FCC limited the number of distant signals carried by cable systems based on their location.

Cable television systems in the top 50 television markets were permitted to carry up to three distant, independent, non-network televison signals. They paid .799 percent of gross receipts as a royalty rate for the first signal, and .503 percent for each of the second and third signals.

Systems in markets 51-100 could carry two distant, independent television signals, paying .799 percent for the first signal and .503 percent for the second. Those systems in smaller markets, defined as any town with at least one television station that is not in the top 100 markets, were permitted only one independent, distant signal. They paid .799 percent of gross receipts for that signal.

In 1980, the FCC, after careful study, decided no justification existed for the distant signal restrictions and repealed them. When the FCC repealed the limits, the copyright tribunal began proceedings to determine an appropriate royalty rate for new distant signals.

The new rate set by the tribunal took effect March 15, 1983. It required 3.75 percent of gross receipts for each distant signal allowed under the old rule-a substantial hike from the old rates. Thus, the smallest systems would have to pay 3.75 percent of gross receipts for their second and third distant signals, while the largest systems could continue to bring in three signals at the old rate. The 3.75 percent rate would not apply for them until a fourth distant signal was brought in.

The royalty tribunal said the new rate was based on an assessment of what cable systems would have to pay for distant signals in a free market, in the absence of the copyright licensing scheme.

The new rate was immediately challenged by the National Cable Television Association (NCTA), which represents about 2,000 cable system owners.

The NCTA claimed that the tribunal acted improperly in raising the royalty rates so dramatically. However, the rate was upheld in a Dec. 30 decision of the U.S. Court of Appeals for the District of Columbia. The court said that Congress intended the tribunal to have wide latitude in setting royalty rates, and that there was no evidence to conclude that the tribunal had acted unreasonably.

Since the rate went into effect 11 months ago, cable companies and satellite common carriers, which provide signals to cable systems, have charged that the rate severely damaged their businesses because the cable systems cannot afford as many distant signals.

Rep. Sam B. Hall Jr., D-Texas, sponsor of a bill to ease the impact of the new rule, told Kastenmeier's subcommittee Oct. 19, 1983, that the tribunal's rule meant "immediate discontinuation of many distant broadcast signals by cable systems and a consequent wholesale loss of programming to the public.... This loss was particularly severe in rural areas," Hall said, "where diverse television service is needed but is all too often lacking."

Hall's bill (HR 3419) would provide exemptions from the tribunal's rate structure for broadcast stations such as WTBS in Atlanta that engage in national marketing and negotiate directly with copyright holders for use of their materials.

Rep. Mike Synar, D-Okla., has introduced a separate bill (HR 2902) that would permit all cable systems, regardless of market location, to carry at least three distant signals without having to pay the new 3.75 percent royalty rate. He said his bill presumed that systems would continue to pay royalty rates for the first three signals under the old formula.

In House subcommittee testimony Oct. 19, NCTA President Thomas E. Wheeler said NCTA research showed that 76 percent of those cable operators liable for the new copyright fees had had to drop one or more distant signals they had added after the FCC deregulation in 1980.

The Motion Picture Association applauded the new rate structure. Fritz Attaway, its counsel, said in an interview that the old rates were inadequate and amounted to a "subsidy" for cable systems. "For the first time, we received something approaching fair market value."

Cable and Canada

Still another cable issue involves the United States and its Canadian neighbors, an issue of particular concern to Sen. Patrick J. Leahy, D-Vt.

The problem, according to Leahy, is this: Canadian cable systems are able to pick up U.S. broadcast signals and retransmit them to Canadian viewers. However, the Canadian systems are not paying any compensation to U.S. copyright holders whose works are embodied in those signals, even though U.S. cable operators must pay Canadians for similar use of their copyrighted works.

Leahy has introduced a bill (S. 736) to address the problem. He calls it the "international copyright fairness bill," and although it would apply to any foreign country, it is primarily aimed at Canada. Leahy's measure would require that before royalties are disbursed to non-resident foreign nationals for cable retransmissions, the Copyright Royalty Tribunal must find that the claimant's country provides equivalent compensation to American copyright holders for use of their materials. If no such finding can be made, the tribunal would retain the claimant's fees.

"Canadians remain entitled to their fair share of cable copyright royalty fees," Leahy said when he introduced the bill last March. "However, a fair share must be fair to everyone. That is all we are asking of the Canadian government, a fair opportunity for Americans to be compensated for the use of their creative works."

