having received advance notice from the copyright owner. If the owner does not provide advance notice, the retramsmission would be treated as if it were in the gray area. As for CATV operations in the gray area, the Subcommittee proposes to withhold the possibility of an injunction or stautory damages, and limit the operator's liability to a "reasonable license fee" to be fixed by the court in the absence of agreement. However, in order to induce negotiations, the proposed amendment would provide the court with discretion to triple the recovery if it finds that the infringer failed to accept a reasonable offer, or to withhold any recovery if it finds that the copyright owner had refused to accept a reasonable offer. It should be emphasized that the Subcommittee's proposal is directed solely to a prospective solution to the community antenna problem under the general revision by the copright law. It is in not intended as the expression of any opinion as to what the present law is under the 1909 statute or as to how the courts should ultimately decide that question. With best regards, Sincerely yours, ROBERT W. KASTEN MEIER, Acting Chairman for Copyright Revision Subcommittee No. 3. Mr. BRENNAN. The first witness is Mr. Abraham Kaminstein, Register of Copyrights. Senator BURDICK. Mr. Kaminstein. Will you introduce your assistant for the record, please? STATEMENT OF ABRAHAM KAMINSTEIN, REGISTER OF COPYRIGHTS; ACCOMPANIED BY BARBARA A. RINGER, ASSISTANT REGISTER OF COPYRIGHTS; AND ABE A. GOLDMAN, GENERAL COUNSEL, COPYRIGHT OFFICE Mr. KAMINSTEIN. On my left is Miss Barbara Ringer, who is the Assistant Register of Copyrights and on my right our General Counsel, Abe Goldman. Mr. Chairman, my name is Abraham L. Kaminstein and I am the Register of Copyrights. It is a privilege for me to appear again before your committee as a witness in this series of hearings devoted to one of the most difficult problems in copyright law revision: How community antenna television and similar retransmission services should be dealt with in the copyright law. As I mentioned when I testified before you nearly a year ago, S. 1006 is the product of more than a decade of study, discussion, and drafting. Out of the many problems dealt with in the bill, one in particular did not emerge as an important issue until the last 2 or 3 years, and has become urgent only recently. That is the question of whether, in the revised copyright law, commercial community antenna television systems should be fully subject to copyright control or should be accorded special treatment. The Copyright Office, after carefully weighing the arguments put forward on both sides, concluded that what CATV is doing is a public performance that should be subject to copyright control, and we therefore drafted S. 1006 in terms of full CATV liability. In doing so, however, we were careful to point out that we were not expressing any opinion as to what the present law on the subject is, and that the problems facing CATV operators in obtaining clearances are real ones that cannot be brushed aside. Under the 1965 revision bill, a commercial community system that picks up television or radio broadcasts of copyrighted material, and retransmits them to paying subscribers over wires or similar connections, would be fully liable for copyright infringement unless it obtained a license from the copyright owner. These provisions of the bill were the subject of extensive testimony at the 1965 hearings before House Judiciary Subcommittee No. 3, under the chairmanship of Representative Robert W. Kastenmeier. Although most of the witnesses took flat positions favoring or opposing the bill on this point, it becomes increasingly apparent from their testimony that the problem is multifaceted and extremely complex. The legislative alternatives were obviously not limited to full liability or outright exemption, and the problem was complicated by the fact that, although in litigation for several years, the present law on the subject had never been construed by the courts. Beginning in February of this year, the House subcommittee has been holding twice-weekly executive sessions aimed at revising and reporting the bill. So far there have been 40 of these sessions, and it would be difficult to imagine a more searching, comprehensive, and productive appraisal of any piece of legislation. Consideration of the CATV problem alone took well over a month, during which every aspect of this immensely complex problem was explored and a proposed solution was drafted, reviewed, and agreed upon. Because the closely related problem of regulation of community antenna systems by the Federal Communications Commission was being considered at the same time by the House Committee on Interstate and Foreign Comthe subcommittee communicated its conclusions by means of a letter from Mr. Kastenmeier to Chairman Staggers of the Commerce Committee. That letter was sent on May 5, 1966. Since then, as you know, Judge Herlands has handed down his decision in one of the CATV cases, United Artists Television, Incorporated v. Fortnightly Corporation (149 U.S.P.Q. 758 (S.D.N.Y. 1966)), holding that the activities of a commercial CATV system constitute a "public performance for profit" and are therefore fully actionable as copyright infringements under the present copyright law. This development, coupled with the closely related problems of communications law and regulations confronting the FCC and the Congress in this area, have thrown a spotlight on