Our country is going through a most singular moment. Along with one of the major economic, institutional and value crises of its history and a period of violence never seen before, the population at large appears to be mesmerized in a kind of stupor. We are left with the impression that everything is going on anywhere else but here, as if we were all sitting in front of a TV set watching a sci-fi movie.

There is a true collective alienation, whether coincidental or purposeful, from the social and economic realities of our country and the world, as the first prize of the most popular and well-known national lottery accumulates to reach astronomical amounts. The demand for gambling, which is about to be legalized in most Brazilian states, is growing day by day.

Concurrently with all that, even churches are, of late, generally spreading their beliefs by way of true artistic productions, through record and book sales and many other events, which are sometimes broadcast live on several television networks.

Off-season “Carnaval” celebrations are becoming commonplace, with companies actually being organized to offer the promotion of such parties featuring the ever-popular “trios elétricos”, some of which already have branch offices, i.e., several musical groups belonging to the same owner are featured under the same name. First to be targeted were resort cities, then came the state capitals, and nowadays even some towns have their own “Carnaval” celebrations taking place strategically throughout the year all over Brazil.

As far as the audiovisual media are concerned, any and all facts or events pertaining to any one individual, as well as a wide range of artistic expression, can be turned into news to be broadcast, a trend to be exploited or, in short, a product or service to be sold to loyal consumers.

Our times hark back to the era before the French Revolution, when, upon being faced with widespread misery and the population´s dissatisfaction, the Queen would order bread and circus offered to the people – a tactic previously used in ancient times by the Roman Empire. In modern times, this scenario can be clearly perceived on a global scale and, to a much greater degree, for instance, in the United States´ attempt to hold on to its hegemony.

The word “circus” used above is presented in this modern-day scenario as “entertainment,” which is ultimately the subject matter of our study.

Our proposal, in this small sample of something that can be explored in much greater depth and more selectively within the realm of Law, will be:

* to prove the importance of entertainment as an influence in the various fields of “human activity;”

* to demonstrate the need for a regulatory guideline, some sort of regulation that might, at least, direct such an influence;

* to point out the relevance of Entertainment Law vis-à-vis the business relations inherent to the subject;

* to highlight culture within the immense universe of entertainment, and how businesses can possibly contribute to culture (in a manner advantageous to them).”Entertainment” can be deemed a defining concept of life in the 21st century, in areas ranging from Law to Architecture, to Economics and Journalism. Such an element, which reaches the human mind in variegated and delightful fashion, has brought pleasure to billions of people all over the world. Nevertheless, “entertainment” has been accused of being detrimental to our children, of impairing our sense of criticism by diverting our attention, of trivializing culture, debasing discretion, sanctioning violence, polarizing the population, and insidiously weakening the community as a whole.

2.1 Concept

Etymologically, “entretenimento” (entertainment) comes from the Spanish word “entretenir,” which means entertainment, pastime, distraction, the act of entertaining. The “Oxford English Dictionary” points out the “modern” concept of the term, translated as “the act of pleasantly engaging attention; that which affords amusement or interest; or even from the Spanish term itself as “a public performance of various kinds”.

Nevertheless, entertainment is even more ancient than pre-historic cave paintings or Ice Age children´s toys. Our species, Homo sapiens sapiens, is considered a “playful creature” by evolutionary biologists, who say that we have a cultural gene for passing time; the suffix “tenir” means to occupy, hold, maintain. In politics, advertising, teaching, the arts, in widely different areas of human activity, that which is sought is attention, and preferably keeping it (frequently, at any cost).

However, the question still remains: can entertainment be just anything? Is a televised police chase entertainment? The answer is yes. Just as it is for a Franco Zefirelli film classic, a Shakespearean play, or a book by Paulo Coelho. The idea is that entertainment belongs in sophisticated as well as in popular culture. In this case, art presented by a non-profit organization belongs in the same genus as the contents exploited in “Rock in Rio Number 12.” An art museum and the “Ratinho” show are both seeking an “audience.” A night at the opera requires a public that has free time and available income, just like a soccer match does. Trademark registration is a requirement as well, both to a ballet company and to a software company.

