After 14 years of negotiations, the Copyright Alternative in Small-Claims Enforcement Act (CASE) was signed into law by President Trump. The legislation was buried in the omnibus bill that includes $900 billion in coronavirus relief and stimulus spending, and another $1.4 trillion to run the government through September. This new law means that those who post copyrighted material without permission can face up to $30,000 in penalties.  

The Act essentially creates a small claims process that makes it easier for photographers, designers, songwriters, and other creatives to protect their work against copyright infringement. The new law creates a Copyright Claims Board within the Copyright Office that will have the authority to adjudicate copyright infringement claims unless the defendant receives notice and opts out. The Board may issue monetary awards based on actual or statutory damages. The parties bear their own attorneys' fees and costs except where there is bad faith misconduct.

The Board’s final determination precludes relitigating the claims in court or at the Board. Parties may challenge a Board decision in federal district court only if (1) the decision was a result of fraud, corruption, or other misconduct; (2) the Board exceeded its authority or failed to render a final determination; or (3) in a default ruling or failure to prosecute, the default or failure was excusable.

The law was sponsored by Representative Hakeem Jeffries, a New York Democrat with 152 co-sponsors (107 Democrats and 45 Republicans in the House). But it is somewhat controversial and has been harshly criticized by the Electronic Frontier Foundation  which opines that only Big Tech Internet companies will have the resources to be able to keep on the “right” side of the law.  It also creates new ways for major studios and record labels to go after those who use their content without permission.

The Act includes recommendations set forth in the Copyright Offices Small Claims Report issued in 2013. That report mentioned that many artists could not afford the costs of obtaining counsel to bring a federal court lawsuit to protect their work.  

Read the full text of the act here. 
 

Actor Johnny Depp has lost his lawsuit against the British newspaper The Sun, which had claimed he had beaten his former wife Amber Heard.
 
The couple met in 2011 during production of "The Rum Diary," and married in 2015. She was 22 and he was 45. Heard filed for divorce about a year later. She had obtained a temporary restraining order against Depp after claiming he had struck her. However, she later withdrew the claim and in 2017 agreed to a 7 million dollar divorce settlement.
 
Defamation is a communication that harms the reputation of another, so as to lower him in the opinion of the community or to deter third persons from associating or dealing with him. For example, those communications that expose another to hatred, ridicule, or contempt, or reflect unfavorably upon one's personal morality or integrity are defamatory. One who is defamed may suffer embarrassment and humiliation, as well as economic damages, such as the loss of a job or the ability to earn a living. There are a number of defenses and privileges in defamation law in both the United States and the United Kingdom. Perhaps the most important privilege is truth.
 
If your remarks hurt someone's reputation, but your remarks are true, you are absolutely privileged in the United States. An absolute privilege cannot be lost through bad faith or abuse. So, even if you maliciously defame another person, you will be privileged if the statement is true. Truth is an absolute privilege because our society values truth more than a person's reputation.
 
In general, it is easier for a plaintiff to prevail in the United Kingdom on a defamation claim than in the United States. In the United Kingdom the burden of proof to prove the libel (written defamation) is substantially true rests on the defendant. In the United States, the burden is on the plaintiff who has to prove the statement is false in cases involving matters of public concern or public figures, and  that it was made recklessly or intentionally knowing it was false. This is why celebrities rarely sue for defamation in the United States.
 
Because this case was under United Kingdom law, the burden was on The Sun newspaper to prove that the defamatory remark was true. And it was successful at that task by introducing photos, audio recordings and text messages as evidence that Depp beat his wife, causing her significant injuries, and on occasion, leading her to fear for her life. In addition,  Heard testified that he had assaulted her.
 
Depp admitted long-term problems with drugs and alcohol but said the allegations that he was violent toward Heard were "completely untrue." Depp described a troubled childhood. His home life, he said, was not stable or safe and he had been beaten as a child for trivial matters. He said that experience had turned him against violence of any sort. Heard also gave an account of a troubled home life. She said that both her parents were alcoholics. She said that her father had been violent to her mother.
 
