Copyright infringement under the new IP law

IT meets IP by Maricel Estavillo · Thursday, March 7, 2013 · 3:15 pm

One of the upcoming major changes to the Intellectual Property Code of the Philippines, as a result of the recently passed amendments, is the expanded definition of copyright infringement. The new law has introduced the concept of secondary liability, which makes more parties susceptible to copyright infringement.

The amended Section 216 of the code provides that there are two types of copyright infringement liability – direct and secondary. An infringement takes place when the use of a protected work of a copyright owner goes beyond the limitations, to include fair use provisions that are outlined in the law.

Under the new law, an infringer is also anyone who “benefits from the infringing activity of another person” and if this person “has been given notice of the infringing activity and has the right and ability to control the activities of the other person” or if a person “purposely and with the intent to enable or induce infringement by another person and materially contributes to it.”

In the case of a mall owner with a tenant who is selling pirated movies, the Philippine IP Office has explained that for it to be secondarily liable, the mall owner must (1) benefit from the infringing activity; (2) must have been given a notice of the infringing activity and a grace period to address the complaint; and (3) has the right and ability to control the activities of the tenant of who is doing the infringement.

“The complainant has the burden of proof to provide evidence that all the three elements are present. If a landlord or mall owner is not aware of the infringement, he cannot be liable for infringement, even if he benefits from it (from rental payments) or has control over the premises,” according to the IP Office.

Secondary liability in copyright is already enforced abroad, to include US and Europe. For one, the addition of holding someone who benefits indirectly from an infringing activity also liable is reminiscent of the vicarious liability provision for copyright infringement in the US.

The inducement factor is also not new. In the US, the landmark case revolving around inducement liability on the Internet was the 2005 Supreme Court case of MGM Studios versus Grokster. Grokster was a peer-to-peer file sharing website, which came after Napster, another peer-to-peer file sharing web site that was first found guilty of secondary infringement.

With the Grokster case, the court ruled that the operation of the website satisfied all the three elements needed for secondary infringement by way of inducement. The elements were (1) the website promoted the service, which enabled infringement; (2) it failed to filter out infringing activities; and (3) its business plan was dependent on the high volume of infringement.

In the new law, the circumvention of technological measures and rights management information were included as aggravating circumstances to infringement. The inclusion of these two was made for the Philippines to comply with its international obligations, specifically Articles 11 and 12 of the World Intellectual Property Organization (WIPO) Copyright Treaty.

The secondary liability provision can affect third-party business providers such as mall owners, concert, event organizers, and bazaar operators. It can also have an impact on the business of online intermediaries operating in the Philippines such as hosting providers and peer-to-peer file sharing websites.