Amicus Curiae Brief — Hubbard Broadcasting, Inc. v. Southern Satellite System, Inc.

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Text

Supreme Court, U.S,

e; FILED

No. 85-1524 NOV. 14.1998

F. SPAMOL, J

CLERK

In the Supreme Court of the Gnited

OCTOBER TERM, 1986

HUBBARD BROADCASTING, INC., PETITIONER

SOUTHERN SATELLITE SYSTEMS, INC., AND

TURNER BROADCASTING SYSTEM, INC.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

CHARLES FRIED

Solicitor General

CHARLES F. RULE

Acting Assistant Attorney General

LAWRENCE G. WALLACE

Deputy Solicitor General

W. STEPHEN CANNON

Deputy Assistant Attorney General

ANDREW J. PINCUS

Assistant to the Solicitor General

CATHERINE G. O’SULLIVAN

DONALD S. CLARK

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 633-2217

Sof ve te ee

QUESTION PRESENTED

Whether the statutory exemption from liability for copyright

infringement available to a communications carrier when the

carrier retransmits a television broadcaster’s signal (see 17

U.S.C. 111(a)(3)) insulates the carrier from liability if (1) the

carrier selects the particular broadcast signal for retransmission,

(2) the carrier retransmits a signal that it receives directly from

the broadcaster instead of the broadcaster’s over the air signal,

and (3) some of the nonprogram material carried on the broad-

caster’s direct signal is different from the material carried on the

broadcaster’s over the air signal.

(I)

TABLE OF CONTENTS

Page

ES RE eae l

ise cee s hea b nd 6eck ee bese y

es Se ee 19

TABLE OF AUTHORITIES

Cases:

Adickes v. S.H. Kress & Co., 398 U.S. 144... 10

Cable Television Report & Order, 36 F.C.C.2d

141, on reconsideration, 36 F.C.C.2d 326,

aff'd sub nom. American Civil Liberties

Union v. FCC, $23 F.2d 1344 ............ 2

Cable Television Syndicated Program Ex-

clusivity Rules, 79 F.C.C. 663, aff'd sub

nom. Malrite T.V. of New York, Inc. v.

FCC, 652 F.2d 1140, cert. denied, 454 U.S.

EC LES Sel i lee eae 4, 12

Capital Cities Cable, Inc. v. Crisp, 467 U.S.

ee cas sy kes Wied ed ths 0000 3, i2

Eastern Microwave, Inc. v. Doubleday Sports,

Inc., 691 F.2d 125, cert. denied, 459 U.S.

ne ee ee 8, 11, 18

Fortnightly Corp. v. United Artists Television,

I os hn o 60500 decadence ves 1,2

Sony Corp. v. Universal City Studios, Inc.,

Ee ee eee 13

Southern Satellite Systems, Inc. , 62 F.C.C.2d

SS a a 5

Teleprompter Corp. v. CBS, Inc., 415 U.S.

LS Ee a 2

WGN Continental Broadcasting Co. v. United

Video, 693 F.2d 622 ..........2006. 5, 14, 15, 18

(III)

Statutes and regulation: Page

Communications Act § 20l(a), 47 U.S.C.

ie lak ey rae car ee eee ee 11

2 Rie 8 7 ae Cr err rrr re 2

So Sie 8 to | errr Tre 2

Sn EP Greens PED o vb vase eces’s 14

Pit ee ik Fae | ra ee passim

§ 111(a)(3), 17 U.S.C. 111(a)(3) ........ passim

15, 16, 17, 18

S L1eNT), 17 U.S. TU) once oe 3

& 111¢cKS), 17 U.S.C. LIMES) ... 00s. 3,

16, 18

Be Bigg e Soe re 3

ROG ey Oe Ges BERIED bc coc s ces eeee 3, 14

Be yes ea Se errr 7

§ 801(b)(2), 17 U.S.C. 801(b)(2) ........ 3

§ 801(b)(3), 17 U.S.C. 801(b)(3) ........ 3

BF Ri es PED Sabin kdb bo 00k) 60s ceer eee 16

Miscellaneous:

formance Rights — Hearings Before the Sub-

comm. on Courts, Civil Liberties and the

Administration of Justice of the House

Comm. on the Judiciary, 96th Cong., Ist

EAS oe ern rere fae 12

2220 Before the Subcomm. on Courts, Civil

Liberties, and the Administration of Justice

of the House Comm. on the Judiciary, 94th

Cs BOE RS MET? nv cevoccesdccevss 12

Miscellaneous — Continued: Page

51 Fed. Reg. (1986):

a: rr ey Pree rer ry 7 6

iS, RENT cn ce vb oles dedbedesvuneeees 6

H.R. Rep. 2237, 89th Cong., 2d Sess. (1966) ..... 14,17

H.R. Rep. 94-1476, 94th Cong., 2d Sess.

CRUE: v winsa'ceenes xennsereeed 2, 3, 9, 10, 15, 17

In the Supreme Court of the Anited States

OCTOBER TERM, 1986

No. 85-1524

HUBBARD BROADCASTING, INC., PETITIONER

Vv.

SOUTHERN SATELLITE SYSTEMS, INC., AND

TURNER BROADCASTING SYSTEM, INC.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

This brief is submitted in response to the Court’s order in-

viting the Solicitor General to express the views of the United

States.

STATEMENT

1. A cable television system transmits to its customers a

variety of program services. These program services include the

retransmission of the signals of local television stations and, in

many cases, the retransmission of the signals of television sta-

tions located in other areas of the country. The latter practice is

known as the retransmission by the cable system of a “distant”

television signal.

