Clear It or Ditch It!

BY:  Tifanie Jodeh

The script, all script revisions, and every item to be used as a prop and/or set dressing must be cleared.  

Rule of thumb:  You either clear it or ditch it!  This rule of thumb should be applied to each and every clearance issue and item under review for use in a film.  It's best (and cheaper) to do this BEFORE you start shooting.  If you aren't able to get it cleared, then you know not to use it.

I recently conducted clearance review on a film (already shot) and identified for the producers some items which had clearance exposure and risk.  One particular troublesome issue was the use of a major airline's webpage in a scene.  The use of the website was a key point in the scene.  While I was successful in obtaining permission for the use, it took approximately 1 month to get all the required approval from the airline and a volume of correspondence regarding the use of the airline's logo in the scene and in the film.  

“Clear” means:  for script elements (discussed below) that, following legal review and research, that there are no legal issues, or in the case of other items (as discussed below), that proper written authorization has been obtained for the use. 

Below, find a list and examples of the most commonly items cleared in a film:

Literary Works:  Literary works, which include books, short stories, film, television programs, art work, fine art, still photos, among other things, must be licensed.  

The Script:  All drafts of the script and any material revisions needs to be researched by a professional script clearance company and reviewed by your attorney who will provide recommendations for changes to the script in order to avoid exposure. 

News and/or Stock Footage:  News organizations can license the footage that they have shot at press conferences to other entities.  But, any people who appear in the shot, for example a news anchor, will have to be separately cleared.  

Locations, Buildings, and Installations:  Examples Include:  Parks, cemeteries, office buildings, promenades, and homes.

Photographs:  Still photos fall into several categories:  These include:  Publicity Photos (photos for publicity in a film); Production Stills (photos taken on behalf of the production on the set of the motion picture or TV); Film Posters; Paparazzi Photos; and Magazine Covers, Website Front Pages, Book Covers involve three layers of clearance: 1) the magazine, 2) the photographer who took the photo and 3) the person who appears in the photo.

Music:  Hire a good music supervisor!  No on-camera use of music in any form (including humming, whistling, reciting of lyrics in dialogue or otherwise) can be used unless it has been cleared.  To the extent non-original music is used, the music supervisor or whomever may be required to obtain two forms of licenses:  Synchronization license and Master use license. 

Apparel/Products/Logos:  Featuring a product, service logo or trademark (a Nike logo on a shirt) must generally be cleared.  If a product has not been cleared, then caution must be exercised as to how it is used in the film, it cannot be featured or used or referred to in a derogatory manner.  Items such as groceries (Coolwhip), candy (Willy Wonka), chips (Doritos), drinks (Red Bull), health (Advil) and beauty products (Maybelline) should be cleared or created as something original by the props department. 

Props/Production Design:  Examples include: Publications (magazines, newspapers, book, articles); Paintings and Fine Art; Posters, Record Covers and CD Covers; Graffiti and Tattoos; Games, Weapons, Vehicles and Toys; Logos and Trademarks.

Motion Picture/Television Clips:  It is recommended that any excerpt from a feature film or television show must be licenses from the copyright holder and an agreement negotiated for payment for use of the clips(s).  Note here that special consideration must also be taken for SAG/AFTRA and/or DGA reuse rights of any actor appearing in the clip.  

 Youtube/Online Clips/URLs/Websites:  It is a misconception that because these online sites are public, that the content is open and free to use.  In fact, this is not true and permission should be obtained.  

Contact our office with any questions or production legal needs you may have.  We are available for phone consultations by appointment.  Contact us at asst@entlawpartners.com

COPYRIGHT & DISCLAIMER

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

Raise money under the SEC's New Regulation A+

All the things you can do to raise money under the SEC’s New Regulation A+  since the SEC extended an exemption policy for smaller issues as required under Title IV of the Jumpstart our Business Startups ("JOBS Act").

Highlights:

1.  General Advertising and Solicitation Allowed (including internet and social media)

2.  Raise up to $50 million

3.  All investors whether accredited or unaccredited

4.  No requirement to verify investor status

5.  No limit on amount of investors

6.  Easier SEC registration process (Tier I)

7.  Avoid State Blue Sky Filing requirements (Tier II)

On March 25, 2015, the SEC adopted final rules implementing Title IV of the “Jumpstart Our Business Startups Act” (the “JOBS Act”) by amending SEC Regulation A to make two new exemptions for securities offerings by private U.S. and Canadian companies, which is now known as Regulation A+.

