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The sound recordings made under these licenses are "derivative works" which are owned and exploited by the various record companies licensed by the publisher. The publisher's role here is essentially that of a middleman, since it has nothing to do with the making of the derivative work or with the manufacture and distribution of the

This

records reproduced from it. The publisher was entitled to collect
record royalties which, under its agreement with the author, it was
obliged to divide equally with the author or his successors.
fifty-fifty split of record royalties be tween author and publisher
was standard in songwriter contracts of the time.

The Effect of the 1976 Statute

Under the new law, which came into effect on January 1, 1978, copyrights already in their second term were automatically extended by 19 years; the 1923 copyright in "Who's Sorry Now?" is thus scheduled to expire at the end of 1998. Taking advantage of the termination provisions of section 304, Ted Snyder's statutory heirs at the proper time filed the necessary notices of termination of his grani

to Mills Music.

What were the legal effects of this act of termination? seems to be general agreement as to the following conclusions:

There

First, the publisher ceases to be the copyright owner and the persons filing the termination (in this case the author's heirs)

become the owners of the copyright.

Second, the record companies can continue to manufacture

and distribute records and tapes reproduced from sound recordings already made under their licenses with the publisher. A sound recording is a "derivative work" and, under the "derivative works exception," the record companies clearly have the privilege of continuing to utilize their recordings.

Third, the record companies must continue to pay the

same amount of royalties provided for in their licenses.. They must.

pay these amounts to someone, but to whom? This was the question in

the Mills case.

The Decision in Mills v. Snyder

The issue facing the Supreme Court in the Mills case was whether the publisher, who had nothing to do with the derivative work other than collecting royalties from it, was still entitled to its share of the royalties, or whether the termination of its grant means that all royalties should go to the author or his heirs.

I believe that Congress meant the author to have the full benefit of the copyright in this situation. In a five-four decision, the Supreme Court decided otherwise, holding that under the derivative works exception the publisher may continue to share the royalties generated by utilization of derivative works by other licensees, even after the author or his heirs have recaptured the copyright. There was a strong dissent for the minority written by Justice White with which I agree. The decision in Mills Music, Inc. v. Snyder settled questions of statutory construction and is now the law of the land. While I disagree with the majority's interpretation of the wording of the statute, it would be pointless for me to sift over the complex technical arguments on which the decision turned. Technicalities aside, however, I believe that the result reached in the Mills case is not what Congress intended, and that it represents a windfall for publishers at the expense of authors and their families.

Under this decision, authors and their heirs will be deprived of benefits that Congress meant them to have. If, as I believe, the decision runs counter to the legislative intent, then Congress should revise the statute. It should make clear that, following termination, the royalties from utilization of derivative works should go exclusively to authors or their heirs.

The Scope and Importance of the Decision

As obscure and esoteric as this question may appear, it is inmense importance to much of the copyright community. It involves a

great deal of money, and its impact goes far beyond the facts in the Kills case. There are four points to be made here:

First: The decision applies not only to music and

sound recordings but also to every conceivable type of copyrightable work and to every conceivable type of derivative work that can be maje from a copyrighted work.

Second: In the Mills case the author's grant to the publisher provided for him to receive 50 percent of the record royalties, and his heirs will, under the decision, continue to receive this stare, But, especially in fields other then music, the author's grant to the publisher or middleman-entrepreneur may not provide for any author's share of royalties from licensing particular kinds of derivative works, If the publisher or entrepreneur can continue to receive 100 percent of the royalties, the termination of the author's grant becomes a hollow mockery.

Third: The Mills case dealt with section 304 and the 19-year extension of subsisting renewal copyrights. But the 1975 Act contained a parallel and potentially far more important provision in section 203. Under that section, authors and their heirs may teminate grants made after January 1, 1978 at the end of a prescribed period years, but subject to the same "derivative works exception" as that construed in the Mills decision. Thus, unless the Supreme Court's ruling is changed by Congress, its impact will continue into the indefinite future.

Fourth: Most important of all, the issue in the Mills case raises the fundamental question of whom Congress is seeking to benefit by means of the termination provisions in both sections 304 and 203. Does it really mean to benefit the holders of old contracts that go back for generations, or does it want to give real, rather than illusory, benefits to authors and their heirs?,

The Question of Legislative History

Both the majority and minority opinions in the Mills case dwelt

at length on the legislative history of the statutory provisions, a subject on which I have some personal knowledge. It is no secret that I was the author of the provision in question, in the sense that it was my pen that drafted the language. The content of the termination provisions had been hammered out following lengthy debates and discussions, although the compromises had been reached and the issues effectively settled before Congress took up the question of general revision of the copyright law in f ormal hearings. The Copyright Office was the initial drafter of the entire revision bill, including the termination provisions, and it is important to recognize thatthe Copyright CI= fice, as part of the Library of Congress, is an arm of Congress in the legislative branch. Moreover, counsel from the committees charged with

copyright responsibilities in both Houses played an active and continuing role in the whole process that led to the development and drafting

of the revision bill.

Legislative Intent: The Relation Between Longer Copyright Terms and
Termination of Grants

It is important to recognize that the right of termination given by Congress to authors and their heirs in the 1976 Act was not attached to anything already in existence. In the case of section 304, the temination applied only to the 19-year extension of subsisting renewal copyrights--an entirely new term of copyright carved out of what would otherwise have been the public domain. In the case of section 203, the termination applied only to contracts written after the new law came into effect, and that new law provided for a radically different and much longer term of protection..

In both cases Congress was granting a new right, and I believe it is fair to say that Congress would have been extremely reluctant to do this unless it had been assured that individual authors would at least have the opportunity of enjoying the benefits of these new rights, I the author's old and, in many cases, unfair contracts were to be meserved without any provision for termination, I do not think Congress would have extended the length of the copyright term.

Furthermore, the copyright clause of the Constitution empowers Congress to secure to authors the exclusive right in their writings. Bearing in mind that Congress was creating entirely new rights with these longer terms, I believe there is a genuine question as to whether the new rights could be granted to entities other than authors, which for many older copyrights would have been the case.

The basic purpose of the termination was to make sure that authors or their heirs had the opportunity to renegotiate their old contracts, rather than merely letting the contracts run on through the longer copyright term. In a great many cases, I believe that the Supreme Court

decision will effectively defeat this purpose.

Legislative Intent: The Means Congress Chose to Protect the Investments of Publishers and Other Intermediate Entrepreneurs

As already noted, in the 1976 Act Congress enacted two different types of terminations:

(1) the section 304 termination of gravis

covering the 19-year extension of subsisting renewal copyrights; and (2) the section 203 termination of grants made after the effective date of the new law. While the two are closely related, they differ iz certain important respects.

In cases involving the first type of termination, the publisher or other grantee had received everything it ever had any right to expect. There could be no question of allowing the grantee nore tine to recover its investment, since it had already had 56 years in zic to do so, and had never expected anything more. The added 19-year term was a new right and Congress intended it to go to the author or the author's heirs.

With respect to the second type of termination--that is, temirations made under section 203 of grants executed after January 1, 1978the thinking was somewhat different. Congress had decided to phase out the old renewal provision, which included the possibility of reversion to the author or the author's heirs after 28 years. The renewal provision was far from satisfactory in practice, but in some cases it did allow authors or their heirs to recapture their copyri ghts. In abea

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