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April 26, 2009

NEW YORK REPLENISHES FUND FOR 30% TAX CREDIT ON QUALIFIED FILM PRODUCTIONS COMPLETED IN 2009

In early 2008, New York State allocated $515 million for tax credits to be applied for qualified film production expenditures, in connection with the tripling of the available tax credit from 10% to 30%. By February, 2009, the entire sum had been allocated to qualified productions.

$350 Million now Available for 2009 Productions

On April 1, 2009, as part of this year’s budget adoption process, and on the heels of the financial community’s collapse and New York State’s large budget deficits, Governor Patterson approved an additional $350 million in tax credits for qualified film production expenditures for 2009. No funding has yet been approved for 2010 or beyond. The original $515 million allocation was designed to cover applications through 2013 even though the enabling legislation allowed the use of the funds to be accelerated into earlier years. When combined with the 5% tax credit available in New York City, New York City and New York State remain a financially attractive location to create and produce qualified productions.

Timing of Credit Availability Varies

The GT alert of May 2008 which addressed the increased tax credit, how it can be accessed, and how it is administered remains accurate, except for the following recently-enacted changes. Under the new funding legislation, if the amount of the tax credit is at least $1 million, but less than $5 million, the credit is claimed over a two year period, beginning in the taxable year in which the production of the qualified film is completed, and in the next succeeding taxable year, with one-half of the amount of the credit allowed being claimed in each year. If the amount of the credit is over $5 million, then the credit is spread out over three years, with one-third being made available each year. Although not specifically mentioned in the statute, if the amount of the tax credit is under $1 million it presumably is payable in the year in which the production of the qualified production is completed.

We repeat below the remaining provisions of the May 2008 GT Alert which reflect the portions of the tax credit which remain unchanged.

Application Process

The two New York credits are available through a single application, administered by the Governor’s Office of Film & Television and the Mayor’s Office of Film Theatre and Broadcasting. The production entity completes the application. The production entity is frequently a limited liability company, or limited partnership or other “pass-through” entity for tax purposes. As such, the credit made available passes through pro rata to the members or partners of the production entity.

Qualified Production Costs

The credit is 30% of the “qualified production costs” paid or incurred in the production of a qualified film. “Qualified production costs” are “production costs” attributable to the use of tangible personal property or performance of services within New York directly and predominantly in the production of a qualified film.

“Production costs” are certain “below the line” costs. Excluded from the definition of “production costs” are (i) the costs of story and script, and (ii) wages, salaries or other compensation for writers, directors, producers and performers (other than background actors with no scripted lines). Payments for principal cast members, rights agreements, writers, directors, producers and others generally found “above the line” are not eligible for the credit. Extras and other crew, location and equipment costs are eligible for the credit. Certain additional costs, such as insurance, contingency funds and completion bond fees, are not eligible for the credit. Crew members need not live in New York, but must render services in New York. Travel costs within the state from location to location may be included, although travel from outside New York into the state is not included.

In addition, the “qualified production costs” (excluding post-production costs) that are attributable to the use of tangible personal property or the performance of services at a “qualified film production facility” in the production of a qualified film must be at least 75% of the total production costs (excluding post-production costs) at any production facility in or out of New York. A “qualified film production facility” is a film production facility in New York that contains at least one sound stage with at least 7,000 square feet of contiguous production space. A list of such facilities is available at www.nylovesfilm.com.

However, if the qualified production costs (excluding post-production costs) at a qualified film production facility are less than $3,000,000, then the portion of the qualified production costs attributable to the use of tangible personal property or performance of services outside of a qualified film production facility is allowed only if the shooting days spent in New York outside of a film production facility are at least 75% of the total shooting days spent outside of a film production facility both in and out of New York.

Using Credits as Collateral

If any member or partner of a pass-through entity making the application for the credit in New York has an existing tax liability to the State or City, as applicable, that member's or partner's pro rata share of the credit will be used to offset that liability. The balance of the credit would be available to the remaining members or partners. The effect of this provision may be to make it difficult to use the credit as collateral for a loan.

However, where the production entity is a Subchapter C corporation, rather than a pass-through entity, the credit can be used as collateral for a loan. Where the entity is a C corporation, income tax is imposed at the corporate level, and the income and losses do not pass through the entity to the members or partners. This results in two levels of income tax, one at the corporate level and another at the shareholder level when dividends are paid by the corporation to the corporation’s shareholders. If the C corporation is a special purpose vehicle, formed for the purpose of producing the film, the credit may be used as collateral for a loan. In each circumstance, however, the benefit of securing the value of the tax credit, and financing it, must be weighed against the cost imposed by two levels of tax. Certain banks may also be willing to finance the credit based on representations and warranties of the individual investors that they have no New York State or City tax liability.

The new legislation did not alter the prior legislation which provides for no limit on the credit available per project.


Conclusion

The significant increase in the amount of the Empire State film production credit provides increased financial incentives to produce films and television programs in New York for both residents and non-residents. These benefits are significantly enhanced by the federal provision permitting deduction rather than amortization of expenses for certain qualified film and television productions. For a taxpayer in the highest combined U.S. and New York State and City marginal tax bracket of 45%, these provisions will have significant impact on the computation of the break-even point for profitability, and it is possible that if the film returns only slightly more than half the total cost of production, the net effect may be that the investor still realizes an after-tax profit, even before the picture itself achieves cash flow break even. For non-residents, the State and City film credits provide offsets to the taxes imposed for doing business in New York. The combination of the federal income tax treatment of certain qualified film and television productions with the improved New York State and existing New York City tax credits may make investing in qualified audiovisual productions a significantly tax advantaged investment for qualified investors and qualified films.

_______


This EASL Blog was written by Marc Jacobson and David Bunning. Questions about this information can be directed to:

• Marc Jacobson—212.801.6516 (jacobsonm@gtlaw.com)
• David Bunning—212.801.9318 (bunningd@gtlaw.com)


May 8, 2009

Income Tax Treatment of NYS Tax Credits for Films

The earlier post regarding NYS' tax credit raised a question for one producer, regarding the income tax treatment of New York State tax credits for films. The receipt of these credits would not be taxable at the federal level, but to the extent the credit reduces the NYS tax it would also serve to reduce the deduction for state taxes otherwise available on the federal return. Since the credits simply reduce state income tax, they would not be taxable at the New York level either. The credits will not affect basis in the film since these credits are not a credit against against a particular asset, but rather a credit for a qualified expenditures within NYS.

Marc Jacobson
Of Counsel
Greenberg Traurig, LLP | MetLife Building | 200 Park Avenue | New York, NY 10166
Tel 212.801.6516 | Fax 212.805.5516 | Cell 516.459.0436

April 23, 2010

CopyRight and Risk in Film Practice Program

Co-sponsored by the Young Professionals Division of the Copyright Society of the USA
and the New York State Bar Association's Entertainment, Arts and Sports Law Section

Date: April 29, 2010
Time: 6:00 p.m - 7:00 pm.: FREE Cocktails
7:00 p.m. - 8:00 p.m.: Program (will start and end promptly)

Place: The Benjamin N. Cardozo School of Law, 55 Fifth Avenue, New York, NY

Cost: FREE

CLE: The Copyright Society of the U.S.A. is a NY CLE Approved Provider. This course is Transitional and Nontransitional, and provides 1 Credit (based on 60 minutes).

Please join us for a free, jointly-sponsored evening of cocktails and film discussions on Thursday night, April 29th, 2010 from 6-8 PM at the Benjamin N. Cardozo School of Law. Whether you are young or simply young-at-heart, the Young Professionals Division of the Copyright Society of the USA and the New York State Bar Association's Entertainment, Arts and Sports Law Section are excited to invite you to come, network and hear from some experts in the film industry. And, thanks to the generous support of the Cardozo Intellectual Property Society enjoy an open bar and snacks as well.

CopyRight and Risk in Film Practice

This panel will provide a look into business and copyright aspects of the film production, finance and distribution. Topics may include mitigation of production and distribution risk, chain-of-title, errors and omissions insurance, and determination of copyright infringement damages. The panel may also address the controversy surrounding the proposed Cantor Exchange which, if approved by federal regulators, will provide a platform for trading of derivatives based on domestic box office receipts.

SPEAKERS: We are privileged to present respected practitioners Ezra Doner and Dennis Angel and our moderator Professor Derek Bambauer (Brooklyn Law School).

To attend this exciting panel discussion, please complete the registration form, and mail or fax it to: The Copyright Society of the U.S.A., 352 7th Ave., Suite 739, NY, NY 10001, Fax # (212) 354-2847, by Tuesday April 27th. We look forward to seeing you on April 29th!

Go to www.nysba.org for a complete listing of association events and web resources.

August 15, 2010

Report on the ABA Forum on the Entertainment and Sports Industries –Part I: “From Music, Film and Art to Motorcycles and Other Sports: Hot Issues and Disputes in Entertainment, Art and Sports Licensing Deals”

By Monica Pa

This panel was held on Friday, August 6, 2010 at the InterContinental Hotel in San Francisco.

The panel included Richard J. Idell, Idell & Seitel; Jessica Darraby, the Art Law Firm; Samuel Lew, Feldman Gale PA; Jann Moorhead; and Rob Rieders, Pixar Animations Studios. This blog entry only discusses Rob’s presentation, which I thought raised excellent points about entertainment licensing by a content creator.

Pixar has been involved in numerous award-winning animated movies, including Toy Story, Up, Cars, etc. Rob’s presentation provided practice tips for how to negotiate and work with content owners, licensors, creative executives and the marketing team in setting forth the parameters of the licensing agreements and the scope of permissible use for creative works.

He used the movie Toy Story as an example of various entertainment licensing issues that come up in a movie. Toy Story licensed a tremendous number of characters (e.g., Ken and Barbie, Mr. Potato Head, Slinky the dog, lots of Fisher Price toys, etc.). When you are licensing a character, you want to consider all the artistic interpretations of the licensed elements and potential changes to the brand identity from these interpretations. For example, if you are licensing Mr. Potato Head, you want to think about what happens when a toy becomes a “living character,” animated with a voice, personality and 3D design. Similarly, if you are licensing a historic character like Kasper the Ghost, and the licensee intends to update this character, are these updates going to be appropriate for the character? Will it be positive for the brand and/or the overall line of business?

For example the movie Cars animated several iconic cars and gave them distinct personalities. Pixar depicted the 1960 VW Bus as an old hippie van narrated by George Carlin. The 1959 Chevrolet Impala was updated as a snazzy slick Hispanic car narrated by Cheech Marin. In Toy Story, Barbie and Ken were primary characters. Pixar was unsure whether Mattel would be comfortable with the depiction of Ken as a fashionista metrosexual. Barbie, on the other hand, was depicted as very intelligent, which Mattel liked. Similarly, Mr. Potato Head is an important brand for Hasbro (it's the company's Mickey Mouse), so it is protective of this character. In Toy Story, Mr. Potato Head was depicted as a folksy character narrated by Don Rickles. Pixar queried whether Hasbro would be comfortable with the fact that Mrs. Potato Head was depicted walking around for half the film without an eye. Notably, Mr. Potato Head was depicted with a bowler hat and mustache, which was not original to the toy. By doing this, Pixar added to the Mr. Potato Head character, thereby creating new intellectual property that Pixar now has some ownership interest.

In entertainment licensing, you want to continually consult with the licensor along the way. Even if you have a broad license, you do not want to have the licensor unhappy with the resulting product or be surprised about how its character was depicted. Once a film is made (which can take up to five years), it is extremely difficult and expensive to extract elements from the animated work if a dispute arises.

In licensing a character or toy, you’ll also want to consider unexpected uses of the licensed element. For example, Pixar created a Mr. Tortilla Head (which took Mr. Potato Head’s features and put it on a tortilla because at one point the toys needed to slide under a closed door.) Make sure the license provides for whether the elements of the intellectual property can be disembodied and whether it governs the “whole” work. Remember, people love mash ups.
In seeking to obtain a license for a character, as a preliminary consideration, analyze whether a license is even obtainable given the intended use. For example, in the current Toy Story, the nemesis was an evil teddy bear. There is no famous teddy bear brand (such as Paddington Bear) that would be willing to license their character for this use because this would be so detrimental to the brand. Accordingly, Pixar created its own teddy bear character that is pink, bitter and walks with a cane. Indeed, it’s sometimes better to create your own content rather than operate under a restrictive license where the licensor is uncomfortable with the intended use.

However, if you are going to license a character as a nemesis, e.g., a “Bad Guy”, make sure you fully and accurately disclose your intended use because, again, you do not want the licensor to be unhappy later. Put a full disclosure in writing setting forth the intended use (e.g., this character is going to be depicted as a homicidal maniac). Regardless of how the character is going to be used, the licensee should never agree to a “positive light” provision, which provides that the character will be portrayed positively; at most, agree to a “neutral light” provision. Also pay attention to the precatory language in the agreement, and be careful about boiler-plate provisions, including provisions for injunctive relief, venue, choice of law, and publicity rights the content creator should control the publicity of the film and not the licensor).
A content creator also wants to avoid giving the licensor script approval or final product approval. This, however, depends on the bargaining power of the respective parties, and on the reputation of the content creator. Pixar does not give story approvals, but they have good relationships with their licensors. They work closely with those companies to keep people on board all along the way. With smaller content creators, a licensor may want to be more careful and protective of their brand. In these instances, the licensor may want to push for some level of script approval.

Rob pointed out the challenges that arise when the creative team insists that an element is a “must have.” This results in the loss of negotiation leverage (e.g., the licensor know that you need them more than they need you). If the content creator has an unequal bargaining position (desperation can be obvious), the resulting license will not only be more expensive, it can be limited in the scope of granted rights, and other provisions (e.g., the representations and warranties, indemnification) may be compromised. The in-house lawyer should be willing to push back on the creative team. Try exploring available alternatives with them, such as creating a new character instead.

Another practice point is to make sure that the in-house lawyer is consistent with licensing methods and practices. If the company has a best practices policy, these should be consistently followed. For example, if Pixar is licensing several characters from various toy companies, all of the companies should be treated fairly and subject to similar deal terms. For example, do not give one company script approval when no other company go this and/or there is a company practice against this. Try not to make exceptions, even if the licensed elements is a “must have.” Bear in mind that the licensing community is tight knit and people talk.
In drafting, make sure the license contains contingent obligations. Obligations for payment and screen credit should be contingent on actual use. Without this provision, if the product or character does not actually appear in the film, there is a chance that the content creator will still need to pay the licensor.

License agreements should also contain certain non-contingent obligations, such as a strict confidentiality clause. If the creator discloses preliminary drafts of its film and marketing campaign with its licensing partners, this needs to remain confidential. Another non-contingent obligation should be that the creator reserves the right to use or not use any licensed element. The content creator wants to make sure that no one is shoving their product into a film or marketing campaign.

Finally, Rob pointed out that, in entering into a license, the content creator should assume success; meaning, the film is going to have sequels, toys, books, games, theme parks, etc. For example, there is a “Cars Land” theme park now based on the Cars movie. Try not to give away toy merchandising rights, book rights, and other derivative rights. The creative team may not think this far ahead and, if this is a “must have,” may be willing to forgo these rights in order to get the deal done.

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 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.

October 27, 2010

“Media Masala"

“Media Masala – Current Trends and Issues in
US – India Film, Television and Music Programming, Production and Distribution”

The New York City Bar Association Entertainment Law Committee presents an evening of industry professionals sharing experiences, developments and challenges in the rapidly expanding media markets between India and the U.S.

Date: Monday, November 8, 2010
Time: 6:00-8:00

Location: New York City Bar Association
42 West 44th Street
New York, New York 10036
(212) 382-6600

Admission: Free
RSVP to: Michelle Adams at madams@cdas.com


Panelists:

Megha Bhouraskar
Founding Partner, Poppe and Bhouraskar LLP

Steve Stander
Vice President & Deputy General Counsel
A&E Television Networks, LLC.

Salil Gandhi
Co-founder, Cry Baby Media

Anadil Hossain
Co Founder, Dillywood Inc.

Mark Merriman
Frankfurt Kurnit Klein & Selz
Production counsel, “Darjeeling Limited,” Wes Anderson, Director

Co-sponsored by Entertainment Law Committee members Joanne Cassidy and
Madhu Goel Southworth


February 23, 2011

A Friday Night: Reflections on the Critiques of "Would the Bard have Survived the Web?"

By Mary Rasenberger

The excellent op-ed entitled "Would the Bard have Survived the Web?," written by Scott Turow, Paul Aiken, and James Shapiro (the Authors Guild's President, Executive Director and a member, respectively) and published in the New York Times on February 15th (available at: http://www.nytimes.com/2011/02/15/opinion/15turow.htm?_r=2), generated numerous responses and a great deal of controversy in the blogosphere. The op-ed took a look at the golden age of English theater in the late 16th and early 17th centuries when there was "a wave of brilliant dramatists", and described how the erection of walls around theaters (literal pay-walls) allowed theaters to charge theater-goers, which enabled playwrights and actors to get paid by the public for the first time, rather than only by patrons. When authorities knocked the walls down in the mid-17th century to silence the seditious political ideas they feared were being expressed within, the ability to make a living from playwriting came to an end for a time and so did the "explosion of playwriting talent." The article warned that if we allow the copyright system we currently have in place to crumble under prevailing attitudes and internet piracy, the explosion of creative talent we have today may likewise dwindle. A number of letters to the editor and blogs have criticized the op-ed and used it against copyright law generally. The primary arguments can be summarized as follows: (1) there was no copyright at the time of Shakespeare, so clearly money can be made without copyright, and (2) Shakespeare copied from others, showing that copyright law restricts rather than induces creativity.

The first point does not even merit a response, since the op-ed authors themselves describe how copyright developed a half century later, providing a new, more stable way for authors to make a living. The second point belies a complete over-simplification and misunderstanding of U.S. copyright law. Incorporating elements of a prior work into one's own is not necessarily infringement and has always been part of the creative process. Copyright law, as construed by the courts, has long-since accommodated this process through, among other doctrines, the substantial similarity test, lack of protection for ideas, facts, common expression, and scènes a faire, the fair use doctrine, and for older U.S. works, formalities that put a large number of works into the public domain, as well as the almost 80 pages of exceptions and limitations in the Copyright Act. As a copyright practitioner, rarely a day goes by when I don't tell a client, usually a copyright holder, that it is free to use elements of another's work in some manner or another. While the courts don't always get copyright right, they often do, and through the last two centuries they have demonstrated enormous flexibility in their applications of the copyright law as technologies have shifted, including expanding fair use considerably in a manner that reflects evolving practices and technological advancements.

While the analogy to Shakespearean theater in the op-ed was imperfect, as most analogies are, the point of the article was clear and an excellent one - that "a rich culture", such as we now have requires a large number of creative individuals - "authors and artists", who devote their careers to their art. Indeed, our Founders were wise enough to understand that a true democracy requires a proliferation of free expression, that individuals not be beholden to any patron including the government, and that this can only be achieved by allowing professional creators to earn money from their works on the open market. Copyright is a brilliant way to achieve that end. The Shakespearean era theater grew out of the literal pay-wall described in the op-ed; our vast, prolific culture today has largely grown out of copyright law, a legal pay-wall.

The Guild's op-ed acknowledges that there is a place for free creative work online; and certainly there are those who will create for free, as many of the responses also point out. Indeed, many professionals who make a living from their works often will produce, perform and/or distribute works for free for any number of reasons (marketing, friendship, philanthropy, or the desire to see a particular work "out there"). Copyright gives creators the flexibility to do that - to decide when they want to assert their rights. Yet that is not what the op-ed is talking about; rather, it reminds us that copyright law enables artists and authors to make a living and is why we have the tremendous creative output we have today -- just as the theater's literal pay-wall was key to the creative burst in the theater in Shakespeare's time.

Let me give you a concrete example. Friday, after finally having acknowledged that my son was too sick to join my husband skiing, I cancelled our plans and we found ourselves with a delightfully free weekend ahead of us. I worked late and, among other things, read posts critiquing the op-ed forwarded to me by my co-teacher at Fordham Law (of a seminar "Copyright Reconsidered - Authorship in Historical Perspective"). Pondering the posts, I signed off and decided to indulge myself for the rest of the evening: I went to the gym and watched a movie on TV. As I later realized, it had been a truly indulgent evening -- over the next four hours my two kids (ages 13 and 14) and I had consumed millions and millions of dollars' worth of copyrighted works.

First, my daughter and I listened to the radio on the way to the gym, switching stations to find songs one or both of us liked; we heard some hard rock that was too hard for me, the Rolling Stones, Pink Floyd, and Rihanna (my choice --over her eye rolling). At the gym, she listened to her iPod, with a collection of about 2000 songs -- post-1990 alt-rock, punk rock and hard rock (all legally downloaded). I watched and listened to music videos licensed by the health club chain. I surfed between 6 or 7 stations, including dance, top hits, rock, alternative, rap, and whatever was playing songs that would keep me moving, some of which were creative and fun - lots of great choreography, dancing and/or special effects. On the way home, we listened to Evanescence (I'd been watching one of their videos when my daughter came to find me and we started to talk about it), and an Angels and Airwaves song that my daughter had heard in the locker room and wanted me to hear, on her iPod. She also played me a Blink 182 song and another sister band of Angels and Airwaves to compare the music.

At home, my son suggested I watch the "The Other Guys" on video-on-demand (a superb, hilarious movie). He listened to his iTunes songs (a collection of pre-1980 rock, also legally downloaded) on the computer while playing Wii Ski (which has wonderful artwork - it makes you feel like you are there on the powder covered mountain). He also watched the George Lopez sitcom simultaneously while checking out interactive ski trail maps. My daughter took pictures on her digital camera of our new kitten, then edited them and added special effects using iPhoto and Picnik software, chatted with friends on Facebook, texted others, all while listening to her iTunes collection on her computer. Then, we all got into bed and read - different books. (I read Just Kids by Patti Smith - a testament to the artistic soul and the difficulties creators experience for their art. Thanks to copyright, Smith's and Mapplethorpe's days of privation when "just kids" paid off and they both were eventually able to make a living off of their art.)

As spoiled as we are with an abundance of creative content, our activities on Friday evening were not completely atypical for Americans. I am sure that even those who object to copyright laws and believe that somehow art gets produced without it, also have iPods full of songs, watch TV and movies, read books, and rely on a large assortment of software programs, and would feel deprived without this "content."

The reason why I describe all this is because it's important to bear in mind that it took hundreds of professional creators who work full-time honing their art so that we can enjoy it to produce what the three of us consumed in just one evening. At a minimum, the following full-time creative professionals were involved in creating our evening at home, most of whom you can assume need to earn a living:

• Recorded music: performers (lead and side musicians) and song writers for about 50 songs, amount to at least several hundred people.

• Music videos: recording artists, professional dancers (hundreds among all the videos), choreographers, sound engineers, directors, cinematographers amount to several hundreds of people for all of the videos combined.

• Movie and TV: screen writers (probably several for just the movie), actors (who clearly added some of their own creativity/improvisation), directors, editors, cinematographers, special effects artists, sound artists. Don't forget the scores and accompanying background music, which are in addition to the music listed above.

