Copyright and the Publisher in a Market Economy

Charles Clark

The four corners of the copyright system are the security in law of the creator; the marking- out of the publisher's role as "producer" the balance of the interests of copyright owners with those of copyright users; and enfo'rcement of rights. To advance the system, publishers must make an economic case for copyright, explain what they actually do, publish about themselves, educate one another, and develop and exploit specialist knowledge.

The Four Comers of the Copyright System

The four corners of the "market economy" copyright system carpet woven together by the contributors to this issue are:

1. The security in law of the creator 2. The marking-out of the publisher 's role as "producer" 3. The balance of the interests of copyright owners with those of copy-

right users 4. Enforcement of rights in the copyright system.

The Security in Law of the Creator

The publisher has three interests. First, the publisher most often derives rights from the author. The author 's rights in any copyright system must be founded on rock, otherwise his licensees or assignees, his publishers, are work- ing for h im on shifting sand. And perhaps we underest imate the extraordinary vision of the founding fathers of the Berne Convent ion in making copyright secure wi thout any formalit ies--as soon as author puts pen to p a p e r - - a n d in then spreading that security from nation to nation through the strategy of "national treatment." The simplicity, and at the same time the sophistication, of that structure has stood the test of time and stands publishers in good stead.

Second, the publisher is, in some circumstances, in effect an author. Jon Baumgarten set out in detail the status that publishers seek as authors, as initial owners of copyright, as "successors in interest" of authors, and as sharers both of "the legitimate interests of authors" under the Berne Convention, and

Charles Clark is general counsel to the International Publishers Copyright Council. Address for correspondence: 90 Tottenham Court Road, Fifth Floor, London W 1 P 9HE.

80 Publishing Research Quarterly/Summer 1992

of "the author's economic interests" under the Universal Copyright Conven- tion. He urges (a) "recognition that publishers may sometimes be considered authors of particular works"; (b) "creation of legal presumptions or conclusions that for certain rights in certain works publishers are the initial owners of copy- right"; (c) "full acceptance of publishers as 'successors in interest' of authors under Article 2(6) of the Berne Convention, and as 'copyright proprietors' under Article I of the Universal Convention, of any exclusive rights acquired by contract"; and (d) "acknowledgement that the 'legitimate interests of au- thors' under the constraining clauses of Article 9(2) of the Berne Convention and the 'author's economic interests' under Article IV bis of the universal Con- ven t ion . . , contemplate the interests of publishers as well."

Third, the creative role of the publisher may need separate protection and security in the form of the much-debated publisher's right, whether as a copy- right or as a neighboring right. Responses from national publishers' associa- tions in membership with IPA to the Report of Autumn 1990 for the IPA and STM executive boards are still being gathered and collated, and further com- ment here would be premature.

The Marking-Out of the Publisher's Role as "Producer"

Here we examine first copyright as "the trading system for works of the mind," in Clive Bradley's now famous formula. And second, here fall naturally the attitudes of our different legal cultures to the control of the publisher's role. The publisher, in the traditional language of copyright, "exploits" the rights of the author. May he, in ways that should be controlled at taw, also "exploit" the author in a more sinister sense of that word?

As to "the trading system for works of the mind," the articles on the sale of rights explore the extraordinary richness of rights dealings. Lynette Owen is a leading practitioner in the art and craft of rights dealings across the wide range of what Professor W. R. Cornish (in his Intellectural Property) has called "a heady concoction of prospects." And the importance of the practical work of rights departments cannot be overstated in "developing a system," to bor- row again from Clive Bradley, "that allows the dissemination of a work to the maximum number of readers." The whole of Lynette Owen's article deserves reading and re-reading, especially her description of how rights managers and directors in publishing houses set about maximizing dissemination. It amounts to a "mini-textbook."

Let me move very briefly to another aspect of the trading system. That sys- tem depends entirely on exclusive marketing arrangements, whether for li- censing production of, or for selling directly copies in bulk into a territorial market, for licensing a translated edition into a territorial or language market, for a complex co-edition in several markets and languages. It matters not what kind of right or what form of edition is being negotiated: exclusivity is the factor that alone enables the heavy investment by publishers in any country, in

Clark 81

any language, in producing, stocking, distributing, marketing, and accounting for sales of what authors write.

Jon Baumgarten has noted the importance of exclusive territories and the challenge of the concept of "parallel importation." An article in Rights by Clive Bradley reviews fully this most dangerous threat to authorship and publishing alike. The World Intellectual Property Organization (WIPO) has consistently understood and supported the nature of the publisher's role in copyright. We are pleased to see that the gap in the Berne Convention of a distribution right--which may fatally open the door to parallel importation through the false notion of international exhaustion--was on the agenda for the Berne Protocol meeting in November 1991, and we welcome in the GATT/TRIPS context any support that WIPO can give to publishers on their position on exhaustion and parallel importation.

