Statement of Roger L. Mayer Page 4 Indeed, it may be that at least in some cases the "European system of moral rights" is actually moving closer to the American system. As an example, I would draw your attention to the recent decision by the French Court of Appeals in Huston v. Societe d'Exploitation de la Cinquieme Chaine de Television, Le Cinq, (Paris Appeals Court, decided July 6, 1989). In this case, the heirs of the renowned American director John Huston brought suit to prevent a French broadcast of the colorized version of "Asphalt Jungle," to which Turner owns the copyright. Their claim was based on Mr. Huston's moral right to prevent an adaptation of his movie to which, during his lifetime, he had clearly objected. The plaintiffs were successful in the trial court, but that decision was overturned on appeal. The Appeals Court held that, under the rules of international conflicts of laws, American law must be applied, and that under American law, colorization was permissible. The Court then proceeded to hold that "colorization, in itself, cannot be criticized by the heirs of Huston even if they could invoke a moral right in the film in black and white." (Page 15.) In other words, colorization is not an affront even to French moral rights. ... This opinion illustrates that the scope of enforceable "moral rights" in Europe may be far more narrowly circumscribed than the Directors Guild and other advocates of importing "moral rights" to this country understand them to be. I include a translation of this decision as part of my testimony. Perhaps the most fundamental difference between the various European systems and ours is that, unlike the United States, most European countries have developed a situation where the various copyright intensive creative industries have evolved over hundreds of years alongside the doctrine of moral rights. These industries, such as publishing, filmmaking, broadcasting, and the like, have arrived in the 20th century with a history of accommodation, both statutory and judicial, to the prevailing concept of the rights of creative contributors. When motion pictures were invented in the early years of this century, European countries where would-be filmmakers lived already had moral rights systems, within the confines of which a new industry was conceived. Our Quite the opposite is true in the United States. copyright-intensive industries have matured in a system which relies on contracts and property rights, which safeguards the predictability and certainty of business transactions, and which does not recognize the subjective opinion or caprice of a contracting party. The Directors' Guild position, as we understand it, would conflict with the long-standing American notion of the exclusivity of copyright by allowing an author, after he has sold the exclusive right to reproduce his work and make derivative uses of it, to prevent the creation of such derivative uses. Moral rights would restrict the fair use doctrine by allowing an author to prevent the use of his work in such valuable Statement of Roger L. Mayer activities as teaching, scholarship, news reporting, parody and critical commentary. Because many countries regard moral rights as continuing in perpetuity, these rights may violate both the "limited time" restriction of the Constitution as well as the prevailing notion here that personal torts, such as defamation and invasion of privacy, expire with the death of the complainant. And then there is the basic and proper refusal of the American judiciary to make what are essentially subjective assessments regarding matters of taste and sensibility. The old Hollywood studio system Until the 1950's, Hollywood movies were conceived, financed, executed, and distributed for the most part by the giant studios run by the well-known Hollywood "moguls." Of course, there was an occasional rare exception, such as Orson Welles. But in the overwhelming majority of cases these movies were the "children" of the studio heads. They were not the "children" of the scores of salaried collaborators, including directors, who, to implement the studio head's vision, were traded among studios, hired and fired, assigned projects by the mogul or a staff producer, and replaced during shooting if their work didn't satisfy. (A famous example is "The Wizard of Oz. In short order three directors were assigned to the movie, and removed from it, before a fourth director finished the film.) These movies were produced by large companies as commercial ventures in order to entertain the public and thereby make money for all concerned. The broadest possible ownership rights were obtained from directors, writers and other personnel, by collective and individual bargaining under employment agreements, in exchange for large salaries and sometimes profit percentages. For their part, the owners received control of the methods and manner of distribution, advertising, and use in the various secondary markets. In these business ventures, it was the studio's money at stake. Directors and others did not return their salaries if a film was unsuccessful. They were (and are) paid regardless of the quality of the resulting product. It is the successors to the original studios, such as TBS, who have both the contractual right and the greatest incentive to preserve and distribute these old movies, in order to maximize their investment. The greater our freedom to adapt to changing markets, the greater the benefit the public through the broadest possible access to the great film heritage we own. to The modern Hollywood system The business of modern filmmaking has become even riskier than in the heyday of the studio system. Today a feature film costs an average of almost $30,000,000 to produce and distribute. Only 10% of today's feature films recoup their investment through first-run world-wide theatrical release. In all other cases the only hope for breaking even is through full exploitation of all additional markets. Statement of Roger L. Mayer The willingness of a potential investor (including major studios) to finance a film is directly related to the investor's perceived ability to exploit the film in all possible ways and places. Under current law, the owner of the copyright in a film knows that if, as is almost certain to be the case, the picture is still in the red after first-run theatrical release, he can license it to cable or broadcast television, rent and sell it in videotape format, license it for in-flight use on airlines, and distribute it to foreign countries after having it dubbed or subtitled. With these tools, he has a much better chance, although still no guarantee, of redeeming his investment. The ability of even one, let alone several, creative contributors to stop or even delay the use of these markets will chill the desire of investors to gamble on the vagaries of the movie business (and all other creative businesses including television, music, records, book and magazine publishing, etc.). can have a As an indication that "European-style moral rights" negative impact on investment in entertainment programming, I would point out that last October an Italian Court ruled that it is a violation of a deceased director's moral right for a television station to insert commercials during the broadcast of his film. In