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

• Decision Date: 31 January 1975
• Docket Number: No. 74-1200,74-1200
• Parties: FAME PUBLISHING CO., INC., et al., Plaintiffs-Appellees, v. ALABAMA CUSTOM TAPE, INC., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 667

507 F.2d 667

184 U.S.P.Q. 577

FAME PUBLISHING CO., INC., et al., Plaintiffs-Appellees, v. ALABAMA CUSTOM TAPE, INC., et al., Defendants-Appellants.

No. 74-1200.

United States Court of Appeals, Fifth Circuit.

Jan. 31, 1975.

F. Dulin Kelly, Hendersonville, Tenn., Robert L. Estes, Nashville, Tenn., for defendants-appellants.

W. Michael Atchison, Birmingham, Ala., John S. Clark, New York City, Arnold Teks, Florence, Ala., Sidncy S. Rosdeitcher, Steven B. Rosenfeld, New York City, for plaintiffs-appellees.

Appeal from the United States District Court for the Northern District of Alabama.

Before GODBOLD and MORGAN, Circuit Judges, and BOOTLE, District Judge.

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 publishers ¹ for copyright infringement the 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 on '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 made 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 not 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 arist, 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 Corporation v. Stern, 458 F.2d 1305, 1311 (9th Cir. 1972), concluded:

Rosner may, or 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.

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...