Subcommittee No. 3's proposal, and have prompted a number of comments on it. I am sure that a good deal of testimony during this series of hearings will be directed toward the provisions of that proposed draft. Senator BURDICK. Pardon me, Mr. Kaminstein. What was Subcommittee No. 3's proposal? Mr. KAMINSTEIN. I should like to submit it for the record. Senator BURDICK. Fine. Mr. KAMINSTEIN. There is both the proposal of statutory language and a letter for release by the committee.1 I cannot, of course, speak for the members of the House Judiciary Subcommittee in arguing the substantive merits of their draft or in commenting on alternative proposals. However, since the Copyright Office assisted the subcommittee in developing the language of the 1 The letter and proposal referred to appear on pp. 2-6. proposal, I believe I can explain in general what it means and is intended to do. I should say also that I believe the draft has stood up well in the light of detailed comments from both sides, and that its general approach and content deserve serious consideration by your committee. The basic theory of the subcommittee's proposal is that the extent of a CATV system's liability for copyright infringement should be related to the extent of its impact on the copyright owner's market. As explained in Mr. Kastenmeier's letter, the proposed compromise would divide CATV into three general areas, which for convenience can be called "white," "black," and "gray." In very broad terms, a community antenna system would be exempt from copyright liability with respect to its operations that are exclusively in the "white" area, and would be fully liable for its operations in the "black" area. "Gray" area operations would be subject to a sort of compulsory license. The "white" area, as envisioned in the proposal, is the normal service area of the broadcaster whose signals the CATV operator is picking up. If the community antenna system is merely operating as a master antenna or fill-in service-picking up nothing but New York City signals and transmitting them to New York City subscribers only, for example then the copyright owner would not appear to be damaged and the CATV should be exempt. Conversely, in the "black" area situation, the CATV system is transmitting signals outside the broadcaster's normal service area and into an area where none of the existing broadcasters is licensed to carry the copyrighted program. For example, a CATV operator brought a New York broadcast of a motion picture into Washington when none of the Washington stations as yet had a license to broadcast it, this would be an example of a "black" area. In this situation the copyright owner's Washington market would presumably be destroyed or seriously damaged, and he should therefore be entitled to the full remedies of the statute. The intermediate or "gray" area, as the subcommittee viewed it, is one where there would be no direct destruction of an existing market but where there is an uncompensated "free ride" and the possibility of indirect damage. Under the proposal there would be two types of "gray" area: first, where the broadcaster's signals are imported into an area where there is no other existing service at all; and second, where the area is already served by a broadcaster who has a license to carry the same program. An example of the first type would be a CATV system serving a town in the Far West that is not within the service area of any television station. An example of the second type would be a CATV that carries a local network outlet on one of its channels and an outlet of the same network in another city on another one of its channels; typically, its subscribers could receive "Bonanza" at the same time on either one of the two channels. these two "gray" area situations the subcommittee felt that, in the absence of agreement, the operator's liability should be limited to a reasonable license fee as fixed by the court. Where in this type of case the court found that there had been a failure to bargain in good faith, the license fee could be reduced or, alternatively, could be increased up to three times. In In addition, the subcommittee proposed to make CATV operations in the "white" or "gray" areas fully actionable if the system alters the content of the programs it picked up, or made special charges for particular programs, or originates its own programing other than weather and news. On the other hand, in response to the arguments of the CATV operators as to the difficulty of obtaining advance clearances, the proposal would require advance notice from the copyright owner before a "black" area transmission would be fully actionable; if advance notice were not given, the transmission would be subject to a reasonable license fee. On May 23, 1966, after the subcommittee's proposal was made public, the district court in the United Artists case decided in effect that all CATV operations are in the so-called "black" area today, that is under the present title 17. It is important to note, however, that this decision, which is presently being appealed, is based on a statutory construction of the present law, and does not purport to decide what the law should be for the future. Toward the end of his opinion Judge Herlands stated: The court notes in passing that, despite the fact that exemptions from inclusion within the copyright proprietor's performance monopoly may arguably be desirable in certain instances purely on policy grounds, such desiderata are for Congress and