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Warner Bros. Inc. is prepared to confirm this policy to any individual nursing hone, or representative thereof, should it desire such coneination. If any nursing home or representative thereof is not satiséied with this statement of position and would prefer that a license for such

erformances be issued by Warner Bros. Inc., Warner Bros. inc. will do so on a royalty-free basis for a 25-year period. We look forward to working with you to neet our common goals of serving those in nursing homes and maintaining a vigorous copyright law. Sincerely,

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Mr. KASTENMEIER. I have a couple of questions for you, but first we would like to hear from the other witnesses.

Next is Mr. Peter W. Kuyper, who, in terms of the films as intellectual property, I guess has a somewhat different point of view about this question. We would be glad to hear from you, Mr. Kuyper.

STATEMENT OF PETER W. KUYPER, CHAIRMAN, MOTION

PICTURE LICENSING CORP. Mr. KUYPER. Thank you, Chairman Kastenmeier, for giving me this opportunity to testify in opposition to H.R. 3158.

I had hoped not to be here today. I had hoped that there would have been already a nonlegislative solution and settlement, which I and some of the other people have worked hard to accomplish. I do believe also that this bill is ill-advised and has implications far beyond the intended scope of the legislation; and, most importantly, as you have heard, legislation is not necessary to accomplish the positive intentions of the bill.

At this point I would just like to very briefly review some of the underlying economics and perhaps bring some of the facts which have led up to this proposed legislation into perspective.

First, the Motion Picture Licensing Corp. is an independent copyright licensing service, solely in the business of licensing certain public performances of home videocassettes in accordance with the Federal copyright law.

Movies, which are what we license, are not new to nursing homes. Prior to home videocassettes, nursing homes watched movies. They just used 16mm films and it cost them at least $75, and sometimes $125 or more, for each exhibition. Obviously, since the cost was so high, very few movies were shown, but no one complained.

When home video players and cassettes became commonly available after 1980, the cost of showing a movie dropped to a few dollars. The showings increased so that virtually every nursing home in America is showing a lot of movies in their common rooms. Unfortunately, from 1980, when all this really began, to 1987, there was no way that a nursing home, anyone else for that matter, could obtain the appropriate license. The studios wouldn't grant them, and until 1985, when my colleagues and I at MGM started some public performance license experimentation, there was no way for anyone to show a home videocassette in a public place legally. Unlicensed usage grew to the point where it became commonplace. Finally, in 1987, MPLC was created to provide such a license by reinventing the blanket license, which we call an umbrella license, to cover these performances.

MPLC's objective is not to stop or limit the use of home videocassettes by nursing homes or anyone else but, rather, to provide a cheap and effective method to allow legal showings. Our objective is to encourage the use of home videocassettes in certain public performance areas, but to do so under the copyright law, not outside of it.

We believe we have provided such a service. Today a nursing

obtain one free from the public library, and pay a copyright royalty for public performance for an average of $1 or $2, depending upon its size or frequency. This contrasts with the cost, a few short years ago, of $75 to rent one 16mm print of the same movie.

The average MPLC fee for copyright is one-half of 1 cent per person per day. The maximum fee is 1 cent per person per day. If a nursing home shows a lot of movies, they would pay $30 a month, which is an average nursing home of 100 people, $3.65 per person per year for 100 people. In a nursing home using one or two cassettes per week, they would be asked to pay $15, or $180 per year.

To put this in perspective, these fees represent eight one-thousandths of 1 percent of a daily medicare reimbursement to nursing homes, and less than that of the total nursing home revenue per patient. We can find no other cost for health or activity services incurred by nursing homes which is smaller.

a copyright fee, as we heard earlier, for a nursing home could be $16,000, then this, indeed, must be a very, very large chain of nursing homes, with revenues well into the tens or hundreds of millions of dollars. We believe that providing a legal license to show unlimited videocassettes of movies at this rate is an appropriate and proper service and one that does not represent demands which would result in depriving anyone the opportunity to enjoy the industry's classic or current movies.

However, when MPLC began canvassing the nursing homes, there was confusion, and there was objection to making a payment, albeit a small one, for something which had previously been used for free. That, I am afraid, is the origin of this bill. The legislation has as its objective to relieve the owners of nursing homes from the obligation to pay copyright royalties when they exhibit movies to their residents. It should be noted that this is not an issue of elderly residents in nursing homes being deprived of their right of the opportunity to watch movies; it is a dollars and cents issue, of the nursing home operators attempting to obtain a commodity for free.

Not in the medical care area, nor in other activities areas, do I believe legislation would be considered to require suppliers to nursing homes to provide their goods and services for free. That is the essence of this legislation.

Notwithstanding all of the above, we believe this legislation is not now necessary to accomplish your objectives. As you have heard, there has been considerable discussion and a series of meetings between the various interested industry associations and companies regarding a proposed, nonlegislative solution. Prior to these discussions, it was MPLC's position that when a resident of a nursing home had a TV and a VCR in their room, an exhibition of a videocassette was, indeed, a home use. It was private under the Copyright Act, regardless of the number of guests. However, if that machine and TV were taken across the hall and put in a common room provided by the nursing home, and motion pictures were exhibited, we believe that that was public and would require a public performance license. I understand the U.S. Copyright Office concurs.

Now, in these discussions that we had with the nursing home associations, we saw the argument advanced by the American Association of Homes for the Aging that when the nursing home is the

sole and permanent residence of someone, and when only a bedroom facility is provided, each resident has or should have some interest in the common room-say a one-tenth or a one-hundredth share of that living room, so to speak. This concept was the basis for a proposed contractual "agreement” worked out in Senator Roth's offices between the nursing home associations, MPLC, and Swank Motion Pictures. MPLC has supported that concept and terms of this proposed agreement.

Additionally, as you have heard, the major motion picture companies have offered to provide for royalty-free exhibitions, or royalty-free licenses, in letters to Senator Roth and Congressman Cardin.

In conjunction with the above-mentioned letters from motion picture companies, and in the absence of legislation, for nursing homes covered under the terms of the proposed agreement, MPLC will not seek licenses and, if a license is required, MPLC will grant one at no charge to the full extent of the various rights which MPLC may have.

Thank you.
Mr. KASTENMEIER. Thank you, Mr. Kuyper.
[The prepared statement of Mr. Kuyper follows:

Statanont of

PBTER 1. KUYPER

for

Motion Picture Licensing Corporation

Before the Subcommittee on
Courts, Intellectual Property and the Administration

of Justice

Committee on the Judiciary

April 5, 1990

Chairman Kastenmeier, members of the Subcommittee, thank you for giving me this opportunity to testify in opposition to H.R. 3158. This bill would amend the copyright Act to exempt nursing homes and certain other institutions from the performance aspects of the copyright law.

I believe this bill is ill-advised, ill-formed; it represents the worst kind of special private interest legislation; it carries negative and potentially dangerous international implications far beyond the intended scope of the legislation and, most importantly, legislation is not necessary to accomplish the positive intentions of the bill.

an

Motion Picture Licensing Corporation (MPLC) is independent copyright licensing service solely in the business of licensing certain public performances of home video cassettes in accordance with the federal copyright law.

an

Prior to the home video cassette revolution, nursing homes used 16mm film to exhibit motion pictures. Since the cost of such exhibition was high, (about $75.00 $125.00), there were only a few movies shown per year. When home video players and cassettes became commonly available after 1980, the cost of showing a movie dropped to a few dollars. And, the number of exhibitions increased such that virtually every nursing home in America shows movies frequently in the public

"common" room of the institution.

or

However, under the 1976 copyright law, these exhibitions require a public performance license...and are, therefore an

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