2.2 Importance

During Plato´s century, the problems arising from entertainment were obvious. “When people listen to poets, it is like they were under a spell”, he admonishes in his book Republic. “They forget about themselves, and become easy to manipulate, irrational, everything an ideal citizen is not. The danger of art lies in its power to create values that are hostile to the community.” So, he banishes the poet from his ideal city to protect us from what can happen to us when we are fascinated.

What is the formula nowadays? What happens when “incredible people” become more important than information and education? What happens when there are no longer any values other than those spewed forth by “show biz?” “Bread and circus” was the notorious formula used by the Roman Empire. Who benefits from it? What are the costs?

The relevance of this topic has been rousing the attention of professionals and academics in all areas. The University of Southern California (USC) has developed a project to conduct an in-depth study of entertainment, seeking to analyze its every aspect, which has already been awarded a five million-dollar grant. Its concept is based on the premise that today, in all of the world´s advanced economies, the largest and most important element of cultural content is entertainment. In the professional realm, Booz Allen & Hamilton, a world leader in management consulting and technology, which provides services to such clients as major international corporations and governments worldwide, with $1.8 billion in billings for 2000, has a worldwide department focusing especially on the media and entertainment areas. In his book “The Entertainment Economy,” Michael Wolf, a partner and director at Booz Allen, estimates that every American family spends more on entertainment (5.4% of its budget) than it does on clothing and health (both with 5.2%).

2.3 Law and Entertainment

With globalization, researchers of this subject claim that developing countries like our own would be accelerating their development if they did not have to adapt to an alien culture, as a result of technology being disseminated in totally unbridled fashion. From this theory ultimately stem fears of “cultural homogenization” and “cultural synchrony.” Because of such “fears,” and apprehensive about so-called “cultural imperialism,” many countries have created protectionist policies to keep their national cultural content under control and nourish a kind of “nationalism” within their own “entertainment producers.” France and Canada, for instance, have aggressively implemented such policies, which apparently have not been very effective, since “American entertainment” continues to prevail in both markets.

The present situation of global entertainment proves to be conceptually so complex as it is economically vibrant. In a strikingly convergent world, as far as mass media is concerned, the supranational exploitation of the elements that make up this new world market – which are in essence “audiences” residing in different countries and regions that share a common identity, language or interests – proves extremely profitable. Such an audience defies international borders and, generally speaking, uses the Internet and satellite TV to carve out its own cultural personality, which is virtually independent of its physical location.

While entertainment businesses have been using the Internet, at first as an exclusively promotional tool, which is already obsolete, most surveys foresee that the web will truly become a key means of distributing entertainment products and services, since it allows such content to be received and optimized to target, directly and individually, the consumer it is intended for. There could be no better example of such a trend than the megamerger between America OnLine (AOL), the world´s largest Internet provider, and Time Warner Turner, which can be characterized as, if not the largest, one of the “largest entertainment providers in the world.” Each member of this “global audience” has multiple social identities, geared and defined by the entertainment choices available to it. An Egyptian immigrant in England, e.g., can consider himself a Scotsman when he watches a television channel of that country.

Directly related to such issues is the debate surrounding technology. Because the primary avenue used by globalization is technology, both are inexorably interconnected. Technological breakthroughs have changed the profile of entertainment due to the fact that they have drastically cut its production and distribution costs, while increasing worldwide demand for such products and services. The fact that such breakthroughs were extremely fast in establishing themselves makes it even more difficult to solve certain crucial questions. First of all, what role will the Internet play in the global evolution of entertainment? What will be the commercial and cultural effects of “Titanic 2” being released simultaneously all over the world? On the other hand, how will technology enable small entertainment providers to stand out? How has it reinforced or wasted cultural identities and values on a general as well as on a regional basis?

At the same time, there is still another remarkable band within this same spectrum: the gigantic and as yet little exploited industry surrounding personalities involved in “show business.” Such businesses are multiplying proportionally to technological breakthroughs, involving true legal strategies developed so as to protect the venture capital of financiers who remain “backstage” in this scenario.

