# Appellants Reply Brief — Watson v. Buck > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386401_0429%3A06 ## Record - **Collection:** Supreme Court brief - **Document type:** Appellants Reply Brief - **Published:** January 1, 1941 - **Citation:** 313 U.S. 387 ## Text FILED - APR-26 1041 Le ELMORE CROPLEY | Supreme Court of the 2 2. October Term, 1940 \ 8 e e * 5 - yt Sere oe, Ca SS * ry N La ees N * ay 45 5 o> wag Ne eek a) eee i aa a 2 ti ee x — — — 1 „ " * 1 2 * 0 — * ’ : ’ No. 610 J. Tom Watson ~( Gps) Individually in as _— Genera] of the State of Florida, et al., i Appellants —Vv8.— Gene Buck, Individually and as President of the American. — of Composers, Authors and Publishers, et al. Appellees. No. 611 Geng Buck, Individually and as President of the American Society of Composers, Authors and Publishers, et al. Appellants — VN. — J. Tom Watson (mas) Individually and as Attorney General of the State of Florida, et al., | Appellees. ON APPEAL FROM THE COURT OF THE UNITED STATES REPLY BRIEF FOR APPELLANTS (Defendents Below) In Case 610—and—APPELLEES in Case 611. \ J. Tom WATSON, \ Traus A. Norwoop, Attorney General of Assistant Attorney General Florida. of Florida. © \ Loom H. Boses, \ ANpaew W. BxNrrr, Jacksonville, Florida. Washington, D. C. Counsel for Appellants I Office - Supreme Court, U. . | Qn pee eee 8 JFF S Rey r a, A te are as BF eee Sree 38 . 0 * Pas * ree ate Tee ASS ih Pe SR eS n ; 2 A 8 — * ‘TABLE OF core Nene: > 1 a Page : FOREWORD ........ . „ f COMMENTS ON PLAINTIFFS’ “QUESTIONS 10 PRHOUNTRDꝛ·ꝛ·ꝛ eee 1 _ ERRORS AND INACCURACIES IN PLAIN- i TIFFS’ “STATEMENT OF THE CASE” .. . . 7 "ARGUMENT .. ee eth inn 1 Plaintiffs Show No Reason Why They Should ‘Not Be Barred of Relicf by the “Clean Hands” Doctrine Because of Their Monopolistic Prac- ticeees ͤ—ͤ— — . 20 II. The Plaintiffs Have Failed to Show that the Provisions of the 1937 Act Were Inseparable, and Failed to Overcome the Presumption of Separability Created by the petits Clause „ „eee eee . 22 III. The Enactment of the Statutes Was Within the Police Power of the State of Florida and Plain- tiffs Have Failed to Show the Contrary. ...... 24 IV. The Statutes Do Not Deny the Equal Protec- tion of the Laws to Owners of Copyrighted ite Music wee meee 06 EERE *3*3ũé!m̃ Tee ee 27 V. The Florida Statutes Create No “Arbitrary Pre- sumption of Guilt” and the McFarland Case Is Not in Point S - „„ 20 VI. The Objection That the State Statutes Impair Obligations under Existing Contracts is Un- founded % ο o ‚— ç—p , çt e eee 30 * 0 . . = 2 5 ? ‘ 1 2 8 N . . 3 * 0 N : ö 0 Nyaa sf * n * 8 at Kr 2 * ö ; N 8 2 4 — 2 J — = E 1 * „ Sic 9—9—ç—E— . ———— ——— —— AL ALLL ALARA — r e oe eee ‘ U ae PF 8 CONCLUSION BELT FDIS te Og AEE SS Slee 5 i] . i * . 2 APPENDIX “A”—Criminal Tatormstion in United 2 States v. American Society of Composers,. Aw thors and Publishers, U. 8. D. C. E|D Wiscon- . sin COC CC oe Roe Ce 050 Co; ebE DESO eee ee e een 33 APPENDIX “B”’—Civil Decree and Judgment in Uni- ted States v. American Society of Composers, Authors and Publishers, U. S. D. C. SID New, Feen eee e n 1 TABLE OF CASES AND AUTHORITIES CITED Alen v. Riley, 208.0. 8, 847 - 3 e ne, 24, 26 lüb oogt Line B. Co. v Goldsbar, 2 „ ß Brock v. Hardie, 114 Fla, Go 1 Buck v. Gallagher, U.S. D. C. W|D Washington (not . „ Appendix C1 defendants’ main brief Carrol v. Greenwich Ins. Co, 199 U. 8. 401 . 5 ; ee United States, 1 309 U. S. 436 . CPE eee eee Oe 22 Gibbs v. Buck, 207 d. S 60. —ͤ—y— ʒ I q . ᷑ 42.2 eee Blaisdell, 290 U. 8. eeeeee — — 2 2 31 1 Co. v. Missouri, 234 U. 8. 199 eeeeeeeee r 5625„5„„— 3 „. 28 McFarland v. American Sugar Refining Co., 241 U. & 799 4% 40600 et. 29 Motion Picture — Co. v. Universal Film Co. , 243 U. S. 502 „ „„ „„ ee „ „„ „„ „ „„ „46 22 New Orlane Gus gt & Louisiana Light Co, WW 31 Radite v. Sow Yaek, 20 U. E 28 Standard Oil Co. (Ind.) v. United States, 283 U. S. 162 ........... 65665 21 1 J — * 0 —— — 2 — — — one Fan e eee e — — ft . ee rt 8 CASES 2 Page " Stephenson v. Ainford, 287 U. S. 2 31 Tigner v. Texas, 310 U. 8. 141 sedevecesseseyeanae BT Union Dry Goods Co. v. Georgia Public Service Corp., : 8B BBB cere . 31 Vnited States v. Ameriean Society of 8 Au- thors and Publishers, U. S. D. C. E|D Wisconsin a (not reported) — Appendix BV, this brief .... 14 United States v. American e of Composers, Authors and Publishers . lee 6, 13 D V. S. D. C. SD New York (not reported) —Ap- pendix “A”, this brief. | United States v. Broadcast Müsle, Ine. U.8.D. 0. ED Wisconsin (not re ted) — Appendix 9 — ° K United States v. 8 9 100 Co., n v. 8. 2 .... . . .. ee Young, ex parte, 209 U. 8. 128 . Ba SES ee 1 STATE. STATUTES: „% ie te Compiled General Laws of Florite, Seaeetions 7944 - 794 UE . 26 Supreme Courtof the United States , October Term, 1940 rs pa F No. 610 . 8 J. Tom WarsoN (GmnS) dms) Individually and as diet . — General of the State of Florida, et al., ; . ; ) =~ Appellants, 8 ae * —v.— ~ Gene Buck, individually and as President of the Ameri _ can Society of Composers, Authors and Publishers, et all, A ppellees. No. 611 | GENE Boer, Individually and as President of the Ameri- can Society of Composers, Authors and Publishers, et al., _ Appellants, —_— J. Tom WATSON (Grpss) Individually and as 7 Attorney General of the State of Florida, et al., * * pace f U * 7 4 arri y BRIEF FOR APPELLANTS (DEFEND- .. ANTS BELOW) IN CASE 610 AND 1 0 e ASE 611.“ — 2 2 a _ FOREWORD 7 : at Finn brief is a lengthy = occupying 94 pages ex- . & 1 * \ \ \ > * FF | 1 1 1 . clusive of the 159-page Appendix. Much of their brief proper is repetitive, and it would be impossible without ex- tending this brief to undue length to reply to every assert- ion or argument with which defendants take issue. Therefore, this reply brief will concern itself only with such of the facts and arguments as are deemed essential to a proper understanding of the case..One fallacy in plain- tiffs’ brief has been reiterated so many times, that, in order to conserve the time of the court, it is best dealt with on the threshold: A very large part of plaintiffs’ argument is devoted to discussion of facts and legal principles which relate only to Sections 2-A, 2-B and 6 of the 1937 Act. In some instances one or more of these sections are specifically referred to, but in many places, the reference arises only by inference, At pages 31-35 inclusive of defendants’ main brief, it is demonstrated that these three sections of the 1937 Act were repealed by the 1939 Act; that consideration of these sections is also moot in the instant case because the de- fendants, as enforcement officers of the State of Florida have no duties to perform concerning them. Relying upon the arguments made in their main brief, defendants will not attempt to deal with any contentions advanced by ‘ plaintiffs with regard to these sections other than in some of the instances ‘where plaintiffs have referred to one or more of these sections by inference only, to point out that those are the sections involved. Sg The full text of these sections is printed in Appendix “A” to defendants’ main brief (Secs. 2-A and 2-L, pp. 61, 62; Sec. 6, pp. 66, 67). However, for the court’s con- vience in identifying reference to them in plaintiffs’ brief, es we digest the three sections briefly below: Section 2-A in substance provides that all authors, com- posers and publishers selling any musical composition in Florida in whatever form published, printed, manufactur- ed or prepared for use must cause to be specified thereon its selling price; that when a purchaser acquires the com- position and pays the specified selling price, the purchaser may render or permit to be used or rendered such composi- tion by players, orchestras, bands, radio apparatus, elec- trical transcriptions, music records or. otherwise, either privately or publicly without further license fees or exact- ions, the initial selling price being deemed to be full com- pensation for all such renditions. Z -’ Section 2-B provides that if any author, composer or publisher fails to affix the selling price on a musical com- position and collect the same in the time and in the manner provided in Section 2-A, then any person in Florida. who has purchased such composition may use it for private or public performance for profit without further license fee and shall be free from liability in any infringement or in- junction suit or suits instituted by the copyright proprie- tor. Section 6 deals with radio stations, theaters, moving pic- ture houses and similiar places of entertainment in Florida which are affiliated with concerns outside of the State originating the performance of copyrighted music, whether the original rendition of such music is by radio, sound pro- duction instrumentalities, or by furnishing persons to sing or play such music in the state. With respect to such con- cerns it places the entire responsibility and liability for the use of copyrighted music upon the affiliate outside the s - 2. 8 % * state who originates the broadcast or other performance. It forbids the owner from suing for copyright infringe- mént, loss or damage within this state because of the Flor- ida performance, remitting him to make his collection from the outside affiliate. ; . Thus it is readily seen that these three sections are not limited to combinations of copyright owners, as are Sec- tion 1 and the sections of the 1937 Act dependent on See- tion 1. They are intended to apply with equal force to uli copyright owners. Also it is apparent that any controver- dies which these three sections might &foke, would be con- troversies between private parties only, with which the de- fendant State enforcement officers would not be concern- ed. See Section 9 of the 1937 Act (def. br., pp. 68, 69), con- fining the duties of the state prosecuting officers to en- forcing the Act against combinations as defined in Section 1. Plaintiffs’ brief does not refute the proofs overwhelming- ly shown in the record (def. br. 11-22) that the Society constitutes a price-fixing combination in restraint of trade, but it tenders various excuses for its illegal operations such as: necessity for cooperative licensing (p. 8) ; blanket license only feasible method (p. 11); that blanket license is granted at low cost to user (p. 16) etc. However, these excuses can not justify plaintiffs’ illegal price-fixing acti- vities. See decisions of this court cited in defendants’ brief, 93 oes | 8 l N Piaintiffs Wave directly referred to a letter written by Assistant Attorney General Norwood to Judge Foster (R. I, 96, 97) at pages 30, 46, 58, 56, and also made other é mee to this letter by implication in their brief. They / \ / 9 ‘ 72 ead ay i ee eas ee he Pergo VER iss. eee ey * it 75 . ee on ris . 229 2 JF Bee CM eS A eo ital LL ekg, Sa eds. Say. yan „%% VV 1 * } 5 argue from this letter chat the defendants have threatened; / to prosecute the Society under the 1937 Act if it attemp to bring infringement suits in the State of Florida. _. This letter was pleaded in extenso in paragraph 8 of the Supplemental Bill (R. I, 96, 97) and referred to in para- graph 10 (R. I, 98). It is alleged that defendant, Attorney General Gibbs who succeeded Judge Landis would prose- cute the complainants if they brought suits for infringe- ment in the Federal Courts. In defendant Gibbs’ answer to the Supplemental Bill the writing of the letter is admitted but the other allegations of threats are denied (R. I, 108). At the time of the writing of the letter, Cary D. Landis was “Attorney General of Florida. He was succeeded by George Couper Gibbs, who was in turn on January 8, 1941 sticceeded by J. Tom Watson. There is no proof in the record that Gibbs while Attorney General threatened to prosceute the plaintiffs if they instituted infringement suits. There is neither pleading nor proof of such threats by the incumbent Attorney General Watson. Surely in the absence of such allegation and proof this court will not assume that either Gibbs or Watson will interfere with the rights of plaintiffs to sue for infringe- ment specifically granted by the federal copyright law, particularly since the Florida statute does not attempt to. make it unlawful for any owner of copyrights to sue for infringemenv. Suits of this character do not violate the eleventh amendment to the Federal Constitution because they are personal to the officers threatening to enforcé the legislation. (Ex syste Tome. 209 U. 8. 123. 1 * eh a eee — — —— ——ͤ—ͤ1 r ˙ m 57 ee oon al Reed 2 2 RE ———ů 1v SE Re ae BOE em TT — * PC 4 COMMENTS. ON PLAINTIFFS’ “QUESTIONS PRESENTED” (Ptf. br. pp. 2, 3.) The questions as stated by plaintiffs include some that are moot and others that plaintiffs do not even argue. Question 1 (b). This question attacks by inference Sec- tion 4-A of the 1939 Act. It is unfairly stated, because that section (def. br. pp. 74-76) makes no requirement what- ever as to how individual copyright owners should license their music.It seguintes only blanket licensing by a com- bination of “two ‘or more.“ Question 1 (d). This question is not presented by the record in the instant case, since it assumes that the Socie- ty’s method of doing business is the “only way that has been found to be commercially feasible.” There is no evi- dence in the record that the Society has tried any other licensing method. It is interesting to note however, that the Society now professes its willingness to embark upon a different system of licening, as shown by its consent to the decree entered against it in the Southern District of New York, March 4, 1941, in United States v. American Society of Composers, Authors and Publishers, a copy of which is attached as Appendix “A” to this brief. Question 1 (e) and (f). These questions deal with Ste- tions 2-A, 2-B and 6 of the 1987 Act, which as stated in the “Foreword” to this brief and demonstrated in defendants’ main brief (pp. 31-35), are moot in the instant case. Question 2. This question likewise is moot. So far as this record shows, all of the Society’s license contracts ex- pired December 32, 1940 (R. I, 33, 70). 