Brief for Respondent — Teleprompter Corp. v. Columbia Broadcasting System, Inc.

Supreme Court brief1974

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What actually matters in this document.

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1. Teleprompter’s Farmington, New Mexico

Cable Television Station ................

2. Teleprompter’s Great Falls, Montana Cable

INN TINO av ese 5 ca se sn nce

3. Teleprompter’s Rawlins, Wyoming Cable

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4. Teleprompter’s Elmira, New York Cable

Television Station ............. seen tees

SUMMARY GP ARGUMENT oe coe Scan cc cv ccccecccs

I 55 5h 5 kas Ans kos ea oe

I, TELEPROMPTER’S IMPORTATION AND DISTRIBU-

TION OF DisTANT SIGNALS IS A PERFORMANCE

WITHIN THE MEANING OF THE COPYRIGHT

Dit ome POs Sa sieakSs Wes sass Bei ak. os cs

A. The purpose of the Copyright Act of 1909

is to grant statutorily protected rights of

public performance to proprietors

in order to serve the public interest by re-

warding the creators of copyrighted works

by payment for these rights ............

B. Under all relevant pre-Fortnightly de-

cisions, Teleprompter’s activities in import-

ing distant signals constitute a performance

of the programs embodied in those signals

Fortnightly, T s activities in

importing distant signals constitute a per-

_. formance of the programs embodied by

Se eer

1. The Fortnightly case established only a

limited copyright immunity ..........

2. Importation of distant signals is a func-

tion that falls on .the broadcaster’s-

performer’s “side of the line” and is

not that of a “passive beneficiary” ....

(a) The concept that there is a differ-

ence between

(b) Under the Fortnightly test Tele-

prompter’s cable television stations

when they import “distant signals”

fall on the broadcaster’s “side of the

line” and are subject to copyright

pS EE errr rT reer

PAGE

C. Under the test set down by this Court in.

iii

PAGE

II. TELEPROMPTER’s Non-CopyrIGHT ARGUMENTS

IN SUPPORT OF A REVERSAL OF THE DECISION

OF THE CourT OF APPEALS BELOW ARE IR-

RELEVANT AND UNFOUNDED ............--

A. Neither the Communications Act nor FCC

regulations can amend or interpret the

B. Teleprompter’s economic argument, based

on a mis-use of the term “Coverage Area”

of broadcasting stations, is strained and

a Seer yy Prrey ee yy Pepys

C. Teleprompter’s “license implied-in-law”

argument, even recast as a “dedicated to the

public” argument, has no basis in law and

has been repeatedly rejected by the courts ..

D. The rule of the Court of Appeals below

does not threaten the viability of cable tele-

COMCERIBUINT ono cccccnncnccochocacnssenspesee

Adams v. Burke, 84 U. S. (17 Wall.) 453 (1873) .. 63

Allen v. State Board of Elections, 393 U. S. 544

PRMD Snes ccomahnns sta Ghaceasces eee sss ss 71

Aro Mfg. Co. v. Convertible Top Replacement Co.,

ue Fe). eS 63

Associated Music Publishers, Inc. v. Debs Memorial

Radio Fund, Inc., 141 F. 2d 852 (2d Cir.), cert

denied, 323 U. S. “766 5 (| eer 23, 29

Bobbs-Merrill Co. v. Staus, 210 U. S. 339

CORRE Siiias « carstiens + + ce Vases Fons 63, 64

Buck v. Debaum, 40 F. 2d 734 (S. D. Cal.

pt Pr eat Sed Perr prec ereper eee 34, 35, 63

Buck v. Jewell-LaSalle Realty Co., 283 U. to 191

Qk ere pr ee ee 23, 26, 48, 63

Cable Vision, Inc. v. KUTV, Inc., 335 F. 2d 348

(9th Cir. 1964), cert. denied, 379 U. S. 989

(1965) 22... ee We rvctonte eee cs Hees 50, 51

Chevron Oil Co. v. Huson, 404 U. Ss: 97 C1971) .... 71

Cipriano v. City of Houma, 395 U. S. 701 (1969) .. 71

Davis v. E. I. DuPont de Nemours & Co., 249 F.

ta ER ee 5 RR aes 26, 65

Davis v. E. I. DuPont de Nemours & Co., 240 F.

a ae LO Be Ban 0. RUD 48 esc awkdnnkss 23

Dorchester Music Corp. v..National Broadcasting

Co., 171 F. Supp. 580 (S.D. Cal. 1959) ...... 23, 26

England v. Louisiana State Board of Medical Ex-

aminers, 375 U.S. 411 (1964) ...............

Farmers Union v. WDAY, 360 U. S. 525 (1959) . 51

FCC v. Pottsville Broadcasting Co., 309 U. S. 134

COUNT caDbiyiesedccdas cw apaccecn cbhasess 50

Ferris v. Frohman, 223 U.S. 424 (1912) ........

Fortnightly Corp. v. United Artists Television

Corp., 302 U. S$: SOLISSE) 65 6S passim

Fox Film Corporation v. Doyal, 286 U. S. 123

CIODRD sod 6 ian ccs ms nage Gresignneles 19, 20, 22

Goldsmith v. Commissioner of Internal Revenue, 143

F. 2d 466 (2d Cir.), cert. denied, 323 U. S. 774

C2088): 2. och ees LAS SY i es i 21

Great Northern Railway v. Sunburst Oil & Refining

Co., 287 U. S. S56. CISRZ) wo oc cent cee snnes 71

Harms, Inc. v. Sansom House Enterprises, Inc.,

162 F. Supp. 129 (E. D. Pa. 1958), aff'd sub.

nom. Leo Feist, Inc. v. Lew Tendler Tavern, Inc.,

267 F. 2d 494 (3d Cir. 999) <5. LS Si ees 23, 24

Herbert v. Shanley Co., 242 U. S. 591 (1917) . ~ 47

Herwig v. United States, 105 F. Supp. 384 (1952) 22

Interstate Circuit, Inc. v. United States, 306 U. S.

BUS CITED) 5 svn sca ten cnbsteeesnts eee

Jerome H. Remick & Co. v.. American Automobile

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

denied, 269 U. S. 556 (1925).....-.-+. 23, 24, 29, 48

Jerome H. Remick & Co. v. General Electric Co.,

16 F. 2d 829 (S. D. N. Y. 1926) ...... 23, 34, 35, 36

Kalem Co. v. Harper Bros., 222 U.S. 55 (1911)... 24

King v. Mister Maestro, Inc., 224 _F. Supp. 101

5 SS Er rer

Law v. National Broadcasting Co., 51 F. Supp. 798

oS oe a eres rrr 23, 26, 65

M. Witmark & Sons v. L. Bamberger & Co., 291

Fed. 776 (D. N. J. 1923) ....55..000aees 23, 47, 48

Manners v. Morosco, 252 U. S. 317 (1919) ..... 22, 64

Maser v. Stein, 347 U. S. 201 (1954) ....... 20, 21, 47

Metro-Goldwyn-Mayer Dist. Corp. v. Bijou Theatre

Co., 59 F. 2d 70 (ist Cir. 1982). 222. cee es “3

Robertson v. Batten, Barton, Durstine & Osborn,

Inc., 146 F. Supp. 795 . D. Cal. 1956) . Stace +. 2

PAGE

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

U. S. P. Q. 288 (S. D. N. Y. 1943) ...... 23, 24, 25,

: 29, 36, 65

Shapiro, Bernstein & Co., Inc. v. 4636 S. Vermont

Ave., Inc., 367 F. 2d 236 (9th Cir. 1966) ...... 70

Society of European Stage Authors and Composers,

Inc. v. New York Hotel Statler Co., 19 F. Supp.

Bete UB 8s eek Se ec ey eee 23

Tiffany Prods., Inc. v. Dewing, 50 F. 2d 911

Coe ME Ns oo 5-05 0 5.545 5 kO Cabe koe ers es 23

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

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

See CIE se bk kv os Fe eo oi veces 6, 22, 27, 28, 61

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

CI a ek Viti cd ecslasbaesis on 5,6

United States v. Paramount Pictures, Inc., 334

SLE: CEO eG dd oh oh kes bak neboeers 21

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

RT MAES is cae sae tae sa aeC Kees) 9, 34, 58, 59

Uproar Co. v. NBC, 8 F. Supp. 348 (D. Mass.

1934), aff'd, 81 F. 2d 373 (1st Cir.), cert. denied,

Pw Ue OO CIGD oso oh cccdascnceens beeen

Walt Disney Prod’ns v. Alaska Television Network,

Inc., 310 F. Supp. 1073 (W. D. Wash. 1969) . .23, 42

Washington Publishing Co. v. Pearson, 306 U. S.

RATER boc i va ced cogeber hs vwiaaawb eee 47

Woolworth Co. v. Contemporary Arts, 344 U. S.

MER SPR o Cewbs deb WakGepe 606s 4 EUS Gee's hes 70

CONSTITUTION, STATUTES, RULEs:

United States Constitution:

Art. 1, Section 8, Clause 8 ...............

Communications Act of 1934:

Mee 3. CoB AGNES) ooo sac bac cates -- 6

6915. S, CS USOD i cdc ccinenionceionree . 20

AP3); SOE BDAC). n' oka teas cneend> tek 38

47 U.S. C. § 303(d) ......... AEGIS owen 38

47 U.S CED) VU EG AA 38, 58

APU BO BEY vn cca ved Vegeta datcunss 58

47 Se C, 3 SRGLOY.. on ks cntcnnntedncsvanwe 13

47 U.S. CG IGS HE hee 50, 64

17 U. S.C. § 1(c), (d) ...3, 18, 19, 23, 24, 28, 48, 50

17-T BL BAO) 56 oa ken ite copier doatndeo 23

U. S. Supreme Court Rule 36 ............-.-44- 1

Rules of the Federal Communications Commission :

eed ye Rae eee ree 43

47 CBR BPO cs 32

67-8 BEIM Gece ecnave ee 51

8 CR DEM Seite 57

re 8 ene pueden ee 69

OCR x acces Ses kee 57

WORE CM ccm phe er ers 69

CCRT eee 69

foe Et, eb eugng, Seep uate: 69

47 C.F. R. § 7691-159 .. 2. ccc ce rescence

viii

PAGE

REPORTS AND ORDERS OF THE FEDERAL COMMUNICA-

TIONS COMMISSION :

eeesener eee es eee

**: CASEY a ac yt Le bas bude euee eae

First Report and Order on Microwave Served

_ CATV, 38 FCC 683 (1965) ........+-005- 39, 59

‘Notice of Proposed Rule Making and Notice of _

~ Inquiry, 15 FCC 2d 417 (1968) ......-- 57, 58, 60

Further Notice of Proposed Rulemaking (Cable

Television Docket), 27 FCC 2d 13 (1971) ... 53

_“Ascertainment of Community Problems by

Broadcast Applicants,” 27 FCC 2d 650 (1971) 38

Cable Television Report and Order, 36 FCC 2d

143 (1972) ....cesevesecees 39, 51, 52, 57, 58, 69

Memorandum Opinion and Order on Reconsidera-

tion.of the Cable Television Report and Order,

sor R26) eee

‘CONGRESSIONAL: ;

ie oss Sia ga eeneasp odes oe aus 29

_.. Bills: sk f

H. R. 4347, 80th Cong., 2d Sess. (1966) .../... 65

H. R. 2512, 90th Cong., Ist Sess. (1967) ......- 65

S. 3008, 88th Cong., 2d Sess. (1964) .......++- 65

-§, $43, 91st Cong., Ist Sess. (1969) .......+4+- 65

+, 8.644, 92nd Cong., Ist Sess. (1971) ......++0- 65

'S. 1361, 93rd Cong., 1st Sess. (1973) ........-

pace

TEXTS:

Milgrim, “Territoriality of Copyright: An Analysis

of Assignability Under the Universal Copyright

Convention,” 12 ASCAP Copyright Law Sympo-

sium 1 (1963) 2.22. cece cece eee e ee eeneeeees

Nimmer, Copyright Publication, 56 Colum. L. Rev.

185 (1956) ....... ‘oe koe do WECR SG Ord Seb Sty

MISCELLANEOUS:

Broadcasting, March 12, 1973 ........--+++++++ 70

Cable News, March 12, 1973 ........--00++0005

ee -Newsweekly of Cable Television, March 19,

5 RE ARSE AA Oe SE PEE

CATV-Newsweekly of Cable Television, Nov. 26,

OFS 2. NA AGA EIST 27, 39, 60

Comments of the NCTA, In the Matter of Various

Methods of Transmitting Program Material to

Hotels and Similar Locations, et al., FCC Dkt.

No. 19671 et al. (May 21, 1973) ......-+++++: 60

Comments of Teleprompter Corp., In the Matter of

Various Methods of Transmitting Program

Material to Hotels and Similar Locations, et al.,

FCC Dkt. No. 19671 et al. (May 21,1973) .... 60

Complaint in Teleprompter Cable Services, Inc. v.

American Microwave and Communications Corp.,

FCC Dkt. No. 72-643 (complaint filed May 25,

TOTZ) cocci ccccctccsnsegescuavectesaesesss

Complaint in Teleprompter Corp. v. Lake Superior

Cablevision Ltd., File No. M42-72 CA3 (W. D.

