Do the "Rights" Thing: A Multi-Media Checklist

A.            BASICS OF COPYRIGHT

1.            Grounded in the Constitution.

“Congress shall have the power to promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”  U.S. Const., Art. I, § 8, cl. 8

2.            Codified into Law.

Title 17 of the U.S. Code codifies the Constitutional concept and provides protection to authors of original works of authorship.  Protection is afforded to, among others:

• Literary and musical works
• Motion pictures/audiovisual works
• Sound recordings
• Pictorial, graphic and sculptural works
• Computer programs
• Other artistic and dramatic works

3.            Basic Elements.

To be protected under the Copyright Act a work must be:

• Original
• Expression
• Fixed in a tangible medium
• Not purely utilitarian
  

Copyright does not protect:

• Ideas
• Themes
• Titles
• Historical Events
• Fonts
• Slogans
• Information with no original authorship

 4.            Benefits Derived from Copyright.

 The copyright owner is afforded the exclusive right to:

• Reproduce the work
• Prepare derivative work
• Distribute copies of the work
• Perform the work publicly
• Display the work publicly

5.            Ownership of Copyright.

• Copyright protection exists as soon as work is created in fixed form
• The author who created work is the owner
• Work made for hire:
  • An employer is deemed the author of work created by employee within his or her scope of employment; and
  • An employer is deemed the author of the work where employer commissions one of several types of work, including work for use as part of a motion picture or other audiovisual work, and the parties agree in writing that it will be a work made for hire.
• Ownership of tangible embodiment of work does not equal copyright ownership.

 6.            Copyright Term (works created on or after 1/1/78).

• Author’s life plus 70 years
• For works made for hire, 95 years from publication or 120 years from creation, whichever is shorter
• The constitutionality of the provision of the 1998 Copyright Term Extension Act extended the terms of the existing copyrights by 20 years has been challenged, petitions claim the provision violates the copyright clause and the First Amendment.  The Supreme Court has granted certiorari.  Eldred v. Ashcroft, No. 01-618.

7.            Notice and Registration.

• Notice not required for works created since March 1, 1989, although it is still a good idea to use notice
  • Form of notice:  © [year of first publication] [owner name]
  • Prevents defense of innocent infringement
• Registration is not a condition of copyright protection, although still provides certain benefits
• Must register before can bring infringement suit
  • if registered within five years of publication, is prima facie evidence of validity of copyright
  • if made within three months of publication or prior to infringement, statutory damages and attorneys’ fees are available remedies
• Registration is a simple, inexpensive procedure.  See www.copyright.gov for forms and information

8.            Transfer of Copyright.

• Rights may be subdivided
• Transfer of exclusive rights must be in writing
• First sale doctrine, 17 U.S.C. 109, provides that with certain exceptions, the owner of a copy may sell or rent it (but not copy it)

9.            Infringement of Copyright.

Infringement arises when exclusive rights of a copyright owner are violated.  To prove infringement, generally must show:

• Ownership of valid copyright
• Infringer’s access to the original work (may be implied)
• Copying of original expression; substantially similar standard

 Independent creation without access to original work is not infringement.

 10.            Fair Use.

 17 U.S.C. § 107 sets forth limitations on the exclusive rights of copyright.  Fair uses are not infringing.  Fair use factors include:

• Purpose and character of use
  • Commercial, educational, etc.
  • Transformative
• Nature of the copyrighted work
• Amount and substantiality of portion used
• Effect of use on potential market

 11.            Penalties for Infringement.

• Injunction
• Impoundment and destruction of infringing material
• Can be liable for damages equal to:
  • Copyright owner’s actual damages and infringer’s profits not taken into account in computing actual damages, OR
  • Statutory damages equal to $750 to $30,000; or if willful, up to $150,000
  • Costs and attorneys’ fees
• Certain offenses can carry criminal penalties

 12.            Digital Millennium Copyright Act (enacted 1998).

• Prohibits the circumvention of copyright protection systems (17 U.S.C. §§ 1201 et seq.)
• Provides for civil and criminal penalties

B.        WHO OWNS WHAT AND WHY DOES IT MATTER?

1.            Copyright Issues in Film, Video, and Multimedia Projects.

Multiple tensions exist in entertainment projects that, at the most basic level, are often based on issues of copyright.  Some of these tensions are:

• Authorship v. ownership
• Grant of rights v. reservation of rights
• Control and division of territorial rights
• Control and division of different media rights
• Authorized v. unauthorized use of third party material

In general in the entertainment industry, he who controls the rights has the power, and he who puts up the money, gets the rights.  Writers and other creators are forever trying to protect themselves and their work from unscrupulous producers, distributors, and financiers who want a lot for a little, while at the same time those unscrupulous types are struggling to limit and protect their investment by maximizing their control and minimizing cash outlay.

