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which will benefit society at large. The “carrot" or monopoly or copyright is only granted for a limited time and with the understanding that upon termination of the monopoly all rights inure to the Public Domain.

Ralph Waldo Emerson wrote, “The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble."

In the matter of copy rights, the underlying Principle is the benefit of society at large. The Method is to reward the creator. It follows that in any legislation centering on copyrights, the Primary interests of society are at least as important as the Methods and Secondary benefactors involved.

The music industry has prospered and grown dynamically since 1920 (see accompanying chart). This has only been possible because of a sound underlying body of laws. Title 17 has served society well since 1909.

As we meet during these sessions to consider changing and revising the present copyright statutes, we should be cautioned by Emerson's wisdom and not "get the methods ahead of the principle” or we are sure to have trouble. There has been, during the past 10 years, a great deal of emotion and activity at the Federal and State legislative level and also in the Federal and State courts related to control efforts in the copyright area. Indeed, most of these efforts resulted in various authorities, both Federal and State, imposing some form of control over matters of a copyright nature when the authority to do such was vested only in Congress. We all know the familiar saying about "too many cooks spoiling the soup".

There is presently sweeping across our country a trend that will, if allowed to mature, reverse the primary and secondary goals of the intent of our present Congressional copyright scheme, leaving the interests of society neglected. My purpose here today is to provide, what hopefully will be, constructive comments to assure Society is not neglected and we continue to enjoy sound growth in our industry based on fair, equitable laws.

COMMENTS ON HI.R. 2223

Addressing ourselves now to specific points in H.R. 2223, I offer the following comments.

Under section 115, at page 21, line 21—“A person may not obtain a compulsory license for use of the work in the duplication of a sound recording made by another.” I suggest you add "without the approval of the owner of the master sound recording”. Many of the sound recording masters in use today are licensed out to businesses who manufacture and distribute under the compulsory license provisiors. Present wording of section 115 could be construed so as to render legally useless large libraries of music properly assembled for this purpose. Presently section 115 requires the use of musicians to qualify for a compulsory license and ignores the fact that there are businesses which specialize in recording (studios), and there are businesses which manufacture and distribute. There are also the major music companies who are wealthy enough to do both. Section 115 as it stands would eliminate that segment of the music industry (small business) which cannot justify or afford an expensive recording studio. It pre-empts the present pooling of such cost by small business and would result in lost royalties to the copyright holder. It favors big business.

Section 115, paragraph (a), clause (2) should be reviewed carefully to assure it does not stifle creativity. Many innovations such as the moog might be cramped by the wording of this clause.

Under Section 115, paragraph (c), clause (1), at line 21—It is suggested that, due to problems frequently experienced today, a more specific location for the identification of a copyright holder be set forth. ... "the registration or other public records of the copyright office" is too vague to be workable as experience has proved. This is an excellent time to solve this age old problem by simply nailing down a specific location where anybody can obtain this information readily. By location, I mean a specific file in the Library of Congress.

Under Section 115, paragraph (c), clause (3), at line 35--The requirement for a CPA to certify with a detailed statement of account, the monthly royalty reports, each month, is unworkable in practice and it is a severe and unnecessary burden on small businesses. It will not hurt big business. Annual Certified statements following monthly statements attested to by company officers should be adequate.

Under Section 115, some provisions should be provided to clarify situations which arise when the copyright holder refuses to acknowledge the rights of a

compulsory license applicant. Experience has shown that this is not an isolated problem. The statutes are generally written with the protection of the copyright holder in mind; however, where we have a compulsory contract between two parties by statute, we must be sure to offer consideration to both.

l'nder Section 301, more detail should be set forth defining the legal status of property rights which are vested in the public. Such property, presently in the public domain, is being denied the public use through various interpretations of the many courts across our great land. The confusion exists at all court levels, both Federal and State and even manifests itself in a 5 to 4 Supreme ('ourt decikion. While section 301 is supposed to preempt those laws in the nature of copyrights, such intent is circumvented by simply calling it another name ; i.e., unfair competition. In one case a court ruled that a plaintiff had no statutory property right and the plaintiff had no common law property right but the plaintiff did have a “Quasi property right" in a musical sound recording. How in the world can a businessman foresee a court creating a whole new “thing" not provided by statute! Much of the public's time and money can be spared by eliminating expensive litigation in our courts through clarifying definition now.

l'nder Section 302, an objection must be made to the copyright term of life plus 50 years. First of all, this has been proposed more as an attempt to standardize with what is the custom in certain European countries and the wording of the Geneva ('onvention. In Europe, they don't feel as we do about monopolies and cartels. Our government, the people, feel differently and I see no reason to offer more stimulus to the creative individuals in our society than is required to keep society enriched with a free flow of ideas and useful arts. ('ertainly no one can say the present incentive of 28 years plus 28 years has resulted in lack of growth. Why then increase the cost to society? It is absolutely not necessary. Remember, the primary goal of the copyright laws is to benefit society. This philosophy also extends to the idea of extending present copyrights beyond their legal limit. How can that possibility give a just return to Society for granting monopoly (copyright)?

