Teleprompter Corporation v. Columbia Broadcasting System, Inc. – Oral Argument – January 07, 1974

Media for Teleprompter Corporation v. Columbia Broadcasting System, Inc.

Audio Transcription for Opinion Announcement – March 04, 1974 in Teleprompter Corporation v. Columbia Broadcasting System, Inc.

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Warren E. Burger:

We will hear arguments next in 72-1628, Teleprompter Corporation against Columbia Broadcasting and Columbia Broadcasting against Teleprompter.

Mr. Barnard, I think you may proceed whenever you’re ready and if you will help, watch your time, I’ll help you too.

Robert C. Barnard:

Thank you Your Honor.

Mr. Chief Justice and may it please the Court.

I represent Teleprompter Corporation, a Community Antenna Television operator, petitioner number 1628.

Columbia Broadcasting Company, CBS, and the other copyright owners are petitioners in the conditional cross-petition, number 1633.

The two petitions had been consolidated for argument and counsel had agreed, the Teleprompter will present its position first in both the petition and the cross-petition, CBS will respond and I will reply.

To avoid confusion as to who is petitioner and respondent, I will refer to the parties as Teleprompter and CBS.

Warren E. Burger:

Do you wish to save five minutes for rebuttal or won’t?

Robert C. Barnard:

I would like to Your Honor.

CBS owns copyrights on works which CBS licenses to broadcaster to be broadcast for reception by the public.

The other cross-petitioners are copyright owners who have by contract granted the CBS the right to license their works for broadcast.

Teleprompter owns CATV systems.

He reception of the licensed broadcasts of the copyrighted works by five of Teleprompter’s CATV systems.

In 1964, 1969 and 1971, is alleged in the complaint to be a copyright infringement.

And fortnightly against United Artists, this Court held that a CATV system which receives a broadcast and makes the broadcast signals available to subscribers — members of the public does not perform the work which was broadcast.

Two issues are presented by these petitions.

First, the main petition, the so-called distant signal issue.

Does the location of the CATV’s receiving antenna on which the broadcasts were received more than a few miles from the CATV community and the connection from the antenna to the community by a microwave link licensed by the FCC have copyright significance?

Trial court held it did not — Court of Appeals concluded that the antenna location and the connection to the antenna have copyright significance.

Second, the conditional cross-petition raises the issue whether the reception of a broadcast by a CATV system is converted into a performance of the broadcast work not by what the CATV system did with reference to the broadcast copyrighted work but by reason of what the CATV system did on separate channels not used to receive broadcasts and not involving CBS’s copyrights.

Both courts —

That is the origination of other programs and the commercials and the interconnection?

Robert C. Barnard:

That’s correct Your Honor.

And the use of microwaves?

Robert C. Barnard:

The issue of microwave is not up in this petition.

No.

But it’s the interconnection, – and the origination of other programs.

Robert C. Barnard:

And the sale of commercial.

And the sale of commercials.

Robert C. Barnard:

Both courts below held that those three activities did not have a spillover effect on the reception service and held that it did not change it into a performance.

Right.

Robert C. Barnard:

I turn first to the leading question of the distant signal issue.

Fortnightly as the Court will recall involve two CATV systems in West Virginia, one in Clarksburg, one in Fairmont which received Pittsburg and other stations 60 to 80 miles away.

In Fortnightly the issue was whether the reception of — by the two CATV systems was a performance and hence an infringement.

In holding that this — that the reception service by those two CATV systems was not a performance, this Court did not discuss the receiving antenna or its location in relationship to the CATV communities which had granted a franchise to the Fortnightly CATV’s.

There were actually five towns that had granted franchises to the Clarksburg CATV and two to the Fairmont CATV.

Nor did the Court discuss the devices which connected the antenna to the CATV distribution system.

There was in Fortnightly a issue as to the technology of the equipment, cables, amplifiers and other equipment to bring the signal from the antenna to the subscriber sets.

United Artists, the copyright owner there argued that — and CBS repeats the argument here, that the CATV systems have complicated equipment, sophisticated equipment and that they are active rather than passive and that the transmission and retransmission of the broadcast signals by the CATV systems, in the course of distributing the signals to the subscribers constitutes a performance.

There was also in Fortnightly issues to whether the CATV systems spoiled the market for the copyright owners by making a broadcast available in the CATV community outside the broadcast stations market.

The trial court found that the broadcast could not be received by the residents of Clarksburg and Fairmont on their own antennas.

The CATV reception, the copyright owner argued, spoiled his market.

The Fortnightly Court of Appeals said that the copyright owner was entitled to prevent delusion of his market and to limit his license to areas and to audiences.

This Court rejected arguments based on the technology of equipment and by the Court of Appeals — and the arguments by the CAT — of the copyright owner that his market had been spoiled.

It focused on the meaning of the word performance and held that reception of a broadcast intended for public reception and the distribution of the broadcast signals to the — what this Court called additional viewers was not a performance.

Despite this background, the Court of Appeals in this case concluded that the location of the antenna on which the broadcast was received and the technology of the equipment to connect the antenna to the cable distribution system had copyright significance.

The error, we submit in the decision of the court below stems from the fact that the court based its reasoning here as it did in Fortnightly on what the copyright owner said was his preferred method of economics in exploiting his copyright rather than on the meaning of the word performance.

CBS and the copyright amici in the court below argued that the television station has a specific market area bounded by the points for the broadcast to receive off the air by rooftop antennas.

