OPENING STATEMENT OF SENATOR DENNIS DeCONCINI

Senator DECONCINI. Before turning to the matter at hand and our group of witnesses here, I would like to publicly express my deep appreciation to the distinguished chairman, Strom Thurmond, for holding these hearings today.

Jurisdiction over copyright matters lies with the full committee, and the chairman has gone well beyond the demands of conventional courtesy in assuring speedy action on this pressing issue. I should also like to commend his able staff, particularly Eric Hultman, for devoting the time and effort necessary to set up these hearings on such short notice.

In 1976, Universal Studios and Walt Disney Productions sued the Sony Corp. of America in Federal district court claiming that video cassette recorders produced by Sony and others infringed upon their copyrighted material.

The district court found for the defendants, but the matter was appealed to the Ninth Circuit Court of Appeals by Universal and Walt Disney Studios. At the end of last month the circuit court reversed the district court, remanding the case for the purpose of assessing damages.

Without going into all aspects of this complicated case, including the current appeal to the Supreme Court, I would simply like to state that I am convinced that this is clearly an issue for Congress to decide, not the courts. The courts are at a disadvantage. They cannot, or at least should not, make the law. Their function is to interpret what Congress meant to cover and what Congress meant to exempt in the Copyright Act.

In point of fact, Congress never did consider specifically the issue of video cassette recorders and, in that context, what the full reach of the Copyright Act should be. This is a field of burgeoning technology which is constantly outdistancing static legal concepts.

In agreeing that artistic productions should be protected by copyrights to insure not only the reasonable property rights of the producers, but to stimulate the creative process, Congress did not assess whether such copyright protection should reach into the living rooms of private American citizens.

Today, because of the invention and marketing of video cassette recorders, about 3 million American homes have the capability to record television signals on tape for replay at a time of the individual's choosing.

The issue which I believe the Congress must now address is whether: (a) the consumer who tapes a television broadcast for replay at a time or times convenient to him or her is violating the Copyright Act, and (b) whether the intent of the act should be extended to reach into individuals' homes by either banning the sale of video cassette recorders or creating a special tax on recorders and blank tapes that would be distributed to copyright holders.

In drafting S. 1758, Senator Thurmond, Senator D'Amato, and I have clearly stated our view on the matter. S. 1758 amends the Copyright Act by creating an exemption to the act for individuals taping broadcasts for their personal, noncommercial use.

It is our strong belief that Congress never intended to deprive the individual of his or her rights to tape signals legally entering

their living room for replay at a more convenient time or times. Indeed, it is this Senator's view that once a signal crosses the threshold of the individual's home, all copyright obligations cease unless the signal is captured for commercial purposes.

Representatives of some copyright holders' groups have suggested that our legislation be modified to clarify that the individual using a video cassette recorder is not violating the law but that we simultaneously impose upon the consumer yet another tax or fee, this one redounding to the benefit of copyright holders. I expect that one or more of our witnesses today will be arguing for such a proposal, and I am interested to listen to those proposals, but I have some skepticism if indeed they are what I have made reference to.

It is not generally my inclination to reject ideas in advance of their formal presentation. But although I am firmly committed to working with the entertainment industry to insure that the wording of our legislation does not go beyond our intent, I am equally opposed to the imposition of a copyright tax on the American consumer. To create such a tax, or whatever euphemism may be used for the tax, concedes that the individual does not have a right to the television signal which legally enters his home.

Home video recording does not deprive the entertainment industry of copyright proceeds to which they would be entitled in its absence. But a new copyright tax would add to the coffers of copyright holders hundreds of millions of dollars from individuals sitting in their own living rooms who wish merely to time shift existing programming.

It is my view that the individual consumer has already paid for copyrighted material that enters the home, albeit indirectly, but sometimes even directly. Movies and other entertainment features broadcast on free television are paid for, usually quite handsomely, by the networks on the basis of whatever the market will bear.

