MULTIMEDIA PRODUCTION AGREEMENTS

AND RIGHTS CLEARANCES:

Practical and Legal Considerations in the United States(1)

by Paul D. Supnik

This paper was originally presented at the annual meeting of the Union International des Avocats in September 1994, at Marrakech, Morocco.

Links to other web sites provided as a convenience. No responsibility is assumed for the content of web sites referenced. Their inclusion does not necessarily constitute an endorsement of the linked cite, nor does the inclusion here of a reference to a web cite or a link to a webcite represent an endorsement by web cite referenced or its sponsors. Comments are generalizations and may not apply to every situation. Matter included here or in linked websites may not be current. It is advisable to consult with a competent professional before relying on any written commentary. No attorney client relationship is established by the viewing, use, or communication in any manner through this web site. Confidential information should not be sent by e-mail or otherwise through the internet. It may not be secure, may lose its confidential character and may lose its ability to be protected by the attorney-client privilege. Paul D. Supnik is a member of the State Bar of California and not of any other state or country. The material set forth herein is not for the purpose of soliciting any engagements where to do so would be to offend or violate the professional standards of any other state, country or bar. This web page Copyright 1994, 1996 by Paul D. Supnik
 
 

INTRODUCTION





A production agreement for a multimedia work has elements of a production agreement for a motion picture, elements of a production agreement for a recording contract and elements of neither. Unlike the motion picture script, the length is not 120 pages. It may be more than 10 times that size. It may or may not have an ending, it may have multiple endings, it may have a beginning but not an end, it may have dead ends. But it may not require the complicated coincidence of vast numbers of individuals coming together at the same time for a costly shoot. A live shoot may involve a single actor working with a blue screen. Financing may not be dependent upon finding a foreign distributor to provide bankable guarantees in the same manner as a theatrical motion picture. The cost range for the projects might be closer to resembling that for a recording session and not for a major theatrical film. And royalties are likely to be subject to reserves and deductions for returned goods. The lawyer in structuring an agreement for the production of a multimedia work then may go back to the traditional elements of entertainment industry agreements to consider what must be acquired, what is to be licensed and how and when cash flows to the producer.

If we assume that the producer is the individual or entity having overall responsibility for creating the work, what are the relations that must be explored and with whom are contracts required? Like the motion picture producer, the producer of a multimedia work may be a financier or may have more creative input in the property. Typically, the project is sold to a hardware manufacturer or software publisher which turns it in from what might be analogous to an answer print to manufactured and packaged products which it then has distributed through various distribution chains.

The deal with the distributor can be in-house or can be outside. The anticipated costs of production and the clout of the producer may determine how close the producer's team must be working with the distributor. Investments exceeding, $2,000,000 in a project are likely to be treated differently than those with a $200,000 budget.

There is an exceptionally wide range of material that can be placed within the range of a CD. That can consist of an large number of high quality visual images, an enormous amount of text, a limited amount of animation, and a small amount of full motion video.

The producer must develop a business plan with budget projections that at least attempts to establish time lines for the completion and delivery of the project. Based on projected delivery dates, the lawyer at least has a starting place to understand how to structure the agreement. If the producer is seeking financing of the project, it must seek advances from the distributor based on specific delivery times. The lawyers both on the side of the distributor, and the producer should be concerned about seeing that the project is adequately funded for each stage of development.

The producer, developer or software provider will be making a number of different arrangements and contracts for the multimedia project being developed. There will be a deal with a distributor, typically a hardware company or a software publisher, to distribute the finished product. There will be clearances and releases for various rights that may need to be acquired. For original material, agreements need to be made with writers, composers, actors, creative developers, and software engineers. Talent agents have begun an active roll in learning the ways of interactive media, and will be involved in the negotiation process for actors with name recognition. Talent agents have also sought out connection within the realm of multimedia authors and developers.
 

Distribution Agreement With Producer
 

The producer may seek to obtain an agreement with a distributor in several different forms. The agreement may be an in house agreement whereby there is substantial control over the project by the distributor. The distributor that advances money will want substantial control and liaison over the product that is being produced and it is likely to be in the interest of the producer as well to have a product which will be highly saleable.
 

The agreement may be structured similar to a pickup deal in the motion picture arena where obligations are established in advance, and the producer has a distributor on delivery. The deal may be structured in a way comparable to a record deal where a budget is provided for the project and there are incentives for keeping within the budget and disincentives for going above the budget. A completed project may be licensed for distribution with a substantial advance against future royalties.
 