• Wii Ski: visual artists, computer programmers -a couple dozen at least, I'd guess.

• Computer programs (iPhoto, Picnik, digital camera, cell phone, interactive maps, Facebook ... among others) - involving dozens, if not hundreds of people

• Books: Each one probably took the author the equivalent of at least one year (and probably much longer) of full-time work, plus there may have been ghost writers, and editors likely played a creative role.

All of those people make a living doing their work and had to get paid (in most cases, not a heck of a lot but enough to make a living) - before the big bad media companies who are, according to some, ruining the world with copyright, made a cent of profit. Although I paid for every item of content where payment was required, my amortized costs for our evening were maybe $20.

How fortunate we are. We have access to so much wonderful and creative art that brings us together in the ways we share and experience it. Yet we take all this content and the shared experiences it provides us for granted. Try to imagine our lives without music everywhere we go, TV, movies, books, newspapers and software. (What if we didn't have music, movies, TV, and books to share and talk about with our teenage kids? The arts afford so many opportunities for sharing thoughts, feelings and learning - and the kids don't even realize it!) The reason that we are able to have access to an abundance of really great content is that we live in a country with so many creative people who have devoted their lives to their art -- and they can do so because we have copyright laws that work.

What if we couldn't support professional creators anymore because no one could afford to pay them - which, as the Authors Guild op-ed warns, could happen if it becomes impossible to make money on content because everyone is stealing it online? The op-ed authors' point is that we, as a culture, have been lulled into taking that kind of creative output for granted, but there is no guarantee it will continue. While it's certainly true that there will always be people who will create regardless, do we really want to rely on the creativity of kids, academics, moonlighters and retirees, or, blogs for our culture? Without copyright, we certainly wouldn't have anyone to underwrite the significant costs of creating film, videos, computer games or software - so just say good bye altogether to those arts. There are few creators who could afford the time to write a book, write or record original music, or choreograph if they had to find other ways to make a living.

Copyright propelled a huge explosion of creative output in America. The production of our creative works is so vastly more complex than any patronage system could muster, even if we were willing to give up expressive and artistic freedom - which we are not. Furthermore, creativity is one of the things we are really good at in this country. We excel at teaching our kids to think creatively in and out of school, and as a society at large. As a result, copyrighted works are one of our largest exports. Let's celebrate that creativity. Let's not let rhetoric and the imperfections of current copyright law diminish it. Rather, let's learn from the past and help steer copyright law so that it continues to morph to accommodate the evolving technologies and practices of our arts today.

October 25, 2011

Sarver v. The Hurt Locker LLC et al.

By Carter Anne McGowan

In 2010, director Kathryn Bigelow's The Hurt Locker nearly swept the major awards at the Oscars, winning Best Picture, Best Director, and Best Original Screenplay. Recently, a lawsuit brought by Jeffrey Sarver, alleging not only that The Hurt Locker wasn't entirely original but was also defamatory and a violation of Sarver's rights to privacy and publicity, was tossed out by the District Court for the Central District, California, under that state's anti-SLAPP (Strategic Lawsuits Against Public Participation) Law.

Jeffrey Sarver serves in the U.S. Army. While serving in Iraq from July 2004-January 2005, he worked as an Explosives Ordinance Disposal (EOD) Technician. In December 2004, journalist Mark Boal was embedded with Sarver's unit. In addition to interviewing Sarver, Sarver's unit, and several other units, Boal photographed and videographed them. When Sarver returned to the U.S., Boal spoke with him again. In August 2005, Boal's article was first published in Playboy and later published as an abridgement in Reader's Digest. In what Sarver alleged was a surprise to him, the article focused entirely on Sarver, instead of on the units with which Boal was embedded.

Boal later wrote the screenplay for The Hurt Locker and also served as a co-producer on the film. The film featured a main character named "Will James," a damaged, antiheroic cowboy of a soldier who lives for danger and flouts the chain of command. When released in 2009, the film contained a disclaimer that it was a work of fiction. In March 2010, Sarver sued Boal, Bigelow, and the production companies behind the film, alleging: (1) a violation of his right to publicity due to misappropriation; (2) false light invasion of privacy; (3) defamation; (4) breach of contract; (5) intentional infliction of emotional distress; (6) actual/intentional fraud; (7) constructive fraud/negligent misrepresentation. The defendants filed a Motion to Strike the complaint under California's anti-SLAPP statute, Cal. Code. Civ. Proc. §425.16, and, last week, Judge Jacqueline Nguyen held in their favor and struck the complaint in its entirety.

The California anti-SLAPP provision, which shall be "construed broadly", §425.16(a), provides: "A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." §425.16(b)(1).

Therefore, a defendant must initially show that those acts alleged to be violative are (a) First Amendment protected acts (rights of petition or free speech) and (b) made in connection with a "public issue." The Sarver court easily found the The Hurt Locker to fall under the First Amendment's protection, citing Burstyn v. Wilson (343 U.S. 495 (1952)), in finding that "Motion Pictures are a significant medium for the communication of ideas" (Burstyn, 343 U.S. at 501), and therefore protected speech.

With regard to the second prong of the defendants' burden - that of a public issue - California courts have taken to heart the legislative exhortation to construe the statute broadly. The court, in finding that the alleged portrayal of Sarver is related to an issue in the public interest, relied upon Tankin v. CBS Broadcasting, Inc. (193 Cal. App 4th 133, 144 (2011)), which stated, "an issue of public interest...is any issue in which the public is interested. In other words, the issue need not be 'significant' to be protected by the anti-SLAPP statute." The Sarver court then went on to list several aspects of Sarver's story that made it to be "of public interest": (1) Sarver's service in the Iraq War; (2) the importance of EOD Technicians in the War; (3) the danger of Sarver's job; and (4) "Sarver's claim that he disarmed more IED's than any single team." (Sarver at 3.)

Once the court found that the defendants had met both prongs of their burden under anti-SLAPP, the burden of proof shifted to plaintiff Sarver to prove that the facts of each cause of action, if believed by the fact-trier, would support a judgment as a matter of law in favor of the plaintiff. The second half of anti-SLAPP motions are, in this way, similar to summary judgment motions.

In short order, the court struck down each of Sarver's causes of action as failing to establish the necessary prima facie showing necessary for a judgment as a matter of law:

Right of Publicity/Misappropriation. Relying on the common law definition of misappropriation, and California's willingness to extend misappropriation claims to non-celebrity plaintiffs, the court nevertheless found that, pursuant to the "transformative use" defense adopted by the California Supreme Court in Comedy III Productions, Inc. v. Gary Saderup, Inc. (25 Cal. 4th 387 (2001)), the defendants were protected by their First Amendment rights, as The Hurt Locker contained "significant transformative elements", such as personal differences between Sarver and the Will James character in the film, the dialogue in the film, and the direction of the film. Furthermore, "the value of The Hurt Locker unquestionably derived from the creativity, and skill, of the writers, directors, and producers...whatever recognition or fame Plaintiff may have achieved, it had little to do with the success of the movie. Thus, Plaintiff's misappropriation claim is banned by the First Amendment as a matter of law." (Sarver at 15.)

Right of Privacy/False Light: Successful false light claims must prove that not only must the depictions of the harmed individual be false, but they also must be highly offensive to a reasonable person. In less than one paragraph of analysis, the court did away with this claim as (1) redundant to the defamation claim and (2) unsupportable, as, in the court's opinion, "Will James" is presented as a war hero, which would not be a highly offensive portrayal to a reasonable person.

Breach of Contract: Sarver alleged that he was a third party beneficiary of the agreement between Boal and the U.S. Department of Defense, and that Boal "breached the contract by reporting about Plaintiff's personal life." (Sarver at 19.) Unfortunately, Sarver presented no evidence of such a contract.

Intentional Infliction of Emotional Distress: In another brief dismissal, the court did not even reach the second and third requirements for success under this cause of action, holding that the defendants' actions were not "extreme and outrageous" under the first requirement for intentional infliction of emotional distress, as there was nothing extreme or outrageous about writing a screenplay based on reporting (although, notes this blogger, the court earlier in its decision relied on the disclaimer alleging the film to be fictional) and that it was not outrageous to use a fictional name for a character, even if it was based on Sarver.

Fraud/Negligent Misrepresentation: The court bundled these last claims together, holding that Sarver did not submit any evidence that Boal misrepresented his intent to write about EOD Techs, and that he did not "obfuscate[] the fact that he was writing a screenplay based on the Playboy article..." (Sarver at 22.)

Finally, as if to add insult to (non)injury, the court awarded attorney's fees to the defendants, as defendants who succeed in an anti-SLAPP special Motion to Strike are entitled to reimbursement of attorneys' fees. Although the court held that Sarver's rights were not violated in The Hurt Locker, it certainly put him in one.

Yet there is something about this case that nags a bit at the conscience. The speed and lack of analysis with which the court did away with Sarver's claims, combined with its reliance on fairly flimsy arguments like disclaimers and character names, combined with its statements later in the decision that the film was based on the Playboy article, leave questions as to how thoroughly the court analyzed the issue before it.

Also, is this the sort of case to which we want anti-SLAPP motions should apply? In California, anti-SLAPP Motions to Strike immediately stay discovery. This case seems to be a case where discovery is warranted. It hardly seemed to be a "strategic lawsuit" of the type we saw during the civil rights movement, designed to chill free speech. Despite the gung-ho language of the California anti-SLAPP statute, this case may be one in which a statute meant to be construed broadly was indeed construed too broadly.

April 10, 2012

Unraveled: A Film Review

By Christine A. Pepe

The documentary film Unraveled tells the compelling story of Marc Dreier, a once well-regarded attorney, who was convicted in 2009 for defrauding hedge funds and other investors of more than $400 million dollars. Dreier's scheme involved creating and selling fictitious promissory notes purportedly issued by his "clients." Of course, there were no real clients borrowing the money--Dreier used the borrowed funds to fuel his lavish lifestyle (e.g., an art collection including works by Warhol, Picasso, Matisse, and Damien Hirst, two yachts, an Aston Martin, a vacation home in the Caribbean, multiple homes in the Hamptons) and grow his law firm, Dreier LLP. The successful perpetration of Dreier's Ponzi scheme ultimately involved arranging meetings for the hedge fund investors during which Dreier (or one of his lackeys) impersonated representatives from the purported issuers of the promissory notes. If you haven't heard of Marc Dreier, that's largely because his story was overshadowed by an even bigger Ponzi schemer, Bernie Madoff, who was arrested and sentenced around the same time. Madoff was sentenced to 150 years in prison--Dreier to 20 years.

Consisting of first person accounts, archival footage and graphic animation, Unraveled presents an engaging and thought-provoking portrait of one of America's more brazen white collar criminals. Part of the film's impact is that it captures Dreier during his period of house arrest as he awaits sentencing after pleading guilty, an undoubtedly intimate and vulnerable time. Unraveled is directed by Marc Simon--an entertainment attorney at Cowan, DeBaets, Abrahams & Sheppard LLP--who previously worked for Dreier LLP and knows Dreier personally, even viewing him as a mentor at one time. Despite this potential closeness to the subject matter, Simon's film remains objective in its case study. The score, written by Chris Hajian, adds to the film, creating an ominous and powerful backdrop to this dark tale of one man's self-inflicted demise.

Dreier graduated from Yale and went on to Harvard Law School; in high school, he was president of his class and was voted "Most Likely To Succeed." These types of achievements apparently weigh heavy on a person throughout life--they convinced Dreier that not only was he was destined for tremendous success, but that he must achieve it--at all costs. Success can mean a lot of things to different people, but for Dreier, success meant money, status, and more importantly, the appearance of success. While many attorneys can relate to the pressure to succeed, for Dreier, the illusory appearance of success became a compulsion. The film gives Dreier a platform to explain why he "lost his way", as he admits, and lets the viewer decide whether any degree of sympathy is warranted.

Most people will never cross the line that Dreier crossed, but is that, as Dreier muses in the film, because the line is presented to so few people--dare we say an elite few? As Dreier continues his on-camera introspection, he ponders what really stops most people from committing crimes: Is it moral opposition or just a fear of getting caught? In this way, Dreier is reminiscent of Dostoevsky's Raskolnikov. It seems that what was driving both Dreier and Raskolnikov in part was a desire to prove themselves "extraordinary men" above morality and law. Raskolnikov killed because he could; Dreier swindled because he could. Of course, the analogy to Raskolnikov ends when Dreier gets caught in the criminal act, whereas, if you recall, Raskolinkov's guilt over his murder overwhelmed him to the brink of confession. For me, Unraveled provided a fascinating exploration of the psychological motivations of a white collar criminal. See this film and decide for yourself what drove a member of the legal profession off the rails into a life of criminality and whether the punishment fits the crime.

UNRAVELED premieres April 13th, 2012 at the City Village Cinema East (2nd Avenue and 11th/12th Streets)

Tickets can be purchased here: http://www.fandango.com/citycinemasvillageeast_aaecf/theaterpage?date=4%2F13%2F2012

or you can visit the UNRAVELED Facebook page with links to the theatre website: http://www.facebook.com/Unraveledthefilm?ref=tn_tnmn

August 19, 2013

Faulkner Literary Rights, LLC v. Sony Pictures Classics Inc., et al

By Barry Werbin

The decision in Faulkner Literary Rights, LLC v. Sony Pictures Classics Inc., et al., (N.D. Miss. July 18, 2013) dealt a quick Rule 12(b)(6) dismissal death-knell to a widely criticized claim by the Faulkner folks who alleged that Sony infringed the copyright in Faulkner's book Requiem for a Nun, where, in Woody Allen's film Midnight in Paris, Owen Wilson's character (Gil Pender) at one point misquotes a line from that book (with attribution credit). The misquoted and original lines are:

Original: "The past is never dead. It's not even past."

Misquote: "The past is not dead! Actually, it's not even past. You know who said that? Faulkner. And he was right. And I met him, too. I ran into him at a dinner party."

The District Court had no trouble finding this was fair use. The court in particular cited to Fifth and Second Circuit precedents for the contention that "the substantiality of the similarity is measured by considering the qualitative and quantitative significance of the copied portion in relation to the plaintiff's work as a whole." Qualitative and quantitative significance of course are one of the four core fair use factors under Section 117 of the Copyright Act.

The court also referenced the de minimis copying doctrine, which has been recognized in the Fifth Circuit but without having "specifically enunciated its proper place in the infringement analysis." The doctrine "is part of the initial inquiry of whether or not the use is infringement in the first instance, as opposed to the fair use inquiry, which is an affirmative defense." Either way, the court deemed "both the substantial similarity and de minimis analyses in this case to be fundamentally related, and wholly encompassed within the fair use affirmative defense." As the de minimis doctrine is "largely undeveloped" the court was "reluctant to address it, except within the context of Sony's affirmative defense, fair use."

With respect to the first fair use factor, the court found that "[t]he speaker, time, place, and purpose of the quote in these two works are diametrically dissimilar... It is difficult to fathom that Sony somehow sought some substantial commercial benefit by infringing on copyrighted material for no more than eight seconds in a ninety minute film." Other factors included the comedic context of the film and that the "minuscule" nine words in issue "adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message." (quoting Campbell) Thus, the court readily found "heavy [in] favor of transformative use that... diminishes the significance of considerations such as commercial use that would tip to the detriment of fair use."

The second factor (nature of the copyrighted work) was found to be "neutral" - the court was not prepared to characterize the film as a parody, but nevertheless did say it was "highly transformative under the first factor, whether parody or not."

Under the third "substantiality" factor, Falkner argued that the quote described the "essence" of Requiem for a Nun, that "there is no such thing as past." Yet the court deemed this to refer to the qualitative theme of Requiem itself, not the "not the qualitative importance of the quote itself." The ideas embodied in Requiem for a Nun cannot be protected, only its expression, which here "constitutes only a small portion of the expression of this idea throughout the novel." The quote itself in the film "is a fragment of the idea's expression."

Interestingly, the court on this factor also held that "the quote at issue is of minuscule quantitative importance to the work as a whole. Thus, the court considers both the qualitative and quantitative analyses to tip in favor of fair use. The court concludes that no substantial similarity exists between the copyrighted work and the allegedly infringing work." [Emphasis added]Query in light of this finding of no "substantial similarity" why fair use even had to be addressed as fair use presupposes there is infringement.

On the last potential market effect factor, the record in the case was silent. In any event, the court considered this factor "to be essentially a non-issue in light of the stark balance of the first factors weighing in favor of Sony..." Nevertheless, the court did not see any relevant market harm resulting from Sony's use of the quote. If anything, the use in the film helped Faulkner's legacy.

Finally, the court expressed its frustration at the entire lawsuit: "How Hollywood's flattering and artful use of literary allusion is a point of litigation, not celebration, is beyond this court's comprehension."

A copy of the decision is available here: Faulkner decision (ND Miss ) (2).pdf

August 25, 2013

New Rules Allow Crowdfunding Campaigns to Offer Profit Participation

By Adam Beasley

President Obama signed the awkwardly named Jumpstart Our Business Startups (JOBS) Act on April 5, 2012. The JOBS Act seeks to encourage investment in small businesses by easing certain securities regulations. Title II is the first implementation of the Act to effect crowdfunding by giving birth to an "equity crowdfunding" market. Public solicitation of early stage investment has been banned for the past 80 years.

New SEC Rules will give filmmakers the ability to provide equity to investors through crowdfunding platforms. The new rules implement Title II of the JOBS Act and are set to go into effect on September 23rd. Currently, investment opportunities may only be presented to individuals through private offerings and cannot be publicly solicited because of perceived investment risk. The new rules allow those seeking funding to advertise investment opportunities on television, Facebook, Twitter, and basically everywhere else, including through crowdfunding sites. This development will greatly impact filmmakers, startup companies, and others utilizing crowdfunding platforms by giving them the ability to offer profit participation if the ventures are successful.

Title II applies to investment from "accredited investors," which are individuals with (a) a combined net worth, excluding the primary residence, in excess of $1 million, or (b) an annual income of $200,000 over the previous two years ($300,000 for couples). An estimated nine million Americans qualify. Title II creates a special type of offering called 506(c) allowing advertisement of fundraising opportunities.

The SEC Rules for Title III of the JOBS Act, which applies to non-accredited investors, are estimated to go into effect in 2014. Investors who make at least $100,000 annually will be allowed to invest up to 10% of their incomes. Investors who make less than $100,000 can invest up to 5% of their incomes or $2,000, whichever is greater.

Many companies are positioning themselves to move into the equity crowdfunding market, including Indiegogo, Slated, EarlyShares, and Crowdfunder, among others. Kickstarter, the largest crowdfunding platform, has stated that it has no current plans to offer equity investments.

It is estimated that the equity crowdfunding market could reach over $4 billion in the next four years. Due to the allure of the film industry and many filmmakers' early adoption of crowdfunding methods, it stands to reason that the industry would be a major beneficiary of these dollars. In fact, EarlyShares and Crowdfunder are already in talks with independent studios to set up projects, some seeking as much as $5 million.

Filmmakers will still be able to set their own rules for campaigns, including minimum investment and profit participation. In an article for THR, Earlyshares chairman Stephen Temes estimated that filmmakers would likely require minimum investments of at least $1,000 to much more from accredited investors but will set far lower minimums from unaccredited investors -- perhaps $100. The idea being that more investors will mean more marketing evangelists. As the market is currently embryonic, there will likely be various profit participation models ranging from basic 50/50 deals (investors/producers) to complex Hollywood-style definitions before industry standards emerge.

It will remain to be seen how popular equity crowdfunding becomes. It could completely change the world of independent film finance as more established players utilize the platform, and one can only anticipate the potential headlines if individual investors start making real money crowdfunding films.

The rules: https://www.federalregister.gov/articles/2013/07/24/2013-16883/eliminating-the-prohibition-against-general-solicitation-and-general-advertising-in-rule-506-and

Adam Beasley is an entertainment and intellectual property attorney in New York City. He can be reached at www.adambeasleylaw.com. A previous version of this post can be found here, at http://adambeasleylaw.com/new-rules-allow-crowdfunding-campaigns-to-offer-profit-participation/

October 28, 2013

New York Festivals International Television & Film Awards Adds New Categories To The 2014 Competition

By Kim Swidler

Rose Anderson, Executive Director of the New York Festivals International Television & Film Awards, has added new categories to the coming year's competition. This organization is coming into its forth year of showcasing the winners to more than 93,000 media and entertainment professionals from 156 countries, including more than 1,700 industry press representatives, at the annual NAB show in Las Vegas.

New categories in 2014 include: Best Host, Best Screenplay, Best Nonfiction Series, Corporate Social Responsibility, Business & Finance documentary, Human Concerns documentary, Legal Issues documentary, Financial & Legal Reporting, and Production Design/Graphic Design for Promos.

Last year, medal recipients in this organization's new categories included Julia Stiles (WIGS), Troian Bellisario(WIGS), and Robert Taylor (Longmire), for their performances; "The Fabric Of The Cosmos: What is Space?" (Nova/PBS/Pixeldust) and "You, Planet - An Exploration in 3D" (Terra Mater) for Special Visual Effects; "Exposure: The Other Side of Jimmy Savile"(ITV) for Current Affairs; "The Resurrection Tomb Mystery" (Discovery Channel) for Innovation; "Titanoboa Online" (Smithsonian) and "The Dalai Lama at St Paul's" (CTN) for Online Special Event; and "X Games" (ESPN), for their Technical Production Team.

To read Kim Swidler's blog piece published by Times Union.com concerning the New York Festivals International Television & Film Awards and Ms. Anderson's insights into this organization, please go to blog.timesunion.com/travelgal.

October 31, 2013

IsoHunt Goes Out with a Bang

By Angele Chapman

BitTorrent websites like IsoHunt.com have become the "underground" way to illegally download music, movies, and more without paying. BitTorrent is a file distribution protocol that enables torrent files to be shared between users through a peer-to-peer file sharing software. These torrents usually contain media files that are hot commodities for those who wish to avoid paying for movies, music, programs, and other products. This new blast of technology is opening up the doors to copyright infringement and a great deal of lawsuits in the entertainment industry.

In March of this year, the U.S. Court of Appeals for the Ninth Circuit affirmed a summary judgment ruling in favor of seven film studios, finding that the defendant Gary Fung, who is the founder of IsoHunt, induced third parties to download infringing copies of the plaintiffs' copyrighted works. (Columbia Pictures Industries, Inc., et al. v. Gary Fung, et al., Case No. 10-55946 (9th Cir., Mar.21, 2013) (Berzon, J.)). Fung failed in his attempt to use the DMCA's safe harbor provision as a defense against parties such as Disney Enterprises, Inc, Paramount Pictures Corp., and Warner Bros Entertainment, Inc. Fung asserted, "A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the provider's transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing or providing connections..." (Columbia Pictures Indus. v. Gary Fung, 710 F.3d 1020, 1040 (9th Cir. Cal. 2013)).

