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Mr. MALEC. Most parks are between 10 to 50 acres. There are very few bigger ones.

Senator BURDICK. In other words, your testimony is this should apply to all parks?

Mr. MALEC. All parks, yes, sir.

Senator BURDICK. Your first point is, of course, there is a difference between the individual contractor and the employer relationship? Mr. MALEC. Yes, sir.

Senator BURDICK. The next witness is Donald J. Brown, counsel for the National Ballroom Operators Association.

STATEMENT OF DONALD J. BROWN, COUNSEL FOR THE NATIONAL BALLROOM OPERATORS ASSOCIATION

Mr. BROWN. My name is Donald J. Brown. I am a member of the law firm of Thoma, Schoenthal, Davis, Hockenberg and Wine of Des Moines, Iowa. We have for many years been counsel for the National Ballroom Operators Association. The N.B.O.A. is an association of proprietors of ballrooms. There are some 200 members.

The typical ballroom charges an admission price at the door to patrons who come to the establishment for the principal purpose of dancing. Some operators make light food and liquid refreshments available, incidental to their main attraction, which is dancing.

Normally ballrooms operate only in the evenings and only a few nights a week-from one to four-although a very few operate more often. Ballroom operators normally contract with orchestra leaders who are in the single engagement field, to play a dance program on a specific night. The orchestra arrives at the ballroom shortly before the dance is to begin, leaves when the dance is finished, and ordinarily does not appear again at that ballroom for at least another month, several months or a year, or more.

Under existing law the rule is well established that an employer may be held liable for infringing acts committed by his employees.

By reason of what has been referred to as "an interesting application of the theory of vicarious liability to copyright law" (Study No. 25, "Liability of Innocent Infringers of Copyright," Latman and Tager, p. 146, of committee print, 86th Cong., 2d sess.), however, innocent proprietors of ballrooms have been held liable for infringements committed by independent contractors.

Such liability goes beyond the ordinary rules of respondent superior and applies even though the relationship between the ballroom operator and the orchestra leader is not one of master-servant, but of independent contractors.

The ballroom operator does not select or control the music played by the orchestra. It has been made abundantly clear by court decisions in recent years that the orchestra leader, in such circumstances, is the employer of the musicians and is, himself, an independent contractor. Nevertheless, from an early date, courts have imposed strict liability on the ballroom operator for infringements committed by the orchestra.

Moreover, the ballroom operator has been held liable whether or not he had any knowledge of the composition to be played. The courts

have even imposed liability on the operator where his contract with the musicians expressly prohibited the playing of the composition

involved.

Thus, under existing law, operators are forced either to purchase licenses from every music licensing organization, even though none of their selections may ever be played at the ballroom, or to take the chance that an orchestra will play a composition for which the ballroom has no license, and thereby subject the operator to statutory damages, costs and attorney fees.

The number of ballroom operators who have gone broke in the years following World War II is legion. With the advent of television, and the increased availability of cabaret entertainment to a more affluent. society, the number of people patronizing ballrooms has diminished. Those hardy operators who remain are by no means in a lucrative industry. Ballroom operation remains possible only to those who keep expenses to a minimum.

Consequently, the alternative of paying for multiple licenses, from the various music licensing groups, or facing a possible action for innocent infringement, presents a substantial financial dilemma to the operator.

It is true, of course, that the careful operator can direct an orchestra not to play certain selections, and, if it does so, obtain a right of action over against the infringing musicians, for the damages (except for his own attorney fees) that may be incurred. This, however, may often be of little solace, because there is no provision for service of process on the orchestra, except within the State where the operator is sued (or within 100 miles of that place). Hence, the two lawsuits ordinarily are necessary to resolve the rights of all proper parties, and double litigation expenses are incurred by the operator.

We believe that the extreme position which the courts have reached in imposing absolute liability on ballroom operators who intend no infringement and do not control the choice of selections to be played, has develped because the existing law contains no definition of the word "perform." Thus, in construing the exclusive right of the copyright owner to perform a composition, the courts have held that the operator, as well as the orchestra, is a performer. While a master-servant relationship would certainly justify this result under accepted legal principles, an independent contractor relationship does not.

The proposed legislation does contain a definition of the phrase "to perform," as "to recite, render, play, dance, or act a work." Enactment of a definition, of course, will foreclose the availability to courts of the right to formulate their own definition and will, we believe, result in the restoration of a more equitable rule when an operator neither "plays" the work, in the pertinent word of the definition, nor occupies the position of master in a master-servant relationship with those who do play it, thereby foreclosing the application of the respondent superior doctrine. The so-called "multiple performance doctrine." of Buck v. Jewell LaSalle Realty Co., would not apply here.

