Entertainment & Media Law Signal : Canadian Entertainment Lawyers for Licensing, Intellectual Property & New Media Matters

Telefilm Canada has revamped its international treaty co-production materials:

• new guidelines (published November 29, 2010)
• updated FAQs
• revised forms and affidavits
• selection of useful tools

The new guidelines, in particular, look quite valuable: stream-lined and re-formatted, they appear at first glance to be easier to navigate than the somewhat unwieldy previous version.  It's been a while since I visited the Telefilm website, but it too looks like it has received a nice upgrading.

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Matt Galsor at Law Law Land put up a nice post on formulas for determining the purchase price when optioning a book for a film or TV project:

The purchase price for the book should be a percentage of the final, in-going budget — typically 2% to 3%. There should also be a so-called “floor” — a minimum purchase price regardless of what the final budget is. Since your director “works almost no budget on his movies,” the floor will most likely be the purchase price. Most of the time there is also a “ceiling” — a cap on the purchase price (but this only makes a difference if the budget is relatively high). A common mistake in option agreements is expressing the purchase price as a percentage of the final budget without also stating that before the final budget is determined the option may be exercised by paying the “floor” amount, and once the final budget is determined making the catch-up payment if the percentage of the budget is higher than the “floor.”

Matt goes on to discuss net profits participation - his post provides a great little formula to remember.  His point which I've bolded in the quotation above is a great one and one which I've found actually only rarely gets addressed in option agreements.

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Rachelle Gardner has written a very clear post about the challenges posed by electronic formats to reversion of rights clauses in book publishing contracts:

“Reversion of rights” simply refers to the point in time at which the publisher no longer owns the rights to your book. When the rights revert to you, the author, you’re free to sell them again or do whatever you want with your book. In the past this wasn’t as important because it was unlikely that another publisher would want to take on an already-published book. Your main option was to self-publish and you'd likely not be able to make enough money to cover your self-pub costs.

But all that’s changed in the digital age. Now, when the rights revert, you can simply and cheaply format your book for Kindle and all the other e-book formats, and keep it for sale forever, perhaps making a few extra bucks a year. So there’s a strong reason to want to get the rights back as soon as the publisher is no longer making you any money.

Rachelle provides some useful thoughts on how reversion clauses should be worded to address digital formats.  Ivan Hoffman also has some more general suggestions on issues to consider when negotiating reversion clauses in book contracts.

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According to Tom Moroney writing at Bloomberg Businessweek (hat tip: Entertainment Law Reporter), the climate in the United States for lucrative film and television incentive programs may be shriveling: Strapped States to Hollywood: Stay Home.

[Detroit 1-8-7]'s producers were lured [to Michigan] by state incentives—a mix of tax credits, job-training subsidies, low-interest loans, and other aid. A state report says such subsidies are the most generous in the U.S., and cost Michigan taxpayers more than the economic activity they generate. The 355 full-time jobs created as a result of the program last year cost the state about $193,000 each, the study found. Rick Snyder, the Republican governor-elect, wants to curb the largesse.

Since 2005 states have granted $3.5 billion in incentives to makers of films, TV shows, and commercials, according to a Tax Foundation calculation for Bloomberg Businessweek. Now, as states face a total of $72 billion in budget deficits in their coming fiscal years, according to the National Conference of State Legislatures, some are concluding Hollywood gets a lot more than it gives.

The Tax Foundation has put up its own post (States Slashing Film Tax Subsidies) which provides further details, and includes a link to the Tax Foundation's own lengthy report on the topic.  For contrary perspectives on the value of tax credits, see this earlier Signal post: A US Perspective on Tax Credits.

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Matthew Nied has written a very interesting and well-researched article (published by the Alberta Law Review Supplement) (hat tip: slaw) calling for a reassessment of how Canadian courts treat damage awards for online defamation: "Damage Awards in Internet Defamation Cases: Reassessing Assumptions About the Credibility of Online Speech".  The abstract:

There is a recent trend toward substantially higher damage awards in internet defamation cases than those involving traditional media. Higher awards are attributable to the instantaneous nature of the internet and the potential for limitless replication, as well as questionable assumptions about the credibility of internet speech when it is anonymous, presented in a style that is hyperbolic and unreasoned, or posted in a dubious setting. Because there is a reduced likelihood that readers will believe internet libel in these circumstances, plaintiffs are likely to suffer less reputational harm. Courts should mitigate damages to avoid assessing higher awards than are warranted by the gravity of the defamation.

As the article notes, Canadian courts have traditionally taken into account the character or "credibility" of the "source" of a defamatory statement in the context of printed statements.  The Ontario Court of Appeal in Barrick Gold Corp. v. Lopehandia ((2004), 71 O.R. (3d) 416) took the view that, in the absence of countervailing evidence, the permanence of internet statements (ie the fact that the statements are effectively able to be retrieved in perpetuity) militated in favour of enhanced damages for online statements.  In his post at slaw (Reconsidering Online Defamation Damages), which is well-worth reading, Omar Ha-Redeye muses that a "rebuttal presumption of higher damages for online defamation" seems appropriate.  While not disagreeing entirely with his position, I'll take a slightly different tack: the internet's heterodox nature means that presumptions (rebuttable or not) should be avoided in favour of highly contextual assessments of the nature of the statement, the identity of the speaker and the subject (ie the purportedly defamed individual), and the nature of the forum in which the statement is made.

