and public access; 3) allocation of Federal, State and local authority over cable; and 4) non-duplication and exclusivity. The Commission thus forced substantial changes in the revision bill to adjust to its new standards, and a so-called "consensus agreement" among some of the parties supposedly cleared the way toward acceptance of limited copyright liability under a compulsory licensing system. The framework of the present version of section 111 emerged from this maelstrom, but was amended further after the Teleprompter decision changed the bargaining positions of the parties and allowed the revision bill to move once more.

Analysis of section 111

As presently drafted, Section 111 of H.R. 2223 treats a variety of so-called "secondary transmission." The passive redistribution of local transmissions to the private rooms of hotels and similar establishments, without charge, is exempted under section 111 (a) (1). So, too, are secondary transmissions of performance or displays by instructional broadcasters as would be allowed under Section 110(2). Pure common carriers, who do not exercise direct or indirect control over the selection of programming to be secondarily transmitted, or its recipients, are also exempted. The final exemption in Section 111 (a) (4) is in favor of boosters, translators and repeaters, which are non-profit, often governmental broadcast extension devices that customarily do not charge for their service.

Section 111(b) would impose full liability for the secondary transmission of primary transmissions that were not intended for reception by the public at large. Common examples include closed-circuit or pay-TV broadcasts, as well as music subscription services such as Muzak.

Section 111 (c) is the controlling provision governing cable television. Earlier provisions rested on questions of the source of the signal (local or imported) and the market in question (top 50 or second 50 markets), and included an openended provision for payment of a "reasonable license fee." With the FCC regulations establishing a mandatory carriage rule for local signals, and a minimum service standard under which certain distant signals may be imported, all of the "allocations" provisions in Section 111 have been dropped. Instead, Section 111 (c) tracks the FCC's actions.

In effect, section 111 (c) (1) permits the secondary transmission by cable systems of any primary transmission that it can legally carry under the FCC regulations, but subjects all of these signals to a compulsory licensing system provided in subsection (d).

To obtain a compulsory license, a cable operator must:

(1) At least one month prior to secondary transmissions, or within one month following the enactment of the bill, record with the Copyright Office a notice containing the identity and address of the owner or operator of the cable system, as well as the name and location of the signals being carried.

(2) Thereafter, four times yearly, cable systems must submit statements specifying the number of cable channels to be used for secondary transmissions over the next quarter, the name and location of the primary transmitters so carried, the total number of subscribers to the cable service, and the gross receipts of the cable company, from all sources, to date; and

(3) Remit a royalty fee for the period covered by the statement, computed from a sliding scale set out in section 111(d) (2) (B).

Failure to comply with these requirements, both as to the signals that can be carried and the procedural exigencies of the compulsory licensing scheme, will subject a cable operator to full copyright liability.

The remainder of the section deals with distributions of the royalties and settlement of disputes over them. These provisions are closely patterned on those in section 115, dealing with distribution of jukebox royalties.

TITLE I, CHAPTER 1, SECTION 113 AND TITLE II

WORKS OF ART AND ORNAMENTAL DESIGNS

General summary

Section 102 of title I of H.R. 2223 identifies "pictorial, graphic, and sculptural works" as copyrightable subject matter, and section 106 protects them against reproduction and distribution of copies, adaptation, and public display. The length and scope of their protection is essentially the same as for other copyrighted works.

Title II of H.R. 2223 is, in origin and content, essentially a separate though related piece of legislation. Under the rubric "Protection of Ornamental Designs of Useful Articles" it offers what is in effect a limited form of copyright protection to the ornamental design elements of useful articles.

Section 113 of title I recognizes the obvious overlap between these two forms of protection, and seeks to provide a bridge between title I and title II. Design patents and copyright protection

Design patents.-The first legislation ever enacted in the United States specifically to protect ornamental designs of useful articles was part of the Patent Act of 1842. Congress has continued to provide specific design protection under the patent law, and without much change from the 1842 provisions. To secure design patent protection an article of manufacture must meet four requirements: novelty, originality, ornamentality, and invention. The latter requirement means there must be some indefinable quality present which is to be distinguished from what would be obvious to a designer of ordinary skill in the art.

