Mr. MOORHEAD. Professor Karjala. STATEMENT OF DENNIS S. KARJALA, PROFESSOR OF LAW, ARIZONA STATE UNIVERSITY, ON BEHALF OF THE U.S. COPYRIGHT AND INTELLECTUAL PROPERTY LAW PROFESSORS Mr. KARJALA. Thank you. I want to thank the chairman and the members of the subcommittee for inviting me to testify today. I will present my views on this legislation and those of a great number of my academic colleagues who work and conduct research on a daily basis in the areas of copyright and intellectual property. Our comments are based on a familiarity with the subject matter and, we believe, a sensitive understanding of how copyright has traditionally sought to balance competing public and private interests. I'd like to begin with a few words about American copyright philosophy and tradition. The special genius of the U.S. copyright system has been its emphasis on an appropriate balance of these public and private interests. Our system has been remarkably successful in promoting the creation of economically and culturally valuable products, particularly in the copyright industries like movies, music, and computer software. This is shown by our current dominant position in international trade in these areas. We should know, however, that our dominance is primarily in current products of authorship. Our system has been phenomenally successful at continuing a supply of new and valuable work. The movies like "The Lion King" and the most recent Sylvester Stallone film, for example, generate vastly more revenues, probably any single one of those movies generates more revenues, than all of the works that are the true focus of this bill, which were produced in the 1920's and 1930's. Nobody has the precise numbers, apparently, but from the numbers we heard this morning, that seems not an unfair estimate. And the creation of these new products is possible because of the rich and vibrant public domain that has been passed down to us and our current creative authors from earlier authors. This valuable source of cultural building blocks is itself a product of our system's careful balance of public and private interests. Our Constitution provides for the protection of intellectual property for limited times to encourage the production of creative works. On the other hand, the longer exclusive rights last in a particular work, the more expensive it is for subsequent artists to create new works based upon it. And the most important goal in drawing the balance is that of promoting the creation and dissemination of information. This, in turn, depends on the existence of a rich public domain consisting of works on which contemporary authors can freely draw. I'm glad that Representative Conyers has returned. He expressed earlier this morning a special concern for the little guy, and I think that's one of the more important people we're talking about. The person who's out there today trying to create new works needs and wants a vibrant box, if you will, of building blocks out of which new works can be created. I think that it is very important to focus our attention on this difference between old works and new works. In my opinion, the extension legislation would prematurely, and without compensating benefit, abandon our traditional balance in vested private interests. Europeans have long followed a different copyright philosophy based on notions of so-called natural rights rather than economic efficiency and overall social progress. We should not abandon what has worked for us so well in the past simply to imitate an untried European model that will provide an economic bonanza to the owners of a relatively small number of very old copyrights at a cost of taking crucial building blocks out of the hands of current authors. We must ask whether we really wish to remake our cultural industries in the image of Europe. We should not make the mistake of viewing the extension proposals as an us-against-them conflict between Europe and America. This, in fact, is not a conflict between Europe and the United States. The real conflict in both places is between the interest of the public in a richer public domain and the desires of copyright owners, who incidentally may or may not be related to the authors in question, to control the economic exploitation of the works that remain in their hands. That Europe has resolved the conflict in one way does not mean that we should blindly follow suit. Our written testimony details the deficiencies of the arguments offered in support of this extension legislation. The proposed extension would supply no additional incentives to the creation of new works and it, obviously, supplies no incentive to the creation of works already in existence. Moreover, the notion that copyright is supposed to be a welfare system to two generations of descendants has never been a part of American copyright philosophy, nor has anyone made any showing, in fact, that life plus 50 years is insufficient to sustain a revenue stream through two generations. In addition, so-called harmonization with European law would, in any event, not be achieved by this legislation, even with respect to length of term, much less with respect to other fundamental differences like moral rights and fair use. Nor is the so-called unequal treatment of U.S. copyright owners in Europe a ground for mimicking a bad European move that favors the owners of a few old, but economically valuable, copyrights over the interests of the general public. It is not unfair that a work enter the public 50 years after the death of the author. Rather, that's an integral part of the social bargain on which our highly successful system has always been based. In fact, the works in question here, which were produced in the 1920's and 1930's, have already received one 19-year extension from the original 56-year term promised to their authors. After supplying a royalty stream for such a long time, now 75 years, these old works should be available as bases on which current authors can continue to create culturally and economically valuable products. We already have a balance of public and private interests that protects works of authorship for a very long time. As I said earlier, there's no tension here between Europe and America. The tension is between the heirs and assignees of copyrights in old works versus the interests of today's general public in freer competition, lower prices, and a greater supply of new work. Europe has resolved the tension in favor of the owners of old copyrights; we should rather favor the general public. [The prepared statement of Mr. Karjala follows:] PREPARED STATEment of DennIS S. KARJALA, PROFESSOR OF LAW, Arizona State UNIVERSITY, ON BEHALF OF THE U.S. COPYRIGHT AND INTELLECTUAL PROPERTY LAW PROFESSORS INTRODUCTION The proposed legislation (H.R. 989) would extend the term of copyright protection for all copyrights, including copyrights on existing works, by 20 years: For individual authors, the copyright term would extend for 70 years after the death of the author, while corporate authors would have a term of protection of 95 years. Unpublished or anonymous works would be protected for a period of 120 years after their creation. The legislation would also extend the copyright in works that may be as old as our Republic or even older but that were never published prior to 1978 (when these works were first brought into the federal copyright system). Initially, these copyrights would be extended by another 10 years (to the year 2013), and if the copyright owners publish the works prior to 2013, copyrights in these already ancient works would continue in force until the year 2047. We believe that enactment of this legislation would impose substantial costs on the United States general public without supplying any public benefit. It would provide a windfall to the heirs