Petition for a Writ of Certiorari — Teleprompter Corp. v. Columbia Broadcasting System, Inc.

SUPREME COURT, U. BS.

IN THE

Supreme Court of the

Ocroser Term 1972

Ne 72- 1633

COLUMBIA BROADCASTING SYSTEM, INC., CALVADA

PRODUCTIONS, a joint venture, JACK CHERTOK TELE-

VISION, INC., ann DENA PICTURES INCORPORATED,

Petitioners,

v.

TELEPROMPTER CORPORATION anp

CONLEY ELECTRONICS CORPORATION,

Respondents.

CONDITIONAL CROSS-PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

Asa D. SoxoLtow CHarces H. MILcer

SypnEy M. Kaye Royat E. BLAKEMAN

Puitip MANDELKER BERTRAND H. WEIDBERG

575 Madison Avenue 430 Park Avenue

New York, New York 10022 New York, New York 10022

Harry R. Otsson, Jr. Attorneys for Petitioner Calvada

51 W. 52 Street Productions

New York, New York 10022 Evucene Z. DuBose

Attorneys for Petitioner Columbia Atrrep C. Moran

Broadcasting System, Inc. 120 Broadway

New York, New York 10005

Attorneys for Petitioner Jack

Chertok Television, Inc.

Seymour GRAUBARD

345 Park Avenue

New York, New York 10022

Attorney for Petitioner Dena tg

Pictures, Incorporated

ey as

TABLE OF CONTENTS

ORARI 2. cen vccceesncvvesesnesseseeeevesessees

JURLMETIONE SEES a CRP REG

OCousrtonw PRRRAIED: iS oie nw cetdeenes

StaAvorE IMPOR i 6k ks Ss ORL ak

STATEMENT ...........3; Ee aS ea

A Pete Fea eee ee Se ee ths

REASONS FOR GRANTING THE WRIT .............+-

A. The Court of Appeals in Partially Affirming the

District Court Did Not Properly Apply the Func-

tional Test of Fortnightly ..................

B. Before Assessing Teleprompter’s Activities In

Distant Signal Importation the Court Should

Have Before It for Consideration All the Facts

of Teleprompter’s Operations ...............

COOL TIE ns esc wae bb KG 6a he

APPENDIX A

Opinion and Judgment of the United States Court

of Appeals for the Second Circuit .............

APPENDIX B

Opinion of the United States District Court for the

Southern District of New York ..............

PAGE

10

17

18

la

PAGE

boo Te Corp. v. United Artists Television Corp.,

S300 (1968) rey Sees 5, 6,7, 8,9, 10, IL 12

United Artists Television, Inc. v. Fortnightly C.

255 F. Supp. 177 (S. D. N. Y. 1966), aff'd,

F. 2d 872 ¢ (2d Cir. 1967), rev'd 392 U. S. 390

CRIED cbs kone dtanssansad » ROBERTA Hee 5

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

OB a SE ee re Ca ht soe 5 10, 15

United States v. Southwestern Cable Co., 392 U. S.

ee ees Oe Ter ee sks y 10

STATUTES AND RULEs:

Copyright Act of 1909

a7 U.S. GC. Bite), CE) 028i ii 3, 4, 8, 12, 13, 14, 17

SB Wi Be SSS 6 ek A, 2

Rules of the Supreme Court of the United States... 9

MISCELLANEOUS:

Broadcasting, March 19, 1973 ................. 16

Broadcasting, April 30, 1973 ....... cucandad ca’ 4

Petitioner’s Reply Brief to the Supreme Court in

Fortnightly Corp. v. United Artists Television

ee ere 8, 11

Television Digest, Vol. 13 No. 17, April 23, 1973 .. 10

Television Fact Book, Vol. 41 (1971-72) ........ 15

;

i

|

IN THE

Supreme Court of the Rnited States

October Term 1972

No.

ap.

7

CotumBia Broapcastinc System, Inc., CatvapaA Pro-

DUCTIONS, a joint venture, JAcK CHERTOK TELEVISION,

Inc., and Dena Pictures INCORPORATED,

Petitioners,

‘\

‘

v

TELEPROMPTER CORPORATION and

ConLEY ELECTRONICS CORPORATION,

Respondents.

CoNDITIONAL Cross-PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STaTEs Court oF APPEALS FOR THE

Seconp Crrcult

.%

> 2

Columbia Broadcasting System, Inc. (“CBS”), Calvada

Productions, Jack Chertok Television, Inc., and Dena Pic-

tures Incorporated (hereinafter “plaintiffs”) conditionally

petition for a writ of certiorari to review the judgment of

the United States Court of Appeals for the Second Circuit

entered on March 8, 1973 to the extent that it affirms in

part the judgment entered on June 27, 1972 by the United

States District Court for the Southern District of New

York. The part of the judgment which plaintiffs con-

ditionally bring to the Court’s attention in this petition

has resulted inthe dismissal of plaintiffs’ claims of copy-

right infringement insofar as they were based on the func-

tion of Teleprompter Corporation and Conley Electronics

Corporation (hereinafter “Teleprompter”) as a program

2

originator, seller of advertising for transmission by their

cable television stations, and a cable television network

operator.

This petition is conditioned on the Court’s granting

Teleprompter’s petition in No32-!¢2% Plaintiffs are opposing

the said Teleprompter petition. However, if this matter is

to be reviewed to the Supreme Court, then we respectfully

submit that all of the issues should be presented to the Court.

OPINIONS BELOW :

The opinion of the Court of Appeals is reported at ——

F. 2d ——, 177 U. S. P. Q. 225 (2d Cir. 1973) and is

annexed hereto as Appendix A, infra pp. la-28a. The

opinion of the United States District Court for the Southern

District of New York is reported at ——— F. Supp. ——,

173 U. S. P. Q. 778 (S. D. N. Y. 1972) and is annexed

hereto as Appendix B infra pp. 1b-26b.*

JURISDICTION

The judgment of the Court of Appeals was entered on

March 8, 1973. The jurisdiction of this Court is invoked

under 28 U. S. C. § 1254(1).

QUESTION PRESENTED

Did the Court of Appeals err in holding that the un-

B

3

of Section 1(c) and (d) of the Copyright Act of 1909, 17

U. S.C. §.1(c) and (d), when the said cable stations per-

formed all or some of the functions described below:

(a) origination of programming;

(b) sale of advertising for transmission by its cable

stations ;

(c) interconnection with other cable television stations

to form a cable television network.

STAVUTE INVOLVED

Section 1(c) and (d) of the Copyright Act, 17 U. S. C.

§ l(c) and (d), provide:

“Any person entitled thereto, upon complying with

the provisions of this title, shall have the exclusive

right:

* * *

(c) To deliver, authorize, the delivery of, read, or

present the copyrighted work in public for profit if

it be a lecture, sermon, address or similar produc-

tion or other nondramatic literary work; to make

® or procure the making of any transcription or rec-

ord thereof by or from which, in whole or in part,

it may in any manner or by any method by exhibited,

delivered, presented, produced, or reproduced; and

to play or perform it in public for profit, and to

exhibit, represent, produce, or reproduce it in any

manner or by any method whatsoever * * * and

(d) To perform or represent the copyrighted work

publicly. if it be a drama or, if it be a dramatic work

and not reproduced in copies for sale, to vend any

4

manuscript or any record whatsoever thereof; to

make or to procure the making of any transcription

or record thereof by or from which, in whole or in

part, it may in any manner or by any method be ex-

hibited, performed, represented, produced or repro-

duced ; and to exhibit, perform, represent, produce,

or reproduce it in atiy manner or by any method

whatsoever * * *.”

STATEMENT

A. Facts.

This is an action for copyright infringement commenced

on December 11, 1964 and supplemented by complaints

filed on December 15, 1969 and May 17, 1971. Plaintiffs

are creators and producers of television programs which

were protected by statutory copyright and which were ,

initially licensed for transmission by the CBS Television /

Network, a Division of CBS, to its affiliated television f

Stations for simultaneous broadcast by those stations to

viewers in their service area (“network programs”). Some

of the copyright works described in the complaints were

subsequently “syndicated,” i.e. licensed by the copyright

owners or their licensed distributors to individual tele-

vision stations for further broadcast to viewers in their

service areas.

Teleprompter is the nation’s largest operator of cable

television stations. At the time of trial, it owned and

operated some 100 cable television stations throughout the

country with more than 500,000 paying subscribers.* The

complaints alleged that the Teleprompter cable television

stations had intercepted the signals of television stations

*T

‘subscribers, "Broadcasting April 30, 1973 ct p. SC (Citing, Tele

prompter Corp.’s first quarter report for 1973).

5

broadcasting plaintiffs’ copyrighted works and then re-

transmitted both the network and syndicated programs to

their paying subscribers, without authorization or license,

thereby infringing plaintiffs’ copyrights.

At the time of the filing of the original complaint there

was pending in the United States District Court for the

Southern District of New York the case of United Artists

Television, Inc. v. Fortnightly Corp., 255 F. Supp. 177

(S. D. N. Y. 1966), aff'd, 377 F. 2d 872 (2d Cir. 1967),

rev'd, 392 U. S. 390 (1968) (hereinafter “Fortnightly” ).

That was the first case to test the copyright liability of

traditional CATV systems, the sole function of which was

to enhance the reception by television viewers of the signals

of nearby television stations.

The District Court in Fortnightly found that the

CATV systems described therein infringed plaintiff’s copy-

rights, basing its decision in large part upon its analysis of

the technical and engineering aspects of the defendants’

systems. 392 U. S. at 399 n. 27. On appeal, the Second

Circuit in that case affirmed the finding of infringement,

basing its decision largely on the quantitative and qualita-

tive contributions which the Fortnightly systems made to

bring about the viewing of the copyrighted works. Jd. at

306.*

A divided Supreme Court reversed, holding inter aka

that the issue of copyright infringement depended upon

“a determination of the function” that a particular cable

television system plays “in the total process of television

broadcasting and reception.” Jd. at 397. The Court, char-

acterizing Fortnightly’s overall function as that of a mere

reception service—a passive beneficiary—, determined that

* ortnightl appeal cot 1 .

ad Ghee ow wet green gine Blend et 7 dene

necessary on the courts.

6

the Fortnightly CATV systems were “on the viewer’s side

of the line” and thus did not infringe. Jd. at 399.*

After Fortnightly, pre-trial proceedings resumed in this

case. The bulk of the basic facts pertaining to the function

of the Teleprompter systems was stipulated by the parties.

These stipulations established that the ——

cable television stations performed significant new f

tions which were not performed by the Fortnight

systems. Thus, the courts below found that the Tele-

prompter cable television stations selected and imported for

retransmission programs broadcast in the first instance by

television stations in markets far distant from the com-

munities in which defendants’ cable television stations oper-

ated, originated substantial programming, sold advertising,

interconnected with other cable television stations, and

were in addition to the reception service which enhanced

the ability of subscribers to receive the signals broad-

cast by television stations in local and adjacent markets.**

(App.’A at 5a-10a, 15a, 16a; App. B at 6b-13b.) The courts

below also found that all of the various services offered by

the Teleprompter stations were sold as a package, that no

one of their services was available independent of the others.

(App. A at 13a; App. B at 13b, 24b.)

OP a RN acre discussion of Fortnightly see infra at pp.

Sl eg a erg ar a issues, plaintiffs,

although their complaints nt by all of the Tele-

stations named in the ints be stipulated to and the

— prot atl Tt'was agree at thse were Tobe ted a

“jllustrative” were so recognized by the District

Court. ( B at 3b.) Each of the illustrative cable television

stations functions substantially different from those per-

formed by the CATV systems involved in Fortnightly. Nasie of them

provided solely or primarily a mere reception service.

7

On the basis of these facts, plaintiffs contended at trial

that the Teleprompter cable television stations functioned

not as mere passive beneficiaries, but were fully and func-

tionally equivalent to “broadcasters” and, accordingly, could

not consistently with the Fortnightly test be deemed to fall

“on the viewers’ side of the line” for purposes of copyright

liability.

B. Decisions Below.

The District Court agreed with the plaintiffs that Fort-

nightly was not on its face dispositive of the issues before

it. The Court noted that “[p]rogress in the CATV indus-

try” and certain novel and “specific differences between

defendants’ CATVs and those in Fortnightly’ made this

case “the inevitable sequel to [Fortnightly].” (App. B at

2b.) But notwithstanding this conclusion, the District

Court held that the result in Fortnightly was controlling

in every respect in the present action. (App. B at 25b-26b.)

Accordingly, it dismissed the complaints.

On appeal, the Second Circuit in an unanimous opinion

recognized that the question was

“whether the character of CATV is so changed by

additional services that the cable systems here have

undertaken that their total operation, including the

reception service, under the Fortnightly functional

test, have become functionally equivalent to those of

a broadcaster, and thus these systems should be

deemed to ‘perform’ the broadcast programming that

they distribute.” (App. A at 12a.)

Having thus initially formulated the issue, in light of

Fortnightly, as an analysis of the “total operation” of the

Teleprompter cable stations the Court of Appeals, however,

undertook only a consideration of “the effect of each of

8

these operations [not previously considered] on the appli-

cation of the Fortnightly doctrine to the CATV systems

involved.” (App. A at 12a.) (Emphasis added.)

