Pursuing a Better Harmonization of Copyright Law and Communications Law

By Stuart N. Brotman
September 10, 2020

“Copyright law and communications law remain in separate legislative and regulatory domains, yet with overlapping interests, as media has increasingly combined content in a phenomenon known as convergence.”

https://depositphotos.com/11172182/stock-illustration-vector-retro-tv-set.htmlUntil 1976, the worlds of American copyright and communications law operated largely in parallel universes. Under the U.S. Constitution, Congress is vested with the power “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

This authority was first used in the enactment of the Copyright Act of 1790, with modern copyright law first reflected in the Copyright Act of 1909. That Act covered all published works exclusively under federal law, provided a copyright notice was affixed.

In contrast, communications law has no specific constitutional mandate, with federal legislation first enacted in the early part of the 20th century. This was accomplished through the enactment of the Radio Act of 1927, followed by its successor, the Communications Act of 1934, which also included television broadcasting in its scope.

New Technologies Raise Coordination Concerns

In the ensuing years, these distinct statutory schemes—one for content protection, the other for conduit regulation—continued to operate under two expert government agencies. Copyright law is overseen by the Library of Congress Copyright Office, while broadcast communications law is administered by the Federal Communications Commission (FCC). Nether agency has any legal requirement to deal with each other; moreover, until 1976, there was little if any working relationship between them. They also reported to separate Congressional committees in both the U.S. House of Representatives and the U.S. Senate (Judiciary for Copyright; Commerce, Science, and Transportation for Communications), which meant that there also was little, if any, legislative coordination as needs arose for statutory reform.

However, new electronic media began to challenge important aspects of both copyright law and communications law at roughly the same time. Entrepreneurs in areas with relatively sparse broadcast television coverage invested in master antenna systems that then could retransmit the broadcast signals through a coaxial cable rather than through the airwaves.

Broadcasters, who maintained valuable FCC licenses, began to recognize a competitive threat as more Community Access Television (CATV) systems were started in various regions of the United States. Since broadcast television revenues could only be generated from advertisers based on ratings measurements of broadcast households, any CATV viewers would not be included in this advertiser-supported business model. Additionally, any revenues generated by CATV subscribers would not be shared with the originating television stations. In effect, CATV was a free-rider on broadcast television’s investments, including those allocated to copyrighted program acquisition. There was no regulatory oversight under either copyright or communications law then either.

A New Era for Communications, New Challenge for Copyright

Over time, broadcasters organized an intensive lobbying campaign at the FCC, arguing that CATV’s potential to siphon viewers from over-the-air service would undermine broadcasting’s revenue base. In turn, under that theory, this could affect a broadcaster’s ability to provide local programming, including news and information deemed to be in the “public interest.”

The FCC ultimately accepted this rationale to assert ancillary jurisdiction over CATV based on its explicit statutory authority to allocate and license broadcast spectrum. The U.S. Supreme Court subsequently affirmed the FCC’s assertion of regulatory authority over CATV in 1968, ushering in a new era for communications law.

This decision, however, did not address the legal protection for the programming content that CATV was retransmitting from broadcast television stations. There still remained the open question regarding what legal liability this new medium might face under the Copyright Act of 1909, which required a “public performance” to trigger a copyright infringement claim. CATV asserted that it was merely a passive technology retransmitting intact over-the-air broadcast signals, so that no statutorily-required public performance was taking place.

The analogy was to a rooftop antenna; viewers with an antenna installed would not face copyright liability since they were merely receiving the broadcast signal and retransmitting it through a wire into the home. CATV argued that since the only difference was that its receiving antenna was placed so that it could serve an entire community, the nature of the retransmission—private rather than public performance—was the same. Consequently, there could be no copyright liability.

The Courts, and Then Congress, Weigh In

In 1968, the U.S. Supreme Court found this argument to be persuasive, which resulted in CATV remaining under communications law jurisdiction. The separate and parallel structure of the Copyright Act of 1909 and the Communications Act of 1934 thus remained fully intact.

Broadcasters argued that this new configuration had transformed CATV into a medium that was more than the strictly passive system the Supreme Court had considered in its initial decision. Yet even when a second case was heard by the Court in 1974, the holding remained the same—namely, that CATV (now called cable television in recognition of its broadened capability) was not engaged in public performance, and thus remained outside the coverage of the Copyright Act of 1909.

When these decisions are viewed together, the state of the law by the mid-1970s revealed that the divergent Court opinions created a legal hole for cable television: liable to the FCC’S regulatory authority but not to the Copyright Office. This asymmetry could not be remedied solely by having the FCC impose more regulatory restrictions on cable, which broadcasters aggressively lobbied for. None of these restrictions would provide more compensation to programming content owners, however, since cable television had no financial liability under the Copyright Act.

A solution that would help create a better sense of symmetry between copyright law and communications law was needed. The result of a comprehensive review of the Copyright Act of 1909 and a workable industry-driven plan was Section 111 of the Copyright Act of 1976, which adapted the Copyright Act of 1909’s compulsory license provision that fixed compensation to music publishers by music roll and phonorecord manufacturers.

