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4. If 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 received 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 intormation as to the name and location of the stations carried on the CATV system,

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 tee and the Court decides the issue in case they cannot agree Failure of either party to otter 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 ongin at the Commission it 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 H R 2512 (90th Cong ), the then President of NCTA (Hearings before Subcommittee No. 3. Committee on the Judiciary House of Representatives, 89th Cong , 151 Session, p. 1245, June 24, 1965), after discussing the conflict 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 qualifica. tions (1) The further transmission by CATV is made without altering the content (2) no direct admission 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 over 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, D H3624, 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) effectively prohibiting CATV from onginating 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 (S.D. NY.) holding CATV liable for intringement of copynight. It this decision were to be attırmed on appeal, at least half 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 HA 4347. This testimony was delivered some 16 months after testimony before the House on H R 4347 and some eight months before House passage of HA 2512

A number of things had occurred between the House and Senate Committee heanngs The District Coun (SD. N.Y) nad held on May 23, 1966 that Fortnightly's CATV system had intunged United

21 *Notwithstanding the provisions of Section 106, the following are not infringements of copynghe

**151 the further transmitting to the puble by means of broadcast receiving equipment of whatever dengan tarting antennas and related equipment wherever located, which receives and makes ava ab e by means of cable or **es aride 1 equipment to ino vidual reception sets of the kind commonly used in vale nozes. ola "asserertinya gent or exhibition of a work. Provided: The further transmission is made without altering adding to the content of the c!unata mission and no direct admission tee is charged for the privilege of seeing or hearing such transmission and the receiving apparatus is not coin operated

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Artists' copyrights; the FCC asserted jurisdiction over all CATV systems on March 8. 1966, and the House Subcommittee no. 3 announced substantial modification in the provisions of H.A 4347 Operating in this climate, NCTA believed, at that time, that it was compelled to make a compromise proposal in doing so, it was stated:

"These proposals in their entirety may satisfy no one – certainly not our.

selves – but they are made in good faith ..." (Hearing, id. p. 86).
There were six points in the proposal. In brief, they were as follows:

1. No liability for programs received off-the-air;
2. A compulsory license for distant signals in an inadequately served area;
3. Industry wide bargaining for programs from distant signals received in adequately served

areas at fees fixed by statue somewhat higher than lees in adequately served areas
4. Liability of CATV for all copyrighted programs which it originates;
5. Music should be considered cleared at the source;

6. No limitation on CATV reception of non-copyrighted programs,

Despite the efforts of NCTA to propose a solution to the copyright issues, admittedly, under the pressure of the District Court holding, no action was taken on that bill. It should be noted that the Depart. ment of Justice opposed any extension of copyright liability to CATV because of the possibility of harmful anti-competitive consequences and that this extension is not justified by valid considerations of the right to copyright protection (Hearings, p. 211, et seq.).

S. 597 was introduced by Senator McClellan on January 23, 1967 and S. 543 was introduced by him on January 22, 1969. These bills, so far as CATV is concerned, were substantially the same as S 1006. however, further hearings were held on S.547 and a Committee Print of December 10, 1969 (9151 Cong. 1st Session) contained a number of changes in Section 111. S.644 was introduced on February 18, 1971 containing the changes reported in Section 111 of S.547. Except for technical changes, S. 1361, introduced on March 26, 1973, was the same as S.644.

In a letter dated November 1, 1968, the NCTA submitted to Senator McClellan a proposal which, under the circumstances then existing, NCTA believed was the only workable compromise, i.e. an across. the-board approach. This plan would (1) require a compulsory license upon an inclusive payment for all television signals carried; (2) a single place to pay; (3) a provision honoring sports "blackouts" under Public Law 87-331; and (4) no restrictions on originations or reception of uncopynghted programs Needless to say, this proposal was not accepted. This plan, as well as many other proposals, made to the National Associat of Broadcasters and copyright owners have all been rejected.

Finally, Tom Whitehead, of OTP, and Chairman Dean Burch called a meeting of the interested parties from which came the Consensus Agreement of November 8-12, 1971. This Agreement has been termed the ransom price extracted from NCTA for the supposed relaxation of CATV rules (Cable Television Report and Order, 36 FCC 2d 3 (Feb. 3, 1972).)