Additionally, now that sound recordings are entitled to copyright protection, a problem arises where the creator is granted a copyright for life plus 50 years. Most sound recordings are "created" by a corporation whose life (specified in the articles of incorporation) is perpetuity. So we have perpetuity plus 50 years which is forever and that conflicts with the constitution which requires that such monopolies be "for limited times."

Regarding Section 705, some consideration should be given to providing additional data to the public by the Library of ('ongress. If, in fact, the primary purpose of the copyright scheme is to benefit the publie then an effort should be made to make it easy for the public to avail themselves of that which is theirs. To accomplish this is relatively simple. In addition to the aforementioned fle reflecting the copyright holder, the date and renewal date of the copyright should be shown. A separate file containing works on which the copyrights have expired should be provided so it may be used by the society which paid for it with a limited monopoly.

CONCLUDING REMARKS The preceding comments have been offered to help bridge the gap between the business place and the legislative offices of you, gentlemen. Throughout this presentation you undoubtedly noted that an emphasis was placed on society's welfare. I felt this was neat asary. During the past ten years, the hotly contested battles which have taken place in our court rooms on such subjects as cable T.V., pirating sound recordings and copying of literary works and others have resulted in so much case law that is at odds with statutory law. Federal judges disagreeing with other Federal judges. Companies fighting tooth and nail in ugly displays of greed, power and corruption. Not once in some 100 plus court cases reviewed hy this person involving copyright matters did the interests of society emerge. Always it is some special interest faction attempting to rement a position of advantage over others. More often than not, those of us whose lives are involved with copyrights are easily canght up in the complex and emotional issues ai hand and it is very difficult to keep one's head screwed on correctly - To view the issues from their proper perspective.

I suggest to you, gentlemen, that our own life blood, the society in which we live, has not received a proper share of her just earnings and consideration. Please contemplate this as you consider some of the suggestions which I have brought to you today.

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YEARLY PEACENT CHANGE

YEAA

+ 30 0%

1921

+ 36.1%

1922

+ 220%

1923

+ 11 1%

1924

+ 18.0%

1925

66

- 05%

1926

+ 6.7%

1927.,

(Source Record Industry Association of America Excise tax payments, estimates from other data)

SALES IN
YEARLY

SALES IN
SALES IN

MILLIONS

PERCENT
YEARLY

MILLIONS
YEAR
MILLIONS
PEACENT
OF DOLLARS CHANGE YEAR

OF DOLLARS
OF DOLLARS CHANGE

1938.
26 :......... + 100% 1955..

277
$106

1939

44
+ 69.2% 1956

377
92
-13.2%
1940

48
+ 9.1%
1957

460
79
- 14.1%
1941

51
+ 6.3%
1958

511...
68.. -13.9%

1942
55

1959
+ 7.8%

603
59
-13 2%
1943

1960

600

+ 20%
70
+ 18.6%

1961,

640... 1944

66

NC
70
NC

1962

687 1945

109 73

+ 65.2% + 4.3%

1963

698
1946
75

218

+ 100% + 2.7%

1964

758. 1947

224 46

+ 2.8% -38 7%

1965

862
1948
18

189

--15.6% --60.9%

1966

959
11
-38 9%
1949
173

8.5%

1967
6
-45.5%
1950

189
+ 92%
1968

1124
7
+ 16 7%
1951

199
+ 53%
1969

1170
9
+ 28.6%
1952
214. + 75%

1970

1182
11
+ 22 2% 1953

219
+ 23% 1971

1251
13
+ 18.2% 1954

213
2.7% 1972

1383

73%

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Mr. KASTENMEIER. This concludes this morning's hearing on copyrights. The subcommittee, upon adjournment, will meet on Wednesday next for a continuation of our hearings on copyrights. Until such time, we stand adjourned.

[Whereupon, at 12:25 p.m., the hearing was recessed to reconvene on Wednesday, June 11, 1975, at 10 a.m.]

