Opposition Brief — Cablevision Co. v. Motion Picture Ass'n of America, Inc.

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| ™ 1988

No. 87-1814 —

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IN THE ee eee

Supreme Court of the United States

OCTOBER TERM, 1987

NATIONAL CABLE TELEVISION ASSOCIATION, INC.,

~ Petitioner,

COLUMBIA PICTURES INDUSTRIES, INC., et al.,

UNITED STATES COPYRIGHT OFFICE and ITS REGISTER,

Respondents.

On Petition for Writ of Certiorari to the United States

~ Court of Appeals for the District of Columbia Circuit

BRIEF IN OPPOSITION OF RESPONDENTS

COLUMBIA PICTURES INDUSTRIES, INC., e¢ al.

EDWARD BENNETT WILLIAMS

RICHARD M. COOPER

Counsel of Record

PAUL MOGIN

WILLIAMS & CONNOLLY

839 17th Street, N.W.

Washington, D.C. 20006

(202) 331-5000

ARTHUR SCHEINER

DENNIS LANE

WILNER & SCHEINER

1200 New Hampshire Ave., N.W.

Washington, D.C. 2003

(202) 861-7800

Counsel for Respondents

Columbia Pictures Industries,

Inc., et al.

June 8, 1988

SA ERE RENE Ae, SERRE ES

WILSON - Eras PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

RULE 28.1 LISTING

The following are parents, subsidiaries (except

wholly-owned subsidiaries) or affiliates of respond-

ents Columbia Pictures Industries, Inc.; Embassy

Communications; MGM/UA Communications Co.;

Motion Picture Association of America, Inc.; Orion

Pictures Corporation; Paramount Pictures Corpora-

tion; Turner Entertainment Company; Twentieth

Century-Fox Film Corporation; Universal Pictures,

a Division of Universal City Studios, Inc.; and War-

ner Bros. Inc.:

Chris-Craft Industries, Inc.

The Coca-Cola Company

Fox Television Stations, Inc.

Gulf & Western

MCA, Ine.

The News Corporation Limited

Turner Broadcasting System, Ine.

Warner Communications, Inc.

(i)

TABLE OF CONTENTS

RULE 28.1 LISTING AE MASE RP

TABLE OF CONTENTS

TABLE OF AUTHORITIES

STATEMENT OF THE CASE ............

REASONS FOR DENYING THE WRIT

NCTA’s current interpretation, which contra-

dicts its position in the rulemaking, was prop-

erly rejected ..

The Copyright Oftice’s interpretation of section

111 is entitled to deference

NCTA’s separation-of-powers contention was

not presented below and lacks merit

The court of appeals concluded that the Copy-

right Office’s interpretation is superior to

NCTA’s

CONCLUSION

(iil)

ill

_ ee, i

TABLE OF AUTHORITIES

CASES: Page

Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970).. 19

Andrus v. Sierra Club, 442 U.S. 347 (1979)........ 17

Bartok v. Boosey & Hawles, Inc., 382 F. Supp.

Ci | RE oeeeeaereeesnecineeencenpatsrncens 14

Bartok v. Boosey & Hawkes, Inc., 525 F.2d 941

OO GR RR asec snc cicaientcesmanrenetccrnerncsannida itp 14, 15

Bowsher v. Synar, 106 S. Ct. 3181 (1986) —...... 19, 20, 21

Buckley v. Valeo, 424 U.S. 1 (1976) (per

ee) A AIS TIS ER ene OR EON ARR ce Ce 21

Burnap v. United States, 252 U.S. 512 (1920)... 21

Chevron U.S.A., Ine. v. Natural Resources De-

fense Council, 467 U.S. 837 (1984) .................... 19

Cox Cable New Orleans, Inc. vy. City of New Or-

leans, 594 F. Supp. 1452 (E.D. La. 1984) _...... 12

Delta Airlines, Ine. v. August, 450 U.S. 346

(| Dia catered dusted Asa cleaasaaskbaaneasnisae 19

De Sylva v. Ballentine, 351 US. 970 (1956) ........ 13, 14,

17, 20

Eltra Corp. v. Ringer, 579 F.2d 294 (4th Cir.

ELE TORT PIT ee RE Tm. 13, 19, 20, 22

Esquire, Inc. V. Ringer, 591 F.2d 796 (D.C. Cir.

1978), cert. denied, 440 U.S. 908 (1979) -........... 13

Ex parte Hennen, 38 U.S. (13 Peters) 250

PRI... 55h canucctec anscsuaeeeeadpaeaabamiadiaiandareteapieesnemomanans 21

Goldstein v. Califernia, 412 U.S. 546 (1975) __.... 13, 14,

17, 20

Hoffenberg v. Kaminstein, 396 F.2d 684 (D.C.

Cir.) (per curiam), cert. denied, 393 U.S. 913

I esate igs detseaertkana pita ac ncecana wap teontioanen 13 |

Home Box Office, Inc. v. FCC, 567 F.2d 9 (D.C.

Cir.), cert. denied, 434 U.S. 829 (1977) _.......... 3

INS v. Chadha, 462 U.S. 919 (1983) . ....... .. 22

Jones V. Wilkinson, 800 F.2d 989 (10th Cir. 1986),

a 6. S68 EC Te ee eet 3

Keim vy. United States, 177 U.S. 290 (1900) er OBD 21

Lawn v. United States, 355 U.S. 339 (1958). _.... 19

Mazer v. Stein, 347 U.S. 201 (1954) sae We 13, 14, 17, 20

National Nutritional Foods Ass’n Vv. Weinberger,

512 F.2d 688 (2d Cir.), cert. denied, 423 U.S.

ee on ons basgseniebcnolesiadsonmmanmacnanninde 15

TABLE OF AUTHORITIES—Continued

Page

Norris Indus., Inc. vy. ITT, 696 F.2d 918 (11th

Cir.), reh’g denied, 703 F.2d 582, cert. denied,

S04 Wh BO CR co ccksnenthntaene eee 13

Schnapper Vv. Foley, 667 F.2d 102 (D.C. Cir.

