cording another-which you can do, by the way-Nielsen and Arbitron record you as having watched both programs-the fact that you will time shift the other one.

Senator DECONCINI. Often, I guess, on prime hours there is more than one selection a viewer would like to see.

Mr. WAYMAN. That is what the networks and the local stations like to do-compete with each other for good programing.

Senator DECONCINI. Could any of you inform the committee as to your knowledge of various new technologies which may soon be forthcoming in the area of electronic communications and also indicate to us what problems in the area of copyright would develop as a result of these new technologies? Are we just talking about the tip of the iceberg here? Is there something else that could be forthcoming, in your opinion?

Mr. WAYMAN. I do not know of anything right now. The television has become an active product. Someone said it was a vast wasteland. We think it is a verdant valley today. You have the ability to do home movies with this VCR. You are moving away from film technology to tape technology, and in a year or so you are going to see this-as we are doing today-use of cameras to record your own home movies. You can play prerecorded tapes on it. Also, the video disk is here, and that can also play copyrighted material. Certainly, those copyright holders have been well compensated.

We see nothing in our area in the foreseeable future. Projection television is here with us but has nothing to do with this case.

Senator DECONCINI. Maybe Mr. Lagore could answer this one. What is the feasibility of making a video recorder that can play over a conventional television set but would not be able to record off it?

Mr. LAGORE. Could I have the question again?

Senator DECONCINI. Yes. What is the feasibility of making a video recorder that can play over a conventional television set but would not be able to record off it?

Mr. LAGORE. You mean to be used as a playback unit only?
Senator DECONCINI. Yes.

Mr. LAGORE. We do not think it is feasible.

Senator DECONCINI. You do not think it is feasible? You have looked into that as a company?

Mr. LAGORE. Yes, we have.

Senator DECONCINI. What would be the cost involved in recalling the video recorders already in the possession of the American public and mechanically fixing them so that they would be subject to this limitation?

Mr. WAYMAN. You can answer it, Joe. We both know the answer to that one.

Mr. LAGORE. The cost would be astronomical-in the millionsand I do not think it technically could be done. I do not believe you can pull the tuners out of the sets. The electronics of the machines are related. I do not think it could be done.

Senator DECONCINI. You do not think it could be done, even ifMr. LAGORE. Well, perhaps at tremendous expense it could be done. Who would allow it?

Senator DECONCINI. Pardon?

Mr. LAGORE. What consumer would allow it?

Senator DECONCINI. I do not know. I ask the question to try to find out what the economic problems are here in the event that nothing is done and an injunction is granted or an order to order such action. I just wonder if your company or your industry has assessed what the damages could be.

Mr. KRETZER. I would like to add to that, Senator.

Senator DECONCINI. Yes, please.

Mr. KRETZER. I think you would find a lot of law violators. I do not think people will voluntarily give up their ability to record. Mr. WAYMAN. It is inconceivable, Senator, that this could ever happen or that we would even try to do it.

Senator DECONCINI. You answered a question for me, Mr. Kretzer, that obviously the popularity of videotape recorders is mushrooming by sales. Is that true in your national organization, the National Association of Retail Dealers? Is that true all over? Mr. KRETZER. Yes.

Senator DECONCINI. They are a very popular item today?

Mr. KRETZER. I would say it is the difference between many businesses carrying on and probably going out of business today. It is a new life for them, and it is just inconceivable the number of units being sold, especially in your major markets.

Senator DECONCINI. Thank you. I have no further questions.
Senator D'Amato.

Senator D'AMATO. Thank you, Mr. Chairman.

A number of the witnesses have testified that were the process to be continued or left in abeyance, there would be created as a result of this great uncertainty. We have heard about the fact that we are talking about people's rights and individual rights, but let us deal with the hypothetical that Congress does not act and this procedure is allowed to continue winding its way through the courts, and that in the absence of any clear legislative intent-as we have heard Professor Friedman testify that there appears to be that absence and ultimately the circuit court's decision is affirmed, now we come to that situation of penalties or an attempt to bring about a cessation of the infringement of the copyrights.

I think Mr. Kretzer said it is inconceivable to think that people would allow, for example, their recorder to be tampered with-the 3 million that are now in homes and Lord knows how many if the procedure continues. That being the case-and I ask our esteemed counsel here-it would seem that the manufacturers would really come in for the onus, and the financial burden then would befall them as a result of the copyright infringements and their allowing these devices to be sold. Is that not true?

Mr. DAY. Yes, I think it definitely is true, Senator. I think not only is there the burden that has been referred to of the enormous cost of trying to make an electronic alteration in the equipment that is out there, even if you could get access to it which is doubtful in many cases, but the consumer has a product which he bought with all good intentions, and somebody is going to have to compensate him for a loss of a very important feature of that prod

uct.

It is like somebody suddenly decided that you cannot have fourwheel brakes in your car anymore. If you are going to have those

taken away, you are entitled to be compensated for the loss of that benefit.