A copyrighted owner, it is said, does not intend his broadcast to be viewed outside that area and it was viewed outside that area by reason of the CATV reception is — it is as CBS says as an importation of a distant signal which is according to CBS, a broadcast function.

No matter how its broadcasted?

Robert C. Barnard:

That’s correct.

All of this is an echo of the copyright owners’ economic argument.

Building on this copyright owners’ preferred economics, the court below concluded that the CATV perception would be permitted only if the broadcast signal was in the Court’s words, “In the community.”

But the signal was not already in the community, than it was a distant signal and importing it into the CATV community made the CATV functionally equivalent to a broadcaster and the Court deemed that to be an infringement.

The Court recognized the difficult task of defining the term distant signal.

It could not use rooftop antennas as the CBS had suggested.

Such a conclusion, the Court said, “It would fly in the face of the mandate of Fortnightly.”

It could not require that the receiving antenna be located in the CATV community.

The CATV receiving antennas in Fortnightly were located outside, all seven of the CATV communities although the exact distance did not figure in any way in the decision in Fortnightly.

Robert C. Barnard:

In the end, the court below devised the definition based on antenna technology using such vague litigation prone words as near or adjacent to.

When the antenna is not near or adjacent to the CATV community and what the court called, transmittal or re-transmittal devices were needed to bring the signal form the antenna to the CATV community, then it is a distant signal.

Unless the CATV can bear what it called the heavy burden of showing that the signal could be received near or adjacent to the CATV community on an antenna of equivalence sophistication, another litigation prone test.

The transmittal or re-transmittal device that the court talked about in its formulation included either microwave or cable.

In the courts below, CBS argued that because microwave is transmission through the air, its use makes CATV like a broadcaster who also transmits through the air.

But both courts below held that microwave is point to point transmission equivalent to or a substitute for cable or wire.

And that issue of microwave is not in the petition here.

Nonetheless, the court below made the use of the transmittal device, such as microwave or cable critical overlooking the fact that a transmittal device was in fact used in Fortnightly cables and amplifier to bring the signal from the antenna to the community.

In support for this new judicial formulation, the court below and CBS here placed central reliance on two sentences in this courts opinion, United States v. Southwestern Cable.

That case involved the FCC’s rule under the Communications Act requiring that CATV systems in the Grade B contour of a station received the station and block out other signals, so-called non-duplication of the same program.

And upholding the FCC’s regulatory authority, this Court described CATV systems as having one or both of two functions.

First, enhancing reception of local stations and second, transmitting to subscribers the signals of stations beyond the reach of local antennae which this Court referred as the importation of distant signals.

This was said in a regulatory context, not copyright.

And this Court specifically noted that the term “distant signal” was given a specialized definition by the FCC in the context of the compulsory carriage rule.

Distance meant, received beyond the Grade B contour of a station aligned, calculated on an engineering assumption along which good reception is expected 90% of the time at 50% of the locations.

It does not mark the limits of actual reception.

The court below recognized that this FCC definition of distant signals for regulatory purposes was in its words “unsuitable for copyright purposes.”

Five of the ten stations received in — by the Fortnightly CATV’s were distant under the FCC rule beyond the B contour.

This is significant because Fortnightly and Southwestern were argued together and decided at virtually the same time.

If the FCC definition of distant signals had copyright significance, this Court would surely had said so.

Instead, it held that the reception of signals, both distant and non-distant under the FCC definition was not a performance.

While the court below uses the word distant signal, the rule that constructed is not based on distance nor in the FCC definition.

In fact, it conflicts directly with the FCC definition.

The Durango Station received by the CATV in Farmington which the court below held was distant, is only in fact 45 miles from Farmington.

In Fortnightly, the Pittsburg stations were 80 miles from the Clarksburg CATV systems.

A mountain blocks the reception of the Durango Station in Farmington.

The CATV receiving antenna is on the side, on a maser, 40 miles away and the signal is brought to Farmington by a microwave link licensed by the FCC.

But Farmington is within the Grade B contour of the Durango Station and hence, it is local under the FCC compulsory carriage rule.

The station demanded and received compulsory carriage and non-duplication protection.

Under the new definition of the court below, the reception of the Durango Station by the Farmington CATV which is required by the FCC has become a performance, the consequence which CBS dryly describes as anomalous.

Robert C. Barnard:

The court below said without analysis that in receiving distant signals, as it defined them, the CATV was functionally equivalent to a broadcaster.

But it made no attempt to compare the functions of a CATV system and a broadcaster.

Whether or not the signal is distant under the rule of the court below, the CATV had nothing to do with procuring or originating the program, the broadcaster did.

The CATV system merely received what was broadcast and made the signals available instantaneously and without editing to its subscribers.

This is exactly what the CATV did in Fortnightly.

CBS argues that the CATV selects stations to be received for their programming and hence selects programs.

This is an echo of the attempt made in Fortnightly to confuse the selection of stations with the selection of programs.

In Fortnightly, the selection of stations was held not to be — was held to be on the viewer side and not a performance.

The same conclusion we think should be applicable here.

Moreover the court overlooked the fact that in law and in the economics of the television industry, the CATV subscribers are in the audience coverage area of the television station.

The FCC has authority under its statute to fix the “areas or zones to be served by a station.”

It has done this by its general rules permitting CATV reception of stations including the so-called distant signals.

But in this instance, the FCC has acted more specifically.

It has granted microwave licenses to receive these specific stations, by these specific CATV’s to distribute the signals in this CATV community.

This is a specific act by the commission exercising its authority to put the CATV subscribers in the zone or area to be served by the station.