After this case, other companies whose business has been affected by IsoHunt's copyright infringement have joined in seeking an injunction. As result, IsoHunt and the Motion Picture Association of America recently reached a settlement for $110 million, three weeks before their trial was set to begin. IsoHunt will finally shut down, after over 10 years of operation, to its 7.5 million unique visitors. This settlement also includes a global prohibition against founder Gary Fung from further profiting from the infringement of MPAA member studio content. (Popular BitTorrent Site IsoHunt Shutdown, Forced To Pay $110 Million, RT (Oct. 18, 2013, 3:46 PM), http://rt.com/usa/bittorrent-isohunt-shutdown-forced-340/)

What this Means for IsoHunt

IsoHunt has agreed to cease all of its international operations, leading to the shutdown of another top BitTorrent file sharing website. Gary Fung agreed to this settlement as it became apparent he was fighting a losing battle. Another motivating factor may have been that the MPAA warned Fung that it was seeking as much as $600 million in damages if the case proceeded to trial. Nonetheless, this settlement sends a strong message to other BitTorrent websites that continue to infiltrate the entertainment industry and profit from illegal business practices by enabling users to engage in copyright infringement. (Eriq Gardner, IsoHunt To Shut Down After Settlement With Hollywood Studios, THE HOLLYWOOD REPORTER (Oct. 17, 2013, 9:31 AM),
http://www.hollywoodreporter.com/thr-esq/isohunt-shut-down-settlement-hollywood-649203).

This settlement speaks volumes for the power that large media companies have to shutdown file sharing websites. Specifically, it places a duty on websites to regulate the files being shared in order to avoid copyright liability. It also causes great concern for those companies who have evolved primarily on their access to such illegal activity. However, there seems to be an apparent difference between decisions stemming from courts in Europe and the United States. For example, The Pirate Bay, another torrent website, was handed a judgment against it in Swedish courts, yet the website is still in operation. Both websites were sued by the MPAA, yet The Pirate Bay has been able to survive that lawsuit. Regardless of what country in which the website is based, the March decision and recent settlement between IsoHunt and MPAA illustrates that enforcing copyright infringement is essential to major corporations.

As of October 23rd, the IsoHunt website no longer existed. The founder wrote a farewell letter to his users and advised as to how they might go about obtaining sought-after torrent files. He noted, "about 95% of those torrent files can be found off Google regardless and mostly have been indexed from other BitTorrent sites in the first place." His quote depicts that while the content companies may feel as if they have won the battle here, the war is far from lost.


January 8, 2014

Capitol Records, LLC et al. v. Vimeo LLC et al., case number 1:09-cv-10101, (SDNY)

Blurb adapted from a report by Andrea Calvaruso

On January 2nd, Judge Ronnie Abrams of the SDNY ruled to allow Vimeo LLC (Vimeo), a video-sharing service, to file an immediate appeal with the Second Circuit regarding whether the DMCA safe harbor for copyright infringement covers pre-1972 recordings covered by state copyright law. Vimeo's questions regarding what constitutes red flag knowledge were also certified.

The court rejected the right to appeal of the other questions regarding the DMCA safe harbor mid-case, including Vimeo's repeat infringer policy, whether it was willfully blind and "right and ability to control "the allegedly infringing activity, whether it acted with "willful blindness" and whether it had a repeat infringer policy in place.

The Judge Abrams also allowed the plaintiffs to amend the complaint to add more claims of infringement, finding the amendment timely.

May 20, 2014

Supreme Court Ensures Copyright Suit against MGM "Rages" On

By Barry Werbin and Sharon O'Shaughnessy
Herrick, Feinstein LLP

In Petrella v. Metro-Goldwyn-Mayer, Inc., the Supreme Court delivered a TKO to MGM when it decided, in a 6-3 decision on May 19, 2014, that the equitable defense of laches cannot be invoked as a defense to preclude claims brought within the Copyright Act's three-year statute of limitations for successive acts of copyright infringement. As a result, screenwriter Paula Petrella (Petrella) may continue to pursue more than $1 million in damages for MGM's continued distribution of the classic film Raging Bull. The decision likely sounds the death knell for laches as an affirmative defense in copyright infringement litigation and has the potential to expose Hollywood studios, music labels and media companies to an onslaught of cases brought by copyright holders' heirs and estates seeking a share of profits from classic films, TV shows, music recordings and other creative works that are re-released in various formats.

By way of background, Frank Petrella collaborated with renowned boxer Jake LaMotta on a screenplay about LaMotta's life, which inspired the Oscar-winning film Raging Bull. The screenplay was copyrighted in 1963. In 1976, Frank Petrella and LaMotta assigned their rights and renewal rights, which were later acquired by United Artists, then a subsidiary of MGM. In 1980, MGM released Raging Bull and registered a copyright in the film. MGM continued to market the film, including converting it into DVD and Blu-ray formats, which did not exist in 1980.

Frank Petrella died in 1981, during the initial copyright term, thereby vesting the copyright in the screenplay with his daughter, Paula, who renewed the copyright in 1991, thus becoming its sole owner. For works copyrighted under the 1909 Copyright Act (pre-1978), the Supreme Court had previously confirmed in Stewart v. Abend, 495 U.S. 207, 221 (1990) that when an author who has assigned her rights away "dies before the renewal period, . . . the assignee may continue to use the original work only if the author's successor transfers the renewal rights to the assignee."

In 1998, Petrella's counsel advised MGM that its exploitation of Raging Bull violated her copyright and threatened suit, repeating such threats over the next two years. Petrella, however, did not actually file suit until January 6, 2009, when she filed claims against MGM seeking (i) monetary damages due to acts of infringement resulting from MGM's continuing commercial use of the film (as a derivative work of the screenplay) after January 6, 2006 (including its continual release of the film on DVD and other digital formats); and (ii) injunctive relief prohibiting further distribution of the work without compensation.

Under Section 505(b) of the Copyright Act, copyright plaintiffs have three years to bring suit from the accrual date of a claim. However, if acts of infringement are repeated anew, the statute of limitations operates on a "rolling" basis that allows a plaintiff to collect damages going back three years before the claim accrues. In barring Petrella's action, however, the district court and the Ninth Circuit disregarded the Copyright Act's three-year look-back period for statute of limitations purposes and, instead, held that the equitable defense of laches precluded Petrella from bringing suit because she had unreasonably delayed suit by not filing until 2009. The Ninth Circuit affirmed and agreed with the studio's argument that Petrella's 18-year delay was unreasonable in light of Petrella having been aware of her potential claims many years earlier. The Supreme Court then granted certiorari to resolve a Circuit split concerning the application of laches to infringement claims brought within the three-year statute of limitations under the Act.

MGM argued that delayed copyright lawsuits could impact studios' investments made towards the distribution of works and also pointed to the challenges of trying a case on a delayed basis, such as difficulty in obtaining records and the fact that, as here, key witnesses may be deceased. The Court, however, was unpersuaded. Justice Ruth Bader Ginsburg, writing for the majority, held that the Copyright Act's bar on lawsuits initiated more than three years after a claim accrued did not bar Petrella's lawsuit because, in this instance, there was ongoing copyright infringement and Petrella only sought damages for the three years preceding the filing of her lawsuit. The Court explained that the concept of laches originally served as a guide when no statute of limitations controlled, but could not be invoked as a rule for interpreting a statutory prescription established by Congress. Put simply, laches does not trump the statute of limitations protections that the Copyright Act provides for copyright owners whose works are infringed on an ongoing basis, so long as the owners only seek relief for acts of infringement occurring during the limitations period.

In addressing MGM's claim that an open-ended period to file copyright claims makes it difficult for companies to make future business decisions, Justice Ginsburg emphasized that the "'sue soon or forever hold your peace' approach" advocated by MGM is imprudent because it would force copyright owners to initiate infringement litigation at a time when the value of the copyrighted work was not being undercut or there was no detrimental effect on the original work. Instead, Justice Ginsburg explained that the three-year limitations period "allows a copyright owner to defer suit until she can estimate whether litigation is worth the candle. She will miss out on damages for periods prior to the three-year look-back, but her right to prospective injunctive relief should, in most cases, remain unaltered." The Court observed that allowing Petrella's lawsuit to go forward would put at risk "only a fraction" of the income that MGM earned during that three-year period and would work no unjust hardship on consumers who have purchased copies of Raging Bull. To the extent key witnesses no longer are available, the Court noted that the plaintiffs would be affected equally because they have the burden of proving infringement.

Another equitable "out" was provided, however, by the Court's observation that where a copyright owner intentionally engages in misleading representations concerning his or her abstention from suit, and an alleged infringer detrimentally relies on such deception and would be harmed, reasonable reliance on such copyright owner's past actions could give rise to an estoppel defense. Unlike laches, estoppel does not undermine the Copyright Act's statute of limitations because it rests on misleading acts or omissions. Perhaps anticipating this issue being raised on remand, Justice Ginsburg noted that "Petrella notified MGM of her copyright claims before MGM invested millions of dollars in creating a new edition of Raging Bull" and that "[t]he circumstances here may or may not (we need not decide) warrant limiting relief at the remedial stage."

The decision only addresses the narrow, procedural issue of whether the Copyright Act's statute of limitations for ongoing infringement precludes the assertion of laches. On remand, Petrella must prove her case on the merits. While Petrella is now able to seek damages back to 2006, Justice Ginsburg indicated that laches may come back into play before the district court, where Petrella's delay in commencing action may properly be taken into account at the remedial stage in determining damages and the scope of any appropriate injunctive relief.

Lastly, all is not lost for a company that must defend against a "delayed" claim of continuing copyright infringement. Laches may still play into the remedial stage of an action. and, as the Court pointed out, a defendant may retain any "investment shown to be attributable to its own enterprise, as distinct from the value created by the infringed work."

In a dissenting opinion joined by Chief Justice Roberts and Justice Kennedy, Justice Breyer argued that the majority's opinion undercut basic principles of fairness and could encourage the type of gamesmanship resulting from a claimant sitting back for years until the economics of the exploitation of a copyrighted work make the timing of suit more valuable.

The decision can be accessed here: http://www.supremecourt.gov/opinions/13pdf/12-1315_ook3.pdf

June 25, 2014

U.S. Supreme Court Decision Favors Broadcasters over Aereo

By Barry Skidelsky

Today the Supreme Court decided 6 to 3 against Aereo, the innovative Internet broadcaster. Although this case (American Broadcasting Cos., Inc., et al v. Aereo, Inc. aka Bamboom Labs, Inc) primarily involved television and cable retransmissions, it will likely have a strong impact on anyone involved at the intersection of entertainment and communications law and business with wide ranging repercussions yet to be felt.

For example, terrestrial radio and television may find that the Aereo case could be used as ammunition in the current effort to pass federal legislation imposing a performance royalty for sound recordings, which are currently applicable only to digital transmissions and paid through Sound Exchange (the licensing collective organized by the record labels), although broadcasters currently also pay performance royalties for compositions through the Performing Rights Organizations of ASCAP, BMI and SESAC. Other well known copyright related reforms are also underway.

For the moment, at least, Aereo does not appear to put television broadcasters at risk of loss for the retransmission fees (an estimated $2.4 billion in 2013) that they receive from cable and satellite distributors -- despite Justice Breyer's comment for the majority that "Aereo's system is, for all practical purposes, identical to a cable system." Justice Breyer also said that: "We believe that resolution of questions about cloud computing, remote storage DVRs and other novel items not now before us, should await a case in which they are clearly presented."

Aereo, backed by Barry Diller (inter alia a co-creator of Fox Broadcasting), operates in 11 major cities and had plans to expand. However, the ruling today by our nation's top court -- finding in key part that Aereo publicly performs the petitioners' works within the meaning of the Transmit Clause of the Copyright Act -- threatens to put Aereo out of business. A link to the Supreme Court's decision is found here: http://www.supremecourt.gov/opinions/13pdf/13-461_l537.pdf.

Barry Skidelsky is a New York City based attorney, whose practice is primarily focused on communications, entertainment and technology related matters. An Executive Committee member of the EASL Section of the NYSBA, Barry also co-chairs EASL's Television and Radio committee, and he is a former chair of the NY chapter of the Federal Communications Bar Association -- whose members practice before the FCC in Washington, DC. In addition to serving as an attorney, Barry also offers services as consultant, broker, arbitrator and bankruptcy trustee or receiver for lenders and others directly or indirectly involved in these fields. Barry can be reached at 212-832-4800 or bskidelsky@mindspring.com.

July 16, 2014

Garcia v Google Amended Opinion

By Barry Werbin

On Friday, July 11th, the Ninth Circuit issued an amended opinion in the controversial Garcia v. Google case (Innocence of Muslims film case addressing an individual actor's own copyrightable performance right). Chief Judge Kozinski tries to backpedal a bit by sticking to his earlier divisive opinion, but saying:

"It suffices for now to hold that, while the matter is fairly debatable, Garcia is likely to prevail based on the record and arguments before us. Nothing we say today precludes the district court from concluding that Garcia doesn't have a copyrightable interest, or that Google prevails on any of its defenses. We note, for example, that after we first issued our opinion, the United States Copyright Office sent Garcia a letter denying her request to register a copyright in her performance. Because this is not an appeal of the denial of registration, the Copyright Office's refusal to register doesn't "preclude[] a determination" that Garcia's performance "is indeed copyrightable." OddzOn Prods., Inc. v. Oman, 924 F.2d 346, 347 (D.C. Cir. 1991). But the district court may still defer to the Copyright Office's reasoning, to the extent it is persuasive. See Inhale, Inc. v. Starbuzz Tobacco, Inc., 739 F.3d 446, 448-49 (9th Cir. 2014). After we first published our opinion, amici raised other issues, such as the applicability of the fair use doctrine, see 17 U.S.C. § 107, and section 230 of the Communications Decency Act, see 47 U.S.C. § 230. Because these defenses were not raised by the parties, we do not address them. The district court is free to consider them if Google properly raises them." [Emphasis added]

The opinion is available here: Garcia v Google Amended Opinion.pdf

April 4, 2015

Distributor Hits Drake With Libel Lawsuit After Denouncing Upcoming Concert Film

By Adam Freedman

On March 19th, the distributor of the concert movie Drake's Homecoming: The Lost Footage, reportedly served Drake with a libel lawsuit after the multi-platinum artist took to social media to publicly denounce the film only a few days before its release. (Kennedy, John. "Distributor Sues Drake for Disavowing Concert Film." Global News Distributor Sues Drake for Disavowing Concert Film. March 19, 2015. http://globalnews.ca/news/1891438/distributor-sues-drake-for-disavowing-concert-film/.) The film's distributor, Specticast, is seeking damages and a declaration from the court confirming that the film's release was authorized.

The film depicts a 2009 sold-out concert performance in Toronto. Shortly after the show, Drake was signed to Lil Wayne's Young Money label and became a global superstar. However, the issue arose on March 16th, 2015, when Drake publicly disavowed any connection with the film by tweeting: "The Drake Homecoming film is not something OVO or Drake have any part in. I feel it is my responsibility to inform and protect my fans." (Id.) Drake continued to post further tweets using the hashtag #ProtectTheFans. (Id.) Specticast alleges that Drake's statements are false, and the rapper has harmed the value of the movie by encouraging his 21 million Twitter followers to boycott its release.

According to documents obtained by the Los Angeles Times, Drake signed a contract with Serious Entertainment, the promoters of the concert detailed in movie, in which he agreed to the concert's filming alongside a $15,000 cash fee and a 15% royalty on the film's profits. (Kennedy, Gerrick. "Drake, Producers Battling over 'Homecoming' Film Days before Release." Los Angeles Times. March 16, 2015. http://www.latimes.com/entertainment/music/posts/la-et-ms-drake-producers-disputing-homecoming-concert-film-20150316-story.html.) The contract also stipulated that, should Drake's 2009 concert sell out, he would be required to play another show for $5,000. (Id.) This second show has yet to take place. (Id.)

Under this set of facts, if Specticast can produce an enforceable contract, the distributor will have a strong case for libel. New York courts have explained that, "Under New York law, the elements of a defamation claim are a false statement, published without privilege or authorization to a third party, constituting fault . . . and it must neither cause special harm or constitute defamation per se." (Peters v. Baldwin Union Free Sch. Dist., 320 F.3d 164, 169 (2d Cir. 2003).)

A statement is defamatory "if it tends so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating with him." (Restatement (Second) of Torts § 566.) Furthermore, a statement can only be defamatory if it includes a statement of fact, rather than opinion. (Id.) Drake's statements here allege facts -- that he never authorized the movie -- and Specticast's actions should deter third parties from associating with the company professionally.

Secondly, publication generally requires the written communication of a libel to a person other than the one defamed. <(em>Stella v. James J. Farley Assn., 122 N.Y.S.2d 322, 204 Misc. 998 (N.Y. Sup. Ct., 1953).) New York courts have already held that social media posts satisfy the publication requirement. (Angelotti, Ellyn. "How Courtney Love and U.S.'s First Twitter Libel Trial Could Impact Journalists." Poynter. January 14, 2014.) Here, Drake's tweets communicated the relevant facts to his fans, in a matter that they understood, making them analogous to other forms of written publication.

Third, Specticast's general theory is that Drake acted recklessly in publishing these tweets; Drake had a disregard for their truthfulness. Through public statements by representatives of Specticast, the company has already speculated that Drake knows that he is wrong, and he's simply trying to strong-arm them to prevent them from showing the film. (Kennedy, John. "Distributor Sues Drake for Disavowing Concert Film." Global News Distributor Sues Drake for Disavowing Concert Film. March 19, 2015. http://globalnews.ca/news/1891438/distributor-sues-drake-for-disavowing-concert-film/.)

The biggest issue will be for the plaintiffs to actually establish a concrete amount of damages that were caused by Drake's tweets. There is no set formula for valuing one's social media followers, and it will be a difficult task to determine whether Drake's statements proximately caused anyone to avoid seeing the movie as well. However, if the statement is found to be libel per se, then they will not have to prove damages, and may be awarded general damages.

A publication is libelous per se if it tends to subject one to hatred, distrust, ridicule, contempt or disgrace, or tends to injure one in his trade or profession, or if it imputes to another conduct, characteristics, or a condition incompatible with proper exercise of his lawful business, trade, profession or office. (Iiuffine v. South Shore Press, 2012 NY Slip Op 30169 (N.Y. Sup. Ct., 2012).)

In the case of Rinaldi v. Holt, Rinehart & Winston, Inc., a New York judge sued the Village Voice and its advertising agency for libel, after a Village Voice writer included Judge Rinaldi in its article entitled "The 10 Worst Judges in New York." (Rinaldi v. Holt, Rinehart & Winston, Inc., 42 N.Y.2d 369 (N.Y., 1977).) The court explained that the plaintiff had a strong case for libel per se, however, judges are considered public figures under New York law, therefore he must prove the additional element that the defamatory statement was published with actual malice. (Id.) Judge Rinaldi could not prove actual malice because the court determined that the article at issue was either opinion or a reasonable conclusion drawn from facts. (Id.)

Just as the statements in Rinaldi alleged that Judge Rinaldi could not serve reputably in his position, Drake's statements imply that Specticast is an unscrupulous business entity, presumably injuring Specticast in its business. Most likely, Specticast will not be found to be a public figure, nor will this be considered a matter of public concern, thereby not implicating the "actual malice" requirement. The issue of whether Drake authorized the film has no effect on the public.

The movie already premiered, so Specticast will likely pursue a negligence per se theory, due to the apparent difficulty in calculating damages. However, the case between Specticast and Drake will most likely settle, even though Drake presumably has greater financial means to survive a long drawn-out legal battle. However, the key elements of libel cases have yet to fully evolve to meet the realities of Twitter and social media, raising a host of additional questions, including:

- How will the courts determine status (who is a public figure) in the context of Twitter? What role does the number of followers play in determining this?

- What is "a matter of public concern" in the context of Twitter?

- What do the remedies for defamation look like in the age of Twitter? How can free speech be encouraged while deterring defamatory speech on Twitter?

Given that Specticast claims it can produce the original, enforceable contract, this only brings up more questions about Drake's motivation behind attacking the film. Does Drake really believe the film was unauthorized? Interestingly, Drake announced his OVO Music Festival on March 20th, and critics have speculated that this entire incident was simply intended to draw more attention around the festival.

September 18, 2015

The 11 Contracts Every Artist, Songwriter and Producer Should Know -- Music and the Movies


By Steve Gordon and Robert Seigel

Steven R. Gordon, Esq. (steve@stevegordonlaw.com, www.stevegordonlaw.com) is an entertainment attorney specializing in music, television, film and video. His clients include artists, songwriters, producers, managers, indie labels, music publishers as well as TV and film producers, and digital music entrepreneurs. He provides music and sample clearance services for producers of any kind of project involving music. Mr. Gordon is also the author of The Future of the Music Business (Hal Leonard 4th ed. 2015).

Robert L. Seigel, Esq. (rlsentlaw@aol.com, www.rlsentlaw.com) has more than twenty years experience in the counseling and representation of producers, writers, directors, distribution companies and foreign sales agents concerning development, production, marketing, distribution and exploitation of fiction and non-fiction film, television, publishing and new media projects. His clients' projects have appeared theatrically and on network, syndicated, public and cable television and have earned Academy Award and Emmy nominations and awards as well as prizes at major film festivals.

The authors gratefully acknowledge the assistance of Ryanne Perio, Esq. in the preparation of this article. Ryanne is an associate at Manatt, Phelps & Phillips, LLP where she focuses on intellectual property litigation. They would also like to thank Clémence Barbet-Gros, a graduate law student at Lyon University, France, and Sonia Hanson, a recent graduate of the University of Minnesota Law School.

The sixth installment of this 11-part series on basic music industry agreements focuses on music and the movies. We will discuss two different forms of agreement: composer deals for the creation of music to be used throughout a movie, and an agreement for the recording and licensing of a previously written but unreleased single song for a film. If you are a filmmaker seeking previously recorded and commercially released music, you may be interested in reading Part II of Steve Gordon's book The Future of the Music Business, which includes a comprehensive discussion on how to clear music for movies. Producers should be aware of at least one fact: licensing popular prerecorded music can be very expensive. For instance, one of the authors of this article recently received a quote of $50,000 for a Tom Petty song for a feature film, even though the movie was a low budget Dutch language production with extremely limited commercial potential. This quote was just for the song, or underlying musical composition (see the last installment in this series, Now You Know Everything about Music Publishing, for a discussion of the difference between musical works and sound recordings.) The client would have had to pay another $50,000 to use Petty's recording. This article is aimed at benefiting musicians who have been offered the opportunity to write new music for a film. But for filmmakers who read this article, know that hiring a composer to create music for your movie can save you a great deal of money.

COMPOSER AGREEMENTS

The key terms of a contract between a film producer and a composer are: (i) Whether the composer will be responsible for recording as well as writing the music; (ii) the fee payable to the composer; (iii) the time schedule for the delivery of the music; (iv) the composer's credit; (v) how a composer would be compensated if there is a soundtrack album; and importantly, (vi) the permitted use and ownership of the music itself.

