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I will not read my statement. I submit it for the record and will summarize it.

Senator MATHIAS. The full statement will, of course, appear in the record, without objection.

(Material referred to follows:

October 1, 1982

UNITED STATES SENATE
COMMITTEE ON THE JUDICIARY

Statement of The Authors League of America

on

S. 2044, To Amend The Definition of

"Works Made For Hire"

The Authors League of America is the national society of professional authors, with a membership of 11,000 authors and playwrights. The Authors League is grateful for this opportunity to testify in support of s. 2044, introduced by Senator Cochran. The Bill would prevent serious abuses of authors' rights that now occur under Clause (2) of the "works-made-forhire" proviso of Sec, 101 of the Copyright Act.

S. 2044 would delete from Clause (2) three categories of commissioned works which it now permits to be considered as works-made-for-hire" under certain circumstances, thus protecting non-employee authors of such works from compulsion to surrender their valuable right of termination under Sec. 203. The three categories are:

(1) articles, stories, poetry, graphic materials and other "contributions" to a magazine, anthology, encyclopedia or other "collective work"; (11) components of a motion picture or other audio-visual work; and (111) instructional texts.

The Authors League statement is addressed primarily to the impact of Clause (2) on authors of contributions to periodicals and other collective works, but our comments apply to graphic materials, motion pictures and other audiovisual works, and to educational texts.

Effect of s. 2044

S. 2044 would prevent publishers of collective works from compelling non-employee authors to sign agreements that transform their writings into "works-made-for-hire" and thus deprive the authors of the valuable right to terminate long-term or perpetual transfers of copyrights, 35 years after execution, and recover their rights,

s. 2044 would not, as will be noted, end another serious abuse, the use of publishers' superior bargaining power to compel authors to transfer all rights in their works as a condition to first publication in a magazine, newspaper or other collective work. The Authors League earnestly recommends that the Judiciary Committee also consider this problem and possible amendments of Chapter 2 of the Copyright Act that would prevent publishers from depriving authors of income from subsequent uses of their works.

Initial Ownership of Copyright

Consistant with the Constitutional mandate, the Copyright Act provides that copyright in an article, story, illustration or other work "vests intially in the author or authors of the work." The true author of the work, 1.e, the person who created it, is the author for Copyright Act purposes -- if the article, story, novel, poem, etc, was not

a "work made for hire". If, however, the contribution, book or other work is a "work made for hire", then the Copyright Act provides that "the employer or other person for whom the work was prepared is considered the author for purposes of this title..." (Sec. 201(b)).

The "work-for-hire" proviso of Sec. 101 defines such a work as
"(1) a work prepared by an employee as a work prepared by an employee

within the scope of his or her employment...

Clause (2) of Sec. 101

Sec. 101 contains a second definition which transcends the limits of the employment relationship and enables publishers to convert works by non-employee authors into "works made for hire to their benefit and the author's considerable detriment. Clause (2) of Sec. 101 provides that a contribution to a periodical or other collective work, an instructional text or a work in other specified categories is a "work made for hire" if:

(a) it is specially ordered or commissioned; and
(b)"if the parties (author and publisher) expressly agree in a written

instrument signed by them that the work shall be considered a work
made for hire.

Many publishers of magazines and other collective works have, since 1978, compelled countless non-employee authors to sign such agreements, thereby sharply curtailing the rights the Copyright Act was intended to provide to authors - i.e. those who create literary or artistic works independently and not as an "employee within the scope of his or her employment."

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Because of their superior bargaining position, publishers are are able to insist that individual free-lance authors sign away their rights in this manner, as a condition for the publisher's agreement to publish the article, story or other contribution thereby vesting all rights and the copyright in the publisher as "author", and depriving the true author of the rights and the privilege of terminating the assignement after 35 years,

The Right of Termination

Sec. 203 provides that the author of any work "other than a work made for hire", or the author's surviving spouse, children or grandchildren can terminate any transfer or license of a copyright or right it secures.

The termination can take effect after 35 years from the date the transfer was executed. In the case of publishing contracts, it may take effect on the earlier of 40 years from execution or 35 years from publication.

In their Reports on the Copyright Act of 1976, both Judiciary Committees said the provision was "needed because of the unequal bargaining position of authors, resulting , resulting in part from the impossibility of determining

a work's value until it has been exploited." Senate Report No. 94-473, 94th
Congress, 1st Session, p. 108; House Report No. 94-1476, 94th Congress,
2d Session, p. 124.

Paradoxically, the very inequality of bargaining power that prompted
Congress to establish a termination right is used to deprive non-employee
authors of that right under Clause (2) of the work-made-for-hire proviso
of Sec. 101. The termination right is particularly necessary for authors of
contributions to collective works because "Clause (2) agreements"
forced on them by publishers deprive them of their "subsidiary rights"
and all future income from these rights.

