Alden-Rochelle, Inc. v. AMERICAN SOC. OF C., A. AND P.

• Decision Date: 19 July 1948
• Parties: ALDEN-ROCHELLE, Inc., et al. v. AMERICAN SOC. OF COMPOSERS, AUTHORS AND PUBLISHERS et al.
• Court: U.S. District Court — Southern District of New York

80 F. Supp. 888

ALDEN-ROCHELLE, Inc., et al. v. AMERICAN SOC. OF COMPOSERS, AUTHORS AND PUBLISHERS et al.

United States District Court S. D. New York.

July 19, 1948.

COPYRIGHT MATERIAL OMITTED

Weisman, Celler, Quinn, Allen & Spett, Milton Weisman, and Adolph Kaufman, all of New York City, for plaintiffs.

Gilbert & Gilbert, Francis Gilbert and Godfrey Cohen, all of New York City, for defendant Gustave Schirmer.

Schwartz & Frohlich and Louis Frohlich, all of New York City, for defendant ASCAP.

Bogle, Bogle & Gates, of Seattle, Wash., for Pacific Coast Conference of Independent Theatre Owners, amicus curiae.

LEIBELL, District Judge.

Two claims are asserted in this suit by each of the 164 plaintiffs who operate 200 motion picture theatres. Both claims are based on violations of the Federal anti-trust laws by the American Society of Composers, Authors and Publishers (Ascap) and its members and officers. The first claim is a private right of action for treble damages, which is specifically conferred by statute Title 15 U.S.C.A. § 15 on any one who has been injured in his property or business by conduct of another which violates the provisions of the anti-trust laws. The second claim is a suit for injunctive relief Title 15 U.S.C.A. § 26 against threatened loss or damage by a violation of the antitrust laws.

The complaint was filed in this Court on April 9, 1942. Between July 1943 and August 1946 the litigation was dormant. A pre-trial hearing was had before Judge Knox in December 1947, and an order was made after the hearing which was very helpful when the case was tried early in March 1948. Counsel filed their briefs and proposed findings of fact and conclusions of law late in April. After reviewing the record, considering the arguments of counsel and the cases cited in their briefs, I have concluded that Ascap has violated the anti-trust laws, but that plaintiffs have failed to prove that they have been injured thereby and have sustained damages. Plaintiffs have shown, however, that the power which Ascap has acquired in violation of the anti-trust laws and which Ascap attempted to use in August 1947 in a way that would have increased, many times, the license fees charged exhibitors for the right to perform publicly for profit musical compositions synchronized on films, is a constant threat which may cause loss or damage to the plaintiffs and plaintiffs are entitled to an injunction. The court's findings of fact and conclusions of law are being filed herewith. For a complete understanding of the factual situation, referred to only generally in this opinion, the findings of fact should be consulted.

§ 1 of the Copyright Law (Title 17 U.S.C.A. § 1) enumerates the exclusive rights which a person who owns a copyrighted work receives under the statute, including the right § 1(e) "to perform the copyrighted work publicly for profit if it be a musical composition and for the purpose of public performance for profit; and for the purposes set forth in subsection (a) hereof to print, reprint, publish, copy and vend the copyrighted work, to make any arrangement or setting of it or of the melody of it in any system of arrangement or any form of record in which the thought of an author may be recorded and from which it may be read or reproduced." In Buck v. Jewell-LaSalle Realty Co., 1931, 283 U.S. 191, 51 S.Ct. 410, 75 L.Ed. 971, 76 A.L.R. 1266, Mr. Justice Brandeis held that the acts of a hotel proprietor, in making available to his guests, through the instrumentality of a radio receiving set and loud speakers installed in his hotel and under his control and for the entertainment of his guests, the hearing of a copyrighted musical composition which had been broadcast from a radio transmitting station, constituted a performance of the composition within the meaning of the act, even though no detailed choice of selections was given to the hotel proprietor who had to accept whatever program was transmitted. "Intention to infringe is not essential under the Act."

Origin and Activities of Ascap.

