picture to the period of 15 months after release of the motion picture. "Exploit" is defined in the Settlement Agreement as obtaining a commercial recording and also the publication of a "printed edition of a major theme" from the motion picture, during that 15 month period, in any one of the following countries: the United States, the United Kingdom, France, Germany or Japan.

If the producer does not succeed in so "exploiting" the music during that 15 month period, the composer shall, for 30 months, have the right to exploit the music, the producer's share of such income to be divided 75% to the composer and 25% to the producer.

As stated in the Court approved Settlement Agreement, "the copyright remains with the producer"

[11.(2)].

Tax considerations apply to music and other commissioned works. As I am not a tax specialist, I only allude to advice passed on to me that, in order to generate additional retirement, pension, health and welfare benefits--in addition to those available through union and guild Plans, composers and others prefer to provide their services through corporations of which they are direct employees. Such employer corporations then "lend" the services of their employees to a motion picture producer to create a work specially ordered or commissioned as part of a motion picture.

Other composers insist that they be engaged under the terms of a contract in the form of the so-called standard songwriter contract form of the American Guild of Authors and Composers ("AGAC"). Among its other provisions is ¶2. which limits the publisher's rights to a period not to exceed 40 years from the date of the contract or 35 years from the date of first release of a commercial sound recording of the composition, whichever

terms ends earlier [Shemel & Krasilovsky, supra, Form 1]. Compare $203. and S304. (c) of the Act.

WRITINGS USED IN MOTION PICTURES

Writers in the motion picture industry are employed under the terms of the Writers Guild of America ("WGA") Theatrical & Television Basic Agreement of 1981, which has been signed by most motion picture producers and the WGA. This collective bargaining agreement, one that is regularly renegotiated at intervals provided in each WGA -motion picture industry contract, allocates rights between writers and producers, covering not only material written for the producer, but also unpublished material previously written by the writer for himself, and later purchased by the producer.

The WGA Agreement contains detailed Separation of Rights provisions, as well as reversion of rights provisions.

OTHER TALENTS INVOLVED IN MAKING MOTION PICTURES

the

Many of the other creative people who combine their talents, at the sole risk and cost of the producer, include, of course, the director, the actors, the set designer, the cameraman, costume designer, the special effects creators, to name but a few. In order to protect the motion picture copyright, which is a separately copyrightable derivative work, not only in the United States, but in foreign countries, it becomes almost essential that there be one author of this derivative work, with one nationality (that of the motion picture producer), freely able to bargain and contract for the many talents and rights incorporated in a motion picture.

Indeed, over the years, just such accommodations have been reached, in direct contract negotiations, in collective bargaining agreements and in litigation settled after hearings in

Federal Court. See generally, Mickey Rooney v. Columbia Pictures

Industries, Inc., 538 F. Supp. 211 (S.D.N.Y. 1982), currently on

appeal to 2nd Cir.

THE ADVERSE IMPACT OF S. 2044 ON THE MOTION PICTURE INDUSTRY

Some of the negative aspects of S. 2044 were outlined on pages 2 and 3 of this Statement. In addition to those, I wish to raise the following problems that the Amendment would create for the motion picture industry if it were enacted.

Direct and substantial damage to the ability of those at risk--the producers and financial talent who manage the creation, production and distribution of motion pictures--I am sorry to say, would be worked by the Amendment. Of transcending importance to the successful distribution of motion pictures is the potential sequel or remake. Many of the major, successful or soon to be successful (we hope), motion pictures in theatres today are sequels utilizing the very creative talents that appeared in the first motion picture in what may be a trilogy, or even more, of sequels.

For example, consider the fantastic special effects and costume designs in such spectacular motion pictures as "Star Wars," "Star Trek," and "E.T." to name but a few. Without commenting on their contractual arrangements (many of which are confidential), I would point out that the Amendment would in time under $203. of the Act prevent the producers from making sequels to such motion pictures without needlessly recreating at substantially duplicative costs (but without infringing, and thereby making substantially different) special effects and costumes used in the first motion picture.

Since the Amendment would exclude such works specially ordered or commissioned as part of a motion picture from qualifying as works made for hire, even if the parties agree that they should, such works would not come within the exclusions to the

Termination of Transfers and Licenses provisions of $203. and $304. (c), inasmuch as those sections cover "any work other than a work made for hire." Thus, as a result of the Amendment the writer or other creator would be able to secure the return of certain copyright rights under the Termination of Transfer provisions of the Act, notwithstanding the present delicate balance of rights contained in the Act.

NEW USES IN NEW MEDIA

The argument has been made that the writer or the composer, for example, should be protected from new uses of their writings in new media, in the revenue of which they do not share. Recognizing that there may be some merit in this point of view, the parties have continually worked out contractual arrangements that deal with this question in a variety of ways.

Examples are found in detailed residual payment arrangements in industry-wide collective bargaining agreements, agreements of limited duration (usually three or four years) and therefore subject to improvement as in 1981, with Screen Actors Guild, the Directors Guild of America and the Writers Guild of America.

Witness 19. of the standard songwriters AGAC contract, captioned "Negotiations for New or Unspecified Uses," requiring new negotiations with the songwriter for any use of the song "for which no specific provision has been made herein," and that "no such right shall be exercised until specific agreement has been made."

Indeed, many agreements in which motion picture rights are acquired in a book or a magazine article are limited in scope, duration and territory, reserving to the writer many rights, particularly in new media, thereby requiring a new negotiation if use of such rights is contemplated.

FOREIGN RIGHTS

In many foreign distribution arrangements it becomes essential to establish the United States nationality of a motion picture or its music, and to establish, if possible, that the owner of the copyright in all its component parts is a United States national.

Two examples will, perhaps, make the point.

In France, Articles 14. and 17. of that country's Copyright Law of March 11, 1957, provide that only in the absence of proof to the contrary are the co-authors of a cinematographic work made in collaboration presumed to include the authors of the script, the adaptation, the dialogue, the musical compositions, and the director. In Italy, Article 44. of the Italian Copyright Law describes the authors of a cinematographic work as including the author of the "subject," the author of the scenario, the composer of the music, and the artistic director. Exercise of the rights to economic utilization of the copyright belong to the producer by virtue of Articles 45. and 46. of the Law.

In the United Kingdom, in a 1980 case in the House of Lords, the Redwood case, 2 All E.R. 817, and in the settlement agreement applying that decision with respect to musical compositions, it was decided that the determination of the status of the equivalent of our works made for hire would be reached under United States law with respect to "United States contracts." This was established in a case dealing with potential reversion rights in laws throughout the British Commonwealth. See generally section 4.(4) of the British Copyright Act of 1956.

As summed up in Copyright Office Study No. 13, supra at 141,

1 Studies on Copyright, 717 at 733:

Ownership in the employer seems most appropriate where the work is created by a more or less numerous team of employees, such as in the case of motion pictures, newspapers and other periodicals, and cyclopedie works (encyclopedias, dictionaries, directories, catalogs, etc.).