Petitioners Brief — Teleprompter Corp. v. Columbia Broadcasting System, Inc.

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IN THE

Supreme Court of the United

OcrosBer TERM 1973

No. 72-1633

COLUMBIA BROADCASTING SYSTEM, INC., CALVADA |

PRODUCTIONS, a Jornt vENTURE, JACK CHERTOK TELE- ~

VISION, INC., ann DENA PICTURES, INCORPORATED,

Petitioners,

Vv.

TELEPROMPTER CORPORATION anp

CONLEY ELECTRONICS CORPORATION,

Respondents.

On Certiorari to the United States Court of Appeals

For the Second Circuit

BRIEF FOR PETITIONERS

Asa D. SoKOLow Cuarctes H. MILLER

Sypney M. Kaye Roya E. BLAKEMAN

Puitip MANDELKER BERTRAND H. WEIDBERG

575 Madison Avenue 430 Park Avenue

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

Attorneys for Petitioner Calvada

Harry R. Otsson, Jr. Productions

51 W. 52 Street

New York, New York 10022 Eucene Z. DuBose

Attorneys for Petitioner Columbia ALFRep C. MorRAN

Broadcasting System, Inc. 120 Broadway

New York, New York 10005

Attorneys for Petitioner Jack

Chertok Television, Inc.

Seymour GRAUBARD

Bernarp BucHHOLZ

345 Park Avenue

New York, New York 10022

Attorney for Petitioner Dena

Pictures, Incorporated

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; Teleprompter’s New York City Cable Tele-

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2. Teleprompter’s Great Falls, Montana, Cable

Tebovisinn Staten soi ioe k hae e esac 11

3. Teleprompter’s Farmington, New Mexico,

Cable Television Station ...............- 12

4. Teleprompter’s Rawlins, Wyoming, Cable

Television Stathow oo ss 5 oss toss cede she 13

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I. The Fortnightly Case Established Only A Lim-

ited Copyright Immunity .........-..++++++ 15

II. Cable Television, Having Undergone Drastic

Changes Since 1960, Currently Functions Like

A Broadcaster And Should Be Subject Under

The Fortnightly Test ToFll Copyright Libility

For The Broadcast Programming It

tionally performed by broadcasters ....... 23

1. Program Origination .............+.. 23

2. The sale of commercials ............. 26

Be I (os dicen ncstccevaccses 27

B. All of the functions performed by the Tele-

prompter cable television stations here at

issue are integral parts of the total opera-

tions of those stations and under the Fort-

nightly test must be analyzed as such. The

sum of these functions is precisely the sum

of a broadcaster’s functions and under the

Fortnightly test must be treated as such .... 29

CASES:

Associated Music Publishers, Inc. v. Debs Memorial

Radio Fund, 141 F. 2d 852 (2nd Cir.), cert. de-

died, S48 U. S706. (1944) ies ccs avccsi... 18, 33 |

Fortnightly Corp. v. United Artists Television |

Corp., 392 U. S. 390 (1968) ..... 5, 6, 7, 8, 9, 13, 14,

15-19, 21, 22, 23, 26, 27, 29, 31, 32, 33

Herbert v. Shanley Co., 242 U. S. 591 (1917) .... 33

Jerome H. Remick & Co. v. American Automobile

Accessories Co., 5 F. 2d 411 (6th Cir.), cert. de-

elem: BED U.S: SSG CIES) 5 5 ao Senki ec cceee 18

Select Theatres Corp. v. Ronzoni Macaroni Co., 59

U.S. P. Q:: 288 (S. D. N. ¥. 1943) .......... 18

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

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

i ee Cr Sy ee Ee PY Oe 5, 15, 16

ili

PAGE

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

sted Anstey (8, D.N. ¥. 1966), rd, SF

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

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

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STATUTES: a

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Communications Act of 1933:

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Court AND AGENCY RULES:

Rules of the Supreme Court of the United States .. 1

Federal Communications Commission Rules:

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JURISDICTION

The judgment of the Court of Appeals (A. xliv), re-

versing in part and affirming in part the judgment of the

District Court (A. 143a-145a), was entered on March 8,

1973. Respondents Teleprompter Corporation and Conley

Electronics Corporation (hereinafter ““Teleprompter”) filed

a Petition for Certiorari on June 1, 1973. On June 5, 1973,

petitioners Columbia Broadcasting System, Inc. (herein-

after “CBS”), Calvada Productions, Jack Chertok Tele-

vision, Inc., and Dena Pictures Incorporated (hereinafter

“Petitioners”) filed a Conditional Cross-Petition for Cer-

tiorari with respect to the issues as to which the Court of

Appeals had affirmed the judgment of the District Court.

Both petitions were granted on October 9, 1973.* The

jurisdiction of this Court was invoked under 28 U. S. C.

§ 1254(1).

QUESTION PRESENTED

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

authorized retransmission of Petitioners’ copyrighted works

by Teleprompter’s cable television stations was not an in-

fringement of the copyrights of those works in violation

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 commercials for transmission over their

cable television stations ;

to form a cable television network.

2The Question Presented in No. 72-1628 is whether the Court

of Appeals erred in i ing copyright liability on Teleprompter for

importing distant signals. Petitioners and Teleprompter are filing

separate briefs with respect to each petition, since the parties were

unable to agree that each would present a single consolidated brief

covering all issues.

STATUTE INVOLVED

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

§ 1(c) and (d), provides:

“Any person entitled thereto, upon complying -with

the provisions of this title, shall have the exclusive

right:

*. * *

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 record

thereof by or from which, in whole or in part, it may

in any manner or by any method be exhibited, deliv-

ered, 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

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

exhibited, performed, represented, produced or re-

produced; and to exhibit, perform, represent, pro-

duce, or reproduce it in any manner or by any method

whatsoever * * *,”

STATEMENT

A. Prior Proceedings Herein

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 (A. 1a-28a,

50a-59a, 87a-93a).

