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Mr. KASTENMEIER. I have several questions, some of which are devoted to clarification. Whether there is legislation or whether there is agreement, we do want some common understanding of what is involved and what is not involved.

For example, Mr. Rodgers, are there any institutions that you represent which would not be included? I ask that conscientiously because it isn't just older people who may be living together in some sort of community relationship. As I understand the other witnesses, there was some sort of identification with health care associated with these persons, probably elderly, who are living together. I'm just wondering whether you have groups of people who wouldn't be reached by this bill.

Mr. RODGERS. Yes, we're concerned about that. Obviously, Mr. Chairman, I'm charged with representing all our membership. Looking at the legislation as currently drafted, we believe that some of our members may not fall under the protection of this legislation. I think it's important to note that “health care or health care related services,” in the long-term care field today, is, in our interpretation, a wide area. We have moved away, fortunately, I think, from a very narrow definition of health care as associated purely with the physical sciences. We are seeing some benefits, certainly, from national demonstration programs that have been mandated by the Congress to include congregate living environments for older people.

To give you an example, Mr. Chairman, the Congress has created a section 202 program for the elderly. It's low income housing for the elderly as part of the National Housing Act. There have been constraints put on that housing: The facilities must be comprised of at least 25, and sometimes more, percent of efficiency apartments, and residents' income must be below 50 percent of the median income. There are common rooms in those facilities, nutrition is provided, health screening and some home health assistance is provided for those members. We would hope that those facilities would be covered by this legislation. The facility itself may not meet the traditional definition of a nursing home, but clearly, health care and health care related services are provided to those individuals.

Mr. KASTENMEIER. Now, you happen to represent nonprofits, and one distinction the Register made was that it would be easier for him, conceptually, to accept nonprofits than profit-making institutions. However, you do believe that all nursing homes, whether profit-making or nonprofit, ought to be included, do you not?

Mr. RODGERS. Yes, we do. We don't think this is a facility issue. Quite clearly, our member facilities can stop showing videos tomorrow. That's not going to harm them one bit. This is a resident issue. I think my colleague from the American Health Care Association would agree. This legislation was not initiated by the facilities. As Senator Roth stated, the legislation was initiated by a resident. Certainly, we have heard from our facilities who have been concerned about the prospect of lawsuits and the expense involved in protracted litigation. However, this issue has clearly come to the public's attention through the residents.

Mr. KASTENMEIER. Would you agree with the Register's statement, that if you're going to have this, you would want to include

tions? I say traditional ones. Often county mental hospitals are probably not thought of in the same category. But should it also apply to such institutions?

Dr. WILLGING. I think it clearly should. In fact, the specific category that we consider a part of our membership are intermediate care facilities for the mentally retarded.

I think the issue again is the type of facility which can be considered a home. This evening at 6 o'clock I'm going to be attending a board meeting of Howard County General Hospital, Mr. Chairman. I'm on the board. That institution, even though it provides health care services and the word "hospital" is in the legislation, would clearly not be covered by H.R. 3158. There is no one in that hospital that considers that hospital a home. Had they eaten the food, they would be even less inclined to consider it a home.

We are talking about a residence, what people consider, ofttimes in the last years of their lives, to be their home. Those are the kinds of facilities we're talking about.

Mr. KASTENMEIER. Thank you.

I would now like to change to Mr. Boggs, who has tried to lend his good offices to a possible agreement made here and who has made a very substantial offer. Mr. Boggs, would you agree with Mr. Cardin, that they have a reasonable expectation of three things: one, however this is resolved, that it be binding; two, that it be across-the-board, uniform; and three, that it be transaction-free? Would you agree that those are reasonable and necessary components of a resolution of this question?

Mr. Boggs. Yes, we do. Let me go over our point of view on each one of them individually.

With regard to the question of whether or not the compromise should be binding, it is our view that our letter is binding on our corporation. It is binding because we're a public-spirited corporation; it is binding because I, as an officer of the corporation, am sitting here in front of you telling you that we will do this.

