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SONY CORPORATION OF AMERICA, et al., Petitioners, v.

UNIVERSAL CITY STUDIOS,


INC. and WALT DISNEY PRODUCTIONS, Respondents.
No. 81-1687

OCTOBER TERM, 1981

May 10, 1982

BRIEF AMICUS CURIAE OF MOTION PICTURE AND TELEVISIONPRODUCERS AND


DISTRIBUTORS IN OPPOSITION TO THE PETITION FOR WRIT OF CERTIORARITO THE
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

STUART ROBINOWITZ, (Counsel of Record), ROBERT S. SMITH, 345 Park Avenue,


New York, New York 10154, (212) 644-8000, Attorneys for Amici Curiae

Of Counsel:

Stephen D. D. Hamilton, Andrew J. Peck, Martin Klotz, PAUL, WEISS, RIFKIND,


WHARTON & GARRISON, 345 Park Avenue, New York, New York 10154, (212) 644-
800

TABLE OF AUTHORITIES

Cases:

Brotherhood of Locomotive Firemen & Enginemen v. Bangor & Aroostook R.R. Co.,
389 U.S. 327 (1967)

Diamond v. Chakrabasty, 447 U.S. 303 (1980)

Elektra Records Co. v. Gem Electronic Distributors, Inc., 360 F. Supp. 821
(E.D.N.Y. 1973)

Encyclopedia Britannica Educational Corp. v. Crooks, 447 F. Supp. 243 (W.D.N.Y.


1978)

Goodson-Todman Enterprises, Ltd. v. Kellogg Co., 513 F.2d 913 (9th Cir. 1975)

Kalem Co. v. Harper Brothers, 222 U.S. 55 (1911)

Leon v. Pacific Telephone & Telegraph Co., 91 F.2d 484 (9th Cir. 1937)

MCA, Inc. v. Wilson, 211 U.S.P.Q. 577 (2d Cir. 1981)

Meeropol v. Nizer, 560 F.2d 1061 (2d Cir. 1977), cert. denied, 434 U.S. 1013
(1978)

New York Times Co. v. Roxbury Data Interface, Inc., 434 F. Supp. 217 (D.N.J.
1977)

Rosemont Enterprises, Inc. v. Random House, Inc., 366 F.2d 303 (2d Cir. 1966),
cert. denied, 385 U.S. 1009 (1967)

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Rubin v. Boston Magazine Co., 645 F.2d 80 (1st Cir. 1981)

Screen Gems-Columbia Music, Inc. v. Mark-Fi Records, Inc., 256 F. Supp. 399
(S.D.N.Y. 1966)

Screen Gems-Columbia Music, Inc. v. Metlis & Lebow Corp., 453 F.2d 552 (2d Cir.
1972)

Smothers v. Columbia Broadcasting System, Inc., 359 F. Supp. 723 (C.D. Cal.
1973)

Fennessee Valley Authority v. Hill, 437 U.S. 153 (1978)

United States v. Oregon, 366 U.S. 643 (1961)

Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d 354 (9th Cir. 1947)

Wainwright Securities, Inc. v. Wall Street Transcript Corp., 558 F.2d 91 (2d Cir.
1977), cert. denied, 434 U.S. 1014 (1978)

Walt Disney Productions v. Air Pirates, 581 F.2d 751 (9th Cir. 1978), cert. denied,
439 U.S. 1132 (1979)

Walt Disney Productions v. Alaska Television Network, Inc., 310 F. Supp. 1073
(W.D. Wash. 1969)

Williams & Wilkins Co. v. United States, 487 F.2d 1345 (Ct. Cl. 1973), aff'd by
equally div. Ct., 420 U.S. 376 (1975)

Wihtol v. Crow, 309 F.2d 777 (8th Cir. 1962)

Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562 (1977)

Statutes:

Copyright Act of 1909, § 1, previously codified at 17 U.S.C. § 22

Copyright Revision Act of 1976, 17 U.S.C. §§ 101-810

Section 106, 17 U.S.C. § 106

Section 107, 17 U.S.C. § 107

Section 108, 17 U.S.C. § 108

Section 110, 17 U.S.C. § 110

Section 111, 17 U.S.C. § 111

Section 112, 17 U.S.C. § 112

Section 118, 17 U.S.C. § 118

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Administrative Rulings:

Memorandum Opinion and Order In Re Network Broadcasting, 25 F.C.C.2d 318


(1970), aff'd sub nom. Mt. Mansfield Television, Inc. v. FCC, 442 F.2d 470 (2d Cir.
1971)

Legislative Reports:

H.R. Rep. No. 83, 90th Cong., 1st Sess. (1967)

H.R. Rep. No. 92-487, 92nd Cong., 1st Sess. (1971) reprinted in 1971 U.S. Code
Cong. & Ad. News 1566

H.R. Rep. No. 94-1476, 94th Cong., 2d Sess. (1976) reprinted in 1976 U.S. Code
Cong. & Ad. News 5686

S. Rep. No. 94-473, 94th Cong., 1st Sess. (1975)

Treatises, Articles, Legal Memoranda, and Official Reports:

Marsh, Betamax and Fair Use: A Shotgun Marriage, 21 Santa Clara L. Rev. 49
(1981)

Memorandum of Jon A. Baumgarten before the Committee on the Judiciary, United


States Senate, 97th Cong. 2d Sess., April 21, 1982

Memorandum of David Ladd before the Committee on the Judiciary, United States
Senate, 97th Cong. 2d Sess., April 21, 1982

