House IP Subcommittee Focus Turns to Moral Rights, Copyright Term, Droit de Suite

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By Tamlin H. Bason  

July 15 — A panoply of copyright issues often pushed to the background were front and center during a July 15 hearing held by the House Subcommittee on Courts, Intellectual Property and the Internet.

Five witnesses testified about copyright terms, termination rights, moral rights and resale royalties as the House Judiciary Committee pushed forward with its review of the nation's copyright laws.

The hearing also nominally focused on a pending bill that was introduced by the subcommittee's ranking member, Rep. Jerrold Nadler (D-N.Y.), which would give visual artists a portion of the proceeds of resales of their works by auction houses. A representative from the Copyright Office said the office was “pleased that the bill adopted a number” of recommendations that were made in a December report issued by the agency.

Increasing Global Droit De Suite Recognition

Associate Register of Copyrights Karyn A. Temple Claggett testified about resale royalties for visual artists. The concept of allowing visuals artists to share in profits generated by downstream sales of their works originated as a French legal doctrine and is often called “droit de suite.”

The American Royalties Too Act of 2014 (H.R. 4103; S. 2045) has been introduced to the House and the Senate. It would cause the United States to join the growing list of countries that allow visual artists to benefit from the fact that their works often fetch higher prices on resale than they do on first sale. Specifically, the ART Act would create a new exclusive right under Section 106 of the Copyright Act. That exclusive right would give a visual artist a resale royalty rate of five percent, up to $35,000, for any work that sold at auction for $5,000 or more. The rate would only apply to auction houses that sold at least $1 million of visual art the previous year.

“By adopting a resale royalty, the United States would join the rest of the world in recognizing this important right,” Nadler said during the hearing. “And because these countries have reciprocal agreements, they would then pay U.S. artists for works resold in their countries.”

The ART Act was introduced shortly after the Copyright Office revisted—at Congress's request—the droit de suite issue. In a 1992 report the agency had concluded that “there was insufficient economic and copyright policy justification for enacting resale royalty right or droit de suite legislation in the United States.”

But the office's December report noted that since that report the number of countries offering resale rights had increased from 36 to more than 70. And, in 2001, the European Union adopted Council Directive 2001/84/EC on the Resale for the Benefit of the Author of an Original Work of Art, which required member states to implement such a right by 2006. The report thus suggested that Congress may want to consider enacting a limited resale royalty provision, though the office also noted that there may be suitable alternatives to legislation.

“The international trend is compelling,” Claggett said during the July 15 hearing. Moreover, “The issue of resale royalties is at its core an issue of fundamental fairness,” she said. “Should visual artists be able to receive some compensation from the substantial increases in the value of their works over time, to help ensure a fair return in works that are uniquely produced?”

However, Claggett reiterated the office's position that resale royalty legislation “is not necessarily the only or best option to address the position of visual artists.” Rather, she said that the issue may also be addressed though voluntary initiatives and best practices among stakeholders in the visual art community.

U.S. Moral Rights ‘A Patchwork of Laws.'

Rick Carnes, president of the Songwriters Guild of America, was asked to testify about whether the United States should insert a “moral rights” provision into the Copyright Act. Another doctrine that originated in France, moral rights, or “droit moral,” allow copyright owners to control downstream uses of their works. The doctrine is included in many foreign copyright regimes and it was even part of the 1886 Berne Convention, which the United States ratified in 1998.

“Most commentators have described the American moral rights system as a patchwork of laws,” Rep. Robert Goodlatte (R-Va.), chairman of the full Judiciary Committee, said.

The only federal law in that patchwork is the Visual Artists Rights Act of 1990, 17 U.S.C. §106A, which granted visual artists a limited set of moral rights—namely, the rights of attribution and integrity. But moral rights have never been extended beyond the fine arts community.

Carnes said it was a “bedrock moral rights principle that a creator has the right to control the use of something he or she has created, and to receive attribution for such use.” Carnes, however, did not offer any concrete recommendations for how— or even if—Congress should codify moral rights for the music community. Instead, Carnes focused on the fair use doctrine, saying it is an “excellent, flexible framework for courts to settle questions concerning the adequacy of a fair use defense in any copyright infringement action.” Carnes said the doctrine “needs to be left alone.”

Casey Rae, vice president of the Future of Music Coalition, also testified on behalf of the music industry and like Carnes he offered vague support for an extension of moral rights.

“Attribution is something that is supported by every artist to whom I've spoken,” Rae said. “So if Congress can help with attribution, the creative community would likely respond favorably,” he said.

Are Sound Recordings Subject to 203 Terminations?

Rae also testified about who should be able to exercise termination rights under Section 203.

If the original author of a work granted, licensed, or otherwise transferred long-term rights in that work after 1977, Section 203 of the Copyright Act gives that original author or his successors the right to cancel such transfer agreements after 35 years.

“There should be no question that recording artists, songwriters and composers are eligible to terminate transferred copyrights after 35 years under Section 203,” Rae said.

Rae said record labels have argued that sound recordings are not subject to the termination provisions.

“It is my view, and also the view of a great many artist advocates, legal professionals and copyright scholars, that Section 203 applies to all expressive works and authors,” Rae said.

Carnes also said his organization supported termination rights. “We think it is one of the most important reflections of moral rights that Congress has ever included in American law,” he said.

Copyright Term Still Controversial

The most controversial topic discussed during the hearing related to copyright term. Two of the five witnesses, Rae and Professor Michael W. Carroll from American University Washington College of Law, argued that the current term of life plus 70 years was too long. They also both voiced support for Copyright Register Maria Pallante's suggestion that Congress consider shortening the copyright term to life plus 50 years, with the remaining 20 years of protection available on an opt-in basis.

“Copyrights have to expire; the Constitution says so,” Carroll said. “From an economic perspective, to promote means to provide incentive, life plus 70 is far longer than is necessary,” he said.

Rae approached the issue from a different angle, saying that the underlying issue is how to advance the fundamental respect for copyright. “The issue here is that in the public's mind—perhaps wrongly—many believe that copyright term has only been expanded to serve corporate interests.” He said that an adoption of Pallante's approach would be a public demonstration of a concept that restores more balance to the Copyright Act.

Thomas D. Sydnor II, a vising fellow at American Enterprise Institute, said that any perception that the copyright term has only been expanded to serve corporate interests is indeed mistaken. In his written testimony Sydnor explored the reasons behind every copyright term extension from 1831 through today. Every extension, he said, has served two core principles that were articulated by the Framers: that copyright serve the author during her lifetime and for a post-mortem period to benefit the author's immediate family; and that U.S. copyright policy accord wither international norms.

“The simple truth of the matter is that the term we have right now is there for a reason: it is a sensible way of limiting copyright,” Sydnor said. “It has been a principled evolution of copyright term.”

Carnes also opposed any attempt to shorten the current term, noting that the issue has been considered again and again by Congress, the Supreme Court and the Copyright Office.

“To reconsider this issue yet again would be an unfortunate waste of valuable, legislative time far better spent on other issues critical to improving the U.S. copyright system,” he said.

To contact the reporter on this story: Tamlin Bason in Washington at tbason@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com

Hearing materials available at http://judiciary.house.gov/index.cfm/hearings?ID=B380074D-8EF1-4445-AAA9-06CB2F60535F