The SEC released a statement that:

"The updated exemption will enable smaller companies to offer and sell up to $50 million of securities in a 12-month period, subject to eligibility, disclosure and reporting requirements."

These exempt offerings are referred to as Tier 1, for offerings of up to $20 million annually, and Tier 2, for offerings of up to $50 million annually. 

Tier 1, which would consist of securities offerings of up to $20 million in a 12-month period, with not more than $6 million in offer by selling security-holders that are affiliates of the company issuer. The increase in the offering maximum amount from $5 million to $20 million could make capital raises under this alternative more attractive to a number of companies in need of capital as the cost of preparing an offering memorandum can be a smaller amount to that of the offering size.  

Tier 2, which would consist of securities offering of up to $50 million in a 12-month period, with not more than $15 million in offer by selling security-holders that are affiliates of the issuer.  The new Tier 2 creates a form of "mini-public offering" with a number of reporting requirement that resemble those of a normal full fledged offering, for example, two years of audited financial statements and the new periodic and current reporting requirements.

The rules limit the amount of securities that can be sold by selling shareholder at the time of the company issuance of its first Regulation A+ offering and during the 12 months following to no more than 30% of the total offering price of any instance of that offering. The registration process is done online via the SEC’s program called EDGAR. Tier 2 offerings are exempt from state blue sky laws and Tier 1 offerings are not exempt.

The new SEC regulations are complex and often technical.  The foregoing article should not be taken as legal advice or presupposes that all of the information is included with respect to any particular company’s or individual’s circumstances. 

COPYRIGHT & DISCLAIMER

Tifanie Jodeh is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs.  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.

Weak Link in your Chain of Title?

To begin, a “chain of title” means a group of documents that proves you have the rights and ownership in your film, TV show, webisode, etc.  You must prove you own your project in order to satisfy due diligence requirements by investors, distributors, financiers, banks, etc.  As the your project is being produced, it is very likely you are tempted to rely on email exchanges or make handshake deals, which you believe gives you the rights to produce, finance, own and sell your project.  However, this is what I term "the weak link" in any chain of title.  As a producer, you must be over cautious is making sure the rights you gain are properly documented.  In this way, you demonstrate your professional, organizational and technical skills as a producer at the onset rather than having to go back and retrace your steps to find the "weak link" in your chain of title.  Depending on the scope of your project, you may need only a few documents or as much as a few binders.  You should know that each document must lead to the next one in the chain so as to make sure there is no gap in the rights flowing from each person and eventually leading to you.   

If you can prove a proper chain of title, you will have satisfied one of the main requirements by any distributor, financier, bank, etc.  Why?  By securing a chain of title, you can legally prove you are the owner and, thereby, avoiding a lawsuit alleging that you did not have the proper rights.  Chain of title is, sometimes, an afterthought to some inexperienced producers.  These producers discover chain of title requirements at the time they enter into distribution discussions for their project.  Distributors will deliver to Producers what's known as a "Delivery Schedule", which lists, amongst other things, required legal documents to be delivered.  Here is a list of some examples of documents you may need to have in your chain of title:

1.  Copyright registration certificates for underlying material

2.  Life Rights

3.  Writer Agreements

4.  Work for Hire Agreements

5.  Producer agreements


6.  Option Agreements

7.  Extension Agreements

8.  Quitclaims

9.  Certificates of Authorship

10.  Life Rights

11.  Copyright search

12.  Script clearance

One of the main documents a Producer will need to deliver to a distributor is Errors & Omissions (E&O) insurance.  This is required prior to any distributor buying your film.  E&O insurance will require you, amongst other things, to list and provide copies of such things as like chain of title documents, title clearance, copyrights, and script clearance.  E&O will help to protect and indemnify you from lawsuits filed against you or the project for such claims as intellectual property infringement, defamation, libel, slander, name and likeness, etc. 