Memorandum of Melville B. Nimmer before the Committee on the Judiciary, United


States Senate, 97th Cong. 2d Sess., April 21, 1982

Memorandum of Laurence H. Tribe before the Committee on the Judiciary, United


States Senate, 97th Cong. 2d Sess., April 21, 1982

M. Nimmer, Nimmer on Copyright (1981 ed.)

Note, The Betamax Case: Accommodating Public Access and Economic Incentive in
Copyright Law, 31 Stan. L. Rev. 243 (1979)

Note, Copyright -- Fair Use -- Recording of Televised Copyrighted Work in the


Home, 55 Tulane L. Rev. 1295 (1981)

Note, Copyright: Gone With the Betamax?, 8 Rev. L. & Soc'l Changes 45 (1978)

Note, Universal City Studios, Inc. v. Sony Corp.: Fair Use Looks Different on
Videotape, 66 Va. L. Rev. 1005 (1980)

Remarks of David Ladd, Cong. Rec., Nov. 4, 1981

Report of the Berne Union Working Group on the Legal Problems Arising from the
Use of Videocassettes and Audiovisual Discs, Feb. 21 to 25, 1977, reprinted in

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Copyright, April, 1977

L. Seltzer, Exemptions and Fair Use in Copyright (1978)

R. Stern and E. Gressman, Supreme Court Practice (5th ed., 1978)

Other Sources:

Business Week, Nov. 29, 1976

Mart, January, 1982

Wall Street Journal, Dec. 27, 1977

INTERESTS OF AMICI CURIAE

This brief is filed in opposition to Sony Corporation of America's ("Sony") Petition


for a Writ of Certiorari on behalf of amici Columbia Pictures Industries, Inc., Embassy
Communications, Lorimar Productions, Inc., MTM Productions, Metro-Goldwyn-Mayer
Film Co., Paramount Pictures Corp., Rosebud Releasing Corp., D.L. Taffner/Ltd.,
Tandem Productions, Twentieth Century-Fox Film Corporation, Twentieth Century-
Fox Television, Inc., United Artists Corporation, United Artists Television, Inc.,
Warner Bros. Inc., and Viacom International Inc. n1

n1 The parties in this case have filed with the Court a general consent to the
submission of briefs amicus curiae.

Amici produce and/or distribute theatrical feature motion pictures and/or television
programs, including made-for-television movies, documentaries, specials, mini-series
and regular series. Amici and respondents own the statutory copryrights of a great
deal, if not most, of the popular entertainment programming on television today.
Sony threatens to erode the value of those copyrights by marketing a videotape
copying machine (or "VCR") called Betamax. The commercial success of Betamax is
based primarily on the copying of amici 's and respondents' copyrighted creations.

The Ninth Circuit correctly held that Sony was guilty of contributory copyright
infringement. That result was compelled by the language of the Copyright Act, its
legislative history and well-accepted precedents. The leading copyright scholars all
agree. Sony, in its current petition, fails to raise a single issue worthy of certiorari.

Moreover, the petition is ill-timed. There is no final judgment yet because the
district court has not passed on Sony's affirmative defenses or on the critical
question of a remedy. More important, Congress is now actively considering
legislation that would resolve the public policy, economic and social questions
involved in accommodating the interests of copyright owners, the public and VCR
manufacturers. The legislative solution, supported by the Copyright Office, would
immunize consumers from personal liability while imposing a reasonable royalty on
Sony and other manufacturers and importers of VCRs and blank tapes. Hearings on
such legislation are almost complete. The legislation is moving forward
expeditiously. To grant this petition might well have the effect of delaying
legislation.

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BACKGROUND FACTS
The Production and Distribution of Theatrical Motion Pictures

Theatrical feature films are the most complex and expensive form of copyrighted
material that exists today. The average investment in a feature ranges from
$10,000,000 to $20,000,000. Production and distribution of feature films, moreover,
is a high risk venture. Only about two out of ten films recoup their investment from
theatrical exhibition. Accordingly, post-theatrical markets -- the markets most
directly threatened by Sony -- are critical to the vitality of the film community and all
its creative forces.

After initial theatrical exhibition, motion pictures are generally licensed to pay
cable or pay television for repeated exhibitions over a period of several months.
Thereafter, popular films are typically licensed to the television networks for two or
more exhibitions over a period of several years. Then, films are normally released to
individual television stations for many exhibitions under a series of multi-year
licenses. In addition, feature films are now sold or rented to consumers in the form
of pre-recorded video tapes or discs. Some films are also licensed for performances
in the home-rental 16 mm market, on college campuses, on airplanes and ships, and
in various other non-theatrical forums.

