but you cannot get a primary transmission from Los Angeles because of the mountains. Suppose I have a cable system and I pick up the Los Angeles broadcast and take it by cable into the valley and the desert and distribute it. I'm going to call that, for our purposes a primary transmission to dispose of the secondary transmission you are talking about. Do you feel there should be an additional fee there? Mr. GOLDBLOOM. Yes.

Mr. DANIELSON. Why?

Mr. GOLDBLOOM. Of course, the whole subject of these copyright laws has been debated long and hard to the extent that the Congress has attempted through this bill to accommodate these various interests. We feel that it has accomplished beneficially a great deal because there are competing interests here. Cable television does have the ability to extend beyond the mountainous area that you described, something which other systems are not naturally or not normally able to do.

Mr. DANIELSON. Is there anything natural or normal about the primary transmission; it is a mechanical device, an electronic device, a creation of man which has been out in these areas. Seriously, your rationale to support your statement that the copyright holder is helped and not hurt by such activity within the primary viewing area, does it not apply equally to the viewing over the mountains?

Mr. GOLDBLOOM. Well, it does, but in the context of the world of communications there is a need we feel to accommodate the interests of both the cable as well as the copyright owners.

Mr. DANIELSON. How would they not be accommodated? Is it not a fact that the royalty agreement between the copyright holder and the broadcasting station is based in part on the number of viewers and, in calculating the number of them, the broadcasting station includes those who are reached through the cable transmission on the other side of the mountain?

Mr. GOLDBLOOM. I don't know that that is necessarily correct.

Mr. DANIELSON. Do you have any documentation or authority for that?

Mr. GOLDBLOOM. I would have to look into that.

Mr. DANIELSON. I don't expect you to know answers on a multitude of problems, but I think you are going to find in the advertising business the rates that the broadcaster receives for advertisements-and that is what keeps him alive-are based on the viewers; the rate he pays the copyright holder is based on the viewers.

So, if you expand the number of viewers, you are going to expand the advertising rates and the amount he pays for his royalties. I think you will find that to be the case. Assuming that is true, then would not that be your rationale on secondary transmission whether it be over the mountain or inside the mountain, if you are applying that rationale?

Mr. GOLDBLOOM. I think it would.

Mr. DANIELSON. On fair use, Mr. Pattison has brought out the analogy of making textbooks for a school. This poses a real problem in my mind yet, I am hoping it will be cleared up. I am sure we agree that if the school were to go through a first-class printing operation and reprint, set plates, and type, print and bind a copy of a book, you would have an infringement and there would be royalties.

Then back down one step instead of doing the traditional photooffset job, but it be otherwise the same, I think you would agree you still have a copyright violation. So, if you back down to a mimeograph and suppose you typed on a stencil and then bound it with a nice, hardboard cover, et cetera, I think you would still contend, and many of us would, that you would still have a violation.

You take the same mimeograph, but you don't bind it and have just loose sheets now you are confronted with whether or not it is a copyright violation and, if you go to Xerox, now you have two questions; what do you do with that?

I have gone through this step by step on purpose. I wonder if we are coming to grips with the real issue? Should we basically copyright on the type of mechanical reproduction used or upon the number of copies; is it valid to say it is the use to which they are put, whether they go to a nonprofit school? I don't know if there is a valid way of determining this and I am seeking help because I don't understand it. Are we saying when we talk about schools and churches, are we saying we must be good to the nonprofit organizations? There certainly isn't this consideration on brooms and buckets and typewriters and the people who sell printed books to the schools make a profit. I don't know the answer and I want to find out. Thank you.

Mr. KASTENMEIER. The gentleman from Illinois, Mr. Railsback. Mr. RAILSBACK. On page 16 of your statement, you indicate that secondary transmission within the local service area of the primary transmitter finds the cable system only filling gaps or improving reception in the service area of the primary transmitter and supplementing the primary transmission. Of course, the primary transmitter has sponsors; when the secondary transmitter within this area picks up the program does he not also run the commercials and wouldn't that have an adverse effect on possibly discouraging a prospective sponsor?

In other words, I don't see how that wouldn't really dilute the effectiveness of a sponsored program.

Mr. GOLDBLOOM. I am not certain specifically how the FCC rules operate, but I believe they would have to reproduce the program in its entirety with the sponsored portions.

Mr. DANIELSON. I am willing to be corrected, but it is my understanding that when a cable system is picked up by a broadcaster that it is transmitted in its entirety and they do not excise the commercials. Therefore, the sponsor gets the advertising over the mountain as well as inside of the mountain.

Mr. RAILSBACK. I see. First of all in respect to Father Drinan's question, and comments, I certainly do welcome you; we invited you to testify. Secondly, with respect to forfeiture, aren't we talking about record pirates who have actually stolen somebody's work?

Mr. GOLDBLOOM. Yes.

Mr. RAILSBACK. I just want to conclude by saying that I do not find that particular recommendation draconian. I disagree with some others, but I thank you.

Mr. KASTEN MEIER. The Chair will state that indeed you were invited along with the Justice Department, along with the Departments of Commerce, and State. As a matter of fact, your predecessor appeared

in this room 10 years ago on a similar bill and you are aware of that I am sure.