Its analysis led the Court of Appeals properly to reverse

the judgment of the District Court with respect to Tele-

prompter’s activities in selection, importation and distribu-

tion of television signals embodying plaintiffs’ copyrighted

works from distant broadcast stations located many, in

some cases hundreds of, miles from the communities served

by its cable television stations and clearly beyond the

service areas of those stations—functions admittedly not

before the Supreme Court in Fortnightly.* The Second

Circuit held that cable television stations to the extent

that they import such “distant” signals are “functionally

equivalent to a broadcaster and thus should be deemed

to ‘perform’ the programming distributed to subscribers

on these imported signals” within the meaning of Fort-

nightly and of the Copyright Act. (App. A at 18a.)**

On the other hand, its analysis led the Court of Appeals

to conclude, improperly we contend, that in and of them-

selves neither the origination of programming by the Tele-

prompter stations nor sale of advertising on such program-

ming should alter the result of Fortnightly. (App. A

at 12a-15a.) The Second Circuit following the District

Court’s lead glossed over the importance of interconnection

because of “the minimal interconnection” evidence before it.

here rine aeee Leeman, or erent Toeconet

a in a brief to this Court that the systems involved

snd tee the ly were “in the service area” Sf the: tcgnniidiing: stations

+

the importation from distant markets was “not

rape y wig yUForimphy} ease ” Petitioner’s Reply Brief, March

1968, pp. 1 a ]

Plainti will present a fuller analysis of the Second Circuit’s

to

ffs

the distant their ion to Tele-

orm rg ant signal question in eir oppositi

9

(App. A at 15a-16a.)* The Court of Appeals chose not to

consider the effect of the overall operation of the Tele-

prompter cable stations as functioning entities and whether

such overall operation would put them on the broadcaster’s

“side of the line” within the meaning of Fortnightly.

REASONS FOR GRANTING THE WRIT

It is the understanding of plaintiffs** that Teleprompter

is filing a petition for certiorari whch challenges the Court

of Appeals’ decision insofar as it holds that cable television

stations when “distributing [television] signals that are

beyond the range of local antennas . . . ‘perform’ the pro-

gramming distributed to subscribers on these imported

signals... .” (App. A at 18a.) Plaintiffs believe that hold-

ing is correct and will in a brief in opposition oppose the

If, however, this Court should grant that petition, plain-

tiffs believe that the issues with respect to program orig-

ination, sale and transmission of advertising, and inter-

10

A. The Court of Appeals in Partially Affirming the Dis-

trict Court Did Not Properly Apply the Functional

Test of Fortnightly.

Cable television in this country is only some 20 years

old. The Fortnightly case, though before this Court in

1968, was originally instituted in 1960 and the factual

record included even earlier material. As a result this

Court in its opinion dealt only with questions concerning

the copyright liability of a CATV system which functioned

merely as a well-located antenna and which only improved

reception of nearby television stations. 392 U.S. at 392.

Since 1960, however, the cable television industry has

undergone a “revolution” and “transformation in purpose,

scope and expectation.” This was readily acknowledged by

Teleprompter executives before trial. (E.g., J. A. 582a-

584a, E-62.) The revolution was not in the develop-

ment of new devices to improve television reception for

persons living in mountain valleys or rough terrain; the

revolution involved a change in function. Modern cable tele-

vision stations no longer act merely as reception-aiding de-

vices. They perform, rather, the functions of traditional

“broadcasters,” deliberately selecting and, importing pro-

grams from distant stations, originating its own programs,

selling advertising, and connecting into networks. With this

revolution in function, the cable television industry has ex-

perienced “explosive” growth. See, e.g., United States v.

Midwest Video Corp., 406 U. S. 649, 651 (1972) and

United States v. Southwestern Cable Co., 392 U. S. 157,

163-164 (1968). Indeed, since 1968 when Fortnightly was

decided the CATV subscriber figures have grown from

2.8 million homes to more than 7 million homes. Television

Digest, Vol. 13 No. 17, Apr. 23, 1973, at p. 5.

At the time Fortnightly was before this Court, amici

made the Court aware of the fact that some cable television

11

stations performed functions far different than those per-

formed by the Fortnightly systems. Counsel for Fort-

nightly, however, urged the Court to limit its decision to the

particular CATV systems before it and not to consider the

issue of other cable television stations which originated

programming, sold advertising, interconnected into cable

television networks, and imported and distributed distant

broadcast programming by microwave.* =~

This Court limited its opinion accordingly. In a foot-

note at the very beginning of the opinion, the Court ob-

served: “Some CATV systems, about 10%, originate some

of their own programs. We do not deal with such systems

in this opinion.” 392 U. S. at 392 n. 6. Further on, the

Court noted that “While we speak in this opinion generally

of CATV, we necessarily do so with reference to the facts

of this case.” Id. at 399 n. 25.

Thus, this Court explicitly reserved judgment on the

issue of copyright liability on the part of cable television

stations which originate programming and perform such

other functions as sale of advertising, interconnection into

cable television networks, and the importation of programs

from distant television stations. These are all functions

that are performed by the Teleprompter stations involved

in the present action and they are all functions which are

of growing importance in an industry of explosive growth,

Moreover, importation of programs from distant television

stations drastically interferes with the copyright owners’

ability to seek future revenues from syndication. Such

*E.g., Fortnightly’s counsel, who also represent Teleprompter

emphasized that this Court’s decision “must necessarily rest on

the facts concerning the operation of petitioner’s community antenna

television systems and not on possible or theoretical OPS March 5,

12

importation also provides an inducement for subscribers

to accept the Teleprompter package; having thus attracted

subscribers, program origination in substantial amounts

by Teleprompter has the inevitable effect of diluting the

broadcaster’s audience and thus further reducing the

income of copyright owners.

Clearly, this Court in Fortnightly did not decide the ques-

tion of the effect of a cable television station’s origination,

interconnection and sale of advertising on its copyright lia-

bility. However, the Court did posit a test by which it was to

be determined whether or not cable television systems would

be liable under the Copyright Act of 1909 for their use of

broadcast television programs.

Analogizing to the influence of “drastic technological

change” on the concept of “performance” within the mean-

ing of the Copyright Act, this Court in Fortnightly, 392

U. S. at 395-399, stated that the resolution of the issue

.of whether or not cable television systems “performed”

depended “upon a determination of the function that

CATV plays in the total process of television broadcast-

ing and reception,” id. at 397: where a CATV considered

“in this framework . . . falls on the viewer’s side of the

line” it does not “perform.” Jd. at 399. The distinction

rests upon a determination of whether the cable system is

more akin to an “active performer” or to a “passive bene-

ficiary.” Id. 2

A “broadcaster” according to this Court in Fortnightly:

(i) “selects and procures the program to be viewed, [which

he] may produce . . . himself, whether ‘live’ or with film

or tape, or he may obtain . . . from a network or some

other source”; (ii) converts the images and sounds into

electronic signals and transmits them to the public, unless

of course “the broadcaster obtains his program from a net-

work [in which case] he receives the electronic signals

13

directly or by means of telephone lines or microwave.” Id.

at 397; see id. at 400. Viewers, on the other hand, merely

“receive the broadcaster’s signals,” Jd. at 401. A “broad-

caster” is also engaged in the business of selling its time

and facilities to sponsors and is concerned with program

content and arrangement. Jd. at 400 n. 28.

The Fortnightly systems, the Court found: (i) did not

“select the programs to be viewed,” they simply carried

“whatever programs they received;” (ii) did not “procure

programs and propagate them to the public,” they merely

“receive programs that have been released to the public ;”

and (iii) had “nothing to do with sponsors, program con-

tent or arrangement,” but only sold an “ ‘antenna service

to a segment of the public for which [broadcasters’] pro-

grams were intended but which is not able because of

location or topographical condition, to receive them with-

out rebroadcast or other relay service by community an-

tenna....’” Jd. at 400 (brackets in original).

Thus, the Court held that the Fortnightly systems as

functioning entities were merely “passive beneficiaries”

when analyzed in light of the traditional functions of broad-

casters and viewers. The Court did not hold, however,

that all cable stations, regardless of the functions they per-

form, were television “viewers,” mere “passive benefici-

aries,” or “on the viewer’s side of the line.” Rather it

established a test for the question of whether the activities

of any particular cable television station constitute a per-

formance within the meaning of the Copyright Act. This

test requires the courts to analyze whether the activities

of a particular cable station as a functioning entity are

more akin to a broadcaster than to a viewer and so consti-

tute a performance within the meaning of the Act.

This was the test that the Court of Appeals below set

forth when it stated that the question before it was whether

14

the Teleprompter cable stations’ “total operation, including

the reception service, under the Fortnightly functional test

[has] become functionally equivalent to [that] of a broad-

caster, and thus these systems should be deemed to ‘per-

form’ the broadcast programming that they distribute.”

(App. A at 12a.) |

As noted supra at 8-9, however, the Court of Appeals

apparently found it unnecessary to consider the Tele-

prompter stations as “total operation[s],” to see whether

as “total operation[s]” they were “functionally equivalent

to .. . a broadcaster.” Rather, the Court of Appeals con-

sidered only the separate effect of each of the variots

functions performed by the Teleprompter stations. As in-

dividual functions, the Second Circuit held that none of

them, except the importation of distant signals, had any

effect whatsoever on defendants’ liability for the perform-

ance of plaintiff’s copyrighted works initially broadcast by

over-the-air television stations.

The question, however, both under Fortnightly and

under the test as set down at the outset of the Second

Circuit’s opinion below is not the effect of any single func-

tion performed by a cable television station on the broad-

cast programming it replays. The question is rather

whether the cable station in its “total operation” is “func-

tionally equivalent to a broadcaster” and thus is a per-

former within the meaning of the Copyright Act. In

affirming the District Court’s dismissal of plaintiffs’ causes

of action to the extent they were based on the effects of

Teleprompter’s overall operations, the Court of Appeals

did not answer that question.

If the Second Circuit had addressed itself to the per-

tinent question of the cable stations’ overall operations and

had analyzed in light of Fortnightly the Teleprompter cable

television stations as functioning entities, it should have

15

concluded that the stations were “functionally equivalent

to a broadcaster” and thus deemed to have “ ‘perform[ed]’

the broadcast programming that they distribute.”

The Teleprompter stations performed every operation

that this Court in Fortnightly identified as characteristic of

dence also showed that the commercials sold and carried

by Teleprompter stations were identical to those on broad-

*A majority of this very Court has already

that insofar as cable stations originate and distribute their own pro-

Game, Oy me ye oy United States v.

( idwest Video Corp U._S. 649, 667-670, 677, 680-681 (1972)

16

function. (J. A. 286a, E-54-55, E-179-181, E-236-241.)*

As well as being technologically intertwined these func-

por ye . . -

national oe J. A. 258a-259a, 280a, st oft tf

already been taken time of trial.

ne eee 1c B38 E-212, E-752-753, Ew, E-589.) Plans

national agg erg

was not adduced was that plaintiffs simplified the issues at trial

poygors yg oP crag hagbos tive systems. Secondly, the decision

of (Orictiene bs Gaeek ss wlteeion cs ene,

and importation functions. J. A. 5760-9772.) Further, there. was

eat te eoity omaniceha (J. rie festracted by cn 55a.

17

Based on these facts, numerous witnesses familiar with

both the broadcasting and cable industries described at trial

the Teleprompter cable television stations as functionally

equivalent to broadcasters. (J. A. 298a-299a, 322a-323a,

326a-327a, 373a,379a, 400a-402a, 413a.)

In such circumstances, it is clear that the Court of

Appeals, as the District Court before it, erred in extend-

ing to cable stations performing these functions the limited

immunity granted by Fortnightly to those CATV systems

performing only a local reception service and that in so

doing the Court of Appeals decided certain of the issues be-

fore it in such a way as to conflict with the Fortnightly de-

cision of this Court.

B. Before Assessing Teleprompter’s Activities In Dis-

tant Signal Importation the Court Should have

Before It for Consideration All the Facts of Tele-

prompter’s Operations.

Plaintiffs are of the view that, should Teleprompter’s

petition for certiorari be granted, then the facts and issues

presented herein should be simultaneously before the

Court. This is necessitated by the very test laid down by

the Court in Fortnightly and discussed at length supra at

12-14. |

The Court in Fortnightly had before it a question con-

cerning the applicability of the Copyright Act to the

Fortnightly CATV systems. To resolve that question the

Court analyzed the two systems then before it in light of

Fortnightly was closed, the cable television industry has

been revolutionized. See supra at 10-11. The courts below so

18

found. In view of the test for copyright liability set forth

in Fortnightly, this Court, therefore, before attempting

to assess the import of one aspect of the function of

the Teleprompter cable television stations, should have

before it a record which presents the full economic and

technological context in which those stations operate.

If Teleprompter’s petition, which we assume will raise

a question with respect to only one aspect of Teleprompter’s

operations, is granted with no more, this Court will be

deciding an issue of great complexity with only a portion of

the record before it. If the Court reviews at all, then to en-

sure full and fair consideration the Court should also re-

view the facts and issues set forth by plaintiffs herein.

Plaintiffs urge that in the event that Teleprompter’s

petition in No23-i433is granted, this conditional petition

for a writ of certiorari should also be granted.

Respectively submitted,

Asa D. SoKoLow

SypneEy M. Kaye

Puitip MANDELKER

575 Madison Avenue

New York, New York 10022

Harry R. Otsson, JR.

