Mickey Mouse Slated to Become Public Property

Disney's Copyright Conundrum

By Alex Berenson
ABCNEWS.com from TheStreet.com

NEW YORK, May 8, 1998 — Call it the Year 2004 problem.

Unless current law is changed, on Jan. 1, 2004, the copyright on Mickey Mouse will expire.

That means Mickey will become public property—and Walt Disney will lose one of its most valuable assets, the exclusive right to profit from the world's most famous rodent. (Disney owns the two companies that produce ABCNEWS.com)

Exactly how much Disney stands to lose if it can't extend its copyrights is unclear, but the amount could be enormous.

In 1998, the company's consumer products division, which includes Mickey-themed merchandise, is expected to have almost $1 billion in operating income on $3.8 billion in sales, according to Salomon Smith Barney. Disney's theme parks, which feature its characters, are expected to make more than $1 billion on roughly $4 billion in sales. Together, the two divisions are expected to account for more than two-fifths of Disney's 1998 income.

"So many products are tied to Mickey, and he's tied to so many other things," says Brian Eisenbarth, an analyst with San Francisco's Collins & Co. "It would definitely be a blow to the company."

Growing Concern: Intellectual Property

And Disney isn't alone. The creation of "intellectual property" like computer software and movies is growing explosively in the U.S. But many investors don't know that unlike tangible property such as buildings, factories or land, intellectual property can't be owned forever. Eventually, it must pass into the public domain, free to anyone.

The idea is to allow new uses for a work once its author has had a reasonable chance to benefit. For example, Disney's animated film of The Hunchback of Notre Dame offered a modern retelling of Victor Hugo's classic novel, making it newly relevant to children today. But if copyright protection extended forever, and Hugo's descendants didn't want to let Disney turn the book into a cartoon, the company would never have been allowed to present its vision of the novel.

Intellectual property differs from tangible property because it "is not destroyed or even diminished by consumption," says Arizona State University law professor Dennis Karjala. "Once a work is created, its intellectual content is infinitely multipliable. No matter how many people copy or use someone else's idea ... the author still has it ... [and] can still make full use of it."

Trademarks, Copyrights Explained

In the U.S., copyrights, which enable the author or owner of a piece of intangible or intellectual property to control its use, now last 75 years for corporations or for works produced before 1978. For works produced by individuals since then, they end 50 years after the author of the work has died.

So Mickey Mouse, who was first copyrighted under the name Steamboat Willie in 1928, will pass into public hands in 2004—although Disney may still be able to use its trademarks on Mickey, which never expire, to protect itself from competitors. Disney declines to discuss what it will do if its copyrights expire.

 (Trademarks protect brands, enabling a company to distinguish its product from similar offerings made by other corporations. For example, Disney might be able to call its version of Mickey Mouse the "official" Mickey, although it couldn't stop other companies from creating their own versions of the mouse.

Or, lawyers say, the company might even ask for even stronger trademark production, arguing that Mickey is so closely intertwined in the public's mind with Disney that the mouse essentially represents the company and shouldn't be allowed to be copied. But that argument may not hold up. "I'm not sure that everybody identifies Mickey Mouse with Disney," says Duke University law professor Paul Carrington. "Would somebody buy a Mickey Mouse watch because they thought Disney made it? It would probably make some difference what kind of product you were putting it on.")

Opposition to Copyright Extension

Disney, which usually isn't shy about media attention, isn't talking much publicly about the threat expiring copyrights may pose to its business. Instead, the company, along with other big entertainment companies, is quietly pushing lawmakers to extend its protection for another 20 years, pushing the day of reckoning well into the 21st century.

But the legislation, which passed the House in March and was expected to sail through the Senate, has suddenly found some opposition. Both The Washington Post and The New York Times have editorialized against the bill, and some 60 intellectual property professors at law schools from Stanford to Harvard have signed a petition arguing that the legislation "must be rejected."

Karjala, who is leading the informal coalition of academics against the bill, notes that the U.S. Constitution explicitly offers only "limited" protection for copyrights, although that term has never been defined.

"The intellectual property system exists to provide an incentive for the creation of works," Karjala says. "But once the works have been created, the public doesn't get anything more by extending the [copyright] term. You simply require the public to pay more money."

For its part, Disney will release only a one-paragraph statement on the subject, deferring all other questions to the Motion Picture Association of America, whose head, Jack Valenti, is one of Washington's best-connected lobbyists. MPAA Vice President of Public Affairs Rich Taylor says the issue is one of fairness, noting that copyrights in European nations last for the author's life plus 70 years. But that won't apply to works produced by American authors unless U.S. law is changed, Taylor says.

"We're trying to get an environment for American creators in which they get an environment where they get the same protection that's currently enjoyed by European creators," Taylor says. "We think it's essential to seek a term of copyright that's a global standard."

The MPAA also claims that extending copyrights will encourage Hollywood studios to reissue films from the 1920s and 1930s, many of which are now literally rotting in film libraries. "Providing these older works to the public, however, requires investments of time and money and involves risks," the association says. "The necessary investments will not occur without adequate copyright protection."

Santa Thrives Without Protection

But copyright experts say those arguments are bunk. In fact, European law gives corporations only 70 years of copyright protection, so extending U.S. company-owned rights from 75 years to 95 years is unnecessary, says Rochelle Dreyfuss, a law professor at New York University.

If entertainment companies like Disney "want more money, they should develop new and more wonderful characters, and they're doing that," Dreyfuss says. "That's what we really want them to be doing with their fear that Mickey is going into the public domain."

As for complaints that the loss of copyright protection will lead to the denigration of wholesome characters like Mickey Mouse and Bugs Bunny, Dreyfuss notes, "Santa Claus is in the public domain, and nobody has ruined Santa Claus, and the Easter Bunny is in the public domain, and nobody is trying to ruin the Easter Bunny."

Despite the recent swell of opposition to copyright extension, Karjala acknowledges that he faces a uphill fight, given the powerful lobby backing the legislation. For now, he hopes to stall long enough to "educate" lawmakers on the legislation. "I'm still not very optimistic that we're going to stop this."

Copyright 1998