in failing to give effect to the provision of § 4952,
protecting the owners of the copyright in the sole right
of vending the copyrighted book or other article, and
Page 103 of 307
the argument is that the statute vested the whole field
of the right of exclusive sale in the copyright owner;
that he can part with it to another to the extent that he
sees fit, and may withhold to himself, by proper
reservations, so much of the right as he pleases.
What does the statute mean in granting "the sole right
of vending the same?" Was it intended to create a right
which would permit the holder of the copyright to
fasten, by notice in a book or upon one of the articles
mentioned within the statute, a restriction upon the
subsequent alienation of the subject matter of copyright
after the owner had parted with the title to one who had
acquired full dominion over it and had given a
satisfactory price for it? It is not denied that one who
has sold a copyrighted article, without restriction, has
parted with all right to control the sale of it. The
purchaser of a book, once sold by authority of the owner
of the copyright, may sell it again, although he could not
publish a new edition of it.
In this case, the stipulated facts show that the books
sold by the appellant were sold at wholesale, and
purchased by those who made no agreement as to the
control of future sales of the book, and took upon
themselves no obligation to enforce the notice printed
in the book, undertaking to restrict retail sales to a price
of one dollar per copy.
The precise question therefore in this case is, does the
sole right to vend (named in § 4952) secure to the
owner of the copyright the right, after a sale of the book
to a purchaser, to restrict future sales of the book at
retail, to the right to sell it at a certain price per copy,
because of a notice in the book that a sale at a different
price will be treated as an infringement, which notice
has been brought home to one undertaking to sell for
less than the named sum? We do not think the statute
can be given such a construction, and it is to be
remembered that this is purely a question of statutory
construction. There is no claim in this case of contract
limitation, nor license agreement controlling the
subsequent sales of the book.
In our view, the copyright statutes, while protecting the
owner of the copyright in his right to multiply and sell
his production, do not create the right to impose, by
notice, such as is disclosed in this case, a limitation at
which the book shall be sold at retail by future
purchasers, with whom there is no privity of contract.
This conclusion is reached in view of the language of the
statute, read in the light of its main purpose to secure
the right of multiplying copies of the work -- a right
which is the special creation of the statute. True, the
statute also secures, to make this right of multiplication
effectual, the sole right to vend copies of the book, the
production of the author's thought and conception. The
owner of the copyright in this case did sell copies of the
book in quantities and at a price satisfactory to it. It has
exercised the right to vend. What the complainant
contends for embraces not only the right to sell the
copies, but to qualify the title of a future purchaser by
the reservation of the right to have the remedies of the
statute against an infringer because of the printed
notice of its purpose so to do unless the purchaser sells
at a price fixed in the notice. To add to the right of
exclusive sale the authority to control all future retail
sales by a notice that such sales must be made at a
Page 104 of 307
fixed sum would give a right not included in the terms of
the statute, and, in our view, extend its operation, by
construction, beyond its meaning, when interpreted with
a view to ascertaining the legislative intent in its
enactment.
This conclusion renders it unnecessary to discuss other
questions noticed in the opinion in the circuit court of
appeals, or to examine into the validity of the
publisher's agreements, alleged to be in violation of the
acts to restrain combinations creating a monopoly or
directly tending to the restraint of trade.
The decree of the circuit court of appeals isAffirmed.
Economic Rights of Copyright
Sec. 177
Section 177. Copyright 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,
abridgment, 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 a copy of the
work;
177.6. Public performance of the work; and
177.7. Other communication to the public of the work.
(Sec. 5, P. D. No. 49a)
Limitations
Sec. 184
Section 184. Limitations on Copyright. - 184.1.
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
Page 105 of 307
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. No. 49)
(c) The reproduction or communication to the public by
mass media of articles on current political, social,
economic, scientific or religious topic, lectures,
addresses and other works of the same nature, which
are delivered in public if such use is for information
purposes and has not been expressly reserved:
Provided, That the source is clearly indicated; (Sec. 11,
P.D. No. 49)
(d) The reproduction and communication to the public of
literary, scientific or artistic works as part of reports of
current events by means of photography,
cinematography or broadcasting to the extent
necessary for the purpose; (Sec. 12, P.D. No. 49)
(e) The inclusion of a work in a publication, broadcast,
or other communication to the public, sound recording
or film, if such inclusion is made by way of illustration
for teaching purposes and is compatible with fair use:
Provided, That the source and of the name of the
author, if appearing in the work, are mentioned;
(f) The recording made in schools, universities, or
educational institutions of a work included in a
broadcast for the use of such schools, universities or
educational institutions: Provided, That such recording
must be deleted within a reasonable period after they
were first broadcast: Provided, further, That such
recording may not be made from audiovisual works
which are part of the general cinema repertoire of
feature films except for brief excerpts of the work;
(g) The making of ephemeral recordings by a
broadcasting organization by means of its own facilities
and for use in its own broadcast;
(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;
(i) The public performance or the communication to the
public of a work, in a place where no admission fee is
charged in respect of such public performance or
communication, by a club or institution for charitable or
educational purpose only, whose aim is not profit
making, subject to such other limitations as may be
provided in the Regulations; (n)
(j) Public display of the original or a copy of the work not
made by means of a film, slide, television image or
otherwise on screen or by means of any other device or
process: Provided, That either the work has been
published, or, that the original or the copy displayed has
been sold, given away or otherwise transferred to
another person by the author or his successor in title;
and
(k) Any use made of a work for the purpose of any
judicial proceedings or for the giving of professional
advice by a legal practitioner.
Page 106 of 307
184.2. The provisions of this section shall be interpreted
in such a way as to allow the work to be used in a
manner which does not conflict with the normal
exploitation of the work and does not unreasonably
prejudice the right holder's legitimate interests.
Parody & Free Speech
1. Campbell v. Acuff-Rose Music, Inc. 510 U.S.
569
Case Digest10:
Facts: Acuff-Rose Music, Inc. sued 2 Live Crew
and their record company, claiming that 2 Live
Crew's song "Pretty Woman" infringed Acuff-
Rose's copyright in Roy Orbison's "Oh, Pretty
Woman." The District Court granted summary
judgment for 2 Live Crew, holding that its song
was a parody that made fair use of the original
song. In reversing, the Court of Appeals held that
the commercial nature of the parody rendered it
presumptively unfair.
Issue: May 2 Live Crew's commercial parody of
Roy Orbison's "Oh, Pretty Woman" be a fair use
within the meaning of the Copyright Act of 1976?
Held: Yes. In a unanimous opinion delivered by
Justice David H. Souter, the Court held that a
parody's commercial character is only one
10"Campbell v. Acuff-Rose Music, Inc.." Oyez. Chicago-Kent College of Law at Illinois
Tech, n.d. Aug 24, 2016. <https://www.oyez.org/cases/1993/92-1292>
element to be weighed in a fair use enquiry and
that insufficient consideration was given to the
nature of parody in weighing the degree of
copying. The Court found that the Court of
Appeals erred in applying the presumption that
the commercial nature of the parody rendered it
presumptively unfair, as no such evidentiary
presumption was available to address either the
character and purpose of the use or the market
harm. Justice Souter wrote that the appellate
court "erred in holding that 2 Live Crew had
necessarily copied excessively from the Orbison
original, considering the parodic purpose of the
use." Justice Anthony M. Kennedy filed a
concurring opinion.
Original:
Respondent Acuff-Rose Music, Inc., filed suit against
petitioners, the members of the rap music group 2 Live
Crew and their record company, claiming that 2 Live
Crew's song, "Pretty Woman," infringed Acuff-Rose's
copyright in Roy Orbison's rock ballad, "Oh Pretty
Woman." The District Court granted summary judgment
for 2 Live Crew, holding that its song was a parody that
made fair use of the original song. See Copyright Act of
1976, 17 U.S.C. 107. The Court of Appeals reversed and
remanded, holding that the commercial nature of the
parody rendered it presumptively unfair under the first
of four factors relevant under 107; that, by taking the
"heart" of the original and making it the "heart" of a
new work, 2 Live Crew had, qualitatively, taken too
much under the third 107 factor; and that market harm
for purposes of the fourth 107 factor had been
Page 107 of 307
established by a presumption attaching to commercial
uses.
Held:
2 Live Crew's commercial parody may be a fair use
within the meaning of 107.
(a) Section 107, which provides that "the fair use of a
copyrighted work . . . for purposes such as criticism [or]
comment . . . is not an infringement . . .," continues the
common law tradition of fair use adjudication, and
requires case-by-case analysis, rather than bright-line
rules. The statutory examples of permissible uses
provide only general guidance. The four statutory
factors are to be explored and weighed together in light
of copyright's purpose of promoting science and the
arts.
(b) Parody, like other comment and criticism, may claim
fair use. Under the first of the four 107 factors, "the
purpose and Page II character of the use, including
whether such use is of a commercial nature . . .," the
enquiry focuses on whether the new work merely
supersedes the objects of the original creation, or
whether and to what extent it is "transformative,"
altering the original with new expression, meaning, or
message. The more transformative the new work, the
less will be the significance of other factors, like
commercialism, that may weigh against a finding of fair
use. The heart of any parodist's claim to quote from
existing material is the use of some elements of a prior
author's composition to create a new one that, at least
in part, comments on that author's work. But that tells
courts little about where to draw the line. Thus, like
other uses, parody has to work its way through the
relevant factors.
(c) The Court of Appeals properly assumed that 2 Live
Crew's song contains parody commenting on and
criticizing the original work, but erred in giving virtually
dispositive weight to the commercial nature of that
parody by way of a presumption, ostensibly culled from
Sony Corp. of America v. Universal City Studios, Inc.,464
U.S. 417, 451 , that "every commercial use of
copyrighted material is presumptively . . . unfair. . . ."
The statute makes clear that a work's commercial
nature is only one element of the first factor enquiry
into its purpose and character, and Sony itself called for
no hard evidentiary presumption. The Court of Appeals'
rule runs counter to Sony and to the long common law
tradition of fair use adjudication.
(d) The second 107 factor, "the nature of the
copyrighted work," is not much help in resolving this
and other parody cases, since parodies almost
invariably copy publicly known, expressive works, like
the Orbison song here.
(e) The Court of Appeals erred in holding that, as a
matter of law, 2 Live Crew copied excessively from the
Orbison original under the third 107 factor, which asks
whether "the amount and substantiality of the portion
used in relation to the copyrighted work as a whole" are
reasonable in relation to the copying's purpose. Even if
2 Live Crew's copying of the original's first line of lyrics
and characteristic opening bass riff may be said to go to
the original's "heart," that heart is what most readily
Page 108 of 307
conjures up the song for parody, and it is the heart at
which parody takes aim. Moreover, 2 Live Crew
thereafter departed markedly from the Orbison lyrics
and produced otherwise distinctive music. As to the
lyrics, the copying was not excessive in relation to the
song's parodic purpose. As to the music, this Court
expresses no opinion whether repetition of the bass riff
is excessive copying, but remands to permit evaluation
of the amount taken, in light of the Page III song's
parodic purpose and character, its transformative
elements, and considerations of the potential for market
substitution.
(f) The Court of Appeals erred in resolving the fourth
107 factor, "the effect of the use upon the potential
market for or value of the copyrighted work," by
presuming, in reliance on Sony, supra, at 451, the
likelihood of significant market harm based on 2 Live
Crew's use for commercial gain. No "presumption" or
inference of market harm that might find support in
Sony is applicable to a case involving something beyond
mere duplication for commercial purposes. The
cognizable harm is market substitution, not any harm
from criticism. As to parody pure and simple, it is
unlikely that the work will act as a substitute for the
original, since the two works usually serve different
market functions. The fourth factor requires courts also
to consider the potential market for derivative works.
See, e. g., Harper & Row, supra, at 568. If the later work
has cognizable substitution effects in protectable
markets for derivative works, the law will look beyond
the criticism to the work's other elements. 2 Live Crew's
song comprises not only parody, but also rap music. The
absence of evidence or affidavits addressing the effect
of 2 Live Crew's song on the derivative market for a
nonparody, rap version of "Oh, Pretty Woman"
disentitled 2 Live Crew, as the proponent of the
affirmative defense of fair use, to summary judgment.
Pp. 20-25.
JUSTICE SOUTER delivered the opinion of the Court.
We are called upon to decide whether 2 Live Crew's
commercial parody of Roy Orbison's song, "Oh, Pretty
Woman," may be a fair use within the meaning of the
Copyright Act of 1976, 17 U.S.C. 107 (1988 ed. and
Supp. IV). Although the District Court granted summary
judgment for 2 Live Crew, the Court of Appeals
reversed, holding the defense of fair use barred by the
song's commercial character and excessive borrowing.
Because we hold that a parody's commercial character
is only one element to be weighed in a fair use enquiry,
and that insufficient consideration was given to the
nature of parody in weighing the degree of copying, we
reverse and remand.
I
In 1964, Roy Orbison and William Dees wrote a rock
ballad called "Oh, Pretty Woman" and assigned their
rights in it to respondent Acuff-Rose Music, Inc. See
Appendix A, infra, at 26. Acuff-Rose registered the song
for copyright protection.
Petitioners Luther R. Campbell, Christopher Wongwon,
Mark Ross, and David Hobbs, are collectively known as [
CAMPBELL v. ACUFF-ROSE MUSIC, INC., ___ U.S. ___
(1994) , 2] 2 Live Crew, a popular rap music group. 1 In
Page 109 of 307
1989, Campbell wrote a song entitled "Pretty Woman,"
which he later described in an affidavit as intended,
"through comical lyrics, to satirize the original
work. . . ." App. to Pet. for Cert. 80a. On July 5, 1989, 2
Live Crew's manager informed Acuff-Rose that 2 Live
Crew had written a parody of "Oh, Pretty Woman," that
they would afford all credit for ownership and authorship
of the original song to Acuff-Rose, Dees, and Orbison,
and that they were willing to pay a fee for the use they
wished to make of it. Enclosed with the letter were a
copy of the lyrics and a recording of 2 Live Crew's song.
See Appendix B, infra, at 27. Acuff-Rose's agent refused
permission, stating that "I am aware of the success
enjoyed by `The 2 Live Crews', but I must inform you
that we cannot permit the use of a parody of `Oh, Pretty
Woman.'" Nonetheless, in June or July, 1989, 2 2 Live
Crew released records, cassette tapes, and compact
discs of "Pretty Woman" in a collection of songs entitled
"As Clean As They Wanna Be." The albums and compact
discs identify the authors of "Pretty Woman" as Orbison
and Dees and its publisher as Acuff-Rose.
Almost a year later, after nearly a quarter of a
millioncopies of the recording had been sold, Acuff-Rose
sued 2 Live Crew and its record company, Luke
Skyywalker Records, for copyright infringement. The
District Court granted summary judgment for 2 Live
Crew, 3 reasoning that the commercial purpose of 2 Live
Crew's song was no bar to fair use; that 2 Live Crew's
version was a parody, which "quickly degenerates into a
play on words, substituting predictable lyrics with
shocking ones" to show "how bland and banal the
Orbison song" is; that 2 Live Crew had taken no more
than was necessary to "conjure up" the original in order
to parody it; and that it was "extremely unlikely that 2
Live Crew's song could adversely affect the market for
the original." The District Court weighed these factors
and held that 2 Live Crew's song made fair use of
Orbison's original. Id., at 1158-1159.
The Court of Appeals for the Sixth Circuit reversed and
remanded. 972 F.2d 1429, 1439 (1992). Although it
assumed for the purpose of its opinion that 2 Live
Crew's song was a parody of the Orbison original, the
Court of Appeals thought the District Court had put too
little emphasis on the fact that "every commercial
use . . . is presumptively . . . unfair," Sony Corp. of
America v. Universal City Studios, Inc., 464 U.S. 417,
451 (1984), and it held that "the admittedly commercial
nature" of the parody "requires the conclusion" that the
first of four factors relevant under the statute weighs
against a finding of fair use. 972 F.2d, at 1435, 1437.
Next, the Court of Appeals determined that, by "taking
the heart of the original and making it the heart of a
new work," 2 Live Crew had, qualitatively, taken too
much. Id., at 1438. Finally, after noting that the
effect on the potential market for the original (and the
market for derivative works) is "undoubtedly the single
most important element of fair use," Harper & Row,
Publishers, Inc. v. Nation Enterprises, 471 U.S. 539,
566 (1985), the Court of Appeals faulted the District
Court for "refus[ing] to indulge the presumption" that
"harm for purposes of the fair use analysis has been
established by the presumption attaching to commercial
uses." 972 F.2d, at 1438-1439. In sum, the court
concluded that its "blatantly commercial purpose . . .
prevents this parody from being a fair use." Id., at 1439.
Page 110 of 307
We granted certiorari, 507 U.S. ___ (1993), to determine
whether 2 Live Crew's commercial parody could be a
fair use.
II
It is uncontested here that 2 Live Crew's song would be
an infringement of Acuff-Rose's rights in "Oh, Pretty
Woman," under the Copyright Act of 1976, 17 U.S.C. 106
(1988 ed. and Supp. IV), but for a finding of fair use
through parody. 4 From the infancy of
copyright protection, some opportunity for fair use of
copyrighted materials has been thought necessary to
fulfill copyright's very purpose, "[t]o promote the
Progress of Science and useful Arts. . . ." U.S. Const.,
Art. I, 8, cl. 8. 5 For as Justice Story explained, "[i]n
truth, in literature, in science and in art, there are, and
can be, few, if any, things, which in an abstract sense,
are strictly new and original throughout. Every book in
literature, science and art, borrows, and must
necessarily borrow, and use much which was well
known and used before." Emerson v. Davies, 8 F.Cas.
615, 619 (No. 4,436) (CCD Mass. 1845). Similarly, Lord
Ellenborough expressed the inherent tension in the
need simultaneously to protect copyrighted material
and to allow others to build upon it when he wrote,
"while I shall think myself bound to secure every man in
the enjoyment of his copyright, one must not put
manacles upon science." In copyright cases brought
under the Statute of Anne of 1710, 6 English courts held
that in some instances "fair abridgements" would not
infringe an author's rights, and although the First
Congress enacted our initial copyright statute, Act of
May 31, 1790, 1 Stat. 124, without any explicit
reference to "fair use," as it later came to be
known, 7 the doctrine was recognized by the American
courts nonetheless.
In Folsom v. Marsh, Justice Story distilled the essence of
law and methodology from the earlier cases: "look to
the nature and objects of the selections made, the
quantity and value of the materials used, and the
degree in which the use may prejudice the sale, or
diminish the profits, or supersede the objects, of the
original work." Thus expressed, fair use remained
exclusively judge-made doctrine until the passage of the
1976 Copyright Act, in which Story's summary is
discernible:
"107. Limitations on exclusive rights: Fair use
"Notwithstanding the provisions of sections 106 and
106A, the fair use of a copyrighted work, including such
use by reproduction in copies or phonorecords or by any
other means specified by that section, for purposes
such as criticism, comment, news reporting, teaching
(including multiple copies for classroom use),
scholarship, or research, is not an infringement of
copyright. In determining whether the use made of a
work in any particular case is a fair use the factors to be
considered shall include –
"(1) the purpose and character of the use, including
whether such use is of a commercial nature or is for
nonprofit educational purposes;
"(2) the nature of the copyrighted work;
"(3) the amount and substantiality of the portion used in
relation to the copyrighted work as a whole; and
Page 111 of 307
"(4) the effect of the use upon the potential market for
or value of the copyrighted work.
"The fact that a work is unpublished shall not itself bar a
finding of fair use if such finding is made upon
consideration of all the above factors."
Congress meant 107 "to restate the present judicial
doctrine of fair use, not to change, narrow, or enlarge it
in any way" and intended that courts continue the
common law tradition of fair use adjudication. H.R.Rep.
No. 94-1476, p. 66 (1976) (hereinafter House Report);
S.Rep. No. 94-473, p. 62 (1975) (hereinafter Senate
Report). The fair use doctrine thus "permits [and
requires] courts to avoid rigid application of the
copyright statute when, on occasion, it would stifle the
very creativity which that law is designed to foster."
Stewart v. Abend, 495 U.S. 207, 236 (1990)
The task is not to be simplified with bright-line rules, for
the statute, like the doctrine it recognizes, calls for case-
by-case analysis. Harper & Row, 471 U.S., at 560 ;
Sony, 464 U.S., at 448 , and n. 31; House Report, pp. 65-
66; Senate Report, p. 62. The text employs the terms
"including" and "such as" in the preamble paragraph to
indicate the "illustrative and not limitative" function of
the examples given, 101; see Harper & Row, supra, at
561, which thus provide only general guidance about
the sorts of copying that courts and Congress most
commonly had found to be fair uses. 9 Nor may the four
statutory factors be treated in isolation, one from
another. All are to be explored, and the results weighed
together, in light of the purposes of copyright.
A
The first factor in a fair use enquiry is "the purpose and
character of the use, including whether such use is of a
commercial nature or is for nonprofit educational
purposes." 107(1). This factor draws on Justice Story's
formulation, "the nature and objects of the selections
made." The enquiry here may be guided by the
examples given in the preamble to 107, looking to
whether the use is for criticism, or comment, or news
reporting, and the like, see 107. The central purpose of
this investigation is to see, in Justice Story's words,
whether the new work merely "supersede[s] the
objects" of the original creation, Folsom v. Marsh, supra,
at 348; accord, Harper & Row, supra, at 562
("supplanting" the original), or instead adds something
new, with a further purpose or different character,
altering the first with new expression, meaning, or
message; it asks, in other words, whether and to what
extent the new work is "transformative." Although such
transformative use is not absolutely necessary for a
finding of fair use, Sony, supra, at 455, n. 40, 11 the
goal of copyright, to promote science and the arts, is
generally furthered by the creation of transformative
works. Such works thus lie at the heart of the fair use
doctrine's guarantee of breathing space within the
confines of copyright, see, e.g., Sony, supra, at 478-480
(BLACKMUN, J., dissenting), and the more
transformative the new work, the less will be the
significance of other factors, like commercialism, that
may weigh against a finding of fair use.
This Court has only once before even considered
whether parody may be fair use, and that time issued
Page 112 of 307
no opinion because of the Court's equal division.
Columbia Broadcasting System, Inc. v. Loew's Inc., 356
U.S. 43 (1958). Suffice it to say now that parody has an
obvious claim to transformative value, as Acuff-Rose
itself does not deny. Like less ostensibly humorous
forms of criticism, it can provide social benefit, by
shedding light on an earlier work, and, in the process,
creating a new one. We thus line up with the courts that
have held that parody, like other comment or criticism,
may claim fair use under 107. See, e.g., Fisher v. Dees,
794 F.2d 432 (CA9 1986) ("When Sonny Sniffs Glue," a
parody of "When Sunny Gets Blue," is fair use); Elsmere
Music, Inc. v. National Broadcasting Co., 482 F.Supp. 741
(SDNY), aff'd, 623 F.2d 252 (CA2 1980) ("I Love Sodom,"
a "Saturday Night Live" television parody of "I Love New
York" is fair use); see also House Report, p. 65; Senate
Report, p. 61 ("[U]se in a parody of some of the content
of the work parodied" may be fair use).
The germ of parody lies in the definition of the Greek
parodeia, quoted in Judge Nelson's Court of Appeals
dissent, as "a song sung alongside another." 972 F.2d, at
1440, quoting 7 Encyclopedia Britannica 768 (15th ed.
1975). Modern dictionaries accordingly describe a
parody as a "literary or artistic work that imitates the
characteristic style of an author or a work for comic
effect or ridicule," 12 or as a "composition in prose or
verse in which the characteristic turns of thought and
phrase in an author or class of authors are imitated in
such a way as to make them appear ridiculous." 13 For
the purposes of copyright law, the nub of the
definitions, and the heart of any parodist's claim to
quote from existing material, is the use of some
elements of a prior author's composition to create a new
one that, at least in part, comments on that author's
works. If, on the contrary, the commentary has no
critical bearing on the substance or style of the original
composition, which the alleged infringer merely uses to
get attention or to avoid the drudgery in working up
something fresh, the claim to fairness in borrowing from
another's work diminishes accordingly (if it does not
vanish), and other factors, like the extent of its
commerciality, loom larger. 14 Parody needs to mimic
an original to make its point, and so has some claim to
use the creation of its victim's (or collective victims')
imagination, whereas satire can stand on its own two
feet and so requires justification for the very act of
borrowing. 15
The fact that parody can claim legitimacy for some
appropriation does not, of course, tell either parodist or
judge much about where to draw the line. Like a book
review quoting the copyrighted material criticized,
parody may or may not be fair use, and petitioner's
suggestion that any parodic use is presumptively fair
has no more justification in law or fact than the equally
hopeful claim that any use for news reporting should be
presumed fair, see Harper & Row, 471 U.S., at 561 . The
Act has no hint of an evidentiary preference for
parodists over their victims, and no workable
presumption for parody could take account of the fact
that parody often shades into satire when society is
lampoonedthrough its creative artifacts, or that a work
may contain both parodic and nonparodic elements.
Accordingly, parody, like any other use, has to work its
way through the relevant factors, and be judged case by
case, in light of the ends of the copyright law.
Page 113 of 307
Here, the District Court held, and the Court of Appeals
assumed, that 2 Live Crew's "Pretty Woman" contains
parody, commenting on and criticizing the original work,
whatever it may have to say about society at large. As
the District Court remarked, the words of 2 Live Crew's
song copy the original's first line, but then "quickly
degenerat[e] into a play on words, substituting
predictable lyrics with shocking ones . . . [that]
derisively demonstrat[e] how bland and banal the
Orbison song seems to them." Judge Nelson, dissenting
below, came to the same conclusion, that the 2 Live
Crew song "was clearly intended to ridicule the white-
bread original" and "reminds us that sexual congress
with nameless streetwalkers is not necessarily the stuff
of romance, and is not necessarily without its
consequences. The singers (there are several) have the
same thing on their minds as did the lonely man with
the nasal voice, but here there is no hint of wine and
roses." Although the majority below had difficulty
discerning any criticism of the original in 2 Live Crew's
song, it assumed for purposes of its opinion that there
was some.
We have less difficulty in finding that critical element in
2 Live Crew's song than the Court of Appeals did,
although, having found it, we will not take the further
step of evaluating its quality. The threshold question
when fair use is raised in defense of parody is whether a
parodic character may reasonably be
perceived. 16 Whether, going beyond that, parody is in
good taste or bad does not and should not matter to fair
use. As Justice Holmes explained, "[i]t would be a
dangerous undertaking for persons trained only to the
law to constitute themselves final judges of the worth of
[a work], outside of the narrowest and most obvious
limits. At the one extreme, some works of genius would
be sure to miss appreciation. Their very novelty would
make them repulsive until the public had learned the
new language in which their author spoke." Bleistein v.
Donaldson Lithographing Co., 188 U.S. 239, 251 (1903)
(circus posters have copyright protection); cf. Yankee
Publishing Inc. v. News America Publishing, Inc., 809
F.Supp. 267, 280 (SDNY 1992) (Leval, J.) ("First
Amendment protections do not apply only to those who
speak clearly, whose jokes are funny, and whose
parodies succeed") (trademark case).
While we might not assign a high rank to the parodic
element here, we think it fair to say that 2 Live Crew's
song reasonably could be perceived as commenting on
the original or criticizing it, to some degree. 2 Live Crew
juxtaposes the romantic musings of a man whose
fantasy comes true with degrading taunts, a bawdy
demand for sex, and a sigh of relief from paternal
responsibility. The later words can be taken as a
comment on the naivete of the original of an earlier day,
as a rejection of its sentiment that ignores the ugliness
of street life and the debasement that it signifies. It is
this joinder of reference and ridicule that marks off the
author's choice of parody from the other types of
comment and criticism that traditionally have had
a claim to fair use protection as transformative
works. 17
The Court of Appeals, however, immediately cut short
the enquiry into 2 Live Crew's fair use claim by confining
its treatment of the first factor essentially to one
relevant fact, the commercial nature of the use. The
Page 114 of 307
court then inflated the significance of this fact by
applying a presumption ostensibly culled from Sony,
that "every commercial use of copyrighted material is
presumptively . . . unfair. . . ." Sony, 464 U.S., at 451 . In
giving virtually dispositive weight to the commercial
nature of the parody, the Court of Appeals erred.
The language of the statute makes clear that the
commercial or nonprofit educational purpose of a work
is only one element of the first factor enquiry into its
purpose and character. Section 107(1) uses the term
"including" to begin the dependent clause referring to
commercial use, and the main clause speaks of a
broader investigation into "purpose and character." As
we explained in Harper & Row, Congress resisted
attempts to narrow the ambit of this traditional enquiry
by adopting categories of presumptively fair use, and it
urged courts to preserve the breadth of their
traditionally ample view of the universe of relevant
evidence. 471 U.S., at 561 ; House Report, p. 66.
Accordingly, the mere fact that a use is educational and
not for profit does not insulate it from a finding of
infringement, any more than the commercial character
of a use bars a finding of fairness. If, indeed,
commerciality carried presumptive force against a
finding of fairness, the presumption would swallow
nearly all of the illustrative uses listed in the preamble
paragraph of 107, including news reporting, comment,
criticism, teaching, scholarship, and research, since
these activities "are generally conducted for profit in
this country." Congress could not have intended such a
rule, which certainly is not inferable from the common
law cases, arising as they did from the world of letters in
which Samuel Johnson could pronounce that "[n]o man
but a blockhead ever wrote except for money."
Sony itself called for no hard evidentiary presumption.
There, we emphasized the need for a "sensitive
balancing of interests," 464 U.S., at 455 , n. 40, noted
that Congress had "eschewed a rigid, bright-line
approach to fair use," id., at 449, n. 31, and stated that
the commercial or nonprofit educational character of a
work is "not conclusive," id., at 448-449, but rather a
fact to be "weighed along with other[s] in fair use
decisions." Id., at 449, n. 32 (quoting House Report, p.
66). The Court of Appeals' elevation of one sentence
from Sony to a per se rule thus runs as much counter to
Sony itself as to the long common law tradition of fair
use adjudication. Rather, as we explained in Harper &
Row, Sony stands for the proposition that the "fact that
a publication was commercial as opposed to nonprofit is
a separate factor that tends to weigh against a finding
of fair use." 471 U.S., at 562 . But that is all, and the
fact that even the force of that tendency will vary with
the context is a further reason against elevating
commerciality to hard presumptive significance. The
use, for example, of a copyrighted work to advertise a
product, even in a parody, will be entitled to less
indulgence under the first factor of the fair use enquiry
than the sale of a parody for its own sake, let alone one
performed a single time by students in school.
B
The second statutory factor, "the nature of the
copyrighted work," 107(2), draws on Justice Story's
expression, the "value of the materials used." This
Page 115 of 307
factor calls for recognition that some works are closer to
the core of intended copyright protection than others,
with the consequence that fair use is more difficult to
establish when the former works are copied. See, e.g.,
Stewart v. Abend, 495 U.S., at 237 -238 (contrasting
fictional short story with factual works); Harper &
Row, 471 U.S., at 563 -564 (contrasting soon-to-be-
published memoir with published speech); Sony, 464
U.S., at 455 , n. 40 (contrasting motion pictures with
news broadcasts); Feist, 499 U.S. 348 -351 (contrasting
creative works with bare factual compilations); 3 M.
Nimmer & D. Nimmer, Nimmer on Copyright 13.05[A]2.
(1993) (hereinafter Nimmer); Leval 1116. We agree with
both the District Court and the Court of Appeals that the
Orbison original's creative expression for public
dissemination falls within the core of the copyright's
protective purposes. fact, however, is not much help in
this case, or ever likely to help much in separating the
fair use sheep from the infringing goats in a parody
case, since parodies almost invariably copy publicly
known, expressive works.
C purloin a substantial portion of the essence of the
The third factor asks whether "the amount and
substantiality of the portion used in relation to the
copyrighted work as a whole," 107(3) (or, in Justice
Story's words, "the quantity and value of the materials
used," Folsom v. Marsh, supra, at 348) are reasonable in
relation to the purpose of the copying. Here, attention
turns to the persuasiveness of a parodist's justification
for the particular copying done, and the enquiry will
harken back to the first of the statutory factors, for, as
in prior cases, we recognize that the extent of
permissible copying varies with the purpose and
character of the use. See Sony, 464 U.S., at 449 -450
(reproduction of entire work "does not have its ordinary
effect of militating against a finding of fair use" as to
home videotaping of television programs); Harper &
Row, 471 U.S., at 564 ("[E]ven substantial quotations
might qualify as fair use in a review of a published work
or a news account of a speech" but not in a scoop of a
soon-to-be-published memoir). The facts bearing on this
factor will also tend to address the fourth, by revealing
the degree to which the parody may serve as a market
substitute for the original or potentially licensed
derivatives.
The District Court considered the song's parodic
purpose in finding that 2 Live Crew had not helped
themselves overmuch. 754 F.Supp., at 1156-1157. The
Court of Appeals disagreed, stating that "[w]hile it may
not be inappropriate to find that no more was
taken than necessary, the copying was qualitatively
substantial. . . . We conclude that taking the heart of the
original and making it the heart of a new work was to
original." 972 F.2d, at 1438.
The Court of Appeals is, of course, correct that this
factor calls for thought not only about the quantity of
the materials used, but about their quality and
importance, too. In Harper & Row, for example, the
Nation had taken only some 300 words out of President
Ford's memoirs, but we signalled the significance of the
quotations in finding them to amount to "the heart of
the book," the part most likely to be newsworthy and
important in licensing serialization. 471 U.S., at 564 -
Page 116 of 307
566, 568 (internal quotation marks omitted). We also
agree with the Court of Appeals that whether "a
substantial portion of the infringing work was copied
verbatim" from the copyrighted work is a relevant
question, see id., at 565, for it may reveal a dearth of
transformative character or purpose under the first
factor, or a greater likelihood of market harm under the
fourth; a work composed primarily of an original,
particularly its heart, with little added or changed, is
more likely to be a merely superseding use, fulfilling
demand for the original.
Where we part company with the court below is in
applying these guides to parody, and in particular to
parody in the song before us. Parody presents a difficult
case. Parody's humor, or in any event its comment,
necessarily springs from recognizable allusion to its
object through distorted imitation. Its art lies in the
tension between a known original and its parodic twin.
When parody takes aim at a particular original work, the
parody must be able to "conjure up" at least enough of
that original to make the object of its critical wit
recognizable. Whatmakes for this recognition is
quotation of the original's most distinctive or
memorable features, which the parodist can be sure the
audience will know. Once enough has been taken to
assure identification, how much more is reasonable will
depend, say, on the extent to which the song's
overriding purpose and character is to parody the
original or, in contrast, the likelihood that the parody
may serve as a market substitute for the original. But
using some characteristic features cannot be avoided.
We think the Court of Appeals was insufficiently
appreciative of parody's need for the recognizable sight
or sound when it ruled 2 Live Crew's use unreasonable
as a matter of law. It is true, of course, that 2 Live Crew
copied the characteristic opening bass riff (or musical
phrase) of the original, and true that the words of the
first line copy the Orbison lyrics. But if quotation of the
opening riff and the first line may be said to go to the
"heart" of the original, the heart is also what most
readily conjures up the song for parody, and it is the
heart at which parody takes aim. Copying does not
become excessive in relation to parodic purpose merely
because the portion taken was the original's heart. If 2
Live Crew had copied a significantly less memorable
part of the original, it is difficult to see how its parodic
character would have come through.
This is not, of course, to say that anyone who calls
himself a parodist can skim the cream and get away
scot free. In parody, as in news reporting, see Harper &
Row, supra, context is everything, and the question of
fairness asks what else the parodist did besides go to
the heart of the original. It is significant that 2 Live Crew
not only copied the first line of the original, but
thereafter departed markedly from the Orbison lyrics for
its own ends. 2 Live Crew not only copied the bass
riff and repeated it, 19 but also produced otherwise
distinctive sounds, interposing "scraper" noise,
overlaying the music with solos in different keys, and
altering the drum beat. This is not a case, then, where
"a substantial portion" of the parody itself is composed
of a "verbatim" copying of the original. It is not, that is,
a case where the parody is so insubstantial, as
Page 117 of 307
compared to the copying, that the third factor must be
resolved as a matter of law against the parodists.
Suffice it to say here that, as to the lyrics, we think the
Court of Appeals correctly suggested that "no more was
taken than necessary," 972 F.2d, at 1438, but just for
that reason, we fail to see how the copying can be
excessive in relation to its parodic purpose, even if the
portion taken is the original's "heart." As to the music,
we express no opinion whether repetition of the bass riff
is excessive copying, and we remand to permit
evaluation of the amount taken, in light of the song's
parodic purpose and character, its transformative
elements, and considerations of the potential for market
substitution sketched more fully below.
D factor against 2 Live Crew, just as it had the first, by
The fourth fair use factor is "the effect of the use upon
the potential market for or value of the copyrighted
work." 107(4). It requires courts to consider not only the
extent of market harm caused by the particular actions
of the alleged infringer, but also "whether unrestricted
and widespread conduct of the sort engaged in by the
defendant . . . would result in a substantially adverse
impact on the potential market" for the original. The
enquiry "must take account not only of harm to the
original, but also of harm to the market for derivative
works."
Since fair use is an affirmative defense, 20 its proponent
would have difficulty carrying the burden of
demonstrating fair use without favorable evidence
about relevant markets. 21 In moving for summary
judgment, 2 Live Crew left themselves at just such a
disadvantage when they failed to address the effect on
the market for rap derivatives, and confined themselves
to uncontroverted submissions that there was no likely
effect on the market for the original. They did not,
however, thereby subject themselves to the evidentiary
presumption applied by the Court of Appeals. In
assessing the likelihood of significant market harm, the
Court of Appeals quoted from language in Sony that "[i]f
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." The
court reasoned that, because "the use of the
copyrighted work is wholly commercial, . . . we presume
a likelihood of future harm to Acuff-Rose exists." 972
F.2d, at 1438. In so doing, the court resolved the fourth
applying a presumption about the effect of commercial
use, a presumption which as applied here we hold to be
error.
No "presumption" or inference of market harm that
might find support in Sony is applicable to a case
involving something beyond mere duplication for
commercial purposes. Sony's discussion of a
presumption contrasts a context of verbatim copying of
the original in its entirety for commercial purposes, with
the noncommercial context of Sony itself (home copying
of television programming). In the former
circumstances, what Sony said simply makes common
sense: when a commercial use amounts to mere
duplication of the entirety of an original, it clearly
"supersede[s] the objects," Folsom v. Marsh, 9 F.Cas., at
348, of the original and serves as a market replacement
Page 118 of 307
for it, making it likely that cognizable market harm to
the original will occur. Sony, 464 U.S., at 451 . But when,
on the contrary, the second use is transformative,
market substitution is at least less certain, and market
harm may not be so readily inferred. Indeed, as to
parody pure and simple, it is more likely that the new
work will not affect the market for the original in a way
cognizable under this factor, that is, by acting as a
substitute for it ("supersed[ing] [its] objects"). This is so
because the parody and the original usually serve
different market functions. Bisceglia, ASCAP, Copyright
Law Symposium, No. 34, p. 23.
We do not, of course, suggest that a parody may not
harm the market at all, but when a lethal parody, like a
scathing theater review, kills demand for the original, it
does not produce a harm cognizable under the
Copyright Act. Because "parody may quite legitimately
aim at garroting the original, destroying it commercially
aswell as artistically," B. Kaplan, An Unhurried View of
Copyright 69 (1967), the role of the courts is to
distinguish between "[b]iting criticism [that merely]
suppresses demand [and] copyright infringement[,
which] usurps it."
This distinction between potentially remediable
displacement and unremediable disparagement is
reflected in the rule that there is no protectable
derivative market for criticism. The market for potential
derivative uses includes only those that creators of
original works would in general develop or license
others to develop. Yet the unlikelihood that creators of
imaginative works will license critical reviews or
lampoons of their own productions removes such uses
from the very notion of a potential licensing market.
"People ask . . . for criticism, but they only want praise."
S. Maugham, Of Human Bondage 241 (Penguin ed.
1992). Thus, to the extent that the opinion below may
be read to have considered harm to the market for
parodies of "Oh, Pretty Woman,".
In explaining why the law recognizes no derivative
market for critical works, including parody, we have, of
course, been speaking of the later work as if it had
nothing but a critical aspect (i.e., "parody pure and
simple," supra, at 22). But the later work may have a
more complex character, with effects not only in the
arena of criticism but also in protectable markets for
derivative works, too. In that sort of case, the law looks
beyond the criticism to the other elements of the work,
as it does here. 2 Live Crew's song comprises not only
parody but also rap music, and the derivative market
for rap music is a proper focus of enquiry. Evidence of
substantial harm to it would weigh against a finding of
fair use, 23 because the licensing of derivatives is an
important economic incentive to the creation of
originals. See 17 U.S.C. 106(2) (copyright owner has
rights to derivative works). Of course, the only harm to
derivatives that need concern us, as discussed above, is
the harm of market substitution. The fact that a parody
may impair the market for derivative uses by the very
effectiveness of its critical commentary is no more
relevant under copyright than the like threat to the
original market. 24
Although 2 Live Crew submitted uncontroverted
affidavits on the question of market harm to the
original, neither they nor Acuff-Rose introduced
evidence or affidavits addressing the likely effect of 2
Page 119 of 307
Live Crew's parodic rap song on the market for a non-
parody, rap version of "Oh, Pretty Woman." And while
Acuff-Rose would have us find evidence of a rap market
in the very facts that 2 Live Crew recorded a rap parody
of "Oh, Pretty Woman" and another rap group sought a
license to record a rap derivative, there was no
evidence that a potential rap market was harmed in any
way by 2 Live Crew's parody, rap version. The fact that
2 Live Crew's parody sold as part of a collection of rap
songs says very little about the parody's effect on a
market for a rap version of the original, either of the
music alone or of the music with its lyrics. The District
Court essentially passed on this issue, observing that
Acuff-Rose is free to record "whatever version of the
original it desires," the Court of Appeals went the other
way by erroneous presumption. Contrary to each
treatment, it is impossible to deal with the fourth factor
except by recognizing that a silent record on an
important factor bearing on fair use disentitled the
proponent of the defense, 2 Live Crew, to summary
judgment. The evidentiary hole will doubtless be
plugged on remand.
III
It was error for the Court of Appeals to conclude that the
commercial nature of 2 Live Crew's parody of "Oh,
Pretty Woman" rendered it presumptively unfair. No
such evidentiary presumption is available to address
either the first factor, the character and purpose of the
use, or the fourth, market harm, in determining whether
a transformative use, such as parody, is a fair one. The
court also erred in holding that 2 Live Crew had
necessarily copied excessively from the Orbison original,
considering the parodic purpose of the use. We
therefore reverse the judgment of the Court of Appeals
and remand for further proceedings consistent with this
opinion.
It is so ordered.
Appendix A
"Oh, Pretty Woman" by Roy Orbison and William Dees
Pretty Woman, walking down the street, Pretty Woman,
the kind I like to meet, Pretty Woman, I don't believe
you, you're not the truth, No one could look as good as
you Mercy
Pretty Woman, won't you pardon me, Pretty Woman, I
couldn't help but see, Pretty Woman, that you look
lovely as can be Are you lonely just like me?
Pretty Woman, stop a while, Pretty Woman, talk a while,
Pretty Woman give your smile to me Pretty woman,
yeah, yeah, yeah Pretty Woman, look my way, Pretty
Woman, say you'll stay with me Cause I need you, I'll
treat you right Come to me baby, Be mine tonight
Pretty Woman, don't walk on by, Pretty Woman, don't
make me cry, Pretty Woman, don't walk away, Hey, O.K.
If that's the way it must be, O.K. I guess I'll go on home,
it's late There'll be tomorrow night, but wait!
What do I see Is she walking back to me? Yeah, she's
walking back to me! Oh, Pretty Woman.
Appendix B
Page 120 of 307

"Pretty Woman" as Recorded by 2 Live Crew
Pretty woman walkin' down the street Pretty woman girl
you look so sweet Pretty woman you bring me down to
that knee Pretty woman you make me wanna beg
please Oh, pretty womanBig hairy woman you need to
shave that stuff Big hairy woman you know I bet it's tough
Big hairy woman all that hair it ain't legit Cause you look like
"Cousin It" Big hairy woman
Bald headed woman girl your hair won't grow Bald
headed woman you got a teeny weeny afro Bald headed
woman you know your hair could look nice Bald headed
woman first you got to roll it with rice Bald headed
woman here, let me get this hunk of biz for ya Ya know
what I'm saying you look better than rice a roni Oh bald
headed woman
Big hairy woman come on in And don't forget your bald
headed friend Hey pretty woman let the boys Jump in
Two timin' woman girl you know you ain't right Two
timin' woman you's out with my boy last night Two
timin' woman that takes a load off my mind Two timin'
woman now I know the baby ain't mine Oh, two timin'
woman Oh pretty woman
Fair Use Doctrine
Sec. 185
Section 185. Fair Use of a Copyrighted Work. - 185.1.
The fair use of a copyrighted work for criticism,
comment, news reporting, teaching including multiple
copies for classroom use, scholarship, research, and
similar purposes is not an infringement of copyright.
Decompilation, which is understood here to be the
reproduction of the code and translation of the forms of
the computer program to achieve the inter-operability of
an independently created computer program with other
programs may also constitute fair use. In determining
whether the use made of a work in any particular case
is fair use, the factors to be considered shall include:
(a) The purpose and character of the use, including
whether such use is of a commercial nature or is for
non-profit educational purposes;
(b) The nature of the copyrighted work;
(c) The amount and substantiality of the portion used in
relation to the copyrighted work as a whole; and
(d) The effect of the use upon the potential market for
or value of the copyrighted work.
185.2. The fact that a work is unpublished shall not by
itself bar a finding of fair use if such finding is made
upon consideration of all the above factors.
Cases:
1. Habana v. Robles, G.R. No. 131522, July 19,
1999 (read dissenting opinions)
Summary:
Page 121 of 307
Petitioners herein are authors and copyright owners of
their published books while respondents Robles and
Goodwill Trading Co., Inc. are authors and publishers,
respectively, of another published work that was also
covered by copyrights issued to them. In the course of
revising their published works, petitioners chanced upon
the book of respondent Robles. After an itemized
examination and comparison of the books, petitioners
found that several pages of the respondents book are
similar, if not altogether a copy from the petitioners
book, which is a case of plagiarism and copyright
infringement. When respondents ignored demands of
petitioners for damages, the latter filed a complaint for
infringement and/or unfair competition with damages.
The trial court dismissed the complaint of the
petitioners herein. Petitioners appealed their case to
the Court of Appeals (CA), which affirmed the judgment
of the trial court. The CA also deleted the award of
attorneys fees, since its view was that there was no bad
faith on the part of the petitioners in instituting the
action. The petitioners filed a motion for
reconsideration, but, the CA denied the same, hence,
this petition for review on certiorari.
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. The least that
respondent Robles could have done was to acknowledge
petitioners as the source of her book. To allow another
to copy the book without appropriate acknowledgment
is injury enough. The petition was granted. The case
was 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.
Doctrines:
1. COMMERCIAL LAW; INTELLECTUAL PROPERTY
CODE OF THE PHILIPPINES; PROVIDES
PROTECTION FOR COPYRIGHT OWNER. 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
Page 122 of 307
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 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) xxx (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.
2. ID.; ID.; INFRINGEMENT; CONSTRUED; WHEN
COMMITTED. 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.
3. ID.; ID.; ID.; WHEN NOT COMMITTED. 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:
xxx ( 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
Page 123 of 307
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.
4. ID.; ID.; COPYRIGHT; PURPOSE THEREOF. 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.
Original:
Facts: Petitioners 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[4] against private
respondents.[5]
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
Page 124 of 307
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.
On July 27, 1988, respondent Robles filed a motion for a
bill of particulars[6] which the trial court approved on
August 17, 1988. Petitioners complied with the desired
particularization, and furnished respondent Robles the
specific portions, inclusive of pages and lines, of the
published and copyrighted books of the petitioners
which were transposed, lifted, copied and plagiarized
and/or otherwise found their way into respondents book.
On August 1, 1988, respondent Goodwill Trading Co.,
Inc. filed its answer to the complaint[7] 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.
On November 28, 1988, respondent Robles filed her
answer[8], 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.
Page 125 of 307

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.[9]
During the pre-trial conference, the parties agreed to a
stipulation of facts[10] and for the trial court to first
resolve the issue of infringement before disposing of the
claim for damages.
After the trial on the merits, on April 23, 1993, the trial
court rendered its judgment finding thus:
WHEREFORE, premises considered, the court hereby
orders that the complaint filed against defendants
Felicidad Robles and Goodwill Trading Co., Inc. shall be
DISMISSED; that said plaintiffs solidarily reimburse
defendant Robles for P20,000.00 attorneys fees and
defendant Goodwill for P5,000.00 attorneys fees.
Plaintiffs are liable for cost of suit.
IT IS SO ORDERED.
Done in the City of Manila this 23rd day of April, 1993.
(s/t) MARVIE R. ABRAHAM SINGSON
Assisting Judge
S. C. Adm. Order No. 124-92[11]
On May 14, 1993, petitioners filed their notice of appeal
with the trial court[12], and on July 19, 1993, the court
directed its branch clerk of court to forward all the
records of the case to the Court of Appeals.[13]
In the appeal, petitioners argued that the trial court
completely disregarded their evidence and fully
subscribed to the arguments of respondent Robles that
the books in issue were purely the product of her
researches and studies and that the copied portions
were inspired by foreign authors and as such not subject
to copyright. Petitioners also assailed the findings of the
trial court that they were animated by bad faith in
instituting the complaint.[14]
On June 27, 1997, the Court of Appeals rendered
judgment in favor of respondents Robles and Goodwill
Trading Co., Inc. The relevant portions of the decision
state:
It must be noted, however, that similarity of the
allegedly infringed work to the authors or proprietors
copyrighted work does not of itself establish copyright
infringement, especially if the similarity results from the
fact that both works deal with the same subject or have
the same common source, as in this case.
Appellee Robles has fully explained that the portion or
material of the book claimed by appellants to have been
copied or lifted from foreign books. She has duly proven
that most of the topics or materials contained in her
book, with particular reference to those matters claimed
by appellants to have been plagiarized were topics or
matters appearing not only in appellants and her books
but also in earlier books on College English, including
foreign books, e.i. Edmund Burkes Speech on
Page 126 of 307
Conciliation, Boerigs Competence in English and
Broughtons, Edmund Burkes Collection.
xxx
Appellants reliance on the last paragraph on Section 11
is misplaced. It must be emphasized that they failed to
prove that their books were made sources by appellee.
[15]
The Court of Appeals was of the view that the award of
attorneys fees was not proper, since there was no bad
faith on the part of petitioners Habana et al. in
instituting the action against respondents.
On July 12, 1997, petitioners filed a motion for
reconsideration,[16] however, the Court of Appeals
denied the same in a Resolution[17] dated November 25,
1997.
Hence, this petition.
In this appeal, petitioners submit that the appellate
court erred in affirming the trial courts decision.
Issues: Petitioners raised the following issues: (1)
whether or not, despite the apparent textual, thematic
and sequential similarity between DEP and CET,
respondents committed no copyright infringement; (2)
whether or not there was animus furandi on the part of
respondent when they refused to withdraw the copies of
CET from the market despite notice to withdraw the
same; and (3) whether or not respondent Robles abused
a writers right to fair use, in violation of Section 11 of
Presidential Decree No. 49.[18]
Held: 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;
Page 127 of 307
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;[20]
In the above quoted provisions, work has reference to
literary and artistic creations and this includes books
and other literary, scholarly and scientific works.[21]
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[22]
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[23]
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.[24]
On page 100 of the book DEP[25], also in the topic of
parallel structure and repetition, the same example is
found in toto. The only difference is that petitioners
Page 128 of 307
acknowledged the author Edmund Burke, and
respondents did not.
In several other pages[26] 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.[27]
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.[28]
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.[29]
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.[30]
Page 129 of 307
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?
In 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
Page 130 of 307
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.
Dissenting Opinion:
Doctrines:
1. COMMERCIAL LAW; R.A. No. 8293
(INTELLECTUAL PROPERTY CODE); COPYRIGHT;
DEFINED; PURPOSE OF THE LAW. A copyright may
be accurately defined as the right granted by statute to
the proprietor of an intellectual production to its
exclusive use and enjoyment to the extent specified in
the statute. Under Section 177 of R.A. No. 8293, the
copy or economic right (copyright and economic right
are used interchangeably in the statute) consists 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, abridgment, 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; 177.5 Public display of
the original or a copy of the work; 177.6 Public
performance of the work; and 177.7 Other
communication to the public of the work. The work, as
repeatedly mentioned, refers to the literary and artistic
works defined as original intellectual creations in the
literary and artistic domain protected from the moment
of their creation and enumerated in Section 172.1,
which includes books and other literary, scholarly,
scientific and artistic works. Stripped in the meantime
of its indisputable social and beneficial actions, the use
of intellectual property or creations should basically
promote the creator or authors personal and economic
gain. Hence, the copyright protection extended to the
creator should ensure his attainment of some form of
personal satisfaction and economic reward from the
work he produced.
2. ID.; ID.; ID.; INFRINGEMENT; CONSTRUED. The
execution of any one or more of the exclusive rights
conferred by law on a copyright owner, without his
consent, constitutes copyright infringement. In
essence, copyright infringement, known in general as
piracy, is a trespass on a domain owned and occupied
by a copyright owner; it is violation of a private right
protected by law. With the invasion of his property
rights, a copyright owner is naturally entitled to seek
redress, enforce and hold accountable the defrauder or
usurper of said economic rights.
Page 131 of 307

