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September 1, 2010

New York's Film Tax Credit in the 2010 Legislature

By Bennett Liebman

In the course of final passage of the State budget, the State legislature, followed by gubernatorial approval, passed a significant extension and expansion of New York's existing film tax credit. The 30% film production tax credit was extended for five additional years, and it was funded at the rate of $420 million per year for this five year period.(1)

Additionally, the legislature added a standalone credit for productions that do their post production in New York State. Eligible productions that complete 75 percent of their post production in New York can now apply for a 10% credit for the post production work done in NY.(2)

The legislation allocates additional $420 million in each of 2010, 2011, 2012, 2013, and 2014 and defines this as an "additional pool" for those years. Previously, the legislature had allocated $85 million in 2010, $90 million in 2011 and 2012, and $110 million in 2013 for the film credit.(3) In 2009, the legislature allocated an additional $350 million for the film credit for that year (4) on top of $75 million that had been previously allocated.(5)

New York State is among numerous states that have provided tax incentives to the film and TV industries. According to the nonpartisan Tax Foundation, 44 states plus the District of Columbia and Puerto Rico offered significant movie production incentives in 2009, up from five states in 2002.(6) 28 of these states offered tax credits. In the Unites States, the film tax credit concept started in Louisiana which in 1992 passed legislation for tax credits for investment losses for films which contained substantial Louisiana content.(7) The initial Louisiana experiment did not spur much added economic activity. Minnesota similarly enacted a film credit in 1997, (8) but by 2002, there were only four states in the nation that had film incentives. New Mexico (9) and Louisiana,(10) however, changed the entire ballgame in 2002 by expanding the monetary value of the film tax credits significantly. The 2002 Louisiana legislation included "a series of incentives designed to revitalize the state's movie business, which had declined in part because of a nationwide migration to Canada, where producers enjoy generous incentives and a favorable currency exchange rate."(11)

New York State has one of the larger film production industries in the United States. "Sources generally conclude that the states of California, New York, and New Mexico receive the most economic impact (in that order.)"(12) The Motion Picture Association in 2006 estimated a $1.5 billion economic effect for the film industry in New York.(13) The New York Governor's Office for Motion Picture and Television Development states that in 2009 the film production credit led to $1.88 billion in direct production spending.(14)

New York started its film production credit in 2004 with the aggregate amount of annual tax credits capped at $25 million (15) It was expanded in 2006 to increase the cap to $60 million.(16) It was further expanded in 2008 and 2009 to increase the cap, and with the 2010 legislation, it has reached its highest levels of State support.

The New York 30% credit applies only to below the line film expenses. According to the Governor's Office for Motion Picture and Television Development, below the line film expenses "mean hard costs of production including the salaries of crew and extras as well as equipment and facility rental, lab costs, construction materials, props, wardrobe, locations, editing and catering, etc. Typically, BTL represents 65 percent of the average budget."(17) Thus, the 30% credit would typically provide a benefit that approximates "18 percent of a project's total budget."(18)

Besides the additional $2.1 billion in funding, the 2010 legislation placed some qualifications on claiming the credit. The legislation specifies a time frame which will determine the tax year for which the credit can be claimed. It requires that at least 10% of the principal shooting days be spent at a qualified New York film production facility. This 10% requirement is waived for "qualified independent film production companies" which are smaller entities defined as entities "principally engaged in the production of a qualified film with a maximum budget of fifteen million dollars, and (ii) controls the qualified film during production, and (iii) either is not a publicly traded entity, or no more than five percent of the beneficial ownership of which is owned, directly or indirectly, by a publicly traded entity".(19)

The legislation requires that the completed DVD release of the production either contain an end credit acknowledging New York State support of the production or contain a New York promotional video approved by the governor's office of motion picture and television development. The production must also "certify that it will purchase taxable tangible property and services, defined as qualified production costs" only from companies registered to collect sales tax in New York.(20)

Postproduction costs of a qualified production will only be eligible for the general film credit where "the post production costs paid or incurred that is attributable to the use of tangible property or the performance of services in New York in the production of such qualified film equals or exceeds seventy-five percent of the total post production costs spent within and without New York in the production of such qualified film."(21)

The 2010 legislation also provided a separate credit that would cover 10% of work at a post production facility. This would cover works not eligible for the general 30% film production tax credit. It would cover works only where the costs at the New York post production facility met or exceeded "seventy-five percent of the total post production costs paid or incurred in the post production of the qualified film at any post production facility."(22)

$7 million is allocated annually for the post production tax credit. A separate chapter amendment makes clear that this $7 million allotment is part of and not in addition to the overall $420 million annual allocation.(23) The chapter amendment provides "that the post production tax credit will be allocated $7 million annually from the $420 million pool of available tax credits. Unallocated post-production tax credits may be made available for the Empire film production credit upon the exhaustion of the aggregate amount of film credits."(24)

In an especially tight budget year, there was significant legislative support for the film credit in New York. Governor Paterson's initial budget proposed the $2.1 billion in additional funds for the credit, and the only action taken by the legislature to in any way alter this funding was to use $35 million of the $2.1 billion allocation to establish the post production credit.

There was little substantive discussion given to curtailing or suspending the film credit. There were few questions raised about the overall merit of the program. While the Governor's Office for Motion Picture and Television Development maintains that the funding is necessary to make New York competitive with states such as Connecticut Michigan and Massachusetts that have more generous film credits, (25) some studies have questioned the overall value of the film credit.