Prior to the adoption of the Copyright Act of 1976, this

Court twice considered the status under the copyright laws of

cable systems’ retransmissions of television broadcast signals. In

Fortnightly Corp. v. United Artists Television, Inc., 392 U.S.

390 (1968), the Court—interpreting the Copyright Act of

1909 — held that a cable system’s retransmission of a local televi-

sion broadcast did not constitute a “performance” within the

meaning of the Act and therefore did not infringe the copyrights

(1)

of the program material contained in the broadcast (392 U.S. at

400-401). In Teleprompter Corp. v. Columbia Broadcasting

System, Inc., 415 U.S. 394 (1974), the Court declined to adopt a

different rule for retransmissions of distant television signals,

and held that such retransmissions also did not constitute per-

formances under the statute.

These decisions permitted cable systems to retransmit televi-

sion signals without incurring any copyright liability, but their

practical effect was undercut to some extent by the Federal

Communications Commission’s “program exclusivity” rule. The

rule provided that a broadcast station that obtained from a

gram in one of the fifty largest television markets could prevent

a cable system operating in that market from retransmitting a

distant signal containing the program. This exclusivity remained

in effect for the entire term of the broadcaster’s exclusive

license. Cable Television Report & Order, 36 F.C.C.2d 141,

181-185, on reconsideration, 36 F.C.C.2d 326 (1972), aff'd sub

nom. American Civil Liberties Union v. FCC, 523 F.2d 1344

(9th Cir. 1975).' Thus, the program exclusivity rule maintained

to some extent the copyright owner’s ability to prevent a cable

system from retransmitting the signal of a distant broadcast sta-

tion when that signal contained copyrighted program material.

Congress enacted Section 1i! of the Copyright Act of 1976,

17 U.S.C. 111, in order to resolve “[t]he difficult problem of

determining the copyright liability of cable television systems”

(H.R. Rep. 94-1476, 94th Cong., 2d Sess. 89 (1976)). Congress

concluded that “cable systems are commercial enterprises whose

basic retransmission operations are based on the carriage of

copyrighted program material and * * * copyright royalties

should be paid by cable operators to the creators of such pro-

grams” (ibid.). It accordingly defined the rights of a copyright

Owner so tiiat the unauthorized transmission of a copyrighted

work by a cable system constitutes an infringement of copy-

right. See 17 U.S.C. 101, 106, 111. Recognizing that “it would

be impractical and unduly burdensome to require every cable

system to negotiate with every copyright owner whose work was

' Broadcast stations in the next fifty markets were given more limited rights.

retransmitted by a cable system,” Congress established a “com-

pulsory copyright license for the retransmission of those over-

the-air broadcast signals that a cable system is authorized to

carry pursuant to the rules and regulations of the FCC.” H.R.

Rep. 94-1476, supra, at 89; see also Capital Cities Cable, Inc. v.

Crisp, 467 U.S. 691, 709-710 (1984).

The compulsory license extends only to the “secondary

transmission” of a “primary transmission,” two terms that the

statute defines by reference to one another. Thus, a primary

transmission is “a transmission made to the public by the

transmitting facility whose signals are being received and fur-

ther transmitted by the secondary transmission service” (17

U.S.C. 111(f)). A secondary transmission is “the further

transmitting of a primary transmission simultaneously with the

primary transmission” (ibid.).2 Section 111(c)(1) provides that

“secondary transmissions to the public by a cable system of a

primary transmission made by a broadcast station licensed by

the Federal Communications Commission * * * shall be subject

to compulsory licensing” as long as the cable system satisfies

certain requirements relating to the payment of royalty fees into

a fund maintained by the Register of Copyrights (17 U.S.C.

111(c)(1)).3 The cable systems may not alter the programming,

commercial advertising, or station announcements transmitted

by the broadcast station (17 U.S.C. 111(c)(3)).

Section 111 also contains a provision that provides a “safe

harbor” from liability for copyright infringement for a com-

munications carrier that serves as the link between the broadcast

station and the cable sysiem, transmitting the signal from the

broadcaster’s geographic area to a distant cable system. Such a

retransmission of a broadcast signal is not an infringement of

license — if the retransmission is performed by a carrier that “has

no direct or indirect control over the content or selection of the

primary transmission or over the particular recipients cf the

2 Nonsimultaneous transmission is permitted in certain circumstances not

applicable here. See 17 U.S.C. 111(f).

3 The Copyright Royalty Tribunal distributes the royalties among persons

holding the copyrights relating to that programming. 17 U.S.C. I11(d),

801(b)(2) and (3).

secondary transmission, and whose activities with respect to the

secondary transmission consist solely of providing wires, cables,

or other communications channels for the use of others” (17

U.S.C. 111(a)(3)).

The statute provides that neither the compulsory license nor

the exemption from liability for a carrier is available in one

specific situation. Section 111(b) states that “the secondary

transmission to the public of a primary transmission * * * is ac-

tionable as an act of infringement * * * if the primary transmis-

sion is not made for reception by the public at large but is con-

trolled and limited to reception by particular members of the

public” (17 U.S.C. 111(b)).4

After the Copyright Act of 1976 was enacted, the FCC

rescinded its program exclusivity rule. Cable Television Syn-

dicated Program Exclusivity Rules, 79 F.C.C.2d 663 (1980),

aff'd sub nom. Matrite T.V. of New York, Inc. v. FCC, 652

F.2d 1140 (2d. Cir. 1981), cert. denied, 454 U.S. 1143 (1982).