Fees

In a conventional composer agreement, the composer is responsible for producing or supervising the production of the music as well as composing it. The composer is paid a fee for those services, and the filmmaker sometimes pays for costs associated with rendering those services, including studio time, compensation to engineers, mixers, arrangers and the rental of recording equipment. Alternatively, these costs may be built into the composer's fee. (See the discussion of the Package Deal below.) The composer's fee is generally paid in installments. Part of the fee may be payable upon the signing of the agreement or the commencement of "spotting" - i.e., when the production team and the composer screen the movie to determine where and what type of music should be used in the movie's score. Another portion of the fee may be payable upon the commencement of the recording of the score. A third installment of the fee may be payable upon completion of all services, including delivery of the master recording in a format specified in the contract, and the producer's acceptance (see below) of the master recording.

The Package Deal

With low budget movies, a producer and a composer often enter into a "package deal." The producer pays the composer a fee designed to compensate the composer, as well as cover costs associated with the recording of the score. The composer assumes responsibility for payments to musicians, arrangers, studio time, and instrument rentals, and retains any monies remaining after he or she pays these costs. However, if the composer incurs expenses in excess of the package fee deal, the composer assumes such costs.

There are, however, usually certain excluded costs in the "package deal", which the producer assumes. These costs include the licensing of any music not written by the composer, or if the producer hires another composer to re-write the score, and any re-scoring or re-recording costs required solely for creative reasons. The composer should try to limit the right of the producer to demand changes after delivery and to negotiate a "kill fee" in case the producer is dissatisfied with the score. (See Producer's Acceptance below and Paragraph 2(b) of the second contract analyzed in this blog.) Package deals often work well when a composer is using few instruments and relies on synthesizers and his or her own equipment and recording facilities.

Work for Hire vs. Exclusive License

A key provision in any composer agreement is the section that addresses the ownership rights in the music. In a typical composer agreement, the producer and the composer agree in a signed writing that the music created and recorded by the composer is deemed to be a "work for hire", and that the producer owns all rights in such, including both the underlying music and the recording. This provision also states that, if for any reason the music created and recorded by the composer is not deemed a "work for hire" under federal copyright law, the parties agree that the composer has transferred all rights in and to the music, as well as the recordings of the music, to the producer.

A work for hire contract gives the producer total control of the music and the recordings. The producer can use or modify the music in any manner, and include the music in the trailers, marketing materials, advertisements and any other form of promotion for the movie. In addition, the producer can act as a music publisher and label by licensing the music and the recordings to any third parties, whether or not such third parties have any connection to the movie. For instance, the producer could license the music and/or the recordings to a person or entity that may want to use it in a commercial or advertising campaign. Although the composer has no say in how the music is used and will not share in the income from licensing of the music to third parties, the composer may be entitled to compensation from at least one income stream, i.e., public performance.

A writer subject to a work for hire agreement usually gets paid for the public performance right. As discussed in previously in this series, the publisher's and songwriter's shares are generally divided on a 50/50 basis. Although the filmmaker receives the publisher's share for the music license, the composer retains the songwriter's share regardless, of who owns the rights in and to the music. In the U.S., there is no public performance income from performances of the movie in a theater, and there is no performance income from distribution of DVDs or permanent downloads. However, there are public performance royalties from broadcasting the movie on television and from Internet video on demand (VOD, e.g., Netflix). The composer should be very careful, however, that proper cue sheets are prepared and presented to his or her performance rights organization (PRO) to ensure that he or she will be credited by the PRO. As discussed in "A Simple Guide to Signing the Best Sync Deal Possible" in this series, a cue sheet is a log of all the music used in a production. (See http://www.bmi.com/creators/detail/what_is_a_cue_sheet, for an example.) Cue sheets are the primary means by which performing rights organizations track the use of music in films and TV. The composer will not be compensated by the PRO without first filing the cue sheet.

Work for hire agreements are standard and usually non-negotiable when a major studio engages composers, but majors generally pay significant fees. A composer who is approached by an independent producer whose offer is more financially modest may be able to retain the rights in his or music, or at least share in additional income streams aside from the writer's share of public performance royalties. In addition, if a producer cannot afford to pay a composer his or her customary fee, the composer may agree to a reduced fee, provided that the composer is permitted to share in the publishing rights (the underlying musical composition). For example, if the composer's music from the movie is licensed, the composer could negotiate to receive the full 50% (songwriter's fee) and perhaps one-half of the publisher's share, or 25%. In this scenario, the producer would retain the remaining 1/2 of the publisher's share (i.e, 25%).

Since producers are generally not music publishers, and may not have an interest in engaging music publishers to exploit the music rights on their behalves, a producer may offer a reduced fee to a composer and permit the composer to retain the publishing rights. In this scenario, the composer usually grants an exclusive license for use of the music in the movie as well as in any trailers, advertisements or other promotional materials for or related to the movie, but retains the copyright in his or her music and recordings, and the right to use them in other projects. In this case, the producer may also negotiate to secure the right to create and distribute a soundtrack album in connection with the movie. The composer agreement can go into extensive detail in calculating how a composer will be compensated for the use of his or her music and recorded performances on the soundtrack album, or the parties can agree to negotiate such terms in good faith at a later time if and when the possibility of a soundtrack album is more certain, such as when a distributor agrees to commercially release the movie.

If the producer agrees that the composer will retain rights in his or her music and recordings, the producer will usually require the composer to agree that he or she cannot use or cause others to use the music in any other movie, television program or other audio-visual project for a certain period of time, except with the producer's prior written consent. This period may be several years, either from the date of the initial commercial release of the movie, or from the signing of the composer agreement. After the agreed-upon period, the composer can place the music in any other movie, television program or audio-visual project, such as a video game.

The composer's agreement may also have a provision in which there is a limit to the amount of the movie's music that may be used in an album. This is to prevent an album containing the composer's music from becoming potentially competitive with the movie's soundtrack album, thereby undercutting the marketability and value of the actual soundtrack album. If a composer creates his or her own album and uses any portion of the movie's music, there will generally also be a requirement to credit the movie as the source of the music.

Producer's Acceptance

Prior to accepting the final score, the producer usually will retain the right to request certain changes, omissions or additions to the movie's music. In addition, the producer generally has the right to not use the composer's score in the final version of the movie provided that the composer has been fully compensated for creating and/or recording the score. This is known as a "play or pay" clause, and it is used in a wide variety of different forms of entertainment business agreements such an agreement for an actor's services. Play or pay provisions are usually non-negotiable because (i) they are inherently fair because they pre-suppose that the producer has paid one hundred percent of composer's fee, and (ii) it is overreaching to demand that the producer use the composer's score if the producer does not think it works for the movie.

To increase the likelihood that a composer and producer are on the same page regarding the movie's music, the two can agree that the composer will provide scoring and recording services for a portion of the score, at which point the producer can decide whether or not to continue to work with the composer on the remainder of the score. If the producer chooses to terminate the relationship, the composer would receive some agreed upon "kill fee," but the producer will generally retain the right to use the composer's music and recordings rendered during the trial period.

Credit

Composers should negotiate their credits carefully, because a good credit can be vital to getting higher fees for future work. A composer may request "single card" credit in the main credit sequence of the movie, whether the main credit sequence is at the beginning or the end of the movie. This means that his or her name and credit is the only one to appear on screen at a given time. The producer will usually only promise to provide a credit if it actually uses the music in the movie.

SINGLE SONG AGREEMENTS

Acquiring music for movies can take all kinds of forms. The last agreement that we analyze in this piece is for a single song that was previously written but unreleased. The filmmaker wanted the composer, who was also a record producer, to record the song so that he could put the recording in a music video that would be shown with the end credits. As the producer and composer both knew that the producer wanted to use the composer's pre-existing song, the composer had a great deal of leverage. As a consequence, the composer was able to negotiate a license rather than a work for hire. You could imagine a situation where the filmmaker wanted the composer to create and record an entirely original song. In that case the contract would look more like a work for hire.

THE CONTRACTS

The first contract analyzed below is a standard pro-film producer form of agreement. It makes all the music a composer creates and records a work for hire for the filmmaker. It also gives the filmmaker the right to demand that the composer make an unlimited number of changes and revisions in the music without obligating the film producer to pay any additional compensation to the composer.
The second agreement is much more composer-friendly. It is not a work for hire agreement. Instead, the composer merely grants the filmmaker the right to use the music in his movie and retains all other rights, except that the composer agrees not to license the music for another full length film for a period of time. In addition, the second contract limits the time that the filmmaker can make the composer make changes to two days after the composer delivers the final mix. It also provides for a "kill fee" if the filmmaker decides that the music delivered by the composer is unacceptable.
The last agreement is for the recording of a single song that the composer previously wrote but never recorded. Similar to the second agreement, the composer grants a non-exclusive license to the filmmaker and retains all other rights in the song and the recording. In this case, though, the composer also grants the filmmaker the right to use the recording in a promo video for the movie.

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FIRST AGREEMENT
[PRODUCTION COMPANY NAME] [PRODUCTION COMPANY ADDRESS] Dated as of August ___, 2015 [NAME OF COMPOSER] [COMPOSER ADDRESS]


Re: "[TITLE OF FILM]"/Composer Agreement

Dear ____________:

This letter, when executed by you and [PRODUCTION COMPANY NAME] (referred to as "Company" or "us"), will set forth the material terms of the agreement between you and us relating to your creation and delivery to us of musical score for the motion picture tentatively titled "[TITLE OF PICTURE]" (the "Picture").

All of Company's obligations herein are expressly conditioned upon Company's receipt of fully executed copies of this Agreement and the Certificate of Authorship attached hereto and incorporated herein.

1. Services. You will compose, conduct, perform, record, arrange, produce, and mix the score (hereinafter, the "Compositions" or the "Score") for the Picture in accordance with the schedule set forth below. Company hereby engages the services of Composer to write, compose, arrange, adapt, interpolate, orchestrate and conduct the recording of the Score for the Picture and to supervise the music editing, dubbing and so-called "sweetening" of the recording of the entire Score and to deliver a fully recorded and edited digital audio file or DAT or such form as Company requires for all original and duplicate master recordings embodying the Score (the "Master" or the "Masters") all for and as directed by Company. The Master shall be suitable for synchronization with the Picture and with audio-visual discs, cassettes and other audio-visual devices embodying the Picture or substantially all of the Picture ("AV devices") and, upon Company's request, for manufacture of audio products embodying the Score, upon and subject to the terms and conditions herein set forth. Without limiting the generality of the foregoing, but subject to the specific terms of this Agreement, Composer shall perform all services or duties customarily performed in the motion picture industry by a composer, scorer, conductor, arranger and adapter with respect to the Picture. Company shall have the right to require Composer to make such reasonable changes, modifications or additions to the Score, and to any and all musical compositions, production numbers, or special material composed by Composer hereunder as may be reasonably required by Company.

In this agreement, the composer is not only responsible for writing the score, he or she must deliver the recording of the music.

2. Term of Engagement: The term of Composer's engagement ("Term") hereof shall commence upon the date set forth above and shall continue until complete and satisfactory delivery of the Score. Composer shall deliver the Master in accordance with a schedule to be provided by Company and, subject to the terms herein, perform any re-writes, if any, requested by Company until a Score commercially and technically satisfactory to Company shall have been delivered.

This provision is very favorable to the filmmaker. It would allow him or her to order the composer to make an unlimited number of changes. An alternative is to limit the filmmaker to demand the composer make one round of changes with a payment schedule for additional changes. Further, see the next contract and the comments for Paragraph 3 for another alternative for the composer.

3. Compensation. In full and complete consideration for Composer's full and faithful performance of all services hereunder and for all rights granted to Company hereunder (including, without limitation, all right, title and interest in and to the results and proceeds of Composer's services rendered hereunder), provided Composer is not in material breach hereof and subject to Company's rights of suspension and/or termination in the event of force majeure, disability or default, Composer shall be entitled to be paid an "all-in" fee of ___________ Thousand Dollars ($___,000), payable in the following manner: (i) _______________ Thousand Dollars ($__, 000) upon signature of this Agreement by Composer and commencement of Composer's services; and (ii) ______________ Thousand Dollars ($___, 000) promptly following the satisfactory delivery of the Score as set forth herein.(Notwithstanding the foregoing, no synchronization fees, royalties or other consideration (excluding only mechanical royalties and any public performance fees, if applicable) shall be payable to Composer for the use of the Score, Master or the Compositions (collectively the "Work"), or any part thereof in the Picture or in connection with any advertising, publicizing or exploitation thereof, regardless of the method, media or types of devices utilized for the exhibition or exploitation thereof.

As confirmed in the next paragraph, this agreement is "all-in" meaning (i) the composer is responsible for any expenses such as studio time and musicians' fees; and (ii) the composer will make no more money than the fees in Paragraph 4 except for the "writer's share" of public performance royalties and use of some excerpts of the score in an album.

4. Recording Costs. You will be responsible for all recording costs incurred in connection with the Score and your services hereunder. You agree that you will be solely responsible for, and warrant that you pay, all such recording costs, even in the event such costs exceed the compensation payable to you pursuant to paragraph 4 above.

The composer must be careful not to accept a fee that is not adequate to compensate him or her for his or her time, plus paying for recording costs.

5. Ownership. Subject to the terms and conditions hereof, you hereby acknowledge and confirm that we shall own all right, title and interest in and to the Compositions of the Score (including, without limitation, the worldwide copyrights therein including any extensions and/or renewals thereof) and your performances thereon, throughout the universe and in perpetuity, and that we shall have the right to secure registration of copyright in the Score and the Masters (i.e., the individual master recordings comprising said Score) and the individual compositions comprising the Score (the "Compositions") and your performances thereon in our name, pursuant to the United States copyright laws, as "work made for hire." We shall have the exclusive right, insofar as you are concerned, to use and to authorize others to use the Score and any and all portions thereof throughout the world or any part thereof in any manner we see fit, and to refrain from any or all of the foregoing. If for any reason the results and proceeds of your services hereunder are not deemed to be a work made for hire, you shall and hereby do assign such results and proceeds and all rights therein and thereto to us, for use in any and all media (whether now known or hereafter devised), throughout the world, irrevocably and in perpetuity. The payments made by Company or its assignees under this Agreement are deemed to include sufficient remuneration for all so-called rental and lending rights pursuant to any directive, enabling or implementing legislation, laws and regulations enacted by any nation throughout the world, including the member nations of the European Union. You hereby waive all rights of "Droit Moral" or "Moral Rights of Authors" or any similar rights or principles of law which you may now or later have in the Work.

This is the "work for hire" clause that was discussed in the Introduction. If the composer cannot get a license deal instead, in which he or she gets to keep his or her copyright in the music, the composer can at least try to get more money for giving up his or her rights in the music.

6. Credit. Provided you fulfill your material obligations hereunder and further provided that the majority of the total background musical score embodied in the Picture as released in the United States consists of the Score, we will accord you the following credit: "Original Music by [NAME OF COMPOSER]." The foregoing credit shall appear in the main credit roll in the Movie. All other aspects of such credit, including size and placement, shall be determined by Licensee.

Credit is often a highly negotiated provision. In this agreement however, the obligation to provide any credit at all only applies if the "total background music" in the movie consists of the score. If another composer is brought in to contribute even incidental passages of music, the filmmaker is not obligated to credit the composer. Composers should seek a credit provision more like the one in Paragraph 12 of the next agreement.

7. Soundtrack Album.

(a) Should Company enter into an agreement with a record distributor ("Distributor") for the exploitation of the soundtrack album ("Soundtrack Album"), if any, and should the Soundtrack Album or any audio product embody any of the Score as performed by and/or conducted by Composer and/or the Compositions, then Company shall negotiate in good faith with Composer for a royalty with respect to such audio products manufactured and sold hereunder. Any "Artist's royalty" (as such term is customarily known in the music industry) payable to Composer for use of Composer's recorded performance of any composition on the soundtrack album for the Picture shall be computed, reduced and determined in a no less favorable manner as Company's basic royalty under its agreement with any recording company.

As indicated in the Introduction, instead of the composer agreement going into extensive detail in calculating how a composer shall be compensated for the use of his or her music and recorded performances on the soundtrack album, the parties agree to negotiate such terms in good faith at a later time if and when the possibility of a soundtrack album is more certain, such as when a distributor agrees to commercially release the movie.

(b) The parties acknowledge and agree that Composer shall have the right to include selections from the Score on any record album featuring Composer's solo work (with Company's prior written approval which shall not be unreasonably withheld by Company) provided that the following credit be placed by any of such composition's title: "Music from the motion picture feature [TITLE OF PICTURE]."

Although this is generally a pro-producer form, this provision is a big concession to the composer because, under a work for hire agreement, the composer generally has no rights in the music after delivering it to the producer.

8. Publishing. You acknowledge that we will be the sole owner of all right, title and interest to the Compositions, including (a) the worldwide copyrights therein and any renewals or extensions thereof, and (b) the sole, exclusive, perpetual worldwide rights of administration, exploitation and promotion associated therewith. Nothing in this agreement shall limit Composer's right to receive Composer's performing rights income derived from the exploitation of the Score, whether in whole or in part. Composer shall be entitled to receive the "writer's" share in and to the Compositions.

As discussed in the Introduction, this is the one form of income, aside from the inclusion of some of the music in a composer's own album, that the composer is entitled to under a work for hire agreement.

9. Use of Name, Likeness, Etc.: Company may use, and permit others to use, Composer's name, likeness, voice and biographical material in and in connection with the Picture, the Work, any project or product derived from the Picture, if any, and the sale, distribution, promotion and advertising thereof. Company and its assignees shall have the sole and exclusive right to issue publicity concerning the Picture and concerning Composer's services with respect thereto except for Composer's own publicity provided that there shall be no derogatory statements or references concerning the Picture or any party or entity associated with the Picture.

10. Music Cue Sheets: The music cue sheets for the Picture shall be filed with the proper performance rights societies by Company accurately reflecting Composer's ownership of all Compositions. The cue sheets shall be prepared in consultation with Composer, and Company shall promptly provide Composer with a copy upon its availability. Company will be responsible for submitting cue sheets to distributors (including non-US) and to broadcasters.

The composer should make sure the producer complies with this provision and files a proper cue sheet before the release of the movie on television or on Internet VOD.

11. No Obligation to Exploit: Company or its assigns shall not be obligated or required to print, publish, promote or otherwise exploit the Work or the Picture, or any part of them, in any manner or to exercise any of the rights granted to Company or its assigns hereunder.

12. Notices: All notices which either party is required or may desire to serve hereunder shall be in writing and shall be served to the addresses specified herein. A courtesy copy of such notices shall be sent to: ____________, Esq., ______________________; Tel: (_____) _____-______; E-Mail:_______________.

13. Federal Communications Act: Reference is made to Section 507 of the Federal Communications Act which makes it a criminal offense for any person in connection with the production or preparation of a picture or program intended for broadcasting to accept or pay, or agree to accept or pay, money, service or other valuable consideration for the inclusion of any matter or thing as a part of such picture or program, without disclosing the same to Company thereof prior to the telecast of such picture or program. Composer warrants and agrees that Composer has not and will not accept or pay any money, service, or other valuable consideration for the inclusion of any plug, reference, product identification, or other matter in any material prepared or performed by Composer hereunder.

14. Independent Contractor: Composer warrants that he or she is an independent contractor and is not an employee of Company. As an independent contractor, Composer is responsible and liable for any income tax, unemployment insurance, FICA (Social Security), or any other payment normally associated with an employee relationship.

15. Assignment: Company shall have the right to assign this Agreement at any time to any person or entity. Neither this Agreement nor any rights hereunder are assignable by Composer at any time to any person or entity. This Agreement inures to the benefit of Company's successors, assigns, licensees, grantees, and associated, affiliated and subsidiary companies.

16. Additional Covenants of Composer: Composer agrees that Composer shall:

(a) Not disclose to any party information relating to the subject matter of this Agreement or to the activities of Company with respect to the Picture or otherwise except: (i) to Composer's financial and legal advisors; and (ii) regarding any incidental and non-derogatory references by Composer to third parties concerning Composer's Score in connection with the Picture.

(b) Not incur any liability or expense on Company's account without Company's prior written approval (except as otherwise stated herein), and if such approval is given, Composer will provide Company with any information necessary to satisfy such obligation, including copies of any necessary agreements.

17. Governing Law; Dispute Resolution: This Agreement will in all respects be governed by and interpreted, construed and enforced in accordance with the laws of the State of New York. Any dispute or controversy arising under this Agreement (including, without limitation, the validity and enforce ability of this Agreement) shall be subject to arbitration in the State of New York in accordance with the Rules of the American Arbitration Association as decided by One (1) arbiter mutually approved by the parties and whose decision shall be binding, final and non-appealable and may be entered in a court of competent jurisdiction. The prevailing party shall be entitled to reasonable outside attorneys' fees and costs. For the purpose of enforcing such arbitrator's decision, any action arising out of or relating to this Agreement and its enforcement will have jurisdiction and venue in a state or federal court situated within the State of New York, and the parties consent and submit themselves to the personal jurisdiction of said courts for all such purposes.

18. Remedies: The parties acknowledge and agree that Composer's remedy for any breach of a term of this Agreement by Company shall be limited to monetary damages at law. Composer shall not have the right to rescind this Agreement or to any equitable or injunctive relief or otherwise in which there would be an interference or prevention of Company's right to finance, produce, market, distribute or otherwise exploit any and all rights in and to the Picture.

19. DVD/Blu-Ray and Soundtrack Album: Provided that Composer has rendered services as stated herein and Composer is not in breach of any material term stated herein, Company shall provide Composer with one (1) DVD or Blu-Ray copy and (1) soundtrack album CD (if and when available) of the Picture in its completed form which shall be used by Composer solely for private, non-commercial or resume reel use.

20. Entire Agreement; Modifications: This instrument constitutes the entire agreement of the parties hereto relating to the subject matter specified herein. This Agreement can be modified or terminated only by a written instrument executed by both Composer and Company or Company's successors and assigns. The parties acknowledge and agree that signatures may be by hand, facsimile, electronic or optically scanned (e.g., pdf) and any of these methods shall be deemed as binding on the parties.

21. Miscellaneous. You warrant and represent that neither the Score, the Masters or the Compositions shall infringe the rights of any third party, and that you are not under any disability, restriction or prohibition, whether contractual or otherwise, with respect to the performance of your services hereunder. Without limiting the foregoing, you specifically warrant and represent that (a) you have the full right, power, and authority to enter into this agreement, (b) you have obtained all requisite rights, clearances and permission to enter into this agreement from all applicable third parties, including, without limitation, [record company], [publishing company], and each of their respective affiliates, and (c) we shall not be required to make any payments of any nature for, or in connection with, the rendition of your services or the acquisition, exercise or exploitation of rights by us pursuant to this agreement, except as specifically provided herein (it being understood, for the avoidance of doubt, that you shall be solely responsible for any artist and other third party royalties or other sums payable arising out of our exploitation of the Masters, Compositions and other rights granted hereunder). You further warrant and represent that you have consulted with counsel with respect to the execution of this agreement. You agree to and do hereby indemnify, save and hold us harmless of and from any and all liability, loss, damage, cost or expense (including reasonable attorneys' fees) arising out of or connected with any breach or alleged breach of this letter agreement or any claim which is inconsistent with any of the warranties or representations made by you in this letter agreement.

