​Many bloggers and social media users may be surprised to learn that truth in advertising laws apply to them just as they do to television broadcasters and magazine publishers. Endorsements must be honest and not misleading. The endorser must disclose if they have a financial interest in the product they are promoting or if they are being paid to promote it.
 
Recently, the Federal Trade Commission (FTC) for the first time went after social media influencers who did not disclose their interest in a website that they promoted to their subscribers.  Trevor Martin and Thomas Cassell are popular social media influencers in the online gaming community. They posted videos on their YouTube channels (with 3.3 million and 10 million subscribers respectively) showing them participating in an online gambling service without disclosing that each had a 42.5% ownership interest in the online gambling company, thereby violating FTC disclosure laws. The FTC’s complaint can be read here.  
 
The case was settled with a Consent Agreement that requires the parties to:
 

• Comply with FTC disclosure guidelines, with an additional burden to properly monitor and ensure compliance by any endorsers they partner with for promotional purposes in the future;
• Submit a compliance report in one year;
• Keep records of activities related to the business for up to 10 years; and
• Submit to ongoing compliance monitoring by the FTC for a period of up to 10 years.

  
The FTC is troubled with endorsements that are made on behalf of a sponsoring advertiser. For example, an endorsement by a blogger would be covered by the FTC Act if he or she was paid to mention a product. Even if not paid, if one receives free products or other benefits with the expectation that the blogger will promote a product in a  blog, the blogger is potentially violating the law.  Such practices may constitute unfair or deceptive acts affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.
 
The FTC publishes endorsement guides  to provide guidance as to the rules and laws that apply. A single disclosure on a home page may not be adequate to insulate yourself from liability if visitors would not see the disclosure when reading a review or watching a video on your site.
 
 Mark Litwak

The Grinch and Fair Use
By Mark Litwak
 
On September 15, 2017, Judge Alvin K. Hellerstein of the United States District Court
for the Southern District of New York[1] issued an important fair use ruling about a play based on a children’s book. Playwright Matthew Lombardo wrote Who's Holiday! which makes fun of the characters, plot, and setting of the classic book, How the Grinch Stole Christmas! ("Grinch") by the late Theodor Seuss Geisel who went by the pen name
Dr. Seuss. The author created many of the most popular children's books of all time, selling more than 600 million copies.
 
The original Grinch book is about a green creature that lives in a cave on Mount Crumpit in the town of Who-Ville, home of the merry and cheerful Whos, who love Christmas.
The Grinch, who hates Christmas, decides to ruin the holiday by disguising himself as Santa Claus and stealing all of the communities’ Christmas trees and presents. While pursuing his evil deeds, he meets Cindy-Lou Who, a cute two-year old.  When she asks the Grinch why he is taking her family's tree, the Grinch lies by telling her that he needs to repair a light but will return it soon. Cindy-Lou goes back to bed. The next day, as the Grinch listens for the sound of despair from crying residents, he is surprised instead when he hears merry singing. The Grinch, upon learning that the residents could remain joyous even without presents or Christmas trees, realizes that Christmas means more than presents.

The play is a one woman 75-minute comedy presenting a destitute 45-year-old adult version of Cindy-Lou Who. It takes place at a 1970s-era trailer. Cindy-Lou speaks to the audience in rhyming couplets that are clearly intended to evoke the work of Dr. Seuss while waiting for guests to arrive for her Christmas party. She informs the audience, using bawdy rhymes, of the story of her life, beginning with her first encounter with the Grinch followed by sex, a marriage opposed by her parents, the birth of a child, and eventually divorce.

As she relates her story, Cindy-Lou swills hard alcohol, consumes prescription pills, and smokes a substance she calls “Who Hash," which she describes as just "like a prescription" which keeps her in check to avoid a "conniption." She engages in this self-medication following her realization that none of the guests she invited to her party is going to arrive, as they keep calling throughout the Play to cancel.
 
