was that Congress was faced with the dilemma of either not granting rights in an area where they felt rights should be granted, or granting rights with the knowledge that one company would own them all. As a result, they compromised, the great compulsory license compromise, which was intended to prevent what they called a "great music trust" in 1909. This all seems a little archaic now, but this was the first compulsory license in history, and it was simply a compromise.

Not all, but the great majority of unauthorized record procedures do not pay this royalty. They just go ahead and take the chance. They are really operating outside the law. They are violating sections 1(e) and 101 (e) of the copyright statute.

There are some who go through these very elaborate procedures that are required by the law, and comply with the compulsory license. With respect to the record producer and the performer, the law is somewhat unclear. There is no Federal statutory right; I think that is pretty clearly established. Beginning in 1937 in the case I quoted from, and up to around the Second World War, the States had started granting rights in sound recordings under common law principles. This more or less came to a halt with an adverse decision by Learned Hand, not on grounds of copyrightability, but on grounds of publication. He held that the record was published, and was therefore, in the public domain.

In 1955, a landmark case, Capital Records v. Mercury Records, reversed Hand's decision. Incidentally, he was still on the bench, and dissented in the case. As in the 1937 Waring case, Capitol Records holds that a recorded performance is a writing of an author, but that it is not protected under the Federal statute. It is potentially protected under the Constitution, but in the absence of a Federal statute there are no limits on the protection a State can offer it.

In 1964, the Supreme Court, in the landmark decisions of Sears and Compco, cast some doubt upon the constitutionality of protection for published works that are under the constitutional copyright patent clause, but are not protected by the Federal statute. This question has been litigated consistently since then, and the litigation has been accelerated with the advent of tape cassettes and cartridges.

There is probably technical exception to this statement, but for all intents and purposes, the courts have said the Sears and Compco cases do not apply in this area. They take the line that, when you duplicate a record you are not copying, you are taking the actual thing itself. As a result, there is supposedly unlimited protection against somebody who enters into competition with you, by taking your product without your authorization. I am not predicting what the Supreme Court will do when it finally comes to grips with this question, but if these cases are right-and they are very consistent so far-the record producers and the performers theoretically have more rights than the owners of copyright in the musical composition.

These are not limited in time. There are no formalities. They do not have to put a copyright notice on them. They do not have to register or deposit anything.

They just sue and win.

The catch here is that this is under State law. It is not as effective, and it is not as certain as a Federal statute would be. For this reason,

the proponents of this legislation would prefer Federal legislation. We would prefer it for the reasons I have already indicated: more certainty, more appropriateness.

Mr. KASTEN MEIER. Thank you.

In another area, are you familiar with Senator Hart's statement of April 29 in opposition to the bill, and if you are, I take it you do not agree, and I wonder if you would indicate what his arguments are, and the basis of your disagreement.

I think it is important to this question.

Miss RINGER. It is a serious statement and it was sincerely meant. In distinguishing between what Senator Hart calls "legal piracy" and "illegal piracy," he does tend to ignore this very large body of court decisions.

What he calls legal piracy is legal only within the ambit of the Federal statute. If there are common law rights, what he is defending is just as illegal under State common law as what the out-and-out pirate does who pays nobody anything, and takes his equipment and moves somewhere else if he is caught

Mr. KASTEN MEIER. Would one be a pirate in your view if one used the works of another whose copyright indeed had expired? Miss RINGER. Indeed not. That is perfectly legal.

Mr. KASTENMEIER. Is it not?

Miss RINGER. I may have misunderstood your question. It is perfectly legal as far as the musical composition is concerned.

If you are talking now about sound recordings that were made more than 56 years ago, there are not too many that have commercial value, although there are a few. I would say that the law as it now stands would make this legal, with respect to the musical composition involved, but illegal under State law with respect to recordings by Caruso or Farrar. This is not a very satisfactory situation, as you can well appreciate. But I have not really gotten to Senator Hart's main points, which are three in number.

He says the bill is sound in purpose, troublesome in design, and vague in reach.

I would hardly disagree with the first point, that it is sound in purpose.

