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

Protecting The Image Rights Of Our Sport Stars

South Africa’s march from amateur to professional sports in certain athletic disciplines has seen sports branded merchandising, athlete endorsements and corporate sponsorships become big business today. In particular, the commercial exploitation of an athlete’s image to promote and sell anything from branded clothing to luxury investment properties on golfing estates is fast taking hold. It is common knowledge that many international sports stars and celebrities enjoy a vast amount of added income thanks to lucrative sponsorships, product endorsements and royalty payments earned from the grant of licenses to exploit their image or image rights. Tiger Woods, for example, is reported to have concluded sponsorship and merchandising license agreements to use his image to the value of over $90 million. Michael Jordan, regarded as the richest sports star alive, has enjoyed over $100 million in sport sponsorship, endorsement and character merchandising deals during his illustrious career.

Local South African celebrities and sports stars are, like their overseas counterparts, now beginning to enjoy the commercial rewards gained from the commercial opportunities such as image licensing agreements, sponsorships and celebrity endorsements. This article looks at the laws in place to manage the commercial rights of our celebrities and sports stars as well as the protection it offers those celebrities who may fall prey to the unlawful and unauthorised use and exploitation of their commercial rights, particularly their image rights.

IMAGE RIGHTS

Cloete in his book, Introduction to Sports Law in South Africa (2005), defines image rights succinctly as follows:

” The ability of an individual to exclusively control the commercial use of his name, physical/pictoral image, reputation, identity, voice, personality, signature, initials or nickname in advertisements, marketing and all other forms of media…The sportsperson…often earns substantial license fee or royalties that is paid for the privilege of allowing his name to be used for promotional purposes”

As said, it is fast becoming a reality in the world of sport that athletes earn substantial income not only from their on-field performances, but also from the valuable sponsorship deals and endorsements concluded between them and the vendors of certain goods or services. In particular, the commercialisation of a star’s image rights and the grant of an exclusive license allows, on the one hand, the advertiser to enhance the reputation of the product or goods due to the association with the celebrity or sports star and thus attracting the purchasing public while the athlete or celebrity enjoys compensation in the form of a royalty payments for the right of the advertiser to use and exploit their image.

Besides the exploitation of a sport star’s image right, the athlete may also earn a lucrative sponsorship deal whereby an advertiser or vendor wishes to associate his or her product or goods with that of the star athlete. Furthermore, an athlete may earn huge amounts of money by agreeing to endorse a certain product or service. By endorsing the product, the sports star gives his name as a stamp of approval, letting the general public know that he approves of the product or service. Sports endorsements are all around us from the infamous endorsement of SAP by Ernie Els to golfing equipment by Tiger Woods. Recently, there has been the endorsement of Gillette products by David Beckham as well as the endorsement of the Springboks by British Airways.

PROTECTING IMAGE RIGHTS

Image rights are fast becoming valuable commercial assets of well-known athletes and celebrities, but like any asset of value, it is always subject to some form of risk and in the case of the image rights of sports stars, the threat usually comes from the misappropriation of the star’s image or image rights by both unscrupulous entrepreneurs and big business. Protection and the ongoing management of a star’s image and image rights has become so important that star’s and /or sports agents and/or commercial rights holders are turning to the law in search of protective mechanisms to safeguard the lawful exploitation of such image and image rights. In certain circumstances, the image of a sports star may be recognised and protected as a trade mark. Numerous sports stars and celebrity personalities have sought protection from the statutory laws governing trade marks. Several well-known personalities have registered their names, initials, signatures, images and slogans as commercial trade marks. For example, our past springbok personalities, Naas Botha and James Small have registered their names as registrable trade marks. Eric Cantona, the well-known English footballer, has not only registered the name “Cantona 7″ as a trade mark, but also his famous slogan ” ooo…aaah Cantona”. Trade mark law is a useful protectionist piece of legislation in terms of image rights for sports stars as it gives the athlete a monopolistic control for a certain period over his registered image trade mark and, thereby, preventing another person from registering or attempting to register or use an identical or similar image trade mark.

Copyright law also assists sports stars in their fight to protect their image rights, even if its application to such protection is somewhat limited or bedeviled. Notwithstanding some of the difficulties in applying copyright law, its protective qualities were best put on show when in 2003 a number of senior South African Springbok rugby players brought a High Court application to interdict the distribution and sale of the DVD featuring the infamous Kamp Staaldraad training camp of the springboks in preparation for the 2003 World Cup. Aside from the Court finding that the players featured in the footage would have been the subject of a claim to impairment to their dignity and good name, the Court also found that the producers of the DVD were in breach of South African copyright law. This was due to the fact that the footage of the Kamp Staaldraad training camp belonged to SA Rugby (Pty) Ltd and the said organization had neither consented nor assigned its ownership rights in the footage to the producers of the Kamp Staaldraad DVD.

