Sueyoshi & Sato
IP infringement can affect our daily lives in surprising ways. This is nicely illustrated in the questions raised in a lawsuit brought by a broad range of music-school operators – including individual small business operators and nationwide companies (eg, the YAMAHA Music Foundation) – against the copyright collection society the Japanese Society for Rights of Authors, Composers and Publishers (JASRAC). Imagine that you have a daughter who likes to play the piano and is enthusiastic about improving her musical skills and experience. She finds music lessons in your neighbourhood and asks you to let her attend. At her lessons she purchases a score and plays recent, popular songs on the piano with her teacher; but one day, someone knocks on the classroom door and states that the music lessons are infringing copyright. Whether the music-school operator has infringed any copyrights is now a question before the Tokyo District Court.
Following the Supreme Court’s copyright jurisprudence, the district court found the music-school operators liable for direct copyright infringement. The decision reminds us of how the Japanese courts interpret direct infringement and what the Copyright Act seeks to protect. The court’s decision also offers a good example of the similarities and differences between Japanese and US law.
YAMAHA was one among the numerous plaintiffs. YAMAHA conducts music lessons in classes across Japan. Its teachers teach students who have entered into lesson agreements. The procedure followed by students wishing to take lessons varies depending on the lesson type, but broadly follows the following process:
- At the outset, for the benefit of the student, the teacher performs an assigned song, either in part or in full.
- The student subsequently performs the relevant part of the song.
- The teacher offers the student feedback and sometimes performs the relevant part of the song again.
- The student, in turn, repeats their performance of the song under the teacher’s guidance.
After repeating this process, the student performs the song in whole or in part to measure progress.
Some lessons take place in group classes of typically three to five students in a YAMAHA classroom, while other lessons are conducted in private at a student’s home. In either case, only teachers, students and parents are permitted to enter the rooms during the lessons. In lessons, students use facilities and devices prepared by YAMAHA, but generally bring their own musical instruments. Students purchase musical scores in advance, but the song selection is determined by the teachers from a collection arranged by YAMAHA. The relationship between YAMAHA and the teachers is either between employer and employee, or between the teaching service recipient and the external service provider. YAMAHA equips teachers with an instruction manual so that they can effectively provide students with guidance and instruction.
On 9 February 2017, after having amended the Tariffs for Use of Musical Works, JASRAC notified YAMAHA that from 1 January 2018 it would charge YAMAHA copyright licence fees for the performance of musical works in music lessons. According to JASRAC, the annual licence fee for one facility is 2.5% of the total tuition income. YAMAHA refused to accept JASRAC’s amendment. Having founded the Association for Protecting Musical Education, YAMAHA asserted that the purpose of performance in music classes is for students, as learners, to improve their music skills, not for students, as a public audience, to enjoy the music itself. On 20 June 2017, YAMAHA filed a suit against JASRAC, seeking a declaratory judgment that no copyright infringement existed.
Decision and analysis
The case required the court to answer three fundamental and distinct questions.
- During the music lessons, do the music-business operators, rather than individual teachers or students, perform songs?
- If the answer to the first question is ‘yes’, do the music-business operators perform the songs publicly?
- If the answers to both the first and second questions are ‘yes’, do the music-business operators perform the songs with the purpose of having those songs heard by students as a public audience?
The court addressed these questions in turn, answering yes to each and finding that YAMAHA and all other operators involved in the case to be in direct infringement of the copyrights managed by JASRAC.
The analysis begins with the Copyright Act. Section 22 of the act provides that “the author of a work has the exclusive right to give … [a] musical performance of the work” (emphasis added). There is no dispute that ‘musical performances’ of the work, in themselves, take place in YAMAHA’s music lessons. Musical performances are conducted by teachers and students, at least from a physical perspective. As such, is it only teachers and students who perform when these musical performances take place in a music-business operator’s music lessons? Or, can it be said that, from a legal perspective, a music-business operator, such as YAMAHA, that conducts music lessons also performs the work?
Japan has a well-established case law known as the ‘karaoke rule’. Under this rule, the courts recognise that a business operator that is not involved in an actual infringement activity, is a subject entity of the infringement. For example, in Club Cats Eye in 1988, the Supreme Court held that because the club’s business operators allowed the hostesses and customers to sing songs with the intention of increasing profits, such operators could not “be exempted from tort liability for the infringement of performing rights as a subject entity of the performance” (emphasis added). Subsequent courts have repeated this formulation’s application in other cases. Twenty-three years later, the court in Rokuraku II further refined the Club Cats Eye ruling, holding that playing an essential role in the process of reproduction under the operator’s management and control is enough to regard the operator as an exploiting party.
Citing both Club Cats Eye and Rokuraku II, the Tokyo District Court stated that to decide whether a subject entity exploits musical works during music lessons, “the court must not only observe a performer [in an] individual classroom merely from physical and natural perspective, but make an overall observation including social and economic aspects from a normative perspective considering [the] realities of [a] music-education business”. The court further noted that the decisive factor is “whether an entity plays an essential role in the process of performance under its management and control”. In so stating, the court held that YAMAHA is a subject entity that exploits musical work, basing its finding on the fact that:
- song selection is determined by teachers;
- students’ performances are supervised by teachers;
- teachers follow YAMAHA’s lesson instruction policy;
- sites and facilities necessary for performances are prepared by YAMAHA; and
- profits for lessons belong to YAMAHA.
