This letter is to indicate my strong support for the position Dean Kay presented at the November 20, 1985 hearing on S.1384 before the Senate Judiciary Committee Subcommittee. I have read the various positions presented at that time and, based on my forty years' experience as a music publisher of both serious and popular music, I concur completely with the statements made by Mr. Kay.

Thank you for the information kit on the progress being made with
respect to a decision on "derivative rights".

I am particularly impressed with your comments at a Congressional
hearing because I agree with you the "derivative right" is a right
to be retained by the publisher controlling the second term of
copyright--because the work "he wrought" during the years such
publisher controlfed the composition and generated income for the
composer through promotion efforts, new recording activities,
publication of various printed editions, etc. A lot of us should
be thankful for your efforts.

Senator SPECTER. Thank you very much, Mr. Kay.

I would like to turn now to Mr. Irwin Karp, counsel to the Authors League of America.

Mr. Alvin Deutsch is in the hearing room, as well. Mr. Deutsch, we would be delighted to have you join the panel, if you are interested in doing so.

Mr. DEUTSCH. Thank you, Mr. Chairman.

Senator SPECTER. Mr. Karp, please proceed.

STATEMENT OF IRWIN KARP

Mr. KARP. Senator Specter, thank you very much for this opportunity to present the views of the Authors League, which is the national society of professional authors and dramatists.

I would like to submit a copy of my statement for the record, and also I have attached to it two draft proposals, two 1-page drafts of suggested changes in language.

The Authors League supports the bill. We think it is essential, and we are grateful to you for introducing it, and to Representative Berman for introducing his companion bill.

I do not think there would be any problem in working out language changes. I think the important thing is the thrust of your bill and his bill.

Of the 13 judges who decided in Mills Music, 7 read the present termination clause as meaning exactly what your bill and Representative Berman's bill in effect say it meant. Unfortunately, five of the six other judges were members of the Supreme Court, necessitating an amendment to the copyright statute.

We, of course, ask that both bills amend sections 203 and 304, and not be limited to section 304, because in the long run, section 304 will be much more important and will affect the rights of authors for generations to come.

I should note that the problems raised by the Mills Music decision are not limited to songwriters. Many of our members are composers for the stage and motion pictures and are members of Mr. Weiss' organization as well, but authors of books and plays are also very much affected, adversely, by the legislation.

I think it is clear that despite the Supreme Court's reading of the termination clause, which I think was narrow and totally wrong, the real question is what Congress intended. And the record is pretty clear that Congress intended that on termination, all rights revert as the clause says, all rights without exception revert to the author or his or her heirs, and all that is left is a privilegenot a right, but a privilege-granted by the termination clause to continue using a derivative work. That privilege is subject to certain conditions. The Supreme Court majority did not seem to understand that.

Another indication of congressional intent, aside from Ms. Ringer's very convincing testimony of what she and the committee meant when they drafted the bill, is the amendment which was made to the termination clauses is at the request of the Authors League. I describe it at page 4 of my statement. We asked that Congress permit the termination of nonexclusive as well as exclu

sive licenses. The original draft was limited to the termination of exclusive licenses. We said the reason for that was that:

Were publishers permitted to continue enjoying a nonexclusive license, they could continue to share in the composers' recording income after termination.

Congress and the Copyright Office accepted that argument and amended the section to include nonexclusive licenses, and the Register's report makes it clear that the purpose was to cut off the publisher's opportunity to share in subsidiary rights royalties, including recording royalties, after termination.

The publisher is indeed a middleman, regardless of how little or how much income or money he invests in promoting songs. I will not take your time to discuss the relative contributions, because it is really irrelevant.

The termination clause clearly cuts off the rights of book publishers and many other users of copyrighted works, even though they spend, in many cases, far more than music publishers do, to not only promote, but to produce and distribute copies of the work of the author under the contract that has been terminated. It is totally illogical to assume that Congress would cut off the right of the primary publisher, the publisher who is actually performing the work of producing copies of the work, distributing them, and selling them, cut off that right, but leave standing the right of the same publisher in his role as a passive middleman to receive royalties from the work that other people produce, based on the author's derivative works.

I see the light is on

Senator SPECTER. I took a little of your time earlier with an offstage whisper, so please proceed for another few minutes.

Mr. KARP. I would like to point out that the essence of the termination clause, the very reason for it, is that there is unequal bargaining power between authors and the users of their work.

One of the most unfair provisions that unequal bargaining power imposes on authors in every media is the obligation to give the publisher a perpetual share of income derived from uses of the author's work by third persons, such as a share of recording rights income given to a music publisher, who does not make recordings, does not promote recordings, does not sell recordings. They do this by tying-in under their superior bargaining power the perpetual sharing with the primary obligations they perform of publishing the work.

Now, I cite at page 6 an example of the results of that bargaining power which are not relevant here, but are evidence of its existence, and that is in the field of book publishing, something called "the satisfactory manuscript clause," which in effect requires authors to labor for years under a contract which is really not a contract if the publisher chooses-based on its subject judgment of the manuscript to terminate the contract and get back all the money that it paid the author, leaving the author holding the bag.

I refer you to the opinion in a case called Harcourt, Brace, and Jovanovich against Barry Goldwater, for an exposition of the unequal bargaining power in the book publishing field, and that inequality runs the gamut of publishing

Senator SPECTER. Who had the unequal power in that case?

Mr. KARP. Not Barry Goldwater; the book publisher. Barry Goldwater was only an author in this case, and senatorial prerogative did not help very much.

Senator SPECTER. And you are saying that Senator Goldwater had the lesser power of the parties?

Mr. KARP. Actually, he won this case

Senator SPECTER. So he had the greater power of the parties.

Mr. KARP [continuing]. But he won it on the merits and not because of his bargaining power.

I should also point out that that same inequality is what really led to the concept which was the basis of the termination clause: That when an author granted motion picture rights in a novel or play-and it is the author who always does it; the Supreme Court majority misstated the realities of book publishing in that areawhen the author does that, the motion picture company takes with that right other rights—the right to use the play on television, the right to use it in videocassettes, et cetera-and the result of that has been that, for decades, American authors of books and plays have been unable to receive any share of the income that the motion picture version of their work earned on television or in cable broadcasting, or in cassettes, and have not even been able to arrange for the broadcasting of stage versions of their plays, because the stage version had to be done on tape――

Senator SPECTER. Are you almost concluded?

Mr. KARP. I am finished. In mid-sentence, I stop.

Senator SPECTER. Please finish your sentence, Mr. Karp.
Mr. KARP. I am finished.

[Prepared statement follows:]