Supreme Court: Selling Pirated Software Alone Is Copyright Infringement

The Supreme Court has clarified an important point in Philippine intellectual property law: a person who sells pirated computer software can be held liable for copyright infringement even if there is no proof that he or she personally copied or reproduced the software. The ruling in Microsoft Corporation v. Manansala (G.R. No. 166391, October 21, 2015) settled a dispute over the proper interpretation of the copyright law and affirmed that the mere act of selling pirated copies is enough to establish probable cause for a criminal charge.

Background of the Case

Microsoft Corporation, the copyright and trademark owner of various computer programs, discovered that Rolando Manansala, doing business as Dataman Trading Company and/or Comic Alley, was distributing and selling unauthorized copies of Microsoft software. In November 1997, a private investigator, accompanied by an NBI agent, conducted a test purchase of six CD-ROMs containing Microsoft programs. This led to the issuance and service of a search warrant, which yielded several illegal copies of Microsoft software from the respondent's premises.

Microsoft filed an Affidavit-Complaint with the Department of Justice (DOJ) charging the respondent with violation of Section 29 of Presidential Decree No. 49, the Decree on Intellectual Property. However, the State Prosecutor dismissed the charge, ruling that while there was evidence the respondent was selling pirated software, there was no proof that he was the one who actually printed or copied the products. The prosecutor instead recommended charging the respondent under a provision of the Revised Penal Code relating to unfair competition. The DOJ and the Court of Appeals (CA) affirmed this dismissal.

The Legal Issue

The central question was whether the mere sale of pirated computer software constitutes copyright infringement under Section 29 of PD 49, or whether the prosecution must also prove that the seller personally copied or reproduced the software.

The CA had ruled that Section 5(a) of PD 49, which enumerates the exclusive rights of a copyright owner, should be read conjunctively. Because the provision lists acts such as "to print, reprint, publish, copy, distribute, multiply, sell, and make photographs," the CA reasoned that all these acts must be present before liability attaches. Since there was no evidence that the respondent personally copied the software, the CA concluded that selling alone did not constitute infringement.

The Supreme Court's Ruling

The Supreme Court reversed the CA and ruled that the DOJ committed grave abuse of discretion in dismissing the charge. The Court held that Section 5 of PD 49 defines copyright as an exclusive right consisting of several distinct acts. The commission of any of these acts without the copyright owner's consent constitutes actionable copyright infringement.

The Court rejected the CA's literal interpretation of the word "and" in Section 5(a), citing the rule that laws should be construed to avoid absurd or unreasonable results. As the Court explained, requiring all the enumerated acts to be present would lead to an absurd conclusion—for example, it would be ridiculous to require that computer programs be "photographed, photo-engraved, or pictorially illustrated" before infringement could be found, especially since PD 49 already recognized computer programs as protected works.

The Court emphasized that the gravamen of copyright infringement is the unauthorized performance of any of the acts covered by Section 5, not merely the unauthorized manufacturing of intellectual works. Thus, any person who performs any of the acts enumerated in Section 5 without the copyright owner's prior consent renders himself civilly and criminally liable.

The Court concluded that the mere sale of illicit copies of software programs was enough by itself to establish probable cause for copyright infringement. There was no need to prove who actually copied, replicated, or reproduced the software.

Practical Takeaways

• Selling pirated software is itself a crime. Under PD 49, you do not need to be the one who copied or reproduced the pirated material to be liable for copyright infringement. Selling it is enough.
• The word "and" does not always mean "all." Courts will not apply a literal interpretation of a statute if it leads to absurd results. The Supreme Court will read provisions sensibly and in line with legislative intent.
• Probable cause is a low threshold. For a criminal charge to proceed, the prosecution only needs to show facts sufficient to engender a well-founded belief that a crime has been committed and that the accused is probably guilty. It does not require proof beyond reasonable doubt at the filing stage.
• Prosecutors cannot arbitrarily dismiss complaints. While the determination of probable cause is generally an executive function, the courts will intervene when the prosecutor's dismissal is tainted with grave abuse of discretion—that is, when the decision is whimsical, arbitrary, or capricious.
• Businesses selling software should ensure proper licensing. This ruling reinforces that retailers and distributors of computer programs must secure authorization from copyright owners, as they cannot hide behind the defense that they merely sold the products.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.