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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for a Writ of Certiorari
- **Published:** January 1, 1974
- **Citation:** 415 U.S. 394

## Text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0229%3A03. Public record. Not legal advice.