Page:Copyright Law Revision (Senate Report No. 94-473).djvu/82

 It has been proposed that the fee schedule should be amended to provide that no copyright royalty be imposed on the first $100,000 of any cable system’s annual gross receipts. This exemption would apply to every cable system, and this would include multiple system operations and systems which are part of communications conglomerates. There is no precedent in copyright law or in this legislation for such a significant exemption for a commercial activity. The inclusion of such an exemption would be discriminatory. It would be unfair to public broadcasting which has consented to the payment of reasonable copyright royalties, even though it is a non-profit activity. It would be unfair to thousands of small business firms which have no statutory exemption and pay copyright royalties even though their gross receipts frequently are below the amount of the proposed cable television exemption.

Section 111(d)(3) sets forth the procedure for the distribution of the royalty fees paid by cable systems. Each person claiming such fees must in July of each year file a claim with the Register of Copyrights. Not withstanding any provisions of the antitrust laws the claimants may agree among themselves as to the division and distribution of such fees. The Register shall determine whether there exists a controversy concerning “the statement of account or the distribution of royalty fees.” As a practical matter, the willful or repeated failure of a cable system to include complete and accurate information in the “statement of account” would nullify the compulsory license, and the appropriate remedy of copyright owners would be an infringement action pursuant to chapter 5 of this legislation. If no controversy exists as to the division of the fees the Register of Copyrights, after deducting his reasonable administrative costs, shall distribute the fees to the copyright owners or their agents. If the Register of Copyrights finds the existence of a controversy, he shall proceed as is provided in Chapter 8 to constitute a panel of the Copyright Royalty Tribunal. The Register of Copyrights shall withhold from distribution an amount sufficient to satisfy all claims with respect to which a controversy exists, but shall have discretion to proceed to distribute any amounts that are not in controversy.

Review of royalty rates

Section 802 and other provisions of Chapter 8 of this legislation provide for the periodic review and adjustment of the statutory royalty rates, including those provided in section 111. It has been proposed that the cable television rates should not be subject to the review procedures of Chapter 8, or that there should be a single review shortly after the effective date of this legislation. The royalty rates currently in the bill, following an across the board cut in half, were adopted in the expectation that they would be subject to review at an early date.

A restriction of the review process to a single occurrence is neither logical nor desirable. The history of the cable television industry is replete with highly inaccurate projections of the economics of the industry. There is no reason to assume that judgments reached in an initial review will remain valid in perpetuity.

Definitions

Subsection (e) contains a series of definitions. These definitions are, found in subsection (e) rather than in Section 101 because of their particular application to secondary transmissions by cable systems.