Independent Filmmakers' 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 independent filmmakers. Footnotes have been removed)

Statement of AIVF, Doculink, Film Arts Foundation,
FIND, IDA, IFP, NAMAC, NVR and Public Knowledge
Subcommittee on Courts, the Internet, and Intellectual Property
Committee on the Judiciary
U.S. House of Representatives
March 15, 2006
Re: Orphan Works

 

Chairman Smith, Ranking Member Berman and Members of the Subcommittee,

 

Thank you for this opportunity to submit this statement for the record on the issue of orphan works. We are submitting this statement on behalf of the hundreds of thousands of independent and documentary filmmakers and other independent media producers who are members of, or represented by members of: Association of Independent Video and Filmmakers; Doculink; Film Arts Foundation; FIND (Film Independent); International Documentary Association; IFP (Independent Feature Project); National Alliance for Media Arts and Culture; National Video Resources; and Public Knowledge.

As a whole, we represent individuals and organizations that produce, exhibit, distribute, collect, preserve, and educate through independent film and media. Our group includes or represents filmmakers, video artists, production facilities, community technology centers, film festivals, media distributors, film archives, after-school programs, community-access television stations and individuals working in the field of film and media arts. We are grateful for the opportunity to express the viewpoint of independent and documentary filmmakers and other independent media producers, and are delighted to offer our perspective on the important issue of orphan works.

Introduction

Independent and documentary filmmakers create without the benefit of sustained, large-institution backing. Like many artists in the United States, we work with very limited resources, but with great passion and energy, in order to make films and other cultural products that nourish the unique American marketplace of ideas. We rely on our copyrights to protect our vision and allow us to monetize a labor of love, and believe in strong and clear copyright protection. At the same time, many artists and supporting organizations are affected by the uncertainty surrounding the use of copyrighted works for which the owner cannot be found. This is an issue that affects all artists; for small filmmakers, however, the ensuing risk can simply be crippling. Films—even with the exciting advent of digital and other new technologies—are expensive to make. The independent filmmaker must marshal all of his limited resources to raise funds; find locations; rent or purchase equipment; cast actors; hire the many workers needed to produce a film; obtain permits; search archives; license music and footage; travel; edit; obtain insurance and legal representation; pay out funds to secure distribution channels for his work... and the list goes on.

When a filmmaker cannot clear an orphaned work, she is left with two choices under the present system: 1) proceed, using the work, with the knowledge that unknown liability costs—or even an injunction—may lie ahead; or 2) refrain from using the work. For the independent or documentary filmmaker today, there is no real choice. Without a large institution to help spread the monetary risk, with the knowledge that she will have to compete aggressively to sell her film to often risk-averse distributors and obtain insurance, and with the possibility of an injunction that could silence her film forever, she simply cannot use the orphaned work. As such, the creative work that she has conceived and would like to present to the public is compromised, and the orphaned work languishes in obscurity and silence.

For these reasons, we are delighted that Chairman Smith and Ranking Member Berman, along with Senators Leahy and Hatch, asked the Copyright Office to address the important issue of orphan works, and we are grateful to the Copyright Office for its sound efforts to understand and address the issue over the past year. The expertise, seriousness of purpose and care with which Register Peters, Associate Register Sigall and their team approached the issue are reflected in their thorough work in gathering information from affected parties across the user and copyright holder spectrum, and in their comprehensive, careful and thoughtful Report on Orphan Works. It has been a distinct pleasure to work with the Copyright Office and the many groups who are seeking a solution to the orphan works problem—rarely is there so much convergence on policy matters in the intellectual property realm as there is here, and all participants have been, and continue to be, thoughtful and creative in addressing the issue. As do others involved in this discussion, we agree with many of the Report’s findings and suggestions.

We are, however, concerned about the Report’s recommendations in three main areas:

In addition, we seek clarification as to when it should be appropriate for a user to be eligible for the limitations on remedies when she relies on the results of a previous third-party search. We also seek clear, unambiguous requirements for what constitutes a legitimate attribution, and, lastly, elimination of the proposed sunset provision.

Achieving Certainty: Section 514(b) and “Reasonable Compensation” Compared to a Statutory Cap on Damages

The Report takes the discussion around orphan works precisely where it needs to go: how can orphan works owners’ rights be preserved while encouraging the use of culturally valuable materials? From our point of view, the answer to this question is to: award damages to compensate owners; and be as clear as possible about setting limits on the damages so that users know their potential liability in advance. The Report generally embraces this approach and proposes a limitation on remedies to “reasonable compensation,” after a user completes a “good faith, reasonably diligent search.”