51 W. 52 Street

v7 York, New York 10019

ttorneys for Petitioner

_ Columtia Broadcasting

System, Inc.

19

Cuartes H. MILLER

Roya E. BLAKEMAN

BerTranp H. WEIDBERG

430 Park Avenue

New York, New York 10022

Attorneys for Petitioner

Calvada Productions

Eucene Z. DuBosE

A.trrep C. Moran

120 Broadway

New York, New York 10005

Attorneys for Petitioner

Jack Chertok Television, Inc.

. SEyMour GRAUBARD

345 Park Avenue —

New York, New York 10022

Attorney for Petitioner

Dena Pictures, Incorporated

RosENMAN CoLIn KayYE PETSCHEK

Freunp & EMIL

575 Madison Avenue

New York, New York 10022

MARSHALL, BraTTEeR, GREENE, ALLISON

& TUCKER ;

430 Park Avenue

New York, New York 10022

ALEXANDER & GREEN

120 Broadway

New York, New York 10005

GrauBarD, MosKoy1tz, McGoLprick,

Dannett & Horow!Tz

345 Park Avenue

New York, New York 10022 ‘

Of Counsel

June 5, 1970 .

la

APPENDIX A

Court of Appeals, Second Circuit

CoLuMBIA BROADCASTING SysTEM, INCc., et

al. v. TELEPROMPTER CORPORATION

et al.

No. 72-1800 Decided Mar. 8, 1973

Appeal from District Court for Southern District of

New York, Motley, J.; 173 USPQ 778.

Action by Columbia Broadcasting System, Inc., Cal-

vada Productions, Jack Chertok Television, Inc., and Dena

Pictures, Incorporated, against Teleprompter Corporation

and Conley Electronics Corporation for copyright infringe-

ment. From judgment dismissing complaints, plaintiffs

appeal. Modified.

See also 148 USPQ 417.

Asa D. SoxoLtow and SrymMour GRAUBARD, both of New

York, N. Y., for appellants.

RosENMAN, CoLin, Kaye, PETSCHEK, Freunp & Emit,

New York, N. Y., for Columbia Broadcasting System,

Inc.

MARSHALL, BraTTER, GREENE, ALLISON & TUCKER, New

York, N. Y., for Calvada Productions.

ALEXANDER & GREENE, New York, N. Y., for Jack Cher-

tok Television, Inc.

GRAUBARD, Moskovitz, McGotprick, DaNNett & Horo-

WITZ, New York, N. Y., for Dena Pictures, Incorporated.

2a

Rosert C. BARNARD, JuLIUS Levy, CLEARY, GOTTLIEB,

Steen & Hamitton, R. MicnHae, Duncan, Katz,

RosensweEic & SINDLE, and Davip Z: RosENswEIG, all

of New York, N. Y., for appellees.

Pau, WEtss, RIFKIND, WHARTON & GARRISON, HERMAN

FINKELSTEIN, Stmon H. RiFxinp, JAY H. Topxis, and

Paut L. Lasxrn, all of New York, N. Y., for American

Society of Composers, Authors and Publishers, amicus

curiae.

Stuart F. Fetpstetn, CHARLES S. WALSH, and STEPHEN

A. Gotp, all of Washington, D. C., for National Cable

Television Association, Inc., amicus curiae.

Puituirps, NizeEr, BENJAMIN, Krim. & BALton, Louis

Nizer, GERALD MEYER, and GERALD F. PHILLIPs, all of

New York, N. Y., for Motion Picture Association of

America et al., amici curiae.

Before LumBarpo, KAUFMAN, and MANSFIELD, Circuit

Judges.

LuMBarpD, Circuit Judge.

Plaintiffs-appellants, Columbia Broadcasting System,

Inc. (CBS), Calvada Productions, Jack Chertok Television,

Inc., and Dena Pictures, Incorporated appeal from a final

judgment entered after trial in the Southern District. Ap-

pellants commenced this copyright infringement action’

against defendants-appellees, Teleprompter Corporation

(Teleprompter) and its subsidiary Conley Electronics Cor-

poration, who own and operate numerous Community An- |

tenna Television (CATV) systems throughout the country.

1The original action was commenced on December 11, 1964. At-

tempts to consolidate this action with United Artists Television v.

Fortnightly, 255 F. Supp. 177, 149 USPQ 758 (S. D. N. Y. 1966),

aff'd 377 F. 2d 872, 153 USPQ 696 (2d Cir. 1967), rev'd 392 U. S.

390, 158 USPQ 1 (1968), in the district court were unsuccessful.

The ies voluntarily stayed proceedings in this case while Fort-

nightly was on yay After the Fortnightly decision, supplemental

complaints were filed on December 15, 1969 and May 17, 1971.

3a

Appellants are creators and producers of television pro-

grams that were protected by statutory copyrights and

that were licensed to television stations affiliated with the

CBS Television Network, a division of CBS, and to

independent television stations. The complaint alleged that

_ the Teleprompter cable systems intercepted the signals of

television stations broadcasting appellants’ copyrighted

works and then channeled these programs to their paying

subscribers without authorization or license, thereby in-

fringing appellants’ copyrights.” After trial,® the district

2A: ts claim to have been injured because Teleprompter’s

CA systems distributed signals of stations carrying the copy-

righted to viewers who could not otherwise have received

them. a CATV system brings a into its market

from a more distant television market, assert that this

has a serious adverse impact on the copyright holder’s ability to

program than to some projected audience size. No evidence was pre-

sented in the court below to show that regional or local advertisers

stages. The first stage, on appeal here, concerned the issue of whether

or not Teleprompter had infringed appellants’ copyrights.

4a

court, holding that the reception of telecasts of appellants’

copyrighted programs by Teleprompter’s CATV systems

and the distribution of these programs to CATV subscrib-

ers did not infringe appellants’ copyrights, entered judg-

ment dismissing the complaint. From that judgment, appel-

lants have taken this appeal.

The pertinent facts were the subject of two lengthy

concerns the proper interpretation to be given to § 1(c)

and (d) of the Copyright Act of 1909, 17 U. S. C.4 1(c)

and (d).* This provision gives the copyright holder the ex-

clusive right, inter alia, to perform the copyrighted work.

The issue here, therefore, is whether Teleprompter’s CATV

systems “performed” the copyrighted works within the

on somewhat different facts, considered the meaning of

“perform” in this provision in Fortnightly Corp. v. United

Artists, Inc., 392 U. S. 390, 158 USPQ 1 (1968). Relying

a person entitled thereto, complying with the provisions

olisthe aut antes eee ae

** +

Sa

on Fortnightly, the district court held that. the CATV

systems here did not “perform” the copyrighted works.

The allegations of infringement were limited to an illus-

trative group of copyrighted programs. Similarly, the com-

plaints charged five specific and illustrative CATV systems

with having infringed appellants’ copyrights, although pre-

sumably other CATV systems owned by Teleprompter con-

at issue involve, and are limited to, the operations of Tele-

prompter’s CATV systems in five cities at stated periods:

_ Elmira, New York in November 1964; Farmington, New

Mexico in November 1964, June 1969, and March 1971;

Rawlins, Wyoming in June 1969; Great Falls, Montana in

June 1969; and New York City in June 1969 and March

1971. A knowledge of the operations of each of these

systems is essential to an understanding of our resolution

of the issues.

Elmira: In November 1964, the date of the only in-

fringement alleged with regard to the Elmira CATV

system, the system had the capacity to carry twelve tele-

vision channels. It received and provided its viewers with

the programs of ten television broadcast stations located in

Elmira and in communities varying from 46 to 173 miles

away. Broadcasts from CBS affiliates, as well as from some

stations with other network affiliations, in Buffalo (119

miles), Scranton (76 miles), Syracuse (64 miles), and

Binghamton (46 miles) were received off-the-air® at the

system’s antenna site on a hill adjacent to Elmira and were

made available to the system’s subscribers. Because of dis-

5The term, “off-the-air,” will be used throughout this opinion to

indicate the reception of broadcast television signals by means of an

antenna or similar receiving equipment. We use the term, “broad-

cast,” in accordance with the definition given to in 47

U.S. C. §153(0). Thus, “off-the-air” reception does not include the

reception of microwave transmission. See note 6, infra. %

of the stations in Buffalo and Scranton is not available by

means of rooftop antennas in most locations in and around

Elmira. Satisfactory reception of the Syracuse stations is

available only in some locations in the northern portion of

Elmira. One of the Binghamton stations can be satisfac-

torily received from rooftop antennas, but the other station

cannot. In addition, the Elmira system had two channels

that were provided by means of microwave links.* One of

these was licensed to the school system, which originated

educational programming that was transmitted by micro-

wave from the schools to the CATV system for distribu-

tion. The second microwave link served to connect the

system with an antenna nearer New York City, where a

New York independent station was received off-the-air.

None of the copyrighted programs was broadcast by this

independent station.

Farmington: On two of the dates of alleged infringe-

ment, November 1964 and June 1969, Teleprompter oper-

ated a five-channel system in Farmington. The system re-

ceived and distributed to its subscribers the signals of four

broadcast stations, all of which were received off-the-air on

antennas located on a mesa thirty miles from Farmington.

Originally, all the stations were from Albuquerque, New

Mexico (144 miles from Farmington) ; later, a station from

*A microwave link involves the transmission of signals through

the air. However, microwave transmission in itself is not broadcast-

ing. A broadcast signal, according to 47 U. S. Ss. G } 153(0), is tran$-

ay oe een oy Oe ” In the case of

microwave, the signal is focused and transmitted in a narrow beam

aimed with precision at the receiving points. Thus, microwave trans-

te tn the doth of de dul ban. it th - The receiving antenna must

i signal beam. If the transmission must cover a

7a

Durango, Colorado (43 miles) was added during periods

when one of the Albuquerque stations was not broadcasting.

Because of distance and mountainous terrain, reception of

the Albuquerque stations directly off-the-air by means of

rooftop antennas was not feasible. However, the Albu-

querque stations, including a CBS affiliate that broadcast

several of the copyrighted programs, were received in Farm-

ington on rooftop antennas because they were rebroadcast

by “‘translators’’ under a license issued by the Federal

Communications Commission and pursuant to authorization

given by CBS and the station. The mountainous terrain

also made it impossible to receive by means of rooftop an-

tennas the Durango station, which is also a CBS affiliate.

This Durango station, however, entered into a letter agree-

ment with the Farmington CATV system in which it au-

thorized the latter to distribute the station’s programming

to its subscribers.*

By March 1971, the third date of alleged infringement,

the system had been rebuilt with twelve-channel equipment.

At this time, it received and distributed the broadcasts of

nine stations: four from Albuquerque, one from Durango,

and four independent stations from Los Angeles (600 miles

from Farmington). Obviously, the Los Angeles stations

were not receivable from rooftop antennas in Farmington.

These stations were received on an antenna located approx-

imately fifty miles from Los Angeles and linked with the

Farmington system by a microwave system, 1300 miles in

length.

On the one additional channel available to the system in

1964 and 1969, it originated some limited programming,

righted programs. Tuc uote: etpdunel Gaas

or license was requested or received.

which consisted of general interest programs such as local

news, sports, and movies, an automated time and weather

scan,” and occasionally some educational programs. When

the channel capacity had increased in 1971, the automatic

time and weather scan was originated on a non-broadcast

channel” on a full-time basis. On a second non-broadcast

channel, educational programming was offered. And on the

third available channel, the CATV system originated twenty

hours per week of general interest programs.

Rawlins: At the time of the alleged infringement, in

June 1969, the Rawlins CATV system had a twelve-channel

capacity. The system received and made available to its

subscribers programming from six broadcast stations, five

from Denver, Colorado (184 miles from Rawlins), on

which the copyrighted programming was carried, and one

from Casper, Wyoming (87 miles from Rawlins). The

system received the Denver stations, which could not be

received in Rawlins from rooftop antennas, off-the-air on

antennas located ninety miles from Denver, and transmitted

them by microwave link to Rawlins. The Casper station

was received off-the-air on an antenna located at the edge

of town. Because of mountainous terrain, reception of the

Casper station directly off-the-air by rooftop antennas was

not generally possible; however, the Rawlins audience did

receive its broadcasts as a result of rebroadcasts by a trans-

lator. At the time of the alleged infringement, the only

program origination on non-broadcast channels that the

CATV system produced was an automated time and weather

scan.

Great Falls: The Great Falls CATV system was a

twelve-channel system at the time appellants allege it to

*This consisted of an automated camera that scanned clock and

dials.

A “non-broadcast channel,” as used in this opinion, is a channel

that offers a CATV system’s own original programming but does not

offer programs received from broadcast stations.

9a

have infringed their copyrights. It received and distributed

to its subscribers programming of nine broadcast stations.

Three of the stations (including the one that broadcast the

program whose copyright is alleged to have been infringed)

were in Spokane, Washington (286 miles from Great

Falls), one was in Lethbridge, Canada (163 miles away),

two were in Salt Lake City (466 miles away), and one

was in Helena (71 miles away). The system received the

signal of each of these stations off-the-air by means of

antennas located at varying distances from the originating

stations (17 to 95 miles) and transmitted it by microwave

to a point in Great Falls, from which it was distributed by

cable to the system’s subscribers. Because of distance,

mountainous terrain, and the limitations of the individual

stations, the Great Falls audience could receive none of these

broadcast stations by means of rooftop antennas. In ad-

dition, the system received the signals of two Great Falls

stations off-the-air by means of antennas located in the com-

munity, and distributed these signals to its subscribers. On

a non-broadcast channel, the system offered an automated

time and weather scan. On another non-broadcast channel,

the system originated ten hours per week of movies and

local interest programs.