3. ID.; ID.; ID.; ID.; TEST TO DETERMINE
COPYRIGHT INFRINGEMENT; NO VIOLATION; CASE
AT BAR. To constitute infringement, the usurper must
have copied or appropriated the original work of an
author or copyright proprietor; absent copying, there
can be no infringement of copyright. In turn, a work is
deemed by law an original if the author created it by his
own skill, labor and judgment. On its part, a copy is that
which comes so near to the original so as to give to
every person seeing it the idea created by the original.
It has been held that the test of copyright infringement
is whether an ordinary observer comparing the works
can readily see that one has been copied from the
other. To constitute a substantial reproduction, it is not
necessary 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 is substantially diminished, or if
the labors of the original author are substantially, and to
an injurious extent, appropriated. But the similarity of
the books here does not amount to an appropriation of a
substantial portion of the published work COLLEGE
ENGLISH FOR TODAY. If the existence of substantial
similarities does not of itself establish infringement,
mere similarities (not substantial similarities) in some
sections of the books in question decisively militate
against a claim for infringement where the similarities
had been convincingly established as proceeding from a
number of reasons and/or factors.
4. ID.; ID.; ID.; FAIR USE OF COPYRIGHTED
MATERIAL; DEFINED AND CONSTRUED. Fair use has
been defined as a privilege to use the copyrighted
material in a reasonable manner without the consent of
the copyright owner or as copying the theme or ideas
rather than their expression. No question of fair or
unfair use arises however, if no copying is proved to
begin with. This is in consonance with the principle that
there can be no infringement if there was no copying. It
is only where some form of copying has been shown
that it becomes necessary to determine whether it has
been carried to an unfair, that is, illegal, extent.
5. REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS
OF THE COURT OF APPEALS AND THE TRIAL
COURT; CONCLUSIVE AND BINDING UPON THE
SUPREME COURT; EXCEPTION. Of doctrinal
persuasion is the principle that factual determinations of
the Court of Appeals and the trial court are conclusive
and binding upon this Court, and the latter will not, as a
rule, disturb these findings unless compelling and
cogent reasons necessitate a reexamination, if not a
reversal, of the same. Tested against this
jurisprudential canon, to subject the challenged decision
of the Court of Appeals to further scrutiny would be
superfluous, if not, improvident.
Facts: I am unable to join the majority view.From the
following factual and procedural antecedents, I find no
alternative but to sustain both the trial court and the
Court of Appeals.
On 12 July 1988, HABANA, et al. filed with the trial court
a complaint for infringement and unfair competition,
with damages against private respondent Felicidad C.
Robles (hereafter ROBLES) and her publisher and
distributor, Goodwill Trading Co., Inc. (hereafter
Page 132 of 307
GOODWILL). The case was docketed as Civil Case No.
88-1317.
HABANA, et al. averred in their complaint that they were
the co-authors and joint copyright owners of their
published works College English for Today, Books 1 and
2 (hereafter CET) and Workbook for College Freshmen
English, Series [1]I; they discovered that ROBLES' own
published works, Developing English Proficiency, Books
1 and 2, (hereafter DEP), published and distributed in
1985, exhibited an uncanny resemblance, if not outright
physical similarity, to CET as to content, scheme,
sequence of topics and ideas, manner of presentation
and illustrative examples; the plagiarism, incorporation
and reproduction of particular portions of CET into DEP
could no be gainsaid since ROBLES was substantially
familiar with CET and the textual asportation was
accomplished without their authority and/or consent;
ROBLES and GOODWILL Jointly misrepresented DEP
(over which they shared copyright ownership) "as the
former's original published works and concept"; and
"notwithstanding formal demands made to cease and
desist from the sale and distribution of DEP, [ROBLES
and GOODWILL] persistently failed and refused to
comply therewith." HABANA, et al. then prayed for the
court to: (1) order the submission and thereafter the
destruction of all copies of DEP, together with the
molds, plates, films and other materials used in the
printing thereof; (2) require ROBLES and GOODWILL to
render an accounting of the sales of "infringing works
from the time of its (sic) inceptive publication up to the
time of judgment, as well as the amount of sales and
profitsderived"; and (3) to enjoin ROBLES and
GOODWILL to solidarily pay actual, moral and
exemplary damages, as well as attorney's fees and
expenses of litigation.
In its Answer, GOODWILL denied culpability since "it had
no knowledge or information sufficient to form a belief
as to the allegations of plagiarism, incorporation and
reproduction" and hence "could not be privy to the
same, if (there were) any"; and that in an Agreement
with co-defendant ROBLES, the latter would be solely
responsible for acts of plagiarism or violations of
copyright or any other law, to the extent of answering
for any and all damages GOODWILL may
suffer. GOODWILL also interposed a compulsory
counterclaim against PACITA, et al. and a crossclaim
against its co-defendant anchored on the
aforementioned Agreement.
In her answer, ROBLES asserted that: (1) DEP was the
exclusive product of her independent research, studies
and experience; (2) DEP, particularly the segments
where the alleged literal similitude appeared, were
admittedly influence or inspired by earlier treatises,
mostly by foreign authors; but that "influences and/or
inspirations from other writers" like the methodology
and techniques as to presentation, teaching concept
and design, research and orientation which she
employed, fell within the ambit of general information,
ideas, principles of general or universal knowledge
which were commonly and customarily understood as
incapable of private and exclusive use, appropriation or
copyright; and (3) her works were the result of the
legitimate and reasonable exercise of an author's "right
to fair use of even copyrighted materials as [a]
guide." She further claimed that her various national
Page 133 of 307
and regional professional activities in general education,
language and literature, as well as her teaching
experience in graduate and post graduate education
would obviate the remotest possibility of plagiarism.
ROBLES likewise suggested that any similarity between
DEP and CET as regards scope and sequence could be
attributed to "the orientation of the authors to the scope
and sequence or syllabus - which incorporates
standards known among English grammar book writers -
of the subject-matter for Basic Communication Arts
recommended by the Association of Philippine Colleges
of Arts and Sciences (APCAS)." While the syllabus was
admittedly adopted in DEP, she claimed to have treated
quite differently in DEP the very ideas, techniques or
principles expressed in CET such that neither textbook
could be considered a copy of plagiarism of the other.
At the pre-trial conference, the parties agreed to a
stipulation of facts [2] and for the court to first resolve
the issue of infringement before disposing of the claims
for damages. After trial on the merits, the trial court
rendered its decision in favor of the defendants, the
dispositive portion of which reads:
WHEREFORE, premises considered, the Court hereby
orders that the complaint filed against defendants
Felicidad Robles and Goodwill Trading co. Inc. shall be
DISMISSED: that said plaintiffs solidarily reimburse
defendant Robles for P20,000.00 attorney's fees and
defendant Goodwill for P5,000.00 attorney's
fees. Plaintiffs are liable for costs of suit.
IT IS SO ORDERD.[3]
Noting that the law applicable to the case was
Presidential Decree No. 49, [4] the trial court found that
HABANA, et al. failed to discharge their onus of proving
that ROBLES and GOODWILL committed acts
constituting copyright infringement. Moreover, the trial
court found that "the cause of action or acts complained
of [were] not covered by said decree" as Section 10
thereof barred authors of works already lawfully made
accessible to the public from prohibiting the
reproductions, translations, adaptations, recitation and
performance of the same, while Section 11 allowed the
utilization of reproductions, quotations and excerpts of
such works. The trial court thus agreed with ROBLES
that "the complained acts [were] of general and
universal knowledge and use which plaintiffs cannot
claim originality or seek redress to the law for
protection" and observed that DEP and CET had the
same sources, consisting chiefly of earlier works, mostly
foreign books. GOODWILL's crossclaim against ROBLES,
counterclaim against HABANA, et al. as well as ROBLES'
compulsory counterclaim against GOODWILL were all
dismissed for lack of factual and legal bases.
HABANA, et al. appealed to the Court of Appeals. The
case was docketed as CA-G.R. CV No. 44053. Before
said court HABANA, et al., in the main, argued that the
trial court totally disregarded their evidence and merely
subscribed to ROBLES' arguments. The Court of
Appeals, however, likewise disposed of the controversy
in favor of ROBLES and GOODWILL. [5]
However, the Court of Appeals modified the trial court's
decision by reversing the award for attorney's fees. It
held that the good faith and sincerity of HABANA, et
al. in commencing the action negated the basis
Page 134 of 307
therefor. Their motion for reconsideration having been
denied for want of cogent reasons, HABANA, et
al., instituted this petition. They claim that the Court of
Appeals committed reversible error in failing to
appreciate: (1) the insuperable evidence and facts
admitted and proved demonstrating plagiarism or piracy
and instead afforded full weight and credit to ROBLES'
matrix of general, hypothetical and sweeping
statements and/or defenses; (2) ROBLES' and
GOODWILL's animo furandi or intent to appropriate or
copy CET with the non-removal of the damaging copies
of DEP from the bookstores despite notice to withdraw
the same; and (3) the fact that ROBLES abused a
writer's right to fair use, in violation of Section 11 of P.D.
No. 49. [6] They invoke Laktaw v. Paglinawan [7] which,
they theorize is on all fours with the case at bar. ROBLES
contends that appeal by certiorari does not lie in this
case for the challenged decision and the trial court's
judgment were amply supported by evidence, pertinent
laws and jurisprudence. Hence, her counterclaim for
moral damages should, therefore, be granted or for us
to order the remand of the case to the trial court for
reception of evidence on damages. GOODWILL, on its
part, stood pat on its disclaimer, with the assertion that
no proof was ever introduced that it co-authored DEP or
that is singly or in cabal with ROBLES committed any act
constituting copyright infringement.
The core issue then is whether or not the Court of
Appeals erred in affirming the trial court's judgment that
despite the apparent textual, thematic and sequential
similarity between DEP and CET, no copyright was
committed by ROBLES and GOODWILL.
While the complaint, in Civil Case No. 88-1317 was filed
during the effectivity of PA.D. No. 49, the provisions of
the new intellectual property law, R.A. No.
[8]
8293, nevertheless bears significance here. It took
effect on 1 January 1998, but its Section 239.3 clearly
states that its provisions shall apply to works in which
copyright protection obtained prior to the effectivity of
the Act subsists, provided, however, that the application
of the Act shall not result in the diminution of such
protection. Also, the philosophy behind both statutes as
well as the essential principles of copyright protection
and copyright infringement have, to a certain extent,
remained the same.
A copyright may be accurately defined as the right
granted by a statute to the proprietor of an intellectual
production to its exclusive use and enjoyment to the
extent specified in the statute. [9] Under Section 177 of
R.A. No. 8293, [10]the copy or economic right (copyright
and economic right are used interchangeably in the
statute) consists 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,
abridgment, arrangement or other transformation of the
work;
1777.3 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
Page 135 of 307
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;
177.5 Public display of the original or a copy of the
work;
177.6 Public performance of the work; and
177.7 Other communication to the public of the work.
The work, as repeatedly mentioned, refers to the
literary and artistic works defined as original intellectual
creations in the literary and artistic domain protected
from the moment of their creation and enumerated in
Section 172.1, which includes books and other literary,
scholarly, scientific and artistic works. [11]
Stripped in the meantime of its indisputable social and
beneficial functions, [12] the use of intellectual property
or creations should basically promote the creator or
authors personal and economic gain. Hence, the
copyright protection extended to the creator should
ensure his attainment of some form of personal
satisfaction and economic reward from the work he
produced. Without conceding the suitabilityof Laktaw as
precedent, the Court there quoted Manresa and
explained:
He who writes a book, or carves a statute, or makes an
invention, has the absolute right to reproduce or sell it,
just as the owner of the land has the absolute right to
sell it or its fruits. But while the owner of the land, by
selling it and its fruits, perhaps fully realizes all its
economic value, by receiving its benefits and utilities,
which are represented for example, by the price, on the
other hand the author of a book, statue or invention
does not reap all the benefits and advantages of
his own property by disposing of it, for the most
important form of realizing the economic advantages of
a book, statue or invention, consists in the right to
reproduce it in similar or like copies, everyone of which
serves to give to the person reproducing them all the
conditions which the original requires in order to give
the author the full enjoyment thereof. If the author of a
book, after its publication, cannot prevent its
reproduction by any person who may want to reproduce
it, then the property right granted him is reduced to a
very insignificant thing and the effort made in the
production of the book is in no way rewarded. [13]
The execution, therefore, of any one or more of the
exclusive rights conferred by law on a copyright owner,
without his consent, constitutes copyright infringement.
In essence, copyright infringement, known in general as
piracy, is a trespass on a domain owned and occupied
by a copyright owner; it is violation of a private right
protected by law. [14]With the invasion of his property
rights, a copyright owner is naturally entitled to seek
redress, enforce and hold accountable the defrauder or
usurper of said economic rights.
Now, did ROBLES and GOODWILL infringe upon the
copyright of HABANA, et al. by publishing DEP, which
the latter alleged to be a reproduction, or in the least, a
substantial reproduction of CET? Both the trial court and
respondent court found in the negative. I submit they
were correct.
To constitute infringement, the usurper must have
copied or appropriated the original work of an author or
copyright proprietor, [15] absent copying, there can be no
Page 136 of 307
infringement of copyright. [16] In turn, a work is deemed
by law an original if the author created it by his own
skill, labor and judgment. [17] On its part, a copy is that
which comes so near to the original so as to give to
every person seeing it the idea created by the original.
It has been held that the test of copyright infringement
is whether an ordinary observer comparing the works
can readily see that one has been copied from the
other. [18] A visual comparison of the portions of
CET [19] juxtaposed against certain pages of
[20]
DEP, would inescapably lead to a conclusion that
there is a discernible similarity between the two;
however, as correctly assessed by respondent court and
the lower court, no conclusion, can be drawn that DEP,
in legal contemplation, is a copy of CET.
Was DEP a substantial reproduction of CET? To
constitute a substantial reproduction, it is not necessary
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 is substantially diminished, or if the labors of
the original author are substantially, and to an injurious
extent, appropriated. [21] But the similarity of the books
here does not amount to an appropriation of a
substantial portion of CET. If the existence of substantial
similarities does not of itself establish
infringement, [22] mere similarities (not substantial
similarities) in some sections of the books in question
decisively militate against a claim for infringement
where the similarities had been convincingly established
as proceeding from a number of reasons and/or factors.
1. As both books are grammar books, they inevitably
deal with the same subjects typically and ordinarily
treated by writers of such genre, [23] e.g., system of book
classification, the different kinds of card catalogs and
their entries, use of punctuation marks, paragraphs, the
characteristics of an effective paragraph, language
structure, different parts of a book, etc. These standard
subjects fall within the domain of ideas, concepts,
universal and general knowledge that have, as admitted
by the protagonists here, been in existence for quite a
long time. [24]As such, HABANA, et al. cannot demand
monopoly, by way of example, in the use of the
recognized library classification systems (Dewey
Decimal System and the Library of Congress System), or
how a book can be divided into parts (frontispiece, title
page, copyright page, preface, table of contents, etc.) or
to the different headings used in a card catalogue (title
card, author card and subject card), since these are of
common or general knowledge. Even in this jurisdiction,
no protection can be extended to such an idea,
procedure, system method or operation, concept,
principle, discovery or mere data, even if expressed,
explained, illustrated or embodied in a work. [25]
2. As found by respondent court, CET and DEP had
common sources and materials, [26] such that the
particular portions claimed to have been lifted and
literally reproduced also appeared in earlier works,
mostly by foreign authors. This is clear from the
testimony of petitioner Dr. Pacita Habana:
Q Lets clarify your position Dra. Habana. When
defendants test (sic) showed 10 words similar to yours,
you so concluded it was (sic) copied from yours but
when I pointed out to you same (sic) words contained in
the earlier book of Wills then you earlier in your test in
Page 137 of 307
your book (sic) you refused to admit that it was copied
from Wills.
A Yes, sir. We have never all 35 words were copied from
there.
Q But what I am asking how could you conclude that by
just similarity of 10 words of defendants words that was
copied from yours [sic] and when I point out to you the
similarity of that same words from the words earlier
than yours (sic) you refused to admit that you copied?
A I would like to change the final statement now that in
the case of defendant Robles you pointed out her source
very clear. She copied it from that book by Wills.
Q So, she did not copy it from yours?
A Alright, maybe she did not copy it but definitely it is a
pattern of plagerism [sic].[27]
3. Similarity in orientation and style can likewise be
attributed to the exposure of the authors to the APCAS
syllabus and their respective academic experience,
teaching approaches and methodology. It is not
farfetched that they could have even influenced each
other as textbook writers. ROBLES and Dr. Pacita
Habana were faculty members of the Institute of English
of the Far Eastern University from 1964 to 1974. [28]Both
were ardent students, researchers, lecturers, textbook
writers and teachers of English and grammar. They even
used to be on friendly terms with each other, to the
extent that Dr. Habana admitted that ROBLES assisted
the former in the preparation of her doctoral
dissertation. Given their near-identical academic and
professional background, it is natural they would use
many expressions and definitions peculiar to teaching
English grammar. It comes therefore with no surprise
that there are similarities in some parts of the rival
books. Indeed, it is difficult to conceive how writers on
the same subject matter can very well avoid resorting to
common sources of information and materials and
employing similar expressions and terms peculiar to the
subject they are treating. [29]
To illustrate, an excerpt from page 21 of CET reads:
Author Card
The author card is the main entry card. It contains
1. the authors complete name on the first line, surname
first, which may be followed by the date of his birth and
death if he is no longer living;
2. the title of the book, and the subtitle, if there is one;
3. the edition, if it is not the first;
4. the translator or illustrator, if there is any;
5. the imprint which includes the publisher, the place
and date of publication;
6. the collation composed of the number of pages,
volume, illustrations, and the size of the book;
7. the subjects with which the book deals ;
8. the call number on the upper left-hand corner.
Names beginning with Mc, or M are filed in the card
catalog as though spelled out as MAC, for example Mc
Graw MacGraw. The same is true of St. and Saint.
While a portion of DEP found on page 18 which
discusses the author card provides:
The author card is the main entry card containing:
Page 138 of 307
1. the authors complete name on the first line, surname
first, which may be followed by the date of his birth and
death if he is no longer living;
2. the title of the book, and the subtitle if there is one;
3. the edition, if it is not the first;
4. the translator or illustrator, if any;
5. the imprint which includes the publisher, the place
and date of publication;
6. the collation, composed of the number of pages,
volume, illustrations, and the size of the book;
7. the subject with which the book deals; and
8. the call number on the upper-left hand corner.
Names beginning with MC, or M are filed in the card
catalog considered spelled out as MAC, for example:
Mcleod - Macleod. This is true also of St. and Saint.
The entries found in an author card, having been
developed over quite some time, are expectedly
uniform. Hence, HABANA, et at. and ROBLES would have
no choice but to articulate the terms particular to the
entries in an identical manner.
I thus find that the ruling of the respondent court is
totally supported by the evidence on record. Of doctrinal
persuasion is the principle that factual determinations of
the Court of Appeals and the trial court are conclusive
and binding upon this Court, and the latter will not, as a
rule, disturb these findings unless compelling and
cogent reasons necessitate a reexamination, if not a
reversal, of the same.[30]Tested against this
jurisprudential canon, to subject the challenged decision
of the Court of Appeals to further scrutiny would be
superfluous, if not, improvident.
I am not persuaded by the claim of HABANA, et
at. that Laktaw is on all fours with and hence applicable
to the case at bar. There, this Court disposed that
defendant, without the consent of and causing
irreparable damage to Laktaw, reproduced the latters
literary work Diccionario Hispano-Tagalog, and
improperly copied the greater part thereof in the
work Diccionariong Kastila-Tagalog published by
defendant, in violation of Article 7 of the Law of 10
January 1879 on Intellectual Property. This Court
anchored its decision on the following observations:
(1) [O]f the 23, 560 Spanish words in the defendant's
dictionaryonly 3,108 words are the defendant's own, or,
what is the same thing, the defendant had added only
this number of words to those that are in the plaintiff's
dictionary, he having reproduced or copied the
remaining 20,452 words;
(2) [T]he defendant also literally reproduced and copied
for the Spanish words in his dictionary, the equivalents,
definitions and different meanings in Tagalog, given in
plaintiff's dictionary, having reproduced, as to some
words, everything that appears in the plaintiff's
dictionary for similar Spanish words, although as to
some he made some additions of his own. Said copies
and reproductions are numerous ;
(3) [T]he printer's errors in the plaintiff's dictionary as to
the expression of some words in Spanish as well as their
equivalents in Tagalog are also reproduced, a fact which
shows that the defendant, in preparing his dictionary,
literally copied those Spanish words and their meanings
Page 139 of 307
and equivalents in Tagalog from the plaintiff's
dictionary. [31]
Plainly, the rationale in Laktaw does not apply in this
case. First, aside from an isolated accounting of the
number of words supposedly usurped in a segment of
DEP from CET, [32] the records do not disclose that all the
words allegedly copied were tallied and that the words
thus tallied were numerous enough to support a finding
of copying. Second, as already conceded, while there is
an identity in the manner by which some of the ideas
and concepts were articulated, this prescinded from
various factors already elucidated. Besides, ROBLES'
testimony that she made an independent investigation
or research of the original works or authors she
consulted was unrebutted; [33] for germane here is the
question of whether the alleged infringer could have
obtained the same information by going to the same
source by her own independent
[34]
research. ROBLES convinced the trial court and the
Court of Appeals on this; thus, we are bound by this
factual determination, as likewise explained
earlier. Third, reproduction of the printer's errors or the
author's blunders and inaccuracies in the infringing
copy does not ipso facto constitute copying or
plagiarism or infringement, but it is conceded that they
are telltale signs that infringement might have
committed. [35] However, the records do not reveal this
to be the case. Fourth, the law on intellectual property
violated in Laktaw was a world and time apart from R.A.
No. 8293 or even P.D. No. 49. Thus, under Article 7 of
the Law of 10 January 1879, the Court ruled that nobody
could reproduce another person's work without the
owner's consent, even merely to annotate or add
anything to it, or improve any edition thereof. The more
recent laws on intellectual property, however, recognize
recent advancements in technology transfer and
information dissemination. They thus allow the use of
copyrighted materials if compatible with fair use and to
the extent justified for the purpose. In particular, the
new laws sanction the fair use of copyrighted work for
criticism, comment, news reporting, teaching including
multiple copies for classroom use, scholarship, research
and similar purposes. [36] Further, the limitations of the
exclusive use of copyrighted materials under Sections
10 and 11 of P.D. No. 49 in consonance with the
principle of fair use have been reproduced and
incorporated in the new law. [37] All told, Laktaw is
inapplicable.
Fair use has been defined as a privilege to use the
copyrighted material in a reasonable manner without
the consent of the copyrighted owner or as a copying
the theme or ideas rather than their expression. [38] No
question of fair or unfair use arises however, if no
copying is proved to begin with. This is in consonance
with the principle that there can be no infringement if
there was no copying. [39] It is only where some form of
copying has been shown that it becomes necessary to
determine whether it has been carried to an "unfair,"
that is, illegal, extent. [40] Consequently, there is no
reason to address the issue of whether ROBLES abused
a writer's right to fair use with the ascertainment that
DEP was not a copy or a substantial copy of CET.
WHEREFORE, I vote to DENY the petition and to AFFIRM
the challenged decision of 27 June 1997 of the Court of
Appeals.
Page 140 of 307

2. Harper & Row, Publishers v. Nation
Enterprises, 471 U.S. 539
Case Digest11:
Facts:In 1977, former President Gerald Ford
contracted with Harper & Row, Publishers, Inc. to
publish his memoirs. Harper & Row negotiated a
prepublication agreement with Time Magazine for
the right to excerpt 7,500 words from Ford's
account of his pardon of former President Richard
Nixon. Before Time released its article, an
unauthorized source provided The Nation
Magazine with the unpublished Ford manuscript.
Subsequently, The Nation, using approximately
300 words from the manuscript, scooped Time.
Harper & Row sued The Nation, alleging violations
of the Copyright Revision Act of 1976. The District
Court held that The Nation's use of the
copyrighted material constituted infringement. In
reversing, the Court of Appeals held that Nation's
use of the copyrighted material was sanctioned as
a fair use.
Issue:Did the Copyright Revision Act of 1976's
fair use doctrine sanction The Nation's
unauthorized use of quotations from former
President Gerald Ford's unpublished manuscript?
11"Harper & Row, Publishers, Inc. v. Nation Enterprises." Oyez. Chicago-Kent
College of Law at Illinois Tech, n.d. Aug 25, 2016.
<https://www.oyez.org/cases/1984/83-1632>
Held:No. In a 6-3 opinion delivered by Justice
Sandra Day O'Connor, the Court held that The
Nation's use of verbatim excerpts from the
unpublished manuscript was not a fair use. The
Court reasoned that the unpublished nature of a
work is a key, though not necessarily
determinative, factor tending to negate a defense
of fair use. "Under ordinary circumstances, the
author's right to control the first public
appearance of his undisseminated expression will
outweigh a claim of fair use," wrote Justice
O'Connor. Accordingly, the Court concluded that
the four statutory factors relevant to determining
whether the use was fair were not satisfied. In his
dissent, Justice William J. Brennan, Jr., argued that
the Court was advancing the protection of the
copyright owner's economic interest "through an
exceedingly narrow definition of the scope of fair
use."
Original:
JUSTICE O'CONNOR delivered the opinion of the Court.
[1] This case requires us to consider to what extent the
"fair use" provision of the Copyright Revision Act of
1976 (hereinafter [p*542] the Copyright Act), 17 U.S.C.
� 107, sanctions the unauthorized use of quotations
from a public figure's unpublished manuscript. In March,
1979, an undisclosed source provided The Nation
Magazine with the unpublished manuscript of "A Time to
Heal: The Autobiography of Gerald R. Ford." Working
directly from the purloined manuscript, an editor of The
Nation produced a short piece entitled "The Ford
Page 141 of 307
Memoirs -- Behind the Nixon Pardon." The piece was
timed to "scoop" an article scheduled shortly to appear
in Time Magazine. Time had agreed to purchase the
exclusive right to print prepublication excerpts from the
copyright holders, Harper & Row Publishers, Inc.
(hereinafter Harper & Row), and Reader's Digest
Association, Inc. (hereinafter Reader's Digest). As a
result of The Nation article, Time canceled its
agreement. Petitioners brought a successful copyright
action against The Nation. On appeal, the Second Circuit
reversed the lower court's finding of infringement,
holding that The Nation's act was sanctioned as a "fair
use" of the copyrighted material. We granted certiorari,
467 U.S. 1214 (1984), and we now reverse.
I Navasky, editor of The Nation, a political commentary
[2] In February, 1977, shortly after leaving the White
House, former President Gerald R. Ford contracted with
petitioners Harper & Row and Reader's Digest, to
publish his as yet unwritten memoirs. The memoirs
were to contain "significant hitherto unpublished
material" concerning the Watergate crisis, Mr. Ford's
pardon of former President Nixon, and "Mr. Ford's
reflections on this period of history, and the morality
and personalities involved." App. to Pet. for Cert. C-14 -
C-15. In addition to the right to publish the Ford
memoirs in book form, the agreement gave petitioners
the exclusive right to license prepublication excerpts,
known in the trade as "first serial rights." Two years
later, as the memoirs were nearing completion,
petitioners negotiated a prepublication licensing
agreement with Time, a weekly news magazine. Time
agreed to pay $25,000, $12,500 in advance and an
[p*543] additional $12,500 at publication, in exchange
for the right to excerpt 7,500 words from Mr. Ford's
account of the Nixon pardon. The issue featuring the
excerpts was timed to appear approximately one week
before shipment of the full-length book version to
bookstores. Exclusivity was an important consideration;
Harper & Row instituted procedures designed to
maintain the confidentiality of the manuscript, and Time
retained the right to renegotiate the second payment
should the material appear in print prior to its release of
the excerpts.
[3] Two to three weeks before the Time article's
scheduled release, an unidentified person secretly
brought a copy of the Ford manuscript to Victor
magazine. Mr. Navasky knew that his possession of the
manuscript was not authorized, and that the manuscript
must be returned quickly to his "source" to avoid
discovery. 557 F.Supp. 1067, 1069 (SDNY 1983). He
hastily put together what he believed was "a real hot
news story" composed of quotes, paraphrases, and facts
drawn exclusively from the manuscript. Ibid. Mr.
Navasky attempted no independent commentary,
research or criticism, in part because of the need for
speed if he was to "make news" by "publish[ing] in
advance of publication of the Ford book." App. 416-417.
The 2,250-word article, reprinted in the Appendix to this
opinion, appeared on April 3, 1979. As a result of The
Nation's article, Time canceled its piece and refused to
pay the remaining $12,500.
[4] Petitioners brought suit in the District Court for the
Southern District of New York, alleging conversion,
tortious interference with contract, and violations of the
Page 142 of 307
Copyright Act. After a 6-day bench trial, the District
Judge found that "A Time to Heal" was protected by
copyright at the time of The Nation publication and that
respondents' use of the copyrighted material
constituted an infringement under the Copyright Act,
�� 106(1), (2), and (3), protecting respectively the
right to reproduce the work, the right to license
preparation of derivative works, and the right of first
distribution of [p*544] the copyrighted work to the
public. App. to Pet. for Cert. C-29 - C-30. The District
Court rejected respondents' argument that The Nation's
piece was a "fair use" sanctioned by � 107 of the Act.
Though billed as "hot news," the article contained no
new facts. The magazine had "published its article for
profit," taking "the heart" of "a soon-to-be published"
work. This unauthorized use "caused the Time
agreement to be aborted, and thus diminished the value
of the copyright." 557 F.Supp. at 1072. Although certain
elements of the Ford memoirs, such as historical facts
and memoranda, were not per se copyrightable, the
District Court held that it wasthe totality of these facts
and memoranda collected, together with Ford's
reflections, that made them of value to The Nation,
[and] this . . . totality . . . is protected by the copyright
laws.The court awarded actual damages of $12,500.
[5] A divided panel of the Court of Appeals for the
Second Circuit reversed. The majority recognized that
Mr. Ford's verbatim "reflections" were original
"expression" protected by copyright. But it held that the
District Court had erred in assuming the "coupling [of
these reflections] with uncopyrightable fact transformed
that information into a copyrighted `totality.'" 723 F.2d
195, 205 (1983). The majority noted that copyright
attaches to expression, not facts or ideas. It concluded
that, to avoid granting a copyright monopoly over the
facts underlying history and news, "`expression' [in such
works must be confined] to its barest elements -- the
ordering and choice of the words themselves." Id. at
204. Thus similarities between the original and the
challenged work traceable to the copying or
paraphrasing of uncopyrightable material, such as
historical facts, memoranda and other public
documents, and quoted remarks of third parties, must
be disregarded in evaluating whether the second
author's use was fair or infringing.
When the uncopyrighted material is stripped away, the
article in The Nation contains, at most, approximately
[p*545] 300 words that are copyrighted. These
remaining paragraphs and scattered phrases are all
verbatim quotations from the memoirs which had not
appeared previously in other publications. They include
a short segment of Ford's conversations with Henry
Kissinger and several other individuals. Ford's
impressionistic depictions of Nixon, ill with phlebitis
after the resignation and pardon, and of Nixon's
character, constitute the major portion of this material.
It is these parts of the magazine piece on which [the
court] must focus in [its] examination of the question
whether there was a "fair use" of copyrighted matter.
Examining the four factors enumerated in � 107, see
infra at 547, n. 2, the majority found the purpose of the
article was "news reporting," the original work was
essentially factual in nature, the 300 words appropriated
were insubstantial in relation to the 2,250-word piece,
and the impact on the market for the original was
minimal, as "the evidence [did] not support a finding
Page 143 of 307
that it was the very limited use of expression per
se which led to Time's decision not to print the excerpt."
The Nation's borrowing of verbatim quotations merely
"len[t] authenticity to this politically significant
material . . . complementing the reporting of the facts."
723 F.2d at 208. The Court of Appeals was especially
influenced by the "politically significant" nature of the
subject matter and its conviction that it is not "the
purpose of the Copyright Act to impede that harvest of
knowledge so necessary to a democratic state" or "chill
the activities of the press by forbidding a circumscribed
use of copyrighted words."
II
[6] We agree with the Court of Appeals that copyright is
intended to increase, and not to impede, the harvest of
knowledge. But we believe the Second Circuit gave
insufficient deference to the scheme established by the
Copyright Act for [p*546] fostering the original works
that provide the seed and substance of this harvest. The
rights conferred by copyright are designed to assure
contributors to the store of knowledge a fair return for
their labors.
[7] 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.
[8]As we noted last Term:
[This] 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 monopoly created by copyright thus rewards the
individual author in order to benefit the public." Id.at
477 (dissenting opinion). This principle applies equally
to works of fiction and nonfiction. The book at issue
here, for example, was two years in the making, and
began with a contract giving the author's copyright to
the publishers in exchange for their services in
producing and marketing the work. In preparing the
book, Mr. Ford drafted essays and word portraits of
public figures and participated in hundreds of taped
interviews that were later distilled to chronicle his
personal viewpoint. It is evident that the monopoly
granted by copyright actively served its intended
purpose of inducing the creation of new material of
potential historical value.
[9] Section 106 of the Copyright Act confers a bundle of
exclusive rights to the owner of the copyright. [n1]
Under the Copyright Act, these rights -- to publish, copy,
and distribute the author's work -- vest in the author of
an original work from the time of its creation. � 106. In
practice, the author commonly sells his rights to
publishers who offer royalties in exchange for their
services in producing and marketing the author's work.
The copyright owner's rights, however, are subject to
certain statutory exceptions. �� 107-118. Among
these is � 107, which codifies the traditional privilege
Page 144 of 307
of other authors to make "fair use" of an earlier writer's
work. [n2] In addition, no author may copyright facts or
ideas. � 102. The copyright is limited to those aspects
of the work -- termed "expression" -- that display the
stamp of the author's originality.
[10] Creation of a nonfiction work, even a compilation of
pure fact, entails originality. See, e.g., Schroeder v.
William Morrow & Co., 566 F.2d 3 (CA7 1977) (copyright
in gardening directory); (originator of a photograph may
claim copyright in his work). The copyright holders of "A
Time to Heal" complied with the relevant statutory
notice and registration [p*548] procedures. See ��
106, 401, 408; App. to Pet. for Cert. C-20. Thus there is
no dispute that the unpublished manuscript of "A Time
to Heal," as a whole, was protected by � 106 from
unauthorized reproduction. Nor do respondents dispute
that verbatim copying of excerpts of the manuscript's
original form of expression would constitute
infringement unless excused as fair use. Yet copyright
does not prevent subsequent users from copying from a
prior author's work those constituent elements that are
not original -- for example, quotations borrowed under
the rubric of fair use from other copyrighted works,
facts, or materials in the public domain -- as long as
such use does not unfairly appropriate the author's
original contributions. Ibid.; A. Latman, Fair Use of
Copyrighted Works (1958), reprinted as Study No. 14 in
Copyright Law Revision Studies Nos. 1416, prepared for
the Senate Committee on the Judiciary, 86th Cong., 2d
Sess., 7 (1960) (hereinafter Latman). Perhaps the
controversy between the lower courts in this case over
copyrightability is more aptly styled a dispute over
whether The Nation's appropriation of unoriginal and
uncopyrightable elements encroached on the originality
embodied in the work as a whole. Especially in the
realm of factual narrative, the law is currently unsettled
regarding the ways in which uncopyrightable elements
combine with the author's original contributions to form
protected expression. Compare Wainwright Securities
Inc. v. Wall Street Transcript Corp., 558 F.2d 91 (CA2
1977) (protection accorded author's analysis,
structuring of material and marshaling of facts), with
Hoehling v. Universal City Studios, Inc., 618 F.2d 972
(CA2 1980) (limiting protection to ordering and choice of
words). See, e.g., 1 Nimmer � 2.11[D], at 2-164 - 2-
165.
[11] We need not reach these issues, however, as The
Nation has admitted to lifting verbatim quotes of the
author's original language totaling between 300 and
400 words and constituting some 13% of The Nation
article. In using generous [p*549] verbatim excerpts of
Mr. Ford's unpublished manuscript to lend authenticity
to its account of the forthcoming memoirs, The Nation
effectively arrogated to itself the right of first
publication, an important marketable subsidiary right.
For the reasons set forth below, we find that this use of
the copyrighted manuscript, even stripped to the
verbatim quotes conceded by The Nation to be
copyrightable expression, was not a fair use within the
meaning of the Copyright Act.
III
A
[12] Fair use was traditionally defined as "a privilege in
others than the owner of the copyright to use the
copyrighted material in a reasonable manner without
Page 145 of 307
his consent." H. Ball, Law of Copyright and Literary
Property 260 (1944) (hereinafter Ball). The statutory
formulation of the defense of fair use in the Copyright
Act reflects the intent of Congress to codify the common
law doctrine. 3 Nimmer � 13.05. Section 107 requires a
case-by-case determination whether a particular use is
fair, and the statute notes four nonexclusive factors to
be considered. This approach was "intended to restate
the [preexisting] judicial doctrine of fair use, not to
change, narrow, or enlarge it in any way." H.R.Rep. No.
94-1476, p. 66 (1976) (hereinafter House Report).
[T]he author's consent to a reasonable use of his
copyrighted works ha[d] always been implied by the
courts as a necessary incident of the constitutional
policy of promoting the progress of science and the
useful arts, since a prohibition of such use would inhibit
subsequent writers from attempting to improve upon
prior works, and thus . . . frustrate the very ends sought
to be attained.
Professor Latman, in a study of the doctrine of fair use
commissioned by Congress for the revision effort, see
Sony Corp. of America v. Universal City Studios,
Inc., 464 U.S. at 462-463, n. 9 (dissenting opinion),
summarized prior law as turning on theimportance
[p*550] of the material copied or performed from the
point of view of the reasonable copyright owner. In other
words, would the reasonable copyright owner have
consented to the use?
Latman 15. [n3]
[13] As early as 1841, Justice Story gave judicial
recognition to the doctrine in a case that concerned the
letters of another former President, George Washington.
[A] reviewer may fairly cite largely from the original
work, if his design be really and truly to use the
passages for the purposes of fair and reasonable
criticism. On the other hand, it is as clear that, if he thus
cites the most important parts of the work, with a view
not to criticise, but to supersede the use of the original
work, and substitute the review for it, such a use will be
deemed in law a piracy.
Folsom v. Marsh, 9 F.Cas. 342, 344-345 (No. 4,901) (CC
Mass.) As Justice Story's hypothetical illustrates, the fair
use doctrine has always precluded a use that
"supersede[s] the use of the
original." Ibid. Accord, S.Rep. No. 94-473, p. 65 (1975)
(hereinafter Senate Report).
[14] Perhaps because the fair use doctrine was
predicated on the author's implied consent to
"reasonable and customary" use when he released his
work for public consumption, fair use traditionally was
not recognized as a defense to charges [p*551] of
copying from an author's as yet unpublished works. [n4]
Under common law copyright, "the property of the
author . . . in his intellectual creation [was] absolute
until he voluntarily part[ed] with the same." This
absolute rule, however, was tempered in practice by the
equitable nature of the fair use doctrine. In a given
case, factors such as implied consent through de
facto publication on performance or dissemination of a
work may tip the balance of equities in favor of
prepublication use. See Copyright Law Revision -- Part 2:
Page 146 of 307
Discussion and Comments on Report of the Register of
Copyrights on General Revision of the U.S. Copyright
Law, 88th Cong., 1st Sess., 27 (H.R. Comm. Print 1963)
(discussion suggesting works disseminated to the public
in a form not constituting a technical "publication"
should nevertheless be subject to fair use); 3 Nimmer �
13.05, at 13-62, n. 2. But it has never been seriously
disputed that "the fact that the plaintiff's work is
unpublished . . . is a factor tending to negate the
defense of fair use." Ibid. Publication of an author's
expression before he has authorized its dissemination
seriously infringes the author's right to decide when and
whether it will be made public, a factor not present in
fair use of published works. [n5] [p*552] Respondents
contend, however, that Congress, in including first
publication among the rights enumerated in � 106,
which are expressly subject to fair use under � 107,
intended that fair use would apply in pari materia to
published and unpublished works. The Copyright Act
does not support this proposition.
[15] The Copyright Act represents the culmination of a
major legislative reexamination of copyright doctrine.
Among its other innovations, it eliminated publication
"as a dividing line between common law and statutory
protection," House Report at 129, extending statutory
protection to all works from the time of their creation. It
also recognized for the first time a distinct statutory
right of first publication, which had previously been an
element of the common law protections afforded
unpublished works. The Report of the House Committee
on the Judiciary confirms thatClause (3) of section 106,
establishes the exclusive right of publications. . . . Under
this provision, the copyright owner would have the right
to control the first public distribution of an authorized
copy . . . of his work.
[16] Though the right of first publication, like the other
rights enumerated in � 106, is expressly made subject
to the fair use provision of � 107, fair use analysis must
always be tailored to the individual case. Id. at 65; 3
Nimmer � 13.05[A]. The [p*553] nature of the interest
at stake is highly relevant to whether a given use is fair.
From the beginning, those entrusted with the task of
revision recognized theoverbalancing reasons to
preserve the common law protection of undisseminated
works until the author or his successor chooses to
disclose them.
The right of first publication implicates a threshold
decision by the author whether and in what form to
release his work. First publication is inherently different
from other � 106 rights in that only one person can be
the first publisher; as the contract with Time illustrates,
the commercial value of the right lies primarily in
exclusivity. Because the potential damage to the author
from judicially enforced "sharing" of the first publication
right with unauthorized users of his manuscript is
substantial, the balance of equities in evaluating such a
claim of fair use inevitably shifts.
[17] The Senate Report confirms that Congress intended
the unpublished nature of the work to figure
prominently in fair use analysis. In discussing fair use of
photocopied materials in the classroom the Committee
Report states:
Page 147 of 307
A key, though not necessarily determinative, factor in
fair use is whether or not the work is available to the
potential user. If the work is "out of print" and
unavailable for purchase through normal channels, the
user may have more justification for reproducing it. . . .
The applicability of the fair use doctrine to unpublished
works is narrowly limited, since, although the work is
unavailable, this is the result of a deliberate choice on
the part of the copyright owner. Under ordinary
circumstances, the copyright owner's "right of first
publication" would outweigh any needs of reproduction
for classroom purposes.
Although the Committee selected photocopying of
classroom materials to illustrate fair use, it emphasized
that "the same [p*554] general standards of fair use are
applicable to all kinds of uses of copyrighted
material." We find unconvincing respondents' contention
that the absence of the quoted passage from the House
Report indicates an intent to abandon the traditional
distinction between fair use of published and
unpublished works. It appears instead that the fair use
discussion of photocopying of classroom materials was
omitted from the final Report because educators and
publishers in the interim had negotiated a set of
guidelines that rendered the discussion obsolete. House
Report at 67. The House Report nevertheless
incorporates the discussion by reference, citing to the
Senate Report and stating: "The Committee has
reviewed this discussion, and considers it still has value
as an analysis of various aspects of the [fair use]
problem."
[18] Even if the legislative history were entirely silent,
we would be bound to conclude from Congress'
characterization of � 107 as a "restatement" that its
effect was to preserve existing law concerning fair use
of unpublished works as of other types of protected
works, and not to "change, narrow, or enlarge it." Id. at
66. We conclude that the unpublished nature of a work
is "[a] key, though not necessarily determinative, factor"
tending to negate a defense of fair use.
[19] We also find unpersuasive respondents' argument
that fair use may be made of a soon-to-be-published
manuscript on the ground that the author has
demonstrated he has no interest in nonpublication. This
argument assumes that the unpublished nature of
copyrighted material is only relevant to letters or other
confidential writings not intended for dissemination. It is
true that common law copyright was often enlisted in
the service of personal privacy. In its commercial guise,
however, an author's right to choose when he will
publish is no less deserving of protection. [p*555] The
period encompassing the work's initiation, its
preparation, and its grooming for public dissemination is
a crucial one for any literary endeavor. The Copyright
Act, which accords the copyright owner the "right to
control the first public distribution" of his work, House
Report at 62, echos the common law's concern that the
author or copyright owner retain control throughout this
critical stage. The obvious benefit to author and public
alike of assuring authors the leisure to develop their
ideas free from fear of expropriation outweighs any
short-term "news value" to be gained from premature
publication of the author's expression. (The absolute
protection the common law accorded to soon-to-be
Page 148 of 307
published works "[was] justified by [its] brevity and
expedience"). The author's control of first public
distribution implicates not only his personal interest in
creative control, but his property interest in exploitation
of prepublication rights, which are valuable in
themselves and serve as a valuable adjunct to publicity
and marketing. (successful marketing depends on
coordination of serialization and release to public);
Marks, Subsidiary Rights and Permissions, in What
Happens in Book Publishing 230 (C. Grannis ed.1967)
(exploitation of subsidiary rights is necessary to
financial success of new books). Under ordinary
circumstances, the author's right to control the first
public appearance of his undisseminated expression will
outweigh a claim of fair use.
B No author may copyright his ideas or the facts he
[20] Respondents, however, contend that First
Amendment values require a different rule under the
circumstances of this case. The thrust of the decision
below is that "[t]he scope of [fair use] is undoubtedly
wider when the information [p*556] conveyed relates to
matters of high public concern." Consumers Union of
the United States, Inc. v. General Signal Corp., 724 F.2d
1044, 1050 (CA2 1983) (construing 723 F.2d 195 (1983)
(case below) as allowing advertiser to quote Consumer
Reports), cert. denied, 469 U.S. 823 (1984).
Respondents advance the substantial public import of
the subject matter of the Ford memoirs as grounds for
excusing a use that would ordinarily not pass muster as
a fair use -- the piracy of verbatim quotations for the
purpose of "scooping" the authorized first serialization.
Respondents explain their copying of Mr. Ford's
expression as essential to reporting the news story it
claims the book itself represents. In respondents' view,
not only the facts contained in Mr. Ford's memoirs, but
"the precise manner in which [he] expressed himself
[were] as newsworthy as what he had to say." Brief for
Respondents 38-39. Respondents argue that the public's
interest in learning this news as fast as possible
outweighs the right of the author to control its first
publication.
[21] The Second Circuit noted, correctly, that copyright's
idea/ expression dichotomystrike[s] a definitional
balance between the First Amendment and the
Copyright Act by permitting free communication of facts
while still protecting an author's expression.
narrates. (Copyright laws are not restrictions on
freedom of speech, as copyright protects only form of
expression, and not the ideas expressed); 1 Nimmer �
1.10[B][2]. As this Court long ago observed:
[T]he news element -- the information respecting
current events contained in the literary production -- is
not the creation of the writer, but is a report of matters
that ordinarily are publici juris; it is the history of the
day.
International News Service v. Associated Press, 248 U.S.
215, 234 (1918). But copyright assures those who write
and publish factual narratives such as "A Time to Heal"
that [p*557] they may at least enjoy the right to market
the original expression contained therein as just
compensation for their investment.
Page 149 of 307

