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107, that these exclusive rights shall not bar those fair and non-competitive uses of copyrighted works for socially desirable purposes that are covered by the broadly and flexibly conceived doctrine of fair use. Both now and as new media are introduced in the future, realistic applications of these general principles can and will be worked out.

Denial of the unwarranted educational exemption will not "deprive" teachers of any “right” they may erroneously feel is possessed under existing law. “As shown by a Copyright Office study dated July 22, 1966, the educational groups are mistaken in their argument that a 'for profit limitation is applicable to educational copying under the present law." (House Report No. 83, 90th Congress, March 8, 1967.)

In its Report, the House Judiciary Committee said that "the doctrine of fair use, as properly applied, is broad enough to permit reasonable educational use. It suggested however that teacher and publisher should join together to establish ground rules for mutually acceptable fair use practices, and that they should work out means by which permissions for uses beyond fair use can be obtained "easily, quickly, and at reasonable fees.” (pp. 32-33)

We share the views expressed by the House Judiciary Committee. We urge that they be adopted by this Subcommittee and that the proposed educational exemption be rejected out of hand.

For our part, we renew our offer to meet with the Ad Hoc Committee to establish ground rules for fair use and to establish workable arrangements for the clearance of permissions for uses beyond fair use.

STATEMENT OF THE ASSOCIATION OF RESEARCH LIBRARIES, ON THE AMENDMENT

RECOMMENDED BY THE LIBRARY ASSOCIATIONS TO S. 1361, GENERAL REVISION OF COPYRIGHT LAW

In order to clarify the proposed amendment and distinguish between it and the language of S. 1361 in its present form, it appears desirable to discuss the sections of the amendment and then to note the difference between these provisions and those of S. 1361.

The initial paragraph of section d reads the same as section d in the printed Bill except that the phrase "but only under the following conditions" is substituted for the word "it" at the end of the paragraph.

Section (1) under d of the proposed amendment refers only to an article or other contribution to a copyrighted collection or periodical issue or to a similar small part of a work. The purpose of this amendment is to enable libraries to continue to supply a photocopy of a small part of a work without being required to do any checking to see whether the issue of the periodical or the book in which the item appears is available for sale. This is particularly important with respect to articles in periodicals, since there is no easy way to determine whether or not a particular issue of a periodical is still available from the publisher or dealer. Even if it should be determined that an issue can be ordered from the publisher, the time required to place the order and receive the issue results in a delay which will probably not meet the need of the user.

Section (2) refers to an "entire work," that is, a book or a major part of a book. In this case the amendment would require that the library determine whether or not the book is still in print before providing a photocopy of it. This can be done with relative ease by checking Books In Print.

The distinction may be put in this way: section (1) refers to a periodical article or short excerpt of which a photocopy may be provided without any checking. Section (2) refers to an entire book or a major part of it and in this case a check to see whether the book is still in print is required.

Section (2) of the proposed amendment is similar to section 108(d) (1) in the printed Bill, S. 1361. Section (1) of the proposed amendment is a specific exemption for a periodical article or short excerpt. In this respect, it is an addiction to S. 1361.

"REASONABLE INVESTIGATION" The phrase "reasonable investigation" is used in the amendment which we are recommending but only in section 108(d) (2), This section refers to books, not to periodical articles. A reasonable investigation of the availability through trade sources of a book can easily be made by checking the annual catalog Books In Print. There is no comparable catalog listing all periodical articles.

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Section 108(d) (1) of S. 1361 requires the reader to "establish to the satisfaction of the library or archives that an unused copy can not be obtained at a normal price from commonly known trade sources in the United States including authorized reproducing services.” This requirement applies both to periodical articles and to books. It can be complied with as regards books through the use of Books In Print. There is no feasible way of making a comparable check of the availability of periodicals. Effects of Library Photocopying on Copyright Proprietors.

Those who oppose the proposed library photocopying amendment take the position that library photocopying eliminates sales and reduces the number of subscriptions to periodicals. The most extreme charge is that library photocopying will result in destroying scientific and technical communication by making it economically impossible to continue the publication of periodicals and books.

