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attempted successfully, to my knowledge, to refute this argument. They merely ignore it and talk about something else,

The copyright owners by virtue of their access to the air, with no charges by the Government to transport their product to the public compared to CATV companies whih pay up to $10,000 a mile for their channels of communication to subscribers, should rertainly be required to forgo a second fee from a reception service for the public

This is particularly true here when a handful of companies seek this double payment from the American people across the country for what ('ongressional policy and judicial rulings now dictate is in the public domain."

Cable television or its advertisers will pay for any copyrighted programs it originates, whereas the public would receive nothing for the cash the broadcasters would have the copyright owner siphon from the publir via ('ATV which otherwise could be used for copyright fees for more diverse programming.

There is a basic conflict between commuientions policy and any copyright law in which a cable antenna system is required to pay copyright on any signal it is authorized to receive and distribute on its system by the Federal ('ommunications ('ommission.

The Supreme ('ourt has construed the ('ommunications Act to empower the (Commission to regulate CATV. In exercising this power, the Commission requires, as a condition of receiving and carriage of television broadcast signals, that (ATV systems carry all local signals. The definition of local signal varies according to the size market where the system is located. Veverthelss, the ('ommission exercises its power to require carriage of certain signals and permits the carriage of others. Such regulations now constitute CATV a supplemental service to make the (ommission's allocations of frequencies more effective. l’ntil set aside, revised or reinked, CATV systems must comply with those carriage rules.

The proposed legislation would compel CATV to pay copyright owners for distributing signals carrying their copyrighted works. The broadcaster has the right to pick and choose the copyrighted works he will buy and broadcast. Congress should set the record straight. If the Commission is confirmed by (onpress in the power to require carriage of particular signals by CATV, then (ATV will remain a supplemental reception service, perform nothing, and owe nothing. If it is desired to require copyright payment by (ATV for its supplemental role, then (ATV should be entitled to carry whatever programs it desires, delete the advertising and substitute its own. This is strictly a communications policy question. The broadcaster should not be permitted to have it both ways Collect additional revenue from sponsors for the added carriage of CATV and require CATV to pay copyright fees. In short, the broadcaster is arguing for the morality of unjust enrichment to copyright owners at the expense of the public ('ATV serves as a means of using copyright to restrict the growth of CATV. It is the public who will unjustly enrich the broadcaster and or the copyright owner - not the ('ATV operators. These anti-consumer provisions should not be enacted into law

We urge the Congress not to compromise the fundamental legal principles established by the United States Supreme Court on two occasions-decisions that are on the side of the ricirer. The broadcaster whaterer his motives are is wrong in trying to saddle its viewers with prira copyright payments to view its "free" programs through use of a more efficient rented antenna.

Imposing copyright fees on the community antenna function and, in effect, inaking the American public pay tribute twice to the 28 corporations in New York and Hollywood that own substantially all of the copyrighted material on TV, to watch "free T\"" is wrong. If the copyright owners or merchandisers exercise forbearance on the short term profit of double payment and permit ouble television to flourish, they will be amply rewarded with even greater profits from the insatiable requirements of cable television for material to fill its many origination channels in the years to come. The ('ommission's power to limit the number of distant signals imported by microwave has been confirmed. No further power is needed to protect the copyright owner and the public interest.

11 Sertion 005 of the Communications Act of 1934, as amended, prohibits unauthorized drumure of interstate wire or radio communication rept "The motion shill not apply to the rearving, developing publishing, or utilizing the contents of any radio communi. cation which is broadcast or transmitted by amateurs or others for use of the general public..." (Italic supplied.)

Now that the “unfair competition" shibboleth has been discredited," the only bases for contending that CATV should pay copyright are (1) that it makes a profit from the use of copyrighted material and (2) that it really does engage in a public performance for profit. Neither one of these positions are sound. There is no principle of copyright law which assesses liability for copyright based on profit alone and certainly none exists in the pending Bill.

As to the display or performance of copyrighted works publicly by community antennas, the complete answer is that a reception antenna does not perform. The cable operator does not convert the electronic signal into pictures and soundhe merely delivers a signal to the subscriber who furnishes his own equipment to convert the signal to pictures and sound in order to receive and view the performance. The CATV operator does not use or sell any program or the performance thereof either publicly or privately. A CATV operator sells a receiving antenna service, just as a manufacturer sells a receiving antenna from which he makes a profit, but community antennas do not perform anything. They are, factually and logically, on the side of the viewer. The only way this can be changed is by enactment of the legislative fiction that furnishing an antenna is a performance publicly.

