Entertainment Law Resources Blog

Mark Litwak Named Super Lawyer

2012-01-26T15:46:00.000-08:00

I am pleased to announce that I have been named a Southern California Super Lawyer for 2012. Each year, only 5 percent of the lawyers in the state receive this honor.

Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. The selection process is multi-phased and includes independent research, peer nominations and peer evaluations.

The selections for this esteemed list are made by the research team at Super Lawyers, which is a service of the Thomson Reuters, Legal division based in Eagan, Minn. Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. Super Lawyers can be found online at superlawyers.com where lawyers can be searched by practice area and location.

This is the third time I have received this honor.

Super Lawyers magazine features the list and profiles of selected attorneys and is distributed to attorneys in the state or region and the ABA-accredited law school libraries. It is also published as a special section in leading city and regional magazines across the country.

Super Lawyers magazine is published in all 50 states and Washington, D.C., reaching more than 13 million readers.

Super Lawyer listing

2006 Super Lawyer Profile

UPDATED WEBSITE

We have added new sections to our Entertainment Law Resources website (www.marklitwak.com) including a list of legal blogs, talent and literary agents, information on approval of minor contracts, links to the California Talent Agency Act and the database for agent licensing, and much more.

Go to: Entertainment Law Resources

2011-12-02T13:05:00.000-08:00

The Right of Publicity

The Right of Publicity is the right that individuals have to control the use of their name and likeness in a commercial setting. For example, you cannot put a picture of someone on your brand of pickles without their permission. The right of publicity is typically exploited by celebrities who earn large fees for endorsing products. However, even ordinary folks possess this right in most states. Since there is no federal statute concerning this right, the extent of the right can vary from state to state.

The Right of Publicity is similar to the appropriation form of invasion of privacy. The principal difference is that the right of publicity seeks to ensure that a person is compensated for the commercial value of his name or likeness, while the right of privacy seeks to remedy any hurt feelings or embarrassment that a person may suffer from such publicity.

Celebrities may have difficulty proving invasion of privacy, because they do not seek solitude and privacy. How can a celebrity claim that the unauthorized use of his likeness on a product embarrassed and humiliated him at the same time that he appears in numerous commercials? By thrusting themselves into the public eye, celebrities waive much of their right of privacy. On the other hand, celebrities have an especially valuable property right in their name and likeness, for which they are often paid handsomely to endorse commercial products.

Under either a publicity or privacy theory, subjects can recover for some unconsented uses of their names and likenesses. A problem arises, however, when one person’s publicity/privacy rights come in conflict with another person’s free speech rights under the First Amendment. Suppose a newspaper publisher wants to put a picture of Cher on the front page of its paper. Is her permission required?

While Cher’s name and likeness is being used on a “product,” the newspaper, this product is also “protected expression.” Products such as books, movies and plays are forms of expression protected by the First Amendment. The First Amendment allows journalists to write about others without their consent. Otherwise, subjects could prevent any critical reporting of their activities. When one person’s right of publicity conflicts with another person’s rights under the First Amendment, the rights under the First Amendment are often, but not always, paramount.

So in the case of the use of the name or likeness of Elvis Presley on a coffee cup or T-shirt, there is no expression deserving protection. The seller of these products is not making a statement or expressing an opinion. The seller is simply trying to make a buck by exploiting the name and likeness of Elvis. Since there are no First Amendment rights needing protection in this instance, the right of publicity may stop the unauthorized use of a subject’s name or likeness. Thus the law draws a distinction between products that contain protected expression and those that do not. Generally speaking, it is permitted to use, without consent, a person’s name or likeness in a play, book, magazine, newspaper, musical composition, audiovisual work, radio or television program, work of art, work of political or newsworthy value, or an advertisement or commercial announcement for any of these works.

Courts have struggled with the issue of whether the right of publicity descends to a person’s heirs. In other words, when a celebrity dies, does his estate inherit his right of publicity? Can the estate continue to control the use of the celebrity’s name or likeness, or can anyone use it without permission?

Some courts have held that the right of publicity is a personal right that does not descend. These courts consider the right similar to the right of privacy and the right to protect one’s reputation (defamation). When a person dies, heirs don’t inherit these rights. Suppose you were a descendent of Abraham Lincoln. An unscrupulous writer publishes a defamatory biography claiming Abe was a child molester. You couldn’t sue for defamation or invasion of privacy. Perhaps this is why many scandalous biographies are not published until the subject dies.

In California, courts initially held that the right of publicity was personal and did not descend to one's heirs. In 1984, however, the California legislature enacted the Celebrity Rights Act which changed the law. This statute, presently found at Civil Code section 3344.1, provides that the right of publicity descends and lasts for 70 years after the death of the person. A similar statute, known as the Astaire Celebrity Protection Act (California Civil Code section 3344), prohibits the unauthorized use of the name, voice, signature, photograph or likeness on or in products, merchandise or goods for those who are living. Both statutes attempt to balance First Amendment rights against rights of publicity and privacy.

The California Secretary of State is responsible for registration of claims by successors-in-interest of deceased personalities. Section 3344.1 permits any person claiming to be successor-in-interest to the rights of a deceased personality register their claim. The registry of successor-in-interest claims contains the celebrity name, date of death, the name and address of the claimant and the interest claimed. The filing can be done online at: http://www.sos.ca.gov/business/sf/sf_siisearch.htm

In other states, the right to publicity may descend. The rights of the heirs, however, may be outweighed by other people’s First Amendment rights. Because the Right of Publicity is a state-based right, as opposed to Federal right, its application can vary depending on which state's law applies. In many jurisdictions even if there is not a specific Right of Publicity statute, this right may be recognized by the courts.

Indiana appears to have the broadest Right of Publicity statute in the country, providing recognition of the right for 100 years after death, and protecting not only the usual "name, image and likeness," but also signature, photograph, gestures, distinctive appearances, and mannerisms. However, many of the cases concerning this right arise under New York or California law.

More than 75 copyright forms and documents have been added to my website for free download as either a word or PDF document.

These forms include forms and brochures that explain how to register your copyright whether it is a musical work, book, play or film. There are also detailed explanations of the fair use doctrine, and the entire text of U.S. Copyright law.

Go to: Entertainment Law Resources

2011-10-31T07:27:00.000-07:00

Tintin a Hit

Congratulations to our client Moulinsart SA on the success of the movie version of its classic comic book series Tintin. We are pleased to have represented our client in negotiating an agreement with Dreamworks to produce this film.

Steven Spielberg’s The Adventures of Tintin: The Secret of the Unicorn, was the number one offshore hit with a gross of $55.8 million from 5,620 screens in 19 markets. The movie is in 3 D and comes from Oscar winning director Steven Spielberg and Oscar winning producer Peter Jackson.

The Adventures of Tintin is a series of classic comic books created by the Belgian writer Georges Rémi (1907–1983), who wrote under the name of Herge. Tintin is a young Belgian reporter who is aided in his adventures by his faithful fox terrier dog Snowy. The series is one of the most successful European comics of the 20th century, with translations published in more than 80 languages. More than 350 million copies of the books have been sold to date. Tintin’s popularity has grown ever since its first appearance in 1929.

The 3D animated feature stars an international cast that includes Jamie Bell (Billy Elliot, Defiance), Andy Serkis (Lord of the Rings, King Kong), Daniel Craig (James Bond, Cowboys and Aliens), and comedy duo Nick Frost and Simon Pegg (Shaun of the Dead, Hot Fuzz). Sony is co-distributing abroad with Paramount. According to the Hollywood Reporter the film was No. 1 in 17 of Tintin’s opening markets with France leading the way ($21.5 million collected over five days from 935 spots), which Sony described as “the biggest opening ever for an original, non-sequel film from Hollywood.”

Additional information and trailer at:Tintin

CONDUCTING AN AUDIT

Many filmmakers sign complex distribution agreements that they do not fully understand. Several years ago I was approached by a filmmaker who seemed certain that his distributor was cheating him. His film had been licensed to HBO for a large fee, and significant revenue was generated from foreign sales. Nevertheless, very little revenue was paid to the filmmaker. He asked me to investigate, and to arrange for an audit.

I reviewed the distribution contract and the distributor’s producer reports. The agreement allowed the distributor to deduct virtually any expense, with no caps or limitations. The distributor was therefore able to deduct several hundred thousand dollars in expenses. The contract permitted the distributor to take 35% of gross receipts as a distribution fee. The balance remaining was split 50/50 with the filmmaker. This formula allowed the distributor to retain almost all the revenue without resorting to cheating or creative accounting. It was a terrible deal for the filmmaker. I asked him why he had agreed to these terms. He replied that the distributor told him the terms offered were “standard.”

Of course, these terms are not standard, and a savvy filmmaker would never accept them. A distributor is usually allowed to recoup specified market and promotional expenses only, and the total amount of recoupable expenses may be capped. The distribution fee charged was excessive, and for the distributor to also share in the balance remaining on a film it did not provide any financing for is just outrageous. I told the filmmaker not to bother with an audit since it was unlikely it would make any difference. This was not creative accounting; it was an instance of a gullible filmmaker being taken advantage of by a more experienced distributor.

While creative accounting complaints are common, many films are not profitable by any measure, so the profit participant will not bother to audit the books. For those films that do generate significant revenue, audits often recover more than their cost, which may be $20,000 to $30,000 or more.

An audit may reveal two types of errors. The first type are clerical mistakes. A studio accountant might make a mathematical error when adding numbers. For some mysterious reason, these errors usually favor the studio. When such errors are discovered, distributors usually make corrections without much protest.

The other type of error arises from contract interpretation. The philosophy prevalent at many studios is, “When in doubt, interpret it in our favor and we will fight it out later if someone objects.” Despite the great care taken by lawyers to draft straightforward contracts, new areas of ambiguity constantly arise. As a result, contracts have become increasingly detailed and long. Every time a lawyer thinks that his client has been taken advantage of, he tries to clarify matters in the next deal by being even more explicit. This is why signing a short-form contract may not be wise. A deal memo addresses the major issues without spelling out the details. The resulting ambiguity often does not favor the filmmaker because in a dispute the distributor can better afford the legal expense of contesting the point.

Excerpt taken from Mark Litwak’s Risky Business, 2^nd edition, 2009.

2011-09-19T13:45:00.000-07:00

Mark Litwak's Interview on Filmnut Now Online

Mark Litwak was recently interviewed on the program Filmnut by host Jeff Schubert. The show is distributed by www.thestream.tv

Click Here to watch

The show can also be subscribed to on iTunes and YouTube, and followed on Twitter.

CROWD RELEASE

2011-09-14T07:30:00.000-07:00

When producers shoot a scene at a place open to the public people in the background might be captured on camera. It is often not practicable to get every member of the crowd to sign a release. Consequently, producers may post a sign at the entrances to the event alerting participants that they may be captured on screen and stating that by entering the venue they are consenting to be recorded. Alternatively, a release might be presented to persons when they purchase a ticket to an event and printed on the ticket as well.

Persons do not have an absolute legal right to prevent publication of any photo taken of them without their permission. If every person had such a right, no photo could be published of a street scene or a parade. Liability usually exists only if publication of a photo would be offensive to people of ordinary sensibilities, or is defamatory or invades their right of privacy. See, for example, Gill v. Hearst Publishing, 40 Cal. 2d 224 (1953). However, the use of a person's image or likeness without their permission to sell a product would likely infringe their right of publicity and give rise to liability.

If you are using a posted crowd release, it is good practice to take a photo of all the entrances with the sign clearly posted in public view. The notice should be large enough that those passing by will clearly see it.

CROWD RELEASE

(Post outside of entry doors or on perimeter of filming area)

By entering and by your presence here, you consent to be photographed, filmed and/or otherwise recorded. Your entry constitutes your consent to such photography, filming and/or recording and to any use, in any and all media throughout the universe in perpetuity, of your appearance, voice and name for any purpose whatsoever in connection with the production presently entitled:

____________________________________.

You understand that all photography, filming and/or recording will be done in reliance on this consent given by you by entering this area.

If you do not agree to the foregoing, please do not enter this area.

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3rd Edition, Contracts for the Film and Television Industry Coming Soon

Silman-James Press will soon be publishing a revised and updated edition of Mark Litwak's Contracts for the Film and Television Industry. The second edition of this book was released in 1998. The new third edition will be expanded to 80 contracts and commentary. In addition to updated versions of the 62 contracts in the Second Edition, the new agreements to be published include the following contracts:

Website Content Provider Agreement, Guestbook Release, Talk Show Appearance Agreement, Certificate of Engagement, Synchronization License TV Series, Cable TV Production Agreement, Studio Rental Agreement, Internet Acquisition Distribution Agreement, Website Content Provider Agreement, Video on Demand Agreement, and Theatrical Exhibition Agreement.

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Mark Litwak to be Interviewed on Filmnut

Mark Litwak will be interviewed on the program Filmnut by host Jeff Schubert and distributed by TheStream.tv

The live interview will take place on Wednesday September 14th at 8pm PST and can be watched at:

http://www.thestream.tv

Viewers who wish to ask questions during the netcast can do so by posting questions on twitter on @thestreamdottv

The show can also be subscribed to on iTunes and YouTube, and followed on Twitter.

Eighteen People Indicted for 25 Million Dollar Indie Film Scam

2011-07-28T17:04:00.000-07:00

Federal authorities have charged 18 people in a boiler room scam, accusing them of bilking investors out of millions of dollars, according to the U.S. Attorney's Office. Federal authorities arrested a total of 12 defendants; three persons in Florida and nine people in Southern California. A former CIA agent who ran a Burbank movie company called Q Media Assets has already pleaded guilty to conspiracy, mail fraud, and tax charges in relation to the fraudulent boiler rooms.

From early 2004 to May 2009, the alleged scam solicited $25 million in investments for independent films through the use of fraudulent boiler room telemarketing operations. Cinamour Entertainment LLC and Q Media Assets LLC retained the services of telemarketers to cold-call individuals, asking them to invest in various indie film projects. By way of fraudulent pitches and false promises, these entertainment companies were able to collect millions from their victims. The targets of this scam were the elderly according to Assistant U.S. Attorney Stephen Cazares, because “they are at home and they pick up the phone.”

According to the government, the boiler room operations promised investors up to 1,000 percent returns and maintained that 93 percent of investor money would be used to produce and promote the films. The telemarketers ultimately misrepresented to investors how their money would be spent, including the telemarketers’ failure to disclose that they would receive commission. Some of the investors were even promised movie credits. Despite these promises, in reality, some of the indie films for which money was solicited were never produced. According to Cazares, “The misrepresentations were enticing. Part of the attraction was the aura of movie-making and Hollywood.”

According to the U.S. Attorney’s office, in June of 2011, a federal grand jury returned two indictments against eighteen individuals for these fraudulent boiler room telemarketing operations. The first indictment concerned Cinamour’s activities. Cinamour raised over $15 million from 450 investors for the indie film, From Mexico with Love, but only $5 million of the investments were actually used to produce and promote the film. Cinamour further collected $2.7 million for Red Water, which was never even made into a film. The second indictment concerns Q Media’s activities, which included raising $5 million from 250 investors for Eye of the Dolphin (now called Beneath the Blue) and $4 million for its sequel, Way of the Dolphin, which went straight to home video. Little of the funds raised were used to produce these indie films, instead nearly 1/3 of the investment money alone went directly into the pockets of the telemarketers.

Ultimately, Cinamour was charged with 45-counts of illegal activity, including mail fraud, wire fraud, sale of unregistered securities, money laundering, conspiracy, and tax evasion. Q Media’s 33-count indictment similarly charged defendants with these crimes. The charged individuals could face serious jail time if found guilty of the allegations. Conspiracy, the sale of unregistered securities, and tax evasion each carry a maximum of five years in federal prison. Money laundering, wire fraud, and mail fraud carry even harsher prison sentences. If convicted of money laundering, the individuals could face up to ten years in prison and if found guilty of mail and wire fraud, they could be in federal prison for a maximum of twenty years.

U.S Attorney Press Release

My Article on Protecting Investors

Sundance Announces Online Distribution Opportunities for Sundance Institute Films

iTunes, Amazon Instant Video, Hulu, Netflix, SundanceNOW and YouTube to Participate, with New Video as Exclusive Aggregation Partner.

Keri Putnam, Executive Director of the non-profit Sundance Institute, announced an expansion of the Institute’s Artist Services program, which enables Sundance Institute artists to reach audiences, raise funding and receive support through an educational and resources site.

Filmmakers can now make their films available online to consumer markets via iTunes, Amazon, Hulu, Netflix, SundanceNOW, and YouTube while still retaining ownership of their work and making independent decisions about strategies for each outlet. Each partner will identify and promote these film projects to their audiences, while in turn, the Institute will endorse their availability through its own marketing and promotional efforts and through the vast social community developed by the Institute.

New Video, the Institute’s exclusive aggregation partner for distribution across these portals, will offer all eligible Sundance Film Festival and Lab titles a unique gateway to digital distribution that emphasizes filmmaker ownership and control.

In addition, the Institute has also entered into a deal with Topspin Media to provide its artists with direct marketing tools and fulfillment services. Topspin is a direct marketing and retail software platform for musicians, filmmakers and authors that provides tools for independent artists to increase awareness of their work and build relationships with fans.

Among the first films and filmmakers to use these services will be two selections from the 2011 Sundance Film Festival: Connected: An Autoblogography about Love, Death & Technology by director Tiffany Shlain, which premiered in the U.S. Documentary Competition section and On the Ice, by director Andrew Okpeaha MacLean, which premiered in the U.S. Narrative Competition section.

read the release

Awarded Top Blog Honor

2011-07-12T17:49:00.000-07:00

CourtReporter.net

Clip from Dallas Seminar, Selling Your Film Internationally

2011-07-06T12:41:00.000-07:00

The Hangover II: Tyson Tattoo Copyright Infringement Suit

2011-06-28T03:22:00.000-07:00

Just weeks before the release of the much anticipated sequel to the highest grossing comedy of all time, The Hangover, tattoo artist S. Victor Whitmill filed a copyright infringement lawsuit against Warner Brothers. Whitmill alleged that the facial tattoo worn by actor Ed Helms in The Hangover II, which duplicated the tattoo Whitmill designed for boxing champ Mike Tyson, infringed on his copyright in the tattoo. Specifically, Whitmill sought a preliminary injunction, which if granted, would have halted the film’s long awaited Memorial Day weekend release.

When determining whether or not to grant an injunction, a judge considers the likelihood of the claim succeeding at trial while simultaneously evaluating the hardships that would result if the injunction were granted. Luckily for Hangover fans everywhere, Judge Catherine D. Perry, the U.S. District Court Judge presiding over The Hangover II copyright suit, denied Whitmill’s motion for a preliminary injunction. Judge Perry concluded that the harm it would cause to both Warner Bros. and third parties were simply too great. At the time Whitmill sought to enjoin the film’s release, Warner Bros. had already spent nearly $80 million on promoting the film and it had released prints of the film to over 3,700 theaters across the country. If The Hangover II’s release was halted, these theaters which had been promoting the film and selling advanced tickets would have lost millions of dollars. Further, Warner Bros. would likely sustain additional monetary losses because it would have been exposed to damage claims by these thousands of theaters across the country.

Despite Judge Perry’s decision to deny the preliminary injunction, Warner Bros. was not entirely off the hook. . Whitmill additionally sought a permanent injunction for what he alleged was “reckless copyright infringement," which if granted, would prevent further distribution of the film, including its DVD release. Judge Perry allowed this copyright infringement claim to go forward and indicated in her court opinion that there was a strong likelihood that the powerhouse production studio could be liable for copyright infringement in its recreation of Tyson’s tattoo without first obtaining Whitmill’s permission or consent.

However, the outcome of this case may not be as clear cut as Judge Perry’s opinion would lead one to believe. The question of how far a copyright holder’s rights extend in artwork that is on someone else’s body is unclear. . Up until this point, there have been only a handful of copyright suits involving tattoos, all of which were settled out of court. Thus, there is little legal precedent that can be used to determine the outcome of this lawsuit. Clearly artwork, even in the form of a tattoo, can be protected under copyright law. On the other hand,

Whitmill’s argument that he owns the rights to the tattoo on Tyson’s body was two-fold. First, Whitmill’s alleged that Tyson signed a tattoo release form prior to getting the tattoo, which indicated that “all artwork, sketches and drawings related to my tattoo and any photographs of my tattoo are property of Paradox-Studio Dermagraphics [Whitmill’s business].” Further, Whitmill provided the court with a copy of his copyright registration of the tattoo that went into effect on April 19, 2011.

Warner Bros. contended that even if Whitmill owned a copyright to the tattoo, it had a legal right to reproduce the tattoo in The Hangover II under the fair use doctrine. The fair use doctrine is an exception to the exclusive rights granted by copyright law which allows for limited use of copyrighted artwork without first obtaining permission from the original creator. This doctrine has been used as a defense to claims of copyright infringement in a variety of cases, including when someone recreates work owned by another rights holder in order to parody it. Warner Bros. argued that the tattoo on Helm’s face in The Hangover II was used to parody Tyson, who makes a personal appearance in the film. To successfully invoke the fair use defense, a four factor test must be satisfied. As indicated by the U.S. Copyright Office, these four factors include: “(1) the purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes (2) the nature of the copyrighted work (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole (4) the effect of the use upon the potential market for, or value of, the copyrighted work.”

Judge Perry characterized Warner Bros. fair use argument as “silly.” She found that “there was no parody” and the use of “the entire tattoo in its original form, not in parody form” was a blatant copyright infringement. Since Judge Perry presided only over the issue of whether the film’s initial Memorial Day weekend release could be halted, her court opinion was not the final word on the case. Instead, her decision served as a green light for Whitmill’s claim against Warner Bros. to go forward to trial.

However, before reaching trial, Warner Bros. and Whitmill “amicably” settled the copyright infringement lawsuit during a mediation session. Details of the settlement have not been released. What we do know is that The Hangover II’s DVD release will not be halted and, to the delight of Hangover fans everywhere, the Tyson tattoo on Helms’ face in the film will be there to stay.

U.S. Copyright Office on Fair Use

Findlaw

Written with assistance from law student Elizabeth Schechtman.

The Right of Privacy

2011-04-25T12:42:00.000-07:00

Filmmakers are often uncertain how far they can go when shooting documentaries, without invading the privacy of others. Generally speaking, persons caught on camera in a public place do not have a legal right to preclude others from photographing them. But a lot depends on how their photo is used, and whether it is newsworthy. If the photo is being used on a product, like pickles, you will need to secure a depiction release. But the same photo appearing in a newspaper would not provide grounds for a successful suit for invasion of privacy.

The United States Constitution does not mention a right of privacy. According to the United States Supreme Court, however, such a right is implicit in the Constitution and the Bill of Rights. The right of privacy has been defined as the right to live one’s life in seclusion, without being subjected to unwarranted and undesired publicity. In other words, it is the right to be left alone.

Like defamation, the right of privacy is subject to constitutional restrictions. The news media, for example, is not liable for defamatory statements that are newsworthy unless they are made with knowing or reckless disregard of the truth (i.e., actual malice). Unlike defamation, a cause of action for invasion of privacy does not require any injury to one’s reputation.

Suppose you were in your backyard sunbathing in the nude--your backyard is surrounded by a solid wood fence preventing passersby from seeing you. Suddenly a photographer for The National Enquirer hops over the fence and snaps your picture. Soon the photograph is displayed in newspaper tabloids near supermarket checkout stands across the nation. Can you sue for defamation?

