in writing is not merely to express disagreement with the Court but to underscore what has repeatedly been stated by others as to the need for legislative action. Radio today is certainly a more commonplace and universally understood technological innovation than CATV, for example, yet we are, basically, in essentially the same awkward situation as in the past when confronted with these problems.

We must attempt to apply a statute designed for another era to a situation in which Congress has never affirmatively manifested its view concerning the competing policy considerations involved.

Yet, the issue presented can only be resolved appropriately by the Congress; perhaps it will find the results which the Court reaches today a practical and equitable resolution, or perhaps it will find this "functional analysis" too simplistic an approach.

The reference there is to the interpretation of Justice Stewart in the Fortnightly and Teleprompter case which was carried over to Aiken. It said that, functionally, the CATV operator or the chicken shop operator was operating as a viewer rather than as a performer or broadcaster when it retransmitted the broadcast, which was licensed. The immediate result of this was that several people got phone calls from the press asking what would be the result under the case if it were being decided under the revised law, and the answers were conflicting. It was apparent that this had not been really thought through in these terms. The legislative history I have laid out here implied that the result would be different depending on whether or not you read the House report from 1967 or the Senate report from 1974 or particularly the Senate report that will emerge shortly, and this is obviously not a satisfactory way to leave this problem, which is too important to just pass over.

I should say the bill as reported by the Senate did not change the wording of subsection (5) at all, but I am sure the language in the report will be changed, and my impression, based on what I have been told, is that it will probably indicate that subsection (5) should be interpreted in favor of the copyright owner in the Aiken factual situation.

Mr. KASTEN MEIER. May I say to members of the committee, you do not have to wait until the end of Ms. Ringer's presentation with urgent questions or points that you may want to make. Please feel free to ask it.

Mr. DRINAN. Thank you, Mr. Chairman.

I just ask this question: How could they possibly expect to change the statutory language if they are going to keep (5) here, 110(5) (a) and (b)? How could they possibly change it by saying this does not apply in the Aiken situation? The language there gives the right to the gentleman with the restaurant it seems to me.

Ms. RINGER. It is arguable. I think the language of the report your subcommittee adopted in 1967 would probably have leaned in the way you are suggesting. I do not think anyone had really thought through what is a "receiving apparatus of the kind commonly used in private homes." I am not sure what Aiken had. He had four large speakers, but they were obviously placed for reception by his customers, not by himself.

I am assuming-I do not think we need to reargue the Aiken case. Let me read you my conclusion, and perhaps that might answer your question in some way.

Mr. DRINAN. What page is this on?

Ms. RINGER. This is on pages 10 and 11. The language of section 110(5) seems adequate to express the intended scope of the exemption, and any effort to make the provision more explicit by reference to the size of the establishment, the number of patrons, the number of loudspeakers, et cetera, could freeze the provision unnecessarily and leave unpredictable loopholes.

But it seems imperative for fresh consideration to be given to the interpretation of section 110(5) in both Senate and House reports. The commentary should provide a consistent answer to the frequently asked question: How would the Aiken case be decided under the 1975 revision bill? As things stand now, the House reports of 1966 and 1967 and the Senate report of 1974 are inconclusive, while the 1975 Senate report, now in the form of a draft before the full Senate Committee on the Judiciary, may in its final form state: "This clause is not intended to generally exempt performances or displays in commercial establishments for the benefit of customers or employees."

The main point I am trying to get across is that this should be interpreted consistently. It should not be left up in the air, as it is now. The legislative history of section 110(5) indicates that the provision was based in part on the traditional, pre-Aiken interpretation of the Jewell-LaSalle decision, and that public communication by means other than a home receiving set or further transmission of a broadcast to the public was not intended to be exempted. The Aiken majority based its decision on a narrow construction of the word "perform" in the 1909 statute, which in turn was impelled by the earlier CATV precedents. This is what Justice Blackmun was decrying in his concurring opinion.

This basis for the decision would be completely overturned by the revision bill. It is reasonable to assume that Mr. Aiken's apparatus was not an ordinary home receiving set and that, if four speakers were necessary for proper reception by all his customers, there was a further transmission-that is, a communication "whereby images or sounds are received beyond the place from which they were sent.' This is the definition of "transmit" in the definitions section. In other words, all

Mr. RAILSBACK. Where do you come down on that issue?

