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the consumers who must pay her prices for legitimate products and the government, which loses substantial amounts of tax revenue.

"PIRACY" AND "COUNTERFEITING" DISTINGUISHED

Although the terms "piracy" and "counterfeiting" are sometimes used 5/ interchangeably, they actually have somewhat different meanings. "Piracy" is the term used to describe the unauthorized duplication of records and films on disks, tapes, cassettes, videocassettes, or similar products. Most pirated materials bear little resemblance to legitimate products; e.g., they may have hand-printed labels, contain works by unrelated artists or lengthy gaps between selections, or have other indicia of unprofessional work. In contrast, "counterfeit" works include reproductions of actual labels, record jackets or cassette covers, and similar material, which reproductions are sometimes so sophisticated as to defy detection even by legitimate producers. Thus reputable outlets may purchase and distribute counterfeit products without realizing that they are helping to support a counterfeit operation.

Private and Personal Use

There is an obvious distinction between reproductions made by private persons for their own use and enjoyment and that of their friends, and largescale commercial operations which attempt to make sizable profits from the sale of unauthorized reproductions. dowever, is noted in the introduction,

reproductions for private and personal is also result in substantial loss of revenue to the industries which produc

arket the copied materials.

5/ Piracy Hearings, supra, .

PAA/RIAA statement).

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Inc.,

In a 1984 decision, Sony Corporation of America v. Universal City Studios, 6/

the Supreme Court held that it did not violate the copyright law for home viewers to tape motion pictures off television bets on their video tape recorders [VTR's] for noncommercial use. The Court noted that any individual may reproduce a copyrighted work for a "fair use, and held that that term encompassed the use in question. Legislation was introduced in the 98th Congress to amend the copyright law to prohibit this practice, but no action 8/

was taken on it.

91

Perhaps because of the enforcement problems which could arise if it was attempted to monitor the private use of all tape recorders, VTR's and video cassette recorders [VCR's], legislation introduced in the 99th Congress has focused on taxation of copying equipment rather than on prohibiting copying. This approach is also favored by the MPAA, whose president, Jack Valenti, has noted that most other countries impose modest copyright royalty fees on 10/

machines and blank tapes.

The Sony case is a narrow ruling, applying only to television viewers who tape movies presented on television for (presumably) later viewing. The Court called this "time shift viewing" in that the practice enables viewers

8/ E.g., H.R. 1030 (Rep. D. Edwards); S. 31 (Sen. Mathias).

9/

E.g., H.R. 2911 (Rep. B. Morrison); S. 1739 (Sen. Mathias).

1985,

10/

Valenti, "A Film Ripoff by the Japanese," New York Times, Mar. 6, P. A23. Mr. Valenti was writing with particular emphasis on a new machine which can copy video cassettes in a short time period (20 minutes for a typical motion picture) without requiring that the cassette be aired, as was previously required (and is still required unless this machine is utilized).

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to watch the movie at a time other than that at which it was originally broad

cast, and found that there is no likelihood that time shifting would cause

nonminimal harm to the potential market for, or the value of, defendant

motion picture studios

11/

copyrighted works. The Court also found that this practice did not adversely affect the potential market for or value of the

12/

copyrighted work, since there was no demonstrable effect upon the potential

13/

market for, or the value of, the copyrighted work. However, it can be argued that this practice and others like it do have an adverse impact on 14/

the potential market for, and thus the value of, copyrighted works; and if

the Supreme Court were to accept this evidence, its ruling might be modified in a future decision.

Thus many questions in this area are presently unresolved.

For example,

if a person rents a movie for one evening at a nominal fee, and makes copies and distributes these to friends at no cost, would the reasoning in Sony be controlling? Even with regard to taped television programs, the Court did not consider this scenario, construing the practice as primarily to enable viewers to watch programming missed when it was originally broadcast. While it is clear that unauthorized commercial use is prohibited, the parameters of permissible private reproduction remain unsettled.

suit.

11/ Universal City Studios was joined by Walt Disney Productions in the

12/

Consideration of this point is required by 17 U.S.C. § 107(4).

13/ 464 U.S. at 451-56, relying in part on the findings of the United States District Court for the Central District of California, 480 F.Supp. 429, 451, 467-69 (D.C. Cal. 1979).

14/ See, e.g., Comment, "Cheaper by the Dozen: Unauthorized Rental of Motion Picture Videocassettes and Videodiscs," 34 Fed. Com. L.J. 259 (1982).

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COPYRIGHT INFRINGEMENT

The protection given copyrights is wholly statutory, and is based on congressional authority under Art. I, § 8, cl. 8 of the Constitution "to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." The copyright laws were substantially amended by the Copy15/ 16/

right Act of 1976, most parts of which became effective Jan. 1, 1978, so the protection afforded a particular work varies to some extent depending 17/

upon the date on which it was copyrighted. However, the criminal penalties

discussed below apply to all specified violations, regardless of whether the works involved were copyrighted under the 1976 act or its predecessor statute, 18/

the Copyright Act of 1909.

What Works Can Be Copyrighted

Under present 17 U.S.C. § 102, copyright protection subsists in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Works of authorship include the following categories:

(1) literary works; (2) musical

works, including any accompanying words; (3) dramatic works, including any

17/ For information on copyright law prior to the 1976 Act, see Wincor, How to Secure Copyright (2d Ed. 1957). The 1976 law is discussed in Wiacor and Mandell, Copyright, Patents and Trademarks: The Protection of Intellectual and Industrial Property 25-40 (1980).

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accompanying music; (4) pantomimes and choreographie works; (5) pictorial,

graphic and other audiovisual works; and (6) sound recordings.

Rights of Copyright Owners

Under § 106, the owner of copyright has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work

in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audio visual work, to display the copyrighted work publicly. However, these exclusive rights are somewhat circumscribed by limitations set forth in §§ 107-108. Some of these exceptions are fairly complicated, and it is beyond the scope of this report to discuss them in detail; however, most authorize reproduction for educational or comparable purposes. Under the "fair use" exception, § 107,

the basis for the holding in the Sony case, reproduction is authorized for purposes such as criticism, comment, news reporting, teaching, scholarship

or research. In determining whether the use made of a work in any particular... case is a fair use, the factors to be considered include (1) the purpose and character of the use, including whether it is of a commercial nature or for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. As discussed in connection with the Sony decision, a finding that unauthorized reproductions did in