Act, shall apply only to sound recordings fixed, published, and copyrighted on and after the effective date of this Act and nothing in title 17 of the United States Code shall be applied retroactively or be construed as affecting in any way any rights with respect to sound recordings fixed before that date. Passed the Senate April 29, 1971. Attest:

FRANCIS R. VALEO, Secretary.

[H.R. 6927, 92d Cong., first sess.]

A BILL To amend title 17 of the United States Code to provide for the creation of a limited copyright in sound recordings for the purpose of protecting against unauthorized duplication and piracy of sound recording, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That title 17 of the United States Code is amended in the following respects:

(a) In section 1, title 17, of the United States Code, add a subsection (f) to read:

"To reproduce and distribute to the public by sale or other transfer of ownership, or by rental, lease, or lending, reproductions of the copyrighted work if it be a sound recording: Provided, That the exclusive right of the owner of a copyright in a sound recording to reproduce it is limited to the right to duplicate the sound recording in a tangible form that directly or indirectly recaptures the actual sounds fixed in the recording: Provided further, That this right does not extend to the making or duplication of another sound recording that is an independent fixation of other sounds, even though such sounds imitate or simulate those in the copyrighted sound recording; or to single ephemeral recordings made by transmitting organizations for their own use."

(b) In section 5, title 17, of the United States Code, add a subsection (n) to read:

"Sound recordings other than fixations of sound accompanying a motion picture."

(c) In section 19, title 17, of the United States Code, add the following at the end of the section: "In the case of reproductions of works specified in subsection (n) of section 5 of this title, the notice shall consist of the symbol P (the letter P in a circle), the year of first publication of the sound recording, and the name of the owner of copyright in the sound recording, or an abbreviation by which the name can be recognized, or a generally known alternative designation of the owner: Provided, That if the producer of the sound recording is named on the labels or containers of the reproduction, and if no other name appears in conjunction with the notice, his name shall be considered a part of the notice."

(d) In section 20, title 17, of the United States Code, amend the first sentence to read: "The notice of copyright shall be applied, in the case of a book or other printed publication, upon its title page or the page immediately following, or if a periodical either upon the title page or upon the first page of text of each separate number or under the title heading, or if a musical work either upon its title page or the first page of music, or if a sound recording on the surface thereof or on the label or container in such manner and location as to give reasonable notice of the claim of copyright."

(e) In section 26, title 17, of the United States Code, add the following at the end of the section: For the purposes of this section and sections 10, 11, 13, 14, 21, 101, 106, 109, 209, and 215, but not for any other purpose, a reproduction of a work described in subsection 5 (n) shall be considered to be a copy thereof.".

SEC. 2. This Act shall take effect three months after its enactment. The provisions of title 17 of the United States Code shall apply only to sound recordings fixed, published, and copyrighted on and after the effective date of this Act and nothing in title 17 of the Unied States Code shall be applied retroactively or be construed as affecting in any way any rights with respect to sound recordings fixed before that date.

For our first witness today we are honored in having our own chairman of the Committee on the Judiciary, Hon. Emanuel Celler, whose life-long interest in the rights of authors, composers and performers of musical works is of long standing.

Mr. Chairman, we are most honored, and you are most welcome before the subcommittee.

STATEMENT OF HON. EMANUEL CELLER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK, AND CHAIRMAN, HOUSE JUDICIARY COMMITTEE

Mr. CELLER. Mr. Chairman and distinguished members of the Subcommittee on Patents, Trademarks, and Copyrights, I appear before you this morning in the interest of simple justice. In the area of which I speak, justice has been long delayed. I hope we shall not, by procrastinating, create a situation of justice denied.

I am here to urge your prompt and favorable consideration of S. 646, an act to amend title 17 of the U.S. Code to provide for the creation of a limited copyright in sound recordings for the purpose of protecting against unauthorized duplication, and I use the word piracy with great emphasis, piracy of sound recording, and for other purposes. As used in this bill, a sound recording is a work which results from the fixation of a series of sounds in a material object such as a record or tape, as distinguished, for instance, from the copyrighted literary, dramatic, or musical works incorporated in the record or tape.

Piracy is the unauthorized commercial duplication and sale of a reproduction of a sound recording, often at a sharply cut price.

The limited copyright envisaged by the bill grants to creators of sound recordings an exclusive right to reproduce and distribute reproductions of the copyrighted work, but not any right to restrict or be compensated for commercial performances thereof.

