Full opinion text
FERGUSON, District Judge. Article I, § 8, Cl. 8 of the United States Constitution empowers Congress: “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.” The Copyright Act passed by Congress in 1909 and revised in 1976 gives authors exclusive rights over some but not all uses of their works. As the Supreme Court wrote in Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156, 95 S.Ct. 2040, 2044, 45 L.Ed.2d 84 (1974): The limited scope of the copyright holder’s statutory monopoly, like the limited copyright duration required by the Constitution, reflects a balance of competing claims upon the public interest: Creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts, (footnotes omitted). This case tests the scope of copyright protection for audiovisual material broadcast on public airwaves, and its resolution requires balancing of strong competing claims. Plaintiffs, Universal City Studios, Inc. (“Universal”) and Walt Disney Productions, Inc. (“Disney”), are producers and copyright owners of audiovisual material, some of which they choose to sell for telecast over public airwaves. Defendants include the manufacturer, Sony Corporation (“Sony”), and the distributor, Sony Corporation of America (“Sonam”), of the “Betamax,” a videotape recorder (“VTR”) which can record this telecast off-the-air and make a copy of the audiovisual material which can be viewed at another time. Other corporate defendants are certain retail stores (Carter Hawley Hale Stores, Inc.; Henry’s Camera Corporation; Associated Dry Goods Corporation; and Federated Department Stores, Inc.) which sell the Betamax, and the advertising agency, Doyle Dane Bernbach, Inc. (“DDBI”) which promotes it. The only individual defendant is William Griffiths who used his Betamax in his home to copy plaintiffs’ broadcast material for his own home use. Plaintiffs’ main contentions are that this recording and that of other individuals infringed their copyrights and that the corporate defendants are either direct or contributory infringers or are vicariously liable for the infringement. Plaintiffs also contend that defendants have interfered with their business relations and unfairly competed with them. Finally, plaintiffs assert that the retail defendants violated copyright law when they recorded portions of plaintiffs’ programs to demonstrate the Betamax to a prospective purchaser. Plaintiffs allege that they will suffer great monetary damage if this infringement is allowed to continue. Defendants contend that home copying for home use is not an infringement and, even if it were, defendants could not be held responsible under any theory of infringement or vicarious liability. The resolution of these issues first requires a determination of whether Congress gave authors monopoly power over this use and, if so, whether the corporate defendants are in any way liable. As will be discussed, these determinations are not easily made. Protection of the public interest requires balancing the need for wide availability of audiovisual works against the need for monetary reward to authors to assure production of these works. After three years of litigation, five weeks of trial and careful consideration of extensive briefing by both sides, this court finds: a) Neither the Copyright Act of 1909 (“Old Act”) nor the revised Act of 1976 (“New Act”) gave copyright holders monopoly power over an individual’s off-the-air copying in his home for private, non-commercial use. This court is not deciding whether tape duplication or copying from pay television is prohibited. Nor is this court ruling on off-the-air recording by individuals or groups for use outside the home. b) Even if the Copyright Act did prohibit home-use copying, Sony, Sonam, DDBI and the retail stores would not be liable under any of the theories of direct or contributory infringement or vicarious liability. c) The retail defendants have not infringed plaintiffs’ copyrights. d) Even if home-use copying were infringement and defendants - were deemed liable therefor, this court could not grant the injunctive relief requested by plaintiffs. e) None of the defendants has unfairly competed with plaintiffs or interfered with their advantageous business relations. In so holding, this court makes the following factual findings. • THE PARTIES Plaintiff Universal is a Delaware corporation with its principal place of business in Los Angeles County, California. Universal has done business under its own name and under the names, among others, of Universal Television, Universal Pictures, Universal 16 and United World Films. Universal is a wholly owned subsidiary of MCA, Inc. (“MCA”). Plaintiff Disney is a California corporation with its principal place of business in Orange County, California. Both Universal and Disney produce movies and other audiovisual works for theatrical and television exhibition. Defendant Sony Corporation is a corporation duly organized and existing under the laws of the Country of Japan. Sony manufactures the Betamax videotape recorder. Defendant Sony Corporation of America is a New York corporation with its principal office in Los Angeles County, California. Sonam is a corporation duly organized and existing under the laws of the State of New York and qualified to do business and doing business in the. State of California. Sonam distributes the Betamax in the United States. Defendants Carter Hawley Hale Stores, Inc. (“Carter Hawley”) and Henry’s Camera Corporation (“Henry’s Camera”) are California corporations. Defendant Associated Dry Goods Corporation (“Associated/Robinson”) is a Virginia corporation and defendant Federated Department Stores, Inc. (“Federated/Bullock’s”) is a Delaware corporation. All of these retail stores (the “retail defendants”) do business in Los Angeles County, California and sell the Beta-max. Doyle Dane Bernbach, Inc. is a corporation duly organized and existing under the laws of the State of New York, and is and at all times material to this action was, doing business in Los Angeles County, California. DDBI is an advertising agency retained by Sony to advertise the Betamax. Defendant William Griffiths is a resident and citizen of California and is an owner and user of the Betamax. UNIVERSAL’S PRODUCTS Universal produces motion pictures for exhibition in theaters and for television. Some of those released to theaters are subsequently licensed for television exhibition, either to pay television or to network television. Network telecasts generally consist of two or three runs. After network licensing and exhibition, Universal may license its theatrical motion pictures to local television stations in syndication (generally for three to eight runs) and occasionally will then redistribute them to the theaters. Universal also offers some of its theatrical motion pictures or excerpts thereof for rental to consumers, schools and institutions in the “non-theatrical” 16 mm and 8 mm exhibition markets. Universal also recently began marketing theatrical motion pictures on prerecorded videodiscs. Many of these motion pictures were previously exhibited on television. In the future, Universal plans to release theatrical motion pictures on discs before the first television exhibition as well as after the motion pictures have been televised. Universal’s made-for-television motion pictures consist of television