exactly parallel. You are against the Victor records when you are trying to do the same thing yourself?

Mr. BURKAN. No, sir. We are not doing anything of the kind. Mr. REID of Illinois. You are trying to have a license from theaters. Mr. BURKAN. Of course, we are trying to get the theaters to take out licenses for the giving of public performances for profit of copyrighted musical works. We have a right to do that. The law expressly sanctions it. Does not the motion-picture company license every theater to give public exhibitions of their copyrighted film productions? They furnish the positive print with a license to exhibit it in public and do they not get a tax for that? I don't care what you call it. The motion-picture distributor goes to the exhibitor and says, "I give you the right to exhibit our picture for $100 per day.'

Mr. REID of Illinois. You are getting out of the realm of copyright.

Mr. BURKAN. That is in the realm of copyright, because it is under the copyright that the motion-picture distributor grants a license to the exhibitor to exhibit a particular picture in a particular locality for a specified license fee. We are both in substantially the same position. He sells the positive print and we sell the sheet music. Mr. REID of Illinois. They lease and you sell.

Mr. BURKAN. What is the difference?

Mr REID of Illinois. If you sell it to me, I can do with it as I please.

Mr. BURKAN. If you buy a novel for $1.25, you can not take that novel and reproduce it in motion pictures. You can not reprint it-nor dramatize it, nor give any performances of such dramatization if you made it.

Mr. REID of Illinois. I could not? Somebody stated here that if they bought a harvester machine and used it in one field, the fact that they used that harvester machine in a different field would not entitle the harvester company to damages.

Mr. BURKAN. But you could not take that harvester apart and put the parts of it together with the parts of another harvester.

Mr. REID of Illinois. We are not trying to do that. You want the additional tax. What I am talking about is that you want what the Supreme Court has actually condemned.

Mr. PERKINS. You mean if you buy a harvester machine you can not play the Victor records on it? [Laughter.]

Mr. BURKAN. The Supreme Court held in that case that the "license notice" attached to Victor patented articles was not a means or agency designed in good faith to enable the Victor Co. to make only that full, reasonable and exclusive use of its invention which is contemplated by the patent law.

Mr. REID of Illinois. What they wanted was dough. •

Mr. BURKAN. No; the Victor Co. did not want "dough." It simply did not want its goods sold for less than the schedule price fixed by it for them.

Mr. BLOOM. Mr. Burkan, there has never been at any time pricefixing on sheet music, has there?

Reid under

Mr. BURKAN. Never. But I am trying to make Mr. stand that under the copyright law at the time of the enactment of the very first law, several rights were given to an author.

In the case

of a book, the mere fact that you buy that book and pay for it does not give you the right to reprint that book, or to publish that book or to dramatize that book and give performances of a dramatization of it. All you get is the right to the improvement, knowledge, or amusement which you and your friends of the family circle can derive from it. But you can not take that book and make commercial use of it. That idea was expressed very early in Millar v. Taylor (4 Burr 2303), and in Werckmeister v. American Litho (1347 Fed. 325).

Mr. VESTAL. I would like very much to hear the testimony before the committee, but it is absolutely necessary for me to be on the floor of the House this afternoon, and while I do not want to prevent the committee staying in session this afternoon, personally I would like very much to see the committee recess until this evening after dinner.

Mr. PERKINS. The opponents of this bill have not had an opportunity to be heard, and if we were to recess until this evening they will not be able to put in half of their case.

Mr. HAMMER. Permit me to say I can not be here all the time. But after we have brought people from great distances we ought to show them every consideration possible.

Mr. VESTAL. I shall make no objections to the committee sitting this afternoon.

Mr. HAMMER. I make this motion, that Mr. Burkan be permitted to go on for 10 or 15 minutes, and then we have 5 minutes in which to ask him questions.

(Thereupon a discussion took place which the reporter was directed not to record.)

Mr. BLOOM. I move that Mr. Burkan proceed without interruption. Mr. REID of Illinois. Don't answer my questions, but go on and tell these fellows your story and see if you get anywhere.

Mr. BURKAN. The Supreme Court in discussing this case called attention to the fact

to

Mr. HAMMER. I think the gentlemen of the committee are willing go ahead now until we recess for luncheon.

Mr. BURKAN (Continuing). In connection with the sale of these machines, sound boxes, and records, the licensee of the Victor Co. was required to attach the so-called "license notice," which the court declared was only a makeshift, a device for price fixing. The court said [reading]:

If we look through the words and forms, with which the plaintiff has most elaborately enveloped its purpose, to the substance and realities of the transaction contemplated, we shall discover several notable and significant features.

Then, it said [reading]:

That if the plaintiff comes into court with a bill to enjoin the defendants from reselling machines secretly sold to them in large numbers by the plaintiff's agents, indicates very dearly that at least until the exigency out of which this case grew, arose, the scheme was regarded by the plaintiff itself and by its agents simply as one for maintaining prices by holding a patent infringement suit in terrorem over the ignorant and timid.

That was the scheme and the device to frighten away, scare to death the poor devil who found himself enveloped in this complicated and highly technical document.

The court winds up with the statement [reading]:

Court would be perversely blind if they failed to look through such an attempt as this "license notice" thus plainly to sell property for a full price, and yet to place restraints upon its further alienation, such as have been hateful to the law from Lord Coke's day to ours, because obnoxious to the public interest. The scheme of distribution is not a system designed to secure to the plaintiff and to the public a reasonable use of its machines, within the grant of the patent laws, but it is in substance and in fact a mere price-fixing enterprise, which, if given effect, would work great and widespread injustice to innocent purchasers, for it must be recognized that not one purchaser in many would read such notice, and that not one in a much greater number if he did read it, could understand its involved and intricate phraseology, which bears many evidences of being framed to conceal rather than to make clear its real meaning and purpose. It would be a perversion of terms to call the transaction intended to be embodied in this system of marketing plaintiff's machines a "license to use the invention."