While we believe that the definition of "perform," therefore will accomplish a desirable result, we do foresee that litigation will accompany it. We believe, that to forestall dispute and to clarify the pertinent rule, a further amendment is necessary, akin to the specific ex

emption of the owner of an establishment from responsibility for infringement by coin-operated phonograph players, of which he is not the operator, but which are located in his establishment.

We, therefore, recommend for committee consideration, as being in the interest of justice, the following:

The proprietor of an establishment in which a nondramatic musical work is performed by or under the exclusive direction of an independent contractor, not an employee of the proprietor, is not liable for infringement with respect to such public performance.

We note that the term of copyrights would be extended and that the penalties for infringement have been increased by the proposed legislation. At the same time, however, some relief is given the innocent infringer by section 504 (c) whereby if he sustains the burden of proving and the court finds that he was not aware and had no reason to believe his acts constituted an infringement, the court may reduce the aware of statutory damages to a sum of not less than $100. We deem this reduction in the minimum from $250 to $100 to be a proper mitigation in the usual case where, for instance, an operator may have a house band, the members of which would be his employees, and they infringe without the operator's knowledge. The doctrine of respondent superior would make him liable for the infringement, but since he had no wrongful intent, the penalty should be reduced.

In summary, we feel the recognition given in the bill to the awkward position of the innocent infringer by the reduction of the minimum statutory damage award, is a movement in the right and just direction. Particularly in this day of superabundance of new musical compositions Congress must be sensitive to the hardships which can be imposed on the unintentional infringer.

We deem it to be most important in this regard, that the area of liability be narrowed to include only those actually responsible for an infringement, and those who are responsible for those who actually and really perform the infringing work. While the definition of "perform" may well accomplish this beneficial result, we believe the committee would be acting in the public welfare to clarify this result by proposing the amendment hereby suggested to you.

I am deeply grateful for the opportunity to appear here today to state the existence of a problem of an industry which the committee might well have overlooked, in its deliberations on this bill. You will in all probability hear nothing further about it from the ballroom operators. We ask, however, that you do give careful consideration to this proposed amendment. We feel it is fair, and that this alone will commend it to you.

Thank you.

Senator BURDICK. Thank you very much. I believe we understand your problem.

We will be in recess until 10 o'clock tomorrow morning.

(Whereupon, at 4 p.m., the committee was recessed, to reconvene at 10 a.m., Tuesday, March 21, 1967.)

COPYRIGHT LAW REVISION

TUESDAY, MARCH 21, 1967

U.S. SENATE,

SUBCOMMITTEE ON PATENTS,

TRADEMARKS, AND COPYRIGHTS OF THE

COMMITTEE ON THE JUDICIARY,

Washington D.C. The subcommittee met, pursuant to recess, at 10:05 a.m., in room 3302, New Senate Office Building, Senator Quentin Burdick presiding. Present: Senators Burdick (presiding), McClellan (chairman of the subcommittee), and Scott.

Also present: Thomas C. Brennan, chief counsel: Edd N. Williams, Jr., assistant counsel; Stephen G. Haaser, chief clerk, Subcommittee on Patents, Trademarks, and Copyrights; George S. Green, professional staff member, full committee; and Horace L. Flurry, representing Senator Philip A. Hart.

Senator BURDICK. Come to order, please.

The first witness this morning will be Mr. Thurman Arnold, special counsel for the Record Industry Association of America.

STATEMENTS OF THURMAN ARNOLD, SPECIAL COUNSEL, RECORD INDUSTRY ASSOCIATION OF AMERICA, INC.; ALAN LIVINGSTON, PRESIDENT, CAPITOL RECORDS; SIDNEY DIAMOND, COUNSEL, LONDON RECORDS, AND MEMBER, LEGAL COMMITTEE OF RIAA; CLIVE DAVIS, VICE PRESIDENT AND GENERAL MANAGER, CBS RECORDS; DAVID KAPP, PRESIDENT, KAPP RECORDS; AND ISABEL MARKS, COUNSEL, DECCA RECORDS

Mr. ARNOLD. Mr. Chairman, I am Thurman Arnold, special counsel to the Record Industry Association of America. RIAA appears before this committee for two main purposes. First, to protest the sharp and unjustified increases in the statutory license rates, proposed in section 115 of S. 597, which the record industry must pay to music publishers in order to manufacture phonograph records. Second, to give the united support of the association to amendment 131 to S. 597 introduced by Senator Harrison Williams of New Jersey. Senator Williams' bill amends section 115 of S. 597 by reducing the statutory license fee to its former rate of 2 cents. In addition, it proposes to grant the same performance rights in sound recording which are given to all other copyright holders. There are also additional amendments contained in the bill which the record industry supports.

I will first discuss the issue of the increase of the compulsory license. Thereafter, Mr. Alan Livingston, president of Capitol Records,

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