1981), cert. denied, 455 U.S. 948 (1982)... 13, 14

Shurtleff v. United States, 189 U.S. 311 (19038).... 21

United States v. Midwest Video Corp., 406 U.S.

Oe GRIER esis ie ee ete e aaa a 8

CONSTITUTIONS, STATUTES AND REGULA-

TIONS:

Act of Feb. 19, 1897, ch. 265, 29 Stat. 538 20

Constitution of the United States, Art. II, § 2,

ha Fe cceits.iscacecosamretcaeis eee 21, 22

(1962 & Supp. IV 1986) ........................................ 1

Uses... oh eee ceee es passim

iIUSC Sil ee 1

ST UBS SPAR) ene 1,15

eis Teme BC 8 Sy | | ene m mn mne mm ard 2,9

17 U.S.C. § 111(d) (1) (B) (i)-(iv) 2. 2

ST Uae eee eee 20

De Chee FO eels ea eo eee 15, 20

St UF. Bo Bee (eee) 2 ee. 14

2h Uae © ee Oe ee eee ee 15

2 Uae, § ee freee) 3 ee 21

ADMINISTRATIVE REPORTS AND PROCEED-

INGS:

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

CM es) | ee ene SCAM OME NaN oA atk 8

First Report and Order in Docket No. 19554, 52

Packs 2 Eee 2 eee 8

45 Fed. Reg. 45,270 (1980) 2 4

49 Fed. Reg. 13,029 (1984) 20. passim

16 Fed. Reg. 39,649 (1981) ee 4

43 Fed. Reg. 27,827 (1978) 2.000000... ooo ccceeeeececreeeenee 3, 4, 20

IN THE

Supreme Court of the Wuited States

OCTOBER TERM, 1987

NATIONAL CABLE TELEVISION ASSOCIATION, INC.,

. Petitioner,

COLUMBIA PICTURES INDUSTRIES, INC., et al.,

UNITED STATES COPYRIGHT OFFICE and ITs REGISTER,

Respondents.

On Petition for Writ of Certiorari to the United States

Court of Appeals for the District of Columbia Circuit

BRIEF IN OPPOSITION OF RESPONDENTS

COLUMBIA PICTURES INDUSTRIES, INC., et al.

STATEMENT OF THE CASE

Under the Copyright Act of 1976, 17 U.S.C. $$ 101

et seq. (1982 & Supp. IV 1986), cable systems ob-

tain a compulsory license to retransmit copyrighted

broadcast programming, 17 U.S.C. $111(c), by de-

positing with the Copyright Office a statement of

account and royalty fee, 17 U.S.C. § 111(d)(1). For

larger cable systems, the amount of royalty fees paid

is intended to be commensurate with the amount of

distant non-network broadcast programming carried.

H.R. Rep. No. 1476, 94th Cong., 2d Sess. 90, re-

printed in 1976 U.S. Code Cong. & Admin. News

5659. Congress determined that cable retransmis-

sion of such broadcast programming, unlike the re-

transmission of local broadeast programming and

programming supplied by the three national broad-

cast networks, “causes damage to the copyright owner

by distributing the program in an area beyond which

it has been licensed” and is “of direct benefit to the

cable system by enhancing its ability to attract sub-

scribers and increase revenues.” /d.

Accordingly, Congress created “distant signal

equivalent” (“DSE’’) values. 17 U.S.C. $ 111(d) (1)

(B); H.R. Rep. No. 1476 at 90. It assigned a .25

DSE value to distant non-network affiliates and a

1.0 DSE value to distant independent stations, in

light of “the different amounts of viewing of non-

network programming carried by such stations.”

H.R. Rep. No. 1476 at 90. The DSE values of the

distant signals retransmitted by a cable system are

combined, and then the statutory percentage rates,

17 U.S.C. § 111(d)(1)(B) (i)-(iv), are applied to

the DSE total.’

The resulting values are then multiplied by “the

gross receipts from subscribers to the cable service

for the basic service of providing secondary

transmissions of primary broadcast transmitters.”

17 U.S.C. § 111(d)(1)(B). The parties to this case

disagree as to what revenues must be included in

“gross receipts.”

Cable systems offer subscribers two types of serv-

ice: “basic” and “pay-cable.” See H.R. Rep. No.

1476 at 88. “Basic” service usually consists of re-

‘See Appendix to the Petition (“Pet. App.”) 8a-9a (ex-

plaining fee calculation with illustrations).

transmitted broadcast channels bundled together with

eable-originated (i.e., nonbroadeast) channels in

packages (or “tiers” of channels) that are offered

to subscribers for a single monthly charge for each

package.’ See, e.g., Jones v. Wilkinson, 800 F.2d

989, 1002 (10th Cir. 1986), affd, 107 S. Ct. 1559

(1987): Home Box Office, Inc. v. FCC, 567 F.2d 9,

18-19 (D.C. Cir.), cert. denied, 434 U.S. 829 (1977).