Convinced as we are that the purpose and effect of this "license notice" of plaintiff, considered as a part of its scheme for marketing its product, is not to secure to the plaintiff any use of its machines, and as is contemplated by the patent statutes, but that its real and poorly-concealed purpose is to restrict the price of them, after the plaintiff had been paid for them and after they have passed into the possession of dealers and of the public, we conclude that it falls within the principles of Adams v. Burke, (17 Wall. 453, 456), and of Bauer v. O'Donnell, (229 Ú. S. 1); that it is therefore invalid, etc.

In the case there appeared the American Graphophone Co. and the Columbia Graphophone Co. as amici curiæ. These companies were competitors of the Victor Co., but operating along the same lines. They also had these license agreements; they also attempted to fix the price at which the records, sound boxes, and machines should be sold. The Victor's battle was their battle-the Victor lost and so did they.

So this case and the other cases I have cited give this committee some notion as to how these manufacturers who are the recipients of this most gracious bounty of Congress, used the compulsory license scheme of the law.

Congress feared a monopoly. Well, there is no greater monopoly than the one formed by the Victor Co., the Aeolian Co., the Columbia Co., and the three or four mighty powerful companies that control the whole industry of manufacturing music rolls and sound records. I do not think there are more than a dozen companies that are engaged to-day in this business of reproducing mechanical instruments. Under the circumstances and facts developed by me, the experiment of a compulsory license having been tried out for over 16 years, and having proved a dire failure, the composer having been despoiled of his works without pay, justice demands that the compulsory license feature of the present law be forever banished.

There is no monopoly in contemplation. None is thought of. The law can very effectively handle monopolies; the law had no trouble in destroying the Victor Co. scheme of price control and price fixing. It will have no trouble in handling any situation which is created by a combination to control either the price or to control the output of music in any form.

This bill simply aims to do a long-delayed justice to the men who create and write music. Let them have the right to go out in the open market and sell the mechanical rights to the highest bidder, the one whose records and rolls have reached the highest standard of perfection, whose devices give the best renditions and interpretations of musical works, who is financially responsible and will

make good his promises. These men are entitled to the full fruits or product of their labor. Congress had intended to give it to them in 1909. It then thought that by the compulsory license provisions it had accomplished that purpose. I have shown you in the brief moments I have had that it does not work practically, effectively, equitably, or fairly; that we have been despoiled of our works; that the compulsory license feature has fostered monopoly; that the public has not received any benefit from its operations. It has not resulted in the decrease of any price in rolls and records-on the contrary-the price has gone up. There was not any appreciable effect upon price of records and rolls, because of this compulsory provision of the law.

We subscribe to this bill. It will stimulate original work. It will encourage the writing men of the country. It will make them secure in their property. Story, in section 1152 of his Commentaries on the Constitution, says:

Authors would have little inducement to prepare elaborate works for the public if their publication was to be at a large expense and as soon as they were published there would be an unlimited right of depredation and piracy of their copyright.

You have this task in hand. There is public clamor for revision of the copyright act. The copyright law must keep pace with and must be adapted to modern improvements, modern invention, and modern reproductive processes for the dissemination, transmission, and publication of literary, musical, and artistic material.

With respect to radio, to give you a notion of what radio has done. In 1921 the gross income of the Radio Corporation of America was $1,416,929; in 1924 it was $54,848,131, or 108 per cent of the growth for 1923, which was $28,453,341.

The radio earns tremendous profits through the efforts of the American composers, and they ought to be protected adequately with respect to this new form of transmitting, of publishing, and performing musical works.

I hope your committee will recommend the passage of this bill. Mr. BLOOM. Mr. Burkan, one question. Have you got the gross sales of the Victor Co. last year in round figures before you?

Mr. BURKAN. Yes. I shall put into the record the financial report of the Victor Talking Machine Co. for last year.

The CHAIRMAN. Without objection that document will be submitted at this point in the record.

(The report referred to is as follows:)

Victor Talking Machine Co., condensed balance sheet, as of December 31, 1923

The 8 per cent paid in 1924 would equal 56 per cent prior to the stock dividend in 1922.

The CHAIRMAN. Mr. Butler, representing as counsel the Copyright Bureau of the National Association of Book Publishers.

STATEMENT OF MR. CHARLES H. BUTLER, WASHINGTON, D. C.-Resumed

Mr. BUTLER. This is simply submitting the statement in print and some few additions to it that Major Putnam made at the last meeting, and in print also his alternative proposal for section 41, in regard to the importation of books which are published here. We would like to put this in the record.

Mr. HAMMER. That is what he promised the committee he would furnish?

Mr. BUTLER. Yes; and every member has been furnished one through the mail.

Mr. HAMMER. I have not.

Mr. BUTLER. It was mailed to everyone.

Mr. HAMMER. It probably was received at my office this morning after I had left.

Mr. BUTLER. It is coming through the mail. We will see that another copy is sent you, at any rate.

Then I would like to say that Mr. McCray, Mr. Hilton, and Mr. North, of the three largest publishing concerns in the United States, are here, and the chairman will at the proper time give them an opportunity to be heard in detail on this amendment. This is dropping from the zenith of eloquence to the very technicalities, and this is purely a technical matter, which we would ask the committee to consider. I gave my attention to it, and I am sure it will interest the members of the committee.

1 Includes provisions for payment of income tax.