features, weekly series and novels made for television (i. e., “mini-series”). With the exception of “Operation Prime Time,” these motion pictures are first exhibited on network television. Universal’s first run network licenses of series are usually executed before production starts and are for two showings of each episode in the year of production, with an option to renew for each of the next four years. The number of yearly episodes of a series normally runs from 13 to 22. Universal executives testified at trial that the first run network license fee normally does not cover the cost of production of a series. In recent years Universal has produced mini-series which are first licensed to a group of approximately 100 local stations under the title “Operation Prime Time.” Licenses for these mini-series are also available on an ongoing basis to additional local stations. The Operation Prime Time licenses are generally for six runs with many of the stations telecasting the first two runs within seven days of each other. After Universal’s television products have been shown on network, approximately half of them are licensed for rerun exhibition on late night network, on network daytime television, and/or by syndication. A syndication requires approximately 60-120 episodes, which means 3-5 years of successful first run network exhibition if the package is all of'one series. Syndication licenses of a successful series may be executed as early as the third year of first run network exhibition, but the syndication exhibition does not begin until after the fifth year. Once programming has been syndicated, it seldom goes back to network. Series are syndicated for approximately six showings of each episode over 4-6 years; theater films are syndicated for 3-8 showings each over 3-6 years. Universal has approximately 54 series available for syndication and is adding new ones at a rate of two or three a year; it has approximately 2000 theater films in syndication, available by groupings. Altogether, it has over 3000 syndication licenses covering more than 300,000 different programs. DISNEY’S PRODUCT Disney has an extensive film library of animated and live action films resulting from 52 years of motion picture production for theater. Included in the library are approximately 24 feature length programs (both animated and live action) which Disney regards as “classics.” These classics are exhibited only in theaters and are re-issued approximately every 7-10 years. They include such titles as Snow White, Mary Poppins and Jungle Book. Only three of Disney’s feature length animated films have ever been licensed to television. Disney licenses many of its other theatrical motion pictures to television, generally first for network exhibition and thereafter to pay television. On at least one occasion, however, Disney licensed a motion picture to pay television before- licensing to network. Disney has not to date licensed any of its theatrical motion pictures in syndication. Many of Disney’s theatrical motion pictures have been the subject of one or more network reruns. After network exhibition, Disney, like Universal, licenses some of its theatrical motion pictures for 16 mm rental. It also licenses excerpts of some for sale on 8 mm film. Within the past year, Disney has also offered some of its theatrical motion pictures for sale on videodisc. Disney’s library includes approximately 500 cartoons, each being 6-8 minutes in length. These cartoons receive varying kinds of exhibition, on a revolving basis, including theatrical, rental in the form of 16 mm full length films, and sale in the form of 8 mm excerpts. The only programming currently licensed by Disney to a network is the one hour, weekly Wonderful World of Disney — pursuant to a contract with NBC executed in late 1977 and expiring in the fall of 1981. The license calls for Disney to supply 24 “new” programs and 24 “repeat” programs each twelve months, with one lump sum being paid for four of these new programs and a uniform fee being paid each time Disney delivers one of the other 20 new programs. In the 1977-78 television season, six of the new programs were created for the series and the other 18 new programs came from Disney’s library. The uniform fee per new show covers about 75% of the cost of each program created for the series and exceeds the cost of providing each of the “new” programs from Disney’s library. Programming supplied to NBC never is syndicated or licensed to others during the term of the contract but will be available later. The only Disney programming now being exhibited by syndication is the New Mickey Mouse Club. This is a series of 104 half-hour episodes which was once syndicated in approximately 60 television markets and is now tailing out in the last 30 or 40 of these markets. This series is out of production and no new syndication licenses are being made. BETAMAX AND OFF-THE-AIR RECORDING Three components are required to record off-the-air and play back on the average television set: (a) the videotape recorder; (b) the tuner; and (c) the radio frequency adapter. When audiovisual materials are televised,. the broadcaster telecasts radio frequency (“RF”) signals over the public airwaves. The videotape recorder alone, however, does not receive and record these signals. A tuner is necessary to receive the RF signals and change them to audio and video signals. These signals are the ones recorded on the magnetic tape of the videotape recorder. To play this tape back on a regular TV or a monitor, an RF adapter is necessary to convert the audio-video signals to RF signals. The Betamax machines contain all three components. Before Betamax, as early as 1965, Sony manufactured other videotape recorders — some of them with built-in adapters and tuners and others without. Sony and other manufacturers market and sell separately all three components. Thus, even without the Betamax machines, a person could assemble a system for off-the-air recording after purchasing the components separately. The Betamax machine is marketed in at least four models: LV’ 1901, SL 7200, SL 8200 and SL 8600. These models vary in the options they offer. The SL 8600, for example, has a built-in timer and a remote pause control. The SL 8200 has a slowdown capacity which allows one to record two hours of material on a one-hour tape. These recorders range in price from approximately $875-$1000. Sony also manufactures and sells tape cassettes for the various Betamax models. Some of these tapes can be used with only one particular Betamax model. None of the Sony cassette tapes can be used with other manufacturers’ videotape recorders. The longest cassette tape made by Sony allows three hours of recording. The price for this 3-hour tape is approximately $21. The Betamax tuner and RF reception capability is not dependent on the television set to which it is attached for playback. Betamax can record broadcasted material on one channel while the television set is off or is receiving and showing signals on another channel. Thus it is possible to view one show while taping another and to tape a show while not viewing at all, or even while away from home. This latter function is possible because the Betamax also includes a timer which can be set automatically to activate the recording system at a certain time. The Betamax also includes a