7 - Question 5. The record presents no such question. At no time have plaintiffs urged by pleading or argument any transgression of the commerce clause of the Federal Con- stitution by either of the Florida statutes. * argue uo such question in their present brief. ERRORS AND INACCURACIES IN PLAINTIFFS’ STATEMENT OF THE CASE” (Ptt. br. pp. 4-44) : The weakness of plaintiffs’ arguments is emphasized by the frequently confusing and exaggerated statements in which they indulge in this portion of their brief—state- | ments, which unless references are checked with the rec- ord, can serve only to mislead. Any attempt to point out all such exaggerated and misleading statements would un- duly burden the time of the court, but a few of the more glaring examples should suffice to establish plaintiffs’ lack of accuracy. Page references will refer to the corre- sponding pages of their brief unless otherwise indicated. (Page 8). Under the caption “Cooperative Licensing Is Necessary Because of Divided and Diverse Ownership of Perfoming Rights,” plaintiffs apparently seek to mini- mize the dominating position of the publishers (see de- a hndants' main brief pp. . In the first sentence they state that * cause as a rule the copyrights are in their name: (BR. IT, 798).” ot he a Read in connection with what follows, particulary the sie e | \ “The so-called ‘small rights’ ** are generally own- ed jointly by the writer and pablisher to be ad- ministered through the Society” (citing various record pages) : one is led to believe that the publishers hold the copyrights as trustees. And this in spite of plaintiffs later admission (p.9) that the publishers eed the writer's claim to co- ownership. Moreover, one naturally assumes that the record cita- tions referred to as supporting the statements are the best evidence, that is, the written contracts themselves, and that such contracts actually do support the -positive state- ments of fact. But when one examines the record citations, one learns | differently. The first citation (R. II, 798) is to the testi- mony on cross-examination of plaintiff Buck, President of the Society, himself a writer with years of experience. But what does Mr. Buck say on page 789? We quote: “Q. Let us get this straight’ about publishers members. There are one hunderd and twenty- - five meiabers that are designated as publish- er members; they are the part of your organi- zation that actually own the copyrights?” “A, They do, yes, in the majority of cases, * * *. That copyright is taken out by the publisher and that is why the publisher must be in the American Society.” The record shows that the statement of co-ownership 1. the small performing rights is based-on the self-serving yb" . statements of several of plaintiffs own witnesses Which are not supported by the testimony of other of plaintiffs’ witnesses or by the written contracts which plaintiffs in- troduced in evidence. Plaintiffs’ writer witness Leslie (R. I, 245, 251-3) based his contention on an alleged verbal agreement made with his publisher in 1914; Ahlert (R. I, 264-5, 270, 272) and Meyer (R. I, 392) testified to the co- ownership theory by answering leading questions, but produced no written contracts. There was a striking fail- ure on the part of publisher members, a number of whom testified for the plaintiffs, to confirm the supposed joint 55 ownership of the small rights. The written contracts introduced by plaintiffs support Buck’s statement that the publishers actually own the copyrights. Exhibit “A” to the bill (R. I, 37) specifically vest in the publisher “the rights during the full life of the copyright to authorize or permit the performance of the musical compositions.” Exhibit 8 (R. II, 932) reserves to the composer, the stage performing rights, but grants to the publisher “all other performing rights.” Exhibit 7 (R. II, 990A) and Exhibit “A” (R. II, 1072A), the “Standard Uniform Popular Song-writers Contract” forms, approved in 1932 and 1939 respectively by the Society, the Song Writers Protective Association and the Music Publisher. Protective Association, constitute an outright assignment of the copyrighted coniposition “and all rights of whatso- ever nature thereunder existing.” The single exception to the control of small performing rights by the publisher shown by the record is in the case of the Vietor Herbert compositions. Herbert reserved the ownership of the copyrights and merely granted to his „ * Ge % * 3 of eres 2 4 N LY end 2 e 7 3 ution hi 2 * 7 3 ae ge ae 2 cae 2 hada Me, se eRe tt yi tin * a Sag wh had. ae — 5 a a? i S tek 2 ln Wee 223 2 1 hase 3 * n the right | to print and sell chest music (R. II. — — * * PFunetions,“ plaintiffs state that the eligibility for mem- * bership in the Society of a composer “depends upon his . * ——— —a—ũ—— : — eS 10 985-942). (Pages 9 and 10). Under the caption “How the Society having written and regularly published at least five of his compositions.” What they failed to state was that the re- quired publication must be made by publisher members of the Society. The importance of that part of the require- ment is strikingly shown by the efforts of plaintiffs’ wit- ness Mills to conceal it during his testimony at the trial (R. I, 517, 519, 520) although it had already been frankiy almitted by plaintiffs’ witness Taylor (R. I, 233). The effect of this requirement in increasing the monopolistic power of the Society is shown in defendants’ main brief (pp. 16-18). (Page 11). Here, in discussing the Society’s mode of licensing, plaintiffs assert that payment on the basis of each individual performance is “admittedly” impossible (R. II, 787). From the use of the word “admittedly” would arise a natural inference that defendants conceded the truth of the statement. Such is far from being the case. The record reference furnished by plaintiffs is merely to a self-serving declaration of plaintiff Buck, nme of the Society. 0 Likewise they completely avoid mention of the fact that the Society never has attempted to use a license contract wherein payment of license fees would be on the basis of | each individual performance, though many of plaintiffs’, own witness admitted on cross-examination that this meth- N A N ge aay | Pera eng 8 e ie Ais, * 11 od was used by them in licensing symphonies, grand riguts, and the right to record on moving picture films, electrical aon transcriptions, etc. (Caesar, R. I, 205-217; Taylor, R. I, ä wa 232-233; Von Tilzer, R. I, 292; Fischer, R. I, 329; Schir- 7 mer 357-358; Bornstein, 374.) Certainly the problems pre- on sented in the licensing of such rights are no less compli- 4 20 eated than those involved in the licensing of ordinary per- a ; forming rights. 3 * a Moreover, defendants’ witness Belviso, Manager of the: ina Music Division of the National Broadcasting Company, 5 who was duly qualified and accepted by the Court as an expert on the availability and licensing of music, testified that in quite a number of instances, he negotiated for and obtained the right to use material directly with the copy right holders on a “per piece or per use basis” and that bi usually there was no difficulty in fixing the price for the Be use or per piece arrangement (R. I, 562-563). ’ fs _ (Pages 11-16). Here again under the heading “The Aes, Blanket License Is the Only Feasible Method of Licensing a the ‘Small Right’,” adding further to the confusion already created, plaintiffs seek to justify their licensing system. They state (pp. 11, 12): 8 a “There are two possible methods of licensing | oe performing rights; one is on a basis of the separ- a: ate licensing of each composition for each separ- ate performance; the other is a blanket license which permits the licensee to perform any com- position in the licensor’s repertoire without desig- nating specific compositions in advance of the / performance or securing separate licenses there- : 1 kor.“ ' * ae 12 72 8 Plaintiffs do not define what is meant by the terms “blanket license” and “blanket basis.” The implication is that the terms are used interchangeably to describe. the Society's method of licensing in force up to Deceniber 31, 1940, which has always been to make some sort ‘of a flat charge to all licensees of either a fixed sum per year, a a fixed percentage of gross income per year or both, whether the Society’s music was used or not: They state (p. 13) that “the alternative to issuing blanket licenses would be a system of licensing each composition separately for each performance”, implying that the choice lies 8 between these two methods. a a We suggest that this argument of plaintiffs is not based either on the impossibility or impracticability of any other method, but solely upon the unwillingness of plaintiffs to open the door of price competition and thereby weaken their domination “*** that actually wields the power of life and death over every business in Florida and elsewhere dependent upon copyrighted musical compositions for existence.“ (Mr. Justice Black, Gibbs v. Buek, 307 U. 8. 66, 82.) . That. “onwillingness” to 5 commas with the Florida Sta- tutes is the key to plaintiffs’ opposition is revealed in so many words by the testimony of their own witness such as Caesar, R. I, 209; Taylor, R. I, 228-229; Leslie, R. I, 258. Why not further alternative methods of licensing by agreement under which the licensee is permitted for a stated period to perform any compositions in the licensor’s. repertoire paying to the licensor a license fee based on either: (1) A stated sum for each copyright composition in Uicensor's e which . is performed by the 13 Uscensee; (2) A stated sum for each program in which one or more of the licensor’s copyrighted compositions are per- formed ; 0: (3) A stated percent of income derived by the licexisee from each program in which one or more of licensor’s copyrighted compositions are performed“? These are the methods which good business men general- I have used in collecting royalties or license fees. They are the methods which plaintiffs have used in the licensing of grand rights and recording rights. They are the methods which the plaintiff composers and authors use with the plaintiff music publishers in collecting royalties on sheet music sales, phonograph records, electrica] en 3 motion picture renne ete. Such methods of licensing would. cele licensees tr keep adequate records of performances for the purpose of accounting to the licensors for the license fees due. The fact.that in the past few licensees have kept such records - is no excuse for a continuation of the Soeiety's past l censing method. Under that method no useful purpose aoe would have been served by keeping the record.. 11 it is true as claimed in plaintiffs’ brief that their past “blanket basis” of licensing small rights” is the only féa- sible method, then why did they enter into the Consent De- cree referred to on page 76 of their brief (U. S. v. Ameri- can Society of Composers, Authors and Publishers, U. 8. D. C. SD N. Y., March 4, 1944, (copy attached as Appen- He At Oe tt ene, : n 8 — NEE DADE Te See a ee — 3 — toe ee dager Spa Wade ORME ies * S N — yn — wa re erat ERA Sate PEELS TR Eee a SLAP Au eaten Rate th STS ab en a — — Sots eta | 14 prohibiting other past practices of the Society such as the _ self-perpetuating Board of Directors, prohibits the Socie- ty from refusing to issue licenses on a per piece basis or on a per program basis, (1) or (2) or (3) above. It com- pels the plaintiff Society to make available to broadcast- ing stations either a per piece or per program basis of fee payments. True, on the request of the licensee, the Society is permitted to issue a blanket Hcense such as heretofore used, but the fee payments of such blanket license must bear an ascertainable business relation to the fees charged on the 555 piece or per program basis required by the de- cree. | And why did: any olead nolo contendere to the Criminal Information charging them with violations of the anti- trust laws filed against them in Wisconsin, thereby con- fessing themselves “guilty” for the purposes of that case, and subjecting them to fines actually imposed aggregating $35,000 and to possible jail sentences as well (U. S. v. American Society of Composer>, Authors and Publishers, U. S. D. C. ED Wisconsin, filed February 5, 1941, sen- tence pronounced March 13, 1941; copy of Information at- tached as Appendix “B” to this brief.) Surely, if they had exercised the public performance rights given them. by the Copyright Act in the only way in which those. rights could de made effective, no court would have in? ieted such pun- ishment upon them. Again we suggest that it * not the impossibility or im- _ practicability of license payments based on the music act- - ually used which motivates plaintiffs’ claims that the past blanket license method enforced by it is the only fea- sible method, but that plaintiffs are motivated solely by . 1 7 os Bre 15 2 „„ ‘| their unwillingness to license in any manner Which will +4 open the door to competition and thereby reduce their 14 monopolistie and eee power over the entertain (Page 15). ‘Plaintiffs lay creat. phd ‘on the fact that 1 practically all licensing of this kind, whether by the So- 18 . ciety or by other organizations, is conducted on a blanket Fe license basis.