Thus, a local broadcaster no longer may prevent a cable system

from retransmitting a distant signal that contains copyrighted

works, even if the local broadcaster has obtained from the

2. Respondent Turner Broadcasting System, Inc., owns and

operates WTBS, a television station located in Atlanta,

Georgia. Turner Broadcasting decided to expand WTBS’s au-

dience by actively urging cable systems to retransmit WTBS’s

programming to their customers. By mid-1976, WTBS was car-

ried by nearly 100 cable systems in a five-state area surrounding

Atlanta. Pet. App. A39; C.A. App. 176-177, 186-188; Stipula-

tion of Facts | paras. 8-9.

Turner Broadcasting determined that it could make WTBS’s

signal available to a far greater number of cable systems by

using satellite technology to retransmit the broadcast signal; it

* The statute provides, however, that the secondary transmission of such a

controlled primary transmission is not actionable if the primary transmission

is made by a broadcaster, the carriage of the secondary transmission i re-

quired by the Federal Communications Commission, and the primary

transmission “is not altered or changed in any way by the secondary transmit.

ter” (17 USC. iby

established respondent Southern Satellite Systems, Inc., to ac-

complish this goal. Turner Broadcasting subsequently decided

that the retransmission of the broadcast signal should be ac-

complished by a separately owned company and, therefore, sold

Southern Satellite to its current owners for the sum of one

dollar. Pet. App. A40; C.A. App. 176-183. Southern Satellite is

licensed by the FCC as a resale common carrier authorized to

retransmit television signals to cable systems throughout the

country. Southern Satellite Systems, Inc., 62 F.C.C.2d 153

(1976).* Since 1976, Southern Satellite has utilized satellite

technology to retransmit the WTBS broadcast signal to cable

systems outside the Atlanta area.

In February 1979, with the approval of the FCC, Southern

Satellite constructed a direct microwave link between its satellite

transmission facility and the WTBS studios in order to improve

the quality and reliability of the signal retransmitted to its cable

customers. C.A. App. 170, 466.* Southern Satellite thus can

retransmit either the WTBS broadcast or the microwave signal.

Its equipment automatically selects the microwave signal for

retransmission; the broadcast signal is substituted if the

microwave signal weakens or disappears. Southern Satellite

does not alter the signal that it receives from WTBS. Pet. App.

Al2, A24-A25, A40-A43, A53-A54; C.A. App. 293-300.’

* The FCC determined, in granting the authorization, that there was “no

significam corporate affiliation” between Southern Satellite and Turner

Broadcasting (62 F.C.C.2d at 160-161).

* The signal travels from the WTBS studio over a hard wire cable owned by

Turner Broadcasting to the microwave transmitter and antenna owned by

Southern Satellite. This equipment is located on property leased from Turner

Broadcasting. Southern Satellite’s “uplink” facility receives the microwave

signal and directs it to a satellite transponder. The satellite relays the signal to

the receiving antennae of cable systems around the country. As of May 1984,

6,000 cable systems carried the WTBS signal to approximately 27 million

households. C.A. App. 292-293, 419.

’ Southern Satellite does insert some material into the “vertical blanking in-

terval” of the WTBS signal (Pet. App. A26). The vertical blanking interval is a

25-line space that is created each time the electron gun that creates a television

picture reaches the bottom of the screen, switches off, and returns to the top

of the screen. Certain information can be transmitted in this interval and

received by televisions equipped with special decoding devices. See WGN Con-

unental Broadcasting Co. v. United Video, 693 ¥ .24 622, 623 (7th Cir. 1982).

Since April 1979, the content of the signal fed into the

microwave link by WTBS has differed from the content of the

signal broadcast over the air to Atlanta television viewers.

Although the programming carried on the two signals is iden-

tical, Turner Broadcasting substitutes “national” commercials

and other nonprogramming material on the microwave signal in

place of some of the “local” commercials broadcast in Atlanta.*

Turner Broadcasting charges higher fees for advertisements car-

ried on the microwave signal than for advertising that appears

only on the over the air broadcasts. Pet. App. A40-A42.

Turner Broadcasting’s payments of licensing fees to copyright

owners are substantially higher now than they were when the

WTBS signal was transmitted solely to the Atlanta market.

Turner Broadcasting’s annual program license fees increased

from $710,000 in 1975 to $13.57 million in 1983, while the value

of its new program license agreements increased from $820,000

in 1975 to $22.85 million in 1983. C.A. App. 475-476.’

Petitioner Hubbard Broadcasting, Inc. owns and operates

television stations in Minneapolis/St. Paul, Minnesota; Albu-

querque, New Mexico; and Tampa/St. Petersburg, Florida.

Petitioner purchases licenses allowing it to broadcast

copyrighted programs on its television stations, and sells com-

mercial time to advertisers in conjunction with its broadcasts of

those programs. Pet. App. A43; Stipulation of Facts I paras.

4-7. Petitioner entered into five licensing agreements that

allowed it to broadcast specified movies and television pro-

grams; the agreements prohibited the copyright owners from

licensing these works to other broadcast stations or cable

systems in petitioner’s broadcast areas. Pet. App. A43-A44;

C.A. App. 43-129.

Southern Satellite retransmitted to cable systems in

petitioner’s broadcast areas WTBS’s broadcasts of five pro-

grams covered by petitioner's licensing agreements (Pet. App.