With respect to the charge that it is troublesome in design, what he says, and all he says, is that it fails to identify the copyright owner. This is true. It does not say this belongs to the performer, or to the record producer, or both.

At the end of his statement, Senator Hart admitted he was not a copyright expert, and I think he has overlooked the provisions of the present law. The copyright law gives certain specified rights in certain specified works. Section 1 says that with respect to certain works, musical compositions, dramatic compositions, and so forth, you have certain rights.

Section 5 identifies the works that are protected.

Section 9 says that beneficiary of protection shall be the "author or proprietor, or his executors, administrators, or assigns." That is all. The question Senator Hart is asking is really an indictment of the 1909 law, but what we are trying to do is fit something into the framework of the 1909 law. The structure of the law leaves vague, for example, the beneficiary of protection in the case of a periodical, cyclo

poedic, or other composite work, or who is the owner of a reproduction of a work of art. The most notable example is motion pictures. It would seem to me, that a great deal of thinking could be clarified if you regard audio-recordings, as the capturing of sounds, and motion pictures as the capturing of visual images and sounds. Congress has never had any problem in granting rights in motion pictures. To me, there is not really any distinction. No one really knows who owns each and every right in a motion picture, and yet these things sort themselves out quite satisfactorily. This same question arises in a whole host of other areas that I will not go into.

As to the "vague in reach" question, I would say this is his strongest point. S. 646 grants general rights of reproduction and distribution, but without fully identifying how far these rights reach.

We had some problems with this when the bill was introduced in the Senate. Amendments were made, and they satisfied us in clarifying how far the bill goes.

I believe that some additional questions have been raised concerning educational broadcasting, the making of tape recordings for say educational radio broadcasting, and their distribution. On this point it does not seem to me it is necessary to amend the bill to accomplish what everybody agrees on as the correct interpretation. However, I think this could be clarified in the report of your committee.

The last problem, which Senator Hart devotes a couple or three paragraphs to, is the fear of copyright monopoly. Here we could get into questions of philosophical dogma, and I really would prefer not to debate the fundamental purposes of the copyright law.

This is the sort of thing you can go on forever about, and I doubt if I would have much to contribute to your thinking on this bill. But the basic question is a practical one: whether the bill would promote monopoly, or competition. We believe it would promote competition. The Justice Department letter, which I commend to you, goes a long way in answering this last argument.

The record industry, taken as a whole is a highly competitive industry. There is ease of entry; there are a lot of small companies.

If someone can come in, and legally skim off the hits, who is going to suffer, the small company or the large company? And if it is the small company that suffers from the lack of Federal legislation, then it would seem to me that the effect of the bill would be to promote competition rather than monoply.

Finally, Senator Hart questioned whether this is the way to do it, and he implied that maybe the State courts can work this out. I have already indicated, under State common law, there is no certainty, there is no time limit, there are no restrictions, no notices, no registrations. We feel this protection is properly within the copyright clause, and that it ought to be in the Federal statutory scheme, rather than left up for grabs, as it is now.

I hope this answers your question.

Mr. KASTEN MEIER. Yes. I disagree with the notion, however, that we are not responsible for the monopoly aspect of this bill.

I think we are accountable no matter what we do in terms of general revision or specifics. If we create a monopoly in this area, which is today legally free-and there is always a question when we act in this area--we have to be able to justify it. There are justifications that may

be raised, and objections may be raised by Mr. Nader, and people like him, who are interested in effectuating the public interest. This committee must justify action on its part which has the apparent effect of extending monopoly.

We will have to answer the question, and I pose it to you, will enactment of S. 646 result in higher prices to the public for these sound recordings?

Miss RINGER. I am not here to defend the bill on behalf of any special interests.

I would like to make that clear.

The Copyright Office has supported the extension of the copyright law to the protection of sound recordings simply because we feel that this is a gap in the law and an inequity. But I will go a step further in saying that I did not want to get into questions of philosophical dogma, I certainly did not mean that you should refrain from considering the competitive or anticompetitive effect of this legislation. This is your business.