Mich., complaint filed June 5, 1972) ......-----

D. Burch, Letter to Congress dated August 5,1971 52

D. Burch, Address to the National Cable Television

Association, June 19, 1973 .......-....-0--55 53

D. Burch, Address to the U. K. S Con-

ference on Broadcasting, November 7 1983, Fy

, 60

Johnson, Leland, The Future of Cable Television

(Rand Corp. Rpt. 1970) ............eeeeeees 68

Memorandum for the United States as Amicus

Curiae to the Supreme Court in ry aoetgey

v. United Artists Television, Inc. ............ 62, 63

gig hy Brief to the Supreme Court in

F orp. v. United Artists Television,

Ine we §. 1068 Sy AER ah OES TR ES 31, 32

Petition for Rule-making filed by NCTA in the

Matter of Amendment of Subpart F. of Part 76

of the Commission’s Rules and Regulations with

Respect to Network Program Exclusivity Pro-

tection by Cable Television Systems (Nov. 9,

SAREE ae git Sayan 51, 52

Television Factbook, vol. 38 (1968-1969 Ed.) .... 56

Television Factbook, vol. 41 (1971-1972 Ed.)... .12, 43

Television Factbook, vol. 42 (1972-1973 Ed.) ..... 56

Television Factbook, vol. 43 (1973-1974 Ed.) ....5,72

U. S. Industrial Outlook 1974 (Oct. 1973) ...... 5

Webster’s Third International Dictionary, 1961 ...

PAGE -

IN THE

Supreme Court of the Anited States

October Term 1973

No. 72-1628

»™

TELEPROMPTER CORPORATION and

Contey ELectronics CorPORATION,

Petitioners,

CoLtuMBia BroapcasTING System, Inc., CAtvapa Pro-

DUCTIONS, a joint venture, JAcK CHERTOK TELEVISION,

Inc., and Dena PictruREs INCORPORATED,

Respondents.

On CERTIORARI TO THE UNITED States Court oF

APPEALS FOR THE SECOND Circuit

The opinion of the Court of Appeals (A. xvi-xliii)* is

reported at 476 F. 2d 338 (2d Cir. 1973). The opinion of

*“A” references are to the Appendix filed by the parties pursuant

a “E” references are to the Exhibit

The various briefs already filed in this docket and the companion

docket 72-1633 by the parties and amici will be referred to as follows:

Teleprompter’s brief as Petitioner in 72-1628 as “Pet. Br.” ; National

Cable Television Association’s (hereinafter “NCTA”) brief soar'd)

(cont’

the District Court (A. 103a-142a) is reported at 355 F. .

Supp. 618 (S. D. N. Y. 1972).

QUESTION PRESENTED

The only question really presented by petitioners is:

Do petitioners’ cable television stations which (1) de-

liberately select for importation various television signals

from distant markets, (2) take and import these distant

signals into the communities in which they operate, and (3)

transmit these signals to their paying subscribers over their

cable stations, “perform” the copyrighted material em-

bodied in such signals under Section 1(c) and (d) of the

Petitioners Teleprompter Corporation and Conley Elec-

tronics Corporation (hereinafter “Teleprompter”) set

/ forth three further questions as issues in their petition.

None of these bears any relation to the opinion of the

the Columbia B System, Inc. (hereinafter “CBS”), Cal,

ei Gate eee en Respondents”) brief as Peti-

tioners in 72-1633 as “Cross-Pet. Br.” The brief amicus filed in 72-

mto

Since the parties are filing separate briefs with respect to the two

Seng, creak gt gm grape alpen eg tah tery

(cont’d)

STATUTE INVOLVED

The only relevant statutory provision involved herein is

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

§ 1(c) and (d), which 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

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 supplemented by complaints

filed on December 15, 1969 and May 17, 1971 (A. 1la-28a,

50a-59a, 87a-93a). The plaintiffs below (Respondents

herein) are four separate copyright proprietors. Respond-

ents Calvada Productions, Jack Chertok Television, Inc.,

and Dena Pictures, Incorporated are independent creators

and producers of television programs which are protected

by statutory copyright. Respondent CBS, the operator of

a television network, sues in its capacity as a creator, pro-

ducer, and Nicensee of television programs protected 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

respective service areas (“network programs”). Some of

the copyrighted works described in the complaints were

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

owners or their licensed distributors to individual tele-

vision stations, having no relation to the network on which

the programs were originally run, for further broadcast

to viewers in their service areas. Certain of the -infringe-

ments at issue here occurred during the initial network

“run” of the programs, others during their syndication.’

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

also include programs licensed for network distribution by independ-

ent producers—respondents Calvada, Chertok and Dena—who created

(cont’d)

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. Its

stations (more than 140) are presently serving some 900,-

000 subscribers.*

The complaints alleged that the Teleprompter cable tele-

vision stations, by intercepting the signals of television

stations broadcasting Respondents’ copyrighted works and

then retransmitting them to their paying subscribers with-

out authorization or license, had performed the copyrighted

works and infringed Respondents’ 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” ).

Fortnightly was a case of first impression designed to test

the copyright liability of traditional CATV systems, the

and copyrighted the programs (A. 9a-13a, 15a-19a, 2la-24a). Two

cuet matwaihh programs involved were created and i

ty a eee oe , which assigned all its rights in the

Pp to CBS which then distributed them (A. 50a-52a, 87a-89a).

Pp involved in this action were in syndication at the

time of all infringement (A. 52a-56a, 89a-93a). In one instance

the program in syndication was broadcast by a television station

affiliated with the NBC network (KHQ-TV, Spokane, A. 52a-54a),

in another an ABC affiliate (KBTV, Denver, A. 54a-S6a), and

in the ox BL = ae tag station (KTTV, Los

Angeles, A. 91la-93a). significance of syndicated programs in

this case is discussed at length infra at 45-48.

3CATV-Newsweekly of Cable Television, Nov. 19, 1973 at p. 3.

In January 1973, there were some 3,032 cable television stations

serving more than 6,000 communities. TELEVISION FAcTBOOK,

Services Vol. 43 (1973-1974 Ed.) at pp. 84a, 379a. The Department

of Commerce in its U. S. Inpustrtat Outtoox 1974 (Oct. 1973)

at p. 288 predicts that at the end of 1973 cable television will have

some 8.2 million subscribers nationally.

function of which was to merely enhance the reception by

television viewers of the signals of nearby television

stations. Respondents 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 defendant’s 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. Jd. at 396-397.*

This Court reversed, holding inter alia 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

—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 basic facts pertaining to the function

of the Teleprompter systems was stipulated by the parties

(A. 148a-29la). These stipulations established that the

Teleprompter cable television stations performed significant

functions which were not performed by the Fortnightly

systems.

By pre-trial order dated October 23, 1970, the trial of

this case was divided into separate stages. The first stage,

“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.

*For a more detailed discussion of Fortnightly see infra at 26-36.

on appeal here, was concerned solely with the issue of

whether or not there had been an infringement of Respon-

dents’ copyrights and whether there was a “license implied-

in-law” for Teleprompter’s activities, The issue of damages,

should infringement be established, as well as Tele-

prompter’s detailed “antitrust” defenses were segregated

for consideration at a subsequent stage if such became

necessary (A. 71a-80a, 101a).°

Upon completion of the first trial stage, the courts below

found that the Teleprompter cable television stations: se-

lected and imported for retransmission to their paying sub-

scribers programs broadcast in the first instance by televi-

sion stations in markets far distant from and in no way re-

lated to the communities in which petitioners’ cable television

stations 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 and not

present in Fortnightly—were in addition to a so-called “re-

ception 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, 476 F. 2d at 343-345, 348; A. 11la-121a, 355 F.

Supp. at 621-624). The courts below also found that the

various services were sold by the Teleprompter stations to

their paying subscribers “as a package,” and that no one

“of their services was available independent of the others ©

(A. xxviii, 476 F. 2d at 347; A. 121a, 135a, 355 F. Supp.

at 624, 629).

The basic legal issue presented below was whether cable

television stations performing all or some of these admit-

tedly new functions could be termed “passive beneficiaries”

or “on the viewer’s side of the line” for purposes of copy-

right liability within the meaning of Fortnightly. 392 U. S.

at 396-399.

B. Decisions Below.

The District Court held 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, 355 F. Supp. at 619.) But

notwithstanding this conclusion, the District Court held

itself bound by Fortnightly to dismiss the complaints (A.

138a-139a, 355 F. Supp. at 630), thus granting the entire

cable television industry copyright immunity by judicial fiat.

The Court of Appeals also recognized that the oper-

ations of the cable stations in this case were “different and

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

xxvi, 476 F. 2d at 346). In an unanimous opinion, the

Second Circuit set forth the issue before it as:

“whether the character of CATV is so changed by

the additional services that the cable systems here

have undertaken that their total operation, including

the reception service, under the Fortnightly func-

tional 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, 476 F. 2d at 346.)

The analysis of the Court of Appeals led it properly

to reverse the judgment of the District Court with respect

to Teleprompter’s activities in selection, importation and

distribution of television signals embodying Respondents’

copyrighted works from “distant” broadcast stations locat-

ed at great distances, in some cases hundreds of miles, from

the communities served by the Teleprompter cable televi-

sion stations and clearly beyond the service areas of those

stations—functions admittedly not before the Supreme

Court in Fortnightly. See infra at 31. 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 im-

ported signals” within the meaning of Fortnightly and of

the Copyright Act (A. xxxiii, 476 F. 2d at 349).”

_ The court below did not treat Fortnightly as having

given a total copyright immunity to an entire industry. It

properly observed that importation and transmission of dis- -

tant signals was not present in Fortnightly. It noted that

this Court in Fortnightly’s companion case United States v.

Southwestern Cable Co., 392 U. S. 157, 163-164 (1968),

found that distant signal importation is a function vastly

different than mere enhancement of local television tecep-

tion (A. xxxii-xxxiii, 476 F. 2d at 349). See infra at 34.

The Court of Appeals also recognized that broadcast

television stations have limited effective broadcasting

ranges because television waves travel in straight lines,

while the earth’s surface is curved (A. xxxii-xxxviii, 476

F. 2d at 349-352), thus creating, with Federal Communica-

ions functionally

for copyright purposes. Respondents herein are challenging these

rulings in Dkt. No. 72-1633.

tions Commission (hereinafter “FCC”) recognition, sepa-

rate television markets. See infra at 38-39, 56-57. _.

Finally, the court below acknowledged that the concept

of separate television markets has been consistently accepted

by the courts, the appropriate regulatory authorities and the

endorsed the uncontradicted trial record which clearly shows

that the copyright holders, for sound economic reasons, do

not intend that the programs they license for broadcast in

one “market” be distributed in another “market” without

authorization. The economic reality is that a copyright

owner’s ability successfully to market his creation may de-

pend on the revenue to be derived from syndicating the

performance of his program in areas that did not receive

it in the first instance (A. xviii n. 2, 476 F. 2d at 342 n. 2).

See infra at 45-47."

’.. Having established the premise that a cable television

station “‘is a ‘performer’ of whatever programs from these

distant signals that it distributes to its subscribers” (A,

xxxiv, 476 F. 2d at 350), the Court of Appeals turned to

the “problem of defining what is a distant signal [as op-

posed to a local signal] for copyright purposes” (A. xxxiv-

xxxv, 476 F. 2d at 350). It defined a local signal as one

which is

“capable of projecting, without relay or transmittal,

an acceptable image * * * [receivable] off-the-air

* * * by means of an antenna erected in or adjacent

to the CATV community * * *” (A. xxxvii, 476

F. 2d at 351).

The Court of Appeals then noted that, if, on the other

ew ee ee

Acooaphete recor on the ijt y and potential injur rome

Coase the Court improperty sited to dale citar OE Gn

evidence ta thle commection as irrelevant (A. 3l1la, 314a, 436a-437a).

television station originates in a‘community other than the

CATV community in question, and the cable television

station, in order to import such a signal, locates its re-

ceiving antenna “in or near the originating community” or

“between the originating community and the CATV com-

munity” and then transmits the signal “to the CATV

community by microwave or cable, a strong presumption

arises that * * * [the signal] is a distant signal.” The court

noted that unless the cable television station’s off-the-air

receiving antenna was located within a “few miles” of the

cable community, the distant signal presumption would

come into play. The court below held that this presumption

could be overcome by a showing that the signal “would. be

equally receivable off-the-air in the first instance and would

project an image of similar quality, if there were substan-

tially similar receiving equipment located in or adjacent to

the CATV community.” (A. xxxviii, 476 F. 2d at 351-

352).°

C. The Pertinent Facts.

To simplify resolution of the basic legal issues, Respon-

Cents “elected 60 sue only oman Sinstrative group ot: kngy-

righted works. See supra at 4. ©

' Similarly, while the complaints clearly alleged infringe-

ment of these works by all of the Teleprompter cable tele-

vision stations which received and retransmitted them, Re-

spondents, in order to expedite the trial, primarily limited

their proof to the functions of five specific and illustrative

Teleprompter stations located in Farmington (New

Mexico), Great Falls (Montana), Rawlins id ear ye 6

about the’

activities of those cable television stations relevant to the -

issues involved in this docket and the Court of Appeals’

specific resolution of the issues follow.

1. Teleprompter’s Farmington, New Mexico Cable Tele-

vision Station (described per stipulation at (A. 184a-

192a, 202a-204a, 266a-27la) (see A. xxi-xxii,

xxxix-xlii, 476 F. 2d at 344, 353-354; A. 116a-118a, 355

F. Supp. at 622-623).

Teleprompter’s Farmington cable television station was

using four of its twelve channels to import from Los An-

geles, some 600 miles away, the programs of four independ-

ent (non-network) television stations.” Teleprompter de-

liberately chose to import the signals of these stations

because of the type of programming they had to offer (A.