The Tax Foundation has stated, "While broad-based tax competition often benefits consumers and spurs economic growth and development, industry-specific tax competition transfers wealth from the many to the few. Movie production incentives are costly and fail to live up to their promises."(26)

"A 2005 study from the Louisiana Legislative Fiscal Office found that the state could expect to recoup 16 percent to 18 percent of the tax revenue it spends on the film incentive program. This means Louisiana--often held up as the standard-bearer for successful film incentive programs--loses about 83 cents for every dollar it spends on movie production incentives."(27) A Pennsylvania legislative study found some limited justification for its film credit. The report stated, "While there is a net fiscal loss when comparing the net present cost of the Film Tax Credit program ($58.2 million) to the taxes generated by productions directly receiving tax credits ($17.9 million), there is a net fiscal gain to the Commonwealth of $4.5 million when considering all of the revenues generated by the entire industry. While some of this activity would occur without the benefit of the FTC, a significant proportion of this activity would be at risk without such a tax credit program."(28)

This year, Iowa, Kansas, and New Jersey terminated or temporarily suspended their film tax credit program, the first states in the nation to do so.(29) The Iowa suspension was largely due to corruption found in the film office,(30) and the New Jersey suspension, which was based on budgetary concerns, has been harshly criticized by officials in Bergen County which has often been the site of Law& Order SVU episodes.(31)

Nonetheless, a serious review of the New York film credit will not likely occur in 2010.

1Ch. 57, Part Q, L. 2010.
2Id. See Tax Law §§31, 210.41,and 606.(qq).
3 Ch. 57, L. 2008.
4 Ch. 57, L. 2009.
5See note 3 supra.
6 Tax Foundation, "Study: Film Tax Credits, Production Incentives Fail to Spur Economic Growth," January 14, 2010, http://taxfoundation.org/research/show/25707.html.
7 Louisiana Act 894 (H.B. 252) (1992).
8 Tax Foundation, "Movie Production Incentives: Blockbuster Support for Lackluster Policy," January 2010; The Hollywood Reporter ,June 25, 1997.
9 2002 N.M. ALS 36.
10 2002 La. ACT 6.
112002 La. ACT 6; La. R.S. 47:6007; Stewart Yerton, "Counting on Film Credits," New Orleans Times Picayune, May 11, 2003.
12 Michal H. Salima, "State Film Tax Incentives and the Related Potpourri of Federal Income Tax and Tax Accounting Considerations," 62 The Tax Lawyer 1085 Summer, 2009.
13Motion Picture Association of America, "The Economic Impact of the Motion Picture and Television Production Industry in the United States," 13-14 (2006), http://www.mpaa.org/press_releases/mpa%20us%20economic%20impact%20report_final.pdf.
14 Report on the Empire State Film Production Tax Credit, August 2010, http://www.tax.state.ny.us/pdf/stats/policy_special/film_production_credit/report_on_the_empire_state_film_production_credit_august_2010.pdf .
15Ch. 60, L. 2004.
16Ch. 62, L. 2006.
17 See note 14 supra at p. 24.
18 Id. Besides the state film tax credit, new York City provides a 5% credit applied to the applicant's New York City tax liability. See Tax Law, §1201-a.(b).
19 Tax Law, §24.(b)(7).
20Tax Law §24.(a)(4).
21 Tax Law §24.(b)(1).
22 Tax Law §31.
23 Ch. 312, L. 2010.
24 New York State Assembly Memorandum in Support of Legislation, A. 11678.
25 See note 14 supra at 24.
26See note 8 at 16. See also Mark Sanchez, "Tax Foundation Report Hits Film Incentives by States," West Michigan Business Review, January 14, 2010 http://www.mlive.com/business/west-michigan/index.ssf/2010/01/tax_foundation_report_hits_fil.html.
27Tax Foundation Commentary, "Michigan Should Stop Red-Carpet Tax Treatment of Film Industry," May 4, 2010 http://www.taxfoundation.org/research/show/26275.html.
28 Pennsylvania's Film Production Tax Credit and Industry Analysis, Legislative Budget and Finance Committee May 2009, Pg. 5 http://lbfc.legis.state.pa.us/reports/2009/35.PDF.
29 Tax Foundation, "A Review of 2010's Changes in State Tax Policy, "August 23, 2010. http://www.taxfoundation.org/research/show/26645.html.
30Associated Press, "Iowa AG Files Charges over Film Tax Credits," February 8, 2010 http://wcco.com/local/film.tax.credits.2.1480422.html. Corruption issues have also arisen in Louisiana. See "Film Tax-Credit Scam That Ensnared Dozens With Ties To New Orleans Saints Leads to Guilty Plea," New Orleans Times Picayune, May 13, 2010, http://www.nola.com/crime/index.ssf/2010/05/film_tax-credit_scam_that_ensn.html; "Editorial: Lights, Camera, Corruption," New Orleans Times Picayune, August 20, 2007, http://www.nola.com/news/t-p/editorials/index.ssf?/base/news-4/1187589162244190.xml&coll=1.
31"Freeholders Call for Restoration of Tax Credit for NJ Filmmakers," South Bergenite, August 26, 2010, http://www.northjersey.com/arts_entertainment/101535368_Locals_could_lose_big_on_area_filming_loss.html; "Law & Order: SVU Moves Production," Philadelphia Business Journal, July 30, 2010, HTTP://WWW.BIZJOURNALS.COM/PHILADELPHIA/BLOGS/STIMULUS_TRACKER/2010/07/LAW_ORDER_SVU_MOVES_PRODUCTION.HTML.


