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RICHARD H. DUNLAP, ATTORNEY AT LAW,

Los Angeles, Calif., December 21, 1971. Mr. BEN F. WAPLE, Secretary, Federal Communications Commission, Washington, D.C.

DEAR MR. WAPLE: This letter is written on behalf of Asociacion de Productores y Distribuidores de Peliculas Mexicanas (Mexican Producers Association), a formal association of the more than sixty Mexican corporations, whose business is the production of Spanish language feature motion picture films, and which is located in Mexico, D.F., Mexico. Its content and its submission have been authorized by Sr. Fernando de Fuentes, President of the Association, and its Board of Directors. Reference to the said Mexican Producers Association will be made Jiereinafter to the "Association".

For over forty years Mexican motion picture producers have been producing feature motion picture films for exploitation in the many countries and areas of the world in which the Spanish language is spoken. For many years the producer members of the Association have been producing between 70 and 120 new feature length, Spanish language, commercial motion pictures, all of which are duly copyrighted in Mexico and in the United States of America. Virtually every such feature motion picture is licensed by American-based distributing companies to theatres located within the large Spanish speaking communities within the United States, and later to United States VHF and UHF television stations serving such Spanish speaking communities within the United States.

The license fees received from the licensing of the said motion pictures range from several thousand dollars per exhibition license in connection with the first exhibition in large theatres in the United States of the most important motion pictures to a few dollars per license received from licenses to small town theatres and VHF or UHF television stations in the United States. The total fees received by the Mexican motion picture producers, through their United States distributors, for such licenses of such copyrighted motion pictures within the United States, amount to between fifteen and fifty percent of the total revenue received hy said Mexican motion picture producers from the entire world, including the Republic of Mexico. Said receipts from within the United States are absolutely vital to the recovery of the cost of production of the said Spanish language motion pictures, and, in turn to the continued existence of the Mexican motion picture industry, at least in its present form.

The greater part of such revenue from within the United States derives from licenses to Spanish language theatres serving Spanish speaking communities in the United States. However an increasing portion of such revenue derives from the licensing of such Spanish language feature motion pictures to United Statesbased VHF and UHF television broadcasting stations which serve the SpanishAmerican communities in the states of Texas, New Mexico, Arizona and California.

The Association has become acutely aware of a practice, apparently approved by the Federal Communication Commission of the United States, which permits the importation of Mexican television signals from Mexican television stations into the United States and their dissemination to ever-widening markets within the United States by means of expanding and inter-connected cable television systems. No permission is requested, and no license fee is paid, by such cable television systems for the unauthorized taking and exploitation for economic gain of the Spanish language motion pictures belonging to the producer-members of the Association.

The Association is informed that an American corporation located in Harlingen, Texas, and known as Valley Cable TV, is capturing signals broadcast from three Mexican stations in Monterrey, Mexico and from one Mexican station in Matamoros, Mexico and disseminating these signals to many thousands of Spanish-speaking homes, via microwave connections, in South Texas.

The Association, respectfully but urgently, calls the following factors in connection with this unlicensed use of this Mexican and United States copyrighted motion picture film property to the Commission's attention.

1. The filmed and taped material broadcast by the four Mexican stations in Mexico is broadcast under licenses delimiting the territory and use to be made of such material. In no case does the license include any part of the United States.

2. Much of the filmed material broadcast by the Mexican stations consists of feature motion pictures belonging to the producer-members of the Association. Many of said motion pictures are of very recent production date and the Mexican television stations broadcast them even before their theatrical exploitation within the United States.

3. All of said motion pictures are also licensed later and separately for television exploitation within the United States to various United States entities, in some cases distributors and in many cases directly to United States television stations serving the Mexican-American, Spanish speaking communities in the states of the United States bordering the Republic of Mexico.

4. Valley Cable TV, and other similarly situated cable television systems located on the United States side of the Mexican-American border, obtain no license from the owners of the copyright of such filmed and taped material either in Mexico or in the United States to exploit such copyrighted material.

5. There is a vital and essential difference between the capture and dissemination of copyrighted material by cable television systems that originates within the United States and that which originates outside the borders of the United States. In respect to copyrighted material licensed for broadcast within the United States, there is, in fact, a license for the copyright jurisdiction within which the cable dissemination is made. Furthermore the copyright owner can negotiate a fee commensurate with the extent of the use.

