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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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As co-financiers of feature films, broadcasters generally bring a lot of bargaining power to the negotiation with the producer – they will typically attempt to acquire all broadcast rights beyond the primary transmission rights which fit in with their core business. In some cases, the broadcaster negotiating the acquisition or license may be operating several services, including pay-TV, free TV and even payper-view and video-on-demand and will be justified in trying to aggregate all these rights together to sustain its operations. In other cases, the broadcaster may be active in just one segment of the broadcasting value chain but may still want to buy out the rights to the other segments because – understandably – it does not look kindly on its commercial rivals getting the same film either sooner or later. The producer will generally want to negotiate for a limited license rather than an assignment of broadcasting rights. If the broadcaster wants to include different types of transmission rights into the same quoted license price, the producer may also insist that each use be valued separately and a market rate negotiated for each, to avoid a bundling of the value of IP rights into one bulk quote. If the broadcaster insists on taking transmission rights for broadcast services it does not itself own and operate, the producer may negotiate an obligation for the broadcaster to proactively license those additional broadcasting rights to third party broadcasters and to share the revenue with the producer from the licensing of those rights. Also, the agreement may provide that – in the event that the purchasing broadcaster fails to successfully license or sell the rights on to a third party – those unsold/unlicensed rights could revert to the producer after a preagreed period of time. This last clause can be very strategic as it helps prevent a warehousing of the rights by ensuring there are incentives for the fullest value to be realized across the range of broadcasting IP rights.

Rights, Camera, Action! – IP Rights and the Film-Making Process In some European countries governments have intervened in rights’ bargaining between producers and broadcasters, to level the playing field and ensure the opportunities for secondary rights to be fully exploited in due course. France has specific clauses in agreements between producers and broadcasters to that effect.

The broadcaster’s initial license is limited to two transmissions over a period of two years – thereafter the rights revert to the producer though the broadcaster has rights of first negotiation if it wishes to exploit the rights further.

Broadcasters may not make an equity (or co-production) investment into the film through their acquisitions’ department. These investments may only be made through a wholly-owned film production subsidiary, with separate staff, accounts and governance. This measure is designed to prevent a bundling or rights’ licensing and investment under the same roof, which the French regulator believes would concentrate bargaining power and give the broadcaster the opportunity to take control of all the revenue “upside” from the film. Additionally, single investments by a broadcaster’s film subsidiary may not exceed 50 percent of the production budget.

The broadcaster may only take a financial interest in one ancillary market for the film.

For example, if the broadcaster takes some control over the video/DVD rights, he will not be able to have any stake in the foreign rights, or vice versa.

In this chapter, we hope to have provided a few useful clues as to how producers may carve a path through the film rights’ jungle and get their films financed whilst also retaining a healthy degree of control – or financial interest – over exploitation.

The picture we have painted is that of an ever-changing value chain in which rights’ values are shifting along the fault lines left by technology breakthrough and changes in consumers’ expectations.

In the next section, we look at how producers find a way through the complex maze of relationships with the key talent involved in the making of the film.

Custom and practice and economic conditions may vary from one country to the next and no two film industries are exactly alike. However, all successful films have one thing in common: actors, directors, and other artists doing their very best to Rights, Camera, Action! – IP Rights and the Film-Making Process make the film work. For this prescription to succeed, the producer needs to be an inspired band leader, an exceptional listener and a fair negotiator.

Rights, Camera, Action! – IP Rights and the Film-Making Process The Talent Maze – Rights and Engagement Terms A successful feature film is a unique and singular coming together of individual talent, focused and coordinated towards the same creative vision. There are creative contributors in almost every single department of a film production unit. In a contemporary film, these range from make-up artists, costume designers, choreographers and story board draughtsmen, to special effects concept artists, art directors and directors of photography. And the list goes on.

Many of these artistic contributors require basic consent for the use of their work as part of the finished film as an independent copyrighted work. In this chapter however, we shall focus exclusively on two categories of talent whose contribution can most spectacularly make or break a film: the director and the actor. On the one hand, they are almost invariably the most prominent talent on any film set; on the other hand, the IP clearances involved in attaching them to a film are the most complex and sensitive, lending them a didactic value for the producer in his approach to all the other talent.





3.i Actors Rights’ – an uneven patchwork

Worldwide, the legal status of the actor varies considerably from one jurisdiction to the next. Some countries grant actors a comprehensive set of neighboring rights, which include the right of recording (fixation) of their performance in the film, reproduction rights, communication to the public right (broadcasting) and the right of “making available to the public” (pay-per-view, video on demand, etc.).

Many countries still accord virtually no rights to actors and performers, who are hired on film work purely as employees of the production, with no assignment or license Rights, Camera, Action! – IP Rights and the Film-Making Process being negotiated. In some countries – the US is the most salient example – although actors are not characterized as neighboring right holders, they benefit from powerful union representation, ensuring that the pay scale for non-stars is sufficient and securing further payments linked to the exploitation of the film: US screen actors, though signed up to a production as work-for-hire employees can look forward to minimum pay and a complex scale of residual payments administered through the film studios (or other signatories to the union agreements) and rigorously policed by their union, the powerful Screen Actors Guild.

In many other countries, however, the lack of neighboring rights, combined with weak union representation has left screen actors vulnerable in contractual and economic terms. The International Federation of Actors has been campaigning actively to rectify this imbalance by introducing statutory neighboring rights in primary legislation across the world.