It is not an offer. I am surprised by Mike Rodgers' characterization of it as some interest. It's not some interest. It is a pledge. In fact, I will read it to you:

"Warner Brothers hereby advises that for a period of 25 years it will not, as to any nursing home which provides long-term or permanent residence, assert that the exhibition therein of motion pictures on videocassettes requires a license from Warner Bros., Inc."

It is our view, as a public corporation, that that's a binding pledge on our part. We don't make it lightly.

It is not binding in the sense of a contract that some have proposed. I think we would view that our proposal is better than a contract could provide. In part-in fact, your previous panel talks about litigation in Federal courts. Contracts lead to litigation. We believe that our pledge and our flexibility that we're showing here would, in fact, keep us out of court. It is much more flexible and allows us to respond to a question from someone: Is our home covered under your proposal? We can look at who they are and respond to their question.

Mr. Rodgers talks about the changes that are going on in types of homes and descriptions of homes. The proposal that we make is

flexible enough to permit it to accommodate those changes as they take place.

Second, with regard to uniformity, I believe that that is an area where we can make some improvement in our letter. Our letter has been responded to, as you know, by the Senator and Mr. Cardin, and in their letter of response they make a suggestion as to how we might uniformly describe the types of homes that are reached. We are looking at that and would be happy to approach that with the same spirit that we've approached the other problems.

I think the other studios, it's no accident that each of their letters is different. They were written by different people in different companies. I suspect that you will find, over time—this has only been going on for a couple of months--you will find that the uniformity of practice desired by the nursing home community is going to be reached during the next year of operation of this. I am sure others, as we are, would be prepared to amplify their letters with clarification, with that goal in mind.

With regard to transaction costs, we are not interested in having any transaction costs involved in this process, either. Yes, we're a big company, and yes, we have teams of lawyers who do things for us. But we are certainly not interested in applying those men and women to this task. It is our view that we've made a pledge, a public pledge. We are prepared to advertise that, as I mentioned earlier. Questions with regard to that pledge we hope can be answered in as speedily and direct a way as possible.

Our proposal differs somewhat from some of the other studios in that we understand that some law firms have advised their nursing home clients that they need a license, that they need a piece of paper. We are prepared to provide them with a piece of paper in response to a simple telephone call. It doesn't strike me that it's too much to ask of the nursing homes to make a telephone call to get a license. If they want a blanket license from their association, that's not included in our proposal, and I suspect, in fact, that once the actual nursing home proprietors realize what we have proposed, they will be quite satisfied with it.

So I think those are three reasonable requests and we believe that we have responded to all three of them.

Mr. KASTENMEIER. Thank you for that response. I think it's clear that you can state what you have done is binding. I assume you can do that. You can also speak of it being more or less transaction-free because that would certainly be in your own best interests as well as that of the beneficiary homes.

But I don't know that you're able at this point to speak for other studios in the industry. Though I take it, you can characterize their point of view. I really think they are looking for something which is uniform and which is agreed to by all. I don't know about the term of years or in what form. That, of course, you cannot speak to. I'm not even sure the motion picture association is able, at this moment, to speak to that. But it is something that I guess we should explore.

Let me ask Dr. Willging. Is there advice to you that a clearance, a license, may be legally required? Mr. Boggs states that some law

tutions that they require some sort of license. Do you know whether that's what you're generally informed is required?

Dr. WILLGING. I must admit, my law degree is from K Mart, Mr. Chairman, but I will respond based on what our counsel has told us. Obviously, this proves only that the law is an art and not a science.

It has been suggested to us, given our counsel's reading of the copyright legislation, that we need not have a license. But inevitably, as I think you mentioned in your opening comments this morning, sorting out legal differences of opinion means litigation. Litigation is costly, it's time-consuming, and I think we all recognize resources would be better placed in the care of our residents than in the courts.

Mr. KASTENMEIER. I think that's what we're exploring here. That, one, litigation won't be required, and two, perhaps legislation as such won't be necessary, rather, we can work something out.

Perhaps we should ask Mr. Boggs if he thinks we should get agreement from the Attorney General to permit the studios to talk to one another about this question. Is that a problem, do you think?