Despite the FCC's push for copyright liability, the copyright law is not the place to bypass the Commerce Committees and embed regulatory flexibility in concrete. The Senate Commerce Committee, in its Report on S. 1361 stated that it " * * * believes that in view of the potential impact of certain provisions in S. 1361 on our Nation-wide communications service, ample opportunity should have been afforded it to consider those provisions in-depth and to have held hearings on the communications issues," Certainly, CATV should be eliminated from this Bill, if for no other reason than to permit the Commerce Committees to develop a national communications policy on cable television before any copyright policy on the community antenna function is undertaken.

IV. CONCLUSION Based on the foregoing review of the background and the provisions of this legislation, it must be concluded that the provisions of H.R. 2223 concerning CATV are philosophically unsound. An across-the-board payment, including pay. ment by the public for two tickets to the same performance or for distant signals as limited by the Commission's rules, is, in our opinion, soaking the consumer. We believe that this Subcommittee is justified and should adopt the community antenna industry's historical position by amending this Bill to eliminate any copyright liability for the community antenna function, under Section 106 or other provisions of H.R. 2223, but not, of course, the origination function of cable television systems for which it should be liable like anyone else.

Thank you. 12 Comments of U.S. Department of Justice in FCC Docket No. 18397A (1970).

"II. THE COMMISSION'S ANALYSIS

"Two premises pervade the Commission's analysis and proposals with reefert to importation of distant signals, not only in this immediate proceeding. but throughout Ite consideration of CATV problems: The first is that television broadcasters are being subjected to unfair competition' from CATV operators, and the second is that there is a public interest in preserving marginal television broadcasters from fallure by Tartons cross-subsidy devices and restrictions aimed at CATV. We submit that both of these are incorrect as a matter of policy.

"1. Unfair Competition. The Commission's theory of funfair competition is relatively simne: As a result of the Supreme Court's decision in Fortnightly Corp. v. mited Artist: Television, Inc., 392 U.S. 390 (1969), CATV operators do not have to pay Mpyright fees on broadcast signals. and this the Commission save results in unfair competition' against broadcasters who do have to pay copyright fees for programming

"C'ertainly the Fortnightly decision frees the CATV operator from an expense which broadcasters must hear; but if the Commission is to employ an analysis based on equatin lower costs with unfair competition, then it cannot look at CATV cost savings in fola. tion.. Footnote omitted. It has, for example, turned over to broadcasters publicis owned spectrum at no charges, and allows them to use it at nominal charges. This polliciyowned spectrum, when combined with a broadcast transmitter. Constitutes & POSTAD delivery System which CATV operators cannot duplicate at anything approaching the unit cost per viewer. Tinder the Commission's analreis. this constitutes n'nir competition' by broadcasters akainst all other media of communications including (ATV.

"The Commission's basic error is misapplying the concept of unfair competition.' this concept is to have any meaning it must refer to specific acts by one competitor which are intended to harm others. See kenernlly Callman. The Land of Infair Competition. Trademarks and Mononoline. Ch. 2. "The Theory of Unfair Competition.' By treating CATV cost savings as 'unfair competition.' the Commission has obscured the barle public policy issues with which it is confronted, and has introduced unnecessarily emotional terminology into the making of policy for both broadcasters and CATV operatora.

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MEMORANDUM
November 15, 1974
TO

Ad Hoc Committee of Concerned Cable Television Operators
For a Fair Copyright Law
Post Office Box 389
Painted Post, New York 14870

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This memorandum is in response to your request for an analysis of United Sates Senate Bill No. 1361 which was passed on September 11, 1974 and is now pending in the House of Representatives In addition, this will respond to your further request by letter of October 29, 1974, that we discuss the reasons that community antenna systems, as distinguished from other phases of cable television systems, should not be liable for copyright. Finally, you ask that an approprate revision of Section 111 of S 1361 be prepared

1 - BACKGROUND Before undertaking an analysis of the bill, it is important to understand its background A brief history of the copyright revision program will aid in appreciating the various positions of the cable industry as they have evolved during the past 10 years

The present Copyright Law of the United States was enacted in 1909 to carry out the following language of Article 1, Sec 8 of the Constitution of the United States *To promote the Progress of Science and useful Arts by securing for limited

nd Inventors the exclusive Right to their respective Whit ings and Discoveries." The Legislative Appropriations Act of 1955 appropriated tunds for a comprehensive program of research and study of Copyright Law revision by the Copyright Office of the Library of Congress A number of reports were published, including the Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1965 Revision Bill (89th Cong , 1st Sess, House Com mittee Print), explaining the thinking behind its various sections The bill proposed by the Register of Copyrights was introduced on February 4, 1965 (H.R. 4347, 89th Cong , 2nd Sess.). In describing the basic approach of the bill, the Register of Copynghts stated at page 13

"The basic legislative problem is to insure that the copyright law provides the
necessary monetary incentive to write, produce, publish, and disseminate
creative works, while at the same time guarding against the danger that
these works will not be disseminated and used as fully as they should be
cause of copyright restrictions."

