Copyright and Chain of Title in film and TV Production

Those in the entertainment industry should know facts about Copyright and Chain of Title in film and TV Production.

COPYRIGHT

With certain exceptions everything that has been written – ie story, script, re-write, marketing materials, music, etc belongs to the author. The author owns the copyright in that which they have created.

If you use, without permission, something that has been created by an author you will be in breach of copyright and can have the pants sued off you! 

There is an exception.  Copyright exists for 70 years after the author’s death.  Examples of non- copyright material are Shakespeare, Dickens, Jane Austen, H.G. Wells, etc.

There are two main types of material.  Buying the rights to a book, newspaper article, blog, life rights or acquiring/commissioning original material that you may have commissioned.

Chain of Title

What is a chain of title and why should it matter to you?  In the motion picture/TV/new media business, a chain of title is the documentation that establishes proprietary rights in a film/project.  You cannot sell a film without it.

A chain of title is the sequence of historical transfers of title to a property. The “chain” runs from the present owner back to the original owner.

Imagine a screenwriter, we’ll call him Mr.John Doe, has just finished his newest script entitled “My Dream Date” and a production company called  Super X Films wants to option it.  An “option” is where a company pays a writer a sum of money (say, $5,000) for the right to produce a script within a set amount of time (usually one year).  If they make the movie, the writer will be paid the full purchase price for the screenplay (say, $100,000).  I’d like to stress that, with an option, the film company is not actually buying the script, but rather paying for the right to try and produce it within a certain time frame.  So, in our scenario, Super X Films pays Mr. John Doe $5,000 for the option and during the option period he revises the script numerous times with Super X’s development executives. But, unfortunately, Super X Films is unable to raise enough money to produce the film before the option expires, so the unproduced script gets thrown back into Mr. John Doe file drawer.

Years go by and another film company, we’ll call them MYD Productions, becomes interested in the script and offers to buy it.  The movie is shot and about to be released when Super X Films pops up and says they have an ownership interest in the script because they worked with Mr. John Doe to re-write it and develop it into its current form. Lawsuits, and a lot of headaches later mean that MYD Production did not check out the Chain of Title. The project had not gone into ‘turn around’ (this is when the rights revert back to the author but all development costs must be paid to the original development company on the first day of photography) .

However, this is an extreme example, because before a studio/network/aggregator buys a script they’ll usually hire a company to investigate the ownership history of the screenplay (a.k.a. “chain of title”) and see if there are any potential issues.  This includes checking with the International Copyright Offices to see if any other companies have filed paperwork claiming an interest in the screenplay’s copyright.  Most of the time potential ownership problems will be discovered, but sometimes it is more complex.

What is the best way to avoid this situation from the beginning?  If possible, John Doe should have gotten what’s known as a “quitclaim” from Super X Films once the option expired.  A quitclaim is basically a document stating that the company is giving up any rights it may have in the script.  If the writer had gotten a quitclaim, Super X would have had a very difficult time suing MYD Productions in this case.  So, the lesson here: if you have been developing your script with a production company and intend to take it to a different company, it’s always a good idea to try and get a quitclaim before moving on.  However sometimes, the cost involved in re-paying the development costs is prohibitive.

So, it is always best to get a ‘clean’ chain of title and prevent problems down the road. A “clean” chain of title is that same sequence of documents without gaps in time or other issues that may cloud the title (i.e., raise unresolved questions regarding ownership). For filmmakers, a clean chain of title is essential. No matter whether the filmmaker is approaching a studio executive seeking to obtain a production-financing/distribution deal, approaching another production company seeking a co-production deal, approaching a distribution executive seeking to obtain a negative pickup, split rights or foreign pre-sale agreement or ultimately approaching a distributor for the purpose of negotiating an acquisition distribution agreement, all of these transactions will require a clean chain of title

Chain of title documentation can include:

• copyright clearances on music from the regional collecting society, and to a less common extent, footage of other films;
• trademark clearances;
• talent agreements, which should incorporate a legal release from the talent, be they actors (including crowds), directors, cinematographers, choreographers, or others, to use their works, images, likeness and other personality rights in the film;
• proof of errors and omission insurance (a special form of insurance for motion picture producers which covers omissions in obtaining adequate chain of title).

Filmmakers should not wait until the film is completed to begin assembling the film’s chain of title. This activity should be ongoing throughout the process of creating both the script and the subsequent film. In other words, copies of whatever documents relating to the ownership of rights in the script or film should be added to the chain of title documents as they are created. 

