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Another evidence of the plaintiff's cooperation in the activities of the society is evidenced by the fact that on the 3d day of December, 1923, the plaintiff as well as other publisher members were informed that, at a meeting of the board of directors, it was resolved that commencing January 1, 1924, there should be printed upon all music thereafter published the following notice :
“All rights reserved, including public performance for profits.”
The plaintiff, accordingly, thereafter upon all music published by it upon the first page of the music printed such notice with the exact phraseology and form as contained in the letter of December 3, 1923.
The reason for this requirement was that many proprietors of places of public amusement whenever apprehended infringing, contended that they were unaware of the fact that the song could not be played or sung as they had either purchased a copy of the number or had received it gratuitously; and to prevent such misapprehension on the part of the resort proprietors it was deemed but fair that such notice be imprinted upon sheet music of the society's. members.
The Motion Picture Exhibitors League of America was succeeded by the Motion Picture Theater Owners of America, and for a number of years its president was Mr. Sydney Cohen.
The Motion Picture Theater Owners of America is a national organization made up of State organizations of motion-picture theater owners. Its total membership is approximately 12,000 members. This organization waged a bitter and relentless warfare against the society and its members.
In 1922 that organization filed a complaint against the society with the Federal Trade Commission, charging it with operating in restraint of trade. The Federal Trade Commission investigated the complaint and dismissed it in an opinion as follows:
FEDERAL TRADE COMMISSION,
Washington, January 2, 1923. Mr. SYDNEY S. COHEN, President Motion Picture Theater Owners of America,
New York City. DEAR MR. COHEN : Your letter of the 14th instant, addressed to the secretary of the commission, making application on behalf of the Motion Picture Theater Owners of America against the American Society of Composers, Authors, and Publishers on account of alleged violation of the law against unfair methods of competition by the imposition of a tax or royalty on motion picture theaters for the right to play the copyrighted music of its members, has been considered.
We have carefully considered the facts, as stated by you, and examined the decision of the courts applicable thereto, with the result that it has been concluded that the case is not one calling for the exercise of the commission's corrective powers. The chief reason for this conclusion may be stated as the fact that the making of a claim for royalties, apparently in good faith, can not be said to constitute “an unfair method of competition in commerce;" it can mot be said to be unfair in the sense in which the word is used in the commission's organic act, but is merely an assertion of a supposed legal right which is fully determinable by the courts; and it is not a method of competition” because the parties to the controversy are not in any way competing with each other. It is regretted that we are unable to aid you in this instance. Very truly yours,
FEDERAL TRADE COMMISSION,
MILLARD F. Hudson, Chief Examiner. The Motion Picture Theater Owners of America established a music department which was open to such of its exhibitor members as did not care to violate the rights of the society's members.
In a letter dated August 15, 1922, Mr. Sidney S. Cohen, the president of that association, wrote to his members as follows:
“ We are assured at this writing of sufficient tax-free classical, orchestral, standard, and popular music to meet any and all demands and we desire to extend to you the cooperation in this regard of our music department.”
Attached hereto, marked Exhibit F, and made a part hereof, is a report made by the president of the Motion Picture Theater Owners of America to the annual convention of the association, held on May 21, 1923, in which report the program of that association against the society for the ensuing year is outlined.
The Motion Picture Theater Owners of Kansas and Missouri, at their annual convention held on or about the 27th or 28th of March, 1922, engaged an attorney, one Samuel Handy, of Kansas City, Mo., and Richard J. Hopkins, attorney general of Kansas, to defend and appear for exhibitors charged with infringement of the copyrights of the society's members. In a speech before that convention Mr. Handy urged no one to pay the license fees and pledged his every effort “ to go clear to the finish."
The president of that association stated in the convention :
“I just want to say in regard to the music tax that when every State in the Union is paying
Kansas is not paying, does not intend to pay, and will not pay
and will teach the music tax people that we ‘have millions for defense but not one cent for tribute.'”
The members of this association brazenly and defiantly violated the rights of the society's members and infringed their copyrights. Eleven suits were commenced in western Missouri against the infringers and were bitterly contested by the said Mr. Handy. A judgment was rendered a few weeks ago in each case in favor of the complainants.
