7 PROPOSED AFFIDAVIT STATE OF NEW YORK COUNTY OF NEW YORK SS.: Lewis M. Bachman, being duly sworn, states: 1. I am Executive Director of The Songwriters Guild (formerly known as the American Guild of Authors and Composers and the Songwriters Protective Association). I make this affidavit in support of Respondents' Petition for Rehearing. 2. I have been engaged in the music industry for more than 25 years, successively as an accountant, as a representative of music publishers, and as a representative of songwriters. As a Certified Public Accountant and an employee of Kalish, Rubinroit and Co., C.P.A.s, I audited music publishers from 1959 through 1965. From 1966 through November of 1972 I was Assistant Controller and then Controller of The Aberbach Group of Music Publishing Companies, comprising approximately one hundred domestic music publishing companies. From December 1972 to the present I have been Executive Director of The Songwriters Guild (“the Guild”). In the latter position, I have represented not only songwriters, but also approximately one hundred publishing companies owned by members of the Guild, as part of the Guild's Catalog Administration Program. 3. Throughout my career I have dealt continuously with The Harry Fox Agency ("Fox"). I am quite familiar with its practices concerning the payment of mechanical royalties (i.e., those derived from the manufacture and sale of phonograph records and tapes). I have also discussed those practices with others in the music industry upon innumerable occasions. My statements in this affidavit are based upon my knowledge of these practices, derived through my 25 years of professional experience. 4. I am familiar with the language in the standard Fox "mechanical" license form issued to record companies, which states, with slight variations: "You shall pay royalties and account to us as Agent 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 1985 Lewis M. Bachman 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 Act 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 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 * - - or of In reaching the conclusion that music publishers are not |