Entertainment & Media Law Signal 

When we have our monthly strategy meetings with our marketing consultants about how we can generate traffic for this blog, they usually furrow their brows and ask if we can’t make our topics a little “sexier” in order to attract eyeballs – well, this time, rather than writing about option agreements or copyright infringement, I’m going to follow the advice of the consultants and write about something guaranteed to raise our profile: so-called “nudity riders” to actor agreements. (I’m totally kidding by the way: our marketing consultants don’t think we should have “sexier” content; instead they usually say things like “can’t you write about things like securities law or mining deals, something that, y’know, might actually generate some revenue for the firm?”.)

The topic is not apropos of nothing, by the way: as Eriq Gardner at THR, Esq. has reported, a case in Los Angeles involving some Hollywood heavyweights (including Time Warner and HBO) turns on the “nudity rider” signed by an actress who subsequently refused to perform in the scene:

 
So… what’s a “nudity rider”?

Under the collective bargaining agreements pursuant to which most unionized actors work (in the case of English-speaking Canada, the ACTRA Independent Production Agreement, or “IPA”), scenes in a film or TV project which require nudity or simulated sex are subject to special treatment. The ACTRA IPA imposes certain heightened contracting and conduct requirements and restrictions on the producer of the project when they are dealing with scenes which involve nude or semi-nude performances. So, for example, Article A24 of the ACTRA IPA stipulates how auditions must be carried out (e.g., the audition must be closed, with a maximum of five persons present, each of whom is required to have a “direct professional or artistic relationship to” the audition, and a performer cannot be required to perform a nude or semi-nude audition more than one time for any production).

A “nudity rider” is a separate schedule or exhibit which is attached to a performer’s contract. Article A2402 of the ACTRA IPA sets out various elements relating to (semi-)nude scenes which are required to be contained in an actor’s contract; A2402(b) says that the actor’s contract must contain “as a rider” all of the provisions of Article A24. Although technically the “nudity rider” is only required to contain the provisions of Article A24, for ease of drafting and reference often all of the elements set out in A2042, and all of the matters relating generally to the scene in question, will be incorporated into the rider (rather than simply being built into the “body” of the actor’s contract). Article A24 requires that the actor’s contract contain the following:

• the specific requirements, including but not limited to the exact nature of nude, semi-nude or love scenes of any kind, the maximum degree of nudity required, the nature of attire (e.g., see-through clothes) and any other relevant information pertaining to the scene that may reasonably be expected to give a full, true and complete disclose of the nature of the nudity required

A nudity rider will thus often contain narrative descriptions of the foregoing elements, and will attach an excerpt from the screenplay of the scene in question, so that there is no disagreement or dispute about what was contemplated for the performance.

In addition, Article A2403 of the IPA places certain restrictions on the latitude a producer has in dealing with a (semi-)nude scene:

• the producer cannot permit still photography of the performance (except for “continuity” purposes) without the consent of the actor
• clips or stills of the scene cannot be used in promotions or recaps without the consent of the actor
• a “body double” cannot be used without the performer’s consent

Thus, nudity riders will often also include language which speaks to each of the foregoing items, whereby the performer either expressly refuses or provides the necessary consent (or imposes limitations or approval rights) with respect to the contemplated usage. (With respect to the last bullet, there is a bit of a wrinkle: a body double cannot be used to turn a clothed scene into a (semi-)nude scene without consent, but where a scene was originally performed in the (semi-)nude, a producer can use a body double where the performer gave “general consent” – since it’s not entirely clear what that means, it’s best to just get express consent in the rider.)

So, in addition to following the various requirements of Article A24 (such as providing the details of the scene to the performer at least 48 hours prior to the signing of the contract), a comprehensive “nudity rider” should contain the following:

• the full text of Article A24, or a reference to A24 whereby it is “incorporated by reference” to the rider
• a description of the “specific requirements” of the scene (such as the nature of the scene, the degree of nudity required, any attire to be worn, etc.)
• confirmation that the performer has been provided with the screenplay and has read the scene requiring (semi-)nudity
• a copy of an excerpt (which includes the scene) from the screenplay
• explicit treatment of the various items requiring consent as set forth in Article A2403, such as the ability of the producer to use body doubles, restrictions on using footage in any context other than the final cut of the movie (e.g., no use in “outtakes”, no use in promotional materials, etc.)
• any other items pertinent to how the scene will be shot (e.g., having a female member of the production crew available to provide a robe or other covering to a female performer between takes)

The ultimate goal of the nudity rider should be to address all possible issues which might arise out of what is, in the end, an incredibly sensitive matter for the performer. The ACTRA IPA provides the parameters or (pardon the pun) bare minimum requirements of the rider, but it should always be the subject of careful consideration and modification for the particular circumstances.

