A partnership is legally very similar to a marriage, except that no one has to pronounce you partners. Because partnerships don’t require any government filings or certification, people working together are sometimes surprised to learn they in fact have a legally binding general partnership. Some of the legal implications of partnership are:

Unlimited Personal Liability

Perhaps the thing that most business people think of first is the element of liability. In a partnership, your liability is unlimited not only for your actions but also for your partner’s.

Partners are legally responsible for each other’s obligations incurred in the course of the partnership. For example, if your partner makes purchases on credit for the movie, you are obligated to pay the bill. This is true, unfortunately, even if you aren’t aware of the debts, so be sure you can trust your partners before you agree to work with them.

Even if you have a partnership agreement that states clearly limitations on spending, third parties who aren’t aware of your arrangements aren’t bound by your agreement.

Fiduciary Duty

Each partner has a duty of loyalty and good faith to his partners. In simple terms, that means you can’t engage in business transactions that hurt your partners, financially or professionally. Examples might be making a competing film yourself or taking other work that interferes with your scheduled work on the partnership’s film.

Share in Income & Losses

All partners share equally in the income and losses of the partnership, even if they are not contributing equally to the business. If your partner only shows up half the time or finds extra work for you to do while she takes off, you may get angry when she takes half the profits.

Worse yet is a partner who is absent for most of the work and only shows up to claim his share when the film starts making money. (Did you say “lawsuit”? Even more time and money down the drain.)

Of course, you may divide things up different in a written partnership agreement. If you do, be sure to get a lawyer who understands partnership law to draft it for you.

Ownership of Property

Conversely, all property acquired with partnership funds or brought into the partnership belongs to the partnership and not the individual partners. This is true even if an individual partner contributed the property.

In the case of a movie, it might the script that one partner contributed, set decorations another contributed, equipment purchased, or some other type of intellectual or personal property.

Partnership Agreement

What I discuss above are the default rules for general partnerships, and they are pretty universal in the United States. You can change the rules by having a partnership agreement, which I would highly recommend, setting out what is expected of each partner and their respective rights.

Again, a partnership agreement does not need to be filed with any government agency and you don’t need anyone’s approval. The only time it might become public is if you go to court to settle a dispute.

For More Information

In the video on Setting Up Your Company, volume 1 of the What Every Filmmaker Needs to Know About the Law series, I discuss partnerships and other types of business entities in great detail. If you don’t already own the set (which is available at a discount to my readers), go to WhatEveryFilmmakerNeedsToKnowAboutTheLaw.com to get your copy at a Special reduced price.

If you’d like my help with your production or your agreements, click the “Production Counsel Website” link above.

© Keith E. Cooper. All rights reserved. You may freely link to this post, but please do not copy (in whole or in part) without permission of the copyright owner.

First of all, fair use is not a “right” at all, it is an “affirmative defense.” That means two things: (1) it is decided by a court, and (2) it might be an excuse where a person has been determined to have infringed someone else’s copyright. In real terms, this means that no one can tell you in advance for certain whether your use will be considered fair use.

MYTH of Noncommercial Use

One of the most common myths is that as long as you’re not making money off of using someone else’s work, it’s okay to copy it. That simply isn’t true.

Copyright gives the owner the exclusive right to copy, distribute, perform, display, or make derivative works from the copyrighted work. “Exclusive” means just that: no else can use the work without the owner’s permission. Whether the use is for personal or commercial use makes no difference under the law. The owner—and only the owner—can decide to sell it or give it away.

MYTH Of Attribution

Just because you give the author credit for his work doesn’t give you the right to copy it. If you want to copy someone’s work, you need to ask permission. And, often, pay a fee.

Perhaps the root of this confusion is the confusion some people have between plagiarism and copyright infringement. Plagiarism simply means passing off someone else’s work as your own. In school, we are taught to avoid this by properly crediting the source. That’s fine for the classroom, because scholarly use is one of the criteria for fair use. Proper attribution won’t protect you, however, if you have infringed someone’s copyright.

MYTH Of Minimal Use

There are a surprising number of filmmakers and writers who believe that if they don’t copy more than a little of someone else’s writing (I’ve seen everywhere from 500 to 2000 words), they’re not infringing that person’s copyright.

Likewise, there are many filmmakers and musicians who think that they can use music clips as long as they don’t exceed a certain number of seconds (I’ve heard everywhere from 5 seconds to 30 seconds). Not true.