“Pay-cable” services, such as HBO and Showtime,

consist of uninterrupted nonbroadcast programming

and are transmitted to subscribers for per-program

or per-channel fees over and above the basic service

charge(s). See, e.g., Home Box Office, 567 F.2d at

18 & n.8.

In two rulemakings, the Copvright Office deter-

mined that, when a cable system chooses to bundle

both broadcast and nonbroadecast channels on one

tier of service, offered to subscribers for a single

monthly fee, all subscriber revenues from that tier

must be included in the cable system’s “ross re-

ceipts” under 17 U.S.C. $111(d)(1)(B). The Of-

fice rejected the notion that a portion of the reve-

nues from such a tier may be “allocated” to non-

broadcast programming and excluded from gross re-

ceipts. 43 Fed. Reg. 27,827 (1978); 49 Fed. Reg.

13,029 (1984).

* Subscribers must pay for the entire package; they cannot

purchase only the broadcast channels or only the nonbroad-

cast channels. See Report, Inquiry into the Serambling of

Satellite Television Signals, 2 F.C.C. Record 1669, 1686

(1987) (“Because basic cable services are not sold a la carte

on cable, no individual retail rates are available for them... .

[Also,] the pay cable subscriber must ‘buy through’ basic

cable to purchase the pay service, even if he is not interested

in basic service per se.’’).

The Copyright Office rejected such an allocation

in its first rulemaking implementing $111. It ex-

plained that “[t]he origination and retransmission

services are clearly part of an integral package of-

fered to subscribers,” and that there is “no statutory

justification or basis for allocating the monthly fee.”

43 Fed. Reg. at 27,828.

In 1980, certain cable operators asked the Office

to reconsider its requirement that all subscriber rev-

enues from a bundled tier be included in “gross re-

ceipts.” 45 Fed. Reg. 45,270, 45,273 (1980). The

Office agreed to receive comments and hold a public

hearing. 46 Fed. Reg. 30,649, 30,651 (1981).

At the hearing, petitioner National Cable Televi-

sion Association, Ine. (“NCTA”) testified in oppo-

sition to proposals to permit allocation. In its pre-

pared testimony, NCTA stated that allocation of rev-

enues from a tier containing broadcast and nonbroad-

cast programming “would add undue complication

to the process and might well be a subject for dis-

pute and abuse.” Court of Appeals Appendix (“C.A.

App.”) 334 (emphasis added). In his oral testimony,

NCTA’s representative, Robert W. Ross, reiterated

NCTA’s opposition to allocation:

[Wle encourage you not to go that route.

... We think that is just opening up a hornet’s

nest of problems to try to attempt to do that.

There may well be . . . some cable companies

that are interested in attempting to do that; in

which case we wish them good luck. But fhat is

not the position that reflects the attitude of the

Association. .

I would have a difficult time trying to at-

tribute those revenues, and I would suggest that

you don’t try to go down that road, because I

think you could create a regulatory monster that

would consume more resources than you care to

dedicate to it—and, certainly—more resources

than we care to dedicate to it.

Id. 325-27 (emphasis added). NCTA stated that it

accepted the Office’s 1978 interpretation prohibiting

allocation.*

In promulgating its final regulation in 1984, the

49 Fed. Reg. at 13,035. It concluded that the Act

“does not permit any proration or other allocation

of ... gross receipts . . . where any secondary trans-

mission service is combined with nonbroadeast serv-

ices in program packages, clusters, or tiers.” Jd.

The Office also questioned whether, even if allocation

were permitted, a fair method of allocation could be

designed, and whether abuse by cable systems in

making allocations could be avoided. Jd. Finally, it

found that “[t]o a large extent... a cable system

can control its own ‘tiering’ destiny . . . [by] of-

ferfing] secondary transmission services solely as

part of minimum service or on discrete tiers, exclud-

3 See J.A. 332:

[MS. SCHRADER:]

Do I understand . . . that you are accepting the inter-

pretation the Copyright Office has placed on the Act in

this situation? That as far as the gross receipts calcula-

tion is concerned, a cable system would have to include

all of the receipts from the optinal [sic] tier?

MR. ROSS: That is correct.

ing expensive origination services in either case.”

Id.*

Prior to the conclusion of the rulemaking, NCTA

filed a complaint in district court advancing an in-

terpretation of § 111 directly contrary to its position

before the Copyright Office. Whereas NCTA had

previously opposed allocation, it now sought a de-

claratory judgment that cable systems must be per-

mitted to allocate. NCTA did not advocate a par-

ticular method of allocation; it urged that the mat-

ter be sent back to the Office for the development of

regulations concerning allocation.’

The district court rejected the Copyright Office’s

interpretation on the ground that it “seems unfair,”

Pet. App. 49a, and accepted NCTA’s interpretation.

It reasoned that because royalty fees paid under

§ 111 were intended to compensate copyright owners

for the retransmission by cable systems of distant

non-network broadcast programming, see H.R. Rep.

No. 1476 at 90, “Congress did not intend to include

revenues from nonbroadcast programming in the cal-

culation of ‘gross receipts.’” Pet. App. 50a. The

4 The views advanced in the indented quotation on page 5

of NCTA’s Petition were not part of the explanation the

The quoted sentence appeared in a letter written by the

Office’s General Counsel more than two years later in re-

sponse to certain hypotheticals. See Pet. App. 30a. The court

of appeals ruled that the issues raised in the letter are “un-

ripe for judicial review,” id., and NCTA has not sought re-

view of that ruling.

> Memorandum in Support of Plaintiff’s Motion for Sum-

mary Judgment and Plaintiff's Opposition to Defendants’

Motion To Dismiss, Dec. 5, 1983, at 37 n.18, 44 n.26, and 45.

