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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 pro prietors 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 copy. right 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, 1911 (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 backgrcund music use without the express consent of the copyright owner. The

copyright owner could charge any sum he wishes for a license, or even deny the license altogether. This would put the background music manufacturer at the mercy of the copyright proprietors who could discriminate from one manufacturer to another and possibly drive one or another out of business, or prevent a potential manufacturer from entering it.

We can see no justification for this discriminatory language.

In order to prevent such discrimination, we propose that the second sentence of section 113(a) (1) be eliminated or at least amended to read as follows:

A person may obtain a compulsory license only if his primary purpose in making the particular phonorecords is to distribute them to the public for private home use, or to provide background music in places other than private homes.

In the hearings before this subcommittee it was argued that the exception to compulsory licensing was necessary because tape recordings cannot be traced. But our tape recordings for background music can readily be traced. We should not be penalized because of abuses with respect to other tape recordings, and we object to a shotgun approach.

We appreciate the opportunity of appearing before your committee and we wish to commend you all for the many hours of hearings you have conducted, and for the thorough study you are giving the copyright proposals.

Thank you.

Mr. St. Onge. Thank you very much, Mr. Dwan, for your very explicit statement on the two points that you discuss.

First of all, let's talk about fair use for a moment, which doesn't appear at all in the present statute. Is that right? Mr. Dwan. It is not defined, sir.

Mr. St. ONGE. But there are a number of court cases which have attempted to define it in particular instances ?

Mr. Dwan. There are some; yes.

Mr. St. Onge. The language that you propose in your statement on page 2, adding a sentence to the proposed section 107, would allow someone using one of your machines to go to the library, take out a book and reproduce the entire book without fear of suit by the copyright owner. Am I right?

Mr. Dwan. I think I would like to ask Mr. Lauder to answer that question.

Mr. LAUDER. Yes, sir; this amendment would permit that, which we think the present law permits, too, as long as he uses it for his own use and does not publish it.

Mr. Sr. ONGE. Would the same thing apply to a teacher?
Mr. LAUDER. Yes, sir.
Mr. Sr. ONGE. He would reproduce a whole book?
Mr. LAUDER. For their own use and not for publication; yes, sir.

Mr. St. Onge. Would the teacher be allowed to use it in classroom work?

Mr. LAUDER. That is an open question, sir; whether that is a publication or not. Mr. St. ONGE. What would you say?

Mr. LAUDER. I would say it would be permissible. It is done today and nobody ever sues anybody for it, so everybody assumes it is all right, and I think under present law it would be held to be all right. Mr. St. ONGE. As I recall the testimony of some of the educators who have been before us, some of them have requested guidelines in the definition of fair use to be added to the present section 107, but I don't recall many who asked for the reproduction of a complete work.

I think this is probably going as far as anyone has gone before in the testimony that we have heard.

Mr. Dwan, it would be your position, then, that the present law allows such a practice today?

Mr. Dwan. I wouldn't go so far as to say reproduction of a whole book.

Mr. Herzog. I don't think that we in the copy business feel that it should be allowed to reproduce the whole book for the classroom, but economically, if we are talking about copying machines, it wouldn't be feasible to do so when you consider the cost of each page at approxi. mately 5 cents. You could buy the book a lot cheaper than you could reproduce it.

So the limiting factor today, when you are talking about copying processes, is the economic factor, not whether or not they choose to do it.

Mr. Sr. Onge. I think I would tend to agree with you today, but in 10 years from now I am sure 3-M will have a copying machine that will make reproduction economically feasible.

Wouldn't you agree with that statement?

Mr. HIERZOG. I am sure the publishers will also have printing processes that will do that much cheaper, so I guess the ratio will still hold.

Mr. St. ONGE. Mr. Dwan, you make the point that the public is now using copying machines and the copyright owners have acquiesced in that practice because there have been no lawsuits involved, but isn't it true that extensive use of copying machines is something relatively new ?

Mr. Dwan. Mr. Herzog can answer that one.

Mr. HERZOG. It is not that new. It is now in the neighborhood of extensive use, I guess, extending back about 15 years, certainly within the last 10 years the numbers measured in the hundreds of thousands. So a 10-year period would not, in my opinion, be considered very new.

Mr. ST. ONGE. But there has been a tremendous increase in recent years in the production and sale of copying machines.

Mr. HERZOG. Yes.

Mr. St. ONGE. Mr. Dwan, you refer to a number of cases on unfair use, but you don't cite them. Would it be too much to ask you to give us some citations, not now, but to submit them to the committee? Mr. DWAN. I will be glad to do that, Mr. Chairman. (Subsequently, Mr. Dwan submitted the following:)

SHARP, SOLTER & HUTCHISON,

Washington, D.C., September 3, 1965. Re copyright bill (H.R. 4347). Mr. HIERBERT FUCHS, Counsel, Subcommittee No.3, House Judiciary Committee, Washington, D.C.

DEAR MR. FUCHS: In connection with my testimony on August 4, 1965, representing Minnesota Mining & Manufacturing Co., we undertook to provide the subcommittee with a list of cases on "fair use.” Such a list is respectfully submitted herewith in the hope that it will be helpful to the subcommittee.

It is of considerable interest that in the fourth case listed the judgment was affirmed per curiam in the Supreme Court by an equally divided court. Columbia Broadcasting System v. Loew's, Inc., (1958) 356 U.S. 43, 2 L. Ed. 2d 583). In an

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