pause button and a fast forward capability. Sony has also developed remote control pause buttons and these are part of the 8600 model. Even prior to this, however, such devices could be added to one’s system. The pause button allows an operator to stop whatever function — record, play, fast-forward, reverse — the machine is in. Therefore, if the individual views the material while it is being recorded and decides he doesn’t want something on the tape, he can use the pause button to omit that segment of the broadcast from the recording. Of course, an individual must be both present and viewing to do this. The fast forward makes it possible to avoid watching on playback a segment that has been recorded. While viewing the tape, an individual can fast forward through an undesired segment. For the most part, however, the viewer must guess as to when the undesired segment has been passed. The Betamax and other Sony videotape recorders can also record signals from a video camera. Thus it is possible to purchase a camera, plug it into a videotape recorder, and make one’s own film on a videocassette. This can then be played back on a monitor. ADVERTISING DDBI is Sonam’s advertising agency for consumer products. Since the introduction of the first Betamax model, DDBI, in cooperation with Sonam, has created and published Betamax advertisements for magazines, newspapers and television. In November, 1975, Sonam agreed to indemnify DDBI for any liability arising from this advertising campaign. Many of these national ads for the Beta-max have been introduced into evidence. Some of these exhort the public to “record favorite shows” or “build a library.” Some have suggested recording “novels for television” and “classic movies.” None of the Betamax advertisements warns that recording copyrighted shows is or may be a copyright infringement. In addition to the DDBI national advertising campaign, Sonam operates a cooperative advertising program. Under this program, individual franchise dealers write and place ads for the Betamax and, if Sonam approves the ads, the local dealer receives 5% of the cost of the ads as a credit to the balance owed Sony for previously purchased merchandise. Henry’s Camera has participated in this program and has received credit for advertisements with “record your favorite show” and “build a library” language. WARNINGS None of the Betamax models or the brochures describing them contains warnings about copyright infringement. Pre-Betamax videotape recorders manufactured by Sony (the U-Matic, AV and CV series) had a small plate attached to the back stating: “This videotape recorder is not to be used to record copyrighted works.” The Betamax operating instructions, however, include a warning about possible copyright infringement. On page 17 of the instruction booklet, the following language appears: “Television programs, films, videotapes and other materials may be copyrighted. Unauthorized recording of such material may be contrary to the provisions of the United States copyright laws.” The Betamax machine and this accompanying booklet are delivered to the purchaser in a sealed box. The Betamax warranty states that there shall be no liability on the part of the manufacturer, distributor or seller for any loss or damage arising directly or indirectly from the use of the Betamax. EVIDENCE OF HOME-USE COPYING A. William Griffiths Defendant William Griffiths started recording television programs off-the-air in 1973 or 1974 using a pre-Betamax videotape recorder made by Sony. He then learned about the Betamax while he was in Japan and instructed his sons to buy him one in the United States at the first opportunity. Griffiths owns a model 7200 purchased by his sons from defendant Henry’s Camera. Griffiths never spoke to anyone at Henry’s Camera about Betamax, and he was not induced to buy his Betamax by virtue of any advertisements. He owns approximately 100 tapes. When Griffiths bought his Betamax, he intended not only to time-shift (record, playback and then erase) but also to build a library of cassettes. Maintaining a library, however, proved too expensive, and he is now erasing some earlier tapes and reusing them. Griffiths copied about 20 minutes of a Universal motion picture called “Never Give An Inch,” and two episodes from Universal television series entitled “Baa Baa Black Sheep” and “Holmes and Yo Yo.” He would have erased each of these but for the request of plaintiffs’ counsel that it be kept. Griffiths also testified that he had copied but already erased Universal films called “Alpha Caper” (erased before anyone saw it) and “Amelia Earhart.” At the time of his deposition, Griffiths did not intend to keep any Universal film in his library. Griffiths has also recorded documentaries, news broadcasts, sporting events and political programs such as a rerun of the Nixon/Kennedy debate. Griffiths is a client of plaintiffs’ law firm and consented to being a defendant in the lawsuit. Plaintiffs have waived any claim for damages or costs against Griffiths for his activities alleged in the complaint. Plaintiffs never expected Griffiths to be represented by counsel and he has not been. B. Marc Wielage Mr. Wielage is not a defendant in this-case. Plaintiffs do allege, however, that the corporate defendants are liable for any infringement of plaintiffs’ copyrights by him. Wielage is a video equipment salesman, he has an FCC license authorizing him to adjust commercial television transmitters, and he has been employed in the past as a professional switcher (between programs and commercials) at commercial television stations. The Betamax is Wielage’s primary hobby; he even has a padded suitcase which he uses to carry his Betamax on trips with him. Wielage owns three Betamax recorders — a 7200, an 8200, and an SLO 320. He uses the SLO 320 with an outboard tuner and he has modified the other two. He owns approximately 340 Betamax tapes. Wielage was recording television programs with a U-matic 1600 before Beta-max was available. He knew videotape collectors and library builders who owned and used the U-matic to record off-the-air prior to Betamax. He bought Betamax because it was the first videotape recorder he could afford and he intended to use it to time shift and to build a library. Wielage writes articles of a technical nature for “Videophile” magazine, a subscription publication for VTR owners. Wielage has recorded programs from pay television. He has traded tapes with some 25-30 people, most of whom he has contacted through the Videophile magazine. He exchanges “want lists” of films with these people. All of the tapes that Wielage has made or otherwise acquired are for his own personal use, and he watches them either alone or with a few friends. As a result of some research that he did, Wielage felt uncertain about the propriety of copying copyrighted material, but he did not rely upon anything from the defendants in forming his conclusions. The copyright warning in the Betamax instruction manual did not alter his usage. The evidence showed that Wielage had recorded off-the-air from some Universal films — viz., “Frankenstein,” “Bride of Frankenstein,” “Son of Frankenstein,” “The Mummy,” “Time of Their Lives,” “Wolfman,” “This Island Earth,” “The Mummy’s Hand,” and “Duck Soup.” He copied all of these prior to January 1, 1978. Of the remaining Universal