Part 18

Yours, truly,

THE ÆOLIAN COMPANY, E. R. PERKINS, _General Manager_.

I now ask you, Mr. Chairman and gentlemen, to turn to section 15 of the bill, found at page 11 of the House bill, which would seem to me to be rather ambiguous. It provides that the owner of the copyright may commence proceedings and so forth within thirty days, but that he has a whole year within which to complete his copyright. Now, that means that he does not have to put his mark on it, I suppose, and perhaps an independent manufacturer may go ahead for a year, or, rather, for three hundred and sixty-four days, believing that he has the right to do so, and then, on the three hundred and sixty-fifth day the owner of the copyright completes his record, and he is promptly sued for all that he has done for the past year. True, the act says that in such case no action shall be brought for infringement of the copyright until the requirements have been fully complied with; but that merely says that he can not commence the action until he has complied with the act. It does not say that after he has finally complied he can not recover for the infringement during the full year within which he practically permitted his copyright to lapse.

Mr. PUTNAM. Do you understand that he is not obliged to give notice during the intervening period?

Mr. O'CONNELL. I am speaking of the one-year provision.

Mr. PUTNAM. The works that are issued carry a notice, do they not? You did not understand that it was supposed that the works issued were to be exempt from the notice upon them of copyright, did you?

Mr. O'CONNELL. I would like to know what is the reason for the provision in question, then. If there is no reason for it, it should not be there.

Mr. CHANEY. Then you would strike out all of section 15?

Mr. O'CONNELL. Why not leave the act as it is, and provide that everything must be done before publication, instead of giving them a year in which they might possibly deceive the public?

Mr. PUTNAM. Mr. O'Connell has asked what is the reason for this section. I will ask you, Mr. O'Connell, if you have observed that the section reads, this section 15, that "if, by reason of any error or omission the requirements prescribed above in section 11 have not been complied with," etc. Now, notice that section 11 does not refer to the requirement of notice upon the published works, but of the requirement of deposit and registration in the copyright office.

Mr. O'CONNELL. In answer to that I will say that the Patent Committees of both Houses are probably aware of the fact that there have been means found and adopted for many, many years to keep applications for patents pending in the Patent Office and still not have them outlawed. It would be the easiest thing in the world for an applicant for a copyright to commit irregularities for that very purpose.

Another point: In section 18, subdivision C, there may be a copyright obtained under an assumed name. I confess that I do not see the reason for that.

Mr. CHANEY. Mark Twain, for instance, instead of Samuel L. Clemens? Is there objection to that?

Mr. O'CONNELL. I do not see the reason for it, while it might be all right in the particular instance which you suggest. Of course if it is limited to giving a copyright to a man under his pen name, that might be all right.

Mr. CHANEY. Is not that the purpose of it?

Mr. O'CONNELL. It may be the particular purpose of it, but I think the section is so broad that it might include almost anything from Genesis to Revelations.

Mr. PUTNAM. Where is that in section 18, that you may copyright under an assumed name? Will you state where you find that in that section?

Mr. O'CONNELL. On page 15:

The copyright in a work published anonymously or under an assumed name shall subsist for the same period as if the work had been produced bearing the author's true name.

It is at the end of section 18. That would seem to me to give the right to copyright under an assumed name.

Mr. PUTNAM. Oh, yes.

Mr. O'CONNELL. As to the penalties, Mr. Chairman, I think there never has been an act passed where the penalties have been so severe. I will ask you, Mr. Chairman and gentlemen, to turn to section 23, on page 17, of the bill and I will point out as far as I may where it differs from the old act. In the first place, subdivision A gives the right to an injunction restraining such infringement. As to the damages, in addition to the injunction, it gives the copyright proprietor such damages as he may have suffered. In addition to the injunction and the damages, it gives him the right to all the profits which the infringer may have made from such infringement. And now comes the extraordinary provision. It says: "And in proving profits the plaintiff shall be required to prove sales only"--gross sales, I suppose it meant thereby--"and defendant shall be required to prove every element of cost which he claims."

That provision is revolutionary. In every case, both at law and in equity, where the plaintiff has to prove either damages or loss of profits, it is absolutely essential that he prove the actual damages or the actual profits. By that is not meant gross profits, but the net profits which the infringer has made. Under this act all that the plaintiff is required to do would be to prove that the alleged infringer sold so many goods for such and such a price, and the onus or burden of proof is entirely on the defendant to establish all the items of the expense incurred in producing the infringing article. The old act has no such provision.

Next it says that in lieu of damages and profits the court----

Mr. CHANEY. It says "actual damages."