A recent decision from the US federal courts offers a timely reminder of the importance for producers of specifically spelling out that they are obtaining “merchandising” rights from all actors performing in their film or TV project – including from their “non-star” cast.

Eriq Gardner, reporting at THR, Esq. (‘Office Space’ Actor Loses Lawsuit Over ‘Flair’), describes the factual background to the recent decision in Duffey v Twentieth Century Fox Film Corporation (the full decision is available here):

Though he occupies relatively little screen time in it, fans of the movie Office Space should remember Duffey’s appearances in the movie – Duffey’s character earns Jennifer Aniston’s character’s ire because he wears thirty-seven pieces of “flair” (well in excess of the minimum fifteen required by the restaurant where the two characters work). As can be seen from the images for the “Box of Flair” at the Barnes & Noble website, Duffey’s image appears fairly prominently on the outside of the Box, and his image occupies the entirety of one of the buttons contained in the Box.

Duffey was a “day player” in Office Space – an actor whose role was not a “lead” role and who likely only rendered a few days of services in connection with the film. He signed a “Day Player Agreement” with the production company which produced the film, an agreement which in all likelihood was not the subject of much, if any, negotiation. Critically, for purposes of this lawsuit, Duffey’s Day Player Agreement contained the following language, which granted to the production company:

On the basis of that language, the court dismissed Duffey’s claim, concluding that the “terms admit of only one reasonable interpretation: that Duffey granted [the production company] the right to use images of his performance on Office Space merchandise”. (For my money, I would have been even more satisfied if the agreement specifically mentioned “merchandise” or “merchandising”, but you get to the same place in either event.)

The case is a useful reminder that, in the absence of express language which grants the right to use an actor’s image in merchandising, there might be a cognizable claim on the part of the actor if their image is used – and as Duffey’s situation shows, it can be difficult, if not impossible, to predict ahead of time which actors a producer will want to use in merchandising (I’m happy to wager that no one, at the time of shooting the movie, would have guessed that a day player who probably had less than ten lines of dialogue in the film would end up on a piece of merchandise created nearly a decade after the film’s original theatrical release).

For Canadian producers, the matter is of even more acute importance: unlike the SAG/AFTRA collective  bargaining agreements, which contain explicit language granting to producers certain rights in the performances rendered by SAG actors (e.g., Section 36 of the SAG Theatrical Agreement), the collective bargaining agreements for actors in English Canada (whether ACTRA or UBCP) are completely silent on the nature and scope of rights which actors grant to producers. In short, without a written agreement (for “day players”, the agreement is often attached as a “rider” to their ACTRA standard form agreement), the producer is functionally in danger of not having acquired any rights to use the performer’s image or the copyright in their performance. Various arguments might be constructed that the performer granted some kind of an implied license to the producer, but everyone’s life is going to be simpler if there’s a written agreement that everyone can point to – a written agreement which includes the right to make use of the actor’s image and likeness not only in the film/TV project itself (and advertising related to it), but also in merchandising based on it.

As Torontonians know, we are in the midst of a mayoral election campaign; in all the excitement surrounding the candidate debates, it may have slipped into the rearview mirror that last month it was announced that the film rights for Crazytown: the Rob Ford Story, Robin Doolittle’s bestselling book about Toronto’s current mayor, had been sold to a Toronto-based production company. What are some of the considerations to be taken into account when structuring and negotiating an agreement to make a movie based on a book?

