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

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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Sundance Film Festival 2012 in Park City, Utah has not disappointed so far, with flurries of activity early and often. Here are a few of the recent film and television deals:

• Lionsgate and Roadside Attractions purchased the US rights to Arbitrage, a Richard Gere financial thriller, for about $2 million.
• Entertainment One acquired the North American rights to Wish You Were Here.
• Fox Search Light bought Beasts of the Southern Wild after winning a bidding war against Weinstein, Sony, Focus and a few others. However, Sony and Focus still managed to make a few other acquisitions. Fox also purchased the worldwide distribution rights to The Surrogate for about $6 million.
• Sony Pictures Classics bought the rights to Celeste and Jesse Forever across North America, Latin America and Eastern Europe. Bidding continues for the remaining foreign rights.
• Sony Pictures Worldwide acquired Samuel Goldwyn’s Robot and Frank.
• Focus Features bought Seth Rogen’s newest comedy For a Good Time, Call ….
• IFC Films acquired Liberal Arts and IFC Midnight acquired The Pact, bothwithin North America. Meanwhile, Picturehouse Entertainment and Revolver Entertainment bought the UK rights to Liberal Arts and The Imposter.
• Magnolia bought the North American rights to V/H/S horror film for over $1 million, after a successful bidding war. Apparently, Magnolia has chosen an alternative release schedule for the film by initially releasing it through VOD prior to a theatrical release.
• And, Millenium Entertainment acquired the US rights to Robert De Niro film Red Lights.

On the television side, National Geographic acquired the rights to climate change documentary, Chasing Ice.

A complete wrap up of all of this year’s action at Sundance will follow soon.

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Amy Conroy, a Ph.D. student at the University of Ottawa's Faculty of Law, has written an excellent article summarizing the various legal regimes applicable to the protection of "personality rights" in Canada, from the common law tort of "appropriation of personality" to the statutory "privacy" regimes in various provinces to the civil code and Quebec Charter-based position found in Quebec.  The article, "Protecting Your Personality Rights in Canada: A Matter of Property or Privacy?", is available online, and has been published in the first issue of the University of Western Ontario Journal of Legal Studies.

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The question of whether Ontario law recognizes a tort cause of action for invasion/breach of privacy has long been a contentious one - but it has finally been definitively settled in the affirmative.  The Ontario Court of Appeal has confirmed in the case of Jones v Tsige, 2012 ONCA 32 that Ontario law admits a separate cause of action for what the court terms "intrusion upon seclusion".  (As discussed in this post, the trial decision in Jones v Tsige had flatly declared that "there is no tort of invasion of privacy in Ontario".)

A number of other commentators have already opined on the decision (see Ha-Redeye, Sookman, Hayes, Gannon), so I would like to just summarize the highlights and then comment on the importance of the decision for entertainment lawyers.  (I'd also like to give a shout-out to colleague John Craig, whose article "Invasion of Privacy and Charter Values: The Common Law Tort Awakens" 42 McGill Law Journal 355 was cited by the court in it reasons).

Elements of the Tort

The court is somewhat less clear than it could be on the precise elements of the new(-ish) tort.  From the decision:

[70]         I would essentially adopt as the elements of the action for intrusion upon seclusion the Restatement (Second) of Torts (2010) formulation which, for the sake of convenience, I repeat here:

One who intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the invasion would be highly offensive to a reasonable person.

[71]         The key features of this cause of action are, first, that the defendant’s conduct must be intentional, within which I would include reckless; second that the defendant must have invaded, without lawful justification, the plaintiff’s private affairs or concerns; and third, that a reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish. However, proof of harm to a recognized economic interest is not an element of the cause of action. I return below to the question of damages, but state here that I believe it important to emphasize that given the intangible nature of the interest protected, damages for intrusion upon seclusion will ordinarily be measured by a modest conventional sum.

I have italicized the language which gives rise to the confusion: it's somewhat fuzzy as to whether there are three elements to the tort (intentional/reckless conduct; intrusion on seclusion; highly offensive) or four elements (intentional/reckless conduct; intrusion on seclusion; highly offensive; causing distress/humiliation/anguish).  While nothing in this case turned on the point, it's not difficult to conceive of situations which are offensive but do not cause distress, humiliation or anguish.

The case is also worth keeping a copy of because it provides a rather succinct overview of various legislative and common law attempts to protect privacy interests, and contains an appendix listing damages awards in various "invasion of privacy" circumstances.

Limitations on Tort and Damages

The court identifies the following limitations on the availability of the tort (in paras. 72 and 73):

• limited to only "intrusions into matters such as one’s financial or health records, sexual practices and orientation, employment, diary or private correspondence that, viewed objectively on the reasonable person standard, can be described as highly offensive"
• subject to "competing claims" for things such as the protection of freedom of expression and freedom of the press

It appears that a plaintiff could recover any demonstrated pecuniary losses, along with "symbolic" or "moral" damages which are capped at $20,000.

Implications for Entertainment Lawyers

When advising clients in the entertainment industry, particularly those who produce investigative reporting, news reports, memoirs, documentaries, docu-dramas, even "reality" TV - really anything which involves the depiction of actual living persons - Ontario lawyers will need to be cognizant of the demonstrated availability of the "intrusion upon seclusion" tort - something which previously was largely a marginal concern in the province.

There is, as Mark Hayes notes, "great uncertainty" about how and the extent to which free expression interests will be taken into account in an "intrusion upon seclusion" court action.  How might a documentary or docu-drama make use of letters exchanged between two people, only one of whom is the primary subject to the movie?  Could the other person bring an intrusion upon seclusion claim for revealing "private" thoughts and experiences?  What kind of impact might revelations about an individual's sexual activities or orientation have (e.g., imagine a news report or book revealing that a politician privately practices activities that he or she emphatically denounces in public life)?  What about a book or TV movie about a public figure which reveals that the person once attempted suicide - something which they had worked to keep private?  Could showing that the finances of a public individual do not accord with their cultivated image (e.g., showing that a successful real estate mogul is in fact broke) be cause for a claim?  Is the interest recognized by the intrusion upon seclusion tort a personal one which expires upon death (similar to defamation), or can it be acted upon by heirs (as seems to be the case with the appropriation of personality tort)?

Of course, none of these questions are unique to this new tort - most legal developments are "fuzzy" around the edges and so engender similar considerations.  But because film and TV lawyers, in particular, need to consider not just potential liability for their clients, but also compliance with E&O insurance policy clearance requirements, a heightened sensitivity to the issue is called for.

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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.

This installment in the series isn't from the world of film and TV, but rather videogames: Eriq Gardner at Hollywood, Esq. reports that game publisher Electronic Arts is in court following threats from a manufacturer of helicopters asserting that including depictions of real-life 'copters in videogames constitutes trade-mark infringement (Helicopters In Video Games Under Fire As Electronic Arts Heads to Court).

