Senator BURDICK. Well, if I write a book and I have it copyrighted, do I not have a monopoly?

Mr. ZIMMERMAN. Certainly.

Senator BURDICK. Would you change

Mr. ZIMMERMAN. A limited monopoly.
Senator BURDICK. Would you change that?

Mr. ZIMMERMAN. No, because this

Senator BURDICK. This has caused me to wonder about this noncompetitive situation. That is, it follows from the copyright, does it not?

Mr. ZIMMERMAN. Yes, sir, Senator, but our point here is that unlike the problem of whether you have any copyright protection at all, the problem here is whether copyright holders who are already compensated, who already have a monopoly, should be permitted to extend that monopoly. The question is not whether they get any copyright protection at all. They do. They do get compensated. They have been writing books and writing programs.

The question here is how much compensation they should have and how far they should carry their right to compensation.

Senator BURDICK. The actors guild came before this committee and testified that the actors get a certain royalty for the number of times a program or a movie is shown and that when it is played and replayed over CATV, that it is not counted as a replay for these actors. in that respect, these actors are not compensated as much as if they were played over regular stations.

Mr. ZIMMERMAN. I quite agree they are not compensated as much. I quite agree that the issue here is how much should they be compensated. But our basic point is that the copyright law is not intended to maximize all possible compensation. The copyright_law is designed to give the man enough to do his job and to create. Once you start extending the copyright protection indefinitely, you are doing more than is necessary to get him to create and you are raising the possibilities of adverse consequences.

The question is not whether he gets any compensation. He does. The question is does he have the right to wring every last penny out of what he does and, there, I think, you have to consider the consequences and who else is hurt by it.

Senator BURDICK. I am not arguing about that. I am just saying that if a copyright is a vested right in an individual, has he not a right to control it as to what it is worth?

Mr. ZIMMERMAN. He does not have a right to control what it is worth without regard to every consequence of that control.

Senator BURDICK. I own a house and lot. It is in my name. Do I not have a right to put a value on it?

Mr. ZIMMERMAN. Yes.

Senator BURDICK. Where is the distinction?

Mr. ZIMMERMAN. The distinction is that this is a protection which is accorded to the creator by law and law defines the scope of the protection. The very fact that there is litigation as to the question whether the CATV stations need pay the copyright indicates that it is by no means clear that this particular extension of the right to recoup funds is clear cut.

For example, the copyright holder, the creator of the program, undoubtedly makes it possible for television set manufacturers to have a demand for their product. Yet, if you take the position that the owner of the idea should be able to get every possible compensation for that idea, one could argue that he should be able to collect a royalty from the manufacturer; but we do not do that. There are always limitations on what you can ultimately expect from your copyright. Senator BURDICK. Well, it is an interesting observation anyway. On page 4 you make the statement:

Copyright protection imposes a toll upon the use of copyrighted material. Is that not true in all cases of copyrights?

Mr. ZIMMERMAN. No, because as I indicated, the television set manufacturer is in a sense using copyrighted material. The CATV owner is using copyrighted material and up until now has not been paying a toll, and that is now in the process of litigation.

The hotel which broadcasts a radio program to its rooms is using copyrighted material and under the law, heavily relied on by the district court, has been held subject to copyright liability; and, very interestingly, this very bill which seeks to impose copyright liability on CATV is saying that the hotel does not have to pay copyright fees.

So I think the law is always discontinuous, is always drawing fine distinctions, and there is no absolute requirement to pay for any and every use of the copyrighted material. The law has to decide where the obligation to pay ends, and we think that the way you decide that is to ask yourself what is the copyright all about? And the reason that you have a copyright is to encourage the creation of programs or books.

Senator BURDICK. The staff just called to my attention a distinction in your example, that whereas a hotel that furnishes its guests with music charges no fee for it

Mr. ZIMMERMAN. The hotel-excuse me.

Senator BURDICK (continuing). Whereas the CATV system charges the subscribers.

