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Surfview(TM) Guide
Surfview™
Guide

Entertainment Law Articles
courtesy of
Dinah Perez,
Entertainment Attorney


Article List  

THE 9 GOLDEN RULES FOR CREATING GOOD ENTERTAINMENT INDUSTRY KARMA
THE LITERARY OPTION & PURCHASE AGREEMENT
THE PACKAGE: THE KEY TO SUCCESSFUL FILM FINANCE
PROTECTING YOUR IDEAS, TREATMENTS AND SCREENPLAYS
HIRING THE COMPOSER
LICENSING PRE-RECORDED MUSIC
LEGAL EASE -- "The Power of the Spoken Word"

      Look for a new article here every month!


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Copyright 1997-2014,  James E. Tessier. All Rights Reserved.


ARTICLES FOLLOW 


 

THE 9 GOLDEN RULES

FOR

CREATING GOOD ENTERTAINMENT INDUSTRY KARMA

By Dinah Perez, ESQ


Introduction

Everyday, I counsel people who have dug the proverbial grave for themselves because of the manner in which they comport themselves or conduct business. I have written this article in order to impart what my years in the worlds of law, business and metaphysics have taught me. These "9 Golden Rules" are simply tools for creating a more positive and productive professional life. I hope you find them helpful.


1.  Do Not Lie

Your word and reputation are priceless commodities in an industry riddled with hype and lying wannabes. Be truthful no matter the consequences and you will stand out as a person of integrity.

For example, do not tell sales agents you have an actor attached, when you do not. The truth eventually catches up with you and you may face: losing your credibility, being permanently shunned by the actor and/or her agent, and/or may have a legal claim filed against you for having made the misrepresentation.


2.  Do Not Steal

If it is not yours, then do not take it be it an idea, an equity contact, a piece of equipment, or otherwise.

For example, someone shares an idea for a screenplay with you, which you usurp, rationalizing that it happens all the time or, in fact, has happened to you. If you are completely passionate about the idea and you cannot get it out of your system, then ask the disclosing party if he would mind partnering up with you. If the disclosing party declines, despite your passion for the project, move on knowing that the Universe is full of ideas ready for the picking. If you go on and steal the idea, you may not able to warrant and represent that the idea is wholly original to you, when called upon to do so. Furthermore, the disclosing party may file a legal claim against you for breach of an implied contract.


3.  Be Fair/Do Not Be Greedy

People tend to assert their power in a deal when they are in the power position. Avoid the temptation to squeeze the last penny, or deal term, out of a negotiation if the aforementioned does not affect you negatively, and if it is going to result in someone being treated unfairly. Remember, everyone has to work together when the deal is done. Resentment is going to permeate your relationship with the unfairly treated party; it is virtually impossible to have a positive working relationship with someone who resents you.

4.  Do Not Gossip

Gossip can ruin a person’s career, business relationships and personal life. Do not succumb to the temptation to gossip, even if the information is based in fact, because everyone (you included) has done, or will do, something regretful. If you decide to proceed, remember that the gossiper rarely makes a good impression: the person with whom you share the gossip will wonder if you will ever do the same to her, and you may be perceived as a liar, back stabber and petty person.

5.  Treat People The Way You Want To Be Treated

You need as many people in your corner as possible when you are on the rise. Treat everyone from the assistant to the studio executive with respect, kindness and honesty. People may put up with arrogance and attitude from a director whose movies gross over $100 million dollars at the box office, but they do not have to tolerate the same from a nobody. In other words, be the kind of person people want to know and with whom they want to work.

Also, the assistants and the junior agents are the gatekeepers for the people to whom you need access. Make allies of the gatekeepers by being pleasant and sensitive to the stresses of their job. They will be more apt to assist you if you are friendly and respectful to them. It is also important for you to note that the assistant to whom you are speaking today may be the studio executive with the ability to green light your picture tomorrow.


7.  Lend A Helping Hand

Function as if opportunity is abundant and it will be so. Share information and contacts when called to do so. It is perfectly acceptable to decline this request if this referral is going to be detrimental to you i.e., the referral will reflect badly on you.

8.  Keep Your Commitments

People tend to make commitments they do not honor for a myriad of selfish reasons. You need to be able to depend on people just as much as they need to depend on you. Keep your word unless the object of your promise is illegal, immoral, or likely to harm someone other than yourself. If you decide that you cannot keep your commitment, then be mature and up front about it so that the other party can make other arrangements.


9.  Give Back

The Universe is like a saving account --you have to make deposits if you want continue making withdrawals. Make time to share your accomplishments with others: be a mentor, make referrals, executive produce a film for an up-and-coming filmmaker, give to charity, be a speaker at your child’s school career day, etc.


Conclusion

Working in the film industry is full of complications and stress. Why complicate matters further by being dishonest, undignified and unfair? Approach your business dealings from a positive place and you are more likely to succeed, and enjoy your success.

 

This article is not a complete review of the subject matter and, as such, the reader should not make decisions on the basis of the above without consulting with an attorney.

Dinah Perez, Esq., the author of the article, is available for consultation. She may be reached through http://www.surfview.com/seattdp.htm or by e-mail at Entlaw@msn.com.

