by the FCC and such other additional or "distant" signals as would be consistent with the rules adopted by the FCC in February, 1972. A compulsory license is a tremendous benefit for cable and gives it a competitive advantage over broadcasters because it eliminates the need for bargaining for every program. In the interests of reaching a compromise, however, the broadcast industry and the major program producers were willing to accept such a compulsory license for cable provided that it expressly would not include any more signal retransmission than was contemplated by the Consensus.

3. No CATV system would have to stop retransmitting broadcast stations that were lawfully being retransmitted in the past. The "grandfather" feature of the attached changes means that all existing cable TV systems can continue retransmitting whatever stations they were lawfully retransmitting on March 31, 1972, even though this means in many cases that cable TV systems would have more signals than the FCC's new rules would allow. This is very beneficial to cable TV systems and their subscribers, particularly in light of the recent judicial interpretation of the existing copyright law.

4. Smaller, independently owned CATVs would not have to pay any copyright fees at all. Under the attached changes, and again consistent with the Consensus, existing independently owned CATVs having fewer than 3,500 subscribers would get both the compulsory license described above and be free of any obligation to make payments for that compulsory license. This is a substantial plus for the smaller independent CATV, a plus which is not found in the present provisions of S. 1361.

5. The scope of the compulsory license with respect to distant stations is and ought to be limited. The Consensus provides that the compulsory license shall be limited to "those distant signals defined and authorized under the FCC's initial package" (in addition to local and "grandfathered" signals). In general terms, the FCC's initial rules contemplate importation of usually two distant signals into the 35-mile zones of larger markets, subject to certain exclusivity requirements, enough distant signals to provide adequate program service within the 35-mile zones of smaller markets, and virtually unlimited distant signal carriage beyond the 35-mile zones of all markets. By incorporating by reference the pertinent provisions of the FCC's rules, the attached changes would adopt corresponding limitations on the scope of the preferential compulsory license otherwise being given to cable systems. Without these limitations on the compulsory license no consensus would have been reached among the affected parties. While additional distant signals could be authorized by the FCC, subject to normal copyright liability, otherwise valid exclusivity agreements would be enforceable against any such additional retransmissions.

6. The question of the amount of the compulsory license fee would be resolved in an impartial and fair manner. Cable systems which do not come within the small system exemption noted above would have to pay a fee for their compulsory license. The sum of all such fees would in turn be apportioned among the various copyright owners. The Consensus provides that in the event the parties are unable to agree on a fee schedule, the legislation should provide that the fee schedule will be set by compulsory arbitration. Despite many meetings and negotiations since November, 1971, the parties have not been able to resolve their differences over the fee schedule. The compulsory arbitration approach set forth in the attached changes is not only consistent with the Consensus but also is a desirable means of freeing the Congress from having to resolve a complex and controversial dispute over the fee schedule.

7. Judicial enforcement is authorized. As expressly contemplated by the Consensus, both copyright owners and broadcasters would have the right to enforce valid exclusivity agreements through court actions.

8. Treatment of sports events is unchanged. The Consensus did not address the problem of retransmission of distant station broadcasts of professional team sports events. Thus the attached changes carry forward the special treatment of such events provided for in the present version of S. 1361.

OTHER POSSIBLE REVISIONS IN S. 1361 SHOULD BE REJECTED

1. Approaches at variance with the Consensus should be rejected. The new FCC rules adopted in 1972 benefit cable TV entreprenuers at the expense of broadcasters and program suppliers. Those rules were adopted on the assumption by the FCC and the affected parties that NCTA, the association representing cable TV. would actively support, and that the Congress would adopt, copyright legislation implementing the same Consensus as resulted in the new FCC rules. It

would be grossly unfair either to allow NCTA to renege on its November, 1971, commitment or to adopt copyright legislation still more favorable to cable TV than that which is contemplated by the Consensus. Moreover, rejection of the Consensus would only lead to the reopening of a controversy which has for too long delayed the general revision of the copyright law.

2. A statutory fee schedule should not be included in the legislation. At present S. 1361 includes a statutory fee schedule which some cable TV interests claim is either too high or at best the maximum that cable can afford to pay. The major program suppliers believe that the fee schedule in S. 1361 is unconscionably low, completely arbitrary and wholly unrelated to any economic or other data; the schedule has never been the subject of Congressional hearings. Both sides claim to have expert economic studies backing their respective positions. Resolution of such complex economic details as the precise amount of the fee is traditionally delegated by the Congress to independent agencies or arbitration. That approach should be followed here, and was specifically agreed to by the affected parties in a Consensus which the FCC, Senator McClellan, and others have found to be in the public interest.