New York: At the time of the first alleged infringe-

ment, in June 1969, Teleprompter’s New York CATV

system had a twelve-channel capacity. By March 1971, the

time of the second alleged infringement, its capacity had

increased to thirteen channels. Under the terms of the

system’s franchise, it must receive and distribute all eleven

New York City stations and is barred from importing any

stations from outside New York City. From time to time,

microwave has been used to connect the system’s main

antenna with two subsidiary antennas. The signals of the

New York stations were received off-the-air by these an-

tennas and distributed by cable to the subscribers! The

10a

New York system, on its non-broadcast channels, offered

several forms of automated originations, in addition to

originating from forty to seventy hours of local and general

interest programming per week. In connection with one of

the latter types of originations, a sports event, the Tele-

prompter system sold some commercial time and intercon-

nected with other CATV systems in the New York area.

I. Fortnightly Corp. v. United Artists, Inc.

The starting point in our analysis of appellants copy-

' right-infringement claims must, of course, be the Supreme

Court’s decision in Fortnightly Corp. v. United Artists

Television, Inc., supra. In deciding whether the Fortnightly

CATV system “performed,” within the meaning of the

Copyright Act, the programming that it provided to sub-

scribers, the Court applied a functional test and held that

the CATV system there involved was functionally related

more to the television viewer, who does not “perform,”

than to the television broadcaster, who does “perform.”

In this regard, Mr. Justice Stewart, speaking for the Court,

said:

The television broadcaster in one sense does less

than the exhibitor of a motion picture or stage play;

he supplies his audience not with visible images but only

with electronic signals. The viewer conversely does

more than a member of a theater audience; he provides

the equipment to convert electronic signals into audible

sound and visible images. Despite these deviations from

the conventional situation contemplated by the framers

of the Copyright Act, broadcasters have been judicially

treated as exhibitors, and viewers as members of a

theater audience. Broadcasters perform. Viewers do

not perform * * *.

lla

When CATV is considered in this framework, we

conclude that it falls on the viewer’s side of the line.

Essentially,a CATV system no more than enhances the

viewer's capacity to receive the broadcaster's signals; it

provides a well-located antenna with an efficient connec-

tion to the viewer’s television set. (Emphasis added.)

pp. 398-99, 158 USPQ at 45.

The teaching of Fortnightly is that a CATV re-

ception service that receives broadcast signals off-the-air

from an antenna or other receiving equipment erected with-

in or adjacent to the community it serves, and distributes

the programming received to subscribers, does not “per-

form” the programs and, thus, is not subject to copyright

liability, even though the subscribers could not otherwise

receive the programs without the aid of CATV. Appellants

correctly note that the operations of each of the CATV

systems involved here were different and broader than those

of the system before the Supreme Court in Fortnightly.

Fortnightly’s system provided a simple reception service

and consisted of “antennas located on hills above each city,

with connecting coaxial cables, strung on utility poles, to

carry the signals received by the antennas to the home

television sets of individual subscribers.” Fortnightly, p.

392, 158 USPQ at 2. Although Fortnightly was decided in

1968, the litigation in that case had been instituted in

1960, and, as a result, the Court considered CATV ina

state bf technology that was then eight years out-of-date.

Hence, the Court did not have before it a system that orig-

inated programming on non-broadcast channels, that sold

commercials on its origination programming, that had the

capacity to interconnect with other CATV systems, that

utilized microwave links in bringing broadcast signals to

its subscribers, and that imported signals from statiens lo-

cated hundreds of miles away from the community that the

12a

system was intended to serve. Appellants’ counsel inform

us that the Supreme Court was made aware of the chang-

ing technology of CATV by counsel for amici and by

counsel for Fortnightly (who represent Teleprompter here).

Indeed, the Court’s opinion in at least two places implied

that it was aware of this fact and was not necessarily lay-

ing down a broad rule to apply to all CATV systems re-

gardless of the nature of their operations.”

The question before us is whether the character of

CATV is so changed by the additional services that the

cable systems here have undertaken that their total opera-

tion, including the reception service, under the Fortnightly

functional test, have become functionally equivalent to those

of a broadcaster, and thus these systems should be deemed

to “perform” the broadcast programming that they distrib-

ute. The additional operations undertaken by these CATV

systems, which appellants contend distinguish this case

from Fortnightly and bring about this asserted metamor-

phosis in the character of CATV, are the following: 1)

origination of programming on non-broadcast channels,

and the sale of commercial time on such non-broadcast

programming; 2) interconnection with neighboring CATV

systems; 3) use of microwave links in bringing broadcast

programming to subscribers ; and 4) the importation of dis-

tant broadcast signals from outside the area served by the

CATV system. We shall consider in order the effect of

each of these operations on the application of the Fort-

nightly doctrine to the CATV systems involved.

Il. Non-broadcast Program Origination

At the outset, we reiterate that what is involved here

is the origination of programming on channels not used for

the distribution of broadcast signals and the sale of com-

See Fortnightly Corp. v. United Artists, Inc., 392 U. S. 390;

392n. 6, and 399n. 25, 158 USPQ 1, 2.5 (1968).

13a

mercials on such non-broadcast channels. We do not have

before us, and thus do not consider, the question of what

the effect would be on the Fortnightly doctrine if programs

originated by the CATV system were used to replace se-

lected broadcast programming received from network or in-

dependent stations that would otherwise have been dis-

tributed without alteration to subscribers on broadcast

channels. Similarly, we do not have before us a CATV

system that sold commercials on broadcast programming to

replace the commercials * and transmitted by the broad-

cast station.

Although the Supreme Court noted in Fortnigity that it

was not dealing with a CATV system that originated non-

broadcast programming,” we fail to see why a system’s

program origination on channels other than those on which

it relays broadcast programming should alter the result in

Fortnightly. Obviously, the system “performs” those pro-

grams that it originates for distribution to its subscribers.

However, we do not see the logic in appellants’ contention

that this program origination serves to convert the CATV

system into a “performer” of those programs that it dis-

tributes to its subscribers on broadcast channels. Even

though the origination service and the reception service are

sold as a package to the subscribers, they remain separate

and different operations, and we cannot sensibly say that

the system becomes a “performer” of the broadcast pro-

gramming when it offers both origination and reception

services, but remains a non-performer when it offers only

the latter.

In support of their contention, appellants point to As-

sociated Music Publishers, Inc. v. Debs Memorial Radio

Fund, Inc., 141 F. 2d 852, 61 USPQ 161 (2d Cir.), cert.

denied, 323 U. S. 766, 63 USPQ 358 (1944). In that case,

™2Note 11, supra.

4a

the defendants had argued that they should not be subject

to copyright liability for programs that they broadcast

without advertising support but merely as a service to their

listeners. This court rejected that contention, noting that

the programs, even without advertising, served to increase

the total number of station listeners and thus helped to

maintain the station as a successful financial entity. Ap-

pellants argue that Debs supports their position that the

various functions of the CATV systems should be con-

sidered as a whole to determine whether the system is*func-

tionally equivalent to a broadcaster, in which event it should

be deemed a “performer’’ with regard to all programming

it relays to its subscribers. This argument is but a general

statement of appellants’ particular contention that non-

broadcast program origination converts the system into a

“performer” with regard to broadcast programming dis-

tributed to subscribers.

Debs, however, does not support either proposition. The

issue there was not whether the programs had been “per-

formed”— indeed, having broadcast the programs, the sta-

' tion could hardly contend it was not a “performer”—but

whether the programs had been performed “for profit’;

and one can readily see that indirect “profit” accrued to the

station in Debs as a result of its unadvertised broadcast of

these programs. That decision is not authority for appel-

lants’ broad proposition that the operations of a CATV

system must be viewed and evaluated for copyright purposes

as a whole; and, thus, neither can it support the contention

that a system’s non-broadcast program origination converts

it into a “performer” of broadcast programs distribs to

subscribers by its reception service.

Therefore, we hold that the fact that certain ‘of the

CATV systems involved here originated programming and

non-broadcast channels did not make them “performers,”

for copyright purposes, of broadcast programming distrib-

uted to subscribers. A contrary approach would be un-

necessarily wooden and mechanical in its application of

copyright law to CATV.*

With regard to the sale of commercial time on non-

broadcast programming, although this is another step bring-

ing cable origination programming in competition to some

extent with broadcast programming, again, we do not agree

with appellants’ position that there is some sort of “spill-

over” effect by which the system becomes a “performer”

with regard to its reception service.

Ill. Interconnection

As noted earlier, Teleprompter’s New York CATV

system has occasionally interconnected its facility with those

of the two other CATV systems operating in the New York

area. Appellants analogize this activity to the networking

that is common among broadcast stations, and they point to

this as another factor making the New York system func-

tionally equivalent to a broadcaster. However, the only in-

terconnection with which we are concerned occurred in two

instances of sporting events that the system originated on

non-broadcast channels. There was no interconnection here

relating to the reception of any telecast of appellants’ copy-

righted programs, or indeed of any broadcast programming,

received by the system and distributed to subscribers. There-

fore, we are not presently in a position to evaluate what

The Federal Communications Commission has adopted rules,

which appear in 47 C. F. R. § 76.201, requiring CATV systems with

more than 3,500 subscribers to commence program origination, which

riapeaded wontina telitidh cncies: obviates These rules were

gt gore. judicial review of the FCC’s CATV rules. Al-

though FC uthority over CATV was sustained in United States v.

aa ee ee

rules. \

16a

effect interconnection may have on CATV copyright liability

if and when it ever reaches the point at which it is equiva-

lent to a network of CATV systems. In light of the mini-

mal interconnection we have before us, we must agree with

the district court that “[w]hatever this brief interconnec-

tion may portend for the future, it [did] not transform

[Teleprompter’s] present CATV system into a broadcast-

ing network as [appellants] suggest.”

IV. Microwave

A relatively recent development in CATV technology

that was not before the Court in Fortnightly is the use of

microwave to transmit a broadcast signal from the point of

its reception off-the-air to the point from which it is dis-

tributed by cable to the homes of subscribers. Typically,

microwave is used to import distant signals into the CATV

community, an activity the effect of which on the issue be-

fore us we shall consider below.* However, the use of mi-

crowave is not necessarily limited to this activity.

Appellants contend that the use of microwave, in and of

itself, is sufficient to make a CATV system functionally

equivalent to a broadcaster and thus subject to copyright lia-

bility for all the programming it receives and distributes to

its subscribers. We are unconvinced by this contention.

Neither do we believe that the use of microwave makes the

system a “performer” only of that programming with re-

spect to which the microwave is used. Microwave utilizes

Although we consider them separately, the use of microwave and

| res ap ee ween wd: howe te Sovran Poems Sr

the sense that microwave links are the usual means by which a CATV

oe distant signals. As is evident from the experience of

ew

we consider in this section of the opinion the effect of microwave on

the application of Fortnightly to CATV systems.

17a

point-to-point communication and is merely an alternative,

more economical in some circumstances, to cable in trans-

mitting a broadcast signal from one point ina CATV sys-

tem to another. Hence, we see no reason to attach legal

significance, in terms of copyright liability, tg the decision

to utilize microwave links.

V. Importation of Distant Signals

Appellants’ final, and in the end, most persuasive, con-

tention relates to the fact that certain of the CATV systems

involved here distributed to their subscribers signals from

broadcast stations located many miles from the communi-

ties served by the systems. In CATV parlance, this is

known as the importation of distant signals. This activity

was not before the Supreme Court in Fortnightly, and appel-

lants contend that that decision did not signify that a CATV

system does not “perform” a copyrighted television program

when it brings the signal in from another community, often

from another television market, and distributes that signal

to subscribers.

The CATV system in Fortnightly brought television

signals to viewers who could not otherwise have received

them. However, these signals were already in the com-

munity and were not imported by the CATV system from

another community, as is evidenced by the fact that the

system received them from an antenna located in or di-

rectly adjacent to the CATV community. It was only be-

cause of topographical conditions in and around the com-

munity that residents could not receive the signals on their

receivers. Thus, it was the office of the CATV system in

Fortnightly to use its advanced antenna technology and

equipment to overcome these adverse conditions and there-

by to bring the signals to members of the community. The

Supreme Court held that, in performing this function, the

18a

CATV system did not “perform,” within the meaning of

the Copyright Act, the programming carried on those

signals. However, in United States v. Southwestern Cable

Co., 392 U.S. 157 (1968), decided just one week before

Fortnightly, the Court explicitly recognized that this was

only one of two major services that CATV systems render

to the communities they serve. In this regard, Mr. Justice

Harlan, speaking for the Court, stated at p. 163:

CATV systems perform either or both of two

functions. First, they may supplement broadcasting

by facilitating satisfactory reception of local stations

in adjacent areas in which such reception would not

otherwise be possible; and second, they may trans-

mit to subscribers the signals of distant stations en-

_ tirely’ beyond the range of local antennae.

When a CATV system is performing this second func-

tion of distributing signals that are beyond the range of

local antennas, we believe that, to this extent, it is function-

ally equivalent to a broadcaster and thus should be deemed

to “perform” the programming distributed to subscribers

on these imported signals. See Select Theatres Corp. v.