The importance of the partnership of libraries with the publishing industry cannot be over-emphasized. The economic viability of this industry is indeed a crucial concern to all involved in the dissemination of information. It is difficult, however, to get precise information regarding the effects of photocopying on publication sales. A most important consideration here is that coin-operated photocopying machines are available to virtually everyone. Thus, a significant and ever-increasing amount of photocopying is unsupervised.

In regard to supervised library photocopying, several studies have been made in the past 12 to 15 years and it is the conclusion of these studies that no evidence of significant economic damage caused by library photocopying could be identified. While the general experience is that the number of subscriptions has increased, there have been exceptions to this but it is by no means clear that the decline in the number of subscriptions have increased very substantially in this period and library budgets, particularly in recent years, have been reduced ; thus the canceling of subscriptions cannot be fairly ascribed to library photocopying only.

If it were possible to demonstrate clearly that library photocopying had severely damaged copyright proprietors, it could be expected that publishers would produce this evidence. Since they have not done so, it would appear that the evidence is not persuasive. In the absence of conclusive evidence, it would be most unfortunate if requirements were established for the payment of royalties which would involve "spending dimes to collect pennies."

LIBRARY ASSOCIATIONS SUPPORT THE AMENDMENT RECOMMENDED The amendment in the form in which it has been recommended to the Subcommittee represents the views and recommendations of the American Library Association, the Association of Research Libraries, and the Medical Library Association. These Associations recommend this amendment on behalf of their readers in order that they may be able to maintain the photocopying services now provided by most libraries of all types. In the aggregate the number of readers who use the libraries represented by these Associations runs to many millions. It is on behalf of these readers that the Library Associations urge the Subcommittee to adopt the amendment which they have recommended.

The statement was made in the course of the hearings that machine-monitoring of materials copied was feasible. However, at the present time there is no practical way that a photocopy machine could differentiate existing copyrighted from uncopyrighted materials.

STEPHEN A. MCCARTHY,

Executive Director, August 9, 1973.

HOUSE OF REPRESENTATIVES,

Washington, D.O., August 7, 1973. Hon, JOHN L. MCCLELLAN, U.S. Senate, Washington, D.C.

DEAR SENATOR MCCLELLAN: It is my understanding that the Senate Subcommittee on Patents, Trademarks, and Copyrights has been considering Section III of S. 1361 which sets a copyright fee schedule for the cable television industry. I further understand that in 1971 a consensus agreement was formulated by representatives of the copyright holders, broadcasters, and cable system operators

and that in this agreement is a provision calling for arbitration if rates cannot be agreed upon.

It has always been my belief that Congress should not attempt to set rates in transactions between private individuals or groups and I believe this to be true in regard to copyright fees. The parties that operate with the fees should be allowed to determine them, and for this reason I urge you to reconsider Section III and make provisions instead, for a means of arbitration to determine the fees. With kind regards, I am, Sincerely yours,

ALPHONZO BELL,

U.S. Congressman.

STATEMENT OF PROF. ALBERT P. BLAUSTEIN, RUTGERS UNIVERSITY SCHOOL OF LAW

Scholars should be paid for their scholarship. This preçept is followed in our treatment of the scholars who, as teachers, purvey scholarship and who, as librarians, organize and process scholarship. It should be nonetheless true for the creators of the scholarship which is being purveyed, organized and processed. On this there seems to be agreement.

Those who ursue scholarship are in the vanguard in the struggle for higher salaries for teachers and librarians. They are the most prolific purchasers of the ever-more-costly source of scholarship known as books. And so it goes.

But when this principle is translated into payment for scholarship whose access is via the photocopy machine, there is a strange objection to payment, Payment for scholarship, that is. There is, on the other hand, no objection to indirect payment for that scholarship in the form of machine purchase and rental, the purchase of accessories such as chemicals, paper and repair services and, in many cases, wages for those who operate the machines.

The time has come to face this problem; it can be delayed no longer. The intellectual property of others is being used via reprography in a quantity which must receive our attention.

PROPOSAL

Ten per cent of the net cost of reprography should go to the copyright proprietors of the intellectual property being photocopied.