When some commentators discuss copyright and the incentives to the starving wnter in the c: garret, they are not talking about television. There may be starving writers in cold garrets but if there are any such people involved in television, it is 28 companies, including the networks, that are keeping them there This copyright bill probably will not put one penny in any of their pockets.

Note the testimony of Mr. Arthur B. Krim, President of the United Artists Corporation, on June 24 1965. when he appeared before Subcommittee No. 3 of the House Judiciary Committee (Hearings on H.R. 4347, p. 1332), on behalf of Allied Artists Television Corp.; Danny Thomas Enterprises, Inc Desilu Productions, Inc.; Embassy Pictures Corp.; Independent Television Corp.; Metro-Goldwyn Mayer Inc; Wolper Productions, Inc.; Screen Gems, Inc.; Seven Arts Productions, Inc.: Twentieth Century FCI Television, Inc., United Artists Television, Inc.; Universal Pictures, Inc.; Walt Disney Productions, Inc.. and Warner Bros. Pictures, Inc. Mr. Krim stated:

"I think, gentlemen, that this group of companies which, as you can see.
number 14, represents in excess of 75 percent of the copyrighted material
which is going over the airwaves today. I would venture the further quess
that if we were to add to these 14 another number, certainly not more than 14,
and of course including the three networks, we would cover so close to 100
percent of the copyrighted material which is going over the airwaves and that
the exceptions would be relatively minor in nature."

The Register of Copyrights claimed in his Report that he took no position on the two pending cases against the cable industry.i/ Nevertheless, he stated (p. 22) that under Section 106(a) (4) and (5).

"A community antenna service would be performing when it retransmits the

broadcast to subscribers over wires;" On pages 40, et seg., the Report discusses secondary uses of transmissions. It lists the arguments advanced for an outright exemption of CATV and those opposed to any exemption before summarily disposing of this issue as follows:

"On balance, however, we believe that what community antenna operators are
doing represents a performance to the public of the copyright owner's work.
We believe not only that the performance results in a profit which in fairness
the copyright owner should share, but also that, unless compensated, the
performance can have damaging effects upon the value of the copyright. For
these reasons, we have not included an exemption for commercial community

antenna systems in the bill." Extensive hearings were held on H.R.4347, in 1965, during the 1st Session of the 89th Congress which resulted in the bill being reported on October 12, 1966 with amendments. These amendments did not alter the definitions recommended by the Register of Copyrights "To perform or display a work publicly' " or " 'transmit'." This language was intended to impose full liability on the transmissions Oy CATV as provided by Section 106 of the bill. Earlier studies of the Office of Copyright had not considered CATV. It was purely an afterthought.

The bill also was amended, however, by adding a highly complicated Section 111 which provided limitations on exclusive rights by secondary transmissions (Union Calendar No. 999, 891n Cong. 20 Sess.). Section 111 contained in H.A.4347 may be briefly summarized in the following six points.

1. In order to enjoy any exemption from the payment of copyright lees, a CATV system must not originate any programming other than "weather, time and news reports, free from editorial comment agricultural reports, religious services, and local proceedings of governmental bodies", there must be no "commercial or political" advertising or sponsorship of closed circuit presentations, and there must be no charges made for any particular program or programs. Also, not more than two channels may be devoted to originations. Finally, if the CATV operator engages in the deletion of any commerciais or station identification, or in any way alters program content, he loses all exemption under the ACI

2. A CATV system otherwise eligible for exemption is not liable for the payment of copyacht royalties for any broadcast programs received within the "limits of the area normally encompassed by the broadcast station whose signal is received, as determined by the Register of Copynghts Further. more, it a copyright program is broadcast by two orore TV stations which provide a Grade B signal over the CATV system, and if one of the TV stations has the exclusive license from the copyright owners to transmit the program in the area served by the CATV system, the CATV system must protect that exclusivity, provided it is given ten days' written notice of the exclusivity.

