8 for and on behalf of said Publisher(s) quarterly on the basis of records manufactured and sold." That language has never been understood by Fox, by music publishers, or by others in the music industry to determine the party to whom Fox pays mechanical royalties, when copyright to the musical composition changes hands. Instead, Fox has always determined the payees of such royalties on the basis of ownership of copyright in the music. 5. For as long as I have been engaged in the music industry, it has been the practice of Fox that, when it is notified that ownership of copyright in a musical composition which is the subject of a mechanical license has changed hands, the royalties earned after the change of ownership are paid to the new copyright owner or his designee. This is true regardless of the reason for the change in ownership. In particular, it is true regardless of whether that change takes place by assignment or by operation of law. 6. As an illustration, when copyright ownership changes at the end of the first term of copyright because the owners of the renewal copyright assign the renewal to a new publisher, the standard practice is for the new publisher to notify Fox of the change. Fox then contacts the old publisher to confirm that the change has taken place. Upon confirmation or other determination that the ownership of the copyright has changed hands, Fox then pays all mechanical royalties earned after the renewal to the new copyright owners, pursuant to the mechanical license entered into by the prior music publisher. It does not matter that the licenses under which those royalties were earned may have been issued long before the renewal and may name the old publisher; royalty payments after renewal are governed by ownership of the music copyright. Sworn to before me this day of Lewis M. Bachman 1985 I very much appreciated your courtesy in permitting me to join Dean Kay on the panel of November 20, 1985 and to - I write to elaborate on the subject I briefly addressed at the hearing the treatment of Congressional intent in the Mills Music opinions. I highlight below those portions of the opinions and briefs in that case which discuss Congress' intent, in enacting the Copyright Act of 1976, to accommodate a variety of interests. I then add a few observations about the reach of the Supreme Court's decision in Mills Music and about the bill. I respectfully request that this letter be made a part of the hearing record. Congressional Intent Witnesses who testified at the hearing in favor of the bill argued that the Supreme Court had misinterpreted the intent of Congress in enacting the derivative works exception and urged that passage of the bill was necessary in order to make certain that the intent of Congress will be carried out. In my view, this is a faulty starting point, for two reasons. First, the intent ascribed to Congress simply is not reflected in the Copyrights legislative history; it is inaccurate to conclude that passage of the bill would advance a clear mandate of an earlier Congress. Second, in any event, Congress may at this juncture subject to the Constitutional limitations identified by the Register of decide what the law should be, irrespective of what may have been intended for the Copyright Act at an earlier point. Recognizing that the subject of prior Congressional intent may be of little consequence in the present hearing, I nonetheless now turn to it, simply to respond to other submissions. For the policy issues to be considered, I refer to Mr. Kay's statement and testimony, which show why no change in the law is indicated. The Supreme Court found, as had the District Court, that Congress had not intended to exclude music publishers from a continuing participation in mechanical royalties generated by pre-termination sound recordings prepared under license from them. Instead, both Courts concluded that a continued sharing of royalties results from an attempt by Congress to balance and accommodate the needs and interests of authors, publishers and other users. See Mills Music, Inc. v. Snyder, 105 S. Ct. 638, 650 n.41, 651-52 (1985); 543 F. Supp. 844, 857-63 (S.D.N.Y. 1982). The District Court and Supreme Court majority painstakingly reviewed and weighed the extensive presentations made before Congress between 1965 and 1976 by music publishers and songwriters on their respective roles and their relationship. Those presentations, which informed the Congress that enacted the derivative works exception, are entirely consistent with the testimony recently given by Mr. Kay. Both music publishers and songwriters affirmed the important function played by music publishers in supporting creative talent and in promoting musical compositions. Some of these presentations were marshalled in the main brief for petitioner (at pages 32-35). The Supreme Court specifically referred to portions of this testimony in reaching its decision. 105 S. Ct. at 649 n.37. These presentations lent powerful support to the conclusion that Congress should not be deemed to have intended the exclusion of music publishers from the ambit of the exception. See also 543 F. Supp. at 862.* In addition to reviewing the specific presentations on the partnership between music publishers and composers, and in an effort to determine how Congress intended the derivative works exception to apply to these groups, the Courts also considered a more general question: who was to be benefited by the derivative works exception and, even more generally, by the Copyright Act? Those who criticize the Mills Music decision say that the Supreme Court missed the basic purpose of the 1976 Act, which they say was to favor authors. However, the legislative history of the as the District Court and majority opinions demonstrate reveals no such singular purpose. On the contrary, the legislative history confirms a Congressional recognition that the process of creating and disseminating works involves a variety of participants and a Congressional intent to create suitable incentives for all participants in this process. See 105 S. Ct. at 650; Brief for Petitioner at 37-39. As Judge Weinfeld succinctly Act stated: - [The songwriter's heirs] press that Congress It may readily be acknowledged that the extension period is intended to benefit the author, "the fundamental beneficiary of copyright under the Constitution." Protection of authors and their dependents is one of several * In reaching the conclusion that music publishers are not excluded from the scope of the derivative works exception, the Courts did not adjudicate the respective roles of songwriters and music publishers in the music industry. As Justice Stevens noted, "[a]s a matter of fact -- or of judicial notice -- we are in no position to evaluate the function that each music publisher actually performs in the marketing of each copyrighted song." 105 S. Ct. at 651. This was a case of statutory construction, aided by findings on Congressional intent. The controversy was submitted to the District Court on cross-motions for summary judgment predicated on stipulated facts; the parties agreed not to litigate how the industry actually worked. See Joint Appendix at 83. For this reason, there was no factual basis in the record on which to dismiss music publishers as "mere middlemen, as did the opinion of the Court of Appeals and the dissent in the Supreme Court. 11 reasons specifically identified in the com- The [songwriter's heirs] also ignore express statements in the legislative history indicating that the termination provisions represent an accommodation of the various interests involved. These statements show that while the provisions are intended to benefit authors and their families by giving them an opportunity to share in the benefits of the extended term, other interests were also recognized. The statements form a consistent theme throughout the history. 543 F. Supp. at 857-58 (footnotes omitted). See also id. at 85863. I respectfully suggest that every single argument that has been made in this hearing about legislative intent was addressed by Judge Weinfeld in his exhaustive review of the legislative history.* - Two of the witnesses who appeared at the hearing, Barbara Ringer and Irwin Karp, drew on their own involvement in the pre-legislative history of the 1976 Act that is, the preliminary drafting efforts that preceded introduction of a bill in Congress to support their positions on Congressional intent. - They state that music publishers were not to benefit from the * It has been noted that 7 of the 13 judges who considered the Mills Music case ruled against Mills. Such judicial nosecounting is of little value. The law of the land is as the Supreme Court majority finds it. On the subject of Congressional intent, the District Court opinion is, by far, the most exhaustive analysis. The Court of Appeals opinion, in sharp contrast, makes little reference to what was actually said by or to members of Congress. |