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




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

                           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 implement-
                                 ing federal statutes, 17 USC
Dear Mr. McDonald:               §§ 1-215, the Copyright Act.

          You have asked us for an opinion as to whether Art.
1137r, Sections l-4, Vernon's Penal Code, prohibiting the re-
production of sound recordings without the original owner's
consent is unconstitutional as in conflict with the Copyright
Clause, Article I, Section 8, Clause 8, United States Consti-
tution, and the implementing federal statutes, 17 USC ~551-215,
the Copyright Act. In this connection we have carefully exa-
mined the materials forwarded with the opinion request which
raise the issue of whether the preemption doctrine applied in
the companion landmark decisions   of the United States Supreme
Court in Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225
(1964) and Compco Corp. v. Day-Bright Lighting, Inc., 376 U.S.
234 (1946) precludes the States from enacting statutes pro-
scribing 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 the Copyright
Act, provided a limited prospective protection to owners of
original sound recordings in Public Law 92-140 (S.646).1

          The magnitude of the problem involved which prompted
the federal legislation is described in House 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:

               "The attention of the Committee has
         been directed to the widespread unauthor-
         ized reproduction of phonograph records
         and tapes. While it is difficult to estab-
         lish the exact volume or dollar value of
         current piracy activity, it is estimated
         by reliable trade sources that the annual
         volume of such piracy is now in excess of
         $100 million.     It has been estimated that
         legitimate    prerecorded tape sales have an
         annual value of approximately $300 million.
         The pirating of records and tapes is not only
         depriving legitimate    manufacturers of sub-
         stantial income, but of equal importance
         is denying performing artists and musicians
         of royalties    and contributions to pension
         and welfare 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, Sec-
tions l-4, Vernon's Penal Code, prohibiting the "piracy" of sound
recordings.

          Initially, it is to be presumed that a duly enacted
statute of the State of Texas is valid against objection on
constitutional grounds.  12 Tex. Jur. 2d, Const. Law, Sec. 42,
pp. 385-386:
          II . . . a statute will not be declared
          constitutional for the mere reason that
          it has been enacted by the legislature,
          it is presumed that the legislature has
          acted within its powers, and a duly en-
          acted statute is presumed to be consti-
          tutional. And if there could be a state
          of facts justifying the legislative ac-
          tion, it is presumed 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, 362 U.S. 440, 446 (1960) . A clear showing
of conflict is required. As stated in Schwartz v. State of
Texas, 344 U.S. 199, 203 (1952), the rule is that:
          "'It should never be held that Congress
          intends to supersede, or by its legisla-
          tion suspend, the exercise of the police
          powers of the states, even when it may
          do so, unless its purpose to effect that
          result is clearly manifested.'  Reid v.
          State of Colorado, 187 U.S. 137, 148, 23
          S. Ct. 92, 96, 47 L.Ed 108."

          In Florida Lime and Avocado Growers, Inc. v. Paul, 373
U.S. 132, 142 (1963) the court held:

          "The test of whether 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 superinten-
          dence of the field not whether they are
          aimed at similar 0; different objectives.

          "The principle to be derived from our deci-
          sions 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."
          -(Emphasis supplied)

          Further in Colorado Anti-Discrim. Comm. v. Continental
Air Lines, 372 U.S. 714, 721 (1963), the Supreme Court, in rul-
ing on the validity of a state statute under the Supremacy DOC-
trine, held:

            . . . that the mere "fact of identity does
          not mean the automatic invalidity of State
          measures'.  California v. Zook, 336 U.S. 725,
          730 (1949). To hold that a state statute
          identical in purpose with a federal statute
          is invalid under the Supremacy Clause, we
          must be able to conclude that the purpose

                           -5429-
Honorable W. T. McDonald, Jr., page 4   (M-1114)



          of the federal statute would to some extent
          be 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 the preemption
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 subject matter.