568a-570a; cf. A. 612a). In selecting these signals, Tele-

prompter chose from a virtually unlimited number of

stations. Indeed, in going to Los Angeles for desirable pro-

gramming it bypassed some 113 ether stations nearer to or

the same distance from Farmington.”

Having chosen to import the programming of the four

Los Angeles stations, Teleprompter arranged to intercept

pp. 10-12, 20-33.

22 of their Brief, Petitioners misspeak when inform

WAt p.

the Court that there are currently no television stations in Farming-

ton. Although there were none at the time of the infringements, an

NEC affiliate, KIVA-TV, Channel 12, is currently broadcasting in

“The figures here and infra at 42-43 concerning the number of

stations bypassed by Teleprompter in choosing the stations to import

are based on listings in Tetevision Factsoox, vol. 41 (1971-2), a

standard industry guide which is also relied upon by Petitioners.

See, ¢.g., Pet. Br. p. 35 nn. 54-57, p. 58.

their signals at a point approximately 50 miles from Los

Angeles and to retransmit them to Farmington by a com-

plex 23 step, 1,300 mile microwave system. These pro-

grams were otherwise not receivable in Farmington because

of the distances involved. The Los Angeles signals im-

ported and distributed in Farmington by Teleprompter

were held to be “the clearest example of distant signal im-

portation” by the Court of Appeals (A. xxxix, 476 F. 2d

at 353).

The Farmington cable television station also imports

the programs of four television stations located in Albu-

querque, New Mexico, 150 miles from Farmington, includ-

ing all three network affiliates and one educational station.

These signals are picked-up off-the-air on a mesa 30 miles

from Farmington, whence they are microwaved into Farm-

ington for distribution to the cable television subscribers.

Direct reception in Farmington of these stations is impos-

sible because of the distances involved. As a result the

Court of Appeals found that these signals were presump-

tively “distant” to Farmington (A, xl, 476 F. 2d at 353).

In this situation, however, the court ruled that the presump-

tion was overcome as the signals of the Albuquerque

stations were available off-the-air in Farmington as a re-

sult of the authorized rebroadcasts of certain translator

stations (A. xl-xli, 476 F. 2d at 353).”

Teleprompter also distributes the signal of the CBS

affiliate in Durango, Colorado. Durango is 43 miles from

2A “translator” is a television broadcast translator station. Its

function is to rebroadcast a specific television station’s broadcast sig-

nals. For such purposes it is authorized both by the television station

whose si it is rebroadcasting under 47 U. S. C. 325(a) and

hee Oe ¢ owners of the copyrights whose programs are embodied

_— An 5 ' T

Farmington, but direct reception of the Durango singals in-

Farmington is impossible because of a mountain wall. Tele-

_prompter received these signals at the mesa 30 miles from

Farmington and then retransmitted them by microwave into

town.” There is no translator in Farmington that rebroad-

2. Teleprompter’s Great Falls, Montana Cable Television

Station (described per stipulation at A. 218a-228a)

(see A. xxxiii-xxiv, xxxix-xl, 476 F. 2d at 345, 353;

117a, 355 F.. Supp. at 623).

Teleprompter’s Great Falls Cable Television Station

was using seven of its twelve channels to import the pro-

gramming of seven distant television stations located all

over the northwest quadrant of the United States and

Canada. Signals were imported from Salt Lake City, 466

miles away (ABC affiliate and an educational station),

Spokane, Washington, 286 miles away (CBS, NBC, ABC

affiliates), Lethbridge, Canada, 163 miles away (CBC af-

filiate) and Helena, Montana, 71 miles away (a station

affiliated with both ABC and NBC).” These signals were

48At times, Teleprompter chose to retransmit only particular seg-

ments of the Durango station’s broadcast schedule so as to fit more

neatly into the format it desired to present to its sub-

mee (A. 118a, 355 F. Supp. at 623; A. 187a-

“The Court of A did suggest that a different result might

vegard to Darange (A. sili, 476 F. 2d at 383-394), Teleprompter

to ° at .

Sit ic cate sdteiaan of lt otter

Though Great Falls was 71 miles from KBLL-TV, Helena, and

within what might be considered the normal range of a broadcast

station, reception of KBLL’s signals directly off-the-air in Great Falls

and no person not a subscriber to the

microwave to a point in Great Falls for

Teleprompter subscribers. The cable station carried

the signals of two local television stations (one station

affiliated with ABC and NBC, the other with NBC and

CBS).

they the times at which particular programs were

cable television station (A. 21a).

None of the seven imported signals was available to

Great Falls viewers by any means other than the Tele-

xxxix, 476 F. 2d at 345, 351, 353).

3. Teleprompter’s Rawlins, Wyoming Cable Television

Station (described per stipulation at A. 2340-2400)

(sce A. xxiii, 476 F. 2d at 344-345).

Teleprompter’s Rawlins cable television station was

were bypassed by Teleprompter. These stations included

stations affiliated with ABC, CBS, and NBC as well as a

nas located between 93 and 105 miles from the transmitting

antennas and were relayed to Rawlins by multi-step micro-

wave transmission. Reception of these signals off-the-air

in Rawlins was not possible because of the distance involved

and none of the signals was available to Rawlins viewers

by any means other than the Teleprompter cable station. As

a result they were held to be “distant” by the Court of

Appeals (A. xxxix, 476 F. 2d at 352).

4. Teleprompter’s Elmira, New York Cable Television

Station (described per stipulation at A. 205a-213a)

(see A. xx-xxi, 476 F. 2d at 343-344).

Teleprompter’s Elmira cable television station imports

the signal of WPIX-TV, New York City (173 miles from

Elmira), by means of a four-step (160 mile) microwave

- link. The WPIX signal, a non-network independent station,

is available to Elmira viewers only over the Teleprompter

cable station. In deciding to import WPIX-TV, Telepromp-

ter passed over 57 other television stations that were as far

as or closer than New York City and were not already

being carried on its Elmira cable station. This signal falls

' within the Second Circuit’s definition of “distant.”

- The Elmira cable television station also provides its

subscribers with the programs of nine other television

stations. Reception of two of these was possible in Elmira

by méans of rooftop antennas. Reception of seven others

was generally not feasible by using rooftop antennas due to a

ammi WwW

all three networks), 87 miles distant. The signals of this station,

although not feasibly receivable on the roof-top antennas in Rawlins,

receivable in Rawlins on tower-moun Peep as at ae

SUMMARY OF ARGUMENT

This action was brought by Respondents pursuant to the

involved in this case. The decision of the court below was

based on this act, its purpose, and the law that has been

developed by the courts pursuant to it. The court below

also considered and took into account the intent of the copy-

right proprietors and the economic facts _ which this

_ intent was based.

The decision of the Court of pe below, holding

the importation of distant signals to be a. “performance”

subject to copyright liability, is proper and, indeed, neces-

sitated by well-established case law including this Court’s

decision in Fortnightly.

The attempts by Teleprompter to divert attention from

the Copyright Act by harping on the Communications Act

and FCC rules and regulations are misdirected and irrelev-

ant. Its attempts to escape the conclusion of the Second

Circuit by developing tautological economic arguments are

unavailing. The raising of unsupported specters of the anti-

competitive implicatigns, of the decision below,

economic destruction of the cable television industry, is

factually unfounded. The problems with respect to the def-

inition of distant signals as established unanimously by the

Court of Appeals are overstated. And the attempt, upon the

failure of its other arguments, to once again raise the dis-

credited “license implied-in-law” argument requires little

comment.

Teleprompter urges this Court to grant by judicial fiat

a blanket immunity from copyright liability for an entire

industry. Such a request is unjustified by any facts and

has no basis in law.

ARGUMENT

TELEPROMPTER’S IMPORTATION AND’ DISTRIBU-

TION OF DISTANT SIGNALS IS A PERFORMANCE WITHIN

THE MEANING OF THE COPYRIGHT ACT OF 1909

Teleprompter, in effect, argues that the primary policy

of the Copyright Act would be served by permitting it to

exploit commercially copyrighted works while ‘prohibiting

the creators of these copyrighted works from participating

in the financial gain accruing as a result of such exploita-

tion: It seeks to extend the limited copyright immunity this

Court granted to a “community antenna,” which merely

“enhanced” the broadcast television signals already avail-

able in a community, to the selection and importation of

distant television stations through the use of microwave

systems and other sophisticated means of communication.

It seeks to becloud the economic impact that this extension

of copyright immunity would have on the creators of copy-

righted works and, indeed, the impact it would have on the

creation of copyrighted works, by a misreading of the policy

behind the Copyright Act.

A. The purpose of the Copyright Act of 1909 is to

~ rere tyne A ne eet of public perfor-

to copyright proprietors in order to serve

Guide public interest by rewarding the creators of

copyrighted works by payment for these rights.

The Copyright Act of 1909 was enacted pursuant to a

Constitutional provision that explicitly grants power to

Congress “to promote the Progress of Science and useful

Arts, by securing for limited Times to Authors and In-

vestors the exclusive Right * * *” to their works. U.S.

Const. Art. I, Sec. 8, Cl. 8 (emphasis added). The Act

itself provides that “Any person entitled thereto * * * shall

have the exclusive right: * * * (c) To * * * perform [the

copyrighted work] in public for profit [‘if it be a * * * non-

dramatic literary work’], * * * and (d) To perform * * *

the copyrighted work publicly if it be a drama * * *.” 17

U.S. C. § 1(c), (d) (emphasis added).

The Congressional purpose in enacting the Copyright

Act of 1909 was clear and precise. Congress determined that

the public welfare and interest in dissemination of the

works of authors would best be served by awarding the

work.

The fundamental principle of copyright law was formu-

lated by Mr. Chief Justice Hughes in the landmark case

of Fox Film Corpdration v. Doyal, 286 U. S. 123, 127-130

(1932):

“The Constitution empowers the Congress ‘To pro-

mote the Progress of Science and useful Arts, by

securing for limited Times to Authors and Inven-

tors the exclusive Right to their respective Writings

and Discoveries.’ Article 1, § 8, par. 8. The produc-

tion to which the protection of copyright may be

accorded is the property of the author and not of

the United States.

* * *

The owner of the copyright, if. he pleases, may

refrain from vending or licensing and content him-

self with simply exercising the right to exclude

others from using his property [citations omitted].

The sole interest of the United States and the pri-

mary object in conferring the monopoly lie in the

general benefits derived by the public from the

labors of authors. A copyright, like a patent, is ‘at

once the equivalent given by the public for benefits

bestowed by the genius and meditations and skill

‘20

of individuals, and the incentive to further efforts

for the same important objects’ [citations omitted].

ee eae: 3

the term at his pleasure and exclusively for his own

profit and forms the basis for extensive and profit-

able business enterprises. The advantage to the

public is gained merely from the carrying out of the

general policy in making such grants and not from

any direct interest which the Government has in the

Ee ee oe

grants.”

Thus, underlying the grant of exclusive rights to au-

thors is the recognition that most authors would not devote

themselves to creative work without the prospect of re-

muneration. This philosophy rejects the alternatives of aris-

tocratic patronage or state sponsorship of artists as incon-

sistent with our way of life. By giving authors a means of

securing the economic reward afforded by the marketplace,

tellectual works. As this Court said in Mazer v. Stein, 347

U. S. 201, 219 (1954), the Copyright Act

“is ‘intended definitely to grant valuable, enforceable

rights to authors, publishers, etc., without burden-

some requirements; “to afford greater encourage-

ment to the production of literary (or artistic)

works of lasting benefit to the world.” ’ * * *

“The economic philosophy behind the clause em-

powering Congress to grant patents and copyrights

..- . is the conviction that encouragement of individual

' effort by personal gain is the best way to advance

public welfare through the talents of authors and

inventors in ‘Science and useful Arts.’ Sacrificial

days devoted to such creative activities deserve re-

wards commensurate with the services rendered.”

It is eminently clear then that the Copyright Act was

specifically designed to grant “valuable and enforceable

rights” to copyright owners. There was to be a judicial

“encouragement” of the production of the copyrighted

works, and a consideration of an “economic philosophy”’ to

encourage individual effort “by personal gain.” This “per-

sonal gain” which would “advance the public welfare” can

only be realized through the creator’s own exploitation or

royalties from persons who commercially exploit the copy-

righted works.”

As a result of this philosophy, the courts in applying the

right owners of unlicensed activities. Copyright owners

have traditionally been held to have the right to determine

when and whom to license their exclusive rights. Indeed,

prior to the CATV industry’s attempts to persuade the

courts to ignore such rights, these rights had

“apparently never been seriously challenged. See,

e.g., Goldsmith v. Commissioner of Internal Reve-

nue, 143 F. 2d 466 (2 Cir.) (opinion of Chase, J.)

1™While a purpose of the copyright laws is “to induce release to

the public of the products of [an author's] creative genius,” United

States v. Paramount Pictures, Inc., 334 U. S. 131, 158 . 6)

(emphasis added), (Pet. Br. 68-69, NCTA Br. 16; C. U. Br. 6

the author must be induced by “rewards commensurate with the

services rendered,” Mazer v. Stein, supra, 347 U. S. at 219 (emphasis

added). The commensurability of the reward can only be judged by

the author himself in light of his efforts and needs, and the market

for an inducement to release to the world as a whole. See infra at

53-56. Such a “dedication to the public” concept has never been

accepted in copyright law. See infra at 64.

(dictum), cert. denied, 323 U. S. 774, 65 S. Ct.

