severe with offending exhibitors, having due regard at all times to the general policy not only of protecting the playing-time market of the distributors for their copyrighted works but the honest exhibitor furnishing such market, and to deter previous offenders and other exhibitors tempted to indulge in practices I have above described. With the cooperation of a number of exhibitor organizations I have had my representatives address meetings of their boards of directors and members, with a view to setting forth the evil effects of these practices upon every branch of the industry, and inviting their cooperation toward its elimination. Speeches delivered by these representatives at such conventions were printed in trade papers and extensively publicized. From all this you will see that the purpose of the distributors is essentially to deter those tempted toward these practices, to protect their markets and the honest exhibitor upon whom they must depend for a market. Despite educational attempts at deterrence the law must and should furnish a substantial factor of deterrence, namely: That the offending exhibitor must realize that if and when caught, he must pay in part at least, by minimum statutory damages, for very real but intangible damages incurred by the transgressions of his kind, the bane of every honest element in the industry. Because of these facts, the present minimum statutory damage provisions, in so far as they apply to unauthorized exhibitions of motion pictures, should be continued. Yours very truly, GABRIEL L. HESS. EXHIBIT A The following is a tabulation of the exhibitors and theaters specifically disclosed to have given infringing exhibitions by 18 general territorial investigations made during 1930 and 1931, each of which territorial investigations averaged in duration about three months. The figures indicate (1) the number of exhibitors disclosed, as compared to the number of exhibitors investigated during each of these brief territorial investigations, as well as (2) the theaters disclosed as compared to the number of theaters investigated. The data given includes only the cases where the evidence was unquestionable that the exhibitions were wholly unauthorized by and unrecorded in the records of the respective exchanges of the distributors. Each such exhibitor was involved, on the average, during the brief period of investigation with three distributors. There is also included the figures reported by counsel for the members of the New York Film Board of Trade, with regard to disclosures resulting from investigations made over a number of years only upon specific complaints against specific individuals. RE ALLEGED LETTER COMPLAINING OF THE COPYRIGHT PROTECTION BUREAU IN INFRINGEMENTS OF THE COPYRIGHTS OF MOTION PICTURES AND ANSWER BY THE COPYRIGHT PROTECTION BUREAU THERETO GREENFIELD, Iowa, February 23, 1932. DEAR MR. SIROVICH: I am writing you in regard to the copyright bureau activities. About a year ago they caught me running a news from Universal two days, which the salesman put on the contract for one day to get by with the company, and I didn't know that he had only given me one day, for I run all of my features two days. And Paramount News they put it on the contract two days when they knew that I was running their news three days, for I bought their news for Sunday, Monday, and Tuesday, and had only six issues left when they checked me and cost me $100. They let me off with the minimum because I had Martin talk to them, because they knew that the salesman had done it unknown to me, which I didn't know they had done. I never had thought anything about it. Hoping you will give your support to this copyright activities, would like an answer on your opinion if it is possible. Thanking you in advance, Yours truly. INTEROFFICE MEMORANDUM G. W. MORGAN. MARCH 4, 1932. To: G. L. Hess. From: J. L. Stein. Re G. W. Morgan, Grand Theater, Greenfield, Iowa. Upon my arrival in New York this morning, I found awaiting me the letter dated February 23, 1932, addressed to Doctor Sirovich, by the above exhibitor. I personally handled this case, and recall it very distinctly for the reason that I had several conferences with Mr. Lester F. Martin, secretary-treasurer of the Allied Theater Owners' Association of Iowa (Inc.), with regard thereto, at Des Moines. The letter complains that he was compelled to pay $100 for the complete release of all his previous unauthorized exhibitions. The letter confirms some of the things this exhibitor told me when he called upon me at Des Moines with Mr. Martin on February 7, 1931. He then stated, as he does now, that the reason his Paramount contract did not license exhibitions for three days was that the Paramount salesman told him the home office would never approve the contract at that price for three days of exhibition, although they would probably approve it for two days. Exactly the same thing was stated with respect to the Universal license contract, the claim being made that the salesman told him the license would never be approved at the price in question for two days, but only for one day. The exhibitor admits these facts in his present letter. You will appreciate that news-reel contracts generally call for 52 issues, one a week. He admits that when he made the statement he had only six issues left on one of the contracts. Obviously, in view of the position he took, he had probably committed scores of infringements at the time. I read the letter sent to Doctor Sirovich by Mr. Bowker, of Dunlap, Iowa, dated February 24, 1932, and the memorandum which Mr. Sargoy prepared on the facts in that case. Here again in the case of Mr. Morgan, is another example of that twisted ethics prevalent in many exhibitors whereby they think it justifiable to