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Mr. PURNELL. What do you understand are the rights of outside producers who might want to reproduce a song, the copyright for which is owned by the producing company?

Mr. CHINDBLOM. They have not any rights under this bill.

Mr. PURNELL. Is that the question of accessibility that has been set up here as the basis of the argument?

Mr. CHINDBLOM. That is one of the questions of accessibility, but

Mr. PURNELL (interposing). In other words, I write a song, and you are the producing agency, let us say. You buy my copyright, and I pass out of the picture. Then you are both the producer and the owner of it. If Mr. Michener wants to reproduce that song under this bill, he can not do it.

Mr. CHINDBLOM. No; he can not do it.

Mr. O'CONNOR. Has he ever been able to do it?

Mr. CHINDBLOM. Yes; by paying 2 cents.

Mr. O'CONNOR. Under the situation where the reproducer was also the copyright owner?

Mr. CHINDBLOM. Yes. There was not any contract here. There was not any distinction in the present law. It would not make any difference whether the copyright owner was the mechanical reproducer or not. The moment it was produced everybody else could use it by paying 2 cents.

There is a general notion that this is a tremendous hardship, that is, the present law. I am advised that the ordinary two-sided record sells at wholesale for approximately 372 cents, in lots. There are two productions on that record, and upon that the producer pays 4 cents royalty. He, therefore, pays in excess of 10 per cent royalty, and I do not believe, under ordinary business conditions, that is a very unfavorable return to the man who, while he wrote the song, had nothing to do with the mechanical reproduction or the artistic reproduction of the composition.

Mr. BANKHEAD. How much would I have to pay for that two-sided record?

Mr. CHINDBLOM. Seventy-five cents.

Mr. BANKHEAD. Who gets the big spread between 371⁄2 cents and 75 cents?

Mr. CHINDBLOM. I do not know how many intermediary salesmen. there may be, but I think in most cases the man in your town who sells you the record gets the bulk of it.

Mr. WILLIAMS. They have been wiring in that this bill would put them out of business.

Mr. CHINDBLOM. It probably would, because they could not get the records.

The CHAIRMAN. Have you any idea that that is really true? Perhaps it is; I do not know a thing about it.

Mr. WILLIAMS. They have wired in, and thousands of letters were sent out urging that they wire the Members of Congress to oppose this legislation, and I have no doubt that most of those messages came from people who had never read the bill but who said that they were against it.

Mr. CHINDBLOM. Is that anything unusual? Do you suppose people who wire us about legislation know much about the details of it!

Mr. WILLIAMS. That sort of propaganda does not appeal to me. I think they ought to come before the committee and try to work out an arrangement that would be satisfactory to them, instead of wiring in asking Members of Congress to oppose the bill.

Mr. CHINDBLOM. This proposition has been discussed in the trade journals.

Mr. MICHENER. I know we received a number of telegrams in reference to the matter. The next day after the hearing was held here we received telegrams from a number of people. Of course, they never saw this bill and do not know anything about it.

Mr. WILLIAMS. I had a telegram from one man who thought I was a Member of the United States Senate.

Mr. CHINDBLOM. Is that anything unusual? Do we not get those things all the time?

Mr. WILLIAMS. It is probably overworked in this case.

Mr. CHINDBLOM. Oh, no; I can tell you of similar cases.

I have practically covered what I have to say. But there is one other point that I want to stress, and that is the question of the violation of the antitrust laws, because, if you pass this bill in its present form, the C. A. P. organization definitely takes the position that they are not under the antitrust law, and they say that question has been passed upon by the Department of Justice. So there would be nothing in the world to prevent them from entering into a combination and dictating the price at which the mechanical reproducers shall take their productions. That having been done, it would also be reflected in the price to the seller and to the consumer.

On the other hand, the mechanical reproducers have no such protection; they deal with commodities in interstate commerce, because they sell records and music rolls.

Mr. O'CONNOR. Would it not be much easier for the mechanical reproducers to come in and refuse to reproduce?

Mr. CHINDBLOм. They can not do that; they are subject to the antitrust law.

Mr. BANKHEAD. I understood you to say that these C. A. P. people assert that that question has been decided by the Federal Trade Commission. Has it been so decided, as a matter of fact?

Mr. CHINDBLOM. I do not know. They assert that it has been before the Department of Justice, and as I understand it they say they have received an opinion.

