## E ,L~TIIXBKNEY GENERAL. OlF?J?EZXAS

Honorable W. T. McDonald, Jr. County Attorney Braxos County Bryan, Texas 77801 Opinion No. M-1114

Dear Mr. McDonald: Re: Whether Art. 1137r, Sec. l-4, Vernon's Penal Code, prohibiting the reproduction for sale of sound recordings without the original owner's consent is unconstitutional as in conflict with the Copyright Clause, Art. I, Sec. 8,Cl. 8,United States Constitution, and the implementing federal statutes, 17USC §§ 1-215, the Copyright Act.

You have asked us for an opinion as towhether Art. 1137r, Sections l-4,Vernon's Penal Code, prohibiting the reproduction of sound recordings without the original owner's consent isunconstitutional as in conflict with the Copyright Clause, Article I, Section 8,Clause 8,United States Constitution, and the implementing federal statutes, 17USC ~551-215, the Copyright Act. In this connection we have carefully examined thematerials forwarded with the opinion request which raise the issue ofwhether thepreemption doctrine applied in the companion landmark decisions of the United States Supreme Court in Sears, Roebuck &Co. v. Stiffel Co., 376U.S. 225 (1964)and Compco Corp. v. Day-Bright Lighting, Inc., 376U.S. 234 (1946)precludes the States from enacting statutes proscribing the duplication of uncopyrighted material. Also as you point out, we note that on October 15, 1971, effective four (4)months after enactment, the 92nd Congress of the United States, through a series of amendments to theCopyright Act, provided a limited prospective protection toowners of original sound recordings in Public Law 92-140 (S.646).1

Themagnitude of theproblem involved which prompted the federal legislation isdescribed inHouse Report (Judiciary

11971 U.S. Code Cong. &Adm. News Pamph. No. 9,pp. 2469-2471.
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Honorable W. T.McDonald, Jr., page 2 (M-1114)

Committee) No. 92-487, dated October.4, 1971, on Public Law 92-140, as follows:

"Theattention of the Committee has been directed to thewidespread unauthorized reproduction ofphonograph records and tapes. While it isdifficult to establish the exact volume or dollar value of current piracy activity, it is estimated by reliable trade sources that the annual volume of suchpiracy isnow in excess of $100million. Ithas been estimated that legitimate prerecorded tape sales have an annual value of approximately $300million. The pirating of records and tapes isnot only depriving legitimate manufacturers of substantial income, but of equal importance isdenying performing artists andmusicians of royalties and contributions topension andwelfare funds and Federal and State governments are losing tax revenues."*
The desire to attack this abuse no doubt moved the 62nd Legislature of the State of Texas to enact Art. 1137r, Sections l-4,Vernon's Penal Code, prohibiting the "piracy" of sound recordings.

Initially, it is to be presumed that aduly enacted statute of the State of Texas isvalid against objection on constitutional grounds. 12Tex. Jur. 2d,Const. Law, Sec. 42, pp. 385-386:

II

. . .a statute will not be declared constitutional for the mere reason that ithas been enacted by the legislature, it ispresumed that the legislature has acted within itspowers, and aduly enacted statute ispresumed tobe constitutional. And if there could be a state of facts justifying the legislative action, it ispresumed that such a state of facts exist." Likewise, the Supreme Court of the United States has emphasized that ".

. .this Court's decisions

. . .enjoin(s)

21971 U.S. Code Cong. &Adm. News Pamph. No. 9,p. 2551.

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Honorable W. T.McDonald, Jr., page 3 (M-1114)

seeking out conflicts between state and federal regulation where none clearly exists." Huron Portland Cement Co. v. City of Detroit, 362U.S. 440, 446 (1960)
. A clear showing of conflict is required. As stated in Schwartz v. State of Texas, 344U.S. 199, 203 (1952),the rule is that:

"'It should never be held that Congress intends to supersede, or by its legislation suspend, the exercise of thepolice powers of the states, even when itmay do so, unless itspurpose to effect that result is clearly manifested.' Reid v. State of Colorado, 187U.S. 137, 148, 23 S.Ct. 92, 96, 47L.Ed 108."

