competitive with the market which the copyright owner might reasonably expect?

Mr. DwAN. We can't be sure of that.

Mr. LAUDER. They might apply that test, Mr. Poff. I think first of all the private user would defend on the basis that what he did was not a publication, and has never been covered by the copyright law, and only secondarily would he rely upon the fair use doctrine, that what he did would be fair use as long as he didn't publish, I would think. But it is hard to say what the courts would say.

Mr. POFF. That is all I have on this part of his testimony, Mr. Chairman. I will have questions on the other section later.

Mr. ST. ONGE. Mr. Edwards?

Mr. EDWARDS. Mr. Dwan, do you think that under your amendment the following would be a violation of the copyright, where a citizen takes a Walter Lippmann column and makes 550 copies on one of your machines and sends one to each Member of Congress?

Mr. DwAN. If he sends them gratuitously, I think that would be within our proposal.

Mr. LAUDER. He is not competing with Walter Lippmann at all. Mr. EDWARDS. I would point out that it would cost $27.50 at 5 cents a page, but if he had to buy the New York Times on the west coast it would cost $110.

Mr. LAUDER. If he can find that many copies on the west coast.

Mr. EDWARDS. Yes. So it would be a loss to the newspaper, to the publisher; is that correct?

Mr. LAUDER. It is possible, a minimal loss.

Mr. HERZOG. I think our comment on that is that usually this is done only when you cannot get the original publication. Actually, the problem to the publishers, as we understand it, and to ourselves, who do some publishing, is when someone asks for yesterday's newspaper, it is impossible to get, and they wouldn't make a special run to serve all Members of the Congress this particular copy.

Actually, it would cost them more than the cost of the paper. So it has never been an economical thing to serve the public in that way.

Mr. EDWARDS. Would it be a violation if the head of a high school glee club consisting of 50 members would take one copy of sheet music and make 50 copies on one of your machines and pass them out to the members of the glee club instead of buying 50 copies?

Mr. HERZOG. We think in a way it would, but it is actually being done today and, again, it is the fact that the local music store has only one copy, so there is no other way to supply the orchestra or chorus with these copies, and that is why it is done.

Mr. EDWARDS. That is all, Mr. Chairman. Thank you.

Mr. ST. ONGE. Mr. Tenzer.

Mr. TENZER. I understand, Mr. Chairman, you want us to confine the questioning at this time to the testimony relating to section 107. Mr. ST. ONGE. I think it might be helpful.

Mr. TENZER. Mr. Dwan, on the first page of your statement you suggest, and I quote you:

We believe that practices which are now considered fair use should be stated in that section in order to provide some guidance for consideration of individual

cases.

Have you given consideration to how lengthy the listing or enumeration of practices would be in order to include all which might be considered in "fair use?"

Mr. DWAN. I think Mr. Herzog has some thoughts on that.

Mr. HERZOG. We have been part of these ad hoc committees, and so on, in trying to define this, and the uses are so vast and so limitless that I don't know that anybody would be genius enough to define all the uses that are presently being made.

Mr. TENZER. Then you agree it would be a rather lengthy list?
Mr. HERZOG. Very extensive.

Mr. TENZER. To repeat the question, in your statement you say, “We believe that practices which are now considered fair use should be stated in that section." Is that what you are suggesting?

Mr. HERZOG. I think our suggestion is to cover this in a broad sense rather than listing them individually.

Mr. TENZER. Have you drafted such a provision which you think would enumerate in a broad sense the practices now considered fair use?

Mr. HERZOG. I think our attempt is when we say "personal or private use" it would cover almost all of the uses that are presently being made of these copying devices.

Mr. TENZER. În other words, your opinion is that by the use of the two terms, "private use" and "personal use," you have included all of the present practices which are considered in fair use?

Mr. HERZOG. We think so.

Mr. TENZER. Is that correct, Mr. Dwan; is that your position?

Mr. DWAN. Yes, sir.

Mr. TENZER. Are there possibly any practices which have been considered as fair use in cases which have been through the courts which would not come under the heading of "private" or "personal use”? Mr. LAUDER. Yes, there are.

Mr. TENZER. Could you suggest some of them?

