The following communication was mailed the committee to be included in the record: ALLIED STATES ASSOCIATION OF MOTION PICTURE EXHIBITORS, Hon. FRITZ LANHAM, M. C., House of Representatives, Washington, D. C. In re Duffy copyright bill. DEAR SIR: It was the purpose of this association to appear before the Patents Committee, of which, I believe you are acting chairman, in behalf of (a) an amendment to the Duffy bill, or (b) failing that, in favor of the bill as passed by the Senate. It has only lately come to our attention that the Patents Committee intends to hear representatives of motion-picture exhibitors on the subject on Monday, April 13. Because of the many matters pending in this office, and the possibility that the undersigned might not be in Washington at a time when he could be reached for such hearing, it is respectfully requested that the enclosed memorandum be inserted in the record and considered by the committee as representing the views of the independent exhibitors belonging to this association. Yours very truly, ABRAM F. MYERS. MEMORANDUM FOR THE PATENTS COMMITTEE OF THE HOUSE OF REPRESENTATIVES 1. Representation.-This memorandum is submitted in behalf and by authority of the Allied States Association of Motion Picture Exhibitors. This association is a federation of regional associations composed of independent motion-picture exhibitors; that is to say, exhibitors not connected in any way with the producers and distributors of motion pictures. Annexed hereto, marked "Attachment A", is a list of the constituent organizations. In addition, there are some individual members in unorganized territory. 2. Position of independent exhibitors.-The exhibitors represented by this association favor amending the Duffy bill by adding, at an appropriate place, the following proviso, known as "the Allied amendment", which proviso was included in H. R. 12094, Seventy-second Congress, first session, favorably reported by this committee but later recommitted by action of the House: "Provided, That any assignment, license, or other disposition by the owner of a copyrighted motion picture of the right to exhibit such picture in any theater shall include the right to reproduce any and all sound recorded on the same film, or on disks accompanying and synchronized with such pictures; and no owner of a copyrighted picture shall license the exhibition thereof unless at the time of such license he possesses the authority to license the reproduction of all dialog, sound, and music recorded on the film or disks and synchronized with such picture." If the committee shall feel that at this late date said proviso cannot be incorporated in the bill without endangering its passage at this session, the independent exhibitors favor the prompt enactment of the Duffy bill as passed by the Senate. 3. Purpose of the proviso.-The proviso is designed to remedy a vicious system whereby the exhibitors are compelled to pay, not one, but three separate and distinct charges for the privilege of exhibiting copyrighted motion pictures containing copyrighted music, viz: (1) A film rental paid to the distributor of the motion picture; (2) a so-called score charge also paid to the distributor of the motion picture; and (3) a so-called "seat tax" paid to the American Society of Composers, Authors and Publishers. The film rental is the charge which the distributor has always exacted for the right to exhibit its film. The score charge made its appearance with the advent of sound and has been explained as a special exaction to cover the cost of recording sound. The seat tax is the charge made by A. S. C. A. P. for the right to publicly perform copyrighted music. Under the proviso the producer-distributors of motion pictures would have to bargain for and obtain all the rights necessary to produce, record, exhibit, and reproduce copyrighted motion pictures with copyrighted music and to convey to the motion picture exhibitors all the right necessary to exhibit the films in 53579-36 (Face p. 1004) their theaters for a single charge, thus relieving the exhibitors of the necessity of paying the score charge and seat tax as separate items. 4. Proviso would remedy evils without impairing rights.—The proviso does not contemplate that any royalty now allowed a copyright owner by law shall be abolished. It merely means that the producer-distributors shall bargain for and obtain all necessary rights and embody them in a single license for a single charge. First. There will be no change in the situation so far as the picture itself is concerned, putting out of mind, for the time being, the question of sound. Second. The recording fees exacted by the electrical companies and the Music Publishers' Protective Association will be included in the cost of production instead of in a score charge, the amount of which now is a matter of haggling between the exhibitors and distributors and bears no relation to cost. Third. The organized producers and distributors will bargain freely and openly with the organized composers (through A. S. C. A. P.) for the public performing rights on recorded music and include that, also, in the film rental. Thus the copyright owners and the consumers of music will be placed on an equal footing in bargaining for the right to use copyrighted music. As matters stand, the copyright owners are in a position to dictate, instead of bargain for, terms. This un-American situation must and will be remedied eventually. Why not now? 5. Penalty clause must not be reinstated. The Duffy bill happily eliminates the existing penalty clause, miscalled liquidated damage clause. When Congress passed a law giving copyrightable compositions the status of property, it discharged its full duty under the Constitution. The constitutional provision did not contemplate that this form of property should be elevated above all other forms of property or that the possessors thereof should become dictators. (a) As regards pictures.