and assignees of authors long since deceased, at the expense of the general public, and impair the ability of living authors to build on the cultural legacy of the past. In following a European model of regulation and rigidity, it would hinder overall United States competitiveness in international markets, where the United States is currently at its most powerful. We therefore conclude that it would be a mistake to extend any of the copyright terms of protection. SUMMARY OF ARGUMENT Various reasons have been offered in support of the extension proposal: Some say that the extension is necessary as an incentive for the creation of works. Some argue that the current period for individual authors--50 years after the death of the author--was intended to provide an income stream for two generations of descendants and that the longer human life span now requires a longer copyright term. Some maintain that we should adopt an extended term because the countries of the European Union have done so, in order to "harmonize" our law with theirs. Some claim that the longer copyright term is necessary to prevent royalty inequality between United States and European copyright owners. None of these arguments take into consideration the costs to the United States public of an extended copyright term. Moreover, the arguments are either demonstrably false or at best without foundation in empirical data. If incentives were the issue, there would be no need to extend the copyrights on existing works, even if one were to accept the dubious proposition that the extra 20 years provide an incentive for the creation of new works. If we were worried about two generations of individual descendants, we should prohibit the first generation from selling the copyright outright, and we would have no need to extend the term for corporate authors. If we believe in harmonization, it is in any event not achieved under the proposed legislation nor does supposed royalty inequality provide a basis for extending the term. The discussion below shows the failure of these arguments in detail. It also shows that the costs to the United States general public vastly exceed even the gains to those relatively few copyright owners who would Written Testimony of Intellectual Property Professors benefit from the extension and that the general public itself would receive no compensating benefits. Once the errors in the arguments for increasing the term have been exposed, the real reason for the legislation becomes clear: The maintenance of royalty revenues from those relatively few works from the 1920's and 1930's that continue to have significant economic value today. The continued payment of these royalties is a wealth transfer from the United States public to current owners of these copyrights. These copyright owners are in most cases large companies and in any case may not be descendants of the original authors whose works created the revenue streams that started flowing many years ago. To our knowledge, no one has made a study of just how great this wealth transfer would be, although it is clearly large enough to generate fervent support for the proposed legislation by performing rights societies, film studios, and other copyright owners in economically valuable works whose copyrights are otherwise due to expire in the next few years. The works about to enter the public domain, absent this legislation, were created in 1920. At that time and for many years thereafter, society's "bargain" with the actual authors was a period of exclusive rights under copyright for a maximum of 56 years. Those authors produced and published their works with the understanding that the works would enter the public domain 56 years later. Yet, notwithstanding that bargain, the period was extended by 19 years in 1976 to 75 years, as were the terms of all copyrights acquired after 1920. Now, 19 years later, these same copyright owners have returned seeking yet another extension to continue the wealth transfer for another 20 years, without supplying any evidence, or even any arguments, that the public will benefit. This wealth transfer from the United States general public to copyright owners is, moreover, only a part--probably a small part--of the total cost that we and coming generations will bear if the extension is adopted. It is important to remember that the extension would apply to foreign as well as United States works. Therefore, in order to maintain a flow of revenue to the owners of United States copyrights, the general public will continue to pay on foreign copyrights from the 1920's whose terms must also be extended. No one has shown that there will even be a net international inflow of royalties from the works at issue. Even worse, to maintain the royalty revenues on those few works from this period that have continued economic viability, the copyrights must be extended on all works. This includes letters, manuscripts, forgotten films and music, out-of-print books, and much more, all potential sources on which current authors and scholars can base new works. Copyrights can and usually do have very complicated multiple ownership so many years after an author's death. The transaction costs of negotiating for use can be prohibitively high, even for works that no longer have economic value. None of the arguments for extension take into consideration the loss to both revenue and culture represented by the absence of new popular works that are not created because underlying works that would have served as a foundation remain under the control of Written Testimony of Intellectual Property Professors a copyright owner. By definition, this loss can never be known, but that makes it no less real or substantial. The creation of new works is dependent on a rich and vibrant public domain. Without good reason to expect a substantial compensating public benefit, we should not risk tying the hands of current creative authors and making them less competitive in domestic and international markets just to supply a financial windfall to owners of copyrights in works created long ago. Just as Santa Claus and the Easter Bunny are part of the public domain that anyone can use every Christmas and Easter season, so eventually should Mickey Mouse and Bugs Bunny also join our freely available cultural heritage. That is a crucial part of the copyright "bargain" that the public made at the time these works were created. We recommend that the proposed legislation be rejected. The issue is certainly an important one, but the legislation is premature at best where there has been no empirical demonstration of a public benefit and no thorough exploration of alternative approaches. UNITED STATES COPYRIGHT POLICY Both Congress and the courts have uniformly treated United States copyright law as an instrument for promoting progress in science and the arts to provide the general public with more, and more desirable, creative works: The limited scope of the copyright holder's statutory monopoly, like the limited United States copyright tradition is in this respect philosophically different from that of many other countries that treat intellectual property as natural rights of individual creators. Under our system, Congress need not recognize intellectual property rights at all, but if it does, the purpose must be to promote innovation in science and the useful arts. Our system of copyright protection is delicately balanced. We recognize exclusive rights in creators so that consumers have available an optimal number and quality of works but want those rights to be no stronger than necessary to achieve this goal. We do not recognize new 2 1. Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975)(footnotes omitted). 2 1 P. Goldstein, Copyright § 1.1, at 6-7. Written Testimony of Intellectual Property Professors |