able for distribution and transmission of educational television or radio programs to noncommercial educational broadcast stations;

"(F) to hire or accept the voluntary services of consultants, experts, advisory boards, and panels to aid the Corporation in carrying out the purposes of this section;

"(G) to encourage the creation or new noncommercial educational broadcast stations in order to enhance such service on a local, State, regional, and national basis;

"(H) conduct (directly or through grants or contracts) research, demonstrations, or training in matters related to noncommercial educational television or radio broadcasting.

"(3) To carry out the foregoing purposes and engage in the foregoing activities, the Corporation shall have the usual power conferred upon a nonprofit corporation by the District of Columbia Nonprofit Corporation Act, except that the Corporation may not own or operate any television or radio broadcast station, system, or network, community antenna television system, or interconnection or program production facility.

"(h) Nothing in the Communications Act of 1934, as amended, or in any other provision of law shall be construed to prevent United States communications common carriers from rendering free or reduced rate communications interconnection services for noncommercial educational television or radio services, subject to such rules and regulations as the Federal Communications Commission may prescribe.

MEMORANDUM

OCTOBER 15, 1975.

Re: Amendment to the Copyright Revision Bill (H.R. 2223) adding Section 118 to provide a compulsory license for non-dramatic works in public broadcasting programs

Text of amendment

The text of the public broadcasting compulsory license amendment as adopted by the Senate Judiciary Committee on October 7, 1975, is attached.

Background

Since the licensing of the first noncommercial educational radio and television stations in 1919 and 1952, respectively, noncommercial educational (public) broadcasting has been covered by the not-for-profit exemptions in Section 1 of the 1909 Copyright Law. It has therefore been public broadcasting's view that the current copyright law permits inclusion of non-dramatic, literary, musical and photographic works in educational television and radio programs without obtaining clearance from or making payments to copyright owners.

Since the beginning of revision proceedings, both houses of Congress have shown a preference for removing the general not-for-profit exemptions and substituting specific exceptions or other special treatment where, after careful analysis, they appear to be in the public interest. In adopting the Mathias Amendment, the Senate Judiciary Committee has filled a previous gap in the current Revision Bill for public broadcasting, and with public broadcasting's concurrence has provided for royalty payments to copyright holders in return for ready availability of non-dramatic works. Thus a reasonable compromise has been found between total exemption and total non-exemption-in a manner similar to the compulsory license already provided for phonograph records, cable television and jukeboxes.

The purpose or effect of the public broadcasting compulsory license

The serious dangers in complete non-exemption for public broadcasting are three-fold. First, much important copyright material would necessarily become unavailable by reason of unavoidable clearance difficulties. Second, burdensome administrative structures and prohibitive clearance expenses would be newly required. Third, excessive royalty rates could be imposed because of unequal bargaining strength.

The compulsory license is thus aimed not only at achieving reasonable royalty rates for public broadcasting, but more importantly at ensuring availability for program use and reducing the burdens and expense of obtaining access. It would avoid individual negotiations with copyright owners to secure permissions to use

individual works, and hence eliminate prolonged delays and substantial administrative costs. Without the amendment, the number of copyrighted works requiring clearance could easily be in the hundreds of thousands every year, straining especially the infinitesimal budgets of local stations. Even those scarce resources would undoubtedly not pass to the copyright holders, but would be dissipated in needless administrative procedures.

With the compulsory license, public television and radio stations would have access to nondramatic copyrighted materials without having to undertake the costs and delays of securing individual permissions. Standard fees for the inclusion of such materials could, in the absence of industry-wide private agreements, be set by the Copyright Royalty Tribunal already established to handle royalty fee revisions for other compulsory licenses. Thus, an independent panel would decide, where the major parties cannot agree, what fair payment should be made by public broadcasting for the use of copyrighted materials.