This sort of dispute raises pertinent issues which often arise when conducting an E&O review of a project - namely, what sorts of rights might the owner of an "object" claim against a producer who uses that object in their movie?  For example: is there a need to get clearance (i.e., obtain permission from the owner) for the use of a car in a motion picture?  (On a related point, and for a good summary of the issues see Dear Rich's recent post Can We Use Cars in CD Cover Art or Movie?).  For the lawyer reviewing the matter on behalf of the producer, this often reduces to a "look and feel" analysis: Is the object (e.g., the car) being used in a prominent manner? Is there a danger that someone could construe the use of the object as constituting an endorsement of some sort? Is there a trade-marked logo which is visible? Is the object being disparaged in some fashion? Is there some kind of artistic design element on the object which might have separate copyright protection (to use an example which might be a bit out date: is the object a van with an airbrushed painting on the side)?

Digging a bit deeper into the analysis, however, there are both practical restrictions (if every object appearing on-screen needed clearance, movies would quickly become impossible to make - if every appliance in a kitchen required clearance, there wouldn't be many scenes taking place in kitchens) and legal ones - it becomes difficult to articulate what "rights" a manufacturer might have in an "object".  Section 64 of the Copyright Act (Canada) removes copyright protection for designs or artistic works which are applied to "useful articles" and then reproduced more than fifty times.  That would have the effect of preventing a car manufacturer from claiming copyright in their vehicle designs (assuming we're talking about mass-produced vehicles, and not simply one-off "concept cars").  But they might have some kind of relevant protection under the Industrial Design Act (Canada) which may warrant consideration.  Simply depicting a trade-marked logo is likely not to constitute "use" within the meaning of the Trade-marks Act (Canada), and so the only potentially plausible trade-mark claim would have to rest on some kind of disparagement or dilution basis.  The more difficult question to answer relates to copyright which might subsist in a visible logo - though, again, practically speaking in most circumstances such logos will be difficult to discern on-screen.  All that being said, many E&O insurance policies will simply require that prominently-depicted objects (such as vehicles) and depicted logos be blurred or that clearance be obtained - irrespective of the precise legal grounding of a potential claim.

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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 Matthew Belloni at Hollywood, Esq., the producers of "The Hangover: Part II" are being sued by Louis Vuitton Malletier, S.A., the luxury fashion manufacturer:

Luxury fashion brand Louis Vuitton filed suit in federal court in New York on Thursday alleging that a handbag featured in the movie is a fakery. In the scene, the character played by Zach Galifianakis carries a bag marked LVM and admonishes another character: “Careful, that is.. that is a Louis Vuitton.”

But the complaint (posted in full here by Paid Content) alleges that the bag is instead made by the Chinese American company Diophy, which Louis Vuitton is currently suing in an attempt to prevent knock-off items from being sold in the U.S.

Louis Vuitton says it has been damaged by the consumer confusion ("Careful, that is a Louis Vuitton." has supposedly become a catchphrase) and claims that Warners has refused to alter the scene before the movie is released on DVD.

A copy of the complaint is available here.  A recording of the scene in question is, at least for the moment, available here on YouTube.

The complaint (the "statement of claim", in Canadian legalese) asserts that the movie "prominently features an infringing travel bag ... and misrepresents that the [infringing bag] is a genuine Louis Vuitton piece of luggage". (Query whether a bag which appears on-screen for less than ten seconds is "prominently featured", but let's leave that aside for now.)  The basis of the action is primarily trade-mark related: the plaintiff asserts that the use of the bag will give rise to consumer confusion and lead viewers to conclude that Louis Vuitton authorized or otherwise condoned the use of the infringing bag.

The suit is particularly notable for at least two reasons: the brevity of the on-screen use which has given rise to the lawsuit, and the fact that it is a verbal reference to the brand which seems to have triggered the lawsuit - I suspect that many entertainment lawyers would have advised that a non-derogatory verbal usage of a brand name would not require clearance or otherwise give rise to potential liability.

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Following up on a story we discussed earlier this year (Turmel v CBC (Dragons' Den) - Enforceability of Depiction Releases), the Supreme Court of Canada has denied leave to appeal to the plaintiff in the case of Turmel v CBC (Dragon's Den) (trial decision here: 2011 ONSC 2400; court of appeal decision here: 2011 ONCA 519).  That caps what is an important decision for Canadian entertainment lawyers, as it confirms the enforceability of signed "depiction releases", particularly the enforceability of clauses which waive any right to sue for depictions which might be "disparaging, defamatory, embarrassing or of an otherwise unfavourable nature which may expose me to public ridicule, humiliation or condemnation".

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2011 has seen a variety of news stories about film and television tax credit incentive programs around the world.  In the summer, the Economist reported that many US states were ending their tax credit programs ("Unilateral disarmament"):

Arizona, Arkansas, Idaho, Kansas, Maine, New Jersey and Washington have recently ended, suspended or shrunk their programmes. Many others, struggling with budget deficits, are considering doing the same, investing the money in something permanent or even leaving it to taxpayers. “2010 will likely stand as the peak year,” thinks Mr Henchman.

But where some US states are declining to tread, other jurisdictions are continuing to venture:

UK Extends Movie Tax Break Until 2015

Prime Minister David Cameron has announced that film tax relief will be extended for four more years until the end of December 2015. It had been due to expire March next year.

It is worth emphasizing that the UK has extended its film and TV tax incentive program at the same time that the government is in the midst of enormous budget cuts in other areas of government spending.

Closer to home, the province of New Brunswick, after announcing the end of its incentive program earlier this year, has now indicated that film and TV projects will continue to receive funding, though via different delivery mechanisms:

N.B. filmmakers welcome new funding

Filmmakers in New Brunswick are welcoming a new funding application process launched by the provincial government on Tuesday, after the film tax credit was axed in March.

New Brunswick will provide as much as 25 to 30 per cent of eligible expenditures incurred in the province, depending upon the type of project, said Wellness, Culture and Sport Minister Trevor Holder.

While it's dangerous to draw conclusions from such disparate experiences, it's worth noting that tax credit incentive programs appear to be in the process of being retained in jurisdictions where they have a long history (reflecting a long-term investment in anticipated industry growth and spin-off benefits) and being abandoned in jurisdictions where they were viewed as short-cuts to desirable economic activity.  In other words, tax credit programs appear to be viewed as worthwhile when they are understood as a mechanism for developing or sustaining an indigenous production industry over an extended time horizon; they are less attractive if they are intended to create, virtually overnight, an industry hub in an environment which is otherwise unpromising.

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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 THR, Esq. reports that the owners of a private home are suing NBCUniversal and Shed Media because of the appearance of scenes shot in their home on the television series Bethenny Ever After.   Producers and their counsel are probably scratching their heads at this point: didn't they get a location agreement?  They did - but the plaintiffs in the lawsuit are claiming that the individual(s) who signed the location agreement were not the owners of the home, but merely tenants, without the authority to sign such an agreement and grant the required permissions.

Lesson? Conduct a title search to determine who is registered as the owner of the property which you'd like to use, and make sure that person (or someone who demonstrates that they have authority to sign on their behalf) signs your location agreement. (For other Signal thoughts on location agreements, see So You Want Your House to be Famous? Pitfalls of Location Agreements.)