The key issue raised by the case was whether the Play is a fair use that comments on Grinch by imitating and ridiculing its characteristic style for comic effect, or unfairly exploits the characters, style and themes of Grinch to capitalize on the original. Under the fair use doctrine, authors can draw upon existing works to produce new works of authorship without violating the copyright of the original author. Such uses include fair comment and criticism, parody, news reporting, teaching, scholarship, and research. Thus, a movie or literary critic does not need permission to include a small quote from a work being reviewed. It is sometimes said of writers that if you borrow extensively from another’s work, you are a thief; but, if you borrow small amounts from many, you are a scholar. Of course, the scholar adds value by synthesizing information from prior works and creating something new. 
 
In determining whether the use of a copyrighted work is a fair use, courts weigh four factors: 1) the purpose and character of the work; 2) the nature of the copyrighted work; 3) the amount and substantiality of the portion borrowed in relation to copyrighted work as a whole; and 4) the potential adverse effect on the market for, and value of, the copyrighted work.
 
One type of fair use is a parody, which is a work that imitates the characteristic style of an author or a work for comic effect or ridicule. The work copied must be, at least in part, an object of the parody. The central question in many instances is “whether and to what extent the new work is 'transformative.’'' In other words, as the Supreme Court has explained, "whether the new work merely supersedes the objects of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message."[2]
​
After a detailed analysis, Judge Hellerstein found that the Play “recontextualizes Grinch's easily-recognizable plot and rhyming style by placing Cindy-Lou Who — a symbol of childhood innocence and naiveté — in outlandish, profanity-laden, adult-themed scenarios involving topics such as poverty, teen-age pregnancy, drug and alcohol abuse, prison culture, and murder. In so doing, the Play subverts the expectations of the Seussian genre, and lampoons the Grinch by making Cindy-Lou's naiveté, Who-Ville's endlessly-smiling, problem-free citizens, and Dr. Seuss' rhyming innocence, all appear ridiculous.”
 
This case is another in a recent series of cases[3] that further defines what is a fair use and expands protection for authors who parody pre-existing works. However, this past June, a motion to dismiss a case concerning the works of Dr. Seuss was decided by the United States District for Court for the Southern District of California with a different outcome.[4] Rather than dismiss the case, the court let the matter proceed forward.
 
In Dr. Seuss Enters., L.P. v. ComicMix LLC, Defendants created a Kickstarter campaign in order to fund printing and distribution of an allegedly infringing work, Oh, the Places You’ll Boldly Go! ("Boldly"), which combines aspects of various Dr. Seuss’ works with "certain characters, imagery, and other elements from Star Trek, the science fiction entertainment franchise created by Gene Roddenberry. Here, the court refused to dismiss the copyright infringement claim on the grounds that there was insufficient evidence of whether this work would affect the market for Dr. Seuss’ work. The court found that Boldly failed to qualify as a parody even though it was transformative, explaining, “it combines into a completely unique work the two disparate worlds of Dr. Seuss and Star Trek. Go! tells the tale of a young boy setting out on adventure and discovering and confronting many strange beings and circumstances along his path.” While the defendants were not successful in getting the court to dismiss the complaint with a preliminary ruling, the outcome of the case remains to be decided.
 
These two cases demonstrate the difficulty of determining whether a fair use defense is viable. One useful resource in determining fair use is the copyright office’s compilation of cases in its Fair Use Index found at: https://www.copyright.gov/fair-use/fair-index.html.
[1] Lombardo v. Dr. Seuss Enters., L.P., No. 16 Civ. 9974 (AKH), 2017 U.S. Dist. LEXIS 150213, (S.D.
N.Y. Sept. 15, 2017), available at https://advance.lexis.com/api/document/collection/cases/id/5PGM-YH61-F04F-03KC-00000-00?cite=2017%20U.S.%20Dist.%20LEXIS%20150213&context=1000516. 
 
[2] Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 582 (1994).

[3] See Faulkner Literary Rights, LLC v. Sony Pictures Classics Inc., 953 F. Supp. 3d 701, 712, where the court held that Woody Allen’s inclusion of a short quote (“The past is not dead! Actually, it’s not even past”) from William Faulkner’s Requiem for a Nun in the film Midnight in Paris was a fair use. In Seltzer v. Green Day, Inc., 725 F.3d 1170, 1179 ((9th Cir. 2013), the Ninth Circuit held that the popular band Green Day’s unauthorized use of street artists’ work as a video backdrop for its stage show did not violate the artists’ rights.