[22] Respondents' theory, however, would expand fair
use to effectively destroy any expectation of copyright
protection in the work of a public figure. Absent such
protection, there would be little incentive to create or
profit in financing such memoirs, and the public would
be denied an important source of significant historical
information. The promise of copyright would be an
empty one if it could be avoided merely by dubbing the
infringement a fair use "news report" of the book.
[23] Nor do respondents assert any actual necessity for
circumventing the copyright scheme with respect to the
types of works and users at issue here. [n6] Where an
author and publisher have invested extensive resources
in creating an original work and are poised to release it
to the public, no legitimate aim is served by preempting
the right of first publication. The fact that the words the
author has chosen to clothe his narrative may of
themselves be "newsworthy" is not an independent
justification for unauthorized copying of the author's
expression prior to publication. To paraphrase another
recent Second Circuit decision:
[Respondent] possessed an unfettered right to use any
factual information revealed in [the memoirs] for the
purpose of enlightening its audience, but it can claim
[p*558] no need to "bodily appropriate" [Mr. Ford's]
"expression" of that information by utilizing portions of
the actual [manuscript]. The public interest in the free
flow of information is assured by the law's refusal to
recognize a valid copyright in facts. The fair use
doctrine is not a license for corporate theft, empowering
a court to ignore a copyright whenever it determines
the underlying work contains material of possible public
importance.
[24] In our haste to disseminate news, it should not be
forgotten that the Framers intended copyright itself to
be the engine of free expression. By establishing a
marketable right to the use of one's expression,
copyright supplies the economic incentive to create and
disseminate ideas. This Court stated in Mazer v.
Stein, 347 U.S. 201, 209 (1954):
The economic philosophy behind the clause
empowering Congress to grant patents and copyrights
is the conviction that encouragement of individual effort
by personal gain is the best way to advance public
welfare through the talents of authors and inventors in
"science and useful Arts."
[25] And again in Twentieth Century Music Corp. v.
Aiken:
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 [the
creation of useful works] for the general public good.
[26] It is fundamentally at odds with the scheme of
copyright to accord lesser rights in those works that are
of greatest importance to the public. Such a notion
ignores the major premise of copyright, and injures
author and public alike.
[T]o propose that fair use be imposed whenever the
"social value [of dissemination] . . . outweighs any
detriment to the artist" would be to propose depriving
Page 150 of 307
copyright owners of their right in the property precisely
when they encounter those users who could afford to
pay for it.
Gordon, Fair Use as Market Failure: A Structural and
Economic Analysis of the Betamax Case and its
Predecessors. And as one commentator has noted:
If every volume that was in the public interest could be
pirated away by a competing publisher, . . . the public
[soon] would have nothing worth reading.
[27] Moreover, freedom of thought and expression
"includes both the right to speak freely and the right to
refrain from speaking at all." Wooley v. Maynard, 430
U.S. 705, 714 (1977) (BURGER, C.J.). We do not suggest
this right not to speak would sanction abuse of the
copyright owner's monopoly as an instrument to
suppress facts. But in the words of New York's Chief
Judge Fuld:
The essential thrust of the First Amendment is to
prohibit improper restraints on the voluntary public
expression of ideas; it shields the man who wants to
speak or publish when others wish him to be quiet.
There is necessarily, and within suitably defined areas, a
concomitant freedom not to speak publicly, one which
serves the same ultimate end as freedom of speech in
its affirmative aspect.
Courts and commentators have recognized that
copyright, and the right of first publication in particular,
serve this countervailing First Amendment value.
[28] In view of the First Amendment protections already
embodied in the Copyright Act's distinction between
copyrightable expression and uncopyrightable facts and
ideas, and the latitude for scholarship and comment
traditionally afforded by fair use, we see no warrant for
expanding the doctrine of fair use to create what
amounts to a public figure exception to copyright.
Whether verbatim copying from a public figure's
manuscript in a given case is or is not fair must be
judged according to the traditional equities of fair use.
IV
[29] Fair use is a mixed question of law and fact. Pacific
& Southern Co. v. Duncan, 744 F.2d 1490, 1495, n. 8
(CA11 1984). Where the district court has found facts
sufficient to evaluate each of the statutory factors, an
appellate courtneed not remand for further
factfinding . . . , [but] may conclude as a matter of law
that [the challenged use] do[es] not qualify as a fair use
of the copyrighted work.
Thus whether The Nation article constitutes fair use
under � 107 must be reviewed in light of the principles
discussed above. The factors enumerated in the section
are not meant to be exclusive:
[S]ince the doctrine is an equitable rule of reason, no
generally applicable definition is possible, and each
case raising the question must be decided on its own
facts.
House Report at 65. The four factors identified by
Congress as especially relevant in determining whether
the use was fair are: (1) the purpose and character of
Page 151 of 307
the use; (2) the nature of the copyrighted work; (3) the
substantiality of the portion used in relation to the
copyrighted work as [p*561] a whole; (4) the effect on
the potential market for or value of the copyrighted
work. We address each one separately.
[30] Purpose of the Use. The Second Circuit correctly
identified news reporting as the general purpose of The
Nation's use. News reporting is one of the examples
enumerated in � 107 to "give some idea of the sort of
activities the courts might regard as fair use under the
circumstances." Senate Report at 61. This listing was
not intended to be exhaustive, see ibid.; � 101
(definition of "including" and "such as"), or to single out
any particular use as presumptively a "fair" use. The
drafters resisted pressures from special interest groups
to create presumptive categories of fair use, but
structured the provision as an affirmative defense
requiring a case-by-case analysis.
[W]hether a use referred to in the first sentence of
section 107 is a fair use in a particular case will depend
upon the application of the determinative factors,
including those mentioned in the second sentence.
Senate Report at 62. The fact that an article arguably is
"news," and therefore a productive use, is simply one
factor in a fair use analysis.
[31] We agree with the Second Circuit that the trial
court erred in fixing on whether the information
contained in the memoirs was actually new to the
public. As Judge Meskill wisely noted, "[c]ourts should
be chary of deciding what is and what is not news."
The issue is not what constitutes "news," but whether a
claim of newsreporting is a valid fair use defense to an
infringement of copyrightable expression.
The Nation has every right to seek to be the first to
publish information. But The Nation went beyond simply
reporting uncopyrightable information and actively
sought to exploit the headline value of its infringement,
making a "news event" out of its unauthorized first
publication of a noted figure's copyrighted expression.
[32] The fact that a publication was commercial, as
opposed to nonprofit, is a separate factor that tends to
weigh against a finding of fair use.
[E]very commercial use of copyrighted material is
presumptively an unfair exploitation of the monopoly
privilege that belongs to the owner of the copyright.
In arguing that the purpose of news reporting is not
purely commercial, The Nation misses the point entirely.
The crux of the profit/nonprofit distinction is not whether
the sole motive of the use is monetary gain, but
whether the user stands to profit from exploitation of
the copyrighted material without paying the customary
price.
[33] In evaluating character and purpose, we cannot
ignore The Nation's stated purpose of scooping the
forthcoming hardcover and Time abstracts. [n7] App. to
Pet. for Cert. C-27. The Nation's use had not merely the
incidental effect, but the intended purpose, of
supplanting the copyright holder's commercially
Page 152 of 307
valuable right of first publication. Also relevant to the
"character" of the use is "the propriety of the
defendant's conduct." "Fair use presupposes `good faith'
and `fair dealing.'" The trial court found that The Nation
knowingly exploited a purloined manuscript. Unlike the
typical claim of fair use, The Nation cannot offer up
even the fiction of consent as justification. Like its
competitor newsweekly, it was free to bid for the right
of abstracting excerpts from "A Time to Heal." Fair use
"distinguishes between `a true scholar and a chiseler
who infringes a work for personal profit.'"
[34] Nature of the Copyrighted Work. Second, the Act
directs attention to the nature of the copyrighted work.
"A Time to Heal" may be characterized as an
unpublished historical narrative or autobiography. The
law generally recognizes a greater need to disseminate
factual works than works of fiction or fantasy.
[E]ven within the field of fact works, there are
gradations as to the relative proportion of fact and
fancy. One may move from sparsely embellished maps
and directories to elegantly written biography. The
extent to which one must permit expressive language to
be copied, in order to assure dissemination of the
underlying facts, will thus vary from case to case.
Some of the briefer quotes from the memoirs are
arguably necessary adequately to convey the facts; for
example, Mr. Ford's characterization of the White House
tapes as the "smoking gun" is perhaps so integral to the
idea expressed as to be inseparable from it. But The
Nation did not stop at isolated phrases, and instead
excerpted subjective descriptions and portraits of public
figures whose power lies in the author's individualized
expression. Such use, focusing on the most expressive
elements of the work, exceeds that necessary to
disseminate the facts.
[35] The fact that a work is unpublished is a critical
element of its "nature." Our prior discussion establishes
that the scope of fair use is narrower with respect to
unpublished works. While even substantial quotations
might qualify as fair use in a review of a published work
or a news account of a speech that had been delivered
to the public or disseminated to the press, see House
Report at 65, the author's right to control the first public
appearance of his expression weighs against such use
of the work before its release. The right of first
publication encompasses not only the choice whether to
publish at all, but also the choices of when, where, and
in what form first to publish a work.
[36] In the case of Mr. Ford's manuscript, the copyright
holders' interest in confidentiality is irrefutable; the
copyright holders had entered into a contractual
undertaking to "keep the manuscript confidential" and
required that all those to whom the manuscript was
shown also "sign an agreement to keep the manuscript
confidential." While the copyright holders' contract with
Time required Time to submit its proposed article seven
days before publication, The Nation's clandestine
publication afforded no such opportunity for creative or
quality control. Id. at C-18. It was hastily patched
together, and contained "a number of inaccuracies."
App. 300b-300c (testimony of Victor Navasky). A use
that so clearly infringes the copyright holder's interests
Page 153 of 307
in confidentiality and creative control is difficult to
characterize as "fair."
[37] Amount and Substantiality of the Portion
Used. Next, the Act directs us to examine the amount
and substantiality of the portion used in relation to the
copyrighted work as a whole. In absolute terms, the
words actually quoted were an insubstantial portion of
"A Time to Heal." The District Court, however, found
that "[T]he Nation took what was essentially the heart of
the book." We believe the Court of Appeals erred in
overruling the District Judge's evaluation of the
qualitative nature of the taking. A Time editor described
the chapters on the pardon as "the most interesting and
moving parts of the entire manuscript." Reply Brief for
Petitioners 16, n. 8. The portions actually quoted were
selected by Mr. Navasky as among the most powerful
passages in those chapters. He testified that he used
verbatim excerpts because simply reciting the
information could not adequately convey the "absolute
certainty with which [Ford] expressed himself," App.
303, or show that "this comes from President
Ford," id. at 305, or carry the "definitive quality" of the
original, id. at 306. In short, he quoted these passages
precisely because they qualitatively embodied Ford's
distinctive expression.
[38] As the statutory language indicates, a taking may
not be excused merely because it is insubstantial with
respect to the infringing work. As Judge Learned Hand
cogently remarked, "no plagiarist can excuse the wrong
by showing how much of his work he did not pirate."
Conversely, the fact that a substantial portion of the
infringing work was copied verbatim is evidence of the
qualitative value of the copied material, both to the
originator and to the plagiarist who seeks to profit from
marketing someone else's copyrighted expression.
[39] Stripped to the verbatim quotes, [n8] the direct
takings from the unpublished manuscript constitute at
least 13% of the infringing [p*566] article. (copyrighted
letters constituted less than 1% of infringing work but
were prominently featured). The Nation article is
structured around the quoted excerpts which serve as
its dramatic focal points. In view of the expressive value
of the excerpts and their key role in the infringing work,
we cannot agree with the Second Circuit that the
"magazine took a meager, indeed an infinitesimal,
amount of Ford's original language."
[40] Effect on the Market. Finally, the Act focuses on
"the effect of the use upon the potential market for or
value of the copyrighted work." This last factor is
undoubtedly the single most important element of fair
use. [n9] "Fair use, when properly applied, is limited to
copying by others which does not materially impair the
marketability of the work which is copied." The trial
court found not merely a potential, but an actual, effect
on the market. Time's cancellation of its projected
serialization and its refusal to pay the $12,500 were the
direct effect of the infringement. The Court of Appeals
rejected this factfinding as clearly erroneous, noting
that the record did not establish a causal relation
between Time's nonperformance and respondents'
unauthorized publication of Mr. Ford's expression, as
opposed to the facts taken from the memoirs.
Page 154 of 307
We disagree. Rarely will a case of copyright
infringement present such clear-cut evidence of actual
damage. Petitioners assured Time that there would be
no other authorized publication of any portion of the
unpublished manuscript prior to April 23,
1979. Any publication of material from chapters 1 and 3
would permit Time to renegotiate its final payment.
Time cited The Nation's article, which contained
verbatim quotes from the unpublished manuscript, as a
reason for its nonperformance. With respect to
apportionment of profits flowing from a copyright
infringement, this Court has held that an infringer who
commingles infringing and noninfringing elements
"must abide the consequences, unless he can make a
separation of the profits so as to assure to the injured
party all that justly belongs to him." (the infringer is
required to prove elements of profits attributable to
other than the infringed work). Similarly, once a
copyright holder establishes with reasonable probability
the existence of a causal connection between the
infringement and a loss of revenue, the burden properly
shifts to the infringer to show that this damage would
have occurred had there been no taking of copyrighted
expression. Petitioners established a prima facie case of
actual damage that respondents failed to rebut. The
trial court properly awarded actual damages and
accounting of profits.
[41] More important, to negate fair use, one need only
show that, if the challenged use "should become
widespread, it would adversely affect
the potential market for the copyrighted work." This
inquiry must take account not only of harm to the
original, but also of harm to the market for derivative
works. If the defendant's work adversely affects the
value of any of the rights in the copyrighted work (in
this case the adaptation [and serialization] right) the
use is not fair.
[42] It is undisputed that the factual material in the
balance of The Nation's article, besides the verbatim
quotes at issue here, was drawn exclusively from the
chapters on the pardon. The excerpts were employed as
featured episodes in a story about the Nixon pardon --
precisely the use petitioners had licensed to Time. The
borrowing of these verbatim quotes from the
unpublished manuscript lent The Nation's piece a
special air of authenticity -- as Navasky expressed it, the
reader would know it was Ford speaking, and not The
Nation. App. 300c. Thus it directly competed for a share
of the market for prepublication excerpts. The Senate
Report states:
With certain special exceptions . . . a use that supplants
any part of the normal market for a copyrighted work
would ordinarily be considered an infringement.
Senate Report at 65. [p*569] Placed in a broader
perspective, a fair use doctrine that permits extensive
prepublication quotations from an unreleased
manuscript without the copyright owner's consent poses
substantial potential for damage to the marketability of
first serialization rights in general.
Isolated instances of minor infringements, when
multiplied many times, become in the aggregate a
major inroad on copyright that must be prevented.
V
Page 155 of 307

[43] The Court of Appeals erred in concluding that The
Nation's use of the copyrighted material was excused by
the public's interest in the subject matter. It erred, as
well, in overlooking the unpublished nature of the work
and the resulting impact on the potential market for first
serial rights of permitting unauthorized prepublication
excerpts under the rubric of fair use. Finally, in finding
the taking "infinitesimal," the Court of Appeals accorded
too little weight to the qualitative importance of the
quoted passages of original expression. In sum, the
traditional doctrine of fair use, as embodied in the
Copyright Act, does not sanction the use made by The
Nation of these copyrighted materials. Any copyright
infringer may claim to benefit the public by increasing
public access to the copyrighted work. But Congress has
not designed, and we see no warrant for judicially
imposing, a "compulsory license" permitting unfettered
access to the unpublished copyrighted expression of
public figures.
[44] The Nation conceded that its verbatim copying of
some 300 words of direct quotation from the Ford
manuscript would constitute an infringement unless
excused as a fair use. Because we find that The Nation's
use of these verbatim excerpts from the unpublished
manuscript was not a fair use, the judgment of the
Court of Appeals is reversed, and the case is remanded
for further proceedings consistent with this opinion.
[45] It is so ordered.
Exceptions to Copyright Protection
Secs. 186 to 190
Section 186. Work of Architecture. - Copyright in a
work of architecture shall include the right to control the
erection of any building which reproduces the whole or a
substantial part of the work either in its original form or
in any form recognizably derived from the original:
Provided, That the copyright in any such work shall not
include the right to control the reconstruction or
rehabilitation in the same style as the original of a
building to which that copyright relates. (n)
Section 187. Reproduction of Published Work. - 187.1.
Notwithstanding the provision of Section 177, and
subject to the provisions of Subsection 187.2, the
private reproduction of a published work in a single
copy, where the reproduction is made by a natural
person exclusively for research and private study, shall
be permitted, without the authorization of the owner of
copyright in the work.
187.2. The permission granted under Subsection 187.1
shall not extend to the reproduction of:
(a) A work of architecture in the form of building or
other construction;
(b) An entire book, or a substantial part thereof, or of a
musical work in graphic form by reprographic means;
(c) A compilation of data and other materials;
(d) A computer program except as provided in Section
189; and
(e) Any work in cases where reproduction would
unreasonably conflict with a normal exploitation of the
Page 156 of 307
work or would otherwise unreasonably prejudice the
legitimate interests of the author. (n)
Section 188. Reprographic Reproduction by Libraries. -
188.1. Notwithstanding the provisions of Subsection
177.6, any library or archive whose activities are not for
profit may, without the authorization of the author of
copyright owner, make a single copy of the work by
reprographic reproduction:
(a) Where the work by reason of its fragile character or
rarity cannot be lent to user in its original form;
(b) Where the works are isolated articles contained in
composite works or brief portions of other published
works and the reproduction is necessary to supply them,
when this is considered expedient, to persons
requesting their loan for purposes of research or study
instead of lending the volumes or booklets which
contain them; and
(c) Where the making of such a copy is in order to
preserve and, if necessary in the event that it is lost,
destroyed or rendered unusable, replace a copy, or to
replace, in the permanent collection of another similar
library or archive, a copy which has been lost, destroyed
or rendered unusable and copies are not available with
the publisher.
188.2. Notwithstanding the above provisions, it shall not
be permissible to produce a volume of a work published
in several volumes or to produce missing tomes or
pages of magazines or similar works, unless the volume,
tome or part is out of stock: Provided, That every library
which, by law, is entitled to receive copies of a printed
work, shall be entitled, when special reasons so require,
to reproduce a copy of a published work which is
considered necessary for the collection of the library but
which is out of stock. (Sec. 13, P.D. 49a)
Section 189. Reproduction of Computer Program. -
189.1. Notwithstanding the provisions of Section 177,
the reproduction in one (1) back-up copy or adaptation
of a computer program shall be permitted, without the
authorization of the author of, or other owner of
copyright in, a computer program, by the lawful owner
of that computer program: Provided, That the copy or
adaptation is necessary for:
(a) The use of the computer program in conjunction with
a computer for the purpose, and to the extent, for which
the computer program has been obtained; and
(b) Archival purposes, and, for the replacement of the
lawfully owned copy of the computer program in the
event that the lawfully obtained copy of the computer
program is lost, destroyed or rendered unusable.
189.2. No copy or adaptation mentioned in this Section
shall be used for any purpose other than the ones
determined in this Section, and any such copy or
adaptation shall be destroyed in the event that
continued possession of the copy of the computer
program ceases to be lawful.
189.3. This provision shall be without prejudice to the
application of Section 185 whenever appropriate. (n)
Section 190. Importation for Personal Purposes. -
190.1. Notwithstanding the provision of Subsection
177.6, but subject to the limitation under the Subsection
Page 157 of 307
185.2, the importation of a copy of a work by an
individual for his personal purposes shall be permitted
without the authorization of the author of, or other
owner of copyright in, the work under the following
circumstances:
(a) When copies of the work are not available in the
Philippines and:
(i) Not more than one (1) copy at one time is imported
for strictly individual use only; or
(ii) The importation is by authority of and for the use of
the Philippine Government; or
(iii) The importation, consisting of not more than three
(3) such copies or likenesses in any one invoice, is not
for sale but for the use only of any religious, charitable,
or educational society or institution duly incorporated or
registered, or is for the encouragement of the fine arts,
or for any state school, college, university, or free public
library in the Philippines.
(b) When such copies form parts of libraries and
personal baggage belonging to persons or families
arriving from foreign countries and are not intended for
sale: Provided, That such copies do not exceed three
(3).
190.2. Copies imported as allowed by this Section may
not lawfully be used in any way to violate the rights of
owner the copyright or annul or limit the protection
secured by this Act, and such unlawful use shall be
deemed an infringement and shall be punishable as
such without prejudice to the proprietor's right of action.
190.3. Subject to the approval of the Secretary of
Finance, the Commissioner of Customs is hereby
empowered to make rules and regulations for
preventing the importation of articles the importation of
which is prohibited under this Section and under treaties
and conventions to which the Philippines may be a party
and for seizing and condemning and disposing of the
same in case they are discovered after they have been
imported. (Sec. 30, P.D. No. 49)
Deposit and Registration
Sec. 191 & 192
Section 191. Registration and Deposit with National
Library and the Supreme Court Library. - After the first
public dissemination of performance by authority of the
copyright owner of a work falling under Subsections
172.1, 172.2 and 172.3 of this Act, there shall, for the
purpose of completing the records of the National
Library and the Supreme Court Library, within three (3)
weeks, be registered and deposited with it, by personal
delivery or by registered mail two (2) complete copies or
reproductions of the work in such form as the directors
of said libraries may prescribe. A certificate of deposit
shall be issued for which the prescribed fee shall be
collected and the copyright owner shall be exempt from
making additional deposit of the works with the National
Library and the Supreme Court Library under other laws.
If, within three (3) weeks after receipt by the copyright
owner of a written demand from the directors for such
deposit, the required copies or reproductions are not
delivered and the fee is not paid, the copyright owner
shall be liable to pay a fine equivalent to the required
Page 158 of 307
fee per month of delay and to pay to the National
Library and the Supreme Court Library the amount of
the retail price of the best edition of the work. Only the
above mentioned classes of work shall be accepted for
deposit by the National Library and the Supreme Court
Library. (Sec. 26, P.D. No. 49a)
Section 192. Notice of Copyright. - Each copy of a work
published or offered for sale may contain a notice
bearing the name of the copyright owner, and the year
of its first publication, and, in copies produced after the
creator's death, the year of such death. (Sec. 27, P.D.
No. 49a)
Cases:
1. Manly Sportswear vs. Dadodette
Enterprises, G.R. 165303, Sept. 20, 2005
Facts:
On March 14, 2003, Special Investigator Eliezer P.
Salcedo of the National Bureau of Investigation (NBI)
applied for a search warrant before the Regional Trial
Court (RTC) of Quezon City, based on the information
that Dadodette Enterprises and/or Hermes Sports
Center were in possession of goods, the copyright of
which belonged to Manly Sportswear Mfg., Inc. (MANLY).
[5]
After finding reasonable grounds that a violation of
Sections 172 and 217 of Republic Act (RA) No.
8293[6] has been committed, Judge Estrella T. Estrada of
RTC-Quezon City, Branch 83, issued on March 17, 2003
Search Warrant No. 4044(03).[7]
Respondents thereafter moved to quash and annul the
search warrant contending that the same is invalid since
the requisites for its issuance have not been complied
with. They insisted that the sporting goods
manufactured by and/or registered in the name of
MANLY are ordinary and common hence, not among the
classes of work protected under Section 172 of RA 8293.
On June 10, 2003, the trial court granted the motion to
quash and declared Search Warrant No. 4044(03) null
and void based on its finding that the copyrighted
products of MANLY do not appear to be original
creations and were being manufactured and distributed
by different companies locally and abroad under various
brands, and therefore unqualified for protection under
Section 172 of RA 8293. Moreover, MANLYs certificates
of registrations were issued only in 2002, whereas there
were certificates of registrations for the same sports
articles which were issued earlier than MANLYs, thus
further negating the claim that its copyrighted products
were original creations.[8]
On August 11, 2003, the trial court denied [9] MANLYs
motion for reconsideration. Hence it filed a petition for
certiorari[10] before the Court of Appeals which was
denied for lack of merit. The appellate court found that
the trial court correctly granted the motion to quash and
that its ruling in the ancillary proceeding did not
preempt the findings of the intellectual property court
as it did not resolve with finality the status or character
of the seized items.
Page 159 of 307

Issue: After denial of its motion for reconsideration on
September 15, 2004, MANLY filed the instant petition for
review on certiorari raising the sole issue of whether or
not the Court of Appeals erred in finding that the
trial court did not gravely abuse its discretion in
declaring in the hearing for the quashal of the
search warrant that the copyrighted products of
MANLY are not original creations subject to the
protection of RA 8293.
Held: We deny the petition.
The power to issue search warrants is exclusively vested
with the trial judges in the exercise of their judicial
function.[11] As such, the power to quash the same also
rests solely with them. After the judge has issued a
warrant, he is not precluded to subsequently quash the
same, if he finds upon reevaluation of the evidence that
no probable cause exists.
Our ruling in Solid Triangle Sales Corp. v. Sheriff, RTC,
Q.C., Br. 93[12] is instructive, thus:
Inherent in the courts power to issue search warrants is
the power to quash warrants already issued. In this
connection, this Court has ruled that the motion to
quash should be filed in the court that issued the
warrant unless a criminal case has already been
instituted in another court, in which case, the motion
should be filed with the latter. The ruling has since been
incorporated in Rule 126 of the Revised Rules of
Criminal Procedure[.]
In the instant case, we find that the trial court did not
abuse its discretion when it entertained the motion to
quash considering that no criminal action has yet been
instituted when it was filed. The trial court also properly
quashed the search warrant it earlier issued after
finding upon reevaluation of the evidence that no
probable cause exists to justify its issuance in the first
place. As ruled by the trial court, the copyrighted
products do not appear to be original creations of
MANLY and are not among the classes of work
enumerated under Section 172 of RA 8293. The trial
court, thus, may not be faulted for overturning its initial
assessment that there was probable cause in view of
its inherent power to issue search warrants and to
quash the same. No objection may be validly posed to
an order quashing a warrant already issued as the court
must be provided with the opportunity to correct itself
of an error unwittingly committed, or, with like effect, to
allow the aggrieved party the chance to convince the
court that its ruling is erroneous.
Moreover, the trial court was acting within bounds when
it ruled, in an ancillary proceeding, that the copyrighted
products of petitioner are not original creations. This is
because in the determination of the existence of
probable cause for the issuance or quashal of a warrant,
it is inevitable that the court may touch on issues
properly threshed out in a regular proceeding. In so
doing, it does not usurp the power of, much less
preclude, the court from making a final judicial
determination of the issues in a full-blown trial.
Consequently, MANLYs assertion that the trial courts
order quashing the warrant preempted the finding of
the intellectual property court has no legal basis.
Page 160 of 307
As pertinently held in Solid Triangle Sales Corp. v.
Sheriff, RTC, Q.C., Br. 93:[13]
When the court, in determining probable cause for
issuing or quashing a search warrant, finds that no
offense has been committed, it does not interfere with
or encroach upon the proceedings in the preliminary
investigation. The court does not oblige the
investigating officer not to file an information for the
courts ruling that no crime exists is only for purposes of
issuing or quashing the warrant. This does not, as
petitioners would like to believe, constitute a usurpation
of the executive function. Indeed, to shirk from this duty
would amount to an abdication of a constitutional
obligation.
...
... The finding by the court that no crime exists does not
preclude the authorized officer conducting the
preliminary investigation from making his own
determination that a crime has been committed and
that probable cause exists for purposes of filing the
information.
As correctly observed by the Court of Appeals, the trial
courts finding that the seized products are not
copyrightable was merely preliminary as it did not
finally and permanently adjudicate on the status and
character of the seized items. MANLY could still file a
separate copyright infringement suit against the
respondents because the order for the issuance or
quashal of a warrant is not res judicata.
Thus, in Vlasons Enterprises Corporation v. Court of
Appeals[14] we held that:
The proceeding for the seizure of property in virtue of a
search warrant does not end with the actual taking of
the property by the proper officers and its delivery,
usually constructive, to the court. The order for the
issuance of the warrant is not a final one and cannot
constitute res judicata. Such an order does not ascertain
and adjudicate the permanent status or character of the
seized property. By its very nature, it is provisional,
interlocutory. It is merely the first step in the process to
determine the character and title of the property. That
determination is done in the criminal action involving
the crime or crimes in connection with which the search
warrant was issued. Hence, such a criminal action
should be prosecuted, or commenced if not yet
instituted, and prosecuted. The outcome of the criminal
action will dictate the disposition of the seized property
We have also ruled in Ching v. Salinas, Sr., et al.[15] that:
The RTC had jurisdiction to delve into and resolve the
issue whether the petitioners utility models are
copyrightable and, if so, whether he is the owner of a
copyright over the said models. It bears stressing that
upon the filing of the application for search warrant, the
RTC was duty-bound to determine whether probable
cause existed, in accordance with Section 4, Rule 126 of
the Rules of Criminal Procedure[.]
Further, the copyright certificates issued in favor of
MANLY constitute merely prima facie evidence of
Page 161 of 307
validity and ownership. However, no presumption of WHEREFORE, the petition is DENIED. The July 13,
validity is created where other evidence exist that may 2004 decision of the Court of Appeals in CA-G.R. SP No.
cast doubt on the copyright validity. Hence, where there 79887 and resolution dated September 15, 2004,
is sufficient proof that the copyrighted products are not areAFFIRMED.
original creations but are readily available in the market
under various brands, as in this case, validity and --------------
originality will not be presumed and the trial court may
properly quash the issued warrant for lack of probable
cause.

Besides, no copyright accrues in favor of MANLY despite

issuance of the certificates of registration and
deposit[16] pursuant to Section 2, Rule 7 of the
Copyrights Safeguards and Regulations[17] which states:

Sec. 2 Effects of Registration and Deposit of Work. The

registration and deposit of the work is purely for
recording the date of registration and deposit of the
work and shall not be conclusive as to copyright
ownership or the term of the copyrights or the rights of
the copyright owner, including neighboring rights.

At most, the certificates of registration and deposit

issued by the National Library and the Supreme Court
Library serve merely as a notice of recording and
registration of the work but do not confer any right or
title upon the registered copyright owner or
automatically put his work under the protective mantle
of the copyright law. It is not a conclusive proof of
copyright ownership. As it is, non-registration and
deposit of the work within the prescribed period only
makes the copyright owner liable to pay a fine.[18]

Page 162 of 307

02 September 2016
Moral Rights
Sec. 193 to 199
CHAPTER X
MORAL RIGHTS
Section 193. Scope of Moral Rights. - The author of a
work shall, independently of the economic rights in
Section 177 or the grant of an assignment or license
with respect to such right, have the right:
193.1. To require that the authorship of the works
be attributed to him, in particular, the right that
his name, as far as practicable, be indicated in a
prominent way on the copies, and in connection
with the public use of his work;
193.2. To make any alterations of his work prior
to, or to withhold it from publication;
193.3. To object to any distortion, mutilation or
other modification of, or other derogatory action
in relation to, his work which would be prejudicial
to his honor or reputation; and
193.4. To restrain the use of his name with respect
to any work not of his own creation or in a
distorted version of his work. (Sec. 34, P.D. No. 49)
Section 194. Breach of Contract. - An author cannot be
compelled to perform his contract to create a work or
for the publication of his work already in existence.
However, he may be held liable for damages for breach
of such contract. (Sec. 35, P.D. No. 49)
Section 195. Waiver of Moral Rights. - An author may
waive his rights mentioned in Section 193 by a written
instrument, but no such waiver shall be valid where its
effects is to permit another:
195.1. To use the name of the author, or the title
of his work, or otherwise to make use of his
reputation with respect to any version or
adaptation of his work which, because of
alterations therein, would substantially tend to
injure the literary or artistic reputation of another
author; or
195.2. To use the name of the author with respect
to a work he did not create. (Sec. 36, P.D. No. 49)
Section 196. Contribution to Collective Work. - When
an author contributes to a collective work, his right to
have his contribution attributed to him is deemed
waived unless he expressly reserves it. (Sec. 37, P.D. No.
49)
Section 197. Editing, Arranging and Adaptation of
Work. - In the absence of a contrary stipulation at the
time an author licenses or permits another to use his
work, the necessary editing, arranging or adaptation of
such work, for publication, broadcast, use in a motion
picture, dramatization, or mechanical or electrical
reproduction in accordance with the reasonable and
customary standards or requirements of the medium in
which the work is to be used, shall not be deemed to
contravene the author's rights secured by this chapter.
Page 163 of 307
Nor shall complete destruction of a work unconditionally
transferred by the author be deemed to violate such
rights. (Sec. 38, P.D. No. 49)
Section 198. Term of Moral Rights. –
198.1. The rights of an author under this chapter
shall last during the lifetime of the author and for
fifty (50) years after his death and shall not be
assignable or subject to license. The person or
persons to be charged with the posthumous
enforcement of these rights shall be named in
writing to be filed with the National Library. In
default of such person or persons, such
enforcement shall devolve upon either the
author's heirs, and in default of the heirs, the
Director of the National Library.
198.2. For purposes of this Section, "Person" shall
mean any individual, partnership, corporation,
association, or society. The Director of the
National Library may prescribe reasonable fees to
be charged for his services in the application of
provisions of this Section. (Sec. 39, P.D. No. 49)
Section 199. Enforcement Remedies. - Violation of any
of the rights conferred by this Chapter shall entitle those
charged with their enforcement to the same rights and
remedies available to a copyright owner. In addition,
damages which may be availed of under the Civil Code
may also be recovered. Any damage recovered after the
creator's death shall be held in trust for and remitted to
his heirs, and in default of the heirs, shall belong to the
government. (Sec. 40, P D No. 49)
Subsidiary Forms of Creation and Ownership
Performers and Producer
Secs 202 to 207
RIGHTS OF PERFORMERS, PRODUCERS OF
SOUNDS RECORDINGS AND BROADCASTING
ORGANIZATIONS
Section 202. Definitions. - For the purpose of this Act,
the following terms shall have the following meanings:
202.1. "Performers" are actors, singers, musicians,
dancers, and other persons who act, sing,
declaim, play in, interpret, or otherwise perform
literary and artistic work;
202.2. "Sound recording" means the fixation of
the sounds of a performance or of other sounds,
or representation of sound, other than in the form
of a fixation incorporated in a cinematographic or
other audiovisual work;
202.3. An "audiovisual work or fixation" is a work
that consists of a series of related images which
impart the impression of motion, with or without
accompanying sounds, susceptible of being made
visible and, where accompanied by sounds,
susceptible of being made audible;
Page 164 of 307

202.4. "Fixation" means the embodiment of
sounds, or of the representations thereof, from
which they can be perceived, reproduced or
communicated through a device;
202. 5. "Producer of a sound recording" means the
person, or the legal entity, who or which takes the
initiative and has the responsibility for the first
fixation of the sounds of a performance or other
sounds, or the representation of sounds;
202.6. "Publication of a fixed performance or a
sound recording" means the offering of copies of
the fixed performance or the sound recording to
the public, with the consent of the right holder:
Provided, That copies are offered to the public in
reasonable quality;
202.7. "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;
202.8. "Broadcasting organization" shall include a
natural person or a juridical entity duly authorized
to engage in broadcasting; and
202.9 "Communication to the public of a
performance or a sound recording" means the
transmission to the public, by any medium,
otherwise than by broadcasting, of sounds of a
performance or the representations of sounds
fixed in a sound recording. For purposes of Section
209, "communication to the public" includes
making the sounds or representations of sounds
fixed in a sound recording audible to the public.
Section 203. Scope of Performers' Rights. - Subject to
the provisions of Section 212, performers shall enjoy the
following exclusive rights:
203.1. As regards their performances, the right of
authorizing:
(a) The broadcasting and other
communication to the public of their
performance; and
(b) The fixation of their unfixed
performance.
203.2. The right of authorizing the direct or
indirect reproduction of their performances fixed
in sound recordings, in any manner or form;
203.3. Subject to the provisions of Section 206,
the right of authorizing the first public distribution
of the original and copies of their performance
fixed in the sound recording through sale or rental
or other forms of transfer of ownership;
203.4. The right of authorizing the commercial
rental to the public of the original and copies of
their performances fixed in sound recordings,
Page 165 of 307
 even after distribution of them by, or pursuant to
the authorization by the performer; and
203.5. The right of authorizing the making
available to the public of their performances fixed
in sound recordings, by wire or wireless means, in
such a way that members of the public may
access them from a place and time individually
chosen by them. (Sec. 42, P.D. No. 49a)
Section 204. Moral Rights of Performers. –
204.1. Independently of a performer's economic
rights, the performer, shall, as regards his live
aural performances or performances fixed in
sound recordings, have the right to claim to be
identified as the performer of his performances,
except where the omission is dictated by the
manner of the use of the performance, and to
object to any distortion, mutilation or other
modification of his performances that would be
prejudicial to his reputation.
204.2. The rights granted to a performer in
accordance with Subsection 203.1 shall be
maintained and exercised fifty (50) years after his
death, by his heirs, and in default of heirs, the
government, where protection is claimed. (Sec.
43, P.D. No. 49)
Section 205. Limitation on Right. –
205.1. Subject to the provisions of Section 206,
once the performer has authorized the
broadcasting or fixation of his performance, the
provisions of Sections 203 shall have no further
application.
205.2. The provisions of Section 184 and Section
185 shall apply mutatis mutandis to performers.
(n)
Section 206. Additional Remuneration for Subsequent
Communications or Broadcasts. - Unless otherwise
provided in the contract, in every communication to the
public or broadcast of a performance subsequent to the
first communication or broadcast thereof by the
broadcasting organization, the performer shall be
entitled to an additional remuneration equivalent to at
least five percent (5%) of the original compensation he
or she received for the first communication or
broadcast. (n)
Section 207. Contract Terms. - Nothing in this Chapter
shall be construed to deprive performers of the right to
agree by contracts on terms and conditions more
favorable for them in respect of any use of their
performance. (n)
Sound Producers
Sec. 208 to 210
CHAPTER XIII
PRODUCERS OF SOUND RECORDINGS
Page 166 of 307
Section 208. Scope of Right. - Subject to the provisions
of Section 212, producers of sound recordings shall
enjoy the following exclusive rights:
208.1. The right to authorize the direct or indirect
reproduction of their sound recordings, in any
manner or form; the placing of these
reproductions in the market and the right of rental
or lending;
208.2. The right to authorize the first public
distribution of the original and copies of their
sound recordings through sale or rental or other
forms of transferring ownership; and
208.3. The right to authorize the commercial
rental to the public of the original and copies of
their sound recordings, even after distribution by
them by or pursuant to authorization by the
producer. (Sec. 46, P.D. No. 49a)
Section 209. Communication to the Public. - If a sound
recording published for commercial purposes, or a
reproduction of such sound recording, is used directly
for broadcasting or for other communication to the
public, or is publicly performed with the intention of
making and enhancing profit, a single equitable
remuneration for the performer or performers, and the
producer of the sound recording shall be paid by the
user to both the performers and the producer, who, in
the absence of any agreement shall share equally. (Sec.
47, P.D. No. 49a)
Section 210. Limitation of Right. - Sections 184 and
185 shall apply mutatis mutandis to the producer of
sound recordings. (Sec. 48, P.D. No. 49a)
Broadcasting Organizations
Sec. 211
CHAPTER XIV
BROADCASTING ORGANIZATIONS
Section 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;
211.2. The recording in any manner, including the
making of films or the use of video tape, of their
broadcasts for the purpose of communication to
the public of television broadcasts of the same;
and
211.3. The use of such records for fresh
transmissions or for fresh recording. (Sec. 52, P.D.
No. 49)
1. ABS-CBN v. PMSI GR Nos. 175769-70, January
19, 2009
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
Page 167 of 307
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[5] 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, on April 25, 2001,[6] ABS-CBN demanded for
PMSI to cease and desist from rebroadcasting Channels
2 and 23. On April 27, 2001,[7] 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,[8] 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.[9]
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.[10]
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.
On July 2, 2002, the Bureau of Legal Affairs (BLA) of the
IPO granted ABS-CBNs application for a temporary
restraining order. On July 12, 2002, PMSI suspended its
retransmission of Channels 2 and 23 and likewise filed a
Page 168 of 307
petition for certiorari with the Court of Appeals, which
was docketed as CA-G.R. SP No. 71597.
Subsequently, PMSI filed with the BLA a Manifestation
reiterating that it is subject to the must-carry rule under
Memorandum Circular No. 04-08-88. It also submitted a
letter dated December 20, 2002 of then NTC
Commissioner Armi Jane R. Borje to PMSI stating as
follows:
This refers to your letter dated December 16, 2002
requesting for regulatory guidance from this
Commission in connection with the application and
coverage of NTC Memorandum Circular No. 4-08-88,
particularly Section 6 thereof, on mandatory carriage of
television broadcast signals, to the direct-to-home (DTH)
pay television services of Philippine Multi-Media System,
Inc. (PMSI).
Preliminarily, both DTH pay television and cable
television services are broadcast services, the only
difference being the medium of delivering such services
(i.e. the former by satellite and the latter by cable). Both
can carry broadcast signals to the remote areas, thus
enriching the lives of the residents thereof through the
dissemination of social, economic, educational
information and cultural programs.
The DTH pay television services of PMSI is equipped to
provide nationwide DTH satellite services. Concededly,
PMSIs DTH pay television services covers very much
wider areas in terms of carriage of broadcast signals,
including areas not reachable by cable television
services thereby providing a better medium of
dissemination of information to the public.
In view of the foregoing and the spirit and intent
of NTC memorandum Circular No. 4-08-88,
particularly section 6 thereof, on mandatory
carriage of television broadcast signals, DTH pay
television services should be deemed covered by
such NTC Memorandum Circular.
For your guidance.
On August 26, 2003, PMSI filed another Manifestation
with the BLA that it received a letter dated July 24, 2003
from the NTC enjoining strict and immediate compliance
with the must-carry rule under Memorandum Circular
No. 04-08-88, to wit:
Dear Mr. Abellada:
Last July 22, 2003, the National Telecommunications
Commission (NTC) received a letter dated July 17, 2003
from President/COO Rene Q. Bello of the International
Broadcasting Corporation (IBC-Channel 13) complaining
that your company, Dream Broadcasting System, Inc.,
has cut-off, without any notice or explanation
whatsoever, to air the programs of IBC-13, a free-to-air
television, to the detriment of the public.
We were told that, until now, this has been going on.
Please be advised that as a direct broadcast
satellite operator, operating a direct-to-home
(DTH) broadcasting system, with a provisional
Page 169 of 307
authority (PA) from the NTC, your company, along
with cable television operators, are mandated to
strictly comply with the existing policy of NTC on
mandatory carriage of television broadcast
signals as provided under Memorandum Circular
No. 04-08-88, also known as the Revised Rules
and Regulations Governing Cable Television
System in the Philippines.
This mandatory coverage provision under Section
6.2 of said Memorandum Circular, requires all
cable television system operators, operating in a
community within the Grade A or B contours to
must-carry the television signals of the
authorized television broadcast stations, one of
which is IBC-13. Said directive equally applies to
your company as the circular was issued to give
consumers and the public a wider access to more
sources of news, information, entertainment and
other programs/contents.
This Commission, as the governing agency vested by
laws with the jurisdiction, supervision and control over
all public services, which includes direct broadcast
satellite operators, and taking into consideration the
paramount interest of the public in general, hereby
directs you to immediately restore the signal of IBC-13
in your network programs, pursuant to existing circulars
and regulations of the Commission.
For strict compliance.
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
Page 170 of 307
provisions, in addition to your obligations under
MC 10-10-2003.
Please be guided accordingly.
On December 22, 2003, the BLA rendered a
decision[14] 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.
On February 6, 2004, PMSI filed an appeal with the
Office of the Director-General of the IPO which was
docketed as Appeal No. 10-2004-0002. On December
23, 2004, it also filed with the Court of Appeals a Motion
to Withdraw Petition; Alternatively, Memorandum of the
Petition for Certiorari in CA-G.R. SP No. 71597, which
was granted in a resolution dated February 17, 2005.
On December 20, 2004, the Director-General of the IPO
rendered a decision[15] in favor of PMSI, the dispositive
portion of which states:
WHEREFORE, premises considered, the instant appeal is
hereby GRANTED. Accordingly, Decision No. 2003-01
dated 22 December 2003 of the Director of Bureau of
Legal Affairs is hereby REVERSED and SET ASIDE.
Let a copy of this Decision be furnished the Director of
the Bureau of Legal Affairs for appropriate action, and
the records be returned to her for proper
disposition. The Documentation, Information and
Technology Transfer Bureau is also given a copy for
library and reference purposes.
SO ORDERED.
Thus, ABS-CBN filed a petition for review with prayer for
issuance of a temporary restraining order and writ of
preliminary injunction with the Court of Appeals, which
was docketed as CA-G.R. SP No. 88092.
On July 18, 2005, 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 case was docketed as CA- G.R. SP No. 90762.
On November 14, 2005, the Court of Appeals ordered
the consolidation of CA-G.R. SP Nos. 88092 and 90762.
In the assailed Decision dated July 12, 2006, 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.
Held: 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);[18]that
Memorandum Circular No. 04-08-88 excludes DTH
satellite television operators; that the Court of Appeals
interpretation of the must-carry rule violates Section 9
of Article III[19] of the Constitution because it allows the
taking of property for public use without payment of just
Page 171 of 307
compensation; that the Court of Appeals erred in
dismissing the petition for contempt docketed as CA-
G.R. SP No. 90762 without requiring respondents to file
comment.
Respondents, on the other hand, argue that PMSIs
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; and that the Court of Appeals correctly
dismissed CA-G.R. SP No. 90762 since it found no need
to exercise its power of contempt.
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).
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, [21] 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
Page 172 of 307
broadcasting. Section 202.7 of the IP Code states that
broadcasting meansthe 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.
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,
Page 173 of 307
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.
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.[24] 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
Page 174 of 307
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.
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
Page 175 of 307
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.[26] 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.[27] As correctly
observed by the Director-General of the IPO:
Accordingly, the Must-Carry Rule under NTC Circular No.
4-08-88 falls under the foregoing category of limitations
on copyright. This Office agrees with the Appellant
[herein respondent PMSI] that the Must-Carry Rule is in
consonance with the principles and objectives
underlying Executive Order No. 436,[28] to wit:
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:
WHEREAS, cable television (CATV) systems could
support or supplement the services provided by
television broadcast facilities, local and overseas, as the
national information highway to the countryside.
The Court of Appeals likewise correctly observed that:
[T]he 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.[31]
Further, as correctly observed by the Court of Appeals,
the must-carry rule as well as the legislative franchises
Page 176 of 307
granted to both ABS-CBN and PMSI are in consonance
with state policies enshrined in the Constitution,
specifically Sections 9,[32] 17,[33] and 24[34] of Article II on
the Declaration of Principles and State Policies.[35]
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,[36] 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
Page 177 of 307
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. Thus,
Professor Cass R. Sunstein of the University of Chicago
Law School, in urging reforms in regulations affecting
the broadcast industry, writes:
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. x x x
There is likewise no merit to ABS-CBNs claim that PMSIs
carriage of its signals is for a commercial purpose; that
its being the country’s top broadcasting company, the
availability of its signals allegedly enhances PMSIs
attractiveness to potential customers;[38] 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,[39] 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.[40] Mere allegation is not
evidence, and is not equivalent to proof.[41]
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[42] 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. [43] 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
Page 178 of 307
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. [44] 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 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.
[45]
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
Page 179 of 307
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.[47]
Moreover, the factual findings of the Court of Appeals
are conclusive on the parties and are not reviewable by
the Supreme Court. They carry even more weight when
the Court of Appeals affirms the factual findings of a
lower fact-finding body,[48] as in the instant case.
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.[49] 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
Page 180 of 307
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.
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] InSpouses 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. InPhilippine National Bank v. Palma,[57] we
Page 181 of 307
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.[59] In Philippine Veterans Bank v.
Court of Appeals,[60] we held:
We decline to rule on the issue of constitutionality as all
the requisites for the exercise of judicial review are not
present herein. Specifically, the question of
constitutionality will not be passed upon by the
Court unless, at the first opportunity, it is
properly raised and presented in an appropriate
case, adequately argued, and is necessary to a
determination of the case, particularly where the
issue of constitutionality is the very lis
mota presented. x x x[61]
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.
Page 182 of 307
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.
Limitations
Sec. 212
CHAPTER XV
LIMITATIONS ON PROTECTION
Section 212. Limitations on Rights. - Sections 203, 208
and 209 shall not apply where the acts referred to in
those Sections are related to:
212.1. The use by a natural person exclusively for
his own personal purposes;
212.2. Using short excerpts for reporting current
events;
212.3. Use solely for the purpose of teaching or
for scientific research; and
212.4. Fair use of the broadcast subject to the
conditions under Section 185. (Sec. 44, P.D. No.
49a)
Term of Protection
Sec. 213 to 215
CHAPTER XVI
TERM OF PROTECTION
Section 213. Term of Protection. –
213.1. Subject to the provisions of Subsections
213.2 to 213.5, the copyright in works under
Sections 172 and 173 shall be protected during
the life of the author and for fifty (50) years after
his death. This rule also applies to posthumous
works. (Sec. 21, first sentence, P.D. No. 49a)
213.2. In case of works of joint authorship, the
economic rights shall be protected during the life
of the last surviving author and for fifty (50) years
after his death. (Sec. 21, second sentence, P.D.
No. 49)
213.3. In case of anonymous or pseudonymous
works, the copyright shall be protected for fifty
(50) years from the date on which the work was
first lawfully published: Provided, That where,
before the expiration of the said period, the
author's identity is revealed or is no longer in
doubt, the provisions of Subsections 213.1. and
213.2 shall apply, as the case may be: Provided,
further, That such works if not published before
shall be protected for fifty (50) years counted from
the making of the work. (Sec. 23, P.D. No. 49)
213.4. In case of works of applied art the
protection shall be for a period of twenty-five (25)
years from the date of making. (Sec. 24(B), P.D.
No. 49a)
Page 183 of 307

213.5. In case of photographic works, the
protection shall be for fifty (50) years from
publication of the work and, if unpublished, fifty
(50) years from the making. (Sec. 24(C), P.D. 49a)
213.6. In case of audio-visual works including
those produced by process analogous to
photography or any process for making audio-
visual recordings, the term shall be fifty (50) years
from date of publication and, if unpublished, from
the date of making. (Sec. 24(C), P.D. No. 49a)
Section 214. Calculation of Term. - The term of
protection subsequent to the death of the author
provided in the preceding Section shall run from the
date of his death or of publication, but such terms shall
always be deemed to begin on the first day of January of
the year following the event which gave rise to them.
(Sec. 25, P.D. No. 49)
Section 215. Term of Protection for Performers,
Producers and Broadcasting Organizations. –
215.1. The rights granted to performers and
producers of sound recordings under this law shall
expire:
(a) For performances not incorporated in
recordings, fifty (50) years from the end of
the year in which the performance took
place; and
(b) For sound or image and sound
recordings and for performances
incorporated therein, fifty (50) years from
the end of the year in which the recording
took place.
215.2. In case of broadcasts, the term shall be
twenty (20) years from the date the broadcast
took place. The extended term shall be applied
only to old works with subsisting protection under
the prior law. (Sec. 55, P.D. No. 49a)
Infringement
1. Phoenix Publishing House vs. Jose Ramos,
G.R. No. L-32339, March 29, 1988
Facts: This petition originated in an action for damages
arising from an alleged infringement of petitioner's
copyright for two books entitled "General Science Today
for Philippine Schools, First Year" and "General Science
Today for Philippine Schools, Second Year," both
authored by Gilman, Van Houten and Cornista and
firstpublished in 1961. Named plaintiffs as "copyright
proprietors of said books" were Phoenix Publishing
House, Inc., Purita Dancel-Cornista, Phil N. Gilman, and
L.F. Van Houten. The complaint charged that
defendants, now herein private respondents 'reprinted,
published, distributed and sold said books in gross
violation of the Copyright Law and of plaintiffs' rights to
their damage and prejudice" and prayed for actual,
moral and exemplary damages as well as for attorney's
fees and expenses of litigation.
Page 184 of 307
After trial, judgment was rendered, the dispositive
portion of which is as follows—
WHEREFORE, judgment is hereby rendered, dismissing
plaintiff's action. Instead, judgment is (sic) hereby
rendered in favor of the defendants and against the
plaintiff (sic), and orders the latter to pay the
defendants by way of damages as and for attorney's
fees the amount of P5,000.00. The writ of preliminary
injunction is hereby dissolved, and the copies of General
Science Today mentioned in Exhibits M and M-1 are
hereby ordered returned to the defendants against
proper receipt. (p. 54, Rollo)
From the aforesaid judgment, petitioner Phoenix
Publishing House, Inc. appealed to the Court of Appeals
(under CA-G.R. No. 39498-R) on the grounds that the
lower court erred —
1. In not holding that appellees had lost their right to
interpose the defense of illegality or irregularity of
appellant's copyright;
2. In holding that appellant's copyright is not entitled to
protection for allegedly not having been validly
obtained;
3. In holding that the evidence presented was
insufficient to establish that the books seized from
appellees were spurious;
4. In holding that appellees were not liable for damages
because they had no knowledge that the books they
sold were pirated or spurious; and
5. In dismissing the complaint and sentencing appellant
to pay attorney's fees. (p. 54, Rollo)
In a Decision of the Court of Appeals promulgated on
June 8, 1970 (penned by Justice Hermogenes
Concepcion, Jr. and concurred in by Justices Eulogio S.
Serrano and Lourdes P. San Diego), the lower court's
judgment was affirmed.
Against this Decision, petitioner filed the instant petition
for review assigning several errors to have been
allegedly committed by respondent court.
In a Resolution dated August 25, 1970 the petition was
given due course "but only insofar as the award of
attorney's fees is concerned."
On this issue, petitioner contends that respondent court
erred in assigning attorney's fees against petitioner for
no other apparent reason than for losing its case,
contrary to the fundamental rules settled by
jurisprudence that a penalty should not be set on the
right to litigate (Tan Ti v. Alvear, 26 Phil. 566) nor should
counsel's fees be awarded everytime a party wins a
lawsuit (Jimenez v. Bucoy, 103 Phil. 40) unless it
appears, which does not in petitioner's case, that the
suit instituted by the losing party was clearly unfounded
(Peralta et al. v. Alipio, 97 Phil. 719) and, at all events,
the court must state the reason for the award of
attorney's fees (Buan v. Camaganacan, 16 SCRA 321)
which reason the decision in question does not indicate
(pp. 11-12, Rollo).
The law limits the instances in which attomey's fees
may be recovered. Thus, the Civil Code provides:
Page 185 of 307