Massive videocopying by countless VCR owners threatens all these critical


subsidiary markets for motion pictures. For example, Betamax can duplicate a
popular new motion picture when it is exhibited on pay cable in its complete unedited
form without commercial interruptions; or it can make a copy of a recent film on its
first network run and delete the commercials. Private film collections, amassed in
this manner, will adversely affect the sale or rental of pre-recorded tapes and discs,
later exhibitions of feature films on television or in theatrical re-releases, and home
and other non-theatrical 16 mm rentals. If a viewer copies "Star Wars" or
"Superman," he or she will have no incentive to purchase or rent a pre-recorded tape
or disc of that film or to view its television or theatrical re-runs. By preempting vital
markets, VCR copying will make producers less able and less willing to create new
and innovative films. That will discourage creativity and diversity contrary to the goal
of the copyright clause in the Constitution.
The Production and Distribution of Television Programs

Television programs, like feature films, are a highly complex and expensive form of
copyrighted material. Today, a made-for-TV movie may cost $2,500,000 to
$3,000,000 to produce; a one-hour series, $700,000 to $1,000,000; and a regular
half-hour TV series, $300,000 to $400,000 per episode. Television production is also
a high risk affair. Television programs rarely recoup their large investments during
their network runs and, as a result, producers are heavily dependent on post-
network exhibitions on individual stations in the syndication market. n2

n2 See district court opinion (Pet. App. 37); Memorandum Opinion and Order In Re
Network Television Broadcasting, 25 F.C.C.2d 318, 330 (1970), aff'd sub. nom. Mt.
Mansfield Television, Inc. v. FCC, 442 F.2d 470 (2d Cir. 1971). See also Grover,
Delayed Payoff TV Series Only Becomes Profitable for Producers Upon Syndication,
Years After They Are Made, Wall Street Journal, Dec. 27, 1977, at 26, Col. 1. "A
syndication requires 60-120 episodes, which means 3-5 years of successful first-run
network exhibitions if the package is all of one series" (Pet. App. 37). Very few

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series last that long today in light of frequent network scheduling changes.

Betamax directly threatens the post-network market that is so critical to television


producers. A Betamax owner who makes (or borrows) a taped copy of "Roots" or a
popular made-for-television movie or other television program will have no incentive
to watch that program when it is re-broad-cast.
The Impact of VCRs

The corrosive impact of videocopying on creative forces in the film and television
communities -- on copyright owners, artists, writers, directors and other talent -- is
real and increasing. There are now 3,000,000 VCRs in the United States (Pet. 9).
Sales are increasing at a rapid rate. n3 As VCRs proliferate, the erosion of copyright
values will be aggravated.

n3 Mart, January, 1982, at 9, 18, 24.

Sony reportedly believes -- and understandably so -- that "it has a razor-and-


blades situation with the Betamax unit and the profitable recording tapes it
requires." n4 Sony apparently looks to the sales of large amounts of blank tapes as
its major source of profits over the long run. But the razor and the blades -- the
machine and the tapes -- exist only because of the copyrights of program suppliers
such as amici and respondents.

n4 Business Week, Nov. 29, 1976, at 29.

Sony attempts to obscure this fact (Pet. 4-5). It seeks to create the impression
that the copying of copyrighted material is only a minor part of Betamax's function.
But it is the popular movies and television programs that fuel VCRs' growth. That is
what people copy. n5 As the Ninth Circuit noted:

n5 Sony also claims (Pet. 5) that respondents' copyrighted programming


"constitutes less than 5% of commercial station broadcasting, and constitutes no
part whatsoever of public/educational station broadcasting." But Sony omits to
mention that the remaining programs are almost all copyrighted. Amici own a large
portion of the copyrights. The percentage of programming owned by the particular
parties who brought this test case is obviously irrelevant.

"Videotape recorders are manufactured, advertised, and sold for the primary
purpose of reproducing television programming. Virtually all television programming
is copyrighted material." (Pet. App. 25-26)

Sony also suggests that Betamax is only a "time-shift" machine that allows viewers
to adjust to the scheduling practices of television. But Betamax is far more. It has
also been designed, promoted and advertised by Sony to make permanent copies of
popular films and television programs (Pet. App. 41-42). If Betamax were merely
used for "time shifting," consumers would need only a handful of tapes because they

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are erasable and reusable. But VCR owners typically own about 25 or more tapes
which cost approximately $500 (Pet. App. 39, 47). n6

n6 The three Betamax owners who were defendants or witnesses in this case had
collections of 340, 170 and 100 tapes (Pet. App. 43-46). Survey evidence also
shows that most Betamax users own large numbers of cassettes (id., p. 47).

Viewers would not be buying so many blank tapes at such great expense if
Betamax were a mere "time-shift" device. Those tapes (the blades for Sony's
razors) are being sold by Sony, at substantial profit, to create permanent libraries of
film classics. As the Register of Copyrights noted at the recent Congressional
hearings, "[b]y any calculation... substantial librarying is occurring". n7 Sony seeks
to avoid the fact that VCRs are used for librarying because it virtually concedes (Pet.
17, 19 n.19) that such activity violates the copyright laws.

n7 Memorandum of David Ladd, Register of Copyrights and Assistant Librarian of


Congress for Copyright Services, before the Committee on the Judiciary, United
States Senate, 97th Cong. 2d Sess., April 21, 1982 at 9 (hereinafter the "Ladd
Memorandum").

Moreover, even when a viewer "time-shifts," he is making a copy of a copyrighted


program. That act of copying infringes the prohibition of copying in the copyright
law. When time-shifting, a viewer is making an uncompensated copy of the
copyright owner's property. In addition, time-shifting causes actual and potential
injury to copyright owners. When time-shifting, viewers generally delete
commercials. n8 Time-shifting also means that programs do not reach particular
audiences or time periods for which they are targeted. Moreover, Nielsen and other
audience surveys do not count the viewers who play-back taped television programs.
All of the foregoing factors undercut the basis for copyright payments from
advertiser-supported television.

n8 They eliminate commercials by pressing the pause switch when recording or the
fast-forward button when playing back the tape. According to the most recent
survey evidence submitted at the pending Congressional hearings, nearly 85% of
VCR owners reported that they "skip commercials or erase them." Ladd
Memorandum, Appendix II.