* In the period from October 1982 to April 1983, approximately 40% of the

nonprogsamming material carried on the microwave signal differed from the

nonprogramming material shown on the broadcast signal. C.A. App. 284.

* The record in this case does not establish the relationship, if any, between

this increase in license fees and WTBS's carriage by cable systems. Cf. 51 Fed.

Reg. 12792, 12816, 12817 (1986) (decision of Copyright Royalty Tribunal in

1983 Cable Royalty Distribution Proceeding).

A43-A44). Petitioner subsequently commenced this copyright

infringement action against Southern Satellite and Turner

Broadcasting in the United States District Court for the District

of Minnesota (C.A. App. 9-41). It sought a declaration that

Southern Satellite’s transmissions were “infringing non-exempt

secondary transmissions under the Copyright Act,” a permanent

injunction barring respondents from infringing the copyright

licenses purchased by petitioner, a permanent injunction bar-

ring respondents from effecting a “secondary transmission into

{petitioner’s} local service areas, or to any entity for retransmis-

sion in said local service areas, of any copyrighted audiovisual

works for which they have not obtained the copyright or an ap-

propriate license for transmission,” and an award of statutory

damages pursuant to 17 U.S.C. 504(c). C.A. App. 39-40.'°

The district court granted respondents’ motion for summary

judgment and dismissed the complaint (Pet. App. Al-A34). The

court determined that Southern Satellite’s retransmission of the

WTBS microwave signal did not constitute copyright infringe-

ment under 17 U.S.C. 111(b), and found that Southern Satellite

qualifies for the exemption from liability for copyright infringe-

ment set forth in 17 U.S.C. 111(a)(3).

3. The court of appeals affirmed (Pet. App. A34-A59). The

court first rejected petitioner’s assertion that Southern Satellite’s

retransmission of the WTS3S microwave signal constitutes

found that Section 111(b) applies when the primary transmitter

seeks “to narrow the reception of its signal to an identifiable and

distinct segment of the general public who generally will either

subscribe to or purchase the service provided” (Pet. App.

A46-A47). Since Turner Broadcasting does not seek to limit its

signal to particular recipients, but instead seeks the broadest

possible audience, the court concluded that Section 111(b) does

not apply (Pet. App. A47).''

'* The complaint further alleged that Turner Broadcasting contributorily

and vicariously infringed petitioner’s rights, and that Turner Broadcasting

conspired with Southern Satellite to infringe those rights. C.A. App. 36-39.

'* The court also rejected the contention that the WTBS microwave signal is

not eligible for a compulsory license under Section 111, concluding that the

provision was not limited to broadcast signals but extended to any other form

of transmission to the public (Pet. App. A48-A5S0).

The court next considered whether Scuthern Satellite

qualified for the exemption for carriers set forth in Section

111(aX(3). Rejecting petitioner’s assertion that the cooperation

between Southern Satellite and Turner Broadcasting constituted

evidence of the former’s control of the content of the latter’s

signal, the court found that “from the perspective of Southern,

the motivating force behind the establishment of the microwave

link was its desire to provide its customers with a better quality,

more reliable WTBS signal. This legitimate business interest on

the part of Southern is entirely consistent with the goal of the

public to benefit from the copyright[ed] works carried on televi-

sion signals” (Pet. App. A52). The court also concluded that “it

is clear from the record that Southern exercises no control over

the selection and broadcast of the particular programming or

nonprogramming material transmitted by WTBS” (ibid.).

The court further found that Southern Satellite’s decision to

transmit WTBS’s signal as opposed to the signal of another

broadcast station did not constitute impermissible carrier con-

trol over the selection of the primary transmission. Adopting

the Second Circuit’s conclusion in Eastern Microwave, Inc. v.

Doubleday Sports, Inc., 691 F.2d 125, 130 (1982), cert. denied,

459 U.S. 1226 (1983), the court of appeals stated that

“ ‘{tlechnical restrictions’ ” forcing a satellite resale carrier to

make an “ ‘initial, one-time determination to retransmit the

signals of a particular station, whatever the content of those

signals’” do not constitute control over the selection of the

primary transmission (Pet. App. A53). The court determined

that Southern Satellite’s equipment, which automatically selects

WTBS’s microwave signal for retransmission and shifts to the

broadcast signal if the microwave signal weakens or disappears,

simply allows Southern Satellite to take advantage of available

technology in order to maintain the quality of its transmission,

and also does not effect any impermissible carrier control over

the selection of the primary transmission (id. at A53-A54).

Finally, the court of appeals held that Turner Broadcasting’s

practice of substituting commercials on the microwave signal

does not bar Southern Satellite from utilizing the exemption set

forth in Section 111(a)(3). The court noted that the statute bars

the substitution of commercials by a cable system, and observed

that petitioner did not argue that “either Southern or any cable

system carrying the WTBS signal has ever substituted or in fact

has ever attempted to substitute commercials originally placed

on the WTBS signal by Turner. * * * Thus, under the literal

language of Section 111(c)(3), no infringement based upon com-

mercial substitution has occurred” (Pet. App. A57).'?