Dx alagy ergs Calvada Productions, Jack Chertok Tele-

, Inc. and Dena Pictures, Incorporated are inde-

pares creators and producers of television programs

which are protected by statutory copyright. Petitioner CBS

is also a creator and producer of television programs pro-

tected by statutory copyright.*

The copyrighted programs here at issue were initially

licensed for transmission by the CBS Television Network, a

Division of CBS, to its affiliated television stations for

simultaneous broadcast by those stations to viewers in their

service area (“network programs”). Some of the copy-

righted works described in the complaints were subse-

quently “syndicated”, i.e. licensed by the copyright owners

or their licensed distributors to individual television 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

‘T. cable systems eae some 780,000

Prior3 at p. vs

A er Tele-

prompter Corp's Gat quarter report for 1973). The Department

OvuttLoox 1974 (Oct. 1973) at p.

at the end of 1973 cable television will have some

complaints alleged that the Teleprompter cable television

stations had intercepted the signals of television stations

broadcasting Petitioners’ copyrighted works and then re-

transmitted both the network and syndicated programs to

their paying subscribers, without authorization or license,

thereby infringing Petitioners’ copyrights.

At the time of the filing of the original complaint here-

in 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 “Fort-

nightly’). Fortnightly was a case of first impression

designed to test the copyright liability of traditional CATV

systems, the function of which was to merely enhance the

reception by television viewers of the signals of nearby

television stations. Petitioners herein were not parties to

that action.

The District Court in Fortnightly found that the CATV

systems described therein infringed the copyrights at issue,

basing its decision in large part upon its analysis of the

technical and engineering aspects of the defendants’ sys-

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

unanimously affirmed the finding of infringement, basing

its decision largely on the quantitative contributions which

the Fortnightly systems made to bring about the viewing

of the copyrighted works. Id. at 396-397."

This Court reversed, holding inter ala 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. This Court characterized Fort-

nightly’s overall function as that of a mere reception service

’While Fortnightly was on appeal, counsel for the parties in this

case voluntarily stayed proceedings herein in order to avoid an un-

necessary burden on the courts.

—a “passive beneficiary”—and determined that the Fort-

nightly 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 basie facts pertaining to the function

of the Teleprompter systems was stipulated by the parties

_ (A. 148a-291a). These stipulations established that the

Teleprompter cable television stations performed significant

functions which were not performed by the Fortnightly

systems.

The courts below found that the Teleprompter cable

television stations selected and imported for retransmission

programs broadcast in the first instance by television sta-

tions in markets far distant from and in no way related to

the communities in which defendants’ cable television sta-

tions operated, originated substantial programming, sold

advertising, interconnected with other cable television sta-

tions, and transmitted television signals over-the-air. These

functions—traditionally functions of broadcasters—were

in addition to a so-called “reception service” which in some

areas enhanced the ability of subscribers to receive the

available broadcast signals of television stations in local and

adjacent markets (A. xx-xxv, xxx, xxxi, 11la-121a). The

courts below also found that the various services offered by

the Teleprompter stations were “sold as a package,” and

that no one of their services was available independent of

the others (A. xxviii, 121a, 135a).

On the basis of these facts, Petitioners contended that

the Teleprompter cable television stations did not function

as mere passive beneficiaries. Rather, Petitioners contended

that cable stations performing some or all of the inter-

related functions involved were fully and functionally

equivalent to “broadcasters” and, accordingly, could not

consistently with the Fortnightly test be deemed to fall “on

®For a more detailed discussion of Fortnightly see infra at 15-19.

the viewer’s side of the line” for purposes of copyright

liability.

B. Decisions Below

The District Court agreed that Fortnightly was not dis-

positive of the issues before it. The court noted that

“[p]rogress in the CATV industry” and certain novel and

“specific differences between defendants’ CATVs and those

in Fortnightly’ made this case “the inevitable sequel to

[Fortnightly].” (A. 105a). But notwithstanding this con-

clusion, the District Court held that it was bound by Fort-

nightly to dismiss the complaints (A. 137a-139a), thus

granting the entire cable television industry copyright jgy-

munity by judicial fiat.

The Court of Appeals also recognized that the operations

of the cable stations in this case were “different and

broader” than those before this Court in Fortnightly (A.

at xxvi). And in an unanimous opinion, the Second Circuit

set forth the issue before it as:

“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.” (A. at xxvii) (emphasis added).

Having thus initially formulated the issue as an analysis

of the “total operation” of the Teleprompter cable stations,

the Court of Appeals, however, considered only “the effect

of each of these operations on the application of the Fort-

nightly doctrine to the CATV systems involved.” (A. at

xxvii) (emphasis added). As a result, the court never ap-

plied the test properly and fully since it measured each Tele-

prompter innovation in isolation from the other innovations.