U.S. 132, In Florida Lime andAvocado Growers, Inc.v. Paul, 373

142 (1963)the court held:
"The test ofwhether both federal and state regulations may operate, or the state regulation must give way, is whether both regulations can be enforced without impairing the federal superintendence of the field notwhether they are aimed at similar 0; different objectives.
"Theprinciple tobe derived from our decisions is that federal regulation of a field of commerce should not be deemed preemptive of state regulatory power in the absence of persuasive reasons--either that the nature of the regulated subject matter permits no other conclusion, or that the Congress has unmistakably so ordained. See, e.g., Huron Portland Cement Co. v. Detroit, supra." -(Emphasissupplied)
Further inColorado Anti-Discrim. Comm. v. Continental Air Lines, 372U.S. 714, 721 (1963),the Supreme Court, in ruling on thevalidity of a state statute under the Supremacy DOCtrine, held:

. . .that themere "factof identity does

notmean the automatic invalidity of State measures'. California v. Zook, 336U.S. 725, 730 (1949). To hold that a state statute identical inpurpose with a federal statute is invalid under the Supremacy Clause, we must be able to conclude that thepurpose
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of be T.McDonald, Jr., page 4 (M-1114)

the federal statute would to some extent frustrated by the state statute. We can .~ reach no such conclusion here." (Emphasis supplied)

It is noteworthy that the Judiciary Committee Report on Public Law 92-140, referred to above, while mentioning thepreemption argument concerning the II

. . . jurisdiction of States to adopt legislation specifically aimed at the elimination of record and tape piracy

. . . It,expressly refused to express an (1

. . . opinion concerning this legal question,

. . . ~ "3 Hence, it can hardly be contended from the legislative history of Public Law 92-140 that Congress clearly intended to supersede existing state statutes on this subjectmatter.

Our research fails to reveal any casewhich makes the doctrine of the Sears and Compco cases applicable to thepiracy of sound recordings. To the contrary, we find that the courts of California, Illinois, New York and North Carolina have specifically rejected this application in upholding state statutes prohibiting the "piracy" of sound recordings. See Ca itol Records, Inc. v. Erickson, 2Cal. App. 3d 526, 82Cal. 79 --%7m , 40ALR 3d 553;Capitol Records, Inc. v. Greatest Records, Inc., 43Misc. 2d 878, 252N.Y.S. 2d 553 (Sup.Ct. 1964); Columbia Broadcasting S 2d 723 248

, Inc.v. Spies, Inc.v. Eastern Tape Corp., Superior Court ofMet County, No. 70-CVS-15018 (Jan.6, 1971).

An excellent discussion of this question is contained in the three judge court's opinion in Tape-Industries Association ofAmerica v. Younger, 316F. Supp. 340 (C.D.Calf. 1970), appeal dism. 401U.S. 902 (1971). Therein plaintiffs sued to enioin the enforcement of the California "taoeuiracv" statute.

~- c----1 PeAal Code, Sec. 653h (1968)4:

31971U.S. Code Cong. &Adm. News Pamph. No. 9,p. 2552.
4"§653h. Transfer of recorded sounds for unlawful use; sale (a) Every person isguilty of amisdemeanor who: (1) Knowingly andwillfully transfers or causes tobe transferred any sound recorded on aphonograph record, disc, wire, tape, film or other article onwhich sounds are recorded, with intent to sell or cause tobe sold, or touse or cause to be used forprofit through public performance, such article on which such sounds are so transferred,without the consent of the owner. -5430-,. .

Honorable W. T.McDonald, Jr., page 5 (M-1114)

"Plaintiffs contend that the so-called 'tapepiracy' law of California, Penal Code, Section 653h (1968) is in conflict with the Copyright Clause of theUnited States Constitution, Art. I, Sec. 8,Cl. 8, and the implementing Federal copyright statutes, 17USC 5s 1-215." (316F. Supp. at 341-342).
The court distinguished Columbia Broadcasting System v. DeCosta, 377 F2d 315 (1stCir 1967), Cable Vision, Inc.v. KUTV, Inc., 335F2d 348 (9thCir. 1964), Smith v. Chanel, Inc., 402 F2d 562 (9thCir. 1968) and the Sears and Compco cases, supra, on thebasis that:

