INF/ECOM/16  
 
25 March  2019 
(19-1852) Page: 1/4 
 Original: English  
 
JOINT STATEMENT ON E LECTRONIC COMMERCE* 
ELECTRONIC COMMERCE AND COPYRIGHT  
Communication from  Brazil  
The following communication, dated 21 September  2018, is being circulated at the request of the 
delegation of  Brazil . 
 
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On 12 December 2016, the delegation of Brazil circulated document JOB/IP/19  with the goal of 
contributing to the discussions of electronic commerce at the WTO.  
 
The document highlighted three areas of possible convergence for WTO on the implementation of 
copyright rules and the digital environment, namely: (i) transparency; (ii ) jurisdiction;  and 
(iii) balance of rights and obligations . 
 
In order to  further contribute to the ongoing discussions and taking into account issues raised by 
Members, this document intends to provide additional inputs on the matter.  
 
1  THE "VALUE GAP"  
1.1.  The "value gap " is the difference between the rate of growth of royalties di stributed to copyright 
holders and the rate of growth of the overall digital revenue. The fact that royalties do not increase 
at the same pace than the overall digital revenue and the lack of transparency regarding how those 
royalties are calculated  are behind the complaints by an increasing number of copyright holders . 
1.2.  To better understand the "value gap" issue, the figure below aims at providing additional clarity 
to the existing flow of revenue in digital platforms from the consumer to artists/performers : 
                                                
* This document was originally circulated as JOB/GC/ 200 dated 2 1 September 2018.  INF/ECOM/16  
 
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  Figure 1: sharing of royalties between intermediaries and artists  
 
1.3.  A report1 by the US  Copyright Office indicates that, when a song is downloaded by a consumer 
at the cost of US D1.29, only 9 cents goes to the musical work, corresponding to a mere 7 per  cent 
of the value initially paid by the consumer. For instance,  for every dollar payed by a Brazilian 
consumer, listening in Brazil to a Brazilian performer through a digital service provider (such as 
Spotify), the Brazilian performer will receive only US D0,07. The lack of transparency regarding how 
those royalties are calculated and the asymmetry of information  make it quite difficult for the 
copyright holder  to negotiate better deals.  
1.1  Transparency  
1.4.  The remuneration of artists and performers is a marketplace issue. Artists have to negotiate 
with different parties'  contracts regarding the use of their works. The terms of such contracts include 
modalities about remuneration for copyright and the conditi ons for the exploitation of their works. 
This negotiation has been based upon the bargaining power of the different actors involved with the 
copyright ecosystem.  
1.5.  Although owners of copyrights have always faced a problem of asymmetry of information, this 
problem has become more acute with t he dramatic t ransformation underwent by technology that 
enabled the development of new business models, which are increasingly based on providing access 
to digital content through streaming of data.  In this market, copyrig hted works are available in a 
large number of different platforms, often with different models for the use and remuneration of the 
work.  
1.6.  In this new environment , the problem of the "value gap" is becoming more challenging. The 
larger the number of interme diaries, the greater the administrative burden and the challenges faced 
by creators in the management of their rights.  
1.7.  As a contribution of the WTO to the copyright ecosystem, the adoption of a transparency 
principle regarding copyright and related rights  in the digital environment could become a valuable 
tool aimed at reducing the asymmetries of information between the relevant actors. Information 
technology could and should facilitate access to real -time data on the use and remuneration of right 
holders,  minimizing transactional friction and reducing market inefficiencies. The expected result is 
an overall better functioning framework for all players, enhancing legal clarity and mutual trust for 
those engaged on the digital trade of copyrighted works.  
TRANSPARENCY  
Member s shall ensure that authors and performers receive on a regular basis timely, adequate 
and sufficient information regarding the exploitation of their works and performances from those 
to whom they have licensed or transferred their rights,  notably as regards modes of exploitation, 
                                                
