The Pros and Cons: Arbitration or Litigation. JAMS or AAA?

By: Steven G. Kaplan and Patrick Bowers

Disputes happen all the time.  Most disputes are minor and resolved between parties without involving a third party.  But where parties cannot resolve their disputes--and because we live in an alleged civilized society in which we strongly discourage private resolution of conflict by means labeled “anti-social” (e.g., dueling)—a third party is called in to assist in resolving the dispute.  You pay your taxes (probably) so why not get your money’s worth and take your dispute to court.  If dueling is frowned upon, what’s left other than rushing to court?  Let’s consider binding arbitration.

Arbitration pro:  Speedier resolution, however, this is not always the case due to numerous parties, arbitrators, lawyers, and litigation strategies. 

Litigation pro:  There is a large body of substantive law and procedure which automatically organizes the lawsuit and the parties don’t have to create the rules that will govern the dispute.

Arbitration pro:  Less costly, however, this might not always be the case due to numerous parties, arbitrators, lawyers, and litigation strategies.   

Litigation pro:  The judge, by law, must be impartial and the judge’s salary does not depend upon whether the parties ever use that particular judge in a future matter.  The judge is not personally affected by the outcome of the dispute. 

Arbitration pro:  Exclusionary rules of evidence don’t apply.  Everything can be admitted into evidence so long as relevant and non-cumulative. 

Litigation pro:  Trial takes place in the courthouse and therefore neutral territory.

Arbitration pro:  Not a public hearing.  There is no public record of the proceedings. 

Litigation pro:  If a litigant is unhappy with the court’s decision an appeal might be possible.

Arbitration pro:  From a defense point of view, there is reduced risk of punitive damages and run away juries.

Once the parties choose binding arbitration over litigation, either in the contract or after the dispute arises, they must then choose an arbitration body, the most prominent being JAMS and the American Arbitration Association (AAA). 

Yippee!  You won an award in binding arbitration.  Well, don’t pop the champagne cork just yet.  With JAMS, even if you win an award, it will not give you your award until you pay the arbitrator fees.  So you have racked up quite the tab for arbitrator fees.  No problem; I can pay with part of my award, right?  Nope.  You must pay the arbitrator fees with money apart from the award. 

On the other hand, AAA will release your award without full payment of the arbitrator fees.  That way you can pay the arbitrator fees with part of your award, pop the champagne cork, and move on with your life.  Cheers!       

Right of Publicity: How much are you really worth?

By:  Tifanie Jodeh.      The right of publicity prevents the unauthorized commercial use of an individual's name, likeness, or other recognizable aspects of one's persona.

It gives an individual the exclusive right to license the use of their identity for commercial gain.  Protections have recently been expanded to a celebrity’s “likeness” which can include voice or vocal style. If you have a commercial interest or value to your name and likeness, you are generally afforded protection.   It is a area of intangible personal property that can be marketed and used, assigned or licensed, and,  sometimes, passed down to heirs.

In the United States, the right of publicity is largely protected by state common or statutory law. Only about 19 of the states have statutes or laws recognizing a right of publicity, some of these states include: California, Florida, Massachusetts and Tennessee.  States that recognize the right to publicity in common law only include: Alabama, Arizona, Connecticut, Georgia, Hawaii, Main, Michigan, Minnesota, Missouri, New Jersey and Oregon.

The question becomes how do you value the celebrity’s image in a commercial use?  What more considerations are taken into account when the use was not approved by the celebrity?  And, last, what impact did the unauthorized use have on the celebrity’s future earning capacity. 

An exemplification of this principle can be found in the No Doubt vs. Activision Publishing case.  No Doubt brought an action against video game manufacturer, Activision Publishing, alleging that Activision used No Doubt’s likeness in an unauthorized format in the video game “Band Hero”.   According to the complaint, the Defendant created a game where players have the ability to make lifelike embodiments (an Avatar) of No Doubt singing, dancing and performing.  The Plaintiff and Defendant specifically contracted for animated character representations of the band performing three No Doubt songs.  The contract further stated that any other use would be subject to Plaintiff’s approval.  Instead, the Plaintiff alleged that Defendant created the game to cause members of No Doubt to perform vocally as solo artists without the other band members to over 60 unauthorized songs.  The Plaintiff alleges that they only allowed the name and likeness as a collective group and not individually and, further, that the Avatar function of the games did not allow for the Defendant to manipulate the name and likeness of the band. 

