entered into, between a cable system and a television broadcast station in the area in which the cable system is located, or a network with which such station is affiliated.

(4) As used in this subsection, the term "videotape", and each of its variant forms, means the reproduction of the images and sounds of a program or programs broadcast by a television broadcast station licensed by the Federal Commmunications Commission, regardless of the nature of the material objects, such as tapes or motion pictures, in which the reproduction is embodied.

On page 17, line 19, strike out "(e)" and insert in lieu thereof “(f)”.

On page 17, line 29, immediately after "or", insert a comma and the following: “in accordance with subsection (e),”.

Mr. KASTENMEIER. At this time, the Chair would like to call Mr. Edward Cooper, vice president, Motion Picture Association of America, accompanied by Lawrence Monaco, vice president.

TESTIMONY OF EDWARD COOPER, VICE PRESIDENT, MOTION PICTURE ASSOCIATION OF AMERICA, ACCOMPANIED BY LAWRENCE MONACO, VICE PRESIDENT

Mr. COOPER. Thank you, Mr. Chairman. I am Edward Cooper, vice president of the Motion Picture Association, and with me is Mr. Lawrence Monaco our legislative counsel.

We are substituting for Mr. Valenti, the president of the association, who has testified here before. He is in California for a series of conferences of utmost importance to the motion picture industry. He has asked me personally to apologize for his inability to be here, and give his regret that he cannot testify in person. Before you is a copy of his statement, to which is attached a copy of proposed amendments to the bill, H.R. 2223, and a detailed explanation of those amendments. I will

not

Mr. KASTEN MEIER. Without objection, that statement

Mr. COOPER. I was just about to ask that.

Mr. KASTEN MEIER [continuing]. And the proposed amendments will be inserted in the record.

[The prepared statement of Jack Valenti follows:]

STATEMENT OF JACK VALENTI, PRESIDENT OF THE MOTION PICTURE ASSOCIATION OF AMERICA, INC., AND THE ASSOCIATION OF MOTION PICTURE AND TELEVISION PRODUCERS, INC., ON NONSIMULTANEOUS TRANSMISSIONS BY OFFSHORE CABLE SYSTEMS

My name is Jack Valenti. I am President of the Motion Picture Association of America, a trade association whose members are the major American producers and distributors of copyrighted motion pictures. We are, therefore, the principal holders of the copyrighted program material seen on television and cable.

This statement also represents the view of and is filed in behalf of the Associa tion of Motion Picture and Television Producers of Hollywood, California, whose membership comprises some 70 companies, large and small, employing more than 60.000 persons, who produce copyrighted motion pictures for theatrical exhibition and television viewing, and television series programs. I am also privileged to speak for the Committee of Copyright Owners, an ad hoc committee of independent producers and distributors of filmed and taped copyrighted television programs. This committee was formed to coordinate its members' efforts in resolving copyright-cable television legislative problems and the regulatory issues that arise from time to time on the importation of television signals by cable systems.

I appreciate the opportunity to again testify on that part of Section 111 of H.R. 2223 and on H.R. 4965, the Won Pat Bill, both of which would permit cable systems to tape television programs in the continental United States and exhibit them to cable subscribers in offshore United States possessions.

The Motion Picture Association, the Association of Motion Picture and Television Producers, and the Committee of Copyright Owners are all opposed to the provision in Section 111 in its present form and to the Won Pat Bill as I pointed out in my statement to this Subcommittee on June 12, 1975.

At that time I explained that the proposal was first made in the Senate by Senator Stevens to meet a problem in Alaska and thus became known as the Stevens Amendment. It will be found on page 17, beginning on line 29 of the Bill. The Alaska problem was solved some months ago and no longer exists. As originally drafted, and as now incorporated in H.R. 2223, the so-called Stevens Amendment, and the Won Pat Bill, seek to re-define a "secondary transmission" by asserting that a non-simultaneous transmission shall be deemed to be a simultaneous transmission for certain offshore purposes.

