SOUTH CENTRAL FARM DOCUMENTARY SEEKS COMPLETION FUNDS

Congratulations to our client, Sheila A. Laffey, President of Echo Mountain Productions on the completion of principal photography on her new documentary South Central Farm which tells the heartbreaking true story of the plight of a community of poor urban farmers and their supporters in South Central Los Angeles.

Given a barren plot of vacant land, after the L.A. riots in Watts, this group of dedicated individuals and families turned a concrete desert into an urban oasis. They created the largest urban garden in the country that fed a community of 350 families in need, as well as those who visited their markets, and sheltered birds and other wildlife, only to have it taken away from them and destroyed. The issue remains in the courts.

The film examines the environmental, health and social advantages of urban farms, their ability to create safe, sustainable environments for families, and produce nutritious and plentiful food sources to inner city communities in greatest need, as well as to many visitors. Social and cultural benefits shown include multi-generational and ethnic dynamics, spontaneous learning situations, free child care, mentoring and fostering of indigenous values of the commons and land stewardship. Environmental benefits include diversification of the seed bank, re-charging of the local aquifer, less urban runoff and cleaner air.

The film focuses on people growing their own source of food at the farm, as well as celebrity tree sitters such as Daryl Hannah, Joan Baez and Julia Butterfly Hill, and other supporters such as Martin Sheen and Willie Nelson who brought international attention to the issue. Supporters include Bonnie Raitt, Jodie Evans and James Cromwell and Environmental Media Fund.

Additional completion funding is needed to meet the distribution deadline of July 1 for the Natural Heroes PBS series which wants to air the film in its upcoming third season if the film is completed by July 1.

The International Documentary Association (IDA) is the fiscal sponsor of the Documentary. Donations over $200 that donors wish to be tax deductible can be mad payable to IDA and sent to Echo Mountain Productions for forwarding to IDA. IDA will send a letter to donors acknowledging the not for profit donation. Donations under $200 or donations for more that do not need to be tax deductible can by made payable and sent to Echo Mountain Productions, 1301 17th St., #101, Santa Monica, CA 90404. A trailer and budget are available upon request. For more info contact Sheila at 310-45304272; echoprod@adelphia.net.

BORROWING AGAINST PRE-SALE AGREEMENTS

One method that independents have used to finance films is to borrow the money to produce the film by using pre-sale agreements as collateral.

In a pre-sale agreement, a buyer licenses or pre-buys movie distribution rights for a territory before the film has been produced. The deal works something like this: Filmmaker Henry, or his sales agent, approaches Distributor Juan to sign a contract to buy the right to distribute Henry's next film. Henry gives Juan a copy of the script and tells him the names of the principal cast members.

Juan has distributed several of Henry's films in the past. He paid $50,000 for the right to distribute Henry's last film in Spain. The film did reasonably well and Juan feels confident, based on Henry's track record, the script, and the proposed cast, that his next film should also do well in Spain. Juan is willing to license Henry's next film sight unseen before it has been produced. By buying distribution rights to the film now, Juan is obtaining an advantage over competitors who might bid for it. Moreover, Juan may be able to negotiate a lower license fee than what he would pay if the film were sold on the open market. So Juan signs a contract agreeing to buy Spanish distribution rights to the film. Juan does not have to pay (except if a deposit is required) until completion and delivery of the film to him.

Henry now takes this contract, and a dozen similar contracts with buyers to the bank. Henry asks the bank to lend him money to make the movie with the distribution contracts as collateral. Henry is "banking the paper." The bank will not lend Henry the full face value of the contracts, but instead will discount the paper and lend a smaller sum. So if the contracts provide for a cumulative total of $1,000,000 in license fees, the bank might lend Henry $800,000.

Henry uses the loan from the bank to produce his film. When the movie is completed, he delivers it to the companies that have already licensed it. They in turn pay their license fees to Henry's bank to retire Henry's loan. The bank receives repayment of its loan plus interest. The buyers receive the right to distribute the film in their territory. Henry can now license the film in territories that remain unsold. From these revenues Henry makes his profit.