Everything takes place through one such celebrity´s image being linked to something salable, i.e., a product or service. Just the sale itself of products bearing the image of celebrities or personalities has a turnover of approximately 1 billion “reais” each year in Brazil, a business that is primarily based entirely on images, ideas or any kind of intellectual property. Nonetheless, one can also say that – rather the licensing of their image – the most relevant part of such celebrities´ income is the return on their advertising campaigns, shows, appearances at events, record sales, contracts with television networks, etc.

Noticeably emerging from such an explanation is a new web of social and business relations, which will potentially give rise to new conflicts, which in turn will require the actions of a legal professional to prevent them or keep them from arising and, furthermore, in the event they should inexorably arise, to strike them down. Thus, within the legal field, in a country like Brazil, which does not have a sufficiently comprehensive regulatory system for this subject matter, tools must be found and created to respond to such a complex issue as presents itself in an era of accelerated cultural exchange like ours. From these statements arise hundreds of other practical and specific issues regarding this topic.Increasingly, one´s capacity as a holder of rights has grown to heretofore unimagined levels of complexity, in the wake of the astonishing technological development afforded by the digital information revolution and the new types of businesses originating from this development. Booming growth in areas like television, merchandising and the Internet has created a number of new legal and economic problems. Covering all these possibilities or, at least, studying them so as to elicit a better understanding of their growth is presently the task of those professionals who wish to be at the forefront in the ramification of Entertainment Law.

As already pointed out, the Brazilian regulatory system that sets forth the rules to be applied and construed in this kind of relationship is far from extending over all situations that exist or could ever exist in this area. Therefore, the legal professional should resort to other forms of construction and analysis vis-à-vis such situations, oftentimes having to apply analogy, comparative law, customs and the general principles of law[1] upon providing counsel on conflict prevention, upon verifying the pertinence of cases submitted for an opinion, and intervening in the resolution of such conflicts.

In reality, positive law cannot be grounded otherwise than on general principles and provisions, as it is unable to observe each case individually and the particular circumstances of each factual relationship. “Equity law,” a classification employed by some authors for utilizing the several ways of applying the law, is therefore an element of positive law itself, a criterion for construction in certain matters, rather than a foreign principle in conflict with it. [2]

Accordingly, jurisdictional relief in the various relationships arising from “entertainment” will be supported by a handful of Brazilian laws, which, once interrelated to and used in an analogous or equitable manner together with the comparative law of countries that already have their own case law and writings of legal scholars on this subject, customs and the general principles of law, shall meet the needs for specific provisions on this matter.

To this effect, the statutes which need be addressed with greater attention are:

a) The Copyright Act (Law 9610 of 2/19/98)

What the current statute protects is the fruit of creative work, whether in the realm of abstract ideas or artistic works, whenever their result is intellectual works, i.e., a form having sufficient oneness to be recognized for what it is in itself.

With few exceptions, the new law maintains and stresses the clearly corporate spirit of the previous Copyrights Act (Law 5988/73). This statute has been rewritten based on the previous law, with some additions, a few corrections, and abolishing interventionism from the assessment of copyrights. Additions were due to the challenges of technological development as aforesaid.

In it, a single system has been maintained for dealing with authorship and related rights, referred to as copyrights, which include the rights of performing artists (which are personality rights by nature) and the industrial rights of audio and video producers and broadcasting companies.

b) Industrial Property (Trademark) Act (Law 9279 of 5/14/96)

Under this statute, it is not the idea itself that is protected, but its realization in a defined form.

Every name or sign capable of being affixed to merchandise, or indicating any given service and establishing some identification between the consumer or user and the merchandise, product or service, constitutes a trademark.

Even though such names or signs do not constitute “works of the mind” (protected by the Copyrights Act), they are closely connected to such type of activity, once the commercial exploitation of artistic, cultural or otherwise “entertaining” creation is taken into account.

In that way, the statute in question appears as extremely important in the application of “Entertainment Law.”

c) Worldwide Convention on Copyrights (Decree 76905 of 12/24/75)

d) Bern Convention (Decree 75699 of 5/6/75)

Regarding the protection of literary and artistic works, on September 9, 1886, completed in Paris on May 4, 1896, revised in Berlin on November 13, 1908, completed in Bern on March 20, 1914, and revised in Rome on June 2, 1928, in Brussels on June 26, 1948, in Stockholm on July 14, 1967, and in Paris on July 24, 1971, as amended on September 28, 1979.