ART. 2208. In the absence of stipulation, attorney's fees
and expenses of litigation, other than judicial costs,
cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled
the plaintiff to litigate with third persons or to incur
expenses to protect his interest;
(3) In criminal cases of malicious prosecution against
the plaintiff;
(4) In case of a clearly unfounded civil action or
proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad
faith in refusing to satisfy the plaintiff's plainly valid, just
and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household
helpers laborers and skilled workers;
(8) In actions for indemnity under workmen's
compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability
arising from a crime;
(10) In any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation
should be recovered;
In all cases, the attorney's fees and expenses of
litigation must be reasonable.
Held: Obviously, this case cannot fall under pars. 1, 2,
3, 5, 6, 7, 8, 9 & 10 of the aforequoted article. If at all,
award is under either pars. 4 or 11 thereof.
The evidence on record however, shows that petitioner
secured the corresponding copyrights ( Exhs. U and V)
for its books. These copyrights were found to be all right
by the Copyright Office and petitioner was always
conceded to be the real owner thereof. It was on the
strength of these facts that petitioner filed the
complaint against respondents. Through a proper search
warrant (Exh. "M") obtained after petitioner was
convinced that respondents were selling spurious copies
of its copyrighted books, the books were seized from
respondents and were Identified to be spurious. In the
face of these facts, it cannot be said that the case is
clearly an unfounded civil action or proceeding (par. 4.
Art. 2208).
The lower court justified its award as follows:
It is obvious, however, that the defendants had to get
the services of counsel to vindicate themselves before
the Court and those watching for the ultimate decision
in the instant case. Considering the professional
standing of defendant's counsel, and the nature and
volume of the work performed by said counsel and
discernible from the records of the instant case, and
considering, further, that plaintiff itself assesses the
services of its own counsel fee for defendants' attorneys
Page 186 of 307
in the amount of P5,000.00 would not be
unconscionable. (p. 95, Record on Appeal)
We do not find this as enough justification for such an
award under par. 11 of Article 2208.
In a long line of decisions, We have consistently ruled
that it is not sound policy to place a penalty on the right
to litigate.
WHEREFORE, the decision of respondent Court of
Appeals is MODIFIED by deleting therefrom the award of
attorney's fees against petitioner.
2. 20th Century Fox vs. CA, G.R. No. L-76649-51,
August 19, 1988
Facts: The petitioner questions the application of the
constitutional provision against illegal searches and
seizures to raids conducted in connection with the
government's anti-film piracy campaign. The main issue
hinges on whether or not the judge properly lifted the
search warrants he issued earlier upon the application
of the National Bureau of Investigation on the basis of
the complaint filed by the petitioner.
In a letter-complaint dated August 26, 1985, petitioner
20th Century Fox Film Corporation through counsel
sought the National Bureau of Investigation's (NBI)
assistance in the conduct of searches and seizures in
connection with the latter's anti-film piracy campaign.
Specifically, the letter-complaint alleged that certain
videotape outlets all over Metro Manila are engaged in
the unauthorized sale and renting out of copyrighted
films in videotape form which constitute a flagrant
violation of Presidential Decree No. 49 (otherwise known
as the Decree on the Protection of Intellectual Property).
Acting on the letter-complaint, the NBI conducted
surveillance and investigation of the outlets pinpointed
by the petitioner and subsequently filed three (3)
applications for search warrants against the video
outlets owned by the private respondents. The
applications were consolidated and heard by the
Regional Trial Court of Makati, Branch 132.
On September 4, 1985, the lower court issued the
desired search warrants.
Armed with the search warrants, the NBI accompanied
by the petitioner's agents, raided the video outlets and
seized the items described therein. An inventory of the
items seized was made and left with the private
respondents.
Acting on a motion to lift search warrants and release
seized properties filed by the private respondents, the
lower court issued an order dated October 8, 1985,
lifting the three (3) search warrants issued earlier
against the private respondents by the court. The
dispositive portion of the order reads:
WHEREFORE, the Court hereby orders that Search
Warrants Nos. SW- 85-024; issued against Eduardo M.
Barreto of the Junction Video, etc., Paranaque, Metro
Manila; SW No. 85-025, issued against Raul M. Sagullo
of South Video Bug Center, Inc., etc., also of No. 5355
Pres. Avenue BF Homes, Parañaque, Metro Manila; and
SW No. 85-026, issued against Fortune A. Ledesma of
Page 187 of 307
Sonix Video Services of San Antonio Plaza, Forbes Park,
Makati, Metro Manila, be lifted.
Consequently, the articles listed in the returns of the
three search warrants which could not be a basis of any
criminal prosecution, now in the possession of the
National Bureau of Investigation which under the law
must be delivered to this Court, but which the NBI failed
to do, are hereby ordered to be returned to their owners
through their lawyer, Atty. Benito Salazar or his agents
or representatives, against proper receipt, to be
forwarded to this Court for record purposes, as proof
that said properties have been returned to the
possession of the rightful owners."
The lower court denied a motion for reconsideration
filed by the petitioner in its order dated January 2, 1986.
The petitioner filed a petition for certiorari with the
Court of Appeals to annul the October 8, 1985 and
January 2, 1986 orders of the lower court. The petition
was dismissed.
Hence, this petition.
The main issue hinges on the meaning of "probable
cause" within the context of the constitutional provision
against illegal searches and seizures (Section 3, Article
IV, 1973 Constitution, now, Section 2, Article Ill, 1987
Constitution.
The petitioner maintains that the lower court issued the
questioned search warrants after finding the existence
of a probable cause justifying their issuance. According
to the petitioner, the lower court arrived at this
conclusion on the basis of the depositions of applicant
NBI's two witnesses which were taken through searching
questions and answers by the lower court.
Section 2, Article III of the present Constitution which
substantially reproduces Section 3, Article IV of the
1973 Constitution on illegal searches and seizures
provides:
The right of the people to be secure in their persons,
houses, papers, and effects against unreasonable
searches and seizures of whatever nature and for any
purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause
to be determined personally by the judge after
examination under oath or affirmation of the
complainant and the witnesses he may produce, and
particularly describing the place to be searched and the
persons or things to be seized.
This constitutional right protects a citizen against
wanton and unreasonable invasion of his privacy and
liberty as to his person, papers and effects. We have
explained in the case of People v. Burgos (144 SCRA 1)
citingVillanueva v. Querubin (48 SCRA 345) why the
right is so important:
It is deference to one's personality that lies at the core
of this right, but it could be also looked upon as a
recognition of a constitutionally protected area,
primarily one's home, but not necessarily thereto
confined. (Cf. Hoffa v. United States, 385 US 293
119661) What is sought to be guarded is a man's
Page 188 of 307
prerogative to choose who is allowed entry to his
residence. In that haven of refuge, his individuality can
assert itself not only in the choice of who shall be
welcome but likewise in the kind of objects he wants
around him. There the state, however powerful, does
not as such have access except under the
circumstances above noted, for in the traditional
formulation, his house, however humble, is his castle.
Thus is outlawed any unwarranted intrusion by
government, which is called upon to refrain from any
invasion of his dwelling and to respect the privacies of
his life. (Cf Schmerber v. California, 384 US 757 [1966],
Brennan, J. and Boyd v. United States, 116 630 [1886]).
In the same vein, Landynski in his authoritative work
(Search and Seizure and the Supreme Court [1966]),
could fitly characterize constitutional right as the
embodiment of a "spiritual concept: the belief that to
value the privacy of home and person and to afford its
constitutional protection against the long reach of
government is no less than to value human dignity, and
that his privacy must not be disturbed except in case of
overriding social need, and then only under stringent
procedural safeguards."(ibid, p. 74).
The government's right to issue search warrants against
a citizen's papers and effects is circumscribed by the
requirements mandated in the searches and seizures
provision of the Constitution.
In the case of Burgos, Sr. v. Chief of Staff, AFP (133
SCRA 800), we defined probable cause for a valid search
"as such facts and circumstances which would lead a
reasonably discreet and prudent man to believe that an
offense has been committed and that the objects
sought in connection with the offense are in the place
sought to be searched." This constitutional provision
also demands "no less than personal knowledge by the
complainant or his witnesses of the facts upon which
the issuance of a search warrant may be justified" in
order to convince the judge, not the individual making
the affidavit and seeking the issuance of the warrant, of
the existence of a probable cause. (Alvarez v. Court of
First Instance, 64 Phil. 33; Burgos, Sr. v. Chief of Staff,
AFP, supra).
Held: In the instant case, the lower court lifted the
three questioned search warrants against the private
respondents on the ground that it acted on the
application for the issuance of the said search warrants
and granted it on the misrepresentations of applicant
NBI and its witnesses that infringement of copyright or a
piracy of a particular film have been committed. Thus
the lower court stated in its questioned order dated
January 2,1986:
According to the movant, all three witnesses during the
proceedings in the application for the three search
warrants testified of their own personal knowledge. Yet,
Atty. Albino Reyes of the NBI stated that the counsel or
representative of the Twentieth Century Fox Corporation
will testify on the video cassettes that were pirated, so
that he did not have personal knowledge of the alleged
piracy. The witness Bacani also said that the video
cassettes were pirated without stating the manner it
was pirated and that it was Atty. Domingo that has
knowledge of that fact.
Page 189 of 307
On the part of Atty. Domingo, he said that the re-taping
of the allegedly pirated tapes was from master tapes
allegedly belonging to the Twentieth Century Fox,
because, according to him, it is of his personal
knowledge.
At the hearing of the Motion for Reconsideration, Senior
NBI Agent Atty. Albino Reyes testified that when the
complaint for infringement was brought to the NBI, the
master tapes of the allegedly pirated tapes were shown
to him and he made comparisons of the tapes with
those purchased by their man Bacani. Why the master
tapes or at least the film reels of the allegedly pirated
tapes were not shown to the Court during the
application gives some misgivings as to the truth of that
bare statement of the NBI agent on the witness stand. "
Again as the application and search proceedings is a
prelude to the filing of criminal cases under PD 49, the
copyright infringement law, and although what is
required for the issuance thereof is merely the presence
of probable cause, that probable cause must be
satisfactory to the Court, for it is a time- honored
precept that proceedings to put a man to task as an
offender under our laws should be interpreted
in strictissimi juris against the government and liberally
in favor of the alleged offender.
xxx xxx xxx
This doctrine has never been overturned, and as a
matter of fact it had been enshrined in the Bill of Rights
in our 1973 Constitution.
So that lacking in persuasive effect, the allegation that
master tapes were viewed by the NBI and were
compared to the purchased and seized video tapes from
the respondents' establishments, it should be dismissed
as not supported by competent evidence and for that
matter the probable cause hovers in that grey
debatable twilight zone between black and white
resolvable in favor of respondents herein.
But the glaring fact is that 'Cocoon,' the first video tape
mentioned in the search warrant, was not even duly
registered or copyrighted in the Philippines. (Annex C of
Opposition p. 152 record). So, that lacking in the
requisite presentation to the Court of an alleged master
tape for purposes of comparison with the purchased
evidence of the video tapes allegedly pirated and those
seized from respondents, there was no way to
determine whether there really was piracy, or copying of
the film of the complainant Twentieth Century Fox."
xxx xxx xxx
The lower court, therefore, lifted the three (3)
questioned search warrants in the absence of probable
cause that the private respondents violated P.D. 49. As
found out by the court, the NBI agents who acted as
witnesses did not have personal knowledge of the
subject matter of their testimony which was the alleged
commission of the offense by the private respondents.
Only the petitioner's counsel who was also a witness
during the application for the issuance of the search
warrants stated that he had personal knowledge that
the confiscated tapes owned by the private respondents
were pirated tapes taken from master tapes belonging
Page 190 of 307
to the petitioner. However, the lower court did not give
much credence to his testimony in view of the fact that
the master tapes of the allegedly pirated tapes were not
shown to the court during the application.
All these factors were taken into consideration by the
lower court when it lifted the three questioned search
warrants. There is no truth, therefore, to the petitioner's
allegation that the lower court based its January 2, 1986
order only "on the fact that the original or master copies
of the copyrighted films were not presented during the
application for search warrants, thus leading it to
conclude that it had been "misled by the applicant and
his witnesses."
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 petitioner's 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.
Furthermore, we note that the search warrants
described the articles sought to be seized as follows:
c) Television sets, Video Cassettes Recorders, rewinders,
tape head cleaners, accessories, equipments and other
machines used or intended to be used in the unlawful
reproduction, sale, rental/lease distribution of the
above-mentioned video tapes which she is keeping and
concealing in the premises above-described."
In the case of Burgos v. Chief of Staff, AFP supra, we
stated:
Another factor which makes the search warrants under
consideration constitutionally objectionable is that they
are in the nature of general warrants. The search
warrants describe the articles sought to be seized in this
wise:
l] All printing equipment, paraphernalia, paper, ink,
photo equipment, typewriters, cabinets, tables
Page 191 of 307
communications/recording equipment, tape recorders,
dictaphone and the like used and/or connected in the
printing of the 'WE FORUM' newspaper and any and all
document/communications, letters and facsimile of
prints related to "WE FORUM" newspaper.
2] Subversive documents, pamphlets, leaflets, books,
and other publications to promote the objectives and
purposes of the subversive organizations known as
Movement for Free Philippines, Light-a-Fire Movement
and April 6 Movement; and
3] Motor vehicles used in the distribution/circulation of
the 'WE FORUM and other subversive materials and
propaganda, more particularly,
1] Toyota-Corolla, colored yellow with Plate No. NKA 892;
2] DATSUN pick-up colored white with Plate No. NKV
969;
3] A delivery truck with Plate No. NBS 542;
4] TOYOTA-TAMARAW, colored white with Plate No. PBP
665;and,
5] TOYOTA Hi-Lux, pick-up truck with Plate No. NGV 472
with marking "Bagong Silang."
In Stanford v. State of Texas (379 U.S. 476,13 L ed 2nd
431), the search warrant which authorized the search
for 'books, records, pamphlets, cards, receipts, lists,
memoranda, pictures, recordings and other written
instruments concerning the Communist Parties of Texas,
and the operations of the Community Party in Texas,"
was declared void by the U.S. Supreme Court for being
too general. In like manner, directions to "seize any
evidence in connection with the violation of SDC 13-
3703 or otherwise' have been held too general, and that
portion of a search warrant which authorized the seizure
of any "paraphernalia which could be used to violate
Sec. 54-197 of the Connecticut General Statutes [the
statute dealing with the crime of conspiracy]"' was held
to be a general warrant, and therefore invalid (68 Am.
Jur. 2d., pp. 736-737). The description of the articles
sought to be seized under the search warrants in
question cannot be characterized differently.
Undoubtedly, a similar conclusion can be deduced from
the description of the articles sought to be confiscated
under the questioned search warrants.
Television sets, video cassette recorders, reminders and
tape cleaners are articles which can be found in a video
tape store engaged in the legitimate business of lending
or renting out betamax tapes. In short, these articles
and appliances are generally connected with, or related
to a legitimate business not necessarily involving piracy
of intellectual property or infringement of copyright
laws. Hence, including these articles without
specification and/or particularity that they were really
instruments in violating an Anti-Piracy law makes The
search warrant too general which could result in the
confiscation of all items found in any video store. In fact,
this actually happened in the instant case. Thus, the
lower court, in its questioned order dated October 8,
1985 said:
Although the applications and warrants themselves
covered certain articles of property usually found in a
video store, the Court believes that the search party
should have confined themselves to articles that are
according to them, evidence constitutive of
Page 192 of 307
infringement of copyright laws or the piracy of
intellectual property, but not to other articles that are
usually connected with, or related to, a legitimate
business, not involving piracy of intellectual property, or
infringement of copyright laws. So that a television set,
a rewinder, and a whiteboard listing Betamax tapes,
video cassette cleaners video cassette recorders as
reflected in the Returns of Search Warrants, are items of
legitimate business engaged in the video tape industry,
and which could not be the subject of seizure, The
applicant and his agents therefore exceeded their
authority in seizing perfectly legitimate personal
property usually found in a video cassette store or
business establishment."
All in all, we find no grave abuse of discretion on the
part of the lower court when it lifted the search warrants
it earlier issued against the private respondents. We
agree with the appellate court's findings to the effect
that:
An assiduous examination of the assailed orders reveal
that the main ground upon which the respondent Court
anchored said orders was its subsequent findings that it
was misled by the applicant (NBI) and its witnesses 'that
infringement of copyright or a piracy of a particular film
have been committed when it issued the questioned
warrants.' Stated differently, the respondent Court
merely corrected its erroneous findings as to the
existence of probable cause and declared the search
and seizure to be unreasonable. Certainly, such action is
within the power and authority of the respondent Court
to perform, provided that it is not exercised in an
oppressive or arbitrary manner. Indeed, the order of the
respondent Court declaring the existence of probable
cause is not final and does not constitute res judicata.
A careful review of the record of the case shows that the
respondent Court did not commit a grave abuse of
discretion when it issued the questioned orders. Grave
abuse of discretion' implies such capricious and
whimsical exercise of judgment as is equivalent to lack
of jurisdiction, or, in other words, where the power is
exercised in an arbitrary or despotic manner by reason
of passion or personal hostility, and it must be so patent
and gross as to amount to an evasion of positive duty or
to a virtual refusal to perform the duty enjoined or to act
at all in contemplation of law.' But far from being
despotic or arbitrary, the assailed orders were
motivated by a noble desire of rectifying an error, much
so when the erroneous findings collided with the
constitutional rights of the private respondents. In fact,
the petitioner did not even contest the righteousness
and legality of the questioned orders but instead
concentrated on the alleged denial of due process of
law."
The proliferation of pirated tapes of films not only
deprives the government of much needed revenues but
is also an indication of the widespread breakdown of
national order and discipline. Courts should not impose
any unnecessary roadblocks in the way of the anti-film
piracy campaign. However, the campaign cannot ignore
or violate constitutional safeguards. To say that the
problem of pirated films can be solved only by the use
of unconstitutional shortcuts is to denigrate the long
history and experience behind the searches and
Page 193 of 307
seizures clause of the Bill of Rights. The trial court did
not commit reversible error.
WHEREFORE, the instant petition is DISMISSED. The
questioned decision and resolution of the Court of
Appeals are AFFIRMED.
3. UFS vs. Munsingwear, G.R. No. 76193,
November 9, 1989 (TM)
Facts: This is a petition for review on certiorari filed by
United Feature Syndicate Inc., seeking to set aside the
Resolution of the Seventh Division of the Court of
Appeals * dated September 16, 1986 dismissing the
appeal of petitioner-appellant for having been filed out
of time and denying its Motion for Reconsideration for
lack of merit in its Resolution dated October 14, 1986.
The Resolution dismissing the appeal, reads as follows:
We agree with the Philippine Patent Office and
respondent appellee that the decision of the
aforementioned office dated October 2, 1984 had
already become final and executory at the time the
Notice of Appeal was filed.
Our reasons for this conclusions are borne out by the
following facts:
a) On October 2, 1984, the decision sought to be
appealed was rendered by the Philippine Patent Office
and a copy thereof was received by counsel for
petitioner-appellant on October 3, 1984 — not October
9, 1984 as stated in the Notice of Appeal. There can be
no doubt about the decision having been received by
petitioner-appellant's counsel on October 3, 1984 for
this is clearly written in the Notice of Decision (p. 61,
Original Record), and in point of fact the date of receipt
cannot be October 9, 1984, as declared in the Notice of
Appeal (p. 1, Rollo), because in the motion for
reconsideration subsequently filed by petitioner-
appellant it was stated that a copy of the decision was
received on October 4, 1984 (p. 80, Original Record).
b) On October 18, 1984 — as shown in the stamp mark
of the Philippine Patent Office (p. 80, Original Record) or
on the 15th and last day either for appealing or for
moving for reconsideration, petitioner-appellant filed a
motion for reconsideration.
Sadly and unexplainably for a veteran law office, said
motion did not contain or incorporate a notice of
hearing.
c) Possibly realizing the fatal defect in its motion for
reconsideration, petitioner-appellant subsequently filed
a motion to set for hearing its motion for
reconsideration. This was done, however, only on
October 31, 1984 (p. 162, Original Record).
The motion for reconsideration filed on the last day,
fatally failing as it did to contain a notice of hearing,
said pleading did not interrupt the period for appealing,
for the motion was nothing but a piece of scrap paper.
This deadly and moral deficiency in the motion for
reconsideration, therefore, resulted in the decision of
the Philippine Patent Office being final and executory
Page 194 of 307
on October 19, 1984, the day after themotion for
reconsideration was filed, said motion having been filed
on the 15th and last day for appealing.
WHEREFORE, the motion of respondent appellee is
hereby granted and the appeal dismissed.
This case arose from petition filed by petitioner for the
cancellation of the registration of trademark CHARLIE
BROWN (Registration No. SR. 4224) in the name of
respondent MUNSINGWEAR in Inter Partes Case No.
1350 entitled "United Feature Syndicate, Inc. v.
Munsingwear Creation Mfg. Co.", with the Philippine
Patent Office alleging that petitioner is damaged by the
registration of the trademark CHARLIE BROWN of T-
Shirts under Class 25 with the Registration No. SR-4224
dated September 12, 1979 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 the resolution of April 6, 1987, the petition was given
due course.
In its petition (Rollo, p. 10) and in its memorandum
(Rollo, p. 97), petitioner-appellant raised the following
legal issues:
I. WHETHER THE RESPONDENT COURT OF APPEALS
ACTED IN EXCESS OF JURISDICTION AND/OR
COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT
BASED ITS RESOLUTION IN DISMISSING ITS APPEAL ON
STRICT TECHNICAL RULES OF PROCEDURE AS
Page 195 of 307
ENUNCIATED IN RULE 15 OF THE RULES OF COURT
INSTEAD OF RELYING ON THE POLICY OF THE PHILIPPINE
PATENT OFFICE AS STRESSED IN RULE 169, AS
AMENDED, OF THE RULES OF PRACTICE IN TRADEMARK
CASES.
II. WHETHER THE RESPONDENT COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO EXCESS OF JURISDICTION WHEN BY DISMISSING THE
APPEAL TO IT FROM THE DECISION OF THE DIRECTOR
OF PATENTS, IT KNOWINGLY DISREGARDED ITS OWN
DECISION IN AC-GR. SP. NO. 0342, WHICH WAS
AFFIRMED BY THIS HONORABLE SUPREME COURT TO
THE EFFECT THAT A COPYRIGHTED CHARACTER MAY
NOT BE APPROPRIATED AS A TRADEMARK BY ANOTHER
UNDER PRESIDENTIAL DECREE NO. 49.
III. WHETHER, ASSUMING ARGUENDO, BUT ONLY
ASSUMING, THAT THE DECISION OF THE DIRECTOR OF
PATENTS IN THE CASE AT BAR HAD ALREADY BECOME
FINAL WHEN IT WAS APPEALED TO THE COURT OF
APPEALS, THE LATTER, BY REASON OF THE
SUPERVENING FACTS AFTER THE DECISION APPEALED
FROM WAS RENDERED, SHOULD HAVE HARMONIZED
THE DECISION WITH LAW, THE DEMANDS OF JUSTICE
AND EQUITY.
Held: The petitioner is impressed with merit.
Petitioner's contention that the purpose of a notice of
hearing to the adverse party is to afford him an
opportunity to resist the motion, more particularly the
motion for reconsideration filed by its company is well
taken. Said purpose was served when Munsingwear filed
its opposition thereto on November 20, 1984 and cured
the technical defect of lack of notice of hearing
complained of (Rollo, p. 52). Otherwise stated such
shortcomings of petitioner as to compliance with
procedural requirements in taking its appeal cannot be
deemed sufficient to deprive it of a chance to secure a
review by this court in order to obtain substantial
justice; more so where liverality accorded to the
petitioner becomes compelling because of the
ostensible merit of petitioner's case.
Moreover, in Siguenza v. Court of Appeals, (137 SCRA
570 [1985]) the Court stressed that the right to appeal
should not be lightly disregarded by a stringent
application of rules of procedure especially where the
appeal is on its face meritorious and the interest of
substantial justice would be served by permitting the
appeal.
As enunciated in the case of Castro v. Court of
Appeals (123 SCRA 782, [1983]) the importance and
real purpose of the remedy of appeal was stressed as
follows:
An appeal is an essential part of oar judicial system. We
have advised the courts to proceed with caution so as
not to deprive a party of the right to appeal. (National
Waterworks and Sewerage Authority v. Municipality of
Libmanan, 97 SCRA 138) and instructed that every
party-litigant should beafforded the amplest opportunity
for the proper and just disposition of his cause,
freed from the constraints of technicalities.
Page 196 of 307
The rules of procedure are not to be applied in a very
rigid and technical sense. The rules of procedure are
used only to help secure not override substantial
justice. (Gregorio v. Court of Appeals, 72 SCRA 120),
therefore, we ruled in Republic v. Court of Appeals (83
SCRA 453) that a six day delay in the perfection of the
appeal does not warrant its dismissal. And again
in Ramos v. Bagaso, 96 SCRA 395, this Court held
that the delay of four (4) days in filing a notice of appeal
and a motion for extension of time to file a record on
appeal can be excused on the basis of equity.
It was further emphasized that we allowed the filing of
an appeal in some cases where a stringent application
of the rules would have denied it, or when to do so
would serve the demands of substantial justice and in
the exercise of our equity jurisdiction
In the case at bar, the petitioner's delay in filing their
record on appeal should not be strictly construed as to
deprive them of the right to appeal especially since on
its face the appeal appears to be impressed with merit.
(Emphasis supplied). All aforementioned cases are cited
in G.R. No. 76595, Pacific Asia Overseas Shipping
Corporation v. NLRC, et al., May 6, 1988.
Procedural technicality should not prevail over
substantive rights of a party to appeal (NEA v. CA, 126
SCRA 394).
Moreover, a judgment of the Court of Appeals that
become final by reason of the mistake of the herein
petitioner's lawyer may still be reviewed on appeal by
the Supreme Court particularly where the Supreme
Court already gave due course to the petition for review
(Ernesto v. Court of Appeals, 116 SCRA 755 [1982]).
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]).
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 land decide the same on the merits
rather than merely resolve the procedural question
raised.
Page 197 of 307