Section 111 afforded cable with unlimited access to local broadcast television content provided it paid a statutory rate to be determined periodically by a new federal agency, the Copyright Royalty Tribunal (CRT). This meant that for the first time ever, some level of harmonization between copyright law and communications law was achieved. But the Copyright Office’s practical deference to communications law also meant that the FCC would have unilateral capability to reduce by regulation the amount of copyrighted content to be available through retransmission of local broadcast signals. These regulations could decrease the size of the copyright pool overseen by the CRT. As a result, broadcasters thus had every incentive to continue their advocacy efforts to promote FCC regulation over cable.

In the long term, broadcasters recognized that Section 111, and the reality that cable television would always be paying below-market rates for retransmitted programming, was not a fully satisfactory approach. Although the Copyright Act of 1976 filled one hole in the law by at least establishing some copyright liability for retransmitted broadcast signals, it had no real impact on cable’s ability to adjust its business model in favor of original programming that had a higher revenue potential. This led broadcasters to turn their attention from how extensively the FCC could regulate cable to whether a more comprehensive statutory solution was a better route. That led to major reform of the Communications Act of 1934.

By 1984, broadcasters successfully lobbied Congress for a new series of Communications Act amendments embodied in the Cable Communications Policy Act of 1984, which enshrined the FCC’s jurisdiction over cable in the statute and mandated rate regulation for basic cable (i.e., non-premium networks) to provide yet another way to limit cable’s overall revenue potential. The FCC also adopted must-carry regulations that required cable television systems to carry all broadcast television signals in their local markets. This ensured that broadcasters would be able to reach the largest possible audience to justify increased advertising rates.

Balancing Act

In 1992, a new series of amendments to the Communications Act of 1934 were enacted to achieve a better sense of competitive balance between the broadcasting and cable television industries. Cable sought legislative relief from basic cable regulation, which Congress agreed to provide whenever “effective competition” (e.g., through direct-to-home satellite transmission) was present in a particular geographic market. In exchange, broadcasters championed the adoption of a modified must-carry regime that could be elected by a broadcaster as a mandatory right, or alternatively declined in favor of marketplace negotiations for retransmission consent. For the first time, a quasi-intellectual property right was created in the Communications Act rather than in the Copyright Act, which did not include a broadcast signal as a creation with independent copyright status apart from the program content embodied in that signal.

In the short term, this legislative bargain appealed to both industries since they received tangible benefits. In practice once enacted, most major market network-affiliated broadcast television stations declined to assert their must-carry rights in favor of negotiating directly with cable operators, ideally for cash compensation. During the early years of the three-year negotiating cycle provided for in the Cable Television Consumer Protection Act of 1992, broadcasters found cable to be more likely to offer in-kind rather than cash compensation for retransmission rights. With expanded channel capacity, cable bargained for guaranteed channel placement for new original programming networks to be developed by broadcasters—an alternative win-win outcome that provided attractive new programming for cable and increased revenue for broadcasters.

However, in the long term, there were only a limited number of new cable networks that could be created, branded, and become capable of achieving audience success through sustainable advertising support.

Toward Symmetry

The current reality is that copyright law and communications law remain in separate legislative and regulatory domains, yet with overlapping interests, as media has increasingly combined content in a phenomenon known as convergence.

In theory, if Section 111 was deleted from the Copyright Act of 1976, broadcasters and cable operators would need to negotiate directly with each other for retransmitted broadcast programming content. Rates would be set in the marketplace rather than by the current government agency now in charge of statutory royalty rates for cable, the Copyright Royalty Board (CRB), which was created under the Copyright Royalty and Distribution Act of 2004. In turn, the CRB could be abolished outright.

In communications law, a modification to the Communications Act also would need to be made in order to create legislative symmetry. This would involve eliminating the must-carry option in the 1992 Cable Act, except for commercial independent and public television stations that could be guaranteed must-carry status under a grandfather clause. This would mean that the vast majority of the most-viewed stations nationwide would need to negotiate retransmission consent rights in the marketplace, as they already do. In order to phase this in, Congress could enact a sunset provision in the existing Copyright Act that would bring this about on a certain date, while also giving industry players an opportunity to plan accordingly for a post-compulsory license environment.

Although some might argue that leaving both sets of negotiations to the marketplace might result in prohibitively high transaction costs for broadcasters and cable operators, there may be countervailing economies created since both parties could conduct one set of negotiations that covered both retransmission content and signal carriage rights. There also would be no regulatory compliance costs since the CRB would be abolished.

Statutory reform would be the most durable potential route, but it also may be difficult to achieve at a political level since it would deviate from the status quo that the interested parties operate under. In any event, it underscores the importance of viewing the Copyright Act and the Communications Act in tandem, and continuing to focus on ways to create better harmonization between them.

The author gratefully acknowledges the research assistance of Samantha J. Levin, George Mason University Antonin Scalia Law School, Class of 2020. She is the 2020-2021 Legal Fellow for the Copyright Alliance and the Legal Volunteer for the International Game Developers Association Foundation.

Image Source: Deposit Photos
Author: dmstudio
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The Author

Stuart N. Brotman

Stuart N. Brotman is a Leonardo da Vinci Research Fellow at the Center for the Protection of Intellectual Property, George Mason University Antonin Scalia Law School. He is the inaugural Howard Distinguished Endowed Professor of Media Management and Law and Beaman Professor of Journalism and Electronic Media at the University of Tennessee, Knoxville. Brotman served as Harvard Law School’s first Visiting Professor of Entertainment and Media Law.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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