The European Union has adopted harmonizing legislation which makes it binding for all its member states to recognize neighboring rights for actors and performers in national law and to ensure they are enforced accordingly.

In many European jurisdictions, the law also builds in a presumption that these neighboring rights are fully transferable to the film’s producer at the point where the actor signs a hire contract. This presumption may be qualified or not: for example, it may be rebutable, meaning that the presumption applies unless the performer proactively specifies that he is unwilling to let his rights go. Even if it is a straight legal presumption and non-rebutable, most European legal systems will provide that the condition for the full transfer is remuneration.

In the French intellectual property code (L 121-4), the condition for the presumption of transfer is that remuneration should be offered by contract and that any advance remuneration should be treated as a minimum guarantee against a share in exploitation revenues from the finished film. Consequently, French actors’ contracts, whilst specifying remuneration against a buy-out of all neighboring rights for their entire legal term (50 years from first release), also provide for supplementary remuneration generally expressed as a fixed sum for each cinema admission above a certain threshold.

Rights, Camera, Action! – IP Rights and the Film-Making Process Moral rights are also an issue for actors worldwide, as legislations vary in the extent to which they grant those to creative contributors other than the authors of the film and the underlying works. However, even when working under a jurisdiction which does not grant him a moral right, the actor may be capable of ensuring the protection of his own image and a degree of approval of the use of it as part of the promotion for the film.

3.ii Hollywood Stars – their agents and inflationary effects

For film producers living and working in the Anglo-Saxon world, the ability to attract movie stars to a project has a significantly positive impact on the valuation of the IP rights in the film by potential buyers. It is therefore an essential plank in the strategic deployment of the producer in search of financing for his project.

However, the challenge of attracting a bankable lead to a low-budget project is considerable and becoming more daunting with each passing year.

One of the reasons is that many of the stars from countries such as Britain, Canada or Australia are also pursuing Hollywood careers. Examples of Hollywood luminaries with non-US Anglo-Saxon passports have included Christopher Plummer (Canada), Anthony Hopkins (UK), Russell Crowe (Australia), Naomi Watts (Australia). Known or unknown, a growing number of actors from these countries also have agents in Los Angeles and are members of the extremely powerful Screen Actors Guild, a US union which insists on extending jurisdiction over its members even for productions where hiring is taking place outside the US.

This relative “Hollywoodization” of Anglo-Saxon actors outside the US creates substantial obstacles for lower-budget film makers aspiring to cast lead actors. On the one hand, stars willing to appear in a low-budget movie can make a huge difference to the perceived value of the project. Their commitment to the film will often be the most significant factor in helping raise finance to meet the target budget. On the other hand, popular actors who have appeared in Hollywood films have what agents call a “quote” meaning a standard rate for the films in which they, are willing to appear, based on their perceived attractiveness to the audience. The “quote” however, is rarely affordable for movies with budgets under US$5 million.

Rights, Camera, Action! – IP Rights and the Film-Making Process The producer’s two main assets in persuading a star to work for a price well under

the quoted one are:

(i) the arresting quality of the story and screenplay;

(ii) current shifts in the way leading actors tend to manage their careers:

there was a time when stars took few risks that may have tarnished their heroic image with the public and showcased their true “range” as actors.

Today however, taking such risks is part of most leads’ strategies to acquire credibility with newer, younger, discerning audiences by accepting roles that do not necessarily fit their standard screen persona.

Witness Tom Cruise as the deranged sex coach in Paul Thomas Anderson’s LA saga Magnolia, or Bruce Willis’ down-on-his-luck boxer in Quentin Tarrantino’s Pulp Fiction. Two films distinctly out of the mainstream, directed by young film makers and with budgets well below those two stars’ normal market rate. In these examples, both stars reaped substantial career dividends from laudatory reviews, even if their take-home pay was nothing like their usual rate.

So, having managed to attach stars to low-budget projects, how do producers negotiate a workable package with them?

Let’s look at a film which came out in 2003, won critical acclaim throughout the world and turned in a very respectable commercial performance in most countries where it was distributed.

The film is called The Girl with the Pearl Earring. Based on the acclaimed novel by Tracy Chevalier, it imagines a simmering tale of erotic tension, laced with class tension, behind the painting of the eponymous portrait by Vermeer of Delft, perhaps the most celebrated of the Dutch 17th Century master painters.

The film was a labor of love for British producer Andy Patterson and his writing partner Olivia Hetreed. The US$11 million project was many years in development before cameras finally rolled. Like many ambitious independent film projects it demanded enormous vision and tenacity from all involved. However, for Patterson and his team, the result Rights, Camera, Action! – IP Rights and the Film-Making Process was worth the wait: when the film finally came together, they were lucky enough to be able to attach both British star Colin Firth (Bridget Jones, Love Actually) and the rising new female sensation Scarlet Johanssen (Lost in Translation, Match Point).

At the time, both actors were riding high on the successes of recently-released films. Both had agents in the US whose quoted prices were well over the affordability line for this modest budget.

Both actors accepted the producers’ offer to be remunerated for their respective parts on the basis of an advance payment worth only a fraction of their quote.

However, having accepted such a substantially lower offer, the actors also had two

important demands:

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