“ They mention various other licensing units, ‘including Broadcast Music Inc., recently created by the broadcasting industry. They fail to state that Broadcast Music Inc., entered into a consent decree similar to that of plaintiffs referred to above (United States v. Broad- cast Music Inc., U. S. D. C. E|D, Wisconsin, February, = 1941, copied in def. br. 97-105 as Appendix „Den. mag The facts stated in this paragraph of plaintiffs’ brief re- | 8 tute the charges elsewhere made in plaintiffs“ brief (see aN especially pp. 68-72) to the effect that the statutes are A “Bills of Attainder” directed against the plaintiffs, With i : other organizations conducting their business along the 4 same lines as plaintiffs, it can not be supposed that the ie Florida Legislature was legislating merely against the ö 3 plaintiff Society. | : ‘ : (Page 22-26). In thin section of their brief, plaintiffe ³⁵ charge the users of music with “organized efforts to de- 5 stroy plaintiff Society as means of securing free use ot right of public performance for profit.” They mention var- ie me _ ious litigations in court, bills introdnced in the Federal Congress and in State Legislatures, including statutes euncted by State Legislatures. Fil We ee tht u hee charges are tet, the . TS Sy aaa eee srr a re ff 16 strongly emphasizes the need for legislative intervention to remedy the hersh and oppressive use by plaintiffs of their monopolistic power. Legitimate business operations ordinarily would not be subjected to such attacks. And further, the lack of suecess in most of the we 6g efforts of music users to obtain legislative protectic 88 0 quently of the extensive power wielded y Bociety. 5 (Page 26). Plaintiffs’ wand of 1 evidence must indeed be great when they assert in the last paragraph of Section VII that “the users of music very frankly stated that their purpose in passing these statutes was to avoid the obligation of paying fer public performances for profit of copyrigthed music,” and cited R. II, 848, in support thereof. The record reference is to a letter written by one single dance hall proprietor in the State of Nebraska who was resentful of the fact that the Society’s local agent told him he had to pay what the agent demanded and that he could make him pay $1,000 if he wanted to instead of the $250 per year which he was paying (R. II, 835, 838, 854, 855). There is no other similar testimony in the record. Of course, all this discussion overlooks completely : the fact that courts do not gauge the constitutionality of legis- lation by the supposed motives of private individuals ad- — vocating its passage by the legislative body. (Pages 26 and 27). Here the plaintiffs, attempting to escape the charge that the Society represents a combination that has dominated the industry, lay down the proposi- “tion that it “eontrols only a man part of the available . 17 In so doing, they furnish references to numerous large eatalogues of music which are owned by non-members of the Society. But the question is, not how many other music compositions are in existence, but how many of them are commercially available? | 7 | ‘The latter question need not be argued because it has been abundantly proved out of the mouths of plaintiffs’ own witnesses Buck, Schirmer and Mills.as well as certain of defendants’ witnesses including Belviso, music director for National Broadcasting Corporation, that the Society controle an overwhelming proportion of all music avail- able for commercial use.in the United States (def. br. pp. 13-16). 1 In this section-of their brief plaintiffs also’ refer to Broadcast Musie Ine., organized by the broadcasters to compete with the Society, and ask the court to take judicial notice of the refusal of the radio net works and the affi- - Hiated stations to renew their licenses from the Society which expired December 31, 1940. About this it need only be said that Broadcast. Mu ie Inc., is a new enterprise organized in 1940 and released for competition with the plaintiff Society only with the expiration of the latter's licenses January 1, 1941. No evidence of the extent of its operations or the availability of its music is before this court, and the case must be judged by the many years’ con- : trol whjch the Society has exercised over the e eee for nearly 20 years. small wonder the broadcasters have e organizing this ne tion to loosen the _ ters by which they were bound! ieee * toy . D 3 r e 7 r . 5 . ee. n 5 etek r 18 „„ (Pages 28-43). Here plaintiffs make their own argu- mentative analysis of the two Florida Statutes with much collateral matter thrown in. With most of this defendants are naturally in disagreement, and it is unnecessary to detail the numerous points of controversy, for they willbe otherwise apparent to the court from a study of the briefs and consideration of the oral arguments. Therefore, in considering the few comments made by defendant below, ‘the court will realize that with reference to the remainder of this section of plaintitts’ | brie, silence does not give consent. ö (Page 28). Plaintiffs here quote Conclusion of Law No. 1 of the court below (R. II, 1089-1090) to the effect that the 1937 Statute was not necessary to meet any alleged evil; that its enagtment does not serve the public interest of the State of Florida; that the object of the statute is to take plaintiffs’ copyrighted music for a “private purpose” viz., to benefit the “410 users” within the State of Florida. With all due respect to the eminent court which entered these Conclusions, defendants: insist that there is not one scintilla of évidence in the record to support such an in- dictment of the Florida Legislature. On the contrary, the record speaks abundantly of the monopolistic practices which were prevailing in Florida as elsewhere at the time of the enactment of the 1937 Statute. Full detail of these facts, all of which the Legislature must be presumed to have known, is found in plaintiffs’ main brief (pp. 11-21). And why that court, even if it saw fit to find that the statute was not enacted in the public interest, should. have concluded that it was enacted for the benefit of “410 users”, we are at a lous to understand. — tional rights of the defendants in that case. 19 (Page 31). Here in paragraphs (2) and (3), Sections 2-A and 2-B of the 1937 Act are attacked. As pointed out in the “Foreword” to this brief, these sections are now ‘moot, as well ar Section 6 (P. $3, par. (10) ; pp. 33, 34 par. 11 (d) ). on this same page (31), e (5) refers to the Society’s “ewisting contracts” as declared void by Section 3 of the 1937 Act. So far as this record shows, the Society has no “existing contracts,” and this court can not be ex- pected to take judicial notice of what licenses the Society may have issued since December 31, 1940. (Page 35). In paragraph (e), plaintiffs attack Sections 11-A and 11-B of the 1937 Act. It is obvious from a bare inspection of these sections (def. br. pp. 69, 70) that they are purely procedural. There is no reason to doubt that when and if these sections are invoked in a suit actually pending, the court having jurisdiction of the case will ad- minister these provisions. with due regard for the constitu- oe (Page 39). In discussing 4-A of the 1939 ‘Act, n state that before issuing “any blanket license” the person isquing it must file schedule of prices with affidavit of the copyright owner, etc. Attention is directed. to the fact that the whole of Section 4-A (ptf. br. pp. 74-76) is limited in its operation to cases where two or more copyright owners combine “for the purpose of issuimg blanket licenses *** upon a blanket royalty or fee” covering music owned or controlled by the members of the combination. Section 4-4 imposes no restriction whatever upon the manner in which, besiege Wt ane 0 F 57 a gations „ . ů¶ů ¶ů —ů — 5 8 > - “ 0 3 — 5 7 2 Nera 1 7 r > - “ . * 2 ty L 5 1 ra ‘ f Nur K hie 281) ‘ pats a N Ne ) 8 Oe => * os * 4 n . N 4 5 Dr A ee ag Ba beg 2222 eet AY AR OR aT Leta eA Bees PTT ERAS wf — — — cont ARGUMENT I. Ple‘utiffs Show No Reason Why They Should Not be Barred of Relief By the “Clean Hands” In defendants’ main brief (pp. 9-22), there is made a complete factual analysis of the price-fixing activities of plaintiffs which operate directly in restraint of trade, oh pede the flow of interstate commerce with regard to | broadcasting, sales of sheet music and other articles 5 commerce, and flagrantly violate the Sherman Anti-Trust _ Act. This demonstration is followed (pp. 22-28) by citation of authorities establishing that the “clean hands” maxim applies to just such a situation as this where the aid sought is in furtherance of the monopoly. Attached as Appendix “C.1” to defendants’ brief (pp. 84-91) is the unreported decision of the three-judge District Court for the Western District of Washington in Buck v. Gallagher entered De- cember 23, 1940, dismissing for this reason the bill of the plaintiffs filed to restrain the enforcement of a statute of the State of Washington in many respects similar to the Florida statute here involved. (See also ptf. br. App. „pp. 147.183.) This court will naturally inquire wht showing plain- tiffe have made to offset all this. We submit that the an- swer to this question is, “precisely nothing.” On the factual side, there is nothing in their 94 pages of brief or in the record to contradict the price-fixing acti- vities of the combination represented by plaintiff Society, or the pernicious effects which those operations have pro- duced upon the public entertainment industries in Florida and elsewhere; nothing to contradict the effect of defend- 5 7 21 | ants’ authorities showing that equity should ‘not 250 it cies these restrictions of trade. : Plaintifts refer (p. 90) to the decision of this court af. firming the temporary injunction (Gibbs v. Buck, 307 U. S. 66) as though the court had decided the invalidity of the “clean hands” defense. Upon examination of the opin- ion it is seen that it did no such thing, either expressly or by inference. The majority opinion (307 U. 8. 68-79) did not deal with this defense at all. It decided no more than that (1) there was federal jurisdiction, and (2) that there was no abuse of discretion on the part of ‘the lower ‘court in granting the preliminary injunction. As to the action of the lower court in over-ruling the mo- tion to dismiss, this court said (p. 76): “Whether to grant or refuse a motion to dismiss before answer is atid a matter of discretion for the court below. 8 After e e wee . answers were ‘filed presenting this specific defense (R. I, 108-9, 188) which have been overwhelmingly supported and nowhere contradicted by the record (def. br. p. 11-22). The lower court failed to deal with this defense in its Findings of Fact and Conclusions of Law (R. II, 1082-1092) or in its opinion (R. II, 1092-1104), and the question stands vide open for this court to decide, Cary . Plaintiffs cite (p. 91) Standurd Oil Company (Ind.) v. U. S., 283 U. S. 162 as though it gave them a clean bill of health for their price-fixing operations. The have serious- _ ly misinterpreted that decision. It dealt with a peculiar r — ee GSTS ASRS Ne STRESSORS N rr OT — — 2 — : — 3 RIP POE EES EGE LO FCC ＋ 1 — as: . — : 2 — = — 2 — SPR ETS. RIOR TREE TT AE need Er ES 2 RP . 22 = 2 N 8 oer the pooling was accom ed to ee litigation between the owners. In the course of its . this court said (283 U. S. 174): “Where domination ewists, a suite of competing process patents, or an exchange of licenses for the purpose of curtailing the manufacture and sup- pu of an unpatented product is beyond the pri- vileges conferred by the 8 and constitutes ‘a violation of the Sherman Ac . It further found (pp. 176-179) that the facts in that case disproved the existence of N or restrietion of com- petition. f A different situation is presented by the case at bar where the license fee imposed is not based upon the use of the copyrighted music, but upon a flat percentage of the licensee’s receipts | or other equally arbitrary standards, thereby restraining competition through depriving the user of all incentive to use other music or other kinds of entertainment programs. (See Motion Picture Patents Co. v.Universal Film Co., 243 U. 8. 502, 517; Ethyl Gasoline Corp. v. United States, 309 U. S. 436, 456.) ‘The point raised by plaintiffs at page 92 to the effect that violation of the anti-trust acts are no defense to an infringement suit is conceded as an abstract proposition of law. Obviously it has no applicability to the instant cane. IL The Plaintiffs Have Failed to Show That the Provisions of the 1937 Act Were * and Failed to Overcome the Separability Created by the Saving . Therein: (ptf. br. pp. 93-94). The defendants at pages 28-37 of their main brief have 9 . demonstrated that the lower court was in error in strik- ing down the entire 1937 Act because it found that See- tions 2-A, 2-B, 4-A, 4B, 5-A; 5-B and 6 were unconstitu- tional, and that these sections were. inseparable 1 from the | remaining provisions of the Act. _ : 4. page 93 of their brief, the plaintiffs . to show that the 1937 Act is inseparable and that the court’s act invalidating the entire 1937 Act because it found certain sections unconstitutional was correct. Their argument is clearly erronecus and illogical because it ignores: {1) The presumption of severability created by the sav- ing clause, Section 12 of the ont AG, (2) The legislative interpretation of severability of the Act in Section 15 of the 1939 Act which repealed all, inconsistent laws but expressly saved from the re- pealing clause all of the 1937 8 except ee 2-A, 2-B and 6. | (3) The separate and distinct purpose of Section 1 ery its dependent sections, the anti-monopoly provi- sions, not found per se unconstitutional by the low- er Court from Sections 2-A, 2-B, 4-A, 4-B, and 6, the “without pay” provisions which were held to be per se unconstitutional by the lower Court. 