Need for the grant of limited copyright in sound recordings arises from the great and growing practice of off-the-air taping, and pirating of sound recordings. Recent technological advances have made possible the reproduction of sound recordings at a cost that is a very small fraction of the cost of originally producing the recording. The potential for profit from the simple appropriation and sale of the records and tapes embodying sound recordings has proved too much of a temptation for some to resist. In any event, the siphoning off of sales that would otherwise be made by the creators and owners of the recording (normally the record company and the performers) has reached alarming proportions.

Nine years ago, in a similar context, Congress sought to reduce the unauthorized exploitation of phonograph records by prohibiting interstate traffic in records known to bear counterfeit labels.

I testified in support of this legislation, saying in part:

Because the counterfeiter operates outside the law, paying no compensation to artists, no arrangers' fees, no copyright royalties, and no excise taxes, he is able to sell his illegitimate and often mechanically inferior records to jobbers and dealers at prices far below those charged by the legitimate manufacturers whose work has been forged.

Victims of this unconscionable racket are many. They include song writers and publishers, record manufacturers, distributors and dealers, recording artists and musicians, manufacturers of phonographs, and, last but not least, the U.S. Government.

To a marked degree, the conditions I described in 1962 remain true today, but the difficulties and evils are even much more critical now. Indeed, they have become aggravated. Obviously, the enactment of the counterfeit label bill has not had the desired result. Where I estimated the drain of label counterfeiting at $20 million way back in 1960, pro

ponents of the present legislation claim that today the annual cost in sales of record piracy is close to $100 million.

It is estimated that one out of every four tapes produced is a pirated tape. The legitimate record industry, including both record manufacturers and performing artists, need and deserve protection from these indefensible misappropriations of their creative works. Section 1 of the bill, by creating a limited copyright, affords a method for the suppression of these indefensible practices. The Library of Congress, the Register of Copyrights and the Departments of State and Justice, as has been well indicated by the chairman, have approved limited copyright as an appropriate technique for thus suppressing record piracy.

Section 2 of S. 646 provides stronger remedies for violations of the mechanical royalty section of the copyright law. In commenting on this section, the Librarian of Congress said:

**We strongly support the addition of a new section 2, removing an anachronistic and unfair limitation on the remedies available to owners of copyrighted musical compositions against record pirates. This new section 2 also is the same in substance as provisions included in the general revision bill passed by the House of Representatives on April 11, 1967.

Obviously, as has been well indicated by the chairman in his opening remarks neither the limited copyright for sound recordings nor the increase in remedies for owners of musical compositions is a new expedient. Both have been approved by our committee and passed by the House as a part of H. R. 2512, 90th Congress, the copyright law revision bill of 1967, and both would almost certainly have been enacted into law ere now, had that not been held up pending Senate action on the revision.

I trust we can now make prompt favorable disposition of both proposals.

Gentlemen, I thank you for giving me your very earnest and kind

attention.

Mr. KASTENMEIER. Thank you, Chairman Celler, for a most enlightening statement, an appropriate statement to open these hearings, and while the committee approaches this matter with an open mind, I must say we do pledge to you and others prompt action on this matter.

I agree with your last statement, that this matter might well have been disposed of in the context of overall revision, and should have been, and I regret that the other body has not seen fit to act on it.

It is certainly my most earnest hope that we will not have what is termed piecemeal revision, rather than by general revision. In any event, we do pledge prompt action on this measure.

The gentleman from Massachusetts?

Mr. DRINAN. Thank you, Mr. Chairman, for coming, and for your very fine statement.

Mr. KASTENMEIER. The subcommittee thanks you very much, Mr. Chairman.

Mr. CELLER. Thank you very much.

Mr. KASTEN MEIER. The Chair inquires if the gentleman from the State of Tennessee is present, Hon. Richard H. Fulton, author of H.R.6927.

Since he is not here, the Chair will be pleased to accept his statement and make it a part of the record.

The Congressman from Tennessee, Mr. Fulton, has a deep and abiding interest in the question, and I am handed his statement at this time, and we will make it, without objection, a part of the record. (Mr. Fulton's statement follows:)

STATEMENT OF HON. RICHARD H. FULTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE

Mr. Chairman, I am Richard Fulton, Member of Congress from Tennessee's Fifth Congressional District which is comprised of Metropolitan NashvilleDavidson County.

My District prides itself as being "Music City, U.S.A." We are the home of music's famous "Nashville Sound" and one of the world's largest recording centers. Thus, you can see that I have a very direct interest in the legislation which you consider here this morning, H. R. 6927, which I am sponsoring, and S. 646.

