Of the limitation of powers of the Brazilian Central Copyright Licensing Office (ECAD) – By George Eduardo Ripper Vianna
For some time now, in the search for ways to increase its revenues, ECAD has been attempting to hold the sponsors of musical events liable for allowing public performances of songs, based on Article 68 of Law No. 9.619/98, which governs music copyrights in Brazil.
However, as is known, as a rule a sponsor has no influence on the organization of the event. Sponsorship is restricted to transferring funds in exchange for public display of the sponsor’s trademark or performance of services by the sponsor’s agents. Attempting to hold a sponsor liable, as absurd as it may seem, for payment of copyrights or any other charges that may be derived from events for which it only contributes financially, only serves to make the holding of such events, regardless of their nature, unfeasible.
This issue, which is not a new one, was recently examined by the 5th Civil Chamber of the Court of Justice of Rio de Janeiro in a decision handed down onNovember 22, 2011. The case in question was Civil Appeal No. 0016039-60.2006.8.19.0001, handled by this Law Firm, and the matter in dispute was collection of copyrights for public performance of songs at the Rolling Stones show that PlanMusic Promoções Ltda. presented on Copacabana beach onFebruary 18, 2006. The decision rendered was worded as follows:
“COPYRIGHT – ECAD – LIVE MUSICAL PRESENTATION – PAYBACK FOR SONGWRITER – NONPAYMENT – NO CASE OF JOINT AND SEVERAL LIABILITY – FEES – HIKE IN AMOUNT OF COPYRIGHTS – CRITERIA FOR SETTING THEM – UNREASONABLENESS – INTERFERENCE BY JUDICIARY – POSSIBILITY – REGULATION OF COLLECTION – PRECEDENTS FOR SEPARATION – PREVIOUS SHOW – LACK OF PROPORTION – PROPOSAL – BINDING OBLIGATION.
“1- From the reading of Articles 98, and its sole paragraph, and 99 of Law No. 9.610/98 it can be gathered that ECAD is responsible for collecting from users rights to perform songs which are part of the collections of the associations that are its affiliates.
“2- Included in the category of occasional users are those who use a song on occasion and pay retribution to the songwriter for each event — in the case of musical spectacles.
“3- Nevertheless, joint and several liability either derives from the law or from the consensus between the parties and is never presumed, such that it cannot be considered, by analogy, that joint and several liability for payment of copyrights could be extended to parties, namely the promoter and sponsors of the event, other than those listed in the norm that specifically governs the issue.
“4- On this point, considering the peculiarities of the case, the hike in the fees of the prevailing party becomes due.
“5- On another angle, the principles inserted in the Brazilian Civil Code, chiefly objective good faith and the prohibition against abusive exercise of rights, give rise to an approach that differs from the obligatory proceeding, imposing certain limits on the pretenses derived therefrom.
“6- From such a standpoint, valuation of musical works or any intellectual or artistic work, even if the price is discretionally and unilaterally arbitrated by the copyright holder, should be correlated with the characteristics that are peculiar to it.
“7- Along this line, it has to be recognized that setting a percentage for the total budget of an event, covering expenditures that are completely disconnected from the object that one aims to protect, is an affront to the principles of proportionality and good faith and can be characterized as abuse of rights, and even if the activity is eminently private, interference by the public authorities is warranted, especially the judiciary, whenever there occurs abuse in the exercise of any right.
“8- Among other precedents, ECAD used in a similar event a completely different criterion, in that the percentage charged was well below 10% of the event’s total budget, demonstrating that, despite the statutory injunction, it acted with complete liberty in arbitrating the amounts of songwriter paybacks, not exclusively confined to the criteria set out in its Collection Regulations.
“9- In such a context, it is recognized that there is a proven fact — preexistence and validity of agreement in a lower amount — obstructive to the pretense of receiving the amount charged by way of songwriter payback.” (Emphases added)
The opinion of the distinguished reporting magistrate, Milton Fernandes de Souza, takes the issue head on, rejecting ECAD’s claim, as can be seen in the following passage taken from his opinion:
“In this sphere, cases of joint and several liability are restricted, and one cannot consider, by analogy, extending their reach.
“The lesson taught us by Carvalho de Mendonça (Doutrina e Prática das Obrigações (Doctrine and Practice of Obligations) – Tome I, 4th edition, pg. 300), “legal joint and several liability is always an aggravation of the obligation, a derogatory principle of the equity that leads us to bear consequences of acts that are frequently not imputable to us’.
“Hence, if the norm that specifically regulates the matter (Article 110 of Law No. 9.610/98) textually states that, for violation of copyrights in spectacles and public auditions carried out in the places or establishments alluded to in Article 68 of the same law, ‘the owners, directors, managers, impresarios and lessees (…) shall be held accountable, on the basis of joint and several liability, together with the organizers of the spectacles’, there is no way to empower them to reach other parties, namely the promoter and sponsors of the event.