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The good folks at The Lawyers Weekly have published a short article of mine (in their October 14, 2011 issue) about the Canadian television industry's Terms of Trade.  The article can be found in its entirety here, and here is an excerpt:

The Canadian Media Production Association (CMPA) and five of Canada’s largest private broadcasters announced in April they had entered into a “Terms of Trade agreement” (TTA). The TTA will have a significant and continuing impact on the way in which the Canadian television industry conducts the business of commissioning and licensing new television productions. It also poses novel questions about how it will be enforced and who will benefit from it.

Previous Signal coverage on the Terms of Trade Agreement can be found here.

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This is the eight (and final) installment in our series about the new Terms of Trade applicable to the English-language Canadian private broadcasting industry (Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7).  This installment focuses on Section 9 (Producer Fees and Overhead), Section 10 (Retention of Producer Tax Credits) and Section 11 (Audit Rights)  of the Terms of Trade Agreement.  Archived versions of all eight posts in this series are available at this link.

What do the Terms of Trade say about... producer fees and overhead?

Producer fees and overhead "will be industry standard, as accepted by Canada Revenue Agency".  CRA policy (as set out in Application Policy FAS 2009-01) with respect to fees and overhead paid to "incumbent" producers (e.g., those with an ownership interest in the production company) is that fees in the amount "of 10% of the total actual costs in parts B and C of the standardized production budget" are "generally considered reasonable".  As the CRA document goes on to point out, that threshold amount "is not intended as a 'cap' or 'maximum allowable'. When justified and supported by the facts of the particular case, amounts greater than the reference threshold may be considered reasonable."  (For further information, see this Heenan Blaikie LLP publication on the topic from 2008.)

Producer fees/overhead cannot be deferred or invested.  This, along with Section 10 (to be discussed momentarily) is one of the more interventionist elements of the Terms of Trade.  Producers routinely defer or "re-invest" their fees (whether a portion or the entirety) in order to facilitate production - a flat prohibition on such activity seems designed to spur broadcasters to increase their license fees in order to "close the gap".  Whether the provision will in fact have that result remains to be seen.

What do the Terms of Trade say about... retention of producer tax credits?

Only a maximum of 75% of eligible tax credits may be invested in a project.  Similar to the discussion regarding producer fees/overhead, above, this provision seems to run counter to long-accepted practice in the industry.  Presumably the motivation for this provision is to attempt to ensure that as much money as possible (in this case, the 25% of "non-investable" tax credits) actually reaches the pocket of independent producers, rather than being "soaked up" by the budgetary needs of the production.  While a laudable goal, and completely consistent with the mandate of the CMPA, it raises the question of how this would be enforced: if a broadcaster does not increase their license fee by an amount equal to the 25% of the tax credits which the producer is prevented from "investing" in the budget, would that constitute a breach of the Terms of Trade agreement? To what extent would individual producers be supportive of any action to enforce this particular provision of the Terms of Trade?

What do the Terms of Trade say about... audit rights?

If a producer or broadcaster has an entitlement to a revenue stream, they are entitled to "industry standard audit rights" which include the right to recoup reasonable audit fees if the audit reveals an unpaid amount which is in excess of 5% of the total amount owed and worth more than $1,000.  It remains to be seen what constitutes "industry standard" beyond the circumscribed right to recoup audit costs - for example, audit clauses usually contain restrictions on the number of times per year an audit can be conducted and the number of months or years within which a particular statement must be audited.  It is curious that such matters were not dealt with in the Terms of Trade agreement, but the right to recoup audit costs is itself an often-contested contractual right which producers will undoubtedly be pleased to be entitled to.

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This post is one in 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.

THR, Esq. reports that the US-based Travel Channel is the defendant in a class action lawsuit filed by a representative plaintiff on behalf of individuals who appeared on the show Extreme Fast Food (Travel Channel Faces Class Action Lawsuit Over Filming Woman at Hot Dog Stand).  The plaintiff alleges that she was filmed without consent while eating at a famed hot dog joint in Chicago.

In a fortuitous coincidence, Mark Litwak has a post (which includes sample wording) on the use of "crowd releases", being the posting of signs warning pedestrians or attendees of a particular location that they are being filmed.  As I noted in PIPEDA and Filming/Photographing Individuals for Film and TV Projects:

It is generally accepted practice among entertainment lawyers that a signed release authorizing the reproduction of a person’s image is required for each individual who appears identifiably on-screen in an audio-visual project. There are some widely-recognized limited exceptions to that general rule, such as the placement of prominently-displayed notices in “public” or general access locations alerting pedestrians or attendees that filming is taking place and that entering into the area or venue will be deemed to be authorization for the filming and reproduction of their image.

To my knowledge, no Canadian court has ever pronounced on the effectiveness of a "crowd release".

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This is the seventh installment in our series about the new Terms of Trade applicable to the English-language Canadian private broadcasting industry (Part 1, Part 2, Part 3, Part 4, Part 5, Part 6).  This installment focuses on Section 8 (Super License Fees)  of the Terms of Trade Agreement.  This is the seventh of an anticipated eight posts which will be posted over the course of the next little while and which will cover the Terms of Trade in detail.  Once all eight posts have been published, the archived posts will be available at this link.

What do the Terms of Trade say about... "super-license fees"?

A super-license fee is equal to the lesser of (a) the combined CMF threshold license fee for the applicable genre (if any) plus the maximum license fee top-up for that genre, or (b) a license fee representing at least 60% of the production budget of a project.  Once a super-license fee has been paid, it significantly expands the scope of the rights which a broadcaster can acquire and/or increases the share of revenue they would otherwise be able to obtain from certain forms of exploitation.

The payment of a super-license fee entitles the broadcaster to enter into negotiations for a higher revenue share of certain rights - but the broadcaster's share of revenue can never exceed 75%.  The rights in respect of which the broadcaster can obtain a higher share of revenue are the following:

• transaction-based non-linear on-demand exhibition on all platforms (ie where the customer has only temporary access to content, as opposed to a permanent copy)
• electronic sell-through or download-to-own platforms
• in-flight
• DVD/home video
• producer-created revenue-generating original digital content
• non-promotional games*
• merchandising*

With respect to the foregoing forms of exploitation, then, the payment of a super-license fee effectively opens a window for the broadcaster, allowing them to increase their participation rate from 50% to a maximum of 75%.  As noted in Part 5, the forms of exploitation listed above are not automatically included within the scope of a broadcaster's rights - they have to negotiate for them.  In other words, the broadcaster would first have to negotiate to obtain the rights at all (at a 50/50 split), and then, if they pay a super-license fee, they could negotiate to increase their share of the revenue to a maximum of 75%.  It should be noted that two of the forms of exploitation noted above with an asterisk (non-promotional games and merchandising) are normally reserved exclusively to the producer, but payment of a super-license fee moves those items from the reserved list to the list of items in which the broadcaster can participate.