After a long trial, the court found for the publisher on the basis that the statement alleging Depp had beaten Heard was substantially true. Depp's attorneys claim they plan to appeal. He is also suing Heard in a U.S. court, after she published an op-ed in The Washington Post identifying herself as a survivor of sexual and physical violence.
 
Read the Full Decision. 
 

Mark was recently interviewed as a top professional by Backstage Magazine.  He discusses the role of a production lawyer.  The article is titled: How Entertainment Lawyers Assist Filmmakers + Legal Issues You Should Know About.  

Read the complete article here.

​We are moving to Santa Monica.  Effective September 1, 2020 we will be at our new  offices in Santa Monica.
 
Our new address will be:
 
Law Offices of Mark Litwak & Associates
201 Santa Monica Blvd., Suite 300
Santa Monica, CA 90401
Phone: (310) 859-9595
E Mail: Law3@marklitwak.com
Website: www.marklitwak.com
 
Our phone numbers and email remain the same.

​Congratulations to our client Walden Media which produced the The Baby-Sitters Club which premieres on Netflix on July 3, 2020. We were pleased to provide production legal services on this series.
 
The series has been garnering rave reviews. See, NY Times. https://www.nytimes.com/2020/07/02/arts/television/review-the-baby-sitters-club-netflix.html
 

Christian Charles, a writer and director, and well-known comedian Jerry Seinfeld, had collaborated on various projects. During one of their conversations, Charles suggested to Seinfeld that they create a television show based on the concept of two friends talking and driving. In 2011, Seinfeld allegedly mentioned to Charles that he was considering a talk show about "comedians driving in a car to a coffee place and just 'chatting,'" as his next project. They then purportedly agreed to work together on the endeavor.
 
Charles then generated a treatment which he claims captures the "look and feel" of Comedians in Cars Getting Coffee as well as a "synopsis, camera shot list with visual camera angles, and a script." He claimed he had an understanding with Seinfeld that his company would produce the series and was concerned when Seinfeld brought in a subsidiary of Sony Pictures Television to produce it. According to Charles when he requested compensation and a share of backend profits, Seinfeld objected to giving him anything other than paying him to direct some episodes.
 
Charles alleges that "Seinfeld did not claim authorship or ownership of the Pilot" even though "Charles had often reminded Seinfeld" that the idea for the show came from him.
 
In 2017, Netflix inked a lucrative new deal for the show, leading Charles to contact Seinfeld. Seinfeld's lawyer responded, stating that Seinfeld was the creator and owner of the show.
 
Seinfeld and other Defendants went on to produce and distribute the show without giving any credit to Charles. The Netflix deal has been reported to have a $100 million-dollar production budget with Seinfeld earning about half a million dollars per episode. More than 80 episodes have been produced. Charles filed suit in 2018 claiming among other things, copyright infringement.
 
Seinfeld argued that this lawsuit was a frivolous attempt to capitalize on the success of the show and that Charles requested compensation “five-and-a-half years after the Show premiered” “claiming for the first time to be its creator. As far back as February 2012, Seinfeld claimed he had rejected Charles's requests and made it clear that his involvement would be as a paid hand on a work-for-hire basis. Moreover, the show premiered in July 2012 without crediting Charles, at which point it should have been clear to Charles that Seinfeld was disputing any copyright claim he might have.
 
This delay, Seinfeld argued, barred Charles claims. Claims under the Copyright Act must be brought within three years after the claim has accrued" under 17 U.S.C. § 507(b). The District Court agreed, and on appeal, the Court of Appeals affirmed that dismissal. 
 
This case is a good example of why it is important that if you have a claim, do not delay pursuing it.
 
Read the District Court opinion.
 
Read the Court of Appeals decision.

California has given the green light to resume production under new health protocols meant to minimize transmission of the Coronavirus. The protocols were agreed to by a task force of studios and union officials who drafted a 22-page White Paper setting forth guidelines.
 