Mr. ZIMMERMAN. Senator, the Supreme Court case which dealt with that, and which is the predicate for the decision below, addressed itself to the point of specific fee charging and noted that, of course, a hotel does charge a fee in the sense that this is one of the services it provides in return for the nightly lodging bill. Just because the fee is not pulled out does not mean that this is not one of the things you are paying for. The Supreme Court so held. So I would hold the cases are not distinguishable.

Senator BURDICK. But this sentence on page 4 where you say:
Copyright protection imposes a toll on the use of copyrighted material.

Certainly a copyrighted piece of sheet music or a copyrighted book takes a toll, does it not, for its use?

Mr. ZIMMERMAN. Yes; and the toll has been paid here.
Senator BURDICK. Well, has it?

Mr. ZIMMERMAN. Why, yes. The broadcasting station has charged its sponsor for the program; and the sponsor has paid for the program, and the TV viewer has paid the sponsor; and they paid enough to get the thing created. So the copyright law has done its job.

Senator BURDICK. Suppose a magazine buys my rights on a book, and it is serialized in a national magazine that is circulated throughout the country

Mr. ZIMMERMAN. Yes.

Senator BURDICK (continuing). And the magazine pays for those rights. Does that give the right of another magazine to publish it. without paying for it?

Mr. ZIMMERMAN. Clearly "No." You are being compensated through the magazine and through its ability to charge the reader, just as the television program creator is being compensated by the television viewer; and all readers who enjoy the book should pay for it. All television viewers already pay for the programs they enjoy.

The proposal here would make the CATV viewers pay twice. They have already paid when they buy the sponsor's product.

Senator BURDICK. Well, the testimony has some contradictions in it and I am sure that your views are appreciated.

Well, the thesis of what you are proceeding on this morning is simply this, as I see it, that you do not think that this committee should do anything about the question of liability and we should leave the problem in the hands of the FCC.

Mr. ZIMMERMAN. Well, I think something should be done. I think that two things probably ought to be done.

I think that we ought to get the copyright question out of this problem and that we ought to get FCC regulation into this problem. I think that what Congress should do should be to make it clear that copyright does not apply and should make it clear that the FCC has the power it needs to handle on a regulatory basis problems raised by the CATV. That is what I think is the preferred solution.

We indicate that if you are committed to the role of using copyright as your means of handling what is to us a regulatory problem, we certainly think you should not do it this way-in terms of a blanket copyright liability-and that at the very least, you should attempt to distinguish among situations and tailor the copyright liability according to the regulatory problems. But we do not think that is a preferred solution.

Senator BURDICK. Well, let us get this straight again. The preferred solution is that we as a committee do nothing about the copyright.

Mr. ZIMMERMAN. No. I think that the preferred solution would be to clarify that there is no copyright liability and, at the same time, to insure that the FCC goes forward and regulates.

Senator BURDICK. Well, all we can deal with in this committee is the copyright question.

Now, do you want us to have copyright liability or not have copyright liability?

Mr. ZIMMERMAN. Very clearly we prefer that you do not have copyright liability.

Senator BURDICK. At any time.

Mr. ZIMMERMAN. That is right. But contingent on that is the notion of strong FCC regulation.

Senator BURDICK. Our problem is copyrights.

Mr. BRENNAN. Just one or two questions, Mr. Chairman.

Is not ASCAP at the present time regulated by a Federal antitrust consent decree?

Mr. ZIMMERMAN. Yes, it is.

Mr. BRENNAN. With respect to their rates?

Mr. ZIMMERMAN. Yes.

Mr. BRENNAN. Is there a need for an exemption from copyright liability with respect to copyright works which already are regulated by the antitrust consent decree?

Mr. ZIMMERMAN. I do not know of any such need.

Mr. BRENNAN. That is all.

Senator BURDICK. Do any of you other gentlemen have anything to offer at this time? I want to thank you very much.

Mr. ZIMMERMAN. Thank you very much.

Senator BURDICK. The next witness will be Richard Jencks.

STATEMENT OF RICHARD W. JENCKS, DEPUTY GENERAL COUNSEL, CBS, INC.