Ronzoni Macaroni Co., 59 USPQ 288 (S. D. N. Y., 1943),

cited in Fortnightly, 392 U. S. at 398, n. 23, 158 USPQ

at 5, for the proposition that “broadcasters perform.”

The system’s function in this regard is no longer merely to

enhance the subscriber’s ability to receive signals that are

in the area; it is now acting to bring signals into the com-

munity that would not otherwise be receivable on an an-

tenna, even a large community antenna, erected in that area.

In Fortnightly, the CATV system distributed the pro-

grams to an audience to which they would not otherwise

have been presented. But the Court did not find this fact

significant for copyright purposes. The Court found that

19a

the CATV system made these programs available to this

new audience by providing it with the services of an ad-

vanced antenna, It then reasoned that, since a television

viewer was privileged to view whatever prograins he could

receive using any available antenna, a CATV system should

not be deemed a “performer” for copyright purposes when

it provided this antenna service as a commercial venture.

When a distant signal is involved, CATV is again distrib-

uting television programming to a new audience that could

not otherwise have viewed it. However, in this case, the

new audience is one that would not have been able to view

the programs even if there had been available in its com-

munity an advanced antenna such as that used by the

CATV system. The added factor in such a case is the signal

transmitting equipment, such as microwave links, that is

used to bring the programs from the community where

the system receives them into the community in which the

new audience views them. The viewer’s ability to receive

the signal is no longer a product solely of improved an-

tenna technology; rather it results from the system’s im-

portation of the signal into the CATV community from a

separate, distant community.

As a result, we no longer have a system that “no more

than enhances the viewer’s capacity to receive the broad-

caster’s signals.” Fortnightly, p. 399, 158 USPQ at 5:

We hold that when a CATV system imports distant signals,

it is no longer within the ambit of the Fortnightly doctrine,

and there is then no reason to treat it differently from any

other person who, without license, displays a copyrighted

work to an audience who would not otherwise receive it.

For this reason, we conclude that the CATV system is a

“performer” of whatever programs from these distant

signals that it distributes to its subscribers.

There remains, however, the difficult problem of de-

fining what is a distant signal. The range of a television

20a

signal is a function of many factors, including the current

state of broadcast and reception technclogy. Some of these

factors, such as topography, are unchanging in a particular

area. But broadcast and reception technology are in a

constant state of flux. Moreover, in determining the range

of a broadcast signal, it may not be enough to say that the

signal is or is not receivable in the community served by

the CATV system. The fact that the signal can be re-

ceived may not be meaningful unless it can project an image

that is acceptable acording to industry norms. 3

Thus, it seems clear that a precise judicial definition of

a distant signal is not possible. The FCC for purposes of

the CATV signal-carriage requirements, at one time cate-

gorized signals as “distant” and “local” in terms of their

ability to be received a substantial portion of the time by a

substantial portion of the homes in the area by means of

home antennas.“ However, we find this definition unsuit-

able for copyright purposes because we believe that any def-

inition phrased in terms of what can be received in area

homes using rooftop antennas would fly in the face of the

mandate of Fortnightly. Thus, in the absence of legislation _

on this matter, we must undertake to establish some stan-

ard for determining what is a distant signal for copyright

Any determination that a particular television signal is

“distant” must, of course, be made with respect to its prox+

imity to a specific local area, which we have termed the

:

pect rae acceptable reception of the signal is ex-

pected to bie S0 percent ofthe time atthe best 50

Tae ate he -R. $§ 73.683 and 73.684. With respect

to

locations outside its Grade B contour, Be FOC tas preemmdguaed

“distant signal” by the FCC. Recently the

2la

CATV community, served by the CATV system and desig-

nated in a franchise issued to it by a state or local govern-

body or regulatory authority.”* To say that a particu-

vice (such as microwave, cable, satellite, or the like), is to

indicate that it can be received in the community during a

substantial portion of the time by means of an antenna,

such as a large community antenna or other receiving device,

that is available under current technology. Thus, the mean-

ing of “distant signal” must be determined in light of the

current broadcasting and receiving technology. In this re-

gard, we find that it is easier to state what is not a distant

'*The franchise the CATV of author-

fy ts ‘van tes tohtnn aoweh 1 public streets and facilitice of a

city, town, or county to the homes of its subscribers.

—— . Dame Lawyer

qi ope ee gud agree tages ypocmgprys mee

22a

signal than to state what is a distant signal. Accordingly,

we have concluded that any signal capable of projecting,

without relay or retransmittal,” an acceptable image that a

CATV system receives off-the-air during a substantial por-

tion of the time by means of an antenna erected in or ad-

jacent to the CATV community is not a distant signal. This

seems to us to be required by Fortnightly.

When the community from which the signal originates,

which we term the originating community, and the CATV

community are different, and when the signal is initially re-

ceived by the system.at a location in or near the originating

community and then transmitted to the CATV community

by microwave or cable, a strong presumption arises that it

is a distant signal. The alleged infringer is then under a

heavy burden to show that the signal is not a distant signal

—that is, that it would be equally receivable off-the-air in

the first instance and would project an image of similar

quality, if there were substantially similar receiving equip-

ment located in or adjacent to the CATV community. Un-

less this burden is met, the signal should be deemed a distant

signal, and the CATV system would not be within the am-

bit of Fortnightly with respect to that signal.

Similarly, when the signal is initially received by the

CATV system on an antenna or other receiving device lo-

cated between the originating community and the CATV

community, the signal should be deemed a distant signal in

the absence of a contrary showing by the CATV system.

We do not necessarily mean that the antenna or receiving

1 not constitute

defend ot 7 USE § 153(0) as “the dissemina-

ie SF lis eanaataninne Weenies’ ce to semiead ty ta pln

directly or by the intermediary of relay stations.”

23a

device on which the signal is initially received cannot in any

case be located outside the city limits of the community

that has franchised the CATV system. We can envision

various legitimate circumstances, such as the desire to take

advantage of a tall building, hill, or other topographical

feature, that might cause the system to desire to locate its

antenna or receiving device in an area closely neighboring

the community that it serves. Such an antenna placement

is not motivated by the desire to be closer to the signal’s

point of origin in order to receive it before its strength is

dissipated and then to transmit to another location—pre-

sumably the motive that ordinarily underlies a system's

decision to locate its antenna outside the community that it

serves. Therefore, we would treat such a case in the same

manner as those in which the antenna is located within the

24a

VI. Conclusion

In light of what we have said, we conclude that the

CATV systems in New York City and Elmira were prop-

erly held not subject to copyright liability. In the case of

New York City, it was stipulated that the Teleprompter

system did not at any time import distant signals. As to

Elmira, although it appears that the system did import and

distribute one distant signal from New York City, it is

stipulated that none of the programs at issue involving

alleged copyright infringement were carried by that station.

The remaining stations distributed by the Elmira system

were stipulated to have been received by an antenna located

on a hill directly neighboring the city, and were thus not

distant signals. Therefore, the Elmira system was properly

held not subject to copyright liability with respect to pro-

gramming carried on these signals.

On the other hand, the Rawlins CATV system im-

ported five Denver stations frofn a distane of 184 miles. It

was on these Denver stations that the programs at issue

were carried. The system received these stations on an an-

tenna located 90 miles from Denver. Therefore, we con-

clude that these Denver signals were presumptively dis-

tant signals and that, in distributing the programs carried

on these stations, the Rawlins system “performed” the

copyrighted programs and thereby infringed appellants’

copyrights. For the same reason, we hold that the Great

Falls system “performed” the copyrighted programs, which

were distributed to subscribers through the importation

of a signal originating in Spokane, Washington (284 miles

from Great Falls) and received by antennas located 55 and

67 miles from Spokane.

The Farmington system provides potentially the clear-

est example of distant signal importation, in that signals

originating in Los Angeles, California, 600 miles away,

were distributed to subscribers. Only one of the Los An-

25a

geles stations broadcast any of the copyrighted programs

at issue. Inasmuch as this station was received off-the-air

by an antenna located a substantial distance from Farm-

ington and then transmitted to the Farmington CATV

system for distribution, it is presumptively a distant signal

under our holding, and Teleprompter must be held to have

“performed” the copyrighted program. The other alleged

infringements relate to programs that were carried by sta-

tions located in Albuquerque (144 miles) and Durango,

Colorado (43 miles). These signals were received by the

CATV system on an antenna located on a mesa 30 miles

outside of Farmington. We believe that a distance of 30

miles is too great to sustain an assertion that the antenna

is adjacent to the CATV community. Instead, on these

facts, we must treat the system as one that has located its

antenna outside the CATV community. Thus, in the ab-

sence of a contrary showing by Teleprompter, these signals

should also be deemed distant signals and the system should

be held to have “performed” the copyrighted programs and

thereby infringed the copyrights.

Of course, each system deemed to have imported distant

signals must be afforded an opportunity to show that, al-

though the receiving antenna was located outside the CATV

community, the particular signal could have been received

in a similar fashion by an equivalent antenna located in or

adjacent to the CATV community. We seriously doubt

that the Rawlins and Great Falls systems could sustain this

heavy burden because of the great distances involved. Si-

milarly, it is doubtful that the Farmington system will be

able to make such a demonstration with regard to the Los

Angeles station. However, the Farmington system may be

in a somewhat better position with regard to its carriage

of the Albuquerque and Durango stations. The alleged in-

fringement resulting from this activity concerned program-

ming broadcast by two CBS affiliates—one from Al-

Caos

26a

buquerque and one from Durango. The parties have stipu-

lated that

“[p]ursuant to permission granted by CBS and by

[the Albuquerque affiliate], the signals [of the affi-

liate] * * * were rebroadcast [by a translator sys-

tem] located near Farmington * * *. All of the

signals embodying the programs as to which in-

fringement by the Farmington CATV is, alleged

* * * were rebroadcast by these translators.”

It was further stipulated that, as a result of these trans-

lators, “[t]hese signals * * * could be received by residents

of Farmington on rooftop antennas.”

From these facts, we conclude, without the need for

further showing by Teleprompter, that these Albuquerque

stations could have been received by a CATV antenna lo-

cated within Farmington of substantially similar sophisti-

cation to that erected on the mesa. Thus, it is clear that the

Albuquerque stations were not distant signals, and there

is no need to remand to the district court for findings on

this point.” On the other hand, the stipulation indicated

that the signals of the Durango affiliate were not rebroad-

cast and could not be received by means of rooftop anten-

nas. Thus, if the system is unable to demonstrate that the

Durango station is not a distant signal, it must then be re-

garded as a “performer” of the programming distributed

to subscribers on that station. Since the copyrighted pro-

grams were distributed to subscribers on both the Albu-

27a

querque and the Durango stations, this leads to the con-

clusion that the Farmington system was a “performer,”

and thereby infringed the copyright, when it distributed the

programs on the Durango station, but was not a “per-

former,” and did not infringe, when it distributed the same

programs on the Albuquerque station.” Although this re-

sult is somewhat lacking in symetnry, in the final analysis

it will probably result in minimal damages, if any, being

imposed on the Farmington CATV system; for we find it

hard to see what damages appellants can have sustained,

or what profits Teleprompter earned, from the carriage of

the Durango broadcasts in light of the system’s simultane-

ous non-infringing distribution of the programs on the

Albuquerque CBS affiliate. By the simple turn of a knob,

the viewers who saw the programs on the Durango station

could have viewed them, as a result of the efforts of the

same CATV system on the Albuquerque station. How- —

ever, we think that, unless the Durango station is shown ‘not

to have been a distant signal, there was at least a technical

infringement of the copyright with regard to that station.

Accordingly, in light of our disposition of the issues on

this appeal, we affirm the district court’s holding that Tele-

prompter’s Elmira and New York City CATV system did

not infringe appellants’ copyrights; we reserve the district

court’s decision with regard to Teleprompter’s Rawlins,

Great Falls, and Farmington CATV systems, without prej-

udice, however, to Teleprompter to proceed in the district

court within a reasonable time to show that any of these

systems did not in fact import distant signals; and we re-

mand to the district court for further proceedings, includ-

ae ee ee ne

within our reservation of deci ortnightly on the issue of li-

cense implied in law, sirice the Durango station’s broadcasts were not

receivable off-the-air by means of rooftop antennas in Farmington.

See 377 F. 2d at 884, 153 USPQ at 705-706.

28a

ing the determination of damages, as are not inconsistent

with this opinion.

The complex problems presented by the issues in this

case are not readily amenable to judicial resolution. As the

Supreme Court said in Fortnightly, “[w]e [must] take the

Copyright Act of 1909 as we find it,” and do the best we

can. We hope that the Congress will in due course legislate

a fuller and more flexible accommodation of competing copy-

right, anti-trust, and communications policy considerations,

consistent with the challenges of modern CATV technology.

Affirmed in part and reversed and remanded in part.

29a

Rnited States Court of Appeals

FOR THE

Seconp CircuItT

At a stated Term of the United States Court of Appeals

for the Second Circuit, held at the United States Courthouse

in the City of New York, on the eighth day of March, one

thousand nine hundred and seventy-three.

Present: Hon. J. Epwarp LUMBARD

Hon. Irvinc R. KAUFMAN

Hon. WALTER R. MANSFIELD

Circuit Judges,

CotumBIA Broapcastinc System, INC.,

CaLvaDA PropucTIONs, a joint venture,

Jack CHERTOK TELEviIsION, INc. and

Dena Pictures, INCORPORATED,

Plaintiff s-A ppellants, 72-1800

v.