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Selected materials for consideration about Bill C-32 (The Copyright Modernization Act):

• Barry Sookman uploaded a great presentation on the new fair dealing and other exceptions found in Bill C-32
• ACTRA's official reaction to the bill: Canadian Content – free today, gone tomorrow (and a response)
• The Globe and Mail on How the new copyright bill will affect Canadian culture
• The Professional Writers Association of Canada has posted their Brief to the Ministers of Industry and Heritage (and a response)
• The Canadian Federation for the Humanities and Social Sciences has published Responding to Bill C-32

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To what extent is "I was just joking" a defence to a defamation claim?  Laura Little has written "Just a Joke: Defamatory Humor and Incongruity's Promise" (available at SSRN), which explores the ways in which courts have addressed "humour" in US and Australian defamation law.  The topic can be of particular interest for entertainment lawyers who are called on to review and assess potential liability for jokes contained in screenplays, written materials (such as books or columns) and audio-visual projects.

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The Entertainment, Media & Communications Law Section of the Ontario Bar Association will be publishing the next edition of its Entertainment, Media and Communications Section Newsletter – Journal Edition in September 2011.  (Full disclosure: I am a member of the executive committee for the Section and an editor of the Journal Edition.)  A call for submissions for the Journal Edition has been circulated - submissions are due June 6, 2011.

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Further to our earlier post (The Challenge of the Unlocatable Copyright Owner), Jeremy de Beer and Mario Bouchard have written a very interesting study entitled Canada's "Orphan Works" Regime: Unlocatable Copyright Owners and the Copyright Board.  In addition to providing an excellent description of the existing "orphan works" licensing process, there is a detailed statistical analysis done on the efficiency of that process.

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Aaron Moss, writing at Law Law Land, has a great post about identical or similar movie titles: Reuse and Confuse? The Recycling of Hollywood Movie Titles.  He provides a slew of examples of how Hollywood's major studios have dealt with competing movie titles (the settlement in respect of Austin Powers in Goldmember (a title to which the producers of Goldfinger objected) evidently obliged star Mike Myers to record on-air promos for airings of the latter movie).  As Moss notes, titles are generally not capable of copyright or even trade-mark protection, so in what arena do disputes arise and get settled?

The answer is the MPAA’s Title Registration Bureau, a voluntary agreement that is binding on all member organizations of the MPAA, including the major studios, as well as independent producers who sign the agreement. Members register in-development film projects with the bureau, which sends out lists of proposed titles. The members can then object to a title that is similar to one that has been previously registered. If the challenged title is not voluntarily withdrawn by the registering studio, the dispute will proceed to mandatory arbitration.

For a Canadian take on the topic of protecting film and TV titles, see my IPilogue post (reproduced in full after the jump - and which, ironically, bears one of the single worst titles I've ever fashioned for a blog post), Neither Fish Nor Fowl – Trade-mark and Copyright Protection for Titles.

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Sometimes, it takes a pirate to beat a pirate.

LimeWire LLC, one of the original file-sharing software developers, are trying to stop various other developers from distributing a "pirate edition" of the LimeWire program. On October 26, a permanent injunction was issued against the company, which enjoins LimeWire from distributing its software. Now, it seems that LimeWire has joined the fight against copycat programmers selling the "LimeWire Pirate Edition" of the original program.

In a statement that can be found on the official LimeWire website,  the company demands that "all persons using the LimeWire software, name, or trademark in order to upload or download copyrighted works in any manner cease and desist from doing so". According to one computer developer/hacker who claims to be the leader behind the pirated version of the LimeWire software, the motivation behind this new program is to "make RIAA lawyers cry into their breakfast cereal."

Now the question for the RIAA may become, how do you stop the pirate of my pirate? 

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[Friend and colleague Simon Chester has graciously consented to our cross-posting the following item (which can also be found at slaw.ca).]

Six Canadian provinces have legislative recognition of Remembrance Day, though only two mention Two Minutes Silence, Ontario and Alberta. Nova Scotia for example says:

Every employer carrying on or engaged in an industry to which Section 3 does not apply shall, subject to Section 8, relieve the employees in the industry from duty, and suspend the operations of the industry, for a period of three minutes, at one minute before eleven o'clock in the forenoon.

This post is about silence, and the legal protection of silence. You have the right to silence. And in Quebec, a judge cannot refuse to adjudicate under pretext of the silence, obscurity or insufficiency of the law. In Britain, veterans' organizations have announced that they intend to use social media and YouTube in particular to promote remembrance with a video featuring noiseless contributions from Prime Minister David Cameron, Thom Yorke, the lead singer of Radiohead, Andy Murray, the tennis player, Martin Johnson, the England rugby coach as well as the British actors Bob Hoskins and David Tennant. The track costs £1 and has already garnered well over 25,000 followers on Facebook, who have joined a group entitled, "I’m going to get the Legion to Number 1 for Remembrance Sunday". Anyone who buys the digital single will also receive a video file, which can be downloaded and played either on a computer or on an MP3 player that has a screen, such as an iPod. It is not available as a compact disk or other physical format.