In respect to copyrighted material licensed for broadcast solely outside of the United States (in this case the Republic of Mexico only) the United States cable system is taking and using literary property within the United States which is not licensed for exploitation within the United States at all. The copyright owner cannot negotiate a license requiring the Mexican television station to pay any additional fee for the exploitation within the United States—a jurisdiction, in fact, not within the license granted to the Mexican station.

Seemingly the rules of the Commission permit the United States cable system to take the property of the Mexican owner of the Mexican and United States copyrights without the necessity of anyone having obtained a license to exploit the material within the United States. This is particularly grave inasmuch as there is no apparent legal recourse, and there is no apparent impelling public interest need for such punitive regulations in respect to the motion picture industry of a friendly country.

6. The Association understands the desire of the Commission to assist the rapidly expanding United States cable television industry and understands the aim of the Commission to bring Spanish language entertainment to the Spanish speaking, Mexican-American communities within the United States. It is the opinion of the Association, however, that the Commission has not adverted to the fact that such entertainment is presently available to the border cable television systems from Spanish language full time broadcasts originating within the United States. For example, Valley Cable TV has access to KWEX-TV, San Antonio, Texas, a full time, high-quality Spanish language station, and has access, via microwave, to other excellent and growing Spanish language, United Statesbased television stations as well. To adequately serve the Spanish language communities reached by Valley Cable TV, and other similar situated border cable systems, the importation of Mexican originated signals is not necessary.

It is the further opinion of the Association that the Commission has not adverted to the actual and potential harm done to the Commission's own domestic VHF and UHF Spanish language station licensees by permitting border cable television systems to import and disseminate widely Spanish language programs from Mexico instead of utilizing fully the excellent Spanish language programming originating within the United States. The Association does not need to direct the Commission's attention to the importance of supporting its domestic VHF and UHF Spanish language stations.

It is the final opinion of the Association that the Commission has not taken into consideration at all the grave and unwarranted economic damage to an important industry of a friendly, neighboring country by permitting the taking of its property without compensation insofar as actual television exploitation within the l'nited States is concerned and the endangering of its entire revenue from the United States market from both television and theatrical exploitation.

In connection with this last statement—the endangering of its entire revenue from the United States—the Association has stated hereinabove that recently produced Mexican motion pictures have been imported from Mexican broadcasts by Valley Cable TV and disseminated to the South Texas public before those motion pictures have had even a first exhibition in some South Texas Spanish language theatres. The said theatre operators have advised that they will have to close their theatres if such a practice continues. If such a problem existed only in South Texas the economic harm to the Association's producer-members would be serious enough; however the actual and increasing wide dissemination by microwave of cable-transmitted programs could mean the death blow to Spanish language theatrical exploitation of motion pictures in the United States.

8. In no sense does the Association desire to restrict or to restrain the access by Spanish-speaking, Mexican-American communities to top quality Spanish language film and tape material, including the best Mexican-produced Spanish language feature motion pictures.

There is, in the Association's opinion, one, and only one, equitable and wholly reasonable means of achieving such public interest aim. That is for the Commission to prohibit the unlicensed importation into the United States of Mexican television signals by United States based cable television. This will cause such cable television systems to fully utilize the programs in the Spanish language originating from VHF and UHF stations within the United States.

At this point it is important to note that such domestic VHF and UHF stations, in fact, obtain by license much of the same film and tape Mexican material which Valley Cable TV imports, free of license, at a prior date. It is equally important to note that such material is, and would continue to be, available to Valley Cable TV from such domestic VHF and UHF stations although at a somewhat later date.

Such a prohibition will also prevent the serious and damaging economic harm presently caused to the Mexican motion picture and television industry.

RICHARD H. DUNLAP,

Association's Attorney.

ADDENDUM TO STATEMENT FOR SPECIAL LIBRARIES ASSOCIATION REGARDING LIBRARY

PHOTOCOPYING PROVISIONS IN THE REVISION OF THE COPYRIGHT LAW, S. 1361, AS PRESENTED ON JULY 31, 1973

A proposed amendment to § 108(d) of S. 1361 was presented by the Association of Research Libraries (ARL) and the American Library Association (ALA) at the hearings on July 31, 1973. Because SLA was not aware of the proposed amendment before the hearing, I was not able to reply for SLA when the Committee's Chief Counsel asked if the ARL-ALA proposal was acceptable to SLA. Since then, I have communicated with members of the SLA Board of Directors by means of a telephone conference call.