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LEGAL EASE
"The Power of the Spoken Word"

by Dinah Perez, ESQ

           Many individuals mistakenly believe that oral contracts are not binding.  Hollywood would come to a standstill if that were the case, since it takes attorneys weeks, if not months, to negotiate the language which is eventually committed to a written contract. People have been led to believe that oral contracts do not exist because such contracts are difficult to prove, and, at best, are legally binding only upon certain circumstances. This article attempts to educate the reader as to when an oral contract may be effectively used and how to facilitate proof of its existence.

          For entertainment related purposes, oral contract are binding when the object of the contract can be accomplished within 12 months, and when you are buying or selling something whose value is less $500. For example, an actor who orally assents to perform in a production is committed to do so even though the actor expects the terms of the oral agreement to later be converted into a written form. Main Line Pictures won its trial against Kim Basinger because it proved the existence of an oral contract. Basinger argued that there should have been a signed written contract. The fact of the matter is that many actors, Basinger included, never get around to signing their contracts, or sign after the fact, since their performances are usually completed before the contract is committed to paper.

           So, what does it take for an oral contract to be binding? An agreement, assuming that the subject matter of the contract lends itself to an oral contract (see above). All parties have to come to an agreement on all the major deal points i.e., in hiring of an actor there must be agreement as to compensation, number of days the actor will be required, part which actor is to play, and credit. An oral agreement will not exist if any major deal points are unnegotiated because a "meeting of the minds" is lacking. Therefore, be sure to negotiate all of the deal points that are regularly negotiated and considered important for that type of contract.

           Whenever hiring a union employee it is a good idea to refer to that union's collective bargaining agreement since the agreement might preclude an oral agreement. The Screen Actor's Guild (SAG), for example, requires a written and signed Nudity Waiver if you are hiring union member and the part requires nudity. The actor can agree to be in your film on an oral basis, but the actor must acknowledge and assent to the nudity in writing. Also, the Writer's Guild of America requires a written contracts for writing assignments or the option or sale of a screenplay, treatment, teleplay. . . . In other words, modern law may recognize the existence of an oral contract, but a union may not, and the union's collective bargaining agreement always rules. Therefore, know what the union requires prior to entering into negotiations with a member of any union, and adhere to those requirements.

           Having an oral contract and proving its existence in a court of law are two different things. Without a doubt, oral contracts are difficult to prove. I always recommend that my clients secure a written agreement whenever possible. If the situation does not lend itself to a written agreement, then create a paper trail i.e., after a pitch meeting send the executive a letter thanking them for their time and reiterating the purpose of the meeting; when you are hired, or are hiring someone, send a letter accepting or confirming the acceptance of the position. In summary, you can create a legally binding entertainment industry oral agreement if you follow the checklist provided below.

    1. Negotiate and agree to all the major deal points.
    2. Make sure the contract can be fulfilled within twelve (12) months.
    3. Only sell/buy something for which you will be paid, or are paying less than $500.
    4. In cases where you are dealing with a union member, make sure the collective bargaining agreement does not preclude or restrict the oral agreement. If it does, then adhere to the union rules.
    5. Confirm the oral contract in writing.

Always resort to the written agreement, or contact an attorney, if you are in doubt as to whether an oral agreement is going to be binding.

This article is not a complete review of the subject matter and, as such, the reader should not make decisions on the basis of the above without consulting with an attorney. 

Dinah Perez, Esq., the author of the article, is available for consultation. She may be reached through http://www.surfview.com/seattdp.htm or by e-mail at Entlaw@msn.com.

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LICENSING PRE-RECORDED MUSIC  
By Dinah Perez, ESQ  

Music is a powerful storytelling tool, since it has the ability to convey and heighten the emotion in a scene.  Nonetheless, independent filmmakers, generally out of necessity, under budget for it.  Worse even, they spend the money they did budget, on dealing with unforeseen expenses associated with the production or post-production process. 

Filmmakers who decide to reproduce pre-recorded music on their film’s soundtrack have to be prepared to spend time and money acquiring the music’s synchronization right (these licenses are referred to as "synch licenses").  The endeavor is time consuming because it requires contacting and negotiating with various parties.  It is also expensive since securing the right, to use a particular piece of prerecorded music, includes paying fees to the record company, publisher(s), the American Federation of Musicians, American Federation of Television and Radio Artists and/or Screen actors Guild.  The information below is basic information.  It is not an exhaustive discussion on the topic of music licenses.  I suggest that filmmakers use the below information as a jumping board.  If the licensing process gets too complicated, then I always suggest that filmmakers either hire an attorney attorney knowledgeable in the licensing of music, or a music supervisor. 

  Step 1: Contact the Record Company  

The approach the filmmaker takes to licensing pre-recorded music will vary depending on whether he/she is licensing prior to production or during post production.  Filmmakers are likely to license the music prior to production when the film has a scene, for example, in which an actor is performing the music.  They are likely to license music during post production when the music is part of the underscore.  In either case, filmmakers should contact the record company’s film licensing department to ascertain their procedure and the name of the party authorized to negotiate the licenses required.  The record company will want to read the screenplay if the license is required prior to production, and it will want to see a rough cut of the film if the licensing request is during post production.  The record company insists on reading the screenplay, or viewing the rough cut, in order to determine whether it wants to be involved, and whether the project is something the artist would consider, since many artists have control over how their music is exploited. 