135, 89 L. Ed. 619 (1944); Herwig v. United

States, 105 F. Supp. 384, 388, 122 Ct. Cl. 493,

515-17 (1952) (dictum); Milgrim, Territoriality

of Copyright An Analysis of Assignability Under

the Universal Copyright Convention, 12 ASCAP

pare Interstate Circuit, Inc. v. United States, 306

U. S. 208, 227-228, 59 S. Ct. 467, 83 L. Ed. 610

(1939).” United Artists Television, Inc. v. Fort-

nightly, supra, 377 F. 2d at 882-883."

See Fox Film Corp. v. Doyal, quoted supra at 19, 286

U. S. 123, 127-130; Manners v. Morosco, 252 U. S. 317,

325-326 (1919) (Holmes, J.).

Respondents in this case exercised their statutory rights.

They licensed certain performance rights in their works to

particular broadcasters for telecast in the markets and

communities served by those broadcasters. They did not

license nor intend to license Teleprompter to retransmit

royalty-free those works to communities and markets far

distant from and having no relation to the communities

served by the licensed broadcaster. This was so for sound

economic reasons, clearly understood by the court below.

See infra at 45-48.

B. Under all relevant pre-Fortnightly decisions, Tele-

- prompter’s activities in importing distant signals

constitute a performance of the programs embodied

in these signals.

In keeping with the Constitutional and Congressional

ee ee the

courts have consistently rejected the concept of total copy-

right immunity for an entire burgeoning industry.” Rather,

the cases have consistently held that the public performance

right provided by the Copyright Act embraced every means

of communicating the contents of a copyrighted work to

the public whether by motion pictures,” wire transmis-

sions," broadcast by radio and television,” including

broadcast of recorded material and broadcast of material

received from central studio,™ or the reception of a broad-

cast for communication to members of the public by wire.”

The fact that cable television technology was not speci-

fied by the Congress when it enacted the Copyright Act

does not matter. It is immaterial that the particular art by

The only instance of exemption of an entire industry from copy-

~ ically exempted by Congress ia I(e) of the she Act.

specifically exempted in e i

17 U. S. C. §1(e). See ASCAP Br. io 16.

2°Metro-Goldwyn-Mayer Dist. Corp. v. Bijou Theatre Co., 59

F. 2d 70 (ist Cir. 1932) ; Tiffany Prods., Inc. v. Dewing, 50 F. 2d

911 (D. Md. 1931). ‘

*1Harms, Inc. v. Sansom House Enterprises, Inc., 162 F. Supp.

129 (E. D. Pa. 1958), aff'd sub nom. Leo Feist, Inc. v. Lew T:

Tavern, Inc., 267 F. 2d 494 (3d Cir. 1959) ; cf. Walt Disney Prods.

v. Alaska Television Network, Inc., 310 F. Supp. 1073 (W. D.

Wash. 1969).

Jerome H. Remick & Co. v. American Automobile Accessories

Co., 5 F. 2d 411 (6th Cir.), cert. denied, 269 U. S. 556 ogg? F

Davis v. E. I. DuPont de Nemours & Co., 240 F. S 612

(S. D. N. Y. 1965); Dorchester Music Corp. v. National Broad-

casting Co., 171 F. Supp. 580 (S. D. Cal. 1959); Robertson v.

Batten, Barton, Durstine & Osborn, Inc., 146 F. Supp. 795 (S. D.

Cal. 1956) ; M. Witmark & Sons v. L. Bamberger & Co., 291 Fed.

776 (D. N. J. 1923) ; Jerome H. Remick & Co. v. General Electric

Co., 16 F. 2d 829 (S. D. N. Y. 1926).

Associated Music Publishers, Inc. v. Debs Memorial Radio

rir ite 141 F. 2d 852 (2d Gr.), cert. denied, 323 U. S. 766

*Select Theatres Corp. v. Ronzoni Macaroni Co., 59 U. S. P. 2

288 (S. D. N. Y. 1943); Law v. National Broadcasting Co., 51

F. Supp. 798 (S. D. N. Y. 1943).

*°Buck v. Jewell-LaSalle Realty Co., 283 U. S. 191 (1931);

Society of European Stage Authors and Composers, Inc. v. New

York Hotel Statler Co., 19 F. Supp. 1 (S. D. N. Y. 1937).

which the public was enabled to receive the performance:

of a copyrighted work was not in existence when the

statute was enacted.” As the Court of Appeals for the

Sixth Circuit said in Jerome H. Remick & Co. v. American

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

denied, 269 U. S. 556 (1925):

“(T]he statute may be applied to new situations not

anticipated by Congress, if, fairly construed, such

situations come within its intent and meaning.”

The only question then is whether retransmissions of

the sort at issue here are “performances” under the Act,

1.e. whether Teleprompter’s importation into distant com-

munities of copyrighted programs from the communities

in which they were initially broadcast and distribution in

the distant communities is a “performance.” The cases leave

little doubt that under pre-Fortnightly law such retransmis-

sions were deemed to be “performances,” and that under

the Copyright Act both a person who originates a work and

one,who retransmits it to a public not covered by the original

transmission are “performers.”

A patallel case in the field of radio is Select Theatres

Corp. v. Ronzoni Macaroni Co., 59 U. S. P. Q. 288 (S. D.

N. Y. 1943), relied on by the court below (A. xxxiii, 476

F., 2d at 349). In this case it was held that the simultaneous

retransmission by a second radio station of a copyrighted

work that was being originated by a radio station in another

city was an infringing performance. Station WOV in New

Jerome H. Remick & Co. v. American Automobile Accessories

Co., 5 F. 2d 411 (6th Cir.), cert. denied, 269 U. S. 556 (1925);

Harms, Inc. v. Sansom House Enterprises, Inc., 162 F. Supp. 129

E. D. Pa. 1958), aff'd sub nom. Leo Feist, Inc. v. Lew Tendler

avern, Inc., 267 F. 2d 494 (3d Cir. 1959); cf. Kalem Co. v.

Harper Bros., 222 U. S. 55 (1911).

enemy ste

York City had infringed plaintiff’s copyrighted drama by

broadcasting a play copied from plaintiff's work. These

broadcasts were “piped” to Station WPEN in Philadelphia,

which simultaneously retransnpitted the work to its listeners.

Holding that the acts of the retransmitting station con-

stituted a separate infringement of plaintiff’s copyrighted

drama, the court stated:

“The William Penn Broadcasting Corporation

[WPEN] was made a party to this action by an

amendment of the complaint which alleges a sepa-

rate and independent cause of action solely against

the Penn Corporation for the infringement of plain-

tiff’s plays. It retransmitted the episode of the play

“piped” (telephoned) to it by the International

Broadcasting Corporation [WOV] and thereby ren-

dered itself separately and independently liable for

infringement.” 59 U.S. P. Q. at 289, 290-291.?"

Down through the years the Select Theatres doctrine

that simultaneous retransmission of copyrighted material

to the public in markets other than the market of the orig-

inating station is a performance within the meaning of the

i a

‘i :

this Court in Portuightly, S20, Sat Be eee ee

Teleprompter attempts to escape the obvious import of this case

* . distant o,

equi: to the operations of a network affiliated station under the

ortnightly test. See infra at 29-30. Select Theatres certainly makes

no reference to such a concept of responsibility nor do any of the

other cases.

have held time and again that when a central station orig-

nates a program for broadcast in one market and affiliated

stations simultaneously retransmit the program in other

markets throughout the country, each affiliate retransmis-

sion is a separate performance under the Act. See, ¢.g.,

Davis v. E. I. DuPont de Nemours & Co., 249 F. Supp.

329 (S. D. N. Y. 1966), Dorchester Music Corp. v. Na-

tional Broadcasting Co., 171 F. Supp. 580 (S. D. Cal.

1959) ; Law v. National Broadcasting Co., 51 F. Supp. 798,

799 (S. D. N. Y. 1943).

C. Under the test set down by this Court in Fortnightly,

Teleprompter’s activities in importing distant signals

constitute a performance of the programs embodied

by those signals.

Teleprompter treats this Court’s decision in the Fort-

nightly case as if it were the only relevant decision in the

purport to overthrow all of the copyright law made since

the enactment of the Act of 1909. Indeed, except for

limiting the Buck v. Jewell-LaSalle Realty Co., 283 U. S.

191 (1931), to its particular facts (392 U. S. at 396 n.18),

the Supreme Court in Fortnightly in setting forth—its

“broadcaster” versus “viewer” side of the line functional

test, explicitly relied upon and reaffirmed the basic and often

cited earlier cases. 392 U. S. at 398 nn. 23, 24. And if

Fortnightly is to be regarded as an exception to the earlier

cases, then such an exception should, at the very least, be

narrowly construed. See ASCAP Br. 12-22.

1. The Fortnightly case established only a limited copy-

right immunity.

The copyright liability of the cable industry first came

under the scrutiny of this Court in 1968 with the argument

of the Fortnightly case. As initially conceived, a CATV

functioned merely as a well-located antenna to improve —

fringe reception 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 CATVs (located in

Clarksburg and Fairmont, West Virginia) consisted mere-

ly of receiving antennas, amplifiers and cable connect-

ing the antennas to the subscribers. Each of the two

systems carried only the programs of five television sta-

tions located in communities proximate to the cable com-

munities. The distances between the cities in which the

broadcast signals originated and the two cable communities

varied between 52 and 82 miles.” 392 U. S. at 392. If it

had not been for the hilly terrain in and around Clarks-

burg and Fairmont, these signals would have been satis-

factorily receivable by all residents in the communities.

See 391 U. S. at 391 and 337 F. 2d at 875. Indeed some

residents received them in any case.”

Pita mere teeter ely nt ping jhvekaatomer-ow

Conference on Broadcasting, November 17, 1973, in London i

in a concise historical note, this early type of cable system involved

in Fortnightly as “simply « mode of ‘ ity antenna’ service—

whereby an entrepreneur put up a high tower and sold his subscribers

the signals that were ‘in the air’ anyway, and that they themselves

could have picked with a sufficiently elaborate antenna.” The

is set out in in CATV-Newsweekly of Cable Television,

ov. 26, 1973, at pp. 37, 38.

*°Due to the physical nature of television signals the range of such

signals is limited to about 60-100 miles, assuming there are no ter-

rain barriers such as mountains or hills to reduce this range. See

infra at 37.

As the Court of Appeal

To provide satisfactory reception of these nearby sig-

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

nightly on a hilltop two and one-half miles from the centers

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 its paying subscribers. Jd. at

874-875. The two systems, in other words, each 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). Some residents in the two communities,

on the other hand, decided not to make use of the Fort-

nightly facilities and chose to erect cooperative antennas at a

convenient location to alleviate their particular problems in

the reception of the five stations. Jd. at 391-2. Such co-

operative antennas provided essentially the identical services

provided by the Fortnightly community antennas. _

It was in light 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 particular facts that this Court held that

the Fortnightly CATV systems did not “perform” those

programs.

In determining whether or not the defendant systems

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

(d) of the Copyright Act, this Court sought to establish a

test for “performance” in the “light of drastic technological

change” that had occurred since the enactment of the Act in

1909. Jd. at 395-396. This test was based squarely on an

analogy.

Traditionally, this Court said, the producer of a stage

show “performs” within the meaning of the Copyright

Act, but the “viewer” does not. Likewise, when a motion

picture is shown in a theatre, 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,” the 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 theatre 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 theatre 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 ( foot-

notes omitted. )**

Upon review of these historic modes of “performance,”

this Court stated that the resolution of the issue of whether

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

termination of the function that CATV plays in the total

*!This Court clearly intended to include broadcasts of materials

furnished by others—a recorded program obtained from a syndicator

or a network program from a central studio—as performances. If the

unqualified statement in the text that “Broadcasters perform” leaves

any doubt of this, the footnote to that statement removes it:

“Jerome H: Remick & Co. v. American Automobile Acces-

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

Publishers y. 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). Congress

i validated these decisions in 1952 when it added to

in effect

1 : tele Oak’. Get

Elan Woe a eee ua

process of television broadcasting 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.”

Id, at 399. The distinction rests upon a determination of

whether the function of a particular 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 “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.” Jd. at 397; see id. at 400

(emphasis added). Viewers, on the other hand, merely

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

” is also engaged in the business of selling its time

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 receive”; (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

@ 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 without

rebroadcast or other relay service by community antenna.

. "Id. at 400 (brackets in original, emphasis added).

The Fortnightly systems, 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 FCC definition were liable for

“on the viewer’s side of the line.” r

This Court was aware from the amici briefs filed in

Fortmghtly that many cable stations performed far differ-

‘ent functions than those performed by the Fortnightly sys-

tems. However, the facts were clear that the CATV

systems involved in Fortnightly did “no more than en-

hanc[e] the viewer’s capacity to receive” in areas of rough

terrain. 392 U. S. at 399 (emphasis added). All of the

signals involved were to some extent receivable off-the-air

on roof-top antennas and they were all easily available for

reception by tower-mounted antennas in the CATV com-

munities. See supra at 27-28. Counsel for Fortnightly, the

same counsel who now represent Teleprompter, advised this

Court:

“While respondent and some amici raise the dread

specter of CATV systems carrying signals from

New York to Los Angeles * * *, microwave is not

involved in this case * * *; the systems before this

Court are within or near the Grade B contour,

and in the service area of the stations whose signals

are made available to subscribers.” Petitioner’s Re-

ply Brief, filed with this Court in Fortnightly Corp.

v. United Artists Television, Inc., dated March 5,

1968, pp. 1-3 (emphasis added).**

Fairmont was within the Grade B contour of four of the sta-

tions in suit and Clarksburg within the Grade B contour of one.

See 377 F. 2d at 883.