A production/distribution agreement may provide for production advances for the development of the project followed by recoupment from royalties. It then is important to define the "milestones" by which commitment for payments are to be provided by the distributor, similar to milestones in motion picture production of "start of principal photography" and delivery of the negative or answer print. For example payments may be made upon budget approval and schedule. Delivery of a script and design specifications may be another phase. Approval of production procedures, delivery of final art work, delivery of audio materials, delivery of Alpha tapes and delivery of Beta tapes and delivery of masters may be additional milestones upon which to base additional payments.(2)
 
 
 

In order for the producer to receive the balance of payments owed, the producer should pay careful concern to the delivery items demanded. Are the delivery items really necessary for the distributor? Can the producer realistically provide the items requested in a timely manner? Has or will the producer implement sufficient controls within its organization to make sure that all delivery items will be delivered?
 
 
 

Who gets the rights? -- Producer or Distributor
 

While the producer will want to keep all rights in any new intellectual property created, including the work, the characters and the trademarks, the distributor may demand ownership of everything and the producer then may be left only with the source material and a potential royalty stream for the term of the agreement, perhaps "in perpetuity". The distributor, if it is putting up a substantial sum may demand more, including rights of first refusal on future works based on source materials of the program.
 

The producer may want everything about the work, beyond the creative aspects. It may want to be the copyright proprietor, will require that the work be a work made for hire and seek an assignment of all elements of authorship that cannot be acquired by a work for hire agreement.(3)
 
 
 

Platforms

In any production/distribution or license agreement, the granting of rights must be carefully defined. What are the platforms on which the rights are to be granted? How far do they extend? Keep in mind the rapidly changing platforms which now exist that were not even considered just a few years ago. Examples of current platforms include CD-ROM which might be for use with either computer or television, CD-I which is designed for use with television, cartridge games such as Nintendo or Sega, and various on line systems. Some of these platforms will be interacting with existing media such as home video and television. In the United States, litigation is common each time a new type of media is developed and prior agreements do not provide a specific grant for that unknown media. Consider not only the media of reproduction but also the technologies and methods of distribution. The term "electronic publishing" is also a considerably broad term, but the probably should be defined as well. The term "exploitation" tends to be a rather broad term and may be helpful in broad definitional grants. Also consider uses which might not be directly involved in multimedia project per se, but when the multimedia project is in some manner broadcast over television or transmitted by cable or telephone, perhaps for specific purposes. Advertising and promotional uses of the material must also be considered in acquiring rights.
 

Merchandising and "Ancillary rights"
 

There should be some discussion about what has been referred to in the motion picture and television world as "ancillary rights". What if one party or the other wants to exploit merchandising rights such as a book, t-shirt, or even motion picture? Should there be joint approval? Who should have the rights? The producer may say that its creative work created the interest in developing a motion picture from the work. On the other hand, the distributor's perspective is that the world would not have known of the work without its extensive distribution and promotion.
 

Territory
 

The producer may want to limit the territories granted in any agreement and try to sell the territories directly, particularly if the distributor is not equipped to distribute on a world wide basis and simply wishes to stockpile all rights it can obtain. Royalties for subdistribution tend to be half of the royalties for distribution within the United States.
 

Advertising Committment
 

If the producer must give up virtually all rights in the project, the success of the project in significant part will depend upon an awareness of the product. One aspect that the producer may want to obtain, but may not receive is an advertising and promotion commitment upon certain conditions being met. The distributor, on the otherhand will not only want to avoid any such obligation of minimum advertising commitment, but will want to be able to avoid the necessity of distributing the project at all.
 

Infringing Activity
 

The agreement should consider who has the right to stop infringing activity and who pays for this activity. It may usually be the distributor that has the greater interest in seeing that products bearing its marks are not infringed.
 

Responsibility for Rights Clearance
 

Normally rights clearance is an area and obligation assigned to the producer. But in an analogy to the television arena, where there are generally fixed license fees, the concept of a so called "breakage fees" exist. When the television network wants particular talent on the screen and the costs are too high, the network will pay a "breakage fee" to get the better known talent on the screen and improve the production values in that manner. Consider negotiating and leaving this as a possibility, especially where the licensing of outside source materials, talent and "marquis value" could become important.
 