We support the requirement of a good faith, reasonably diligent search and agree that standards of diligence should be flexible and not rigidly defined by statute. As copyright holders ourselves, we believe strongly that no copyright holder should be deprived of full remedies because a follow-on user cannot be bothered to engage in a reasonable search; as users of works, we understand that reasonable searching differs from medium to medium and from industry to industry, so that any standard must be flexible. We do recommend clarifications as to when a user can reasonably rely on a previously-conducted search. Please see our discussion of this issue below.

We also agree with the Report and the vast majority of proposals that a meaningful solution to the orphan works problem calls for “clear limitations on the statutory damages and attorneys’ fees remedies in cases involving orphan works.” However, the Report’s proposed general remedy of “reasonable compensation” would not provide the necessary level of certainty or clarity to many orphan works users.

Statutory Cap

In order to give independent filmmakers the needed certainty to use orphan works, a statutory damages cap is imperative. The Report recognizes that the prospect of a large monetary award for an infringement claim, regardless of its likelihood, is a substantial deterrent for any user of an orphan work. It is understandable that “reasonable compensation” may be a meaningful option for some users, particularly those with the institutional ability to spread risk. For most independent artists, however, spreading risk across a larger organization or a multitude of projects is not an option, and neither is budgeting for the potential financial costs of adjudicating a claim. This greater risk is exacerbated by the fact that independent filmmakers and other small artists operate in a market where cost is relative and difficult to ascertain in advance. As such, greater certainty of potential financial risk is critical to their ability to use a work. Overall, the small filmmaker needs to be confident that her decision to make use of an orphan work will not engender unanticipated costs that could break her project. Without the certainty provided by a cap, many users simply could not properly measure their potential exposure, preventing them from using orphan works

A statutory damages cap not only gives valuable certainty to users, but also provides efficient compensation to owners. A cap facilitates the transaction between orphan works owners and users by eliminating the need for costly litigation. When a user can properly budget for an orphan works use, she will be in a better position to pay an emerging owner. Both the user and owner can avoid the costs and uncertainties of litigation, ensuring an economical return to the owner. The certainty of a cap provides clear incentives for owners to emerge (and reduces the number of orphan works overall) to collect their awards. It also invites users to create with advance knowledge of what the cost of use will be.

We understand that some may be concerned that a cap does not allow for situations where a copyright holder appears and can only recover an amount that is substantially less than she would have gotten through an arms-length license negotiation. However, this situation is likely to be exceedingly rare, as the follow-on user has already searched for the copyright holder and not found her. Though such instances may rarely occur, and would be unfortunate, the fact that independent users would otherwise not have the certainty to use any orphaned work seems the far greater harm. Additionally, the fact that the proposed limitation on remedies extends only to one use allows a copyright holder to extract value from his copyright (including any value added by attention to the follow-on user’s work) beyond the limited remedies. Again, filmmakers and other artists are copyright holders, and certainly do not want to undermine the rights of those who wish to exploit their copyrights. But an orphan works scheme that is unusable for large numbers of artists would extract a far dearer price from our cultural heritage than one which, in rare situations, may not fully compensate a surfacing copyright holder.

The surfacing owner and the user of an orphan work both suffer from the often prohibitive costs of litigation. Just as an owner might be barred from recovering a royalty because the costs of bringing a lawsuit are greater than the royalty itself, a user might be barred from a use because of the threat of being dragged into a proceeding that is itself more expensive than the reasonable royalty. In fact, the risk of suit, regardless of the merits, is enough alone to prevent numerous creators from using an orphan work. For this reason, many orphan works users would be more, not less, willing to pay a capped amount and thereby avoid costly litigation. Like virtually every independent artist, independent filmmakers work with tight budgets that can restrain their creative endeavors. A monetary cap allows these users to properly budget for their use, and therefore, effectively pay a surfacing owner. Neither side desires to go to court, and a cap would mean, essentially, no reason to do so. Any copyright owner—whether a photographer, author, other filmmaker, or corporate holder of the copyright—would benefit from such a system.