However, throughout congressional consideration of the copyright bill, it has been my policy to attempt to conciliate differences, particularly when special circumstances are involved. That is why, when Mr. Lee Holmes, owner of the Guam Cable TV System and his counsel, Richard Brown, asked me to discuss the Stevens Amendment, I was pleased to do so.

My conferences with Mr. Holmes and Mr. Brown convinced me that as a matter of public interest the people who live on Guam deserved special consideration. Guam is more than 5,000 miles from the Western shore of the continental United States. It has only one commercial television station that operates for a limited number of hours daily. It is apparent that the people of Guam would be denied a fair share of television programming if the cable system was unable to tape programs on the mainland and fly them in.

Moreover, Mr. Holmes spoke of his intention to install and operate systems on the Islands of Tinian and Saipan where the United States Government is expected to create major military installations with large numbers of American service families. Mr. Holmes or other operators of those systems or systems elsewhere in the Marianas and the Trust Territory of the Pacific Islands would be able to use the program tapes supplied to Guam.

It seemed to me, therefore, that in the public interest we should make every effort to work out language acceptable to the parties and which we could recommend to this Subcommittee for its favorable consideration. The copyright owners and the Guam cable system have now reached agreement on such language. It modifies the provisions of Section 111 and makes the Won Pat bill unnecessary. The modifying language we are recommending to the Subcommittee would permit cable systems in offshore areas covered by the so-called Stevens Amendment to tape television programs and show those taped programs to their cable subscribers without infringing any copyright, if the cable system satisfies the requirements stated in the modifying language.

As the Chairman and the Members of the Subcommittee are aware, letters affirming the agreement between the copyright holders and the Guam system have been sent the Committee by Mr. Brown in behalf of Mr. Holmes, and by myself in behalf of the two Associations and the Committee of Copyright Owners. Mr. Brown additionally has written the Delegate from Guam pointing out that his bill is no longer necessary. May I request, Mr. Chairman, that the letters be included in the record of these hearings.

We believe the proposal is in the public interest because it makes allowance for the special circumstances that affect United States offshore areas covered by the so-called Stevens Amendment now in H.R. 2223. For these reasons, we respectfully request that the Subcommittee adopt the recommended language. I am attaching at the end of my statement the text of the proposed Amendments and a detailed explanation of them.

PROPOSED AMENDMENTS TO H.R. 2223

On page 17, between lines 18 and 19, insert the following:

(e) Nonsimultaneous Secondary Transmissions By Cable Systems.(1) Notwithstanding those provisions of the second paragraph of subsection (f) relating to nonsimultaneous secondary transmissions by a cable system, any such transmissions are actionable as an act of infringement under section 501, and are fully subject to the remedies provided by sections 502 through 506, unless:

(A) the program on the videotape is transmitted no more than one time to the cable system's subscribers; and

(B) the copyrighted program, episode, or motion picture videotaped, including the commercials contained within such program, episode, or picture, is transmitted without deletion or editing; and

(C) an owner or officer of the cable system (i) prevents the duplication of the videotape while in the possession of the system, (ii) prevents duplication while in the possession of the facility making the videotape for the system, (iii) takes adequate precautions to prevent duplication while the tape is being transported, and (iv) subject to paragraph (2), erases or destroys, or causes the erasure or destruction of, the videotape; and

(D) within 45 days after the end of each calendar quarter, an owner or officer of the cable system executes an affidavit attesting (i) to the steps and precautions taken to prevent duplication of the videotape, and (ii) subject to paragraph (2), to the erasure or destruction of all videotapes made or used during such quarter; and

(E) such owner or officer places or causes such affidavit, and affidavits received pursuant to paragraph (2) (C), to be placed in a file, open to public inspection, at such system's main office in the community where the transmission is made or in the nearest community where such system maintains an office; and

(F) the nonsimultaneous transmission is one that the cable system would be authorized to transmit under the rules, regulations and authorizations of the Federal Communications Commission in effect at the time of the nonsimultaneous transmission if the transmission had been made simultaneously, except that this clause shall not apply to inadvertent or accidental transmissions.

