a. In general___ E. Exemption of certain performances and exhibitions-Cont. 6. Secondary uses of transmissions b. Retransmission to the public; community antennas and other systems. Page 40 40 40 G. Reproduction of pictorial, graphic, and sculptural works in useful articles.. H. Rights in sound recordings. 1. General observations_ 2. Developments since 1961___ 3. Limited scope of exclusive rights. I. Compulsory license for making and distributing phonorecords of musical works. 1. In general. - 2. Availability and scope of compulsory license_ 3. Notice of intention to obtain compulsory license. 4. Royalty payable under compulsory license. 47 49 49 49 50 53 53 54 55 56 56 56 c. Accounting and payment of royalties__- 58 59 J. Public performance by coin-operated machines___ 59 b. Basis and rate of royalty. Chapter 2 EXCLUSIVE RIGHTS UNDER COPYRIGHT A. BASIC APPROACH OF THE BILL It is hard to predict which provisions of the bill will ultimately be most significant in the development of the copyright law, but on the basis of our discussions there is no question as to which group of sections is most important to the interests immediately affected. The nine sections setting forth the scope and limitations on the exclusive rights of copyright owners represent a whole series of direct points of conflict between authors and their successors on the one side, and users, both commercial and noncommercial, on the other. Moreover, of the many problems dealt with in the bill, those covered by the exclusive rights sections are most affected by advancing technology in all fields of communications, including a number of future developments that can only be speculated about. It is not surprising, therefore, that these sections proved extremely controversial and difficult to draft. In a narrow view, all of the author's exclusive rights translate into money: whether he should be paid for a particular use or whether it should be free. But it would be a serious mistake to think of these issues solely in terms of who has to pay and how much. The basic legislative problem is to insure that the copyright law provides the necessary monetary incentive to write, produce, publish, and disseminate creative works, while at the same time guarding against the danger that these works will not be disseminated and used as fully as they should because of copyright restrictions. The problem of balancing existing interests is delicate enough, but the bill must do something even more difficult. It must try to foresee and take account of changes in the forms of use and the relative importance of the competing interests in the years to come, and it must attempt to balance them fairly in a way that carries out the basic constitutional purpose of the copyright law. Obviously no one can foresee accurately and in detail the evolving patterns in the ways author's works will reach the public 10, 20, or 50 years from now. Lacking that kind of foresight, the bill should, we believe, adopt a general approach aimed at providing compensation to the author for future as well as present uses of his work that materially affect the value of his copyright. As shown by the jukebox exemption in the present law, a particular use which may seem to have little or no economic impact on the author's rights today can assume tremendous importance in times to come. A real danger to be guarded against is that of confining the scope of an author's rights on the basis of the present technology so that, as the years go by, his copyright loses much of its value because of unforeseen technical advances. For these reasons, we believe that the author's rights should be stated in the statute in broad terms, and that the specific limitations on them should not go any further than is shown to be necessary in the public interest. In our opinion it is generally true, as the authors and other copyright owners argue, that if an exclusive right exists under the statute a reasonable bargain for its use will be reached; copyright owners do not seek to price themselves out of a market. But if the right is denied by the statute, the result in many cases would simply be a free ride at the author's expense. We are entirely sympathetic with the aims of nonprofit users, such as teachers, librarians, and educational broadcasters, who seek to advance learning and culture by bringing the works of authors to students, scholars, and the general public. Their use of new devices for this purpose should be encouraged. It has already become clear, however, that the unrestrained use of photocopying, recording, and other devices for the reproduction of authors' works, going far beyond the recognized limits of "fair use," may severely curtail the copyright owner's market for copies of his work. Likewise, it is becoming increasingly apparent that the transmission of works by nonprofit broadcasting, linked computers, and other new media of communication, may soon be among the most important means of disseminating them, and will be capable of reaching vast audiences. Even when these new media are not operated for profit, they may be expected to displace the demand for authors' works by other users from whom copyright owners derive compensation. Reasonable adjustments between the legitimate interests of copyright owners and those of certain nonprofit users are no doubt necessary, but we believe the day is past when any particular use of works should be exempted for the sole reason that it is "not for profit." As possible methods of solving the practical difficulties of clearance with respect to both commercial and noncommercial uses, various suggestions have been advanced for voluntary clearinghouses or for