5 The fact that Sections 4. A, 4B, 5-A and 5-B are only additional deterrents to price-fixing combina- tions violating Section I of the Act, and are thus J subordinate and incidenta] to the fundamental pur- pose of the Act, which was to prohibit the operation ot price-fixing combinations in the State of Florida. (50 The fact that the fendants have no duties to per nn 7 SO IDF RN NTO re Tot N eee * e ü —..... ——. — Se TROIS ONT BOTY — — r e rr ex „ 22 i form with respeet to Sections 2-A, 2-B and 6 of the 1937 Act. : (6) The fact that, if the sections which the Court held per se unconstitutional viz: 2-A, 2-B, 4k 4-B, 5-A, 5-B and 6 are eliminated, the remaining provisions of the Act still constitute a complete ere oly statute. — III. The Exiactment of the Statutes Was within Sis the Police Power of the State of Florida and Plaintiffs Have Failed to Show the gered (ptf. br. pp. 75-78). In defendants’ main brief (pp.38-46), it has. been shown that, notwithstanding. the fact that federal copyrights have their origin in the Federal Constitution, this court has recognized the right of the states to enact reasonable . measures for the protection of their citizens against known evils practiced in the use of such rights. The lead - ing case of Allen v. Riley, 203 U. S. 347, is there an- alyzed and shown to be pertinent because the protection of the citizens of a state against monopolistic practices is a function of state governments, no less than is the protec- tion of its citizens against frauds with reference to own- ership. - That there was shown a known evil to curb is amply demonstrated in defendants’ main brief (pp. 11-22 incl.). "The demonsteation there made has been in no wise offect by any facts or arguments in plaintiffs’ brief. In the effort to take their case out of the police power of the state, plaintiffs at page 75 reiterate their contention that the statutes were not enacted in the public oe but “to benefit the 410 users within the State of Flori ] - 25 citing in support thereof a Conclusion to that effect found by the lower court (R II, 1089-90). The fact that the low- er court entered this Conclusion without any basis in the record or in law to support it has already been dealt with (supra, p. 18), and there is no need to argue it again, as it is in the teeth of the e and the ee in this case. 8 Again (pp. 76, 77) plaintiffs. state that “the statutes are designed to prohibit a lawful enterprise,” citing in support certain cases of inferior courts in the States of New York and Washington, and of British courts containing com- : mendatory language as to some of the functions of the Society and the British Society. Suffice it to a that these cases do not involve the question at ber. ‘at page 77, plaintiffs. say: “The evidence is conclusive that without such col- lective action the exclusive right of public per- formance for profit, vested in the copyright own- er, becomes an unenforceable and valueless right, existing in theory only, and robbed of all commer- cial value. The individual. copyright owner standing alorfe is helpless and hopeless. Neces- ity compels copyright owners to act collectively _ in order to exercise the exclusive right of public performance for. profit, A statute which pre- venté them from acting collectively conflecaten, this right.“ : — . .. ˙ mA There : is not one word fh either of the Florida statutes which pre- ventg individual copyright owners from associating them- eee eee 0 Beet - 7 ＋ ¥ 2 * ih bat wie . . pi bay 5 Sa | = 5 3 1 ; ing infringements, or obtaining the necessary information. upon which they might individually fix license fees on a competitive basis. As this record shows, most of the com - mercially available musical copyrights are owned by large and successful publishing houses (e. g. Carl Fisher Inc. whose music currently published is listed in eleven print. ed catalogues; R. II, 991). Such business houses certain- ly would not be lacking in means to determine the proper basis upon which to offer licenses for ordinary “small rights” any more than they are to determine the basis for dramatico-music rights, sound film tract rights or other - licenses which they enter into without the assistance of the Society. : „ And so, the quotation from Allen v. Riley, supra inserted at page 79 of plaintiffs’ brief to the effect that state legis- lation which “would result in a prohibition of the sale ot the species of property within its borders” would be uncon- stitutional is entirely inapplicable to the Florida statutes. At page 78 of plaintiffs’ brief, they state that the legis- lation was “certainly not necessary to accomplish the pur- pose of destroying any alleged monopoly because earlier Florida statutes * amply provide for the — and punishment of combinations in restraint of t Here we pause to inquire just what shterpeetation Plain tiffs put upon the earlier Florida anti- monopoly statutes (C. G. L. Fla. Secs. 7944-7954). At page 67 plaintiffs an- alyze the case of Brock v. Hardie, 114 Fla. 670, saying: “It is also pointed out in that case (p. 697) that combinations which do not deal in any article of merchandise, manufacture, trade or commerce, are not within the condemnation of the Florida tee mon law. ae ne 27 trust laws.” e 3 ch of these inconsistent interpretations do „ plate ‘tiffs ask this court to adopt, their own interpretation that the earlier statutes do protect the Florida public against monopolies in the licensing of intangible rights in copy- righted music, or the decision of the Florida Supreme Court that these earlier statutes do not cover that field? IV. The Statutes Do Not Deny the Equal Protec- tion of the Laws to Owners of Copyrighted 3 Music (ptf. br. pp. 60-68, 73-75). As pages 60-64, plaintiffs complain of discrimination because the statutes do not regulate the owners of musical works not copyrighted but merely ton a Hy the com- — . 1 e out that mat Aae in the factual situation justify fully the act: on of the Legislature in classifying and regulating the licensing \of musical copyrights. As said by Mr. Justice Frankfurter in Tig- ner v. Texas, 310 U. 8. 141, 147, 149: | “The Constitution does not require things that are different in fact or opinion to be treated in law as though they were the same. * Here 7 again, we must be mindful not of abstract equiva- lents of conduct, but of conduct in the content ok actuality. Differences that permit substan- tive ditferentiations also permit differentiations of remedy.” 15 To. like effect see numerous decisions of this court illustrative of the reasonableness of the eee made Wann nn nga | ee RSE JR er arn ena * CCC K 25 = Sees fr 2 aS i 355 ff q aoe Hi 5 ee 8 ' g „ 0 1 55 . Carroll v. Greenwich Ins. Co., 199 U. S. 401. 1 os International Harvester’ 00. Missouri, 234 U. 8. i it : 199. 5 N Radice v. New York, 264 U. 8.292. mili) |. | 1 The owners of uncopyrighted munen works have 5 1 do the knowledge of anyone, combined to fix prices or for 0 5 other purposes, sca Wate is no indication of any intention 8 to do o. g | i) Foor the same reason * is no merit in plaintitts’ con- 0 tention (p. 73) that the 1987 Act discriminates in favor of i | ee copyright owners outside of the United States be- cause it imposes no regualtion upon them. Certainly it i was competent for the Legislature to determine that there 1 was no serious jeopardy to the publie interest from the — OS So Rr operations of foreign musical copyright holders, or, at least, it could determine that the activities of copyright holders in the United States presented a distinct evil, re- regulation. It is a matter of common knowledge t most of the music used in public performances for profit is controlled by American copyright owners. The Legislature in its discretion simply found that the opera- tions of foreign copyright owners in Florida did not im- mediately require regulation. fee , ed Nor is there any merit in plaintiffs’ contention’ (p. 65) . that the penalties imposed for violation of the statutes here under consideration are far more severe than those im- posed under other Florida anti-monopoly laws. . g The penalties imposed by Section 8 of the 1987 Act are 1 seen by plaintiffs’ own statement to be identical with those | tmposed by the earlier anti- monopoly acts, and in view ; 29 v of the decision of the Supreme Gurt of Florida in Brook v. Hardie, supra, cited at page 67 of plaintiffs’ brief, that the earlier anti monopoly laws do not cover intangibles such as pubiic performance rights, the penalties can not be : ssc eg on-page 65. Plaintiffs’ complaint as to sections 11-A and 11. lon. 66-7) is prema as these sections are procedural mere ly, and in the absenca of any actual case depriving a de- fendant of his constitutional right, it will be assumed that the court having jurisdiction of the case will protect him. V. The Florida Statutes Create No “Arbitrary Presumption of Guilt”) and McFarland Case Is Not in Point (ptf. br. 68-72). Here plaintiffs attack the 1937 Statute because ( pp. 70, 71) it makes illegal price-fixing combinations constitut- ing a substantial number of composers, authors ‘and pub- lishers. They digest the case of McFar v. Amerioan Sugar Refining Oo., 241 U. S. 79, e that the Flor ida statute creates the like arbitrary and nn presumptions of gullt. ‘ This attack, too, is unfounded. Oped eendilntiig ts McFarland case, it becomes clear that the feature of the Louisiana legislation there declared obnoxious to consti- tutional safeguards was the creation of legislative pre- sumptions of guilt which had no real relationship to the offense 5 and were unreasonable as arbitrary legal p That statute was notably bad in ereating CCC tous Raa eae defendant had paid in Louisiana a less price for sugar than it paid elsewhere. Such fact was declared not to be reas- onable proof of a monopoly and incapable even by legisla- \ * A tive declaration of taking the place of _ necessary to Feonviction. In the instant case Peder of the Florida acts attempted to create any such extreme presumptions or any eviden- Gary presumptions. Section 1 of the 1937 Act upon which plaintitts rely in attempting to apply the MeFarland case simply declares a combination of a substantial number of copyright hold- ers for the purpose of fixing prices to be in restraint of trade. Far from being similar to the “presumption” clauses of the Louisiana statute in the sugar case, the language of the Florida Act is closely analogous to that long employed and upheld in the Sherman Act as well as in many other federal and state statutes. In United States v. Trenton Potteries Co., 272 U. 8. 392, and numerous other cases decided before and since, this court has recognized price-fixing as a hall- mark of monop- Joby, and so the Legislature. was creating no presumption, but merely recognizing one which already existed. VI. The Objection That the State Statutes Im- | , Is Unfounded (ptf. br. p. 83). At this place in their brief, plaintiffs complain of See tion 3 of the 1937 Act because it renders void-existing con- tracts by Florida music users with combinations declared’ unlawful under Section 1 of the Act. As heretofore pointed Gali, ‘thal auaitlion Se il on far as this case is concerned because plaintiff Society's li- cense agreements expired December 31, 1940 (R. I, 33, 70) amd there is no evidence as to what contracts if any, may * | a 1 55 have been entered into sines nat time, ae 5 e ‘Yate’ deen besser mess bb bu d at eee, os Atlantic Coast Line R. Co. v. Goldsboro, 232 | a VU. S. 548 : New Orleans Gas Light Oo. „ Louisiana Light Oo. 115 U. S. 650 e Dry Goods Oo. v. Georgia Public Service. Corp., 248 U. S. 372 Stephenson v. Binford, 287 U. S. 251, 278 70 Home Building & Loan Association v. Blaisdell, 3 Num 7 | 7 CONCLUSION (1) That the bill, supplemental bill and further sup: plemental bill should be dismissed by application of the “clean hands” doctrine, because equity should not lend its aid to perpetuate the plaintiffs’ price-fixing activities _ in- restraint of trade—just as was done by the 3-judge Court in the Western District of Washington, to enjoin ~ enforcement of the Washington statute (def. br. App. , “C-2”, “C-8”, pp. 84-95) ; or, in the alternative, . (2) That the anti- monopoly provisions of the 1987 Act and Sections 4-A and 4-C of the 1939 Act be adjudged to be within the police power of the State of Florida, and not subject to the other constitutional attacks levied by plaintiffs. Respectfully submitted, * J. TOM WATSON, Attorney General of Florida. TYRUS A. NORWOOD, Assistant Attorney General. - LUCIEN R. BOGGS, ANDREW W. BENNETT, Counsel for Defendants, N 383 APENDñIX * In the District Court of the United Ststes for the 1 Eastern District of Wisconsin No. 449 Q (CRIMINAL) — Urra Srarms or AMERICA | . AMERICAN Soorry OF — AUTHORS AND us. LISHERS, ET AL., DEFENDANTS Fae ö INFORMATION At the January, 1941, ee eee Cnert of the United States for the Eastern District of Wisconsin, held at Milwaukee, Wisconsin, in said. District, comes the Uni- ted States of America, acting through B. J. Husting, Uni- ted States Attorney in and for said District, and leave of , he Comet, having fires, boom nne. as follows: I of defendants Description 1 That American Boclety:0¢ Competers; Authors end | Publishers, hereinafter referred to as “Society”, an. unin- corporated membership association of music Com posers, authors and publishers, having its principal office at 30 ee ant herein. 