Note the testimony of Mr. Arthur B. Krim, President of the United Artists Corporation, on June 24, 1965, when he appeared before Subcommittee No. 3 of the House Judiciary Committee (Hearings on H.R. 4347, p. 1332), on behalf of Allied Artists Television Corp.; Danny Thomas Enterprises, Inc.; Desilu Productions, Inc.; Embassy Pictures Corp.; Independent Television Corp.; Metro-Goldwyn Mayer, Inc.; Wolper Productions, Inc.; Screen Gems, Inc.; Seven Arts Productions, Inc.; Twentieth Century-Fox Television, Inc.; United Artists Television, Inc.; Universal Pictures, Inc.; Walt Disney Productions, Inc.; and Warner Bros. Pictures, Inc. Mr. Krim stated:

"I think, gentlemen, that this group of companies which, as you can see,
number 14, represents in excess of 75 percent of the copyrighted material
which is going over the airwaves today. I would venture the further guess
that if we were to add to these 14 another number, certainly not more than 14,
and of course including the three networks, we would cover so close to 100
percent of the copyrighted material which is going over the airwaves and that
the exceptions would be relatively minor in nature."

The Register of Copyrights claimed in his Report that he took no position on the two pending cases against the cable industry.1/ Nevertheless, he stated (p. 22) that under Section 106(a) (4) and (5),

"A community antenna service would be performing when it retransmits the
broadcast to subscribers over wires;"

On pages 40, et seq., the Report discusses secondary uses of transmissions. It lists the arguments advanced for an outright exemption of CATV and those opposed to any exemption before summarily disposing of this issue as follows:

"On balance, however, we believe that what community antenna operators are
doing represents a performance to the public of the copyright owner's work.
We believe not only that the performance results in a profit which in fairness
the copyright owner should share, but also that, unless compensated, the
performance can have damaging effects upon the value of the copyright. For
these reasons, we have not included an exemption for commercial community
antenna systems in the bill."

Extensive hearings were held on H.R.4347, in 1965, during the 1st Session of the 89th Congress which resulted in the bill being reported on October 12, 1966 with amendments. These amendments did not alter the definitions recommended by the Register of Copyrights "To perform or display a work 'publicly' " or " 'transmit'." This language was intended to impose full liability on the transmissions by CATV as provided by Section 106 of the bill. Earlier studies of the Office of Copyright had not considered CATV. It was purely an afterthought.

The bill also was amended, however, by adding a highly complicated Section 111 which provided limitations on exclusive rights by secondary transmissions (Union Calendar No. 999, 89th Cong., 2d Sess.). Section 111 contained in H.R.4347 may be briefly summarized in the following six points.

1. In order to enjoy any exemption from the payment of copyright fees, a CATV system must not originate any programming other than "weather, time and news reports, free from editorial comment: agricultural reports; religious services; and local proceedings of governmental bodies", there must be no "commercial or political" advertising or sponsorship of closed circuit presentations; and there must be no charges made for any particular program or programs. Also, not more than two channels may be devoted to originations. Finally, if the CATV operator engages in the deletion of any commercials or station identification, or in any way alters program content, he loses all exemption under the Act.

2. A CATV system otherwise eligible for exemption is not liable for the payment of copyright royalties for any broadcast programs received within the "limits of the area normally encompassed" by the broadcast station whose signal is received, as determined by the Register of Copyrights. Furthermore, if a copyright program is broadcast by two or more TV stations which provide a Grade B signal over the CATV system, and if one of the TV stations has the exclusive license from the copyright owners to transmit the program in the area served by the CATV system, the CATV system must protect that exclusivity, provided it is given ten days' written notice of the exclusivity.

3. A CATV system which receives the program of a television station which does not "normally" serve the area in which the CATV operates must pay copyright fees for such programs, except in an area which is not "adequately" served by television stations.