The payment of a super-license fee entitles the broadcaster to enter into negotiations for a share of profit participation in forms of exploitation which are otherwise exclusively reserved to the producer.
As set out in Part 5, some types of exploitation are normally reserved to the producer and the broadcaster is prohibited from having any share of revenues - but upon payment of super-license fee, two things happen: first, as described above, non-promotional games and merchandising move from the "reserved" list to the "participating" list (whereby a broadcaster gets a share of revenue); second, everything that remains on the "reserved" list becomes open to a restricted form of profit participation for the broadcaster - the rights in question are:

• French-language (Canada)
• other languages (Canada)
• format
• theatrical
• music publishing
• retransmission rights
• sub-licensing and distribution
• book and e-book publishing

However, even though the broadcaster is permitted to participate in these revenues, their participation is capped by a formula: no greater than 1.5x the dollar investment of the broadcaster, expressed as a percentage of the budget, that is over and above the amounts listed in the definition of "super-license fee" (ie 60% of the total budget or the CMF threshold license fee plus the maximum license fee top-up), up to a maximum of 30%.

If the broadcaster does negotiate profit participation, it's profit participation is triggered only once all equity investors in the project (including any tax credit investment by the producer) have recouped their investments.

The super-license fee mechanism is therefore a means by which certain rights allocation matters can be altered - which, although complicated, seems like a relatively workable device for incentivizing higher payments by broadcasters while still reserving to producers the bulk of the benefit of ancillary exploitations.

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As has been mentioned on this blog numerous times, the "clearance" process for obtaining "errors and omissions" (E&O) insurance for film and TV projects can sometimes be an arduous, frustrating process for both producers and their lawyers.  Producers are often frustrated by the seemingly arbitrary or heavy-handed decisions made by their lawyers to cut, obscure or otherwise modify materials appearing on-screen which the lawyer fears could run afoul of the E&O policy's clearance guidelines which stipulate that no copyrighted or trade-marked materials can appear on-screen without some kind of written permission.  This post is the first in an occasional series 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 (even paranoids have enemies, goes the saying).  These posts will point to actual lawsuits which have been filed against film/TV producers for copyright or trade-mark infringement - and which inform the nit-picking approach taken by producer's counsel.

As first reported by Eriq Gardner at THR, Esq., the producers of the MTV show "The Real World" have been sued for failing to blur out video images of "shadow dancers" who were visible in the background of scenes filmed in bars/clubs in New Orleans and broadcast in two different episodes of "The Real World" ('The Real World' Sued for Failing to Blur 'Shadow Dancers').  For anyone who is unclear on what a "shadow dancer" is, the official Shadow Dancers website should provide all the clarification which is required.  A copy of the complaint filed in US federal court is available here.

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With apologies for the delay, this is the sixth installment in our series about the new Terms of Trade applicable to the English-language Canadian private broadcasting industry (Part 1, Part 2, Part 3, Part 4, Part 5).  This installment focuses on Section 7 (Equity)  of the Terms of Trade Agreement.  This is the sixth of an anticipated nine eight posts which will be posted over the course of the next week little while and which will cover the Terms of Trade in detail.  Once all nine eight posts have been published, the archived posts will be available at this link.

What do the Terms of Trade say about... equity investments?

The provisions in the Terms of Trade Agreement which speak to equity investments are primarily concerned with specifying when an investing broadcaster can recoup its investment.  There are no limitations on the amount that a broadcaster can or must invest (though, for "programs of national interest", meeting certain dollar thresholds means the recoupment gets handled in a certain way), nor are there any parameters regarding when an investment must be made (i.e., the payment schedule for when the broadcaster has to actually advance the funds).  The Agreement states that the making of an equity investment is "at Independent Producer's discretion"; it is unclear what effect this phrasing is meant to have, since it clearly is the broadcaster who decides whether it wants to make an equity investment - perhaps the intention is to prohibit broadcasters from making their offers of license fees contingent upon being also allowed to make an equity investment in the program?

The Terms of Trade do not apply to equity investments in feature films.  It is only when a broadcaster is making an investment in a television program that the Terms of Trade Agreement will apply.

Excluding "programs of national interest" (discussed below), if a broadcaster makes an equity investment in a TV program, then, following recoupment of any distribution advance, the broadcaster is entitled to recoup its investment pari passu with the producer (with tax credits being recognized as part of the producer's equity investment) and MFN with any other equity investors.  That sets out the basic structure of the Terms of Trade Agreement's treatment of equity investments: for any program other than a "program of national interest", if the broadcaster makes an investment, distribution advances get recouped first, and then all equity investors (which includes the producer's investment of tax credits) participate pari passu.  (The actual language of the Agreement says it is "pari passu with the [producer] ... and on a most favoured nations basis with other equity investors", which I read to mean that all equity investors recoup on the same tier - since the equity investors must all be MFN with each other and also recoup at the same time as the producer.)

For "programs of national interest" (as defined by the CRTC) different rules apply if the broadcaster makes an equity investment and has paid a license fee in excess of the CMF threshold license fee for the applicable genre:

• if the equity investment is $500,000 or more but less than 30% of the budget, the investment is recouped as is currently provided in the CMF Guidelines, being (after recoupment of any distribution advance) pari passu with all other equity investors including the producer's provincial tax credit investment but excluding the producer's federal tax credit investment (which must be placed on a subsequent tier of recoupment)
• if the equity investment is $500,000 or more and constitutes 30% or more of the budget, the recoupment terms are a matter for negotiations between the producer and the broadcaster

Of particular interest is the fact that broadcasters can aggregate their contributions to meet the thresholds noted in the bullet points - in other words, two or more broadcasters could contribute funds which, added together, exceed the $500,000 threshold or the 30%+ threshold, and take advantage of the treatment identified in the bullet points.

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This is the fifth installment in our series about the new Terms of Trade applicable to the English-language Canadian private broadcasting industry (Part 1, Part 2, Part 3, Part 4).  This installment focuses on Section 6 (Rights Allocation)  of the Terms of Trade Agreement.  This is the fifth of an anticipated nine posts which will be posted over the course of the next week and which will cover the Terms of Trade in detail.  Once all nine posts have been published, the archived posts will be available at this link.

What do the Terms of Trade say about... the rights granted to broadcasters and retained by producers?

Well... they say quite a lot, actually.  Section 6 of the Terms of Trade Agreement starts with a paragraph which might be termed a "statement of intent" (or, less charitably, "throat clearing") which is presumably intended to guide interpretations of the language of the remainder of the Section.  The paragraph states that broadcasters should "enjoy the full use of a program" on broadcast and "new digital platforms" and that "appropriate and reasonable holdbacks ... encourage maximum promotion and ... secure the value of the rights" obtained by a broadcaster.  On the other hand, "certain exclusive rights ... must be retained by the Independent Producer ... to ensure the maximum exploitation of the value of the Program".