These requirements, especially those of novelty and invention, are most appropriately tailored to inventions in the fields of mechanics, electricity, chemistry, and so on. They are unwieldy when applied to works of creativity-works more closely related to arts than technology. This view is shared by many commentators, and is borne out by the frequent failure of design patents to be upheld in court. Patents for designs have also been difficult, slow, and expensive to obtain.

Copyright. As soon as the several problems with the design patent law became apparent to design patent applicants, they began to attempt to register their works under the copyright statute as works of art. The reasons were obvious. The copyright process is simple and the applicant can handle it himself. The cost is minimal, and the time required is normally about three weeks. Moreover, copyright protection begins with publication, and registration can be made later. The Supreme Court hastened the increase in copyright applications from disillusioned design patent applicants by its decision in Mazer v. Stein, 347 U.S. 201 (1954). The court held that use of a work of art (a statuette) as a design of a functional article (a lamp base) was not a bar to copyright protection. An increasing number of copyright registrations have been made for "works of art” which in fact constitute the designs of useful articles, such as textile fabrics, lamps, costume jewelry, toys, dolls, and many others. The courts have consistently upheld the validity of these registrations.

The basic criterion applied by the Copyright Office to determine registrability as a work of art is the existence of artistic features which can be identified separately from any utilitarian article and which are capable of existing independently from the article as works of art. The difficulty of administering this criterion is one reason for the support given by the Copyright Office for specialized design legislation.

At present, copyright protection is available only for designs which can be considered works of art, a concept that excludes many valuable and esthetically meritorious designs. Many industrial designs of useful articles do not qualify as independently copyrightable works and are therefore denied protection. This is perhaps the major reason a new sui generis type of protection has been sought. The copyright law was not formulated to absorb designs of coffeepots and automobiles, and it is generally agreed that it is inappropriate in other ways. The full copyright term may be too long for many designs, and it may be appropriate to limit the scope of protection for industrial designs in other ways. Interrelationship of patent, copyright, and sui generis design legislation

The Design Bill, in which has been pending in Congress for a number of years and in the past has been the subject of active consideration in both Houses, was added to the general revision bill as a matter of convenience. It is not intended to replace the possibility of protection for ornamental designs for useful articles under either patent or copyright law. Instead, it will present an additional option which is intended to correct the most serious defects and injustices under the two existing statutes.

The Design Bill affords a maximum of 10 years of protection to original ornamental designs of useful articles which are not novel or inventive under standards, but would not be considered patent works of art under the copyright law. Protection is available quickly, upon the marketing of the product, under modified copyright principles. For certain designs which qualify under more than one

system of protection (copyright, Design Bill, or design patent), the designer has an option to choose the form of protection preferred. Registration under the Design Bill, however, does not affect copyright protection for the design with respect to utilization in a form other than a useful article.

Section 113 of title I: Scope of exclusive rights in works of art under revised copyright law

This provision was inserted to clarify the status of copyrighted pictorial, graphic, and sculptural works that are capable of being used as ornamental designs. Subsection (a) makes clear that, whatever rights works of art enjoy under the present law to prevent their unauthorized use as designs, they will continue to enjoy under the revision bill. However, a published work of applied art may be pictured in advertising or display material or in news reports without copyright liability.

Subsections (b), (c), and (d) of section 113 confirm and define protection for ornamental designs of useful articles under copyright and under design registration as being two separate options for the designer in certain cases. Subsection (b) provides that, when a pictorial, graphic, or sculptural work in which copyright subsists under title I of the bill, is utilized in an original ornamental design of a useful article, the design shall be eligible for protection under the provisions of title II. Subsection (c) provides that protection of a work in which copyright subsists under title I terminates with respect to its utilization in useful articles when the copyright proprietor has obtained registration of the design under title II. However, protection against the use of the copyrighted work in other works of art would endure for the life of the copyright.

