us since 1909 then fixed at 2 for each record manufactured and sold. After 66 years of living under this maximum royalty, the 1976 Act initially increased the rate to 2.75% and as a result of the CRT hearings, the rate escalated in 1981 to 4 and in 1986 it will reach 5. 4. Even from this brief resume of the 1976 Act, it is apparent that many compromises were effected in order to bring about passage of a long overdue law. Thus, while requiring juke box owners for the first time to pay royalties for their use of our works, it set a fixed royalty on each box and gave them a license to use our songs; similarly, while requiring cable stations which rebroadcast distant signals to honor our copyrights, they were given an absolute right to broadcast our songs upon payment of royalties initially set by the 1976 Act. 5. I believe that the compromises effected by the 1976 law which may be characterized as a cession of exclusivity over one's copyright for non-exclusive use by third parties in exchange for a meaningful compensation, is valid and in most respects a workable solution to conflicting needs. As we approach the 10th anniversary of that law, I find few areas which have not worked well or even better than Congress anticipated. 6. S 1384, with which this hearing deals, involves one of the compromises wrought by Congress. Copyright Law was the creation of a new term of copyright protection for all creators. The two term copyright, of 28 years which had endured since 1909 was supplanted by a term measured by the Author's life plus 50 years thereafter. This term affected all copyrights created after 1978. Existing works, including songs, protected by copyright prior to 1978 were given a prolonged statutory life of an additional 19 years. Thus, to be specific, any song which was in its first or renewal term on January 1, 1978 would now be protected for 75 years rather than 56 years. 7.. One of the questions posed to Congress in creating the extended 19 years of protection was: Who would control the additional 19 years? I believe that at this juncture I must furnish the Committee with some insight into the "business of music" in order that it better understands the compromise it effected: (A) In the world of music publishing as it existed in the 1920s and 1930s the time when the songs were written whose copyrights are now reaching the 19 year extended term songwriters (composers and lyricists) contracted with their music publishers to publish and exploit their songs. In exchange for royalties to be paid on uses secured by the publisher, primarily sheet music and recordings the composer and lyricist would vest rights in their publisher for the initial and renewal copyright terms. If the song was successful all parties would receive renumeration for the life of the copyright. It is fair to say that the publisher always received the larger share. Whatever royalty was allocated to I the creator was shared by the composer and lyricist. A standard contract would provide for the composer and lyricist together to share 3 or less for sheet music which was very important in the 30s and between 10 and 33 1/3% of the mechanical royalties earned from the sale of phonorecords. remind the Committee that the mechanical royalty for 66 years was a maximum of 2, of which the music publisher, under the cited contract, would receive from 1.33 to 1.80 with the composer and lyricist sharing the rest. (B) The contract invariably endured for the two terms of copyright, ie. 56 years. The Fred Fisher case held that so long as the creator lived into the renewal period, there would be no break in ownership by the publisher. Only if the composer or lyricist died before the renewal term could his or her statutory successors (as defined in the 1909 law) succeed to the copyright, free and clear of the contract. If the publisher had taken the additional precaution of getting an assignment from the songwriters' spouse and children when the writers signed up, as was common, then the heirs never recovered the copyright. (C) Many publishing contracts dating from the 1920s and 30s even at that time contemplated the possibility of a new copyright act. To protect against this possibility, it was common for publishers to acquire rights for not only "the initial and renewal term of copyright" but also "for any additions and extensions thereof." 8A. Recognizing that it would be unfair to leave the ownership of the additional 19 years to the vagaries of the market place Congress exemplifying Register Ringer's description of the proposed legislation as a "creator's bill of rights" sensibly enacted Section 304 (c), which provides in substance that the author or his or her widow, widower or children can recapture the copyright at the end of the original 56 year period, by terminating any earlier grant. 8B. Such right of copyright recapture was not automatic (indeed another compromise worked out by the Congress). То reacquire the 19 year term, it was obligatory on the creator, if living, or on his/her statutory successors, to send a Notice of Termination to his/her music publisher and the U.S. Copyright Office within a stated period. 9. If the law had ended there, this Committee would not be meeting today. What had been needed was to balance the equities between the creators and those seeking to employ the fruits of creation. Congress quickly recognized that to allow the creator to recapture 100% of the copyright could wreak havoc on those who, in reliance on their rights, had expended large sums of money in creating derivative works which employed the underlying copyright. I need but cite as examples a motion picture producer who has made a multi-million dollar film based on a novel, or a record company that has recorded a song. Each having expended time, effort, money and creative talent in producing a new work would justifiably complain that it was unfair to allow the owner of the original copyright cut off their rights to exploit their new work. To solve this problem, Congress added to the above provision language which has now become known as the "exception"' to wit: "A derivative work prepared under authority of the grant before its termination may continue to be utilized under the terms of the grant after its termination, but this privilege does not extend to the preparation after the termination of other derivative works based upon the Each party to the equation is now fully protected each has had its rights secured and each is guaranteed the ability to exploit his, her or its respective market place without encumbrance. 10. We have now reached the nub of the problem. In 1978, Ted Snyder and Marie Snyder, widow and son respectively of the late Ted Snyder, co-author of the famous song "Who's Sorry Now?" duly served a Notice of Termination on Mills Music Inc.; which became effective on January 3, 1980. By that A action, the Snyders, on the effective date, reacquired a 100% interest in the late Ted Snyder's 1/3 interest in this song. (The co-authors and their statutory successors some of whom served separate notices of termination, were not parties to the Snyder litigation.) Copies of the Snyders' notice were served on the appropriate parties and on the Harry Fox Agency Inc. The latter has for more than 50 years served the music publishing industry as its agent for issuing licenses to record companies who elect to record a musical composition. The Fox office thereafter collects royalties accruing on the sale of such records, and pay them to the publisher, which, in turn, pays to the composer and lyricist their respective contractual shares. 11. Following receipt of the Notice, Mills Music challenged the right of the Snyders to receive the so-called "publisher's share" of those mechanical royalties which emanated from recordings made and distributed prior to the effective date of termination and which were sold following the effective date. In order to determine the rightful ownership of the disputed royalties, Fox commenced an interpleader action seeking a judicial decision of the following issue: Where a notice of termination had been properly served on the original publisher which which royalties were derived from sound 12. Lest this Committee believe that it is only "old" recordings that are affected by the instant litigation, it must be |