Aside from copyright relief and the exclusiveness granted to the exploitation of entertainment, industry businesses can also find support under rules against unfair competition, whenever they have no other title assuring them exclusiveness to the form of any products or services within their industry. So-called confusing actions find redress under both criminal and civil law as a result of rules against unfair competition.

As for contracts entered into in this realm, they must obviously contain such elements as are essential to any business act under C.C. (Civil Code) article 82. However, contracts and binding instruments already exist which are being regularly implemented in the Brazilian entertainment market in order to use, enjoy and/or economically exploit intellectual works, including their purchase, sale, assignment, exchange and lease.

Many of the contracts being implemented in the market join together, at a single moment, the same aspects of several different categories of this field, which becomes a complicating factor in the analysis and construction of such instruments. This trend is likely to grow even stronger due to the fast development of entertainment, as already discussed above, causing such business transactions to become interdependent, and giving rise to new rights.

Lastly, Entertainment Law might, on a subsidiary basis, further extend its “tentacles” over a wide range of related and unrelated legal fields, inasmuch as entertainment nowadays represents a life-defining concept in our century, and therefore involves a huge gamut of widely different interests.

Our paper is aimed at setting forth an explanation of the direct influence of entertainment in an apparently unrelated branch of the law, i.e., taxation law, so as to illustrate how inherently comprehensive this topic is.

At this point, we move on to the second part of our paper, which will expound upon the forms of investment in the entertainment or cultural fields (a differentiation subject to personal analysis) available to businesses in any industry as well as to individuals through the rules of taxation law.Over the last 15 years, an increasing number of companies have been engaging in cultural marketing. By the end of the decade, it had reached a turnover on the order of 120 million “reais.” According to data from the São Paulo office of the Ministry of Culture, only 1% of the 77,000 São Paulo companies that could benefit from tax incentive laws, and link their trademarks to events of public interest, do so. This underexploited potential is due to the companies´ unawareness of legislation providing tax incentives to cultural sponsorship. The growth potential for this sector in São Paulo is enormous.

This paper seeks to outline the rules for the sponsorship of cultural activities by utilizing tax incentive laws.

Under Brazilian tax legislation, as a rule, no donations are deductible for IR (Income Tax) and CS (Social Contribution) purposes, unless they are made to:

a. educational and research institutions created pursuant to an authorization of federal law;

b. non-profit associations, lawfully organized in Brazil, providing services free of charge, which benefit a corporate donor´s employees and their dependants, or the community where they are active; and

c. cultural and artistic projects – under the “Rouanet Act;”

Cultural events shall receive investments through:

Sponsorship: whenever the company advertises its name or one of its products´ trademarks through the cultural project.

Donation: whenever there is no donor-advertising linked to the cultural project.

Investment: whenever it is possible to ascertain a profit from money invested in the cultural area – as if stock were being purchased in any given production.

Rouanet Act – Law 8313 of 12/23/91:

The Rouanet Act allows projects approved by the National Cultural Incentive Commission (CNIC) to receive sponsorship and donations from corporate entities and individuals, who may deduct the benefit granted, albeit partially, from their payable Income Tax. Individuals, legal entities, companies and institutions, whether non-profit or not, which are culturally-oriented, as well as public agencies under the indirect Government Administration, such as Foundations, “Autarquias” (independently-run government agencies and corporations) and Institutes, provided they are separate legal persons, and also culturally-oriented, may apply for the benefits under the Act,.

The purpose of such projects must be to develop forms of expression, creative and performance means, processes for preserving and protecting Brazilian cultural heritage, and studies and methods of interpreting cultural reality, as well as to contribute to affording such means as will lead to a knowledge of artistic and cultural assets and values, comprised by the following segments:

I – theater, dance, circus, opera, mime and the like;

II – cinematographic, videographic, photographic, music-recording and similar productions;

III – literature, including reference works;

IV – music;

V – plastic arts, graphic arts, prints, posters, philately and the like;

VI – folklore, arts and crafts;

VII – cultural heritage, including historic, architectural, archaeological heritage, libraries, museums, archives and other collections;

VIII – humanities; and

IX – educational and cultural, non-commercial radio and television.