Mr. O'CONNELL. It says that the court, instead of actual damages and profits, may award an arbitrary sum, not less than $250 nor more than $5,000, and it says that that sum shall be made up in this way: For every copy of a music roll or a phonograph record, $10. The old act provided for practically the same kind of a record, the same genesis of things, $1. Why, Mr. Chairman and gentlemen, should you impose a penalty of $10? The old act has it that paintings, statues, or sculptures should pay a penalty of $10. It also has it that prints, etc., should pay $1. Why should you put a music roll into the category of paintings, statues, or sculptures at $10, rather than into the other category?

Mr. BURKAN. We will submit an amendment making that $1. The music publishers will submit an amendment making that $1.

Mr. O'CONNELL. I thank the music publishers for considering us, even in the very slightest degree.

Five thousand dollars would seem to be the limit in any one suit, but suppose the complainant brings 20 or 50 different suits in different jurisdictions, which he would be permitted to do under other sections of the act, which I will point out presently.

Subdivision third of that section 23, says: "In the case of a dramatic or musical composition not less than $100 for the first and not less than $50 for every subsequent infringing performance."

I submit, Mr. Chairman and gentlemen, that we are also liable to that penalty as well as the $10 a roll, because these very astute gentlemen who are back of this bill, on the very first infringement will claim that any performance on an automatic piano player whereby Mr. Sousa's march or Mr. Herbert's composition is played on a pianola or one of the independent pianos, is a musical performance, and that for the first performance, in addition to the $10 a roll, we are liable to be fined $100, and for each subsequent performance $50. I think that this section, if the other provisions of the bill are to remain in, should be amended so as to say that this shall not include a performance on a perforated music roll or on phonograph or music machine disks.

Some other extraordinary provisions of the penalties are, first, this subdivision C of the fourth paragraph of section 23 provides that the infringer is--

to deliver up on oath to be impounded during the pendency of the action, upon such terms and conditions as the court may prescribe, all goods alleged to infringe a copyright.

That is an extraordinary provision. They get an injunction pendente lite, and not alone that, but we have to deliver up to them everything pendente lite. The injunction is not good enough, and we have to give the goods to them.

Next, it says (subsection D):

To deliver up, on oath, for destruction all the infringing copies or devices, as well as all plates, molds, matrices, or other means for making such infringing copies.

It may be proper, as in the old act, to direct the infringer to deliver up the copies or the plates from which they are made, but it is absolutely revolutionary to direct that the machinery be delivered up, because that machinery may be useful for perfectly legitimate purposes, and yet it must be delivered up for destruction.

It also provides that all those results can be obtained in a single action.

As to the jurisdiction of courts in suits of this kind, here is the provision of the bill:

SEC. 32. That all actions arising under the copyright laws of the United States shall be originally cognizable by the circuit courts of the United States, the district court of any Territory, the supreme court of the District of Columbia, the district courts of Alaska, Hawaii, and Porto Rico, and the courts of first instance of the Philippine Islands.

Actions arising under this act may be instituted in the district of which the defendant is an inhabitant, or in the district where the violation of any provision of this act has occurred.

Let us assume that my client, a manufacturer of an automatic piano player in the city of New York, ships one of these with a box of music rolls to Manila or some inland town in the Philippines. If it is an infringement, the infringement has occurred in the Philippines, because the music roll is not published until it is taken out of the box. According to this act they have a right to commence an action in the Philippine Islands. According to another subsection of section 32 they can send the process to the marshal in the southern district of New York, and that marshal serves the process, and thereupon the court of first instance in the Philippine Islands has jurisdiction, and the defendant has to go to the Philippine Islands to defend the case. And a still greater objection is that the complainant in such an action may commence a hundred concurrent suits and distribute them in every court in the United States, the Territories, Porto Rico, and the Philippines.

Mr. CHANEY. The idea, of course, is to put it within the reach of these people who are injured.

Mr. O'CONNELL. Does that put it within the reach of the New York corporation, or is it part of their proper proceedings to get damages or redress that they should go to the Philippine Islands to sue my clients who are domiciled in New York, where the Æolian Company is domiciled, and make us go over there to defend the suit?

Mr. CHANEY. No; but suppose the person injured lives in the Philippine Islands?

Mr. O'CONNELL. If that is the conclusion, if you simply want the plaintiff to sue in the jurisdiction where either the real plaintiff or the defendant is an inhabitant, then that raises another question.

Mr. CHANEY. Evidently that is what has been intended. There was no purpose of anybody to take all the fellows out of New York, because that is a splendid place to live, you know. [Laughter.]

Mr. O'CONNELL. But we have to come to the fountainhead occasionally. [Laughter.]

