Senator D'AMATO. Let me ask you one more question. Suppose we go through the courts and you lose; the Supreme Court rules; Congress does not act. Now Congress sees this terrible inequity and injustice, but the Supreme Court has ruled against you and comes out with injunctive relief, et cetera, and says you have got to get these machines back, and of course you have indicated, as Mr. Day has mentioned, that those who have already been enjoined in this suit would feel the full impact. Could Congress legally, ex poste facto, treat and cure that deficiency once the court has ruled? Does that not raise a question as to whether or not we can cure that deficiency once the Supreme Court may have acted, as it relates to what they might determine to be an infringement of those 3 million or whatever number are out there? Is that a question? Mr. DAY. Yes. I think it is a big question and a big worry. I think it is a situation where the court should do, if they are going to decide against us, what they have done in other recent situations on occasion. That is to say, "This problem is bigger than both of us, and we ought to delay the effect of our decision until there has been a chance for Congress to take care of it." They did that in connection with your savings accounts that pay interest. Although the court said the law at that time did not permit it, they said this was something that was so important that, "we ought to delay the effect of our decision until Congress has a chance to act on it." We would hope that, at a minimum, the courts would do that. Senator D'AMATO. Thank you, Mr. Chairman. Mr. PARRIS. Mr. Chairman, I would just like to make this point. More of these units have been sold since the date of this decision than ever before in history. They have depleted the retail inventory. I think it is reasonable to assume that these criminals are not buying these things to grow flowers in; they are watching TV programs with them. Let us face the incredible absurdity of this thing. I would like to correct with this question, if I could, a common misconception. The incredible absurdity is the question of the enforcement in the real world. I would just like to make one point on the complaint in this original case. It says, The plaintiff does not seek relief against the six residents of California who are homeowners, but the plaintiff contends that such recordings constitute infringements of its copyrights. Would one of you gentlemen like to comment on the fact of whether these plaintiffs here can gratuitously disenfranchise these people from the criminal penalties of an infringement case by saying they do not want to enforce it against those homeowners? Are they not actually acting contrary to law by the simple act of taping, regardless of this gratuitous comment by the plaintiff here? Mr. WAYMAN. That is right, Congressman. In fact, I am looking at a trade press headline that came out several weeks ago: "MCĂ files suit against a slew of VCR manufacturers. Consumers taken off hook." They cannot take the consumer off the hook. The Ninth 96-601 0-82--4 Circuit Court has the consumer on the hook, and they cannot have it both ways, as I said in my testimony. They cannot go after the manufacturers that we represent as contributory infringers if there is not that primary infringer. Mr. PARRIS. Thank you, Mr. Chairman. Mr. DAY. In connection with that, Congressman Parris, back in 1971 when they were having congressional testimony on this subject, the representative of the Copyright Office at that time said that this was something that simply could not be controlled; it was unenforceable. Mr. PARRIS. Thank you. Senator DECONCINI. Thank you very much for your testimony, gentlemen. We appreciate the expertise and the manner in which it was presented. [Prepared statement of Jack Wayman follows:] TESTIMONY OF JACK WAYMAN SENIOR VICE PRESIDENT CONSUMER ELECTRONICS GROUP Description of Our Trade Association and its Membership My name is Jack Wayman; I am Senior Vice President of the Consumer Electronics Group of the 56-year old Electronic Industries Association (EIA/CEG) which has its headquarters here in Washington. With me is our long-time Special Counsel, J. Edward Day, a partner in the law firm of Squire, Sanders & Dempsey. We are the trade association for manufacturers, and sellers at the manufacturer's level, of consumer electronic products including television receivers, radios, tape recorders, audio systems, phonographs, video casette recorders (VCRs) and other consumer products. Video cassette recorders are the same basic product as video tape recorders. Electronic Industries Association represents a broad spectrum of electronic products, but the division which I head, Consumer Electronics Group, represents the consumer products. Our membership consists not only of all the major domestic manufacturers but of most of the leading foreign-controlled manufacturers which have manufacturing facilities in the These member companies account for well over 95 percent of sales of VCRS at the manufacturer's level in the United States. Purpose of Our Testimony Our purpose here today is to urge that VCR record ings of copyrighted materials off the air, when intended only for private, noncommercial use, do not constitute copyright infringement. This would confirm that VCRs are entitled to the same treatment which has been accorded, with congressional approval, to home recordings of copyrighted sound-only audio materials. We seek to have Congress overturn the potentially disastrous effect of the October 19, 1981 decision of the U.S. Court of Appeals for the Ninth Circuit in the case of Universal City Studios, Inc. v. Sony Corporation of America ("Sony case"). That decision reversed the painstaking and thoughtful opinion of the U.S. District Court in Los Angeles. This Sony case has already been in the courts for five years, and further court proceedings are under way. There would no doubt be an If there is no reversal of the decision by a rehearing either by the Ninth Circuit or the Supreme Court, the case will go back to the district court to determine a remedy since the Ninth Circuit left consideration of the remedy to the district court. appeal from that decision on the remedy. We seek legislative relief to avoid the possibility of a long period of uncertainty and confusion while this matter inches its way through the judicial process. Some Facts About VCRS and Their Use There are now almost three million American homes using VCRs, and that number is growing rapidly. In That means about 10 million people have access to VCRS in their homes. In 1978, total VCR sales to dealers amounted to 401,930. the first three quarters of 1981 alone, that figure had jumped to 883,729 units. If sales continue at the same rate during the final quarter of this year, total sales to dealers during 1981 will represent nearly a 200 percent increase over the 1978 figure. The monetary value of the American public's investment in VCRs and related products exceeds $3 billion. In spite of the rapid growth that currently characterizes the industry, few VCR manufacturers have managed to profit from the sales boom because of the enormous initial investments required and the highly competitive nature of the market. The industry is, thus, in one of its most fragile stages of development. Time-Shifting Home video taping occurs primarily for time- shifting purposes. is going to be out at a PTA meeting when a television program he wants to see is going to be on the air, he can set a time dial much like an oven timer, and the program will be recorded so that he can view it at a convenient time. Surveys indicate that 70 to 90 percent of all VCR owners make use of their VCRs primarily to view television programs that they could not otherwise have watched. Time-shifting increases broadcast audience size by allowing those unable to view a program to view it later. A report commissioned by the Federal Communications Commission to assess the effects on broadcasters of home video recording recognizes the benefits copyright owners reap from timeshifting: |