The Media and Entertainment Law Review: Brazil
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 an increase in internet access across 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.
Legal and regulatory framework
The Brazilian audiovisual industry is regulated by the National Film Agency (Ancine), a regulatory agency that, since 2019, reports to the Ministry of Tourism (after a ministerial reorganisation by the current administration). The cinema, home video, broadcasting and pay-TV market segments fall within the scope of Ancine's authority. Ancine has made efforts in past years to include other segments under its authority, such as video games and video on demand, but these market segments remain unregulated.
Audiovisual industry players within the regulated market segments are subject to several different legal frameworks depending on their business. For instance, free-to-air broadcasters are subject to a legal framework of laws mostly dating from the 1960s and require a licence from the executive branch to operate broadcasting business, as well as a licence from the National Telecommunications Agency (Anatel) to use spectrum. Production and programming activities are under the scope of Ancine's authority. Pay-TV networks are regulated by Ancine under a 2011 statute that defines a set of activities connected to this service (production, programming, packaging and distribution). Pay-TV distribution activities are considered a telecommunications service and, therefore, are also under the scope of authority of Anatel.
Tax incentives and local content quotas are important aspects of the audiovisual regulatory framework aimed at spurring on the local industry's development.
The rights of freedom of expression and freedom of the press are provided by the Federal Constitution. Federal statutes regulate specific matters, such as the Right of Reply Act and the Information Access Act, which regulates access to government authorities' information. The Internet Act 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 and the Copyright Act.
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 a 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 must be balanced with other constitutional rights and values. The Constitution does not clearly determine free speech limits and court precedents play an important role in this respect.
Even though there is no leading case on freedom of speech and its limitations 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 for 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 a speech incites some sort of behaviour by means of violence.
Free speech limits have also been in the spotlight in the context of proposed fake news regulation currently under congressional review.
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 under provisions in the Constitution itself. In 2009, the Brazilian Supreme Court struck down the Federal Press Act (enacted in 1967 during a dictatorship regime) after it was considered incompatible with the 1988 Constitution currently in force.
The Supreme Federal Court (STF) has also determined that the government may not impose any type of condition to practicing journalism, such as requiring a university degree or affiliation to a professional association.
The Federal Constitution imposes restrictions on the foreign ownership and intellectual guidance of media outlets: newspaper and broadcasting companies 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 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 regarding the intellectual guidance of newspaper and broadcasting companies (including editorial responsibility, and the selection and direction of content). Only native Brazilians or individuals naturalised for more than 10 years may be in charge of these roles. The extension of these restrictions is subject to controversies. Traditional press vehicle associations filed a complaint in the past arguing that an internet news aggregator controlled by a foreign group was in breach of the constitutional limitations on foreign capital, but the public prosecutor's office shelved the case in 2016. In the same year, the National Journals Association filed a lawsuit at the STF requesting the Court to clarify the scope of the constitutional restrictions that, according to the Association, should cover all 'economic organisations that are dedicated to the production, publishing, and/or propagation of news to the Brazilian public, regardless of the vehicle used, either in hard copy or by digital means (internet)'. The case has not been ruled on yet.
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 Constitution. The law is applicable to all levels of the government (federal, state and local) and to the legislative, executive and judicial branches.
Any person may request access to any information related to a government authority. The mechanisms to make a 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 a request upon valid justification (national security, police investigation, etc.). Authorities have up to 30 days to answer the access request.
The Constitution also provides for the habeas data constitutional remedy. This remedy enables individuals to request access to any relevant information that concerns them 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 their 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 one of 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. A 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 a case and the standards present in judicial precedents 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 an 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 his or her relatives in a lack thereof). According to the Supreme Court, Articles 20 and 21 of the Brazilian Civil Code must be interpreted in accordance with the Constitution, which provides for the fundamental right of freedom of expression. The Supreme Court has 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 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, an 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 few years.
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.
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 neighbouring rights.
Copyright infringement triggers criminal liability, while an injured party may also seek compensation for moral and property damages and ask courts for a preliminary injunction. 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 (three months to one year).
ii Personality rights
Personality rights are provided under the Federal Constitution, which establishes that individuals are entitled to the inviolability of their image, having also the right of reply and redress in cases of violation. The right to image comprises the right to protect an individual's image as a whole or any part of his or her body (if it is identifiable by third parties as belonging to such person), as well as the right to protect his or her 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, inter alia, newspapers, magazines, television, the internet or advertising materials.