The Distributor will require that there be producers errors and omissions insurance. Errors and omissions insurance applies to violations of copyright infringement, trademark infringement, defamation, rights of publicity and rights of privacy. If the distributor is providing funding for the development of the project, the distributor will want other types of insurance as well. These may include fire, theft and vandalism, and workers compensation insurance. If insurance is demanded under a contract, keep in mind that not only the minimum level of insurance should be specified, but also that a sufficiently low deductible be specified that can be met by the party who is obligated to purchase the insurance.
 

Royalties
 

Royalties for product is generally based on the wholesale or retail sales price of the software distributed. As in the record industry, there is usually a provision for reasonable "free goods" and promotional copies which are free from royalties. The producer may seek to place a limit on the percentage of free goods without permission. The fiction of a "breakage" allowance and a packaging deduction from the music industry does not appear to have become the norm. However, royalties are ultimately paid for sales at the retail level and not for returns as is the case in the record industry. For this reason, the distributor will set reserves for returns, but these should be for limited periods of time.
 

Frequently, multimedia products are bundled with hardware and in other ways. When this is done, the sales price of these products tends to drop, and particularly when bundled with other software, there is the question of allocation. Should all titles be allocated on an equal basis? Should more important titles be given a different allocation? This has been an issue in television syndication of motion pictures, and many years ago when theaters in the United States would have "double bills" showing two features for a single admission price.
 

One method of multimedia distribution which is now being tested is rental such as video stores. Blockbuster Video in the United States is experimenting with that now in the San Francisco area. How are royalties to be treated?
 

Audit rights
 

Restrictions in an audit to certified public accounts (CPAs) is generally acceptable, however, a limitation as to a major accounting firm can prevent the reality of an audit from occurring because of the expense. In the motion picture industry, there are some very well known auditors, that were formerly associated with major accounting firms that now practice as boutiques.
 

Is there a built in statute of limitations in the audit provision? This too can be burdensome on the producer, particularly if it is short. It may take a considerable amount of time to determine whether it is even worthwhile to conduct an audit, and that may limit the ability of an audit to be properly conducted. There may be also a statute of limitations as to bringing legal action in connection with the accounting, which may seriously limit the time normally permitted for filing breach of contract actions and present cumulative breaches to make it worthwhile to litigate.
 

Representation and Warranties and Indemnities
 

Representations and warranties which are typical in the entertainment industry are appropriate in multi media. Commonly the party providing material warrants ownership and that the material is free from infringement. It is important for the producer to get warranties from the creator of rights that they are not infringing of copyright. It should reasonably be within the knowledge of the creator whether or not he or she copied during the course of creating the work, and this acts as some incentive for the creator to avoid copying and the resulting inherent problems. More difficult are warranties and representations regarding other issues such as right of publicity and privacy and defamation. The creative representative may argue that the producer is in a better position with its legal staff to determine whether or not a work is defamatory, violates privacy or privilege.
 

The distributor will want a warranty that the producer has paid its creative people so that they cannot contend that there is no assignment of copyright or work for hire as a result of failure of consideration.
 

Indemnities are common areas of dispute. The distributor will want to have the producer (and the producer will in turn want to have other creators of material) indemnify it for not only a judgment for a proven infringement, but for the cost of defense for violation of its warranties. In the event of an infringement claim, what procedures are to be used? Who is to conduct the defense? Can the distributor withhold royalties in the event of a claim?
 

Arbitration
 

Arbitration clauses are used in the entertainment industry, and certain types of union and guild disputes are regularly decided by way of arbitration. In determining whether an arbitration clause is appropriate, one must think of what side of the fence the client is likely to be on in the event of a dispute. A creator licensing a property to a producer may not want an arbitration clause if information may be needed from the distributor to prove its case. In the United States, broad discovery provisions are available in a lawsuit, but not normally in arbitration. However, the parties can specifically agree to permit discovery within the context of arbitration.
 

Lawyers in the United States are most familiar with arbitration under the American Arbitration Association, a private association which handles the vast majority of arbitrated commercial disputes in the United States. AAA as it is known, publishes rules for commercial arbitration. AAA engages in arbitration, mediation and fact finding. A typical arbitration clause specifies binding arbitration under AAA rules of commercial arbitration, may specify the location for the arbitration forum, and may discuss whether discovery will be permitted. The party filing the arbitration pays a fee related to the amount of the demand.
 