MS. RINGER. I came down on the side of an interpretation that would make clear that you would be liable if the receiving set was not of the ordinary home receiving set variety, and you would not be excused by merely stringing speakers-in other words, there is a line that hás to be drawn.

Mr. RAILSBACK. You would further specify in the Senate report? MS. RINGER. I have not seen the final version of the marked up fullcommittee report. My impression is that it will come close to saying that any commercial use of music in this type of situation would be an infringement. I would not go that far. I would say the distinction is whether or not you are actually retransmitting from something that is not home-receiving apparatus. I am inclined to think that is probably what Aiken was doing.

The Court may well have been right in what it was deciding under the 1909 law and may well have been bound by the CATV precedents. There was some regret expressed. They felt themselves trapped into this because there has been licensing in areas like this, and it was a

drastic thing to do to declare this long-standing interpretation of and earlier Supreme Court decision incorrect.

Mr. RAILSBACK. So where they would use some apparatus in addition to the home receiving set, you would make that distinction?

Ms. RINGER. Of course, you have quadrophonic stereo reception now, which presumably involves four speakers. If you have four speakers, a very nice hi-fi rig behind your bar, for example, in a restaurant, and the people that are sitting at the bar get the benefit of it, I would say that would not be an infringement, but if you are stringing the speakers around the restaurant so that people in all four corners or all of the areas of the restaurant or all of the rooms of the restaurant are getting the performance, I think that was what subsection 5(b) was intended to catch, intended not to exclude from the exemption.

Mr. KASTENMEIER. Is it your point of view-apparently we do not know-I read the case of course that Mr. Aiken had a home receiving set, but nonetheless strung four speakers to various parts of his establishment.

Ms. RINGER. I am not clear as to what kind of receiving set he had. Of course, some home receiving sets are very sophisticated. It may well have been something that would fall within that, but he did string four speakers to it, and it was I think recognizable as a commercial motivation rather than a simple mom-and-pop type of candy store I'll-entertain-myself-while-I'm-waiting-for-customers type of operation.

This is, of course, something that needs to be addressed in the report. I do not think there is any necessity for amending the bill.

Mr. DRINAN. Ms. Ringer, would you explain at the bottom of page 9 and 10 the proposed addition to section 501? How does that fit in with the rest of your

MS. RINGER. That is the next point. It is completely unrelated.

Mr. DRINAN. We should just let her talk. Everything flows so well. Ms. RINGER. This is ballroom point. It is completely unrelated. I guess there is some remote relation to the basic liability question, but essentially this was a proposal put forward on behalf of entrepreneurs who contract with independent musicians or combos, and they are not employed. It is an independent contract relationship. The performers arrive, and they unpack their material. They play. Nobody controls what they are playing, and they get back in their van and go on, and somebody from the performing rights society is in the audience, and they sue the proprietor. They consistently win in the Courts, and there was an effort in the Senate-which I believe also produced at least one letter here to your subcommittee-proposing further amendment. That would in fact be to section 501, but it is really more relevant to this subsection-that is why I put it here--which would read, at the top of page 10:

Notwithstanding any other provision of this title, the proprietor of an establishment in which nondramatic musical work is performed by or under the exclusive directions of an independent contractor, not an employee of the proprietor, is not liable for infringement with respect to such public performance.

This was put forward as an amendment offered by Senator Hruska in the Senate Judiciary Committee on October 7 and was voted down.

I would agree with that result for the reasons I give on pages 11 and 12, in which I indicate that vicarious liability in this situation is a settled principle of copyright law, that a person who violates any of the exclusive rights of the copyright owner is an infringer, including persons who can be considered related or vicarious infringers.

The case law on this suggests that to be held a related or vicarious infringer in the case of performing rights, a defendant must either actively operate or supervise the operation of the place where the performances occur or control the content of the infringing program, and he must expect commercial gain from this operation in either direct or indirect benefit from the infringing performance. This does include the entrepreneurs of ballrooms and similar places.