The Terms of Trade Agreement breaks the universe of rights in a program into the following categories:

• rights which broadcasters are entitled to in exchange for a license fee
• rights which broadcasters can negotiate for, subject to a 50/50 revenue split and subject to modification if the broadcaster pays a "super-license fee"
• producer-created digital-content rights which (a) for free-to-consumer applications can be acquired by an additional license fee, and (b) for revenue-generating applications can be included in the initial grant of rights given in exchange for the initial license fee (but subject to a 50/50 revenue split)
• rights which broadcasters cannot acquire
• "other rights" whose allocation among the foregoing categories is to be discussed by the CMPA and the broadcasters

A "fair market value" license fee entitles a broadcaster to the following exclusive rights in Canada in all languages in which the broadcaster is licensed to operate:

• linear broadcast
• linear streaming (whether simultaneous or not with the broadcast channel)*
• free-to-consumer non-linear on-demand exhibition on all platforms*
• subscription-based non-linear on-demand exhibition on all patforms*
• creation and operation of program website, including creation of original free-to consumer or subscription-based content for the website (a footnote in the Terms of Trade Agreement indicates that the producer of the television program has a right of first negotiation to develop and produce the original free-to consumer content - it is unclear whether that means that the producer does not have a similar ROFN over subscription-based content, or whether its exclusion from the footnote was unintentional)

A single asterisk in the list above means that the exercise of the rights must be geo-blocked to Canada.

Broadcasters have a holdback in Canada against the exploitation of the "format" for the duration of the license term.  Because the Terms of Trade Agreement does not have a definition of "format", it is somewhat unclear to what this is meant to apply, and how precisely it interacts with a broadcasters right of last refusal in "Additional Programs" (discussed here).  Are "formats" categorically different from "Additional Programs" or are they a component of "Additional Programs" (the definition of "Additional Programs" contained in Section 4 of the Terms of Trade Agreement seems to indicate the latter)?  If formats are just a type of "Additional Program", and a broadcaster has not elected to exercise its right of last refusal with respect to the Additional Program, does the holdback contained in Section 6 still apply?  Presumably not, but the language is unclear on the point.

Broadcasters can negotiate to acquire the following rights, subject to a 50/50 split of gross revenues* - but if they are not acquired by the broadcaster, then they are subject to a 12 month holdback on their exercise in Canada:

• transaction-based non-linear on-demand exhibition on all platforms (ie where the customer has only temporary access to content, as opposed to a permanent copy)
• electronic sell-through or download-to-own platforms
• in-flight
• DVD/home video

The asterisk above relates to the 50/50 revenue share - that split can be modified where the broadcaster contributes a "super-license fee" (found in Section 8 of the Terms of Trade Agreement, and to be discussed in a future installment of this primer).  it should be noted that where a super-license fee is paid, what changes is the broadcaster's share of revenue (which can go higher, up to 75%) - it would appear that in no circumstances (excluding a breach of the Terms of Trade Agreement) can the producer ever negotiate a higher share of the revenue for themselves.  If a super-license fee is paid, non-promotional games and merchandising are added to the list of items which the broadcaster can negotiate to acquire, subject to the (modified) revenue split.

Certain types of original producer-created digital content can be acquired by a broadcaster for either an additional license fee or subject to a 50/50 revenue split.  The heading for Section 6(c) in the Terms of Trade Agreement uses the examples of websites, webisodes and mobisodes, so presumably this is intended to cover project-related content which is intended for initial exploitation on digital platforms (i.e., something other than the original production itself).  The Terms of Trade Agreement splits producer-created digital content into two categories: free-to-consumer and revenue-generating.  Free-to-consumer digital content can be acquired by a broadcaster upon payment of an additional license fee.  Revenue-generating digital content can evidently be acquired by the broadcaster without the payment of an additional license fee (i.e., the initial license fee for the program would cover revenue-generating digital content), but the broadcaster must agree to a 50/50 split of gross revenues with the producer.  On the face of the Terms of Trade Agreement, that 50/50 split cannot be modified (even if the broadcaster pays a "super-license fee").

If the broadcaster acquires rights to revenue-generating digital content but does not exploit those rights within 12 months, the rights automatically revert to the producer.  The wording of Section 6(c) seems to indicate that only revenue-generating digital content rights are subject to the 12 month reversion, and that "free to consumer" digital content rights are not subject to any such reversion.  While that may be because "free to consumer" rights must be paid for with an additional license fee, since most digital rights of this nature are going to be "free to consumer", the reversion right seems to apply to a much-less desirable set of rights (from the producer's vantage).

Certain rights cannot be acquired by a broadcaster.  The "unacquireable" rights (subject to payment of a super-license fee, as noted above and below) are:

• French-language (Canada) [assuming the broadcaster does not itself broadcast in French]
• other languages (Canada) [assuming the broadcaster does not itself broadcast in the other language]
• format [as noted above, it is not entirely clear what this means]
• theatrical [subject to a negotiated holdback which cannot last longer than the term of the broadcast license]
• music publishing
• games and merchandising [producer "will consult in good faith" with broadcaster prior to exploitation of these rights][if broadcaster pays a super-license fee, these rights can be acquired by the broadcaster, subject to a revenue split arrangement
• all other non-theatrical
• Canadian and international retransmission rights
• Canadian and international sub-licensing and/or distribution*
• publishing of books, e-books or other similar materials

The asterisk above (on Canadian and international sub-licensing and/or distribution) is meant to indicate that broadcasters can acquire and exercise these rights (a) within their corporate broadcast group, (b) (if the broadcaster operates a CRTC licensed conventional television service) to unaffiliated conventional television services operating in markets in Canada where the broadcaster does not have a local station or its signal is not receivable over-the-air, and (c) for the purposes of exploiting the rights to which a broadcaster is entitled or for which it negotiates.

The treatment of "other rights" will be discussed by the CMPA and the broadcasters.  There appears to be an inconsistency in Sections 6(d) and (e) of the Terms of Trade Agreement.  Section 6(d) says that broadcasters "may not acquire or have revenue share/profit participation in any other rights ... including the following" (the list which follows in Section 6(d) is reproduced in the preceding section).  But Section 6(e) contradicts that and says that "any other rights not enumerated in this Agreement ... shall ... be the subject of discussions".  Thus, while 6(d) seems intended to be a catch-all which covers all non-enumerated rights, it seems that it is in fact limited to the rights expressly listed in Section 6(d), with all "other" rights being subject to future discussions.  It will remain to be seen how this inconsistency will be handled in practice, and whose interests will be served by making non-enumerated rights subject to future discussions.

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UPDATED BELOW

The Toronto Star is reporting that oral arguments in the appeal of the Turmel v CBC (Dragons' Den) decision are currently underway ("Brantford entrepreneur claims 'Dragons' defamed him").  The Turmel decisions are valuable for Canadian entertainment lawyers because they are among the few reported decisions which consider the enforceability of depiction releases for television programs.

Some background: Turmel appeared on an episode of the CBC television program Dragons' Den - a "reality TV show" which, per the Wikipedia entry, features "entrepreneurs pitching their business ideas in order to secure investment finance from a panel of venture capitalists".  Turmel was unhappy with the manner in which he was depicted on the show, and sued the CBC for defamation.  He actually sued twice: the first action (2010 ONSC 5318) (which we'll refer to as the Lofchik decision, after the judge hearing the case), which the plaintiff filed after the episode was first broadcast, was dismissed following the defendant's application for summary judgment; the second action (2011 ONSC 2400) (which we'll refer to as the Arrell decision), which was essentially identical to the first, wasbrought after the CBC had re-broadcast the same episode and was, as with the first action, dismissed after the defendant brought an application for summary judgment).

