United Artists Television, Inc. v. Fortnightly Corp.

• Decision Date: 22 May 1967
• Docket Number: No. 256,Docket 30767.,256
• Citation: 377 F.2d 872
• Parties: UNITED ARTISTS TELEVISION, INC., Plaintiff-Appellee, v. FORTNIGHTLY CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

377 F.2d 872 (1967)

UNITED ARTISTS TELEVISION, INC., Plaintiff-Appellee, v. FORTNIGHTLY CORPORATION, Defendant-Appellant.

No. 256, Docket 30767.

United States Court of Appeals Second Circuit.

Argued January 9, 1967.

Decided May 22, 1967.

Louis Nizer, New York City (Gerald Meyer, Gerald F. Phillips, Herbert N. Bobrow, John J. Daly, Phillips, Nizer, Benjamin, Krim & Ballon, New York City, on the brief), for plaintiff-appellee.

Robert C. Barnard, New York City (R. Michael Duncan, Stephen R. Barnett, Cleary, Gottlieb, Steen & Hamilton, New York City and E. Stratford Smith, Smith & Pepper, Washington, D. C., on the brief), for defendant-appellant.

Herman Finkelstein, New York City (Simon H. Rifkind, Jay H. Topkis, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, on the brief), for American Society of Composers, Authors and Publishers, amicus curiae.

Rosenman, Colin, Kaye, Petschek, Freund & Emil, New York City, for

Columbia Broadcasting System, Inc., amicus curiae.

Marshall, Bratter, Greene, Allison & Tucker, New York City, for Calvada Productions, amicus curiae.

Alexander & Green, New York City, for Jack Chertok Television, Inc., amicus curiae.

Graubard & Moskovitz, New York City, for Dena Pictures, Inc., amicus curiae.

Before LUMBARD, Chief Judge, SMITH and KAUFMAN, Circuit Judges.

LUMBARD, Chief Judge:

This interlocutory appeal under 28 U.S.C. § 1292(b) from a decision of Judge Herlands in the Southern District of New York presents the question whether the community antenna television (CATV) systems operated by defendant Fortnightly Corporation (and its predecessors) in and around the cities of Clarksburg and Fairmont, West Virginia, infringed the exclusive right of plaintiff United Artists Television, Inc. (and its predecessors) to perform its copyrighted motion pictures in public,¹ 17 U.S.C. § 1(c), (d), by receiving and transmitting by coaxial cable to their paying subscribers the signals of television broadcasting stations in Pittsburgh, Pennsylvania, Steubenville, Ohio, and Wheeling, West Virginia, which were licensed to broadcast the motion pictures. A further issue is whether, if defendant's CATV systems did perform plaintiff's copyrighted motion pictures in public, they had a license implied in law to do so.

Pursuant to a pretrial order, these issues were separated from unrelated issues, and were tried on the assumptions that the plaintiff owned valid copyrights in the motion pictures and that defendant's CATV systems received and transmitted the signals of television stations which broadcast the motion pictures. Judge Herlands held in a thorough and considered opinion that the operation of the defendant's CATV systems constituted an unlicensed public performance which infringed plaintiff's assumed copyrights. 255 F.Supp. 177 (S.D.N.Y.1966). We agree, and affirm Judge Herlands' decision.²

The hilly terrain in and around Clarksburg and Fairmont makes reception by normal rooftop antennas of television programs broadcast by the Pittsburgh, Steubenville, and Wheeling stations difficult or impossible. See note 14 infra. Both the Clarksburg and the Fairmont CATV systems receive broadcast television signals by means of tall antennas on hilltops some two and a half and one and a half miles respectively from the city centers, and transmit them through coaxial cables strung along utility poles and smaller "house drop" cables to television sets on subscribers' premises. The television signals of each station carried by a system are received by a separate antenna specifically designed and oriented to receive them. The signals of all the stations carried by the system are then transmitted together over its cables, without any editing or selection of programs, and the system has no way of knowing which program, if any, a subscriber has turned on. Both CATV systems carried three stations from their inception in 1953 to 1958, and five thereafter. Although there are local television broadcasting stations in Clarksburg and Weston, West Virginia, the CATV offerings attracted substantial numbers of subscribers to both systems. At the end of 1963, the Clarksburg system had 9571 subscribers and the Fairmont system 6047. The number of subscribers of each system in 1960 was over half the number of occupied housing units counted by the United States Census of Housing in the area they served.