• Option vs Purchase. Most often, the deal to make a movie based on a book takes the form of an exclusive “option” agreement. What that means is that the producer has acquired not the exclusive right to make the movie, but has acquired the exclusive right to purchase the right to make the movie. In other words, there are usually some conditions precedent which the producer needs to satisfy before they can actually go ahead and make the movie, the most important condition (from the author’s perspective) being the payment of a “purchase” price. Why are agreements structured as options? Because the producer usually needs time to make arrangements to actually finance the making of the movie – and while the producer is running around trying to gather the money to make the movie, they need to “secure” the exclusive rights in the book, so that the author doesn’t go and give the rights to some other producer. By entering into an option agreement, the producer is basically acquiring the right to go to potential investors and financiers of the movie and say “hey, I’ve got the exclusive right to make a movie based on this book – want to be a part of it?”
• Who Owns the Rights?  For the film producer, it is critical to ascertain who actually controls the right to make an audio-visual project based on the book (what I’ll refer to throughout this post as the “AV rights”). Often the publisher of the book will have acquired the AV rights in their publishing contract with the author – but it certainly is not unusual for an author to have retained the AV rights. Even if a producer is able to satisfy themselves that the author has the AV rights, it will be prudent to obtain from the publisher a quitclaim or release wherein the publisher confirms that they do not control the AV rights.
• Option Fee. The option fee is the amount which the producer pays to acquire the exclusive option. This fee is usually paid on signing of the option agreement (or very soon thereafter), and is often a relatively nominal amount – but is entirely open to negotiation. Only blockbuster bestsellers will see an option fee in the high five- or (even more rarely) six-figure range. An ancillary issue is whether the option fee is “applicable” against the purchase price – in other words, when the producer has to make payment of the purchase price (which we’ll discuss below) do they get to reduce the amount of the purchase price by the amount of the option fee (and any payments for extensions, also discussed below) which they have already paid? It is often the case that the initial option fee is “applied” against (i.e., reduces) the purchase price, but subsequent payments to extend the option period beyond its initial duration are not – again, however, the point is really a function of the negotiations between the parties.
• Option Period and Payments for Extensions. How long the initial option period lasts for is likewise subject to negotiation, though there are some general parameters: producers will usually be reluctant to enter into an option period which is less than one year, and authors will usually be reluctant to agreement to an option period which is longer than two years – so an initial option period of 12-18th months is fairly common. Given the vagaries of the film/TV production process, however, the “initial” option period is usually just a starting point: producers will often want the ability to extend the option period beyond its initial duration – but it will cost them, and they will not be able to extend the option period indefinitely. The amount of any extension payment is usually a multiple of the initial option fee.
• Purchase Price – Amount and Form. Here’s where things get funky. The purchase price is the amount which the producer has to pay in order to actually obtain the exclusive right to make the movie – payment of the purchase price is what converts the producer’s right from an option to an actual conveyance of rights. The amount of the purchase price is often related to its form: Is the purchase price simply a flat dollar amount which is pre-agreed by the parties at the time of entering into the contract? Or will the amount of the purchase price be determined by reference to a formula which takes into account the budget of the film or TV project? Authors will often want the purchase price to be determined by reference to a formula: the producer making a $3 million movie based on the book is a very different proposition than the producer making a $30 million movie based on the book. By contrast, the producer will often want to place some restrictions on the size of the purchase price they need to pay – and so the purchase price often is expressed as a percentage (usually somewhere between 1.5-4%) of the budget of the film/TV show, subject to a floor and ceiling on the amount. That way, the author knows they won’t get less than $x, and the producer knows they won’t have to pay more than $y. Easy enough, but which budget will be used as the reference point? The “in-going” budget which is used at the start of principal photography, or the “final” budget after all costs have actually been expended? Will there be any exclusions from the budget which is used to calculate the purchase price (such as deferred payments owing to cast and crew who agreed to forego an upfront payment in an effort to get the movie made)?
• Purchase Price – Timing and Process. How the purchase price gets paid and how the option actually gets exercised should be the subject of close attention when drafting an option agreement. The process and payment mechanic (e.g., in order to exercise the option, the producer has to deliver a written notice to this particular person at this particular address, along with payment of the purchase price in this particular way (such as by money order or wire transfer)) should be spelled out in detail. Where the purchase price is to be determined by reference to the budget, there should also be a mechanism which allows for a portion of the purchase price to be paid “up-front” upon exercise of the option (because the relevant amount of the budget might not be known at the time of exercise of the option) with a “catch-up” payment to be made later on, once the final amount of the budget can be determined. Authors will want the option agreement to include a mechanism which makes it clear that the commencement of principal photography is deemed to be an automatic exercise of the option, necessitating payment of the purchase price.
• Contingent Compensation. Another oft-contentious area – the possibilities for contingent compensation are limited only by the parties’ imaginations and tolerance for drawn-out negotiations. Contingent compensation might take the form of box office bonuses, net profit participation, additional payments to the author if the book achieves “bestseller” status on one chart or another, etc. Don’t forget audit and reporting language!
• Subsequent Productions. If the producer is granted rights to produce more than one audio-visual project based on the author’s book, the agreement will need to spell out what sorts of payments (if any) the author is entitled to for such subsequent productions (which can include sequels, prequels, remakes, spin-offs, TV-series-based-on-movies, etc.).
• Scope of Rights Granted. What exactly are the rights being granted to the producer? Is it the right to make a single audio-visual production? Or multiple productions? Can they make sequels? Prequels? Spin-offs? Remakes? Can they create merchandise based on the movie? Can they publish the movie’s screenplay as a stand-alone work? Can they create a theme park ride based on their movie? What about a videogame? Specificity in the wording of the nature of rights being granted will be rewarded down the road.
• Credit. The precise form of the author’s credit will need to be determined. This can take multiple forms, whether on-screen or in promotional materials for the AV project. Some examples: the on-screen credit might read “Based on the book [insert title] written by [insert author name]” – but will that be a main title credit on a separate card, or just a credit in the end credit roll? Is the author going to get credit in paid advertising? Does the paid ad credit get included just in the “billing block” or does the credit get included in the “artwork” so that it is plainly visible to viewers of the ad? In really exceptional cases, the credit obligation might include the right/obligation to use the author’s name as part of the title of the movie (e.g., “John Grisham’s The Firm“). Oh, the contortions we go through in specifying these things…
• Consultation/Approval/Participation. For the most part, unless the author is a J.K. Rowling or John Grisham calibre superstar, most producers are going to be loathe to give any sort of consultation or approval right to an author – the producer just wants to go off and get their movie made without interference from an author who thinks that their character would never say the lines in the screenplay. But, hey, it never hurts to try and ask for the right to approve or be consulted about things like the title, the casting, the screenplay, the promotional campaign, etc. If an author is feeling particularly bold, they might want to argue for a small role in the picture (non-speaking!), or to be engaged as a paid consultant on the project.
• Reserved Rights. Properly drafted grants of rights should make it clear precisely what rights are being granted from the author to the producer – but it can be helpful to have just-as-clearly-drafted provisions which set out what rights are being retained (or “reserved”) by the author. This is often a jumble of “non-core” rights, but ones which can prove lucrative: radio rights, live stage rights, print publication (e.g., graphic novels), etc. Authors will want to make it clear that the author has the right to create “author-written” sequels to their own book.
• Ownership of Development Materials. The producer will inevitably create what are referred to as “development” materials while they, er, “develop” their audio-visual project – things like draft screenplays or character designs if the project will be an animated one. Who gets to keep those materials if the option is not exercised should be addressed.
• Reversion. Sometimes the producer will exercise their option, pay the purchase price and then… the movie/TV show never actually gets made. For the author, that’s a terrible position to be in: they have conveyed the AV rights in their book, and those AV rights are just sitting on a shelf, unexploited. In order to ensure that doesn’t happen, agreements will include a “reversion” clause, which stipulates that, even after exercise of the option, if the audio-visual project has not been commercially released within a certain number of years (usually somewhere between 4-7 years), the AV rights revert back to the author. The producer will try to make such reversion subject to the producer’s right to be repaid any costs which the producer expended in purchasing the rights and developing the project.

