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Computer uses

Under the bill the reproduction of a copyrighted work for storage or use in a data processing machine, and the print-out” or reproduction of the work in the form of copies by the machine, would both constitute infringements unless the reproduction were limited enough to constitute fair use. Although these provisions, and especially the one requiring consent for “input” (that is, the placing of it in the machine) have provoked some concern, I believe that the potential impact of computer uses upon the copyright owner's rights is too great and far reaching to justify exemptions in these two situations.

It has been pointed out that, instead of printing out the work in copy form, computers now, and increasingly in the future, will display the work temporarily on a television screen or the equivalent. Under the bill this would be an infringement only if the image of the work is transmitted beyond the location of the computer in which the

copy

is stored; I do not believe that the transitory image of a copyrighted work, taken from an authorized reproduction stored in a computer and consulted at the computer site, should be treated as different from the consultation of a book in a library. The bill would not exempt the ordinary transmission of an image from one place to another, whether by computers or otherwise, but transmission of an image for classroom use would be freed from copyright control. This latter exemption has caused concern among book publishers, and its implications for the future deserve further study. Educational broadcasting

Under section 109 (4) of the bill, public performances of nondramatic literary and musical works, “otherwise than in a transmission to the public," would be exempt if there is no commercial motive, if there is no admission charge, and if there is no “payment of any fee or other compensation for the performance to any of its performers, promoters, or organizers.” The educational broadcasters have suggested deleting the phrase "otherwise than in a transmission to the public,” thus freeing more than "in-school" instructional broadcasting from copyright control. It is not clear to me just how far the proposed exemption is intended to go, however.

If the suggested language is intended to free the broadcasting of any recorded programs for which the “performers, promoters, or organizers” had been paid originally, the effect would be the virtually complete exemption of educational and other nonprofit broadcasting of nondramatic literary and musical material. For reasons already advanced at some length in the supplementary report and in Mr. Cary's statement on the first day of these hearings, I believe that such an exemption is too broad. On the other hand, it is possible that the intention is more limited, and I believe it would be helpful if the proposal could be clarified to answer the following questions:

Is it intended to exempt the transmission of recorded or live performances by professional performers, announcers, and the like?

Is it intended to exempt the transmission of recorded programs where “residuals” or “reuse” fees are paid to nonprofessional performers?

Is it intended to exempt the transmission of recorded programs produced originally by a commercial enterprise?

Is it intended to exempt the transmission of recorded or live programs produced by the employees of a nonprofit organization whose main function is the production of such programs?

Is it intended to exempt the transmission of recorded or live performances by performers who are paid a salary for full-time activities such as teaching, but whose duties mainly involve appearances in educational broadcasts?

It seems possible that the answers to these questions could point the way to a solution of this problem. Community antenna systems

The problem of whether community antenna television systems should be liable for the use of copyrighted material in commercial broadcasts they retransmit is not only one of the most difficult facing this committee, but it is also greatly complicated by uncertainty as to what the present law on the question is. Although the issue is now before the courts, it seems unlikely that any final resolution of the problem will be reached for several years, and I believe it would be most unfortunate if Congress were to deny copyright owners any rights against CATV systems because of the difficulties in working out the various practical problems.

The recent action of the Federal Communications Commission in taking jurisdiction over community antenna systems for certain purposes has raised speculation as to whether the copyright problem might be solved by requiring the CATV operator to obtain permission from broadcasters to transmit their signals, thus automatically clearing any copyrighted material included in the broadcast. While this possibility has not been debated publicly as far as I know, I am inclined to doubt whether it would meet with much favor from either the copyright owners or the CATV operators. In any event, since the basic question is one of copyright protection and the right to collect royalties under the copyright law, I see no way to avoid coming to grips with the issue under this bill.

