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Your Film: Blockbuster Hit… or Lawsuit-in-Waiting?

A vulnerability to lawsuits can play havoc with any producer's limited financial resources

A mere seven weeks before Steven Spielberg's Amistad was to make its 1997 debut, a lawsuit threatened to sink the movie's release. Barbara Chase-Riboud, author of the novel Echo of Lions, brought the suit, alleging that Dreamworks, Inc. had copied original "scenes, characters and
plot devices" in Amistad from her novel.

Chase-Riboud sought $10 million and a preliminary injunction against the film's opening. Although a judge ruled in Dreamworks' favor regarding the injunction, allowing Amistad to open as scheduled, the studio quickly reached a monetary settlement with Chase-Riboud for an undisclosed amount.

Are small, independent film producers also vulnerable to lawsuits such as this? The answer is "definitely." In today's litigious world, the act of producing a film puts you face to face with numerous legal perils, such as copyright and trademark infringement, libel (or product disparagement), invasion of privacy and misappropriation of an idea (or plagiarism). Any of these can play havoc with almost any producer's limited financial resources.

Even worse: you don't have to do anything wrong to be sued!

For example, when the 1994 documentary Hoop Dreams gained unexpected success, one of the characters in the film sued the producer, alleging he had never given him the authority to film him. In fact, the producer had been extremely diligent about gaining permissions and had a signed contract with the person granting such authority. The producer's defense costs were minimal because, luckily, the person quickly backed off. But that isn't always the case. Sometimes claimants look to drag out litigation, hoping to force a favorable settlement or to gain publicity for a cause—at the producer's expense, of course. To better understand the legal exposures facing film producers, let's take a look at the typical film production process and the potential liability traps along the way.

Story Line

The producer's story is either original or it is obtained from someone else. If the story is not completely original, the producer needs to get a written release to use the story or risk a copyright infringement lawsuit. (More about releases later.) From outward appearances, and without knowing all the details of the case or settlement, it looks as if Dreamworks may have taken someone else's story for Amistad and wound up paying a steep price, both financially and with their reputation. But even the producer who tells a story that he or she believes to be completely original runs the risk of a potential copyright infringement suit. For example, the producer who films a story about the life of a black horse could have a copyright problem if elements of the story resemble any in Black Beauty.

Film Footage 

The producer determines whether the film footage will be completely original or contain clips. The process for using film clips is the same as for using someone else's story line—you need to obtain the necessary releases. Don't ever assume that any film clip is in the public domain and that no release is necessary, as you could be mistaken. Some clips are indeed in the public domain, but it's best to do a search and to make no assumptions.

Performers

The producer must receive permission to be filmed from anyone who appears in the film. (The exception is when filming takes place in a public setting and unrecognizable people appear in the background.) Failure to have a written agreement can result in an invasion of privacy lawsuit.

Permission is especially important in the case of children. If you want to have a child in your film, you need to get a parent's permission to film that child.

Several years ago, a producer filmed a documentary on mental illness that showed patients in a mental hospital. The film was shown in colleges as part of a course, and one student saw her mother in the mental hospital. She sued for emotional distress. Fortunately, the producer did what he was supposed to do by getting permission from hospital administrators to film the patients. The question was whether the patients should have also given their consent. A judge decided in favor of the producer, ruling that the patients were not mentally fit to give consent. The case is a good example of a producer doing the proper due diligence, yet still being vulnerable to a lawsuit.

The same goes for products and trademarks that appear in the film. For example, a scene may depict a Coca-Cola can, so you want to make sure you have Coca-Cola's signed permission to show it. Generally, if a product or trademark appears in a favorable or neutral light, you will have no trouble getting permission from the manufacturer or trademark owner to film it. If the product appears in a negative light, however, you may be sued for product disparagement (or libel) unless you have written permission to film it in that way.

Music Here a producer has two potential exposures: the composer and the performer. A common mistake by independent moviemakers is to assume that it's alright to use music that's in the public domain, such as Beethoven's Ninth Symphony. What is often overlooked is who recorded it. So not only do you have to secure the rights to a musical piece, but you also have to get permission from the group or recording artist that made the recording.

Of course, if you compose your own original music, you're safer. But even here you have to consider who's recording the piece. Does this person know the recording is for a film, and do you have the artist's written permission? Another potential problem is if the original music sounds like someone else's composition, you could be hit with a copyright or plagiarism lawsuit.

One source of protection is to use the services of a musicologist. That's a professional who listens to original music and identifies—and helps people avoid—potential copyright issues.

Title/Distribution

Technically, a title can't be copyrighted unless it's a series such as The Hobbit or Tarzan. But using an existing title or one that resembles another title can create confusion among films, and that can lead to other types of lawsuits, such as infringement. For example, in a recent publishing case, the titleholder for Gone with the Wind sued the author and publisher of the derivative book The Wind Done Gone. The suit was unsuccessful, but expensive to defend.

A title search can help avoid confusing titles and can be done inexpensively. There are two levels of search: title search and title opinion. A title search tells you all the times that a name, or any combination of the name, is used. With a title opinion, the title search firm conducts a title search and also renders an opinion on whether it's okay to use the name. From a liability standpoint, a title opinion offers better protection than a simple title search. Even a completed film may yet contain errors. Distribution has the effect of magnifying errors. That's why it's advisable to have an expert review the finished product before distribution begins. An experienced media attorney can perform this function.

The Number One Risk: Defending Yourself

As noted, film producers face a number of potential liability risks. But the most common risk—and often the largest—is the cost of a legal defense should a lawsuit occur.

