Teleprompter Corp. v. Columbia Broadcasting System, Inc.

delivered the opinion of the Court.

The plaintiffs in this litigation, creators and producers of televised programs copyrighted under the provisions of the Copyright Act of 1909, as amended, 17 U. S. C. § 1 et seq., commenced suit in 1964 in the United States District Court for the Southern District of New York, claiming that the defendants had infringed their copyrights by intercepting broadcast transmissions of copyrighted material and rechanneling these programs through various community antenna television (CATV) systems to paying subscribers.1 The suit was initially stayed by agreement of the parties, pending this Court’s decision in Fortnightly Corp. v. United Artists Television, 392 U. S. 390. In that case, decided in 1968, we held that the reception and distribution of television broadcasts by the CATV systems there involved did not constitute a “performance” within the meaning of the Copyright Act, and thus did not amount to copyright infringement.2 After that decision the plaintiffs in the present litigation filed supplemental pleadings in which they sought to distinguish the five CATV systems challenged here from those whose operations had been found not to constitute copyright infringement in Fortnightly.3The District Court subsequently dismissed the complaint on the ground that the plaintiffs’ cause of action was barred by the Fortnightly decision. 355 F. Supp. 618. On appeal to the United States Court of Appeals for the Second Circuit, the judgment was affirmed in part and reversed in part, and the case was remanded to the District Court for further proceedings. 476 F. 2d 338. Both the plaintiffs and the defendants petitioned for certiorari, and, because of the seemingly important questions of federal law involved, we granted both petitions. 414 U. S. 817.

I

The complaint alleged that copyright infringements occurred on certain dates at each of five illustrative CATV systems located in Elmira, New York; Farming-ton, New Mexico; Rawlins, Wyoming; Great Falls, Montana; and New York City. The operations of these systems typically involved the reception of broadcast beams by means of special television antennae owned and operated by Teleprompter, transmission of these electronic signals by means of cable or a combination of cable and point-to-point microwave4 to the homes of subscribers, and the conversion of the electromagnetic signals into images and sounds by means of the subscribers’ own television sets.5 In some cases the distance between the point of original transmission and the ultimate viewer was relatively great — in one instance more than 450 miles — and reception of the signals of those stations by means of an ordinary rooftop antenna, even an extremely high one, would have been impossible because of the curvature of the earth and other topographical factors. In others, the original broadcast was relatively close to the customers’ receiving sets and could normally have been received by means of standard television equipment. Between these extremes were systems involving intermediate distances where the broadcast signals could have been received by the customers’ own television antennae only intermittently, imperfectly, and sporadically.6

Among the various actual and potential CATV operations described at trial the Court of Appeals discerned, for copyright purposes, two distinct categories. One category included situations where the broadcast signal was already “in the community” served by a CATV system, and could be received there either by standard rooftop or other antennae belonging to the owners of television sets or by a community antenna erected in or adjacent to the community. Such CATV systems, the court found, performed essentially the same function as the CATV systems in Fortnightly in that they “no more than enhance the viewer’s capacity to receive the broadcaster’s signals,” 392 U. S., at 399. The second category included situations where the CATV systems imported “distant” signals from broadcasters so far away from the CATV community that neither rooftop nor community antennae located in or near the locality could normally receive signals capable of providing acceptable images.

The Court of Appeals determined that “[w]hen a CATV system is performing this second function of distributing signals that are beyond the range of local antennas, . .. . to this extent, it is functionally equivalent to a broadcaster and thus should be deemed to ‘perform’ the programming distributed to subscribers on these imported signals.” 476 F. 2d, at 349. The Court of Appeals found that in two of the operations challenged in the complaint — those in Elmira and New York City — the signals received and rechanneled by the CATV systems were not “distant” signals, and as to these claims the court affirmed the District Court’s dismissal of the complaint. As to the three remaining systems, the case was remanded for further findings in order to apply the appellate court’s test for determining whether or not the signals were “distant.” 7 In No. 72-1633 the plaintiffs ask this Court to reverse the determination of the Court of Appeals that CATV reception and retransmission of signals that are not “distant” do not constitute copyright infringement. In No. 72 — 1628, the defendants ask us to reverse the appellate court’s determination that reception and retransmission of “distant” signals amount to a “performance,” and thus constitute copyright infringement on the part of the CATV systems.