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.
Petitioner further stresses that Decision No. 84-83 (TM)
promulgated by the Philippine Patent Office on October
2, 1984 which held that "the name likeness of CHARLIE
BROWN may not provide a cause of action for the
cancellation of a trademark registration," was based in
the conclusion made in the case of "Children's Television
Workshop v. touch of Class" earlier decided by the
Director of Patent Office on May 10, 1984. However,
when the latter case was appealed to the then
Intermediate Appellate Court, docketed as A.C. G.R. SP
No. 03432, the appellate court reversed the decision of
the Director holding said appealed decision as illegal
and contrary to law. this reversal was affirmed by this
Court on August 7, 1985 in G.R. No. 71210 by denying
the petition of respondent Touch of Class.
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.
Pertinently, 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:
(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"
(Memorandum, Rollo p. 97 [211]).
An examination of the records show that the only
appreciable defense of respondent-registrant is
embodied in its answer, which reads:
Page 198 of 307
It uses, the trademark "CHARLIE BROWN" & "DEVICE"
on children's wear such as T-shirts, undershirts,
sweaters, 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 therefore respondent-
registrant's use of "CHARLIE BROWN" & "DEVICE" is not
in conflict with the petitioner's use of "CHARLIE BROWN"
(Rollo, p. 97 [21]).
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.
4. Columbia Pictures vs. CA & Tube Video
Enterprises, G.R. No. 96597-99, October 6,
1994
Facts: 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. (p)irated video tapes of the copyrighted motion
pictures/films the titles of which are mentioned in the
attached list;
2. (p)osters, 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
Page 199 of 307
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. (t)elevision 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 above described.
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 latter's
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 complainant of its alleged
ownership over the films in question does notipso
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.
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
Page 200 of 307
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.
Held: 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
Page 201 of 307
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 deposit
and registration requirements of P.D. No. 49 as amended
by P.D. No. 1988. 5
Judge Austria thus ordered the return of all the items
seized by virtue of the warrants.
Petitioners appealed the order of Judge Austria to the
Court of Appeals, docketed CA-G.R. CV No. 22133-
22135, assigning the following alleged errors:
1. The Court a quo erred in ruling that private
complainants were uncertain of their ownership of the
titles subject of the pirated video tapes.
2. The Court a quo erred in ordering the quashal of the
search warrants on the ground that the requirement of
producing the "master tapes" during the application for
a search warrant, as enunciated in the 20th Century
Fox case, promulgated on 19 August 1988, was
applicable to the facts of the instant case which
transpired on 07 April 1988, and that the same was not
complied with.
3. The Court a quo erred in ruling that appellants do not
have a protectable copyright under Philippine laws for
their failure to comply with the deposit and registration
requirements of Presidential Decree No. 49, as amended
by Presidential Decree No. 1988.
On 31 October 1990, 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.
We affirm the decisions of the Court of Appeals.
This Court, in 20th Century Fox Film Corp. vs. 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:
Page 202 of 307
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 petitioner's 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 P.D. No.
49 as amended by P.D.
No. 1988. This included not only the sale, lease or
distribution of pirated tapes but also the transfer or
causing to be transferred of any sound recording or
motion picture or other audio visual work.
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.
5. Columbia Pictures vs. CA, G.R. No. 110318,
August 28, 1996
Page 203 of 307
Facts: Before us is a petition for review on certiorari of
the decision of the Court of Appeals [1] promulgated on
July 22, 1992 and its resolution [2] of May 10, 1993
denying petitioners motion for reconsideration, both of
which sustained the order[3] of the Regional Trial Court,
Branch 133, Makati, Metro Manila, dated November 22,
1988 for the quashal of Search Warrant No. 87-053
earlier issued per its own order[4] on September 5, 1988
for violation of Section 56 of Presidential Decree No. 49,
as amended, otherwise known as the Decree on the
Protection of Intellectual Property.
The material facts found by respondent appellate court
are as follows:
Complainants thru counsel lodged a formal complaint
with the National Bureau of Investigation for violation of
PD No. 49, as amended, and sought its assistance in
their anti-film piracy drive. Agents of the NBI and
private researchers made discreet surveillance on
various video establishments in Metro Manila including
Sunshine Home Video Inc. (Sunshine for brevity), owned
and operated by Danilo A. Pelindario with address at No.
6 Mayfair Center, Magallanes, Makati, Metro Manila.
On November 14, 1987, NBI Senior Agent Lauro C.
Reyes applied for a search warrant with the court a
quo against Sunshine seeking the seizure, among
others, of pirated video tapes of copyrighted films all of
which were enumerated in a list attached to the
application; and, television sets, video cassettes and/or
laser disc recordings equipment and other machines
and paraphernalia used or intended to be used in the
unlawful exhibition, showing, reproduction, sale, lease
or disposition of videograms tapes in the premises
above described. In the hearing of the application, NBI
Senior Agent Lauro C. Reyes, upon questions by the
court a quo, reiterated in substance his averments in his
affidavit. His testimony was corroborated by another
witness, Mr. Rene C. Baltazar. Atty. Rico V. Domingos
deposition was also taken. On the basis of the affidavits
and depositions of NBI Senior Agent Lauro C. Reyes,
Rene C. Baltazar and Atty. Rico V. Domingo, Search
Warrant No 87-053 for violation of Section 56 of PD No.
49, as amended, was issued by the court a quo.
The search warrant was served at about 1:45 p.m. on
December 14, 1987 to Sunshine and/or their
representatives. In the course of the search of the
premises indicated in the search warrant, the NBI
Agents found and seized various video tapes of duly
copyrighted motion pictures/films owned or exclusively
distributed by private complainants, and machines,
equipment, television sets, paraphernalia, materials,
accessories all of which were included in the receipt for
properties accomplished by the raiding team. Copy of
the receipt was furnished and/or tendered to Mr. Danilo
A. Pelindario, registered owner-proprietor of Sunshine
Home Video.
On December 16, 1987, a Return of Search Warrant was
filed with the Court.
A Motion To Lift the Order of Search Warrant was filed
but was later denied for lack of merit.
Page 204 of 307
A Motion for reconsideration of the Order of denial was
filed. The court a quo granted the said motion for
reconsideration and justified it in this manner:
It is undisputed that the master tapes of the
copyrighted films from which the pirated films were
allegedly copies (sic), were never presented in the
proceedings for the issuance of the search warrants in
question. The orders of the Court granting the search
warrants and denying the urgent motion to lift order of
search warrants were, therefore, issued in
error. Consequently, they must be set aside. (p. 13,
Appellants Brief)[5]
Petitioners thereafter appealed the order of the trial
court granting private respondents motion for
reconsideration, thus lifting the search warrant which it
had therefore issued, to the Court of Appeals. As stated
at the outset, said appeal was dismissed and the motion
for reconsideration thereof was denied. Hence, this
petition was brought to this Court particularly
challenging the validity of respondent courts retroactive
application of the ruling in 20th Century Fox Film
Corporation vs. Court of Appeals, et al.,[6] in dismissing
petitioners appeal and upholding the quashal of the
search warrant by the trial court.
Held:
I Motion to Lift Order of Search Warrant dated April 28,
Inceptively, we shall settle the procedural
considerations on the matter of and the challenge to
petitioners legal standing in our courts, they being
foreign corporations not licensed to do business in the
Philippines.
Private respondents aver that being foreign
corporations, petitioners should have such license to be
able to maintain an action in Philippine courts. In so
challenging petitioners personality to sue, private
respondents point to the fact that petitioners are the
copyright owners or owners of exclusive rights of
distribution in the Philippines of copyrighted motion
pictures or films, and also to the appointment of Atty.
Rico V. Domingo as their attorney-in-fact, as being
constitutive of doing business in the Philippines under
Section 1(f) (1) and (2), Rule 1 of the Rules of the Board
of Investments. As foreign corporations doing business
in the Philippines, Section 133 of Batas Pambansa Blg.
68, or the Corporation Code of the Philippines, denies
them the right to maintain a suit in Philippine courts in
the absence of a license to do business. Consequently,
they have no right to ask for the issuance of a search
warrant.[7]
In refutation, petitioners flatly deny that they are doing
business in the Philippines,[8] and contend that private
respondents have not adduced evidence to prove that
petitioners are doing such business here, as would
require them to be licensed by the Securities and
Exchange Commission, other than averments in the
quoted portions of petitioners Opposition to Urgent
1988 and Atty. Rico V. Domingos affidavit of December
14, 1987. Moreover, an exclusive right to distribute a
product or the ownership of such exclusive right does
Page 205 of 307
not conclusively prove the act of doing business nor
establish the presumption of doing business.
The Corporation Code provides:
Sec. 133. Doing business without a license. No foreign
corporation transacting business in the Philippines
without a license, or its successors or assigns, shall be
permitted to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of the
Philippines; but such corporation may be sued or
proceeded against before Philippine courts or
administrative tribunals on any valid cause of action
recognized under Philippine laws.
The obtainment of a license prescribed by Section 125
of the Corporation Code is not a condition precedent to
the maintenance of any kind of action in Philippine
courts by a foreign corporation. However, under the
aforequoted provision, no foreign corporation shall be
permitted to transact business in the Philippines, as this
phrase is understood under the Corporation Code,
unless it shall have the license required by law, and
until it complies with the law in transacting business
here, it shall not be permitted to maintain any suit in
local courts.[10] As thus interpreted, any foreign
corporation not doing business in the Philippines may
maintain an action in our courts upon any cause of
action, provided that the subject matter and the
defendant are within the jurisdiction of the court. It is
not the absence of the prescribed license but doing
business in the Philippines without such license which
debars the foreign corporation from access to our
courts. In other words, although a foreign corporation is
without license to transact business in the Philippines, it
does not follow that it has no capacity to bring an
action. Such license is not necessary if it is not engaged
in business in the Philippines.[11]
Statutory provisions in many jurisdictions are
determinative of what constitutes doing business or
transacting business within that forum, in which case
said provisions are controlling there. In others where no
such definition or qualification is laid down regarding
acts or transactions falling within its purview, the
question rests primarily on facts and intent. It is thus
held that all the combined acts of a foreign corporation
in the State must be considered, and every
circumstance is material which indicates a purpose on
the part of the corporation to engage in some part of its
regular business in the State.[12]
No general rule or governing principles can be laid down
as to what constitutes doing or engaging in or
transacting business. Each case must be judged in the
light of its own peculiar environmental circumstances.
[13]
The true tests, however, seem to be whether the
foreign corporation is continuing the body or substance
of the business or enterprise for which it was organized
or whether it has substantially retired from it and turned
it over to another.[14]
As a general proposition upon which many authorities
agree in principle, subject to such modifications as may
be necessary in view of the particular issue or of the
terms of the statute involved, it is recognized that a
foreign corporation is doing, transacting, engaging in, or
carrying on business in the State when, and ordinarily
Page 206 of 307
only when, it has entered the State by its agents and is
there engaged in carrying on and transacting through
them some substantial part of its ordinary or customary
business, usually continuous in the sense that it may be
distinguished from merely casual, sporadic, or
occasional transactions and isolated acts.[15]
The Corporation Code does not itself define or
categorize what acts constitute doing or transacting
business in the Philippines. Jurisprudence has, however,
held that the term implies a continuity of commercial
dealings and arrangements, and contemplates, to that
extent, the performance of acts or works or the exercise
of some of the functions normally incident to or in
progressive prosecution of the purpose and subject of
its organization.
This traditional case law definition has evolved into a
statutory definition, having been adopted with some
qualifications in various pieces of legislation in our
jurisdiction.
For instance, Republic Act No. 5455[17] provides:
SECTION 1. Definitions and scope of this Act. (1) x x x;
and the phrase doing business shall include soliciting
orders, purchases, service contracts, opening offices,
whether called liaison offices or branches; appointing
representatives or distributors who are domiciled in the
Philippines or who in any calendar year stay in the
Philippines for a period or periods totalling one hundred
eighty days or more; participating in the management,
supervision or control of any domestic business firm,
entity or corporation in the Philippines; and any other
act or acts that imply a continuity of commercial
dealings or arrangements, and contemplate to that
extent the performance of acts or works, or the exercise
of some of the functions normally incident to, and in-
progressive prosecution of, commercial gain or of the
purpose and object of the business organization.
Presidential Decree No. 1789,[18] in Article 65 thereof,
defines doing business to include soliciting orders,
purchases, service contracts, opening offices, whether
called liaison offices or branches; appointing
representatives or distributors who are domiciled in the
Philippines or who in any calendar year stay in the
Philippines for a period or periods totalling one hundred
eighty days or more; participating in the management,
supervision or control of any domestic business firm,
entity or corporation in the Philippines, and any other
act or acts that imply a continuity of commercial
dealings or arrangements and contemplate to that
extent the performance of acts or works, or the exercise
of some of the functions normally incident to, and in
progressive prosecution of, commercial gain or of the
purpose and object of the business organization.
The implementing rules and regulations of said
presidential decree conclude the enumeration of acts
constituting doing business with a catch-all definition,
thus:
Sec. 1(g). Doing Business shall be any act or
combination of acts enumerated in Article 65 of the
Code. In particular doing business includes:
Page 207 of 307
(10) Any other act or acts which imply a continuity of
commercial dealings or arrangements, and contemplate
to that extent the performance of acts or works, or the
exercise of some of the functions normally incident to,
or in the progressive prosecution of, commercial gain or
of the purpose and object of the business organization.
Finally, Republic Act No. 7042[19] embodies such concept
in this wise:
SEC. 3. Definitions. As used in this Act:
(d) the phrase doing business shall include soliciting
orders, service contracts, opening offices, whether
called liaison offices or branches; appointing
representatives or distributors domiciled in the
Philippines or who in any calendar year stay in the
country for a period or periods totalling one hundred
eight(y) (180) days or more; participating in the
management, supervision or control of any domestic
business, firm, entity or corporation in the Philippines;
and any other act or acts that imply a continuity of
commercial dealings or arrangements, and contemplate
to that extent the performance of acts or works, or the
exercise of some of the functions normally incident to,
and in progressive prosecution of, commercial gain or of
the purpose and object of the business
organization: Provided, however, That the phrase doing
business shall not be deemed to include mere
investment as a shareholder by a foreign entity in
domestic corporations duly registered to do business,
and/or the exercise of rights as such investors; nor
having a nominee director or officer to represent its
interests in such corporation; nor appointing a
representative or distributor domiciled in the Philippines
which transacts business in its own name and for its
own account.
Based on Article 133 of the Corporation Code and
gauged by such statutory standards, petitioners are not
barred from maintaining the present action. There is no
showing that, under our statutory or case law,
petitioners are doing, transacting, engaging in or
carrying on business in the Philippines as would require
obtention of a license before they can seek redress from
our courts. No evidence has been offered to show that
petitioners have performed any of the enumerated acts
or any other specific act indicative of an intention to
conduct or transact business in the Philippines.
Accordingly, the certification issued by the Securities
and Exchange Commission[20] stating that its records do
not show the registration of petitioner film companies
either as corporations or partnerships or that they have
been licensed to transact business in the Philippines,
while undeniably true, is of no consequence to
petitioners right to bring action in the Philippines. Verily,
no record of such registration by petitioners can be
expected to be found for, as aforestated, said foreign
film corporations do not transact or do business in the
Philippines and, therefore, do not need to be licensed in
order to take recourse to our courts.
Although Section 1(g) of the Implementing Rules and
Regulations of the Omnibus Investments Code lists,
among others
Page 208 of 307
(1) Soliciting orders, purchases (sales) or service
contracts. Concrete and specific solicitations by a
foreign firm, or by an agent of such foreign firm, not
acting independently of the foreign firm amounting to
negotiations or fixing of the terms and conditions of
sales or service contracts, regardless of where the
contracts are actually reduced to writing, shall
constitute doing business even if the enterprise has no
office or fixed place of business in the Philippines. The
arrangements agreed upon as to manner, time and
terms of delivery of the goods or the transfer of title
thereto is immaterial. A foreign firm which does
business through the middlemen acting in their own
names, such as indentors, commercial brokers or
commission merchants, shall not be deemed doing
business in the Philippines. But such indentors,
commercial brokers or commission merchants shall be
the ones deemed to be doing business in the
Philippines.
(2) Appointing a representative or distributor who is
domiciled in the Philippines, unless said representative
or distributor has an independent status, i.e., it
transacts business in its name and for its own account,
and not in the name or for the account of a
principal. Thus, where a foreign firm is represented in
the Philippines by a person or local company which does
not act in its name but in the name of the foreign firm,
the latter is doing business in the Philippines.
As acts constitutive of doing business, the fact that
petitioners are admittedly copyright owners or owners
of exclusive distribution rights in the Philippines of
motion pictures or films does not convert such
ownership into an indicium of doing business which
would require them to obtain a license before they can
sue upon a cause of action in local courts.
Neither is the appointment of Atty. Rico V. Domingo as
attorney-in-fact of petitioners, with express authority
pursuant to a special power of attorney, inter alia
To lay criminal complaints with the appropriate
authorities and to provide evidence in support of both
civil and criminal proceedings against any person or
persons involved in the criminal infringement of
copyright, or concerning the unauthorized importation,
duplication, exhibition or distribution of any
cinematographic work(s) films or video cassettes of
which x x x is the owner of copyright or the owner of
exclusive rights of distribution in the Philippines
pursuant to any agreement(s) between x x x and the
respective owners of copyright in such cinematographic
work(s), to initiate and prosecute on behalf of x x x
criminal or civil actions in the Philippines against any
person or persons unlawfully distributing, exhibiting,
selling or offering for sale any films or video cassettes of
which x x x is the owner of copyright or the owner of
exclusive rights of distribution in the Philippines
pursuant to any agreement(s) between x x x and the
respective owners of copyright in such works.[21]
Tantamount to doing business in the Philippines. We fail
to see how exercising ones legal and property rights and
taking steps for the vigilant protection of said rights,
particularly the appointment of an attorney-in-fact, can
be deemed by and of themselves to be doing business
here.
Page 209 of 307
As a general rule, a foreign corporation will not be
regarded as doing business in the State simply because
it enters into contracts with residents of the State,
where such contracts are consummated outside the
State.[22] In fact, a view is taken that a foreign
corporation is not doing business in the state merely
because sales of its product are made there or other
business furthering its interests is transacted there by
an alleged agent, whether a corporation or a natural
person, where such activities are not under the direction
and control of the foreign corporation but are engaged
in by the alleged agent as an independent business.[23]
It is generally held that sales made to customers in the
State by an independent dealer who has purchased and
obtained title from the corporation to the products sold
are not a doing of business by the corporation.
[24]
Likewise, a foreign corporation which sells its
products to persons styled distributing agents in the
State, for distribution by them, is not doing business in
the State so as to render it subject to service of process
therein, where the contract with these purchasers is
that they shall buy exclusively from the foreign
corporation such goods as it manufactures and shall sell
them at trade prices established by it.[25]
It has moreover been held that the act of a foreign
corporation in engaging an attorney to represent it in a
Federal court sitting in a particular State is not doing
business within the scope of the minimum contact test.
[26]
With much more reason should this doctrine apply to
the mere retainer of Atty. Domingo for legal protection
against contingent acts of intellectual piracy.
In accordance with the rule that doing business imports
only acts in furtherance of the purposes for which a
foreign corporation was organized, it is held that the
mere institution and prosecution or defense of a suit,
particularly if the transaction which is the basis of the
suit took place out of the State, do not amount to the
doing of business in the State. The institution of a suit or
the removal thereof is neither the making of a contract
nor the doing of business within a constitutional
provision placing foreign corporations licensed to do
business in the State under the same regulations,
limitations and liabilities with respect to such acts as
domestic corporations. Merely engaging in litigation has
been considered as not a sufficient minimum contact to
warrant the exercise of jurisdiction over a foreign
corporation.[27]
As a consideration aside, we have perforce to comment
on private respondents basis for arguing that petitioners
are barred from maintaining suit in the Philippines. For
allegedly being foreign corporations doing business in
the Philippines without a license, private respondents
repeatedly maintain in all their pleadings that
petitioners have thereby no legal personality to bring an
action before Philippine courts.[28]
Among the grounds for a motion to dismiss under the
Rules of Court are lack of legal capacity to sue [29] and
that the complaint states no cause of action. [30] Lack of
legal capacity to sue means that the plaintiff is not in
the exercise of his civil rights, or does not have the
necessary qualification to appear in the case, or does
not have the character or representation he claims.
Page 210 of 307
[31]
On the other hand, a case is dismissible for lack of
personality to sue upon proof that the plaintiff is not the
real party-in-interest, hence grounded on failure to state
a cause of action.[32]The term lack of capacity to sue
should not be confused with the term lack of personality
to sue. While the former refers to a plaintiffs general
disability to sue, such as on account of minority,
insanity, incompetence, lack of juridical personality or
any other general disqualifications of a party, the latter
refers to the fact that the plaintiff is not the real party-
in-interest.Correspondingly, the first can be a ground for
a motion to dismiss based on the ground of lack of legal
capacity to sue;[33] whereas the second can be used as a
ground for a motion to dismiss based on the fact that
the complaint, on the face thereof, evidently states no
cause of action.[34]
Applying the above discussion to the instant petition,
the ground available for barring recourse to our courts
by an unlicensed foreign corporation doing or
transacting business in the Philippines should properly
be lack of capacity to sue, not lack of personality to
sue. Certainly, a corporation whose legal rights have
been violated is undeniably such, if not the only, real
party-in-interest to bring suit thereon although, for
failure to comply with the licensing requirement, it is not
capacitated to maintain any suit before our courts.
Lastly, on this point, we reiterate this Courts rejection of
the common procedural tactics of erring local
companies which, when sued by unlicensed foreign
corporations not engaged in business in the Philippines,
invoke the latters supposed lack of capacity to sue. The
doctrine of lack of capacity to sue based on failure to
first acquire a local license is based on considerations of
public policy. It was never intended to favor nor insulate
from suit unscrupulous establishments or nationals in
case of breach of valid obligations or violations of legal
rights of unsuspecting foreign firms or entities simply
because they are not licensed to do business in the
country.
II
We now proceed to the main issue of the retroactive
application to the present controversy of the ruling
in 20th Century Fox Film Corporation vs. Court of
Appeals, et al., promulgated on August 19, 1988,[36] that
for the determination of probable cause to support the
issuance of a search warrant in copyright infringement
cases involving videograms, the production of the
master tape for comparison with the allegedly pirated
copies is necessary.
Petitioners assert that the issuance of a search warrant
is addressed to the discretion of the court subject to the
determination of probable cause in accordance with the
procedure prescribed therefor under Sections 3 and 4 of
Rule 126. As of the time of the application for the search
warrant in question, the controlling criterion for the
finding of probable cause was that enunciated in Burgos
vs. Chief of Staff[37] stating that:
Probable cause for a search warrant is defined as such
facts and circumstances which would lead a reasonably
discrete and prudent man to believe that an offense has
been committed and that the objects sought in
Page 211 of 307
connection with the offense are in the place sought to
be searched.
According to petitioners, after complying with what the
law then required, the lower court determined that there
was probable cause for the issuance of a search
warrant, and which determination in fact led to the
issuance and service on December 14, 1987 of Search
Warrant No. 87-053. It is further argued that any search
warrant so issued in accordance with all applicable legal
requirements is valid, for the lower court could not
possibly have been expected to apply, as the basis for a
finding of probable cause for the issuance of a search
warrant in copyright infringement cases involving
videograms, a pronouncement which was not existent
at the time of such determination, on December 14,
1987, that is, the doctrine in the 20th Century Fox case
that was promulgated only on August 19, 1988, or over
eight months later.
Private respondents predictably argue in support of the
ruling of the Court of Appeals sustaining the quashal of
the search warrant by the lower court on the strength of
that 20th Century Fox ruling which, they claim, goes
into the very essence of probable cause. At the time of
the issuance of the search warrant involved here,
although the 20th Century Fox case had not yet been
decided, Section 2, Article III of the Constitution and
Section 3, Rule 126 of the 1985 Rules on Criminal
Procedure embodied the prevailing and governing law
on the matter. The ruling in 20th Century Fox was
merely an application of the law on probable
cause. Hence, they posit that there was no law that was
retrospectively applied, since the law had been there all
along. To refrain from applying the 20th Century
Fox ruling, which had supervened as a doctrine
promulgated at the time of the resolution of private
respondents motion for reconsideration seeking the
quashal of the search warrant for failure of the trial
court to require presentation of the master tapes prior
to the issuance of the search warrant, would have
constituted grave abuse of discretion.[38]
Respondent court upheld the retroactive application of
the 20th Century Fox ruling by the trial court in
resolving petitioners motion for reconsideration in favor
of the quashal of the search warrant, on this renovated
thesis:
And whether this doctrine should apply retroactively, it
must be noted that in the 20th Century Fox case, the
lower court quashed the earlier search warrant it
issued. On certiorari, the Supreme Court affirmed the
quashal on the ground among others that the master
tapes or copyrighted films were not presented for
comparison with the purchased evidence of the video
tapes to determine whether the latter is an
unauthorized reproduction of the former.
If the lower court in the Century Fox case did not quash
the warrant, it is Our view that the Supreme Court
would have invalidated the warrant just the same
considering the very strict requirement set by the
Supreme Court for the determination of probable cause
in copyright infringement cases as enunciated in this
20th Century Fox case. This is so because, as was
stated by the Supreme Court in the said case, the
master tapes and the pirated tapes must be presented
for comparison to satisfy the requirement of probable
Page 212 of 307
cause. So it goes back to the very existence of probable
cause. x x x
Mindful as we are of the ramifications of the doctrine
of stare decisis and the rudiments of fair play, it is our
considered view that the 20th Century Fox ruling cannot
be retroactively applied to the instant case to justify the
quashal of Search Warrant No. 87-053. Herein
petitioners consistent position that the order of the
lower court of September 5, 1988 denying therein
defendants motion to lift the order of search warrant
was properly issued, there having been satisfactory
compliance with the then prevailing standards under the
law for determination of probable cause, is indeed well
taken. The lower court could not possibly have expected
more evidence from petitioners in their application for a
search warrant other than what the law and
jurisprudence, then existing and judicially accepted,
required with respect to the finding of probable cause.
Article 4 of the Civil Code provides that (l)aws shall have
no retroactive effect, unless the contrary is provided.
Correlatively, Article 8 of the same Code declares that
(j)udicial decisions applying the laws or the Constitution
shall form part of the legal system of the Philippines.
Jurisprudence, in our system of government, cannot be
considered as an independent source of law; it cannot
create law.[40] While it is true that judicial decisions
which apply or interpret the Constitution or the laws are
part of the legal system of the Philippines, still they are
not laws. Judicial decisions, though not laws, are
nonetheless evidence of what the laws mean, and it is
for this reason that they are part of the legal system of
the Philippines.[41] Judicial decisions of the Supreme
Court assume the same authority as the statute itself.[42]
Interpreting the aforequoted correlated provisions of the
Civil Code and in light of the above disquisition, this
Court emphatically declared in Co vs. Court of Appeals,
et al.[43] that the principle of prospectivity applies not
only to original amendatory statutes and administrative
rulings and circulars, but also, and properly so, to
judicial decisions. Our holding in the earlier case
of People vs. Jubinal[44] echoes the rationale for this
judicial declaration, viz.:
Decisions of this Court, although in themselves not laws,
are nevertheless evidence of what the laws mean, and
this is the reason why under Article 8 of the New Civil
Code, Judicial decisions applying or interpreting the laws
or the Constitution shall form part of the legal system.
The interpretation upon a law by this Court constitutes,
in a way, a part of the law as of the date that the law
was originally passed, since this Courts construction
merely establishes the contemporaneous legislative
intent that the law thus construed intends to
effectuate. The settled rule supported by numerous
authorities is a restatement of the legal maxim legis
interpretation legis vim obtinet the interpretation placed
upon the written law by a competent court has the force
of law. x x x, but when a doctrine of this Court is
overruled and a different view is adopted, the new
doctrine should be applied prospectively, and should not
apply to parties who had relied on the old doctrine and
acted on the faith thereof. x x x. (Stress supplied).
Page 213 of 307
This was forcefully reiterated in Spouses Benzonan vs.
Court of Appeals, et al.,[45] where the Court expounded:
x x x. But while our decisions form part of the law of the
land, they are also subject to Article 4 of the Civil Code
which provides that laws shall have no retroactive effect
unless the contrary is provided. This is expressed in the
familiar legal maximum lex prospicit, non respicit, the
law looks forward not backward. The rationale against
retroactivity is easy to perceive. The retroactive
application of a law usually divests rights that have
already become vested or impairs the obligations of
contract and hence, is unconstitutional (Francisco v.
Certeza, 3 SCRA 565 [1961]). The same consideration
underlies our rulings giving only prospective effect to
decisions enunciating new doctrines. x x x.
The reasoning behind Senarillos vs. Hermosisima[46] that
judicial interpretation of a statute constitutes part of the
law as of the date it was originally passed, since the
Courts construction merely establishes the
contemporaneous legislative intent that the interpreted
law carried into effect, is all too familiar. Such judicial
doctrine does not amount to the passage of a new law
but consists merely of a construction or interpretation of
a pre-existing one, and that is precisely the situation
obtaining in this case.
It is consequently clear that a judicial interpretation
becomes a part of the law as of the date that law was
originally passed, subject only to the qualification that
when a doctrine of this Court is overruled and a different
view is adopted, and more so when there is a reversal
thereof, the new doctrine should be applied
prospectively and should not apply to parties who relied
on the old doctrine and acted in good faith. [47] To hold
otherwise would be to deprive the law of its quality of
fairness and justice then, if there is no recognition of
what had transpired prior to such adjudication.[48]
There is merit in petitioners impassioned and well-
founded argumentation:
The case of 20th Century Fox Film Corporation vs. Court
of Appeals, et al., 164 SCRA 655 (August 19, 1988)
(hereinafter 20th Century Fox) was inexistent in
December of 1987 when Search Warrant 87-053 was
issued by the lower court. Hence, it boggles the
imagination how the lower court could be expected to
apply the formulation of 20th Century Fox in finding
probable cause when the formulation was yet non-
existent.
In short, the lower court was convinced at that
time after conducting searching examination questions
of the applicant and his witnesses that an offense had
been committed and that the objects sought in
connection with the offense (were) in the place sought
to be searched (Burgos v. Chief of Staff, et al., 133 SCRA
800). It is indisputable, therefore, that at the time of the
application, or on December 14, 1987, the lower court
did not commit any error nor did it fail to comply with
any legal requirement for the valid issuance of search
warrant.
x x x. (W)e believe that the lower court should be
considered as having followed the requirements of the
law in issuing Search Warrant No. 87-053. The search
Page 214 of 307
warrant is therefore valid and binding. It must be noted
that nowhere is it found in the allegations of the
Respondents that the lower court failed to apply the
law as then interpreted in 1987. Hence, we find it
absurd that it is (sic) should be seen otherwise, because
it is simply impossible to have required the lower court
to apply a formulation which will only be defined six
months later.
Furthermore, it is unjust and unfair to require
compliance with legal and/or doctrinal requirements
which are inexistent at the time they were supposed to
have been complied with.
x x x. If the lower courts reversal will be sustained, what
encouragement can be given to courts and litigants to
respect the law and rules if they can expect with
reasonable certainty that upon the passage of a new
rule, their conduct can still be open to question? This
certainly breeds instability in our system of dispensing
justice. For Petitioners who took special effort to redress
their grievances and to protect their property rights by
resorting to the remedies provided by the law, it is most
unfair that fealty to the rules and procedures then
obtaining would bear but fruits of injustice.[49]
Withal, even the proposition that the prospectivity of
judicial decisions imports application thereof not only to
future cases but also to cases still ongoing or not yet
final when the decision was promulgated, should not be
countenanced in the jural sphere on account of its
inevitably unsettling repercussions. More to the point, it
is felt that the reasonableness of the added requirement
in 20th Century Fox calling for the production of the
master tapes of the copyrighted films for determination
of probable cause in copyright infringement cases needs
revisiting and clarification.
It will be recalled that the 20th Century Fox case arose
from search warrant proceedings in anticipation of the
filing of a case for the unauthorized sale or renting out
of copyrighted films in videotape format in violation of
Presidential Decree No. 49. It revolved around the
meaning of probable cause within the context of the
constitutional provision against illegal searches and
seizures, as applied to copyright infringement cases
involving videotapes.
Therein it was ruled that:
The presentation of 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.
Page 215 of 307
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.
For a closer and more perspicuous appreciation of the
factual antecedents of 20th Century Fox, the pertinent
portions of the decision therein are quoted hereunder,
to wit:
In the instant case, the lower court lifted the three
questioned search warrants against the private
respondents on the ground that it acted on the
application for the issuance of the said search warrants
and granted it on the misrepresentations of applicant
NBI and its witnesses that infringement of copyright or a
piracy of a particular film have been committed. Thus
the lower court stated in its questioned order dated
January 2, 1986:
According to the movant, all three witnesses during the
proceedings in the application for the three search
warrants testified of their own personal knowledge. Yet,
Atty. Albino Reyes of the NBI stated that the counsel or
representative of the Twentieth Century Fox
Corporation will testify on the video cassettes that were
pirated, so that he did not have personal knowledge of
the alleged piracy. The witness Bacani also said that the
video cassettes were pirated without stating the
manner it was pirated and that it was Atty. Domingo
that has knowledge of that fact.
On the part of Atty. Domingo, he said that the re-taping
of the allegedly pirated tapes was from master tapes
allegedly belonging to the Twentieth Century Fox,
because, according to him it is of his personal
knowledge.
At the hearing of the Motion for Reconsideration, Senior
NBI Agent Atty. Albino Reyes testified that when the
complaint for infringement was brought to the NBI, the
master tapes of the allegedly pirated tapes were shown
to him and he made comparisons of the tapes with
those purchased by their man Bacani. Why the master
tapes or at least the film reels of the allegedly pirated
tapes were not shown to the Court during the
application gives some misgivings as to the truth of that
bare statement of the NBI agent on the witness stand.
Again as the application and search proceedings is a
prelude to the filing of criminal cases under P.D. 49, the
copyright infringement law, and although what is
required for the issuance thereof is merely the presence
of probable cause, that probable cause must be
satisfactory to the Court, for it is a time-honored precept
that proceedings to put a man to task as an offender
under our laws should be interpreted instrictissimi
juris against the government and liberally in favor of the
alleged offender.
Page 216 of 307
This doctrine has never been overturned, and as a
matter of fact it had been enshrined in the Bill of Rights
in our 1973 Constitution.
So that lacking in persuasive effect, the allegation that
master tapes were viewed by the NBI and were
compared to the purchased and seized video tapes
from the respondents establishments, it should be
dismissed as not supported by competent evidence and
for that matter the probable cause hovers in that grey
debatable twilight zone between black and white
resolvable in favor of respondents herein.
But the glaring fact is that Cocoon, the first video tape
mentioned in the search warrant, was not even duly
registered or copyrighted in the Philippines. (Annex C of
Opposition, p. 152, record.) So that lacking in the
requisite presentation to the Court of an alleged master
tape for purposes of comparison with the purchased
evidence of the video tapes allegedly pirated and those
seized from respondents, there was no way to
determine whether there really was piracy, or copying of
the film of the complainant Twentieth Century Fox.
The lower court, therefore, lifted the three (3)
questioned search warrants in the absence of probable
cause that the private respondents violated P.D. 49. As
found by the court, the NBI agents who acted as
witnesses did not have personal knowledge of the
subject matter of their testimony which was the alleged
commission of the offense by the private
respondents. Only the petitioners counsel who was also
a witness during the application for the issuance of the
search warrants stated that he had personal knowledge
that the confiscated tapes owned by the private
respondents were pirated tapes taken from master
tapes belonging to the petitioner. However, the lower
court did not give much credence to his testimony in
view of the fact that the master tapes of the allegedly
pirated tapes were not shown to the court during the
application (Italics ours).
The italicized passages readily expose the reason why
the trial court therein required the presentation of the
master tapes of the allegedly pirated films in order to
convince itself of the existence of probable cause under
the factual milieu peculiar to that case. In the case at
bar, respondent appellate court itself observed:
We feel that the rationale behind the aforequoted
doctrine is that the pirated copies as well as the master
tapes, unlike the other types of personal properties
which may be seized, were available for presentation to
the court at the time of the application for a search
warrant to determine the existence of the linkage of the
copyrighted films with the pirated ones. Thus, there is
no reason not to present them (Italics supplied for
emphasis).[50]
In fine, the supposed pronunciamento in said case
regarding the necessity for the presentation of the
master tapes of the copyrighted films for the validity of
search warrants should at most be understood to merely
serve as a guidepost in determining the existence of
probable cause in copyright infringement cases where
there is doubt as to the true nexus between the master
tape and the pirated copies. An objective and careful
reading of the decision in said case could lead to no
Page 217 of 307
other conclusion than that said directive was hardly
intended to be a sweeping and inflexible requirement in
all or similar copyright infringement cases. Judicial
dicta should always be construed within the factual
matrix of their parturition, otherwise a careless
interpretation thereof could unfairly fault the writer with
the vice of overstatement and the reader with the
fallacy of undue generalization.
In the case at bar, NBI Senior Agent Lauro C. Reyes who
filed the application for search warrant with the lower
court following a formal complaint lodged by petitioners,
judging from his affidavit[51] and his deposition,[52] did
testify on matters within his personal knowledge based
on said complaint of petitioners as well as his own
investigation and surveillance of the private
respondents video rental shop. Likewise, Atty. Rico V.
Domingo, in his capacity as attorney-in-fact, stated in
his affidavit[53] and further expounded in his
[54]
deposition that he personally knew of the fact that
private respondents had never been authorized by his
clients to reproduce, lease and possess for the purpose
of selling any of the copyrighted films.
Both testimonies of Agent Reyes and Atty. Domingo
were corroborated by Rene C. Baltazar, a private
researcher retained by Motion Pictures Association of
America, Inc. (MPAA, Inc.), who was likewise presented
as a witness during the search warrant proceedings.
[55]
The records clearly reflect that the testimonies of the
abovenamed witnesses were straightforward and
stemmed from matters within their personal
knowledge. They displayed none of the ambivalence
and uncertainty that the witnesses in the 20th Century
Fox case exhibited. This categorical forthrightness in
their statements, among others, was what initially and
correctly convinced the trial court to make a finding of
the existence of probable cause.
There is no originality in the argument of private
respondents against the validity of the search warrant,
obviously borrowed from 20th Century Fox, that
petitioners witnesses NBI Agent Lauro C. Reyes, Atty.
Rico V. Domingo and Rene C. Baltazar did not have
personal knowledge of the subject matter of their
respective testimonies and that said witnesses claim
that the video tapes were pirated, without stating the
manner by which these were pirated, is a conclusion of
fact without basis.[56] The difference, it must be pointed
out, is that the records in the present case reveal that
(1) there is no allegation of misrepresentation, much
less a finding thereof by the lower court, on the part of
petitioners witnesses; (2) there is no denial on the part
of private respondents that the tapes seized were
illegitimate copies of the copyrighted ones nor have
they shown that they were given any authority by
petitioners to copy, sell, lease, distribute or circulate, or
at least, to offer for sale, lease, distribution or
circulation the said video tapes; and (3) a discreet but
extensive surveillance of the suspected area was
undertaken by petitioners witnesses sufficient to enable
them to execute trustworthy affidavits and depositions
regarding matters discovered in the course thereof and
of which they have personal knowledge.
It is evidently incorrect to suggest, as the ruling in 20th
Century Fox may appear to do, that in copyright
infringement cases, the presentation of master tapes of
the copyrighted films is always necessary to meet the
Page 218 of 307
requirement of probable cause and that, in the absence
thereof, there can be no finding of probable cause for
the issuance of a search warrant. It is true that such
master tapes are object evidence, with the merit that in
this class of evidence the ascertainment of the
controverted fact is made through demonstrations
involving the direct use of the senses of the presiding
magistrate.[57] Such auxiliary procedure, however, does
not rule out the use of testimonial or documentary
evidence, depositions, admissions or other classes of
evidence tending to prove the factum probandum,
[58]
especially where the production in court of object
evidence would result in delay, inconvenience or
expenses out of proportion to its evidentiary value.[59]
Of course, as a general rule, constitutional and statutory
provisions relating to search warrants prohibit their
issuance except on a showing of probable cause,
supported by oath or affirmation. These provisions
prevent the issuance of warrants on loose, vague, or
doubtful bases of fact, and emphasize the purpose to
protect against all general searches.[60] Indeed, Article III
of our Constitution mandates in Sec. 2 thereof that no
search warrant shall issue except upon probable cause
to be determined personally by the judge after
examination under oath or affirmation of the
complainant and the witnesses he may produce, and
particularly describing the place to be searched and the
things to be seized; and Sec. 3 thereof provides that any
evidence obtained in violation of the preceding section
shall be inadmissible for any purpose in any proceeding.
These constitutional strictures are implemented by the
following provisions of Rule 126 of the Rules of Court:
Sec. 3. Requisites for issuing search warrant. A search
warrant shall not issue but upon probable cause in
connection with one specific offense to be determined
personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he
may produce, and particularly describing the place to be
searched and the things to be seized.
Sec. 4. Examination of complainant; record. The judge
must, before issuing the warrant, personally examine in
the form of searching questions and answers, in writing
and under oath the complainant and any witnesses he
may produce on facts personally known to them and
attach to the record their sworn statements together
with any affidavits submitted.
Sec. 5. Issuance and form of search warrant. If the judge
is thereupon satisfied of the existence of facts upon
which the application is based, or that there is probable
cause to believe that they exist, he must issue the
warrant, which must be substantially in the form
prescribed by these Rules.
The constitutional and statutory provisions of various
jurisdictions requiring a showing of probable cause
before a search warrant can be issued are mandatory
and must be complied with, and such a showing has
been held to be an unqualified condition precedent to
the issuance of a warrant. A search warrant not based
on probable cause is a nullity, or is void, and the
issuance thereof is, in legal contemplation, arbitrary.
[61]
It behooves us, then, to review the concept of
probable cause, firstly, from representative holdings in
Page 219 of 307
the American jurisdiction from which we patterned our
doctrines on the matter.
Although the term probable cause has been said to have
a well-defined meaning in the law, the term is
exceedingly difficult to define, in this case, with any
degree of precision; indeed, no definition of it which
would justify the issuance of a search warrant can be
formulated which would cover every state of facts which
might arise, and no formula or standard, or hard and
fast rule, may be laid down which may be applied to the
facts of every situation.[62] As to what acts constitute
probable cause seem incapable of definition.[63] There is,
of necessity, no exact test.[64]
At best, the term probable cause has been understood
to mean a reasonable ground of suspicion, supported by
circumstances sufficiently strong in themselves to
warrant a cautious man in the belief that the person
accused is guilty of the offense with which he is
charged;[65] or the existence of such facts and
circumstances as would excite an honest belief in a
reasonable mind acting on all the facts and
circumstances within the knowledge of the magistrate
that the charge made by the applicant for the warrant is
true.[66]
Probable cause does not mean actual and positive
cause, nor does it import absolute certainty. The
determination of the existence of probable cause is not
concerned with the question of whether the offense
charged has been or is being committed in fact, or
whether the accused is guilty or innocent, but only
whether the affiant has reasonable grounds for his
belief.[67] The requirement is less than certainty or proof,
but more than suspicion or possibility.[68]
In Philippine jurisprudence, probable cause has been
uniformly defined as such facts and circumstances
which would lead a reasonable, discreet and prudent
man to believe that an offense has been committed,
and that the objects sought in connection with the
offense are in the place sought to be searched. [69] It
being the duty of the issuing officer to issue, or refuse to
issue, the warrant as soon as practicable after the
application therefor is filed,[70] the facts warranting the
conclusion of probable cause must be assessed at the
time of such judicial determination by necessarily using
legal standards then set forth in law and jurisprudence,
and not those that have yet to be crafted thereafter.
As already stated, the definition of probable cause
enunciated in Burgos, Sr. vs. Chief of Staff, et al., supra,
vis-a-vis the provisions of Sections 3 and 4 of Rule 126,
were the prevailing and controlling legal standards, as
they continue to be, by which a finding of probable
cause is tested. Since the proprietary of the issuance of
a search warrant is to be determined at the time of the
application therefor, which in turn must not be too
remote in time from the occurrence of the offense
alleged to have been committed, the issuing judge, in
determining the existence of probable cause, can and
should logically look to the touchstones in the laws
therefore enacted and the decisions already
promulgated at the time, and not to those which had
not yet even been conceived or formulated.
Page 220 of 307
It is worth noting that neither the Constitution nor the
Rules of Court attempt to define probable cause,
obviously for the purpose of leaving such matter to the
courts discretion within the particular facts of each
case. Although the Constitution prohibits the issuance of
a search warrant in the absence of probable cause, such
constitutional inhibition does not command the
legislature to establish a definition or formula for
determining what shall constitute probable cause.
[71]
Thus, Congress, despite its broad authority to fashion
standards of reasonableness for searches and seizures,
[72]
does not venture to make such a definition or
standard formulation of probable cause, nor categorize
what facts and circumstances make up the same, much
less limit the determination thereof to and within the
circumscription of a particular class of evidence, all in
deference to judicial discretion and probity.[73]
Accordingly, to restrict the exercise of discretion by a
judge by adding a particular requirement (the
presentation of master tapes, as intimated by 20th
Century Fox) not provided nor implied in the law for a
finding of probable cause is beyond the realm of judicial
competence or statemanship. It serves no purpose but
to stultify and constrict the judicious exercise of a
court's prerogatives and to denigrate the judicial duty of
determining the existence of probable cause to a mere
ministerial or mechanical function. There is, to repeat,
no law or rule which requires that the existence of
probable cause is or should be determined solely by a
specific kind of evidence. Surely, this could not have
been contemplated by the framers of the Constitution,
and we do not believe that the Court intended the
statement in 20th Century Fox regarding master tapes
as the dictum for all seasons and reasons in
infringement cases.
Turning now to the case at bar, it can be gleaned from
the records that the lower court followed the prescribed
procedure for the issuances of a search warrant: (1) the
examination under oath or affirmation of the
complainant and his witnesses, with them particularly
describing the place to be searched and the things to be
seized; (2) an examination personally conducted by the
judge in the form of searching questions and answers, in
writing and under oath of the complainant and
witnesses on facts personally known to them; and, (3)
the taking of sworn statements, together with the
affidavits submitted, which were duly attached to the
records.
Thereafter, the court a quo made the following factual
findings leading to the issuance of the search warrant
now subject to this controversy:
In the instant case, the following facts have been
established: (1) copyrighted video tapes bearing titles
enumerated in Search Warrant No. 87-053 were being
sold, leased, distributed or circulated, or offered for sale,
lease, distribution, or transferred or caused to be
transferred by defendants at their video outlets, without
the written consent of the private complainants or their
assignee; (2) recovered or confiscated from defendants'
possession were video tapes containing copyrighted
motion picture films without the authority of the
complainant; (3) the video tapes originated from
spurious or unauthorized persons; and (4) said video
tapes were exact reproductions of the films listed in the
Page 221 of 307
search warrant whose copyrights or distribution rights
were owned by complainants.
The basis of these facts are the affidavits and
depositions of NBI Senior Agent Lauro C. Reyes, Atty.
Rico V. Domingo, and Rene C. Baltazar. Motion Pictures
Association of America, Inc. (MPAA) thru their counsel,
Atty. Rico V. Domingo, filed a complaint with the
National Bureau of Investigation against certain video
establishments one of which is defendant, for violation
of PD No. 49 as amended by PD No, 1988. Atty. Lauro C.
Reyes led a team to conduct discreet surveillance
operations on said video establishments. Per
information earlier gathered by Atty. Domingo,
defendants were engaged in the illegal sale, rental,
distribution, circulation or public exhibition of
copyrighted films of MPAA without its written authority
or its members. Knowing that defendant Sunshine Home
Video and its proprietor, Mr. Danilo Pelindario, were not
authorized by MPAA to reproduce, lease, and possess for
the purpose of selling any of its copyrighted motion
pictures, he instructed his researcher, Mr. Rene Baltazar
to rent two video cassettes from said defendants on
October 21, 1987. Rene C. Baltazar proceeded to
Sunshine Home Video and rented tapes containing Little
Shop of Horror. He was issued rental slip No. 26362
dated October 21, 1987 for P10.00 with a deposit
of P100.00. Again, on December 11, 1987, he returned
to Sunshine Home Video and rented Robocop with a
rental slip No. 25271 also for P10.00. On the basis of the
complaint of MPAA thru counsel, Atty. Lauro C. Reyes
personally went to Sunshine Home Video at No. 6
Mayfair Center, Magallanes Commercial Center,
Makati. His last visit was on December 7, 1987.There,
he found the video outlet renting, leasing, distributing
video cassette tapes whose titles were copyrighted and
without the authority of MPAA.
Given these facts, a probable cause exists. x x x.[74]
The lower court subsequently executed a volte-face,
despite its prior detailed and substantiated findings, by
stating in its order of November 22, 1988 denying
petitioners motion for reconsideration and quashing the
search warrant that
x x x. The two (2) cases have a common factual milieu;
both involve alleged pirated copyrighted films of private
complainants which were found in the possession or
control of the defendants. Hence, the necessity of the
presentation of the master tapes from which the pirated
films were allegedly copied is necessary in the instant
case, to establish the existence of probable cause.[75]
Being based solely on an unjustifiable and improper
retroactive application of the master tape requirement
generated by 20th Century Fox upon a factual situation
completely different from that in the case at bar, and
without anything more, this later order clearly defies
elemental fair play and is a gross reversible error. In
fact, this observation of the Court in La
ChemiseLacoste, S.A. vs. Fernandez, et al., supra, may
just as easily apply to the present case:
A review of the grounds invoked x x x in his motion to
quash the search warrants reveals the fact that they are
not appropriate for quashing a warrant. They are
matters of defense which should be ventilated during
the trial on the merits of the case. x x x
Page 222 of 307
As correctly pointed out by petitioners, a blind espousal
of the requisite of presentation of the master tapes in
copyright infringement cases, as the prime determinant
of probable cause, is too exacting and impracticable a
requirement to be complied with in a search warrant
application which, it must not be overlooked, is only an
ancillary proceeding. Further, on realistic considerations,
a strict application of said requirement militates against
the elements of secrecy and speed which underlie
covert investigative and surveillance operations in
police enforcement campaigns against all forms of
criminality, considering that the master tapes of a
motion picture required to be presented before the court
consists of several reels contained in circular steel
casings which, because of their bulk, will definitely draw
attention, unlike diminutive objects like video tapes
which can be easily concealed.[76] With hundreds of titles
being pirated, this onerous and tedious imposition
would be multiplied a hundredfold by judicial fiat,
discouraging and preventing legal recourses in foreign
jurisdictions.
Given the present international awareness and furor
over violations in large scale of intellectual property
rights, calling for transnational sanctions, it bears calling
to mind the Courts admonition also in La Chemise
Lacoste, supra, that
x x x. Judges all over the country are well advised to
remember that court processes should not be used as
instruments to, unwittingly or otherwise, aid
counterfeiters and intellectual pirates, tie the hands of
the law as it seeks to protect the Filipino
consuming public and frustrate executive and
administrative implementation of solemn commitments
pursuant to international conventions and treaties.
III
The amendment of Section 56 of Presidential Decree No.
49 by Presidential Decree No. 1987,[77] which should
here be publicized judicially, brought about the revision
of its penalty structure and enumerated additional acts
considered violative of said decree on intellectual
property, namely, (1) directly or indirectly transferring
or causing to be transferred any sound recording or
motion picture or other audio-visual works so recorded
with intent to sell, lease, publicly exhibit or cause to be
sold, leased or publicly exhibited, or to use or cause to
be used for profit such articles on which sounds, motion
pictures, or other audio-visual works are so transferred
without the written consent of the owner or his
assignee; (2) selling, leasing, distributing, circulating,
publicly exhibiting, or offering for sale, lease,
distribution, or possessing for the purpose of sale, lease,
distribution, circulation or public exhibition any of the
abovementioned articles, without the written consent of
the owner or his assignee; and, (3) directly or indirectly
offering or making available for a fee, rental, or any
other form of compensation any equipment, machinery,
paraphernalia or any material with the knowledge that
such equipment, machinery, paraphernalia or material
will be used by another to reproduce, without the
consent of the owner, any phonograph record, disc,
wire, tape, film or other article on which sounds, motion
pictures or other audio-visual recordings may be
Page 223 of 307
transferred, and which provide distinct bases for
criminal prosecution, being crimes independently
punishable under Presidential Decree No. 49, as
amended, aside from the act of infringing or aiding or
abetting such infringement under Section 29.
The trial courts finding that private respondents
committed acts in blatant transgression of Presidential
Decree No. 49 all the more bolsters its findings of
probable cause, which determination can be reached
even in the absence of master tapes by the judge in the
exercise of sound discretion. The executive concern and
resolve expressed in the foregoing amendments to the
decree for the protection of intellectual property rights
should be matched by corresponding judicial vigilance
and activism, instead of the apathy of submitting to
technicalities in the face of ample evidence of guilt.
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.[78]
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 what works he was indirectly copying, or 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. 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 a piracy. [79] The question of
whether there has been an actionable infringement of a
literary, musical, or artistic work in motion pictures,
radio or television being one of fact,[80] it should properly
be determined during the trial. That is the stage calling
for conclusive or preponderating evidence, and not the
summary proceeding for the issuance of a search
warrant wherein both lower courts erroneously require
the master tapes.
In disregarding private respondents argument that
Search Warrant No. 87-053 is a general warrant, the
lower court observed that it was worded in a manner
that the enumerated seizable items bear direct relation
to the offense of violation of Sec. 56 of PD 49 as
amended. It authorized only the seizur(e) of articles
used or intended to be used in the unlawful sale, lease
and other unconcerted acts in violation of PD 49 as
amended. x x x.[81]
On this point, Bache and Co., (Phil.), Inc., et al. vs. Ruiz,
et al.,[82] instructs and enlightens:
Page 224 of 307
A search warrant may be said to particularly describe
the things to be seized when the description therein is
as specific as the circumstances will ordinarily allow
(People vs. Rubio, 57 Phil. 384); or when the description
expresses a conclusion of fact not of law by which the
warrant officer may be guided in making the search and
seizure (idem., dissent of Abad Santos, J.,); or when the
things described are limited to those which bear direct
relation to the offense for which the warrant is being
issued (Sec. 2, Rule 126, Revised Rules of Court). x x
x. If the articles desired to be seized have any direct
relation to an offense committed, the applicant must
necessarily have some evidence, other than those
articles, to prove the said offense; and the articles
subject of search and seizure should come in handy
merely to strengthensuch evidence. x x x.
On private respondents averment that the search
warrant was made applicable to more than one specific
offense on the ground that there are as many offenses
of infringement as there are rights protected and,
therefore, to issue one search warrant for all the movie
titles allegedly pirated violates the rule that a search
warrant must be issued only in connection with one
specific offense, the lower court said:
x x x. As the face of the search warrant itself indicates,
it was issued for violation of Section 56, PD 49 as
amended only. The specifications therein (in Annex A)
merely refer to the titles of the copyrighted motion
pictures/films belonging to private complainants which
defendants were in control/possession for sale, lease,
distribution or public exhibition in contravention of Sec.
56, PD 49 as amended.[83]
That there were several counts of the offense of
copyright infringement and the search warrant
uncovered several contraband items in the form of
pirated video tapes is not to be confused with the
number of offenses charged. The search warrant herein
issued does not violate the one-specific-offense rule.
It is pointless for private respondents to insist on
compliance with the registration and deposit
requirements under Presidential Decree No. 49 as
prerequisites for invoking the courts protective mantle
in copyright infringement cases. As explained by the
court below:
Defendants-movants contend that PD 49 as amended
covers only producers who have complied with the
requirements of deposit and notice (in other words
registration) under Sections 49 and 50 thereof.Absent
such registration, as in this case, there was no right
created, hence, no infringement under PD 49 as
amended. This is not well-taken.
As correctly pointed out by private complainants-
oppositors, the Department of Justice has resolved this
legal question as far back as December 12, 1978 in its
Opinion No. 191 of the then Secretary of Justice Vicente
Abad Santos which stated that Sections 26 and 50 do
not apply to cinematographic works and PD No. 49 had
done away with the registration and deposit of
cinematographic works and that even without prior
registration and deposit of a work which may be entitled
to protection under the Decree, the creator can file
action for infringement of its rights. He cannot demand,
Page 225 of 307
however, payment of damages arising from
infringement. The same opinion stressed that the
requirements of registration and deposit are thus
retained under the Decree, not as conditions for the
acquisition of copyright and other rights, but as
prerequisites to a suit for damages. The statutory
interpretation of the Executive Branch being correct, is
entitled (to) weight and respect.
Defendants-movants maintain that complainant and his
witnesses led the Court to believe that a crime existed
when in fact there was none. This is wrong. As earlier
discussed, PD 49 as amended, does not require
registration and deposit for a creator to be able to file
an action for infringement of his rights. These conditions
are merely pre-requisites to an action for damages. So,
as long as the proscribed acts are shown to exist, an
action for infringement may be initiated.[84]
Accordingly, the certifications[85] from the Copyright
Section of the National Library, presented as evidence
by private respondents to show non-registration of some
of the films of petitioners, assume no evidentiary weight
or significance, whatsoever.
Furthermore, a closer review of Presidential Decree No.
49 reveals that even with respect to works which are
required under Section 26 thereof to be registered and
with copies to be deposited with the National Library,
such as books, including composite and cyclopedic
works, manuscripts, directories and gazetteers; and
periodicals, including pamphlets and newspapers;
lectures, sermons, addresses, dissertations prepared for
oral delivery; and letters, the failure to comply with said
requirements does not deprive the copyright owner of
the right to sue for infringement. Such non-compliance
merely limits the remedies available to him and subjects
him to the corresponding sanction.
The reason for this is expressed in Section 2 of the
decree which prefaces its enumeration of copyrightable
works with the explicit statement that the rights granted
under this Decree shall, from the moment of creation,
subsist with respect to any of the following classes of
works. This means that under the present state of the
law, the copyright for a work is acquired by an
intellectual creator from the moment of creation even in
the absence of registration and deposit. As has been
authoritatively clarified:
The registration and deposit of two complete copies or
reproductions of the work with the National Library
within three weeks after the first public dissemination or
performance of the work, as provided for in Section 26
(P.D. No. 49, as amended), is not for the purpose of
securing a copyright of the work, but rather to avoid the
penalty for non-compliance of the deposit of said two
copies and in order to recover damages in an
infringement suit.[86]
One distressing observation. This case has been fought
on the basis of, and its resolution long delayed by resort
to, technicalities to a virtually abusive extent by private
respondents, without so much as an attempt to adduce
any credible evidence showing that they conduct their
business legitimately and fairly. The fact that private
respondents could not show proof of their authority or
that there was consent from the copyright owners for
Page 226 of 307
them to sell, lease, distribute or circulate petitioners
copyrighted films immeasurably bolsters the lower
courts initial finding of probable cause. That private
respondents are licensed by the Videogram Regulatory
Board does not insulate them from criminal and civil
liability for their unlawful business practices. What is
more deplorable is that the reprehensible acts of some
unscrupulous characters have stigmatized the
Philippines with an unsavory reputation as a hub for
intellectual piracy in this part of the globe, formerly in
the records of the General Agreement on Tariffs and
Trade and, now, of the World Trade Organization. Such
acts must not be glossed over but should be denounced
and repressed lest the Philippines become an
international pariah in the global intellectual community.
WHEREFORE, the assailed judgment and resolution of
respondent Court of Appeals, and necessarily inclusive
of the order of the lower court dated November 22,
1988, are hereby REVERSED and SET ASIDE. The order
of the court a quo of September 5, 1988 upholding the
validity of Search Warrant No. 87-053 is hereby
REINSTATED, and said court is DIRECTED to take and
expeditiously proceed with such appropriate
proceedings as may be called for in this case. Treble
costs are further assessed against private respondents.
6. Columbia Pictures vs. CA & Showtime
Enterprises, G.R. 111267, Sept. 20, 1996
Syllabus:
1. REMEDIAL LAW; CRIMINAL PROCEDURE;
PROSECUTION OF OFFENSE; ONLY THE SOLICITOR
GENERAL IS AUTHORIZED TO BRING OR DEFEND
ACTIONS ON BEHALF OF THE PEOPLE OR THE REPUBLIC
OF THE PHILIPPINES ONCE THE CASE IS BROUGHT
BEFORE THE SUPREME COURT OR THE COURT OF
APPEALS; EXCEPTION.- From the records it is clear that,
as complainants, petitioners were involved in the
proceedings which led to the issuance of Search Warrant
No. 23. In People vs. Nano, the Court declared that while
the general rule is that it is only the Solicitor General
who is authorized to bring or defend actions on behalf of
the People or the Republic of the Philippines once the
case is brought before this Court or the Court of
Appeals, if there appears to be grave error committed
by the judge or a lack of due process, the petition will
be deemed filed by the private complainants therein as
if it were filed by the Solicitor General. In line with this
ruling, the Court gives this petition due course and will
allow petitioners to argue their case against the
questioned order in lieu of the Solicitor General.
2. ID.; ID.; SEARCH AND SEIZURE; SEARCH WARRANT;
PRESENTATION OF THE MASTER TAPES OF THE PIRATED
FILMS IS NOT AN ABSOLUTE REQUIREMENT FOR THE
WARRANT TO ISSUE.- "In fine, the supposed
pronunciamento in said case regarding the necessity for
the presentation of the master tapes of the copyrighted
films for the validity of search warrants should at most
be understood to merely serve as a guidepost in
determining the existence of probable cause in
copyright infringement cases where there is doubt as to
the true nexus between the master tape and the pirated
copies. An objective and careful reading of the decision
in said case could lead to no other conclusion than that
said directive was hardly intended to be a sweeping and
Page 227 of 307
inflexible requirement in all or similar copyright
infringement cases. Judicial dicta should always be
construed within the factual matrix of their parturition,
otherwise a careless interpretation thereof could
unfairly fault the writer with the vice of overstatement
and the reader with the fallacy of undue
generalization. xxx It is evidently incorrect to suggest,
as the ruling in 20th Century Fox may appear to do, that
in copyright infringement cases, the presentation of
master tapes of the copyrighted films is always
necessary to meet the requirement of probable cause
and that, in the absence thereof, there can be no finding
of probable cause for the issuance of a search
warrant. It is true that suc master tapes are object
evidence, with the merit that in this class of evidence
the ascertainment of the controverted fact is made
through demonstrations involving the direct use of the
senses of the presiding magistrate. (City of Manila vs.
Cabangis, 10 Phil. 151 [1908]; Kabase vs. State, 31 Ala.
App. 77, 12 So. 2nd, 758, 764). Such auxiliary
procedure, however, does not rule out the use of
testimonial or documentary evidence, depositions,
admissions or other classes of evidence tending to
prove the factum probandum, (See Phil. Movie Workers
Association vs. Premiere Productions, Inc., 92 Phil. 843
[1953]) especially where the production in court of
object evidence would result in delay, inconvenience or
expenses out of proportion to its evidentiary value. (See
3 Jones on Evidence, Sec. 1400)."
3. ID.; ID.; ID.; ID.; REQUIREMENTS FOR VALID ISSUANCE
THEREOF.- The- instant case also differs from 20th
Century Fox in that what herein private respondent put
in issue was the application of the ruling in that case,
not the conduct of Judge Flor in the issuance of Search
Warrant No. 23. From the records, it is clear that Judge
Flor observed all the requirements necessary before the
search warrant was issued: he heard the testimonies
and studied the dispositions of the witnesses for the
petitioners, namely Ms. Rebecca Benitez-Cruz, Ms Analie
I. Jimenez and the VRB's Intelligence Officer, Alfredo G.
Ramos on the existence of probable cause before
issuing the warrant. Under Sec. 3 and 4, Rule 126 of the
Rules of Court, the requirements for the issuance of a
valid search warrant are: "Sec. 3. Requisites for issuing
search warrant. A search warrant shall not issue but
upon probable. cause in connection with one specific
offense to be determined by the judge or such other
responsible officer authorized by law after examination
under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing
the place to be searched and the things to be
seized. Sec. 4. Examination of complainant; record.- The
judge must, before issuing the warrant, personally
examine in the form of searching questions and
answers, in writing and under oath the complainant, and
any witnesses he may produce on facts personally
known to them and attach to the record their sworn
statements together with any affidavits
submitted." Having satisfied these requirements, Judge
Flor committed no grave abuse of discretion in issuing
the warrant.
4. ID.; ID.; ID.; ID.; REQUIREMENT FOR SPECIFICITY;
WHEN SATISFIED.- "A search warrant may be said to
particularly describe the things to be seized when the
description therein is as specific as the circumstances
will ordinarily allow (People vs. Rubio, 57 Phil. 384); or
Page 228 of 307
when the description expresses a conclusion of fact-not
of law-by which the warrant officer may be guided in
making the search and seizure (idem., dissent of Abad
Santos, J.); or when the things described are limited to
those which bear direct relation to the offense for which
the warrant is being issued (Sec. 2, Rule 126, Revised
Rules of Court).
If the articles desired to be seized have any direct
relation to an offense committed, the applicant must
necessarily have some evidence, other than those
articles, to prove the said offense; and the articles
subject of search and seizure should come in handy
merely to strengthen such evidence.
5. STATUTORY CONSTRUCTION; JUDICIAL
INTERPRETATION; BECOMES A PART OF THE LAW AS OF
THE DATE WHEN THE LAW WAS ORIGINALLY PASSED;
EXCEPTION.- "Mindful as we are of the ramifications
ofthe doctrine of stare decisis and the rudiments of fair
play, it is our considered view that the 20th Century Fox
ruling cannot be retroactively applied to the instant
case to justify the quashal of Search Warrant No. 87-
053. Herein petitioners' consistent position that the
order of the lower court of September 5, 1988 denying
therein defendants' motion to lift the order of search
warrant was properly issued, there having been
satisfactory compliance with the then prevailing
standards under the law for determination of probable
cause, is indeed well taken. The lower court could not
possibly have expected more evidence from petitioners
in their application for a search warrant other than what
the law and jurisprudence, then existing and judicially
accepted, required with respect to the finding of
probable cause. xxx It is consequently clear that a
judicial interpretation becomes a part of the law as
ofthe date that law was originally passed, subject only
to the qualification that when a doctrine of this Court is
overruled and a different view is adopted, and more so
when there is a reversal thereof, the new doctrine
should be applied prospectively. and should not apply to
parties who relied on the old doctrine and acted in good
faith. (People vs. Jabinal, L-30061, February 27, 1974, 55
SCRA 607; and other cases cited) To hold otherwise
would be to deprive tlhe law of its quality of fairness and
justice then, if there is no recognition of what had
transpired prior to such adjudication. (De Agbayani vs.
Philippine National Bank, et al., L-23127, April 29, 1971,
38 SCRA 429)."
Facts: Petitioners Columbia Pictures Industries, Inc.,
MGM Entertainment Co., Orion Pictures Corporation,
Paramount Pictures Corp., Universal City Studios, Inc.,
the Walt Disney Company and Warner Brothers, Inc.
question the decision[1]of the Court of Appeals which
affirmed the Order of the Regional Trial Court of Pasig,
Branch 168, the dispositive portion of which states:
"WHEREFORE, finding that the issuance of the
questioned warrants was not supported by probable
cause, the 'Urgent Motion (To Lift Search Warrant [No.
23] and for the Return of Seized Articles)' is hereby
GRANTED.
Accordingly, the Videogram Regulatory Board (VRB)
and/or any Police Agency or other representatives of the
VRB are hereby directed to return to the
defendant/movant or his representative all
Page 229 of 307
articles/items in their possession seized under and by
virtue of Search Warrant No. 23.
The antecedent facts leading to the disputed Order are:
Alfredo G. Ramos, intelligence officer of the Videogram
Regulatory Board (VRB), received information that
private respondent Jose B. Jinco had in his possession
pirated videotapes, posters, advertising materials and
other items used or intended to be used for the purpose
of sale, lease, distribution, circulation or public
exhibition of the said pirated videotapes. Ramos
ascertained the information to be true and filed a
verified Application for Search Warrant dated July 28,
1986 with prayer for the seizure of the properties
described in the search warrant.
On the same date, a hearing was conducted by Judge
Florentino A. Flor of the Regional Trial Court of Pasig,
Branch 168, wherein Ramos and his two witnesses,
Analie Jimenez and Rebecca Benitez-Cruz testified on
the need for the issuance of search warrant.
On July 28, 1986, the prayer for the issuance of the
search warrant was granted and, on the same date,
Search Warrant No. 23 was issued.
On June 2, 1987, private respondent filed a Motion to
Quash Search Warrant No. 23 on the grounds that the
Search Warrant did not state a specific offense and that,
even assuming it stated a specific offense, it covered
more than one specific offense. The VRB opposed the
Motion to Quash stating that Search Warrant No. 23 was
issued for a single specific offense namely, violation of
Section 56 and other related sections of Presidential
Decree No. 49 as amended by Presidential Decree No.
1988.
On September 30, 1987, the trial court denied the
Motion to Quash finding that the Search Warrant was
issued for one specific offense. A Motion for
Reconsideration was filed but the same was likewise
denied.
Private respondent then filed an Urgent Motion to Lift
the Search Warrant and For the Return of the Seized
Articles alleging that Search Warrant No. 23 is a general
warrant, and that it was issued without probable cause.
On May 22, 1989, the assailed order was issued by
Judge Benjamin V. Pelayo, now presiding over Branch
168 of the Pasig RTC, granting the Motion to Quash and
ordering the return of all seized articles to private
respondent.
Petitioners appealed to the Court of Appeals, which
affirmed the said Order in toto.
Hence, this petition.
In granting the Motion to Quash, the trial court relied on
the Court's ruling in 20th Century Fox Film Corporation
v. Court of Appeals, et al.[2] which involved violation of
Presidential Decree No. 49, (otherwise known as the
Decree on the Protection of Intellectual Property). In said
case, video outlets were raided pursuant to search
warrants issued by the Regional Trial Court of
Makati. However, the search warrants were later lifted
Page 230 of 307
by the same court on the ground of lack of probable
cause because the master tapes of the alleged pirated
tapes were never shown to the lower court. The Court
affirmed the lifting of the search warrants holding that
the presentation of the master tapes was necessary for
the validity of the search warrants against those who
have the pirated films in their possession.
When the trial court granted the Motion to Quash
Search Warrant No. 23 on May 22, 1989, it used as its
justification the fact that, as the master copies were not
presented to the court in its hearing of July 28, 1986,
there was no probable cause to issue the said warrant,
based on the pronouncements in 20th Century Fox.
Petitioners now question the retroactive application of
the 20th Century Fox decision which had not yet been
promulgated in 1986 when the search warrant was
issued. Petitioners further argue that, contrary to the
trial court's finding, the search warrant was not a
general warrant since the description of the items to be
seized was specific enough. It removed from the serving
officer any discretion as to which items to seize
inasmuch as it described only those items which had a
direct relation to the offense for which the search
warrant was issued.
The threshold issue that must first be determined is
whether or not petitioners have the legal personality
and standing to file the appeal.
Private respondent asserts that the proceedings for the
issuance and/or quashal of a search warrant are criminal
in nature. Thus, the parties in such a case are the
"People" as offended party and the accused. A private
complainant is relegated to the role of a witness who
does not have the right to appeal except where the civil
aspect is deemed instituted with the criminal case.
Petitioners, on the other hand, argue that as the
offended parties in the criminal case, they have the
right to institute an appeal from the questioned order.
From the records it is clear that, as complainants,
petitioners were involved in the proceedings which led
to the issuance of Search Warrant No. 23. In People v.
Nano,[3] the Court declared that while the general rule is
that it is only the Solicitor General who is authorized to
bring or defend actions on behalf of the People or the
Republic of the Philippines once the case is brought
before this Court or the Court of Appeals, if there
appears to be grave error committed by the judge or a
lack of due process, the petition will be deemed filed by
the private complainants therein as if it were filed by
the Solicitor General. In line with this ruling, the Court
gives this petition due course and will allow petitioners
to argue their case against the questioned order in lieu
of the Solicitor General.
Held: As regards the issue of the validity of Search
Warrant No. 23, there are two questions to be resolved:
first, whether the 20th Century Fox decision
promulgated on August 19, 1988 is applicable to the
Motion to Quash Search Warrant No. 23 (issued on July
28, 1986).
We hold in the negative.
Page 231 of 307
In the recent Columbia Pictures, et al. v. Court of
Appeals, et al.[4] case which resolved the same issue
involving the same petitioners but with different
respondents, the Court en bancheld:
"Mindful as we are of the ramifications of the doctrine of
stare decisis and the rudiments of fair play, it is our
considered view that the 20th Century Fox ruling cannot
be retroactively applied to the instant case to justify the
quashal of Search Warrant No. 87-053. Herein
petitioners' consistent position that the order of the
lower court of September 5, 1988 denying therein
defendant's motion to lift the order of search warrant
was properly issued, there having been satisfactory
compliance with the then prevailing standards under the
law for determination of probable cause, is indeed well
taken. The lower court could not possibly have expected
more evidence from petitioners in their application for a
search warrant other than what the law and
jurisprudence, then existing and judicially accepted,
required with respect to the finding of probable cause.
It is consequently clear that a judicial interpretation
becomes a part of the law as of the date that law was
originally passed, subject only to the qualification that
when a doctrine of this Court is overruled and a different
view is adopted, and more so when there is a reversal
thereof, the new doctrine should be applied
prospectively and should not apply to parties who relied
on the old doctrine and acted in good faith. To hold
otherwise would be to deprive the law of its quality of
fairness and justice then, if there is no recognition of
what had transpired prior to such adjudication.
Likewise, the Court ruled therein that presentation of
the master tapes in such cases is not an absolute
requirement for a search warrant to issue:
"More to the point, it is felt that the reasonableness of
the added requirement in 20th Century Fox calling for
the production of the master tapes of the copyrighted
films for determination of probable cause in copyright
infringement cases needs revisiting and clarification.
In fine, the supposed pronunciamento in said case
regarding the necessity for the presentation of the
master tapes of the copyrighted films for the validity of
search warrants should at most be understood to merely
serve as a guidepost in determining the existence of
probable cause in copyright infringement cases where
there is doubt as to the true nexus between the master
tape and the pirated copies. An objective and careful
reading of the decision in said case could lead to no
other conclusion than that said directive was hardly
intended to be a sweeping and inflexible requirement in
all or similar copyright infringement cases. Judicial dicta
should always be construed within the factual matrix of
their parturition, otherwise a careless interpretation
thereof could unfairly fault the writer with the vice of
overstatement and the reader with the fallacy of undue
generalization.
It is evidently incorrect to suggest, as the ruling in 20th
Century Fox may appear to do, that in copyright
infringement cases, the presentation of master tapes of
the copyrighted films is always necessary to meet the
requirement of probable cause and that, in the absence
thereof, there can be no finding of probable cause for
Page 232 of 307
the issuance of a search warrant. It is true that such
master tapes are object evidence, with the merit that in
this class of evidence the ascertainment of the
controverted fact is made through demonstrations
involving the direct use of the senses of the presiding
magistrate. Such auxiliary procedure, however, does not
rule out the use of testimonial or documentary
evidence, depositions, admissions, or other classes of
evidence tending to prove the factum
probandum especially where the production in court of
object evidence would result in delay, inconvenience or
expenses out of proportion to its evidentiary value. (See
3 Jones on Evidence, Sec. 1400)."
The instant case also differs from 20th Century Fox in
that what herein private respondent put in issue was the
application of the ruling in that case, not the conduct of
Judge Flor in the issuance of Search Warrant No.
23. From the records, it is clear that Judge Flor observed
all the requirements necessary before the search
warrant was issued: he heard the testimonies and
studied the despositions of the witnesses for the
petitioners, namely Ms. Rebecca Benitez-Cruz, Ms.
Analie I. Jimenez and the VRB's Intelligence Officer,
Alfredo G. Ramos on the existence of probable cause
before issuing the warrant.
Under Sec. 3 and 4, Rule 126 of the Rules of Court, the
requirements for the issuance of a valid search warrant
are:
"Sec. 3. Requisites for issuing search warrant.
A search warrant shall not issue but upon probable
cause in connection with one specific offense to be
determined by the judge or such other responsible
officer authorized by law after examination under oath
or affirmation of the complainant and the witnesses he
may produce, and particularly describing the place to be
searched and the things to be seized.
Sec. 4. Examination of complainant; record. -
The judge must, before issuing the warrant, personally
examine in the form of searching questions and
answers, in writing and under oath the complainant and
any witnesses he may produce on facts personally
known to them and attach to the record their sworn
statements together with any affidavits submitted."
Having satisfied these requirements, Judge Flor
committed no grave abuse of discretion in issuing the
warrant.
Private respondent contends that Search Warrant No. 23
also violates the constitutional requirements of
particularity of the description of the warrant, being a
general warrant and thus, is null and void.
In several cases, this Court has held that:
"To be valid, a search warrant must be supported by
probable cause to be determined by the judge or some
other authorized officer after examining the
complainant and the witnesses he may produce. No less
important, there must be a specific description of the
Page 233 of 307
place to be searched and the things to be seized, to
prevent arbitrary and indiscriminate use of the warrant.
When may a search warrant be deemed to satisfy the
legal requirements of specificity?
In Bache and Co., (Phil.) Inc. v. Ruiz, we said:
"A search warrant may be said to particularly describe
the things to be seized when the description therein is
as specific as the circumstances will ordinarily allow
(People v. Rubio, 57 Phil. 384); or when the description
expresses a conclusion of fact - not of law - by which the
warrant officer may be guided in making the search and
seizure (idem., dissent of Abad Santos, J.); or when the
things described are limited to those which bear direct
relation to the offense for which the warrant is being
issued (Sec. 2, rule 126, Revised Rules of Court). . . . . If
the articles desired to be seized have any direct relation
to an offense committed, the applicant must necessarily
have some evidence, other than those articles, to prove
the said offense; and the articles, subject of search and
seizure should come in handy merely to strengthen such
evidence. . . . ."
An examination of Search Warrant No. 23 shows that it
was worded in such a manner that the enumerated
items to be seized bear a direct relation to the offense
of violation of Sec. 56 of Presidential Decree No. 49, as
amended, which states:
"(1) Transfer or cause to be transferred, directly or
indirectly any sound recording or motion picture, or
other audio-visual work that has been recorded on a
phonograph record, disc, wire, tape, film or other article
on which sounds, motion pictures, or other audio visual
works are recorded, with intent to sell, lease, publicly
exhibit or cause to be sold, leased or publicly exhibited,
or to use or cause to be used for profit, such article on
which sounds, motion pictures, or other audio visual
works are so transferred, WITHOUT THE WRITTEN
CONSENT OF HIS ASSIGNEE; or
(2) Sell, lease, distribute, circulate, exhibit, offer for
sale, lease, distribution, or possess for the purpose of
sale, lease, distribution, circulation or public exhibition,
any such article to which the sounds, motion pictures or
audio-visual recordings thereon have been so
transferred, without the written consent of the owner or
his assignee; or
(3) Offer or make available for a fee, rental or any other
form of compensation, directly or indirectly any
equipment, machinery, paraphernalia or any material
with the knowledge that such equipment, machinery,
paraphernalia or material, will be used by another to
reproduce, without the consent of the owners any
phonograph record, disc, wire, tape film or other article
on which sound, motion pictures, or other audio-visual
recordings may be transferred."
In other words, it authorized only the seizure of articles
used or intended to be used in the unlawful sale, lease
and other acts in violation of the said decree. The
search warrant ordered the seizure of the following
properties:
Page 234 of 307
"(a) Pirated video tapes of the copyrighted motion 7. Wilson Ong Ching vs. China National Cereals,
pictures/films the titles of which are mentioned in the G.R. No. 131502, June 8, 2000
attached list;
Facts: This is an appeal by way of a petition for review
(b) Posters, advertising leaflets, brochures, invoices, on certiorari under Rule 45 of the 1997 Rules of Civil
journal, ledgers, and books of accounts bearing/or Procedure of the Decision[1] in Civil Case No. 94-68836 dated
mentioning the pirated films with titles (as per attached November 20, 1997 of the Regional Trial Court, Branch 33,
list); Manila, which rendered a judgment on the pleadings against
herein petitioners, the dispositive portion of which reads:
(c) Television sets, video cassettes records, rewinders,
"WHEREFORE, judgment is hereby rendered in favor of
tape head cleaners, accessories, equipment and other
plaintiffs, and against defendant:
machines and paraphernalia or material used or
intended to be used in the unlawful sale, lease,
"1. Decreeing the cancellation or annulment of the
distribution, or possession for purpose of sale, lease,
Copyrighted Registration No. 0-93-491 of defendant
distribution, circulation or public exhibition of the above-
WILSON ONG;
mentioned pirated video tapes which he is keeping and
concealing in the premises above-described."
"2. Directing defendant Director of the National Library
to effect the cancellation or annulment of the
Clearly, the above items could not be anymore specific
Copyrighted Registration No. 0-93-491 of defendant
as the circumstances will allow since they are all used or
WILSON ONG; and
intended to be used in the unlawful sale or lease of
pirated tapes.Therefore, the finding of the appellate
"Damages cannot be awarded to Plaintiffs as no
court that Search Warrant No. 23 is a "general" warrant
evidence was presented to substantiate their claims.
is devoid of basis.
"With costs against defendant WILSON ONG.
WHEREFORE, the assailed decision and resolution of
respondent Court of Appeals, and necessarily inclusive
The antecedent facts are undisputed.
of the order of the trial court dated May 22, 1989, are
hereby REVERSED and SET ASIDE. The order of the trial
On September 16, 1993, petitioner Wilson Ong Ching
court dated July 28, 1986 upholding the validity of
Kian Chuan, doing business under the firm name of
Search Warrant No. 23 is hereby REINSTATED.
C.K.C. Trading, filed a Complaint for Infringement of
Costs against private respondent.
Copyright with prayer for writ of injunction before the
Regional Trial Court, Branch 94 of Quezon City
Page 235 of 307
(hereinafter Quezon City Court) against Lorenzo Tan,
doing business under the firm name Mcmaster
International Sales, and docketed as Q-93-17628. On
the same day, said court issued a temporary restraining
order enjoining the defendant, his distributors and
retailers from selling vermicelli (sotanghon) "using the
plaintiffs copyrighted cellophane wrapper with the two-
dragons designed label, and setting the hearing of the
injunctive relief for September 21, 1993."
On October 13, 1993, the Quezon City Court issued a
Resolution which granted a writ of preliminary injunction
in favor of the petitioner, denied therein defendants
application for a writ of preliminary injunction and,
issues having been joined, set the case for pre-trial on
November 12, 1993. On December 15, 1993, the
Quezon City Court denied defendants motion for
dissolution of the writ of preliminary injunction.
On January 5, 1994, the China National Cereals Oils &
Foodstuffs Import and Export Corporation (CEROILFOOD
SHANDONG), and Benjamin Irao, Jr., as representative
and attorney-in-fact of CEROILFOOD SHANDONG, herein
respondents, filed acomplaint[3] for
Annulment/Cancellation of Copyrighted Certificate No.
0-93-491 and damages with prayer for restraining
order/writ of preliminary injunction before the Regional
Trial Court of Manila, (hereinafter Manila Court) against
Wilson Ong Ching Kian Chuan, doing business under the
firm name and style C.K.C. Trading and the Director of
the National Library, docketed as Civil Case No. 94-
68836.
On January 7, 1994, Judge Rodolfo G. Palattao of the
Manila Court issued a temporary restraining
[4]
order enjoining petitioner from using his copyrighted
labels and selling his vermicelli products which is similar
to that of respondents. On January 14, 1994, petitioner
filed a motion to dissolve temporary restraining
order[5] praying that the complaint be dismissed on the
following grounds: 1.) litis pendentia, 2.) the issue
involved is one of copyright under PD No. 49 and does
not involve trademarks under Republic Act 166, 3.)
courts of co-equal and coordinate jurisdiction cannot
interfere with the orders of other courts having the
same power and jurisdiction, 4.) plaintiff CEROILFOOD
SHANDONG, being a foreign corporation and with no
license to do business in the Philippines, has no legal
capacity to sue, and 5.) courts should not issue
injunctions which would in effect dispose of the main
case without trial.
On January 27, 1994, the Manila Court issued an
Order[6] granting a writ of preliminary injunction in favor
of respondents and denying petitioners motion to
dismiss.
On January 31, 1994, petitioner filed before the Court of
Appeals a petition for certiorari docketed as CA - G.R. SP
No. 33178, seeking for the annulment of the January 27,
1994 Order of the Manila Court.
On July 22, 1994, after the parties have expounded their
respective positions by way of their comment, reply and
rejoinder, the Court of Appeals rendered its Decision,
[7]
the dispositive portion of which reads:
Page 236 of 307
"WHEREFORE, the instant petition is hereby GRANTED,
and as prayed for by petitioner, the Order dated January
27, 1994 issued in Civil Case 94-68836 by Branch 33,
Regional Trial Court, National Capital Judicial Region,
Manila, is hereby ANNULLED and SET ASIDE, although
the prayer for dismissal of the complaint in Manila may
be pursued before said court during the proceedings."
In the same Decision, the Court of Appeals ruled that
the case was dismissible on grounds of litis
pendentia, multiplicity of suits, and forum shopping.
On September 5, 1994, the Court of Appeals denied
respondents motion for reconsideration.[8] The Court of
Appeals Decision became final on October 3, 1994.
Entry of Judgment[9]was made on November 15, 1994.
On November 21, 1994, petitioner filed a
[10]
motion praying for the dismissal of the Manila case on
the strength of the findings of the Court of Appeals,
particularly on "forum shopping." In an Order[11] dated
March 8, 1995, the Manila Court held in abeyance the
resolution of the motion to dismiss until further
reception of evidence, stating therein that the
dispositive portion of the Court of Appeals Decision did
not order the dismissal of the case. In the meantime,
respondents filed a motion to declare petitioners in
default for failing to file an Answer despite the March 8
Order, which motion was opposed by petitioners, there
being at that time a pending motion to dismiss which
the court a quo refused to resolve on the merits.
In an Order[12] dated July 19, 1996, the Manila court
denied the motion to declare petitioners in default,
admitted motu proprio the motion to dismiss filed by
petitioner as its answer, and directed the parties to
submit their respective pre-trial briefs.
On September 17, 1996, petitioner filed a "Motion for
the Issuance of a Writ of Execution" [13] praying that a
motion for execution dismissing the Manila case be
issued, and citing Atty. Benjamin Irao, Jr., counsel of
CEROILFOOD SHANDONG and his co-counsel, Atty.
Antonio Albano, guilty of forum shopping, pursuant to
the Decision of the Court of Appeals in CA-G.R. SP. No.
33178.
On January 23, 1997, respondents filed before the
Manila court a Supplement To Motion For Judgment On
The Pleadings, claiming that petitioner failed to tender
an issue.[14]
On November 20, 1997, Judge Rodolfo G. Palattao of the
Manila Court rendered a Judgment on the Pleadings in
favor of respondents, and ruled that litis pendentia,
multiplicity of suits, and forum shopping were not
present in the case.
Hence, the present appeal on pure questions of law.
Petitioners raise the following issues:
I
Whether or not the legal pronouncements of the Court
of Appeals in CA-G.R. SP No. 33178 that the Manila case
is dismissible on grounds of litis pendentia, multiplicity
of suits and forum shopping constitute the "Law of the
Case."
Page 237 of 307
 II
Whether or not the Regional Trial Judge of Branch 33,
Manila erred in not applying the law of the case.
III
Whether or not the court a quo can review the legal
conclusions of an appellate court in the same case, on
issues squarely submitted to and passed upon by the
appellate court under identical set of facts and
circumstances obtaining in the court a quo.
IV
Whether or not the court a quo erred in motu
proprio considering a motion to dismiss as the answer to
the complaint and, thereafter, render a judgment on the
pleadings on the ground that the motion to dismiss did
not tender an issue.
Held: In support thereof, petitioners quote the ruling of
the Court of Appeals on the issue of whether there
was litis pendentia and multiplicity of suits in the
present case, as follows:
"The Manila court should have considered also that Civil
Case Q-93-17628 involves practically the same parties,
same subject-matter and same relief as in Civil Case 0-
94-68836. Petitioner filed the first case on September
16, 1993, for INFRINGEMENT OF HIS REGISTERED
COPYRIGHT, which covers the cellophane wrapper that
he uses in packaging the vermicelli which he imports
from the CHINA NATIONAL CEREALS OILS &
FOODSTUFFS IMPORT AND EXPORT CORPORATION
BASED IN BEIJING, CHINA, the main or principal of
private respondent CEROILFOOD SHANDONG, the latter
being the branch of CEROILFOOD in Quingdao, China,
and of which in Civil Case Q-93-17628, LORENZO TAN
avers in his answer he is the exclusive and sole
distributor. In Civil Case 94-68836 subsequently filed in
Manila, on January 5, 1994, LORENZO TAN admitted that
he is the sole distributor of plaintiff China National
Cereals Oil and Foodstuffs Import and Export
Corporation of the latters PAGODA BRAND vermicelli
products. Atty. Benjamin Irao, Jr., the attorney of private
respondents, also the attorney-in-fact of Ceroilfood
Shandong, admitted that his principal does not do
business in the Philippines, and named LORENZO TAN as
his principals exclusive distributor of said product in the
Philippines. Thus, Lorenzo Tan in both Civil Cases Q-93-
17628 and 94-68836 appears as principal defendant in
the first, and as sole distributor of Cereal Food
Shandong, in the second. Indicatively, he is defending
and complaining substantively the same rights and
interests in both cases, and in effect there is identity of
parties representing the same interests. While it is
against TAN with whom the QC RTC issued an injunction,
that writ should also apply to CEROILFOOD SHANDONG,
as Tan is its exclusive and sole distributor in the
Philippines, as private respondent corporation does
business in the Philippines through TAN who imports his
vermicelli wholly from said foreign corporation. And
most importantly, TAN asserts rights to the trademark
PAGODA, also allegedly owned by CEROILFOOD between
TAN and CEROILFOOD SHANDONG that he is its
corporate distributor. Also in 93-17628, petitioners
prayer for injunction is based on his registered copyright
certificate, while TAN averred in his answer thereon that
petitioners copyright should be annulled and cancelled,
and also prayed for injunction. In 94-68836, private
Page 238 of 307
respondent CEROILFOOD SHANDONG, as plaintiff, also
prayed for ANNULMENT AND CANCELLATION OF
COPYRIGHT CERTIFICATE No. 0-93-491 WITH DAMAGES
AND PRAYER FOR RESTRAINING ORDER/WRIT OF
PRELIMINARY INJUNCTION. As can well be seen from
those pertinent allegations/averments/prayers in both
cases, they are identical with each other. They involved
one and the same CERTIFICATE OF COPYRIGHT
REGISTRATION. Though the first case is for
INFRINGEMENT of copyright registration, while the
second is for ANNULMENT AND CANCELLATION of the
same copyright, since the first involves a breach,
infraction, transgression, and the second for
invalidation, discontinuance, termination and
suppression of the same copyright certificate, what the
first seeks to preserve is the exclusive use of the
copyright, and the second seeks to terminate the very
use of the same copyright by the registrant/owner.
Though the quest of petitioner and private respondents
in the two cases are aimed towards different ends - the
first to uphold the validity and effectiveness of the same
copyright, the second is merely a consequence of the
first, - the real matter in controversy can be fully
determined and resolved before the Quezon City court,
and would render the Manila case a surplus age and
also constitutes multiplicity of suits and dismissible on
that ground, although such dismissal should be
considered as without prejudice to the continuance of
the proceedings before the Quezon City court. (pp. 8-10,
CA Decision, Annex "B" of the Petition)"
On the issue of forum shopping, the Court of Appeals
ruled further, thus:
"Finally, the Manila court should also have considered
forum shopping as a third drawback to private
respondents cause. It is a term originally used to
denominate a litigants privilege of choosing the venue
of his action where the law allows him to do so, or of an
election of remedies of one of two or more co-existing
rights. In either of which situations, the litigant actually
shops for a forum of his action. However, instead of
making a choice of the forum of their actions, litigants
through the encouragement of their lawyers, file their
actions on all available courts, or invoke irrelevant
remedies simultaneously, or even file actions one after
the other, a practice which had not only resulted
conflicting adjudications among different courts,
confusion inimical to an orderly administration of justice
and created extreme inconvenience to some of the
parties to the action. And thus it has been held in
Villanueva vs. Andres, 172 SCRA 876, that forum
shopping applies whenever as a result of an adverse
opinion in one forum, a party seeks a favorable opinion
(other than by appeal or certiorari), in another forum.
xxx
"Observedly, Attys. IRAO and ALBANO, who are TANs
lawyers in Quezon City, are also private respondents
lawyers in Manila. ATTY. IRAO who entered his
appearance as counsel for private respondents in the
Manila case, is also the authorized representative and
attorney-in-fact of private respondent corporation in the
Manila case. While Atty. Irao withdrew as counsel of TAN
in the Quezon City, that did not remove the case filed in
Manila outside the sphere of the rule on forum
shopping." (pp. 10-11, CA Decision, Annex "B" of the
Petition)
Page 239 of 307

