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

eR ic ckda ecb aeaceeee ds suede douse kanes

A. The issues in this Petition and the related Peti-

eS S&S tf ERrr ere rrr rr Tr ieee

B. The authorized broadcasts of the copyrighted

works and the reception of the broadcast signals

by Teleprompter’s CATVS ...........-+++-+++- 5

C. Program origination on non-broadcast channels 7

D. The so-called ‘‘interconnection’”’ .............. 13

E. Sale of commercials on non-broadcast channels .. 15

F. CBS’ ‘‘broadband’’ assertions ................ 17

eee Oi DOE iii 566k od caceesaes ai cam, >a ‘e

aN TO Pe ee dca eg ate dil a a a aha tal thin 21

I. Tue Courts Betow Correctty Hetp THaT THE

CATV Reception Service Was Separate From,

anp Not ConverTED INTO a PERFORMANCE OF, THE

Broapcast Sicwats By Reason or ORIGINATION,

Sate or CoMMERCIALS, oR ‘‘INTERCONNECTION’’

on Separate Non-BroapcasT CHANNELS ........ 21

A. The broadcast reception function is separate

from and in no way changed by origination

on non-broadcast channels ..............-- 21

B. The sale of commercials and ‘‘interconnec-

tion’’ in conjunction with origination on non-

broadcast channels does not change the broad-

cast reception function ................+-- 24

ii Index Continued

Page-

C. CBS’ proposed new doctrine of performance

by ‘‘Totality’’ is devoid of substance ...... 25

II. CBS’ Contentions Conruict Wir tHe FCC

Recuatory Puan ror CATV ................. 31

CIE * nha oh ne dc ne cons denne cee cenecnanesed 36

CITATIONS

CASES:

Associated Music Publishers, Inc. v. Debs Memorial

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

nied 323 U.S. 766 (1944) .............. cee ee eee 29

Farmers Union v. WDAY, 360 U.S. 525 (1959) ...... 35

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

392 U.S. 390 (1968) .............. 19, 21, 22, 23, 24, 30

Herbert v. Shanley Co., 242 U.S. 591 (1917) .......... 29

United States v. Midwest Video Corp., 406 U.S. 649

ERUUE dntneasecnhensuvdasevaednngucousews 29, 31, 35

SraTuTes anp RvuLEs: .

Copyright Act:

TT Ri BELGE we vewvernas ces wkatacsescccencees 2

De Th. BARD eich ene ee ns kkese eee eses cers 2

Code of Federal Regulations:

47 CPB. EVER)... ccccccccscccccccscccccvcce 23

BF CPB. SFB E onc ceveccsccscccescscsscsessss 34

GE CALE, OIG bocce ccscsvsicnvsvecescecesevccs 34

BT GLP QTGROE otk cineeceecdveesivawesssacvevs 34

Reports anp Orpers or F.C.C.:

First Report and Order on Community Antenna Tele-

vision Systems, 20 F.C.C. 2d 201 (1969) ....16, 30, 32

Notice of Proposed Rulemaking and Notice of Inquiry,

Docket No. 18397, 15 F.C.C. 2d 417 (1968) ....... 31

Index Continued iii

Page

Letter of Intent (Cable Television Proposals), 31

POSS. 98 TI CIBT) vvsidncccvccancsvatesaceve 33, 37

Cable Television Report and Order, 36 F.C.C. 2d 141

COPTRD i505 0 c85 sec iWeksdndacecenvkcbaceseecs 34

MISCELLANEOUS:

Aspen Notebook on the Cable and Continuing Educa-

tion (ed. of ‘Aspen Program on Communications

and Society, 1973) (mimeographed preprint) ... 18

Comments of the U.S. Department of Justice Before

the Federal Communications Commission, Docket

ee eT er rrr are 36

Comments of the Department of Justice Before the

Federal Communications Commission, Docket No.

19554 (November 1, 1972) ..................4.. 18

Forbes, December 1, 1973 ............... cece cee eees

IN THE

Supreme Court of the Anited States

OctToBER TERM 1973

No. 72-1633

CoLUMBIA BroaDcasTING System, Inc., CALVADA

PRODUCTIONS, A JOINT VENTURE, JACK CHERTOK

TELEVISION, INC., AND DENA PICTURES INCORPORATED,

. Petitioners

Vv.

TELEPROMPTER CORPORATION AND

CoNnLEY ELECTRONICS CORPORATION,

Respondents

On Certiorari to the United States Court of Appeals

for the Second Circuit

BRIEF FOR RESPONDENTS

PRELIMINARY STATEMENT

On October 9, 1973 the Court granted the Conditional

Cross-Petition for a Writ of Certiorari filed by Co-

lumbia Broadcasting System (CBS) and other cross-

petitioners * with respect to three issues as to which

1 Hereinafter referred to as ‘‘CBS”’ for clarity in dealing with

the two groups of parties and with the Petition in No. 72-1628 and

this Conditional Cross-Petition.

“‘JA’’ refers to the printed Joint Appendix filed in this Court

under Rule 36.1 in this case (No. 72-1633) and in No. 72-1628.

‘*JE”’ refers to the printed Exhibit Volume of the Joint Appendix,

‘

2

the Court of Appeals had affirmed the District Court.

On the same day the Court granted the Petition for

Certiorari filed by respondents herein (Teleprompter

and Conley)? in No. 72-1628 respecting the issue as to

which the Court of Appeals had reversed the District

Court. Taken together, the two petitions present fout

of the issues decided by the Court of Appeals.

RESTATEMENT OF QUESTIONS PRESENTED

1. Was the reception by certain of Teleprompter’s

CATV systems of broadcasts on specific dates in 1964,

1969 and 1971 embodying CBS copyrighted works

changed or converted into a ‘“‘performance”’ under sec-

tions 1(c) and (d) of the Copyright Act, not by what

the CATV did with reference to the reception and

distribution of the broadcast signals but by reason of

activity by the CATV on separate non-broadcast chan-

nels, which activity did not involve CBS copyrighted

programs in any way?

2. Should the copyright monopoly-be judicially ex-

tended to hold a CATV system liable for reception of

broadcast signals because programs were originated by

the CATV on non-broadcast channels in accordance

with FCC regulations for CATV and where such

extension of copyright monopoly would be in conflict

with a key element in the FCC’s regulatory scheme for

CATV?

2 Hereinafter, for the same reason, referred to as ‘‘Tele-

prompter’’.

The decision in this case may be of great significance

in determining whether a large segment of the public

can continue to use the services of CATV for reception

of broadcasts. However, it necessarily must rest on the ~

facts concerning the operation of Teleprompter’s

CATV systems in connection with the reception of the

specific broadcasts of the copyrighted works alleged in

the complaint. A holding that Teleprompter “‘per-

formed”’ material copyrighted by CBS as alleged in the

complaint can only result from the activities of the

CATVs at the time of the broadcasts in question

(November 1964, June 1969 and March 1971).

Much of CBS’ brief relies extensively on facts out-

side the record, including references to news reports

of developments long after the dates of alleged in-

fringement as well as speculation as to future plans or

capabilities of Teleprompter’s CATV systems.’ More-

over, CBS criticizes the courts below for comments on

the paucity of facts in the record, claiming that the

failure to rule on the hypothetical circumstances it

wishes to interject “‘merely invites further litigation”’

(Br. p. 27). Under the circumstances, it is necessary

to make a rather extensive statement in response to

distinguish those facts in the record relevant to the

determination of the issues from the extraneous

‘“facts’’ relied on by CBS.

