Brazil is the biggest media and entertainment market in South America, and, as an emerging country, it is expected that its entertainment industry will grow even more. Most of the population is ascending to middle class, which increases the consumption of cultural content.
The growth in the media and entertainment sector is likely to be boosted by the increase of internet access in the country. Although Brazil is frequently ranked as one of the countries with the largest number of internet users in the world, a large part of its population has yet to be connected, creating business opportunities with space to grow.
In this vibrant scenario, a regulatory overhaul is much needed, especially with regard to copyright under the new technologies.
II LEGAL AND REGULATORY FRAMEWORK
The Brazilian audiovisual industry is regulated by the National Film Agency (Ancine), a regulatory agency reporting to the Ministry of Citizenship, which replaced the Ministry of Culture. The cinema, home video, broadcasting and pay-TV market segments fall within the scope of Ancine’s authority. The Agency has made efforts to include other segments under its authority, such as video games and video on-demand.
Industry players are subject to several different legal frameworks depending on the business. For instance, free-to-air broadcasters are subject to a legal framework of laws mostly dated from the 1960s, while pay-TV networks are regulated by a 2011 statute that created a new telecommunications service for pay-TV and defined a set of activities connected to this service (production, programming, packaging and distribution).
Another important aspect of the audiovisual sector is the relevance of tax benefits for the development of this industry. There are three main regulations on the subject: the Rouanet Act (Law No. 8,313 of 23 December 1991), the Audio-visual Act (Law No. 8,685 of 20 July 1993) and Provisional Measure No. 2,228-1 of 6 September 2001, which also created Ancine.
The right to freedom of expression and to freedom of the press are provided by the Federal Constitution. Federal statutes regulate specific matters, such as the Right of Reply Act (Law No. 13,188 of 11 November 2015) and the Information Access Act (Law No. 12,527 of 18 November 2011), which regulates the access to government authorities’ information. The Federal Press Act (Law No. 5,250 of 9 February 1967) was considered incompatible with the 1988 Federal Constitution by the Supreme Court.
The Internet Act (Law No. 12,965 of 23 April 2014) provides a legal framework for the online environment, with provisions that address, among other issues, net neutrality and liability for third-party content on the internet.
The Federal Constitution also provides for intellectual property rights, which are also regulated by international treaties to which Brazil is a signatory, and specific federal legislation, including the Industrial Property Act (Law No. 9,279 of 14 May 1996) and the Copyright Act (Law No. 9,610 of 19 February 1998).
III FREE SPEECH AND MEDIA FREEDOM
i Protected forms of expression
Freedom of speech and freedom of the press are protected under the Federal Constitution. Although manifestation of thought is free, anonymity is forbidden, and the right of reply (along with compensation for property or moral damages) is assured.
Freedom of expression is not absolute, and it may be overridden by other rights and values. There is no clear legal provision on the restrictions that may be imposed on freedom of expression. Rather, individuals must resort to court precedents to have some clarity on the subject.
Even though there is no leading case on freedom of speech in Brazil, several precedents from the Brazilian Supreme Court address the issue. In general, the decisions forbid any type of prior censorship, guaranteeing that freedom of expression protects not only truthful, admirable or conventional ideas, but also (and perhaps most importantly) ideas that may be considered doubtful, exaggerated, reprehensible or not supported by the majority.
Some expressions, however, are not awarded constitutional protection. That is the case of speeches that incite or advocate criminal behaviour. Based on the fact that race discrimination is a criminal offence in Brazil, discriminatory speech is also forbidden whenever it remains demonstrated that the agent responsible for the speech is:
- attesting the dissimilarity between different groups or individuals;
- supporting the superiority of one of the groups or individuals; and
- defending the lawfulness of other people’s domination, exploitation, slavery, elimination, suppression and reduction of rights.
In this sense, to fall outside the scope of protection of freedom of speech, it is essential to demonstrate that the speech incites some sort of behaviour by means of violence.
The Federal Constitution provides for the freedom of the press, guaranteeing that the manifestation of thought, in any form, process or medium, will not be subject to any restriction, except for provisions in the Constitution itself. In 2009, the Brazilian Supreme Court struck-down the Federal Press Act after it was considered incompatible with the 1988 Federal Constitution currently in force.