If the foregoing terms are acceptable, kindly sign on the signature line set forth below and fax this letter to our attention for countersignature. This letter with the Certificate of Authorship, attached hereto, shall constitute the entire agreement between the parties and can only be modified in writing.

Very truly yours,
[PRODUCTION COMPANY NAME]

____________________________
An Authorized Signatory

ACCEPTED AND AGREED IN
ALL RESPECTS:

___________________________
COMPOSER S.S. No.: ________________


This bit of boilerplate drives home that the composer is indeed transferring the copyright in both the recording and music to the producer. The composer also waives "moral rights," which means that the producer can make any changes to the score that it wishes, regardless of whether the composer approves.

EXHIBIT "A"
CERTIFICATE OF AUTHORSHIP

For One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby certifies that the undersigned will write or has written an original musical score (the "Score"), and will produce and record or has produced and recorded master recordings embodying the Score, each intended for initial use in the theatrical motion picture currently entitled "[TITLE OF PICTURE]" (the "Picture"), at the request of [PRODUCTION COMPANY NAME] ("Company") pursuant to a contract of employment between Company and the undersigned dated as of ____________, 2015 (the "Agreement") (the Score, the Masters and all other results and proceeds of the undersigned's services hereunder and under the Agreement are hereinafter referred to as the "Work"). The undersigned hereby acknowledges that the Work has been specially ordered or commissioned by Company for use as part of a contribution to a collective work or as part of the Picture or other audio-visual work, that the Work constitutes and shall constitute a work-made-for-hire as defined in the United States Copyright Act of 1976, as amended, that Company is and shall be the author of said work-made-for-hire and the owner of all rights in and to the Work, including, without limitation, the copyright therein and thereto throughout the universe for the initial term and any and all extensions and renewals thereof, and that Company has and shall have the right to make such changes therein and such uses thereof as it may deem necessary or desirable including but not limited, to the right to include the Work in the Picture in all media now and hereafter devised and on phonorecords and trailers, advertisements, promotions and co-promotions with respect thereto. To the extent that the Work is not deemed a work-made-for-hire, and to the extent that Company is not deemed to be the author thereof in any territory of the universe, the undersigned hereby irrevocably assigns the Work to Company (including the entire copyright therein and any extensions and/or renewals thereof), and grants to Company all rights therein, including, without limitation, any so-called "Rental and Lending Rights" and "Neighbouring Rights" pursuant to any European Economic Community directives and/or enabling or implementing legislation, laws or regulations (collectively, "EEC Rights"), throughout the universe in perpetuity, but in no event shall the period of the assignment of rights being granted to Company hereunder be less than the period of copyright and any renewals and extensions thereof.

Company's rights hereunder shall include, without limitation, the rights to authorize, prohibit and/or control the renting, lending, fixation, reproduction, performance and/or other exploitation of the Work in any and all media and by any and all means now known or hereafter devised, as such rights may be conferred upon the undersigned under any applicable laws, regulations or directives, including, without limitation, all so-called EEC Rights. The undersigned hereby acknowledges that the compensation paid hereunder and under the Agreement includes adequate and equitable remuneration for the EEC Rights and constitutes a complete buy-out of all EEC Rights. In connection with the foregoing, the undersigned hereby irrevocably grants to Company, throughout the universe, in perpetuity, the right to collect and retain for Company's own account any and all amounts payable to the undersigned with respect to EEC Rights and hereby irrevocably direct any collecting societies or other persons or entities receiving such amounts to pay such amounts to Company.

The undersigned hereby waives all rights of droit moral or "moral right of authors" or any similar rights or principles of law which the undersigned may now or later have in the Work. The undersigned warrants and represents that the undersigned has the right to execute this Certificate, that the Work is and shall be new and original with the undersigned and not an imitation or copy of any other material and that the Work is and shall be capable of copyright protection throughout the universe, does not and shall not, (i) violate the trademark, servicemark, or copyright of any third party; and (ii) to the best of undersigned's knowledge, violate or infringe upon any common law or statutory right of any party including, without limitation, contractual rights, and rights of privacy, or constitute unfair competition and is not and shall not be the subject of any litigation or of any claim that might give rise to litigation, including, without limitation, any claim by any copyright proprietor of any so-called "sampled" material contained in the Work. The undersigned further warrants and represents that the undersigned has attained the legal age of majority in the United States, and is at least eighteen (18) years of age. The undersigned further warrants and represents that, to the best of undersigned's knowledge, the undersigned will not utilize any persons who have not attained the legal age of majority and will not utilize the services of any undocumented alien in rendering services hereunder. The undersigned shall indemnify and hold Company, the corporations comprising Company, and its and their employees, officers, agents, assignees and licensees, harmless from and against any losses, costs, liabilities, claims, damages or expenses (including, without limitation, court costs and attorneys' fees, whether or not in connection with litigation) arising out of any claim or action by a third party which arises from a breach of any warranty or representation made by the undersigned in this Certificate or in the Agreement. The undersigned agrees to execute any documents consistent herewith and do any other acts consistent with this Agreement which may reasonably be required by Company or its assignees or licensees to further evidence or effectuate Company's rights as set forth in this Certificate or in the Agreement. Upon the undersigned's failure to do so after ten (10) business days of Company's written request, the undersigned hereby appoints Company as the undersigned's attorney-in-fact for such purposes (it being acknowledged by the undersigned that such appointment is irrevocable and shall be deemed a power coupled with an interest), with full power of substitution and delegation. Company shall promptly provide the undersigned with any documents exercised pursuant to the foregoing power of attorney.

The undersigned further acknowledges that in the event of any breach by Company of this Certificate, the undersigned will be limited to the undersigned's remedy at law for damages (if any) and will not have the right to terminate or rescind this Certificate or to enjoin the distribution, exploitation or advertising of the Picture or any materials in connection therewith, that nothing herein shall obligate Company to use the undersigned's services or the Work in the Picture or to produce, distribute or advertise the Picture, and that this Certificate shall be governed by the laws of the State of New York.

Company's rights with respect to the Work may be freely assigned and licensed and its rights shall be binding upon the undersigned and inure to the benefit of any such assignee or licensee.

The undersigned affirms and acknowledges that the undersigned has been advised and counseled with respect to the negotiation and execution of this document by an attorney of the undersigned's own choice or acknowledges waiver of such advice and counsel.

IN WITNESS WHEREOF, the undersigned has signed this Certificate as of ________________, 2015.

Signature
Printed Name: [NAME OF COMPOSER]
Social Security No.

AGREED AND ACCEPTED:

[PRODUCTION COMPANY NAME]

By: _____________________________
An Authorized Signatory


August ____, 2015

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SECOND AGREEMENT

[PRODUCTION COMPANY NAME]
[PRODUCTION COMPANY ADDRESS]

Dated as of _____ __, 2015
[NAME OF COMPOSER]
[COMPOSER ADDRESS]

RE: Original Music for the motion picture feature, currently entitled [TITLE OF PICTURE]

Dear Colleagues,

This letter shall confirm the agreement (the "Agreement") by and between [PRODUCTION COMPANY NAME] located at [ADDRESS] ("Company") at ____________________________, and [COMPOSER], at ___________________________ ("Composer") in connection with the motion picture feature presently entitled [TITLE OF PICTURE] (which together with all trailers, promotion, publicity, advertising and DVD supplemental material therefrom, is collectively referred to as the "Picture"). All of Company's obligations herein are expressly conditioned upon Company's receipt of fully executed copies of this Agreement.

1. Company hereby engages Composer to compose, arrange and produce original musical compositions (the "Compositions"), as further described in the attached Schedule A, for the score of the Picture, and to record and produce master recordings embodying the Compositions (the "Masters") used in the Picture. The music composed hereunder and all other results and proceeds of Composer's services are referred to herein as the "Work."

Similar to the first agreement, this deal requires the composer to produce as well as write the score.

2. Composer will render your services hereunder during the Term, as defined below, on a first priority basis. You will deliver to us the final mix of the Score no later than ______________, 2015.

This provision is favorable to the composer, as it does not require him or her to turn down other jobs while he or she is working on this movie.

3. Composer shall deliver the Work to Company pursuant to the following schedule (the
"Delivery Schedule"):

(a) Composer shall begin the production of the Work on approximately __________________, 2015; (or upon signing of the agreement and first payment, whichever comes first.)

(b) Composer shall essentially complete the work by ________________, 2015. Company shall be entitled to hear the Work prior to the final mix, which shall be subject to final approval by an individual designated by Company (or Company's designee) for such final approval. Composer agrees to be available for up to two (2) days of consultation, and shall make such revisions during that time in the Work as Company may reasonably require, provided that if after such revisions are made, Company does not accept the Work as acceptable, then Company shall pay Composer a "kill fee" of 25% of the total compensation otherwise payable under Paragraph 5 below in addition to the initial fee and Composer shall retain all rights in the Work and Company shall have no right to use the Work for any purpose.

This is far better than the first agreement in which the composer agrees to keep changing the music at the producer's request without limitation on the number of times the producer can demand changes.

(c) Upon Company's approval of final mixes of the fully produced Work, company shall make delivery ("Delivery") of the Work to ____________________ ("Company's Designee") via disc(s), DAT(s) or computer files (at Company's discretion). Simultaneously with Deliver of the Work or proper to Deliver, Composer shall submit a properly completed music cue sheet for the Picture, provided Composer shall not be responsible for procuring or providing information needed to complete the cue sheets related to third party licensed music. Company shall be responsible for filing final cue sheets to Composer's performance rights organization prior to the initial release of the Picture.

See the Introduction for explanation of a cue sheet and its importance.

(d) Composer shall deliver all Materials to Company's Designee, pursuant to the Delivery Schedule defined herein, to the following address and contact: _________________________

4. Composer shall be responsible for the production of the Work, the payment for all expenses related to the production of the Work, including, but not limited to, the hiring of musicians, the booking of recording sessions, the programmer and engineer. Composer shall not be responsible for a music editor. Company shall have approval over all stages of production of the Work and all constituent elements thereof including the final composition and orchestration. In addition, Composer shall consult with Company throughout the production of the Work.

As with the first agreement, this composer deal is "all-in," that is, the composer is responsible for expenses.

5. The term of this Agreement (the "Term") shall commence upon delivery of first payment and the signing of this agreement. The Term shall end upon delivery to Company of final Work (i.e., final mixes of the Masters), delivery of all documentation necessary for the full exercise of all rights granted hereunder and completion of all services required by Company hereunder but shall not extend past ___________, 2015. Time and full compliance of all delivery requirements are of the essence of this Agreement. During the Term, Composer shall not, without prior written consent of Company and/or Company's Designee, render or agree to render any services of any kind for any other person or entity which would or might conflict with, interfere with or prevent the complete rendition of the services required to be rendered by Composer hereunder. Notwithstanding the foregoing, the Work shall be delivered in accordance with Company's production schedule.

6. In consideration of the rights granted by Composer hereunder, Composer's services and the use by Company of the results and proceeds thereof, Company shall pay to Composer an aggregate amount of ______________ Thousand Dollars ($_____,000.00) (the "Fee"), which shall be inclusive of any and all expenses incurred by Composer in the production and delivery of the Work to Company, payable as follows: (i) $____,000.00 after (A) commencement of Composers' services hereunder and (B) receipt of an executed copy of the Agreement; (ii) the final $___,000 upon delivery to Company of the Materials. But Composer has agreed to defer the money due in ______________, 2015 until a mutually agreeable time not to exceed six months (________________, 2015). All payments made by Company and/or Company's Designee to Composer hereunder shall be inclusive of any sales tax or use taxes required to be paid by Composer to any governmental authority.

7. (a) It is expressly agreed that Composer is performing services hereunder as an Independent Contractor. Composer retains the copyright to the supplied Work but irrevocably grants Company, all synchronization, performance rights and licenses, the rights to secure copyrights throughout the world, the absolute and unrestricted right and permission to reproduce, adapt, edit, copyright, televise, exhibit, distribute, license, disseminate, display and otherwise exploit in any or all markets and media (collectively "use") the Compositions and Masters that Composer supplies to the production in the context of this film. This grant of rights is made without limitation upon time, circumstance, location, market or medium or use of this material in and related to the motion picture feature tentatively entitled "[TITLE OF PICTURE]."

Unlike the first agreement, here the composer retains his or her copyright in the music - both the underlying music and the recordings. This is a huge difference, as it allows the composer to re-use the music and make additional money from its exploitation.

(b) Notwithstanding the foregoing, Company acknowledges that Composer is a member of ASCAP and the worldwide non-dramatic public performance royalties in the Work shall be licensed through ASCAP. Company hereby acknowledges Composer's one hundred percent (100%) of the writer's share of the worldwide non-dramatic public performance royalties in the Work; and one hundred percent (100%) of the publisher's share of the worldwide non-dramatic public performance royalties in the Work with Composer's music publishing designee, _____________ (ASCAP).

Unlike the first agreement, the composer will collect 100% of the public performance royalties.

(c) Composer shall own and separately administrate one hundred percent (100%) of the publishing and one hundred percent (100%) of the so-called writer's share of the publishing rights in and to the Compositions. Composer shall own any and all rights in and to the Masters prepared in connection with the Picture subject to the terms stated herein.

(d) Company and its assigns, licensees, successors and designees shall have the unrestricted right of access to use the Compositions composed by Composer and the masters recorded by Composer in all media, now known or hereafter devised ,throughout the universe, in perpetuity in connection with the Picture.

(e) Without limiting the generality of the foregoing, Composer hereby acknowledges that Company shall have the right to synchronize, perform, and use the Work in the soundtrack of the Picture, and uses ancillary to the Picture, including, without limitation, in trailers, promotions and co-promotions, and advertisements for any or all of the foregoing, and in connection therewith, the parties acknowledge and agree that Company shall have the perpetual right, throughout the universe, to exploit the Work in or related to the Picture in all media including, but not limited to, theatrical release, subscription, satellite, pay/cable and free TV, audio-visual devices (including but not limited to video-cassettes and discs), trailers, advertisements and publicity therefore, any computer-assisted media including but not limited to CD-ROM, CD-I and similar disc systems, interactive cable and in all other uses associated with any new technology and media, whether now known or hereafter devised. Subject to the terms stated in this Agreement, any and all rights to the Work are owned by Composer.

(f) Company shall be free, at its sole discretion, to make any further use, recording, exploitation, publishing, and distribution of the Work and every arrangement, version, orchestration and adaptation thereof, and of recordings thereof as Company may desire in the Picture and any promotion or advertising for the Picture, free and clear of any and all claims by, or asserted, and all claims by, or asserted on behalf of, Composer or any third parties (including, without limitation, any and all composers, musicians and other persons who provide services, performances or materials in connection with the performance of the Work).

(g) Composer agrees to look solely to such society and/or Composer's music publishing designee for such royalties and waive any claim against Company for its publisher's share of such royalties received by Company. Notwithstanding the foregoing, if Company shall receive monies due to Composer, Composer's performing rights society or its publishing designee, then Company shall remit such monies promptly to Composer, Composer's performing rights society or its publishing designee.

(h) Composer shall have the right but not the obligation to exploit the Work in any other form or manner within Composer's sole discretion, throughout the universe and in perpetuity for any purpose except (i) in another feature length motion picture including documentary or "feature" motion picture for a period of three (3) years from the commercial release of the Picture, except with the prior written consent of Company; and (ii) use the Work in an album subject to subparagraph (i) below).

This pro-composer provision allows the composer to exploit the compositions and the masters for any other purpose except in another movie or full length album. For instance, the composer can license the compositions and masters for advertising campaigns or video games and collect 100% of the revenues.

(i) The parties acknowledge and agree that Composer shall have the right to include selections from the Work on any record album featuring Composer's solo work (with Company's prior written approval which shall not be unreasonably withheld by Company) provided that the following credit be placed by any of such composition's title: "Music from [Title of Picture]"

(j) Company, its successors and assigns shall have the right to make, distribute, or sell or authorize others to do the same, any phonorecords, including, without limitation, discs, tapes and devices of any speed or size of type, whether now known or hereafter devised, for the recording of the music material in any soundtrack album(s) for the Picture (the "Soundtrack Album"). The parties shall enter into negotiations in good faith terms for Composer's participation in such Soundtrack Album subject to record company's approval.

8. Company agrees not to exploit or use the Work other than as embodied in the soundtrack of Picture or in advertisements and promotional materials for the Picture. In connection with any other use or exploitation of the Work not set forth herein, Company shall consult with Composer in connection therewith; which such consent shall not be unreasonably withheld. In the case of a soundtrack album, Company shall consult with Composer whereby an agreement shall be negotiated in good faith.

9. The parties acknowledge and agree that Company is not and shall not be a signatory to any union, guild or collective bargaining organization concerning any musicians or performers who have rendered or shall render services in connection with the Work.

10. Composer hereby warrants, represents and covenants to Company as follows:

(a) Composer hereby represents and warrants to Company that Composer has the right to enter into this Agreement and perform all of its obligations pursuant to this Agreement.

(b) Composer shall be the sole author of all material contained in the Work; and that the Work shall be completely original with Composer and shall not infringe upon or violate any copyright, common law right or any other right, of any person, firm or corporation;

(c) That neither the Work nor any element of, or material contained in, the Work will infringe upon or violate the right of privacy of, or right of publicity of, or constitute a libel or slander against, or defame, or violate any copyright, trademark or service mark, common law or other right, of any person, firm or corporation or violate any other applicable law;

(d) Composer has acquired all rights necessary to its grant of rights to Company hereunder, including without limitation, all copyrights, music synchronization and music performance rights licenses;

(e) That no part of the rights herein granted to Company have been transferred to any third party and that said rights are free of any liens, claims and encumbrances whatsoever in favor of any other party, and that said rights and the full right to exercise the same, have not been in any way limited, diminished, or impaired; and that there are no claims, litigation or other proceedings pending, outstanding or threatened adversely affecting or that would or might in any way prejudice Company's rights hereunder.

11. (a) Composer assumes liability for, and hereby agrees to indemnify, defend, protect, save and hold harmless Company, its partners, divisions, subsidiary and affiliates, divisions and companies, distributors, assigns, licensees and the respective shareholders, directors, officers, employees and agents of the foregoing (the "Company's Indemnified Parties") from and against any and all claims, actions, suits, costs, liabilities, judgments, obligations, losses, penalties, expenses or damages (including, without limitation, reasonable legal fees and expenses) of whatsoever kind and nature imposed on, incurred by or asserted against any of Company's Indemnified Parties, arising out of any breach of any representation or warranty made by Composer herein or out of any other breach by Composer of this Agreement.

(b) Company assumes liability for, and shall indemnify, defend, protect, save and hold harmless Composer from and against any and all claims, actions, suits, costs, liabilities, judgments, obligations, losses, penalties, expenses or damages (including, without limitation, legal fees and expenses) of whatsoever kind and nature imposed on, incurred by or asserted against Composer arising out of any breach or alleged breach by Company of any representation, warranty or covenant made, or obligation assumed, by Company pursuant to this Agreement.

(c) In order to seek or receive indemnification hereunder:

(i) the party seeking indemnification must have promptly notified the other of any claim or litigation to which the indemnification relates; and

(ii) the party seeking indemnification must have afforded the other the opportunity to participate in any compromise, settlement, litigation or other resolution or disposition of such claim or litigation.

12. Provided that Composer fully performs all of her material obligations hereunder and is not in material breach of any of Composer's representations, warranties, obligations or agreements hereunder and the Work is synchronized to the Picture's visuals, Company shall accord Composer a credit substantially in the following form: "Original Music by [NAME OF COMPOSER]".

These credit provisions are much more favorable to the composer than the first agreement, and composers should seek to include these terms into any agreement they sign. A good credit can be essential in advancing a composer's career and securing higher fees in future projects.

(a) Such credit shall be on a separate card, in the main credit roll in the Picture.

(b) Credit in the same form as set forth herein shall be provided in any paid advertising and posters for the Picture, wherever the full billing block for the Picture appears.

The "billing block" is the list of names on the bottom portion of the official movie poster. In the layout of film posters and other film advertising, the billing block is usually set in a highly condensed typeface. A successful composer can negotiate for a larger size name.

(c) Except as set forth above, any and all other characteristics of Composer's credit shall be at Company's sole discretion. No casual or inadvertent failure to comply with the provisions of this Paragraph 11 nor any failure by third parties to comply with the credit provision shall constitute a breach of this agreement by Company. In the event of any failure by Company to comply with the foregoing credit provisions, and upon written notice from Composer thereof, Company shall take reasonable steps to prospectively cure any such failure which is economically practicable to cure (i.e., no recall of copies).

An established composer can negotiate for a credit in advertising any time the director or principal actors receive credit.

13. Composer and Company are independent contractors with respect to each other, and nothing herein shall create any association, partnership, joint venture or agency relationship between them. Composer shall be fully responsible for all persons employed by it, in connection with its performance hereunder, whether as independent contractors or as employees, and shall be fully responsible for them, for all compensation and/or withholding taxes, worker's compensation insurance or other required payments in connection with such persons, except as otherwise specifically and explicitly provided herein.

14. Company may use, and permit others to use, Composer's name, approved likeness, voice and approved biographical material (which shall not be unreasonably withheld or delayed by Composer) in and in connection with the Picture, the Work, any project or product derived from the Picture, if any, and the sale, distribution, promotion and advertising thereof. Except as otherwise stated under this Agreement, Company and its assignees shall have the sole and exclusive right to issue publicity concerning the Picture and concerning Composer's services with respect thereto except for Composer's own publicity provided that there shall be no derogatory statements or references concerning the Picture or any party or entity associated with the Picture

15. (a) All notices and other communications from either party to the other hereunder shall be in writing and shall be deemed received when delivered in person or five (5) days after deposited in the United States Mails, postage prepaid, certified or registered mail addressed to the other party at the address specified at the beginning of the Agreement, or at such other address as such other party may supply by written notice.

(b) Composer shall execute any and all further documents that Company may deem necessary and proper to carry out the purposes of this Agreement.

(c) This Agreement contains the full and complete understanding among the parties hereto, supersedes all prior agreements and understandings, whether written or oral pertaining thereto and cannot be modified except by a written instrument signed by each party hereto.

(d) This Agreement is to be governed by and construed in accordance with the laws of the State of New York, applicable to contracts entered into and to be fully performed therein. Any litigation, action or proceeding ensuing out of or relating to this agreement shall be instituted in a court of competent jurisdiction (whether state or federal) in New York.

(e) Composer shall not assign any of its rights or obligations hereunder without the prior written consent of Company, and any purported assignment without such prior written consent, shall be null and void and of no force and effect. Company shall have the right to assign this Agreement at any time to any person or entity, provided that person or entity which assumes Company's obligations in a writing signed by such assignee's duly authorized signatory.

