Answers from Mark Litwak, Attorney At Law
DISCLAIMER: The information provided here is intended to provide general information and does not constitute legal advice. You should not act or rely on such information without seeking the advice of an attorney and receiving counsel based on your particular facts and circumstances. Many of the legal principles mentioned might be subject to exceptions and qualifications, which are not necessarily noted in the answers. Furthermore, laws are subject to change and vary by jurisdiction.
Question: I work as a grip and electrician on many low budget features and music videos. Unfortunately, I do not have the luxury of always working with well-established and reputable companies and producers. Although I have not been burned yet, I have heard many horror stories from associates regarding fees not paid and damaged equipment not replaced. My questions: (1) What are some ways that I can protect myself, in terms of my fee and my equipment, without getting involved with huge contracts and lawyers? (2) Are there steps I can take that will protect me without scaring these small time producers?
Answer: First, try to check on the reputation and integrity of those who seek to employ you. Call some of the people they have worked with before. Most scoundrels act consistently. You can usually determine their reputation with minimal effort. Second, you should always insist on a written contract or deal memo covering the essential terms of the deal.
Sometimes, no matter how careful you are, you may find yourself in a position where another party owes you money and refuses to pay. If you are stiffed for a small sum ($5,000 or less), you have a fairly good remedy in those states that have small claims courts. Otherwise, you may need to retain an attorney. If you include in your agreements a provision for binding arbitration under the American Arbitration Association or AFMA, you could avoid litigation to resolve your dispute, and significantly reduce legal fees and costs.
Question: My foster mother, who cannot read or write well, wrote a song that has now been recorded. She had a "friend" write it out for her. This "friend" signed her own name to the song and submitted it to the person who has recorded it. Even though this person knows that my foster mother wrote the song (the "friend" admitted it), they say my foster mother cannot receive any of the royalties because her name was not on the original manuscript. We don't have money to hire lawyers. Is there anything she can do?
Answer: This is fraud. You can sue the person who misrepresented they were the author when in fact your foster mother was the author. If you can't hire a lawyer, perhaps you can represent yourself or negotiate a settlement. You could notify the publisher of the song of this claim. The publisher might decline to promote the work while its authorship is being contested.
Question: My previous agent submitted a screenplay to at least three major production companies before leaving the business (and the country) to teach. He has not responded to any of my letters—and it is my assumption that he would not be responding to any of those companies if they were trying to contact him. What is your best suggestion for me? Should I attempt to contact those companies myself? Should I hire an entertainment lawyer at this point? Or will my next agent be able to check on those scripts for me without any adverse legal ramifications. (Absolutely no contracts were signed with this first agent.)
Answer: Contact the production companies and inform them of who your new agent or lawyer is, and give them their address and phone number.
Question: I'm writing about Entertainment Lawyers in school. We have to try to convince someone to want to become an entertainment lawyer, what advice could you give me?
Answer: I think the best reason to become involved in entertainment law is if you like the area of intellectual property and enjoy the business aspects of filmmaking and television production. It seems to me you either have an interest in this or you don't.
Question: Do you feel that there is a need for legal reform in entertainment law/ intellectual property law? If so, is there anyone working towards this reform, thus far? When I say legal reform, I'm more or less looking at legal help for the starving artists who have little money and legal knowledge, yet who are taken advantage of by unscrupulous attorneys.
Answer: You may want to contact the State Bar if you are aware of unethical activities by attorneys. Attorneys can be disbarred if they violate the state's rules of professional conduct. As for helping starving artists, you may want to contact California Lawyers for the Arts at http://www.calawyersforthearts.org or (310) 998-5590.
Question: Would you clarify the term "moral rights" used in your books?
Answer: Moral rights have a limited application in the United States. Except in regard to fine art, American law doesn't expressly recognize the moral rights of authors. Moral rights are separate and distinct rights from the copyright or ownership of a particular work. Think of the various rights as a three-tiered scheme: (1) you could go into an art gallery and buy a painting, in which case you would own the actual painting, but not necessarily the copyright to the painting. (2) You could also negotiate to own the copyright to the painting in which case you would have the rights of the copyright owner, which would allow you to duplicate the image of the painting, on lithographs, T-shirts, posters, etc. (3) Authors of some works (in our example, the painter) may have what are called "moral rights" which prevent third parties (in this example, you, the art buyer) who may own the author's work, and the copyright to it, from making any changes in the work or removing the author's credit. Moral rights are generally comprised of the Right of Paternity, which is the right of the authors to be known as the author of a work, and the Right of Integrity, which is the right to prevent other people from desecrating or changing their work. Although the United States does not explicitly recognize moral rights (except for fine art), other legal doctrines, such as the law of unfair competition, have been used to protect similar rights for U.S. authors.
Question: I am a third year law student at St. John's Law School in New York. I'm considering taking a class in entertainment law during the fall semester. The grade is based on an independent research paper. I was wondering if you could give me a few ideas as to what some of the hot topics are in the area of protecting screenwriters' rights.
Answer: I don't know of any hot topics in regard to screenwriter's rights, but there are many topics that would merit attention in regard to telecommunications reform and how existing copyright and intellectual property laws will be applied as we increasingly rely on the Internet.
Question: My writing consultant agreed to represent me as my agent and sell my screenplay. My entertainment lawyer spent a lot of time with her over the phone and at meetings (at my expense) and drew up a contract for that purpose. At the last minute, and without a word to my entertainment lawyer or me, this so-called agent took a job at another company and left me with an unsigned contract. Meanwhile, I still have to pay my lawyer for services rendered. My lawyer says there isn't anything I can do. I think there is. Could I take the agent to small claims court? Or what? I am paying good money for hot air. Thanks for any reply.
Answer: Generally speaking, both parties to a negotiation bear the expense of their own attorney fees. Unless there was some agreement for this person to reimburse you for your attorney fees in the event the deal fell through, I don't see any basis for a claim.
Question: I don't think this is covered in your books, at least from what I've read in them so far: A friend of mine says deferred pay for film crews is illegal, even though everyone does it. I don't see why it would be illegal; so long as it is made clear that the pay is potential only, not guaranteed. Any comments?
Answer: Deferments are not illegal, however, if all pay is deferred, this may run afoul of various minimum wage laws, which require that a minimum payment must be made. As long as the minimum wage laws are met, there is no problem with additional compensation being deferred.
Question: I write screenplays under a pseudonym. I live in Florida and I have registered the pseudonym as a fictitious name in the state of Florida and I have obtained an occupational license in the county I live in to do business under that name. Questions: (1) When I correspond with potential agents or buyers (I am obviously a new writer), do I correspond with them under the fictitious name I write my screenplays under or under my legal name, informing them that I write as …? (2) I also know that you can list other names known as under your Social Security Number. Any advantages or disadvantages to doing that in my case? (3) Finally, I guess, the most to-the-point question: When your write under a pseudonym, how do you best handle that legally and professionally? I don't want to change my name legally, but I would like to be known in the business by my fictitious name. Any advice?
Answer: If you want to be known in the industry by your fictitious name, then you should use it. That is what should be listed on your screenplays and any place else where you received credit. However, even though you received credit pseudonymously, you may want your agent to know your real name. It's really up to you.
Question: Can you please point me to a resource that provides for standard net profit participation for producers, actors, and lawyers in a $30,000 independent film? Thanks.
Answer: No one sets a standard as to what a net profit definition should be, although many of the major studios have similar definitions. You can consult Matthew Bender's Law book series, Entertainment Industry Contracts, which should be available at most law libraries. You can also check my book, Contracts for the Film and Television Business, 2nd Ed. (Silman-James Press), which has a net profit definition in it.
Question: A client of mine is a painter. A movie producer who wants to use her painting in a movie has approached her. At this point I don't know whether the movie is studio-produced or independent, nor do I know the nature of the budget. In general, then, and assuming that the use of the painting will be significant, should we be asking for some money consideration for the use of the painting?
Answer: It would not be unreasonable for you to ask for some payment for the use of your picture, especially if it is featured in the film. Without knowing the prominence of the picture and context in which it will be used, it is hard to give an estimate of what kind of payment would be reasonable.
Question: What is an E&O Insurance policy, and why is this important in a screenplay contract negotiation?
Answer: E&O (Errors and Omissions) Insurance is akin to a malpractice insurance policy for writers and filmmakers. It protects them should they inadvertently infringe another party's copyright, defame a person, invade someone's privacy etc. etc. It does not cover a writer or filmmaker if they knowingly engage in wrongful behavior. In other words, if they are careless and infringe another's rights they are covered, but if they intentionally plagiarize a script, they would not be covered by insurance.
