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Our next meeting, which may or may not be the last meeting, W.. be Thursday, November 13, at 10 a.m. We will make a suintana etfort at that point to have the members here so they can be herr for our last project.

That concludes this morning's session. The committee is adjourna. [Whereupon, at 12:20 p.m., the subcommittee adjourned, to necos tene at 10 a.m., Thursday, November 20, 1975.)



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Washington, D.C. The subcommittee met, pursuant to notice, at 10:15 a.m., in room 2226, Rayburn House Office Building, Hon. Robert W. Kastenmeier [chairman of the subcommittee] presiding.

Present: Representatives Kastenmeier, Drinan, Pattison, and Wiggins.

Also present: Herbert Fuchs, counsel, and Thomas E. Mooney, associate counsel.

Jr. KASTENMEIER. The hearing will come to order. We have met this morning to hear further from Ms. Barbara Ringer, the Register of Copyrights, in what we hope will be the next to the last installment of her testimony and our Subcommittee's hearings on H.R. 2.223, the copyright law revision bill.

We have scheduled the next hearing and possibly the last hearing on Thursday, December 4.

So with that, Ms. Ringer, you may proceed where you left off some 2 or 3 weeks ago.



Ms. Ringer. I will do so.

I must apologize for skipping over chapter 8 which would normally come next in the material I am presenting. It deals with section 111 on rights in sound recordings and the Danielson bill, which is the performance royalty provision of the bill. It is a difficult chapter, and I have been having some trouble with it. I have not finished it. Since it also ties in with an important issue under Section 301, in volving the Federal preemption of sound recordings fixed before February 15, 1972. I would rather like to present these two together in the interest of comprehensibility.

You have before you four chapters which I hope to be able to get through today. For reference, they are chapter 9 on the compulsory license section, 115; chapter 10 on the jukebox provision, section 116; chapter 11 on ownership and transfer of copyright, which is chapter 2 of the Bill; and chapter 14, on the manufacturing clause, chapter 6 of the bill.

57-786—76—pt. 8


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Starting with chapter 9 dealing with what is known familiar'a the mechanical royalty," I think we can identify five questions .. I will try to address in order. The first is whether or not to me the compulsory license for the making of sound recording ata.

Second is an intriguing question involving the availability of!" compulsory license under the copyright law with respect to mus* 2 used by the so-called record pirates or tape duplicators.

Third is the basis of the royalty and the procedural provision section 115.

Fourth is the basis of the royalty rate, which can be charart-t: as a percentage or a flat rate.

And, finally, the all-important question of the amount of the royalty.

Starting with chapter 9, I would like to read bits and pinas, I have been doing, and I will try to identify the page for the sain of the reporter as I go along.

The first issue is. Should the basic compulsory licensing no established in the 1909 act to govern the manufacture and distri/* : of phonorecords of music, be retained ! ind at some length in ta chapter I have traced the legislative history of section 115. This is the bulk of the chapter, pages 3 to 21, and let me try to summarize! contents of that very briefly, if I can.

Section 1(e) of the present law is the treat-granddaddr of a!!.. pulsory licensing systems. I do not think that is an over-tes!! sounds rather broad, but the compulsory licensing provisions of t. 1909 statute were actually an imaginative effort to compris wa difficult problem and they represent a daring legislative ini 01314.4. ! historic significance. Section 1(e) of the 1909 art established the first compulsory licensing system in any copyright or patent statute, ir an! intellectual or industrial property statute or, as far as an rone : 3 to know, in any statute in the world. It set a pattern that has midely followed in other countries in copyright laws as well as ot!!! fie!ls, and lias had a profound effect on the development of the 1.2** indu-trr in the l’nited States.

Mr. KASTENMEIER. Ms. Ringer, I just want to say, I am glad 503 are dealing with this. One of the questions I think paple new too! right law have, and I do not mean to say that critically, but in a free approach-and I have noticed this among conversations with name bers of the committee--whether or not it is possible and praitisip to retreat from a compulsory liccne. In other words, it tento por mp sent not only innovation but a device which proceeds out of me! things, an evolution to the present state.

Is it possible to rewrite the law so as to disengar from a cortiny licen ? I think some members hare that question in their minute

JIS, RINGER. I think it is an absolutely ewential question for 10 na Anir, Mr. (hairman. I have tried to triptir hintory of the pr 1! eion and the attitude whirli evolusince the middle 19,30) in an to your hor the ('oporioht Ottom went through the same pr quotes print that you are poin' thronerli, ott vour thorn'*f*f* ' 1'*** 197 · 1983, 1960 - when thronh the same mental prowyms, ant! you need to go through it again. I think it is an absolutely ewential apertion. It is not given, in my opinion, that the compoulosti must remain forever and ever. I think that once I have tried this in

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a very general way-I think you will see how we came to the point where we now are down to 212, 3 cents type of discussions, but I do not think we can get to that type of discussion until we have addressd the more general questions. I certainly agree with you.

