Case Digests for Technology and the Law

EXPERTRAVEL & TOURS, INC., petitioner,
vs.
COURT OF APPEALS and KOREAN AIRLINES, respondent.

G.R. No. 152392             May 26, 2005

Facts: The respondent posits that the courts are aware of this development in technology; hence, may take judicial notice thereof without need of hearings. Even if such hearing is required, the requirement is nevertheless satisfied if a party is allowed to file pleadings by way of comment or opposition thereto.

In its reply, the petitioner pointed out that there are no rulings on the matter of teleconferencing as a means of conducting meetings of board of directors for purposes of passing a resolution; until and after teleconferencing is recognized as a legitimate means of gathering a quorum of board of directors, such cannot be taken judicial notice of by the court. It asserts that safeguards must first be set up to prevent any mischief on the public or to protect the general public from any possible fraud. It further proposes possible amendments to the Corporation Code to give recognition to such manner of board meetings to transact business for the corporation, or other related corporate matters; until then, the petitioner asserts, teleconferencing cannot be the subject of judicial notice.

The petitioner further avers that the supposed holding of a special meeting on June 25, 1999 through teleconferencing where Atty. Aguinaldo was supposedly given such an authority is a farce, considering that there was no mention of where it was held, whether in this country or elsewhere. It insists that the Corporation Code requires board resolutions of corporations to be submitted to the SEC. Even assuming that there was such a teleconference, it would be against the provisions of the Corporation Code not to have any record thereof.

Issue: Whether or not the resolution made through teleconferencing may be admitted under the circumstances?

Held: Worse still, it appears that as early as January 10, 1999, Atty. Aguinaldo had signed a Secretary’s/Resident Agent’s Certificate alleging that the board of directors held a teleconference on June 25, 1999. No such certificate was appended to the complaint, which was filed on September 6, 1999. More importantly, the respondent did not explain why the said certificate was signed by Atty. Aguinaldo as early as January 9, 1999, and yet was notarized one year later (on January 10, 2000); it also did not explain its failure to append the said certificate to the complaint, as well as to its Compliance dated March 6, 2000. It was only on January 26, 2001 when the respondent filed its comment in the CA that it submitted the Secretary’s/Resident Agent’s Certificate dated January 10, 2000.

The Court is, thus, more inclined to believe that the alleged teleconference on June 25, 1999 never took place, and that the resolution allegedly approved by the respondent’s Board of Directors during the said teleconference was a mere concoction purposefully foisted on the RTC, the CA and this Court, to avert the dismissal of its complaint against the petitioner.

MCC INDUSTRIAL SALES CORPORATION, petitioner,
vs.
SSANGYONG CORPORATION, respondents.

G.R. No. 170633             October 17, 2007

Facts: On August 17, 2000, MCC finally opened an L/C with PCIBank for US$170,000.00 covering payment for 100MT of stainless steel coil under Pro Forma Invoice No. ST2-POSTS080-2. The goods covered by the said invoice were then shipped to and received by MCC.

MCC then faxed to Ssangyong a letter dated August 22, 2000 signed by Chan, requesting for a price adjustment of the order stated in Pro Forma Invoice No. ST2-POSTS080-1, considering that the prevailing price of steel at that time was US$1,500.00/MT, and that MCC lost a lot of money due to a recent strike.

Ssangyong rejected the request, and, on August 23, 2000, sent a demand letter to Chan for the opening of the second and last L/C of US$170,000.00 with a warning that, if the said L/C was not opened by MCC on August 26, 2000, Ssangyong would be constrained to cancel the contract and hold MCC liable for US$64,066.99 (representing cost difference, warehousing expenses, interests and charges as of August 15, 2000) and other damages for breach. Chan failed to reply.

Exasperated, Ssangyong through counsel wrote a letter to MCC, on September 11, 2000, canceling the sales contract under ST2-POSTS0401-1 /ST2-POSTS0401-2, and demanding payment of US$97,317.37 representing losses, warehousing expenses, interests and charges

Issues: Whether the print-out and/or photocopies of facsimile transmissions are electronic evidence and admissible as such? Whether there was a perfected contract of sale between MCC and Ssangyong, and, if in the affirmative, whether MCC breached the said contract?

Held: To be admissible in evidence as an electronic data message or to be considered as the functional equivalent of an original document under the Best Evidence Rule, the writing must foremost be an "electronic data message" or an "electronic document."We conclude that the terms "electronic data message" and "electronic document," as defined under the Electronic Commerce Act of 2000, do not include a facsimile transmission. Accordingly, a facsimile transmissioncannot be considered as electronic evidence. It is not the functional equivalent of an original under the Best Evidence Rule and is not admissible as electronic evidence.

Since a facsimile transmission is not an "electronic data message" or an "electronic document," and cannot be considered as electronic evidence by the Court, with greater reason is a photocopy of such a fax transmission not electronic evidence. In the present case, therefore, Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E" and "F"), which are mere photocopies of the original fax transmittals, are not electronic evidence, contrary to the position of both the trial and the appellate court.

