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photocopying should be permitted free of copyright while other circumstances and conditions called for subjecting photocopying to copyright restrictions. On the foundation of the fair use doctrine developed earlier by the courts, the principles underlying the "Gentlemen's Agreement" worked out initially be some of the interested groups, and the practical and equitable considerations presented by the needs of the several interested groups, Congress was able to establish sets of basic principles and subsidiary conditions and exceptions to resolve the issues in the variety of situations that had arisen or could be foreseen. In this process Congress was aided by the spirit of compromise and accommodation in which the interested groups negotiated agreements among themselves on the principles of the legislative provisions and on practical guidelines for their application.


During the early 1960s commercial enterprises began to be organized to bring to subscribers, by means of new technologies, using special antennas located on high points and a network of cables and amplifiers, television broadcasts of stations whose signals could not be received satisfactorily by the subscribers off-the-air because of the distance or the hilly terrain between the station and the location of the subscribers. By the middle of that decade such commercial enterprises, known as cable television or CATV systems, were proliferating rapidly and expanding their operations to carry more, and farther distant, broadcasting stations; and it had become apparent that a copyright problem of considerable magnitude was involved in their operation. Television broadcast programs commonly included performances of copyrighted motion pictures, plays, music, and other works, for which broadcasters obtained licenses from the copyright owners. Was the retransmission of the broadcast programs by a cable system to its subscribers to be treated as a further performance of the copyrighted works which infringed the copyright owners' exclusive right of public performance?

The existence of this problem and its economic importance for copyright owners and the operators of cable systems, and indirectly for broadcasters, had come to the attention of the House Subcommittee by the time it held its first hearings, in 1965, on the initial bill for general revision of the copyright law. The testimony at the hearings demonstrated that the issue was highly controversial, and that it involved many ramifications pertaining to the economic position and potential growth of cable systems, and their potential impact upon broadcasters as well as copyright owners. It was also evident that the copyright problem was complicated by being intertwined with the problems of communications policy relating to the nations' broadcasting system that were dealt with by the Federal Communications Commission.

In 1966, after its hearing had been completed, the House Subcommittee formulated a complex set of provisions for inclusion in the revision bill by which it proposed to reconcile the divergent views and needs of the interested parties. The Subcommittee recognized that the copyright problem could not be resolved by a uniform rule under which all cable retransmissions would be an infringement, or not an infringement, of copyright; it proposed that in some situations retransmissions by a cable system would be exempt from copyright, in certain other situations their retransmissions would be subject to copyright, in still other situations their retransmissions (of broadcasts from another area) would become subject to copyright only if they were given advance notice that a local broadcasting station had an exclusive license to show the program in the local area, and in yet other situations (where they brought the broadcasts of distant stations into an area not adequately served by local stations) they would be liable only for payment of a reasonable license fee.

Meanwhile, the problem was brought before the courts in the case of United Artists Television, Inc., v. Fortnightly Corp., where a cable system brought to its subscribers the television programs of several stations whose signals could not be received satisfactorily by the subscribers because of the intervening mountainous terrain.

The copyright owners of motion pictures shown in the broadcasts retransmitted by the cable system sued the system for infringement. The District Court (255 F. Supp. 177, S.D.N.Y. 1966) held that the retransmission constituted infringement of the copyright owner's exclusive right of public performance. On appeal, the Circuit Court of Appeals reached the same conclusion (377 F. 2d 872, 1967). Both the District and Circuit Courts considered this case to be parallel with those decided a generation earlier, particularly the Remick, Jewell-LaSalle, and SESA cases (reviewed above in the portion of this report dealing with radio and television broadcasts); in those earlier cases, broadcasts of copyrighted works, and the public diffusion of receptions of such broadcasts, were held to be infringing public performance. Of particular interest here is the philosophical approach stated in the District Court opinion in the Fortnightly case as to the judicial application of the 1909 Copyright Law to the new technology of cable retransmission of broadcasts:

"The updating of statutory language to accommodate it with
current technological advances is part of the genius of our
law to adapt and to grow. The achievements of modern science
and technology surpass the imagined marvels of the philosopher's
stone and Aladdin's lamp. The practical necessities of such
an age require judicial recognition of the contemporary mean-
ing of the words of the Copyright Act...

"It is hardly conceivable that Congress intended the statute to be read with a strangling literalness so as to require it to be amended on a month-to-month basis as the means of keeping pace with science and technology. The responsibility of keeping the Copyright Law a living law devolves primarily, though not exclusively, upon the courts whose traditional function of statutory interpretation and construction, if effectively performed, will achieve in great measure the desirable object of accommodating the statute to the realities of modern science and technology."

The decision of the District and Circuit Courts in this case was destined, however, to be reversed by the Supreme Court: Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968). To the surprise of most commentators, the Supreme Court held, in a 5 to 1 decision, that the retransmission of broadcasts by the cable system to its subscribers did not constitute a performance of the works in the broadcast within the meaning of the Copyright Act. The Supreme Court approached the question by saying:

"At the outset it is clear that the petitioner's systems did
not 'perform the respondent's copyrighted works in any con-
ventional sense of that term, or in any manner envisaged by
the Congress that enacted the law in 1909. But our inquiry
cannot be limited to ordinary meaning and legislative history,
for this is a statute that was drafted long before the develop-
ment of the electronic phenomena with which we deal here. In
1909 radio itself was in its infancy, and television had not
yet been invented. We must read the statutory language of 60
years ago in the light of drastic technological change."

