Subsection (d) (1) provides for notice of ownership of the cable system and other information that may be required to the Office of Copyright one month before the secondary transmission. Clause (2) provides for deposit in the Office of Copyright, on a quarterly basis, in accordance with the Register's regulations. (A) a statement of account specifying source of income, number of subscribers and the like; and (B) the quarterly royalty, based on a sliding percentage scale on gross receipts from subscribers for the basic services of providing secondary transmission of primary broadcast transmitters. The sliding scale runs from 1⁄2 percent on quarterly gross receipts of up to $40,000 to 21⁄2 percent on quarterly gross receipts of more than $160,000. Based on a $5.00 monthly rate, a 3000 subscriber system would pay $250 a quarter and a 6000 subscriber system would pay $750 a quarter on $90,000 of gross receipts for basic subscriber services (Report p. 133). Note the rate base may be expanded to other services on which copyright may already been paid and the rate increased. The only limit is what the three arbitrators from the American Arbitration Association prescribe that is not set aside in Congress within 90 days. Clause (3) of subsection (d) provides procedures for the distribution of royalty fees deposited with the Register of Copyrights. Subsection (e) contains definitions of "primary transmission", "secondary transmission", "cable systems" and "local service area of a primary transmitter". The definition of "secondary transmission" makes special provision for non-contiguous states, territories and possessions. The definition of "cable system" is unusual in that for royalty fee purposes the Commission's definition is changed to: two or more cable systems in contiguous communities under common ownership or control or operating from one headend shall be considered one system. The definition of "local service area of a primary transmitter" is the one in which a television broadcast station is entitled to insist on carriage by the cable system under FCC rules. CHAPTER 5 COPYRIGHT INFRINGEMENT AND REMEDIES Section 501 provides that anyone who violates any of the rights provided in Section 106 through 117 is an infringer. It provides that the legal or beneficial owner may institute an action for infringement subject to certain requirements. The most significant provision is that for any secondary transmission by a cable system which is actionable as an infringement of Section 111(c), a television station holding a copyright or other license to transmit or perform that work shall, for purposes of instituting an action, be treated "as a legal or beneficial owner, if such secondary transmission occurs within the local service area of that television station." The Court may require notice to all persons having an interest in the copyright, as disclosed by the records in the Office of Copyright. Section 502 gives the Courts power to restrain infringements of copyright. Section 504 provides that an infringer is liable for actual damages and profits or, at the election of the copyright owner, statutory damages of $250 to $10,000 as the Court considers just. If the infringement was willful, statutory damages may be increased to $50,000 by the Court or if the infringer shows that he had no reason to believe his acts were an infringement, the Court may reduce the statutory damages to $100. Section 506 provides severe criminal penalties for willful infringement, ranging from $2500 fine and one year imprisonment to $50,000 fine and seven years imprisonment. CHAPTER 8 COPYRIGHT ROYALTY TRIBUNAL Section 801 establishes in the Library of Congress a Copyright Royalty Tribunal. This section states that the purpose of the Tribunal is to make determinations concerning the adjustment of royalty rates specified by Sections 111 and 115 to assure that the rates are reasonable. If the Tribunal finds the statutory rates a Tribunal rate, or the revenue basis in respect to Section 111 does not provide a reasonable royalty fee for the basic service of providing secondary transmissions of the primary broadcast transmitter or is otherwise unreasonable, the Tribunal may change the royalty rate or the revenue basis on which the fee is assessed or both to assure reasonable royalty fee. This section makes it clear that neither the rates nor the rate base on which they will be calculated is fixed, but may be changed very shortly. Section 802 requires the Register of Copyrights to give notice on July 1, 1975 of proceedings to review royalty rates prescribed by Sections 111, 114 and 115. During the year 1982 and every fifth year thereafter, petitions for adjustment of the rates may be filed. Section 803. If the Register of Copyrights determines that there is a controversy on distribution of fees or gives notice of significant interest of a petition under Section 802, he shall request the American Arbitration Association to submit three names to which objections can be filed. If no objections are filed, it will constitute a panel of the Tribunal to function as the Tribunal. If objections to