The insurance policy covers the named insured, and you can add additional named insureds to the policy for a nominal charge. If you are a member of the Writers Guild of America, then by virtue of their collective bargaining agreement, the writer is supposed to be included on the employer's policy. Even with E&O coverage, in the event of litigation the insured may be liable for the deductible, which can be $10,000 or more.
The policy covers both any damages assessed against the writer/filmmaker, and the legal fees incurred for defense.
E&O is often required by U.S. distributors before they will license a film for distribution. They want the right to distribute the film and do not want to buy a lawsuit.
A writer and filmmaker can be liable for copyright infringement even if they don't intend to infringe another's copyrighted material. For instance, if a filmmaker licensed a piece of music for his film, and it turned out that unbeknownst to the filmmaker the musician that sold him the music didn't own all the necessary rights to it, then the filmmaker could be liable even though the filmmaker was an innocent infringer.
Question: I recently started a corporation to be a production company; I plan on filing for an S-Class election in a few days. My question is about public record: this is an industry where people screw each other just because they can. Is there any way that "anyone who wants to" can access public records, such as my S-Class filing or my corporate tax returns? I filed in Delaware because I read somewhere that Delaware, like Nevada, does not disclose the names of the shareholders under any circumstance. Is there any way that the so-called corporate shield could be penetrated, and could I then be liable for personal assets? (Not counting illegal activity, I'm talking case example, I ticked off Disney and they want blood.)
Also, a second question: I understand that a production company needs a business license in the local city that they will film in. Is a business license, or an occupational permit, required for just working out of your home and dealmaking quietly, like pre-preproduction? If it's the law, I obviously can't afford to overlook this, but if it's possible to avoid, I'd like to: the city fees are high at the moment, at least for some things.
Answer: Certain information about your corporation is a matter of public record. For instance, you need to register with the Secretary of State the identity of an agent for service of process. This is the person who can accept papers if a lawsuit is filed against the corporation. Once a lawsuit is filed against a corporation, of course, other information, if relevant, could be revealed through discovery. Generally, corporate tax returns are not publicly available. However, in the course of a lawsuit, if it was relevant, the court might order this information produced. On the other hand, if you become a public company, much information about your company will need to be publicly disclosed.
You do not necessarily need a business license in every city that you film in, but you may need a film permit. A business license will typically be required where you have an office. The laws vary by locality. You will need to check with the city in which you are based.
Question: Last month at a film festival I won some screenwriting contest. The first prize was some $500 in cash and my script read by the panel of producers. When I was announced as the winner, the organizer of the contest told me that he hadn't brought cash money but gave me his business card and asked for mine, saying he would take care of it once back in his town. Since then I didn't hear from him anymore. No money and no one asking to read my script. I wrote him an E-mail message to remind him of what he promised, but he did not answer me. What would you do in my place?
Answer: If he doesn't live up to his promise, then you can bring suit against him. I am not sure what state you reside in, but $500 would put you in small claims court in California, and you don't need an attorney to represent yourself.
Wednesday, May 05, 2004
Monday, April 26, 2004
THE COURT DISMISSES "RUGRATS" INFRINGEMENT CLAIM AND REPRIMANDS PLAINTIFF'S LAWYER FOR FAILING TO WITHDRAW
April 26, 2004
In this newsletter:
THE COURT DISMISSES "RUGRATS" INFRINGEMENT CLAIM AND REPRIMANDS PLAINTIFF'S LAWYER FOR FAILING TO WITHDRAW
Philip Cargile sued Viacom for basing the characters from the Nickelodeon series, the "Rugrats," on his cartoon characters, the "Go-Burns." Cargile claimed that in 1991 and in 1992, he gave copies of his cartoon characters to a member of the Florida Film Commission who was supposed to meet with Nickelodeon.
Viacom denied Cargile's allegations and filed a motion for summary judgment to dismiss the case. Viacom provided evidence that the Rugrats were created by an independent production company in 1989, and a pilot for the series aired in 1990, before Cargile allegedly submitted copies of his cartoons. Viacom also argued that Cargile failed to file his lawsuit within the statute of limitations of four years for contracts, and of three years for trade secret claims. Cargile filed his lawsuit in 2000, more than nine years after Rugrats first aired.
District Judge Stephan Mickle granted Viacom's summary judgment motion. The Judge stated that the case could be dismissed based on the statute of limitations argument alone. The Judge also found that the similarity between the Go-Burns and the Rugrats was so "slight" that it could not support Cargile's allegation that Viacom used his cartoon characters. In addition, Cargile did not provide any evidence of an implied agreement with Viacom to maintain the secrecy of his characters or to pay for their use. Furthermore, the member of the Commission who allegedly had a meeting with Nickelodeon died, and therefore, Cargile's claim that the meeting actually took place could not be corroborated.
Viacom also sought monetary sanctions against Cargile's attorney under Rule 11 of the Federal Rules of Civil Procedure for failing to withdraw from the case after Cargile refused to dismiss the case voluntarily. The Judge did not grant Viacom's request for monetary sanctions but he reprimanded Cargile's attorney for not withdrawing from the case, and thus failing to act in accordance with his duties under Rule 11 and the rules of professional conduct. Cargile v. Viacom International, Inc., 282 F.Supp.2d 1316, 2003 U.S. Dist.LEXIS 21097 (N.D.Fla. 2003)
MARK TO TEACH AT NEW YORK VOLUNTEER LAWYERS FOR THE ARTS
On Nov. 6, Mark will conduct a "Self-defense for Writers and Directors" seminar for New York Volunteer Lawyers for the Arts. He will explain how writers and directors 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. Participants will also learn what remedies are available to enforce their rights in the event of a dispute. For more information or to register, please call Alexei Auld at 212-319-ARTS (2787) ext. 12.
RISKY BUSINESS IS NOW AVAILABLE
Mark's latest book "Risky Business" is now available for purchase and delivery via UPS through his website at www.marklitwak.com/store. "Risky Business" is the comprehensive nuts-and-bolts guide to setting up an independent production project. Starting with the basic organization of the company and the preparation of production, collaboration, and screenplay agreements, it covers in detail everything from raising money via loans, presales, and investors through finding, contracting with, and policing the finished project's distributors.
In this newsletter:
THE COURT DISMISSES "RUGRATS" INFRINGEMENT CLAIM AND REPRIMANDS PLAINTIFF'S LAWYER FOR FAILING TO WITHDRAW
Philip Cargile sued Viacom for basing the characters from the Nickelodeon series, the "Rugrats," on his cartoon characters, the "Go-Burns." Cargile claimed that in 1991 and in 1992, he gave copies of his cartoon characters to a member of the Florida Film Commission who was supposed to meet with Nickelodeon.
Viacom denied Cargile's allegations and filed a motion for summary judgment to dismiss the case. Viacom provided evidence that the Rugrats were created by an independent production company in 1989, and a pilot for the series aired in 1990, before Cargile allegedly submitted copies of his cartoons. Viacom also argued that Cargile failed to file his lawsuit within the statute of limitations of four years for contracts, and of three years for trade secret claims. Cargile filed his lawsuit in 2000, more than nine years after Rugrats first aired.
District Judge Stephan Mickle granted Viacom's summary judgment motion. The Judge stated that the case could be dismissed based on the statute of limitations argument alone. The Judge also found that the similarity between the Go-Burns and the Rugrats was so "slight" that it could not support Cargile's allegation that Viacom used his cartoon characters. In addition, Cargile did not provide any evidence of an implied agreement with Viacom to maintain the secrecy of his characters or to pay for their use. Furthermore, the member of the Commission who allegedly had a meeting with Nickelodeon died, and therefore, Cargile's claim that the meeting actually took place could not be corroborated.
Viacom also sought monetary sanctions against Cargile's attorney under Rule 11 of the Federal Rules of Civil Procedure for failing to withdraw from the case after Cargile refused to dismiss the case voluntarily. The Judge did not grant Viacom's request for monetary sanctions but he reprimanded Cargile's attorney for not withdrawing from the case, and thus failing to act in accordance with his duties under Rule 11 and the rules of professional conduct. Cargile v. Viacom International, Inc., 282 F.Supp.2d 1316, 2003 U.S. Dist.LEXIS 21097 (N.D.Fla. 2003)
MARK TO TEACH AT NEW YORK VOLUNTEER LAWYERS FOR THE ARTS
On Nov. 6, Mark will conduct a "Self-defense for Writers and Directors" seminar for New York Volunteer Lawyers for the Arts. He will explain how writers and directors 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. Participants will also learn what remedies are available to enforce their rights in the event of a dispute. For more information or to register, please call Alexei Auld at 212-319-ARTS (2787) ext. 12.
RISKY BUSINESS IS NOW AVAILABLE
Mark's latest book "Risky Business" is now available for purchase and delivery via UPS through his website at www.marklitwak.com/store. "Risky Business" is the comprehensive nuts-and-bolts guide to setting up an independent production project. Starting with the basic organization of the company and the preparation of production, collaboration, and screenplay agreements, it covers in detail everything from raising money via loans, presales, and investors through finding, contracting with, and policing the finished project's distributors.
