Ms. SCHRADER. Berne, in Article 2, has an extensive listing of the subject matter that is covered. And works of architecture are essentially covered by the phrase "three-dimensional works" relative to architecture.

There is a separate description for "Yes, works of applied art" is the phrase in the Berne Convention. So they are definitely mentioned, and industrial design would be covered to some extent. But it's not a binding obligation necessarily. That is, you can protect that subject matter generally within the Berne Convention, but there are other provisions later in Article 2, for example, that indicate that you have quite a bit of flexibility in deciding the extent to which you would protect applied art and industrial design under copyright.

Now, the Ad Hoc Committee report goes into this issue in some detail, and does express the view that possibly, and I stress possibly, there would be somewhat broader protection for applied design under the Berne Convention than under U.S. law.

The main question really is whether the United States-whether any country-can refuse to protect, to give, can deny protection completely to artistic features of applied design. We do that in this country if the artistic features are not separate from the shape of the utilitarian article.

My own opinion is that our law is consistent with Berne with respect to works of applied art. But I do bring to your attention the comments of the Ad Hoc Committee.

Continuing with the other issues in the bill, the bill deals with moral rights. It would establish by specific language the rights of paternity and integrity. The language of the bill essentially repeats the text of the first paragraph of Article 6(b) of the Berne Convention.

What is not particularly clear under the Berne Convention is the extent to which you can limit those moral rights. The bill does take the approach of making the moral rights freely alienable so they can be transferred from one person to another which, of course, means the author can benefit monetarily by transferring the moral rights. Conversely, it's possible that it means the author could be required by publishers, at the same time as the author conveys the copyright, to convey the moral right.

In some countries, moral rights are not made alienable. They are rights that remain with the author or the author's heirs, and sometimes in perpetuity. That seems to be the case in France, that you cannot transfer the moral rights, they are essentially perpetual. The bill, H.R. 1623

Mr. MOORHEAD. Wait a minute. Just a moment.

Ms. SCHRADER. Yes.

Mr. MOORHEAD. This is a very important point to us in California where you can't get a motion picture studio to buy a play or a book unless they can make a picture that they can make some money on. And if it's going to be totally controlled throughout the process by the person that sold their rights, and it could certainly cut down the value to the producer of the picture. And I think that's something that has to be very definitely clarified for us because we could go forward with something like this, that that right to transfer from the author to whoever was going to put on the-whether

it be on a television show or a motion picture studio, or whoever it was there, we have done that in our bill.

But is there anything in the Berne Convention that might in any way limit that right?

Ms. SCHRADER. The World Intellectual Property Organization which administers Berne has published, several years ago, a guide to the Berne Convention. And as we mentioned in our prepared statement, in that guide, the author suggests that the states have flexibility with respect to moral rights as to whether the right alienable or not.

You will hear different opinions about this. My own opinion is that the practice in the Berne states does diverge on this point; that you have a state such as France which makes the right inalienable. Apparently, in Germany it is common to transfer the moral right by contract.

Mr. MOORHEAD. So you think that each country virtually has the right to make the decision on their own?

Ms. SCHRADER. I think that, to date, that is the opinion that the Copyright Office has reached.

Mr. KASTENMEIER. My only comment would be, and we'll get into this later on, is that appears to be self-defeating particularly to authors who look forward to acquiring a so-called moral right.

Just as though you were in Texas conveying land, you have to convey the mineral rights with the property, why if you have to convey the moral rights with your copyright, then you are no better off than when you started in a sense unless, in the marketplace, it is somehow felt that the so-called moral rights have a value of their own in addition to the intrinsic work itself. I don't know.

But I think that's something we can explore in future hearings. Ms. SCHRADER. With respect to moral rights, the bill also does include limitations to make possible standard industry practices with editing and adapting a work expressly for publication when it has already been licensed for publication. The publisher would have the right to do the customary things that are necessary to get the work ready to be published unless the author made an express reservation, and took that away from the publisher.

The juke box compulsory license, Mr. Oman has already commented on this. The bill does modify the license without repealing it, and the justification for retaining it would be that it's perhaps analogous to the regulation of Performing Rights Societies and regulation of the rates that they set in other Berne states.

With respect to formalities, the bill would eliminate the notice of copyright as a condition of protection. Everyone agrees this must be done to be consistent with the Berne Convention. But the bill does attempt to encourage use of the notice on a voluntary basis by giving it evidentiary weight against a defense of infringement.

The bill does not make any change in the registration and recordation system other than to sever the link with the copyright notice. If, under present law, you publish without notice, you can cure that mistake by registration. And in that sense, registration becomes a condition on copyright in the present law, so that has simply been eliminated from this bill.

But registration remains a prerequisite for a suit for copyright infringement, and so is recordation. And as we have indicated, the Copyright Office believes that there is a justification for this under the Berne Convention, especially if it's practiced in Berne states. We would see the registration recordation requirements as procedural in nature. We think that they've served copyright proprietors, users, and the judicial system and the general public well for many years. And that the present inducements to registration should not be changed.

That would then conclude our summary of the bill.

Mr. KASTENMEIER. May I ask you this in terms of looking at it not only as an issue, but from a historical perspective, it appears that a hundred years ago, the authors were opposed greatly to formalities. And to someone who is not an author, I keep wondering why copyright formalities, at least when compared to the Patent Office, are relatively modest indeed.

I take it it is because authors fear that the failure to comply with one or more of the simple formalities might cost them something with protection of their works. Is that the sole reason that the rather limited formalities that are required by some countries are opposed by, for example, authors?

Ms. SCHRADER. Well, I think that's part of the reason. You're quite right to refer to historical context though of the opposition to formality.