members are well founded, additional names shall be requested and the Tribunal then constituted. There is no provision for appeal to the Courts. Three arbitrators unskilled in this area will effectually control rates and the rate base. Section 806 provides for a report of a Tribunal decision to the Senate and House and Section 807 provides that, if either House resolution, within 90 days, does not favor the decision, it shall not become effective. If no resolution of disapproval is passed, the Tribunal decision shall become effective. Section 809 does not provide for any judicial review of the Tribunal's decisions on royalty rates. SUMMARY In brief, Section 106 makes cable television systems, when performing as a community antenna, fully liable as an infringer when distributing copyrighted programs on signals received from television stations. Exceptions from liability are provided for master antenna, teaching or instructional activities, common and other carriers and nonprofit co-ops. CATV is given a compulsory license to carry radio, local and other signals authorized by the FCC. Nevertheless, it is an infringement if carriage of a signal is not permissible under FCC rules or the appropriate notice is not filed with the Office of Copyright. This provision is a real sleeper because it will give copyright protection and penalties both civil, criminal and injunctive to the broadcaster if CATV by accident or otherwise fails to nonduplicate a network or syndicated signal or in any other way carries a signal not permitted by the FCC rules. In addition, over-the-air carriage of pay-TV is fully actionable unless cleared by the owner of the copyright. QUERY: May the broadcaster clear programs not he can only sue. - apparently A sliding scale of across-the-board fees is prescribed on basic services which must be deposited with the Office of Copyright quarterly. A hearing will be held in 1975 to consider both the rate base and the rates to be paid to insure a "reasonable royalty fee", whatever that is. No standards are prescribed only the sujective idea of the three arbitrators will prevail unless disapproved within 90 days by one house of Congress. There is no Court appeal to test whether the record supports the award. Stiff civil and criminal penalties are provided for infringements. Broadcasters holding a license are treated as a beneficial owner within their local service area for purposes of instituting an action for infringement. A Copyright Royalty Tribunal is formed. Panels of the Tribunal are appointed from the American Arbitrator Society. The rates prescribed in Section 111(d) (1) and the rate base (basic subscriber service) will be reviewed in 1975 and again in 1982 and every five years thereafter to assure the copyright owner a "reasonable royalty fee." |||It is clear that the Register of Copyrights makes his whole case for CATV copyright liability on the fact that CATV charges its subscribers and makes a profit and failure to share these profits could damage the copyright. The Supreme Court disagreed with these assumptions and found otherwise in TelePrompTer Corp. v. CBS, Inc., supra n.l. If the Register's theory of liability is correct, which it is not, then anyone who makes a profit, directly or indirectly, from a performance of a copyrighted work should be liable. This liability would run to wire and receiver manufacturers and countless other business enterprises which enable the public to view the performance. Moreover, this theory assumes that the retransmission of a television signal by CATV is a performance which the Supreme Court of the United Sates, on two occasions, has held that is is not. Mr. Arthur Krim, in his testimony before Subcommittee No. 3, House Judiciary Committee (Hearings on H.R.4347, P. 1334, June 24, 1965), attempted to justify the assertion that carriage of programs by CATV would seriously damage the copyrighted work by referring to the importation of distant signals. Neither Mr. Krim, the Register of Copyrights, or anyone else has attempted to show that the reception of a signal carrying a copyrighted work off-the-air in an area the television station is obligated to serve and for which the copyright owner has been compensated in any way damages the future runs of the work, the broadcaster or anyone else. As we have shown, the Supreme Court found Mr. Krim's contention erroneous. THE PUBLIC SHOULD NOT PAY A COPYRIGHT FEE VIA CATV The fact that CATV makes a profit, by assisting the TV station to deliver its programs to the public 8 it is obligated to serve and for which the copyright owner has been paid, has no bearing on whether CATV should pay copyright. CATV services keeps the copyright owner honest by delivering the signal carrying his program to the public for which he has been paid. In February 1965, in my remarks before the International Radio and Television Society, I stated: "At the present time, a sponsor who buys a program usually pays the "It is a scientific fact, recognized in the Sixth Report and Order, however, that "A community antenna television system within the Grade B contour merely aids the sponsor in