Friday, April 23, 2004
HE COURT DISMISSES CLAIM THAT THE OWNERS OF THE COMEDY CENTRAL INFRINGED RIGHTS WHEN THEY AIRED A CLIP OF A SHOW
April 23, 2004
In this newsletter: T
HE COURT DISMISSES CLAIM THAT THE OWNERS OF THE COMEDY CENTRAL INFRINGED RIGHTS WHEN THEY AIRED A CLIP OF A SHOW
Sandy Kane, a host of a late-night public access television program, “The Sandy Kane Blew Comedy Show,” in which she sings, dances and makes explicit jokes, filed a lawsuit against Comedy Central for copyright and trademark infringement, and for defamation and violation of her right of publicity.
A clip from Kane's show was shown on a segment of "The Daily Show" called "Public Excess." In the clip, Kane was dancing in a bikini and the title of her show appeared in the background. The clip was shown on a full screen for less than a second and then it was minimized but remained on air for another five seconds. In addition, a portion of the clip was used in a commercial promoting "The Daily Show," along with other clips from segments of "The Daily Show." The promo's announcer proclaimed "The Daily Show: comprehensive, extensive, offensive," and as he pronounced the word "offensive," the clip with Kane dancing in a bikini came on.
Federal District Judge George Daniels granted Comedy Partners' (the owners of Comedy Central) motion for summary judgment and dismissed all of Kane's claims. Judge Daniels ruled that "The Daily Show's" use of the clip from Kane's show protected from copyright infringement because it was a fair use. The Judge found that "by airing [the] clip in a segment called 'Public Excess' and adding some derisive commentary, [Comedy Central] unquestionably used her material for the purpose of criticism." The Judge also stated that "the use of the clip on a commercial for 'The Daily Show, coinciding with the announcer's warning that some material on the show may be 'offensive,' puts the clip into a critical context."
Furthermore, Judge Daniels ruled that viewers would not switch to watching "The Daily Show" just because it aired a clip from Kane’s show. Thus, the use of the clip by "The Daily Show" would not affect the market for Kane's show.
As to Kane's trademark infringement claim, Judge Daniels dismissed it because the use of the clip in "The Daily Show" did not create an impression that someone besides Kane herself was the owner of the trademark of "The Sandy Kane Comedy T.V. Show.
In addition, the Judge rejected Kane's claim that "The Daily Show's" use of her clip violated her right of publicity. He ruled that Kane's name or likeness was not used "primarily for advertising or trade purposes." He also found that the use of the clip fell within the New York Civil Rights Act's "newsworthy" exception for "entertainment and amusement."
Finally, the Judge also dismissed Kane's claim that she was defamed. "The Daily Show" announcer's reference to Kane and her performance as "offensive" was clearly "protected expression of opinion."
Kane v. Comedy Partners, 2003 WL 22383387. U.S. Dist. LEXIS 18513 (S.D.N.Y. 2003)
In this newsletter: T
HE COURT DISMISSES CLAIM THAT THE OWNERS OF THE COMEDY CENTRAL INFRINGED RIGHTS WHEN THEY AIRED A CLIP OF A SHOW
Sandy Kane, a host of a late-night public access television program, “The Sandy Kane Blew Comedy Show,” in which she sings, dances and makes explicit jokes, filed a lawsuit against Comedy Central for copyright and trademark infringement, and for defamation and violation of her right of publicity.
A clip from Kane's show was shown on a segment of "The Daily Show" called "Public Excess." In the clip, Kane was dancing in a bikini and the title of her show appeared in the background. The clip was shown on a full screen for less than a second and then it was minimized but remained on air for another five seconds. In addition, a portion of the clip was used in a commercial promoting "The Daily Show," along with other clips from segments of "The Daily Show." The promo's announcer proclaimed "The Daily Show: comprehensive, extensive, offensive," and as he pronounced the word "offensive," the clip with Kane dancing in a bikini came on.
Federal District Judge George Daniels granted Comedy Partners' (the owners of Comedy Central) motion for summary judgment and dismissed all of Kane's claims. Judge Daniels ruled that "The Daily Show's" use of the clip from Kane's show protected from copyright infringement because it was a fair use. The Judge found that "by airing [the] clip in a segment called 'Public Excess' and adding some derisive commentary, [Comedy Central] unquestionably used her material for the purpose of criticism." The Judge also stated that "the use of the clip on a commercial for 'The Daily Show, coinciding with the announcer's warning that some material on the show may be 'offensive,' puts the clip into a critical context."
Furthermore, Judge Daniels ruled that viewers would not switch to watching "The Daily Show" just because it aired a clip from Kane’s show. Thus, the use of the clip by "The Daily Show" would not affect the market for Kane's show.
As to Kane's trademark infringement claim, Judge Daniels dismissed it because the use of the clip in "The Daily Show" did not create an impression that someone besides Kane herself was the owner of the trademark of "The Sandy Kane Comedy T.V. Show.
In addition, the Judge rejected Kane's claim that "The Daily Show's" use of her clip violated her right of publicity. He ruled that Kane's name or likeness was not used "primarily for advertising or trade purposes." He also found that the use of the clip fell within the New York Civil Rights Act's "newsworthy" exception for "entertainment and amusement."
Finally, the Judge also dismissed Kane's claim that she was defamed. "The Daily Show" announcer's reference to Kane and her performance as "offensive" was clearly "protected expression of opinion."
Kane v. Comedy Partners, 2003 WL 22383387. U.S. Dist. LEXIS 18513 (S.D.N.Y. 2003)
Wednesday, April 07, 2004
MARK'S NEWEST BOOK, "RISKY BUSINESS," ABOUT TO BE PUBLISHED
April 7, 2004
In this newsletter:
MARK'S NEWEST BOOK, "RISKY BUSINESS," ABOUT TO BE PUBLISHED
"Risky Business" is the comprehensive nuts-and-bolts guide to setting up an independent production project. Starting with the basic organization of the company and the preparation of production, collaboration, and screenplay agreements, it covers in detail everything from raising money via loans, presales, and investors through finding, contracting with, and policing the finished project's distributors. We will receive copies from the publisher any day now. The book is not yet in bookstores. To order visit the bookstore on Mark's website: www.marklitwak.com/store.
The complete table of contents is below:
PREFACE FILMMAKER SELF DEFENSE CHECKLIST ORGANIZING YOUR COMPANY Choice of Business Entity Sole Proprietorship General Partnership Limited Partnership Corporation Limited Liability Company (LLC)
COLLABORATIONS AND CO-PRODUCTIONS International Co-Productions Production Incentives 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
ATTRACTING INVESTORS Checklist for Film Investors
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
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 Assignment Allocation of Package Revenue Security Interest Governing Law Territorial Minimums Access to Master Materials Return of Materials Delivery
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
LOOKING FORWARD APPENDIX - 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
The book also includes the following template contracts:
CONTRACTS Co-Production Agreement Distributor Sales Agency Agreement Finder Agreement International Distribution License Agreement Lab Access Letter International Distribution Agreement (Filmmaker-friendly version) International Distribution License Agreement
In this newsletter:
MARK'S NEWEST BOOK, "RISKY BUSINESS," ABOUT TO BE PUBLISHED
"Risky Business" is the comprehensive nuts-and-bolts guide to setting up an independent production project. Starting with the basic organization of the company and the preparation of production, collaboration, and screenplay agreements, it covers in detail everything from raising money via loans, presales, and investors through finding, contracting with, and policing the finished project's distributors. We will receive copies from the publisher any day now. The book is not yet in bookstores. To order visit the bookstore on Mark's website: www.marklitwak.com/store.
The complete table of contents is below:
PREFACE FILMMAKER SELF DEFENSE CHECKLIST ORGANIZING YOUR COMPANY Choice of Business Entity Sole Proprietorship General Partnership Limited Partnership Corporation Limited Liability Company (LLC)
COLLABORATIONS AND CO-PRODUCTIONS International Co-Productions Production Incentives 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
ATTRACTING INVESTORS Checklist for Film Investors
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
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 Assignment Allocation of Package Revenue Security Interest Governing Law Territorial Minimums Access to Master Materials Return of Materials Delivery
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
LOOKING FORWARD APPENDIX - 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
The book also includes the following template contracts:
CONTRACTS Co-Production Agreement Distributor Sales Agency Agreement Finder Agreement International Distribution License Agreement Lab Access Letter International Distribution Agreement (Filmmaker-friendly version) International Distribution License Agreement
Thursday, April 01, 2004
TIMES SQUARE BUILDING AND BILLBOARD OWNERS GET A SECOND SHOT AT SONY
April 1, 2004
In this newsletter:
TIMES SQUARE BUILDING AND BILLBOARD OWNERS GET A SECOND SHOT AT SONY
The owners of buildings and billboards in Times Square filed claims against Sony Pictures for altering the way the building and billboards appeared in real life at the time the movie was filmed. In “Spider Man,” images of the buildings and billboards were digitally altered.
