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has disrupted the delicate balance between the rights of creators and those who commission and distribute their works.

Freelance artists, writers and photographers are often presented with overreaching work made for hire contracts in situations that are contrary to the intent of the Copyright Act. Because they do not acquire the status of an employee under such contracts, they receive none of the benefits that employees normally receive as compensation for surrendering copyright ownership to the publisher. Very often publishers demand that work for hire contracts be signed with no opportunity for the creator to engage in meaningful negotiation.

It is very difficult for freelance creators to survive in this atmosphere. It is a situation that does not encourage creativity and productivity.

Since 1982, I have urged passage of legislation in the Senate to clarify the copyright law to ensure that one who actually creates a work of art be considered its author and able to claim the benefits of copyright protection in that work. My bill does not propose a drastic realignment of the relationship between the rights of creators and publishers. Instead, it is a corrective measure designed to restore a more appropriate balance to that relationship.

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Work made for hire would still be a useful doctrine if my bill were enacted. My bill would assure that work made for hire is confined to the limits that Congress intended when it enacted the 1976 amendments. This must be done to stop the corruption of our copyright system.

And,

Mr. Chairman, I am aware that this subject is a difficult one because it brings under scrutiny fundamental questions of authorship and ownership of copyright. there are powerful forces on the other side of the argument. But that is precisely why this Subcommittee should address these concerns. Work made for hire strikes at the heart of the relationship between creators and publishers, and it has been abused and now disrupts that relationship to the detriment of the public. The creative artists of America are being robbed of their incentive to work and their rewards for working. We are all poorer because of it.

If we are to have in this nation a healthy and thriving creative community, these issues can no longer be put aside and left for another day.

I urge this Subcommittee to act favorably and quickly on S. 1253 and restore the balance in our copyright law.

Senator DECONCINI. Thank you, Senator Cochran. I appreciate your statement, and this committee intends to move on your bill and make some decisions this session if we possibly can. You raise a very cogent issue and I can assure you of the careful attention of this subcommittee.

I have no questions for the Senator from Mississippi.
Senator Hatch.

Senator HATCH. I have no questions either.

Thanks, Thad. We appreciate having your testimony.

Senator COCHRAN. Thank you very much for allowing me to

appear.

Senator DECONCINI. Our next witness will be Mr. Ralph Oman, Register of Copyrights. Please come forward. Dorothy Schrader will be with him.

Mr. OMAN. And with your permission, Mr. Chairman, Mr. William Patry, a policy and planning advisor.

Senator DECONCINI. Please proceed. If you would summarize your testimony, Mr. Oman.

STATEMENT OF RALPH OMAN, REGISTER OF COPYRIGHTS, WASHINGTON, DC, ACCOMPANIED BY DOROTHY SCHRADER, GENERAL COUNSEL, AND WILLIAM PATRY, POLICY PLANNING ADVISOR TO REGISTER OF COPYRIGHTS

Mr. OMAN. Thank you very much, Mr. Chairman. I have prepared a written statement and I would submit that for the record, with your permission.

Senator DECONCINI. Without objection

Mr. OMAN. Let me summarize that statement.

Senator Cochran's bill seeks to change the provisions of the Copyright Act concerning work made for hire and joint works by amending the definitions of these terms in section 101 of the Copyright Act. Unlike previous efforts, S. 1253 does not seek to reorder the marketplace in any major way; it only tries to clarify the existing provisions.

As Senator Cochran just noted, the first great rule of copyright law is that the man or woman who creates a copyrighted work is the copyright owner. The work made for hire doctrine represents a departure from this general rule.

În the two circumstances, the law treats the person or company who hires the real author as the legal author and copyright owner, first, where the work is created by an employee within the scope of his or her employment, and in the case of commissioned works where the work falls within one of nine special categories and the parties sign a document agreeing that the work is made for hire. Otherwise, a commissioned work can never be a work for hire.

