On 03 July 2020, the Intellectual Property Office of the Philippines (“IPOPHL”) released several Memorandum Circulars (“MC[s]”) revising some of the rules (“Revised Rules”) with regard to Intellectual Property (“IP”) in the Philippines, which shall be effective starting 05 September 2020.

The Revised Rules include: (1) Revised Rules on the Resolution of Public Performance Disputes (IPOPHL MC No. 2020-022); [1] (2) Rules on Resale Rights (IPOPHL MC No. 2020-023);[2] (3) Copyright Rules for the Government (IPOPHL MC No. 2020-024);[3] (4) Revised Rules on Copyright Registration (IPOPHL MC No. 2020-025;[4] and (5) Revised Rules on Accreditation of Collective Management Organizations (IPOPHL MC No. 2020-026).[5]

This newsletter discusses the first three Revised Rules as mentioned in the previous paragraph.

Revised Rules on the Resolution of Public Performance Disputes

IPOPHL MC No. 2020-022 provides for the resolution of disputes relating to the terms of a license involving an author’s right to public performance or other communication of his work.  The rules clarify the rights of creators of literary and artistic works as well as the protection and enforcement of these interests[6]. IPOPHL MC No. 2020-022 was promulgated in order to govern the procedure to be observed in the resolution of disputes involving the author’s right to public performance or other communication of his work.

Any person affected by the terms of a licensee involving the author’s right to public performance or other communication of his work may file a complaint with the Director (“Director”) of the Bureau of Copyright and Other Related Rights (“Bureau”),[7] who has original jurisdiction over the said disputes.[8] Any complaint must be filed within four (4) years from the time the cause of action arose.[9]

A unique feature provided for in IPOPHL MC No. 2020-022 is the “escrow”[10] provision which states that “any party may elect to avail of the provisions of the Civil Code of the Philippines on consignation with respect to the royalty or any sum of money that may be involved in disputes covered by these Rules.”

Implementing Rules and Regulations on Resale Rights

IPOPHL MC No. 2020-023[11] clarifies the right of artists to proceeds in subsequent transfers, or resale rights pursuant to Section 200[12] of the Intellectual Property Code, which shall apply to the “sale or lease of an author’s original works of painting, sculpture or manuscript subsequent to the first disposition by the author, and notwithstanding that the works sold may have been made before the effectivity of these Rules.”[13] IPOPHL MC No. 2020-023 shall cover authors who are citizens of the Philippines and of other member states of the Berne Convention with resale rights provisions in their national copyright legislation.[14]

Conversely, the following works shall not be covered:[15] (1) Prints, etchings, engravings, works of applied art, and works of a similar kind wherein the author primarily derives gain from the proceeds of reproductions; and (2) Subsequent sales that are: (a) made directly between private individuals without participation of an art market professional; or (b) made by individuals to public museums.

“Resale right” or “droit de suite”[16] is defined as “the right of artists or their heirs to receive royalty from the resale of their work. It also means their right to participate or share in the proceeds of the subsequent sale or lease of their work.”

The resale right shall subsist during the lifetime of the author plus fifty (50) years after his death. In case of joint authorship, the resale right shall be reckoned from the moment of creation plus fifty (50) years after the death of the last surviving author.[17]

According to IPOPHL MC No. 2020-023, a resale right shall be inalienable except in the case of succession or other circumstances as may be provided by law.[18] A resale right can neither be sold nor waived.[19] In addition, any charge or encumbrance on, or assignment or waiver of, or agreement to share or repay, the resale right is void.[20]

As regards the mechanics of resale, the sale of an original work of art, even if the first transfer of ownership was not made for any consideration, money or otherwise, shall be regarded as a resale provided:[21] (1) The subsequent sale involves a professional party or intermediary; or (2) The work is enrolled and registered in the Registry of Qualified Works.[22] The Registry of Qualified works shall provide the means for the enrollment and registration of works that qualify for the application of resale rights, and shall also serve as the repository of information on the author of the work for purposes of remittance on the resale royalty.[23]

Management of resale rights may be exercised individually or through an accredited collective management organization.[24] Accordingly, payment of resale royalty shall be made by the seller to the author or his heirs within sixty (60) days from the date of the sale or lease of work.[25] In case of joint authorship, payment by the seller of the total amount of resale royalty to one of the authors shall discharge the former from paying the other authors.[26] It is further provided that the resale royalty shall be to the extent of five percent (5%) of the gross proceeds of the subsequent sale or lease.[27]

Finally, claims or disputes under IPOPHL MC No. 2020-023 shall be filed within one (1) year from the time the cause of action arose[28] before the Office of the Director of the Bureau. [29]

Copyright Rules and Regulations for the Government

IPOPHL MC No. 2020-024[30] clarifies the rights and duties of the government in relation to the creation, utilization and protection of works protected under the IP Code. The rules shall apply to all works created or used by the Government of the Philippines, but excludes works covered by Republic Act No. 10055, otherwise known as the “Technology Transfer Act of 2009.”[31]

“Government”[32] shall refer to those “offices within the scope of the Civil Service, particularly the legislative, executive, and judicial branches, and the subdivisions, instrumentalities, and agencies of the Government of the Philippines, including government-owned or controlled corporations with original charters, the Armed Forces of the Philippines, and the Civil Service Commission, Commission on Elections, and Commission on Audit, as well as other offices and bodies created by the Constitution, other chartered institutions including state universities and colleges, and local/community colleges.”