In short, whether VCR's are used for "time-shifting" or "librarying," there is


massive nationwide copying of annici's and respondents' creative works and
significant erosion of the copyright value of those works.

Summary of Argument

The Ninth Circuit held that videocopying violates the flat ban against copying in the
Copyright Act; that there is no contrary legislative intent or fair use defense; and
that Sony is a contributory copyright infringer. The Ninth Circuit's decision is clearly
correct. It is in accord with the language and legislative history of the Copyright Act

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and with the unanimous views of all leading copyright experts here and abroad,
including David Ladd, the Register of Copyrights; n9 Professor Melville B. Nimmer;
n10 Jon A. Baumgarten, former General Counsel of the Copyright Office; n11
Professor Laurence H. Tribe; n12 leading experts in the international copyright
community; n13 and law journal commentators. n14 Indeed, Sony should not be
surprised by the Ninth Circuit's opinion because for many years Sony itself placed
clear warnings on its machines indicating that VCR copying of copyrighted programs
was illegal (Pet. App. 42). In short, this case was correctly decided. There are no
conflicting opinions.

n9 Ladd Memorandum, supra; also see Remarks by David Ladd, Cong. Rec., Nov.
4, 1981, at 5149:

"[T]he public is served quite as much by a respect for property -- and copyright is
the highest kind of property -- as by expropriating it from its creators and owners for
mass, free use."

n10 Memorandum of Professor Nimmer submitted to the Judiciary Committee,


United States Senate, 97th Cong. 2d Sess., April 21, 1981 (hereinafter the "Nimmer
Memorandum"); and 3 Nimmer on Copyright § 13.05[F][5] at 13-95-96 n.159
(1981).

n11 Memorandum submitted to the Judiciary Committee, United States Senate,


97th Cong. 2d Sess., April 21, 1982 (hereinafter the "Baumgarten Memorandum").

n12 Memorandum submitted to the Judiciary Committee, United States Senate,


97th Cong. 2d Sess., April 21, 1982, at 30-39 (district court's decision "[t]o create a
multibillion dollar, retroactive exception to the copyright law on the basis of these
sparse statements... is [a] redical a departure from established practice")
(hereinafter the "Tribe Memorandum").

n13 Report of Berne Union Working Group on the Legal Problems Arising from the
Use of Videocassettes and Audiovisual Discs, Feb. 21 to 25, 1977, reprinted in
Copyright, April 1977, at 87-92, PP32-34.

n14 See, e.g., Marsh, Betamax and Fair Use: A Shotgun Marriage, 21 Santa Clara
L. Rev. 49 (1981); Note, The Betamax Case: Accommodating Public Access and
Economic Incentive in Copyright Law, 31 Stan. L. Rev. 243 (1979); Note, Universal
City Studios, Inc. v. Sony Corp.: "Fair Use" Looks Different on Videotape, 66 Va. L.
Rev. 1005 (1980); Note, Copyright -- Fair Use -- Recording of Televised Copyrighted
Works in the Home, 55 Tulane L. Rev. 1295 (1981); Note, Copyright: Gone With the
Betamax, 8 Rev. L. & Soc'l Change 45 (1978).

Sony, in its present petition, fails to raise a single issue worthy of certiorari:

1. There is no basis for Sony's claim that the Copyright Act sub silentio
incorporates an implied exemption for home video taping. That theory rests on a
fanciful version of legislative history that contradicts the unambiguous language of
the Copyright Act.

2. There is no basis for Sony's claim that the Ninth Circuit's opinion raises

8
"confusion" under the doctrine of fair use. The Ninth Circuit applied time-honored
principles of fair use in finding that Sony had failed to meet a single requirement of
that defense.

3. There is no basis for Sony's claim that the Ninth Circuit defied this Court's prior
opinions in finding that Sony was guilty of contributory copyright infringement. The
Ninth Circuit followed this Court's precedents, including the copyright decision that
Sony concedes is most in point.

4. Finally, there is no basis for Sony to ask for an advisory opinion as to the power
of the district court to order a continuing royalty or compulsory license scheme. That
issue is not ripe because the district court has not yet fashioned any remedy.
Sony thus has failed to advance a single bona fide reason to grant certiorari.

There are compelling reasons not to do so. First, the case is not finally adjudicated
because the district court has not yet passed on Sony's affirmative defenses or
fashioned relief. Second, and most important, Congress is now in the midst of
intensive efforts to devise a legislative solution that would balance the rights of
copyright owners, the public and VCR manufacturers -- namely, a compulsory license
that would relieve consumers of personal copyright liability while imposing
reasonable royalties on Sony and other manufacturers and importers of VCRs and
blank tapes. The Copyright Office strongly supports this legislative solution. n15
Congress, which has virtually completed hearings on this matter, is uniquely able to
weigh the policy, economic and social issues involved in the VCR controversy and to
devise an appropriate remedy, as it has done in the case of other new technologies.
The legislative activities are proceeding with unusual speed and momentum. Sony's
premature petition should not be allowed to becloud the issue.

n15 Ladd Memorandum, supra.