 I am often asked, while performing production legal services for my Producer and Production company clients, to provide a list of documents needed for chain of title.  The type and number of documents varies depending on numerous factors, which includes the source of materials (i.e. is it from a book or original screenplay) to deciphering whom contractually on the production holds approval rights over materials, production, concept and writing services.  The most basic premise is: remember get written permission for any and all rights from EVERYONE working on your project so you can claim 100% ownership in your project.  The chain of title has to start with the very first work where your project idea originated, then work down the chain from that point.   For example, say you want to have a screenplay written based on a book.  You must acquire rights or permission to create a film based on the book from the book's author.  Then, you will most likely engage a screenwriter to write the script.  You will need to obtain the rights for the screenplay as well.  So far, the document count in your chain of title is 2.  Next, say, you have a director who wishes to have one of his employee's perform a few changes to the script.  You need to obtain the rights from your director's employee as well.  That makes 3 documents in your chain... and so on.  Also, the screenplay must have documentation proving it has been registered with the U.S. Copyright Office.  Later, eventually, you will have to obtain documentation that your actual final project is also registered with the U.S. Copyright Office. 

So, as I said at the onset of this article, avoid weak links in your chain of title!  In order to preserve your chances of selling your project and protect against potential legal claims, then it is best and most important for Producers to engage a proper lawyer to navigate and manage your production legal and the chain of title. 

 COPYRIGHT & DISCLAIMER

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

Endorsement Deals- What is a Morals clause?

It is an ongoing newsworthy story when scandals relating to stars, such as Paula Deen, Lance Armstrong, and Tiger Woods, who make high amounts of money in endorsement deals simply by being public figures, are ripped away from their endorsement deals in the blink of an eye. Many of you may wonder how it is so easy for product placement companies to legally bid "adieu" to endorsement deals with their celebrities.  

Endorsement agreements between companies (such as Walmart, Macy's, Verizon, and Nike) and celebrities can be high profit, high volume business ventures.  These companies rely on the persona and high profile image of their endorsers to positively attract attention to their products.  This could be either endorsements of a particular product, say, Taylor Swift for Diet Coke, or for an entire company such as Adam Levine for Proactiv. 

One of the most important tools for any company to have is the ability to protect their brands and intellectual property.  In order to achieve this protection, companies include very specific clauses in any endorsement contract which are intended to give companies the ability to terminate the endorsement and even possibly recoup payments previously rendered to the celebrities.  Morality clauses are deeply negotiated because, on one hand, the celebrity wants as much specificity as possible when having their behavior judged while companies want to judge and interpret the contract in a fluid, sole discretion manner.  A well drafted morals clause clearly delineates the standards of conduct and what the repercussions will be if the endorser's actions are out of line.  Clear trigger points and adherence to the company's code of conduct and/or company policy is a good starting point to drafting the morals clause in an endorsement contract.     

What happens if a company feels that their celebrity endorser breached the morality clause?  A company's course of action not only affects its current business but its societal position. After evaluating the violations that took place, it is up to the company to decipher termination vs. reaction from the public.  It could be as small as doing nothing and letting the incident die off to as much as making a public statement against the celebrity and terminate the agreement. 

An entertainment attorney can play a crucial part in the negotiation and administration of a deal.  The deal making process needs to be understood by knowing what the company needs from an endorser and having a practical handle on what a celebrity can deliver.  

Marketing is an integral piece of both a celebrity and company's success.  It is in the interests of both parties to maximize their brands and add value in order to gain a high presence in public commerce.  Neither party wishes to have the morality clause triggered, but if it does, the clause should be specific, clear and encompass the company's best business practices and protect the celebrity's persona. 

COPYRIGHT and DISCLAIMER

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

When is it OK to Use Copyrighted Materials Without Obtaining Permission

By:  Tifanie Jodeh

Copyright 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.

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.

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

COPYRIGHT & DISCLAIMER

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

The Missing Piece of the Jigsaw.