No, because you were sunbathing in the nude and truth is an absolute defense to defamation. Could you sue for invasion of privacy? Yes. You have a reasonable expectation of privacy in your enclosed backyard.

Suppose you were sunbathing in the nude on your front porch, in open public view. Could you bring a successful action for invasion of privacy? No, because you do not have a reasonable expectation of privacy under these circumstances. Thus, whether an intrusion into your privacy will be actionable depends on whether you have a reasonable expectation of privacy.

Many defenses to defamation apply to invasion of privacy. But truth is not a defense. Revealing matters of public record cannot be the basis for an invasion of privacy action because the information is already public. Express and implied consent are valid defenses. If you voluntarily reveal private facts to others, you cannot recover for invasion of your privacy.

Privacy actions typically fall into four factual patterns.

Intrusion into One’s Private Affairs

This category includes such activities as wiretapping and unreasonable surveillance. The intrusion must be highly offensive. Whether an intrusion is highly offensive depends on the circumstances. Most people would find it offensive to discover a voyeur peering through their bedroom window. On the other hand, a salesman knocking on your front door at dinnertime may be obnoxious, but will not be sufficiently offensive to state a cause of action.

Public Disclosure of Embarrassing Private Facts

One who gives publicity to a matter concerning the private life of another is subject to liability for invasion of privacy, if the matter publicized is of a kind that:

a) would be highly offensive to a reasonable person, and

b) is not of legitimate concern to the public. In other words, it is not newsworthy.

An example of this type of invasion of privacy would occur if someone publicizes embarrassing derogatory information on another person, publicizes it and the information is not of legitimate interest to the public.

Appropriation

An action for appropriation of another’s name or likeness is similar to action for invasion of one’s right of publicity. The former action seeks to compensate the plaintiff for the emotional distress, embarrassment and hurt feelings that may arise from the use of one’s name or likeness on a product. The latter action seeks to compensate the plaintiff for the commercial value arising from the exploitation of one’s name and likeness.

As with the right of publicity, a person cannot always control the use of his name and likeness by another. While you can prevent someone from putting your face on their pancake mix, you cannot stop Time magazine from putting your face on its cover. Thus the use of someone’s name or likeness as part of a newsworthy incident would not be actionable.

False Light

Publicity placing a plaintiff in a false light will be actionable if the portrayal is highly offensive. This type of invasion of privacy is similar to defamation but harm to reputation is not required. An example of false light invasion of privacy could entail a political dirty trick such as placing the name of a prominent Republican on a list of Democratic contributors. Although this person’s reputation may not be harmed, he has been shown in a false light.

CLIENT CORNER

NTSF:SD:SUV

Congratulations to our client producer Jon Stern on completion of his first TV season of the outrageous comedy National Terrorism Strike Force: San Diego: Sport Utility Vehicle (NTSF: SD:SUV).

The series is produced for Cartoon Network’s Adult Swim (Turner Broadcasting) and is a parody of the numerous police procedurals on network television.

The series features Paul Scheer, Rob Riggle, Brandon Johnson and June Raphael among others. Trailer at: http://www.youtube.com/watch?v=XKylO_zfGIs

Forks Over Knives

Brian's Wendel's documentary Forks Over Knives will be theatrically released beginning with a 19 city roll out on May 6, 2011. The feature film examines the claim that most, if not all, of the degenerative diseases that afflict us can be controlled, or even reversed, by rejecting our present
menu of animal-based and processed foods.

Forks Over Knives (FOK) will play at Landmark, Regal and AMC theaters, among others.

An advance screening in Portland, Oregon generated $42,000 over five weeks at Regal Fox Tower theater. The film was featured on the CNN.com: http://eatocracy.cnn.com/2011/03/03/vegan-on-the-silver-screen; The film was also featured on Oprah.com: http://www.oprah.com/oprahshow/Diet-Power-Video;

Information on the film and the trailer are available at http://www.forksoverknives.com.

Last Fast Ride

Last Fast Ride will be shown at the Newport Beach Film Festival on May 1, 2011. The film produced by Shannon Factor and directed by Lilly Scourtis Ayers premiered at Slamdance. This documentary is about Marian Anderson,a controversial and influential punk rock lead singer and songwriter who died at the age of 33 from a heroin overdose.

Through a combination of concert footage, photographs, and interviews with key people in Marian's life, director Lilly Ayers pieces together the portrait of a fragmented and damaged girl who was left to fend for herself in a world of danger and exploitation. Narrated by punk rock legend and actor Henry Rollins, this riveting film covers Marian's idyllic youth, her tormented adolescence, and her tragic adult life, climaxing in an unforgettable ending.

The film will screen at the Triangle Square, theater 1, 1870 Harbor Blvd., Costa Mesa, CA 92627 at 8:00 PM Sunday, May 1, 2011. http://lastfastridefilm.com/

Jimi Hendrix Right of Publicity Suit

2011-02-23T09:47:00.000-08:00

The Right of Publicity is the right that individuals have to control the use of their name and likeness in a commercial setting. You cannot put a picture of Cher on your brand of pickles without her permission. Everyone has a right of publicity but it is particularly valuable for celebrities who can earn large fees from endorsing products.

The right is determined under state law. Each state applies its own laws, and the states provide varying treatment on a number of issues. For example, the states decide whether this right is inherited by one's heirs or is a personal right, that dies with the celebrity.

California courts first held that the right of publicity was personal and did not descend. In 1984, however, the California legislature changed the law. The legislators enacted Civil Code section 990 which provides that the right of publicity descends for products, merchandise and goods, but does not descend for books, plays, television and movies. A similar statute, California Civil Code section 3344 prohibits the unauthorized use of the name and likeness of living persons on products, except for news and public affairs uses. . Both statutes attempt to balance First Amendment rights of journalists and business people against rights of publicity of celebrities and their heirs.

Generally, the state law that applies is the law where the celebrity was domiciled when he or she dies. The state of Washington, however, attempted to expand its rights of publicity so that it would cover even those who did not reside in Washington when they died.

That Washington law, the Washington Personality Rights Act (“WPRA”), was reviewed in a recent decision regarding Jimi Hendrix’s estate's right of publicity. A federal judge in ruled that WPRA), violated the U.S. Constitution. The court concluded that applying this law regardless of the law of the domicile of the individual at the time of death was arbitrary and unconstitutional.

WPRA was initially passed in 1998 after a prior decision concluded that Hendrix' publicity rights didn't descend to his father and sole heir, Al Hendrix, since Jimi Hendrix didn't reside in Washington at the time of his death. The law applied retroactively.

The suit was brought by Experience Hendrix, L.L.C. which owns several songs written by Jimi Hendrix and various federally registered trademarks incorporating Hendrix’s name, image, and song titles. They sued defendant Hendrixlicensing.com, a seller of Jimi Hendrix merchandise, and sought to enjoin it from using various song titles and lyrics and use of his name and likeness.

Even though the plaintiff did not allege any claims under WPRA, the court reviewed it because the essence of plaintiff’s allegation was that Hendrix’s right of publicity did not expire upon his death. Under New York law, where Hendrix was domiciled at the time of his death, the right of publicity did not survive his death.

The Defendant argued successfully that such a choice-of-law directive violated the Full Faith and Credit Clause and Due Process Clause of the United States Constitution.

The court also found the law arbitrary because applying it would result in uncertainty regarding the ownership and existence of a right of publicity because it applies only in Washington, and that almost all states except Indiana have determined that the law of the person’s domicile should apply.

The decision can be read at: CASE

Note that this decision could be reversed by a higher court.

Entertainment Law Resources Blog: Copyright Registration Checklist Scripts or compl...

2011-01-21T17:32:00.001-08:00

Entertainment Law Resources Blog: Copyright Registration Checklist Scripts or compl...: "You can now register your scripts and films over the internet with the electronic copyright office, the ECO system. LI..."

Copyright Registration Checklist Scripts or completed Motion Pictures

2011-01-21T17:32:00.000-08:00

You can now register your scripts and films over the internet with the electronic copyright office, the ECO system. LINK

Here is a checklist to gather the information you will need to complete an application.

To Register a Script:

What is title of the script?

Are there any alternative titles?

Has the script or a previous version been registered with the U.S. copyright office? If so, provide registration number: _____

Who wrote the script? List all writers and description of what each contributed. Give full names.

For individuals, give date of birth. If the person is deceased, provide year of death.

Which persons or companies currently own the script? If a company, give full legal name and state of incorporation.

Did the writers create the script for themselves or were they creating the script for an employer? If the latter, who was employer?

What is the address of each owner?

Is the author (owner) a U.S. Citizen?

Was ownership of the script ever assigned or transferred? If so, explain.

Is this script original or based on another work (like a book)?

What year was script that you are registering completed?

Has the script been published? (Publication is distribution to the public. Most scripts are not published).

If script was published, what nation was it first published in?

To Register a Motion Picture:

What is the title of the motion picture?

Are there any alternative titles?

Is the motion picture a documentary or a narrative fictional film?

Has the motion picture or a previous version been registered with the U.S. copyright office? If so, provide registration number: _____________ and the title it was registered under.

Who wrote the underlying script that was the basis for the motion picture?

Who owned the script prior to production?

Was the script registered? If so, under what title and what was the registration number.

Who directed the motion picture? Provide full name(s).

Who produced the motion picture?

For individuals, give date of birth. If the person is deceased, provide year of death.

Who owns the completed motion picture? (Either individuals or a company). Provide full legal name, address and state of incorporation.

Was the motion picture created by individuals as its owners or was it created for a company?

What is the address of the owner?

Is the author (owner) a U.S. Citizen?

Was ownership of the motion picture ever assigned? If so, explain.

Is this motion picture based on another work (such as a book or play)?

What year was production completed?

Has the motion picture been distributed to the public?

If distributed, what nation was it first released in?

Was a previous version of this motion picture registered for copyright?

Does the motion picture incorporate any pre-existing copyrighted works such as music, stock footage, artwork or photographs?

You will also need a brief one paragraph description or synopsis of the the motion picture.

LAST FAST RIDE

Congratulations to our clients Shannon Factor and Lilly Scourtis Ayers for having their film shown at Slamdance 2011.

The Slamdance opening night party party (Jan. 21) will feature the punk band InSaints with an unannounced special guest.

The InSaints and their late frontwoman, Marian Anderson, is the subject of a Slamdance doc called "Last Fast Ride." She was a controversial and influential lead singer and songwriter who died at the age of 33 from a heroin overdose.

Film Website LAST FAST RIDE

IFTA PUBLISHES ARBITRATION AWARDS

2010-12-10T13:12:00.001-08:00

There is a new source of information for those researching the reputations and track records of sales agents, distributors and other companies in the independent film world. IFTA, the Independent Film and Television Alliance, recently decided to publish summaries of the awards made by its arbitrators from 2007 through 2010. They are posted on its website at: http://www.ifta-online.org/recent-awards

The summaries include the names of the parties, the name of the arbitrator, the date the award was issued and a short summary of the nature of the award. While IFTA administers the arbitration program, the decisions are solely the prerogative of the arbitrator hearing each dispute.

A review of the award summaries shows that certain companies have been involved in multiple disputes. While this does not necessarily indicate that these companies breached their agreements or are to be avoided, it does offer some insight into disputes that up until recently were not available for public review. Court records are generally available to the public. Arbitration proceedings, however, are usually private and not available for others to review.

Producers contemplating entering into an agreement with a sales agent, for instance, might want to know if that agent was the respondent in numerous disputes. Sales agents thinking of contracting with a territory buyer might find it useful to know if that buyer failed to live up to its contractual obligations in the past.

IFTA Arbitration may be used for a wide variety of domestic and international entertainment disputes, such as those arising out of production agreements, motion picture, television and multimedia licensing agreements, financing agreements, film exhibition agreements and sales agency agreements, to name a few.

IFTA Arbitrators are all veteran entertainment attorneys acting as neutral experts who hear arguments, review evidence and issue binding arbitration awards. IFTA Arbitration is usually less formal, faster and costs less compared with litigation in court. Many matters submitted to IFTA Arbitration are settled during the arbitration process.

Filmmakers can use the IFTA Arbitration process if the relevant contract contains an arbitration clause designating the IFTA tribunal to resolve disputes. For disputes arising out of existing contracts that do not provide for IFTA Arbitration, it is still possible to file a claim, as long as both parties agree in writing to use IFTA Arbitration at the time the claim is filed.

Link: IFTA Arbitration Awards

Full disclosure: I am an IFTA arbitrator and also have represented many clients in IFTA, JAMS and AAA arbitrations.

UPCOMING SEMINAR with Mark Litwak

SELF DEFENSE FOR WRITERS AND FILMMAKERS

BOSTON, Friday, February 11, 2011, 8 AM to 5 PM

Writers and filmmakers need to understand their legal rights and how to defend themselves from those who may seek to exploit them. Production companies and distributors often know all the tricks of the trade, while writers and filmmakers know little about how to protect themselves. This seminar, geared towards both artists and attorneys representing artists, explains how writers and filmmakers can prevent problems from arising by properly securing underlying rights, and by encouraging the other party to live up to agreements by adding performance milestones, default penalties and arbitration clauses. In the event of a dispute, participants learn what remedies are available to enforce their rights. Related topics include creative approvals, typical compensation and terms of studio contracts, merchandising deals, and negotiating tactics and strategies. The seminar includes more than 100 pages of useful contracts, checklists, forms and materials.

At Law firm of Fish & Richardson, One Marina Park Drive, Boston MA 02210

PARIS HILTON’S “THAT’S HOT”

2010-11-10T13:17:00.000-08:00

According the N.Y. Post, Hallmark Greeting Cards has settled a lawsuit with Paris Hilton after she sued Hallmark for releasing a card using her trademarked phrase “that’s hot.”

Paris Hilton is a celebrity known for her lifestyle as a flamboyant heiress and her role in the reality TV program “The Simple Life.” The series placed her and fellow heiress Nicole Ritchie in situations where their privileged upbringing may not have prepared them for ordinary tasks that working class folks regularly perform. In many episodes Hilton stated “that’s hot,” whenever she found something out of the ordinary or humorous. She registered the phrase as a trademark in 2007 with the United States Patent & Trademark Office.

Later that year, Hallmark released a card parodying Hilton’s “First Day as a Waitress” that used the phrase. Hilton claimed that the card’s depiction copied too closely a scene that she made famous on her television series. The card juxtaposes a female face with a cartoon drawing of a waitress’s body, with the composite woman performing the tasks of a waitress and saying Hilton’s trademark phrase. Hilton herself wore a waitress’s uniform, served customers, and said, “That’s hot,” in an episode of “The Simple Life.” However, Hilton did not claim that the card
literally depicted her.

Hilton filed suit asserting three causes of action, misappropriation of publicity under California common law; false designation under the Lanham Act; and infringement of a federally registered trademark. Hallmark moved to strike Hilton’s right of publicity claim under California’s anti-SLAPP statute. “SLAPP” stands for “strategic lawsuit against public participation. It is a law designed to stop attempts to chill a person from exercising their First Amendment rights on a matter of public interest by forcing them to incur the expense and bother to defend against a meritless and abusive lawsuit. In other words, sometimes plaintiffs file lawsuits against defendants without merit just to shut them up and intimidate them. Such suits can stifle a defendant from speaking out, especially if the plaintiff is a well-heeled company and the defendant an ordinary citizen without the means to hire lawyers to defend his/her rights. The lower court denied Hallmark’s motion to strike under California’s anti-SLAPP statute.

Hilton’s claim was for misappropriation of the common law right of publicity. The elements of the claim under California law are “(1) the defendant’s use of the plaintiff ’s identity; (2) the appropriation of plaintiff ’s name or likeness to defendant’s advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury.” Hallmark did not dispute that Hilton meets these requirements. Hallmark, however, claimed two affirmative defenses under California law, both based on the First Amendment: the “transformative use” defense and the “public interest” defense.

Under California law, “when an artist is faced with a right of publicity challenge to his or her work, he or she may raise an affirmative defense that the work is protected under the First Amendment because it contains significant transformative elements or that the value of the work does not derive primarily from the celebrity’s fame.”

In regard to the public interest defense, California law holds that “no cause of action will lie for the publication of matters in the public interest, which rests on the right of the public to know and the freedom of the press to tell it.” This defense did not help Hallmark, because it only precludes liability for “the publication of matters in the public interest.” The birthday card did not publish or report such information.

The case went up to the Ninth Circuit Court of Appeals, with Hallmark claiming its First Amendment right to free speech insulated it from liability. The appeals court rejected Hallmark’s appeal, however, and the suit was scheduled to go to trial as early as December if the parties had not settled. The court did not find that Hilton was entitled to a judgment as a matter of law, only that there was at some probability of her prevailing on the merits if it went to trial, and so it would not be dismissed.

The amount of the settlement was not revealed.

Read full case at: case

SPEILBERG PREVAILS IN COPYRIGHT INFRINGEMENT SUIT

2010-10-07T12:30:00.000-07:00

The U.S. Southern District Court in New York has found that director Steven Spielberg's film "Disturbia" does not infringe the copyright in the short story "Rear Window," which was the basis for the Alfred Hitchcock movie with the same title. U.S. District Judge Laura Taylor Swain found there was no substantial similarity between "Rear Window" and "Disturbia."

Spielberg and the other defendants produced and distributed the motion picture Disturbia; in 2007. For a plaintiff to prevail in a copyright infringement case, two elements must be proved: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original. The defendants conceded access and actual copying. Thus, the only questions for resolution were whether Defendants unlawfully appropriated copyrightable elements from Plaintiff's Short Story, and, if there is no such appropriation, whether Defendants are entitled to judgment dismissing Plaintiff's copyright infringement claims as a matter of law. To prove unlawful appropriation of protectible elements, a plaintiff must show that there is substantial similarity between protectible elements in the two disputed works.

The short story Rear Window spans four days and depicts, through first-person narrative, protagonist Hal Jeffries' observations of his neighbors' activities which eventually lead him to discover and solve a crime through deductive logic. It is set in New York City.
At the opening of the Short Story, the reader learns that Jeffries is incapacitated such that he can only move from his bed to a chair near the window of his second floor bedroom.

The events depicted in Disturbia span more than a year. The story's chief protagonist is Kale Brecht, a troubled teenager who, sentenced to house arrest, spies on neighbors to stave off boredom and, after learning of the disappearance of several women in the area, discovers that his neighbor may be to blame.

The court found that “It cannot be disputed that both works tell the story of a male protagonist, confined to his home, who spies on neighbors to stave off boredom and, in so doing, discovers that one of his neighbors is a murderer. The voyeur is himself discovered by the suspected murderer, is attacked by the murderer, and is ultimately vindicated. Although it is possible to characterize the plots of both works so they appear indistinguishable, such similarity is not, standing alone, indicative of substantial similarity. The law of copyright only protects an author's particular expression of an idea, not the idea itself.”

The court concluded that the expression of the voyeur-suspicion-peril-vindication plot idea is quite different in the two works. This broad plot idea, or premise, is not a protectible element. Similarity at this level of generality is not probative of the question of infringement.

The Plaintiffs also contended that the characters were similar. The court disagreed stating that they are not substantially similar. “While Plaintiff correctly points out that both Kale and Jeffries are confined, single men, such generalized similarities are not protectible.”

The Sheldon Abend Revocable Trust, v. Steven Spielberg et al., No. 08 Civ. 7810 United States District Court, S.D. New York, September 21, 2010. The full decision is posted below.

THE SHELDON ABEND REVOCABLE TRUST, Plaintiff, v. STEVEN SPIELBERG et al., Defendants.

2010-10-07T12:27:00.000-07:00

No. 08 Civ. 7810 (LTS)(JCF).
United States District Court, S.D. New York.
September 21, 2010.

HANLY CONROY BIERSTEIN, SHERIDAN FISHER & HAYES, LLP, By: Steven M. Hayes, Esq., New York, NY, MORGAN & MORGAN, P.A., By: Clay M. Townsend, Esq., Keith R. Mitnik, Esq., Orlando, FL., Attorneys for Plaintiff The Sheldon, Abend Revocable Trust.
WHITE O'CONNOR FINK & BRENNED LLP, By: Lee S. Brenner, Esq., Andrew M., White, Esq., Lost Angeles, CA, LAW OFFICES OF SCOTT, GOLDFINGER, By: Scott G. Goldfinger, Esq., Allison S. Rohrer, Esq., New York, NY, Attorneys for Defendants Steven Spielberg, Paramount Pictures Corporation, DW, Studios LLC, Viacom Inc., Paramount Home, Entertainment, Montecito Picture Company, LLC, Cold Springs Pictures LLC and United, International Pictures, B.V.

OPINION AND ORDER

LAURA TAYLOR SWAIN, District Judge:

The Sheldon Abend Revocable Trust ("Plaintiff"), brings this action asserting copyright infringement, contributory infringement, and vicarious copyright infringement pursuant to 17 U.S.C. § 101 et seq. as well as common law breach of contract claims against Defendants Steven Spielberg; DW Studios, LLC; Paramount Pictures Corporation; Viacom, Inc.; NBC Universal, Inc.; Universal Pictures Company, Inc.; Universal City Studios, LLP; United International Pictures, B.V.; and Does 1-10,[1] alleging that the motion picture Disturbia — a film produced by Spielberg, owner of DW Studios, LLC, which is in turn a wholly-owned subsidiary of Paramount Pictures Corporation and its parent company, Viacom, Inc. — infringed upon Plaintiff's copyright in the short story Rear Window and upon the derivative Alfred Hitchcock film of the same name.[2] On October 27, 2009, Plaintiff filed its Second Amended Complaint, adding defendants Montecito Picture Company LLC, Cold Spring Pictures LLC, and Universal Pictures International, GmbH. Plaintiff asserted copyright infringement, contributory infringement, and vicarious copyright infringement claims against these new defendants. The Court has jurisdiction of Plaintiff's copyright claims pursuant to 28 U.S.C. §§ 1331 and 1338.

The case is now before the Court on Defendants' motion for partial summary judgment dismissing Plaintiff's copyright infringement claims. The Court has reviewed thoroughly and considered carefully all of the parties' submissions. For the reasons discussed below, Defendants' motion for partial summary judgment is granted.

BACKGROUND

The following material facts are undisputed, unless expressly noted.
In 1942, Cornell Woolrich wrote the short story Rear Window (also known as It Had to be Murder and Murder from a Fixed Viewpoint) ("Short Story"), which was published in the Dime Detective Magazine. Plaintiff currently holds the copyright in the Short Story.

In 1953, a predecessor to Defendant Paramount Pictures obtained the motion picture rights to the Short Story, which was subsequently made into a film of the same title, directed by Alfred Hitchcock, in 1954. Plaintiff relies heavily on the film in its claims of substantial similarity and copyright infringement.

Defendants produced and distributed the motion picture Disturbia; distribution began in April 2007. The record before the Court includes a published version of the Short Story and a DVD copy of Disturbia.

Plaintiff has also submitted thousands of pages of exhibits, including: expert reports; previous drafts of the screenplay; references to and copies of media articles and film critics' reviews likening Disturbia to the Rear Window film; and many lists, charts and DVDs purporting to identify similarities among the Short Story, the Rear Window film, and Disturbia. Defendants have proffered copies of numerous published works predating the Short Story, in support of their contention that various elements of the Short Story are not protectable and/or not original.

DISCUSSION

Summary judgment is appropriate where the "pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). A fact is material "if it `might affect the outcome of the suit under the governing law,'" and "[a]n issue of fact is `genuine' if `the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Holtz v. Rockefeller & Co., 258 F.3d 62, 69 (2d Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The evidence is viewed in the light most favorable to the nonmoving party and all reasonable inferences are drawn in its favor. Rubens v. Mason, 527 F.3d 252, 255 (2d Cir. 2008) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)).