sign applications for licenses requesting the approval of the home office upon the basis of a number of days of exhibition for a certain license rental which they believe the home office will accept, while secretly intending, and in some cases alleging that they connive with the salesman, to use the picture for a greater number of days than the home office, the licensing body, would ever have permitted for the rental in question. In this case this exhibitor without shame "asserts a side agreement savoring of the illegitimate, which simply does not belong in orderly commercial transactions." I recall that when I again spoke to Mr. Martin about the case, shortly after this conference, Mr. Martin admitted that he appreciated that if the facts were as claimed, that the salesman connived with the exhibitor (which my investigation did not at all bear out), the situation would be parallel to an analogous case which I mentioned, namely, a real-estate agent acting for the owner of the building, while negotiating a lease for the owner with a prospective tenant. orally promises the tenant the last month's rent of the year free, without the knowledge of the landlord, and stating that the landlord would not sign the lease if it had any such clause in it. In fact the situation in the motion-picture case would be much worse, for the simple reason that the exhibitor would be likely to get away with the additional exhibitions without anybody ever being the wiser. In view, however, of Mr. Martin's request, and plea that the exhibitor could not afford to pay any more than $100, I recommended a settlement in that amount. You thereupon recommended it for approval to the distributors. I frankly believe that an exhibitor like this should be ashamed to mention the matter. J. L. STEIN. LETTER COMPLAINING OF THE COPYRIGHT PROTECTION BUREAU IN RE ALLEGED INFRINGEMENTS OF THE COPYRIGHTS OF MOTION PICTURES AND ANSWER BY THE COPYRIGHT PROTECTION BUREAU THERETO Hon. Wм. I. SIROVICH, Washington, D. C. THE DUNLAP THEATER, Dunlap, Iowa, February 24, 1932. DEAR SIR: You being chairman of the committee on patents I take this opportunity to protest the abuses perpetrated on the motion-picture exhibitors by the copyright protection bureau. My knowledge was gotten first hand in the way of being hijacked out of $250 for holding a news reel three days when my contract called for two days. The contract was made for two days in order to get it approved by the home office with the understanding by the local manager that I was to run it three days, and the local manager notified the booker in my presence to bill it out to me for two days but to book it so that I could run it three days, which I did for about eight months without any complaint from any one. Then on December 10, 1930, a representative of Gabriel L. Hess, general attorney, demanded $2,500 for violating the copyright law on a contract that only called for $5 a week for 52 weeks or $260. I settled the claim for $250 cash. If the copyright protection bureau can get away with this kind of business I feel that there should be some laws changed, repealed, or made to stop this high-handed method of robbing the little fellow. I trust, Mr. Sirovich, that you will give this matter your most profound consideration and you will, I feel, be convinced of the injustice of the law as it now stands. Yours very truly, INTEROFFICE MEMORANDUM W. A. BowKER.. MARCH 4, 1932.. To: G. L. HESS. From: E. A. SARGOY. Re W. A. BOWKER, Dunlap Theater, Dunlap, Iowa. After reading the letter dated February 24, 1932, addressed to Doctor Sirovich by the above exhibitor, I examined the file in question. Mr. Liebler, of this office, who personally handled the matter, was not available, so I referred to his reports. The complaint of this exhibitor is that he had to settle a claim involving some news reels for $250. He neglects to mention that the releases he secured covered all previous unauthorized exhibitions of all national distributors up to the date of his settlement agreement. He volunteers the admission that he ran the news reel in question three days each week over a period of eight months, although he further admits that his contract and his bills called for but two days. By his own admission in this regard, he infringed over 35 separate copyrights. His letter is an apt illustration of the curious ethics, or moral lapses, many exhibitors have. Exhibitors know, as it has been the practice since the inception of the industry, that their written exhibition licenses take effect only by approval by the home office of the distributor. All their exhibition contracts state that until approved by an executive officer at the home office of the distributor, the copy of the exhibition contract signed by the exhibitor is only an application for a license and that approval or rejection must take place within a specified number of days. Home-office approval of license rentals for the playing time of pictures is, of course, dependent upon the amount of playing time to be licensed and the rental payable therefor. That this exhibitor was obviously aware thereof, as all exhibitors are, is indicated by his own admission that the "contract was made for two days in order to get it approved by the home office." Even if the exhibitor's claim were true that he collaborated with the salesman and branch office in this deal, and Mr. Liebler's report of the facts is that this was not true, the exhibitor's own admission is that he was participating in a fraudulent transaction with the branch representatives to deceive the home office. It is quite obvious, from his letter, that the home office, which grants the licenses in such instances, would never have licensed exhibitions of its pictures for three days at the same rental if he