I speak as a university professor, a lawyer, an author, a former librarian, and as one who teaches in the field of intellectual property. In each of these roles I have made use of the scholarship of others. Frequently their material has been made available to me through reprography. In performing the functions of librarian, I have made the scholarship of others available to the researcher and educator; and I know the importance of satisfying the research needs of others as well as myself. As an author, I have seen many of my articles, books, and parts of books reprinted in other publications for compensation and photocopied by researchers and educators without compensation. And since I teach the Intellectual Property course at Rutgers-Camden, I have gained familiarity with the background as well as the law in this particular field.

In preparing this statement, an examination has been made of the many proposals which previously have been submitted. And I must acknowledge at the outset that these have, in some measure, guided and influenced the proposal here. However, most of them have been set aside as unworkable because of their complexity and because of their high cost of administration. (This is also a time to express thanks for the research assistance of one of my students, Mark Gertel, who assisted me in preparing this statement.)

In setting forth this basic proposal, the procedural problem is divided into three parts: (1) How shall royalty payments be collected ? (2) Who should administer the royalties collected ? and (3) How should the royalties be distributed ?

IMPOSING ROYALTY CHARGES

Royalties for the copyright proprietors of material being photocopied should come from a flat fee tax. This would be in the form of a ten percent surcharge on the selling price or the regular monthly rental of all photocopy machines.

The advantages of such a plan are as follows:

A. While the total royalties will eventually be substantial, the individual sums paid by the user are de minimus. The overall rental charge on photocopying today is under four cents per page. (And the base rates are even lower in the rentals to government and educational users.)

B. The plan is administratively sound. The cost of collection would be at a minimum. Note in this connection the precedent of Article 53 of the German Copyright Act of 1965 which places a flat fee of five per cent on the sale of visual or sound recorders.

There are several objections which have been raised to the imposition of an arbitrary fat fee tax. It is, of course, obvious that many photocopy machines are not used to reproduce copyrighted materials. One might illustrate this by examining the photocopy equipment in a teaching hospital. The machine in the hospital administrative office, for example, reproduces hospital records, clerical accounts, etc., almost exclusively. On the other hand, the photocopy machine in a medical library is always a major user of copyrighted material. The answer is partly that it "evens out." And the administrative costs involved preclude making distinctions between where machines are located-using this as a basis for determining royalty rates.

What of the counter-suggestion that the tax be based solely on the extent of use rather than sales price or monthly rental. This is certainly possible in imposing a royalty surcharge on sound equipment. Rather than tax the sale of the tape recorder, there could be a tax on the sale of tape. In that manner, the user who merely records a favorite song for home consumption would pay only a negligible sum for royalties. On the other hand, the large commercial user of copyrighted music would buy tapes in quantity and thus pay a much higher royalty. Such a scheme is impossible with photocopy machines since they are increasingly able to use ordinary rather than specially treated paper. Note, however, that the factor of use is already considered and built into current rental charges. Most of the large producers of photocopy equipment charge a base fee of $35.00-$50.00 a month, plus a figure based solely upon the number of copies made.

A third objection is raised by educators who argue that any tax, regardless of how small, is an interference with the free dissemination of necessary educational material. Theoretically, this position is indefensible. As a practical matter, it should not preclude a minimum royalty charge. The key is access to information. And access is always thwarted by a series of variables involving cost. The educator may be barred from the utilization of educational materials by the fact that the school system does not have adequate secretarial help, or because the school library did not buy the books which contained the desired works of scholarship, or because the school board vetoed the purchase of sufficient photocopying equipment. And where such equipment is acquired, the bulk of the cost is for rental, paper and chemicals. Measured against all of these factors, a royalty tax, in the form discussed here, really does not preclude the use and dissemination of educational materials.

Cavcat: With the payment of the ten percent tax, users would be free to photocopy all copyrighted materials, with one notable exception. Consumables (meaning workbooks, standardized test forms meant to be used only once, etc. must be excluded from the photocopy grant.