The Consensus Agreement, it is understood, was adopted by a one-vote majority of the NCTA Board of Directors under great pressure from the Government. That sort of agreement is no agreement (For a current press account of the Agreement see CABLE NEWS, Dec. 17, 1971.) Moreover, all of the Consensus Agreement had to be accepted or nothing - no qualifications or reservations of any kind were permitted. The pressure for acceptance by the Government was so great that time was not allowed to consult the industry generally.

The stated purpose of copyright legislation, Mr. Burch informed Senator McClellan in his letter of January 26, 1972, was “... to bring cable into the competitive television programming market in a fair and orderly way." (Underscoring supplied.)

Cable television, when it originates like a broadcaster, is already on a completely competitive basis with television - except for the anti-siphoning restrictions placed on cable by the FCC !trere was any intention of being fair, no such restrictions would have been placed on one of iwo competitors by the Government. When CATV is acting as a master antenna on the "side of the viewer" it is not a corrpetitor. Television stations compete with each other which is facilitated by CATV. The CATV function does not compete (fairly or unfairly) with television - a concept fully supported by the Department of Justice. (See Comments of Department of Justice in FCC Docket 18397-A, Dec. 7, 1970.) Chairman Burch also stated in his letter to Senator McClellan:

"But the nature of consensus is that it must hold together in its entirety

or not at all – ..." It is important to observe that the Commission disavowed the Consensus Agreement, in denying the public the right to comment on it, as it must. This was done by the Commission just a few short Il-- ANALYSES OF S. 1361 $ 1361 consists of eight chapters containing some 68 sections in Title I - General Revision of Copyright Law There are three chapters of particular concern to cable television Chapter 1 is concerned with the subject matter and Scope of Copyright Chapter 5 deals with Copyright Infringement and Remedies Chapter 8 establishes the Copyright Tribunal

months after the Agreement by stating, in paragraph 66 of the Cable Television Report and Order, that

"The Commission has no intention of setting out detailed regulations today
only to revise them tomorrow But, as we gain expenence and insight, we
retain the flexibility to act accordingly – to make revisions, major or minor
and to keep pace with the future of this dynamic area of communications

technology If the Commission can disavow the Agreement in 1972, certainly after the Supreme Court decision in 1974 in Teleprompter Corp. v CBS, Inc., supran 1. determined that importation of distant signals would have no impact on copyright holders extracting recompense for their creativity and labor or sulter loss, the cable television industry is certainly justified in disavowing the Agreement

In addition to this tact, when the compulsion under which CATV was subjected, in proposing compromise plans and acceping the Consensus Agreement there is no reason to continue to support the payment of copyright. This is particularly true in the light of Department of Justice's opposition to the extension of copyright to CATV as anti-competitive

On July 31 and August 1, 1973, hearings were held on S 1361 The bill was reported on July 3, 1974 and was passed by the United States Senate on September 11, 1974 It is now pending in the House of Representatives where no achon is likely this year A new bill must be introducer and passed by both houses next year before it becomes law. As previously indicated. HA 2512 was passed in 1967 after Secron 111 was deleted from the bill following a major confrontation betweer two committees it is, therefore important to analyze Section 111 in the context of the present situation because Subcommittee No 3 of the House Judiciary Committee has not considered the provisions of the present section.

CHAPTER 1

SUBJECT MATTER AND SCOPE OF COPYRIGHT Section 101 defines various terms. "To perform a work means to recite render play dani e orari it etther directly or by means of any device or process or, in the case of a motion picture or other au funvisual work, to show its images in any sequence or to make the sounds accompanying it audible To display a work means to show a copy of it, either directly or by means or a tim, slide, television image or any other device or process or, in the case of a motion picture or other audiovisual work, to show individual images nonsequentiaily " To perform or display a work publicly means: (1) to perform or display it at a piace open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered, (2) to transmit or otherwise commun cate a performance or display of the work to a place specified by clause (1) or to the public, by reang it any device or process whether the members of the public capable of receiving the pertaniance or dir receive of the Same place or in separate pidces and at the same time or at different times

To trarsi a performar (il dispy is 10 Communicate it by any device or process whereby images or souls are received beyond the place from which they are sent