Another example of how laws assist sport stars to protect their image rights was tested in England when Eddie Irvine, the famous Formula 1 racing driver, successfully won his case for the unauthorised use of his image when it became apparent that a certain radio station had manipulated a photograph of Irvine by removing the cellphone in his hand and replacing it with a radio emblazoned with the words ” Talk Radio”. Irvine claimed that the use of his image amounted to a misrepresentation of his endorsement of the radio station and the radio show’s programme content. The Court concluded that Irvine had established a substantial reputation not only among Formula 1 racing fans, but across a wide spectrum of the British public. The Court held further that the use of the manipulated photograph would be seen to be understood by the general public at large as an implicit endorsement by Irvine of the radio station when in fact he did not.

In a matter leading up to the 2003 ICC Cricket World Cup, the ICC attempted to have contracted players sign agreements incorporating a provision that entitled the ICC to use and exploit the image rights of the players for its benefit without any compensation to the players. When a stand-off ensued, an agreement was reached whereby the ICC was entitled to make use of the contracted players’ rights for a short period during and after the World Cup.

SOUTH AFRICAN LAW

South African law does not, currently, recognise any specific proprietary interest and property rights in the image, likeness, voice or other aspects of the persona of individuals such as famous sport stars or celebrities. Where sports stars themselves or through their image companies have registered their image rights as trade marks, infringement proceedings may be instituted against the infringer for such trade mark infringement. Copyright also acts as a useful tool, but this will mainly find application where the action is based on a breach of copyright and if it can be proved that there was a reproduction in material form of a substantial part of an original work. At common law, the sport star can institute an action for delict where he has been defamed or his dignity has been violated. Alternatively, a claim for a breach of ones constitutional right to privacy may also be of some assistance to the sports star.

Despite these legal frameworks to protect and manage the image rights of sports stars, it is still regarded by many industry experts that the South African law does not do enough in this regard. The law seems to fail in the growing commercial reality that the exploitation of image rights by unscrupulous advertisers and vendors without the permission of the athlete may cause patrimonial damages in the form of a dilution in the value of certain marketing aspects of the image or the substantial loss of royalty earnings or license fees associated with the lawful use and exploitation of the athlete’s image. It also fails to recognise that a lawful rights holder of image rights will find his advertising market being “thinned out” when a third party exploits such image without consent or authority.

In the case of Federation Internationale de Football v Bartlett (1994 4 SA 727 (T)), the Court stated that the “concept of character merchandising has taken hold in South Africa”. While this provided a glimmer of hope for the recognition of the commercial realities of image rights and the starting point for a change in legal precedent to recognise a stand alone protectable right, Louw in his article, Suggestions for the Protection Of Star Athletes and Other Famous Persons against Unauthorized Celebrity merchandising in South African Law (2007 19 SA Merc LJ at 287) says, however that such recognition has not provided a distinct remedy based on a distinct and legally recognised property right in the case of celebrity merchandising. Louw and many other experts are hopeful that our laws will change soon to accommodate this new commercial realisation in South African sport, especially when such recognition to a distinct right will have many benefits for our sport stars, in particular the previously disadvantaged who have, all but, hung their hat solely on their talent and ability to earn a living as sport stars.

CONCLUSION

While the growth in sport and the various tentacles of commercialisation takes hold, laws around the world are in desperate need of change in order to recognise the protectable interests in matters such as the image rights of sport stars and celebrity personalities. While America, Canada and Germany have made huge in-roads into recognizing and creating laws to protect image rights of stars and celebrities, South Africa and other countries such as the United Kingdom and Australia do not yet recognise a so-called “stand alone image rights”. Our sports stars, who are by the nature of their calling and training, athletes and not lawyers or sport administrators, will be well advised, in the interim, to take time out to seek professional help and guidance in managing their commercial rights, especially when it involves aspects of image and character merchandising rights. As a starting point, use should be made of trade mark registrations wherever possible as well as a properly negotiated and structured contracts to ensure legitimate exploitation of such rights to the benefit of the sports star. In the meantime, it is hoped that judicial acceptance of a stand alone image right will find favour and that our laws will align itself with the commercial realities of our growing sports industry.

Author details:
Sean G. Bosse (Bjuris LLb HDip Co MBA (Eng)) is a sports, sponsorship and entertainment management consultant. Please feel free to contact him on sbosse@vodamail.co.za

LEGAL NOTICE:
This article may be published in any medium and in any territory in full or in part, subject to the condition that copyright remains vested in the author and the publisher agrees to give and make full reference to the author hereof.

“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

Stealing stories: How to protect yourself

How can writers protect themselves from story theft and what legal remedies are at hand to assist them in preventing such story theft? The first part of this article will look at how a writer can protect his story using the law of contract and, in a future article, I will look at how copyright law can further assist a writer in this regard.

Recently, I was engaged by a writer who had authored a novel a few years back and had subsequently written a screen play therefrom. My client wanted to approach one of the country’s leading television production companies with a view to marketing the screen play and, hopefully, for the creation thereof into a television series.

During our consult, my client told me a few horror stories regarding story theft by independent production companies and, in some cases, how writers were left penniless after their story was created into a Broadway production, television series or movie. While this situation is not typical in South Africa and within our entertainment industry, it is very much alive in more mature markets such as Hollywood.

