Filscap justly slapped down in Baguio restaurant case


Ben D. Kritz

COPYRIGHT infringement is a sensitive issue for anyone who earns from his or her creative effort, and weakness in legal protection against exploitation is a chronic problem everywhere. Part of the reason why it continues to be a problem is that sincere efforts on the part of most artistic workers are continually being sabotaged by the greed-headed stupidity of the music industry’s rights watchdogs, represented in the Philippines by the Filipino Society of Composers, Authors and Publishers, Inc. (Filscap).

In a rare victory for common sense and against brazen extortion, the Court of Appeals 4th Division last week upheld a regional trial court ruling against Filscap in a case that started in 2009, when the organization sued a Baguio restaurant company for copyright infringement, after the latter refused to pay royalties for playing the FM radio in its three outlets in the city.

Filscap is the holder of deeds of assignment to collect royalties on behalf of Filipino artists, but focuses primarily on the music industry.

The case started when a Filscap agent visited a Sizzling Plate restaurant in Baguio owned by Anrey Inc. and noticed the restaurant was playing the FM radio in its dining room. Filscap demanded royalties of P6,300 per year per outlet, and sued when Anrey Inc. ignored the demand.

The courts sided with the restaurant owners, ruling that the company did not commit copyright infringement as they were playing a public broadcast station, and did not charge any admission or other fees to its customers for providing music.

As a result of the ruling, the Baguio Association of Bars and Entertainers has told all its members not to pay royalties to Filscap for simply playing the radio. According to the group’s president, Filscap called for a meeting with the association about a year ago, but the request was completely ignored by the restaurant and bar owners.

Filscap is likely to appeal, which means the case may eventually end up in the Supreme Court, but the organization should probably quit while it’s ahead; for years it has gotten away with charging double royalties – once to the radio stations, and again to business establishments who play the radio – and a logical ruling from the Supreme Court confirming the lower court rulings would knock this particular gravy train off its tracks on a nationwide basis.

As it is now, Filscap is able to cow many businesses into paying the demanded royalties by the threat of draconian legal action and potential penalties several orders of magnitude greater than the price of compliance. The owners of Anrey Inc. deserve some credit for recognizing a shakedown when they saw one, and holding their ground.

If this were a reasonable world, the Baguio case would inspire Filscap, the artists it supposedly represents, and the primary customers of creative work to reconsider whether an arcane, mid-20th century business model that never did work to the advantage of the people doing the actual creating is the best way to support and encourage the arts. Indeed, many creative workers are not compensated fairly for their work in one way or another, but the royalty model is not the answer and never has been. Most of what royalties are collected on behalf of artists never find their way into the artists’ hands, even if organizations like Filscap are doing their jobs with integrity. Monitoring and enforcement of copyrights is difficult and becoming more so as public access expands, thanks to the internet, which means that much of the “royalties” are diverted to pay administrative costs. Artists in effect are bearing the cost of inefficiency, with the practical result being that even though they are being “protected,” their bottom line still does not reflect fair returns for their efforts.

Given that use of creative work is almost impossible to control, a better model to follow would be to ensure that artists are compensated fairly for their compositions or creative work in the first place. Under the current model, in which artists are initially paid relatively little – and more often than not, nothing at all, as an upfront payment is usually an “advance” on future royalties – the system is completely unfair because it obliges the artist to transfer control of his or her work while retaining all the risk.

A system in which artists are paid the fair value of their work outright would transfer the risk along with control over the work. Of course, one result of that is that it would very likely narrow opportunities for creative workers; publishers would have to be more conscious of their bottom line, and would not accept work of uncertain commercial value.

By the same token, the dominance of any highly-commercialized product in a market paradoxically drives up demand for more “authentic” alternatives – the rapid expansion of things like “natural” foods and “craft beers” in the past 20 years or so is a good example – meaning that outlets for higher quality creative work would probably increase as well. That would be a benefit to both the artists and the public; there may be fewer artists getting public exposure, but those who do would no longer be faced with an unavoidable choice of being talented or being able to earn an appropriate livelihood.


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