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(4) For other programming, commencing with purchase and until day after first run, but no longer than one year. Provided, however, that no exclusivity protection would be afforded against a program imported by a cable system during prime time unless the local station is running or will run that program during prime time.

Existing contracts will be presumed to be exclusive. No preclearance in these markets. C. Smaller Markets.

No change in the FCC proposals. Erclusivity for Network Programming:

The same-day exclusivity now provided for network programming would be reduced to stimultaneous exclusivity (with special relief for time-zone problems) to be provided in all markets. Leapfrogging:

A. For each of the first two signals imported, no restriction on point of origin, except that if it is taken from the top 25 markets it must be from one of the two closest such markets. Whenever a CATV system must black out programming from a distant top-25 market station whose signals it normally carries, it may substitute any distant signals without restriction.

B. For the third signal, the UHF priority, as set forth in the FCC's letter of August 5, 1971, p. 16 Copyright Legislation:

A. All parties would agree to support separate CATV copyright legislation as described below, and to seek its early passage.

B. Liability to copyright, including the obligation to respect valid exclusivity agreements, will be established for all CATV carriage of all radio and television broadcast signals except carriage by independently owned systems now in existence with fewer than 3500 subscribers. As against distant signals importable under the FCC's initial package, no greater exclusivity may be contracted for than the Commission may allow.

C. Compulsory licenses would be granted for all local signals as defined by the FCC, and additionally for those distant signals defined and authorized under the FCC's initial package and those signals grandfathered when the initial package goes into effect. The FCC would retain the power to authorize additional distant signals for CATV carriage; there would, however, be no compulsory license granted with respect to such signals, nor would the FCC be able to limit the scope of exclusivity agreements as applied to such signals beyond the limits applicable to over-the-air showings.

D. Unless a schedule of fees covering the compulsory licenses or some other payment mechanism can be agreed upon between the copyright owners and the CATV owners in time for inclusion in the new copyright statute, the legislation would simply provide for compulsory arbitration failing private agreement on copyright fees.

E. Broadcasters, as well as copyright owners, would have the right to enforce exclusivity rules through court actions for injunction and monetary relief. Radio Carriage:

When a CATV system carries a signal from an AM or FM radio station licensed to a community beyond a 35-mile radius of the system, it must, on request, carry the signals of all local AM or FM stations, respectively. Grandfathering:

The new requirements as to signals which may be carried are applicable only to new systems. Existing CATV systems are "grandfathered.” They can thus freely expand currently offered service throughout their presently franchised areas with one exception: In the top 100 markets, if the system expands beyond discrete areas specified in FCC order (e.g., the San Diego situation), operations in the new portions must comply with the new requirements.

Grandfathering exempts from future obligation to respect copyright exclusivity agreements, but does not exempt from future liability for copyright payments.

APPENDIX E

FEDERAL COMMUNICATIONS COMMISSION

Washington, D.C. 20554

January 26, 1972
Hon. John L. MCCLELLAN,
Chairman, Subcommittee on Patents, Trademarks and Copyrights,
U.S. Senate,
I’ashington, D.C.

DEAR MR. CHAIRMAN: This letter is directed to an important policy aspect of our present deliberations on a new regulatory program to facilitate the evolution of cable television. That is the matter of copyright legislation, to bring cable into the competitive television programming market in a fair and orderly way-a matter with which you as Chairman of the Subcommittee on Patents, Trademarks and Copyrights have been so deeply concerned in this and the last Congress.

You will recall that we informed the Congress, in a letter of March 11, 1970 to Chairman Magnuson, of our view that a revised copyright law should establish the pertinent broad framework and leave detailed regulation of cable television signal carriage to this administrative forum. In line with that guiding principle and a statement in our August 5, 1971 Letter of Intent that we would consider altering existing rules to afford effective non-network program protection, we are now shaping a detailed program dealing with such matters as distant signal carriage, the definition of local signals, leapfrogging, and exclusivity (both network and non-network). That program is now approaching final action.

As of course you know, representatives of the three principal industries involved-cable, broadcasters, and copyright owners—have reached a consensus agreement that deals with most of the matters mentioned above. On the basis of experience and a massive record accumulated over the past several years, we regard the provisions of the agreement to be reasonable, although we doubtless would not, in its absence, opt in its precise terms for the changes it contemplates in our August 5 proposals. But the nature of consensus is that it must hold together in its entirety or not at all-and, in my own view, this agreement on balance strongly serves the public interest because of the promise it holds for resolving the basic issue at controversy.

This brings me directly to a key policy consideration where your counsel would be most valuable. That is the effect of the consensus agreement, if incorporated in our rules, on the passage of cable copyright legislation.

The Commission has long believed that the key to cable's future is the resolution of its status vis-a-vis the television programming distribution market. It has held to this view from the time of the First Report (1965) to the present. We remain convinced that cable will not be able to bring its full benefits to the American people unless and until this fundamental issue is fairly laid to rest. An industry with cable's potential simply cannot be built on so critical an area of uncertainty.

