The Media and Entertainment Law Review: Brazil
Brazil is the biggest media and entertainment market in South America and, as an emerging country, its entertainment industry is expected to grow even more. Increasingly, most of the population could be characterised as middle class, which is reflected in increased 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 in relation to the new technologies.
Legal and regulatory framework
The Brazilian audiovisual industry is regulated by the National Film Agency (Ancine), a regulatory agency that has since 2019 reported to the Ministry of Tourism (following a ministerial reorganisation by the current administration). The cinema, home video, broadcasting and pay television (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 market participants 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 within 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, also fall within the scope of Anatel's authority.
Tax incentives and local content quotas are important aspects of the audiovisual regulatory framework aimed at spurring on local industry 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 Law2 and the Information Access Law,3 which regulates access to government authority information. The Internet Law4 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 Law5 and the Copyright Law.6
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 manifestations of thought are freely allowed, anonymity is forbidden and the right of reply (along with compensation for property or moral damage) 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. This is the case for speeches that incite or advocate criminal behaviour. Based on the fact that racial discrimination is a criminal offence in Brazil, discriminatory speech is also forbidden where it can be demonstrated that the agent responsible for the speech is:
- attesting to the dissimilarity between different groups or individuals;
- asserting the superiority of one of the groups or individuals; and
- defending the lawfulness of the domination, exploitation, slavery, elimination, suppression or reduction of rights of other peoples.
In this sense, for an expression to fall outside the scope of protection of freedom of speech, it is essential to demonstrate that the speech or other form of expression incites behaviour that constitutes some sort 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 restrictions except for those found in provisions of the Constitution itself. In 2009, the Supreme Court struck down the Federal Press Law (enacted in 1967 during a dictatorship regime) after it was found to be incompatible with the 1988 Constitution, which is currently in force.
The Supreme Federal Court (STF) has also determined that the government may not impose any type of condition on the practice of journalism, such as requiring a university degree or affiliation with a professional association.
The Federal Constitution imposes restrictions on the foreign ownership and intellectual direction of media outlets: newspaper and broadcasting companies may only be owned by native Brazilians, by individuals who have been 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 who have been 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 direction of newspaper and broadcasting companies (including editorial responsibility and the selection and direction of content). Only native Brazilians or individuals who have been naturalised for more than 10 years may occupy these roles. The extension of these restrictions is a subject of debate. In the past, associations representing the traditional press filed a complaint arguing that an internet news aggregator controlled by a foreign group constituted a 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 Association of Newspapers (ANJ) filed a lawsuit with the STF requesting clarification of the scope of the constitutional restrictions, which should, according to the ANJ, cover all 'economic organisations dedicated to the production, publishing 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 yet to be decided.
iii Freedom of access to government information
Under the Federal Constitution, individuals have the right to obtain from government authorities information that is 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 Law provides for procedures that government authorities must follow to comply with the Constitution. The law is applicable to all levels of 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 for making a request vary among the different authorities. There is no need to present a justification for such a request. In contrast, a petitioned authority may only deny a request on the basis of a valid justification (national security, police investigation, etc.). Authorities have up to 30 days to answer an access request.
The Constitution also provides for the constitutional remedy of habeas data. 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 for their professional activity. The protection of sources is a journalistic prerogative and includes the right of journalists to not be subject to any type of direct or indirect punishment on account of the lawful exercise of this 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 investigations. The journalist did not reveal the source of the leaked records, starting a debate on the limits on journalists' right to protect their sources. After the journalist claimed to have been subject to coercion (by means of several investigations directed against him), a member of the Supreme Court barred the government from opening any type of investigation into the journalist's activities regarding the receipt and transmission of information through the media. The Court's final decision favoured the journalist and confirmed the constitutional protection granted to sources.
v Private action against publication
The Federal Constitution assures individuals of 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 grounds in the media and entertainment business are copyright infringement, defamation, slander, and 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 observed in judicial precedents for similar cases. The indemnity must be reasonable and proportionate to the injury. For property damages, the burden of proof lies with 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 perform or not perform certain acts depending on the extent of an injury. For instance, a publisher may be ordered to stop publishing material.
In 2016, the Supreme Court decided that biographical works do not depend on the main subject's authorisation (or his or her relatives in the absence thereof). According to the Supreme Court, Articles 20 and 21 of the Brazilian Civil Code7 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 against an individual's honour may also trigger criminal liability. The Brazilian Criminal Code8 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 Law, the author of an intellectual work or a licensee may request injunctions, such as search and seizure measures.
vi Government action against publication
Public outcry was essential to the successful overturning of two suppressive government actions in the past few years.
A justice of the Supreme Court ordered two online magazines to remove news articles on the grounds that they were 'fake news'. The order came upon the request of another member of the Supreme Court. The news articles suggested that a contractor convicted for corruption mentioned in 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.
In 2019, 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 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 specific provisions of the Federal Constitution and various federal acts and international treaties. Copyright is regulated by the Copyright Law, which follows the standards established in the World Trade Organization 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 Law, 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 of the work, 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 Law also protects neighbouring rights.
Copyright infringement triggers criminal liability and the injured party may also seek compensation for moral and property damage, and may ask the courts for a preliminary injunction. Plagiarism is a criminal offence, as it falls within the scope of the crime of copyright infringement, the penalty for which ranges from a 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 and have the right of reply and redress in cases of violation. Authorisation for use of personality rights must always be for specific and determined purposes, and generic and broad provisions may be disregarded by Brazilian courts in disputes over personality rights.