The record company will not consider the licensing request unless the filmmaker can afford the licensing fees.  It is highly unlikely that an independent filmmaker, with a limited music budget, will be able to license music by major artists like Mariah Carey, Madonna, Barbara Streisand, Bruce Springsteen, since the record company fees alone can cost as much as $20,000 - $50,000.  Furthermore, the record company will refuse a request for a film festival license, which generally ranges $200 - $300 (one year worldwide), if the filmmaker cannot afford the fees for the additional licenses. 

The filmmaker may be able to convince the record company to make special payment arrangements.  The "step deal" is one such payment arrangement.  In a step deal, the filmmaker makes an up front payment based on the film’s budget and he/she makes additional payments when the film’s grosses reach certain specified sums.  Structuring the license this way may make the filmmaker’s licensing request feasible assuming that the filmmaker can come up with enough money up front. 

Record companies all have artists they want to expose to the public.  When short on cash, filmmakers should take advantage of the record company’s desire to promote up-and-coming artists.  The filmmaker can enlist the record company's assistance, in the search for affordable music, by contacting the record company and expressing an interest in licensing music by an up-and-coming artist.  The record company will read the script, or view the rough cut, so that it can make suggestions which work with the film, and are within the filmmaker's budget.  Licensing fees are dramatically reduced when the record company views the film as an opportunity for their talent.  The filmmaker may well end up licensing a unique piece of music, from an artist that has hit potential, for a mere $2,000 to $5,000. 

Timing is important when the filmmaker’s financial resources are limited.  Filmmakers should contact the record company as early on in the process as possible.  It is going to take approximately a week for the record company to read the screenplay or view the rough cut of the film.  If the record company forwards the screenplay or rough cut to the artist for approval, then the filmmaker can count on an additional minimum two week delay. Filmmakers will need to allow for more time if the record company is suggesting talent and music.

 

   Step 2: Contact the Publisher

The filmmaker will have to contact and, subsequently, secure a license from each of the publishers.  The most tedious part of the licensing process begins here, since each piece of music can have multiple composers and publishers.  ASCAP, BMI and/or SESAC are organizations that represent publishers; they can provide the filmmaker with publisher information if he/she can supply them with the exact title of the song and the name of the author(s). 

Publishing licenses are also not inexpensive.  A one year film festival license can cost as little as $500, but a license for a major piece of music can cost upwards of $50,000.  If the music budget is limited, then I suggest that the filmmaker either find a less expensive piece of music to license, or that he/she attempt to structure a step deal (see above).  The filmmaker can find a more affordable piece of music by enlisting the publisher’s assistance.  Most major publishers will read the script, and/or view the rough cut, in order to make licensing suggestions that are within the filmmaker’s budget.  Again, filmmakers need to allow sufficient time for this process.

 

   Step 3: New Use Fees 

The American Federation of Musicians ("AF of M") requires a "new use fee" whenever prerecorded music is incorporated in a film.  The new use fee is the equivalent of a session fee for each musician who performed on the song when it was originally recorded.  The new use fee is supposed to vary depending on the number of musicians performing on the recording and the size of the film’s budget. If the budget is a "high budget" in excess of $12,750,000, then the fee is in $219.37 per musician (the fee can technically be higher, but Colleen Howell of the AF of M assures me that she always charges this lower " Schedule A" fee).  The "low budget" new use fee is $141.84 per musician for theatrical motion pictures whose estimated and actual budgets are less than $10,600,001 or $12,750,001 respectively.  Films produced for cable qualify for this "low budget" new use fee rate if the budget does not exceed $1,804,000.  Filmmakers need to specifically request the "low budget" new use fee and, therefore, should contact Sue Collins for the application.  In addition to the above new use fees, filmmakers will also have to pay a ten percent (10%) pension fund contribution. 

New use fees can inflate the music budget since a fully orchestrated symphonic piece of music, for a "high budget" and "low budget" film, can cost in excess of $25,000 and $15,000 in new use fees respectively.  The AF of M does give preference to films that are not profit driven and, therefore, does not charge a new use fee to films whose only venue is film festivals. Furthermore, the AF of M will waive the new use fees where non-profit (401(c)3) projects are concerned. 

Singers on the prerecorded music the filmmaker is licensing may be members of Screen Actor’s Guild ("SAG") and/or the American Federation of Television and Radio Artists ("AFTRA").  The filmmaker will, as such, have to pay new use fees to these unions as well. The calculation of these fees is not straightforward, therefore, SAG and AFTRA ask that filmmakers with questions regarding new use fees contact them directly. 

The AF of M is supposed to provide the filmmaker with a copy of the original session sheet. The session sheet lists every musician that performed on the recording.  Do not agree to pay the new use fee unless they provide the original, since the AF of M cannot pay the musicians unless they know their identity.  AFTRA and SAG may not have the original session sheet available but they will identify the performers. 

