In other words if one of the companies purchases from the composer a composition, or a melody that turns out well, and they manufacture it. There is nothing in this bill that would require them to let any other company have the use of that composition. Do you see how dangerous that could be?

In our consideration of this matter we are apt to look at it entirely from the standpoint of the composer. We should, however, have a broader view. The music we receive from a phonograph record means more than the genius of the composer who gave us the melody. It represents the tireless work of the one who invented the talking machine, and those who have perfected it-the inventor of the record and its many improvements. It means all of the inventions that have gone into all the devices for receiving and recording in true form the musical strain or melody. It also represents the genius of the musician or the artist who renders the composition. Thus it means more than the genius of the composer who gave us the melody.

The people of America are entitled to hear these great voices and the rendition of musical compositions by outstanding musicians. Naturally, they do not write their own compositions. They must sing or play the compositions of others. It is not often that the person who has the ability to sing has also the ability to write the song, and therefore a record is a composite thing. It is not enough that the melody itself should be protected. There are rights of others as well as the public involved, and yet they receive no consideration whatsoever, so far as the provisions of this bill are concerned. I therefore most earnestly ask you to consider this matter in that broader light. Furthermore, there is nothing in this bill that would prevent composers or publishers from making such terms as they please; there is nothing to prevent them from changing those terms after they have been entered into; terms might be entered into under which the right to use compositions could in fact create sole use by the grantee.

Then it is retroactive in character, and the danger with that is this, that any copyright that anyone has at the present time would not be accessible for use by anyone else unless the person or company holding the same might desire to release it. The effect is that accessibility could be denied to anyone except upon such terms as the holder might grant.

This bill is not framed in the interest of the public. It is a bill that would benefit only a few and the public would pay the price. You are asked to grant the rule that would, in effect, benefit but a few, with no general or public demand for it, and to the detriment of the great industry that has been built up on a basic principle established by the law of 1909. This bill is not just a modification of the present law; it is revolutionary in character; it performs a major operation; the proponents are using a surgeon's knife to effect their purpose. This bill will, if enacted, do irreparable injury to an industry that has been built up over a period of 20 years, and that is struggling now against the inroads of the radio, and we ask you gentlemen, members of the Committee on Rules, to give consideration to the public and business interests that are opposed to it, and refuse to give any rule that would grant to this legislation preferential action by the House.

MEMORANDUM RELATING TO LEGAL ASPECTS OF H. R. 13452, TO AMEND SECTION 1 (E) OF THE COPYRIGHT ACT

This bill fails to safeguard the interests both of the public and of the mechanical-reproducing industry. It is not only defective but it fails of its purpose. I am, therefore, opposed to it and urge this committee not to take any action which would result in its being brought on the floor of the House for a vote before due opportunity has been afforded by the Committee on Patents for deliberate consideration of the numerous vital changes necessary to make the bill both fair and workable.

The purpose of the bill is stated as the repeal of the price-fixing clause for mechanical reproduction. It purports to carry out this purpose by the substitution of the right of free bargaining for the present 2-cent royalty provided for statutory licenses.

But what will happen if this bill becomes a law? Will there be actual competitive or free bargaining on the part of the copyright proprietors-i. e., the musical publishers? They are now, and have been for some years past, banded together and acting in concert in fixing uniform copyright royalty rates. Where is there anything in this bill or any existing law to prevent them from combining to fix a uniform and noncompetitive royalty rate for mechanical reproduction?

The bill does not eliminate price fixing. In effect it merely eliminates the 2-cent rate fixed by statute and leaves it open to the publishers to combine and fix their own uniform price instead. Under such conditions the price can not only be expected to be increased but may well become extortionate. The granting of a copyright is, of course, itself a legal monopoly, but it is fundamental that such monopolies should be properly safeguarded and never susceptible of being misused to create a monopoly on a monopoly.

Do the Federal antitrust laws reach the monopoly on the monopoly created through the combination in which the publishers are already engaged, based upon the copyrights in their musical composition?

This question was raised in the case of Harms et al. v. Cohen (279 Fed. Rep. 276), in which suit was brought by the complainant, a music publisher, against the defendant for infringement by the use of a copyrighted musical composition publicly for profit in a moving-picture theater. Among the defenses raised was that the complainant was engaged with composers, authors, and other publishers in a combination in restraint of trade and operating in violation of the Sherman antitrust law.

The court overruled this defense and in so doing stated in its opinion: "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, or the giving of exhibition of baseball games "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."

This combination of composers, authors, and publishers was investigated as the result of a large number of complaints, by the Department of Justice. The investigation covered a period of about two years, and then the department issued a statement under date of August 6, 1926, in which it concurred in the publisher's view that the acts complained of were not within the prohibition of the antitrust laws. The department's findings are as follows:

"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 restrained 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."

In connection with the granting of licenses for the public performance of copyrighted musical compositions for profit, it is a fact and a matter of common knowledge that such public performances are widely effected by means of phonograph records and player-piano rolls, and many of the licenses granted by the publishers relate to performances by such devices.