[4] Dr. Seuss Enters., L.P. v. ComicMix LLC, No. 16cv2779-JLS (BGS), 2017 U.S. Dist. LEXIS 89205, at *31 (S.D. Cal. June 9, 2017). 

According to a recent New York Appellate Division  decision, stories based on facts that have significant fictionalization may violate New York’s Civil Rights Law Section 51,  which contradicts precedent in other jurisdictions and has created uncertainty as to when one can produce a fictionalized movie based on true events without obtaining releases from the subjects of the story.
 
Several years ago, a New York court enjoined Lifetime Television from exhibiting the movie Romeo Killer: The Christopher Porco Story, which was based on the true story of Porco's murder of family members. Porco sued Lifetime, but Lifetime was able to vacate the injunction as a prior restraint of its first amendment right to free expression. This ruling was later upheld on appeal, and Porco's complaint dismissed. Now, however, the Appellate Division has reversed that dismissal.  
 
Porco, who is incarcerated, contended that the movie violated New York’s Civil Rights Law Section 51, the state's privacy law, which protects individuals from the use of their identity for advertising or trade without the prior written consent of the subject. New York's law, however, has an exception for stories considered newsworthy. Porco alleged that the story is a fictionalized account, and that it appropriates his name without his consent "for purposes of profit."  In a surprise decision, the appeals court ruled that the newsworthiness exception could be overcome by fictionalizing the story.
 
The decision is based in part on an earlier decision concerning a fictionalized biography of Warren Spahn, a well-known baseball player, who sued over the publication of an unauthorized biography alleging that his rights under New York’s misappropriation (privacy) statute had been invaded. In the purported biography, the author took great literary license, dramatizing incidents, inventing conversations, manipulating chronologies, attributing thoughts and feelings to Spahn, and fictionalizing events. The invented material depicted the Spahn’s childhood, his relationship with his father, the courtship of his wife, important events in their marriage, and his military experience.
 
The book’s author argued that the literary techniques he used were customary for juvenile books. The defendant never interviewed Spahn, any members of his family, or any baseball player who knew him. The author’s research was comprised of newspaper and magazine clippings, the veracity of which he rarely confirmed. The court held that the New York privacy statute protects a public person from fictionalized publication only if the work was published with knowledge of the falsification or with reckless disregard for the truth (actual malice). In the Spahn case, the court found that the author knowingly incorporated a lot of fictional and false material.
 
So, the precedent became that factual reporting of newsworthy persons and events is in the public interest and is protected, but the fictitious is not. But what happens when facts and fiction are combined, which is common?  Many films are based on true stories, but take considerable creative liberties in telling their tales, including fictionalizing persons and events to make the story more compelling.
 
The Reporters Committee for Freedom of the Press, as well as HBO and the Motion Picture Association of America, Inc. (MPAA) have filed petitions to submit amicus briefs in support of Lifetime and have asked for an immediate review by the Court of Appeals. They argue that the decision is inconsistent with other New York and other state decisions involving expressive works, and with protections for freedom of speech. They contend it threatens to chill creative expression and deter the creation of films and television shows based on real people and events.
 
The full decision can be read here:
 
Reporters Amicus motion: 
 
Lifetime’s motion:
 
HBO and MPAA motion:
​

Actresses often complain about age discrimination in the movie business. Even relatively young actresses claim they have experienced discrimination. Olivia Wilde was reportedly denied the role of Leonardo DiCaprio’s wife in The Wolf of Wall Street when she was 28 years-old, ten years DiCaprio’s junior, with the role given to Margot Robbie who was only 23. [1]

It is not always easy to determine the age of an actor by their appearance at a time when plastic surgery is ubiquitous.  One frequently used source to determine an actor’s age is IMDb.com and its professional version, IMDb pro.com, which are widely used for casting in the entertainment industry. Consequently, many actors do not want to reveal their true age on their IMDb profiles because they believe it may put them at a competitive disadvantage.

