Do i need an entertainment lawyer?

You are a local movie producer. You receive a “contract of intent” from a foreign-based film production company wanting you to act as its South African producer for the filming of its SA segment of the movie. Agreements are submitted to you that speak of several contractually binding clauses governed by numerous foreign laws and statutes of which you have no idea and never heard of before.
Perhaps you are a talented author who has just completed writing a new novel and believe that it has the potential to be a runaway success. You want to showcase the content thereof to certain publishing houses to gauge interest, but don’t want to necessarily give them the whole manuscript for fear that your story may be stolen. How can go about showing your manuscript to the publishing houses and, at the same time, protect your work?

1. Hesitant to sign

There are also several financial obligations tied to the agreement and imperatives that your production company put up “closed guarantees” as well as unconditional warranties for the benefit of the foreign based film production company and its funding investor. The offer seems too good to turn down, but you are hesitant to sign or agree to the terms of the contract of intent. Who do you approach for help? Who would best be able to understand and negotiate better terms that favor your company?

Suppose, for example, your company holds the exclusive rights to the marketing and management of an international live performance show. The terms require of you to manage the events set-up and place control on sponsorship rights within the venue. Your company also holds rights for the exclusive marketing of merchandising opportunities that flow from the show.

It also seems that numerous intellectual property rights are not protected under SA law and before you can proceed with the contract, you need to give the foreign based company who owns the show the assurances of your ability to manage the event and consequent protection of its rights. Where do you start? Who can you talk to?

What happens, for example, if you produce a song or create a television show or write a book only to find that your work is being challenged by another person accusing you of stealing their idea or copying their work? Perhaps you are accused of “passing off” you work as that of another person or being involved in a form of unlawful competition. You are faced with High Court interdicts and claims for thousands of rands in damages and compensation! Who do you turn to for help?

2. Enter the entertainment lawyer

Enter the entertainment lawyer. The phenomenal and continuing growth of the entertainment industry is in desperate need of legal practitioners who specialise in the area of entertainment law. As the entertainment industry becomes more complex and with it the need to understand and manage complex relationships and commercial obligations, so the need has developed for specialist service providers to assist entertainers, artists, sports stars and various entertainment companies navigate the growing commercial complexity of their business and business relationships.

Entertainment law is a fast growing and specialist area of legal practice. The entertainment lawyer is not an average general legal practitioner (found in most law firms in South Africa) but rather a lawyer that devotes his practice of law to the understanding of the complex legal and business requirements associated with entertainment and the entertainment industry. This involves expertise in matters of:
• Contract law
• Intellectual property Law ( trademarks, copyright,etc)
• Labour law
• Delictual law (law of damages)
• Competition law (unlawful competition, including Passing Off)
• Constitutional law (Bill of Rights)
• Tax law
• International law

Entertainment lawyers differ from the general attorney in that they have not only developed specialist knowledge of entertainment law, but have also developed unique relationships with many of the leading entertainment companies and influential people in the industry.

3. Resource and asset

These specialist lawyers are a useful resource and asset to the entertainment client as they are usually positioned to make certain useful introductions to the client, for example as between as film producer and a production finance investor.

Entertainment lawyers can also guide clients by pointing out who to network with or who to do business with and which companies or individuals are not worth considering given their relative unknown “status’ in the industry. Entertainment lawyers are also strategic negotiators and often interact with industry role players such as investors, financiers, broadcasters, media, celebrities and sports stars when negotiating deals or agreeing the terms of a contract.

Relationships between entertainment lawyers and clients are not only limited to SA and many such lawyers have useful business connections and relationships with international clients within the international entertainment sector that may be useful to you, the SA client.

It is, unfortunately, a fact of life that entertainers find themselves facing claims of dispute or wishing to protect their rights and interests by way of litigation. Entertainment litigation often involves complex legal issues and, in some cases, may involve complex questions of national and international law. Entertainment lawyers are skilled advocates and will have the unique expertise and advocacy skills to assist you to protect your rights and, where necessary, defend you in matters of civil litigation claims.