II

We turn first to the assertions of the petitioners in No. 72-1633 that irrespective of the distance from the broadcasting station, the reception and retransmission of its signal by a CATV system constitute a “performance” of a copyrighted work. These petitioners contend that a number of significant developments in the technology and actual operations of CATV systems mandate a reassessment of the conclusion reached in Fortnightly that CATV systems act only as an extension of a television set’s function of converting into images and sounds the signals made available by the broadcasters to the public. In Fortnightly this Court reviewed earlier cases in the federal courts and determined that while analogies to the functions of performer and viewer envisioned by the Congress in 1909 — that of live or filmed performances watched by audiences — were necessarily imperfect, a simple line could be drawn: “Broadcasters perform. Viewers do not perform.” 392 U. S., at 398 (footnotes omitted). Analysis of the function played by CATV systems and comparison with those of broadcasters and viewers convinced the Court that CATV systems fall “on the viewer’s side of the line.” Id., at 399 (footnote omitted).

“The function of CATV systems has little in common with the function of broadcasters. CATV systems do not in fact broadcast or rebroadcast. Broadcasters select the programs to be viewed; CATV systems simply carry, without editing, whatever programs they receive. Broadcasters procure programs and propagate them to the public; CATV systems receive programs that have been released to the public and carry them by private channels to additional viewers. We hold that CATV operators, like viewers and unlike broadcasters, do not perform the programs that they receive and carry.” Id., at 400-401 (footnotes omitted).

The petitioners claim that certain basic changes in the operation of CATV systems that have occurred since Fortnightly bring the systems in question here over to the broadcasters’ “side of the line.” In particular, they emphasize three developments that have taken place in the few years since the Fortnightly decision. First, they point out that many CATV systems, including some of those challenged here, originate programs wholly independent of the programs that they receive off-the-air from broadcasters and rechannel to their subscribers.8 It is undisputed that such CATV systems “perform” those programs which they produce and program on their own; but it is contended that, in addition, the engagement in such original programing converts the entire CATV operation into a “broadcast function,” and thus a “performance” under the Copyright Act. Second, these petitioners assert that Teleprompter, unlike the CATV operators sued in Fortnightly, sells advertising time to commercial interests wishing to sell goods or services in the localities served by its CATV systems. The sale of such commercials, they point out, was considered in the Fortnightly opinion as a function characteristically performed by broadcasters. Id., at 400 n. 28, citing Intermountain Broadcasting & Television Corp. v. Idaho Microwave, Inc., 196 F. Supp. 315, 325. Finally, they contend that by engaging in interconnection with other CATV systems — whereby one CATV system that originates a program sells the right to redistribute it to other CATV systems that carry it simultaneously to their own subscribers — the CATV operators have similarly transferred their functions into that of broadcasters, thus subjecting themselves to copyright infringement liability.99

The copyright significance of each of these functions— program origination, sale of commercials, and interconnection — suffers from the same logical flaw: in none of these operations is there any nexus with the defendants’ reception and rechanneling of the broadcasters’ copyrighted materials. As the Court of Appeals observed with respect to program origination, “[e]ven though the origination service and the reception service are sold as a package to the subscribers, they remain separate and different operations, and we cannot sensibly say that the system becomes a ‘performer’ of the broadcast programming when it offers both origination and reception services, but remains a nonperformer when it offers only the latter.” 476 F. 2d, at 347. Similarly, none of the programs accompanying advertisements sold by CATV or carried via am interconnection arrangement among CATV systems involved material copyrighted by the petitioners.10

For these reasons we hold that the Court of Appeals was correct in determining that the development and implementation of these new functions, even though they may allow CATV systems to compete more effectively with the broadcasters for the television market, are simply extraneous to a determination of copyright infringement liability with respect to the reception and retransmission of broadcasters’ programs.

Ill

In No. 72-1628 Teleprompter and its subsidiary, Conley Electronics Corp., seek a reversal of that portion of the Court of Appeals' judgment that determined that the importation of “distant” signals from one community into another constitutes a “performance” under the Copyright Act. In concluding that rechanneling of “distant” signals constitutes copyright infringement while a similar operation with respect to more nearby signals does not, the court relied in part on a description of CATV operations contained in this Court's opinion in United States v. Southwestern Cable Co., 392 U. S. 157, announced a week before the decision in Fortnightly:

“CATV systems perform either or both of two functions. First, they may supplement broadcasting by facilitating satisfactory reception of local stations in adjacent areas in which such reception would not otherwise be possible; and second, they may transmit to subscribers the signals of distant stations entirely beyond the range of local antennae.” Id., at 163.