TELEPROMPTER CORPORATION and CONLEY

ELECTRONICS CORPORATION,

Defendants-A ppellees.

Appeal from the United States District Court for the .

Southern District of New York

This cause came on to be heard on the transcript of

record from the United States District Court for the

Southern District of New York, and was argued by counsel.

On CONSIDERATION WHEREOF, it is now hereby or-

dered, adjudged, and decreed that the judgment of said

District Court be and it hereby is affirmed in part and re-

versed in part and that the action be and it hereby is re-

manded to said District Court for further proceedings,

including the determination of damages, as are not incon-

sistent with the opinion of this court.

A. DANIEL Fusaro

Clerk

ib

APPENDIX B

District Court, S. D. New York

CoLuMBIA BROADCASTING System, INc., et al.

v.

TELEPROMPTER CORPORATION et al.

64 Civ. 3814 Decided May 2, 1972

Action by Columbia Broadcasting System, Inc., Cal-

vada Productions, Jack Chertok Television, Inc., and Dena

Pictures, Inc., against Teleprompter Corporation and Con-

ley Electronics Corporation for copyright infringement.

Complaint dismissed.

See also 148 USPQ 417.

RosENMAN, COLIN, KAYE, PETSCHEK, FreunD & Emit,

Asa D. SoxoLtow, RENEE J. Roperts, JaMEs K. NeEv-

LING, JR., and Harry OLsson, all of New York, N. Y.,

for Columbia Broadcasting System, Inc.

MARSHALL, BRATTER, GREENE, ALLISON & TUCKER, RoYAL

E. BLAKEMAN, and BERTRAM WEIDBERG, all of New

York, N. Y., for Calvada Productions.

ALEXANDER & GREEN and ALFRED C. Moran, both of New

York, N. Y., for Jack Chertok Television, Inc. ©

GRAUBARD, Moskovitz, McGotpricx, DANNETT & Horo-

Witz and BERNARD BucHHoOLz, both of New York,

N. Y., for Dena Pictures, Inc.

CLEARY, GOTTLIEB, STEEN & HAMILTON, Rosert C. BAr-

NARD, R. MicHaEL DuNcAN, Katz, SCHIER, ROSEN-

swEIG & SINDLE, WALTER C. Scuier, and Davip R.

' RosENSWEIG, all of New York, N. Y., for defendants.

Mottey, District Judge.

2b

I. Introduction

Four years ago, in Fortnightly Corp. v. United Artists

Television, Inc., 392 U. S. 390, 158 USPQ 1 (1968) (Fort-

nightly), the Supreme Court developed the test by which

the. copyright liability of community antenna television

(CATV) systems was to be measured.’ Progress in the

CATV industry has brought us the inevitable sequel to

that case. We are asked here to decide whether specific

differences between defendants CATV’s and those in Fort-

nightly—most importantly, transmittal of broadcast signals

from stations hundreds of miles a and program origi-

nation—make defendants liable for infringement of plain-

tiffs’ copyrights.

Defendants Teleprompter Corp. (Teleprompter) and

Conley Electronics Corp. (a wholly-ownéd subsidiary of

Teleprompter) own a large number of CATV stations

throughout the United States. Plaintiff Columbia Broad-

casting System (CBS) operates a television broadcasting

network, furnishing programs to approximately 200 affili-

ated television stations CBS owns copyrights on certain

programs, and, in addition, licenses programs from the other

plaintiffs who likewise produce television programs. De-

3 abe Bare t by the Federal Com-

withers Sc cette way dense Sete

Neh cy San alg

aoe a 47 C. F. R By eS ee also

Cale Co 32 57, 1 X

, 157, 161-163

United. Arti 302 W. S. 390, 158 SPO i Pa Te CR Tv

— mn es wl ge ge

even

i, i antenna television” suggests a pre Pomme

in this case, as it does a is no more than an

3b

fendants’ CATV systerns receive broadcast television

signals embodying plaintiffs’ copyrighted material and

transmit those signals to the homes of their subscribers,

The parties agreed that the activities of five of defend-

ants’ facilities located in different parts of the country

would best illustrate the nature and extent of defendants’

activities for purposes of decision here. These five facil-

ities are located as follows: Elmira, New York; Farming-

ton, New Mexico; Great Falls, Montana; New York,

New York; and Rawlings, Wyoming. The activities of

these five stations, including how and from where they

received plaintiffs’ copyrighted materials, form the "basis

of a lengthy stipulation of facts. It is only the legal sig-

nificance of those facts which forms the core of this

dispute.

It is also stipulated that none of defendants’ stations

had licenses under the copyrights from plaintiffs or from

the television broadcast stations around the country which

broadcast the plaintiffs’ programs over-the-air, and the

licenses granted by plaintiffs to stations which broadcast

their programs did not authorize carriage of the programs

by CATV systems.

The ultimate question before us is whether defendants

“performed” plaintiffs’ works within the meaning of § 1 of

Copyright Act. 17 U. S. C. § 1. In Fortnightly, the facts of

which will be stated below, the Court addressed the issue of

whether CATV’s perform. Recognizing that “[t]elevision

viewing results from combined activity by broadcasters and

- viewers,” it held that broadcasters perform while viewers do

not. The CATV system in Fortnightly, the Court con-

cluded, fell on the viewer’s side of the line and hence did not

perform. This conclusion was reached by analyzing the

“* * * function that CATV plays in the total process of tele-

vision broadcasting and reception”; that is, whether the

CATV system functioned more like a viewer or more like a

4b

broadcaster. Comparing the function of the CATV system

before it to that of both the viewer and his equipment and

the broadcaster, the Court found the function of CATV

more similar to the former.

It is plaintiffs’ contention that defendants’ five CATV

systems engage in activities different from those of the

CATV systems in Fortnightly, placing defendants’. systems

on the broadcaster’s side of the line. Specifically, the follow-

ing activities are said to have iven defendants’ CATY sys-

tems the function of broadcasters: 1) program origination,

2) the importation of distant signals, 3) selection of pro-

grams, 4) microwave transmission, 5) interconnection with

other,CATV stations, 6) advertising, and 7) sale of com-

mercials. These activities, plaintiffs charge, were either not

performed by the Fortnightly systems or were performed to

a significantly lesser degree. Singly or together, plaintiffs

suggest, these differences amount to a difference of function

between defendants’ systems and those in Fortnightly.

Not surprisingly, defendants stress the similarities be-

tween their operations and those of the Fortnightly sys-

tems. They further contend that, regardless of whatever

else their stations do, with respect to plaintiffs’ programs

Teleprompter is conducting a reception service identical to

the one in Fortnightly.*

We are thus faced with the question of the extent to

which defendants’ operations differ from those of the

CATV systems in Fortnightly, and whether these differ-

ences cause defendants to function as broadcasters, there-

fore “performing” plaintiffs’ works within the meaning of

the Copyright Act. For the reasons set forth below we find

that defendants have not performed plaintiffs’ works in

violation of the Copyright Act. Defendants are therefore

not liable for infringement of copyright.

*Defendants raise several other defenses we need not discuss at

this point.

5b

Il. Findings of Fact

Since many of the facts in this case were stipulated by

the parties, these findings will treat only the ultimate facts

relevant to the decision.

A. Prior Proceedings

This action was ‘commenced on December 11, 1964. At

that time Fortnightly was pending before Judge Herlands

in this District. Efforts to consolidate this case with Fort-

nightly for purposes of trial or appeal were unsuccessful,

and by agreement of the parties proceedings in the instant

case were stayed pending the ultimate decision in Fort-

nightly. Plaintiffs were granted permission to file supple-

mental complaints on December 15, 1969 and May 17, 1971

to include allegations concerning events up to March 31,

1971. By the pretrial order of October 23, 1970, trial of

the case was divided into stages. The first stage, which

this opinion addresses, is the trial of the issue of whether

there was an infringement of copyright. A trial to the court

was held from September 21 through 30, 1971.

B. Plaintiffs

CBS as a regular part of its business creates programs

for television and acquires other programs. These programs

are broadcast by television stations which are affiliates of

the CBS Television Network (an unincorporated division

of CBS); many of them are later placed in syndication—

licensed to individual television stations for broadcast.

Jack Chertok Television, Inc., Calvada Productions and

Dena Pictures, Inc. are independent program packagers

which create television programs that are furnished to net-

works and independent television stations.

6b

C. Defendants

Teleprompter Corp. is a New York corporation widely

engaged in CATV activities. Conley Electronics Corp., an

Illinois corporation, is a wholly-owned subsidiary of de-

fendant Teleprompter.

Defendants’ CATV systems, five of which were the

subject of the evidence at trial, operate generally as follows.

Homeowners who subscribe to CATV pay an installation

fee and a monthly charge. The monthly charge does not vary

with the amount of time CATV is used or with any particu-

lar programs watched. A coaxial cable links the homeowner’s

television set to the CATV facility. By means of this con-

nection, homeowners receive two general types of program-

ming on their sets. One is programming originated by the

CATV systems themselves and carried by the cable. The

other type is programming received off-the-air by CATV

receivers which has been broadcast by “regular” TV broad-

cast stations. Frequently, the homeowner could not receive

these signals via his rooftop antenna.

All of the five CATV’s have the capacity to carry twelve

channels to subscribers, except New York. which has a

25-channel cable link to some subscribers. None of the

CATV’s uses its full complement of available channels.

D. Origination

As mentioned above, Teleprompter’s systems receive

signals from television broadcast stations, modify tlie

signals, and then carry them to subscribers’ homes by

coaxial cable. In addition, defendants’ systems originate

their own programs. This is done by transmitting pro-

grams live, on videotape or on film from the CATV station

on channels not then being used for the received programs.

Some of the origination consists of a camera scan of

time and weather information, printed messages, stock and

7b

news tickers, and program listings—what may be called

“automatic origination.”

By 1969, all five of the stations were transmitting

“automatic” origination, often consisting of time and

weather information, virtually 24 hours a day.

In addition to this automatic origination, the stations

carry varying amounts of other program origination. At

the low end of the scale, the Elmira system occasionally

originates educational programming from a studio located

in a city school. This material appears on the same channel

as the automatically originated programs, replacing the

time, message and weather scan during that period. Aside

from these educational shows, the only origination by the

Elmira station is “automatic.”

The Great Falls, Rawlins and Farmington stations

originate more non-automatic programming than Elmira

but less than New York. Though neither Great Falls nor

Rawlins apparently originated any programming of this

nature in 1964, by 1969 both were transmitting an average

of ten hours a week besides time, weather and message

scans. Farmington originated an average of four and a

half hours a day, seven days a week in 1964, three hours a

day, five days a week in 1969; and four hours a day, seven

days a week in 1971.

New York City originated approximately forty hours a

week of “non-automatic” programming during June 1969.

By March 1971 this figure had grown to seventy hours a

week,

Programs originated by the Great Falls, Farmington,

New York and Rawlins systems have a wide range of con-

tent. Though the emphasis varies in different cities, with a

large amount of local coverage by all systems, the kinds of

programs originated by these four CATV systems are gen-

erally similar to those normally broadcast by television

stations. Thus, Teleprompter originates news, sports and

weather reports, documentaries, educational and religious

shows, discussions, interviews, bingo, sports events, chil-

dren’s shows, movies and entertainment films.

The number of hours of program origination is in all

cases substantially less than the number of hours of broad-

cast programming transmitted by the CATV systems.

In originating programming some Teleprompter person-

nel perform tasks similar to those performed by people in-

volved in broadcasting television programs. Some of the

equipment used by the Teleprompter stations to originate

programs is also used by broadcast stations.

E, Distant Signals

Since “[t]he effective range of the broadcast is de-

termined by the combined contribution of the equipment

employed by the broadcaster and that supplied by the

viewer,” (Fortnightly, 392 U. S. at 398, 158 USPQ at

4), it is impossible to define a precise line between a “dis-

tant” and a “local” signal. The term is applied here only to

connote a distinction between signals ordinarily receivable

by rooftop or tower-mounted antennas and those that are

not. The plaintiffs, at least, place a great deal of importance

on this difference.

All of Teleprompter’s CATV systems except New York

receive and carry to subscribers signals not ordinarily re-

ceivable either by house-top antennas or both house-top and

tower-mounted antennas. These systems are outside the

“Grade B” contour of the stations whose signals they re-

ceive and carry.

“The Grade B contour of a television station is

the boundary of a hypothetical area at whose outer

limits televiston reception of ‘a quality acceptable to

the median observer’ is expected to be available at

least 90 percent of the time at the best 50 percent of

9b

the receiver locations, based on expected field in-

tensities and certain assumptions as to the nature

and height of the receiving antenna, and the capabil-

ies of the television set. For the Grade A contour

the pertinent figures are 90 percent of the time and

the best 70 percent of the locations. These predicted

contours are plotted on the basis of propagation

charts and rules set forth in 47 CFR 73.684.” (Stip-

ulation No. 1, { 60.)

In most instances the signals are received in the locale

where they were broadcast by a receiving antenna. The

signals are then carried by microwave transmission, some-

times hundreds of miles, to a microwave receiving station.

From there the signals would be carried by cable, eventually

to subscribers’ homes.

