Entertainment & Business Law Services - Sisto

One must first differentiate between an agent and a manager – they are not the same. According to the California Labor Code, an agent (or agency) is “a person or corporation who engages in the occupation of procuring, offering, promising, or attempting to procure employment or engagements for an artist or artists.” So, the agent’s mandate is to find work for the talent. A talent manager’s mandate, by contrast, is to “counsel or direct artists in the development of their professional careers”. Whether or not assuming the role and mandate of an agent is regulated depends on the jurisdiction. In California, the California Labor Code and Code of Regulation (Title 8) regulates talent agency and prohibits anyone from assuming such a role or mandate “without first procuring a license therefore from the Labor Commissioner” (§ 1700.5 California Labor Code). The same is NOT true of talent management, which is an unregulated occupation. Therefore, anyone can assume the role and mandate of a manager without the need to obtain a license. However, beware to the talent managers who go beyond the call of duty and actually seek to secure work for their clients. The act of soliciting work for their clients removes them from the realm of management and parachutes them into the realm of agency – without a license, the manager is breaking the law. In Canada, only the Province of British Columbia regulates talent agency and requires agents to obtain licenses from the B.C. Ministry of Labour’s Director of Employment (ss 38 and 38.1 Regulation to BC Employment Standards Act).

A “completion bond” (also referred to as a “completion guaranty”) is akin to an insurance policy and is usually a prerequisite for a producer to secure financing (be it private equity investments, bank loans, gap loans or even distribution advances). Most independent films that are produced are bonded. If a film is not bonded and the producer fails to complete the film (usually because he has run out of funds) or goes over schedule (risking the loss of cast members and/or missing a delivery date with a distributor), the film’s investors are out of luck and their investments are most likely lost. The bond is intended to protect the film’s financiers as it guarantees that the film will be completed and delivered on budget and on schedule. If the producer fails to complete and deliver the film, the completion guarantor has the option of either completing and delivering the film itself or abandoning the production and reimbursing the investors. The bond company, if it accepts to bond a film, will enter into two agreements: a “Completion Guaranty” among itself and the investors (who are the beneficiaries of the bond); and a “Completion Agreement” between itself and the producer. Bond representatives must be kept informed of all relevant production matters during the shoot (with daily and weekly reports) and will oversee the production to make sure it stays on track. Occasionally, the bond rep will visit the set. The bond company usually has the power to fire and replace the producer, director or other key elements of the production crew if it judges that the film is at serious risk. Whether or not a bond company accepts to bond a film in the first place will depend on a number of factors including the reputation of the producer, the script, the cast, the budget, the production schedule, the qualifications of department heads, and the value and reliability of the sales estimates. The two most prominent bond companies as of the writing of this text are Film Finances and International Film Guarantors.

You are referring to the notion of "de minimus" under the "fair use" doctrine ("fair dealing" in Canada) and the widespread myth that there exists a fixed minimum amount of use that is permitted under the fair use doctrine. Producers have (improperly) adopted the notion that using less than 5 seconds of a proprietary musical work does not require a license - FALSE. There is no statutory or jurisprudential basis for this. Nor is there a minimum word count when using proprietary literary works. The notion of "de minimus" does indeed exist in law, but it is not a test that is applied based on a fixed minimum amount of time or words used without permission. It's far more complicated than that. The courts (in the U.S.) have found that using as little as three musical notes over two seconds constituted a copyright violation that was not saved by the fair use doctrine (Bridgeport Music v. Dimension Films). In other cases, defendants have invoked the de minimus test successfully. Therefore, when in doubt, the rule of thumb is get permission or don't use it.

Opinions vary on whether reality TV formats benefit from copyright protection. In the U.S., courts have looked at whether the elements in production bibles or format treatments passed the “originality” threshold in deciding whether to extend copyright protection (Latimore v. NBC Universal; and Milano v. NBC Universal). They have also applied the “substantial similarity” test to protectable elements when comparing two competing formats. If the similarities between two formats are limited to the generic concept for the shows or expressions that are standard to the topic and naturally flow from the concept, the courts will likely decide against extending any protection (CBS Broadcasting v. ABC; and Castorina v. Spike Cable Networks). In Canada, like in the U.S., ideas are not copyrightable and to benefit from copyright protection, the tangible expression of an idea must also meet an originality threshold In Quebec, the court held that a television format for a proposed show which was never produced and was not sufficiently detailed in the expression of the idea did not benefit from copyright protection (Cummings v. Global Television Network Quebec). Canadian courts have held that a sufficiently original expression of a television format will benefit from copyright protection, but whether or not a competing format constitutes infringement will depend on the extent of the similarities between them. If the differences outweigh the similarities, the court is likely to dismiss a claim of copyright infringement (Hutton v. CBC). There is, therefore, a reluctance to extend copyright protection to reality TV formats and in cases where copyright protection has been afforded, courts have not been generous toward claims of infringement against competing formats.