Nevertheless, despite the pro forma invoices not being electronic evidence, this Court finds that respondent has proven by preponderance of evidence the existence of a perfected contract of sale.

In an action for damages due to a breach of a contract, it is essential that the claimant proves (1) the existence of a perfected contract, (2) the breach thereof by the other contracting party and (3) the damages which he/she sustained due to such breach. Actori incumbit onus probandi. The burden of proof rests on the party who advances a proposition affirmatively. In other words, a plaintiff in a civil action must establish his case by a preponderance of evidence, that is, evidence that has greater weight, or is more convincing than that which is offered in opposition to it.

In general, contracts are perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. They are, moreover, obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. Sale, being a consensual contract, follows the general rule that it is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.

The essential elements of a contract of sale are (1) consent or meeting of the minds, that is, to transfer ownership in exchange for the price, (2) object certain which is the subject matter of the contract, and (3) cause of the obligation which is established.

In this case, to establish the existence of a perfected contract of sale between the parties, respondent Ssangyong formally offered in evidence the testimonies of its witnesses

ELLERY MARCH G. TORRES, Petitioner,
vs.

PHILIPPINE AMUSEMENT and GAMING CORPORATION, represented by ATTY. CARLOS R. BAUTISTA, JR.,Respondent.

G.R. No. 193531               December 14, 2011

Facts: The CSC found that the issue for resolution was whether petitioner's appeal had already prescribed which the former answered in the positive. The CSC did not give credit to petitioner's claim that he sent a facsimile transmission of his letter reconsideration within the period prescribed by the Uniform Rules on Administrative Cases in the Civil Service. It found PAGCOR's denial of having received petitioner's letter more credible as it was supported by certifications issued by its employees. It found that a verification of one of the telephone numbers where petitioner allegedly sent his letter reconsideration disclosed that such number did not belong to the PAGCOR's Office of the Board of Directors; and that petitioner should have mentioned about the alleged facsimile transmission at the first instance when he filed his complaint and not only when respondent PAGCOR raised the issue of prescription in its Comment.

Issue: Whether or not the Civil Service Commission erred in ruling that there was no valid letter/motion for reconsideration submitted to reconsider petitioner's dismissal from the service?

Held: Petitioner received a copy of the letter/notice of dismissal on August 4, 2007; thus, the motion for reconsideration should have been submitted either by mail or by personal delivery on or before August 19, 2007. However, records do not show that petitioner had filed his motion for reconsideration. In fact, the CSC found that the non-receipt of petitioner's letter reconsideration was duly supported by certifications issued by PAGCOR employees.

Even assuming arguendo that petitioner indeed submitted a letter reconsideration which he claims was sent through a facsimile transmission, such letter reconsideration did not toll the period to appeal. The mode used by petitioner in filing his reconsideration is not sanctioned by the Uniform Rules on Administrative Cases in the Civil Service. As we stated earlier, the motion for reconsideration may be filed only in two ways, either by mail or personal delivery

We, therefore, conclude that the terms "electronic data message" and "electronic document," as defined under the Electronic Commerce Act of 2000, do not include a facsimile transmission. Accordingly, a facsimile transmission cannot be considered as electronic evidence. It is not the functional equivalent of an original under the Best Evidence Rule and is not admissible as electronic evidence.

NATIONAL POWER CORPORATION, Petitioner,
vs.
HON. RAMON G. CODILLA, JR., Presiding Judge, RTC of Cebu, Br. 19, BANGPAI SHIPPING COMPANY, and WALLEM SHIPPING, INCORPORATED, Respondents.

G.R. No. 170491             April 4, 2007

Facts: On 16 November 2004, public respondent judge issued the assailed order denying the admission and excluding from the records petitioner’s Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I", "J" and its sub-markings, "K", "L", "M" and its sub-markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its sub-markings, "R" and "S" and its sub-markings. According to the court a quo:

The Court finds merit in the objections raised and the motion to strike out filed respectively by the defendants. The record shows that the plaintiff has been given every opportunity to present the originals of the Xerox or photocopies of the documents it offered. It never produced the originals. The plaintiff attempted to justify the admission of the photocopies by contending that "the photocopies offered are equivalent to the original of the document" on the basis of the Electronic Evidence (Comment to Defendant Wallem Philippines’ Objections and Motion to Strike). But as rightly pointed out in defendant Wallem’s Reply to the Comment of Plaintiff, the Xerox copies do not constitute the electronic evidence defined in Section 1 of Rule 2 of the Rules on Electronic Evidence as follows:

"(h) "Electronic document" refers to information or the representation of information, data, figures, symbols or other models of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically. It includes digitally signed documents and any printout, readable by sight or other means which accurately reflects the electronic data message or electronic document. For the purpose of these Rules, the term "electronic document" may be used interchangeably with "electronic data message".

The information in those Xerox or photocopies was not received, recorded, retrieved or produced electronically. Moreover, such electronic evidence must be authenticated (Sections 1 and 2, Rule 5, Rules on Electronic Evidence), which the plaintiff failed to do. Finally, the required Affidavit to prove the admissibility and evidentiary weight of the alleged electronic evidence (Sec. 1, Rule 9, Ibid) was not executed, much less presented in evidence.