Filmmakers who have never used prerecorded music are unaware of the need to pay the new use fee.  Licensing agreements usually include a clause which states that the filmmaker is responsible for paying all union fees, but the clause goes unnoticed, misunderstood, or ignored by many.  The novice filmmaker usually does not find out that he/she is responsible for paying new use fees until the union contacts them; this always creates a problem since the union generally contacts the filmmaker after the film is in distribution -- too late for the filmmaker to choose an alternate piece of music, include the fee in the film’s budget, or incorporate the cost in the distribution deal.  Filmmakers should contact the AF of M, AFTRA or SAG, as soon as they identify the music they wish to license, since knowing the extent of the new use fees beforehand may influence the filmmakers choice of music, may allow him/her to include it in the budget, or make arrangements for payment. 

  Conclusion

A filmmaker with a limited music budget must be realistic and flexible when choosing prerecorded music.  If licensing music is beyond the filmmakers financial reach, despite the above suggestions, then he/she should consider hiring a composer to write a comparable piece of music.  There are a lot of up-and-coming composers who, for the sake of experience and a film credit, are willing to work for a small stipend. I will be discussing the legal issues associated with hiring a composer in my next article.

 

This article is not a complete review of the subject matter and, as such, the reader should not make decisions on the basis of the above without consulting with an attorney. 

Dinah Perez, Esq., the author of the article, is available for consultation. She may be reached through http://www.surfview.com/seattdp.htm or by e-mail at Entlaw@msn.com.

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HIRING THE COMPOSER  
By Dinah Perez, ESQ  


Introduction
 

Most independent filmmakers appreciate the importance of the film score, but their method of budgeting time and money often make it difficult, if not impossible for the composer to do the best job possible. Composers are generally hired during post-production, a hectic time, when the composer is given a very short time to create a "masterpiece." Composer’s agent, Linda Kordek, believes these expectations can sometimes be unrealistic, since the composing process is a creative one which requires time, and feels that filmmakers greatly compromise the quality of the score when they make composers rush through the process. Ms. Kordek believes that the filmmaker should hire the composer as early on in the process as possible. In fact, she suggests that the composer be hired during preproduction so that he/she may immerse him/herself in the film and the director’s vision. Unfortunately, the reality of the business is such that independent filmmakers are always underbudgeted and they seldom, if ever, have the luxury of time on their hands. 

  Music Budget & Costs

It is key that filmmakers understand the importance of actually budgeting for the score and soundtrack. Filmmakers make the mistake of thinking that the soundtrack deal is going to pay for the expenses associated with the film’s music. The theory behind the soundtrack deal is that the record company will advance the filmmakers monies against future sales, and the filmmaker uses the advance to hire the composer and license music to create the score and soundtrack for the film. Novice filmmakers erroneously believe that budgeting for music is unnecessary. Filmmakers with more experience know that most record companies will not make a soundtrack deal unless distribution is in place. In other words, do not count on the record company advance to finance your score and soundtrack unless distribution is in place. To be safe, filmmakers should set aside five to six percent of the film’s budget for the score, and up to ten percent if the filmmaker intends to hire a music supervisor and license pre-recorded music.   

The filmmaker can expect to pay a top quality composer $50,000 - $175,000 for films with budgets in excess of $15 million. An independent filmmaker producing a low budget film can hire a lesser known composer for $25,000, and one without a feature credit for $10,000. The composer’s fee compensates the composer for writing, arranging, and orchestrating all of the dramatic underscoring and theme music in the film and, in addition, conducting the musicians during the soundtrack recording session. If the composer doesn’t orchestrate his/her own music, as is the case with the top film composers, then a separate orchestrator will have to be hired. Orchestrator services are covered by the American Federation and these fees are in the $15,000 to $25,000. The composer’s fee also does not include the cost of hiring the musicians and the actual production costs. 

  Publishing Royalties  

Music publishing royalties are divided into a composer’s share and a publisher’s share with the composer being entitled to the composer’s share and the filmmaker to the publisher’s share. Publishing royalties are generated from exploitation of the film, its soundtrack album and it’s publishing i.e., sheet music, public performances, and synchronization and mechanical licenses and, hence, can be a substantial source of income. Composers, as such, are always interested in obtaining as much of the publishing royalties as possible. A filmmaker, with a deficient music budget, may be able to convince a composer to work for less than his/her customary fee, if the filmmaker is willing to part with some or all of the publisher’s share of the music publishing income. Music publishing royalties can be a substantial source of revenue. It’s always best for filmmakers to properly budget for music so that they can keep their publisher’s share of the music publishing royalties.   


"Work for Hire
"

The filmmaker needs complete freedom to exploit the film’s score and masters and, as such, must hire the composer on a "work for hire" basis. If the filmmaker does not employ the composer on a "work for hire" basis then he/she may lack the legal right to distribute the film or the soundtrack album embodying the score. The composer will create a "work made for hire" if he/she is hired so that the score is created within the regular course of the composer’s employment, and when the composer is hired as an independent contractor, or based upon a loan out agreement, so that the score is specially ordered or commissioned. If the composer is not hired on a "work for hire" basis, then the filmmaker will have to acquire the right to use the music via a copyright assignment; this complicates the process and creates risks, since the composer can cause the rights to music to revert to him/her at a later date by notifying the Copyright Office and the copyright owner. The filmmaker, in order to avoid unnecessary complications, should have the composer sign a deal memo, contract or Certificate of Authorship, prior to allowing the composer commence services. 

