A similar line of argument is used to justify the use of the Tribunal in the adjustment of statutory rates. The contention is that Congress neither has the time nor the expertise to deal with disputes over royalty rates, and yet it is unfair to proprietors and users alike to freeze royalty rates at arbitrary levels for indefinite periods. A form of "compulsory arbitration," it is argued, will be the most fair and efficient method of fee adjustment. One other factor is the apparent success of the "tribunal concept" in reviewing royalty rates in other nations. This system has been used in a number of countries to administer various sorts of performance royalties for many years.

One theoretical argument against the Tribunal is based upon opposition to compulsory licensing systems in general. Under compulsory licensing the authorproprietor has no right to control use of his intellectual property, which right has traditionally been considered equal, if not superior, to the right to receive compensation for uses. Compulsory licensing systems accommodate only the pecuniary right. So far the compulsory licensing systems in the bill have been established in areas where the author-proprietor had no rights to begin with, but concern exists that the Tribunal concept may grow into a device for substituting compulsory licensing systems for the concept of copyright as an "exclusive right" in the Constitutional sense, and for establishing a degree of government control over authorship.

Opposition to the authority of the Tribunal also comes from certain user groups, who argue that statutory royalty rates will inevitably go up whenever they are reviewed. It is argued that Congress should accept its responsibilities and should not delegate them to an unpredictable arbitration panel. Objection is also made by certain users to the short period provided for review of the royalty rates. Finally, some opponents rather cynically contend that the Tribunal will not be able to reach fair determinations because of the strong pressures large, well-organized special interests will exert.

ANALYSIS OF CHAPTER 8

Section 801: Authority of the tribunal

Section 801 would establish the Tribunal as part of the Library of Congress. It would be empowered to adjust certain royalty fees established in other portions of the bill "to assure that such rates are reasonable," to change the rate or revenue basis if necessary, and to determine the distribution of royalty fees in cases of dispute.

Section 802: Petitions for adjustment of royalty rates

Periodic review.-Section 802 (a) provides that on July 1, 1977 the Register of Copyright shall commence proceedings for a review of the rates of royalty payment specified in sections 111 and 115. During calendar year 1984, and in each subsequent fifth calendar year any owner or user of a copyrighted work whose royalty rates are initially specified by sections 111 and 115, or as previously adjusted by the Tribunal, may file a petition with the Register of Copyrights requesting an adjustment of the rate.

Decision to empanel Tribunal.--The Register shall make a determination as to whether the applicant has a significant interest in the royalty rate in which an adjustment is requested. If the Register determines that the petitioner has a significant interest, notice of this decision will be published in the Federal Register and the Register will proceed as provided in section 803 for the constitution of a panel of the Tribunal to consider an adjustment of the appropriate statutory rate.

Section 803: Membership of the Tribunal

List of arbitrators.-In accordance with section 802, or upon certifying the existence of a controversy concerning the distribution of royalty fees, the Register shall request the American Arbitration Association to furnish a list of three members of the Association as potential arbitrators.

Appointment of Arbitrators.-The Register shall communicate the proposed names to all known parties of interest. The parties may submit written objections to any or all of the proposed names. If no objections are received, or if the Register determines that the objections are not well founded, he shall certify the appointment of the three arbitrators who would constitute a panel of the Tribunal for the consideration of the specified rate or royalty distribution. If the Register decides that the objections to the designation of any of the proposed

individuals are well founded, he shall request the American Arbitration Association to propose the necessary number of substitute individuals.

Section 804: Procedures of the Tribunal

Under section 804 the procedures of the Tribunal are broadly defined. It would generally be empowered to fix the time and place for its proceedings and to establish its own procedure. A panel of the Tribunal could hold hearings, administer oaths, and require, by subpoena or otherwise, the attendance and testimony of witnesses and the production of documents. It is the intent of this legislation that the Tribunal complete each proceeding within one year from the certification of a panel.