The Xerox or photocopies offered should, therefore, be stricken off the record. Aside from their being not properly identified by any competent witness, the loss of the principals thereof was not established by any competent proof.

Issues: Whether or not the photocopies are indeed electronic documents as contemplated in Republic Act No. 8792 or the Implementing Rules and Regulations of the Electronic Commerce Act, as well as the Rules on Electronic Evidence?

Held: A perusal of the information contained in the photocopies submitted by petitioner will reveal that not all of the contents therein, such as the signatures of the persons who purportedly signed the documents, may be recorded or produced electronically. By no stretch of the imagination can a person’s signature affixed manually be considered as information electronically received, recorded, transmitted, stored, processed, retrieved or produced. Hence, the argument of petitioner that since these paper printouts were produced through an electronic process, then these photocopies are electronic documents as defined in the Rules on Electronic Evidence is obviously an erroneous, if not preposterous, interpretation of the law. Having thus declared that the offered photocopies are not tantamount to electronic documents, it is consequential that the same may not be considered as the functional equivalent of their original as decreed in the law.

When the original document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated. The offeror of secondary evidence is burdened to prove the predicates thereof: (a) the loss or destruction of the original without bad faith on the part of the proponent/offeror which can be shown by circumstantial evidence of routine practices of destruction of documents; (b) the proponent must prove by a fair preponderance of evidence as to raise a reasonable inference of the loss or destruction of the original copy; and (c) it must be shown that a diligent and bona fide but unsuccessful search has been made for the document in the proper place or places. However, in the case at bar, though petitioner insisted in offering the photocopies as documentary evidence, it failed to establish that such offer was made in accordance with the exceptions as enumerated under the abovequoted rule. Accordingly, we find no error in the Order of the court a quo denying admissibility of the photocopies offered by petitioner as documentary evidence.

Finally, it perplexes this Court why petitioner continued to obdurately disregard the opportunities given by the trial court for it to present the originals of the photocopies it presented yet comes before us now praying that it be allowed to present the originals of the exhibits that were denied admission or in case the same are lost, to lay the predicate for the admission of secondary evidence. Had petitioner presented the originals of the documents to the court instead of the photocopies it obstinately offered as evidence, or at the very least laid the predicate for the admission of said photocopies, this controversy would not have unnecessarily been brought before the appellate court and finally to this Court for adjudication. Had it not been for petitioner’s intransigence, the merits of petitioner’s complaint for damages would have been decided upon by the trial court long ago. As aptly articulated by the Court of Appeals, petitioner has only itself to blame for the respondent judge’s denial of admission of its aforementioned documentary evidence and consequently, the denial of its prayer to be given another opportunity to present the originals of the documents that were denied admission nor to lay the predicate for the admission of secondary evidence in case the same has been lost.

DIAMOND, COMMISSIONER OF PATENTS AND TRADEMARKS
v.
DIEHR ET AL.

450 U.S. 175 (1981) Decided March 3, 1981.

Facts: Respondents claim that their process ensures the production of molded articles which are properly cured. Achieving the perfect cure depends upon several factors including the thickness of the article to be molded, the temperature of the molding process, and the amount of time that the article is allowed to remain in the press. It is possible using well-known time, temperature, and cure relationships to calculate by means of the Arrhenius equation when to open the press 178*178 and remove the cured product. Nonetheless, according to the respondents, the industry has not been able to obtain uniformly accurate cures because the temperature of the molding press could not be precisely measured, thus making it difficult to do the necessary computations to determine cure time. Because the temperature inside the press has heretofore been viewed as an uncontrollable variable, the conventional industry practice has been to calculate the cure time as the shortest time in which all parts of the product will definitely be cured, assuming a reasonable amount of mold-opening time during loading and unloading. But the shortcoming of this practice is that operating with an uncontrollable variable inevitably led in some instances to overestimating the mold-opening time and overcuring the rubber, and in other instances to underestimating that time and undercuring the product.

Respondents characterize their contribution to the art to reside in the process of constantly measuring the actual temperature inside the mold. These temperature measurements are then automatically fed into a computer which repeatedly recalculates the cure time by use of the Arrhenius equation. 179*179 When the recalculated time equals the actual time that has elapsed since the press was closed, the computer signals a device to open the press. According to the respondents, the continuous measuring of the temperature inside the mold cavity, the feeding of this information to a digital computer which constantly recalculates the cure time, and the signaling by the computer to open the press, are all new in the art.

Issue: Whether a process for curing synthetic rubber which includes in several of its steps the use of a mathematical formula and a programmed digital computer is patentable subject matter?

Held: In determining the eligibility of respondents' claimed process for patent protection under § 101, their claims must be considered as a whole. It is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis. This is particularly true in a process claim because a new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination was made. The "novelty" of any element or steps in a process, or even of the189*189 process itself, is of no relevance in determining whether the subject matter of a claim falls within the § 101 categories of possibly patentable subject matter.

