books printed in other foreign countries in violation of the General Agreement on Tariffs and Trade (GATT) as well as many of our bilateral commercial treaties. In this regard we have studied with care the issues raised in Mr. French's submission accompanying the proposal to except Canada. As Mr. French notes, our present restriction on the importation of books avoids conflict with Article XI of the GATT only by virtue of the Protocol of Provisional Application, which provides that the laws existing on October 30, 1947 are not in violation of Part II of the GATT. While the proposed exception would be a liberalization in the sense that it would allow increased imports of books from Canada, it is clearly discriminatory in granting a concession to the Canadians not offered to our other trading partners. The Protocol has been interpreted to allow re-enactment of laws existing in October of 1947, and to allow the liberalization of such laws. However, the proposed modification of the law creating a discriminatory exception would create a conflict with the spirit of the mostfavored-nation requirement in Article I, and in all likelihood with the words of Article I calling for most-favored-nation treatment "with respect to all rules and formalities in connection with importation and exportation" (the Protocol does not except legislation inconsistent with Article I); and would also create a new conflict with the non-discrimination requirement in Article XIII, paragraph 1, providing that: "No prohibition or restriction shall be applied by any contracting party on the importation of any product of the territory of any other contracting party... unless the importation of the like product of all third countries is similarly prohibited or restricted.” Mr. French suggests Article XIII applies only to prohibitions or restrictions authorized under Article XI. However, Article XIV, paragraph 1, specifically excepts from Article XIII, under certain circumstances, restrictions authorized by Articles XII and XVIII, section B, thus indicating that Article XIII was meant to apply to prohibitions and restrictions generally. Consequently, this Department believes it applies also to ban new provisisons that would introduce discriminatory prohibitions on imports, even when these new provisions are modifications of restrictions which are themselves exempted from the GATT Article XI requirements by virtue of the aforementioned Protocol. Moreover, a discriminatory provision such as is proposed would be contrary to the requirements for most-favored-nation treatment contained in bilateral commercial treaties with many of our major trading partners (see e.g., our Friendship, Commerce and Navigation Treaties with Germany (TIAS 3593), paragraphs 1 and 3 of Article XIV and Japan (TIAS 2863), paragraphs 1, 2, and 3 of Article XIV, both of which contain most-favored-nation provisions similar to Articles I and XIII of the GATT). Mr. French further contends that the book manufacturing clause is excepted from GATT requirements by Article XX, paragraph (d). This provision permits measures to secure compliance with laws and regulations for the protection of copyrights providing such laws and regulations "are not inconsistent with the provisions of this Agreement." The over-all heading of Article XX also requires that such measures do not "constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail." While Article XX (d) may permit new measures, for example, prohibiting importation of books or work that would infringe a copyright, it would not permit a new provision in a copyright law laying on a fresh discrimination among countries as to the importation of books into the United States. A further suggestion is that Article XXIV of the GATT, which provides for exceptions for customs unions, free trade areas, and frontier traffic, applies to a provision such as the proposed exception to the manufacturing clause. However, it does not appear that such an exception would fit into any of the above categories. Customs unions and free trade areas involve comprehensive tariff and trade arrangements providing for the removal of duties and other trade restrictions from most if not all of commodities in trade between two or more countries. An agreement covering only books could not properly be considered as establishing a free trade area. The exception for frontier traffic is also inapplicable since it was intended to apply to local traffic between neighboring areas close to the frontier. Although it is in theory possible for the United States to seek a waiver of its obligations under the GATT and the bilateral treaties, the Department does not view this as a feasible course of action. In addition to legal problems which would have to be surmounted, such an approach would conflict with major policy goals of this Government, i.e. to maximize international trade through the mostfavored-nation principle and to maintain the strength of the GATT organization. In summary, the Department feels that as long as the manufacturing clause remains a part of the copyright law, it would not be proper to except any nation from