Chain of title is a crucial concept that is often misunderstood or else neglected (to their peril) by producers. Chain of title addresses the question of whether a given producer actually has the right to develop, produce, distribute and otherwise exploit his/her film or grant others the right to do so. Your chain of title is the mountain of contracts and other legal documents that evidence the history of ownership pertaining to the production from the moment the idea for the film was conceived to putting the negative in the can to exploiting the finished product (theatrically, on t.v., home video, merchandising, etc). Who owns the copyright in the film? Who owns the screenplay upon which it was based? Who owns the exploitation rights? Has ownership ever changed hands? Your chain of title is what answers those questions. If there is a gap in the chain, it's a problem. How serious a problem depends in part on how far you have progressed in the production process. The further along you are in the process, the greater the problem...Many producers seeks to cut costs by cutting corners on chain of title. This is a disaster waiting to happen and is far more expensive to repair a gap in your chain of title later than it is to hire a lawyer to paper it properly for you at the outset and ensure that you have a "clean" chain.

E&O stands for Errors & Omissions. Producers (and, by extension, their distributors and financiers) not only face financial risk, but also the additional risk of being sued for the content of their productions. To mitigate this additional risk, producers normally obtain an E&O insurance policy (sometimes referred to as Producer’s liability insurance). Such a policy protects the beneficiaries (producer, distributors and financiers, as the case may be) against lawsuits filed by third parties claiming invasion of privacy, defamation, violation of publicity rights, copyright  and trade-mark infringements, among other claims. The E&O policy will NOT cover the producer for contract-based claims, damaged film stock, bodily injuries, damaged equipment and props, workers’ compensation, third party property damage, etc. That sort of coverage requires a separate insurance policy. The insurer will require the producer to fill out an application form and will often require (depending on the insurer) that a lawyer vet the application and sign off on it. Warning to producers: the answers you provide in the application form are considered representations and warranties and if you fill it in incorrectly (of course, you would never deliberately misrepresent the facts...), you risk being denied coverage if a claim arises.  The insurer will expect the producer to have a clean chain of title before it will issue the policy. The producer must follow standard clearance procedures which, in some cases, may require the producer to obtain a copyright report and, in most cases, will require script clearance and title reports. Sometimes insurers will require the producer to deliver a title opinion (not to be confused with a chain of title opinion) prepared by a lawyer and concluding that the title of the production is safe to use.

By way of example: A producer completes a feature film. The film is released with great fanfare. The next morning, the producer receives a demand letter from a lawyer claiming that the film was based on his client’s original idea and that the production and exploitation of the film constitute an infringement of his client’s copyright. What’s the producer to do? Retain legal counsel and immediately call the E&O insurer to inform the insurer of the claim.

Canada is a signatory to over 50 film production treaties. If a production qualifies under one of the treaties, its treaty status enables the Canadian co-producer and its foreign co-producing partner to pool their creative, artistic, technical and financial resources to co-produce the film or television program and continue to qualify as a national production in each of the respective treaty countries (which usually means access to improved tax credits and broadcaster / distributor licenses). Where a production does not qualify as an official treaty co-production (this is always the case when the screenwriter or a co-producing partner is American), the CRTC co-venture may be a viable alternative. If a production receives "special recognition" as a CRTC co-venture, a Canada - U.S. co-production may qualify as "Canadian content" for broadcast purposes (Although it would not qualify for Canadian content tax credits or Telefilm Canada or CTF funding). Since Canadian broadcasters are legally required to include a minimum threshold of "Canadian content" in their programming, a CRTC co-venture is more likely to be sold to a Canadian broadcaster and will probably garner a more attractive license fee.

There is no quick answer here. There are many variables to consider in attempting to estimate tax credits, such as whether the film will be a content or a service production, qualifying labour, urban versus rural locations, producer bonuses, and special tax credits (such as VFX credits). In addition, the following items will each influence the tax credit calculation: will the film be shot entirely in the Province of Ontario? Will you be receiving any form of assistance, such as a Telefilm Canada or OMDC investment (which would have the effect of grinding down the tax credits)? Is all eligible labour Ontario residents? Estimating your tax credit requires a thorough review of all of the above by qualified professionals.

Global Rule One is a rule imposed by the Screen Actors Guild (SAG) on its members. Essentially, it prohibits SAG members from working on non-union productions. Until May 1, 2002, the rule applied only to productions shot in the United States. However, as of May 1, 2002, SAG extended the application of the rule across borders - no SAG member may work on a non-union production anywhere in the world. There are exceptions and waivers are granted on a case-by-case basis. Non-resident SAG members who are citizens of other countries may work on a non-SAG production provided the production is subject to a union agreement in that country. This most commonly occurs with Canadian actors residing in Canada that are members of both SAG and ACTRA.

Unfortunately, the law of copyright does not protect ideas. So if all you have is a clever idea, then the old legal adage applies: "The general rule of law is...knowledge, truths ascertained, conceptions, and ideas (are)...free as the air..." (International News Services v. Associated Press, 1918). However, what the law of copyright does protect is the expression of an idea fixed in tangible form. In other words, put your idea to paper in as much detail as possible. A story synopsis, a story treatment, a screenplay, a teleplay, a production bible are all expressions of ideas that benefit from copyright protection. Once you've expressed your idea in such a tangible form, there are a number of measures a writer may take to minimize the risk of story theft. For example, I always recommend that a writer register his/her material with a guild that offers such a service (the WGA, WGC and SARTEC all offer registration services for nominal fees). I also recommend registering copyright with the appropriate government office (in the U.S., it's the United States Copyright Office; in Canada, it the Canadian Intellectual Property Office). For a more thorough discussion on this topic, refer to my article entitled "Can Screenwriters Protect Themselves from Story Theft" by clicking here; and an interesting article in Screenwriter magazine by clicking here.