We also understand concerns that a damages cap—or other remedy limitation— would cause some users to refuse to make any payment because the user would know that the costs of pursuing a damages award by the owner would greatly exceed the amount of the capped damages. At the March 8 th, 2006, Oversight Hearing on orphan works, David Trust of the Professional Photographers of America voiced concerns about the proposed reasonable compensation scheme, fearing individuals of “ill will” who would claim every work as an orphan and decline to cooperate with owners. At the hearing, Mr. Sigall thoughtfully addressed these concerns by suggesting an exception to the limitation of remedies in cases where a user refuses “to negotiate in good faith.” Assuming that such an exception would be reserved for cases of bad faith, we wholeheartedly support the idea. (In fact, under proposed Section 514(a)(1), bad faith would vitiate the threshold test of a reasonable, good faith effort to find the owner. Such a victimized copyright owner would qualify for statutory damages and a judge should take the fraudulent conduct into consideration in setting such damages.) Regardless of the form the remedies limitation takes, an exception to the limitation of remedies would solve this economic incentive issue by preserving the right of an owner to claim attorneys’ fees, actual, and statutory damages against individuals who act in bad faith. Coupled with a statutory cap, an exception would encourage the user to negotiate in good faith and pay compensation in the form of capped damages, while at the same time providing a level of certainty essential to orphan works legislation.

Certainty regarding potential future costs is fundamentally important to filmmakers’ and other independent media artists’ ability to use orphaned works. With a cap in place, neither party would have the uncertainty and expense associated with litigation. Further, clarity creates the added benefit of limiting the costs and burdens to the judicial system, generally.

Determining “Reasonable Compensation”

All three of the priorities mentioned by the Report are facilitated by the certainty of a cap: reducing the number of orphan works; permitting use of existing orphan works; and reducing costs and burdens on all stakeholders dealing with an orphan works scenario. Though we strongly believe that a statutory cap is essential to an orphan works solution that is truly workable for many follow-on users, should Congress nonetheless adopt a “reasonable compensation” remedy, there are important changes that can be made to the Report’s definition of “reasonable compensation” that would provide some more comfort to an independent filmmaker or other artist using an orphan work. Most notably, we follow others in suggesting the addition of statutory language that makes clear how “reasonable compensation” is determined. Although the Copyright Office’s recommended statutory language does not explain the term “reasonable compensation,” the Report provides noteworthy guidance on what it should represent. The Report’s explanation that, “the burden is on the copyright owner to demonstrate that his work had fair market value,” and that, “he must have evidence that he or similarly situated copyright owners have actually licensed similar uses for such amount” should be incorporated into the statute. Similarly, the Report states that, “it should be clear that ‘reasonable compensation’ may, in appropriate circumstances, be found to be zero, or a royalty-free license, if the comparable transactions in the marketplace support such a finding.” Indeed, the best way to make this clear is to include corresponding language in the statute. We recommend the addition of the same statutory language proposed in the statement of Maria Pallante-Hyun of the Solomon R. Guggenheim Foundation:

We also agree with Ms. Pallante-Hyun that the legislative history of orphan works legislation should include examples of what might constitute reasonable compensation. In the legislative history, particular attention should be paid to independent artists and filmmakers and other non-institutional follow-on users, who will rely heavily on clear limitations on remedies in order to move forward with the use of an orphaned work. For example, it should be unmistakably clear that an independent filmmaker’s “reasonable compensation” to a surfacing owner of an orphan work should not be compared to what major motion picture studios pay owners of highly-managed works. An illuminative legislative history, demonstrating that it is often the practice of independent filmmakers to negotiate royalty-free or significantly discounted royalty rates, is crucial for independent artists and creators to confidently use orphan works.

Option to Cease Infringement and “Direct or Indirect Commercial Advantage”

The Report’s proposed legislation (§ 514 (b)(1)) grants users the option to cease use rather than pay reasonable compensation when the use is “without any purpose of direct or indirect commercial advantage.” These users are fortunate: they have a measure of control over what form relief takes, and can decide on the best option in the context of their particular projects. While we do not advocate for ceasing use (“takedown”) as an overall solution to the orphan works problem, we note the increasing importance of this option for follow-on users as monetary risk becomes more uncertain. As such, filmmakers and other users should also benefit from the option to “take down” an infringing work, particularly if the less-certain “reasonable compensation” payment is their remaining option.

We believe that the types of users benefiting from this exception under the Copyright Office suggestions are unnecessarily limited. Not every commercial user is a large movie studio or rich author. Many individual artists, including independent filmmakers, are not endowed with great resources, yet to the extent that their art is their livelihood, their use of orphan works is indeed commercial. Moreover, as Representative Lofgren articulated at the Oversight Hearing, thinking of orphan works in terms of profit versus nonprofit uses sets up a false dichotomy: the orphan works problem is essentially about opening access to cultural materials that are in effect abandoned, commercial use or not.