It has been urged that novelty is an appropriate consideration under § 101. Presumably, this argument results from the language in § 101 referring to any "new and useful" process, machine, etc. Section 101, however, is a general statement of the type of subject matter that is eligible for patent protection "subject to the conditions and requirements of this title." Specific conditions for patentability follow and § 102 covers in detail the conditions relating to novelty. 190*190 The question therefore of whether a particular invention is novel is "wholly apart from whether the invention falls into a category of statutory subject matter." In re Bergy, 596 F. 2d 952, 961 (CCPA 1979)(emphasis deleted). See also Nickola v. Peterson, 580 F. 2d 898 (CA6 1978)

We have before us today only the question of whether respondents' claims fall within the § 101 categories of possibly patentable subject matter. We view respondents' claims as nothing more than a process for molding rubber products and not as an attempt to patent a mathematical formula. We recognize, of course, that when a claim recites a mathematical formula (or scientific principle or phenomenon of nature), an inquiry must be made into whether the claim is seeking patent protection for that formula in the abstract. A mathematical formula as such is not accorded the protection of our patent laws, Gottschalk v. Benson, 409 U. S. 63 (1972), and this principle cannot be circumvented by attempting to limit the use of the formula to a particular technological environment. Parker v. Flook, 437 U. S.584 (1978). Similarly, insignificant postsolution activity will not transform 192*192 an unpatentable principle into a patentable process. Ibid. To hold otherwise would allow a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection. On the other hand, when a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect (e. g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of § 101. Because we do not view respondents' claims as an attempt to patent a mathematical formula, but rather to be drawn to an industrial process193*193 for the molding of rubber products, we affirm the judgment of the Court of Customs and Patent Appeals.

It is so ordered.

State Street Bank and Trust Company

Vs. Signature Financial Group, Inc.

149 F.3d 1368 (Fed. Cir. 1998)

Facts: On March 9, 1993, Signature Financial Group, Inc. was granted U.S. Patent 5,193,056 entitled "Data Processing System for Hub and Spoke Financial Services Configuration". The "spokes" were mutual funds that pool their assets in a central "hub". It has been pointed out that the patent claim comprises means for performing steps that are the requirements specified in an Internal Revenue Service regulation for avoiding taxes on a partnership. That the invention described and claimed in the patent constituted protectable subject matter was affirmed by the Federal Circuit in July 1998. The court held that: (http://en.wikipedia.org/wiki/State_Street_Bank_v._Signature_Financial_Group)

(...) the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm, formula, or calculation, because it produces 'a useful, concrete and tangible result' -- a final share price momentarily fixed for recording and reporting purposes and even accepted and relied upon by regulatory authorities and in subsequent trades.

This is considered by many to be significant because previously "methods of doing business" had been widely speculated to be an excluded class of patentable subject matter, although some point out that the issue was never directly addressed by the courts until the State Street decision.

The Federal Circuit in this opinion observed that: (http://en.wikipedia.org/wiki/State_Street_Bank_v._Signature_Financial_Group)

Issues: Whether or not an invention was eligible for protection by a patent in the United States if it involved some practical application and if "it produces a useful, concrete and tangible result."?

Held: The business method exception has never been invoked by this court, or the CCPA, to deem an invention unpatentable. Application of this particular exception has always been preceded by a ruling based on some clearer concept of Title 35 or, more commonly, application of the abstract idea exception based on finding a mathematical algorithm. Illustrative is the CCPA's analysis in In re Howard, 394 F.2d 869, 157 USPQ 615 (CCPA 1968), wherein the court affirmed the Board of Appeals' rejection of the claims for lack of novelty and found it unnecessary to reach the Board's section 101 ground that a method of doing business is "inherently unpatentable."

Id. at 872, 157 USPQ at 617. (http://en.wikipedia.org/wiki/State_Street_Bank_v._Signature_Financial_Group)

The Federal Circuit found it unnecessary to carve out a new exception to the principle that "anything under the sun made by man is patentable" (a phrase from the U.S. Supreme Court ruling in the Chakrabarty decision based on a 1952 report from the Congress). Accordingly, that principle is equally applicable to any business method that produces a useful, concrete and tangible result. (http://en.wikipedia.org/wiki/State_Street_Bank_v._Signature_Financial_Group)

In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 (Fed. Cir. 2008)

Facts: This was an en banc decision of the United States Court of Appeals for the Federal Circuit (CAFC) on the patenting of method claims, particularly business methods. The Federal Circuit court affirmed the rejection of the patent claims involving a method of hedging risks in commodities trading. The court also reiterated the machine-or-transformation test as the applicable test for patent-eligible subject matter, and stated that the test in State Street Bank v. Signature Financial Group should no longer be relied upon. (http://en.wikipedia.org/wiki/In_re_Bilski)

The applicants (Bernard L. Bilski and Rand Warsaw) filed a patent application (on 10 April 1997) for a method of hedging risks in commodities trading. Such patent claims are often termed business method claims. (http://en.wikipedia.org/wiki/In_re_Bilski)