—————————

court did not prescribe a method of allocation, but

left that task to the Copyright Office. Id. 54a, 58a.

The court of appeals unanimously reversed. It

concluded that the district court had misunderstood

the function of DSEs in the statutory scheme. Id.

22a. Although the district court had “correctly ob-

served that liability under the compulsory license

was to be limited to the retransmission of distant

non-network programming,” id. 22a-23a (citation

omitted), it had ‘“‘failed to appreciate how the distant

signal equivalents satisfy that intention,” id. 23a.

[T]he DSE value—and hence the percentage of the

fixed gross receipts base due as a fee—rises with

each distant broadcast channel retransmitted ... .”

Id. In exeluding revenues attributable to non-

broadcast programming from “gross receipts” to en-

sure that royalty payments are limited to distant

non-network programming, the district court had dis-

regarded Congress’s decision to use the DSEs for

that purpose. Jd.

REASONS FOR DENYING THE WRIT

1. NCTA’s current interpretation, which contradicts its

position in the rulemaking, was properly rejected.

NCTA’s contention that the term “gross receipts”

includes only revenues “attributable” to the retrans-

mission of broadcast programming is wholly unten-

able, and was properly rejected by the court of ap-

peals. First, NCTA’s interpretation “violate[s] the

canon of construction that effect should be given to

every word of the statute so that no part is ren-

dered ‘inoperative or superfluous.’” Jd. 21a-22a (ci-

tation omitted). The relevant statutory language is

“gross receipts from subscribers . . . for the basic

service of providing secondary transmissions of pri-

mary broadcast transmitters.” As the court of ap-

peals noted, NCTA’s interpretation

reads “basic service” out of the statute; under

this view, the language could as easily be “gross

receipts from subscribers . . . for secondary

transmissions of primary broadcast transmit-

ters.”

Id. 22a.

Second, it was well understood in 1976 that the

term ‘‘basic service” encompassed non-broadcast pro-

gramming (as well as broadcast programming). As

NCTA conceded before the court of appeals, in 1976

cable systems offered one or more channels of cable-

originated programming “as part of their broadcast

retransmission service.” ® Moreover, the inclusion of

nonbroadcast programming as part of basic service

was explicitly brought to Congress’s attention during

the hearings on copyright revision. For example,

®‘ Brief for Appellee National Cable Television Association,

Inc. at 8. Before the adoption of the Act, nonbroadcast

channels were included in the basic retransmission service

as a result of the FCC’s “program-origination” requirement

for cable systems with more than 3,500 subscribers; the FCC

required that a cable system operate “to a significant extent

as a local outlet by cablecasting”’ and have “available facili-

ties for local production and presentation of programs other

than automated services.” First Report and Order, 20

F.C.C.2d 201, 223 (1969) (setting forth § 74.1111(a)); see

United States v. Midwest Video Corp., 406 U.S. 649 (1972);

see also First Report and Order in Docket No. 19554, 52

F.C.C.2d 1, 47 (1975) (expressly exempting basic nonbroad-

cast channels from FCC rules restricting ‘“pay-cable’’) ;

Cable Television Report and Order, 36 F.C.C.2d 143, 193

(1972) (recognizing that basic cablecasting would develop

through the availability of “interconnected programming via

satellite or interstate terrestrial facilities’’).

Community Antenna Television Association, a cable

group, testified that nonbroadcast movie channels

were regularly offered in combination with broadcast

services at no separate charge: ‘“‘Many systems have

a 24-hour movie channel. That is not something you

pay extra for, that is just part of the service.” ‘

In light of the bundling of broadcast and nonbroad-

cast programming that existed in 1976 and Con-

gress’s awareness of such bundling, the absence of

any provision in §$111(d)(1)(B) for allocation of

broadcast and nonbroadcast revenues is highly sig-

nificant. As the court of appeals noted, “the clear

implication of the phrase ‘basic service’ [is] that

cable services are typically provided in packages.”

Pet. App. 22a. If Congress had intended to permit

allocation, there presumably would have been a refer-

ence to allocation in the statute, or at least in the

House Committee Report, which contains a step-by-

step description of how royalty fees are to be calcu-

lated. H.R. Rep. 1476 at 90.*

’ Hearings on H.R. 2223 Before the Subcommittee on

Courts, Civil Liberties, and the Administration of Justice of

the House Comm. on the Judiciary, 94th Cong., 1st Sess. 623

(1975).

* Congress’s intent to include in “gross receipts” all sub-

scriber revenues other than those for pay-cable services is

underscored by earlier versions of the copyright revision

bill, which contained more elaborate specifications for the

statement of account to be filed by cable systems.

Section 111(d) (2) (A) of S. 1361, 93rd Cong., 2d Sess.

(1974), and S. 22, 94th Cong., Ist Sess. (1975), divided

revenues into two categories for reporting purposes: (1)

gross revenues “for advertising, leased channels, and cable-

casting for which a per-program or per-channel charge is

Third, the statutory scheme makes clear that rev-

enues from a bundled tier should not be allocated to

limit “gross receipts” to revenues attributable to the

carriage of distant non-network programming. To

make royalty fees commensurate with the amount of

distant non-network programming carried, Congress

created the DSE value, which it considered ‘central

to the computation of the royalty fees payable.” H.R.

Rep. No. 1476 at 100. In approving allocation in or-

der to limit royalty fees to the carriage of distant

non-network programming, the district court reduced

cable royalties to achieve the same purpose already

served by the DSEs. There is no reason to think that

Congress intended that the amount of distant non-

made,” and (2) gross revenues paid “‘by subscribers for the

basic service of providing secondary transmissions of pri-

mary broadcast transmitters.”’