Senator D'AMATO. Ultimately that damage that occurs will come down on the corporations that have manufactured these recording devices-Sony, RCA, et cetera. Does that not place the corporate structure at the present time in a somewhat precarious position? It is one thing to say, "Well, we know it really won't take place. Something will take place. Congress will act on it." But is there a feeling of that precariousness and that uncertainty that you now have to deal with, which is one that takes on some very real financial responsibilities? Are you or will you be limiting some of your activities in this area if this situation is not dealt with expeditiously? Maybe Mr. Lagore could answer.

Mr. LAGORE. I do not think we are in any position to start reimbursing consumers.

Senator D'AMATO. We are not talking about reimbursing consumers. We are talking about if there is a failure of Congress to undertake the kind of remedial legislation necessary in this area. Does there develop some financial impact with respect to your company? What will you be doing? Will you continue in terms of your economic development and sales and distribution in the same manner as you would if this uncertainty were removed?

Mr. LAGORE. If there was an injunction, we would not be able to sell machines at all. Statutory damages would hurt us also.

Senator D'AMATO. So how concerned are you about this decision? What does it do? My gosh, I am feeding them up. These are slow pitches. [Laughter.]

Mr. LAGORE. Senator D'Amato, we are asking for help. We are very concerned.

Senator D'AMATO. Do not give me that, "We have to record them, fixing the recorders, blocking it off," and so on. What are the kinds of things that this does as a result of the uncertainty that is created in your industry? What kinds of economic consequences? Do you put your full force in? Are you striving to go ahead?

Are you striving, or do you see some limitations if this thing is not resolved in a year and if you see some real battle developing over here? Do you think this might impede your development, et cetera? Are there some financial considerations other than this business of having to buy back or make the change with the private recorders?

Mr. LAGORE. I think so. I think it could put some doubt in the mind of consumers about buying these machines.

Senator D'AMATO. Anything else in terms of the corporate side? Mr. DAY. Yes, sir. There is definitely a discriminatory aspect in that if an injunction is issued in the near term, it affects only Sony and the other companies selling at the manufacturer's level who obtain their product from Sony, because it is the only manufacturer-level seller that is a defendant in the case.

It also affects the entire merchandising structure of all of these companies that are selling the Betamax, which goes right down through their home office, marketing, executives, assistants, distributors, dealers, all the way down. They would all be wiped out as far as this kind of product is concerned.

Senator D'AMATO. Let me ask you one more question. Suppose we go through the courts and you lose; the Supreme Court rules; Congress does not act. Now Congress sees this terrible inequity and injustice, but the Supreme Court has ruled against you and comes out with injunctive relief, et cetera, and says you have got_to_get these machines back, and of course you have indicated, as Mr. Day has mentioned, that those who have already been enjoined in this suit would feel the full impact.

Could Congress legally, ex poste facto, treat and cure that deficiency once the court has ruled? Does that not raise a question as to whether or not we can cure that deficiency once the Supreme Court may have acted, as it relates to what they might determine to be an infringement of those 3 million or whatever number are out there? Is that a question?

Mr. DAY. Yes. I think it is a big question and a big worry. I think it is a situation where the court should do, if they are going to decide against us, what they have done in other recent situations on occasion. That is to say, "This problem is bigger than both of us, and we ought to delay the effect of our decision until there has been a chance for Congress to take care of it."

They did that in connection with your savings accounts that pay interest. Although the court said the law at that time did not permit it, they said this was something that was so important that, "we ought to delay the effect of our decision until Congress has a chance to act on it." We would hope that, at a minimum, the courts would do that.

Senator D'AMATO. Thank you, Mr. Chairman.
Senator DECONCINI. Congressman Parris.

Mr. PARRIS. Mr. Chairman, I would just like to make this point. More of these units have been sold since the date of this decision than ever before in history. They have depleted the retail inventory. I think it is reasonable to assume that these criminals are not buying these things to grow flowers in; they are watching TV programs with them.

Let us face the incredible absurdity of this thing. I would like to correct with this question, if I could, a common misconception. The incredible absurdity is the question of the enforcement in the real world. I would just like to make one point on the complaint in this original case.

It says,

The plaintiff does not seek relief against the six residents of California who are homeowners, but the plaintiff contends that such recordings constitute infringements of its copyrights."

Would one of you gentlemen like to comment on the fact of whether these plaintiffs here can gratuitously disenfranchise these people from the criminal penalties of an infringement case by saying they do not want to enforce it against those homeowners? Are they not actually acting contrary to law by the simple act of taping, regardless of this gratuitous comment by the plaintiff here? Mr. WAYMAN. That is right, Congressman. In fact, I am looking at a trade press headline that came out several weeks ago: “MCA files suit against a slew of VCR manufacturers. Consumers taken off hook." They cannot take the consumer off the hook. The Ninth

Circuit Court has the consumer on the hook, and they cannot have it both ways, as I said in my testimony. They cannot go after the manufacturers that we represent as contributory infringers if there is not that primary infringer.

Mr. PARRIS. Thank you, Mr. Chairman.

Mr. DAY. In connection with that, Congressman Parris, back in 1971 when they were having congressional testimony on this subject, the representative of the Copyright Office at that time said that this was something that simply could not be controlled; it was unenforceable.

Mr. PARRIS. Thank you.

Senator DECONCINI. Thank you very much for your testimony, gentlemen. We appreciate the expertise and the manner in which it was presented.

[Prepared statement of Jack Wayman follows:]