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cable system of responsibility for any meaningful royalty payment. I submit, therefore, that the Teleprompter Corporation proposal should be rejected by your subcommittee.
In closing I must reiterate that it is the NCAA's hope and urgent request that you will propose an amendment to H.R. 2223 which will make provision for the imposition of limitations on cable retransmissions of sports events necessary to protect high school and college athletic programs. Sincerely yours,
NATIONAL CABLE TELEVISION ASSOCIATION,
Washington, D.C., November 14, 1975, Hon. ROBERT W. KASTENMEIER, Chairman, Subcommittee on Courts, Civil Liberties and the Administration of
Justice, Rayburn House Office Building, Washington, D.C. DEAR CONGRESSMAN KASTENMEIER: This is in response to your letter of November 4, asking for our thoughts on the cable television copyright payment plan advanced by TelePromptTer Corporation for inclusion in H.R. 2223.
As you know, NCTA has consistently expressed its willingness to support a bill which provides for a reasonable copyright payment for the carriage of broadcast signals.
The key to NCTA's support of H.R. 2223 is the phrase "reasonable copyright”, as we stated in our testimony of June 10 before your subcommittee. In the bill as presently written a CATV system would pay a progressive percentage of its gross subscriber revenues from the basic reception service. The fee schedule set in the bill would be subject to periodic review by a tribunal. NCTA testified in support of the payment plan but took strong exception to the tribunal arbitration mechanism on the ground, among others, that this is an arbitrary system without criteria or adequate review which is therefore fraught with danger and uncertainty for the cable industry.
On the subject of the fee schedule itself, NCTA recognized that H.R. 2223's payment plan is based solely on gross revenues. This approach disregards the local or distant source and the number of broadcast signals carried by a CATV system. From the standpoint of logic, NCTA has always been, and still is, attracted to a concept of paying only for signals not normally received in the community. Local signals are already present off-the-air in the community and the copyright owner has been compensated for distribution of his product. Like wise, a CATV system carrying one distant signal should not have to pay as much as a CATV system carrying five distant signals. We have heretofore been unable to formulate a fair method of apportioning payment along such local signal versus distant signal lines.
TelePrompTer has submitted a new method of calculating a CATV system's copyright liability. It is based on payment solely for each distant signal carried, a concept which, as indicated above, appears to be logically sound, but needs further review. Rather than the usual arbitrary assumptions found in other payment plans, this proposal attempts to track market place factors in calculating the fees to be paid by a CATV system. The built-in features of the plan seem to provide ascertainable standards for tribunal fee review. Thus, NCTA is study. ing the plan and we are presently engaged in a thorough statistical and economic analysis of all of its facets. We will be happy to provide your committee with our findings when our research has been completed. Sincerely,
REX A. BRADLEY, Chairman of the Board.
MAYER, BROWN & PLATT,
Washington, D.C., November 13, 1795. Mr. ROBERT W. KASTEN MEIER, Chairman, Subcommittee on Courts, Civil Liberties and the Administration of
Justice, Committee on the Judiciary, House of Representatives, Washington,
D.C. DEAR MR. KASTENMEIER: Mr. David O. Wicks, Jr., of Becker Communications Associates, has asked me to respond to your letter of November 4, 1975, inviting
a submission of views with respect to a proposed alternative method of dealing with the computation of copyright royalty payments in H.R. 2223. We have been able to review the proposal only on its face and have not been able to project the actual economic impact of the proposal on the cable industry. Such a study would involve a review of the financial results of individual companies and information as to their plans for the importation of distant non-network programming, the market share of such programs, and the average programming cost of cable television systems.
Nevertheless, we are able to conclude that the proposed alternative, to the extent it would eliminate the possibility of changes in the royalty rate by action of a copyright tribunal, will have a more predictable effect upon the operations and profitability of cable television systems. The elimination of this uncertainty should improve financing opportunities for such systems.
As noted in Mr. Wicks' testimony, however, any copyright royalty of the magnitude provided in H.R. 2223 will have a significant adverse effect upon the profitability of most cable systems and must be regarded as having a potentially inhibiting impact upon their growth prospects.