Significantly, the only subscriber revenues excluded from

the second category were those for cablecast programming

“for which a per-program or per-channel charge is made,”

i.e., pay-cable channels. Subscriber revenues “attributable”

to cablecast programming other than pay cable were thus to

be included in the gross revenues for the basic retransmis-

sion service.

This understanding is confirmed by the Senate Report

accompanying S. 22;—which_stated that “‘[i]ncome received

from the installation of equipment~or from advertising ac-

companying CAT V-originated programfs] is excluded from

the computation of the gross receipts of ~a. cable system.”

S. Rep. No. 473, 94th Cong., 1st Sess. 81 (1975) (emphasis

added). As Professor Nimmer noted, “[i]f subscriber pay-

ments attributable to such originated programming\were to

be excluded [from ‘gross receipts’], it would hardly ‘be nec-

essary to add that in addition advertising income for \such

programming was also to be excluded.” 2 Nimmer on Copy-

right § 8.18[E] at 8-213 n.137 (1987 ed.). \

network programming carried be accounted for both

by the DSEs and by allocation of “gross receipts.” °

Fourth, both methods of allocation proposed by

NCTA in the district court would create the “hor-

net’s nest of problems” that NCTA cited in 1981.

Pet. App. 25a. A flat per-channel allocation cannot

be reconciled, as NCTA has recognized, with “the

® See also Pet. App. 24a:

If an allocation between broadcast and non-broadcast

programming revenues in each tier were required by the

statutory scheme, one would wonder why Congress did

not call for a further allocation, to remove local broad-

cast revenues from gross receipts, and do away with the

DSE system altogether. The answer, it seems to us, must

be that DSE calculations were considered more practical

and were therefore adopted in lieu of attempts at such

allocation.

NCTA argues that revenues “attributable” to basic non-

broadcast programming must be excluded from “gross re-

ceipts’” because “Congress had no logical basis to demand

an additional statutory payment for the right to carry pro-

gramming which cable operators had already acquired and

paid for through private negotiations.” Pet. 24. The diffi-

culty with this argument is that ‘‘gross receipts” are not

payments to copyright owners; “gross receipts” and the

DSE values are interrelated elements in the formula chosen

by Congress to produce a level of royalty payments it con-

sidered appropriate. See H.R. Rep. No. 1476 at 91. The in-

clusion in “gross receipts” of revenues “attributable” to

basic non-broadcast programming does not result in an un-

warranted payment to copyright owners any more than does

the inclusion of revenues ‘attributable’ to local or network

broadcast programming. Congress determined that the cable

retransmission of local or network broadcast programming

does not require compensation to copyright owners, see page

2, supra, but it is undisputed that revenues “attributable”

to such programming must be included in “gross receipts.”

liaise

financial realities of the cable business.’ It also

would enable a cable system to reduce “gross re-

ceipts” unfairly by loading a tier containing broad-

cast programming with cable-originated channels

that are inexpensive or free to the cable system. 49

Fed. Reg. at 13,035 n.15. Allocation based on meas-

urements of actual viewership, a position never ad-

vocated during the two rulemakings, is impractical

and incompatible with the statutory purpose of

achieving a method of compensating copyright own-

ers that is simple and efficient and has low trans-

action costs. See H.R. Rep. No. 1476 at 89. Measure-

ments within specific service areas of viewership of

individual channels carried by cable systems are not

currently available, see C.A. App. 327, would be pro-

hibitively expensive for most cable systems, and

would require costly monitoring to prevent abuse.”

2. The Copyright Office’s interpretation of section 111 is

entitled to deference.

NCTA asserts that the Copyright Office has no

authority to interpret the Copyright Act in a man-

“C.A. App. 457 n.3 (brief filed by NCTA in Cox Cable

New Orleans, Inc. vy. City of New Orleans, 594 F. Supp. 1452

(E.D. La. 1984) ).

1! By contrast, including all revenues from a bundled tier

in gross receipts imposes no burden on a cable system. As

the Copyright Office noted, a cable system can iargely control

its own “ ‘tiering’ destiny.” 49 Fed. Reg. at 13,035. If the

inclusion in “gross receipts” of revenues “attributable” to

nonbroadcast programming is considered burdensome, a cable

system can simply unbundle the nonbroadcast channels from

its basic retransmission service tiers and offer them for a

separate monthly charge. Cable systems are free to “forego

those marketing advantages that now lead them to pay higher

than necessary fees.” Pet. App. 26a.

ner ‘‘affecting the substantive rights of private par-

ties.” Pet. 10; see also id. 14. That assertion is er-

roneous.

NCTA fails to address the decisions of this Court

recognizing that the Copyright Office’s interpreta-

tions are entitled to deference. This Court deferred

to the Office’s construction of the law in Mazer v.

Stein, 347 U.S. 201, 213-14 (1954), and again in

Goldstein v. California, 412 U.S. 546, 567-69 (1973).

In De Sylva v. Ballentine, 351 U.S. 570, 577-78

(1956), the Court made clear that it would have de-

ferred but for the fact that the Office had not made a

“confident interpretation.” NCTA discusses none of

these cases. Numerous decisions of the courts of ap-

peals have also accorded deference to the Office’s in-

terpretations.’"- NCTA ignores most of those deci-

sions as well.

NCTA errs in suggesting that the Copyright Of-

fice has been “given latitude only in strictly minis-

terial functions and in determining whether a par-

ticular submission was ‘copyrightable.’” Pet. 14 n.20

(citations omitted). For example, in Goldstein v.