SECTIONAL ANALYSIS OF TITLE II

Section 201: Designs protected

The special protection provided by the design bill is available to the author or other proprietor of an "original ornamental design of a useful article." An article which in normal use has an intrinsic ultilitarian function, which function is not simply to portray the appearance of the article or to convey information, is a "useful article." The "design of a useful article," consists of all aspects of the article, including its two or three-dimensional features of shape and surface, which make up the appearance of the article. The design is "ornamental" if it is intended to make the article attractive or distinct in appearance, and it is "original" if it is the independent creation of an author who did not copy it from another source.

Section 202: Designs not subject to protection

Protection under this section is denied if the design is not original, and this concept is elaborated by statements denying protection if the design is staple or commonplace--such as standard geometric figures (circles or squares for example), familiar symbols, emblems, or motifs, or any other shape, pattern or configuration which has become common, prevalent or ordinary. Designs using these publicly known items cannot escape the prohibition against protection by the addition of insignificant details, minor differences, or variants commonly used in the relevant trade. Nevertheless, one who adds originality to public domain material by a substantial adaptation, revision, or rearrangement is entitled to protection for his contribution.

A design cannot be protected if it is dictated solely by a utilitarian function of the article that embodies it. Finally, and as the result of a major compromise, a design composed of three-dimensional features of shape and surface with respect to men's women's, and children's apparel, cannot be protected.

Section 203: Revision, adaptations, and rearrangements

Employment of subject matter not protectible under section 202 does not bar protection for a design if the new design substantially revises, adapts, or rearranges that unprotectible subject matter. Protection given to a revision, adaptation, or rearrangement of this sort will also be available to designs which employ subject matter already protected under the copyright law (title I of the bill) or the patent law (title 35, U.S. Code), but only if the protected material has been employed with the consent of its proprietor. Protection for a revision using previously registered subject matter is independent of any subsisting protection, and does not grant the author any right to subject matter excluded from protection or extend the term of protection.

Section 204: Commencement of protection

Design protection begins under the bill on the date the design is first made public. The definition of "making public" is quite similar to the criterion for "publication" under copyright law. It occurs when an existing useful article embodying the design is anywhere publicly exhibited, publicly distributed, or offered for sale or sold to the public.

Section 205: Term of protection

Designs will be protected for a term of five years from the date of first being made public, and may be extended for a second term of five years if a proper application for renewal is made during the last year of the original period. Section 206: The design notice

Whenever any design for which protection is sought under this title is made public, it must be marked with a design notice consisting of three elements: the words "Protected Design," the abbreviation "Prot'd Des.," or the letter "D" within a circle; the year date in which the design was first made public; and the name of the proprietor. The name of the proprietor may be in any one of the several forms.

The notice must merely be applied and located so as to give "reasonable notice of design protection while the useful article embodying the design is passing through its normal channels of commerce." In the case of sheetlike or strip materials bearing repetitive or continuous designs (such as printed fabrics) the notice may be applied to each repetition, to the margin, selvage or reverse side of the material at "reasonably frequent intervals;" or to tags or labels affixed to the material at such intervals. If the proprietor has complied with provisions of this section regarding notice, the protection he acquired under this title shall not be affected by the removal, destruction, or obliteration by others of the design notice on an article.

Section 207: Effect of omission of notice

Omission of a design notice is not fatal in infringement suits and does not cause loss of protection, but no recovery is possible if the offender began an undertaking leading to infringement before receiving notice of the design registration.

Section 208: Infringement

Additional safeguards for the innocent infringer, particularly retailers, appear in section 208. A seller or distributor of an article who did not make or impart it is considered an infringer only if he: (1) induced or acted in collusion with a manufacturer to make the infringing article, or an importer to import such an article; or (2) if he refuses, or fails, to make a prompt disclosure of his source of such article, and he orders or reorders such article after having received a personal written notice of the protection subsisting in the design. Section 209: Application for registration

Application for registration of a design must be made within six months after the design was first published, or protection for the design is lost.

