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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.

T'he legislative history of section 110(5) indicates that the provision was based in part on the traditional, pre-Aiken interpretation of the Jerrell-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 has 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 saving 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 witled principle of copyright law, that a person who violates any of the exlusive rights of the copyright owner is an infringer, includi persons who can be considered related or vicarious infringers.

The case law on this suggests that to be held a related or vicarious infringir in the case of performing rights, a defendant must either mittely operate or supervise the operation of the place where the priormances occur or control the content of the infringing program, as.d he must expert commercial gain from this operation in either direct or indireri benefit from the infringing performance. This does il:rlude the entrepreneurs of ballrooms and similar places

l'ure is a large and forceful body of authority upholding vicarious lability where these conditions are met. So justification exists for

oping a contradictory amendment which could create a large and dar.gerous loophole in the public performance right. I am quoting artually from a letter I wrote to Senator JoClellan who had asked *f*wift ally for my opinion on this earlier, and I did give him my (fion with a lot of citations which I have spared you.

Jir. PATTINON. How, as a practical matter, can the owner of the putabl:chment- let us say, let us talk about a fieldhouse at an institutinti, & college, how as a practical matter can that owner when he has

an independent contract arrement, and he is being very care. til net to turn into an employer-emplover relationship with all the 'al: itt tone that flow from it, how can he as # legal matter control limur that is played by the group that is performing!

ME RINGER. Idmittedly, a lot of this is not handled in a very fummal manner, but of course he can indemnify himself. Mr. PATTINON. It can be part of the contract !

M. RIYOR. Yps. Turning it around, Mr. Pattison, as the things nerate practically, he may be the only person that can be found for anyone to sue.

Ifr. Patrikox. Which makes the indemnity not terribly valuable. la Rixen. I would probably agree with that as a practical matter, ut it is a balancing which the courts have 1xen rery consistent in tvr111. in favor of the copyright owner.

This 14 not a part of the statute, but is a part of copyright cane law.
Mr. PATTIM . Thank you.
Mc Krnorr. This is all on chapter 4.
Now, I will go on, if I may to the difficult problem of cable tele.

son. This is in a very fluid sinte, I think this is illustrated by the furt that after I wrote this the full Senate Judiciary Committee did work its will and made a few change. I think there has been a strategir policy decision to save some of the propwaly for the llony. lihink this is not as filed as some of the other in-00% we have been

Ning What I mainly want to get allow to vou hem in the enormou. Hault of story that has behind this provision and the complevity of "). tuntion whh involves by no means just the print las and the, brat in addition a body of administrative rrulations which help an ritratlınary history of their own and ongoing artists in the #frutite branrh, which is continuing to work on this tolay.

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 trans mission 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 Convene tion provisions respecting retransmissions of copyrighted mate. rial, but in the United States the issue really did not arise until the earlv 1960s. 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 subcor• mittee in completely dialectical terms, the operators arguing for complete exemption, and all of the copyrights owners plus the broad. casters and sports promoters arguing for full liability. It did look vers, very difhcult. It looked like a very difficult problem to try to reach ar.y sort of compromise on this.

Before your subcommittee acted, while it was marking up the bill in 1966, the Federal ('ommunications Commission, which had backrd and filled on this issue, came down with an order asserting jurisdiction over CiT\systems and promulgated rules which I think aimant everyone would agree amounted to a freeze. This was a system in. volving a very complex requirement for hearings in order to in.port distant signals.

There were a number of requests for hearings. The backlog son med in. stantly. It was obviously not a viable way of approaching the problema. 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 nobodly could get through to the end of the hearing.

On October 12, 1966, and again on March 8, 1967, the House Indie. iary 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 grav arra approach. This did not involve compulsory licensing, but it involved the white arra, which was completely erempt, the black area that was completely liable, and an intermediate or grav area which was liable only if adiance notice had been given that a local station had an exclusive license to show the same program in the arra.

This was, of course, & fairly clear-cut recognition of convright owners' right in this subject matter. I have to mention--although I am coming to it in a minute in mort detai)--that during this per rioch. these questions were being heavily litrated, and the us were heade for the Supreme ('ourt. Them wisome support for the com promise, but more opwsition, and it was obvious that the bill as it

had enormous communications implications, which produced an unfortunate jurisdictional dispute between the Judiciary and Commare ('ommittees, which got onto the floor, as I am sure the chairman remembers very well.

The result was that, in a successful effort to save the rest of the legis. Larson, the CATV section was deleted in its entirely, and the whole problem was sent over to the Senate.

Meanwhile, after victories in lower courts, the copyright owners peat their big copyright case in cable in the Fortnighily case in June of 1996m. In fact and I think this is sometimes forgotten there were two decisions a week apart in the Supreme Court, both very fundaHantal to cable television in this country. These were the Southirext. en can and the Fortnightly case. They were certainly intended to antenat, but they have not done so.

Tie Sinethirentern case, which was decided first, involved two ques10--I am now on page first, whether the Federal ('ommunica. ***** ('ommission has authority, under the Communications Act of 1954, to riglate CATV systems at all: and second, whether 1966 FCC Paarilations banning cable retransmission of distant signals into the low larget television markets under certain conditions were within 1: l'omminkion's authority.

The Court's decisions supported the FCC's anthority to regilate rable television under the 1934 act and without additional learislation, As long as the actions it takes are reasonably ancillary to the effective performance of the ('ommission's various responsibilities for the regu. lation of television broadcasting. This was an opinion by Justice llarlan, and it made clear there were limits to the ('ommission's author

Ix, but it pointedly declined to define what those limits are, and it wer:fcally upheld the administrative order involved in the case as yng within the regulatory authority of the FG.

The Fir-and this is no secret-was certainly relying on the Court to uphold copyright liability as part of its master plan. It was definitely relying on copyright to assist it in regilating cable as part of it# pitorts to support local over-the-air broadcasting in the late Die This was its policy, and it was seeking the help of the copyright law in carrying it out.

It was therefore quite disappointed that the Supreme Court i Werk later held against copyright liability in the Fortnightly case, bust under circumstances that left the scope of the decision somewhat urlear I am reading now from page

The Fil'in 14, was committed to the active mupport of local broad. rat1!particularly be independent stations on the ultra-hinh irr. !!!. brands, and it considered it a duty to maintain the inviolabil. 188 of clearly defined geographic television markets by preventing ra!!e frorn immenting loxal audience and thereby causing log of Burnt silig revenue to the local stations. This is a flat statement. I tl..nk it is nie, The F('( wanted cable to stand and barrain, and it Trally wanted to prevent what it called unfair competition is unst low albmara ere.

The FTP was therefore as disappointed as anyone by the Fort. Nordily decision which held that, at leas ander the tit11111ennes !! types we', cable operators do not perforin the programs they merans.

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