films allegedly copied off the air by Wielage after January 1, 1978, only one, “Saboteur,” was actually copied by Wielage. He acquired the others from friends, viz., “Duel,” “House of Frankenstein,” “House of Fear” and “Horse Feathers.” Wielage copied at least one episode of the New Mickey Mouse Club. He also copied the following cartoons which were contained within six other episodes of the New Mickey Mouse Club: viz., “Firechief,” “Mickey’s Parrot,” “Trick or Treat,” “Tortoise and the Hare,” “Clock Cleaners,” and “The Pointer.” There was no evidence that he had recorded “Autograph Hound” as alleged. None of these cartoons bore its own copyright notice when Wielage made the copies. The only Disney film that Wielage copied after January 1,1978 was an episode of The Wonderful World of Disney called “Chip and Dale/Mixed Nuts.” Wileage also possessed recordings of the Disney ' films called “On Vacation With Mickey Mouse and Friends” and “This is Your Life Donald Duck.” C. Mr. and Mrs. Clinton Bird Plaintiffs allege that Mr. and Mrs. Bird copied two episodes of a Universal television series entitled “Bionic Woman” and that defendants are liable for this infringement. There is no evidence to support this allegation except two tapes which plaintiffs’ attorney said were made by the Birds. D. James Lowe Plaintiffs also allege that the corporate defendants are liable for copying done by Mr. Lowe. Lowe owns a 7200 Betamax and about 170 tapes. Lowe is an attorney who has formed his own opinion that it is legal to record off-the-air. Lowe is also the publisher of the “Videophile.” No defendant is involved in the Videophile in any way. Lowe recorded the Universal film “Psycho” and he intends to erase it. Lowe’s son recorded a few 7-8 minute cartoons contained within episodes of the New Mickey Mouse Club and the two of them watched these together when Lowe got home from work. The cartoon titles were: “Donald Applecore,” “Pluto’s Quinpuplets,” “Modern Inventions,” “Two Chips and a Miss” and “Donald’s Better Self.” Lowe’s own second recording was a cartoon entitled “Spare the Rod.” None of the New Mickey Mouse Club episodes was recorded except for the foregoing cartoons. Lowe generally views what he has recorded and then erases it. Lowe has erased some cartoons and would have erased the rest of them except that they are in the middle of tapes containing other items. E. Geoffrey Soule Geoffrey Soule owns a 7200 Betamax. He knew about other videotape recorders on the market, but the Betamax was the first he could afford. He could not remember seeing any of defendants’ ads before purchasing his Betamax. He bought the Betamax for time shift usage, and this proved to be about 95% of the actual use he made of it. He always had the impression .(not gained from Sony) that it was permissible to record off television provided he did not sell what he copied. Soule’s general usage of Betamax recordings was to watch once and then erase. Soule did record the Marx Brothers movies “Horse Feathers,” “Coconuts” and “Duck Soup” but he never watched a playback of any one. In fact, he planned to erase the movies because he was not watching them for lack of time and interest, and it was too expensive to keep them. SURVEYS OF USAGE Both plaintiffs and defendants conducted surveys of Betamax owners to ascertain use of the recorder. Field Research Corporation conducted plaintiffs’ survey and Crossley Surveys, Inc. conducted defendants’ survey. From June 27-July 7, 1978, plaintiffs interviewed by telephone 805 adults who identified themselves as the household member most familiar with the use of the VTR. Of the 805 interviewees, 23 owned a non-Sony VTR. From August 3-24, 1978, defendants interviewed by telephone 998 persons identified as the household member who uses the Betamax most frequently. Both surveys are extensive. Some of their findings are as follows: * Plaintiffs’ survey found that the average number of cassettes owned by the interviewees was 31.73. 63.9% of plaintiffs’ interviewees had less than five cassettes with movies on them and 81.1% had less than five cassettes with television programs on them. Defendants’ interviewees reported an average of 25.21 cassettes with material recorded off-the-air. * According to plaintiffs’ survey, 75.4% of the VTR owners use their machines to record for time-shifting purposes half or most of the time. Defendants’ survey showed that 96% of the Betamax owners had used the machine to record programs they otherwise would have missed. * When plaintiffs asked interviewees how many cassettes were in their library, 55.8% said there were 10 or fewer. In defendants’ survey, of the total programs viewed by interviewees in the past month, 70.4% had been viewed only that one time and for 57.9%, there were no plans for further viewing. * According to plaintiffs’ survey, 58.3% of the owners eliminate commercials from the recording either “sometimes,” “rarely,” or “never”; 56.1% use the fast-forward to pass commercials either “sometimes,” “rarely,” or “never.” * Defendants found that 82.4% of the recording done by Betamax owners in the past month was done while they were gone or viewing another channel (and therefore could not use the pause button to eliminate the commercials). 17.6% of the recording was done while viewing, with the pause button being used 8.1% of the time. While viewing playbacks in the past month, defendants’ interviewees fast-forwarded through commercials in 24.6% of them. * Defendants further found that for 89.8% of the interviewees, most of the cassette playback was with family members only. 81.9% of the defendants’.interviewees watched the same amount or more of regular television as they did before owning a Betamax. 83.2% reported their frequency of movie going was unaffected by Betamax. RECORDING BY RETAIL DEFENDANTS Plaintiffs hired Paul Ruid, a private investigator, to visit retail stores to observe videotape recorder marketing practices. Plaintiffs’ attorneys instructed him to ask for demonstrations. Ruid visited the Broadway (Carter Hawley) on October 1, 1976 and asked for a demonstration of the Betamax. The salesman showed him a playback of part of an unidentified episode from a Universal series called “Adam 12.” It was never determined who had made the recording. Ruid visited the Broadway again on October 18 at a time when he knew that an old Universal series called “Major Adams” was being telecast. Ruid' again asked for a demonstration and this time added a request that “something in the nature of an old movie” be recorded. As he had hoped, a portion of “Major Adams” was recorded. Ruid visited Associated/Robinson’s on October 14,1976, at a time when he knew that a Universal series called “Gemini Man” was being telecast. He found “Gemini Man” already being shown on television demonstration sets at the store, and he asked for a demonstration of the Betamax. The salesman made two 8-minute recordings of the program, the second to correct what he thought was an error in the first. Ruid visited Federated/Bullock’s on October 14,1976 at a time when he knew that a Universal mini-series called “Captains and the Kings” was being telecast. He found the television demonstration sets already showing an episode from “Captains and the Kings,” and he requested a demonstration of Betamax. In response, the salesman put the Betamax in the record