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

NOTE: What follows is an informative and well-written article by Stephen Zolf recently published by Heenan Blaikie's Nota Bene and discussing a very recent Supreme Court decision ruling that ISPs are not considered "broadcasters":

On February 9, 2012, the Supreme Court of Canada confirmed that Internet service providers (ISPs) do not act as “broadcasting undertakings” in providing end-users with access to broadcasting content through the Internet. This ruling is significant as it addresses the scope of the regulatory jurisdiction of the Canadian Radio-television and Telecommunications Commission (“CRTC”) under the Canadian Broadcasting Act. The Supreme Court of Canada has now clearly demarcated the respective roles of various entities involved in the chain of Internet transmission, some of which communicate broadcasting content and some of which merely provide the means of communication.

The legal nature and scope of ISP activity from the standpoint of broadcasting law came before the Supreme Court of Canada in view of the increasing amount of broadcasting content (television programs, feature films, etc.) available over the Internet. This trend led the CRTC in 2009 to reconsider its 1999 New Media Exemption Order pursuant to which all new media content, including broadcasting content on the Internet, was exempt from CRTC licensing and the corresponding requirements to contribute to Canadian content.

In the 2009 proceeding, the CRTC reaffirmed its approach that it would not impose licences or any other material regulatory obligations on any providers of film and television content delivered and accessed over the Internet referred to as “new media broadcasting undertakings”.

However, during the CRTC hearing, several parties had submitted opposing views on whether ISPs were subject to the Broadcasting Act. A coalition representing the Canadian cultural industry argued that ISPs are integral to the transmission of broadcasting and should be viewed as equivalent to the role played by cable and satellite broadcasting distributors who are subject to regulation as broadcasters under the Broadcasting Act. The coalition proposed that the CRTC impose a levy on ISPs to fund the creation of new Canadian broadcasting content for new media platforms (similar to the levy paid by conventional Canadian broadcasters). The ISPs in opposition argued that their role was distinct from that of a programming or distribution undertaking and akin to a telecommunications common carrier (and therefore subject to regulation under the Telecommunications Act, rather than the Broadcasting Act).

In its determination following the 2009 hearing, the CRTC determined that a levy was unnecessary from a policy perspective. Nevertheless, it wished to resolve the legal question of whether ISPs are “carrying on a broadcasting undertaking” and are therefore subject to the Broadcasting Act. Rather than ruling on whether ISPs were broadcasting undertakings, the CRTC referred the issue to the Federal Court of Appeal for determination, asking the following question by way of “reference”: “Do retail Internet service providers (ISPs) carry on, in whole or in part, ‘broadcasting undertakings’ subject to the Broadcasting Act when, in their role as ISPs, they provide access through the Internet to ‘broadcasting’ requested by end-users?”

The Federal Court of Appeal released its decision on the CRTC’s reference question in July 2010. The Court first clarified that it was not examining the CRTC’s earlier determination in the 1999 new media proceeding that “broadcasting” does occur on the Internet. Rather it noted the following:

…the issue to be decided is whether, when providing access to the “transmission of programs …”, ISPs are broadcasting. The answer to this question hinges on a consideration of the findings of the CRTC as to how programs are transmitted on the Internet on the one hand, and the exact purport of the definition of the word “broadcasting”, on the other.

The Federal Court of Appeal noted the CRTC’s description in the reference question that in providing access to broadcasting, “ISPs do not select or originate programming or package or aggregate programming services” in providing for the transmission of content requested by their end-user Internet customers. This characteristic led the Court to conclude that an ISP is not carrying on a “broadcasting undertaking” under the Broadcasting Act as it has no control or input over the content made available to the end-user. Therefore, it does not “transmit” the program for reception by the public as per the statutory definition in the Broadcasting Act.

The cultural groups sought leave to appeal to the Supreme Court, which was granted in March 2011. In a relatively rapid timeframe, the Supreme Court heard oral argument in January 2012 and released its ruling on February 9, 2012. In brief reasons, the Supreme Court upheld the Federal Court of Appeal’s finding that the activities of intermediaries such as ISPs cannot be said to “transmit” the content when their role is limited to providing the means of transmission. In these circumstances, ISPs are exempt from the operation of the Broadcasting Act.

Among the key determinations of the Court were:

• The Broadcasting Act makes it clear that “broadcasting undertakings” are assumed to have some measure of control over programming which an ISP does not when it merely provides the mode of transmission;
• An ISP does not engage the policy objectives in the Broadcasting Act which focus on content goals (i.e., cultural enrichment of Canada, the promotion of Canadian content, programming standards and diversity) when it merely provides the mode of transmission;
• When providing access to the Internet, ISPs take no part in the selection, origination, or packaging of content. The term “broadcasting undertaking” does not contemplate an entity with no role to play in contributing to the Broadcasting Act’s policy objectives; and
• While cable television companies have control over content, by contrast ISPs have no such ability to control the content of programming over the Internet.

However, it is significant that the Court elected not to decide whether the nature of ISP activity (i.e., use of “routers”) prevents them from being characterized as a “telecommunications common carrier”. The Court determined that it did not need to decide this question in order to make its finding that ISPs were not “broadcasting”.

The Supreme Court’s Decision has provided much needed guidance on this contentious issue in Canadian broadcasting law.The Court’s ruling has implications not only for the issue of who among various entities involved in Internet broadcasting are subject to regulatory obligations under the Canadian Broadcasting Act but also with respect to the harmonized approach to copyright law over the Internet. With respect to the latter issue, the Supreme Court cited its previous determination with respect to copyright liability of ISPs in SOCAN v. CAIP 2004 SCC 45, in particular that ISPs merely act as a conduit for information provided by others and, therefore, they could not themselves be held to implicate the communication right under Canadian copyright law.

References:

Broadcasting Public Notice CRTC 1999-84;

Broadcasting Regulatory Policy CRTC 2009-329

Broadcasting Order CRTC 2009-660;

Re Canadian Radio-television and Telecommunications Commission 2010 FCA 178;

Re Broadcasting Act, 2012 SCC 4.
 