TEXT: I.
THE NINTH CIRCUIT WAS CLEARLY CORRECT IN CONCLUDING THAT COPYING OF
MOTION PICTURES AND TELEVISION PROGRAMS BY BETAMAX VIOLATES THE
COPYRIGHT LAW.
A. Videocopying Violates the Copyright Act's Ban Against Copying

As the Ninth Circuit recognized (Pet. App. 5-6), copying on a Betamax violates the
exclusive right of copyright owners to make copies of their copyrighted motion
pictures and television programs under Section 106(1) of the 1976 Copyright Act (17
U.S.C. § 106(1)). n16

n16 The same conclusion was reached in the only other videocopying case under
the new statute. Encyclopedia Britannia Educational Corp. v. Crooks, 447 F. Supp.
243 (W.D.N.Y. 1978) (videotaping of off-the-air educational television programs).
The identical result was reached under Sections 1(a) and 1(d) of the 1909 Copyright
Act, to which Section 106(1) in the new Act corresponds. Goodson-Todman
Enterprises, Ltd. v. Kellogg Co., 513 F.2d 913 (9th Cir. 1975); Smothers v. Columbia
Broadcasting System, Inc., 359 F. Supp. 723 (C.D. Cal. 1973); Walt Disney
Productions v. Alaska Television Network, Inc., 310 F. Supp. 1073 (W.D. Wash.
1969).

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After setting forth the exclusive and absolute rights of copyright proprietors in
Section 106, the new Act goes on to spell out certain limited exceptions (Sections
107-118). Significantly, none of those exceptions permits home videotaping of
motion pictures and television programs, even though VCRs were well known at the
time of the passage of the new Copyright Act. The exemptions in the Act, as the
Ninth Circuit notes (Pet. App. 8-9), allow unauthorized use of various copyrighted
materials for scholarly and other purposes, but afford a particularly high level of
protection to motion pictures and other audiovisual material because they are
"exceptionally vulnerable to copyright impairment." H.R. Rep. No. 83, 90th Cong.,
1st Sess., at 61 (1967). n17 For example, while libraries and archives can make
limited copies of copyrighted material for scholarly purposes under the new Act, they
cannot do so in the case of motion pictures and other audiovisual works (Sec.
108(h)). n8 Sony should fare no better than the educational and philanthropic
institutions which, although granted various exemptions by the new Act, are
prohibited from making copies of motion pictures and television programs.

n17 "This is so because the capital investment is high, the risk of loss on any given
work is large, and unauthorized copies tend to satisfy fully the demand for the lawful
copy." Ladd Memorandum at 25.

n18 Motion pictures and other audiovisual works are also specifically excluded from
the exceptions contained in Sections 112(a), 118, 110 and 110(1).

B. There Is No Legislative History to Support a "Home Use" Exemption for


Videocopying

Faced with the ban against copying in Section 106 and finding no exception for
VCRs in Sections 107 to 118, Sony seeks to unearth some contrary legislative history
for its cause. It primarily relies (Pet. 16) on an isolated sentence in the 1971 House
Report on the stop-gap piracy amendment, the Sound Recording Amendment of
1971, n19 to the effect that the amendment was not intended to reach the taping of
phonograph records at home for private use. But, as the Ninth Circuit points out
(Pet. App. 16-17) -- and as the leading copyright scholars all agree n20 -- Sony's
reliance is totally misplaced.

n19 Act of October 15, 1971; P.L. 92-140, 85 Stat. 391.

n20 Ladd Memorandum at 8-9, 36-37; Nimmer Memorandum at 3-12; Baumgarten


Memorandum at 1, 5-9; Tribe Memorandum at 30-35; see also 3 Nimmer on
Copyright § 13.05[F][5] at 13-95-96 n. 159.

Sony's argument rests on a three-step exercise in reconstructing legislative


history. Sony claims (1) that the 1971 piracy amendment included an implied
exemption for home audio taping of phonograph records; (2) that this exemption for
records was incorporated sub silentio into the omnibus Copyright Revision Act of
1976; and (3) that the implied exemption for records was sub silentio extended to
videotaping of movies and television programs in the 1976 Act. Each link in the
chain is flawed.

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First, the interim 1971 amendment was aimed exclusively at the growing practice
of commercial piracy. The amendment did not purport to deal with home taping of
records. That subject is not even mentioned in the amendment. An isolated remark
in the House -- but not the Senate -- Report surely does not create an exemption in
the legislation. In any event, as the Ninth Circuit notes (Pet. App. 9-10), the 1971
House Report makes it crystal clear that motion pictures were not affected in any
way by the amendment. n21

n21 See H.R. Rep. No. 92-487, 92d Cong., 1st Sess., at 5-6 (1971).

Second, even if the 1971 amendment had implicitly created an exemption for the
taping of records at home, that exemption was not carried over into the Copyright
Revision Act of 1976. When Congress passed the comprehensive 1976 statute,
superseding the interim anti-piracy amendment, it did not repeat the language of the
1971 House Report cited by Sony in any of its Reports, even though other portions of
the 1971 House Report were repeated verbatim. As the present Copyright Register
observes, the Senate Report of the new Act specifically negates the notion of a home
use exemption. n22 And as Professor Nimmer declares: "There is not and never has
been an exemption from copyright liability for home audio recording." n23

n22 Ladd Memorandum at 8, citing S. Rep. No. 94-473, 94th Cong., 1st Sess.
(1975) at 66 (hereinafter the "Senate Report"). In that Report, the Senate
Committee considered off-the-air videotaping within the context of educational uses.
In sanctioning the copying of instructional transmissions for delayed viewing during a
school's daily schedule in remote areas such as Alaska, the Senate Committee
warned: "The Committee does not intend to suggest, however, that off-the-air
recording for convenience would under any circumstances be considered 'fair use'."

n23 Nimmer Memorandum at 1; also see 3 Nimmer on Copyright § 13.05[F][5] at


13-95-96 n.159.