Copyright Infringement

For a plaintiff to prevail in a copyright infringement case, "two elements must be proved: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." Feist Publ'ns, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 361 (1991). The second criterion, copying of original constituent elements, may be proven with either direct or indirect evidence: to prove copying via indirect evidence, a plaintiff must show (1) defendant's access to the allegedly infringed work; (2) actual copying; and (3) unlawful appropriation of copyrightable materials. See Walker v. Time Life Films, Inc., 784 F.2d 44, 48 (2d Cir. 1986) ("Walker II"); Denker v. Uhry, 820 F. Supp. 722, 728 (S.D.N.Y. 1992).

For purposes of the instant motion, Defendants have conceded access and actual copying. Thus, the only questions for resolution are whether there is a genuine dispute of material fact as to whether Defendants unlawfully appropriated copyrightable (that is, protectable) elements from Plaintiff's Short Story, and, if there is no such appropriation, whether Defendants are entitled to judgment dismissing Plaintiff's copyright infringement claims as a matter of law.

To prove unlawful appropriation of protectible elements, a plaintiff must show that there is substantial similarity between protectible elements in the two disputed works. Laureyssens v. Idea Group, Inc., 964 F.2d 131, 139-40 (2d Cir. 1992). The appropriate test for substantial similarity is "whether an ordinary observer, unless he set out to detect the disparities, would be disposed to overlook them, and regard [the] aesthetic appeal as the same." Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 111 (2d Cir. 2001) (citations and internal quotations omitted); Walker II, 784 F.2d at 51 (noting that Second Circuit generally judges substantial similarity "by the spontaneous response of the ordinary lay observer").

Where, as here, a work is an amalgamation of protectible and unprotectible elements, a "more discerning" ordinary observer test is employed, Knitwaves, Inc. v. Lollytogs, Ltd., 71 F.3d 996, 1002 (2d Cir. 1995), which requires that the court first filter out from consideration any non-protectible elements. The remaining, protectible elements are then analyzed for substantial similarity. Id. ("[W]here [courts] compare products that contain both protectible and unprotectible elements, [their] inspection must be `more discerning'; [courts] must attempt to extract the unprotectible elements from our consideration and ask whether the protectible elements, standing alone, are substantially similar."). Thus, similarities between unprotectible elements in the disputed works may not contribute to a determination of substantial similarity.

Because questions of substantial similarity often present close questions of fact, Arnstein v. Porter, 154 F.2d 464, 468-69 (2d Cir. 1946), court have historically been hesitant to grant summary judgment on copyright infringement claims. See Hoehling v. Universal City Studios, Inc., 618 F.2d 972, 977 (2d Cir. 1980) ("[S]ummary judgment has traditionally been frowned upon in copyright litigation."). However, "[t]he question of substantial similarity is by no means exclusively reserved for resolution by a jury . . . in certain circumstances, it is entirely appropriate for a district court to resolve that question as a matter of law, `either because the similarity between two works concerns only non-copyrightable elements of the plaintiff's work, or because no reasonable jury, properly instructed, could find that the two works are substantially similar.'"[3] Peter F. Gaito Architecture, LLC v. Simone Dev. Corp., 602 F.3d 57, 63 (2d Cir. 2010) (citing Warner Bros. Inc. v. Am. Broad. Co., 720 F.2d 231, 240 (2d Cir. 1983)). In considering the issue of substantial similarity a court must base its determination on "its considered impressions upon its own perusal" of the disputed works. Nichols v. Universal Pictures Corporation, 45 F.2d 119, 123 (2d Cir. 1930); Williams v. Crichton, 84 F.3d 581, 583 (2d Cir. 1996).

Substantial Similarity

A determination of copyright infringement requires a side-by-side comparison of the disputed works themselves.[4] Williams, 84 F.3d at 583. The elements that should be considered in analyzing two works for substantial similarity include "such aspects as the total concept and feel, theme, characters, plot, sequence, pace, and setting of the [plaintiff's] books and the [defendants'] works." Id., at 588.
In considering the similarities between these elements, the proper inquiry is "whether an ordinary observer, unless he set out to detect the disparities, would be disposed to overlook them, and regard [the] aesthetic appeal as the same." Yurman Design, 262 F.3d at 111. The test does not, however, require the Court to ignore dissimilarities. However, if the dissimilarities between two works exceed the similarities and the similar elements "are — when compared to the original work — of small import quantitatively or qualitatively, a finding of no infringement is appropriate." See Rogers v. Koons, 960 F.2d 301, 308 (2d Cir. 1992). Thus, in considering the question of substantial similarity, an analysis of both the similarities and the differences is appropriate. The Court has reviewed both works carefully.

Summary Overview of Each Work

Cornell Woolrich's Rear Window

The Short Story spans four days and depicts, through first-person narrative, protagonist Hal Jeffries' observations of his neighbors' activities which eventually lead him to discover and solve a crime through deductive logic. It is set in New York City.

At the opening of the Short Story, the reader learns that Jeffries is incapacitated such that he can only move from his bed to a chair near the window of his second floor bedroom. (Brenner Decl., Ex. A., 1.) The reader learns little of Jeffries' background and personality, as the character is minimally developed.

To pass the time, Jeffries observes from his window the goings-on in several of his neighbors' homes. He watches a young couple with an active social life, a young widow and her child, and a couple whom he later learns are the Thorwalds. (Id. 1, 10.)

Mrs. Thorwald, he notices, is in chronic poor health. (Id. 2.) At first, her husband, Lars Thorwald ("Thorwald"), appears concerned about her health but, as Jeffries observes the Thorwalds over a period of days, he notices that Mrs. Thorwald has disappeared. (Id. 8.) Jeffries speculates that Thorwald has murdered her. (Id.) He phones his old friend, Detective Boyne, to report his suspicion, and Boyne institutes an investigation. (Id. 10-11.) Following a lead that Mrs. Thorwald's belongings had been shipped to the countryside, the police encounter a woman who identifies herself as Mrs. Thorwald. (Id. 14-15.) Boyne then stops the investigation, to Jeffries' dismay. (Id.)

Undeterred from the belief that Thorwald murdered his wife, Jeffries enlists the assistance of his faithful servant, Sam, in obtaining proof of the murder. (Id. 15.) Sam's character is also minimally developed. Jeffries instructs Sam to slip a note that reads "What have you done with her?" beneath Thorwald's door. (Id.) Upon receiving the note, Thorwald becomes agitated, and paces his apartment nervously. (Id. 16.) His pacing closely parallels that of a realtor showing a newly renovated apartment two floors above Thorwald, but Jeffries does not immediately recognize the significance of this coincidence. (Id. 16-17.) Thorwald's reaction to the note, however, convinces Jeffries that Thorwald is, in fact, guilty of murder. (Id. 16.)

To obtain more concrete evidence of murder, Jeffries phones Thorwald, pretending to be a blackmailer, and convinces Thorwald to meet him in a local park. (Id. 17-18.) When Thorwald sets out to pay off his blackmailer, Jeffries dispatches Sam to Thorwald's apartment with instructions to make it appear as if the apartment has been searched, in order to make Thorwald believe that his blackmailer has obtained concrete evidence of the murder. (Id. 18-19.) Sam does as he is told. (Id. 19.) When Thorwald returns, Jeffries immediately phones him, pretending to have discovered evidence, but Thorwald does not believe him. (Id. 19-20.) Thorwald then unexpectedly phones Jeffries, and, hearing his voice, deduces that Jeffries is his blackmailer. (Id. 21.) After this phone call, Jeffries suddenly recalls the mirrored movements of Thorwald and the realtor two floors above. (Id. 22-23.) He realizes that, when passing from the kitchen to the living room, the realtor's height relative to the window changed while Thorwald's remained the same because, as part of the ongoing renovations to the building, a raised kitchen floor had been poured in concrete for decorative effect. (Id.) Jeffries deduces that Thorwald buried his wife's body in the still-wet concrete of the fifth floor apartment, which was under renovation. (Id. 26.)

Jeffries attempts to phone Inspector Boyne, but the line goes dead: Thorwald has entered Jeffries' building and severed the telephone line. (Id. 23.) Jeffries realizes Thorwald is coming to kill him. (Id.) Rendered unable to escape by his cast, Jeffries conceals himself with a rug, and places a bust sculpture upon his shoulder, hoping that in the dark Thorwald would be tricked by the ruse. (Id. 23-24.) As Thorwald enters and shoots the bust, Inspector Boyne arrives. (Id. 24-25.) Thorwald escapes out the window, climbs to the roof of his own building, then shoots into Jeffries' apartment. (Id. 24-25.) Inspector Boyne returns fire and strikes Thorwald, causing him to fall to his death. (Id. 25.)

From the available information, Jeffries completes his theory of the case for the reader: Thorwald had been poisoning his wife for some time, but killed her outright when she discovered what he was doing; and he concocted a scheme with another woman, likely his lover, to suggest that his wife had gone upstate. (Id. 26-27.) The other woman impersonated Mrs. Thorwald when the police investigated, and was going to stage her suicide. (Id.) In the closing lines of the story, a doctor arrives to remove the cast and notes, ironically, that Jeffries must have been bored while sitting around. (Id. 27.)

Disturbia

The events depicted in Disturbia span more than a year. The story's chief protagonist is Kale Brecht, a troubled teenager who, sentenced to house arrest, spies on neighbors to stave off boredom and, after learning of the disappearance of several women in the area, discovers that his neighbor may be to blame.
Kale is introduced to the viewer while on a fishing trip with his father. In a picturesque wilderness setting, Kale and his father joke and bond. On the trip home, however, while Kale is driving, a horrific accident occurs and his father is killed. A year later, Kale has become a troubled and depressed teenager. After assaulting a teacher, Kale goes to court and is sentenced to three months of house arrest in suburban California. His probation officer outfits him with an ankle bracelet that confines him to a 100-yard radius from the receiver in his kitchen.
Kale begins to entertain himself by watching his neighbors live their unrestricted lives. He observes his new neighbors moving in, and takes particular note of their attractive teenage daughter, Ashley.

Among other things, he notices, almost in passing, Robert Turner, a neighbor who constantly mows his lawn. After hearing news reports about a missing woman, and of a string of missing women in Texas, Kale recalls that Turner's car matches the description of the suspect's vehicle, right down to a dented fender. Venturing outside, Kale spies on Turner. Kale's friend Ronnie joins Kale in his surveillance of Turner and in spying on Ashley. Eventually, Ashley catches them watching her and confronts them. Ronnie explains their interest in Turner, and she joins them in the stake-out. During their stake-outs, a romance develops between Kale and Ashley.

One night, Kale observes Turner escorting a red-haired woman to his home, and then later sees her panicked and trying to escape the house. A reflection of Kale's video camera alerts Turner to the fact that Kale is watching. Kale later sees a redhead leaving Turner's house, and reasons that he may have been mistaken (although the viewer later learns that it was, in fact, Turner wearing a wig). Some time later, at Turner's house, there is a scream and blood spatters across the inside of a window.

Ashley later notices Turner dragging a blood-covered blue bag into his garage. Kale, Ashley, and Ronnie decide to investigate Turner's garage. With Ashley acting as a look-out and Kale watching via live-feed video camera, Ronnie finds the blue bag, in which he sees something decomposing. Ronnie panics, and, fearing for his friend, Kale rushes to Turner's house wielding a baseball bat, triggering his ankle bracelet, and summoning the police. He tells the police about the blue bag, in which they discover the decomposing carcass of a deer.

Upon reviewing the footage that Ronnie shot while sneaking about Turner's house, Kale notices the face of a dead woman, visible in the basement through a heating grate. At the same time, Kale's mother is attacked by Turner in Turner's home. Turner then comes to Kale's house and attacks Ronnie and Kale, rendering them unconscious. Kale awakens, bound with tape. Turner informs Kale of his plan to frame Kale for murdering his own mother and to stage Kale's suicide. Ashley arrives at the last moment, however, and in the course of a struggle, Kale and Ashley escape to safety by jumping off Kale's roof and into Ashley's pool.

Kale then returns to Turner's house, armed with hedge clippers, to rescue his mother. He discovers the body of the dead woman he had seen in Ronnie's video, as well as an operating room filled with gruesome mementos. Summoned by Kale's ankle bracelet, a police officer arrives at Turner's house, but is killed by Turner. Meanwhile, while searching the basement of Turner's house for his mother, Kale falls into a pool of water filled with the dead bodies of Turner's previous victims. Kale locates his mother just as Turner arrives. Kale, his mother, and Turner fight, culminating in Turner being stabbed and falling into the pool.
The next day, Kale's parole officer removes his ankle bracelet, releasing him from house arrest early for good behavior. The film ends with Kale and Ashley kissing while Ronnie attempts to videotape them.

Comparison of the Works

Plot

It cannot be disputed that both works tell the story of a male protagonist, confined to his home, who spies on neighbors to stave off boredom and, in so doing, discovers that one of his neighbors is a murderer. The voyeur is himself discovered by the suspected murderer, is attacked by the murderer, and is ultimately vindicated. Although it is possible to characterize the plots of both works so they appear indistinguishable, such similarity is not, standing alone, indicative of substantial similarity. The law of copyright only protects an author's particular expression of an idea, not the idea itself. Arden v. Columbia Pictures Indus., Inc., 908 F. Supp. 1248 (S.D.N.Y. 1995).

Upon any work . . . a great number of patterns of increasing generality will fit equally well, as more and more of the incident is left out. The last may perhaps be no more than the most general statement of what the [work] is about, and at times might consist of only its title. But there is a point in this series of abstractions where they are no longer protected, since otherwise the [author] could prevent the use of his `ideas,' to which, apart from their expression, his property is never extended.

Nichols, 45 F.2d at 121. Here, as will be explained in the analysis that follows, the expression of the voyeur-suspicion-peril-vindication plot idea is quite different in the two works. This broad plot idea, or premise, is not a protectible element. Similarity at this level of generality is not probative of the question of infringement.

Characters

Plaintiff contends that "[c]haracter elements of . . . Disturbia are derivative of (i.e. substantially similar to) Rear Window, notwithstanding some differences." (See Pl.'s Opp. 24.) "In determining whether characters are similar, a court looks at the `totality of [the characters'] attributes and traits as well as the extent to which the defendants' characters capture the `total concept and feel' of figures in [plaintiff's work]." Hogan v. DC Comics, 48 F. Supp. 2d 298, 309-10 (S.D.N.Y. 1999) (citing Walker II, 784 F.2d at 50) (internal quotations omitted). "No character infringement claim can succeed unless plaintiff's original conception sufficiently developed the character, and defendants have copied this development and not merely the broader outlines." Smith v. Weinstein, 578 F. Supp. 1297, 1303 (S.D.N.Y. 1984), aff'd mem., 738 F.2d 419 (2d Cir. 1984).

The bar for substantial similarity in a character is set quite high. For example, in Adrand v. Columbia Pictures Industries, Inc., the protagonists of the two disputed works were both self-centered bachelors in their mid-thirties who pursued love interests and became trapped in a repeating day. 908 F. Supp. 1248, 1261 (S.D.N.Y. 1995). The district court found that "any similarity between the two characters exists only at a level of abstraction too basic to permit any inference that defendant[s] wrongfully appropriated any `expression' of plaintiff's ideas." Id. In Hogan, the two main characters were both half-human, half-vampires named Nicholas Gaunt; both were young white males with pale skin, a medium build, dark, tired eyes, and dark, scraggly hair; both sought to learn the truth about their origins; both learned about their origins through flashbacks or memories; both faced the choice of pursuing good or evil; and both were indoctrinated into the forces of evil. 48 F. Supp. at 310. The Hogan Court nonetheless found that the two Nicholas Gaunts were not substantially similar because the similarities were among "unprotectible ideas and themes that do not represent any original elements of plaintiffs' work." Id.

Because substantial similarity should be determined based on the Court's "considered impressions," Nichols, 45 F.2d at 123, a comparison of some of the disputed characters is warranted. The protagonists of the respective disputed works at issue here are not substantially similar. While Plaintiff correctly points out that both Kale and Jeffries are confined, single men, such generalized similarities are not protectible. Furthermore, Jeffries' character is far less developed than the Kale character in Disturbia. Kale Brecht is a troubled teen, struggling to cope with the loss of his father, and is confined to his house on house arrest. Hal Jeffries is a male of indeterminate age. Kale has, at least initially, other pastimes to stave off boredom — television, video games, and music — while Jeffries has none. While Kale consistently finds himself in trouble with a police officer, Jeffries' close friend is a detective. Any similarities between Kale and Jeffries are too general to be afforded protection under copyright law, and when the "totality of [the characters'] attributes and traits" are considered, Hogan, 48 F. Supp. 2d at 309, the dissimilarities vastly outweigh the similarities, which are qualitatively and quantitatively insubstantial in this regard. Indeed, the decisions in Arden and Hogan demonstrate that similarities far more numerous can be insufficient to support a finding of substantial similarity.

Nor are the antagonists in Plaintiff's Short Story and Defendants' Disturbia substantially similar. Turner is a single middle aged man who is suspected — and later is confirmed — to be a serial killer. Thorwald is a married man, who kills his wife — apparently the first and only woman he murders — to be with another woman. Plaintiff attempts to demonstrate substantial similarity between the antagonists by characterizing Turner as a neighbor suspected of killing women and Thorwald as a neighbor who murders a woman. (Compl. ¶ 86.) The similarity between these two characters ends, however, with their middle age and their position as the protagonist's neighbor: a serial killer is distinguishable from a one-time killer. These similarities amount to nothing more than age, sex, and status as a personification of evil living next door — a basic character type — and therefore do not rise to the level of protectible expression of an idea. See Hogan, 48 F. Supp. 2d at 310 ("A stock character or basic character type, however, is not entitled to copyright protection.").

Plaintiff also asserts that the supporting characters in each work are substantially similar. Notwithstanding the fact that Ronnie and Ashley are, in fact two people, and Sam is but one, Plaintiff attempts to demonstrate substantial similarity by designating their character types as "the Assistant(s)." (See, e.g., Compl. ¶ 86.) The characters of Ronnie and Ashley however, bear no resemblance to Sam, beyond the most generalized level of supporting characters. Such a basic character type and functional role warrants no copyright protection. See Hogan, 48 F. Supp. 2d at 310.

Setting

Plaintiff contends that there is substantial similarity between settings in the Short Story and Rear Window. Plaintiff's position cannot withstand scrutiny. Disturbia is set in a house in suburban California while the Short Story is set in an apartment in New York City. The setting of the Short Story is Jeffries' bedroom, and more specifically, his chair within that bedroom and the view from that chair. In contrast, Disturbia's setting encompasses all of Kale's house and much of his yard, as well as a shopping center, a parking garage, Ashley's house and yard, a courthouse, the wilderness, a classroom, and Turner's home. Furthermore, where Jeffries' room is impersonal — the only detail the author provides is that the books and sculpture in Jeffries' room were left by a previous tenant — Kale's room reflects his personality, and his house is furnished and decorated with personal items and photographs. Jeffries' world, as expressed in the short story, consists of what he can see from his single bedroom window. Kale, on the other hand, roams from room to room, utilizes windows throughout his home, and goes outside. The role of the windows is similar only at a high level of generalization, and thus is not protectible. See Walker I, 784 F.2d at 48-49 (citing Warner, 654 F.2d at 208) (The Court must determine "whether the similarities shared by the works are something more than mere generalized idea[s] or themes.").

"Total Concept and Feel"

Plaintiff argues principally that Disturbia is, as a whole, substantially similar to the total concept and feel of the Short Story. The total concept and feel of a work is comprised of the way an author "selected, coordinated and arranged the elements of his or her work," Feist, 499 U.S. at 358. Where the total concept and feel of the works is markedly different, summary judgment is appropriate. Denker, 820 F.Supp. at 731.

There is no substantial similarity between the total concept and feel of the Short Story and that of Disturbia. The main plots are similar only at a high, unprotectible, level of generality. Where Disturbia is rife with subplots, the Short Story has none. The setting and mood of the Short Story are static and tense, whereas the setting and mood of Disturbia are more dynamic and peppered with humor and teen romance. The pace of the two works is dramatically different: the Short Story takes place in just four days, while Disturbia spans more than a year and the main action takes place over an indeterminate period of days or weeks.

The Short Story and Disturbia thus are only similar at very general levels of abstraction. Their similarities derive entirely from unprotectible elements and the total look and feel of the works is so distinct that no reasonable trier of fact could find the works substantially similar within the meaning of copyright law. There is, thus, no genuine issue of material fact and Defendants are entitled as a matter of law to summary judgment dismissing Plaintiff's copyright infringement claims.

CONCLUSION

For the foregoing reasons, the Defendants' motion for partial summary judgment is granted. Plaintiff's claims of copyright infringement, vicarious infringement, and contributory infringement are dismissed.[5]

The opinion resolves docket entry 49.

The Clerk of Court is respectfully requested to close this case.
SO ORDERED.

[1] Pursuant to Joint Stipulations (docket entry nos. 40, 53), Plaintiff's claims against Defendants NBC Universal, Inc.; Universal Pictures Company, Inc.; and Universal City Studios, LLP were dismissed on December 8, 2008 (Universal Pictures Company, Inc.) and March 30, 2009 (NBC Universal, Inc. and Universal City Studios, LLP). Because the contract claims in the First Amended Complaint were asserted only against those defendants, those claims, too, have been dismissed.

[2] Pursuant to a joint stipulation dated May 28, 2009 (docket entry no. 61), Plaintiff's claims premised upon similarity of Disturbia to the film version of Rear Window have been dismissed.

[3] Plaintiff, seeking to apply a rule referred to in this Circuit as the inverse ratio rule, argues in its Opposition that Defendants' concession of access and evidence of actual copying lessens plaintiff's burden to prove substantial similarity. That rule, however, is irrelevant here, as it is applied only in the determination of whether there was actual copying. Aldon Accessories, Ltd. v. Spiegel, Inc., 738 F.2d 548, 553-54 (2d Cir. 1994). As noted above, Defendant has conceded copying for purposes of this motion practice.

[4] The opinions of experts or other third parties are irrelevant to a determination of substantial similarity. See Laureyssens, 964 F.2d at 140 (while expert opinion may be relevant to the issue of actual copying, it is irrelevant to the question of substantial similarity); Nichols 45 F.2d at 123 (in copyright infringement cases, expert testimony "ought not be allowed at all"). Nor are lists or charts, in any medium, of purported similarities relevant to a determination of substantial similarity. See Williams, 84 F.3d at 590 (Lists are "inherently subjective and unreliable, particularly where the list emphasizes random similarities scattered throughout the works . . . . Such a scattershot approach cannot support a finding of substantial similarity because it fails to address the underlying issue: whether a lay observer would consider the works as a whole substantially similar to one another."). Furthermore, because "the Court considers the works as they were presented to the public," Walker v. Time Life Films, Inc., 615 F. Supp. 430, 434 (S.D.N.Y. 1985) ("Walker I"), aff'd 784 F.2d 44, 51 (2d Cir. 1986), earlier drafts of a book, manuscript, or screenplay are irrelevant. Opinions of third parties published in secondary materials are also irrelevant. Walker I, 615 F. Supp. at 434; see Crane v. Poetic Prods., 593 F. Supp. 2d 585, 595 (S.D.N.Y. 2009). Accordingly, the Court has focused on the Short Story and the finished film Disturbia, rather than Plaintiff's voluminous submissions of expert reports, similarity comparisons and other materials. The Court has also found it unnecessary to consider the "prior works" submitted by Defendants.

