Heilman v. Levi, Civ. A. 75-C-117.

• Decision Date: 28 April 1975
• Docket Number: Civ. A. 75-C-117.
• Citation: 391 F. Supp. 1106
• Parties: David L. HEILMAN and E-C Tape Service, Inc., a Wisconsin Corporation, Plaintiffs, v. Edward H. LEVI, Attorney General of the United States of America, his agents, servants, employes, attorneys, successors and all those persons in active concert or participation with them, Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

391 F. Supp. 1106

David L. HEILMAN and E-C Tape Service, Inc., a Wisconsin Corporation, Plaintiffs, v. Edward H. LEVI, Attorney General of the United States of America, his agents, servants, employes, attorneys, successors and all those persons in active concert or participation with them, Defendants.

Civ. A. 75-C-117.

United States District Court, E. D. Wisconsin.

April 28, 1975.

Robert H. Friebert, Thomas W. St. John, Milwaukee, Wis., for plaintiffs.

Joseph P. Stadtmueller, Asst. U. S. Atty., Milwaukee, Wis., for defendants.

DECISION AND ORDER

REYNOLDS, Chief Judge.

This matter is presently before the Court on plaintiffs' motion for a temporary restraining order and preliminary injunction. Plaintiffs' complaint seeks declaratory and injunctive relief with respect to a threatened federal criminal prosecution of the plaintiffs for alleged violations of 17 U.S.C. § 101(e) as amended in Public Law 92-140, the Sound Recording Act of 1971. In addition, plaintiffs have requested the convening of a three-judge court pursuant to 28 U.S.C. § 2282, if 17 U.S.C. § 101(e) is construed so as to allow a criminal prosecution of the plaintiffs. Following a hearing held on March 26, 1975, the Court took plaintiffs' motions under advisement. Having fully considered the briefs and arguments of the parties, this Court concludes that plaintiffs' motion for a temporary restraining order and preliminary injunction must be denied, and that plaintiffs' constitutional challenge to § 101(e) is insubstantial and therefore a three-judge court need not be convened.

I.

The plaintiff, David L. Heilman, resides in the Eastern District of Wisconsin and is president of the plaintiff corporation E-C Tape Service, Inc. Plaintiff, E-C Tape Service, Inc., is a corporation organized and existing under the laws of the State of Wisconsin with corporate headquarters in the Eastern District of Wisconsin. The defendant, Edward H. Levi, is Attorney General of the United States of America. This suit is brought against the Attorney General in his official capacity and against his agents, servants, employees, attorneys and successors and all those persons in active concert or participation with them.

Plaintiffs are "tape pirates" or duplicators as they prefer to be called. Plaintiffs purchase records and tapes, manufactured by others, on the open market and then duplicate or copy the recordings on their own sound equipment and offer the duplicated recordings for sale to the general public at a price well below the retail price of the original recordings. A "tape pirate" need only purchase a single legitimate sound recording and reproduce it. The "pirate" bears none of the costs of arranging and recording the music and because pirates copy only successful recordings, they bear none of the risk of failure to which legitimate record companies expose themselves in acquiring musical rights and marketing music with unknown popular appeal.

Plaintiffs are presently engaged in duplicating recordings "fixed" prior to February 15, 1972. That date is important because Congress has given federal copyright protection only to those sound recordings "fixed" subsequent to February 15, 1972. Thus the sound recordings which plaintiffs are duplicating are not themselves protected by a copyright. With respect to all recordings used by them, plaintiffs have paid or tendered to the composition copyright holder the two cent royalty to which the musical composer is entitled if plaintiffs, as tape pirates, come within the compulsory licensing provision of 17 U.S.C. § 1(e). Certain publishing companies have accepted the payments (27 in number), while others (127 in number) have refused to accept the tendered payments. In order to adequately understand how this particular lawsuit arose and the positions taken by the parties, it is necessary to review the development, amendments and interpretations of the federal copyright statutes involved.

II.