(f) The parties acknowledge and agree that Composer's remedy for any breach of a term of this Agreement by Company shall be limited to monetary damages at law. Composer shall not have the right to rescind this Agreement or to any equitable or injunctive relief or otherwise in which there would be an interference or prevention of Company's right to finance, produce, market, distribute or otherwise exploit any and all rights in and to the Picture.

(g) Provided that Composer has rendered services as stated herein and Composer is not in breach of any material term stated herein, Company agrees to provide a DVD of the Picture in its completed form in a professional format (preferably mini-DV or Video DVD) for use solely as a sample of Composer's professional work, not for any commercial use or distribution.

(h) All representations and warranties contained herein or made in writing by Composer in connection herewith shall survive the execution, delivery, suspension and termination of this Agreement and any provision herein.

(i) No waiver by either party hereto, or any failure by any party hereto to keep or perform any covenant or condition of this Agreement, shall be deemed to be a waiver or breach of any preceding or succeeding covenant or condition.

(j) If any part of this Agreement shall be held to be void, invalid or unenforceable, it shall not affect the validity of the balance of this Agreement.

(k) The parties acknowledge and agree that this Agreement may be signed in counterparts (with the counterparts deemed to be one fully executed document) either manually, by facsimile or optical image scanner (e.g., pdf) and such signatures shall be deemed as binding upon the parties.

Kindly indicate your agreement to and acceptance of the foregoing by signing the enclosed copy of this Agreement where indicated below.

Company: [PRODUCTION COMPANY NAME]

By: __________________________________

Print Name: ___________________________

Its: __________________________________

Composer: ____________________

By: __________________________________

Print Name: ___________________________

Its: __________________________________ 


***************************************************************************************************************************
THIRD AGREEMENT

PRODUCTION, MUSIC SYNC, MASTER USE & VIDEO LICENSE AGREEMENT

This agreement (the "Agreement") is entered into as of May 11, 2015 (the "Effective Date") by _________ LLC (the "Licensee") with principal offices at ______________, and ______ ________ (the "Composer/Producer") with an address at ____________.

Licensee and Composer/Producer shall each be referred to as a "Party" or collectively be referred to as the "Parties".

For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties agree as follows:

1. Production: The Composer/Producer shall produce a recording of a pre-exisint musical composition titled "__________" (the "Song") written by Composer/Producer. That recording shall be hereafter referred to as the "Recording" and shall be includive of the Song.The Recording will feature the vocal performance of Ms. __________ ("Artist") who is featured in the movie titled "____________" (the "Movie"). The recording shall take place on a date and time and at a location approved by Licensee.

Since the Composer/Producer is retaining rights in the Recording, he or she needs to have a separate agreement with the Artist so the Composer/Producer and the Artist know their respective rights and obligations with regard to the use of the Recording outside the movie.

2. Non-exclusive License.

(a) Composer/Producer hereby grants to Licensee a non-exclusive license to use the Recording, including the Song, in the Movie in any manner determined exclusively by Licensee, and to distribute the Movie in all media now known or hereby developed, throughout the world (the "Territory") for the duration of the Term (as defined below), as well as in advertising, publicity, and promotion of the Movie.

Since this is a non-exclusive license, the Composer/Producer retains the right to use the Recording, including the Song, outside the movie and retain all of the income. In this case, the Composer/Producer even retained the right to license the Song and Recording for use in another movie.

(b) Licensee shall be permitted to edit or modify the Recording or perform post-production mastering alterations to the Recording without the prior written consent of Composer/Producer. Nothing in this Agreement requires the Licensee to use the Recording in the Movie and the Licensee may use the Recording in whole or in part in Licensee's sole discretion. All rights in and to the Movie shall be owned solely by Licensee, and Composer/Producer shall have no rights therein.

3. Video.
Composer/Producer hereby grants to Licensee the non-exclusive right to use the Recording, inclusive of the Song, in a video to promote the Movie (the "Video"), and to distribute the Video in all media now known or hereby developed, throughout the world (the "Territory") for the duration of the Term (as defined below).

In this case, the Licensee movie producer wanted to make a video including the Recording to promote the Movie.

4. Publicity.

Licensee shall have the right to publish, advertise, announce and use the Composer/Producer's name, approved likeness and bio in connection with Licensee's exploitation of the Movie or the Video.

5. Consideration.

As complete and exclusive consideration for the services rendered and the rights granted to Licensee hereunder, Licensee is obligated to pay Composer/Producer the sum of __________ ($____) (the "Composer/Producer Fee"). The Composer/Producer Fee includes her travel to and accommodations in New York City. Composer/Producer hereby acknowledges that Licensee has paid the Composer/Producer Fee in full.

In this case the Composer/Producer had traveled from L.A. to New York and recorded the Song for the Licensee filmmaker and the Licensee had already paid her fee by the time I was asked to do the paperwork.

6. Term.

All licenses and rights granted in this Agreement shall commence on the Effective Date and extend for the duration of the copyrights in the Recording, the Song and the Video.

7. Limitations.

Composer/Producer reserves all of its right title and interest in the Recording and the Song not expressly granted herein.

8. Credit.

Licensee shall accord Composer/Producer screen credit in the Movie, substantially as set forth below, with respect to the Recording and the Song:

"[Name of Song]"
Words and Music by ________
Performed by [Artist]
Copyright (P) © 2015
Produced and arranged by ________

The foregoing credit shall appear in the main credit roll in the Movie. All other aspects of such credit, including size and placement, shall be determined by Licensee.

9. Cue Sheet.

Licensee agrees to prepare an accurate music cue sheet for the Movie and the Video and file the cue sheet with ASCAP, with a copy provided to Composer/Producer, within 30 days after completion of the Movie.

In this case, ASCAP was the Producer/Composer's PRO.

10. Notices.

Notice in regard to this Agreement shall be delivered by certified mail at to each Party at the addresses listed above or to a new address provided by either Party.

11. Representation and Warranty.

Composer/Producer and the Composer/Producer represent and warrant that Composer/Producer is the sole author of the Song, that the Song is completely original and contains no samples or other third party created content; that there are no liens or encumbrances on the Song and that Composer/Producer and the Composer/Producer have the full right, power and authority to enter into this Agreement and to grant the rights agreed to be granted hereunder.

12. Indemnity.

Composer/Producer and the Composer/Producer shall at all times indemnify and hold harmless Licensee from and against any and all third party claims, damages, liabilities, costs and expenses, including legal expenses and reasonable counsel fees, arising out of breach by Composer/Producer or the Composer/Producer of any warranty, representation or agreement made by them herein.

13. Miscellaneous.

Notwithstanding any provision of this Agreement to the contrary, nothing herein shall be construed to create a partnership or joint venture between the Parties, to authorize either Party to act as agent for the other, to permit either Party to undertake any agreement for the other, or to use the name or identifying mark of the other, all except as it is specifically provided herein. Neither Party shall be construed for any purpose to be an employee subject to the control or direction of the other. This Agreement is binding upon and shall inure to the benefit of the Parties' respective successors and assigns. Licensee may not assign any rights or obligations under this Agreement without the express written consent of Composer/Producer, which shall not be unreasonably withheld or delayed. This Agreement contains the entire understanding of the Parties relating to the subject matter hereof and supersedes any prior understanding or agreements. This Agreement may not be modified or amended except in writing signed by each of the Parties. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to its principles of conflicts of laws. This Agreement can be signed in counterparts.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first written above


Composer/Producer _______________ LLC


___________________ ___________________________
Authorized Signatory

Name: ______________________

Title: _______________________


November 9, 2015

Second Circuit Court Holds That Director Does Not Own Separate Copyright for His Contribution

By Robert L. Seigel

Over the years, there has been a metaphorical dance in which a media project's attorney often has to chase down cast or crew members to sign agreements that include the customary "work for hire" language. Some cast and crew members (and their respective representatives) have been less than helpful in this manner. Sometimes it is forgetfulness; however, sometimes these personnel and their representatives believe that if they do not sign their agreements, there will be a resulting problem with the "chain of title" for the production company. They often think that by not signing, they may hinder or prevent the production company from signing a sales or distribution agreement and completing delivery of the required elements of a media project to the sales company, distributor or licensee.

Then the case of 16 Casa Duse v. Merkin, No. 13-3865 (2d Cir. 2015) arrived on the legal landscape.

Robert Krakovski, the principal of the film production company 16 Casa Duse, LLC (Casa Duse), purchased the rights to a screenplay titled "Heads Up" from a third party, and asked Alex Merkin to direct the film. As part of standard operating procedure, Krakovski then hired a cast and crew for the film, and each cast and crew member (other than Merkin) signed an Independent Contractor Agreement with Casa Duse, which was a work-for-hire agreement providing that Casa Duse would own all rights in the film.

Everyone signed the agreement except for Merkin, despite Krakovski's repeated attempts requesting Merkin to sign the agreement. Despite Krakovski not receiving a signed agreement from Merkin, the film's production commenced and principal photography as well as post production occurred.

Compounding matters, Krakovski gave Merkin a hard drive that included the film's raw footage, so that Merkin could prepare an initial, or "rough cut" of the film. Although Merkin would not sign his director's agreement, he did sign a media agreement, which permitted him to edit the raw footage, but he could license, sell or copy the footage without the production company's permission.

However, a problem arose when Krakovski began submitting the film to film festivals, and scheduled a screening at the New York Film Academy (NYFA) with a reception to follow the screening. Krakovski placed a deposit of $1,956.58 for the reception. On the date of the screening, the NYFA canceled the screening because Merkin's attorney, Maurice Reichman, had sent it a cease-and-desist notice. This cancellation resulted in Krakovski losing his restaurant deposit.

To refute Merkin's claims that the production company was liable to Merkin for copyright infringement and that Merkin had a copyright interest in the film, the production company brought a declaratory action to address such issues, not only against Merkin, but also his attorney.

The district court granted a temporary restraining order and preliminary injunction enjoining Merkin from interfering with Casa Duse's use of the film. Casa Duse also moved for summary judgment on its claims and its requests for fees and sanctions. Merkin cross-moved for summary judgment, requesting that the district court vacate the preliminary injunction and dismiss the production company's request for fees and sanctions.

The district court declined to vacate the injunction and granted summary judgment to the production company on all claims, along with fees against Merkin and sanctions against Reichman. It also dismissed all of Merkin's counterclaims, except for his claim for breach of contract, which Merkin agreed to voluntarily dismiss without prejudice. The district court entered final judgment, awarding Casa Duse (1) $1,956.58 in damages resulting from Merkin's interference with the NYFA screening event; and (2) $185,579.65 in attorneys' fees and costs, of which Merkin and Reichman would be jointly and severally liable for $175,634 and Reichman would be solely liable for the remaining $9,945.65. Merkin and Reichman appealed to the Second Circuit.

The Second Circuit noted that the case presented a question of first impression in the Circuit: Can a contributor to a creative work whose contributions are inseparable from and integrated into the work maintain a copyright interest in his or her contributions alone? The question was answered in the negative.

The Court first addressed the competing copyright claims. Merkin argued that the district court erred in concluding that he could not copyright his creative contributions to the film, and that he lacked a copyright ownership interest in the "raw film footage." The production company countered that the individual contributions to a film, such as direction, are not themselves subject to copyright protection, and that the production company retained sole copyright ownership of the final film and the film's raw footage. The parties agreed that Merkin was not a "joint author" or "co-author" of the film under the Copyright Act, and that Merkin's efforts could not be deemed a "work made for hire," which would have precluded Merkin's copyright infringement claims.

The Second Circuit concluded that copyright protection does not subsist in creative contributions to a work that are inseparable from the work itself. The Copyright Act's definitional terms and legislative history supported the conclusion that Merkin's contributions to the film did not themselves constitute a "work of authorship" sufficient on its own to be provided copyright protection. Although the Copyright Act does not define "works of authorship," it does list examples of categories of "works of authorship," which do not include integral, non "stand alone" constituent parts of a work. The Second Circuit also relied upon the Ninth Circuit's decision in Garcia v. Google, Inc., which held that an actor did not own a copyright interest in her performance in a completed film, because such a theory of copyright law would result in a "legal morass" making "Swiss cheese of copyrights." According to the Second Circuit, filmmaking is a collaborative process that typically involves artistic contributions from large numbers of people, including producers, directors, screenwriters, actors, designers and cinematographers. Although these various contributors can contribute original artistic expressions that are arguably fixed in the medium of film footage, this alone is not sufficient. Authors are not entitled to copyright protection except for the "works of authorship" they create and fix, which does not include non-freestanding contributions to an integrated work.

The Second Circuit next considered the parties' competing copyright claims with respect to the raw film footage. It agreed with the district court that the production company was the "dominant author" of the film, based on the production company's decision-making authority over production of the film, its purchase of the underlying screenplay, and its work-for-hire agreements with the cast and crew. The record did not reflect any developments that occurred between the creation of the raw film footage and the production company's attempts to create a finished product that would alter the analysis as to the raw footage. Therefore, the production company, not Merkin, owned the copyright to the finished film and its prior versions.

Addressing the production company's claim for tortious interference with business relations under New York law, the Second Circuit disagreed with the district court, concluding that the undisputed material facts required judgment in Merkin's favor. To support its claim, the production company was required to show that Merkin's conduct rose to the level of a crime or a tort, or that Merkin engaged in the conduct solely for the purpose of inflicting intentional harm. The Court maintained that the production company failed to show that Merkin acted for a wrongful purpose, or used dishonest, unfair or improper means. It also rejected as insufficient the production company's argument that Merkin acted with a willful blindness to the factual and legal realities of his position. Finally, the Second Circuit held that the district court did not err in awarding fees and costs to the production company and imposing sanctions against Reichman.

On a practical level, does this decision mean that producers should not secure "work for hire" or assignment of rights agreements? Obviously not. The Second Circuit's decision leaves certain issues unaddressed, such as whether such contributions and a screenplay or a music score could be deemed an independent contribution. The licensees and purchasers of audio-visual media works, such as a motion picture feature, will still require such documentation for chain of title purposes to enter into such agreements, as well as secure Errors and Omissions (E & O) insurance. This decision, however (hopefully extended in such circuits as the Ninth), shall permit production counsel to take a collective breath when those that work on a media project (or their representatives) attempt to engage in what be called unfair and "strong-arm" tactics in negotiations.

December 15, 2015

Understanding the Option Agreement for a Screenplay

By Wallace Collins

Many writers dream that some day their stories or scripts will garner interest and develop into feature films or TV projects. Usually, the first step is taken when a producer or a production company, or even a movie studio, offers the writer a contract known as an option agreement. As with all such matters where art meets commerce, I always advise that if one is asked to sign anything - other than an autograph - one's lawyer should review it first. Every writer should have a literary agent and a lawyer advising him or her about his or her business dealings once this stage of the process arrives, where artistic creation spills over into the business world.

An option agreement at its most basic is a contract whereby the writer grants someone, for a period of time and for a payment, the right to make a film of the writer's screenplay. The three material issues that usually arise in negotiating such a deal are: 1) the length of the option period, 2) the amount of the option payment and 3) the purchase price if the project comes to fruition. How each of these issues will be resolved will vary depending on the negotiating leverage of the respective parties (i.e., whether the writer is a beginner or has had prior success in the industry, and whether the producer is an experienced player or just a fledgling production company trying to get traction).

An option agreement will designate an "option period", or length of time granted to a producer or studio to commence production of the project. It can range from six months to two years, or longer, depending on the negotiations. Such agreements frequently include additional periods of time for the producer to extend the length of the agreement in consideration of additional payments to the writer.

The option agreement will also set forth an "option payment", which is the amount to be paid to the writer as consideration for allowing the producer the privilege of utilizing the writer's screenplay for development purposes. Again, depending on the negotiating strength of each side, this could range from a very small amount (e.g., a few hundred dollars or even one dollar) to a larger payment (tens of thousands of dollars). Then, if the other party wants to extend the option period for an additional length of time, there should be additional payments to the writer. In most cases, these additional payments will be negotiated to be substantial even if the first payment is small. The amount of the option payments will vary, depending on the negotiation process and other factors, such as the writer's track record in the industry and the potential budget of the film or TV project. Some industry experts have said that as a rule of thumb, option payments are frequently equivalent to 10% of the purchase price, but these amounts are always negotiable, and writers need to be careful not to allow themselves to be taken advantage of in the rush of excitement that surrounds interest in their screenplays.

Another material term in an option agreement is the "purchase price", which is the amount of money that the writer will receive in the event the screenplay is made into a feature film or TV project. The purchase price is often calculated on a sliding scale as a percentage of the budget, so as the budget of the film project grows, so will the purchase price, although as with all negotiated terms this too can vary greatly.

When properly negotiated, an option agreement can be a win-win situation for both the writer and the producer. The writer is paid to lease his or her screenplays for a limited period of time, while the producer attempts to get the project green-lighted by a studio or production company. If this happens, the writer will receive a nice purchase price for the screenplay. If it does not happen during the option period, then the writer keeps the option payment or payments paid to date, and all rights to the screenplay revert back to the writer. The writer could then decide to option the script again to another producer. From the producer's perspective, an option agreement gives the producer an opportunity to hold on to a screenplay exclusively for a period of time, without having to lay out a lot of money up front while trying to get the project off the ground.

December 27, 2015

Congress Gave Certain Entertainment Industry Investors A Christmas Present for 2015 and 2016! Section 181 is Back for Film & TV Projects and Now Theatrical Projects, Too

By Marc Jacobson

Now, certain investors in film and theatrical projects that begin production in 2015 or 2016 may deduct their investments in the year in which the entity that receives the money actually spends the money. While tax on the profits will always have to be paid and the tax benefit of the deduction, once recouped, also creates taxable income, certain investors will get a current deduction, which is always welcome, because it reduces the investor's current tax liability.

Not every investor is eligible for the benefit of this deduction. Some prominent bloggers gloss over this requirement. (See, "The Producers Perspective," By Ken Davenport, http://bit.ly/KD181blog) Only investors who (a) have qualifying passive income, generally from real estate rents and income are eligible for this benefit, and then only up to the amount of their passive incomes in that year, or (b) are producers who pursue producing as an active trade or business, can reap this benefit. A doctor or dentist, successful stockbroker, and the like, who does not have passive rental income and who may be the traditional source of film, TV and theater investment, is not able reap the benefit of this deduction.

Revised §181 of the Internal Revenue Code (the Code) provides that investors in Film and TV Productions, and now, thankfully, Theatrical Productions, may deduct their investments in the year incurred, provided that certain steps are taken and rules are followed. When we read the Consolidated Appropriations Act of 2016 and the Protecting Americans from Tax Hikes Act of 2015 (http://bit.ly/Sec169HR2029) that President Obama signed into law on December 18, 2015, we don't see any mention of the passive activity rules. We also don't see it in the text of the old or new §181 of the Code, but we do see it in the accompanying regulations. (http://bit.ly/IRSregsForSec181)

However, any tax preparer worth his or her salt will tell you that while §181 is clear on its face and makes no mention of the passive activity rules, the taxpayer and his or her preparer must consider the entire Code when preparing a tax return. That includes things like the Alternative Minimum Tax, (http://bit.ly/AltMinTax) as well as §469 of the Code, (http://bit.ly/Sec469PassiveActivityLimited) entitled "Passive Activity Losses and Credits Limited" and its accompanying regulations.

The Code limits the benefit of deductions for Passive Activity. (Id.) Most investors in Film, TV and Theatrical Productions invest their money, watch carefully what happens with the "show," then sit back and wait for a return of capital and hopefully a profit, paid out ideally over the life of copyright. That is passive activity, completely legitimate and welcomed by the producers of and the investors in the show. Yet the Code says that if an investor does that, and does it in Film, TV and now, thankfully, Theatrical Productions, the investor can only deduct that investment against passive income received that year from real estate investments, and only up to the amount of that real estate passive income.

Therefore, if the investor had passive rental income of $50,000, but invested $75,000 in the qualifying Film, TV or Theatrical Production, only $50,000 would be deductible. If the investment were $35,000, then the full amount of the investment would be deductible, because the passive income exceeded that amount. All of this, of course, assumes that the entity that receives the investment owns the property, spends the money, makes the proper election in a timely fashion, and otherwise complies with the law. (This blog is only to alert people to the overall limitations on the benefit of the investment, and not to discuss all the steps necessary to qualify for the deduction.)

The only other method by which the investment can be deducted is if a person who is already active in the trade or business of the production makes the investment. The Tax Court in Storey v. Commissioner (http://bit.ly/Storey-v-Commissioner) outlined how a documentary filmmaker was found to be a producer and thus eligible to reap the benefit of the Code §181. It is instructive for the rest of us about what constitutes being active in a trade or business sufficient to qualify as a producer eligible for the current deduction.

The following assumptions show how this works on a film production with a cost of $2 million, received and spent entirely in one calendar year, where the traditional model applies where the investors recoup their money in full, first, before any "profit participation" is distributed to talent or other contributors to a film:

• The production follows the steps necessary to qualify under §181 when filing its tax return for the year in question.

• The investors all have passive rental income in excess of their individual investments.

• All of the investors are in a tax bracket of 50%

• The production then receives license income of $1.5 million, significantly less than the cost of production.

In this example, the investors in the aggregate had a net after-tax risk of $1 million, since the deduction "saves" them 50% of the actual cost of the investment. When the production receives $1.5 million as license income, the investors will receive cash of $1.5 million, an amount in excess of their tax-advantaged investments, thus creating taxable income. Although the production's license income is less than the cost of production, the investors are "in profit" before the picture itself reaps a cash on cash profit. This surely will continue to be an incentive for such investors to invest again with that producer, and with other producers as well.

The reinstatement of §181 for 2015 and 2016 is a welcome incentive for producers and will likely help create more films, TV shows, and live theatrical events. It is only for a certain few, however. Further, its effect is to only accelerate the deductibility of the investment, which is only meaningful for as long as the show does not return the investment or a profit. Tax will always need to be paid on income in excess of the tax-advantaged investment. It is important to consult with a tax advisor for more information.

January 20, 2016

The 11 Contracts Every Artist, Songwriter & Producer Should Know: Video Production

By Steven R. Gordon

Steven R. Gordon (steve@stevegordonlaw.com, www.stevegordonlaw.com) is an entertainment attorney specializing in music, television, film and video. His clients include artists, songwriters, producers, managers, indie labels and music publishers as well as TV and film producers and digital music entrepreneurs. He also provides music and sample clearance services for producers of any kind of project involving music. Mr. Gordon is the author of The Future of the Music Business [www.futureofthemusicbusiness.com/] (Hal Leonard 4th ed. 2015).

The author gratefully acknowledges the assistance of Ryanne Perio, Esq. in the preparation of this article. Ryanne is a litigation associate at the WilmerHale law firm. He would also like to thank his intern Jena Terlip, 2L at Benjamin N. Cardozo School of Law, for her research and editing assistance.

DISCLAIMER
This series of articles and the forms included in them have been created for informational purposes only and do not constitute legal advice. This article and other articles in this series should be used as a guide to understanding the law, not as a substitute for the advice of qualified counsel. You should consult an attorney before making any significant legal decisions.