[5] Defendats Dreamworks Home Entertainment, Inc. and Does 1-10 have not joined Defendants' Motion for Summary Judgment. However, because the Court has determined that there was no copyright infringement as a matter of law, the claims against these Defendants are also dismissed.

CREATIVE ACCOUNTING

2010-10-06T18:26:00.000-07:00

Filmmakers and profit participants often lament about distributors engaging in creative bookkeeping. This is one area where filmmakers concede that studios are sufficiently imaginative in their thinking. A frequent complaint is that the studios continually devise new and ingenious ways to interpret a contract so that all the money stays in their pockets. The general consensus among filmmakers is that net profits are illusory. Rarely does a share of net profits generate hard cash.

No doubt, there are numerous instances where producers or distributors have cooked the books to avoid paying back-end compensation to those entitled to it. Expenses incurred on one movie might be charged to another. Phony invoices can be used to document expenses that were never incurred. Some ruses are subtler, and not readily apparent to the uninitiated.

The major studios determine profits for participants using their own special accounting rules as set forth in their net profit defi¬nitions. The accounting profession has generally agreed-upon rules called Generally Accepted Accounting Principles (GAAP). There are special guidelines for the motion picture industry called Financial Accounting Standards Bulletin 53 (FASB 53). These rules provide, among other things, for the accrual method of account¬ing. Under this method, revenues are recognized when earned, and expenses are recognized when incurred. But distributors do not necessarily follow these rules. They may use GAAP and FASB 53 when accounting to their shareholders, or reporting to their bankers, but they often resort to their own Alice in Wonderland-type rules when they calculate net profits for participants. They may recognize revenue only when it is actually received, while taking expenses when incurred. So if the distributor licenses a film to NBC, the distributor may not count the license fee as revenue until they actually receive it. Even when they receive a non-refundable advance, they might not count it as income until the time of the broadcast. Meanwhile, they count expenses as soon as they are incurred, even if they have not paid them. This mismatching of revenues and expenses allows the distributor to delay payment to participants. It also allows distributors to charge producers interest for a longer time on the outstanding “loan” extended to the producer to make the film.

The Art Buchwald case illuminates some of the devices Paramount used to deny payment to net profit participants. The trial judge found many of these practices to be unconscionable and therefore refused to enforce them. Paramount appealed, and the case was settled before the Court of Appeals could rule on the issue.

If Buchwald had won the appeal, the precedent would have caused severe repercussions for all the major studios. That is because Paramount’s “net profit” definition was virtually identical to the definitions found throughout the industry. If Buchwald’s contract was invalid because it was unconscionable, then many other contracts could be contested.

In my opinion, Buchwald may well have lost the appeal had the case been decided. The trial court judge in Buchwald used the doctrine of unconscionability to invalidate a contract that Buchwald was trying to enforce. Courts have traditionally embraced this doctrine only when it was used as a defense, or shield, against enforcement of an unfair contract, rather than as a sword to enforce the terms of a contract against another. Courts have typically relied on the doctrine to protect uneducated people who have been taken advantage of. If an unscrupulous door-to-door salesman sells a refrigerator for an exorbitant price to a poor, illiterate consumer on an installment plan using a boilerplate contract not open to negotiation, the judge might refuse to enforce the contract because it “shocks the conscience of the court.”

Buchwald, however, was hardly a poor, defenseless victim. He was an intelligent, wealthy, and acclaimed writer represented by the William Morris Agency. If a judge was willing to rewrite his contract because it was unfair, then why not rewrite thousands of other writer contracts? Indeed, why not rewrite any unfair contract? Where does one draw the line? If any contract can be contested simply because it is unfair, then how can anyone safely rely upon the terms of a contract? How can you conduct business if you cannot be sure your contracts will be enforceable?

Under long-established precedent, courts refuse to invalidate contracts simply because they are unfair. Law students are taught the principle that even a peppercorn—something worth less than a penny—can be valid consideration. This means that if you are foolish enough to sign a contract to sell your $200 bike for a dime, do not expect a court to bail you out of a bad deal. Absent fraud, duress, or some other acceptable ground to invalidate a contract, courts do not second-guess the wisdom of what the parties agreed to.

While the trial judge in the Buchwald case thought the doctrine of unconscionability could be invoked to invalidate a net profit definition, it bears noting that another Los Angeles Superior Court came to a different conclusion. In reviewing the accounting practices of Warner Bros. in the Batman case, the judge found that the plaintiffs had failed to prove that the studio’s net profits definition was unconscionable.

Regardless of whether the Buchwald decision would have been upheld on appeal, the dispute has had an impact on the industry. The major studios have rewritten their contracts, replacing the phrase “net profits” with such terms as “net proceeds.” They want to avoid any implication that the back-end compensation promised participants has anything to do with the concept of profitability.

As a result of many highly publicized creative-accounting disputes, anyone who has clout insists on receiving either large up-front payments or a share of gross revenue. Distributors have consequently lost the ability to share risk with talent. Budgets have escalated to accommodate large up-front fees, with major stars now demanding $20 million per picture. Moreover, stars and directors have little incentive to minimize production expenses, since it doesn’t affect their earnings.

Not all complaints about creative accounting concern accounting errors. Many grievances reflect the inequality of the deal itself. The studio uses its leverage and superior bargaining position to pressure talent to agree to a bad deal. The distributor then accounts in accordance with the terms of the contract and can avoid paying out any revenue to participants because of how net profits are defined. The contract may be unfair, but the studio has lived up to its terms. It is only after the picture becomes a hit that the actor bothers to read the fine print of his employment agreement. This is not creative accounting. This is an example of a studio negotiating favorable terms for itself.

Keep in mind that there is no law requiring distributors to share their profits with anyone. Indeed, in most industries, workers do not share in their employer’s profits. Moreover, when a major studio releases a flop, losses are not shared; they are borne by the studio alone.

Excerpt taken from Mark Litwak’s Risky Business, 3nd edition, 2010.

Filmmaker Battles Chevron

2010-09-10T18:02:00.001-07:00

A three-judge panel of the United States Court of Appeals for the Second Circuit in Manhattan issued an order on July 15th in the case of documentary filmmaker Joe Berlinger (Brother’s Keeper 1992) after hearing arguments from attorneys for both the filmmaker and for Chevron. Berlinger had been ordered by the lower trial court to turn over 600 hours from his documentary Crude to Chevron. The documentary chronicles the legal struggle by 30,000 Ecuadorian rainforest residents over Chevron’s illegal dumping of more than 18 billion gallons of toxic water into the Amazon. At least 345 million gallons was crude oil, and Chevron admitted to the dumping in order to save $1-3 per barrel of oil. The suit concerned whether or not a journalist could be compelled to turn over such materials.

The Court of Appeals order was a partial win for each side. The panel concluded that Mr. Berlinger must turn over to Chevron all footage that does not appear in publicly released versions of the movie that depict the lawyers for the Ecuadorean plaintiffs, experts or current or former government officials. However, the many hours of footage that Berlinger gathered alone with the plaintiffs and their families, friends, and neighbor does not need to be disclosed and the court restricted Chevron use of the footage to the legal dispute.

In August Berlinger claimed that Chevron violated the court’s order by making “false and misleading” statements about his outtakes. Several days ago a federal judge in Manhattan ruled Berlinger must submit to depositions in the case and writing that the oil company’s original request to see the filmmaker’s raw documentary footage was not a fishing expedition. Chevron has been continuously fighting the filmmaker and its legal tactics have been criticized by many prominent figures and groups including Robert Redford, Bill Moyers, Michael Moore, the Director's Guild of America, the Writer's Guild of America, the NY Times, LA Times, NBC and HBO.

NEW EDWARD KENNEDY BOOK PUBLISHED

2010-09-10T16:41:00.000-07:00

Congratulations to our client historian and journalist Burton Hersh whose new book EDWARD KENNEDY: An Intimate Biography has just been published. In this groundbreaking biography, Hersh combines extensive critical research with more than fifty years of never-before-told anecdotes and observations from his lifelong acquaintance with Edward Kennedy to create an indelible portrait of one of the finest legislators and most influential senators in American history.

The author provides the first full report of the vendetta that developed between Kennedy and Richard Nixon, describing the behind-the-scenes manipulations that Kennedy employed to eventually drive Nixon from office during the Watergate scandal.

Burton Hersh has long been regarded as Edward Kennedy’s principal biographer and is the author of such widely respected nonfiction as Bobby and J. Edgar, The Shadow President, The Old Boys: The American Elite and the Origins of the CIA, and The Mellon Family. A veteran journalist, he has contributed to such publications as Esquire, The Washingtonian, and The New York Times.

WHEN A DISTRIBUTOR DEFAULTS

2010-07-06T13:34:00.000-07:00

Many years ago I represented a filmmaker who entered into an agreement with a small home-video distributor. The company had a decent reputation, and since there were no other offers for this $80,000 movie, a deal was struck. The filmmaker was promised a $40,000 advance for U.S. home video rights. The advance was payable in four installments over the course of a year. After the second installment was received, the distributor was acquired.

The new owners stopped making payments to my client. There was no question that the company owed another $20,000, and that my client had fulfilled all of his contractual obligations. The only excuse offered was that the company was experiencing “financial difficulties.” We suggested small monthly payments to retire the balance due. Payments were promised but never made. We initiated arbitration, quickly won an award, confirmed it in court, and obtained a writ of execution directing the sheriff to seize the company’s film library. Miraculously, the distributor’s cash-flow problems immediately disappeared, and full payment was received. But that was not the end of the matter. When I negotiated the agreement, I included a clause enabling my client to demand accelerated payments on default, interest on late payments, and reversion of all distribution rights. So the distributor not only had to pay the balance due with interest, but it forfeited its right to distribute the film. We re-licensed the picture to another home video distributor and received another $40,000 advance, thereby enabling the filmmaker to repay his investors. The film is an example of a picture that performed poorly in exhibition but did great in litigation. Ironically, if the first distributor had not defaulted, the filmmaker would not have been able to re-license the film and repay his investors.

There are honest distributors, but there are also a fair number of disreputable distributors who will look for any real or imagined excuse to avoid paying a filmmaker his share of revenue. Distributors know that the relatively small amounts at stake may not be enough to justify legal proceedings. Most independent filmmakers have limited financial resources, and most, if not all, of that will be spent to complete the film. Attorneys are not inclined to take on such cases on a contingency fee basis (i.e., the attorney gets a percentage of the recovery rather than being paid an hourly rate). That’s why it is often wise to provide for arbitration. With arbitration, disputes can be settled without the expense and delays typical of litigation. The arbitration clause should provide that the prevailing party be reimbursed attorneys’ fees and costs.

Filmmakers need to exercise great caution when negotiating distribution agreements. Even if the filmmaker thoroughly trusts the executives at a distribution company, the contract is signed with a company, and companies can be sold. Your friend who manages the company today could be gone tomorrow. Therefore, filmmakers need ironclad protections no matter which individuals may be running the company.

One of my recent cases concerned a dispute with a home video distributor. The filmmaker made an oral agreement with the distributor and delivered his film. The distributor began to advertise and promote the picture. Six weeks later, before any paperwork had been signed, the company reneged on the deal and pressured the filmmaker to renegotiate its terms.

To protect yourself from such tactics, make sure all promises are in writing. Do not deliver any materials until you have received a fully executed copy of the contract. Always retain possession of your film negative and master elements by providing a lab access letter instead of the actual master elements.

SELECTING A DISTRIBUTOR

Filmmakers may not have the luxury of choosing a distributor to their liking. In many instances, only one or a handful of distributors express interest. The terms may range from bad to worse. But assuming one has a choice, here are some factors to consider:

1. Media: Which media (e.g., theatrical, television, home video) does the distributor serve? Is the distributor an unnecessary middleman, or does it provide valuable resources and expertise? Any company can call itself a distributor. What services does this entity provide? To what extent does it use subdistributors? If subdistributors are used, do they take an additional commission?

2. Territory: What geographical area does the distributor serve? American independent filmmakers often use multiple distributors: a foreign sales company for international sales and a domestic distributor(s) for release in North America.
3. Reputation: Has the distributor left a trail of unhappy filmmakers in its wake? Is the distributor known for distributing films of a similar genre, budget, and stature? Does the distributor have a good reputation among its licensees or exhibitors?

4. Advance/Minimum Guarantees: What is the amount of any advance? When is it payable, and what conditions need to be satisfied? When are minimum guarantees payable? Will the distributor pay this guarantee if the film is not successful?

5. Division of Proceeds: How will revenues be shared? How much does the distributor take in fees or commission? Can the distributor recoup any of its overhead or staff expenses? Are there caps on marketing and distribution expenses?

6. Marketing: Is there a guaranteed marketing commitment? What is the minimum amount the distributor will spend to advertise the film? On how many screens in how many venues will the picture open? What is the marketing strategy? What kind of audience does the distributor think will be attracted to the film? What grass¬roots promotion efforts are planned? Will the film be entered into festivals?

7. Consultation Rights/Final Cut: Does the producer have any input or approval over artwork? Can the title be changed or the film re-edited without the filmmaker’s approval?

8. Financial Health: Is the company in any danger of becoming insolvent or going bankrupt? How long has the company been in existence? How well capitalized is it?

9. Cross-collateralization: Are expenses from one media or territory cross-collateralized with other media or territories?

10. Accounting: How often does the distributor issue producer reports? How detailed are the reports? Will the distributor provide receipts to document its expenses and revenues? Is interest paid on late payments? What kind of audit rights does the filmmaker have?

11. Ability to Collect: How much leverage does the distributor have with exhibitors/licensees to collect revenue?

12. Conflicts of Interest: Does the distributor handle any competing films? Does the distributor produce its own films that might receive preferential treatment?

13. Term: For how long will the distributor have the right to distribute the film? What is the maximum license term that the distributor can grant to others? Are there performance milestones that must be met before the term is extended? Does the producer have the right to regain distribution rights if the distributor per¬forms poorly or breaches the agreement?

14. Personal Chemistry: Does the filmmaker have a good rapport with distribution executives?

Excerpt taken from Mark Litwak’s Risky Business, 2nd edition, 2009.

Google's You Tube Prevails Against Viacom

2010-07-02T10:07:00.000-07:00

In March 2007 Viacom filed a $1 billion copyright action against Google's You Tube website for contributory copyright infringement. Viacom wanted You Tube to be responsible for infringements committed by You Tube users uploading content they did not own. Viacom cited more than 100,000 instances of its copyrighted works being posted on YouTube and claimed You Tube knew its works were being infringed. It claimed the “safe harbor” provisions of the Digital Millennium Copyright Act (DMCA) did not apply. Citing the Grokster case, Viacom contended that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” Grokster, 545 U.S. at 919.

However, the United States District Court for the Southern District of New York rejected Viacom's claim that Google's site was liable for copyright infringement. Instead, the court granted Google's motion for summary judgment and found that YouTube qualified for the “safe harbor” protections of the DMCA.

Under the DMCA, online service providers can avoid liability for copyright infringement by appointing an agent to receive “takedown” notices from rights holders and then acting promptly to remove infringing materials. In order to qualify for this safe harbor, the service provider must not have actual knowledge that the material is infringing or, not be aware of facts or circumstances from which infringing activity is apparent.

“The present case shows that the DMCA notification regime works efficiently,” the court concluded, noting that “when Viacom over a period of months accumulated some 100,000 videos and then sent one mass take-down notice on February 2, 2007. By the next business day YouTube had removed virtually all of them.”

There is no doubt that congress passed the DMCA to reduce legal uncertainty facing online service providers, encouraging the growth of the internet and e-commerce. The ruling is the latest in a series of rulings upholding the safe harbor provisions against the attacks by various entertainment companies trying to restrict uploading of their content without their permission. In this case, Viacom contended that because YouTube had general knowledge that infringing videos were available on its service, it should be denied the safe harbor protections. If the court had agreed with Viacom, the safe harbors would not offer much protection. The court held that “General knowledge that infringement is ‘ubiquitous’ does not impose a duty on the service provider to monitor or search its service for infringements.” Only if the service provider receives specific notice from the owner, must the provider promptly remove the infringing material.”
Viacom announced that it will appeal the ruling.

Viacom International, Inc., v. YouTube, Inc., 2010 WL 2532404 (SDNY June 23, 2010)

ATTRACTING INVESTORS

2010-06-19T18:34:00.000-07:00

Many filmmakers begin their careers by persuading private investors to back them. Indeed, unless you are a star like Kevin Costner or Barbra Streisand, it is rare for a major studio to fi¬nance a beginning filmmaker. Banks will not lend money without substantial collateral. Loans based on pre-sales are difficult to obtain because territory buyers want packages with name actors from an experienced director. That leaves most film¬makers looking to Mom, Dad, and whatever they can scrape up from friends, relatives, and MasterCard. While such resources have financed many films, distributor’s expectations have risen over the years. With a glut of independent motion pictures available, many distributors are not interested in acquiring a feature unless it 1) is shot with name actors; or 2) wins an important film festival.

Thus, filmmakers are forced to raise increasingly large sums of money to produce more ambitious movies if they hope to secure distribution. As digitally shot motion pictures gain greater acceptance, some production costs may decline. Nevertheless, numerous producers are chasing a small number of name actors. This competition has driven up the price of talent, even for low-budget indie films.

As a result, the ability to woo investors has become a critical skill—one that is not taught in film school. Perhaps the best preparation for an aspiring filmmaker would be to enroll in business school and learn the intricacies of high finance. Even if you didn’t learn much, you would graduate with a class of MBAs who would eventually earn large incomes and become good prospects to invest in your films. Better yet, go to dental school.

Most filmmakers have an aversion to fundraising. Like other “artists,” they would prefer that someone else deal with the unsavory task of raising money. But filmmakers without personal wealth or a rich uncle may have no choice but to beat the bushes for cash. Most underestimate the difficulty of raising funds. Joel and Ethan Coen spent a year raising the budget for Blood Simple. First they produced a slick trailer. Then they contacted everyone they knew who could potentially invest. Many of their friends who promised to back them didn’t come through. But the Coen brothers were shrewd networkers. Those prospects who were unable or unwilling to invest were asked to suggest other candi¬dates. Whenever they found an interested investor, they would visit them and show their trailer.

The Coen brothers discovered that the motive for people to invest in film has little to do with its financial merits. There are no special tax breaks. As will be discussed later, film is a risky investment. Yet there are many reasons people invest in film. The primary motivation is usually based on their attraction to the glamor of the movie business. Perhaps they think movie¬making will be exciting and fun. They may be turned on by the enthusiasm and passion of the filmmaker. They might want to rub shoulders with the “stars.” They may have a special interest in a topic. They may seek to impress their friends by inviting them to a screening of “their” film. They may desire an “executive producer” credit, a role for their niece, or a role for themselves.

Prime prospects are middle-class professionals: doctors, lawyers, and dentists. Most working-class folks can’t afford to invest in a movie. Wealthy individuals are difficult to approach unless you have a pre-existing relationship with them. They have investment advisors who tend to be financially conservative people immune to stardust. They analyze investments according to financial cri¬teria, under which movie proposals fare poorly.

The ideal investor is a doctor who makes several hundred thousand dollars a year and has substantial assets. He can lose his entire investment and the loss will not affect his lifestyle. This year instead of going to Las Vegas for a week and blowing ten grand, he is going to invest in a film in the hope that the experience will be more entertaining—it certainly won’t be less of a gamble. Investors who will suffer if they lose their investment should always be avoided.

Film investments have a bad reputation, and deservedly so. There are instances where investors were cheated and lost everything. Consequently, investors who have been burned or have heard of such horror stories may be unwilling to consider film-related investments. A filmmaker needs to be persuasive and have done his research if he hopes to raise funds. One needs to convince a prospect that film can be an intelligent investment for a small portion of the potential investor’s portfolio. While film investments are risky, the potential return from a hit can be enormous. Not only can the film earn revenue from box office receipts, but there are also ancillary sources of income. These sources include revenue from television, home video, merchandising, music publishing, soundtrack albums, sequels, and remakes.

Excerpt taken from Mark Litwak’s Risky Business, 2nd edition, 2009.

ALAN LADD PREVAILS AGAINST STUDIO PACKAGING PRACTICE

2010-05-27T18:20:00.000-07:00

W hen a package of movies is licensed, a frequent issue is how to allocate the license fee among the pictures in the package. If all the pictures are of the same commercial worth, a simple division among the films would appear to be fair. But movies are not fungible commodities like jelly beans, and their value can vary greatly. Moreover, the worth of a movie can be subjective.

Producer Alan Ladd claimed that Warner Brothers undervalued and underpaid the license fees attributable to Blade Runner, Body Heat, Night Shift, Tequila Sunrise, Outland, Chariots of Fire, and the Police Academy franchise, consisting of the original and sequels 2, 3, 4, 5 and 6. Ladd was entitled to profit participation from the films.

Warner licensed packages of movies to broadcast television and cable networks. In a practice known as "straight-lining," Warner allocated the same share of the licensing fee to every movie in a package, regardless of its value to the licensee. The gravamen of Ladd's action against Warner is that by allocating the same portion of the licensing fee to every movie in a package without regard to the true value of each movie, Warner deprived Ladd of a fair allocation of the licensing fees to which Ladd was entitled as a profit participant. The complaint included causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud and negligent misrepresentation.

Ladd's expert testified that in treating every movie as though it had the same value, "the studio was not doing its expert work, as a provider or distributor of content, in weighing the value of each of these titles." Ladd was entitled to 5 percent of gross revenues on all films once Warner recouped its costs, except for Chariots of Fire, on which he was entitled to 2.5 percent. Thus, on the $97 million in under allocated licensing fees, Ladd's profit participation should have been $3,190,625.

In its opinion the California Court of Appeals held that Warner owed a duty to allocate license fees fairly to Ladd's movies. It mentioned that every contract in California contains an implied covenant of good faith and fair dealing that "neither party will do anything which will injure the right of the other to receive the benefits of the agreement." (Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390, 400.) The implied covenant "finds particular application in situations where one party is invested with a discretionary power affecting the rights of another. Such power must be exercised in good faith." (Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 372.)

In evaluating its movies, Warner internally assigned each movie a grade of A, B or C. All of Ladd's films were rated either A or B. The problem was that Warner allocated the same proportion of the license fee to each title in the package, irrespective of the letter grade.

The court noted that movies rated C were filler material, which is why they are bundled in a package together with A and B movies. Leslie Cohen, director of film acquisitions at HBO, testified that in one licensing deal, Warner added a group of old Tarzan movies to a licensing package at no cost. Warner then allocated a license fee of $40,000 to each of the Tarzan movies, thereby reducing other movies' allocations in the package.

Ladd's expert also testified that in non-straight lined film packages, movies that were less valuable than Ladd's received greater value. For example, there were times when Daffy Duck and Bugs Bunny animated films were allocated double the money that was allocated to Chariots of Fire, a valuable feature film which won multiple Academy Awards, including Best Picture. Those animated films were wholly owned by Warner, which means Warner kept every dollar generated by licensing fees on those films. Ladd's expert determined that Warner was over allocating license fees to movies that were studio owned or that did not have profit participants.

Warner Bros had appealed a judgment on a jury verdict awarding plaintiffs $3,190,625 in damages. Most aspects of the judgment were affirmed and Ladd was granted recovery of costs on the appeal. Ladd v. Warner Bros. Entertainment, Inc. B204015. Court of Appeals of California, Second District, Division Three. Filed May 25, 2010.

