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has been reached is in the public interest and reflects a reasonable compromise of the positions of the various parties.

The Chief Counsel of the Subcommittee on Patents, Trademarks and Copyrights in a letter of December 15, 1971 has notified all the parties that it is the intention of the Subcommittee to immediately resume active consideration of the copyright legislation upon the implementation of the Commission's new cable rules.

I hope that the foregoing is helpful to the Commission in its disposition of this important matter. With kindest regards, I am Sincerely,

JOHN L. MCCLELLAN, Chairman.

[APPENDIX c)

COPYRIGHT REVISION BILL

REVISED TEXT ON CABLE TELEVISION PROPOSED BY COMMITTEE OF COPYRIGHT

OWNERS, NATIONAL ASSOCIATION OF BROADCASTERS, AND ASSOCIATION OF MAXIMUM SERVICE TELECASTERS

Sec. 111. Limitations on exclusive rights : Secondary transmissions

(a) CERTAIN SECONDARY TRANSMISSIONS EXEMPTED.—The secondary transmission of a primary transmission embodying a performance or display of a work is not an infringement of copyright if:

(1) the secondary transmission is not made by a cable system, and consists entirely of the relaying, by the management of a hotel, apartment house, or similar establishment, of signals transmitted by a broadcast station licensed by the Federal Communications Commission, within the local service area of such station, to the private lodgings of guests or residents of such establishment, and no direct charge is made to see or hear the secondary transmission; or

(2) the secondary transmission is made solely for the purpose and under the conditions specified by clause (2) of section 110; or

(3) the secondary transmission is made by a common, contract, or special carrier who has no direct or indirect control over the content or selection of the primary transmission or over the particular recipients of the secondary transmission, and whose activities with respect to the secondary transmission consist solely of providing wires, cables, or other communications channels for the use of others : Provided, That the provisions of this clause extend only to the activities of said carrier with respect to secondary transmissions and do not exempt from liability the activities of others with respect to their own primary or secondary transmission; or

(4) the secondary transmission is not made by a cable system and is made by a governmental body, or other non-profit organization, without any purpose of direct or indirect commercial advantage, and without charge to the recipients of the secondary transmission other than assessments necessary to defray the actual and reasonable costs of maintaining and operating the secondary transmission service.

(b) SECONDARY TRANSMISSION OF PRIMARY TRANSMISSION TO CONTROLLED GROUP.--- Notwithstanding the provisions of subsections (a) and (c), the secondary transmission to the public of a primary transmission embodying a performance or display of a work is actionable as an act of infringement under section 501, and is fully subject to the remedies provided by sections 502 through 506, if the primary transmission is not made for reception by the public at large but is controlled and limited to reception by particular members of the public.

(c) SECONDARY TRANSMISSIONS BY CABLE SYSTEMS.-(1) Subject to the provisions of clause (2) of this subsection (c), secondary transmissions to the public by a cable system of a primary transmission made by a broadcast station licensed by the Federal Communications Commission and embodying a performance or display of a work shall be subject to compulsory licensing upon compliance with the requirements of subsection (d) in the following cases:

(A) Where the signals comprising the primary transmission are exclusively aural and the secondary transmission is permissible under the rules and regulations of the Federal Communications Commission; or

(B) Where the community of the cable system is in whole or in part within the local service area of the primary transmitter; or

(C) Where the signals comprising the secondary transmission are contemplated by and consistent with section 76.5 (a), (f), (g), (h), (i), and (0) through (u) and Subparts D and F of the rules and regulations of the Federal Communications Commission as published in Volume 37, Federal

Register, page 3252 et seq., on February 12, 1972. (2) Notwithstanding the provisions of clause (1) of this subsection (c), the secondary transmission to the public by a cable system of a primary transmission made by a broadcast station licensed by the Federal Communications Commission and embodying a performance or display of a work is actionable as an act of infringement under section 501, and is fully subject to the remedies provided by sections 502 through 506, in the following cases :

(A) Where the signals comprising the secondary transmission, whether or not authorized by the Federal Communications Commission, are inconsistent with, or in excess of those contemplated by, the rules and regulations of the Federal Communications Commission referred to in subclause (C) of clause (1) of this subsection (c); or

(B) Where the community of the cable system is in whole or in part within the local service area of one or more television broadcasting stations licensed by the Federal Communications Commission, and

(i) the content of the particular transmission program consists primarily of an organized professional team sporting event occurring simultaneously with the initial fixation and primary transmission of the program ; and

(ii) the secondary transmission is made for reception wholly or partly outside the local service area of the primary transmitter; and

(iii) the secondary transmission is made for reception wholly or partly within the local service area of one or more television broadcasting stations licensed by the Federal Communications Commission, none of which

has received authorization to transmit said program within such area. (d) COMPULSORY LICENSE FOR SECONDARY TRANSMISSIONS BY CABLE SYSTEMS.