Mr. BANKHEAD. Have you seen that opinion?

Mr. CHINDBLOM. No, sir.

Mr. BANKHEAD. Do you know anybody who has?

Mr. CHINDBLOM. No. I am sorry I mentioned that. You have asked me for the proof. I have not got it here, but if I can get the proof I will.

Mr. BANKHEAD. That is a very important phase of this hearing. Mr. CHINDBLOM. I will make it my business to get the proof of

that.

I will say I have been trying to give my attention to this matter in conjunction with other work in which I am engaged, and I know that my presentation is faulty. I have not got all the facts I would like to state, but I do urge that steps be taken which will give an opportunity to have here a bill that is practically agreed upon. I

think it is the kind of subject that should have that consideration and presentation.

I thank the committee for its consideration and patience.

The CHAIRMAN. Mr. Lehlbach wanted to be reported as being opposed to the consideration of this bill at the present time.

Mr. CHINDBLOM. Mr. Schuyler Merritt, of Connecticut, expected to be here in opposition to the request for a rule and I received a telephone message this morning saying that he is home sick.

Mr. McLaughlin, of Michigan, who sits alongside of me in the Committee on Ways and Means, asked me to state that he agrees with my views on the matter, but he could not come to this hearing. With reference to the applicability of the antitrust laws to the owner of a copyright and particularly to the American Society of Composers, Authors, and Publishers, I append a "release" by the Department of Justice, under date of August 6, 1926, holding that the granting of licenses by that society for the local performance of music in a place of amusement does not constitute interstate commerce. Similarly, the granting of a license to reproduce a musical composition by mechanical operation could not be held to constitute interstate commerce, the latter case being even stronger than the former, because the granting of the license or the making of the contract for the mechanical reproduction is consummated at a single point and the article transported is not made or shipped by the copyright owner himself.

The release is as follows:

DEPARTMENT OF JUSTICE, August 6, 1926.

In the matter of the American Society of Composers, Authors, and Publishers: As the result of a large number of complaints which were received by the Department of Justice with reference to the so-called music tax collected by the American Society of Composers, Authors, and Publishers from the owners of motion-picture houses and of other public places of entertainment where popular music is played, a thorough and comprehensive investigation was made of the organization and operations of that society. Several special agents of the Bureau of Investigation were engaged in that investigation and it was conducted almost continuously for a period of about two years.

After all the facts elicited by the department's investigation and also the facts and arguments submitted both by the various complaints against the American society and by the representatives of the American society, had been very carefully considered by the department, the society has been advised that the department saw no reason for proceeding against it under the antitrust laws on account of its operations in collecting licenses for the public performance of copyrighted music from the owners of motion-picture houses, of hotels, of dance halls, and of similar places where copyrighted music is publicly performed for profit.

It was found that the rights conferred under the copyright act by Congress on the owners of copyrighted music had repeatedly been held by the Federal courts to be violated by the unlicensed performance of such music in motionpicture theaters, hotels, and similar places of amusement where the performance of the music constituted at least part of the public entertainment from which the owner of the place of amusement derived profit through the charges made to his patrons.

The only question for consideration by the department, therefore, was whether the operation of the American Society in receiving assignments from its members of the rights to the public performance of their copyrighted music and the issuance by the society to many places of amusement throughout the country of the right to publicly perform for profit all the copyrighted music of its members constituted a combination which restained trade and commerce within the prohibitions of the Sherman Act.

It was found, however, that the American Society has nothing whatsoever to do with the published music or with any physical objects which enter into

the course of interstate commerce, and that it has been held repeatedly by the courts that acts similar to the granting of licenses for the local performance of music in a place of amusement do not constitute interstate commerce, even when the contracts are entered into in a different state from that where the performance may take place.

No decision has been reached in reference to the licensing of radio broadcasting stations because of the unsettled state of the law relating to radio and the possibilities of legislation by Congress at the next session.

I also call attention to the case of Harms v. Cohen, 279 Fed. 276, decided in United States District Court for the Eastern District of Pennsylvania in 1922, where the court held directly that the American Society of Composers, Authors, and Publishers was not subject to the Federal antitrust law in dealing with copyrights.