However, shooting is subject to approval by county public health officials at the locations for each shoot.  The changes in production include elimination of buffet-style meals, greater sanitation and disinfection of equipment, and social distancing. 
 
Other changes include:
 
Disposable masks will need to be replaced each day and reusable masks will be cleaned each day.  There will also be increased access to hand washing stations and sanitizer.
 
Regular, periodic testing of the cast and crew will be used to mitigate the risk of the spread of COVID-19.
 
The use of face coverings when feasible on set or at production/studio facilities workspaces.
 
Crew lists, call sheets, production reports and other similar documents should be electronic, not paper, whenever possible.
 
Mealtimes should be staggered to avoid the gathering of large groups in the same location at the same time.
 
One or more COVID-19 Compliance Officer(s) with specialized training, responsibility and authority for COVID-19 safety compliance and enforcement will be in the workplace at all times during work hours. These officers shall be in charge of monitoring physical distancing, testing, symptom monitoring, disinfecting protocols, and PPE education.  All personnel will  have access to the COVID-19 Compliance Officer(s)  and know how to contact them.
 
Download the full white paper report here.
 
Download the Covid-10 Health Department guidelines here

I am again presenting  my Risky Business seminar for the New York Volunteer Lawyers for the Arts. However, this year because of the Covid-19 crisis the seminar will be in the form of an online webinar on Zoom. The seminar will be presented over two days, 3 hours each day. For those of you who have wanted to attend this seminar but could not come to New York, now is your chance to participate remotely.
 
This comprehensive seminar is for new attorneys, attorneys transitioning to entertainment law, and filmmakers. It explores how independent films are financed and produced.
 
Particular attention will be paid to how producers and filmmakers can protect themselves, including:
 
·       Criteria for selecting a distributor;
·       Investigating distributors;
·       Adding contract provisions and understanding terms;   
·       Dealing with investors, and more

Other topics will include compliance with state and federal laws regarding investors, retaining an attorney, producer's rep, and publicist, and confirming awards and enforcing judgments.

Participants will receive a 149-page detailed handout with a distribution contract, articles, forms and a self-defense checklist, as well as a 150 slide powerpoint of the presentation. 

This program is a two-day online seminar offering up to 7 Continuing Legal Education credits to attorneys.

Dates and Time:
Thursday, June 18, 2020:  1 - 4:30 PM EST
Friday, June 19, 2020: 1 - 4:30 PM EST
 
​For additional information and to register.

Mark was recently interviewed on the National Public Radio's program Marketplace about the exhibition of films on Amazon Prime that were selected to be screened at the SXSW festival, before it was cancelled due to COVID-19.
 
While Amazon is to be commended for offering this showcase, participating in such a virtual film festival is a mixed blessing for filmmakers.  For some filmmakers, especially those with short films, it might give them exposure they otherwise would never receive, plus a fee for participating.  However, for many filmmakers this offer poses a dilemma, because participating could preclude them from appearing at other top festivals in the future and may make it more difficult to secure a deal with a distributor or sales agent. Moreover, it would likely eliminate any chance for a theatrical release and the revenue that might result. Perhaps that is why so few filmmakers elected to participate. The Amazon screenings are comprised of only 39 films including only four narrative features and three documentary features.  
 
One's leverage in negotiating a distribution deal depends on whether distributors perceive the film as desirable. There is no substitute for having your film screen at a top festival in the presence of acquisition executives who can witness firsthand an audience enjoying your film. Moreover, if your film is shown at a top tier festival, you may also benefit by having your film reviewed by the New York Times or other major media. Most publications only review films screened at such festivals, or films that have already secured distribution and are about to be released in theaters.  A positive review from a major publication can in turn attract distributors and assist in marketing your film.
 