According to IPOPHL MC No. 2020-024, no copyright shall subsist in any work of the Government created by an officer or employee thereof as a part of his/her regularly prescribed official duties.[33]  However, the government is not precluded from exercising propriety rights over the work against any party.[34] Further, this does not create the requirement that such work be made publicly without any restrictions nor does this preclude the Government or any of its agencies from asserting protection in countries where copyright is provided for government works.[35]

The exceptions when copyright subsists are:[36] (1) Due to the nature and circumstances of their creation, the works are not considered as works of the Government when: (a) they are not part of the regularly prescribed official duties of a government employee; or (b) the works are made for the Government by an author who is not a government employee, including those made by a consultant; and (2) unless the author of the works previously mentioned transfers the copyright over the work to the Government, the author remains as the owners of the copyright.

With respect to use and exploitation of works of the Government, any natural or juridical person, association, entity or institution may use and exploit the works of the Philippine Government, provided, that prior approval is obtained, depending on the circumstances in accordance with IPOPHL MC No. 2020-024.[37] No prior approval or conditions shall be required for the use of statutes, rules and regulations, and speeches, lectures, sermons, addresses, and dissertations, pronounced, read or rendered in courts of justice, before administrative agencies, in deliberative assemblies and in meetings of public character, except for the limited purpose of making a collection thereof.[38]

On the other hand, the Government may be a user of works belonging to other agencies, entities, and individuals, both public and private.[39] IPOPHL MC No. 2020-024 provides for provisions regarding “Prior Permission”, “Statutory Fair Use,” and “Moral Rights.”[40] Further, the Government is not precluded from receiving and holding copyright transferred to it by assignment, bequest, or otherwise.[41] Lastly, there shall be no abridgment or annulment of copyright on work upon publication or republication by the Government.[42]

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[1] IPOPHL Memorandum Circular No. 2020-022, 3 July 2020.

[2] IPOPHL Memorandum Circular No. 2020-023, 3 July 2020.

[3] IPOPHL Memorandum Circular No. 2020-024, 3 July 2020.

[4] IPOPHL Memorandum Circular No. 2020-025, 3 July 2020.

[5] IPOPHL Memorandum Circular No. 2020-026, 3 July 2020.

[6] IPOPHL Memorandum Circular No. 2020-022, 3 July 2020.

[7] Id. Sec. 6.

[8] Id. Sec. 4.

[9] IPOPHL Memorandum Circular No. 2020-022, 3 July 2020, Sec. 7.

[10] Id. Sec. 23.

[11] IPOPHL Memorandum Circular No. 2020-023, 3 July 2020.

[12] SECTION 200. Sale or Lease of Work. – In every sale or lease of an original work of painting or sculpture or of the original manuscript of a writer or composer, subsequent to the first disposition thereof by the author, the author or his heirs shall have an inalienable right to participate in the gross proceeds of the sale or lease to the extent of five percent (5%). This right shall exist during the lifetime of the author and for fifty (50) years after his death. (Republic Act No. 8293. Intellectual Property Code of the Philippines, Sec. 200).

[13] IPOPHL Memorandum Circular No. 2020-023, 3 July 2020, Sec. 3.

[14] Id. Sec. 5.

[15] Id. Sec. 4.

[16] Id. Sec. 2(l).

[17] Id. Sec. 6.

[18] IPOPHL Memorandum Circular No. 2020-023, 3 July 2020, Sec. 10.

[19] Id.

[20] Id.

[21] Id. Sec. 11.

[22] Id. Sec. 15.

[23] Id.

[24] Id. Sec. 13.

[25] Id. Sec. 12.

[26] Id.

[27] Id. Sec. 7.

[28] Id. Sec. 17.

[29] IPOPHL Memorandum Circular No. 2020-023, 3 July 2020, Sec. 18.

[30] IPOPHL Memorandum Circular No. 2020-024, 3 July 2020.

[31] Id. Sec. 2.

[32] Id. Sec. 3(b).

[33] Id. Sec. 4.1.

[34] Id.

[35] Id.

[36] Id. Sec. 4.2.

[37] IPOPHL Memorandum Circular No. 2020-024, 3 July 2020, Sec. 4.3.

[38] Id. Sec. 4.4.

[39] Id. Sec. 5.

[40] Id.

[41] Id. Sec. 6.

[42] Id. Sec. 7.