Juan's commitment to purchase the film must be unequivocal, and his company financially secure, so that a bank is willing to lend Henry money on the strength of Juan's promise and ability to pay. If the contract merely states that the buyer will review and consider purchasing the film, this commitment is not strong enough to borrow against. Banks want to be assured that the buyer will accept delivery of the film as long as it meets certain technical standards, even if artistically the film is a disappointment. The bank will also want to know that Juan's company is fiscally solid and likely to be in business when it comes time for it to pay the license fee. If Juan's company has been in business for many years, and if the company has substantial assets on its balance sheet, the bank will usually lend against the contract.

In some circumstances banks are willing lend more than the face value of the contracts. This is called gap financing, and since the bank is assuming a greater risk of not being repaid its loan, higher fees are charged. Gap financing is helpful if the filmmaker is unable to secure enough pre-sales to cover the loan. The bank lends more than the amount of pre-sales based on its belief that the gap will be covered when unsold territories are licensed. Before agreeing to supply gap financing, the bank will carefully review the existing pre-sales, and extrapolate from those sales an estimate as to what other territories might fetch. The estimate is based on the bank's experience that a film licensed to Italy for $150,000, usually fetches $100,000 in Spain. Of course, there is no guarantee that when the film is completed that a Spanish buyer will license the film, so the Bank wants to see projected revenue that is at least twice the amount of any gap. This ensures that even if some territories remain unsold, the gap is likely to be covered. Moreover, the bank will rely on the reputation and track record of the sales agent and/or producer in judging whether these estimates are realistic. Banks may decline to lend funds based on projections from a sales agent with a history of overly optimistic projections.

The bank often insists on a completion bond to ensure that the filmmaker has sufficient funds to finish the film. Banks are not willing to take much risk. They know that Juan's commitment to buy Henry's film is contingent on delivery of a completed film. But what if Henry goes over budget and cannot finish the film? If Henry doesn't deliver the film, Juan is not obligated to pay for it, and the bank is not repaid its loan.

To avoid this risk, the bank wants a completion guarantor, a type of insurance company, to agree to put up any money needed to complete the film should it go over budget. Before issuing a bond , a completion guarantor will carefully review the proposed budget and the track record of key production personnel. Unless the completion guarantor is confident that the film can be brought in on budget, no completion bond will issue.

First-time filmmakers may find it difficult to finance their films based on pre-sales. With no track record of successful films to their credit, they may not be able to persuade a distributor to pre-buy their work. How does the distributor know that the filmmaker can produce something their audiences will want to see? Of course, if the other elements are strong, the distributor may be persuaded to take that risk. For example, even though the filmmaker may be a first-timer, if the script is from an acclaimed writer, and several big name actors will participate, the overall package may be attractive.

Nowadays it is very difficult to finance a film completely through pre-sales. There are many completed films available for acquisition, and a distributor needs a compelling reason to take the extra risk present when one licenses a film that does not yet exist. There is much less risk in licensing a film that has been completed, because you know exactly what you are buying even if you don't know how popular it will be with the public. Consequently, independent films today are often financed with a combination of pre-sales, equity investors and various production incentives offered by states and nations. This article is based on an excerpt from Risky Business, Financing and Distributing Independent Films, by Mark Litwak, published by Silman-James Press (2004).

REGISTERING YOUR SCRIPT OR FILM WITH THE COPYRIGHT OFFICE

If the motion picture is finished, you should register it and the underlying script by sending in Form PA with a cassette of the finished film and an attached synopsis describing the film. If you are still at the script stage, you can register the script now and register the film when complete.
In either case, closely follow the instructions on Form PA. The following guide addresses those sections that applicants often find confusing when registering scripts or motion pictures. Remember to complete all applicable sections of the form, not just those discussed below.

Registering a Script

Under #1, Nature Of This Work, you could write "Screenplay for Motion Picture."

Under #2, "Name of Author": Note that if a screenplay has been written for you or your company, in other words, if you hired someone to write the screenplay, then it may be a work-made-for-hire. In this case, you or your company is the copyright holder and should be listed under "Name of Author."

On the other hand, if a writer has created the screenplay on his own, and he is then selling it to you, the writer would be the author. If this writer has already registered their script with the Copyright Office, you should not register it again, but merely record the transfer (assignment) of the copyright to you. The copyright should be assigned to you or your company with a written contract, and a short form copyright assignment recorded with the Copyright Office.

Under "Nature of Authorship," you should give a brief general description of the author's contribution to the work. If the author wrote the entire script you might write: "Entire Text." If you are claiming copyright to something less than the entire script, describe your contribution, for example, "Editorial Revisions."