In addition, in television industry economics, the CATV subscribers are included in the stations coverage area.

Television is a mass medium and its economics turned on audience size.

The selection of affiliates, the prices paid for to charge the advertisers the prices paid for programs all turn on the size of the audience.

The audience is measured by the rating services, ARB and Nielsen are the two big ones and this service —

Byron R. White:

National advertisers may perhaps — might be able to be charged on the total exposure – do you think some local advertiser on the San Fransisco station really is going to pay for being advertised in Phoenix or –?

Robert C. Barnard:

Mr. Justice White, an advertiser will have to compete for television time against other advertisers who want that television time.

The station’s rates are geared to the size of the station’s audience.

If he wants to use the station, then he has to pay the station’s rates which are tied directly into the stations audience.

He may not want to have his program or advertisements seen by somebody in Phoenix or he may not want to have it seen by juveniles or he may not want to have it seen by women, but he pays for them because they’re in the stations audience.

Byron R. White:

And if the station’s audience is increased by CATV, they count that in their rates?

Robert C. Barnard:

The rates charge the advertisers, the price is paid for programs.

The cost of living console and the orders which it issued about this industry has said that both the rates charged advertisers and prices paid for programs are not tied to costs, but to the size of the audiences measured by the rating services.

And the significant thing Your Honor is that the distant station here that CBS talks most about, Los Angeles to Farmington is — has the Farmington CATV subscribers included in its coverage area in the — and it’s published in the volumes, as they are published to shows — what the coverage area is.

And the record has got a number of proposals by the stations citing in CATV coverage including that of a Los Angeles station which talks about its CATV coverage in the New Mexico.

When CBS decided to use television to exploit its works, it took the medium the way it is, in fact and in the law.

Robert C. Barnard:

When CBS authorized the broadcast, it was broadcast under the words of the statute intended to be received by the public.

The statute says, “The public,” not just the part of the public, CBS would like for its own private reasons to be allowed to receive the broadcast, and in the industry economics, the subscribers were in the stations coverage area.

I now turn to the issue raised by the cross-petition.

Whether the activity of CATV system on separate not used for broadcast perception so tainted the reception of the broadcast as to convert that reception into a performance put in another way as there are doctrine of infringement by analogy or in the words of the court below, is there a spillover effect?

When a CATV originates the program and makes it available to subscribers, it performs the program.

If copyrights were involved, Teleprompter secured a license and paid a royalty.

No CBS program was involved in any CATV origination.

This is not pay TV, no extra or separate charge was made for the originated program.

The origination by the CATV was on separate non-broadcast channels and in no way interfered with or interrupted the reception of the broadcast.

There were two kinds of programming, the so-called automated programming in which cameras, scans, clock and weather instruments and the sort of general interest programming.

The idea of originating programming occurred in the early 60’s because there was an empty channel not used for broadcast reception in the Farmington system.

And they’ve conceived the notion of originating with the idea of attracting people to use the CATV service.

It worked and in the relevant periods in this case, three of the five system had general interest programming and automated programming, Farmington, Great Falls and New York.

The amount varied, Great Falls had two hours a day, five days a week, and up to in New York, 1971, 10 hours a day.

Now the interconnection that Justice Stewart mentioned is actually a form of origination.

It was closed circuit rights to the (Inaudible) the systems got in 1964 and 1965.

Three other systems here carried those fights.

No extra charge was made for that.

But with reference to — I should say that all of this CATV origination was in conformity with the FCC rules and there was one sale of commercials that occurred in 1971 in New York, the New York CATV, that also was in conformity with the FCC rules.

CBS has proposed a doctrine of totality by which a reception service can be converted from a non-performance into a performance.

Because the broadcaster originates programs, sells, commercials, is interconnected in networks, the CATV, it is said which performs these functions is equivalent to a broadcaster and its entire reception service thereby becomes a performance.

But the CATV systems performed none other broadcaster functions that CBS talks about with reference to the broadcast works.

CBS also speaks about receiving distant signals by broadcasting stations.

But here also, the analogy is based on a confusion.

A distant signal in this context means that a broadcasting station got its program from a distant source, i.e. a network.

But the broadcaster remained responsible as the originator of the program and he performed it when he broadcast it.

Moreover, there’s no totality here.

Two other systems, Rawlins and Elmira had only these automated programming devices, time and weather scan.

New York did not receive distant signals.

Its franchise required it to receive only local New York stations.

Robert C. Barnard:

Only one system sold commercials on originations in New York.

Two events of interconnection that are talked about occurred in 1964 and 1965, months away or years away from the dates of the alleged infringements.

The courts below we submit were correct in holding that there is no spillover effect and that there is no doctrine of totality by analogy.

In conclusion, the FCC’s regulatory plan perhaps for CATV was designed among other things to provide television service to households in small communities.

That is like the service otherwise only residents in large metropolitan areas are able to get.

More than 2 million households now depend on CATV reception of distant signals for part of their television service.

By emphasizing —

How do you define distant signals?

Robert C. Barnard:

I think there is no significance for distant signals in the copyright context.

Do you just use the phrase? Now what (Voice Overlap) —

Robert C. Barnard:

I’m using the phrase that I used distant signals in the context of the court below.

In other words when the Farmington — when the Farmington CATV station went out and got KTTV, an independent station in Los Angeles, that was something that nobody in that area with his own television set, no matter what kind of an area he might have had, including one on a high hill, could’ve possibly receives, isn’t that correct?

Robert C. Barnard:

That’s correct Your Honor.