The serial number for the patent application is 08/833,892. The text is available on the USPTO web site. The patent application describes a method for providing a fixed bill energy contract to consumers. Under fixed bill energy contracts, consumers pay monthly prices for their future energy consumption in advance of winter based on their past energy use. The monthly prices remain the same no matter how much energy they then use. Thus, consumers save money relative to others if, for example, a given winter is unusually cold and they use an unusually large amount of energy for heating. On the other hand, consumers pay more than others if a winter is unusually warm and their energy use is lower than average. (http://en.wikipedia.org/wiki/In_re_Bilski)

Method claim 1 of the patent application claims a three-step method for a broker to hedge risks for purchaser-users of an input of a product or service (termed a commodity). For example, an electric power plant might be a purchaser and user of coal, which it purchases from coal-mining companies (producer-sellers) and uses to make electricity. The power plant might seek to insulate itself from upward changes in the price of coal by engaging in "hedging" transactions. The risk can be quantified in terms of dollars (termed a "risk position"). Thus, if the purchaser-user uses 1000 tons of coal in a given period, and the potential price spike is $10 per ton, the purchaser-user's total risk position for that period is 1000 × $10, or $10,000. (http://en.wikipedia.org/wiki/In_re_Bilski)

Held: The en banc Federal Circuit upheld the rejection, 9–3. The majority opinion by Chief Judge Paul Redmond Michel characterized the issue as whether the claimed method is a patent-eligible "process," as the patent statute (35 U.S.C. § 101) uses that term. While any series of actions or operations is a process in the dictionary sense of that term, the court explained, the Supreme Court has held that the statutory meaning is narrower than the dictionary meaning which "forecloses a purely literal reading." Patent-eligible processes do not include "laws of nature, natural phenomena, [or] abstract ideas." The limiting legal principle applies not just to processes, but to anything on which a patent is sought. As a trilogy of Supreme Court decisions on patent-eligibility from approximately three decades ago had taught, "Phenomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work." Therefore, the question was whether Bilski's process fell within any of the prohibited categories (that is, was a claim to a "principle"), and the underlying legal question was what legal tests or criteria should govern that determination when a claim is directed to a principle. (http://en.wikipedia.org/wiki/In_re_Bilski)

The court concluded that prior decisions of the Supreme Court were of limited usefulness as guides because they represented polar cases on the abstraction and concreteness spectrum. Nonetheless, a legal test could be distilled from them: "A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing." Not only did the patent-eligibility trilogy (Benson, Flook, and Diehr) support this test, the court explained, but so too did earlier Supreme Court precedents dating back well into the 19th century. (http://en.wikipedia.org/wiki/In_re_Bilski)

The court then considered whether this two-branch test should be considered all-inclusive, that is, as stating indispensable conditions of patent-eligibility. It concluded that the answer was affirmative, even though much of the language in the Supreme Court's patent-eligibility trilogy was more reserved. The Federal Circuit placed great weight on the use of the definite article in several Supreme Court statements that transformation and use of a particular machine provided "the clue to the patentability of a process claim." At the same time the court placed no weight on the fact that the Benson Court had not accepted the Government's argument that the case law "cannot be rationalized otherwise." (http://en.wikipedia.org/wiki/In_re_Bilski)

BRANDIR INTERNATIONAL, INC., Plaintiff-Appellant,
v.
CASCADE PACIFIC LUMBER CO., d/b/a Columbia Cascade Co.,
Defendant-Appellee,
and
David L. Ladd, Register of Copyrights, United States
Copyright Office, Third-Party Defendant.

834 F.2d 1142 Decided Dec. 2, 1987.

Facts: Against the history of copyright protection well set out in the majority opinion in Carol Barnhart Inc. v. Economy Cover Corp., 773 F.2d 411, 415-18 (2d Cir.1985), and in Denicola, Applied Art and Industrial Design: A Suggested Approach to Copyright in Useful Articles, 67 Minn.L.Rev. 707, 709-17 (1983), Congress adopted the Copyright Act of 1976. The "works of art" classification of the Copyright Act of 1909 was omitted and replaced by reference to "pictorial, graphic, and sculptural works," 17 U.S.C. Sec. 102(a)(5). According to the House Report, the new category was intended to supply "as clear a line as possible between copyrightable works of applied art and uncopyrighted works of industrial design." H.R.Rep. No. 1476, at 55, U.S.Code Cong. & Admin.News 1976, p. 5668. The statutory definition of "pictorial, graphic, and sculptural works" states that "the design of a useful article, as defined in this section, shall be considered a pictorial, graphic, or sculptural work only if, and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article." 17 U.S.C. Sec. 101. The legislative history added gloss on the criteria of separate identity and independent existence in saying: (http://bulk.resource.org/courts.gov/c/F2/834/834.F2d.1142.86-6260.828.html)

On the other hand, although the shape of an industrial product may be aesthetically satisfying and valuable, the Committee's intention is not to offer it copyright protection under the bill. Unless the shape of an automobile, airplane, ladies' dress, food processor, television set, or any other industrial product contains some element that, physically or conceptually, can be identified as separable from the utilitarian aspects of that article, the design would not be copyrighted under the bill. (http://bulk.resource.org/courts.gov/c/F2/834/834.F2d.1142.86-6260.828.html)

Issue:  Whether the configuration of Brandir's bicycle rack can be protected?