Comparatively, in the United States, a different approach would be taken – the doctrines of vicarious and contributory liability. For example, in CPI v Aveco, in which Aveco’s business of renting video cassettes of motion pictures in conjunction with viewing rooms was challenged, the court found that, although Aveco itself did not ‘perform’ the video cassettes, it “may still be responsible as an infringer”. The court specifically noted that “in granting copyright owners the exclusive rights to ‘authorise’ public performances, Congress intended ‘to avoid any questions as to the liability of contributory infringers’”. Because face-to-face live teaching of profit-making institutions is not exempt under Section 110(1) of the US Copyright Act, a business operator may be secondarily liable for teachers’ and students’ activities so long as other requirements are met. In other words, the United States and Japan take a fundamentally different approach, but remain similar in that both consider a business entity’s liability under copyright law, whether direct or indirect.
For YAMAHA to perform songs alone is not enough to establish its copyright infringement liability. The copyright owner’s performing rights do not reach to private performances. Section 22 of the Copyright Act provides that musical performances must be heard “by the public”. The ‘public’ here, under Section 2(5) of the act, “includes exclusive groups made up of many persons”. From those definitions, it is construed that ‘the public’ is first, a non-exclusive group, regardless of the number of people; and second, an exclusive group but made up of many people. Here, musical performances are conducted in confined classrooms where only limited people – the teacher, the students belonging to the group and their parents – have access. The question then is, can it be said that students at their music lessons constitute the public?
It should be only a slight exaggeration to state that the answer to this question was already determined when the court recognised YAMAHA as an exploiting entity. As recently described by the Supreme Court in Maneki TV, whether audiences constitute the ‘public’ is determined from a perspective of the exploiting entity. If so, students attending lessons would unquestionably constitute the public – from YAMAHA’s point of view, any member of the public can take a lesson by entering into a lesson agreement, and before making any such agreement, no personal relationship between YAMAHA and its students exists. Under such circumstances, the court determined that students were from a non-exclusive group, and therefore, constitute the public. The court further noted that because YAMAHA provides multiple lessons continuously and structurally in different areas, students were made up of many people, and as such, constitute the public in this respect as well.
This court’s interpretation and application of the term ‘public’ can be found in the 2003 Nagoya District Court case Dance School. During dance lessons, the defendant dance-school operators played the music whose copyrights were managed by the plaintiff. The plaintiff sued the defendant for copyright infringement, alleging that the defendant performed copyrighted works publicly. On the issue of the term ‘public’, the court found that, considering the statute did not define the language used straightforwardly, the act was considered to leave the courts to interpret it on a case-by-case basis from a normative perspective, including considering common sense. In so finding, the court determined that, based on common sense, students constituted the public because the defendant provided performances continuously and structurally, and students could attend simply by purchasing tickets to make reservations. This finding is essentially the same as for the Tokyo District Court case, although the latter is more analytical.
The United States would likely reach the same conclusion based on essentially the same analysis. For example, in CPI v Redd Horne, the court found, after finding that any member of the public could view a copyrighted motion picture by paying the appropriate fee, that the place for performances was ‘open to the public’, and such performances were therefore public. The court particularly noted that the fact that “the cassettes can be viewed in private” was irrelevant. Further, the US courts would consider the pre-existing relationship to the underlying work as important. For example, in ABC v Aereo, the Supreme Court said, “we would say that a car dealership … does provide cars to the public, for it sells cars to individuals who lack a pre-existing relationship to the cars” (emphasis added). Here, there is no such a pre-existing relationship between the underlying work and potential customers or students.
The third main issue is presumably unique to the Japanese Copyright Act. Based on Section 22 of the act, to infringe copyrights the infringer must have “the purpose of having it [the music] … heard directly by the public”. YAMAHA vigorously asserted that, to meet the requirement of “the purpose of having it heard”, the performers must have had the intention of having audiences enjoy the essence of musical works, and that merely having the intention to have audiences receive the sound wave of musical works was not enough to create copyright infringement liabilities. YAMAHA then stated that because in-class performances by teachers in lessons were for teaching or student practice, students did not enjoy the essence of musical works at all; and, in the same vein, because in-class performances by students in lessons were for acquiring and improving musical skills, neither teachers nor students enjoyed the essence of the music either. Based on these reasons, YAMAHA maintained that it did not have “the purpose of having it [the music] heard”.
The court rejected YAMAHA’s argument, stating that, from the ordinary meaning of the language, to find “the purpose of having it heard” is enough, as long as an exploiting entity has the intention, from an external and objective viewpoint, to have audiences hear performances. Applying this interpretation to the facts at issue, the court concluded that because teachers play the music for students to listen to carefully during the lesson, and because students must listen to their own performances carefully to improve their musical skills, it was obvious that YAMAHA had the intention of having students hear performances. According to the court, the allegation from YAMAHA was unreasonable in large part because such an interpretation of the intent was not in line with the literal meaning of the statute in itself and legislative history.
Consequences of the judgment
On 4 March 2020, YAMAHA appealed the Tokyo District Court’s dismissal of their declaratory judgment claims, announcing that the judgment merely expressed a foregone conclusion with unreasonable and insufficient grounds, far from common sense (see https://music-growth.org/common/pdf/200305.pdf). Meanwhile, JASRAC announced that it acknowledged this judgment to be a full recognition of its claims, whereby it would continue to strive for the development of music culture through the distribution of remuneration back to creators (see www.jasrac.or.jp/ejhp/release/2020/0228.html).
From the Japanese law’s perspective, the fundamental, if not the only, issue of this infringement case is who essentially exploits copyrighted musical works belonging to the copyright owners. If, in this case, that is YAMAHA, it should be possible to conclude that music-school operators infringe upon the owners’ copyrights. Given the legal development of the karaoke rule, it is likely that a performing entity should be a music school rather than, or in addition to, a teacher and student. However, some issues remain, such as whether small businesses are given any exemptions, unlike with a nationwide music-school operator such as YAMAHA. Although Japan does not recognise the doctrine of fair use, the more general doctrine of abuse of rights is available under the Civil Code. The legal battle before the IP High Court has just begun.