So let’s be more specific regarding what documents should be included in a film’s chain of title:

Acquisition of Underlying Rights – A film script may be based on a copyrighted story that has already been published in some form. This story may come from an existing book, article, essay, short story, life story, poem, song, comic book, stage play, television show or prior film. In any event, the filmmaker will need to acquire the rights to the story. This is usually done by way of an option/acquisition agreement. This is effectively an agreement that gives the filmmaker the option to purchase the rights to that underlying material for a specific period of time, after which the filmmaker may purchase the motion picture rights to the work for an agreed price. The filmmaker should also ensure that the agreement by which he or she acquires the motion picture rights includes a warranty from the author that he or she is the true owner and an indemnity that he or she will he will be liable for any loss the filmmaker may incur in the event of a breach of this warranty. These agreements relating to the acquisition of the underlying rights should be included with the film’s chain of title documents.

Treatment – In many instances, a screenplay is not the first document relating to a film that may be copyrighted. A treatment may precede the drafting of the script, and the treatment may be the first document to be filed with the U.S. Copyright Office/WGA or your lawyer. In those situations where a screenplay is derived from a treatment, the screenplay is considered a derivative work of the treatment, and as such, the treatment could be the first element in the chain of title. Without the written permission of the author of the treatment to create a screenplay based on it, the chain of title would be clouded.

Copyright Registration of Script – If an original script is being written (i.e., no underlying rights are involved) and there is no treatment, a film’s chain of title may also begin with the screenwriter’s copies of the script’s registration with the Copyright Office, including both the registration form and the receipt sent back from the copyright office/WGA/Registered Delivery.

Certificate of Authorship – If there is no treatment that was copyrighted, another of the early documents to be found in a film’s chain of title may be a certificate of authorship signed by the script’s author. A certificate of authorship is a signed statement executed by the script’s author or authors attesting to the fact that the script was original with that writer or those writers.

Similarly, documents containing releases, licenses or permissions from other copyrighted materials used as a source for something written in a script should also be included.

Title of Film – While there is generally no copyright in the title of a film, a film-maker may also need to obtain a clearance to use a proposed film title. Where the title includes the name of a place, musical group or product the filmmaker should conduct or have conducted on his or her behalf, a search of the trademarks registry to ascertain whether the name is trademark protected. It will also be necessary to do searches of the trademark registries in other markets in which the film will be distributed. If the name is registered, then the filmmaker may need to contact the trademark owner and enter into a licensing agreement for use of the name, and that agreement should be included in the film’s chain of title.

Talent agreements – Such agreements should include a release from the talent, whether actors, actresses, directors, cinematographers, costumers, set designers, illustrators, sketch artists, graphic designers, costume designers, choreographers, or others, to use their works, images, likeness and other personality rights in the film. For chain of title purposes it is important that employment agreements for talent include a legal release which ensures that the individual consents to his or her performance being used in the film. Then, of course, each of such agreements are included with the chain of title documents

Crowd and extra releases — Make sure that every individual appearing in the film has signed a release or show evidence of proper notice in crowd sequences.

Music Clearances – Documentation relating to copyright clearances on music, including master use licenses from the owners of pre-recorded sound recordings, composer agreement, songwriter agreement and synchronization license. This last license to synchronize music with visual images in the film is obtained from the owners of the copyright protected work and should be included in the chain of title folder.

Film Clip Clearances – Copyright clearances on footage from other films used in the current film should be obtained from copyright owners. Film clips may also include music which needs to be cleared separately.

Trademark Clearances — Clearances or licenses from the owners of any trademarks appearing in the film (t-shirts, signage, art etc)

Design rights – Clearances or  licenses relating to any rights associated with the design of any property that appears in the film should be included with the film’s chain of title documents.

BUYING THE RIGHTS

In the first instance you probably won’t be actually buying the rights to a work but paying for an OPTION to buy the rights.

Suppose you want to make a TV drama based on a book by Maria Johnsen.  You will first contact Maria’s literary agent . After a negotiation you agree to buy the rights to Maria’s book for £30k and adapt it for television.  This has nothing to do with who will eventually write the script. 

Having agreed to pay £30k for the rights what you don’t do is to pay that amount up front.  It’s usually only payable on the first day of Principal Photography ie when you are actually making the film/programme.

Normally an option (to buy the rights) will cost you about 10% of the full price.  An option gives you an agreed period of exclusivity to sell the project to a broadcaster/commissioner/studio.  Put simply it stops other people trying to sell the IP while you get a script written (costly) and hawk it round. 

You need to negotiate as long an option period/exclusivity as possible.  On the other hand it’s in the agent’s/author’s interest to keep it as short as possible.  It’s not uncommon for a popular/fashionable work to be optioned several times before it is actually made.

