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motion picture registered for $4, for example?" Our purpose here was to standardize the fee across the board.

Mr. TENZER. For example, your proposed increase for the entire catalog under H.R. 2853 over the price of 1948 is a 200-percent increase, whereas, in the renewal fee there is only a 100-percent increase. Mr. CARY. The main reason for increasing the cost of the catalog to that extent is that printing costs have shot up almost sky high. Mr. TENZER. In addition to the overall cost of the salary increases? Mr. CARY. That is quite right.

Mr. TENZER. Thank you, Mr. Cary.

Mr. ST. ONGE. Mr. Poff?

Mr. POFF. Mr. Cary, I have just been reviewing section 708 of H.R. 4347. I find in subparagraph (5) the following

for the filing, under section 113(b), of a notice of intention to make phonorecords, $3.

I don't find elsewhere in section 708 any language about a notice of intention to use.

Mr. CARY. I don't have the bill before me, but my recollection is that the notice of use is done away with in the new bill.

Mr. POFF. Do you mean in the Steed bill?

Mr. CARY. No, in H.R. 4347. You see, we are not in the present bill, H.R. 2853, trying to revise any of our procedures. We are merely upping the fees that currently exist under the present law.

Mr. PoFF. The present, current law has a fee for recordation of a notice of use, but it has no fee for the recordation of a notice of intention to use.

Mr. CARY. That is right.

Mr. POFF. In other words, the purpose would be, under the new law, to require such a fee, as I understand it.

Mr. CARY. May I state it this way: the present law provides for the notice of use and the notice of intention to use. But for some unknown reason, only a fee for the filing of the notice of use was prescribed.

What we are proposing to do is to add a fee for the recordation of the notice of intention to use, making it on a par with the fee for recordation of the notice of use.

Mr. POFF. Your purpose would be effectuated in H.R. 2853. Your purpose would not be effectuated in section 708 of H.R. 4347.

Mr. CARY. It is because the procedures in H.R. 4347 have been somewhat modified to the extent that that would not be necessary.

Mr. POFF. Suppose we adopt the Steed bill now and later adopt H.R. 4347?

Mr. CARY. That would be perfectly all right. There would be no conflict there. If you adopt H.R. 4347, and I certainly hope you do, you will set up a new procedure, and you will not necessarily need the fees that I am referring to here.

Mr. PoFF. We will not need a fee for the recordation of a notice of use?

Mr. CARY. That is right; yes, sir. There will be a fee only for the recordation of a notice of intention to make phonorecords, to which you just referred.

Mr. POFF. That is all.

Mr. ST. ONGE. Are there any further questions?

If not, thank you, Mr. Cary.

Our next witness will be Ralph H. Dwan, representing the Minnesota Mining & Manufacturing Co.

STATEMENT OF RALPH H. DWAN, ON BEHALF OF MINNESOTA MINING & MANUFACTURING CO.; ACCOMPANIED BY RAYMOND H. HERZOG AND CHARLES LAUDER

Mr. DWAN. Mr. Chairman and members of the committee, my name is Ralph H. Dwan, and I am an attorney in Washington, D.C., representing the Minnesota Mining & Manufacturing Co., of St. Paul, Minn., sometimes known as the 3-M Co.

I would like at this point to introduce on my right Mr. R. H. Herzog, vice president of the company, and on my left Mr. C. H. Lauder, a St. Paul lawyer who advises the company on patents, copyrights, and trademarks,

The company is a manufacturer of photocopying equipment and supplies, as well as magnetic recording equipment and supplies, along with many other products.

We come before you today urging that section 107 and section 113 of H.R. 4347 be revised. Because of various types of manufacturing, we find wide application of H.R. 4347 to our company's operation. We will first confine our comments to section 107. We feel that this section is inadequate in failing to indicate the scope of the principle of fair use. While it might not be possible to specify in that section every use which could qualify as a fair use, we believe that practices which are now considered fair use should be stated in that section, in order to provide some guidance for the consideration of individual cases.

