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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 tees 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 (91st 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 8.547. 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 acrossthe-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 uncopyrighted programs Needless to say, this proposal was not accepted. This plan, as well as many other proposals, made to the National Association 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 Teievision 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 permittted. 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 Ittere was any intention of being fair, no such restrictions would have been placed on one of two 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 tunction 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

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 experience and insight, we
retain the flexibility to act accordingly - to make revisions, maior or
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 Suller 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 accepting the consensus Agreement there is no reason to continue to support the payment of copynght. 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 neid on S 1361 The bill was reported on July 3, 1974

Ssed by the United States Serate on September 11, 1974 It is now pending in the House of Representatives where no action is likely this year A new bill must be introducetard passed by both houses next year before it becomes law. As previously indicated. HA 2512 was passed in 1967 atter Section 111 was deleted from the bill following a major controntation betweer two committees it is, therefore important to analyze Section 111 in the context of the present situation because Subcommittee Nu 3 of the House Judiciary Committee has not considered the provisions of the present section.

11 -- ANALYSES OF S. 1361 S 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

CHAPTER 1

SUBJECT MATTER AND SCOPE OF COPYRIGHT Section 101 detines various terms. "To 'perform a work means to recite render play dane e of ar! it either directly or by means of any device or process or, in the case of a motion picture or other au 110

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 tiim, 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 nonsequentially " To perform or display a work publicly means (1) to pertorm 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 icate a performance or display of the work to a place specified by Clause (1) or to the public, By Transit any device or process whether the members of the public capable of receiving the per rmance or U receive it in the Satie place or in separate piaces and at the same time or at different times to transmit d performar of display is 10 Cormunicate 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 transititled or communicator to the public Thus
for example a cable television System is perhring when it ret ( !
the broadcast to its subsenbers. The purely aura perturmance of a m an
picture sound track or the sound portions of an audiovisual work would en
stitute a performance of the motion picture or other audiovisual works but,
where some of the sounds have been reproduced separately on phong
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 then Iding of the United States Supreme Court in Fortnightly Corp. v United Artists Television, Inc., 392 US 190 (1968) that

"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, qualifications, 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, has 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 five subsections. Subsection (a) provides that a secondary transmission (CATY 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, ar

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

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. #1 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 exemption 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 carriage of 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 continually 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 signais. or where secondary transmission are permissible under the FCC rules subject to the notice to Copyrights 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) pr. vides for deposit in the Office of Copyright, on a quarterly basis, in accordance with the Register s regulations. (A) a statement of account specifying source of income, number of subscribers and the like and iB) 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 y percent on quarterly gross receipts of up to $40 000 to 2 percent on quarterly gross receipts of more than $160.000 Based on a $5 00 monthly rate, a 3000 Subscnber system would pay $. 0 a quarter and a 6000 subscriber system would pay $750 a quarter on $90 000 of gross receipts for basic Subscriber services (Report p 133). Note the fate base may be expanded to other services on which Copyright may already been paid and the rate increased The only limit is what the three antators 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 Copyrights.

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 wich 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 11 provides that the legal or beneficial owner may institute an action for infringement subiect to certain requirements The most significant provision is that for any secondary transmission by à catile system which is actionable as an infringement 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, It such secondary transmission occurs within the local service area of that television station " The Court may require notice to all persons having an interest in the copyright 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 intringer 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 infringement was wilful, statutory damages may be increased to $50.000) by the Court of the intrnger shows that he had no reason to believe his acts were an intringement, the Court may reduce the statutory damages to $100

Section 506 provides severe criminal penalties for willful infringement, 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 Copyright Royalty Tribunal This set ton states that the purpose of the Tribunal is to make determinations concerning the adjustment of prydy rates specified by Sections 111 and 115 to assure that the rates are reasonable if the Tribunal finds ite 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 printia

I 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 reasonatie royally * This Sectori roket clear that neither the rates nor the rate base on which they will be calculated is fixed, but may be changed very shortly

Section 802 requires the Register of Copyrights to give notice on July 1, 1975 of proceedings to review royalty rates prescribed by Sections 111, 114 and 115. During the year 1982 and every fitin year thereafter, petitions for adjustment of the rates may be filed.