3 CBS also states the facts relating to activities of the specific

CATV systems in such a fashion as to leave confusion on the rela-

tionship of these activities to the dates of alleged infringement.

For example, CBS’ statement asserts origination by the Rawlins

CATV of ‘‘10 hours a week of programming typical of that

originated by television broadcasters’’ (Br. p. 13) ; such origination

by the CATV did not commence until several months after the

alleged infringement. See n. 10 infra.

4

A. The issues in this Petition and the related Petition in

No. 72-1628 ;

CBS and the other petitioners‘ own copyrights in

programs which CBS was authorized to broadcast or

license for broadcast." The CBS complaint asserted

that the reception of broadcast signals by five of Tele-

prompter’s CATV systems named in the complaint

constituted a ‘‘performance’’ ‘‘in public” of the copy-

righted works embodied in the broadcast signals. The

issues raised by the CBS complaint fall into three

categories :

First. CBS claimed that the signals received

and distributed by the CATV systems were ‘‘dis-

tant signals’’ respecting which the CATV systems

had to obtain copyright licenses. As to this issue,

the Court of Appeals reversed the District Court

and held such reception by three of Teleprompter’s

systems should be ‘‘deemed’’ to be a performance

and hence an infringement. This issue is pre-

sented in petition no. 72-1628.

Second. CBS based part of its argument on

the fact that the CATV systems used microwave

links. CBS contended that such links transmitted

signals through the air and changed the CATV

~~ systems’ function into that of a broadcaster. Both

the District Court and the Court of Appeals re-

, *The other petitioners are program producers who have granted

to CBS for the period of the license ‘‘the exclusive right to broad-

east or to authorize the broadcast’’ (including rebroadcasts) of

copyrighted programs produced for CBS. JE 309, 325.

* The trial of this action was divided into stages pursuant to pre-

trial orders. JA 71-72, 101. The so-called basic copyright issue

and the question whether the reception service was protected by a

license implied-in-law were tried in the first stage separate from

other issues and defenses. The validity of the copyrights was

assumed for the first stage.

jected this CBS contention, finding that microwave

is point-to-point transmission analogous to and an

alternative to cable. CBS’ contention as to micro-

wave is not renewed in this Court except inciden-

tally in connection with the ‘‘distant signal’’ issue.

In order to attract subscribers, the CATV sys-

tems advertised the fact that the system provided

not only a broadcast-reception service but also

made available to subscribers on non-broadcast

channels programs originated by the CATV. .CBS

contended that such advertising demonstrated a

change in function. This contention was also re-

jected by the courts below and i is B not renewed here

as a separate question.

Third. The third category of contentions re-

lates to origination of programs (and in one case

the sale of commercials) and to interconnection

of CATV systems for such origination on non-

broadcast channels. None of the programs origi-

nated by the CATV systems involved any copy-

right owned by CBS or other petitioner. Both

courts below held that activity on non-broadcast

channels not involving the CBS copyrighted pro-

grams had no effect on the function of the CATV

reception service. These issues are presented by

CBS’ Conditional Cross-Petition.

B. Tho eutheried beendonats of the copyrighted weeks end

the reception of the broadcast signals by Teleprompter's

CATVs

Most of the facts relevant to the issues posed in this

petition were stipulated.

The copyrighted programs were broadcast by tele-

vision stations pursuant to license by CBS (acting on

6

its own behalf and pursuant to contractual authority

from the other petitioners). Teleprompter operates

CATYV systems in a number of communities. The com-

plaint names five of its systems: Elmira, New York;

‘New York City; Farmington, New Mexico; Rawlins,

Wyoming; and Great Falls, Montana." It alleges that

on the pertinent dates in November 1964 (Farmington

and Elmira), in June 1969 (Farmington, Great Falls,

Rawlins and New York City), and in March 1971

(Farmington and New York City), these CATV sys-

tems infringed CBS’ copyrights by receiving the broad-

casts of the copyrighted programs and distributing

those broadcast signals to subscribers.

The operation and equipment of Teleprompter’s

CATV systems named in the complaint are covered in

detail in the two lengthy stipulations. JA 148-291.

Each of the systems received off-the-air television sig-

nals broadcast by television stations and distributed

those signals to subscribers’ homes for viewing on their

own sets. The broadcasts were received in their en-

tirety and distributed instantaneously without editing

to the subscribers.

The CATV systems use co-axial cable. Co-axial

cable, as distinguished from ordinary wire, is capable

of simultaneously transmitting signals of many differ-

ent frequencies. Originally CATV amplifiers used in

the distribution of the signals were technologically

*CBS asserts that the complaint charges infringement by all of

Teleprompter’s CATV systems but that proof was limited to five

*‘illustrative’’ systems to expedite trial. Br. p. 28. The com-

plaint (as amended and supplemented) contains seventeen claims

for relief, each of which relates to the reception of a broadcast

of one of the copyrighted works on a specific day by one or more

of the five systems named in the complaint. JA 1-27, 50-57, 87-91.

~~ Ff

limited to one channel. The equipment was improved

so that three channels could be handled; later five and

then twelve channels could be distributed to subscrib-

ers." JA 486-87.

At each of the relevant dates in 1964, 1969 and 1971,

Teleprompter’s CATV (eables, amplifiers and

related equipment) had a capability of carrying more

channels than the number of television stations which

were being received. One or more of these channels

not being used for the reception and distribution of

broadcasts was used as a separate non-broadcast

channel for the origination of programs.

C. Program origination on non-broadcast channels

The origination of programming by the CATV sys-

tems and the equipment used for that purpose ® is de-

scribed in detail in the stipulations. JA 193-202, 214-

216, 229-233, 241-245, 254-259, 271-275, 281-290.

None of the progra#is originated by the CATV sys-

tems involved any of CBS’ copyrighted programs.

JA 164. The CATV systems were either the actual

originator or obtained the right to distribute the orig-

inated program from the copyright owner. JA 164.

A flat monthly charge (in the range of $5-$7) was

made for the CATV service. No per program or sepa-

rate or additional charge was made by the CATV sys-

tems for the originated programs. JA 162. The orig-

* Modern CATV amplifying equipment is capable of distributing

20 or more channels. In addition, ‘‘converters’’ have been used

to increase channel capacity in older equipment. See n. 12 infra.

®Some of the equipment used was not of a technical quality

which would have permitted its use by a TV station. JA 472-74.

8

inated programs made up only a small portion of the

entire service—consisting of reception and distribution ©

of broadcasts plus origination—provided to subscribers

by the CATV systems here involved.

The origination equipment was not used by the

CATV systems in the reception of the allegedly in-

fringed broadcasts. Neither the programs which were

originated nor the origination equipment had anything

to do with, or in any way interfered with or inter-

rupted, the reception of broadcast signals and the dis-

tribution of those signals to the subscribers. JA 326,

472, 561, 562.

The programming originated by Teleprompter’s

CATV systems falls into two categories:

First, automated programs, e.g., a time and

weather scan, where a camera is set automatically

to scan a board which contains a thermometer,

wind gauge, barometer (or similar equipment)

and a clock. Other automated programs include a

message wheel, t.e., a wheel containing typed mes-

sages is slowly rotated in front of a camera. The

New York CATV system also had a camera which

scanned stock market quotations when the market

was open and a news ticker.

Second, non-automatic programs, e.g., films,

interviews, shows put on in the CATV’s stuiio

(if any) and local sports events.