The right to image comprises an individual's right to protect his or her own image, as a whole or any part of his or her body (if it is identifiable by third parties as belonging to that individual) and the right to protect his or her features and personal qualities, such as honesty, loyalty and professionalism, among other socially valued characteristics.
Under Brazilian law, all persons are warranted the right to the protection of their own image from unauthorised public exposure in photographs, drawings, paintings, legal indictments and other representations that would include them in evidence or subject them to publicity in, inter alia, newspapers, magazines, TV, the internet or advertising materials.
Image protection is also governed by the Civil Code, which establishes that a person may demand the cessation of conduct (or the threat of conduct) injurious to his or her personality rights. Affected individuals are also entitled to seek redress in court for losses and damage, 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 publishing, 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 against 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 Law addresses unfair competition by listing several acts of wrongdoing that are punishable by imprisonment, including publishing a false statement that defames a competitor, diverting someone else's clientele and making unauthorised disclosures of confidential information. The Law 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's 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 acquired 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 Law9 created a cross-ownership restriction between pay TV networks on one side and free-to-air broadcasters, programmers (channels) and content producers (studios) on the other. The following two restrictions apply:
- 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 production services and cannot own, directly or indirectly, more than 30 per cent of the total and voting capital of broadcasting companies, producers or programmers with headquarters in Brazil.
AT&T has a controlling interest in a Brazilian pay TV network and Time Warner has interests in several companies engaged in the production and programming of content distributed in Brazil. The merger of these 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 provided that the operations in Brazil remained separate and sensitive information was not shared, but deal closure in Brazil was stayed by an extended regulatory debate about the application of cross-ownership restrictions on the Brazilian subsidiaries of both companies. In 2020, Anatel's board finally decided to approve the merger (by a three-to-two majority), in view of the fact 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 Law 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 provides the implementing regulations for the Internet Law, further states that these indispensable technical requirements must be aimed at preserving network stability, security, integrity and functionality. The Decree also stipulates that lawful network management technical requirements must be compatible with international standards.
In any event, the Internet Law determines that traffic discrimination must:
- not cause damage to users;
- be proportionate, transparent and equal;
- be notified to users in advance; and
- not be anticompetitive.
Internet service providers (ISPs) are prevented from blocking, monitoring, filtering or analysing the content of data packages. Commercial agreements of the following types between ISPs and internet application providers are forbidden:
- agreements in violation of the public and universal nature of the internet;
- agreements prioritising data packages based on commercial arrangements; or
- agreements prioritising 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 into 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 Law or its regulatory Decree. The antitrust authority's decision was supported by favourable opinions from Anatel and the Ministry of Science, Technology and Innovation.
CADE has also been investigating one of Brazil's largest media groups on suspicion of abuse of a dominant market position because of its exclusivity arrangement with its main actors, which prevents them from entering into agreements with competitors (mainly streaming platforms).
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 that Anatel 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 (onerous) pay TV regulatory and tax obligations, which include, among other things:
- the requirement to carry channels and meet local content quotas;
- limitations on direct offers by foreign companies;
- cross-ownership restrictions between telecoms and production, programming or broadcasting activities; and
- a heavy tax burden generally applicable to telecoms services.
Anatel recently decided that OTT linear channels are not subject to pay TV regulation. In a parallel action, in 2019 the Brazilian Independent Producers Association filed a lawsuit with the STF also arguing that OTT linear channels should be deemed pay TV. The case is ongoing and several industry participants 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 Law, 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 to allow 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 which case, a court order is not necessary and a notice and takedown procedure is applicable instead. If after receiving notice the internet application provider fails to take action within its technical capabilities, it will be secondarily liable for damages.
Copyright infringements are expressly excluded from the Internet Law provisions on secondary liability. Accordingly, a specific legal provision is required to address this issue; however, no law has been passed on the subject to date.
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 Law, 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 applicable royalties. The decision is not binding on third parties, but lower courts will most likely follow its reasoning in the future. Most large streaming and social media platforms have entered into agreements with ECAD for the payment of royalties.
However, because of the covid-19 pandemic and the suspension of musical performances, there has been a significant increase in music live streams on these platforms, which has led ECAD to claim additional royalties from the live stream 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 rebroadcasting of their performances.
Year in review
The year 2021 has still been marked by the covid-19 pandemic, which has had a considerable impact on the cultural sector as a whole. As increasing numbers of the general population, become vaccinated, in-person cultural activities are being held with capacity restrictions and health precautions in place to prevent the spread of covid-19. However, musical shows scheduled for 2021 are being delayed until 2022.
International streaming services continue to thrive while traditional market participants migrate their business offer to digital platforms. More options for streaming services and platforms were made available to Brazilian users in 2021, by both global and local participants and with different types of content, increasing competition within the sector.
1 Raphael de Cunto is a partner and Beatriz Landi Laterza Figueiredo and Luiza Rehder are associate attorneys at Pinheiro Neto Advogados.
2 Law No. 13,188 of 11 November 2015.
3 Law No. 12,527 of 18 November 2011.
4 Federal Law No. 12,965/2014 – the Brazilian Civil Rights Framework for the Internet.
5 Law No. 9,279 of 14 May 1996.
6 Law No. 9,610 of 19 February 1998.
7 Law No. 10,406 of 10 January 2002.
8 Decree-Law No. 2,848 of 7 December 1940.
9 Law No. 12,485 of 12 September 2011.