Leahy's bill is pending in the Senate Judiciary copyright subcommittee, where a hearing was held on the measure Nov. 15, 1983.

Spokesmen for the Canadian Broadcasting Corporation and the Canadian Association of Broadcasters acknowledged there were problems to be worked out between the United States and Canada. However, both representatives and David Ladd, the U.S. register of copyrights, who also testified, expressed strong reservations about Leahy's proposal.

A Judiciary Committee staffer said privately that Leahy was really more interested in "getting the Canadians' attention" on the problem than passing the legislation.

Dirty dishes?

The problem of unauthorized use of copyrighted material surfaces in still another technological area-use of “dishes" and decoding devices set up in back yards or on rooftops to snag signals. This issue, according to Attaway, is often less a copyright issue than a matter of federal communications law.

When a person installs a receiving dish to bring in special programming, such as from pay television stations offering movies, he does not violate the copyright law unless there is a "public performance" of a program.

There is no public performance if the person simply views the program at his home, even if he invites friends over to watch. However, if a dish is installed at a bar or a fraternal lodge, and groups of people can watch it, this, according to case law, would be a "public performance" and in violation of the copyright laws.

The law is somewhat unclear in this area, Attaway said, because there is no clear definition of what is a "public performance."

Most often, according to Attaway, dish owners violate a section of the 1934 communications act that bars the unauthorized interception of broadcast or radio signals.

Enforcement of this law has been spotty, and virtually non-existent against an individual homeowner. Instead, the lawsuits initiated in the past few years have been brought by television services against the makers of signal decoders, which are necessary to unscramble the signals transmitted by some pay television services.

SECURITY/PRIVACY ISSUES

Copyright questions are only part of the problems raised by the new technology. Equally difficult issues concern the security of computer systems and the information each system contains.

The issues were succinctly stated last Oct. 24 by computer security specialist Willis H. Ware, a member of the corporate research staff of the Rand Corporation. Ware testified during one of three days of hearings on security questions before the Science and Technology Subcommittee on Transportation, Aviation and Materials, headed by Rep. Glickman.

"Computer security is of importance whether the information to be protected is personal in nature and therefore relative to privacy; whether it is defense in nature and therefore related to the security of the country; or whether it is sensitive in nature and therefore relevant to corporate welfare in the private sector," Ware said. "The important point to be noted is that a comprehensive set of security safeguards within and around a computer-based information system is an essential prerequisite for assuring personal privacy."

Computer security

The issue of computer security has been underscored in recent months because of reported instances in which so-called "hackers" have been able to break into government and private sector computer systems. One of the more notable episodes involved the "414" group, named for the telephone area code of young computer enthusiasts in Milwaukee, Wis. Over a period of time, these young men gained access

to about 60 computers, including systems at Memorial Sloan Kettering Cancer Center in New York City and the Los Alamos Laboratory, a government nuclear weapons research center in New Mexico.

Spokesmen for Los Alamos said the intruders did not gain access to classified or sensitive data. Sloan Kettering officials said the intruders threw administrative records into disarray but that no patients were harmed.

To help prevent such occurrences, members of Congress have introduced bills (S. 1733, H.R. 1092) to make unauthorized use of computers a federal crime. However, the bills have not been well received.

One Republican Senate Judiciary staffer who has studied the legislation said that as drafted, it sweeps too broadly. He said it could give the federal government jurisdiction over a wide range of activity that more properly should be left for state law enforcement.

Similar concerns were expressed by John Shattuck, head of the Washington office of the American Civil Liberties Union (ACLU).

Some representatives of private industry testified in support of computer crime legislation at the Science and Technology hearings. They said that such a law at minimum would make the public more aware of the computer crime problem.

Chairman Glickman said he does not expect legislation to come out of his panel in 1984, but he said the subcommittee will issue a report on the subject.

Determining just how much computer crime exists is difficult. In testimony Oct. 17 before Glickman's panel, Floyd I. Clarke, of the criminal investigative division of the FBI, said there was "no method in place now to observe the statistical dimensions of computer-related crime. . . . There is no one agency at this time that has jurisdiction for computer-related crimes and very probably there cannot be because of the wide application of computers."

Clarke said the FBI views a computer as an "instrumentality of some other form of traditional crime, for instance theft or larceny. It is much like a gun, a knife, or a forger's pen."