September 6, 2010

Remarks from EASL Chair Judith B. Prowda

My first few months as Chair have been exciting and eventful as we move forward with new initiatives and build on past achievements. In July, I formed an In-House Counsel Committee and appointed Kimberly Ayers Shariff, Esq. as Chair. Kim is the Deputy General Counsel of Lincoln Center for the Performing Arts. The mission of this Committee is to create a forum where members can share information and best practices, as well as address the unique opportunities, challenges and substantive issues that face attorneys practicing in-house in the entertainment, arts and sports law fields. One of the Committee’s specific goals is to form an “open source” information bank where in-house attorneys can seek (as well as contribute) advice and substantive guidance akin to the attorney-to-attorney exchange of information that occurs in a law firm environment but less frequently in-house. To facilitate these goals, Kim is already planning programs of great interest to in-house and outside counsel in the entertainment, arts and sports law fields, in both the for-profit and not-for-profit arenas.

As ever, our committee programs and pro bono activities filled the Winter, Spring and Summer calendars.

In March we co-sponsored the annual Sports Law Forum with Fordham Law School, as we have been doing since 2005. This year, the day-long program featured keynote speaker John P. McEnroe, Sr., Esq., and high level panels addressing some of the most cutting edge legal topics affecting sports, such as licensing, the legality and impact of age restrictions, and salary arbitration. EASL Sports Law Committee Co-Chair Anthony Dreyer and the student organizers at Fordham, especially Cassie Mullman, Managing Editor of the Sports Law Forum, deserve high praise. Also in March, the Fine Arts Committee which I chair, held a very informative program on Holocaust looted art and recovery, focusing on Bakalar v. Vavra, 2008 U.S. Dist. LEXIS 66689 (S.D.N.Y. 2008), the first Holocaust-era art recovery trial in the U.S. In that case, the District Court found that passing the artwork in question through Switzerland gave it clean title. Our guest speaker Raymond Dowd, Esq., partner at Dunnington, Bartholow & Miller, who recently argued the case before the Second Circuit on behalf of the Defendants-Appellants, presented the legal and evidentiary obstacles to litigating Holocaust-era expropriation and provided legal practitioners with basic tools to assemble evidence and prove Nazi property looting. This sold-out program was held at Sotheby’s Institute of Art, where I am a senior faculty member, and was followed by an elegant reception.

Our biennial Popcorn & Ethics Program with Mark Solomon in April proved to be a resounding success, focusing on the recently adopted “New York Rules of Professional Conduct” (effective April 1, 2009). The audience participated in a lively discussion on ethical dilemmas cleverly illustrated in film clips, and enjoyed popcorn at intermission. Many thanks to Program Co-Chair Tracey Greco and everyone who worked on this excellent program worth 4 CLE credits in Ethics. Whether or not you attended this program, I urge you to read Monica Pa’s excellent blog summarizing key points covered, located on the EASL Blog at http://nysbar.com/blogs/EASL/.We also co-sponsored the program CopyRight and Risk in Film Practice with the Young Professionals Division of the Copyright Society of the U.S.A. in April. This free program was a bonus to our members and wonderful opportunity to network and hear from some experts in the film industry. Thanks to the generous support of the Cardozo Intellectual Property Society, our members enjoyed an open bar and snacks as well.

If you had any gnawing questions about the intricacies of copyright term issues around the world, you were fortunate to have attended the comprehensive program in April organized by Jay Kogan and Neil Rosini, Co-Chairs of the Copyright & Trademark Committee. Dennis Angel, noted authority on United States and foreign copyright law, gave a thorough overview of this complex subject. The Committees on Motion Pictures (Stephen Rodner and Mary Ann Zimmer) and Television & Radio (Pamela Jones and Barry Skidelsky) co-sponsored two back-to-back programs this spring. An enormously successful luncheon 2 CLE credit program featuring Stan Soocher, Editor-in-chief, Entertainment Law & Finance was held at Pryor Cashman on May 26th. On June 16th, these Committees co-sponsored another program, this time with the Copyright & Literary Property Committee of The City Bar, regarding the use of music in digital media, with speakers David Oxenford and Robert Driscoll of Davis Wright Tremaine LLP. T) The City Bar hosted this long-awaited event, which had been postponed last February due to the blizzard.

Pro bono continues to be one of the highest priorities of the NYSBA and EASL and our Pro Bono Committee is working hard under the guidance of its Steering Committee (comprised of Elissa Hecker, Pippa Loengard, Carol Steinberg, Monica Pa and Kathy Kim) in its Spring programs. Over the course of the Spring, the Pro Bono Committee and the Brooklyn Arts Council co-sponsored a pro bono lecture on copyright and trademark basics for artists and art organizations, at the DeKalb branch of the Brooklyn Public Library, held a Pro Bono Clinic for the Dramatists Guild (co-sponsored by the IP Section and hosted by the Intellectual Property Society at New York Law School), and offered a highly successful non-CLE program focusing on setting up and running an art business, which was held at the School of Visual Arts. More information about these and future EASL Pro Bono Committee programs and Clinics can be found in the Pro Bono Update. Please mark your calendar for future events!