1. Story theft

When a writer applies his mind and his labour to create a story, the end result constitutes not only a creative work but also an intellectual property asset belonging to the writer. Like many writers the world over, the creative process must be married to the commercial process in order for the writer to enjoy the material fruits of his or her labour. This usually comes in the form of a book deal or book publishing; it may also result in a screenplay and, ultimately, a television or movie production.

Story theft can happen in an instant to the inexperienced or unrepresented writer. For example, where a writer leaves a copy of his manuscript with the receptionist of a production company to be passed on to someone higher up. Several months later, the writer learns that his story has been published (with a few changes here and there) under the name of another author!

Where there is a clear case of the theft of a writer’s story by, for example, a production company, such company and/or its employees or agents face not only a civil claim by the writer for the loss the writer has suffered as a result of the theft of his story, but also the reality that the production company and/or its directors, agents or employees may be charged with theft in the criminal court.

2. Agreements

But how can a writer avoid even reaching this critical juncture? The answer lies in contract law. Contract law is that body of rules and regulations that govern the agreements between contracting parties and the enforcement of each one’s rights in terms of the content of their agreement. Before I look at specific ways that contract law can be used to help protect a writer’s story from being stolen, let’s first understand the general ambit of contract law and how our law deals with the rules and regulations in interpreting and enforcing agreements.

In terms of contract law, it is always in the contracting parties’ best interests to record their agreement in writing. A written agreement provides documentary proof of the terms and conditions agreed by the parties when they entered into the agreement by signing the document. Our law recognises the principle of the freedom of contract and will enforce those terms and condition on each of the parties to the extent that terms and conditions are lawful.

A verbal contract is also recognised in our law as a valid and enforceable contract between parties who have concluded such an agreement. While our courts do recognise a verbal contract, it is usually very difficult and time-consuming to prove the exact terms and conditions thereof. Where the parties are in a dispute and the matter is referred to court or arbitration, each party will be called upon to lead evidence to prove the terms and conditions that the parties agreed to when concluding the verbal contract.

As you can imagine, this is a difficult process and the result of the court award or arbitration will usually be made in favour of the person who can prove his case better than the other party. It still doesn’t however, mean that the court or the arbitrator would have seen and understood the true terms and conditions as they would have done had the contact been in writing.

3. Express, tacit or implied

Another important element to consider in interpreting and enforcing contracts is whether such contracts are express, tacit or implied contracts.

An express (written or verbal) contract poses no difficulty because the terms and conditions are clear for all parties.

It becomes a little more difficult when contracts (written or verbal) are interpreted as being tacit or implied. For example, you take your family out for supper to your local restaurant; you choose your meal, eat your selected meal and drink the bottle of wine you ordered. At the end of the evening you walk towards the door but don’t pay at the till point. The manageress stops you and demands payment. While you may not have directly and expressly entered into a contract with the Manageress, the mere fact that you entered the restaurant, chose and ate your meals and enjoyed a bottle of wine all adds up to conclusion that by your actions you agreed to pay for your meal even though you did not expressly enter into a formal contract.

Your actions, in this case, creates a contract based on the implied terms of the restaurant offering to sell you a meal and your offering to pay for it at the end.

4. Confidentiality contracts

With that understanding of a few of the general principles of contract law (there are more), let’s look at how a writer can use the law of contract to protect his or her story from possible misappropriation.

Where a writer, for example, goes to see a publisher or production company to pitch his or her story, may want to start by saying something like,” I would really like to show you my story. I am willing to do so on the understanding that if you want to produce it or publish it, you agree to pay me.” If the agent says he will, then you have an agreement which is enforceable in law.

It is always best to try and have the producer acknowledge the terms of the agreement in a written contract, but practically it is seldom that a producer or publisher will sign a legal document of this nature and, by doing so, bind his or her company without first having seen your story.

In such a case, I suggest that you follow up your meeting with a short email to the producer confirming your meeting and summarising the terms upon which you showed him or her your story. The important part of the email may want to read something like this,” I confirm that you have agreed to look at my story and, in the event that you decide to publish it, you will pay me therefore.”

But what happens where the producer, after having read your story, tells another person of the plot, characters and more and such other person then goes about developing his or her story based on what he or she heard the producer say about your story?

This can also be overcome by binding the producer to a confidentiality agreement. You could say something like ” I am telling you my story in the strictest of confidence and that you will not share it with anyone else unless you ask me and I consent to such sharing.”

In this way, the producer is bound by the terms of your agreement and may not disclose the story to any other person without your permission. If he or she does so, he or she commits a breach of your contract and you, as the writer, can sue him or her for any loss or damage you suffer as a result of this breach of the confidentiality contract.

5. Useful tool

Contract law provides a useful tool to a writer or writer’s agent to protect against the threat of story theft. Where stories are, however stolen and contract law does not provide any assistance to the writer, all is not lost. The law of copyright provides some meaningful ammunition to deal with story theft. More on this point in my next article.

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!