Section 803. If the Register of Copyrights determines that there is a controversy on distribution of fees or gives notice of significant interest of a petition under Section 802, he shall request the American Arbitration Association to submit three names to which objections can be filed. If no objections are tuled. it will constitute a panel of the Tribunal to function as the Tribunal. It objections to members are wei founded, additional names shall be requested and the Tribunal then constituted. There is no provision tof appeal to the Courts. Three arbitrators unskilled in this area will effectually control rates and the rate base,

Section 806 provides for a report of a Tribunal decision to the Senate and House and Section 807 provides that, if either House resolution, within 90 days, does not favor the decision, it shall not become effective. If no resolution of disapproval is passed, the Tribunal decision shall become effective

Section 809 does not provide for any judicial review of the Tribunal's decisions on royalty rates

SUMMARY

In brief, Section 106 makes cable television systems, when performing as a community antenna fully liable as an intringer when distributing copyrighted programs on signals received from television stations. Exceptions from liability are provided for master antenna, teaching or instructional activities common and other carriers and nonprofit co-ops. CATV is given a compulsory license to carry radio, local and other signals authorized by the FCC.

Nevertheless, it is an infringement if carriage of a signal is not permissible under FCC rules or the appropriate notice is not filed with the Office of Copyright. This provision is a real sleeper because it will give copyright protection and penalties both civil, criminal and injunctive to the broadcaster il CATV by accident or otherwise fails to nonduplicate a network or syndicated signal or in any other way carnes a signal not permitted by the FCC rules. In addition, over-the-air carriage of pay-TV is fully actionable unless cleared by the owner of the copyright. QUERY: May the broadcaster clear programs - apparently not - he can only sue.

A sliding scale of across-the-board fees is prescribed on basic services which must be deposited with the Office of Copyright quarterly. A hearing will be held in 1975 to consider both the rate base and the rates to be paid to insure a "reasonable royalty fee", whatever that is. No standards are prescribed only the sujective idea of the three arbitrators will prevail unless disapproved within 90 days by one house of Congress. There is no Court appeal to test whether the record supports the award.

Stift civil and criminal penalties are provided for infringements. Broadcasters holding a license are treated as a beneficial owner within their local service area for purposes of instituting an action for infringement.

A Copyright Royalty Tribunal is formed. Panels of the Tribunal are appointed from the American Arbitrator Society. The rates prescribed in Section 111(d) (1) and the rate base (basic subscriber services will be reviewed in 1975 and again in 1982 and every five years thereafter to assure the copyright owner a "reasonable royalty fee.'

III - THE PUBLIC SHOULD NOT PAY A COPYRIGHT FEE VIA CATV

It is clear that the Register of Copyrights makes his whole case for CATV copyright lability on the fact that CATV charges its subscribers and makes a profit and failure to share these profits could damage the copyright. The Supreme Court disagreed with these assumptions and found otherwise Teie Prompter Corp. V. CBS, Inc., supran.l. If the Register's theory of liability is correct, which it is no! then anyone who makes a profit, directly or indirectly, from a performance of a copyrighted work should be liable. This liability would run to wire and receiver manufacturers and countless other business enterprises which enable the public to view the performance. Moreover, this theory assumes that the re. transmission of a television signal by CATV is a pertormance which the Supreme Court of the United Sates, on two occasions, has held that is is not. Mr. Arthur Krim, in his testimony belore Subcommittee No. 3, House Judiciary Committee (Hearings on H.R.4347, P. 1334, June 24, 1965), attempted to justily the assertion that carriage of programs by CATV would seriously damage the copyrighted work by referring to the importation of distant signals. Neither Mr. Krim, the Register of Copyrights, or anyone else has attempted to show that the reception of a signal carrying a copyrighted work off-the-art in an area the television station is obligated to serve and for which the copyright owner has been compensated in any way damages the future runs of the work, the broadcaster or anyone else. As we have shown, the Supreme Court found Mr. Krim's contention erroneous.

The fact that CATV makes a profit, by assisting the TV station to deliver its programs to the public

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