Our summer season has also offered a wide range of programs. In July, EASL’s Music and Recording Industry Committee co-sponsored the New Music Seminar (NMS), held on three days in New York City. The program included several invitation-only summits which provided a high-level forum for dialogue about the challenges the music industry is facing. In one summit, panelists (Tom Silverman, Adam Ritholz, Jim Cooperman and venture capitalist David Pakman) discussed key developing legal and deal-making issues, such as emerging structures of recorded music agreements and emerging economic models. Please see the “New Music Seminar Report” by EASL’s blogger extraordinaire, Monica Pa, for a terrific overview of the event. Kudos to Alan Barson and Christine Pepe, Co-Chairs of the Committee on Music and the Recording Industry, for developing this exciting co-sponsorship opportunity. Look for the Committee’s expanded involvement with NMS in 2011!

On August 6th, the In-House Counsel Committee and Lawyers in Transition Committee held a breakfast panel on the transition to in-house careers. In-house jobs are in high demand and, among other topics, this panel discussed how to get an in-house position, how to best prepare, and what you can expect as in-house counsel. The program was led by In House Counsel Chair Kim Shariff and EASL Lawyers in Transition Co-Chair, Saryn Leibowitz. Panelists included Tracey Knuckles, General Counsel, New York City, Department of Cultural Affairs and Meg Louis, Director of Legal Affairs/Senior Counsel for NYC Media. This program was held at Frankfurt Kurnit Klein and Selz, PC.

Looking forward to the fall, the Pro Bono Committee and Fine Arts Committee are co-sponsoring a joint program with Cardozo’s Intellectual Property Program and Cardozo’s Art Law Society, on legal issues in producing and presenting public art. Our speakers will be Katie Hollander, Deputy Director of Creative Time and Judi Church, Counsel to Creative Time. This non-CLE program and reception will be held at Cardozo on September 15th from 6-8 p.m.

This year, EASL’s ADR Committee, co-chaired by Judith Bresler and myself, is co-sponsoring a full day CLE program with the NYSBA Dispute Resolution Section. The program, which will be held on October 12th at Fordham Law School, will offer six CLE credits, including one Ethics credit. The morning session will be devoted to mediation on an art-related topic, and will feature highly trained mediators in an interactive role play with members of the audience rotating in as the disputing parties. An experienced mediator will serve as a commentator and stop the action in a “freeze frame” fashion at teachable moments throughout the mediation and invite discussion. After lunch, an entertainment law-related program on arbitration will be conducted in a similar teaching format. We hope that this highly interactive, largely unscripted program will provide excellent training for all levels of ADR practitioners.

Our Fall Meeting will be held on October 22nd, our fourth year in conjunction with the CMJ Music Marathon & Film Festival. There will be panels on ethics, right of publicity, copyright termination rights, mobile apps and gaming, international issues in digital licensing overseas and distribution, and agreements with minors. Breakout panels will include the latest developments in mobile tv issues and film deals. Hope to see you there!

As most of you know, it is a priority of mine as Chair to vitalize EASL throughout the State and have appointed a District Representative in each of the 13 Judicial Districts in New York State. To accomplish my goal, I share the good news that I have appointed two District Representative Leaders – Leslie Greenbaum for Upstate and David Faux for Downstate – to serve as points of contact for District Representatives if they have any questions on how to go about organizing a program in their District. Both Les and David have done extraordinary work in creating programs and making connections in their Districts. I would like all District Representatives to be involved in this manner, and I am delighted that Les and David have agreed to help in this effort. Les will be the point of contact for the 3rd, 4th, 5th, 6th, 7th and 8th Districts. David will be the point of contact for the 1st, 2nd, 9th, 10th, 11th, 12th and 13th Districts.

Another wonderful piece of news is that I have appointed Kathy Kim to serve as Co-Chair of the Young Entertainment Lawyers Committee with Stephanie Khalifa. Kathy will also continue as Co-Chair of the Pro Bono Committee. In addition, EASL welcomes two liaisons from the Young Lawyers Section – Jason Aylesworth and Ezgi Kaya. I hope that our Sections will plan interesting and valuable programs for our Members.

Hope you had a wonderful summer!

Message from EASL Chair Judith B. Prowda

I am pleased to announce the appointment of Diane Krausz as a member of the New York State Bar Association Committee on Continuing Legal Education. Diane is the first EASL representative to serve on the NYSBA CLE Committee. During her three-year term, Diane will attend meetings in New York and Saratoga twice a year and make recommendations on CLE programs and policies. The CLE Committee is one of the most important committees within the NYSBA since its members advise and inform the content and direction of NYSBA CLE programs.

Diane is a long-time member of the EASL Executive Committee, and serves as EASL Treasurer as well as Co-Chair of the Theater and Performing Arts Committee. During her more than two decades practicing law, Diane has represented many leading performers, writers, producers, composers, filmmakers, music publishing interests, talent representatives, writers, actors and directors in the theatre, film, television and motion entertainment industry, including emerging media production companies. A Wharton School of Business and Fordham Law graduate, Diane is also trained and qualified as a Certified Public Accountant. In addition to her work with EASL, Diane is a member of the League of Professional Theatre Women, the Finance Committee of the Friars Club, and New York Women in Film and Television.

