So, it does not have to be on the National Film Board's list in order for us to label it. That has seemingly been quite acceptable to the public and we have a few people writing to us to say, "Thank you; now we understand." So I think that it also had a positive effect from that point of view.

So, in conclusion, Mr. Chairman, I just think the system has worked very well and as several of you stated, the burden would seem to be, and we hopefully think it should be a substantial one, of proving that changes are necessary in a system that seems to work very well at this time. Thank you very much.

Mr. KASTENMEIER. Thank you, Mr. Mayer.

[The prepared statement of Mr. Mayer follows:]

214 of the Hollywood stufle system, creative Jueves were almost all tired on salary to effect the vision of the took all the financial risk, and the wtyyur work quid regardless of whether a movie succeeded or failed.

In whey's tallywood, filmmaking is an even riskier business, with W WISTHA Ver picture cost of $30 million. Only 10% of today's films MALE Costs during first-run theatrical release. Access to such 23 broadcast and cable television, foreign videocassette sales and rentals, and airlines is thus

eruis, to investment decisions.

agree with the Library of Congress that the retroactive application of "Buropean-style moral rights to films produced prior to enactment, in all likelihood would violate the takings clause of the Fifth In addition, retroactive application of "moral rights" to bar practices such as colorization raises First Amendment concerns.

The ability of creative contributors to object to adaptations or derivative uses could result in decreased incentive to invest in new kachnology It could also result in decreased ability to invest in new Exsative talent and ideas, because foreclosure of secondary markets for films places increased pressure on the success of first-run theatrical valease, meaning greater use of established stars and formats with proven box office appeal,

In conclusion, our system works very well, and those who would change it bear the substantial burden of proving that changes are

Statement of Roger L. Mayer

Turner Entertainment Co.

January 9, 1990

Mr. Chairman, my name is Roger Mayer. I am President and Chief Operating Officer of Turner Entertainment Co. (TEC), a wholly owned subsidiary of Turner Broadcasting System, Inc. (TBS). Thank you for this opportunity to testify before your Subcommittee as you consider the question of moral rights in the film and entertainment industry.

I have been an executive in the motion picture and television industries for approximately 36 years, first with Columbia Pictures, then MGM, and now with TEC. I was with MGM for 25 years, most notably as Senior Vice President of Administration and as President of the MGM Laboratory. My main duties included administrative control of the MGM studio and the MGM library. For the last 3 years I have supervised the Turner subsidiary which distributes, services and preserves the great MGM, RKO and Warner Bros. film libraries.

TBS now owns, at a cost of over $1.4 billion, the world's largest film library, composed of over 3,600 motion pictures, 1,700 hours of television programming, and 4,000 short subjects and cartoons. These properties are marketed both in the United States and throughout the world via cable and broadcast television, videocassette sales and rentals, and theatrical distribution. Our ability, as the copyright owner, to adapt these properties to the various markets is crucial, not only to our business but to our capacity to fulfill the constitutionally grounded public policy of the widest possible dissemination to the public of creative works.

My testimony today will cover the following subjects: the nature of the proposed changes in current law you are being asked to consider; the nature of the "European system of moral rights;" the old Hollywood studio system, under which most of the films in our library were made; the modern filmmaking industry; constitutional questions; public policy issues respecting retroactive legislation; and public policy respecting prospective legislation.

issues

The nature of proposed changes in American copyright law

As we understand it, this Subcommittee is being asked to explore the possible enactment of so-called "moral rights," similar to provisions thought to be in place in Europe, which would be applicable to the motion picture industry. The basic premise appears to be that film directors and perhaps many others would be given the right, perhaps inalienable, to veto a multitude of post-production or post-release modifications made to films during the various distribution processes. The types of practices involved may include subtitling and dubbing for foreign distribution, panning and scanning so that a film may be shown on television, time compression and expansion, various types of editing, and colorization, as well as various processes not now known or contemplated.

statement of Roger L. Mayer
January 9, 1990
Page 2

Under current law, a director can obtain these veto rights, but only through individual contract negotiations or collective bargaining. Typically, and for good reason, these rights are retained by the production company or studio, although there have always been exceptions for directors or producers of unusual stature, from Orson Welles to David 0. Selznick to Steven Spielberg.