  Credit

The composer will expect to receive credit in three media: the picture, paid advertisements and the soundtrack album. Composer’s are not members of a guild, therefore, there is no union to control the composer’s credit. The most common credit is "Music By . . ." The credit appears on a separate card with size and type equal to the producer, writer and director credits. The composer will expect to have his credit appear whenever the producer, writer, or director appears. 

  Conclusion  

Producing a film is a lengthy and expensive process. Filmmakers must take care not to sabotage the process by not budgeting sufficient time and money where music is concerned, and by not adhering to the appropriate legal formalities. The composers deal is at least as, if not more complicated than the literary purchase deal. The filmmaker should not venture forward unless he/she has consulted with an attorney. Needless-to-say, the composer agreement should be drafted by an attorney. 

This article is not a complete review of the subject matter and, as such, the reader should not make decisions on the basis of the above without consulting with an attorney.    

Dinah Perez, Esq., the author of the article, is available for consultation. She may be reached through http://www.surfview.com/seattdp.htm or by e-mail at Entlaw@msn.com.

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PROTECTING YOUR IDEAS, TREATMENTS AND SCREENPLAYS   
By Dinah Perez, ESQ.


Every writer or producer I represent, or know, is concerned that their ideas, treatments or screenplays will be stolen by some unethical and unscrupulous producer, studio exec or competitor.  As such, this article is meant to educate producers and writers regarding the protection of ideas and screenplays. 

  Copyright Law

The U. S. Copyright Act (the "Act") protects literary works, literary characters, movies, videos . . . when these are original works of authorship, which are fixed in a tangible medium.  By fixed, the Act means that the work is embodied in a manner which is "sufficiently permanent or stable to permit it to be perceived, reproduced or otherwise communicated for a period of more than transitory duration" i.e., a treatment, screenplay, video, film . . . 

The Act does not protect ideas, concepts, principles and discoveries.  Therefore, never blurt out your idea to anyone who has not agreed previously to purchase it from you, or attach you to it as its writer or producer.  The reason for asking for permission and conditioning the disclosure is that contract law can protect you where copyright law falls short.  Do not pitch the idea or screenplay if the potential pitchee refuses to agree, since your idea will become public domain material once it leaves your mouth.  If the pitchee agrees and you pitch the idea, then follow up the pitch/meeting with a letter thanking the pitchee for his/her time, reiterating the purpose of the pitch/meeting, and how he/she agreed to pay, or attach you, should they decide to use your idea.  Sending the letter will remind the pitchee of the agreement, and it will provide you with proof of an agreement should the pitchee use your idea without paying you.  Again, since ideas are not protected by copyright, you should ask the pitchee not disclose the idea without your permission, and you should include this in your letter as well. 

The 1976 Act required that the author of the work register his/her work with the U.S. Office of Copyright and that he/she post a copyright notice on the work.  Those formalities are no longer necessary for copyright protection.  Today, copyrights are automatic as of the moment of creation.  Nonetheless, I recommend that the author of the work adhere to the formality of registration, since it affords the author certain valuable benefits not otherwise available.  For example, if the author of the work discovers that someone has infringed his/her copyright, the author can have the court order an injunction against the infringer, and/or win a suit where damages are awarded by the court.  The author may secure an injunction whether or not he/she registered the copyright, but damages are only available if the work was registered.  I also always instruct clients to place the copyright symbol and year of copyright on their works so as to deter potential infringers. 

In order to copyright a work, you must file a registration form, which you may secure by calling the U.S. Copyright Office at (202)707-9100, or by sending me a self-addressed and stamped envelope (5670 Wilshire Boulevard, Suite 2420, Los Angeles, CA 90036). You must mail the completed form, along with a copy of the work, and a $30 check to the U.S. Register of Copyrights.  You will receive proof of registration in eight to twelve weeks. 

  Poor Man’s Copyright

Self-mailing has been referred to as the "poor man’s copyright."  Essentially, this entails the author placing the work in and envelope, mailing it to himself/herself via registered mail, saving it upon receipt, and not opening it.  The reasoning behind this is the unopened envelope, which is post dated, can be used as evidence in a court proceeding to provide verification as to the date of existence of the work.  The poor man’s copyright provides no more protection than the unregistered copyright.  My advice — register the work with the U.S. Copyright Office.   


Writers Guild Registration

Many writers and producers mistakenly believe that WGA registration protects their idea, treatment or screenplay.  The WGA does not and cannot provide protection against infringement -- only the Act can do that.  As such, WGA registration only serves to provide evidence at trial.  If someone infringes your work, you will be able to call the WGA as a witness who will then testify regarding the date of WGA registration.  The WGA cannot testify as to the originality of your idea, treatment or screenplay, or the validity of your infringement claim.  The cost of WGA registration is$20 for non-members and $10 for members. 

