Fame Publishing Co., Inc. v. Alabama Custom Tape, Inc.

LEWIS R. MORGAN, Circuit Judge.

Although defendants-appellants are popularly known as “tape pirates” they could more accurately be described as “tape parasites.” When it becomes apparent that a recording of a composition copyrighted by one of plaintiffs-appellees is destined to become a “hit,” appellants purchase a copy of the recording, reproduce it hundreds of thousands or millions of times, and sell the copies to the public. While most record producers face substantial risks and expenses, never knowing whether their efforts will succeed, appellants encounter no such problems; they buy their hits for a song.

In this action by music publishers1 for copyright infringement, *669the district court granted their motion for summary judgment and permanently enjoined defendants from continued infringement of plaintiffs’ copyrights in musical compositions. For reasons developed below, we affirm the district court.

I. THE COPYRIGHT ACT

Appellants’ principal contention is that their activity is protected under the “compulsory license provision” of the Copyright Act of 1909, 17 U.S.C. § 1(e). Congress therein granted the holders of the copyright in a musical work the exclusive right

. to make any arrangement or setting of it or of the melody of it in any system of notation or any form of record in which the thought of an author may be recorded and from which it may be read or reproduced .

Plaintiffs, independent music publishers, may refuse to allow their copyrighted works, in the form of “sheet music,” ever to be recorded at all. If they do grant such permission, however, the compulsory license provision automatically applies, stipulating

as a condition of extending the copyright control to such mechanical reproductions, that whenever the owner of a musical copyright has used or permitted or knowingly acquiesced in the use of the copyrighted work upon the parts of instruments serving to reproduce mechanically the musical work, any other person may make similar use of the copyrighted work upon the payment to the copyright proprietor of a royalty of 2 cents on each such part manufactured, to be paid by the manufacturer thereof.

In the majority of cases, this means that once a composition has been recorded, other artists must be allowed to make a recording of their performance of it. Appellants, of course, simply re-record the first recording. The precise issue for decision is therefore whether duplicating a sound recording of a performance of a copyrighted composition is a “use” of the composition “similar” to the original recording of it.

As a preface to our analysis, it may be helpful to emphasize that the copyrights here involved are in the musical compositions themselves, not the particular recorded performances. These rights have been protected by federal law since 1909; no federal law provided for copyright protection of a particular performance until 1971. See our discussion of the “Sound Recording Amendment of 1971” at (c) infra.

(a) The statutory language. The Act provides that, after the first mechanical recording of a composition, others may make “similar use” of the composition, upon' the payment of two cents per recording. The first recording is made, of necessity, from a live performance; it involves, in varying degrees depending on the nature of the composition, singers, instrumentalists, arrangers, and conductors. The “use” of the composition thus consists of a process (a live performance) as well as a product (a recording); neither one by itself is sufficient to constitute the “use” being licensed.

A taped duplicate is simply not a “similar use” of the composition as we understand the words. There is no live performance; in fact, there are no musicians at all. Only a tape recorder is required. The end product, of course, is *670not only “similar” but virtually indistinguishable; the process, however, is completely dissimilar. This distinction is not mere musical metaphysics; it is the dividing line between that which the statute commands and that which it forbids. Although appellants “produce” recordings, they do not make a “similar use” of appellees’ compositions in so doing.

(b) Congressional intent. We need not rest our holding solely on the plain meaning of the statute, however; the general policy of the Copyright Act reinforces our conclusion. We begin by noting that the compulsory license provision is a limited exception to the copyright holder’s exclusive right to decide who shall make use of his composition. As such, it must be construed narrowly, lest the exception destroy, rather than prove, the rule. Thus we should neither expand the scope of the compulsory license provision beyond what Congress intended in 1909, nor interpret it in such a way as to frustrate that purpose.

Congressional intent was apparently twofold: to encourage future creative endeavor and to combat monopolization in the music industry. H.R.Rep.No.2222, 60th Cong., 2d Sess. (1909). See Goldstein v. California, 412 U.S. 546, 565, 93 S.Ct. 2303, 37 L.Ed.2d 163 (1973). The compulsory licensing provision was an ingenious device for the accomplishment of these objectives: the artist is left free to choose the manner in which his composition will initially be offered to the public, yet he must then license others who wish to present their own competing renditions.

It is incontestable that protecting tape duplication would frustrate rather than further these objectives. First, far from encouraging artistic creativity, such statutory protection would have precisely the opposite effect.

For several obvious reasons, duplication is far less expensive than the more traditional method of producing a popular recording. The duplicator need not exert himself in finding and developing ' the artist, nor need he bear the actual costs of recording the composition and promoting the finished product. It is apparent then that if duplicators are allowed to operate, they will. As a result, ' there would be fewer new interpretations of hit records, either by established artists or by “unknowns.” A related result would be that fewer new artists would be afforded the opportunity to record their own work. The aspiring artist would be caught in a two-way squeeze; the duplicators, of course, would have no interest in financing his shot at stardom, while recording companies, their profits cut by duplicators, would be able to take far fewer chances on untested talent. As a result, fewer people could realistically consider commercial music as a way to earn a livelihood; artistic endeavor would inevitably be curtailed. Naturally, plaintiffs’ businesses would suffer since there would be fewer compositions to publish.