mode. Ruid never saw a playback, and he could not say whether “Captains and the Kings” had been successfully recorded. Nobody but Ruid ever saw the demonstration playbacks which he had requested and Ruid never saw Betamax demonstrated to anybody else. Ruid did not go to Henry’s Camera and request a demonstration. Henry’s Camera normally records for about one minute during customer demonstrations at its store. HARM TO PLAINTIFF Plaintiffs admitted that at the time of trial, no existing contract, license or advantageous business relationship of either Universal or Disney had been injured, interfered with or disrupted by the sale or use of Betamax and Betamax tapes or by any other activity of any defendant. This includes without limitation plaintiffs’ theatrical, television, 8 or 16 mm, and video-disc products. In addition, plaintiffs conceded that neither the sale nor the use of Betamax and Betamax tapes had by the time of trial caused Universal or Disney any measurable monetary damage, economic loss or revenue loss. 1978 was a very successful year for both Universal and Disney. It was Disney’s eleventh consecutive year of increased profit and the most profitable year in history for Universal Pictures’ Theatrical Division. Universal’s television revenues had increased steadily over the three years prior to trial and Disney received its highest television income in 1978. Plaintiffs did present extensive expert testimony at trial on the issue of prospective harm. Executives of both Universal and Disney testified that in the future Betamax would decrease the value of their copyrights in a number of ways, e. g., by exhausting interest in reruns and by fragmenting the live television audience. These predictions are discussed extensively below. Uniformly, however, these experts were unable to predict at what point in either time or Betamax sales such harm would occur. THE BROADCASTING INDUSTRY There are 727 commercial television stations in the United States, 516 broadcasting very high frequency (“VHF”) signals and 211 broadcasting ultra high frequency (“UHF”) signals. These commercial stations are spread out geographically over approximately 235 television “markets.” There are currently three commercial television networks in the United States, each network owning and operating (“O&O”) some television stations and having many more stations as “affiliates” — each such station being the network’s exclusive outlet in its particular market. Those stations which are not owned by, or affiliated with, a network are called “independents.” Each network feeds programming to its affiliates from approximately 7:00 a. m. to 11:00 p.m., with approximately five hours of local programming interspersed in that time period. The network pays the affiliate to broadcast its material. The affiliate can reject the network programming and broadcast local programming if it wishes. The affiliate can also tape the network programming and broadcast it up to seven days at a time when no network programming is being provided. The commercial networks and stations obtain their revenue primarily from advertisers, who pay to have their commercials telecast. Advertisers buy time (1) on network programming, (2) on a national “spot” basis, and (3) on a local basis — the individual stations receiving the revenue directly on the latter two bases. A typical affiliate station obtains 10% of its revenue from the network and 45% each from national spot and local advertising. The network feed contains commercials but also allows “station breaks or position,” wherein the local station may insert national “spot” or local advertising and keep the revenue. The prevailing “unit” of commercial advertising time is 30 seconds. The rule of thumb is that the larger the perceived rating of the program carrying the commercial, the larger the advertising fee. This fee can run from $45,000 to $125,000 per 30 second commercial for a prime time network slot. There are also 259 public/educational television stations in the United States, 101 being YHF and 158 being UHF, none of which is commercial network owned or affiliated. Approximately 200 of the public/educational stations are interconnected by a network called the Public Broadcasting Service. Some educational stations are also members of regional networks — i. e., the Eastern Educational Network. The public/educational stations do not carry advertising and obtain their operating funds from individual and governmental contributions. The three commercial networks obtain their programming, in part, by virtue of licenses each makes with producers to show the producer’s programs. Individual stations, viz., O&O’s affiliates and independents, also make such licenses with producers — through syndication. Syndication, as indicated earlier, is generally undertaken only for rerun material — and often is for a kind of exhibition called “stripping,” which means running the same series at the same time of day five days a week. Individual stations also create some of their own programming — i. e., commercial stations approximately 16 hours per week and public/educational stations approximately 11 hours per week. RATINGS The fees which networks and stations pay producers to show their programs, and the fees which advertisers pay networks and stations to show their commercials (sometimes measured in “cost per thousand,” e. g., $5/1000 households) are influenced substantially by the size and demographics of the audience which the programs (and hence the commercials) are expected to reach. For rerun programming, larger audiences obtained during prior showing generally increase the expected audience, and hence the fee, for rerun licensing. Audience measurement uses several criteria. One size criterion is “ratings” — one rating.point is one percent of all homes owning television sets in the relevant market. Nationally, there are approximately 75 million homes owning television, and one national rating point represents 750,000 homes. There is believed to be an average of two individuals viewing television in each home. Another size criterion is “market share” — a percentage figure, indicating what percent of all homes using television (“HUT”), i. e., with television sets turned on in the relevant market at a given time, is tuned to a particular network or station. The criterion of “demographics” is basically a measurement of sex, age, and income bracket of the audience. Nielsen and Arbitron perform audience measuring services for broadcasters, advertisers, and producers. Nielsen’s National Television Index is a ratings service in which a meter attached to each television set in 1200 sample households continuously records what channel the set is tuned to while in use. This meter service does not tell who, if anyone, is watching the set. Ratings measurements are subject to a margin of error of plus or minus 1 to lVh points. Nielsen’s National Audience Composition Service surveys 2400 sample households by providing diaries in which the households keep • a record of the viewing actually done by individuals in the household. Diaries are also the source of demographic information. Nielsen also provides a meter service comparable to its national meter service in four local markets. Nielsen’s fourth service is the Nielsen Station Index, which uses diaries and reports individually and