  Releases

Chances are that you will be asked to sign a release if you are attempting to make asubmission and you are unrepresented by an agent or attorney. I f you take the time to read the release, you will notice that the release gives the producer/production company/studio carte blanche to use your idea without compensating you for it. As such, it is highly unlikely that you will be attached to whatever project they develop from your idea, since there was no understanding of your attachment.  I always advise writers against signing releases. I f you do not have an agent, then hire an attorney to make the submission for you. 

  
Conclusion

The best protection for your idea, treatment or screenplay is non-disclosure, but that approach is impractical if you intend to have a career in filmmaking.  The next best alternative is registering your work with the U.S. Office of Copyright and creating oral contracts, as detailed above, to protect your ideas during the pitching process.  The aforementioned procedures for protection are not a guarantee against theft, but they are a deterrent with legal punch. 


This article is not a complete review of the subject matter and, as such, the reader should not make decisions on the basis of the above without consulting with an attorney.
 

Dinah Perez, Esq., the author of the article, is available for consultation. She may be reached through http://www.surfview.com/seattdp.htm or by e-mail at Entlaw@msn.com.

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THE PACKAGE: THE KEY TO SUCCESSFUL FILM FINANCE  
 By 
Dinah Perez, ESQ. 
 
You have written or optioned a script that you want to produce.  You just know it has blockbuster potential.  Lack of financing for your film is the only obstacle in the way of your box office success.  So, what are you waiting for -- get the film financed! 
 
One of the most, if not the most, daunting tasks any producer faces is the actual financing of the film, but as difficult as it is, it is not impossible.  So, what's the key to making the almost impossible a reality -- the package. The word gets thrown around a lot, but for those of you unfamiliar with the vernacular, the package is that part of the film which comprises the talent -- it is your cast. 

The independent market is flooded with product today. Distributors and sales agents determine whether they want involvement in a film on the basis of the package.   In other words, it is the package that drives the market. 

This is not to say that the script is completely unimportant, but the reality is that the most brilliant script is unlikely to secure distribution if it is packaged with what distributors or sales agents perceive to be unbankable talent. Yet,  a mediocre, and, dare I say an inferior script, is more likely to secure a distributor or sales agent if the package has bankable talent. 

The package is  crucial because it affects your ability to secure a distributor or sales agent, and, consequently, your ability to secure financing: banks use distribution contracts and sales agent estimates to determine whether to lend production financing, and private equity investors are more apt to invest when they recognize the cast members. 

The filmmaker not only needs  a distributor or sales agent, but he/she needs one with a good reputation. Securing a credible distributor/  sales agent is key since, among other things, bank financing hinges on the strength of the distributor and its payment history, and the sales agents' track record for accuracy.  Lesser quality distributors and sales agents  rarely fulfill the banking industries strict requirements. You have to  do a little due diligence before committing to any one distributor/sales agent -- verify with the bank(s) that the distributor/sales agent in which you have an interest is acceptable to them. 

Hopefully, it has become apparent to you by now that producing a movie is an artistic, as well as, business endeavor, and that you have to approach casting in that manner.  So, make a list of all the actors you want to cast and then research their bankability domestically and internationally. You will find that the definition of bankability varies from distributor to distributor and sales agent to sales agent.  This makes it difficult for you to know whose opinion to trust, but it is advisable to trust the opinion of the distributors and sales agents that have a credibility with the banks. 

The hard work commences once you have completed your casting list since, this is when you start contacting actors and their agents and/or managers. Convincing an actor 
to commit to a film  before the financing is in place is no easy task --  it is not   for the faint at heart or easily dissuaded.  It takes perseverance, chutzpah and, most importantly, contacts. 

Your likeliest path  to success is one which lets you initially sidestep the gatekeepers. Agents like the immediate gratification of the pay-or-play offer and, as such, are unlikely to assist you unless they are a personal contact.  The manager, although more of a visionary and long term planner, may be reticent to commit the talent for fear that a  better film might come along.   Therefore, make list of everyone you know who may know the actor, or everyone you know who knows someone who may know the actor. Believe it or not, the six degrees of separation approach has been known to work.  If it turns out that you are indeed "contactless," then you have no choice but to venture into the world of the gatekeepers.  Find  a unique way to appeal to the agent or manager: be passionate; befriend the assistant since he or she can be your best friend, or enemy; be 
respectful; and, be persistent without being a pest. 

You are going to need what is commonly known as a letter intent from the talent once the talent agrees to be attached to your film.  Anyone can say that they have talent attachments  film and, as such, distributors, sales agents, banks, and private equity 
investors require the letter as proof of those attachments.  The best letter of intent is one which states in incontrovertible terms that the talent is performing in your film. Talent and their representatives will be reluctant to commit to such terms without a pay-or-play offer since, they do not want to be attached to a film which may never get made. Furthermore, actors have been sued over oral contracts to perform in films and letters of intent and the actor and his agent and manager are aware of this. Do not get discouraged if the actor initially declines your request for a letter.  A letter which states that the talent is interested in performing in your film pending his or her availability is noncommital, but at the same time provides proof to the distributors/sales agents. Many actors are willing and do provide such a letter. 

You can start shopping your film to potential  distributors, sales agents and banks once you have letters of intent from your talent.  You will be surprised how much more smoothly the process flows once talent is attached.  It gives the film credibility and a 
certain level of cache, and you are on your way to making the almost 
impossible a reality. 
 