Mr. WEBB. The act distinctly says "In the district where any violation of this act has occurred."

Mr. O'CONNELL. Under the old provision with regard to infringement, you could only sue a defendant where you found him, in the district where he resided. That is the provision in relation to patents, and the provision of the bill as the old act stands. Why should this new provision be inserted? Perhaps the members of this committee will be able to determine.

Mr. CHANEY. I take it that that was for the purpose of making it convenient to the person injured, or the parties injured.

Mr. O'CONNELL. That might be all right, if the party injured was a resident of the Philippines.

Mr. CHANEY. Yes.

Mr. O'CONNELL. Or of the Sandwich Islands, or Porto Rico?

Mr. CHANEY. That is the idea.

Mr. O'CONNELL. I think you will find that there are none of the owners of any of these copyrights living in any of those districts; none of them. I do not suppose that Mr. Sousa intends to change his residence just at present, or Mr. Herbert either. I think they will be found doing business here right along. [Laughter.]

Section 34 provides--

That no action shall be maintained under the provisions of this act unless the same is commenced within three years after the cause of action arose.

Why not leave that the old two-year limit? What is the necessity for three years? There is no reason for that.

Then, look at the provision in section 35.

Mr. CHANEY. Is there a disadvantage in putting it three years?

Mr. O'CONNELL. Why should it be extended to three years?

Mr. PUTNAM. Is it not true that the present limitation is only for actions for penalties or forfeitures, whereas this is a general limitation on all actions, including civil actions for infringement, so that although it enlarges by one year the criminal action, it reduces the term that the complainant at present has in his civil action? This now applies to all actions. Did you notice that, Mr. O'Connell?

Mr. O'CONNELL. I think that the present provision relating to kindred actions of this kind is a two-year statute of limitations, and it has been found ample for a great many years, for all purposes, to protect patentees, inventors, and everybody else.

Look at section 35:

That in all recoveries under this act full costs shall be allowed.

That is to say, where the complainant recovers he must get from the defendant, and the court must allow the complainant, full costs. Let us assume a case where the defendant gets the bill dismissed. That is not a recovery. He does not get a recovery, but there is no provision giving the defendant in that case full costs. Oh, no. They are only careful of the complainant where he recovers; but where his action fails there is no provision giving the defendant full costs.

Mr. WEBB. You would strike out "recoveries" and insert "suits?"

Mr. O'CONNELL. If you want to do it that way. You will not be then giving one side any more than the other. But I think that provision should not be in there at all. I think the court should have full discretion in the award of costs, these actions being mostly equitable actions, and the general rule being that in a court of equity the awarding or denial of costs is in the discretion of the court.

I see no reason why the jurisdiction of the courts should be limited by a provision of this kind. I think it should be left to the courts to say in all cases whether costs should be awarded or withheld, and how much costs should be awarded; although I think there should be a provision to the effect that in the case of an action wilfully brought, and where there is no recovery--brought simply for the purpose of intimidation, where there is no reasonable ground for recovery, simply to get hold of the man's business and keep him from doing business--that there should be some provision in there giving a penalty against the complainant in such an action as that. I have only thought of that at this moment, but I think it is a good suggestion to make to the committee.

Gentlemen, I thank you for the time you have given me, and I have no more to say on the subject. I again ask, however, as I did at the outset, that on these contracts and on the question of the monopoly in the hands of this concern and its associates, the committee should take proofs such as may be necessary to determine what the situation is. All I ask on behalf of the independent manufacturers of automatic musical instruments in the United States is that we should have a fair show, that our business should have the same protection as any other business has, and that you gentlemen may not do anything which will help this great centralization and put it in the power or a monopoly to ruin our business.

Mr. PUTNAM. I understand that Mr. H. N. LOW is by agreement to speak next.

STATEMENT OF H. N. LOW, ESQ., OF WASHINGTON, D.C.

Mr. LOW. I appear for the manufacturers of the music rolls and of instruments operated by such rolls.

Mr. CURRIER. I understood that the music-roll people had had over two hours now.

Mr. LOW. Pardon me. My remarks will be very brief.

Mr. CURRIER. The talking-machine people are to have thirty minutes, and the committee can not sit here a very great while.

Mr. LOW. My suggestions will be very brief.

The ACTING CHAIRMAN. We have to adjourn in a little while, and the gentleman who preceded you exceeded his time.