The Court in Southwestern Cable, however, was faced with conflicting assertions concerning the jurisdiction of the Federal Communications Commission to regulate in the public interest the operations of CATY systems. Insofar as the language quoted had other than a purely descriptive purpose, it was related only to the issue of regulatory authority of the Commission. In that context it did not and could not purport to create any separation of functions with significance for copyright purposes.11

In the briefs and at oral argument various rationales for the distinction adopted by the Court of Appeals have been advanced. The first, on which the court itself relied, is the assertion that by importing signals from distant communities the CATV systems do considerably more than “enhance the viewer’s capacity to receive the broadcaster’s signals,” Fortnightly, 392 U. S., at 399, and instead “bring signals into the community that would not otherwise be receivable on an antenna, even a large community antenna, erected in that area.” 476 F. 2d, at 349. In concluding that such importation transformed the CATV systems into performers, the Court of Appeals misconceived the thrust of this Court’s opinion in Fortnightly.

In the Fortnightly case the Court of Appeals had concluded that a determination of whether an electronic function constituted a copyright “performance” should depend on “how much did the [CATV system] do to bring about the viewing and hearing of a copyrighted work.” 377 F. 2d 872, 877. This quantitative approach was squarely rejected by this Court:

“[M]ere quantitative contribution cannot be the proper test to determine copyright liability in the context of television broadcasting. .. .. . Rather, resolution of the issue before us depends upon a determination of the function that CATV plays in the total process of television broadcasting and reception.” 392 U. S., at 397.

By importing signals that could not normally be received with current technology in the community it serves, a CATV system does not, for copyright purposes, alter the function it performs for its subscribers. When a television broadcaster transmits a program, it has made public for simultaneous viewing and hearing the contents of that program. The privilege of receiving the broadcast electronic signals and of converting them into the sights and sounds of the program inheres in all members of the public who have the means of doing so. The reception and rechanneling of these signals for simultaneous viewing is essentially a viewer function, irrespective of the distance between the broadcasting station and the ultimate viewer.

In Fortnightly the Court reasoned that “[i]f an individual erected an antenna on a hill, strung a cable to his house, and installed the necessary amplifying equipment, he would not be ‘performing’ the programs he received on his television set,” id., at 400, and concluded that “[t]he only difference in the case of CATV is that the antenna system is erected and owned not by its users but by an entrepreneur.” Ibid. In the case of importation of “distant” signals, the function is essentially the same. While the ability or inclination of an individual to erect his own antenna might decrease with respect to distant signals because of the increased cost of bringing the signal to his home, his status as a “nonperformer” would remain unchanged. Similarly, a CATV system does not lose its status as a nonbroadcaster, and thus a “nonperformer” for copyright purposes, when the signals it carries are from distant rather than local sources.

It is further argued that when a CATV operator increases the number of broadcast signals that it may receive and redistribute, it exercises certain elements of choice and selection among alternative sources and that this exercise brings it within scope of the broadcaster function. It is pointed out that some of the CATV systems importing signals from relatively distant sources could with equal ease and cost have decided to import signals from other stations at no greater distance from the communities they serve. In some instances, the CATV system here involved “leapfrogged” nearer broadcasting stations in order to receive and rechannel more distant programs.12 By choosing among the alternative broadcasting stations, it is said, a CATV system functions much like a network affiliate which chooses the mix of national and local program material it will broadcast.

The distinct functions played by broadcasters and CATV systems were described in Fortnightly in the following terms:

“Broadcasters select the programs to be viewed; CATV systems simply carry, without editing, whatever programs they receive. Broadcasters procure programs and propagate them to the public; CATV systems receive programs that have been released to the public and carry them by private channels to additional viewers.” Id., at 400.

