Lunes, Mayo 26, 2014

Implications of the amendments on the Intellectual Property Code of the Philippines

IMPLICATIONS OF THE AMENDMENTS ON THE INTELLECTUAL PROPERTY CODE

The evolving needs of society on intellectual property rights have demanded the parallel improvement of various regulatory structures around the world. Most countries have come a long way in protecting the creative minds of its citizens from the evils of copyright, trademark, and trade name infringement.  Notably, the initiatives seem to be directed towards harmonization of regulatory provisions and structures with Philippines in tow. One of the manifestations of the push for improvement is the passage of Republic Act No. 10372 which amended certain provisions in the Intellectual Property Code of the Philippines.

However, despite the purported aim of the legislators to strengthen the law on intellectual creations, the aforementioned act was strongly criticized by various legal practitioners. In the article of Dimacali[1], it was reported that Atty. JJ Disini who is considered to be a technology law expert, expressed his inhibitions on certain changes made in the Intellectual Property Code.  He was quoted saying that the new law allowed for warrantless arrests and seizures in violation of the Constitution, has dangerously expanded the meaning of infringement, and has provided for the vicarious liability of mall owners when infringement is proven to take place within its facilities.

In the same article, other problems such as the abolishment of the consumer’s right to import copyrighted materials without the consent of the copyright owner and exception of personal use to the economic rights of copyright owners and producers were likewise mentioned.

For its part, the government has issued a clarification on the criticisms held against the new law on the website of its Official Gazette[2]. On the issue of importing copyrighted materials, it explained that the new law in fact took out the limitation on the number of copies that may be imported contrary to claims that importation in itself was prohibited if made without the consent of the copyright owners. It states: “Only the importation of pirated or infringed material is illegal. As long as they were legally purchased, you can bring as many copies you want, subject to Customs regulations”. In terms of the warrantless searches and seizures, it stated: “The IPO may visit establishments based on reports and complaints; this in itself is constitutional. However, if the IPO intends to perform a search and seizure, it must comply with constitutional requirements, such as having a search warrant. A warrant wouldn’t be required, however, if the IPO is accompanied by the Bureau of Customs or the Optical Media Board—two agencies that can perform a search and seizure on their own right without a warrant (per Republic Act No. 1937 and 9239, respectively).”  

This paper will discuss the implications of the above mentioned issues together with the following changes in the new law: added requirement for the designation of societies that will manage the owners’ economic rights, change in the wordings of “fair use of a copyrighted work”, amendment on the period of protection in light of delineating moral rights from economic rights, and the added alternative of statutory damages as a claim for infringement.

Warrantless searches and seizure
Section 7 of the Intellectual Property Code[3] was amended to include within the powers of the Director General and Deputies Director General, the power to “conduct visits during reasonable hours to establishments and business engaging in activities violating intellectual property rights and provisions of this act based on report, information or complaint received by the office.”  Atty. Disini, as reported in the article of Dimacali[4], stated that the quoted provision is in violation of the constitutional right of people against unreasonable searches and seizures. This interpretation is further bolstered by the clarification made by the government[5] where it confirmed that a search warrant will not be required in the event that the IPO is accompanied by the Bureau of Customs or the Optical Media Board.

The Constitution safeguards the right of the people to be secure in their houses, as such the bill of rights[6] 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 (emphasis supplied), 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 persons or things to be seized.” 

Well settled is the rule that the Constitution is the supreme law of the land and no statute can be passed that contravenes the former. The interpretation of Atty. Disini that the amendments on the said section are violative of the constitution must be upheld because it clearly does not provide for the above quoted constitutional limitation. Should this provision continue to be left without the proper rectifications, it will set a bad precedent that statutes may eventually render the constitution worthless.

Moreover, the sound protection consistently established by our jurisprudence against unreasonable searches and seizures will drastically be dented and eventually crack the foundation of the basic human rights of the people. This power, without the proper safeguards is very much susceptible to abuse and arbitrary exercise by cunning and greedy officers. It can open the floodgate for harassment or extortion and lead to the detriment of legitimately operator of businesses. In the same vein, the projected hesitation of businesses to operate in the Philippines, may affect our economy in general.

Expansion of the definition of infringement
Another criticism thrown against the R.A. 10372 is the expanded definition of “infringement” which included the making of temporary copies as an act of infringement. Sec. 171.9 of R.A. 8293 was amended to read as follows: “Reproduction is the making of one or more copies, temporary or permanent (emphasis supplied), in whole or in part, of a work or a sound recording in any manner or form xxx.”  According to Atty. Disini[7], the provision implies that the temporary usage of a pirated software, whether the same be made in a coffee shop or not, will constitute infringement already. He explained thus: "The mere act of running software which triggers the OS to temporarily copy software into random access memory (RAM) already constitutes infringement.” 