But that may have significance in the regulatory context but it seems to me it has no significance in the —

Copyright (Voice Overlap) —

Robert C. Barnard:

— copyright context.

That’s your argument.

Robert C. Barnard:

In addition, the FCC in that instance, KTTV granted the license which put the CATV subscribers in (Voice Overlap) —

I think it’s the KTTV, it’s that independent state in Los Angeles (Voice Overlap) —

Robert C. Barnard:

Yes.

There are four.

You’ve picked up four, I think.

Robert C. Barnard:

That’s correct Your Honor.

And how far away was KTTV from the broadcasting facility (Voice Overlap) —

Robert C. Barnard:

I think its about 900 miles —

— in Farmington, its about —

Robert C. Barnard:

Its about 900 miles from — I think the microwave network was a little longer because it wandered around but a (Voice Overlap) — I think the air miles are about 900 miles.

Yes.

Robert C. Barnard:

By emphasizing a perspective ruling only and by offering to waive damages, CBS is really asking this Court to turn its back on the Fortnightly, overruling or restricting CBS, restricting Fortnightly, CBS asks, will place in the hands of a large copyright owners like CBS the power to set the FCC, CATV plan aside and to decide in their own private interest what television service, the public in the United States should receive.

I’d reserve the remainder of my time Your Honor.

Robert C. Barnard:

Thank you.

Asa D. Sokolow:

Mr. Chief Justice and members of the Court.

The Court did agree pursuant to our application Your Honor that I could share five minutes of my half hour time with my co-counsel, Mr. Graubard who will address himself to the question of the syndication market and the effect of importation of distant signals on copyright owners in that context and the Court did grant that request Your Honor.

This lawsuit is not a lawsuit involving what Mr. Barnard calls antenna technology.

The ultimate issue here, we see it is whether the Copyright Act is going to be declared inoperative with respect to an entire industry.

Because the cable television industry as it exists today is not the same industry that had existed at the time of the Fortnightly decision.

All due respect to the Court, one could say that the Fortnightly decision was outdated almost at the time it was written.

Fortnightly was decided at 1968.

The complaints were filed, I believe in 1960.

The record was filled with facts prior to that time.

Fortnightly involved the system that did nothing more but go two-and-a-half miles out of town, put up an antenna on a long hill — big hill and enhanced the reception of television signals which were over the air in those communities were intended to be received by the members of those communities, were in fact received by some members of the community with rooftop antenna and received by others with cooperative antennas.

That’s all that the Fortnightly system did.

Now, at the time that the Fortnightly issue was before this Court, the Court was informed that there were then in existence other cable stations.

They included Teleprompter who were not back in the horse and buggy days of Fortnightly but which were importing distant signals hundreds of miles away who could not enter a particular market except for the activity of the cable systems.

These stations were originating programming.

As a matter of fact the Teleprompter Cable Station in New York City originates more programming that WCBS TV, are owned and operated affiliate in New York.

They were selling commercials and they were interconnecting into networks.

When the Fortnightly case was here, the question was what was the performance, all that we had to guard ourselves Your Honor was the (Inaudible) we thought that a performance consisted of a retransmission and a reproduction of a copyrighted work and in broadcasting parlance, radio, I thought that the electronic transmission or retransmission of a program and its reception by the public constituted a performance.

I thought the re-transmitter and the receiver were both performers.

But the receiver was not performing in public and therefore is not engaged in a public performance and he wasn’t a copyright violator.

Televisions that were turned on a bar and grill, it would then be a performance that violated — (Voice Overlap)

Asa D. Sokolow:

Might very well Your Honor.

And if I called someone into my home, because in the Fortnight case Your Honor, differentiated between broadcasters and viewers but I think that if I brought my new colored television set into my home and charged everybody ten dollars —

No.

Even if you didn’t charge them anything.

Asa D. Sokolow:

If I invited a group in, it could be a public performance.

Right.

And therefore the person who sold you the television set could be a contributory infringer?

Asa D. Sokolow:

I don’t think so.

I don’t — I think the transmitter of that television programming was a performer.

Asa D. Sokolow:

I think the receiver was a performer but that the transmitter of the programming was performing in public and for public.

And if you came in and invited people in, other than the social occasion —

Well, why would you — why would it be other than a social occasion?

Asa D. Sokolow:

Well, if I charged ten people ten dollars to see the (Voice Overlap) —

Well, what difference does that make?

From the point of view of the Copyright Act?

Asa D. Sokolow:

I think it would be —

It would violate copyright if you put on a dramatic performance so you — whether or not you charged admission, don’t you?

Asa D. Sokolow:

I don’t know whether the courts would that if I invited in two or three friends to watch a reception that that we —

Because it would be — whether it not — it’d be in public —

Asa D. Sokolow:

Yes.

— but whether or not it’s in public doesn’t depend upon how much admission is charged, does it?

Asa D. Sokolow:

Doesn’t — does not Your Honor.

Well, in the event it would be — what the pre-Fortnightly law was as far as the performance was concerned was as we understand Mr. Justice Fortas who dissented in the Fortnightly case was changed so that now we’ve got a functional test as to what a performance is at least for this particular industry.

Now, Mr. Barnard says that we’re making a frontal assault on the Fortnightly decision.

I think that we are entitled to recover here and there should be an infringement whether the Fortnightly decision stands, whether it falls, whether it’s limited to its own facts.

Of course, if you read Fortnightly, Fortnightly says that you have to look at the functions, what place does cable television play in the total spectrum of the broadcasting industry and it used such words as viewers, passive beneficiaries on the viewers side of the line as contrast with broadcasters.