(1) For any secondary transmission to be subject to compulsory licensing under subsection (c), the cable system shall at least one month before the date of the secondary transmission or within 30 days after the enactment of this Act, whichever date is later, record in the Copyright Office, a notice including a statement of the identity and address of the person who owns or operates the secondary transmission service or has power to exercise primary control over it together with the name and location of the primary transmitter, or primary transmitters, and thereafter from time to time, such further information as the Register of Copyrights shall prescribe by regulation to carry out the purposes of this clause (1).

(2) A cable system whose secondary transmissions have been subject to compulsory licensing under subsection (c) shall during the months of January, April, and July and October, deposit with the Register of Copyrights, in accordance with requirements that the Register shall prescribe by regulation and furnish such further information as the Register of Copyrights may require to carry out the purposes of this clause (2)—

(9) A statement of account, covering the three months next preceding, specifying the number of channels on which the cable system made secondary transmissions to its subscribers, the names and locations of all primary transmitters whose transmissions were further transmitted by the cable system and the gross amounts irrespective of source received by the cable system.

(B) A total royalty fee for the period based upon a schedule or schedules to be determined as follows:

(i) Within sixty days after the enactment of this Act, the Register of Copyrights shall constitute a panel of the Copyright Royalty Tribunal in accordance with Section 803 for the purpose of fixing a schedule or schedules of just and reasonable compulsory license fees.

(ii) The schedule or schedules of compulsory license fees shall be determined by the Tribunal in a like manner as if the Tribunal were convened to make a determination concerning an adjustment of copyright royalty rates, provided, however, that Sections 806 and 807 shall not apply and that the determination of the Tribunal shall be effective at the end of the twelfth month after the enactment of this Act or on the date the Tribunal renders its decision, whichever occurs sooner.

(iii) The Tribunal, immediately upon making a determination, shall transmit its decision, together with the reasons therefor, to the Register of Copyrights who shall give notice of such decision by publication in the Federal Register within fifteen days from receipt thereof. Thereafter, the determination of the Tribunal may be subject to judicial review in a like inanner as provided in Section 809 but no other official or court of the United States shall have power or jurisdiction to otherwise review the Tribunal's determination.

(iv) Notwithstanding any of the provisions of the antitrust laws (as designated in $ 1 of the Act of October 15, 1914, c. 323, 38 Stat. 730, Tit. 15 U.S.C. $ 12; and any amendment of any such laws) owners of copyrights in different works and owners of cable systems may among themselves or jointly with each other agree on, or submit to the Copyright Tribunal for its consideration, one or more proposed schedules of compulsory license royalty fees, and proposed categories of secondary transmissions and cable systems for inclusion in any of the schedules to be established or adjusted by the Tribunal pursuant to this subsection and Section 802.

(C) The preceding subclause (B) of clause (2) of this subsection (d), shall not apply to cable systems that before March 31, 1972, were operating in accordance with the rules and regulations of the Federal Communications Commission, served less than 3,500 subscribers, and were not, directly or indirectly, by stock ownership or otherwise, under common ownership or control with any other cable systems serving in the aggregate more than 3,500 subscribers, provided that this exemption shall continue to apply as long as the cable system continues to serve not more than 3,500 subscribers and is not directly or indirectly, by stock ownership or otherwise, under common ownership or control with any other cable systems serving in the aggregate more than 3,500 subscribers, and provided further, that such cable system files annually at the Copyright Office in accordance with requirements that the Register of Copyrights shall prescribe by regulation, a statement setting forth the names and addresses of other cable systems directly or indirectly in control of, controlled by, or under common control with the cable system filing the statement, the number of subscriber served by each of such other cable systems; and the names and addresses of any person or persons who directly or indirectly own or control the cable system filing the statement and directly or indirectly own or control any other cable system or systems, and the names and addresses of the cable systems so owned or controlled. For the purposes of this subclause (C) or clause (2) of subsection (d), "subscriber" shall mean a household or business establishment, or, if a hotel, apartment house or similar establishment, it shall mean a lodging or dwelling unit within such establishment containing a television receiving set.