One of my favorite legal quotes in copyright law is from a case where the judge said that no copyright infringer “can excuse the wrong by showing how much of his work he did not pirate.” Sheldon v. Metro-Goldwyn Pictures Corp., 81 F.2d 49 (2nd Cir. 1936).

In summary, it is important to note that even though “fair use” is mentioned in copyright law, there are no “bright line” rules for what is and is not fair use. The distinction between fair use and infringement in a given case may be unclear, even though there are tests that courts routinely apply in such cases. A given judge may (or may not) review any of the above factors—as well as several others—in determining whether an infringement is fair use, but no one factor by itself has ever been held to be determinative.

For More Information

In the video on Rights, volume 2 of the What Every Filmmaker Needs to Know About the Law series, I discuss copyright and the tests for fair use in great detail, presented in a way that non-lawyers can easily understand. If you don’t already own the set (which is available at a discount to my readers), go to WhatEveryFilmmakerNeedsToKnowAboutTheLaw.com to get your copy.

If you’d like my help with your production or your agreements, click the “Production Counsel Website” link above.

© Keith E. Cooper. All rights reserved. You may freely link to this post, but please do not copy (in whole or in part) without permission of the copyright owner.

Types of Entities

The types of business entities that are most commonly used for film productions are: corporation, limited liability company (LLC), or limited partnership (LP). All of these allow the owners to limit their liability to the amount they have invested in the company.

Each of these types of entities has their advantages and disadvantages and it’s best to discuss your needs with an entertainment attorney before you form the entity. If you would like an in-depth general discussion, I discuss each of these entities and their pluses and minuses in the DVD series, What Every Filmmaker Needs to Know About the Law.

Advantages of an Entity

By setting up an entity you can divide the financial risk among several people. That is, you are able to have investors in your production or otherwise share responsibilities.

Your company can enter into contracts, hold rights, and bring lawsuits. It also allows you to avoid personal lawsuits so that your assets are protected. While this may not seem an issue for many young filmmakers who have no assets, it will become an issue when your film is successful.

You can separate your personal finances from the company’s finances, which has many accounting and tax advantages.

If something happens to you, the company lives on and can be run by your partners or successors with very little disruption. Similarly, you can sell and transfer your interests in the company.

Avoiding Liability

Anytime you have a film production you expose yourself to liability. Whether it’s the claim of an author that you’ve stolen his or her work, a vehicle accident a crew member has while running an errand for you, or a designer who uses someone else’s work in his or her design, something will go wrong in every production.

Under the legal principle of respondeat superior, an employer is responsible for the actions of its employees. It is preferable that the employer be a business entity rather than an individual so you can avoid personal liability.

Partnerships

Whether you intend it or not, when two or more people decide to do a film production together, they have formed a partnership. That is, until they form one of the business entities mentioned above.

There are downsides and upsides to a partnership depending on your perspective. Each partner is personally responsible for the debts and obligations of each of the other partners (even if you don’t know about them), so if your partner does something wrong, you could end up in trouble.

Each partner has a fiduciary duty to his other partners, which is a way of saying you can’t act against your partners’ interests and must be loyal to your partners.

Unless you have a written agreement that says otherwise, the partnership owns all property acquired through the partnership. All partners share equally in the income and losses of the partnership regardless of the amount of work they actually do in the business.

So, be aware of this before you call up your friend and say, “let’s make a movie together.”

DBAs

Some filmmakers create a fictitious business name, often referred to as a “DBA,” under the erroneous belief that it gives them some protection. It does not.

A fictitious business name is merely a marketing device for sole proprietorships and partnerships that allows them to do business under a name other than their own, while notifying the public of the actual person responsible for any debts. DBAs are often chosen to describe the business and make it more memorable in advertising.

A fictitious business name (DBA) does not in any way reduce the liability of the owner or owners of that company.

For More Information

In the video on Setting Up Your Company, volume 1 of the What Every Filmmaker Needs to Know About the Law series, I discuss business entities in great detail, presented in a way that non-lawyers can easily understand. If you don’t already own the set (which is available at a discount to my readers), go to the What Every Filmmaker Needs to Know About the Law website to purchase it today.

If you’d like my help with your production or your agreements, click the “Production Counsel Website” link above.

© Keith E. Cooper. All rights reserved. You may freely link to this post, but please do not copy (in whole or in part) without permission of the copyright owner.

