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«Rights, Camera, Action! IP Rights and the Film-Making Process Creative industries – Booklet No. 2 Rights, Camera, Action! IP Rights and the ...»

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Rights, Camera,

Action!

IP Rights and the Film-Making Process

Creative industries – Booklet No. 2

Rights, Camera, Action!

IP Rights and the Film-Making Process

Rights, Camera, Action! – IP Rights and the Film-Making Process

TA B L E O F C O N T E N T S

PREFACE

INTRODUCTION

CHAPTER 1

Eye of the Needle – The Disciplines of Development

1.i Digging for Gold – the search for the perfect script

1.ii Passion and Eloquence – attracting funds for development

1.iii Buying Time – how to negotiate an option

1.iv The Big Jump - purchasing underlying rights

1.v Into the Void – commissioning a script

1.vi The Art of War – producers, writers and their agents

1.vii Development – the real stories CHAPTER 2 Financing Films – on the Merry-go-Round of Debt, Equity and Rights

2.i Sink or Swim – the trials of debt financing

2.ii Cutting the Cake – the basics of equity financing

2.iii IP Rights as the Most Strategic Source of Financing

2.iv Into the Rights’ Jungle – the film distribution agreement

2.v The Rights’ Jungle thickens – a strategic look at television rights CHAPTER 3 The Talent Maze – Rights and Engagement Terms

3.i Actors’ Rights – an uneven patchwork

3.ii Hollywood Stars – their agents and inflationary effects

3.iii In the Director’s Chair – author vs technician-for-hire

3.iv Licensing by Numbers – collective management and talent rights CHAPTER 4 Managing the Risk of Production CHAPTER 5 Crossing Borders – The Art of Selling and Co-producing

5.i. Weaving the Patchwork of International Pre-sales

5.ii The World is Not Enough – the role of the sales agent

5.iii The Producer – Sales Agent Agreement

5.iv Through the Pain Barrier – international co-productions CONCLUSION The Great Film Bazaar in the Sky?

ANNEX Glossary of Film Production Terms

ACKNOWLEDGEMENTS

Rights, Camera, Action! – IP Rights and the Film-Making Process P R E FAC E The World Intellectual Property Organization (WIPO) is pleased to present this second booklet in the Creative Industries series centering on the legal and financial complexities within the film industry, with a focus on the importance of strategically managing intellectual property (IP) rights throughout the main stages of film production.

The creative process and business models of film industries are being refined as new technologies are used to develop, produce, finance, distribute and market film productions. In fact the prevalent belief is that the business of making films has become more important than the actual film itself. Yet the coming together of notions of ‘art’, ‘culture’ and ‘enterprise’ is arguably common to cinematographic productions worldwide. The boundaries between the three have become increasingly blurred, to such an extent that the position of the filmmaker as creator and entrepreneur has strengthened.

The publication examines the various stages of the film making process – development (i.e. concept/idea, dealing with financiers); pre-production (i.e. underlying rights acquisitions, attaching key talent, dealing with agents; production (i.e. principal photography); post-production (i.e. editing, adding audio-sound, visual effects);

distribution; and exhibition. The filmmaking process faces specific circumstances anchored in the economic, social and cultural status of the national audiovisual sector, underpinned by the country’s legal framework governing audiovisual works.

So as to integrate creative cultural works into development policies and safeguard an industry that is considered a cultural asset, countries should expand on their efforts to protect and promote the interests of their national film industries. Together with the issues dealing with entertainment financing, accounting, marketing and promotion, distribution, and other matters relating to the management and operation of film production companies, the core issue not to be neglected is the need for a coherent and dependable national IP rights system.

Rights, Camera, Action! – IP Rights and the Film-Making Process The use of new technologies has encouraged independent filmmakers, especially those from developing nations to enter and compete in regional and international market places. However, there are still considerable challenges facing these filmmakers as they try to keep abreast of the transformation of the legal and commercial film environment. These challenges are explored thoroughly in this WIPO Publication.

The booklet was commissioned by WIPO and written by Bertrand Moullier and Richard Holmes, experienced international film industry professionals. The views expressed in the booklet are those of the authors and do not necessarily reflect those of the Organization.

Rights, Camera, Action! – IP Rights and the Film-Making Process

INTRODUCTION

This booklet is written from the perspective of the small-size film producer and/or entrepreneur. His economic success depends on matching ideas with talent, obtaining relevant intellectual property (IP) rights and using them to attract finance from commercial film distributors – and the altogether more optimistic prospect of rapt audiences leaving the movie theatre with a heartfelt laugh, a tear in their eye or a spring in their step.





In choosing this perspective, the World Intellectual Property Organization (WIPO) is merely reflecting the dominant reality of the film industry worldwide. Most readers will have some acquaintance with Hollywood, and those who know about its remarkable business model will probably agree that – rather than representing a worldwide norm – it is an almost entirely singular phenomenon, one intimately connected to the specific industrial history of the United States (US) and not reflective of other film making traditions elsewhere in the world: at the turn of the new century, most films in most places on earth are made by driven, dynamic, cultural entrepreneurs with a strong creative vision, an appetite for stories, dreams of cinemas packed to the rafters and almost no money of their own. This booklet is primarily written to educate those who aspire to membership of this spirited community whose efforts do so much for IP-based economic growth and cultural diversity all over the world.

