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Senator SPECTER. Next, we will hear from Barbara Ringer, former Register of Copyrights.

Thank you very much for joining us, Ms. Ringer. We appreciate your being here, and we look forward to your testimony.

Ms. RINGER. Thank you, Mr. Chairman.

Senator SPECTER. I might say that all prepared texts will be made a part of the record, as is the custom of the committee and the subcommittee, and to the extent practical, we would appreciate your summarizing your testimony within the allotted time.

STATEMENT OF BARBARA RINGER, FORMER REGISTER OF COPYRIGHTS, WASHINGTON, DC

Ms. RINGER. Thank you, Mr. Chairman.

This is more or less what I plan to do. I have a 13-page statement which I have filed for the record, and I will just make a few very general remarks, if that is agreeable, and then will be open to any questions that you have.

Senator SPECTER. Fine. Thank you.

Ms. RINGER. At a hearing of this subcommittee on the criminal and enforcement questions of the copyright laws on April 17, I was kind of an extra added attraction. I broached the subject of the problems raised by the Mills case because I feel very strongly about them. I should say that I do not represent any interest here. I am here strictly as a former Register of Copyrights who knows something about the background of this subject.

On April 17 I did express my disappointment with the Mills decision and what I consider its misconstruction of the "derivative works exception" to the termination provisions of the 1976 act.

I must say that, since April, I have been gratified with what action I have seen. As Congressman Berman has said, two good bills have been introduced. They are not exactly the same, but their thrust is exactly the same. We are now having a hearing in the Senate, and I think there is a good chance that they will have one, as he said, in the House next year.

And I think it is worthwhile. This is a very complex and difficult subject. It is the sort of thing that makes people's eyes glaze over when you start trying to tell them what it is all about, but once they get it, they get excited. And I think that the people that I have seen most excited are authors and their families who, when they realize what is going to happen to them, say, “Oh, my God. How did this happen?"

As it stands, the decision takes money away from authors and their families and gives it to entrepreneurs, who did not bargain for it, did not expect it, and did nothing to deserve it.

Something needs to be done fairly quickly-by Congress, because that is the only body that can do anything about this. Unless something is done, we are going to see some very drastic effects, I am afraid. The decision, which sounds very limited upon its face, applies to all types of copyrighted works; it applies to all types of derivative works made from all types of copyright works, and it applies to all uses where there is money coming in under these intermediate license arrangements.

I am not going to go over my whole statement, but there are three points that I would like to make, very briefly.

I was involved very closely with the drafting of the revision bill, and it was my pen that drafted this section. Based on my personal knowledge of what went into the drafting and the intention of Congress with respect to it, I think this decision is just dead wrong.

Let me say first that, with respect to the added term-the 19 years that was added on to the maximum of 56 before the copyright would expire-Congress was very leery. This was a lot of years being added. We were completely changing the duration provision and we were, in fact, finally bringing the United States into line with the rest of the world with respect to duration. But that 19 years looked like a lot to be taking away from the public domain. Some Congressmen who were leery about it-and some of them were very closely involved with the bill-were much more satisfied when they realized that the money was not just going to go to the same entrepreneurs who had been raking it in before-that there were these termination provisions which were going to be available to authors if they chose to make use of them.

This added term was brandnew. The entrepreneurs had not bargained for it and did not expect it; they expected 56 years, and that is all they were going to get under the old law. If that was a windfall, as some people regarded it, I have absolutely no doubt that what Congress intended was that that "windfall" was to go to the individual authors and their families and not to these holders of old contracts that in some cases went back to the turn of the century.

The whole concept of termination was based on the principle that it would go back to the author.

Second, as far as the future was concerned-the many copyrights that came into existence after January 1, 1978, which was the effective date of the new law-there was a lot of negotiation among the parties. The crucial year on this issue was 1964, which was before the first hearing on revision in Congress. But there were endless negotiations between the publishers and the authors on how that issue was to be handled. The principle was finally agreed to that contracts should terminate at some point. In other words, the term was going to be life of the author plus 50 years, or in some cases, 75 years or upward of 100 years. And the question was how to deal with authors who have made unremunerative contracts at the outset. Nobody-or almost nobody-knows what a work is worth at the beginning. So the question was whether that author should have the right to reclaim the copyright. And it was agreed, fairly early on, that the author should.

