Directors Guild Testimony . . .

Stock Asylum Staff Report
March 29, 2006

(Editors note: Following is written testimony presented to the U.S House of Representatives' Judiciary Committee, Subcommittee on Courts, the Internet, and Intellectual Property about proposed orphan works legislation by the Directors Guild of America. Footnotes have been removed)

Statement of the
DIRECTORS GUILD OF AMERICA
Submitted for the Record
Oversight Hearing on
“The Report on Orphan Works by the Copyright Office”
House Judiciary Committee
Subcommittee on Courts, the Internet, and Intellectual Property
Wednesday, March 8, 2006

I. Introduction

The Directors Guild of America (DGA) commends the House Judiciary Subcommittee on Courts, the Internet, and Intellectual Property for convening a hearing to focus on the Copyright Office’s recent report on orphan works. DGA appreciates the opportunity to submit its views on this critically important issue.

Founded in 1936 by the most prominent directors of the period, DGA today represents 13,475 directors and members of the directorial team who work in feature motion pictures, television, commercials, documentaries and news. DGA’s mission is to protect the creative and economic rights of directors and members of the directorial team — working to advance their artistic freedom and ensure fair compensation for their work.

II. Copyright Office report

DGA submitted a comment letter to the Copyright Office on March 25, 2005 as part of that office’s review of the orphan works problem (a copy of the comment letter is attached). The essence of our position is that if the Copyright Office were to endorse a proposal increasing the public’s access to orphan motion pictures, the economic and creative rights of directors and screenwriters, as artist creators with contractual and other interests in such motion pictures, must be protected.

Since the names of the director and screenwriter are prominently displayed in each motion picture, DGA proposed a simple administrative process that could be established enabling the public, in situations where the copyright holder of a motion picture no
longer existed or could not be determined, to seek an appropriate non-exclusive license from the director or screenwriter to use such motion picture. Under the DGA recommendation, in the event that a copyright holder subsequently emerged to claim ownership of a work identified as an orphan work, procedures would be established for restoring the copyright holder’s rights.

In its report, the Copyright Office declined to follow DGA’s recommendations. They stated that “[t]o include such a provision in the recommendations would go well beyond the scope of this study, and touch upon fundamental issues about how rights and interests
in the exploitation of motion pictures are apportioned.”

The Copyright Office report continues: “The guilds’ concern, however, about how directors’ works might be used against their wishes in reliance on the orphan works provision, should prompt them to take steps, in their agreements with motion picture production companies, to ensure that the current copyright owner of a film is known and
easily found from a reasonable search.”

Unfortunately, the Copyright Office ‘solution’ to the threat faced by directors and screenwriters by expanding the public’s right to use orphan motion pictures ignores the business realities of the motion picture industry.

Rights in motion pictures, including the underlying copyright and fractionalized distribution rights, generally pass through many hands over the economic life of a motion picture. Production companies are routinely created to produce a single picture, the rights to that picture are transferred, and the production company dissolves. Subsequent rights holders often transfer partial or all rights to further transferees, and may well not record their transfers with the Copyright Office. Sometimes all distribution rights and other rights of economic exploitation are transferred, but the transferor technically retains the underlying copyright to a motion picture. These patterns are particularly pervasive when motion pictures are produced by independent producers that do not use a major studio to effectuate distribution in all markets or territories.

This business mode creates two issues: 1) a substantial likelihood that motion pictures will seem like orphans because the chain of title is too difficult to determine from public records; and 2) the problem of privity insofar as directors enter into a contract with the production company, but their economic and creative rights are harder to protect as the chain of title lengthens over time.

Congress recognized this privity issue through its passage of the Digital Millennium Copyright Act of 1998. That legislation contains a provision (Section 406) adding new protections upon the transfer of copyright ownership in a motion picture, subjecting the transferees to continuing obligations to make residual payments that were negotiated with producers under collective bargaining agreements. The law imposes such obligations if the transferee knows or has reason to know at the time of the transfer that a collective bargaining agreement was or will be applicable to the motion picture, and looks to databases maintained by each Guild as a basis for constructive knowledge of such coverage.

