Congress Puts Power Behind Hollywood’s Goals

This marks Hollywood’s biggest week in Washington in years, thanks to a stew of measures that could mean billions of dollars to the entertainment industry.

Legislation expected to be signed soon by President Clinton means Mickey Mouse remains out of the clutches of the public domain until 2023, the result of an extension of copyright protections giving studios such as Walt Disney Co. an extra 20 years to profit from movies and characters before they are up for grabs.

Hollywood is also a bit more at ease with the Internet because another measure allows the Feds to crack down forcefully on anyone who tries to illegally snatch movies, TV shows, books or music once the inevitable day comes when studios use cyberspace as another form of distribution.

Even directors, writers and actors got something: federal protection against sleazy companies that renege on paying residuals when they peddle their movies.

And as part of the horse trading that went on behind the scenes, studios are also offering to pay residuals on all films released before 1960, although the Hollywood talent guilds are barking that they want old TV shows to be covered as well.

Now comes the hard part--making this hodgepodge of measures stick.

At the heart of it are international copyright agreements adopted nearly two years ago in Geneva by representatives of the World Intellectual Property Organization (WIPO), which is charged with bolstering global copyright protection.

It was up to Congress to bring U.S. laws into line with the treaties. That’s why it passed stronger laws protecting movies, music and writings when they are transmitted online and enacted provisions protecting Internet service providers such as America Online from liability when their systems are used by copyright violators.

The Digital Millennium Copyright Act is designed in part to give Hollywood a club to crack down on, say, the hacker in South Dakota who in the future may try to pirate “Rush Hour 5” when it gets downloaded over the Web.

Clearly, one of Hollywood’s biggest qualms about the Internet is that once it launches something electronically, anything can happen. Witness how bent out of shape Universal Pictures got when a trailer for “Psycho” that it released exclusively online first ended up on a TV show.

Hollywood is already frustrated with Internet gnats like Harry Knowles and Matt Drudge, who regularly tweak gigantic studios’ noses by publishing state secrets such as the cool response test audiences gave to “Batman Forever.”

Legislation Is No Panacea

So who’s to say that Hollywood’s success at stopping electronic pirates will be any greater than it has been against video pirates? In December, one could walk into plenty of Asian video stores and buy “Titanic” just as it was hitting U.S. theaters.

However, Jack Valenti, chief of the Motion Picture Assn. of America, says that over the last 10 to 12 years, the industry group has put a sizable dent in piracy by applying constant pressure on the Feds and distributors around the world to crack down.

“We spend $50 million to $60 million a year on anti-thievery measures, including legal fees,” Valenti said.

Still, piracy of all intellectual property, including software and musical works, robs the industry of an estimated $18 billion to $20 billion worldwide each year. Movies and videos account for more than $3 billion, and with music, the problem amounts to about $5 billion.

“We’re never going to wipe out piracy any more than we can wipe out crime,” Valenti said. “But we’ve made significant progress.” He estimates that 10% of products sold are pirated.

The WIPO measure is most significant for the U.S. because it is the largest supplier of copyrighted works and its films are in great demand all over the globe.

That raises another question: How enthusiastically will the rest of the world embrace something that largely benefits Hollywood? Valenti hopes to convince other countries that their own film industries are just as vulnerable to piracy.

It’s up to each individual country to police piracy. The MPAA, which has ties to more than 20 anti-piracy federations around the world, makes it its business to help with the implementation of these protections around the world.

When it comes to distributing over the Internet, copyright owners themselves must protect their wares against electronic thieves. In recent years, as the Internet has blossomed into a medium to buy books, music and other information and entertainment products, copyright holders have become increasingly fearful of hackers and thieves.

Entertainment companies now believe they can breathe a little easier about putting their movies, music and other creations on the Web, which is still years away from becoming a mass medium.

New Measures Increase Confidence

The new bill would make it illegal to circumvent anti-piracy protections that are built into most commercial software, such as encryption, and makes it a crime to manufacture, sell or distribute code-cracking software that enables users to illegally copy the product.

“This gives us enough confidence that our ability to use the digital domain to encrypt, encode and scramble our works can truly protect our properties,” said Time Warner Senior Vice President Tim Boggs, the company’s chief government affairs representative in Washington.

But just as banking and tax laws are regularly circumvented through offshore companies operating in such places as the Cayman Islands, who’s to say that electronic copyright pirates won’t find their own safe haven to set up shop? Or that some teenager in a garage won’t hack through Hollywood’s defenses to copy the latest Sheryl Crow album just as people have found ways to illegally tap into cable and pay-television systems?

Boggs said that while Time Warner doesn’t kid itself that it will stop the college kid from making a single copy of a CD, “we’ll certainly take steps to protect our works if there’s been a pattern of making multiple copies.”

Boggs said Time Warner, owner of the Warner Bros. movie and TV studio and a global music empire, was “thrilled” that Congress also sanctioned copyright extension for another 20 years. The lengthier protection conforms with the duration of protection in Europe.

Time Warner and Disney were strong supporters of the legislation, motivated by the danger of their historic libraries and characters falling into the public domain within a few years.

Boggs pointed out that his company’s Warner Chappell division was affected immediately because it controls the copyright to George Gershwin’s music, which was already heading into the public domain. “For any company with large, deep libraries, 20 more years means a lot,” said Boggs.

Disney’s Steamboat Willie, the first animated incarnation of Mickey Mouse, was going to lose its protection in 2003, followed closely by its Winnie the Pooh franchise.

It’s not unusual for one legislative settlement to lead to a new battle. In this case, the studios and talent guilds are gearing up for a fight over residuals for work done before the current 1960 cutoff date.

To placate Hollywood workers who complained that the studios were getting a windfall with the copyright extension, the guilds were able to persuade Congress to make it illegal to renege on residuals when film rights change hands. Hollywood’s talent guilds estimate that their members lose tens of millions of dollars each year through such shady deals as, for example, when video rights to “Weekend at Bernie’s” were sold by the now-defunct Gladden Entertainment.

But again, enforcement is a sticking point. Movie owners desperate for cash, and less-than-ethical buyers looking for a bargain, may simply ignore the law and hope they aren’t discovered.

In addition, Congress prodded studios to offer the guilds residuals for work before 1960. But guilds want it to also apply to television, which is clearly going to be a problematic point.

Valenti said the companies are willing to discuss the issue but would prefer to first deal with the film residuals.

“I don’t want to start a big controversy,” Valenti said. “Let’s get it done with films, then we’ll see what else needs to be done.”

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Hollywood Wins in Washington

Congress approved legislation that would:

* Extend studios’ copyright term 20 years, to 95 years.

* Increase protection against Internet piracy.

* Protect the payment of residuals to directors, writers and actors when film rights exchange hands. Also, studios agreed to offer residuals to directors, writers and actors on pre-1960 films.

But ...

* There’s no assurance that copyright thieves won’t continue to circumvent laws.

* Collecting residuals when film rights are transferred can be difficult, especially when they are sold to foreign countries.

* Studios and Hollywood’s talent guilds are already at odds over the pre-1960 residuals issue, with guilds insisting that it apply to TV shows as well as films.