Sections 805 and 806: Expenditures; reports

Section 805 provides that, in proceedings for the distribution of royalty fees, the compensation of the members of the Tribunal and other expenses shall be deducted prior to the distribution of the funds. However, in proceedings for the adjustment of royalty rates there is authorization for the appropriation of funds necessary for the compensation of the members and the expenses of the Tribunal. Section 806 requires the Tribunal, immediately upon making a rate determination, to report its decision and reasons to the appropriate Congressional officers. Section 807: Effective date of royalty adjustment and congressional review

No recommendation of the Tribunal for adjustment of a statutory royalty rate shall become effective until Congress has had the opportunity to determine whether the proposed adjustment should be disapproved. Section 807 establishes a procedure, modeled on the Reorganization Act, whereby within ninety calendar days of continuous session either House of Congress may adopt a resolution stating that the recommended royalty adjustment is not favored. If such a resolution is adopted by either House of Congress the adjustment shall not become effective. If neither House adopts a resolution of disapproval, the rate adjustment shall take effect after the expiration of a specified period of time. Sections 808 and 809: Effective date of royalty distribution; judicial review

Section 808 provides that a final determination of the Tribunal concerning the distribution of royalty fees pursuant to sections 111 and 116 becomes effective as to a particular claimant 30 days following the communication to the claimant of written notice of the determination, unless an application for judicial review has been filed and notice of the application has been served upon the Register of Copyrights.

Section 809 is modeled on the Federal Arbitration Act and provides that the determinations of the Tribunal shall not be subject to review in any Federal court unless: (1) the determination was procured by corruption, fraud, or undue means; (2) there was evident partiality or corruption in any member of the Tribunal; or (3) any member of the Tribunal was guilty of any misconduct by which the rights of any party were prejudiced.

CHAPTERS 5, 7, AND TRANSITIONAL AND SUPPLEMENTARY PROVISIONS

MISCELLANEOUS PROVISIONS

Only one major issue has been raised in connection with provisions of Chapter 5 (Copyright Infringement and Remedies), Chapter 7 (Copyright Office), and Sections 102 through 113 (Transitional and Supplementary Provisions), and this is a part of the entire problem of cable television. Subsection (c) of section 501 provides that "a television broadcast station holding a copyright or other license to transmit or perform the same version of that work" is to be treated, for purposes of maintaining an infringement suit in a case of CATV retransmission, as the copyright owner if the infringing transmission "occurs within its local service area." Cable operators have challenged this provision, and their arguments should be considered in connection with the other problems raised in connection with section 111.

The fees for registrations and other Copyright Office services are provided in section 708, and remain at the level set in the 1965 bill and established by special statute in that year. It is for consideration as to whether changes in these fee levels, and in other of the provisions in the fee section, should be reexamined with, or in advance of, the general revision bill.

APPENDIX 3

REPORT OF WORKING GROUP OF CONFERENCE ON RESOLUTION OF COPYRIGHT ISSUES (DEALING WITH LIBRARY PHOTOCOPYNG)

To: Conference on Resolution of Copyright Issues.
From: Working Group.

APRIL 17, 1975.

Subject: Activities of Working Group since Feb. 5, 1975-Actions of Working Group & Its Committees-Recommendations.

§ 1. Introduction.-Efforts between Nov. 1974 and Jan. 1975 to solve the problem of achieving meaningful consensus concerning compensation by libraries to copyright proprietors for photocopying of copyrighted periodical and journal articles made by librarians for their patrons had made no progress through an approach to a definition of systematic copying or through discussion of examples. This led to the summary report and recommendation by the Working Group (WG) to the Conference at its Feb. 5, 1975 meeting. The Conference adopted the Recommendation of the Working Group:

“a. That the Conference investigate the development of workable clearance and licensing procedures, or other procedures, applicable to library photocopying of periodical and journal articles, and

"b. That the Conference direct the Working Group, or a reconstituted Working Group, to proceed with such investigation as rapidly as possible and, in this connection, authorize the Working Group to utilize such expertise as is available from organizations represented at the Conference or such other informational or technical resources at its command."