It has also been the Commission's view, particularly in light of legislative history, that the enactment of cable copyright legislation requires the consensus of the interested parties. I note that you have often stressed this very point and called for good faith bargaining to achieve such consensus.

Thus, a primary factor in our judgment as to the course of action that would best serve the public interest is the probability that Commission implementation of the consensus agreement will, in fact, facilitate the passage of cable copyright legislation. The parties themselves pledge to work for this result.

Your advice on this issue, Mr. Chairman, would be invaluable to us as we near the end of our deliberations. With warm personal regards. Sincerely,

Dean BURCH, Chairman.

U.S. SENATE COMMITTEE ON THE JUDICIARY, SUBCOMMITTEE ON PATENTS.

TRADEMARKS, AND COPYRIGHTS

(Pursuant to Sec. 13, S. Res. 32, 92d Congress)

Washington, D.C. 20510

January 31, 1972
Hon. DEAN BURCH,
Chairman, Federal Communications Commission, Washington, D.C.

DEAR MR. CHAIRMAN: I have your letter of January 26, 1972, requesting my advice on the effect of the consensus agreement reached by the principal parties involved in the cable television controversy on the passage of legislation for general revision of the copyright law.

I concur in the judgment set forth in your letter that implementation of the agreement will markedly facilitate passage of such legislation. As I have stated in several reports to the Senate in recent years, the CATV question is the only significant obstacle to final action by the Congress on a copyright bill. I urged the parties to negotiate in good faith to determine if they could reach agreement on both the communications and copyright aspects of the CATV question. I commend the parties for the efforts they have made, and believe that the agreement that has been reached is in the public interest and reflects a reasonable compromise of the positions of the various parties.

The Chief Counsel of the Subcommittee on Patents, Trademarks and Copyrights in a letter of December 15, 1971 has notified all the parties that it is the intention of the Subcommittee to immediately resume active consideration of the copyright legislation upon the implementation of the Commission's new cable rules.

I hope that the foregoing is helpful to the Commission in its disposition of this important matter. With kindest regards, I am Sincerely,

John L. MCCLELLAN, Chairman. NATIONAL CABLE TELEVISION ASSOCIATION, INC.,

Robinson, III., February 14, 1972. Mr. DAVID HOROWITZ, SCREEN GEMS New York City, N.Y.

DEAR MR. HOROWITZ: As you know, the FCC issued its long-awaited CATV Report and Order on February 3. The rules adopted in that document are largely based on the compromise agreement of November 5, 1971, to which NCTA, NAB, AMST and the ad hoc copyright owners' committee were signatories.

NCTA has analyzed the new rules, and, although we would have preferred to have many of the provisions enacted in a different manner, we have decided not to cause further delay by our opposition.

The compromise obliged all of the agreeing parties to support implementation of its provisions. The FCC has now acted, and the new rules are scheduled to take effect on March 31. I trust that you will joint with us in opposing any reconsideration of the Report and Order, attempts to stay the effective date, or appeals from the rules. Support of the Commission at this time is called for by the compromise. Best personal regards, Sincerely,

JOHN GWIN.

PICTURE INDUSTRIES, INC..

New York, N.Y., February 18, 1972.
Mr. JOHN GWIN,
Chairman of the Board, National Cable Television Association, Inc., Robinson,

Ill.
DEAR MR. GWIN: Thank you for your letter of February 14, 1972.

We are in full accord with your statement that "the compromise obliged all of the agreeing parties to support implementation of its provisions." I trust that we are also in agreement that such implementation pertains not only to the rules issued by the FCC but also to copyright legislation and that these two aspects of implementing the Compromise are inextricably tied together.

In this connection, I would like to stress the need for immediate meetings between our respective lawyers to agree on the text of a revised Section 111 of the Copyright Bill which would reflect the provisions of the Compromise and which the parties would recommend jointly to the Congress. In my absence, Gerald Phillips telephoned you earlier this week to request that NCTA's lawyers be made available for this purpose at dates earlier than they have stated they could meet in view of their other NCTA commitments. I sincerely hope that you will be able to arrange for such a meeting within the next several days.

As to the fee schedule under the compulsory license, the members of your and our negotiating committees agreed at our last meeting that a fee schedule could not be worked out between the parties. It was recognized that this was inevitable as long as NCTA feels that any agreement must provide for a single fee to embrace all types of program material. Obviously, since our Committee represents producers and distributors of filmed and taped television programs, we could not negotiate for fees payable to the music performing societies, the networks or other possible claimants. This is a point which we had made at the outset of our negotiations, and it was for that reason that we suggested to your Committee at our meeting in December of last year that NCTA should enter into negotiations with these other groups.

