Amicus Curiae Brief — Teleprompter Corp. v. Columbia Broadcasting System, Inc.

NOV 21 is?:

LIBRAR

EME-COURT, U. 8 \. OMAEL RODAK, JR.CLER

Supreme Court of the Auited

OCTOBER TERM, 1973

No, 72-1628 °

TELEPROMPTER CORPORATION AND CONLEY

ELECTRONICS CORPORATION,

Petitioners

v.

COLUMBIA BROADCASTING SYSTEM, INC.

CALVADA PRODUCTIONS, A JOINT VENTURE,

JACK CHERTOK TELEVISION, INC., AND DENA

PICTURES, INC.

Respondents

ON CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

BRIEF OF THE NATIONAL CABLE TELEVISION ASSOCIATION

AS AMICUS CURIAE

STUART FELDSTEIN

CHARLES S. WALSH

STEPHEN A. GOLD

918 16th Street, N.W.

Washington, D.C. 20036

Attorneys for Amicus Curiae

: Page

Preliminary Statement. ...... 2

Interest of Amicus Curiae. .... 2

ARMOR. of SSIES or OSE a ee a

I.- Judicial Expansion of

the Statutory Monopoly

under the Copyright Act

Would Defeat the Reali-

zation of the Goal of

the F.C.C. of Maximiza-

‘tion of Television

Service to all Communities 5

II. The Unworkable Rule of

the Court Below Threatens

the Viability of CATV

Gyeteme.. 6 ee ce eee

COomGlusiee. . andde asa bes edd

ii

TABLE OF AUTHORITIES

Cases:

Fortnightly Corp. v. United Artists

Television, Inc., 392 U.S. 390

(1968). “Se a ee ae Ee A ee, ee Ne ee 13.82.47

National Broadcasting Co., v. United

States, 319 U.S. 190 (1943) “ss *«~é « 16

United States v. Paramount Pictures, Inc.,

334 U.S. 131 (1948). . . . . - e . e -16

Statutes:

Communications Act of 1934, 47 U.S.C. §151-609

Beene Soke 6 «se w 0 oS 8 ee ee

Seution 307(B). Ss FOE EPR eee 1 1S

Sention SOStEP eC eo Sem ee Ee CT

Sention ISSterits co. 6 eee ee CA

Copyright Act of 1909, 17 U.S.C.. .3,14,16

Federal Communications Commission

Prodeedings :

Cable Television Report & Order, :

we aes. Oe Bee. Leet) sc «es 0 ee 9

First Report and Order in Docket No. 18397,

20 Vets ce 22 201 (1969) _ — . * a - - 9

iii

Notice of Proposed Rule Making, 29 Fed.

Reg. 11458 (1964) > > oe + a * —_ > J 8

Notice of Proposed Rule Making and Notice

of Inguiry in Docket No. 18397,

1S F.C.C. 2d 417 (1968). os SS

Report and Order in Docket No. 18452,

20: 9.C.C; 28.435 (1960 2 as a8

Sixth Report aha Order in Docket Nos.

8736, et al, 17 Fed. Reg. 3905

(1952) * J - . * al a ee *- * > s * 2s * 6

Rules:

Rules of the Federal Communications Commission

47 C.F.R.

Section 21.700 et. seq. . 2.2. 24.29

Section 76.51 = 76.65. 6.4 se a0

SUCtagm FRAG. aS we SD

Section ‘76.351. seer ss At SS. 18

Other Authorities:

Cox, The Television Inquiry, The Problem

of Television Service for Smaller

Communi ties 423959). 4 3 ee See

Chazen and Ross, Federal Regulation of

Cable Television; The Visible Hand,

63 Sarvs: lis: Rev« 1980. soe ws 3S

Television Factbook Service Volume,

1973-1974 edition. e e e © e + e e 11

IN THE

Supreme Court of the United States

OCTOBER TERM, 1973

No. 72-1628

TELEPROMPTER CORPORATION AND CONLEY

ELECTRONICS CORPORATION,

Petitioners

v.

COLUMBIA BROADCASTING SYSTEM, INC.