The Supreme Court has also decided that the government may not impose any type of condition to practice journalism, such as requiring a university degree or affiliation to a professional association.
Media outlets (newspaper and broadcasting) may only be owned by native Brazilians, by individuals naturalised for more than 10 years or by companies incorporated under the laws of Brazil with head offices in the country. In any case, at least 70 per cent of the voting capital of the media outlets must be held, directly or indirectly, by native Brazilians, by individuals naturalised for more than 10 years or by companies incorporated under the laws of Brazil with head offices in the country. There are also restrictions to the intellectual guidance of newspaper and broadcasting companies (including editorial responsibility, selection and direction of content). Only native Brazilians or individuals naturalised for more than 10 years may be in charge of these roles.
Under the Right of Reply Act, an individual that has been offended by a news article is entitled to the right of reply, free of charge and in a manner proportionate to the offence. The statute creates a special regime for right-of-reply requests, setting forth short time limits for the media outlet to act.
iii Freedom of access to government information
Under the Federal Constitution, individuals are entitled to the right of receiving, from government authorities, information in their personal interest or in the public interest, except for information that must be kept secret to guarantee the safety of society or the country.
The Information Access Act provides for the procedures that government authorities must follow to comply with the Federal Constitution. The law is applicable to all levels of the government (federal, state and local) and to all three branches (legislative, executive and judicial).
Any person may request access to any information related to a government authority. The mechanisms to make the request vary among the different authorities. There is no need to present a justification for making the request. However, the relevant authority may only deny the request upon valid justification (national security, police investigation, etc.). Authorities have up to 30 days to answer the access request.
The Federal Constitution also provides for the habeas data constitutional remedy. This remedy enables individuals to request access to any relevant information that concerns them and that is stored in a database kept by government authorities.
iv Protection of sources
Under the Federal Constitution, journalists are entitled to the right to protect their sources whenever necessary to the professional activity. The protection of sources is a prerogative of journalism, and it includes the right of journalists to not be subject to any type of direct or indirect punishment due to the lawful exercise of such prerogative.
The subject has been in the spotlight since the publication of a series of controversial news articles leaking private messages of individuals directly involved with the country’s largest corruption investigation. The journalist did not reveal the source of the leaked records, starting a debate on the limitations of journalists’ right to protect their sources. After the journalist’s claims of coercion (by means of several investigations opened against him), a member of the Supreme Court barred the government from opening any type of investigation against him for the receipt and transmission of information through the media. The ruling is preliminary, as the full court must still take on the case.
v Private action against publication
The Federal Constitution assures individuals the right to seek compensation for damage caused by a faulty act or omission (negligence, imprudence or malpractice). Any individual that suffers somehow because of a publication is entitled to file a lawsuit. The damage claim can be based on several grounds. The most common in the media and entertainment business are copyright infringement, defamation, slander, privacy and image rights.
Damages are divided into two different categories: moral damages, which are related to anguish, pain and suffering; and property damages, which are related to compensation for actual damage and loss of profit. Courts assess damages claims on a case-by-case basis. For moral damages, courts take into consideration the circumstances of the case and the standards present in case law for similar cases. The indemnity must be reasonable and proportionate to the injury. For property damages, the burden of proof lies on the injured party, which must demonstrate the occurrence of the faulty act or omission, the causal relation between the offence and the injury, and the extent of the damage.
Apart from indemnification, courts may also impose obligations to do or not to do certain acts depending on the extent of the injury. For instance, a publisher may be ordered to stop publishing material.
In 2016, the Brazilian Supreme Court decided that biographical works do not depend on the main character’s authorisation (or their relatives in the lack thereof). According to the Supreme Court, Articles 20 and 21 of the Brazilian Civil Code (Law No. 10,406 of 10 January 2002) must be interpreted in accordance with the Constitution, which provides for the fundamental right of freedom of expression. The Supreme Court asserted that ordinary law (such as the Civil Code) cannot restrict constitutional rights, even on the grounds of protecting another right provided for in the Constitution. In the case of a conflict of rights, the collective interest must prevail.