The B contour of a television station is the

of a hypothetical area at whose outer limits television reception

(cont'd)

On the basis of this representation, counsel for Fort-

mghtly urged this Court that its decision in Fortnightly

“must necessarily rest on the facts concerning the operation

of Petitioner’s [Fortnightly’s] community antenna. tele-

vision systems and not on possible or theoretical operations

- of some CATV system in the future.” Jd. at 1-2. In res-

ponse to this argument, this Court specifically limited its

opinion to the particular cable systems before it, stating:

“While we speak in this opinion generally of CATV,

we necessarily do so with reference to the facts of

this case.” 392 U. S. at 399 n. 25. See 392 U. S.

at 392 n. 6; Cross Pet. Br. 16-17. j

It is equally clear that this Court was not including the im-

portation of “distant” signals within that group of CATV

functions it deemed noninfringing.

For one thing, this Court pointed out that the cable

systems which it was considering only “ ‘sell community

antenna service to a segment of the public for which

[broadcaster’s] programs were intended but which is not

able because of location or topographical condition to

\ receive them without rebroadcast or other relay service by

! community antenna. . . .’” 392 U. S. at 400 n. 28 (brackets

in original, (emphasis added). The evidence here, how-

ever, as Clearly understood by the court below, showed con-

clusively that the imported Los Angeles broadcasts, for

example, were not “intended” to be received in Farmington,

New Mexico. See infra at 46. Nor was it “location” in a

the Los Angeles stations. See supra at 12-13.

“For a discussion of CATV systems generally,” the

Court in Fortnightly chose to refer, (392 U. S. at 391 n. 1,)

Mr. Justice Fortas’ dissenting opinion further supports the fact

that importation of “distant” signals was not being considered by

this Court in its Fortnightly opinion. He points out the significant

differences between such activities and the activities of the Fortnightl

systems and he spells out how the majority’s description of the Fort-

nightly practices could not apply to importation of distant signals.

Specifically, he said:

“It may be, indeed, that insofar as CATV operations are

limited to the ical area which the licensed broadcaster

’ (whose signals the TV has picked up and carried) has the

power to cover, a CATV is little more than a ‘cooperative

antenna’ employed in order to ameliorate the i

‘to its week-old opinion in United States v. Southwestern

“Cable Co., 392 U. S. 157 (1968). Southwestern explicitly

recognized that the function of importing distant television

‘signals is different in kind from a local signal reception

service:

“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 transmit

to subscribers the signals of distant stations entirely

beyond the range of local antennae. As the number

and size of CATV systems have increased, their

principal function has more frequently become the

importation of distant signals. [citing statistics. ]

* * * CATV systems, formerly no more than local

auxiliaries to broadcasting, promise for the future

to provide a national communications system, in

which signals from selected broadcasting centers

would be transmitted to metropolitan areas through-

out the country.” 392 U. S. at 163-64 (footnotes

omitted) (emphasis added).

A functional distinction between “local” and “distant”

signals in the copyright area may have been anticipated

by Buck v. Debaum, 40 F. 2d 734 (S. D. Cal. 1929), and,

Jerome H. Remick & Co. v. General Electric Co., 16 F.

2d 829 (S. D. N. Y. 1926), on which this Court in Fort-

nightly relied for the proposition that “viewers do not per-

form” 392 U. S. at 398 n. 24.

Buck v. Debaum was the only one of the early broad-

casting cases which found no “performance” within the

meaning of the Copyright Act. In the case, the district

court was faced with the question of whether a Los Angeles

cafe owner who installed and turned on a radio receiver in

his cafe “performed” the programs embodied by the signals

of the Los Angeles radio stations. The court held that there

was no “performance” of those programs because the sig-

nals at issue were “within the range of reception,” “within

hearing,” and “omnipresent in the air” and because the cafe

owner “did not specifically intend” to pick them up. Jd. at

734-735. The court analogized the cafe owner to “one who

opened a window and permitted the strains of music of a

passing band to come within the inclosure in which he was

located.” Jd. at 735. The court clearly did not include im-

portation of distant signals within this analogy and did not

authorize the copyright-free importation of distant sig-

nals.**

. _- The second case’ relied on by this Court in Fortnightly

for the proposition that “viewers do not perform” makes

it perfectly clear that the importation of “distant” signals

is not a function of a “viewer.” In Remick v. General

Electric, the court held that there was a “performance”

when a person “picked up” by means of a microphone

another’s performance of a copyrighted work and trans-

mitted it to a segment of the public for which the per-

formance was not intended. The court argued as follows:

“Certainly those who listen do not perform, * * *

Can it be said with any greater reason that one who

enables others to hear participates in the * * * per-

formance * * *? Surely not, if, as is argued by

analogy, he merely leaves the window open, so that

the strains of the music may be heard by those in

the street below. Such is not the case of the broad-

caster * * * who throughout the performance of the

orchestra picks up each note, * * * and transmits it

to persons within a radius of several hundred miles

so that they can hear the original sound. It is not

__“Teleprompter’s bland exhortations to the contrary, Pet..Br..69,

are made with no discussion of the facts or reasoning of the court.

enough to say that the broadcaster merely opens the

window, and the orchestra does the rest.” 16 F. 2d

at 829.

The “open window” analogy might have been applicable

to the activities of the primitive local reception, antenna on

the hill, CATV systems that were involved in Fortnightly.

See supra at 27-28. The Teleprompter stations involved

here, however, do not merely “open” the windows of the

viewers in Farmington, Great Falls, Rawlins and Elmira.

“Opening” the television window by merely putting up

an antenna on some high point outside of Farmington,

Great Falls, Rawlins or Elmira would not have enabled

anyone in those areas to receive the signals held by the

Court of Appeals below to be “distant.”

Finally, the Court’s reliance in Fortnightly upon Select

Theatres, supra at 24-26, cited at 392 U. S. at 398 n. 23, for

the proposition that “broadcasters perform” indicates that

this Court recognized that the importation of distant signals

was a function different in kind than the reception service

with which it was then dealing and, indeed, was the function

of a “performer.” This was correctly recognized by the

Court of Appeals below (A. xxxiii, 476 F. 2d at 349) and

vainly struggled with by Teleprompter. Pet. Br. 47-49.

2. Importation of distant signals is a function that falls

on the broadcaster’s-performer’s “side of the line” and

is not that of a “passive beneficiary.”

(a) The concept that there is a difference between

“local” and “distant” broadcasting signals is well

established and recognized.

Notwithstanding Teleprompter’s attempts to suggest

that the concept of “distant” signals is a peculiar invention

of the Court of Appeals, e.g., Pet. Br. 50, the fact that there

are “distant” signals and that they are a very different

matter than “local” signals is recognized by everyone

familiar with broadcasting. As seen supra at 24-26, 34-36,

this distinction has long been recognized for copyright pur-

poses by the courts. It has also been recognized for a

variety of purposes by Congress, the FCC, copyright

holders, and Teleprompter itself.

cast although occasionally some penetrate a bit further

tion by conventional

(J A 356).” Reference to A. 356a clearly shows that Mr. Davis

was talking of CATV hi ce gig nee Rag aad enema §

nally, in the testimony at A. 477a-4: to Peti-

n ; \-478a, M Cohen contrary

pi antennas Figs Camas of f50-180 ‘nas Ber Br. 12 n.

_In recognition of the physical nature and limitations of

radio and television broadcasting, the Communications Act

of 1934, §§ 303(c), (d), (h), empowered the FCC to: “As-

sign frequencies for each individual station,” “determine

the power which each station shall use,” “determine the

location of * * * individual stations,” and “have authority

to establish areas or zones to be served by any station.” 47

U.S.C. §§ 303(c); (d) and (h). Pursuant to these powers

and others granted it by the Communications Act, the FCC

has supervised the establishment and maintenance of a

nation-wide system of local radio and television broadcast-.

ing stations, each with primary responsibility to a particular

community.**

The various actions taken by the FCC down through.

the years in maintenance of this system—e.g., the assign-

ment of stations to particular communities, the assignment

of the same frequencies to several stations in geographically

different communities, the establishment of areas of pri-

mary responsibility for each station, the limitation of the

power of the transmitting antennas, the definition of tele-

vision reception contours for each station—have firmly es-

tablished the fact that each and every broadcasting station

operates in its own limited community or market and serv-

ices the public only to the extent that the public is found

within its market.” elt

Similarly for the FCC, upon whose cable rules and

regulations Teleprompter and the NCTA rely so heavily,

Problems by B

cast Applicants.” 27 FCC 2d 650 (1971). See MPAA Br. Point IT.

_.**The fact that the boundaries of each icular broadcast station

market are not and cannot be drawn with lute precision, again due

to the nature of television waves, has never before now resulted in a

to the validity of this fact. See, e.g., Fortnightly, 392 U. S.

at 400 n. 28. . . 7 ;

_ In a recent.speech in London, Chairman Burch concisely set forth

the basic concept of FCC broadcasting regulation as following “from

(cont’d)

signals has played a major part in its cable television regu-

lations since the First Report and Order on Microwave-

Served CATV, 38 FCC 683 (1965), and the Second Report

and Order on Community Antenna Television Systems, 2

FCC 2d 725 (1966). See infra at 51, 56-60. :

. As a result of these actions, only local signals have

traditionally been available to television viewers through-

out the nation, and signals originating from stations be-

yond this geographical range and in separate markets ha

been known as “distant signals.” That this distinction

exists for copyright purposes as well as for engineering

and regulatory purposes has been recognized by the courts

ever since the early days of broadcasting. See supra at 34-

36.

The FCC itself has also, recognized the distinction for

Cable Television Report and Order, 36 FCC 2d 143, 290

(1972), FCC Chairman Burch said:

“* * * how about the courts? But, to the courts, the

issue is not one of fashioning an appropriate regu-

latory approach. The Supreme Court in Fortnightly

(392 U. S. at 401-402) made it clear that only

Congress can do that. The Court’s job was to say

whether signal carriage by cable is or is not a ‘per-

formance’ within the meaning of the 1909 Copy-

right Law, and it held that carriage of off-the-air

signals (Grade B contour and just beyond) is not.

The still open question—in CBS v. TelePrompTer,

S. D. N. Y.—is whether cable carriage of distant

the fundamental rationale of our ‘allocations scheme, under which

every station is

signals via microwave comes within the * * * [copy-

right] Law. * * *”

As will be shown below, there can be no doubt that this

distinction between local and distant signals is basic to the

economic relationships in the industry between the copy-

right holders and the broadcasting stations. See infra

at 4448. For the moment though, it might be noted

that Teleprompter itself recognizes the distinct commercial

value of programs from distant televisions stations. It

advertises these imported television programs as “Exclusive

on Cable TV Tonight” or “Cable TV Exclusive” (A. 540a,

E-214-219, E-224-225, E-228-229). It is interesting that

these programs which Teleprompter advertises as exclu-

sively its own are the very programs that it wishes to im-

port royalty-free on the ground that they are “intended to

be received by the public.” See infra at 64.

(b) Under the Fortnightly test Teleprompter’s cable

television stations when they import “distant sig-

nals” fall on the broadcaster’s “side of the line”

and are subject to copyright liability.

One of the indicia of “broadcaster” activity for copy-

right purposes, according to this Court in Fortnightly, is the

“selecting” and “procuring” of the programs to be viewed

by those receiving the signals. The source of the programs

selected or procured was held immaterial. “He [the ‘broad-

caster’] may produce it himself * * * or he may obtain it

from a network or some other source.” 392 U. S. at 397.

A viewer, on the other hand, though active to the extent of

buying and operating a television receiving set, the Court

found to be primarily a passive “receiver” of whatever

broadcast signals happen to be in range. Jd. at 397-398."

**Dictionary definitions illustrate aptly the difference between

the word “receive” whith implies that something comes “into one’s

presence * * * while one is passive” and the word ” which

imports taking “particular care or effort” in order to “cause” some-

to happen. See, ¢.g., WessTER’s THIRD NEw INTERNATIONAL

Dictionary, 1961.

In Fortnightly, this Court found that the cable systems

in question neither “selected” nor “procured” the programs

and stations they carried. Not so here. Indeed, as the Dis-

. trict Court below acknowledged, “[w]here they import dis-

tant signals * * * Teleprompter’s systems make a decision

about which stations should be received.” (A. 118a, 355

F. Supp. at 623.) In short, Teleprompter systems do “se-

lect” and “procure” the distant signals.

At trial Teleprompter’s Chief Executive Officer testified

that in selecting the distant stations to provide its subscrib-

ers Teleprompter deliberately considered the type of pro-

gramming offered by the various distant stations, the times

at which the stations broadcast particular programs and the

program arrangement of the stations. It was only upon

consideration of all these factors and in light of its particu-

lar programming needs and the format it wished to develop

that Teleprompter purposely selected the particular signals

to be imported and transmitted over its cable stations (A.

568a-570a).*° Moreover, there were occasions when Tele-

prompter (unlike the situation in Fortnightly) chose to re-

transmit only particular segments of the broadcast sched-

ules of some of the stations it imported, so as to fit more

neatly into the format it desired to present.*

*°See also the trial testimony of Gordon Gray and Dale Moore, ex-

perienced broadcasters and former cable television operators (A.

371la-372a, 412a, 418a).

The extent of Teleprompter’s control over the selection of the

programs it imported and its audience’s viewing fare is clearly demon-

strated by Irving Kahn’s threat to the Mayor of Farmington not to

bring in the Los Angeles signals if the town went ahead with plans to

buy and upgrade the translators which made the Albuquerque si

available without payment off-the-air in Farmington (A. 612a).