Teleprompter’s chief executive officer (Mr. Kaln)

testified that Teleprompter’s business was providing

the ‘‘finest reception service available,’’ and that tais

service was the source of income to Teleprompter’s

9

CATV systems. JA 560, 562, 578. Improvement in

reception is difficult to describe in words, so Tele-

prompter used various advertising devices to attract

subscribers to try the reception service on the theory

that many would stay subscribers after seeing the

quality of reception provided by the CATV. JA 561,

063-64, 566-67, 574-76.

Prior to November 1964 the Farmington system had

an ‘“‘empty channel’? not being used to receive tele-

vision broadcasts. Mr. Kahn conceived the idea of

originating programs to attract subscribers by offer-

ing variety on the channel not used for broadcast re-

ception. JA 520-23, 560-66. The Farmington CATV

advertised its service and included references to orig-

ination.

Farmington. In 1964 the Farmington CATV sys-

tem had equipment capable of carrying 5 channels. It

received and made available to subscribers the signals

of 4 broadcast stations.

In November 1964 the service consisted of 96 hours

per day of broadcast-reception service (4 stations 24

hours a day)® and 414 hours per day of origination.

The originated programs consisted of interviews with

local officials and local sports figures, and films, con-

sisting of both short subjects and some feature films.

JA 193-194. The production of these programs and

the showing of the movies was handled by CATV per-

sonnel on a part-time basis JA 523, 531.

In June of 1969 the Farmington CATV originated

programs 3 hours per day (5 days a week) and had

® The CATV system operated 24 hours a day and received the

signals of any TV station whenever it was broadcasting, whether or

not the station broadcasted during the full 24 hour day.

10

added a time and weather scan on the non-broadcast

channel when programs of the type described above

were not being originated. JA 193. In addition the

CATV system, at the request of the school board, and

with the permission of the Albuquerque educational

TV station, recorded four educational programs to be

distributed at other times to classrooms and to be made

available to subscribers. JA 198-99; JE 340-343.

In 1970 the Farmington CATV system was rebuilt

with 12 channel equipment. On March 9, 1971, the

date of the alleged infringement, the CATV service

consisted of 192 hours per day of broadcast-reception

service (8 channels receiving 9 stations (2 part time)

24 hours a day), plus four hours a day of originated

programs (five days a week) and a message wheel on

one non-broadcast channel, and an automated time and

weather scan on another. (It also continued the dis-

tribution of the school programs.) JA 187, 267-268,

271-275.

Great Falls. In June of 1969, Great Falls was a 12

channel system. The service it offered consisted of

192 hours per day of broadcast-reception service (8

channels receiving 9 stations (2 part time) 24 hours

a day) and two hours a day (five days a week) of

program origination (films, interviews, etc.). An

automated message wheel was used during the remain-

der of the time on the origination channel. It also

offered a time and weather scan on a separate channel.

JA 221, 229-233.

Rawlins. In June of 1969, Rawlins was a 12 channel

system. The service it offered consisted of 144 hours

per day of broadcast-reception service (6 stations 24

il

hours a day), and a time and weather scan on a sepa-

rate non-broadcast channel.”

New York City. In June of 1969, the New York

City CATV was a 12 channel system. The New York

franchise requires the CATV to receive all eleven New

York City stations and bars it from receiving non-

New York stations. JE 390, 404.

In June 1969 the New York City CATV provided

more than 200 hours per day of broadcast-reception

service." JA 247-248. On a separate channel the

New York system originated about 534 hours per day

of local and general interest programs; a time and

weather scan was provided when it was not originating

such programs. A newsticker and stockmarket quo-

tations were scanned when an educational station was

not received. JA 254-257.

In March 1971 the capacity of the New York City

system had been increased to 13: channels by the use of

a supplemental device called a ‘‘converter’’ attached

to the TV set.” JA 251, 487-89. The CATV continued

10The Rawlins CATV did not commence its origination of pro-

grams—two hours a day five days a week—until November 1969

(JA 241-43), not in June 1969 as CBS implies (Br. p. 13). On

three occasions prior to June, it kad originated individual programs

(i.e., election matters and a United Fund Telethon, in November

1968) on the non-broadeast channel on which it provided the time

and weather service. JA 547-548.

11 Elevert stations (2 part time) were received.

12There were two types of ‘‘converters’’ used. One had a

capability of 12 channels and a newer model had a capability of

25 channels. While some subscribers had ‘‘converters’’ installed

in 1969 and, therefore, had the capability of receiving 13 channels,

the CATV system in fact used only 12 channels. JA 251, n*.

By March 1971 some subscribers were equipped with 25 channel

converters, but a substantial number (2500) still had no converter

and another 1000 had the 12 channel converter. JA 279, n*.

The New York City franchise required that by July 1971 the

12

to offer broadcast-reception service similar to that it

provided in 1969. JA 276-77. It provided similar

automated programming and originated 10 hours per

day of general interest programming.“ JA 287-291.

CBS’ brief (pp. 10-11) makes a series of references

to press reports of activities of the New York CATV

since 1971 without in any way indicating the relevance

of these reports to alleged infringement by reception

of specific broadcasts in June 1969 and March 1971."

The trial court concluded that

“copyright liability for the ‘reception service’

should not be affected by what can be considered

an unrelated function—program origination. . . .

What Teleprompter is doing to CBS’ copyrighted

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

system have 17 channel capacity: 11 channels for reception of

New York City Stations; 2 channels for city use; 2 public

channels and 2 company channels. JE 404. It also required the

CATV to achieve 24 channel capacity by 1973. JE 401. The

New York City CATV expected to achieve the 24 channel capacity

by the use of the 25 channel converter. CBS’ reference to the

CATV’s ‘‘capability to deliver programming over 25 channels’’

(Br. p. 10) is in error. The system never had more than 13

channel capacity at any relevant time. Moreover, the franchise

required the system when it achieved 24 channel capacity to

receive the 11 TV stations, provide 3 city channels, and 4 public

channels. The remaining five were for use by the company.

** The sale of commercials involved in this case (see infra pp.

15-16) oceurred in connection with one series of originated sports

programs.

In the courts below CBS also charged that Teleprompter’s

Elmira CATV system in 1964 performed a broadcast function

by reason of program origination. In November 1964, the service

of the Elmira CATV system consisted of 240 hours a day of

broadcast-reception service (10 stations). It also had a time and

weather scan and carried certain programs originated by the Elmira

school system on a separate non-broadcast channel. JA 214-217,

The CBS brief does not discuss Elmira.

13

same whether the CATV’s originate programs or

not. The ‘function’ of the reception service is not

changed by the simultaneous sale of original

shows, just as it would not be changed by Tele-

prompter’s simultaneous delivery of free ice cream

or candy to every subscriber”. JA 135-36, 355 F.

Supp. at 629.

The court of appeals affirmed, stating ‘‘we do not

agree with CBS’ position that there is some sort of

‘spillover’ effect by which the system becomes a ‘per-

former’ with regard to its reception service”. JA xxx;

476 F.2d at 348.

D. The so-called “interconnection”

The only evidence in the record relating to ‘‘inter-

connection’’ among Teleprompter CATV systems con-

sists of two sporting events (Ali-Liston fights) which

took place on February 25, 1964 and May 25, 1965.

Teleprompter purchased rights to make these events

available to subscribers via closed circuit. Through

telephone company circuits the fights were carried to

the Elmira, Farmington and Great Falls CATV systems

where they were distributed on non-broadcast channels

on the cable system to subscribers who chose to view

them on their own sets. JA 258-259.