The arbitration clause may also attempt to get parties to consent to in personam jurisdiction of the federal and state courts where one party is located. One U.S. Supreme Court case in the franchising arena that would appear to suggest that this type of clause is permissible, at least where there had been a real and continuing relationship with between the party in the forum state.(4)
 

Forum and Choice of Law
 

Each party to an agreement is likely to want to have the location of any hearing, whether that be arbitration or court proceeding in their backyard, and applying the law that they are familiar with. In the United States, that generally means specifying a law of a particular one of 50 states, which law may differ from state to state. Attorneys tend to be hesitant to permit the law of the other state, probably more out of concern that they are not familiar with the law of another state just as one would not be familiar with the law of a different country.

Limitation as to Monetary Relief
 

In the motion picture area, of vital concern is a limitation on the extent of rights which may be asserted in litigation against a producer or distributor of a work. In a motion picture which involves the collaborative effort of so many parties and involves also the intricate financing of a number of entities, it is vital that the risk of stopping production or distribution by a court cannot be tolerated. Therefore, rights to equitable relief, such as seeking injunctions are bargained away in contracts. That concern is not quite as great in the multimedia area, but are still of concern. By way of example, what happens if a credit is left off a CD ROM. What if the credit is incorrect or the credit not placed according to contract? Must the printing of the CD ROM be redone? Must the promotion for the work be redone? Must the CD ROM be repressed? It may be that these concerns are less in the multimedia area. Nevertheless, the producer and distributor will want to try to use this type of clause to prevent the risk that distribution might have to be halted. Thus, inadvertent omission of a credit might not give rise to injunctive relief. However, the lack of injunctive relief does not mean that damages are not possible in the United Starts. By way of example, a court has recently awarded some $3,000,000 for wilfully leaving off a company credit on a motion picture distributed outside of the United States under Section 43(a) of the United States trademark law, the Lanham Act.(5)
 
 
 

Clearances
 

Typical rights which might be acquired in a multimedia project are somewhat different than other projects in that it is difficult to identify what the rights are, their source, and the potential for rights which must be cleared. The producer will want to take adequate time to clear any underlying rights in connection with a project. Some general clearance guidelines are the following. Understand what the rights are that need to be cleared. It may be that more rights are purchased than needed. It also may be the case that what the producer thinks has been cleared has not been cleared. For example, the master use of a sound recording may not include rights in an underlying musical composition. Permission by the copyright proprietor may not result in permission to use the picture of a performer as the leading feature which sells the product. Rights should attempted to be cleared at the earliest possible time. Once the product is substantially developed, the cost for removal of the material becomes more costly, and the bargaining power in deciding whether to use the material becomes weakened. Try to use brief standardized clearance agreements. They may not be accepted but they can help get all elements put together quicker. Try to seek clearances from single source. Many companies are stockpiling and creating libraries of material for CD ROM use because the clearance costs and problems in the multimedia area can be horrendous. Have a backup plan to either use original materials or substitute materials when the big studio says no to your clearance requests. It is easy for a large organization to prevent your use of important clips and other materials. More than one project has had to be scrapped for the failure of a studio to cooperate, at least at a cost within the budget of a project. Finally as a housecleaning matter, use outlines, grids and ring notebooks to keep track of the rights so that you can be on top of the status of clearance issues.
 

Title
 

A title search should be done to determine if there is a confusingly similar title or mark which is likely to cause confusion. From the United States perspective, common law uses of other titles can create as much a problem as registered marks. Usually a search is made of registered marks, particularly as to international classes 9 (which includes videos and sound recordings), class 16 (which includes publications), and 28 (which includes games). The common law search may include titles of various publications. Under common law, the title of a work may acquire protection if it has obtained secondary meaning, so that the public associates it as a unique source or coming from a single production entity.
 

Trademarks
 

The production company will want to make sure that it has rights to use particular marks in several situations. The first is where it is obvious that the public would think that there is sponsorship, endorsement or a link between the owner of the mark and the usage made on the multimedia product. An example would be the use of a cartoon character in the format of a video game. Both the name of the character and images of the character may be trademarks requiring licensing. Trademark licensing in the United States requires control by the licensor of quality. That means that some mechanism must be established to determine that the multimedia product meets the standards required by the trademark proprietor. Depending on the trademark, those standards may be very high and limiting the nature of what can be done with the property in multimedia product. For example, a corporate owner might not want its trademark associated with any goods using inferior products, or inferior software that is bereft with bugs. And the corporate owner might not want to be associated with any software whose contents is found to be objectionable by any significant or vocal segment of the community. Aside from normal corporate needs, the corporate proprietor also wants to maintain quality control to protect its mark. Courts will not protect a trademark that is a naked license, and the failure to either have a quality control provision in the license or to actually exercise quality control leaves enforcement of the trademark in a court vulnerable to attack.