periodically on some 200 local market areas. These latter diaries, distributed to households four times a year during so-called “sweep periods,” cover four weeks each. The Nielsen meter services already measure videotape recording but do not yet make any measure of playback. At the time of trial, the Nielsen diary surveys made no specific reference to videotape recorder usage, and the only playback information obtained was what people volunteered in the diary. The Arbitron rating service provides a meter service in three local markets and also a diary service in individual markets in the rest of the country. Arbitron also has sweep periods which are almost the same as Nielsen’s. Arbitron was not measuring any videotape recorder usage at the time of trial. Both Nielsen and Arbitron are capable of obtaining substantially the same kind of information with respect to videotape recorder usage as they presently do with respect to television set usage. Both Nielsen and Arbitron have conducted pilot surveys with videotape recorder owners in order to develop a framework for additional survey work, all leading to the ultimate measurement of videotape recorder usage. In attempting to maximize ratings and audience shares, networks frequently broadcast their better and stronger programs at the same time — a practice known as “counter-programming.” Heightened competition during sweep periods encourages counter-programming. LEGAL CONTENTIONS The above discussion sets forth the factual background for this lawsuit. The fundamental legal premise of this litigation is plaintiffs’ contention that the activity of the individual and the retail defendants in recording plaintiffs’ copyrighted works off-the-air is copyright infringement. With this basis, they assert that the involvement of Sony, Sonam, DDBI, and the retail stores in the manufacturing, distributing, advertising, and selling of the Betamax makes the defendants liable as direct or contributory infringers or under the theory of vicarious liability. Finally, building on these assertions, plaintiffs look to the economic arrangements of today’s broadcasting industry and foresee irreparable harm to themselves from these allegedly infringing activities. They ask this court for injunctive relief to prevent future infringement. Plaintiffs’ legal argument depends on the basic assumption that the off-the-air recording of their works by defendant William Griffiths and other individuals as well as by the retail defendants constitutes infringement. Because plaintiffs predict the greatest harm from individuals’ home-use copying, this court has considered the issue' of infringement first with respect to home-use recording and then with respect to the retail defendants’ store demonstrations. HOME-USE RECORDING “Home-use” recording as used in this opinion is the operation of the Betamax in a private home to record a program for subsequent home viewing. The programs involved in this lawsuit are broadcast free to the public over public airwaves. The court heard extensive testimony from defendant William Griffiths and four non-defendant individuals about this activity, and the court’s declaration of non-infringement is limited to this home use-situation. It is important to note the limits of this holding. Neither pay nor cable television stations are plaintiffs in this suit and no defendant recorded the signals from either. The court is not ruling on tape swapping, organized or informal. The court is not ruling on tape duplication within the home or outside, by individuals, groups or corporations. Nor is the court ruling on off-the-air recording for use outside the home, e. g., by teachers for classrooms, corporations for employees, etc. No defendant engaged in any of these activities and the facts necessary to determine their legality are not before this court. The ramifications of this new technology are greater than the boundaries of this lawsuit. A court reviewing the limited claims of specified parties in a particular factual setting cannot and should not undertake the role of a government commission or legislative body exploring and evaluating all the uses and consequences of the videotape recorder. I. INFRINGEMENT AND FAIR USE Recordings made prior to January 1,1978 are governed by the Old Act (1909) and those made after that date are governed by the New Act (1976). The testimony showed that Marc Wielage had recorded two broadcasts, one Universal and one Disney, after January 1, 1978. All other incidents of copying occurred prior to that date, and these included the recording of five Universal titles by defendant Griffiths; nine Universal and seven Disney by Wielage; two Universal by Soule; one Universal and six Disney by the Lowes; and two Universal by the Birds. This court finds that this home-use recording is not an infringement under either the Old Act or the New Act. This finding rests on statutory interpretations of both the Old and the New Acts, the legislative history of the New Act, and the doctrine of fair use. A. The Old Act Section I of the Copyright Act, 17 U.S.C. § 1, gave the copyright owner the “exclusive right: (a) To print, reprint, publish, copy, and vend the copyrighted work; . .” Under this broad, unqualified language, Betamax recording appears to be an infringing activity. The legislative history does not discuss home-use recording; in 1909, television and its ensuing technology was not even contemplated by Congress. In applying the Old Act, courts created the fair use doctrine to immunize some forms of copying from the literal implications of the statute. The fair use doctrine is discussed extensively below. This court concludes that home-use copying is fair use. This conclusion is based on the doctrine as it was developed by the courts under the Old Act and left unaltered by the New Act. Therefore, this conclusion applies equally to instances of home-use recording under the Old and New Acts. B. The New Act Copyright holders have monopoly power only over those uses of their works that Congress has protected through legislation; their rights do not exist independent of Congressional action. The broad language of the New Act suggests that copyright holders have monopoly power over all reproductions of their works. Legislative history, however, shows that Congress did not intend this broad statement to include reproductions of sound recordings for home use. The central question here is whether Congress intended the same language to give copyright holders of audiovisual works monopoly power over off-the-air recording of their works for home use. Legislative history does no.t show this intent. On the occasions when the issue was discussed by Congress, all indications were that Congress did not intend to give monopoly power over this use. This legislative history is surveyed below. Section 106 of the New Act provides: § 106. Exclusive rights in copyrighted works Subject to sections 107 through 118 [17 U.S.C. §§ 107-118], the owner of copyright under this title [17 U.S.C. §§ 101 et seq.] has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, panto-. mimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; and (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly. Plaintiffs contend that this statutory language is clear. According to them, § 106(1) gives the owner of the copyright an unqualified and exclusive right to “reproduce the copyrighted work in copies or phonorecords.” Plaintiffs urge that if Congress had intended to allow home-use copying, it would have made express qualifications as it did in subsections (4) and (5) of § 106. Defendants respond, and this court agrees, that interpretation of the New Act’s language is not that simple. Legislative history must be examined. As the Supreme Court wrote in Train v. Colorado Public Interest Research Group, 426 U.S. 1, 9-10, 96 S.Ct. 1938, 1942, 48 L.Ed.2d 434 (1976): To the extent that the Court of Appeals excluded reference to the legislative history of the FWPCA [Federal Water Pollution Control Act] in discerning its meaning, the court was in error. As we have noted before: “When aid to construction of the meaning of words, as used in the statute, is available, there certainly can be no 'rule of law’ which forbids its use, however clear the words may appear on ‘superficial examination.’ ” United States v. American Trucking Assn., 310 U.S. 534, 543-544, 60 S.Ct. 1059, 1064, 84 L.Ed. 1345, 1351 (1940) (footnotes omitted). The language in § 106 is general and broad. It appears to apply to every situation involving reproduction of a copyrighted work. It does not reflect the specific attention Congress gave to several types of reproduction. As the legislative history shows, Congress did not always draft statutory language to reflect its intent. In 1955, Congress ■ began revising the Copyright Act of 1909. From 1955 to 1976, the Office of the Register of Copyrights worked with Congress to draft the new legislation and focus issues of concern. Comprehensive revision was a complex and controversial effort. In 1971, the process was impeded by strong disagreement about the treatment of cable television in the revised statutory framework. By the same year, the problem of record piracy had become severe. Relief for this problem was blocked by the dispute over the cable television portions of the revision act. Rather than waiting for complete revision, Congress passed an amendment to the Old Act to deal with sound recording piracy. This amendment became subsection (f) of § 1 of the Old Act and established limited copyright protection for owners of sound recordings. This subsection (f) was not distinct and separate from the comprehensive revision under way in Congress. Its language was lifted- from the earlier general revision bills, and it was incorporated virtually verbatim into § 106 et seq. of the New Act. As the Librarian of Congress wrote to the Chairman of the Senate Judiciary Committee on January 19, 1971: In general, we also support the amendatory language adopted in the bill which draws heavily upon the language of the bill for general revision of the copyright law (S. 543) . The most fundamental question raised by the bill is its relationship to the program for general revision of the copyright law. The revision bill before your committee this past session and which Senator McClellan proposes to reintroduce, has parallel provisions, and if general revision were on the threshold of enactment S. 4592 would be unnecessary. However, some fundamental problems impeding the progress of general revision of the copyright law, notably the issue of cable television, have not yet been resolved. We agree that the national and international problem of record piracy is too urgent to await comprehensive action on copyright law revision, and that the amendments proposed in S. 4592 are badly needed now. Upon enactment of the revision bill, they would, of course, be merged into the larger pattern of the revised statute as a whole. S.Rep.No.72, 92d Cong., 1st Sess., 7-8 (1971) (emphasis added). A comparison of the statutory language shows that the amendment was merged into the New Act. This incorporation is significant because Congress, in passing the legislation, clearly expressed its intent not to restrain home sound recording from broadcasts, tapes or records where the recording is for private, non-commercial use. As the House Report which accompanied the 1971 Amendment stated: Home Recording In approving the creation of a limited copyright in sound recordings it is the intention of the Committee that this limited copyright not grant any broader rights than are accorded to other copyright proprietors under the existing title 17. Specifically, it is not the intention of the Committee to restrain the home recording, from broadcasts or from tapes or records, of recorded performances, where the home recording is for private use and with no purpose of reproducing or otherwise capitalizing commercially on it. This practice is common and unrestrained today, and the record producers and performers would be in no different position from that of the owners of copyright in recorded musical compositions over the past 20 years. H.Rep.No.487, 92d Cong., 1st Sess. 7, reprinted in [1971] U.S.Code Cong. & Admin. News, pp. 1566, 1572. Thus, while the language of § 106 of the New Act appears to give copyright holders exclusive rights over all recordings, the Congressional intent was that home-use sound recording was not prohibited. Holders of copyrights in sound recordings were not to have any “broader rights than are accorded to other copyright proprietors.” U.S.Code Cong. & Admin.News 1971, p. 1572. Defendants contend that, as with home-use sound recording, Congress did not intend to protect copyright holders from off-the-air audiovisual recording for home-use, even though the statute does not expressly so state. The issue of home-use recording was not addressed in any subsequent House or Senate report. The reports accompanying the 1976 general revision legislation did not restate Congressional refusal to give monopoly power over home-use recording, but the language of the 1971 Amendment was incorporated into the New Act without any suggestion that legislative intent had changed. The 1971 House Report is not the only support for a finding that the Copyright Act does not prohibit home-use recording. Home-use recording from radio and television broadcasts was discussed in committee hearings, floor debates and reports from the Office of Copyrights. Statements from all three sources are relevant to a determination of legislative intent. In June, 1971, Subcommittee No. 3 of the House Committee on the Judiciary met in hearings on the sound recording amendment. Representative Beister of Pennsylvania engaged in the following dialogue about off-the-air recording with Ms. Barbara Ringer, then Assistant Register of Copyrights: MR. BEISTER. I do not know that I can add very much to the questions which you have been asked so far. I can tell you I must have a small pirate in my own home. My son has a cassette tape recorder, and as a particular record becomes a hit, he will retrieve it onto his little set. Now, he may retrieve in addition something else onto his recording, but nonetheless, he does retrieve the basic sound, and this legislation, of course, would not point to his activities, would it? MISS RINGER. I think the answer is clearly, “No, it would not.” I have spoken at a couple of seminars on video cassettes lately, and this question is usually asked: “What about the home recorders?” The answer I have given and will give again is that this is something you cannot control. You simply cannot control it. Hearings on S. 646 before the Subcomm. No. 