CALVADA PRODUCTIONS, A JOINT VENTURE,

JACK CHERTOK TELEVISION, INC., AND DENA

PICTURES, INC.

ON CERTIORAR! TO THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

BRIED OF TH= NATIONAL CABLE TELEVISION ASSOCIATION

AS AMICUS CURIAE

Respondents

lien ’

PRELIMINARY STATEMENT

. The National Cable Television

Association, Inc., pursuant to Rule 42

of this Court, is filing this brief as

amicus curiae in support of the peti-

tion. Consents of the parties to the

filing of this brief have been pre-

sented to the Clerk.

INTEREST OF AMICUS CURIAE

The National Cable Television

Association, Inc., (NCTA) is the

national trade association represent-

ing the cable television industry.

Its membership includes about 1,300

cable television systems serving

nearly 5,000,000 subscriber homes.

This is about two-thirds of the tele-

vision homes in the United States

served by cable television systems.

In cooperation with 8 affiliated

regional associations and 41 state

associations, NCTA collects and pub-

lishes statistical and other informa-

tion of interest to its members, the

public and governmental agencies. NCTA

acts on behalf of the industry before

governmental regulatory agencies; it

represents the industry in proceedings

ata

in state and federal courts; and it

has presented the industry's views

before Congress.

The issue of copyright liability

for the reception of television broad-

cast signals under the 1909 Copyright Act

is vitally important to the cable

television industry. The expansion of

the copyright monopoly would carry with

it the potential for litigation which

could bankrupt the cable television

industry in an attempt to satisfy the

potentially huge amount of accrued damages.

NCTA's interest in such a matter goes

to the very heart of cable television's

future as a new and developing

communications technology.

THE CABLE TELEVISION INDUSTRY

Cable television systems (some-

times referred to as CATV) began in 1948

in mountain areas and rural areas where

off-the-air reception was poor or

unavailable. Members of the public

found CATV service attractive as a way

to receive TV broadcasts, and the

number of homes using CATV service grew

rapidly. By 1962 there were 742 firms

which provided CATV service in 967

communities. In 1973 there are about

1,600 companies operating 3,000 CATV

systems in over 6,000 communities.

a

There are now CATV systems in every

state of the United States serving

8.2 million subscriber homes, or

about 12% of the total number of

television homes in the United States.

While there are some larger

CATV systems in metropolitan areas, the

average size of a CATV system is about

2,240 subscribers. Large numbers of

CATV systems are found in the West and

South and in the mountainous areas of

the Northeast. “There are about 1,800

communities where CATV permits have been

issued but no construction started.

There are a number of other communities

where CATV applications are pending.

The issue of copyright liability is

obviously of great importance to this

relatively young indystry. The ability

of the public in many communities to

use CATV or some other new technology

in the future to receive television

broadcasts will be determined by the

outcome of this proceeding and the

proceedings on the cross petition in

No. 72-1633.

ARGUMENT

I. Judicial Expansion of the

Statuto nopoly under the

Copyright Act would Defeat

Expansion of the copyright statu-

tory monopoly under the rule devised

by the court below to impose copyright

liability for the reception and distri-

bution of "distant signals" would

frustrate the aims of the Communications

Act of 1934 (47 u.s.c. 88 151-609) ana

undermine the carefully devised rules

of the F.C.C. to integrate CATV into its

plan to accomplish those statutory aims.

The Communications Act charges the

Federal Communications Commission with

the duty to “make available, so far as

possible, to all the people of the

United States, a rapid, efficient,

nationwide and worldwide wire and radio

communication service" (47 U.S.C.

88 151) and directs the Commission “to

provide a fair, efficient, and equit-

able distribution of radio service" to

each of the several States and communi-

ties (47 u.s.c. § 307(b)).

In 1952, the Commission adopted

a plan allocating frequencies and

locations where television broadcast

atke

stations could be establishea.1/

While one of the.Commission's objec-

tives was to provide service to as

many communities as possible, electri-

cal interference and the matter of

station economic viability in small

communities made it impossible for the

Commission to provide any television

service in many communities, especially

rural communities. In other communities

only one television station could be

accommodated. Only in large metropolitan

areas was it possible to provide enough

stations to offer programming variety

to the public.