Copyright
 

Licensing of copyrighted material takes various forms depending upon the work being licensed. There are instances when the producer will not be able to license the copyrighted work but may have the opportunity to rely on the defense of fair use. It is not the best, and probably should be used as a last resort. The doctrine of fair use has been codified under the U.S. Copyright Law.(6)
 
 
 

Music
 

Music must be licensed in a multimedia work. In the United States, there is a provision for compulsory licensing of cover versions of a work by paying a mechanical licensing fee set forth in the Copyright Act. However, it is likely that a CD for a multimedia work is not akin to a phonorecord of the type contemplated under the statute, but rather requires a synchronization license as would a motion picture. Synchronization licenses may be obtained from the music publisher. Many music publishers have delegated this task to the Harry Fox Agency. A telephone call to the Harry Fox Agency might be used to determine if they have the rights. Music publishers often have their rights handled by the Harry Fox Agency in New York(7)

Another source for clearing rights is The Clearing House Ltd.(8) This organization is in the business of clearing rights to musical compositions, and regularly does this type of work in connection with obtaining rights in the television and motion picture industries.

Other clearance issues in connection with music deal with performance rights. A multimedia work is generally not intended for use in connection with exhibition in theaters. However, issues may arise is there is anticipated a use for the video at any place where the video is displayed to more than a small circle of friends, under the copyright, which defines public performance. Generally, however, it then becomes the venue where the work is played that must deal with the collecting societies in the United States, primarily ASCAP, BMI and SESAC.

Another music clearance issue might be tied either to the personalities who sang the music. If the work is not an instrumental, and a famous singer is involved, must rights be cleared? If it is the name or likeness of the celebrity that is used to sell the multimedia work, rights of that person should also be cleared.
 

Photographs
 

Photographs are always a concern from a copyright perspective, primarily because they are often used in large quantities, making clearance difficult. That can be of great concern in a multimedia project where the author wishes to have a great number of photographs used, all from diverse sources and with unknown origins. As a practical matter, it may be possible to go to various companies which specifically engage in the licensing of photographs. Problems which exist in the United States are determining whether or not the works are subject to copyright. There are some guidelines in the United States that are helpful, which might not be present in other countries. The first issue is the copyright notice. The copyright notice(9) under the 1909 Copyright Act was required to establish copyright in a work, and the failure to include a copyright notice upon first publication resulted in the work falling into the public domain. The 1976 Copyright Act modified this slightly so that in the event a copyright notice was left off a work, there were saving provisions which if adhered to would avoid the work going into the public domain. However, publication with notice no longer established copyright. Rather, it then become fixation in a tangible medium of expression. The 1989 Berne Convention Implementation Act then did away completely with the requirement of copyright notice. Today, the term of copyright in a work is a maximum of 100 years for certain types of works such as posthumous works, 75 years for works made for hire, and for works which were subsisting at the time of the 1976 act which was effective in 1978 and life plus 50 years for works created after the act. Nevertheless, determining what is and what is not subject to copyright can still be a considerable task.
 

Publicity rights
 

Much has been said recently about the rights of publicity which exist in the United States, but may not have been as developed in other countries, at least to the extent that they have been developed in the United States. Examples given are frequently tied to the use of a celebrities name or likeness used in a commercial or for merchandising purposes. For example, the use of Bette Midler's name in a ford commercial resulted in a $400,000 judgment, and Tom Waits received over a million dollars when not even his own voice, but a simulated groveling voice which sounded like his was used in connection with a commercial. In addition, the Elvis Presley estate has vigorously defended his posthumous rights in publicity.(10) There is no nationwide statute concerning rights of publicity and rights of publicity are the subject of state law, enacted on a state by state basis. Some states apply common law developed from the individuals states and borrow from other states. Other states have enacted specific legislation. Of particular interest are California and New York. California has Section 3344 of the California Civil Code which provides extensive protection in addition and cumulative with any other existing common law protection. It provides for damages, profits of the defendant, treble damages and attorneys fees to the prevailing party. New York does not have a right of publicity per se, but has a privacy statute, in Sections 50 and 51 of the Civil Rights Code. That statute specifies that one cannot use anothers name or likeness in connection with advertising, but its use is limited. Even the California statute has considerable limitations concerning for example, television programs, seeking to protect and recognized the protections of the First Amendment of the United States Constitution to avoid the use of these statutes preventing and chilling the ability to do stories about famous people. Also some statutes and the common law limit the right of publicity ether to ones lifetime or when the use was exploited during the lifetime of the celebrity.
 

