ABS-CBN BROADCASTING CORPORATION, PETITIONER, VS. PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG BIAO), MANUEL F. ABELLADA, RAUL B. DE MESA, AND ALOYSIUS…

ABS-CBN Broadcasting versus Philippine Multi-Media System

The Case

This is a petition for review on certiorari brought by ABS-CBN Broadcasting Corporation against Philippine Multi-Media System, Incorporated and the members of its board of directors. ABS-CBN, a licensed television and radio broadcaster, complains that PMSI, the operator of a direct-to-home satellite television service, rebroadcast its Channels 2 and 23 without authority, and thereby infringed its broadcasting rights and copyright under the Intellectual Property Code. The case matters because it fixes the boundary between broadcasting and mere cable-style retransmission, and because it recognizes the government's must-carry rule as a limitation on copyright.

Procedural History

ABS-CBN filed a complaint with the Intellectual Property Office for violation of laws involving property rights, with a prayer for a temporary restraining order and a writ of preliminary injunction. The Bureau of Legal Affairs granted the restraining order, and later, on December 22, 2003, rendered a decision finding that PMSI had infringed ABS-CBN's broadcasting rights and copyright and ordering it to permanently cease and desist from rebroadcasting Channels 2 and 23.

PMSI appealed to the Office of the Director-General of the Intellectual Property Office. On December 20, 2004, the Director-General reversed and set aside the decision of the Bureau of Legal Affairs, holding that PMSI was not engaged in rebroadcasting. ABS-CBN then went up to the Court of Appeals on a petition for review with a prayer for a temporary restraining order and a writ of preliminary injunction. It later filed a petition for contempt against PMSI for continuing to rebroadcast despite the restraining order. The Court of Appeals consolidated the two petitions and, on July 12, 2006, sustained the Director-General and dismissed both petitions. ABS-CBN's motion for reconsideration was denied, hence this petition for review on certiorari before the Supreme Court.

Facts

ABS-CBN is licensed to engage in television and radio broadcasting. It broadcasts by wireless means to Metro Manila and nearby provinces, and by satellite to provincial stations, over Channel 2 on Very High Frequency and Channel 23 on Ultra High Frequency. It also owns regional stations whose programming follows the perceived demands of their regions, so that programs shown in Metro Manila are not necessarily shown in other provinces.

PMSI operates the Dream Broadcasting System, delivering digital direct-to-home television by satellite to subscribers all over the Philippines. It was granted a legislative franchise in May 1998 and a Provisional Authority by the National Telecommunications Commission in February 2000 to install, operate and maintain a nationwide direct-to-home satellite service. When it commenced operations, its program line-up included ABS-CBN Channels 2 and 23, together with other free-to-air channels and paid premium channels.

On April 25, 2001, ABS-CBN demanded that PMSI cease and desist from rebroadcasting Channels 2 and 23. PMSI replied that the rebroadcasting was in accordance with the authority granted by the National Telecommunications Commission and its obligation under the must-carry rule of Memorandum Circular No. 4-08-88. Negotiations followed but were terminated on April 4, 2002. ABS-CBN then filed its complaint with the Intellectual Property Office. In the meantime, the National Telecommunications Commission, through its Commissioner and later through formal letters, took the position that direct-to-home satellite services are covered by the must-carry rule, and that Memorandum Circular No. 10-10-2003 did not amend or repeal Memorandum Circular No. 04-08-88.

Issues

• Whether or not PMSI's carriage of ABS-CBN's Channels 2 and 23 constitutes rebroadcasting that infringes ABS-CBN's broadcasting rights and copyright under the Intellectual Property Code.
• Whether or not the must-carry rule of Memorandum Circular No. 04-08-88 applies to direct-to-home satellite television operators such as PMSI.
• Whether or not the must-carry rule, as applied, amounts to a taking of property for public use without just compensation in violation of the Constitution.
• Whether or not the Court of Appeals erred in dismissing the petition for contempt without requiring the respondents to file comment.

Applicable Provisions

Section 211 of the Intellectual Property Code defines the scope of a broadcasting organization's rights:

Sec. 211. Scope of Right. - Subject to the provisions of Section 212, broadcasting organizations shall enjoy the exclusive right to carry out, authorize or prevent any of the following acts: 211.1. The rebroadcasting of their broadcasts.

This is the right ABS-CBN invokes, and the whole case turns on whether PMSI's carriage amounts to rebroadcasting.

Section 202.7 of the Intellectual Property Code defines broadcasting:

Section 202.7. Broadcasting. - The transmission by wireless means for the public reception of sounds or of images or of representations thereof; such transmission by satellite is also "broadcasting" where the means for decrypting are provided to the public by the broadcasting organization or with its consent.

The Court uses this definition to test whether PMSI itself is a broadcasting organization.

Section 184 of the Intellectual Property Code sets out limitations on copyright:

Sec. 184. Limitations on Copyright. - 184.1. Notwithstanding the provisions of Chapter V, the following acts shall not constitute infringement of copyright: (h) The use made of a work by or under the direction or control of the Government, by the National Library or by educational, scientific or professional institutions where such use is in the public interest and is compatible with fair use.

This is the provision that shelters the carriage of ABS-CBN's signals under the must-carry rule.

Ruling

On the first issue, the Court held that PMSI is not engaged in rebroadcasting and therefore did not infringe ABS-CBN's broadcasting rights or copyright. Under the Rome Convention, rebroadcasting is the simultaneous broadcasting by one broadcasting organization of the broadcast of another broadcasting organization. PMSI does not qualify as a broadcasting organization because it does not take the financial and editorial responsibility for the selection and arrangement of, and investment in, the transmitted content. ABS-CBN creates and transmits its own signals; PMSI merely carries them, and viewers receive them in unaltered form. PMSI does not produce, select, or determine the programs on Channels 2 and 23, and does not pass itself off as their origin or author. Its service is akin to cable retransmission, which the Rome Convention does not reach.

On the second issue, the Court upheld the application of the must-carry rule to direct-to-home operators. The National Telecommunications Commission had consistently treated direct-to-home satellite services as covered, and the Court found the carriage to fall within the limitation on copyright:

The carriage of ABS-CBN's signals by virtue of the must-carry rule in Memorandum Circular No. 04-08-88 is under the direction and control of the government though the NTC which is vested with exclusive jurisdiction to supervise, regulate and control telecommunications and broadcast services/facilities in the Philippines.

On the third issue, the Court rejected the taking argument, holding that the must-carry rule is a valid exercise of the Commission's power to promulgate rules as public safety and interest may require, and that it serves the constitutional state policies on information and public service.

On the fourth issue, the Court found no error in the dismissal of the contempt petition, since the Court of Appeals found no need to exercise its power of contempt.

Doctrine

First, rebroadcasting, as the term is used in the Intellectual Property Code, requires a broadcasting organization on both ends. A direct-to-home satellite operator that merely carries another broadcaster's signals in unaltered form, without financial and editorial responsibility for the content, is not a broadcasting organization and does not rebroadcast. Second, the must-carry rule is a government-directed use that falls within the limitations on copyright, so carriage under it does not constitute infringement. Third, intellectual property protection is not absolute; it is a means toward the end of making society benefit from the creations of its people of talent and genius, and the creator enjoys no more rights than are consistent with public welfare.

Disposition

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, so PMSI prevailed and was not held liable for infringement.

Remember This

Memorize this line: a direct-to-home satellite operator that merely carries another broadcaster's signals in unaltered form is not a broadcasting organization and does not rebroadcast. Examiners use this case to test the definition of broadcasting and rebroadcasting under the Intellectual Property Code, and the must-carry rule as a limitation on copyright.