3 of the House Judiciary Comm., 92d Cong., 1st Sess. 22 (June 9 and 10, 1971). Ms. Ringer proceeded to discuss the problem of unauthorized video recordings finding their way into the market. She recognized that this was a problem which Congress might face in the future but stated that it could not be met by carrying copyright enforcement into the home or by banning devices for off-the-air recording. Her testimony continued: But I do not see anybody going into anyone’s home and preventing this sort of thing, or forcing legislation that would engineer a piece of equipment not to allow home taping. MR. BEISTER: Secondly, with respect to video cassettes, are we approaching an additional problem, not with respect to private use, but with respect to public distribution after it has been retrieved over a home set? MISS RINGER: The answer is very definitely, “yes.” For years the motion picture industry has been faced with bootlegging problems, much of it deriving from the 10 mm prints that were distributed to the Armed Forces and got out of control. The film industry has had a very active policing activity for years. I think that this problem is going to undergo a quantum increase when video cassette recorders are freely available. But I would say that there is a big difference, and I think it is something that you might consider. In that area, they have got copyright protection, and in this area, who knows? It is certainly not protectable under the Federal statute. Id. pp. 22-23. When the 1971 Amendment reached the House floor, the question of noncommercial home recording was raised by Representative Kazen of Texas and answered by Representative Kastenmeier. Representative Kastenmeier was chairman of the House Judiciary Subcommittee responsible for the New Act, a sponsor of the general revision legislation, and a member of the Conference Committee which put the New Act in final form. The dialogue was as follows: MR. KAZEN. Am I correct in assuming that the bill protects copyrighted material that is duplicated for commercial purposes only ? MR. KASTENMEIER. Yes. MR. KAZEN. In other words, if your child were to record off of a program which comes through the air on the radio or television, and then used it for her own personal pleasure, for listening pleasure, this would not be included under the penalties of this billl MR. KASTENMEIER. This is not included in the bill. I am glad the gentleman raises the point. On page 7 of the report, under “Home Recordings,” Members will note that under the bill the same practice which prevails today is called for; namely, this is considered both presently and under the proposed law to be fair use. The child does not do this for commercial purposes. This is made clear in the report. 117 Cong.Rec. 34, 748 (1971). Treatment of home-use recording is consistent outside the legislative history, as well. Indeed, since 1955, the Copyright Office of the Library of Congress and the Register of Copyright consistently avoided and even opposed efforts to protect copyright owners against home-use recording. In 1961, the Office issued a report which urged that private performance of a copyrighted film or motion picture not be restrained. The Register contended that statutory damages for such- infringement “would be grossly excessive” and that “private performances could rarely be discovered or controlled.” The Register directly confronted the issue of home-use videotape recording: New technical devices will probably make it practical in the future to reproduce televised motion pictures in the home. We do not believe the private use of such a reproduction can or should be precluded by copyright. Copyright Law Revision, Report of the Register of Copyrights (July, 1961), p. 30. As discussed above, the Copyright Office, through Barbara Ringer, continued to advocate this view throughout the years of legislative revision. The Office was an active participant in drafting, promoting and explaining the legislation for Congress and always maintained that home-use recording is not an infringement. This position of the Office developed in part from a concern about invasion of the individual’s privacy in his home. As Ms. Ringer testified, home recording simply cannot be controlled. Nobody is going into anyone’s home to prevent it. The fears of Representatives Beister and Kazen that the legislation would reach their children’s activities in their homes were not realized. Of course, not all activity is made legal by virtue of occurring in a private home. Congress can constitutionally legislate against some activity which may occur in the home, but doing so necessarily requires caution. Here, legislative history shows that, in balance, Congress did not find that protection of copyright holders’ rights over reproduction of their works was worth the privacy and enforcement problems which restraint of home-use recording would create. C. Fair Use Analysis of whether home-use recording is an infringement cannot end with the statutory language and legislative history. While the Old Act was in effect, courts devised the doctrine of fair use, which creates a “privilege in others than the owner of a copyright to use the copyrighted material in a reasonable manner without his consent, notwithstanding the monopoly granted to the owner . . . .” Rosemont Enterprises, Inc. v. Random House, Inc., 366 F.2d 303, 306 (2d Cir. 1966), quoting Ball, Copyright and Literary Prop erty 260 (1966). Fair use has always been a doctrine without rigid definition. “The line which must be drawn between fair use and copyright infringement depends on an examination of the facts in each case. It cannot be determined by resort to any arbitrary rules or fixed criteria.” Meeropol v. Nizer, 560 F.2d 1061, 1068 (2d Cir. 1977), cert. denied, 434 U.S. 1013, 98 S.Ct. 727, 54 L.Ed.2d 756 (1978) (citations omitted).. In this case, new technology has spawned a copyright question of first impression. This court finds that the legislative history of the New Act shows that Congress did not intend to restrain the home-use copying at issue here. Even if this finding were erroneous, the legislative history would be sufficient to raise doubts about the meaning of the statutory language of § 106. This language appears to give copyright holders the exclusive right to reproduce their works in copies or phonorecords. Yet legislative history shows an intent to allow home-use copying of both sound recordings and broadcasted audiovisual material. In Twentieth Century Music Corp. v. Aiken, supra, 422 U.S. at 156, 95 S.Ct. at 2044, the Supreme Court stated that “[w]hen technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of [its] basic purpose.” (footnote omitted). The fair use doctrine is a tool for such construction. The New Act did not change fair use. It did, however, codify the doctrine for the first time and characterize fair use as non-infringement rather than excused infringement. In doing so, both the House and the Senate emphasized that they did not intend to alter the judicial fair use doctrine: The statement of the fair use doctrine in section 107 offers some guidance to users in determining when the principles of the doctrine apply. However, the endless variety of situations and combinations of circumstances that can rise in particular cases precludes the formulation of exact rules in the st