"We would love it if people watched the online video during the two minute's silence," said a spokesman. It is already on track to reach number one this Sunday, with the book maker Ladbrokes marking it down as favourite.

The Daily Telegraph reports from Leeds based marketers Communisis that British workers may be tempted to log on this morning at 11:

A quarter of 3,000 respondents asked in the survey claimed they would continue to send emails during tomorrow’s vigil, while one in eight admitted they would be happy posting status updates on Facebook and six per cent would continue to write a blog entry or post a message on the Twitter micro-blogging service. The survey was undertaken on behalf of Communisis, a marketing company, which said that typing recorded an average measure of 60 decibels and a conversation between two people was not that much louder at 80 decibels. Alistair Blaxill, director at Communisis, said: “The rise of social networking and online communications has created a workforce that feels the need to stay connected to their friends and colleagues whatever the circumstances. For many continuing to work and communicate despite the two minute silence will be second nature. “We hope that all of the British workforce will take a step back and stop what they are doing during the two minute silence, ceasing all communication, both on and offline.” The Royal British Legion, which organises the two minute's silence, said it was entirely up to individuals as to how they observed the tradition. "All we ask is that people stop, pause and reflect for two minutes," a spokesman said. He made it clear that emailing or tweeting would clearly fail to constitute "pausing and reflecting" but this year the charity does, in fact, want people to log onto the internet at 11 o'clock. That is because it has released a single to raise money, which can be downloaded from the internet with an accompanying video.

For intellectual property lawyers this raises the interesting - and entirely theoretical question, whether the Royal Legion video may have infringed the rights of the John Cage Estate, which has asserted rights over a musical work consisting of silence, namely 4 minutes and 33 seconds. Interestingly this work was rebroadcast this week as the choice of Ian McMillan on Desert Island Discs. The issues are fully canvassed by Jeffrey Richardson's The Sounds of Silence - How Copyrights Affect Composition, Michigan Bar Journal, Vol. 82, Issue 6 (June 2003), pp. 36-41.

The Planets' album Classical Graffiti contained a track entitled "A One Minute Silence", consisting of one minute of silence. In August 1952, however, John Cage had published a piano piece called 4'33'', which also consisted entirely of silent notes. Mike Batt, the man who composed and arranged The Planets' album, was accused of plagiarism from Cage's music publishers. While the case on silence copyright was seen as a potential test for establishing what a "musical work" could be if litigated, it was settled out of court with a reported six figure settlement. Batt had credited the piece initially to Batt/Cage just for a laugh. Batt justified his position

But my silence is original silence, not a quotation from his silence. My piece was qualitatively different because the recorded silence consists of the absence of noise, rather than the presence of ambient silence. I certainly wasn't quoting his silence. I claim my silence is original silence... Our's is better silence", he said, "it's digital. Their's is only analogue. Mine is a much better silent piece. I have been able to say in one minute what Cage could only say in four minutes and 33 seconds.

The Guardian Arts Section review compares a performance of the two works:

First, the Planets perform A One Minute Silence. Batt conducts, waving his hands contemplatively as though like he is stroking a cat in slow motion. The spangly people look at him intently. They all hold their instruments in the ready position, apart from the violinist. He must be the one that rebellious teenagers identify with. Let us call him Uranus. The "silence" constitutes these ambient noises: the hum of an air-conditioner, the swooshing of polyester trouser material, a jangle of keys, and a deep nasal exhalation. A minute later, it's all over. We applaud enthusiastically. Cage's 4'33" is performed next, by Marc Dooley, a clarinettist and employee of Peters Edition. He warms up with a few burbling arpeggios, and adjusts the sheet music. Then he solemnly inserts the clarinet into his mouth and begins. It becomes clear that this is a very different piece. Batt's work did not feature, for example, the rustling of paper as people followed the printed score (thoughtfully handed out beforehand), nor the footsteps of wandering camcorderists, nor the unzipping of a bag. The live performance of Batt's A One Minute Silence was actually unfaithful to the original CD version, which is simply one minute's-worth of the absence of any digital signal. Cage's 4'33", on the other hand, has always been meant to be an ambient soundwork, rather than a pure silence. In the post-performance discussion, Batt says: "Ours is better silence: it's digital. Theirs is only analogue." Let us, too, compare the scores. Cage's score consists merely of vertical ruled lines marked with timings. Batt's piece, on the other hand, is clearly in the key of G major (or E minor), and is more structurally complex, finishing with a flourish of metre-switching from five-eight to three-eight to four-four. These are obviously quite different pieces of music.