Owners of the buildings and billboards claim that in the movie scenes of Times Square, Sony digitally inserted other companies’ ads and signs in order to “generate revenue.” Sony, on the other hand, argues that the reason they changed the appearance of Times Square is in order to create a more “artistically satisfying [in] appearance.” The real appearance of Times Square was too “advertising-encrusted” for the movie.
Sony scanned the images of the Times Square buildings and billboards with a laser light beam, and then digitally created new images for the movie. Owners of the buildings and billboards claim that under New York state law, this digital alteration violated their trademark and trade dress rights and amounted to “trespass.” They also filed federal law claims against Sony.
Both federal and state law claims of the Times Square’s owners were dismissed by federal District Judge Richard Owen. Times Square’s owners appealed and the federal appellate court affirmed the dismissal of federal causes of action. However, in a Summary Order marked “May Not be Cited as Precedential Authority,” the appellate court has vacated Judge Owen’s dismissal of the owners’ state law claims “with prejudice” and remanded the state law claims with instructions that they be dismissed “without prejudice.” For the owners, dismissal “without prejudice” means that they may file their claims in state court, if they decide to do so.
In its decision, the Court of Appeals concluded that the owners’ state law claims should not be dismissed because their allegations of trespass were “an unsettled question of state law.” The case was dismissed before Sony could show that its digital alterations had “artistic relevance” to the movie and were therefore protected under the First Amendment. Sherwood 48 Associates v. Sony Corp., 76 Fed.Appx. 389, 2003 U.S.App.LEXIS 20106 (2nd Cir. 2003).
CLARIFICATION
In my last newsletter, I discussed the arbitration award won by my client, Florida Film Investment Company against RGH/Lions Share. Mention was made of a license between RGH/Lions Share to a home video label, Singa Home Entertainment, which is also managed by Eric Louzil a principal of RGH/Lions Share. Singa, in turn, attempted to license the film to Pathfinder Pictures, which is not a company affiliated or connected in any way with RGH/Lions Share, Singa or Eric Louzil. I want to make it clear to my readers that Pathfinder was not a party to the arbitration proceeding, and was not accused of any wrongdoing in this matter at all.
In this newsletter:
TIMES SQUARE BUILDING AND BILLBOARD OWNERS GET A SECOND SHOT AT SONY
The owners of buildings and billboards in Times Square filed claims against Sony Pictures for altering the way the building and billboards appeared in real life at the time the movie was filmed. In “Spider Man,” images of the buildings and billboards were digitally altered.
Owners of the buildings and billboards claim that in the movie scenes of Times Square, Sony digitally inserted other companies’ ads and signs in order to “generate revenue.” Sony, on the other hand, argues that the reason they changed the appearance of Times Square is in order to create a more “artistically satisfying [in] appearance.” The real appearance of Times Square was too “advertising-encrusted” for the movie.
Sony scanned the images of the Times Square buildings and billboards with a laser light beam, and then digitally created new images for the movie. Owners of the buildings and billboards claim that under New York state law, this digital alteration violated their trademark and trade dress rights and amounted to “trespass.” They also filed federal law claims against Sony.
Both federal and state law claims of the Times Square’s owners were dismissed by federal District Judge Richard Owen. Times Square’s owners appealed and the federal appellate court affirmed the dismissal of federal causes of action. However, in a Summary Order marked “May Not be Cited as Precedential Authority,” the appellate court has vacated Judge Owen’s dismissal of the owners’ state law claims “with prejudice” and remanded the state law claims with instructions that they be dismissed “without prejudice.” For the owners, dismissal “without prejudice” means that they may file their claims in state court, if they decide to do so.
In its decision, the Court of Appeals concluded that the owners’ state law claims should not be dismissed because their allegations of trespass were “an unsettled question of state law.” The case was dismissed before Sony could show that its digital alterations had “artistic relevance” to the movie and were therefore protected under the First Amendment. Sherwood 48 Associates v. Sony Corp., 76 Fed.Appx. 389, 2003 U.S.App.LEXIS 20106 (2nd Cir. 2003).
CLARIFICATION
In my last newsletter, I discussed the arbitration award won by my client, Florida Film Investment Company against RGH/Lions Share. Mention was made of a license between RGH/Lions Share to a home video label, Singa Home Entertainment, which is also managed by Eric Louzil a principal of RGH/Lions Share. Singa, in turn, attempted to license the film to Pathfinder Pictures, which is not a company affiliated or connected in any way with RGH/Lions Share, Singa or Eric Louzil. I want to make it clear to my readers that Pathfinder was not a party to the arbitration proceeding, and was not accused of any wrongdoing in this matter at all.
Wednesday, March 31, 2004
RGH/LIONS SHARE ARBITRATION AWARD
March 31, 2004
In this newsletter:
RGH/LIONS SHARE ARBITRATION AWARD
In a recent newsletter, I mentioned an arbitration award I obtained against RGH/Lions Share on behalf of our client, the Florida Film Investment Company. Mr. Eric Louzil, who manages RGH/Lions Share as well as Echelon Entertainment and Singa Home Entertainment, has objected, complaining that I did not describe the arbitrator’s award accurately and as a result his reputation has been tarnished.
Mr. Louzil objects to my statement that the arbitrator found that his company had failed to provide "accurate" accountings. Indeed, the exact words the arbitrator used were that RGH/Lions Share had failed to provide “complete and timely accountings.” The arbitrator also noted that RGH/Lions Share failed to provide backup of its expenses. I am not sure how an incomplete and late accounting could possibly be accurate, but let’s set the record straight.
Mr. Louzil claims that it is not fair to say that his company had engaged in numerous incidents of wrongdoing. The arbitrator specifically found that RGH/Lions Share failed to provide complete and timely accountings, reported questionable expenses, refused to acknowledge my client’s cancellation of the distribution agreement, failed to return materials, entered into an invalid agreement with Singa Home Entertainment that appeared to be a sham transaction, and tortiously interfered with my client’s attempt to enter into a home video distribution deal with another distributor. Sounds like multiple acts of wrongdoing to me.
Another objection concerns my statement that RGH/Lions Share attempted to sell DVD rights to Pathfinder Pictures (which is not a company managed by Mr. Louzil). Apparently, the agreement was between another of Mr. Louzil’s companies, Singa Home Entertainment, and Pathfinder. So it appears that RGH/Lions Share contracted with my client, and then assigned the home video rights to Singa, which in turn attempted to license the rights to Pathfinder. So Mr. Louzil may be technically correct that the agreement was with Singa, not RGH/Lions Share. Of course, we should also mention that the arbitrator specifically found that RGH/Lions Share agreement with Singa was invalid, and had “all the appearances of a sham transaction between related entities serving simply to dilute the proceeds from the distribution and the potential revenues.”
Mr. Louzil is upset that I wrote that “damages” were awarded in the amount of $75,000. In fact, the award was for $50,000 in damages, $25,052.52 in reimbursement of attorney fees, costs and arbitration expenses, for a total award against RGH/Lions Share of $75,052.52. I am not sure, from the perspective of Mr. Louzil’s reputation, how this makes any difference but perhaps he thinks that people will think more highly of his company if a portion of the award is for reimbursement of attorney fees and costs rather than damages.
It appears that Mr. Louzil is not aware that in defamation actions, truth is an absolute defense and a defendant is not required to prove the literal truth of an allegedly defamatory statement in every detail, so long as the imputation is substantially true so as to justify the gist or sting of the statement. Southwell v. Mallery, Stern & Warford 194 Cal. App. 3d 140, 239 Cal. Rptr. 371 (2nd Dist., 1987).
In order make sure that our readers are precisely and accurately informed, we are publishing this correction. Because we don’t want to quibble over words chosen to describe the award, here is a verbatim copy of the arbitrator’s award:
AFMA INTERNATIONAL ARBITRATION TRIBUNAL
In the matter of the Arbitration between AFMA Arbitration No. 03?62
FLORIDA FILM INVESTMENT COMPANY and RGH/LIONS SHARE PICTURES STATEMENT OF DECISION AND AWARD OF ARBITRATOR T
his matter was heard on February 2, 2004, and argued and submitted for decision on February 9, 2004. Roy G. Rifkin, Esq. was duly appointed as Arbitrator pursuant to the parties’ agreement to arbitrate contained in the agreement dated as of March 2, 2000, and the AFMA Rules for International Arbitration effective September 19, 2002 (“Rules”).