Teleprompter used these events as promotional de-

vices to solicit subscribers. Teleprompter paid for the

right to make the fights available on the CATV sys-

tems, but made no separate or additional charge to

subscribers for this service. JA 259, 566, 567; JE

230-231.

The New York City franchise required Tele-

prompter’s system to establish a standby capability to

connect its system with two other New York systems

14

(not owned by Teleprompter). JE 402, JA 280-81.

The purpose of this “‘interconnection’”’ was to enable

the city officials upon request to communicate at one

time on public channels with all people in New York

who were subscribers to one of the three CATV sys-

tems. JA 570. CBS cites no evidence in the record

(and there is none) for its statement that this

‘‘interconnection”’ is part of ‘‘a natiofial cable network

set up by Teleprompter’? (Br. p. 11). Indeed, the

record shows that no ‘‘interconnection’’ was used in

connection with the reception of the broadcast of any

copyrighted program involved in this case. JA 483-

484, 503, 508.

The trial court found that the ‘‘interconnection”’ did

not ‘‘transform [Teleprompter’s] present CATV sys-

tems into a broadcast network as [the CBS petitioners]

suggest.’”? JA 125, 355 F.Supp. at 625. The Court of

Appeals agreed. JA xxxi, 476 F.2d at 348.

CBS refers to indications in the record regarding

Teleprompter’s hopes and plans for the future, includ-

ing references to an ‘‘application to own and operate

receiving stations for a domestic communications

satellite’’, to create a network of cable systems through

“interconnection”? (Br. p. 28). FCC approval is re-

quired for any such plans. CBS has suggested no

reason why such approval long after the events in 1964,

1969 or 1971 can have any bearing on the issue as to

whether the operation of Teleprompter’s CATV sys-

tems constituted a ‘‘performance”’ of CBS’ programs

on those dates.”

** Similarly CBS has suggested no basis on which a press report

of a news program originated by the New York City CATV

system and made available to other CATV systems in October 1973

(Br. pp. 11, 28) can have any bearing on the issue of infringement

in 1964, 1969 or 1971.

15

Teleprompter has gone into the business of producing

programs which are licensed to CBS and TV stations

and are also offered to CATV systems. JA 571. Re-

ferring to such programs as a ‘‘network package’’

(Br. p. 28) is CBS’ own invention. Teleprompter

referred to these programs offered for license to other

CATVs simply as a “program package’’ of profes-

sional quality. JE 575-76, 589.

E. Sale of commercials on non-broadcast channels

The evidence shows one instance of a sale of adver-

tising by Teleprompter’s CATV systems, consisting of

a contract entered into by the New York City CATV

for one sale of commercials in connection with sports

events on a non-broadcast channel. The New York City

CATV bought the right to distribute certain Madison

Square Garden events to its subscribers on a non-

broadcast channel and the advertising contract pro-

vided for two 60 second commercials by the Schaefer

Brewing Company per event. JA 284-87; JE 179-81,

235-41.

The District Court and the Court of Appeals both

noted (JA 126-27, 355 F. Supp. at 626; JA xxx, 476 ©

F.2d at 348) that these commercials were sold and car-

ried on a non-broadcast channel and had nothing to do

with broadcasts received by the system where the en-

tire broadcast including commercials was made avail-

able to subscribers.

The FCC regulations relating to program origina-

tion by CATV systems are discussed infra at pp. 31-34.

But it should be noted here that when the FCO

adopted the rule requiring CATV systems with more

than 3500 subscribers to originate programming on a

non-broadcast channel, it authorized the CATV systems

16

to sell commercials in connection with the origination.

The Commission recognized that the required program -

origination would be an expensive burden and con-

cluded that

“*the public interest would be best served by per-

mitting CATV operators to derive revenues Som

commercials to help defray the cost of their origi

— or programming presented by he on

eased channels, and sceeias the public with a new

ape of service—one where commercials occur

at natural intermissions or breaks in program

material ....’’**

The significance of the Commission’s conclusion in this

regard is shown by the fact that Teleprompter paid

$1,500 per sports event for the right to make it avail-

able to subscribers on a non-broadcast channel and the

gross amount receivable from the advertising amounted

to $300 per event.” JA 285-286. Similarly, CBS re-

fers (Br. p. 26) to Teleprompter’s projection in 1969

that by 1974 the income from the sale of commercials

16 First Report and Order on Community Antenna Television .

Systems, 20 F.C.C. 2d 201, 7 17, at 208 (1969) (hereinafter cited as

‘First Report and Order’’). See also id. JJ 31-38, at 215-218.

Tt was only in 1969 after the Commission’s order that Tele-

prompter changed a firm policy against sale of commercials on

originated programs and the one sale referred to above occurred.

JA 576-578, 605-606.

™ CBS refers to published reports concerning income from sale

of commercials in 1972, more than a year after the alleged infringe-

ment in March 1971 (Br. pp. 11, 26 & n. 30). It fails to note

that the advertising for the sports events is reported to be about

half the cost for the closed circuit rights. The danger of reliance

on such extraneous ‘‘facts’’ not reflected in a trial record is shown

by published reports that Teleprompter has for financial reasons

drastically reduced its budget for originations. Forbes, Decem-

ber 1, 1973, at 62-63.

17

would reach $2 million (for all of its systems, not just

New York City CATV) but fails to mention that the

projected cost of the program origination in 1974 was

$10.5 million, more than five times the projected in-

come. JE 592.

F. CBS’ “broadband” assertions

Throughout its brief, CBS refers to “cable televi-

sion stations’ rather than CATV or cable systems,

apparently with the objective of trying to demonstrate

similarity between a CATV system and a broadcasting

station by the use of the word “‘station”’.“ Similarly,

a major portion of CBS’ argument (Br. pp. 20-22) is

devoted to so-called admissions in speeches or state-

ments by Mr. Kahn, then Teleprompter’s chief execu-

tive officer, that the terms “‘CATV” and “‘cable tele-

vision’? were outmoded and should be replaced by

**broadband communications.”’ JE 26-152.

As CATV struggled to gain a foothold in business

over the years, Mr. Kahn promoted CATV using public

relations words and ‘catchy imagery. Teleprompter’s

basic business was providing ‘‘the finest reception serv-

ice available’’ (J A 560, 584), but in promoting CATV

and particularly services which might be offered on

non-broadcast channels, he used the terms “‘broadband”’

and ‘‘broadband communications systems” in a number

of speeches. He did not invent those terms, but used

them as a shorthand way to describe the channel capa-

_ bility of modern CATV systems and the possibility

which this capability offered for the access, govern-

8 CBS (Br. p. 21) apparently regards it as significant that Mr

Kahn wes quoted in the prean an referring to “cable television

stations’, a report which Mr. Kahn testified was a **misquote’’,

JA 598-99.

18

ment, leased, and origination channels, a channel capa-

bility which the FCC now requires. Mr. Kahn made

it clear that this capability is what he meant by the

term “‘brogdband communications’’. JA 579-87. He

also made clear that this was a promise for the fu-

ture, not the present: ‘“‘No one of our existing sys-

tems with the exception of two experimental ones we

are building in California are today broad band.”” JA

580.