The Commission set out to accomplish

its statutory duty of maximizing tele-

vision service to all communities in

several ways. First, it set out to

stimulate the establishment of UHF

stations. Seventy UHF channels were

added to the ve original VHF

channels for télevision broadcast use.

When the use of these channels did not

develop quickly, the Commission sponsored

legislation requiring TV receivers to

1/ Sixth Report and Order in Docket

Nos. 8736, et al, 17 Fed. Reg. 3905

(1952).

-8-

signal fromthe point where it vas aheet

» 20 P.C.C.2a 415 (1969).

4/ id. P- 418 Le

>

.

-9-

they were received to the CATV community

(47 c.P.R. 88 21.700 et seq.) to include

the use of microwave to carry broadcast

signals to CATV systems in outlying

areas. These uses of microwave fall

under the rule of the court below as to

“distant signals."

In 1968 the Commission proposed its

comprehensive plan to integrate CATV

national communications system. 5/ The

Commission's first action was to promul-

gate a rule requiring CATV systems

with more than 3,500 subscribers to

originate their own programming, thus

serving as an outlet for local self-

expression in order to supplement the

satisfaction of television reception

needs. t

Docket No. 18397, 20 F.C.C.2d 201 (1969).

There were a number of subsequent

proposals and hearings culminating in

the Cable Television Report and Order,

36 F.C.C.2da 143 (1972) where the Commis-

sion set forth its complete regulatory

plan to use CATV as a positive tool in

implementing the statutory directive

3/

15 F.C.C.2d 417 (1968) .

e 8397,

-10-

of providing television service to all

communities. Integral parts of that

plan included the requirement that CATV

systems provide equipment capable of

handling 20 channels, two-way communica-

tions and extensive origination capacity.

CATV systems were pening to receive

“distant signals ly defined

rules, so that pittaenase aaniials provide minimum

television service, especially in less

populated areas. Thus CATV systems were

authorized to receive "distant signals"

necessary to provide 3 full network

stations, plus one to three independent

stations (depending on the size of the

television market), plus an education

station. (47 c.F.R. 88 76.51 - 76.65.)

To provide more local outlets, CATV

systems in the top 100 television

markets were required to make available

channels for public use (local access

channels), educational use and for the

use of local governments. (47 C.F.R.

s 76.251.)

The Commission recognized that

reception of “distant signals" was an

indispensable part of its plan to

enable CATV to provide television

service in less populated areas. The

rule constructed by the court below

would frustrate that objective and

create a serious geographical discrimina-

tion so far as television service is

’ the court below.

-li-

concerned. The large metropolitan

areas with numerous television stations,

and those commuhities whose location

is such that a CATV system could pro-

vide minimum television service without

the use of microwave, would be able to

continue to receive that service under

this Court's decision in Fortnightly

Corp. v. United Artists Television, Inc.,

392 U.S. 390 (1968). However, all other

areas now discriminated against under

the existing Commission television

station allocations plan because they

cannot support a station or because

interference will not permit a station

to be ished will continue to be

discrimina against. A minimally

acceptable service will be denied the

hundreds of communities where minimum

television service now depends on micro-

wave.6/ m addition, the opportunity

§/ The Television Factbook Service

Volume, 1973-1974 Ed., a standard

industry source book, shows that nearly

700 CATV systems use microwave to

enable them to receive a network station.

There is no data on the number of

systems which have receiving antennas

located outside the town and beyond the

limits permissible under the rule of

-12-

to get any appropriate service at all

will be denied to many communities

which do not now have adequate tele-

vision service. :

The decision below would place

in the hands of the copyright owners

the power, when it suits their own .

economic interest, to set aside the

Commission's carefully developed plan

to provide television service "to all

the people of the United States." .._.

Acceptance of this result would also

negate the basic principle of the.

Communications Act that broadcasting

must be “intended to be received. by:

the public" (47 u.S.c. 8 153(0))...The

statute speaks of reception by “the.

public," not just that part of the.

public using a television antenna the

copyright owner approves. Sucha .

result will perpetuate the existing

discrimination as to television service

between communities, a discrimination

which, we submit, is not justified .

under Fortnightly.