2.            Creator Beware.

One of the biggest fears of creators, especially novice creators, is that in the process of “pitching” their ideas or work, they will be stolen.  A creator can take steps to put himself in the best position possible.  These include:

• Remember that copyright does not protect ideas
• Protect ideas as best you can
  • Loose lips sink ships
  • Register with the Writers Guild.  See www.wga.org for information
  • Use a copyright notice
  • Register completed works with Copyright Office
  • Keep good records
• Establish actual or implied contract
  • Start pitch by stating expectation material will be kept confidential and you’ll be paid if material used
  • If don’t get at least a nod back, think twice
  • Send confirming letter
• Secure representation

3.            Devil’s Choice.

Unfortunately, a novice writer or filmmaker must struggle to get any foot in the door.  Agents, directors, studios and others are reluctant to accept work without a Submission Release, which seems to give the world away.  What to do?

• Takes the steps in 2 above
• Try to negotiate the Release (unlikely)
• Swallow hard and send it in

Submission releases are basically contracts of adhesion because the creator has no bargaining power, like terms on a parking ticket.  Courts have held overreaching provisions in certain contracts of adhesion unenforceable.  Are Submission Releases valid and enforceable?

• Know of no case law saying they are not
• Could be held invalid if material is misappropriated and Release is found overreaching, unconscionable or against public policy

Scrupulous types usually don’t steal material, but there are enough unscrupulous types who do:

• Desny v. Wilder, 46 Cal. 2d 715 (1956).  Mr. Desny called Billy Wilder about a story idea, based on a true story, and spoke to his secretary.  At her request, Desny read his outline over the phone.  She took it down in shorthand and said she’d discuss it with Wilder.  He said okay, but he expected to be paid for the story if it was used.  Paramount made a movie containing Desny’s fictionalized incidents.  Desny sued.  He had no copyright claim but won on theory of implied contract.
• Blaustein v. Burton, 9 Cal. App. 3d 161 (1970).  Mr. Blaustein, an experienced producer, spoke to Richard Burton’s agent about his idea to have Richard and Elizabeth star in Shakespeare’s Taming of the Shrew with Franco Zeffrelli as director.  The Burtons loved the idea, but left Mr. Blaustein out of it.  Appellate court found under all of the circumstances, an implied contract existed.
• Buchwald v. Paramount Pictures  In phase I of this litigation:  Art Buchwald successfully sued Paramount, claiming that “Coming to America,” the Eddie Murphy movie, was based on a story idea that Buchward had developed and pitched to the studio.  Buchwald v. Paramount Pictures, 13 U.S.P.Q. 1497 (Cal. Super. Ct. 1990)  In phase II, the Court determined that the net profits formula in Buchwald’s contract with Paramount (a standard provision in Hollywood contracts) was unconscionable, and awarded Buchwald damages accordingly.  Buchwald v. Paramount Pictures, 90 Daily Journal D.A.R. 14482 (Cal. Super. Ct. 1990).  Concerned with the effects of the unconscionability holding; and unwilling to take the risk on appeal, Paramount settled with Buchwald.  The unconscionability decision was vacated as a term of the settlement agreement.

Certain recent decisions holding that federal copyright law pre-empts contract claims call into question the viability of the continuing ability to protect ideas on an implied contract theory.  Compare Endemol Entertainment B.V. v. Twentieth Television, 48 USPQ 1524 (U.S. Dist Ct. CA 1998) and Wrench LLC v. Taco Bell Corp., 256 F.3d 446 (6^th Cir. 2001).

3.            The Option Deal.

Before a deal is firm, producers want to tie up and develop rights as cheaply as possible.  The classic way to do this with an existing work such as a book, script or treatment, is to enter into an option agreement.

• Producer wants as long an exclusive option period as possible for as little money as possible
• Writer wants some cut off date – either acquire the rights or they should revert
• Producer will acquire specified rights, when option is exercised for agreed upon consideration
• Depending on nature of project, writer can reserve certain rights, such as publication and dramatic stage, but may be subject to holdbacks
• Creator with any leverage may be able to negotiate ways to stay involved, e.g. first bite at script or rewrite, consultant or producing role, but any approval rights or creative control very rare
• Except for limited author reserved rights, Producer will want all rights in all media throughout the universe
• Writer must be sure there is compensation for exercise of ancillary rights such as sequel, remake, television, merchandising, soundtrack, etc.

Another mechanism used by producers to minimize their risk is the Step Deal, which allows the producer to hire a writer one step at a time (treatment; first draft; first rewrite; etc.) without committing to the next until having seen the prior one.

Note:  A number of issues addressed in this outline may be affected by the rules of the Writer’s Guild.  Those rules are not addressed here, but are available at www.wga.org.

4.            Producer Also Needs Protection.

While the writer is trying to make sure she isn’t cheated out of valuable rights, the producer has his own worries about his rights and rights of others.