(3) The royalty fees deposited under clause (2) shall be subject to the following procedures :

(A) During the month of July in each year, every person claiming to be entitled to compulsory license fees for secondary transmissions made during the preceding twelve-month period shall file a claim with the Register of Copyrights, in accordance with requirements that the Register shall prescribe by regulation. Notwithstanding any provisions of the antitrust laws (as designated in $1 of the act of October, 15, 1914, 38 Stat. 730, Tit. 15 U.S.C. $12, and any amendments of any such laws), for purposes of this clause any claimants may agree among themselves as to the proportionate division of compulsory lịcensing fees among them, may lump their claims together and file them jointly or as a single claim, or may designate a common agent to receive payment on their behalf.

(B) After the first day of August of each year, the Register of Consrights shall determine whether there exists a controversy concerning the statement of account or the distribution of royalty fees deposited under clause (2). If he determines that no such controversy exists, he shall, after deducting his reasonable administrative costs under this section, distribute such fees to the copyright owners entitled, or to their designated agents. If he finds the existence of a controversy he shall certify to that fact and proceed to constitute a panel of the Copyright Royalty Tribunal in accordance with section 803. In such cases the reasonable administrative costs of the Register under this section shall be deducted prior to distribution of the royalty fee by the tribunal.

(C) During the pendency of any proceeding under this subsection, the Register of Copyrights or the Copyright Royalty Tribunal shall withhold from distribution an amount sufficient to satisfy all claims with respect to which a controversy exists, but shall have discretion to proceed to distribute

any amounts that are not in controversy. (e) Relation to Other Laws and Regulations.Nothing in this section shall be construed as limiting or preempting the authority of the Federal Communications Commission to regulate the operations of broadcast stations or cable systems pursuant to any other Act of Congress; Provided that, the Federal Communications Commission shall not limit the area, duration or other scope of the exclusivity a television broadcast station may acquire respecting secondary transmissions by cable systems that are not subject to the compulsory license provided for in subsection (c) of this Section 111 beyond any limits that may be applicable to the area, duration or other scope of the exclusivity a television broadcast station may acquire respecting other television broadcast stations.

(f) Definitions.-As used in this section, the following terms and their variant forms mean the following:

(1) A "primary transmission” is a transmission made to the public by the transmitting facility whose signals are being received and further transmitted by the secondary transmission service, regardless of where or when the performance or display was first transmitted.

(2) A "secondary transmission" is the further transmitting of a primary transmission simultaneously with the primary transmission without change in program or other message content.

(3) A "cable system" is a facility that in whole or in part receives signals transmitted by one or more television broadcast stations licensed by the Federal Communications Commission and makes secondary transmissions of such signals by wires, cables, or other communications channels to subscribing memhers of the public who pay for such service. For purposes of determining the royalty fee under Subsection (d) (2) (B), two or more cable systems in contigous communities under common ownership or control or operating from one headend shall be considered as one system.

(4) The “local service area of a primary transmitter" as used in this section comprises the area in which a television broadcast station is entitled to insist upon its signal being retransmitted by a cable system pursuant to the rules and regulatons of the Federal Communications Commission as published in Volume 37. Federal Register, page 3252, et seq., on February 12, 1972, or such similar rules as the Federal Communications Commission may from time to time lawfully adopt in the future in light of changed circumstances.

(5) The terms "full network station," "partial network station," "independent commercial station," and "non-commercial educational station" as used in subpart D of the rules and regulations of the Federal Communications Commission as published in Volume 37, Federal Register, page 3252, et seq., on February 12. 1972. shall be defined in accordance with the rules and regulations of the Commission of the same date with such additional elaboration as the Commission may from time to time provide consistent with the intent of this Act.