"In contrast, plaintiffs in the instant case do not imitate the product of the record companies. They actually take and appropriate theproduct itself--the sounds recorded on the albums--and commercially exploit the product." (316F. Supp at 350)
The Sears and Compco cases, supra, involved suits for damages and injunctive relief under the Illinois "unfair competition" statute with respect to the copying of designs for lighting fixtures which were either unpatentable or unpatented. In this situation the Supreme Court held that the Illinois statute could not be applied constitutionally toprevent the copying of these designs even though theproducts were virtually identical. However, the Supreme Court expressly reserved to the States the right toprohibit practices such ashere involved. In the Compco case, the Supreme Court specifically restricted its ruling as follows:

"Aswe have said in Sears, while the

federal patent laws prevent a State from prohibiting the copying and selling of unpatented articles, they donot stand in the way of state law, statutory or decisional, which requires those who make and sell copies to take precautions to identify their products as their own. A State of course has power to impose liability upon those who, knowing that thepublic is relying upon an

(2) Sells any such article with the knowledge that the sounds thereon have been so transferred without the consent of the owner." -5431-Honorable W. T.McDonald, Jr., page 6 (M-1114)

original manufacturer's reputation forquality and integrity, deceive thepublic by palming off their copies as the original."

An appropriate area for State legislation was found to exist by the three judge court in the Tape Industries case,
~"~~~e which was not precluded by the Sears and Compco decisions.

351 of the opinion the Court held: "Undoubtedly, tape pirates are costing legitimate and authorized tapeproducers substantial amounts ofmoney, and the State of California has properly and reasonably concluded that these parasitic tape pirates must be controlled. Regardless ofwhether Calif. P.C. 5653h (1968)isdeemed a larceny statute or an unfair competition law, it is clear that theCalifornia Legislature isnot precluded by the Federal Copyright aws rom rohibitin the activities o $pel&a'&. 'Nor'szould we intervenefin t e egitimate enforcement of the statutorily expressed desires of the California Legislature by the authorized prosecution officials who are the defendants." (Emphasis supplied.) Recently, on February 29, 1972, inCivil Action No. 3-5536-A, styled Independent Tape Merchant's Association v. Crawford Martin, et al., filed in the United States District Court for theNorthern District of Texas, a suit similar to the Tape ,Industriescase, to enjoin the enforcement ofArt. 1137r, Vernon's Penal Code, was dismissed by the court on the finding that:

I,

. . . this Court should not interfere

with the state criminal court's enforcement of state law under the circumstances as set forth by plaintiff in this action,

II

. . . . Finally, it should be observed thatwhile the situation under the Patent Act, 35USC 55 l-293, is one of either protection or noprotection, adifferent situation ispresented by the Copyright Act, 17USC 55 l-215, even as amended, in that under 52of theAct provision ismade forprotection of socalled "common law" copyrights.5 The weight of authority is

5"Nothi.ngin this title shall be construed to annul or limit the right of the author or proprietor of anunpublished work, -5432-. . .

Honorable W. T. McDonald, Jr., page 7 (M-1114)

that the giving of aperformance and the sale of a recording does not constitute publication, Columbia Broadcasting Systems, Inc.v. Documentaries Unlimited, Inc., supra (newsreports), Metropolitan Opera Association, Inc.v. Waqner Nichols Recorder 01N.Y.S. 2d 483 (Sup.Ct. 1950) ff'd.,

2d 795 (1951) (operabroadczsts); from other "masters", Capitol Records, Inc.v. Mercury Records Corp., 109 F. Supp. 33'b(S.D.N.Y. 1952); RCA v. Premier Albums, Inc., 19App. Div. 2d 62, 240N.Y.S. 2d 995 (19 );from phonograph records sold to thepublic, Capitol Recorii, Inc. v. Greatest Records, I supra; Capitol

