Sound Recording Agreements

Entertainment Law & Contract
Negotiations
Prof. K.J. Greene
Background
• Teach Entertainment, Music & Contract
Law, San Diego, California
Background
• Entertainment/IP Lawyer, NYC
Background
• IP/Entertainment Law Expert consultant
A Spectrum of Landmines
Contract Disputes
Entertainment Properties &
Contracts
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Motion Picture Contracts
Television Contracts
Sound Recording Contracts
Music Publishing Contracts
Book Publishing Contracts
Entertainment Contracts and IP
• Does contract law favor elites over the
disadvantaged?
Concentration
• Major motion picture studios
Concentration
• Music labels
Concentration: Publishing
• Simon & Schuster (a subsidiary of CBS
Corporation)
• HarperCollins (a subsidiary of NewsCorp)
• Penguin Random House (a subsidiary of
Bertelsmann and Pearson)
• Hachette Livre.
Concentration
• Video games
Complexity
• Industry-specific provisions, customs,
jargon— “NET PROFITS”
• A Blockbuster Deficit : 'Batman' Accounts
Show a $35.8-Million Deficit for Warner Hit
That Grossed $253.4 Million; the Film May
Never Show Profit”
Costs!
• New Batman/Superman film “needs to turn
over a profit of between $925 - $930
million in its theatrical run alone (before
any ancillaries such as TV syndication,
DVD sales etc.).”
Informality—Oral & Napkin
Deals
• “Flip This House”: Began with an oral
agreement to split the show profits 50-50
in exchange for Davis developing and
appearing on the show; no compensation
agreed to in writing at that time.
Outcome
• $4 million dollar verdict against A&E for
breach of oral contract.
Lesson: Oral Agreements=Bad
Legal Hygiene
• 4 out of 5 lawyers recommend WRITTEN
agreements.
Incomplete Negotiations &
Liability
• Aretha Franklin—negotiations to play the
Mahalia Jackson on Broadway collapse.
Relationships
• Clubby (incestuous?) and repeat players
Un-savvy Artists—Savvy Labels
& Studios
• This story repeats over and over.
Negotiating Rights
• Key to Entertainment deals
• Rights=rights to services, rights to
intellectual property, rights to credit &
compensation.
Acquiring Rights
• “To secure meaningful distribution for a
film, a producer must be able to prove that
she owns, or has a license to use EVERY
piece of IP in the film”
Rights Acquisition
• Option agreements
• Assignments/transfers
• Tied to copyright
Negotiating/acquiring rights
Tale of the Divided Hobbit
• These guys owned the rights to the Hobbit
& Lord of the Rings.
Hobbits
• Sold the rights to Warner(1998) for $11.5
million + 5% of gross.
• Spilt from Miramax, Weinstein's get $90
million for LOR, and $25 million for 1st
Hobbit movie.
Hobbits
• Warner Brothers calls sale of the rights:
• “One of the great blunders in movie
history.”
The Fight: 1 Movie or 3?
• Contract states Weinstein's to be paid “on
the 1st motion picture of each book” but
NOT on “remakes.”
• Contract SILENT on what happens if
single book is spilt into multiple movies.
“Grant of Rights” Provisions
• Sound Recording Contracts:
• Artist grants and conveys to Label, and
confirms that Label shall be the exclusive,
perpetual owner of all Masters throughout
the universe, including without limitation,
all copyrights therein as a “work made for
hire”.
Grant of Rights-Sound
Recordings
• “Label and all parties authorized by Label
shall have the exclusive right to exploit the
Masters, and to use your name, voice and
likeness in connection with such
exploitation. The right to use your name,
voice and likeness shall be exclusive
during the term and non-exclusive
thereafter.”
Clearance Failure=Copyright
Infringement
• If rights—assignments or license not
secured, the result is copyright
infringement
• The result: damages or worse, an
injunction
Copyright Infringement
• A violation without authorization or legal
excuse of any of the exclusive rights of
copyright owner
Dukes of Hazard
• Writer/producer Bob Clark, “Moonrunners”
• Marc Toberoff, Shark
Dukes of Hazzard Debacle
• Warner Brothers attained (or thought it
had) the rights to make the movie into a
television series in 1978. However, the
movie rights remained with the producer of
the original movie.
Get Your Dukes Up!
• “Warner Bros. agreed to pay Clark a $17.5
million settlement--more than the studio
spent on the combined salaries of
Simpson, Johnny Knoxville, Seann William
Scott, and Burt Reynolds.”
Fight Over “Watchman”
• Fox sued Warner after Warner began
production of “Watchman”
Watchmen
• Written by Alan Moore & and art by Dave
Gibbons.
• Published by D.C. Comics 1986
Watchmen
• Film rights acquired by Lawrence Gordon
for 20th Century Fox, 1986.
• Key provision: Fox to have right re-acquire
if film went into “turnaround.”
Watchmen Battle
• Fox contended “that no matter how many
hands "Watchmen" has passed through,
Fox controls the right to make or, at the
very least, distribute "Watchmen," even
though Warner had begun producing and
distributing the film.”
Fox “Turnaround” Deal
• Granted Fox a right to become involved
with the project any time a star, director,
budget or other material element changed.
• The project kicked around for years, going
to Universal, Paramount, and then
Warner.
Drafting/Interpretation Missteps
• Beyoncé Video Game dispute with Gate 5.
• Gate 5 spent $6.7 million to develop a
video game around Beyoncé.
Beyoncé Dance Video Game
• Agreement allowed Bey to back out if Gate
5 could not obtain “COMMITTED FINANCING”
of at least $5 million by a date certain.
Gate 5 v. Beyoncé
• This term was nowhere DEFINED.
• Gate Five contended that it was on the
verge of closing a $19.2 million financing
contract before Beyoncé terminated.
Beyoncé Video Dance Game
• She backed out days before Xmas, Gate 5
laid off 70 employees.
• Sued for $100 million.
What is Star Trek? Drafting &
Interpretation
• Lawsuit by Mrs. Eileen Rodenberry.
• “Eileen Roddenberry had agreed to give
up her participation in Norway in exchange
for half interest in all of Gene
Roddenberry’s future profit participation
from “Star Trek.”
Star Trek
• What did “Star Trek” mean?
• The original 1968 show?
• Remakes, movies, cartoons, merchandise,
films?
Snoop
“Blast” Endorsement Deal
• Endorsement deal to promote Colt 45
Blast Deal could net $70 million
• Fo’Schizzle!