4. Where can you find them?

So, when do you need an entertainment lawyer and where can you find them? Well, most people believe that you only approach a lawyer when you are in trouble; that you or your agent or company has enough skill and expertise to manage your own negotiation and concluding of contracts without the need of having to incur the cost of a lawyer. On occasion that may be true, but as the industry grows and as we immerse ourselves into the international entertainment arena, issues of law and compliance become critical to ensuring that you, as entertainer or management company or entertainment business owner, minimise your risk by employing a specialist professional.

Can you use any lawyer, even perhaps your family lawyer? Possibly, but if that lawyer is not practicing his calling as an entertainment lawyer, he would be ethically obliged to tell you so and, where he can refer you to someone with more knowledge and experience than he has, to do so as to ensure that you get the best representation.

Not to do so places both the attorney and the client in a very precarious position (The client may have a professional negligence claim against the lawyer and his or her law firm where the advice and service has caused him or her harm. The client may suffer damages and even face the threat of sequestration or liquidation due to him or her relying on advice of a non-specialist entertainment lawyer)

If you employ the services of an entertainment lawyer, it doesn’t have to cost you an arm or a leg. Most entertainment lawyers will agree on a fee structure that meets both your needs and requirements. It’s even possible to have an entertainment lawyer contract to you on the basis of a retainer contract and, in some cases, a contingency agreement where the lawyer gets paid if he is successful with the work he must do for you.

5. Finding the right one

So, how do you know if you have found the right entertainment lawyer?

Well, ask him or her about their experience and training. Establish if they have attended special courses on entertainment law and, in particular, which areas of entertainment law they specialise: is it music law, television and broadcasting law, events management or general entertainment law? Do they belong to any known associations of the entertainment industry and do they contribute to the advancement of the industry through regular articles, workshops and presentations? Establish from them who their client base consists of and ask them for client referrals so you can phone and gauge for yourself their value and worth.

Importantly, make sure that the entertainment lawyer you employ is passionate about what he or she does and the field of law he or she practices in. Passion and dedication, above all else, is the hall mark of a specialist entertainment lawyer.

You want to be in a movie? (sign a release!)
By Sean Bosse
Bosse & Associates Attorneys (Cape Town)
Tel: +27 21 556-9451
E-mail: sean@bosse-associates.co.za

There is an old saying that goes, “everybody wants to be in the movies!” Ask any person on the street if he or she wants to be in a movie and you will get more “yes please” than “no thank you”.

The question we are asked more often than anything else is whether a filmmaker must get actor releases before they can use the actor’s image in a shoot? In short, the answer is “yes”.

Most developed countries have privacy laws and this momentum is now being carried over into developing countries. South Africa, in particular, has one of the world’s most modern and dynamic constitutions in the world that makes provision for a person’s right to privacy.

Any actor or actress must sign a release to use his image (or even body part) in a movie. We would suggest that the release be worded in such a way that it includes not only consent for the use of the image in the motion picture but also wide enough to cover the use and exploitation of the image in all marketing, advertising and teaser cuts.

The signed release is also a necessary contractual requirement where the film is to be distributed outside its country of shooting. In most instances a distributor will insist that you prove a so-called “chain of title”, being your rights of ownership in the intellectual property of the film. Without this chain of title guarantee, distribution of your film may be limited.

It is vitally important that when use is made of minors under the age of 18 years old that a release is signed by the minor’s legal guardian. The minor themselves cannot sign such a release unless he or she is assisted by his or her guardian. Our suggestion is to always have the release signed by both the minor as well as the legal guardian.

Shooting a large crowd of people in a public place is a necessary evil in any movie production. The question is whether a release must be obtained from every person in the public mob. Again, the privacy laws may unbalance your plans and affect your chain of title if you don’t. Again, this does not apply in every country and you would be best advised to speak with an entertainment lawyer in the country of the shooting of the film to get advice on the laws applicable.

A failure to obtain a release may cause your project film to suffer a disasterous financial blow, especially where a person whose image is used without the required release. The injured person could institute legal action against you on the basis of a breach of his/her privacy and claim an award of damages. The damages claimed is dependent on several factors that is beyond the scope of this article but, if proved, could see an award running into tens of thousands of rands.

So, do you want to be in the movie? First, sign my release!