had applied therefor. The industry generally has always taken the position that side agreements of the nature above indicated are unscrupulous transactions, if in fact they are made. I quote a signed editorial in bold type on the first page of the Motion Picture Daily for July 3, 1931, by Maurice Kann, its editor, under the caption "Indorsed": "Conversation promises in future dealings with exhibitors are on the slaughtering block. From now on distributors will insist that whatever deals their salesmen make shall be set down in writing, for all and sundry to read. In other words, it is going to be unpleasant in the future for unscrupulous salesmen and unscrupulous showman alike. "Which is exactly as it should be. It is good form and nothing else to reduce to writing exactly what the buyer and the seller agree upon. Side agreements savor of the illegitimate and simply don't belong in orderly commercial transactions." In addition to the admission of the holding over of the above news reels at the conference with Mr. Liebler, Mr. Bowker admitted holding over of the feature picture of another distributor for an additional day, the contract for which called for payment of the rental on a percentage basis and required a signed report by the exhibitor of the gross receipts for each day of exhibition, so that the distributor could ascertain whether, and if so, how much, it was entitled to share in the receipts for its rental. The exhibitor admitted that he had withheld reporting the receipts for an entire day of exhibitions, which he had given in addition to the number booked and of which the exchange was aware. The investigation also showed the pictures of two other companies to have been held over and exhibited in excess of the number of days permitted in the exhibition contracts, and of which there were no records in the respective exchanges. At the conference with Mr. Liebler, Mr. Bowker said that he was not going to settle because he did not own the theater, the owner being his wife. As Mr. Bowker was admittedly the manager of the theater during the period in question, he was clearly liable for these exhibitions, and by his statement was merely adding another person liable therefor, i. e., the ostensible owner for whom the infringing exhibitions were given. Mr. C. E. Williams, president of the Motion Picture Theater Owners Association of Nebraska and Western Iowa, was present at the conference between Mr. Bowker and Mr. Liebler and participated in the settlement discussions. At the close of the conference Mr. Bowker submitted an offer to settle all claims for $250, which offer you recommended for approval by the distributors, and he was given the complete release requested. E. A. SARGOY. LETTER COMPLAINING OF THE COPYRIGHT PROTECTION BUREAU IN RE ALLEGED INFRINGEMENTS OF THE COPYRIGHTS OF MOTION PICTURES AND ANSWER BY THE COPYRIGHT PROTECTION BUREAU THERETO CASTAMBA AND OPERA HOUSE, Hon. WILLIAM I. SIROVICH, House of Representatives, Washington, D. C. DEAR SIR: I wish to state my case of the Copyright Protection Bureau: Mr. F. G. Allwein and myself started in the motion-picture business in Shelby, Ohio, in 1915, and continued as partners in the same until his death, December of 1929. Since that time I have conducted the business alone. During the first week of July, 1930, I heard of the copyright bureau activities in this section. Immediately I checked my bookings and found I was using Fox News on some weeks three days, although the contract called for two days. When the salesman of the Fox Film Corporation sold the contract, he said it would be O. K. to use the third day when our feature runs three days. I also found two or three single Vitaphone acts that had been held an extra day. When we signed for the Vitaphone acts the salesman told us to hold the acts the extra day if we wanted to, as no one would ever question the act, but that it looked better to have two days on the contract, as he was selling the film very reasonably. I immediately went to Cleveland and told Mr. I. J. Schmertz, of Fox Film Corporation, that I had been holding the Fox News the extra day and wanted to pay or settle the entire bill. Mr. Schmertz asked me if I had received notice of copyright infringement (this being around July 1) and I told him that I had not. Mr. Schmertz asked me the second time if I had received a notice and again I told him I had not. He then said he would take care of it. I immediately had the contract changed. Also on the same day I went to the Vitagraph Corporation and told them what I had done; they told me not to do it any more, which, to be sure, I did not. On July 30, 1930, I received a registered letter-No. 533250-from Gabriel L. Hess, New York City, stating that I had violated my contract under the copyright law of the United States and should appear before the film board of trade, August 7, 1930, at 1 p. m., to meet Mr. H. L. Groves, their representative. After receiving and reading this letter, I did not sleep for three days or nights. August 4 I made a special trip to Cleveland and pleaded with Mr. Groves to give me immediate attention, as I could not stand the worry of being a criminal or thief. Mr. Groves consented to relieve my mind the same day-August 4. I went to the film board of trade office that afternoon and he advised me about the Fox News and two or three Vitaphone acts but no features. I continually held over features from three to four days over initial days on contract, but each time I called the exchange and paid for the extra time. Mr. Groves commended me several times on the fact that I never held a feature unless paid for. I was very anxious to get this settled. After pleading and telling him I was absolutely innocent of the crime, he advised me he would settle for $485, |