In any event, it has been quite clear to both parties that any further efforts at negotiation of fees would not only be fruitless, but would delay prompt introduction and enactment of a copyright bill, which is essential to implementation of the consensus agreement.

At the last meeting of the two industry committees, the NCTA representatives stated that despite this inability to agree upon fees, the NCTA would nonetheless support inclusion in the statute of a fee schedule not agreed to by the parties. In a subsequent conversation, Alfred Stern confirmed to me that this was the official position of the NCTA, adopted at a board meeting of the Association. In our view, this violates the clause of the Compromise which states expressly that "[u]nless schedule of fees covering the compulsory licenses or some other payment mechanism can be agreed upon between the copyright owners and the CATV owners in time for inclusion in the new copyright statute, the legislation would simply provide for compulsory arbitration failing private agreement on copyright fees." In view of the past history of open and fair dealing between our groups, the indicated failure of the NOTA to support the cited provision of the Compromise has caused grave concern among the members of our Committee.

In the meanwhile, I have received conflicting reports on the official attitude taken by the NCTA regarding its support for the above provision of the Compromise. I believe, therefore, that it would be most helpful if you could advise me hy letter of the XCTA's unquivocal position that it sunports all of the provisions of the Compromise including that dealing with arbitration. Such assurance would be most helpful in bringing about a full and speedy implementation of the Compromise--a goal to which our industry is completely committed. With best personal regards. Sincerely yours,

DAVID H. HOROWITZ.

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2, 839

6.20

396

Total

7.13

1.93

COPYRIGHT REVISION BILL

COPYRIGHT

PROPOSED TEXT OF CABLE TELEVISION SUBMITTED BY COMMITTEE OF

OWNERS

SEC. 111. Limitation on eaclusive rights: Scondary transmissions

(a) CERTAIN SECONDARY TRANSMISSION EXEMPTED.-The secondary transmission of a primary transmission embodying a performance or display of a work is not an infringement of copyright if :

(1) the secondary transmission is not made by a cable system, and consists entirely of the relaying, by the management of a hotel, apartment house, or similar establishment, of signals transmitted by a broadcast station licensed by the Federal Communications Commission, within the local service area of such station, to the private lodgings of guests or residents of such establishment, and no direct charge is made to see or hear the secondary transmission; or

(2) the secondary transmission is made solely for the purpose and under the conditions specified by clause (2) of section 110; or

(3) the secondary transmission is made by a common, contract, or special carrier who has no direct or indirect control over the content or selection of the primary transmission or over the particular recipients of the secondary transmission, and whose activities with respect to the secondary transmission consist solely of providing wires, cables, or other communications channels for the use of others; Provided, That the provisions of this clause extend only to the activities of said carrier with respect to secondary transmissions and do not exempt from liability the activities of others with respect to their own primary or secondary transmission; or

(4) the secondary transmission is not made by a cable system and is made by a governmental body, or other non-profit organization, without any purpose of direct or indirect commercial advantage, and without charge to the recipients of the secondary transmission other than assessments necessary to defray the actual and reasonable costs of maintaining and operating the secondary transmission service.

(b) SECONDARY TRANSMISSION OF PRIMARY TRANSMISSION TO CONTROLLED GROUP.-Notwithstanding the provisions of subsections (a) and (c), the secondary transmission to the public of a primary transmission embodying a performance or display of a work is actionable as an act of infringement under section 501, and is fully subject to the remedies provided by sections 502 through 506, if the primary transmission is not made for reception by the public at large but is controlled and limited to reception by particular members of the public.

(c) SECONDARY TRANSMISSIONS BY CABLE SYSTEMS

(1) Subject to the provisions of clause (2) of this subsection (c), secondary transmissions to the public by a cable system of a primary transmission made by a broadcast station licensed by the Federal Communications Commission and embodying a performance or display of a work shall be subject to compulsory licensing upon compliance with the requirements of subsection (d) in the following cases:

(A) Where the signals comprising the primary transmission are exclusively aural and the secondary transmission is permissible under the rules and regulations of the Federal Communications Commissior ; or

(B) Where the community of the cable system is in whole or in part within the local service area of the primary transmitter; or

(C) Where the signals comprising the secondary transmission are contemplated by and consistent with section 76.5(a), (f), (g), (h), (i), and (0) through (u) and Subparts D and F of the rules and regulations of the Federal Communications Commission as published in Volume 37, Federal Register. page 3252 et seq., on February 12, 1972.

(2) notwithstanding the provisions of clause (1) of this subsection (c), the secondary transmission to the public by a cable system of a primary transmission made by a broadcast station licensed by the Federal Communications Commission and embodying a performance or display of a work is actionable as an act of infringement under section 501, and is fully subject to the remedies provided by sections 502 through 506, in the following cases :

(A) Where the signals comprising the secondary transmission, whether or not authorized by the Federal Communications Commission, are inconsistent with, or in excess of those contemplated by, the rules and regulations of the

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