Finally, even if the Copyright Revision Act of 1976 had secretly incorporated an
implied 1971 exemption for audiotaping of phonograph records, Sony does not
explain how that exemption was sub silentio extended to videotaping of motion
pictures and television programs in the 1976 Act. On the contrary, as shown above,
the new Act gives a high level of protection to audiovisual works.

Thus, the Ninth Circuit -- in full accord with the nation's leading copyright scholars
-- correctly rejected Sony's claim that legislative history created an implied
exemption for VCRs. Moreover, Sony's efforts to divine Congressional intent are
wholly inappropriate here because the statute is unambiguous on its face. Since the
statute is so clear, resort to legislative history is not proper. United States v.
Oregon, 366 U.S. 643, 648 (1961). This Court recently warned against reading into
a statute limitations and conditions which the legislature has not expressed.
Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980); Tennessee Valley Authority v.
Hill, 437 U.S. 153, 188 (1978). That rule applies in this case.
C. The Fair Use Defense Is Not Applicable

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Unable to find statutory support for a home use exemption for VCRs, Sony is
forced to rely on the "fair use" defense contained in Section 107 of the new
Copyright Act. But fair use has nothing to do with Betamax's commercial
exploitation of the property rights of copyright owners. The fair use doctrine does
not sanction the copying of complete feature motion pictures and other television
programs for convenience and amusement. Rather, as the Ninth Circuit pointed out
(Pet. App. 14-19), the fair use doctrine is designed to serve the constitutional goals
of copyright by allowing scholars, crities and others to use limited excerpts from prior
copyrighted material in order to further their own independent creative endeavors.
n24

n24 See, e.g., Rosemont Enterprises, Inc. v. Random House, Inc., 366 F.2d 303,
307 (2d Cir. 1966), cert. denied, 385 U.S. 1009 (1967): "The fundamental
justification for the privilege [of fair use] lies in the constitutional purpose in granting
copyright protection in the first instance, to wit, 'To Promote the Progress of Science
and the Useful Arts.'" See also Meeropol v. Nizer, 560 F.2d 1061, 1068-71 (2d Cir.
1977), cert. denied, 434 U.S. 1013 (1978); Wainwright Securities Inc. v. Wall Street
Transcript Corp., 558 F.2d 91 (2d Cir. 1977), cert. denied, 434 U.S. 1014 (1978);
Rubin v. Boston Magazine Co., 645 F.2d 80 (1st Cir. 1981); L. Seltzer, Exemptions
and Fair Use in Copyright (1978) at 24; 3 Nimmer on Copyright § 13.05[B] at 13-62-
68.

The new Copyright Act specifically characterizes fair use as involving "purposes
such as criticism, comment, news, reporting, teaching... scholarship, or research"
(Section 107). The House and Senate Reports give more concrete examples of
activities which may be fair use under appropriate circumstances:

"quotation of excerpts in a review or criticism for purposes of illustration or


comment; quotation of short passages in a scholarly or technical work, for
illustration or clarification of the author's observations; use in a parody of some of
the content of the work parodied; summary of an address or article, with brief
quotations, in a news report; reproduction by a library of a portion of a work to
replace part of a damaged copy; reproduction by a teacher or student of a small part
of a work to illustrate a lesson; reproduction of a work in legislative or judicial
proceedings or reports; incidental and fortuitous reproduction, in a newsreel or
broadcast, of a work located in the scene of an event being reported." n25

n25 Senate Report at 61-62; H.R. Rep. No. 94-1476, 94th Cong., 2d Sess. at 65
(1976).

None of these activities bears any resemblance to Betamax copying of "Jaws" or


"Rocky" for convenience and entertainment.

In light of this legislative history and time-honored precedents, n26 the Ninth
Circuit in rejecting the fair use defense properly placed significant weight on the fact
that Betamax copying involves an "intrinsic" rather than "productive" use of
copyrighted material. But the Court did not, as Sony suggests (Pet. 22), stop its
analysis at that point. Rather, the Ninth Circuit went on to weigh and balance the
four "factors" listed in Section 107 of the new Act (Pet. App. 18-25).

12
n26 See footnote 24, supra.

The first factor, concerning the character of the use, weighs against Sony because
videotapint is not for nonprofit educational purposes, but for amusement and
convenience. "The Committee does not intend to suggest, however, that off-the-air
recording for convenience would under any circumstances be considered 'fair use'."
Senate Report at 66.

The second factor, relating to the nature of the work, also undermines Sony's
position because the works at issue (motion pictures and television programs) are
not basically informational materials, but "creative, imaginative, and original" works
n27 which, by their nature, are designed for repeated exhibitions. n28

n27 Compare, e.g., MCA, Inc. v. Wilson, 211 U.S.P.Q. 577 (2d Cir. 1981), with,
e.g., New York Times Co. v. Roxbury Data Inferface, Inc., 434 F. Supp. 217 (D.N.J.
1977).

n28 "In general terms it could be expected that the doctrine of fair use would be
applied strictly to the classroom reproduction of entire works, such as musical
compositions, dramas, and audiovisual works including motion pictures, which by
their nature are intended for performance or public exhibition." Senate Report at 64.