1/ Fortnightly Corp. v. United Artists Television Inc. 392 U.S. 390 (1968) TelePrompTer, Inc. v. CBS 415 U.S. 394 (1974)

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4. If the CATV system is in an area which is not “adequately" served by television stations, it can receive, under a system of compulsory licensing, the programs of a TV station which does not "normally" serve the area. The bill or report defines an area as "adequately" served when a "preponderance" or "more than half" or "substantially all" of the programs of the three major television networks are normally received. Also, the exclusivity limitation discussed under paragraph 2, above, applies equally in an inadequately served area. In order to qualify for compulsory licenses for the importation of non-Grade B or non-local signals under the provisions discussed above, the CATV system must supply to the Register of Copyrights information as to the persons who own or control the CATV system and information as to the name and location of the stations carried on the CATV system.

5. If a CATV system receives the programs of non-local stations in an area covered by a "local" station, and duplicates the programming provided by the local station, the CATV system loses all exemption from copyright liability.

6. The parties bargain for a reasonable fee and the Court decides the issue in case they cannot agree. Failure of either party to offer or accept a reasonable fee will incur up to treble fee damages for the copyright holder.

The section reflects many regulatory concepts which would be enforced by the copyright bill. These regulatory concepts, it was understood, had their origin at the Commission. It should be remembered that at this time (October 12, 1966) the legality of the Commission's Second Report and Order asserting general jurisdiction over CATV was still very much in doubt. The Commission's regulatory program of containment "peeks" out of the provisions of this section.

In presenting testimony on H.R. 4347 (89th Cong.), which became H.R. 2512 (90th Cong.), the then President of NCTA (Hearings before Subcommittee No. 3, Committee on the Judiciary, House of Representatives, 89th Cong., 1st Session, p. 1245, June 24, 1965), after discussing the conflict between the bill and communications policy under the jurisdiction of the Interstate and Foreign Commerce Committee, stated that CATV systems should be free of copyright clearance requirements. An amendment was then offered2 / (Hearings, p. 1255) to exempt CATV from copyright with the following three qualifications: (1) The further transmission by CATV is made without altering the content, (2) no direct admission fee is charged, and (3) the reception apparatus is not coin operated. This amendment would have removed the possibility, it was stated, of a conflict between this legislation and other legislation being considered for establishment of communications policy.

When H.R. 2512 was passed, Section 111, relating to CATV, was stricken from the bill under an agreement between the Chairmen of the Judiciary Committee and the Interstate and Foreign Commerce Committee. This agreement was entered into to settle a violent dispute between the Committees over regulation of CATV in the copyright bill. This dispute erupted after a speech by Congressman Arch A. Moore, Jr. (R. W.Va.) (Cong. Record, April 6, 1967, p. H3624, et seq.) following up his letter of the previous day to all members of the House.

In his speech, Congressman Moore attacked the bill for attempting to use copyright for the regulatory control of CATV by: (1) an invasion of the jurisdiction of the Commerce Committee; (2) effectively prohibiting CATV from originating programs; and (3) protecting pay-TV on broadcast stations and effectively precluding pay cable.

As the bill passed, it left CATV fully liable for copyright. NCTA agreed to the bill because of the frightening decision of the U.S. District Court (S.D. N.Y.) holding CATV liable for infringement of copyright. If this decision were to be affirmed on appeal, at least half of the legislative process would be completed and speedy legislative action would be possible to protect the industry.

On August 2, 1966, the then President of NCTA presented testimony to the Subcommittee on Patents, Trademarks and Copyrights of the Committee on the Judiciary of the U.S. Senate of S.1006, an identical bill to H.R. 4347. This testimony was delivered some 16 months after testimony before the House on H.R. 4347 and some eight months before House passage of H.R. 2512.

A number of things had occurred between the House and Senate Committee hearings. The District Court (S.D. N.Y.) had held on May 23, 1966 that Fortnightly's CATV system had infringed United

21 "Notwithstanding the provisions of Section 106, the following are not infringements of copyright.