Mr. GOLDBLOOM. Yes.

Mr. KASTEN MEIER. In that connection, what was being considered was a similar bill and any of the issues you spoke to this morning were expressed then. Had the views of the Department of Justice, the Antitrust Division and any other parts of that, changed or are they the same as they were 10 years ago with respect to this bill? Mr. GOLDBLOOM. I believe to the extent that issues were then in existence, our position is close to what they were then. I don't know because we have not examined each position we took then in light of the position we have taken today, but I think there is a similarity and identity.

Mr. KASTENMEIER. Do I understand that you regard as the most important issues, the issue of ornamental design in title II, term and the manufacturing clause; those are among the more important positions, issues as far as the Department of Justice is concerned? Mr. GOLDBLOOM. Yes, Mr. Chairman, and CATV.

Mr. KASTENMEIER. If the bill is reported in its present form, will it be the disposition of the Justice Department to oppose it, to recommend that the President veto the bill?

Mr. GOLDBLOOM. I cannot really speak to that at the moment. I think there is a different function when one is recommending to the President, what he should do with legislation from when one appears before the Congress while it is contemplating.

Mr. KASTEN MEIER. It is your stance then that you are making certain recommendations and stating your positions on whether the bill should be passed or not passed; that is your reason for being here? Mr. GOLDBLOOM. Yes.

Mr. KASTEN MEIER. Thank you for your appearance.

KASTENMEIER.

[The prepared statement of Mr. Goldbloom follows:]

STATEMENT OF IRWIN GOLDBLOOM, DEPUTY ASSISTANT ATTORNEY GENERAL, CIVIL DIVISION, DEPARTMENT OF JUSTICE

Mr. Chairman: I am pleased to respond to the Committee's invitation to present the views of the Department of Justice on H.R. 2223, A Bill for the General Revision of the Copyright Law, Title 17 of the United States Code, and for other purposes.

We are in sympathy with the general purpose of Title I of the Bill, to provide a thorough revision and updating of the Copyright Law, Title 17, United States Code. However, as set out below, we recommend certain modifications in the proposed revision. We oppose Title II of the Bill which creates a new type of intellectual property, a hybrid between a copyright and a design patent.

H.R. 2223 and its companion bill, S. 22, are nearly identical with S. 1361 as passed by the Senate in the 93d Congress on September 9, 1974. There are, however, technical and perfecting amendments and changes required by the enactinent of Public Law 93-573, providing for interim copyright extension and increased penalties for tape piracy. A section-by-section analysis of S. 1361 is part of Senate Report No. 93-983, 93d Cong., at pages 102-228. Further details as to the history of this copyright revision bill appear in the same Report at pages 101-103. The summary below is specificially directed to features of the Bill of particular concern to this Department.

Section 107 relates to the "fair use" doctrine. This is fully discussed in Senate Report No. 93-983, pages 115-120. The scope of fair use in copying is illustrated to include reproduction by a teacher or a student of a small part of a work to illustrate a lesson (S. Report 93-983, p. 115). This example, therefore, does not include reproduction of the entire work to illustrate a lesson. In determining

whether the use made of a work in a particular case is a fair use, a court is to consider as factors the purpose and character of the use, the nature of the copyrighted work, the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and the effect of the use upon the potential market for or value of the copyrighted work. As to the reproduction of entire works for classroom use, the doctrine of fair use would be applied “strictly" (S. Rept. 93-983, p. 117).

Sections 108, 110, and 111 cover exemptions from liability for copyright infringement in the fields of library and archive reproduction (Section 108), the exemption of certain performances and displays, such as in classrooms in faceto-face teaching activities of a nonprofit educational institution (Section 110) and the retransmission of a primary transmission simultaneously with the primary transmission or nonsimultaneously with the primary transmission if by a "cable system" outside defined geographic areas ("secondary transmissions" of Section 111).

Section 302 establishes a new term for the duration of copyright. Generally, this is for a term consisting of the life of the author and fifty years after his death. In the case of joint works, the period of fifty years commences upon the death of the last surviving author. For anonymous works, pseudonymous works, and works made for hire, the copyright period is for a term of seventy-five years from the year of its first publication, or a term of one hundred years from the year of its creation, whichever expires first. Where one or more authors areidentified for an anonymous or pseudonymous work before the end of the copyright term, the longer period of copyright terminating fifty years after the death of the author then applies.

Section 405 deals with the effect of the omission of the copyright notice. Section 411 covers infringement actions in certain situations.

Section 506 contains special provisions applying to persons who infringe willfully and for purposes of commercal advantage. With respect to copyright in a sound recording, for the first such offense, a person is fined not more than $25,000 or imprisoned for not more than one year, or both. For any subsequent offense a person is fined not more than $50,000 or imprisoned not more than two years, or both. Section 507 provides a three-year statute of limitations for both criminal proceedings pursuant to provisions of the Bill after the cause of action arose (under the provisions of Sections 116 and 506) and for civil actions after the claim accrued.

Section 601 affords preferential protection to publishers and printers of the United States and Canada (Report 93-983, pp. 195–200).