The third factor, the substantiality of the amount copied, is fatal to Sony. Fair use
applies to copying small excerpts, not complete works. n29

n29 See Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562 (1977);
accord, e.g., Walt Disney Productions v. Air Pirates, 581 F.2d 751 (9th Cir. 1978),
cert. denied, 439 U.S. 1132 (1979); Wihtol v. Crow, 309 F.2d 777 (8th Cir. 1962);
Leon v. Pacific Telephone & Telegraph Co., 91 F.2d 484, 485 (9th Cir. 1937);
Encyclopedia Britannica Educational Corp. v. Crooks, 447 F. Supp. 243 (W.D.N.Y.
1978). Even for historical or scholarly works, as opposed to entertainment, courts
have restricted fair use to the copying of small excerpts. see, e.g., Meeropol v. Nizer,
560 F.2d 1061, 1068-71 (2d Cir. 1977), cert. denied, 434 U.S. 1013 (1978). And, in
the area of educational copying of printed works, there is no fair use privilege to
reproduce a "sizeable integrated work published as an entity (a novel, treatise,
monograph and so forth)." Senate Report at 64.

The final factor, the effect on the "potential market for or value" of the copyrighted
work (Section 107(4)), also cuts strongly against Sony because VCR copies are "used
for the same purpose as the originals" (Pet. App. 23 n.13). n30 "With certain special
exceptions (use in parodies or as evidence in court proceedings might be examples)
a use that supplants any part of the normal market for a copyrighted work would
ordinarily be considered an infringement." Senate Report at 65 (emphasis added).
n31

n30 "Isolated instances of minor infringements, when multiplied many times,

13
become in the aggregate a major inroad on copyright that must be prevented."
Senate Report at 65.

n31 As the Ninth Circuit correctly held (Pet. App. 23), the burden of proving the
absence of potential harm rested with Sony. see, e.g., Encyclopedia Britannica
Educational Corp. v. Crooks, 447 F. Supp. 243, 247, 251 (W.D.N.Y. 1978). Sony did
not meet that burden.

The Ninth Circuit's reasons for rejecting Sony's fair use defense are overwhelming
under all of the criteria listed in the new Act and under well-established precedents.
Instead of replying to the Ninth Circuit's rationale on this point, Sony mainly argues
(Pet. 22) that its decision conflicts with Williams & Wilkins Co. v. United States, 487
F.2d 1345 (Ct. Cl. 1973), aff'd by equally div. Ct., 420 U.S. 376 (1975). But even
the district court in this case recognized that Williams & Wilkins "has little
precedential value" (Pet. App. 73). In that case, the Court of Claims permitted
government libraries to copy medical articles from learned journals for critical
scientific research. That is a far cry from what Betamax does. Moreover, the Court
of Claims stated that its decision was merely "a 'holding operation' in the interim
period before Congress" acted on the then pending revision of the Copyright Act (487
F.2d at 1363). Shortly thereafter, Congress did act. It sharply limited library
copying for scholarly purposes and, significantly, did not authorize and such copying
of motion pictures and other audiovisual works (Sec. 108(h)). n32

n32 The Ninth Circuit questioned the rationale of Williams & Wilkins (Pet. App. at
15). Leading copyright scholars have also been critical of that opinion. Nimmer,
supra, § 13.05[E][4][c] at 13-83. But such criticism of that isolated opinion hardly
warrants a grant of certiorari, especially since Congress itself restricted that case's
holding in the new Copyright Act.

D. Sony Is Liable as a Contributory Copyright Infringer Sony is clearly liable as a


contributory copyright infringer because it manufactures, advertises and sells the
Betamax machines and tapes for "the primary purpose of reproducing television
programming" (Pet. App. 25). Sony correctly states the law when it says (Pet. 24):
"One who, with knowledge of the infringing activity, induces, causes or materially
contributes to the infringing conduct of another may be held liable as a 'contributory
infringer.'" n33 That is exactly what Sony does with Betamax.

n33 Kalem Co. v. Harper Brothers, 222 U.S. 55, 62-63 (1911); Universal Pictures
Co. v. Harold Lloyd Corp., 162 F.2d 354, 365-366 (9th Cir. 1947); Elektra Records
Co. v. Gem Electronic Distributors, Inc., 360 F. Supp. 821 (E.D.N.Y. 1973) (record
store with taping facilities is liable for unauthorized copying of records even though
the final act of copying is performed by individual customers). See generally Screen
Gems-Columbia Music, Inc. v. Metlis & Lebow Corp., 453 F.2d 552, 554 (2d Cir.
1972); Screen Gems-Columbia Music, Inc. v. Mark-Fi Records, Inc., 256 F. Supp.
399, 403 n.9 (S.D.N.Y. 1966) (Weinfeld, J.).