Registering a Completed Film

Under #1, "Nature of This Work," write: "Motion Picture."

Under #2, "Name of Author": Usually this will be the name of the Production Company or entity that hired everybody who made the motion picture. If this is project was entirely a work made for hire, check "Yes" under "Was this contribution to the work a 'work made for hire'."

Under "Nature of Authorship," write in "Screenplay and adaptation as motion picture."
If this motion picture was not at all a work for hire, fill in the name of the person(s) who made the motion picture, and check "No" under "Was this contribution to the work a 'work made for hire'."

Under "Nature of Authorship," write in "Screenplay and adaptation as motion picture."
If this motion picture was partly a work for hire, and partly not, you'll need to fill in a space for each part. For example, if your production company made the motion picture as a work for hire but bought a completed screenplay from a writer who was its author, then you would fill out two spaces:

In one space, you could fill in the writer's name as author, check NO under to the question of whether it was a "work made for hire," and fill in "Screenplay" or "Script" in "Nature of Authorship."

In another space, you could fill in the production company's name, check YES indicating it is a "work made for hire," and fill in "All other cinematographic material" under Nature of Authorship."

Under section 5, if the motion picture contains a substantial amount of previously registered material, answer "Yes," to the first question and check the box indicating the reason for this registration. Include the registration number and year of the previously registered material.
Fill out #6a & b only if the work has a significant amount of previously registered, previously published, or public domain material.

Under #6a, "Derivative Work or Compilation," you could write in "Previously registered screenplay."

Under #6b, "Material Added to This Work," write "Motion Picture."
You are required to deposit a copy of your film within 3 months of publication. If you do not, you may be subject to fines and penalties.

In General

Complete #4, "Copyright Claimants," even if the Claimant is the same as the Author. The Claimant is the person or company that has legally acquired the copyright. It will be either the Author or the entity to which the copyright has been transferred. When the Claimant is not the Author, you need to describe under "Transfer" how the copyright was obtained by the Claimant. You could state, for example, "by written assignment."

Don't forget to include a copy of your script or film when you send in your registration form.You need to sign Form PA and send it in with a check for $45 payable to "Register of Copyrights." Retain a photocopy of everything you send the Copyright Office including the completed Form PA and your cover letter. It is a good idea to send your package by certified mail.

If you would like to put your attorney's name under "Correspondence" so that he/she can answer any questions the Copyright Office may have, you may do so. In this event, you should send your attorney a photocopy of the form and your cover letter so he/she will have a record of what you have submitted.

Mail to:Library of CongressCopyright Office101 Independence Ave., S.E. Washington, D.C. 20559-6000

Copyright circulars and forms are available from the Forms and Publications Hotline, (202) 707-9100 (leave a recorded message requesting the documents you want mailed to you), or on the Copyright Office website, http://rs6.net/tn.jsp?t=afuwkbcab.0.yun9mbcab.8f8tz4bab.630&ts=S0261&p=http%3A%2F%2Fwww.copyright.gov%2F. The website also offers extensive copyright information. Circular 45 specifically addresses copyright registration for motion pictures. To speak to an information specialist, call (202) 707-3000.

INTERNET LAW TREATISE

Check out the free internet law treatise at http://ilt.eff.org/. It is sponsored by the Electronic Frontier Foundation and is an open collaborative treaty summarizing the law relating to the internet.

Based on the publication Electronic Media and Privacy Law Handbook, published by Perkins Coie in 2003, it contains extensive information including sections on Defamation, Content and Speech Regulation, Copyright, Trademark, Misappropriation, Electronic Contracts and Privacy. It is still in Beta stage, and it is a wiki, or collaborative endeavor of many contributors who can edit the material, so one should be cautious about relying exclusively on it.

MARILYN MONROE ESTATE HAS NO RIGHT OF PUBLICITY

A federal judge has held that Marilyn Monroe's right of publicity did not survive her death. Consequently a the owner of photographs of her could sell images of the screen siren to commercial product manufacturers without paying a licensing fee.

The judge said Monroe did not have the capacity to grant property rights that she did not own at the time of her death.