Mark Litwak, Esq. appeared as counsel for Claimant Florida Film Investment Company (“Florida Film”), and Eric Louzil appeared on behalf of Respondent RGH/Lions Share Pictures (“RGH”).
The Arbitrator, having considered the evidence and arguments submitted, makes the following Findings of Fact and Conclusions of Law and Award:
FINDINGS OF FACT
1 . Claimant is the producer of a motion picture entitled Oliver Twisted (the “Picture”).
2. Respondent is in the business of motion picture distribution.
3. The parties entered into an agreement (the “Agreement”) dated as of March 2, 2002, for the worldwide distribution of the picture by Respondent.
4. The Agreement provides, inter alia, for: (a) Written approval by Claimant of any sub?distribution agreements (paragraph 3(e)); (b) The allocation of gross receipts (paragraph 14); (c) Recoupable expenses (paragraph 15); (d) Rendering of accountings by Respondent to Claimant (paragraph 21); (e) Claimant’s right to cancel the Agreement based on failure to generate $100,000 net proceeds to Claimant in the first year of the Agreement (paragraph 17) (“performance clause”); (f) Arbitration of disputes (paragraph 24); and (g) Attorney’s fees and expenses to the prevailing party (paragraph 25).
5. Respondent reported to Claimant total gross receipts in the amount of $8,232.89 from the distribution of the Picture.
6. Respondent reported to Claimant expenses in the amount of $36,460.11 in connection with the distribution of the Picture.
7. Claimant canceled the Agreement pursuant to the performance clause by letter dated February 22, 2003.
8. As of February 22, 2003, Claimant demanded from Respondent the return of all materials in connection with the Picture. Respondent did not return any materials.
9. By agreement dated as of January 15, 2003, Respondent purported to license domestic home video rights to the Picture to Singa Home Entertainment (“Singa”). Singa is affiliated with Respondent. Claimant was not aware of and did not consent to the distribution agreement between Respondent and Singa.
10. In or about April 2003 Claimant had an agreement to license the Picture for domestic home video (including DVD) to BCI Eclipse. The transaction was aborted due to the assertion by Respondent and/or Singa that it had the rights to the Picture.
CONCLUSIONS OF LAW
1. Respondent was in violation of the terms of the Agreement by its failure to provide complete and timely accountings of its distribution activities. Respondent never provided the backup which Claimant requested regarding reported expenses. Furthermore, many of the reported expenses are questionable, including, but not limited to, $2,000 for advertising, $4,000 for M&E tracks, $4,000 for poster, and $500 each for legal/handling fee in connection with various territories. However, even assuming the invalidity of many of the expense items reported, Claimant has not established that it was damaged by any of these breaches. For example, no evidence was offered challenging the market expenses reported by Respondent, under paragraph 15(i) of the Agreement, in the amount of $10,000; and the evidence does not support a finding that Respondent received gross receipts in excess of the $8,232.89 reported. Accordingly, even if all of the questionable distribution expenses were to be disallowed, Claimant still would not be entitled to any producer’s revenues under the terms of the Agreement.
2. Claimant was entitled to cancel the Agreement under the terms of the performance clause because the Picture did not generate $100,000 in producer’s revenues the first year. Such cancellation was effective as of February 22, 2003. Respondent’s refusal to acknowledge the cancellation and return the materials was unwarranted. Respondent’s assertion of prior breach by Claimant in connection with Claimant’s limited attempt to market DVDs of the Picture is not compelling as Respondent had knowledge of and impliedly consented to such activity; and, in any case, there is no evidence of such activity having any detrimental commercial effect on Respondent’s distribution activities. However, Claimant offered no evidence establishing that Respondent’s failure to recognize the cancellation of the Agreement and failure to return the materials proximately caused any damage to Claimant. See Postal Instant Press v. Sealy, 43 Cal.App.4th 1704 (1996). Accordingly, while Claimant is entitled to the return of the materials, it is not entitled to any monetary damages in connection with this claim.
3. Respondent’s distribution agreement with Singa is invalid. It was entered into without the consent of Claimant as required by the Agreement; it exceeded the allowable term of years; and it has all the appearances of a sham transaction between related entities serving simply to dilute the proceeds from the distribution and the potential revenues.
4. Respondent tortiously interfered with Claimant’s domestic home video distribution deal with BCI Eclipse. Respondent had no legitimate basis to deny Claimant’s cancellation of the Agreement nor to rely upon Respondent’s distribution agreement with Singa. Accordingly, Respondent had no reasonable basis to assert to BCI Eclipse its own rights to the Picture as of April 2003. Although the evidence of actual damage based on Claimant’s loss of the distribution deal with BCI Eclipse is somewhat sketchy, there is support for a finding that, had Respondent not interfered with the deal, revenues from the home video distribution of the Picture to the producer would approximate $50,000 (see Exhibits 16 and 25).
AWARD
1. The Agreement dated as of March 2, 2000 is terminated effective as of February 22, 2003. Respondent RGH/Lions Share Pictures retains no rights in the motion picture Oliver Twisted, and Claimant Florida Film Investment Company is free to deal with the Picture as it sees fit in all territories.
2. Respondent RGH/Lions Share Pictures is permanently enjoined from advertising, selling, distributing, manufacturing, or shipping the motion picture Oliver Twisted in any media or any territories whatsoever.
3. Respondent RGH/Lions Share Pictures is ordered to deliver immediately to Claimant Florida Film Investment Company at the office of its counsel, Mark Litwak, Esq. any and all materials in its possession, custody, or control relating to the motion picture Oliver Twisted including, but not limited to, masters, submasters, negatives, videotapes, video disks, stills, cue sheets, boxes, posters, photographs, artwork, advertising material, access letters, and distribution agreements.
4. Respondent RGH/Lions Share Pictures shall pay to Claimant Florida Film Investment Company the following: (a) damages in the amount of $50,000.00; (b) attorney’s fees in the amount of $22,702.52; (c) costs in the amount of $850.00; and (d) reimbursement for one?half of the compensation and expenses of the Arbitrator in the amount of $1,500.00; for a total monetary award in the amount of $75,052.52.
DATED: February 12, 2004
In this newsletter:
RGH/LIONS SHARE ARBITRATION AWARD
In a recent newsletter, I mentioned an arbitration award I obtained against RGH/Lions Share on behalf of our client, the Florida Film Investment Company. Mr. Eric Louzil, who manages RGH/Lions Share as well as Echelon Entertainment and Singa Home Entertainment, has objected, complaining that I did not describe the arbitrator’s award accurately and as a result his reputation has been tarnished.
Mr. Louzil objects to my statement that the arbitrator found that his company had failed to provide "accurate" accountings. Indeed, the exact words the arbitrator used were that RGH/Lions Share had failed to provide “complete and timely accountings.” The arbitrator also noted that RGH/Lions Share failed to provide backup of its expenses. I am not sure how an incomplete and late accounting could possibly be accurate, but let’s set the record straight.
Mr. Louzil claims that it is not fair to say that his company had engaged in numerous incidents of wrongdoing. The arbitrator specifically found that RGH/Lions Share failed to provide complete and timely accountings, reported questionable expenses, refused to acknowledge my client’s cancellation of the distribution agreement, failed to return materials, entered into an invalid agreement with Singa Home Entertainment that appeared to be a sham transaction, and tortiously interfered with my client’s attempt to enter into a home video distribution deal with another distributor. Sounds like multiple acts of wrongdoing to me.
Another objection concerns my statement that RGH/Lions Share attempted to sell DVD rights to Pathfinder Pictures (which is not a company managed by Mr. Louzil). Apparently, the agreement was between another of Mr. Louzil’s companies, Singa Home Entertainment, and Pathfinder. So it appears that RGH/Lions Share contracted with my client, and then assigned the home video rights to Singa, which in turn attempted to license the rights to Pathfinder. So Mr. Louzil may be technically correct that the agreement was with Singa, not RGH/Lions Share. Of course, we should also mention that the arbitrator specifically found that RGH/Lions Share agreement with Singa was invalid, and had “all the appearances of a sham transaction between related entities serving simply to dilute the proceeds from the distribution and the potential revenues.”
Mr. Louzil is upset that I wrote that “damages” were awarded in the amount of $75,000. In fact, the award was for $50,000 in damages, $25,052.52 in reimbursement of attorney fees, costs and arbitration expenses, for a total award against RGH/Lions Share of $75,052.52. I am not sure, from the perspective of Mr. Louzil’s reputation, how this makes any difference but perhaps he thinks that people will think more highly of his company if a portion of the award is for reimbursement of attorney fees and costs rather than damages.