Basically, therefore, what the new section provides is similar to the compulsory licenses already in H.R. 2223 for CATV systems (section 111), record manufacturers (section 115) and jukebox operators (section 116). It differs from these others in two important respects, however. First, it calls for initial rate determination by the Copyright Royalty Tribunal. Second, it encourages the substitution of mutually acceptable arrangements for Royalty Tribunal determinations. In summary, the public broadcasting compulsory license provides ample possibility for the success of purely private arrangements—but where they cannot be accomplished, provides an objective mechanism for fair resolution of disagreements.

Need for amendment

Without the compulsory license, noncommercial educational broadcasting would be treated exactly the same as commercial broadcasting. But there are at least four critical differences between commercial and noncommercial broadcasting:

1. Public television and radio programs use more copyrighted material than their commercial counterparts. Situation comedies, quiz shows, sports programs do not require significant access to copyrighted materials. Extensive music performances, historical programs, children's programs, informational and cultural programs often unique to public broadcasting-do. With the increased use of copyrighted materials necessary for educational programming go increased clearance burdens.

2. Central to the philosophy of public broadcasting is repeated program use. One or two exposures are maximum in commercial broadcasting, and are almost unheard of in public television. With repeated use goes vastly greater clearance burdens, particularly with the use of music.

3. Most commercial stations do little, if any, local production which requires resort to copyrighted materials. Public broadcasting stations are built upon local production at large and small producing organizations throughout the country-not just in Hollywood and New York. With centralized production, commercial television can support large clearance staffs; with dispersed production, public broadcasting cannot.

4. To serve the functions that Congress and the American people intend for noncommercial broadcasting, its scarce resources should be spent on paying fair fees to the creators of copyrighted materials, not squandered in unnecessary clearance procedures.

Status of negotiations between public broadcasting and copyright holders

At the request of the Senate and House Subcommittees, meetings were held continuously since last February to attempt to work out a non-legislative solution to public broadcasting's clearance and royalty problems. For several reasons, such negotiations could not resolve those difficulties:

Music.—The music agencies originally proposed to jointly provide public broadcasting with blanket licenses for all copyrighted music at rates negotiated on a periodic basis, with rate disagreements to be subject to separate arbitration with each music organization. There is still no agreement, however, on the amount of initial fees and definite disagreement on the necessity for combined rather than separate arbitration. More importantly, at least one music agency has taken the firm position that any such joint agreement would require prior legislative relief from the antitrust laws.

Public broadcasting has indicated its unwillingness to abandon its efforts for a compulsory license now for a possible antitrust exemption later on. (What if the antitrust exemption is not ultimately adopted? If it is, what if mutually agreeable arrangements cannot ultimately be reached?) In the absence of a public broadcasting commitment, the music agencies have declined to go on with further negotiations on clearances and payments in the meantime and so discussions have now been discontinued.

To public broadcasting, compulsory licensing as adopted by the Senate Committee appears to be the most direct and least complicated way to handle the problem. Not only is it consistent with established mechanism in the copyright law, but it contains an automatic antitrust exemption. Moreover, private arrangements can at any time be substituted for Royalty Tribunal decisions by virtue of section (a)(2) of the Senate Committee's amendment.

Literary works. In the course of many meetings, the author/publisher organizations offered, as a substitute for the compulsory license, a so-called clearing office and recommended license form, maintaining that royalties, rights and access must remain the exclusive prerogative of authors and publishers. Public broadcasting has urged that a compulsory license would provide access to materials without damaging authors, would reduce administrative clearance costs over a clearing office for publishers, and would, in the end, permit increased royalties to be paid to authors.

Early on, the publishers organizations emphasized their inability to discuss rates or other essential licensing provisions because of serious antitrust questions. The authors' representatives also indicated that such matters must be left to the authors' sole discretion. In the fact of these deficiencies, public broadcasting declined to commit itself to abandonment of all compulsory license amendment efforts, but offered to continue discussions of possible clearance arrangements in the interim. Again, the authors and publishers refused this offerand so discussions have been discontinued for some time.

In the face of these antitrust and other problems, to public broadcasting only a compulsory license appears to offer a practical means of assured access and reasonable payment among the thousands of individual authors and publishers concerned.

