Justia Federal District Court Opinions

The original action was commenced on December 11, 1964. Attempts to consolidate this action with United Artists Television v. Fortnightly, 255 F.Supp. 177 (S.D.N.Y.1966), aff'd 377 F.2d 872 (2d Cir. 1967), rev'd 392 U.S. 390, 88 S.Ct. 2084, 20 L.Ed.2d 1176 (1968), in the district court were unsuccessful. The parties voluntarily stayed proceedings in this case while Fortnightly was on appeal. After the Fortnightly decision, supplemental complaints were filed on December 15, 1969 and May 17, 1971

Appellants claim to have been injured because Teleprompter's CATV systems distributed signals of stations carrying the copyrighted programs to viewers who could not otherwise have received them. When a CATV system brings a program into its market from a more distant television market, appellants assert that this has a serious adverse impact on the copyright holder's ability to license that program for later presentation in the importing market

We have been informed by one of the amici that a copyright holder usually licenses his programs first to a network and later to local stations for broadcast. The larger markets are ordinarily licensed first because of the greater demand caused by competition among the more numerous broadcast stations in those markets. We are told that if a CATV system brings into the smaller markets programs that are broadcast by network or independent stations in the larger markets, it reduces the potential audience for that program when it is later licensed for exhibition by a local station. As a result, the fee that the station in the smaller market is willing to pay for the right to broadcast the program will diminish, appellants assert, to the injury of the copyright holder.

Teleprompter has argued that the copyright holder can demand a greater fee from the broadcast station in the larger market in light of the greater audience that will now view the programs as a result of CATV. However, appellants have responded, and we must agree, that the amount that a broadcast station is willing to pay for the privilege of exhibiting a copyrighted program is economically tied more to the fees that advertisers are willing to pay to sponsor the program than to some projected audience size. No evidence was presented in the court below to show that regional or local advertisers would be willing to pay greater fees because the sponsored program will be exhibited in some distant market, or that national advertisers would pay more for the relatively minor increase in audience size that CATV carriage would yield for a network program. Indeed, economics and common sense would impel one to an opposite conclusion.

By pre-trial order, the trial of this case was divided into separate stages. The first stage, on appeal here, concerned the issue of whether or not Teleprompter had infringed appellants' copyrights

"Any person entitled thereto, upon complying with the provisions of this title, shall have the exclusive right:

(c) To deliver, authorize the delivery of, read, or present the copyrighted work in public for profit if it be a lecture, sermon, address or similar production, or other nondramatic literary work; to make or procure the making of any transcription or record thereof by or from which, in whole or in part, it may in any manner or by any method be exhibited, delivered, presented, produced, or reproduced; and to play or perform it in public for profit, and to exhibit, represent, produce, or reproduce it in any manner or by any method whatsoever . . . and

(d) To perform or present the copyrighted work publicly if it be a drama or, if it be a dramatic work and not reproduced in copies for sale, to vend any manuscript or any record whatsoever thereof; to make or to procure the making of any transcription or record thereof by or from which, in whole or in part, it may in any manner or by any method be exhibited, performed, represented, produced or reproduced; and to exhibit, perform, represent, produce, or reproduce it, in any manner or by any method whatsoever . . ."

The term, "off-the-air," will be used throughout this opinion to indicate the reception of broadcast television signals by means of an antenna or similar receiving equipment. We use the term, "broadcast," in accordance with the definition given to "broadcasting" in 47 U.S.C. Sec. 153(o). Thus, "off-the-air" reception does not include the reception of microwave transmission. See note 6, infra

A microwave link involves the transmission of signals through the air. However, microwave transmission in itself is not broadcasting. A broadcast signal, according to 47 U.S.C. Sec. 153(o), is transmitted by a broadcaster for "[reception] by the public." In the case of microwave, the signal is focused and transmitted in a narrow beam aimed with precision at the receiving points. Thus, microwave transmission is point-to-point communication. The receiving antenna must be in the path of the signal beam. If the transmission must cover a considerable distance, the microwave signal is transmitted to the first receiving point from which it is re-transmitted to another receiving point, and this process is repeated until the signal reaches the point from which it is distributed by cable to subscribers

A "translator" is a television broadcast translator station that is authorized to rebroadcast a specific station's signals

Teleprompter has not attempted to show that this letter agreement amounts to an authorization or license for its carriage of the copyrighted programs. The parties stipulated that no such authorization or license was requested or received

This consisted of an automated camera that scanned clock and weather dials

A "non-broadcast channel," as used in this opinion, is a channel that offers a CATV system's own original programming but does not offer programs received from broadcast stations

See Fortnightly Corp. v. United Artists, Inc., 392 U.S. 390, 392 n. 6, and 399 n. 25, 88 S. Ct. 2084, 20 L.Ed.2d 1176 (1968)