I predict that the Legion will go to number 1 on this week's charts, and the Cage Estate will decide to sit the infringement route out - sometimes even litigants with rights would look ridiculous to sue. Of course we've been down this road before. The British techno group Orbital (Phil and Paul Hartnoll) released the video below to protest against a statute which clamped down on the rave scene in England: Are We Here? (Criminal Justice and Public Order Act 1994?)

The Parliamentary draftsman had fun trying to describe a rave which is according to section 63:

a gathering on land in the open air of or more persons (whether or not trespassers) at which amplified music is played during the night (with or without intermissions) and is such as, by reason of its loudness and duration and the time at which it is played, is likely to cause serious distress to the inhabitants of the locality; and for this purpose— (a)such a gathering continues during intermissions in the music and, where the gathering extends over several days, throughout the period during which amplified music is played at night (with or without intermissions); and (b)“music” includes sounds wholly or predominantly characterised by the emission of a succession of repetitive beats.

And Remembrance Day may be marked by the Last Post, too, rather than silence.

Eric Wong will be at Dundas Square at 11 AM in Toronto.

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Recent article on-line which likens the burgeoning popularity of iPhone applications to a gold rush for game developers in Montreal.   Its clearly the case that Montreal's initiatives to encourage the growth of its video game industry have paid off.  Whether you are talking about the local outposts of publishers such as Ubisoft, Eidos, WB Interactive and Electronic Arts or the growth of numerous home grown operations, the industry is vibrant.

The city of Toronto - and the Province of Ontario- has also seen the genius of Montreal's plan and have convinced France's Ubisoft to set up in Toronto.  There are also numerous companies in Toronto which specialize in the development of apps and other mobile software - as highlighted in this Toronto Life article.  Let's hope we here in Toronto can take a page from the home of Les Habitants.

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On Tuesday, November 2, the US Supreme Court heard oral arguments of an appeal regarding a California law which prohibits the rental or sale of violent video games to minors (being under 18 years of age). Last year, the Ninth Circuit appeals court struck down the law for violating First Amendment rights. Bob Tarantino introduced this case in a blog entry on April 27, which can be read here.  

During the hearing, the Supreme Court appeared to be split between arguments in support of the California law and arguments that First Amendment rights should not be applicable to violent forms of media. In one of the more animated exchanges that took place during the hearing, Justice Sotomayor challenges the logic of banning the sale of video games to minors, as opposed to banning violent forms of film, television, or music lyrics:

One of the studies, the Anderson study, says that the effect of violence is the same for a Bugs Bunny episode as it is for a violent video. So, can the legislature now, because it has that study, say we can outlaw Bugs Bunny?

 Justice Sotomayor goes on to say the following about rap lyrics:

Could you get rid of rap music? Have you heard some of the lyrics of some of the rap music, some of the original violent songs that have been sung about killing people and about other violence directed to them?

At one point during the hearing, Justice Kagan asks if "Mortal Combat" should be prohibited by this statute. In a humorous retort, Justice Scalia replies, "I don't know what she's talking about."

It is interesting to note that while a case on the restriction of video game sales to minors has made it to the United States Supreme Court, domestic laws relating to the same issue has received little attention from the courts. As pointed out in Bob Tarantino's blog, in Canada, Ontario has had content-based restrictions on the sale or rental of video games to minors in place for a number of years now, which are administered by the Ontario Film Review Board.  Under the Film Classification Act, 2005, and Ontario Regulation 452/05, "video games that are classified as "Mature" may not be sold, rented or exhibited to a person under the age of 17 and video games that are classified as "Adults Only" may not be sold, rented or exhibited to a person under the age of 18."

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As Bill C-32 moves into the critical committee stage, commentary on the topic has been piling up at a frenzied pace.  Some selected materials for perusal:

• Hansard of the second day of Parliamentary discussion on second reading of Bill C-32
• Michael Geist: In Search of a Compromise On Copyright
• James Gannon: TPMs - A comprehensive guide for Canadian copyright law
• Barry Sookman: Some observations about the debates on Bill C-32 in the House of Commons
• Meera Nair provides some thoughts the day after second reading
• Nino Ricci: This updated copyright bill guts Canadian culture
• David Fewer had a letter published in the Ottawa Citizen regarding the proposed addition of "education" as a head of "fair dealing"
• Michael Geist summarized Where The Parties Stand on C-32's Digital Lock Provisions

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Under CAVCO's amended policy regarding proof of Canadian citizenship or permanent residency,  producers and key creative personnel working under the Canadian Film or Video Production Tax Credit (CPTC) will be required to obtain a CAVCO personnel number in order to be eligible for Canadian content points. In order to receive a CAVCO personnel number, each eligible individual must send a copy of their proof of Canadian citizenship or permanent residency directly to CAVCO. Producers should be aware that as of December 31, 2010, it will be mandatory for producers and key creative personnel to have a CAVCO personnel number. Previously, CAVCO required applicants under the CPTC to retain a copy of an individuals citizenship or permanent residency documentation.

Going forward, producers and their counsel are encouraged to include necessary wording in the contracts or deal memos of such key personnel ensuring that each Canadian filling a producer-related or key creative role in their production has obtained a CAVCO personnel number. It is also encouraged that producers and key personnel apply for a CAVCO personnel number as soon as possible, regardless of whether an application for funding has been made.