Here is a brief (and I emphasize the word brief) description of some of those paragraphs that should be included. As always, for a more thorough discussion of entertainment contracts, please refer to Volume 4 of the DVD series, “What Every Filmmaker Needs to Know About the Law.”

Work for Hire

If you’re hiring someone to do work for you on a film, you need to be sure that your agreement specifies that the work is a “work for hire” under copyright law. Why is this important? Because you want to make sure you own all the rights to the work in your film.

Under U.S. copyright law, an employer owns all the rights to the work done by an employee in the course of his employment. However, if the worker is not a regular employee, or the work being done is not part of his/her regular job description, the copyright in the work belongs to the worker.

Where the “work for hire” doctrine does not apply automatically, copyright must be transferred in writing. Even though workers on a film are almost universally categorized by law as employees, and not independent contractors (another common mistake among filmmakers), it’s a good idea to clarify the intent that the work being done belongs to the film maker.

Right of Assignment

Another provision that you should have in every entertainment agreement is the right to assign the agreement. Why? Because it’s very likely that you will transfer your rights at some point during the production or distribution of your motion picture.

If you decide to form a new entity for your production, or when you license or sell your movie to a studio or distributor, you will need to be able to transfer the rights to that other entity. The right of assignment gives you legal permission to do so.

In a similar vein, you don’t want your workers to be able to assign their obligations under the agreement. Obviously, if you hire someone to do a job because you think they’re the right person to do it, you don’t want someone else showing up to do the work. You can avoid this by saying that you may assign the agreement but the worker can’t.

No Obligation to Use

A common provision in motion picture agreements is a statement that says the production company is not obligated to use the person or their work in the final motion picture. Why? Because our industry being what it is, sometimes people take jobs so their work will be seen, perhaps taking a reduced fee to be associated with the production.

When you’re editing your movie, you may decide to change the narrative and delete or add scenes. Or you may decide that some of the work isn’t up to par and you want to redo it. You want to be sure that no one can force you to use a scene you’ve decided to delete.

In order to manage expectations, you should get the worker’s agreement in writing that you have no obligation to use their work.

No Injunction

There is a flip side of that principle. Under copyright law, the copyright owner may legally prevent the use of his or her work. We call that an injunction.

In the context of motion picture, that means one of your workers could stop you from showing your movie. By including a clause that says the worker has no right to an injunction, you preclude them from deciding, after the fact, that they don’t want you to use their work.

For More Information

In my book and video on Contracts, volume 4 of the What Every Filmmaker Needs to Know About the Law series, I discuss in great detail entertainment agreements, presented in a way that a lay audience can easily understand. That DVD is a great resource for understanding entertainment transactions and I recommend you take advantage of it. If you don’t already own the set (which is available at a discount to my readers), go to the What Every Filmmaker Needs to Know About the Law website to purchase it today.

If you’d like my help with your production or your agreements, click the “Production Counsel Website” link above.

© Keith E. Cooper. All rights reserved. You may freely link to this post, but please do not copy (in whole or in part) without permission of the copyright owner.

When people ask me whether they can use form contracts found in books or on the Internet or borrowed from a friend, I say “no.”

Form contracts, especially those in books, are not meant to be used by anyone. They are samples of fictitious ideal transactions which never took place. These samples are meant to show the types of things that go into an agreement, but not necessarily your agreement.

Many of the agreements you get from friends were not written, or even reviewed, by an attorney. Most of them are not written correctly, do not make sense, and do not apply to your situation. They are passed from filmmaker to filmmaker and their errors are perpetuated, or even magnified if someone decides to make a “little” change in the wording.

Contract basics

A contract is an agreement between two or more parties and reflects what the parties agreed to. If it doesn’t reflect what these particular parties want to do, it’s detrimental rather than helpful because it may set conditions the parties never intend to observe.

Among the essentials in an agreement, whether it’s oral or written, are:

• the names of the parties to the agreement;
• what each of the parties will do;
• when they will do it; and
• the consideration.

Consideration means what each party will give to the other. It can be money, services, or goods. Without consideration, you have a gift, not a contract.

In written agreements, you must be sure to have the exact name of the parties. Non-attorneys are often vague or incorrect in how they name parties. Sometimes they will put in the name of a person when the party to the contract should actually be a corporation. Sometimes the name of the person or company will be spelled incorrectly. Be aware that XY Corporation is not the same as XYZ Corporation, and XYZ LLC is not the same as XYZ Corporation.