Congratulations Diane! We look forward to your excellent representation of EASL within the NYSBA CLE Committee.

September 8, 2010

Whose Life is it Anyway? Clearance of Life Story Rights in Film

By Diane Krausz

The right to privacy is one of the most treasured fundamental rights in American society. Another treasured fundamental right is freedom of expression. A great deal of filmed media involves the re-imagination of historic events, the examination of public figures and their private lives, or the dramatization of the lives of private citizens with compelling, interesting or unusual stories. Often, the right of a film maker’s freedom of expression can overshadow or destroy an individual’s right of privacy, particularly for a private citizen. Attorneys who advise screenwriters, producers and film financiers often need to weigh the existing state laws, precedents and particular facts of a matter to determine how to advise their clients in this confusing area.

Even a first year film student understands that writing a screenplay based upon someone's life can raise significant legal issues. Law students are taught to analyze the facts; specifically, to classify the characters of a script into the "living" or "dead", "private" or "public” citizen, and the specific issues in a scene (“newsworthy”, “private matter” or “public matter”), as this can make all the difference when determining whether the depiction of a particular individual in a specific scene constitutes infringement on someone’s ”right to publicity” or is permissible because of “fair use.” Note that a right to privacy is a protected right of an individual to non-interference by others, while the right of publicity is an individual’s right to exploit and profit from the exploitation of the exact things he or she is entitled to protect under the right of privacy.

A right of publicity is typically defined as an individual’s right to control and profit from the commercial exploitation of his or her name, likeness, image, or persona. In order to grant a right of publicity in New York State, the individual must give permission for such use in writing. In order to use a person’s name and likeness in New York, one must look to N.Y.Civil Rights Law 50 and 51. Absent the obtaining of a signed release, a private individual may have a cause of action if private information about him or her is disclosed in a film, and if such information is offensive, embarrassing or defamatory.

However, the private individual could lose the right to object to the public dissemination of the above information if a court determines that the story and/or facts disclosed is/are something that the public needs to or should know, e.g., is "newsworthy", and that there is a "public need" to share the story. For information to fall within the newsworthy exception the information must: 1) Be a current news item, or a past event currently disseminated for informative purposes, 2) be a media presentation on public issues, or 3) be based on historic information. This means that fair use extends to underlying events discussed in the film containing information obtained during a private information session, but already available to the public (for example, court records, newspaper, etc.). Of course, the actual record cannot be reproduced or read verbatim, since that would infringe on the "actual means of expression" concerning the event. Again, one must always consider whether one can get the private individual in question to sign a permission or release, waiving his or her right to sue, or whether the facts disclosed are already in the public domain.

Screenwriters who cannot obtain releases from unwilling or unavailable individuals are often advised to craft characters and situations that are inspired by actual people and events, but where no individual is identifiable in the resulting film. Another approach is to create a "composite" character, which represents a number of various participants in a particular life story, but does not resemble or be identified as a specific individual.

Even in this age of sophisticated film students and eager life story litigants, rarely does a screenwriter or creative producer analyze a screenplay in the same way as a production attorney at a studio, or an attorney who clears errors and omissions insurance for a film prior to distribution. Post production decisions regarding the need for additional releases can often hold up the financing or distribution of a film until such a clearance is obtained. Absent the ability to obtain the mandated written waivers/permission, significant edits and other changes dictated by legal and business rather than creative concerns are often made to a final film prior to distribution.

It is important to note that the right of publicity is not a federal right. Therefore every state has a different view on what constitutes “infringement” and what is “fair use.” For example, in New York a photographer may not need permission to take someone’s picture and make the photograph a special feature at his next exhibit (see Nussenzweig v DiCorcia, 832 N.Y. S. 2d 510). However, in May, Judge Trauger of the Middle District Court of Nashville Tennessee refused to dismiss the plaintiff’s claim in summary judgment in Samuel David Moore et al. v. The Weinstein Co. LLC, opining that the use of Samuel David Moore’s identity as the basis for a character in the film “Soul Men” could sustain a cause of action for breach of right of publicity against a defense of First Amendment privilege.

It is important to point out that a claim for violation of a right to someone’s publicity is not limited to the main subject of a film or story. If there are ancillary individuals involved in the film, it is necessary for to obtain permission for the depiction of their names, likenesses, etc., especially if the dramatized depiction of the events was not previously recorded in a public manner. The upcoming release of the film, The Social Network, based on the actual facts surrounding the creation and creators of “Facebook”, has recently received quite a bit of media attention to the issue of whose and what rights producers should clear when dealing with recent, highly public and litigated issues concerning disagreement as to facts. A New York Times article by Michael Cieply and Miquel Helft correctly stated that "filmmakers often elect not to buy rights for people who figure only marginally in a picture....But studios like to lock down the rights to their principal living subjects if only so that they will not be bound to literal truth in their portrayals." An quote from one of the film’s producers, Scott Rudin, in The Wall Street Journal on September 3, 2010, excellently summarizes a film producer’s (and attorney’s) best legal justification for not obtaining releases from principals in connection with their portrayals in a film:

These guys (the major players in the Facebook lawsuits) all walked into a
courtroom to give their depositions-their version of the truth. And they told
three different stories. The movie exists in that grey area.