its provisions. We therefore would advise against the amendment proposed by Mr. French. We shall be glad to be of service should you desire further information or views from the Department. The Bureau of the Budget has informed the Department that from the standpoint of the Administration's program there is no objection to the submission of this report. Sincerely yours, WILLIAM B. MACOMBER, Jr., Assistant Secretary for Congressional Relations. STORER BROADCASTING CO., Re hearings on S. 597. SUBCOMMITTEE ON PATENTS, TRADEMARKS, AND COPYRIGHTS, SENATE JUDICIARY COMMITTEE, Old Senate Office Building, Washington, D.C. (Attention: Mr. Brennan). DEAR SIRS: There is transmitted herewith a Statement of Storer Broadcasting Company concerning the proposal to extend public performance rights to manufacturers and performers of sound recordings. It would be appreciated if this statement is included for the Subcommittee's consideration in the record of the hearings on S. 597. Should the Subcommittee have any questions concerning this matter, please communicate directly with the undersigned. Very truly yours, WARREN C. ZWICKY. STATEMENT OF STORER BROADCASTING COMPANY Storer Broadcasting Company, a radio and television broadcaster with headquarters at Miami Beach, Florida, respectfully submits the following comments concerning the status to be given to sound recordings under the copyright laws, with particular reference to proposed Amednment No. 131 which would extend exclusive public performance (royalty) rights to record manufacturers for the benefit of themselves and record performers. Testimony concerning this matter has been heard on March 21, April 11-12, and April 28, 1967 before this Subcommittee. Storer Broadcasting Company endorses and adopts the testimony presented April 12, 1967, by the National Association of Broadcasters (“NAB") and by National Broadcasting Company, Inc. ("NBC") in opposition to the amendment. Generally, their testimony was to the effect that the amendment would not serve the underlying historical objectives of copyright protection and, through imposing heavy and unnecessary financial burdens on the portion of the broadcast industry least able to afford it, would limit those broadcasters' ability to serve the public. Storer does not intend to re-state or expand upon the NAB and NBC presentations. It does, however, invite the Subcommittee's attention to two central considerations therein, which, in Storer's opinon, totally negate the claims made by proponents of the amendment : (1) Radio broadcasting-the primary broadcast user of sound recordingsis not the bottomless cornucopia of wealth portrayed by the amendment's proponents as being able to offset untold additional expenses against lucrative profits. As shown by NAB and NBC, the proponents have told the Subcommittee only about the few most profitable stations, not the 83% which reported sule stantially lower than average profits, the 1,150 radio stations which lost an aver age of $26,594 in 1965, or the independent FM stations which lost an aggregate of $3,300,000 in the same year (official FCC statistics for the most recent available year). And, since the smaller AM stations and all FM stations generally utilize recordings for a proportionately greater portion of their program material, they are the ones which would suffer a proportionately greater burden if the amendment were adopted. This burden would inevitably affec the stations' continued ability to serve the public. (2) Broadcasters do not take form, but contribute to, record manufacturers and performers. After forty years in the broadcast business, Storer is unaware of any manufacturer or performer which was ever reluctant to gain the exposure provided by air play on its stations. The very reverse is true. As the Subcommittee is aware, record companies often go to great lengths in their attempts to receive broadcast exposure. It is customary for them to offer free promotional copies of their releases to broadcast stations; indeed, many broadcasters-including Storer-have had to develop elaborate control procedures to guard against the occasionally over-enthusiastic record promotion tactics which have become known generically as payola. It is beyond question that broadcast performance has been a prime factor in the growth of the record industry, and the promotion of performers' personalities and talents. Thus it is entirely erroneous to suggest that broadcasters unjustly enrich themselves at the expense of manufacturers and performers. Manufacturers are in the business of selling records to the public, and their sales are enhanced by the wide exposure given by broadcasters. Similarly, performers make records to gain income from the sales of those records and to promote their own personalities in order to increase the demand not only for their recordings but also for their personal appearances, endorsements, and other services. They are now usually paid on the basis of a negotiated flat performance fee from the record manufacturer plus a specified sum for each record sold. To add a third payment for each air play-when air play is conceded