California, this Court deferred not to the determina-

tion whether a particular submission was copyright-

able, but to the Copyright Office’s general view that

claims to exclusive rights in mechanical recordings

12 See Norris Indus., Inc. v. ITT, 696 F.2d 918, 922 (11th

Cir.), reh’g denied, 703 F.2d 582, cert. denied, 464 U.S. 818

(1983); Schnapper v. Foley, 667 F.2d 102, 110 (D.C. Cir.

1981), cert. denied, 455 U.S. 948 (1982); Esquire, Ine. v.

Ringer, 591 F.2d 796, 801 (D.C. Cir. 1978), cert. denied,

440 U.S. 908 (1979); Eltra Corp. v. Ringer, 579 F.2d 294,

297-98 (4th Cir. 1978); Hoffenberg v. Kaminstein, 396 F.2d

684, 685 (D.C. Cir.) (per curiam), cert. denied, 393 U.S. 913

(1968).

(or in the performances they reproduce) were not

entitled to copyright protection. 412 U.S. at 567-68.

Similarly, the interpretation accorded deference in

Mazer v. Stein was not a determination concerning a

particular work, but a general interpretation set

forth in a regulation, 37 C.F.R. § 202.8 (1949). 347

U.S. at 212-13.”

Contrary to what NCTA suggests, the opinion be-

low does not conflict with Bartok v. Boosey

Hawkes, Inc., 523 F.2d 941 (2d Cir. 1975). First,

in Bartok, which involved a dispute as to who could

renew a copyright, it was “unlikely . .. that the

fore the court. /d. at 947 n.10. The Register had

adopted a form containing a general definition of

“posthumous” work, but had not addressed the issue

that later came before the court. /d. at 946. More-

over, the Register had “permitted the filing of both

renewals[,] expressly declining to adjudicate as be-

tween them.” Bartok v. Boosey & Hawkes, Inc., 382

F’. Supp. 880, 882 (S.D.N.Y. 1974). Here, the Copy-

right Office conducted rulemaking proceedings and

adopted a regulation that directly addresses the is-

sue of allocation.

Second, as the court below noted, because the Sec-

ond Circuit “held the interpretation put forward by

the Office was inconsistent with legislative intent,

' See also Schnapper Vv. Foley, 667 F.2d at 110 (according

deference to the Copyright Office’s consistent acceptance for

registrat'on of federally commissioned works).

'* Unlike Cablevision Company, petitioner in No. 87-1642,

NCTA makes no claim that the decision below conflicts with

De Sylva v. Ballentine.

_ its statement on the deference due the Office

would seem to be a dictum.” Pet. App. 21a.

Third, the court below did not reject the Bartok

dictum. The court explained that, even if the dictum

were “generally sound,” “the Second Circuit was not

considering section 111” (which had not yet been

enacted) and its dictum should not be extended to

interpretations of that provision. Jd. The court be-

low also emphasized that its own conclusion concern-

ing deference was limited to interpretations of § 111.

Id.

The relevant provisions of Title 17 confirm that

the Copyright Office has the power to interpret § 111.

Section 702 expressly authorizes the Register “to es-

tablish regulations . . . for the administration of the

functions and duties made the responsibility of the

ample support for the promulgation of an interpre-

tive regulation such as that at issue here; indeed,

similar language has been construed to authorize the

promulgation of substantive regulations having the

force of law.” In addition, Congress gave the Office

specific authority to issue regulations governing

statements of account and royalty fees: § 111(d)(1)

provides that cable systems’ semi-annual filings are

to be made “in accordance with requirements that

the Register shall . . . prescribe by regulation.”

NCTA’s position is also self-contradictory. Pet.

App. 17a. NCTA contends that the Copyright Office

5 See, e.qg., National Nutritional Foods Ass'n v. Wein-

berqer, 512 F.2d G88, 696-97 (2d Cir.) (§ 701 (a) of the Food,

Drug & Cosmetic Act, 21 U.S.C. §571(a)), cert. denied, 123

U.S. 827 (1975).

can only perform ministerial functions and decide

whether individual works are copyrightable. But

throughout this litigation NCTA has urged that the

matter be sent back to the Office for the development

of regulations governing allocation.'"® NCTA asserted

below that it could “demonstrate to the Copyright

Office that a ‘per channel’ allocation scheme is rea-

sonable.” '* Deciding the validity of this or any other

method of allocation would not be “strictly minis-

terial’; it would require substantive policy choices

as to the proper method of allocation, would have an

impact of tens of millions of dollars annually, and

would affect thousands of cable systems and hundreds

of copyright owners."* If, as NCTA contends, the

"See, e.g., Transcript of oral arcument in the court of

appeals, Oct. 15, 1987, at 45; Memorandum in Support of

Plaintiff's Motion for Summary Judgement and Plaintiff's

Opposition to Defendants’ Motion To Dismiss, Dec. 5, 1983,

at 57 n.18, 14 n.26, and 45

' Brief of Appellee National Cable Television Association,

Inc. at 38 n.33

'’ In a statement to NCTA’s counsel at oral argument, the

court of appeals focused on the contradiction that lies at the

heart of NCTA’s position:

QUESTION: We're talking about a method of alloca-

tion which is impregnated with policy concerns, and

which is so difficult and so confusing that no one is

prepared even in this Court to talk about. You're say-

ing, send that back to the Copyright Office: have them

issue a regulation that accomplishes that and, of course,

that’s the very Copyright Office that we [sic: should be

“you"] claim doesn’t have any authority to issue regula-

tions.