In that case suit was brought by Harms against Cohen for an infringement of copyright through the use of a copyrighted musical composition publicly for profit in a moving-picture theater. Among the defenses raised was that the complainant was a member of the American Society of Composers, Authors, and Publishers, which was alleged to be a combination in restraint of trade and operating in violation of the Federal antitrust law. The court overruled this defense and in doing so stated in its opinion as follows:

"But a copyright is an intangible thing, and it is separate and distinct from the material object copyrighted, and the right under a copyright to perform musical compositions is not trade or commerce any more than producing plays is trade or commerce * * or producing grand opera,

giving of exhibitions of baseball games."

The court further said:

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* or the

"The material object, the sheets of music, are not involved. If therefore the material object is not involved so far as the defendant is concerned, the answer does not show that interstate commerce is directly affected by the combination, and it is therefore no defense."

I therefore urge that before complete control in bargaining for mechanical reproduction is given to the copyright owner, he should be prevented from forming and joining a combination whose members would be subject to no restraint in agreeing upon and compelling the payment of noncompetitive compensation for their copyright privileges. For that purpose I suggest an amendment to the pending bill in such form as the following:

"It shall be unlawful for any copyright owner to contract, combine, or conspire with any other copyright owner or owners, either directly or through any agent or agents, to fix a price or royalty rate for the use of any copyrighted work upon parts of instruments serving to reproduce the same mechanically, and any such act shall be a complete defense to any suit, action, or proceeding for any infringement of any copyright of such copyright owner.

"The several district courts of the United States are invested with jurisdiction to prevent and restrain violations of the provisions in the preceding paragraph contained; and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations. Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited. When the parties complained of shall have been duly notified of such petition the court shall proceed, as soon as may be, to the hearing and determination of the case; and pending such petition and before final decree, the court may at any time make such temporary restraining order or prohibition as shall be deemed just in the premises. Any person who shall be injured in his business or property by reason of anything forbidden by the provisions in the preceding paragraph contained may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover three fold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee."

I wish to add that this provision was proposed to the Committee on Patents, but the entire idea was rejected in the bill reported to the House and now pending (H. R. 13452).

The CHAIRMAN. Mr. Busby, we will hear you now.

STATEMENT OF HON. JEFF BUSBY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSISSIPPI

Mr. BUSBY. Mr. Chairman and gentlemen of the committee, I hope you will permit me to say a word in a general way with regard to the copyright law and the copyright situation, because this particular bill, proposing to amend the copyright law by piecemeal, can not be fairly considered if we only look to the particular provisions contained in the bill.

I gather, before we start, that the committee is somewhat prejudiced because they have received propaganda from the manufacturers of the type of musical devices that would be dealt with by this bill.

We are all more or less inclined to take that attitude when we receive from an unsolicited source an argument concerning any legis lation. I know I am.

This bill undertakes to deal with a proposition that involves two sets of business people, one including composers, authors, and publishers. But I tell you, members of this committee, that it sifts itself down in reality to the music publishers and the business manipulators in the music world who are clamoring for this law, who have, at the hearings, failed to disclose, and they refuse to tell you what percentage of the money that comes into this composers', authors', and publishers' society goes to the actual brains that produce the thing that is to be protected under the copyright law.

Now, again, this legislation is being clamored for by the publishers who manipulate the business end of the musical world to-day, and nobody else. That is one class.

Then we have the manufacturers of mechanical devices, the makers of records and the makers of perforated music rolls.

There is another great class of people that has had no representative or spokesman on this bill. They have not been heard; nobody has spoken for them. I refer to the people of the United States who purchase the music records and rolls. Not one bit of testimony has gone into this record to suggest that there is a point beyond which we can not conscientiously enact legislation for copyright holders to aid them in collecting money from the people.

I am going, in my general way, for two or three moments, to revert to that thought.

Prior to 1909, with the possible exception of Italy, no country in the world permitted by its copyright laws, the holder of a copyright to go far enough to collect from the producer of graphophone records or perforated music rolls a royalty because he used music that was sold under the original idea of copyright, in order to engage an artist to put this music on the mechanical device. In fact, some countries had enacted legislation declaring that he should not go that far.

But our country, recognizing in a liberal way the clamor of the same people who are before us now, and who at that time agreed that if we would give them this further field from which to collect revenue, because of their copyright, saying that they would be satisfied with 2 cents a piece, gave them that legislation.

Now, I am coming to the question asked by the gentleman from Michigan [Mr. Michener], and keep in mind the point I have reached in my argument.

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