This function by function analysis led the Court of

Appeals to reverse the judgment of the District Court with

respect to Teleprompter’s activities in selecting, importing

and distributing television signals located in some cases

hundreds of miles from the communities served by its cable

- television stations, functions admittedly not before the Su-

preme 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 broad-

caster and thus * * * ‘perform’ the programming distributed

to subscribers on these imported signals” within the mean-

ing of Fortnightly and of the Copyright Act (A. xxxiii).°

At the same time, the Court of Appeals concluded that,

when considered without relation to each other, neither

origination of programming, sale of commercials nor inter-

connection into cable television station networks—ad-

mittedly functions not present in Fortnightly—should

impose copyright liability on the Teleprompter cable tele-

vision stations (A. xxvii-xxxi).® At no time, however did

the court below consider the effect of the overall operation of

the Teleprompter cable television stations as functioning

entities. This refusal to consider whether such overall

eae id tee coer ee ae coe

here, stated in a brief to this Court that the systems invol in

ree wats fe tee marvice ren of Be trenenitting tations

that importation of programs from distant markets was “not

involved in i eta case.” Petitioners’ Reply Brief, March

a ae Pe Te ed ee eee Se Seeeet Creal

' *With respect to the use of microwave to transmit various signals

» ous i mal ok Maclt Ga coke phy a as capr Bewie

not in stem i i t

to a-broadcaster (A. xxxi-xxxii). -

operation put them on the broadcaster’s “side of the line”

resulted in an erroneous application of the Fortnightly

functional test.

C. The Pertinent Facts

To simplify resolution of the basic legal issues, Peti-

tioners elected to sue only on an illustrative group of

and licensed to CBS and some created by CBS itself.

Certain of the examples err were of programs infringed

. during their initial network “runs” and others during their

syndication.” For purposes oe trial it was stipulated that

the copyrights were valid (A. 72a).

While the complaints clearly alleged infringement by

all of the Teleprompter cable television stations which

received and retransmitted Petitioners’ copyrighted works,

Petitioners sought to expedite the trial by primarily limiting

their proof to five specific and illustrative Teleprompter

stations located in New York (New York), Great Falls

(Montana), Farmington (New Mexico), Rawlins (Wyom-

ing), and Elmira (New York)."* These five were chosen

by Petitioners as presenting for judicial consideration a

representative mixture of the functions performed by

modern cable television stations in the various combinations

in which they then appeared in the industry and were rec-

1°Network programs involved include three programs created,

copyrighted and distributed by CBS itself (A. 4a-9a). They also

include s licensed for network distribution by CBS from

t producers—petitioners Calvada, Chertok and Dena—

who created and copyrighted the programs (A. 9a-13a, 15a-19a,

21a-24a). Two other network programs involved were created and

Hei hae ke Seo ia ts img which assigned all its rights

in the programs to CBS which then distributed them (A. 50a-52a,

87a-89a). Three programs involved in this action were in syndication

at the time of alleged infringement (A. 52a-56a, 89a-93a).

The facts with respect to the Elmira station will be dealt with in

Petitioners’ Answering Brief in No. 72-1628.

The Great Falls cable station also originated for trans-

mission over another of its channels some ten hours per

week of programming typical of a small-market broadcast

television station. Printed messages, as well as time and

the day. The Great Falls cable station has been intercon-

nected with other cable stations of Teleprompter and others

into a nation-wide network (A. 258a-259a).

3. Teleprompter’s Farmington, New Mexico, Cable Television

Station (described per stipulation at A. 184a-204a, 266a-

275a). (see A. xxi-xxii),

Initially, the Farmington cable television station im-

ported the programs of four television stations located in

Albuquerque, New Mexico, 150 miles away. These signals

were picked-up off-the-air at a point 30 miles from Farm-

ington and then microwaved into Farmington, as later were

those of a Durango, Colorado television station. Direct

reception of the Albuquerque stations was impossible in

Farmington because of the distances involved; direct re-

ception of the Durango station was impossible because of

the nature of the intervening terrain.”

air-miles away, by means of an intricate microwave link-up

extending some 1,300 miles. These programs were other-

wise not a in Farmington because of the distances

involved.

Answering Brief in No. 72-1628.

The Farmington cable television station has also been

originating its own programming for transmission over

one of its cable channels. The amount of such program-

ming has varied from 15 to 42 hours per week and is of a

nature typical of programming originated by a traditional

other cable television stations of Teleprompter and others

into a nationwide network (A. 258a-259a).

4. Teleprompter’s Rawlins, Wyoming, Cable Television Ste-

tion (described per stipulation at A. 2340-245a) (see

A. xxiii).

elaborate microwave system the programs of five television

stations from Denver, 184 miles away. The signals of these

five stations were not available in Rawlins off-the-air be-

cause of the great distance involved. In addition, the cable

station imported the‘signals of the Casper, Wyoming sta-

tion, 87 miles away, direct reception of which was not

feasible in Rawlins due to distance and terrain.

‘The cable station was originating 10 hours a week of

- programming typical of that originated by traditional tele-

vision broadcasters, as well as full-time weather and time

information.

SUMMARY OF ARGUMENT

Fundamental to the issues of this case are the rights of

the copyright owners. In Fortnightly this Court passed on

the copyright liability of a “community antenna” which

merely “enhanced” the broadcast television signals already

available in the air over a community. In this case, the

Court is presented with the issue of whether copyright

immunity should be expanded to cover the newly devel-

oped cable television industry, an industry that is rapidly

becoming indistinguishable from the broadcasting indus-

try, while leaving the directly competing broadcasting

industrywith no such immunity,

This Court in Fortnightly granted a limited immunity

from copyright liability. It should not be extended to cable

television stations which are functionally equivalent to

broadcasters. Television and cable television are increas-

ingly in competition today and cable television is growing

rapidly. Under the decision below cable television may

borrow and use at will locally broadcast programs of the

television stations, despite the fact that the cable television

stations are simultaneously performing the functions of a

“broadcaster.” On the other hand, nobody has suggested

that competition be equalized by extending to broadcast

television stations the privilege of free borrowing and

usage of cable programs. Cable television interests cer-

tainly would protest loudly and properly if any television

station, by subscribing to cable television, received and

retransmitted such programs.