to generate sales to the public and to promote the performers' personalities in the first instance-would be to enforce unequitable and unwarranted duplication. For these reasons, in addition to those more fully developed and analyzed in the testimony of NAB and NBC, it is respectfully submitted that the proposed amendment to S. 597 which would extend performance rights to record manufacturers and performers should be rejected. WEIL, GOTSHAL & MANGES. Re Copyright Law revision on behalf of textile industry. Chairman, Patents, Trademarks, and Copyrights Committee, Senate Judiciary MY DEAR SENATOR MCCLELLAN: In connection with the proposed new copy. right law, we write to you to ask you your cooperation in approving an amendment of same with respect to the use of original artistic designs applied to textiles. A similar request, as I understand it, has been expressed to you by greeting card manufacturers through their attorney, Howard C. Miskin. For your information, we enclose herewith copy of a letter sent to the Judiciary Subcommittee on March 13, 1967, which sets forth in general our ideas. As we indicated in that letter, we feel it essential in the public interest, that there be a further revision of the Bill omitting the use of the date in the notice of copyright so far as textiles are concerned and other articles similarly related. The public policy and the practical philosophy behind the inclusion of the year and date in the copyright notice with respect to biographical and historical literature and works of art, simply does not apply in any sense to textile products. The publisher and the reader of literature and the creator of a painting and of course, the purchaser or owner, are naturally desirous of knowing, even long after publication, of the date of first use and often biographical and historical information relevant to such literature and all works of art, but this date or information is in no way justified or of any interest in the case of textiles bearing an artistic design where consumer use and the importance of fashion are primary considerations. Obviously, also, there is no underlying social purpose to be achieved in imposing such a burden of date upon the uses of artistic designs applied to textiles. www. The evil of copying has long been rampant in the American textile industry, whereas in most other civilized countries, effective law has been present to prevent such copying. It took many years of effort and many Court decisions to enable textile products bearing artistic designs to obtain relief under the old copyright law. We are certain that those responsible for the drafting of the new law which is most commendable in its major provisions, had no idea of removing from textiles the benefits acquired under the old law, but failure to exempt textiles is primarily the result either of an oversight or concentration on the other aspects of copyright. We strongly urge, therefore, that Section 401 (b) (2) of the proposed new law be amended so as to omit requirement of date in connection with tetxiles. The greeting card industry, as I understand, has proposed an amendment to such section as follows: "***; however, for reproductions of (a) works of art: (b) photographs: (c) prints; and (d) pictorial illustrations used in products to be sold for profit, the year date may be omitted;" We think that this wording is most satisfactory from the standpoint of our industry and the public interest and we therefore request very strongly that the law be so amended. We would appreciate an acknowledgment of the receipt of this letter and look forward to affirmative action on the part of your Committee. Respectfully submitted. Very truly yours, The CHAIRMAN, SYLVAN GOTSHAL, Counsel, Textile Distributors Association, Inc. WEIL, GOTSHAL & MANGES, New York, N.Y., March 13, 1967. Judiciary Subcommittee on Patents, Trademarks, and Copyrights, U.S. Senate, Washington, D.C. DEAR SIR: We represent the Textile Distributors Association, Inc., a trade association consisting of 135 regular members engaged in all aspects of the textile industry and 48 associate members engaged in such business as synthetic fiber manufacture, factoring and the like, who are interested in the promotion of a sound and ethical textile industry. First, we wish to join in complimenting the work of the Registrar of Copyrights and all the others who were responsible for the drafting of this proposed revision of the Copyright Act. The textile industry, like all industries which utilize the benefits of copyright, welcome this proposed new Copyright Act, which has been so long needed, subject to certain essential changes as follows: As is inevitable with any legislation of such scope, some harmful provisions have crept in along with the generally praiseworthy revisions. In particular, Section 401 of the proposed bill contains a radical departure from present law which may seriously curtail the textile industry's increasing use of the copyright statute to promote higher standards in the industry, and protection for the products of the artists who create designs for textile fabrics. Briefly, Section 401 