Under these circumstances is it not essential that provisions be inserted in the bill to insure against the operation of this combination of publishers in connection with the granting of licenses for mechanical reproduction, when the 2-cent statutory royalty is eliminated and the rate is to be fixed by bargaining? If free bargaining is to be established as the proper basis, the actual freedom of the bargaining should be provided for in clear and unmistakable terms, so that competitive conditions shall be maintained thereunder.

There is no question that the phonograph-record and piano-roll companies, through the production and sale of such devices, are engaged in interstate commerce, and it seems clear that under the controlling authorities any combination and concerted action on their part in reference to mechanical licenses would directly affect and restrain interstate commerce and fall within the prohibition of the antitrust laws.

Would it be just and fair under the bill to have free bargaining by the respective mechanical companies, and collective bargaining by the publishers? The answer is plain.

To safeguard free bargaining and insure against collective bargaining, conditions should be attached to the rights created by this bill, by appropriate amendment.

That Congress has the power to attach the necessary conditions in a bill of this character, see the decision of the United States Supreme Court in Wheaton & Donaldson v. Peters & Griggs (8 Pet. 592), in which the court uses this language:

"No one can deny that when the legislature are about to vest an exclusive right in an author or an inventor, they have the power to prescribe the conditions on which such right shall be enjoyed; and that no one can avail himself of such right who does not substantially comply with the requisitions of the law."

Congress has long ago recognized the necessity of guarding against the formation of oppressive monopolies in dealing with statutes creating copyrights. In this connection, the following is quoted from the report of the Committee on Patents of this House, on the bill which became the existing copyright act of 1909:

"The main object to be desired in expanding copyright protection accorded to music has been to give to the composer an adequate return for the value of his composition, and it has been a serious and a difficult task to combine the protection of the composer with the protection of the public, and to so frame an act that it would accomplish the double purpose of securing to the composer an adequate return for all use made of his composition and at the same time prevent the formation of oppressive monopolies, which might be founded upon the very rights granted to the composer for the purpose of protecting his interests."

There are numerous other serious grounds of objection to this bill. Most of them, or at least the more important ones, have been covered in the arguments of Mr. Chindblom and Mr. Busby at the previous hearing by this committee. I concur in all of those objections, but in view of the limited time shall not attempt to discuss them further. I would, however, call attention to the fact that specific amendments, necessary to meet these other objections, are indicated on the marked copy of the bill, with accompanying memorandum setting forth briefly the reasons for each change, which were made of record at the previous hearing.

At the risk of repetition, I do, however, wish to refer to the question of public performance for profit. In section 5 of the bill you will note that it is provided that the payment of royalty for the use of copyrighted musical compositions, for mechanical reproduction, shall free the articles or devices for which such royalty has been paid from further contribution to the copyright, "except in the case of public performance for profit."

It is urged that the exception just noted should be eliminated from the bill. If licenses for mechanical reproduction are to be placed on a free bargain basis, why should not the bargaining include the right to make this use of the phonograph records, or piano rolls, along with the other rights which must necessarily be secured from the copyright proprietors, in connection with

the manufacture and sale of such mechanical devices. The elimination of this exception is highly important from the standpoint of the public, in order to relieve the ultimate consumer from continuing tribute to the copyright monopoly, after he has once bought an article which has been manufactured and sold under authority of the copyright proprietor. It is obnoxious to our law to have restrictions tied to articles after full title thereto has passed to the purchaser from one duly authorized to make and sell the physical thing. It has frequently been so held in connection with patented articles.,

In conclusion, I would point out that if a special rule is granted we shall be deprived of the opportunity of having the amendments necessary to make this bill workable, considered on the merits, with due deliberation. If a rule should be granted, subject to the right of amendment on the floor, the subject matter of the bill is highly technical and the discussion of the amendments would necessarily be too involved to permit their adequate consideration and intelligent action thereon under such circumstances.

I submit that the special rule should be denied in the public interest. As stated by the United States Supreme Court in Kendall v. Windsor (21 How. 322):

"It is undeniably true that the limited and temporary monopoly granted to inventors was never designed for their exclusive profit or advantage; the benefit to the public or community at large was another and doubtless the primary object in granting and securing that monopoly."

This obviously applies to the copyright monopoly as well as the patent, since they both spring from the same constitutional provision.

HARMS ET AL. V. COHEN (279 FED. REP. 276)

(District Court, Eastern District of Pennsylvania. March 21, 1922. No. 2271) 9. Monopolies-Key number 12(2).-Right to perform musical composition not "trade or commerce," under the Sherman Act.

A copyright is an intangible thing, and the right to perform a musical composition under a copyright is not "trade or commerce," and a combination of composers, authors, and publishers, under which extortionate license fees are demanded for public performances for profit of musical numbers copyrighted by the various members, does not constitute a violation of the Sherman Antitrust Act. (Comp. St. pars. 8820-8823, 8827-8830.)

(EDITOR'S NOTE. For other definitions, see Words and Phrases, first and second series, Commerce; Trade.)

In equity. Suit by T. B. Harms and another against William Cohen. On motion to strike out parts of answer. Granted in part, and denied in part.