The fact that Betamax purchasers rather than Sony perform the final act of
copying does not immunize Sony. For example, in Kalem Co. v. Harper Brothers,
222 U.S. 55 (1911) -- the copyright precedent relied on by Sony (Pet. 23 n.24) --

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the defendant Kalem had made an unauthorized motion picture of the plaintiff's
copyrighted book "Ben Hur" and sold the film for ultimate theatrical exhibition by
third parties. Kalem was held to have infringed the plaintiff's exclusive right of
performance even though the film had actually been exhibited by independent
theatres -- i.e., Kalem, like Sony, had not committed the final act of infringement.
Justice Holmes wrote for a unanimous court: "It [Kalem] is liable on principles
recognized in every part of the law." 222 U.S. at 63. So is Sony.

Sony also tries to analogize Betamax to a "staple item of commerce" like


typewriters, cameras, or duplicating machines (Pet. 23-25). The flaw in the analogy
is obvious. Unlike those neutral machines which have countless legitimate non-
infringing uses, Betamax is designed, promoted and advertised to be used almost
exclusively for the copying of popular copyrighted motion pictures and television
programs. The ability to make copies of copyrighted movies and television programs
is the sine qua non of Betamax. It is the basis on which Sony sells the "razor and
the blades."

II.
THE COURT SHOULD NOT GRANT CERTIORARI TO CONSIDER ISSUES THAT ARE
PRESENTLY, AND MORE PROPERLY, BEFORE CONGRESS AND THE DISTRICT COURT

In addition to Sony's failure to raise any issues worthy of certiorari, there are other
compelling reasons to deny its petition.

First, the decision below is not yet final because the district court has not passed
on Sony's affirmative defenses or fashioned relief. It is the usual practice of this
Court to avoid reviewing non-final decisions. n14 This ia a particularly strong case
for adhering to that practice. The question of relief -- e.g., whether a continuing
royalty or compulsory license should be awarded -- is even Sony concedes, a crucial
issue. As the Ninth Circuit observed:

n34 See R. Stern & E. Gressman, Supreme Court Practice at 300 (5th ed. 1978)
("[t]he Supreme Court will not usually grant certiorari to review a nonfinal
judgment"); Brotherhood of Locomotive Firemen & Enginemen v. Bangor &
Aroostook R.R. Co., 389 U.S. 327, 328 (1967).

"The relief question is exceedingly complex, and the difficulty in fashioning relief
may well have influenced the district court's evaluation of the liability issue. The
difficulty of fashioning relief cannot, however, dissuade the federal courts from
affording appropriate relief to those whose rights have been infringed." (Pet. App.
28.)
Remarkably, Sony itself is now asking this Court to review the remedy issue, before
the remedy has even been determined by the lower courts. n35

n35 Question 4 of Sony's Petition.

Moreover, premature review of this non-final judgment would be particularly


inappropriate here because the entire VCR controversy is now under active
consideration in Congress. Proposed legislation, supported by the Copyright Office

15
and leaders in both Houses of Congress, would create a compulsory license for VCRs
-- it would immunize consumers from copyright liability while compensating
copyright owners by imposing a reasonable royalty on Sony and other manufacturers
and importers of VCRs and blank tapes. n36 The royalty would be set, collected and
distributed to copyright holders by the Copyright Royalty Tribunal. Congress has
recently enacted similar compulsory licenses to deal with other new technologies
such as cable television. n37 Hearings on the pending VCR bills are almost
complete. There is substantial momentum for legislation. n38

n36 Amendment No. 1333 to S. 1758, 97th Cong., 1st Sess. (1981) (March 4,
1982) (introduced by Senator Mathias and co-sponsored by Senators Andrews,
Baker, Baucus, Boren, Boschwitz, Burdick, Byrd, Cochran, Cranston, Dodd, Hart,
Kasten, Kennedy, Mattingly, Melcher, Nunn, Pell, Riegle, Sasser and Stevens).
Similar legislation was introduced in the House by Representative Edwards, H.R.
5705, 97th Cong., 2d Sess. (1982). The Edwards bill already has more than 60 co-
sponsors. Legislation has also been introduced that would overturn the Ninth
Circuit's opinion without providing any royalties. H.R. 4783, 97th Cong., 1st Sess.
(1981) (introduced by Rep. Duncan); H.R. 4794, 97th Cong., 1st Sess. (1981)
(introduced by Rep. Parris); H.R. 5250, 97th Cong., 1st Sess. (1981) (introduced by
Rep. Foley); S.1758, 97th Cong., 1st Sess. (1981) (introduced by Sen. DeConcini).

n37 17 U.S.C. § 111 (cable retransmission of distant television signals).

n38 Similar legislation for videocopiers has been enacted in West Germany and
Austria and is being considered in Norway, Sweden, Denmark, France and Japan.
Ladd Statement at 47-48.

To grant this premature petition could only have the effect or delaying a legislative
solution. If the petition is denied and the case is remanded to the district court to
complete the litigation, it is likely that Congress will have dealt with the problem
before the case is finally adjudicated. In any event, the litigation is not ripe for
review now.

Conclusion

For all of the foregoing reasons, Sony's Petition for a Writ of Certiorari should be
denied.

Respectfully submitted,

STUART ROBINOWITZ, (Counsel of Record), ROBERT S. SMITH, 345 Park Avenue,


New York, New York 10154, (212) 644-8000, Attorneys for Amici Curiae Motion
Picture and Television Producers and Distributors

Of Counsel: Stephen D. D. Hamilton, Andrew J. Peck, Martin Klotz, PAUL, WEISS,


RIFKIND, WHARTON & GARRISON

Dated: New York, New York, May 10, 1982

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