Personal experience has found that when negotiating life story rights with major studios, it is extremely difficult, if not impossible, to carve out, limit or modify any provision that gives the studio absolute control to make any and all changes to a story line, character, plot of any kind or nature, including a specific waiver of droit moral rights in European jurisdictions. The result of one very long but ultimately successful negotiation resulted from one client, a former head of a foreign government agency, to legally forbid the producers of a film from having him depicted in the act of personally carrying out the murder of anyone during the course of the film’s action. In other instances, film producers have been known to change the gender of an individual for a film, much to the consternation of the underlying life story owner/grantor.

Attorneys prefer well written and signed releases from anyone and everyone depicted in a film. If such releases are unavailable, the analysis and procedure for "clearing" the rights or "chain of title" to a film, including the need to obtain rights in and to life stories of characters in a film production, the decision of what creative edits are required often becomes a complicated and multi-tiered process. An ultimate resolution is often an imperfect combination of financial, practical, creative, legal and business considerations unique to the particular project in question.

September 9, 2010

IDPPPA: The Copyright Compromise

By Biana Borukhovich, EASL Fashion Law Committee Member

Is the third try a charm? That is what Senator Schumer and the fashion industry are pondering. As some of you may know, Representative Robert W. Goodlatte and other representatives, such as Hillary Clinton, introduced the Design Piracy Prohibition Act (DPPA) into Congress, twice. This bill was designed to Amend Title 17 of the Copyright Act to offer copyright protection to fashion designers. Nevertheless, this bill has been pending in the Senate since August 2, 2007.

However, a new name and a few additional provisions have offered new hope for these representatives. On August 6, 2010, Senator Schumer introduced the Innovative Design Protection and Piracy Prevention Act (IDPPPA), which can be found at http://thomas.loc.gov/cgi-bin/query/z?c111:S.3728. This bill was introduced to offer similar protection to fashion designers for their original creations. Both the DPPA and IDPPPA offer copyright protection to designers for 3 years for their original designs, but not for articles in the public domain. Moreover, neither bill speaks to fashion designers' liability for "independent creations" of similar designs.

Conversely, the IDPPPA has offered a few new set-asides from the DPPA. Under the new bill, fashion designers do not have a registration period during which they must apply for copyright protection. In addition, the new bill provides that a claimant can only plead the facts with particularity, which is a heightened standard compared to that of the DPPA. Under this standard, the complainant must meet three elements: (1) the design must be original, (2) the defendant's design is substantially identical and (3) the defendant had the opportunity to have seen the design before it was released publicly. Hence, such a standard would deter fraudulent and futile lawsuits that the previous bill might have encouraged.

In my opinion, this new bill seems more practicable at this point in time. Although I am all for the passage of the DPPA, at the same time, in an economy such as the one the U.S. is struggling with right now, we must take precaution in passing bills that might affect the job market. Hence, I think that the IDPPPA offers equilibrium between the designers and the "secondary" designers, a.k.a copycats, because it offers protection for fashion designers without offering over breadth provisions that would cause chaos in the fashion industry and unnecessary litigation. What do you think?

September 15, 2010

Message from EASL Chair Judith B. Prowda

I am pleased to announce the appointment of Jason Aylesworth as EASL's liaison to the Dispute Resolution Section. Jason also serves as the Young Lawyers Section's liaison to EASL as well.

Jason is an Associate at Sendroff & Baruch, LLP, where he practices transactional entertainment and intellectual property law in the areas of theatre, music, film and television. Jason received his undergraduate degree from Fordham University, and his juris doctorate from Touro Law Center. While in law school, Jason served as President of Touro's Alternative Dispute Resolution Society. As an active participant in numerous American Bar Association ADR competitions, Jason won both the Negotiation Competition and Arbitration Competition at his school and placed second in the Client Counseling Competition. In addition to representing his school in the regional ABA Negotiation Competition in New York and ABA Arbitration Competition in Oklahoma, he competed successfully in two regional ABA Mediation Competitions.

Thank you Jason for serving as the liaison among the Young Lawyers, Dispute Resolution and EASL Sections!

September 19, 2010

EASL Fall Meeting

What: Dispute Resolution Section and EASL Section Joint Fall Meeting

HOW TO MAXIMIZE RESULTS IN MEDIATION AND ARBITRATION

An Illuminating and Engaging Day of Interactive Role Play with Experienced Mediators, Arbitrators and Counsel

When: Tuesday, October 12, 2010

Where: Fordham Law School
McNally Auditorium
140 West 62nd Street
New York City

For more information about the program, please visit EASL's website at: http://www.nysba.org/AM/Template.cfm?Section=Entertainment_Arts_and_Sports_Law_Home1&CONTENTID=42436&TEMPLATE=/CM/ContentDisplay.cfm

For a registration form, please visit EASL's website at: http://www.nysba.org/AM/Template.cfm?Section=Entertainment_Arts_and_Sports_Law_Home1&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=42438

Entertainment Business Law Seminar

CMJ Music Marathon
New York University
Helen and Martin Kimmel Center for University Life
New York City

Friday, October 22, 2010

To view/download the flyer, visit: http://www.nysba.org/AM/Template.cfm?Section=Entertainment_Arts_and_Sports_Law_Home1&CONTENTID=42235&TEMPLATE=/CM/ContentDisplay.cfm

To view/download the registration form, visit:http://www.nysba.org/AM/Template.cfm?Section=Entertainment_Arts_and_Sports_Law_Home1&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=42236

To register online now, visit: http://www.nysba.org/AM/Template.cfm?Section=Entertainment_Arts_and_Sports_Law_Home1&Template=/Security/Login.cfm

Attorney Rate - $199.00. Fee includes admission to the Music Business Law Seminar only (Friday, October 22, 2010), New York MCLE credits, written course materials, breakfast, and refreshments. This fee DOES NOT include a CMJ Music Marathon 2010 registration.