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Kudos to The Documentary Organization of Canada (DOC), which has released a proposed Exemption for Documentary Filmmakers to Circumvent Technical Protection Mechanisms in Bill C-11. I commend their efforts to do something which is not as common as it could be in Canadian copyright debates: actually proposing statutory language to address their concerns.

The DOC proposal is in response to the "technological protection measures" (TPM) provisions of Bill C-11, which, subject to certain limited exceptions, would make it an act of infringement to circumvent a TPM.  Suffice it to say that the TPM provisions of the bill are the most contentious in the draft legislation.  DOC argues that incorporating protection for TPMs into the Copyright Act (Canada), and more particularly making their circumvention constitute copyright infringement with no allowance for a fair dealing exception to such deemed infringement, constitute a "serious problem" because they "prevent documentary filmmakers from accessing the materials they need in order to produce their works".  The DOC proposal goes into detail about the technical problems faced by documentary filmmakers who wish to make use of, for example, short clips from DVDs for inclusion in their documentaries and who would be forced to employ non-circumventing means to access the clips (basically, they would have to re-film the clip - which is apparently a lot more technically complex, and expensive, than you might have imagined).

This is the text of DOC's proposed "documentary filmmaker" exception to Bill C-11's TPM provisions:

41.1X (1)Notwithstanding Paragraph 41.1.(1)(a)herein, documentary filmmakers, may circumvent technological protection measure in order to incorporate copyrighted material into new works for the purposes of Fair Dealing (outlined in section 29 of the Copyright Act) provided that:

a. The documentary filmmaker is not able to to access the copyrighted material after reasonable attempts to do so and must therefore circumvent the technological protection mechanism; and

a. i) the documentary filmmaker has lawfully obtained the work, the performer’s performance fixed in a sound recording or the sound recording that is protected by the technological protection measure; or

ii) if an orphaned work or a work that is unavailable for purchase to the public that is protected by the technological protection measure, the documentary filmmaker has made best efforts to legally obtain the material; and in all cases

b. the documentary filmmakers has reasonable grounds for believing that circumvention is necessary to fulfill the purpose of the use of the material in the documentary.

(2) However, a person acting in the circumstances referred to in subsection (1) is not entitled to benefit from the exception under that subsection if the person does an act that constitutes an infringement of copyright or an act that contravenes any Act of Parliament or any Act of the legislature of a province.

(3) Paragraph 41.1(1)(b) does not apply to a person who offers services to the public or provides services for the purposes of circumventing a technological protection measure if the person does so for the purpose of incorporating the material into a new documentary work for the purposes of fair dealing.

(3) [sic] Paragraph 41.1(1)(c) does not apply to a person who manufactures, imports or provides a technology, device or component for the purposes of circumventing a technological protection measure purpose of incorporating the material into a documentary work for the purposes of fair dealing; and uses that technology, device or component only for that purpose.

One might quibble with the specifics of the drafting (e.g., I'm not entirely sure how subclause (2) is intended to operate, since it seems to short-circuit the effect of subclause (1)), but I think the proposal, like DOC's Guidelines to Fair Dealing Practices for Documentary Filmmakers, is a productive exercise and should be applauded.  Hopefully the proposal will engender many responses.

The proposal would, if enacted, certainly be beneficial to documentary filmmakers.  My biggest concern (and this is not a criticism of DOC, who are doing their job by advocating for their members and other stakeholders) is that proposals like this clutter the Act - to the extent possible, we should avoid particularism in copyright statute drafting even if only to make the Act less byzantine (if you're ever bored, take a waltz through the "libraries, archives and museums" provisions of the Act; to witness the reductio ad absurdum of copyright drafting, see Section 32.2(2) of the Act, the "agricultural or agricultural-industrial exhibition or fair" provision).  We would be better served by principles-based exceptions (e.g., circumvention of TPMs is not an infringement if done for a fair dealing purpose) - but since such an approach goes against the trend-line, the DOC proposal is likely the best we'll be able to do in the short term.

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On Feb. 23^rd, Stephen Colbert included an integrated sponsorship on The Colbert Report. Colbert refers to these product integrations as brand-funded requests from the network and this most recent “Sponsortunity” was brought to you by Nabisco’s “Wheat Thins” crackers. Colbert goes on to satirically discuss the product and the brand’s ‘important’ role in our everyday lives based on a directional memo provided by the brand. While viewer’s may have been ‘cracking’ up over the broadcast some of the references may have had Nabisco execs tuning out.

Colbert refers to an “actual memo” he received from the makers of Wheat Thins for the purposes of the sponsorship, which details what the role of the Wheat Thins brand is (and is not) and provides instruction for how he should (and should not) interact with the product on the show. Colbert quotes from the memo sarcastically referencing the importance of Wheat Thins in our lives as the “snack for anyone who is actively seeking experiences” and that “Wheat Thins keep you on the path to, and proud of, doing what you love to do no matter what that is…” For example, “driving kids to practice, watching a movie” and “arson”, as added by Colbert. He goes on to discuss further descriptions in the memo, including that “Wheat Thins are not a creator of isolated, un-sharable experiences; they are a connector of like-minded people encouraging sharing”. And Wheat Thins are “not an exclusive or exclusionary brand” so, as Colbert jokes, “blacks, jews get in here!” In addition, Stephen reads from the memo that the Wheat Thins cracker brand is “not a crusader or rebel looking to change individual paths (or the world)”. The memo further goes on to caution against showing over consumption and requests that Colbert not show (as in a bowl), or eat, more than the recommended serving size of 16 crackers. This leads Colbert to obnoxiously stuff 16 crackers in his mouth at one time and then, in a rebellious move, to attempt to add a 17^th cracker, which results in the broadcast cutting out citing “technical difficulties”. The scene is followed by a ‘fauxpology’ – an apology made to appear as though it was either network or brand-mandated but which is clearly incorporated into the sketch as a continuation of the brand mockery.  The skit is likely to be perceived as nothing more than a good natured jab at the brand for its attempts to control the parameters of the sponsorship. For all execs participating in branded entertainment, however, it is also a good reminder of the potential pitfalls involved in engaging in product integrations.