What I meant was that I did not intend to attack or defend the basic premises of copyright law as such, and a good deal of Senator Hart's statement directly or indirectly questions the premises on which copyright law is based.

It seems to me this is the sort of thing you can argue until the cows come home, and I am not sure what I have to say would be worth anything at all to your committee.

What I would say is this. In the absence of Federal legislation, performers and record producers have what amounts to a complete monopoly under State law. This is certainly anticompetitive. Conversely, if the Supreme Court, for example, should hold that all this host of court decisions are wrong, and that Sears and Compco do control in this area, the result would also be anticompetitive. It seems to me that the cost to the public would go up, and the reason it would go up is that you would have people on the fringes who, with legal immunity, come in and take only the hits. Record producers finance the huge area of stuff they release that does not represent hits from the profits they get from the hit records. If people can come in and skim off these profits, the public is sure to suffer.

We have had some experience with this in the design area. For years, there were design bills in Congress. All of a sudden, the Supreme Court held that a lot of this stuff was copyrightable all along.

The effect, I think, has been beneficial to the consumer. The design houses no longer have to write into their initial costs and pricing the costs of piracy of a certain percentage of their best designs. It would seem to me that the same thing is true here. I think this can be proved on economic grounds.

Mr. KASTEN MEIER. Thank you very much for a sound statement.
The gentleman from Massachusetts.

Mr. DRINAN. Thank you very much.

May I just ask for a bit of clarification. I was following your fine testimony very carefully.

One moment you said the bill would, in fact, in your judgment promote competition, and yet then when the question was raised about the consumers and higher prices, did I understand you to say that the

prices would, in fact, go up, and you suggested that the bill might, in fact, be anticompetitive?

Miss RINGER. No; I stated it in a negative way, which I realized at the time could be misleading.

I meant exactly the opposite.

Mr. DRINAN. What do you mean?

Miss RINGER. What I mean is that, if Congress does not act in this area, and if the pirates are able to continue to operate as they now do and as they certainly would be encouraged to do if the court decisions begin to go against the record producers then I believe the price of the legitimate records will go up.

If the bill were passed, the price is not likely to go down, but I do not think it would go up. The record producers would know that, if they had a hit, it was theirs, and they would not have to write into their basic price the cost of the losses, the damages they suffer from piracy. Mr. DRINAN. Another point you say, you are disinclined to discuss philosophical dogma.

It seems to be a contradiction of terms. Do you think the Congress should go back and evaluate and assess very carefully the fundamental things that Senator Hart raises?

Did the Constitution intend this? He concludes to the contrary. He says the use of copyright is to protect, and he goes on, and so on, don't you think we should really confront those matters?

Miss RINGER. Of course you should.

Mr. DRINAN. The philosophical dogma is at the heart of it, and we cannot brush it aside, would you agree with that?

Miss RINGER. I would say the key word in that sentence is "nonauthors," and I dispute that performers and record producers are nonauthors. I agree that you do not go out and protect talented housepainters and automobile mechanics, but there is a difference here.

This is an area where creative effort of a rather high level of a sophistication and value is going unprotected under the Federal law. Mr. DRINAN. You are a very fascinating witness.

Thank you very much.

Mr. KASTENMEIER. The gentleman from Pennsylvania.

Mr. BIESTER. I do not know that I can add very much to the questions which you have been asked so far.

I can tell you I must have a small pirate in my own home.

My son has a cassette tape recorder, and as a particular record becomes a hit, he will retrieve it onto his little set.

Now, he may retrieve in addition something else onto his recording, but nonetheless, he does retrieve the basic sound, and this legislation, of course, would not point to his activities, would it?

Miss RINGER. I think the answer is clearly, "No, it would not.” I have spoken at a couple of seminars on video cassettes lately, and this question is usually asked: "What about the home recorders?" The answer I have given and will give again is that this is something you cannot control.

You simply cannot control it.

My own opinion, whether this is philosophical dogma or not, is that sooner or later there is going to be a crunch here. But that is not what this legislation is addressed to, and I do not see the crunch coming in the immediate future.