2. That the following individuals, who have been or are now officers or directors of Society as indicated after their names, actively engaged during the period covered by this Information in the management, direction md control of the affairs and polices of the Society, and in particular of An enen and policies which are covered by thie Infor- 3 ‘ * 8 8 oa , 4 0 ; ne , 5 , %% ᷑ꝶ wo F s : 8 * mation, who have authorized, ordered and done the acts Ae of the defendants constituting the: offenses hereinafter 5 | | charged, are likewige made defendants herein. fe 1. Gene Buck, President and Director: he 2. Louis Bernstein, Vice President and Director, 3 J 3. Otto A. Harbach, Vice President and Director. ea 4. George W. Meyer, Secretary and Director. a 1 5. Gustave Schirmer, Treasurer and Director. N SN 6. Fred E. Ahlert, Director. 15 8 f it 1 7. Saul Bornstein, Director. 2 ~ 1 : 8. J. J. Bregman, Assistant Secretary pa Director. ~ 75 9. Irving Caeser, Assistant Treasurer aud Director. Ee 10. Max Dreyfus, Diréctor. : ENS 4 11. George Fischer, Director. LEE 12. Walter Fischer, Director. ; J 13. Raymond Hubbell, Director. é lea | 14. Jerome Kern, Director. s 4 15. Edgar Leslie, Director. g i : : 16. Jack Mills, Director. ae ie 1 : 17. Herman Starr, Director. 1 1 18. John O'Connor, Director. - He 19. J. J. Robbins, Director. if : 20. Oley Speaks Director. es te. | 45 21. Deems Taylor, Director. . 3 22. Will Von Tilzer, Director. ‘ ii 1 i. 23. John Mercer, Director. 24. Oscar Hammerstein II, Director. / 4 - 25. E. C. Mills, Chairman Administrative Committee. 5 wy: 286. John G. Paine, General Manager. 7 4 The following corporations which have had divers offi- 4 cers and Agents and representatives on the-Board of Di- $ ‘ * 35 rectors of the Society: oe Chappell. & Co., Inc., Organized and duly 8 ; „ Shapiro, Bernstein & Co., Inc., Organized 4 d duly authorized, to do business under a laws of the State of New York; Irving Berlin, Inc., Organized and a authorized to o do business under the laws of the State of New York; : Bregman, Voeco & Conn, Inc., Organized and duly authorized to do business under the laws of the State of New belie! ie to do business under the laws of the State of New Vork; ö T. B. Harms Company, Orangized and duly authorized to do business under the laws of the State of New: York; 7 J. Fischer & Bros., 8 and duly authorized to do business under the laws of the State of New . York; Carl Fischer, ‘Inc, Organized and ele authorized to do business under saa laws of the State of New Vork; Mills Music, Ine., Organized and duly authorized to do business under the laws of the State of New mm ¢ . 4 — Words & Music, Ine., organized and duly authorized to do business under the laws of the State of New York; Robbins Music Corporation, Organized and duly au- thorized to do business under the laws of: the State of New York; D WET Rei OUD Ys ie ata g tt Rak when adie hinds Sie Bien YY 5 352 N y =e 2 ain SUES Seinen sine septa enor . SSCA, een eae Pea eles ae me r e ate gt) ĩ² u u.. o Sa tL NPC e eee e ee ee SRS r e n = Feo ames fan ee 3 1 7 Ey 1 4 + 1 9 Ls oe > L 8 2 . S452 4 3 5 ... —. .. ̃ ͤ——...ñ ... . ̃]¶—- ] —ẽůÄK d 2 * 2 5 . ° \ 5 TR . 1 9 8 ees e LE, ELT TREES PIG D MRS aT LDL Ee IE el Seca — r 0 j SOT RMS es Tie oe ee a aa SFL ee ey 2 eee ses Pte Ey. :: r ³⁰＋ꝶqmꝶqꝶqꝶꝶgfꝛꝛĩ ð⁊ ß a ĩ⅛ » a 5 2 ‘ Pe aS es Pee IE : * ces 84 i — es 2 2 ree! Soin fae - 132 D Ao Sa, oes 8 Rigs 9 rr e — 2 — are made defendants herein. Leo Feist, Inc., Organized and duly authorized vo do : business under the laws of the State of New York; Miller Music, Inc., Organized and duly authorized to do business under the laws of the State of New York; : G. Schirmer, Inc., Organized and duly authorized (0 do business under the laws of the State of West Vir- ginia ; 0 ö N a g Boston Music Company, Organized and duly autho- rized to do business under the laws of the State of West Virginia; i Willis Music Company, Organized and duly autho- rized to do business under the laws of the State of Ohio; ‘ Harms, Inc., Orgunieed and duly authorized to do business under the laws of the State of New York; © M. Whitmark & Sons, Organized and duly authorized to do business under the awe of the State of N ew York ;. Remick Music Corporation, Organized and duly au- thorized to do business under the laws of the State of New York; Harry Von Tilzer Music Publishing Co., Organized and duly authorized to do business under the laws of the State of New Jersey 1 \ 3. That all members of the Society, in addition to those made defendants herein, are expressly named as co-con- spirators herein. 71 N fuer oe ‘ a N ej . “ #5} 9 f | va) 37 . 41. That defendant Society, an unincorporated associa- ; tion, was organized in or about the year 1914, by the lead- ing publishers, composers and authors of musical compo- 2 sitions in the United States, for a period of ninety-nine ; (99) years from the date of its organization; that the pur-- poses for which it was organized were, among other things, as | — to grant licenses and collect royalties for the public per- 4 5 f formance of the works of its members, to allot and distri- bute the royalties collected, and to accumulate and main- : tain a reserve fund to be used in carrying out any of the ia objects of the Society; that its membership at the time of at the filing of this Information consists of approximately a 140. publishers and 1,200 composers and authors and in- cludes the owners of the copyrights of a substantial of -amount,.more than 75 percent, of all the copyrighted 20 4 | musical compositions demanded by the public of the Uni- 1 | ted States for entertainment purposes at the time of the \filing of this Information and for a number of yeare prior thereto; that the management. of defendant Society is 4 vested exclusively in a seif-perpetuating board of directors - of consisting of 24 persons, 12 of whom represent publisher 3 members, 6 represent composer members, and 6 represent author members; that each director is elected to serve for EB a period of three years, and is eligible for reelectton upon — | the expiration of his term; that the terms of office of a eight members of said board expiré each year, and their - i: successors are elected annually by the remaining members 9 of the board; that the directors have exclusive and abso- is lute control of the management and of all activities of the 1 Society and appoint all its committees, officers and em- : 1 RS NR NBO te POSIT BIN LO eee 0 — ————————————— — — . . a ee . RTT ERE Rae a — SFRTUNSE ASAE Oe ORE ployees; that admission to membership in the Society is by election thereto by the board; that each member upon admission must execute an agreement in the form required by the board of directors, assigning to the Society the ex- clusive nondramatic public performance for profit rights of all of the members’ works for the period of any then ex- isting agreement between the Society and its members; that the agreement-between the Society and its members, a copy of which is hereto attached marked Exhibit “A” and expressly made a part hereof, expired December 31, 1940; that the agreements between the Society and its members, existing prior to December 31, 1940, have been renewed for a further ten-year period; that by reason of the vast num- ber of copyrights of compositions controlled by the mem- ders of the Soceity, by reason of the great public demand therefor, and by reason of the vesting of the absolute man- _ agement and control of all activities of the Society in the self-perpetuating board of directors, the twenty-four per- sons constituting such board have the power to and do fix the price of and control the public performance for profit rights of the greater part of the music demanded by the public of the United States for entertainment purposes. 5. That licenses to perform publicly for profit the musi- cal compositions copyrighted by its members are issued by the Society upon application therefor; that agents of the Society solicit applications for such licenses by threat of prosecution for infringement of the copyright laws of the United States, from all unlicensed persons, firms or corp- orations in the United States who use music in connection with their business; that defendant Society refuses to grant licenses to perform single musical compositions or 2 1 — r. ͤ ͤ ͤ——... rE en 7 * i i groups of compositions selected by, the licensees; that it grants only blanket licenses to perform any and all musi- cal compositions of all its members upon the payment of such royalty as is demanded by the board of directors of the Society ; that six forms of licenses have been and are in use, copies of which are hereto attached and marked 2 Exhibits “B”, “oO”, D, „E-, 4H, 4, respectively, and are expressly made a part hereof; that Exhibit “B” is the form of license which radio broadcasting e stations not accept prior to December 31, 1940; that Exhibit “C” is the form of license which radio broadcasting stations owned at least 61 percent by newspapers were offered, accepted by many and outstanding prior to December 31, 1940; that Exhibit “D” is the form of license which theatres are re- quired to accept; that Exhibit “E” is the form of general license which all other isers of musical compositions are required to accept; that Exhibit F“ is the only form of license offered radio broadcasting stations not originating programs as part of a chain broadcast, or the simultaneous broadcasting of programs over two or more stations, sub- sequent to December 31, 1940; that Exhibit “G” is the only form of license offered radio broadcasting stations origi- nating programs as part of a chain broadcast or the simul- taneous broadcasting of a program or programs over two or more stations, subsequent to December 31, 1940. 6. ‘That defendant Bociety maintains agents and repre- sentatives throughout the United States, whose duty is to enforce the demands of the Society in the sale of licenses and in collecting, royalties therefor. 9.4 te. 33 4 j 7 70 9 . 1 11 * a 24 — 9 1 8 4 8 ae 1h : ai | 7 40 4 15 = a Nt 7 That, the term “radio broadcasting station“ is used | H : herein to designate those radio stations operated for the en- Hin ment of the residents of the United States and resi- | 1 1 denta of adjacent and more distant foreign countries; that 1 there are approximately 793 such radio broadcasting sta- b iy tions interspersed throughout the states of the United Hie States and operated under authority of the Federal Com- | 14 munications Commission, pursuant to the Act of Congress 1 : | known as the Covamunications Act of 1934, approved June 1h 19, 1934, and prior Acts of Congress; that each station 0 f is required to broadcast a minimum regular operating if 1 schedule of two-thirds of the hours it is authorized to 2 ELE broadcast under the license granted it by the Communica - BD tions Commission; that the continued existence, success i 41 . and prosperity of a radio broadcasting station depends en- Hg ' tireb upon the entertainment offered by it to the radio BE listening public withig the range of the station’s power; a that music is the prin form of entertainment demand- pi ed by the radio listening public and must be offered by a it iH station in order to retain the continuing interest and pa- 0 1 tronage of the listening publie; that approximately 50 fh i _percent of the time devoted to the transmission of energy, 1 ideas and entertainment across state or national boundar- i 4 ies by radio broadcasting stations in the United States is if ie) devoted to the radio broadcasting of music in varying HEE forms, and such music must represent the rendition of com- ö Ri positions most desired by the listening public; that the 4 only income available to a station is derived from the sale of its facilities to persons desiring to communicate energy, ideas and entertainment to the public within listening 5 2 5 — 7 7 7 & 5 a: 4 ae . * Rs . 41 4 range of the station’s transmission power; that such ‘a sale of facilities consists primarily of sales to business 7 concerns for the purpose of advertising the products of the 5 particular concern and of ereating good will on the part if of the public for the services or products of the advertiser ; 1 that the desirability of a particular station for advertising . purposes is directly dependent upon the number of per- i Fons listening to the programs broadcast by that station, 4 and such persons can only be induced to listen to the sta- ij tion’s broadcasts by furnishing the musical entertainment 1 demanded by the radio audience; that a substantial por- a tion of the entertainment furnished by the station must be 2 | furnished at the expense of the station, for which is re- 4 ceives no compensation or income. : 4 8. That during all the time herein mentioned it has been 4 , and is essential to the continued operation of each of the at stations in the United States broadcasting radio entertain- i | ment, in order to avoid liability for infringement of copy- 79 right, to obtain the permission or license of the owners of | the copyrighted musical compositions the public perform- -, ance of which is demanded by the radio audience. 