eat. Of course, the advocates of this bill don't want charity. They just want equal treatment. Senator Roth made this point on several occasions. They just want a reasonable and workable means of licensing the movies which their people want to watch, just as if these people were at home in their own living rooms. If Congress concludes that the system isn't working, that the voluntary negotiations will not bear fruit, and that legislation is necessary, then Congress should also make clear that the new exemption should not serve as a precedent for further erosion of the public performance right. Mr. Chairman, if you prefer, rather than going for the bill as drafted, you might want to consider limiting the bill to nonprofit health care institutions. That would, of course, eliminate probably 80 percent or so of the nursing homes in question, but it would take care of Senator Roth's specific concern. I also might suggest, as I do in my written statement, Mr. Chairman, that you might want to permit the exemption only for those nursing homes who make neither direct nor indirect charges for the service. As drafted now, the bill limits the exemption only for those that don't make a direct charge. Mr. KASTENMEIER. As I read subsection (C) of H.R. 3158, "no direct charge is made to see or hear such performance or display," does that adequately respond to that? Mr. OMAN. That suggests to me that if they don't set up a ticket window at the door to the common area and charge people a dollar every time they walk in, but they, in fact, add a $20 fee every month to the charge they're making to their- Mr. KASTENMEIER. So you're saying direct or indirect? Mr. OMAN. Or indirect. I think that would be an important distinction to make. You also might want to consider another clarification if you do decide to move forward, and that is to make clear the health care facility would be providing not only physical health care but also mental health care. If, in fact, it was an institution for the mentally ill with long-term care, this also would fall within the scope of the exemption. Those are essentially the points we have to make on the first bill, Mr. Chairman, so now let me comment on Mr. Berman's bill, H.R. 671. Under existing law, as you know, the court has discretion to award attorneys' fees to the prevailing party, whether plaintiff or defendant. H.R. 671 makes mandatory the award of reasonable attorneys' fees to small businesses or individual authors who sue somebody for copying their works. In most cases, the mandatory attorneys' fees would not apply to libraries, to schools, or to universities. The old discretionary rules would continue to apply to these institutions if they copied works, but they would be subject to mandatory fees under the bill if they infringed other exclusive rights, such as the public performance right. Individual author plaintiffs present the most compelling case for some consideration of mandatory fees. They almost always have shallow pockets and they have fewer opportunities to hire crackerjack lawyers. The author usually nets only modest damages from copyright infringement, so he or she usually faces two bleak alter natives: either a forced licensing of the work on an unfavorable basis, or the big companies taunt of "sue me." In drafting the copyright law, Congress relied on individual authors to enforce their own rights rather than give a Government agency that responsibility. In most cases, especially when the authors can band together in collective groups, they can vindicate their rights. So by facilitating enforcement of rights, mandatory attorneys' fees for individual authors and small businesses could further that other, larger congressional purpose that was embodied in the Copyright Act. Moreover, mandatory fees would have a deterrent effect on a large organization's decision to use copyrighted materials without permission. On the other hand, I have not yet seen convincing evidence of injustice with the existing discretionary system of awarding attorneys' fees. The courts, in those circuits at least where copyright cases are most often heard-specifically the second circuit and the ninth circuit-those circuits already award reasonable fees routinely, and almost always do so when a small business is suing a major corporation. On the downside, I worry that genuinely innocent infringers may be unfairly penalized if we eliminate the court's discretion on whether or not to award attorney's fees. So what we're talking about here, Mr. Chairman, is basically two things. First, the training film makers can't afford to bring suit because they can't afford high-priced lawyers. With mandatory attorneys' fees, they can attract those "hot shot" lawyers that they need to enforce their rights. The lawyers will be more willing to take the case if they are guaranteed something at the end. The second thing we're talking about here, Mr. Chairman, is deterrence. The people who favor the bill think the threat of suit without mandatory attorneys' fees lacks credibility, since it does not expose the infringer to enough liability to discourage illegal activity. On that point, they are probably right. But I wonder, Mr. Chairman, if they've given the new regime that you worked out last year enough time to work. Just last year, in connection with U.S. adherence to the Berne Convention, you doubled statutory damages. That may have a great deterrent effect, but it's still too early to tell. In terms of deterrence, if they could convince the Justice Department to bring just one criminal suit in a flagrant, large-scale, willful infringement, they would solve their problem in another way. Put one of these corporate scofflaws in the slammer and the others would rush to clean up their act. Maybe Congress could write the Attorney General and urge that such