getting his moneys worth from the copyright owner and the station by assuring the sponsor that anyone who desires the signal will receive it clearly, and thus increase the potential audience. Certain copyright owners are not satisfied with this. They collect from the sponsor who recovers his cost from the public and they would like to collect again from the CATV operator who must also pass his cost on to the public. Some way or other it does not seem right to me for the public to have to pay for 'two tickets to the same performance ." No one has attempted, to my knowledge, since that time to refute this argument. There is an additional factor relating to the question of "profits". Although early figures breaking down program expenses for television were not published, it is significant that the television industry, as a whole, was reported in 1952, by the FCC, to have had revenues of $323,266,000 and expenses of $267,902,000. In 1973, the Commission reported that 604 VHF and UHF stations expended 218,266,000 for film and $64,749.000 for royalty and license fees for a total of $283,015,000. The three networks expended $624,430.000 in amortization expense on programs obtained from others: $3,128,000 for records and transcriptions: $7,248.000 for music license fees and $75,467,000 for other performances or program rights. It is difficult, if not impossible to estimate the actual copyright fees received because of the intermixture of other program costs with copyright. It is obvious, however, that because of television the 28 companies that control, almost 100% of copyrighted fare on television, have made huge profits (of which 85% we are told, comes from the top 50 markets) from that exposure and have been paid handsomely by the public through the broadcaster for programs dedicated to serve that same public. Why should the copyright owner, these 28 companies, Mr. Krim spoke of in 1965 and a few others that may have since joined them, be entitled to "siphon off" duplicate copyright fees from the public under the quise that CATV makes a "profit" and these companies are entitled to "a piece of the action"? Those facts should demonstrate conclusively that the copyright owner giants (1) by virtue of their access to the air, (2) with no charges by the Government to transport their product to the public (3) compared to CATV companies which pay up to $10,000 a mile for their channels of communication to subscribers, should certainly be required to forego double fees from a reception service for the public. The small number of copyright owners who dominate this area should certainly be required to give something back to the public in return for using the public domain for what are obviously huge profits. Cable television or its advertisers will pay for any programs it siphons from broadcast television, whereas the public would receive nothing for the cash the broadcasters would have the copyright owner siphon from the public via CATV. There is a basic conflict between communications policy and any copyright law in which a cable antenna system is required to pay copyright on any signal it is authorized to receive and distribute on its system by the Federal Communications Commission. The Court has construed the Communications Act to empower the Commission to regulate CATV. In exercising this power, the Commission requires, as a condition of receiving and carriage of television broadcast signals, that CATV systems must carry all local signals. The definition of local signal varies according to the size market where the system is located. Nevertheless, the Commission exercises its power to require carriage of certain signals and permits the carriage of others. Such regulations now constitute CATV a supplemental service to make the Commission's allocations of frequencies more effective. Until set aside, revised or revoked, CATV systems must comply with those carriage rules. The proposed legislation would compel CATV to pay copyright owners for distributing signals carrying their copyrighted works. The broadcaster has the right to pick and choose the copyrighted works he will buy and broadcast. Congress should set the record straight. If the Commission is confirmed in the power to require carriage of particular signals by CATV, than CATV is a supplemental reception service, performs nothing, and owes nothing. If it is desired to require copyright payment by CATV for its supplemental role, then CATV should be entitled to carry whatever programs it desires, delete the advertising and substitute its own. The broadcaster should not be permitted to have it both ways - collect additional revenue from sponsors for the added carriage of CATV and require CATV to pay copyright fees. In short, the broadcaster is arguing for the morality of unjust enrichment to copyright owners at the expense of the public CATV serves as a means of using copyright to restrict the growth of CATV. It is the public who will unjustly enrich the broadcaster and/or the copyright owner- not the CATV operators. These anti-consumer provisions should not be enacted into law. Based on the foregoing review