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illegal performance.

Unfortunately, from 1980 to 1987 there was no procedure or way that a nursing home (or anyone else, for that matter) could obtain the appropriate license. There was no practical and effective way to license the vast number of titles or the vast number of locations requiring a license.

Therefore, unlicensed usage grew to the point where it became commonplace.

Because there was no practical or effective way for a user to obtain a license; in 1987, MPLC was created to provide such a license through its concept of a "blanket" license (called an "Umbrella License") which would cover unlimited usage. Rather than the impossible requirement to obtain a separate license for each movie from as many as twenty different sources, the MFLC license would year's showings with only one license and one payment.


The general motion picture license is for one movie at a time, each for a specific price. The MPLC Umbrella License is for the user (a building, a company, etc.) covering any or all of the authorized titles for one year for one fee.

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


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We believe that we have provided such a service; today a nursing home may show a movie by renting a cassette for $2.00, So,

a copyright royalty for public performance for an average of $1.00, or so. This contrasts with the cost a few short years ago of $75.00 or more to rent a 16mm print of the same movie.

with the objective of bringing the widespread performance of home video cassettes by nursing homes under the copyright law, in 1987, MPLC began offering performance licences to nursing homes. The average MPLC fee is 1/2 of 1 cent per person, per day. The maximum fee is 1 cent per person, per day. Thus, the maximum fee for the average size nursing home showing a daily movie would be $30 per month

home using one or two cassettes per week would be asked to pay $15, or $180 per year.

To put this in perspective, these fees represent 8 one-thousandths of 1 per cent (.00008) of the daily Medicare reimbursement to nursing homes, and less than that of total revenue. We can find no other cost for health or activities incurred by a nursing home which is smaller.


We believe that providing the legal license to show unlimited home video cassettes of movies at this rate is an appropriate and proper service, and

that does not represent demands whích would result in depriving anyone of the opportunity to enjoy the industry's classic or current movies.

We believe that the law, the technology, and the motion picture industry have all' worked together to provide a mechanism for the low price, widespread viewing of movies and a method of low price all-encompassing copyright royalty collection to conform to the existing copyright laws.

Unfortunately, in the six or seven years prior to 1987, the copyright owners fell behind the use of the technology. No demand was made for licensing, nor was there an objection to the use of home videocassettes without a license.

Therefore, when MPLC began canvassing the industry, after several years of growing usage; one can understand the confusion and the objection to making a payment, albeit a small one, for something which had previously been used for free.

However, we do not believe these conditions warrant a change in the law.



The response from the nursing home industry to the request for copyright payment was mixed,

might expect. There were those who welcomed legality, those who openly spurned the law, and those who would continue unauthorized showings until caught. Unfortunately, in this industry, which is charged with the care of the ill and elderly, only about 7% fell into the first category and obtained a license.

The licensed operators include only one group operator from the top 25, in what you know is a highly concentrated industry. No other major group owner or operator became licensed (although we understand another has stopped showing cassettes).

The impetus for this legislation did not come from the small operators of single nursing homes who were asked to make copyright payments of $10 per month for this new activities program (movies) made possible by home video technology. Indeed not, since in prior years it cost between $75 and $200 to exhibit one film via a 16mm print. For the previous cost of 2 or 3 movies, now a small nursing home can obtain all the equipment and an MPLC license to show as many as 150 movies every year.

Although cloaked in an appeal that this legislation is required to allow our senior citizens the opportunity to view motion pictures in their "home", the real impetus for this legislation is from the major profit making chains.

One chain, due to its immense size, when faced with a copyright payment of approximately $400,000.00 per year refused to even consider operating its nursing homes within the copyright law. Indeed, from a recent NBC news series and Los Angeles Times coverage, it appears that certain chains of nursing homes openly operate in disregard for not only the copyright law but also the health laws. According to the NBC series, one chain has paid over $1 million in fines and settlements this year for health and care code violations. Indeed, if that company were inclined to operate within all the laws of this country, the fines and penalties which they would have avoided could have paid for their copyright fees well into the next century.

Instead, some large nursing home chains continued to exhibit movies in defiance of the law and told MPLC that they would obtain legislation by, mounting a campaign through their state and national associations to exempt them from the law.

I believe that to reward the large and defiant chain operators with this legislation for avoiding and ignoring the law, and, thus, penalizing those who have obtained licenses and operated legally under the law is the wrong

This 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 the elderly residents in nursing homes being deprived of the right or 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 would legislation be considered to require suppliers to nursing homes to provide their goods and services for free. That is the essence of this legislation.

This is not a bill for the people; this is a bill for the owners.

Finally, prior to discussing other issues, let me add that, MPLC recognizes that the copyright laws are not widely understood, and has trained its sales staff to be teachers of the law as well as sellers of licenses. They are trained to be as polite and non-threatening in the education process as possible. However, because law is not accepted readily understood should not necessarily result in exemption.


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Although it is for others to fully articulate this argument, may I suggest that the implications are immense for the motion picture industry which depends upon the protection of intellectual property and copyrights world wide as the basis of their revenue. I do not need to remind you of the status of American motion pictures as generators of foreign exchange. Also, this small exemption in our copyright law may very well be in violation of the Berne copyright agreements and certainly flies in the face of our national policy to protect intellectual property rights around the world. In every U.S. Government list of foreign trade barriers, "inadequate protection for patents, copyrights and trademarks" is listed for Japan, the European community, Taiwan, South Korea, Brazil, etc. The MPEAA'S efforts are worldwide to stop public showings of home video cassettes where vast sums of revenue (and foreign exchange) are lost to unauthorized exhibition. The United States Government should not undertake a program of legislation to exempt, classes of users from our own copyright laws when there is a reasonable and practical licensing mechanism.

Senator Roth, in his 1988 comments makes three factual assertions which should be highlighted: 1. Licenses


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"generally not possible" to obtain "as a practical matter.", 2. "Licenses are costly", and 3. Licenses which can be obtained from any single source cover only a "fraction" of the titles available in home video.

With respect to nursing homes, and the other areas in which MPLC operates, numbers 1 and 2 are not now accurate. There is validity to the third point, and we are hopeful that as the concept of the MPLC "blanket " license matures, this problem, also, will cease to be an issue.

Notwithstanding all of the above, this legislation is not necessary to accomplish your objectives. As you are aware, there have been a series of meetings between the various interested industry associations and companies regarding a proposed non-legislative solution.


Prior to these legislative discussions, it was MPLC'S position that when a resident of a nursing home had a TV and

VCR in their room, any exhibition was "home use" and "private" under the copyright Act, regardless of the number of guests. However, if that machine and TV were located in the "common

room" the resulting performance would "public" and require a performance license. It understanding that the U.S. Copyright office concurs.

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We have seen the argument advanced by the American Association of Homes for the Aged, that when a nursing home is the sole and

permanent residence, and when only "bedroom" facilities are provided, each resident has should have

interest in the common room; say, one-tenth or one-hundredth "share" of the "living room", so to speak.

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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 the concept and terms of this "proposed agreement".

Additionally, some MPLC licensors and other 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

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