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compulsory license applicant. Experience has shown that this is not an isolated problem. The statutes are generally written with the protection of the copyright holder in mind; however, where we have a compulsory contract between two parties by statute, we must be sure to offer consideration to both.
Under Section 301, more detail should be set forth defining the legal status of property rights which are vested in the public. Such property, presently in the public domain, is being denied the public use through various interpretations of the many courts across our great land. The confusion exists at all court levels, both Federal and State and even manifests itself in a 5 to 4 Supreme Court decision. While section 301 is supposed to preempt those laws in the nature of copyrights, such intent is circumvented by simply calling it another name; i.e., unfair competition. In one case a court ruled that a plaintiff had no statutory property right and the plaintiff had no common law property right but the plaintiff did have a "Quasi property right" in a musical sound recording. How in the world can a businessman foresee a court creating a whole new "thing" not provided by statute! Much of the public's time and money can be spared by eliminating expensive litigation in our courts through clarifying definition now.
Under Section 302, an objection must be made to the copyright term of life plus 50 years. First of all, this has been proposed more as an attempt to standardize with what is the custom in certain European countries and the wording of the Geneva Convention. In Europe, they don't feel as we do about monopolies and cartels. Our government, the people, feel differently and I see no reason to offer more stimulus to the creative individuals in our society than is required to keep society enriched with a free flow of ideas and useful arts. Certainly no one can say the present incentive of 28 years plus 28 years has resulted in lack of growth. Why then increase the cost to society? It is absolutely not necessary. Remember, the primary goal of the copyright laws is to benefit society. This philosophy also extends to the idea of extending present copyrights beyond their legal limit. How can that possibility give a just return to Society for granting monopoly (copyright)?
Additionally, now that sound recordings are entitled to copyright protection, a problem arises where the creator is granted a copyright for life plus 50 years. Most sound recordings are "created" by a corporation whose life (specified in the articles of incorporation) is perpetuity. So we have perpetuity plus 50 years which is forever and that conflicts with the Constitution which requires that such monopolies be "for limited times."
Regarding Section 705, some consideration should be given to providing additional data to the public by the Library of Congress. If, in fact, the primary purpose of the copyright scheme is to benefit the public then an effort should be made to make it easy for the public to avail themselves of that which is theirs. To accomplish this is relatively simple. In addition to the aforementioned file reflecting the copyright holder, the date and renewal date of the copyright should be shown. A separate file containing works on which the copyrights have expired should be provided so it may be used by the society which paid for it with a limited monopoly.
The preceding comments have been offered to help bridge the gap between the business place and the legislative offices of you, gentlemen. Throughout this presentation you undoubtedly noted that an emphasis was placed on society's welfare. I felt this was necessary. During the past ten years, the hotly contested battles which have taken place in our courtrooms on such subjects as cable T.V., pirating sound recordings and copying of literary works and others have resulted in so much case law that is at odds with statutory law. Federal judges disagreeing with other Federal judges. Companies fighting tooth and nail in ugly displays of greed, power and corruption. Not once in some 100 plus court cases reviewed by this person involving copyright matters did the interests of society emerge. Always it is some special interest faction attempting to cement a position of advantage over others. More often than not, those of us whose lives are involved with copyrights are easily caught up in the complex and emotional issues at hand and it is very difficult to keep one's head screwed on correctly-To view the issues from their proper perspective.
I suggest to you, gentlemen, that our own life blood, the society in which we live, has not received a proper share of her just earnings and consideration. Please contemplate this as you consider some of the suggestions which I have brought to you today.
U.S. RECORD/TAPE SALES 1921-1972
U.S. RECORD SALES 1921-1972
(Source: Record Industry Association of America Excise tax payments, estimates from other data)
+100% 1955 + 69.2%
1971 1972 1383 +10.6% Billboard 1973-1974 International Music Record Directory
277........... + 30.0%
+11 1% +18.0% 0.5%
Mr. KASTEN MEIER. This concludes this morning's hearing on copyrights. The subcommittee, upon adjournment, will meet on Wednesday next for a continuation of our hearings on copyrights. Until such time, we stand adjourned.
[Whereupon, at 12:25 p.m., the hearing was recessed to reconvene on Wednesday, June 11, 1975, at 10 a.m.]
COPYRIGHT LAW REVISION
WEDNESDAY, JUNE 11, 1975
HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON COURTS, CIVIL LIBERTIES,
AND THE ADMINISTRATION OF JUSTICE
The subcommittee met, pursuant to notice, at 10:10 a.m., in room 2226, Rayburn House Office Building, Hon. Robert W. Kastenmeier [chairman of the subcommittee] presiding.
Present: Representatives Kastenmeier, Danielson, Drinan, Badillo, Pattison, Railsback, and Wiggins.
Also present: Herbert Fuchs, counsel; and Thomas E. Mooney, associate counsel.
Mr. KASTENMEIER. The committee will come to order.
We are convened this morning for another hearing in the series of hearings on the proposed revision of the Copyright Law. This morning will be completely devoted to witnesses representing cable television, in one respect or another. We have six witnesses representing varying viewpoints on the question of how this proposal will affect cable television in this country.
The House will be in session earlier than normal. We will try to move as quickly as we can, but with due respect to the witnesses, we will try to complete our business, so we will be able to attend the regular session.
I am very pleased this morning to greet as our first witness the chairman of the National Cable Television Association, Rex A. Bradley. Mr. Bradley, will you come forward, please?
You might also like to identify your colleagues. The Chair observes that you have a rather substantial statement and addendum of material submitted to the committee, which, will, without objection, be accepted for the record. You may proceed, sir.