II. The Unworkable Rule of the.

The rule of the court below is. so

vague as to be unworkable. Virtually

all of the adjectives used by the court

oi Se

below in formulating its definition of

“distant signals" will be the subject

of litigation. Thus the meaning of

“near” and “adjacent to" With regard to

antenna location are certain to be the

subject of dispute. The court below

The overwhelming burden of litiga-

tion must be borne by a scattered and

diffuse industry of 1,600 firms now

engaged in providing CATV service.

About half of these entities are small

independent companies not affiliated

with other CATV operations. The average

size of a CATV system in the United

States is 2,240 subscribers. at the

normal charge of $6 per month for the

service, such a system has an annual

gross revenue of less than $150,000.

The magnitude of the threat to

these systems is painfully evident. aA

television station on one channel will

use an estimated 5,000 copyrighted

programs per year. In addition there

will be thousands of copyrighted musical

programs broadcast. Assuming that the

minimum damages under the Copyright.

Act of $250 per infringement were. .

assessed, the typical CATV system is

rear ie y Pay coda

of $1.5 million to $2 million per |

in nm ae ae partes

were received.

Even if the copyright owners were

willing to negotiate licenses, the CATV

system is in an intolerable position. ;

There are no compulsory licenses “in 7

bulk" except for ASCAP for some musical

compositions. Thus the CATV Operator .

in the small community -- or in the.

large community for that matter --

would be compelled to search out: and

negotiate with the copyright owner. in

advance of the broadcast. Television

stations publish programs in advance,

but they do not publish the names of

the copyright owners...There is no.

device or way for the CATV system to

locate the copyright owner, and certainly

no way to compel him to negofiate once

located. The bargaining power. of a

CATV system with an annual gross income

of $150,000 is non-existent as against

the networks and the movie companies

and others controlling large blocks of

copyrights. The lack of bargaining

power is equally true for large opera-

tors, for even if a CATV operator were

able to enter into agreements with all

95.

but one copyright owner, the refusal

of that one would destroy the service

as to that program. Moreover, tele-

vision stations frequently change

announced programs, and in such circum-

stances the CATV system is in a hopeless

position to find and negotiate with

the copyright owner of the substituted

In addition, the existing pattern

of program exclusivity rights creates

an impregnable barrier for the cable

industry. The tremendous bargaining

power of network affiliates and major

market independents, as fortified by

the Commission's rules obliging CATV

exclusivity when carrying distant

signals (47 C.P.R: 8 76.151), would

render meaningful ‘bargaining impossible.

A commentator has observed that “(ijt

makes little sense for an individual

copyright owner to brave the wrath

. L. Rev

-~16-

Thus unless a gigantic new "ASCAP"

type organization were to be created to

consist of all TV program suppliers --

a proposal which raises the gravest

antitrust problems -<- no system of ~~

negotiation’ and licensing would work.

CATV systems now dependent on “distant

signals” to provide minimal television

service would cease to be viable, and

the public in those communities would

be denied “the maximum benefit of

radio" which this Court said was the

“avowed aim" of the Communications Act

to secure "to all people of the United

States." National Broadcasting Co.,

(1943).

CONCLUS ION

The foregoing adverse consequences,

we submit, are relevant to the question

of whether the statutory copyright mono-

poly should be enlarged by judicial

construction. They are particularly

relevant in light of this Court's repeated

holding that the primary objective of

the Copyright Act is "to induce release to

the public of the product of [the author's

creative genius.” United States v.

Paramount Pictures, Inc., 334 U.S. 131,

158 (1948). Here, the author's work was

released in the form of a broadcast for

public reception. The rule of the court

below would create and perpetuate a

~ ye

and it both evades and contravenes the |

rationale and result adopted in Fortnightly

Corp. v. United Artists Television, Inc.,

392 U.S. 390 (1968). The decision and

judgment below should be reversed.

Respectfully submitted,

By Stuart F. Feldstein

Charles S. Walsh

Stephen A. Gold

Attorneys for Amicus Curia.

National Cable Television

Association, Inc.

918 16th Street, N.W.

Washington, D.C. 20006

November 21, 1973