Petitioners contend that the foregoing conclusions of
fact and law of the Court of Appeals are correct and
should not be disturbed, especially since the decision of
the Court of Appeals had already become final and
entered in the Books of Judgment; that the parties to
the case and the Regional Trial Judge in Branch 33,
Manila are bound by the said conclusions of fact and law
and the same should not be reopened on remand of the
case; and that it is not within the Trial Judges discretion
to take exception to, much less overturn, any factual or
legal conclusions laid down by the Court of Appeals in
its verdict and to dispose of the case in a manner
diametrically opposed thereto, citing the case of PNB
vs. Noahs Ark Sugar Refinery, 226 SCRA 36, 48.
Petitioners further allege that the acts of the trial judge
suffer from procedural infirmity: and that it makes no
sense for the trial judge to refuse to resolve the motion
to dismiss on the merits; to motu proprio consider the
motion to dismiss as the answer to the complaint; and
to later rule that the motion to dismiss did not tender an
issue and, therefore, a judgment on the pleadings is in
order. Petitioners also aver that a motion to dismiss is
not a responsive pleading; that at the time the trial
judge considered the motion to dismiss to be the
answer to the complaint, he knew very well, or at least
should have known that the motion to dismiss did not
tender an issue for indeed, it is not within the province
of the motion to admit or deny the allegations of the
complaint, and there being no legitimate answer and no
real joinder of issues, the rendition of the subject
Judgment on the Pleadings becomes suspect. According
to petitioners, in deviating from the usual procedure,
the court a quo gave undue benefit and advantage to
the respondents at the expense of herein petitioners;
and that the explanation given by the trial judge that
the dispositive portion of the Court of Appeals decision
did not expressly order him to dismiss the case is flimsy
and untenable.
On the other hand, respondents assert that the doctrine
of law of the case is not applicable to the present case
because the Court of Appeals never ordered the
dismissal of the case and that the Order of the Manila
Court dated January 27, 1994 was annulled and set
aside only insofar as the preliminary injunction is
concerned. Respondents cite the case of Magdalena
Estate, Inc. vs. Caluag, 11 SCRA 333 which ruled that
the deficiencies in the dispositive part of the decision
cannot be supplied by any finding or opinion found in
the body of the decision. Respondents also allege that
while petitioner Wilson Ong had belatedly faulted the
Court below in considering his motion to dismiss as his
answer, he never questioned the correctness of the
findings of the court a quo in the assailed decision.
After a review of the records of the case and an
examination of the pleadings filed by the parties, the
Court finds the petition to be meritorious.
Being interrelated, the first, second and third issues
shall be discussed jointly.
Indeed, the court a quo erred in not resolving the
petitioners motion to dismiss in accordance with the
decision of the Court of Appeals which found that "The
Manila court should have considered also that Civil Case
Page 240 of 307
Q-93-17628 involves practically the same parties, same
subject-matter and same relief as in Civil Case 94-
68836"; that "the real matter in controversy can be fully
determined and resolved before the Quezon City court
and would render the Manila case a surplusage and also
constitutes multiplicity of suits and dismissible on that
ground, although such dismissal should be considered
as without prejudice to the continuance of the
proceedings before the Quezon City court"; and that
"the Manila court should also have considered forum
shopping as a third drawback to private respondents
cause."
While the Court of Appeals stated in the dispositive
portion of its decision that "the prayer for dismissal of
the complaint in Manila may be pursued before said
court during the proceedings," it is clear from the body
of the Court of Appeals Decision that the case before
the Manila court should be dismissed on grounds of litis
pendentia, and forum shopping.
While the general rule is that the portion of a decision
that becomes the subject of execution is that ordained
or decreed in the dispositive part thereof, there are
exceptions to this rule.
The exceptions where the dispositive part of the
judgment does not always prevail over the body of the
opinion are:
(a)....where there is ambiguity or uncertainty, the body
of the opinion may be referred to for purposes of
construing the judgment because the dispositive part of
a decision must find support from the decisions ratio
decidendi;[16]
(b)....where extensive and explicit discussion and
settlement of the issue is found in the body of the
decision.[17]
Considering the circumstances of the instant case, the
Court finds that the exception to the general rule
applies to the instant case. Since the statement of the
Court of Appeals regarding the prayer for the dismissal
of the case seemingly gave the Manila court the
discretion to dismiss or not to dismiss Civil Case No. 94-
68836, the Manila court should have referred to the
body of the decision for purposes of construing the issue
of whether or not the complaint should be dismissed,
because the dispositive part of a decision must find
support from the decisions ratio decidendi. Findings of
the court are to be considered in the interpretation of
the dispositive portion of the judgment.[18] Moreover,
extensive and explicit discussion and settlement of the
issues are found in the body of the Court of Appeals
decision so that it is grave error for the court a quo to
rule again, as it did, on the issues of litis pendentia and
forum shopping in its decision, and to overturn that of
the Court of Appeals, thus:
"The argument of Defendant Ong in his motion for
execution that the case at bench should now be
dismissed on the grounds of forum shopping and litis
pendentia as allegedly ruled by the Court of Appeals,
does not impress this Court. For while the appellate
court urged this Court to consider litis pendentia and
forum shopping in the trial resolution of the case at
bench, nowhere in its (CA) decision could it be deduced
that this Court is mandated to dismiss the case on these
Page 241 of 307
precise grounds. The dispositive portion of the decision
does not contain such a mandate."[19]
In Viva Productions, Inc. vs. Court of Appeals,[20] this
Court set aside the decision of the Makati court and
declared null and void all orders of the RTC of Makati
after ruling that:
"Thus, we find grave abuse of discretion on the part of
the Makati court, being a mere co-equal of the
Paranaque court, in not giving due deference to the
latter before which the issue of the alleged violation of
the sub-judice rule had already been raised and
submitted. In such instance, the Makati court, if it was
wary of dismissing the action outrightly under
administrative Circular No. 04-94, should have, at least
ordered the consolidation of its case with that of the
Paranaque court, which had first acquired jurisdiction
over the related case in accordance with Rule 31 of the
Revised Rules of Court." (emphasis ours.)
The Quezon City court and the Manila court have
concurrent jurisdiction over the case. However, when
the Quezon City court acquired jurisdiction over the
case, it excluded all other courts of concurrent
jurisdiction from acquiring jurisdiction over the same.
The Manila court is, therefore, devoid of jurisdiction over
the complaint filed resulting in the herein assailed
decision which must perforce be declared null and void.
To hold otherwise would be to risk instances where
courts of concurrent jurisdiction might have conflicting
orders.[21]
WHEREFORE, the assailed decision of the Regional Trial
Court of Manila, Branch 33 in Civil Case No. 94-68836 is
ANNULLED and SET ASIDE. Said case is ordered
dismissed without prejudice to the continuance of the
proceedings before the Quezon City court where Civil
Case No. Q-93-17628 is pending.
8. Wilson Ong Chin vs. CA, G.R. No. 130360,
August 15, 2001
Facts: This petition for review[1]seeks to annul the
decision[2] dated August 27, 1997 of the Court of
Appeals which set aside the resolutions [3] dated October
13 and December 15, 1993 as well as the order dated
March 1, 1994 of the Regional Trial Court of Quezon City,
Branch 94.[4]
Petitioner Wilson Ong Ching Kian Chuan (Ong),
imports vermicelli from China National Cereals Oils and
Foodstuffs Import and Export Corporation, based in
Beijing, China, under the firm name C.K.C. Trading. He
repacks it in cellophane wrappers with a design of two-
dragons and the TOWER trademark on the uppermost
portion. Ong acquired a Certificate of Copyright
Registration from the National Library on June 9, 1993
on the said design.
Ong discovered that private respondent Lorenzo Tan
repacked his vermicelli he imports from the same
company but based in Qingdao, China in a nearly
identical wrapper. On September 16, 1993, Ong filed
against Tan a verified complaint for infringement of
copyright with damages and prayer for temporary
restraining order or writ of preliminary injunction with
Page 242 of 307
the Regional Trial Court in Quezon City. Ong alleged that
he was the holder of aCertificate of Copyright
Registration over the cellophane wrapper with the two-
dragon design, and that Tan used an identical wrapper
in his business. In his prayer for a preliminary injunction
in addition to damages, he asked that Tan be restrained
from using the wrapper. He said he would post a bond to
guarantee the payment of damages resulting from the
issuance of the writ of preliminary injunction.
The trial court issued a temporary restraining order on
the same date the complaint was filed. Tan filed an
opposition to Ongs application for a writ of preliminary
injunction with counter-application for the issuance of a
similar writ against Ong. Tan alleged that Ong was not
entitled to an injunction. According to Tan, Ong did not
have a clear right over the use of the trademark Pagoda
and Lungkow vermicelli as these were registered in the
name of CHINA NATIONAL CEREALS OIL AND
FOODSTUFFS IMPORT AND EXPORT CORPORATION,
SHANDONG CEREALS AND OILS BRANCH (hereafter
Ceroilfood Shandong), based in Qingdao, China. Further,
Tan averred that he was the exclusive distributor in the
Philippines of the Pagoda and Lungkow vermicelli and
was solely authorized to use said trademark. He added
that Ong merely copied the two-dragon design from
Ceroilfood Shandong which had the Certificates of
Registration issued by different countries. He concluded
that Ongs Certificate of Copyright Registration was not
valid for lack of originality.
On September 30, 1993, Ong countered Tans opposition
to the issuance of the writ of preliminary injunction.
On October 13, 1993, the court issued the writ in Ongs
favor upon his filing of a P100,000.00 bond.[5]
Tan filed a motion to dissolve the writ of preliminary
injunction, but the trial court denied it on December 15,
1993.[6] The motion for reconsideration was also denied
on March 1, 1994.
Tan elevated the case to the Court of Appeals via a
special civil action for certiorari with a prayer for the
issuance of a TRO and/or writ of preliminary
injunction. Ong filed an opposition to Tans prayer for an
issuance of TRO and/or writ of preliminary injunction on
the ground that the trial court did not commit a grave
abuse of discretion in issuing the writ in his favor.
After oral argument, the Court of Appeals rendered a
decision on August 8, 1994, setting aside the trial courts
order. It decreed:
WHEREFORE, the petition is GIVEN DUE COURSE, and
GRANTED. The order dated October 13, 1993 and
related orders, as well as the writ of preliminary
injunction issued by the respondent court, are SET
ASIDE as issued with grave abuse of discretion. No
costs.
Ong filed a motion for reconsideration and on January 3,
1995, the Court of Appeals modified its August 8, 1994
order as follows:
WHEREFORE the phrase the order dated October 13,
1993 and related orders, as well as the writ of
preliminary injunction issued by the respondent court,
are SET ASIDE as issued with grave abuse of discretion
Page 243 of 307
is hereby deleted in our resolution dated 08 August
1994. In all other respects, said resolution must be
maintained.
However, let a writ of preliminary injunction be issued
enjoining the herein respondents and any and all
persons acting for and in their behalf from enforcing
and/or implementing the Writ of Preliminary Injunction
issued on October 15, 1993 pursuant to the Resolution
dated October 13, 1993 of the PUBLIC RESPONDENT in
Civil Case No. Q-93-17628 entitled WILSON ONG CHING
KIAN CHUAN, ETC. vs. LORENZO TAN, ETC. upon
petitioners filing of a bond of P200,000.00.
The Branch Clerk of Court of the RTC, Branch 94,
Quezon City is directed to elevate the records of Civil
Case No. 293-17128 within TEN (10) DAYS from notice.
The parties are given THIRTY (30) DAYS from notice to
file their memorandum or any pertinent manifestation
on the matter, after which the case shall be considered
submitted for decision.
Pursuant to the Court of Appeals resolution on January
16, 1996, the parties submitted their memoranda. On
August 27, 1997, the appellate court promulgated its
decision, decreeing as follows:
WHEREFORE, the resolutions dated October 13, 1993
and December 15, 1993 as well as the order dated
March 1, 1994 - all in Civil Case No. Q-93-17628 are
hereby SET ASIDE and our injunction heretofore issued
made permanent.
On October 17, 1997, Ong filed the instant petition for
review, claiming that the Court of Appeals committed
grave and serious errors tantamount to acting with
grave abuse of discretion and/or acting without or in
excess of its jurisdiction:
I. WHEN IT ISSUED A PERMANENT PRELIMINARY
INJUNCTION IN FAVOR OF THE PRIVATE RESPONDENT
WHEN THE LATTERS RIGHT TO SUCH A RELIEF IS NOT
CLEAR, DOUBTFUL AND HAS NO LEGAL OR FACTUAL
BASIS.
A. CERTIFICATE OF COPYRIGHT REGISTRATION JUSTIFY
ISSUANCE OF WRIT OF PRELIMINARY INJUNCTION UNDER
P.D. NO. 49.
B. ISSUANCE OF PRELIMINARY INJUNCTION MUST BE
BASED ON CLEAR AND UNMISTAKABLE RIGHT WHICH
PETITIONER HAD AND WHICH RIGHT WAS INVADED BY
THE PRIVATE RESPONDENT.
C. COURT OF APPEALS DECISION OF AUGUST 8, 1994
AND ITS RESOLUTION OF JANUARY 3, 1995 RESULTS IN
CONFUSION.
II. BY INTERFERING WITH THE JUDICIAL DISCRETION OF
THE TRIAL COURT.
A. RESPONDENT COURT OF APPEALS INTERFERENCE
WITH THE DISCRETION OF TRIAL COURT CONSTITUTES
GRAVE ABUSE OF DISCRETION.
III. BY ISSUING A WRIT OF PRELIMINARY INJUNCTION IN
FAVOR OF THE PRIVATE RESPONDENT AND
DISREGARDING THE WRIT OF PRELIMINARY INJUNCTION
Page 244 of 307
ISSUED BY THE TRIAL COURT WHOM (SIC), UNDER THE
JANUARY 13, 1995 RESOLUTION OF RESPONDENT
COURT OF APPEALS, WAS JUDICIALLY HELD NOT TO
HAVE COMMITTED ANY GRAVE ABUSE OF DISCRETION IN
THE ISSUANCE OF THE OCTOBER 13, 1993 AND
RELATED ORDERS.
A. ISSUANCE OF WRIT OF PRELIMINARY INJUNCTION
ADDRESSED TO THE SOUND DISCRETION OF THE TRIAL
COURT.
IV. WHEN IT MADE ITS OWN FINDINGS AND
CONCLUSIONS, PRE-EMPTING THE TRIAL COURT AND
PRE-JUDGING THE CASE, THUS LEAVING THE TRIAL
COURT WITH NOTHING TO RULE UPON.
A. COURT OF APPEALS PREJUDGED THE CASE
REMANDED TO THE TRIAL COURT
The issues for our determination are: Was the issuance
of the writ of preliminary injunction proper? Was there
grave abuse of discretion committed by the Court of
Appeals when it set aside the order of the trial court,
then issued a judgment touching on the merits?
Petitioner avers that the CA erred in issuing a
preliminary injunction in private respondents favor. He
says, firstly, that he is more entitled to it. He states that
as holder of the Certificate of Copyright Registration of
the twin-dragon design, he has the protection of P.D. No.
49.[10] Said law allows an injunction in case of
infringement. Petitioner asserts that private respondent
has no registered copyright and merely relies on the
trademark of his principal abroad, which insofar as
Philippine laws is concerned, cannot prevail over the
petitioners copyright.
Private respondent, for his part, avers that petitioner
has no clear right over the use of the copyrighted
wrapper since the PAGODA trademark and label were
first adopted and used and have been duly registered
by Ceroilfood Shandong not only in China but in nearly
20 countries and regions worldwide. Petitioner was not
the original creator of the label, but merely copied the
design of Ceroilfood Shandong. Private respondent
presented copies of the certificates of copyright
registration in the name of Ceroilfood Shandong issued
by at least twenty countries and regions worldwide
which although unauthenticated are, according to him,
sufficient to provide a sampling of the evidence needed
in the determination of the grant of preliminary
injunction.[11] Private respondent alleges, that the
trademark PAGODA BRAND was registered in China on
October 31, 1979[12] while the trademarkLUNGKOW
VERMICELLI WITH TWO-DRAGON DEVICE was registered
on August 15, 1985.[13]
Held: To resolve this controversy, we have to return to
basics. A person to be entitled to a copyright must be
the original creator of the work. He must have created it
by his own skill, labor and judgment without directly
copying or evasively imitating the work of another.
[14]
The grant of preliminary injunction in a case rests on
the sound discretion of the court with the caveat that it
should be made with extreme caution. [15] Its grant
depends chiefly on the extent of doubt on the validity of
the copyright, existence of infringement, and the
damages sustained by such infringement.[16] In our view,
Page 245 of 307
the copies of the certificates of copyright registered in
the name of Ceroilfood Shandong sufficiently raise
reasonable doubt. With such a doubt, the preliminary
injunction is unavailing.[17] In Medina vs. City Sheriff,
Manila, 276 SCRA 133, 139 (1997), where the
complainants title was disputed, we held that injunction
was not proper.
Petitioner Ong argues that the Court of Appeals erred
and contradicted itself in its January 3, 1995 Resolution,
where it deleted the phrase the order dated October 13,
1993 and related orders, as well as the writ of
preliminary injunction issued by the respondent court,
are SET ASIDE as issued with grave abuse of
discretion in its August 8, 1994 decision, and at the
same time issued a writ of preliminary injunction in Tans
favor.
Ong’s claim (that the Court of Appeals in deleting the
aforequoted phrase in the August 8, 1994 decision
abandoned its earlier finding of grave abuse of
discretion on the part of the trial court), however, is
without logical basis. The appellate court merely
restated in its own words the issue raised in the
petition: from a) whether the RTC committed grave
abuse of discretion, to b) whether Tan was entitled to an
injunctive relief. Then it clarified that the relief sought is
a prohibition against Ong and his agents from enforcing
the writ of preliminary injunction. Properly understood,
an order enjoining the enforcement of a writ of
preliminary injunction issued by the RTC in
a certiorari proceeding under Rule 65 of the Rules of
Court effectively sets aside the RTC order for being
issued with grave abuse of discretion.
To be entitled to an injunctive writ, petitioner must
show, inter alia, the existence of a clear and
unmistakable right and an urgent and paramount
necessity for the writ to prevent serious damage.
[18]
From the above discussion, we find that petitioners
right has not been clearly and unmistakably
demonstrated. That right is what is in dispute and has
yet to be determined. In Developers Group of
Companies, Inc. vs. Court of Appeals, 219 SCRA 715,
722-723 (1993), we held that in the absence of proof of
a legal right and the injury sustained by the plaintiff, an
order of the trial court granting the issuance of an
injunctive writ will be set aside, for having been issued
with grave abuse of discretion. Conformably, there was
no abuse of discretion by the Court of Appeals when it
issued its own order to restrain the enforcement of the
preliminary injunction issued by the trial court.
Finally, we note that the complaint initially filed with the
RTC was for infringement of copyright. The trial courts
resolution subject of Tans petition under Rule 65 before
the CA concerns the correctness of the grant of the writ
of preliminary injunction. The only issue brought before
the CA involved the grave abuse of discretion allegedly
committed by the trial court in granting the writ of
preliminary injunction. The Court of Appeals in declaring
that the wrapper of petitioner is a copy of Ceroilfood
Shandongs wrapper went beyond that issue and
touched on the merits of the infringement case, which
remains to be decided by the trial court. [19] In our view,
it was premature for the Court of Appeals to declare that
the design of petitioners wrapper is a copy of the
wrapper allegedly registered by Ceroilfood
Page 246 of 307
Shandong. That matter remains for decision after
appropriate proceedings at the trial court.
WHEREFORE, the instant petition is PARTIALLY
GRANTED. The prayer for a writ of preliminary injunction
to prohibit Tan from using the cellophane wrapper with
two-dragon device is denied, but the finding of the
respondent appellate court that Ongs copyrighted
wrapper is a copy of that of Ceroilfood Shandong is SET
ASIDE for being premature. The Regional Trial Court of
Quezon City, Branch 94, is directed to proceed with the
trial to determine the merits of Civil Case No. 33779
expeditiously. Let the records of this case be REMANDED
to said trial court promptly.
No pronouncement as to costs.
9. Microsoft vs. Maxicorp, G.R. No. 140946,
Sept. 13, 2004
Facts: This petition for review on certiorari[1] seeks to
reverse the Court of Appeals Decision[2] dated 23
December 1998 and its Resolution dated 29 November
1999 in CA-G.R. SP No. 44777. The Court of Appeals
reversed the Order[3] of the Regional Trial Court, Branch
23, Manila (RTC), denying respondent Maxicorp, Inc.s
(Maxicorp) motion to quash the search warrant that the
RTC issued against Maxicorp. Petitioners are the private
complainants against Maxicorp for copyright
infringement under Section 29 of Presidential Decree
No. 49 (Section 29 of PD 49) [4]and for unfair competition
under Article 189 of the Revised Penal Code (RPC).
On 25 July 1996, National Bureau of Investigation (NBI)
Agent Dominador Samiano, Jr. (NBI Agent Samiano) filed
severalapplications for search warrants in the RTC
against Maxicorp for alleged violation of Section 29 of
PD 49 and Article 189 of the RPC. After conducting a
preliminary examination of the applicant and his
witnesses, Judge William M. Bayhon issued Search
Warrants Nos. 96-451, 96-452, 96-453 and 96-454, all
dated 25 July 1996, against Maxicorp.
Armed with the search warrants, NBI agents conducted
on 25 July 1996 a search of Maxicorps premises and
seized property fitting the description stated in the
search warrants.
On 2 September 1996, Maxicorp filed a motion to quash
the search warrants alleging that there was no probable
cause for their issuance and that the warrants are in the
form of general warrants. The RTC denied Maxicorps
motion on 22 January 1997. The RTC also denied
Maxicorps motion for reconsideration.
The RTC found probable cause to issue the search
warrants after examining NBI Agent Samiano, John
Benedict Sacriz (Sacriz), and computer technician
Felixberto Pante (Pante). The three testified on what
they discovered during their respective visits to
Maxicorp. NBI Agent Samiano also presented
certifications from petitioners that they have not
authorized Maxicorp to perform the witnessed activities
using petitioners products.
On 24 July 1997, Maxicorp filed a petition for certiorari
with the Court of Appeals seeking to set aside the RTCs
Page 247 of 307
order. On 23 December 1998, the Court of Appeals
reversed the RTCs order denying Maxicorps motion to
quash the search warrants. Petitioners moved for
reconsideration. The Court of Appeals denied petitioners
motion on 29 November 1999.
The Court of Appeals held that NBI Agent Samiano failed
to present during the preliminary examination
conclusive evidence that Maxicorp produced or sold the
counterfeit products. The Court of Appeals pointed out
that the sales receipt NBI Agent Samiano presented as
evidence that he bought the products from Maxicorp
was in the name of a certain Joel Diaz.
Hence, this petition.
Issues: Petitioners seek a reversal and raise the
following issues for resolution:
1. WHETHER THE PETITION RAISES QUESTIONS OF LAW;
2. WHETHER PETITIONERS HAVE LEGAL PERSONALITY
TO FILE THE PETITION;
3. WHETHER THERE WAS PROBABLE CAUSE TO ISSUE
THE SEARCH WARRANTS;
4. WHETHER THE SEARCH WARRANTS ARE GENERAL
WARRANTS.
Held:
On Whether the Petition Raises Questions of Law
Maxicorp assails this petition as defective since it failed
to raise questions of law. Maxicorp insists that the
arguments petitioners presented are questions of fact,
which this Court should not consider in a Rule 45
petition for review. Petitioners counter that all the issues
they presented in this petition involve questions of law.
Petitioners point out that the facts are not in dispute.
A petition for review under Rule 45 of the Rules of Court
should cover questions of law. [6] Questions of fact are
not reviewable. As a rule, the findings of fact of the
Court of Appeals are final and conclusive and this Court
will not review them on appeal,[7] subject to exceptions
as when the findings of the appellate court conflict with
the findings of the trial court.[8]
The distinction between questions of law and questions
of fact is settled. A question of law exists when the
doubt or difference centers on what the law is on a
certain state of facts. A question of fact exists if the
doubt centers on the truth or falsity of the alleged facts.
Though this delineation seems simple, determining the
true nature and extent of the distinction is sometimes
problematic. For example, it is incorrect to presume
that all cases where the facts are not in dispute
automatically involve purely questions of law.
There is a question of law if the issue raised is capable
of being resolved without need of reviewing the
probative value of the evidence.[9] The resolution of the
issue must rest solely on what the law provides on the
given set of circumstances. Once it is clear that the
issue invites a review of the evidence presented, the
question posed is one of fact. [10] If the query requires a
re-evaluation of the credibility of witnesses, or the
Page 248 of 307
existence or relevance of surrounding circumstances
and their relation to each other, the issue in that query
is factual.[11] Our ruling inPaterno v. Paterno[12] is
illustrative on this point:
Such questions as whether certain items of evidence
should be accorded probative value or weight, or
rejected as feeble or spurious, or whether or not the
proofs on one side or the other are clear and convincing
and adequate to establish a proposition in issue, are
without doubt questions of fact. Whether or not the
body of proofs presented by a party, weighed and
analyzed in relation to contrary evidence submitted by
adverse party, may be said to be strong, clear and
convincing; whether or not certain documents
presented by one side should be accorded full faith and
credit in the face of protests as to their spurious
character by the other side; whether or not
inconsistencies in the body of proofs of a party are of
such gravity as to justify refusing to give said proofs
weight all these are issues of fact.
It is true that Maxicorp did not contest the facts alleged
by petitioners. But this situation does not automatically
transform all issues raised in the petition into questions
of law. The issues must meet the tests outlined
in Paterno.
Of the three main issues raised in this petition the legal
personality of the petitioners, the nature of the warrants
issued and the presence of probable cause only the first
two qualify as questions of law. The pivotal issue of
whether there was probable cause to issue the search
warrants is a question of fact. At first glance, this issue
appears to involve a question of law since it does not
concern itself with the truth or falsity of certain facts.
Still, the resolution of this issue would require this Court
to inquire into the probative value of the evidence
presented before the RTC. For a question to be one of
law, it must not involve an examination of the probative
value of the evidence presented by the litigants or any
of them.[13]
Yet, this is precisely what the petitioners ask us to do by
raising arguments requiring an examination of the TSNs
and the documentary evidence presented during the
search warrant proceedings. In short, petitioners would
have us substitute our own judgment to that of the RTC
and the Court of Appeals by conducting our own
evaluation of the evidence. This is exactly the situation
which Section 1, Rule 45 of the Rules of Court prohibits
by requiring the petition to raise only questions of law.
This Court is not a trier of facts. It is not the function of
this court to analyze or weigh evidence. [14] When we
give due course to such situations, it is solely by way of
exception. Such exceptions apply only in the presence
of extremely meritorious circumstances.[15]
Indeed, this case falls under one of the exceptions
because the findings of the Court of Appeals conflict
with the findings of the RTC.[16] Since petitioners
properly raised the conflicting findings of the lower
courts, it is proper for this Court to resolve such
contradiction.
On Whether Petitioners have the Legal
Personality to File this Petition
Page 249 of 307
Maxicorp argues that petitioners have no legal
personality to file this petition since the proper party to
do so in a criminal case is the Office of the Solicitor
General as representative of the People of the
Philippines. Maxicorp states the general rule but the
exception governs this case.[17] We ruled in Columbia
Pictures Entertainment, Inc. v. Court of
[18]
Appeals that the petitioner-complainant in a petition
for review under Rule 45 could argue its case before this
Court in lieu of the Solicitor General if there is grave
error committed by the lower court or lack of due
process. This avoids a situation where a complainant
who actively participated in the prosecution of a case
would suddenly find itself powerless to pursue a remedy
due to circumstances beyond its control. The
circumstances in Columbia Pictures
Entertainment are sufficiently similar to the present
case to warrant the application of this doctrine.
On Whether there was Probable Cause to Issue
the Search Warrants
Petitioners argue that the Court of Appeals erred in
reversing the RTC based on the fact that the sales
receipt was not in the name of NBI Agent Samiano.
Petitioners point out that the Court of Appeals
disregarded the overwhelming evidence that the RTC
considered in determining the existence of probable
cause. Maxicorp counters that the Court of Appeals did
not err in reversing the RTC. Maxicorp maintains that
the entire preliminary examination that the RTC
conducted was defective.
The Court of Appeals based its reversal on two factual
findings of the RTC. First, the fact that the sales receipt
presented by NBI Agent Samiano as proof that he
bought counterfeit goods from Maxicorp was in the
name of a certain Joel Diaz. Second, the fact that
petitioners other witness, John Benedict Sacriz, admitted
that he did not buy counterfeit goods from Maxicorp.
We rule that the Court of Appeals erred in reversing the
RTCs findings.
Probable cause means such reasons, supported by facts
and circumstances as will warrant a cautious man in the
belief that his action and the means taken in
prosecuting it are legally just and proper. [19] Thus,
probable cause for a search warrant requires such facts
and circumstances that would lead a reasonably
prudent man to believe that an offense has been
committed and the objects sought in connection with
that offense are in the place to be searched.[20]
The judge determining probable cause must do so only
after personally examining under oath the complainant
and his witnesses. The oath required must refer to the
truth of the facts within the personal knowledge of
the petitioner or his witnesses, because the purpose
thereof is to convince the committing magistrate, not
the individual making the affidavit and seeking the
issuance of the warrant, of the existence of probable
cause.[21] The applicant must have personal knowledge
of the circumstances. Reliable information is insufficient.
[22]
Mere affidavits are not enough, and the judge must
depose in writing the complainant and his witnesses.[23]
The Court of Appeals reversal of the findings of the RTC
centers on the fact that the two witnesses for
Page 250 of 307
petitioners during the preliminary examination failed to
prove conclusively that they bought counterfeit software
from Maxicorp. The Court of Appeals ruled that this
amounted to a failure to prove the existence of a
connection between the offense charged and the place
searched.
The offense charged against Maxicorp is copyright
infringement under Section 29 of PD 49 and unfair
competition under Article 189 of the RPC. To support
these charges, petitioners presented the testimonies of
NBI Agent Samiano, computer technician Pante, and
Sacriz, a civilian. The offenses that petitioners charged
Maxicorp contemplate several overt acts. The sale of
counterfeit products is but one of these acts. Both NBI
Agent Samiano and Sacriz related to the RTC how they
personally saw Maxicorp commit acts of infringement
and unfair competition.
During the preliminary examination, the RTC subjected
the testimonies of the witnesses to the requisite
examination. NBI Agent Samiano testified that he saw
Maxicorp display and offer for sale counterfeit software
in its premises. He also saw how the counterfeit
software were produced and packaged within Maxicorps
premises. NBI Agent Samiano categorically stated that
he was certain the products were counterfeit because
Maxicorp sold them to its customers without giving the
accompanyingownership manuals, license agreements
and certificates of authenticity.
Sacriz testified that during his visits to Maxicorp, he
witnessed several instances when Maxicorp installed
petitioners software into computers it had assembled.
Sacriz also testified that he saw the sale of petitioners
software within Maxicorps premises. Petitioners never
authorized Maxicorp to install or sell their software.
The testimonies of these two witnesses, coupled with
the object and documentary evidence they presented,
are sufficient to establish the existence of probable
cause. From what they have witnessed, there is reason
to believe that Maxicorp engaged in copyright
infringement and unfair competition to the prejudice of
petitioners. Both NBI Agent Samiano and Sacriz were
clear and insistent that the counterfeit software were
not only displayed and sold within Maxicorps premises,
they were also produced, packaged and in some cases,
installed there.
The determination of probable cause does not call for
the application of rules and standards of proof that a
judgment of conviction requires after trial on the merits.
As implied by the words themselves, probable cause is
concerned with probability, not absolute or even moral
certainty. The prosecution need not present at this stage
proof beyond reasonable doubt. The standards of
judgment are those of a reasonably prudent man, [24] not
the exacting calibrations of a judge after a full-blown
trial.
No law or rule states that probable cause requires a
specific kind of evidence. No formula or fixed rule for its
determination exists.[25] Probable cause is determined in
the light of conditions obtaining in a given situation.
[26]
Thus, it was improper for the Court of Appeals to
reverse the RTCs findings simply because the sales
Page 251 of 307
receipt evidencing NBI Agent Samianos purchase of
counterfeit goods is not in his name.
For purposes of determining probable cause, the sales
receipt is not the only proof that the sale of petitioners
software occurred. During the search warrant
application proceedings, NBI Agent Samiano presented
to the judge the computer unit that he purchased from
Maxicorp, in which computer unit Maxicorp had pre-
installed petitioners software.[27] Sacriz, who was present
when NBI Agent Samiano purchased the computer unit,
affirmed that NBI Agent Samiano purchased the
computer unit.[28] Pante, the computer technician,
demonstrated to the judge the presence of petitioners
software on the same computer unit. [29] There was a
comparison between petitioners genuine software and
Maxicorps software pre-installed in the computer unit
that NBI Agent Sambiano purchased.[30] Even if we
disregard the sales receipt issued in the name of Joel
Diaz, which petitioners explained was the alias NBI
Agent Samiano used in the operation, there still remains
more than sufficient evidence to establish probable
cause for the issuance of the search warrants.
This also applies to the Court of Appeals ruling on
Sacrizs testimony. The fact that Sacriz did not actually
purchase counterfeit software from Maxicorp does not
eliminate the existence of probable cause. Copyright
infringement and unfair competition are not limited to
the act of selling counterfeit goods. They cover a whole
range of acts, from copying, assembling, packaging to
marketing, including the mere offering for sale of the
counterfeit goods. The clear and firm testimonies of
petitioners witnesses on such other acts stand
untarnished. The Constitution and the Rules of Court
only require that the judge examine personally and
thoroughly the applicant for the warrant and his
witnesses to determine probable cause. The RTC
complied adequately with the requirement of the
Constitution and the Rules of Court.
Probable cause is dependent largely on the opinion and
findings of the judge who conducted the examination
and who had the opportunity to question the applicant
and his witnesses.[31] For this reason, the findings of the
judge deserve great weight. The reviewing court should
overturn such findings only upon proof that the judge
disregarded the facts before him or ignored the clear
dictates of reason.[32] Nothing in the records of the
preliminary examination proceedings reveal any
impropriety on the part of the judge in this case. As one
can readily see, here the judge examined thoroughly the
applicant and his witnesses. To demand a higher degree
of proof is unnecessary and untimely. The prosecution
would be placed in a compromising situation if it were
required to present all its evidence at such preliminary
stage. Proof beyond reasonable doubt is best left for
trial.
On Whether the Search Warrants are in the
Nature of General Warrants
A search warrant must state particularly the place to be
searched and the objects to be seized. The evident
purpose for this requirement is to limit the articles to be
seized only to those particularly described in the search
warrant. This is a protection against potential abuse. It
is necessary to leave the officers of the law with no
Page 252 of 307
discretion regarding what articles they shall seize, to the
end that no unreasonable searches and seizures be
committed.[33]
In addition, under Section 4, Rule 126 of the Rules of
Criminal Procedure, a search warrant shall issue in
connection with one specific offense. The articles
described must bear a direct relation to the offense for
which the warrant is issued.[34] Thus, this rule requires
that the warrant must state that the articles subject of
the search and seizure are used or intended for use in
the commission of a specific offense.
Maxicorp argues that the warrants issued against it are
too broad in scope and lack the specificity required with
respect to the objects to be seized. After examining the
wording of the warrants issued, the Court of Appeals
ruled in favor of Maxicorp and reversed the RTCs Order
thus:
Under the foregoing language, almost any item in the
petitioners store can be seized on the ground that it is
used or intended to be used in the illegal or
unauthorized copying or reproduction of the private
respondents software and their manuals.[35]
The Court of Appeals based its reversal on its perceived
infirmity of paragraph (e) of the search warrants the RTC
issued. The appellate court found that similarly worded
warrants, all of which noticeably employ the phrase
used or intended to be used, were previously held void
by this Court.[36] The disputed text of the search
warrants in this case states:
a) Complete or partially complete reproductions or
copies of Microsoft software bearing the Microsoft
copyrights and/or trademarks owned by MICROSOFT
CORPORATION contained in CD-ROMs, diskettes and
hard disks;
b) Complete or partially complete reproductions or
copies of Microsoft instruction manuals and/or literature
bearing the Microsoft copyrights and/or trademarks
owned by MICROSOFT CORPORATION;
c) Sundry items such as labels, boxes, prints, packages,
wrappers, receptacles, advertisements and other
paraphernalia bearing the copyrights and/or trademarks
owned by MICROSOFT CORPORATION;
d) Sales invoices, delivery receipts, official receipts,
ledgers, journals, purchase orders and all other books of
accounts and documents used in the recording of the
reproduction and/or assembly, distribution and sales,
and other transactions in connection with fake or
counterfeit products bearing the Microsoft copyrights
and/or trademarks owned by MICROSOFT
CORPORATION;
e) Computer hardware, including central
processing units including hard disks, CD-ROM
drives, keyboards, monitor screens and diskettes,
photocopying machines and other equipment or
paraphernalia used or intended to be used in the
illegal and unauthorized copying or reproduction
of Microsoft software and their manuals, or which
contain, display or otherwise exhibit, without the
authority of MICROSOFT CORPORATION, any and
all Microsoft trademarks and copyrights; and
Page 253 of 307

