KMLA Broadcast. Corp. v. Twentieth Century Cig. Vend. Corp.

• Decision Date: 13 February 1967
• Docket Number: No. 64-1726.,64-1726.
• Citation: 264 F. Supp. 35
• Court: U.S. District Court — Central District of California
• Parties: KMLA BROADCASTING CORPORATION and Musicast, Inc., Plaintiffs, v. TWENTIETH CENTURY CIGARETTE VENDORS CORPORATION et al., Defendants.

264 F. Supp. 35

KMLA BROADCASTING CORPORATION and Musicast, Inc., Plaintiffs, v. TWENTIETH CENTURY CIGARETTE VENDORS CORPORATION et al., Defendants.

No. 64-1726.

United States District Court C. D. California.

February 13, 1967.

Greenberg & Glusker, by Philip Glusker, Beverly Hills, Cal., for plaintiffs.

Mack, Morello & Nast, by Thomas Nast, Los Angeles, Cal., for defendants.

OPINION OF COURT AND DECISION GRANTING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT

WHELAN, District Judge.

Plaintiffs sued defendants for judgment to enjoin defendants from manufacturing, distributing, selling or using equipment which picks up multiplex radio transmissions by plaintiff KMLA Broadcasting Corporation hereafter "KMLA" without plaintiffs' consent, and for damages to plaintiffs arising out of the violation by defendants of Section 605 of the Communications Act of 1934, Title 47, United States Code, Section 605, in intercepting and publishing such transmissions as well as damages for unfair competition and exemplary damages arising out of such interception and publishing.

Plaintiffs and defendants Twentieth Century Cigarette Vendors Corporation hereafter "Twentieth Century" and International Industries, Inc., dba International House of Pancakes hereafter "International", which two defendants are the only remaining defendants in the action, have respectively filed motions for summary judgment on the question of liability alone. Plaintiffs on their motion seek declaratory judgment that the transmissions of background music entitled multiplex transmissions by KMLA on its subcarrier frequency are non-public radio communications protected by said Section 605 from the activities of defendants and that such activities are in violation of said Act; and that plaintiffs have a private right of action against defendants arising out of the conduct of defendants in violation of said Section 605 and the regulatory pattern thereunder, and unfair competition by defendants by virtue of the same conduct. Defendants on the other hand seek summary judgment that the involved transmissions of plaintiffs are broadcasts not protected by said Section 605 and that defendants are not liable to plaintiffs on a private right of action.

The motions have been submitted to the Court for decision upon an agreed statement of facts, and upon legal memoranda submitted by the parties and upon an amicus curiae brief filed with leave of Court by the Federal Communications Commission. The Court has already announced its decision and this opinion and decision sets forth the grounds of the Court's decision.

This case, where there is no issue as to any fact, material or otherwise, is an appropriate case for partial summary judgment on the question of liability.

It would appear that this is a case of first impression.

JURISDICTION OF THE COURT

This action arises under the Communications Act of 1934, Title 47, United States Code, Sections 151-609, and the jurisdiction of this Court is founded on that Act and on Title 28, United States Code, Section 1337.

THE FACTS

Only such facts as are necessary for the understanding of this decision are set forth.

KMLA, a wholly owned subsidiary of plaintiff Musicast, Inc. hereafter "Musicast", owns and operates, and has owned and operated at all pertinent times, a FM radio station in the City of Los Angeles, California, under a license from the Federal Communications Commission hereafter "the Commission", granting KMLA authority to broadcast. In addition, KMLA has been and is licensed under a Subsidiary Communications Authorization SCA to transmit on a separate, subcarrier frequency, a background music program to subscribers. This subcarrier frequency is entitled the multiplex channel; and a FM station broadcasting over its main frequency and at the same time transmitting a background music program to subscribers over its multiplex channel is said to be "multiplexing."

Musicast has been and is, under a license from KMLA, providing background music to industrial and commercial establishments Musicast's subscribers in Los Angeles County, California, for a monthly fee. Musicast installed on the premises of each such subscriber a special multiplex receiver fixed to and capable of receiving KMLA's multiplex channel, as well as speakers, amplifiers, volume controls and related equipment. Ownership of the multiplex receiver is always retained by Musicast and the other equipment is either sold or leased to Musicast's subscribers. Musicast services the equipment and provides background music, free of commercials, twenty-four hours of every day, to its subscribers.