Now, I can’t imagine a television viewer or a passive beneficiary who imports distant signals or originates programming or who sells commercials or interconnects into a network.

No, I know who performs that kind of a function.

Broadcasting stations.

WCBS TV in New York City imports a local signal from a network broadcasting center and it originates programming, it sells commercials and it’s a broadcasting.

So does the Teleprompter Cable Station in New York City.

It receives those local signals.

It originates programming and its selling commercials.

Now, when the case was here, the Fortnightly case was here, Mr. Barnard didn’t talk to this Court about importation of distant signals.

He said repeatedly in that oral argument, ”It were in the area where reception is possible off the air.”

We’re in the area where reception would’ve been expected if it were not for the ruggedness of the area.

There was no talk about business signals, he said that those areas were in the service area of the broadcast stations.

Now, what’s involved in the importation of distant signals taking that function?

The fact of the matter is that the Court of Appeals didn’t invent the term, the earth is round and television signals on the earth travel in straight lines.

Asa D. Sokolow:

As a result, as an engineering matter, television signals normally don’t travel more than 60 to 100 miles, although there are a few exceptions.

There was uncontradicted evidence in the record on that subject. Furthermore, the FCC is always regarded as a policy to have separate markets.

They don’t want super stations in New York City retransmitting to different areas and therefore Los Angeles is a separate market and its not Farmington.

Now, how did Teleprompter Farmington get the Los Angeles Stations?

Well, what it did was to procure and select the type of programming what it — that it wanted Mr. Justice Stewart.

That’s what you said in Fortnightly, was a characteristic of a broadcaster.

There were some 113 other television stations as close to or closer to Farmington than Los Angeles.

But they wanted those Los Angeles Stations because of the type of programming that they had.

I’m sure they had sports.

I’m sure they had situation comities.

I’m sure they had lots of things to get those signals into Farmington.

There was no way of getting those signals into Farmington other than by this importation and Teleprompter got a 1,000 mile microwave transmission link in order to bring it in there.

And the Los Angeles Stations did not intend that their programs go to Farmington.

And that copyright owners who testified at this trial said that they — when they licensed those independent stations at Los Angeles, they did not intend the programs to go to Farmington because they were looking to sell those programs again until they license them again for syndication in the Farmington area.

That’s the subject on which Mr. Graubard will talk.

This Los Angeles supermarket or the used car salesman who was sponsoring the program on the Los Angeles Station had no interest in Farmington.

There’s been an amicus brief submitted there by MPAA which has some very interesting statistics on the subject that Mr. Justice White asked about.

The statistics show that only 30% of the advertising on national television, is national advertising, 70% of it is local advertising, spot advertising, those kind of advertisers have no interest in this.

Mr. Barnard closed with the question of how the court below defined distant signals.

Well, the court started out by defining local signals, a local signals.

A local signal, it said was something that could be received in the local community with a CATV antenna for example, which you had to get a clearer and good reception.

If you went 600 miles or 800 miles further, if you had to locate your antenna near the broadcasting station miles and miles away and you had to use microwave to bring it in there, then the Court said the signal is presumptively distant.

It’s costly to lay miles of cable and to go through this microwave apparatus.

If Teleprompter didn’t have to go 600 miles to Los Angeles, it would never have done it.

So the Supreme Court — excuse me, the Court of Appeals said that with respect for example to the Los Angeles stations which went 600 miles to Farmington, they were presumptively distant.

No one would quarrel with that.

The Salt Lake City stations with 400 odd miles away from Great Falls, no way that those signals could have gotten in there.

Noway that they could be called anything but distant.

The Denver stations were something like a 160 miles from New Orleans.

No question about the fact that they were distant.

Asa D. Sokolow:

So that the dispute as to what the court really did here below, I think is rather meaningless.

Mr. Barnard has referred to the fact that the FCC has recently refined its description instead of now talking just in terms of Grade A and Grade B contours, they now use the term, “significant viewing.”

If you applied the significant viewing test, the current FCC test to the signals that were involved in our case or with the exception of Durango that the Court of Appeals found imported and distant signals would be distant signals under current FCC definition.

Mr. Barnard disagrees with our arguing totality of services but I don’t I don’t understand how we can talk about anything but totality if were talking about function.

Teleprompter advertises that it imports distant signals, then it attracts an audience and the audience listens till the Teleprompter originations.

And that new audience is attracted to the originations, turns on the commercials and listens to the commercials.

Now, what difference does it make that its on a different channel.

The Court of Appeals said maybe there would be a different result if you’re on a different channel.

Well, up in New York City where I am, that Teleprompter channel has four or five channels on which its originating, programming or having public access programming or showing time and whether or its running an A&P report.

Every time you turn on to that other channel, you are not watching WCBS TV, it’s not enhancing the reception of the signal.

It’s blocking it out.

Now, that might be desirable because the FCC encourages this type of activity but it blocks out our signal just as much as if they had run those originations on our channel two in New York City.

Now, its true that if Teleprompter weren’t there, channel two is competing with channel four and channel five and channel seven and the viewer has the same option.

But every one of those competitors is paying copyright royalties.

The only competitor that’s not paying copyright royalty is Teleprompter and make no mistake about it, teleprompter has said repeatedly in its public statements that it was a competitor.

The Fortnightly system was no competitor or a broadcaster at most, it enhanced the reception.

But the Teleprompter prospectuses which we have placed into evidence here state that they are competitive with broadcasters for programming, for personnel, for sponsors and for content.