Tax relief launched in the UK for high-end TV and animation, is being hailed as “one of the biggest opportunities we’ve had in a generation”. Clive Bull reports

The UK’s already robust film and television production sector is experiencing another uplift thanks to recently launched Creative Sector Tax Reliefs announced for high-end television and animation, with a games incentive pending EC Sate Aid Approval. The schemes include provision for tax relief on television productions where the budget exceeds £1m per broadcast hour, amounting to a 25% rebate on qualifying production spend within the UK, capped at 80% of the budget. To a large extend, the new television incentive is based on the existing Film Tax Relief (FTR), which is credited with bringing numerous major productions to the UK. As with the FTR, there is a points-based cultural test to establish whether the production qualifies as British.

            “The Film Tax Relief, since it was launched in its present form in 2007, has been a great success,” Adrian Wootton, chief executive of the British Film Commission and Film London, says. “It’s attracted an awful lot of inward investment, which has allowed the British film industry to invest and expand.”

            But while film companies were finding the UK an attractive proposition both in terms of facilities available and the financial incentives, there was a growing feeling the large-scale television productions, particularly from the US, were not being offered the same competitive edge. That case was conveyed by the industry to the UK government and the result was the announcement of a tax relief in April 2012 which already appears to be attracting ambitious drama projects that might previously have had to look elsewhere.

            Wootton says a lot of creative decision-making informs television companies’ choice of location, unless that choice is ruled out on the ground of finance. Companies like HBO, he adds, were insisting that they wanted to come to the UK but needed the level playing field that a competitive incentive affords in order to make that choice. “They said, ‘We’re spending billions of dollars worldwide and where’s the one place we want to shoot and we can’t? It’s in the UK. So give us the reason to do it. We know what you can deliver and we’d rather make it with you if we could.’”

            It’s clear that the financial incentive is not the only motivation behind productions preferring to be based in the UK. “Think about the concentration of facilities that we have, the quality of the crews, the amount of investment we have made in training, the time zones – and also the language factor is not an inconsiderable one,” Wootton says. “There’s a whole multiplicity of factors and what we needed was the missing piece in the jigsaw puzzle. We’ve got that missing piece now and I think we’ve got a really competitive and exciting offer that people will want to grab.”

            The worldwide shift towards high-end serial drama is another significant factor behind the new incentive, as terrestrial broadcasters, along with cable, satellite and online players, seeking to give themselves an audience USP, move increasingly towards more lavish shows with higher production values.

            Richard Williams, chief executive of Northern Ireland Screen, cites HBO’s Game Of Thrones as a case in point. “It is the perfect example,” he says. “I think our being able to articulate what the value of Game Of Thrones was to the development of the sector here, and its value to the economy, was one of a number of very significant arguments that led to the tax incentive.”

            The HBO epic fantasy series is now confirmed as shooting for a fourth season in Northern Ireland. Williams says help from the Northern Ireland Assembly in funding the pilot was the clincher: “We provided the same level of incentive for the pilot that we did for the first season, on the logic that if you don’t get the pilot, you can’t get the series. So that was a bit of a risk, but it paid off for us. And that is one of the important pieces of the legislation – that the incentive needs to be available to pilots, because for a lot of the broadcasters that’s still the way they do it. Game Of Thrones wouldn’t have happened in Northern Ireland if the pilot hadn’t happened in Northern Ireland.”

            John McVay, chief executive of Pact, which represents UK independent content, was on the Treasury working group that advised government on the structure of the new tax relief. He agrees that high-end series will be attracted to the UK by the scheme. “If you look at the strategies of a lot of the US networks that produce high-cost drama, they are looking to try and find ways to finance that,” he says. “They look around the globe for co-production partners, co-financing and incentives, because the TV industry has gone global very quickly. So the UK is well placed to be a hub for that type of production internationally. But also it’s a great opportunity for us, because we have very high-quality international producers based in the UK. Having an incentive in your pocket when you go out into the market is very, very helpful.”

            McVay says the Starz/BBC Worldwide production Da Vinci’s Demons, shot in South Wales with the help of the Welsh government, is another example of the kind of high-quality drama already shooting in the UK. “They started that without incentives and I’m quite sure those shorts of channels and producers will be looking at the UK with even more interest now that we have an incentive,” he says. “People like to work in the UK because we offer very high quality, have a very can-do attitude, and the people are generally welcoming to production. We have very good technical skills, and very good post-production and CGI – that’s been the rationale for so many US feature films to come here.”

