COPYRIGHT CASES JAMES LIPTON v.

THE NATURE COMPANY November 28, 1995,USCA (2nd district) FACTS: At issue in this case is a compilation of "terms of venery"--collective terms for identifying certain animal groups--gathered and published by the author and etymologist James Lipton in his book, An Exaltation of Larks. The first edition of the book was published in 1968, and two subsequent editions were published in 1977 and 1991; Lipton holds a valid copyright to all three versions of the book. Lipton's complaint alleged that the defendants created various posters and other products that infringed the copyright of the first and second editions of his book, in violation of 17 U.S.C. Sec. 501 et seq., and unfairly competed with Lipton, in violation of Sec. 43(a) of the Lanham Trademark Act. Lipton compiled his terms of venery through research of various fifteenth-century texts and manuscripts. According to Lipton, he translated the terms from Middle English to modern English and arranged them based on their "lyrical and poetic potential." The first and second editions of the book, which include scattered illustrations and explanatory text, were a considerable success and have sold over 150,000 copies to date. In 1990, in an attempt to further capitalize on the success of his book, Lipton sought to license his compilation for use on various products. In the course of doing so, he discovered that Nature had already licensed the rights to a virtually identical compilation of terms of venery from the defendant, Wein. In 1988, Wein, doing business as "Animal Wisdom," filed for copyright registration of a compilation of animal terms, representing that the work was original to him. Wein manufactured and sold posters ("the Wein posters") of the compilation to various zoos, libraries, and other entities. In 1988, he approached Nature, a retailer specializing in products about the environment, to market his compilation. Between 1989 and 1990, Nature and Wein entered into a series of licensing agreements by which Nature acquired the right to use Wein's compilation of animal terms on a series of posters, t-shirts, and other products, which came to be known as the "Multitudes" products. Nature sold these products both in its stores and through its catalogs. The catalog copy accompanying the Multitudes poster stated, "Michael Wein has surveyed the English language back to its earliest roots to compile a list of the most remarkable ... names of animal multitudes ever assembled." The Multitudes poster, as well as a note cube marketed by Nature, included copyright notices in the names of Wein and Nature. Simultaneously, Wein continued to market and sell various adaptations of the initial Wein poster. In 1991, Wein incorporated Animal Wisdom Enterprises to market and distribute these products as the "Animal Congregations" line of merchandise. In its promotional brochure, AWE stated that it had "thoroughly researched dozens and dozens of animals, fish and birds to uncover correct terminology." Upon learning of Nature's and Wein's actions, Lipton sent a letter demanding that they stop and requesting compensation for the alleged infringement. When they refused, Lipton brought the present suit alleging copyright infringement and unfair competition. 3C SY 2012-2013 - IPL The district court denied Wein's Motion to Dismiss and found Wein and AWE liable for copyright infringement and, for violation of the Lanham Act. The said court likewise issued an injunction against Wein and Awe, enjoining them from use of any of plaintiff's terms, together or separately. Hence, this appeal. ARGUMENTS: Wein: He claims that the terms used on the Wein poster and the Multitudes products were copied from a banner or scarf ("the scarf") that he received in the late 1960's while working as an advertising executive in

New York City. According to Wein, this scarf, which listed 73 animal terms and one cryptic term--"a synoptic of SCI"--was an unsolicited promotional item from an unidentified source. Both Wein and his art director, Michael English, testified that the scarf was the sole source of the compilation featured on the initial poster that Wein marketed to libraries and museums. According to Wein, he decided to market the terms on the scarf as a poster in 1988. Both he and English inspected the scarf, and finding no copyright notice, typeset the terms listed on it. Lipton: The compilation of terms was original to him and therefore protected by the copyright law. ISSUES: A. Whether Wein and AWE are guilty of copyright infringement B. If so guilty, whether the district court correctly ruled that the said infringement was willful C. Whether the district court correctly ruled that Wein and AWE are guilty for unfair competition under the Lanham Act D. Whether the injunction issued was excessively broad HELD: Wein and AWE's Appeal partly granted. A) A successful claim of copyright infringement pursuant to the Copyright Act, 17 U.S.C. Sec. 501 et seq., requires proof that (1) the plaintiff had a valid copyright in the work allegedly infringed and (2) the defendant infringed the plaintiff's copyright by copying protected elements of the plaintiff's work. It is undisputed that Lipton has a valid copyright in the first and second editions of his book, An Exaltation of Larks. The defendants argue that while Lipton's book itself is protected, the mere compilation of the collective nouns--without the accompanying artwork and explanatory text--is not protectible because the terms are facts, and not the original work of Lipton. Although facts are considered to be in the public domain and therefore not protectible under copyright law, a compilation of facts may be protectible in certain instances. Three requirements must be met for a compilation to qualify as protectible: "(1) the collection and assembly of preexisting data; (2) the selection, coordination, or arrangement of that data; and (3) a resulting work that is original, by virtue of the selection, coordination, or arrangement of the data contained in the work." The amount of creativity required for copyright protection of a compilation is decidedly small. "Original, as the term is used in copyright, means only that the work was independently created by the author ... and that it possesses at least some minimal degree of creativity." Although the defendants correctly assert that the terms themselves are not original, the uncontradicted evidence is that Lipton's selection and arrangement of the terms were original. In compiling his work, Lipton assembled terms from various fifteenth century texts and manuscripts. They were selected from numerous variations of hundreds of available terms. Furthermore, the defendants offer nothing to contradict Lipton's assertion that he selected the terms "based on [his] subjective, informed and creative judgment." Lipton's arrangement of the terms is similarly protectible. The defendants do not challenge Lipton's statement that his compilation does not replicate the sequence of terms in any of the fifteenth century sources that he consulted, nor do they contradict his assertion that he repeatedly rearranged the terms based upon his own aesthetic judgment. Instead, they argue that because Lipton's arrangement does "not follow any sort of alphabetical, chronological, or other system," it is inherently unprotectible under copyright law. This argument misconstrues governing case law. We have held that while "mechanical" arrangements, such as alphabetical or chronological order, do not display the requisite originality, any minimal level of creativity is 3C SY 2012-2013 - IPL

sufficient to render an arrangement protectible. The second prong of a successful copyright action requires proof that the defendant copied protected elements of the plaintiff's work. Since direct evidence of copying is seldom available, "[c]opying may be inferred where a plaintiff establishes that the defendant had access to the copyrighted work and that substantial similarities exist as to protectible material in the two works." In the alternative, "[i]f the two works are so strikingly similar as to preclude the possibility of independent creation, 'copying' may be proved without a showing of access." Wein's copying of the scarf is in any event no defense to a claim of infringement. As a matter of law, "innocent infringement," or copying from a third source wrongfully copied from the plaintiff, without knowledge that the third source was infringing, does not absolve a defendant of liability for copyright infringement. If Wein and AWE did copy the list of terms from the scarf, that defense is unavailing if the scarf itself was an unauthorized copy of Lipton's protected compilation. The inquiry then becomes whether the scarf itself was infringing--that is, whether its manufacturer had access to Lipton's work and substantial similarities exist between the scarf and Lipton's compilation, or whether the two works are so strikingly similar as to preclude the possibility of independent creation. A comparison between the selection and arrangement of terms in Lipton's book and the selection and arrangement of those on the scarf leads us to conclude that the two are "strikingly similar." Accordingly, we find that scarf infringed on Lipton's copyright. First, the scarf includes essentially the same selection of animal-related terms as Lipton's book. In principle, the scarf could have included any of the hundreds of animal terms listed in various fifteenth century texts and other resources, but in fact, it mimics the list in Lipton's book almost exactly. Out of the 77 different animal terms of venery that appear in the first edition of An Exaltation of Larks, 72 of them are listed on the scarf. Indeed, the scarf includes only one animal term-"covey of quail"--that does not appear in the Lipton compilation. Furthermore, the scarf contains at least six translation errors that existed in Lipton's first two editions. Although some of those errors do exist in other sources, they further support our conclusion that the scarf could not have selected the same terms independent of Lipton's book. See Eckes v. Card Prices Update, 736 F.2d 859, 863 (2d Cir.1984) ("[C]ourts have regarded the existence of common errors in two similar works as the strongest evidence of piracy.") Wein fully acknowledged that he copied the scarf for use on the original Wein products, Nature's Multitudes products, and the Animal Congregations line currently being distributed by Wein through AWE. By copying the scarf--an unauthorized copy that infringed on Lipton's protected compilation--Wein and AWE also infringed. We therefore affirm the district court's order of summary judgment to Lipton on its copyright claim against Wein and AWE. B) Wein disputes the assertion that he willfully copied from An Exaltation of Larks, arguing that he innocently copied from the scarf what he believed to be an unprotectable compilation. Determinations of credibility are within the province of the jury and may not be resolved on summary judgment. United States v. Rem, 38 F.3d 634, 643-44 (2d Cir.1994). The district court erred in concluding, on a summary judgment motion, that Wein willfully infringed Lipton's copyright based on its determination that Wein's story about the scarf was "inherently incredible." Accordingly, we reverse the district court's award of summary judgment to Lipton on the question of willful infringement and its award of enhanced damages pursuant to 17 U.S.C. Sec. 504(c)(2). We remand for trial on the question of Wein's willfulness or reckless disregard of Lipton's copyright. C) A successful claim for "reverse passing off" under the Lanham Act requires that the plaintiff prove (1) that the work at issue originated with the plaintiff; (2) that origin of the work was falsely designated by the defendant; (3) that the false designation of origin was likely to cause consumer confusion; and (4) that the