In making this recommendation, the members of the Working Group considered "that it was presently impossible to achieve any meaningful consensus concerning the existence of any obligation of libraries to compensate copyright proprietors for the photocopies of copyrighted periodical and journal articles made by libraries for their patrons”, but that discussions could proceed with “all parties reserving their respective rights and positions as to the obligation of libraries to compensate copyright proprietors for photocopies..."

Therefore, the WG has operated since Feb. 5 in response to the above action of the Conference. The Working Group has met 3 times. In addition, there were 4 meetings of committees appointed by the WG; committee members included persons as technical advisers who were not members of the WG or of the Conference. Nine Agenda Documents were prepared by the committees and by the library component and publisher component of the WG.

Because an assignment to one committee was often interrelated with other assignments, it is difficult to present a relatively simple list of actions of the WG. In some cases, the WG amended portions of a document without a final action by the WG. Therefore copies of the Agenda Documents are appended to this report so that Conference members can see the rationale presented in each document.

§2. Summary

§2.1 Terminology.-Because the words, system and systematic, have several possible interpretations, the WG agreed to eliminate the use of these two words. The word, mechanism, has been used in a number of instances (e.g. in reference to portions of AgenDoc 5) so as to avoid the use of the word, system, in such contexts.

§ 2.2 Definition of Serials (Periodicals).—The WG accepted a definition of serials prepared by a committee for purposes of defining a serial; and that at a later date a determination would be made whether any payment mechanisms will apply to all serials or only to certain categories of serials:

Serial. A publication issued in successive parts bearing numerical or chronological designations, which is intended to be continued indefinitely and which is identified by an ISSN. Serials include periodicals, newspapers, and the journals, memoirs, proceedings, transactions, etc. of societies. Serials are subject to subscription prices paid in advance. (This eliminates publications that appear annually or less frequently.) (See AgenDoc 7)

§ 2.3 Variable Pricing vs. Transaction or Usage Charges.-A list of advantages and disadvantages for both approaches were prepared by a committee and considered by the WG. All lists include items that are advantages and disadvantages to publishers and/or libraries. The definitions are:

Variable pricing. This should refer to any system under which separate prices may be established by the publisher for each serial or periodical for various classes of customer. The price set for a particular class of customer could be

based on the subscriber's status or could relate to the usage of the material, such as for a library not carrying out photocopying activities, a library doing modest photocopying or a library doing a large amount of photocopying.

Transaction or usage charges. This should refer to any method by which royalties or payments are directly related to individual instances of photocopying or duplicating material by any means. Such royalties or payments will be according to a specified charge per unit. (These royalties or payments may vary from publication to publication and would be established by the publisher; the royalty charges established for the copying of a particular item or unit would be the same for all libraries.) The transaction or usage charges are independent of any subscription price charged by a publisher.

The lists were compiled with awareness of the absence of certain necessary information and the need for some study of the impact of both systems on the future operations of libraries, on the business of publishers, and on the dissemination of knowledge. (See AgenDoc 6)

§ 2.4 Mechanism for Royalty Payments, Data Collection and Related Criteria.-A document, "Mechanisms and Criteria for Royalty Payments and/or Clearance and Licensing Procedures," was submitted by the Library Component. A document, "Elements in Photocopy Transactions," was submitted by the Publisher Component. A study of the two documents by the WG was assisted by a committee and resulted in the development of 4 major points by the WG (AgenDocs 8, 3 & 5):

Point 1.-Any mechanism must provide a method for the user to determine whether the contemplated copying falls within the inclusive dates of a stated fee period.

Point 2.-A system based exclusively on duplicate copies of the first page of the copied journal article in "hard copy" does not provide a royalty payment mechanism for copying accomplished in microfilm, telefax, video, etc.

Point 3.-It is recognized that there are costs to the library intrinsic to a royalty payment mechanism. If these costs can be clearly defined, it must be determined how the costs shall be borne.

Point 4.-The mechanism was evaluated for interlibrary copy transactions. No evaluation was made of either the criteria or the mechanism for other than interlibrary copy transactions.