THOMPSON, District Judge. The plaintiff, a corporation engaged in the business of publishing and selling musical compositions, has brought this suit as owner of the copyright in a musical composition entitled "Tulip Time," from Ziegfeld Follies, 1919. The defendant is alleged to be the owner and manager and operator of the Model Theater where moving pictures and photoplays are exhibited and musical compositions are played, and to which the general public is admitted upon the payment of an admission fee. It is charged that the defendant, in infringement of the copyright, has given public performances for profit of the musical composition in question, by causing it to be played and performed in his theater for the entertainment and amusement of his patrons.

Paragraph 18 of the answer avers in substance that the plaintiff is a member of the American Association of Composers, Authors, and Publishers, which includes a majority, if not all, of the composers, authors, and publishers in the United States; that the members thereof, for the purpose of securing to themselves "an unreasonable and extortionate profit, and for the purpose of establishing and maintaining an unreasonable and extortionate license fee for the performance of their musical numbers," have combined and assigned to the society the privilege to issue licenses for the performance of the music of the members, and to charge such sums as the society might fix; that the society appointed an agent to issue licenses for the performance of the musical compositions in Philadelphia; that the agent demanded extortionate fees for such license, which the defendant refused to pay.

It is averred that the plaintiff is therefore engaged with others in a combination or conspiracy in restraint of interstate trade or commerce, in violation of section 1 of the Sherman Act; that the present bill is one of eight simultaneously brought by members of the alleged combination; and that the present suit is not a bona fide action to protect the plaintiff's rights, but is part of a combination or conspiracy to create a monopoly in the musical composing and publishing business, in restraint of trade, and to demand unreasonable and extortionate profit from moving-picture theater owners and lessees.

(7) Under the copyright act (sec. 1 (Comp. St. par. 9517)) the copyright owner has the exclusive right to print, reprint, publish, copy, and vend the copyrighted work, and under section 41 (Comp. St. par. 9562) the copyright is distinct from the property in the material object copyrighted, and the sale or conveyance by gift or otherwise of the material object does not, of itself, constitute a transfer of the copyright, nor does the assignment of the copyright constitute a transfer of the title to the material object.

(8) Does a combination of composers, authors, and publishers, under which extortionate license fees are demanded for public performances for profit of the musical numbers copyrighted by the various members, constitute a violation of the Sherman Act? (Comp. St. pars. 8820-8823, 8827-8830.) The agreement under which the alleged unlawful combination was formed is not before the court, and the question must be decided upon the averments in the answer. In order to constitute a defense, it must be established that one charged with infringement may be relieved from liability if the plaintiff is engaged in an alleged unlawful combination. Congress has declared in the Sherman Act that all such contracts and combinations in the form of trust or otherwise are illegal, but, on the other hand, has granted to musical composers a monopoly in their works, and has provided methods for enforcing their rights in the courts. If an infringer, when these remedies are invoked, may set up as a defense that the copyright is the object of an unlawful combination, and is being used to carry into effect the purposes of an unlawful combination, may he thus escape the results of his own wrongful act? If he can set up an unlawful combination as a defense against his infringement of the copyright, then anyone who wrongfully trespasses upon or takes the property of another may set up as a defense that the property was being held and used by a member of an unlawful combination in carrying out the purposes of that combination. It would follow, if one took possession of cattle or beef belonging to a corporation or individual, a member of a combination for fixing the price of cattle or beef in restraint of trade, he would be relieved from liability to pay for the property so taken, or from returning it to its owner, upon producing proof that the owner was engaged in such unlawful combination. In the same manner one might with impunity take possession of oil, gasoline, sugar, or other commodities belonging to members of an alleged trust or combination in restraint of trade. But there is no provision in the Sherman Act divesting members of combinations in restraint of trade of their property. The remedies under that act are clearly defined and are exclusive. (Geddes v. Anaconda Mining Co., 254 U. S. 590, 41 Sup. Ct. 209, 65 L. Ed. 425; Motion Picture Patents Co. v. Ullman (C. C.), 186 Fed. 174; Fraser v. Duffey et al. (D. C.), 196 Fed. 900; Weyman-Bruton Co. v. Old Indian Snuff Mills (D. C.), 197 Fed. 1015; Corrugated Paper Patents Co. v. Paper W. M. Co. of N. Y. (D. C.), 237 Fed. 380; Edison Electric Light Co. v. Sawyerman Electric Co., 53 Fed. 592, 3 C. C. A. 605; U. S. Fire et al. Co. v. Halsted (D. C.), 195 Fed. 295.)

(9) 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, People v. Klaw (55 Misc. Rep. 72, 106 N. Y. Supp. 341); or producing grand opera, Metropolitan Opera Co. r. Hammerstein (162 App. Div. 691, 147 N. Y. Supp. 532); or the giving of exhibitions of baseball games, National League et al. v. Federal Baseball Club et al. (269 Fed. 681, 50 App. D. C. 165).

The answer does not set up that the defendant is affected in any other way by the alleged unlawful combination, except by his being prevented from producing the plaintiff's copyrighted music. 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. (Hopkins v. United States, 171 U. S. 578, 19 Sup. Ct. 40, 43 L. Ed. 290; Ander