Film production has legal issues that can arise at every stage of the project. The role of production counsel is to take care of those matters whether it involves setting up financing, securing intellectual property rights, negotiating and drafting agreements, or minimizing potential liability. Our attorneys have extensive experience in all areas of law affecting film productions and can guide you through the legal aspects of the production process so you can concentrate on the creative side.
Do You Need Financing for Your Film?
Producing a film is like starting a business. You need money to get it off the ground, but film production is particularly expensive. There are several ways to finance your film, including loans, donations, and grants. However, many productions seek investors to finance the project. Generally, the investor will help fund the film in return for a portion of the film’s proceeds. This type of investment creates a security interest and may be subject to state and/or federal securities laws. Experienced production counsel is required to draft different types of financing agreements and related documents and comply with securities and other applicable laws.
Single (or Special) Purpose Vehicles
Regardless of how the film will be financed, it may be beneficial to set up a single (or special) purpose vehicle (SPV) for the project. SPVs are oftentimes set up as limited liability companies. A producer with several projects would first establish a “holding company” which would then create individual SPVs for each film production. The advantages of this are that each project can have a different ownership structure, financing, and investor provisions. In addition, productions are separate for accounting and liability purposes. However, forming an SPV can be complicated. It is important to seek legal advice in selecting an entity for the SPV, drafting and filing appropriate documents, and complying with state laws.
Have You Cleared Intellectual Property Rights for Your Film?
Before production can move forward, ownership of all intellectual property rights must be determined and cleared for use. A typical production can involve contributions from writers, artists, composers, and actors. Rights clearance is the process of obtaining permission to use works owned by third parties. It should be done early in the production process to avoid delays and other problems.
Intellectual property rights may exist under copyright, trademark, privacy, defamation, and other laws. Production counsel can offer guidance regarding who owns the rights to a work and whether permission is required to use the material. Where permission is necessary, counsel can obtain a release or negotiate and draft a licensing agreement.
Rights clearance is essential to avoid significant liability and related costs. Monetary and injunctive relief may be awarded if intellectual property rights are violated. In addition to damages and legal fees, production may be stopped or delayed resulting in additional losses.
What Types of Production Agreements Are Needed for Films?
A good concept for a film is not enough to ensure success. Other parties are involved in providing services related to the production and contracts are necessary to protect both sides. Production counsel can advise regarding the relevant legal issues as well as negotiate and draft agreements, such as the following:
- Option Agreements. In an option agreement, the owner of a work (e.g., screenplay, book, etc.) gives the producer the exclusive option to purchase the rights in the work for a limited time.
- Attachment Agreements. An attachment agreement is a contract between a talent and a producer in which the talent commits to the specific project.
- Talent Agreements. Any talent (e.g., actors, directors, writers) associated with the production will need to sign an agreement to ensure the producer has intellectual property rights to their work.
- Vendor Agreements. Suppliers and vendors also need to sign agreements related to the production.
- Location Releases. A location agreement covers when, where, and how the location will be used and indemnifies the owners of the property for any damage during the production.
- Licensing Agreements. Where the production wants to use intellectual property owned by a third party, a licensing agreement may be needed to obtain permission and compensate the rights owner.
Do You Have Chain of Title?
Every film production needs to create a chain of title for film purchasers and distributors. The chain of title establishes the producer’s rights to develop and sell rights to the film. Production counsel will help to detail all intellectual property clearances, talent agreements, and proof of insurance covering omissions in obtaining an adequate chain of title.
What Types of Distribution Agreements Are Needed for Your Film?
Once production is complete, the film must be distributed. There are different types of distribution agreements and each has its advantages and disadvantages. For example, a distributor may have financed the production in exchange for the right to handle all distribution. There also may be multiple distribution agreements, such as when an agreement only gives the distributor limited rights to distribute the film in a particular region or for a specified time. Agreements also vary depending on the distribution outlet (e.g., streaming services, video on demand, television, and foreign distribution). Production counsel can advise regarding the best options for the film as well as negotiate and draft the agreements to protect the producer’s interests.
Note that if a sales agent is used to find distributors, a sales agent agreement may be needed in addition to a distribution agreement.
Utilizing experienced production counsel can have a substantial impact on the success of a film production. Failure to comply with laws or negotiate advantageous terms can result in serious financial losses, including reduced revenue, higher costs, and legal liability. Producers should hire an attorney early in the process to help ensure legal issues are addressed before they cause serious damage to the success and viability of the production.
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