Self Defense Checklist

2010-04-05T14:34:00.001-07:00

Here is a summary of some of the most important ways film¬makers can protect their interests:
1. OBTAIN ALL PROMISES IN WRITING. Don’t accept oral assurances from a producer or studio executive. If they promise to spend $50,000 to promote your film, put that promise in writing. If there is not enough time to draft a long-form contract, insist on a letter agreement spelling out the essential terms.
2. REGISTER ALL WORKS WITH THE COPYRIGHT OFFICE. Before you pitch a story, write it out and register it with the U.S. Copyright Office for maximum protection.
3. OBTAIN AN ARBITRATION CLAUSE: Make sure contractual disputes are subject to binding arbitration where the prevailing party is entitled to reimbursement of legal fees and costs. Arbitration is less costly than litigation, and going to court is not much of a remedy if you can’t afford it.
4. WATER DOWN THE WARRANTIES: Warranties are promises. For example, when you sell a script, the buyer will want you to promise that you have not plagiarized another writer’s work or defamed someone. If you make an absolute warranty, you will be liable, even if you made a good-faith mistake and honestly believed that you had secured all the rights. Therefore, it is best to make your warranties “to the best of your knowledge and belief,” rather than making them absolute.
5. RETAIN POSSESSION OF YOUR MASTER ELEMENTS: Independent filmmakers should not relinquish possession of their master materials. Instead, give the distributor a lab access letter permitting it to order copies of your originals held in your lab under your name. This way, if the distributor ever breaches your contract or goes bankrupt, at least it will not possess your masters. You should also retain control of your original still photos and any artwork.
6. OBTAIN INSURANCE COVERAGE: Typically the producer purchases insurance, including Errors and Omissions (E&O) insurance, which protects the producer if he inadvertently infringes another’s rights (e.g., defames somebody, infringes their copyrighted material). It is best to purchase the E&O policy early so that coverage begins during preproduction. If you be¬gin production and a claim is made, insurance companies may decline to issue a policy or insist that the policy exclude the pre-existing claim. E&O insurance will pay (minus a deductible) for your defense and any damages that may arise from liability for inadvertently defaming someone or infringing their rights.
7. CHECK REFERENCES: The most airtight contract in the world offers limited protection against a scoundrel who ignores its terms. Carefully investigate any party with whom you contemplate do¬ing business. For distributors, confer with other filmmakers who have had dealings with a distributor over the course of several years. Check with the Filmmaker’s Clearinghouse on my website (www.marklitwak.com) to see how indie filmmakers rate various distributors. Usually, people who have lousy reputations have earned them.
8. TERMINATION CLAUSE: If the other party defaults, it is best if you have the right to terminate the contract and regain all rights to your film in addition to monetary damages. Writers should insist on a reversion clause so that if a script is bought and not produced within a reasonable amount of time (e.g., five years), all rights revert to the writer.
9. INVESTOR MONEY: Never make any “offers” to investors or accept any investor money without fully complying with all ap¬plicable state and federal securities laws. These laws apply when you offer investments to “passive” investors, which are investors who provide financing but are not actively involved in making the movie. Have an entertainment attorney with experience in securities prepare appropriate disclosure documents (e.g., a Private Placement Memorandum).
10. SAVE COPIES: Retain copies of all correspondence, contracts, and drafts of your screenplay. When you make a story sugges¬tion or enter into an oral agreement, follow up with a letter documenting the extent of your contribution.
11. DEFINE ADVERTISING EXPENSES: Distribution contracts should specify in writing the minimum amount the distributor will spend to advertise and promote a film. It is wise to cap ex¬penses as well. Obtain a detailed definition of which advertising, promotional, and marketing expenses are recoupable, thereby precluding the distributor from reimbursing itself for overhead and any inappropriate or undocumented expenses.
12. INDEMNITY: The filmmaker should be indemnified (reimbursed) for any losses incurred as a result of the distributor’s breach of contract, and for any liability arising from material added to the script/film by the distributor.
13. RIGHT TO INSPECT BOOKS AND RECORDS: The distributor should be required to maintain complete books and records with regard to all sales and rentals of the motion picture. The film¬maker should receive quarterly producer reports with a detailed accounting statement along with any payment due. In the event the filmmaker wants to examine the distributor’s books and records, he should be permitted to do so with reasonable notice. If an audit discloses a significant underpayment (e.g., $5,000), the distributor should reimburse the filmmaker the cost of the audit.
14. LATE PAYMENTS/LIENS: All monies due and payable to the filmmaker should be held in trust by the distributor. In addition, the filmmaker should have a lien on the filmmaker’s share of the gross receipts derived from the film. The distributor should be required to pay the filmmaker interest on any late payments.
15. REMEDIES: A filmmaker should be given at least three years from receipt of a financial statement, or from discovery of an accounting error, to object.
16. ASSIGNMENT: No assignment (transfer) of rights by the distributor should relieve it of its contractual obligations to the filmmaker unless the filmmaker consents to the assignment.
17. FILMMAKER DEFAULT: A distributor should give the filmmaker at least 10 days’ written notice of any alleged filmmaker default (breach of agreement) before taking any action to enforce its rights.

Distributing Your Indie Film

2010-02-13T13:22:00.000-08:00

Filmmakers expend so much effort to produce their film that they often don’t give much thought to distribution until the movie is complete. Many filmmakers believe that if they just make a good film, distribution will take care of itself. However, securing distribution is often more challenging than raising financing and producing the movie.

One’s leverage in negotiating a distribution deal depends on whether distributors perceive the film as desirable. Of course, films cannot be appraised like real estate, as every picture is unique and there are no sure-fire criteria to determine a film’s commercial worth. I don’t know of a single industry executive who could have predicted the success of Slumdog Millionaire or Precious. The major studios, despite all their market research and expertise, frequently release big budget flops. While no one can accurately predict the commercial worth of a film, there are techniques and strategies that can be employed to improve one’s prospects. Even filmmakers with low-budget pictures with limited commercial appeal can usually improve upon the initial offer if they are savvy. An experienced negotiator can obtain many concessions just by knowing what to ask for.

In a typical deal, the distributor secures the right to distribute the movie in one or more media (e.g., theatrical, home video, television). The distributor pays for all distribution, advertising and marketing costs. Both parties share revenue derived from the film.

Competition improves terms. Giving one distributor an early peek at your film is usually a bad idea. If the distributor passes on the film, word gets around and other acquisition executives may not bother to view your film. On the other hand, if the distributor likes the film, a pre-emptive bid is likely, and you may only have a day or two to decide whether to accept the offer. If you decline, you may be rejecting the best deal you will ever receive. If you accept, you foreclose the possibility of a better deal tomorrow. Thus, you will be forced to make a decision without knowing where you stand in the marketplace and what other companies might offer. That is why it is important to orchestrate the release of your film to potential buyers so as to create maximum competition and enhance your leverage. Here are some guidelines:

1) NO SNEAK PREVIEWS: It is best not to screen your film for distributors until it is complete. Executives may beg to see a rough cut. They may assure you, "Don’t worry. We are professionals. We can imagine what the film will look like with sound and titles." Don’t believe them. Most people cannot extrapolate. They will view your unfinished film and perceive it as amateurish. First impressions last.

2) SCREEN IT BEFORE A CROWD: It is usually better to invite executives to a screening than to send them DVD. If you send a DVD to a busy executive, he will pop it in his machine and hit the pause button as soon as the phone rings. Then he will watch another few minutes until his secretary interrupts. After numerous distractions, he passes on your film because it is "too choppy."

You want an executive to view your film in a dark room, away from distractions, surrounded by a live audience--hopefully one that loves your film. So rent a screening room at a convenient location, invite all the acquisition executives you think appropriate, and pack the rest of the theater with your friends and relatives, especially Uncle Bob with his infectious laugh. Perhaps the best venue for exhibiting a picture is at a film festival. If the film is warmly received, your bargaining position will be strengthened. If an executive views your film surrounded by an appreciative audience, it may affect his perception of the film.

Moreover, festivals can generate favorable publicity. Most publications only review films about to be released theatrically in their community. Thus films seeking distribution are not reviewed. But entertainment trade papers and selected publications will review pictures exhibited at major festivals.

When arranging a screening, book a theater large enough to hold everyone expected to attend but not so spacious that your viewers are sitting in a sea of empty seats. Filling out the audience with cast, crew and friends may be a good idea as these people are likely to respond positively. At the screening, have someone at the door collecting business cards or taking names of those attending. That way you can determine which companies have seen the film and which have not.

3) DO NOT GIVE AWAY YOUR FESTIVAL PREMIERE LIGHTLY: Carefully plan a festival strategy. I have seen filmmakers give their premiere to minor festivals and thereby disqualify themselves from participating in more significant ones. You can participate in lesser festivals later. If you are turned down by an important festival, the worse that happens is that you incur a small delay in seeking distribution. No one knows which festivals passed on your film unless you tell them.

4) TIMING IS EVERYTHING: You should sell your film when buyers are hungry for product. Distributors that acquire films for international distribution plan their activities around a market calendar. The major film markets are 1) AFM in the fall in Santa Monica, California, 2) Berlin in February in Germany, 3) Cannes in May in Cannes, France. There are also television markets including NATPE in the U.S.A., and MIP and MIP-COM in France.

Distributors are hungriest for product when a market is rapidly approaching and they do not have enough fresh inventory. A distributor may spend $90,000 or more to attend Cannes, and if it appears the company will have nothing new to sell, the executives panic. This is the best time to approach a distributor. Give your distributor enough time to include your film in their marketing efforts. A movie acquired at the last moment will often receive rushed and slipshod treatment. As a result, the film may sell poorly at the first market, which is the most critical market for a picture. At subsequent markets, the film is no longer new product. The best time to approach a distributor is 60-90 days before a market. Assuming a distributor wants to acquire rights to your film, it may take a month or longer to negotiate a deal.

Purchasing Life Story Rights

2009-12-28T14:31:00.000-08:00

Before you decide to purchase the rights to a person’s life story, it is worth considering what you are buying. When you buy the rights to portray someone in film or television, you are buying a bundle of rights. These rights include protection from suits based on defamation, invasion of privacy and the right to publicity. You may also be buying the cooperation of the subject and his family or heirs. Perhaps you want access to diaries and letters that are not otherwise available to you.

If the subject of the life story is deceased, much of the rationale for buying these rights disappears, since defamation and invasion of privacy actions protect personal rights that do not descend to the estate. In other words, people can spread lies and falsehoods about the dead, reveal their innermost secrets, and their heirs cannot sue for defamation or invasion of privacy on behalf of the deceased person. A writer could publish a revisionist history of George Washington, portraying our first President as a child molester and a thief, and his heirs would have no remedy. So when a subject is deceased, a producer has less need for a depiction release. The right of publicity may or may not descend to one’s heirs, depending on state law.

It is also important to consider whether the subject of your film is a private individual or a public official or public figure. Public officials and figures have opened more of their lives to public scrutiny, and consequently more of their lives can be portrayed without invading their privacy. Moreover, public officials and figures must meet a much higher burden of proof in order to establish defamation or invasion of privacy. They must prove that a defamer intentionally spread a falsehood or acted with reckless disregard of the truth.

One should also consider the possibility of fictionalizing a true story. If you change the names of the individuals involved, change the location and make other alterations so that the real-life people are not recognizable to the public, you could avoid the necessity of a depiction release.

Keep in mind, however, that the story’s appeal may be predicated on the fact that it is a true story. In such a case, fictionalization is not a good alternative. Suppose you wanted to do the Jessica McClure story, describing how a Texas community rallied to the rescue of a young girl who fell down a well-hole. Here you would want to bill the movie as The Jessica McClure Story. That is why viewers would tune in.
Terms of the Agreement

In negotiating for life-story rights, there are a number of important issues that need to be resolved. At the outset, the parties must determine the extent of the rights granted. Does the grant include remakes, sequels, television series, merchandising, novelization, live-stage rights and radio rights? Are the rights worldwide? Buyers will usually want as broad a grant as possible. The seller may insist on retaining certain rights.

The buyer must also consider other releases that may be needed. What about the subject’s spouse, children, friends and relatives? Will these people consent to be portrayed? Will the subject ask his friends and relatives to cooperate? Can these secondary characters be fictionalized? If the producer is planning an ensemble piece about a basketball team, it makes no sense to sign up players one by one, hoping to get them all. A smart producer will gather the team in a room and purchase all of the rights or none.

Another issue is whether the rights can be assigned to a studio or production company. If the buyer is a producer, she will often need to assign such rights to a studio or network later as part of a financing/distribution agreement.

The purchase of life-story rights can be structured as either an option/purchase deal or as an outright sale, often with a reversion clause. A reversion clause provides that in the event the rights are not exploited within a certain number of years (i.e., the movie is not made), then all rights would revert to the subject. This provision protects the subject if he has sold rights to his life story to a producer who never uses them, and some time later another producer is interested in making such a film.

The agreement should recite the consideration exchanged. Consideration is a legal term of art. Consideration is that which is given in exchange for a benefit received. It is a necessary element for the existence of a contract. A contract is only binding with consideration. It is what distinguishes a contract from a gift, which may be revocable.

Consideration is usually money, but it can be anything of value. As a general principle, courts do not review the adequacy of consideration. In other words, should you be foolish enough to agree to sell your brand-new car, worth $15,000, for only $5,000, don’t expect a judge to rescue you from the results of your poor judgment. Unless there was some sort of fraud or duress involved, the contract will be enforced, although it may be unfair to one party.

To ensure that a contract is binding, agreements often recite: “For ten dollars and other valuable consideration.” This clause establishes that there has been an exchange of value, even if it is nominal consideration. Make sure the consideration is actually paid. It is wise to pay by check so that you will have the cancelled check as proof of payment.

Mutually exchanged promises can be adequate consideration. For example, a producer’s efforts to develop a project could be deemed adequate consideration for an option. But to be sure their contracts are enforceable; producers may want to pay some money for the option. There are some exceptional circumstances when courts will throw out a contract if the terms of the contract are unconscionable.

There are other ways to compensate a subject of a life story besides a flat fixed fee. You could give the subject points (percentage of net profits), consulting fees and/or bonuses to be paid when the film is exploited in ancillary markets.

An important part of any depiction agreement is the “Warranties and Representations” clause. A warranty is a promise. The buyer will want the seller to promise never to sue for an invasion of his rights of publicity and privacy, or for defamation, even if the buyer takes some creative liberties in telling the story. The warranties must cover all conceivable situations. No one wants to buy a lawsuit.

There will also be a provision that gives the buyer the right to embellish, fictionalize, dramatize and adapt the life story in any way he chooses. This is a frequent sticking point in negotiations. The subject is delighted to be asked to have her story told on the silver screen, but when you present her with a depiction release, she becomes concerned. She asks, “This document says you can change my story any way you like and I can’t sue for defamation. How do I know you won’t portray me as a monster?”

A producer may reply: “Trust me, trust me.” Sometimes that will work. But the subject may respond: “I have no intention of trusting any of you charming Hollywood types. I want script approval. Write your script, and if I like it, I’ll sign the release.”

Can a producer give a subject script approval? No sane producer would. No producer is going to expend a lot of time and money developing a script only to find that the subject has changed her mind or is unreasonably withholding approval.

If the subject refuses to give the producer carte blanche, are any compromises possible? Yes. The subject could have approval over the treatment or selection of the writer. Perhaps the subject will figure that if she approves only a classy writer, her portrayal will be acceptable.

Alternatively, the producer could offer to make the subject a creative or technical consultant to the production. “You’ll be right there by the director’s side,” says the producer, “giving him advice and suggestions to ensure that everything is authentic.” The producer may not mention that the director doesn’t want the subject on the set and is not required to accept her suggestions.
Another possible compromise could limit the subject matter and period portrayed. Perhaps the subject is primarily concerned that an embarrassing incident in her life not be re-enacted in Panavision. The release could say that certain incidents (e.g., a divorce) are not included in the release. Or the release could cover limited periods of the subject’s life (e.g., only those incidents that occurred before 1947).

Finally, the subject might have the right to determine screen notice. She could decide if the film will be billed as a true story or a dramatized account. Alternatively, she could decide whether real names are used for the characters.

Excerpt from Dealmaking in the Film and Television Industry, 3rd Edition, by Mark Litwak.

IFTA Posts Summaries of Arbitration Awards

2009-11-23T18:54:00.000-08:00

Many industry disputes involving independent film or international sales are resolved under IFTA (formerly AFMA) arbitration. IFTA now posts summaries of their awards which can be interesting reading. The summaries are available at: http://www.ifta-online.org/IndustryServices/RecentAwards.aspx

The summaries name the parties to the disputes and briefly describe which party prevailed.

According to IFTA, it has administered the resolution of disputes in more than 1700 cases involving more than US$500 million in claims. IFTA Arbitration may be used for a wide variety of domestic and international entertainment disputes, such as those arising out of production agreements, motion picture, television and multimedia licensing agreements, financing agreements, film exhibition agreements, and sales agency agreements, to name a few.

METHOD FEST

The 12th annual The Method Fest independent film festival is currently accepting entries for the 2010 festival, March 25 April 1, in Calabasas, California. Method Fest is dedicated to showcasing breakout acting performances in story and character-driven independent feature and short films. The Method Fest provides a great opportunity to receive Los Angeles reviews and to have films seen by distributors based in Los Angeles. The submission deadlines are:
Early Deadline - December 1, 2009;

Late Entry Deadline February 1, 2010.

You can print / download the entry form for the 12th annual Method Fest on the festival web site, www.methodfest.com. Filmmakers can also submit via www.withoutabox.com.

Over the past 11 years The Method fest has launched over 120 feature films into the marketplace (theatrical releases, DVD/video distribution, TV deals), and has brought to attention actors like Naomi Watts, Jeremy Sisto, Hunter Parrish, Michael Angarano, Jena Malone, Tamara Hope, Hill Harper, Navid Negahban and Eugene Byrd, to name just a few.

Full disclosure: I am an advisor to the festival.

If you have any questions, you can email don@methodfest.com or call (310) 535-9230.

TAX INCENTIVE UPDATE

Hawaii has laid off its film commissioner Donne Dawson and reduced staff in order to economize. Incentives under Acts 215 and 221 (which provide a 100% tax credit for 5 years, dropping to 80% for 2009/2010) sunsets at the end of 2010, but the 15-20% refundable credit remains in place.

Additional info at:

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2009/11/state-budget-cuts-hit-hawaii-film-office.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+newsandbuzz+(News+%26+Buzz)

The new tax incentive guide put out by The Incentives Office is available for free at:
http://fs6.formsite.com/jeff5000/

The regional film commissions (Big Island, Honolulu, Kauai and Maui) are still operational.

THE DIFFERENCE BETWEEN MARKETS & FESTIVALS

Some filmmakers are confused about the difference between a film festival and a film market. Markets are only open to the trade: A member of the public cannot buy a ticket to see a film at a market or participate in it. At markets, films are screened for buyers. Actually, it would be more accurate to call these buyers “licensees” since they usually do not buy films outright but license distribution rights for a term in a territory. One buyer might be a German broadcaster interested in acquiring films to distribute by cable television in Germany. Another buyer might be a Turkish theatre-chain owner who wants to acquire theatrical rights for Turkey. Some buyers want all media rights (theatrical, television, and home video) in a territory, and may sub-license rights to other distributors.

Markets are an opportunity for buyers worldwide to converge at one location to meet with sellers of film rights. In the course of a market, a buyer can talk to many sellers and view multiple films. Deals may be signed during the market or afterwards. The market is also an opportunity for sellers and buyers to socialize, and to meet people with whom they transact business long-distance.

Festivals, on the other hand, are open to the public. Anyone can buy a ticket to a screening, although at the most popular festivals, there may not be enough tickets to go around. Festivals can provide a test of audience appeal. A festival screening may be the first opportunity for the filmmaker to see how moviegoers react to his work. Of course, festival-goers tend to be better-educated, wealthier, and more avid moviegoers than the average moviegoer. Nevertheless, a festival screening does provide some good feedback.

Festivals serve two important functions. First, they expose films to distributors. Acceptance at a top festival will induce many acquisition executives to take a look at your film, either at the festival or by asking to screen it outside the festival. Winning a top festival may make your film highly desirable in the eyes of distributors, and may lead to a furious bidding war.

Second, festivals can be used to generate publicity for a film and draw the public’s attention to it. Thus, once distribution has been secured, the distributor may want the film in a festival to build awareness. If the timing of the festival is near the release date for the film, participation in the festival may further publicize the pic¬ture. On the other hand, if the film is not going to be released for another six months, publicity now may not be helpful, and can be harmful. That is because when the film is released, the prior coverage will have been forgotten by the public, and the news media will consider the film old news. The media may not review the film again or write articles about it.

Except from Risky Business, 2nd Edition by Mark Litwak.

JUST PUBLISHED! 2ND EDITION RISKY BUSINESS

2009-11-03T17:57:00.000-08:00

UPDATED AND REVISED

$26.95

CONTENTS

FILMMAKER SELF-DEFENSE CHECKLIST

1. ORGANIZING YOUR COMPANY
Choice of Business Entity
Sole Proprietorship
General Partnership
Limited Partnership
Corporation
Limited Liability Company (LLC)

2. COLLABORATIONS AND CO-PRODUCTIONS
International Co-Productions
Production Incentives
Contract: Co-Production Agreement
Contract: Distributor Sales Agency Agreement

3. FINANCING INDEPENDENT FILMS
Loans
Contract: Promissory Note
Contract: Promissory Note with Guarantee
Borrowing Against Pre-sale Agreements
Investor Financing
Registration and Exemptions
504 Offering
505 Offering
506 Offering
Intrastate Offering Exemption
Accredited Investor Exemption
California Limited Offering Exemption
Anti-Fraud Provisions
Distributor Supplied Financing
Finders
Contract: Finder Agreement
Contract: International Distribution License
Agreement

4. ATTRACTING INVESTORS
Checklist for Film Investors

5. TACTICS AND STRATEGY IN ARRANGING
.DISTRIBUTION
How Much Is My Film Worth?
How Distributors Evaluate a Film
Sources of Revenue
Increasing Your Leverage
Film Festivals
Working the Festival Circuit
Balancing Risks and Rewards
The Acquisition/Distribution Agreement
Investigate the Distributor

6. THE DISTRIBUTION AGREEMENT
Principle Terms of a Distribution Agreement
Territory
Media
Term
Distribution Fee
Distribution and Marketing Expenses
Advances and Guarantees
Consultation Rights
Warranties and Representations
Accounting
Arbitration
Insurance
Termination
Allocation of Package Revenue
Governing Law
Territorial Minimums
Access to Master Materials
Return of Materials
Delivery
Contract: Lab Access Letter
Contract: International Distribution Agreement
(Filmmaker-friendly version)

7. WHEN A DISTRIBUTOR DEFAULTS
Selecting a Distributor
Creative Accounting
Conducting an Audit
How Revenue Is Divided
Creative Accounting Pitfalls
Accounting Terms
Defensive Tactics
A Filmmaker's Bill of Rights

8. LOOKING FORWARD

APPENDIX A - DISTRIBUTION
Delivery Checklist
Certificate of Origin
Statement of Prior Distribution
Statement of Distribution Restrictions and Obligations
Major Deal Points: Acquisition/Distribution Agreement
Copyright Security Agreement

GLOSSARY OF TERMS

INDEX
CONTRACTS AND FORMS*

Co-Production Agreement
Promissory Note
Promissory Note with Guarantee
IFTA International Schedule of Definitions
Finder Agreement
International Distribution License Agreement
Lab Access Letter
IFTA Rider to International Distribution Agreement
International Distribution Agreement
(Filmmaker-friendly version)

COPIES AVAILABLE FOR IMMEDIATE SHIPMENT. GO TO WWW.http://www.marklitwak.com/store/ to order or call (310) 859 9595 and speak to Katrina.