Product placements in film, television and other entertainment vehicles are not uncommon. They come in many different forms, from passive product placement, where products can been visually seen or are referred to in commentary or dialogue, to active integration and usage by the hosts and/or characters of the entertainment program. A classic and well known example of product integration is Coca-Cola’s product placement on American Idol where large Coca-Cola branded glasses are shown prominently placed in front of each judge and from which the judges drink (presumably a Coke product) for the duration of the show.  Product integrations provide another avenue by which brands can reach consumers, and they can be enormously successful (e.g., Reese’s Pieces in E.T.; Ray Bans in Risky Business; Mini Cooper in The Italian Job). On the flip side, however, they also bring certain inherent risks and additional concerns.  There is no specific model for product integrations. Brands may pitch to have their product included in a particular program or the producers may (with or without permission) include a brand as a fundamental element of the script and/or character development.  Product integrations are secured in a number of ways. For example, they can be paid for by the brand, the products themselves may be offered in a barter exchange for inclusion in the program without any payment, or the placement may be provided at the producer’s cost – this usually occurs when the inclusion of the product is an essential element of the plot or will add some value to developing the strength of a show’s character.

With traditional advertising, the advertiser has complete control over the messaging, content and placement of the advertisement. This includes what is said about the product, when it is said, and how and when the product is used (or not used). In contrast, product placement deals (depending on the particular arrangement between the brand and the producer) usually require at least some relinquishment of control over these factors. Too much control can cause the integration to appear opportunistic and transparent, which may degrade the authenticity and creativity of the programming and alienate viewers. On the other hand, having no parameters over the use of the product may backfire resulting in the product being used in a derogatory or inappropriate manner, which can have a significant negative impact on the value of the brand and, ultimately, the bottom line.  So, regardless of whether it’s an integration in online, film or television, or the genre is live action, comedy or drama, or the program is scripted, unscripted, news or reality-based, brands engaging in product integrations must participate in a bit of a balancing act between relinquishing control and taking on risk.

The parameters of the agreed upon deal are usually governed by contract. Typically speaking, however, product integration contracts will include a bar against injunctive or equitable relief, so that any claim a brand may have for a violation of the terms of the integration will be limited to an action for damages and the show will continue to be marketed, sold and distributed without alteration or removal of the offending product integration.

Colbert’s presentation of Wheat Thins in the “sponsortunity” segment appears to be an example of a brand’s failed attempt to limit or control the form of the integration.  That said, Wheat Thins must have been comfortable assuming the risk of Stephen Colbert himself. Anyone who has ever watched The Colbert Report knows that Colbert doesn’t often do what he’s told. Colbert ends the segment by saying “join me next time when I will read the memo from someone else who gave me money.”

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This post is part of an occasional series highlighting the type of risks which film and TV producers face and which are supposed to be covered by E&O insurance, and which aims to demonstrate that what might seem to a producer to be paranoia on the part of their lawyer is, in fact, well-founded.  These posts will point to actual lawsuits which have been filed against film/TV producers for various alleged rights infringements (whether copyright, trade-mark, right of publicity, or otherwise) - and which inform the nit-picking approach taken by producer's counsel.

Eriq Gardner at Hollywood, Esq. is reporting that visual artist Maya Hayuk is suing RCA Records and Sony Music over the inclusion of one of her works of art in a music video.  The lawsuit has been filed in Massachusetts federal court.  The work in question, entitled "Sunshine", is a mural which appears to be painted on a wall in Brooklyn (this page has what purports to be a picture of the work, the picture apparently being a still from a different music video in which the work appeared).  The video in which the infringing copy appears, for a song called "Only Wanna Give It to You", can be found here - the purportedly infringing depiction of "Sunshine" can be seen at around the 2:00 and 3:00 marks.

A few items to note about the lawsuit:

• the mural only appears for an aggregate of about ten seconds in the clip, and does not appear to ever show up in its entirety in the video - the shots are all fairly tightly focused on the performers, with only portions of the mural viewable on the wall in the background
• the mural is on the side of a building, viewable from the public sidewalk - it would be virtually impossible to film the building (at least from this particular angle) without depicting the mural

What might potential defences, under Canadian copyright law, be to such a claim?  One could try to argue that the "incidental inclusion" provision found in Section 30.7 of the Copyright Act (Canada) applies.  As I explained in detail in this post at IPilogue, that would be a difficult argument to succeed with: the section requires that the inclusion of the copyrighted work be both "incidental" (arguably met in this case) and "not deliberate" - which is almost certainly not the case here, since the director of the video clearly intended to shot the scene at the particular location with the mural in the background.  None of the "fair dealing" exceptions found in the Act would apply.  What about the fact the mural is in a "public place"?  Still not going to help us: Section 32.2 of the Act which allows the reproduction in a "cinematographic work" (which would include a music video) of a work that is "permanently situated in a public place or building" only applies to sculpture and works of "artistic craftsmanship" - and a mural is decidedly not a sculpture or a work of artistic craftsmanship.

The launching of the lawsuit offers a timely reminder for those conducting E&O clearance on a film clip: the inclusion of virtually any copyrighted work (or an identifiable portion thereof) should prompt an assessment of whether the depiction of the work has been properly licensed or whether a fair dealing or other exception to infringement might apply.

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On Wednesday, February 22, the same night as the film’s red carpet premiere, Astral Media removed 38 of Goon’s movie posters from Toronto city bus shelters after the City of Toronto received numerous complaints. The Goon posters in question show Canadian actor Jay Baruchel making a sexually suggestive gesture with his fingers and tongue. Other posters for the film featuring co-stars Liev Schreiber and Seann William Scott are still standing.

According to the Globe & Mail, the film’s distributor Alliance Films says that “outdoor advertiser Astral Media was told to rip down the signs from transit shelters Wednesday after the city apparently received numerous complaints about the sexually suggestive pictures”.  According to Alliance the posters have been up for two weeks.  However, Elyse Parker of Toronto’s transportation services says it was not the city that made the decision to remove the posters. According to her, “staff contacted Astral after they received at least one complaint Tuesday from a city councillor’s office. Astral took down the posters without further discussion with the city.”