In the Report of the Senate Committee on the Judiciary to accompany S 1361, at page 113, the meaning of the above provisions are expiained as follows

"Under the definitions of perform' 'display', 'publicly and transmit' in Ser.
tion 101, the concepts of public performance and public display cover not
only the initial rendition or showing but also any further act by which that
rendition or showing is transititted or communicates to the public. Thus
for example a cable television system is pertutung when it retransmis
the broadcast to its subscribers. The purely aural performance of a mun
picture sound track or the sound portions of an audiovisual work would een
stitute a pertormance of the motion picture or cther audiovisual works but
where some of the sounds have been reproduced separately on phono
records, a performance from the phonorecords would not constitute per.

formance of the motion picture or audiovisual work The foregoing provisions make it clear that the bill intends to reverse the nilding of the United Slates Supreme Court in Fortnightly Corp. v United Artists Television, Inc., 392 US 190 (1968) that

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"Broadcasters perform, viewers do not perform. Thus, while both broad.
caster and viewer play crucial roles in the total television process, a line is
drawn between them. One is treated as active performer; the other, a passive
beneficiary. When CATV is considered in this framework, we conclude that
it falls on the viewer's side of the line. Essentially, a CATV no more than en.
hances the viewer's capacity to receive the broadcaster's signal; it provides
a well-located antenna with an efficient connection to the viewer's television
set. It is true that a CATV system plays an 'active' role in making reception
possible in a given area, but so do ordinary television sets and antennas,"

(Footnotes omitted.) Section 106 lists five fundamental rights given to copyright owners - the exclusive nghts of reproduction, adaptation, publication, performance and display – are stated generally in this section

"These exclusive rights, which comprise the so-called 'bundle of rights' that
is a copyright, are cumulative and may overlap in some cases. Each of the
five enumerated rights may be subdivided indefinitely and, may be owned

and enforced separately." However, the bill, after setting up these exclusive rights, provides various limitations, qualifica tions, or exceptions in the remaining 11 sections of the chapter. Thus, section 106 is subject to those sections and must be read in conjunction with those provisions (Report, p. 110, et seq.).

Section 111, which was deleted from H.R. 2512 before it was passed by the House in 1967, nas been revised by the Senate. This section modifies the liability of CATV by limitations on the exclusive rights of copyright owners in secondary transmission.

This section has tive subsections. Subsection (a) provides that a secondary transmission (CATV embodying a performance or display of a work is not an infringement if:

(1) The secondary transmission is not made by a cable system, but is, in effect, a mastes

antenna system located in the local service area of a broadcast station licensed by the

FCC for which no direct charge is made. (2) The secondary transmission is solely for purposes described in clause (2) of Section 110

(systematic instructional activities, related to teaching content of the transmission, if transmitted for reception in classrooms, to persons disabled from attending classes or

reception by government employees in the course of official duties), (3) The secondary transmission is by a carrier that has no control over subject matter or re

cipients thereof and which only provides wire or cable for use of others. (4) The secondary transmission is by a governmental body or other non-profit organization

which makes no charge except to defray actual expenses. This exemplion applies to "translators" or "boosters”. “This exemption does not apply to a cable television system

(Report, id, p. 131) Subsection (c) provides in clause (1) for compulsory licensing of secondary transmission of the primary transmission by an FCC licensed broadcast facility upon compliance with the notice of owner. ship and quarterly payment provisions of subsection (d), and (A) the primary transmission is exclusively aural and the secondary transmission is permisible under FCC rules; (B) where the cable system is in whole or in part, within the local service area as prescribed by the FCC, of the primary transmitter or (C) where carriage of signals comprising the secondary transmission is permissible under FCC rules

Clause (2) of subsection (c) provides that notwithstanding the compulsory license, the secondary transmission is actionable under Section 501, 502 and 506, as an infringement where camage of the signals comprising the secondary transmission is not permissible under FCC rules or where the cable system has not recorded a notice with the Office of Copyright, as specified in subsection (d). This section converts the Copyright Law into an enforcement law for FCC rules by which broadcasters could con. tinually harass cable operators with vexatious litigation on any pretext of carriage of signals not permitted by the FCC rules. It is submitted that this is not a proper function of Copyright Law

The Committee considered excluding from the scope of the compulsory license carriage of certain professional sports, but decided to leave this matter to the Commission and the Commerce Committee (Report p. 132).