Therefore I think that each of these separate functions, one feeds on the other, I think that the Court —

William H. Rehnquist:

Mr. Sokolow, you said a moment ago that when people turn on the Teleprompter channels in New York, it blocks out channel to it, I’m not sufficiently familiar to understand what you mean.

Asa D. Sokolow:

Mr. Justice Rehnquist, let me explain it, it — we have a — on the top of our television set a converter which is provided by Teleprompter, it has all the usual channels plus the other particular channels.

So —

Including the two?

Asa D. Sokolow:

Yes, of course, they including to which is WCBS to the —

Which is required — it’s required to carry all the local stations?

Asa D. Sokolow:

Definitely sir.

And it does carry all of the local stations and the UHF stations included in the educational channel in addition, it has four or five other origination channels.

All I was saying Mr. Justice Rehnquist is that if I turn that dial and I put on a — origination channel and I’m watching the New York Knicks or the New York Rangers which are pretty populous sports.

I’m not watching channel two and I don’t mind that if it can apply (Voice Overlap) –

(Voice Overlap) —

Asa D. Sokolow:

I beg your pardon?

You’re getting a good — a better picture in channel two, you know.

Asa D. Sokolow:

Well, I’m subscriber, I have told you probably rather but that doesn’t make me an infringer but I –[Laughter]

But — so, it only blocks it on — in that sense —

William H. Rehnquist:

You said you were blocked out, when you turn away from one broadcaster to another one —

Asa D. Sokolow:

That’s the only differentiation I was making Mr. Justice Rehnquist is that when — if don’t have the color, cable with me, it’s a question of free competition whether I change — turn on channel two or channel four, let them pay the share – the proper share, the origination of the programming and we’ll all be happy.

Well, there is no question as whether that they pay whatever (Inaudible) royalties or due with respect to any programming that they originate.

Asa D. Sokolow:

I don’t think that’s correct.

I did stipulate when Mr. Barnard left for the purpose of programming which they originate, you know, this case was done mainly by stipulations Your Honor.

Yes, I know.

Asa D. Sokolow:

I do not believe that Teleprompter plays for the music that it uses and that the — I think ASCAP who has filed a brief amicus here would really not concede that its being paid by Teleprompter for (Voice Overlap) —

Well, is that an issue here, I thought the only issue was as to the — its liabilities under the copyright act for —

Asa D. Sokolow:

That — that’s what —

— most originated by CBS.

Asa D. Sokolow:

That’s what I’m concerned with Your Honor.

I was just trying to answer your question as to whether or not the — in fact the paid copyright (Voice Overlap) —

No, I want to know whether that was an issue in this case?

Asa D. Sokolow:

No, its not.

I’m — as far we’re concerned, that ASCAP issue was a question between ASCAP, and then we’ve stipulated.

As far as this case is concerned, we’ll concede that they pay those.

That’s what I thought.

Asa D. Sokolow:

And now I’d like to have, Mr. Graubard addressed himself to the question of syndication, I want to explain why I’m doing that syndication, it’s a very important subject, CBS is not allowed by FCC law to engage in syndication anymore so I thought that the argument would more appropriately come from —

Teleprompter, isn’t it?

Asa D. Sokolow:

Yes.

It involves Your Honor is the production of television programming which maybe shown initially on a network.

Then after its been on the network for two or three times, it maybe sold or licensed in another area and that’s the process of syndication that there are various runs.

In fact sometimes the program is not even played for network television, it’s created to be sold in one market.

But that that is what Mr. Graubard’s clients do and they are copyright owners.

Warren E. Burger:

Mr. Graubard you will have somewhat more than five minutes that your colleague promised you, you will have until 2:46 if you’ll help me keep an eye on the clock.

Seymour Graubard:

Thank you sir.

Mr. Chief Justice, may it please the Court.

Seymour Graubard:

I am speaking for those copyright owners who are independent producers and who license their works to television broadcasters and to others.

Thus, Dina Corporation which I represent directly is owned by Danny Kaye, an actor and by his wife, Sylvia, Fine Kaye a composer and lyricist.

They do not broadcast themselves, any of their productions.

They license their productions.

So do the other named co-plaintiffs in this action.

And so do many others including producers of motion pictures.

I’m also speaking for the authors, actors, directors, composers and musicians who sell their creative output to the producers.

Under their guild contracts, they receive in addition to their compensation for the initial performance of their works, stipulated percentages of the amounts paid for reruns of the programs.

Most television programs even if they are fortunate enough to be rewarded with a network broadcast do not recover their costs through that initial broadcast.

The profits that may be earned, generally come from the additional showings or reruns that follow, the initial network performance.

Both the producers and the artists who create these programs rely on these returns, these reruns for their ultimate compensation.

Now the term —

The actors who are members of the cast of a —

Seymour Graubard:

Yes sir.

Either a movie or a one made exclusively for a TV and those — these are the so-called residuals, isn’t that right?

Seymour Graubard:

Yes sir.

That’s correct.

They’ve come in recently.

The old time movies unfortunately those old time stories don’t get a nickel, do they or they don’t?

Seymour Graubard:

That’s right.

As a matter of fact in the old days, even the producers —

Right.

Seymour Graubard:

— failed to have legalize the values of —

Residuals —

Seymour Graubard:

Residuals.

Right.

Seymour Graubard:

No longer the case today.

No.

Seymour Graubard:

Mr. Sokolow has explained the meaning of the term syndication.

Generally speaking, once the initial performance is over, the program owner licenses individual television stations to perform the work or the program and these television stations obtain their own advertising revenues for the programs.