This isn’t the first time that advertisements for the Canadian hockey comedy have come under scrutiny. Commercials for the film were also reportedly prohibited by the World Junior Hockey League from airing during the championship game due to violence and its association with the sport of hockey. No doubt due in part to significant media coverage over the level of violence in hockey today and the recent deaths of NHL hockey players.

If the city of Toronto has received complaints, one can expect that Advertising Standards Canada (“ASC”) will too. ASC is Canada’s self-regulatory body that administers the Canadian Code of Advertising Standards (the “Code”), which sets the criteria for acceptable advertising in Canada and forms the basis for review and evaluation of consumer, trade and special interest group complaints. With limited exceptions, the Code applies to all advertising of products and services in any medium in Canada.  In this case complaints would likely fall under Clause 14 “Unacceptable Depictions and Portrayals” which sates that: 

Advertisements shall not:

(a) condone any form of personal discrimination, including that based upon race, national origin, religion, sex or age;

(b) appear in a realistic manner to exploit, condone or incite violence; nor appear to condone, or directly encourage, bullying; nor directly encourage, or exhibit obvious indifference to, unlawful behaviour;

(c) demean, denigrate or disparage one or more identifiable persons, group of persons, firms, organizations, industrial or commercial activities, professions, entities, products or services, or attempt to bring it or them into public contempt or ridicule;

(d) undermine human dignity; or display obvious indifference to, or encourage, gratuitously and without merit, conduct or attitudes that offend the standards of public decency prevailing among a significant segment of the population.

If the advertisement were found to be in violation of Clause 14 of the Code, ASC would likely determine that the poster was degrading to women and/or offended standards of public decency prevailing among a significant segment of the population.  A significant number of complaints received and pursued by ASC each year fall under this provision.  If ASC agrees that the advertisement raises a valid issue, it will notify the advertiser of the complaint. Depending on the nature of the complaint, the advertiser will either respond directly to the consumer or to ASC.  If the consumer or ASC is not satisfied with the response, the matter may proceed to the Standards Council (the "Council"), an independent review body made up of volunteers from across a number of sectors (e.g., legal, marketing, media, etc.).  If the Council upholds the complaint, the advertiser is asked to amend or withdraw the ad. If either side disagrees with the decision, an appeal may be requested.  Council findings on upheld complaints are published in ASC’s Ad Complaints Reports (the “Report”). Note that if an advertiser withdraws or modifies the ad appropriately before the Council hearing, the advertiser’s identity will not be disclosed in the Report.

While the advertisements have been removed in Toronto this wouldn’t prevent the ASC from receiving complaints and/or determining that the posters violated the Code.

Goon is set to open this Friday, February 24th.  

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The job of any good lawyer, agent or manager is to protect the client from extraordinary and unforeseen events – force majeure, casus fortuitus, unusual consequences of natural occurrences. No matter how it's described, almost all contracts should include language that protects a party from unavoidable, external forces. This is contract law 101 - cut, paste and move on. What happens though, when a performer’s services involve dangerous acts, the consequences of which are entirely foreseeable? Sometimes the race car driver does not make it to the last lap and the skydiver does not land on two feet. While such accidents are rare, they do occur. So, while the accident of Canadian freestyle skier Sarah Burke was undoubtedly tragic, the extreme nature of her sport did not make it unforeseeable.

If lawyers and managers consistently protect their clients from the most unexpected events, how did Burke lack certain medical insurance? This is a troubling question that anybody representing artists and athletes should ponder.

Following news of Burke’s death, it seemed shocking to those in the legal community that the skier's manager, through the Canadian Freestyle Ski Association, was asking for donations covering immense medical expenses. Any athlete participating in such a dangerous activity would surely have proper medical insurance covering often predictable accidents of any degree. Accidents in extreme sports are not extraordinary or unforeseen – this is the nature of the sport.

It was discovered that while Burke had $5 million in medical coverage for officially sanctioned events and training, she died during an event that was hosted by her sponsor, Monster Beverage Co.

Someone should have made sure that her policy covered exhibitions and corporate events, said Greg Sutton, president of Sutton Special Risk, in a quote from Rick Westhead's Toronto Star article. “You have to add those kinds of events to her policy and that should have happened here.

While we don’t know whether the issue of medical coverage for certain events was ever discussed between Monster and Burke’s camp, the accident shines an important light on such legal issues as duress and certain fiduciary duties owed to a client.

In Westhead’s article, former Olympic gold medalist Ross Rebagliati makes an interesting point about the relationship between extreme athletes and their sponsors.

It’s not an easy game. Kids are going to sponsors and begging them, but the way it should work is that the medical coverage should be a part of their sponsorship.

Most entertainment and sports lawyers, especially those who represent individual artists and athletes, are keenly aware that a client’s desire for work or a sponsorship deal can often hinder their bargaining power. It can be difficult to justify to a client the need for proper insurance coverage when compensation and publicity cast a shadow over negotiations. Legal counsel and an athlete’s management team must look beyond mere remuneration when concluding any type of agreement for the extreme and not-so-extreme athlete. While this balancing act can be difficult for a client to accept, the lawyer and management team may be under a fiduciary duty to ensure that proper insurance coverage is put in place either externally or bargained for with sponsors or event organizers. At a minimum, the client must be well aware of the risks associated with the lack of certain medical insurance and fully appreciate the consequences of not obtaining coverage. This duty is magnified in the extreme sports industry.

Before the Sarah Burke accident, lawyers and managers may have thought of insurance coverage as a mere "give" during negotiations. This should no longer be the mindset for an athlete's representatives - contractual negotiations should focus on medical coverage for all types of injuries in all circumstances and settings. This issue is no longer about best alternatives to a negotiated agreement – lack of certain medical coverage should no longer be an alternative.

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Here is another episode of What’s The Deal, reporting on recent industry activity around the globe.