In 2013, actress, Huong “Junie” Hoang, initiated a suit   against IMDb based on age discrimination in the case of Huong Hoang v. Amazon.com, Inc. [2]As an aspiring actress, Hoang had signed up for IMDbPro in 2001 but wanted to conceal her real age of 30 so she represented that she was 23. In September 2007, she decided that she no longer wanted the false birth date, and began contacting IMDb, asking that her birth date to be removed from her profile. IMDb informed her it would take measures to remedy any confirmable inaccuracies. She then sent IMDb a number of documents purporting to show her listed birth date was incorrect, including a fake Texas ID, but none of these documents satisfied IMDb, which refused to remove her date of birth from her profile page.

Last year SAG-AFTRA advocated the passage of AB 1687 which was part of effort to mitigate age discrimination in Hollywood by requiring subscription-based entertainment casting databases like IMDb to remove subscribers’ date of birth information upon request. The bill was also backed by the Teamsters, DGA, WGA-West, the Association of Talent Agents, and AARP of California. The law passed through both houses of the California Legislature with an overwhelming majority. The law took effect on January 1, 2017. AB 1687 permits anyone who pays for IMDb Pro to have a date of birth or age removed from an IMDb profile.

IMDb.com, which is part of Amazon.com, has contested the constitutionality of the law and has filed a lawsuit against the State of California in United States District Court for the Northern District of California (Case No. 16-cv-06535-VC) seeking to have a judge void the law. IMDb.com argues that this law does not prohibit the discriminatory use of information, but forces the removal of factual information from the public, which it says is unconstitutional censorship.  

The court found the government had identified a compelling goal – preventing age discrimination in Hollywood. But the government had not shown how the law was necessary to advance that goal. In other words, the court found that it was unclear how preventing one website from publishing age information could meaningfully combat discrimination. Consequently, on February 22, 2017 United States District Judge Vince Chhabria granted the request for the injunction which will stop enforcement of the law while the lawsuit is pending. 

[1] http://www.jdsupra.com/legalnews/25-is-the-new-40-california-s-ab-1687-15211/

[2] Huong Hoang v. Amazon.com, Inc., 2013 U.S. Dist. LEXIS 190477 * (W.D. Wash. Mar. 18, 2013)

Mark was interviewed for Blog Talk Radio by Carole Dean on her show The Art of Film Funding.

The interview explored the details of film distribution.  Click to Listen. 

If you have a website that exhibits third party content, you should make sure you are in compliance Digital Millennium Copyright Act (DMCA) regulations. The rules have recently changed as the copyright office has implemented a new online registration system that replaces the prior paper system. Agents designated before December 1, 2016 must re-register before December 31, 2017 and renew such designations every three years to maintain safe harbor status.
 
The DMCA safe harbor provisions can shield you from liability for copyright infringement in the United States. So if you allow others to post comments, photos or other content on your website, and those materials infringe another person’s copyright, you can avoid liability if you follow the DMCA procedures. This is important because if you allow someone to post material on your website, and you don’t comply with these rules, you could be liable for copyright infringement even though you did nothing improper yourself.
 
To obtain the protection offered under the DMCA, you need to include on your website a DMCA notice informing visitors how to contact you to notify you of the presence of infringing material on your site. You will need to designate a person who will be your agent to receive notices of infringement and register that agent with the US Copyright Office's using their new online registry system.
 
A sample notice for a website is reproduced below which you can borrow from to create your own notice. Where there is a blank at the end after “Copyright Agent,” fill in your name, address, email and contact info of the person you are authorizing to accept any notices. You can serve as your own agent. This notice can be included in your terms and conditions portion of your website.
 
Then you need to register the agent with the copyright office. Go to: https://www.copyright.gov/dmca-directory/
 
There is a 6 dollar filing fee that can be paid online by credit card.
 
The copyright office has a help page with useful instructions at https://www.copyright.gov/dmca-directory/help.html
 
Sample Notice for website:
 
Notice and Procedure for Making Claims of Copyright Infringement
If you believe that your work has been copied in a way that constitutes copyright infringement, please submit your complaint with this information:

• A physical signature of the person authorized to act on behalf of the owner of the copyright interest;
• A description of the copyrighted work that you claim has been infringed upon;
• A description of where the material that you claim is infringing is located on the site;
• Your address, telephone number, and e-mail address;
• A statement by you that you have a good-faith belief that the disputed use is not authorized by the copyright owner, its agent, or the law;
• A statement by you, made under penalty of perjury, that the above information in your notice is accurate and that you are the copyright owner or authorized to act on the copyright owner's behalf.