The eighth installment of this 11-part series on basic music industry agreements focuses on the business of producing music videos. This article contains a form agreement that can be used to hire a video producer, as well as releases for people and locations appearing in videos. Although MTV does not play many anymore, music videos have become more important in breaking new artists than ever before. Before making your own video, though, it's important to know the legal ins and outs of producing them.

INTRODUCTION

In the first part of this Introduction, I give a brief history of music video followed by a survey of how successful artists have used and continue to use them to launch their careers. The second part of the Introduction offers a summary of business considerations in producing videos.

PART I: HISTORY & CONTINUING IMPORTANCE OF MUSIC VIDEOS

1. Before Music Videos
Audiovisual presentations of music have existed since the first motion pictures containing sound. In fact, the first Hollywood "talkie," released in 1927, was a musical featuring Al Jolson called "The Jazz Singer." Before the invention of the video cameras, there were many musical short films featuring the performance of single songs, such as Frank Sinatra's patriotic "The House I Live In (That's America To Me.)" (https://www.youtube.com/watch?v=EWxW2Z5znWQ) These films were sometimes shown before main features at movie theatres. In the 1960s, artists like the Rolling Stones and the Beatles started to make short form films of individual songs to promote their albums. The dawn of what we think of as music videos began in the 1970s. For example, in 1975, Queen commissioned the production of a video for its new single, "Bohemian Rhapsody," to show on Top of the Pops, a popular British TV show showcasing the week's top hit songs. In the U.S., Video Concert Hall was launched on November 1, 1979 as the first nationwide video music program on American television, predating MTV by almost three years.

2. MTV and the Birth of the Era of Music Videos on Television
In 1981, MTV launched by airing "Video Killed the Radio Star," and began an era of 24-hour-a-day music videos on television.

The founders of MTV, including Robert Pitman (current chairman and CEO of iHeartMedia, Inc. (formerly Clear Channel)), convinced record labels to produce more videos and give them to MTV for free, just as they gave free records to radio stations. The pitch was that the videos would promote the labels' records and increase sales. The only money MTV paid to the labels was a relatively small fee to secure exclusive rights to play select videos for a limited period of time. For instance, MTV paid Sony Music $4 million a year for such rights.

By the mid-1980s, MTV grew to play a central role in marketing pop and rock music. Many important acts of this period-- most notably Madonna, Aerosmith, The Who, Phil Collins, John Mellencamp, Phil Collins and Billy Idol-- owe a great deal of their successes to the seductive appeal of their videos. After years of controversy regarding the lack of diversity among artists on the network, MTV aired Michael Jackson's "Billie Jean," "Thriller" and other videos, which helped Jackson become the best-selling pop artist of all time.

However, by the late 1990s, MTV sharply decreased the number of videos it showed on its airways. Former MTV president Van Toeffler explained: "Clearly, the novelty of just showing music videos has worn off. It's required us to reinvent ourselves to a contemporary audience." A decade later, MTV was playing an average of just three hours of music videos per day, preferring cartoons such Beavis and Butt-Head and, later, unscripted reality shows, such as Jersey Shore. MTV continued to play some music videos instead of relegating them exclusively to its sister channels (such as MTV Hits), but around this time, the channel began to air music videos only in the early morning hours and in Total Request Live , which aired the 10 most requested music videos of the day. As a result of these programming changes, Justin Timberlake implored MTV to "play more damn videos!" while giving an acceptance speech at the 2007 Video Music Awards. Despite the challenge from Timberlake, MTV continued to decrease its total rotation time for music videos in 2007 and shut down TRL in 2008.

3. YouTube and the Rise of Cover Videos
YouTube was created by three former PayPal employees in February 2005. In November 2006, it was bought by Google for $1.65 billion. The online video sharing site is this generation's MTV. Artists like Beyoncé and Taylor Swift regularly have hundreds of millions of views for new videos, and their record companies and music publishers monetize them by allowing ads. YouTube keeps approximately 40% of the ad income, although the details of its formulas for arriving at the exact amount is not public record, and the balance is paid to the copyright owners.

YouTube allows you to share your videos with a worldwide audience. However, the thing that makes YouTube great for new artists--that it's so easy to upload and reach a huge audience--also makes it incredibly competitive. YouTube reports that hundreds of hours of video content are uploaded to its servers each minute. Unfortunately, therefore, although you have a potential audience of millions who you can directly reach with your video, standing out in the sea of other content is a huge challenge.

One way new artists have used YouTube to attract attention is to "cover," that is, re-record hit songs. A good example of an artist who was discovered from making covers is Justin Bieber. Before he was the erratic "bad boy" that many love to hate, Justin Bieber was just a kid from Stratford, Ontario. At age 12 Bieber began to regularly post covers of hit R&B songs on his YouTube channel under the username "kidrauhl."

As his videos got more and more views, he was eventually discovered by talent manager Scooter Braun. After tracking Bieber down, Braun flew the then-13 year old to Atlanta to record some demo tapes. Braun introduced Bieber to Usher, who reportedly beat out Justin Timberlake in a bidding war to sign the young YouTube star. After being signed by Usher, Bieber recorded his first album, released the single "One Time," and proceeded to have his face put up on tween bedroom walls everywhere. He's had three multi-platinum albums that have all reached number one on the charts, and continues to play to sold-out arenas all across the world.

Another example of how cover videos have launched careers is Vazquez Sound, a musical trio known for its covers of hits, including Adele's "Rolling in the Deep," which has garnered over 172 million views. In September 2014, Vazquez Sounds released its first original album, which was an instant hit that earned a nomination at the 2015 Latin GRAMMYs for "Best New Artist." Another example is the pop duo, Karmin. Karmin broke a couple of years ago with a string of clever, sassy covers of hits by acts such as Lil Wayne, Nicki Minaj, and Katy Perry. Alessia Cara, a 19 year old Canadian singer and songwriter, is another example. She is currently signed to Def Jam and is best known for hit single "Here," which reached the Top 20 in the United States. Before her original album was released, though, Cara was known for her acoustic song covers on YouTube.

4. YouTube Musical Celebrities
Other artists have made careers by producing original content for their YouTube channels. A prime example is Lindsey Stirling. She plays the violin, dances and then does them both at the same time. Stirling began posting videos of herself performing in 2007 after failing to be signed by a major record label. Now, she claims they are begging to sign her, but it's too late--she doesn't need them anymore. Explains Stirling: "It's a very loyal fan base that wants you to succeed because they found you. It wasn't some big radio station or record label that shoved art down someone's throat." Coming in fourth in Forbes' round-up of the most financially successful YouTube personalities, Stirling raked in $6 million in earnings last year. She has also released two albums, "Shatter Me" and "Lindsey Stirling", scored a book deal, and developed a lucrative touring career.

5. YouTube's New Subscription Service
YouTube recently unveiled its long-discussed paid subscription service, "YouTube Red." The new service offers ad-free versions of all current YouTube videos and additional exclusive content from some of the site's top creators, including PewDiePie and Lilly Singh, both of whom perform music as well as comedy. It launched on October 28, 2015 and costs $9.99 per month. YouTube Red will have a big emphasis on music, providing access to music streaming service Google Play Music and a new app called YouTube Music, which offers a Pandora-like personalized playlist based on a selected song or artist. Both music apps also have ad-supported versions that non-Red users can access.

6. Self-Made Indie Videos Launching Careers On Social Media Such As Vine & Instagram
Over the past several years, with the advent of smart phones with video capability, as well as greater connectivity across social platforms, an entirely new phenomenon has occurred with singer songwriters as well as rappers catapulting themselves to recognition and commercial success. They use self-contained performances on social media in addition to, or other than, YouTube. One example is Shawn Mendes. In 2013, when he was 15, Shawn Mendes began posting cover videos on Vine and picked up millions of views. The next year he was signed to Island Records and became the youngest artist to debut in the Top 25 with a song on the Billboard Hot 100.

PART II: LEGAL AND BUSINESS ISSUES

1. Cover Videos
It is legally necessary to get a license from the owner of the song before making a cover video. However, YouTube has developed a system Content ID that deals with this issue. The system recognizes the identity of the cover song and then notifies the publisher. The publisher can then choose to order YouTube to take down the video, or let the video continue to play and "monetize" it. If the latter is chosen, YouTube splits the advertising revenue with the publisher. It is important to note that if the publisher chooses the second option, the artist performing the cover will not receive any of the fees generated by advertising. This, however, is to be weighed against the possibility of worldwide recognition discussed above.

Although Vine and Instagram do not employ Content ID, the music publishers have not, so far, cracked down on covers on these social networks. An argument could be made that the snippets played in these services are "de minimis," i.e., too trivial to amount to copyright infringement. It can also be argued in a litigation defense that these brief videos are "fair use." The argument would be that, under the doctrine of fair use, a person can use a brief excerpt of a copyrighted work if the new work is "transformative" of the original.

2. Work For Hire Production Contract
I was the Director of Business Affairs for TV & Video at Sony Music from 1991 to 2001. We produced over 250 videos each year that I worked there, and every video that Sony commissioned was a "work for hire." Under the copyright law, a work for hire is defined as follows:

(1) a work prepared by an employee within the scope of his or her employment; or
(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

In the case of works made for hire, "the employer or other person for whom the work was prepared is considered the author ...[and] owns all of the rights comprised in the copyright."

Recently I worked with a small book publishing company that wished to produce a series of music videos to promote the new edition on one of its religious text books. The videos will feature songs by 12 different Christian rock acts. The agreement that we used to commission the videos was basically the same as Sony's work for hire agreement. I recommend to my artist clients the same business format for the production of their music videos. Re-published below is sample work for hire contract for producing a music video.

3. Releases
If you are either a new artist or a small label, and you wish to create a music video, in addition to using a work for hire agreement, you should also make sure that you will not have legal problems associated later on with any person or location depicted in your video. Although you should always have every side artist, model, dancer or actor in your video sign a release, some judgment is required when determining whether to secure a location release.

Personal Releases: If a label is commissioning a video, the artist's appearance in the video will generally be covered by the recording agreement between the artist and the label, which usually includes a provision specifically addressing music videos and giving the label the right to use the video for any promotional or commercial purpose. If an indie artist is appearing in a video, obviously he or she will not need a release for his or her own performance. Regardless of whether the commissioning party is a label or an artist, it will want to have any other person appearing or performing in the video sign a personal release giving the label or the artist, as the case may be, the right to use the video, including that person's appearance and/or performance in any and all media. Usually, the production company will handle this responsibility.

An example of a personal release is included below. Personal releases do not vary very much, although some contain more legalese than others. The basic point of any personal release, however, is that the person signing the release grants the artist or label all rights to use his or her appearance and/or performance in the video.

Note that the person signing such a release may have recorded the audio performance as a background vocalist or musician. A separate contract usually covers that audio recording, but the release contained below would cover that audio performance as well. Please also note that the release usually does not include financial remuneration; but if a musician, dancer or actor contributed a performance in the underlying audio track, there may be a separate agreement in which that person is compensated.

A cautionary tale about failing to secure proper releases: The producer of a video for an artist at a major record label used a picture of an old girlfriend from her Facebook profile in a spilt second of a still titled "Missing Persons" in a video featuring the artist singing about a romantic break-up. The ex-girlfriend noticed and was not pleased. She retained a lawyer who was able to negotiate a significant settlement.

Crowds and Audiences: If you are shooting in a public place, releases should be given to anyone wandering into the scene if anyone is are recognizable. If a person doesn't want to sign the release, you should avoid using that footage. If you are shooting in front of a live audience, you can use one or more signs at the entrance to the performance area informing the audience members that, by entering, they consent to appearing in the video. The sign (or signs) should be large enough and displayed in a place prominent enough that anyone entering will notice. However, if a person from the audience is featured, or especially if he or she appears on stage, a personal release should be signed.

Location Release: The location release at the end of this article is for a venue that agrees to let you shoot your video at the location without a fee. It is particularly useful if there is a sign or logo that people would recognize. The release will make it clear that no consideration was expected for the use of the location. Of course, sometimes a location, such as a restaurant or bar, will require a fee. In that case, the amount to be paid can be inserted in the release.

Public Places: Generally, if public venues and landmarks, such as the Empire State Building appear in the video, you do not need a release if the location is incidental to the action in the video. If, however, you are shooting in front of a well-known place, such as Nathan's hotdog restaurant in Coney Island, and its name appears prominently in the video, it would be wise to have the manager sign a location release.

4. Trademarks
The use of a trademark in a music video is generally protected by the First Amendment, but not always.

Likelihood of Confusion Test: The limited purpose of trademark protection set forth in the Lanham Trademark Act (15 U.S.C. § 1051 et. seq.) is to avoid confusion in the marketplace by allowing a trademark owner to prevent others from duping consumers into buying a product or using a service they mistakenly believe is sponsored by the trademark owner. Trademark law aims to protect trademark owners from a false perception that they are associated with or endorse a product or service. Generally, to assess whether a defendant has infringed upon a plaintiff's trademark, the courts apply a "likelihood of confusion" test that asks whether use of the plaintiff's trademark by the defendant is likely to cause confusion or mistake, or to deceive as to the affiliation, connection, or association of plaintiff's brand with defendant's product or service.

Applying these principles to music videos, the bottom line is that if a trademark is used in such a way that it is not likely to confuse a viewer into thinking that the brand sponsored the video, the producer may have a First Amendment right to use the mark (notwithstanding any licensing issues). The classic example is a rapper wearing a baseball cap or t-shirt. Just because the singer may be wearing a Yankees cap or Baltimore Orioles t-shirt doesn't mean that a reasonable person would think that the Yankees or Orioles sponsored or produced the video.

On the other hand, where a trademark is prominently featured, it may be reasonable to think that a brand is sponsoring the video. For instance, a number of brands are featured in the video for "Telephone" featuring Beyoncé and Lady Gaga. Yet in that case, the brands were actually sponsoring the video by paying for product placement. In fact, these days, many indie artists use brands to help pay for or at least defray the costs of their videos. However, if you have not received approval or received a sponsorship from a brand, it is important not to lead your viewers to believe that you have by drawing too much attention to the brand in your video.

Product Disparagement: This is also called product defamation, trade libel, or slander of goods; product disparagement is any statement about a brand that is false and likely to adversely affect its profits. Product disparagement includes negative statements about a product or service, false comparisons of competing consumer products or services, and statements harming the reputation of an artist.

When applying these principals to a music video, it is important to note that showing a brand's name or logo in a negative context could prompt a demand that the video be changed or not shown at all. Consider this real world example: A record label made a video in the early 1990s, when MTV was still playing videos, of a toy train running off the track and smashing into small models of people made of clay. During the video, close-ups of the artist as the conductor of the wayward train would appear. The video was lighthearted, and no one would think that the artist/conductor was actually running over real people. However, the name of the well-known U.S. railroad appeared on the toy train, and its representatives were less than amused. In fact, they sent a letter to MTV demanding that it stop playing the video. The label agreed to take the name off the toy train by blurring it, but the railroad still insisted that the video be banned because the color of the toy train--a particular shade of yellow--was the same color as its actual trains. The label reacted by changing the entire color of the video to sepia, which made the toy trains a different shade of yellow. Yet the railroad still had a problem because the cars were still yellow. The label defiantly re-released the video. However, the railroad company initiated a lawsuit against the label and was able to persuade a federal judge to permanently enjoin the further exhibition of the video on MTV and any other outlet. Later, the label settled the suit by paying damages to the railroad, in addition to agreeing to never use the video for any purpose again.

5. Artwork and Other Copyrighted Works
A best practice is to avoid using material protected by copyright. This will save you a lot of headaches, and possibly money. The case of Ringgold v. Black Entertainment Television is an important case in this regard. In the late 1990s, Faith Ringgold, a successful contemporary artist, sued BET for airing an episode of a television series called ROC in which a poster containing her artwork appeared. In the scene, at least a portion of the poster was shown a total of nine times. In some of those instances, the poster was at the center of the screen, although nothing in the dialogue, action, or camera work particularly called the viewer's attention to it. The nine sequences in which a portion of the poster was visible ranged in duration from a little more than one to four seconds. The aggregate duration of all nine sequences was approximately 27 seconds.

The case was decided by a federal appeals court in New York. The court found BET liable, rejecting the de minimis defense. As already noted in the section on "Cover Videos" above, if the amount of a work copied is so trivial as to fall below the quantitative threshold of substantial similarity, the copying is de minimis, and does not constitute copyright infringement. However, the court found that in addition to its appearance in the scene, there was also a qualitative connection between the poster and the show. The poster included a painting depicting a Sunday school picnic held by the Freedom Baptist Church in Atlanta, Georgia in 1909, and was intended to convey "aspects of the African-American experience in the early 1900s." ROC was a television sitcom series about a middle-class African-American family living in Baltimore, and the scene in question was of a gathering in a church hall with a minister.

In contrast to Ringgold, the case of Sandoval vs. New Line Cinema Corp stands for the proposition that use of copyrighted artwork in the background of a scene may be de minimis.

In Sandoval, the same court that decided the Ringgold case, found that the use of the plaintiff's copyrighted photographs in the motion picture "Seven" was de minimis and therefore not actionable. The photographs appeared in the film for a total of 35.6 seconds, but they were always in the background and never in focus. The court found that the "photographs as used in the movie [were] not displayed with sufficient detail for the average lay observer to identify even the subject matter of the photographs, much less the style used in creating them." The court distinguished the facts from Ringgold because there was no substantive connection between the appearance of the photos and the subject matter of the scene.  

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The agreement below contemplates that an artist is hiring a production company to produce a promotional video. The same form of agreement may be used by a record company. An artist may consider forming a corporate entity (i.e., C corporation, Subchapter S or LLC) in order to avoid any personal liability in regard to any agreement including a video production agreement. In addition, an artist would be wise to consult with an accountant or attorney about forming an LLC or S corporation for tax purposes including eligibility to deduct video expenses from his or her personal income.

DISCLAIMER
This form has been created for informational purposes only and does not constitute legal advice. You should consult an attorney before making any such legal agreements.


VIDEO PRODUCTION AGREEMENT


This agreement ("Agreement"), effective as of _____, 2016, is between __________ ("Artist") with an address of __________________, and _____________ ("Producer"), with an address at _____________________________.

WITNESSETH:

WHEREAS, Producer has recognized expertise in video production; and

WHEREAS, Artist wishes to engage Producer to record a music video featuring Artist performing a song titled "_____________" (the "Video").

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

1. PRODUCTION SERVICES

1.1. Producer shall provide Artist with the video recording and production services (hereinafter "Production Services") described within this Agreement.

1.2. Principal photography shall begin on ____________, 2016. Producer shall make Delivery, as defined herein, of the Video to Artist no later than _________, 2016. "Delivery" shall consist of delivery of (i) a fully edited sound synchronized video master, and (ii) all other recorded elements created during production, including but not limited to all audio tracks, video footage and outtakes. Delivery will not be deemed to have occurred until Artist accepts the Video as suitable for commercial exploitation.

1.3. Producer shall provide the Production Services to Artist promptly with the degree of skill, attention and due care that is standard practice within the professional Production Services industry.

1.4. Producer and Artist agree that the budget attached in Schedule A shall represent 100% of the funds required to produce the Video (hereinafter "Budget"). This amount represents the Producer's total anticipated costs and profit.

The Budget should include all costs for producing the video including producer and director fees as well as post production editing costs. For examples of music video budgets ranging from "shoestring" to "commercial/studio" budgets, see http://garrettgibbons.com/music-video-budgets.


1.5. If the Producer hires a director (hereinafter "Director"), the Director shall be an employee of the Producer for purposes of the production and Delivery of the Video.

1.6. All employees and representatives of Producer providing the Production Services hereunder to Artist during the Term of this Agreement shall be deemed for all purposes (including all compensation, taxes and employee benefits) to be employees or representatives solely of Producer, and not to be employees or representatives of Artist or to be independent contractors of Artist.

1.7. The Video shall depict content to be included in a treatment or script to be approved by Artist prior to principal photography.

2. GRANT OF RIGHT: WORK MADE FOR HIRE

This clause transfers all rights to the person (or company as the case may be) commissioning the Video.


2.1. Production Services provided by the Producer and any other person providing such Services shall be deemed to be provided on a "work made for hire" basis as that term is defined under the U.S. copyright law. The Video and all other materials created or contributed by the Producer including all footage, outtakes and audio tracks (the "Materials"), shall be the sole property of Artist throughout the universe, free from any claims whatsoever by Producer; and Artist shall have the exclusive right to register the copyright(s) in such Materials in her name as the owner and author thereof and to secure any and all renewals and extensions of such copyright(s).

2.2. Without limiting the generality of the foregoing, Artist and any person authorized by Artist shall have the unlimited exclusive right, throughout the universe, to manufacture or create copies of the Video or any other Materials by any method now or hereafter known, or any work derived from the Video or the Materials and to sell, market, transfer or otherwise deal in same under any trademarks, trade names and labels, or to refrain from such manufacture, sale and dealing.

2.3 Artist or any Person authorized by Artist shall have the right throughout the universe, and may grant to others the right, to reproduce, print, publish, or disseminate in any medium the name, portraits, pictures, likenesses and biographical material concerning Producer and Director any other person providing Production Services, as news or information, or for the purposes of trade, or for advertising purposes, in connection with promotion marketing and sale of the Video. As used in this Agreement, "name" shall include, without limitation, any professional names.

3. COMPENSATION

3.1. The Parties agree that the Effective Date of this Agreement shall be as set forth at the beginning of this Agreement (hereinafter "Effective Date"). The parties acknowledge that the total amount of the attached Budget is___________ Dollars ($_____). Within five (5) days of the Effective Date, Artist shall pay Producer 50% of the Budget, that is, _________ Dollars ($_____). The second payment of 25%, that is, _________ Dollars ($_____), shall be due upon completion of principal photography. The third and last 25% payment of ________ Dollars ($_____) shall be due upon Delivery of the Video and other Materials to Artist.

3.2. Overages. In regard to overages to the Budget, Producer shall not charge Artist any monies in addition to the approved Budget without Artist's prior written approval.

4. NOTICES

Notices, reports, accountings or other communication which Producer or Artist may require or desire to send to the other must be delivered either by:

Certified mail, return receipt requested to the parties at the addresses first written above or other address to be designated by Producer or Artist as the case may be; or

Electronic mail at the following addresses:

(i) for Artist: _________@___.com
(ii) for Producer: ___________@___.com

5. ASSIGNMENT

Producer may not assign this Agreement or any right or obligations under this Agreement. Artist may assign this Agreement or any of her rights or obligations hereunder to any person, firm, or corporation including a corporation in which Artist is a principal, provided that (i) Artist shall remain responsible for any payments required to be made under this Agreement, and (ii) the assignee has the necessary cash on hand to make any payments required under this Agreement.

6. WARRANTIES AND INDEMNIFICATION

6.1. Producer warrants and represents that he has the legal right to enter into this Agreement including the legal right to sign on behalf of the Director. Producer further warrants and represents that (a) all content contributed by the Producer shall be original and not interfere with or violate any rights of any third party; and (b) no content appearing in the Video, including artwork or photography, will interfere with or violate any rights of any third party.