A claimant can allege that he or she was harmed even when a producer hasn't done anything wrong. The claimant may want money and believe that the producer has "deep pockets" (perhaps in the form of insurance). Or the claimant may be seeking publicity and a soapbox on which to stand and make a point. Or the claimant may sense that the producer can be induced to pay in order to avoid negative publicity. The claimant may have no intention of taking a case all the way to court, and hope to force a settlement. Most cases are, in fact, either dismissed or settled before they get to court. It doesn't cost much money to bring a lawsuit, with or without merit, but the cost of mounting a defense can be enormous. In the event of a false accusation, you have little choice but to prove your innocence. The burden of proof may be on the accuser, but the defense will often be forced to submit to a lot of discovery, i.e. pay to produce mountains of semi-relevant documents.

I've mentioned some of the ways film producers can reduce their chances of being sued and ward off potentially catastrophic financial losses. What follows is a more detailed look at these and other important "loss control" measures; ways of mitigating the risks:

Releases

The importance of getting releases can't be overstated, and all releases should be in writing. The release document itself is fairly standard. But having a signed release in hand isn't enough; you also need to make sure that the person signing the release has the proper authority to do so.

It is critical to understand that a verbal release has no value, especially in a legal proceeding. A handshake agreement—even one made with the best of intentions—offers no proof of rights, so that any contested case will become a "he said-she said" scene in a courtroom, with a dubious outcome for the producer.

As further protection, the written release should include a warranty and indemnification section, which shields the producer in the event that any warranties are breached—that is, the person granting the release doesn't actually own the rights being released.

Subcontractors

Using subcontractors to provide content or services for the film, such as footage, special effects, graphics or music, also carries risks. Be sure you know who they are, their procedures and their reputation. It's a good idea to make sure that they do just as good a job as you do in obtaining releases.

Media Attorney

Probably the most valuable part of an effective loss control program is having an experienced media attorney. The attorney should establish procedures for making sure that all necessary releases are obtained, check the authority of people signing releases, evaluate subcontractors and review the finished product for potential liability exposures. In short, your media attorney should be involved throughout the entire moviemaking process.

Film Review

An expert review of the final film, by a media attorney and/or experienced media liability insurance professional, can help to prevent potential problems from ever arising. For example, a documentary about four American nuns who were murdered in El Salvador repeatedly showed footage of the bodies being removed from crude graves. Worried that the nuns' parents, who also appeared in the film, would suffer emotional distress and possibly sue, the producer was asked to obtain releases from the parents, granting permission to show the emotional graveside footage. The producer readily agreed, and all the parents signed releases with no problems. It is better to be overcautious than regretful later.

Another example: a documentary film about gay people started out with credits rolling, and at a distance down the street two women were walking toward the camera. As they approached the camera and walked past, they became quite recognizable. The two women may have been unknowns who just happened to be filmed on the street, but the insinuation was that they were gay, and they probably weren't. The producer was advised to either obtain releases from the women or re-shoot the titles. Since the producer didn't know who the women were, and the footage was inconsequential to the film, he redid the titles without the women, eliminating a potential exposure.

Insurance

It's impossible to distribute a film without insurance, since distributors require it, so insurance is critical from that standpoint. But before you think of insurance as a mere commodity and purchase the first policy you see, consider the ramifications of buying something that offers less than adequate protection. If you are like most film producers, your personal assets are definitely limited, and you can't afford to lose them defending a lawsuit or in a settlement because your insurance left critical gaps in coverage.

The important considerations in purchasing insurance, therefore, are covering the most important exposures, the dollar amount of coverage, the insurance company and broker and value (the coverage received for the amount of premium paid).

Comprehensive coverage for the unique exposures faced by film producers is unlikely to be found in an off-the-shelf general liability policy that has been modified. So look for a policy that is specifically written to cover multimedia liability exposures. A true multimedia liability policy will explicitly spell out broad coverage for a producer's most critical exposures. It will address distribution in all forms (TV, radio, DVD, etc.) and merchandising. It will cover defense costs, offer the option of covering these costs inside or outside the policy limits and allow you to select your own defense counsel. A good policy will not have a "settlement hammer clause." In other words, the insurer cannot agree to a settlement without your permission—nor will it exclude coverage for internal copyright disputes, such as when an employee or freelance writer prepares material for you and then claims ownership of the material. Finally, it will offer coverage for as long as your rights are granted, otherwise known as lifetime coverage.

For anyone who asks how much insurance is enough, the pat answer is: "You'll need one dollar more than the largest lawsuit you'll ever have." That gets a chuckle and doesn't solve their problem, but it opens the door for a proper discussion. What is the nature of the film? What are the potential exposures? How wide is its distribution? Has a media attorney been involved throughout the filming process? As a general guide, most cable companies require coverage of $1 million per occurrence and $3 million in total (or "aggregate"). That is likely enough coverage for most films, but not for a major film.

Usually with insurance, you get what you pay for. Purchasing a policy on the cheap probably means coverage is dangerously limited or contains critical gaps—gaps that you may not discover until you file a claim with the insurance company and learn that it won't pay. Getting value for your premium dollars is a far more effective purchase strategy since, in the long run, it can save you money. Finding value means examining coverage, of course, but it also means selecting the right insurer and broker.

Selecting an insurance company or insurance broker may not sound like much fun, but it doesn't have to be difficult. Consider the financial strength of the insurer—will they be around long enough to pay a claim?—as well as the reputations of the insurer and the broker. You certainly want an insurer that has a good reputation for handling claims, and you want a broker that responds quickly to your requests. Perhaps most importantly, you want them to have expertise in multimedia liability and be able to offer important value-added services such as an expert liability review of the final film product. You want to obtain a policy through a broker who specializes in handling multimedia liability coverage and handles dozens of film producer customers and claims every year. The expertise offered by an insurance specialist who knows the film industry could save you a blockbuster claim, a major headache and a lot of money. MM

by Walter J. Coady, Jr.


 


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