According to the court, that broad non-compete was a misuse of the copyright (even if it did not violate the antitrust laws) because the copyright holder attempted to use its copyright "to control competition in an area outside the copyright."3/ Lasercomb notwithstanding, it would likely be

More

difficult to prove that ASCAP and/or BMI have misused their copyrights. It is not clear for example that any of the anecdotes amount to a claim that the organizations have attempted to control competition outside the copyrights. fundamentally, the doctrine of copyright misuse, unlike the doctrine of patent misuse, has not been widely accepted by the courts. Indeed, no court of appeals other than the Fourth Circuit has clearly embraced the doctrine. There is good

reason for the reluctance on the part of other courts: the remedy for a misuse i.e., non-enforcement of the copyright

-

-

is

even against third-parties not affected by the misuse draconian. Moreover, there is reason to be concerned when the enforceability of property rights turns on the whims of what a federal judge believes is good "public policy."

Third, those who feel aggrieved by some practice of ASCAP and/or BMI could try to persuade the Department of Justice to modify the ASCAP and BMI decrees to prohibit the allegedly abusive practice. As explained above, the decrees

have been modified before. However, unless ASCAP and BMI were

willing to consent to the modification, the Department would

3/911 F.2d at 979.

essentially have to prove through litigation that the

challenged practice violates the antitrust laws. The

Department, like a private plaintiff, however, would have to surmount the Supreme Court's BMI decision in order to prove

the practice unreasonably restrains trade.

None of these options makes as much sense as

legislation.

As a practical matter, what the National

Restaurant Association and others are complaining about is really not an antitrust issue or at least not one that antitrust courts are well equipped to handle. The complaint is not that owners of copyrighted musical works have restrained competition but rather that the law provides them with too much protection of their property rights. It is not clear, however, whether the law gives them too much or not enough.

On the one hand, when a restaurant tunes its sound system to a local radio station to improve its ambiance and to attract more business it is profiting from performance of a non-dramatic musical work. There is some appeal to the argument that the copyright owner has a right to share in those profits. From society's point of view, to the extent

that copyright holders effectively cannot share in those profits, then at the margin and in theory fewer copyrighted works will be produced.

On the other hand, there is no way of which I am aware to determine whether we as a country currently devote

too much, too little, or just the right amount of resources to If we devote too many resources to such

copyright creation.

endeavors, then society will be better off by denying

copyright protection to incidental performances of works of

music.

this conundrum.

There is no correct answer in an absolute sense to Rather it is essentially a political question best resolved in a political forum, namely Congress. I wish

we antitrust lawyers could help, but I fear you are on your own on this one!

MAY 8, 1996

PUBLIC HEARING

HOUSE SMALL BUSINESS COMMITTEE

STATEMENT OF

TOMMY TAVENNER

SILO INN

OLNEY, MARYLAND

ON BEHALF OF THE

NATIONAL RESTAURANT ASSOCIATION

National Restaurant Association 1200 Seventeenth Street, NW = Washington, DC 20036 ■ 202/331-5900

Madame Chairwoman and distinguished members of the Committee, thank you for inviting me here today.

My name is Tommy Tavenner, and I own the Silo Inn in Olney, Maryland. My dad opened the restaurant back in 1965, when Olney wasn't a whole lot more than a single intersection. As the town grew up around us, we grew too. We now have about 50 employees at our restaurant and pub. I am testifying today on behalf of the National Restaurant Association, and I thank you for holding this hearing.

First, let me say I'm a musician and a still-practicing amateur composer myself. I wish I could say I've gotten far enough to be licensed by ASCAP or BMI...but I haven't. I do, however, understand the importance of protecting authors and publishers.

I've paid licensing fees to ASCAP and BMI for nearly 30 years now. For two nights of live music a week, we pay about $2,400 a year. Sometimes I feel like the biggest fool in Maryland: After all this time, I have no idea what I'm paying for or why I pay what I pay. I have a file as thick as an encyclopedia documenting my efforts to understand the rates. Included in that are what I call the "New York lawyer letters"-the letters from ASCAP threatening me with lawsuits for failure to pay what I'm told to. It's a strange way of doing business. Unfortunately, current law appears to let them get away with it.

"Scam" is a harsh word to use, but I've heard enough stories about my colleagues and their experiences to convince me that "scam" is not an inappropriate word to describe what is happening to us. Let me share some of the other stories with you:

► A BMI agent who came into a Phoenix restaurant during business hours, threw a yelling fit at the restaurant owner and her mother, and threatened to bring in a federal marshal if she didn't sign a new contract.

► A catering hall owner in Maryland leases his facility to dance instructors one night a week. The dance instructors pay $300 for the music. ASCAP asked the hall owner to pay $880-for the same music.

► A Massachusetts bar owner keeps the volume on his TV set turned off but turned it up at the beginning of one World Series game. A few weeks later a music licensing representative called him and demanded money because the game carried a licensed version of the national anthem.

Although ASCAP and BMI have spent thousands of dollars on ads over the past year trying to convince Congress these problems don't exist, the examples of arbitrary prices, litigation threats and abusive collection I've cited are real. I didn't invent them. They actually happened. In fact, they are happening every single day in small businesses around the country.