"(5) the further transmitting to the public, by means of broadcast receiving equipment of whatever design, including antennas, and related equipment, wherever located, which receives and makes available by means of cable or wires and related equipment to individual reception sets of the kind commonly used in private homes, of a transmission embodying a performance or exhibition of a work; Provided: The further transmission is made without altering or adding to the content of the original transmission and no direct admission fee is charged for the privilege of seeing or hearing such transmission and the receiving apparatus is not coin operated."

Artists' copyrights; the FCC asserted jurisdiction over all CATV systems on March 8, 1966; and the House Subcommittee no. 3 announced substantial modification in the provisions of H.R. 4347. Operating in this climate, NCTA believed, at that time, that it was compelled to make a compromise proposal. In doing so, it was stated:

"These proposals in their entirety may satisfy no one — certainly not our-
selves but they are made in good faith..." (Hearing, id. p. 86).

There were six points in the proposal. In brief, they were as follows:

1. No liability for programs received off-the-air;

2. A compulsory license for distant signals in an inadequately served area;

3. Industry wide bargaining for programs from distant signals received in adequately served areas at fees fixed by statue somewhat higher than fees in adequately served areas;

4. Liability of CATV for all copyrighted programs which it originates;

5. Music should be considered cleared at the source;

6. No limitation on CATV reception of non-copyrighted programs.

Despite the efforts of NCTA to propose a solution to the copyright issues, admittedly, under the pressure of the District Court holding, no action was taken on that bill. It should be noted that the Department of Justice opposed any extension of copyright liability to CATV because of the possibility of harmful anti-competitive consequences and that this extension is not justified by valid considerations of the right to copyright protection (Hearings, p. 211, et seq.).

S. 597 was introduced by Senator McClellan on January 23, 1967 and S. 543 was introduced by him on January 22, 1969. These bills, so far as CATV is concerned, were substantially the same as S.1006, however, further hearings were held on S.547 and a Committee Print of December 10, 1969 (91st Cong., 1st Session) contained a number of changes in Section 111. S.644 was introduced on February 18, 1971 containing the changes reported in Section 111 of S.547. Except for technical changes, S.1361, introduced on March 26, 1973, was the same as S.644.

In a letter dated November 1, 1968, the NCTA submitted to Senator McClellan a proposal which, under the circumstances then existing, NCTA believed was the only workable compromise, i.e. an acrossthe-board approach. This plan would (1) require a compulsory license upon an inclusive payment for all television signals carried; (2) a single place to pay; (3) a provision honoring sports "blackouts" under Public Law 87-331; and (4) no restrictions on originations or reception of uncopyrighted programs. Needless to say, this proposal was not accepted. This plan, as well as many other proposals, made to the National Association of Broadcasters and copyright owners have all been rejected.

Finally, Tom Whitehead, of OTP, and Chairman Dean Burch called a meeting of the interested parties from which came the Consensus Agreement of November 8-12, 1971. This Agreement has been termed the ransom price extracted from NCTA for the supposed relaxation of CATV rules (Cable Television Report and Order, 36 FCC 2d 3 (Feb. 3, 1972).)

The Consensus Agreement, it is understood, was adopted by a one-vote majority of the NCTA Board of Directors under great pressure from the Government. That sort of agreement is no agreement. (For a current press account of the Agreement see CABLE NEWS, Dec. 17, 1971.) Moreover, all of the Consensus Agreement had to be accepted or nothing no qualifications or reservations of any kind were permittted. The pressure for acceptance by the Government was so great that time was not allowed to consult the industry generally.

The stated purpose of copyright legislation, Mr. Burch informed Senator McClellan in his letter of January 26, 1972, was "... to bring cable into the competitive television programming market in a fair and orderly way." (Underscoring supplied.)