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plaintiff was harmed by the defendant's false designation of origin. In the instant case, the district court based its finding of a Lanham Act violation on the fact that the copyright notices on the infringing products were false designations of origin. We find that, as a matter of law, a false copyright notice alone cannot constitute a false designation of origin within the meaning of Sec. 43(a) of the Lanham Act. Thus, we reverse the district court's summary judgment on Lipton's Lanham Act claims. D) Because summary judgment was proper solely on the plaintiff's copyright cause of action, we find the district court's injunction to be excessively broad. In the instant case, it is the compilation--i.e., the selection and arrangement--of the terms that is protectible, not the individual terms themselves. Thus, the district court erred in enjoining Wein from producing and marketing a line of six different T-shirts and mugs, each displaying a different animal term of venery. By so holding, however, we do not foreclose the possibility that an injunction might be appropriate to prohibit Wein from producing or marketing a more extensive line of products that infringes Lipton's selection of terms. Accordingly, this courts remands the case with instructions to amend the injunction, and for such further proceedings as may be appropriate in the circumstances, including the award of costs and attorneys' fees with respect to the copyright claim. xx 0 xx WALDMAN PUBLISHING CORP. v. LANDOLL, INC. 43 F.3d 978 December 22, 1994 OAKES FACTS: Waldman publishes a line of children's books while Playmore sells and distributes the books for Waldman. The books are adaptations of literary works that are in the public domain, including Oliver Twist, The Merry Adventures of Robin Hood, The Mutiny on Board H.M.S. Bounty, Black Beauty, The Swiss Family Robinson, and David Copperfield. The Waldman books are abbreviated versions of the classics. They are written in simplified language and have illustrations on every other page in order to make them more appealing to young children. In creating this series, Waldman contracted with writers to adapt the text of the classics and with artists to create the illustrations. The writers and artists are credited in the front of each book. Each book also contains a copyright notice on behalf of Playmore and Waldman for the cover, and on behalf of Waldman for the text. In 1979, Waldman and Playmore began selling the softcover line of books called Illustrated Classics. They introduced hardcover versions of the same books called Great Illustrated Classics in 1990. Waldman and Playmore sell the books to retail outlets such as discount department stores, toy stores, drug stores and book stores. Defendant Landoll also publishes children's books. In December 1993, Landoll began publishing and selling a line of books called First Illustrated Classics. The series consists of six softcover books that are illustrated adaptations of Oliver Twist, The Merry Adventures of Robin Hood, The Mutiny on Board H.M.S. Bounty, Black Beauty, The Swiss Family Robinson, and David Copperfield. Landoll began publishing and selling hardcover versions of the books in January 1994. The Landoll books are not exact copies of the Waldman books. It is undisputed by the parties that the cover designs are not confusingly similar. However, the arrangement of the chapters in the Landoll books mirrors that in the Waldman books, and the Landoll texts closely follow the Waldman texts. Many of the illustrations in the Landoll books depict the same events as are illustrated in the Waldman books.

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Landoll purchased the six adaptations from an English publisher named Peter Haddock on a "camera ready" basis, meaning that Haddock sent the text and illustrations to Landoll, and Landoll published the books at its facility. Each book displays the Landoll logo and includes a copyright notice on behalf of Landoll. A writer by whom the story is "retold" and an illustrator are credited in each book. Waldman and Playmore filed a complaint in the Supreme Court of the State of New York alleging that Landoll had violated section 43(a) of the Lanham Act, New York common law, and section 368-d of New York General Business Law. Waldman and Playmore alleged that the books published by Landoll entered into the stream of commerce with a false designation of origin because a recipient of the books would likely think that the books originated with Landoll, when they in fact originated with Waldman. Waldman and Playmore applied for, and the court issued (1) an order for Landoll to show cause why a preliminary injunction should not issue, and (2) a temporary restraining order which prohibited Landoll from publishing or selling its Oliver Twist, The Merry Adventures of Robin Hood, The Mutiny on Board H.M.S. Bounty, Black Beauty, The Swiss Family Robinson, and David Copperfield. The court ordered that a preliminary injunction issue against Landoll. The court held that Waldman and Playmore had shown a likelihood of success on their claim of false designation of origin in violation of section 43(a), and that in the absence of a preliminary injunction they would suffer irreparable harm. It also prohibits Landoll from publishing or selling any books which copy to a substantial degree books published by Waldman and distributed by Playmore. This appeal ensued. Section 43(a) has been interpreted as prohibiting misrepresentations as to the source of a product in primarily two types of activities: (1) false advertising and (2) "passing off" (also called "palming off") in which "A" sells its product under "B's" name. However, section 43(a) also prohibits a practice termed "reverse passing off," in which "A" sells "B's" product under "A's" name. Id. The typical reverse passing off case involves a manufactured product rather than a written work. Reverse passing off as applied to a written work involves somewhat different concepts. In the context of written works, the Lanham Act may be used to prevent "the misappropriation of credit properly belonging to the original creator" of the work. In this context, the Lanham Act prohibits not only, as Landoll suggests, the relabeling of a printed work, as by tearing the cover off a book and selling it with a false cover, but also the reproduction of a work with a false representation as to its creator. The misappropriation is of the artistic talent required to create the work, not of the manufacturing talent required for publication. Landoll asserts that it cannot be held liable for copying Waldman's books because, at the time Waldman and Playmore sought the preliminary injunction, Waldman had not registered its copyright. This contention, however, misconstrues the relation between copyright law and the Lanham Act. A claim of reverse passing off is separate and distinct from a claim of copyright infringement. Landoll also asserts that it has not falsely designated the origin of its books because, it contends, two written works can have the same origin only when the two works are identical. Landoll bases its claim on a line of Ninth Circuit cases holding that a claim of reverse passing off in the context of written work requires that one work be a "bodily appropriation" of the other. The Ninth Circuit's conclusion, however, was based not on an analysis of what constituted a "false designation of origin" but instead on the Ninth Circuit's determination that only bodily appropriation would create a likelihood of consumer confusion. Whether Landoll falsely designated the origin of its books is a particularly difficult question in light of two circumstances in this case (1) the underlying classic books are in the public domain, and (2) the Landoll and Waldman books are not identical. ISSUES:

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A. Whether Waldmans books are original enough to constitute an origin which may be falsely designated B. Whether Landolls books are similar enough to Waldmans so that Landolls failure to credit Waldman constitutes false designation of origin C. Whether Waldman and Playmore have shown a likelihood of consumer confusion HELD: Waldmans books are considered as original works Copyright law defines at what point a work becomes an original creation and who should be considered its creator. It is fair to say that it would constitute a false designation of origin to publish without attribution to its author a work that is original enough to deserve copyright protection. Therefore, in order to evaluate Waldman's claim, we must determine whether the Waldman books are original works. Under the Copyright Act, copyright protection subsists only in "original works of authorship." Even if a work is completely identical to a prior work, it may be considered original if it is not copied from the prior work but is rather the product of an independent effort by the author. The Waldman books are adaptations of classic novels and hence are what are termed "derivative works" in copyright law, meaning that they are adaptations of existing works. Section 101 of the Copyright Act defines a derivative work as:
a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a "derivative work."

In the case of a derivative work based on an underlying work that is in the public domain, only the material added to the underlying work is protected by copyright. A derivative work is copyrightable if it is sufficiently original. The law requires more than a modicum of originality. This has been interpreted to require a distinguishable variation that is more than merely trivial. Originality is distinguished from novelty; there must be independent creation, but it need not be invention in the sense of striking uniqueness, ingeniousness, or novelty, since the Constitution differentiates "authors" and their "writings" from "inventors" and their "discoveries." Originality means that the work owes its creation to the author and this in turn means that the work must not consist of actual copying. The test of originality is concededly a low threshold. By this definition, the Waldman books are original works. The selection of which episodes in the classics to include in the books, the redrafting of the text to tailor the books to young readers and the illustrations add more than a quantum of originality to the original works. The Landoll books are substantially similar to the Waldman books 3C SY 2012-2013 - IPL Having determined that the author or authors of the Waldman books deserve attribution when their works are used, we must determine whether the Landoll books are similar enough to Waldman's to create an inference that Landoll has copied Waldman's books and that Landoll's failure to credit Waldman constitutes a false designation of origin. The district court found that this was the case. The court held that the similarities between the structure, texts and illustrations of the books "compel the inference that the Landoll adaptations are copies of the Waldman adaptations, with the minimal changes intended to disguise the copying." The district court concluded that Landoll falsely designated the origin of its books by placing the Landoll name on what was essentially a Waldman product.