systems of compulsory licensing under the statute. All of these suggestions deserve consideration, but we are inclined to doubt the present need to impose a statutory licensing system upon the exercise of any of these rights. We believe that the work already in progress toward developing a clearinghouse to license photocopying offers the basis for a workable solution of that problem, and, if found necessary, could be expanded to cover other uses. B. COPYRIGHT OWNER'S EXCLUSIVE RIGHTS IN GENERAL 1. GENERAL SCOPE OF COPYRIGHT In very general terms the 1961 Report recommended that, "[s]ubject to certain limitations and exceptions. the statute should continue to accord to copyright owners the exclusive rights to exploit their works by (1) making and publishing copies, (2) making other versions, (3) giving public performances, and (4) making records of the work," and that the language of the provision setting forth these rights be simpler and clearer than that used in the present law. Section 106(a) of the bill follows all of these recommendations, and also specifies a fifth exclusive right—that of public exhibition-not now explicitly recognized in the statute: Subject to sections 107 through 114, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: (1) To reproduce the copyrighted work in copies or phonorecords; (2) To prepare derivative works based upon the copyrighted work; (3) To distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) In the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures, to perform the copyrighted work publicly; (5) In the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, to exhibit the copyrighted work publicly. Copyright has often been called a bundle of rights, and the five clauses of section 106 (a) represent a general statement of what that bundle would consist of under the bill. These rights are cumulative and to some extent overlapping: for example, the preparation of a derivative work would usually also involve its reproduction, and hence the reproduction of the basic work, in copies or phonorecords. The rights as stated may also be subdivided without limitation, and each of the subdivided rights may be owned and enforced separately, as explained further in chapter 3. It is vital to an understanding of the bill to note that all of the exclusive rights specified in section 106 are "[s]ubject to sections 107 through 114," and to realize that all of these sections provide limitations, qualifications, or outright exceptions with respect to the copyright owner's exclusive rights. Section 106 is intended to mark out the perimeter of copyright in broad terms, and the remaining sections in the chapter are intended to define its scope in particular situations and for particular kinds of works. Thus, for example, section 106 (a) (3) gives the copyright owner the exclusive right to lend copies of his work, but section 108(a) makes clear that, when a library has acquired ownership of a copy, it would be free to lend that copy without any obligation to the copyright owner. Every provision of section 106(a) must be read in conjunction with the provisions of sections 107 through 114 in order to determine the scope of the exclusive rights under a copyright in a particular case. Under the language of section 106 a copyright owner "has the exclusive rights to do and to authorize" any of the activities specified in the five numbered clauses of subsection (a). The right "to do" something is probably broad enough to include the right "to authorize" that the thing be done, but we have added the phrase "and to authorize" in order to avoid possible questions as to the liability of contributory infringers. One example cited was of a person who legally acquires an authorized print of a copyrighted motion picture but who then engages in the business of renting it to others for purposes of unauthorized public performance. There should be no doubt that this kind of activity constitutes infringement. 2. RIGHTS OF REPRODUCTION, PREPARATION OF DERIVATIVE WORKS, AND PUBLICATION a. In General The rights covered by the first three clauses of section 106(a) encompass all of the author's rights except those of performance and exhibition, and are known very generally today as "reproduction," "recording," "adaptation," and "publishing" rights. They are, of course, closely interrelated, since typically a publisher must "reproduce" copies in order to "distribute" them, and in the process he may prepare a "derivative work" as well. On the other hand these rights are not interdependent: a distributor of copies may be an infringer even if he had no connection with their reproduction, a person may infringe by preparing a derivative work even if he reproduces no copies, and the mere duplication of a copy may constitute an infringement even if it is never distributed. Note in this connection that although clauses (1) and (3) refer to "copies or phonorecords," the use of the plural here, as elsewhere, is intended to include the singular. One of the principal issues in the entire dispute over educational and scholarly use of copyrighted material involves the extent to which reproduction of copies and records of copyrighted works, and their distribution to students and library users, should be permitted. Since this is essentially a question of the scope of "fair use," we shall defer our discussion of it until later in this chapter. b. Reproduction As noted in chapter 1, "copies" and "phonorecords" together are intended to comprehend all forms of material objects in which copyrightable works are capable of being fixed. Thus, the right "to reproduce the copyrighted work in copies or phonorecords" means the right |