The court found that Plaintiff contracted with Activision so that they would only engage in certain contacted for activities.  Plaintiff controlled the rights it was allowing Activision to incorporate into the videogame.  Subsequently, Defendant engaged in certain additional activities that were not contractually permissible.  Thus, No Doubt had a valid breach of contract cause of action and that they had a valid tort cause of action for violation of the Plaintiff’s right of Publicity.    In other words, No Doubt did not agree to the manner and use of their name and likeness in the game and had not contractually assigned or authorized such use.  No Doubt will likely be granted damages for commercial loss.  

So, the lesson learned?  The best way to avoid a violation of the right of publicity is to obtain an individual's consent to use their name or likeness in a commercial product.  You can obtain a simple assignment of name and likeness rights release or negotiate out a licensing deal for authorized use of these rights. 

COPYRIGHT & DISCLAIMER

Tifanie Jodeh is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs.  You may contact her at Tifanie@entlawpartners.com.

Tifanie Jodeh grants column recipients permission to copy and distribute this column and distribute it free of charge, provided that copies are distributed for educational and non-profit use, no changes or revisions are made, all copies clearly attribute the article to its author and include its copyright notice.

DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.

Navigating the Cannes Film Festival

By:  Steven G. Kaplan.   Whether it is your first or twelfth time to the Cannes Film Festival, this article will help you navigate the complexity of the festival and market. I first attended Cannes in 1999 to support the international sales efforts on my first feature, TERROR TRACT. Since then, I've attended the festival every year so my comments derive from personal experience (some painful, some not).

1. Stay in Cannes. I really cannot emphasize enough how important it is to stay in Cannes and not outside. Walking distance from the Palais (where most of the sellers have their offices) and the hotel row on the Croisette is critical. Sole exception would be the Hotel Du Cap, particularly if you are a financier or just want your privacy, then Du Cap is the place to be. Most of the major film industry heavy weights stay there, but it is a 25 minute drive into the part of town where most of the action is. Don’t stay at Du Cap if your meetings and events mostly take place in town. The best locations to stay would be center pointe on the Rue la Croisette, between the Majestic Hotel and the Carlton Hotel, or in an apartment behind those hotels to the main drag. Another great option is staying on a yacht. Even though the staterooms tend to be small, there is nothing like the convenience and glamour of spending your time in Cannes on a yacht.

2. Rent a Car? What’s the point? You have to hassle with parking, the expense and everything that goes with that. Taxis are plentiful and don’t cost that much. Exception would be if you are staying out of town or at Du Cap.
3. What About My Stuff? There is a fair amount of risk of theft or loss of your personal possessions. I follow a very simple rule: carry everything on your body that you can absolutely not afford to lose. This includes your passport, money and credit cards. Hide everything you care about otherwise in your room. Only leave things behind that you care nothing about. With iPads and tablet devices, laptop is no longer necessary unless you are doing heavy duty writing or drafting documents.
4. Advance Planning. The best way to make Cannes effective is to plan in advance. There is so much happening that the chaos theory frequently rules. I find that starting your meetings at 11 a.m. is most effective to avoid last minute cancellations from too much partying the night before. Schedule meetings and events in advance but remain flexible as everyone’s schedule is constantly in flux. A typical day would include numerous meetings, cocktail hours (2 or 3), dinner meeting, premiere and afterparty.
5. Things to Pack. Necessities: bring a Tux or Formal Dress, a passport and credit cards (better exchange rate). All of the screenings at the Luminere (the superbowl of movie theaters) require formal wear for the men (including bow tie- NO neckties allowed) and formal dress for the ladies. They won’t let you in without it.
6. Credentials. You must get a Marche du Film credential if you want to see any screenings. A market badge is critical if you want to enter the Palais to meet with buyers or sellers. If you have produced or executive produced a film, register for the Producer’s Network. American Pavilion pass is good if its your first time in Cannes at the festival and need a good meeting spot with WiFi.
7. Pace Yourself. The Cannes Film Festival is a whirlwind of meetings, panels, network opportunities, red carpet premieres, yacht parties, late night drinks and rockstar parties. Pace yourself (see #4). Need I say more?
Most importantly, have fun and don’t get too stressed.  After all, you are in Cannes for the Superbowl of film festivals and film markets. It could be worse.
Entertainment Law Partners will be in attendance at the Cannes Film Festival from May 17-23. To set a meeting to discuss your project, please email us.                       