a case be brought. If the Justice Department just announced its intention to start looking for such a case, it would have en electrifying effect on the industry. Today, there are some arrogant corporate executives who, with clear eye and utter ruthlessness, cooly calculate that they can violate the rights of small creators with impugnity. They are not at risk. Just one criminal case would change the equation dramatically, much more so, I would think, than a change in statutory damages and attorneys' fees that is proposed under the bill. So, on balance, Mr. Chairman, the Copyright Office would favor the status quo, at least for the immediate time-being. The courts ble attorneys' fees. We can trust them to balance the appropriate factors in occasionally withholding fees, but I suspect that the practice of continuing to grant attorneys' fees in the case of small creators suing large corporations will eliminate much of the injustice that we encounter in the industry. That concludes my oral statement, Mr. Chairman, and I would be pleased to answer any questions. Mr. KASTENMEIER. Thank you for that brief commentary on both pieces of legislation. [The prepared statement of Mr. Oman follows:] STATEMENT OF RALPH OMAN REGISTER OF COPYRIGHTS AND ASSOCIATE LIBRARIAN FOR COPYRIGHT SERVICES Before the Subcommittee on Courts, Intellectual Property and the Administration of Justice House of Representatives April 5, 1990 Mr. Chairman and members of the Subcommittee, I am Ralph Oman, Register of Copyrights in the Copyright Office of the Library of Congress and Associate Librarian for Copyright Services. I thank you and the Subcommittee staff for giving me the opportunity to appear today to testify on H.R. 671 and H.R. 3158. H.R. 671, introduced in the 101st Congress by Representative Berman on January 27, 1989, makes mandatory the award of reasonable attorney's fees to small businesses or individual authors prevailing in copyright infringement actions. Under existing law, the court has discretion to award attorney's fees to the prevailing party, whether plaintiff or defendant. The mandatory award of reasonable attorney's fees would not apply to the reproduction of a work by nonprofit educational institutions, libraries or archives, or the reproduction of a transmission program by a public broadcasting entity. H.R. 3158, introduced in the 101st Congress by Representative Cardin on August 10, 1989, would amend section 110 of the Copyright Act, 17 USC §110 (1976), to permit the public performance of works by using videocassettes in hospitals and related facilities under certain conditions. I. HOSPITAL VCR PERFORMANCE EXEMPTION 1. The Cardin Bill H.R. 3158 would add a new exemption to the public performance right by amending section 110 of the Copyright Act. Specifically, the public performance or display of a work by means of a videocassette recorder and a television set of a kind commonly used in private homes would be exempt from copyright liability if four conditions were met: 1) the performance or display occurs in a hospital, hospice, nursing home, retirement home, or other group home; 2) such institution provides long term health or healthrelated care and services to individuals on a regular basis and also serves as a temporary or permanent home for such individuals; 3) no direct charge is made to see or hear such performance or display; and 4) the performance or display is not further transmitted by closed circuit television or by other means. 2. The Public Performance Right Section 106 of the 1976 Act gives the copyright owner the exclusive right "to perform the copyrighted work publicly..." 17 U.S.C. §106(4). The legislative history to the Act indicates that a "performance may be accomplished 'either directly or by means of any device or process,' including all kinds of equipment for reproducing or amplifying sounds or visual images and any other techniques and systems not yet in use or even invented." H.R. Rep. No. 1476, 94th Cong., 2d Sess. 63 (1976). Under this definition, the viewing of videotapes at a hospital or other health ... although the question remains in each case whether the performance is a public one. A work is performed publicly if it occurs "at a place open to the public or at any place where a substantial number of persons outside the normal circle of a family and its social acquaintances is gathered." Id. at 64. A hospital may be a non-profit, state-run facility, open to residents needing its services. A health care facility may also be a private, commercial enterprise, admitting only a narrowly defined group of people. In either circumstance, the facility generally would not make a given videocassette available to a walk-in member of the public for viewing purposes. Persons with the opportunity to attend a showing of a videocassette would probably be patients or residents staying at an institution, immediate family members, or close social acquaintances. ... However, even if the audience viewing a videotape at a hospice or hospital consists of patients, family members or friends, the viewing might be a "public performance." It is quite possible that such a display could take place "where a substantial number of persons outside the normal circle of a family and its social acquaintances is gathered." Id. "The legislative history indicates that this category [semi-public place] was added [to the Copyright Act] to expand the concept of public performance by including those places that, although not open to the public at large, are accessible to a significant number of people." Columbia Pictures Industries v. Redd Horne, Inc., 749 F.2d 154, 158 (3d Cir. 1984). Thus, "if a place is public, the size and composition of the audience are irrelevant." Id. Accordingly, it does not matter whether the people who may view a videocassette are |