It is noteworthy that, after devoting at least 2 of the 35 studies on copyright law revision to the photocopying of copyright works, the Register is unable to decide upon the amount of photocopying which constitutes a fair use of a copyrighted work. In the remarks to this committee by Mr. George D. Cary, the able Deputy Register of Copyrights, on May 26, 1965, it was recognized that at least some photocopying of copyrighted works is a fair use under the present law, and it was his opinion that the enactment of H.R. 4347 would not make any change from the present law. However, no one has ever been even charged with infringement of copyright under the present law by use of a photocopying machine in making copies of a copyrighted work, so there can be no assurance as to the outcome in court of any action brought under either the present law or the proposed bill. It seems inconsistent to ask a court to decide a question in litigation which the Register of Copyrights could not decide, even with the benefit of all of the materials and persons which were assembled in connection with the drafting of H.R. 4347.

While the copyright law revision studies would undoubtedly be useful in the presentation of arguments to a district judge in a lawsuit, if H.R. 4347 was enacted with section 107 in its present form, those materials will support just about any argument which both sides would want to make, and it would be impossible for anyone to determine the correct legislative intent as to the scope of fair use without a clear

statement of it. Since the words "fair use" do not mention photocopying, and photocopying has never been held to be a fair use, the only way the legislative intent to include it can be clearly stated is in section 107 itself. We recommend that the following sentence be added to that section:

Fair use shall include the right to reproduce the copyrighted work for personal or private use but not for sale.

We believe that the above amendment is absolutely necessary in order to protect the public from harassment by copyright owners if H.R. 4347 was enacted into law in its present form. Thousands and thousands of people have purchased copying machines and copy paper and have long used that equipment to make copies of copyright materials for their own use. Since no legal action has ever been brought against anyone for engaging in that practice, the public has a right to believe that the practice is perfectly lawful, and copyright owners have acquiesced in that right. We submit that the enactment of H.R. 4347 with section 107 in its present form could be to provide copyright owners with arguments for extinguishing that right which the public now has, and such an enactment could hardly be said to be in the public interest.

Similarly, thousands of people own magnetic tape recorders which they use to record music off the air, either from AM or FM radio stations and/or television stations. Some FM radio stations broadcast on two bands simultaneously, in order to facilitate the taping of music by persons in their own home and for their own use. Insofar as we are aware, no action for copyright infringement has ever been brought against any of the persons who tape music off the air for their own use, and no attempt has ever been made to stop that practice. Therefore, the public has a right to believe that there is nothing unlawful about what they are doing, and the copyright owners have acquiesced in that right. The enactment of H.R. 4347 might, however, provide copyright owners with arguments for stopping that practice in lawsuits for the recovery of the minimum amount of $100 for each song. Only then would the public become aware of the fact that Congress has left open such an important matter.

The proponents of H.R. 4347 have said that the enactment of that bill into law with section 107 in its present form would not make any change in the principle of fair use as it would be applied today, but we submit that this is not true. The protection afforded by the present Copyright Act is based upon publication, with no protection given by it to unpublished works. The unpublished works are protectable today by theories of common law copyright or unfair competition and not by the statute. Under H.R. 4347, however, the philosophy of protection would be changed to become based upon creation, rather than publication, and unpublished works would be subject to statutory protection. Also, the copyrightable works would be protected from reproduction, rather than from publication. Although this difference in the philosophy behind the present act and H.R. 4347 might be a little difficult to discern, the effect of that difference could be to make quite a change in the application of the principle of fair use.

The cases which have been decided under the present law on the principle of fair use have been concerned primarily with fringe

uses by competitors of the copyright owner. Those persons have not been charged with making only a copy of the copyrighted work for their own personal or private use, but, instead, they have published part of the copyrighted work in another work and they have sold it. Since those persons are competitors of the copyright owner, plaintiff in the lawsuit, the courts have had some evidence by which to determine the effect of such a use on the copyrighted work. However, copyright owners have refrained from bringing lawsuits under the present law against persons who make copies for their personal or private use but not for sale, because the courts would find the defendant is not a competitor, so they would probably not apply the same standards as have been developed in connection with suits against competitors, and the copyright owner would not be successful. Therefore, the copyright owners apparently have decided to attempt to change the philosophy of the law in order to compel the courts to treat persons who make copies for their own private or personal use and not for sale in the same manner and by the same standards as the competitors of the copyright owner are now treated. That seems inconsistent with statements to this committee that there would be no change in the application of the principle of fair use.