•  The Weinstein Company recently entered a multi-year exclusive licensing agreement with Netflix for several titles, including Oscar hopefuls The Artist and Undefeated. The deal also includes foreign-language films, documentaries and other titles that are not part of the 2008 deal between Weinstein and Showtime. Unfortunately, Netflix did not get the rights to other successful films such as My Week With Marilyn, The Iron Lady, The King’s Speech and Scream 4.
• In other Weinstein news, they are looking to raise approximately $150 million backed by their content library.
• Tim Haslam and Hugo Grumbar recently formed Embankment Films and are offering a complete arsenal with pre-sales, tax credit cash-flow and gap financing. Aver Media showed its support with a $20 million credit facility. Both Haslam and Grumbar bring a long history of success in the business after spending time at HanWay Films, Majestic Films, Intermedia and Icon U.K. Group. Embankment has already completed 40 pre-sales worldwide.
• On the global stage, the US and China recently completed a deal that will see an increase in US films being released in China’s growing number of movie theatres. Foreign studios will be entitled to a 25% share of box office (almost double what it used to be). The film quota also increased from 20 to 34 films. Given the number of new screens appearing in China as of late, there is a high demand for content and the prices have increased drastically as a result (click here and here for more details). Unfortunately, we cannot say the same for certain parts of Europe. Nevertheless, Festival de Cannes will surely bring some exciting deals later this year.

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In a decision dated February 17, 2012, the Copyright Board has denied the request made by SOCAN for an interim tariff which would have applied to the online delivery of movies and television shows and the use of musical works in "user generated content" (UGC) - the interim tariff would have applied to services such as Netflix, YouTube, MySpace and Facebook.

The arguments which SOCAN advanced, as summarized in the decision, were as follows:

• the websites who would be subject to the tariff use significant amounts of music and generate vast amounts of revenues, some of which is attributable to music contained with SOCAN's repertoire
• no tariff is in place which applies to these websites, and a Copyright Board decision on the matter is unlikely to be released before 2013 (and then will be subject to appeal, etc.)
• the absence of a tariff (and the prospect of at least a year before we get a certified one) is unfair to both SOCAN's members and to users of music: to members because they are not currently receiving any payments for the use of their works, to users because there is significant uncertainty as to how much they will eventually have to pay for the current uses (and so setting aside reserves for the liability becomes a matter of guesswork as much as anything else)
• there is a gap created by the certified Tariff 22.D, which covers webcasts provided by conventional TV services, but does not apply to services like Netflix (thereby imposing a competitive disadvantage)

The objectors to the application argued as follows (again, as summarized by the Board's decision):

• the stringent tests for interim relief were not met by SOCAN
• significant uncertainty exists as to whether the Board even has authority to certify significant parts of the proposed tariff - the Supreme Court has yet to release its decision on the issue of whether a "download" is a "communication to the public by telecommunication" - if it is not, then the proposed tariff cannot be applied in the proposed
• current certified tariffs are user-based, whereas the proposed interim tariff is structured using a use-based approach - such a change should not be implemented without a full hearing on the advisability of it

The Board sided with the objectors, denying the SOCAN application, and based its decision on the following reasons:

• user-based tariffs are more easily adaptable to "the constantly evolving Internet environment" and the Board isn't inclined to switch to use-based tariffs without at least some evidence being proffered to justify the switch
• the proposed interim tariff specifically targets certain services, which is a departure from previous tariffs which target activities
• no economic rationale had been provided by SOCAN for the rates it was proposing to charge under the interim tariff
• a number of issues arise in the context of the application (is SOCAN entitled to a tariff? who should pay it? what is the appropriate rate base?) which deserve a full hearing and so pre-empting the hearing by granting an interim tariff would be unadvisable
• finally, "there are no deleterious effects that cannot be remedied through the issuance of the final tariff"

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The Alliance of Canadian Cinema Television and Radio Artists (“ACTRA”) claims that Labatt breached its obligations under the National Commercial Agreement (“NCA”) by hiring non-union actors and paying non-union wages in its “Flash Fans” commercial that recently aired during the Canadian broadcast of the Super Bowl. ACTRA negotiates the terms of the NCA with the Institute of Communication Agencies and the Association of Canadian Advertisers, of which Labatt is reportedly a member.

The “Flash Fans” commercial features hundreds of fans (reports suggest at least 600 fans were involved) surprising two unsuspecting Ontario recreational hockey league teams during a recent pick up game just outside Toronto. At one point during the game, the fans rush into the arena screaming and cheering alongside mascots and cheerleaders; at the same time live announcers come on calling the plays and a hidden jumbotron along with a plethora of Budweiser advertising is revealed. The flash fans bring with them the energy usually reserved for professional league play.

The commercial was created for Budweiser Canada by Labatt’s New York agency Anomaly, a part of MDC Partners Inc. network of agencies. As an American advertising agency Anomaly is not a signatory to the NCA. Generally speaking, ACTRA does not have jurisdiction over non-signatory agencies and advertisers, who are free to create non-union productions, hire non-union talent and negotiate talent fees on an individual basis outside the obligations set forth in the NCA or any other collective performers agreement. Like agencies and advertisers, once they become members of the union, ACTRA talent is prohibited from participating in non-union productions. There is, however, no prohibition on non-union talent being engaged in a non-union production.

The issue in this case lies in whether or not Labatt is a signatory advertiser to the NCA. The allegations by ACTRA rely on this being the case. In an ACTRA release issued Feb. 10, Heather Allin, ACTRA Toronto president said “[i]t’s an embarrassing day for Labatt when they’re caught exploiting everyday folks in their multi-million dollar television ads. We are shocked that Labatt, with whom we have a long-standing business relationship, would undermine their agreement and hire workers for much less than industry-standard pay.”  Likely complicating the situation are reports (by ACTRA) that Anomaly has produced a number of union-compliant commercials for Labatt in Canada in the past year.

Had the commercial been produced as a union production, Labatt would have been obligated to pay each performer in the spot, including the hockey players, ACTRA union wages. According to a Feb. 14 article in the National Post, ACTRA claims the hockey players are owed “at least $3,215.15 each, with an extra $537.85 given to players who appeared in short follow-up interviews”.  Similarly, while members of the crowd reportedly would have likely received a cash rate of $11 per hour under the agreement, prominent crowd members may have qualified for a “principal performer” fee of $3,753. Instead, members of the flash mob were reportedly paid $150 a piece and the hockey players were rewarded with a private Super Bowl party.