Nevertheless, the Court held that the cable retransmission was not a "performance" under the Act. It reasoned:

"Broadcasters have judicially been treated as exhibitors, and viewers as members of a theater audience. Broadcasters perform. Viewers do not perform. Thus, while both broadcasters and viewers play crucial roles in the total television process, a line is drawn between them. One is treated as active performer; the other, as passive beneficiary.

"When CATV is considered in this framework, we conclude that it falls on the viewer's side of the line. Essentially, a CATV system no more than enhances the viewer's capacity to receive the broadcaster's signal; it provides a well-located antenna with an efficient connection to the viewer's television set."

In his lone dissent, Justice Fortas agreed with the lower courts that the precedents of the Jewell-La Salle and SESAC decisions should be followed here. He observed that any decision of the Court -- either that CATV systems were liable for copyright infringement, or that they were not -had dangerous implications for one party or the other, and commented:

"Our major object, I suggest, should be to do as little damage as possible to traditional copyright principles and to business relationships, until the Congress legislates and relieves the embarrassment which we and the interested parties face.'

Justice Fortas said that the majority opinion abandoned the teachings of the precedents "in an attempt to foster the development of CATV", and he had noted earlier that "it is darkly predicted that the imposition of full liability upon all CATV operations could result in the demise of this new, important instrument of mass communications." The majority opinion, in a footnote, said that the result of following the JewellLaSalle decision here would be such "as retroactively to impose copyright Tiability where it has never been acknowledged to exist before." These brief quotations suggest a plausible explanation of the surprising result reached by the majority, namely, the argument which was made by the cable system in this case that a holding of infringement would subject existing cable systems generally to retroactive liability of such aggregate magnitude as to destroy many of them.

It should be noted specifically that both the majority and dissenting opinions in the Supreme Court decision in Fortnightly, as well as the lower court decisions, took cognizance of the ongoing consideration by Congress of the copyright problem of cable retransmissions, in the context of the general revision of the copyright law, and suggested that the problem in its complex and varied aspects called for resolution by Congress in the manner permitted by the flexibility of legislative improvisation. (We have already seen the same thought echoed in the Court of Claims decision in Williams and Wilkins.)

A few years later, in 1974, another case involving the copyright liability of CATV systems was before the Supreme Court. In this case, Teleprompter Corp. v. CBS, 415 U.S. 394, the cable system, using microwave relay equipment, brought to its subscribers the signals of far distant broadcast stations that could not have been intended to be received by them. (We leave aside the other issues in this case that are not relevant here.) The District Court in which this case began held (CBS v. Teleprompter, 355 F. Supp. 618, S.D.N.Y 1972) that the Supreme Court decision in Fortnightly applied here; it considered the function of the cable system in importing distant signals to be no different in essential character from the function of the system in the Fortnightly case as analyzed by

the Supreme Court. The Circuit Court of Appeals held otherwise (476 F. 2d 338, 2d Cir. 1973); it thought that the Fortnightly decision of the Supreme Court established the governing rule where the CATV served to bring the signals of a local broadcasting station to persons in the adjacent community who were prevented from receiving them directly only because of topographical conditions. When the CATV imported distant signals, the Circuit Court held, it did more than merely providing an antenna service; it brought the broadcast programs to a new audience that could not have received them even with an advanced antenna such as CATV used in the community, and in doing this it was "functionally equivalent to a broadcaster and thus should be deemed to 'perform' the programming distributed to subscribers on these imported signals."

The Supreme Court, in its majority opinion, agreed with the District Court's view that its ruling in the Fortnightly case applied to the CATV importation of distant signals since, it thought, the function of the CATV in providing viewers with the means of receiving broadcast signals is essentially the same. The majority opinion also rejected the argument that copyright liability should be imposed upon the importation of distant signals because the CATV was thereby diluting the value of the copyright owner's market for licensing broadcasts by stations in the area to which the distant signals were imported.

Three Justices dissented strongly, two of them not having participated in the Fortnightly decision. The dissenters indicated that they thought the Fortnightly decision itself was wrong, but that, accepting that decision now, the importation of distant signals presented a different case in which the CATV was functionally equivalent to a broadcaster. In one of the two dissenting opinions, by Justice Douglas with the concurrence of Chief Justice Burger, it was said:

"The Copyright the owner of a copyright 'the exclusive right' to present the creation 'in public for profit' and to control the manner or method by which it is 'reproduced. A CATV that builds an antenna to pick up telecasts in Area B and then transmits it by cable to Area A is reproducing the copyright work not pursuant to a license from the owner of the copyright but by theft. That is not 'encouragement to the production of literary (or artistic) works of lasting benefit to the world' that we extolled in Mazer v. Stein...

'... Rechanneling by CATV of the pirated programs robs the copyright owner of his chance for monetary reward through advertising rates on rebroadcasts in the distant area and gives those monetary rewards to the group that has pirated the copyright."

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