There are about six major background music companies, each with between 300 and 800 subscribers, and more than ten smaller background music companies, in Los Angeles County. In the same area there are eight FM radio stations multiplexing background music. There are about 450 FM stations one-third of all FM stations in the United States licensed to engage in multiplexing, with related or licensed background music companies.

Neither a FM radio station on its main channel nor an AM radio station which has only one channel can broadcast a 100% background music program because rules and regulations of the Commission require all stations to broadcast to the general public a varied program content, some of which has to be the spoken word. FM stations, in operating their main channel, like AM stations, are obligated by the Commission to serve the public interest, provide periodic station identifications, broadcast public service announcements, etc. Background music by radio can thus be obtained only over a subcarrier frequency, separate and apart from, and in addition to, a FM station main channel broadcast.

The main channel broadcasts of FM stations are intended for the public and may be heard without charge by anyone having a radio. On the other hand the background music program of plaintiffs, like those of other FM stations, as transmitted over the multiplex channel, is not intended for the public but is intended solely for paying subscribers; the background music program can't be heard by the public. No radio manufactured or sold in the United States can receive such multiplex transmissions. Only two or three companies in the United States make the special multiplex receivers which can receive them, and these are now made so that each receiver is capable of picking up the multiplex transmission of only a single FM station. Such multiplex receivers are sold only to, or with the express consent of, the FM station to whose subcarrier frequency the receiver is fixed.

Prior to October 1, 1960, plaintiffs supplied background music to subscribers by the following method, termed "simplexing": their subscribers' receiving radio sets were built with a special circuit which, when actuated by the transmission by KMLA of an electronic signal, a "beep", eliminated from reception by the subscribers' radio sets all spoken words of the KMLA broadcast there was then no separate subcarrier frequency but only the channel for broadcast to the general public. Thus the subscribers for background music could have the music transmission, as they wanted it, free of any spoken words while the public received both the music and the spoken material as required by the Commission.

The Commission has prohibited the transmission of background music on a simplex basis and now requires all FM stations who desire to engage in a subscription background music program to do so on a multiplex basis under a special license termed Subsidiary Communications Authorization. In making its rule requiring multiplexing the Commission concluded that the public interest will be served by divorcing subscription services from main channel FM broadcasting.

The aggregate cost to plaintiffs in converting from simplexing to multiplexing was approximately $100,000. This amount covered the cost to KMLA in the installation of multiplex transmission equipment at its radio station and the cost to Musicast of the multiplex receivers installed at the premises of its subscribers, and the cost of removing the old simplex receivers, installing the new multiplex receivers, multiplex aerials, etc.

Since 1959 Musicast has had between 750 and 800 subscribers, each paying an average of $22.60 per month for background music, plus additional charges for the leasing and servicing of equipment. Musicast has a staff of approximately ten electronic and radio technicians for installation and servicing of equipment at its subscribers' premises, ten office employees, a full-time program director; and has spent approximately $3500 per month since 1959 for the promotion, advertising and selling of its music service.

Neither plaintiff owns any copyright in any of the musical selections making up the background music program. Musicast constantly acquires a great number of musical recordings, and selects, edits and arranges the selections in a particular order. The type of music transmitted varies at different hours of the day and even during different days of the week. The program is constantly changed and improved. KMLA transmits such selections over its multiplex transmitter and channel.

The intention of plaintiffs is that the background music be received and used only on the premises of Musicast's subscribers.

DEFENDANTS' ACTIVITIES

In 1961 Twentieth Century began to offer a background music service for little or no charge to those commercial establishments which would allow it to place its cigarette vending machines on the premises of such establishments. Under such arrangement the establishment received a certain percentage of the sale price of cigarettes sold through such machines. During 1961 and 1962 Twentieth Century purchased twelve multiplex receivers of Japanese origin which were fixed to KMLA's multiplex subchannel frequency and installed them and necessary related equipment on the various premises where Twentieth...