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 & Mr. KLIPPER. Thank you, Mr. Chairman. 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 believe 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 made 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:] Summary of Statement of the Committee for America's Copyright Community The Committee for America's Copyright Community ("CACC") strongly opposes both (1) efforts to inject moral rights into federal law, especially the Copyright Act, and (2) S. 1253. I. Moral Rights. The goal of the Copyright Clause of the Constitution is ensuring public availability of a broad, diverse array of intellectual and artistic works. The vitality of U.S. copyright industries, which today provide both American and foreign consumers with a vast array of U.S. copyrighted works, demonstrates that this constitutional goal is being met by our current system. The success of our copyright system is due, in part, to the operation of the Copyright Act, which (1) gives copyright owners the financial incentive to devote resources and energy to produce and disseminate creative works; (2) provides the certainty that business activities will be governed by objective terms set forth in the four corners of business agreements; and (3) allows copyright owners and users the flexibility to devise agreements that make works available to the public. CACC believes that expressly incorporating moral rights into federal law would threaten the on-going success of our copyright industries. In sum, we believe that moral rights would (1) inject great uncertainty into the marketplace and thus make it extremely difficult for copyrighted works to be made available to both primary and ancillary markets; (2) cause copyright owners and users to worry that even their most routine activities could subject them to lawsuits; (3) seriously inhibit the ability of many of our copyright-intensive industries to attract potential investors; (4) put federal judges in the position of making aesthetic judgments about the quality of copyrighted works; (5) conflict with key provisions of the Copyright Act; and (6) be at odds with our nation's commitment to freedom of contract. Therefore, CACC urges Congress to adhere to its long-standing practice of not expressly incorporating moral rights into federal law, including the Copyright Act. II. Work-Made-for-Hire. S. 1253 is objectionable for a number of reasons. First, S. 1253 would make major changes in the work-made-for-hire definition in the Copyright Act at a time when employers and commissioning parties are assessing the impact of the CCNV decision, which was a landmark victory for contributors. Second, S. 1253 is much more than a mere clarification of CCNV; in particular, it rejects the Supreme Court's resolution of how to determine who is an employee under the first prong of the work-made-for-hire definition. Third, S. 1253 would reduce flexibility in the marketplace by altering the definition of work-made-for-hire to impose rigid, formalistic rules. Finally, S. 1253 proceeds on the faulty assumption that its changes will benefit all contributors. 28-054-90 - 19 Mr. Chairman, my name is Michael R. Klipper. I am of counsel to the Washington, D.C. law firm of Leventhal, Senter and Lerman. I appear here today in my capacity as counsel to the Committee for America's Copyright Community (CACC). CACC is composed of representatives of a variety of America's copyright creators and users. Its members include the creators and producers of newspapers, books, magazines, newsletters, computer software and databases, educational testing and training materials, information services, motion pictures and other video and film products, music, as well as commercial broadcasters (see Attachment A). The members of CACC have joined together out of their concern over legislative efforts that threaten the constitutional goals of promoting the production and dissemination of creative works. In particular, our members are concerned about |