Columbia Broadcasting System, Inc. (C.B.S.) brings this class action for itself and on behalf of all other recording companies that produce, manufacture
and sell musical performances on records and tapes. It is alleged that C.B.S. contracts with well-known artists for the exclusive right to record their performances, and that by the use of costly and sophisticated equipment records their performances upon master recordings and at great expense manufacturers records and tapes from such masters. C.B.S. pays royalties to the recording artists and to the proprietors of the copyrights of the musical compositions involved, based upon the sales of records and tapes under C.B.S.'s exclusive label. It is charged that defendants unlawfully copy and reproduce the recorded performances embodied on the records and tapes manufactured and sold by C.B.S. and other recording companies by mechanically duplicating the recordings and transferring the exact duplicated sound onto their own records and tapes. In the trade this process is known as "pirating." The products thereby offered for sale are known as "pirated records" and "pirated tapes." C.B.S. contends that defendants have unjustly enriched themselves at its expense. More specifically, it alleges that the acts of defendants constitute a violation and infringement of its common law copyrights, are an unlawful and unauthorized appropriation of its rights, constitute unfair competition and are an unlawful interference with its contractual rights. An injunction against the pirating is sought, as well as an accounting and damages both compensatory and punitive.
Both sides have filed cross-motions for summary judgment, supported by extensive and detailed affidavits. Additionally, defendants seek a stay of this action pending a decision by the United States Supreme Court in Goldstein v. California , No. 71-1192. The specific question presented in Goldstein is whether the copyright clause of the U.S. Constitution and the federal copyright act preempt, under the supremacy doctrine, state anti-tape and record pirating laws or preclude the application of unfair competition principles to prevent such pirating. This court heretofore denied
C.B.S.'s application for a stay, reserving for decision at this time the motions for summary judgment.
An abbreviated view of federal law relating to copyrights in the music recording area is necessary for the comprehension and adjudication of this matter. The U.S. Constitution grants to Congress the power:
To 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. [ U.S. Const. , Art. I, § 8, cl. 8]
Pursuant to this grant Congress first legislated upon the subject in 1790, the latest general revision of the law being the Copyright Act of 1909, 17 U.S.C.A. § 1 et seq. At that time, and in light of what was then a new technological advance in the wake of Edison's invention, copyright protection was given to authors of musical compositions against the recording or mechanical reproduction of their copyrighted musical work. Prior to the 1909 revision it had been held that the manufacture of phonograph records embodying a copyrighted musical composition was not an infringement of that copyright. White-Smith Pub. Co. v. Apollo Co. , 209 U.S. 1, 28 S. Ct. 319, 52 L. Ed. 655 (1908). By virtue of § 1(e) of the 1909 act, which for the first time extended copyright control over the recording industry, it was provided in pertinent part as follows:
And as a condition of extending the copyright control to such mechanical reproductions, that whenever the owner of a musical copyright has used or permitted or knowingly acquiesced in the use of the copyrighted work upon the parts of instruments serving to reproduce mechanically the musical work, any other person may make similar use of the copyrighted work upon the payment to the copyright proprietor of a royalty of 2 cents on each such part manufactured, to be paid by the manufacturer thereof. * * *
In basic terms, Congress granted to a composer the right to prohibit mechanical reproduction of his work but provided at the same time, in order to foster the widest dissemination
of musical works for the benefit of the public, that once a composer approved and permitted the use of his copyrighted work for mechanical reproduction then, upon payment of the congressionally prescribed royalty, "any other person" or (in effect) all who desired, might at will reproduce the music. Such is the so-called "compulsory license" provision relied upon by all defendants in this case. 17 U.S.C.A. § 1(e). They allege compliance with 17 U.S.C.A. § 101(e) by serving notices of intention to use the musical composition upon the copyright owners and by paying royalties for each so-called "pirated record" or "pirated tape." Under this procedure nothing is paid to the original record or tape manufacturer, such as C.B.S., who has the underlying contractual arrangement with the proprietor of the musical copyright. Although the fruits of the manufacturer's efforts are utilized in the pirating process, the manufacturer is completely by-passed with respect to royalty payments. Until a recent congressional enactment added subsection (f) to § 1 of the Copyright Act of 1909, see Pub. L. ...