The networks charge advertisers for the privilege of giving their products exposure concurrent with the airing of the entertainment item, and the circle closes when the American consumer purchases merchandise to which has already been added the cost of advertising. Thus, in a roundabout way the American consumer has already paid the copyright fee to the copyright holder.

In the case of pay television, the connection is direct. An individual pays a monthly fee for certain events like movies, the proceeds of which are used by the supplying company to pay copyright holders and other costs and, of course, the profit.

I would like to make it equally clear, however, that our legislation exempts only individuals who tape programs strictly for their personal, noncommercial use. S. 1758 only addresses one very specific problem area which demands immediate resolution. It does not address the myriad other problems which have been and are being created by the tremendous advances in communications technology. Congress must begin the process of integrating current technology with existing legal concepts such as the copyright laws. The basic issue here today is the right of the consumer versus the right of the copyright holder, although I should note that not all copyright holders have viewed home taping as an infringement.

The question is: Should the Copyright Act extend into the homes of American citizens who desire to tape programs for reviewing at another time? Or should the American consumer be exempt from this extension of the Copyright Act into the home?

I believe that S. 1758 captures not only the original intent of Congress but certainly reflects its current feeling. I will do everything I possibly can to insure that the full Senate has this issue brought before it in a most timely fashion.

Before closing my statement and welcoming our distinguished witnesses, I would again reiterate my thanks to the chairman of this committee, Senator Thurmond, for his efforts in support of this legislation and the hearings today. Also, Senator D'Amato will speak for himself, but I would simply like to thank him and his staff, with whom we have worked and cooperated from the outset in what I believe is a wholly cooperative, bipartisan effort to resolve a delicate and difficult issue.

Senator Denton.

STATEMENT OF HON. JEREMIAH DENTON, A U.S. SENATOR FROM THE STATE OF ALABAMA

Senator DENTON. Thank you, Mr. Chairman.

Allow me first to congratulate both you and the coauthor of the bill. I applaud the quick response to this knotty problem and your equally prompt scheduling of hearings on this important copyright issue. I believe that this committee hearing should be welcomed by the electronics and entertainment industries as well as by the American consumer.

For all its gravity, the so-called Betamax case does have a lighter side. In the last several weeks I have been treated to a number of cartoons dealing with this question, including one of a bewildered family being bundled into a paddy wagon as one bath-robed elderly lady, a neighbor, whispers to another, "I understand they were watching a home-recorded videotape." I have had a few cartoons made of bills that I have introduced, so there is nothing novel there.

The court's ruling in the Universal v. Sony case was unprecedented, and many believe that it represents one more instance in which technology has outpaced our laws. The 1976 revision of the Copyright Act was an attempt to update that body of law in every imaginable way.

This hearing is perhaps attributed to the ingeniousness of man, in that we are faced once again with a controversy over the impact of a sophisticated and readily available technology on newly codified copyright laws.

I believe the Congress of the United States is an appropriate forum in which to resolve the differences between the competing interests represented in the Sony case. As we proceed, I know that this committee will seek to protect the rights of both the producers and consumers of entertainment and video equipment.

I shall follow with interest the testimony of all those invited today and wish once again to acknowledge your leadership, Mr. Chairman.

I have noted the presence of an outstanding Alabamian on the list of those about to testify and like our distinguished colleague, Senator D'Amato, would ask the chairman that I be afforded the pleasure of introducing Mr. Julius Kretzer at the appropriate point in today's proceedings.

Senator DECONCINI. Thank you, Senator Denton.

At this time we will hear from Senator D'Amato of New York. Senator D'Amato, we welcome you and thank you for your cooperation and assistance in this matter. Please proceed.

STATEMENT OF HON. ALFONSE D'AMATO, A U.S. SENATOR FROM THE STATE OF NEW YORK

Senator D'AMATO. Thank you very much, Mr. Chairman and Senator Denton.

