ATTACHMENT A

Coming to the defense of the Copyright Royalty Tribunal

The necessity of a Copyright Royalty Tribunal and the role of the compulsory license have been the subject of fair-minded debate for some time. There have also been less useful ad hominem attacks on the tribunal members and their decisions. The tribunal's commissioners are called "political hacks" and "incompetent," their rulings "plucked out of thin air, sometimes "outrageous." Cries for abolition or reform have recently been propelled by an episode (the resignation of the tribunal's chairman) which, in the long run, should prove irrelevant to the tribunal's work. Making funeral plans for the tribunal has become something of a Washington parlor game.

It is time to take more objective stock of the tribunal. If one takes into account the agency's difficult, and very subjective, functions and the records put before it submit that one will find that the tribunal has done precisely what Congress told it to do, and is has done is job quite well.

Reform may well be in order. But it must be based upon careful review of the tribenal's statutory role and analysis of its performance based upon the records the partes put before it. Anything short of this will surely make things worse.

One must appreciate the nature of the tri

Bruce G. Forrest joined the Washington oflice of the Oaklanc. Call, law firm of Farrow Schildhause. Wason & Rains in December 1984. Before mna ne was with the appetats stail of the Justice Department's civil division. While at Juice. Forrest delenced a number of the Copynge Foyalty Tribunal's administrative decisions before the courts.

not like seming rates for a public utility. The tribunal is not determining a reasomeble rate of return on capital investment, or remunerating the cost of service.

even

right useres by supressing rates

Counsel for the cable industry were fully aware of these matters when the tribunal entered its most controversial proceeding: the setting of cable rates in light of FCC deregulation. The cable operators put on an affirmative case to show that the rates were aiready high enough. But this presentation was successfully rebuted by the coordinated presenations of many copyright owners groups. They proved overwhelmingly that a very substantial rate increase was in order.

The reviewing courts have unanimously affirmed the tribunal's rate decisions substantially in their entirety The reviewing courts were correct because there was ampie evidence of record to support tribunal decisions.

Whether the compulsory licenses should be abolished is a policy question beyond the purview of this nose. But proposals to keep the compulsory licenses, and to replace the tribunal with a Federal Copyright Agency Cablecasting." June 3), or move its function to the Department of Commerce or the Library of Congress, should be scrutinized most carefully in absence of changes in the substantive statutory guidelines, it should not be assumed that a different decision maker would have made a substantially dif ferent decision. Based on the records I've seen, the tribunal's decisions were not at all surprising.

The worst route, which all interests should avoid. is the delegation of any initia

Property created by a population of artists as diverse as our culture. It then allocates the collections among competing claimants.

The tribunal inherned three low-balled starutory rates which were nothing more than political compromises. The legislative history of the rwo-and-three-quarter-cent song fee for "mechanical recordings shows that Congress rejected a proposal to maintain that rate pending the occurrence of "relevant factors aner enactment. The 58 fee set for cach jukebox for each year was absurdly low: The statutory fees for cable television signals were premised upon the FCC's anticable operator restrictions of distan-signal camage and the syndicated program tion option given to local broadcasters. The new tribunal was directed to commeans proceedings to adjust the phono record jukebox fees to make them "reasonable." The cable television fees were to be adjusted. again to be "reasonable. when the FCC's anucipated deregulation steps took place.

and

It was assumed that substantial upward adjustments of fees would occur. But the tribunal was given only very blunt instruments to decide by how much.

Senting fees for compulsory copyright li

The tribunal's struggles to explain "in detail the reasons for s decisions have been met with scorn. But anyone who participated in drafting this state should be dissuaded or at least embarrased from criticizing the tribunal for vagueness.

la the firs: rwo tribunal rate proceedings be mechanical fee for the record industry

juke box feel. the copyright users lied upon an attempt to impose a proof on anyone seeking to change sory fee levels, and poormouthing about the plight of their industry. But by any measure those fees were inadequate. If inflation alone were used to adjust the mechanical phone record fee, I would have risen to 14 cents per song. The jukebox fee was a small fraction of comparable fees charged in a wide vanery of Western nations. No one should have been surprised when the agency declined to impose a burden of proof on copynght owners or when u refused to require copyright owners to subsidize copy

case fees and nepouston will divide the pool. The cable television fee schedule. es. pecially, needs revision. Even if overall recempts are maintained. the schedule is toc rococo, and is dictates results based more or history than economic reality

Meanwhile. absem station change. copyright users should still be able to substantially improve the evidenuary show. ings before the agency. The tribunal has dis counted the "marketplace analogie: presented by copyright owners. finding tha: resulting fees would be unfairly high. Cer tainly some effon should be made to bette: quantify the value of these differences. Es perience with current fee leveis should previde valuable information as to whethe those fees were set at leveis that were loc high or too low.

But absent statutory changes or improve: administrative presentations, don't expec new commissioners or new bureaucrati structure to satisfy complaints about perfo: mance under this statute.