1 8 ft The interstate commerce involved ff ; _ A. In radio broadcasting A a 9. That radio broadcasting stations in the United States 1 are engaged in interstate or foreign commerce; that each 1 station is an instrumentality through which energy, ideas and entertainment are transmitted across state or national } boundaries to the radio listening population of the United i= States or foreign countries; that approximately 40 percent if of the time devoted to the transmission of energy, ideas ö N f * i eue, DDO NIE OMNES eee, r ode Qe eee 42 and entertainment across state or national boundaries by radio broadcasting stations in the United States has been devoted to the radio broadcasting of copyrighted musical compositions owned or controlled by the Society and its members; that as each radio station under the copyright laws must obtain permission from the copyright owners of 110 musical compositions before such compositions can be 15 j broadcast in interstate commerce, any interference with or * restraint upon the obtaining of such permission from the copyright owners upon a competitive basis restrains the |. (8, (interstate and foreign transmission of energy, ideas and i entertainment by radio broadcasting stations. —— = a a et a = 8 — 2 * 1 ‘I 10. That there bas developed in the radio . a He practice which is commonly called “chain”. or “network” 6 Ii broadcasting ; that by this method of operation several i iat radio broadcasting stations are connected in a chain or fis i Hy) network by means of leased telephone lines for the purpose 4 5 of broadcasting simultaneously raido programs origina: + ting at one of the stationg in the network; that this method 4 { is generally inaugurated and controlled by what is known as a network company; that the principal network com- panies presently existing in this country are the National Broadcasting Company, the Columbia Broadcasting Sys- tem, and the Mutual Broadcasting System; that approxi- mately 350 radio stations located in the United States are affiliated with and engaged in such “network” broadcast - ing; that. only those network stations which originate net- work programs have control over the selection of the con- tent of the programs which are broadcast simultaneously by all of the stations in the network; that approximately 45 percent of the total time devoted to network broadcast - * ccc — ) 43 4 : | | 18 he * ing in this country is devoted to the broadcasting of musi- cal compositions; that a substantial number of the copy- | righted musical compositions performed over radio net- ‘ works during the period: covered by this Information | | were owned or controlled by the Society and its members; 4 that the network stations other than those originating net - 5 work broadcasting, have no eontrol whatsoever over the 4 selection of the musical compositions which are performed ,. . by the several stations comprising the network. . | n In sheet music ö 4 11. That each defendant who is a publisher member ot 4 defendant Society prints, or causes to be printed, the music * and lyrics, and special arrangements thereof, of musical 1 compositions; that such printed sheets of music are sold . by such deefndants to customers located in all states of : the United States and are transported across state bound- aries in interstate commerce; that the greater part of the musical compositions broadcast by radio stations is per- i formed by entertainers located in the studio of particular f broadeasting stations, or in close proximity thereto, from q musical scores transported across state boundaries. | | | 12. That the essential element in effecting the sale and distribution of sheet music throughout the United States is the transmitting of musical compositions to the ear of the public, in order to create a desire on the part of indi- vidual members of the public to purchase the printed score representing particular compositions; that radio broad- casting is the principal medium through which individual musical compositions are transmitted to the ear of the purchasing public and a demand for the printed score . created; that by means of the combination and conspiracy — 0 14 hereinafter described, defendant Society through the is- surance of only blanket licenses authorizing the perform. ance of the Society’s entire repertoire of music at a price which requires the payment of a percentage of the revenue derived from all radio programs regardless of whether Society owned or controlled music is performed, has de- stroyed the économic incentive on the part of radio. sta- tions, having the Bociety’s, license, to perform the musical compositions of authors, composers and publishers not members of Society, thereby depriving those owners of copyrighted musical compositions who are not members of defendant Society of the opportunity of transmitting their musical compositions to the ear of the purchasing public, with the result that the sale of scores written by nonmem- bers to purchasers in states of the United States other than the state where such scores were manufactured, and the transportation thereof across state and national bound- aries, is and has been restrained. ©. Motion pictare films 13. That notion picture films are B primarily in the States of New York and California, and shipped to motion picture exhibitors located in every state in the United States; that these motion picture films are produced and shipped in interstate commerce for the sole and exclusive purpose of exhibition or public per-“ formance by motion picture exhibitors; that without the right to exhibit or perform, the motion picture films are rendered valueless and restricted from a free flow in interstate commerce; that a substantial portion of the motion picture films are synchronized with music to the extent that the films cannot be exhibited without per- * — - 5 — 2 uf. . , P eT ee ce 5, 3 om staan a, I ee See | 45 G forming the music synchronized therewith ; that a great majority of the music synchronized with the films is copy- righted music, the public performance for profit rights of which are controlled by the Society; that the Society, therefore, has the power to fix the price of, control or otherwise unreasonably restrain the Usage of a substan- tial portion of the motion picture films passing in inter state commerce. ete ree en 14. That electrical transcriptions are mechanical de- vices upon, which programs are recorded or mechanically ~ reproduced for the exclusive use of radio broadcasting sta- tions; that more than 50 percent of the electrical tran- scriptions produced in the United States are produced or manufactured in the States of New York and California and shipped to radio broadcasting stations located through- out the United States; that upon practically all of these electrical transcriptions are recorded musical composi- tions; that a substantial portion of the music so recorded is a u music owned or controlled by the 2 417 and its members. V us The combination and conspiracy 15. o ante an denein te period of three years next preceding the filing of this In- formation, and continuing to the date of the filing thereof, defendants, and others to the United States Attorney un- known, well knowing the foregoing facts, have been en- gaged in the United States, and particularly in the East- ern District of. Wisconsin, in a ‘wrongful and unlawful combination and conspiracy in restraint of the aforesaid interstate and foreign trade and commerce in radio broad- al ~ * Ar rr . — 9 8 5 PF .. eed n — — , 2 é — — .. 8 7 r 83 SS 2 AE RIE CRRET CSW IF BIOS WT ee * — ae , . 2 — tS et 2 r e — rr Ss OE is See Bites Bereta, — >. .... n 24 ee 2 2 * ee Se eS = —— — Ss — — — — — easting, sheet music, motion picture films, and electrical '. ‘transcriptions in violation of Section 1 of the Act of Con- gress of July 2, 1890, entitled “An Act to Protect Trade \ and Commerce Against Unlawful. Restraints and Mono- polies” (U. S. C. A., Title 5, Section 1), commonly known as the Sherman Act, and have conspired to do all acts and things and to use all means necessary and appropriate to make said restraints effective, including the means, acts iz d things hereinafter more particularly alleged and other leans, acts and things which at the time of filing this 2 S. e = A n * —— — ee a * — | Information are unknown to the United States Attorney; that as part of said conspiracy the defendants have ar- i ranged and agreed de themselves to do the e ö „ e epee | 3 To create, maintain and utilize . Societx | as an instrumentality for promoting and maintaining the 4 illegal combination and conspiracy herein described; to 1 ereate defendant Society as such instrumentality with a EEE _ self-perpetuating board of directors and to vest in the twen- Hh ty-four persons constituting such board the exclusive pow- ae er to control the activitiés of defendant Society; to re- i! * strict membership in defendant Society to such composers I and authors who have written or composed and had regu- it TZ larly published not less than five copyrighted musical com- HEE | positions, and to such publishers as may be approved by the board of directors; to have transferred to and to 1 pool in defendant Society the sole and exclusive right to if 4) perform publicly for profit all musical compositions of : ee which all the members of Society are the copyright pro- t prietors, or which any member, either alone or jointly or f in collaboration with others, wrote, composed, published, rere rr —— — — — . — = RAAT Es: ee — ——— . —ͤ— —— 47 acquired or owned, or in which any member has any right, title, interest, or control whatsoever, in whole or in part. or which any member during the term of the agreement may write, compose, acquire, own, publish or copyright, either alon¢, jointly, or in collaboration with others, or in which any member may at any time, during the term of the agreement, have any right, title, interest or coutrol, either in whole or in part; to have all members of defend- ant Society vest in defendant Society absolutely until and including December 31, 1940, the sole and exclusive right to license others to perform publicly for profit all their musical compositions; to renew and extend the agreements between Society and its members which expired Decem: ber 31, 1940, for a further ter-year period. B. To vest in detendant Society a complete monopoly of the right to license for public performance for profit all the musical compositions of all, its members, aggregating an unknown number of musical compositions; to refuse 5 to furnish to its licensees complete lists of the musical 1 compositions in the Society’s repertoire of music; to elim- inate competition among members of defendant Society in the sale of rights to perform publicly their respective musical compositions, which, but for the illegal combina- ‘tion and conspiracy herein described, would have existed ; ae to refuse radio broadcasting stations, advertisers. (desir- ae ing to utilize the service of such stations to promote the — sale of their merchandise), orchestras, theatres, and others N + desiring the right to perform publicly the copyrighted 45 musical compositions of members of defendant Society, the right to acquire from the individual members of the So- giety the public performance for profit rights of their r ae oe indians aS 3 b n . * a 1 5 5 48 respective copyrighted musical. compositions; to require commercial users desiring only certain musica romposi- tions in the Society’s repertoire to accept a blanket license from defendant Society for all of its copyrighted musical compositions, upon terms and conditions arbitrarily fixed by it. ; Pie ORS C. To agree to establish ams iat and pursuant to such agreement, to establish and maintain, by means of the pooling of their individual copyright monopclies, enhanced and non-competitive prices or royalties for licenses to per- form-publicly copyrighted musical compositions owned and controlled by individual defendants; to eliminate all competition among members of defendant Society in the sale of licenses to perform publicly their individual music- al compositions and to exercise the power obtained by de- dendants through the unlawful pooling of their individual copyright monopolies by concertedly refusing to Ifcense the public performance by radio broadcasting stations and all other persons engaged in the public performance for profit of copyrighted music of any copyrighted musical composition owned and controlled by a member of defend- ant Society, except on the basis of a general license cover- ing any and all musical compositions of all members and except upon the basis of an arbitrary royalty for such gen- eral license, fixed and determined by the aforesaid self- perpetuating board of directors of defendant Society; to require compliance with the terms fixed by the defendants by radio broadcasting stations affiliated with radio “net- works,” prior to December 31, 1940, by issuing licenses to network affiliated radio stations only on the basis that the license issued to each station was not to be construed 49 as authorizing the license to grant others any right to per- form publicly for profit by any means, method or process whatsoever. The radio stations s affiliated with a radio “network,” other than the. station originating the radio program, have had no control over the copyrighted musica} compositions performed by the network affiliated stations simultaneously.