In June, of course, as we have learned, the Supreme Court in a unanimous decision for the first time interpreted the "work made for hire" provisions of the 1976 act in CCNV versus Reid. As you know, Mr. Chairman, Mitch Snyder's group commissioned a Baltimore sculptor to create a statue of a homeless family. The Court said that since the work didn't fit into one of the nine enumerated categories, it could not be a commissioned work for hire under the second circumstance.

The Court also said that we should define "employee" in the first circumstance, with reference to agency law, looking at factors like actual control. With this definition they found that Mr. Reid did not qualify as an employee.

The question naturally arises, Mr. Chairman, as to why we need legislation after the Supreme Court's authoritative ruling. I see two reasons why Congress should act.

First, the Court's decision on the agency question rested on an absence of Congressional guidance on the definition of employee, guidance that Congress can now provide.

Second, as a matter of policy, the Court by adopting an agency standard for work made for hire raises some real problems. It introduces uncertainty into the business relationship by setting out 11 different interrelated criteria that should be examined. That is quite a burden on transactions in copyrighted works.

The agency approach also makes many ownership determinations ad hoc and post hoc because we cannot evaluate many of the criteria until after the work is completed.

So the Cochran bill defines employee as "formal, salaried employee," which greatly reduces the possibility of confusion and uncertainty. Unless the real author or artist is actually on your staff, or unless the work falls into one of the nine categories of commissioned works, you cannot own the copyright as the author of a work made for hire.

Of course, the freelance author can then assign all rights of exploitation to the person who pays for the work, but the author would then recapture those rights after 35 years under the termination clause. In most cases the work has no commercial value after 35 years, so this termination of the assignment has no economic significance, but in some rare cases it may have value, and this troubles some of the publishers. If they had to renegotiate a fresh assignment for a work of enduring value, the bargaining power of the author could allow some polite extortion.

With regard to commissioned works, the Cochran bill also makes explicit that the parties must sign the written agreement before the author begins work. It doesn't make good business sense to wait until after the work is created to begin bargaining over ownership. A carpenter who is about to build a house would not want to start negotiating with the owners of a piece of property over the price of the house after he had completed the house on their property. The negotiation should take place before the work is done, when the bargaining power of both parties is the greatest, so Congress should require a written agreement for all nine categories of commissioned works before the artist starts working. This approach is fair to both sides.

The second major area addressed by S. 1253, Mr. Chairman, is that of joint authorship. In CCNV, the court of appeals remanded this issue back to the district court, and the Supreme Court left it undecided.

Under the current joint authorship doctrine, when two authors intend to merge their individual contributions into a single, unitary whole, like the words and music of a song, each author owns an undivided one-half interest in the work and can market the

work without the other author's permission. All they have to do is account for profits to the joint author.

The circuit court opinion in CCNV hinted that a so-called joint author may not need to contribute what they called copyrightable authorship in order to be considered a joint author. This reasoning is wrong as a matter of both statutory construction and policy. Applying this theory, unscrupulous people could take advantage of freelancers by forcing them to agree to a phony joint authorship arrangement. Congress opposed this potential exploitation back in 1976, and Congress should oppose this reading of the law today.

Mr. Chairman, the court of appeals in CCNV recognized that a more restrictive definition of work made for hire might just shift the battle over work made for hire from that arena into the joint works arena. Congress should treat work made for hire and joint authorship as a package and lay all of these issues to rest once and for all.

S. 1253 offers a fair, comprehensive solution. While I see some areas for improvement, I support it. It will not help one side or the other so much as encourage the creation of new works, which is the underlying purpose of the copyright clause of the Constitution. At bottom, Mr. Chairman, the public will benefit.

That concludes my oral presentation, Mr. Chairman. I would be pleased to answer any questions.

Senator DECONCINI. Thank you, Mr. Oman. I will submit some questions due to time here.

[The prepared statement of Mr. Oman and responses to additional questions follow:]

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