ADMINISTRATION OF ROYALTIES

For the administration of any royalty plan, it is essential to set up a central copyright clearing house to supervise the collection and distribution of the ten percent surtax on sales and monthly rentals.

It is recommended that this clearing house have a quasi-governmental status provided for in the copyright statute. This would have the following advantages :

(1) Enforcement of payment would be facilitated. Failure to pay royalties would constitute a criminal rather than a civil offense.

(2) As a quasi-governmental entity created by statute, the anti-trust problem would be avoided.

(3) As a quasi-governmental agency operating under statute, it would be more difficult for any particular combination of selected publishing houses to gain control.

(4) An agency under governmental sponsorship would discourage the formation of splinter groups or alternative clearing houses set up to give special protection to special interests.

The membership of the clearing house would consist of all participating publishers. Royalties would be paid to the copyright proprietors only via these member-publishers.

(In addition to its administrative arm, the clearing house would also have an agency (or agencies) to perform as quasi-judicial tribunals. It would be the responsibility of one such tribunal to determine who would be a bona fide publisher. Another tribunal responsibility would be to hear arguments on royalty distribution.)

DISTRIBUTION OF ROYALTIES The greatest percentage of the moneys received and administered by the clearing house would be paid over to the member-publishers. The relative distribution as between the publishers and their authors (as copyright proprietors) would be allocated in accordance with their author-publisher contracts.

The most difficult administrative problem is the allocation of royalties among the various publishing houses. This must be based, as far as possible, upon the frequency with which certain materials are photocopied. At the same time, the plan must be kept as simple as possible.

It is recommended that all copyrighted books, periodicals and other publications be divided into five categories, depending upon the extent to which they are usually photocopied. Each publisher would have so many "units" in each category. (A monthly issue of a given oft-copied scientific journal might be a unit to the same extent as a given textbook.)

Category A units (those most frequently copied) would receive fifty per cent of the total royalties. Category E, containing those units copied the least, would include all novels, for example, and might be limited to as little two per cent of all royalties. Initial category assignments would be based on a preliminary sampling--and updated by subsequent samplings.

It would be the responsibility of an administrative arm of the clearing house to decide what book, annual or magazine issue constitutes a "unit" and to determine the proper category for each. Appeals would be made by the publishers to one of the clearing house tribunals.

As noted above, the bulk of all moneys received by the clearing house (after administrative costs are deducted) would be distributed to the publishers. However, it is proposed that twenty per cent of the net total be allocated (and administered by the clearing house) for the benefit of authors as a whole. Part of this sum could be designated for awards, scholarships, loans, pension arrangements, group. medical services, insurance, etc. And other funds could be used to maintain and operate authors' associations and other agencies working for the benefit of those who produce intellectual property.

My thanks to the Committee for giving me the opportunity to express my position on this important issue now before the Congress.

CADCO,

OKLAHOMA CITY, OKLA., July 24, 1973. Hon. John L. McCLELLAN, U.S. Senate, Washington, D.C.

DEAR SENATOR MCCLELLAN: I am writing this letter in regard to hearings scheduled before the Senate Judiciary Committee, sub-committee on Patents, Trade-Marks and Copyrights, this coming July 31 and August 1.

The purpose of these hearings is to take testimony on pending Senate Bill S. 1361, and more particularly on section 111 of that bill; as it relates to CATV systems.

Section 111 of this proposed bill contains an "exemption from copyright liability” and “program exclusivity (for) CATV systems with fewer than 3,500 subscribers".

My company, CADCO, INC., is a manufacturer of CATV equipment. My company specializes in the manufacture and installation of CATV equipment for CATV systems in towns of 10,000 people and down. This happens to work out to CATV systems with 3,500 or fewer homes.

My company publishes a more-or-less monthly publication for our customers in this area of CATV; a copy of the most recent issue of which is enclosed. Our TECH TALK publication reflects the operating and technical problems of this segment of the CATV industry; and it does so because other publications and companies in this industry do, for the most part, ignore this portion of the market place.

CADCO is known within the CATV industry as “the small town specialists". And this extends much further than merely supplying equipment to these smaller communities; it includes providing know how and a rallying point for the operators of these CATV systems.

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