The plaintiff's claims were dismissed on a variety of grounds: he had failed to provide the notice required by the Libel and Slander Act (Ontario); the second action was res judicata; and, most importantly for our purposes, both the Lofchik decision and the Arrell decision held that the "consent" (or depiction release) which was signed by Turmel was binding on him and, in the words of the Arrell decision, was "a complete bar" to the lawsuit.

In addition to signing the depiction release, the plaintiff had also been given a "Contestant Guide" which set out various elements of the show.  The Guide, coupled with the consent/depiction release which Turmel signed, included a number of critical clauses which buttressed the defendant's argument:

• the Guide said that "anything that is discussed on camera can be broadcast on the show"
• there was "no guarantee" that a participant would appear on the show or be chosen to receive investment funds from the panel of entrepreneurs
• from the Guide: "a pitch may take on a life of its own - anything goes"
• per the Arrell decision, the depiction release expressly stated that the CBC had "sole and exclusive rights to the taping and to edit and use it in any way or anytime it wished"
• the depiction release included an express acknowledgment that the participant might be portrayed in “…disparaging, defamatory, embarrassing or of an otherwise unfavourable nature which may expose [the participant] to public ridicule, humiliation or condemnation”
• the depiction release also included a complete waiver and release of claims ("The plaintiff also agreed pursuant to paragraph 27 of the consent not to sue for any loss or damage no matter how caused")

Both the Lofchik and Arrell decisions indicated that the plaintiff had been provided with the Guide prior to his participation, had been provided with the depiction release prior to his participation, told to read it carefully, given time to review it (and even to have his own lawyer review it).  Also of significance was the finding in the Arrell decision that "[n]o evidence ha[d] been led that [the depiction release] was in any way unconscionable and like Justice Lofchik I find as a fact it was not" - it will be interesting to see if the issue of unconscionability is raised on appeal, since one of the lingering issues about depiction releases is whether they constitute "contracts of adhesion" (since they are effectively provided on a "take or leave it" basis, with no opportunity to negotiate terms).

The Ontario Court of Appeal decision in Turmel v CBC will be an important one in the Canadian entertainment lawyer's little corner of the legal universe: it will represent the first, to my knowledge, instance of appellate consideration in Canada of the enforceability of depiction releases.  If the Court of Appeal holds the release to be unenforceable against the plaintiff, it will require some serious reassessments of contracting practices in the industry; but if the Court upholds the lower court decisions, it will provide authoritative confirmation of the general practice of relying upon signed depiction releases.

UPDATE (July 13, 2011): I have been reliably informed that the Ontario Court of Appeal has dismissed the appeal from the bench.  The Court's reasons for the dismissal confirm that, because the plaintiff voluntarily appeared on the show and was given an opportunity to read the depiction release and raise any concerns about it (which he declined to do), the depiction release was not unconscionable; because the depiction release contained a waiver of any right to relief, his claims were barred.  As I mentioned in the last paragraph, above, this is a positive decision for producers' counsel.

UPDATE (September 24, 2011): The Ontario Court of Appeal's decision can be found here: 2011 ONCA 519.  To quote:

[1] The appellant voluntarily agreed to go on the show.  In order to do so, he was required to and did sign a consent.  Paragraph 27 of the consent precluded the two actions he commenced.

[2] The only issue on the appeal is whether it would be unconscionable for the court to give effect to the terms of the consent.  We are of the view that it would not be unconscionable.

[3] The Contestant Guide alerted the appellant to read the consent for the detailed rules about the show.  Before the taping, the appellant was given ample time to read the consent and was free to ask for more time to review it.  He did not ask for more time and signed the consent without expressing any concern about its terms.

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This is the fourth installment in our series about the new Terms of Trade applicable to the English-language Canadian private broadcasting industry (Part 1, Part 2, Part 3).  This installment focuses on Section 5 (License Term)  of the Terms of Trade Agreement.  This is the fourth of an anticipated nine posts which will be posted over the course of the next week and which will cover the Terms of Trade in detail.  Once all nine posts have been published, the archived posts will be available at this link.

What do the Terms of Trade say about... the duration of broadcast licenses?

Broadcast licenses can have a maximum duration of five years.

The term of a broadcast license must commence no later than the earlier of (i) delivery of the program (or last episode of a series) and (ii) first broadcast of the program (or episode of a series).

Broadcast licenses cannot provide for an automatic extension of term if a broadcaster picks up (one or more) additional season(s) of a series.  This is an important point: many broadcast license have previously provided that the term of the license automatically extends if the broadcaster picks up a subsequent season of a series.  So, for example, the Season 1 license would be for a five year term, but if the broadcaster picked up Season 2 for a five year term, then the Season 1 license would extend and terminate only once the Season 2 license had terminated - so the Season 1 license would effectively become a 6 year license (or longer, depending on when the Season 2 license actually started).  By prohibiting such arrangements (and the Terms of Trade says such arrangements can exist "in no circumstances"), the potential value of early seasons of successful shows is reserved to the producer... subject to the next point.

Broadcasters are entitled to a right of first negotiation and a right of last refusal to acquire broadcast rights beyond the original five year term (through the payment of a "fair market value licensee fee").  Any subsequent license term can have a maximum duration of five years, and the broadcaster "may" acquire the rights "as of the earlier of" (i) 6 months prior to the expiry of the 3rd year of the initial term or (ii) 3 months after the signing of the license agreement for the second season.  Those timeframes would also apply to any subsequent sets of negotiations for extended terms.  The use of the word "may" in Section 5(c) of the Terms of Trade is presumably intended to convey that these timeframes are the earliest at which the broadcaster can sign a contract for an extension of the term - in other words, they have to wait until either the third year of the term or, if the production in question is a series, three months after signing the contract for a subsequent season - only once one of those milestones has passed can the broadcaster seek to go back and try to acquire an extension of the license term.

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This is the third installment in our series about the new Terms of Trade applicable to the English-language Canadian private broadcasting industry (see here for Part 1 and here for Part 2).  This installment focuses on Section 4 (Basic Licensing Conditions)  of the Terms of Trade Agreement.  This is the third of an anticipated nine posts which will be posted over the course of the next week and which will cover the Terms of Trade in detail.  Once all nine posts have been published, the archived posts will be available at this link.

What do the Terms of Trade say about... basic licensing conditions?

After a project is greenlit, the producer has 90 days to confirm other sources of financing for the production.  The 90 day period is subject to alteration by mutual agreement (presumably meaning it can be made either shorter or longer) so as to "mesh with funding deadlines or exigencies of production".  While this provision nominally seems to be included for the benefit of the producer, the fact that the 90 day period is not an absolute minimum seems to mean that it remains subject to the vagaries of differential negotiating power between producers and broadcasters.

Broadcasters must commit to broadcasting a program within 12 months of the start of the license term.

Rights of first negotiation are subject to express parameters on their exercise.  The Terms of Trade stipulate that, whether contained in a development agreement or a license agreement, ROFNs must:

• be exercised by a fixed start date or in reference to a specified timeframe
• contain a maximum negotiating period of 45 days (excluding the decision to initially license (3(k)) or renew an order (4(i)) or extend a license term (5(c))

If an agreement does not expressly set out a fixed start date or timeframe, then the timing of the exercise of the ROFN is "at the sole discretion of the Independent Producer".