Our Copyright Agent for notice of claims of copyright infringement on its site can be reached as follows:
Copyright Agent:  ______________________ 

The death of actress Carrie Fisher raised the issue of whether her name and likness could be resurrected after her death for future Star War movies. 

Virtual characters have been used before such as when when Universal Pictures combined CGI and previous footage for Paul Walker's role in 2015's "Furious 7" after his  death in a car crash.

Disney gave a supporting role to a digital version of  actor Peter Cushing in Rogue One, after he died in 1994.

Read the full article here

Distribution of independent films has grown increasing difficult and complex. Today, a filmmaker needs to not only understand how to use social media to promote a film, but also needs to carefully orchestrate varied revenue streams essential to recoupment. These new sources include the Tugg theatrical platform, various Video On Demand (VOD) outlets, Electronic Sell-Through (EST) revenue, direct DVD sales from Amazon, and licensing to Subscription Video on Demand (SVOD) outlets such as Netflix and Hulu. Each year, a handful of films are auctioned off to the highest bidder at Sundance; however, for most films, the producer struggles to figure out how to split rights to maximize return. Reliable information about how best to distribute one’s film and how much can be expected from each source is hard to find.

That is why it is refreshing to be able to access this information for several documentary films. Last September at the International Documentary Association Getting Real Conference, Jon Reiss, the Senior Lab Leader at the IFP Filmmaker Labs presented a seminar called “So Your Film Didn’t Get into Sundance: Navigating the New Distribution Landscape.” The seminar included three documentary case studies: Hooligan Sparrow by Nanfu Wang, which follows a maverick activist Ye Haiyan in southern China as she seeks justice in the case of school girls allegedly sexually abused by their principal (which was at Sundance); Touch the Wall by Grant Barbeito & Christo Brock, which follows two Olympic Swimmers as they prepare for the 2012 London Olympics; and Age of Champions by Christopher Rufo & Keith Ochwat about seniors who compete in the National Senior Olympics.

Touch the Wall used social media and Kickstarter to raise awareness one year before the film premiered. The producers also partnered with various swimming organizations like USA Swimming to promote the film, which premiered at the Denver International Film Festival. The film was briefly released in NYC followed by 363 Tugg screenings, with an average of 153 attendees each and grossing $712,993. The producer also sold $169,000 of DVD’s from their website and through Amazon.com. The film is currently available on Amazon instant video, Vimeo, PlayStation, Google Play and Vudu.

These case studies disclose in detail with real numbers how these films were marketed and distributed and the amount of revenues from each window. This information is rarely made public.
​
You can access a free download of the presentation here: LINK

Dealmaking is the first "self-defense" book for everyone working in the film and television industry. Addressing a general, non-attorney readership, it is a fascinating, highly accessible guide to current entertainment law's peculiarities, "creative" practices, and practical applications.

The Fourth Edition updates the existing text and adds more than 100 pages of new material covering changes occurring in the movie industry such as the growth of new media outlets like Netflix and You Tube.  The first edition won the 1995 Kraszna-Krausz Foundation Book Award. Winning books have been those which make original and lasting educational, professional, historical and cultural contributions to the field.

Purchase your copy today!

Anyone who has been following the presidential campaign is probably aware that Donald Trump has been accused by multiple women of sexual assault. These allegations surfaced after an Access Hollywood recording was disclosed in which Trump bragged to correspondent Billy Bush about kissing women without their permission and claimed that because he was a star, he could grab women by the genitals and get away with it. At the October 9th debate, co-moderator Anderson Cooper pressed him on whether he had engaged in such behavior and Trump denied ever having done so.