We appreciate this opportunity to make these comments upon the alternative proposal referred to in your letter. Very truly yours,
CHARLES W. PETTY, Jr., Counsel for Becker Communications Associates.
New York, N.Y., November 14, 1975. Hon. ROBERT W. KASTENMEIER, Chairman, House Judiciary Subcommittee on Courts, Civil Liberties and the
Administration of Justice, Rayburn Building, Washington, D.C. DEAR MR. CHAIRMAN: We are taking this opportunity to amplify the copyright proposal we previously submitted to your Committee.
In particular, we would like to address the criticism that our formula is overly complex. We strongly believe that this criticism is unjustified for two reasons :
First, the formula is not in fact complicated. It involves only two simple calculations, both of which depend upon data which is either readily available or can be easily obtained. Attached hereto is an example, using one of our own systems, of how our formula works.
Second, the simplicity of H.R. 2223 as it now stands is deceptive. The simple formula contained in H.R. 2223 required periodic adjustment from a Royalty Tribunal-which almost certainly ensures periodic litigation. Then, too, if for some reason either House of Congress overrode a determination made by the Tribunal an extremely uncertain and difficult situation would exist.
The simple formula of H.R. 2223 is deceptive for another reason as well-it gives absolutely no guidance as to how to distribute the royalty payments. The present bill (in Section 111(d) (3) (A)) rather wistfully contemplates that an ASCAP-like organization will develop to remedy this omission. But what if one does not? Or if all copyright owners do not join the same organization? Or if, as in fact happened in the case of ASCAP, some members claim that the distribution scheme utilized by the organization is unfair?
Moreover, the present bill gives absolutely no guidance as to how the Royalty Tribunal (which in the absence of agreement among the claimants will be required to make the fee distribution) should perform its distribution function. Probably the tribunal will use, as do ASCAP and BMI, the relative popularity of copyrighted programs as the basis for distribution. Any other result would be absurd since it would not relate the payment received to the value of the work created.
This, however, would not solve the problem since it is likely that the localdistant signal controversy will once again erupt—this time among the copyright owner claimants. That is, copyright owners whose programs are carried on imported independent stations will object to sharing the cable royalties with the copyright owners whose programs are broadcast locally on the perfectly reasonable ground that the local broadcast station has already adequately compensated the copyright owner for the local cable viewership. Perfectly reasonable,
to be sure—but how is the tribunal to respond when the argument runs counter to the entire philosophy of H.R. 2223?
We believe that our proposal would give the statutory guidance necessary to solve these distribution problems. First, of course, because it adopts the logical local-distant (as well as network-non-network) distinction, it immediately solves the question of who are the proper claimants. Second, because the formula is itself based on the popularity of the imported programming it is much more consistent with what we envision will necessarily have to be the mechanism of the distribution arrangement.
We also wish to address the question of whether Teleprompter's formula disadvantages smaller, rural systems in favor of larger urban systems. We are right now doing a complete analysis of this matter and will be able to give your committee a definite answer to this question in a short time. For now we merely observe that this problem, if it exists, can easily be remedied by adopting an exclusion · which would be applicable only to small independently owned systems. Such a proposal would have only a minimal impact on the total copy. right fees collected from the cable industry but would go far toward winning the support of the small independent operators. Very truly yours,
Example Teleprompter's system in Farmington, New Mexico had revenues of $563,072 in 1974. The system, which is located in San Juan County, New Mexico, imported the following distant independent television stations which received the respective market shares o indicated below:
share Station :
2. 2 KTLA
9.0 We have proposed that copyright liability be determined by the following formula :
Subscriber revenues X percentage of revenues which broadcast stations spend on programming X popularity of imported independent and non-network programming as expressed as a market share percentage.
Applying the Farmington data to our formula (and assuming that all broadcast stations spend 28 percent of their revenues for programming costs“) results in a copyright fee of $14,189.41 (2.5% of subscriber revenues). This result is derived as follows:
$563,072 X 28% X 9%=$14,189.41
1 It should be remembered that rural systems which are able to import many television stations are often much more profitable than the larger urban systems. Teleprompter's Manhattan and Los Angeles systems lost $11,350,000 in 1974 while many of our smaller systems were extremely profitable.