The standard of comparison used by the district court was essentially the "substantial similarity" standard used to show copyright infringement. In order to prove infringement of a copyright, the owner of the copyright must show that the protected work was copied. "Since direct evidence of copying is rarely possible, copying is generally established by showing (a) that the defendant had access to the copyrighted work and (b) the substantial similarity of protectible material in the two works." We find this standard an appropriate one for determining false designation of origin under the Lanham Act. A second work can be said to have the same origin as a first if the second was copied from the first. When the two works are identical, copying can almost always be assumed. When the works are somewhat different, copying can be established as it is in copyright infringement. The district court did not abuse its discretion, or make an erroneous finding, let alone a clearly erroneous one, in finding that the Landoll books were copied from the Waldman books and thus that the books have a common origin. First, the Waldman books have been on the market since 1979, giving the public, and especially any publisher of children's books, ample access to them. Counsel for Landoll, in addition, represented to the district court that Peter Haddock distributed the Waldman Great Illustrated Classics before he created what are now the Landoll books. Second, the district court's finding that the Landoll books are similar to the Waldman books in structure, text and illustration is not challenged on appeal. The similarities between the books extend beyond the underlying story which is in the public domain. In creating the Waldman adaptations, the authors had to choose which episodes to summarize, which scenes to illustrate, and what chapter headings to use. All these aspects of the Waldman books are original to the adaptations and are not taken from the underlying works. The Landoll books are substantially similar to the Waldman books in all these respects. Thus, absent a showing of independent creation, the inference is that Landoll falsely designated the origin of its books by indicating its own authors as the source of the adaptations. False designation of origin, as applied to written work, deals with false designation of the creator of the work; the "origin" of the work is its author. The court did not answer the question who the author or authors of the Waldman books were, and hence, who should be credited on the Landoll books. The Supreme Court, interpreting section 201(a) of the Copyright Act, has held that "the author is the party who actually created the work. Section 201(b) of the Copyright Act provides further: "In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title...." A work made for hire is defined as a work prepared by an employee within the scope of his or her employment; or 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. 3C SY 2012-2013 - IPL If the books were "made for hire," then Waldman is the source of the works, and should be credited when the works are used. If the books were not "made for hire," then the writers and illustrators should be credited. It is unclear from the record whether, as required by part one of the statute, some or all of the books were written by Waldman employees within the scope of their employment. As this determination is essential to crafting appropriate preliminary relief, this issue is remanded to the district court for further consideration.

Consumers are likely to be confused by Landoll's misrepresentation as to the source of its books, even though the Landoll books are "substantially similar" to but not "bodily appropriations" of the Waldman books The district court found that consumers will be led to believe falsely that Landoll, and the writers and illustrators credited in the Landoll books, are the source of the adaptations. As mentioned above, the Ninth Circuit has held that in the context of reverse passing off, consumer confusion is caused only by the false designation of works that are "bodily appropriations" of the originals. We concur with the district courts conclusion. The injunction issued by the district court prohibits Landoll from publishing and selling any books that are substantially similar to Waldman's Great Illustrated Classics. Even if an injunction is warranted, which depends upon whether Waldman and Playmore can prove an irreparable economic injury, the scope of the district court's injunction is too broad. At most, Waldman and Playmore can enjoin only Landoll's acts that violate section 43(a). In this case, Landoll's false designation of the origin of its books is the act potentially violative of the Lanham Act. Therefore, Waldman and Playmore are only entitled to enjoin Landoll from falsely representing the source of its books. Landoll may in any case continue to publish its books as long as it correctly credits Waldman's and Playmore's authors. The issue of whether Landoll can reproduce the Waldman books at all is a copyright issue. At the time Waldman and Playmore moved for the preliminary injunction, Waldman had not registered its copyright, and therefore could not seek an injunction based on copyright infringement. It has now registered its copyright and has amended its complaint to include a cause of action for copyright infringement. Because this was done after this appeal was filed, we have not considered the copyright claim in this appeal. The district court may consider on remand whether the parties' positions have changed now that Waldman has registered. xx 0 xx DAVID WOODS, ET. AL. v. BOURNE CO. 60 F.3d 978 July 25, 1995 FEINBERG FACTS: Harry Woods (Woods) wrote the words and music to "When The Red, Red, Robin Comes Bob, Bob, Bobbin' Along" in 1926. Woods entered into a Songwriter's Agreement with the publishing company of Irving Berlin, Inc. (Berlin). The heirs of Woods, doing business as Callicoon Music (Callicoon), are plaintiffsappellees in this matter. Later on, the Bourne Company (Bourne), defendant-appellant herein, succeeded to Berlin's interests in the Song. By the Songwriter's Agreement, Woods transferred to Berlin the original musical composition including the publishing rights, the performing rights, the rights to use the same for mechanical reproduction, the right to make, publish and perform any arrangement or adaptation of the same, and all copyrights and the rights to secure copyrights and extensions and renewals of copyrights in the same, or in any arrangements or adaptations thereof. Berlin obtained a certificate of registration of copyright for the original unpublished musical composition. The copyright certificate indicates that Woods is the author of the words and music. Berlin also published a piano-vocal arrangement, and Berlin obtained a certificate of copyright for that arrangement one month after registering the unpublished Song. The copyright certificate for the piano-vocal arrangement also

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names Woods as the author of the words and music. Berlin is listed as the copyright owner on both certificates. The certificates do not indicate that anyone other than Woods acted as arranger. Under the Copyright Act of 1909, in effect at the time of Woods's grant to Berlin, the original term of a copyright was 28 years, followed by a renewal term of another 28 years. Thus, the grant from Woods to Berlin in the Songwriter's Agreement, which included renewal rights, was to endure for up to 56 years, ending in 1982. The reason for including a renewal term in the Copyright Act was to permit an author who sold the rights in his work for little consideration, when measured against the work's subsequent success, to enjoy a second opportunity with more bargaining power to reap the full value of the work. Thus, Congress attempted to alleviate the problem of the inability of authors to know the true monetary value of their works prior to commercial exploitation. That purpose, however, was largely eroded by a subsequent Supreme Court decision holding that renewal rights were assignable along with original term rights in a work. When the Copyright Act was revised in 1976, Congress attempted to restore a second chance to authors or their heirs. Among other changes, Congress prolonged the duration of copyrights then in the renewal term so that they would continue for an additional 19 years. At the end of the 28th year of the renewal term, the author (if alive) or the author's surviving spouse or children may terminate the rights of a grantee, usually a publisher, to whom the author had transferred rights in the original work. During the 19year extended renewal term, a copyrighted work does not enter the public domain but continues to generate royalties. If the author or heirs elect to terminate the publisher's rights, royalties become payable to them rather than to the publisher. The author or heirs thus "recapture" rights in the copyrighted work and may thereby be relieved "of the consequences of ill-advised and unremunerative grants that had been made before the author had a fair opportunity to appreciate the [work's] true value." There is an important exception to the reversion rights of the author or heirs for derivative works produced by an authorized party during the original and renewal copyright terms. The Copyright Act of 1976 provides that:
[a] derivative work prepared under authority of the grant before its termination may continue to be utilized under the terms of the grant after its termination, but this privilege does not extend to the preparation after the termination of other derivative works based upon the copyrighted work covered by the terminated grant. The Act defines a derivative work as a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a "derivative work."

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The renewal term for Bourne's copyright in the Song came to an end and Callicoon terminated Bourne's rights immediately thereafter. During the original and renewal copyright terms, Berlin, and then its successor Bourne, successfully exploited the Song for its commercial value. Berlin registered the piano-vocal arrangement with the Copyright Office, naming Woods as the author. Bourne obtained 16 different registrations of copyright for different arrangements of the Song. The copyright registrations for these arrangements indicate that Woods is the author of the words and music. Other people are listed as arrangers or authors of new material. Bourne authorized the Hal Leonard Publishing Company (Leonard) to reprint arrangements of the Song in assorted sheet music compilations. Bourne also issued numerous licenses (known as mechanical licenses), often through its agent, the Harry Fox Agency, to record companies to make sound recordings of the Song as performed by popular artists. Bourne also issued licenses (known as synchronization licenses or synch licenses), frequently through the Harry Fox Agency, to motion picture and television studios to incorporate the Song in movies and in television programs.

After terminating Bourne's rights in the Song, Callicoon began to commercially exploit the Song. Bourne claims, and Callicoon does not dispute, that Callicoon licensed Leonard to reprint published arrangements of the Song formerly licensed by Bourne, simply changing the copyright notice to read "Callicoon" instead of "Bourne." When Leonard announced that it would continue to pay Bourne the royalties for these reprints, Callicoon licensed Warner Brothers Publications instead to reprint arrangements of the Song. Callicoon (or the Harry Fox Agency as Callicoon's agent) also issued synch licenses for use of the Song in various new television programs. Callicoon also granted new synch licenses, similar to an expired license originally issued by Bourne prior to termination, for use of the Song in an episode of "The Lucy Show." Further, Callicoon licensed use of the Song in a television advertisement for Delta Faucet. The principal issues in this case concern rights to perform the Song publicly. Under the Copyright Act, "[t]o 'perform' a work means to recite, render, play, dance, or act it, either directly or by means of any device or process...." As relevant here, performances include television broadcasts of the Song as captured in movies and television programs and radio broadcasts of the Song as captured in sound recordings. To facilitate these functions, authors and publishers early in this century established a performing rights society, the American Society of Composers, Authors and Publishers (ASCAP). Currently, two other societies, Broadcast Music, Inc. (BMI) and the Society of European State Authors and Composers (SESAC), carry out similar functions. By becoming members of ASCAP, authors and publishers may transfer to it the public performance rights in their works. ASCAP in turn issues licenses to radio stations, television stations, restaurants, stores and other entities that "perform" music publicly. Television stations generally obtain blanket licenses from ASCAP that entitle them to perform any musical composition in ASCAP's extensive catalogue. In exchange, the stations pay ASCAP a percentage of their annual gross receipts. During the original and renewal terms, Bourne received royalties from ASCAP for television broadcasts of movies and television programs containing the Song and radio broadcasts of the Song. For each pre-recorded audiovisual work incorporating the Song, Bourne had two sources of income: royalties from the producer for the right to incorporate the Song in the audiovisual work and royalties from television stations, via ASCAP, for each performance of the Song contained in the work. Similarly, Bourne received income from both record producers and, via ASCAP, radio stations performing recordings of the Song. However, the licenses Bourne issued to the record producers do not address performance rights, as the audiovisual synch licenses do. Public performances of the Song as contained in movies, television programs and sound recordings continue to generate substantial royalties. Since Callicoon exercised its termination right in April 1982, Callicoon has continued to receive from ASCAP the author's 50% share of performance royalties, which share is not disputed. What is disputed is the publisher's share of royalties for several categories of post-termination public performances of the Song. The first category concerns post-termination television broadcasts of audiovisual works produced under licenses issued by Bourne before termination. The second category concerns radio performances during the extended renewal term of the Song through sound recordings that were produced before termination under licenses issued by Bourne. Another category concerns post-termination television and radio broadcasts of the Song for which source material is not identified in ASCAP records. In a fourth category by itself is a television commercial for Delta Faucet licensed by Callicoon after termination; according to Bourne, the commercial contains a 1981 Bourne-authorized arrangement of the Song that is a derivative work. Prior to Callicoon's termination of Bourne's rights, Bourne notified ASCAP of Bourne's contention that it " 'continued to be possessed of the right to receive income from all derivative works retained by it.' " ASCAP then deemed that a dispute existed between the parties as to rights to publisher's royalties from posttermination performances of the Song. In accordance with ASCAP policy, such royalties have been held in