Not only do top festivals compete to premiere the best films, many distributors also demand to show films first. It usually is next to impossible to convince theaters to exhibit a film that has already been shown on television or Video on Demand. Indeed, most theaters demand that films they exhibit are not shown in other media for 90 days after the theatrical run ends. Some platforms like Netflix may require an exclusive first run to consider acquiring a film.
 
The SXSW virtual film festival will stream from April 27 to May 6, 2020, with 39 shorts and features being shown free to the public. A list of the films being streamed can be found here.
 
Marketplace  can be listened to here.

IndieWire covers the changes to production insurance and what productions will be like after the Corona virus. Read article here.

The movie and television industries have been devastated by the COVID-19 virus. Almost all production has been halted, theaters have shuttered and cast and crew have been furloughed or terminated. Delivery of films to networks and streaming outlets have been delayed and, in some instances, productions may never resume.   If a producer was in the middle of a shoot when forced to shut down, it may be impossible to restart, because the cast and crew may have conflicting commitments that preclude them from resuming their work at a later time.

Many movie industry contracts contain a Force Majeure clause to deal with situations like the COVID-19 pandemic. This is one of those boilerplate clauses that parties rarely pay much attention to or bother to negotiate.  However, the clause is important because it may excuse the performance of one or more parties who cannot fulfill their obligations because of something outside their control, like an earthquake, war or a pandemic. Sometimes these events are referred to as Acts of God. These events may excuse a breach of an agreement by either party because they are deemed unforeseeable. So, for example, if a producer in the midst of production of a television series has to stop production because of a pandemic, the producer may be able to terminate or suspend the performers employed, without any obligation to pay them the balance of their salary for the rest of the season.  

Here is a typical force majeure clause found in many artist employment agreements:  

FORCE MAJEURE:  During the Term, in the event that the development or production of the Series for which Artist is rendering services hereunder are materially hampered, interrupted or interfered with by reason of an event of force majeure or by virtue of any other disruptive event which is beyond Producer's control or a labor dispute, strike or lockout (collectively, "Force Majeure"), Producer shall have the right to suspend this Agreement pursuant to the provisions regarding suspension. Producer may terminate this Agreement at any time upon written notice during the continuation of such event of Force Majeure, and regardless of whether Producer shall have exercised the right of suspension. If this Agreement is terminated pursuant to any of the provisions of this paragraph, Producer shall be released from and relieved of all further obligations and liabilities to Artist, other than Producer's obligation to pay Artist  such compensation, if any, as may be due and payable to Artist hereunder at the time of such termination.

Under such a provision, the obligations of the parties to each other can be terminated or suspended. The provision works both ways. It might excuse an actor failing to show up at a location because flights have been cancelled, or it might excuse a producer who suspends or terminates the actor because the shoot had to shut down.
The clause above does not explicitly mention that a disease or a pandemic qualifies as a force majeure and sometimes it may not be clear if a party has been prevented from fulfilling their obligations or just that the event has made it more difficult or expensive to do so.  In the case of shooting in Los Angeles, since local authorities have prohibited shooting in the entire County, there is no question that COVID-19 has shut down all productions here.

A producer’s liability from a shutdown might be reimbursable if the producer has a completion bond or business interruption insurance. A completion bond is a type of insurance that guarantees completion of film even if the production goes over budget. Typically, the insurance covers extra costs incurred due to the death, illness, incapacity, default of the producer, director, any principal cast member or other person essential to the production. It also covers the occurrence of an event of force majeure. Before issuing a policy, the completion guarantor will require a realistic budget, with a ten percent contingency amount for unforeseen cost overruns, and an automatic extension of the delivery deadline for up to three months.  The insurer will also require that experienced crew be hired.   However, not all productions have completion bonds. Many studios self-insure and independent filmmakers with budgets less than one million dollars cannot obtain this kind of insurance.

Business interruption insurance can also cover lost profits and costs that result from disruptions in a company’s supply chain, including failures by suppliers or the inability to sell to customers. However, after the 2002 SARS outbreak, some insurers excluded communicable diseases from their coverage.  