Let me also take up here the fascinating debate on privatization. Privatization means investment, investment means profit, profit means maximizing income, and maximizing income from primary and secondary uses of copyright works rests on security of contractual dealings. And what is contracted for, dealt in, and exploited are rights in copyright. Once again, the rock on which the pub- lisher builds his house is copyright.

Let me turn, then, to the other more sinister meaning of "exploit." The au- thor-publisher contractual relationship fascinates copyright experts: they love inventing ways of controlling the wicked publisher, sometimes through sanc- tions that have little or even no relevance to the realities of market economics. The Anglo-American tradition is that the law should not thrust its thick and clumsy hands into matters it does not understand, and should leave matters to the delicate fingerwork of negotiation, of union and literary agent representa- tion, of collective model agreements, etc. This tradition is challenged by the Continental practice (shared both by the West's "droit d'auteur" and the East's socialist economy codes) of invoking the historical imbalance of bargaining power between the weak author and the strong publisher, and asserting some legal control in their relationship.

There may, in the end, be little difference between the kind of light control- ling law proposed by Professor Nordemann and the reality of Anglo-Ameri- can practice. Each concentrates on the balancing of just reward to the author, on account of each and every act of sale or rights dealing that brings income in to the publisher, with a freedom of contract that allows the publisher (to quote Professor Nordemann) "to acquire all rights to exploit the work in every pos- sible way," especially in the new world of fast-developing technology. The description by Pere Vicens of the recent Spanish copyright law, in his address to the "East Meets West" conference, makes very clear, however, how clumsy-- how at times harmful to the legitimate economic interests of the publisher-- detailed intervention of the law can be.

This debate will run and run. The participants in the WIPO Hearing on

82 Publishing Research Quarterly / Summer 1992

Model Provisions in July 1990 drew back from detailed control by the law, and we look forward to the two consultancy reports on this topic currently being prepared for WIPO by Denis de Freitas and Georgy Boytha.

Finally, on contract, we can all welcome the new freedom for direct dealings between USSR authors and publishers and their foreign colleagues.

The Balance of the Interests of Copyright Owners with Those of Copyright Users

This is the third corner of the copyright carpet. Copyright owners have adopted two strategies in their entirely legitimate search for reward for the use by users of their copyright works. The first strategy is to guard vigilantly the gates of the exception provisions (which all copyright laws do recognize) and particularly the gates marked "private use." Those who must grapple with new copyright legislation must avoid the common historical mistake of leav- ing the gates more than marginally open. New technology, starting with the photocopying machine, opens enormous opportunities for abuse of copyright works. If the gates of private use are left ajar, the users will drive a horse and carriage through them. All use will be justified as exceptional, and no copy- right will prevail.

The first strategy, then, is to define and to interpret provisions in new copy- right laws for fair use, fair dealing, private, personal, domestic use, and so forth as narrowly as possible. Having limited the scope for exceptional uses (which, it must be stressed, do not in many copyright laws infringe copyright at all and thus earn nothing for copyright owners), the copyright owners need to develop a strategy for ensuring reward for non-exceptional users. In the case of photocopying, the central strategy is collective licensing. I want to endorse fully Joseph Alen's call to those who have not yet set up collective societies for photocopying, reproduction rights organizations (RROs), to start finding out about principle and practice in collective licensing. It is no longer a peripheral technique, but, given new technology, it is the central strategy of the copyright system for reconciling the two famous paragraphs of the Univer- sal Declaration of Human Rights on the rights of copyright owners and the needs of copyright users.

Members of both the European Community and the European Free Trade Association must, of course, pay close attention to and respond to the "action plan" for copyright now being implemented by the EC Commission's DGIII. But the role of the EC in copyright will loom large also for East European countries that seek trading links with the EC. And within such countries the publishers must be ready to advocate their interests: the enquiries, recommen- dations, regulations, and directives that are inherent in the "action plan" for copyright already make up a major and urgent task for the Federation of European Publishers (FEP) and for the International Publishers Copyright Coun- cil (IPCC), and publishing colleagues in the East must and shall be consulted and kept informed.

Clark 83

Enforcement of Rights in the Copyright System

No national copyright law, to look at enforcement within nations, is worth the paper it is written on unless it contains strong, effective sanctions in both civil and criminal law against the abuse of copyright rights. Both Maarten Asscher and Katerina Czarnecki set out, in the general and in the particular, the provisions publishers seek. Katerina Czarnecki points to six provisions: (1) making importation of books, where there exists an exclusive license, an in- fringement; (2) making the possession of infringing copies an infringement; (3) building injunctions into the repertoire of civil law enforcement weapons; (4) making abuse of copyright a criminal offense with real fines and imprisonment; (5) granting powers of customs seizure and search and seizure generally on premises reasonably suspected of containing pirated goods; and (6) building into civil proceedings presumptions in favor of the copyright holder. Most of that shopping list is highly relevant to Eastern European colleagues now threatened by massive piracy from within.