1 US Copyright Office, "Copyright and the music marketplace", 2015.  
INF/ECOM/16  
 
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  revenues generated and remuneration due. The obligation shall be proportionate and effective 
and shall ensure an appropriate level of transparency in every sector.   
1.2  Jurisdiction  
1.8.  The digital environm ent is borderless by its nature while the copyright system is based on 
national laws.  Remuneration of intellectual rights might not be effectively regulated by national laws  
since payments can be made through international  credit cards and therefore circum vent the law in 
the country of access to the creative content.   
1.9.  This issue has been discussed in different fora but the issue of the applicable law in relation to 
global business initiatives that rely on the use of copyrighted works remains unclear.  
1.10.   In the example of para 1.3 of a Brazilian consumer located in Brazil who is listening to a 
Brazilian performer, access to the creative content is made from the same country of residence of 
the artist or performer but the content  itself is hosted in a different country.  In the physical 
environment, such a transaction would take place entirely in the Brazilian territory and under 
applicable Brazilian legislation, ensuring compliance with transparency obligations, among others. 
In this scenario, it would be easier for the artist to negotiate better deals (less actors, only one 
jurisdiction).  
1.11.   The current m ultilateral framework on copyright is consolidated in the TRIPS Agreement and 
the WIPO  Berne Convention, to which all WTO Members are party to. Other relevant international 
agreements include the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms 
Treaty (WPPT), with the caveat that their obligations are applied only to half of all WIPO Members; 
the WCT and WPPT are neither part of the TRIPS framewor k. Further, the WCT and WPPT were 
developed during the 1990 's, when many of the current uses of works in the digital environment  did 
not exist.  
1.12.   None of the four treaties mentioned above have clear rules regarding the applicable 
jurisdiction in the case of  the use of works in the digital environment . This lack of clarity generates 
an "international forum shopping" for the most convenient jurisdiction, creating an additional layer 
of intermediaries and the potential application of a legislation unknown to th e right  holder.  
1.13.   Therefore, in  order to  allow for the protection of authors  and guarantee their fair 
remuneration , Member s should make their best efforts to make their national  copyright legislation 
applicable to trade relations  where content is accessed f rom within their national  borders, curbing 
"international forum shopping". Consumers ' interest would also be advanced by the clarification of 
applicable legal rules, facilitating the relationship between individual consumers and service 
providers.  
1.14.   An impro ved business environment in the electronic  copyright trade may be achieved by  
reaffirming the territoriality of  copyright in the digital environment as a principle of  the international 
trading system.  The proposed language below does not entail any modifications of the international 
treaties on copyright and related rights currently in force.  
JURISDICTION  
1. Members reaffirm the principle of territoriality of copyright and agree that the applicable 
legislation regarding copyright and related rights in the digital environment shall be that from 
where content is accessed.  
2. Without prejudice to paragraph 1,  Members reaffirm the application of Article 6 of the TRIPS 
Agreement with regard to the exhaustion of intellectual property rights.  INF/ECOM/16  
 
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  2  BALANCE OF RIGHTS AN D OBLIGATIONS  
2.1.  In order to maintain  an appropriate balance between the interests of right  holders and u sers 
of protected  works, copyright laws allow certain limitations on  economic rights, that is, cases in 
which protected  works may be used without the authorization of the  right holder and with or without 
payment of  compensation. In the Berne Convention and  the TRIPS  agreement, a three - step test 
was included to determine  the scope of exceptions and limitations to copyright.  Exceptions and 
limitations must (i ) be restricted to  "certain special cases "; (ii) "not conflict with a  normal exploitation 
of the work "; and ( iii) "not unreasonably prejudice the legitimate interests of the  author ". National 
copyright systems are trying to  expand and update their list of exceptions and  limitations in ord er 
to keep pace with changes in technology and with new uses of inte llectual works.  
2.2.  There is a growing concern that obligations related to the inviolability of  technological 
protection measures (TPM) might exclude the  possibility of enjoying exceptions and limitations in  
the digital environment . These technologies are  essential for the normal exploitation of the work in  
e-trade and its circumvention could be understood as a  breach of international obligations (step 2 
of the  three -step test), rendering illegal what would be allowed in the case of physical goods.   
2.3.  To give  a concrete example, in the analog environment students may freely access a book at 
their local library. If the book is in the public domain, they are entitled to fully copy the book. If the 
book is under copyright protection, exceptions and limitations ma y be applied, allowing, for instance, 
the use of short excerpts. In the case of the digital environment, however, the lack of balance in the 
implementation of rules on TPMs may create a situation in which studies are obliged to pay for the 
access to a book  from the 19th century, which is already in the public domain. Therefore, exceptions 
and limitations regarding the educational use of an e -book in a classroom would be hindered if 
students were not able to access the content of the e -book, even in the case  of small excerpts, 
thereby affecting the dissemination of information and knowledge.  
2.4.  While the three -step test was originally conceived for the analog environment, it should be 
interpreted so as to ensure a proper and balanced application of limitations a nd exceptions  in the 
digital environment as well. This will result in lower transaction costs for companies and individuals 
by raising legal certainty for participants in the market, whether authors, intermediaries or 
consumers. The flexibility of the thre e-step test provides sufficient scope for reaffirming its 
technological neutrality, which will facilitate the adaptation of national and regional copyright 
systems to changes in technology.  
2.5.  As a third contribution  to improve management of copyright in the  digital environment, WTO 
Members should unequivocally assert the principle that exceptions and limitations available in 
physical formats should also be made available in the digital  environment.  Members will also need 
to consider the necessity of ensuring  that a TPM does not become a barrier to the enjoyment of 
legitimate exceptions and limitations  by their intended beneficiaries.  
BALANCE OF RIGHTS AN D OBLIGATIONS  
1. Members agree that exceptions and limitations provided for the analog environment under 
Article 13 of the TRIPS Agreement shall be carried forward and appropriately extended into the 
digital environment. It is further recognized the right of Members to develop new exceptions and 
limitations to copyright and related rights appropriate to the dig ital environment, provided that 
they comply with Article 13.  
2. In case the relevant legislation provides protection against the circumvention of any effective 
technological protection measures, Member shall take appropriate measures to ensure that the 
beneficiary of an exception or limitation provided for in the relevant legislation  has the  means of 
benefiting from that exception or limitation, to the extent necessary to benefit from that exception 
or limitation and where that beneficiary has legal access to the protected work.  
 
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