Reducing Piracy on E-Commerce Platforms in the Philippines

to meThis year, the Intellectual Property Office of the Philippines (IPOPHL) Voluntary Administrative Site Blocking Regulations, or Memorandum Circular No. 2023-025, went into effect. It legally allows internet service providers (ISPs) to block sites that distribute infringing or pirated content. By restricting access to these pirated sites, the initiative also aims to direct consumers to legitimate sources. It is one of several measures aimed at combating the still-prevalent online piracy in the Philippines.

The IPOPHL site blocking mechanism is lauded as the pioneering voluntary site blocking mechanism in the Asia-Pacific region, and the second in the world. This regulation promises significant benefits, especially for the film and television industry, which suffered a staggering loss of $700 million in 2022 due to illegal streaming. Authors, publishers, and other creators can also benefit. The challenge, however, lies in constant monitoring, as pirates can quickly migrate to new online servers to avoid detection and enforcement. More sophisticated consumers can also access international pirate sites via VPNs.

Currently, the new blocking mechanism is voluntary, but support for legislation that would otherwise give the IPOPHL more power is currently pending in Congress. House Bill 7600, which amends the Philippine IP Code, was approved by the lower house on third reading, while a corresponding Senate Bill 2150 is still pending.

If passed, the measures would authorize the IPOPHL itself to receive complaints and issue site-blocking orders, with internet service providers required to comply within 48 hours. The bills would give the IPOPHL more enforcement functions, such as intelligence gathering and investigations.

Meanwhile, research reveals that about 44% of Filipinos interact with pirated content on social media platforms. While the aforementioned site-blocking policies and pending legislation make it easier to block sites associated with e-tailers, such as individual sellers and merchants, these measures do not extend to e-marketplaces, including Facebook, Shopee, and Lazada, where the threat of piracy is exponentially greater. Pirates leverage the vast reach and influence of social media to promote illegal products and easily distribute pirated materials.

Joint Administrative Order 22-01 (JAO 22-01) defines an e-merchant as “an organization that sells products or services directly to consumers online.” Meanwhile, an e-marketplace refers to “an online intermediary that allows participating sellers to exchange information about products or services to complete an electronic commerce transaction, which may or may not provide payment and logistics information/services.” JAO 22-01 defines online sellers/vendors as “an organization or retailer that sells products or services to consumers through an e-marketplace.”

A cursory review of popular e-marketplaces in the Philippines indicates that piracy and unauthorized distribution of copyrighted materials, from e-books to computer software, still occur.

Worse still, the algorithms of these e-marketplaces themselves often direct consumers to this pirated and infringing content. The timeliness of responses to takedown notices varies. While there has been an increase in the number of applications and issuances of Copyright Registration Certificates by IPOPHL, demonstrating copyright ownership can also pose a challenge for copyright holders.

JAO 22-01 outlines some basic principles that internet companies should follow, such as “taking consumer complaints seriously, establishing a fair and transparent complaint handling system” and “refraining from illegal, deceptive and/or unethical business practices.” However, the reality is that the internet is a hotbed of bad actors who aim to profit from the copyrighted works of others.

IN COSAC Inc. v FILSCAP (GR No. 222537, February 28, 2023) The Supreme Court ruled that Articles 216 and 216.1 of the Intellectual Property Code, as amended by RA 10372, provide for two types of copyright infringers: primary infringers, or those who directly commit infringing acts; and secondary infringers, or those who induce, materially contribute to, or benefit from an act that infringes the rights of another.

Secondary infringement through contributory infringement occurs when a person, with knowledge of infringing activity, materially contributes to the infringing conduct of another person. Hence, e-markets such as Facebook cannot avoid liability by arguing that they are merely online intermediaries. An e-market that has been notified of piracy but refuses or fails to remove the infringing/pirated material may be held liable for secondary infringement.

The Philippine digital economy reached $17 billion in 2021 and is expected to grow to $40 billion by 2025. In addition to the obvious financial harm, piracy discourages and demoralizes our creators. Efforts to reduce, if not eliminate, piracy must be coordinated and responsive.

Ernest Luigi A Manzanares is an associate at Federis & Associates Law Offices in Makati City