Cable television, when it originates like a broadcaster, is already on a completely competitive basis with television except for the anti-siphoning restrictions placed on cable by the FCC. If there was any intention of being fair, no such restrictions would have been placed on one of two competitors by the Government. When CATV is acting as a master antenna on the "side of the viewer" it is not a competitor. Television stations compete with each other which is facilitated by CATV. The CATV function does not compete (fairly or unfairly) with television a concept fully supported by the Department of Justice. (See Comments of Department of Justice in FCC Docket 18397-A, Dec. 7, 1970.)

Chairman Burch also stated in his letter to Senator McClellan:

"But the nature of consensus is that it must hold together in its entirety

or not at all — . . ."

It is important to observe that the Commission disavowed the Consensus Agreement, in denying the public the right to comment on it, as it must. This was done by the Commission just a few short

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months after the Agreement by stating, in paragraph 66 of the Cable Television Report and Order, that: "The Commission has no intention of setting out detailed regulations today

only to revise them tomorrow. But, as we gain experience and insight, we
retain the flexibility to act accordingly - - to make revisions, major or minor
and to keep pace with the future of this dynamic area of communications
technology."

If the Commission can disavow the Agreement in 1972, certainly after the Supreme Court decision in 1974 in TelePrompTer Corp. v. CBS, Inc., supra n. 1, determined that importation of distant signals would have no impact on copyright holders extracting recompense for their creativity and labor or suffer loss, the cable television industry is certainly justified in disavowing the Agreement.

In addition to this fact, when the compulsion under which CATV was subjected, in proposing compromise plans and accepting the Consensus Agreement, there is no reason to continue to support the payment of copyright. This is particularly true in the light of Department of Justice's opposition to the extension of copyright to CATV as anti-competitive.

On July 31 and August 1, 1973, hearings were held on S.1361. The bill was reported on July 3, 1974 and was passed by the United States Senate on September 11, 1974. It is now pending in the House of Representatives where no action is likely this year. A new bill must be introduced and passed by both houses next year before it becomes law. As previously indicated, H.R. 2512 was passed in 1967 after Section 111 was deleted from the bill following a major confrontation between two committees. It is, therefore, important to analyze Section 111 in the context of the present situation because Subcommittee No. 3 of the House Judiciary Committee has not considered the provisions of the present section.

II- ANALYSES OF S. 1361

S. 1361 consists of eight chapters containing some 68 sections in Title I General Revision of Copyright Law. There are three chapters of particular concern to cable television. Chapter 1 is concerned with the Subject Matter and Scope of Copyright. Chapter 5 deals with Copyright Infringement and Remedies. Chapter 8 establishes the Copyright Tribunal.

CHAPTER 1

SUBJECT MATTER AND SCOPE OF COPYRIGHT

Section 101 defines various terms. "To 'perform' a work means to recite, render, play, dance or act it either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible." "To 'display' a work means to show a copy of it, either directly or by means or a film, slide, television image, or any other device or process or, in the case of a motion picture or other audiovisual work, to show individual images nonsequentially." "To perform or display a work 'publicly' means: (1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; (2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times." "To 'transmit' a performance or display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent.'

In the Report of the Senate Committee on the Judiciary to accompany S.1361, at page 113, the meaning of the above provisions are explained as follows:

"Under the definitions of 'perform', 'display', 'publicly' and 'transmit' in Sec-
tion 101, the concepts of public performance and public display cover not
only the initial rendition or showing, but also any further act by which that
rendition or showing is transmitted or communicated to the public. Thus,
for example: ... a cable television system is performing when it retransmits
the broadcast to its subscribers; ... The purely aural performance of a motion
picture sound track or the sound portions of an audiovisual work, would con-
stitute a performance of the 'motion picture or other audiovisual works'; but,
where some of the sounds have been reproduced separately on phono-
records, a performance from the phonorecords would not constitute per-
formance of the motion picture or audiovisual work."