f) Documents relating to any passwords or protocols in
order to access all computer hard drives, data bases
and other information storage devices containing
unauthorized Microsoft software.[37](Emphasis supplied)
It is only required that a search warrant be specific as
far as the circumstances will ordinarily allow.[38] The
description of the property to be seized need not be
technically accurate or precise. The nature of the
description should vary according to whether the
identity of the property or its character is a matter of
concern.[39] Measured against this standard we find that
paragraph
(e) is not a general warrant. The articles to be seized
were not only sufficiently identified physically, they
were also specifically identified by stating their relation
to the offense charged. Paragraph (e) specifically refers
to those articles used or intended for use in the illegal
and unauthorized copying of petitioners software. This
language meets the test of specificity.[40]
The cases cited by the Court of Appeals are
inapplicable. In those cases, the Court found the
warrants too broad because of particular circumstances,
not because of the mere use of the phrase used or
intended to be used. In Columbia Pictures, Inc. v.
Flores, the warrants ordering the seizure of television
sets, video cassette recorders, rewinders and tape
cleaners x x x were found too broad since the defendant
there was a licensed distributor of video tapes. [41] The
mere presence of counterfeit video tapes in the
defendants store does not mean that the machines
were used to produce the counterfeit tapes. The
situation in this case is different. Maxicorp is not a
licensed distributor of petitioners. In Bache & Co.
(Phil.), Inc., et al. v. Judge Ruiz, et al., the Court
voided the warrants because they authorized the
seizure of records pertaining to all business transactions
of the defendant.[42] And in 20th Century Fox Film
Corp. v. Court of Appeals, the Court quashed the
warrant because it merely gave a list of articles to be
seized, aggravated by the fact that such appliances are
generally connected with the legitimate business of
renting out betamax tapes.[43]
However, we find paragraph (c) of the search warrants
lacking in particularity. Paragraph (c) states:
c) Sundry items such as labels, boxes, prints, packages,
wrappers, receptacles, advertisements and other
paraphernalia bearing the copyrights and/or trademarks
owned by MICROSOFT CORPORATION;
The scope of this description is all-embracing since it
covers property used for personal or other purposes not
related to copyright infringement or unfair competition.
Moreover, the description covers property that Maxicorp
may have bought legitimately from Microsoft or its
licensed distributors. Paragraph (c) simply calls for the
seizure of all items bearing the Microsoft logo, whether
legitimately possessed or not. Neither does it limit the
seizure to products used in copyright infringement or
unfair competition.
Still, no provision of law exists which requires that a
warrant, partially defective in specifying some items
sought to be seized yet particular with respect to the
Page 254 of 307
other items, should be nullified as a whole. A partially
defective warrant remains valid as to the items
specifically described in the warrant.[44] A search warrant
is severable, the items not sufficiently described may be
cut off without destroying the whole warrant.[45] The
exclusionary rule found in Section 3(2) of Article III of
the Constitution renders inadmissible in any proceeding
all evidence obtained through unreasonable searches
and seizure. Thus, all items seized under paragraph (c)
of the search warrants, not falling under paragraphs a,
b, d, e or f, should be returned to Maxicorp.
WHEREFORE, we PARTIALLY GRANT the instant petition.
The Decision of the Court of Appeals dated 23
December 1998 and its Resolution dated 29 November
1999 in CA-G.R. SP No. 44777 are REVERSED and SET
ASIDE except with respect to articles seized under
paragraph (c) of Search Warrants Nos. 96-451, 96-452,
96-453 and 96-454. All articles seized under paragraph
(c) of the search warrants, not falling under paragraphs
a, b, d, e or f, are ordered returned to Maxicorp, Inc.
immediately.
10. Sony Music vs. Dolores Español, G.R.
No. 156804, March 14, 2005
Facts: Assailed and sought to be nullified in this
petition for certiorari with application for injunctive relief
are the orders issued by the respondent judge on June
25, 2002[1] and January 6, 2003,[2] the first
quashing Search Warrant No. 219-00, and the second,
denying reconsideration of the first.
From the petition, the comment thereon of private
respondents, their respective annexes, and other
pleadings filed by the parties, the Court gathers the
following relevant facts:
In a criminal complaint filed with the Department of
Justice (DOJ), the Videogram Regulatory Board (VRB)
[3]
charged herein private respondents James Uy, David
Chung, Elena Limandanother officer of respondent Solid
Laguna Corporation (SLC) with violation of Presidential
Decree (PD) No. 1987.[4] As alleged in the complaint,
docketed as I.S. No. 2000-1576, the four (4) were
engaged in the replication, reproduction and distribution
of videograms without license and authority from VRB.
On account of this and petitioners own complaints for
copyright infringement, the National Bureau of
Investigation (NBI), through Agent Ferdinand M. Lavin,
applied on September 18, 2000, with the Regional Trial
Court at Dasmarias, Cavite, Branch 80, presided by the
respondent judge, for the issuance of search warrants
against private respondents David Chung, James Uy,
John and Jane Does, doing business under the name and
style Media Group inside the factory and
productionfacility of SLC at Solid corner Camado Sts.,
Laguna International Industrial Park, Bian, Laguna.[5]
During the proceedings on the application, Agent Lavin
presented, as witnesses, Rodolfo Pedralvez, a deputized
agent of VRB, and Rene C. Baltazar, an investigator
retained by the law firm R.V. Domingo & Associates,
petitioners attorney-in-fact. In their sworn statements,
the three stated that petitioners sought their assistance,
complaining about the manufacture, sale and
distribution of various titles of compact discs (CDs) in
Page 255 of 307
violation of petitioners right as copyright owners; that
acting on the complaint, Agent Lavin and the witnesses
conducted an investigation, in the course of which
unnamed persons informed them that allegedly
infringing or pirated discs were being manufactured
somewhere in an industrial park in Laguna; that in the
process of their operation, they were able to enter,
accompanied by another unnamed source, the premises
of SLC and to see various replicating equipment and
stacks of CDs; and that they were told by their
anonymous source that the discs were being
manufactured in the same premises. They also testified
that private respondents were (1) engaged in the
reproduction or replication of audio and video compacts
discs without the requisite authorization from VRB, in
violation of Section 6 of PD No. 1987, presenting a VRB
certification to such effect; and (2) per petitioners
certification and a listing of Sony music titles, infringing
on petitioners copyrights in violation of Section 208 of
Republic Act (RA) No. 8293, otherwise known as
Intellectual Property Code.[6]
On the basis of the foregoing sworn statements, the
respondent judge issued Search Warrant No. 219-
00[7] for violation of Section 208 of R.A. No. 8293
and Search Warrant No. 220-00[8] for violation of Section
6 of PD No. 1987.
The following day, elements of the Philippine National
Police Criminal Investigation and Detection Group, led
by PO2 Reggie Comandante, enforced both warrants
and brought the seized items to a private warehouse of
Carepak Moving and Storage at 1234 Villonco Road,
Sucat, Paranaque City and their custody turned over to
VRB.[9] An inventory of seized items,[10] as well as a
Return of Search Warrant were later filed with the
respondent court.
Meanwhile, the respondents in I.S. No. 2000-1576
belabored to prove before the DOJ Prosecutorial Service
that, since 1998 and up to the time of the search, they
were licensed by VRB to operate as replicator and
duplicator of videograms.
On the stated finding that respondents can not . . . be
considered an unauthorized reproducers of videograms,
being licensed to engage in reproduction in videograms
under SLC in which they are the officers and/or or
officials,the DOJ, via a resolution dated January 15,
2001,[11] dismissed VRBs complaint in I.S. No. 2000-
1576.
On February 6, 2001, private respondents, armed with
the DOJ resolution adverted to, moved to quash the
search warrants thus issued. [12] VRB interposed an
opposition for the reason that the DOJ has yet to resolve
the motion for reconsideration it filed in I.S. No. 2000-
1576.
Eventually, the DOJ denied VRBs motion for
reconsideration, prompting private respondents to move
anew for the quashal of the search warrants. In its
supplement to motion, private respondents attached
copies of SLCs license as videogram duplicator and
replicator.
In an order dated October 30, 2001,[13] the respondent
judge, citing the January 15, 2001 DOJ resolution in I.S.
Page 256 of 307
No. 2000-1576, granted private respondents motion to
quash, as supplemented, dispositively stating:
Nonetheless, such being the case, the aforesaid Search
Warrants are QUASHED
Petitioners forthwith sought clarification on whether or
not the quashal order referred to both search warrants
or to Search Warrant No. 220-00 alone, since it was the
latter that was based on the charge of violation of PD
No. 1987.[14] The respondent judge, in a modificatory
order dated January 29, 2002, [15] clarified that her
previous order quashed only Search Warrant No. 220-
00.
Meanwhile, or on November 22, 2001, petitioners filed
with the DOJ an affidavit-complaint, docketed thereat
as I.S. No. 2001-1158, charging individual private
respondents with copyright infringement in violation of
Sections 172 and 208 in relation to other provisions of
RA No. 8293.[16] Attached to the affidavit-complaint were
certain documents and records seized from SLCs
premises, such as production and delivery records.
Following their receipt of DOJ-issued subpoenas to file
counter-affidavits, private respondents moved, in the
search warrant case, that they be allowed to examine
the seized items to enable them to intelligently prepare
their defense.[17] On January 30, 2002, respondent judge
issued an order allowing the desired examination,
provided it is made under the supervision of the courts
sheriff and in the presence of the applicant of Search
Warrant No. 219-00.[18]
On February 8, 2002, the parties, represented by their
counsels, repaired to the Carepak warehouse. An NBI
agent representing Agent Lavin appeared. The
examination, however, did not pushthrough on account
of petitioners counsel insistence on Agent Lavins
physical presence.[19] Private respondents were able to
make an examination on the following scheduled
setting, February 15, 2002, albeit it was limited, as the
minutes of the inspection discloses, to inspecting only
one (1) box containing 35 assorted CDs, testing
stampers, diskettes, a calendar, organizers and some
folders and documents. The minutes also contained an
entry stating - Other items/machines were not
examined because they cannot be identified as they are
not properly segregated from other items/machines in
the warehouse. The parties agreed to schedule another
examination on (to be agreed by the parties) after the
items/machines subject of the examination shall have
been segregated from the other items/machines by
Carepak Moving and Storage , Inc.[20]
During the preliminary investigation conducted on
February 26, 2002 in I.S. No. 2001-1158, however,
petitioners counsel objected to any further examination,
claiming that such exercise was a mere subterfuge to
delay proceedings.
On April 11, 2002, individual private respondents,
through counsel, filed a Motion To Quash Search
Warrant (And To Release Seized Properties) grounded
on lack of probable cause to justify issuance of search
warrant, it being inter alia alleged that the applicant and
his witnesses lacked the requisite personal knowledge
to justify the valid issuance of a search warrant; that the
Page 257 of 307
warrant did not sufficiently describe the items to be
seized; and that the warrant was improperly enforced.
[22]
To this motion to quash, petitioners interposed an
opposition dated May 7, 2002 predicated on four (4)
grounds.[23] On June 26, 2002, respondent SLC filed a
Manifestation joining its co-respondents in, and
adopting, their motion to quash.[24]
On June 25, 2002, the respondent judge issued the
herein first assailed order quashing Search Warrant
No. 219-00 principally on the ground that the integrity
of the seized items as evidence had been compromised,
commingled as they were with other articles. Wrote the
respondent judge:
Based on the report submitted, it appears that on
February 15, 2002, an examination was actually
conducted. Unfortunately, the alleged seized items
were commingled with and not segregated from
thousands of other items stored in the warehouse. Only
one box . . . were (sic) examined in the presence of both
parties with the sheriff, such that another date was set .
. . . On February 22, 2002, during the hearing before the
Department of Justice (DOJ), [petitioners counsel] Atty.
Arevalo manifested their objection to the further
examination on the alleged ground that all of the items
subject of the DOJ complaint have been examined.
Analyzing the report and the incidents relative thereto,
it shows that the items subject of the questioned Search
Warrant were commingled with other items in the
warehouse of Carepak resulting in the failure to identify
the machines and other items subject of this Search
Warrant, while the other items enumerated in the said
Inventory of Seized Items and Certification of Legality,
Orderliness and Regularity in the Execution and
enforcement of Search Warrants were not examined,
hence, the charge imputed against the respondents
could not be established as the evidence to show such
violation fails to determine the culpability of said
respondents, thus, violating their constitutional rights.[25]
Excepting, petitioners moved for reconsideration,
arguing on the main that the quashal order was
erroneously based on a ground outside the purview of a
motion to quash.[26] To this motion, private respondents
interposed an opposition, against which petitioners
countered with a reply.
On January 6, 2003, respondent judge issued
the second assailed order denying petitioners motion
for reconsideration on the strength of the following
premises:
Careful scrutiny of the records of the case reveals that
the application of the above-entitled case stemmed
from the application for Search Warrant alleging that the
respondent was not licensed to duplicate or replicate
CDs and VCDs. The Court was misled when the
applicants declared that Solid Laguna Corporation (SLC)
is not licensed to engage in replicating/duplicating CDs
and VCDs, when in truth and in fact, SLC was still a
holder of a valid and existing VRB license. Considering
the fact that respondent was duly licensed which facts
(sic) was not laid bare to this Court when the application
for writ was filed by the private complainant through the
National Bureau of Investigation, this Court hereby
recalls and quashes the above writ.
Page 258 of 307

Lastly, taking into account that respondents were
licensed to engage in replicating/duplicating CDs and
VCDs, the issuance of search warrant was of no force
and effect as there was absence of probable cause to
justify said issuance. xxx
Hence, petitioners present recourse.
In a Resolution dated February 19, 2003,[28] the Court
issued a temporary restraining order enjoining the
respondents from implementing and enforcing the
respondent judges questioned orders.
Petitioners ascribe on the respondent judge the
commission of grave abuse of discretion amounting to
lack or in excess of jurisdiction in issuing the first
assailed order in that:
1. It was based on a ground that is not a basis for
quashal of a search warrant, i.e., private respondents
failure to examine the seized items, which ground is
extraneous to the determination of the validity of the
issuance of the search warrant.
2. Public respondent, in effect, conducted a preliminary
investigation that absolved the private respondents
from any liability for copyright infringement.
3. Public respondent recognized the motion to quash
search warrant filed by persons who did not have any
standing to question the warrant.
Petitioners also deplore the issuance of the second
assailed order which they tag as predicated on a ground
immaterial to Search Warrant No. 219-00.
Private respondents filed their Comment on May 13,
2003, essentially reiterating their arguments in
the Motion To Quash Search Warrant (And To Release
Seized Properties). Apart therefrom, they aver that
petitioners violated the rule on hierarchy of courts by
filing the petition directly with this Court. As to be
expected, petitioners reply to comment traversed
private respondents position.
Owing to their inability to locate respondent David
Chung, petitioners moved and the Court subsequently
approved the dropping, without prejudice, of said
respondent from the case.[29]
On February 20, 2004, private respondents filed their
Rejoinder, therein inviting attention to petitioner IFPIs
failure to execute the certification on non-forum
shopping as required by Rule 7, Section 5 of the Rules of
Court and questioning the validity of the Special Powers
of Attorney of petitioners attorney-in-fact to file this
case.
In Resolution of March 31, 2004, the Court gave due
course to the petition and directed the submission of
memoranda which the parties, after each securing an
extension, did submit.
Held: The underlying issue before Us revolves on the
propriety of the quashal of Search Warrant No. 219-
00 which, in turn, resolves itself into question of the
propriety of the warrants issuance in the first place.
Page 259 of 307

It has repeatedly been said that ones house, however,
humble is his castle where his person, papers and
effects shall be secured and whence he shall enjoy
undisturbed privacy except, to borrow from Villanueva
vs. Querubin,[30] in case of overriding social need and
then only under the stringent procedural safeguards.
The protection against illegal searches and seizure has
found its way into our 1935 and 1973 Constitutions and
is now embodied in Article III, Section 2 of the 1987
Constitution, thus –
The right of the people to be secure in their persons,
houses, papers and effects against unreasonable
searches and seizures of whatever nature and for any
purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause
to be determined personally by the judge after
examination under oath or affirmation of the
complainant and the witnesses he may produce, and
particularly describing the place to be searched and the
persons or things to be seized,and in Section 4, Rule
126 of the Rules of Court, viz -
Sec. 4. Requisites for issuing search warrant. A search
warrant shall not issue but upon probable cause . . . to
be determined personally by the judge after
examination under oath or affirmation of the
complainant and the witnesses he may produce, and
particularly describing the place to be searched and the
things to be seized.
Complementing the aforequoted provisions is Section 5
of the same Rule, reading:
SEC. 5. Examination of the complainant; record. The
judge must, before issuing the warrant, personally
examine in form of searching questions and answers, in
writing and under oath, the complainant and any
witnesses he may produce on facts personally known to
them and attach to the record their sworn statements
together with any affidavits submitted.
To prevent stealthy encroachment upon, or gradual
depreciation of the right to privacy, a liberal
construction in search and seizure cases is given in
favor of the individual. Consistent with this postulate,
the presumption of regularity is unavailing in aid of the
search process when an officer undertakes to justify it.
[31]
For, the presumption juris tantum of regularity
cannot, by itself, prevail against the constitutionally
protected rights of an individual because zeal in the
pursuit of criminals cannot ennoble the use of arbitrary
methods that the Constitution itself detests.[32]
A core requisite before a warrant shall validly issue is
the existence of a probable cause, meaning the
existence of such facts and circumstances which would
lead a reasonably discreet and prudent man to believe
that an offense has been committed and that the
objects sought in connection with the offense are in the
place to be searched.[33] And when the law speaks of
facts, the reference is to facts, data or information
personally known to the applicant and the witnesses he
may present. Absent the element of personal knowledge
by the applicant or his witnesses of the facts upon
which the issuance of a search warrant may be justified,
the warrant is deemed not based on probable cause and
is a nullity, its issuance being, in legal contemplation,
Page 260 of 307
arbitrary, as held by us in Columbia Pictures, Inc. vs.
Court of Appeals.[34] Testimony based on what is
supposedly told to a witness, being patent hearsay and,
as rule, of no evidentiary weight[35] or probative value,
whether objected to or not,[36] would, alone, not suffice
under the law on the existence of probable cause.
In our view, the issuance of the search warrant in
question did not meet the requirements of probable
cause. The respondent judge did not accordingly err in
quashing the same, let alone gravely abuse her
discretion.
Petitioners argue that the instant petition is on all fours
with Columbia,[37] wherein the en banc Court upheld the
validity of search warrants based on the testimonies of
the applicant and his witnesses who conducted an
investigation on the unlawful reproduction and
distribution of video tapes of copyrighted films.
We are not persuaded.
In Columbia, the issuing court probed the applicants and
his witnesses personal knowledge of the fact of
infringement. It was, however, determined by this Court
that during the application hearing, therein petitioners
attorney-in-fact, a witness of the applicant, stated in his
affidavit and further expounded in his deposition that
he personally knew of the fact that private respondents
had never been authorized by his clients to reproduce,
lease and possess for the purposes of selling any of the
copyrighted films.[38] Significantly, the Court, in
upholding the validity of the writ issued upon complaint
of Columbia Pictures, Inc., et al., stated that there is no
allegation of misrepresentation, much less finding
thereof by the lower court, on the part of petitioners
witnesses.[39]
Therein lies the difference with the instant case.
Here, applicant Agent Lavin and his witnesses,
Pedralvez and Baltazar, when queried during the
application hearing how they knew that audio and video
compact discs were infringing or pirated, relied for the
most part on what alleged unnamed sources told them
and/or on certifications or lists made by persons who
were never presented as witnesses. In net effect, they
testified under oath as to the truth of facts they had no
personal knowledge of. The following excerpts of the
depositions of applicant Lavin and his witnesses suggest
as much:
A. Deposition of Agent Lavin
28. Question: What happened next?
Answer: We then went to the Laguna Industrial Park,
your Honor . . . We then verified from an informant that
David Chung, James Uy . . . under the name and style
Media Group were the ones replicating the infringing
CDs.
36. Question: How do you know that all of these VCDs
and CDs you purchased or are indeed infringing?
Answer: I have with me the VRB certification that the
VCDs are unauthorized copies. I also have with me the
Complaint-Affidavit of Sony Music and IFPI that certified
Page 261 of 307
that these are infringing copies, as well as the title list
of Sony Music wherein some of the CDs purchased are
indicated. (Annex 10, Comment, Rollo, p. 841)
B. Deposition of Baltazar
18. Question: What did you see in that address?
Answer: We saw that they had in stock several
infringing, pirated and unauthorized CDs. They also had
videograms without VRB labels, aside from artworks and
labels. John Doe gave us a Wholesome CD while Jane
Doe gave us Kenny Rogers Videoke and Engelbert
Humperdinck Videoke which the informant told us were
being reproduced in that facility. The informant further
showed us the rooms where the replicating and/or
stamping machine was located.
19. Question: How did you determine that the CDs you
purchased are counterfeit, pirated or unauthorized?
Answer: The Attorney-in-fact of Sony Music and IFPI
certified in his Complaint-Affidavit that they are
unauthorized copies. I also have with me a listing of
Sony Music titles and some of the CDs I purchased are
in that list.[40]
C. Deposition of Pedralvez
27. Question: What proof do you have they are
producing infringing materials?
Answer: We were given some samples by John Doe
and Jane Doe. These are Kenny Rogers Videoke,
Engelbert Humperdinck Videoke, and Andrew E.
Wholesome CD. The informant told us that the said
samples were being reproduced in the facility.
28. Question: How do you know that all of these VCDs
you purchased or got are indeed unauthorized?
Answer: The VRB has certified that they are
unauthorized copies.
Unlike their counterparts in Columbia who were found to
be personally knowledgeable about their facts, Agent
Lavin and his witnesses, judging from their above
quoted answers, had no personal knowledge that the
discs they saw, purchased or received were, in fact,
pirated or infringing on petitioners copyrights. To us, it
is not enough that the applicant and his witnesses
testify that they saw stacks of several allegedly
infringing, pirated and unauthorized discs in the subject
facility. The more decisive consideration determinative
of whether or not a probable cause obtains to justify the
issuance of a search warrant is that they had personal
knowledge that the discs were actually infringing,
pirated or unauthorized copies.[41]
Moreover, unlike in Columbia, misrepresentation on the
part of the applicant and his witnesses had been
established in this case.
This is not to say that the master tapes should have
been presented in evidence during the application
hearing, as private respondents, obviously having in
mind the holding in 20thCentury Fox Film Corp. vs. Court
of Appeals,[42] would have this Court believe. It is true
that the Court, in 20th Century Fox, underscored the
necessity, in determining the existence of probable
Page 262 of 307
cause in copyright infringement cases, of presenting the
master tapes of the copyrighted work. But, as
emphatically clarified in Columbia such auxiliary
procedure, however, does not rule out the use of
testimonial or documentary evidence, depositions,
admissions or other classes of evidence xxx especially
where the production in court of object evidence would
result in delay, inconvenience or expenses out of
proportion to its evidentiary value.[43] What this Court is
saying is that any evidence presented in lieu of the
master tapes, if not readily available, in similar
application proceedings must be reliable, and, if
testimonial, it must, at the very least, be based on the
witness personal knowledge.
Petitioners argue, citing People v. Chua Uy,[44] that Agent
Lavins informants testimonies are not indispensable as
they would only be corroborative.
[45]
Like Columbia, Chua Uy is not a winning card for
petitioners, for, in the latter case, there was a reliable
testimony to corroborate what the applicant testified
to, i.e., the testimony of the police poseur-buyer in a
buy-bust operation involving prohibited drugs. The
circumstances are different in this case wherein the
applicant and his witnesses had no personal knowledge
that the discs they purchased were infringing or pirated
copies. It cannot be overemphasized that not one of
them testified seeing the pirated discs being
manufactured at SLCs premises. What they stated
instead was that they were given copies of Kenny
Rogers Videoke, Engelbert Humperdinck
Videoke and Andrew E. Wholesome CD by two
anonymous sources, while yet another informant told
them that the discs were manufactured at said
premises.
Initial hearsay information or tips from confidential
informants could very well serve as basis for the
issuance of a search warrant, if followed up personally
by the recipient and validated,[46] as what transpired
in Columbia. Unfortunately, the records show that such
is not the case before us.
On the issue that the public respondent gravely abused
her discretion in conducting what petitioners perceived
amounted to a preliminary investigation, this Court has
already ruled inSolid Triangle Sales Corp. vs. Sheriff of
RTC Quezon City, Branch 93,[47] that in the
determination of probable cause, the court must
necessarily resolve whether or not an offense exists to
justify the issuance or quashal of the warrant. In the
exercise of this mandate - which we can allow as being
akin to conducting a preliminary investigation - abuse of
discretion cannot plausibly be laid at the doorstep of the
issuing court on account of its prima facie holding that
no offense has been committed, even if consequent to
such holding a warrant is recalled and the private
complainant is incidentally deprived of vital evidence to
prove his case. Solid Triangle succinctly explains why:
The proceedings for the issuance/quashal of a search
warrant before a court on the one hand, and the
preliminary investigation before an authorized officer on
the other, are proceedings entirely independent of each
other. One is not bound by the others finding as regards
the existence of a crime. The first is to determine
Page 263 of 307
whether a warrant should issue or be quashed, and the
second, whether an information should be filed in court.
When the court, in determining probable cause for
issuing or quashing a search warrant, finds that no
offense has been committed, it does not interfere with
or encroach upon the proceedings in the preliminary
investigation. The court does not oblige the
investigating officer not to file the information for the
courts ruling that no crime exists is only of purposes of
issuing or quashing the warrant. This does not, as
petitioners would like to believe, constitute a usurpation
of the executive function. Indeed, to shirk from this duty
would amount to an abdication of a constitutional
obligation.[48]
While the language of the first questioned Order may be
viewed as encroaching on executive functions,
nonetheless, it remains that the order of quashal is
entirely independent of the proceedings in I.S. No. 2001-
1158. And needless to stress, the DOJ is by no means
concluded by the respondent judges findings as regards
the existence, or the non-existence, of a crime.
We can, to a point, accord merit to petitioners lament
that the basis of the first questioned order, i.e., the
mingling of the seized items with other items, is
extraneous to the determination of the validity of the
issuance of the search warrant. It is to be pointed out,
though, that public respondent corrected her error when
it was raised in petitioners motion for reconsideration.
There can really be no serious objection to a judge
correcting or altogether altering his case disposition on
a motion for reconsideration, it being the purpose of
such recourse to provide the court an opportunity to
cleanse itself of an error unwittingly committed, or, with
like effect, to allow the aggrieved party the chance to
convince the court that its ruling is erroneous.[49] A
motion for reconsideration before resort to certiorari is
required precisely to afford the public respondent an
opportunity to correct any actual or fancied error
attributed to it by way of re-examination of the legal
and factual aspects of the case.[50]
Similarly, as to the matter of the respondent judges
recognizing the April 11, 2002 motion to quash search
warrant[51] filed by the individual private respondents,
instead of by SLC, as presumptive owner of the seized
items, such error was properly addressed when
respondent SLC, represented throughout the
proceedings below by the same counsel of its co-
respondents, formally manifested that it was adopting
the same motion as its own.[52]
It is apropos to point out at this juncture that petitioners
have imputed on individual private respondents criminal
liability, utilizing as tools of indictment the very articles
and papers seized from the premises of SLC. Be that as
it may, petitioners should be deemed in estoppel to
raise the personality of individual private respondents to
interpose a motion to quash. To be sure, it would be
unsporting for petitioners to prosecute individual private
respondents on the basis of seized articles but on the
same breath deny the latter standing to question the
legality of the seizure on the postulate that only the
party whose rights have been impaired thereby,
meaning SLC, can raise that challenge. There can be no
quibbling that individual private respondents stand to
be prejudiced or at least be inconvenient by any
Page 264 of 307
judgment in any case based on the seized properties. In
a very real sense, therefore, they are real parties in
interest who ought not to be prevented from assailing
the validity of Search Warrant 219-00, albeit they
cannot plausibly asked for the release and appropriate
as their own the seized articles.
Petitioners related argument that SLC could not have
validly adopted individual private respondents motion to
quash due to laches is untenable.
The records show that the seizure in question was
effected on September 19, 2000. The complaint in I.S.
No. 2000-1576 was filed against the officers of SLC, all
of whom, except for one, are also private respondents in
the instant petition. I.S. No. 2000-1576 was only
resolved on January 15, 2001 when the DOJ dismissed
the complaint on the ground that SLC was, in fact, duly
licensed by the VRB. Shortly thereafter, or on February
6, 2001, less than five (5) months after the seizure,
private respondents moved to quash both search
warrants.[53] The motion clearly indicates private
respondents desire for the return of the seized items,
and there is nothing in the records showing that
petitioners objected to the motion on the ground that
the movants had no standing to question the warrants.
This bring Us to the second assailed order. As earlier
stated, DOJ, in I.S. No. 2000-1576, found respondent
SLC to be licensed by VRB to engage in the business of
replicating or duplicating videograms.
Petitioners would have the Court believe that the
second questioned order was based on a ground
immaterial to the charge of infringement. A scrutiny of
the text of the said order, however, shows that the
respondent judge denied petitioners motion for
reconsideration because she was misled by the
applicants and his witnesses testimony. It may be that a
VRB license is no defense to a charge of violating
Section 208 of R.A. No. 8293. It must be stressed in this
regard, however, that the core issue here is the validity
of the warrant which applicant secured on the basis of,
among others, his representation which turned out to be
false.
As above discussed, the answers of Agent Lavin and his
witnesses to the public respondents searching
questions, particularly those relating to how they knew
that the compact discs they purchased or received were
illegal, unauthorized or infringing, were based on
certifications and not personal knowledge. The subject
warrant, as well as Search Warrant No. 220-00, was
issued nonetheless. It may well have been that the
issuing judge was, in the end, convinced to issue the
warrants by means of the erroneous VRB certification
presented during the joint application hearing,
overriding whatever misgivings she may have had with
the applicants and his witnesses other answers. This
Court, however, cannot engage in such speculation and
sees no need to.
Summing up, the issuance of Search Warrant No. 219-00
was, at bottom, predicated on the sworn testimonies of
persons without personal knowledge of facts they were
testifying on and who relied on a false certification
issued by VRB. Based as it were on hearsay and false
information, its issuance was without probable cause
and, therefore, invalid.
Page 265 of 307
Given the foregoing perspective, the peripheral issues
of (a) whether or not petitioner IFPI (South East Asia),
Ltd. failed to comply with the rules requiring the filing of
a certification on non-forum shopping; and (b) whether
or not IFPIs board of directors ratified its conditional
authorization for its attorney-in-fact to represent IFPI in
this petition, need not detain us long. In our review of
the records, R.V. Domingo & Associates, whose authority
to represent the petitioners in this petition continues,
had duly executed the sworn certification on non- forum
shopping.
In the same manner, this Court, having taken
cognizance of this petition, need not belabor the issue
of whether or not petitioners have cavalierly breached
the rule on hierarchy of courts. Suffice it to state that,
while the Court looks with disfavor on utter disregard of
its rules,[54] it is within its power to suspend its own rules
or to except a particular case from its operation
whenever the ends of justice so requires, as here.
WHEREFORE, the instant petition is hereby DISMISSED
and the temporary restraining order issued on February
19, 2003 is consequently RECALLED.
11. NBI-Microsoft vs. Judy Hwang, G.R. No.
147043, June 21, 2005
Facts: This is a petition for certiorari[1] of the
Resolutions[2] of the Department of Justice dismissing for
lack of merit and insufficiency of evidence petitioner
Microsoft Corporations complaint against respondents
for copyright infringement and unfair competition.
Petitioner Microsoft Corporation (Microsoft), a Delaware,
United States corporation, owns the copyright and
trademark to several computer software. [3] Respondents
Benito Keh and Yvonne Keh are the President/Managing
Director and General Manager, respectively, of
respondent Beltron Computer Philippines, Inc. (Beltron),
a domestic corporation. Respondents Jonathan K. Chua,
Emily K. Chua, Benito T. Sanchez, and Nancy I. Velasco
are Beltrons Directors. On the other hand, respondents
Alfonso Chua, Alberto Chua, Judy K. Chua Hwang,
Sophia Ong, and Deanna Chua are the Directors of
respondent Taiwan Machinery Display & Trade Center,
Inc. (TMTC), also a domestic corporation.[4]
In May 1993, Microsoft and Beltron entered into a
Licensing Agreement (Agreement). Under Section 2(a)
of the Agreement, as amended in January 1994,
Microsoft authorized Beltron, for a fee, to:
(i) xxx reproduce and install no more than one (1) copy
of [Microsoft] software on each Customer System hard
disk or Read Only Memory (ROM); [and]
(ii) xxx distribute directly or indirectly and license copies
of the Product (reproduced as per Section 2(a)(i) and/or
acquired from Authorized Replicator or Authorized
Distributor) in object code form to end users[.] xxxx[5]
The Agreement also authorized Microsoft and Beltron to
terminate the contract if the other fails to comply with
any of the Agreements provisions. Microsoft terminated
the Agreement effective 22 June 1995 for Beltrons non-
payment of royalties.[6]
Page 266 of 307

Afterwards, Microsoft learned that respondents were
illegally copying and selling Microsoft software.
Consequently, Microsoft, through its Philippine agent,
[7]
hired the services of Pinkerton Consulting Services
(PCS), a private investigative firm. Microsoft also sought
the assistance of the National Bureau of Investigation
(NBI). On 10 November 1995, PCS employee John
Benedic[8] Sacriz (Sacriz) and NBI agent Dominador
Samiano, Jr. (Samiano), posing as representatives of a
computer shop,[9] bought computer hardware (central
processing unit (CPU) and computer monitor) and
software (12 computer disks (CDs) in read-only memory
(ROM) format) from respondents. The CPU contained
pre-installed[10] Microsoft Windows 3.1 and MS-DOS
software. The 12 CD-ROMs, encased in plastic
containers with Microsoft packaging, also contained
Microsoft software.[11] At least two of the CD-ROMs were
installers, so-called because they contain several
software (Microsoft only or both Microsoft and non-
Microsoft).[12] Sacriz and Samiano were not given the
Microsoft end-user license agreements, users manuals,
registration cards or certificates of authenticity for the
articles they purchased. The receipt issued to Sacriz and
Samiano for the CPU and monitor bore the heading
T.M.T.C. (PHILS.) INC. BELTRON COMPUTER.[13] The
receipt for the 12 CD-ROMs did not indicate its source
although the name Gerlie appears below the entry
delivered by.[14]
On 17 November 1995, Microsoft applied for search
warrants against respondents in the Regional Trial Court,
Branch 23, Manila (RTC).[15] The RTC granted Microsofts
application and issued two search warrants (Search
Warrant Nos. 95-684 and 95-685).[16] Using Search
Warrant Nos. 95-684 and 95-685, the NBI searched the
premises of Beltron and TMTC and seized several
computer-related hardware, software, accessories, and
paraphernalia. Among these were 2,831 pieces of CD-
ROMs containing Microsoft software.[17]
Based on the articles obtained from respondents,
Microsoft and a certain Lotus Development Corporation
(Lotus Corporation) charged respondents before the
Department of Justice (DOJ) with copyright infringement
under Section 5(A) in relation to Section 29 of
Presidential Decree No. 49, as amended, (PD 49) [18] and
with unfair competition under Article 189(1) [19] of the
Revised Penal Code. In its Complaint (I.S. No. 96-193),
which the NBI indorsed, Microsoft alleged that
respondents illegally copied and sold Microsoft software.
[20]
In their joint counter-affidavit, respondents Yvonne Keh
(respondent Keh) and Emily K. Chua (respondent Chua)
denied the charges against respondents. Respondents
Keh and Chua alleged that: (1) Microsofts real intention
in filing the complaint under I.S. No. 96-193 was to
pressure Beltron to pay its alleged unpaid royalties, thus
Microsoft should have filed a collection suit instead of a
criminal complaint; (2) TMTC bought the confiscated 59
boxes of MS-DOS CDs from a Microsoft dealer in
Singapore (R.R. Donnelly); (3) respondents are not the
source of the Microsoft Windows 3.1 software pre-
installed in the CPU bought by Sacriz and Samiano, but
only of the MS-DOS software; (4) Microsofts alleged
proof of purchase (receipt) for the 12 CD-ROMs is
inconclusive because the receipt does not indicate its
Page 267 of 307
source; and (5) respondents Benito Keh, Jonathan K.
Chua, Alfonso Chua, Alberto Chua, Judy K. Chua Hwang,
Sophia Ong, and Deanna Chua are stockholders of
Beltron and TMTC in name only and thus cannot be held
criminally liable.[21]
The other respondents did not file counter-affidavits.
Meanwhile, respondents moved to quash Search
Warrant Nos. 95-684 and 95-685. The RTC partially
granted their motion in its Order of 16 April 1996.
Microsoft sought reconsideration but the RTC denied
Microsofts motion in its Order of 19 July 1996. Microsoft
appealed to the Court of Appeals in CA-G.R. CV No.
54600. In its Decision of 29 November 2001, the Court
of Appeals granted Microsofts appeal and set aside the
RTC Orders of 16 April 1996 and 19 July 1996. The Court
of Appeals Decision became final on 27 December 2001.
DOJ Resolutions: In the Resolution of 26 October
1999, DOJ State Prosecutor Jocelyn A. Ong (State
Prosecutor Ong) recommended the dismissal of
Microsofts complaint for lack of merit and insufficiency
of evidence. State Prosecutor Ong also recommended
the dismissal of Lotus Corporations complaint for lack of
interest to prosecute and for insufficiency of evidence.
Assistant Chief State Prosecutor Lualhati R. Buenafe
(Assistant Chief State Prosecutor Buenafe) approved
State Prosecutor Ongs recommendations.[22] The 26
October 1999 Resolution reads in part:
[T]wo (2) issues have to be resolved in this case,
namely:
a) Whether or not Beltron Computer and/or its
stockholders should be held liable for the offenses
charged.
b) Whether or not prima facie case exist[s] against
Taiwan Machinery Display and Trade Center, Inc. (TMTC)
for violation of the offense charged.
Complainant had alleged that from the time the license
agreement was terminated, respondent/s is/are no
longer authorized to copy/distribute/sell Microsoft
products. However, respondent/s averred that the case
is civil in nature, not criminal, considering that the case
stemmed only out of the desire of complainant to collect
from them the amount of US$135,121.32 and that the
contract entered into by the parties cannot be
unilaterally terminated.
In the order of Honorable William Bayhon dated July 19,
1996 [denying reconsideration to the Order partially
quashing the search warrants], he observed the
following:
It is further argued by counsel for respondent that the
act taken by private complainant is to spite revenge
against the respondent Beltron for the latter failed to
pay the alleged monetary obligation in the amount of
US$135,121.32. That respondent has some monetary
obligation to complainant which is not denied by the
complainant.
[]It appears therefore that prior to the issuance of the
subject search warrants, complainant had some
business transactions with the respondent [Beltron]
along the same line of products. Complainant failed to
Page 268 of 307
reveal the true circumstances existing between the two
of them as it now appears, indeed the search warrant[s]
xxx [are] being used as a leverage to secure collection
of the money obligation which the Court cannot allow.
From said order, it can be gleaned that the [RTC] xxx,
had admitted that the search warrants applied for by
complainant were merely used as a leverage for the
collection of the alleged monetary obligation of the
respondent/s.
From said order, it can be surmise (sic) that the
obligations between the parties is civil in nature not
criminal.
Moreover, complainant had time and again harped that
respondent/s is/are not authorized to sell/copy/distribute
Microsoft products at the time of the execution of the
search warrants. Still, this office has no power to pass
upon said issue for one has then to interpret the
provisions of the contract entered into by the parties,
which question, should be raised in a proper civil
proceeding.
Accordingly, absen[t] a resolution from the proper court
of (sic) whether or not the contract is still binding
between the parties at the time of the execution of the
search warrants, this office cannot pass upon the issue
of whether respondent/s is or are liable for the offense
charged.
As to the second issue, we find for the respondent/s.
TMTC had provided sufficient evidence such as pro-
forma invoice from R.R. Donnelley; Debt Advice of the
Bank of Commerce; Official Receipts from the Bureau of
Customs; and Import Entry Declaration of the Bureau of
Customs to prove that indeed the Microsoft software in
their possession were bought from Singapore.
Thus, respondent/s in this case has/have no intent to
defraud the public, as provided under Article 189 of the
Revised Penal Code, for they bought said Microsoft MS-
DOS 6.0 from an alleged licensee of Microsoft in
Singapore, with all the necessary papers. In their
opinion, what they have are genuine Microsoft software,
therefore no unfair competition exist.
Moreover, violation of P.D. 49 does not exist, for
respondent/s was/were not the manufacturers of the
Microsoft software seized and were selling their
products as genuine Microsoft software, considering that
they bought it from a Microsoft licensee.
Complainant, on the other hand, considering that it has
the burden of proving that the respondent/s is/are liable
for the offense charged, has not presented any evidence
that the items seized namely the 59 boxes of MS-DOS
6.0 software are counterfeit.
The certification issued on December 12, 1995 by
Christopher Austin, Corporate Attorney of the
complainant, does not disclose this fact. For the term
used by Mr. Austin was that the items seized were
unauthorized.
The question now, is whether the products were
unauthorized because TMTC has no license to sell
Microsoft products, or is it unauthorized because R.R.
Page 269 of 307
Donnelley has no authority to sell said products here in
the Philippines.
Still, to determine the culpability of the respondents,
complainant should present evidence that what is in the
possession of the respondent/s is/are counterfeit
Microsoft products.
This it failed to do.[23]
Microsoft sought reconsideration and prayed for an
ocular inspection of the articles seized from
respondents. However, in the Resolution of 3 December
1999, Assistant Chief State Prosecutor Buenafe, upon
State Prosecutor Ongs recommendation, denied
Microsofts motion.[24]
Microsoft appealed to the Office of the DOJ Secretary. In
the Resolution of 3 August 2000, DOJ Undersecretary
Regis V. Puno dismissed Microsofts appeal. [25] Microsoft
sought reconsideration but its motion was denied in the
Resolution of 22 December 2000.[26]
Hence, this petition. Microsoft contends that:
I. THE DOJ ERRED IN RULING THAT THE LIABILITY OF
RESPONDENTS WAS ONLY CIVIL IN NATURE BY VIRTUE
OF THE LICENSE AGREEMENT.
II. THE DOJ MISAPPRECIATED THE FACT THAT
RESPONDENTS WERE ENGAGED IN THE ILLEGAL
IMPORTATION, SALE AND DISTRIBUTION OF
COUNTERFEIT SOFTWARE AS EVIDENCED BY THE ITEMS
PURCHASED DURING THE TEST-BUY AND THE ITEMS
SEIZED FROM RESPONDENTS PREMISES.
III. THE DOJ MISAPPRECIATED THE LAW ON COPYRIGHT
INFRINGEMENT AND UNFAIR COMPETITION.
IV. ONLY TWO OUT OF THE NINE RESPONDENTS
BOTHERED TO FILE COUNTER-AFFIDAVITS; HENCE, THE
CHARGES AGAINST SEVEN [RESPONDENTS] REMAIN
UNCONTROVERTED.[27]
In its Comment, filed by the Solicitor General, the DOJ
maintains that it did not commit grave abuse of
discretion in dismissing Microsofts complaint.[28]
For their part, respondents allege in their Comment that
Microsoft is guilty of forum-shopping because its petition
in CA-G.R. CV No. 54600 was filed ahead of, and has a
common interest with, this petition. On the merits,
respondents reiterate their claims in their motion to
quash Search Warrant Nos. 95-684 and 95-685 that the
articles seized from them were either owned by others,
purchased from legitimate sources, or not produced by
Microsoft. Respondents also insist that the Agreement
entitled Beltron to copy and replicate or reproduce
Microsoft products. On the confiscated 2,831 CD-ROMs,
respondents allege that a certain corporation [29] left the
CD-ROMs with them for safekeeping. Lastly,
respondents claim that there is no proof that the CPU
Sacriz and Samiano bought from them contained pre-
installed Microsoft software because the receipt for the
CPU does not indicate [s]oftware hard disk. [30]
Page 270 of 307
In its Reply, Microsoft counters that it is not liable for
forum-shopping because its petition in CA-G.R. CV No.
54600 involved the Orders of the RTC partially quashing
Search Warrant Nos. 95-684 and 95-685 while this
petition concerns the DOJ Resolutions dismissing its
complaint against respondents for copyright
infringement and unfair competition. On the merits,
Microsoft maintains that respondents should be indicted
for copyright infringement and unfair competition.
Issues:
(1) Whether Microsoft engaged in forum-shopping; and
(2) Whether the DOJ acted with grave abuse of
discretion in not finding probable cause to charge
respondents with copyright infringement and unfair
competition.
Held:
Microsoft did not Engage in Forum-Shopping
Forum-shopping takes place when a litigant files
multiple suits involving the same parties, either
simultaneously or successively, to secure a favorable
judgment.[32] Thus, it exists where the elements of litis
pendentia are present, namely: (a) identity of parties, or
at least such parties who represent the same interests
in both actions; (b) identity of rights asserted and relief
prayed for, the relief being founded on the same facts;
and (c) the identity with respect to the two preceding
particulars in the two cases is such that any judgment
that may be rendered in the pending case, regardless of
which party is successful, would amount to res
judicata in the other case.[33] Forum-shopping is an act
of malpractice because it abuses court processes.[34] To
check this pernicious practice, Section 5, Rule 7 of the
1997 Rules of Civil Procedure requires the principal
party in an initiatory pleading to submit a certification
against forum-shopping.[35] Failure to comply with this
requirement is a cause for the dismissal of the case and,
in case of willful forum-shopping, for the imposition of
administrative sanctions.
Here, Microsoft correctly contends that it is not liable for
forum-shopping. What Microsoft appealed in CA-G.R. CV
No. 54600 were the RTC Orders partially quashing
Search Warrant Nos. 95-684 and 95-685. In the present
case, Microsoft is appealing from the DOJ Resolutions
dismissing its complaint against respondents for
copyright infringement and unfair competition. Thus,
although the parties in CA-G.R. CV No. 54600 and this
petition are identical, the rights asserted and the reliefs
prayed for are not such that the judgment in CA-G.R. CV
No. 54600 does not amount to res judicata in the
present case. This renders forum-shopping impossible
here.
The DOJ Acted with Grave Abuse of Discretionin
not Finding Probable Cause to Charge
Respondents withCopyright Infringement and
Unfair Competition
Generally, this Court is loath to interfere in the
prosecutors discretion in determining probable
[36]
cause unless such discretion is shown to have been
[37]
abused. This case falls under the exception.
Page 271 of 307

Unlike the higher quantum of proof beyond reasonable
doubt required to secure a conviction, it is the lower
standard of probable cause which is applied during the
preliminary investigation to determine whether the
accused should be held for trial. This standard is met if
the facts and circumstances incite a reasonable belief
that the act or omission complained of constitutes the
offense charged. As we explained in Pilapil v.
Sandiganbayan:[38]
The term [probable cause] does not mean actual and
positive cause nor does it import absolute certainty. It is
merely based on opinion and reasonable belief. Thus, a
finding of probable cause does not require an inquiry
into whether there is sufficient evidence to procure a
conviction. It is enough that it is believed that the act or
omission complained of constitutes the offense charged.
Precisely, there is a trial for the reception of evidence of
the prosecution in support of the charge.
PD 49 and Article 189(1)
Section 5[39] of PD 49 (Section 5) enumerates the rights
vested exclusively on the copyright owner. Contrary to
the DOJs ruling, the gravamen of copyright infringement
is not merely the unauthorized manufacturing of
intellectual works but rather the unauthorized
performance of any of the acts covered by Section 5.
Hence, any person who performs any of the acts under
Section 5 without obtaining the copyright owners prior
consent renders himself civilly[40] and criminally[41] liable
for copyright infringement. We held in Columbia
Pictures, Inc. v. Court of Appeals:[42]
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.
(Emphasis supplied)
Significantly, under Section 5(A), a copyright owner is
vested with the exclusive right to copy, distribute,
multiply, [and] sell his intellectual works.
On the other hand, the elements of unfair competition
under Article 189(1)[43] of the Revised Penal Code are:
(a) That the offender gives his goods the general
appearance of the goods of another manufacturer or
dealer;
(b) That the general appearance is shown in the (1)
goods themselves, or in the (2) wrapping of their
packages, or in the (3) device or words therein, or in (4)
any other feature of their appearance[;]
(c) That the offender offers to sell or sells those goods
or gives other persons a chance or opportunity to do the
same with a like purpose[; and]
(d) That there is actual intent to deceive the public or
defraud a competitor.[44]
The element of intent to deceive may be inferred from
the similarity of the goods or their appearance.[45]
Page 272 of 307