As to enforcement between nations, the weakness of the Berne Convention is widely acknowledged, and the attempt to graft the protection of copyright onto the GATT is supported by publishers. I must, however, risk this query: If I were an American publisher, would I want to see the tried and tested power of S.301 enforcement traded for the laborious uncertainties of enforcement under GATT/TRIPS, at least in anything like its present draft? For if TRIPS goes through as a multilateral means of enforcement, then bilateral enforce- ment could, in practical diplomacy, hardly be exercised by the United States as a signatory to GATT/TRIPS. Let me leave this question hanging in the air.

Awareness of the Values of Copyright

Throughout this issue, contributors have written of the need for awareness of the points where the copyright system and the publishing trade meet in a market economy. We need, as publishers, to explain ourselves endlessly. As Maarten Asscher noted, publishers are forced "to explain our profession to national authorities, to consumer organizations, to libraries, to universities and to lawyers. What is our research, what is publishing initiative, acquisition, the forming of authors' teams? What is editing, compiling, production, electronic storage and display? What is marketing, physical and on-line distribution, promotion, etc.?" Let me try to unravel five threads of this general theme:

1. The economic case for protection of copyright must be made again and again, and publishers must carry the financial burden of building the case over the years. IPCC must keep the economic value of the copy- right industries as a standing item on its agenda.

2. Publishers must explain what they actually do in their working lives. "Publishers," said Jon Baumgarten, "can hardly demand recognition of their vital role in the creative art of literary communicat ion. . , if they

84 Publishing Research Quarterly/Summer 1992

cannot or do not effectively communicate their artistry to the public and to their political representatives." And we must explain to na- tional governments the essential role of the publisher in creating and sustaining national culture.

3. Publishers must publish about themselves. The cultural and professional literature about the work of publishers is not, in some countries, exten- sive. I was more pleased than I could express when the Dutch recently adopted the concept of the book of practice and precedent in publishing contracts, Publishing Agreements, which I edit for the U.K. trade, and made their own book for the Dutch trade. The IPA itself has published some very useful short guides to its own work, and to the fight against piracy. And now Lynette Owen has put her knowledge and experience on paper in her forthcoming Selling Rights, published in the United Kingdom. We need much more literature about what we, as publishers, do.

4. Fred Kobrak, in his informative review of U.S. antipiracy action, men- tioned a "copyright enforcement workshop" in Jakarta. This kind of initiative is also part of awareness, and we should be building on this and other American initiatives. We need in Europe, in my personal opinion, a European version of the International Intellectual Property Alliance (IIPA), in which publishers from both Eastern and Western Europe could take part and thus strengthen their own political and technical positions. Perhaps workshops between colleagues in the new Europe would also be useful. Indeed, the International Publishers Copy- right Council has pledged "to make serious efforts to raise funds to enable copyright experts from IPA/STM member countries to hold copyright workshops, and to respond in other ways to the relevant information needs of their Central and East European colleagues."

5. General awareness needs specialist knowledge. We should consider very carefully Clive Bradley's nine main tasks for a publishers' national trade association: a. Representation of the industry to the authorities on all points of

concern to the industry, supported by concerted campaigns on ma- jor matters

b. Information back to the industry on the decisions and requirements of the authorities

c. Public relations work in support of the industry d. Statistical analysis e. Information to the industry about other developments likely to be of

interest f. Provision of advisory services to members on specialist matters g. Ensuring that the industry enjoys a sound infrastructure

Clark 85

h. Relationships with related trades and industries, to achieve mutua l action and support, and to improve unders tand ing

i. Market development.

The scale of specialist knowledge that list entails is formidable, yet, in no doubt differing degrees, the most modest , struggling association will find itself having one way or another both to harness the relevant specialist knowledge and then to command the advocacy necessary (and this is a great art) to con- vert specialist knowledge into general awareness.

A picture on the wall exists, as the artist has painted it, for all of us to see. But a work of literature does not, in any sense of the real world, exist in the same way. We cannot, any of us, read it until the publisher has mult ipl ied and distributed to us, in the envelope we call a book, what the author has written. The artist paints, and we see. The author writes, but we do not r ead - -un t i l the publisher gives life to what the author has written. That is our role in copy-

I

transaction

THE ILLUSION OF A CONSERVATIVE REAGAN REVOLUTION Larry M. Schwab This book presents a new and provocative perspective on the debate over the impact o! the Reagan administration. Schwab denies the thesis that the 1980s has been a period of fundamental conservative change. He demonstrates how policy developments and the political system have actually moved in the opposite direction.

"Lawrence Schwab's challenging, perhaps even plausible, thesis that there never was a conservative Reagan revolution, demands the most serious response and counteranalysis from conservatives. If Dr. Schwab is correct, then the policy differences between Republican and Democratic parties from 1981 to 1989 were matters of detail rather than substance."

--Arnold Beichman, Research Fellow, Hoover Institution

ISBN: 0-88738-413-7 (cloth) 243 pp. $21,95

Order from your bookstore or direct from the publisher. Major credit cards accepted. Call (908) 932-2280.

~ Transaction Publishers Department 492R8 Rutgers~The State University

ttansa~ction New Brunswick, NJ 08903