“For example, the Farmington cable station transmitted to its

subscribers KREZ-TV, the CBS affiliate in Durango, Colorado, on a

part-time basis, using the same cable channel to transmit KNME-TV,

an Alb ¢ educational channel at all other times (A. 187a-

188a). Similarly, the Great Falls cable station transmitted KBLL-

TV,. Helena, over cable channel 8 only part-time, at all other times

transmitting KVED-TV, Salt Lake City (A. 221a).

(cont’d)

The decisions as to which stations and programs would

be selected for importation were not limited in any way by

the availability of stations relatively near a cable community.

Teleprompter chose from a virtually unlimited number of

. consciously bypassed i

dent stations in Denver (KWGN-TV), Phoenix (KPHO-

TV), Las Vegas (KHBV-TV), Nogales, Arizona

(KZAZ-TV), and Pocatello, Idaho ( KTLE-TV), notwith-

standing the fact that these cities with the exception of

Las Vegas are, like Farmington, in Mountain Time, while

Los Angeles is in Pacific Time.* There is currently no

FCC rule, and there never has been any, requiring or en-

couraging such “leapfrogging” by cable television stations.

Having “selected” the~stations and programming it

« when Ti » Great Falls, ended in i

been impossible. Rather, Teleprompter stretched out across

the country in order to “procure” for its cable systems the

signals of those stations which it had selected. In order to

miles away, for example, Teleprompter had to arrange with

private microwave carriers for the carriage of the signals

from a receiving antenna just outside of Los Angeles to

Farmington. Since there was no direct microwave service

between Los Angeles and Farmington, Teleprompter itself

had to scout out an intricate hookup “via twenty-three steps

over a roundabout, 1,300 mile route to establish the link”

common carrier rules, 47 C. F. R. § 21.713. If Tele

prompter had not taken even one of these various affirmative

steps or if it had met with failure at any stage, the Farming-

ton audience would still be without the Los Angeles pro-

grams.

The function of a Teleprompter cable station in im-

porting “distant” signals is clearly not that of a simple

antenna reception service. See supra at 42. Rather the

virtually reaching out over the entire Northwestern quadrant of the

United a catia ot escent catty nly seven of the 32

cable station functions precisely like a network-affiliated

broadcast station which imports network programs origin-

ated in distant broadcasting centers, usually Los Angeles or

New York, by the same methods as Teleprompter—micro-

wave, off-the-air, cable (A. 17]a, 316a, 319a-320a, 388a;

cf. 392 U. S. at 397)—and then distributes those network

programs in its local community. As the affiliated station

chooses and selects the network whose programs it desires

to distribute—and, indeed, the network programs it desires

to broadcast—so too the Teleprompter cable station chooses

the station and programs it desires to distribute. As the

affiliated station generally broadcasts the bulk of the pro-

gram schedule offered by the network with which it has

chosen to affiliate, so the Teleprompter cable station general-

ly distributes the bulk of the program schedule of those

Stations it has chosen to procure.

On the basis of these facts, experienced broadcasters

testified without contradiction that the importation of

distant signals made the Teleprompter stations functi

equivalent to broadcasters (A. 298a-299a, 373a-374a, 387a-

388a, 399a-400a). And, on the basis of these facts, the

Court of Appeals below correctly concluded that the Tele-

prompter cable television stations when importing distant

signals are under the Fortnightly test “functionally equiva-

lent toa broadcaster and thus should be deemed to ‘perform’

the programming distributed to subscribers on these im-

ported signals.” (A. xxxiii, 476 F. 2d at 349.)

D. Application of the Fortnightly doctrine in the

mer urged by Teleprompter, 0 as to grant conyrighs

The physical and regulatory structure of television

markets and broadcasting, as discussed supra at 36-39, have

long been recognized by the program suppliers, the holders

of copyrights for materials used on television and those

involved in the production of such materials, e.g., authors,

music publishers, actors, directors and other creative per-

sonnel. It is on the basis of this recognition that copyright

owners, including plaintiffs, have entered into negotiations

for the license of their works and have actually licensed

them.

This may be illustrated by the traditional use of net-

work television programs—programs which copyright

holders license for initial transmission by all television sta-

tions across the United States affiliated with a particular

television network. Proof was offered at trial, to the effect

that the creation of such first run television programming

by the copyright owners is expensive and highly risky. At

the time of the initial investment and commitment of funds,

no one knows whether the program will be attractive to

advertisers or to the public on the original network show-

ing. As a result, the license fees that the copyright owners

receive are limited, a substantial part of risk of loss being

theirs (A. 314a). See MPAA Br. Point I(3).

Upon completion of a network run, however, the copy-

right holders may often syndicate a program to individual

stations, television or cable, thoughout the country for

further broadcast and rebroadcast or wire transmission in

their respective local markets. The copyright holders can

and do syndicate their programs several successive times,

up to the point where the programs no longer attract an

audience and advertisers. For each separate syndicated

broadcast in a particular television market the copyright

holder gets a license fee, recoups the balance of his invest-

ment and often makes his profit (A. 31la, 313a, 423a-425a,

428a-429a, 432a-434a, 436a-437a).*

**From these syndication fees, benefits also accrue to the other

creative personnel involved in the industry, including the writers of

screenplays, writers and publishers of music, actors, directors, etc.

(cont’d)

distribution in the

the ability of the copyright holder to subsequently license

his program for a run in that second market.“ And even if

additional

the ies when made their

wcringenans’ Ch bide 4280-4294) The interest

Gmportatntive Personnel and the economic effects of Teleprompter’s

in this docket jointly by the Writers Guild of America

the Screen Actors Guild, ‘and the Directors Guild af Ace ee

ee rehome ae by the: . the possibility

i concerned with

that others might be i hes soctoes nie by

carrying and di Programs in which Tele-

i had started

two suits, one in F Court and one before the FCC to a

Canadian i of its cable station in Sault St. Marie, Onterin

from using microwave and cable to i American television sig-

nals which up until recently were available in the commeane y

on the Teleprompter cable. See the complaints in Teleprompter Corp.

v. Lake Superior Cablevision Ltd., File No. M42-72 CA3 (W. D.

(cont’d)

it were possible after a cablecast of the imported program

to syndicate the program in that second market, the copy-

right holder would not be able to obtain as great a fee for it

as he would have if the program had never previously been

shown in that market. A second “run” fee is smaller than

a first “run” fee and, similarly, a third “run” fee is smaller

than a second “run” (A. 3lla, 434a-437a). Thus given

the fact that with each run there is a smaller audience in-

terested in seeing the program, the intent of the copyright

holders in licensing their programs for broadcast in par-

ticular markets makes perfect economic sense. See MPAA

Br. Point I (2).

Traditionally, the right of a copyright holder to grant a

license for only certain uses and freely to determine when

and to whom to issue a license for other uses has never been

challenged, whether or not the particular choice made

sound economic sense. M. Witmark & Sons v. L. Bam-

berger & Co., 291 Fed. 776, 779-780 (D. N. J. 1923); see

cases cited supra at 21-22. The record here clearly indi-

cates that Respondents, for sound economic reasons, did not

grant nor intend to grant a royalty-free copyright license to

Teleprompter’s cable television stations which would per-

mit those stations to import their copyrighted works into

far distant markets for the purpose of enhancing Tele-

prompter’s revenues and destroying their own opportunities.

The Court of Appeals below recognized the record facts

concerning this intent and the economic interest on which

it is legitimately based; and it gave to them the weight it

was bound to give under the Copyright Act and the cases

applying it (A. xviii n. 2, 476 F. 2d at 342 n. 2).

Mich., complaint filed June 5, 1972) and Teleprompter Cable Sero-

ices, Inc. v. American Microwave and Communications C Corp., FCC

Dkt. No. 72-643, complaint filed pion ne Rewtent Se

lack of jurisdiction, 35 FCC 24 943 (1975

“See,-e. g., Mazer v. Stein, 347 U. S. ae 30, 56 38 {ism Wash-

ingtonian Publishing Co. v. Pearson, 306 U. S.

Herbert v. Shanley Co., 242 U. S. 591, SO gOS (i9i7) ‘Holes

(cont’d)

cast” the copyrighted works within the meaning of the

; ication Act or the rules promulgated by the FCC.

The rights of the copyright holders are based on the

Section 8, Clause 8 of the Unrrep States CoNsTITUTION,

which grants Congress the power “to promote the Progress

of Science and the useful Arts, by securing for limited

‘Times to Authors and Inventors the exclusive Right * * *” to

their works, It was this Act of Congress and this Consti-

tutional provision with which the Court of Appeals below

ignored as irrelevant. .

There is no substance to the contention that the Com-

munications Act amends, limits, modifies, supersedes, or

makes exceptions to the Copyright Act. Section 414 of the

Communications Act, 47 U. S. C § 414, specifically pro-

vides that:

“Nothing in this chapter contained shall in any way

abridge or alter the remedies now existing at com-

mon law or by statute, but provisions of this chapter

are in addition to such remedies.”

In FCC v. Pottsville Broadcasting Co., 309 U. S. 134,

138 (1940), this Court said, “The Communications Act is

‘not designed primarily as a new code for the adjustment of

conflicting private rights through adjudication.” Similarly,

in Cable Vision, Inc. v. KUTV, Inc., 335 F. 2d 348, 349

(9th Cir. 1964), cert. denied, 379 U. S. 989 (1965), the

Ninth Circuit noted that Congress “had not pre-empted the

adjustment of property rights in the communication field

by passage of the Communications Act.’ 3

-Nor has the FCC ever contended that its rulings or the

provisions of the Communications Act can or should over-

Tide copyright obligations. On the contrary, the FCC has

consistently stressed that it has never intended by its cable

rules to “affect in any way the pending copyright suits,

involving matters entirely beyond * * * [the FCC’s] juris-

diction.” Indeed, the Commission has bluntly stated

that its rules afford “no defense * * * in a copyright suit.”

Second Report and Order, Community Antenna Television

Systems, 2 FCC 2d 725 at J 108 (1966).

- ~ On February 2, 1972, the FCC adopted a Cable Tele-

vision Report and Order, 36 FCC 2d 143, in which certain

“exclusivity rules” were imposed on the Cable Television

Industry (47 C.F.R. 76.91-159, set out at 36 FCC 2d at

233-236) and the number of distant signals a cable station

may import was limited (47 C.F.R. 76.51-65, set out at 36

FCC 2d at 220-233). Teleprompter and the NCTA now

contend that by these rules the FCC has taken into con-

‘sideration all the legitimate interests of the copyright own-

ers and that as a result no further protection is due them.

‘Pet. Br. 54-55; NCTA Br. 15.”

*The only case cited by Teleprompter in support of its that

this Court Bre ag the onrrens Act is Farmers Union v. Woar

360 U. S. 525 (1959). That case is by no stretch of the imagination

i to the instant situation. In it this Court held that a section

of the Communications Act specifically denying a broadcasting stati

result in the pre-emption of a Congressional act by agency regula-

tions. Pet. Br. 73. Even Consumers Union _ Amicus in support

of Teleprompter recognizes the inapplicability of Farmers Union for

this proposition. C. U. Br. 18.

**It might be noted the NCTA has very recently filed with the

FCC a Petition for Rule-making in the Matter of Amendment

Subpart F. of Part 76 of the Commission’s Rules and Regulations

(cont’d)

“* * * one of the gut issues of the cable controversy

[is] that cable remains an uneasy outsider with

respect to the programming market. And only when

its right to the use of its basic product is secure and

regularized, only then will its future be unclouded.

It is this issue that the Federal Communications

Commission can neither resolve, nor avoid.” 36

FCC 2d 143, 290 (1972).

“Copyright policy,” as Chairman Burch told Congress in a

letter dated August 5, 1971, “is most appropriately left to

the Congress and the courts. * * * In short, we believe that

the two matters—cable regulation and copyright—can be

separately considered.”

distant stations must, like any other user of copyrighted

works, pay royalties for the use of those programs.”

This is wholly in accord with what the FCC itself has

said in its Further Notice of Proposed Rulemaking (Cable

Television Docket), 27 FCC 2d 13 (1971), at $4:

“The copyright owner must be given fair and ad-

equate compensation for his creative work; that is

the cornerstone of the whole system.”

“First,” Chairman Burch recently told a gathering of the

NCTA, “we have to assume a copyright resolution, to

establish beyond any question the principle that cable pays

for the product it uses.”™

B. Teleprompter’s economic argument, based on a mis-

use of the term “Coverage Area” of broadcasting

stations, is strained and incorrect.

Teleprompter seeks to becloud the significance of its

importation of signals into communities far distant from

the market area of the originating broadcasting sta-

tions by relying on what it calls the “coverage area”

of the various broadcast stations as purportedly

D th held cake ieee an? Union al-axpetes ene.

Br. 18-19. But as the NCTA itself admits these are objectives that

the FCC has in the past attempted to implement by means of UHF

broadcasting, translator, and satellite stations. N A Br. 6-7; see

other means by which the FCC has implement

the same , are i liable under the

right Act and do in fact obtain ight licenses from

owners. is certainly no reason cable stations should be

treated differently, even assuming the had the power, which

it clearly has not, to cause them to be treated di .

88Address by FCC Chairman Burch te the whoa Cable Tele-

vision Association, June 19, 1973.

of the New York station. Moreover, it would require the

absurd belief that a local New York department store

which advertised on the New York station would be pre-

pared to pay approximately double for its advertising since

the inclusion of Tokyo would double the station’s “coverage

area.”