At a meeting of the motion-picture theater owners of eastern Pennsylvania, southern New Jersey, and Delaware, held on the 16th of February, 1923, its secretary and counsel urged all exhibitors within the radius of 50 miles of Philadelphia not to pay any music royalties, and declared that the organization would defend any action brought by the society against the organization's members in that district. Acting upon these instructions, the members of that association gave public performances for profit of the music of the members of the society.
Sixty-five suits were commenced in the eastern district of Pennsylvania. These suits were defended by Mr. George P. Aarons, the counsel for the exhibitors' organization. Thirty-nine were tried before a special master and decrees were recommended in favor of the plaintiffs in those cases. In several of those suits the plaintiff in this suit was the complainant.
For the purpose of those litigations the plaintiff furnished the society with its copyright-registration cards, copies of the music infringed, and the employees of the plaintiff traveled to Pennsylvania, without subpæna, and gave their testimony in such, suits. The plaintiff cooperated in every way toward suppressing the piracies which were instigated by that association of exhibitors.
In the States of Ohio, South Carolina, Connecticut, and Massachusetts, exhibitor members of State organizations of the Motion Picture Theater Owners of America gave performances of the musical numbers of the society without the leave or license of the society. Suits were commenced against the infringers and invariably those suits were defended by the counsel for the State associations. Mr. George P. Aarons, the secretary and counsel of the Motion Picture Theater Owners of America appeared not only in the Pennsylvania cases, but also in the South Carolina cases, and the answer prepared by him was used in the Connecticut cases. Defense funds were raised by voluntary contributions by exhibitors.
In New York the president of the Motion Picture Theater Owners of America, Mr. Sidney Cohen, in his own theater, gave infringing performances, and 22 actions were brought against him in the District Court of the United States for the Southern District of New York, and the identical answer interposed in the other suits was interposed in the suits against Mr. Cohen.
The Motion Picture Theater Owners of America and its several State associations and the members thereof, were unwilling to treat with the society as a whole or with the members thereof. They did not seek to secure a license from any individual member of the society or the composition of any individual composer. Their attitude has been that they were entitled to the free and unrestricted use of copyrighted music without the leave or license of the copyright proprietors, and by collective and united action they were prepared to resist the demands of the society to the utmost. Under such circumstances, the existence of the society justified itself.
The society, on May 27, June 17, and July 8, 1922, published a paid advertisment in the motion picture trade papers in the form of an open letter to the - officers and members of the Motion Picture Theater Owners of America, exhibitors organizations, Chambers of Commerce, etc., inviting such organizations to : a conference for the purpose of reaching an honorable understanding and recognition of each others lawful rights.
Attached thereto and made a part hereof is a reprint of this letter (Exhibit D).
The invitations were ignored.
Experience demonstrated that collective bargaining was to the advantage of the society as well as its licenses, and the plan of collective bargaining was encouraged by the society as far as practicable.
The following are instances of such collective bargaining :
A conference was held at Minneapolis between the representatives of the society and a committee representing an exhibitors association of Minnesota and South Dakota, and then and there the committee on behalf of three hundred exhibitors, agreed to take out licenses from the society for each of its loembers at rates varying from $5 per theater per annum to 10 cents per seat per annum in certain other theaters, the rates being adjusted at a joint conference according to the general business condition of the cities in which the theaters were located,
Subsequently, a similar conference was held with a committee representing an exhibitors' association of North Carolina, at Charlotte, N. C., where a like procedure was observed. At that conference with that committee, the representatives of the society agreed upon the rates which should prevail for licenses to be issued to every motion picture theater in the territory represented by the exhibitors organization. The rates were mutually agreed upon and as a result of the conference, the exhibitors organization recommended to each and every of its members that they proceed to take out the licenses at the rates agreed upon.
Further instances of collective bargaining between the society and other groups of resort proprietors is evidenced by the negotiations and the consummation of negotiations with the society and the New England Hotel Association, the Atlantic City Hotel Association, the New York Hotel Association, and the Dance Hall Proprietors Association, and the Society of Restrauteurs, the Motion Picture Theater Owners of Michigan, and the Motion Picture. Theater Owners of Virginia.