Note: To receive discount rate of $199, attorney registrations must be received by 5:00 p.m. on Wednesday, October 13th. If you register after this time or on day of event, an additional amount of fifty dollars ($50.00) will be added to registration fee.

Lawyers attending the seminar will receive 6 New York State MCLE (Mandatory Continuing Legal Education) credits, consisting of 4 in Practice Management, 1 in Skills and 1 in Ethics, all of which may also be accepted in other jurisdictions.

NEW FOR LAW STUDENTS!
Law Student Rate - $100.00. Fee includes one year student membership with NYSBA and EASL, refreshments during the seminar, however, no MCLE materials or MCLE credit. Students will need to fax a copy of their current student ID along with the registration form. Registration under this option will be available in advance through the NYSBA site until Wednesday, October 13th. This fee DOES NOT include a CMJ Music Marathon 2010 registration.

CMJ Registration link: http://cmj2010.com/registration
CLE Program Information: http://cmj2010.com/daytime-events/cle-legal-program
CLE Schedule: http://cmj2010.com/daytime-events/cle-legal-program/schedule

The last day to pre-register online is October 13, 2010. Register online now

Accommodations for Persons with Disabilities:
NYSBA will make reasonable modifications/accommodations to allow participation in its services, programs, or activities by persons with disabilities. NYSBA will provide auxiliary aids and services upon request. NYSBA will remove architectural barriers and communication barriers that are structural in nature where readily achievable. To request auxiliary aids or services or if you have any questions regarding accessibility, please contact Kathy Heider at 518-487-5500 or kheider@nysba.org.

September 22, 2010

Event Recap: Creative Time--Bringing Cutting Edge Art to the Public

By Stephanie Spangler

Held on September 15, 2010 from 6-8pm, this informative event was co-sponsored by EASL's Pro Bono and Fine Arts Committees, Cardozo's Intellectual Property Program, and the Cardozo Art Law Society. The program provided insight into the legal issues faced by non-profit art organizations aimed at producing and displaying public artworks. The panelists included Katie Hollander, Creative Time's Deputy Director, and Judith Church, Esq., from Debevoise & Plimpton LLP and pro bono counsel to Creative Time. The moderators included EASL Chair Judith Prowda and Pro Bono Committee Co-Chair Carol Steinberg.

The evening began with Ms. Hollander's introduction of some of Creative Time's well-known and recent projects, which included Tribute in Light, a temporary 9/11 memorial co-created with the Municipal Art Society, Playing the Building, by Talking Heads artist David Byrne, and The Key to the City Project, by Paul Remirez Jonas, a project recently based out of Times Square. More information on Creative Time's projects can be found at its website (http://creativetime.org/programs/index.html ). What is most significant about Creative Time's work is that its projects aim to reach a broad array of the public. Hence, the projects have an inherent public artwork identity, and it is this apparent interaction between the artworks and the public that gives rise to potential legal issues.

Ms. Church then spoke on the legal issues about which she has advised Creative Time. She began with the the issue of whether the American Disabilities Act (ADA) applies to sculptures, especially where ADA compliance fundamentally alters the nature of the artwork. One of two examples Ms. Church used was the recreation of Freedom of Expression National Monument, by architect Laurie Hawkinson, performer John Malpede, and visual artist Erika Rothenberg. (See more information about the work at: http://www.creativetime.org/programs/archive/2004/freedom/ ). The main feature of this work is the gigantic, operative megaphone attached to a platform six feet above ground. Since access to part of the sculpture was only possible by traversing a twenty-one foot long ramp to the six-foot tall platform, the work was not initially ADA compliant. After negotiations with the City, the solution eventually was to alter the work by adding a pipeline that connected with the megaphone. However, this compromise raises fundamental issues regarding the nature of the artwork, and perhaps serious considerations artists must have if creating public works to meet ADA requirements.

A second legal issue related to the right of publicity. One work entitled It Is What It Is, by Jeremy Diller (http://www.conversationsaboutiraq.org/), which included a journey across America and engaging the public in conversations about Iraq. As the artist also documented this three and a half week trip, there were concerns regarding the right of publicity relating to the documentation. Ms. Church discussed the common law right of publicity, differences in statutory law in different states, and challenges with utilizing a release form versus release signage.

Ms. Church also discussed representation of third parties in works. As part of Creative Time's Democracy in America: The National Campaign project, one of the commissioned works was Revolutionary Love 1: I am Your Worst Fear, by Sharon Hayes (http://www.creativetime.org/programs/archive/2008/democracy/hayes.php). This piece required publication participation, and because of the politically charged material recited during a politically charged time, there were concerns about representations of these participants.