Even in exercising its limited freedom to choose among various broadcasting stations, a CATY operator simply cannot be viewed as “selecting,” “procuring,” or “propagating” broadcast signals as those terms were used in Fortnightly. When a local broadcasting station selects a program to be broadcast at a certain time, it is exercising a creative choice among the many possible programs available from the national network with which it is affiliated, from copyright holders of new or rerun motion pictures, or from its own facilities to generate and produce entirely original program material. The alternatives are myriad, and the creative possibilities limited only by scope of imagination and financial considerations. An operator of a CATY system, however, makes a choice as to which broadcast signals to rechannel to its subscribers, and its creative function is then extinguished. Thereafter it “simply carr [ies], without editing, whatever programs [it] receive [s].” Ibid. Moreover, a CATV system importing “distant” signals does not procure programs and propagate them to the public, since it is not engaged in converting the sights and sounds of an event or a program into electronic signals available to the public. The electronic signals it receives and rechannels have already been “released to the public” even though they may not be normally available to the specific segment of the public served by the CATV system.

Finally, it is contended that importation of “distant” signals should entail copyright infringement liability because of the deleterious impact of such retransmission upon the economics and market structure of copyright licensing. When a copyright holder first licenses a copyrighted program to be shown on broadcast television, he typically cannot expect to recoup his entire investment from a single broadcast. Rather, after a program has had a “first run” on the major broadcasting networks, it is often later syndicated to affiliates and independent stations for “second run” propagation to secondary markets. The copyright holders argue that if CATV systems are allowed to import programs and rechannel them into secondary markets they will dilute the profitability of later syndications, since viewer appeal, as measured by various rating systems, diminishes with each successive showing in a given market. We are told that in order to ensure “the general benefits derived by the public from the labors of authors,” Fox Film Corp. v. Doyal, 286 U. S. 123, 127, and “ 'the incentive to further efforts for the same important objects,’ ” id., at 127-128, citing Kendall v. Winsor, 21 How. 322, 328, current licensing relationships must be maintained.

In the television industry, however, the commercial relations between the copyright holders and the licensees on the one hand and the viewing public on the other are such that dilution or dislocation of markets does not have the direct economic or copyright significance that this argument ascribes to it. Unlike propagators of other copyrighted material, such as those who sell books, perform live dramatic productions, or project motion pictures to live audiences, holders of copyrights for television programs or their licensees are not paid directly by those who ultimately enjoy the publication of the material — that is, the television viewers — but by advertisers who use the drawing power of the copyrighted material to promote their goods and services. Such advertisers typically pay the broadcasters a fee for each transmission of an advertisement based on an estimate of the expected number and characteristics of the viewers who will watch the program. While, as members of the general public, the viewers indirectly pay for the privilege of viewing copyrighted material through increased prices for the goods and services of the advertisers, they are not involved in a direct economic relationship with the copyright holders or their licensees.13

By extending the range of viewability of a broadcast program, CATV systems thus do not interfere in any traditional sense with the copyright holders’ means of extracting recompense for their creativity or labor. When a broadcaster transmits a program under license from the copyright holder he has no control over the segment of the population which may view the program— the broadcaster cannot beam the program exclusively to the young or to the old, only to women or only to men— but rather he gets paid by advertisers on the basis of all viewers who watch the program. The use of CATV does not significantly alter this situation. Instead of basing advertising fees on the number of viewers within the range of direct transmission plus those who may receive “local signals” via a CATV system, broadcasters whose reception ranges have been extended by means of “distant” signal CATV rechanneling will merely have a different and larger viewer market.14 From the point of view of the broadcasters, such market extension may-mark a reallocation of the potential number of viewers each station may reach, a fact of no direct concern under the Copyright Act. From the point of view of the copyright holders, such market changes will mean that the compensation a broadcaster will be willing to pay for the use of copyrighted material will be calculated on the basis of the size of the direct broadcast market augmented by the size of the CATV market.15

These shifts in current business and commercial relationships, while of significance with respect to the organization and growth of the communications industry, simply cannot be controlled by means of litigation based on copyright legislation enacted more than half a century ago, when neither broadcast television nor CATV was yet conceived. Detailed regulation of these relationships, and any ultimate resolution of the many sensitive and important problems in this field, must be left to Congress.16

The judgment of the Court of Appeals is affirmed in part and reversed in part, and these cases are remanded to the District Court with directions to reinstate its judgment.

It is so ordered.