Mr. LAUDER. A lot of them involve parodies of various works, or taking a piece of a work and including it in another work. That is where most of the cases of fair use are. They are in published works which include a little bit of the copyrighted work in which the court has said it is a fair use and not an infringement because it is not a substantial use. All of the cases, as far as I am aware, are in that area.

Mr. TENZER. Then in cases instituted after passage of a law including an amendment such as you propose, we would still require court action to determine whether a particular instance was fair use or not fair use; isn't that correct?

Mr. LAUDER. As long as there was a publishing, yes, sir. It would involve the same law there is today. It would involve a court decision as to whether the particular published use was a fair use or not.

Mr. TENZER. Then perhaps Mr. Dwan could explain the statement on page 2 in which he says:

It seems inconsistent to ask the court to decide a question in litigation which the Register of Copyrights could not decide.

What do you mean by that?

Mr. DWAN. We feel that the Register had all these witnesses and all this testimony, and he ought to be able to give the court some guidance.

Mr. TENZER. The Register of Copyrights is not supposed to perform a judicial function.

Mr. DwAN. I mean suggesting to the committee legislative proposals which would give the courts guidance.

Mr. TENZER. What troubled me, sir, is the use of the term "inconsistent" when you suggest that it is inconsistent to ask a court to make a decision on a problem which the head of an administrative agency has not been able to decide. Isn't that the function of the court?

Mr. DwAN. I think what we really meant was the head of the administrative agency making suggestions to the Congress to define the thing more fully.

Mr. TENZER. But you don't want to take away the right of the court to make a final determination in any case not covered by the statute or by the regulations of an administrative agency?

Mr. DwAN. As one lawyer to another, no, sir; I do not.

Mr. TENZER. I will reserve my other questions, Mr. Chairman, until we get to 113.

Mr. ST. ONGE. We are running late, so I shall be very brief in my questions on the second section of your statement, Mr. Dwan.

As I understand your statement, the 3-M Co. has prepared some new equipment and is proposing to sell the equipment and magnetic tape music libraries with no leasing involved, and you feel that no license fee should be paid for the use of that equipment even though it is to be used for the playing of music in public places by the owner? Mr. DWAN. Mr. Chairman, we propose that we pay the regular 2

cents or 3 cents.

Mr. ST. ONGE. For the record?

Mr. DWAN. The mechanical license.

Mr. HERZOG. Actually, the problem is not related to the payment. Actually, our being able to police the payment on both the performance fees and the mechanical fees is not in question. We are not arguing that. We believe they have a right to that.

Mr. ST. ONGE. But wouldn't the effect of the amendment proposed on page 8 of Mr. Dwan's statement be to exempt Muzak from paying the fee that it now has to pay?

Mr. HERZOG. No, not at all.

Mr. DwAN. We are perfectly willing to pay the regular fee. We just don't want to be excluded from the privilege of paying that fee. Mr. ST. ONGE. Mr. Poff?

Mr. POFF. I will be brief, too, Mr. Chairman.

This is not precisely the point, but it may help to give us some insight into your reasoning.

How do you feel, if you have an attitude, about the so-called jukebox controversy?

Mr. DWAN. Mr. Poff, we would like to stay out of that one.

Mr. POFF. That is all I will ask, Mr. Chairman.

Mr. ST. ONGE. Mr. Tenzer?

Mr. TENZER. Mr. Dwan, on page 6 of your testimony, would you attempt to define for us the term which you use, "very small commercial establishments" on the last line of the first full paragraph? Mr. DwAN. Mr. Herzog will answer that.

Mr. HERZOG. Actually, because of the present use of background music, the lease fee and the payments of mechanical and performance

fees, the average lease per month fee, which is the only present means of obtaining background music, is relatively high.

We think that a unit in which we can incorporate this in a for-sale unit that a person can own, would broaden the use of music, so that in a sense we are increasing the fees that these societies get by doing this.

Mr. TENZER. I appreciate the statement, but I suggest that it is not responsive to the question. I am looking for a definition of what you consider to be a "very small commercial establishment."

Mr. HERZOG. A barber shop, a beauty shop, which historically have used radios for this application because of the cost of leased music. Mr. TENZER. Have you considered, for example, the size of some beauty shops? Have you seen any with 100 seats and 100 operators? Is that a small shop?