The court below, in its analysis, ignored the importance

of the origination of programs, the sale of commercials and

the interconnection of cable stations.** It ignored the inter-

relationship of these functions with Teleprompter’s re-

transmission of broadcast television signals. It disre-

garded the competitive position of cable television in the

television industry as a whole and the economic impact of

its holding on copyright owners.

Under the Fortnightly rule correctly applied, modern

cable television stations performing the additional functions

described herein are entitled to no copyright immunity, just

as broadcast television affiliate stations which perform these _

same functions are entitled to no copyright immunity.

16Petitioners in their answering brief in No. 72-1628 will demon-

strate that the Court of Appeals was correct in its determination with

regard to the retransmission of distant signals.

THE FORTNIGHTLY CASE ESTABLISHED ONLY A

LIMITED COPYRIGHT IMMUNITY

The cable television industry in this country is only some

20 years old. As initially conceived, a CATV functioned

merely as a well-located antenna to improve fringe re-

ception of nearby television stations. This was the type of

cable system involved in Fortnightly, 392 U. S. at 399

(A. 298a-299a, 372a-373a, 593a, E-62, E-74, E-136).

The two Fortnightly systems (located in Clarkburg

82 miles.” 392 U. S. at 392. If it had not been for the hilly

terrain in and around Clarksburg and Fairmont, these sig-

To provide satisfactory reception of these nearby sig-

nals for their subscribers, an antenna was erected by Fort-

nightly on a hilltop near the center of each of those two

towns. These antennas picked up the broadcasts of the

stations involved directly off-the-air and transmitted them

by cable to the paying subscribers. Jd. at 874-875. The

two systems, in other words, provided nothing more than

a “well-located antenna with an efficient connection to the

viewer’s television set.” 392 U. S. at 399 (footnote

omitted ).”°

It was in fight of these facts that this Court set out

to determine whether or not the Fortnightly CATV systems

“performed,” within the meaning of §1(c) and (d) of

the Copyright Act, the programs of the five television

stations whose signals they retransmitted. And it was on

the basis of these limited facts that this Court held that

the Fortnightly CATV systems did not perform those

programs.

\\. Amici informed this Court at the time that certain

cable stations performed functions far different than those

performed by Fortnightly. But as urged by Fortnightly

counsel,*® this Court clearly limited its decision to the par-

Some residents in the two communities, on the other hand,

decided not to make use of the Fortnightly facilities and chose to

erect cooperative antennas at some convenient location to alleviate

their particular problems in the reception of the five stations. 392

U. S. at 391-2. Such cooperative antennas provided essentially the

identical services provided by the Fortnightly community antennas.

*°Fortnightly’s counsel (who also represent Teleprompter here)

stated that this Court’s decision “must necessarily rest on the facts

concerning the operation of petitioner's community antenna television

systems and not to possible or théoretical et igee of some CATV

eye in the pore Petitioner’s Reply Brief, March 5, 1968, pp.

1-2 (emphasis added).

Cable system counsel there also emphasized that the systems in

Beige gt Ripe “tn the service area” of the transmitting stations

and that importation of signals from distant markets via micro-

wave was “not involved in this case.” Jd. pp. 2-3 (emphasis added).

Before the Court of Appeals it was represented that the CATV sys-

tems in Fortnightly, “unlike a broadcasting station, do not originate

or advertising***.” Brief for Defendant-Appellant to the

of Appeals, dated November 9, 1966, p. 4.

ticular cable systems before it and refused to consider

whether copyright immunity should also be extended to

cable stations which imported distant signals, originated

programming, sold commercials or performed other non-

reception functions. Thus, in a footnote at the very begin-

ning of its opinion, this Court observed: “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, 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. ecieee

n. 25 (emphasis added).

This Court in Fortnightly sought to establish a test

for “performance” in the “light of drastic technological

change” that had occurred since the enactment of the Copy-

right Act in 1909. Jd. at 395-396. This test was based

squarely on an analogy.

Traditionally, the producer of a stage show ‘ ‘jinsfdenne”

within the meaning of the Copyright Act, but the “viewer”

does not. Likewise, when a motion picture is shown in a

theater, the exhibitor, but not the viewer, “performs”. Jd.

at 398.

Analogizing these situations to the functions of a tra-

ditional “broadcaster” as contrasted to those of a television

“viewer,” this Court observed:

“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 contem-

plated by the framers of the Copyright Act, broad-

casters have been judicially treated as exhibitors,

and viewers as members of a theater audience._

Broadcasters perform. Viewers do not perform.

Thus, while both broadcaster and viewer play crucial

roles in the total television process, a line is drawn

between them. One is treated as active performer; -

the other, as passive beneficiary.” Jd. at 398-9

(footnotes omitted) .**

Upon review of these historic modes of “performance,”

the Court stated that the resolution of the issue of whether

or not the defendants “performed” depended “upon a deter-

mination of the function that CATV plays in the total

process of television broadcasting and reception,” id. at 397

(emphasis added); 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 de-

termination of whether the cable system is more akin to an

“active performer” or to a “passive beneficiary.”

A “broadcaster” according to the Court: (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

*1This Court clearly intended to include broadcasts of materials

furnished by others—a recorded program obtained from a syndicator

or a network program from the central studios—as performances.

Even if the statement in the text that “Broadcasters perform” left any

doubt of this, the footnote to that statement would completely re-

move it:

“Jerome H. Remick & Co. v. American Automobile Accessor-

ies Co., 5 F. 2d 411 (radio broadcast); Associated Music

Publishers v. Debs Memorial Radio Fund, 141 F. 2d 852

(radio broadcast of recorded program) ; Select Theatres Corp.

v. Ronzoni Macaroni Co., 59 U.S. P. Q. 288 (S. D.N. Y.)