The main conclusion indicated in the supplementary report—that the copyright owner should be compensated for the use of his works by CATV systems, but that the practical difficulties of advance clearances should be recognized—have been confirmed and reinformed in my mind by the extensive and articulate testimony you have heard on both sides of this question, including that which you heard yesterday. This suggests that at least one solution might be sought through a special provision limiting or remitting liability for CATV uses under certain conditions. Ephemeral recordings

As the supplementary report explains in some detail, section 110 on "ephemeral recordings" appeared for the first time in the present bill as a response to separate demands from educational broadcasters and commercial broadcasting organizations. No such privilege of making recordings is given to broadcasters in the present statute. Because the provisions of this section are new and untried, you have heard a good deal of opposing testimony, both from copyright owners who feel it goes too far and from broadcasters who feel it does not go far enough. I look on this as a sorting-out process of a kind we have experienced before in developing this bill.

It seems probable that this section is going to have to be revised, but I also detect a general recognition that the United States should adopt a provision, such as is common in foreign copyright laws, giving broadcasters a limited privilege of recording their own programs. I am confident that the reasonable metes and bounds of this privilege can be worked out. Rights in sound recordings

As must be obvious to you, this bill contains a number of what might be called “half-a-loaf” provisions, and section 112 is one of them. By recognizing sound recordings as copyrightable works with rights of reproduction and distribution, but by denying them rights of public performance, the bill reflects-accurately, I think——the present state of thinking on this subject in the United States. I look on this, not as mere expediency, but as a necessary and conscious recognition of what will and will not be accepted in this country today in this evolving field.

Let me say plainly there is no doubt in my mind that recorded performances represent the "writings of an author" in the constitutional sense, and are as fully creative and worthy of copyright protection as translations, arrangements, or any other class of derivative works. I also believe that the contributions of the record producer to a great many sound recordings also represent true “authorship” and are just as entitled to protection as motion pictures and photographs. No one should be misled by the fact that in these cases the author expresses himself through sounds rather than words, pictures, or movements of the body. There is a great deal of case law in this field, and it is in full support of the principles embodied in section 112.

Under these circumstances it is hardly surprising that you have heard testimony from representatives of performers and some record companies urging recognition of a performing right in sound recordings. There is much to be said for this point of view, and it is possible that this right will eventually be recognized in the copyright law of the United States as it is now in other countries. Incidentally, I am wholly sympathetic with the testimony given yesterday concerning the protection of live broadcasts of sporting events, including protection of the players themselves. But I believe-and this is a conviction based on years of experience with this problem here and abroad—that the chance now of enacting a copyright law in this country that recognizes any rights of public performance in sound recordings is so remote as to be nonexistent. You have seen no towering wave of opposition to these proposals simply because there is a general feeling that they will not get anywhere; but, if genuine fears were to be aroused on this score, I am sure you would see a wave of protest that would be likely to tear this bill apart. The compulsory licensing rate

As I interpret the extensive testimony that has been presented to you on section 113, there appears to have been a general acceptance of the revised compulsory licensing provision on both sides, and the controversy seems to have boiled itself down to the economic issue of the statutory royalty rate. On this point I was most reluctant to take a flat position, or even to express firm opinions, until we have had an opportunity to study thoroughly the mass of data and arguments offered here. For these reasons, I hope you will regard the following observations as tentative:

My conviction that, in addition to a flat rate per record, there must be an alternative rate based on playing time was strengthened during the hearings. The quarter-cent per minute rate now prevalent in the industry strikes me as much too low, but I was also impressed by the undesirability of establishing a rate that would impose artificial time restrictions on recordings. I am now inclined to think that the 1-cent per minute rate provided in the bill is too high, whether the basic rate remains 3 cents per record or not.

I agree with the argument that the decline in the value of money since 1909 is not a conclusive answer to whether the 2 cents is a fair rate today. The entire industry has changed so radically in 56 years that, although unlikely, it would not be impossible for a rate of 2 cents to have been fair then and to remain fair now. What we must do is look carefully and objectively at the situation as it presently exists, bearing in mind that statistics, even the fullest and most accurate, cannot tell the whole story.