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escrow pending resolution of the dispute. The parties have stipulated that the publisher's share of posttermination royalties withheld by ASCAP from the fourth quarter of 1982 to the first quarter of 1992 is $85,042.69. In addition to performance royalties, the parties dispute rights to royalties from sales of reprints of published arrangements of the Song in sheet music compilations produced and distributed by Leonard and Warner Brothers during the extended renewal term. Callicoon filed an amended complaint against Bourne and ASCAP in the district court seeking principally a declaration that Callicoon is entitled to the publisher's royalties withheld by ASCAP. Callicoon also sought a determination of rights to reprint royalties. The district court held a bench trial in rendered its decision in favor of Callicoon. The district court determined that Callicoon was entitled to all of the royalties generated by posttermination performances of the Song, including performances contained in pre-termination derivative audiovisual works. The court found the controlling issue, as to all categories of performance, to be whether the underlying arrangement of the Song itself is a derivative work. Only then would performance royalties continue to go to Bourne during the extended renewal term. The court then considered whether any of the printed or performed arrangements of the Song were derivative works. It found, first, that the original pianovocal arrangement published by Berlin (Bourne's predecessor in interest) was not a Berlin-created derivative work. The court then found that none of the printed or performed arrangements of the Song, with the exception of one arrangement performed by Fred Waring, could be called a derivative work. Since Bourne claimed an exception to the general rule in the 1976 Act permitting termination of the publisher's rights, the court placed the burden on Bourne to identify performances of derivative arrangements. Since Bourne offered no evidence of performances of the Fred Waring arrangement, the court held that all of the withheld ASCAP royalties should be paid to Callicoon. The district court also found that none of the printed arrangements made after the piano-vocal arrangement were derivative works. Accordingly, it ordered all reprint royalties to be paid to Callicoon. This appeal by Bourne followed. ISSUES: A. Whether the arrangement of the Song within a derivative work is itself a derivative work. B. Whether the district court invoked the correct standard for determining whether arrangements of the Song are sufficiently original to be derivative works and, if so, whether the court correctly applied that standard to the facts before it. HELD: We disagree with the district court in this respect. Whether the arrangement of the Song is itself a derivative work is not relevant to this category of royalties. The derivative work status of an arrangement of the Song, however, is relevant to several other kinds of royalties at issue in this suit. These include royalties from performances of pre-termination sound recordings, performances of post-termination audiovisual works and sales of sheet music reprints. Royalties from Television Performances We consider first the basis for determining entitlement to royalties from post-termination performances of the Song as contained in pre-termination movies and television programs.

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The Derivative Works Exception preserves the right of owners of derivative works to continue to exploit their works during the extended renewal term under previously negotiated terms. Without such an exception, authors might use their reversion rights to extract prohibitive fees from owners of successful derivative works or to bring infringement actions against them. The goal of keeping derivative works in public circulation does not require that publishers rather than authors receive royalties for their use. As long as the royalties paid by a derivative work user remain unchanged, the user should be indifferent as to whether an author or publisher receives the payment. The royalties generated during the extended renewal term will be a windfall to either authors (and their heirs) or publishers since, at the time the rights at issue were originally established, neither group expected to get royalties for more than 56 years. The question, therefore, is: Who is the beneficiary of this windfall? The answer, according to the decision of the Supreme Court in Mills Music, Inc. v. Snyder, is found in the phrase "under the terms of the grant," as used in the Derivative Works Exception. We quote its text again for convenience: A derivative work prepared under authority of the grant before its termination may continue to be utilized under the terms of the grant after its termination, but this privilege does not extend to the preparation after the termination of other derivative works based upon the copyrighted work covered by the terminated grant. Mills Music posed circumstances similar to those of the instant case. The Supreme found that the phrase "terminated grant," the last two words in the Derivative Works Exception, must refer to the original grant from author to publisher. The Court reasoned that the other two uses of the word "grant" in the single sentence of the Derivative Works Exception must logically refer to the same grant. The Court noted that "[t]he 1940 grant from Snyder to Mills expressly gave Mills the authority to license others to make derivative works." It then concluded that "a fair construction of the phrase 'under the terms of the grant' as applied to any particular licensee would necessarily encompass both the [original] grant [from author to publisher] and the individual license [to record producers] executed pursuant thereto." Mills Music is, of course, binding upon us. Mills Music appears to require that where multiple levels of licenses govern use of a derivative work, the "terms of the grant" encompass the original grant from author to publisher and each subsequent grant necessary to enable the particular use at issue. If one of those grants requires payment of royalties by licensees to an intermediary, such as a publisher, then continued utilization of derivative works "under the terms of the grant" requires continued payments to the intermediary. The effect of Mills Music, then, is to preserve during the post-termination period the panoply of contractual obligations that governed pre-termination uses of derivative works by derivative work owners or their licensees. The derivative works involved in Mills Music were sound recordings, and the use there was the sale of copies. The concededly derivative works we now address are audiovisual works and the use in question is public performance. We believe that the reasoning of Mills Music also applies in this situation. There is no question that the owners of the copyrights in audiovisual works have the right to perform the works publicly. They typically exercise this right by licensing television stations to broadcast their works. In this case, the terms of the synch licenses issued by Bourne to the producers required the television stations performing the audiovisual works to obtain a second grant from either Bourne or ASCAP, licensing the stations to perform the Song contained in the audiovisual works. In practice, this license is always obtained from ASCAP, which then remits the publisher's share of fees to Bourne pursuant to the agreement between Bourne and ASCAP. Under our reading of Mills Music, the "terms of the grant" include the provisions of the grants from Bourne to ASCAP and from ASCAP to television stations. This pair of licenses is contemplated in the grant of the synch licenses from Bourne to film and television producers. 3C SY 2012-2013 - IPL

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Callicoon contends that neither the terms of the grants from Bourne to audiovisual work producers nor the terms of the grant from Bourne to ASCAP identify Bourne as the payee of performance royalties. By contrast, Callicoon points out that the mechanical licenses to record companies in Mills Music explicitly named Mills as payee, and the Supreme Court viewed this fact as dispositive. Therefore, Callicoon argues, termination in this case "simply subjects distribution of the royalties to ASCAP's usual procedures, under which, absent any specific direction to the contrary, royalties are distributed to current copyright owners." We do not agree. The fact that the performance right in the Song is conveyed separately through ASCAP is simply an accommodation dictated by the practical problem of enforcing performance rights and should not control analysis of the distribution of performance royalties. It may be true that no license specifically identifying audiovisual works containing "Red, Red, Robin" requires payment of performance royalties to Bourne. However, as explained above, performance royalties are generally traded "in bulk," with a publisher granting ASCAP non-exclusive performance rights in all of its songs, whether contained in derivative works or not. Television broadcast stations in turn obtain blanket licenses from ASCAP. Thus, even if the terms of a grant to perform any single work may be somewhat obscured by the bulk trading of performance rights, the terms are necessarily contained within the overarching grants (from Bourne to ASCAP and from ASCAP to the television broadcast stations) and may be reconstructed by reference to them. The relevant terms, according to Mills Music, would be those that were in place "at the time of termination." 469 U.S. at 174, 105 S.Ct. at 650. We therefore reverse the decision of the district court as to royalties from post-termination performances of pre-termination audiovisual works. Royalties from Sound Recordings and Other Works The analysis above, which applies to post-termination performances of pre-termination movies and television programs, does not apply to certain other post-termination uses of the Song. The various posttermination uses which we now consider have little in common except that for each, the question whether the arrangement of the Song itself is a derivative work is relevant to the allocation of post-termination royalties. The first category to which we turn is post-termination radio performances of pre-termination sound recordings. At first blush, it may seem anomalous that sound recordings should be subject to a different analysis than the audiovisual works considered above. Like audiovisual works, sound recordings are clearly derivative works, which at least for some purposes fall within the Derivative Works Exception. However, while the Act confers a right of public performance on the owner of a copyright in an audiovisual work, it specifically denies such a right to the owner of a copyright in a sound recording. Instead, the right to perform a song contained in a sound recording belongs to the owner of the copyright in the song. The Derivative Works Exception provides for continued utilization of a derivative work. As the Supreme Court noted in Mills Music, "The purpose of the Exception was 'to preserve the right of the owner of a derivative work to exploit it, notwithstanding reversion.' Thus, the Exception protects only authorized uses made by derivative work copyright owners, or their licensees. Therefore, even though a sound recording is concededly a derivative work, that fact alone does not justify application of the Derivative Works Exception to performances of sound recordings. We must still consider, however, whether a different analysis requires application of the Exception. Since the owner of the copyright in the Song holds the public performance right for sound recordings, that right would ordinarily revert to Callicoon during the extended renewal term. However, if the particular Song arrangements contained in the sound recordings are themselves Bourne-authorized derivative works, as Bourne contends,

