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IV. the photographer represents and warrants that al photographs propered under the terms of this agreement will be original and will not violate any copyright. proprietary night, or other night.

VI. This instrument, which shall be construed and governed by the law of the State of Florida, constitutes the whole agreement between the Photographer and the Publisher and can only be amanded by an agreement in writing by both the Photographer and an officer of the Publisher (Harcourt Brace Jovanovich, Inc.). The Photographer acknowledges that the Publisher may publish works and materials dealing with subject matter similar to that contained in the Work, and nothing contained in this agrooment shall be the Publisher from publishing such other wortus and materials. Nothing in this agreement shall be construed to require the Publisher to act as a truste for the benefit of the Photographer or otherwise to act u i fiduciary.

V. All photographs taken by the photographer as a resun of the agrement shall be work-for-hire of which the Publisher is author-et-law and the Publisher shall be the exclusive owner of all rights in the original photographs ind reproduction thereof. Including all copyrighta, extensions of copyright, and renowala. The Publisher shall, sto solo dlacration, have the right to use the photographs In the Work and in any other materials or publications, Including but not limited to the exclusivo right to print publian, Aim, diaplay, record, broadcast, transmit, and othenute mproduce and exploit the Work In la original or dapted form in all languages and formata, in audio-visual form and in all other forma, media and systems, Including information storage and retrieval systems, or by any other proceus now known or hereafter dovoloped.

RESPONSES OF TOM CLANCY TO QUESTIONS
PRESENTED BY SENATOR DECONCINI

1. The fundamental question here is not one of legal remedy but of practicality. The great majority of writers, photographers, and other artists in our country is composed of people earning on the order of $30,000 per year or less. For such people to engage in legal combat with multi-billion-dollar corporations, while technically possible, is not a serious option -- even discounting the ability of the media corporations to black-list their lilliputian enemies. All the large corporation need do is to instruct its legal counsel to delay and obfuscate until the litigant's funds are exhausted, thus winning the case by default.

My own dispute involved a third-rate publisher and one of the top five or so best-selling authors in America. My own financial resources were barely equal to those of my adversary. Principles cost money. Publishers have far more money than any author. Because of that the playing field is heavily weighted against the little guy.

One additional point may need saying. American publishers are being acquired by overseas entities for whom the United States Constitution is no doubt an interesting but foreign document. It is not possible that the thoughts of American creators will to some greater or lesser degree soon be subjected to approval of others for whom American interests and American rules of conduct are simply not relevant? A recent article on the acquisition of Columbia Pictures by Sony quoted Sony's CEO as saying that the purchase would go far to correct American perceptions of Japan. While I have not the slightest reason to doubt the integrity of Mr. Morita, is it possible to read such a statement and not feel a slight chill? I hasten to add that I am also the #1 bestselling author in Japan, and am published world-wide. Red Storm Rising, by the way. was not published in a foreign country for fear of offending its sensibilities. That country is a NATO ally, and one of its corporations now owns a major American media empire. The ownership of American media institutions by foreign agencies, added to the ability of those agencies to control the creative thoughts of American citizens under "work-for-hire" is something quite troubling to me.

2. The Constitutional mandate and its ethos are explicit: the only way for useful ideas to appear at all is to ensure that those who create them are encouraged and protected. However much the publishers may protest that they spread ideas about - while making a good deal of money in the process -- the Constitution does not mandate their right to disseminate ideas. It mandates our right to be protected from those who try to steal them. Anything that makes our work harder to steal, then, is of benefit to creators and therefore in keeping with Constitutional intent. What the Constitution recognizes are not marketing rights, but rather the simple fact that unless people are encouraged to create new ideas, there will not be many new ideas. Ideas are what built America.

3. The Author's Guild also has a model contract that has gained a fair measure of acceptance with the major trade publishers, but not with many small ones. Presumably there are other such model contracts for other artistic areas, but our ability to encourage their acceptance on the various segments of the publishing industry is impaired by the fact that artists are not exempt from anti-trust legislation.

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4. First of all, the issue of "moral rights" is a red herring foisted upon the issue by the publishers for their own propagandistic purposes. My own perspective here is limited to what the framers of the Constitution clearly thought.

Publishers do not create books. If they did, they would have no need of authors. They don't pay us because we are amusing, but because we are essential. We make the product which they sell.

Third, publishers of all sorts exist because people want to read and see ideas and other expressions of the human mind. That is the market. Publishing is a business which connects creators with consumers. A publisher is someone who takes an idea from Person A and sells it to Person B. A publisher creates neither the ideas nor the market. The publisher is the agency which exploits both -- and when done successfully, performs its exploitation to the benefit of all.

The Constitution seeks to promote creativity by protecting creators. Publishers do not need Constitutional encouragement or protection. Adam Smith takes care of them quite nicely.

5. As currently structured, publishers do indeed take the greatest financial risk, and, appropriately, theirs is also the greatest financial reward in the event of success. Please allow me to illustrate how this works:

In the case of my first novel, The Hunt for Red October, each book costs roughly $1.50 to manufacture. My royalties per copy are roughly $1.50. The publisher sells the book to vendors (book stores) for about $7.50, and it was sold to the consumer at whatever price the vendor deemed appropriate. Thus, while my gross income from the book is $1.50, the publisher's gross income is roughly $4.50, or three times what I make per copy. (If someone notes that their gross profit necessarily includes various business expenses, well, so does mine. I have a family to feed and my own living expenses to cover. "Net Profit" to a publisher goes to dividends paid out to stockholders. "Net Profit" to an author is what is left over for savings after his or her day-to-day expenses are met.)