Life Story Rights
 

When a motion picture or television project is made dealing with the circumstances and events of individuals lives, there is often an attempt to acquire "life story rights". This may happen in the context of a multimedia project. Typically the type of rights which are acquired are waivers of rights of publicity and privacy, and a release from defamation which may occur in fictionalizing the story in the project. For the most part, there is no defamation for the deceased, nor is there a right of privacy that may be asserted by the heirs of the deceased in more than a few minor circumstances. Thus, "life story rights" generally need not be acquired from heirs. However, in the event that the story not only deals with the particular individual involved but deals with those around the person, either by inclusion or omission in a particular project, it may be desirable to acquire such rights or at least some document that purports to acquire those rights.
 

The typical situation where rights of publicity are applicable is either where the use of a celebrities name or likeness is used as a product endorsement or to sell product. For example, the use of a celebrity's name on a poster or an article of clothing. It generally drives the consumer to purchase the product because of the celebrity's likeness on the product. More difficult is where there is something more than the product that is being sold. Some rights holders have tried to broaden the scope of the right of publicity by asserting uses that probably the right should not attach. From a policy perspective the use of a right of publicity to stop a biographical material on an individual cuts too deeply in the inherent rights of the public to know, as embodied in the First Amendment of the U.S. Constitution. This is a very significant right and significantly curtails the scope of the right of publicity.
 

Clip Clearance, Unions and Guilds
 

Multimedia works may wish to use motion picture and television clips from various sources. This may require clip clearance, and if a number of sources are used, the cost for clearance may be very high and make the project unworkable. Generally, it is not simply a matter of going to the copyright proprietor or producer and asking for clearance. The reason is that the producer most likely, for United States projects then has an obligation from prior contractual commitments to various unions and guilds to pay various types of residual or reuse fees. Not all production companies are signatories to the unions and guilds. Not all projects are made under the unions and guilds, but the majority of highly visible projects are. Depending upon when the project was made may help determine to what extent obligations exist.
 

The actors union primarily for anything created on film is the Screen Actors Guild. It has jurisdiction over filmed television shows as well as theatrical motion pictures. AFTRA, or the American Federation of Television and Radio Actors has jurisdiction over matter which is initially videotaped, in general. The Directors Guild of America covers directors, their assistants and certain others. The Writers Guild of America, west(11) has a one page interactive agreement.
 

The policies of each of these unions with regard to multimedia is just developing. There are two situations that must be dealt with with the guilds. The first is where the material involves clip clearance. In that situation, the common approach is to analogize the situation to clip clearances for motion picture and television uses. There can be negotiation with the guild as to the nature and kind of usage, budgets, whether the clip is featured and other factors.
 

The second set of guild issues arise in producing multi media works is the creation of new new material. There, the guilds are beginning to develop materials and policies. Of particular interest is the agreement which has been prepared by AFTRA. It provides a complete and lengthy collective bargaining agreement for actors working in he multimedia genre. If actors are members of AFTRA, they must also abide by the multi media agreement. There is encouragement to participate and come under the guild's jurisdiction. The advantage to using guild members is that there is likely to be name recognition of the parties used, and from the guilds point of view, the members of the guilds are more likely to be professionals.
 

The Screen Actors Guild known as SAG(12) does have a Standard Interactive Media Agreement which essentially demarcates jurisdiction between AFTRA and SAG, and makes the SAG television agreement apply to interactive, which in turn sets minimum scale wages. The normal jurisdiction of SAG has traditional been for filmed entertainment as opposed to taped entertainment. It also provides for a contribution to pension and health plans a percentage of compensation paid to performers. By way of example, a day performer rate is currently $504 and the pension and health contribution is 12.65%. SAG is in the process of preparing a codified agreement pertaining to the interactive arena.
 