-Without going into details at the present time, permit me to point out that infringements of motion-picure copyrights are in substance nothing more or less than violations of contracts. Exhibitors cannot come into the possession of films without a license from the distributor of the films. These license agreements are lengthy, technical, complicated. This sometimes leads to controversies as to whether a picture was exhibited prior to or after the licensed period, i. e., whether there was an "unauthorized showing". In all cases of this kind the exhibitor is cited by the Copyright Protection Bureau to pay the statutory penalties, regardless of whether the alleged violation was knowing and willful, and irrespective of any collusion or connivance on the part of the agents of the distributors. In the Hearings on General Revision, mentioned hereafter, you will find on pages 388-389 a copy of the letterhead of this bureau which sets forth prominently the penalty clause of the copyright statute. The first peremptory demand usually is followed by an offer to compromise on the basis of $100 for each alleged unauthorized showing, and the exhibitor being terrified, and in many cases unable to afford a trial at a considerable distance from his home, succumbs to the extortion. Thus the Federal Government has taken sides in a controversy growing out of an exhibition contract; it not only has relieved the distributor of the necessity of proving any damages, but has armed him with a weapon wherewith to extort sums greatly in excess of any possible damages. But if the distributor breaches his contract-for example, if he fails to deliver a picture he has contracted to furnish-the exhibitor is put to his proof in the matter of damages, which in the nature of the case must be speculative, and frequently is without remedy. (b) As regards music.-These penalties enable the copyright owners to charge double royalties (one for recording and one for publicly performing), and effectively preclude both the producers and exhibitors from bargaining with the copyright combinations on a basis of equality, and further enable the latter to impose whatever royalties they choose not only for copyrighted compositions actually recorded on the films but for their entire repertoire. The utterly fictitious value given to copyrighted compositions by the arbitrary and excessive statutory penalties clearly transcends what is reasonably necessary to protect the copyright monopoly, is not within the fair intendment of the constitutional grant of power to enact copyright legislation, and enables combinations of copyright owners to practice coercion and extortion in a manner denied to all other property owners. We cannot believe that the committee will restore the penalty provisions in deference to the representations of the attorneys for the copyright combinations. The motion-picture exhibitors will resist to the utmost any proposal to enact a copyright law perpetuating these penalties. In taking this position they are seeking no selfish end. They are being discriminated against by a law of the United States and they are exercising their constitutional right to petition the Congress for a redress of grievances. Should the committee follow the compromise suggestions that have been circulated, to relieve certain consumers of music from the penalty clause and not others, the independent exhibitors insist that they be included in the exempted class. They will deeply resent any action taken to relieve other small businesses, such as taverns and innkeepers, of this oppression whilst leaving the independent theaters subject to it. 6. Summary.-The motion-picture exhibitors have long sought a revision of the copyright laws which would relieve them of activities of combinations of copyright owners made possible by the extortionate statutory penalties. The theater owners do not seek to use the property of others without payment of just compensation. They are not looking for "something for nothing." They do, however, protest against statutory provisions which, in effect, deny to them the equal protection of the law. In the winter of 1932 the Patents Committee of the House of Representatives held extensive hearings at which the unjust burdens inflicted upon the exhibitors by such combinations as the American Society of Composers, Authors, and Publishers (represented by Messrs. Buck and Burkan) and the Copyright Protection Bureau (represented by Mr. Hess) were fully explained. These hearings finally resulted in the reporting out of a bill (H. R. 11948, 72d Cong., 1st sess.) which contained provisions calculated to curb the depredations of these combinations. This bill was remanded to the committee for reasons not related to these wholesome provisions, and the Patents Committee took no further action in the matter. The present protracted hearings have produced a large transcript, and we are not disposed to add to the bulk and expense by repeating all that was said in 1932. We earnestly hope that members not on the committee at this time will read the portions of the former hearings that we have indicated in order that they may have an accurate picture of the position of the independent motionpicture exhibitors. Respectfully submitted. ALLIED STATES ASSOCIATION OF MOTION PICTURE EXHIBITORS, By ABRAM F. MYERS, General Counsel. REVISION OF COPYRIGHT LAWS TUESDAY, APRIL 14, 1936 HOUSE OF REPRESENTATIVES, The committee met at 9:30 o'clock a. m., Hon. J. Burrwood Daly presiding. Mr. DALY. According to the agenda for today, the program was to give the entire day to the motion-picture producers and distributors. As I understand it, there are three representatives of those organizations here and each desires 30 minutes time. The subject is a broad one, with many ramifications, and I can readily see where it would take approximately that time to give the committee a clear understanding of the matter. That will take us until 11 o'clock. A request has been made by several others to be heard today and, subject to getting through with the motion-picture producers and distributors, to whom the day really belongs the committee will hear them if the schedule for today's proceedings permits. My understanding is you have arranged among yourselves the order in which you are to be called for the presentation of your evidence. Mr. KILROE. Yes, sir. Mr. DALY. I think the first one is Mr. Kilroe. I presume you have already given to the stenographer your name, address, and official title. STATEMENT OF EDWIN P. KILROE, ATTORNEY FOR TWENTIETH CENTURY-FOX FILM CORPORATION AND MOVIETONEWS, INC. Mr. KILROE. Yes; I have already done that. I am attorney_for Twentieth Century-Fox Film Corporation and Movietonews, Inc., producer of Fox Movietone News and chairman of the copyright committee of the Hays organization-Motion Picture Producers and Distributors of America, Inc. The first point I would like to discuss with the committee is the concern of the motion-picture industry in copyright legislation and when I use the term "we" I am going to refer to the industry. The chief concern of the motion-picture industry in copyright legislation is that the law enacted be clear, definite, and precise and that there be no ambiguity about the rights granted under the law. We are probably the greatest users of copyrighted material in the world. We pay more money for the use of copyrighted material than all the other users put together, I believe. The exact figures are not available, but a fair estimate of the money paid by the in 53579-3664 1005 |