Film exhibitors and the ECAD

In 2003, discussion began of Senate Bill No. 532. With the bill, film exhibitors seek to avoid collection of a percentage of cinema tickets prices for copyright and related rights for public exhibition of musical works. The bill gained momentum recently and has been the subject of numerous magazine announcements designed to raise public awareness concerning the issue.

The Central Office for Collection and Distribution of Royalties (ECAD) is responsible for collecting copyright and related fees for public exhibition of musical works. It must therefore collect the established fees for music performed between film screenings as well as in the soundtracks of the films themselves. Likewise, the ECAD collects for music heard on television, regional festivals and radios, as well as in dentist offices, stores and many other locations.

For years film exhibitors have been fighting against the 2.5% charge on the gross price of cinema tickets established by the ECAD; the bill in question is one more battle in this war. In summary, exhibitors argue that when foreign or Brazilian studios obtain a license to use a piece of music in a film, this license automatically extends to public exhibition, and naturally to its distribution and exhibition. The bill then creates a legal presumption by changing the relationship between private parties and establishing a dangerous legal exception.

Firstly, authorization to include a musical workinasoundtrackdoesnotautomatically mean that all rights for public execution were paid. On the contrary, Copyright Law (Law No. 9,610/98) clearly establishes that the diverse ways of using works are independent of one another and that authorization granted by the author, or by the producer, respectively, does not extend to the others.

Secondly, the bill does not completely eliminate the obligation to pay copyright fees for public exhibition of musical works ­ which in theory would violate international treaties ­ but rather excludes one category from this payment. In other words, the bill tends to favor only a small group of companies, those with film exhibition chains. The question to be asked is the following: If the film exhibitor will benefit, why not television networks as well? As proposed, the bill at best fails to treat identical situations equally before the law.

Thirdly, by exempting the exhibitors from the fees, the bill does not specify who should assume responsibility for the payment due. Would this fall on distributors? on producers? This fundamental issue, unfortunately, is not even addressed.

Finally, if the bill is approved and sanctioned by the Brazilian President, holders of copyrights and related rights will no longer receive royalties for public exhibition of musical works, in films exihibited theatrically at least until the currently undecided matter of who would be responsible for the fees has been settled.

The bill as submitted favors one category of business to the detriment of those holding copyrights and related rights. One hopes that the National Congress reflects carefully on the matter so as to avoid one more significant problem in the Brazilian copyright legislation.