Rights of last refusal can be granted to a broadcaster in "limited" circumstances, and when granted are subject to strict parameters. ROLRs are not permitted in development agreements in any circumstances.  In broadcast license agreements, ROLRs are only permitted to allow the broadcaster to (i) acquire exclusive exhibition rights in "Additional Programs", or (ii) extend a license term (subject to parameters set out in Section 5(c), and discussed below).  "Additional Programs" means additional episodes for the same season or subsequent seasons, prequels, sequels and remakes of a program and any "spin-off" program (being a program based on, adapted from or derived from the initial program or the underlying property "including the characters and the format thereof").  Where granted, a ROLR must be exercised within the specified time period set forth in the license agreement, which period cannot exceed 45 days from the broadcaster's receipt of written notice of a third party offer.  ROLRs are incredibly powerful rights which have serious distorting effects on the rights of producers and their ability to extract profits from their properties.  It should be noted that while manner in which the Terms of Trade are drafted at first makes it appear that ROLRs are to be limited in scope, the language actually allows them to be instituted with respect to valuable rights: extensions of terms and subsequent productions.  It appears that in exchange for that latitude, broadcasters are prevented from obtaining ROLRs at the development stage - which puts the onus on broadcasters to make binding decisions on projects at the development stage, without a "fail-safe" mechanism which would allow them to reach out and take back a project that they had previously turned down but which one of their competitors finds attractive.

Long-form broadcast license agreements must be signed by broadcasters at least two weeks prior to the commencement of principal photography/key animation, subject to the producer having submitted "reasonable agreed-upon deliverables".  If a license agreement has not been signed two weeks prior to principal, the broadcaster and producer must choose one of the following options:

• the broadcaster will provide an advance against the license fee to cashflow production
• production will be deferred until a later date (provided that the producer is not financially prejudiced if the delay is caused by the broadcaster)
• not proceeding with the project

This provision raises a number of questions: what constitutes "reasonable deliverables"? If the parties elect not to proceed with a project, does that mean that the rights automatically revert to the producer? If a delay of production would financially prejudice a producer, and is the fault of the broadcaster, does that mean the broadcaster must compensate the producer, or does it mean that a delay is simply no longer an option?

When a production is delivered under budget, the broadcaster is entitled to a pro rata share of the savings.

Where a producer receives surplus funds after a financing plan has been approved by a broadcaster, the broadcaster and producer will "give good faith consideration" to whether those funds should form part of the financing or simply be shared by participants.  In no circumstances can a broadcaster require a producer to agree to a reduction of the broadcaster's license fee because of the availability of surplus funds.

If a broadcaster wishes to renew a program by ordering additional episodes for a new season, the broadcaster must make that order within 6 months of the first broadcast of the last commissioned episode.  If the broadcaster does not order the new season, the broadcaster can still have a right of last refusal - meaning that the producer is able to shop the program to other broadcasters, but will, if the license agreement has a ROLR clause, need to provide the previous broadcaster with the opportunity to match any new offers.  If a program does end up with a new broadcaster, then "the parties" (it is unclear precisely who is being referred to by that term) "shall in good faith consider negotiating a buy-out of the licensed rights to previous episodes held by the [original] broadcaster by any subsequent broadcaster".

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This is the second installment in our series about the new Terms of Trade applicable to the English-language Canadian private broadcasting industry (see here for Part 1).  This installment focuses on Section 2 (Editorial Control) and Section 3 (Evaluation and Development) of the Terms of Trade Agreement.  This is the second of an anticipated nine posts which will be posted over the course of the next week and which will cover the Terms of Trade in detail.  Once all nine posts have been published, the archived posts will be available at this link.

What do the Terms of Trade say about... editorial control?

Producers have control - subject to broadcasters' standard approvals. Subject to what is expressly set out in the Terms of Trade, "editorial and creative control of a project rest with the independent producer".  However, a broadcaster's "standard creative, financial and technical approvals" apply on a project "except where the [Terms of Trade] stipulates otherwise".  Broadcasters are to post their "Standard Approvals" on their websites.

Post-contract changes to creative elements result in a higher license fee.  If a broadcaster requests changes to, or additional creative elements for, a program which were not contemplated when a license agreement was entered into, the broadcaster must provide an enhanced license fee proportionate to the scope of the new work required.

Broadcasters are entitled to on-screen credits.  Credit placement and credit titles "shall be in conformity with industry standards".  Broadcasters and their personnel are not entitled to "Producer" or "Executive Producer" credits, but can be accorded "traditional" credits, such as "Executive in Charge of Production".

What do the Terms of Trade say about... evaluation and development?

Broadcasters need to be user-friendly.  Broadcasters are obliged to identify on their website all personnel "who are responsible for responding to written program proposals ... including telephone number and e-mail address".

Rights in a proposal remain with producer until a development agreement is signed.  'Nuff said.

Proposals are to be treated as confidential by a broadcaster.  Producers are obliged to keep confidential a broadcaster's programming strategies.  Importantly, broadcasters "will not request that the Independent Producer waive any existing rights in the Independent Producer's program proposal".  That presumably will have an impact on so-called "submission releases", which often require that submitting producers waive a number of rights to commence a lawsuit in respect of a proposal.

Written proposals must be responded to by a broadcaster within 6 weeks.  The timeline can be extended by up to an additional six weeks by mutual consent.  If the broadcaster does not respond within 6 weeks, the proposal is deemed withdrawn and the broadcaster will have no further rights to the proposal.  Strangely, the Terms of Trade state that "it is incumbent upon the Independent Producer to advise the Broadcaster in writing that the time period has elapsed or is about to elapse".  It is unclear whether that means that if the producer fails to notify the broadcaster in writing that the time period is about to elapse then the deemed withdrawal does not apply.

If a broadcaster expresses interest in a program proposal, the producer must submit a "business proposal" within 60 days.  The "business proposal" would includes elements such as a development budget, financing plan, existing contractual commitments, rights agreements, locations and key production personnel.

If the broadcaster approves of the "business proposal" the parties will use "best efforts" to enter into a development agreement within 60 days.  A producer should not be expected to undertake development activities (especially expending money) without a distribution agreement in place. The development agreement must specify each phase of development and the creative and other elements to be developed by the producer.  When development materials are delivered to the broadcaster, the broadcaster will have no more than 18 days (40 days for animation co-productions) (extendable by mutual agreement of the parties) to approve or disapprove of the elements (with a failure to disapprove in the timeframe deemed to constitute approval).  The payment schedule for development fees must be expressly described in the development agreement, with no less than 50% payable on signing and no more than 10% tied to delivery fo the final development materials.

The  broadcaster's financial participation in development entitles them to certain exclusive rights.  The exclusive rights are as follows:

• to request changes to delivered materials
• to participate in additional development (subject to agreement with the producer about the nature and length of such additional development)
• to negotiate a license agreement

The terms of a license agreement are not to be included in or "pre-negotiated" in the development phase or the development agreement.  License terms are only to be negotiated once the project has been "fully developed" or an order for the project has been made by the broadcaster.