- Broadcasting stations affiliated with radio “networks” have had to accept a license from de- fendant Society upon any terms and conditions imposed by defendant Society, or subject themselves to numerous infringement suits in which they would be compelled to pay not less than $250 for each copyright infringement, * 2 as provided in the copyright laws of the United States. D. Concertedly to demand and receive from radio broad- casting stations increased amounts as royalties for li- censes to perform publicly copyrighted musical composi- tions owned and controlled by members of defendant So- ciety; to notify on or about April 1, 1932, all radio broad- casting stations throughout the United States that, on and after June 1, 1932, defendant Society would issue to-broad- casting stations only a general license covering all musical compositions of all members of defendant Society, which license would require the payment annually as royalty of a sum approximately equal to the annual royalty thereto- fore paid by them, and in addition thereto, 5 percent of the gross income of the broadcasting station from whatever source derived. This fee represented an increase of ap- proximately 400 percent in so-called “royalty” payments over the aggregate royalty demanded for the previous year. Protests were made by the broadcasting stations to de- fendant Society and the then existing licenses were tem- — — eave a Dee 8 1 W A —— —.. ar agende artes 8 22 ee ° 1 50 * 9 , : 5 HH 4 porarily extended to September 1932, Thereupon efforts i i 1 were made by the broadcasting stations, acting through a i 1 committee appointed for the purpose, to obtain licenses f 1 providing for royalty payments by each station based on ; hi a the number of performances by such station of copyrighted i 4 musical compositions owned’ and controlled by Society or 1 its members. The defendants refused to agree to royalty 1 payments based on actual use made of their musical com- 141 positions. Other proposals submitted by the broadcasting 411 stations were also rejected by defendants. Each broad- ies casting station, in order to use the copyrighted musical 14 1 compositions controlled by defendant Society and to avoid i 1 a multiplicity of infringement suits, acceded to the de- ie mands of defendant Society. and accepted from defend- | 1 ant Society a three-year blanket license agreement, com- 11 meneing on or about September, 1932, covering all music- te al compositions of all members of defendant Society, upon 1 the basis of a royalty payment approximately equal to N _ the fixed annual royalty paid for the preceding year, plus Ha) three percent of the station’s net receipts during the first i 4 A year of the agreement, four percent of such receipts dur- Hee ing the second year, and five percent of such receipts dur- 5 | ae. ing the third year. “Net receipts” as defined in said 3 6 : agreement, constituted the full amount paid to the sta- tion for the use of its broadcasting facilities, after deduct- ing commissions not exceeding fifteeen percent, if any, paid to an independent advertising agent or agency. —— K e e eee HOS Aros E. To refuse to alter or change the terms of the con- tracts executed by and between the Society and radio Hae broadcasting stations in 1932, which expired December 31, 1 1935; and to issue an ultimatuni on or about January 10, If | 1 5 . ih 1 . 1 51 1936, in writing, to the various radio broadcasting sta- tions to the effect that the performance of copyrighted musical compositions in the Society’s repertoire of music _ would constitute a copyright infringement unless the ex- isting contracts were renewed by January 15, 1936. The radio broadcasters located throughout the United States had no alternative but to accept the terms dictated by the ; Society, since they could not operate without being sub- 4 jeeted to the $250 minimum damage provision for each copyright infringement of the copyright laws by perform- ing musie owned and controlled by the Society and its 1 members. Within the specified time they accepted re- f newals of the contracts executed in 1932. These contracts 8 | executed in 1932, expired on December 31, 1940. : F. To refuse to renew the licenses to radio broadcast- ers which expired December 31, 1940, under threat of withdrawing from the interstate commerce of radio broadcasting and public enjoyment the vast pool of copy- righted music acquired by the Society, by means of the illegal conspiracy alleged herein and under the further threat of inflicting the $250 minimum damage provision of the copyright laws, unless the radio broadcasters ac- cepted the licenses attached hereto and marked Exhibits “RF” and „G.“ The percentage of income demanded by members of defendant: Society from radio broadcasting stations since 1932, represents a percentage of the entire income received by such broadcasting stations for the sale to advertisers of their operating time on the air. Such demand for the payment of these percentages con- stitutes a charge upon income received by radio broadcast - ing stations for their time devoted to the broadcasting of rn ee 7 54 members of defendant Society from receiving the com- pensation for the rights of public performance of their musical compositions, which they pices ene receive, and limiting and restricting the populay demand of the listening public to a sae anne controlled by de- fendant Society. ; - K. To require acceptance of their arbitrary and non-com- petitive demands for royalties by all classes of music users, as a condition precedent to the acquisition by such music users of the right to perform any copyrighted musical com- positions of any members of the Society publicly for profit. The motion picture exhibitors, interspersed throughout the United States must- perform those musical composi- tions synchronized with the motion picture films in order to exhibit the motion picture films. Without the right to exhibit and perform the musical compositions synchron- jzed therewith, the motion picture films received in inter- state commerce are valueless. All users of music must perform those musical compositions demanded by their audiences. The limitation and restriction of popular de- mand to the musical compositions controlled by defendant Society has forced such users of music to obtain from de- fendant Society a license to perform music controlled by defendant Society so demanded by the public. The mem- bers of defendant Society, through defendant Society have concertedly refused to grant such users permission to perform individual musical composition selected by the users, but have insisted and still insist that general li- censes be accepted which cover all the musical composi- tions of all the members of defendant Society, upon pay- ment of a Nen amount therefor, irrespective of whether one or more of such musical compositions are actually per- formed. By this method of licensing the members of de- tendant Society have further restricted the popular de- by the members of defendant Society, and, have prevented the use of musical compositions owned by non-members of defendant Society. . L. To prevent the sale and transportation in inter- state commerce of musical scores owned by composers authors and publishers who are not members of defendant Society, by refusing to issue licenses for the public per- formance of musical compositions owned or controlled by them, except upon the terms and conditions above set forth. M. To adopt and maintain a comprehensive system for the acquiring of detailed and complete information rela- tive to the musical compositions used by broadcasting sta- tions, by means of which information the members of de- fendant Society have been and are enabled to conduct their operations through defendant Society so as to pre- vent the development of competition between members of defendant Society and owners of copyrighted musical com- positions who are not members of defendant Society, and to maintain and enforce all provisions of the licenses be- tween Society and radio broadcasting stations. VI Purpose and effect of the conspiracy 16. That the defendants have adopted the means and engaged in the activities aforesaid, with the intent, pur- pose and effect unreasonably and unlawfully maintaining mand to those musical compositions owned or controlled and are within the jurisdiction of the Court. 1 1 . E enhanced and uniforn prices in the interstate commerce in copyrighted musical compositions controlled by Society, and have otherwise restrained unreasonably the interstate commerce of radio broadcasting, sheet music, motion pic- ture films, and electrical transcriptions; that all members of defendant Society, through the mutual and identical agreements hereinbefore described, have actively and ef- -fectively restrained their own activities, have eliminated competition among themselves, and have created, main- tained and utilized defendant Society as an instrument- ality unreasonably to restrain and restrict, directly and indirectly the interstate trade and ne * — VII E 17. That the combination cnd conspiracy herein set forth has operated and has been carried out in part with- in the Eastern District of Wisconsin, and many of the unlawful acts pursuant thereto have been performed by defendants and their representatives in said District; that the interstate trade and commerce in radio broadcasting, sheet music, motion picture films and electrical transcrip- tions as herein described, is carried on in part within said District; that said defendarits have usual places of busi- ness in the said District and therein transact business 18. That this Information is filed and the jurisdiction of this Court is invoked against defendants American Society of Composers, Authors and Publishers, its offic- ‘ers and directors, and the members thereof, because of their violations, jointly and severally, as herein alleged, * 57 ot Section 1 of the Sherman Act, entitled “An Act to Pro- tect Trade and Commerce against Unlawful Kestraints and Monopolies.” | And 20, the United States Attorney accuses aiid says: That the defendants throughout the Period aforesaid, at the places and in the manner and form aforesaid, un- lawfully have engaged in a combination and conspiracy ; in restraint of the aforesaid trade and commerce in radio broadcasting, sheet music, motion picture films, and elec- trical transcriptions among the several states and with foreign nations; contrary to the form of the statute in such ease made and provided, and against the peace and dignity of the United States. Victor O. Warnss, Special Assistant to the Attorney General. WARREN P. CUNNINGHAM, Special Attorney. APPENDIX “B” In the District Court of the United States for thé a Southern District of New Vork Civil Action No. 13-95 ‘Unirep STATES OF AMERICA, PLAINTIFF Die eee 1 ou : ‘ * 25 as 775 7 ig ke , . AMERICAN SOCIETY or COMPOSERS, AUTHORS AND PUBLISH: ERS; GENE BUCK, PRESIDENT; Gronce W. dicen SEo- RETARY; AND GUSTAVE Schirn, nnn DEFEND- ‘ANTS CIVIL DECREE AND JUDGMENT ~ .. his cause came on to be heard on this 3d day of March, 1, the plaintiff being represented by Thurman Arnold, Assistant Attorney General, Victor O. Waters, Special g to the Attorney General, and Warren Cunning: r., Special Attorney, and the defendants being rep- . ted by their counsel, and having appeared and filed théir answer to the complaint herein. py It appears to the Court that ‘defendants herein have 1g consented in writing to the making and entering of this i 4 deeree, without any findings of fact, upon condition that ‘ ib 4 neither such consént nor this decree shall be construed pe as an admission or adjudication that said defendants have violated any lav. It further appears to the Court that this decree will provide suitable relief concerning the matters alleged in ON the complaint filed herein and that by reason of the afore- |) Oo said consent of defendants and its acceptance by plaintiff i‘. tit is unnecessary tb proceed with the trial of the action, or to take testimony therein, or that any N be. made of the facts. i 0 —— 2 Ä P AAA T A r 2 err. Nea ete es N . * 3 8 een 1 5 en A 55 — e Arde gant Se, © N . tent N vif e sh) * 2 pe isla gd ee Aaa 8 Ree ee eS ö 5 - 59 Now, THEREFORE, Upon motion of plaintiff, and in ac- cordance with said consent, it is hereby ; ‘ OrdERED, ADJUDGED AND DECREED The Court has jurisdiction of the subject-matter set torth in the complaint and of the parties hereto with full ‘power and authority to enter this decree and the com- * palaint states a cause of action against the defendants un- der the Act of Congress of July 25 1890, entitled An Act to Protect Trade. and Commerce Against Unlawful Re- straints and Monopolies” and the Acts amendatory thereof and supplemental thereto. II. Defendants, ‘Gene Buck, as President of the Amer ican Socięty of Composers, Authors and Publishers; George W. Meyer, Secretary; Gustave Schirmer, Treasur- er; and American Society of Composers, Authors and Publishers, its officers, directors, agents, servants, em ployees, members, and all persons acting or claiming to act on its behalf are hereby perpetually enjoined and re- . Strained from entering into or carrying out, directly or in- directly, any combination or conspiracy to restrain inter- state trade and commerce, as alleged in the complaint, hy doing, performing, agreeing upon, entering upon or carrying out any of the acts or things hereinafter in this paragzaph II prohibited. (1). Defendant, Ae Society of i hn 8 thors and Publishers, shall not, with respect to any mu- sical composition, acquire or assert any exclusive perform- ing right as agent, ‘trustee or otherwise on behalf of Any copyright owner, its members, or other owner of the per- " forming right, or pursuant to any understanding or agree- k / 2 . f 3 ° e ey te ‘ ‘ e . — 8 * — * * De ee een 1 “hy N * 1 . 