Mr. HERZOG. No, that is a big shop.

Mr. TENZER. Where would you draw the line of demarcation? Would you define it by the number of persons permanently employed in the shop, the size of the business, the dollar volume of the business, or the square-foot area of the store or establishment?

Mr. HERZOG. It could obviously be any of those. We are thinking primarily of the one-man grocery stores, the two-lady dress shops, the one-man barbershop, the one-doctor office.

Mr. TENZER. Since this is your statement and you use the term "very small commercial establishments," would you be satisfied if it were confined to a strictly "mama and papa" store type of business? Mr. HERZOG. Confined?

Mr. TENZER. Yes, confined.

Mr. HERZOG. No.

Mr. TENZER. How far would you go?

Mr. DWAN. We have no objection to selling to a larger establishment. We were just pointing out here that the little people can take advantage of our facilities for the first time, but also the big ones,

too.

Mr. TENZER. Then are you, in effect, suggesting that upon the payment of 2 cents royalty per record, you would permit the making of a magnetic tape from the record, which could be sold to "very small commercial establishments" which can reproduce and play the music over and over and over again without the payment of any fee to the creator of the music?

Mr. HERZOG. I don't think we are asking to change any of the rules as they currently apply, whether to Muzak or leased music or ourselves. The fees are exactly the same. I think our objection is to the discriminatory right to prevent someone from going into the thing rather than having the compulsory license mechanical fee apply. I don't think we are arguing with the rules of the payment. Our payment would be exactly the same as anyone else's.

Mr. TENZER. I am not suggesting anything about any competitive company. I am just trying to get the record clear for our use in our committee work and for an understanding by the Members of the House as to exactly what you are proposing.

You are suggesting on page 6 of your testimony that you will soon have a machine, a creative work just like the author of music, and you want to get paid for that machine, don't you?

Mr. HERZOG. Yes, sir.

Mr. TENZER. I want to know the process by which this music will get onto the tape and whether anyone is going to be paid for the music on that tape.

Mr. HERZOG. Yes.

Mr. TENZER. How?

Mr. HERZOG. By the mechanical and performance fees in which the standards are pretty well defined by the societies.

Mr. TENZER. In other words, for placing the recording from a record onto a tape you would pay a fee?

Mr. HERZOG. Yes.

Mr. TENZER. You would pay for the privilege of placing that music onto the tape and then sell the tape with the machine to the "very small commercial establishments" as you would define them?

Mr. HERZOG. That is correct.

Mr. TENZER. So it is your intention to pay a fee for the use of the music?

Mr. HERZOG. We are now so doing.

Mr. TENZER. Would you be paying a fee based upon the number of times you duplicate the record onto the tapes, based upon the number of tapes you manufacture?

Mr. HERZOG. Yes.

Mr. TENZER. May I refer you first to the statement relating to "very small commercial establishments" on page 6, and tie it up with the term on page 2 of your proposed amendment in which you use the terms "personal" and "private"?

Let us take as an example a "very small commercial establishment" serving the public in which they sell merchandise for profit, and where they use your new equipment. Would you consider that personal and private use?

Mr. TENZER. I have no other questions, Mr. Chairman.

Mr. ST. ONGE. Thank you, Mr. Tenzer.

Thank you, Mr. Dwan, for your statement, and the help given to us by yourself and your associates.

Mr. DwAN. Thank you, Mr. Chairman and gentlemen.

Mr. ST. ONGE. The next witness is Mr. Lyle Lodwick, representing Williams & Wilkins Co.

Mr. Lodwick, we want to get the full benefit of your statement, but would it be possible for you to summarize it?

STATEMENT OF LYLE LODWICK, DIRECTOR OF MARKETING, WILLIAMS & WILKINS CO., BALTIMORE, MD.; ACCOMPANIED BY FRANCIS OLD, EDITOR IN CHARGE OF RIGHTS AND PERMISSIONS

Mr. LODWICK. Yes, sir.

I would like to introduce Mr. Francis Old. I am director of marketing and Mr. Old is editor in charge of rights and permissions for the Williams & Wilkins Co.

We would be delighted to summarize it, if you would use the statement as source material for any questions that you would like to ask.