Teleprompter’s Farmington, New Mexico and Great

Falls, Montana systems best illustrate this importation of

distant signals. Farmington lies 144 miles from Albuquer-

que, New Mexico. Due to the distance and rough topo-

graphy between the two cities, television reception t Farm-

ington of Albuquerque stations directly off-the-air by house-

top or tower-mounted antennas is not feasible. Farmington

CATV erected off-the-air receiving antennas on Huerfano

Mesa, an elevated point about thirty miles from. Farming-

ton. Signals from the Albuquerque stations were received _

there, carried by microwave to the Farmington system’s ~

building in Farmington, and then to subscribers by cable.*

Signals from a station in Durango, Colorado were also re-

ceived at Huerfafo Mesa and carried by Farmington

CATV.* Though Durango is only 43 miles from Farming-

ton, mountains between the two cities prevent reception in.

. 'The stations are KGGM-TV (a CBS affiliate), KOB-TV,

KNME-TV, and KOAT-TV.

*KREZ-TV (a CBS affiliate).

10b

Farmington by house-top antennas. Farmington is within

the “Grade B” contour of the Durango station.

Beginning in November 1970 the Farmington CATV

received and distributed signals of four television stations

on Los Angeles, California, in addition to those stations

mentioned above.® Farmington is over 600 miles from Los

Angeles, so off-the-air reception of the Los Angeles stations

by either house-top or tower-mounted antennas is impos-

sible. Signals of the Los Angeles stations were received

off-the-air by antennas forty-seven miles from Los Angeles.

They were then carried by microwave via twenty-three steps

over a round-about, 1300-mile route to Farmington.

It should also be noted that translators owned by the

San Juan Non-Profit TV Association serve the Farmington

area. The Association’s operations are supported by volun-

tary contributions from Farmington residents. A trans-

lator receives signals from a television broadcasting station,

converts the carrier waves of the television signals to a new

carrier frequency, amplifies them, and broadcasts them into

the air. The translators in Farmington received three VHF

stations located in Albuquerque and rebroadcast them on

UHF frequencies.* Farmington residents could then receive

the signals on housetop antennas. CBS and its Albuquerque

affiliate, KGGM-TV, gave written permission for rebroad-

cast by the Association’s translators.

The Great Falls CATV imports distant signals by a

similar method of receiving the television broadcasts off-

the-air near their source and carrying them by microwave

to Great Falls. Signals are received in Great Falls from

Spokane, Washington (226 miles); Lethbridge, Canada

(163 miles); Salt Lake City, Utah (466 miles); and

Helena, Montana (71 miles).

5The stations are KTLA-TV, KTTV-TV, KHJ-TV, and

KCOP-TV.

*The stations are KGGM-TV, KOB-TV, and KOAT-TV.

11b

F. Program Selection

It appears that all five CATV systems carry every tele-

vision broadcast station operating within their own areas.

That is, any station a resident can receive by house-top an-

tenna will also be brought to him over cable by his local

CATV system. In addition, as we have seen, in all cities

but New York a subscriber receives other, more distant,

stations."

Whereas they import distant signals, as described above,

Teleprompter’s systems make a decision about which sta-

tions should be received. Teleprompter has freedom to

choose which signals from other cities to receive and trans-

mit to each locale.

With possibly one exception, the Teleprompter CATV

systems receive the signals of the television stations they

carry continuously, and distribute them without editing or

deletion, except for deletion of the signals of distant stations

as required by the FCC’s non-duplication rules. The one

possible exception is the Farmington CATV, which for a

period carried the signals of KREZ-TV in Durango, Colo-

rado only in the evening hours.

Teleprompter’s systems do not otherwise choose the

sequence or content of programs they receive and carry to

subscribers. Boardcasters determine the nature of programs

to be viewed and the times they will be shown.

A viewer with an ordinary television set, of course,

directly chooses the programs to be seen from those avail-

able to him by broadcast and CATV.

G. Microwave

As mentioned above, Teleprompter uses microwave

transmission to carry signals from its receiving antennas

"The New York CATV’s franchise from the City of New York

nee Crneteasting Stations to be carried by the

CA system.

12b

to its various local systems. Microwave systems beam

signals from a microwave transmitting antenna to specific

microwave receiving antennas; these signals cannot be

received with a television antenna. With one exception

these transmitters send signals from one discreet point to

another single specific location. That exception is a device

called an Amplitude Modulated Link used by Telepromp-

ter’s New York facility which sends signals from one trans-

mitter to two receiving points simultaneously. z

In some cases Teleprompter owns the microwave equip-

ment it uses (New York, some in Farmington) ; in others

the microwave equipment is owned by an independent cor-

poration (Elmira, some in Farmington and Great Falls).

In all cases microwave serves the same function asecable

in carrying signals from one point to another within the

CATV system.

H. Interconnection

Teleprompter purchased the rights to carry to its sub-

scribers the February 25, 1964 and May 25, 1965 heavy-

weight championship fights between Sonny Liston and

Muhammed Ali. The fights were carried live to closed

circuit theatres by an independent company and to Tele-

prompter’s CATV systems in Farmington, Elmira and

Great Falls by AT&T facilities. Defendants’ CATV’s —

were linked to the nationwide AT&T circuits carrying the

signals. No additional or separate charge was made to sub-

scribers for viewing the fights.

Teleprompter’s New York CATV is connected by a

microwave link to the two other CATV systems in New

York City, as required by its franchise agreement with the

City of New York.

I, Advertising

Teleprompter specifically advertises its originated pro-

grams in an effort to attract subscribers. It also advertises

13b

the fact that subscribers can receive distant signals that

are otherwise unavailable. It cannot be said either that the.

originated programs are publicized only to attract sub-

scribers to a “basic” reception service, or, on the other hand, .

that the received programming is advertised in order to

promote the “basic” sale of originated programs. Tele-

prompter’s systems sell one basic service which includes

both original programming and programming received off-

the-air from broadcast stations. Teleprompter would be

most likely to emphasize in its advertising whatever it

thought would convince consumers to purchase this one

service.

J. Sale of Commercials

Teleprompter’s New York CATV system sold com-

mercials for its original coverage of sporting events from

Madison Square Garden, commencing on January 1, 1970.

These commercial messages consisted of two ten-second

“billboards” before and after the event (identifying the

sponsor) and two 60-second commercial announcements

during the program. The sponsor paid a total of $300 for

each sporting event. Plaintiff introduced evidence that

Teleprompter intends to increase its sales of commercials

in the future, but during the period covered by the plead-

ings in this case, no other commercials than these were

sold.

III. Conclusions of Law

Our point of departure in determining Teleprompter’s

liability under the Copyright Act is the Supreme Court’s

decision in Fortnightly. As mentioned above, Fortnightly

held that the copyright liability of CATV “depends upon

a determination of the function that CATV plays*in the

total process of television broadcasting and reception.”

14b

(at 397, 158 USPQ at 4). Finding that television view-

ing results from the combined activity of broadcasters and

viewers, the Court concluded that broadcasters perform

while viewers do not. Our task, as the parties recognize, is

to decide whether Teleprompter’s systems “function” as

broadcasters or as viewers.

Though it found the CATV systems before it to be on

the “viewer’s side of the line” (at 399, 158 USPQ at 5),

the Fortnightly Court did not delineate the “functiqns” of a

viewer and his receiving equipment. Rather, it analogized

the function performed by CATV to that of “a well-located

antenna with an efficient connection to the viewer’s televi-

sion set.” Id. Both “received and delivered” electronic in-

formation (at 399 n. 27, 158 USPQ at 5). Whether this

well-located antenna was owned by one homeowner, several

homeowners or an entrepreneur did not affect its function

in the Court’s view.

The Court did set forth the important functions of

broadcasters and compared them with the functions of the

Fortnightly CATV systems:

“Broadcasters select the programs to be viewed;

CATV systems simply carry, without editing, what-

ever programs they receive. Broadcasters procure

programs and propagate them to the public; CATV

systems receive programs that have been released to

the public and carry them by private channels to ad-

ditional viewers.” (citations omitted) (at 400, 158

USPQ at 6).

Other distinguishing features of broadcasters were added in

a footnote. Broadcasters sell their time and facilities to

sponsors while CATV’s do not. CATV’s on the other hand,

charge the public for the right to view their offerings;

broadcasters do not. Unlike broadcasters, CATV’s have no

15b

influence on program content and arrangement. [at 400, n.

28, 158 USPQ at 5S, citing Intermountain Broadcasting &

Television Corp. v. Idaho Microwave, Inc., 196 F. Supp.

315, 325, 130 USPQ 127, 135-136 (D. Ida. 1961).].

The Court's application of the functions of broadcasters

and wiewers provides only the broadest guide to analyzing

the function of the CATV systems before us.* Fortnightly

did not maké clear, for example, how many functions com-

mon to broadcasters a CATV system must fulfill for it to

fall on the broadcaster’s side of the line or, indeed, the ex-

tent an operation need be carried on for it to be found a

“function.” Nor does Fortnightly deal with instances where

a CATV system simultaneously petforms some functions

of a viewer and some of a broadcaster, as in the case before

us. é

Since under Fortnightly’s functional analysis test, the

Fortnightly CATV systems functioned as viewers and con-

sequently fell on the viewer’s side of the line, our approach

must be to compare Fortnightly’s CATV’s with the ones

before us in order to isolate the differences between the two.

We shall then explore whether those differences, singly or

in combination, cause Teleprompter’s CATV’s to “function”

. So differently from those in Fortnightly as to place Tele-

--prompter on the broadcaster’s side of the line.

At the outset we can dispense with certain minor fea-

tures of Teleprompter’s CATV’s that do not effect a signifi-

cant change in function, though they did not exist in

Fortnightly. These features are the use of microwave, in-

terconnection, advertising, and the sale of commercials.

Plaintiffs contend that defendants’ CATV’s are operating

like broadcasters by using microwave, since microwave

SJustice Fortas stated in his Fortnightly dissent: “The vague

undienmt an hee ede of the term a is *? * mm

satisfactory.” (at 407, 158 USPQ at 8). See also Comment, The

aoe Law and Its Relevance to CATV, 19 Buff, L. R. 65, 81-82

16b

transmits signals through the air. Broadcasters propagate

signals over-the-air, the argument goes ; and since the micro-

wave transmitters used by Teleprompter do also, Tele-

prompter, we are told, is functioning as a broadcaster.

However, a broadcaster sends out signals to the public,

‘ while, as we have found, Teleprompter uses microwave to

carry signals from one of its facilities to another ; no home-

owner receives Teleprompter’s microwave transmissions.

Its use of microwave is thus completely analogous ta.the use

of cable as a connecting carrier. Not every over-the-air

transmission of signals by electromagnetic energy is a

broadcast, human speech being just one example.

Nor does interconnection of several Teleprompter

CATV’s with closed-circuit theaters for the Liston-Ali

fights make these CATV systems into a broadcast network.

This interconnection occurred on two separate, temporary

and special occasions. Teleprompter’s CATV’s were inter-

connected only in the sense that several of them were linked

to the same independent nationwide circuits. Whatever this

brief interconnection may portend for the future, it does not

transform defendants’ present CATV systems into a broad-

cast network as plaintiffs suggest.

Defendants’ advertising efforts are somewhat similar

to those of the Fortnightly systems. One CATV system in

that case advertised that it afforded access to a greater

number of channels than an ordinary antenna. 255 F. Supp.

177, 149 USPQ 758 (S. D. N. Y. 1966).* Teleprompter

makes similar contentions about the numbers of otherwise

unavailable channels its subscribers can receive.

The unique aspect of Teleprompter’s advertising is its

mention of programs originated by the CATV; as will be

noted below, the Fortnightly systems originated only time

and weather scans. We fail to see though how emphasis on

its originated programs changes Teleprompter’s function.

*United Artists Television, v. Fortnightly Corporation

17b

The type of eieeitialnn demmabbientads sit tees: ii Dibes:

prompter felt its unique service would be more attractive to

consumers if original programs were offered. But if any

change in function occurred because of origination, it was

due to the origination itself, not to Teleprompter’s adver-

tisement of that fact. ,

Nor do we find decisive significance in the sale of com-

«mercials to accompany Teleprompter’s origination of sport-

ing events in New York City. While the Supreme Court

described commercial sponsorship as an attribute of a

broadcaster, it was listed as merely one 6f a number of

indicia of broadcasting, not as a sole determinant. The sale

of commercials in the case before us was small in both the

amount of money involved and in relation to the amount

of programming carried by the New York CATV. Im-

portantly, these commercials were sold and carried as part

of the ‘programming originated by Teleprompter, and not

~~ itt connection with its transmittal of over-the-air broad-

casts. Of course, both types of programming were part

of the same overall service, and realistically, some of the

audience for the commercials was at least partly attracted

to Teleprompter by its “reception service.” But the com-

mercials were not inserted in the midst of the received

programs, and the sponsor seems to have geared the com-

mercials closely to the originated sports events.

We come now to Teleprompter’s importation of distant

signals—the retransmission of broadcast signals that can-

not be received on rooftop or tower-mounted antennas.

This function is a salient feature of the Farmington, Great

Falls and Rawlins CATV’s and is also present in Elmira.

‘It is almost certainly responsible for much of the business

of the first three of these systems.