(2) If a cable system transfers to any person a videotape of a program nonsimultaneously transmitted by it, such transfer is actionable as an act of infringement under section 501, and is fully subject to the remedies provided by sections 502 through 506, except that any cable system in Guam, the Northern Mariana Islands, or the Trust Territory of the Pacific Islands may transfer, pursuant to a written, nonprofit contract providing for the equitable sharing of the costs of such videotape and its transfer, a videotape nonsimultaneously transmitted by it in accordance with paragraph (1), to another cable system in Guam, the Northern Mariana Islands, or the Trust Territory of the Pacific Islands, if:

(A) each such contract is available for public inspection in the offices of the cable systems involved, and a copy of such contract is filed, within 30 days after such contract is entered into, with the Copyright Office in the Library of Congress (which Office shall make each such contract available for public inspection); and (B) the cable system to which the videotape is transferred complies with paragraph (1)(A), (B) (i), (iii) and (iv), and (C) through (F); and

(C) such system provides a copy of the affidavit required to be made in accordance with paragraph (1) (D) to each cable system making a previous nonsimultaneous transmission of the same videotape.

(3) This subsection shall not be construed to supersede the exclusivity protection provisions of any existing agreement, or any such agreement hereafter entered into, between a cable system and a television broadcast station in the area in which the cable system is located, or a network with which such station is affiliated.

(4) As used in this subsection, the term "videotape", and each of its variant forms, means the reproduction of the images and sounds of a program or programs broadcast by a television broadcast station licensed by the Federal Communications Commission, regardless of the nature of the material objects, such as tapes or motion pictures, in which the reproduction is embodied. On page 17, line 19. strike out "(e)" and insert in lieu thereof “(f)”.

On page 17, line 29, immediately after “or”, insert a comma and the following: "in accordance with subsection (e),".

EXPLANATION OF PROPOSED MODIFYING LANGUAGE

The proposed modifying language would permit a cable system in offshore areas covered by the Stevens Amendment to tape television programs and show the programs to its subscribers, without infringing any copyright, if the cable system satisfies all of the following requirements:

(1) The system shows the taped program only one time.

(2) The copyrighted program, whether it is a motion picture, television series, a documentary, or any other television program, must be taped and shown by the cable system without any deletion or editing, including no deletion of commercials with one exception: The system is authorized to delete commercials prior to the beginning of, and after the end of, the motion picture, documentary, or other program being taped.

(3) The cable system is required to prevent duplication of the tape while the tape is in the system's possession and while it is in the possession of the facility making the tape. The cable system must also take adequate precautions to see that there is no duplication during any time the tape is being transported from one place to another. After showing the tape one time, the system shall destroy or erase the tape, unless the tape is being transferred to another cable system in accordance with the proposed language.

(4) Every 3 months the cable system is required to execute an affidavit on the measures it has taken during the preceding 3-month period to prevent duplication. Each affidavit must be made available for public inspection by the cable system.

(5) The cable system may tape and show its subscribers only those television programs which the system is permitted to show live under FCC rules (but cannot do so because of geographical distance). If, however, the system inadvertently or accidentally shows a program that it would not have been permitted to show live, no copyright infringement occurs.

A cable system is prohibited from transferring any of its videotapes to another cable system for showing to the other system's subscribers unless that other system is located in Guam, the Northern Marianas, or the Trust Territory of the Pacific Islands, and unless certain additional requirements are met.

The first condition is that the transfer may be made only under a nonprofit contract providing for the equitable sharing of the costs of the tape among the authorized cable systems using the tape. These costs include the purchase price of the blank tape, the processing costs, and the transportation and handling costs in transferring the tape from the taping facility to the first cable system and thereafter to each system. The contract must be filed in the office of each cable system and with the Copyright Office in the Library of Congress. Each system to which the videotape is transferred must comply with the same requirements that bind the cable system which originally showed the tape. However, the subsequent system users are not covered by the prohibition against the duplication at the taping facility. In addition, each cable system must furnish a copy of its affidavit to every cable system which previously had shown the same tape. The last provision of the proposed, modifying language makes clear that any existing or future contract between a cable system and a television station or network that provides for exclusivity or nonduplication protection may not be superseded by the amendment. For example, assume cable system X tapes the programs of a Los Angeles television station and shows them in Guam. The Guam television station shows many of the same programs that the Los Angeles station does. The Guam television station and cable system sign a contract that provides that the cable system will not show the Los Angeles-taped programs for a specified period of time immediately following the showing in Los Angeles. If the Guam television station has not shown the program after the end of the period, the Guam Cable System may then show the program unless the Federal Communications Commission has adopted a contrary rule.