Finally, CBS makes much of conclusory testimony

by “‘experts”’ regarding the function of Teleprompter’s

CATV systems in light of the activities described

The Comment of the Department of Justice from which

CBS quotes which mentions cable television as contrasted to

community antenna television (Br. p. 22) related to the Commis-

sion’s proceedings regarding regulations respecting programs for

which a per-program or per-channel charge would be made (Docket

No. 19554). The Department referred to ‘‘broadband cable tech-

nology and its capacity for providing a wide variety of electronic

services, many of which would be unrelated to television, without

the use of scarce radio frequency spectrum.’’ Comments of the

Department of Justice Before the Federal Communications Com-

mission, Docket No. 19554, at p. 15 (November 1, 1972).

The report of a recent conference convened to explore the de-

velopment of CATV systems in this country concluded that

‘*a cable system is capable of providing not only more channels

of conventional television, but of carrying new kinds of pro-

“Despite . . . [the interest of groups who believe cable can

help them], cable today remains essentially a broadcast re-

ception service. What has changed is not the actual use of the

cable, but the nature of the thinking about cable and its

potential... . If cable is to succeed in the top markets where

80% of the population lives (and where broadcast TV stations

are plentiful and reception is generally good), systems’ will

have to provide new services to attract urban subscribers.”’

Aspen Notebook on the Cable and Continuing Education, Part I, at

28 (ed. of Aspen Program on Communications and Society, 1973)

(mimeographed preprint) (emphasis added).

19

above. Br. pp. 22, 26. This testimony, described by

CBS as “factual conclusions”’ by ‘‘experienced broad-

easters’’ and by its engineering witness regarding the

similarity in ‘function’? between Teleprompter’s

CATV systems and a broadcasting station, is in fact

nothing more than the conclusory expression of the

witnesses’ opinions echoing CBS’ legal contentions.

SUMMARY OF ARGUMENT

I. Fortnightly establishes that reception and distri-

bution of broadcast signals to subscribing members of

. the public is not a “‘performance’”’ of the broadcast

work. CBS has pointed to no principle of law whereby

the operation of a CAT'V reception service which does

not constitute a ‘‘performance”’ becomes converted into

a performance because of origination or other activity

on separate non-broadecast channels which in no way

involved the copyrighted works. Neither the operation

nor the function of the reception service is changed by

activity on separate non-broadcast channels.

The two incidents of ‘‘intereonnection” among Tele-

prompter’s CATVs for distribution of a special pro-

gram on a non-broadcast channel in 1964 and 1965 are

in reality merely a form of origination on a non-broad-

cast channel. Neither those events of interconnection,

nor the one sale of commercials on a non-broadcast

channel, changed or affected the separate reception

function.

The formless ‘‘totality”’ theory of infringement pro-

posed by CBS attempts to obscure the fact that there

is no “‘totality’”’ among the systems—the facts as to

operations or ién-broadeast channels vary from sys-

20

tem to system. More basically, the ‘‘totality’’ argu-

ment overlooks the fact that with respect to the recep- -

tion of the broadcast and its distribution to subscribers,

the CATV performed only a reception function and

no function of a broadcaster. When Teleprompter’s

CATV systems originated programs on non-broadcast

channels, they paid the copyright owner if his program

was used.

II. The FUC% regulatory plan for integrating

CATV into a national communications system includes

the requirement that CATV systems be required to

originate programs on a non-broadcast channel and also

to provide non-broadcast channels for lease, for gov-

ernmental access, and for educational use. In recogni-

tion of the expense of providing this service and these

facilities on non-broadeast channels, the FCC has au-

thorized CATV systems on a limited bis to sell com-

mercials in connection with originat#§n on non-broad-

cast channels. The FCC’s plan ificludes encourage-

ment of a CATV network using non-broadcast chan-

nels but its regulatory scheme also encompasses any

development of such networks.

The Commission’s regulation of CATV in the public

interest would be supplanted by private regulation by

copyright owners under the new judicial expansion of

copyright sought by CBS. Moreover, such an expan-

sion of the copyright monopoly would conflict with the

FCC requirement of compulsory origination by CATV

systems. The courts below correctly -held that there

was no “‘spillover’’ effect on the reception service from

activities on non-broadeast channels, thus avoiding a

conflict between a judicial enlargement of the copyright

monopoly and the FCC regulation of CATV in the

public interest.

21

ARGUMENT

L THE COURTS BELOW CORRECTLY HELD THAT THE

CATV RECEPTION SERVICE WAS SEPARATE FROM.

AND NOT CONVERTED INTO A PERFORMANCE OF.

THE BROADCAST SIGNALS BY REASON OF ORIGI-

NATION. SALE OF COMMERCIALS. OR “INTER-

CONNECTION” ON SEPARATE NON-BROADCAST

CHANNELS.

CBS’ argument attempts to obscure the central

issue: was the reception of a broadcast on specific

dates in 1964, 1969 and 1971 embodying a copyrighted

work changed or converted into a performance, not

by what the CATV did with reference to the recep-

tion and distribution of the broadcast signals, but by

reason of activity on separate non-broadcast channels

not involving CBS’ copyrights in any way? The issue

must necessarily be tested and judged on the facts as

to the operation of Teleprompter’s CATV systems with

respect to the specific broadcasts on the specific dates

in question. CBS, to the contrary, rests much of its

argument on ‘‘developments’’ occurring long after

those dates as gleaned from press reports or from

suppositions respecting possible or theoretical opera-

tions of CAT'V systems in the future.

The issue is not, as CBS asserts, whether there

should be “immunity”? for CATV reception service

(Br. p. 14), but rather whether the reception and

distribution of broadcast signals is a ‘“‘performance’’

of the copyrighted works ‘‘in public’? under the Copy-

right Act.

A. The broadcast reception function is separate from and in no

way changed by origination on non-broadcast channels

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

Artists Television, Inc., 392 U:S. 390 (1968), estab-

lished that reception and distribution of broadcast sig-

22

nals to subscribers for viewing on their own sets did

not constitute a ‘‘performance”’ of the broadcast pro--

grams within the meaning of the Copyright Act.

CBS has pointed to no principle of law hold-

ing that activity such as CATV reception service which

is not a “‘performance’’ can be changed into a per-

formance because of extraneous activity not in any

way involving the copyrighted work.

This Court’s analysis in Fortnightly was based on its

“determination of the function that CATV plays in

the total process of television broadcasting and recep-

tion” (392 U.S. at 397) in which “‘broadeasters per-

form”’ and ‘‘[v]iewers do not perform” (id. at 398).

The CATV system provided ‘‘a well-located antenna

with an efficient connection to the viewer’s television

set’’ (id. at 399). Its function ‘‘has little in common

with the function of broadcasters” (id. at 400).

The underlying principle of Fortnightly that

‘““CATV operators, like viewers and unlike broad-

casters, do not perform the [broadcast] programs that

they receive and carry’’ (id. at 400-401), must neces-

sarily serve as the basis for determining whether Tele-

prompter’s CATV systems performed the broadcast

program when they received the broadcast signals and

distributed them to subscribers.” Teleprompter’s

*° This Court’s norinal reservation in two footnotes (id. at 392

n. 6, 399 n. 25) that it was reaching its decision on the basis of

the facts in the case arose because the copyright owners and amici

made numerous and in some cases extravagant forecasts as to what

CATV might be capable of doing in the future.