The government[8]has explained that the interpretation of the expanded definition by critics is not accurate as it pertains to the making of multiple copies to be utilized for distribution that is punishable. In its FAQ section, it stated thus: “Infringement in this context refers to the economic rights of the copyright owner. So, if you transfer music from a lawfully acquired CD into a computer, then download it to a portable device for personal use, then you didn’t commit infringement. But if, for example, you make multiple copies of the CD to sell, then infringement occurs.”

It can be noted that the clarification made by the government is based on the intent of the proponents of the act while the contention of legal experts is based on what is written in the law itself. A plain reading of the provisions of the amendment will divulge that the interpretation of the critics is proper because Sec. 171.9 in defining “reproduction” does not make any qualification as to intent nor number of copies. On the contrary, it merely added the word “temporary” in its definition which highlighted the intention of the lawmakers to include all forms of reproduction in relation to infringement.

The problem posited by this change is the lack of qualification in law which would delineate the temporary reproduction for personal use from the temporary reproduction for the purpose of committing infringement. One cannot simply rely on the interpretation made by the government for the implementation of the law because it can change throughout the course of events. Ultimately, what is specifically written in the law will prevail and hence a qualification must be made to address the discussed implication.

Vicarious liability of mall owners and other owners of establishments

Sec. 216 (b) of R.A. 8293 was amended to include the liability of “another person who commits an infringement if the person benefitting has been given notice (emphasis supplied) of the infringing activity and has the right and ability to control the activities of the other person.” The critics expressed their apprehension against the said provision due to the seemingly automatic liability of owners of establishments wherein infringement may take place without being given a leeway to take appropriate action against people who commit infringement. On the other hand, it was explained that the liability of the mall owners and other establishments will only attach after they have been given ample time to address the infringement activity after they are given notice of the same.

However, the interpretation of the critics is not without basis because of the noted lack of additional elements for the liability to attach. Again, sole reliance on the interpretation of the implementing department or proponents of the bill is not legally sound and the needed requirements must be established in the law itself to ensure proper implementation. It is suggested that an additional requisite be made before the liability can attach to owners of establishment such as a specific duration of time after they receive notice of infringement activities to gauge their willingness to address the problem.

It is submitted that the vicarious liability of mall owners and other business establishments is an additional barricade against the evils of infringement. It can be reasonably expected that the mall owners are aware of the activities being conducted by its tenants and they cannot escape liability on the excuse of ignorance. More often than not, they are inclined to turn the other cheek when it comes to illegal activities of their tenants in exchange for the consistent return of investments. There is thus the need to positively impose upon these owners of establishments the responsibility of putting an end to infringement activities that are very well within their control. The role of the owners is not confined to profit making but extends to the need of the protection of the public as part of the economic enrichment of our country.

Importation of copyrighted materials

Perhaps one of the most resounding criticisms against the amendment is on the importation of copyrighted materials. Originally, Sec. 190.1 and 190.2 of R.A. 8293 provided for the importation of copyrighted materials for personal use. It has given a limitation of one copy for personal use and three copies for the use of any religious, charitable, or educational society or institution.[9]  Sec. 14 of R.A. 10372 has deleted the allowance, thus: “Sections 190.1 and 190.2 of R.A. 8293 are deleted in its entirety.”  Yet again, the government has attempted to clarify that the deletion of the mentioned provisions are aimed to take away the limitation of copies of copyrighted materials that may be imported. In the same article of Dimacali[10] it explained: “Amendments to the Intellectual Property Code have removed the original limitation of three copies when bringing legitimately acquired copies of copyrighted material into the country. Only the importation of pirated or infringed material is illegal. As long as they were legally purchased, you can bring as many copies you want, subject to Customs regulations.”

With the retention and amendment of Sec. 190.3 of R.A. 8293 the Commissioner of Customs is “empowered to make rules and regulation for preventing the importation or exportation of infringing materials…”, it is deemed that the clarification made by the government cannot find basis in law and that it in fact presents more limitation than freedom. As Atty. Disini has posited “What's going to happen now is that copyright owners can simply go to the Bureau of Customs and say that copyrighted items can't be imported except by certain identified persons.”

Requirement for the designation of societies that will manage the owners’ economic rights

Sec. 183 of R.A. 8293 provides for the designation of societies of artists, composers and other right holders that will collectively manage the copyright owners’ economic or moral rights. It was amended to add that the said societies must first secure the necessary accreditation from the Intellectual Property Office. This addition is a positive indication of the political will to properly secure the rights of copyright owners. Certainly, the accreditation of societies will lead to strengthen their credibility and a more efficient regulation of their affairs.