In all these instances satisfactory rates and terms and conditions of licenses were agreed upon in joint conference between the society and the respective associations, and the society has arrived at an honorable understanding and lived in terms of neighborliness in each instance. This again justifies the existence of the society.
The Motion Picture Theater Owners of America caused to be introduced a bill in the House of Representatives providing for the repeal of the musical performing rights provisions of the copyright act. Resolutions were passed by the National Association of Motion Picture Theater Owners and the various State organizations, asking all exhibitors to write to the Senators and Congressmen from their respective States to vote for such repeal. Contributions were solicited from all exhibitors to provide a fund for propaganda purposes to secure the repeal of the law.
During all this time, the rights of the members of the society were invaded, and the infringers were protected and defended by the State and local associations of motion-picture theater owners.
With respect to the advisory committee : At a meeting of the board held on July 26, 1923, at which Mr. Walter G. Douglas was present, it was reported that it was advisable in the interest of the society to appoint an advisory committee, the members thereof at all times to be subject to the approval of the board, to promulgate plans for the increase of the business of the society. The business of the society was lagging and in an unsatisfactory state, and the principal object of this advisory committee was to suggest to the board ways and means of increasing the society's business and suggesting to the board of directors ways and means for its betterment.
About two years ago another form of invasion of the rights of writers of musical works came into prominence--radio broadcasting. Within a very short period of time 576 radio broadcasting stations were installed, equipped, and in operation. The stations were licensed by the Department of Commerce. Bureau of Navigation.
The most distinctive, attractive, and prominent feature of the daily and nightly program broadcasted was music, and particularly the musical "hits" of the day. Radio took a sensational hold of the people. The industry did a
gross business of $175,000,000 last year. It is expected that it will do a business of $350,000,000 this year and $500,000,000 next year.
There are probably 3,000,000 or more receiving sets in use. Programs are announced in all the newspapers beforehand, with the day and hour when they can be heard.
The broadcasting performances are competitive and may destroy the very monopoly which the law intends the copyright owner to have. It has been publicly announced that the Radio Corporation of America proposes to erect 9 or 10 superpower stations of larger power and greater range, and to provide a national program of high quality, located at suitable points in the country and interconnected so as to enable all of these units to send out the same program simultaneously. (See hearings, March, 1924, Committee on the Merchant Marine and Fisheries, on H. R. 7357, p. 159.)
The radio audience pays partially for what it hears through paying for its radio equipment and in purchasing of radio parts. The rendition of songs in the studio is for the purpose of “public performance for profit.” That profit has been received by the radio manufacturers who could not easily dispose of their sets unless the purchasers expected to hear something of their liking through them.
Broadcasting has become a business—a business supported by advertisers. The American Telegraph & Telephone Co., at its New York station, WEAF, charges $100 per 10 minutes' use and $400 per hour's use of its broadcasting station. The radio broadcaster renders entertainments varied unexpectedly from time to time with talks on where and when to buy commodities and commending such commodities. This advertising is paid for, yet those who listen do so mainly in expectation of more entertainment to follow.
It has occurred to the members of the defendant society whose sheet music and mechanical royalties have been cut one-half by reason of radio invasion that they should be paid for holding the auditors' attention.
In many instances the broadcasing is done for advertising purposes, to introduce the manufacturer's product into the market, to popularize and create a demand therefor, and to promote the sales of radioreceiving apparatus, parts, tubes, batteries, ear phones, loud speakers, and other radio accessories; to introduce the broadcaster and its products to the public in order to get certain advertising, good will, and celebrity from the operation of a broadcasting station,
The report and the hearings of the Committee of the House of Representatives on the Merchant Marine and Fisheries on radio regulation, May 13, 1924, report 719, Sixty-eighth Congress, first session, are very illuminating. I beg leave to submit and make part of this affidavit the testimony of Mr. Paul B. Klugh, executive chairman of the National Association of Broadcasters; Mr. David Sarnoff, vice president and general manager of the Radio Corporation of America ; and William E. Harkness, asssistant vice president of the American Telephone & Telegraph Co.
The society viewed with great concern the actions and attitude of the broadcasters in giving or causing to be given performances of the works of its members without regard to the rights of the creator of such works.