of the background and the provisions of this legislation, it must be concluded that the provisions of S. 1361 concerning CATV are philosophically unsound. An across-theboard payment, including payment by the public for two tickets to the same performance or for distant signals as limited by the Commission's rules, is, in my opinion, soaking the consumer and will add to an already inflationary economy. I believe that you are justified and should revert to the industry's historical position and make every effort to seek an amendment to this bill, substantially as recommended in 1965 (supra n.1), to eliminate any liability under Section 106 or other provisions of S. 1361. The Subcommittee on Communications of the Senate Commerce Committee, in its Report No. 93-1035 on S. 1361, proposed certain amendments to the bill. In conclusion, the subcommittee stated on page 71: "Despite proposing amendments to the Judiciary Committee's amendment in the nature of a substitute for S.1361, you Committee emphasizes it is reporting the bill out without recommendation. "Clearly, some of its subject matter substantially affects the broadcasting and cable industries, and is regulatory in nature. "Should it be enacted it will have a significant impact on our nationwide communications system, without the relevant issues having been analyzed in the forum designated the Senate for that purpose, i.e. your Committee on Commerce." I have not undertaken to separate the regulatory parts of the bill from those properly in a copyright bill. At a later time, this type analysis should be made in order to further demonstrate the inappropriateness of the provisions of S. 1361 relating to cable television. 10 Frederick W. Ford AD HOC COMMITTEE OF CONCERNED CABLE TELEVISION OPERATORS FOR A FAIR COPYRIGHT LAW, Painted Post, N.Y., June 10, 1975. Re H.R. 2223-Omnibus Copyright Revision Legislation-Cable Television. Hon. ROBERT W. KASTEN MEIER, Chairman, Subcommittee on Courts, Civil Liberties, and the Administration of Justice, Judiciary Committee, House of Representatives, Washington, D.C. DEAR CONGRESSMAN KASTEN MEIER: The Ad Hoc Committee of Concerned Cable Television Operators For a Fair Copyright Law is enclosing herewith for insertion in the records on the current Hearings on the above-referenced legislation the following: 1. Listing of State and Regional cable television associations that have adopted resolutions against the payment of copyright fees by cable television systems. 2. Copies of resolutions passed by 53 municipalities in the United States against the payment of copyright fees by CATV systems and indirectly the United States public that happens to view their television on CATV systems. It is pertinent to note that no municipalities in the United States have voted in favor of having CATV systems pay copyright. It would obviously not be logical for them to do so because the cost of the copyright fees will be passed on to the subscribing U.S. consumers. Obviously they know it would not be popular or even intelligent to adopt such a position. This special interest legislation would in effect require the American consumer to pay special copyright fees for viewing programming that has advertisements attached to it. Such "pork barrel" legislation is clearly not in the public interest. You will note that to date 23 states have officially adopted resolutions against the payment of copyright fees by CATV systems. CATV operators are essentially providing an "antenna service". As such, CATV operators do not understand this entire issue of copyright. However, as CATV operators become more and more aware that they will have to pay copyright fees in the immediate future if this disastrous legislation goes through, they are putting pressure on individual state associations to officially adopt positions against the payment of copyright. The only people that are for the payment of copyright are the large multiple system owned CATV operators that control the National Cable Television Association. These operators feel that the Federal Communications Commission will continue to enact disastrous legislation in our industry if this copyright issue is not settled. We agree that it should be settled. But we also feel that to agree to pay copyright which we feel is fundamentally immoral and anti-consumer is not the appropriate course of action. We hope that your Committee will consider in its deliberations on the proposed copyright legislation the strong feeling of the municipalities that voted against this legislation. Please also consider the feelings of all the state associations representing approximately 1⁄2 of all the states in America that have taken the trouble to adopt resolutions against this legislation as it relates to cable television. Very truly yours, LAWRENCE FLINN, JR., Member. LISTING OF STATE AND REGIONAL CATV ASSOCIATIONS THAT HAVE ADOPTED A "No PAY" POSITION ON COPYRIGHT AS OF JUNE 6, 1975 STATE ASSOCIATIONS 1. Alabama* 2. Arkansas 3. Colorado 4. Iowa* 5. Kentucky* 6. Louisiana 7. Minnesota* 8. New York* 9. Oklahoma* 10. Oregon* 11. Pennsylvania 1 Footnotes at end of listings. |