Note 11, supra

The Federal Communications Commission has adopted rules, which appear in 47 C.F.R. Sec. 76.201, requiring CATV systems with more than 3,500 subscribers to commence program origination, which is known in industry parlance as "cablecasting." These rules were suspended pending judicial review of the FCC's CATV rules. Although FCC authority over CATV was sustained in United States v. Midwest Video, 406 U.S. 649, 92 S.Ct. 1860, 32 L.Ed.2d 390 (1972), the FCC has not yet reinstated the rules

Although we consider them separately, the use of microwave and the importation of distant signals are often very closely connected, in the sense that microwave links are the usual means by which a CATV system imports distant signals. As is evident from the experience of the New York system, however, it is possible for microwave to be used apart from distant signal importation, and it is in this sense that we consider in this section of the opinion the effect of microwave on the application of Fortnightly to CATV systems

This was phrased in terms of the Grade B contour, which marks the boundary along which acceptable reception of the signal is expected to be available 90 percent of the time at the best 50 percent of the locations. See 47 C.F.R. Secs. 73.683 and 73.684. With respect to locations outside its Grade B contour, a signal was considered a "distant signal" by the FCC. Recently the FCC has promulgated regulations that give a broader definition of distant and local signals for purposes of the signal-carriage requirements of CATV systems. 47 C.F.R. Secs. 76.59, 76.61, and 76.63. See 37 Fed.Reg. 3263 (Feb. 12, 1972)

The franchise represents a grant to the CATV system of authority to run its cables through the public streets and facilities of a city, town, or county to the homes of its subscribers

Almost 5,000 such franchises have already been granted, with the number continuing to increase. See Barnett, State, Federal and Local Regulation of Cable Television, 47 Notre Dame Lawyer 681, 702 (1972). Although the franchises have for the most part been issued by local authorities such as cities and towns, at least five states (Connecticut, Nevada, Rhode Island, Vermont, and Hawaii) have in effect laws subjecting CATV to state regulation, and more appear to be in the process of enacting such state regulatory schemes (e. g., Massachusetts, Illinois, New York and New Jersey), probably because of the disadvantages associated with local as compared with state regulation, id. at 698-708. Hence it may be anticipated that some state agencies may, as part of their new regulatory schemes, create local franchise areas or regions within the state based upon community of interest and population concentrations, as has been done by Connecticut. Id. 701-02.

As used by us, the term "CATV community" is limited strictly to the specifically designated local area for which the franchise is granted by the state or local authority, which may not be expanded or enlarged by interconnection, merger of two or more franchised areas, or other means. We do not have before us, and thus do not consider, the hypothetical case in which the area for which the franchise is granted is not local, but state-wide or comprising a broad region. We are aware of no such franchises presently granted or under consideration. For the moment, we can say that the "CATV community" we envision is essentially a local entity, the parts of which share substantial common interests.

By "relay or retransmittal," we do not mean the authorized rebroadcast of the signal by a translator station, or the like. See note 19, infra, and accompanying text, where we indicate that the mere use of a translator does not, without more, make the signal a "distant signal," as that term is used in this opinion. It should be noted that microwave transmission, in the context of CATV distant-signal importation, does not constitute a broadcast or a rebroadcast. "Broadcasting" is defined at 47 U.S.C. Sec. 153(o) as "the dissemination of radio communications intended to be received by the public, directly or by the intermediary of relay stations."

Teleprompter has argued that it is insulated from copyright liability by a license implied in law. This court explicitly rejected this argument in our Fortnightly decision. United Artists, Inc. v. Fortnightly Corp., 377 F.2d 872, 880-884 (2d Cir. 1967), rev'd. 392 U.S. 390, 88 S.Ct. 2084, 20 L.Ed.2d 1176 (1968). The Supreme Court in Fortnightly refused to embrace this argument when it rejected the Solicitor General's proposed compromise resolution of that case, although it did not necessarily reject this line or reasoning. See 392 U.S. 401-402, 88 S.Ct. 2084. Teleprompter argues that the terms of our decision on this issue in Fortnightly would not necessarily apply to the facts presented by three of the five CATV systems involved here-Elmira, New York City, and Farmington. In light of our resolution of this case, we need not deal with this contention with regard to the Elmira and New York City systems. As to the Farmington system, our decision with regard to the Albuquerque stations obviates the necessity to consider the license-implied-in-law issue. See Part IV, infra. On the matter of the Durango station, see note 20, infra. In other respects, we decline to re-examine our prior decision on this issue in Fortnightly

Although these signals were receivable because they were rebroadcast by translators, our earlier statement of the governing standard, "that any signal capable of projecting, without relay or transmittal, an acceptable image that can be reached off-the-air . . . by means of an antenna . . . erected in or adjacent to the CATV community is not a distant signal," does not make the Albuquerque stations distant signals. We were not referring to an authorized rebroadcast of the signal

We do not believe that the carriage of the Durango stations falls within our reservation of decision in Fortnightly on the issue of license implied in law, since the Durango station's broadcasts were not receivable off-the-air by means of rooftop antennas in Farmington. See 377 F.2d at 884