• If acquiring a script or book, or if a script is based on a pre-existing work, get a copyright report to make sure ownership chain is clear and unencumbered
• Clear the title
  • Titles aren’t protected by copyright
  • Order title report (Thomson & Thomson)
  • MPAA
• Acquire rights and releases to identifiable products, locations, background art, film clips, in addition to music and people
• Make sure all rights agreements are in writing
• Check for any material that could be defamatory or invade rights of privacy or publicity
• E&O insurance

 5.            When Do You Need a Release?

 If you are depicting a person, a private location, or a work or product in which another has copyright or trademark rights, get a release.  Rules of thumb for locations, works, and products:

•  If items are merely background or use is fleeting, the fair use exception probably applies
• If a work is clearly identifiable or is featured, even if only for a few seconds, a release is wise, i.e. get a release for any location, work or product the audience will remember seeing
• Multiple releases may be necessary for film clips because there are multiple rights holders:
  • Copyright owner
  • Unions
  • People in clip
  • Music rights

A good release should be broad in scope and allow:

• Perpetual, worldwide use in all media
• Right to edit, fictionalize or modify
• No requirement to use portrayal
• Release of any claim based on defamation, privacy, publicity or infringement

6.            Infringement or Fair Use?

• Ringgold v. Black Entertainment Television, 126 F.3d 70 (2d Cir. 1997).  Faith Ringgold, an artist, owns the copyright in a unique quilt she created.  Defendant produced a television show episode that depicted a poster of the quilt hanging on a wall.  The work appeared in nine sequences of a five-minute scene for a total of 26.75 seconds.  Defendant argued the use was de minimus (below threshold for litigation) or fair use.  The lower court agreed.  On appeal the Second Circuit reversed the lower court and sent the case back for further action.
• Sandoval v. New Line Cinema Corp., 147 F.3d 215 (2d Cir. 1998).  This is a seemingly similar case in which a series of photographic self-portraits owned by Sandoval, an artist, appear in 11 camera shots for a total of 35.6 seconds.  However, the photos are never in focus and are often partially obstructed.  Sandoval claimed copyright infringement; the court disagreed.
• Devil’s Advocate (settled).  Frederick Hart sued Warner Brothers and TimeWarner for an infringing recreation of Hart’s bas-relief sculpture in the movie Devil’s Advocate.  The case settled early after the court imposed a 48‑hour injunction on distribution of the film.  The settlement included a gag order on the court documents.  Warner agreed to put a disclaimer sticker on videos already produced and agreed to edit the film for any future distribution.
• Hofheinz v. A&E Television Networks, 146 F. Supp.2d 442 (S.D.N.Y. 2001).  Susan Hofheinz owns rights in the 1950’s film “It Conquered the World,” featuring Peter Graves.  An A&E biography about Graves included 20 seconds from a promotional trailer of the film.  Hofheinz claimed infringement.  A&E defended on the ground of fair use.  The NY District Court ran through each step of the fair use analysis and ruled in favor of A&E.  Currently being appealed.

C.            Leveraging Rights.

Projects get financed, produced, and distributed under various models.  One is straight in-house production and distribution where the project goes start to finish within the studio or network.  A variation of this is a production financing/distribution model, where the producer initially develops the project, but then gets studio or network funding for production.  In both of these models, the studio/network will end up with all rights in and control over the project.

The producer who can finance and produce a project independently is more likely to end up with a measure of control, certain reserved rights and a bigger piece of the pie.  Obviously, this model requires the filmmaker to come up with funding for the project.  This is often done using presales of rights in the project.

1.            Bundle of Rights.

Copyright is a bundle of rights, and the bundle can be separated, with each component sold or exploited separately, whether by media or territory.  Creators can take advantage of this to try to maximize revenues and financing opportunities.  Different parts of the bundle include:

• Theatrical
• Television
• Video
• Cable
• Merchandising
• Stage
• Publication
• And each of the above in the various foreign markets

Filmmakers can sell or license certain rights to one party, others to another, and can reserve even others.

2.            Pre-Sales.

Raising financing for a film often takes advantage of the ability to exploit separate parts of the copyright bundle.

• Financing for independent films is often raised through pre-sales, i.e. granting licenses of rights to a distributor in a particular media and a particular territory before the film is complete.  A pre-sale can take the form of funds, guarantees, or commitments and may be used as collateral for bank financing or as an enticement to investors.
• Pre-sales can be complex and are by definition piecemeal
• International sales agents are frequently used to pre-sell foreign rights

Note that presales of U.S. cable and television rights to a picture intended for theatrical release separate from the theatrical rights may make finding a domestic theatrical distributor impossible.

3.         Negotiating with the Distributer.

Issues for filmmaker to watch for in distribution deals include:

• Purchase price and amount of advance
• Extent of rights sold or licensed
• What is the distribution fee and how are profits split?
• Are markets cross-collateralized?
• Does the producer have input into artwork and marketing strategy?
• No editing except for censorship and other limited purposes
• Expense categories and caps
• Reasonable term
• Lab access letter rather than possession of negative
• Audit and inspection rights
• Is the distributor healthy financially?
• Does the distributor have clout with exhibitors?
• What rights does producer have if distributor pulls film early or goes bankrupt?
• Generally, the less dependent the filmmaker is on the studio/distributor for funding, the more rights he can keep and the more control he can exercise
• Domestic distributor for theatrical will also want TV, video and interactive rights
• Filmmaker should retain as many other rights, such as soundtrack, publication, sequel and remake, as possible