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then Bourne should retain the performance right under the Derivative Works Exception and receive the royalties therefrom. The same analysis applies to the royalties from the remaining post-termination uses of the Song, since Bourne argues with respect to all of them that they utilize arrangements of the Song that are Bourneauthorized derivative works. These categories of uses are the reprinting and selling of sheet music of pretermination arrangements, the performance of a television commercial for Delta Faucet, which was produced after termination, and post-termination radio and television performances for which ASCAP records do not identify source material. The district court found that the first sentence of that definition, which plainly identifies a "musical arrangement" as one type of derivative work, must be read in conjunction with the second sentence's requirement of "modifications which, as a whole, represent an original work of authorship." Therefore, according to the district court, not every musical arrangement is entitled to derivative work status. The arrangement must be an original work of authorship. The court then asserted that Bourne's claim that Berlin's arrangers somehow exercised authorship by turning the lead sheet into a commercially exploitable pianovocal arrangement was "contrary to the ways of the trade." In order for a work to qualify as a derivative work it must be independently copyrightable. The basis for copyright protection contained in both the constitution and the Copyright Act is originality of authorship. While a certificate of copyright registration, such as the one that Berlin obtained for the piano-vocal arrangement, creates a presumption of copyrightability, the existence of a registration certificate is not dispositive. In the case of Batlin, we held that "there must be at least some substantial variation [from the underlying work], not merely a trivial variation." We warned that "[t]o extend copyrightability to minuscule variations would simply put a weapon for harassment in the hands of mischievous copiers intent on appropriating and monopolizing public domain work." As the Gracen court explained in discussing the originality requirement for a painting derived from a photograph, there must be "sufficiently gross difference between the underlying and the derivative work to avoid entangling subsequent artists depicting the underlying work in copyright problems." This observation may be particularly relevant in the musical context. Bourne argues that the district court overstated the degree of originality required for an arrangement of a song to merit derivative work status. Bourne focuses on the court's statement that "[t]here must be such things as unusual vocal treatment, additional lyrics of consequence, unusual altered harmonies, novel sequential uses of themes...." We agree that the sentence that Bourne quotes does overstate the standard for derivative work originality. As we have observed on several occasions, the requirement of originality is not the same as the requirement of novelty, the higher standard usually applied to patents. Following its apparent exaggeration of the standard for derivative work originality, the court explained that [there must be] something of substance added making the piece to some extent a new work with the old song embedded in it but from which the new has developed. It is not merely a stylized version of the original song where a major artist may take liberties with the lyrics or the tempo, the listener hearing basically the original tune. It is, in short, the addition of such new material as would entitle the creator to a copyright on the new material. This, we believe, is a correct statement of the originality standard as set out in Batlin. The first and third sentences simply reiterate Batlin 's "substantial variation" requirement. The second sentence, disqualifying "stylized version[s] of the original song," as well as the district court's earlier dismissal of "cocktail pianist variations of the piece that are standard fare in the music trade by any competent musician," merely express, in terms relevant to the musical context, our explanation in Batlin that "the demonstration of 'physical skill' or 'special training,'

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To determine whether a work is sufficiently original to be a derivative work, the judge in a bench trial must make findings of fact based upon a comparison of two works. The judge must then apply the legal standard of originality to the facts to determine whether the standard has been met. Although this seems at first blush to be a two-step process, with review of the factual findings governed by a clearly erroneous standard and the legal conclusion subject to de novo review, most courts, including this one, apparently view the process as purely a factual inquiry, reviewable for clear error alone. Regardless of the applicable standard of review, in the instant case we believe that there is adequate support in the record for Judge Owen's determinations. In other words, on this aspect of the case we find that the district court did not err--period. Royalties from Performances Where Source Material was not Identified We are left with the category of royalties, worth about $18,000, pertaining to radio and television performances monitored by ASCAP for which source materials were not sufficiently identified. The district court placed the burden on Bourne, as the party claiming an exception to the heirs' right of termination to prove that any post-termination performances were based upon pre-termination derivative arrangements of the Song. Finding that Bourne failed to meet this burden, the court awarded the royalties to Callicoon. On appeal, Bourne claims that the recapture right and the Derivative Works Exception are two parts of a legislative compromise, and that the two parts should be placed "on a level playing field." We are unpersuaded by Bourne's argument that the Derivative Works Exception should not be treated like any other exception to a statutory rule. It is clear from the statutory scheme that it is indeed an exception to the general rule of reversion of rights to the author's heirs upon termination, and it Therefore, we hold that the district court properly placed the burden on Bourne to prove that particular performances were based upon Bourne-authorized derivative works. Because, as the parties stipulated, the "source materials" for these performances were unidentified, it is impossible to determine from the record whether the works performed were created before or after termination. As to the unidentified television performances, Bourne has introduced no evidence that any of these disputed performances were of pre-termination audiovisual works, which would entitle it to royalties under the analysis of above. In addition, in light of our affirmance of the district court's ruling that virtually none of the Bourne-authorized arrangements are derivative works, it is not more likely than not that unidentified performances are performances of Bourne-authorized derivative works. Thus, the district court did not err in finding that Bourne had failed to satisfy its burden of proof. Accordingly, we affirm the judgment to the extent that it awarded Callicoon approximately $18,000 attributable to post-termination performances of unidentified material. xx 0 xx PEARL & DEAN (PHIL.), INCORPORATED v. SHOEMART, INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED G.R. No. 14822, August 15, 2003, THIRD DIVISION (CORONA, J.) 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. 3C SY 2012-2013 - IPL

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FACTS: Pearl and Dean (Phil.) (P&D), 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. P&D 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 covering the following products: stationeries such as letterheads, envelopes and calling cards and newsletters. From 1981 to about 1988, P&D employed the services of Metro Industrial Services (MIS) to manufacture its advertising displays. Sometime in 1985, P&D negotiated with Shoemart, Inc. (SMI) for the lease and installation of the light boxes. SMI offered that it be installed in SM Cubao and SM Makati. Accordingly, on September 11, 1985, Pearl and Deans submitted for signature the contracts covering SM Cubao and SM Makati to SMIs. However, only the contract for SM Makati was returned signed. On October 4, 1985, P&D wrote SMI inquiring about the other contract but it did not bother to reply. Instead, SMIs house counsel informed P&D that it was rescinding the contract for SM Makati due to non-performance of the terms thereof. P&D protested the unilateral action of SMI and pushed for the signing of the contract for SM Cubao. Two years later, MIS 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, P&D discovered light boxes similar to those it manufactures were installed in SM City and in the fast food section of SM Cubao and in two (2) other SM stores bearing the words Poster ads. It further discovered that 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. In the light of its discoveries, P&D sent a letter 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 P&D of compensatory damages in the amount of Twenty Million Pesos. Claiming that both SMI and NEMI failed to meet all its demands, P&D filed a case for infringement of trademark and copyright, unfair competition and damages. The RTC decided in favor of P&D. On appeal, however, CA reversed the RTCs decision holding that since the light boxes cannot, by any stretch of the imagination, be considered as either prints, pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly classified as a copyrightable class "O" work and that Section 20 of the Trademark Law impliedly permits a manufacturer to venture into the production of goods and allow him to appropriate the brand name of the senior registrant on goods other than those stated in the certificate of registration of the latter. ARGUMENTS OF P&D: 3C SY 2012-2013 - IPL

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1. That SMI infringed on its copyright over the light boxes when SMI had the units manufactured by Metro and EYD Rainbow Advertising for its own account. ARGUMENTS OF SMI and NEMI: 1. That the registration of the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like; 2. That the word "Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as such, registration of such mark is invalid; 3. That what was copyrighted were the technical drawings only, and not the light boxes themselves; and 4. 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: A. 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? B. 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? C. 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: Petition DENIED. ON THE ISSUE OF COPYRIGHT INFRINGEMENT: Obviously, P&Ds position was premised on its belief that its copyright over the engineering drawings extended ipso facto to the light boxes depicted or illustrated in said drawings. In ruling that there was no copyright infringement, CA held that the copyright was limited to the drawings alone and not to the light box itself. The Court agrees with the CA. 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. Accordingly, it can cover only the works falling within the statutory enumeration or description. P&Ds application for a copyright certificate and the 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. Said section provides that:
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the following works: Xxxx (O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;