Section 210: Benefit of earlier filing date in foreign country

This provision is a standard one under international industrial property treaties.

Section 219: Ownership and transfer

The property right vests at the time design registration is made, and may be transferred by any of various means. The bill contains standard recording and constructive notice provisions.

Sections 220, 221, and 222: Remedy for infringement; injunction; recovery

The bill grants a remedy for infringement by civil action after issuance of a certificate. Provision is also made for judicial review of a final refusal to register by the Administrator in section 220. Injunctions may be issued on equitable principles, in accordance with the discretion of the courts.

Section 227: Relation to Copyright Law

The section leaves intact any right or remedy now or hereafter held by any person under the copyright act. It also provides that, when a pictorial, graphic or sculptural work in which copyright subsists under title I of the bill is utilized

in an original ornamental design of a useful article, the design shall be eligible for protection under title II.

Section 227: Relation to patent law

The option of registration under this title coexists with the rights and remedies under title 35, the patent law. However, issuance of a design patent for an ornamental design under title 35 terminates any protection of the design under this title.

Section 229: Common law and other rights unaffected

Any common law rights or remedies available to a proprietor of a work not made public are left intact by passage of the design bill, including trademarks and the right to protection against unfair competition.

Section 230: Administrator

The Office and Administrator of the Design Protection Act will be designated by the President of the United States.

Summary

CHAPTER 1, SECTION 114 AND H.R. 5345

RIGHTS IN SOUND RECORDINGS

Neither the present copyright law nor the revision bill extends protection to performances of sound recordings. A proposal to establish a compulsory licensing system governing the public performance of sound recordings was included in revision bills pending in the Senate between 1969 and 1974. In passing the revision bill last September, the Senate adopted the Ervin amendment striking the provisions relating to public performance of sound recordings. As under the present law, the revision bill in section 114, would grant only the limited right to reproduce and distribute exact duplications of sound recordings. It would not confer any rights to prepare derivative works or to perform the sound recordings.

The proposal to create a right in the performance of sound recordings is pending before this Congress in H.R. 5345, a separate bill introduced by Mr. Danielson to revise the copyright law for this purpose only. The Danielson Bill is patterned after the provisions formerly included in the revision bills. A compulsory licensing system would be created, apparently to provide a fall-back solution in case voluntary negotiation fails. The bill in its present form requires some technical adjustments in two areas: an antitrust exemption is necessary to facilitate voluntary negotiations and an organization should be designated to receive royalties paid under compulsory licenses. Should the Danielson bill be rejoined with section 114 of the revision bill, it would presumably resume the form of the earlier Senate versions of that section, in which these technical problems are dealt with to some extent.

Background

Sound recordings embody the efforts of three groups who consider themselves entitled to federal statutory copyright protection. The first group consists of the authors or composers who are the initial owners of works embodied in sound recordings. The second group consists of the record producers who employ the sound engineers, directors, and others responsible for capturing and editing the sounds reproduced on recordings. The third group is made up of the musicians, singers, actors and others whose performances are captured on sound recordings. Authors and composers receive the greatest protection under the present copyright statute. Copyright protects their right to contract initially for or license the reproduction of their copyrighted work in the form of phonorecords. Although the copyright statute then allows anyone to make a phonorecord of the work, a subsequent manufacturer must comply with the compulsory licensing provisions of the law which require a two cent payment to the copyright owner for each phonorecord manufactured. In addition, the present statute affords to the author or composer the exclusive right to perform the work publicly for profit. This means that a phonorecord of a copyrighted composition may neither be broadcast over commercial radio or television nor played for profit by suppliers of background music without the permission of the composition's owner. As a practical matter, the right to broadcast copyrighted works embodied in phonorecords is obtained through blanket licenses from organizations such as ASCAP. BMI, and SESAC, who protect the financial interests of their author and composer members.