(radio broadcast of program received from network). Con-

gress in effect validated these decisions in 1952 when it added

to §1(c) a special damages provision for ‘infringement by

broadcast.’ 66 Stat. 752.” 392 U. S. at 398 n. 23.

aa eencrngfpesoemencetnat

“the broadcaster obtains his program from a network [in

which case] he receives the electronic signals directly or

by means of telephone lines or microwave.” Id. at 397;

see id. at 400 (emphasis added). Viewers, on the other

hand, merely “receive the broadcaster’s signals.” Jd. at

401. A “broadcaster” 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) do not

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

“whatever programs they receive”; (ii) do not “procure

programs and propagate them to the public,” they merely

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

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

tent or arrangement,’ ” but only sell 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 topographica? condition, to receive them without

rebroadcast or other relay service by community antenna.

..” Id. at 400 (brackets in original emphasis added).

The Fortnightly systemis, thus examined in light of these

traditional functions of “broadcasters” and “viewers,” were

held by this Court to be merely “passive beneficiaries” in

comparison with broadcasters. But at the same time, this

Court clearly did not hold that only those entities that

were “broadcasters” by technical Federal Communications

Commission (herein “FCC”) definition were liable for

systems, regardless of the functions they perform, were

television “viewers,” mere “passive beneficiaries,” or even

“on the viewer’s side of the line.”

CABLE TELEVISION, HAVING UNDERGONE DRASTIC

CHANGES SINCE 1960, CURRENTLY FUNCTIONS LIKE A

‘BROADCASTER AND SHOULD BE SUBJECT UNDER THE

FORTNIGHTLY TEST TO FULL COPYRIGHT LIABILITY

FOR THE BROADCAST PROGRAMMING IT RETRANSMITS

The Fortnightly case was decided by this Court in 1968.

The complaint in that case, however, was filed in 1960 and

the factual record included even earlier material. Since 1960

the cable television industry has undergone a drastic change

in function. The Teleprompter executives themselves care-

fully noted before the trial that the industry had undergone

a “revolution,” a “transformation in purpose, scope and

expectation” (A. 582a, 584a, E-62). Accordingly, they re-

garded themselves as part of a “new industry” conveying

“a great many types of services into the home” (E-62).

They publicly stated that the terms “community antenna

television,” “CATV,” even “cable television” were outmoded

(A. 582a-583a, 594a-595a, E-136-137, E-149). They saw

themselves as part of a “broadband communications” in-

dustry, a difference which they described as being one of

basic “concepts,” not just words (E-119).

The revolution which Teleprompter executives described

was not a revolution in the development of new mechanical

devices to improve television reception for persons living in

mountain valleys or in rough terrain. Rather, the revolution

was a dramatic change in function (see, e.g., A. 582a-584a),

with the modern cable stations, not merely acting as recep-

tion-aiding devices, but performing the same functions as

“broadcasters” by deliberately selecting and importing

distant signals, originating programs, selling commercials,

connecting into networks, and transmitting television

signals through the air. The significance of this change in

function for the future was dramatized by Teleprompter’s

claim that within a brief span of time “85% of our popula-

tion will be receiving its television via cable” (A. 609a,

E-35, E-57-58, E-139).”* -

Irving Kahn, then Teleprompter’s Chief Executive Of-

ficer, characterized at trial these new operations of his com-

pany as “cable television stations” (A. 598a); and he was

equally explicit in his pre-trial speeches. In 1969, he con-

ceded that there was “little resemblance” between the CATV

system of “ten years ago,” (i.e. of 1959, or one year before

the complaint in Fortnightly was filed), and the modern

cable station (A. 594a, E-77).

These many and various admissions against interest

cannot be characterized, as respondents sought to do below,

22As noted supra at 4n. 4, the Department of Commerce’s latest

report puts cable penetration at the end of 1973 at 82 million

“I am going to suggest that we discard the terms ‘community

antenna television’ . . . ‘cable TV’. . . and ‘CATV’. --.” “In our

too. I that we should forget about ‘cable TV’ and ‘community

antenna TV’ and ‘CATV’ and think in terms of

as mere hyperbole, public relations words, catchy imagery —

and the like. Their accuracy is confirmed by a recent Justice

Department filing with the FCC wiich states:

“Community Antenna Television (CATV), the

medium that the Commission set out to regulate

more than six years ago, no longer exists. Cable

Television has replaced it.’’**

Equally important are the repeated assertions by Tele-

prompter, and thus for this case its concessions, that its

cable television stations are in direct competition with

broadcast television stations (A. 590a-59la, 599a-600a,

E-3-4, E-, E-8, E-11, E-21, E-40, E-70-71, E-83-84).**

In summary, since the Fortnightly test for copyright

liability is based upon the “function” that cable television

stations play “in the total process of television broadcasting

and reception,” it is inescapable that the cable television

industry, as the record herein demonstrates, is not the same

industry, functionally, as that industry characterized by

Fortnightly as being a “passive beneficiary” on “the viewer’s

side of the line.” Rather, it must be recognized that the

Teleprompter cable stations are as operating entities func-

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

323a, 326a-327a, 373a-379a, 400a-402a, 413a).

**Comments of the Department of Justice Before the Federal

ema Commission, Docket No. 19554 at p. 15 (Novem-

s5i°CC regulations have already made applicable to cable television

many of the rules traditionally applicable only to broadcasters. These

include the rules governing time for political candidates (com-

pare 47 U. S. C. $315 and 47 C. F. R. 73.657 with id. raga |

the “Fairness Doctrine, 29 Fed. Reg. 10415 (1964) and 47 C

§ 73.679 with id. § 74.1115), Hestge jus Seng ps id. § 73.656 » vith

program charge for their services are subject to regulations like those

placed on pay-TV (compare id. § 73.643(a), (b) with id. § 74.1121).