Then the question was how long should publishers be given to exploit the works and get their investments back.

We started in our drafting in the Copyright Office with a period of 20 years. In other words, in lieu of the complicated old renewal provision, which I think most people were glad to see the end of, we proposed that assignments would end after 20 years. The question was whether or not contracts should be allowed to run on for the life of the author plus 50 years, or 75 or 100 years, depending on the circumstances, with the author never having a crack at get

ting his property back, or remaking the deal which he may have made at the outset.

After endless wrangling, we came out with about 35 years. There are variations on this. But the point I am trying to make, Mr. Chairman, is that this-was the agreement between the publishers and the authors. At no point was it even dreamed that they would be able to hook onto the royalties that were coming in through intermediate licenses.

There was an endless wrangle between the publishers and authors over this 35-year period, and at no point was it suggested that, if you had termination, there would be anything other than real termination where the rights were cut off.

My last point is that the utilization of derivative works is the one exception to this, but the derivative works exception was intended as a privilege and not a right with no rights or privileges to the middleman, who had nothing to do with creating or utilizing the derivative work.

The Mills case has upset a carefully constructed statutory balance between authors, publishers, and creators of the derivative work that not only hurts authors but undermines the copyright law. I believe it is important that Congress do something about this problem.

Thank you.

[Prepared statement follows:]

PREPARED STATEMENT OF BARBARA RINGER

FORMER REGISTER OF COPYRIGHTS

SUMMARY

In Mills Music, Inc. v. Snyder, 105 S. Ct. 638, a sharply-di

vided U. S. Supreme Court ruled that, even after termination of its contract with an author, a publisher can continue to share royalties from the distribution of sound recordings made by others. On the basis of my personal knowledge of the drafting and purpose behind the "derivative works exception" to the termination provisions of the 1976 Copyright Act, I believe that the Mills decision is wrong. It runs counter to Congressional intent, and is seriously prejudicial to the legitimate rights of authors and their heirs.

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The Mills decision not only involves a great deal of money, but its impact also goes far beyond the facts in the case. It applies to all types of copyrightable works, to all types of derivative works that can be made from copyrighted works, and to all conceivable uses of those derivative works. In many cases it will provide a wholly unjustifiable windfall to publishers and other middlemen-entreprepreneurs at the expense of authors and their families.

Unless changed

by Congress, the inequities of the Mills decision will continue into the indefinite future.

For these reasons I am gratified by the introduction of the Specter Bill, S. 1384, and of the Berman Bill, H.R. 3163, both of which are aimed at remedying this serious injustice. I strongly support both bills in principle, and suggest consideration of the draft amendatory language appended to my full statement.

In January of this year the U.S. Supreme Court handed down its decision in Mills Music, Inc. v. Snyder, 105 S. Ct. 638, a case involving the so-called "derivative works exception" to the termination

The court ruled that, even after termination of its contract with an author, a publisher can continue to share royalties from the distribution of sound recordings made by others.

provisions of section 304 of the Copyright Act.

I believe that this decision runs counter to Congressional intent and is seriously prejudicial to the legitimate rights of authors and their heirs. I therefore support the principle embodied in the Specter Bill, S. 1384, which is aimed at redressing the imbalance created by the Mills decision.

The Background of the Decision

The Mills case arose under section 304 of the 1976 Copyright Act, dealing with the duration of subsisting copyrights already in existence when the new law took effect. Section 304 extended the total duration.

of subsisting copyrights from 56 to 75 years; it also gave authors (or certain of their heirs) the right to terminate any of the author's grants of rights and to reclaim full copyright ownership during the 19-year extension of the term.

However, this right of termination was made subject to an excep

tion:

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 copyrighted work covered by the terminated grant. 17 U.S.C. § 304(c)(6)(A).

The work involved in the Mills case was the 1923 song "Who's Sorry Now?". In 1940 the author, Ted Snyder, assigned his rights under the copyright to the music publisher Mills Music, Inc., in exchange for a commitment to pay royalties, including half of all net royalties received by the publisher from its licenses with record companies. The publisher in turn licensed various record companies to make sound recordings and to manufacture and distribute phonograph records of

the song.

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