In this Addendum, SLA is presenting our reply plus comments on several other items in S. 1361 which are pertinent to our position as well as pertinent to our comments on the ARL-ALA proposed amendment. Our comments are presented in the sequence :

1. SLA Adherence to the Position.
2. SLA Opinion Regarding the Proposed ARL-ALA Amendment.

2.1 In relation to proposed § 108 (d) (1).
2.2 In relation to proposed 108(d) (2).
2.3 In relation to the Qualifying Clause of proposed § 108 and to existing

$ 108(a) (1) and (2). 2.4 Summary. 3. Support for proposed National Commission on New Technological Uses of Copyrighted Works.

1. SLA Adherence to its Position. SLA maintains as its first preference, the position as presented in our written statement (dated July 26, 1973) as presented to the Subcommittee. To restate our position briefly, it is one which seeks to reach an intermediate position of accommodation between the seemingly irreconcilable positions of publishers and literary authors on the one side, and the positions of some parts of the library and educational communities on the other. We have suggested that there be a provision for the payment of a per-page royalty on photocopies of copyrighted works at a rate of “cents-per-page.” Such an arrangement has precedence already in the proposed Copyright Act in 88 111, 114, 115 and 116 (relating to cable transmissions, sound recordings, etc.) A Royalty Tribunal of

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the type proposed in Chapter 8 of the Copyright Revision Bill could assure that the per-page royalty rate is reasonable. We believe that a range of $0.01-$0.05 should be both fair and adequate. In addition, the publishers must themselves establish the agency for the collection and for the determination of pro rated payments to each publisher (in an ASCAP-style operation).

2. SLA Opinion Regarding the Proposed ARL-ALA Amendment, SLA could only support the proposed amendment to $ 108(d) if certain modifications were to be introduced. Some of the modifications refer to the specific wording as submitted; other modifications refer to the relationship of g 108(d) to g 108(a) (1) and (2).

2.1 SLA objects to the unnecessary inclusion of the word, further, in g 108(d) (1) of the proposed amendment:

“(1) The library or archives shall be entitled without further investigation, to supply a copy of no more than one article or other contributions.

Inclusion of the word, further, can mean that some other investigation is required. If the intent of the proposed § 108(d) (1) is to implement the concept of "fair use" (§ 107) the inclusion of the word, further, can result in interpretations which will inevitably lead to delays in service to the user.

Although the proposed ARL-ALA substitute for the existing $ 108(d) (1) states library or archives entitlement to supply a copy of “no more than one article or other contribution to a copyrighted collection or periodical issue . (emphasis supplied),” it is principally periodical articles that must be photocopied in or for most special libraries. Moreover, time is usually of the essence. Hence, the language of $ 108(d) (2) in the proposed substitute requiring “reasonable investigation" for obtaining reprints or permissions to copy is a procedure that might cripple the operations of most special libraries. A similar "procedural" requirement for obtaining "an unused copy" presently exists in § 108(d) (1) of s. 1361. It is certain that most special libraries would prefer either no requirement to seek permissions or reprints of periodicals especially, or, preferably, some means of paying for all copying that might exceed a statutory limitation on "fair use" however finally defined. In the event that multiple copies might be required, such a proposed payment would also provide equitable payment to the publishers.

2.2 SLA objects to the underlined portions of the proposed § 108(d) (2). “(2) The library or archives shall be entitled to supply a copy or phonorecord of an entire work, or if more than a relatively small part of it, if the library or archives has first determined, on the basis of a reasonable investigation that a copy or phonorecord of the copyrighted work cannot readily be obtained from trade sources."

The second italicized words, from trade sources, are even broader than the existing $ 108(d) (1) in S. 1361, "from commonly known trade sources," and therefore the proposed amendment is even less satisfactory. “Trade sources" is a term used to include second-hand book stores, antiquarian book dealers, etc. If the book is "out-of-print" (that is, when the original publisher's stock is exhausted), the original copyright owner is not deprived of any income if a copy is purchased from a second-hand book dealer. The mechanism of using "Books-InPrint” (published by the R. R. Bowker Co., a Division of Xerox, New York) is a simple and straight forward mechanism. The information in "Books-In-Print" is supplied by the publishers themselves. (There is no comparable compilation for periodicals.)