There has been nothing whatever offered during these hearings to change my view that the present statutory rate of 2 cents per record manufactured (not per record distributed) has operated as an abso lute ceiling. While 2 cents does seem to be the going rate in most cases, it represents records sold and does not include the large quantities of club dividends, free records, dealer returns, et cetera, which would have to be paid for under the statute. Moreover, there still appears to be a substantial number of licenses negotiated at a rate below 2 cents per record sold-enough to show that a rate below the statutory ceiling can be negotiated when called for by economic factors.

The whole picture presented at these hearings suggests that the present statutory rate is operating as an artificial ceiling under which the bargaining is necessarily of the take-it-or-leave-it variety. I hold no brief for 3 cents, and that rate may well be more than the industry can afford to pay in the light of present conditions; at the same time the fact that the going rate has been at the 2-cent mark in a growing preponderance of cases implies to me that the present statutory ceiling is keeping the lid on too tight, and that there is not enough range within which anything like real, two-sided negotiations can take place. The jukebox provision

We come now to a subject dear to all our hearts: the problem of how to deal with the public performance of copyrighted music on jukeboxes. Having been charged at these hearings with "obvious bias," I suppose I should reply by admitting a strong bias against the complete exemption of jukebox performances under section 1(e) of the present law, and by expressing the hope that this bias is very obvious. However, I think that these hearings have carried us beyond the stage of invective and that we are now, at long last, on the threshold of a constructive solution to this difficult problem.

At the hearings on June 9, Mr. Allen stated the basic position of the jukebox operators succintly and well:

If the automatic-phonograph operators are compelled to negotiate with these huge performing-rights organizations * * * as would be the case if section 114 is enacted, they cannot possibly do so on equal terms. * * * It is this "open end” aspect of the new law, which is inherent in an outright repeal of the present exemption, that causes the operators their greatest concern. Added to this is the danger of statutory damages for unintentional infringement to which the operators would be exposed, which could amount to as much as $10,000 plus costs for a single violation.

Then, after reviewing the reasons why the operators felt that no added jukebox royalty is justified, Mr. Allen came forward with a concrete proposal:

If, however, this committee and the Congress believe that the operators should pay more, then it is their belief that this should be done through the means now provided in the existing law, that is, by an increase, an add on to the mechanical royalty. This method has the advantage (1) that there is a statutory maximum which will protect operators against exorbitant charges; (2) it will obviate the necessity for any bargaining with the performing-rights organizations ; and (3) the royalties that are paid will most accurately reflect the popularitythe performance if you will—of records that are played on these machines.

This alternative proposal is submitted by the operators in all good faith. It is intended to be applicable only to records purchased by them for use on automatic phonographs. * *

Proposals of this sort have been advanced before, and have been opposed on the ground that they would require record companies to maintain double inventories or to act as involuntary collection agents. I agree that there is no theoretical justification for imposing this burden on record companies, and I doubt whether any such system could be made to work well in practice. On the other hand, I believe that the basic proposal advanced by the jukebox operators would not necessarily have to involve the record manufacturer in the payment procedure. As I suggested at the hearings in the Senate committee 2 weeks ago, alternative methods, such as the purchase from a performing rights society or other copyright owner of stamps at a specified rate for affixation on jukebox records or machines, might be worked out under statutory safeguards.

I should interpolate also that I do not believe this should be called a mechanical royalty provision, and I note that Mr. Allen himself refers to the performance aspect. This is really a performance right and, whatever the basis for payment of royalties, it should be designated as such.

I am fully aware of the practical difficulties a system such as this would present, but I believe that there are similar difficulties inherent in any system that can be devised to meet this problem.

I should like to emphasize that, while the Copyright Office is committed to finding a fair and workable solution to the jukebox problem within the context and as a part of the general revision of the copyright law, it is not committed to any particular formula for working out this problem. I should like to urge again that all concerned give the possibility of alternative proposals their careful and open-minded consideration. Ownership of copyright

The problems I have already discussed involve the first 14 sections of the bill. It is worth noting that at least at present the remaining 51 sections appear to present only 5 issues worth mentioning here, and

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