EXERCISING THE OPTION

When producers option a script, they are purchasing the right to buy certain rights to intellectual property. A typical option fee is 10% of the cost of the rights, should the producers manage to secure full financing for their project and have it “greenlit”. Because few projects actually manage to be greenlit, options allow producers to reduce their loss in case a project does not come to fruition. Should the project be greenlit, an option provides a legally-binding guarantee to purchase the film rights.

The contract for an option will specify the length of time it is valid for. If the producer cannot have their project greenlit in the specified window of time (e.g. two years), the option will expire. The rights holder can then put the previously-optioned rights up for sale again. Or, the contract may allow the producer to renew the option for a certain price.

Let’s assume that having optioned the work you subsequently get a commission from a broadcaster or studio to actually make it.  At that point you will be in a position to EXERCISE THE OPTION ie buy the rights.

What you don’t do is immediately pay the £30k up front – remember, it’s usually payable on the first day of principal photography.  It’s not uncommon for deals to come unraveled before the actual shoot and you could then find yourself severely financially embarrassed. 

OUT OF COPYRIGHT MATERIAL

This is a real bonus – nothing to pay and you are entirely free to exploit the material anywhere in the universe.  The reality is that you won’t be the only one chasing this material (unless it is something entirely unheard of – in which case why would you want to exploit it?). 

The worst case is that you could find yourself in a race to production with yet another Sherlock project…

TERRITORIES

Be very clear what rights you are actually buying.  A license that only gives you rights in the UK is virtually useless and will certainly preclude any distributor or other investment.

If you are really lucky you’ll get a free and clear license to exploit the work anywhere in the universe.  Usually it’s limited by territory/time/showings.  The agent/author will see the work as a cash cow and negotiate accordingly.  This can be a tricky negotiation if the underlying work is of limited value and will need massive amounts of adaptation by a skilled screenwriter.

ORIGINAL WORK

An original work is something new from a writer ie not an adaptation of an existing work. 

Always beware ideas that come to you unsolicited.

1. You need to check, as far as you can, that they really are original and not cribbed from an existing book or someone else’s script.
2. Once you have read something you put yourself at risk of being accused of stealing the idea if you subsequently reject the work but do commission something similar. This situation is by no means uncommon, is extremely painful and makes lawyers rich.

You would be well advised to take copious notes at any meeting and write a contemporaneous note of that meeting as soon as possible afterwards.  File it somewhere safe.  You might even send it to the writer/agent.  It will stand you in good stead should trouble arise. 

The process of contracting the writer and buying rights is not dissimilar to that for acquiring an existing work.

If a writer ‘invents’ or ‘creates’ a work they will be the copyright owner and you will need to proceed accordingly.

Remember that (in almost all cases) you will only be licensing the rights not buying them outright.

AN EXAMPLE

Having discussed an idea or pitch with a writer (could be for a single, serial or series) you agree that you want to proceed to a script.

Again, like Options, you can proceed in stages. 

First off you would want to see a treatment or storyline for the drama or an opening episode for a serial or series.

You should expect to pay a writer 25% of whatever fee you have agreed with the agent for writing this treatment.

The next stage is a step outline. This is a much longer document than the treatment or storyline and, for a one hour episode, would normally run to 40 pages (the full script would be 60+).  This will give a crystal clear indication of structure and exactly how the writer wants to tell the story.

Again you would expect to pay 25% of the final agreed fee for this scene by scene.

So you’ve spent 50% of the total writer’s fee before a word of dialogue has been written.

This 50% sometimes gets broken down differently. If you want a premise or series pitch document to hawk round broadcasters this is a much simpler piece and you would normally expect to spend only 10% of the writer’s fee for this.

So the calculation here would be:

1. 10% for a premise or outline
2. 15% for the storyline
3. 25% for the scene by scene.

Assuming things are going well you will now proceed to a full script. This will usually go through several drafts until it is accepted.  At the point of acceptance, usually the issuing of a shooting script, you will pay the other 50% of the writer’s fee.

On the first day of principal photography you will be required, under the various agreements between the WGGB, PMA and the broadcasters, to pay an additional 100% to 115% of the fee as an advance in respect of all television repeat fees and other secondary uses – DVD sales, sales to other channels and overseas sales etc.

On top of this the writer/creator of a series will be entitled to a FORMAT FEE on every subsequent script written for the series by any author other than themselves.  This format fee is usually 10% of the highest fee paid to a writer on that season or series.

The format fee is a potential cash cow if you happen to be the author of a successful, large volume, long running series – especially if there are spin-offs.