“In this context, the sponsors, ATL and Motorola, as mere purchasers of sponsorship quotas, and in the wake of the jurisprudential precedent of this Court, are no more than “a financial collaborator’ whose “promotional return obtained is equivalent to that of a mere advertiser”. [AC No. 0000805-90.1996.8.19.0000 (1996.001.01266), Court of Justice of Rio de Janeiro (TJRJ), 7th Civil Chamber, Reporting Magistrate Amaury Arruda de Souza, judgment rendered April 23, 1996].
“Such sponsorship is thus equivalent to an ad for which they pay to have their name linked to a mass cultural event and disseminated to the viewing public, either present or at a distance.
“Likewise, the municipal entity, in its role as promoter of the event, merely performed its legitimate task of fostering culture and promoting tourism in the city.
“In reality, we gather from the case records that the City of Rio de Janeiro limited itself to promoting the event and injecting financial resources, with the entire organization and general production being the work of PlanMusic, as it assumed in a most crystalline manner (pg. 1791, paragraph 4).
“Under such circumstances, the rejection of the plaintiff’s claim as groundless is correct in relation to the other parties listed as defendants in the case.”
In a judgment rendered simultaneously on the same date, in a suit for payment into court filed by the very same PlanMusic Entretenimento Ltda., the 5th Civil Chamber also turned down the arbitrary charges imposed by ECAD, invalidating the accounts it submitted for calculation of the copyrights due at musical events open to the public, as we can see in the decision transcribed below:
“ECAD – COLLECTION REGULATIONS – PRECEDENTS FOR SEPARATION – PREVIOUS SHOW – LACK OF PROPORTION – PROPOSAL – BINDING OBLIGATION – PAYMENT INTO COURT – LATE PAYMENT – CREDIT.
“1- Among other precedents, in a similar event ECAD used a completely different criterion, in that the percentage charged was well below 10% of the event’s total budget, demonstrating that, despite the statutory injunction, it acted with complete liberty in arbitrating the amounts of songwriter paybacks, not exclusively confined to the criteria set out in its Collection.
“2- In such a context, it is recognized that there is a proven fact — preexistence and validity of agreement in a lower amount — obstructive to the pretense of receiving the amount charged by way of songwriter payback
“3- And payment into court is subordinate to the refusal to receive the consideration at the time and in the manner and place agreed upon, presence of which constitutes late payment of the creditor and give rise to acceptance of the petition.”
Without doubt, the decision reached the crux of the matter, imposing severe restrictions on the lack of criterion with which ECAD has been guiding its activities in procedures for collection of copyrights in events of this kind.
It is further worth transcribing, due to its importance, what the opinion of the reporting magistrate made clear regarding the matter at issue:
“Moreover, as amply reported in the case records and particularly well documented in the expert report and its attachments (on pages 1453-1542 of the collection proceedings), in the show put on by singer Lenny Kravitz, ECAD used a criterion that departs completely from the one set out in its Collection Regulations, since the percentage charge was well below 10% of the total budget for the event.
“The fact, albeit not servient — since it is not found in the same juridical relationship — to configuration of violation of the prohibition against venire contra factum proprium, as claimed by the appellant, is quite illustrative of the flexibility that ECAD grants itself in arbitrarily deciding on the prices charged, as well as the absolute lack of fixed criterion.
“By the way, the discrepancy of 3,054% (three thousand and fifty-four per cent) found in the comparison between the songwriter payback charged for the event in which the cited singer performed and that now claimed in relation to the show put on by Rolling Stones is completely unglued from any rationality.
“Still in the same vein, it was also reported in those same case records (that there was) a ‘verbal agreement with such Office, from the time he was Special Events Advisor, to pay over 10% of the amount of the artistic fee of any musical show performed free of charge in public”, according to the Undersecretary for Municipal Events. FIFTH CIVIL CHAMBER OF THE COURT OF JUSTICE. Appeal No. 0017974-38.2006.8.19.0001- Page 6 of 7.
“Along this line, we are forced to conclude that, despite the injunction contained in its bylaws, ECAD acts with full liberty in arbitrarily deciding the amounts of songwriter paybacks, not being exclusively confined to the criteria set out in its Collection Regulations.
“Any agreement to set the price lower is thus deemed validated by repeated practice. “
In practice, this means that there is no obligation for unrestricted and mandatory compliance with the charge tables contained in the ECAD Collection Regulations, just as such collection agency does not have legal competence to set – at its whim and free criterion – such amounts as it deems are due at musical events without box-office collection.
The decision that were unanimously made and which fully accept the arguments put forth by our client in the debate on the issue, aimed at demonstrating that ECAD’s procedures and conduct are subject to certain moderation, which cannot subvert the economic principles that should regulate the public use of musical works in our nation.
Both decisions were published in the Official Gazette of November 28, 2011.