Herbert v. Shanley Co.
1917 U.S. LEXIS 2158, 37 S. Ct. 232, 242 U.S. 591 (1917)
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Rule of Law:
A public performance of a copyrighted musical work in a commercial establishment, such as a restaurant or hotel, constitutes a 'performance for profit' under the Copyright Act, even if no direct fee is charged for admission to hear the music.
Facts:
- Victor Herbert, the composer, owned the copyright to a comic opera titled 'Sweethearts,' which included a song of the same name.
- The Shanley Company operated a restaurant on Broadway in New York.
- Shanley Company hired professional singers, accompanied by an orchestra, to perform the song 'Sweethearts' on a stage in its restaurant for the entertainment of its patrons.
- In a similar case consolidated with this one, the Hilliard Hotel Company had its paid orchestra perform the copyrighted march 'From Maine to Oregon' in the Vanderbilt Hotel dining room.
- Neither the Shanley Company nor the Hilliard Hotel Company charged patrons a separate or direct fee for admission to hear the musical performances.
Procedural Posture:
- In Herbert v. Shanley Co., the copyright owners sued Shanley Co. in U.S. District Court for copyright infringement.
- The District Court, following precedent from a similar case, ruled in favor of Shanley Co., finding no performance for profit.
- The copyright owners appealed, and the U.S. Circuit Court of Appeals affirmed the District Court's decision.
- In the consolidated case, John Church Co. v. Hilliard Hotel Co., the District Court initially found for the copyright owner.
- On appeal by the hotel, the U.S. Circuit Court of Appeals reversed the District Court, finding the performance was not for profit.
- The copyright owners in both cases, the petitioners here, appealed to the Supreme Court of the United States.
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Issue:
Does the performance of a copyrighted musical composition in a hotel dining room or restaurant, without a direct admission fee, constitute a 'performance for profit' under the Copyright Act?
Opinions:
Majority - Mr. Justice Holmes
Yes. The performance of a copyrighted musical composition in a commercial establishment constitutes a 'performance for profit' even if no direct admission fee is charged. The Court reasoned that the performances were not charitable ('eleemosynary') but were an integral part of the total experience for which the public pays. The music is used as a commercial tool to attract customers and enhance the dining experience, which in turn generates profit for the establishment. The fact that the overall cost is not broken down to assign a specific price to the music is irrelevant; the ultimate purpose of employing the music is to increase profits, and that is sufficient to meet the statutory requirement.
Analysis:
This decision significantly broadened the interpretation of a 'performance for profit' under U.S. copyright law, establishing the 'indirect commercial benefit' doctrine. It rejected the narrow view that a profit motive requires a direct charge, like an admission fee. This ruling became the cornerstone for the business model of performing rights organizations (PROs) like ASCAP and BMI, empowering them to license and collect royalties from thousands of commercial establishments, including bars, restaurants, retail stores, and hotels, that publicly perform music to enhance their business. The case ensures that copyright holders are compensated whenever their work is used as a functional part of a commercial enterprise.