Photographs. No discussions have been possible because there has been no copyright organization or other agency to deal with. No photographer or photographic agency has so far been involved sufficiently in recent copyright revision activities to participate in meetings or other discussions.

By the same token, it is virtually impossible to clear the use of photographs with individual photographers, who usually cannot be found in time to include the work. A compulsory license would permit use of pictures at fees acceptable to both public broadcasting and photographers.

CONCLUSION

A public broadcasting compulsory license is a fair and workable compromise between a previous complete exemption-unacceptable to copyright holdersand a total non-exemption—unacceptable to public broadcasting. Accordingly, the Senate Amendment provides the best opportunity for a reasonable and lasting resolution of this problem.

§ 118. Limitation on exclusive right: Public broadcasting of nondramatic literary and musical works, pictorial, graphic, and sculptural works

(a) Notwithstanding the provisions of section 106, it is not an infringement of copyright for a public broadcasting entity to broadcast any nondramatic literary or musical work, pictorial, graphic, or sculptural work under the provisions of this section.

(b) Public broadcasting of nondramatic literary and musical works, pictorial, graphic, and sculptural works by a public broadcasting entity shall be subject to compulsory licensing upon compliance with the requirements of this section. The public broadcasting entity shall

(1) record in the Copyright Office, at intervals and in accordance with requirements prescribed by the Register of Copyrights, a notice stating its identity, address and intention to obtain a license under this section, and (2) deposit with the Register of Copyrights, at intervals and in accordance with requirements prescribed by the Register, a statement of account

and the total royalty fees for the period covered by the statement based on the royalty rates provided for in subsection (c).

(c) Reasonable royalty fees for public television and radio broadcasts by public broadcasting entities shall be established by the Copyright Royalty Tribunal. Such royalty fees may be calculated on a per-use, per-program, prorated or annual basis as the Copyright Royalty Tribunal finds appropriate with respect to the type of the copyrighted work and the nature of broadcast use, and may be changed or supplemented from time to time by the Copyright Royalty Tribunal. A particular or general license agreement between one or more public broadcasting entities and one or more copyright owners prior or subsequent to determination of applicable rates determined by the Copyright Royalty Tribunal may be substituted for a compulsory license provided in this section.

(d) The royalty fees deposited with the Register of Copyrights under this section shall be distributed in accordance with the following procedures:

(1) During the month of July of each year, every person claiming to be entitled to compulsory license fees for public broadcasting during the preceding twelve-month period shall file a claim with the Register of Copyrights in accordance with the requirements that the Register shall prescribe by regulation. Notwithstanding any provision of the antitrust laws (as defined in section 1 of the Act of October 15, 1914, 38 Stat. 730; 15 U.S.C. 12, and any amendments of such laws), for purposes of this paragraph any claimants may agree among themselves as to the proportionate division of compulsory license fees among them, may lump their claims together, and may designate a common agent to receive payments on their behalf.

(2) On the first day of August of each year, the Register of Copyrights shall determine whether there exists a controversy regarding the statement of account or distribution of royalty fees. If the Register determines that no such controversy exists, the Register shall, after deducting reasonable administrative costs under this section, distribute such fees to the copyright owners entitled, or to their designated agents. If the Register finds the existence of a controversy, the Register shall certify to such effect and proceed to constitute a panel of the Copyright Royalty Tribunal in accordance with section 803. In such cases, the reasonable administrative costs of the Register under this section shall be deducted prior to distribution of the royalty fees by the Tribunal.

(3) During the pendency of any proceeding under this subsection, the Register of Copyrights or the Copyright Royalty Tribunal shall withhold from distribution, an amount sufficient to satisfy all claims with respect to which a controversy exists, but shall have discretion to proceed to distribute any amounts that are not in controversy.

(e) The compulsory license provided in this section shall not apply to unpublished nondramatic literary or musical works or to dramatization rights for nondramatic literary or musical works.