Even without insurance or a force majeure clause to rely on in one’s contract, a party could assert the impossibility defense if they fail to live up to their obligations because of unforeseen circumstances. Thus, a producer who misses a delivery deadline could argue that the pandemic made it impossible for him to deliver the production on time, and therefore his failure should be excused. A party relying on the defense of impossibility of performance must establish (1) the unexpected occurrence of an intervening act, (2) that occurrence was of such a character that its non-occurrence was a basic assumption of the agreement of the parties, and (3) that occurrence made performance impracticable[1] Under California law, impossibility of performance will excuse a party's performance under a contract.[2]

The impact of COVID-19 is going to financially hurt many people in the movie industry, including the workers, executives and companies large and small that produce and distribute content. Some companies may not survive.  However, the demand for entertainment will surely endure after this crisis is over.
 
 [1] Restatement (Second) of Contracts § 261. In re Janssens, 449 B.R. 42 (Bankr. D. Md. 2010), judgment aff'd on other grounds, 2011 WL 1642575 (D. Md. 2011). 

[2] In re Toyota Motor Corp., 790 F. Supp. 2d 1152, 85 Fed. R. Evid. Serv. 451 (C.D. Cal. 2011) (applying California law). 

​The Hollywood Reporter has published a story that major studios risk losing their franchise rights to major 80’s films like Terminator, Friday the 13th and Who Framed Roger Rabbit because authors have the right to terminate grants to their work and regain ownership under copyright law.
 
Under U.S. copyright law, authors (or, if the authors are not alive, their surviving spouses, children, or executors), can “terminate” copyright assignments they have previously made in certain circumstances and regain rights to their work.  Consequently, even if an author, musician, or filmmaker signed an agreement transferring all rights in their work in perpetuity, the Copyright Act provides that the author can terminate that grant and demand that the rights revert. Essentially, the author is getting a second chance to make money from his work.
 
Congress deemed these provisions desirable “because of the unequal bargaining position of authors, resulting in part from the impossibility of determining a work's value until it has been exploited.”  However, the mechanism that Congress put in place in order to allow authors and their heirs to regain their rights is complicated.
 
Copyright termination rights are found in § 203 and § 304  of the U.S. Copyright Act of 1976. The relevant provisions in § 203 of the statute set forth that “[i]n the case of any work other than a work made for hire, the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978, otherwise than by will, is subject to termination.  Termination of works assigned after January 1, 1978 may be exercised during a five-year window that starts 35 years after the date of assignment under certain conditions.  These conditions include the requirement that the author provide notice of an intent to exercise the termination right between two and ten years before the effective date of the termination. On the effective date of termination, all rights previously transferred from the author to the grantee revert to the author.
 
Works previously created before termination can continue to be distributed. The owner of a film produced based on a novel, for example, can continue to exploit the movie because that grant was prepared under authority of rights before termination.  However, no new sequels or remakes could be made after termination.
 
It bears noting that termination rights cannot be waived in advance by contract including an agreement to make a will or to make any future grant.” §§ 203(a)(5), 304(c)(5).
 
These rules do not apply when the content created was made as a work for hire. This is one reason it is preferable for producers to enter into work for hire agreements with their collaborators, rather than obtain rights from them by way of assignment.
 
Notices of termination may be served no earlier than 25 years after the execution of the grant or, if the grant covers the right of publication, no earlier than 30 years after the execution of the grant or 25 years after publication under the grant (whichever comes first).  However, termination of a grant cannot be effective until 35 years after the execution of the grant or, if the grant covers the right of publication, no earlier than 40 years after the execution of the grant or 35 years after publication under the grant (whichever comes first).
 
The provisions generally provide that transfers before 1978 can be terminated during a five-year period beginning at the end of 56 years from the date copyright was originally secured, while transfers after 1978 can be terminated during a five year period beginning either 35 or 40 years after execution of the grant, depending on the nature of the grant.