DISCUSSION

Section 111 of the Copyright Act of 1976, 17 U.S.C. 111, ad-

dresses “[t}he difficult problem of determining the copyright

liability of cable television systems” (H.R. Rep. 94-1476, 94th

Cong., 2d Sess. 89 (1976)). This case concerns the application of

the highly technical provisions of Section 111 to the relationship

between Southern Satellite and Turner Broadcasting—an ar-

rangement that Congress did not specifically address when it

designed this complex statutory scheme. In our view, the

touchstone for interpreting the requirements contained in Sec-

tion 111 is Congress’s basic intention of protecting copyright

owners. Since the insertion of commercials and other non-

program materials into WTBS’s “cable” signal is most unlikely

to harm the owners of the copyrights pertaining to that

material, the court of appeals’ conclusion that Turner Broad-

casting’s practice does not contravene Section 111 is correct.

'2? The court further concluded that none of the policies underlying the pro-

hibition upon commercial substitution contained in Section 111(c)\3) were im-

plicated by Turner Broadcasting’s practices. It found that the prohibition was

based upon Congress’s desire to preserve fair competition between cable

systems and local broadcasters—“Congress sought to ensure that cable

systems were not allowed, while claiming protection of the compulsory license,

to compete for local advertising dollars without having to bear comparable

programming costs” (Pet. App. AS6-A57). The court observed that Turner

Broadcasting was not competing with petitioner for local advertising

customers and that to the extent the two companies competed for national

advertisers, “that competition will exist regardless of Turner’s current practices

since even absent the microwave signal, Turner’s UHF signal will continue to

reach a national market and carry national advertising” (id. at AS7).

Moreover, this question does not warrant review by this

Court. First, there is no conflict among the courts of appeals

with respect to the issue of statutory interpretation presented

here. Moreover, as far as we are aware, there is currently only

one other broadcast station that provides an altered version of

its signal for transmission to cable systems. Finally, the Federal

Communications Commission recently announced an inquiry

into the effects of both the compulsory licensing scheme

established in Section 111 and the elimination of the program

exclusivity rule. For these reasons, the Court need not at this

time address the question presented in this case.

1. Section 111 establishes a comprehensive scheme govern-

ing liability for copyright infringement in connection with the

retransmission of signals initially transmitted by a television

broadcast station. One element of this scheme is Section

111(aX3)—the exemption from liability for copyright infringe-

ment afforded to a communications carrier that retransmits a

television signal. The question in this case is whether Southern

Satellite’s retransmissions of WTBS’s signal comply with the re-

quirements set forth in this provision.'?

a. Section 111(a)(3) provides an exemption from liability for

“secondary transmitters that act solely as passive carriers” (H.R.

Rep. 94-1476, supra, at 92). In order to qualify for the exemp-

tion, the carrier may not exercise control “over the content or

selection of the primary transmission” or over the “particular

recipients of the secondary transmission” (17 U.S.C. 111(a)(3)).

The carrier’s activities with respect to the transmission may not

extend beyond “providing wires, cables, or other communica-

tions channels for the use of others” (ibid ).

Petitioner has identified three separate ways in which

Southern Satellite allegedly violates these requirements. First,

'? Petitioner presented a second question in its petition for a writ of cer-

tiorari (at 22-26), contending that the court of appeals erred by declining to

consider whether Turner Broadcasting is liable for copyright infringement.

The court of appeals found (Pet. App. A58) that “this theory of liability was

not asserted in the district court” and declined to consider the theory for the

first time on appeal. In view of the fact that the question of Turner Broad-

casting’s liability was not addressed by either of the courts below, this Court

should not consider petitioner's claim in the first instance (see Adickes v. S.H.

Kress & Co., 398 U.S. 144, 147 n.2 (1970)).

Southern Satellite selected the primary transmission by initially

deciding to retransmit WTBS’s signal. Second, Southern

Satellite selects the recipients of its transmissions by providing

its service only to its own customers. Third, Southern Satellite

actively engages in marketing activities in order to obtain addi-

tional customers for its retransmission of the WTBS signal.'¢

We agree with the two courts of appeals that have addressed

this issue—the court below (Pet. App. A51-A55) and the court

in Eastern Microwave, Inc. v. Doubleday Sports, Inc., 691 F.2d

125 (2d Cir. 1982), cert. denied, 459 U.S. 1226 (1983)—that

these factors do not render Southern Satellite’s retransmissions

ineligible for the Section 111(a)(3) exemption. Southern

Satellite’s initial decision to rebroadcast the WTBS signal was a

one-time selection of a primary transmitter made necessary by

limitations upon Southern Satellite’s retransmission capacity.

The courts of appeals have correctly concluded that “[t]echnical

restrictions which forced [the carrier] to make an initial, one-

time determination to retransmit the signals of a particular sta-

tion, whatever the content of those signals, do not evidence the

‘control over the content and selection of the primary transmis-

sion’ intended to be precluded under Section 111(a)(3).” Eastern

Microwave, Inc., 691 F.2d at 130; see also Pet. App. AS53. If

Southern Satellite could be found to violate the statute because

it made this choice, only a large carrier with the capacity to

retransmit an essentially unlimited number of signals— suc’: 2s

the telephone company — would be able to qualify for the ex-

emption.

Southern Satellite also does not exercise control over the reci-

pients of its transmissions; the Communications Act requires

Southern Satellite to provide its service to any cable system will-

ing to pay the rate specified in its tariff (see 47 U.S.C. 201(a)).

And Southern Satellite’s other activities—such as its active

marketing of the WTBS signal to cable systems —do not violate

the limitations imposed by Section 111(a)(3) because they do not

affect the content of the secondary transmission. Eastern

Microwave, Inc., 691 F.2d at 131 & n.15; Pet. App. A27-A28.