Subsection (b). The meaning of subsection (b) is clearer if considered after (c) because it is phrased in terms of an exemption to both (a) and (c). This section provides that notwithstanding ex. emptions of subsection (a) (master antenna, teaching, carriers or co-ops) or subsection (c) (compulsory license for, aural primary transmissions carried in compliance with FCC rules; local service area signals. or where secondary transmission are permissible under the FCC rules subject to the notice to Copy. rights Office) the secondary transmission is not made for reception of public at large. but limited to particular members of the public (pay-TV).

Subsection (d) (1) provides for notice of ownership of the cable system and other information that may be required to the Office of Copyright one month before the secondary transmission Clause (2) pru. vides tor deposit in the Office of Copynght, on a quarterly basis, in accordance with the Registers regulations. (A) a statement of account specifying source of income, number of subscribers and the like and (8) the quarterly royalty, based on a sliding percentage scale on gross receipts from subscribers for the basic services of providing secondary transmission of primary broadcast transmitters The sliding scale runs from a percent on quarteriy gross receipts of up to $40.000 to 24 percent on quarterly gross receipts of more than $160.000 Based on a $5 00 monthly rate, a 3000 subscnber system wouid pay $.150 a quarter and a 6000 subscnber system would pay $750 a quarter on $90 000 of gross receipts for basic Subscriber services (Report p 133). Note the sale base may be expanded to other services on when copynghe may already been paid and the rate increased The only limit is what the three ant lauts from the American Arbitration Association prescribe that is not set aside in Congress within 90 days

Clause (3) of subsection (d) provides procedures for the distribution of royalty fees deposited with the Register of Copyrighis.

Subsection (e) contains definitions of "primary transmission", "secondary transmission, "Cable systems and "local service area of a primary transmitter“

The definition of "secondary transmission" makes special provision for non-contiguous states, territones and possessions

The definition of "cable system" is unusual in that for royalty fee purposes the Commissions definition is changed to two or more cable systems in contiguous communities under common Owner ship or control or operating from one headend shall be considered one system

The definition of "local service area of a primary transmitter" is the one in wmich a television broadcast station is entitled to insist on carriage by the cable system under FCC rules

CHAPTER 5

COPYRIGHT INFRINGEMENT AND REMEDIES Section 501 provides that anyone who violates any of the nights provided in Section 106 through 117 is an intringer It provides that the legal or beneficial owner may institute an action for infringemen! subiect to certain requirements The most significant provision is that for any secondary transmission by a cable system which is actionable as an intringement of Section 1111c), a television station holding a copyright or other license to transmil or perform that work shall, for purposes of instituting an action be treated "as a legal or beneficial owner, If such secondary transmission occurs within the local service area of that television station." The Count may require notice to all persons having an interest in the copyrighe as disclosed by the records in the Office of Copyright,

Section 502 gives the Courts power to restrain infringements of copyright

Section 504 provides that an infringer is liable for actual damages and profits or at the election of the copyright owner statutory damages of $250 to $10.000 as the court considers just 1! the infurgement was willful, statutory damages may be increased to $50.000 by the Court or if the ininnger shüws that he had no reason to believe his acts were an intringement, the Count may reduce the statutory damages to $100

Section 506 provides severe criminal penalties for willful intringement, ranging from $2500 fine and one year imprisonment to $50,000 tine and seven years imprisonment

CHAPTER 8

COPYRIGHT ROYALTY TRIBUNAL Section 801 establishes in the Library of Congress a Copynght Royalty Tabunal This sei rion states that the purpose of the Tribunal is to make determinations concerning the adjustment of many fales specified by Sections 111 and 115 to assure that the rates are reasonable if the Tribunal finds the statutory rates a Tribunal rate, or the revenue basis in respect to Section 111 does not prov de a reasonable royally fee for the basic service of providing secondary transmissions of the primary broadcast transmitter or is otherwise unreasonable, the Tribunal may change the royalty rate or the revenue basis on which the fee is assessed or both to assure reasonat ie royally for this server makes! clear that neither the rates nor the rate base on which they will be calculated is fixed, but may be changed very shortly

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