Tr. of Oct. 15, 1987 at 412-43.

tive interpretations,” it could scarcely resolve such

an important issue.

NCTA cites the Copyright Office’s lack of enforce-

ment power. Pet. 11-12. There is no reason, how-

ever, for deference to turn on the existence of power

to commence enforcement actions. This Court cer-

tainly has not linked deference to enforcement power;

it has recognized that deference should be accorded

to the interpretations of the Copyright Office '’ and

of other agencies that do not enforce the law.”

Nor is there any merit in NCTA’s contention that

the Copyright Office’s interpretations are unworthy

of deference because the Office “[f]rom its inception

_ has had an institutional bias favoring copyright

owners.” Pet. 14-15. First, NCTA’s views were fully

and fairly considered by the Copyright Office; in

fact, the Office accepted the position concerning allo-

eation that NCTA advanced at the 1981 hearing.

See Pet. App. 14a (“No doubt influenced in part by

the NCTA’s position,” the Office disallowed alloca-

tion.). Second, neither this Court nor the courts of

appeals have considered the Copyright Office to be

biased in favor of copyright owners.”

Third, the statements of former Registers of Copy-

rights Barbara Ringer and Abraham Kaminstein

quoted at Pet. 16-17 & nn. 23-24 were made in 1975

in a legislative hearing addressing what the law

19 See Goldstein v. California, 412 U.S. at 568-69; De Sylva

v. Ballentine, 251 U.S. at 577-78; Mazer v. Stein, 247 U.S. at

215.

2 See, e.g., Andrus Vv. Sierra Club, 442 U.S. 347, 358 (1979)

(Council on Environmental Quality).

21 See cases cited at page 13 and note 12, supra.

should be, not in a rulemaking proceeding interpret-

ing the statute enacted by Congress. NCTA has not

cited a single example of bias or preferential treat-

ment in the rulemaking proceedings concerning § 111

or otherwise in the administration of the Act.

NCTA’s claim that the Copyright Office “would in-

variably resolve issues in favor of the copyright own-

ers’ (Pet. 18) is belied by the very rulemaking at

issue here. In the same 1984 Notice in which it ad-

dressed the issue of allocation, the Office rejected

MPAA’s positions on several other issues.”

Fourth, a statement by a Register of Copyrights

that he or she favors authors, composers, and artists

is analogous to a statement by the Administrator of

EPA that he favors the environment, or by the Com-

missioner of Food and Drugs that he seeks to pro-

tect consumers. Such expressions do not bar those

officials from interpreting statutes or, indeed, making

adjudicatory decisions in matters involving manufac-

turers. General support for an agency’s protective

mission does not constitute bias.

3. NCTA’s separation-of-powers contention was not pre-

sented below and lacks merit.

NCTA also contends that the separation-of-powers

doctrine precludes deference to the Copyright Of-

fice’s interpretations. Pet. 19-22. This issue was not

raised below. “Only in exceptional cases will this

Court review a question not raised in the court be-

*2 See, e.g., 49 Fed. Reg. at 13,032 (part-time carriage on

a single cable channel of distant television stations having

different DSE values); id. at 15,036 (specification of basis

for classifying particular television station carriage as local).

low,” “ and there are no exceptional circumstances

here.

NCTA was fully aware of the issue. A separation-

of-powers challenge to the Copyright Office was con-

sidered (and rejected) in a case—Eltra Corp. v.

Ringer, 579 F.2d 294 (4th Cir. 1978)—that was

cited in briefs in this case in both the district court “

and the court of appeals,” and in the Copyright Of-

fice’s notice issuing its final regulation in 1984.”

Moreover, the principal case now relied on by NCTA

—Bowsher v. Synar, 106 S. Ct. 3181 (1986)—was a

highly publicized decision handed down more than a

year before NCTA filed its brief in the court of ap-

peals. NCTA was obviously aware of the separation-

of-powers issue, but deliberately decided not to raise

28 Lawn Vv. United States, 355 U.S. 359, 362 n.16 (1958)

(citations omitted) ; see, ¢.g., Delta Airlines, Inc. v. August,

450 U.S. 346, 362 (1981); Adickes v. S.H. Kress & Co., 398

U.S. 144, 147 n.2 (1970).

24 See NCTA’s Memorandum of Points and Authorities in

Support of NCTA’s Renewed Motion and Cross-Motion for

Summary Judgment and in Opposition to the Copyright

Owners’ and Copyright Office’s Motion for Summary Judg-

ment, June 9, 1986, at 45-44.

25 See Reply and Answering Brief for Appellants/Cross-

Appellees Motion Picture Association of America, Inc., et al.,

at 6; Reply Brief for Appellee/Cross-Appellant Cablevision

Company at 6.

“6 49 Fed. Reg. at 13,031 n.10.

27 NCTA cannot claim that it was surprised by the court

of appeals’s deference to the Copyright Office. The district

court also recornized that the test of Chevron U.S.A., Inc,

v. Natural Resources Defense Council, 467 U.S. 837 (1984),

is applicable, Pet. App. 46a-17a, and the issue of deference

was fully briefed in the court of appeals.

Paice neal

NCTA’s contention lacks merit in any event. The

brarian of Congress since 1897.°* On three separate

occasions, this Court has recognized that the Office’s

considered interpretations are entitled to deference,

without suggesting the slightest doubt as to the con-

stitutionality of the Office’s interpretive role.” As

the Fourth Circuit noted in Eltra, “it seems incredi-

ble that, if there were a constitutional infirmity... ,

it would have so long escaped notice by either the

Supreme Court or the bar or that the Supreme Court

would have given implicit authorization [in Mazer,

De Sylva, and Goldstein] for the exercise by the Reg-

ister of the power to issue rules and regulations.”