(f) As used in this section, the term

(1) "public broadcasting" means production, acquisition, duplication, interconnection, distribution, and transmission of educational television or radio programs (as defined in section 397 of the Federal Communications Act of 1934 (47 U.S.C. 397)) by or for noncommercial educational broadcast stations (as defined in section 397 of the Federal Communications Act of 1934 (47 U.S.C. 397)), except as may be otherwise exempted under sections 110(2), 111(a)(2) and (4), 112(b), and 114(a); and (2) "public broadcasting entity" means any licensee or permittee of a noncommercial educational broadcast station, or any nonprofit institution or organization engaged in public broadcasting.

§ 801. Copyright Royalty Tribunal: Establishment and purpose

(a) There is hereby created in the Library of Congress a Copyright Royalty Tribunal.

(b) Subject to the provisions of this chapter, the purpose of the Tribunal shall be: (1) to make determinations concerning the adjustment of the copyright royalty rates [specified by] as provided in sections 111, [and] 115, 116, and 118 so as to assure that such rates are reasonable and in the event that the Tribunal shall determine that the statutory [royalty] rate, or a rate previously established by the Tribunal, or the [revenue] basis in respect to such rates, [section 111,] does not provide a reasonable royalty fee for the basic service of providing secondary transmissions of the primary broadcast transmitter or is otherwise unreasonable, the Tribunal may change the royalty rate or the [revenue] basis on which the royalty fee shall be assessed or both so as to assure reasonable royalty fee; and (2) to determine in certain circumstances the distribution of the royalty fees deposited with the Register of Copyrights under sections 111, [114 and] 116, and 118.

§ 802. Petitions for the adjustment of royalty rates

(a) On [July 1, 1975,] January 1, 1980, the Register of Copyrights shall cause to be published in the Federal Register notice of the commencement of proceedings [for the review of the royalty rates specified by sections 111, 114, and 115,] with respect to the royalty rates as provided in sections 111, 115, 116, and 118. (b) During the calendar year [1982,] 1990, and in each subsequent [fifth] tenth calendar year, any owner or user of a copyrighted work whose royalty rates are specified by this title, or by a rate established by the Tribunal, may file a petition with the Register of Copyrights declaring that the petitioner requests an adjustment of the rate. 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, he shall cause notice of his decision to be published in the Federal Register.

§ 803. Membership of the Tribunal

(a) In accordance with Section 802, or upon certifying the existence of a controversy concerning the distribution of royalty fees deposited pursuant to section 111, [114, 116, and 118, the Register shall request the American Arbitration Association or any similar successor organization to furnish a list of three members of said Association. The Register shall communicate the names together with such information as may be appropriate to all parties of interest. Any such party within twenty days from the date said communication is sent may submit to the Register written objections to any or all of the proposed names. If no such objections are received, or if the Register determines that said objections are not well founded, he shall certify the appointment of the three designated individuals to constitute a panel of the Tribunal for the consideration of the specified rate or royalty distribution. Such panel shall function as the Tribunal established in section 801. If the Register determines that the objections to the designation of one or more of the proposed individuals are well founded, the Register shall request the American Arbitration Association or any similar successor organization to propose the necessary number of substitute individuals. Upon receiving such additional names the Register shall constitute the panel. The Register shall designate one member of the panel as Chairman.

(b) If any member of a panel becomes unable to perform his duties, the Register, after consultation with the parties, may provide for the selection of a successor in the manner prescribed in subsection (a).

§ 804. Procedures of the Tribunal

(a) The Tribunal shall fix a time and place for its proceedings and shall cause notice to be given to the parties.

(b) Any organization or person entitled to participate in the proceedings may appear directly or be represented by counsel.

(c) Except as otherwise provided by law, the Tribunal shall determine its own procedure. For the purpose of carrying out the provisions of this chapter, the Tribunal may hold hearings, administer oaths, and require, by subpoena or otherwise, the attendance and testimony of witnesses and the production of documents.

(d) Every final decision of the Tribunal shall be in writing and shall state the reasons therefor.