Further information on the CAVCO personnel number can be found on the Canadian Heritage website. 

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Since its release in 1982, the coming of age comedy Porky's has had the distinction of being the most successful Canadian film with a worldwide box office tally of around $111 Million.

Today the Ontario Media Development Corporation announced that Resident Evil: Afterlife has moved into the top spot with a worldwide gross of  $280 Million.  Resident Evil: Afterlife is the fourth installment of the science fiction action series set in a post-apocalyptic world.  What set this installment apart from the earlier ones is the use of cutting-edge 3D technology.

Question: What common element do both Porky's and Resident Evil: Afterlife share? 

Answer: Veteran Canadian producer Don Carmody  produced both films.   A tip of the hat to Mr. Carmody.

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A round-up of questions and answers provided by entertainment law blogs (readers should note that the links below are to US-based blogs, and so the advice dispensed is limited to situations governed by US law):

• I'm Producing a Film Based On a Memoir. Any Tips to Minimize the Chance of a Defamation Suit? (Law Law Land)
• Legendary characters – public domain or protected? (Gordon P. Firemark)
• I'm Spoofing a Well-Known Person in My Film, Should I Worry About Defamation or Likeness Issues?(Law Law Land)
• Do I Understand This Unsolicited Submission Agreement, Saying That I Am Basically Giving Up All My Rights?(Law Law Land)
• How do I protect myself when I submit my idea? (Gordon P. Firemark)

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Greg Lastowka (Professor of Law at Rutgers University) has just published Virtual Justice: The New Laws of Online Worlds (Yale University Press).  Paper copies can be purchased at the previous link, and Lastowka and Yale have also made the book available as a Creative Commons-licensed (BY-NC) 3.0 .pdf download.  From the promotional blurb:

Tens of millions of people today are living part of their life in a virtual world. In places like World of Warcraft, Second Life, and Free Realms, people are making friends, building communities, creating art, and making real money. Business is booming on the virtual frontier, as billions of dollars are paid in exchange for pixels on screens. But sometimes things go wrong. Virtual criminals defraud online communities in pursuit of real-world profits. People feel cheated when their avatars lose virtual property to wrongdoers. Increasingly, they turn to legal systems for solutions. But when your avatar has been robbed, what law is there to assist you?

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If there's a single maxim by which entertainment lawyers live, it's surely "get it in writing".  And if anyone needed a cautionary tale about the matter, then the recently-reported tale of the ongoing legal dispute between Lisa Kudrow (best known as Phoebe from Friends) and her former manager (hat tip: Eriq Gardner) should serve the purpose:

Three years ago, Kudrow terminated Scott Howard, a business manager who had been representing her since 1991. The two operated under an oral deal where Howard provided management services for Kudrow in return for 10 percent commission on her income.

It was a lucrative arrangement for Howard, even after the commission was trimmed to just 5 percent in 2004. At the height of Kudrow's fame, she was getting nearly $1 million an episode for Friends, plus a chunk of the "backend" earnings of the show in syndication. 

After Kudrow terminated Howard in 2007, he sued for breach of contract, alleging that she had failed to make ongoing commission payments for work that he had handled. Howard sought a declaration that he was entitled to receive his commissions on all of Kudrow's continuing earnings for work done between 1991 and 1997, even after Kudrow terminated him.

I admit to being surprised when I first read that story - one of the world's highest-paid television actresses had an oral agreement with her manager?  And over the course of a relationship which lasted more than fifteen years, neither of them saw fit to reduce it to writing?  The entertainment industry abounds with stories about deals done "on a handshake", but the notion is enough to give a lawyer a serious case of the heebie-jeebies. 

The most recent milestone in the dispute between Kudrow and her former manager is this unreported decision by the Court of Appeals of California, which is well-worth reading in detail.  The dispute involves a classic example of the sort of contract term which would almost certainly not be part of an "oral agreement" - because oral agreements are by their nature simple, and the type of clause in question is by its nature complicated.  The clause in question is of a type often referred to by entertainment lawyers as a  "sunset clause", and is found in contracts which involve some sort of commissionable activity - generally management or agency agreements.  (It is not to be confused with a "sunset clause" of the kind found in legislation which provides for a pre-determined expiration date of the legislation.)  While a manager might be entitled to a 15% commission on an artist's earnings, a sunset clause would provide that once the agreement had been terminated, the manager's commission entitlement doesn't simply disappear, but rather "leverages down" over a specified period of time (the metaphor recalls the sun sinking below the horizon) - so, even if terminated, a manager might be entitled to receive 15% for the first six months after termination, 10% for the next six months, and 5% for the following six months, with 0% commission thereafter.  Often a sunset clause will be worded to provide that the now-terminated agent is entitled to commission only revenues derived from work performed by the agent (so, for example, fees paid under an endorsement contract which the manager/agent was responsible for advising on or securing).  Such a clause protects the interests of a manager or agent who successfully guides a career or secures employment for a client, and who could be short-changed if the client terminates the agreement and, in the absence of a sunset clause, enjoys the full fruits of the manager or agent's work without having to pay any commission (it also serves to prevent a subsequent agent from reaping the rewards of work done by a previous agent).