Our choice of adopting the producer’s perspective is also largely motivated by our mandate to be as educational as possible about the intricacies of rights and the film production process, within the constraints of a short publication. Of all contributors to the making of a film, the producer stands closest to the heart of the process.

Like a skilled and overworked traffic warden, he does his best to direct traffic at the crowded intersection where talent, rights, money and dreams all meet and – if all goes well – ends up leading them in the same direction. In this unique position, Rights, Camera, Action! – IP Rights and the Film-Making Process the producer has to understand extremely well how IP rights may be used strategically to obtain production finance and attract the best authors, actors and other talent.

His insights into the process should be the insights of anyone genuinely interested in understanding how films come to be made and the dynamic role IP rights play in their creative and economic genesis.

One of the central topics of this booklet centers on the profound changes currently affecting the value of different rights in the global film industry. Our presentation of current shifts in the film value chain was primarily based on an analysis of the mainstream Western film industries and the trend affecting the film markets there.

A Western focus, as far as certain sections of the booklet are concerned, presents in

our view two distinct advantages for readers all over the world:

(i) It provides a useful insight into possible future value chain developments for producers in developing countries where film industry growth is strong and where cable, satellite and broadband connections are beginning to present consumers of film with more choice: what is happening in the US and Europe is also mirrored in many parts of Asia and will likely happen in most developing countries with a film industry in the near future.

(ii) Experience shows that – over a certain level of budget – wherever in the world a producer lives and works, he will need to reach out to the international film financiers’ community and will therefore need to acquaint himself with the global market for film rights, whose standards are those currently practiced predominantly in the West European and North American film-making arena.

Elsewhere, we have tried to be as general as possible, focusing almost exclusively on aspects of the film-making custom and practice which could apply widely across various regions of the world or, where appropriate, to point out differences.

As far as possible, we have tried to illustrate many of our analyses of how rights are optioned, bought, sold or licensed, by summarizing real life case-studies. These required the consent of the film producers, authors, and artists who were involved in the contractual arrangements, and we express our deep gratitude to those who gave Rights, Camera, Action! – IP Rights and the Film-Making Process freely of their time (a precious commodity indeed in the life of a film producer) to help us breathe life into this publication. In some cases, we were given permission to use specific figures, culled from real contracts. In many cases we chose not to use them, in part because we wanted to spare our sources’ blushes, but also because figures as they relate to the value of specific rights at specific times are mostly reflective of a particular film and are at best unreliable pointers to the average value of those rights across the board.

This publication is dedicated exclusively to rights and the interplay of rights in the making of feature-length cinema films. Our omission of other forms of audiovisual expression, such as the vast sector of programs made for television, is a choice dictated merely by our desire to convey a sense of the complexity of rights-based transactions in an audiovisual medium which engages the full range of rights, across the entire value chain. The story of how feature films come to be made is rich and intricate enough to deserve its own stand-alone publication. However, this exclusive editorial focus does not in any way suggest a lack of interest on our part in the rest of the audiovisual enterprise sector, and its own IP rights’ challenges and opportunities deserve to be explored in just as much detail.

The cinema, perhaps more so than any other art form, is a collaborative phenomenon. Whilst we have described the film producer’s role as pivotal, his own efforts are bound to be sterile unless he is able to engage and motivate the film’s talent, especially its authors and performing artists, on terms which will secure their enthusiasm and commitment. To bring about this creative chemistry requires the intuitive skills to enthuse others. It also requires a willingness to strive for balance and fairness in negotiations over the authors’ and performers’ rights and their remuneration. We hope this booklet will act in its own modest way as a helpful guide for the novice producer willing to walk this ethical path.

Bertrand Moullier With Richard Holmes May 2007 Bertrand Moullier is an independent audiovisual industry consultant based in London. From 2002 to 2005 he was the Director General of the International Federation of Film Producers Associations (FIAPF).

Richard Holmes is an independent film producer, also based in London. Amongst his successful films are two comedies Waking Ned and Shooting Fish.

Rights, Camera, Action! – IP Rights and the Film-Making Process CHAPTER 1 Eye of the Needle – The Disciplines of Development

1.i Digging for Gold – the search for the perfect script In film making, “Development” refers to the time and actions necessary to move from an idea to a completed script (or screenplay) ready to be filmed and a so-called “package” consisting of elements such as expressions of interest from one or more lead actors and the commitment of a director to the project.

The script is the most essential part of the development process. There are only very few films made each year without a completed script. A film by the renowned British director Mike Leigh, Naked, which won its main star an award at the prestigious Cannes Film Festival in 1993, was made using an element of improvisation: actors came to work in the morning, were given time to rehearse and – whilst they followed the director’s story structure – they would largely improvise their lines on the spur of the moment. Such movies are extremely rare however, and most critics would agree that only a masterful film director such as Leigh is capable of making an illuminating film using such improvisation.

So, most movies have a detailed script. If they don’t have one, they don’t have the faintest chance of attracting money from financiers to make the film. A script can be an original story, or it can be based on a novel, a factual book, an existing script for another film, a theatre play, a magazine article, or culled from somebody’s real life story, etc. The script itself is always an original creation to which intellectual property rights are attached. However, if it is not an original story but an adaptation of an existing creation, other intellectual property rights will be involved. These other creations are generally referred to as the underlying work or underlying material.



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