Mr. LOW. Then to merely supplement the remarks of the gentleman who has preceded me, I ask leave of the committee to submit two more contracts, similar to the ones that he has submitted, with the Æolian Company in the carrying out of the agreement that we allege. My information is that that agreement now embraces practically the whole music-publishing trade, and those outside of that agreement are very small manufacturers, and the trust or combination is just about complete and ready for this legislation. I submit that this legislation is most dangerous, and that this pretended revision of the copyright law is a cloak for something that is very wrong.

[The contracts referred to by Mr. LOW are as follows:]

Memorandum of agreement made and entered into this 30th day of April, 1902, by and between Chicago Music Company, of Chicago, in the State of Illinois, party of the first part, hereinafter called the publisher, and the Æolian Company, a corporation organized under the laws of the State of Connecticut, and having a place of business in the city of New York, in the State of New York, party of the second part, hereinafter called the Æolian Company, witnesseth:

That whereas the publisher is the proprietor of certain copyrights for musical compositions and the owner of rights in copyrights for other musical compositions; and

Whereas the Æolian Company is engaged in the business of manufacturing and selling automatic musical instruments controlled by perforated music sheets, and in manufacturing and selling machines for playing keyboard musical instruments, which machines are controlled by perforated music sheets, and in manufacturing and selling perforated music sheets for such automatic musical instruments and machines; and

Whereas the Æolian Company is desirous of acquiring the exclusive right for such perforated music sheets in and to all the copyrighted musical compositions of which the publisher is the proprietor, or as to which he is the owner of any rights, and of all those other musical compositions which may hereafter be protected by copyright, and the copyrights for which or rights in which may be acquired by him;

Now, therefore, the publisher, for and in consideration of the premises, and of the sum of $1, lawful money of the United States, to him paid by the Æolian Company, receipt of which is hereby acknowledged, and for and in consideration of the true and faithful performance by the Æolian Company of its covenants hereinafter made, does hereby sell, assign, transfer, and set over unto the Æolian Company the exclusive right for all perforated music sheets of the kinds aforesaid in and to all the copyrighted musical compositions of which the publisher is the proprietor, or in the case in which he is the owner of any less rights, to the extent of said rights, and does hereby covenant and agree with the Æolian Company to give and secure to it the exclusive right in like manner for all perforated music sheets of the kinds aforesaid in and to all those other musical compositions which may hereafter be protected by copyright, and the copyrights or rights in which may be acquired by the publisher, except that if the Æolian Company do not accept any price offered them within three months after said offer, then the publisher may be at liberty to dispose of the same otherwise.

And the publisher, for the consideration aforesaid, hereby covenants and agrees, so far as it may be reasonably in his power, to protect the Æolian Company against any claim of any third person in respect to any and all copyrighted musical compositions which may be involved in this agreement, and the copyright of which may be owned by the publisher.

And the Æolian Company, for and in consideration of the premises, hereby agrees that it will keep correct and true books of account in which it will set down or cause to be set down entries of all perforated music sheets made by it for playing the copyrighted musical compositions owned or controlled by the publisher; that it will on the 20th day of each and every January and July, during the continuance of the manufacture and sale by it of the perforated music sheets for playing such musical compositions, render unto the publisher a correct and true statement of the number, names, and other designations of such perforated music sheets sold by it during the six preceding calendar months, and that at the time of rendering each and every such statement it will well and truly pay unto the publisher a license fee or royalty of 10 per cent of the list prices made by the United States publishers of the printed scores or copies of such musical compositions, but never more than 50 cents for any one of such perforated music sheets.

And the parties hereto mutually covenant and agree that nothing herein contained is to obligate the Æolian Company to pay any license fee or royalty upon such perforated music sheets as shall be made by it in the United States and sold or shipped to any other country, unless it shall have been decided by a court of competent jurisdiction of such other country that the copyright laws of that country shall be applicable to perforated music sheets of the kinds herein mentioned.

And the parties hereto mutually agree and covenant that the term "perforated music sheets" is not to be construed as covering the controllers of those musical instruments which are generally known as phonographs, or music boxes, or hand organs.

Anything herein to the contrary notwithstanding, at the expiration of thirty-five years from the payment of the first license fee hereinbefore provided, the Æolian Company shall not be entitled to licenses under the copyrights thereafter acquired by the publisher, but all licenses existing under copyrights theretofore acquired by him shall remain in force until the expiration of the terms of the copyrights under the terms hereinbefore provided.

During the existence of this contract, after the payment of the license fee hereunder, the Æolian Company obligates itself to prosecute diligently, at its own expense and by its own counsel, in the name of the proprietors of the copyright, all infringers of the rights granted to it, the Æolian Company.

And the parties hereto mutually covenant and agree that all the provisions of this agreement shall be binding upon and inure to the successors, executors, administrators, and personal representatives of both the parties hereto.