Alas, Kudrow and her former manager, having no written contract, lack any concrete evidence of whether they had ever agreed to a sunset clause - the former manager, obviously, argues that he was entitled to the benefit of a sunset clause.  The argument presented by the manager seems to be that it is customary in the industry for management agreements to contain a sunset clause, and so, even though the agreement in this case was a verbal one, the sunset clause was implicitly understood by the parties to be part of the agreement.  The trial judge in the case, agreeing with Kudrow's argument, excluded the manager's evidence about industry custom and practice regarding sunset clauses - the Court of Appeals of California reversed that exclusion, concluding that Kudrow's former manager should have been allowed to introduce such evidence.

While the decision is of course focused on California law, it provides some interesting factual background about how artists and managers conduct their business affairs, and some useful consideration of how artist/manager agreements are structured.

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[The following post was written by Heenan Blaikie articling student Michael Shedletsky - I'd like to thank him for contributing to the Signal.]

Over twenty years ago, the Supreme Court of Ontario held in Planet Earth Productions Inc. v. Rowlands 73 O.R. (2d) 505 that photographic negatives and the copyright therein could be seized from the owner to satisfy a judgment debt. The Court stated that the negatives were worthless without the accompanying copyright to them. The decision relied on copyright falling under the definition of ‘choses in action’ used in section 19(2) of Ontario's Execution Act (RSO 1980, c. 146), and under the ambit of rights to chattels in section 18. Rights to chattels included, “any interest in or in respect of any goods, chattels or personal property… of the execution debtor”. At the time, the Execution Act, under section 17, only explicitly permitted the seizure of patents as personal property.

Shortly after the decision in Planet Earth, Professor David Vaver wrote a lengthy paper on the decision "Can Intellectual Property be Taken to Satisfy a Judgment Debt?" ((1991) 6 Banking & Finance Law Review 255). His view was that intellectual property should not be subject to sheriff’s seizure in Canada unless express statutory language permitted such seizure. Although it took over twenty years, the Saksatchewan Court of Queen's Bench in Wira v. Jubilee Enterprises Ltd (2010 SKQB 320) recently held that both trademarks and copyrights were not available for seizure by a judgment creditor. In the case, the Sheriff seized copyrights and trademarks registered in the name of the judgment debtor in regards to a board game named “Dare to Dream” as a result of a writ of execution in favour of the judgment creditor. The judge held that the copyrights and trademarks could not be seized because they were not choses in action and the Sheriff was ordered to return the intellectual property associated with the board game. However, even the judge in the Wira decision was of the view that his decision will be short-lived.

The Saskatchewan Enforcement of Money Judgments Act, S.S. 2010, c. E-9.22 received royal assent on May 20, 2010, but has not been proclaimed into force as of October 29, 2010. The EMJA permits the sheriff to seize intellectual property to satisfy judgment debts. According to section 2(1)(z) of the EMJA, “intellectual property” includes any property right or interest in: a copyright; letters patent for an invention; a trade mark; an industrial design; integrated circuit topography; plant breeder’s rights; and a transferable licence, interest or right derived from or associated with any of the intellectual property mentioned in subclause (i) to (vi); whether the property right or interest arise or was recognized under the law of Canada or the law of any other country.

In Ontario, the Execution Act still does not cover the seizure of intellectual property other than patents. However, the Planet Earth decision is precedent for the seizure of copyrights. Perhaps Ontario and other provinces will amend their execution statutes to follow the Planet Earth decision and Saskatchewan’s EMJA by permitting all forms of intellectual property to be seized to satisfy judgment debts. It is only a matter of time before the sheriff attempts to seize copyrights or trademarks in Ontario again. Maybe then the legislators will revisit this issue, and give it further consideration. For additional background, please see this IPilogue post on the topic.

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The CRTC has issued revised definitions for some of its Canadian television program categories following a public consultation process earlier this year. The television program categories are central in the CRTC’s oversight of licensed programming services and are used to delineate the specific nature of service governing every licensed Canadian conventional, specialty and pay TV programming service and compliance with conditions of licence. The program categories are also the basis for all broadcaster program logging to ensure compliance with Canadian content requirements.

Revisions to the program definitions follow the new TV policy announced in March 2010 for the large English-language private television ownership groups. In the TV policy the CRTC replaced the on-air scheduling requirements for Canadian “priority programming” with a new expenditure requirement for “programs of national interest”, which the CRTC has deemed “the primary vehicles for communicating Canadian stories and values”. Programs of national interest encompass programs from categories 2(b) (Long-form documentary) and category 7 (Drama and comedy). The CRTC has also decided that Canadian award shows that celebrate Canadian creative talent are programs of national interest, such as The Geminis, The Junos, The Giller Prize, The National Aboriginal Achievement Awards, The East Coast Music Awards and The Aboriginal Peoples Choice Music Awards.  