Sections 801-809 are concerned with the Register's duties to collect royalties and make determinations concerning the adjustment of copyright royalty rates for certain uses where compulsory licenses are provided by the Bill. They also relate to his duties to determine in certain circumstances the distribution of these royalties deposited with the Register of Copyrights. Section 803 provides for selection of membership of the tribunal to make necessary determinations with respect to royalty matters, to be on the basis of a list of names furnished by the American Arbitration Association to the Register of Copyrights. Section 804 provides for procedures to be followed by the tribunal in making its determinations. Subsection (e) of Section 804 directs that the tribunal shall render a final decision in each proceeding within one year from the certification of the panel, certified by the Register of Copyrights on the basis of the names furnished by the American Arbitration Association. This subsection further provides that the Senate Committee on the Judiciary and the House of Representatives Committee on the Judiciary, upon a showing of good cause, may waive this requirement of the rendering of a final decision within one year from the certification of the panel in a particular proceeding. The judicial review for tribunal final determinations, provided in Section 809 (concerning the distribution of royalty fees), is limited. A court may vacate, modify or correct such a determination if it was procured by corruption, fraud or undue means, where a member of the panel was partial or corrupt, and where any member of the panel was guilty of misconduct by which the rights of any party were prejudiced.

Provisions for the protection of ornamental designs of useful articles appear in Title II of the Bill. Section 201 provides that authors or proprietors of an original ornamental design of a useful article may secure a period of protection. except for certain subject areas set out in Section 202, for a period provided in Section 205. Section 201 contains definitions of the terms "useful article", "design of a useful article", "ornamental", and "original" as needed for purposes of

the particular protection provided by this Title. Section 204 provides that protection commences on the date when the design is first made public, either by being exhibited, publicly distributed, or offered for sale or sold to the public. Section 205 provides that the term of protection extends for five years, subject to being renewed for an additional five years prior to the expiration of the initial term. Section 206 provides for certain design notices to be applied to the products protected, and Section 207 limits recovery for infringement if the design notice requirements of Section 206 have been omitted. However, actual notice of design. protection to a particular person can take the place of the design notice requirement of Section 206.

Section 209 of Title II provides for loss of protection if registration of the design is not made within six months after the date on which the design was first made public, who may make application for renewal registration of a design protected under the Bill, how and under what conditions and with what supporting papers a design protected under the Bill can be renewed.

Section 212 of Title II deals with the examination of the design application and provides for cancellation of registrations on application of a person who believes he is or will be damaged by a registration under this Title. Grounds for cancellation are that the design is not subject to protection under the provisions of the Title.

Section 220 of Title II provides remedies for infringement of a design protected under this Title. It provides for a civil action to have judicial review of a final refusal of the Administrator to register the design as for infringement if commenced within a time period specified by the Administrator of the Title, but not less than sixty days after the decision, and permits simultaneous remedy for infringement by the same action if the court adjudges the design subject to protection under this Title. This would appear to mean that the infringer would have to be joined as a party defendant with the Administrator of this Title. The requirements for such an action are that the design proprietor has filed and prosecuted to final refusal an application for registration of the design, a copy of the complaint in the action is delivered to the Administrator within ten days after commencement of the action, and the defendant has committed acts which would constitute infringement of the design.

Section 221 of Title II gives courts jurisdiction of actions under this Title and authority to grant injunctions to prevent infringement, including temporary restraining orders and preliminary injunctions.

Section 222 of Title II relates to recovery of infringement, setting maximum amounts of recovery per infringing copy by way of compensation and provides for the delivery for destruction or other disposition of any infringing articles. Section 223 of Title II provides for cancellation of a registration of a design by a court and certification by the court of such order to the Administrator.

Section 227 of Title II provides that copyright protection under Title I, when utilized in an original ornamental design of a useful article, may still be a design work eligible for protection under the provisions of this Title.

The issuance of a design patent for an ornamental design for an article of manufacture under the patent laws, Title 35 U.S.C., terminates any protection of the design under this Title.

Section 229 of Title II provides that nothing in this Title annuls or limits common law or other rights or remedies available to a person with respect to a design which has not been made public as provided in this Title or any trademark right or right to be protected against unfair competition.

Section 232 of Title II amends various other statutes. Of particular importance to the Department is the revision proposed for Title 28 U.S.C. § 1498(a) to provide that whenever a registered design or invention is used or manufactured by or for the United States without license of the owner thereof, the owner's remedy shall be by action against the United States in the Court of Claims for recovery of reasonable and entire compensation. Use or manufacture of a registered design or invention by a contractor, subcontractor or any person, firm or corporation for the government and with the authorization or consent of the government is to be construed as use or manufacture for the United States. Use or manufacture by or for the United States of any article owned, leased, used by or in the possession of the United States prior to, in the case of an invention, July 1, 1918, and for registered designs, prior to July 1, 1978, is not to be the basis of an award under this Section. Government employees have the right to sue the government under this Section except when in a position to order, influence or induce use of the registered design or invention by the government. Further excluded as a basis for claim under this Section are claims by a regis