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This being so, P&Ds copyright protection extended only to the technical drawings and not to the light box itself because the latter was not at all in the category of "prints, pictorial illustrations, advertising copies, labels, tags and box wraps. Although P&Ds copyright certificate was entitled "Advertising Display Units" its claim of copyright infringement cannot be sustained. Furthermore, 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. ON THE ISSUE OF PATENT INFRINGEMENT: For some reason or another, P&D 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, P&D could not legally prevent anyone from manufacturing or commercially using the contraption. To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a primordial requirement. No patent, no protection. The ultimate goal of a patent system is to bring new designs and technologies into the public domain through disclosure. Ideas, once disclosed to the public without the protection of a valid patent, are subject to appropriation without significant restraint. 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 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. It is only after an exhaustive examination by the patent office that a patent is issued. Such an indepth investigation is required because "in rewarding a useful invention, the rights and welfare of the community must be fairly dealt with and effectively guarded. To that end, the prerequisites to obtaining a patent are strictly observed and when a patent is issued, the limitations on its exercise are equally strictly enforced. To begin with, a genuine invention or discovery must be demonstrated lest in the constant demand for new appliances, the heavy hand of tribute be laid on each slight technological advance in art. There is no such scrutiny in the case of copyrights nor any notice published before its grant to the effect that a person is claiming the creation of a work. The law confers the copyright from the moment of creation and the copyright certificate is issued upon registration with the National Library of a sworn ex-parte claim of creation. Therefore, not having gone through the arduous examination for patents, the P&D 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. ON THE ISSUE OF TRADEMARK INFRINGEMENT: Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate Court, where the Court, 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." 3C SY 2012-2013 - IPL

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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. xx 0 xx

FRANCISCO G. JOAQUIN, JR., and BJ PRODUCTIONS, INC., v. HONORABLE FRANKLIN DRILON, GABRIEL ZOSA, WILLIAM ESPOSO, FELIPE MEDINA, JR., and CASEY FRANCISCO G.R. No. 108946, January 28, 1999, SECOND DIVISION (MENDOZA, J.) 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. The show's format and style of presentation was also submitted to the National Library on June 28, 1973. Francisco Joaquin, Jr. (Joaquin), president of BJPI, saw on RPN Channel 9 an episode of It's a Date, which was produced by IXL Productions, Inc. (IXL). Consequently, he wrote a letter to Gabriel M. Zosa (Zosa), president and general manager of IXL, informing Zosa that BJPI had a copyright to Rhoda and Me and demanding that IXL discontinue airing It's a Date. Zosa apologized to Joaquin and requested a meeting to discuss a possible settlement. IXL, however, continued airing It's a Date, prompting Joaquin to send a second letter reiterating his previous demand and warning him of a legal action. Meanwhile, Zosa sought to register IXL's copyright to the first episode of It's a Date for which it was issued by the National Library a certificate of copyright August 14, 1991. Upon complaint of Joaquin et al., an information for violation of P.D. No. 49 was filed against Zosa together with certain officers of RPN Channel 9. However, Zosa sought a review of the resolution of the Assistant City Prosecutor before the Department of Justice. Secretary of Justice Franklin M. Drilon reversed the Assistant City Prosecutor's findings and directed him to move for the dismissal of the case against Zosa et al. Joaquins MR was denied. Hence, he filed a petition for certiorari with the SC. ARGUMENTS: Zosa et al.: BJPI's copyright covers only a specific episode of Rhoda and Me and that the formats or concepts of dating game shows are not covered by copyright protection under P.D. No. 49. DOJ Sec: The idea of a dating game show is, in the opinion of this Office, a non-copyrightable material. Ideas, concepts, formats, or schemes in their abstract form clearly do not fall within the class of works or materials susceptible of copyright registration as provided in PD. No. 49.
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Joaquin et al.: That Secretary of Justice gravely abused his discretion in ruling that the master videotape should have been presented in order to determine whether there was probable cause for copyright infringement. ISSUE: Whether the formats or concepts of dating game shows are covered by copyright protection under P.D. No. 49 HELD: Petition DISMISSED. 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. This provision is substantially the same as 172 of the INTELLECTUAL PROPERTY CODE OF PHILIPPINES (R.A. No. 8293). The format or mechanics of a television show is not included in the list of protected works in 2 of P.D. No. 49. For this reason, the protection afforded by the law cannot be extended to cover them.
Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent right granted by the statute, and not simply a pre-existing right regulated by the statute. Being a statutory grant, the rights are only such as the statute confers, and may be obtained and enjoyed only with respect to the subjects and by the persons and on terms and conditions specified in the statute. (18 C.J.S. 161)

P.D. No. 49, 2, in enumerating what are subject to copyright, refers to finished works and not to concepts. The copyright does not extend to an idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work. Thus, the new INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES provides:
Sec. 175. Unprotected Subject Matter. Notwithstanding the provisions of Sections 172 and 173, no protection shall extend, under this law, to any idea, procedure, system, method or operation, concept, principle, discovery or mere data as such, even if they are expressed, explained, illustrated or embodied in a work; news of the day and other miscellaneous facts having the character of mere items of press information; or any official text of a legislative, administrative or legal nature, as well as any official translation thereof.

Cinematographic works and works produced by a process analogous to cinematography or any process for making audio-visual recordings;

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.

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The Court is of the opinion that Joaquin et al.s copyright covers audio-visual recordings of each episode of Rhoda and Me, as falling within the class of works mentioned in P.D. 49, 2(M), to wit:

xx 0 xx FILIPINO SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, INC., v. BENJAMIN TAN G.R. No. L - 36402, March 16, 1987, THIRD DIVISION (PARAS, J.) FACTS: Plaintiff-appellant is a non-profit association of authors, composers and publishers duly organized under the Corporation Law of the Philippines and registered with the Securities and Exchange Commission. Said association is the owner of certain musical compositions among which are the songs entitled: "Dahil Sa Iyo", "Sapagkat Ikaw Ay Akin," "Sapagkat Kami Ay Tao Lamang" and "The Nearness Of You." Defendant-appellee is the operator of a restaurant known as "Alex Soda Foundation and Restaurant" where a combo with professional singers, hired to play and sing musical compositions to entertain and amuse customers therein, were playing and singing the above-mentioned compositions without any license or permission from the appellant to play or sing the same. Accordingly, appellant demanded from the appellee payment of the necessary license fee for the playing and singing of aforesaid compositions but the demand was ignored. Hence, appellant filed a complaint with the lower court for infringement of copyright against defendant-appellee for allowing the playing in defendant-appellee's restaurant of said songs copyrighted in the name of the former. Defendant-appellee, in his answer, countered that the complaint states no cause of action. While not denying the playing of said copyrighted compositions in his establishment, appellee maintains that the mere singing and playing of songs and popular tunes even if they are copyrighted do not constitute an infringement under the provisions of Section 3 of the Copyright Law. The lower court, finding for the defendant, dismissed the complaint. Plaintiff appealed to the Court of Appeals which certified the case to the Supreme Court for adjudication on the legal question involved. ISSUES: A. Whether the playing and signing of musical compositions which have been copyrighted under the provisions of the Copyright Law (Act 3134) inside the establishment of the defendant-appellee constitute a public performance for profit within the meaning and contemplation of the Copyright Law of the Philippines. B. Whether or not appellee can be held liable assuming that there were indeed public performances for profit. ARGUMENT OF APPELLANT: 3C SY 2012-2013 - IPL The playing or singing a musical composition is universally accepted as performing the musical composition and that playing and singing of copyrighted music in the soda fountain and restaurant of the appellee for the entertainment of the customers although the latter do not pay for the music but only for the food and drink constitute performance for profit under the Copyright Law. HELD: The appealed decision of the Court of First Instance of Manila in Civil Case No. 71222 is hereby AFFIRMED.

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We concede that indeed there were "public performances for profit" 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." 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. The defendant conducts his place of business for profit, and it is public; and the music is performed for profit. In a similar case, the Court ruled that "The Performance in a restaurant or hotel dining room, by persons employed by the proprietor, of a copyrighted musical composition, for the entertainment of patrons, without charge for admission to hear it, infringes the exclusive right of the owner of the copyright.". In delivering the opinion of the Court in said two cases, Justice Holmes elaborated thus:
If the rights under the copyright are infringed only by a performance where money is taken at the door, they are very imperfectly protected. Performances not different in kind from those of the defendants could be given that might compete with and even destroy the success of the monopoly that the law intends the plaintiffs to have. It is enough to say that there is no need to construe the statute so narrowly. The defendants' performances are not eleemosynary. They are part of a total for which the public pays, and the fact that the price of the whole is attributed to a particular item which those present are expected to order is not important. It is true that the music is not the sole object, but neither is the food, which probably could be got cheaper elsewhere. The object is a repast in surroundings that to people having limited power of conversation or disliking the rival noise, give a luxurious pleasure not to be had from eating a silent meal. If music did not pay, it would be given up. If it pays, it pays out of the public's pocket. Whether it pays or not, the purpose of employing it is profit, and that is enough.