On the Sufficiency of Evidence toSupport a overdue royalties to Microsoft. Significantly, in its
Finding of Probable CauseAgainst Respondents
In its pleadings filed with the DOJ, Microsoft invoked
three clusters of evidence to support its complaint
against respondents, namely: (1) the 12 CD-ROMs
containing Microsoft software Sacriz and Samiano
bought from respondents; (2) the CPU with pre-installed
Microsoft software Sacriz and Samiano also purchased
from respondents; and (3) the 2,831 CD-ROMs
containing Microsoft software seized from respondents.
[46]
The DOJ, on the one hand, refused to pass upon the
relevance of these pieces of evidence because: (1) the
obligations between the parties is civil and not criminal
considering that Microsoft merely sought the issuance of
Search Warrant Nos. 95-684 and 95-685 to pressure
Beltron to pay its obligation under the Agreement, and
(2) the validity of Microsofts termination of the
Agreement must first be resolved by the proper court.
On the other hand, the DOJ ruled that Microsoft failed to
present evidence proving that what were obtained from
respondents were counterfeit Microsoft products.
This is grave abuse of discretion.[47]
First. Being the copyright and trademark owner of
Microsoft software, Microsoft acted well within its rights
in filing the complaint under I.S. No. 96-193 based on
the incriminating evidence obtained from respondents.
Hence, it was highly irregular for the DOJ to hold, based
on the RTC Order of 19 July 1996, that Microsoft sought
the issuance of Search Warrant Nos. 95-684 and 95-685,
and by inference, the filing of the complaint under I.S.
No. 96-193, merely to pressure Beltron to pay its
Decision in CA-G.R. CV No. 54600 dated 29 November
2001, the Court of Appeals set aside the RTC Order of 19
July 1996. Respondents no longer contested that ruling
which became final on 27 December 2001.
Second. There is no basis for the DOJ to rule that
Microsoft must await a prior resolution from the proper
court of (sic) whether or not the [Agreement] is still
binding between the parties. Beltron has not filed any
suit to question Microsofts termination of the
Agreement. Microsoft can neither be expected nor
compelled to wait until Beltron decides to sue before
Microsoft can seek remedies for violation of its
intellectual property rights.
Furthermore, some of the counterfeit CD-ROMs bought
from respondents were installer CD-ROMs containing
Microsoft software only or both Microsoft and non-
Microsoft software. These articles are counterfeit per
se because Microsoft does not (and could not have
authorized anyone to) produce such CD-ROMs. The
copying of the genuine Microsoft software to produce
these fake CD-ROMs and their distribution are illegal
even if the copier or distributor is a Microsoft licensee.
As far as these installer CD-ROMs are concerned, the
Agreement (and the alleged question on the validity of
its termination) is immaterial to the determination of
respondents liability for copyright infringement and
unfair competition.
Lastly, Section 10(b)[48] of the Agreement provides that
Microsofts rights and remedies under the contract are
Page 273 of 307
not xxx exclusive and are in addition to any other rights
and remedies provided by law or [the] Agreement. Thus,
even if the Agreement still subsists, Microsoft is not
precluded from seeking remedies under PD 49 and
Article 189(1) of the Revised Penal Code to vindicate its
rights.
Third. The Court finds that the 12 CD-ROMs (installer
and non-installer) and the CPU with pre-installed
Microsoft software Sacriz and Samiano bought from
respondents and the 2,831 Microsoft CD-ROMs seized
from respondents suffice to support a finding of
probable cause to indict respondents for copyright
infringement under Section 5(A) in relation to Section 29
of PD 49 for unauthorized copying and selling of
protected intellectual works. The installer CD-ROMs with
Microsoft software, to repeat, are counterfeit per se. On
the other hand, the illegality of the non-installer CD-
ROMs purchased from respondents and of the Microsoft
software pre-installed in the CPU is shown by the
absence of the standard features accompanying
authentic Microsoft products, namely, the Microsoft end-
user license agreements, users manuals, registration
cards or certificates of authenticity.
On the 2,831 Microsoft CD-ROMs [49] seized from
respondents, respondent Beltron, the only respondent
who was party to the Agreement, could not have
reproduced them under the Agreement as the Solicitor
General[50] and respondents contend. Beltrons
[51]
rights under the Agreement were limited to:
(1) the reproduc[tion] and install[ation of] no more
than one copy of [Microsoft] software on each
Customer System hard disk or Read Only Memory
(ROM); and
(2) the distribut[ion] xxx and licens[ing of] copies of the
[Microsoft] Product [as reproduced above] and/or
acquired from Authorized Replicator or
Authorized Distributor) in object code form to end
users.
The Agreement defines an authorized replicator as a
third party approved by [Microsoft] which may
reproduce and manufacture [Microsoft] Product[s] for
[Beltron] xxx.[52] An authorized distributor, on the other
hand, is a third party approved by [Microsoft] from
which [Beltron] may purchase MED[53] Product.[54] Being
a mere reproducer/installer of one Microsoft software
copy on each customers hard disk or ROM, Beltron could
only have acquired the hundreds of Microsoft CD-ROMs
found in respondents possession from Microsoft
distributors or replicators.
However, respondents makes no such claim. What
respondents contend is that these CD-ROMs were left to
them for safekeeping. But neither is this claim tenable
for lack of substantiation. Indeed, respondents Keh and
Chua, the only respondents who filed counter-affidavits,
did not make this claim in the DOJ. These circumstances
give rise to the reasonable inference that respondents
mass-produced the CD-ROMs in question without
securing Microsofts prior authorization.
The counterfeit non-installer CD-ROMs Sacriz and
Samiano bought from respondents also suffice to
support a finding of probable cause to indict
Page 274 of 307
respondents for unfair competition under Article 189(1)
of the Revised Penal Code for passing off Microsoft
products. From the pictures of the CD-ROMs packaging,
[55]
one cannot distinguish them from the packaging of
CD-ROMs containing genuine Microsoft software. Such
replication, coupled with the similarity of content of
these fake CD-ROMs and the CD-ROMs with genuine
Microsoft software, implies intent to deceive.
Respondents contention that the 12 CD-ROMs Sacriz
and Samiano purchased cannot be traced to them
because the receipt for these articles does not indicate
its source is unavailing. The receipt in question should
be taken together with Microsofts claim that Sacriz and
Samiano bought the CD-ROMs from respondents.
[56]
Together, these considerations point to respondents
as the vendor of the counterfeit CD-ROMs. Respondents
do not give any reason why the Court should not give
credence to Microsofts claim. For the same reason, the
fact that the receipt for the CPU does not indicate
[s]oftware hard disk does not mean that the CPU had no
pre-installed Microsoft software. Respondents Keh and
Chua admit in their counter-affidavit that respondents
are the source of the pre-installed MS-DOS software.
WHEREFORE, we GRANT the petition. We SET ASIDE
the Resolutions dated 26 October 1999, 3 December
1999, 3 August 2000, and 22 December 2000 of the
Department of Justice.
12. People vs. Choi, G.R. No.
152950. August 3, 2006
Facts: This petition for review on certiorari [1] seeks the
reversal of the decision[2] of the Court of Appeals (CA)
dated April 10, 2002 in CA-G.R. SP No. 59587, the
dispositive portion of which read:
WHEREFORE, the petition for certiorari and prohibition is
GRANTED. Search Warrant No. 99-17 is
deemed NULL and VOID and SET ASIDE.
Respondent ATTY. BENNY NICDAO is prohibited from
using in evidence the articles seized by virtue of Search
Warrant No. 99-17 in Crim. Case No. I.S. No. 99-8116.
The factual antecedents follow.
On April 27, 1999, Mario P. Nieto, Intelligence Operative
of the Economic Intelligence and Investigation Bureau,
Department of Finance, applied for a search warrant
with the Regional Trial Court (RTC) of Angeles City,
Pampanga, Branch 56,[4] against respondent Christopher
Choi for violation of Section 168, paragraphs 2 and 3 (a)
and (c), in relation to Section 169 of RA 8293,[5] also
known as the Intellectual Property Code.[6]
After examination of the applicant and his witnesses,
namely, Max Cavalera and David Lee Sealey, Judge
Lourdes F. Gatbalite issued Search Warrant No. 99-17
dated April 27, 1999 worded as follows:
TO ANY PEACE OFFICER:
G r e e t i n g s:
Page 275 of 307
It appearing to the satisfaction of the undersigned, after
examining under oath in the form of searching and
probing questions, the applicant, MARIO P. NIETO,
Intelligence Operative, Economic Intelligence
Investigation Bureau, Department of Finance, and his
witnesses Max Cavalera and David Lee Sealey that
there are good and sufficient reasons to believe that
Christopher Choi of No. 25-13 Columbia Street,
Carmenville Subd., Angeles City has in his possession,
control and custody [r]eams and packs of fake Marlboro
Red Cigarettes, as well as cardboard cases of fake
Marlboro Red Cigarettes (each cardboard case contains
two (2) [m]aster [c]ases of Marlboro and each [m]aster
case contains fifty (50) reams) being distributed, kept
and sold thereat in violation of Section 168, par. 2 and 3
(a) and (c) in relation to Section 169 of R.A. 8293;
You are hereby commanded to make an immediate
search at anytime of the day or night of the above-
premises and forthwith seize and take possession of the
aforedescribed items found at the residence/warehouse
of Christopher Choi at No. 25-13 Columbia Street,
Carmenville Subd., Angeles City.
THEREFORE, seize and bring the said articles to the
undersigned to be dealt with in accordance with law.
You are hereby further directed to submit a return within
ten (10) days from today.
Given under my hand this 27 th day of April, 1999 at
Angeles City, Philippines.[7]
The search was conducted on the same date.[8]
On May 12, 1999, respondent filed a motion to quash
search warrant[9] and a supplemental motion to
quash[10] on June 22, 1999. Both were denied by Judge
Gatbalite in an order dated November 29, 1999.
[11]
Reconsideration was likewise denied.[12]
On June 19, 2000, respondent filed a petition for
certiorari and prohibition[13] before the CA. He alleged
that Judge Gatbalite committed grave abuse of
discretion in refusing to quash the search warrant,
arguing that probable cause was not sufficiently
established as the examination conducted was not
probing and exhaustive and the warrant did not
particularly describe the place to be
searched. Respondent also prayed that Atty. Bennie
Nicdao[14] be prohibited from using as evidence the
articles seized by virtue of the search warrant. This was
granted by the CA in a decision dated April 10, 2002.
According to the CA, in determining whether there was
probable cause to believe that the cigarettes purchased
by Nieto were fake and in violation of RA 8293, [15] Judge
Gatbalite failed to ask searching and probing questions
of witness David Lee Sealey.[16] The examination of
Sealey went this way:
Court:
Q There was testimony here given by Mr. Mario Nieto
and Max Cavalera, that fake Marlboro cigarettes bought
by them from Michael Chua, Christopher Choi and
Johnny Chang were turned over to you for examination,
is that correct?
A Yes, your Honor.
Page 276 of 307

Q After the same had been turned over to you, what did
you do with the said merchandise, if you did anything?
A I examined the sample of cigarettes and their
packaging bearing the Marlboro Trade Marks which were
suspected to be produc[ed] and manufactured by La
Suerte or [with] the permission of Philip Morris.
Q What was the result of your examination?
A Based on the packaging of the packs, the color of the
box and the printing on the front side of the packs and
the cigarettes themselves, I concluded that they are
counterfeit or unauthorized product[s].
Q Do you have any knowledge of this person named
Christopher Choi?
A None, your Honor.
Q There is an affidavit here marked as exhibit, executed
by one David Lee Sealey, do you know this David Lee
Sealey?
A Yes, your Honor, I am the one.
Q Whose signature is this appearing on the printed
name David Lee Sealey?
A This is my signature, your Honor.
Q Do you affirm and confirm other contents of this
affidavit?
A Yes, your Honor.
Court:
That’s all.[17]
In addition, the CA ruled that Judge Gatbalite committed
grave abuse of discretion when she merely relied on the
conclusion of Sealey that the cigarettes he received
from Nieto were fake. She should have at least required
Sealey to present the alleged fake Marlboro cigarettes
and the genuine ones for comparison, instead of relying
on his testimony alone. The CA reasoned that this was
an absolute requirement under the Supreme Court
ruling in 20th Century Fox Film Corporation v. Court of
Appeals.[18]
Hence, this petition.
The People of the Philippines aver that the CA erred in
finding that Judge Gatbalite committed grave abuse of
discretion in issuing the search warrant allegedly
because she failed to determine probable cause
pursuant to Sections 4 and 5 of Rule 126 of the Rules of
Court.[19] The People assail the finding of the CA that, in
issuing the search warrant, Judge Gatbalite purportedly
did not comply strictly with the requirement to
determine the existence of probable cause by
personally examining the applicant and his witnesses
through searching questions and answers.The People
also assert that the CA erred in applying the doctrine
in 20th Century Fox Film Corporation[20] since it had
already been superseded byColumbia Pictures, Inc. v.
Court of Appeals.
Held: We rule for the People of the Philippines.
Sections 4 and 5 of Rule 126 state:
Page 277 of 307
Sec. 4. Requisites for issuing search warrant. A search
warrant shall not issue except upon probable cause in
connection with one specific offense to be determined
personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he
may produce, and particularly describing the place to be
searched and the things to be seized which may be
anywhere in the Philippines.
Sec. 5. Examination of complainant; record. The judge
must, before issuing the warrant, personally examine in
the form of searching questions and answers, in writing
and under oath, the complainant and the witnesses he
may produce on facts personally known to them and
attach to the record their sworn statements, together
with the affidavits submitted.
According to the foregoing provisions, a search
warrant can be issued only upon a finding of probable
cause. Probable cause means such facts and
circumstances which would lead a reasonably discreet
and prudent man to believe that an offense has been
committed and that the objects sought in connection
with the offense are in the place sought to be searched.
[22]
The determination of the existence of probable cause
requires the following:
(1)the judge must examine the complainant and his
witnesses personally;
(2)the examination must be under oath and
(3)the examination must be reduced in writing in the
form of searching questions and answers.[23]
The searching questions propounded to the applicant
and the witnesses depend largely on the discretion of
the judge. Although there is no hard-and-fast rule
governing how a judge should conduct his examination,
it is axiomatic that the examination must be probing
and exhaustive, not merely routinary, general,
peripheral, perfunctory or pro-forma.[24] The judge must
not simply rehash the contents of the affidavit but must
make his own inquiry on the intent and justification of
the application.[25] The questions should not merely be
repetitious of the averments stated in the affidavits or
depositions of the applicant and the witnesses.[26] If the
judge fails to determine probable cause by personally
examining the applicant and his witnesses in the form of
searching questions before issuing a search warrant,
grave abuse of discretion is committed.[27]
The determination of probable cause does not call for
the application of rules and standards of proof that a
judgment of conviction requires after trial on the merits.
As the term implies, probable cause is concerned with
probability, not absolute or even moral certainty. The
standards of judgment are those of a reasonably
prudent man, not the exacting calibrations of a judge
after a full-blown trial.[28] No law or rule states that
probable cause requires a specific kind of evidence. No
formula or fixed rule for its determination exists.
[29]
Probable cause is determined in the light of
conditions obtaining in a given situation. [30] The entirety
of the questions propounded by the court and the
answers thereto must be considered by the judge.[31]
Page 278 of 307
In this case, aside from the testimony of Sealey,
petitioner judge also heard the testimony of applicant
Nieto:
Q: In connection with Search Warrant 99-17, are you the
same Mario Nieto who is the applicant in this application
for search warrant filed today April 27, 1999?
A: Yes, your Honor.
Q: Do you know this Christopher Choi referred to herein?
A: Yes, your Honor.
Q: Why do you know him?
A: He was introduced to us by Michael Chua, your Honor.
Q: As what?
A: As the supplier for the goods.
Q: Subject of the application?
A: Yes, your Honor, in violation of Section 169 of R.A.
8293.
Q: How did you know him?
A: When I was conducting a test-buy operation against
Mr. Michael Chua, Mr. Michael Chua told me that the
bulk of supply if we need more supply we can get from
the source, a certain Christopher Choi, who lives in the
same village and who is actually the supplier for the
entire region.
Q: Where did you see him. This Christopher Choi?
A: I went to his house, your Honor.
Q: Where?
A: At No. 25-13 Columbia St., Carmenville Subd.,
Angeles City, Pampanga.
Q: Upon arriving at the place what did you do?
A: Upon arriving at the place, your Honor, I introduced
myself as the one who was referred by a certain Michael
Chua who is interested in buying the Marlboro cigarettes
from him and he accommodated me and showed me
the sample that he has and I was able to procure the
samples from him, the samples that like what we did to
the others were inspected by certain Mr. David Lee
Sealey, the representative and authority from the Philip
Morris.
Q: Did you actually buy those samples?
A: Yes, your Honor, I got the samples form Mr.
Christopher Choi and I submitted them to Mr. David Lee
Sealey.
Q: How many Marlboro cigarettes did you buy?
A: We bought only one ream, P17.00 per pack.
Q: Do you know from what particular place the house of
Christopher Choi did he got (sic) those samples?
A: The volume stocks were found inside the house, they
are almost everywhere in the house of Christopher Choi.
Q: There is a sketch here attached to your application,
can you point it out here?
A: Yes, your Honor, at the warehouse, in the storage
room as shown in the lay out of the house, it is adjacent
to the residential house as shown in the sketch.
Q: You went to the warehouse?
Page 279 of 307
A: We were shown [the] entire area by the supplier,
Christopher Choi. As a matter of fact he was trying to
show us how much volume he has and his capacity to
supply.[32]
Max Cavalera, a witness who accompanied Nieto during
the test-buy operation,[33] also testified:
Q How about this Christopher Choi?
A As Ive said earlier, he was one of those identified by
the informant storing and selling counterfeit Marlboro
cigarettes, so on April 22, 1999 we conducted a
surveillance and we were able to confirm that the said
cigarettes are being stored at the subject place.
Q At what place?
A At 25-13 Columbia St., Carmenville Subd., Angeles
City. On April 23, 1999 at about 8:30 p.m., Mario Nieto
and I again went to the subject place to conduct a test-
buy operation. [A]fter Mr. Choi had been convinced of
our intention to buy cigarettes from him, he brought us
to his warehouse where he showed to us several
cardboard cases of Marlboro cigarettes.[34]
Given the foregoing testimonies and applying the
established standards in determining probable cause,
we cannot say that Judge Gatbalite committed grave
abuse of discretion in issuing the search warrant. Her
questions were sufficiently probing, not at all superficial
and perfunctory. The testimonies were consistent
witheach other and the narration of facts was credible.
The testimonies and other evidence on record
constituted adequate bases to establish probable cause
that the alleged offense had been committed.
Since probable cause is dependent largely on the
opinion and findings of the judge who conducted the
examination and who had the opportunity to question
the applicant and his witnesses,[35] the findings of the
judge deserve great weight. The reviewing court can
overturn such findings only upon proof that the judge
disregarded the facts before him or ignored the clear
dictates of reason.[36] We thus find no reason to disturb
Judge Gatbalites findings.
Furthermore, as correctly pointed out by
th
petitioners, 20 Century Fox Film Corporation, insofar as
it required the presentation of the master tapes for
comparison with the pirated copies for a search warrant
to issue, had already been superseded by Columbia
Pictures, Inc. v. Court of Appeals:
More to the point, it is felt that the reasonableness of
the added requirement in 20th Century Fox calling for
the production of the master tapes of the copyrighted
films for determination of probable cause in copyright
infringement cases needs revisiting and clarification.
In fine, the supposed pronunciamento in said case
regarding the necessity for the presentation of the
master tapes of the copyrighted films for the validity of
search warrants should at most be understood to merely
serve as a guidepost in determining the existence of
probable cause in copyright infringement cases where
there is doubt as to the true nexus between the master
tape and the pirated copies. An objective and careful
reading of the decision in said case could lead to no
other conclusion than thatsaid directive was hardly
Page 280 of 307
intended to be a sweeping and inflexible purpose but to stultify and constrict the judicious
requirement in all or similar copyright exercise of a courts prerogatives and to denigrate the
infringement cases. Judicial dicta should always be judicial duty of determining the existence of probable
construed within the factual matrix of their parturition, cause to a mere ministerial or mechanical
otherwise a careless interpretation thereof could function.There is, to repeat, no law or rule which
unfairly fault the writer with the vice of overstatement requires that the existence of probable cause is or
and the reader with the fallacy of undue generalization. should be determined solely by a specific kind of
evidence. Surely, this could not have been
It is evidently incorrect to suggest, as the ruling contemplated by the framers of the Constitution, and
in 20th Century Fox may appear to do, that in we do not believe that the Court intended the statement
copyright infringement cases, the presentation of in 20th Century Fox regarding master tapes as the
master tapes of the copyrighted films is always dictum for all seasons and reasons in infringement
necessary to meet the requirement of probable cases.
cause and that, in the absence thereof, there can
be no finding of probable cause for the issuance It is obvious that 20th Century Fox Film
of a search warrant. It is true that such master tapes Corporation should not be applied to the present case
are object evidence, with the merit that in this class of since this involves the offense of unfair competition and
evidence the ascertainment of the controverted fact is not copyright infringement. More importantly, as
made through demonstrations involving the direct use pronounced by the Court in Columbia Pictures, Inc., the
of the senses of the presiding magistrate. Such auxiliary judges exercise of discretion should not be unduly
procedure, however, does not rule out the use of restricted by adding a requirement that is not
testimonial or documentary evidence, depositions, sanctioned by law.
admissions or other classes of evidence tending to
prove the factum probandum, especially where the WHEREFORE, the petition is hereby GRANTED. The
production in court of object evidence would result in assailed decision of the Court of Appeals dated April 10,
delay, inconvenience or expenses out of proportion to 2002 in CA-G.R. SP No. 59587 is REVERSED and SET
its evidentiary value. ASIDE. Judgment is hereby rendered declaring Search
Warrant No. 99-17 as VALID.
Accordingly, to restrict the exercise of discretion by a
judge by adding a particular requirement (the 13. Sanrio vs. Lim, G.R. No.
presentation of master tapes, as intimated 168662, February 19, 2008
by 20th Century Fox) not provided nor implied in the law
for a finding of probable cause is beyond the realm of Facts: This petition for review on certiorari [1] seeks to
judicial competence or statesmanship. It serves no set aside the decision of the Court of Appeals (CA) in
Page 281 of 307
CA-G.R. CV No. 74660[2] and its resolution[3] denying
reconsideration.
Petitioner Sanrio Company Limited, a Japanese
corporation, owns the copyright of various animated
characters such as Hello Kitty, Little Twin Stars, My
Melody, Tuxedo Sam and Zashikibuta among others.
[4]
While it is not engaged in business in the Philippines,
its products are sold locally by its exclusive distributor,
Gift Gate Incorporated (GGI).[5]
As such exclusive distributor, GGI entered into licensing
agreements with JC Lucas Creative Products, Inc., Paper
Line Graphics, Inc. and Melawares Manufacturing
Corporation.[6] Theselocal entities were allowed to
manufacture certain products (bearing petitioner's
copyrighted animated characters) for the local market.
Sometime in 2001, due to the deluge of counterfeit
Sanrio products, GGI asked IP Manila Associates (IPMA)
to conduct a market research. The research's objective
was to identify those factories, department stores and
retail outlets manufacturing and/or selling fake Sanrio
items.[7] After conducting several test-buys in various
commercial areas, IPMA confirmed that respondent's
Orignamura Trading in Tutuban Center, Manila was
selling imitations of petitioner's products.[8]
Consequently, on May 29, 2000, IPMA agents Lea A.
Carmona and Arnel P. Dausan executed a joint affidavit
attesting to the aforementioned facts.[9] IPMA forwarded
the said affidavit to the National Bureau of Investigation
(NBI) which thereafter filed an application for the
issuance of a search warrant in the office of the
Executive Judge of the Regional Trial Court of Manila.[10]
After conducting the requisite searching inquiry, the
executive judge issued a search warrant on May 30,
2000.[11] On the same day, agents of the NBI searched
the premises of Orignamura Trading. As a result thereof,
they were able to seize various Sanrio products.[12]
On April 4, 2002, petitioner, through its attorney-in-fact
Teodoro Y. Kalaw IV of the Quisumbing Torres law firm,
filed a complaint-affidavit[13] with the Task-Force on Anti-
Intellectual Property Piracy (TAPP) of the Department of
Justice (DOJ) against respondent for violation of Section
217 (in relation to Sections 177[14] and 178[15]) of the
Intellectual Property Code (IPC) which states:
Section 217. Criminal Penalties. 217.1. Any person
infringing any right secured by provisions of Part IV of
this Act or aiding or abetting such infringement shall be
guilty of a crime punishable by:
(a) Imprisonment of one (1) year to three (3) years plus
a fine ranging from Fifty thousand pesos (P50,000) to
One hundred fifty thousand pesos (P150,000) for the
first offense.
(b) Imprisonment of three (3) years and one (1) day to
six (6) years plus a fine ranging from One hundred fifty
thousand pesos (P150,000) to Five hundred thousand
pesos (P500,000) for the second offense.
(c) Imprisonment of six (6) years and one (1) day to nine
(9) years plus a fine ranging from Five hundred
thousand pesos (P500,000) to One million five hundred
Page 282 of 307
thousand pesos (P1,500,000) for the third and
subsequent offenses.
(d) In all cases, subsidiary imprisonment in cases of
insolvency.
217.2. In determining the number of years of
imprisonment and the amount of fine, the court shall
consider the value of the infringing materials that the
defendant has produced or manufactured and the
damage that the copyright owner has suffered by
reason of infringement.
217.3. Any person who at the time when copyright
subsists in a work has in his possession an article which
he knows, or ought to know, to be an infringing copy of
the work for the purpose of:
(a) Selling, letting for hire, or by way of trade offering or
exposing for sale, or hire, the article;
(b) Distributing the article for purpose of trade or any
other purpose to an extent that will prejudice the rights
of the copyright of the owner in the work; or
(c) Trade exhibit of the article in public, shall be guilty of
an offense and shall be liable on conviction to
imprisonment and fine as above mentioned. (emphasis
supplied)
Respondent asserted in his counter-affidavit[16] that he
committed no violation of the provisions of the IPC
because he was only a retailer. [17] Respondent neither
reproduced nor manufactured any of petitioner's
copyrighted item; thus, he did not transgress the
economic rights of petitioner.[18] Moreover, he obtained
his merchandise from authorized manufacturers of
petitioner's products.[19]
On September 25, 2002, the TAPP found that:
Evidence on record would show that respondent bought
his merchandise from legitimate sources, as shown by
official receipts issued by JC Lucas Creative Products,
Inc., Paper Line Graphics, Inc. and Melawares
Manufacturing Corporation. In fact, in her letter dated
May 23, 2002, Ms. Ma. Angela S. Garcia certified that JC
Lucas Creative Products, Inc., Paper Line Graphics, Inc.
and Melawares Manufacturing Corporation are
authorized to produce certain Sanrio products. While it
appears that some of the items seized during the search
are not among those products which [GGI] authorized
these establishments to produce, the fact remains that
respondent bought these from the abovecited legitimate
sources. At this juncture, it bears stressing
that respondent relied on the representations of these
manufacturers and distributors that the items they sold
were genuine. As such, it is not incumbent upon
respondent to verify from these sources what items
[GGI] only authorized them to produce. Thus, as far as
respondent is concerned, the items in his possession are
not infringing copies of the
[20]
original [petitioner's] products. (emphasis supplied)
Thus, in a resolution dated September 25, 2002, it
dismissed the complaint due to insufficiency of
evidence.[21]
Page 283 of 307
Petitioner moved for reconsideration but it was denied.
[22]
Hence, it filed a petition for review in the Office of
the Chief State Prosecutor of the DOJ. [23] In a resolution
dated August 29, 2003,[24] the Office of the Chief State
Prosecutor affirmed the TAPP resolution. The petition
was dismissed for lack of reversible error.
Aggrieved, petitioner filed a petition for certiorari in the
CA. On May 3, 2005, the appellate court dismissed the
petition on the ground of prescription. It based its action
on Act 3326 which states:
Section 1. Violations penalized by special acts shall,
unless otherwise provided in such acts, prescribe in
accordance with the following rules: (a) after a year for
offenses punished only by a fine or by imprisonment for
not more than one month, or both; (b) after four years
for those punished by imprisonment for more than one
month, but less than two years; (c) after eight years for
those punished by imprisonment for two years or more,
but less than six years; and (d) after twelve years for
any other offense punished by imprisonment for six
years or more, except the crime of treason, which shall
prescribe after twenty years; Provided, however, That all
offenses against any law or part of law administered by
the Bureau of Internal Revenue shall prescribe after five
years. Violations penalized by municipal ordinances
shall prescribe after two months.
Section 2. Prescription shall begin to run from the day of
the commission of the violation of the law, and if the
same may not be known at the time, from the discovery
thereof and the institution of judicial proceedings for its
investigation and punishment.
The prescription shall be interrupted when proceedings
are instituted against the guilty person, and shall begin
to run again if the proceedings are dismissed for
reasons not constituting jeopardy. (emphasis supplied)
According to the CA, because no complaint was filed in
court within two years after the commission of the
alleged violation, the offense had already prescribed.[25]
On the merits of the case, the CA concluded that the
DOJ did not commit grave abuse of discretion in
dismissing the petition for review. [26] To be criminally
liable for violation of Section 217.3 of the IPC, the
following requisites must be present:
1.possession of the infringing copy and
2.knowledge or suspicion that the copy is an
infringement of the genuine article.
The CA agreed with the DOJ that petitioner failed to
prove that respondent knew that the merchandise he
sold was counterfeit. Respondent, on the other hand,
was able to show that he obtained these goods from
legitimate sources.[27]
Petitioner moved for reconsideration but it was denied.
Hence, this petition.
Petitioner now essentially avers that the CA erred in
concluding that the alleged violations of the IPC had
prescribed. Recent jurisprudence holds that the
pendency of a preliminary investigation suspends the
Page 284 of 307
running of the prescriptive period.[28] Moreover, the CA
erred in finding that the DOJ did not commit grave
abuse of discretion in dismissing the
complaint. Respondent is liable for copyright
infringement (even if he obtained his merchandise from
legitimate sources) because he sold counterfeit goods.
[29]
Although we do not agree wholly with the CA, we deny
the petition.
Held:
FILING OF THE COMPLAINT IN THE DOJ TOLLED
THE PRESCRIPTIVE PERIOD
Section 2 of Act 3326 provides that the prescriptive
period for violation of special laws starts on the day
such offense was committed and is interrupted by the
institution of proceedings against respondent (i.e., the
accused).
Petitioner in this instance filed its complaint-affidavit on
April 4, 2002 or one year, ten months and four days
after the NBI searched respondent's premises and
seized Sanrio merchandise therefrom. Although no
information was immediately filed in court, respondent's
alleged violation had not yet prescribed.[30]
In the recent case of Brillantes v. Court of Appeals,[31] we
affirmed that the filing of the complaint for purposes of
preliminary investigation interrupts the period of
prescription of criminal responsibility.[32] Thus, the
prescriptive period for the prosecution of the alleged
violation of the IPC was tolled by petitioner's timely
filing of the complaint-affidavit before the TAPP.
IN THE ABSENCE OF GRAVE ABUSE OF
DISCRETION, THE FACTUAL FINDINGS OF THE DOJ
IN PRELIMINARY INVESTIGATIONS WILL NOT BE
DISTURBED
In a preliminary investigation, a public prosecutor
determines whether a crime has been committed and
whether there is probable cause that the accused is
guilty thereof.[33]Probable cause is defined as such facts
and circumstances that will engender a well-founded
belief that a crime has been committed and that the
respondent is probably guilty thereof and should be held
for trial.[34] Because a public prosecutor is the one
conducting a preliminary investigation, he determines
the existence of probable cause.[35]Consequently, the
decision to file a criminal information in court or to
dismiss a complaint depends on his sound discretion.[36]
As a general rule, a public prosecutor is afforded a wide
latitude of discretion in the conduct of a preliminary
investigation. For this reason, courts generally do not
interfere with the results of such proceedings. A
prosecutor alone determines the sufficiency of evidence
that will establish probable cause justifying the filing of
a criminal information against the respondent. [37] By way
of exception, however, judicial review is allowed where
respondent has clearly established that the prosecutor
committed grave abuse of discretion. [38] Otherwise
stated, such review is appropriate only when the
prosecutor has exercised his discretion in an arbitrary,
capricious, whimsical or despotic manner by reason of
Page 285 of 307
passion or personal hostility, patent and gross enough
to amount to an evasion of a positive duty or virtual
refusal to perform a duty enjoined by law.[39]

The prosecutors in this case consistently found that no

probable cause existed against respondent for violation
of the IPC. They were in the best position to determine
whether or not there was probable cause. We find that
they arrived at their findings after carefully evaluating
the respective evidence of petitioner and respondent.
Their conclusion was not tainted with grave abuse of
discretion.

WHEREFORE, the petition is hereby DENIED.

-------------------

09 September 2016

Articles 712, 721, 1624, 1625, Civil Code

Article 712. Ownership is acquired by occupation and

by intellectual creation.

Ownership and other real rights over property are

acquired and transmitted by law, by donation, by
testate and intestate succession, and in consequence of
certain contracts, by tradition.
They may also be acquired by means of prescription.
(609a)

Article 721. By intellectual creation, the following

persons acquire ownership:
Page 286 of 307

(1) The author with regard to his literary, dramatic,
historical, legal, philosophical, scientific or other work;
(2) The composer; as to his musical composition;
(3) The painter, sculptor, or other artist, with respect to
the product of his art;
(4) The scientist or technologist or any other person
with regard to his discovery or invention. (n)
Article 1624. An assignment of creditors and other
incorporeal rights shall be perfected in accordance with
the provisions of article 1475. (n)
Article 1625. An assignment of a credit, right or action
shall produce no effect as against third persons, unless
it appears in a public instrument, or the instrument is
recorded in the Registry of Property in case the
assignment involves real property. (1526)
IP Code:
Remedies
Sec. 216
Section 216.Remedies for Infringement. - 216.1. Any
person infringing a right protected under this law shall
be liable:
(a) To an injunction restraining such infringement. The
court may also order the defendant to desist from an
infringement, among others, to prevent the entry into
the channels of commerce of imported goods that
involve an infringement, immediately after customs
clearance of such goods.
(b) Pay to the copyright proprietor or his assigns or heirs
such actual damages, including legal costs and other
expenses, as he may have incurred due to the
infringement as well as the profits the infringer may
have made due to such infringement, and in proving
profits the plaintiff shall be required to prove sales only
and the defendant shall be required to prove every
element of cost which he claims, or, in lieu of actual
damages and profits, such damages which to the court
shall appear to be just and shall not be regarded as
penalty.
(c) Deliver under oath, for impounding during the
pendency of the action, upon such terms and conditions
as the court may prescribe, sales invoices and other
documents evidencing sales, all articles and their
packaging alleged to infringe a copyright and
implements for making them.
(d) Deliver under oath for destruction without any
compensation all infringing copies or devices, as well as
all plates, molds, or other means for making such
infringing copies as the court may order.
(e) Such other terms and conditions, including the
payment of moral and exemplary damages, which the
court may deem proper, wise and equitable and the
destruction of infringing copies of the work even in the
event of acquittal in a criminal case.
Page 287 of 307
216.2. In an infringement action, the court shall also
have the power to order the seizure and impounding of
any article which may serve as evidence in the court
proceedings. (Sec. 28, P.D. No. 49a)
Penalties
Sec. 217
Section 217.Criminal Penalties. - 217.1. Any person
infringing any right secured by provisions of Part IV of
this Act or aiding or abetting such infringement shall be
guilty of a crime punishable by:
(a) Imprisonment of one (1) year to three (3) years plus
a fine ranging from Fifty thousand pesos (P50,000) to
One hundred fifty thousand pesos (P150,000) for the
first offense.
(b) Imprisonment of three (3) years and one (1) day to
six (6) years plus a fine ranging from One hundred fifty
thousand pesos (P150,000) to Five hundred thousand
pesos (P500,000) for the second offense.
(c) Imprisonment of six (6) years and one (1) day to nine
(9) years plus a fine ranging from five hundred thousand
pesos (P500,000) to One million five hundred thousand
pesos (P1,500,000) for the third and subsequent
offenses.
(d) In all cases, subsidiary imprisonment in cases of
insolvency.
217.2. In determining the number of years of
imprisonment and the amount of fine, the court shall
consider the value of the infringing materials that the
defendant has produced or manufactured and the
damage that the copyright owner has suffered by
reason of the infringement.
217.3. Any person who at the time when copyright
subsists in a work has in his possession an article which
he knows, or ought to know, to be an infringing copy of
the work for the purpose of:
(a) Selling, letting for hire, or by way of trade offering or
exposing for sale, or hire, the article;
(b) Distributing the article for purpose of trade, or for
any other purpose to an extent that will prejudice the
rights of the copyright owner in the work; or
(c) Trade exhibit of the article in public, shall be guilty of
an offense and shall be liable on conviction to
imprisonment and fine as above mentioned. (Sec. 29,
P.D. No. 49a)
Evidence
Sec. 218
Section 218.Affidavit Evidence. - 218.1. In an action
under this Chapter, an affidavit made before a notary
public by or on behalf of the owner of the copyright in
any work or other subject matter and stating that:
(a) At the time specified therein, copyright subsisted in
the work or other subject matter;
(b) He or the person named therein is the owner of the
copyright; and
Page 288 of 307
(c) The copy of the work or other subject matter
annexed thereto is a true copy thereof, shall be
admitted in evidence in any proceedings for an offense
under this Chapter and shall be prima facie proof of the
matters therein stated until the contrary is proved, and
the court before which such affidavit is produced shall
assume that the affidavit was made by or on behalf of
the owner of the copyright.
218.2. In an action under this Chapter:
(a) Copyright shall be presumed to subsist in the work
or other subject matter to which the action relates if the
defendant does not put in issue the question whether
copyright subsists in the work or other subject matter;
and
(b) Where the subsistence of the copyright is
established, the plaintiff shall be presumed to be the
owner of the copyright if he claims to be the owner of
the copyright and the defendant does not put in issue
the question of his ownership.
(c) Where the defendant, without good faith, puts in
issue the questions of whether copyright subsists in a
work or other subject matter to which the action relates,
or the ownership of copyright in such work or subject
matter, thereby occasioning unnecessary costs or delay
in the proceedings, the court may direct that any costs
to the defendant in respect of the action shall not be
allowed by him and that any costs occasioned by the
defendant to other parties shall be paid by him to such
other parties. (n)
Presumptions
Sec. 219
Section 219.Presumption of Authorship. - 219.1. The
natural person whose name is indicated on a work in the
usual manner as the author shall, in the absence of
proof to the contrary, be presumed to be the author of
the work. This provision shall be applicable even if the
name is a pseudonym, where the pseudonym leaves no
doubt as to the identity of the author.
219.2. The person or body corporate whose name
appears on a audio-visual work in the usual manner
shall, in the absence of proof to the contrary, be
presumed to be the maker of said work. (n)
International Registration
Sec. 220
Section 220.International Registration of Works. - A
statement concerning a work, recorded in an
international register in accordance with an
international treaty to which the Philippines is or may
become a party, shall be construed as true until the
contrary is proved except:
220.1. Where the statement cannot be valid under this
Act or any other law concerning intellectual property.
220.2. Where the statement is contradicted by another
statement recorded in the international register. (n)
Page 289 of 307

Scope of Protection
Secs. 221 to 224
CHAPTER XVIII
SCOPE OF APPLICATION
Section 221.Points of Attachment for Works under
Sections 172 and 173. - 221.1. The protection afforded
by this Act to copyrightable works under Sections 172
and 173 shall apply to:
(a) Works of authors who are nationals of, or have their
habitual residence in, the Philippines;
(b) Audio-visual works the producer of which has his
headquarters or habitual residence in the Philippines;
(c) Works of architecture erected in the Philippines or
other artistic works incorporated in a building or other
structure located in the Philippines;
(d) Works first published in the Philippines; and
(e) Works first published in another country but also
published in the Philippines within thirty days,
irrespective of the nationality or residence of the
authors.
221.2. The provisions of this Act shall also apply to
works that are to be protected by virtue of and in
accordance with any international convention or other
international agreement to which the Philippines is a
party. (n)
Section 222.Points of Attachment for Performers. - The
provisions of this Act on the protection of performers
shall apply to:
222.1. Performers who are nationals of the Philippines;
222.2. Performers who are not nationals of the
Philippines but whose performances:
(a) Take place in the Philippines; or
(b) Are incorporated in sound recordings that are
protected under this Act; or
(c) Which has not been fixed in sound recording but are
carried by broadcast qualifying for protection under this
Act. (n)
Section 223.Points of Attachment for Sound
Recordings. - The provisions of this Act on the protection
of sound recordings shall apply to:
223.1. Sound recordings the producers of which are
nationals of the Philippines; and
223.2. Sound recordings that were first published in the
Philippines. (n)
Section 224.Points of Attachment for Broadcasts. -
224.1. The provisions of this Act on the protection of
broadcasts shall apply to:
Page 290 of 307
(a) Broadcasts of broadcasting organizations the the National Library and the Supreme Court Library in
headquarters of which are situated in the Philippines; accordance with the provisions of this Act shall become
and the property of the Government. (Sec. 60, P.D. No. 49)

(b) Broadcasts transmitted from transmitters situated in

the Philippines.

224.2. The provisions of this Act shall also apply to

performers who, and to producers of sound recordings
and broadcasting organizations which, are to be
protected by virtue of and in accordance with any
international convention or other international
agreement to which the Philippines is a party. (n)

Actions
Secs. 225 to 227

CHAPTER XIX
INSTITUTION OF ACTIONS

Section 225.Jurisdiction. - Without prejudice to the

provisions of Subsection 7.1(c), actions under this Act
shall be cognizable by the courts with appropriate
jurisdiction under existing law. (Sec. 57, P.D. No. 49a)

Section 226.Damages. - No damages may be

recovered under this Act after four (4) years from the
time the cause of action arose. (Sec. 58, P.D. No. 49)

CHAPTER XX
MISCELLANEOUS PROVISIONS

Section 227.Ownership of Deposit and Instruments. -

All copies deposited and instruments in writing filed with
Page 291 of 307

Cases:
1. Sony vs. Universal, 464 U.S. 417
JUSTICE STEVENS delivered the opinion of the Court.
[1] Petitioners manufacture and sell home video tape
recorders. Respondents own the copyrights on some of
the television [p*420] programs that are broadcast on
the public airwaves. Some members of the general
public use video tape recorders sold by petitioners to
record some of these broadcasts, as well as a large
number of other broadcasts. 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.
[2] 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 video tape recorders (VTR�s) to record
some of respondents� copyrighted works which had
been exhibited on commercially sponsored
televisionand 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. [n1]
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.
[3] After a lengthy trial, the District Court denied
respondents all the relief they sought and entered
judgment for petitioners. 480 F.Supp. 429 (1979). The
United States Court of Appeals for the Ninth Circuit
reversed the District Court�s judgment on
respondents� copyright claim, holding petitionersliable
for contributory infringement and ordering the District
Court to fashion appropriate relief. 659 F.2d 963 (1981).
[p*421] We granted certiorari, 457 U.S. 1116 (1982);
since we had not completed our study of the case last
Term, we ordered reargument, 463 U.S. 1226 (1983). We
now reverse.
[4] 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
Page 292 of 307
time-shifting in this litigation, were unable to prove that
the practice has impaired the commercialvalue 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 tuner,
[5] 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: [p*422] by authorizing theatrical
exhibitions, by licensing limited showings on cable and
network television, by selling syndication rights for
repeated airings on local television stations, and by
marketing programson prerecorded videotapes or
videodiscs. Some works are suitable for exploitation
through all of these avenues, while the market for other
works is more limited.
[6] 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: [p*422] by authorizing theatrical
exhibitions, by licensing limited showings on cable and
network television, by selling syndication rights for
repeated airings on local television stations, and by
marketing programson prerecorded videotapes or
videodiscs. Some works are suitable for exploitation
through all of these avenues, while the market for other
works is more limited.
[7] Petitioner Sony manufactures millions of Betamax
video tape recorders and markets these devices through
numerous retail establishments, some of which are also
petitioners in this action. [n2] Sony�s Betamax VTR is a
mechanism consisting of three basic components: (1) a
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.
[8] 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 [p*423]
Page 293 of 307
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 runthe
tape rapidly when a segment he or she does not desire
to see is being played back on the television screen.
[9] 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. [n3]
Sony�s survey indicated [p*424] that over 80 of the
interviewees watched at least as much regular
television as they had before owning a Betamax. [n4]
Respondents offered no evidence of decreased
television viewing by Betamax owners. [n5]
[10] 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. [n6] [p*425] 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
[11] 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. [n7] No issue concerning the
transfer of tapes to other persons, the use ofhome-
recorded tapes for public performances, or the copying
of programs transmitted on pay or cable television
systems was raised. See id., at 432-433, 442.
[12] 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
Page 294 of 307
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 servedthe 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, 412
U.S. 94, 102." Id., at 454. [n8] Even when an entire
copyrighted work was recorded, [p*426] the District
Court regarded the copying as fair use "because there is
no accompanying reduction in the market for
�plaintiff�s original work.�" Ibid.
[13] As an independent ground of decision, the District
Court also concluded that Sony could not be held liable
as a contributory infringereven 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." Id., at 436.
[14] 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." Id., at 461. 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 precedentand
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 [p*427] for a purpose which a court
later deemed, as a matter of first impression, to be an
infringement." Ibid.
[15] 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." Id., at 465.
[16] 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
Page 295 of 307
noncopyrighted material or material whose owners
consentedto the copying. An injunction would deprive
the public of the ability to use the Betamax for this
noninfringing off-the-air recording." Id., at 468.
The Court of Appeals� Decision
[17] 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." [n9] 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. 659 F.2d, at 974.
[18] [p*428] 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." Id., at
975. VTR�s, however, are sold "for the primary purpose
of reproducing television programming" and "[virtually]
all" such programming is copyrighted material. Ibid. 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.
[19] 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 thereproduction of copyrighted materials was
either "the most conspicuous use" or "the major use" of
the Betamax product. Ibid.
[20] 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
[21] 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."
[22] [p*429] 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
Page 296 of 307
motivate the creative activity of authors and inventors
by the provisionof a special reward, and to allow the
public access to the products of their genius after the
limited period of exclusive control has expired.
[23] "The copyright law, like the patent statutes, makes
reward to the owner a secondary consideration. In Fox
Film Corp. v. Doyal, 286 U.S. 123, 127, 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., 334 U.S. 131, 158
(1948).
[24] 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 writingsand 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. [n10] [p*430] From its beginning, the law of
copyright has developed in response to significant
changes in technology. [n11] 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. [n12] Repeatedly, as new
developments have [p*431] 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, 661-662 (1834). The remedies for infringement
"are only those prescribed by Congress." Thompson v.
Hubbard, 131 U.S. 123, 151 (1889).
[25] The judiciary�s reluctance to expand the
protections afforded by the copyright without explicit
legislative guidance is a recurring theme. See, e. g.,
Teleprompter Corp. v. Columbia Broadcasting System,
Inc., 415 U.S. 394 (1974); Fortnightly Corp. v. United
Artists Television, Inc., 392 U.S. 390 (1968); White-
Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1
(1908);Williams & Wilkins Co. v. United States, 203 Ct.
Cl. 74, 487 F.2d 1345 (1973), aff�d by an equally
divided Court, 420 U.S. 376 (1975). 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.
[26] 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
Page 297 of 307
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
[p*432] encouraged and rewarded, but private
motivation must ultimately servethe 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, 127. See Kendall v. Winsor, 21 How. 322, 327-328;
Grant v. Raymond, 6 Pet. 218, 241-242. When
technological change has rendered its literal terms
ambiguous, the Copyright Act must be construed in light
of this basic purpose." Twentieth Century Music Corp. v.
Aiken, 422 U.S. 151, 156 (1975) (footnotes omitted).
[27] 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 usesof his work. [n13]
Rather, the Copyright Act grants the [p*433] 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. [n14] 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 wor for a "fair use"; the copyright owner
does not possess the exclusive right to such a use.
Compare � 106 with � 107.
[28] "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 waysset
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.
[29] 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 [p*434] 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. [n15]
[30] 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
Page 298 of 307
copying of their works. [n16] 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
[31] The Copyright Act does not expressly render
anyone liable for infringement committed by another. In
contrast, the [p*435] 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. [n17] 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.
[32] 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 [p*436] 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." Id., at 62-63.
[33] 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 protectedwork 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.
[34] 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
Page 299 of 307
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 thatmay 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 [p*437] 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.
[35] 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. [n18] This case, however, plainly does
not fall [p*438] 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." 480 F.Supp., at 460. 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." Ibid.
[36] [p*439] If vicarious liability is to be imposed on
Sony in this case, it must rest on the fact that tit 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. [n19] [p*440] In
the Patent Act both the concept of infringement and the
concept of contributory infringement are expressly
defined by statute. [n20] 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. 35
U. S. C. � 271(c).
Page 300 of 307
[37] 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 [p*441] 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. [n21]
[38] 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, 198 (1980). Unless a commodity
"has no use except through practice of the patented
method," id., at 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." Henry v. A. B. Dick Co., 224 U.S. 1, 48
(1912), overruled onother grounds, [p*442] Motion
Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S.
502, 517 (1917).
[39] 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
[40] 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
Page 301 of 307
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. [p*443]
A. Authorized Time-Shifting
[41] 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. [n22] If they were to prevail, the outcome
of this litigation wouldhave 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. [n23] 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.
[p*444] "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 extremelyharsh remedy, as well as one
unprecedented in copyright law." 480 F.Supp., at 468.
[42] 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, [n24]
two items in the record deserve specific mention.
Page 302 of 307
[43] [p*445] 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. [n25] 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. [n26]
[44] 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. [n27] [p*446] 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.
[45] 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 seeksaffects 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. [n28] The seller of the equipment that
expands those producers� audiences cannot be a
contributory [p*447] infringer if, as is true in this case, it
has had no direct involvement with any infringing
activity.
B. Unauthorized Time-Shifting
[46] 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 154-155. Moreover, the definition of
Page 303 of 307
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." [n29] [p*448]
That section identifies various factors [n30] that enable
a court to apply an "equitable rule of reason" analysis to
particular claims of infringement. [n31] Although not
conclusive, the first [p*449] factor requires that "the
commercial or nonprofit character of an activity" be
weighed in any fair use decision. [n32] If the Betamax
were used to make copies for a commercial or profit-
making 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 [p*450]
that the entire work is reproduced, see � 107(3), does
not have its ordinary effect of militating against a
finding of fair use. [n33] 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 [p*451] merely inhibit
access to ideas without any countervailing benefit.
[n34] 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.
[47] 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 libraryingwould 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,
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�invisible boundaries� are passed: �the copyright
owner has lost control over his program.�" 480 F.Supp.,
at 467.
[48] [p*452] 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." Id., at 469. [n35]
[49] 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."
Id., at 451.
[50] 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. [n36] It
rejected respondents� prediction "that live television
[p*453] 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." Ibid. [n37] 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." Ibid. [n38] And it
declared that respondents� suggestion that "theater or
film rental exhibitionof a program will suffer because of
time-shift recording of that program" "lacks merit." Id.,
at 467. [n39] [p*454] 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." Ibid. "The
audience benefits from the time-shifting capability have
already been discussed. It is not implausible that
benefits could also accrue toplaintiffs, broadcasters, and
advertisers, as the Betamax makes it possible for more
persons to view their broadcasts." Ibid. "No likelihood of
harm was shown at trial, and plaintiffs admitted that
there had been no actual harm to date." Id., at 468-469.
"Testimony at trial suggested that Betamax may require
adjustments in marketing strategy, but it did not
establish even a likelihood of harm." Id., at 469.
"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."
Ibid.
[51] 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, 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" thatrequires
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.
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[52] When these factors are all weighed in the
"equitable rule of reason" balance, we must conclude
that this record amply [p*455] 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. [n40] [p*456] 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.
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.
[55] 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.
[56] It is so ordered.
2. Maljack Productions v. UAV Corp., 964
F.Supp 1416
3. Arnstein v. Porter 154 F.2d 464
4. Bright Tunes Music v. Harrisongs Music 420
F. Supp. 177
5. Steinberg v. Columbia Pictures, 663 F. Supp.
706

V
[53] "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, 530 (1972).

[54] One may search the Copyright Act in vain for any
sign that the elected representatives of the millions of
people who watch televisionevery day have made it
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