Mr. JENCKS. Mr. Chairman, members of the subcommittee, I am Richard W. Jencks, deputy general counsel of the Columbia Broadcasting System, Inc. I am here at your invitation to discuss with you the current position of CBS with respect to the possibility, suggested in a letter from Subcommittee Counsel Thomas C. Brennan, dated June 16, that your committee may wish to consider in this session copyright legislation limited to CATV systems.

I am pleased to have the opportunity to appear before you today and to submit a statement of the position of CBS with respect to this important matter.

As the committee knows, it has been judicially determined in United Artists Television, Inc. v. Fortnightly Corporation that the unauthorized retransmission of copyrighted material by a CATV system constitutes an infringing performance within the meaning of the present copyright statute. We believe that this case vindicates the basic philosophy of our system of copyright. That philosophy, expressed in article I, section 8, clause 8 of the Constitution, is '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 ***99

It seems to us that the encouragement of authorship can be achieved only through the protection of the opportunity to license copyrighted works under the free marketing conditions which have evolved to form the natural economic backbone for the growth of mass communications in the 20th century. I might digress at this point briefly from my prepared statement to note that on a free marketing basis of bargaining between users and copyright proprietors, in the television and radio field, more than 800 television stations and more than 5,700 radio stations are constantly utilizing copyrighted material under licenses obtained under free marketing conditions and without the intervention of any scheme of regulation, finely honed or otherwise, designed to regulate traffic in rights in copyrighted material.

In thus supporting the constitutional objective of the copyright law we believe that this committee may also properly give due weight to the need for maintaining the uniquely American system of free television broadcasting and to the need to provide acceptable television reception for people living within the normal coverage areas of stations but who cannot be reached by the ordinary techniques of overthe-air television transmission.

CBS believes that these objectives can be met by legislation which would grant to CATV systems an exemption from copyright infringement for retransmissions of television broadcasts to subscribers within the normal coverage area of the television station initiating such broadcasts. The rationale for this proposal is that a copyright owner who licenses his work for television broadcast by a particular station can reasonably expect his work to be seen by all persons who live within the normal coverage area of that station. In this fact situation the copyright owner can be fully compensated by the royalties he receives for his licensing of broadcasting rights whether the audience sees the performance of his work on a television set connected to a conventional antenna or on a television set which can receive a CATV system's retransmission. Our endorsement of such a proposal for copyright exemption for CATV retransmissions for subscribers within a station's normal coverage area is subject to the following conditions with which a CATV system ought to be required to comply in order to qualify for the exemption:

(1) In order to be entitled to such an exemption a CATV system should be required to carry, during its hours of operation and subject to applicable FCC regulations, the entire schedule of the station whose broadcasts it retransmits. It seems clear that a special copyright privilege should not be granted to a CATV system which can pick and choose those portions of a station's schedule to be offered to the system's subscribers. The basis for the exemption is to make all programs of such station available to members of the public who otherwise cannot adequately receive them.

(2) In order to be entitled to such an exemption a CATV systems service should be limited to the retransmission of broadcast programing. CBS believes that it is fundamentally sound that CATV systems who desire a special copyright privilege to retransmit the broadcasts of stations should not originate programing which competes with such stations and which, by diverting the broadcast audience, is economically harmful to the copyright proprietor. In addition, it would seem that program origination is historically, as well as logically, contrary to the CATV industry's own view that its function is the supplementary one of providing optimum television reception to poor reception

areas.

(3) The limits of the normal coverage area in which the copyright exemption would apply should be capable of being determined with precision by reference to a map or chart showing such area. Compliance with the civil and criminal penalties of the copyright laws should not rest on technical measurements which are difficult or expensive to ascertain and which can be disputed. Such a precise designation of the normal coverage area will eliminate the uncertainties and disputes which have already arisen in establishing broadcast contours under the present regulations of the Federal Communications Commission relating to CATV.

(4) The exemption should not apply to any CATV system which makes any separate or direct charge for any particular retransmission or which otherwise bases its charges to subscribers in whole or part on program content. Such charges should be limited to a periodic charge usually now made by CATV systems on a monthly basis-for the retransmission service rendered by the CATV system, together with an appropriate installation charge.