Bosse & Associates Attorneys copyright 2013 (c)
Entertainment law specialists

Entertainment Law – Liability Of Company Directors

INTRODUCTION

The new Companies Act (Act 71 of 2008) has introduced a strict regime on all directors of companies in the execution of their duties and irrespective whether such directors are employed by a private or listed company.
The extent of the liability that a director faces is also not limited to so-called executive directors but also to non-executive directors, alternate directors, members of board and audit committees. It even extends its reach to so-called “prescribed officers” that can be grouped as senior managers and officials with defined levels of powers and functions.

DIRECTOR DUTIES

As a director, you have certain duties and functions to fulfil in the process of managing and directing the company. In addition to the day to day duties and functions you have, there are more onerous and far reaching duties placed upon you in terms of the law and the Companies Act in particular. Some of these onerous duties include:

• To act strictly within the limits of your authority and in accordance with the companies’ MOI (Memorandum of Incorporation);
• Not to be a party to any act or omission with a fraudulent purpose or ‘calculated to defraud” a creditor, employee or shareholder of the company;
• You use your position as a director (and all the knowledge you have or obtain while in this position) for the benefit of the company and never for your own personal gain;
• You always vote against any proposed prohibited activity such as the issuing of unauthorised shares, payment of undeclared dividends, etc

LIABILITY

It is a fact of life that with all the best intentions, we all make mistakes, bad make bad decisions or fail to act at times that we should have done had we applied ourselves our minds to the situation at hand. As a director of a company, such acts of life could spell disaster for you in your personal life and your financial well being.The Companies Act provides the means to hold a director personally liable in situations where the company or fellow directors/ shareholders/investors, etc have been harmed.
To avoid personal liability, you must be able to show that you acted, in your capacity as a director, honestly and reasonably in the circumstances and that the decisions that you took at the time were both rational and informed. Specifically, you will need to show that:
• You took reasonable steps to become informed of the matter( you cannot plead that you did not know);
• You must show that you have complied with all obligations placed upon you in terms of the Companies Act as well as the MOI;
• That the decision you took had a rational basis for believing that such decision was in the best interest of the company.

INDEMNITY & INSURANCE

In light of the extreme nature of the potential liability you can face as a director, it is worth ensuring that you get the Company to indemnify you, as a director, against any claim made against you by any person instituting a claim. The indemnity provided to you is not automatic and must be agreed at a directors meeting and must not be prohibited by the terms and conditions of the Companies’ MOI.
Another way to protect yourself is to take out so-called “D & O Insurance” or Directors and Officers insurance. This specialised insurance provides the company with the financial backing to cover the payment of a claim in circumstances where you are sued as a director. Bear in mind, however, that if your actions as a director were fraudulent or a wilful breach of the trust placed in you by the company, such insurance will not pay out and you will bear the brunt of those payment costs.

CONCLUSION

The days of the nice title, “director”, has lost some of its shine since the introduction of the Companies Act and more especially the huge responsibility placed on the shoulders of company directors. In the long run, the hope and belief is that company directors will raise their game and ensure they act in the manner prescribed by the law and, in so doing, help eradicate the scourge of wrongful and unlawful acts against the companies they serve and the people who depend on such companies.
Think about it

“I have an option”-What the law says!
By Sean Bosse
Bosse & Associates Attorneys (Cape Town)
Tel: +27 21 556-9451
E-mail: sean@bosse-associates.co.za

In recent years, we have come to observe that many entertainment (commercial) agreements that purport to be “option” agreements are, by their very legal nature, in fact “rights of first refusal” contracts. While we have yet to litigate on such contract terms of dispute, it appears to us that it will only be a question of time before we do, all being the result of the contracting parties not knowing or understanding the subtle differences between an “option” contract and a “right of first refusal” contract.

This article sets out to explain, in broad terms, the differences between the two types of agreements with the aim to empower contracting parties to understand “what the law says” about each type of contract.

The South African law of contract is based on the principle of freedom of contract. That is to say, parties can enter into any type of agreement with each other so long as it is not illegal or against public policy. It is a further tenant of South African contract law that the premise of any agreement is to be found in the mutual understanding and agreement between the parties as to the content, nature and execution of the contract and contract terms.