In addition to civil liability, offences to an individual’s honour may also trigger criminal liability. The Brazilian Criminal Code (Law-Decree No. 2,848 of 7 December 1940) provides for three different crimes against honour:
- slander, which means falsely accusing someone of committing a criminal offence, is punishable by fine and imprisonment (six months to two years);
- defamation, which means damaging someone’s reputation by communicating degrading statements about them, is punishable by fine and imprisonment (three months to one year); and
- insult, which means insulting someone by hurting their dignity or decorum, is punishable by fine and imprisonment (one to six months).
Copyright infringement is also a criminal offence, and penalties vary from fines to imprisonment. Under the Copyright Act, the intellectual work’s author or a licensee may request injunctions, such as search and seizure measures.
vi Government action against publication
Public outcry was essential for successfully overturning two suppressing government actions in the past year.
A justice of the Brazilian Supreme Court ordered two online magazines to remove news articles on the grounds they were ‘fake news’. The order came upon the request of another member of the Supreme Court. The news articles suggested that a contractor that had been convicted for corruption mentioned, during his deposition, the justice who had requested the order. The decision was severely criticised by the public prosecutor’s office, several organisations and public figures, including other members of the Supreme Court. The order was then revoked.
Rio de Janeiro’s mayor tried to ban a comic book showing two male characters kissing because of its ‘sexual content for minors’. He ordered a police raid to seize the copies of the comic from a book fair. The case received great public attention with protests on social media and at the book fair. A local judge prohibited the ban, but the decision was later overturned by the court of appeals, permitting the seizure. The case was then taken by the Brazilian Supreme Court, which ruled that the mayor’s actions were illegal, and officials could not target LGBTQ+ content. According to the Supreme Court decision, the ban violated the right to freedom of expression and the right to equal protection for all.
IV INTELLECTUAL PROPERTY
i Copyright and related rights
Intellectual property rights are protected in Brazil by provisions set forth in the Federal Constitution and various federal acts and international treaties. Copyright is regulated by the Copyright Act, which follows the standards established in the Agreement on Trade Related Aspects of Intellectual Property Rights. Brazil is also a signatory to the Berne Convention for the Protection of Literary and Artistic Works of 9 September 1886 and to the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations of 26 October 1961.
Under the Copyright Act, any original work of authorship fixed in any tangible medium of expression is protected as intellectual property. The author is entitled to moral and economic rights related to the intellectual work created. Moral rights include the right to claim authorship and the right to object to any modification, while economic rights relate to the work’s use and disposal. Economic rights are protected for a period of 70 years as of 1 January of the year following the author’s death.
Copyright may be fully or partially transferred to third parties by licensing, assignment or any other mean provided by law, subject to specific limitations.
In Brazil, copyright is based on a declarative system, which means that registration of an intellectual work is optional and not essential for its protection. The Copyright Act also protects related rights.
Copyright infringement triggers criminal liability, while the injured party may also seek compensation for moral and property damages and ask courts for a preliminary injunction.
ii Personality rights
Personality rights are provided by the Federal Constitution, which establishes that individuals are entitled to the inviolability of their image, having also the right of reply and redress in case of violation. The right to image comprises the right to protect the individual’s image as a whole or any part of their body (if it is identifiable by third parties as belonging to such person), as well as the right to protect their features and qualities, such as honesty, loyalty and professionalism, among other socially praised characteristics.
Under Brazilian law, everyone is warranted the right to protect their image from unauthorised public exposure in photographs, drawings, paintings, charges and other representations that would bring them into evidence, or publicity in newspapers, magazines, television, internet, advertising materials, etc.
Image protection is also governed by the Brazilian Civil Code, which establishes that a person may demand that injurious conduct (or the threat of an injurious conduct) to his or her personality rights is ceased. Affected individuals are also entitled to seek redress for losses and damages in court, regardless of other possible applicable penalties prescribed by law.
Unless authorised or otherwise necessary for administration of justice or maintenance of public order, the depicted person may prohibit the disclosure of writings, the transmission of words, or the publicity, exposure or use of his or her image, whenever it affects his or her honour, reputation or integrity. If the affected person is dead or missing, the spouse, ancestors or descendants are entitled to protect his or her image on his or her behalf.
The Brazilian Civil Code protects other personality rights, such as the right to a person’s name and pseudonym and the right to honour, physical integrity and privacy. Names and pseudonyms cannot be used by third parties in publications or representations that are shameful, or in advertising material without authorisation.