Change in the wording of “fair use of a copyrighted work”

Originally, Sec. 185 of R.A. 8293 has utilized the word “multiple copies” to allow for the fair use of copyrighted materials but this was amended to “limited number of copies” by R.A. 10372[11]. It can be gleaned from the amendment that the purpose of the author of this bill is to restrict the number of copies for classroom use, scholarship, research and other purposes. As opposed to the word “multiple” which is defined as “several or many”[12], “limited” clearly implies a more restricted number of copies although not specified.  Under this purview, the concept of fair use is consistently established with the expression that the dissemination copyrighted materials for classroom use and others are reasonably restricted.

Amendment on the period of protection in light of delineating specific moral rights

Sec. 198[13] was amended to qualify the term of the moral rights of an author from during the lifetime plus 50 years to during the lifetime plus in perpetuity. It further qualified the coverage of protection under the posthumous term and confined the same to the right of the author to be attributed. The other rights stipulated under Arts. 193.2, 193.3 and 193.4 which are restrictions on the use of copyrighted materials have been expressly made to be coterminous with the economic rights of the author. It is deemed that the creation of dichotomy of protection between the attribution and restriction of usage is but proper and practical in view of the real purpose of our law. Aside from the respect to be given to authors, the law likewise aim to provide the public with quality materials coming from these well endowed authors. After all, the enrichment of the public’s knowledge is the moving power for our country’s improvement.

Added alternative of statutory damages as a claim for infringement

Sec. 216.1 was amended to add an alternative to claim actual damages which is the statutory damage. It states: “The copyright owner may elect (emphasis supplied), at anytime before final judgment is rendered, to recover instead of actual damages and profits, an award for statutory damages for all infringements involved in an action in a sum equivalent to the filing fee for the infringement action but not less than Fifty thousand pesos...” This provision is deemed to be a floodgate for unjustifiable claims for profit. It must be noted that the structure of our laws and jurisprudence when it comes to awarding damages is based on either the capacity of the losing party to actually pay the amount claimed and the definite loss sustained by the aggrieved party. The design is to rule out the possibility of lawsuits to become a money making business as opposed to other countries which have awarded excessive claims and known to be clogged with baseless law suits. In providing for the actual damages, our law confines the claim of the aggrieved party to the value of actual loss sustained while the other forms of damages take into consideration the circumstances that may not be obtained through pecuniary estimation. Should the law do-away with the restriction on award for damages, and provide this statutory damage as can be seen in the amendment without any specification as to the maximum amount that may be recovered, there is a possibility that shameless claimants will come forward and claim said statutory damage instead of actual damages. This can further lead to harassments suits that will work to the detriment of perfectly legitimate businesses.

Ultimately, R.A. 10372 is designed to improve the safeguards of intellectual property rights and the fair use by its public. However, as discussed above, the loopholes found within its provisions cannot be left unheeded because the issuance of clarificatory statements or opinions from the government will be insufficient in litigation. In addition, the said opinions are deemed to change alongside the current political agenda or demands of the public. The lawmakers must be able to provide us with stable and sound laws to ensure the unbiased protection of the various stakeholders.







[1] TJ Dimacali, “New IP Law allows warrantless searches, 'erases' right to personal use”, http://gmanetwork.com/news/tag/intellectualproperty, last retrieved: 5/23/2014
[3] Sec. 7, R.A. 8293, Intellectual Property Code of the Philippines as amended by R.A. 10372
[4]TJ Dimacali, “New IP Law allows warrantless searches, 'erases' right to personal use”, http://gmanetwork.com/news/tag/intellectualproperty, last retrieved: 5/23/2014
[5] Official Gazette of the Philippines, http://www.gov.ph/2013/03/11/infographic-faqs-on-the-amendments-to-the-intellectual-property-code-of-the-philippines/, last retrieved: 5/23/2014
[6] 1987 Philippine Constitution, Sec.2 Article 3, Bill of Rights
[7] TJ Dimacali, “New IP Law allows warrantless searches, 'erases' right to personal use”, http://gmanetwork.com/news/tag/intellectualproperty, last retrieved: 5/23/2014
[8] Official Gazette of the Philippines, http://www.gov.ph/2013/03/11/infographic-faqs-on-the-amendments-to-the-intellectual-property-code-of-the-philippines/, last retrieved: 5/23/2014
[9] Sec. 109.1 (a)(i-iii), R.A. 8293, Intellectual Property Code of the Philippines
[10] TJ Dimacali, “New IP Law allows warrantless searches, 'erases' right to personal use”, http://gmanetwork.com/news/tag/intellectualproperty, last retrieved: 5/23/2014
[11] Sec. 12 of R.A. 10372, An act amending certain provisions of R.A. 8293, otherwise known as the “Intellectual Property Code of the Philippines”, 2012
[12] Merriam-Webster Dictionary, United States of America, 1989
[13] Sec. 198 of R.A. 8293 The Intellectual Property Code of the Philippines as amended by R.A. 10372

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