Craigslist Wins Motion for Judgment on the Pleadings

2009-10-23T17:36:00.000-07:00

Federal Judge John F. Grady in Illinois has granted Craigslist's motion for a judgment on the pleadings in a suit over the website's "erotic services" internet classified listings.

Thomas Dart, the sheriff of Cook County, Illinois, alleged that Craigslist facilitated prostitution and constituted a public nuisance. The Sheriff claimed that Craigslist knowingly arranges meetings for the purpose of prostitution and directs people to places of prostitution. Dart asked for an injunction prohibiting Craigslist from publishing erotic services listings, and sought to recover the money that his office spent investigating prostitution on the site. The Sheriff claims to have arrested over 200 people through Craigslist since January of 2007.

The court held that Craigslist was shielded from liability by Section 230 of the Communications Decency Act.
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http://blogs.findlaw.com/courtside/2009/10/craiglist-sure-to-be-pleased-by-judges-ruling-in-erotic-services-lawsuit.html

U.S. to Extradite Polanksi

The United States has formally requested that Switzerland extradite film director Roman Polanski, 76, who fled California in 1977 before sentencing for sexually assaulted a 13-year-old girl.

Swiss authorities said that director Roman Polanski could spend up to two years in prison if he was extradited back to the United States for sentencing in a sexual assault case. Los Angeles County prosecutors have declined to reveal what kind of sentence they would seek if he is returned to Los Angeles.

The extradition process is complex and could delay Polanski’s return if he challenges the request. A Swiss court recently rejected a bid by Polanski for release on bail, saying the risk that he would flee was too great.

Production Incentive Update

According to Entertainment Partners http://www.productionincentives.com/ Iowa has suspended its incentive program and Connecticut recently passed budget bill changes the existing motion picture and digital animation production and infrastructure project expense tax credits, applicable for income years commencing on or after January 1, 2010.

Changes to the motion picture and digital animation tax credits include: (1) a minimum spend of $100,000 for a 10% credit, a minimum spend of $501,000 for a 15% credit, and a minimum spend in excess of $1,000,000 for a 30% credit; (2) a minimum local principal photography requirement of 50% for the film credit; (3) an aggregate project cap on star talent compensation subject to local income tax of $20,000,000 (in addition to the per person cap of $15,000,000); (4) exclusion of costs for the independent certification; (5) exclusion of all costs incurred outside the state, but used within; (6) infomercials have been excluded from eligible formats; and (7) the independent audit must be completed by an approved firm.

The digital media and motion picture infrastructure project credit has also been changed to require a minimum qualifying spend of $3,000,000 to be eligible for a 20% credit.

Risky Business at UCLA February 20, 2010

2009-09-25T17:55:00.001-07:00

Mark will present his "Risky Business: Financing & Distributing Independent Films" seminar at at UCLA on February 20. Those who attend this comprehensive one-day seminar will learn how independent films are financed and distributed. Topics include organizing your company, raising financing via pre-sales, debt and limited partnerships, negotiating tactics, principal terms of the acquisition/distribution agreement, cross-collateralization and creative accounting. Particular attention is paid to how producers and filmmakers can protect their interests by watering down warranties, getting added to the E& O policy, using lab access letter to retain possession of the negative, and utilizing termination and arbitration clauses.
The seminar is all day Saturday. Limited Enrollment.
Registration number: V4464B. Attorneys receive 7 hours of MCLE credit.
more info at:

An extensive handout accompanies the course. The handout covers:

SELF DEFENSE CHECKLIST

ORGANIZING YOUR COMPANY
Choice of Business Entity
Sole Proprietorship
General Partnership
Limited Partnership
Corporation
Company Formation Checklist
Limited Liability Company
Comparison of Entities

COLLABORATIONS AND CO-PRODUCTIONS
International Co-Productions
Co-Production Checklist

RAISING MONEY
Loans
Pre-sale Agreements
Contract: IFTA International Schedule of Definitions
Entertainment Finance Companies
Equity Investments
Finders

TACTICS AND STRATEGY IN ARRANGING DISTRIBUTION
How Much is My Film Worth?
How Distributors Evaluate a Film
Sources of Revenue
Increasing Your Leverage
Film Festivals
Working the Festival Circuit
Balancing Risks and Rewards
The Acquisition/Distribution Agreement
Tactics and Strategy
Markets and Festivals
Investigate the Distributor

PRINCIPAL TERMS OF THE DISTRIBUTION AGREEMENT
Territory
Media ¬
Term
Distribution Fee
Distribution and Marketing Expenses
Advances and Guarantees
Consultation Rights
Warranties and Representations
Accounting
Arbitration
Insurance
Termination
Assignment
Allocation of Package Revenue
Security Interest
Governing Law
Territorial Minimums
Retain Your Masters
Return of Materials
Delivery
Contract: Lab Access Letter
Contract: IFTA Rider to International Distribution Agreement

WHEN A DISTRIBUTOR DEFAULTS
Selecting a Distributor
Creative Accounting
Conducting an Audit
How Revenue is divided
Creative Accounting Pitfalls
Accounting Terms
Defensive Tactics

Tax Incentives Revisted

The Los Angeles Times published an article on September 22, 2009 entitled "Filmmaking incentives losing glamour in cash-strapped states. The article stated that while more than 40 states offer tax breaks or rebates for film and television production, some states were re-considering the wisdom of such programs in light of their budget difficulties.

Wisconsin quashed its state's tax program this summer after a report by the state Department of Commerce raised questions about money the state paid for "Public Enemies," the Universal Pictures gangster movie starring Johnny Depp. The governor replaced its program providing a 25% tax credit with no cap -- with a $500,000-a-year grant designed to bolster Wisconsin-based film production companies. That's much less than the $6.1 million the state awarded in tax credits in the last year.

2010 CineVegas Film Festival Cancelled

Organizers are canceling the CineVegas Film Festival in Las Vegas next year because of the economy.

President Robin Greenspun and Artistic Director Trevor Groth announced today that the CineVegas Film Festival will not be held in 2010

Festival President Robin Greenspun issued a Friday statement citing "the current economic climate and the pressures it created."

Greenspun says organizers didn't want to let the economy affect the festival's quality, so they put the event on hold.
Artistic Director Trevor Goth says he hopes to relaunch CineVegas after the economy recovers.

The 11th CineVegas Film Festival was held June 10 - 15, 2009 at the Palms Casino Resort and Brenden Theatres in Las Vegas.

INTERNET RADIO DEAL CONCLUDED WITH MUSIC LABELS

2009-07-07T18:24:00.000-07:00

After several years of debate, webcasting radio stations have at last reached a deal with copyright holders regarding royalty rates. The non-profit SoundExchange a performance rights organization designated by the U.S. Copyright Office to collect royalties from digital playback of music announced a deal with Internet radio services on new royalty terms. Online radio has become increasingly popular because it has the ability to target music to niche audiences.

Before 1995, Sound Recording Copyright Owners in the United States did not have a performance right. The Digital Performance in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998 altered that by granting a performance right in sound recordings. Consequently, the law now requires that users of music pay the copyright owner of the sound recording for the public performance of that music via certain digital transmissions.

A controversy arose in 2007, when the Copyright Royalty Board (CRB) issued royalty rates for Internet radio that many stations complained would put them out of business. The fees were going to increase next year to 0.19 cents a song each time they streamed a song.

Both sides negotiated for several years, eventually agreeing to legislation that let Internet radio and copyright holders work out a deal on their own. If they reached an agreement, the CRB's rates would be vacated. The Webcasters Settlement Act of 2008, and a second bill, the Webcasters Settlement Act of 2009, extended that deadline for another month after President Obama signed it on July 2.

The agreement treats sites according to their size and business model. Under the deal Internet radio stations are divided into three categories: large pureplay webcasters; small pureplay webcasters (i.e. those that earn $1.25 million or less in total revenues and have a cap on the amount of music streamed); and pureplay webcasters that provide bundled, syndicated, or subscription services.

Large pureplay stations will pay a pay-per-performance rate or 25 percent of their revenue, whichever is greater. They are required to report to SoundExchange on the music they stream to listeners. These rates are in place until 2015. Small stations will pay either a percentage of their revenue or a percentage of their expenses. They have the option of less rigorous reporting requirements if they pay a proxy fee. These rates are in place until 2014. Pureplay webcasters pay an annual fee of $25,000.

SoundExchange represents more than 3,500 record labels and 31,000 artists and whose members include both signed and unsigned recording artists as well as independent and major label record companies. The agreement applies exclusively to "pureplay" webcasters -- those that simply play music, frequently supported by advertisements. Those sites usually have minimal revenues. Websites that stream music and sell other products won't find the terms as tempting because they must pay a percentage of all their revenue.

J. D. SALINGER SUES TO PREVENT PUBLICATION OF BOOK

2009-06-25T14:30:00.000-07:00

Lawyers for acclaimed author J. D. Salinger, who wrote “The Catcher in the Rye,” have filed suit to enjoin circulation of Fredrik Colting’s new novel, “60 Years Later: Coming Through the Rye,” claiming that it infringes Salinger’s copyright.

Defendant Colting’s novel has already been released in Europe and was scheduled for a September release in the U.S. Colting claims his novel is legally protected commentary and a parody of "The Catcher in the Rye." Colting, writing under the pen name John David (J.D.) California, introduces “Mr. C.” in his book as the 76-year-old Holden Caulfield who escapes from a nursing home and pontificates on his experiences while meandering New York City. The novel, which is Colting’s first novel to be published, also features a character named "J.D. Salinger."

Salinger’s lawyers contend that the right to create a sequel to “The Catcher in the Rye” or to use the character “Holden Caulfield” belongs only to Salinger, who has never permitted his work to be filmed, staged or otherwise adapted. The suit further argues that sales of Colting’s unauthorized book would siphon off profits due Salinger. Catcher has been a highly successful book that has been translated into dozens of languages and has sold more than 35 million copies worldwide

Colting’s lawyers contend that 60 Years is a commentary on Catcher, Salinger and the Holden character. They contend that the work shows the battle between Salinger and a 76 year-old “Mr. C” as Salinger struggles to kill off his famous character. They further argue that Colting has only taken as much of Catcher as needed to make his points, and there is no literal copying of any expression in Catcher other than a few catch-phrases such as “phony” and “goddam.” Only three of the 80 or so characters in Catcher appear in 60 Years, and they are considerably older than their younger counterparts in Catcher. In Catcher, Holden is 16 years old.

While characters can be protected under copyright, most decisions involve protection of characters from cartoons, films and other visual medium, rather than literary characters described only in words.

Colting’s lawyers further argue that many elements of “The Catcher in the Rye” are generic to numerous works of fiction and are hence not protectable, and that, even if protectable, their manifestations in the two books are insufficiently similar. Salinger’s lawyers, on the other hand, enumerate specific parallels between what they contend are idiosyncratic elements of “The Catcher in the Rye,” and elements of Colting’s book.

Even if the court finds Colting’s work to be substantially similar to protectable aspects of Salinger’s work, Colting may prevail on a fair use defense. Courts have tended to consider parodies that do not detract commercially from the copied work to be fair uses of the work. In filed declarations, Colting and academicians describe Colting’s novel as a parody exploring the unresolved relationship between Salinger, who emerges as a character in the book, and his autobiographical creation, Holden Caulfield.

Salinger’s lawyers, alternatively, characterize Colting’s book as merely an imitative knock-off, or sequel to the original. They contend the work is not a parody and it has no claim to fair use because it does not poke fun, ridicule, comment upon, criticize, or otherwise transform “The Catcher in the Rye.”

J.D. SALINGER v. John DOE, writing under the name John David California; Windupbird Publishing Ltd.; Nicotext A.B.; and ABP, Inc. d/b/a SCB Distributors Inc., No. 09 Civ. 5095 DAB (June 1, 2009).Complaint available at Westlaw, 2009 WL 1615819 (S.D.N.Y).

FORMER BEAUTY QUEEN SUES ICM FOR SEXUAL ASSAULT

A former Canadian beauty queen has filed a class-action lawsuit accusing ICM of a conspiracy to sexually assault and exploit young actresses. ICM denied any wrongdoing.

Claire Robinson, a past Miss British Columbia (2004), claims ICM agent Jack Gilardi and his friend John Rockwell ran a scam in which they “hip-pocketed” actresses in attempt to take sexual advantage of them. A “Hip-pocket” client is one that is represented on the side by an agent while not officially being represented by the agency at large. At many mid and large-sized agencies, the partners have to approve acceptance for all new clients of the firm.

The complaint alleges that Robinson, 23, met Rockwell in March 2007 when she moved from Vancouver, Canada, to Los Angeles, California to become an actress.

Robinson claims that Gilardi and his assistants sent her on several “mock auditions.” During one such audition a producer allegedly asked her to perform bedroom scenes and a lewd act. On another audition Robinson met a producer who held Robinson's hand, touched her body and attempted to plan a vacation with her, according to the lawsuit.

Robinson further alleges that Rockwell made sexual advances during a trip to the Cannes Film Festival under the ruse that the trip would help her career. Robinson claims that Rockwell became “increasingly aggressive and controlling” when she rejected his advances. One year after the trip to Cannes, Rockwell forced himself into Robinson's apartment and raped her, according to the suit.

Robinson filed a class-action because she believes other women have been “ensnared” in the ICM scheme in the past. Robinson seeks $10 million in punitive damages or ten percent of ICM's annual gross earnings.

The lawsuit alleges fraud, negligent supervision and sexual battery. It also seeks to designate the hip-pocketing scheme as an ongoing criminal enterprise under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c).

Robinson v. International Creative Management Inc. et al., No. BC414002, complaint filed (Cal. Super. Ct., L.A. County May 19, 2009). 21 No. 5 ANENTILR 2. 2009 WL 1468113

REAL DEALS

2009-06-14T10:18:00.000-07:00

The following article written by Mark Litwak was published on June 2, 2009 in the L.A. Daily Journal, the primary legal newspaper for the Los Angeles legal community.

Film investments have a bad reputation, and deservedly so. There are instances where financiers have been cheated and lost their entire investment. Consequently, some investors simply refuse to consider film-related investments. This is unfortunate because an intelligent investment in a motion picture can earn substantial returns. While film investments are risky, the potential return from a hit can be enormous. No only can the film earn revenue from box office receipts, but there are many ancillary sources of income. These sources include revenue from television, home video, merchandising, music publishing, soundtrack albums, sequels and remakes.

There are ways to reduce the risk of film investments. Here is a checklist to guide investors.

Thoroughly investigate the reputation and track record of any producer or distributor you contemplate doing business with. No contract can adequately protect you against a scoundrel. Speak to filmmakers and investors who have done business with a candidate. Check court records to see if the company has been sued.

Federal and State security laws are designed to protect investors. Offerings to the public generally require prior registration with the SEC or a state agency. Usually private placements are limited to persons with whom the offeror has a pre-existing relationship. Even if registration is not required, the anti-fraud provisions of the security laws require that the offeror make full disclosure of all facts that a reasonably prudent investor would need to know in deciding whether to invest. The information disclosed should include a detailed recitation of all the risks involved in developing, producing and marketing a movie. Avoid any offering that appears to violate this requirement by making less than full and truthful disclosure. Carefully read the prospectus, and consult your own financial and legal advisors before making a decision to invest.

Do not back a filmmaker or production team that does not possess the proven skill needed to make a professional-looking movie. Avoid first-time filmmakers. You are safer backing filmmakers whose have completed at least one short or a feature-length work. Partner with people of integrity who bring the skills, expertise and resources to the endeavor that you lack. For instance, if you don't have the knowledge necessary to evaluate a script, bring aboard someone who has that expertise, or hire a script doctor.

There is a very limited market, and modest potential revenue, to be earned from short films, documentaries, black and white films, and foreign language pictures. Distributors and exhibitors are prejudiced against motion pictures shot on videotape. They prefer films shot on 35-millimeter stock, although quality films shot on 16-millimeter or Super 16-millimeter stock can obtain distribution. The top festivals do not exhibit motion pictures on videotape.

Certain themes, topics and genres can be difficult to sell. Religiously-themed pictures can easily offend audiences. Cerebral comedies can be difficult to export because their humor may not translate well. Films with a great deal of violence may be shunned by European television which is a prime market for independents. Films with explicit sex may not pass censorship boards in certain countries.

Independent films without name actors are difficult to sell. Of course, name recognition varies around the world. The star of an American television series may be a big name in the United State but unknown abroad. On the other hand, some actors have large following aboard, yet are relatively unknown in the United States. There are several publications that can be consulted to determine the commercial appeal of actors. The Ulmer Guide surveys financiers, sales agents and other industry insiders. Also, the Hollywood Reporter publishes its "Star Power" guide.

The director of the film is the key person who will determine whether the final product is marketable. If a filmmaker shows no concern about making a movie with audience appeal, you can expect a film whose exhibition will be limited to the family and friends of the filmmaker. This is not to say that the only films you should invest in are low-brow fare like "Dumb and Dumber." A well-made "art" film like "Elizabeth," can win awards and make a handsome return on investment. Filmmakers should give some thought beforehand as to the nature of the film's intended audience. I once watched a wonderful "Lassie" type film spiced with four-letter words uttered by one character. I explained to the filmmaker that his film would never sell in the family market because of the vulgar language, and it was too soft a story to appeal to teens and adults.

It is best to invest in an endeavor where everyone shares the same risks and rewards. A filmmaker who takes a large fee from the production budget may financially prosper from a picture that returns nothing to the investors. It is better to back a filmmaker willing to work for a modest wage and share in the success of the endeavor through deferments or profit participation. An investor can take some comfort investing in a motion picture on the same terms as a producer or distributor where all parties recoup at the same time. Beware of investing in a project where other parties benefit when you lose.

Usually, investors are entitled to recoup all of their investment from first revenues before payment of deferments or profits. Many times investors are allowed to recoup 110 percent or more of their investment in order to compensate them for loss of interest and inflation. Profits are declared after payment of debts, investor recoupment and payment of deferments. Profits are generally split 50/50 between the producer(s) and the investors. Thus, investors who provide 100 percent of the financing are entitled to 50 percent of the profits. From the producer's half of net profits are paid any third-party profit participants (e.g. the writer, director and stars).

Don't ever accept oral assurances from a producer or distributor. If they promise to spend $50,000 on advertising, get it in writing. If there is not enough time to draft a long-form contract, ask for a letter reiterating the promises. Retain copies of all correspondence, contracts and any promotional literature. If a filmmaker makes fraudulent statements in order to induce you to invest, you will have a much stronger case if his statements are in writing.

Avoid filmmakers who make handshake deals. Such individuals may neglect to obtain the necessary contracts needed to fully secure ownership to their motion picture. In order to have a complete chain of title to a film, one needs to secure written contracts with many parties including actors, writers and music rights owners. Filmmakers who fail to pay attention to such legal niceties lack the professionalism needed to succeed.

Creative Studio Heads Can Be Both Risky and Rewarding

2009-04-21T13:37:00.000-07:00

The following article written by Mark Litwak was recently published in the L.A. Daily Journal, the primary legal newspaper for the Los Angeles legal community.

Hollywood suffers from many of the same problems that plague other American industries. Professional managers have taken the reins of control. They are better-educated than their predecessors but often lack their entrepreneurial zeal and willingness to take risks.

Entrepreneurs who start businesses often don't have the desire or management skills to run a large organization. Inventors, like Steve Wozniak, may find it more satisfying to tinker in their garages and invent new products than attend board of directors' meetings and manage a large bureaucracy. While these entrepreneurs may function well as lone operators or in small groups, when called upon to supervise large enterprises, their shortcomings can prevent the organization from prospering. So the entrepreneurs stand aside - or are shoved aside -and the managers take over.

But the movie and television industry is different from other industries. The commodity being sold is creativity. Movies don't lend themselves to assembly-line manufacturing. It's not like making soap, where once you devise the right formula you can churn out the same product time and again. A consumer who finds a brand of soap he/she likes may stick with it for a long time. He/she doesn't want the tenth bar to be any different from the first. He/she doesn't expect the product to entertain him/her or provide a new experience.

But people don't find one movie they like and watch it repeatedly. Moviegoers always want something different. They want to be taken where they haven't been before. They want fresh situations, plots, and characters - not a rehash of last week's hit.

Consequently, the movies that do best are often those that are distinctly original. Star Wars was a breakthrough film because of its wonderful special effects, unusual setting, and fresh characters. Moviegoers had never seen anything like it before.

Unfortunately, the atmosphere prevalent at many major studios today is not conducive to creative filmmaking because executives are so risk-adverse. United Artists and Universal rejected Star Wars before Alan Ladd Jr. at 20th Century Fox decided to back it. Often filmmakers can't find a single executive willing to gamble on anything that is offbeat or unusual. It took director Oliver Stone ten years to produce Platoon, and then he succeeded only because an independent company provided the financing.

Many intelligent, provocative, and innovative movies - like Crouching Tiger, Hidden Dragon; The Crying Game; Roger & Me; Sex, Lies, and Videotape; Hollywood Shuffle; Kiss of the Spider Woman; and Blood Simple - have been made with independent financing. Some of these independently made pictures are enormously profitable, such as The Full Monty and My Big Fat Greek Wedding, and many have received Academy Award nominations for Best Picture. Such critically acclaimed films as Juno, Crash, March of the Penguins, and Little Miss Sunshine were made outside Hollywood. The public is generally unaware of how many of the best movies are only distributed by a major studio.

Due to the risk-adverse climate in Hollywood, a common failing of studio movies today is that they are derivative of other movies. Flashdance spawns Footloose; Animal House is reworked into Meatballs and Police Academy. Any movie that is the least bit profitable is the basis for one or more sequels. The studios try to squeeze as much as possible from every successful property they own.

Coping With Risk

Because of their aversion to risk, the studios have largely withdrawn from producing films in-house. While many maintain production lots, which are rented to anyone needing a soundstage, the studios essentially function as specialized banks, lending money to produce worthy projects and then distributing the finished product.

Like banks, they evaluate proposals submitted to them but rarely initiate projects. After borrowing money from large banks or obtaining investment funds, the studios decide which producers to back. The producer and director make the movie, with oversight by the studio concerned about protecting its investment. Once the picture is complete, the studio markets it, creating an advertising campaign and duplicating and distributing prints. Finally, the studio uses its clout to collect receipts from exhibitors.

There are some exceptions to this modus operandi. At some independent production entities like Castle Rock Entertainment and Imagine Entertainment, the executives who run the company are more involved in creating product.

But most studios are run by dealmakers, not filmmakers. Many executives rise to the top based on their relationships with big-name talent and their dealmaking prowess, not because of their understanding of what makes a good script or their film-making ability.

Other problems have arisen because the studios have relinquished much of their creative authority. Increasingly, executives make decisions based on market research, demographic trends, and minimizing financial risks. It has become much more of a lawyer-agent game, with less showmanship, according to producer Martin Ransohoff (Jagged Edge): "Picture-making itself had a better shot under the old moguls. They were basically movie guys. Not conglomerate or bank-endorsed people."

The old studio staff producers have been replaced by creative-affairs executives. "They function as staff producers but without the public shame and responsibility that comes from having your name on the picture," says industry analyst A.D. Murphy. "They exercise authority but remain anonymous. And when you have a lot of faceless people who are not out there naked next to their films, you have a lot of copping-out and log-rolling."