'* Petitioner also has cited Southern Satellite’s ability to switch between the

two WTBS signals, an issue that we discuss below (see page 13).

Moreover, it appears unlikely that Congress intended to pro-

hibit a carrier such as Southern Satellite from obtaining the

benefit of this exemption. The exemption that became Section

111(a)(3) was included in the statute at the urging of the

American Telephone & Telegiaph Co., which was concerned

that the absence of such an exemption might subject it to liabili-

ty in connection with its provision of retransmission services.

See C.A. App. 308-318.

But the telephone company was not the only provider of

retransmission services. Broadcast signals also were retransmit-

ted to cable systems via microwave, a medium that closely

resembles satellite retransmission in that a microwave service in-

itially selects the broadcast signal to be retransmitted and fre-

quently engages in marketing activities designed to expand the

number of its cable system customers. See, e.g., Cable Televi-

sion Syndicated Program Exclusivity Rules, 79 F.C.C.2d at

807-808; Copyright Law Revision: Hearings on H.R. 2220

Before the Subcomm. on Courts, Civil Liberties, and the Ad-

ministration of Justice of the House Comm. on the Judiciary,

94th Cong., Ist Sess. 668 (1975); C.A. App. 454. Since Congress

apparently did not intend to subject microwave carriers to

liability for copyright infringement, satellite retransmission

services also should qualify for the exemption set forth in Sec-

tion 111(a)(3). Indeed, interpreting the provision in this manner

comports with Congress’s intent by “enhanc[ing] the ability of

cable systems to retransmit [copyrighted] programs carried on

distant broadcast signals, thereby allowing the public to benefit

by the wider dissemination of works carried on television broad-

cast signals” (Capital Cities Cable, Inc. v. Crisp, 467 U.S. at

711).'5

'S The United States Copyright Office, which was actively involved in the

drafting of the 1976 statute, has expressed a different view of the meaning of

Section 111(a)(3). It has stated that Congress enacted the provision solely te

accommodate the concerns of the American Telephone and Telegraph Co.

and that the Section 111(a)(3).exemption therefore is available only to a carrier

such as the telephone company that simply provides facilities for the

retransmission of a broadcast signal. See Copyright Issues: Cable Television

and Performance Rights — Hearings Before the Subcomm. on Courts, Civil

Liberties and the Administration of Justice of the House Comm. on the

Judiciary, 9th Cong., Ist Sess. 23, 32 (1979) (testimony of Barbara Ringer,

Petitioner also argues (Pet. 19-20) that Southern Satellite ex-

ercises impermissible control over the content of the primary

transmission because Southern Satellite decides whether to

retransmit the microwave signal or the over the air signal.

However, Southern Satellite does not choose between these

signals on the basis of program content; it simply functions as a

conduit for WTBS programming, retransmitting the clearest

available WTBS signal. Limiting satellite carriers to the

retransmission of a signal actually received over the air, or

preventing such a carrier from switching to a clearer signal upon

the failure of the signal that it normally transmits, would simply

force the carriers to forgo’the use of new technology that pro-

vides improved signal quality. There is no warrant for inter-

preting Section 111(a)(3) to require that result.'®

b. Petitioner contends that the exemption contained in Sec-

tion 111(a)(3) does not apply here because Southern Satellite

retransmits WTBS’s microwave signal rather than its broadcast

signal. The microwave-satellite link employed by Turner Broad-

casting and Southern Satellite was not in general use when Sec-

titled to the Section 111(aX3) exemption. That view —and, indeed, any inter-

pretation of Section 111(a)3)—would also have implications affecting the

ability of carriers such as Southern Satellite to furnish signals directly to con-

sumers receiving signals through satellite dishes.

' Petitioner also argues (Pet. 14-17) that Southern Satellite is in a position

to control Turner Broadcasting’s commercial substitution policies and

therefore exercises “control over the content *** of the primary

transmission” within the meaning of Section 111(a)(3). As the court of appeals

noted, however, Southern Satellite’s purpose in establishing the microwave

link was to improve the quality and reliability of its transmissions (Pet. App.

A52; see C.A. App. 254); there is no indication that Southern Satellite derives

any benefit from Turner Broadcasting’s substitution of commercials or has

any interest in the content of the commercials. Even if it had constructive

knowledge of Turner Broadcasting’s practices with respect to the commercial

content of the signal, Southern Satellite may not be charged with control over

those practices simply because it established a microwave link that serves the

legitimate and independent function of improving signal quality. Cf. Sony

Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984) (the sale of equip-

ment with constructive knowledge that customers may use the equipment to

make unauthorized copies of copyrighted materials does not constitute con-

tributory infringement if the product is capable of a substantial noninfringing

use).

tion 111 was enacted in 1976. It does not follow, as petitioner

suggests (Pet. 18-19), that the system of exemptions and obliga-

tions embudied in Section 111 of the Copyright Act should be

construed to apply only to transmissions originally broadcast

over the air.