Mr. Boggs. Much has been made of the antitrust concern of the copyright owners in this matter. I think some have suggested that perhaps it's not as genuine concern, that it's a frivolous concern. We believe it's a genuine concern. We believe we are also not discussing, as some have in the past, when you have arranged clearances, only a legislative question. We are discussing a licensing scheme that we would agree to with our competitors in a commercial setting. Therefore, to our mind, it is not identical to some of the clearances that have been given in the past. I will let more competent antitrust counsel advise you more fully on that point.

But I think we would take the view, Mr. Chairman, that antitrust clearance is not necessary because the problem is on the brink of being solved without it. We will make some clarifications and amplifications in our letter, and I suspect our competitors are prepared to look at those and study them as well. A year from now, if you were to revisit this question, I believe you will find that nursing homes across America are happily showing our videocassettes, all of those thousands of great American movies that patients want to see, without any copyright questions being raised whatsoever.

Mr. KASTENMEIER. I would suspect that they would rather not wait till a year from now for this matter to be resolved. I would think it could be resolved to everyone's satisfaction much more quickly than that.

Mr. Boggs. I wasn't suggesting it will take a year from now. I believe the problem is solved today. I think this afternoon there are patients in nursing homes happily watching more home videos, without any fear of our interference based on this pledge that we made 2 weeks ago. What I was suggesting is if you waited for a period of time and then reviewed how that is operating, you will have a whole year's evidence of it operating smoothly, I suspect.

But I believe the problem is solved today. If there are amplifications or clarifications that are needed, we're here to talk to anyone who can advise us on that.

We have not been dealing with the associations. I must say, I have never met either of these gentlemen. They have never communicated to me and made any request of us. We have been dealing with the sponsors of the legislation, primarily Mr. Cardin, and I believe if you talk to him, he is quite enthusiastic about how forthcoming we have been. I believe the other studios are in the same posture, but they have to speak for themselves.

Mr. KASTENMEIER. As I read it, Mr. Cardin's second requirement of uniformity has yet to be forthcoming. There are many letters and they are somewhat different in terms of how they approach this, though the bottom line may be about the same.

There are many nursing homes nationwide, and they would like one single sort of resolution to this. They would like to know if a single term of years is involved, whether the commitment will be binding and if it will be generally uniform, that one studio wouldn't have a different proposition from another. They would also, I think, like to know whether 5 or 10 years from now one of the studios might just withdraw their good offer and decide on a different course of action. I think that is the remaining issue, uniformity.

Mr. Kuyper, you might see it somewhat differently than Mr. Boggs, in terms of what you think. You see studios more generally in terms of having a different point of view about their product and your distribution of it. I would like to know whether you think uniformity is achievable here among the studios.

Mr. KUYPER. I would hope so, although as you have seen, it's difficult with the major motion picture companies.

I would just like to add one other concern with respect to uniformity, that I would also concur in and urge upon everyone, that the definition of a covered area should be clear and concise so that any nursing home knows exactly whether or not they're covered.

Let me just take a minute and go into some of the discussions we've had with the representatives of the association-and I believe I'm characterizing this perfectly accurately.

There are many hybrid associations, organizations. There are large communities which have homes on acreage, independent private homes, golf courses, community centers. They also have apartments where there's more care given, and ultimately a nursing home. I think it is our concern that we understand we here are granting a royalty-free license, for whatever the exact reasons are, to the nursing home.

But when a community of independent homes, a retirement community, has a community center, and has what I call a theater, a recreation room with a large screen projection television, and on Friday night they're exhibiting motion pictures, that those are not covered by this license. I think that in some language, if possible, we should attempt to define-whether it's the health care provision or, as I'm suggesting, the bedroom concept, the architectural provision—that we define exactly what is and what is not covered.

Mr. KASTENMEIER. I think that's a reasonable suggestion. I don't know that we can fully define it at this hearing, although I did attempt, through two or three questions, to try to get a good fix on it. What I have learned is that we're really talking about a home

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