Tokyo is not in the New York market any more than

Farmington is in the Los Angeles market or Great Falls

in the Salt Lake City market despite.the selection and pro-

curement of a Teleprompter cable station, a selection that

might change and a procurement that might cease at any

time. These ions and procurements are made by Tele-

prompter for its own benefit without the consent of the

a copyright owner could not base any royalty negotiations

on such a “coverage area” which might be enlarged or con-

tracted at any time, without notice, at any cable station’s

whim.

Contrary to Teleprompter’s arguments, Pet. Br. 50-52,

the FCC has found that distinct localized markets do exist

in the television industry. See supra at 38; MPAA Br.

Point II. The FCC has specifically identified many of

them in its distant signal importation regulations. 47

began the importation of KC X-TV into Great Falls, that Cascade

County sig, Sepa within the “coverage area” of KCPX-TV for ARB

purposes. TELEVISION FAcTBOOK, vol. 42 at p. 809-b (1972-73).

: Ss rte to import KTTV into Farmington in November,

y coverage

813-b. This results from the fact that Tel rompter imports KCPX,

but not KSL into Great Falls. . i

C. F. R. § 76.51 as set forth in Cable Television Report

and Order, 36 FCC 2d at 220-221. This fact, in itself,

negates Teleprompter’s “coverage area” argument.

Teleprompter attempts to escape this conclusion by

maintaining that the FCC used ARB ratings in ranking the

television markets. Pet. Br. 18, 61. This assertion is

highly misleading. Rather, recognizing the fact that ARB

generally includes ex post facto cable coverage in its tele-

vision station “coverage areas,” the FCC, to properly rank

the various television markets and correctly identify which

signals are “local” and which “distant” for the purpose of

its cable regulations, had ARB prepare a special study of

television station circulation from which cable “coverage”

was specifically excluded.” It was on the basis of these

ARB studies, from which cable station “coverage” was

specifically and intentionally excluded, that the FCC com-

piled its television market definitions. Cable Television

Report and Order, 36 FCC 2d 143 at ff 81-85; 47 C. F. R.

-§ 76.54(a) set out at 36 FCC 2d at 229; and Appendix B

to Memorandum Opinion and Order on Reconsideration of

the Cable Television Order, 36 FCC 2d at 378 (1972)."

Indeed, any other approach by the FCC would have

flown directly in the face of its “long standing allocations”

and market identification policies which

“* * * do not contemplate that a major television

market should become to a significant extent, merely

a satellite of another major market for television

purposes, since that would thwart the local service

At notes 33 and 92 of Petitioners’ Brief, Teleprompter briefly

acknowledges that this ARB study was “special” in some way.

*"By this same token, the granting to a cable station of a micro-

wave license to retransmit a certain broadcast station’s signal is not

an expansion of that television station’s natural marlet. Pet. Br.

51-52. If such were the case, the precaution taken by the FCC in the

concept of the Communications Act. (See Sections

303(b), 303(h) ; see legislative history of Section

303(s) ; Second Report, 2 FCC 2d at 770-771). As

stated in the Midwest case (13 FCC 2d at 501), if

such a result were deemed in the public interest, the

Commission would follow the direct approach of

granting increased height and power to stations in

the largest communities and authorizing them to

operate translator and satellite facilities in other

sizable communities.” Notice of Proposed Rule-

making and Notice of Inquiry, 15 FCC 2d 417 at

934 (1968).” ;

Importation of distant signals copyright-free by cable

stations, rather than being of value to copyright owners

“Although CATV may in some circumstances make

possible ‘the realization of some of the [Commis-

occasions, it has neither the authority nor the intent to t copy-

right license or aflect copyright eights. See supra at 50-53.

"It is irrelevant that television stations may claim certain

distant areas to be within their “coverage areas” or that rating

sion’s] most important goals,’ First Report and

Order [38 FCC 683] at 699, its importation of dis-

tant signals into the service areas of local stations

may also ‘destroy or seriously degrade the service

offered by a television broadcaster,’ #d., at 700, and

thus ultimately deprive the public of the various

benefits of a system of local broadcasting stations.”

392 U. S. at 175 (footnote omitted).

In its Second Report and Order (1966), the FCC con-

cluded that unrestricted cable importation of distant signals

may harm the public interest by: (1) discouraging new

program sources (Second Report and Order, Community

Antenna Television Systems, § 153 n. 70, 2 FCC 2d 725,

787 (1966) ) ; (2) destroying local broadcasters (Id. {| 123,

2 FCC 2d at 774); and (3) precluding the establishment

of educational broadcasting stations (Jd. | 93, 2 FCC 2d

at 762).

“Indeed the anomalous conditions [cable station

receipt and retransmission of distant signals] could

have an adverse effect on development of new pro-

gram sources. Multiple owners such as Westing-

house or Metromedia have undertaken some develop-

ment of new programs; this endeavor promotes the

“public interest by increasing the programs available

and diversifying their sources. But, as Westing-

house points out, the undertaking is a difficult one,

which might not be sustained if the programs are

brought into the major markets by’CATV systems

of significant size or impact, thus diminishing or

ending the opportunity for the sale of the programs

in these markets. The same consideration might. be

pertinent in the case of the development of a fourth

network.” Id. {| 153 n. 70, 2 FCC 2d at 787.

60 .

Similarly, in its Notice of Proposed Rulemaking and

Notice of Inquiry in Dkt. No. 18397, 15 FCC 2d 417

(1968), the FCC expressed quite emphatically its concern

about the copyright-free importation of distant signals by

cable television stations and the impact of this inherent

“unfair competition” on broadcasters :

“* * * because CATV presently stands outside the

competitive TV program distribution market (para-

graphs 132-133, Second Report), an anomalous and

completely unfair situation is presented. * * * And,

even more important, both the CATV system and

the broadcast station are large scale operations com-

peting for audience—yet the one pays for its product

and the other without any payment, brings the same

material into the community by simply importing

the distant signals (para. 135, Second Report).

“* * * The unfair competition * * * will be a

significant factor in the development or healthy main-

tenance of television broadcast service.” Jd. at [§ 35-

36." ;

Just last month Chairman Burch reaffirmed ,this concern

with the “unfair competition” aspects of cable television’s

**When Teleprompter feels that it is being forced to compete on

oni some. SR ak Ree ae CaN Te eee eee ee

. . be placed

In the Matter of Various

to Hotels and Similar

al. at J 16-17 (May 21,

of the NCTA in the

“Inevitably, cable television with its multiplicity of

channels poses a very real threat to conventional

broadcast television; it tends to carve up the avail-

able audience ; it competes for some of the same pro-

gramming; and, ironically enough, it builds this

competitive threat on the base of retransmission of

‘broadcast signals for which up to now it pays

nothing. (This is another facet of the cable problem!

Cable systems do not yet pay for the product they

use, insofar as this product is conveyed over broad-

cast signals, and this unresolved copyright issue is a .,

principal barrier to cable’s acceptance and to its

assured growth. * * *)”*

It is quite clear that the Court of Appeals correctly un-

derstood the economics of the broadcasting and cable indus-

tries." |

C. Teleprompter’s “license implied-inlaw” argument,

even recast as a “dedicated to the public” argument,

has no basis in law and has been repeatedly rejected

by the courts.

. Inits struggle to find a way to escape liability for what

is clearly an infringing performance, Teleprompter resur-

rects yet again the “license implied-in-law” argument. Pet.

Br. 73-78. This argument was explicitly rejected by the

Court of Appeals in Fortnightly with respect to the “local”

signals that were there involved. 377 F. 2d at 881-883.

*Address in London, November 17, 1973. The speech is set out

in full in CATV-Newsweekly of Cable Television, November 26,

1973, at 37, 42.

: *'Teleprompter’s arguments to the contrary based on the Cost of

Br. 60-61. Respondents do not deny that “pricing in_the industry is

(cont'd)

Though this Court never explicitly reached the question of

“license implied-in-law” in Fortnightly, 392 U. S. at 401 a.

32, it implicitly did so. As the Court of Appeals rightly

pointed out (A. xxxviii n. 18, 476 F. 2d at 352 n. 18), the

compromise proposed in Fortnightly by the Solicitor General

was based on a “license implied-in-law.” The compromise

was rejected. This Court refused to distort the Copyright

Act by accommodating it to allegedly conflicting policies of

communications and antitrust. Rather, this Court insisted

that such a job was for Congress and it merely took “the

The attempt to resurrect the “license implied-in-law”

theory here is even more misguided than originally, for

here the question is whether such a license can be implied

with respect to “distant” signals broadcast in markets

wholly unrelated to markets served by the Teleprompter

cable television stations. The Solicitor General, who sup-

ported the concept of a “license implied-in-law” theory in

Fortnightly, supported it only with respect to “CATV

carriage of signals within the normal service area of the

originating stations.”**

While the cases relied on by Teleprompter, the same

which were relied on in Fortnightly for this proposition,

based upon ‘anticipated and actual public response’.” Respondents

say only that the looked to is the of the public

in the particular which is covered by initial broadcast

ee ae oe cee Oak attention is

distant communities which the

i This is based on i i

recognized and understood by

pra at 44-47, recognizes

—< and distant signals, ey xt

ing Teleprompter’s atttempts to brush it under rug. Id. at :

See MPAA Br. Pt. I(2).

did not lead to any implication

the case of the “local” signals there at issue,

tainly cannot lead to any such implication here. The “long

line of cases” to which Teleprompter refers, Pet. Br. 75, is

just non-existent. As the Solicitor General in Fortnightly

readily admitted, “We recognize that there is a significant

lack of precedent for the implication of a copyright license

in light of policy considerations.”™

Acs the Solicitor General said, “The dictum in Jewell-

LaSalle (283 U. S. at 199 n. 5) is not persuasive au-

thority * * *.”** Nor is Buck v. Debaum relevant. That

case, as Fortnightly, merely held that the receipt of a local

signal was not a performance protected by the Copyright

Act. See supra at 34-35. The other three cases cited

by Teleprompter as supporting the license are completely

inapposite. Both Aro Mfg. Co. v. Convertible Top Replace-

ment Co., 377 UTS, 476 (1964), and Adams v. Burke, 84

U. S. (17 Wall.) 453 (1873), are patent cases which this

Court in the only other case cited by Teleprompter, Bobbs-

Merrill Co. v. Straus, 210 U. S. 339, 346 (1908) said

“are not altogether controlling’ ” due to the “ ‘wide dif-

ferences’” between the rights protected by the copyright

statutes and those secured by the patent statutes. Nor does

the Bobbs-Merrill case itself support any type of “license

implied-in-law” under the copyright statutes. That case

merely established the “first sale” doctrine whereby a copy-

right owner who has authorized the sale of a copy of his

work, #.e. the transfer of title to the principal copy, can-

not control the resale of the copy, although he can prevent

the reproduction, recording, or performance of his work

from the copy.™ -

S/d. at 7-8.

4] bid.

Realizing the weakness of this “license implied-in-law”

argument under copyright precedent, Teleprompter sup-

ported by the NCTA attempts to reclothe it so that it

would appear to have the blessings of the Communications

Act. Teleprompter maintains that, as a result of the Com-

munications Act’s definition of broadcasting, 47 U. S. C.

§ 153(0), once a copyrighted work is licensed to any broad-

caster and once it is broadcast by any one broadcast station

anywhere, it must be “intended” for the public everywhere

and in the public domain. Pet. Br. 69-70, 76-77; NCTA

Br. 12.

Teleprompter, of course, in advancing this argument

ignores the active-passive dichotomy set down by this Court

in Fortnightly as well as the explicit proviso in § 414 of

the Communications Act that no private rights are abridged

by the provisions of the Communications Act. See supra

at 50. Similarly it ignores the fact that this “dedica-

tion to the public” theory has been universally rejected by a

long line of judicial precedent going back to the early days

of the Copyright Act, a line which was reaffirmed by this

Court’s decision in Fortnightly Where the copyright liability

of broadcast network affiliates was restated. 392 U. S. at

398 n. 23.

If a license for Teleprompter’s activities in importing

programs one-quarter of the way across the country from

agreement controling the subsequent sales of the book.”

See, e.g., Ferris v. Frohman, 223 U. S. 424, 435-436 (1912)

. . . the public performance of the play is not an abandonment of

it to the public use.”) ; King v. Mister

07 (S. D. N. Y., 1963);

”), aff'd.,

denied, 298 U. S. 670 (1936) ; Nimmer,

(cont’d)

‘ | 65

Les Angeles to Farmington is to be implied here, it must

be implied under the Copyright Act. As the Court of Ap-

peals below correctly recognized there is just no basis for

such an implication (A. xxxviii n. 18, 476 F. 2d at 352

n. 18).

D. The rule of the Court of Appeals below does not

the viability of cable television.

Other arguments having failed them, both Teleprompter

and the NCTA present all manner of dire predictions as to

supposed effects of holding cable television stations liable

under the Copyright Act for the performance of

they import from distant stations. Pet. Br. 5, 14, 29-30, 32-

33, 37-38, 55-56, 66-67, 78; NCTA-Br. 12-15. They raise

the specter of television networks exercising their alleged

powers to drive cable television stations out of markets

and charge that the effect of this will be to deprive the

public of access to cable television and its great benefits.

Pet. Br. 5, 14, 29-30, 37-38, 55-56, 66-67, 78; NCTA Br.

12, 15. They complain that there is a lack of any “mecha-

nism” by which cable television operators can negotiate

with program suppliers for copyright licenses. Pet. Br.

