Cable TV Copyright

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Neal McLain

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Aug 25, 2002, 6:02:18 AM8/25/02
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I wrote:

> The FCC's signal-carriage rules, [...] specified the
> conditions under which cable systems could carry the
> signals of television broadcast stations. [...] But
> nowhere in these rules is there any mention
> of any form of financial compensation by either party.

Whereupon Garrett Wollman <wol...@khavrinen.lcs.mit.edu> wrote:

> However, cable systems were still required to pay license
> fees -- just not to the stations themselves. The fees
> were (still are?) paid directly to a department of the
> U.S. Copyright Office, which was responsible for
> distributing the revenue received among the copyright
> owners (mostly Hollywood studios).

True: they were, and still are. But that's copyright law, not
telecommunications law. The payments made by cable TV operators are
called "copyright royalty fees"; they are defined by statute, and they
are not subject to free-market negotiation. The whole process is
administered by the U.S. Copyright Office.

Some history:

Throughout the early years of the cable television industry, a number
of broadcast entities and program suppliers had attempted to impose
copyright liability on cable systems on grounds that they were
"performing" their copyrighted works without permission. Some had
sued, but the courts were divided on the issue because the
then-current copyright law (The Copyright Act of 1909) did not address
it.

This issue eventually made its way to the United States Supreme Court
[Fortnightly Corp. v. United Artists (1968)]. In this case, United
Artists Television, owner of the copyright on several motion pictures,
had sued Fortnightly Corporation, a cable television operator,
alleging that Fortnightly had "performed" several of United Artists'
motion pictures without permission. United Artists won the first
round in District Court. Fortnightly appealed; United Artists won
again in the Court of Appeals. Finally, Fortnightly appealed to the
United States Supreme Court; in a divided opinion, the Supreme Court
reversed the Court of Appeals and ruled for Fortnightly.

But the Court made it clear that is was not ruling on the merits of
the case; instead, it was merely refusing to write new laws. Justice
Potter Stewart delivered the opinion of the Court as follows:

"We have been invited ... to render a compromise
decision in this case that would, it is said,
accommodate various competing considerations of
copyright, communications, and antitrust policy. We
decline the invitation. That job is for Congress. We
take the Copyright Act of 1909 as we find it. With due
regard to changing technology, we hold that the
petitioner did not under that law `perform' the
respondent's copyrighted works. The judgment of the
Court of Appeals is reversed."

At the behest of broadcasters and program suppliers -- as well as the
cable industry, which wanted to get the issue resolved once and for
all -- Congress eventually revised the copyright law. The new law,
the Copyright Act of 1976, created a legal construct known as the
"compulsory license." The compulsory license did two things:

It guaranteed that cable systems had the right to
"secondarily transmit" broadcast stations without
having to obtain copyright clearance from the individual
stations or from any program supplier.

It established a system for collecting royalties from
cable operators and disbursing them to "claimants" --
the various program suppliers, music producers, sports
interests, and others who claimed a piece of the pie.

Two government agencies were charged with the responsibility for
collecting and disbursing royalties:

The U.S. Copyright Office, a unit of the Library of
Congress, was assigned the job of collecting the
royalty fees and depositing them into a trust fund
in the United States Treasury.

An independent federal agency known as the Copyright
Royalty Tribunal (CRT) received two assignments:
establishing the fee schedule and allocating the
proceeds among the claimants.

This procedure worked reasonably well, although the CRT had more than
its share of political trouble (at one point, it received Senator
Proxmire's Golden Fleece Award in recognition of the amount of money
it had spent on plants for its offices).

Yet in spite of its political problems, the CRT did manage to
establish a royalty fee schedule for cable television companies.
Royalty fees were based on several factors including each separate
cable system's gross revenues and the number of distant non-network
broadcast stations it carried. Royalty fees were to be calculated and
paid semiannually.

During the Clinton Administration, the CRT was abolished as part of
the "Reinventing Government" effort, and was replaced by a system that
utilized a three-member Copyright Arbitration Royalty Panel (CARP).
CARPs are convened on an ad-hoc basis when needed to set royalty fees
and/or distribute royalties to claimants. This procedure is still in
place today.

CARPs are also used to set copyright royalty fees for other
distribution methods (e.g. satellite television, digital audio
recordings, jukeboxes, webcasting), and to distribute the proceeds.
The current altercation over webcasting of sound recordings centers on
a CARP recommendation.

Related links:
- Copyright Office website: http://www.copyright.gov/
- Copyright Law of the United States:
http://www.copyright.gov/title17/
- CARPs generally: http://www.copyright.gov/carp/
- Full text of Fortnightly Corp. v. United Artists:
http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=US&vol=392&invol=390

Garrett also wrote:

> These days, most major-market station operators use the
> 'retrans consent' process as a way to extort more money
> from cable ratepayers, by requiring cable systems to carry
> affiliated non-broadcast services in their standard tier
> of service, as a condition of carrying the broadcast
> signal. Thus, if you have a Disney-owned station in your
> market, chances are pretty good that you are paying for
> all of the Disney cable channels as a part of your basic
> cable package.

But cable operators still have to pay those copyright royalty fees to
the Copyright Office no matter what their "Retrans[mission] Consent"
agreements stipulate. And you know who ends up paying for it all.
This is what your elected representatives call "Consumer Protection."


Neal McLain
nmc...@annsgarden.com

Neal McLain

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Jan 2, 2014, 10:04:13 PM1/2/14
to
In the previous post, I wrote:

> During the Clinton Administration, the CRT was abolished as
> part of the "Reinventing Government" effort, and was replaced
> by a system that utilized a three-member Copyright Arbitration
> Royalty Panel (CARP). CARPs are convened on an ad-hoc basis
> when needed to set royalty fees and/or distribute royalties
> to claimants. This procedure is still in place today.

In 2004, CARPs were phased out and replaced with the Copyright
Royalty Board (CRB).

Details:
http://www.copyright.gov/carp/

Neal McLain

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