If the contract is a contract for services, be sure to specify exactly what services are being rendered. Being vague here can lead to misunderstandings and disputes. Likewise, it is important to specify the timing of when services are to be rendered and where.

It continues to surprise me how often I see contracts that are missing one or more of the above basic elements.

The Importance of a Written Contract

A properly written contract can save your deal, save you money, describe how you will be paid, make sure the rights are properly allocated, describe what happens when disputes arise, provide a back-up plan if things do not work out as intended, and much more.

In my book and video on Contracts, volume 4 of the What Every Filmmaker Needs to Know About the Law series, I go into great detail about the components of entertainment agreements. That DVD is a great resource for understanding entertainment transactions and I recommend you take advantage of it. If you don’t already own the set (which is available at a discount to my readers), go to the What Every Filmmaker Needs to Know About the Law website to purchase it today.

If you’d like my help with your production or your agreements, click the “Production Counsel Website” link above.

© Keith E. Cooper. All rights reserved. You may freely link to this post, but please do not copy (in whole or in part) without permission of the copyright owner.

Misclassification of a worker as an independent contractor can lead to significant penalties on both the federal and state levels, including fines and criminal prosecution. Regulatory agencies seem to focus on certain industries, and entertainment companies are among those most frequently examined.

This should not be surprising considering the manner in which entertainment companies typically hire their workers. All too often, production crew who are properly “employees” are called “independent contractors” because the producer thinks it’s easier to pay them that way. Unfortunately, this is not a legally determinative reason to do so.

Factors for Determining Status

There are number of factors that determine whether a worker is classified as an employee or an independent contractor, and different agencies have different criteria. What is most difficult, and frustrating, in this area is that the same worker may be considered an employee under the set of rules used by one agency and an independent contractor under another agency’s rules.

Different states may have different sets of rules, so you need to check your local government regulations. However, under most regulations, crew members on a film will never be considered independent contractors. They work at the producer’s location under instructions given to them by the producer, in furtherance of the producer’s objectives, all of which are characteristics of an employee within most guidelines.

In California the status of film crews may be likened to migrant farmworkers, in the sense that both groups come together for a short period of time on a particular project, complete the project, then move onto a new project for new employer. They may even work with minimal, or no, supervision. Case law in California says that migrant workers are employees. See S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations, 48 Cal.3d 341 (1989).

Other Types of Workers

There may be categories of workers, however, who are independent contractors on a film production. In general, these would be outside service providers such as editing houses and special effects houses who do their work independent of the producer’s supervision. Where an employer specifies an end result and the worker is left to determine how to achieve it, uses his own equipment at his own location, and has advanced professional skills, that worker embodies typical characteristics of an independent contractor.

Please note that it does not matter whether there is a written agreement that specifies otherwise. Under the law, the contract is not controlling as to the definition of independent contractor or employee.

Interns

Another area to be wary of is the use of “interns” in the production of your film. Again, there are legal restrictions on the definition of intern. Many of the people considered interns by film producers don’t qualify under the law.

This year the United States Department of Labor warned that it intended to crack down on the use of unpaid workers misclassified as interns. It issued guidelines that set forth a six-factor test:

• the internship must be similar to training that would be given in an educational environment;
• the internship experience is for the benefit of the intern, not the employer;
• the intern does not displace any regular employee, but works under close supervision of staff;
• the employer that provides the training derives no immediate advantage from the activities of the intern and on occasion its operations may actually be impeded;
• the intern is not necessarily entitled to a job at the end of the internship;
• the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Only if the employer can show that all these factors are met will the intern be exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act. In most cases unpaid workers on a professional film crew would not meet all of these criteria.

There is much more information about labor and employment law in the context of film production in Volume One of What Every Filmmaker Needs to Know About the Law, which is available at a discount to my readers.

If you’d like my help with your production or your agreements, click the “Production Counsel Website” link above.

© Keith E. Cooper. All rights reserved. You may freely link to this post, but please do not copy (in whole or in part) without permission of the copyright owner.

What Are Deliverables?

In the context of a distribution agreement, deliverables are the materials that a distributor needs in order to release the film. It might include a negative from which to make prints for theatrical release, or it might be a color corrected video version for television broadcast or DVD release. It may specify the particular format for the soundtrack or versions with and without subtitles.

Deliverables also include publicity materials, such as photographs, biographical materials, and perhaps behind-the-scenes footage.