This article is not a complete review of the subject matter and, as such, the reader should not make decisions on the basis of the above without consulting with an attorney.  

Dinah Perez, Esq., the author of the article, is available for consultation. She may be reached through http://www.surfview.com/seattdp.htm or by e-mail at Entlaw@msn.com.

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THE LITERARY OPTION & PURCHASE AGREEMENT  
By 
Dinah Perez, ESQ. 

 

Introduction

The literary option and purchase agreement (the “Agreement”) gives a  producer, production company or studio  the right  to shop, package, set up,   or produce a film based upon the screenplay or book (the “literary property”) that is the subject matter of the Agreement.  As such, the Agreement is one of the most crucial legal documents associated with the production of a film.  If the producer does not acquire all of the rights necessary, then the producer may find it impossible to secure  such critical things as  production financing and distribution.   For the writer, the Agreement determines payment, credit, and  future rights to  the property. 

This article highlights the  most important aspects of the Agreement so that both producers and writers know  what to expect of each other and their respective attorneys or agents when dealing with such agreements. 

The Contract 

Oral contracts, which are common in the entertainment industry, are not advisable where options and purchases of literary properties are concerned.  It is best to negotiate all the deal points and memorialize them in a written document.  There is so much is at stake that it is best for all concerned if the legal details are taken care of up front.  Furthermore, most producers will find that a written document is always ultimately required: financiers, banks, studios, production companies, sales agents distributors,  completion bond  companies, and the Writers Guild of America  (the “WGA”), all require a “writing,” to  prove that the producer, producing entity or studio acquired the right to produce and exploit the film. 

 It is strongly recommended, since so much tends to be at risk, that producers and writers negotiate the Agreement with the representation of  an agent or attorney.  From the producer’s perspective, hiring an attorney to negotiate and draft the Agreement will cost on average from $1,000 to $2,000. It should cost the writer less since his/her attorney will only have to negotiate and revise the agreement rather than draft it.  From experience, it is not wise to scrimp on an endeavor in which millions of dollars will be invested, or where one’s rights to a literary property will potentially be  sold.   In other words, the cost of hiring an attorney to negotiate and draft the Agreement is well worth it. 

The Option 

A producer reads a literary property and decides he/she would like to produce a film based upon it.  It would be silly for the producer to actually purchase the literary property prior to knowing that there is an actual market for it, so instead the producer options it.  To  “option” means to lease with an option to buy, so to speak.   The producer negotiates an option with the writer so that the producer can solicit interest in the production of a film, for a determined period of time, based upon the literary property.  If the producer is successful in securing production financing, then the producer will “exercise”  the option and buy the literary property.  If the producer is not successful, then the producer walks away having lost nothing more than the option monies and legal fees  paid in the process. 

The Term 

Writers are usually concerned with tying up their literary properties for long periods of time but the fact of the matter is that producers need that time. Producing is a long and arduous process. The  writer has to give the producer the time necessary to get the job done, while at the same time not giving the producer time to dawdle. 
It is less likely that producers will waste time if they have paid an option fee, and actually have money invested in the venture.  This is not to say that a writer should never option a literary property for free. It just means that if the writer is forced to option for free,  because the producer will not option otherwise, it becomes necessary for the writer to approach the decision intelligently. In this case, the writer should only option for free if the producer has a track record, important contacts, and the  ability to set up or finance production of the literary property. Also, the writer should keep the option periods short, i.e., 3 to 6 months maximum, if the option is free, or relatively free.  If the producer is paying a fair price for the option, then it is likely that the producer will require a 12 - 18 month option with an automatic renewal period upon payment of a renewal option fee.

 
The Option Fee 

The producer, production entity or studio pays an option fee in order to secure the option during the initial, and then again, renewal option period.   There is usually a direct correlation because the option fee and the purchase price.  The average option fee is 10% of the literary property’s purchase price. 

It is easy to determine the option fee when the literary property’s purchase price is a determined sum. It gets a little tricky when the purchase price is expressed as a percent of the production budget. 


Purchase Price
 

Producers should always negotiate the literary property’s option and purchase simultaneously. The producer takes a big risk if the producer waits until the financing is in place.  For example,  the writer and producer might not be able to come to a decision on purchase price, or the writer might hold the literary property for ransom if the  writer knows there is great demand for the literary property. 

Outside of the WGA’s schedule of minimums, there is no such thing as a standard literary property purchase price. Instead, purchase prices are influenced by the writer’s previous credits, the demand for the script, and the production budget. WGA minimum for a  feature ranges between $42,000 to $80,000, and a writer with any sort of credits or acclaim is likely to require a purchase price well beyond that sum. 

It is typical for a writer’s attorney to  attempt to negotiate the purchase price as a percentage of the production budget, or on a sliding scale basis, when the budget and the producers intentions, in that regard, are unknown.  Expressing the purchase price as described above  protects the writer because the literary property might be worth one sum if it is being made as an independent film, and a much higher sum if it being financed by a large production entity or studio.  If the purchase price is described as a percentage of the production budget, then  the attorney will negotiate a purchase price that is  between 2.5% to 5% of the production budget with a floor and, sometimes, upon the insistence of the producer, a cap, i.e., 5% of the production budget, but  no less than $100,000 and  more than $500,000.  If the attorney negotiates a purchase price on a sliding scale basis, then the price will be a floor price with incremental increases if the budget is above a specified range, i.e., $50,000 if the picture is produced for $1,000,000 or less, with an additional $10,000 for every $1,000,000 increase in the production budget. 