As found by the trial court, the music provided is for the purpose of entertaining and amusing the customers in order to make the establishment more attractive and desirable. It will be noted that for the playing and singing the musical compositions involved, the combo was paid as independent contractors by the appellant. It is therefore obvious that the expenses entailed thereby are added to the overhead of the restaurant which are either eventually charged in the price of the food and drinks or to the overall total of additional income produced by the bigger volume of business which the entertainment was programmed to attract. Consequently, it is beyond question that the playing and singing of the combo in defendant-appellee's restaurant constituted performance for profit contemplated by the Copyright Law. Nevertheless, appellee cannot be said to have infringed upon the Copyright Law. Appellee's allegation that the composers of the contested musical compositions waived their right in favor of the general public when they allowed their intellectual creations to become property of the public domain before applying for the corresponding copyrights for the same is correct. The Supreme Court has ruled that "Paragraph 33 of Patent Office Administrative Order No. 3 (as amended, dated September 18, 1947) entitled 'Rules of Practice in the Philippines Patent Office relating to the Registration of Copyright Claims' promulgated pursuant to Republic Act 165, provides among other things that an intellectual creation should be copyrighted thirty (30) days after its publication, if made in Manila, or within the (60) days if made elsewhere, failure of which renders such creation public property." (Santos v. McCullough Printing Company, 12 SCRA 324-325 [1964]. Indeed, if the general public has made use of the

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object sought to be copyrighted for thirty (30) days prior to the copyright application the law deems the object to have been donated to the public domain and the same can no longer be copyrighted. 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 while the song "The Nearness Of You" registered on January 14, 1955 (Brief for Appellant, p. 10) had become popular twenty five (25) years prior to 1968, (the year of the hearing) or from 1943 and the songs "Sapagkat Ikaw Ay Akin" and "Sapagkat Kami Ay Tao Lamang" both registered on July 10, 1966, appear to have been known and sang by the witnesses as early as 1965 or three years before the hearing in 1968. The testimonies of the witnesses at the hearing of this case on this subject were unrebutted by the appellant. Under the circumstances, it is clear that the musical compositions in question had long become public property, and are therefore beyond the protection of the Copyright Law. xx 0 xx NATIONAL RIFLE ASSOCIATION OF AMERICA v. HANDGUN CONTROL FEDERATION OF OHIO, et al., 15 F.3d 559, Feb. 1, 1994 FACTS: The National Rifle Association of America ("NRA") is a New York-based non-profit corporation that lobbies officials and educates the public in support of the ownership of firearms. Handgun Control Federation of Ohio ("HCF") is also a non-profit organization and engages in similar activities, but toward a goal opposing that of the NRA. On two occasions, the NRA sent short letters (two pages in May and one page in June) to its members urging opposition to two gun control bills pending before the Ohio legislature that provided for the ban of certain assault rifles and for waiting periods before gun purchases. Attached to each newsletter was a three-page listing of Ohio state legislators. One page lists the thirty-three members of the Ohio Senate. An asterisk was placed before each of the eight members of the Senate Judiciary Committee. The other two pages contain the same information for a list of the ninety-nine members of the Ohio House of Representatives, with asterisks placed before the nineteen members of the House Judiciary and Criminal Justice Committee. Later, HCF mailed a ten-page newsletter to about 200 of its members, attempting to arouse support for the same House bill the NRA opposed. The newsletter in pages eight and nine contain a two-page list of Ohio representatives, which HCF admits was photocopied from one of the NRA mailings, which HCF received. The block of text at the bottom of the list was copied, except that a few words, including the word "opposing," were blocked out. Subsequently, the NRA filed for and received copyright protection for their earlier newsletters. The NRA then filed a complaint, alleging that HCF copied the NRA's compilation of information concerning the members of the Ohio legislature and published it in its newsletter in violation of the NRA's exclusive copyright. The district court granted summary judgment to the defendant. The court held that the NRA's list of the Ohio representatives could not be copyrighted because the selection and arrangement of the information was "mechanical and routine." Even if the material was copyrightable, the court held, the defense of "fair use" would bar any damage recovery The NRA now appeals.

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ISSUE: Whether HCF made fair use of the NRA legislator list under 17 U.S.C. Sec. 107 HELD: Decision of District Court AFFIRMED. HCF made fair use of the NRA legislator list. Copyrights provide an incentive for the creation of works by protecting the owner's use of his or her intellectual creation, allowing creators to reap the material rewards of their efforts. However, because not every use of a work undermines this underlying rationale of copyright law, and because some uses of copyrighted works are desirable for policy reasons, the courts have long held that many uses of a copyrighted work do not infringe upon the copyright. Codifying these longstanding "fair use" principles, Congress in the 1976 Copyright Act laid out 17 U.S.C. Sec. 107, which reads:
[T]he 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 whole; and 4. the effect of the use upon the potential market for or value of the copyrighted work.

We have no hesitation in finding a fair use here, for all the factors point in that direction. Though not conclusive, the fourth factor--dealing with effect on market share--is "the single most important element of fair use." This factor is generally demonstrated by a showing that the purpose or character of the use was commercial. In Sony Corp. v. Universal City Studios, the Court explained that whether an activity is commercial sets a presumption regarding which way the fourth factor points in a fair use analysis. HCF's use of the NRA legislator list was noncommercial. HCF, a non-profit organization, made no attempt to sell the list, which in any event contains information so readily available that it is doubtful it could be profitably sold. HCF used the list only to further its own lobbying goals. It is also difficult to see how the use could harm the NRA's "market." HCF only sent the information to about 200 members, which could not be a particularly damaging distribution. HCF's use of the list, if it did anything, helped create a market for the NRA, as citizens on one side of a controversial issue presumably feel more need to engage in political activity if citizens on the other side of the issue are active. This, in fact, is the apparent reason why the NRA sent out its newsletters in the first place. The publication here may be compared with the publication of an original list of information by one of two competing magazines. In such a case, the copying and publication of the list by the competitor would be presumptively unfair and an infringement, for it would reduce the market for the copyright-holding magazine. This contrast with commercial activity helps show that the purpose and character of HCF's use is far removed from that which the copyright law centrally protects and instead falls within the realm of the designated fair use purposes. The document was used primarily in exercising HCF's First Amendment speech rights to comment on public issues and to petition the government regarding legislation. The scope of the fair

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use doctrine is wider when the use relates to issues of public concern. Taken as a whole, the HCF newsletter also served an educational purpose, given the considerable information contained within the mailing regarding guns and gun legislation. Also, there is no evidence of bad faith on the part of the HCF person who compiled the mailing. The other factors also support the conclusion that this was a fair use, particularly the second factor, the nature of the copyrighted work. The list in the NRA newsletter is almost entirely factual, and "[t]he law generally recognizes a greater need to disseminate factual works than works of fiction or fantasy." Harper & Row, 471 U.S. at 563, 105 S.Ct. at 2232. As HCF amply shows us, lists containing similar facts are readily available. Regarding the third factor, although HCF used the entire House of Representatives address list, it did not use the remainder of the copyrighted newsletter, which included a Senate list and a letter to NRA members regarding the pending legislation. This letter contained most of the "originality" in the document. For purposes of the second and third factors, one might contrast the list with the HCF's seven pages of detailed analysis of gun legislation, gun types, and related legislation from other states. Mainly in questionand-answer form, those pages provide many facts and opinions in a fairly creative manner. Assuming these pages were copyrighted, if they were photocopied by someone else, their nature and substantiality would weigh on the side of an infringement rather than of a fair use. xx 0 xx PACITA I. HABANA, ALICIA L. CINCO and JOVITA N. FERNANDO v. FELICIDAD C. ROBLES and GOODWILL TRADING CO., INC. G.R. No. 131522, July 19, 1999, FIRST DIVISION (PARDO, J.) 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), 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), 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. 3C SY 2012-2013 - IPL After an itemized examination and comparison of the two books (CET and DEP), petitioners found that several pages of the respondent's 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 so petitioners filed with the RTC a complaint for "Infringement and/or unfair competition with damages" against private respondents.

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Petitioners alleged that in 1985, respondent Robles being substantially familiar with the contents of petitioners' works, and without securing their permission, lifted, copied, plagiarized and/or transposed certain portions of their book CET. The textual contents and illustrations of CET were literally reproduced in the book DEP. The plagiarism, incorporation and reproduction of particular portions of the book CET in the book DEP, without the authority or consent of petitioners, and the misrepresentations of respondent Robles that the same was her original work and concept adversely affected and substantially diminished the sale of the petitioners' book and caused them actual damages by way of unrealized income. 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. Goodwill Trading filed its answer and alleged that petitioners had no cause of action against Goodwill Trading Co., Inc. since it was not privy to the misrepresentation, plagiarism, incorporation and reproduction of the portions of the book of petitioners; that there was an agreement between Goodwill and the respondent Robles that Robles guaranteed Goodwill that the materials utilized in the manuscript were her own or that she had secured the necessary permission from contributors and sources; that the author assumed sole responsibility and held the publisher without any liability. Respondent Robles filed her answer, and denied the allegations of plagiarism and copying that petitioners claimed. Respondent stressed that (1) the book DEP is the product of her independent researches, studies and experiences, and was not a copy of any existing valid copyrighted book; (2) DEP followed the scope and sequence or syllabus which are common to all English grammar writers as recommended by the Association of Philippine Colleges of Arts and Sciences (APCAS), so any similarity between the respondents book and that of the petitioners was due to the orientation of the authors to both works and standards and syllabus; and (3) the similarities may be due to the authors' exercise of the "right to fair use of copyrighted materials, as guides." Respondent interposed a counterclaim for damages on the ground that bad faith and malice attended the filing of the complaint, because petitioner Habana was professionally jealous and the book DEP replaced CET as the official textbook of the graduate studies department of the Far Eastern University. After the trial , the RTC rendered its judgment dismissing the complaint and ordered plaintiffs solidarily reimburse defendant Robles for P20,000.00 attorney's fees and defendant Goodwill for P5,000.00 attorney's fees. Petitioners, in their appeal to the CA, 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. The CA rendered judgment in favor of respondents Robles and Goodwill Trading Co., Inc. staing that similarity of the allegedly infringed work to the author's or proprietor's 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. With regard to the award of attorneys' fees, the CA pronounced that such was not proper, since there was no bad faith on the part of petitioners Habana et al. in