Held: It is unnecessary to determine whether to the art world the RIBBON Rack properly would be considered an example of minimalist sculpture. The result under the copyright statute is not changed. Using the test we have adopted, it is not enough that, to paraphrase Judge Newman, the rack may stimulate in the mind of the reasonable observer a concept separate from the bicycle rack concept. While the RIBBON Rack may be worthy of admiration for its aesthetic qualities alone, it remains nonetheless the product of industrial design. Form and function are inextricably intertwined in the rack, its ultimate design being as much the result of utilitarian pressures as aesthetic choices. Indeed, the visually pleasing proportions and symmetricality of the rack represent design changes made in response to functional concerns. Judging from the awards the rack has received, it would seem in fact that Brandir has achieved with the RIBBON Rack the highest goal of modern industrial design, that is, the harmonious fusion of function and aesthetics. Thus there remains no artistic element of the RIBBON Rack that can be identified as separate and "capable of existing independently, of, the utilitarian aspects of the article." Accordingly, we must affirm on the copyright claim. (http://bulk.resource.org/courts.gov/c/F2/834/834.F2d.1142.86-6260.828.html)

We are reminded that the design of a product itself may function as its packaging or protectable trade dress. See LeSportsac, Inc. v. K mart Corp., 754 F.2d 71, 75 (2d Cir.1985). The district court dismissed Brandir's claims, saying that its analysis of the copyright issue was sufficient to dispose of the Lanham Act and common law claims. The court stated "the design feature of the Ribbon Racks is clearly dictated by the function to be performed, namely, holding up bicycles. If the steam pipes were not bent into the design, but instead remained flat, the bicycles would not stand up, they would fall down." But as Judge Newman noted in his dissent in Carol Barnhart, 773 F.2d at 420 n. 1, the principle of conceptual separability of functional design elements in copyright law is different from the somewhat similar principle of functionality as developed in trademark law. For trademark purposes, he pointed out, a design feature "has been said to be functional if it is 'essential to the use or purpose of the article' or 'affects the cost or quality of the article.' " Id. (quoting Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 850 n. 10, 102 S.Ct. 2182, 2187 n. 10, 72 L.Ed.2d 606 (1982)); see LeSportsac, Inc. v. K mart Corp., 754 F.2d at 75-76 (trade dress of a product is eligible for protection if it has acquired a secondary meaning and is nonfunctional). (http://bulk.resource.org/courts.gov/c/F2/834/834.F2d.1142.86-6260.828.html)

Copyright Infringement

Downloading Copyrighted Works

The Law on copyright as regards infringement is not as crystal clear in the Philippines. It is not even defined in the act but merely states limitations, fair use and rights whether moral or economic. It would seem that infringement must be taken in its literal sense hence violation is committed by violation of such rights specified by the Intellectual P

roperty Law. But if we look at the law, Section 185 where it states that “In determining whether the use made of a work in any particular case is fair use, the factors to be considered shall include:

(c) The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(d) The effect of the use upon the potential market for or value of the copyrighted work.”

This presupposes a wide understanding of what is substantially infringing to the copyright owner and what is the effect on the potential market or value of the copyrighted work. The copyright owner is burdened with these explanations before he could exercise the remedies provided in the law.

Infringement is usually an administrative penalty of law sanction by the rules of court. Hence, the state would not act in behalf of a clear violation of the law or rights of the copyright owner which applies only to violations of penal laws. There is no liability here unless there be a remedy exercised by the copyright owner. But there is no copyright infringement on the part of the downloader since there is only an effect on the potential market and value of the copyrighted work which is yet to be proved before it becomes illegal. This gives rise to another question of how would the owner of the copyright run after the downloader? How would the copyright owner maintain the loyalty of the downloader who precisely downloded the work since such person actually likes the work. Running after them would discourage potential audiences for which the copyrighted work depends for its exposure thereby a target market for generating profit for the copyright owner.

Another provion related to this is Section 184 on the Limitations on copyright. It states that “the following acts shall not constitute infringement of copyright:” which is a negative provision as to its application. Does this mean that every act done outside of those mention is an infringement just by using a violation of the economic and moral rights as basis for copyright infringement? But under the mentioned provisions of this paragraph, there is no copyright infringement on the part of the downloader bacause it is directed against those who offer the copyrighted work to the public whether for profit or not. Particularly section 187 states that “Section 187. Reproduction of Published Work. - 187.1. Notwithstanding the provision of Section 177, and subject to the provisions of Subsection 187.2, the private reproduction of a published work in a single copy, where the reproduction is made by a natural person exclusively for research and private study, shall be permitted, without the authorization of the owner of copyright in the work.

187.2. The permission granted under Subsection 187.1 shall not extend to the reproduction of:

e) Any work in cases where reproduction would unreasonably conflict with a normal exploitation of the work or would otherwise unreasonably prejudice the legitimate interests of the author. (n)”

Should laws be passed to optimize the enforcement of copyright laws?