TESTIMONY OF REX A. BRADLEY, CHAIRMAN, NATIONAL CABLE TELEVISION ASSOCIATION
Mr. BRADLEY. Mr. Chairman, I have a shorter version of my testimony, from which, in the interest of time, I will be speaking. If members of the committee would like to have copies, we have them. available.
With me at the table on my right is Mr. Bruce Lovett, who is the immediate past chairman of NCTA; I relieved him a couple of months ago. He is also vice president for industry affairs of ATC, one of the Nation's larger cable companies.
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To my left is Mr. Stuart Feldstein, who is the vice president for legal and government relations for NCTA. And at the end of the table is Mr. Don Andersson, who is the vice president for statistical services of NCTA.
As you have indicated, my name is Rex Bradley, and I am chairman of the National Cable Television Association, and I am also president of TeleCable Corp. of Norfolk, Virginia, which is the owner and operator of 15 cable systems serving 130,000 subscribers in 10 States. Today I am speaking in my capacity as chairman of NCTA.
The National Cable Television Association is the major trade association representing the cable television industry. Our membership includes both multiple system operators and independent cable television operators. NCTA's 1,320 member systems currently serve 5.8 million subscribers, or 58 percent of the Nation's 10 million cable television households. We recognize that copyright was conceived in the public's interest, to assure that creative minds would be encouraged by compensation to produce and distribute the fruits of that creativity. Later in my statement I will discuss further our view of copyright and comment specifically on H.R. 2223.
Since time is limited, I will summarize my longer statement. The longer statement, submitted for the record, contains a comprehensive review of cable's early development, the FCC's gradual assumption of jurisdiction over cable, and the early pattern of broadcaster opposition to cable growth.
Additionally, it takes note of the important legal decisions on copyright, resulting in two Supreme Court decisions holding cable not liable for copyright under the 1909 law, attempts of various parties to negotiate a settlement, and the very close relationship between FCC regulatory actions and the copyright question.
I believe it is important for the Congress to understand this background to current copyright consideration. It demonstrates the complexity of the cable/copyright problem, the intense pressures and uncertainties created for the cable industry and the almost inextricable interrelationship between copyright and cable regulation.
During these hearings, I am sure you will hear charges-principally from broadcasting and motion picture representatives to the effect that the cable television industry has not lived up to its copyright responsibilities, that cable is an unfair competitor, and that the industry has attempted to delay resolution of the copyright issue.
I can only assure you that throughout this frustrating period NCTA has attempted in every way possible to live up to its fundamental commitment to work for fair copyright legislation.
As a member of this committee you are no doubt aware that there are divisions within the cable industry over the issue of copyright payments. There are those who feel that there should be no copyright liability at all. Others believe that there should be no liability for signals received off-the-air, while others suggest no liability for a complement of signals that can reasonably be defined as adequate service. I believe, however, that the majority of the members of NCTA support the association's efforts to work with Congress in arriving at fair and reasonable legislation.
Before addressing myself to specific provisions in H.R. 2223, I would like to emphasize several key factors which I believe this com
mittee and the Congress must consider in arriving at fair copyright legislation.
The Constitution and the courts have recognized that copyright protection has a twofold purpose, to encourage creativity and equally as important, to promote the dissemination of knowledge to the public.
Cable television, through its reception and distribution of television broadcast signals, promotes the dissemination of knowledge to the public. Indeed, without this service, significant numbers of Americans would be denied the fruits of creative labor. Congress should be cognizant of this vital CATV role. Legislation which, for whatever reason, restricts or decreases the dissemination of knowledge to the cable television public would not be consonant with the primary public interest concern of copyright.
Second, the Congress should be aware that imposition of copyright liability will have an impact on the CATV subscribing public. To a significant extent, the cost of copyright liability will be borne by cable subscribers.
Let me make several further observations on the current financial state of the industry. It has taken several years, but an awareness is growing that CATV is not the pot of gold it was once thought to be. Last year, for example, nine of the top publicly held companiescompanies who will bear a very sizeable percentage of the copyright burden-suffered a combined net loss of nearly $17 million on total revenues of $267 million.
CATV is a capital intensive business. It is also a business whose expenses, for the most part, are fixed, subject to very little influence of the CATV manager. Cable systems experience a number of substantial expenses, whose levels are established arbitrarily by some authority, not subject to the moderation of competitive pressures. Some of these expenses are subject to change, with little opportunity of the CATV operator to influence the level. Examples of these are pole rents, microwave charges, interest, franchise taxes, property taxes, and FCC fees.
Because most cable expenses are fixed, the only opportunity for cable operators to obtain and maintain a favorable profit margin is through additional subscribers, or by increasing subscriber ratesoften difficult because city councils' approval must be obtained.
The uncertainties related to these uncontrollable expenses make financial planning and borrowing difficult and expensive.
Let me now turn to the specific provisions of H.R. 2223. Chapter 8 of the bill would create for the first time a Copyright Royalty Tribunal in the Library of Congress. This tribunal would be composed of three persons and would be empowered by statute to adjust copyright royalty rates, the revenue base, and in certain circumstances, the distribution of royalty fees. The tribunal is directed to undertake a review of royalty rates within 6 months of the date of enactment of the law, and that review is to be completed within 18 months. Thenceforth, the tribunal would conduct a review every 5 years ad infinitum. Mr. Chairman, we are opposed to the establishment of a tribunal with the uncertainty which is inherent in the tribunal's power, and we further believe that chapter 8 of this bill is laced with infirmities that represent a very serious threat to the future viability of the cable television industry. This tribunal carries with it the potential for substantial escalation of copyright fees in a very short period of time.