It is my understanding that the distinguished Chairman of the Judiciary Committee, Mr. Celler, will or has spoken in behalf of this bill and he can do this far more adequately than can I. Therefore, I will take only a few moments of your time to summarize briefly why I feel that there is a justified urgent need for this legislation and why failure to provide it at the Federal level will threaten the very existence of the recording industry as you know it today.

First, the passage of this legislation to provide for the creation of a limited copyright in sound recordings to protect against piracy will help alleviate an economic threat to the recording business which is already costing this legitimate industry an estimated loss of $100 million or more a year. The industry is faced with an economic crisis unless this loss is curtailed.

When one realizes that only one of ten music recordings make any money at all, it becomes readily apparent how damaging these unauthorized duplications and piracies are. The recordings that do make money must support the industry. But they cannot provide this support if they are not given the legal protection to prevent these acts of piracies.

Second, the House itself already has accepted the principle contained in this bill in passage of the General Copyright Revision Act of 1971, which is still before the Senate.

Third, the grant of copyright is supported by all interested Federal agencies including the Copyright Office, Department of State, Department of Justice. Ironically the Department of State, I am led to understand, is in the somewhat embarrassing position of trying to negotiate an international agreement on this general piracy problem at a time when it is a critical problem within our own borders.

Fourth, the State of Tennessee as well as other States recognizes this problem and has outlawed the Act. However, proper protection is going to be afforded only by passage of Federal legislation..

Fifth, the entire music industry supports this bill.

It is anticipated that this legislation will receive very little opposition, particularly on its merits. In view of the widespread approval by members of the House and the fact that it passed the Senate without a roll call vote, I hope that the Chairman will give consideration to calling up this legislation at an early date under suspension of the rules.

The absence of appropriate copyright protection is costing legitimate music recording producers thousands of dollars daily and adding to the growing economic threat to the music industry itself.

The Senate has passed this legislation with some refinements and alterations. Permit me to assure you these changes are completely acceptable to me and those who are supporting my bill.

Mr. KASTEN MEIER. At this time the Chair would like to call Hon. Bruce C. Ladd, Jr., Deputy Assistant Secretary for Commercial Affairs and Business Activities for the Department of State, and with Mr. Ladd is Mr. Winter, and you might identify the other gentleman.

STATEMENT OF BRUCE C. LADD, JR., DEPUTY ASSISTANT SECRETARY FOR COMMERCIAL AFFAIRS AND BUSINESS ACTIVITIES, DEPARTMENT OF STATE; ACCOMPANIED BY HARVEY J. WINTER, CHIEF OF THE DIVISION OF BUSINESS PRACTICES, AND WILLIAM C. LIEBLICH, ATTORNEY IN OFFICE OF LEGAL ADVISER

Mr. LADD. Yes, sir.

Mr. Chairman, I am Bruce C. Ladd, Jr. I am in my second week as Deputy Assistant Secretary at the Department of State for Commercial Affairs and Business Activities.

I have with me this morning Mr. Harvey Winter, Chief of the Division of Business Practices of the Department of State, and Mr. William C. Lieblich, an attorney in the Office of Legal Adviser in the Department of State.

I will direct my remarks primarily to the international aspects of S. 646 and explain the Department's endorsement of the proposed legislation.

Unauthorized duplication of legitimate commercial recordings has grown by leaps and bounds during the past decade and has become a matter of public concern both in the United States and abroad.

It is estimated that over 100 million pirated records are now made and sold throughout the world each year.

The unauthorized copying and sale of legitimately produced records and tapes has become a serious problem for every composer, author, performing artist, and record producer, and also for every country having a national music culture and recording industry.

All countries having a legitimate recording industry suffer from the practice of unauthorized copying of sound recordings.

The pirate producers draw on the repertories of all established legitimate record producers indiscriminately. The problem thus affects the recording industries in developing as well as developed countries. Developing countries which suffer from the pirate trade include several of our Latin American neighbors, in particular Brazil, Mexico, and Venezuela.

Because of the ease with which unauthorized recordings can be made and the relatively small investment required to make such recordings on a large scale, it is believed that this activity will continue and grow unless effective legal methods to combat and reverse it are provided. In our view, S. 646 would provide a satisfactory means of combating and curbing the unauthorized duplication of sound recordings in the United States.

The enactment of S. 646 would also be most important in terms of international developments in this field. As you may know, there is a move toward an international treaty to deal with the record piracy problem. This project is the result of a joint initiative by the United States and the United Kingdom at meetings of member States of the Universal Copyright Convention and the Berne Copyright Convention held in September 1970.

At these meetings a resolution was approved calling for a meeting of governmental experts to prepare a draft agreement to protect "producers and phonograms" that is, sound recordings-against unauthorized reproduction of these recordings.