It appears that Mr. Louzil is not aware that in defamation actions, truth is an absolute defense and a defendant is not required to prove the literal truth of an allegedly defamatory statement in every detail, so long as the imputation is substantially true so as to justify the gist or sting of the statement. Southwell v. Mallery, Stern & Warford 194 Cal. App. 3d 140, 239 Cal. Rptr. 371 (2nd Dist., 1987).
In order make sure that our readers are precisely and accurately informed, we are publishing this correction. Because we don’t want to quibble over words chosen to describe the award, here is a verbatim copy of the arbitrator’s award:
AFMA INTERNATIONAL ARBITRATION TRIBUNAL
In the matter of the Arbitration between AFMA Arbitration No. 03?62
FLORIDA FILM INVESTMENT COMPANY and RGH/LIONS SHARE PICTURES STATEMENT OF DECISION AND AWARD OF ARBITRATOR T
his matter was heard on February 2, 2004, and argued and submitted for decision on February 9, 2004. Roy G. Rifkin, Esq. was duly appointed as Arbitrator pursuant to the parties’ agreement to arbitrate contained in the agreement dated as of March 2, 2000, and the AFMA Rules for International Arbitration effective September 19, 2002 (“Rules”).
Mark Litwak, Esq. appeared as counsel for Claimant Florida Film Investment Company (“Florida Film”), and Eric Louzil appeared on behalf of Respondent RGH/Lions Share Pictures (“RGH”).
The Arbitrator, having considered the evidence and arguments submitted, makes the following Findings of Fact and Conclusions of Law and Award:
FINDINGS OF FACT
1 . Claimant is the producer of a motion picture entitled Oliver Twisted (the “Picture”).
2. Respondent is in the business of motion picture distribution.
3. The parties entered into an agreement (the “Agreement”) dated as of March 2, 2002, for the worldwide distribution of the picture by Respondent.
4. The Agreement provides, inter alia, for: (a) Written approval by Claimant of any sub?distribution agreements (paragraph 3(e)); (b) The allocation of gross receipts (paragraph 14); (c) Recoupable expenses (paragraph 15); (d) Rendering of accountings by Respondent to Claimant (paragraph 21); (e) Claimant’s right to cancel the Agreement based on failure to generate $100,000 net proceeds to Claimant in the first year of the Agreement (paragraph 17) (“performance clause”); (f) Arbitration of disputes (paragraph 24); and (g) Attorney’s fees and expenses to the prevailing party (paragraph 25).
5. Respondent reported to Claimant total gross receipts in the amount of $8,232.89 from the distribution of the Picture.
6. Respondent reported to Claimant expenses in the amount of $36,460.11 in connection with the distribution of the Picture.
7. Claimant canceled the Agreement pursuant to the performance clause by letter dated February 22, 2003.
8. As of February 22, 2003, Claimant demanded from Respondent the return of all materials in connection with the Picture. Respondent did not return any materials.
9. By agreement dated as of January 15, 2003, Respondent purported to license domestic home video rights to the Picture to Singa Home Entertainment (“Singa”). Singa is affiliated with Respondent. Claimant was not aware of and did not consent to the distribution agreement between Respondent and Singa.
10. In or about April 2003 Claimant had an agreement to license the Picture for domestic home video (including DVD) to BCI Eclipse. The transaction was aborted due to the assertion by Respondent and/or Singa that it had the rights to the Picture.
CONCLUSIONS OF LAW
1. Respondent was in violation of the terms of the Agreement by its failure to provide complete and timely accountings of its distribution activities. Respondent never provided the backup which Claimant requested regarding reported expenses. Furthermore, many of the reported expenses are questionable, including, but not limited to, $2,000 for advertising, $4,000 for M&E tracks, $4,000 for poster, and $500 each for legal/handling fee in connection with various territories. However, even assuming the invalidity of many of the expense items reported, Claimant has not established that it was damaged by any of these breaches. For example, no evidence was offered challenging the market expenses reported by Respondent, under paragraph 15(i) of the Agreement, in the amount of $10,000; and the evidence does not support a finding that Respondent received gross receipts in excess of the $8,232.89 reported. Accordingly, even if all of the questionable distribution expenses were to be disallowed, Claimant still would not be entitled to any producer’s revenues under the terms of the Agreement.
2. Claimant was entitled to cancel the Agreement under the terms of the performance clause because the Picture did not generate $100,000 in producer’s revenues the first year. Such cancellation was effective as of February 22, 2003. Respondent’s refusal to acknowledge the cancellation and return the materials was unwarranted. Respondent’s assertion of prior breach by Claimant in connection with Claimant’s limited attempt to market DVDs of the Picture is not compelling as Respondent had knowledge of and impliedly consented to such activity; and, in any case, there is no evidence of such activity having any detrimental commercial effect on Respondent’s distribution activities. However, Claimant offered no evidence establishing that Respondent’s failure to recognize the cancellation of the Agreement and failure to return the materials proximately caused any damage to Claimant. See Postal Instant Press v. Sealy, 43 Cal.App.4th 1704 (1996). Accordingly, while Claimant is entitled to the return of the materials, it is not entitled to any monetary damages in connection with this claim.
3. Respondent’s distribution agreement with Singa is invalid. It was entered into without the consent of Claimant as required by the Agreement; it exceeded the allowable term of years; and it has all the appearances of a sham transaction between related entities serving simply to dilute the proceeds from the distribution and the potential revenues.
4. Respondent tortiously interfered with Claimant’s domestic home video distribution deal with BCI Eclipse. Respondent had no legitimate basis to deny Claimant’s cancellation of the Agreement nor to rely upon Respondent’s distribution agreement with Singa. Accordingly, Respondent had no reasonable basis to assert to BCI Eclipse its own rights to the Picture as of April 2003. Although the evidence of actual damage based on Claimant’s loss of the distribution deal with BCI Eclipse is somewhat sketchy, there is support for a finding that, had Respondent not interfered with the deal, revenues from the home video distribution of the Picture to the producer would approximate $50,000 (see Exhibits 16 and 25).
AWARD
1. The Agreement dated as of March 2, 2000 is terminated effective as of February 22, 2003. Respondent RGH/Lions Share Pictures retains no rights in the motion picture Oliver Twisted, and Claimant Florida Film Investment Company is free to deal with the Picture as it sees fit in all territories.
2. Respondent RGH/Lions Share Pictures is permanently enjoined from advertising, selling, distributing, manufacturing, or shipping the motion picture Oliver Twisted in any media or any territories whatsoever.
3. Respondent RGH/Lions Share Pictures is ordered to deliver immediately to Claimant Florida Film Investment Company at the office of its counsel, Mark Litwak, Esq. any and all materials in its possession, custody, or control relating to the motion picture Oliver Twisted including, but not limited to, masters, submasters, negatives, videotapes, video disks, stills, cue sheets, boxes, posters, photographs, artwork, advertising material, access letters, and distribution agreements.
4. Respondent RGH/Lions Share Pictures shall pay to Claimant Florida Film Investment Company the following: (a) damages in the amount of $50,000.00; (b) attorney’s fees in the amount of $22,702.52; (c) costs in the amount of $850.00; and (d) reimbursement for one?half of the compensation and expenses of the Arbitrator in the amount of $1,500.00; for a total monetary award in the amount of $75,052.52.
DATED: February 12, 2004
Thursday, February 26, 2004
RGH/LIONS SHARE LIABLE FOR WRONGDOING, CLAIMANT AWARDED $75,000
February 26, 2004
In this newsletter:
RGH/LIONS SHARE LIABLE FOR WRONGDOING, CLAIMANT AWARDED $75,000
In an AFMA arbitration proceeding, RGH/Lions Share Pictures was found liable for multiple counts of wrongdoing. RGH/Lions Share failed to provide accurate and timely accountings, wrongfully refused to accept cancellation of its distribution agreement for the motion picture “Oliver Twisted,” and tortuously interfered with the producer’s attempt to re-license the picture to a new distributor. The arbitrator also found that RGH/Lions Share, a company controlled by Eric Louzil, wrongfully attempted to enter into a license agreement with Singa Home Entertainment, another company controlled by Eric Louzil. The arbitrator found that the Singa distribution agreement was invalid, and awarded Claimant $75,000 in damages.
Mark Litwak, attorney for Claimant Florida Film Investment Company, stated, “we are very pleased that the arbitrator agreed with all our claims against RGH/Lion’s Share, and dismissed all of RGH/Lions Share’s purported defenses.” Litwak added, “The sworn testimony of Eric Louzil during the proceedings was incredibly shocking, as he admitted that his producer reports were full of errors and improper deductions, and that he had freely transferred assets among his affiliated companies, including Singa Home Entertainment, Echelon Entertainment, and Newmark/Echelon, as well as transferred assets offshore.”