Seymour Graubard:

As some members of this court may have noticed, some of these reruns seem to go on forever.

And there is a different scale of compensation for the artists depending upon how many reruns there are.

Now obviously, a program has a greater potential audience and a greater sales value through licensing, if it has not previously been shown in the local area.

Many network broadcasts that are initially licensed are limited to certain regions.

No broadcasts through broadcasting stations reach the entire nation.

By importing distant signals, the CATV systems enter the market for these programs that are to be shown initially in the areas not previously fortunate enough to have had the benefit of the initial performance.

Thus the cable performance in this distant area is frequently and exclusive first run for which the copyright owners received nothing.

Moreover, the copyright owner must then deal in these areas for licensed fees based on second showings rather than on initial performances.

To the extent that the copyright owners receive a smaller amount for a second run, the creative artists similarly suffer.

On the other hand, to the extent that the cable systems would pay a reasonable royalty for a license to perform programs received distant signal, the copyright owners and the artists would benefit.

We believe that this is a clear case for the enforcement of the copyright law whose purpose and design were to reward the creators of programs for the performance of their works.

It follows that the copyright owners and their associated creative artists also support the contention that cable systems that function as broadcasters are actually performing the copyrighted works and should pay royalties for the use they make of these works.

Now we are not as concerned frankly at this time about classifying as broadcasters, those cable stations that have innovated programs that have interconnection that go advertising.

We independents and artists know that cable television today is still growing.

By the end of the decade, it is predicted that approximately one-half, the families of the United States with television sets will be linked to cable.

It is also predicted and the Court may find this amply demonstrated in the briefs before it that pay television on a broad scale will be a fact that there may be two way connections between cable stations and their subscribers and in short, that the cable stations are progressively becoming a more and more important communication element in our society.

If this Court is going to make law in regard to the function of a cable television set today, not as in Fortnightly, a pair of giant rabbit ears which performed none of these functions.

But if it is going to view cable television as it is currently developing as it has developed since Fortnightly and as its — on the well on the road to become in the future, I believe the court will find that cable television projectors or stations will be major competitors if not the major competitor of the broadcasters.

To give these stations the unfair competitive advantage of being able to perform certain works without the payment of royalties, is very bad of course for CBS.

You are begging the question when you say they’re performing, weren’t you?

Seymour Graubard:

I recognized that Your Honor —

It’s like saying a — that a whole —

Seymour Graubard:

May I say, correct myself and say I hope the Court will call that a performance but I will correct myself by saying to use these programs, to use these programs means potential great injury for the television broadcasters.

The television set uses the programs and if its not done in private there, you could make the argument that a violation every time he turns on his set of the copyright laws, if it’s still on public.

Seymour Graubard:

Your Honor I would not personally make that argument.

Oh!

It can be made just the same way you’re making this one.

Seymour Graubard:

I would —

Are you doing that for commercial purposes?

Seymour Graubard:

Yes Your Honor.

Seymour Graubard:

The —

The listener?

Seymour Graubard:

Oh!

You mean in the home?

(Voice Overlap) A man in his home turning on a television set, as he isn’t selling that to anybody, is he?

Seymour Graubard:

Not —

This case —

Seymour Graubard:

Not in any case before this Court.

If the statute doesn’t say anything at all about doing it for commercial purposes or non-commercial purposes (Voice Overlap) about a performance in public.

Seymour Graubard:

That’s right sir.

I have every confidence that if that particular question, that issue reached this Court at some future time, this Court would deal with it accordingly as it saw fit.

I am not making any advocacy of a position which I believe at the present time to be extreme.

Rather I am stating that I believe in the future and its becoming increasingly obvious today.

The owners of copyright, they’ll be losing revenues if the cable stations are not going to be held liable to pay the copyright owners proper license fees just as do the television stations.

Warren E. Burger:

I think your time is up —

Seymour Graubard:

Thank you.

Warren E. Burger:

— Mr. Graubard.

Mr. Barnard.

Mr. Graubard, before you sit down, Mr. Graubard, as I remember, the Fortnightly case was argued and decided back in 1967-1968, I think it originated in 1960.

We were told at that time that this was a matter in the Congress and that it was about ready to be settled in the Congress, it’s going to be a legislation.

Now, I don’t think this apparently, all we still have is a statute enacted back in 1909, long before anybody dreamed of television set and let alone CATV.

What’s the status now of the situation in Congress because this of course is the basic problem in this case as we all know is trying to apply a 1909 statute to technological revolution.

Seymour Graubard:

Well, it did appear before the Fortnightly decision came down that there was likely to be legislation.

In fact, it appeared that there was likely to be legislation when this particular case was on the way up but after the District Court opinion was rendered, the CATV people any — at any rate lost interest in the compromised legislation that was pending.

Now Your Honor there is nothing in the record in regard to this.

I’m just attempting to answer question directly.

Well, Congress itself might have some interest.

Will they only move if the CATV people are registered?

Seymour Graubard:

I could not answer that, perhaps Mr. Barnard can.[Laughter]

I don’t know sir.

Is there a Bill now in the Congress?

Seymour Graubard:

Yes sir.

And (Voice Overlap) —

(Voice Overlap) —

Seymour Graubard:

— I am told, I am told that if the CATV people are motivated by what eventuates from this case, there is likely to be legislation.

Have there been committee hearings?

Seymour Graubard:

There have been committee hearings, yes sir.

In both Houses?