CBS here, for example (Br. p. 32 n. 36), asserts that CATV

systems have the technical capability of deleting commercials from

broadcast programs and substituting CATV commercials, and

refers to deletion of commercials by CATV systems in Canada,

without pointing out that in the United States such deletions are

A i a eh reat

systems performed exactly the same function with

respect to the broadcasts of CBS’ copyrighted works as

the Fortnightly CATV systems did. Here as in Fort-

nightly the broadcasters procured the programs and

broadcast them for public reception. The CATV.

tem carried whatever broadcast it received and di

tributed the broadcast signals without editing to the

subscribers’ homes. If the CATV reception service

in Fortnightly was not a performance, Teleprompter’s

CATV reception service is not a performance.

CBS has fastened on the fact that this Court referred

to a broadcaster as an “‘active performer’ and the

viewer as a ‘‘passive beneficiary’’ (id. at 399), to argue

that if the CATV performed some function in addition

to the reception function, the reception function is

changed and no longer ‘‘passive’’ in the process of

broadcasting and reception. Thus CBS claims that

the origination of programming by a CATV is “‘fune-

tionally equivalent’’ to broadcasting and that the

CATV reception service thereby also becomes equiv-

alent to broadcasting.

Whatever merit there is in comparing ‘‘functions”’

of broadcasters and CATV systems on activities sep-

arate from and unrelated to broadcast reception, it

cannot obscure the fact that the reception function

of the CATV with respect to broadcasts remains un-

changed regardless of the additional and separate func-

tions the CATV company was performing. The

CATV reception function is no more changed into

forbidden by the FCC. 47 C.F.R. §76.55(b). As a result, there

is, of course, no evidence in the record of any such CATV activity

here, and in fact CBS stipulated that the entire broadcasts, ‘in-

cluding station identification and commercials, were received and

distributed to subscribers by the CATV systems involved in this

ease. JA 158-59.

a broadcast function by these extraneous activities than _

it would be changed into a broadcasting function be-

cause a CATV happened to be owned by a broadcaster.

JA 152, 262 (CBS ownership of 13 CATVs).

CBS argues that Teleprompter’s CATV systems are

not ‘‘passive beneficiaries”? ‘‘on the viewer’s side of

the line’’ within the meaning of Fortnightly because

‘‘origination of programming, sale of commercials, in-

terconnection into networks, and selection, procure-

ment and distribution of programs to be viewed”’ (Br.

p. 23) are characteristic operations of broadcasters.

But this adds little to logical analysis. Teleprompter

has never denied that its CATV systems ‘‘selected’”’

and ‘‘procured’’ the programs to be originated on the

non-broadeast channels. However, with respect to

broadeasts received, Teleprompter did not select or pro-

cure the programs, nor have anything to do with the

sale of commercials by the station, nor was there any

“interconnection”? or ‘‘CATV network” with respect

to the reception of the broadcasts.

B. The sale of commercials and “interconnection” in con-

junction with origination on non-broadcast channels does

not change the broadcast reception function

Both the single sale of commercials by the New York

City CATV and the ‘‘interconnection’’ in this case

involved non-broadcast channels, and the courts below

held that these activities did not change the reception

service into a broadcast function. The courts reached

this conclusion for the same reason that they held

origination did not change the reception service. JA

xxxi; 476 F.2d at 348.

CBS apparently recognizes its failure to establish

the legal relevance of Teleprompter’s very limited

sale of commercials and interconnection associated

with CATV origination. CBS tries to shore up this

argument by criticizing the courts below for failing

to issue an opinion on the issue because the failure»

“merely invites further litigation” (Br. p. 27), and

it also asserts, without foundation, that there were only

a few instances of interconnection because proof was

presented only with respect to five systems. CBS does

talk of Teleprompter’s plans for the future, and an

“avowed step toward the establishment of an already

planned network”’ by the filing of an application with

the FCC to operate ground stations to receive satel-

lite transmissions (Br. p. 28). These future **plans’”’

turn on authorizations by the FCC and involve econ-

tingencies so numerous as to make prediction perilous.

If the future course of development of the CATV in-

dustry does in fact pose new copyright issues, they

should surely be dealt with in a new court proceeding

at which the actual CATV development could be fully

explored and subjected to regular fact-finding

processes.

C. CBS’ proposed new doctrine of performance by

“Totality” is devoid of substance

CBS’ major argument (Br. pp. 29-33) that Tele-

prompter’s CATV reception of the broadcasts of the

copyrighted works is ‘‘tainted’’ and converted into a

performance is based on the alleged ‘‘functional equiv-

alence”’ of the CATV system compared as a totality to

a broadcaster. Both the District Court and the Court

of Appeals focused on the acts of Teleprompter’s

CATV systems with respect to the copyrighted works.

The District Court found that copyright liability

should not be affected by an “unrelated function.”

JA 135; 355 F.Supp. at 629. The Court of Appeals

agreed. Equally, it refused to find any “spillover”

effect from the sale of commercials ‘“‘by which the —

system becomes a ‘performer’ with regard to its recep-

tion service.’’ JA xxx; 476 F.2d at 348.

In making the ‘‘totality’’ contention, CBS paints

with a broad brush and attempts to gloss over differ-

ences between the facts applicable to each of Tele-

prompter’s five CATV systems. CBS argues, contrary

to the record, that there is a ‘“‘totality” applicable to

all of these systems.

The New York City CATV system on which CBS

particularly focuses (Br. p. 20) carried only New York

City television stations (as required by its franchise)

and never imported ‘‘distant signals.”” JE 390, 404.

The New York City system was ‘‘transmitting signals

through the air” (Br. p. 20) only to the extent that a

microwave connection was used in lieu of cable to

serve as the connection between the antenna sites in

the city and two subsidiary equipment locations.” JA

252-253, 280-281. The only sale of commercials oc-

curred in 1971. The only ‘‘interconnection’”’ was a

standby capability to connect with other New York

City CATV systems as required by the franchise.

The Farmington CATV originated programming

(both automated and non-automated) but did not sell

any commercials.” The ‘‘interconnection”’ involved

21In the courts below CBS argued that the use of microwave

made Teleprompter’s systems functionally equivalent to a broad-

caster. This contention was rejected by both courts below on the

ground that microwave is point-to-point communication analogous

to, and used as an alternative to, a cable or wire. JA 119-120; 355

F.Supp. at 623; JA xxxi-xxxii; 476 F.2d at 348-349. CBS has

not renewed the microwave contention in this petition.

22 The ‘‘distant signal’’ issue with respect to Farmington, Great

Falls and Rawlins is briefed in No. 72-1628.

,

27

carrying the Ali-Liston fights in February 1964 and

May 1965, eight months before and six months after the

alleged infringements in November 1964.

The facts as to the Great Falls CATV are similar

to those for Farmington, except that the alleged in-

fringement is in June 1969 so that the sole interconnec-

tion in the record is at least four years prior to the

alleged infringement.

The Rawlins and Elmira CATVs had only auto-

mated programming at the time of the alleged infringe-

ments ™ and did not sell any commercials. Elmira

carried the Ali-Liston fights.

Moreover, CBS’ totality argument obscures the fact

that it was the broadcast station which procured CBS’

copyrighted programs, converted the images and

sounds of the programs into electronic signals and

broadcast those signals for public reception. Tele-

prompter’s CATV systems merely received and car-

ried those signals in their entirety, including the com-

mercials the broadcaster sold. CBS’ focus on the num-

ber of hours a broadcaster originates (Br. p. 10, 12, 13,

24) cannot obscure the fact that a broadcaster is re-

sponsible for, and must identify himself with, all pro-

grams he broadcasts whether he procures them from a

network, or originates them in his own studio. (JE

493) No broadcasting television station performs the

function of receiving broadcast signals off-the-air and

**CBS discusses origination without referring to the con-

cession during trial by CBS Vice President David M. Blank that

it was ‘‘debatable’’ whether automated programming such as time

and weather should be considered as programming in this context.