3. The compulsory license must not be left open-ended so that still more broadcast signals could be brought within its ambit. With the attached changes, S. 1361 would subject CATV systems to normal copyright liability for retransmissions of copyrighted works broadcast by non-local stations when those transmissions are inconsistent with the 1972 FCC rules. This limitation on the ambit of the compulsory license is called for by the Consensus and was vital to reaching any consensus. Since a compulsory license constitutes preferential treatment of CATV at the expense of the program suppliers and broadcasters, it would be completely unfair to allow a four member majority of the FCC to expand the scope of that compulsory license by simple administrative fiat as would be the case if the compulsory license were open-ended. The limitation on the scope of the compulsory license is not a regulatory measure, nor is it a measure that unwisely ties the hands of the FCC. The FCC would retain full power to change its rules as it sees fit consistent with the public interest standards of the Communications Act. But the FCC would not be given, just as the FCC does not now have and should not have, the power to change the copyright law and thereby the power to take private property from one party and give it to another party simply through administrative dictates.

COPYRIGHT REVISION BILL

PROPOSED TEXT ON CABLE TELEVISION SUBMITTED BY COMMITTEE
OF COPYRIGHT OWNERS

SEC. 111. Limitations on exclusive rights: Secondary transmissions

(a) Certain secondary transmissions 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 nonprofit organization, without any purpose of direct or indirect commercial advantage, and without charge to the recip

ients 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 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 Commission; 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 Federal Communications Commission referred to in subclause (C) of clause (1) of this subsection (c); or

(B) Where the community of the cable system is in whole or in part within the local service area of one or more television broadcasting stations licensed by the Federal Communications Commission, and—

(i) the content of the particular transmission program consists primarily of an organized professional team sporting event occurring simultaneously with the initial fixation and primary transmission of the program; and

(ii) the secondary transmission is made for reception wholly or partly outside the local service area of the primary transmitter; and

(iii) the secondary transmission is made for reception wholly or partly within the local service area of one or more television broadcasting stations licensed by the Federal Communications Commission, none of which has received authorization to transmit said program within such area. (d) Compulsory license for secondary transmissions by cable systems.-(1) For any secondary transmission to be subject to compulsory licensing under subsection (c), the cable system shall at least one month before the date of the secondary transmission or within 30 days after the enactment of this Act, whichever date is later, record in the Copyright Office, a notice including a statement of the identity and address of the person who owns or operates the secondary transmission service or has power to exercise primary control over it together with the name and location of the primary transmitter, or primary transmitters, and thereafter from time to time, such further information as the Register of Copyrights shall prescribe by regulation to carry out the purposes of this clause (1).

(2) A cable system whose secondary transmissions have been subject to compulsory licensing under subsection (c) shall during the months of January, April, and July and October, deposit with the Register of Copyrights, in accordance with requirements that the Register shall prescribe by regulation and furnish such further information as the Register of Copyrights may require to carry out the purposes of this clause (2)—

(A) A statement of account, covering the three months next preceding, spec. ifying the number of channels on which the cable system made secondary transmissions to its subscribers, the names and locations of all primary transmitters whose transmissions were further transmitted by the cable system and the gross amount irrespective of source received by the cable system,

(B) A total royalty fee for the period based upon a schedule or schedules to be determined as follows:

(i) Within sixty days after the enactment of this Act, the Register of Copyrights shall constitute a panel of the Copyright Royalty Tribunal in accordance with Section 803 for the purpose of fixing a schedule or schedules of just and reasonable compulsory license fees.

(ii) The schedule or schedules of compulsory license fees shall be determined by the Tribunal in a like manner as if the Tribunal were convened to make a determination concerning an adjustment of copyright royalty rates, provided, however, that Sections 806 and 807 shall not apply and that the determination of the Tribunal shall be effective at the end of the twelfth month after the enactment of this Act or on the date the Tribunal renders its decision, whichever occurs sooner.

(iii) The Tribunal, immediately upon making a determination, shall transmit its decision, together with the reasons therefor, to the Register of Copyrights who shall give notice of such decision by publication in the Federal Register within fifteen days from receipt thereof. Thereafter, the determination of the Tribunal may be subject to judicial review in a like manner as provided in Section 809 but no other official or court of the United States shall have power or jurisdiction to otherwise review the Tribunal's determination.

(iv) Notwithstanding any of the provisions of the antitrust laws (as designated in § 1 of the Act of October 15, 1914, c. 323, 38 Stat. 730, Tit. 15 U.S.C. § 12; and any amendment of any such laws) owners of copyrights in different works and owners of cable systems may among themselves or jointly with each other agree on, or submit to the Copyright Tribunal for its consideration, one or more proposed schedules of compulsory license royalty fees, and proposed categories of secondary transmissions and cable systems for inclusion in any of the schedules to be established or adjusted by the Tribunal pursuant to this subsection and Section 802.