           Our research fails to reveal any case which makes the
doctrine of the Sears and Compco cases applicable to the piracy
of sound recordings.   To the contrary, we find that the courts
of California, Illinois, New York and North Carolina have speci-
fically rejected this application in upholding state statutes
prohibiting the "piracy" of sound recordings.   See Ca itol Re-
cords, Inc. v. Erickson, 2 Cal. App. 3d 526, 82 Cal.--%7m
                                                      79         ,
40 ALR 3d 553; Capitol Records, Inc. v. Greatest Records, Inc.,
43 Misc. 2d 878, 252 N.Y.S. 2d 553 (Sup. Ct. 1964); Columbia
Broadcasting S
2d 723 , 248
Inc. v. Spies,
Inc. v. Eastern Tape Corp., Superior Court of Met
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 Associa-
tion of America v. Younger, 316 F. Supp. 340 (C.D. Calf. 1970),
appeal dism. 401 U.S. 902 (1971). Therein plaintiffs sued to
enioin the enforcement of the California "taoe uiracv" statute.
                                             ~-   c----1

PeAal Code, Sec. 653h (1968)4:


  31971 U.S. Code Cong. & Adm. News Pamph. No. 9, p. 2552.

  4"§653h. Transfer of recorded sounds for unlawful use; sale
     (a) Every person is guilty of a misdemeanor who:
          (1) Knowingly and willfully transfers or causes to be
    transferred any sound recorded on a phonograph record, disc,
    wire, tape, film or other article on which sounds are recorded,
    with intent to sell or cause to be sold, or to use or cause to
    be used for profit through public performance, such article on
    which such sounds are so transferred , without the consent of
    the owner.
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Honorable W. T. McDonald, Jr., page 5        (M-1114)



                 "Plaintiffs contend that the so-called
              'tape piracy' law of California, Penal
              Code, Section 653h (1968) is in conflict
              with the Copyright Clause of the United
              States Constitution, Art. I, Sec. 8, Cl.
              8, and the implementing Federal copyright
              statutes, 17 USC 5s 1-215."   (316 F. Supp.
              at 341-342).

The   court distinguished Columbia Broadcasting System v. DeCosta,
377   F2d 315 (1st Cir 1967), Cable Vision, Inc. v. KUTV, Inc.,
335   F2d 348 (9th Cir. 1964), Smith v. Chanel, Inc., 402 F2d
562   (9th Cir. 1968) and the Sears and Compco cases, supra, on
the   basis that:

                 "In contrast, plaintiffs in the instant
              case do not imitate    the product of the re-
              cord companies.     They actually take and
              appropriate the product itself--the sounds
              recorded on the albums--and commercially
              exploit the product."     (316 F. Supp at 350)

          The Sears and Compco cases, supra, involved suits for
damages and injunctive relief under the Illinois "unfair compe-
tition" statute with respect to the copying of designs for light-
ing fixtures which were either unpatentable or unpatented.  In
this situation the Supreme Court held that the Illinois statute
could not be applied constitutionally to prevent the copying of
these designs even though the products were virtually identical.
However, the Supreme Court expressly reserved to the States the
right to prohibit practices such as here involved.  In the Compco
case, the Supreme Court specifically restricted its ruling as
follows:

                 "As we have said in Sears, while the
              federal patent laws prevent a State from
              prohibiting the copying and selling of un-
              patented articles, they do not 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 the public 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 for quality
          and integrity, deceive the public 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,
       which was not precluded by the Sears and Compco decisions.
~"~~~e  351 of the opinion the Court held:

             "Undoubtedly, tape pirates are costing
          legitimate and authorized tape producers
          substantial amounts of money, and the State
          of California has properly and reasonably
          concluded that these parasitic tape pirates
          must be controlled.   Regardless of whether
          Calif. P.C. 5653h (1968) is deemed a lar-
          ceny statute or an unfair competition law,
          it is clear that the California Legislature
          is not precluded by the Federal Copyright
           aws rom rohibitin     the activities o
          $pel&a'&.      'Nor'szould we intervenefin
          t e egitimate enforcement of the statu-
          torily expressed desires of the California
          Legislature by the authorized prosecution
          officials who are the defendants."    (Em-
          phasis supplied.)