I am especially pleased to have this opportunity to address the hearing today on S. 1758, a bill which would exempt the private, noncommercial recording of copyrighted works on video recorders from copyright infringement. I think that is important. We are talking about a bill that exempts the private, noncommercial recording of copyrighted works on video recorders from copyright infringement.

My interest in this matter arose when I read of the opinion handed down by the U.S. Court of Appeals for the Ninth Circuit. Under the ninth circuit's opinion, over 3 million owners of video recorders would be liable for damages if they used their equipment to record from their televisions.

To me it seems most unjust that people in the privacy of their own homes should be unable to use their equipment in a private, noncommercial manner. So, I was especially delighted and pleased to be able to work with Senator DeConcini and his staff. I want to pay public tribute to the chairman and his staff for coming up with a proposal that I think treats this matter fairly, deliberately, and, yes, expeditiously, because time is of the essence. Owners and users of videotape recorders should be afforded certainly the same rights enjoyed by audio enthusiasts.

Since the inception of audio technology people have been recording from the radio without penalty, and the consumer and the industry have jointly benefited from the ability to record from commercial programing for private home listening. This same relationship, until recently, has existed between the consumer and the video recording industry.

Furthermore, the benefits of home video recording extend to numerous industries involved. The television industry significantly benefits from the wider viewing audience generated by delayed viewing, which in turn greatly increases the impact of television advertising.

The Ninth U.S. Court of Appeals said in its opinion that it is the prerogative of Congress to provide exemptions in the area of copyright law, and it is clear that the technological advances in the videotape recording field have created an inequitable situation under current copyright law, especially as that was interpreted by the recent decision.

Congress has not examined this area of law since 1976. S. 1758, which Senator DeConcini and I have introduced, would address this situation. Our bill would update the copyright law to reflect recent technological advances. It is in no way infringement upon the powers of the judiciary.

I would hope, Mr. Chairman, that as a result of this committee hearing and the testimony that will be presented to the committee, we would be able to go forth with a bill that could be acted upon expeditiously in the Senate.

Senator DECONCINI. Thank you, Senator D'Amato. We welcome you in this committee to join us up here to listen to the testimony and participate.

We are very pleased to have Representative Stan Parris, who has introduced similar legislation in the House of Representatives. Representative Parris, please proceed.

STATEMENT OF HON. STAN PARRIS, A U.S. REPRESENTATIVE FROM THE STATE OF VIRGINIA

Mr. PARRIS. Thank you, Mr. Chairman and Senator Denton. I appreciate the opportunity to testify today, and I would submit my complete statement for the record, with your permission.

Senator DECONCINI. Without objection, it will be included in the record.

Mr. PARRIS. I will simply summarize briefly the points that we try to make in that statement.

The Ninth Circuit Court of Appeals decision that we address today, in my opinion, was just the latest example of idiocy by the Federal judiciary and is a decision that is another unwarranted intrusion by the Federal courts into the privacy of American homes and is an extension of the intent of Congress that was never intended. It means that 9 to 12 million Americans who view their 3 million video recorders are violating the law if they record television programs without first obtaining the permission of the programs' producers, which is clearly impossible.

Therefore, on October 21, I introduced legislation in the House of Representatives, H.R. 4808, which is identical to the bill that you address today, S. 1758, to correct the inequity by allowing the continued sale and use of videotape recorders for noncommercial purposes.

As of this morning in the House of Representatives, my legislation has attracted 25 cosponsors, and I am sure that there will be considerably more support as the public and the Members of Congress return from the Thanksgiving break and become aware of the dilemma caused by this decision. This is an issue, as I see it, which is totally nonpartisan and has captured the interest of Members of the Congress from all regions of the country.

If the ninth circuit's decision is allowed to prevail, we will be jeopardizing a prosperous and growing industry with a very bright future. By the end of this year, I am told that there will be over 3 million video recorders in American homes with an additional sale of 2 million estimated for 1982. There are 35,000 education and entertainment oriented prerecorded cassettes to choose from today on the market, including 4,000 movies, all of which have copyright