Plaintiffs contend that Teleprompter is engaging in

broadcasting by bringing signals into a new locale. In

plaintiffs’ view, importation of distant signals differentiates

ee

18b

this case from Fortnightly, whose CATV’s functioned

“merely as an auxiliary antenna to enhance the quality of

the television picture* * * ” (Plaintiffs’ pre-trial brief at

8, 19). Plaintiffs thus urge us to limit the copyright-im-

munity resulting from Fortnightly to those CATV’s which

“enhance” the quality of picture that can already be received

in the locale.

A reading of the Fortnightly opinions of the District

Court of Appeals and Supreme Court reveals that the Fort-

nightly systems did more than “enhance” poor quality pic-

tures—they in fact brought in stations from which usable

reception could not be had at all. All of the courts recognized

that the Fortnightly CATV’s carried broadcasts to addi-

Fortnightly involved two CATV’s one in and around

Clarksburg, West Virginia, and another in and around Fair-

mont, West Virginia, eighteen miles from Clarksburg.

Clarksburg is located approximately 82 miles from Pitts-

burgh, 57 miles from Wheeling, West Virginia, and 74

miles from Steubenville, Ohio—the cities from which it

received broadcast signals. Fairmont, which received the

same signals, is 67, 52 and 65 miles from those cities re-

spectively. The Fortnightly systems had antennas on hills

above Clarksburg and Fairmont, connected by coaxial

cables to individual subscribers.

istrict Judge Herlands found that:

“No credible competent evidence was adduced

which demonstrated that the residents of Clarksburg

or Fairmont, other than the subscribers to defend-

ant’s systems, could receive a usable and reasonably

satisfactory picture from any of the five stations in

Pittsburgh, Wheeling or Steubenville.” 255 F.Supp.

at 186, 149 USPQ at 765, aff’d 377 F.2d 872, 883

n. 14, 153 USPQ 696, 705-706 (2d Cir. 1967).

19b

Judge Herlands also found as a fact that:

“The basic purpose of defendant’s CATV sys-

tems * * * is to process and retransmit signals of a

television broadcast station to areas in which direct

reception by ordinary home antennas of such televi-

sion broadcast is unsatisfactory because of distance,

intervening conditions, or similar fac-

tors.” 255 F. Supp. at 196, 149 USPQ at 772.

The Court of Appeals cited Judge Herlands’ first find-

ing above in stating that “[t]he hilly terrain in and around

Clarksburg and Fairmont makes reception by normal roof-

top antennas of television programs broadcast by the Pitts-

burgh, Steubenville and Wheeling stations difficult or tm-

possible.” 377 F. 2d 872, 874, 153 USPQ 696, 698 (2d Cir.

1967) (Emphasis added).

The Supreme Court treated the Fortnightly case as one

where most residents of the areas involved could not receive

broadcasts of other than local stations by ordinary rooftop

antennas, 392 U. S. at 391, 158 USPQ at 2. It went on to

distinguish CATV systems from broadcasters on the ground

that the former “receive programs that have been released

to the public and carry them by private channels to addi-

tional viewers’”® 392 U. S. at 400, 158 USPQ at 6 (Empha-

sis added).

It is clear, then, that Teleprompter’s importation of

signals not receivable on rooftop antennas is no different

from that in Fortnightly. This case differs from Fort-

nightly in that in a number of the systems the antenna

tower receiving the signals is located not on a hill over the

city but many miles away in the vicinity of the broadcast-

* In United States v. Southwestern Cable Co. 392 U.S. 157, 162

ep eas week before Fortnightly, the Court stated that «

TV systems “may transmit to subscribers the signals of distant

stations entirely beyond the range of local antennae.”

ing station. Farmington, as we have seen, receives Los

Angeles stations whose signals are received off-the-air near

their point of origination and relayed by microwave to

New Mexico. Does this greater distance alone between the

receiving antenna and the CATV station and its customers

change the function of the Fortnightly reception service?

To put the question another way, did the Supreme Court

mean to imply a geographical limit beyond which signals

could not be imported? Though the Court of course, was

concerned with the system before it, which imported signals

from a maximum distance of 82 miles, there is no indica-

tion that it intended to imply a geographical limit.” In

fact, the Supreme Court in Fortnightly explicitly declined

to make copyright liability dependent on the distance the

broadcast signal was carried by a CATV. There the Court

said:

“We have been invited by the Solicitor General

in an amicus curiae brief to render a compromise de-

cision in this case that would, it is said, accommodate

various competing considerations of copyright, com-

1° Justice Fortas, in dissent, may have understood the majority

to have been impliedly limiting the distance signals could be carried

wrote :

normally serves.” 392 U. S. at 407, 158 USPQ at

It is also le that Justice F thought that such a

sprinted etiaciion’ shobal tava bene teeta ty den cacy te

was not.

ee

21b

munications, and antitrust policy. We decline the

invitation.** That job is for Congress. We take

the Copyright Act of 1909 as we find it. With due

regard to changing technology, we hold that the

petitioner did not under that law ‘perform’ the re-

spondent’s copyrighted works.”

392 U. S. at 401-402, 158 USPQ at 6. (Other

footnotes omitted)

Furthermore, the Court’s reasoning in Fortnightly

would not support our creation of a difference between

signals received on a local tower and signals received on a

distant one. “The effective range of the broadcast is de-

termined by the combined contribution of the equipment

employed by the broadcaster and that supplied by the

viewer.” Id. at 398, 158 USPQ at 4. Here, the “viewer”

(the CATV system) has, by supplying more sophisticated

equipment, enlarged the. effective range of the broadcast,

just ae the CATV-in Fortnightly enlarged the range of

broadcasts with its tower on a hill. The Court’s description

of a CATV in Fortnightly is equally apt for this case:

“Essentially a CATV system no more than enhances the

viewer’s capacity to receive the broadcaster’s signals; it pro-

vides a well-located antenna with an efficient connection to

the viewer’s set.” Id. at 399, 158 USPQ at 5. What Tele-

Reg. 3905, 3915. Since we hold that the petitioner’s sys-

not

ed.

did not perform copyrighted works we do

22b

prompter has done is to make its antenna even more “well-

located” and even more “efficiently” connected to a viewer’s

set than in Fortnightly.

If a viewer erected an antenna on a hill, the Court said,

he would not be performing the programs he received. Id.

at 400, 158 USPQ at 5. Nor, it would seem, would a viewer

be “performing” if he set up a strategically-placed antenna

miles from his home and brought in signals from that

antenna. The fact that the same operation is conducted here

as a commercial enterprise by a viewing innovator does not

change its function—which is to “enhance the viewer’s

capacity to receive the broadcaster’s signals.” We therefore

find that Teleprompter’s importation of distant signals does

not cause it to function as a broadcaster.

Plaintiffs contend that the importation of distant signals

allows defendants greater latitude in program selection and

that this latitude makes them more like broadcasters than

viewers. We have found that Teleprompter’s practice of

importing distant signals allowed it to exercise discretion

in choosing which distant signals to import. It is not clear

from the record what freedom the Fortnightly systems had

to select the broadcast stations they would carry. Because

they received broadcast signals on a single antenna located

near the area it served, the Fortnightly CATV’s had less

control over program selection than CATV’s that would

mount antennas near selected broadcast stations in other

cities. But, though Teleprompter has greater freedom of

choice than Fortnightly, its latitude is not comparable to

that of a broadcaster, which controls program content

and scheduling.

Perhaps the most striking difference between this case

and Fortnightly is Teleprompter’s program origination.

The Fortnightly CATV’s transmitted by video

scanner and no more. 255 F. Supp. at 197, 149 USPQ at

773-774. The Supreme Court in Fortnightly did not find

23b

this meager origination of significance and explicitly ex-

cluded from consideration CATV systems originating their

own programs. 392 U. S. at 392 n. 6, 158 USPQ at 2.

Due to the development of the CATV industry, we are

here squarely faced with CATV systems that do originate

a substantial amount of their own programming. We have

found that all the CATV’s originate “automatic” transmis-

sions around the clock, and all originate substantive pro-

grams to some degree, ranging from a few hours a week

in Elmira to seventy hours a week in New York as of

March 31, 1971. We have also found that the content of

these shows is not significantly different from those of

ordinary broadcast stations. As far as we.can tell, the

volume and variety of program origination by CATV will

probably increase in the future. In fact, though we need

not decide if it is a defense to potential copyright liability

as defendants urge, it is worth noting that the Federal Com-

gram origination by most CATV systems. 47 C. F. R.

§ 74.1111."

We do not doubt that Teleprompter’s program origina-

tion is similar to that done by broadcasters. These CATV’s

select the programs, propagate them, and have control over

program content and arrangement. Teleprompter’s New

York system sells commercials for a portion, albeit small,

of its originated schedule. Certainly New York originates

at least as many hours of programming as many local

broadcast stations. With respect to its program origina-

tion Teleprompter is functioning as a broadcaster.

We are thus faced with the question of whether a

CATV’s function as a broadcaster with respect to program

origination affects the nature of the function it performs

* Teleprompter argues that to find copyright liability because of

demanded by the F C. would be unconscion-

able. Cf. Farmers Union v. WDAY, 360 U. S. 525, 531.

24b

in receiving and re-transmitting over-the-air broadcasts.

We are of the opinion that the copyright liability for the

“reception service” should not be affected by what can be

considered an unrelated function—program origination. It

is true that the originated programs and the received pro-

grams are sold to subscribers as a package; nobody buys

one without the other. But the nature of the function of a

CATV with respect to received shows is not changed by

the presence of original material on other channels or at

other times. What Teleprompter is doing to plaintiffs’ copy-

righted material, and other over-the-air broadcasts, is the

same whether the CATV’s originate programs or not. The

“function” of the reception service is not changed by

simultaneous sale of original shows, just as it would not

be changed by Teleprompter’s simultaneous delivery of free

ice cream or candy to every subscriber.

Having examined the separate activities which plain-

tiffs feel put defendants on the broadcaster’s side of the

line, it may be appropriate to look at defendants’ systems

as a whole. It is somewhat difficult to apply either the

term “viewer” or “broadcaster” to the CATV systems in

their entirety in this case. As we have already seen, these

CATV’s perform two functions: 1) delivery of the signals

of over-the-air broadcast stations, and 2) transmission of

original television programs. It often cannot fairly be

said that one is the predominant function. The service sold

by Teleprompter is the combination of these functions, not

either in isolation.

Beyond the “functional test” we have discussed at

length and attempted to apply, it may be that the lesson

of Fortnightly is, as the Eighth Circuit Court of Appeals

says in another context: “broadcast signals are dedicated

to the public.” Midwest Video Corp. v. United States,

441 F. 2d 1322, 1326 (8th Cir. 1971), cert. granted, 40

25b

U. S. L. W. 3314 (U. S. Jan. 10, 1972).” Certainly, that is

one conclusion that can be drawn from the Supreme

Court’s first finding that the range of a viewer is deter-

mined by the equipment of both the broadcaster and the

viewer, and then analogizing a CATV to a viewer’s an-

tenna. For if a CATV is like a viewer and a viewer by his

choice of equipment can determine the range of a broad-

cast, then there seems to be little limit to what can be done

with broadcast signals by CATV’s. The result indeed may

be that “the right to receive and distribute [signals] may

be exercised by any one with the capacity to capture the

signals.” Id. at 1327.

It should be remembered that our task here is to. decide

whether what defendants do infringes plaintiffs’ exclusive

rights under the Copyright Act of 1909, 35 Stat. 1075, as

amended, specifically § 1, 17 U. S. C. § 1, by “performing”’

plaintiffs’ copyrighted works. In construing the Copyright

Act in the years since 1909 the courts have built on the

basic analogy of the producers of a stage play and their

audience ; the producers perform the play, the audience does

not. See 392 U. S. at 395 n. 15, 158 USPQ at 3. This

metaphor was then analogized to the dichotomy between a |

listener and a broadcaster, see e.g. Jerome H. Reniick &

Co. v. American Automobile Accessories Co., 5 F. 2d 411

(6th Cir. 1925); Buck v. Jewell-LaSalle Realty Co., 283

U. S. 191, 201, 9 USPQ 17, 20 (1931), which in turn was

used as a model for differentiating a broadcaster from a

non-infringing CATV in Fortnightly. We have here carried

this analogy yet another step by comparing the instant

CATV’s with those in Fortnightly. Undoubtedly, future

It has been observed that this result is quite similar to that

which would follow from defendants’ license-implied-in-law argu-

ment. Comment, supra, note 8, at 79-80.

_ The issue in Midwest Video is whether the Federal Comsnunica-

tions Commission has the power to require nny cable television

systems to originate programming.

reeset snEnEENEEEEEEEEEEEEEE

26b ’

technological change, drastic and otherwise, will see the

courts asked to take further «steps. Perhaps the time has

come to cease piling analogy on analogy and to await word

from

The copyright monopoly is “wholly statutory”, White-

Smith Music Publishing Co. v. Apollo Co., 209 U. S. 1, 15

(1908), and we should perhaps be reluctant to expand an

exception to the general disfavor of monopolies in the ab-

sence of a more precise expression of Congressional intent,

particularly in light of the considerations of national com-

munications policy that Congress may want to bring to

bear on the CATV industry.

In any case, taking the law in its present state, we find

that the CATV’s before us do not function as broadcasters

within the meaning of the Fortnightly test, that they there-

fore do not “perform” plaintiffs’ works, and. hence do not

infringe their copyrights. We, of course, do not reach any

of defendants’ arguments other than those considered above.