Soon thereafter, women starting coming forward with allegations that Trump had acted inappropriately toward them. At the present time, 11 women have made claims about his alleged behavior. Trump has threatened that he will sue the women after the election. The nature of his claim against them is not yet clear, but likely the cause of action would be defamation, which is harm to one’s reputation. Trump also threatened to sue the New York Times for publishing an article featuring two women accusing him of touching them inappropriately.

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 their personal morality or integrity, are defamatory. One who is defamed may suffer embarrassment and humiliation, as well as economic losses, such as loss of a job or the ability to earn a living.

However there are a number of defenses and privileges to defamation. The most important privilege is truth. If your remarks hurt someone’s reputation, but your statement is true, you are absolutely privileged. 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 society values truth more than it values protection of people’s reputations.

Public figures, such as celebrities or public officials have a much higher burden to bear to prevail in a defamation action. They must prove that the defendant acted with “actual malice.” Actual malice is a legal term that means that the defendant intentionally defamed another or acted with reckless disregard of the truth.

Plaintiffs find it difficult to prove that a defendant acted with actual malice. That is why so few celebrities bother suing The National Enquirer. To successfully defend itself, the Enquirer need only show that it did not act with malice. In other words, the newspaper can come into court and concede that its report was false, defamatory and the result of sloppy and careless research. However, unless the celebrity can prove that the Enquirer acted with actual malice, the court is obliged to dismiss the case. Mere negligence is not enough for liability. So, a lawsuit against the New York Times would be particularly difficult for Trump to win since the Times only needs show that its reporting was not reckless.

Trump faces a dilemma. He has claimed his comments on the bus were “locker room talk,” and that he never actually engaged in the activities he bragged about. However, this is a double- edged sword for him. If he had never engaged in these activities, then he is a braggart that was lying to Billy Bush, and thus a jury may find his testimony suspect on other matters. On the other hand, if he was telling the truth, then he has admitted to sexual assault. Either way, he has a problem. Under the first scenario he is an admitted liar, or at least an exaggerator, and under the second he has sexually assaulted women. So, the most important witness against Trump may well be Trump himself.

If he files lawsuits, the women will be able to engage in discovery. Their attorneys will be able to depose him under oath and ask him all kinds of uncomfortable questions as well as subpoena relevant documents to support their defense. His opponents can force disclosure of any information relevant to the claims even if that information is not admissible as evidence.

If he lies under oath, he could subject himself to a perjury charge. A person convicted of perjury under federal law can face up to five years in prison and fines. If he tells the truth, and admits he assaulted the women, then he will not only lose his case, but open himself to a counterclaim for sexual assault. Moreover, Trump has denounced the woman as liars. So while some of the women might be barred by the statute of limitations for sexual assault, Trump has now given them an opening to sue him for defaming them.

As reported by USA Today,[1] Trump has been involved in at least 4,095 lawsuits. These include 14 media or defamation related cases including suits against Miss Pennsylvania, Bill Maher and author Tim O’Brien. Trump was a plaintiff in seven and a defendant in seven. He has apparently won only one case for defamation, an arbitration award against Miss Pennsylvania for $5 million after she called the pageant “fraudulent.” She later filed a malpractice suit against her lawyer.[2] A federal judge said the lawyer’s representation was “unconscionable.” She entered into a settlement agreement with the lawyer that helped her settle her case with Trump.

Many of Trumps lawsuits have ended before trial. For example, Trump filed suit against comedian Bill Maher for $5 million in 2013. Maher had offered to donate $5 million to a charity if Trump produced his birth certificate to prove his mother had not mated with an orangutan. This was said after Trump had challenged Obama to produce his birth certificate, and offered $5 million to a charity of Obama's choice, if Obama produced documents such as his college applications. Trump produced his birth certificate and filed a suit after Maher failed to donate $5 million, asserting Maher’s offer was legally binding and not just a comedian making a joke. However, Trump withdrew the lawsuit after eight weeks.

Perhaps the biggest obstacle for Trump to overcome is proving that his reputation has been harmed. Even if he is able to show that the statements about him were false, he has been the subject of so much other negative publicity during the campaign. Thus, how could he prove how much reputation suffered from these allegations compared with the many other disparaging remarks made about him? Persons who have poor reputations can find it difficult to prove that their reputation has been lowered further because they are already dwelling in the cellar.