Therefore, the option to cease an infringing use rather than pay monetary damages should be available to all users, most especially those who are least likely to have institutional funds to pay damages or defray risk. Dividing between commercial and noncommercial uses, as the Report attempts to do when it parses between uses that have “direct or indirect commercial advantage” and those that do not, is challenging and problematic. This is reflected in the Report’s explanation and was captured at the Summer 2005 roundtables, as well. A bright line still evades us, especially so in the context of media created by individuals who lack institutionally “non-profit” status, but who operate without a pure profit motive. For instance, what would be made of a film project undertaken by a filmmaker and submitted to a school-run film festival that goes on to garner awards at national festivals? There are simply too many areas that are technically commercial, but operate with such limited budgets and for the public good that the distinction fails. Likewise, there are not-for-profit organizations that are so large and successful that their ability to respond to damages and undertake risk mirrors their commercial counterparts. The option to take down should not be based on such a murky distinction.

In many cases, of course, it is impossible for a filmmaker to cease a use in a film that has already been finished, but in some cases, “takedown” may be a better choice for the filmmaker. Since independent filmmakers have such sensitive budgets and work on projects where the unique fair market value for a particular use might be hard to know in advance, they need the option of taking down the work. If they had been able to negotiate beforehand and known what the cost would be, they may not have ever used the work and should be able to preserve the right to take down. This is especially important when there are few useful market transaction guidelines, as in the case of experimental and avant-garde films or other new types of art. And, of course, all artists are not filmmakers, and most create work that could be considered commercial. For other types of artists, for example web artists or those working in other multi-media platforms, the option to take down may be even more important and useful than it is for filmmakers.

To be effective, a take-down provision should require that owners meet certain evidentiary thresholds in order to make a valid notice of infringement. This would guard against fictitious claims. Orphan works owners should bear the burden of substantiating their ownership before a user is expected to comply with the notice in an “expeditious” manner. We find ourselves in agreement with the testimony submitted by Maria Pallante-Hyun of the Guggenheim in this regard, which calls for the user to be held to a reasonable standard and cease the infringement “as expeditiously as is possible under the circumstances after receiving notice of the claim for infringement.”

Injunctive Relief and Orphan Works Incorporated in Other Copyrighted Works

So long as there is a broad threat of a catastrophic injunction, artists will be forced to shun the use of orphan works. As the Report acknowledges, one of the worst nightmares for any filmmaker is a last-minute injunction brought right before the release of a film. Although takedown may in some cases be the best option in the face of a lawsuit to determine reasonable compensation, it will always be a second-best option for a filmmaker or other follow-on creator who has incorporated orphan works into new creations. As such, a meaningful limitation on injunctive relief is critical for filmmakers.

An orphan work may represent a little or a lot of the new creation, and may be impossible to remove from the overall work. We greatly appreciate the Report’s recognition that the fear of such a crippling injunction brought by a surfacing orphan works owner “provides enough uncertainty that many choose not use [sic] the work, even though the likelihood of such injunction is small.” We agree with the Report’s conclusion that injunctive relief should not be available against qualified users of orphan works except “where a user simply republishes an orphan work, or posts it on the Internet without transformation of the content.”

Although the Report thoughtfully speaks to the issue of limiting injunctive relief, the recommended statutory language is presently somewhat confusing and restrictive. A properly-drafted and expanded notion of what types of work can be protected from injunction is an important recognition of the risk and reliance undertaken by a user who wants to make use of an orphan work. Therefore, we again adopt the view represented in Maria Pallante-Hyun’s statement, suggesting a less restrictive characterization of works protected from injunctions. It should be enough that the orphan work is adapted for or incorporated into another work that includes separate substantial expression.

We appreciate Copyright Office Principal Legal Advisor Robert Kasunic’s comments at Professor Peter Jaszi’s February 24 th conference on orphan works that any ambiguity in Section 514(b)(2)(A) was unintentional and understand that the Copyright Office is presently undertaking a review of proposed Section 514(b)(2)(A) with the intent of addressing any confusion. We are grateful for this effort and look forward to the results, and to working with stakeholders on any remaining concerns.