Large talent agencies such as CAA and William Morris exercise considerable influence in developing and packaging projects. Agents conceive ideas for movies, discover new talent, and decide which writers, directors, and stars shall work together in the packages they create. In the old days, the studios performed these creative tasks.

Managing a Creative Enterprise

In many ways the atmosphere for creative moviemaking was better during the era of the moguls. More than 50 million Americans went to the theater every week in the days before television. Admissions reached an all-time high of four billion in 1946. Because films cost less and there was no competition from television, videogames, and the like, even mediocre films stood a better chance of making a profit. Since the moguls owned the studios they ran, they were more secure in their positions and could afford to take more risks - if a picture flopped, it might hurt their pocketbook but they wouldn't lose their job.

Some studios have belatedly realized the importance of creativity in moviemaking. Burned by expensive star-studded flops based on agency packages, these studios have hired executives who can play a more creative role in filmmaking.

In 1984, after Rhinestone (starring Sylvester Stallone and Dolly Parton) bombed, 20th Century Fox fired Alan Hirschfield and Joe Wizan and hired Barry Diller. Diller was head of the much-vaunted Paramount team (Diller/Eisner/Katzenberg/Mancuso) that insisted on developing projects itself rather than accepting agency packages. Disney also lured two other members of that Paramount team, Michael Eisner and Jeff Katzenberg, to replace the more business-oriented Ron Miller.

In each of these instances, studios replaced executives with backgrounds in finance and dealmaking with people known for their creative abilities. But creativity can be risky. In 1994, Steven Spielberg, Jeffrey Katzenberg, and David Geffen launched Dreamworks SKG to create an artist-friendly studio. However, by 2006, after flirting with bankruptcy twice, the company was sold to Viacom, losing its independence. Likewise, independent New Line Cinema, founded in 1967, was acquired by Turner Broadcasting System in 1994, which in 1996 merged with Time Warner. The company lost its autonomy in 2008 when Time Warner absorbed it.

Daily Journal

California Officials Pursuing Noncompliant LLC's

2009-01-13T16:08:00.000-08:00

Under a new state program, the state tax board has begun sending out the first of many monthly mailings to approximately 23,332 limited liability companies whose records are eligible for suspension. California officials are suspending LLCs due to the lack of filed state tax returns and other necessary information filings and overdue annual tax fees.

According to the Franchise Tax Board and the California state tax agency, if a company is suspended, that company will lose the rights to its name, it will be unable to sue or be represented in court, its contracts will be unenforceable and it will not be able to do business in California.

Next year, the secretary of state is expected to begin proceedings of its own to suspend LLCs for lack of filing an information statement every two years. Those LLCs who have not filed these forms, could be subject to a $250 penalty.

Before a suspension is imposed, the tax board is allowing any targeted LLCs 60 days to resolve any issues or explain why a notice was sent in error. To avoid suspension, LLCs must file missing income tax returns and pay any outstanding fees, taxes, penalties and accrued interest charges. If an LLC is cancelled, it is still responsible for missing income returns and unpaid fees, taxes and interest.

The tax board anticipates its new suspension program will reduce tax gaps and bring about LLC compliance. An estimated $64.7 million is owed by these non-compliant LLCs in back taxes, fees, penalties and interest. In addition, California officials will continue to bridge these gaps by increasing 2009 fees and penalties and forcing LLCs to file income tax returns sooner. At least one decision by the Board of Equalization has indicated that a shareholder can be liable for corporate taxes if certain conditions are met, and similar liability could apply to an LLC member who walks away. So it is best to close down an LLC that is no longer being used to ensure that you do not become liable for taxes, fees and penalties.

For more information on LLCs and the tax board's suspension program, please visit the tax board website at www.ftb.ca.gov.

Risky Business Seminar in New York April 25, 2009

Volunteer Lawyers for the Arts is sponsoring a one day seminar with Mark Litwak on Saturday, April 25, 2009 in Manhattan.

This comprehensive seminar explores how independent films are financed and distributed. Topics include financing via pre sales, debt and limited partnerships, negotiating tactics, typical contract terms, cross collaterization and creative accounting. Particular attention is paid to how producers and filmmakers can protect themselves by watering down warranties, getting added to the E & O policy, adding performance, termination and arbitration provisions, using lab access letter to retain possession of the negative, and a schedule a minimums.

Other topics include criteria for selecting a distributor; what is negotiable and what is not; compliance with state and federal laws when seeking investors; retaining an attorney or producer's rep; confirming arbitration awards in Superior Court; and enforcing judgments. The seminar includes a handout with a distribution contract, articles, a self defense checklist and other materials.

Since 1969, Volunteer Lawyers for the Arts has been the leading provider of pro bono legal services, mediation services, educational programs and publications, and advocacy to the arts community in New York. The first arts-related legal aid organization, VLA is the model for similar organizations around the world. For more information about Volunteer Lawyers for the Arts, please go to: www.vlany.org.

NETFLIX WILL AWARD $350,000 TO FILMMAKER

NETFLIX, in association with Film Independent, has announced its Find Your Voice film competition contest. The contest is open only to the first two thousand individuals who are legal residents of the fifty (50) United States (including D.C.), at least eighteen (18) years old at the time of entry and who have never created and publicly screened a full length narrative feature film of seventy (70) minutes or more. The prize of cash and services is worth approximately $350,000.

To apply, one must submit an application and a feature length script (80-120 pages). Applicants can also submit optional materials: a list of cast and crew, a budget top-sheet and a DVD with sample footage or a link that provides online access to such footage. The award is for a narrative film, not a documentary.

Additional information at netflix The deadline to submit an application is February 9, 2009.

Risky Business at UCLA February 21, 2009

2008-11-19T13:32:00.000-08:00

Mark will once again present his yearly "Risky Business: Financing & Distributing Independent Films" all day seminar at the UCLA campus on February 21, 2009. Those who attend this comprehensive seminar will learn how independent films are financed and distributed. Topics include organizing your company, raising financing via pre-sales, debt and limited partnerships, negotiating tactics, principal terms of the acquisition/distribution agreement, cross-collateralization and creative accounting.

Particular attention is paid to how producers and filmmakers can protect their interests by watering down warranties, getting added to the E& O policy, using lab access letter to retain possession of the negative, and utilizing termination and arbitration clauses.

The seminar is all day Saturday. There is limited enrollment so enroll early to assure a place.

Registration number: U6442. Attorneys may receive 7 hours of MCLE credit.

More info at: https://www.uclaextension.edu/index.cfm

An extensive handout accompanies the course. The handout covers:

SELF DEFENSE CHECKLIST

ORGANIZING YOUR COMPANY
Choice of Business Entity
Sole Proprietorship
General Partnership
Limited Partnership
Corporation
Company Formation Checklist
Limited Liability Company (LLC)
Comparison of Entity Choices

COLLABORATIONS AND CO-PRODUCTIONS
International Co-Productions
Co-Production Checklist

RAISING MONEY
Loans
Pre-sale Agreements
Contract: IFTA International Schedule of Definitions
Entertainment Finance Companies
Equity Investments
Finders

TACTICS AND STRATEGY IN ARRANGING DISTRIBUTION
How Much is My Film Worth?
How Distributors Evaluate a Film
Sources of Revenue
Increasing Your Leverage
Film Festivals
Working the Festival Circuit
Balancing Risks and Rewards
The Acquisition/Distribution Agreement
Tactics and Strategy
Markets and Festivals
Investigate the Distributor

PRINCIPAL TERMS OF THE DISTRIBUTION AGREEMENT
Territory
Media
Term
Distribution Fee
Distribution and Marketing Expenses
Advances and Guarantees
Consultation Rights
Warranties and Representations
Accounting
Arbitration
Insurance
Termination
Assignment
Allocation of Package Revenue
Security Interest
Governing Law
Territorial Minimums
Retain Your Masters
Return of Materials
Delivery
Contract: Lab Access Letter
Contract: IFTA Rider to International Distribution Agreement

WHEN A DISTRIBUTOR DEFAULTS
Selecting a Distributor
Creative Accounting
Conducting an Audit
How Revenue is divided
Creative Accounting Pitfalls
Accounting Terms
Defensive Tactics

COPYRIGHT OFFICE INSTITUTES ONLINE REGISTRATION SYSTEM

The copyright office has joined the internet revolution and now prefers that you register your work online through the Copyright Office online system (eCO). This is now the primary method to register works.

The advantages of this new system include a lower filing fee of $35 for a basic claim, faster processing time, online status tracking, secure payment by credit card or electronic means and the ability to upload certain deposits directly into the system as electronic files.

For works that require a hard-copy deposit, one may submit an application, make a payment online, and then send copies to the Copyright Office via mail or express courier.

For the registration of motion pictures there are two other methods. There is now a new fill-in Form CO. Using 2-d barcode scanning technology, the Copyright processes these forms much faster and more efficiently than paper forms completed manually. Simply complete Form CO on your personal computer, print it out, and mail it along with a check or money order and your deposit. To access Form CO, go the Copyright Office website and click on Forms.

One can still rely on traditional paper Form PA (performing arts works, including motion pictures). However, these forms are no longer downloadable from the Copyright Office website. One has to request that they be mailed to you.

http://www.copyright.gov/

SUPREME COURT TO HEAR APPEAL OVER ANTI HILLARY CLINTON FILM

The Supreme Court will hear an appeal from a conservative group that wanted to promote its anti-Hillary Clinton movie without complying with the campaign finance law. The McCain-Feingold Act forbids corporate-funded broadcast ads that attack a candidate within a month of a primary or general election. Moreover, political groups are required to disclose who paid for the advertisements.

The Federal Election Commission found that the group could not broadcast the film on television or air ads close to the election. A lower court ruled that the 90-minute "Hillary: The Movie" was clearly intended to influence people to vote against Clinton in her run for the presidency. A three-judge court in Washington said the group had to attach a disclaimer and disclose its donors in order to run ads promoting the movie.

Attorneys for the conservative group Citizens United claim the law limits "core political speech rights" and is unconstitutional. Citizens United v. FEC, 08-205.

Brief: http://www.usdoj.gov/osg/briefs/2008/0responses/2008-0205.resp.html

MARK CUBAN ACCUSED OF INSIDER TRADING

The SEC has charged the dot-com billionaire Mark Cuban and owner of 2929 Entertainment with insider trading. Cuban also has interests in HDNet and Landmark Theatres, a chain of arthouse movie theaters.

The complaint arises from Cuban's sale in 2004 of 600,000 shares in the search engine company mamma.com (aka Copernic, Inc.). The SEC claims that Cuban dumped all of his shares the evening and day after he received material non-public information from the company's CEO, avoiding a loss in excess of $750,000.

Link http://news.lp.findlaw.com/hdocs/docs/sec/20081117-cuban-sec-complaint.pdf

The Middle East International Film Festival

2008-10-31T11:48:00.000-07:00

I recently had the great pleasure of serving as a juror at the Middle East International Film Festival, held in Abu Dhabi, in the United Arab Emirates, from October 12 – 19. The Middle East Film Festival, in its second year now, was organized to bring together filmmakers from all over the world, particularly filmmakers from the Middle East. It’s part of the country’s multi-pronged approach to building a film industry from the ground up in Abu Dhabi. That approach includes building studio space to attract film production, offering budding filmmakers a focused education through the soon-to-be opened New York Film Academy, and providing financing for both international and local films.

MEIFF Director of Programming Jon Fitzgerald (who was also the founder of the Slamdance Film Festival) put together a fabulous line-up of Hollywood films, Bollywood Films, and student films, which shared the venues with a smorgasbord of films from the Middle East. The festival was headquartered at the stunning Emirates Palace, a luxurious seven- star hotel in the heart of Abu Dhabi; additional screens at the nearby Marina Mall and the Abu Dhabi Mall were also enlisted for the eight days of non-stop film showings. Hollywood star power was in residence, with Actor Adrien Brody and Director Rian Johnson present for the Opening Night Film, “The Brothers Bloom.” Susan Sarandon participated in a “Spotlight on Women” panel about environmental and cultural issues facing women throughout the world, which were addressed in the film “The Shape of Water,” which Ms. Sarandon had narrated. Catherine Deneuve participated in a debate about humanitarian concerns in Lebanon; and Jane Fonda was there to receive the Cinema Verite Lifetime Achievement Award. Famous Egyptian actress Youssra served on the Feature Jury.

At MEIFF, Middle Eastern film was represented by films from the United Arab Emirates, Morocco, Palestine, Egypt, Iran, Jordan, Syria and Lebanon. Nashwa Al-Ruwaini, the Executive Director of MEIFF introduced many of the films and filmmakers. Of course the government of Abu Dhabi supported this effort, led by Sheikh Sultan Bin Tahnoon Al Nahyan, Chair of the Abu Dhabi Authority for Culture and Heritage.

I am probably not alone when I say that MEIFF took networking and hospitality to a whole different level, with some of the best parties ever hosted at a film festival. After the last screening of the evening, festival participants would gather in the gardens outside the Emirates Palace, overlooking the Arabian Gulf, for entertainment that was truly out of 1001 Arabian Nights. At the Bedouin Party, festivalgoers lounged on couches in Bedouin tents and smoked shisha (Arabic tobacco) with a water pipe (hookah); camel rides were offered to the daring, animal lovers could get up close and personal with a trained falcon, and a sensational belly dancer entertained the captivated audience. On Bollywood Night, we were treated to the ritualized, gracious dance of India; and after the screening of the documentary “Youssou N’Dour: I Bring What I Love,” N’Dour himself, one of Africa’s most adored musicians, gave a concert, accompanied by his band. The Middle Eastern cuisine, the hospitality, and the graciousness of our hosts was truly incomparable.

It is amazing that oil was only discovered in the Emirates in the 1970s. They are now the world’s 10th largest producer of oil—and of course it has transformed their society. It was an eye-opening, mind-bending experience to witness this transformation, and to be part of the blossoming culture of film, art and architecture in the UAR.

Congress Extends Federal Tax Incentive

The Section 181 tax incentive has been extended through December 2009. This program which was first enacted in 2004 was extended and enhanced by being attached to the $700 billion financial markets rescue plan passed by Congress.

The new legislation improves upon the prior law by applying the tax incentive to the first $15 million of all motion picture productions in the USA. The prior legislation was flawed because this threshold amount included all costs, including difficult to predict residuals and participations. This quirk in the law made it risky to accept the incentive if your budget plus these extras might exceed $15 million.

The new provisions are retroactive to January 2008.

Film L.A. has new Online Permit System

2008-10-31T11:33:00.000-07:00

FilmL.A. is a nonprofit organization that coordinates and processes permits for on-location motion picture, television and commercial production in the Los Angeles region. FilmL.A has a new Online Permit System (OPS), which will change how permits to film on-location are applied for, coordinated and delivered. Applicants will be able to apply online and create and save templates for future applications, receive instant confirmation that permit applications were received, track permit progress and status of agency approvals in real-time and download paid-for and finalized permits at their convenience.

Additional information at: http://www.eidc.com/about.php

Middle East International Film Festival (MEIFF)

Mark will be serving on the short film jury at the upcoming MEIFF from October 10-19 in Abu Dhabi. The festival celebrates world cinema by presenting quality films from across the globe. Competition sections include world premiere screenings and highlight up-and-coming films making a splash on the festival scene. Gala screenings and the Festival of Festivals showcase new work by established filmmakers and films that have garnered prestigious awards.

Additional info: http://www.meiff.com/

Libel Tourism Bill Passed

The House of Representatives passed a bill that would prohibit U.S. courts from enforcing foreign libel judgments that undercut First Amendment rights. The law is designed to address the phenomenon known as “libel tourism,” or the exploitation of defamation laws in foreign countries that lack the broad protections of free speech guaranteed by the First Amendment in the United States.
The bill was introduced as a result of a lawsuit involving New York author Rachel Ehrenfeld. She was sued in Britain by Khalid bin Mahfouz, a Saudi Arabian businessman, for her book “Funding Evil: How Terrorism Is Financed and How to Stop It.” Ehrenfeld lost the libel suit, and as a result the New York Legislature passed a law preventing state courts from recognizing foreign libel judgments. http://www.rcfp.org/newsitems/index.php?i=4878

The New York law was the first of its kind in the United States. "As our world becomes more and more interconnected, we need new laws to ensure that Americans’ First Amendment rights won’t be hindered by more restrictive, foreign mandates," Congressman Steve Cohen of Tennessee said. The bill will prohibit domestic courts from recognizing or enforcing foreign defamation judgments unless the domestic court finds that the foreign judgment comports with our First Amendment.

The Association of American Publishers (AAP) has applauded Congressman Cohen’s legislation, and the bill has already received wide, bipartisan support in the House Judiciary Committee.

Jackson Browne Sues McCain

2008-09-10T09:23:00.000-07:00

Jackson Browne has sued John McCain and the Ohio and national Republican in U.S. District Court in Los Angeles alleging that they are using his song "Running on Empty" without his consent. The suit claims the song's use is copyright infringement and will mislead people to conclude he endorses McCain.

Browne is a lifelong liberal associated with various progressive and environmental causes. The ad criticizes Democratic presidential candidate Barack Obama who Browne supports. The song "Running on Empty" plays in the background of the ad criticizing the candidate.

The chairman of the Ohio party claimed the ad was pulled when Browne objected. McCain spokesman Brian Rogers said the ad was not from the McCain campaign. Browne's lawsuit contends the Ohio Republican party released the ad on behalf of McCain and the RNC. The singer claims is seeking more than $75,000 in damages.

GREETINGS FROM THE SHORE OPENS SEPTEMBER 12

Congratulations to our clients the producers of the independent film Greetings From The Shore which opens theatrically in numerous theaters in New Jersey and New York.

Since its debut at the Montreal World Film Festival, "Greetings" has been in numerous films festivals including those in Fort Lauderdale, New Orleans, and Boston. It has won 25 awards, most importantly five Audience Awards for "Best Feature." The film is a coming-of-age romance starring an ensemble cast that includes Paul Sorvino ("Goodfellas"), David Fumero ("One Life to Live"), Jay O. Sanders ("Half Nelson"), and the debut of newcomer Kim Shaw (upcoming "Sex and the City" movie).

The story is a tribute to the Jersey Shore based on the life of Writer/Producer Gabrielle Berberich, who spent every summer in the same seaside town where the feature was filmed. It's reminiscent of such coming-of-age classics as "Dirty Dancing" and "Mystic Pizza."

The film was shot on 35mm by Writer/Director Greg Chwerchak, who has created music videos for hundreds of artists such as Britney Spears, Duran Duran, and Destiny's Child, as well as commercials for McDonald's and ESPN. He previously directed award-winning short films, "The Hook-Armed Man" and "The Quarry." Additional info at: http://www.greetingsfromtheshore.com/

Manzarek v. St. Paul fire & Marine Ins. Co.

2008-07-10T17:16:00.000-07:00

Ray Manzarek of "The Doors" classic rock group filed suit against his insurance company, St. Paul Fire & Marine, after St. Paul's refused to provide a defense under Manzarek's general liability policy.

Manzarek was sued by John Densmore and Jim Morrison's parents for infringing on "The Doors" name, logo, and trademark. Manzarek incurred more than $3 million in legal fees. However, St. Paul's argued that the policy had a "field of entertainment" exclusion, barring "personal injury or advertising injury that results from the content of, or the advertising or publicizing for, any properties or programs which are within your field of entertainment business." The District Court dismissed Manzarek's case with prejudice, citing the exclusion as conspicuous, clear and unambiguous.

However, the 9th Circuit reversed, finding a contractual duty to defend. The Court of Appeals said the lower court did not apply the exclusion language to the facts. If the language was narrowly construed, advertising injury could occur, and thus St. Paul must defend, in distribution channels not listed in the exclusion. Thus, specifically, the court found that Manzarek was entitled to advertising injury coverage for marketing t-shirts and guitars with "The Doors" logo. Further, the underlying lawsuit never specified the type of product allegedly being sold, which, if stated, might have allowed St. Paul to escape liability under this exclusion.

Finally, the court held that Manzarek should have been allowed to amend his complaint to show the exclusion did not bar coverage, which was the reason for the initial dismissal. For more information, please see: Manzarek et al. v. St. Paul Fire & Marine Insurance Co., No. 06-55936, 2008 WL 763385 (9th Cir. Mar. 25, 2008).

Completing Form PA for Screenplays and Films

Screenwriters and Filmmakers often find it confusing to complete copyright form PA which is used to register scripts and completed films. Here is quick guide: If the motion picture is finished, you should register it by sending in Form PA with a copy 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."

Then enter the year in which the creation of the work was completed and the copyright claimant (the author or whomever has legally acquired the copyright).

Under #5, if the screenplay contains a substantial amount of previously registered material, answer "Yes," to the first question and check the box indicating the reason for this registration. Add the registration number and year of the previously registered material. If no portion of the work was previously registered, write "No" to the first question and leave the rest of the space blank.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 might write "Previously registered screenplay."

Under #6b, "Material Added to This Work," you might write "additional dialogue and text."
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 descending order of preference the format for the copy should be 70mm, 35mm, 16mm film print, Betacam SP, Digibeta, DVD or VHS cassette.

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. 20559-6000Copyright 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://www.copyright.gov.

The website also offers extensive copyright information. Circular 45 found at http://www.copyright.gov/circs/circ45.html specifically addresses copyright registration for motion pictures. To speak to an information specialist, call (202) 707-3000.

Screenwriter Sues Mel Gibson for Fraud

2008-05-13T17:04:00.000-07:00

Mel Gibson has been sued for fraud and unjust enrichment by Benedict Fitzgerald, one of the screenwriters for Gibson's "Passion of the Christ." Fitzgerald claimed that Gibson misrepresented facts regarding the film's budget and Gibson's financial take, leading him to believe the film had a $4-7 million budget and Gibson would take no percentage of profits.

Fitzgerald was paid as a writing a fee of $75,000, while Gibson took home a $5 million salary for directing, as well as his producer's share of profits derived from the $600 million of the film's worldwide receipts.

Fitzgerald alleges that Gibson had the express purpose of depriving him of the full fruits of his efforts as the screenwriter, and that Fitzgerald experienced severe cash-flow problems due to his devotion to the project.

Law Banning Violent Videogames Held Unconstitutional

The state of Minnesota is fighting an 8th Circuit decision regarding violent video games. In March, The 8th Circuit Court of Appeals affirmed an injunction against enforcement of a 2006 state law banning minors from buying violent video games (rated "M for Mature" or "AO for Adults Only.) Residents under age 17 faced $25 fines if caught buying or renting games with the mature ratings.

The court found that violent video games are protected free speech under the First Amendment and the burden of proof required "incontrovertible proof of a causal relationship between the exposure to such violence and subsequent psychological dysfunction" to overcome the burden and uphold the state law.

The state has now petitioned the Court of Appeals for a rehearing en banc (by all of the judges rather than the customary 3 judge panel) to reconsider its previous ruling, as well as question the "incontrovertible proof" standard set forth by the court, which would create an "unprecedented and unreasonably high evidentiary standard" regarding the well-being of children. The state argues that the "grossly repugnant" video games are not worthy of First Amendment protection because they do not communicate or express ideas or information.

For more information, please see: Entertainment Software Association et al. v. Swanson et al., No. 06-3217, petition for rehearing filed (8th Cir. Mar. 28, 2008).