Usually, the only right under a copyright which the publisher itself exercises is the right to publish the author's article, poem, illustration or other contribution in its periodical -- and that is the only right the publisher actually pays for. But as a condition for agreeing to publish, the publisher insists on a "tie-in" transfer -- the author is required to transfer not only the rightof periodical publication (or first publication), but also all of the other rights in the author's work. These "subsidiary rights" include other publications, recording rights, motion picture rights, television rights, and rights to make to make use of the author's creation by other means. That tie-in transfer is accomplished under a "Clause (2) agreement" because by artificially converting the work into one made for hire, the publisher becomes the "author" and all rights are automatically vested in it.

Thus, the publisher, rather than the author, has the right to license others to use the author's various subsidiary rights, and the publisher will receive all the proceeds. Authors are deprived of the ownership and economic benefit of the rights which the Constitution intended them to enjoy. And they are paid only for the right the publisher actually exercises, the right of publication; no publisher pays a higher price to compensate an author for any share of future income from his/her subsidiary rights lost by the compulsory divestiture of a "Clause (2) agreement".

Publishers do not require the ownership of an author's copyright or exemption from the termination right, in order to protect the publication right they actually pay for and actually exploit. That protection is fully available to them under the Act when the author retain's ownership of his/her copyright and subsidiary rights. Nor is it necessary for a publisher to divest the author of his/her copyright, subsidiary rights and right of termination in order to make legitimately related uses of the contribution or other work it has published, This can be accomplished by reasonable contract provisions, without appropriating the author's copyright.

Tle-In Transfers of All Rights

s. 2044 would not prevent publishers from requiring an author to assign his/her copyright and all rights under it as a condition for the publisher's agreement to publish the work in its periodical. A contract for such a transfer is effective so long as it is in writing and signed by the author. The publisher can acquire the rights for 35 years, or for the duration of the copyright if the termination right is not exercised, For the reasons discussed above, the Authors League urges the Committee also consider this problem and possible amendments of Chapter 2, to deal with it.

Mr. KARP. The usual for-hire magazine contract, as the previous witness has said, contains two relevant paragraphs. The first-and I am reading from one an author signed 2 weeks ago-says that, “Our standard agreement with contributors is that all material accepted by the magazine is considered work made for hire. This gives us all rights to your material throughout the world for which you are paid the regular fee. We also want to make it clear that in all respects other than under the new copyright law you function as an independent freelance contributor, not as an employee of the magazine. Unless otherwise stated, you are responsible for all expenses in preparation of your material.

Most of these agreements are drawn basically along the lines of forms contained in a very comprehensive survey of magazine industry legal and copyright problems published by the Practicing Law Institute in 1979. The title is "Legal and Business Aspects of the Magazine Industry 1979” (G4-3656).

It is obvious that under this type of agreement, umbrellaed by clause (2) of section 101, the publisher gets the best of all possible worlds. The writer is an employee for the critical purpose of vesting control of the copyright in the publisher. For all other purposes, the author gets none of the benefits of an employment relationship, as Ms. Roth pointed out.

Three consequences flow from these agreements. First, the publisher is the author who initially becomes the copyright owner. Second, the term of copyright is 75 years from publication rather than life and 50 years. Third, the termination right, which is available to all free-lance authors to terminate long-term transfers of rights, is not available to authors who become employees for-hire in this ersatz manner.

The bill introduced by Senator Cochran will prevent the execution of these agreements. Its most important effect would be to restore to such freelance authors the right of termination. Actually, it will not help protect authors against being compelled to transfer their rights outright because there is nothing in the Copyright Act that prohibits any publisher from saying to an author: if you want me to publish your work in any media, I insist that you convey the copyright to me. Some book publishers—they are a minority-do that, and they are not covered by this section. Magazine publishers did it for a hundred years and, if this bill is passed, will continue to do it.

The only difference is that, if the bill is passed, the magazine will acquire the rights for only 35 years rather than in perpetuity or for the duration of copyright, because the author or the author's spouse and children will after 35 years be able to terminate that grant. That is a small consolation in most cases because the problems that authors and artists face arise within a much shorter period after publication.

Magazine publishers and other publishers and users who are protected by clause (2) of section 101 unlike book publishers, usually pay a flat fee. If they acquire all rights forever, what they are doing, in effect, is forcing a tie-in transaction on the author. They are saying: as a condition for your selling us and our accepting the first serial right, which we are really in the business of exercising by publishing your article, story, or illustration in this magazine,

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