Labatt has responded to the allegations by calling the commercial “a spontaneous event rather than a traditional, scripted television advertisement.” They draw attention to the fact that the visceral responses of the real life players would not have been possible or may not have been as authentic under scripted circumstances. Anomaly’s approach in producing the ‘event’ has proven successful with over 3.5 million views on YouTube. As to whether or not a similar campaign would be as successful using actors, it is difficult to tell. One would have to recreate the entire event, which as we know would cost the ‘King of Beers’ a small fortune.

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The news that the stage play Potted Potter has come to Toronto should be something which causes the ears of copyright lawyers (and others interested in copyright law) to perk up.  The show is described as "present[ing] all seven of J.K. Rowling’s iconic books in 70 minutes" - which certainly seems like something that should be within the exclusive purview of the owner of copyright in the Harry Potter books.  (Section 3(1)(c) of the Copyright Act (Canada) provides that copyright includes "the sole right in the case of a novel ... to convert it into a dramatic work".)

But Potted Potter, which has evidently enjoyed "years of success all around Great Britain, Australia and New Zealand" bills itself as "unauthorized" - so what gives?  Ignoring for the moment the efforts of the playwright duo behind Potted Potter to entice Ms Rowling to attend by keeping a seat open for her at every performance of the show, why is Potted Potter not being enjoined from taking place on the basis that the play constitutes an infringement of copyright? 

Perhaps there is an additional clue in the remainder of the show's subtitle: "The Unauthorized Harry Experience - A Parody by Dan and Jeff".

"Parody" is one of those words that sets the hearts of copyright lawyers aflutter - particularly Canadian copyright lawyers.  There is no "parody" defence to a claim of copyright infringement under Canadian copyright law: our statutory "fair dealing" mechanism only covers research, private study, criticism, review and news reporting.  Indeed, so clear is the conclusion that parody is not a defence to infringement, that the government in Bill C-11 (The Copyright Modernization Act), the copyright-overhaul legislation which is currently trundling its way through Parliament, has seen fit to expressly amend the fair dealing section to add "parody" (along with "satire") as an enumerated exception.

Which is all to the good: the addition of parody as a fair dealing category is almost universally supported.  But that means we still don't have an answer as to why Potted Potter is gracing Canadian floorboards.  The lack of a parody defence, and the fact that Potted Potter is not being sued into oblivion despite its appearances on Canadian stages (and assuming that there is not some undisclosed arrangement in the background via which the copyright owners in Harry Potter have authorized the play), confirms that one of the intangible elements in any copyright analysis is always the disposition of the copyright owner to sue to enforce their rights.  In this case, Ms Rowling (and her Canadian publisher, among others) have elected evidently not to sue - and so Potted Potter continues on at their sufferance.

That's not an ideal situation, but then few things in life are.  Given that almost everyone agrees that "fair dealing" should be expanded to include parody, it would be best if the statute was amended to expressly include it.  But, even in the absence of such an amendment, parodic (and otherwise infringing) works are being created and even, as Potted Potter indicates, being commercially exploited (which means attracting significant investment amounts notwithstanding the potential threat of litigation).  Providing legal advice in such a situation, where the law on its face does not allow for a course of action but there are real-world instances of that course being taken, is not impossible, but it's certainly more difficult: it requires a finger-in-the-wind assessment of a potential plaintiff's litigation proclivities, their potential indulgence of a friendly homage, the likelihood of a PR backlash against the plaintiff (and the plaintiff's fear thereof) and the potential defendant's abilities to withstand (or at least endure) the litigation process.

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What does it mean to call something a "director's cut"?  Who else would have a right to "cut" a film if not a director?  What sorts of limitations can be placed on a director's right to "cut" their film?

Let's start with what a "cut" of a film is.  The notion of "cutting" a film derives from the traditional process of editing a film: strips of film containing different takes of scenes would be literally "cut" and spliced together in order to create a single sequentially-running version of the film.  As the various individuals working on a film (editor(s), director, producer(s)) create different versions of the film in the process of "finalizing" the film for public release, different people will have different rights to "cut" the film until a "final" version is created.  However, even once a film is "finalized", and released for public consumption (either theatrically or on home video or on TV), there may still be people or entities entitled to further "cut" the film (no George Lucas jokes, please).

A director will generally want the version of the film which arises from their right to cut to coincide as closely as possible with the "final" version of the film which is initially released to the public.  To that end, directors will often seek to negotiate a contractual right to "final cut" - a right which is typically reserved only for the most famous and successful directors (and, as will be discussed below, even if a director is lucky enough to get "final cut" rights, those rights will be subject to certain limitations).  The default position for audio-visual projects is that the producer(s) of the film will wield the prerogative of "final cut" - it is the producer(s) who will decide when a project is "finished" and ready for public release.

The producer's right of final cut can be modified by contract: if the director is not a member of a guild such as the Directors Guild of Canada (DGC), then the relevant contracts are the contract between the producer (usually in the guise of the production company) and the director and the contract between the producer and any distributor or broadcaster.  In that context, the director will have whatever cut rights they can negotiate, subject to whatever restrictions are imposed on the producer by the distributor/broadcaster (which the producer in turn imposes on the director).  However, if a director is a guild member, then their cut rights are informed by the applicable guild agreement.  Here's what the DGC Standard Agreement (Schedule 1) has to say about director's cut rights:

• Article DR9 clarifies that a "director's cut" is "the assembling and editing process whereby a Motion Picture is assembled and arranged, or edited under the Director’s exclusive supervision and control" - the agreement further articulates that the right to a director's cut is an "absolute right" is "a cornerstone of the Director’s creative rights", and that so long as a director prepares his or her cut within the timeframes specified in the agreement, no one is allowed to interfere with the director's efforts
• the DGC agreement stipulates various minimum time allowances to which a director is entitled in order to prepare their cut, which timeframes depend on things like type of production (theatrical, TV MOW, episodic TV) and budget levels
• a specific process is identified by which the producer must abide in enabling the director to create the director's cut: when the director can see the assembled sequences once the editor has completed work on them; who can see the completed assembly before the director (no one other than the editor and the editor's staff); what happens at the screening of the director's cut
•  even after the director has delivered their director's cut, the DGC agreement accords certain rights to the director: the right to be present and consult and participate in "all creative decisions throughout the entire post-production period" - that means that a DGC-member director has the right to a "reasonable opportunity, subject to his availability, to screen and discuss the last version of the Motion Picture before negative cutting, digital mastering or dubbing, whichever occurs first"
• further, the producer is obliged to "implement any reasonable and practical suggestions" made by the director in respect of "the last version of the Motion Picture before negative cutting, digital mastering or dubbing"
• the DGC agreement also prohibits producer's from undertaking post-production work at a distant location in an effort to stymie the feasibility of the director's exercising his or her right to a reasonable opportunity to be present for post-production decisions - the producer is obliged to pay for the director's transportation, meals and accommodations to any distant location
• a director is also entitled to further consultation rights to any post-completion edits, discussed in further detail below

While the foregoing list applies to DGC-member directors, any contract with a non-guild director should address the same issues: who wields the right of final cut; timeframes for delivering cuts; any rights (or lack thereof) with respect to post-director's cut modifications; etc.

As mentioned above, the right of "final cut" generally rests with the producer, and such right is essentially absolute (subject, when hiring a director who is a guild member, to abiding by the guild requirements) - if the producer wants a movie with 110-minute duration and the director delivers a movie lasting 180 minutes, they can chop away (or if the director deliver a cut which would only qualify for an MPAA rating of NC-17, they can make such cuts as they see fit to bring down to the contracted-for rating). 

However, even after the producer has delivered the "final cut" to distributors or broadcasters, modifications can be made to the film.  Distributors and broadcasters will often have contractually secured for themselves the right to modify a film which has been delivered to them for a variety of reasons, the primary ones being listed below.  (As an aside, a producer who has agreed to give a director "final cut" rights should ensure that their contract with the director "carves out" the following reasons, so that the producer can "pass along" such rights to the distributor(s)/broadcaster(s) without falling afoul of their commitment to the director.)  The standard reasons for which a distributor or broadcaster can modify a film after it has been delivered to them:

• language dubbing or subtitling
• censorship restrictions (which may vary from territory to territory)
• timing restrictions (e.g., a television version of a film which must meet broadcast time slots)
• content restrictions (such as in-flight versions)
• broadcast standards restrictions
• format alteration (e.g., a "pan and scan" version of a wide-screen film for purposes of broadcast on TV)

DGC members have some protection with respect to such modifications by a distributor/broadcaster: Article DR9.13 stipulates that if a producer enters into a distribution agreement or broadcast license that entitles the distributor/broadcaster to make any such edits, the producer must ensure that the distribution/license agreement requires the distributor/broadcaster to provide notice to the director of the proposed edits and give them an opportunity to comment thereon.

We can see then, that even in a situation where a director has successfully negotiated for themselves a right to "final cut", other parties, such as producers, broadcasters and distributors will have rights to create what might be termed a "post-final" cut.  As Matt Galsor at Law Law Land points out when a director gets a "final cut" right, that right will often be contractually limited to cover only certain versions (such as the US theatrical version and the home video version, but not the broadcast network television version) - but a savvy negotiator will often be able to secure for the director the right of first opportunity to cut the versions outside of the scope of the "final cut" right. 

The director's right to "cut" his or her film, then, is articulated via, and circumscribed by, contractual arrangements put in place between the director, the producer, the director's guild (if any) and any applicable distributors or broadcasters.  That being said, there is one final element which needs to be considered in the Canadian context: moral rights.  Assuming, for the moment, that a director is the (or an) author of a motion picture, we should note that Section 14.1 of the Copyright Act (Canada) reads as follows:

The author of a work has, subject to section 28.2, the right to the integrity of the work...

And Section 28.2 of the Act clarifies that "integrity of the work" means:

The author’s right to the integrity of a work is infringed only if the work is, to the prejudice of the honour or reputation of the author, ... (a) distorted, mutilated or otherwise modified

There is thus at least a plausible argument that a post-director's cut modification to an audio-visual project which is sufficiently egregious could constitute an infringement of the director's moral rights.  Unfortunately, not only has that issue been considered by Canadian courts, but it is unlikely ever to be considered by them: contracts with directors which have been reviewed by competent producer's counsel, in addition to describing the limits of a director's right to "cut" their film, will also generally include an unqualified waiver of moral rights.

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Tarragon Theatre hasn’t announced next year’s season yet, but Michael Healey’s Proud won’t be part of it. And Healey has been making media circuit rounds, alleging libel chill as the reason why his play wasn’t selected. Proud never identifies the subject by name, but Healey openly acknowledges that his play satirizes Prime Minister Stephen Harper.

Some arts organizations have become sensitive to creating political drama through their season programming, and though the artistic director at Tarragon, Richard Rose, hasn’t commented on his reasoning for passing over Proud, Healey asserts a concerned Tarragon board member questioned whether certain passages discussing personal integrity could be seen as libel.

But if Stephen Harper is not named in the play, can a person identified through reference to his/her position or title be defamed under Canadian law?

Brown on Defamation indicates that in an action alleging defamation, it is not required that the plaintiff be named specifically, so long as the plaintiff can be identified through the defamatory publication. While in other cases, references to occupation may not be specific enough to indentify an individual, given Harper’s unique occupation as the currently-sitting-Canadian-prime-minister, references to his occupation are likely to be pretty identifying (though without script in hand, it’s difficult to tell exactly how Healey makes it clear that he’s referring to Harper).

As the Supreme Court indicated in Hill v. Church of Scientology of Toronto, public figures are not given special treatment under Canadian defamation law, unlike in the United States, where there is broader latitude arising from freedom of speech considerations (including for such things as parody). Defamatory statements in literary works, films or plays are not shielded either. If the portrayal is found to be defamatory and not within the protection of fair comment (and that’s another set of hoops to jump through), the Tarragon could potentially face some kind of legal liability.