Understanding and mutual agreement of the terms and conditions of the contract is fundamental to a binding commercial contract. It is for that reason that the parties must understand and be aware of what the terms and conditions of the contract are and how they will apply when the contract is executed. Failure to do so may result in the contract being thwarted and, possibly, result in expensive and acrimonious litigation.

Option contracts and contracts of a right of first refusal find regular inclusion in many entertainment contracts, whether they be in the film, music, sports and/or sponsorship sector of the industry. While these two types of contracts (or clauses within a contract) may appear to be and mean the same thing, the reality is that they do not and the law treats them very much as mutually exclusive contractual concepts.

To illustrate the difference between the two legal concepts, let’s consider the following scenario. A South African distributor wishes to secure the rights to distribute certain home video products in South Africa from the US producer of a certain well-known television series that currently airs in South Africa. The South African distributor concludes a distribution agreement with his US counterpart and which distribution contract incorporates an option that the South African distributor may continue to distribute the product in South Africa for a period of two years after the termination of the original contract(subject to certain conditions having been met and certain guarantees being fulfilled).

In a second agreement concluded by the South African distributor with his US counterpart, a contract is entered into in terms of which the US producer grants to the South African distributor the right of first refusal to distribute in South Africa the second season showing of the popular television series once such series makes its way to video distribution.

Both agreements provide certain rights to the South African distributor and while they may appear to grant him rights that are the same, the terms of those contracts are decidedly different. In the first instance, the option granted to the South African distributor are rights that are vested in him as soon as the ink dries on the signing of the distribution contract. The “option” clause in the agreement cannot be taken away from the distributor and he has the right to elect to exercise the option should he fulfil any terms or guarantees linked to such exercise of the option (for example that the distributor must sold at least a million units within the first year). If the distributor elects to exercise the option granted in his favour, the US distributor is obliged to honour the contract.

The option clause is different from that of the second contract that the South African distributor concluded. In the second scenario, the contract vests in the South African distributor only a right that in the event that the US producer decides to distribute the second series of the television show in South Africa, the US Producer is obliged to first offer the distribution opportunity to the South African producer before he may offer it to any other third party producer. As can be seen from this clause, the contract term is not as strong in favour of the South African distributor as that of the option agreement.

In assisting clients finalise entertainment and commercial agreements, we far too often find that parties intend one thing and then conclude agreements that don’t necessarily record those intentions in the contract terms. Many times, the issue of whether to grant and accept an option or right of first refusal comes up as a sticking point in negotiations simply because the parties don’t understand the subtle differences in the legal concepts. This not only has legal ramifications but will also affect the commercial value and viability of concluding such agreements (especially if the parties do not know the differences between the two legal concepts)

Most legal systems in the world will come to the aid of parties should there be disagreement about the true intentions of contract terms. However, this not only comes at a price to litigate but all courts apply the founding principle “caveat emptor; caveat venditor” (loosely translated: contracting parties beware!). Ignorance of the law is frowned upon, especially in the conclusion of commercial agreements where the contracting parties may be expected to have a higher sense of understanding of the terms of the contract they have concluded.

We would strongly suggest that before concluding any type agreement, especially entertainment and commercially oriented entertainment contracts, the parties have their respective attorneys and legal advisers review such contracts to give the parties peace of mind that that which is stipulated is what the contracting parties intended to apply and ….that it is what the law says!

Bosse & Associates Attorneys copyright 2013 (c)
Entertainment law specialists

Entertainment Law – Changes to your company

Introduction
Many people in the entertainment industry operate their business in either a company or a close corporation. These legal entities are established and, to a large degree, governed by the provisions of the various acts such as the Companies Act (and its regulations) and the Close Corporation’s Act (and its regulations) and its founding or constitutional documents.
Although the New Companies Act (Act 71 of 2008) has been effective for nearly 2 years now, many companies have neglected to act in compliance with the provisions of the new Act. In particular, companies have been slow to develop and register their company’s Memorandum of Incorporation (“MOI”) which has now replaced the old form Memorandum and Articles of Association.
This article looks at the need for the change to the Company’s constitutional documents and gives a few practical suggestions to company directors to accomplish this task.