The threshold question under Section 111(a)(3) is whether the

WTBS signal received and retransmitted by Southern Satellite

qualifies as a “primary transmission.” As we have discussed,

Southern Satellite retransmits the electronic signal that it

receives over the hard wire connecting the WTBS studio to the

microwave link. See page 5 & note 6, supra. The statute defines

a primary transmission as “a transmission made to the public by

the transmitting facility whose signals are being received and

further transmitted by the secondary transmission service” (17

U.S.C. 111(f)). The legislative history of Section 111 indicates

that the requirement that a primary transmission be made “to

the public” was intended by Congress to exclude from Section

111 “private transmissions such as telephone conversations,

space communications, closed circuit private telecasts, and

private transmissions by computer” (H.R. Rep. 2237, 89th

Cong., 2d Sess. 81, 85 (1966)). Transmissions intended for

limited public distribution, such as background music services,

pay television, and cable television, were classified as primary

transmissions (id. at 85). The WTBS transmission satisfies the

statutory requirement because it is not private but rather is in-

tended for eventual distribution to a portion of the public at

large (see Pet. App. A47).!’

'? The provisions of the Copyright Act defining an infringement of

reach the public is a transmission “to the public” within the meaning of Section

111. The statute provides that a transmission infringes a copyright if it in-

terferes with the copyright owner’s exclusive right “publicly” to perform or

display the copyrighted work (17 U.S.C. 106(4) and (5)). The transmission of a

work via any “conceivable forms and combinations of wired or wireless com-

munications media” constitutes a public performance or display of the work as

long as the “transmission reaches the public in any form” (Pet. App.

A48-A49). The indirect transmission of a work to the public therefore con-

stitutes a public performance or display of the work. See WGN Continental

Broadcasting Co. v. United Video, Inc., 693 F.2d 622, 625 (7th Cir. 1982).

Indeed, if the indirect transmission of a work to the public did not con-

stitute a public performance or display of the work, a carrier such as Southern

Even though the WTBS signal qualifies as a primary

transmission, Southern Satellite still may be liable for copyright

infringement if the primary transmission is “not made for recep-

tion by the public at large but is controlled and limited to recep-

tion by particular members of the public” (17 U.S.C. 111(b)).

The legislative history of Section 111(b) cited as examples of

controlled transmissions “background music services such as

MUZAK, closed circuit broadcasts to theaters, pay television

(STV) or pay-cable” (H.R. Rep. 94-1476, supra, at 92).

Putting to one side Turner Broadcasting’s practice of com-

mercial substitution, the fact that Southern Satellite retransmits

the WTBS signal that is provided solely to Southern Satellite,

rather than the WTBS over the air broadcast signal, does not by

itself trigger the limitation set forth in Section 111(b). Where a

special transmission to a carrier simply duplicates the broad-

caster’s over the air signal, and the content of the transmission is

therefore available to the public at large via the broadcaster’s

over the air signal, there is no reason for Section 111(b) to

apply. Section 111 was enacted to safeguard the rights of

broadcaster’s signal. Broadcasters and carriers should not be

precluded from using improved technology where there is no

impact upon substantive rights.

Here, of course, the content of the signal provided to

Southern Satellite does differ from the content of the WTBS

broadcast signal: Turner Broadcasting includes some substitute

commercials and other nonprogram material on the signal

transmitted to Southern Satellite. In our view, the fact that this

material is carried only on the WTBS “cable” signal does not im-

plicate the concerns that underlie Section 111(b). The limita-

tions upon the compulsory license established in Section 111

primarily are designed to protect two groups—primary

transmitters and copyright owners. Turner Broadcasting plainly

Satellite that does not engage in direct transmission to the public could never

be liable for copyright infringement. The exemption in Section 111(a)(3)

would then be completely superfluous. See WGN Continental Broadcasting

Co., 693 F.2d at 625. Petitioner argued successfully in the district court that

Turner Broadcasting and Southern Satellite publicly performed the works at

issue in this case. Pet. App. AS.

is not harmed by the commercial substitution at issue here; it is

the architect of the commercial substitution plan. Similarly,

there can be no injury to the owners of the copyrights pertaining

to the substituted material such as the companies whose adver-

tisements are included on the “cable” signal. These advertisers

specifically request the inclusion of their copyrighted material

on the cable signal and therefore cannot be harmed by the

retransmission of that material by Southern Satellite and its

cable system customers. Accordingly, there is no reason to inter-

pret Section 111(b) to prohibit the substitution of nonprogram-

ing material by Turner Broadcasting. '*

We note that our conclusion that commercial substitution by

a broadcaster does not violate Section 111(b) rests on a nar-

rower ground than the decision of the court of appeals. The

court of appeals concluded (Pet. App. A46 (citation omitted))

that the prohibition contained in Section 111(b) applies only if

“the primary transmitter itself seeks to limit the reception of its

signal to ‘particular members of the public.’ ” Under the court

of appeals’ interpretation of the statute, Section 111(b) would

not be implicated even if Turner Broadcasting carried different

program material on the WTBS “cable” signal. In our view, the

substitution of program material presents a more difficult ques-

'§ Petitioner asserts (Pet. 20-23) that Turner Broadcasting’s substitution of

commercials offends the statutory bar against the substitution of commercials

by a cable system (17 U.S.C. 111(c)(3)). But this provision by its terms applies

only to actions by a cable system; it does not reach conduct by a broadcaster.

And the court of appeals correctly concluded (see note 12, supra) that the

policies underlying Section 111(c)(3) are inapplicable in the present con-

text — where the distant broadcaster is substituting national commercials but is

not competing with local broadcasters for local advertising.