The foregoing list does not address provisions which are not specific to option agreements, such as representations and warranties, “no injunctive relief” clauses, dispute resolution, etc.; nor does it address extra-contractual matters such as the need for conducting a chain of title review on the project.

A final thought: perhaps moreso than other film/TV-related contracts, option agreements require significant input from author’s agents, who can advise on what is “market” for certain elements of the agreement with reference to the particular book being optioned, particularly those relating to payment and credit.

The good folks at Nova Scotia’s Artists’ Legal Information Society (ALIS) have published their free Legal Guide for Writers, a solid plain-English resource which will prove useful both for authors and their lawyers. Published under a Creative Commons BY-NC-ND license, the Guide explains how contractual relationships in the book publishing industry are structured, explores how copyright protection arises and can be registered and how copyright can be infringed, with reference to relevant fair dealing concepts.

Of perhaps most use to those trying to navigate their way through a book publishing contract, the Guide also contains explanations of common concepts and clauses, such as royalty provisions and author representations/warranties, and provides advice on clauses which authors should negotiate (e.g., reversion on bankruptcy, non-competition restrictions). The impact of digital books, and how “traditional” clauses may need to be modified to take account of e-book exploitation, is also addressed. Finally, the Guide contains some helpful guidance on agent contracts.

While nothing is a substitute for the advice of a lawyer who has experience reviewing and negotiating publishing agreements, the ALIS Legal Guide for Writers provides quality information in an easy-to-understand and -navigate format – interested authors and lawyers should definitely check it out.

At some point along the way, “CLE” (Continuing Legal Education) has morphed into “CPD” (Continuing Professional Development) for reasons which aren’t entirely clear to me. In any event, here are a couple of upcoming events which qualify as either/both and will be of particular interest to Canadian entertainment lawyers:

• on Thursday, February 6, 2014, as part of the Ontario Bar Association’s annual Institute super-CPD conference taking place in Toronto, the Entertainment, Media & Communications Law Section will be hosting a half-day conference, chaired by Brian Wynn – details are available here (disclosure: I am currently Chair of the executive committee of the EM&C Section)
• ALIS (the Artists’ Legal Information Society) is hosting a conference in Halifax in March: On the Edge of Now – Emerging Trends in Entertainment, Digital and IP Law (to my great pleasure, I will be speaking at the conference on Saturday)