Thus, it appears that the standards as to fair use for persons who make copies for their personal or private use will be changed if H.R. 4347 is enacted with section 107 in its present form and without the amendment we have suggested.

The inclusion of that amendment is the only way of which we are aware in which the doctrine of fair use will remain as it is with respect to private or personal copying which is being done at the present time. The people who are making these copies are our customers, and we can't believe that it is in the public interest to change the law and make them defendants in lawsuits brought by a publisher and require that they defend on the basis of the standards applicable to a competitive publisher. Those people are also the customers of the publisher, and their private use of property by making copies which are not for sale, does not compete with the publication by the copyright owner. Public policy should favor the use of the information contained in a copyrighted publication, after the publication has been published and purchased, and anything which inhibits such use should be considered as being contrary to the public interest.

In the "Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law," in July of 1961, it was recommended that the new statute should include a provision affirming the doctrine of fair use and indicating the scope of that principle. That recommendation was followed in the bill which was introduced in 1964, (H.R. 11947, 88th Cong., 2d sess.), but the recommendation as to the scope of fair use was not followed in H.R. 4347. Although we cannot be sure of the reason for failing to follow that recommendation in drafting the present bill, we believe that the failure to indicate the scope of the principle of fair use is contrary to the public interest. We submit that the public interest is better served by the present Copyright Act than it would be by the passage of H.R. 4347 without the amendment which we recommend.

I now come to section 113, our second point.

Section 113 applies to a different department of our company. During the past few years, Minnesota Mining & Manufacturing Co., has developed a new type of commercial background music system. This system includes playing equipment and magnetic tape music libraries. This equipment and music will be sold outright rather than leased and will soon be on the market. We believe that the economic advantage to the user of being able to purchase rather than lease a background music system will make it possible, for the first time, for the very small commercial establishments to have a background music service. Our concern is with the language of section 113 of H.R. 4347, specifically, the second sentence of clause (a) (1), which deals with the right of a person to obtain a compulsory mechanical license.

The "Supplementary Report of the Register of Copyrights of the General Revision of the U.S. Copyright Law, May 1965," (Copyright Law Revision," pt. 6) at page 54, last paragraph, reads as follows, with reference to section 113:

The second sentence of clause (1) provides: "A person may obtain a compulsory license only if his primary purpose in making phonorecords is to distribute them to the public for private use." Thus, no compulsory license would be valid unless the licensee's "primary purpose" is to distribute records for ordinary use in private homes. The validity of a compulsory license would not be affected because some of the records are sold to broadcasters, jukebox operators, etc., but the provision would not apply, for example, to reproduction in a motion picture sound track or recording primarily for use in broadcasts, wired music transmissions, or jukeboxes. To make this distinction clearer, consideration might be given to adopting suggestions that the last part of the sentence be amended to read: "only if his primary purpose in making the particular phonorecords is to distribute them to the public for private home use."

This explanation by the Register in no way justifies the inclusion of a special exception to the compulsory license. In our opinion, the exception is discriminatory against manufacturers of background music equipment and recordings.

The law is well settled that when music is performed publicly for profit, a fee is due to the copyright proprietors. Similarly, when phonorecords are manufactured, a fee is due to the copyright proprietors as well. However, it is only the first recording for which more than the statutory license fee can be charged. Subsequent to the first recording, the compulsory license fee, with a statutory ceiling of 2 cents (a fee which is increased under H.R. 4347 to 3 cents for the benefit of copyright proprietors), can be imposed.

In the past, the compulsory license provision in the law has prevented the abuse of the mechanical licensing privilege of the copyright proprietors, but it took the Department of Justice and three consent decrees to curb the abuses of the performing rights societies in exercising their exclusive right to license the public performance of music. (Original consent decree Mar. 4, 1941 (CCH 1940-1943 Trade Cases, par. 56,104). Amended by consent decree-Mar. 14, 1950 (CCH 1950-1951 Trade Cases, par. 62,595). Further amended by consent decree Jan. 7, 1960 (CCH 1960 Trade Cases, par. 69,612).) Now the proposed bill, and particularly the language of the second sentence of section 113 (a) (1), will create a third class of rights. These rights can be exercised in such a manner that no background music manufacturer can have the right to record music for background music use without the express consent of the copyright owner.

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