When the Berne Convention was being created in the late 19th century, there were many formalities applied in the various countries, and different formalities. I mean not just a copyright notice, there might have been a formality that you had to first publish in that particular country in order to enjoy protection. It was a very common requirement.

There might have been certain filing requirements which would be a condition of initiating the right. This is why without making such a registration, you would have no right whatsoever.

And, of course, naturally the authors had problems with both the variety of the required formalities and the fact that they had to comply in the various countries.

So the Berne Convention attempted to deal with this initially by saying basically that you had to only comply with formalities in a country of origin. So that was their initial attempt to deal with it, so that you would only have one set of formalities that you would have to look to.

But then, by 1908, there was sufficient opposition, and they decided that it was far better to simply do away with formalities.

Another point that might also be made is that, at least in the 19th century, there probably was some concern that the formalities would be applied in a discriminatory way against foreign authors. You have certain formalities on the books which are not necessarily invoked very strongly against your national authors, but might be used to curtail protection for foreigners.

So there were these kinds of fears, and one of the major achievements of the Berne Union was both originally to minimize those requirements, and then to do away with them.

The Universal Copyright Convention, on the other hand, because the United States was not, even by the mid-fifties, 1950s, prepared

to do away with notice, the UCC took the alternative of simply minimizing formalities down to one so that it was one formality that had to be observed to get protection, and that is the UCC system.

Mr. OMAN. I think that the reason the authors feared the formalities includes not just the fear of losing their copyright, the other side of it is that they are generally not sophisticated in the world of business, they don't like paperwork and bureaucracy, and they wanted to be free to spend their time creating beautiful things and not filling out forms and paying $10. And those factors also figure into the equation.

Let me continue now that we have had the analysis of H.R. 1623, and really, by way of concluding; we have already gone longer than we wanted. Up until now, the debate on Berne really has not been entirely satisfactory. We have had very general and very refined conversations, at least publicly. It's much like a very polite tea party.

Your hearings, I think, will add some life to that debate and get the parties to talk frankly about their real interests. Up till now, we've talked about platitudes, hoping somehow that Berne wouldthat we would slip into Berne in the still of the night, and hoping that no one would notice that there really are some controversies out there lurking in the dark.

Your bill, Mr. Chairman, I think throws a hunk of red meat on the table. It raises all of the right questions. Let me list some of the questions that I think your bill raises and that we hope to have answers to in the near future.

First, would Berne be directly applied in U.S. courts, the issue of self-execution? If so, can Congress bar direct application by statute and a sufficiently clear statement of Congressional intent?

It's our view that this can be done, but we want to hear what the affected industries have to say about it.

Second, to what extent must we accord retroactive protection in order to satisfy Article 18 of Berne?

Ms. Schrader has gone into this, and I won't repeat it, but it is a question that certainly has to be answered.

If Congress grants no retroactive protection, would our courts hold that we have breeched the Convention if we did not provide any retroactivity? Could we refuse to provide redress either in the courts or by amending the copyright law? What are the experiences of other Berne states in applying Article 18?

These are answers that I hope we get in a subsequent hearing and, if we don't, the Copyright Office would be pleased to do research on its own to get those answers.

Third, we wonder whether or not we can retain the juke box compulsory license in the modified form, that is, as a last resort if private negotiations fail, or again would our courts hold that the compulsory license, no matter how it's buried, violates Article 11 of Berne. Would our courts find the modified compulsory license justifiable based on analogies to practices in other Berne states, regulating performing rights societies as monopolies?

Fourth, we wonder whether or not the United States would be granting adequate moral rights either under your formulation or

under the Federal-state law theories that have been propounded by the Ad Hoc Committee.

Are state law theories preempted by Section 301 of the Copyright Act? Are state law theories sufficiently settled and uniform to satisfy the treaty obligations? Does your amendment in H.R. 1623, Mr. Chairman, go far enough, or does it go too far?

I think those questions have to be answered.

And, last, we wonder how many buildings would in fact be protected if U.S. law is amended to protect architectural works? What is the standard of artistry, if any, that should be applied, and what will be the practical impact on your normal real estate transactions?

These are some of the hard questions as we see them. The Copyright Office has not attempted to evaluate the credibility or the strength of the arguments pro and con so much as to lay them out for your own examination.

The office wants to bring the most contentious issues into sharper focus for you so that Congress can better evaluate the testimony of future witnesses.

We do not have unlimited resources, Mr. Chairman, but we will give the very highest priority to any requests from you for additional study or for help evaluating testimony of subsequent wit

nesses.

And having said that, Mr. Chairman, I would be pleased to answer any questions that you might have.

Thank you.

Mr. KASTENMEIER. Thank you very much, Mr. Oman and Ms. Schrader. You have been very helpful and covered a lot of area I think in a remarkably short time.

I appreciate your raising those questions at the end, and I look forward to having you help us answer those questions and perhaps others in the days ahead.

I should point out that the last 15 pages or so of your statement are arguments both in favor of U.S. adherence and arguments in opposition to U.S. adherence which are very helpful, and which are even-handed I might say, and rather objective.

May I ask, being as balanced as it is, does the Copyright Office currently have a position as to whether it supports U.S. adherence to the Berne Convention or is that something

Mr. OMAN. I was afraid you were going to ask that, Mr. Chair

man.

[Laughter]

We did think long and hard about that. Since we do suggest that there are so many unanswered questions there's an element of irrationality in us deciding whether or not the U.S. should join the Berne Convention at this point without hearing subsequent testimony and evaluating the evidence.

I have said that Berne adherence is the most important international copyright issue that the United States will face in this century, and in the prepared statement I have tried to help you focus on issues by analyzing the legal incompatibilities and summarizing the major policy arguments on both sides.

I am hesitant to take a position on the general question of adherence before I do hear the subsequent testimony.