218 “performances”) ; Davis v. E. I. DuPont de Nemours & Co.,

249 F. Supp. 329 (S. D. N. Y., 1966) ; Select Theatre Corp. v. Ron.

zoni Macaroni Co., 59 U. S. P. O. 288 i

*It should be noted tisat in all the vari

that have been introduced down through the

38; NCTA Br. 14-15. They urge that application of the

rule established by the court below would “inundate”

cable television stations with litigation totally disruptive

of their operations. Pet. Br. 32-33, 66; NCTA Br: 12-13.

They charge that potentially huge damages, as a result of

this decision, threaten the very existence of cable television

stations. Pet. Br. 33, 67; NCTA Br. 3, 13-14. These

claims are without merit.

With respect to the specter of “network” domination

Teleprompter appears to rest solely on one CBS press

release, which it argues shows that CBS plans to use its

power over its copyrighted programs to maintain its control

over the broadcasting industry and to deprive large seg-

ments of the public of television service. Pet. Br. 5, 29-30,

37-38, see 14, 55-56, 66-67, 78. The phrases quoted by

Teleprompter are taken cumpletely out of context. Refer-

ence to the press release (E-469-471) makes it clear that

CBS stated that it would not “ ‘assert its statutory rights’ to

prevent CATV reception * * *.” Pet. Br. 37. Rather, it

would act only as a- defensive measure “should CA‘TV

retransmission of network programming force stations off

the air in some communities.” Indeed, the final paragraph of

the release clearly states CBS’ corporate policy:

“Once copyright is established CBS will grant

CATV systems permission to use its network tele-

vision programs when those systems are the only

means by which satisfactory television service ‘will

be available.”

The specter of a “network” conspiracy to exclude cable

television from the program market is totally irreleventt to

the present action. This Court in Fortnightly was pre-

sented with similar arguments, but refused to take them

into consideration, holding that they were for Congress and

that the Court’s job was to “take the Copyright Act of 1909

as we find it.” 392 U. S. at 401-402. In any event, there

was no evidence below of any great power the networks

have to deny copyright licenses to cable television stations.

Teleprompter raised similar antitrust allegations as

defenses in its answers to the several complaints (A.

37a-38a, 63a-65a, 96a). They are not, however, properly

before the Court at the present time, having been specifically

eliminated by Pre-Trial Order No. 1 from the first stage

of this action, the only stage which Teleprompter can now

bring to the attention of this Court (A. 72a, 10la). No

proof has been taken with respect to these allegations and

no record has been developed. What Teleprompter is in

substance trying to do by i arguments to the

Court at this time is to ask f judgment with

respect to these allegations. This is highly improper. Ac-

cordingly, we ask the Court to disregard them.

Nor is there any support in the record or elsewhere that

any of Teleprompter’s and the NCTA’s dire predictions of

exclusionary practices will come to pass. If such conduct

ever does occur, the government or the aggrieved parties

could quite properly find appropriate relief in the courts.

Distorting the law as it presently exists, however, to prevent

possible future abuses is not — See MPAA Br.

Point IV (2).

Nor is there any substance to the complaint that cable

television stations should not be liable for copyright in-

fringement because there is no “mechanism” for them to

negotiate for copyright licenses. Teleprompter has never

made any effort to negotiate such licenses with Respondents

and has always acted on the assumption that it could enjoy

perpetually the fruits of its misappropriation. The Court of

Appeals has made it clear that the courts have not granted

blanket copyright immunity to an entire industry. Once it

is certain that this decision is final and no longer subject to

review, a “mechanism” will be found.“ See MPAA Br.

Point IV (1).

The allegations of the “overwhelming burden of litiga-

tion” that will have to be borne with disruptive effect on

cable television service as a result of “the uncertainty

of the test” propounded by the Court of Appeals are simi-

larly unfounded. Pet. Br. 66; NCTA Br. 13. In only a

relatively small number of situations will litigation as to

whether a particular signal is or is not “distant” have to be

embarked upon as a result of the decision below. In the

usual situation it will be quite evident on the face of the

matter whether a signal is “distant” within the test set

forth below or “local.” The Court of Appeals below cer-

tainly had no trouble deciding that Los Angeles signals

are distant to Farmington, that Denver signals are distant

to Rawlins, or that Spokane and Salt Lake signals are dis-

tant to Great Falls. Similarly, there would be little difficulty

from the face of the matter in recognizing that the signals

carried by the Teleprompter New York City cable station,

or those carried by the Fortnightly systems, are local.**

While it is true that perhaps the Court of Appeals’ test

as to the point beyond which a receiving antenna will no

longer be considered “near” or “adjacent to” a cable com-

**As was found in THe Future or CaBLE TELEVISION a study of

the field by Dr. Leland Johnson, an independent expert, at p. 17n.

(Rand Seep. Rapest peepeced fot The Pord Foundation, 1970) :

6x difficulty of obtaining retransmission consent

exist is clearly exemplified

by the fact that every other class of copyright users has managed to

deal successfully with the copyright proprietors.

“Indeed, given the numerous situations with which it was pre-

sented, the court below found only one, Durango, where it was un-

certain and thought that the facts might be further devel Tele-

Pe SK ae clarification (A. xli-xlii, 476

. at ‘

munity is not a precise mathematical formula, a “pre-

cise” definition is not possible given the nature of broad-

casting. But the fact that there definitely is a distinction

between “local” and “distant” signals is clear, as is the

fact that there are very distinct television markets. See

supra at 36-39, 56-58. The Second Circuit’s touchstone

for local signals as signals receivable on an antenna located

within a “few miles” of the receiving community does not

yield to an unbearable vagueness or to burdensome varia-

tions in understanding. Thirty miles was explicitly held to

be beyond this limit (A. xl, 476 F. 2d at 353).

As a last resort Teleprompter and the NCTA argue

that a finding of infringement here would “bankrupt the

cable television industry in.an attempt to satisfy the po-

tentially huge amount of damages.” NCTA Br. 3. The

concept that the decision of the Court of Appeals sounds

the death knell of cable television is not before this Court

now™ and is, in any event, ludicrous.” The decision below

"After years of experimenting, the FCC in 1972 revised its

definition of “local” and “distant” signals for cable carriage

Cable Television Report and Order, 36 FCC 2d 143, 173-176, as

Application of this new FCC definition to this case would have

achieved virtually the same specific results reached by the Court of

Appeals formulation. (At the same time, application of the current

FCC definition would solve the allegedly anomalous decision by the

court below with respect to the Durango station. See Pet. Br. 72-73.)

™The damage issue was ted out from this first stage of

this case by Pre-Trial Order No. 1 (A. 72a, Wa). The Court of

Appeals remand order specifically covered the damage issue (A. xliv).

72On the contrary, it is interesting to note that following the

cement Sn Saciean of Cece a both Tel

and the NCTA released to the press self-satisfied and con-

(cont’d)

merely recognizes the obligation of cable television stations

to compensate the owners of the copyrights of those pro-

grams on which they base their business. Neither CBS

nor any of the other plaintiffs in this action is desirous of

extracting unreasonable sums from the cable television

industry. Indeed, Teleprompter concedes that CBS has

made it clear that it is not seeking “large damages.” Pet.

Br. 37. 3

Both Teleprompter’s and the NCTA’s purported fears

are rooted in the erroneous assumption that statutory

damages of not less than $250 per infringement would

automatically be granted. Pet. Br, 33, 67; NCTA Br. >

13-14. This Court, however, has made it clear that in copy-

right cases the courts have wide discretion among the

remedies of actual damages, accounting and statutory

damages, and that they are to be governed by the equities

of the case and the policies of the- Copyright Act. Wool-

worth Co. v. Contemporary Arts, 344 U. S. 228, 231-232,

234 (1952). One of the obviously relevant factors is the

degree to which the copyright proprietor has actually been

damaged, and this will vary greatly from case to case de-

pending upon the particular facts. See, e.g., Shapiro, Bern-

stein & Co., Inc. v. 4636 S. Vermont Ave., Inc., 367 F. 2d

236 (9th Cir. 1966) (where de minimis damages shown,

the court denied the granting of statutory damages). The

Court of Appeals below itself recognized that no more than

de minimis damages might be involved in certain instances

here (A. -xlii, 476 F. 2d at 354). See MPAA Br. Point V.

Tal handy conmstant with Wis ener Gales tees tp el cn

the brink of catastrophe. See Cable News, March 12, 1973 at 6;

Broadcasting, March 12, 1973 at 12; CATV-Newsweekly of Cable

es — 19, 1973 at Set niaed tx in ole

spectuses that even if Reapondents here are aA in their action

“management of the Corporation believes that the effect on the Cor-

tion will not be materially adverse.” (E. 20.) This opinion has

Seen reiterated in annual reports as recently as 1971 and 1972.

See MPAA Br. Point V.

The Copyright Act was not designed to require that

remorseless retribution be’éxacted in every case of infringe-

ment no matter “what the circumstances. The history of

owners are not interested in destroying their prospective

licensees.™

With respect to this litigation in particular, Telepromp-

ter need not have any fear as to what the result of such

remanded proceedings will be. In order to ensure that the

extraneous matters, Respondents are prepared to waive their

rights to damages for past infringements and to request

only that the injunctive relief originally prayed for be

granted (A. 26a, 56a, 91a).

Nor need Teleprompter or the: NCTA have any general

coacern as to what other copyright holders might do to

enforce claims of damages for past infringing activities

by cable television stations. The decision on this point rests

solely with this Court. If the Court wishes to avoid

“retroactively to impose copyright liavility where it has

never been acknowledged to exist before,” 392 U. S. 401

n. 30, the principle is firmly entrenched that this Court is

well within its powers to act prospectively only. Great

Northern Railway v. Sunburst Oil & Refining Co., 287

U. S. 358, 363-366 (1932) ; see Chevron Oil Co. v. Huson,

404 U. S. 97, 106-107 (1971) ; Cipriano v. City of Houma,

395 U. S. 701, 706 (1969) ; Allen v. State Board of Elec-

tions, 393 U. S. 544, 571-572 (1969) ; England v. Louisiana

State Board of Medical Examiners, 375 U. S. 411, 422

(1964). See ASCAP Br. 22; MPAA Br. Point V. In

"In light of the fears expressed ‘y ipter and the

ot ors ook iat oon years of CATV”.

ccpannk br dlaia cditidioh evs

order to resolve the copyright issue on its merits, Respon-

dents have no objection to the adoption of this principle

here.**

CONCLUSION .

In urging this Court to reverse the decision of the

Court of Appeals below, Teleprompter and the NCTA are

arguing that cable television systems, though for all in-

tents and purposes functionally equivalent to broadcasters,

should be judicially granted total copyright immunity. ,

Cable television is today big business. It is expanding

and proliferating at a tremendous rate. Since 1960 when

the Fortnightly case was brought, it has grown from a local

service with some 650,000 subscribers to a national industry

serving significantly more than 7,300,000 subscribers.”

Consequently, any blanket copyright exemption for all cable

Stations (regardless of the functions they perform) will

have enormous future consequences on all copyright holders,

including producers, writers, publishers, broadcasters and

others.

There is no reason why works of the mind in our so-

ciety should be confiscated for the benefit of Teleprompter’s

expanding private enterprises. There is no public policy

served by exempting all cable stations from royalty pay-

ments. Total exemptions from copyright liability is a

matter solely for Congress. Congress has not exempted all

cable television stations. Nor has it ever been seriously

proposed that Congress exempt all cable television stations.

The argument for total exemption, if it were valid, could

be mace with respect to every form of communication,

“Other copyright holders are willing to take the same position

Ses ¢g, ASCAP Br. 4, 22; MPAA' Er Posty mee

"TELEVISION Factsoox, Services Vol. 43 (1973-1974 Ed.) at p.

oe alone has some 900,000 subscribers. See supra

indeed by any copyright user. Thus, if it would be in

the “public interest” to allow all cable television stations to

escape payment, why not reverse the settled case law and

exempt all broadcasting stations? Why not encourage the

pitating of all books and phonograph records?

The answer is obvious. Reducing the incentives and

rewards for creativity will in time prove disastrous to the

public interest, rather than benefit the public. Such a result

is exactly what the Constitution of the United States and the

For all the above reasons the judgment of the court

below insofar as it reversed the decision of the District

Court should be affirmed.

Respectfully submitted,

Asa D. SoxoLow

Sypney M. Kaye

Puitie MANDELKER

575 Madison Avenue ~

New York, New York 10022

Harry R. OLsson, Jr.

51 West 52 Street

New York, New York 10019

Attorneys for Respondent

Columbia Broadcasting

System, Inc.

Cartes H. MILter

Roya E. BLAKEMAN

BERTRAND H. WEIDBERG

430 Park Avenue

New York, New York 10022

Attorneys for Respondent

Calvada Productions

Eucene Z. DuBosgE

ALFRED C. Moran

120 Broadway

New York, New York 10005

Attorneys for Respondent

Jack Chertok Television, Inc.

SEYMOUR GRAUBARD

BERNARD BUCHHOLZ

345 Park Avenue

New. York, New York 10022

Attorneys for Respondent

Dena Pictures, lcorporated

-RosENMAN COLIN Kaye PetscHEK

FrEUND & EMIL

575 Madison Avenue

New York, New York 10022

MarsHALL, Brattrer, GREENE, ALLISON

& TucKER

430 Park Avenue

New York, New York 10022

ALEXANDER & GREEN

120 Broadway

New York, New York 10005

GRAUBARD Moskovitz McGotprick

- Dannett & Horow1tz

345 Park Avenue

New York, New York 10022

Of Counsel

December 19, 1973

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.