Whatever the form of your other deliverables, you will always need to deliver the legal documentation proving that you own all the elements of your picture. Without the assurance that it has a legal right to do so, no distributor is going to take the risk of releasing your film.

Why is This Important?

Creating each of the deliverables has a price tag attached to it and you want to keep your costs down as much as possible.

Often, the distributor will give you its comprehensive boilerplate list of things to be delivered. This may include things the distributor doesn’t actually need from you because of the type of release it is doing for you. So, your first task is to scrutinize the list and query anything you don’t already have, or anything you think they don’t actually need. Many times you can have some items removed from this list of required deliverables.

Typically, the distribution agreement will say that the distributor has the right to create any deliverables you don’t provide. The problem with this is that the distributor will bill you for these costs–at a premium–and deduct them from your share of the income. This may result in your seeing very little money, or a long delay before you get paid, from a small release. You may be able to create the deliverables yourself, or get them done less expensively than the distributor.

Legal Deliverables

The amount of legal documentation may vary from distributor to distributor, but generally includes all the contracts for each person working on the production. It also includes the chain of title for the screenplay and picture, location and prop releases, music releases, and the like. Required documentation may also include an errors and omissions insurance policy, title and clearance reports, and an MPAA rating.

If you engage an attorney from the outset of your production, legal delivery can be relatively inexpensive and straightforward. Usually, the work your attorney is doing as he goes along will include the deliverables you need. If you wait until after the production is completed to hire an attorney, it can be very expensive for the attorney to go back and re-create the documents you need to deliver.

The best advice I can give any filmmaker is to prevent problems by engaging an attorney early in the process, and hire a knowledgeable attorney to review your distribution agreement and negotiate your deliverables.

For more information about deliverables and contracts, be sure to get a copy of What Every Filmmaker Needs to Know About the Law, which is available at a discount to my readers.

If you’d like my help with your production or your agreements, click the “Production Counsel Website” link above.

© Keith E. Cooper. All rights reserved. You may freely link to this post, but please do not copy (in whole or in part) without permission of the copyright owner.

As with most legal issues, to give a reliable answer to this question, an attorney needs to know exactly who is being depicted and the gist of the story being told. After my client gave me the facts, I was able to give guidelines for keeping the script out of litigation.

Knowing that I was able to help someone else doesn’t help you, I realize, but I can share a few general principles for screenwriters and producers dealing with material about real people.

Two main areas to be concerned about are right of publicity and right of privacy.

Right of Publicity

When you’re depicting a real person, especially one who is well-known and makes their living through endorsements and selling artifacts of themselves (such as actors, athletes, writers, and the like), you need to be aware of the right of publicity.

Right of publicity means the right of each living person to control the commercial exploitation of their identity (what some people refer to as their “personal brand”). Obviously, the right isn’t worth much unless you have willing buyers, so the right is generally thought of in connection with celebrities.

Although fewer than half the states have enacted right of publicity laws, the states that have are, not surprisingly, where most celebrities live. Often the laws were created in response to demands by a particular celebrity or their heirs, and the law reflects the desires of that celebrity. Each state’s law is different, which is one reason an attorney needs to know the unique facts of a given situation before giving advice.

Traditionally, the right of publicity was considered a “personal” right, meaning that it belongs to the person and dies with them. However, some states permit the right to be inherited after the person’s death. In California, for example, a celebrity’s heirs can control these rights for 70 years after the celebrity’s death. In Tennessee (where Elvis Presley lived and died), the rights extend for 10 years after death, but if the rights are exploited during that time, the rights can continue in perpetuity as long as the rights are used (you can thank Elvis’s heirs for that).

In California, as well as some other states, the right of publicity descends (that is, may be inherited) for products, merchandise and goods, but does not descend for books, plays, television and movies. Which means generally that, under the laws of those states, writers and filmmakers are free to depict dead celebrities any way they choose.

(NOTE: The law that applies in a given case is the law in the state where that person was legally domiciled at the time of their death–which may or may not be where they died. Marilyn Monroe, for instance, was a legal resident of New York at the time of her death in California. Therefore, New York law–where right of publicity dies with the person–applies to Marilyn Monroe.)

There is a much more expansive discussion of Right of Publicity, including cases decided in several states, in the DVD/book series What Every Filmmaker Needs to Know About the Law.

Right of Privacy

Most of us understand the principle that we have a right to personal privacy. Again, this is a personal right that dies with us; it is not inheritable.