At a meeting of the board of directors held on February 27, 1923, at which was present Mr. Walter G. Douglas, there was “read the various proposed amendments of the articles and by-laws of the society, each of which was considered separately and unanimously recommended by the board of directors for presentation at the general meeting of the society,” among which was the following proposed amendment:
Amend section 1, subdivision (g) of Article 1, so the same shall read as follows:
“(g) To grant licenses and collect royalties for the public representation of the works of its members by instrumentalists, singers, mechanical instruments, radio broadcasting stations, or any kind of combination of singers, instrumentalists, and mechanical instruments, and to allot and distribute such royalties.”
At the general meeting of the entire membership of the society, held on March 1, 1923, there was presented to the general meeting of the society such amendment with others and the same were unanimously adopted and became part and parcel of the articles of association in the form as the same now appear in Exhibit B hereto attached.
At a meeting of the board of directors of the society held on the 20th of April, 1922, the chair requested an opinion from the counsel of the society as to the rights of the members of the society to prevent the broadcasting of their compositions. Counsel for the society reported that he had given the subject considerable thought, and that he was prepared to say that under the copyright act, the unlicensed radio broadcasting of copyright musical compositions infringed upon the rights of the copyright owner. Thereupon a resolution was adopted :
"To restrict the members of the society from granting any permission to broadcast their musical compositions unless a license was secured from: the society granting such permission.”
With a view of arriving at an agreement respecting the recognition of the rights of copyright proprietors in regard to public performance by radio broadcasting of their copyrighted works, a conference of the leading broadcasters and the representatives of the society was held on the 20th of September, 1922. Stenographic notes of the conference were taken and printed copies thereof were sent to every member of the society, including the plaintiff. The attitude of the society toward broadcasting was fully, fairly, frankly, and freely stated; that is, that the society expected that broadcasters would recognize the rights of the members of the defendant society and would pay reasonable royalties if they elected to use the works of the society and its affiliated foreign societies.
The plaintiff was fully apprised of the conference and the attitude of the society, and not only did the plaintiff take no exception thereto, but, on the contrary, gave its express approval of everything that was said and done in that regard.
At a meeting of the board of directors held on the 21st of September, 1922, at which was present Mr. Walter G. Douglas, an officer of the plaintiff, a report of the radio conference was made in the presence and hearing of Mr. Douglas. The report to the effect that the conference had been held on September 20, at which the representatives of the leading broadcasting stations of the East were in attendance, and that no definite answers were received as to the final attitude of the broadcasting stations.
The conference with the broadcasters was resumed on the 25th of October, 1922, and again the society emphasized its position concerning broadcasting.
At a meeting of the board of directors held on the 31st of October, 1922, at which was present Mr. Walter G. Douglas, it was reported to the board that the conference with the broadcasters was resumed on October 25th. At this meeting a resolution was unanimously carried " to notify all broadcasting stations that they must discontinue using the works of the members of this society, unless a license is secured.”.
At a meeting held on December 19, 1922, at which Mr. Douglas was present, a report was made that the society had received a number of applications for licenses from radio broadcasting stations and that a committee of the society had met for the purpose of determining the license fee to be charged to each of the stations so applying.
At a meeting of the board held on March 22, 1923, at which Mr. Walter G. Douglas was present, it was unanimously resolved:
“That a special letter be sent to all publisher-members instructing them that permission to broadcast their publications be withdrawn and that their representatives be immediately notified that all compositions must be restricted by broadcasting stations which are not licensed by the society.”
On October 20, 1923, the society wrote to Mr. Walter G. Douglas, of Waterson, Berlin & Snyder Co., to forward a list of the plaintiff's branch managers to whom the society was authorized to send information relative to the discontinuance of broadcasting at unlicensed stations. Mr. Douglas replied as follows:
WATERSON-BERLIN & SNYDER Co.,
New York, October 22, 1923. AMERICAN SOCIETY OF PUBLISHERS, AUTHORS AND COMPOSERS,
New York City, N. Y. GENTLEMEN: In reply to your communication of October 20th, we have insrtucted our branch offices to discontinue broadcasting, and will not be necessary for you to write them. Very truly yours,
W. G. DOUGLAS,