The first italicized words, if the library or archives has first determined, will result in very bad delays in our opinion. The larger research libraries (from whom most photocopies are requested) have, for a number of years, complained publicly of insufficient staff even to service requests for photocopies of only a few pages. There is only a limited number of librarians (in the larger research libraries) qualified to address intelligent queries to “trade sources.

2.3 Deletion of the Qualifying Clause in the first sentence of the proposed $ 108(d): "... whose collections are available to the public or to researchers in any specialized field.”

This language simply emphasizes a qualification already stated in $ 108(a)(1) and $ 108(a)(2) that “(1) ... reproduction or distribution is made without any purpose of direct or indirect commercial advantage; (emphasis supplied) and (2) The collections of the library or archives are (i) open to the public ... (emphasis supplied)."

Without further definition of the meaning of this existing language, it must be pointed out that a majority of special library operaitons are conducted for purposes of "indirect commercial advantage" for parent business or industry. Moreover, a majority of these libraries are not usually "open to the public" nor to "researchers in any specialized field” if this language is further interpreted to mean specialized research of a competitive nature as now defined in Clause (ii) of $ 108 (a) (2) of S. 1361, 93rd Congress.

Hence, the immediate concern of the Special Libraries Association in the 8 108 limitation on exclusive rights is the exception from this limitation by virtue of the character of most special libraries—a point not heretofore clearly expressed to Congress or widely understood by the other library associations who have a wider public constituency. However, it is understood that it would be totally inequitable to seek a further limitation on exclusive rights by insisting upon the deletion of g 108(a) (1) and (2) language as it apparently applies to special libraries. But we would insist upon the deletion of the "access" requirement that is repeated in the ARL-ALA proposed substitute for $ 108(d) (1).

2.4 In summary, it is for the above reasons that Special Libraries Association is seeking to reach an intermediate position of accommodation between the publishers and literary authors on the one hand, and other library associations on the other hand by way of establishing some method of collecting per-page royalty copying fees in excess of "fair use" copying in special libraries—however, “fair use" is finally defined in g 107 of S. 1361.

In the view of this Association, it would be far more equitable for both publishers and libraries to establish a royalty or licensing mechanism that would free both parties from the onerous routine of seeking reprints or permissions before copying out-of-print works.

3. Support for Proposed National Commission. Proliferation of new, and ever more specialized periodicals and other publications at constantly increasing subscription rates is a major cause of decreasing number of subscribers. This proliferation of new periodicals began after World War II in the same time period that photocopying equipment became more commonly available and more widely used. All decreases in subscription income cannot be ascribed to photocopying. Publishers themselves have not applied appropriate “birth control" or management evaluation measures to their own products. Unfortunately, no unbiased data are available to sort out and evaluate the resulting claims and counter claims.

Special Libraries Association wishes to emphatically state its support of Title II of S. 1361 for the establishment of a National Commission on New Technological Use of Copyrighted Works.

Special Libraries Association is aware of the many contradictory points of view and problems in interpretation that have been submitted to the Subcommittee. The Association wishes to record its commendation of the Subcommittee for its careful consideration and assessment of the many aspects of the copyright field.

F. E. MCKENNA,

Executive Director. PIERSON, BALL & DowD,

August 1, 1973. Hon. John L. MCCLELLAN, U.S. Senate, New Senate Office Building, Washington, D.C.

DEAR SENATOR MCCLELLAN: It is my understanding that you have scheduled hearings this week on S. 1361 before the Senate Subcommittee on Patents, Trademarks and Copyrights and that you will be hearing from a cross-section of representatives of the various media on the copyright questions to which the proposed legislation is addressed.

I am writing to you as Chairman of that Subcommittee with the request that the substance of this communication be taken into consideration in your deliberations. My communication is addressed to you in my capacity as Chairman of the Board of Sterling Communications, Inc. whose wholly-owned subsidiary, Sterling Manhattan Cable Television, Inc. operates the cable television system in the southern half of Manhattan Island, the largest cable system in the nation. Time Inc., of which I am a vice president, in turn owns almost 80% of Sterling Communications.

As you are well aware, although segments of the cable industry still have serious reservations, the industry generally has been committed for some time to supporting the concept of payment of a reasonable fee for copyrights. You are also aware, of course, of the recent judicial decisions bearing upon this question and the fact that they lend support to the position that cable systems are not and

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