As one can see, the publisher is already given significant reward and incentive to market his product. Following up on this reasoning we see that the act of publishing is in no way heroic. It is, rather, a business, with wholly normal business risks and rewards. By the rules of the publishing game -- drafted, of course, by the publishers themselves -- their marketing and promotional efforts bear greater fruit for themselves than for the authors: In my case by a factor of three-to-one.

The only efforts that a publisher can expend to aid an author are of even greater aid to itself. This sort of enlightened self-interest is the ideal condition for any healthy business, and is precisely the condition which we hope to extend through all aspects of the publishing industry.

The next panel will have Michael Klipper of Leventhal, Senter & Lerman; Victor Kovner, chairman, legal affairs committee, Magazine Publishers; Mr. Nicholas Veliotes, president, Association of American Publishers; and Jack Fishman, a publisher representing the National Newspaper Association.

Gentlemen, both Senator Hatch and I have some time constraints, so we will ask that you summarize your statements. The full statements will be in the record. If you can do that in 3 minutes, that will be helpful here.

We will start with you, Mr. Klipper.
STATEMENT OF MICHAEL R. KLIPPER, LEVENTHAL, SENTER &

LERMAN, WASHINGTON, DC, REPRESENTING THE COMMITTEE
FOR AMERICA'S COPYRIGHT COMMUNITY
Mr. KLIPPER. Thank you, Mr. Chairman.
Senator DECONCINI. Welcome back.

Mr. KLIPPER. Thank you again. My name is Michael Klipper; I am a counsel to the Washington, DC, law firm of Leventhal, Senter & Lerman. I appear here today in my capacity as counsel to the Committee for America's Copyright Community (CACC] which is composed of a number of the authors and creators of copyrighted works in this country. A list of our membership is contained in my formal statement, and I will now ask that my formal statement be made a part of the record.

Senator DECONCINI. Without objection.

Mr. KLIPPER. Appearing with me today are representatives of three of the several industries that make up CACC, which itself is composed of large and small businesses.

Today, I have with me representatives of magazines, newspapers, and books, and it had been my intention, Mr. Chairman, to discuss both the moral rights issue and the work for hire issue. My formal statement does in fact address both issues. Given the testimony we've had today and given the limited time we have available, I will turn to the work for hire question.

Senator DECONCINI. Thank you.

Mr. KLIPPER. I will make a series of points within my allotted time.

First, the 1976 Copyright Act was the result of a series of compromises, including one involving the current definition of work for hire. In a real sense, this definition was an important victory for contributors because it was a marked departure from the employeroriented approach that had evolved by 1976 under the 1909 act.

It is also important to note with respect to clause 2 of the definition, which you've heard something about this morning, that the categories were included there because these works are prepared at the expense, risk, and instance of the publisher or producer. We be lieve the reasons that prompted Congress to include these categories, to ensure that works were made available to the public, are as valid today as they were in 1976 when Congress acted.

Second, it is important to note that the CCNV case, which has been discussed at some length this morning, was also a landmark victory for contributors. Significantly, by adopting the agency law standard, the Supreme Court in CCNV acknowledged that this test is sufficient to meet the congressional goal of providing certainty and predictability in the marketplace. In addition, the Court did reject the formal salary approach.

I think it is important to point out that this decision is 3 months old. Employers and commissioning parties alike, in and out of our coalition, are assessing the impact of CCNV. It is simply too soon to gauge the full impact of that case. However, I would note parenthetically that considering the large number of Federal courts that follow the now-discarded supervision and control test, it is quite possible that the dislocation and the adverse effect on business practices could well be substantial. It is too early for us to say.

Fourth, we urge Congress at this time to give the marketplace a chance to adjust to CCNV. We ask that you not consider legislation in this area, especially legislation such as S. 1253, that we believe would upset the delicate balance in the Copyright Act.

I would make three additional points about the legislation.

One, it goes well beyond CCNV and is much more than a mere clarification of that case. As I mentioned, it would reject the agency test adopted by the Court. It would accept the formal salaried approach, which was not adopted by the Court in that case. And it would reach out to address issues not before the Court in CCNV involving clause 2 and the joint work issue.

S. 1253 would undercut the flexibility now found in these provisions of the act by imposing rigid, inflexible rules that ignore the realities of the business world and the marketplace. For example, the formal salaried test ignores various employer-employee relationships that have evolved in recent times in the marketplace. This point is discussed at some length on pages 30 and 31 of my testimony.

Finally, the vague provisions in this legislation-such as what constitutes a formal salaried employee, a term unknown, to our knowledge outside of the Dumas case-would invite litigation.

Finally, S. 1253 proceeds on the faulty premise that changes in the work for hire provisions will benefit all contributors. That is just not true. If enacted, it will prohibit longstanding practices that are both beneficial and desired by contributors, employers, and commissioning parties alike.

If I might have another 15 seconds, I would like to add two final thoughts.

We have heard much this morning about blanket agreements. We call them multiple work agreements. They are common in some industries. There are beneficial, again, and desired by parties on both sides, and they are an important tool in some very important industries, such as educational book publishing.

Finally, to the assertions that some have inade in their written statements that we're dealing here with work for hire and one-time payments, I would say that work for hire does not define the form of payment under a work for hire agreement. The provisions allocate ownership under the Copyright Act. In fact, as my testimony states, various forms of compensation are utilized, including royalties under such agreements.

Thank you, Mr. Chairman.
[Mr. Klipper's submissions for the record follow:]

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