“Chain of Interest” Protection and the Attribution Requirement

We agree with the Report’s recommendation that the attribution requirement can function as a way to advertise the use of orphan works to potential owners, thus encouraging them to step forward. More generally, artists appreciate and follow the general convention of crediting authors and other creative contributors to a project, and we expect others to do the same for us. However, when an attribution is “appropriate under the circumstances” must be clarified in statutory language and legislative history so that the steps required to meet it are not unnecessarily complicated or vague. We echo the concerns voiced by Allan Adler of the American Association of Publishers at the Oversight Hearing: unless the attribution requirement is clear, the validity of the attribution might become a target for attack by an emerging owner seeking to disqualify the use of an orphan work from the purview of this proposed legislation.

We also share the concerns voiced by Mr. Adler with regard to instances where a user could reasonably rely upon the results of a previous third party search. The mechanisms of many media industries require a downstream user to rely on the reasonable search efforts undertaken by another party, but still within the context of a single “use” of an orphaned work. For example, a film’s distributor should not be required to conduct a brand new search after the filmmaker has already done so in order to obtain protection. Indeed, the Report mentions that it might be reasonable under certain circumstances for a user to rely on the search conducted by another. We agree with Mr. Adler that further clarification on this matter is required and support his recommendations.

Sunset Provision

We join the seemingly broad consensus that a Sunset Provision would not benefit the progress of orphan works legislation but instead create more confusion and disruption. As we move toward an orphan works paradigm that provides more certainty for owners and users, a sunset provision that would change the law in the future would fundamentally undermine the goal of these collective efforts. Before she can change the way she works and creates vis a vis orphan works, a filmmaker, like any user, would have to know that protections granted by new legislation are enduring.

We similarly support a follow-up Report requirement conducted by the Copyright Office on the effect of orphan works legislation. Understanding the relative successes of the legislation as it is applied, and gathering additional feedback from creators and owners so as to fine tune it, is a commendable goal.

Conclusion

In conclusion, we would like to thank Chairman Smith, Ranking Member Berman and members of the Subcommittee for the opportunity to address these important matters surrounding orphan works legislation. We would also like to thank the Copyright Office for its efforts and valuable insights, and all the stakeholders with whom we have been working toward the important goals of mapping and solving the loss of valuable cultural products caused by the orphaning of copyrighted works.

Providing the public with broader exposure to valuable works from our cultural heritage is truly within reach. We commend Chairman Smith’s efforts to bring parties together to collectively craft working legislation. We look forward to working with other stakeholders toward a mutual solution and are confident that under Chairman Smith’s leadership we can achieve meaningful and effective orphan works legislation.

Coalition Organizations:

Association of Independent Video and Filmmakers (AIVF): a non-profit membership organization with 5,000 members serving local and international film and videomakers— from documentarians and experimental artists, to makers of narrative features—by providing a variety of informational services and other resources. (http://www.aivf.org)

Doculink: an association of Los Angeles documentary filmmakers that meet regularly to review the projects and problems of local filmmakers. (http://www.doculink.org)

Film Arts Foundation: a non-profit membership service providing comprehensive education, equipment, information, consultations, and exhibition opportunities to independent filmmakers. (http://www.filmarts.org)

FIND (Film Independent) (formerly IFP/Los Angeles): a non-profit membership organization that is home of the Spirit Awards and the Los Angeles Film Festival. (http://www.filmindependent.org)

International Documentary Association (IDA): a non-profit organization representing the interests of documentary filmmakers. IDA represents nearly 3000 members in 50 countries around the world. (http://www.documentary.org)

IFP (Independent Feature Project): a not-for-profit membership organization designed to foster a more sustainable infrastructure that supports independent filmmaking and ensures that the public has the opportunity to see films that more accurately reflect the full diversity of the American culture. Headquartered in NYC, there are IFP organizations in Chicago, Minneapolis/St. Paul, Seattle, and Phoenix. IFP is also part of an international network of organizations, each supporting their own national filmmaking efforts. (http://www.ifp.org)

National Alliance for Media Arts and Culture (NAMAC): a non-profit association dedicated to the support and advocacy of independent film, video, audio, and online/multimedia arts. NAMAC represents over 350 member organizations, which in turn represent at least 400,000 media artists and others working in the media field. (http://www.namac.org)

National Video Resources (NVR): an organization that provides grants to filmmakers and creates educational programming using film and video. NVR represents over 350 Media Artist Fellows in the United States, and its programs have been used in over 400 public libraries in 48 states. (http://www.nvr.org)

Public Knowledge is a public-interest advocacy organization dedicated to fortifying and defending a vibrant information commons. Public Knowledge works with wide spectrum of creative artists, including filmmakers, musicians, creative writers, dancers, and visual artists to ensure that their interests are represented in copyright and communications policy debates. (http://www.publicknowledge.org) .