The defendant Ascap is a voluntary association which was organized in 1914 for the purpose of licensing the public performance of musical compositions, of which its members owned the copyrights. Acting alone, the individual authors and composers were unable to detect infringement of their copyrights by those who performed their compositions publicly for profit. Even the corporate publishers of musical compositions could not do so. It was felt that an organization, with branches throughout the United States, could "police" the public performances of musical compositions by bands and orchestras, in hotels, theatres and places of amusement. If infringements were detected, Ascap would endeavor to get the infringer to take a blanket license covering all the works of Ascap's members, for a reasonable annual fee; and if the infringer refused to take a license, Ascap would have a suit filed for infringement.

So that Ascap might act for all its members most effectively, each member assigned to Ascap the non-dramatic performing rights of his copyrighted musical compositions. The sums that Ascap collected were kept in a common fund and a division of the proceeds, less expenses, was made at regular intervals. The division was one-half to the publisher members, and one half to the composer and author members.

Ascap is governed by a board of directors of 24 members. Prior to 1941 they were self-perpetuating, but since then 12 members are selected by the publishers and 12 by the composers and authors. The 12 who represent the publishers determine how the publishers share of the fund shall be divided among the publishers; the 12 directors who represent the composers and authors perform a like service in allotting their respective shares to the composers and authors. From their determination there is a right of appeal to a Board of Appeal; and from its decision an appeal may be taken to the full board of directors.

The division of the publishers share among the publisher members is based upon the popularity, earning capacity, seniority and the number and quality of the compositions in a publisher member's catalog. Popularity or vogue is determined by a survey of the compositions played over certain broadcasting chains in a given period.

The composers and authors are classified into a number of groups and grades, 19 in all. Many elements are considered in fixing a composer's classification. Length of membership, quality of compositions, popularity or vogue, earning power for the Society and the like, are duly weighed and the classification determined in the manner provided by the Articles of Association.

When silent pictures were shown in theatres the music was supplied either by a piano player or by an orchestra, which varied in size according to the size and importance of the theatre. The theatre owners refused to pay any royalties or license fee for performing the musical compositions played in the theatres. Ascap brought a number of suits for infringement. In 1923 theatre owners took a blanket license for each theatre and paid Ascap an annual fee based on seating capacity. The form of the license and the fees paid were the result of negotiations between Ascap and trade organizations of theatre operators.

When motion pictures with sound were introduced in 1928, new problems were presented to Ascap and its members. The so-called "talkies" showed the action of the members of the cast and reproduced their speech. Music was employed as part of the background for some of the scenes. At first the sound part of talkies was recorded on phonograph discs which were so operated that they synchronized with the pictures projected on the screen. Later, the speech of the actors, the music and sound effects, were recorded on the "sound track" of the film, which paralleled the pictures, so that when the pictures were projected on the screen the sound was heard by the audience. The Columbia Encyclopedia explains this as follows: "The sound track method (now commonly used)" is one "by which the sound is recorded on a strip of sound cells attached to the film itself and projected with the aid of the photo-electric cell." The development and application of this invention are described as follows: "In 1926 the first successful efforts were made to add sound to sight; in 1927 sound effects and bad music gave way to steadily improving spoken dialogue, and `The Jazz Singer' with the well known Al Jolson, made a sensation with its spoken sequence; in 1928 the first all talking picture, `The Lights of New York' appeared."

After the introduction of music on films, motion picture producers began acquiring the catalogs of music publishers, many of them members of Ascap. Ascap's writer members were requested by producers, as the need arose, to license the recording of specific musical compositions on films. From all of this the following arrangements evolved. A member of Ascap, on request, licensed a motion picture producer to record, i. e. to synchronize his musical compositions on the film, but expressly excepted the performing rights of the musical composition. Motion picture producers rented their films to the exhibitors (theatre operators) with a provision in the contract that the film would be exhibited only in a theatre for which Ascap had issued a license to perform publicly for profit the musical composition of Ascap's members. The exhibitor in order to show the film had to obtain a license from Ascap. His contract with the producer barred him from altering or deleting any part of the rented film. Licenses were issued by Ascap to exhibitors in blanket form, good for at least one year, and covering all music of which Ascap held the performing rights. The license fee was based on the seating capacity of the theatre. The charge per theatre per annum was very reasonable. On the basis of 25 compositions per film and 6 shows a day for every day in the year,...