CURRENT POSITION

In terms of the new Companie’s Act, a certain period of grace is afforded to all existing companies that were established under the regime of the old Companies Act to become compliant with certain provisions of the new Companies Act.
If your company was established under the regime of the old Companies Act, your company’s constitutional documents, known as the Memorandum and Articles of Association, is now known as its MOI.
The new Companies Act requires all existing companies to convert their existing Memorandum and Articles of Association into an MOI that is compliant with the provisions of the New Companies Act. This period of grace is granted until no later than 1 May 2013

THE MOI

The new Companies Act is more user-friendly and modernised to take into account the dynamic business world in which companies operate. In the process of this change to improving the company laws, the new Companies Act has modernised, simplified and made a user-friendly MOI for use by companies as opposed to the old and archaic form of the Memorandum and Articles of Association.
It is possible for a company to now select from a set of standard forms of MOI to use as their company constitution. These standard forms are readily available and accessible to company owners via the CPIC and can also be found in the regulations to the new Companies Act. Once selected and completed by the company, the MOI must be registered with the Registrar of Companies together with a special resolution the company adopting the MOI as its constitutional document.
The standard forms available for the MOI establishes as so-called “default” MOI that may be used in compliance with the New Companies Act. However, it is possible for the companies to also select the so-called Long Standard Form which allows a company to modify the provisions of the MOI to suit its particular needs

CHANGING THE PROVISIONS OF THE MOI

No two companies are ever the same and just as your birth certificate and identity book is created and applicable to only you, it stands to reason that companies may wish to have a constitutional document forming the foundation of its existence and its powers that is unique to it.
The new Companies Act allows a company to tailor its MOI to fit its particular needs and requirements. There are, obviously, certain provisions that are applicable to all companies and that are unalterable. The ability to alter certain of the company’s constitutional obligations is allowed in circumstances where the company imposes a higher standard or greater restriction than would ordinarily apply.

FAILURE TO ACT TO CHANGE TO THE NEW MOI

A failure to act and to comply with the requirements to establish and register the company’s MOI in terms of the New Companies Act will see the Registrar of Companies issuing out compliance notices. A compliance notice will render the affected company liable to a fee on the registration of its MOI.

BENEFITS OF THE MOI

The MOI spells out in a single document the unique “do’s and don’ts” peculiar to that company and its rights and obligations. The MOI is of such a nature that many companies deem it to be equal to the content of the old form of shareholder’s agreement and has seen a few companies deeming its shareholder agreements as now defunct.
The MOI provides further benefits such as, for example, being able to make use of the provisions to be exempt from certain audit filing obligations. The Old Companies Act required that all companies had to be audited and file audited statements irrespective of the size, value or turnover of such company. The New Companies Act allows companies to be exempt from such process if they comply and adhere to certain determined provisions set out in the MOI and the Act.
Taking advantage of these unique opportunities will not only improve the legal and management function of the company but it may even result in costs savings from, example, the need to no longer pay auditing fees!

STEPS TO TAKE

All company directors must:
1. Consult their attorney and/or accountant with a view to determining the Company’s needs insofar as it relates to the creation and registration of the MOI.

2. Consider whether it is appropriate to register the default form of MOI or whether it is better to develop an MOI with provisions that are unique to your company and its business needs.

3. Complete and sign the MOI and register a true copy thereof with the Registrar of Companies before 1 May 2013 or face potential penalties.

4. Make sure that the MOI is consistent with the provisions of the New Companies Act, failing which the revisions of the MOI may lead to civil action/applications to court to declare it void.

5. Engage all company stakeholders to explain the provisions of the MOI with a view to all parties being aware of their rights, duties and obligations.
Should you require any assistance in the creation and registration of your MOI, please feel free to call us.

Entertainment Law – Copyright Infringement in the movies

INTRODUCTION

In the early 1990’s, Barbara Chase-Riboud instituted a civil claim against world renowned movie director and producer, Steven Spileberg, for copyright infringement. It was Chase-Riboud’s case that Spielberg’s film, Amistad, had infringed her novel about the real life mutiny that took place on board the slave ship, the Amistad, in 1839. The cause of action against Spielberg was that the script (and later the movie) of Amistad copied, without Chase-Riboud’s permission, the characters, storyline, themes and events (historical and fictional) that appeared in her novel.
At the hearing, evidence was led on behalf of Chase-Riboud that several characters, themes and events of the novel and the movie script overlapped. It was also shown that prior to the script being produced by Spielberg had met with Chase-Riboud in the US to discuss her novel and to negotiate an option for Spielberg to acquire the movie rights thereto.
The copyright landscape (and courts throughout the world) is littered with similar tales of copyright infringement and the question to be asked and answered is what can be copied without permission by another person and how can I protect my ideas from copyright infringement?