COPYRIGHT LAW REVISION

WEDNESDAY, JUNE 11, 1975

House of REPRESENTATIVES,
SUBCOMMITTEE ON COURTS, CIVIL LIBERTIES,

AND THE ADMINISTRATION OF JUSTICE
OF THE COMMITTEE ON THE JUDICIARY,

Washington, D.C. The subcommittee met, pursuant to notice, at 10:10 a.m., in room 2.226, Rayburn House Office Building, Hon. Robert W. Kastenmeier (chairman of the subcommittee) presiding.

Present: Representatives Kastenmeier, Danielson, Drinan, Badillo, Pattison, Railsback, and Wiggins.

Also present: Herbert Fuchs, counsel; and Thomas E. Mooney, associate counsel.

Mr. KASTENMEIER. The committee will come to order.

We are convened this morning for another hearing in the series of hearings on the proposed revision of the Copyright Law. This morning will be completely devoted to witnesses representing cable television, in one respect or another. We have six witnesses representing varying viewpoints on the question of how this proposal will affect cable television in this country.

The House will be in session earlier than normal. We will try to move as quickly as we can, but with due respect to the witnesses, we will try to complete our business, so we will be able to attend the renular session.

I am very pleased this morning to greet as our first witness the chairman of the National Cable Television Association, Rex A. Bradley. Mr. Bradley, will you come forward, please?

You might also like to identify your colleagues. The Chair observes that you have a rather substantial statement and addendum of material submitted to the committee, which, will, without objection, be accepted for the record. You may proceed, sir.

TESTIMONY OF REX A. BRADLEY, CHAIRMAN, NATIONAL CABLE

TELEVISION ASSOCIATION

Mr. BRADLEY. Mr. Chairman, I have a shorter version of my testimony, from which, in the interest of time, I will be speaking. If members of the committee would like to have copies, we have them available.

With me at the table on my right is Mr. Bruce Lovett, who in the immediate past chairman of NOTI: I relieved him a couple of months 1 go. He is also vice president for industry atlairs of ATC, one of the Nation's larger cable companies.

( 483 )

To my left is Mr. Stuart Feldstein, who is the vice president for legal and government relations for NCTA. And at the end of the table is Mr. Don Andersson, who is the vice president for statistical services of NCTA.

As you have indicated, my name is Rex Bradley, and I am chair. man of the National Cable Television Association, and I am also president of TeleCable Corp. of Norfolk, Virginia, which is the owner and operator of 15 cable systems serving 130,000 subscribers in 10 States. Today I am speaking in my capacity as chairman of NCTA.

The National Cable Television Association is the major trade association representing the cable television industry. Our membership includes both multiple system operators and independent cable television operators. NCTA's 1,320 member systems currently serve 5.8 million subscribers, or 58 percent of the Nation's 10 million cable television households. We recognize that copyright was conceived in the public's interest, to assure that creative minds would be encouraged by compensation to produce and distribute the fruits of that creativity. Later in my statement I will discuss further our view of copyright and comment specifically on H.R. 2223.

Since time is limited, I will summarize my longer statement. The longer statement, submitted for the record, contains a comprehensive review of cable's early development, the FCC's gradual assumption of jurisdiction over cable, and the early pattern of broadcaster opposition to cable growth.

Additionally, it takes note of the important legal decisions on copyright, resulting in two Supreme Court decisions holding cable not liable for copyright under the 1909 law, attempts of various parties to negotiate a settlement, and the very close relationship between FCC regulatory actions and the copyright question.

I believe it is important for the Congress to understand this background to current copyright consideration. It demonstrates the complexity of the cable/copyright problem, the intense pressures and uncertainties created for the cable industry and the almost inextricable interrelationship between copyright and cable regulation.

During these hearings, I am sure you will hear charges--principally from broadcasting and motion picture representatives--to the effect that the cable television industry has not lived up to its copyright responsibilities, that cable is an unfair competitor, and that the industry has attempted to delay resolution of the copyright issue.

I can only assure you that throughout this frustrating period XCTA has attempted in every way possible to live up to its fundamental commitment to work for fair copyright legislation.

As a member of this committee you are no doubt aware that there are divisions within the cable industry over the issue of copyright payments. There are those who feel that there should be no copyright liability at all. Others believe that there should be no liability for signals received off-the-air, while others suggest no liability for a complement of signals that can reasonably be defined as adequate service. I believe, however, that the majority of the members of NCTA support the association's efforts to work with Congress in arriving at fair and reasonable legislation.

Before addressing myself to specific provisions in II.R. 2223, I would like to emphasize several key factors which I believe this com

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