not the courts. (Citing, among other things, Mr. Kastenmeier's letter.) Once the court has determined, as it has herein, that a defendant's activities constitute a public performance for profit within the meaning of the Copyright Act, it has no discretionary power to except that defendant from the coverage of the Act. Only Congress can do that. Similarly, Report No. 1635 of the Commerce Committee, issued June 17, 1966, on H.R. 13286, the bill to amend the Communications Act of 1934 with respect to community antenna systems, recognized the close relationship between the copyright and the communications aspects of this problem. It now appears, and I suspect that the testimony of the next 3 days will bear this out, that the three CATV threads of copyright legislation, communications legislation, and infringement litigation, which have been separately considered up to this point, are beginning to merge. Since the subcommittee proposal was published, we in the Copyright Office have discussed it in detail with most of the private interests involved and with representatives of the FCC. It would be premature for me to express opinions on any of the specific proposals for amendments, but it might be helpful for me to try to pinpoint the most important suggestions concerning the subcommittee's proposal that are likely to be raised here. Among others at these hearings: 1. On the question of exclusivity, it has been argued by the copyright owners and their licensees, the broadcasters, that it is unfair to regard as "gray" the situation in which a CATV system is importing a program that has already been licensed in the area. Their point, which certainly deserves consideration, is that a local broadcaster has a right to insist on exclusivity when he is buying a motion picture or a syndicated series; if a license to him will automatically permit a community antenna system to import the same program from another locality for a reasonable license fee, the value of his supposed exclusivity for which he now pays the copyright owner is destroyed. 2. Origination: the community antenna operators have challenged the provision of the proposal under which origination of programing on a CATV system, beyond mere news and weather reports, would convert "white" or "gray" situations into full liability. The theory behind the provision was that a CATV operator should not be permitted to build a subscribing audience on the basis of other transmitters' programs and then unfairly profit from them by originating its own competing programs. It is clear, however, that a new trend in CATV is toward an emphasis on local service programing. 3. The extent of the "white" area: Questions have been raised on both sides as to the extent of the "area normally encompassed" by the primary broadcaster. Should it be his grade A contour, his grade B contour, a fixed-mileage radius, or some other criterion? Although the proposal would leave this to regulations, the House subcommittee generally regarded the grade B contour of a station as the "area normally encompassed," and this may turn out not to be the appropriate area in some cases. 4. A view has been expressed that in a so-called underserved area, where CATV is bringing in programs that would not be received otherwise, the committee should consider whether the copyright owner should be allowed to enjoin this added service. In addition, issues involving the procedure for giving notice, the method of fixing the reasonable license fee, and other matters of practice and procedure are likely to be raised during the hearings, but are too detailed for discussion here. Important as these matters are, I believe they are essentially details of the House subcommittee proposal. Out of the multitude of problems involved in copyright law revision, that of community antenna television is unique in many ways. Because of the mushrooming growth of the industry, the problem sprang into existence as a major issue in copyright law revision almost overnight and without warning. It is one of the few major issues on which the present law has been unsettled and hotly disputed. It is the only major issue that is inextricably bound up with policy questions in the communications field; these are questions of national importance that can affect the course of radio and television communications in this country for years to come. And of the principal disputed issues in revision it is by all odds the most complex. Having lived and worked with this problem over the past several months, let me say that the active development of CATV jurisprudence, of which these hearings are a part, is one of the most fascinating studies of the law in action that I have ever seen. The interrelationships and interaction of interests and industries, the need for balancing between copyright and communications policies, and the impact of pending court actions on future legislation, all involving the future of the fastest growing mass communications medium on the American scene, have left me with a single profound conviction. It is, simply, that there is no easy shortcut for solving this problem; no outright exemption or provision for full liability would serve the public interest here. The need is for a reasonable, well-considered compromise, and for a fairminded, flexible approach on the part of all the interests affected in working toward it. I have been impressed, during our many discussions of this subject over the past 3 months, by the constructive spirit and willingness to |