What I am trying to say now is that this was essentially an antitrust measure, attempting to create exclusive rights which were considered just in 1909, the right of the composer or an author of music or a music publisher to have rights against those who were recording his music, tan on piano rolls, primarily, but without creating a monopoly in the music industry. And this was because of the particular situation that elted in 199, and I do go into this briefly here.

There was one company, to make a long story short, that had bought up sound recording rights and musical compositions in anticipation that Congress would change the law, and Congress was thus faced ith the prospect that, if it granted exclusive rights with no restric. oblant would be creating an automatic monopoly in the Aeolian ('o., **uh was this big piano roll manufacturer that had succeeded in pting licen*. And they did not feel they could do that. And their tripotawhile the section is poorly drafted, at least looking at it fiwn the vantage point of 70 vars later; nevertheless, it was, I think, an 11.mative effort. And if you look at the hearings in 1909, 1906,

Id 1:0014, actually the bulk of the testimony was on this issue. This 188-11 big in de in the 1909 law.

I do not think I need to emphasize the point that obviously the pronograph industry went through enormous ups and downs with the HAY! 'ral developments of the 20th century, but lying these in te ba iruund all the way through it was the compulsory license, and in 1.4:.) way the music industry in the United States was built up with them in pulsory license there.

low, in 1991, obviously the whole industry had been transformed, art it was difficult and is difficult to justify compulsory license sump's 0.t of hand, s.mply by itself. I compulsory license has to be a compuppies w of the it.. And the industry had changed so radially that top (ofitriglit Otlice felt that there miglit l a possibiler of song Alla with the pulsorv license and, therefore, in our recommended 1.** Intl. Register's report in 1901 we recommended that the challup be done away with altogether and that licensing of sound recordings Il. rudernning of sound recordings, be left to free negotiation,

Wer herding our proposal benie we reozed how indical thin *anut we in oumerdded that if the clause were retained, that it be 11.6688.pils overhaulest.

V . A. I tried to bring out in the first or ) of the l.p. ter, there 19 a storm of controversy after this. And without going 11.11) I will not rail, I will try to summarize. l! Nicond industry laitted a major contain aprainst r ul, and their bol argument # 18 Automne. But they are wimilarly that the laws for the rom. pory trene would produce the same kind of rule that W74 Hy het to knoidesi in 1M1), baxially that it would lead to the tration and monofrols problems and would raise the cont of more to

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what would happen to it I am talking now about anthors and propter lishers and performing rights organizations. Publicly, obviously, them were in favor of repeal, but I think that I can say without any fear of contradiction that privately they were concerned about what it would do to them. It was obviously going to lead to restructuring. This was laid so firmly at the basis of the music industry that I feel, as we said in the 1965 report, they would rather bear what ills they had than fly to others that they know not of. And that was really the prevailing sentiment.

In any case, it became apparent that some sort of compromise w going to be necessary, and these things do become apparent to you along the way, and we put forward various alternatives. 'p thronzo 1964 we stuck with an outright repeal, and our preliminary draft had an alternative that was an outright repeal with some softening happens to it. The other alternative was a compulsory license.

Now, at this point a very major role in the compromise procedure was played by a subcommittee of the American Bar Association. I think there are a few people that remember this or know this. But it is true that there was a subcommittee made up of representatives of record industry, the music publishers, and others in the field, who dd try to take what we were doing and produce a compromise. It was tripartite, or perhaps even multipartite, and they did produce a com: promise which involved, among other things, 3 cents or 1 cent port minute of playing time. And for purposes of this discussion t... morning, Jr. Chairman, I am going to not worry about the minie playing time; I will just talk about cents per song. * This subcommittee and there were many discussions going on around this at the timedid agree upon a formula for section 115 8* * whole, and it also agreed upon this 3 cents flat rate type of apple By 1965 the question was not whether, but how much.

The revised language and structure of section 115 was accepted him both sides, but having gotten that far, the record industry that mounted a major campaign to bring the rate down. They went for ward with economic studies in a major effort to try to prewet! *t *) rent rute was satisfartory and that any raise would not be inst:fed or fair. As you well know, Jr. (hairman, the House subcomin*** 1965 and the Senate subconimittee later in 197 had litera!'r ar. avalanche of statistical material presented to it, together with data and arguments and even audiovisual performances, and the base et way that the concentration of the subcommittee was on the first

But I think, going back to your initial question, Jr. (hapin, is fair to say that the House Judiciary boommittee in 1974 .1 1967 did make a very thorough review of the baci, question of the or not the compnlmry licens should be retained. And if I rar t** to page 11, they are the conclusions that it reached then. The ments pro and con are laid out in the preceding paps. From the a uments, after reviewing them, and from the arrar of planirano data presented to it in connection with the rate the comm!*** AXI cluded that a compulsory lireneing system is still marte s condition for the riuhts of reprowing and dimeributing phon074** * of copyrighted music. The committee also concluded, howeser, that

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