COPYRIGHT & DISCLAIMER
Steven G. Kaplan is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs.  You may contact him at Steve@entlawpartners.com.

Steven G. Kaplan grants column recipients permission to copy and distribute this column and distribute it free of charge, provided that copies are distributed for educational and non-profit use, no changes or revisions are made, all copies clearly attribute the article to its author and include its copyright notice.

DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.

2012 Catalina Soiree in celebration of the Catalina Film Festival

When is it OK to use Copyrighted materials without obtaining permission. By: Tifanie Jodeh

As digital signage emerges further into the mainstream marketplace, content providers find it necessary to retain value by displaying content which captures attention, educates, promotes, and entertains and, most of all, generates revenue.

This article briefly addresses how content providers can deliver such content legally.

It is likely that most everyone reading this article has taken a magazine to the scanner and made a copy of an image or article of interest. On the same level, it could be assumed that a select number of content providers may have incorporated a film clip or piece of music into a produced piece which was displayed to the public. The issue is whether such use was a violation of copyright law. 

Copyright law is protective of works such as photographs, music compositions, films, sculptures, news articles and paintings.  These forms of creative, expressive media are protected as any “original work of authorship fixed in any tangible medium of expression.” (Under the Copyright Act).

Many content creators are confused about the fair use doctrine and whether they need permission to borrow from the owners of copyrighted works. “Fair use” allows conditions under which content creators can use material that is copyrighted by someone else without paying royalties or needing to obtain a license.  It gives the public a limited right to draw upon copyrighted works to produce separate works of authorship.

Such examples of uses include news, fair comment and criticism, parody, reporting, teaching, scholarship and research. Filmmakers, artists and writers benefit from the fact that the copyright law does not exactly specify how to apply fair use.  Creative needs are considered and whether the use is “fair” according to a “rule of reason”. 

Courts employ a four part test (set out in the Copyright Act) and ask two key questions:

1.  Did the unlicensed use “transform” the material taken from the copyrighted work by using it for a different purpose than the original, or did it just repeat the work for the same intent and value as the original. 

2. Was the amount and nature of material taken appropriate in light of the nature of the copyrighted work and of the use. 

If the answer to both questions is in the affirmative, a court is likely to find a fair use. 

For example, if a reporter quotes a paragraph from an article you wrote online and that reporter compares your opinion with that of other commentators, this is likely permitted by the fair use doctrine without the need to obtain your permission.

The following are some common questions with regard to usage of content:  “What if the usage had been only to advertise the network?”  “Can I use of segment from a music video or copy an excerpt from an article without obtaining permission?”  “What if I am planning on getting permission after the content is displayed?”   “If I am not making money from the display of the content, do I violate the copyright act?” 

The answer to most of these questions is: It depends on the use of the content. 

Be sure to keep in mind that fair use is a very fact-sensitive defense to a copyright claim.  It is sometimes difficult for producers, writers and content creators to determine beforehand whether a particular use is in fact a fair use. For this reason, it is a good idea to seek out a license before engaging in a use that might be a "maybe" fair use.

In conclusion, digital signage content providers, whether agencies or individuals, should consider the following before incorporating material into their content:

Don’t assume you have permission to use copyrighted material.  Be sure to get the permission in writing. 

If you did not create the content yourself then assume that it is copyrighted and you should obtain permission for its use. 

If you think you made need a license to use the content, then you probably do.

Assume and prepare for negotiating license fees or obtaining permission to use copyrighted material.

Have a second choice lined up in the event that you do not obtain permission from your first choice. 

You will most likely be required to provide a credit for the use of the copyrighted content (such as: “footage provided by XYZ Network”).

If you are in doubt that you need permission to use a certain clip, image, quote, or song, then stay on the safe side and obtain permission.  You should retain an attorney to help you through this process. 

For more information, visit the copyright office at http://www.copyright.gov/.

COPYRIGHT & DISCLAIMER

Tifanie Jodeh is Partner at Entertainment Law Partners, LLP dedicated to corporate, business and entertainment affairs.  You may contact her at Tifanie@entlawpartners.com.