Lawsuits may be filed for reasons other than prevailing at  trial. Threats of defamation suits may be used to intimidate other persons from coming forward and making claims, and deter publications from disseminating such allegations.  Defamation cases often take years to resolve. For example, the Republican presidential nominee Barry Goldwater in 1964 sued FACT magazine for assertions made in a special issue that accused him of having a paranoid personality and being psychologically unfit for the White House. The suit did not come to trial until May 1968, which was years after Lyndon B. Johnson had won the election.[3] After a 15-day trial Goldwater won $1 in actual damages and $75,000 in punitive damages. Appeals then dragged on until January 1970 when Richard Nixon was president and the Supreme Court refused to review the case. So, a quick resolution of any defamation cases brought by Trump should not be expected.
 
[1] http://www.usatoday.com/pages/interactives/trump-lawsuits/
[2]http://www.thedailybeast.com/articles/2015/07/31/trump-lawyer-bragged-i-destroyed-a-beauty-queen-s-life.html
[3] http://www.factcheck.org/2008/02/suing-over-false-political-advertising/

After a four year wait, as of May 16, 2016, crowdfunding portals can finally begin to operate and raise investment funds for film and other enterprises.  For the first time, producers will be able to offer funders a share of the profits of a project, including low budget films. Until today, internet platforms like Kickstarter were limited to seeking donations and could only offer T-shirts and other swag to those who donated funds. The new rules make crowdfunding cheaper and easier but there is a $1 million cap on the amount that can be raised in a 12-month period.

Crowdfunding refers to the process of raising money to fund a project or business through numerous small donors, often using an online platform or funding portal to solicit their investment. Because film investments are so risky, the ability to allocate that risk among many investors should increase the amount of financing available for indie films.

Anyone can invest in crowdfund offerings subject to limits on the amounts invested. The entity raising funds must be American and cannot be an investment company.
Funding portals are platforms that provide investors with information about investments being offered.  These portals are designed to allow internet-based platforms or intermediaries to facilitate the offer and sale of securities.  Portals are required to register with the Securities and Exchange Commission and become a member of the Financial Industry Regulatory Authority (FINRA). FINRA’s standards can be reviewed here.

Under FINRA rules, funding portals communication cannot include in their communications any false, exaggerated, unwarranted, promissory or misleading statement or claim; nor omit any material fact or qualification which would cause the communication to be misleading.

The SEC has issued an investor bulletin on Crowdfunding, portions of which are reproduced below:

Can I make a crowdfunding investment?

Anyone can invest in a crowdfunding securities offering.  Because of the risks involved with this type of investing, however, you are limited in how much you can invest during any 12-month period in these transactions.  The limitation on how much you can invest depends on your net worth and annual income.
If either your annual income or your net worth is less than $100,000, then during any 12-month period, you can invest up to the greater of either $2,000 or 5% of the lesser of your annual income or net worth.
If both your annual income and your net worth are equal to or more than $100,000, then during any 12-month period, you can invest up to 10% of annual income or net worth, whichever is lesser, but not to exceed $100,000. 










Joint calculation.  You can calculate your annual income or net worth by jointly including your spouse’s income or assets.  It is not necessary that property be held jointly.  However, if you do calculate your income or assets jointly with your spouse, each of your crowdfunding investments together cannot exceed the limit that would apply to an individual investor at that annual income or net worth level.

How do I calculate my net worth?

Calculating net worth involves adding up all your assets and subtracting all your liabilities.  The resulting sum is your net worth.
For purposes of crowdfunding, the value of your primary residence is not included in your net worth calculation.  In addition, any mortgage or other loan on your home does not count as a liability up to the fair market value of your home.  If the loan is for more than the fair market value of your home (i.e., if your mortgage is underwater), then the loan amount that is over the fair market value counts as a liability under the net worth test.

Further, any increase in the loan amount in the 60 days prior to your purchase of the securities (even if the loan amount doesn’t exceed the value of the residence) will count as a liability as well.  The reason for this is to prevent net worth from being artificially inflated through converting home equity into cash or other assets.

How do I make a crowdfunding investment?