People who place themselves in the public eye give up much of their right of privacy. This applies not only to actors, athletes, writers, and politicians, but also to activists who participate in public debate. So, even living celebrities may be fair game for depiction of events that are publicly known.

What some filmmakers and writers forget, however, is that even though the celebrity they are depicting may be fair game, other people involved in the story of the celebrity’s life may not be. When writing about a person (living or dead), be mindful of not disclosing, unless you have permission, facts that are not publicly known. Especially if they involve other people, you may find yourself on the wrong end of an invasion of privacy suit.

Obtaining Rights

Most writers and filmmakers who intend to depict actual persons in their works will approach the persons depicted to obtain “life rights.” In reality, no one has the right to facts about their life. Facts are not protected by copyright or any other law.

What a “life rights” agreement really gives these writers and filmmakers is (1) an assurance that they can depict the person in a dramatic way without being sued, and (2) access to information they would not otherwise be able to get.

If you are able to get the person (or the deceased person’s heirs) to cooperate and sign a life rights agreement, great! Your work will be easier. Caveat: be sure to have an attorney who knows what he’s doing draft the agreement for you, or at least review it before it’s signed.

For writers who are not able to obtain permission or cooperation, all is not lost. Publicly available factual information may be freely used. A rule of thumb, to be safe, is to confirm any information from at least three independent sources before considering it a fact.

Be wary of using information directly from other written sources. Fact are not protected, but expressions of fact (the ways writers describe a fact) are protected by copyright and other laws. Occasionally, a biographer will fictionalize certain portions of his or her book to amplify the story or to protect third parties. Repeating those fictionalized portions may result in a copyright infringement lawsuit.

Other Considerations

This is, of course, a limited exploration of the types of things to think about when you are depicting real people in your work. For a more in-depth discussion of these topics, see What Every Filmmaker Needs to Know About the Law. Or, consult with an attorney experienced in the legal rights of writers and filmmakers.

© Keith E. Cooper. All rights reserved. You may freely link to this post, but please do not copy (in whole or in part) without permission of the copyright owner.

There is much more about these myths in “Volume 2 – Rights” of the What Every Filmmaker Needs to Know About the Law series.

1)  Copyright isn’t effective until it’s registered

Many people believe that copyright is not effective until it is registered with the Library of Congress.  That’s not true.

Although there are several benefits to registering a copyright, the copyright itself is effective as soon as a work is created.  “Created” under copyright law means that the work is fixed in a tangible medium of expression that can be shared with other people.

So, as soon as the words are on the page, or the performance is put on film or tape or some other means of recording, it is copyrighted.

2)  The “c” in the circle is required for copyright to be effective

In the olden days (before 1989), in order for a copyright to be in effect and remain effective, the author of the work was required to give notice to the public by putting a copyright notice on the work.   No longer.

As we learned above, copyright is effective as soon as the work is created.  There is no requirement that the author put a notice of copyright on his or her work.

There are advantages, however, to doing so.  One is that it puts other people on notice that you are claiming the copyright, which eliminates the “I didn’t know” defense to an infringement claim.  Actually, “I didn’t know” isn’t a complete defense, but it may reduce the amount of damages an infringer has to pay.

If you decide to put a notice on your work, be aware that there are rules as to format: 
first, © OR the word “copyright” OR the abbreviation “copr” (no other variations are acceptable);
second, the year;
third, the name of the copyright owner (note that the owner may be different from the author, but usually they are the same at the time of creation).

3)  I paid someone to create the work, therefore I own it

Just because you hired someone to write a script for you, or help you make your movie, does not mean that you own the copyright in their contribution.

Under the “work for hire” rule of copyright law, if someone creates a work in the ordinary course of their employment, the employer owns the copyright.  However—and this is where people get confused—if creating the work isn’t actually part of their job description, the “work for hire” rule doesn’t apply.

Likewise, if you hire an independent contractor, or someone is working as a volunteer, you don’t own the rights to their work automatically.

In these cases, the rights must be transferred in a writing (usually a contract, but it could be a simple assignment) stating that the parties agree the results and proceeds of the services rendered are a “work for hire” that the employer or person paying owns.

4)  I can use a small amount of a copyrighted work for free

It does not matter how much or how little of someone else’s work you are stealing, it is still stealing.  (Just because a thief takes $100 instead of $500 doesn’t make him or her less of a thief.)

Many people have heard the term “fair use” and think it applies to them if they’re using only a small excerpt from a copyrighted work or if they’re not making money from it.