23 -

A. Each of the Teleprompter functions presently before

the Court is a fonction traditionally performed by

broadcasters.

Each of the new Teleprompter functions at issue in this

case is a function .-aditionaily performed by broadcasters.

Indeed, these operations are the very same ones that this

Court in Fortnightly identified as characteristic of a broad-

caster: origination of programming, sale of commercials,

interconnection into networks, and selection, procurement

and distribution of programs to be viewed. See 392 U. S.

at 397, 400; supra at 19.“ None can be characterized

as being identifiable with a “passive beneficiary” or “on the

viewer's side of the line” within the meaning of Fortnightly.

l. Pregram Origination.

None of the pristive CATV systems involved in Fort-

nightly originated any programming. Jd. at 392. In contrast,

four of the five Teleprompter cable stations involved in this

appea! originated programming. At the time of trial, seventy

of the approximately one hundred Teieprompter cable sta-

tions also originated programming. (See Teleprompter

Corp.’s First Annual Report on Program Origination to

the FCC, Sept. 1971, at pp. 2, 28.)*" Television “viewers”

be fet liability will be diseussed, in the

bro be 0. 72-1628. Sistas

October 1972, ies Annual Report 5

s on

ote tee

that it cannot be held

cceranalg or ke. gaqunen abiguandse setaisaheoates? cine

order requiring non-automatic program origination by cable stations.

toa cave brought under the Copyright At irrelevant

to a case brought under the Act. any event, the FCC

order, codified as 47 C. F. R. § i, ied only to cable stations

with more than 3,500 subscribers. Pr only som: 24% of cable

systems satisfy the condition. Texeviston Factsoox, Vol. 43, 1973-

74. Furthermore, this rule is not and has never been in effect

having been suspended by the See 36 Fed. 1086

(2971) andthe epinie of the Court below A, Bae SPs urther,

eleprompter co its own purposes

long before the CC preaslgated tes

do not originate television programming—“broadcasters”

and modern cable stations do.

In terms of the number of hours of locally originated

programming, the Teleprompter New York City cable

television station originated more programming than the

average of the three large New York City network owned

stations. Indeed, the New York station originated as

many or more hours of local programming than any tele-

vision affiliate in the United States (A. 454a-455a,

E-250).7*

The origination efforts of the Teleprompter cable tele-

vision stations in Farmington, Great Falls, and Rawlins

in terms of the number of hours and type of programming

are the equivalent of the average local television station

operating in the sixty smallest television markets in the

country (A. 452a, E-242-249; cf. A. 375a-376a, 393a-

395a).

It is not disputed that the type of programming origina-

ted by the Teleprompter cable stations is similar to and

often precisely the same as that originated by broadcasters.

Experienced broadcasters so testified at the trial (A. 376a-

378a, 400a-40la) and the District Court so recognized

(A. 113a). (See also A. 281a-284a, E-193-208. )

Teleprompter itself viewed those of its cable television

stations that originated programs as functionally equivalent

to broadcasters. The Teleprompter cable stations frequently

referred to themselves as “stations” and even “networks.”

Like broadcasters, they maintained “studios,” considered

themselves “on-the-air” during origination periods, signed

on and off at the beginning and end of the origination day,

maintained program logs, and performed station identifi-

cations in the manner prescribed by FCC regulations for

broadcasters (A. 528a-529a, 541a, 557a-558a, 598a, E-158-

159, E-161-162, E-173, E-182-183, E-190, E-209, E-210,

**For a full description of the New York City station’s current

origination efforts, see supra at 10-11.

E-221, E-223, E-227, E-229, E-251). Further, by their

own admission, they regarded themselves as competitive

with broadcasters for audience support, programming ma-

terial, and programming personnel (A. 559-56la, E-549,

E-551, E-556-557, E-563-565).

The record shows that Teleprompter planned to play a

“role of leadership” in the development of program orig-

ination in the cable television industry. In 1969 Tele-

prompter submitted to the FCC a five-year plan which

called for doubling its volume of self-originated program-

ming within the first year (A. 604a-650a, E-566, E-575).

An independent producer of television programming was

acquired for the purpose of developing programming (A. —

602a, E-30, E-153-155, E-577, E-584-585). National head-

quarters personnel were used to produce programs for Tele-

prompter’s own and other cable stations (A. 571a-574a,

E-34).

In 1968 Teleprompter’s chief executive officer stated

that his industry had to decide “whether we want to locally

originate and be a station or whether we want to be a cable

service” (A. 578a-579a, E-54) (emphasis added). He sub-

sequently stated that when his cable television stations

originated programming, they would be “functioning in

much the same manner as . . . radio and television industries

have before us” (A. 602a-603a, E-96).

It was on the basis of these facts that experienced

broadcasters testified at trial that the Teleprompter cable

stations were functionally equivalent to broadcasters (A.

305a, 374a-375a, 379a-380a, 391a, 393a-395a, 399a-400a,

413a-414a). And it was on the basis of these facts that the

District Court found that in originating programming,

Teleprompter was plainly and simply functioning as a

broadcaster (A. 135a).**

?°Subsequent to the opinion of the District a majority of

the Supreme Court in United States v. Midwest Video Corp., 406

U. S. 649, 667-670, 677, 680-681 (1972) (Brennan Opinion, Douglas

Opinion) expressed the view that insofar as cable stations originate

and distribute their own programs they are the equivalent of broad-

casters.