would require that the mandatory copyright notice for all types of copyrighted works include the date of first publication. In contrast, Section 19 of the present law only requires that "printed literary, musical or dramatic works" include the year of first publication. Thus, the proposed legislation would, for the first time impose the requirement of dating any textile design sought to be protected by copyright. This would impale the textile designer, manufacturer or distributor, upon the horns of a dilemma. On the one hand. protection may be sought for designs through copyright, but to do so, means that products must bear the date of first publication of the design. In an industry so highly conscious of fashion, the insertion of any year other than the present year would mean that the product would be labeled as out of fashion. Thus, the simple requirement that a date be inserted would seriously affect the marketability of what might otherwise be a highly desirable textile fabric. On the other hand, one might forget about copyright protection entirely but such choice is equally unpalatable in an industry which has only recently started to use copyright extensively, and as a result begun to enjoy the encouragement which copyright gives to creative artists. Accordingly, we request that the Committee remedy this situation by exempting the requirement for inserting a date in the pertinent copyright notice, textiles and similar products being dependent upon public acceptance of their modishiness. In making this request we have examined with care the reasons advanced for the change in existing law. We frankly believe that this change was made without giving due consideration to the problems of such industries as textiles. The House Report indicates that the date requirement was made applicable to all copyrighted works because that date "is still significant in computing the term and determining the status of a work". However, this may be true of literary works; it plays little or no role for textiles. This is borne out by the copyright office's own study of the commercial use of the copyright notice. Thus, there appears to be no valid reason why textile designs should be dated, while, on the other hand, such requirement imposes a serious deterrent to the use of copyright by textile companies. We do not wish to impose upon this Committee any specific language. We know that there are other industries whch share our problem and are, therefore, opposed to the universal mandatory dating requirement. We simply ask that the dating requirement not be applied indiscriminately to industries such as textiles where benefits are non-existent and potential damages devastating. An examination of the records of your Committee and Congress will show that the writer and the organization he represents, have long been advocates of effective legislation for protection of original designs. The request, therefore, for elimination of the dating provision for designs on textiles, is the result of careful consideration, long practical experience in this field, and of the conclusion that such elimination is in the interest of the consumer as well as the textile designer, manufacturer and distributor. Respectfully submitted. SYLVAN GOTSHAL. P.S.-It is with regret that I will be unable to attend the hearings. I would appreciate your acknowledgment of the receipt of this letter and the fact that it will be incorporated in the record. KIRKLAND, ELLIS, HODSON, CHAFFETZ & MASTERS, Hon. JOHN L. MCCLELLAN, DEAR CHAIRMAN MCCLELLAN : During the course of this Subcommittee's public hearings on S. 597, I appeared together with Herbert J. Miller, Jr. to testify on March 17, 1967, on behalf of the sole domestic manufacturers of coin-operated phonographs, the Wurlitzer Company, The Seeburg Corporation, Rock-Ola Manufacturing Co., and Rowe Manufacturing Co. At that time I requested and received the permission of Acting Chairman Senator Quentin N. Burdick to submit at a later date a supplemental memorandum. I submit the attached memorandum for your consideration and I respectfully request that it be incorporated in the record of the hearings on S. 597. Very truly yours, PERRY S. PATTERSON. SUPPLEMENTAL STATEMENT OF COUNSEL FOR THE WURLITZER COMPANY, THE SEEBURG CORP., ROCK-OLA MANUFACTURING Co., AND ROWE MANUFACTURING CO. Introduction At the urging of the Senate Subcommittee on Patents, Trademarks and Copyrights and the Register of Copyrights that a fair statutory compromise on the jukebox royalty problem be developed, we prepared and distributed to all interested parties a proposed substitute for Section 116 on behalf of the jukebox manufacturers. By this time, it was generally recognized that the original Section 116 was unworkable and unreasonable in every respect. Our proposal was acceptable to the Register of Copyrights, the performing rights societies, and the jukebox operators. The reception was so unanimous that these parties, acting in unison, prevailed upon the House of Representative to replace the unworkable Section 116 with the substitute. The House did so with but a few minor modifications. |