The opposite view is taken inGrans v. Harris, 98 F. SUPP. 906 (S.D.N.Y. 1951);McIntyre v. Double A. Music Co., 166 F. Supp. 681 (C.D.Cal. 1958); Mills Music v. Cromwell Music Co., 126 F. Supp. 54 (S.D.N.Y. 1954); Shapiro, Bernstein &Co. v. Miracle Record Co., 91F. Supp. 473 (N.D.Ill. 1950). It is resoectfullv submitted that these cases are cited because thev erroneously-fail to recognize the distinction between "copying" and "appropriating". Herewe are not concerned with a situation where the recordings are being imitated but rather the actual sounds, theperformance itself, isbeing appropriated. Each of the cases cited above rely on RCA Manufacturing Co. v. Whitman, 114 F2d 86 (2ndCir. 1940) for their result. However, this case was expressly overruled in Capitol Records, Inc. v.Mercury Reco;d;o;;:phLl~~l F2d 657 (2ndCir. 1955). Therein atpage 663

"Our conclusion is that the quoted statement from the RCA case isnot the law of the State ofNew Yx.
"Since itsdecision theNew York courts have had close contact with the question in Metropolitan Opera Assn. v. Wagner Nichols Recor er Cor ., 99Misc. 786 101 2d 483, Id., 279App. Div. 63;, 107"l%. 2d 795. We believe that the inescapable result of that case is that, where the originator, or the assignee of the originator, of records ofperformances bymusical artists

at the common law or in equity, toprevent the copying, publication, or use of such unpublished work without his consent, and to obtain damages therefor." -5433-. .

Honorable W. T. McDonald, Jr., page 8 (M-1114)

puts those records onpublic sale, his act does not constitute adedication of the right to copy and sell the records."

A very excellent annotation is contained in 40ALR 3d 553, following Capitol Records, Inc. v. Erickson, supra, which may be referred to for a rather more extensive treatment of this whole subject. Noteworthv is the citation in the court's opinion in the ErEckson case, 40ALR 3dat 561, to Pottstown Daily News Publishing Co. v. Pottstown Broadcasting co., 11Pa. 383 192 A2d 657, 662 (1963)which holds thatwhile unfair competi&on law originally related to "palming off" of one's goods as those of another, "In recent years its scope has been extended. It has been held to apply tomisappropriation aswell asmisrepresentation", quoting-from A.L.AI-S;hechter Poultry Corp. v. United States, 295U.S. 495, 531-532 (195)

.

The courts of the State of Texas have apparently long recognized the distinction between copying and appropriation. In Gilmore v, Sammons, 269 SW 861 (Tex.Civ. App. 1925,writ dism.), itwas held that aonrooriation of news items bv a comuetitor constituted unfair‘kompetition under thedoctrine of International News Service v.Associated Press, 248U.S. 215 (1918). On the other hand the simulation of a sportinq event broadcast by a non-comoetitor to the oriainal broadcaster was found not to constitute-unfair competition, and the Gilmore case, supra, was distinguished. See Loeb v. Turner, 257 SW2d 800 (Tex.Civ. App. 1953, no writ).

In conclusion, our opinion is that by the enactment ofArticle 1137r, the 62nd Legislature has done nomore than the California Legislature did in itspassage of 6 653h, P.C. and such constitutes the adoption of either an unfair competition law or a theft statute which has been held in the Tape Industries case, supra, to constitute avalid exercise of the State's legislative powers and not to constitute any undue interference or conflict with the federal copyright policy devised pursuant to theConstitutional authority of Congress in the Copyright Act, 17USC 65 l-215.

SUMMARY

It is our opinion that Article 1137r, Vernon's Penal Code, isvalid and is not in conflict with Art. I, Sec. 8,Cl. 8, United States Constitution, or the Copyright Clause, and the implementing federal statutes, 19USC 55 l-215, the Copyright Act. -5434-. . .

HOnOrabl8 W. T.McDonald, Jr., page 9 (M-1114)

truly yours,

d*
C. MARTIN General of Texas

PREPARED BY:

Van Thompson, Jr. Assistant Attorn8y General

APPROVED: OPINION COMMITTEE

Kerns Taylor, Chairman Bill Allen, Co-Chairman

Scott Garrison Roland Allen Houghton Brownlee Ralph Rash Wayne Rodgers

SAMUEL D.MCDANIEL Staff Legal Assistant

ALFRED WALKER Executive Assistant
NOLAWHITE First Assistant

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