2. The sale of commercials

In Fortnightly the Supreme Court singled out the sale

of commercials as a characteristic of a business entity which

fell “on the broadcaster’s side of the line.” 392 U. S. at 400

n, 28. The systems involved in Fortnightly did not sell com-

mercials. However, the Teleprompter systems do sell com-

mercials and the commercials they sell are identical with

those shown on broadcast television stations (A. 286a,

E-179-181, E-236-241). Television “viewers” do not sell

commercials.

Teleprompter viewed itself as an advertising medium

which would enable advertisers to reach local and specialized

audiences as well as national markets by means of cable

station networks (A. E-78-80, E-140-142). It freely ad-

mitted that it was competing with television stations for

the advertising dollar (E-549, E-553, E-556-557). To the

FCC it predicted that by 1974 its cable television stations

would be carrying $2,000,000 worth of its own national and

local avertising annually (E. 589-590).*°

It was on the basis of these facts that experienced

broadcasters testified that the use of commercials by cable

stations made them functionally equivalent to broadcasting

stations (A. 298a-299a, 378a, 387a, 40la, 407a).™

*°By 1972, the New York City Teleprompter station alone was

$300,000 of advertising. See Broadcasting, October

3. Interconnection.

A prime function of a broadcast television network

affiliate station is to act as the local outlet for the simul-

taneous interconnected network retransmission of pro-

grams originated at a single central source. The primitive

CATV systems involved in Fortnightly did not have the

capacity to form part of an interconnecting cable network

and did not do so. However, the national Teleprompter

«=@ystem clearly had the capability to do so, the intention to

so, and in fact did so using its own stations as well

as non-Teleprompter cable stations (A. 258a-259a, 280a,

E-30, E-34).

This obviously is not the activity of a “passive bene-

ficiary” or of a television “viewer,” and it led experienced

broadcasters to testify that the Teleprompter cable stations

were functionally equivalent to network affiliated stations

(A. 298a-299a, 378a, 401a, 407a, 41 1a).

As was the case with the District Court’s approach to

the sale of advertising, supra at 26n. 31, both the Court of

Appeals and the District Court chose to disregard Tele-

prompter’s networking activities on the ground, inter alia,

that only a few instances of interconnection were in-

volved. Both courts felt that it was not necessary to

consider “what this may portend for the future” (A. xxx-

xxxi, 125a).

Such a stance, however, merely invites further litiga-

tion. One reason that there were relatively few examples

*2The District Court and the Court i

out only two or three examples of interconnection by Telersomien

There were,

and to deliver programming . The i

York City is on and operating (A. 507a, E-30).

of interconnection in the record is that Petitioners’ proof

in order to expedite pre-trial proceedings and the trial itself.

Notwithstanding such limitation, however, the record

contains ample evidence that extensive interconnection is

not merely a gleam in Teleprompter’s eye for the distant

future. It has played an integral part in Teleprompter’s

past actions and in its planning for the future. The per-

manent implementation of this network was one of its

aims in acquiring a corporation which produces television

programs (A. 602a, E-575-577). In 1970 Teleprompter

merged with H & B American to form the nation’s largest

cable television company ; an acknowledged purpose of this

merger was to acquire more outlets for a national cable

television network (E-38, E-93, E-212, E-572-573). The

very next year, as an avowed step towards the establish-

ment of the already planned network, Teleprompter filed

with the FCC an application to own and operate receiving

stations for a domestic communications satellite (E-29).

Plans for such a national satellite connected cable television

network are proceeding apace. As noted above, Tele-

prompter recently began production of a cable network news

program transmitted by more than 25 interconnected cable

stations with 500,000 subscribers in New York, New Jersey

and Pennsylvania.**

The evidence on record clearly shows that Teleprompter

is currently expanding its national cable station network

activity (J. A. 602a, E-22). To the FCC it represented that

by this year its cable stations as well as 100 independent

stations would be receiving from it a network package

(E-575-576, E-589). This is not the boast of a “passive

beneficiary” with no more than dreams for its future.

**See Broadcasting, March 19, Pad y aegE

*4See Broadcasting, October 1, 1

sold in “isolation” (A. 136a). Both of the Courts below

correctly stated that the Teleprompter systems “sell one

basic service” (A. 12la); that the various services were

advertised and sold to the public “as a ”= that no-

newspaper advertisements and promotions (A. 575a-576a,

E-163-164, E-171-172, E-193, E-194-208, E-223).

Similarly, the importation of distant signals was heavily

advertised with the acknowledged purpose and effect of

attracting new subscribers to the Teleprompter cable tele-

vision stations and, thus, enlarged the audience for Tele-

prompter’s originated programmirig and commercials

( E-234; see A. 540a, E-215, E-216, E-218, E-219, E-224- |

226, E-228, E-284).

Teleprompter also viewed the sale of commercials as

an integral part of its total operations. It deemed the sale

of commercials as essential for offering the public a “wider

choice of programming” (E-54-55)._~

It is equally clear that Teleprompter did not regard

interconnection as an “isolated” function. It too was an

integral part of its efforts to attract new subscribers to

the entire Teleprompter “package”. Just as with program

origination, Teleprompter extensively advertised its inter-

connection function (A. 567a, E-230, E-231, E-233).

In its advertising Teleprompter linked origination, im-

portation of distant signals, and interconnection (A. 120a-

121a).It often did this in the same copy.** At the same

time, it sold commercials to help finance these new functions.