Congress extended federal copyright protection to composers and publishers of original musical compositions for the first time in 1831. Act of Feb. 3, 1831, Ch. 16, 4 Stat. 436. Under this Act an individual who possessed the copyright had the exclusive right to sell, among other things, "copies" of the musical score. In response to the Supreme Court's interpretation of the 1831 Act in White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1, 28 S.Ct 319, 52 L.Ed. 655 (1908), Congress enacted the Copyright Law of 1909, Pub.L. 349, Chapter 320, 35 Stat. 1075, Act of March 4, 1909 as codified at 17 U.S.C. § 1(e). In the White-Smith decision, the Supreme Court held that mechanical reproductions such as perforated piano rolls and records were not "copies" of the composition from which they were reproduced, but were mere component parts of the machine which executed the composition. Therefore, the Supreme Court held that composers did not have any copyright interest in mechanical reproductions of their musical compositions. In response to this decision, Congress extended the copyright interest of the composer to "mechanical reproductions" of his composition in 1909, the year following the White-Smith decision. Act of March 4, 1909, Pub.L. 349, Chapter 320, 35 Stat. 1075 as codified at 17 U.S.C. § 1(e); 43 Cong.Rec. 3765-3767.

Section 1(e) of Title 17 provides in part:

"Any person entitled thereto * * * shall have the exclusive right:

* * * * * *

"(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 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: Provided, That the provisions of this title, so far as they secure copyright controlling the parts of instruments serving to reproduce mechanically the musical work, shall include only compositions published and copyrighted after July 1, 1909, * * *." (Emphasis added).

At the same time, Congress, fearful of creating a monopoly within the recording industry, added a compulsory licensing provision to 17 U.S.C. § 1(e) which provides that:

"* * * 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; * * *".

The composer is thus given the right to select the licensee who will originally produce a record of the musical work but thereafter any other manufacturer can also record the composition pursuant to this compulsory licensing provision upon the payment of the two cent fee to the copyright proprietor.

Section 1(e) of Title 17 was implemented by § 101(e) of the 1909 Copyright Act which provided in part:

"Whenever the owner of a musical copyright has used or permitted the use of the copyrighted work upon the parts of musical instruments serving to reproduce mechanically the musical work, then in case of infringement of such copyright by the unauthorized manufacture, use, or sale of interchangeable parts, * * * no criminal action shall be brought, but in a civil action an injunction may be granted upon such terms as the court may impose, and the plaintiff shall be entitled to recover in lieu of profits and damages a royalty as provided in section 1, subsection (e), of this title: * * *."

Therefore, the state of the federal copyright law with respect to mechanical reproductions of recordings from 1909 until the Sound Recording Act of 1971, Public Law 92-140, can be summarized as follows:

(1) The composer or publisher was entitled to a composition copyright which included mechanical reproductions of his composition, 17 U.S.C. § 1(e);

(2) No copyright existed with respect to the mechanical reproductions themselves, i. e., records, piano rolls, tapes; only the compositions used in the records or tapes were protected;

(3) Once the owner of the composition copyright allows another to mechanically reproduce the musical work, any other person may make a "similar use" of the composition upon the payment of two cents to the composition copyright holder. 17 U.S.C. § 1(e).

(4) No criminal action would lie with respect to infringement of the composition copyright by unauthorized mechanical reproduction. 17 U.S.C. § 101(e).

On October 15, 1971, Congress enacted the Sound Recording Act of 1971, Pub.L. 92-140, 85 Stat. 391. First, the 1971 amendments added subsection (f) to § 1 of Title 17. Subsection (f) grants to the producer of a sound recording a copyright in the recording itself to be effective February 15, 1972. Thus all recordings "fixed" subsequent to February 15, 1972, are now protected from "piracy" by their own copyrights. Pre-February 15, 1972, recordings still have no independent copyright protection of their own.

The second principal aspect of Public Law 92-140 and the aspect under consideration in this lawsuit was an amendment to § 101(e) as it existed in the 1909 Copyright Act. 17 U.S.C. § 101(e) was amended to provide the following:

"If any person shall infringe the copyright in any work protected under the copyright laws of the United States such person shall be liable:

"(e) Interchangeable parts, such as discs or tapes for use in mechanical music-producing machines adapted to reproduce copyrighted musical works, shall be considered copies of the copyrighted musical works which they serve to reproduce mechanically for the purposes of this section 101 and sections 106 and 109 of this title, and the unauthorized manufacture, use, or sale of such

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