According to Gersh Morningstar, CEO of the Florida Film Investment Company, RGH/Lions Share attempted to continue licensing its film, “Oliver Twisted,” even after RGH/Lions Share’s rights were terminated. After Morningstar gave formal notice that the distribution agreement was terminated to Eric Louzil, the President of RGH/Lions Share, in February 2003 , RGH/Lions Share concluded deals for which revenue had never been reported to the producer. Louzil and his company also continued to market “Oliver Twisted,” months after the termination.
Morningstar states that RGH/Lions Share attempted to sell DVD rights for “Oliver Twisted” to Pathfinder Pictures, which in turn advertised on their website that they would be releasing a DVD on Oct. 28, 2003. When attorney Litwak contacted Pathfinder in June at Morningstar’s behest, the company disclosed that RGH/Lions Share had entered into a contract with them in April 2003; more than a month and a half after the agreement with RGH/Lions Share was canceled. Pathfinder, embarrassed by this revelation, had to withdraw the picture from its slate.
BRANDON COLE WINS PANASONIC FILMMAKERS’ GRANT
Congratulations to our client, Brandon Cole! Cole was awarded a Panasonic Digital Filmmakers’ Grant based on the merits of his film “Bristol Boys.” “Bristol Boys” is a coming-of-age crime-comedy about the rise and fall of a trio of suburban drug dealers and is based on a true story.
“SCREEN DOOR JESUS” TO SCREEN IN L.A.
Congratulations to our clients, producers Sam Adelman and David Stuart, and writer/director Kirk Davis, whose film, “Screen Door Jesus” won the 2003 Hamptons International Film Festival (Best Feature, Best Cinematography, Best Score), 2003 Deep Ellum Film Festival (Best Texas Film), 2003 New York International Film & Video Festival (Best Drama), and 2003 St. Louis International Film Festival (Best Emerging Talent, Eugene Williams).
The film tells the story of that summer in Bethlehem, TX (pop. 2,378) when people thought they saw none other than the images of Jesus on Mother Harper’s screen door.
At 8PM on March 5, “Screen Door Jesus” will roll on Screen 1 at Laemmle’s Fairfax 3 Cinemas, 7907 Beverly Blvd, Los Angeles, CA 90025.
Tickets are available online and at the box office. Purchase tickets online: ticketweb.com/user/?region=socal&query=detail&event=493919
In this newsletter:
RGH/LIONS SHARE LIABLE FOR WRONGDOING, CLAIMANT AWARDED $75,000
In an AFMA arbitration proceeding, RGH/Lions Share Pictures was found liable for multiple counts of wrongdoing. RGH/Lions Share failed to provide accurate and timely accountings, wrongfully refused to accept cancellation of its distribution agreement for the motion picture “Oliver Twisted,” and tortuously interfered with the producer’s attempt to re-license the picture to a new distributor. The arbitrator also found that RGH/Lions Share, a company controlled by Eric Louzil, wrongfully attempted to enter into a license agreement with Singa Home Entertainment, another company controlled by Eric Louzil. The arbitrator found that the Singa distribution agreement was invalid, and awarded Claimant $75,000 in damages.
Mark Litwak, attorney for Claimant Florida Film Investment Company, stated, “we are very pleased that the arbitrator agreed with all our claims against RGH/Lion’s Share, and dismissed all of RGH/Lions Share’s purported defenses.” Litwak added, “The sworn testimony of Eric Louzil during the proceedings was incredibly shocking, as he admitted that his producer reports were full of errors and improper deductions, and that he had freely transferred assets among his affiliated companies, including Singa Home Entertainment, Echelon Entertainment, and Newmark/Echelon, as well as transferred assets offshore.”
According to Gersh Morningstar, CEO of the Florida Film Investment Company, RGH/Lions Share attempted to continue licensing its film, “Oliver Twisted,” even after RGH/Lions Share’s rights were terminated. After Morningstar gave formal notice that the distribution agreement was terminated to Eric Louzil, the President of RGH/Lions Share, in February 2003 , RGH/Lions Share concluded deals for which revenue had never been reported to the producer. Louzil and his company also continued to market “Oliver Twisted,” months after the termination.
Morningstar states that RGH/Lions Share attempted to sell DVD rights for “Oliver Twisted” to Pathfinder Pictures, which in turn advertised on their website that they would be releasing a DVD on Oct. 28, 2003. When attorney Litwak contacted Pathfinder in June at Morningstar’s behest, the company disclosed that RGH/Lions Share had entered into a contract with them in April 2003; more than a month and a half after the agreement with RGH/Lions Share was canceled. Pathfinder, embarrassed by this revelation, had to withdraw the picture from its slate.
BRANDON COLE WINS PANASONIC FILMMAKERS’ GRANT
Congratulations to our client, Brandon Cole! Cole was awarded a Panasonic Digital Filmmakers’ Grant based on the merits of his film “Bristol Boys.” “Bristol Boys” is a coming-of-age crime-comedy about the rise and fall of a trio of suburban drug dealers and is based on a true story.
“SCREEN DOOR JESUS” TO SCREEN IN L.A.
Congratulations to our clients, producers Sam Adelman and David Stuart, and writer/director Kirk Davis, whose film, “Screen Door Jesus” won the 2003 Hamptons International Film Festival (Best Feature, Best Cinematography, Best Score), 2003 Deep Ellum Film Festival (Best Texas Film), 2003 New York International Film & Video Festival (Best Drama), and 2003 St. Louis International Film Festival (Best Emerging Talent, Eugene Williams).
The film tells the story of that summer in Bethlehem, TX (pop. 2,378) when people thought they saw none other than the images of Jesus on Mother Harper’s screen door.
At 8PM on March 5, “Screen Door Jesus” will roll on Screen 1 at Laemmle’s Fairfax 3 Cinemas, 7907 Beverly Blvd, Los Angeles, CA 90025.
Tickets are available online and at the box office. Purchase tickets online: ticketweb.com/user/?region=socal&query=detail&event=493919
Monday, February 02, 2004
Unauthorized Movie Recording Gets Tougher Punishment in California
February 2, 2004
In this newsletter:
Congratulations to “Mango Kiss”
Client Sascha Rice’s film “Mango Kiss” has been bestowed a bevy of praise and awards in recent weeks. The film won the gold award at the Park City Film Festival, was the Opening Night Film at Seattle’s Sex on Screen Film Festival and Park City Film Music Festival, and is slated to be the closing night film for the Durango Film Festival, which will be held March 6-14, 2004.
Congratulations Sascha!
Unauthorized Movie Recording Gets Tougher Punishment in California
This new California law is designed to stop illegal recording of movies. It was necessary to enact this new law because it’s become increasingly easy to record movies in theaters illegally. With the shrinking size of video and digital recorders, anyone can smuggle them into theaters without being noticed.
California has already had a law that made it a misdemeanor to refuse to stop operating a recording device in a movie theater “upon the request of the theaterowner.” However, the legislature had to take tougher measures in order to protect the movie industry and curb piracy. The new statute supplements the existing law by adding a section to the California Penal Code, Section 653z. This section makes it a “public offense” to operate a recording device in a movie theater while a movie is being shown. Unless the person recording the movie has a written authorization from the movie theater’s owner, the act is punishable by imprisonment for as long as one year in county jail and a fine of as much as $2,500.
This tougher law will make it more difficult and risky for anyone to record movies illegally and will help decrease movie piracy.
Mark in Moviemaker, FFT, Will Speak at Miami Film Festival Feb. 7 Mark’s article, “Soft Money in Hard Times,” has been published in the current issue of Moviemaker magazine. Moviemaker can be found online at www.moviemaker.com.
Mark was also mentioned as one of “The Top 25 Indie Players” in Film Festival Today. FFT was distributed during the Sundance Film Festival and can be found online at www.filmfestivaltoday.com.
On Feb. 7, Mark will deliver his “Self-defense for Writers and Filmmakers” seminar at the Miami Film Festival. He’ll cover typical compensation and terms of studio contracts, merchandising deals, creative approvals, and negotiating tactics and strategies. To register, call 305.237.1696. Visit the Miami International Film Festival website at www.miamifilmfestival.com/.
In this newsletter:
Congratulations to “Mango Kiss”
Client Sascha Rice’s film “Mango Kiss” has been bestowed a bevy of praise and awards in recent weeks. The film won the gold award at the Park City Film Festival, was the Opening Night Film at Seattle’s Sex on Screen Film Festival and Park City Film Music Festival, and is slated to be the closing night film for the Durango Film Festival, which will be held March 6-14, 2004.
Congratulations Sascha!
Unauthorized Movie Recording Gets Tougher Punishment in California
This new California law is designed to stop illegal recording of movies. It was necessary to enact this new law because it’s become increasingly easy to record movies in theaters illegally. With the shrinking size of video and digital recorders, anyone can smuggle them into theaters without being noticed.