Second, protecting duplication through the compulsory licensing provision would promote rather than inhibit the growth of monopoly in the recording industry. As the Register of Copyrights testified in connection with the 1971 amendment to the Copyright Act:

The record industry, taken as a whole, is a highly competitive industry. There is ease of entry; there are a lot of small companies.
If someone can come in and legally skim off the hits, who is going to suffer, the small company or the larger company? Hearings on S. 646 and H.R. 6927 Before Subcomm. No. 3 of the House Comm, on the Judiciary, 92d Cong. 1st Sess. 20 (1971).

The answer is obvious, of course. Only the largest producers could afford to suffer the losses inflicted by duplicators.

(c) Judicial authority. The issue before this court has been raised infrequently, due to its relatively recent genesis. In fact, only two Courts of Appeals have considered the question; both have held precisely as we do that duplication is not protected by the statute. The Ninth Circuit, in Duchess Music Cor*671poration v. Stern, 458 F.2d 1305, 1311 (9th Cir. 1972), concluded:

Rosner may, of course, record appellants’ songs, when she hires musicians, artists, and technicians. Instead, she steals the genius and talent of others. She deceives others into thinking that her tapes represent her' own work. She has no “right to copy.” She may not continue her piracy under the flag of compulsory licensing. (Citation omitted.)

Appellants attempt to distinguish Duchess on the grounds that Rosner, the duplicator there, did not tender the two cent royalty until after she had been “caught red-handed” in her copying. It is, of course, precisely because she attempted to comply with the compulsory license provision that the question arose; we cannot see that the timing of her tender changes or taints the issue.

Edward B. Marks Music Corporation v. Colorado Magnetics, Inc., 497 F.2d 285 (10th Cir. 1974) (en banc) arises from a factual setting even more similar to ours, in that defendant’s method of operation included from the beginning a tender of “royalties” which plaintiffs refused. There the court concluded that the compulsory license provision means that once Marks has licensed one recording,

Magnetics may make its own arrangements, hire its own musicians and artists, and then record. It does not mean that Magnetics may use the composer’s copyrighted work by duplicating and copying the record of a licensed recording company. Such, in our view, is not a similar use. 497 F.2d 285, 288.

Duchess and Marks in turn find support in Aeolian Company v. Royal Music Roll Company, 196 F. 926 (W.D.N.Y.1912), the initial decision construing the compulsory license provision. The court there held that duplicating a player piano roll, that era’s analogue of a sound recording, was not a “use” of the composition “similar” to making the original roll, and was therefore not protected by the statute.

Finally, in Fame Publishing Company, Inc. v. S & S Distributors, Inc., 363 F.Supp. 984 (N.D.Ala.1973), the court likewise concluded that the provision offers no protection to duplicators.

Against this impressive battery of judicial authority, appellants offer as their principal weapon Jondora Music Publishing Company v. Melody Recordings, Inc., 351 F.Supp. 572 (D.N.J.1972). In holding that duplication is a “similar use” protected by the statute, that court committed one of the most basic of legal errors: by asking the wrong question, it got the wrong answer. Rather than asking whether duplicating a recording is a “similar use” of the composition, it asked whether recorded performances are protected by the Copyright Act. This fallacy is most clearly illustrated in the court’s analysis of Duchess:

. that court [9th Circuit] believed that because a musical composition is copyrighted, the unauthorized reproduction of the performance embodied in the sound recording of that composition is, and ought to be, prohibited by federal copyright laws. But that clearly was not the law when Duchess was decided. Neither performance nor recording was copyrightable. 351 F.Supp. 572, 580 (emphasis supplied).

Of course, the Duchess court was not concerned with the recording or performance but with infringement of the copyright in the composition itself. The district court simply could not distinguish form (the recording) from substance (the composition).2

*672Not surprisingly, this approach lead the district court into conceptual cul de sacs such as the legislative history of the “Sound Recording Amendment of 1971,” (Public Law 92-140, 85 Stat. 391). That amendment created a copyright in sound recordings “fixed” after February 15, 1972; again, the court’s concern with this amendment illustrates its misconception that the underlying issue concerned particular recordings rather than the compositions themselves. In examining the legislative history of the amendment, the court unearthed numerous statements to the effect that “tape piracy” was not prohibited by federal law. The court concluded that since no copyrights existed in recordings “fixed” before the effective date of the statute, duplication was therefore legal.