Not true.

“Fair use” has specific guidelines in copyright law, and several factors are weighed (and may be weighed differently in different cases). Among the factors are: (a) the purpose and character of the use, including whether it is for commercial or educational purposes; (b) the nature of the copyright work; (c) the amount and substantiality of the portion used in relation to the work; and (d) the effect of the use on the potential market for the copyrighted work.

There is no absolute rule about what is and is not fair use (it is left up to judges and juries to decide in each case). In general, fair use applies only to teachers and critics who are commenting on the work. Just know that if you are simply using someone else’s work because it sounds good or fits in with your work, that’s not fair use.

5)  Sending a copy of my script to myself takes the place of registration

This myth was created by someone who didn’t think it through.  Sending a copy to yourself has no legal effect, even though it may show a postmark date.

Think about it:  someone could send an empty envelope and seal it later; or they could open it and re-seal it.  From a legal standpoint, it would be very hard to prove “chain of custody” and that the package was never tampered with.  Furthermore, all the envelope could prove is a date it was sent, which is not an issue under copyright law.

Don’t waste your time or money doing this.  Copyright registration, which gives actual protection, is relatively easy and inexpensive.  You can get more information about copyright at the U.S. Copyright Office website at www.copyright.gov.

As part of my law practice, I help people with copyright registrations and licensing. Feel free to contact me if you need such help.

© Keith E. Cooper. All rights reserved. You may freely link to this post, but please do not copy (in whole or in part) without permission of the copyright owner.

In the What Every Filmmaker Needs to Know About the Law books and videos, I spend a fair amount of time on options, and I encourage you to get this set and review the material. While you’re waiting for it to arrive, here’s a very brief, down-and-dirty overview of options.

Types Of Options

In the financial industries, there are two broad types of options (which Black’s Law Dictionary defines generally as “the right of election to exercise a privilege”). One is the right to buy something in the future at a price you fix today, which Wall Street types term a “call.” The other broad category of option is the right to sell something in the future for a price you fix today, which financial investors term a “put.” There are variations on these two broad categories.

In motion pictures, it’s usually the first type people are talking about when they say “option.”

Option on a Screenplay

An option on a screenplay means the right to buy it in the future for a price that is stated in the option. It obligates the screenplay’s owner (the “optionor”) to sell for that price, but it does not obligate the person optioning (the “optionee”) to buy. It is the optionee’s choice whether to purchase.

The biggest mistake many do-it-yourselfers (i.e. people who foolishly try to do their own legal work) make is in not fixing the purchase price and purchase terms in the option. Unless you fix the purchase price and terms, you don’t really have an option to purchase.

In practice, most experienced lawyers who draft options agreements create a separate purchase agreement that is attached to the option and signed at the same time, but which is not effective unless the option is “exercised.” [CAUTION: Don’t try this at home.]

Sometimes, people come to me with agreements they’ve put together that say if the optionee exercises the option, the parties agree to “negotiate in good faith” on the purchase price. To a lawyer, that’s not an option, it’s a “right of first negotiation.” Other problems with this: What does “negotiate in good faith” mean? Who decides? Usually, a judge or jury. After you sue (i.e., spend a lot of money and time fighting).

Another important part of the option is a description of how the option may be exercised. The best, and most obvious, way is to give the seller a check for the purchase price. It surprises me how often unwitting screenwriters agree that the option may be exercised simply by giving them written notice without any mention of payment.

There’s much more about options in What Every Filmmaker Needs to Know About the Law, which is available at WhatEveryFilmmakerNeedsToKnowAboutTheLaw.com.

Why Do An Option?

If you’re the screenwriter, you may wonder why someone doesn’t just buy your screenplay outright, instead of optioning it.

Generally, the purpose of optioning, rather than buying, is to give the producer an opportunity to see if there is interest in the marketplace for a film based on the screenplay (or book or whatever source material). Making a movie is an expensive venture, both in money and time, so the producer will want to see if any investors are interested in funding the project. The investors, in turn, will want to know if there will be a large enough audience for the finished film to make the project profitable. The producer wants to spend as little money as possible until he/she is sure the project can be completed.

If you are a producer or a screenwriter who needs help with your options, please feel free to contact me via the contact page at ProductionCounsel.com.

© Keith E. Cooper. All rights reserved. You may freely link to this post, but please do not copy (in whole or in part) without permission of the copyright owner.