Definitional changes to the program categories have been made in three key areas: 

Reality television and Long-form documentaries: The CRTC has determined that reality television does not need the same regulatory support as long-form documentaries. Consequently, the Commission has created a new sub-category for reality programming by redefining the current category 11 (General Entertainment) as category 11(a) (General Entertainment and Human Interest) and created a new category, 11(b), “Reality television”. “Reality television” describes programs that present unscripted dramatic or humorous situations, documents actual events and typically features ordinary people instead of professional actors. This type of programming involves passively following individuals as they go about their daily personal and professional activities. It is characterized by very minimal amounts of in-depth critical analysis of a specific subject or point of view in contrast to the key defining element (long-form documentary programming category 2(b)). 

Canadian Award Shows: The Commission has now codified its TV Policy ruling to include Canadian award shows. The Commission has established a “living list” of eligible award shows that will be published on its website. Under the proposal, should a party wish to have a Canadian award show considered for inclusion on the list, the party would provide a detailed rationale to the Commission for its qualification as a program of national interest.  

The following criteria will apply for determining award shows that will qualify as programs of national interest:  

1. Award shows of national or regional scope that celebrate Canadian creative talent and/or cultural diversity and achievements in Canadian arts and culture (broadcasting, film, music, video, new media and the arts sector).

2. Parties must apply to the Commission to add or delete an award show and must demonstrate that it clearly meets or no longer meets the above-noted criteria.

3. A full list of eligible programs may be found on the Commission’s website at www.crtc.gc.ca, as amended from time to time.  

Eligible expenses related to qualifying award shows will count towards the expenditure requirement for programs of national interest established in the TV policy.  

References to program length and advertising: The Commission has also decided to amend the definition of category 2(b) (long form documentary) to specify a minimum length of at least 22 minutes (formerly 30 minutes less commercial breaks) and to clarify that programs that fall under the new Reality television category do not qualify as long form documentary programming.

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The Globe and Mail last weekend ran an interesting article by Kate Taylor: Visual artists seek a percentage of resale riches (hat tip: Stikes).  As the article notes:

In 59 ... countries including most of Europe, [painter Mary] Pratt would get a small percentage (from a fraction of one per cent to five per cent, depending on the sale price) of the hammer price of her resold painting thanks to a principle known as “droit de suite,” or the artist’s resale right.

The right, which has existed in France for decades but was only introduced to the U.K. in 2006, means that an artist, who has previously sold works for low prices, can profit from rising prices on subsequent sales of those pieces. The law applies after death too, so that an artist’s heirs would get a share until copyright expires, 75 years after death in most of these countries.

“The whole value of an art work is not made on the original sale,” said April Britski, national executive director of the Canadian Arts Representation (CARFAC). “Visual artists are at a great disadvantage compared to writers or musicians who keep getting money from recordings or books. [With art,] you sell it once and it’s gone.” Britski said the right would be particularly valuable to older artists and to Canada’s aboriginal artists, who may sell works for much less than urban collectors eventually pay for them. Australia has just adopted the right specifically to address the exploitation of its aboriginal artists.

CARFAC has published information regarding the resale right (see their brief backgrounder and detailed Recommendations).  Also worth reading are this very detailed treatment of the Australian resale regime (along with some international comparisons) prepared by Caslon Analytics, Mara Grumbo's "Accepting Droit de Site as an Equal and Fair Measure under Intellectual Property Law and Contemplation of Its Implementation in the United States Post Passage of the EU Directive" 30 Hastings Comm. & Ent. L.J. 357 (2007-2008) and the California Arts Council's online resources about the California Resale Royalty Act.

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More selected Bill C-32 (The Copyright Modernization Act)-related commentary for perusal:

• James Gannon points out Charlie Angus’ C-32 Blunder
• Gannon also discusses the Bill's TPM provisions and queries What Do the WIPO Treaties Require?
• Barry Sookman has posted his slide presentation Bill C-32: Impacts on the IT Community
• Michael Geist chronicles the first day of Bill C-32's Second Reading: The Bill C-32 Debate Begins: Locks, Levies & Misinformation on Fair Dealing
• Hansard of the first day of Second Reading is available here

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IP Osgoode has published a lengthy and insightful interview with Susan Abramovitch on the legal issues arising in the context of producing and exploiting videogames.  Topics covered include TPMs, Bill C-32, tax credits and "virtual" property rights.

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[It's November, and Remembrance Day is only a handful of days away, so the topic of this post is bound to come up at some point for Canadians: the use of poppy images in media or online endeavours (poppy twibbon, anyone?).  Below is the text of an article I wrote which originally appeared in the February 10, 2006, issue of The Lawyers Weekly published by LexisNexis Canada Inc. (A .pdf of the article can be accessed here.)  To the best of my knowledge, the Legion still finds itself between a rock and a hard place when it comes to this issue as a result of the competing statutes and registrations in place which govern the Legion's rights in and to the poppy image - and Canadians will likely still find themselves frustrated by the position which the Legion is obliged to take on the matter.  The Legion publishes a Poppy Manual which is worth reading.  Analogous issues arise in relation to the iconic "Red Cross" and its use in entertainment products such as video games (see also here).]