Defendant, like its predecessors, is a private corporation operating the CATV systems for profit under municipal franchises. Each subscriber pays an initial charge, which is reduced if his premises are already connected to the CATV system, and fixed monthly charges. Additional charges are made for connecting additional sets. Different charges, sometimes individually negotiated, have at times been established for hotels, motels, and other nonresidential subscribers. Both the Clarksburg and the Fairmont systems often advertised the variety of stations and programming they made available, at times in connection with particular programs. Both systems conducted mail ballots among their subscribers to determine which stations they preferred to receive.

A clear understanding of defendant's contention that its CATV systems do not publicly perform telecast motion pictures because the motion pictures are nowhere made visible or audible within the systems requires a brief summary of Judge Herlands' extensive and careful account of the technology of television and the operation of defendant's systems. See 255 F.Supp. at 188-197. Television broadcasting equipment first translates the sight and sound of the program being broadcast into two voltages, the video signal, which measures the intensity of light at each spot on a photosensitive screen inside the camera as it is scanned by an electron beam, and the audio signal which measures the intensity of sound. These two changing voltages are then encoded in a radio frequency carrier wave for broadcasting; the video signal is used to modify, or modulate, the amplitude or maximum strength, of the carrier wave, and the audio signal is used to modulate the frequency of the carrier wave. The modulated carrier wave is then broadcast by an antenna as electromagnetic radiation. When this radiation strikes a home television antenna, it induces a voltage between the antenna terminals which reproduces the modulated carrier wave. The reproduced carrier wave is then conducted into the television set, and there demodulated to yield reproductions of the video and the audio signals. The video signal controls the intensity of a scanning electron beam, which reproduces on the electroluminescent interior of the television tube the image seen by the camera, and the audio signal controls the speaker of the set. Since the broadcast radiation propagates at the speed of light, the whole process of television broadcasting and reception consumes a fraction of a second.

The radiation broadcast by a television broadcasting station, when it strikes the corresponding antenna of one of defendant's CATV systems, induces in it a reproduction of the station's modulated radio frequency carrier wave just as it does in a home antenna. The CATV system's "head end equipment," housed in a small building near the antennas, then amplifies the carrier wave, converts it if it is a high-frequency, or high-band, VHF wave (channels 7 to 13) to one of the low-band VHF channels (2 to 6) in order to reduce losses in transmission through the system's coaxial cables, narrows its frequency range, and then propagates it as electromagnetic radiation through the system's cables. The radiation, amplified by numerous trunkline and distribution amplifiers along the cables, is transmitted at nearly the speed of light to the terminals of subscribers' television sets, in most cases through matching transformers.

Before 1958 and after 1964 the function of converting high-band to low-band VHF waves at each system's "head end" was performed by equipment which heterodyned an incoming wave, that is, mixed it with a locally produced wave whose frequency was chosen so that the beat wave resulting from the mixing, whose frequency was the difference between the frequencies of the two mixed waves, possessed the desired frequency. From 1958 to 1964 the same function was performed by units which demodulated the video signal of the incoming wave and used it to remodulate a locally produced wave of the desired frequency, and which heterodyned the audio component of the incoming wave.³ Thus broadcast television programs have never been made visible or audible within defendant's CATV systems. Nor have the systems originated television programs. While they possessed video scanners which could transmit a still image drawn on a slide inserted in the scanner, they had no equipment capable of originating television signals representing a moving image. With such equipment at its head end, one of the defendant's systems could originate programs; but defendant's expert, A. Earl Cullum, Jr., a consulting communications engineer, testified that the added capital and operating costs of such equipment would be relatively substantial.

I.

Defendant contends that its CATV systems should not be held to have performed plaintiff's copyrighted motion pictures in public because the motion pictures were not made visible or audible within the systems, but only in the television sets owned and controlled by their subscribers. We do not think that this fact is decisive. In light of prior decisions and of the policies of the Copyright Act, the result brought about by one of defendant's CATV systems — the simultaneous viewing of plaintiff's copyrighted motion pictures on the television sets of as many as several thousand of defendant's subscribers — is fairly characterized as a public performance infringing the copyrights.

No legislative history indicates whether Congress expressly intended the exclusive right to perform in public to embrace the operation of systems like def...