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instituting the action against respondents. The Motion for Reconsideration filed by petitioners was denied by the CA. ISSUES: A. Whether or not despite the apparent textual, thematic and sequential similarity between DEP and CET, respondents committed no copyright infringement? B. Whether or not respondent Robles abused a writer's right to fair use, in violation of Section 11 of Presidential Decree No. 49? HELD: Petition GRANTED. The case was 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. 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 substanlial portion of the work; 177.2 Dramatization, translation, adaptation, abridgement, arrangement or other transformation of the work; 177.3 The first public distribution of the original and each copy of the work by sale or other forms of transfer of ownership; 177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a work embodied in a sound recording, a computer program, a compilation of data and other materials or a musical work in graphic form, irrespective of the ownership of the original or the copy which is the subject of the rental; (n) 177.5 Public display of the original or copy of the work; 177.6 Public performance of the work; and 177.7 Other communication to the public of the work

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)

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xxx xxx 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. A perusal of the records yields several pages of the book DEP that are similar if not identical with the text of CET. Petitioners Book page 404 He died on Monday, April 15, 1975. Miss Reyes lives in 214 Taft Avenue, Manila page 250 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." Respondents Book page 73 He died on Monday, April 25, 1975. Miss Reyes address is 214 Taft Avenue Manila page 100 the same example is found in toto. The only difference is that petitioners acknowledged the author Edmund Burke, and respondents did not.

In several other pages the treatment and manner of presentation of the topics of DEP are similar if not a rehash of that contained in CET. We believe that respondent Robles' act of lifting from the book of petitioners substantial portions of discussions and examples, and her failure to acknowledge the same in her book is an infringement of petitioners' copyrights. When is there a substantial reproduction of a book? It does not necessarily require that the entire copyrighted work, or even a large portion of it, be copied. If so much is taken that the value of the original work is substantially diminished, there is an infringement of copyright and to an injurious extent, the work is appropriated. In determining the question of infringement, the amount of matter copied from the copyrighted work is an important consideration. To constitute infringement, it is not necessary that the whole or even a large portion of the work shall have been copied. If so much is taken that the value of the original is sensibly diminished, or the labors of the original author are substantially and to an injurious extent appropriated by another, that is sufficient in point of law to constitute piracy. The essence of intellectual piracy should be essayed in conceptual terms in order to underscore its gravity by an appropriate understanding thereof. Infringement of a copyright is a trespass on a private domain

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owned and occupied by the owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a synonymous term in this connection, consists in the doing by any person, without the consent of the owner of the copyright, of anything the sole right to do which is conferred by statute on the owner of the copyright. The respondents' claim that the copied portions of the book CET are also found in foreign books and other grammar books, and that the similarity between her style and that of petitioners can not be avoided since they come from the same background and orientation may be true. However, in this jurisdiction under Sec 184 of Republic Act 8293 it is provided that:
Limitations on Copyright. Notwithstanding the provisions of Chapter V, the following shall not constitute infringement of copyright: 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 mentioned.

A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such cases, did not know whether or not he was infringing any copyright; he at least knew that what he was copying was not his, and he copied at his peril. The next question to resolve is to what extent can copying be injurious to the author of the book being copied. Is it enough that there are similarities in some sections of the books or large segments of the books are the same? 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 cannot 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? 3C SY 2012-2013 - IPL 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 latter's research work and compilation and misrepresented them as her own. She circulated the book DEP for commercial use did not acknowledged petitioners as her source.

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Hence, there is a clear case of appropriation of copyrighted work for her benefit that respondent Robles committed. Petitioners' work as authors is the product of their long and assiduous research and for another to represent it as her own is injury enough. In copyrighting books the purpose is to give protection to the intellectual product of an author. This is precisely what the law on copyright protected, under Section 184.1 (b). Quotations from a published work if they are compatible with fair use and only to the extent justified by the purpose, including quotations from newspaper articles and periodicals in the form of press summaries are allowed provided that the source and the name of the author, if appearing on the work, are mentioned. In the case at bar, the least that respondent Robles could have done was to acknowledge petitioners Habana et. al. as the source of the portions of DEP. The final product of an author's toil is her book. To allow another to copy the book without appropriate acknowledgment is injury enough. xx 0 xx NBI- MICROSOFT CORPORATION AND LOTUS DEVELOPMENT CORP. v. JUDY HWANG ET.AL., OF BELTRON ELECTRONICS AND JONATHAN K. CHUA ET.AL. OF TAIWAN MACHINERY DISPLAY AND TRADE CENTER G.R. No. 147043, June 21, 2005 (CARPIO, J.) FACTS: Microsoft Corp, a Delaware, USA corp, owns the Copyright and Trademark to several computer software. Beltron Corp. and Taiwan Machinery Display and Trade Center Inc., both domestic corps. Entered into a Licensing Agreement. 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

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. Microsoft learned that respondents were illegally copying and selling Microsoft software. Microsoft sought the assistance of NBI and PCS, a private investigative firm. Posing as buyers, agents bought hardwares and softwares of Microsoft from respondents encased in Microsoft containers. Microsoft then applied for Search Warrants, and searched the premises of respondents, yielding among others 2,831 pieces of Microsoft Software. Microsoft then charged the respondents in the DOJ with Copyright Infringement and Unfair Competition. Respondents denied charges averring that Microsoft only wants them to pay their outstanding royalty obligations and that the case was civil in nature not criminal arising from the obligations to pay. The DOJ issued resolutions recommending the dismissal of Microsofts complaint for lack of interest to prosecute and insufficiency of evidence. Respondents also filed a motion to Quash the Search Warrant, which was sustained by RTC since respondents presented evidence that the Softwares were bought legitimately from R.R. Donelly, a Microsoft licensee from Singapore. ISSUE:

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Whether the DOJ acted with grave abuse of discretion in not finding probable cause to charge respondents with copyright infringement and unfair competition HELD: Yes, the DOJ acted with grave abuse of discretion. RATIO: Generally, this Court is loath to interfere in the prosecutors discretion in determining probable cause, unless such discretion is shown to have been abused. This case falls under the exception. 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. Section 5 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 and criminally liable for copyright infringement. We held in Columbia Pictures, Inc. v. Court of Appeals: 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. Significantly, under Section 5(A), a copyright owner is vested with the exclusive right to copy, distribute, multiply, [and] sell his intellectual works. The DOJ, when Microsoft presented evidence of the seized materials, refused to pass upon the relevance of these. This is grave abuse of discretion. 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. 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. Beltron is not even an authorized replicator under their agreement, since the Agreement defines an authorized replicator as a third party approved by Microsoft which may reproduce and manufacture Microsoft Products for Beltron.

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The counterfeit non-installer CD-ROMs Sacriz and Samiano bought from respondents also suffice to support a finding of probable cause to indict 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, 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. xx 0 xx MANLY SPORTWEAR MANUFACTURING, INC. v. DADODETTE ENTERPRISES AND/OR HERMES SPORTS CENTER G.R. No. 165306, September 20, 2005, FIRST DIVISION (YNARES-SANTIAGO, J.) FACTS: NBI Special Investigator Eliezer P. Salcedo applied for a search warrant before the RTC of Q.C. based on the information that Dadodette Enterprises and/or Hermes Sports Center (Respondents) were in possession of goods, the copyright of which belonged to Manly Sportswear Mfg., Inc. (MANLY). After finding reasonable grounds that a violation of Sections 172 and 217 of Republic Act (RA) No. 8293 has been committed, a search warrant was issued. Respondents moved to quash and annul the search warrant. The court which issued the warrant, 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, granted the motion and declared the warrant as null and void. On appeal, CA declared that the trial court correctly granted the motion to quash and that its ruling in the ancillary proceeding did not pre-empt the findings of the intellectual property court as it did not resolve with finality the status or character of the seized items. ARGUMENT OF MANLY: That the trial court gravely abused 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 since this issue is within the province of the Intellectual Property Court. ARGUMENT OF RESPONDENTS: 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. ISSUE: Whether or not the trial court acted within its bounds when it ruled, in an ancillary proceeding (quashal of a search warrant), that the copyrighted products of MANLY are not original creations HELD: Petition DENIED. 3C SY 2012-2013 - IPL

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The trial court was acting within its bounds when it ruled, in an ancillary proceeding, that the copyrighted products of MANLY are not original creations 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 pre-empted the finding of the intellectual property court has no legal basis. Furthermore, 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. Additionally, the copyright certificates issued in favor of MANLY constitute merely prima facie evidence of validity and ownership. However, no presumption of validity is created where other evidence exist that may cast doubt on the copyright validity. Hence, where there is sufficient proof that the copyrighted products are not 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 pursuant to Section 2, Rule 7 of the Copyrights Safeguards and Regulations 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.

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