3. A CATV system which receives the program of a television station which does not "norirally ** serve the area in which the CATV operates must pay copyright fees for such programs, except in an area which is not "adequately" served by television sta ions.

11 Fortnightly Corp. v United Artists Television Inc. 392 US 390 (1968)

Teleprompter, Inc. v CBS 415 U.S. 394 (1974)

4.1 the CATV system is in an area which is not "adequately served by television stations, it can receive, under a system of compulsory licensing the programs of a TV station which does not "normally serve the area. The bill or report defines an area as "adequately served when a "preponderance" or "more than half" or "substantially all of the programs of the three major television networks are normally re. ceived Also, the exclusivity limitation discussed under paragraph 2, above, applies equally in an in adequately served area. In order to quality for compulsory licenses for the importation of non-Grade B or non-local signals under the provisions discussed above, the CATV system must supply to the Register of Copynghts information as to the persons who own or control the CATV system and information as to the name and location of the stations carried on the CATV Sys

5 If a CATV system receives the programs of non-local stations in an area covered by a "local" station and duplicates the programming provided by the local station, the CATV system loses all exemption from copyright liability.

6. The parties bargain for a reasonable fee and the Court decides the issue in case they cannot agree Failure of either party to offer or accept a reasonable fee will incur up to treble tee damages for the copyright holder

The section reflects many regulatory concepts which would be enforced by the copyright bill These regulatory concepts, it was understood, had their origin at the Commission 11 should be remembered that at this time (October 12, 1966) the legality of the Commission's Second Report and Order asserting general jurisdiction over CATV was still very much in doubt. The Commission s regulatory program of containment "peeks" out of the provisions of this section

In presenting testimony on HR 4347 (89th Cong ), which became HR 2512 (90th Cong ), the then President of NCTA (Hearings before Subcommittee No. 3. Committee on the Judiciary House of Representatives. 89th Cong, 1 st Session. p 1245, June 24, 1965), after discussing the contact between the bill and communications policy under the jurisdiction of the Interstate and Foreign Commerce Committee stated that CATV systems should be free of copyright clearance requirements. An amendment was then offered2 (Hearings, p. 1255) to exempt CATV from copyright with the following three qualitica. tions (1) The further transmission by CATV is made without alte lee is charged, and (3) the reception apparatus is not coin operated. This amendment would have removed the possibility, it was stated. of a conflict between this legislation and other legislation being considered for establishment of communications policy.

When H R 2512 was passed, Section 111, relating to CATV, was stricken from the bill under an agreement between the Chairmen of the Judiciary Committee and the Interstate and Foreign Commerce Committee. This agreement was entered into to settle a violent dispute between the Committees ove regulation of CATV in the copyright bill. This dispute erupted after a speech by Congressman Arch A Moore, Jr. (R. W. Va ) (Cong. Record, Apni 6, 1967, DH3624, et seg ) following up his letter of the previous day to all members of the House

In his speech, Congressman Moore attacked the bill for attempting to use copyright for the regulatory control of CATV by (1) an invasion of the jurisdiction of the Commerce Committee (2) effect. ively prohibiting CATV from originating programs, and (3) protecting pay-TV on broadcas! stations and ettectively precluding pay cable

As the bill passed, it left CATV fully liable for copyright. NCTA agreed to the bill because of the frightening decision of the US District Court (SD. NY.) holding CATV liable for intringement of copy nght it this decision were to be affirmed on appeal, at least halt of the legislative process would be completed and speedy legislative action would be possible to protect the industry

On August 2, 1966, the then President of NCTA presented testimony to the Subcommittee on Patents. Trademarks and Copynghts of the Committee on the Judiciary of the US Senate of S 1006. an identical bill to HR 4347. This testimony was delivered some 16 months after testimony before the House on HR 4347 and some eight months before House passage of HR 2512

A number of things had occurred between the House and Senate Committee heanings The Dis. trict Court (SD. NY) had held on May 23, 1966 that Fortnightly's CATV system had iniunged United

21 "Notwithstanding the provisions of Section 106, the following are not infringements of copynght

**15! the lurther transmitting to the public by means of broadcast receiving equipment of whatever design inrling antennas and related equipment wherever located, which receives and makes avaab'e by means of cable or we are relate1 equipment to indvidual reception sets of the kind commonly used in pevale nozes. 01 aastn ertaging agent t or exhibition of a work. Provided. The further transmission is made without altering or adding to the cortent of the cigra missoon and no direct admission fee is charged for the privilege of seeing or heanng such transmission and the receiving apparatus is not coin operated

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