Finally, there were comments on determinations of reuse rights between Creative Time and the artist. There was also discussion on the importance of seeking the involvement of the Board of Directors to prevent Board liability when the project occurred in an uninhabited, unmaintained building.

Overall, the evening was an engaging discussion between Ms. Hollander and Ms. Church. The audience could quickly pick up on the collaborative nature between the arts organization and its pro bono counsel. The discussion lent itself to be more of a conversation between the two panelists which allowed the audience a better behind-the-scenes look at how the panelists work together on ensuring the projects come to fruition with as little legal strife as possible.

September 28, 2010

Message from EASL Chair Judith B. Prowda

I am pleased to announce the appointment of Emily Miranda Galindo as an EASL Law Student Liaison for the 2010-2011 academic year. Law Student Liaisons attend EASL Executive Committee meetings, participate in the lively exchange of ideas with EASL colleagues, assist with EASL programs and serve as the voice for their fellow classmates.

Miranda is a second year student at Fordham Law School, where she is studying intellectual property. At Fordham, Miranda co-founded a student group that examines the legal issues within indigenous communities. She is also a Competitor on Fordham’s Jessup Moot Court Team. This past summer she was Professor Sonia Katyal’s Research Assistant on a project examining cultural property issues in the indigenous context. Miranda graduated from Brown University in 2006 with a B.A. in Public Policy and American Institutions. At Brown, she was a member of Mezcla, the Latino performing arts troupe. After Brown she became a Coro Fellow in Public Affairs in New York City. Miranda comes from a family of artists and entertainers and enjoys painting and photography and performing with Teatro Pachuco throughout Mexico and Europe.

Message from EASL Chair Judith B. Prowda

I am pleased to announce the appointment of Jessica Thaler as Co-Chair of EASL’s Membership Committee with Rosemarie Tully (EASL’s Vice-Chair and District Representative from the 10th District). Jessica’s law practice includes counseling clients in connection with corporate and commercial transactions, including mergers and acquisitions, lending and finance, development and cooperation, services, real property and licensing. She is an active member of NYSBA and serves on the NYSBA Membership Committee and the Committee on Lawyers in Transition, and is a member of the Business Law and Corporate Counsel Sections. Jessica graduated cum laude from UCLA and received her J.D. from Fordham University School of Law.

Please join me in welcoming Jessica to the EASL Executive Committee. We look forward to working together to build our membership.

September 29, 2010

Second Circuit Confirms Digital File Download is Not a Public Performance

By Joel L. Hecker
HeckerEsq.com

The United States Court of Appeals for the Second Circuit has just issued its decision, dated September 28, 2010, affirming the district court ruling that a download of a digital file containing a musical work does not constitute a public performance of that work under the U.S. Copyright Act. However, the appellate court vacated the district court's assessment of fees for a blanket ASCAP license and remanded it for further proceedings. The decision can be found at US v. American Society of Composers, Authors and Publishers, decided September 28, 2010, docket number 09-0539-CV.

Digital File Downloads

The first issue before the court on appeal was whether a download of a digital file containing a musical work constitutes a public performance of that work. It was not disputed that playing the music after it had been downloaded is a public performance, since the downloading of the files actually created copies of the musical work. Therefore, the copyright owners must be compensated for these downloads. However, the case involved the public performance right, which is a separate and distinct copyright right.

The court first turned to Section 101 of the Copyright Act, which defines "performance" to mean to "recite", "render", "play", "dance", or "act it". The court stated that a download is plainly neither a "dance nor an act", and went on to determine whether the download falls within the meaning of the terms "recite", "render", or "play".

The court had no difficulty determining that the ordinary sense of these words entail what is called contemporaneous perceptibility. That is, a "recital" is a performance before an audience and a performance, as defined in the audio-visual context of Section 101, requires such contemporaneous perceptibility.

The court also dismissed ASCAP's interpretation of the definition of "publicly", holding that "publicly" simply defines the circumstances under which a performance will be considered public and does not define the meaning of "performance".

In further support of its decision, the court juxtaposed the parties' agreement that stream transmissions constitute public performances because streaming entails a playing of the song that is perceived simultaneously with the transmission. In contrast, said the court, downloads do not immediately produce sound. That only occurs after a file has been downloaded and played back. Accordingly, the court concluded that transmittal without a performance does not constitute a "public performance" under the Copyright Act.

Fee Determination for Using the ASCAP Repertory

The district court had determined royalty rates for blanket licensing fees for the uses involved in the case. The Second Circuit found that the district court did not adequately support the reasonableness of its methods or royalty rate applied. Accordingly it remanded the case to the district court to redetermine reasonable fees for the licenses in light of the guidelines set forth in the opinion. A discussion of those guidelines is too involved for this blog and the reader is referred to the opinion itself.

Joel L. Hecker, Of Counsel to Russo & Burke, 600 Third Avenue, New York, NY 10016, practices in every aspect of photography and visual arts law, including copyright, licensing, publishing, contracts, privacy rights, and other intellectual property issues. He can be reached at (212) 557-9600, website www.heckeresq.com, or via email: HeckerEsq@aol.com.

About September 2010

This page contains all entries posted to The Entertainment, Arts and Sports Law Blog in September 2010. They are listed from oldest to newest.

August 2010 is the previous archive.

October 2010 is the next archive.

Many more can be found on the main index page or by looking through the archives.