Seymour Graubard:

IN the House of Representatives, certainly, Senate — I don’t believe there has been any in the Senate.

Anything reported out of either — if any — of a committee in either House?

Seymour Graubard:

I think they are awaiting a final determination of these issues as far as this point is concerned.

They’re awaiting what?

Seymour Graubard:

They are awaiting a resolution of issues between the —

Byron R. White:

What difference would that make to legislate for certainly, who are drafting a new statute.

Seymour Graubard:

Mr. Justice White you’re completely correct.

I have no excuse or alibi to offer for what Congress has done or is contemplating doing –[Laughter]

And the —

But you think they’re awaiting?

Seymour Graubard:

Perhaps they have greater reliance on the wisdom of this Court than on their own means.

I have no other reason to offer.

That’s very nice.

Seymour Graubard:

Thank you sir.

Only as the 1909 statute to guide us.

Seymour Graubard:

I recognize that.

Robert C. Barnard:

Your Honor I don’t think I can make a forward course, I believe —

Warren E. Burger:

Mr. Barnard, you have five minutes now.

Robert C. Barnard:

Thank you.

I don’t believe that — I believe that a statute has been reported out by a Senate subcommittee and there’s pending action on the Senate side.

There have been, I believe hearings on both sides —

There is a full committee or has it been reported out by the whole committee?

Robert C. Barnard:

As I understand it Sir, it’s been reported out by a subcommittee to the full committee.

And what would that — will provide?

Robert C. Barnard:

Its got a fairly complicated set of rules that have among other things compulsory licenses.

They have provisions for payments, they have a whole set of standards as to which CATV systems would — as would apply to.

I say to the Court these in very general terms because I am not involved in the legislative fight and I know it only incidentally.

But I would suggest to the Court that what Mr. Graubard has said and what CBS has also intimated as well as one of the other amici that the Court should decide against CATV to motivate the situations so that there’s legislation hardly places the proper emphasis on the issue in front of this Court, the issue in front of this Court is not to motivate legislations to decide what is the meaning of the word performance and a statute which is in front of the Court.

May I comment on one or two of the points that Mr. Sokolow made in the course of his argument.

He talked about how much origination CATV does and compared the origination by the New York CATV with WCBS in New York.

In fact, WCBS New York under the rules originates everything it broadcasts, whether it gets it from the network or not.

It is the responsible broadcaster and a responsible originator.

Mr. Sokolow said that we transmit this.

We are engaged in transmission and retransmission.

We are in engaged in handling electromagnetic energy.

We do not handle the sight or sounds of the programs in any way.

We received a signal, we deliver the signal to our subscribers homes.

If he chooses to view the program, he turns on a set, if he doesn’t, he doesn’t.

Otherwise there is no sight or sound involved in this.

Mr. Sokolow talked about whether we were active or passive.

This Court in Fortnightly said that the CATV systems were active.

They were active on the side of the viewer.

He said that in Fortnightly, it was intended that this programs be viewed by the broadcast by the Pittsburg stations, be viewed in Clarksburg and Fairmont.

The Court of Appeals here said, “They recognized that the programs would not have been viewed in Clarksburg and Fairmont but for the CATV.

And the Clarksburg — in the Fortnightly, the copyright owner made exactly the same argument as made here that his market in Clarksburg where there was a television station was being disturbed by the reception of the CATV programs.

In Fortnightly, we urged that the CATV subscribers were in the coverage area of the stations.

I think that our subscribers now are in the coverage area of the stations.

They’re in the area — coverage area of the stations by the industry’s economics and by the action —

Well, by reason of your activities, they are —

Robert C. Barnard:

And in the industry’s economics were taken into account as part of the stations audience which it uses as a basis for its rates and the — that the prices which are paid for its program, he said that the Los Angeles station does not intend that it signal be received in Farmington but in fact it exploits that fact by putting out sales — you’re saying that you can get reception in New Mexico by subscribing to the system, — in the record there is a sales brochure from one of the stations.

The same is true of the Great Falls.

Knowing it, this is a —

Robert C. Barnard:

A station in Los Angeles.

This is a CATV trying to sell it to (Voice Overlap) —

Robert C. Barnard:

No.

A station in Los Angeles trying to sell advertisers, put out a sales brochure in which it brags about its CATV coverage including the coverage in New Mexico.

I see.

And the CATV also advertises similarly, doesn’t it if you subscribe to our service, you’ll get Los Angeles stations.

Robert C. Barnard:

Yes.

Actually —

Robert C. Barnard:

We advertise what we provide to our subscribers.

Whatever it is we provide (Voice Overlap) —

But your point is that the Los Angeles broadcaster sells to advertisers on the basis if you — advertise with us, your message will be heard over in Farmington and New Mexico.

Robert C. Barnard:

That’s correct.

I see.

Robert C. Barnard:

And there maybe some advertisers that don’t want that but he has to compete with advertisers that do want that because that’s the basis for which this — there’s probably (Voice Overlap) —

William H. Rehnquist:

Well, how many Los Angeles advertiser, either they want there message heard in Farmington, New Mexico?

Robert C. Barnard:

There may be a great many.

There may be people who engage in mail service.

There are a lot of —

But it will harm people who come into Los Angeles.

Robert C. Barnard:

There are a lot of organizations that sell by mail.

There are a lot of people who would want it.

Whoever turns on a television?

Robert C. Barnard:

Sure.

People who sell records.

People who have mail order services.

People who advertise institutionally, sure.

Warren E. Burger:

I think your time is up now Mr. Barnard.

Thank you gentlemen.

The case is submitted.