Several of those who testified said the government could help the private sector with security matters not by crime legislation but by establishing guidelines for adequate security.

Jack L. Hancock, a senior vice president of Wells Fargo Bank, suggested that an independent agency be created to certify that a security device or technique meets specified minimum requirements.

He also discussed what he called "computer ethics."

"It seems as though there is a feeling that attempting unauthorized access to a computer system is fun and games, particularly if nothing is lost or stolen," Hancock said. "This attitude needs to be changed, and schools that teach computer science must also teach the ethics and morals associated with computer use. Otherwise, we will have a very serious crime problem in the future."

At least one company seems to agree with Hancock's observation. On Jan. 20, IBM took out a large newspaper ad telling readers, "Everyone knows that the rules of the road have to be taken seriously. So do the rules for using a computer. Two of those rules are basic: Everyone who uses a computer has a responsibility for the security of the information in that machine. No one who uses a computer has the right to violate anyone else's security. Both the suppliers and computers, software and telecommunications have a responsibility to help ensure that such information systems are used conscientiously, and with the understanding that other people depend on these systems too."

Privacy matters

Concerns about personal privacy are as pervasive as concerns about computer security. What is at stake, according to the ACLU's Shattuck, is the ability to assure citizens that personal, and perhaps sensitive, information about them is kept private. "The technology has so far outstripped the protection of privacy that a great deal of new lawmaking is necessary," Shattuck said in an interview.

One example that Ware cited in his testimony is the use of electronic mail, the transfer of information by electronic device.

With such services "vast amounts of information about people" is transmitted, Ware said. The mere exchange of information relates addressee and sender, he noted, adding that "in principle, such information could be used to establish relationships among groups of people, such as organized groups or circles of acquaint

ances.

"Obviously such information could be of high interest to the law enforcement community, but the legal umbrella of protection over such information is confused and probably incomplete."

One area that worries Shattuck and many other privacy specialists is the current wiretap law. Under the present 1968 law, it is a federal felony for a third party to intercept the conversations of others by placing an electronic listening device or other "bug" on a telephone or in places such as an office.

An exception exists for federal, state and local law enforcement officers, who can use wiretaps for investigations so long as they have the approval of a specific prosecutor and have obtained a court order.

The law apparently does not apply to tapping into a computer, because the law defines the word "intercept" as the “aural acquisition" of information, and computer transmissions do not involve sounds.

One federal appeals court came to this conclusion, as did various privacy specialists and the General Accounting Office in a 1980 report.

This issue was discussed during a hearing Jan. 24 before Kastenmeier's subcommittee that dealt with the wiretap law generally.

The Rand Corporation's Ware suggested that Congress revise the 1968 wiretap law so that “it is the legal basis for protecting against unauthorized interception wherever it occurs." He cautioned against a "piecemeal" approach that only dealt with certain types of technology.

Although the privacy issue is complicated, Shattuck said it was important to remember that Congress already has dealt with some privacy matters. The 1974 Privacy Act, for example, bars the government's use of personal, private information collected for one purpose for a totally different purpose.

It also permits an individual access to personal information contained in federal agency files and to correct or amend the information. (1974 Almanac p. 292) "We're not writing on a clean slate,” he said. “The bottom line politically," Shattuck added, "is that all of these problems are quickly rising to the surface, but I don't believe the legislative solutions to them are going to be that quick."

[From Billboard, Nov. 12, 1983]

[Copyright Billboard, (1943), reprinted with permission]

COPYRIGHT AT THE CROSSROADS

By Jon Baumgarten

As early as 1945, Prof. Zachariah Chaffee described the relationship between copyright and technological innovation as follows:

"Copyright is the Cinderella of the law. Her rich older sisters, Franchises and Patents, long crowded her into the chimney coner. Suddenly the Fair Godmother, Invention, endowed her with mechanical and electrical devices as magical as the pumpkin coach and mice footmen. Now she whirls through the mad mazes of glamorous ball."

The magical devices noted by this scholar were motion pictures and radio. Since that time copyright has come face to face with over-the-air, cable, subscription and direct broadcast television; satellite, microwave and laser interconnection, network and delivery systems; photocopying and microform reproduction, further enhanced by electronic search capabilities; computer imput, manipulation, retrieval and transmission; vastly inproved means of audio and video recording; object code, bubble and optical/digital storage; software and firmware; etc.