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 damage in court, regardless of other possibly applicable penalties prescribed by law.
Unless authorised or otherwise necessary for the administration of justice or the maintenance of public order, a 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, his or her spouse, ancestors or descendants are entitled to protect his or her image on his or her behalf.
The 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 damage arising from a violation of their right to image, name and objective honour. In the case of an offence to a 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, whether tangible or intangible.
The Industrial Property Act 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, injured parties may seek compensation for other unlisted unfair competition practices that may have tainted their business' reputation.
Unfair competition is often in the spotlight during discussions regarding search engines and keywords or tags associated with search results or sponsored links. Brazilian court precedents in the past have almost unanimously considered that using a competitor's trademarks as keywords in search results is unlawful not only because of the unauthorised use of the trademark, but also because it is deemed unfair competition (free-riding on the trademark and on the market repute obtained by the trademark owner).
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 that could apply to the Brazilian affiliates of both companies.
The Pay TV Act 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. There are two different restrictions:
- free-to-air broadcasting companies, producers and programmers with headquarters in Brazil cannot provide telecom 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 a controlling interest in a Brazilian pay-TV network, while Time Warner has interests in several companies engaged in the production and programming of content distributed in Brazil. The merger of both companies puts the Brazilian pay-TV network and the production and programming companies 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, but the closing in Brazil was stayed by a long-lasting regulatory debate around the application of the cross-ownership restrictions to the Brazilian subsidiaries of both companies. In 2020 Anatel's board finally decided to approve the merger (in a three-to-two score), considering that the Time Warner content distributed in Brazil is produced and programmed abroad.
In October 2020, Ancine's board cleared the merger unanimously following Anatel's decision.
Net neutrality rules are addressed in the Internet Act and are built on the principle of equal treatment of all data packages. Traffic discrimination and throttling are only permitted in cases of prioritisation of emergency services or the 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;
- prioritisation of data packages based on commercial arrangements; or
- prioritisation of applications offered by an 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 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.
The regulation of digital audiovisual content has been under debate for a long time as demand moves from traditional pay-TV services to internet distribution business models. In 2018 a dominant pay-TV service provider requested Anatel to initiate an investigation into two direct-to-consumer linear channels over the internet (OTT linear channels), claiming they should be deemed pay-TV services and comply with pay-TV (heavy) regulatory and tax obligations, which include, among other things:
- that they must carry channels and meet local content quotas;
- limitations on direct offers by foreign companies;
- cross-ownership restrictions between telecom and production, programming or broadcasting activities; and
- a heavy tax burden generally applicable to telecom services.
Anatel recently decided that OTT linear channels are not subject to pay-TV regulation. In parallel, in 2019 the Brazilian Independent Producers Association filed a lawsuit at the STF also arguing that OTT linear channels should be deemed pay-TV. The case is ongoing, and several industry players have presented their opinions. The Attorney General Office's and Anatel's opinions were contrary to the Association's claim. With regard to secondary liability, under the Internet Act, ISPs are never liable for damage 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, a 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.
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. Most large streaming platforms have entered into agreements with ECAD for the payment of royalties.
Due to the covid-19 pandemic and the suspension of musical performances, however, there has been a significant increase of music livestreams through these platforms, which has led ECAD to claim additional royalties from the livestreams' sponsors or promoters. 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 performances.
Year in review
The year 2020 has been marked by the covid-19 pandemic, which has had a great impact on the cultural sector as a whole. To follow social distancing standards, activities that involved people gathering were cancelled or suspended – including films, musical shows, theatrical performances and artistic expositions. In this scenario, Congress passed Law 14.017/2020 providing 3 billion reais to states, municipalities and the federal district to carry out emergency aid to the cultural sector.
In the private sector, international streaming services continue to thrive while traditional players migrate their business efforts to digital platforms. The year has been particularly exciting for the video game subsector, which saw demand increase in connection with the pandemic. Researches before the pandemic had already indicated 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 in 2019 a public consultation to review the copyright legal framework in Brazil. Most submissions made to the public consultation indicated that Brazilian copyright law must be reviewed as a whole. Matters involving copyrights in the internet environment (such as ISPs' civil liability for copyright infringements) also received attention in the contributions. It is expected that the public consultation will now serve as the basis for a bill of law to amend the Copyright Act. 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 offered assurances that the Brazilian reviewing process will run independently, not necessarily following the European approach.