579 F.2d at 299.

There is no constitutional infirmity. NCTA re-

peatedly cites and quotes from Bowsher, but fails to

mention ‘“‘[t]he critical factor’ relied upon by this

Court: Congress’s power to remove the Comptroller

General “at any time” on “very broad” grounds.

106 S. Ct. at 3189-90. Congress has no comparable

-power to remove the Librarian of Congress, who di-

rects and supervises the Copyright Office and ap-

proves all regulations issued by the Office,”’ including

the regulations at issue here.*' Congress has speci-

fied that the Librarian of Congress is to be appointed

by the President with the advice and consent of the

*s See Act of Feb. 19, 1897, ch. 265, 29 Stat. 538, 545.

*° See Goldstein Vv. California, 412 U.S. at 567-69: De Sylva

v. Ballentine, 351 U.S. at 577-58; Mazer v. Stein, 347 U.S. at

213

” See 17 U.S.C. $$ 701 (a), 702.

“! See 43 Fed. Reg. at 27,830; 49 Fed. Reg. at 13,038.

Senate,” and has not given itself the power to remove

the Librarian.“ Assuming for the sake of argument

that the Copyright Office exercises ‘executive’ power

when it interprets $111 or other provisions of the

move the Librarian of Congress readily distinguishes

Bowsher.™

NCTA’s reliance on Buckley v. Valeo, 424 U.S. 1

(1976) (per curiam), is also misplaced. There, four

members of the Federal Election Commission were

appointed by the President pro tempore of the Senate

and the Speaker of the House. The other two mem-

bers were nominated by the President, but his nomi-

nations were subject to confirmation not only by the

Senate but also by the House. /d. at 126. The Court

concluded that this procedure violated the Appoint-

ments Clause, Art. II, § 2, cl. 2, because the members

of the Commission performed ‘administrative func-

tions [that] may . .. be exercised only by persons

who are ‘Officers of the United States.’” Jd. at 141.

This ruling does not help NCTA, for the Librarian of

Congress is appointed by the President with the ad-

32 See 2 U.S.C. § 136 (1982).

“ The power to remove the Librarian rests with the Presi-

dent. “The power to remove is, in the absence of statutory

provision to the contrary, an incident of the power to ap-

point.” Burnap v. United States, 252 U.S. 512, 515 (1920)

(citations omitted) ; see Shurtleff v. United States, 189 U.S.

311, 314-16 (1903); Keim v. United States, 177 U.S. 290,

293-94 (1900); Ex parte Hennen, 38 U.S. (13 Peters) 230,

259 (1839).

“% See 106 S. Ct. at 3188 n.4 (stressing that “/t]his case

involves nothing like” statutes that specify that agency mem-

bers are removable by the President for specified causes or

do not specify a removal procedure).

vice and consent of the Senate—one of the modes of

appointment that the Appointments Clause permits

for “Officers of the United States.” See Eltra, 579

F.2d at 301.”

4. The court of appeals concluded that the Copyright

Office’s interpretation is superior to NCTA’s.

There are many indications in the court of ap-

peals’s opinion that deference was not critical to its

rejection of NCTA’s interpretation. The court de-

clared that “[t]he Copyright Office’s regulation is...

the interpretation before us that best accounts for

the statutory language,’ and that it “evinces a full

understanding of the structure and purpose that un-

derlie [the statutory] language.” Pet. App. 22a (em-

phasis added). The court found “no requirement in

the statute or its history that the fee paid by a cable

system reflect precisely the value it receives from

retransmissions.” Jd. 24a (emphasis added). The

court concluded that ‘including all revenues from any

separately priced tier that contains one or more

broadcast stations is a convenient, indeed perhaps

the only reasonable, way of computing gross receipts

that ensures a revenue base large enough to perform

the function Congress intended—reimbursing copy-

right owners.” Jd. 26a (emphasis added). These

statements demonstrate that the result would have

35 INS v. Chadha, 462 U.S. 919 (1983), another case cited

by NCTA, is totally irrelevant. Chadha holds that, when

Congress exercises legislative power, it ordinarily must act

through “bicameral passage followed by presentment to the

President.” Jd. at 954-55. Since NCTA makes no claim that

the Copyright Office exercises legislative power, Chadha does

not support its position.

been the same even if the court had not accorded def-

erence to the Copyright Office.”

CONCLUSION

For the foregoing reasons, the Petition for a Writ

of Certiorari should be denied.

Respectfully submitted,

EDWARD BENNETT WILLIAMS

RICHARD M.._COOPER

Counsel of Record

PAUL MOGIN

WILLIAMS & CONNOLLY

839 17th Street, N.W.

Washington, D.C. 20006

(202) 331-5000

ARTHUR SCHEINER

DENNIS LANE

WILNER & SCHEINER

1200 New Hampshire Ave., N.W.

Washington, D.C. 20036

(202) 861-7800

Counsel for Respondents

Columbia Pictures Industries,

Inc., et al.

June 8, 1988

36 In an attempt to manufacture some basis for review by

this Court, NCTA asserts that the decision below “dramati-

cally increases” royalty fees. Pet. 6. It would be more ac-

curate to state that NCTA’s interpretation would dramati-

cally reduce royalty fees. The decision below simply reaffirms

the interpretation of $111 that the Copyright Office has

adhered to since 1978.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.