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Senator Orrin G. Hatch
Chairman, United States Senate Committee on the Judiciary
Washington, D.C. 20570-6275

ATTN: Mr. Ed Damich:

BY FAX: 202-224-9102 (total number of pages faxed: ___)
Original to follow

S. 483, Copyright Term Extension Act

Dear Senator Hatch:

Mr. Larry Urbanski has forwarded to me a copy of your letter to him dated February 16, 1996, concerning S.483, the Copyright Term Extension Act. While I understand your conviction that the benefits of extension will outweigh its costs, I write one more time to urge reconsideration of the arguments you offer in its favor. At a minimum, Congress should undertake a careful study of the true costs and benefits before irrevocably committing the public it represents to yet another 20-year slice out of the public domain.

The supposed need for "harmonization" with Europe has not been proved. For one thing, the extensions as proposed do not harmonize even the terms, much less other features like fair use and moral rights: Works for hire, to the extent they are recognized in Europe, are protected there only for 70 years (less than the 75 we recognize NOW). To the extent they are not recognized in Europe, works for hire are protected for life of the individual author plus 70 years (although, of course, the copyright will invariably have been transferred to the employer, so this is not a notion that protects individual authors). This period in Europe has no relation to our proposed 95-year period. Moreover, the transition provisions from our 1909 Act will continue to cause disharmony between the U.S. and Europe for decades to come (75 or 95 years from publication, as opposed to a term measured by the life of the author). At a minimum, "harmonization" requires that we NOT extend the term for works for hire, so that we more closely imitate the European term.

Moreover, no one has shown that failure to harmonize the terms is or will be a source of any significant problem. Europe itself has partially rejected harmonization by adopting a mandatory "rule of the shorter term." The failure to protect U.S. works in Europe for the same period that European works are protected there does, indeed, result in less cash in the pockets of owners of old U.S. copyrights. That, however, is a beneficial result of the "disharmony." It means that CURRENT authors, both in the U.S. and in Europe, can freely use these old works for the creation of new works for the benefit of all, including most especially the current authors of new derivative works. If current U.S. authors are the most productive, as is arguably the case today in view of our favorable balance of trade in current works, the supposed "disharmony" will work a net benefit for U.S. authors (as opposed to the owners of old U.S. copyrights, who may or may not even be related to the original creative author).

This brings me to your point concerning international trade. The $40 billion figure you cite for current foreign sales does NOT say is how much is from blockbuster current works, like "The Lion King," which in any event have some 75 years of copyright protection before them, and how much is from works from the 1920's that, absent extension, are due to enter the public domain in the next few years. Nobody has presented evidence before any Committee of Congress or anywhere else showing that international trade in works from the early decades of this century favors the United States or, even if it does, that it represents more than an infinitesimal fraction of our overall trade in copyright-protected works. In fact, because the public domain is such an important source of inspiration for the creation of valuable new works, maintaining our lead in CURRENT international intellectual property exchange may depend significantly on NOT extending our copyright periods, while development of European cultural products remains tied up in copyright knots.

Your letter also refers to the advantages to American CREATORS. Creative AUTHORS, however, will not be the beneficiaries of the extension. It is only the transferees or distant descendants of creative authors who will benefit, at a heavy cost to the public in the form of a diminished public domain and a smaller supply of creative works based on it. Application of the "rule of the shorter term" in Europe or elsewhere does not deny "fair compensation" to U.S. copyright owners. The copyrights in question, to the extent they still have economic value, will have paid royalties for a full 75 years. Why is that not a "fair return"?

It is also vital to note that allowing U.S. copyright owners to "benefit to the fullest extent from foreign uses" by matching the European period will require not just Europeans but also the U.S. public to pay those same U.S. copyright owners (and to pay for the use of extended European copyrights as well). It stands to reason that we are greater users of U.S. copyrights than citizens of other countries. I am aware of no data on the question, but whatever the multiple is (for example, if foreign uses constitute 20% of the total use of U.S. works, the multiple is 4:1), the U.S. public will have to continue to pay that multiple of dollars to U.S. copyright owners for every dollar paid by Europeans. Again, Congress should not impose these costs of the American public without a careful study showing that there really are benefits that outweigh these costs.

Your letter to Mr. Urbanski took issue with my argument that extension does not increase incentives by saying that I failed to discount social costs. This response would be valid, however, only to the extent that the extensions were wholly PROSPECTIVE. The severe and real costs of extension for existing works appear immediately and therefore should not be discounted in the cost/benefit calculation. I would continue to oppose the legislation as unwise even if the extended terms were prospective only, but I cannot absolutely prove that the small present value of the increased incentive to create future works is zero. Therefore, because the costs for works yet to be created would not begin to appear for at least 50 years, it is theoretically possible that benefits could outweigh the costs. Again, a study should be made before acting, even on purely prospective extensions. But because no added incentives can possibly result from extensions for existing works, the cost/benefit ratio is obviously infinite for them no matter how one discounts social costs. (And while I have great admiration and respect for Professor Goldstein, ordinary free-market economic theory tells us that no film company is going to change its willingness to invest in risky projects just because it has more money in its pockets. Of course all film projects are risky and many mistakes are made that require offsetting moneymakers to remain in business. But there is no reason to think that Disney will use whatever "extra" money it makes from extended copyrights to make riskier films rather than distribute the profits to its shareholders.)

Finally, the record of the film industry on preservation of films is not a good one, even while those films were still under copyright protection. And again the reason is clear from ordinary free-market economic theory. A profit-oriented entity is likely to invest only where its calculus (which admittedly may be mistaken) gives an expected return greater than expected costs. When works are in the public domain, many people can try that calculation and, if even one of them thinks preservation has value, the work will be preserved (even if the preserver has made a mistake and loses money on the deal). When only the copyright owner can make that decision and decides against preservation, the work is lost irretrievably. That many companies profitably deal in reprinting public domain books, films, and music attests to the value of the public domain in preserving and disseminating our cultural heritage.

In short, the copyright periods are already long enough to insure "fair compensation" to American creators. What we must do to insure their continued creativity is to keep available to them the cultural building blocks they need to "advance the Progress of Science and Useful Arts." That means NOT extending the copyright protection periods. 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.

I apologize for the length of this letter, but I very much appreciate your willingness to consider my arguments. I have no personal stake in the matter of extension except my increasingly strong belief that passage of this legislation would make a few people a little richer and the American public in general much, much poorer.

Sincerely yours,

Dennis S. Karjala
Professor of Law

cc: Mr. Larry Urbanski
08-460-9099 (fax)