Mr. COOPER. Thank you. I will not take the time to read Mr. Valenti's statement, because I think your time is precious. We don't really need it. I hope the committee will have an opportunity to read Mr. Valenti's

statement.

The members of the committee have received the letters the chairman just referred to from both Mr. Valenti and Mr. Holmes, explaining that an agreement had been worked out on legislative changes in the bill between the copyright holders and Mr. Holmes on behalf of the cable system. That agreement is embraced in the proposal that has been submitted to the committee. As the committee knows and as Mr. Valenti testified here last June, he made clear the sharp concern of copyright holders with the language in the bill, 2223, on page 17, beginning line 29, which has commonly been referred to as the "Stevens amendment" because it came over from the Senate bill. That provision. would have permitted cable systems to tape television programs in the continental United States and exhibit them to subscribers in offshore possessions of the United States. Our concern, then, was that this pro

vision failed to take into consideration the lawful rights and interests of copyrighted owners in their copyrighted copies. It did so by redefining a secondary transmission, so that what was actually not a nonsimultaneous transmission could be held to be a simultaneous transmission in these offshore areas.

We were further disturbed because the provision lent itself to the misuse of taped material through piracy of the programs. Piracy of films currently costs our industry many millions of dollars annually.

The Won Pat bills, H.R. 4965 and 9301, have the same deficiency by permitting widespread taping, but they closed, fortunately, some of the piracy loopholes, a proposal which we strongly endorse, and which has been incorporated into the amendments we respect fully propose to the committee.

Moreover, there was another factor. Guam presented an unusual situation because of its distant geographical location, coupled with the inability Mr. Holmes referred to of the cable system to obtain adequate local programing. As Mr. Valenti noted in his statement before you, and as Mr. Holmes has pointed out, a series of meetings was held with Mr. Holmes and his counsel and a good faith effort was made to seek a legislative compromise that would meet the current situation in Guam and in the adjacent islands and in the Pacific Trust Territories.

In short, the Won Pat bills formed the basis for those provisions in the agreement that protect the integrity of the tapes in a manner satisfactory to the copyright holders.

On our part, we have made special concessions on the use and the handling of tapes for Guam and the far Pacific. We respectfully ask the committee's favorable consideration of what the parties have agreed upon. But clearly, we think that what has been agreed upon is greatly in the public interest.

I thank you.

Mr. KASTEN MEIER. Thank you very much, Mr. Cooper, for presenting Mr. Valenti's statement to us and a restatement of his position and that of your association. Needless to say, when a matter can be reconciled, such as in this case, the committee is very happy indeed.

The committee will, of course, examine it, because we do not need to be reminded that we represent more than merely two parties to a potential dispute, but I would assume that what you have agreed to can be accepted as being in the public interest?

Mr. COOPER. We certainly believe so, Mr. Chairman.

Mr. KASTENMEIER. I would like to yield to the gentleman from

Illinois.

Mr. RAILSBACK. I want to thank you for your testimony this morning, and also just say that I want personally to welcome the Holmes, whom I met while visiting Guam. I was with the Eilberg subcommittee and we received tremendous hospitality from the Governor and all of the Guamanians and also we had a chance to visit the northern Marianas. I was very impressed with the desire of those people to become American citizens. So, we are happy to hear you and we are glad you worked out an agreement.

Mr. HOLMES. Thank you very much, sir.

Mr. DRINAN. I take it, from what I heard, that nonsimultaneous recording in noncontingent use areas is a nonproblem?