Monroe's estate argued that it was the successor to Monroe's right of publicity, arising from her grant of the right in her will to actor Lee Strasberg, a friend of Monroe's. When Strasberg died, his heirs established a company to manage the intellectual property assets of the beneficiaries of Monroe's will. Monroe's estate claimed that Shaw Family Archives (SFA), owner of the photos, use of the actress's image violated its rights under Indiana's 1994 Right of Publicity Act. This law creates a descendible and transferable right of publicity that survives for 100 years after a person's death.

SFA contended that the Monroe estate could not lay claim to the rights because Monroe could only devise by will property that she owned when she died. Neither New York nor California, the only possible domiciles of Monroe at the time of her death, recognized such rights at that time. Moreover, Indiana also did not recognize such rights at the time.

Shaw Family Archives Ltd. et al. v. CMG Worldwide Inc. et al., No. 05-3939, 2007 WL 1413381 (S.D.N.Y. May 7, 2007).

MUSIC DOWNLOADERS NOT REQUIRED TO PAY PERFORMANCE ROYALTIES.

AOL and other online services are not required to pay performance royalties on music downloaded over the Internet, according to a New York federal court. The court held that downloading a song is not a public performance of the song under copyright law.

Both parties had asked for partial summary judgment on the question of whether Internet downloads of music constitutes “performance” of music under the Copyright Act.

U.S. District Judge William C. Conner, found that a download involves copying a file from one computer to another. The file is stored on a recipient’s hard drive and can be copied to other devices such as digital music players.
Downloading, is a reproduction of a copyrighted work, but it is not a public performance right, Judge Conner said. The judge cited statements from the U.S. Copyright Office and the U.S. Department of Commerce, which have taken the position that digital downloads of music are not public performances of those works.

On the other hand, “streaming” is when a song is transmitted over the Internet to be listened to in real time. The file is not stored on the recipient's computer and must be “streamed” again each time the recipient wants to listen to it. The court acknowledged that streaming music is a public performance. United States v. American Society of Composers, Authors & Publishers et al., No. 41-1395, 2007 WL 1346568 (S.D.N.Y. Apr. 25, 2007).

THE FUTURE IS MOBILE

I recently attended the NATPE Mobile ++ conference in Las Vegas to find out how the ability to watch content on mobile devices will change the motion picture and television industry. I learned that there are now more mobile phones in the U.S.A. than people - guess some of us use more than one, and perhaps have a few older models sitting in a drawer. However, only 10 percent of those mobile phones have the capability to exhibit video footage. And only 10 percent of those capable are actually using their phones and mobile devices to watch such content.

Experts predict that the viewers of content on mobile devices are likely to grow exponentially. In the first quarter of 2006, the revenue from mobile video was $51 million; by the third quarter it had risen to $140 million, and mobile video is now a-half-billion-dollar-a-year market. The world has 2.5 billion cell phone subscribers, yet most don't have phones with the new third generation (3-G) technology.

Meanwhile, a new generation of devices is generating enthusiasm among consumers and competition among manufacturers. Samsung Electronics Co. has a new mobile phone, the Ultra Smart F700, which has many of the same features as the new Apple iPhone. The Samsung phone can access the Internet, play music, take pictures, show videos, handle e-mail and share photos. Its third-generation (3G) technology is faster than iPhone's EDGE system, and its 5-megapixel camera has better resolution than the iPhone's 2-megapixels.

Primetime viewing for mobile video is in the afternoon and early evening. According to consumer research firm Telephia, 30 percent of mobile video users watch mobile TV and video clips on their cell phones between noon and 4 pm, and 31 percent watch during the early evening commuting hours of 4 pm to 8 pm. Mobile video viewing drops to nine percent during the regular television primetime hours of 8 pm to 11 pm.

Contrary to popular belief, mobile video usage is being consumed by older age groups, as well as teens. 50 percent of mobile video users are 25-to-36-year-olds, compared to 24 percent of the total mobile population. In terms of gender, mobile video usage does resemble an early adoption profile, where 7 out of 10 users are men, compared to a nearly even male/female ratio for all mobile subscribers. Mobile video user demographics show an ethnically diverse population, with 16 percent of mobile video users being African-American and 27 percent Hispanic, compared to 11 percent for each group for general mobile subscribers. No one has explained why mobile video is so popular with these demographic groups. Surprisingly, 22 percent of mobile video watching is at home, the same amount as during commuting; 16 percent of mobile viewing is done while shopping, and 14 percent happens at work.