Aside from noting the basic analytical confusion embodied in reliance on this amendment, two other criticisms may be made. First, neither the district court nor this court is bound by rather impressionistic statements in a legislative history as to what a prior existing law means. Especially is this true when, as here, a great deal of time (63 years) has elapsed between the two Congresses involved. “[T]he views of one Congress as to the construction of a statute adopted many years before by another Congress have ‘very little, if any, significance.’ ” United States v. Southwestern Cable Company, 392 U.S. 157, 170, 88 S.Ct. 1994, 2001, 20 L.Ed.2d 1001 (1968) (citation omitted). It should be readily apparent that a more accurate guide to Congressional intent is the legislative history of the 1909 Act itself; as we haye seen, that history indicates that the dual purposes of the Act would be thwarted by extending its protection to duplication.

Second, the Congress reached its conclusion despite a dearth of judicial interpretation; no Court of Appeals had spoken on the issue at the time the amendment was being considered.

Based, therefore, on our analysis of statutory language, Congressional intent, policy considerations, and prior judicial authority, we can only conclude that appellants’ acts do not fit within the compulsory license provision.

II. THE GRANT OF SUMMARY JUDGMENT

Appellants also challenge the district court’s grant of summary judgment as improper because of “numerous and complicated issues” of fact which they argue should have been tried. The alleged issues may be numerous and complicated, but they are not material. Neither in their denial and affidavits below nor in their brief do appellants deny that they were engaged in the unauthorized duplication of appellees’ copyrighted compositions in reliance on the compulsory licensing provision. Their denials of other allegations, for example that their sole business is such duplication, or that they had established a “clandestine operation,” are beside the point. They admitted the material facts necessary to permit the district court to rule whether, as a matter of law, their activity was protected; no material issue of fact remained in dispute.

Summary judgment was therefore properly granted, and the district court is therefore

Affirmed.

. The dissent maintains that plaintiffs-appel-lees lack standing under the tests of Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970) and Sierra Club v. Morton, 405 U.S. 727, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972). Data Processing's two-pronged test is met here. First, plaintiffs alleged “injury in fact.” Each plaintiff music publishing company alleged specific violations of its copyrights in specific musical compositions, (Complaint paragraphs 15-114) and asked for an injunction against and damages for each such infringement (Prayer for Relief, paragraphs one and two). In paragraph four of their complaint, they alleged:

Such bootleg tape cartridges [produced by defendants] are sold . . . for cash at prices substantially lower than the prices of legitimate tape cartridges, to the material detriment of the recording artists, recording companies, music publishers and song writers, and to the great damage or retail merchants engaged in the sale of legitimate recordings. (Emphasis supplied.)

We note, finally, that the Data Processing plaintiffs, who were held to have standing, alleged only prospective economic injury while plaintiffs here allege they have already been injured.

Clearly, plaintiffs also meet the second prong of Data Processing’s test, “whether the interest sought to be protected ... is arguably within the zone of interests to be protected or regulated by the statute . ”, Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 830, 25 L.Ed.2d 184. Here the interest sought to be protected was created by the statute in question, 17 U.S.C. § 1; there can therefore be no serious argument that the “interest” which plaintiffs seek to protect, their copyrights in the compositions, are not within the “zone of interests to be protected.”

The dissent’s reliance on Sierra Club is inapposite, since that case dealt with the question of “what must be alleged by persons who claim injury of a noneconomic nature . ”, Sierra Club v. Morton, 405 U.S. 727, 734, 92 S.Ct 1361, 1366, 31 L.Ed.2d 636 (1972). However, even under Sierra Club’s requirement that “the party seeking review be himself among the injured” id. p. 735, 92 S.Ct. p. 1366, plaintiffs clearly have standing, since they allege economic injury to their music publishing businesses. Sierra Club does not challenge the proposition that “palpable economic injuries have long been recognized as sufficient to lay the basis for *669standing, with or without a specific statutory provision . . . Id. pp. 733 — 734, 92 S.Ct. p. 1365.

The dissent argues that plaintiffs cannot have been injured since defendants tendered the two cent statutory royalty for each reproduction. This analysis overlooks the fact that the compulsory license provision is an exception to the general prohibition against duplication. The central issue in this case is whether defendants made “similar use” of plaintiffs’ compositions; only if they did are they permitted to tender the royalty and entitled to be licensed. The dissent, in asserting that defendants are entitled to tender the statutory royalty, assumes of necessity that they are within the compulsory license exception, i. e., that duplication is a “similar use.” But this is precisely the issue for decision, one which cannot be disposed of with such legal legerdemain.

. The dissent follows this same reasoning in its reliance on Jondora and Goldstein v. California, 412 U.S. 546, 93 S.Ct. 2303, 37 L.Ed.2d 163 (1973). In fact, the passage from Jondo-ra chosen for quotation by the dissent is one which reveals that court’s misconception of the underlying issue, since it concerns copyright protection of “mechanical recordings.”

The dissent correctly cites Goldstein for the proposition that Congress had not acted in the area of copyright protection of sound recordings fixed before the effective date of the 1971 amendment. We agree completely, but again, this does not advance our inquiry since the issue of copyright piotection for sound recordings is simply not involved in this case.