§ 2.5 Proposed Statistical Study and Test of a Payment Mechanism.-That the Conference recommend to NCLIS that NCLIS assume responsibility for financing and co-sponsoring with the Conference a study such as suggested in AgenDoc 9 with an understanding that such a study would include some testing of a payment mechanism.

§3 Queries to Conference.-It is appropriate for the Working Group to ask the Conference:

(a) If the present Working Group should continue or if the Conference wishes to designate other members; and

(b) To give guidance to the Working Group regarding items not yet reSolved; and

(c) To define other items to be investigated. Prepared by:

RICHARD L. KENYON.
FRANK E. MCKENNA.

AGENDA DOCUMENTS APPENDED TO APR. 17, 1975, REPORT OF WORKING GROUP

Actions of the Working Group. Because the WG treated various documents and their recommendations in several different ways, some of the WG actions are reported here in addition to those reports that were accepted (See § 2.2 & 2.5).

Adopted Without Vote.

AgenDoc 1.-Proposals for Procedures at Meetings of the Working Group (WG3/4/75).

RECEIVED A REPORT OR RECOMMENDATION

AgenDoc 6.-Received the document after amending Disadvantage 7 of Variable Pricing to read:

(7) There is no necessary relation between the subscription price and the amount of photocopying. Therefore a single photocopying subscription price causes libraries preparing few photocopies to subsidize those libraries preparing many photocopies. Some publishers may be undercompensated and other publishers may be overcompensated.

and after adding Disadvantage 10 to Variable Pricing:

(10) The publisher may establish prices that are so high so as to restrict usage of material.

and after adding Disadvantage 9 to Transaction or Usage Charges:

(9) The publisher may establish prices that are so high so as to restrict usage of material.

AgenDoc 8.-Received the document as amended by the Working Group, and noted the 2 Appendixes without prejudice. (Note: This document refers to AgenDocs 3 & 5.)

After replacing the text of Point 1 with:

Point 1.-Any mechanism must provide a method for the user to determine whether the contemplated copying falls within the inclusive dates of a stated fee period.

and replacing the text of Point 3 with :

Point 3.-It is recognized that there are costs to the library intrinsic to a royalty payment mechanism. If these costs can be clearly defined, it must be determined how the costs shall be borne.

and eliminating Points 4 & 5

and renumbering Point 6 as Point 4 and replacing that text with:

Point 4.-The mechanism was evaluated for interlibrary copy transactions. No evaluation was made of either the criteria or the mechanism for other than interlibrary copy transactions.

and amending Appendix A, Criterion 4 (c) to read:

(4c) Definition of inclusive period needs further work (see Committee Point 1). It was noted that copyright constitutes a bundle of rights and that establishing a specified fee period for single copy copying does not mean publisher gives up other rights in copyright.

and amending Appendix B, Items I, IIB & III to read:

I. The title of the Flow Charts at p. 2 & 4 and elsewhere should read: "Elements in Photocopy Transactions."

IIB. An overlay of the ILL or copy request form which would provide data elements 7 and 10 as well as others. This was the publishers' preferred method, but it would be expected that data element 1 would, in many cases, be obliterated so as to protect the privacy of the user. This method would assure that each document contains reference to data elements 7 & 10. III. An additional data element 12 providing the "inclusive date" for fee payment (see committee Point 1). This, like data elements 4, 8 and 11, would be preprinted on the first page of each article by the publisher. Thus, the mechanism is understood to call for the publisher to preprint data elements 4, 8, 11 and 12 on the first page of each article to signify its participation in the mechanism. SPECIAL LIBRARIES ASSOCIATION, New York, February 19, 1976.

To: Working Group, Conference on Resolution of Copyright Issues.
From: F. E. McKenna.

Subject: Proposals for Procedures at Meetings of the Working Group. Because I criticized the apparent lack of procedures at past meetings, I am presenting the following for agreement or modification to serve as a guide for future meetings.

(1) That it be understood that no specific action by any one individual or group of individuals at a meeting of the Working Group be binding on his constituents; that such a statement be made at the beginning of each meeting and appear in the Minutes of each meeting (instead of repetitious statements to this effect during the course of each meeting).