addition, the court ruled that the director's heirs can dictate whether, how many, and where commercials may be inserted. Italian directors themselves note that this decision may result in reduced funding for future films. I enclose an article on this decision from the October 18, 1989 edition of Variety. The role of labor negotiations has also changed. The various guilds representing creative contributors are among the strongest unions in the country. Agreements with members of the Directors Guild of America, for example, typically run to hundreds of pages, containing dozens of hotly negotiated provisions ranging from precise credit rights to profit participation to adaptive consultation. There is no question but that these guilds enjoy bargaining power relatively equal to that of the studios and independent producers who employ their members. We all remember the havoc wreaked on the television industry when the television writer's union went on strike in 1988. In the modern system of making films, parties of relatively equal bargaining power engage in protracted negotiations in which each side seeks to maximize their profit and control. The producer, facing greater investment risks than ever before, negotiates with various creative contributors, who enjoy greater autonomy and influence than ever before. The result is a balanced, productive working relationship in no need of legislative interference. Constitutional issues Legislation to allow the exercise of "European-style moral rights" with regard to works copyrighted prior to the date of possible enactment of new legislation must undergo severe constitutional scrutiny. There is Statement of Roger L. Mayer a very high degree of probability, for example, that colorization legislation which bans the distribution and exhibition of colorized versions of movies copyrighted prior to enactment would violate both the First and Fifth Amendments to the Constitution. In his recent report entitled "Technological Alterations to Motion Pictures," (March 1989) the Register of Copyrights states that "(a) new federal moral right affecting preexisting works, the copyright of which is owned by individuals other than the beneficiary of the new right, raises serious constitutional issues under the 'takings' clause of the Constitution," (page 159) and thus concludes that "(a)ny future legislation should extend moral rights prospectively only to works created on or after the date of enactment ..." (page 182). Indeed, these doubts about the constitutionality of a retroactive ban caused the Register to call into question "the need for any legislation, since very few motion pictures are now created in black and white, and those that are will probably be created by directors with sufficient individual bargaining leverage to prohibit colorization." (Emphasis in original.) (Page 160.) Our attorneys have also looked into this question, and have concluded that a retroactive ban on colorization would also violate the free speech guarantee of the First Amendment. We also agree with the Register that such action would violate the takings clause of the Fifth Amendment. Public policy issues respecting retroactive legislation Our company is greatly concerned about all the technologies that could be affected by the "European system of moral rights," including colorization. During the consideration of the National Film Preservation Act 1988, we made a commitment to voluntarily label all movies that we colorize, regardless of whether they are chosen for the National Film Registry, using the labeling language contained in that law. We have and will continue to actively market and make available the black-and-white versions of the movies we colorize. In addition, Turner enjoys the reputation of being one of the most active copyright owners in the field of film restoration and preservation, spending more than $30,000,000 in recent years in this area. Thus, in terms of "truth in advertising" and film preservation, our company is already doing much more than is required by current law. A major motivation to make these large expenditures is our freedom to distribute our movies and hopefully recoup the investment. An important public policy question raised by retroactive legislation concerns future development of entertainment technology. While technologies such as panning and scanning, time compression and foreign-language dubbing and subtitling have existed for decades, Statement of Roger L. Mayer colorization was invented only a few years ago. We are currently witnessing the rapid growth of relatively new industries such as direct broadcast satellites and high-definition television. The pursuit of technological innovation in the media is grounded in the assurance of the current system that when a better mousetrap is invented, there will be cheese with which to bait it. Uncertainty as to whether individual creative contributors may lodge protests against the adaptation of their work to new uses may prove to have a chilling effect on the development of technologies as yet undreamt. Public policy issues respecting prospective legislation While a large part of our concern about the "European system of moral rights" involves our ability to distribute our old films to the public, we are also concerned about restrictions on the distribution of new works. Our newest cable network, Turner Network Television (TNT), now one year old, has become a major player in the Hollywood production community, and we plan to spend almost $1 billion over the next 5 years on original series, mini-series, and movies produced exclusively for TNT. We hope to enter other new creative fields as the opportunity arises. Our TNT product and other projects will require freedom of distribution in other media throughout the world to recoup its cost and enable us to continue to finance future productions and give employment to many creators. There is a high probability that, depending on the precise nature of the proposal, "European-style moral rights" legislation of a prospective nature affecting the motion picture industry could drastically alter the nature of that business. Such legislation could deprive copyright owners of the unfettered ability to distribute their property, or at minimum, subject that ability to substantial uncertainty. Thus, a vastly increased financial risk is introduced into the investment process. When an investor faces increased financial risk, he is understandably less willing to invest in an experimental, untried, but nevertheless creative and possibly useful enterprise. This may mean that, because the prospective investor in a filmmaking venture knows he must rely more heavily on the success of a first-run theatrical release, he is more likely to rely on safer, more "bankable" material or participants. It is quite possible that moral rights legislation may thus redound to the benefit of established artists, "name directors," and formula scripts, and to the detriment of unknown talent and creative but untried techniques. Conclusion This Subcommittee is being asked to consider the importation of concepts from other countries, whose effectiveness is highly questionable and whose antecedents are antithetical to our own system, in order to change an industry which is clearly the most successful, productive and |