The protection of personality rights is also applicable to legal entities to the extent possible. Legal entities are entitled to seek compensation for damages arising from the violation of their right to image, name and objective honour. In the case of an offence to the legal entity’s reputation, for instance, an indemnity claim may be applicable.
iii Unfair business practices
Abstract ideas are not protected by copyright in Brazil. Instead, copyright protects creative works expressed in some kind of medium, tangible or intangible.
In Brazil, plagiarism is a criminal offence, as it falls within the scope of the copyright infringement crime. The penalty for this criminal offence varies from fine to imprisonment (of from three months to one year). If a person reproduces a work without the author’s authorisation with the aim of making profit, he or she will be subject to more severe penalties (fine or imprisonment of two to four years).
A plagiarism case has made the headlines recently. A Brazilian novelist is being sued by a US writer, accused of copying and paraphrasing material from 10 of her books. The case has not yet been decided by Brazilian courts. The suit follows other plagiarism accusations against the Brazilian novelist.
The Industrial Property Act also addresses unfair competition by listing several wrongdoings that are punishable by imprisonment, including publishing a false statement that defames a competitor, diverting someone else’s clientele and making unauthorised disclosure of confidential information. The Act presents an exhaustive list of unfair competition practices that trigger criminal liability. However, an injured party may seek compensation for other unlisted unfair competition practices that may have tainted their business’ reputation.
V COMPETITION AND CONSUMER RIGHTS
While the Disney/Fox deal was cleared by the Brazilian antitrust authority (CADE) without further regulatory challenge (the acquisition was approved subject to the sale of the Fox Sports channel in Brazil and related sports programme rights), the merger of Time Warner and AT&T in the United States sparked controversy, particularly because of cross-ownership restrictions to which the Brazilian affiliates of both companies are subject.
The Pay TV Act (Law No. 12,485 of 12 September 2011) created a cross-ownership restriction among pay-TV networks, on one side, and free-to-air broadcasters, programmers (channels) and content producers (studios), on the other side. There are two different restrictions:
- free-to-air broadcasting companies, producers and programmers with headquarters in Brazil cannot provide telecoms services, and cannot own, directly or indirectly, more than 50 per cent of the total and voting capital of pay-TV networks; and
- pay-TV networks cannot provide broadcasting, programming or producing services, and cannot own, directly or indirectly, more than 30 per cent of the total and voting capital of broadcasting companies, producers and programmers with headquarters in Brazil.
AT&T has controlling interest in a Brazilian pay-TV network, while Time Warner has interests in several companies engaged in content production and channel programming in Brazil. Once AT&T and Time Warner merge, the pay-TV network and the production and programming companies would be under common control. The transaction was cleared from an antitrust perspective, with CADE approving the deal as long as the operations in Brazil remained separate, and sensitive information was not shared. On the regulatory side, however, the Board of the National Telecommunications Agency (Anatel) has not issued a final opinion. Parallel to Anatel’s review of the merger but certainly driven by the deal, the National Congress is currently reviewing the Pay TV Act’s cross-ownership restrictions.
Net neutrality rules are addressed in the Internet Act and are built on the principle of equal treatment to all data packages. Traffic discrimination and throttling are only permitted in cases of prioritisation of emergency services or implementation of technical requirements that are indispensable for the adequate provision of network services and applications. Decree No. 8,771 of 11 May 2016, which regulates the Internet Act, further explains that these indispensable technical requirements must be aimed at preserving network stability, security, integrity and functionality. The Decree also mentions that lawful network management technical requirements must be compatible with international standards.
In any event, the Internet Act determines that traffic discrimination must:
- not cause damage to users;
- be proportionate, transparent and equal;
- be informed in advance to users; and
- not be anticompetitive.
Internet service providers (ISPs) are prevented from blocking, monitoring, filtering or analysing the content of data packages. Commercial agreements between ISPs and internet application providers are forbidden in the case of:
- violation of the public and universal nature of the internet;
- priorisation of data packages based on commercial arrangements; or
- priorisation of applications offered by the ISP itself or by companies within the same economic group.