            Already prompting widespread interest from around the world, Wootton says the initiative will bring inward investment from big international dramas, co-productions with UK companies, and domestic drama that was previously going offshore.

            “I think it’s one of the biggest opportunities we’ve had in a generation,” Wootton adds. “This is a brand new opportunity and, certainly, if the volume of enquiries and level of interest that we’ve been getting both in London and in the US office of the British Film Commission is anything to go by, the UK will soon be first choice for international high-end production.”

For more information go to: http://www.britishfilmcommission.org.uk/

Article courtesy of Location UK.

Latest update on Crowdfunding

By:  Tifanie Jodeh, Esq.

"Crowd Funding" (also known as crowd financing, equity crowdfunding, or group funding) describes a group effort by supporters of a project who network and pool their money, usually via a website/Internet to fund efforts initiated by other people or organizations.

Crowdfunding has arguably revolutionized the way in which low budget films are sourced, financed and supported. 

The two biggest crowdfunding sites are Kickstarter and Indiegogo.   Kickstarter uses the “all or nothing” funding model, whereby projects receive money pledged only if their total fundraising goals are met.  Indiegogo offers two different options:  1. the same “all or nothing” model or 2.  “Flexible Funding” campaign that allows users to keep money raised, irrespective of whether their funding goals are met. There are many other crowdfunding sources available.  These include sites such as Pozible, Peerbackers, RocketHub, Speed&Spark and USAprojects (as examples). Though, Kickstarter is the leader in the pack. 

There is little doubt that crowdfunding works.  To date, Kickstarter has successfully funded over 9,000 films.   

Even more, these projects are noteworthy in their own right.  The short documentary “Inocente” became the first Kickstarter-funded film to win an Oscar.  Other Kickstarter-funded films nominated for Oscars include the live action short “Buzkashi Boys” and the documentary shorts “Kings Point,” “Incident in New Baghdad,” “Sun Come Up” and “Barber of Birmingham.” 

Recently, Rob Thomas’ “Veronica Mars” Kickstarter campaign shattered Kickstarter records when it raised $1 million in just four hours and 24 minutes, and $2 million in 10 hours.   At the time of this writing, over $3.7 million has been pledged by more than 56,500 people. 

These crowdfunding sites generally operate on a reward basis.   Prospective supporters can pledge money flat out, or they can give money in exchange for pre-determined non-monetary rewards.  These rewards may include items such as DVDs, signed movie posters or scripts, tickets to red carpet premieres, Executive Producer credits and the like.    

A key point is that, under the current crowdfunding model, potential supporter will never see or should expect a financial return on their investments.  Their financial contributions do not buy them any ownership in a film, any right to recoup what they've invested, or any right to share in the profits that a film may make.     

Crowdfunding participants do not own any equity in the project. So if it ends up doing very well, the producers and stars also stand to earn a decent amount of money since there will be no need to repay the production and investment costs.  

An additional option to raise funds through the Internet will be available via Obama's JOBS (Jumpstart Our Business Startups) Act.  The JOBS Act is set to fundamentally change how crowdfunding works by allowing sites like Kickstarter and Indiegogo to sell to its members equity – or ownership - stakes in films.  This is known as “equity crowdfunding.”     

President Obama signed the JOBS Act into law on April 5, 2012, and at Congress’ instruction, the Securities and Exchange Commission (SEC) is monitoring the new changes before they take effect, which is expected to occur at the end of 2013.    

Before the JOBS Act, filmmakers were prohibited from publicly soliciting, via calls, email blasts, or websites, for funds in exchange for equity.   Additionally, they were only allowed to take such investments from accredited (generally meaning wealthy investors), or up to $1 million from unaccredited investors they had a "substantive" (such as friends and family) relationship with. 

The JOBS Act lifts the ban on general solicitation and advertising, and allows, with certain protective guidelines, a filmmaker to take funds in exchange for equity from anyone, regardless of their financial status or their relationship to the filmmaker.

You should work with a experienced entertainment/securities attorney to make sure you are properly within the guidelines of the JOBS Act. 

With the combination of Crowdfunding and the JOBS Act, filmmakers and producers have a better chance to build a project to success and independently control its fate.  

(c) Entertainment Law Partners and Tifanie Jodeh, Esq.  

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.