Yes, the Philippines should pass similar proposed legislations as SOPA/PIPA; Digital Economy Act and New Zealand's three-strike rule. This would strengthen the economy and encourage competition in the industry for a more healthy market based on copyrighted works of authors and artists. There would be a problem in some areas of the businesses dedicated to protecting copyrighted works as there would be lesser security of tenure as to artists and authors but isn't that the core of artistic and literary works. The creation of copyrightable works is the very reason for works and it embraces the chance of competition of creators in selling their work under similar categories or fields of work. Now, most artistist do not create their own works but rather make derivative works of original creations. To me, that is not artistic or much less copyrightable. The failing economy is caused by the dissappearance of competition. Singers and writers tend to derive classical works rather than make a phenomenal classic themselves. And they even call it “Official Filipino Music” or “Official Filipino Movies”.

The proposed legislations would even create jobs in enforcement of the copyright law. Since computer technicians for software and hardware would be employed to fight infringement. By such protection, artists would be able to appropriately sell their copyrighted works with the consumers and avoid downloading sites to destroy their only source of profit and livelihood. We should protect such right of the artists and authors because if we don't the market for artists will be lost. They would not create anymore and find other profitable work. This would lead to the uselessness of the fredom of expression for artists who base their livelihood on their artistic works. Unlike other fields of work where there is no need of artistry or harmony but only refer to mechanical and technical work.

The Philippines should not sign and ratify the ACTA Treaty. We can make our own laws to bolster the enforcement of Intellectual Property laws. Signing the treaty would only pave the way for the big countries to interfere with our community and economy. It does not provid for any stricter definition of infringement wich calls for trouble in enforcing the copyright laws. Infringement is a very broad term which could criminlaize a wide range on internet surfers and users in a short period of time. This would also supress the availability of information and essential goods for health measures for those who need medication.

ACTA Treaty and the right to freedom of expression and privacy

Under the treaty, Article 11: Information Related to Infringement

“Without prejudice to its law governing privilege, the protection of confidentiality of information sources, or the processing of personal data, each Party shall provide that, in civil judicial proceedings concerning the enforcement of intellectual property rights, its judicial authorities have the authority, upon a justified request of the right holder, to order the infringer or, in the alternative, the alleged infringer, to provide to the right holder or to the judicial authorities, at least for the purpose of collecting evidence, relevant information as provided for in its applicable laws and regulations that the infringer or alleged infringer possesses or controls.” Clearly the treaty is at a loss of understanding the right of persons to expression. Under this provision mentioned, there appears to be a wide range of potential infringers covered by this treaty. It would supress the right to speech and eventually the democracy which is the heritage of many countries. There is even a risk to surrender the control of domain anmes to authorities thus restrict the people in conducting their business over the internet which is one of the basic strategies in expanding the industry with less expenses for transportation issues. The treaty also allows the authorities to look into the personal details of the users thereby a clear violation of the right to person and papers protected by the constitution. 

Fan Art

The Legality of Fan Art

Fan Art in the Philippines is a mere species of what has been a deviant business enterprise as regards intellectual works considering piracy as detrimental to the right of creators and authors of intellectual works. Under Republic Act 8293, the criteria for fair use of a copyrighted work is that such art must be for critcism, comment, news reporting, teaching and research is not an infringement thus makes any other use as an infringement of the copyrighted work. It would however cover a derivative work which is considered a new work and is not extension of the copyright of the original work. Under the foregoing limitations, any fan art would be legal in the strict sense. Any simple alteration of the original art would fall under the derivative work hence protected but this has an economic impact in the Philippines where the original owner of the work may at any day file a case of infringement against almost everything being sold in the market like slippers by by crocs, clothes by nike and other possible object which may be the subject of appropriation appears an imitation of the the original. A fan art would be included as it is based on an original work and is made for profit. This would be a clear violation of the provision of fair use under the Republic Act 8293. It is considered a fan art where the premise is personal idolization or commitment of a fan for any originally made character like super heroes. Any use for profit would give rise to a right of the original artist of the work. In legal fiction the artist has every right to file an action for infringement but in the real sense, would any artist prohibit another to spread his creation? I personally wouldn't since this would be a legacy burnt in the heart of the public eye so that the creator would be known until his demise or even thereafter. However, this does not mean that the creator of the fan art is free to do anything with the derivative art made. Under Republic Act 8293, the original artist of the work has economic rights including the right to prevent Dramatization, translation, adaptation, abridgment, arrangement or other transformation of the work thus Fan Art is legal, we must take into account that the right belongs to the author of the work. For as long as the derivative work is not violative of the economic and moral rights of the author then the fan art is legal under the provion on fair use. It is the profiting from the derivative work which makes the fan art infringing . Unlike in trademark and patent, there must be confusion as to the article or object which prejudice the right of the owner when such article or object passes to the public misleading who the real owner is. In copyright, there is a clear view and understanding who the author of the artistic work is in respect of the original work where the fan art is based. From the very words used FAN ART it distinguishes that any reproduction of a work whether a copy or transformation, the public would immediately consider the work is not their creation but is merely based on an original work made by a fan to admire the artistic work of another or the representation depicted by the work. In addition, the moral rights of the author which cannot be waived must be considered as well but this would by absurd in case of fan art since such derivative work is to boost the impact of the author by any fan as to the original work. The fan art would be an act of good faith by the creation of the derivative work provided that it is made to favor the prominence of the original author of the work. But the author still has the right against any derivative work based on his original creation. But in legal fiction as to astistic work, no one would be injured, confused or mislead since a fan art is in itself an admiration of the original work of the author.  

