Copyright term, film labeling, and film preservation legislation : hearings before the Subcommittee on Courts and Intellectual Property of the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, first session, on H.R. 989, H.R. 1248, and H.R. 1734 ... June 1 and July 13, 1995 (1996)

296 then go on to show that the arguments in favor are either logically fallacious or unsupported by any plausible evidence. COSTS OF A LONGER PROTECTION PERIOD While the asserted public benefits of an extended copyright protection period range from speculative to nonexistent, two identifiable costs are real and substantial: The first is the economic transfer payment to copyright owners during the period of the extension from consumers or other producers who would otherwise have free use of works. The second is the cost to the public of works that are not produced because of the diminished public domain. Economic Costs and Transfers The direct economic costs of a 20-year-longer period of protection, although difficult to calculate precisely, includes higher cost to the consuming public for works that would otherwise be in the public domain. That these costs are substantial is shown by the very claims of the proponents of this legislation that they will miss out on the European windfall if we do not extend our term to that of Europe. This windfall does not arise out of whole cloth. Rather, it is ultimately paid by consumers, that is, by the general public. And if Europeans will be paying for the right to use United States works in Europe, the United States public will be paying for the right to use both United States and European works here at home, increasing the windfall to copyright owners at the expense of United States consumers. In the legislative history of the Copyright Act of 1976, it was argued that the general public received no substantial benefit from a shorter term of protection, because the cost for works in the public domain was frequently not significantly lower than that for works still under copyright.'' Even without the fervor of the special interest protagonists of this legislation, however, economic theory tells us that the price to the public for popular works must, through competition, decrease to the marginal cost of producing the work if there are no exclusive rights. If the work is under copyright, the marginal cost of production would have to include the royalty owing to the copyright owner, even if there is general licensing to competing producers of the work. Moreover, if there is no general licensing of a copyright-protected work, the price can be expected to be set at the level that maximizes the return of the copyright owner, which is invariably higher than the marginal cost of production. Consequently, any claim that the public pays the same for public domain works as for protected works is implausible, at least in general/ Educational and scientific uses would also seem to be large markets for public domain H.R. Rep. No. 94-1476, 94th Cong., 2d Sess. 133 (1976). Of course, the market for many public domain works may often be small, with the result that competition is thin, or even nonexistent. This can allow, say, a book publisher to charge a price for a republished public domain work that is consistent with prices for similar types of books that are under copyright. Given the thin market, such a price may be necessary for this publisher even to cover Written Testimony of Intellectual Property Professors Page 5