On Nov. 4, 2005, a representative of the Royal Canadian Legion contacted Pierre Bourque, author of the widely-read Canadian news website www.bourque.com, and demanded the removal of a digital image of a poppy posted on the site. The Legion asserted a right to prohibit unauthorized use of the poppy image arising from the Legion’s registered trade-mark of the image. Bourque had included the image on his website to mark Remembrance Day. When Bourque made note of the Legion’s demand on his website (under the caption “Legion Declares War on Bourque”), the reaction was swift and furious: dozens of online pundits condemned the Legion’s perceived heavyhandedness and, according to Bourque, “hundreds and hundreds of emails poured into the Legion”. News coverage rapidly spread to radio, the CBC and the Sun chain of newspapers.  Many of the negative responses expressed surprise that the poppy could be the subject of a trade-mark registration at all, coupled with anger that well-intentioned activities on the part of a person wishing to join the Legion in remembering the sacrifices of previous generations of Canadians were giving rise to potential legal action.

Many Canadians would regard the poppy as virtually a cultural artifact: since 1921 artificial poppies have been annually worn in Canada as a symbol of remembrance. After World War I, inspired in particular by John McCrae’s 1915 poem “In Flanders Fields”, the poppy became a widespread token for commemorating war dead. Judging by the online reaction, many Canadians would be surprised to learn that the poppy image can be treated as an item of commerce, no different from a logo for a vacuum manufacturer. Troubling issues about the commodification of cultural items are raised, as well as concerns relating to the pitfall-laden nature of trade-mark enforcement. Do we really want the poppy to be subject to potential dilution, the vagaries of trade-mark law and potentially ineffectual enforcement of their mark by the Legion? Do we want to force the Legion to be in the position of having to devote time and resources to the policing of its marks?

The nature of the Legion’s right to the poppy image is complex. The poppy is the subject of seven separate CIPO registrations, including the poppy image alone, various Legion logos incorporating it and even the word “poppy”. Most interesting is Application Number 0980289, which displays the image of a poppy and bears the appellation “Mark Protected by An Act Respecting the Royal Canadian Legion” – this is a separate registration from the mark found under Registration Number TMA586995, which is the identical image but in the more traditional format for trade-mark registrations.

The Legion’s rights in the poppy image arise from two distinct sources: the Trade-Marks Act (the “TMA”) and An Act Respecting the Royal Canadian Legion (the “Legion Act”). The latter is a private statute, not available in consolidations or even online at the Department of Justice’s database [UPDATE: the Legion Act, and its amendments, are now available online at the Legion's website]. Enacted in 1948, the Legion Act incorporated the Legion; a 1981 amendment made three important additions to the statute: the poppy image (together with certain other visual insignia) was made a mark of the Legion; it became prohibited for any person to, without the authorization of the Legion, adopt or use, in any circumstances, any mark of the Legion or any mark that is “confusing” or “likely to be mistaken” for such a mark; and the poppy image was made a “registered trade-mark” for purposes of the TMA.

The cultural niche occupied by the poppy is not entirely unique: the TMA recognizes that there are certain marks of a national, international, civic or public nature such that they are not properly the subject of use as a mark to designate a product or service. Section 9 of the TMA lists these prohibited marks, which include various Crown and state symbols (such as armorial crests, flags and the letters “RCMP”), as well as the national flags of foreign states, United Nations symbols and the emblems of the Red Cross, Red Crescent and Red Lion. Section 11 of the TMA prohibits the use “in connection with a business” (which makes this protection less comprehensive than that found in the Legion Act) of a mark identified in section 9. This gives rise to yet a third facet of the Legion’s interest in the poppy: section 11 of the TMA also extends its prohibition on use to the marks listed in sections 13 and 14 of the Unfair Competition Act, which include the “emblem of any fraternal society, the legal existence of which is recognized under any law in force in Canada” – such as the Legion Act.

A confusing amalgam of rights results: the poppy is treated as a registered trademark for certain purposes; though not quite a prohibited mark (under section 9), it is treated similarly (following a race through some old statutes, under section 11; and, in some respects, is almost a sui generis IP right with extremely broad reach (under the Legion Act, the tracking down of which even briefly stumped a law library). Some form of protection for the poppy symbol is appropriate: to discourage use by unscrupulous individuals or prevent it being associated with endeavours which reflect poorly on the memory of the veterans it is meant to honour. Would it not be better if the poppy were protected in some fashion, such that it’s use in commercial activities was prohibited, but that non-commercial use by people of goodwill wishing to take part in a Canadian tradition be allowed (even encouraged)? If the mark is sufficiently important to our culture, it should be added to the list of prohibited marks rather than being buried in a partly-forgotten statute, possibly susceptible to loss due to ineffective enforcement by the Legion. The answer lies with whether we want to allow an intellectual property regime designed to protect commercialinterests to be used to protect cultural interests.

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