Legal Ease, A Legal Rights Workshop for Writers

June 21, 2008, 11:00AM – 12:30PM at GREAT AMERICAN PITCHFEST

Date: Saturday - June 21, 2008Time: 11 a.m. - 12:30 p.m.

Mark will be a speaker at the upcoming Great American Pitchfest.

Screenwriters need to protect themselves from the people they write about and producers they contract with. They also need to take care when collaborating with others.

This seminar explains how writers can avoid legal problems by properly securing rights, obtaining releases and not infringing the rights of others. Related topics include registering your work, submission releases, and annotating and clearing your script.

Topics include:

When you need to purchase the rights to a person's life story
What is in the public domain
Defenses to defamation and invasion of privacy
Title and Copyright searches
Reserving rights
Reversion and Turnaround clauses
Watering down warranties
E & O insurance
Story theft
Shopping
Typical compensation and terms of studio contracts
Defenses and privileges to defamation and invasion of privacy
How to preserve the integrity of your screenplay and avoid costly lawsuits

The fifth annual Great American PitchFest will take place on June 20-22, 2008 at the Burbank Marriott Hotel & Convention Center, 2500 N. Hollywood Way, Burbank, CA 91505.

For additional information: http://www.pitchfest.com

UCLA Self-Defense for Writers and Independent Filmmakers: Protecting Your Legal Rights JULY 12, 2008

Mark will present his annual legal defense seminar the weekend of July 12, 2008.

Filmmakers learn how to make shrewd business decisions and protect their interests in negotiations with production and distribution companies. Instruction covers how to anticipate problems before they arise and how to encourage other parties to live up to their contractual obligations through performance incentives, default penalties, and arbitration.

In the event of a dispute, learn what remedies are available to enforce your rights. Topics include creative accounting; customary terms of contracts; negotiating tactics and strategies; properly securing rights to your work; and how to avoid being sued for copyright infringement, defamation, or invasion of privacy. Attention is paid to how to protect oneself by modifying warranties, obtaining E&O coverage, using lab access letters to retain control of masters, and utilizing termination clauses.

The seminar includes an extensive handout with sample forms, contracts and a self-defense checklist.

Registration No. U2433, Additional info at: http://www.uclaextension.edu/index.cfm?reg=U2433&href=/courseListings/course_display/courseDetails.cfm&inweb=1

Michael Moore Use of Clip Did Not Defame Army Veteran

2008-04-15T18:31:00.000-07:00

Sgt. Peter Damon filed a defamation suit against Michael Moore alleging that his non-consenting appearance in the documentary “Fahrenheit 9/11” lowered his reputation and subjected him to scorn in the military community.

Damon lost both arms to an explosion in Iraq, and participated in an NBC News Interview about a new type of pain blocker while being treated at Walter Reed Army Medical Center. Moore obtained rights to the clip of Damon and included it in “Fahrenheit 9/11.”

Damon claimed that Moore used the clip out of context and that it voices a “complaint about the war effort” instead of complaining about the “excruciating type of pain” Damon suffered. He further claimed that he was criticized by fellow veterans who believed he shared and endorsed Moore’s attack on President Bush and the war effort.

However, the court held that a “reasonable viewer” would not construe Damon’s clip as supporting Moore’s message. The clip ran 16 seconds out of a two-and-a-half hour film, and in the brief scene, Damon appears with two other veterans who do not express anti-war sentiments. While the film does convey an anti-war message, no viewer could reasonably conclude that Damon shared any type of political or ideological kinship with Moore.

Thus, the court found that Moore did not defame Damon.

See Damon v. Moore (1st. Dist., March 21, 2008) No. 07-1365 at http://www.ca1.uscourts.gov/pdf.opinions/07-1365-01A.pdf

Wal-Qaeda, Walocaust Are Not Trademark Infringements

Charles Smith created certain expressions such as “Wal-Qaeda” and “Walocaust” (sometimes including a smiley face) which appeared on his websites and products he sold on cafepress.com. Wal-Mart felt that Smith was infringing on its trademarks; however, Smith disagreed and filed suit seeking a judgment that his use of the catchphrases was lawful.

In Smith v. Wal-Mart Stores, Inc., a federal judge ruled that these expressions did not infringe on or tarnish trademarks held by Wal-Mart. The expressions were successful parodies, and were not confusing to customers. Smith disclaimed affiliation with Wal-Mart in an attempt to avoid customer confusion, and furthermore, Wal-Mart did not own a trademark for the smiley face. The court found that no fair-minded jury could find a reasonable consumer would likely be confused by Smith’s marks.

Further, Smith did not dilute Wal-Mart’s marks through tarnishment. A trademark must be used in an unsavory context so as to create negative public opinion to dilute through tarnishment. However, dilution claims only apply to commercial speech and Smith’s parodies were noncommercial and thus protected by the First Amendment. Therefore, Smith was granted summary judgment.

See Smith v. Wal-Mart Stores Inc., No. 06-526, 2008 WL 760196 (N.D. Ga., Atlanta Div. Mar. 20, 2008).

Michigan Raises the Tax Incentive Bar

Michigan is now offering the most generous film tax incentives in the United States. Michigan doubled its existing tax rebate from 20% to 40%, even offering 42% for doing business in certain Michigan communities.

This is a refundable and transferable tax rebate equal to 40% of qualified production expenditures, not a credit against taxes owed. There is no project, annual cap, or sunset, and only a $50,000 minimum spend. Qualified expenditures include prep, production, or post-production costs incurred in Michigan including cast and crew. Wages are capped at $2 million per person.
Further, Michigan provides a 25% tax credit for companies that invest at least $250,000 into infrastructure (studios, equipment, or other facilities); however, a $10 million cap exists for all infrastructure credits per year.

An opportunity also exists for production loans in conjunction with the Jobs for Michigan Investment Fund. Qualifying films with at least a $2 million budget are eligible for investment loans up to $15 million, with 0% loans available in exchange for backend participation. A guarantor for the loan is required. Productions can be eligible for both the loan and the 40% tax credit. Production loans (with an interest rate of up to 2%) are available for a production to receive all or a portion of the value of discounted tax credits the company is eligible to receive in the form of a loan.

The new Michigan law also includes a workforce development incentive which covers 50% of on-the-job training expenses for Michigan residents working as advanced below-the-line crew members.

For more information on Michigan film tax incentives, please visit http://www.michiganfilmproduction.com/ or http://michigan.gov/filmoffice/0,1607,7-248--186660--,00.html

Bob Yari Loses Producer’s Credit Battle

Producer Bob Yari contended that he should have received a screen producer credit for the film “Crash,” which entitled him to an Academy Award when the film won Best Picture in 2006.

In 2005, The Academy changed its procedure for determining eligible producers for a nominated film, deferring to Producer’s Guild designations of which producers performed the major portion of the producer function. Mr. Yari’s application was unsuccessful; therefore, he was not given Academy credit for being a producer of “Crash.”

Yari subsequently sued the Academy and the Producer’s Guild alleging that he was entitled to a common law right of fair procedure. He argued that the defendants were obligated to protect against arbitrary administrative interference and allow for substantively rational and procedurally fair decision-making.

However, the court disagreed, saying that the right of fair procedure only applies to private decisions which can effectively deprive an individual of the ability to practice a trade or profession. Here, the Guild did not control Yari’s ability to produce; in fact, he received a screen credit on “Crash,” and he has also continued his career as a film producer.

The judgment against Yari was affirmed. See Yari v. Producers Guild of America, Inc., Et Al. (2nd Dist., Div. 5, March 25, 2008) No. B196817 at http://california.lp.findlaw.com/ca02_caselaw/3_2008ca.html

KIRBY v. SEGA (2006)

2008-03-24T18:41:00.000-07:00

A recent case has found that videogame developers can base game characters are real celebrities provided they are transformed sufficiently. Keirin Kirby was the lead singer of a retro-funk-dance musical group known as “Deee-Lite,” who had a diva-like artistic character reminiscent of the 1960’s. Sega of America, Inc. developed a videogame in 1999 called “Space Channel 5” set in outer space and featuring a character named “Ulala,” who shared many attributes of Kirby’s character. Kirby claimed Ulala was a direct appropriation of her character’s unique public identity, and she sued Sega under an invasion of privacy claim.

Some of Ulala's characteristics and computer-generated features resemble Kirby, and her name is a phonetic variant of “ooh la la”- a phrase associated with Kirby. However, aspects of each character’s costuming and style are different- Ulala dons a jetpack, blue headset, and the number five on her outfit as opposed to Kirby’s 60’s flair. Kirby conceded she has no singular identity; her appearance and visual style are “continually moving.”

Sega contended that the First Amendment is a complete bar to the invasion of privacy claim. A defendant may raise the First Amendment as an affirmative defense to an allegation of appropriation if the defendant's work “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.” This is known as the “transformative test” and was applied here by the court. Based on the differences stated above, the court found that Ulala is “transformative” from Kirby’s likeness and constitutionally protected.

Thus, given the many dissimilarities between Ulala and Kirby, any public confusion arising from a mistaken assumption that Kirby endorsed the videogame is easily outweighed by the public interest in free artistic expression. Kirby v. Sega of America, Inc., 144 Cal. App. 4th 47 , 2006 Cal. App. LEXIS 1672 (Cal.Ct.App. 2006)

Entertainment Software Association v. Swanson (2008)

The 8th Circuit Court of Appeals affirmed the District Court’s ruling, striking down a part of the Minnesota Restricted Video Games Act. Provisions of the Act prohibited the sale of video games to minors if the games were rated “M” for mature or “AO” for adults only. The Entertainment Software Association challenged the constitutionality of the Act, while the State defended, citing numerous studies linking media violence and aggressive behavior.

The court followed Interactive Digital Software Ass’n v. St. Louis County, and held that violent video games are protected free speech. Thus, any restrictions were subject to strict scrutiny analysis; requiring the law to be necessary to serve a compelling state interest and narrowly tailored to achieve that end.

The State argued that safeguarding both the psychological well-being and the moral and ethical development of minors were compelling interests and the court agreed. However, an interest in safeguarding the psychological well-being of minors must be real and not merely abstract. In other words, the State must prove that the law will in fact protect minors in a direct and material way and present more than anecdote and supposition.

Here, the court found that the State could not prove that violent video games actually negatively affected the psyche of minors. Without indisputable proof of causation between the exposure to video game violence and subsequent psychological dysfunction, the State did not meet its burden to satisfy strict scrutiny and the law was struck down.

Entertainment Software Association v. Swanson http://caselaw.lp.findlaw.com/data2/circs/8th/063217p.pdf

Upcoming Speaking Engagements

Mark will be moderating a panel on International Co-Productions held by the Producers Guild of America on March 26, 2008 at the DeMill Screening Room at 9336 W. Washington Blvd., Culver City. Non PGA members and students can attend by paying a fee. To attend or inquire RSVP by March 24, 2008 to pgaseminars@yahoo.com
Please put your first and last name in the subject line of your “RSVP” email response.

Mark will be speaking at a film finance seminar titled “Getting Films Funded” held at the WGA theater on March 29, 2008. http://www.filmfinancingseminars.com/

On June 25, 2008, Mark will moderate a panel on Intellectual Property In Entertainment & Media" put on by the California State Bar Intellectual Property Section at the Beverly Hills Hotel. The panel will discuss clearance issues in documentary filmmaking. www.calbar.ca.gov/ipsection

Tolkein Trust Sues New Line Cinema Over “Lord of the Rings” Profits

2008-03-03T06:40:00.000-08:00

The trust that manages the estate of J.R.R. Tolkein, the author of the massively popular trilogy, has not received any profits from New Line Cinema, the distributor of the three films which have grossed nearly $6 billion.

The suit claims that New Line has engaged in various “bookkeeping” practices in order to avoid paying the trust and other gross revenue participants, including director Peter Jackson.

According to the lawsuit, a series of 1969 agreements granted the underlying rights to the books to United Artists in exchange for 7.5% of the gross receipts of any films based on the works. New Line subsequently acquired the rights.

The suits asks for over $150 million in damages and other remedies for breach of contract.

http://news.findlaw.com/hdocs/docs/ent/tlknnewline21108cmp.html

Judge Reverses Decision In Regard To Restraining Website

Website Wikileaks: (http://wikileaks.be/wiki/Wikileaks) blows the whistle by exposing corporate and government wrongdoing. It focuses mainly on oppressive regimes in Asia, the former Soviet bloc, Sub-Saharan Africa and the Middle East. The site was completely shut down when Judge Jeffrey S. White ordered that the entire site be taken offline. The site allowed whistleblowers to disclose sensitive documents without them being traced back to their source. It has received more than 1.2 million documents from dissident communities and anonymous sources.

The judge completely reversed himself, however, after several organizations including the Electronic Frontier Foundation, The Reporters Committee for Freedom of the Press, The Associated Press and the ACLU filed briefs contending that such an order was an unlawful prior restraint.

The Feb. 15 order required the required domain name service provider stop all access to the Wikileaks site, disabling its Web address. A Swiss bank had asked the court to require the site to be taken down on the grounds that it had disclosed private banking records. The site was allowed to resume when the judge dissolved his previous order.

The media coalition's brief in the case can be found at: www.rcfp.org/news/documents/20080229-amicusbrie.pdf
State Bar Conference

Mark Litwak will be moderating a panel at a one-day conference entitled "Intellectual Property In Entertainment & Media" put on by the California Bar Intellectual Property Section on March 25th at the Beverly Hills Hotel.

Self Defense for Writers and Filmmakers Comes to New York April 26, 2008

Volunteer Lawyers for the Arts is sponsoring a one day seminar with Mark Litwak on Saturday, April 26, 2008: 10 am – 5 pm in Manhattan.

Writers and filmmakers need to understand their legal rights and how to defend themselves from those who may seek to exploit them. Production companies and distributors often know all the tricks of the trade, while writers and filmmakers know little about how to protect themselves.

This seminar explains how writers and filmmakers can prevent problems from arising by properly securing underlying rights, and by encouraging the other party to live up to agreements by adding performance incentives, default penalties and arbitration clauses. Participants learn what remedies are available to enforce their rights in the event of a dispute.

Related topics include creative approvals, typical compensation and terms of studio contracts, merchandising deals, and negotiating tactics and strategies. The seminar includes more than 100 pages of useful contracts, checklists, forms and materials.

Speaker: Mark Litwak is a veteran entertainment attorney with offices in Beverly Hills, California. His practice includes work in the areas of copyright, trademark, contract, multimedia law, intellectual property, and book publishing. Litwak also functions as a Producer's Rep, assisting filmmakers in the financing, marketing and distribution of their films. For more information about Mark Litwak, please see www.marklitwak.com.

Lawyers can receive Eight (8) New York CLE "Areas of Professional Practice" credits.

Artists and Full-Time Students: $100 if registering on or before Friday, March 28th; $125 after March 28th.

Attorneys (including 8 CLE credits): $275 if registering on or before Friday, March 28th; $375 after March 28th.
To register, please complete the registration form at: http://www.vlany.org/forms/Litwak08.Registration.pdf

Since 1969, Volunteer Lawyers for the Arts has been the leading provider of pro bono legal services, mediation services, educational programs and publications, and advocacy to the arts community in New York. The first arts-related legal aid organization, VLA is the model for similar organizations around the world. For more information about Volunteer Lawyers for the Arts, please see www.vlany.org.

Red Hot Chili Peppers Sues Showtime for “Californication”

2008-01-27T12:25:00.000-08:00

The rock band Red Hot Chili Peppers recently filed suit for disgorgement of all profits, unspecified damages, and a permanent injunction against Showtime Networks for use of the name of their 1999 Grammy-winning album “Californication” as the title of a television show.

The televisions show, “Californication,” stars David Duchovny as a troubled writer and father living in Los Angeles with a habit of sleeping with beautiful women. The show premiered in 2006. The show also features a character named “Dani California”—the title of a single released by the Chili Peppers in 2006.

The lawsuit, filed in Los Angeles County Superior Court, alleges a violation of federal trademark law because the album and single title are inherently distinctive and “widely recognized by consumers and those in the trade.” Furthermore, the use of the name is a “false designation of origin” and causes “a likelihood of confusion…in the minds of the public.”

Andre Agassi Wins Injunction Against Target

The US District Court of Nevada has agreed with Andre Agassi and has issued an injunction against Target to prevent the continued sale of sandals bearing Agassi’s name.

According to the complaint, Agassi had licensed Target to use his likeness, but had never authorized the company to use his name. Target had agreed to take the sandals with his name on them off the market, but one month later the sandals were still for sale in Nevada and online.

The court indicated that Target violated Agassi’s right of publicity and that Agassi was likely to succeed on the merits of the infringement claim. In a balance of hardship analysis, the court ruled that there would be no undue hardship to retail giant Target by taking the shoes off the market while the damage to Agassi’s reputation could not be remedied through any amount of monetary award.

Fields of Fuel Wins at Sundance

Congratulations to our client, Johnny O’Hara the writer of the Documentary Fields of Fuel which won the Audience Award at Sundance. A look at America's addiction to oil, the documentary is about a man with a plan and a Veggie Van, who is taking on big oil, big government, and big soy to find solutions in places few people have looked.

Diamond Dog Caper to Premiere at Santa Barbara Film Festival

Congratulations to our client filmmaker Mark Stouffer, whose new family film, Diamond Dog Caper, will premiere at the Santa Barbara International Film Festival on Saturday, February 2, 2008 at 10 AM at the Victoria Hall Theater at 33 West Victoria Street in Santa Barbara (between State and Chapala Streets).
The picture is about a thief and his two dim-witted accomplices who arrive in a small town with a dog they mistreat. An ingenious boy battles to protect the dog and keep it away from the thieves. Unaware the animal is carrying a fortune in stolen jewels, the boy defends himself and dog at his fort hidden deep in the woods. Fortunately, the fort has an array of clever booby traps and devices the boy has created to fend off the thieves. Fun for the whole family, Diamond Dog Caper will delight kids of all ages with its fast-paced action and comedy. A trailer can be viewed at www.DiamondDogCaper.com.
Diamond Dog Caper stars French Stewart (3rd Rock From the Sun, Home Alone IV), Brittany Curran (Suite Life of Zach & Cody), John Farley (Blonde and Blonder), Kevin Farley (Waterboy), Kelly Perine (One on One); Luke Benward (How to Eat Fried Worms), and Cameron Monaghan (Click; The Three Investigators and the Secret of Skeleton Island). Special effects were supervised by Lance Wilhoite (Pirates of the Carribbean).

Director/Producer Mark Stouffer (Wild America) is the winner of 2 Emmy Awards (including Outstanding Achievement in Directing), 9 Emmy Award Nominations, a Directors Guild of America - Best Director Nomination, and over 75 prestigious, international awards. Mark Stouffer's productions include 4 features, 18 network specials, and 120 episodes of series television.

House of Blues Files Trademark Infringement Suit

2007-12-24T11:43:00.000-08:00

The well-known venue for blues music, House of Blues, has filed a $2 million trademark infringement suit against a Lousiana company for using its name without authorization.

Since 1992, House of Blues has operated numerous clubs in cities across the nation as a “Southern-style juke-joint.” Additionally, House of Blues has used its trademark in themed gaming areas at casinos, on televised poker tournament, websites, and promoting concerts.

The House of Blues learned of defendant Leonard Douglas’s Baton Rouge House of Blues in April 2007. A cease-and-desist letter was sent and there was no reply.

The complaint includes actions based on federal and state trademark infringement, trademark dilution, and unfair competition.

MPAA Wins Ruling Against TorrentSpy

A US District Court ruled in favor of the Motion Picture Association of America (MPAA) in a case against the operators of TorrentSpy.com. The judge based the default judgment on tampering with evidence by the defendants.

TorrentSpy is a central location to find files distributed on the peer-to-peer network BitTorrent. The MPAA filed the suit based on the distribution without a license of its member companys’ copyrighted material on the TorrentSpy website. TorrentSpy has contended that because its servers are located in the Netherlands, it is protected by Dutch law from having to turn over server logs and other information.

In May, a US Magistrate judged had ruled that TorrentSpy must preserve server data logs held in random access memory (RAM). In the ruling on December 15th, the court found that subsequent to the ruling in May, TorrentSpy “engaged in widespread and systematic efforts to destroy evidence and have provided false testimony under oath in an effort to hide evidence of such destruction.” TorrentSpy has indicated that it destroyed the evidence in order to protect consumer privacy.

While not directly addressing the merits of the MPAA’s case, by supporting the previous ruling, the court’s decision might expose private information about website users inother civil lawsuits.

Protecting Internet Commerce

The New York Public Interest Research Organization, a group I was one of the founders of 35 years ago while a college student, has launched a new website to help computer users safeguard their privacy information and avoid internet scams.

The group awards “Screen Door,” and “Steel Door” Awards after evaluating how well websites protect their consumer’s personal information. Netflix.com and ralphlauren.com received a Steel Door awards for superior protection. Disneyshopping.com and homedepot.com received Screen Door awards for poor protection of personal information. http://www.cyberstreetsmart.org/privacy/shopping/shopping01.html

Visit the site at: http://www.cyberstreetsmart.org/index.html

Entertainment Law Resources Blog

Mark Litwak Named Super Lawyer

CROWD RELEASE

Eighteen People Indicted for 25 Million Dollar Indie Film Scam

Awarded Top Blog Honor

Clip from Dallas Seminar, Selling Your Film Internationally

The Hangover II: Tyson Tattoo Copyright Infringement Suit

The Right of Privacy

Jimi Hendrix Right of Publicity Suit

Entertainment Law Resources Blog: Copyright Registration Checklist Scripts or compl...

Copyright Registration Checklist Scripts or completed Motion Pictures

IFTA PUBLISHES ARBITRATION AWARDS

UPCOMING SEMINAR with Mark Litwak

Sponsored by the Arts & Business Council of Greater Boston / Volunteer Lawyers for the Arts

PARIS HILTON’S “THAT’S HOT”

SPEILBERG PREVAILS IN COPYRIGHT INFRINGEMENT SUIT

THE SHELDON ABEND REVOCABLE TRUST, Plaintiff, v. STEVEN SPIELBERG et al., Defendants.

CREATIVE ACCOUNTING

Filmmaker Battles Chevron

NEW EDWARD KENNEDY BOOK PUBLISHED

WHEN A DISTRIBUTOR DEFAULTS

Google's You Tube Prevails Against Viacom

ATTRACTING INVESTORS

ALAN LADD PREVAILS AGAINST STUDIO PACKAGING PRACTICE

Self Defense Checklist

Distributing Your Indie Film

Purchasing Life Story Rights

IFTA Posts Summaries of Arbitration Awards

JUST PUBLISHED! 2ND EDITION RISKY BUSINESS

Craigslist Wins Motion for Judgment on the Pleadings

Risky Business at UCLA February 20, 2010

INTERNET RADIO DEAL CONCLUDED WITH MUSIC LABELS

J. D. SALINGER SUES TO PREVENT PUBLICATION OF BOOK

REAL DEALS

Creative Studio Heads Can Be Both Risky and Rewarding

California Officials Pursuing Noncompliant LLC's

Risky Business at UCLA February 21, 2009

The Middle East International Film Festival

Film L.A. has new Online Permit System

Jackson Browne Sues McCain

Manzarek v. St. Paul fire & Marine Ins. Co.

Screenwriter Sues Mel Gibson for Fraud

Michael Moore Use of Clip Did Not Defame Army Veteran

KIRBY v. SEGA (2006)

Tolkein Trust Sues New Line Cinema Over “Lord of the Rings” Profits

Red Hot Chili Peppers Sues Showtime for “Californication”

House of Blues Files Trademark Infringement Suit