1 1 Ay n Se Ae, Bh a eee n N N —. eae Teel ae ee ae Ste ps n 2 ment with such owner, or its members, to pay for such right a share of, or an amount measured by, the receipßts or revenues of said defendants. Nothing herein contained : shall be construed as preventing defendant, American So- ciety of Composers, Authors and Publishers, from regu- lating the activities of its members in the follo-ving re- spects: (a) By requiring all moneys derived from the is- suance of licenses by the respective members of defend- ant to be paid by the licensee to defendant and distribut- ed in the same manner as other revenues; (b) by requir- ing of its members that notice be given the defendant of their intent to issue licenses before the issuance of same; (e) by prohibiting the members from issuing exclusive licenses to commercial users of music; (d) by requiring, ae | as a condition precedent to the issuance of a license by an — individual member of the Society, the approval and von- ot sent, to be obtained by the licensor, of the composer (e), i) ie author(s) and publisher subject to such reasonable regu-: - ae | lations as may be adopted by the composer(s), author(s), ae and publisher for that purpose; (e) by prohibiting the members from granting or assigning, to persons, firms, corporations of enterprises, including Broadcast Music, Inc., the right to license or assign to others the right to per- form publicly for profit the respective copyrighted music- al compositions of which performance rights are owned ae or controlled by the respectjye members of the defendant Ee 4 (2) Defendant, American Society of Composers, Au- . thors and Publishers, shall not enter into, recognize as valid or perform any performing license agreement which shall result in discriminating in price or terms between 61 licensees similarly situated; provided, however, that dif- ferentials based upon applicable business factors which justify different prices or terms shall not be considered discriminations within the meaning of this sub-paragraph ; and provided further that nothing contained in this sub- paragraph shall prevent price changes from time to time by reason of changing conditions affécting the market for or marketability of performing rights. (3) Defendant, American Society of Composers, Au- thors and Publishers, shall not require, as a condition. to any offer to license the public performance for profit-of a musical composition or compositions for radio broadcast- ing, a license fee of which any part shall be (a) -in respect of commercial programs, based upon a percentage of the income received by the broadcaster from programs in, which no musical composition or compositions licensed by said defendant for performance shall be performed, or (b) in respect of sustaining programs, an amount which does not vary in proportion either to actual performance, during the term of the license, of the musical composi- tions licensed by said defendant for performance, or to the number of programs on which such compositions or any of them shall be performed; provided, however, that noth- ing herein contained shall prevent said defendant from licensing a radio broadcaster, on either or both of the fore- going bases, if desired by such broadcaster, or upon any other basis desired by such broadcaster. With respeet to any existing or tature 3 li- cense agreement with a radio broadcaster, defendant, — Americun Society of Composers, Authors and Publishers, shall not, if required by such broadcaster, refuse to offer S — — = oid at 3 ng — Oe RRs a ie . —— r as a 4 7 . r eset ee ae ee ee ox os — — — A . Te Repose ee or — eo NET as FOS 62 a per program basis of compensation on either or both of the following bases which may be e p by the broad - caster : (1) in 9 of sustaining programs a per program license fee, expressed in terms of dollars, requiring the payment of a stipulated amount for each program in which musical compositions licensed by said defendant shall be performed; (2) in respect of commercial programs, a per pro- gram license fee, either expressed in terms of dollars, requiring the payment of a stipulated amount for each program in which the musical compositions licensed by said defendant for performance shall be performed, or, at the option of defendant, the payment of a percentage of the revenue derived by the licensee for the use of its broadcasting facilities in connection with such program. In the event that defendant shall offer to license the public performance for -profit of a musical composition. or compositions for radio broadcasting upon either or both of the foregoing per program bases, and shall also offer to license such performance on a basis of compensation which shall not vary in direct proportion either to actual performances during the term of the licenses of the music- al compositions licensed by said defendant for performance or to the number of programs on which musical composi- tions licensed by defendant shall be performed, defendant shall act in good faith so that there shall be a relationship between such per program basis and such other basis, justi- fiable by applicable business factors, including availa- bility, so that there will be no frustration of the purpose of this sub-paragraph to afford radio broadcasters alterna- - 63 tive bases of license compensation. 4) Defendant, American Society of eee Au- thors and Publishers, shall not license the public’ perform - ance for profit of any musical composition or composi- tions except on a basis whereby, insofar as network radio broadcasting is concerned, the issuance of a single license, ‘ authorizing and fixing a single license fee for such per- formance by network radio broadcasting, shall permit the simultaneous broadcasting of such performance by all sta- tions on the network which shall broadcast such perform- ance, without requiring separate licenses for such several stations for such performance. : : (5) With respect to any musical composition in de- fendant’s catalogue of musical compositions licensed for radio broadcasting and which is or shall be lawfully re- corded for performance on specified commercially spon- sored programs on an electrical transcription or on other specially prepared recordation intended for broadcasting purposes, said defendant shall not refuse to offer to license the public performance for profit by designated radio broadcasting stations of such compositions by a single 5 license to any manufacturer, producer or distributor of such transcription or recordation or to any advertiser or advertising agency on whose behalf such transcription or _ recordation shall have been made who may request such license, which single license shall authorize the broadcast- ing of the recorded composition by means of such tran- scription or recordation by all radio stations enumerated by the licensee, on terms and conditions fixed by said de- fendant, without requirng — licenses for such enu- merated stations. : pre gar Take “a ate gt eae as te BO eu ee pe i . } e —— —ññ — — GA EE a 8 2 5 rr M SES 12 PE RR * ene . cS 7 aX) oe ran eee eee aes — rea — . 64 2° (6) Defendant, American Society of Composers, Au- thors and Publishers, shall not, in connection with any offer to license by it the public performance for profit of musical compositions by users other than broadcasters, refuse to offer a license at a price or prices to be fixed by said defendant for the performance of such specific (i. e., per piece) musical compositions, the use of which shall be requested by the prospective licensee. (7) Defendant, American Society of Composers, Au- thors and Publishers, shall not, in connection with any offer to license by it the public performance for profit of musical compositions by radio broadcasters, refuse to offer a license on a per performance or per program basis as provided for in paragraph II (3) hereof at a price or prices to be fixed by said defendant for the performance of such programs, the use of -which shall be requested by = pros- pective licensee. (8) Defendant, Ame Society of 8 Au- thors and Publishers, shall not assert or exereise any right or power nor shall any of its members exereise any right or power to restriet from publie ormance for profit by any licensee of said defendant any copyrighted musical composition in order to exact additional consideration for the performance thereof, or for the purpose of permitting the fixing or regulating of fees for the recording or tran- seribing of such composition; provided, however, that nothing in this sub-paragraph shall prevent said defend- ant or its members from restricting performances of a musical composition in order reesonably to protect the work against indiscriminate performances or the value of the public performance for profit rights therein or to 65 protect the dramatic performing rights ‘therein, or, a8 may be reasonably necessary in connection with any claim or litigation involving the performing rights in any such composition. ~ a (9) The Society shall not elect the members of tae Board of Directors in any manner other than by a mem- bership vote in which all author, composer and publisher members shall have the right to vote for their respective representatives to serve on the Board of Directors. Due weight may be given to the elassification of the member within the Society in determining the number of votes each member may cast for the election of directors. Upon the expiration of the terms of office of the present direct- ors, the provisions of this section shall apply to the election of their successors. Thereafter, not less than one-twelfth of the total membership of the Board of Directors shall be elected annually. : (10) Defendant, American Society of Composers, Au- thors and Publishers, shall provide in its by-laws that the Society shall not distribute to its members the moneys re- “ eeived by granting the right to perform copyrighted mus- - ical compositions publicly for profit on any basis other than the number, nature, character and prestige of the copyrighted musical compositions composed, written or published by each_member, the length of time in which : the works of the member have been a part of the catalog of the Society, and popularity and vogue of such works, all to be determined in a fair and non-discriminatory man- ner. . a d 3 (11) Defendant, American Society of Composers, Au- thors and Publishers, shall not require as a condition precedent to eligibility for author or composer member- ship in the Society the regular publication of more than one musical composition or writing by any person who | regularly practices the profession of writing music and the text or lyrics of musical works. III. The terms of this decree shall be binding upon, and shall extend to each and every one of the successors in interest of defendant, American Society of Composers, Authors and Publishers, and to any and all corporations, partnerships, associations and individuals who or which may acquire the ownership or, control, directly or indi- rectly, of all or substantially all of the property, business and assets of defendant, American Society of Composers, Authors and Publishers, whether by purchase, merger, consolidation, re-organization or otherwise. None of the restraints or requirements herein imposed upon the de- fendant shall apply to the acquisition of or licensing of the right to perform musical compositions publicly for profit outside the United States of America, its territories and possessions. IV. For the purpose of securing compliance with this decree, and for no other purpose, duly authorized repre- sentatives of the Department of Justice shall, on the writ- ten request of the Attorney General or an Assistant Attor- ney General and on reasonable notice to defendant, Amer: ican Society of Composers, Authors and Publishers, made to the principal office of said defendant, be permitted (a) reasonable access, during the office hours of said de- fendant, to all books, ledgers, accounts, correspondence, memoranda, and other records and documents in the possession or under the control of said defendant, relating 67 to any of the matters contained in this decree; (b) sub- ject to the reasonable convenience of said defendant and without restraint or interference from it, and subject to any legally recognized privilege, to interview officers or employees of said defendant, who may have counsel pres- ent, rgarding any such matters; and said defendant, on such request, shall submit such reports in respect of any such matters as may from time to time be reasonably necessary for the proper enforcement of this decree; pro- vided, however, that information obtained by the means permitted in this paragraph shall not be divulged by any representative of the Department of Justice to any person other than a duly authorized representative of the De- partment of Justice, except in the course of legal proceed- ings in which the United States is a party or as otherwise required by law. v. This decree shall become effective ninety (90) days after the entry hereof, except that the provisions of sub- paragraph (6) of paragraph II shall become effective nine (9) months after the effective date of the other pro- visions of this decree. VI. Jurisdiction of this cause is retained for the pur- pose of enabling any of the parties to this decree to make application to the Court any time after the effective date hereof for such further orders and directions as may be necessary or appropriate in relation to the construction of or carrying out of this decree, for the modification hereof upon any ground for the enforcement of compliance here with and the punishment of violations hereof. Jurisdic- tion of this cause is retained for the purpose of granting or denying such applications so made as justice may re- a ee SP EST SG ~ 4 NN . arses — . 21 rn 68 e tof the defendant to make such apl. cation and to mn ‘ ~ Approved: Henry W. oveans, United States District Judge. \ We here, consant to the entry of the fereguing deen For the complainant: THURMAN ARNOLD, Assistant Attorney General. Victor O. WATERS, Special Assistant to the Attorney General. WARREN CUNNINGHAM, JR, Special Attorney. For the defendants: CHARLES POLgTTI, MILTON D1aMonp, 1 ScuHwartz & Fronten, By HseeMan FINKELSTEIN, Member of the Firm. Judgment rendered March 4th, 1941. Grorce J. H. FoLLunn, rot Clerk, — 4 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386401_0429%3A06. Public record. Not legal advice.