A Glance on the Data Privacy Act of 2011 By its very title it can be seen as a grant of statury right to privacy as mentioned under the Philippine Constitution of 1987. “Section 3 The privacy of communication and correspondence shall be inviolable except upon lawful order of the court, or when public safety or order requires otherwise, as prescribed by law.” Though it seems promising on the privacy part when the ACT states that “SEC. 2. Declaration of Policy.- It is the policy of the State to protect the fundamental human right of privacy of communication. The State recognizes the vital role of information and communications technology in nation building and its inherent obligation to ensure that personal information ininformation and communications systems in the GOVERNMENT and in the private sector are secured and protected.” Indeed an executory implementation, however it recognizes as well the information and communications in the government. Why o why? Haven't we experienced enough circumvention under statutory law on “Anti-Wire Tapping Act (Republic Act No. 4200)” which I am totally against as well. Hello! Garci! What if this act is passed? Dearest! Garci! Even if the ACT discloses exceptions under Section 4. Scope which states among others that “This Act does not apply to the following: (a) Information about all individual who is or was an officer or employee of a government institution that relates to the position or functions of the individual,”. It just gives more ideas on how to cloak the data by making the document personal as to its source when under the definition of Personal information found in Section 3 when it states that ”xxxfrom which the identity of an individual is apparent or can be reasonably and ascertained by the entity holding the information, or when put together with other information would identify an individual.xxx” The creator may make an information or communication by simply including an identification thus become personal. The scenario does not forsee that the Public offecer can attach anything on the document and poof! Public document becomes personal informationor communication. The individual can even make encrypted content to make it look geometric by using mathematical expressions to appear coded simply as addition and subtraction when in fact it contains detailed message of those exluded by the ACT. A clear example. What if the information contains a bar graph or a pie graph. For anyone's sake, that could have been a computation of profits in a election scam which this country has been trying to supress and still trying. Another point is under “Section 5. Extraterritorial Application. - This Act applies to an act done or practice engaged in and outside of the Philippines by an entity if: (a) The act, practice or processing relates to personal information about a Philippine citizen or a resident;” It may be deduced that foreign relations within the Philippines would be excluded in the protection which for instance could simply identify the information or communication to pertain to foreigners with actually contents referring to a citizen of the Philippines or a resident. The ACT even says that “The personal information was collected or held by an entity in the Philippines. ” What if merely sent from overseas, who is to say that such information or communication is as such when the processing would be limited and responsibility would be held by the maker under trust of the contents made. How can this be ascertained when the ACT under “Section. 9. General Data Privacy Principles. -The processing of personal information shall be allowed, subject to compliance with the requirements ofthis Act and other laws allowing disclosure of information to the public and adherence to the principles of transparency, legitimate purpose and proportionality.” ? The title of the ACT says privacy but under processing the same must be disclosed. How can anything be private when it shall undergo processing or as defined in the ACT “Processing refers to any operation or any set of operations performed upon personal information including, but not limited to, the collection, recording, organization, storage, updating or modification, retrieval, consultation, use, consolidation, blocking, erasure or destruction of data.” If under operation, what data can be actually protected when under current events that POSTAL offices cannot even protect the mail of the citizens from being stolen. What more in cases where the information or communication is processed before being kept and protected which this ACT aims to do including Information or communication of Government Relations. In fact the ACT even includes “Sensitive personal information refers to personal information: (among other things About an individual's health, genetic or sexual life of a person, or to any judicial proceeding for any offense committed or alleged to have been committed by such person, the disposal of such proceedings, or the sentence of any court in such proceedings;)” How in the case of a delinquent who commits a heinous act then becomes old but runs for election, let's say the Presidency for example and thereafter wins. BOOM! Dearest! Garci! Or under the Anti-Wire Tapping ACT! Hello! Garci! Under “Section 11 Sensitive Personal Information and Privileged Information. prohibited, except in the following cases: ( a) The data subject has given his or her express consent, specific to the purpose prior to the processing; ” So what if it gives his consent? the information still gets processed and thereafter data is protected. Final note, the information or communication which deserves protection is that of private in nature only by constitutional expression “Privacy of Communication under the fundamental law of the State as a limitation on the Government for the protection of Sovereignty which resides in the PEOPLE and all government authority emenates from THEM as against Public office is a Public trust. Public officers and employees must at ALL TIMES be ACCOUNTABLE to the PEOPLE, SERVE THEM with utmust responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, lead modest lives. ” as mentioned in ARTICLE XI, SECTION 1 and ARTICLE II SECTION 1 of the 1987 Constitution.