A regulation promulgated by the Federal Communications Commission

provides that “[w]here a television broadcast signal is carried by a [cable

system], * * * the programs broadcast shall be carried in full, without deletion

or alteration of any portion except as required by the [FCC regulations].” 47

C.F.R. 76.55(b). The Commission has not addressed the question whether this

rule bars commercial substitution by a broadcaster such as the practice of

Turner Broadcasting involved here. No question concerning this regulation is

presented in this case.

tion than the practice of Turner Broadcasting at issue here.'®

Since the permissibility of program substitution is not an issue

in the present case, we express no opinion regarding the applica-

tion of Section 111(b) in that situation.?°

'9 In contrast to copyright owners of commercials, who ordinarily benefit

from wider distribution of the copyrighted materials and would wish to restrict

their use only in connection with another product, the holders of copyrights in

program materials are endeavoring to market a valuable commodity. It is the

latter interest of copyright holders that was the focus of congressional con-

cern. .

20 The court of appeals concluded that Section 111(b) was intended simply

to prevent the unauthorized appropriation of transmissions originated by

background music services, pay cable systems, and others who, unlike broad-

casters, charge their recipients. Under that view, which reflects a plausible

reading of the legislative history, the relevant inquiry is whether the originator

of the transmission had any interest in limiting its distribution. Thus, the

House Commission report concerning an earlier version of Section 111 stated

that the predecessor of Section 111(b) imposed copyright liability upon a car-

rier that “picks up primary transmissions not intended for reception by the

public at large” (H.R. Rep. 2237, supra, at 82).

The court of appeals observed that its interpretation did not conflict with

Congress’s primary purpose in enacting Section 111—to protect creators of

copyrighted materials— because copyright holders are free to negotiate a

license fee from the originator of the transmission commensurate with the

transmission’s anticipated distribution. Pet. App. A57-A58; see also Br. in

Opp. 9-10. Indeed, the record in this case indicates that Turner Broadcasting

began pdying substantially increased copyright license fees when Southern

Satellite began transmitting the WTBS signal. See page 6, supra. Congress

considered the analogous issue of network broadcasts in 1976 and determined

that cable operators should not be required even to pay license fees for their

use of ‘network programming because copyright holders could demand com-

pensation from the networks reflecting their national audience. H.R. Rep.

94-1476, supra, at 90.

On the other hand, Section 111(b) could be interpreted to limit the com-

pulsory license to transmissions of program material that duplicate the pro-

gram material in broadcasting signals, even if the originator makes no attempt

to limit the distribution of the transmissions. The legislative history of Section

111 indicates that the provision was intended “to establish a compulsory

that a cable system is authorized to carry pursuant to the rules and regulations

of the FCC” (H.R. Rep. 94-1476, supra, at 89). Thus, “[t]he compulsory

license applies * * * to the carriage of over-the-air broadcast signals and is in-

a’ ble to the secondary transmission of any nonbroadcast primary

ii. nission such as a program originated by a cable system or a cable net-

2. There are additional reasons why this Court need not ad-

dress the question of statutory interpretation presented in this

case. First, the determination of the court of appeals does not

conflict with the decision of another court of appeals. Indeed,

the court of appeals in this case expressly adopted (Pet. App.

A53) the reasoning of the Second Circuit in Eastern Microwave,

Inc. v. Doubleday Sports, Inc., supra. The Seventh Circuit in

WGN Continental Broadcasting Company vy. United Video,

Inc., supra, held that a satellite carrier does not qualify for the

carrier exemption if it alters the broadcaster’s signal (693 F.2d at

625-628). Southern Satellite does not alter the WTBS signal,

and the rationale of the Seventh Circuit’s decision does not in

any way conflict with the decision below.

There are, moreover, relatively few “superstations” such as

WTBS and, as far as we are aware, only one other such station

cooperates with a carrier by providing an altered signal for

retransmission to cable systems. In the typical case — where the

carrier retransmits a broadcast signal without the broadcaster’s

cooperation —Section 111 clearly bars both the carrier and the

cable system from altering the broadcaster’s signal (see 17

U.S.C. 111(a)(3) and (c\(3)). While the legal questions presented

here could arise in other contexts,”' we do not believe that they

warrant this Court’s attention at this time in the absence of a

conflict in the circuits.??

Finally, regulatory developments may, as a practical matter,

resolve the question presented here. The Federal Communica-

tions Commission has directed its staff “to prepare a Notice of

Inquiry to study the effect of the compulsory copyright licensing

scheme and the syndicated and network program exclusivity

work. The latter would be subject to full copyright liability under other sec-

tions of the [1976 Act]” (id. at 93). Section 111(b)’s requirement that a primary

transmission be made for reception by “the public at large” could be inter-

preted to enforce this limitation by ensuring that the carrier exemption and the

compulsory license apply only with respect to primary transmissions that

resemble broadcast signals.

2! See, e.g., note 15, supra.

22 The issues are somewhat curtailed in this case, moreover, because the

court of appeals declined on procedural grounds to consider one possible

theory of liability. See note 13, supra.

situation on cable/broadcast competition” (Fact Sheet Regard-

ing Cable Carriage Decision, MM Dkt. No. 85-349, at 2 (Aug.

7, 1986)). The Commission indicated that “[t]he results of this

inquiry will be used by the FCC as a basis for possible rule mak-

ing (in the case of program exclusivity) and/or legislative pro-

posals, as appropriate” (ibid.). The outcome of that inquiry

cannot, of course, be predicted at this time. If the Commission

were to reinstate its program exclusivity rule, however, peti-

tioner would be provided with protection against competing

broadcasts such as those at issue here. The pendency of these

regulatory proceedings provides an additional reason for the

Court to stay its hand.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.