The net neutrality debate gained prominence when CADE opened an investigation against the four major mobile operators in the country. The investigation looked into different zero-rating practices carried out by the telecoms providers. In 2017, CADE decided to shut down the investigation, as it concluded that the zero-rating practices being investigated did not violate the net neutrality principle or any other provision of the Internet Act or the Decree. The antitrust authority’s decision was supported by the favourable opinions of Anatel and the Ministry of Science, Technology, Innovation and Communication (MCTIC).
VI DIGITAL CONTENT
There is an ongoing debate on whether online video content must be regulated in the same way as TV content. In Brazil, TV content distribution is subject to two different regimes: pay-TV networks are subject to the authority of Ancine, while free-to-air broadcasters are subject to the authority of the MCTIC, both being heavily regulated. Despite Ancine’s efforts to regulate video on-demand, the service remains unregulated for now.
With regard to secondary liability, under the Internet Act, ISPs are never liable for damages arising from third-party content, and internet application providers, including social media platforms, can only be held liable if they fail to comply with a court decision that orders the removal of infringing content. The court order must clearly indicate the infringing content, allowing the application provider to precisely locate it.
An exception applies to the unauthorised disclosure of content containing nudity or sexual acts that were meant to be private. In this case, the court order is not necessary, and a notice and takedown procedure is applicable instead. If the internet application provider fails to take action after receiving the notice, within its technical capability, it will be secondarily liable for damages.
Copyright infringements are expressly excluded from the Internet Act provisions related to secondary liability. Accordingly, a specific legal provision must address the issue. However, no law has yet been enacted in relation to the subject.
VII CONTRACTUAL DISPUTES
One of the main contractual litigation issues in the media and entertainment sector currently relates to the collection of royalties for the public performance of musical works. Under the Copyright Act, the Central Bureau for Collection and Distribution (ECAD) is entitled to collect the royalties for public performances of musical works for later distribution to the copyright holders. The dispute centres on music streaming and whether it can be considered a public performance.
After much debate, the Superior Court of Justice decided that streaming (both webcasting and simulcasting) must be considered public performance of music, authorising ECAD to collect and distribute the applicable royalties. The decision is not binding to third parties, but lower courts will likely follow its reasoning in the future.
Other common issues brought to trial are licensing and royalty disputes, employment contract disputes, image rights, future works (artists can only be bound to a contract for a maximum of five years) and performance of old works in new media, such as streaming platforms. Reruns have also been the object of dispute between performers and TV studios, as artists seek some sort of compensation for the rebroadcast of their performance.
VIII YEAR IN REVIEW
The year 2019 has been marked by the election of President Jair Bolsonaro, which was followed by several changes in the government’s structure, particularly with the cutback on the number of Ministries. The Ministry of Citizenship was created, assembling the powers of the former Ministry of Culture, Ministry of Sports and Ministry of Social Development.
The National Congress’ efforts have been mainly focused on the social security reform with few successful legislative initiatives. The President, however, was able to pass the Economic Freedom Act (Law No. 13,874 of 20 September 2019), which aims at simplifying the bureaucratic procedures for business activities in Brazil.
In the private sector, international streaming services continue to strive while traditional players migrate their business efforts to digital platforms. The year has also been exciting to the video game subsector, with researches indicating that more than half of the Brazilian population plays some type of electronic game.
Over 20 years since the enactment of the Copyright Act, the government decided to carry out a public consultation to review the copyright legal framework in Brazil. The legal overhaul is highly anticipated by the market in general, as the current legislation is not entirely fitting to most of the current technologies and business models, especially in the digital environment. Even though the initiative was influenced by recent changes introduced to European copyright legislation, the government’s office in charge of the process has assured that the Brazilian reviewing process will run independently, not necessarily following the European approach.
Changes are also expected in relation to the scope of Ancine’s authority. The agency has been making efforts to include new market segments under its full control, such as video on-demand. One of the biggest controversies centres around the ‘contribution to the development of a national cinematographic industry’ payment required of video on-demand providers. Similar to video games, the video on-demand market segment is not considered a part of the audiovisual industry under Brazilian law, which means regulation depends on legislative action.
1 Raphael de Cunto is a partner and Sofia Cruz is an associate attorney at Pinheiro Neto Advogados.