The project´s theme must be centered on the areas and segments defined by the Act. Also, the project must benefit the population. In addition to increasing production, Law 8313/98 is intended for democratizing the population´s access to cultural assets. Mechanisms that facilitate such access (inexpensively-priced tickets or free admission to shows, books distributed to libraries, open art exhibits, etc.) are fundamental to the accomplishment of such purposes. It is also a part of the Act´s philosophy to earmark as many funds as possible to the target activity, i.e., the cultural project.

Incentives under the Act:

* Individuals – sponsorship: a 60% direct IRPF* deduction

donation: an 80% direct IRPF deduction

Limit: 6% (to be taken into account together with any incentive donations under the Audiovisual Act)

* Legal Entities – sponsorship: a 30% direct IRPJ** deduction

donation: a 40% direct IRPJ deduction

Limit: 4% (to be taken into account together with any incentive donations under the Audiovisual Act)

(* Individual Income Tax – ** Corporate Income Tax.)

* A 100% deduction of the incentive amount as an Operating Expense. The expense is deductible for payable IRPJ and CS calculation purposes. The amount spent on sponsorship is subtracted from the calculation base of payable IR ´in the form of a balance sheet entry as an operating expense.´

A practical example applying the Rouanet Act:

The table below shows the hypothetical example of a company having a net income of R$ 1 million in two cases: without a cultural tax incentive and with a tax incentive based on the sponsorship of a cultural project with an estimated quota in the amount of R$ 10 thousand:

Tax Items

No Cultural Tax Incentive

Tax Incentive: R$ 10 Thousand Sponsorship

(1) Net Income



(2) Incentive Amount *



(3) New Net Income



(4) Social Contribution (9% of (3))



(5) Taxable Income ((3) – (4))



(6) IR owed (15% of (5)) **



(7) IR Deduction allowed by Rouanet Act ***



(8) Payable IR



(9) Total Taxes Paid ((8) + (4))




* Donation/sponsorship amount is deducted as an Operating Expense.

** 15% tax rate on Taxable Income. Over the R$ 240 thousand limit, an additional 10% is assessed. Will vary depending on other benefits.

*** Law 8313/91, where deduction of the incentive amount may be 30% for Sponsorship or 40% for Donation, limited to 4% of payable IR. In some cases, a definition might not be reached as regards these two types of cultural patronage.For an incentive of R$ 10 thousand, the company actually spent R$ 5,265.00 on the project.

Law 9874 of 11/23/99 (former MP 1589/97):

This law amends some provisions of the Rouanet Act.

Previously approved cultural projects pertaining to the categories below are allowed a 100% deduction of actual donation and sponsorship amounts (in these cases, no deduction may be made as an operating expense):

* Performance arts;

* Books of artistic, literary or humanistic value;

* Classical or instrumental music;

* Circulation of fine-art exhibitions;

* Donations of collections to public libraries and museums.

Audiovisual Act – Law 8685 of 7/20/93:

This Federal Law provides tax incentives to producers, exhibitors, distributors and suppliers of equipment and infrastructure for the production of Brazilian movies; i.e., this law is specifically meant for the Brazilian film industry.

This Act considers cinema productions on film, with or without sound, to be audiovisual works. For the incentive purposes of this Act, video productions and advertising films, whether institutional or not, and works produced by commercial radio-broadcasting companies are not considered audiovisual works.

Its logic is based on quotas representing marketing rights to Brazilian audiovisual cinematographic works. This turns the patron of such incentive into an investor as well, provided that such investment is made in the capital market (box-office profits in the stock exchange). The maximum limits for such investments are: legal entities: 3% of payable taxes, and the total investment amount may also be deducted as an operating expense; individuals have a 5% deduction from their payable taxes.

Mendonça Act – Law 10923 of 12/30/90:

Sponsored by then city alderman Marcos Mendonça, this Municipal Law provides a tax incentive for cultural projects put on within the jurisdiction of the São Paulo municipal government, allowing both individual and corporate investors to reduce their municipal taxes as follows: IPTU (Urban Property and Land Tax) and ISS (Service Tax), up to 70% of the incentive amount, not to exceed 20% of the corresponding payable tax amount.