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It’s time for another edition of “What’s the Deal?” In addition to some recent cross-border activity in the industry, we also have a feel-good comeback story and some noteworthy productions making deals.

• Buyer’s beware, MGM is back! In just one year after bankruptcy, MGM managed to pay off about $325 million of debt and secure a new revolving $500 million credit facility syndicated by several key banks in the US, Canada and overseas. They will be looking to use their available cash to acquire new content, and once again solidify themselves as key players in the film and television world. Click here for more.
• Meanwhile in China, Harvest Alternative Investment Group and Sun Redrock Investment Group recently formed the “Harvest Seven Stars Media Fund”, an $800 million private equity fund aimed at predominately English-language films in China. The Fund will be looking to grow private companies in Asia through mergers and acquisitions, as well as acquire film content directly. It will also look to build strong media distribution and marketing platforms. Keep an eye out as this Fund continues to make moves worldwide with the help of the Beijing office of Creative Artists Agency (CAA). New York Times had this to say about it:

If Chinese versions of Rupert Murdoch and Oprah Winfrey teamed up with, say, China’s J. P. Morgan to start a film fund, this would be it.”

(Click here for the complete New York Times article.)

• In other international news, New Regency Productions and ADD (an Israeli production, management and talent agency) agreed to a first-look deal, giving New Regency access to ADD’s Israeli film and television projects. We can all thank ADD for such shows as “Homeland” (known as “Hatufim” in Hebrew, meaning “abducted”) and “In Treatment” (or “BeTipul” in Hebrew) both of which were adapted from Israeli television shows. Regency is hoping that their return to television can be bolstered by successful Israeli adaptations. For more information on ADD, click here.
• Universal bet big bucks on Hasbro’s Battleship board game turned movie. They recently announced about $50 million worth of promotional partnerships across multiple platforms, including television, print, online and in-store packaging. Look for special edition Battleship branded Coke Zero cans at a store near you! For more details on soon-to-be-released Battleship and its promotional partners, click here.
• In advance of its world premiere at the Berlin Film Festival this weekend, Marley’s US rights have been acquired by Magnolia. VH1 acquired the licensing rights to be the first to show the documentary on television. The documentary about legendary reggae musician Bob Marley releases in theatres on April 20. The Marley family fully endorsed the project, and even granted access to private family archives.

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This post is part of an occasional series highlighting the type of risks which film and TV producers face and which are supposed to be covered by E&O insurance, and which aims to demonstrate that what might seem to a producer to be paranoia on the part of their lawyer is, in fact, well-founded.  These posts will point to actual lawsuits which have been filed against film/TV producers for various alleged rights infringements (whether copyright, trade-mark, right of publicity, or otherwise) - and which inform the nit-picking approach taken by producer's counsel.

As reported by Eriq Gardner at Hollywood, Esq., a lawsuit was launched in California against Jay Leno and NBC as a result of the use in a the Tonight Show joke of a picture of a temple.  As described by Fordham's IPLJ blog:

A California Sikh, Dr. Randeep Dhillon, has filed a lawsuit against Jay Leno, alleging that the Sikh community was the unfair butt of The Chin’s joke on the January 19^th episode of The Tonight Show.  The joke at issue portrayed Mitt Romney, the uber-wealthy Republican presidential candidate, as the summer resident of the Golden Temple of Amritsar—the holiest shrine of the Sikh religion.  Seizing on the buzz created by the release of Romney’s tax records for 2010-2011—when he earned $42.5 million in income—Leno mocked the candidate’s wealth by showing Newt Gingrich’s and Ron Paul’s homes, saving “Romney’s” gilded temple for the final zinger. ... In the complaint, Dr. Dhillon seeks general and punitive damages for libel.  He claims that the joke “clearly exposes plaintiff, other Sikhs and their religion to hatred, contempt, ridicule and obloquy because it falsely portrays the holiest place in the Sikh religion as a vacation resort owned by a non-Sikh.”

Without getting into the merits of the claim, the situation offers a timely reminder that Canadian entertainment lawyers who are conducting E&O reviews of film and TV projects should ensure that their review is a fulsome one, extending beyond the usual concerns relating to copyright, trade-mark, defamation and personality rights.  Other matters for consideration (and of possible particular relevance for documentaries) include:

• possible Criminal Code violations, such as obscenity (Section 163), child pornography (Section 163.1) and hate propaganda (Sections 318 and 319)
• violations of court orders or other legal prohibitions on identifying participants in court proceedings and crimes (such as a court order prohibiting broadcasting the identity of the victim of an alleged sexual assault, or the provisions of the Youth Criminal Justice Act which prohibit identifying youths accused of crimes)
• contraventions of the broadcasting standards such as those contained in the Broadcasting Act , the CRTC Policy on Violence in TV Programming and the Canadian Association of Broadcasters' codes of ethics, portrayal of violence and equitable portrayal

(A hat tip to Tony Duarte, whose invaluable resource Canadian Film & Television Business & Legal Practice, provided inspiration for this post.)

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J. Kelly Nestruck reported in the Globe and Mail on Monday that a tax credit aimed at the theatre industry has recently been passed by the Illinois legislature. The Live Theatre Production Tax Credit will provide commercial producers up to $2 million dollars in tax rebates for “pre-Broadway” and “long run” shows.

Both Chicago and Toronto are traditional pre-Broadway stops for large-scale musicals, and the cities derive tourism and economic boons from their vibrant theatre scene. And now with the Illinois tax credits taking effect in July, some of Toronto’s theatre advocates are trying to make the case that a similar tax credit for Toronto is both arts friendly and business savvy.

Tax credits are certainly not new to the Canadian film industry, but Mirvish Productions and Dancap –along with representatives of theatre unions and associations – are hoping for similar incentives directed towards the theatre as well. They have been active in advocating for competitive measures from the city and the province so that productions aren’t lost to American cities.

Could this be, as Nestruck suggests, the new ammunition in a theatre war between the Windy City and Hogtown?

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