Last year, during consideration of the bill to implement the Berne Convention in the United States, Congress found that this country already protects the rights of authors to an extent sufficient to allow us to join Berne. This finding was based on a close examination of various federal statutes, state statutes, and common law. Copyright law, the Lanham Act, and common law concepts such as libel, unfair competition and false advertising, taken as an amalgam, all converge to protect the basic integrity of an author's work, as required by article 6(bis) of the Berne Convention. In addition, creative contributors have the ability to negotiate for additional rights through the collective and individual bargaining processes.

It is no exaggeration to say that American copyright-intensive businesses are the healthiest and most productive in the world. We dominate the world in the fields of filmmaking, magazine publishing, data base services, music publishing and textbooks, to name a few. In an era of staggering trade deficits, the American copyright industries combined contribute a surplus of over $13 billion annually to the U.S. trade

balance.

American films dominate theatre and TV screens throughout the world and contribute a surplus of $2.5 billion to the U.S. trade balance. In contrast, as The Washington Post recently reported, "foreign-made films barely make a ripple in the United States," and are in serious economic difficulty in their Own markets. Indeed, the French government has recently announced its intention to provide a direct annual subsidy of $30 million to promote domestic production of motion pictures. The House report on the Berne Convention confirms the financial distress of the foreign film industries, noting that foreign film producers feel that moral rights have hurt foreign film production. (H.R. Rept. No. 100-609, 100th Congress, 2nd session at 36 (1988).)

American creative industries have reached this position in large part because of the nature of our copyright system. This system promotes the public availability of creative works by providing economic incentives which spur the creation and dissemination of new works. The current Copyright Act gives copyright owners, whether business entities or individuals, the financial incentive to devote resources and energy to producing and distributing creative works, allows copyright owners and users the flexibility to enter freely into business agreements that make works available to the public, and provides both copyright owners and users with the certainty that their business activities will be governed

Statement of Roger L. Mayer
January 9, 1990
Page 3

by the objective terms of such traditional business agreements and will not be hindered by the subjective judgments inherent in the "European system of moral rights."

In light of the undeniable success of the current copyright system, a very large burden of proof rests with those who would change the system.

In considering the wisdom of grafting a "European-style moral rights system" onto American copyright law, we urge the Subcommittee to carefully examine the precise nature of moral rights and how they are implemented in other countries. We are concerned that advocates of adopting broad-ranging moral rights legislation may not have a thorough understanding of how such mechanisms work elsewhere. We are confident that such a review will underline the minimal benefits and high potential costs of altering the legal foundation of our film and video industries.

The nature of the "European system of moral rights"

It should not be a foregone conclusion that because different systems of moral rights have long existed in Europe, alien European concepts can necessarily be grafted onto the American system, or that they are necessarily superior. Nor should it be assumed that moral rights have had a benign effect abroad. This notion requires analysis in two parts: first, the nature of moral rights in Europe, and second, the practical impact if these European concepts are imported and superimposed on our current system.

As to the nature of moral rights in Europe, it appears to be far from a settled question what rights do in fact exist in any uniform, coherent sense. Some countries' statutes condition the exercise of the paternity right on the presence of "reasonable" circumstances or "fair" practices, or words to that effect, so that the element of objectivity is introduced. Some countries allow moral rights to be waived in a signed writing, after which they may not be reasserted by the author. Even France, generally regarded as having the most vigorous moral rights regime of all, prohibits the exercise of the integrity right in an "absolute" or "arbitrary" manner. Many countries prohibit moral rights objections to changes made in the process of adaptation or creation of a derivative work. France has even prevented the application of moral rights to their computer software industry, apparently in order to promote its growth.

These and many other examples of the very uncertain nature of moral rights in Europe are well documented in the paper submitted by Ambassador Nicholas Veliotes during the September 20, 1989 hearing conducted by the Senate Subcommittee on Patents, Copyrights and Trademarks, entitled "Preserving the Genius of the System; a Critical Examination of the Introduction of Moral Rights into United States Law." This paper has also been submitted to your Subcommittee.