The purpose of all this was to attract subscribers to the

“package” of services Teleprompter was selling as a unit

(A. 120a-121a, 525a-526a, 561a-562a, 565a-567a). And

these new functions did succeed in increasing the number

of subscribers to and the revenues of the various Tele-

prompter cable television stations (A. 525a-526a, 60la,

E-134, E-192, E-224-226, E-234). Teleprompter, of

course, was able to devote its energies and monies to pro-

gram origination and interconnection in competition with

broadcasters because it was receiving and retransmitting

without payment programs for which broadcasters must

Teleprompter’s advertising policies reflected the eco-

nomic realities because all of their subscribers receive the

totality of the services offered (A. 121la, 135a-136a). No

one can buy the Teleprompter program origination service

from a broadcast importing cable television station without

also buying the imported distant signals service, just as no

viewer can receive the local program originations of a net-

work affiliated television broadcast station without also re-

ceiving the signals imported from the distant network

centers, signals which constitute the backbone of an affili-

ate’s programming. Yet notwithstanding the foregoing,

the courts below ignored the Fortnightly “total operations”

principle and proceeded to analyze each of the combined

services in “isolation”.

The District Court isolated Teleprompter’s program

origination function ca the ground that it was somehow an

“unrelated function,” like the offer of “free ice cream or

candy to every subscriber” (A. 135a-136a). Origination,

however, is not an “unrelated function” to Teleprompter,

any more than it is to any broadcaster. It is part of the total

package made available to subscribers and part of the total

package subscribers expect to receive from Teleprompter.

Similarly, the Court of Appeals improperly applied the

Fortnightly “total operations” principle. It considered the

than as integral parts of a whole, for the sole reason that

they were provided by Teleprompter, at Teleprompter’s

choice, on channels separate from the channels used for

retransmission of broadcast station programming. Such an

artificial segmentation of the various functions included

within the service package provided by Teleprompter to its

subscribers, however, does not reflect the logic or economic

realities of either the cable television or broadcasting

industries.

The artificiality of this approach is emphasized by the -

Court’s suggestion that a different result might have been

appropriate if the Teleprompter originated programming

had physically replaced the retransmitted broadcast pro-

gramming on a single channel, or if the Teleprompter-sold

commercials had been substituted for the commercials em-.

bodied in the broadcast programming distributed by the

cable stations™, or if cable station interconnection had oc-

curred with respect to broadcast programming (A. xxvii-

XXvili, Xxx-xxxi).

With due respect, Petitioners cannot believe that under

this Court’s Fortnightly rule the question of the overall

function of a cable television station for copyright purposes

can turn on the number of channels utilized at its option by

a cable television station. After all, a circus is functionally

a circus whether it has one ring as in the case of the tradi-

tional European circus, or three rings, as in the case of the

traditional American circus. Just as the American spectator

can freely change the object of his attention from the center

**It might be noted that there is no technical disability to inhibit

cable television stations from their own commercials for

those broadcast in the first instance television stations whose

are being retransmitted. cable television

are doing just that with respect to the commercials on the

example, in Herbert v. Shanley, 242 U. S. 591 (1917)

(Holmes, J.), the Supreme Court rejected the argument

that, since there was no charge in a restaurant for the per-

formance of music, it was not a performance for profit.

It pointed out, among other things, that “[p]erformances

not different in kind from those of the defendant’s could

be given that might compete with and even destroy the

success of the monopoly that the law intends the plaintiff

to have. * * * They are part of a total for which the public

pays, and the fact that the price of the whole is attributed

to a particular item which those present are expected to

order, is not important.” Id. at 594. See Associated Music

Publishers, Inc. v. Debs Memorial Radio Fund, 141 F. 2d

852 (2d Cir.), cert. denied, 323 U. S. 766 (1944).

In the instant case, it would ignore reality to assume

that cable subscribers view what they are receiving as

being in distinct niches. The cable subscriber pays for the

spectrum of services and programs that a cable television

station furnishes, regardless of channel; and its makes no

difference to him whether or not these services and pro-

grams are on the same or separate channels.

A business entity such as Teleprompter, which redis-

tributes television programming originated by others, orig-

inates its own programming, sells commercials, and inter-

connects into networks does precisely what a broadcast

television network-affiliated station does. Such a business

entity performs precisely those functions identified by

this Court in Fortnightly as the functions of a “broad-

caster.” Copyright immunity should not be extended to

such an entity.

CONCLUSION

The judgment of the Court of Appeals should be

reversed insofar as it affirms in part the judgment of the

District Court.

Respectfully submitted,

Asa D. SoKoLow

Sypney M. Kaye

Puitip MANDELKER

575 Madison Avenue

New York, New York 10022

Harry R. Otsson, Jr.

51 W. 52 Street

New York, New York 10019

Attorneys for Petitioner

Columbia Broadcasting

System, Inc.

Cuartes H. MILLer

Royat E, BLAKEMAN

BERTRAND H. WEIDBERG

430 Park Avenue

New York, New York 10022

Attorneys for Petitioner

Calvada Productions

EucENE Z. DuBosE

ALFRED C. Moran

120 Broadway

New York, New York 10005

Attorneys for Petitioner

Jack Chertok Television, Inc.

SryMouR GRAUBARD

BERNARD BUCHHOLZ

345 Park Avenue

New York, New York 10022

Attorney for Petitioner

Dena Pictures, Incorporated

RosENMAN COLIN Kaye PETSCHEK

Freunp & Emi

575 Madison Avenue

New York, New York 10022

MARSHALL, BraTTER, GREENE, ALLISON

& TucKER

430 Park Avenue

New York, New York 10022

ALEXANDER & GREEN

120 Broadway

New York, New York 10005

GRAUBARD, Mosxkovitz, McGorpricx,

DanneEtt & Horowitz

345 Park Avenue

New York, New York 10022

Of Counsel

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