You can only invest in a crowdfunding offering through the online platform, such as a website or a mobile app, of a broker-dealer or a funding portal.  Companies may not offer crowdfunding investments to you directly—they must use a broker-dealer or funding portal.   

The broker-dealer or funding portal—a crowdfunding intermediary—must be registered with the SEC and be a member of the Financial Industry Regulatory Authority (FINRA).  You can obtain information about a broker by visiting FINRA’s BrokerCheck or calling FINRA’s toll-free BrokerCheck hotline at (800) 289-9999.  You can obtain information about a funding portal by visiting the SEC’s EDGAR website.
Keep in mind that you will have to open an account with the crowdfunding intermediary—the broker-dealer or funding portal—in order to make an investment and all written communications relating to your crowdfunding investment will be electronic.

What should I keep in mind?

Crowdfunding offers investors an opportunity to participate in an early-stage venture.  However, you should be aware that early-stage investments may involve very high risks and you should research thoroughly any offering before making an investment decision.  You should read and fully understand the information about the company and the risks that are disclosed to you before making any investment.
The following are some risks to consider before making a crowdfunding investment:

• Speculative.  Investments in startups and early-stage ventures are speculative and these enterprises often fail.  Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market.  You should be able to afford and be prepared to lose your entire investment.
• Illiquidity.  You will be limited in your ability to resell your investment for the first year and may need to hold your investment for an indefinite period of time.  Unlike investing in companies listed on a stock exchange where you can quickly and easily trade securities on a market, you may have to locate an interested buyer when you do seek to resell your crowdfunded investment. 
• Cancellation restrictions.  Once you make an investment commitment for a crowdfunding offering, you will be committed to make that investment (unless you cancel your commitment within a specified period of time).  As detailed in the box below for Changing your mind, the ability to cancel your commitment is limited.
• Valuation and capitalization.  Your crowdfunding investment may purchase an equity stake in a startup.  Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult and you may risk overpaying for the equity stake you receive.  In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold through crowdfunding.
• Limited disclosure.  The company must disclose information about the company, its business plan, the offering, and its anticipated use of proceeds, among other things.  An early-stage company may be able to provide only limited information about its business plan and operations because it does not have fully developed operations or a long history to provide more disclosure.  The company is also only obligated to file information annually regarding its business, including financial statements.  A publicly listed company, in contrast, is required to file annual and quarterly reports and promptly disclose certain events—continuing disclosure that you can use to evaluate the status of your investment.  In contrast, you may have only limited continuing disclosure about your crowdfunding investment.
• Investment in personnel.  An early-stage investment is also an investment in the entrepreneur or management of the company.  Being able to execute on the business plan is often an important factor in whether the business is viable and successful.  You should also be aware that a portion of your investment may fund the compensation of the company’s employees, including its management.  You should carefully review any disclosure regarding the company’s use of proceeds.
• Possibility of fraud.  In light of the relative ease with which early-stage companies can raise funds through crowdfunding, it may be the case that certain opportunities turn out to be money-losing fraudulent schemes.  As with other investments, there is no guarantee that crowdfunding investments will be immune from fraud.
• Lack of professional guidance.  Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g., angel investors and venture capital firms).  These investors often negotiate for seats on the company’s board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans.  An early-stage company primarily financed through crowdfunding may not have the benefit of such professional investors.

​How do I get informed?

Broker-dealers and funding portals that operate crowdfunding platforms are required to offer educational materials to help investors understand this type of investing.  These materials further detail the risks involved when making a crowdfunding investment.  You should take advantage of this resource to educate yourself and understand the risks of making crowdfunding investments.  Remember, this is your money that you are putting at risk, and you should only invest after careful consideration of the risks.
Read the full Investor Bulletin.
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About Mark Litwak: Mark Litwak is a veteran entertainment attorney and producer’s rep based in Los Angeles, California. He is the author of six books including: Dealmaking in the Film and Television Industry, Contracts for the Film and Television Industry, and Risky Business: Financing and Distributing Independent Film. He is an adjunct professor at USC Gould School of Law and the creator of the Entertainment Law Resources (www.marklitwak.com). He can be reached at law2@marklitwak.com