Those of us fortunate to practice law on the cutting edge of copyright have to develop new vocabularies. Where we once spoke of paragraphs, scenes and lyrics, copying and paraphrasing, licenses and options, we now talk about bits, bytes and pixels, downloading, downlink intercepts, and reverse engineering, vertical blanking intervals, source code escrows, and beta testing.

Fascinating? Yes! But glamorous? I suggest that, from the viewpoint of copyright proprietors, the result has not altogether been one of glamor. To a greater extent, and increasingly so, the new technologies tend toward erosion of both copyright owners' rights and their abilities to control or secure compensation for the use of their works. Equally disturbing, these developments have contributed to popular, political, and in some cases even to judicial denial of the fundamental legitimacy of copyright.

Jan Baumgarten is a partner in the law firm of Paskus Gordon & Hyman, with offices in New York and Washington, D.C. He is a former general counsel of the U.S. Copyright Office.

The technological revolution clearly holds great promise, but whether the copyright system will survive the headlong rush to fulfill that promise or be trampled in a technocratic stampede deserves the most careful consideration. This concern goes well beyond the particular interests of individual copyright owners, for our system is based on the Constitutional premise that the public interest is best served by assuring economic incentive to creative effort.

This premise, I might add, has in the past proved itself manifold in the richness of this country's scientific, intellectual and artistic products and in the diversity of the channels of communication open for expresion of the most conventional-or heretical-of views.

Technology's impact on copyright owners undoubtedly takes several forms. It can be seen, for example, as having the beneficial effect of offering new or expanded market possibilities. But to stop there would be superficial, for it has other, troubling effects (on prior or more traditional markets, as well as on the reality of those newly made possible). Let me briefly catalog some.

It has made reproduction of copyrighted works a simple and relatively inexpensive task, moving even commercial piracy to within easy reach and mobility (e.g. record, tape, and computer software and chip piracy).

It has decentralized unauthorized duplication, generating forms of infringement that assume significance principally when it is recognized that they must be viewed on a cumulative or aggregate basis (e.g. photocopying, concert bottlegging, off-air recording).

It has changed the locus of infringement, moving it from public activity to private or semi-private contexts and raising practical problems of detection and enforcement, as well as concerns over intrusion (e.g., home audio and video recording, intra-corporate photocopying, program and data base appropriation).

It has distorted traditional roles played by publishers and consumers of copyrighted works. The consumer is now capable of serving as the publisher, creating copies as and when needed, on demand (e.g., photocopying, audio and video recording, software duplication).

It has created an enormous public appetite for immediate access to copyrighted works, one having little patience for the nicetices of property and contributing to resurrection of the old misguided shibboleths of copyright (e.g., as a "monopoly" or "obstacle" to dissemination) as well as to new ones (e.g., equating "public air waves" with "public domain," and creating a false dichotomy between the "private" interests of authors and publishers and a higher "public" good).

For copyright to survive, a number of steps must be taken, including education as to the values of the copyright system and the dignity of intangible property; copyright owners' own reexamination of existing permissions and and marketing systems; litigation, where necessary; and innovative legislation. The latter may be particularly important, but practically quite difficult because of perceived political problems in causing alleged consumer "deprivations."

One of our problems is that the very speed of technology means that copyright owners are often playing catch-up, seeking relief after the public has become accustomed to appropriating the intellectual property of others for free, an attitude that is not easily countered.

Yet, if copyright is to continue to serve the interests of both creators and society, our legislators must accept the recent admonition of Sen. Charles Mathias, chairman of the copyright subcommittee of the Senate Judiciary Committee, that:

"Failing to protect (rights of copyright owners) is not excused by the fact that new technologies have made the protection of those rights more difficult. The very ingenuity of our age that has produced these remarkable technologies should be able to devise the laws to accommodate them."

I must concede, of course, that my conclusion to this point rests on an assumption-namely, that copyright should survive. This is an assumption that has, on occasion in the past and more often of late, been questioned. Technology, we are told by some, will make copyright obsolete.

I do not accept this assertion. Some specifics of copyright law may change-some may have to change-but the basic principles of copyright, the dignity of creations of the intellect as well as of physical labor and the encouragement of creative effort through economic reward will, I think, bear retention.

The alternatives are not acceptable: a diminishing of creative commitment and investment; a minimizing of alternative, even beneficially redundant, channels for expression; and the substitution of some institutional, central or official authority in the process of creation, selection and publication.