Contingent Compensation 

This remuneration, which is commonly known as profit participation, contingent compensation or back-end points, is not due until the film is in a profit position.  Contingent compensation is not required by the WGA, but it is pretty standard to give a writer 2.5% - 5% of the picture’s net profits.  Producers and writers have to be careful not to confuse the “picture’s net profits” with “producer’s net profits.” The former entitles the writer to a percent of 100% of the film’s net profits, and the latter entitles the writer to 5% of the producer’s net profits, which is a percent of the producer’s share of net profits.  Contingent compensation based on producer’s net profits is always substantially less than contingent compensation based on the picture’s net profits. 

The writer’s contingent compensation may be reduced if the writer has to share the writing credit.  This issue arises when a different writer is hired to rewrite the screenplay.  In this case, the writer should attempt to negotiate for no reductions in his/her contingent compensation, and in no event less than 2.5%. 
 

Credit   

The writer wants to negotiate a “Screenplay by” credit.   The writer’s credit should appear in the main credits of the film, on a single card, in a size and type equal to the size and type of any other writer’s credit.  The credit should also appear in all screen and paid ads if the director, producer, and any other writer receives credit.  If the writer is not the only writer, as happens so often in the industry, then the writer will have to share the writing credit. 

The WGA has a credit determination process which decides who gets credits and how, if there is a dispute.  If the production company is non-signatory, then the writer, who cannot be a WGA member, should negotiate for a term in the Agreement which provides for determination by an independent arbitrator in case of a dispute.


  Warranties 

The producer needs for the writer to make certain representations and warranties in regards to the originality of the literary property and the writers ability to convey it. The producer needs this warranty even if a  copyright search conclusively determines  that the literary property is registered in the writer’s name.  The writer must also  warrant that the writer is the sole and exclusive proprietor of the literary property,  that any material which is not original to the writer came from the public domain,  and that the material which is not original to the writer is included in the literary property with the permission of the original material’s author. 

The warranty also  includes an indemnification clause whereby the writer agrees to  reimburse the producer, production entity or studio for all costs associated with defending a claim, or a judgment, due to breach of the writer’s warranty.


Rights Sold

The writer sells exclusively and forever all rights associated with the literary property.  If the writer wants to reserve any rights, then the writer has to negotiate for those specific rights.  In general, the producer acquires any  and all rights to the literary property for the purpose of producing and exploiting a motion picture based upon the literary property. This includes prequels, sequels,  remake rights, television movies, television series, videos, cable, CD Rom, DVD, etc.  In other words, unless the writer reserves any rights,  the producer acquires the right to use the literary property in any and all formats and mediums whether now in existence or yet to be invented for exploitation anywhere in the universe. 

Option Reversion and Turnaround Right 

The option automatically ends with all rights reverting to the writer if the producer does not  exercise the option and pay the purchase price in a timely fashion.  Should this be the case, the writer gets to keep all sums paid including any and all option and writing fees.  The writer also has the turnaround right if the option is timely exercised and the purchase price is paid, but a film is not produced within the time specified in the Agreement,  usually 5 - 8 years. 

The “turnaround right” means that the writer has the right to reacquire the literary property when the writer reimburses the producer’s direct out-of-pocket development costs.   The rights to the property are transferred back to the writer when he/she pays the aforementioned sum.  The writer has the freedom to option and sell the literary property to another producer, production entity or studio once the interest in the literary property reverts or to him/her. 

The turnaround and reversion rights are important because they  allows the writer to reacquire the literary property if he/she believes that there is an opportunity for it to be produced elsewhere. Writers may like having their screenplays purchased, but they like having them produced more. 


Copyright Search 

The producer should, prior to coming to an agreement with a writer, hire an attorney to do a copyright search.  A copyright search will inform the producer as to whether the literary property has been registered for copyright, whether the producer needs to seek the agreement of any additional writer, and whether any of the rights in which the producer is interested,  have been transferred to any party.  The findings of a copyright search are not always conclusive. The producer can proceed once the copyright search is done and his/her attorney is satisfied with the results. The cost of a copyright search is approximately $300. 


Conclusion
 

It is impossible to discuss every aspect of the Agreement within the confines of this article.  I have touched on the most important areas, but there are others which are significant, as well. Producers and writers should seek the assistance of a competent agent or entertainment attorney prior to embarking on this very complicated and important endeavor. 

This article is not a complete review of the subject matter and, as such, the reader should not make decisions on the basis of the above without consulting with an attorney.

This article is not a complete review of the subject matter and, as such, the reader should not make decisions on the basis of the above without consulting with an attorney. 

Dinah Perez, Esq., the author of the article, is available for consultation. She may be reached through http://www.surfview.com/seattdp.htm or by e-mail at Entlaw@msn.com.

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