There is a large and forceful body of authority upholding vicarious liability where these conditions are met. No justification exists for adopting a contradictory amendment which could create a large and dangerous loophole in the public performance right. I am quoting actually from a letter I wrote to Senator McClellan who had asked specifically for my opinion on this earlier, and I did give him my opinion with a lot of citations which I have spared you.

Mr. PATTISON. How, as a practical matter, can the owner of the establishment-let us say, let us talk about a fieldhouse at an institution, a college, how as a practical matter can that owner when he has got an independent contract agreement, and he is being very careful not to turn into an employer-employee relationship with all the liabilities that flow from it, how can he as a legal matter control the music that is played by the group that is performing?

Ms. RINGER. Admittedly, a lot of this is not handled in a very formal manner, but of course he can indemnify himself.

Mr. PATTISON. It can be part of the contract?

Ms. RINGER. Yes. Turning it around, Mr. Pattison, as these things operate practically, he may be the only person that can be found for anyone to sue.

Mr. PATTISON. Which makes the indemnity not terribly valuable. Ms. RINGER. I would probably agree with that as a practical matter, but it is a balancing which the courts have been very consistent in resolving in favor of the copyright owner.

This is not a part of the statute, but is a part of copyright case law. Mr. PATTISON. Thank you.

Ms. RINGER. This is all on chapter 4.

Now, I will go on, if I may, to the difficult problem of cable television. This is in a very fluid state. I think this is illustrated by the fact that after I wrote this, the full Senate Judiciary Committee did work its will and made a few changes. I think there has been a strategic policy decision to save some of the proposals for the House, so I think this is not as settled as some of the other issues we have been discussing.

What I mainly want to get across to you here is the enormous body of history that lies behind this provision and the complexity of the situation which involves by no means just the present law and the bill, but in addition a body of administrative regulations which have an extraordinary history of their own and ongoing activities in the executive branch, which is continuing to work on this today.

I think I can review very briefly the history of copyright issues involving cable television under 14 headings which I have included on pages 2 through 26 of this chapter.

Cable was not an issue until around 1963 in copyright because it had not yet come to have a significant commercial impact on the copyright owners' rights. I was interested to discover, when I was doing some research in Europe on performers' rights, that this secondary transmission issue had been a copyright issue before World War II with respect to radio in Switzerland where the Alps were in the way of the radio signals, and the same questions had arisen.

There are written into basically two versions of the Bern Convention provisions respecting retransmissions of copyrighted material, but in the United States the issue really did not arise until the early 1960's. The early efforts to try to deal with this were a little naive, although I think not uncreditable.

Let me skip to the hearings that were held before your subcommittee in 1965-I discuss them briefly on page 5-which were black and white in more ways than one. The problem was put forward to your subcommittee in completely dialectical terms, the operators arguing for complete exemption, and all of the copyrights owners plus the broadcasters and sports promoters arguing for full liability. It did look very, very difficult. It looked like a very difficult problem to try to reach any sort of compromise on this.

Before your subcommittee acted, while it was marking up the bill in 1966, the Federal Communications Commission, which had backed and filled on this issue, came down with an order asserting jurisdiction over CATV systems and promulgated rules which I think almost everyone would agree amounted to a freeze. This was a system involving a very complex requirement for hearings in order to import distant signals.

There were a number of requests for hearings. The backlog soared instantly. It was obviously not a viable way of approaching the problem, but this was the rule. During the time you were considering the bill in 1966 and 1967, the FCC had in effect frozen the importation of distant signals because you had to have a hearing, and nobody could get through to the end of the hearing.

On October 12, 1966, and again on March 8, 1967, the House Judiciary Committee reported the general revision bill with a carefully worked out compromise provision which neither imposed full liability on cable operators nor made them completely exempt. It adopted what was known as the white, black, and gray area approach. This did not involve compulsory licensing, but it involved the white area, which was completely exempt, the black area that was completely liable, and an intermediate or gray area which was liable only if advance notice had been given that a local station had an exclusive license to show the same program in the area.

This was, of course, a fairly clear-cut recognition of copyright owners' rights in this subject matter. I have to mention-although I am coming to it in a minute in more detail-that during this period, these questions were being heavily litigated, and the cases were headed for the Supreme Court. There was some support for the compromise, but more opposition, and it was obvious that the bill as it