[Tifanie Jodeh grants column recipients permission to copy and distribute this column and distribute it free of charge, provided that copies are distributed for educational and non-profit use, no changes or revisions are made, all copies clearly attribute the article to its author and include its copyright notice.]
DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.

Article by Tifanie Jodeh: Legal Issues Surrounding Funding Via Private Equity

Nailing down investors is just the beginning of the story and a very integral part of the production process. You should be aware of the security laws that regulate how investors make investments into a project and how they hope for a large return but understand the risk of loss. 

Generally, Producers are required to register any offer or sale of securities unless it is exempt (as discussed below).  The registration process takes time and can be expensive. Instead, Producers sometimes operate on the practical exemptions for acquiring investment.

The most common exemption for entertainment projects is found under Rule 506.  This is called the "safe harbor" clause.  Rule 506 makes sure a production company meets the requirements that the investment request is a private offering.

Elements to Rule 506:
To qualify under Rule 506 it is important to address the following items:

1. No General Solicitation and General Advertising.

The Producer cannot engage in "general advertising" or "general solicitation".

This means that offers and sales of securities cannot be made through traditional advertising media such as radio, television and the Internet. Representatives of the production company must have a substantive pre-existing relationship with the person or entity being offered the securities. So, in other words, a friends or family type relationship.  This "pre existing" relationship is one which is present before a Producer approaches a potential investor to invest.   Even more, the producer must establish that the relationship is substantive; one where the representatives of the production company believe that the person or entity being offered the securities is sophisticated in investing. The combined effect rule (which is interpreted by Securities and Exchange Commission) can sometime conflict with how you have witnessed in the entertainment business.

2.  Purchaser Limitation. 

The sale of any security may be made to an unlimited number of "accredited" investors (meaning sophisticated, high net worth investors who can meet certain requirements as set forth in the SEC rules) and up to 35 unaccredited investors. These unaccredited investors (or their representatives) must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment.  

3. Time Restriction/ Securities "Restricted"

The securities may not be resold for a certain time period and such re-sales are governed by securities laws. Producers must try to assure that an investor is purchasing the securities for investment purposes and not just to turn around and re-sell them.

4. Information Disclosure

One of the main goals of securities laws is to allow investors to make educated and informed decisions based on accurate information provided by the Producer.  If any unaccredited investors are sold securities in an offering, then specific information disclosure is required to be provided such as in a private placement memorandum. On the other hand, if the investment is being made by accredited investors then there are no specific disclosure requirements other than disclosures required to avoid the anti-fraud provisions of the securities laws. It is recommended, that the Producer provided extensive disclosure information to avoid the potential lawsuit of an unhappy investor.

5. Form D Filing

Lastly, a Form D is required to be filed within the first the 15 days of the first allocation of a security, plus filings of the form must be made in most states where sales are made to residents of that state. 

Now that you understand the rules, following the rules is very important no matter the size of your project.  Be over prepared and know how much money you need and have a detailed budget. This will show investors see you are serious and professional.   Make sure an entertainment attorney is on your team who can help you navigate the world of entertainment investment. 

COPYRIGHT & DISCLAIMER

Tifanie Jodeh is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs.  You may contact her at Tifanie@entlawpartners.com.

Tifanie Jodeh grants column recipients permission to copy and distribute this column and distribute it free of charge, provided that copies are distributed for educational and non-profit use, no changes or revisions are made, all copies clearly attribute the article to its author and include its copyright notice.

DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.

Tifanie Jodeh authors article in the premiere issue of "Hollywood and Vine" magazine.

Co-founder and partner, Tifanie Jodeh, authored an article under the "Showbiz, Esq." section of the Hollywood and Vine premiere issue. 

The article is entitled, "Copyright and the Rule of Reason". An excerpt from the article includes a discussion on fair use. “Fair use” allows conditions under which content creators can use material that is copyrighted by someone else without paying royalties or needing to obtain a license. It gives the public a limited right to draw upon copyrighted works to produce separate works of authorship.  You can get your copy of the magazine by visiting:  http://www.hollywoodvinemag.com/premiereissue.  The kick off party was hosted by Editor in Chief, Angela Hutchinson, at the W Hotel in Hollywood.  You can find pictures of the entire event by clicking here: Launch Party.

Jodeh's next article for the mag is scheduled to be released in September 2011.