California has already had a law that made it a misdemeanor to refuse to stop operating a recording device in a movie theater “upon the request of the theaterowner.” However, the legislature had to take tougher measures in order to protect the movie industry and curb piracy. The new statute supplements the existing law by adding a section to the California Penal Code, Section 653z. This section makes it a “public offense” to operate a recording device in a movie theater while a movie is being shown. Unless the person recording the movie has a written authorization from the movie theater’s owner, the act is punishable by imprisonment for as long as one year in county jail and a fine of as much as $2,500.
This tougher law will make it more difficult and risky for anyone to record movies illegally and will help decrease movie piracy.
Mark in Moviemaker, FFT, Will Speak at Miami Film Festival Feb. 7 Mark’s article, “Soft Money in Hard Times,” has been published in the current issue of Moviemaker magazine. Moviemaker can be found online at www.moviemaker.com.
Mark was also mentioned as one of “The Top 25 Indie Players” in Film Festival Today. FFT was distributed during the Sundance Film Festival and can be found online at www.filmfestivaltoday.com.
On Feb. 7, Mark will deliver his “Self-defense for Writers and Filmmakers” seminar at the Miami Film Festival. He’ll cover typical compensation and terms of studio contracts, merchandising deals, creative approvals, and negotiating tactics and strategies. To register, call 305.237.1696. Visit the Miami International Film Festival website at www.miamifilmfestival.com/.
Friday, November 21, 2003
USE OF ELVIS FOOTAGE IN FILM BIOGRAPHY IS NOT FAIR USE
November 21, 2003
In this newsletter:
THE BIG EMPTY OPENS TONIGHT IN L.A.
Congratulations to our client, Echo Lake Productions. Their film, “THE BIG EMPTY,” starring Jon Favreau, Joey Lauren Adams, Rachael Lee Cooke, Kelsey Grammer, and Daryl Hannah opens this Friday, Nov. 21, at the Laemmle Sunset Five (8000 Sunset Boulevard, corner of Sunset and Crescent Heights) in Los Angeles. Producer Doug Mankoff will conduct an informal Q&A at the Wolfgang Puck Café next to the theater on Sunday evening. The film is also screening at the Century Orleans in Las Vegas, and AMC River Park Square 20 in Spokane, WA. Watch the trailer or read about the production by connecting to www.thebigempty.com . Advance tickets are available at www.moviefone.com or www.laemmle.com .
FIRESIDE FILMS LLC
Congratulations to our client, Fireside Films, LLC and director Brad Keller. Their film, “A Killer Within,” began principal photography in Dallas this week. The production stars C. Thomas Howell, Sean Young, Ben Browder, Dedee Pfeiffer and Giancarlo Esposito.
USE OF ELVIS FOOTAGE IN FILM BIOGRAPHY IS NOT FAIR USE
The King has won its appeal. Elvis Presley Enterprises won affirmation from the U.S. Court of Appeals for its preliminary injunction against Passport Entertainment, which prevented Passport from selling a multi-disc documentary about Elvis Presley entitled, “The Definitive Elvis.”
Elvis Presley Enterprises received its original injunction on the basis of copyright infringement. “The Definitive Elvis” incorporated unlicensed clips of copyrighted music, photographs, movies, and television appearances.
Passport Entertainment, which produces celebrity video biographies for the home video market, sought a review of the lower court’s decision, claiming the court abused its discretion and that Passport could, among other things, present a plausible fair use defense.
The doctrine of fair use requires the courts to consider four factors: the purposes and character of the use, including whether the use is of a commercial nature or is for nonprofit educational purposes; the nature of the copyrighted work; the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and the effect of the use upon the potential market for and value of the copyrighted work.
In an analysis of the lower court’s decision, Circuit Judge Richard Tallman of the U.S. Court of Appeals determined that the lower court had not made any errors, legal or otherwise, in its factual findings. However, the judge left the door open for a rehearing, writing that the Appeals Court “might view this case as closer than the district court saw it.”
In a dissenting opinion, Circuit Judge John T. Noonan wrote that the district court had both misstated critical facts and governing law, and that the appeals court should, in fact, reverse the grant of preliminary injunction.
Detailing the errors in the district court’s findings, Judge Noonan further commented on the district court’s failure to conduct an analysis of the public interest in the subject of the documentary and the public injury that would be caused by what is essentially a suppression of speech.
In this newsletter:
THE BIG EMPTY OPENS TONIGHT IN L.A.
Congratulations to our client, Echo Lake Productions. Their film, “THE BIG EMPTY,” starring Jon Favreau, Joey Lauren Adams, Rachael Lee Cooke, Kelsey Grammer, and Daryl Hannah opens this Friday, Nov. 21, at the Laemmle Sunset Five (8000 Sunset Boulevard, corner of Sunset and Crescent Heights) in Los Angeles. Producer Doug Mankoff will conduct an informal Q&A at the Wolfgang Puck Café next to the theater on Sunday evening. The film is also screening at the Century Orleans in Las Vegas, and AMC River Park Square 20 in Spokane, WA. Watch the trailer or read about the production by connecting to www.thebigempty.com . Advance tickets are available at www.moviefone.com or www.laemmle.com .
FIRESIDE FILMS LLC
Congratulations to our client, Fireside Films, LLC and director Brad Keller. Their film, “A Killer Within,” began principal photography in Dallas this week. The production stars C. Thomas Howell, Sean Young, Ben Browder, Dedee Pfeiffer and Giancarlo Esposito.
USE OF ELVIS FOOTAGE IN FILM BIOGRAPHY IS NOT FAIR USE
The King has won its appeal. Elvis Presley Enterprises won affirmation from the U.S. Court of Appeals for its preliminary injunction against Passport Entertainment, which prevented Passport from selling a multi-disc documentary about Elvis Presley entitled, “The Definitive Elvis.”
Elvis Presley Enterprises received its original injunction on the basis of copyright infringement. “The Definitive Elvis” incorporated unlicensed clips of copyrighted music, photographs, movies, and television appearances.
Passport Entertainment, which produces celebrity video biographies for the home video market, sought a review of the lower court’s decision, claiming the court abused its discretion and that Passport could, among other things, present a plausible fair use defense.
The doctrine of fair use requires the courts to consider four factors: the purposes and character of the use, including whether the use is of a commercial nature or is for nonprofit educational purposes; the nature of the copyrighted work; the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and the effect of the use upon the potential market for and value of the copyrighted work.
In an analysis of the lower court’s decision, Circuit Judge Richard Tallman of the U.S. Court of Appeals determined that the lower court had not made any errors, legal or otherwise, in its factual findings. However, the judge left the door open for a rehearing, writing that the Appeals Court “might view this case as closer than the district court saw it.”
In a dissenting opinion, Circuit Judge John T. Noonan wrote that the district court had both misstated critical facts and governing law, and that the appeals court should, in fact, reverse the grant of preliminary injunction.
Detailing the errors in the district court’s findings, Judge Noonan further commented on the district court’s failure to conduct an analysis of the public interest in the subject of the documentary and the public injury that would be caused by what is essentially a suppression of speech.
Tuesday, November 04, 2003
NEW YORK VOLUNTEER LAWYERS FOR THE ARTS
November 4, 2003
In this newsletter:
NEW YORK VOLUNTEER LAWYERS FOR THE ARTS
On Nov. 8 at the Lower Manhattan Cultural Council, Mark will conduct a comprehensive seminar that explores how independent films are financed and distributed. During this Volunteer Lawyers for the Arts seminar, Mark will review include financing via pre?sales, debt and limited partnerships, negotiating tactics, typical contract terms, cross?collateralization and creative accounting. He will address how producers and filmmakers can protect themselves by watering down warranties, getting added to the E&O policy, using lab access letters to retain possession of the negative, utilizing termination and arbitration clauses. The seminar includes a handout with a distribution contract, articles, a self?defense checklist and other materials. 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. To register, please call Jonathan Tominar, VLA Office Administrator, at 212-319-ARTS (2787) ext. 10, or email vla@vlany.org.
In this newsletter:
NEW YORK VOLUNTEER LAWYERS FOR THE ARTS
On Nov. 8 at the Lower Manhattan Cultural Council, Mark will conduct a comprehensive seminar that explores how independent films are financed and distributed. During this Volunteer Lawyers for the Arts seminar, Mark will review include financing via pre?sales, debt and limited partnerships, negotiating tactics, typical contract terms, cross?collateralization and creative accounting. He will address how producers and filmmakers can protect themselves by watering down warranties, getting added to the E&O policy, using lab access letters to retain possession of the negative, utilizing termination and arbitration clauses. The seminar includes a handout with a distribution contract, articles, a self?defense checklist and other materials. 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. To register, please call Jonathan Tominar, VLA Office Administrator, at 212-319-ARTS (2787) ext. 10, or email vla@vlany.org.
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