Brazil: a royalty fee affair

The company CLUBE VIDALONGA PROGRAMA DE CONDICIONAMENTO FÍSICO LTDA ('the club' from now on) had used publicly music in its commercial activity without permission of authors and other copyright holders. Because of this, the Central Bureau of Revenue Collection and Distribution ( ECAD) brought an action against the Club to pay the fee due, plus default interest. Both parties appealed but only ECAD obtained leave to appeal.

The Terceira Turma do Superior Tribunal de Justiça (STJ) heard the appeal. The ECAD claimed that the Tribunal de Justiça do Rio de Janeiro (TJRJ ) did not consider the right of the author to price the use of his work by others. It also argued that the values set out in its Rules of Collection for the fines are binding on the parties who make use of its members’ works.

The minister Massami Uyeda, rapporteur of the appeal, acknowledged that indeed copyright holders have the prerogative to fix the value for the use of their work. However, Law 9.610/98, which regulates the copyright, does not expressly determine these values when there is an illicit use. Therefore, values of fines, interest and other charges arising from such actions are determined by civil legislation and not by the Rules of ECAD.

Finally, it was said that the unauthorized use of artistic work does not create a contractual relationship between the user and the author - it bypasses the contractual relationship and does not create links between them. With this reasoning, the minister denied the appeal of ECAD supported by all members of the Terceira Turma of the STJ.

An overview of the case can be read here.
The stages of the case here.