This same privity problem applies to orphan works. Any agreement that DGA, or individual directors, may reach with the original motion picture production company obliging that producer to ensure later copyright holders will be “known and easily found from a reasonable search” may only be binding on that particular producer. By transferring its economic rights in the film to another company, this duty to the directors and screenwriters would be rendered meaningless, as there may be no privity of contract between the director and the new holder of economic rights in the film.

Regardless of any agreements we might reach with the producer to prevent the film from becoming orphaned, if the producer in turn transfers its interest in the copyright to another entity we cannot easily defend the director’s interests if we lack privity of contract with the new copyright holder.

III. Rights of directors and screenwriters in motion pictures

Under typical industry practice in the United States, directors and screenwriters are employed by movie studios on a “work for hire” basis; accordingly, they do not hold the copyright to the movie. They do, however, have various economic and creative rights established both in the collective bargaining agreement negotiated by their respective guilds, and in specific contractual arrangements they enter into with the copyright holder. Screenwriters have similar continuing economic and creative interests in motion
pictures.

DGA continues to believe that any expansion of the public’s right to access and use orphan motion pictures must take into account all existing legal and contractual rights of creative artists in connection with their interests in the economic proceeds and integrity of their work, and in rights of attribution concerning their creative role.

While in some cases a motion picture may be orphaned because the copyright holder determines the picture has no continuing economic value, or insufficient value to justify the expense of protecting the copyright, the motion picture will likely still have value to the creators.

For example, a multinational corporation copyright owner may lose interest in a motion picture producing modest revenue streams, but those ‘modest’ revenue streams will in all probability appear much more significant to individual directors and screenwriters. And regardless of the economic interests of the copyright holder in maintaining a copyright, the creators will also have a continuing interest in protecting the integrity of the motion picture from distortion and manipulation in such a way that undermines the creative reputation of the director and screenwriter, and, through attribution, in protecting recognition of their creative role.

IV. DGA recommendations

Any ‘reasonably diligent’ search must include the director and screenwriter.

DGA recommends that in any legislation implementing the Copyright Office recommendations, the legislative history specify that any ‘reasonably diligent’ search for the copyright holder (a precursor under the proposal to establish orphan work status) of a motion picture include, in addition to searching for the copyright holder of the film, searching for the director and screenwriters.

This simple procedural requirement would not create any new substantive rights under copyright law for directors and screenwriters of motion pictures, but it would certainly enable more effective searches for copyright holders, and would assist directors and screenwriters in protecting their continuing interests in their work.

In its scroll of credits, every motion picture contains information identifying the film’s director and screenwriters. Modern day search technology (i.e., the Internet) and databases easily enable an individual desiring to use a motion picture to track down either the director or screenwriter. Of course such a search could turn up no records of either the director or screenwriter, in which case, if the potential user also was unable to determine the copyright holder through its ‘reasonably diligent’ search, then the film could truly be considered an ‘orphan work.’ However, finding a director or screenwriter may well enable contact with the ultimate copyright holder. And consider when directing or screenwriting services were not provided on a “work-for-hire” basis; in such circumstances the search for a director or screenwriter will facilitate contact with the
authors of the work.

Including a requirement in the statutory legislative history that a ‘reasonably diligent’ search include searching for the director or screenwriter makes policy sense because, given their economic and contractual interests in the use of their film in secondary markets and the residual payments that attach to that reuse, the director and screenwriter are highly motivated and situated to find, if they do not already know, the film’s copyright holder. Requiring potential users of an ‘orphan’ film to demonstrate a search for the director or screenwriter would ensure a simple, yet effective, back-stop against inappropriate ‘orphan works’ designations for motion pictures. It is also consistent with the pattern established by Sec. 406 of the DMCA, in which the ability to search Guildmaintained databases for information concerning Guild coverage contributes to “knowledge” under that statute.

V. Conclusion

The Directors Guild greatly appreciates review of the Copyright Office Orphan Works Report by the House Judiciary Subcommittee on Courts, the Internet, and Intellectual Property. This is a serious issue that deserves careful deliberation. As the process moves forward, DGA looks forward to demonstrating how the economic and creative interests of its Member directors are intimately connected with the films they create. Any orphan works legislation should take these concerns into account. The Guild stands ready to work with the Committee on this most important matter.