          Recently, on February 29, 1972, in Civil Action No.
3-5536-A, styled Independent Tape Merchant's Association v.
Crawford Martin, et al., filed in the United States District
Court for the Northern District of Texas, a suit similar to the
Tape ,Industries case, to enjoin the enforcement of Art. 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 enforce-
          ment of state law under the circumstances
          as set forth by plaintiff in this action,
          . . . .
                  II

          Finally, it should be observed that while the situa-
tion under the Patent Act, 35 USC 55 l-293, is one of either
protection or no protection, a different situation is presented
by the Copyright Act, 17 USC 55 l-215, even as amended, in that
under 52 of the Act provision is made for protection of so-
called "common law" copyrights. 5 The weight of authority is


  5"Nothi.ng in this title shall be construed to annul or limit
    the right of the author or proprietor of an unpublished work,
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Honorable W. T. McDonald, Jr., page 7      (M-1114)



that the giving of a performance and the sale of a recording
does not constitute publication, Columbia Broadcasting Systems,
Inc. v. Documentaries Unlimited, Inc., supra (news reports),
Metropolitan Opera Association, Inc. v. Waqner Nichols Recorder
                       01 N.Y.S. 2d 483 (Sup. Ct. 1950)    ff'd .,
                               2d 795 (1951) (opera broadczsts);
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., 19 App. Div. 2d 62, 240 N.Y.S. 2d 995 (19 ) ; from phono-
graph records sold to the public, Capitol Recorii, Inc. v. Great-
est Records, I
supra; Capitol



          The opposite view is taken in Grans 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., 91 F. 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".   Here we are not concerned with a situation
where the recordings are being imitated but rather the actual
sounds, the performance itself, is being appropriated.   Each of
the cases cited above rely on RCA Manufacturing Co. v. Whitman,
114 F2d 86 (2nd Cir. 1940) for their result. However, this case
was expressly overruled in Capitol Records, Inc. v. Mercury Re-
co;d;o;;:phLl~~l F2d 657 (2nd Cir. 1955). Therein at page 663


                "Our conclusion is that the quoted state-
             ment from the RCA case is not the law of the
             State of New Yx.

                "Since its decision the New York courts
             have had close contact with the question in
             Metropolitan Opera Assn. v. Wagner Nichols
             Recor er Cor ., 99 Misc. 786 101
             2d 483, Id., 279 App. Div. 63;, 107"l%.
             2d 795. We believe that the inescapable
             result of that case is that, where the ori-
             ginator, or the assignee of the originator,
             of records of performances by musical artists


        at the common law or in equity, to prevent the copying, publi-
        cation, or use of such unpublished work without his consent,
        and to obtain damages therefor."
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Honorable W. T. McDonald, Jr., page 8   (M-1114)



          puts those records on public sale, his act
          does not constitute a dedication of the
          right to copy and sell the records."

          A very excellent annotation is contained in 40 ALR 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, 40 ALR 3d at 561, to Pottstown Daily News
Publishing Co. v. Pottstown Broadcasting co., 11 Pa. 383 192
A2d 657, 662 (1963) which holds that while 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 to misappropriation as well as misrepre-
sentation", quoting-from A.L.AI-S;hechter Poultry Corp. v. United
States, 295 U.S. 495, 531-532 (19 5) .

          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.),
it was held that aonrooriation of news items bv a comuetitor
constituted unfair‘kompetition under the doctrine of International
News Service v. Associated Press, 248 U.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 con-
stitute-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
of Article 1137r, the 62nd Legislature has done no more than
the California Legislature did in its passage 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 Indus-
tries case, supra, to constitute a valid exercise of the State's
legislative powers and not to constitute any undue interference
or conflict with the federal copyright policy devised pursuant
to the Constitutional authority of Congress in the Copyright
Act, 17 USC 65 l-215.

                    SUMMARY

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

NOLA WHITE
First Assistant




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