Mobile viewing is a personal experience, not often shared with others. News, weather and sports are currently the most watched content. ABC News was the most popular mobile TV channel in the second quarter of 2006, commanding 40 percent of the total mobile TV audience. Thirty-two percent watched The Weather Channel, while Fox Sports and ESPN followed with 31 and 29 percent, respectively.

With the spread of new high-speed 3G networks, distribution of porn is expected to surge. In 2006, adult mobile content generated about $1.4 billion in sales worldwide in a market where mobile entertainment overall generated about $17 billion, according to Juniper Research. While adult mobile content generated far less revenue than other types of entertainment such as the $6.6 billion revenue from music, it will likely grow rapidly over the next several years. By 2011, adult content is expected to account for $3.3 billion worth of mobile content sales out of a total of $77 billion in entertainment revenue. None of the large U.S. wireless carriers offer adult content programming, and there is concern about how to verify subscribers' ages. In Europe and in parts of Asia, carrying porn hasn't been a major issue with even the largest carriers such as Vodafone, Orange and T-Mobile.

The Sundance Institute recently embraced mobile content by joining with the GSM Association (GSMA), to create the Global Short Film Project, a pilot program to showcase independent short films to mobile users worldwide. Six filmmakers who have had films at Sundance received $20,000 each to create short films of three to five minutes for mobile distribution. "Cell phones are fast becoming the 'fourth screen' medium, after television, cinema and computers," according to Sundance Institute founder Robert Redford.

MobiTV, Inc. (http://www.mobitv.com/) is one of the largest content providers with more than one million subscribers. The service is available in the US through Sprint, AT&T, Cingular, Alltel; in the UK through 3UK and Orange; in Canada through Bell Canada, Rogers and TELUS Mobility; in Latin America through América Móvil, Claro and Telcel; and other regional carriers internationally. The service offers many popular TV channels such as MSNBC, ABC News Now, CNN, FOX News Channel, Fox Sports, ESPN 3GTV, NBC Mobile, CNBC, CSPAN, The Discovery Channel, TLC, and The Weather Channel.

Subscribers need to sign up for data packages on top of their monthly voice fees in order to access video clips. Sprint Nextel offers packages for $15, $20 and $25 a month. Verizon Wireless V Cast service costs $15 per month. It is not clear how many consumers are willing to pay $9.99 or more per month for such a subscription, or whether an ad-supported free service is more likely to gain wide acceptance.

The ability to distribute independent films over mobile devices may enable filmmakers to reach consumers by bypassing the established networks and studio gatekeepers that have traditionally been uninterested in niche content and short films. It is by no means clear how the market will develop, and what opportunities will be available for independent filmmakers. But it is worth noting that seven billion dollars was spent last year on ring tones, and a hundred million user generated videos are viewed daily on YouTube.

CANNES FILMMAKERS

Congratulations to our clients Writer/Director Cecilia Miniucchi and Executive Producer Antoni Stutz who feature film "Expired" will be shown as part of the Cannes Film Festival. It will be the closing film in Critics Week. Expired was the only U.S. picture to make it into Critics Week from over 600 features reviewed. The film which was first shown at Sundance. It is a bittersweet comedy starring Samantha Morton and Jason Patric.

DIAMOND DOG COMMENCES PRODUCTION

I am executive producer of a new family film that commenced principal photography this past week in Spokane, Washington. It is a family comedy feature Diamond Dog, being directed and produced by Emmy-winning and DGA Award-nominated Mark Stouffer.

The film stars French Stewart (Clockstoppers) as the boss of a bumbling band of jewel thieves, with Kevin Farley (The Waterboy) and Kelly Perine (One on One) as his sidekick thugs.

The thieves have pulled off a $5 million jewel heist and are in town to make their connection, when a 12 year old boy - played by Luke Benward (How To Eat Fried Worms) -- rescues a dog from them after they threaten it. Unbeknownst to the boy, the dog is the mule they used to smuggle the jewels, and the thieves will do anything to get it back. The boy takes the dog, which he names Diamond, to his secret fort in the woods and prepares for battle. When the thieves come after him, the ingenious traps he's devised wreak havoc.

The film also features John Farley, Garrett Morris, Brittany Curran, Cameron Monaghan and Denyse Tontz.