2 Such as excluding the first $100.000 of system revenues from copyright liability.
3 We have attached a page from Neilson which shows the market shares of each of these stations in San Juan County.
* We have attached a copy of the FCC's summarization of the Forms 324 filed for 1974 from which the 28 percent figure is derived.
County and State name
Sandoval, N. Mex.
San Juan, N. Mex..
San Miguel, N. Mex....
Santa Fe, N. Mex..
Sierra, N. Mex........
37 El Paso.
Socorrd, N. Mex..
Source: From Neilson survey ratings.
This appendix 2 consists of the 18 briefing papers submitted by the Copyright
BRIEFING PAPERS ON CURRENT ISSUES RAISED BY H.R. 2223, MAY 7, 1975
The collection of briefing papers in folders 2-19 included in this portfolio are
The following staff members of the Copyright Office, listed in alphabetical
CHAPTER 1, SECTIONS 101-105
SUBJECT MATTER OF COPYRIGHT Summary
Under the Copyright Clause of the Constitution, Congress is empowered to grant to authors the exclusive rights in their writings. The present copyright law, as adopted in 1909, repeats the Constitutional phrase and grants copyright to "all the the writings of an author.” Although the broad sweep of this phrase may imply that the statutory copyright grant is co-existensive with the Constitutional power, it is clear that Congress has not exhausted the scope of "writings of an author" in the existing law.
The revision bill substitutes the phrase "original works of authorship" for "writings of an author" as a clarification that the Constitutional power has not been exhausted in copyright legislation. The new phrase also more accurately reflects the variety of authorship covered by the copyright status. It also dispenses with the term "writing" which, in ordinary statutory parlance, could be given a more limited meaning, but in fact has been broadly interpreted by the courts to apply to works such as paintings, sculpture, photographs, motion pictures, and sound recordings.
The standard of original, creative authorship would not be changed by the revision bill. Choreographic works and pantomimes, however, would be covered explicitly.
The bill continues and clarifies the principle of existing law that copyright in new versions covers only the new material and does not enlarge the scope or duration of protection in pre-existing works.
The section on national origin extends statutory protection to unpublished works without regard to the nationality or domicile of the author. Published works of foreign nationals are eligible for United States copyright protection if they meet one of four conditions. Section 101: Definitions
For the sake of convenience, the definitions of terms used in two or more sections throughout the bill are compiled in the first section. Provisions dealing with specialized subject matter, such as section 111 on cable retransmissions and section 116 on jukebox performances, include their own definitions subsections. Section 102: Copyrightable subject matter
Original works of authorship.-Section 102 provides that copyright protection subsists in original works of authorship fixed in tangible form. While seven broad categories illustrative of "works of authorship" are listed, it is clear that the categories are illustrative and not limitative. It is intended that the standards of originality and creativity developed by the courts under the existing law should remain unchanged by the revision bill. The copyright standard of originality is modest and does not approach the novelty standards of the patent law.
Fixation.-The requirement of fixation is retained and will serve as the dividing line between common law and statutory copyright under the revised law. Unfixed works, such as spontoneous oral conversations or unrecorded dances, are left to common law protection. Under the definitions in section 101, a work is " fixed' in a tangible medium of expression when its embodiment in a copy or phonorecord ... is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration."
Pantomimes and choreographic works.-A special comment is in order on the reference to pantomimes and choreographic works in the revision bill. The present law has no specific provision for copyright in choreographic works, although they are undoubtedly protected as “dramatic works." The same is true of pantomimes. To resolve any doubt as to the necessity for dramatic content as a condition for protecting these recognized art forms, the bill mentions them explicitly.
Ideas, systems, etc.-Subsection (b) of section 102 states the fundamental principle that copyright protection does not extend to ideas, plans, systems, or methods, no matter how unique the concept. This proviso was added as a result of the debate over the copyrightability of computer programs, and is intended to make clear that, although the programer's "literary" expression, as embodied in a program, would be copyrightable, his ideas, system, and methodology would not.