The foregoing provisions make it clear that the bill intends to reverse the holding of the United States Supreme Court in Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968) that:

"Broadcasters perform, viewers do not perform. Thus, while both broad-
caster and viewer play crucial roles in the total television process, a line is
drawn between them. One is treated as active performer; the other, a passive
beneficiary. When CATV is considered in this framework, we conclude that
it falls on the viewer's side of the line. Essentially, a CATV no more than en-
hances the viewer's capacity to receive the broadcaster's signal; it provides
a well-located antenna with an efficient connection to the viewer's television
set. It is true that a CATV system plays an 'active' role in making reception
possible in a given area, but so do ordinary television sets and antennas."
(Footnotes omitted.)

Section 106 lists five fundamental rights given to copyright owners the exclusive rights of reproduction, adaptation, publication, performance and display are stated generally in this section.

"These exclusive rights, which comprise the so-called 'bundle of rights' that
is a copyright, are cumulative and may overlap in some cases. Each of the
five enumerated rights may be subdivided indefinitely and, may be owned
and enforced separately."

However, the bill, after setting up these exclusive rights, provides various limitations, qualifications, or exceptions in the remaining 11 sections of the chapter. Thus, section 106 is subject to those sections and must be read in conjunction with those provisions (Report, p. 110, et seq.).

Section 111, which was deleted from H.R. 2512 before it was passed by the House in 1967, has been revised by the Senate. This section modifies the liability of CATV by limitations on the exclusive rights of copyright owners in secondary transmission.

This section has five subsections. Subsection (a) provides that a secondary transmission (CATV) embodying a performance or display of a work is not an infringement if:

(1) The secondary transmission is not made by a cable system, but is, in effect, a master antenna system located in the local service area of a broadcast station licensed by the FCC for which no direct charge is made.

(2) The secondary transmission is solely for purposes described in clause (2) of Section 110 (systematic instructional activities, related to teaching content of the transmission, if transmitted for reception in classrooms, to persons disabled from attending classes or reception by government employees in the course of official duties).

(3) The secondary transmission is by a carrier that has no control over subject matter or recipients thereof and which only provides wire or cable for use of others.

(4) The secondary transmission is by a governmental body or other non-profit organization which makes no charge except to defray actual expenses. This exemption applies to "translators" or "boosters". "This exemption does not apply to a cable television system." (Report, id, p. 131)

Subsection (c) provides in clause (1) for compulsory licensing of secondary transmission of the primary transmission by an FCC licensed broadcast facility upon compliance with the notice of ownership and quarterly payment provisions of subsection (d), and (A) the primary transmission is exclusively aural and the secondary transmission is permisible under FCC rules; (B) where the cable system is, in whole or in part, within the local service area as prescribed by the FCC, of the primary transmitter; or (C) where carriage of signals comprising the secondary transmission is permissible under FCC rules.

Clause (2) of subsection (c) provides that notwithstanding the compulsory license, the secondary transmission is actionable under Section 501, 502 and 506, as an infringement where carriage of the signals comprising the secondary transmission is not permissible under FCC rules or where the cable system has not recorded a notice with the Office of Copyright, as specified in subsection (d). This section converts the Copyright Law into an enforcement law for FCC rules by which broadcasters could continually harass cable operators with vexatious litigation on any pretext of carriage of signals not permitted by the FCC rules. It is submitted that this is not a proper function of Copyright Law.

The Committee considered excluding from the scope of the compulsory license carriage of certain professional sports, but decided to leave this matter to the Commission and the Commerce Committee (Report p. 132).

Subsection (b). The meaning of subsection (b) is clearer if considered after (c) because it is phrased in terms of an exemption to both (a) and (c). This section provides that notwithstanding exemptions of subsection (a) (master antenna, teaching, carriers or co-ops) or subsection (c) (compulsory license for: aural primary transmissions carried in compliance with FCC rules; local service area signals; or where secondary transmission are permissible under the FCC rules subject to the notice to Copyrights Office) the secondary transmission is not made for reception of public at large, but limited to particular members of the public (pay-TV).

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