JA 459-460. In addition, one of CBS’ ‘‘experienced broadcaster’’

witnesses testified on cross-examination that he did not think of

the automatic weather scan as program origination. JA 386-387.

28

distributing them unedited to subscribers. There is no

similarity in function or responsibility as between ~

activities of a broadcaster and Teleprompter’s CATV

systems so far as concerns the copyrighted programs.

In making its argument, CBS stresses that a sub-

seriber pays a single fee for the CAT'V service and

receives both the broadcast signals carried and the

programs originated by the CATV. The reception

service function constitutes the overwhelming and

primary operation of the business of Teleprompter’s

CATV systems. The reception service, as measured by

hours of broadcast reception available, subscriber in-

terest and source of income, outweighed all other serv-

ices. JA 533, 542-43, 549, 564-66. There was no change

in the charge for the service because of a change in the

amount of program origination. In fact the program

origination provided an ancillary service to attract

subscribers to the reception service ; Teleprompter used

all kinds of promotional devices on the assumption that

if a member of the public once experienced the excel-

lence of reception he would remain a subscriber. JA

523-24, 533, 542-43, 550, 560-62, 566, 574-78. The courts

below found no change in function because the CATV

systems made a single charge for reception of broadcast

i as well as for origination of programs. This

Court should find none.

The reception service is discrete as to each channel

of broadcast reception, and the broadcast reception

function is equally discrete from the origination func-

tion. Origination on non-broadcast channels in no

way interfered with or interrupted broadcast reception.

The fact that the CATV as the originator on non-

broadcast channels concededly performed the origi-

nated programs does not change its separate reception

function as to broadcast programs.

CBS’ reliance on Herbert v. Shanley Co., 242 U.S.

591 (1917), and Associated Music Publishers, Inc. v.

Debs Memorial Radio Fumd, Inc., 141 F.2d 852 (2d

Cir.), cert. denied 323 U.S. 766 (1944), in support of

its totality theory is misplaced. There was no question

in those cases that the music was performed; rather,

the sole issue was whether the performances were for

profit. In Herbert the copyrighted compositions were

performed ‘‘live’’ for the entertainment of guests dur-

ing meal times. In Associated Music Publishers a

phonograph record containing the copyrighted com-

position was broadcast over a radio station. Nothing

in either case suggests that activity which is a non-

performance can be transformed into a performance by

activity unrelated to the copyrighted work.

United States v. Midwest Video Corp., 406 U.S. 649

(1972), also cited by CBS (Br. p. 25 n. 29), involved

a dispute as to authority of the Federal Communica-

tions Commission under the Communications Act to

issue regulations requiring CATV systems with more

than 3500 subscribers to originate programming on a

non-broadeast channel. No question of copyright was

involved. Comparisons by members of the Court in the

separate opinions of the origination by CATV with

origination by a broadcaster in no way suggests that

the CATV origination tainted or changed the reception

service so far as concerns copyright liability.

OBS relies heavily on opinion testimony by ‘‘expe-

rienced broadcasters’’ that petitioners’ CATV systems

are ‘‘functionally equivalent’’ to a broadcaster. Br.

24, 27. These ‘‘opinions’’ were no more than conclu-

sory statements echoing CBS’ legal argument of ‘“‘to-

tality.”” Aside from the formless ‘‘totality’’ theory,” -

CBS has never suggested why the same reception

service as that provided by the CATV in Fortnightly

should be converted into a performance because of

origination, sale of commercials or ‘‘interconnection’”’

on unrelated non-broadcast channels.

When Teleprompter’s CATV systems originated pro-

grams on non-broadcast channels, they paid the copy-

right owner if his program was used. Thus, if a CBS

program had been used, CBS would have been paid.

But CBS has made clear that its primary interest is

not in reaping royalties on programs used in origina-

tion by CATV but to use copyright to freeze ‘‘the

present system of nationwide program distribution by

television stations through their affiliated stations ....”’

JE 470. In 1968 when the FCC was considering its

proposed CATV rules, broadcasters urged that origi-

nation should be prohibited and advertising be barred.”

The Commission rejected that position as without

merit, pointing out that ‘“‘we do not think that the

public should be deprived of an opportunity for greater

diversity merely because a broadening of selections

may spread the audience and reduce the size of the

audience for any particular selection.’’* Doubtless

CBS would like to use copyright to supplant the

FCO’s regulation of CATV and to substitute its own

restrictions to preserve what it regards as the present

** CBS’ engineer witness, on cross-examination as to the factors

entering into his conclusion of ‘‘functional equivalence’’, stated

that they could be ‘‘not ranked, but perhaps lumped.’’ JA 345.

%% First Report and Order, supre n. 16, J 4, at 202.

%* Id, 1 5, at 203.

31

network structure. This however is no basis for a

judicial expansion of the copyright monopoly through

adoption of a new and formless doctrine of ‘‘perform-

ance’’ by analogy and ‘‘totality.”’

Il. CBS’ CONTENTIONS CONFLICT WITH THE

FCC REGULATORY PLAN FOR CATV

CBS gives short shrift in its brief to the FCC

egulations applicable to CATV program. origination.

TR pp. 22 n. 25, 23 n. 27. In contrast, both courts

bélow noted that the FCC had adopted rules dealing

with CATV origination, which require systems with

more than 3500 subscribers to have their own program

origination on a non-broadcast channel.” JA xxx n. 13,

476 F. 2d at 348 n. 13; JA 135, 355 F. Supp. at 629.

In 1968, when the Commission announced its major

inquiry into CATV, it stated that it intended to con-

sider CATV program origination ‘‘as a means for

increasing the number of local outlets for community

self-expression and for augmenting the public’s choice

of programs and types of service, without use of spec-

trum.’’* It also made clear that ‘‘interconnection of

local cable systems’? (which in reality is merely one

aspect of program origination on non-broadcast chan-

nels) fell within the scope of its inquiry.”

* The requirement of origination was suspended during judicial

review. The Commission’s regulatory authority was upheld in

United States v. Midwest Video Corp., 406 U.S. 649 (1972), but

the suspension of the rule requiring origination has not yet been

lifted by the FCC.

*8 Notice of Proposed Rulemaking and Notice of Inquiry, Docket

No. 18397, 15 F.C.C. 2d 417, 7 5, at 418 (1968).

2 Id., 1] 8-9, at 419-420.

In 1969 in its first major Report in the CATV in-.

quiry, the Commission confirmed its tentative conclu-

sion that ‘CATV program origination is in the public

interest and should be encouraged.” * Moreover, the

Commission’s plan was based on encouragement of

CATV systems to make more non-broadcast channels

available to others for program origination on a com-

mon carrier basis and also to provide public access

channels." This interrelated plan—involving CATV

earriage of broadcast signals and other services to be

provided on non-broadcast channels—was based on a

recognition of "

“the great potential of the cable technology to

further the achievement of long-established regu-

latory goals in the field of television broadcasting

by increasing the number of outlets for com-

munity self-expression and augmenting the pub-

lic’s choice of programs and types of services

In that context the Commission considered possible

interconnection of CATV systems, either in connec-

tion with the CATV origination or through use of the

channels leased on a common carrier basis.” The

Commission noted the additional service which the

public might derive from a CATV network if one

were to be established. It went on, however, to point

out the difficulties in establishing such a CATV net-

work, and concluded that should adverse consequences

develop the Commission could and would take remedial

% First Report and Order, supra n. 16, { 3, at 202.