The American Federation of Television and Radio Artists (AFTRA)(13) has a fully completed codified agreement pertaining to the interactive area.
 

The Directors Guild of America (DGA)(14) has been working on a case by case basis with multimedia producers. The guilds may need to be dealt with both in clearing rights for existing materials as well as for new projects. For existing materials, supplemental market usage payments will need to be obtained. This is similar to the situation where materials are used in connection with a video cassette. That may depending on whether the materials is used in the context of other things. On new materials, the guilds tend to be negotiating with the producers on a project by project basis. They will look at the cost of production. Directors compensation by the DGA might be negotiated like a feature film with a flat fee for deliverable dates and post production. Royalties might be the subject of individual negotiation and tend to be based on the role of the director in the project. There may be a difference between blue screen and live action. Negotiations for directors, as well as unit production managers or assistant directors might be based on the budget for the project. The interactive producer would not need to become a regular signatory to the Directors Guild. The special agreement may reference several provisions of the basic agreement. The Basic Agreement is applicable in the United States and Canada if the director is from the United States. The agreement becomes applicable anywhere in the world if the producer takes the director on location. Of particular interest are Articles 18 and 20 of the Basic agreement of the 1990 agreement, and 1993 version. Also of interest is the tape agreement, that is where a television show is done with tape.
 
 
 

1. © Paul D. Supnik 1994

2. Alpha testing is generally in house testing on the system, while Beta testing is testing by actual users of the program. Alpha tapes and Beta tapes are the program materials submitted at the completion of these testing phases.

3. A Work Made For Hire agreement is unique in U.S. copyright law. In addition to a situation where a real employment relationship exists, the United States copyright law provides for creating work made for hire relationships in limited circumstances typically for certain types of specified collaborative works where aspects of the work are commissioned. One of those types of works is an audio visual work. The requirements are specific. There must be a writing stating that it is a work made for hire. The writing must be signed by both parties. Recent case law suggests that the writing must be signed before work is commenced, and one case even suggested that perhaps a work made for hire agreement must be signed even before conceptual work is undertaken. For this reason, it is common for such agreements to also include a provision that there be an assignment of copyright if the work is not construed as a work for hire.
 

Copyright Act Definitions, 17 USC 101
 

As used in this title, the following terms and their variant forms mean the following:

...





"Audiovisual works" are works that consist of a series of related images which are intrinsically intended to be shown by the use of machines or devices such as projectors, viewers, or electronic equipment, together with accompanying sounds, if any, regardless of the nature of the material objects, such as films or tapes, in which the works are embodied.

...

A "work made for hire" is--
 

(1) a work prepared by an employee within the scope of his or her employment; or
 

(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a "supplementary work" is a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwards, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes, and an "instructional text" is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities.
 

A "computer program" is a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.
 

17 U.S.C. 201

(a) Initial Ownership.--Copyright in a work protected under this title vests initially in the author or authors of the work. The authors of a joint work are coowners of copyright in the work.
 

(b) Works Made for Hire.--In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.

...





4. Burger King v. Rudziewicz, 471 U.S. 462, 85 L.Ed. 2d 528, 105 S. Ct. 2174 (1985).

5. "Any person who, or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which --
 

(1) is likely to cause confusion, or to cause mistake, or to decide as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
 

(2) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

6. 17 U.S.C. 107 Limitations on exclusive rights: Fair use

Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include--

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.
 

7. (212) 370-5330.

8. 849 S. Broadway, Suite 760, Los Angeles, CA 90014, (213) 624-3947.

9. ©, the name of the copyright proprietor and year of first publication.

10. An excellent history of the rights of publicity may be found in the lengthy court opinion in Elvis Presley v. Estate of Russen, 513 F. Supp. 1339 (DNJ 1981).

11. The Writers Guild of America, west, 8900 Beverly Boulevard, Los Angeles, California 90048, (310) 550-1000.

12. 5757 Wilshire Boulevard, Los Angeles, California 90036-3600, (213) 549-6847; fax: (213) 549-6801.

13. 6922 Hollywood Boulevard, Los Angeles, California; (213) 461-8111.

14. 7920 West Sunset Boulevard, Los Angeles, California, 213-289-2000.
 


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Paul D. Supnik
Attorney at Law

Domestic and International Copyright and Trademark Law;
Motion Picture, Television, Publishing, Media and General Entertainment Law;
Multimedia and Internet Law; Licensing;
Related Litigation