6.2 Producer warrants and represents that he shall provide valid signed releases from any third party performing or appearing in the video, and that he shall, if legally required, secure valid signed location releases from any location appearing in the video. Acceptable forms of release are attached hereto as Schedule "A" and "B" respectively.

The attached releases may be used as Schedules A and B. Note that the releases allow the Producer to assign the rights secured in the releases to the Artist.

6.3. Producer and each of his representatives, employees, contractors, agents and representatives hereby release, indemnify and agree to hold harmless Artist and her agents and representatives from and against any and all losses and/or damages which arise out of the Production Services.

7. TERMINATION

Artist may terminate this Agreement upon written notice in the event of a material breach by Producer, including late delivery of the Video, if such breach is not cured within __ days of notice thereof. If such breach is not cured within that time, Producer shall not be entitled to any additional payments and, upon notice by Artist, Producer shall refund to Artist any monies previously paid.

8. MISCELLANEOUS

8.1. Governing Law. This Agreement shall be interpreted under the laws of the state of ________ without regard to its choice-of-law rules, and the parties shall submit to the exclusive jurisdiction of the courts of that state.

Since the Artist is the party paying money in this Agreement, the Artist should have the right to decide in which state any dispute arising from the Agreement should be litigated.

8.2. Relationship of Parties. Producer and Artist shall have the relationship of independent contractors. Nothing herein shall be construed to place Producer and Artist in the relationship of principal and agent, employer and employee, master and servant, partners, or joint venturers, and neither party shall, either expressly or by implication, have represented themselves as having any authority to make contracts in the name of, or binding on, each other, or to obligate the other in any manner.

8.3. Complete Agreement. Producer and Artist acknowledge that this Agreement represents the complete and exclusive statement of the agreement between the Producer and Artist with regard to the subject matter herein, and that it supersedes any proposal or prior agreement, whether oral or written, and any other communications between the Parties relating to the subject matter of this agreement.

8.4. Enforcement. If any provision of this Agreement shall be found invalid or unenforceable, then such provision shall not invalidate or in any way affect the enforceability of the remainder of this Agreement.

UNDERSTOOD AND AGREED:

[ARTIST's NAME]

_______________________________


[NAME OF PRODUCER]

_______________________________

SS #____________________________


If the Producer is a production company or LLC ("Production Company"), the president or managing partner should sign the personal guarantee below:


In order to induce Artist to enter into this Agreement, I hereby agree and acknowledge that (a) I have read all of the terms and conditions set forth in this Agreement; and (b) I shall be personally bound by all the terms and conditions in this Agreement applying to the Production Company, and that I shall be personally liable for any breach of this Agreement by Production Company.

PRESIDENT OR MANAGING PARTNER

_______________________________
Print Name: _____________________
Position: ________________________

PERSONAL RELEASE

To ______________ ("Producer")
Address

I understand that Producer is producing a video containing the performance of a song titled "_____________" (the "Video").

For good and valuable consideration, including my desire to appear in the Video, I irrevocably grant to Producer, his licensees and assigns the right to film, videotape, portray and photograph me, my likeness and my performance, and to record my voice and other sound effects, and the right to use them or any portion thereof, and my name and any biographical facts which may have been provided to Producer, in connection with the production of the Video and the advertising, promotion and publicity therefor, and all rights of every nature whatsoever in and to all films, video, portrayals, photographs, performances and recordings produced hereunder ("Material"), including without limitation all copyrights therein and renewals and extensions thereof, and the exclusive right to reproduce, exhibit, distribute and otherwise exploit the Material in whole or in part in perpetuity throughout the universe in all languages, in any and all versions (including digitized versions) and forms, and in any and all media now known or hereafter devised. Independently and apart from any consideration accruing to me hereunder, I hereby release Producer and Producer's authorized designees from, and covenant not to sue Producer and Producer's authorized designees for any claim or cause of action, whether known or unknown, for libel, slander, invasion of right of privacy, publicity or personality, or any other claim or cause of action, based upon or relating to the exercise of any of the rights referred to herein. I understand that nothing herein will require Producer or Producer's designees actually to produce or utilize any Material hereunder.

This grant is irrevocable so that Producer may proceed in reliance thereon. This instrument contains the entire understanding of the parties, may not be changed or terminated except by an instrument by Producer and me and will be construed in accordance with the laws of the State of ______, provided that the courts of the state of __________ shall have exclusive jurisdiction to resolve any disputes arising from this Release.


Dated:______________________

Authorized Signature

______________________________
[Print name]


LOCATION RELEASE

Property Owner: [Name]
Address: ___________________________ _
Phone: ____________________________ Fax: _______________________________
Email: _____________________________ Contact: ____________________________

Producer: [Name]
Address: _____________________________
Phone: _____________________________ Fax: ______________________________
Email: ______________________________ Contact: _____________________________

Your signature in the space provided below as owner or agent, will confirm the following agreement ("Agreement") between you as the Property Owner ("Owner") and Producer regarding filming of your property (the "Premises") described below in connection with a video containing the performance of a song titled "_____________" (the "Video").

1. For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Owner hereby grants to Producer the right during the Term (as defined below) hereof to photograph and record at, the Premises (including, without limitation, the right to photograph and record both the real and personal property, all of the signs, displays, exteriors, and the like appearing therein, if any) for the period specified below.

2. As used herein, the term "Premises" refers to the premises located at: __________________________________________________________________

3. The term hereof (the "Term") shall commence from __________am/pm to ____________ am/pm on or about ____________________________ and shall continue until _________________________, unless modified by the parties. The Term shall be subject to modification due to changes in production schedules. Owner agrees to consult closely with Producer's representatives to ensure scheduling is arranged which will allow for completion of the scenes planned to be included in the Video using the Premises. Owner acknowledges that Producer is incurring significant expenses in reliance on Owner's cooperation and participation in connection with this Agreement and that Owner may be held responsible for the actual and/or consequential damages incurred by any breach of this agreement.

4. Owner represents and warrants that: (a) Owner has the right and authority to make and enter into this Agreement and to grant Producer the rights set forth herein, without obtaining any consents or permissions from any third party; and (b) Owner shall take no action, nor allow or authorize any third party to take any action which might interfere with Producer's authorized use of the Premises. Owner hereby waives all rights of privacy or other rights of a similar nature with respect to Producer's use of the Premises. Owner shall indemnify Producer, his licensees and assigns, and their parent, affiliate, and related entities, shareholders, directors, officers and employees from and against any breach or claim of breach by Owner of any representation, warranty, agreement or obligation herein.

5. Producer shall leave the Property in as good condition as when received, reasonable wear and tear to be expected. Producer shall remove all of his material, equipment and personnel from the Property.

6. Producer agrees to indemnify and hold Owner harmless from damage to the Premises and property located thereon and for personal injury occurring on the Premises during the Term and from any liability and loss which Owner may incur by reason of any accidents, injuries, death or other damage to the Premises directly caused by Producer's negligence in connection with his use of the Premises. In connection therewith Owner must submit to Producer, within three (3) days after Producer vacates the Premises, a detailed list of any property damage or personal injuries which Owner feels Producer is responsible, failing which Owner will be deemed to have acknowledged that there is no property damage or personal injuries for which Producer is responsible. Owner shall permit Producer's representatives to inspect any damaged property and to verify any claims for damages by Owner.

7. Nothing shall obligate Producer to photograph, to use such photography, or to otherwise use the Premises. Producer shall have the right to photograph, record and depict the Premises and/or any part or parts thereof, accurately or otherwise, as Producer may choose, using and/or reproducing the actual name, signs, logos, trademarks and other identifying features thereof and/or without regard to the actual appearance or name of the Premises or any part or parts thereof, in connection with the Video.

8. a. Owner acknowledges that, as between Owner and Producer, Producer is the copyright owner of the photography and/or recordings of the Premises, and that Producer, his successors and assigns have the irrevocable and perpetual right, throughout the universe, in any matter and in any media to use and exploit the films, photographs, and recordings made of or on the Premises in such manner and to such extent as Producer desires in his sole discretion without payment of additional compensation to Owner. Producer and his licensees, assigns and successors shall be the sole and exclusive owner of all rights of whatever nature, including all copyrights, in and to all films, programs, products (including interactive and multimedia products), photographs, and recordings made on or of the Premises, and in the advertising and publicity thereof, in perpetuity throughout the universe.

b. The Owner hereby gives to Producer, his assigns, agents, licensees, affiliates, clients, principals, and representatives the absolute right to use any names associated with the Property in the Video, or to promote the Video, all without inspection or further consent or approval by the Owner.

9. Producer may assign or transfer this Agreement or all or any part of his rights hereunder to any person, film or corporation; Owner agrees that Owner shall not have the right to assign or transfer this Agreement.

10. From the date of execution of this Agreement, through and including the date this Agreement may be terminated, Producer shall keep or cause to be kept in force the following insurance:
Commercial General Liability Insurance, including public liability, contractual liability, bodily injury, and property damage insurance, each policy with a combined single limit of bodily injury and property damage liability of $1,000,000.00 per accident or occurrence. Owner shall be an additional insured. The policies shall provide that they cannot be canceled or reduced without thirty (30) days prior written notice to Owner.

All insurance policies required hereunder shall be with companies having at least a Best A+10 rating as of the date of issuance of the policy, and shall contain language to the extent obtainable, to the effect that (i) any loss shall be payable notwithstanding any act or negligence of Owner that might otherwise result in a forfeiture of the insurance, (ii) that the insurer waives the right to subrogation against Owner and against Owner's agents and representatives, including Owner's insurers, (iii) that the policies are primary and non-contributing with any insurance that may be carried by Owner. Producer shall furnish Owner with certificates evidencing the insurance on or before ______________________. All certificates of insurance required herein, and exclusions from coverage in all policies, and the actual liability policies are subject to the approval of Owner's counsel.

Insurance should be obtained if shooting is to occur inside a location such as a store or someone's house. The cost of the insurance should be included in the Budget for the Video.

11. This Agreement constitutes a binding agreement and is the entire agreement among Producer and Owner and supersedes all prior negotiations and communications, whether written or oral; representations and warranties, whether written or oral; and documents and writings, whether signed or unsigned, with respect to the subject matter hereof.

APPROVED AND ACCEPTED:

Owner or Owner Representative
Signature: _________________________
Print Name: _________________________

Producer or Producer Representative
Signature: _________________________
Print Name: _________________________

June 7, 2016

Protecting Yourself Legally in the Film Industry

By Neville Johnson and Douglas Johnson
www.JJLLP.com

We litigate controversies on behalf of producers, distributors, writers, actors, directors, talent, and independent film companies. We frequently sue the major studios on behalf of talent and independent producers. Here are common issues arising in the industry:

Get all agreements in writing. Film legend Samuel Goldwyn once said: "A verbal contract isn't worth the paper it's written on." That's not true. Oral contracts are just as enforceable, but they are much more difficult to prove. Get it in writing as best you can, as soon as you can. We have had many cases based on handshake agreements that would not have arisen had there not been this barrier. We have seen this especially in situations where one party is raising money for another, typically investment in a film. The investor is obtained, and thereafter, details of the deal become fuzzy between or among the parties because there is no clear documentation. A sound recording of the parties agreeing on an iPhone constitutes a writing. Always confirm details and understandings of any deal with relevant parties so there is a record. Send follow-up emails and letters that state the deal agreed upon as this can be relevant and important evidence that there was an agreement.

Another term that must be considered in the event of a dispute is venue, which means where the dispute be adjudicated? It is always thought that the city or "home court" of the contracting party is best. Otherwise, there are travel costs associated, and the possibility of being "hometowned," that is, that the other side and its attorneys are more wired into the legal process than the other. The parties need to specify where the venue will be otherwise it will be in one of the jurisdictions where the parties reside - probably the one with more leverage. In international agreements, they must consider which country the dispute will be adjudicated in. The party fighting will surely want it to be in its country. The smart business person has the contract state the venue for jurisdiction, the country, the city.

What is the forum for dispute resolution --- the courts of one of the parties or arbitration? Many contracts provide the forum and this is an increasingly controversial problem. In foreign sales agreements, the Independent Film & Television Alliance (IFTA), arbitration process is commonly required. This makes good sense for the parties because it is a relatively speedy process, inexpensive in comparison to full-blown court litigation, and arbitrators are knowledgeable about industry practices. However, in IFTA arbitration, punitive damages are not allowed. Therefore, if one party defrauds another, the only claim effectively can be for contract damages.

Contracts frequently require disputes to be heard in a confidential, binding arbitration before one provider, Judicial Arbitration and Mediation Service (JAMS), which has offices in the United States and London, thus preventing the establishment of precedent or publication of unfavorable information. The major movie studios are all requiring JAMS arbitration clauses and refuse to negotiate on this. Most attorneys for claimants say that because of this there is at least a perception of repeat player/provider bias in requiring mandatory arbitration before one provider. There are merely 14 entertainment arbitrators working for JAMS in Los Angeles and six studios that employ them. Rule once for serious damages against studios, so the argument goes, and that arbitrator won't adjudicate another case. This is called "repeat player" bias.

Add to the forgoing the cost of arbitration. If a small amount is owed, talent or other claimant is easily priced out of the market on a risk/reward basis given the administrative costs and the hourly fees charged by arbitrators -- often up to $900 per hour. There is no realistic way to challenge the fees of arbitrators either. Few qualified contingency fee attorneys (and this is if one can legally be allowed to work on this basis, which can be a factor affecting lawyers outside the United States) will take such cases, and studios habitually do not provide attorney fees clauses in their agreements.

Additionally, discovery is usually limited in arbitrations, sometimes with only one deposition per side permitted. This disfavors claimants, who may need to depose several witnesses from the other side to create a clear picture of events.

For these reasons, having a case in a court of law may be the best scenario if there is a dispute. Public trials provide unwanted "sunshine" on nefarious business practices and can intimidate wrongdoers and warn others by such exposure, and they may be much less expensive. Further, if the trial court or jury "gets it wrong" there is always the possibility of a winning appeal, which would otherwise be foreclosed in a binding arbitration. If the other side insists on arbitration, document the refusal to negotiate on this issue as some courts of law may find this to be "unconscionable" and thus allow a court trial instead.

If it is not going to be an IFTA arbitration, or in a court of law, and arbitration will be the forum, we recommend a provision that provides that the arbitrator will be selected by the parties and if they cannot agree, they shall each designate a third person who shall select the arbitrator.

To be enforceable, the agreement must state that the arbitration is binding, final, and can be enforced by any court of competent jurisdiction.

Auditing. In any contingent compensation or distribution agreement, there must be an accounting and audit provision. Ensure the right to audit or suffer the consequences, namely, the inability to know if there has been an underpayment. Get regular accountings and the right to see all relevant documents relating to any income and costs. (One common area of dispute is the "allocation" a distributor/sales agent may charge for marketing and attending festivals, such as Cannes or MIP.)

Can attorney's fees and costs of litigation be obtained? The general rule of the United States is that the prevailing party in litigation is not entitled to attorney's fees and costs unless there is a requirement stating so in the contract. The rule in Europe is that attorney's fees and costs are awarded to the prevailing party. The attorney fees can sometimes dwarf the amount at stake. Some lawyers work on contingency or partial contingency basis; they may be willing to do so when attorney's fees are available, warranted, and collectable. For this reason, we generally suggest that an attorney's fees provision awarding them to the prevailing party be made in part of the contract.

In sum, there is no substitute for conscientiousness in deal-making and being aware of the legal pitfalls and strategies if the deal goes sour, as so many do.

March 30, 2017

Horizon Comics Productions, Inc. v. Marvel Entertainment, LLC et al

By Mike Steger

In this case, brought by Horizon Comics, Horizon claims that the armored suits used in Marvel's "Iron Man" and "Avengers" movies infringe on Horizon's copyrights in armor displayed in its "Radix" comic book series. On Marvel's motion to dismiss the complaint, the court ruled that (1) issues of fact exist as to similarities between the armor used in a promotional poster for "Iron Man 3" and promotional art for the "Radix" series, and (2) the mechanized body armor in the films was not substantially similar to that in the "Radix" series.

IronManDecision3.27.17.pdf

April 3, 2017

We Know That A Monkey Can't Own a Copyright, But Can a Computer?

By Barry Werbin

IBM's Watson supercomputer created its own video trailer for the upcoming film thriller called "Morgan" about an AI robot child who rebels. It's creative and haunting. Who owns the copyright in the trailer, if there is one....? Watch the trailer and IBM commentary: https://techcrunch.com/2016/09/01/this-trailer-made-by-ibms-watson-proves-ai-knows-how-to-creep-you-out/

August 29, 2017

Ninth Circuit Upholds Preliminary Injunction Against VidAngel's DVD "Filtering" Service

By Barry Werbin

In a decision issued in Disney Enterprises, Inc., et al. v. VidAngel, Inc. on August 24, 2017 [Disney v. VidAngel.pdf], the Ninth Circuit affirmed the grant of a preliminary injunction to stop VidAngel's ripping of DVDs, decrypting and copying them to its servers, and then filtering out objectionable content at the request of end users who could then stream the filtered content from VidAngel's cloud servers for $20. After viewing a stream, however, the end user would "return" it to VidAngel for a $19 credit. VidAngel then discards the filtered segments after the customer views them. The discs contained film and TV content owned by Disney and the other studio plaintiffs.

The Court held that the Family Movie Act of 2005 ("FMA"), 17 U.S.C. § 110(11), only exempted from copyright infringement filtered versions of content that is created from authorized versions, and the copies ripped to VidAngel's servers at that point became unauthorized and infringing, even though VidAngel originally purchased legitimate DVDs. VidAngel was also found in likely violation of the DMCA for circumventing the plaintiff's anti-circumvention technology. Finally, a fair use defense was rejected.

This was the first Ninth Circuit case to interpret the FMA. The Court emphasized that FMA authorized "'making imperceptible'--filtering--by or at the direction of a member of a private household of limited portions of audio or video content of a motion picture, during performances or transmissions to private households, 'from an authorized copy of the motion picture.'"

If VidAngel could meet this "authorized copy" requirement by simply starting with a lawfully purchased disc, it would open up a "giant loophole" in the statute and eviscerate its purpose. Indeed, observed the Court, Congress intended that FMA not impact "established doctrines of copyright law."

With respect to fair use, the Court found that: "Although removing objectionable content may permit a viewer to enjoy a film, this does not necessarily 'add[] something new' or change the 'expression, meaning, or message' of the film" so as to make it transformative. The District Court's ruling that market harm was presumed was also affirmed in light of VidAngel's commercial, non-transformative use.

November 20, 2017

Conducting Salary Discussions in New York City after November 1, 2017

By Marc Jacobson, Esq.

Don't ask for an applicant's salary history, whether for you or your client, when interviewing that applicant for employment in New York City.


You were asked to represent a film production to take place in NYC. As part of that engagement, you were asked to negotiate agreements for the director, cast members, and for the department heads, including makeup, sound, transportation, costumes, and others.

Calls start coming in and you're ready to get to work. An actor's agent confirms that her client wants to play the female lead. In turn, you say the role requires eight consecutive weeks of shooting preceded by one week of rehearsal. You want to minimize costs for the production, and ask: "What's her quote?", meaning, what was her fee per week on her last film?

Or, you're working on any other NYC production--a TV show, play, or music video-- and you need to negotiate the agreement for the Costume or Set Designer. You ask each agent for a quote.

Under a new law, now in effect in NYC, each such question can subject the production to a fine of $125,000.

Section 8-107 of the NYC Administrative Code was recently amended to add a new subdivision 25. That subdivision prohibits employers from inquiring about or relying on a prospective employee's salary history prior to setting a new salary. When enacting the law, the council said: "When employers rely on salary histories to determine compensation, they perpetuate the gender wage gap. Adopting measures like this bill can reduce the likelihood that women will be prejudiced by prior salary levels and help break the cycle of gender pay inequity."

It is now unlawful for an "employer, employment agency, or employee or agent thereof:
1. To inquire about the salary history of an applicant for employment; or
2. To rely on the salary history of an applicant in determining the salary, benefits or other compensation for such applicant during the hiring process, including the negotiation of a contract."

There is a definition of "inquire" in the code as well:
" 'to inquire' means to communicate any question or statement to an applicant, an applicant's current or prior employer, or a current or former employee or agent of the applicant's current or prior employer, in writing or otherwise, for the purpose of obtaining an applicant's salary history, or to conduct a search of publicly available records or reports for the purpose of obtaining an applicant's salary history, but does not include informing the applicant in writing or otherwise about the position's proposed or anticipated salary or salary range."

The term "salary history" is also defined: "For purposes of this subdivision, 'salary history' includes the applicant's current or prior wage, benefits or other compensation. 'Salary history' does not include any objective measure of the applicant's productivity such as revenue, sales, or other production reports."

The employer, or its representatives, "may, without inquiring about salary history, engage in discussion with the applicant about their expectations with respect to salary benefits and other compensation..."

Going further, and making these interviews/negotiations even more awkward, "where an applicant voluntarily and without prompting discloses salary history to the [employer or its representatives] the employer [or its representatives] may consider salary history in determining salary benefits and other compensation for such applicant, and may verify such applicant's salary history."

If you're in the midst of such a discussion, you cannot "prompt" the applicant to tell you his or her salary history. Further, if you learn it from another source, you also cannot "rely" on it in determining the salary of the applicant.

However, if the applicant voluntarily reveals that information to you without prompting, you can rely on the information, and make whatever decision you want.

Without a tape recording of every conversation between the employer or the employer's representatives, and the applicant or the applicant's representatives, it seems like whatever happens in these calls will be difficult to prove.

Under §8-126 of the NYC Administrative Code, if the Human Rights Commission, which has the authority to enforce the new subdivision, finds that a person "has engaged in an unlawful discriminatory practice, it may, to vindicate the public interest, impose a civil penalty" of not more than $125,000. This penalty is in addition to the complainant's right to bring a private action under the code. Criminal misdemeanor penalties are available for "any person who shall willfully resist, prevent, impede or interfere with the commission or any of its members or representatives in the performance of any duty" under the code.

Whether acting for yourself or your clients, it is now a violation of the NYC Administrative Code to inquire about salary history, or to rely on salary history, to determine the salary of any employee.

Link to the NYC Charter: https://www1.nyc.gov/site/cchr/law/chapter-1.page#8-107.1

The code, as enacted, with summary of the law: http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=2813507&GUID=938399E5-6608-42F5-9C83-9D2665D9496F

Marc Jacobson, Esq. is the Founding Chairman of the NYS Bar Association Section on Entertainment Arts & Sports Law. He speaks regularly at bar association and other events about issues related to his practice. He is licensed to practice law in New York, California, and Florida. He can be reached at marc@marcjacobson.com or +1-212-245-8955. www.marcjacobson.com

About Motion Pictures

This page contains an archive of all entries posted to The Entertainment, Arts and Sports Law Blog in the Motion Pictures category. They are listed from oldest to newest.

Copyright and Trademark is the previous category.

Music and Recording Industry is the next category.

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