%1 Td., JJ 11-16, at 205-207.

2 Id., 1 3, at 202.

33 Id., 7-8, at 203-204.

or preventive action.“ Finally, the Commission recog-

nized that providing these services on non-broadcast

channels would be expensive and concluded that it was

in the public interest that CATV owners be permitted

to sell commercials on non-broadcast originations to

help defray the expense.™

In 1971 the Commission explained that its develop-

ing plan for CATV regulation involved a number of

interlocking aspects, including ‘‘access to and use of

nonbroadcast cable channels, [and] minimum channel

capacity”. The Commission’s plan for “‘integration

of cable service into the nation’s communications strue-

ture without undue disruption’’™” included not only

one channel for non-automatic origination, but also

minimum CATV channel capacity so that non-broad-

cast channels would be available for public use and

access. The Commission also noted that a ‘“‘nation-

wide interconnected cable network”? was “far from

imminent.’’* In this respect, the Commission said:

“*The type of interconnection and, most important,

the cable penetration levels to permit the forma-

tion of a network capable of outbidding broadcast

networkt@are far in the future. We intend to keep

a close watch on this question and to take whatever

action is called for within our jurisdiction.” ™

The Commission’s integrated plan for CATV was

embodied in regulations announced and explained in

* Id., 18, at 204; see also id., 17, at 207-208.

88 Id,

% Letter of Intent (Cable Television Proposals), 31 F.C.C. 2d

115, 116 (1971).

5 Td., at 117.

%8 Td., at 125.

%° Td.

34

its 1972 Cable Television Report and Order,” where |

the Commission made clear that a condition of the car-

riage of broadcast signals was the obligation of CATV

to provide non-broadcast channels for origination, for

public access, education access and leased access.“ The

sale of commercials in connection with ‘origination

cablecasting’”’ was specifically permitted, although sig-

nificantly restricted when compared to the commercials

a broadcaster would carry.” 47 C.F.R. § 76.217.

Now CBS would have Teleprompter’s CATV sys-

tems penalized. CBS proposes a new copyright rule

which converts the CATV broadcast reception service

» into a ‘“‘performance’’ and hence an infringement be-

eause the CATV systems were doing what the Commis-

sion wanted them to do in the public interest—.c.,

program origination on non-broadecast channels. In-

deed, CATV origination in compliance with the Com-

mission’s compulsory origination rule would, CBS

asserts, so ‘‘taint’’ the reception service that the CATV

operations as a “‘totality’’ would become ‘‘functionally

equivalent to a broadcaster.’’ “

CBS’ concern with a cable network is obvious. But

‘‘interconnection”’ between two CATV systems to per-

mit simultaneous origination of the Ali-Liston fights in

1964 and 1965 at dates far removed from the alleged

# 36 F.C.C. 2d 141 (1972).

41 Td., J 121-25, at 190-92; 47 C.F.R. §§ 76.201, 76.251.

42For example, WCBS-TV New York, carried approximately

22 hours of commercials in a week in February 1971 out of a total |

broadcasting time of 161 hours. JA 265-66.

48 CBS’ contentions reach this ultimate position. CBS contends

that the New York City CATV system infringed in June 1969

although, as CBS concedes (Br. p. 10), ‘‘[i]t did not import

distant signals’’, and there was no ‘‘interconnection’’ and no sale

of commercials in 1969 (see pp. 13-14, 15, 26 supra).

infringement hardly amount to such a ‘‘network’’.

Moreover, the Commission has made clear that it wants

to keep open the conditions which may permit the

establishment in the future of a network either through

interconnection with respect to non-broadcast CATV

origination or origination on leased non-broadcast

channels. The Commission has made equally clear

this is a matter within its regulatory compass and that

any such network which may develop will be controlled

within the regulatory plan the Commission has devel-

oped for CATV.

CBS proposes to substitute for the FCC plan

its own ‘“‘regulation” using copyright in order to

eliminate CATV origination and commercials and to

prevent the emergence in the future of a CATV net-

work which may be competitive with CBS operations.

The enlargement of the copyright monopoly which it

seeks will enable it to supplant the Commission’s

regulatory plan with its own scheme to preserve ‘“‘the

present system of nationwide program distribution

by television networks through their affiliated sta-

tions ....”’ (JE 470.)

Such an enlargement of the copyright monopoly by

judicial construction conflicts with the principles of

statutory construction approved by this Court,“ and

would lead to an unconscionable result. A large num-

ber of CATV systems, including Teleprompter’s

systems, voluntarily complied with the Commission’s

requirement for origination and the provision of non-

broadcast channels for lease and public access (see JE

158-59, 161-62), which requirements were upheld by

this Court in Midwest Video. The entire reception

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

service of all of these systems would be subjected to

copyright infringement and to the attendant poten-

tially huge damage liability if CBS’s contention were

to be accepted.

We submit the courts below correctly held that Tele-

prompter CATV’s program origination on separate -

channels (with the one related sale of commercials by

the New York City CATV on a non-broadeast origi-

nation, and the two episodes of ‘‘interconnection’’)

was a separate function. The conclusion that there is

no “‘spillover effect’? from that origination on non-

broadcast channels correctly avoids a direct conflict

between judicial enlargement of the copyright

monopoly and the FCC regulations under the Com-

munications Act.

CONCLUSION

The Department of Justice has said that ‘‘the major

television networks have an economic interest in the

limited number of channels of access to the public

which the present television system provides; and this

general interest clearly conflicts with the large-scale

development of CATV as a means of access to the

viewing public.’”’“ Adoption of the novel interpreta-

tion of the Copyright Act for which CBS contends

would undermine the Federal Communications Com-

mission’s carefully drawn CATV regulatory plan and

give the networks power to prevent CATV from pro-

viding the service on non-broadcast channels which

the Commission has found to be in the public interest.

An essential element of the Commission’s ‘‘interlock-

* Comments of the U.S. Department of Justice Before the Fed-

eral Communications Commission, Docket No. 18397 at 21 n. 11

(1969) (investigation regarding ownership of CATV systems by

broadcasters and other media).

37

ing”’ and ‘‘interwoven”’ plan for CATV was CATV

origination and the provision of public access channels.

This plan, which the Commission designed to get

‘cable moving so that the public may receive its

benefits” “ would be frustrated ; the substitution of pri-

vate regulation of cable by the networks through use

of copyright for regulation in the public interest by

the Commission would deny to the public the service

which the Commission seeks to foster.

The decision below on these issues should be affirmed.

Respectfully submitted,

Rosert C. BARNARD

R. Micnart Duncan

CHARLEs F. Letrow

1250 Connecticut Ave., N.W.

Washington, D. C. 20036

Davin Z. RosENswEIG

437 Madison Ave.

New York, New York 10022

Attorneys for Respondents

Of counsel:

Cieaky, Gorruies, STEEN & Hamiiton

1250 Connecticut Ave., N.W.

Washington, D.C. 20036

Karz, Leavy, Rosensweic & SrInDLE

437 Madison Ave.

New York, New York 10022

December 21, 1973

“° Letter of Intent (Cable Television Proposals), 31 F.C.C.2d 115,

117 (197").