(g) This section shall be effective upon the enactment of this Act. [Add the following to section 501]

(c) For any secondary transmission by a cable system that embodies a performance or a display of a work which is actionable as an act of infringement under subsection (c) of section 111, a television broadcast station holding a copy. right or other license to transmit or perform the same version of that work shall, for purposes of subsection (b) of this section 501 be treated as a legal or beneficial owner if such secondary transmission occurs within the local service area of that television broadcast station. [Amend Section 801 (b) by deleting the words "continue to be reasonable" and by

substituting the words "are just and reasonable."]

[APPENDIX D]

COMMENTS OF NAB AND MST ON SPECIFIC CHANGES IN SECTION 111 OF S. 1361

PROPOSED BY NCTA NCTA made a number of proposals for amendments of Section 111 of S. 1361 on pages 36-42 of Mr. Foster's statement of August 1, 1973. NAB and MST present the following comments with respect to these proposals.

1. NCTA proposes that Section 111(b) be eliminated, thereby making retransmission of subscription pay television programs broadcast by STV stations subject to compulsory licensing.

NCTA argues that, under Section 111(b), a CATV system would have to violate either the copyright law or the rules of the Federal Communications Commission. This is not so. Section 111(b) merely provides that preferential copyright treatment does not apply if a cable system retransmits an over-the-air pay television transmission. A CATV system wishing to retransmit such programs would simply have to bargain for them. If it cannot obtain authority to carry them, the Commission's Rules clearly would not require it to do so—assuming that the carriage provisions apply to STV programs at all.

In fact, if the Commission had intended that CATV systems could pick up scrambled STV signals, unscramble them and sell them to their subscribers, certainly it would have said so in its February 1972 decision adopting the new cable regulations. But there is not a word in the decision to suggest any such intent. Moreover, as a matter of copyright law, there is no reason why cable subscribers should be able to receive over-the-air subscription television programs without paying the STV station for them just as members of the public who receive the signals directly over the air must do. In addition, the Communist's Rules provide that television broadcast signals carried by cable must be retransmitted as received without any alteration. If a CATV system picks up a "scrambled" signal, the Commission's regulations neither require nor permit it to transmit and unscramble the signal for its subscribers. To the contrary, the rules prohibit such unscrambling.

2. NCTA proposes that Section 111(1), which provides an exemption from copyright liability for master antenna systems which serve a hotel, apartment house or similar establishment, should be eliminated because the exemption unfairly discriminates between master antenna systems and CATV systems. It is difficult to see why hotels, apartment houses or similar establishments which do no more than provide a master antenna service with respect to purely local signals for the use of their guests or residents should be subject to copyright liability. Accordingly, we support the present provision so long as it is limited to installations which do not receive and transmit the signals of non-local stations.

3. NCTA proposes that Section 111(a)(4) be eliminated in order to treat government-owned CATV systems in the same manner as privately owned CATV systems under the copyright law.

Section 111(a) (4) is limited to secondary transmissions by government bodies, or other nonprofit organizations, “without any purpose of direct or indirect commercial advantage” and without charge to recipients of the service other than assessments necessary to defray the actual and reasonable cost of maintaining and operating the service. As the legislative history of this provision shows since it was first added to proposed copyright bills at the request of the Federal Communications Commission, this provision is intended to exempt from copyright liability translator broadcast stations owned by municipal bodies or nonprofit organizations. These translators invariably serve very small communities and are typically built and operated non-commercially by localities or nonprofit groups for the purpose of providing service to remote areas which are beyond the reach of regular off-the-air television broadcast stations. NAB and MST have always supported the exemption of such translators from copyright liability.

We believe that, as the bill is now drafted, government owned CATV systems would typically be subject to copyright liability because they are ordinarily operated for the purpose of commercial advantage and the charges to the recipients would be more than those necessary to defray out-of-pocket expenses. Municipalities and nonprofit organizations which seek to operate CATV systems do so in order to make a profit and accordingly would not be exempt from copyright liability under Section 111(a) (4) as it is now written. However, in order to avoid any question on this score NAB and MST have no objection to adding to Section 111(a) (4) language making clear that it does not apply to cable systems. This language is included in Section 111 of the Revised Text set forth in Appendix C.

4. NCTA urges that “provisions of a regulatory nature that were the subject of the recent FCC rule-making proceeding” be eliminated. We quite agree, but there should be no misunderstanding over semantics. The Consensus provided for certain basic terms and conditions of compulsory copyright licenses for CATV.

20-344-73-41

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