COPYRIGHT (GENERAL OVERVIEW)

Copyright is a form of legal protection granted to a person who qualifies therefore to allow him to make exclusive use (and financial gain) from his unique material. The material may be in the form of a novel, music, and computer programs, to name but a few. Copyright law does not, however, protect ideas and historical facts or themes of a general nature. Put differently, copyright laws aim to protect the author’s expression of an idea and not the idea itself.
In copyright cases heard before the courts, it has been held that ideas of a “basic plot”, “general storyline” and “stereo-typical characters” are not protected under copyright laws. The courts have argued that these devices are the everyday tools in the novelist’s toolkit and no one person can lay claim to it as his or her own idea.
It often happens that a novelist will pitch an idea or a concept or general storyline to a producer or broadcaster only for the idea to be turned down. Years later the novelist goes to court and sues the producer for copyright infringement where it is alleged that the producer has created a television show or movie that bears a striking similarity to the idea or storyline pitched to the producer a few years earlier. The court must now decide whether there is a case to be made for copyright infringement.

COPYRIGHT TEST

To succeed with a case of copyright infringement in the scenario set out above, the claimant will need to prove that the respondent not only copied his work but also that there is a substantial similarity between the two works. The copying of the works must be so substantial and similar that it can be shown that such works was a slavish copying of the copyright owner’s works.

THE AMISTAD CASE

The court in the US dismissed the Chase-Riboud’s application citing several reasons pointing to Spielberg’s defence that no copyright infringement had taken place. In the first instance the court found that the only common elements between Chase-Riboud’s work and that of Spielberg’s script/movie was the historical facts and the broadly described characters which, the court reasoned, was not sufficient to constitute copyright infringement.
The court looked at the total “concept and feel” of the two works. The court analysed and compared the two works by looking at the “plot”, “general characters”, “mood and setting” and “sequence of events” from the vantage of a casual observer. The court stated that issues of historical context in the two works are not protected under copyright laws as such historical contexts were in the public domain and available to any person. Similarly, the court argued that in comparing the characters of the novel and the movie script, the Chase-Riboud’s characters described in her novel were not copied by the respondent as while there may have been certain general similarities, the claimant’s characters were not ‘distinctive” and a clear creation of the mind of Chase-Riboud. The court also argued that while the plot and scene for the two works may appear, at first blush, to be similar, there structure and sequencing was not and that any casual observer referencing the two works would not be misled to believe that the movie was related in any way to the novel.

PROTECTION

It is generally said that copying is “the mother of all invention”. It is in society’s best interest for people to take hold of an idea and make it better. If we did not do so, there would, for example, be no new technical advancements in most areas of life, music would be one-dimensional and movies would be limited to single genre’s. This, however, does not give license to infringe the hard work of another person and the copyright laws of the world will come to the assistance of a copyright holder in cases of copyright infringement.
The copyright owner will, however, have to prove not only his copyright but aloe its infringement. This is especially where a case is to be made against a producer or public broadcaster who has allegedly stolen an idea and usurped it for its own good without recognition or compensation to the copyright owner. To do so, the best protection is to ensure that a paper trial of the idea, storyline, characters, plot and plot sequence is kept by the creator. It is also a good idea that in promoting the concept to a third party, you obtain from the producer or broadcaster a confidentiality and non-use of idea agreement. Doing so creates a contract between the parties and should there be an infringement by a producer or broadcaster, the copyright owner can then claim not only copyright infringement but, as an alternative, sue for breach of contract.
It is also a good idea, in these situations, to register a story, plot, and series with the local writer’s guild. The date of registering such material with the writer’s guild establishes an important evidentiary record of when you first established the story and will be a significant factor taken into account by our courts in any copyright infringement case.
Think about it!