(C) The preceding subclause (B) of clause (2) of this subsection (d), shall not apply to cable systems that before March 31, 1972, were operating in accordance with the rules and regulations of the Federal Communications Commission, served less than 3,500 subscribers, and were not, directly or indirectly, by stock ownership or otherwise, under common ownership or control with any other cable systems serving in the aggregate more than 3,500 subscribers, provided that this exemption shall continue to apply as long as the cable system continues to serve not more than 3,500 subscribers and is not directly or indirectly, by stock ownership or otherwise, under common ownership or control with any other cable systems serving in the aggregate more than 3,500 subscribers, and provided further, that such cable system files annually at the Copyright Office in accordance with requirements that the Register of Copyrights shall prescribe by regulation, a statement setting forth the names and addresses of other cable systems directly or indirectly in control of, controlled by, or under common control with the cable system filing the statement, the number of subscribers served by each of such other cable systems; and the names and addresses of any person or persons who directly or indirectly own or control the cable system filing the statement and directly or indirectly own or control any other cable system or systems, and the names and addresses of the cable systems so owned or controlled. For the purposes of this subclause (C) of clause (2) of subsection (d), "subscriber" shall mean a household or business establishment, or, if a hotel, apartment house or similar establishment, it shall mean a lodging or dwelling unit within such establishment containing a televi sion receiving set.

(3) The royalty fees deposited under clause (2) shall be subject to the following procedures:

(A) During the month of July in each year, every person claiming to be entitled to compulsory license fees for secondary transmissions made during the preceding twelve-month period shall file a claim with the Register of Copyrights, in accordance with requirements that the Register shall prescribe by regulation. Notwithstanding any provisions of the antitrust laws

(as designated in § 1 of the act of October 15, 1914, 38 Stat. 730, Tit. 15 U.S.C. § 12, and any amendments of any such laws), for purposes of this clause any claimants may agree among themselves as to the proportionate division of compulsory licensing fees among them, may lump their claims together and file them jointly or as a single claim, or may designate a common agent to receive payment on their behalf.

(B) After the first day of August of each year, the Register of Copyrights shall determine whether there exists a controversy concerning the statement of account or the distribution of royalty fees deposited under clause (2). If he determines that no such controversy exists, he shall, after deducting his reasonable administrative cost under this section, distribute such fees to the copyright owners entitled, or to their designated agents. If he finds the existence of a controversy he shall certify to that fact and proceed to constitute a panel of the Copyright Royalty Tribunal in accordance with section 803. In such cases the reasonable administrative costs of the Register under this section shall be deducted prior to distribution of the royalty fee by the tribunal.

(C) During the pendency of any proceeding under this subsection, the Register of Copyrights or the Copyright Royalty Tribunal shall withhold from distribution an amount sufficient to satisfy all claims with respect to which a controversy exists, but shall have discretion to proceed to distribute any amounts that are not in controversy.

(e) Relation to other laws and regulations.-Nothing in this section shall be construed as limiting or preempting the authority of the Federal Communications Commission to regulate the operations of broadcast stations or cable systems pursuant to any other Act of Congress: Provided that, the Federal Communications Commission shall not limit the area, duration or other scope of the exclusivity a television broadcast station may acquire respecting secondary transmissions by cable systems that are not subject to the compulsory license provided for in subsection (c) of this Section 111 beyond any limits that may be applicable to the area, duration or other scope of the exclusivity a television broadcast station may acquire respecting other television broadcast stations.

(f) Definitions. As used in this section, the following terms and their variant forms mean the following:

(1) A "primary transmission" is a transmission made to the public by the transmitting facility whose signals are being received and further transmitted by the secondary transmission service, regardless of where or when the performance or display was first transmitted.

(2) A "secondary transmission" is the further transmitting of a primary transmission simultaneously with the primary transmission without change in program or other message content.

(3) A "cable system" is a facility that in whole or in part receives signals transmitted by one or more television broadcast stations licensed by the Federal Communications Commission and makes secondary transmissions of such signals by wires, cables, or other communications channels to subscribing members of the public who pay for such service. For purposes of determining the royalty fee under Subsection (d) (2) (B), two or more cable systems in contiguous communities under common ownership or control or operating from one headend shall be considered as one system.

(4) The "local service area of a primary transmitter" as used in this sec tion comprises the area in which a television broadcast station is entitled to insist upon its signal being retransmitted by a cable system pursuant to the rules and regulations of the Federal Communications Commission as published in Volume 37, Federal Register, page 3252, et seq., on February 12, 1972, or such similar rules as the Federal Communications Commission may from time to time lawfully adopt in the future in light of changed circumstances.

(5) The terms "full network station," "partial network station," "independent commercial station," and "non-commercial educational station" as used in subpart D 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, shall be defined in accordance with the rules and regulations of the Commission of the same date with such additional elaboration as the Commission may from time to time provide consistent with the intent of this Act.

(g) This section shall be effective upon the enactment of this Act. [Add the following to section 501]

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