Once development has been completed, the broadcaster has 6 months to decide whether to license the project.  Development is "completed" when a polished script has been created (where applicable) and final deliverables as set out in the development agreement have been received.  At the 6 month point, the broadcaster must either (i) order the project (subject to finalizing license terms), (ii) agree with the producer to further develop the project, or (iii) release its interest in the project in writing.

If a broadcaster releases its interest in a project, the broadcaster remains entitled to reimbursement for its cash investment in the project. Reimbursement is only payable if and when a project is greenlit by another broadcaster, and becomes due on the first day of principal photography (or key animation).  No interest or other charges can be charged on the development investment (unless it is not repaid on the first day of principal/key animation).  If a project is assigned from one producer to another, the assignee must assume the obligation to repay the development financing.

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The Canadian Media Production Association (CMPA) recently announced that it had successfully concluded negotiations and entered into Terms of Trade Agreements with five of Canada's largest broadcasters (Astral Television Networks, Bell Media, Rogers Broadcasting, Shaw Media and Corus Entertainment).  Because the Terms of Trade Agreements are a significant development for the Canadian television industry, we have put together this lengthy primer which sets out some basic elements of the Terms of Trade.  This is the first of an anticipated nine posts which will be posted over the course of the next week and which will cover the Terms of Trade in detail.  Once all nine posts have been published, the archived posts will be available at this link.

What are "Terms of Trade" generally?

"Terms of Trade" is a phrase used to describe an agreement entered into between, on the one hand, television broadcasters and, on the other hand, independent producers of television programs.  The "Terms of Trade" essentially function like a code of conduct or "rules of the road" for participants in the television production and broadcasting industry.  They are an attempt to lay out the basic framework which will guide negotiations of individual program license agreements between broadcasters and individual independent producers.  Terms of Trade are of particular interest to independent producers because they stipulate that, in exchange for a base license fee, broadcasters will only be entitled to obtain a particular suite of rights - obtaining additional rights requires payment of an enhanced purchase price.

What are these specific "Terms of Trade"?

The CMPA (Canadian Media Production Association) recently entered into a Terms of Trade Agreement with the major private English-language Canadian broadcasters, being Astral Television Networks, Bell Media, Rogers Broadcasting, Shaw Media and Corus Entertainment (technically, Corus has entered into its own separate agreement, but according to the CMPA the Corus agreement "contains no substantive differences from the agreement signed with the other broadcasters".  The CMPA is still in negotiations with the CBC for a separate terms of trade agreement.  The full text of the main Terms of Trade Agreement is available here.  The full text of the Corus Terms of Trade Agreement is available here.

When do the Terms of Trade come into effect? How long do they last for?

Most of the Terms of Trade came into effect on June 1, 2011; sections 7 (Equity Investments), 9 (Producer Fees and Overhead) and 10 (Retention of Producer Tax Credits) come into effect on August 1, 2011.  The Terms of Trade Agreement will remain in effect with respect to each signatory broadcaster until "the expiry of the longest of the next issued license terms of the Broadcasters (excluding Astral...)".  In other words, the Agreement will be binding on the broadcasters who have signed it until the expiration of the next (i.e., issued after June 1, 2011) CRTC license issued to Bell, Rogers or Shaw, whichever is latest.

Why do we have these Terms of Trade?

The simple answer is that the CRTC made it very clear to broadcasters that they had to put in place Terms of Trade or else the CRTC would not even consider license-renewal applications from the broadcasters (“[the Commission will] only consider [licence] renewal applications [from the private corporate broadcast groups] for seven years with finalized terms of trade agreements in place.” (Broadcasting Regulatory Policy CRTC 2009-406, Policy determinations resulting from the 27 April 2009 public hearing, July 6, 2009, paragraph 84).

The longer answer, and the motivation for the CRTC's position, was that, to quote from the CMPA's website,"broadcaster consolidation in the English-language market has created an imbalance in negotiating power between independent producers and giant media conglomerates".  The independent production community felt that structural changes in the television industry had resulted in broadcasters being able to leverage their dominant market positions to extract unfair deals from producers, which could jeopardize the long-term health of the industry.

Who is subject to the Terms of Trade?

The existing Terms of Trade cover the five major private English-language Canadian broadcasters: Astral, Bell, Rogers, Shaw and Corus.  The Terms of Trade apply to "all independent productions produced by English-language Canadian independent television producers".  To full under the Terms of Trade, the Canadian producer must satisfy the five indicators enumerated in Section 4.10 of CAVCO's Canadian Film or Video Production Tax Credit Guidelines (March 31, 2010) - the five indicators are: control of development; control of all creative and financial elements; control over all aspects of production financing; control over negotiation of initial exploitation agreements; and "reasonable and demonstrable monetary participation in terms of budgeted fees and overhead, and participation in revenues of exploitation".

The Terms of Trade do not apply to the following:

• programs acquired by a broadcaster for which the broadcaster does not have "industry standard commissioning broadcaster creative and financial approval rights"
• broadcaster-affiliated/in-house production
• service production (i.e., one where "the idea or concept originates from, and all or substantially all of the development in the project is undertaken by the broadcaster or its affiliate; or the format rights were exclusively acquired by the broadcaster and were assigned to the independent producer")
• digital production that is unrelated to a television program

How are the Terms of Trade enforced? What happens if someone breaches them?

Disputes relating to the Terms of Trade Agreement itself (but excluding disputes relating to the confidentiality provisions in Section 3(c)) are to be resolved by a dispute resolution mechanism (the DRM) set out in Appendix "A" of the Terms of Trade Agreement.  The DRM involves an initial 30-day mediation stage, followed by, if necessary, an arbitration stage conducted in accordance with the Arbitration Act, 1991 (Ontario).

It is important to note that the DRM applies only to disputes relating to the Terms of Trade Agreement itself, and not to contractual disputes relating to a particular license agreement between a broadcaster and producer entered into within the framework of the Terms of Trade Agreement.

What do the Terms of Trade cover?

Although only 20 pages long, the Terms of Trade cover a large number of matters, each of which is the subject of a separate question and answer, below.  The areas covered are the following:

• editorial control (i.e., what approval rights broadcasters have)
• evaluation and development (i.e., of potential television programs)
• basic licensing conditions
• license duration
• rights allocation
• broadcaster equity investments
• "super license fees"
• producer fees and overhead
• retention of tax credits
• audit rights

The next eight installments in this Terms of Trade Primer will cover each of the foregoing areas in detail.  As the installments are published, the table above will be updated with hyperlinks to the relevant post.

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Tony Wong had an interesting article in last week's Toronto Star, the title of which gives an indication of how a reader is supposed to react to the possibility of having their house used for a film or TV project: "3 days rent for my Maple home? $13,000".  A hefty fee, plus she got to have her picture taken with Whoopi Goldberg.  The same savvy homeowner even managed to get some nice perks built into her contract:

She even took the extra step of stipulating in her contract that her children be part of Good Fences as extras. For a party scene filmed in her dining room, her daughter wore a gold lame dress and her two sons wore tuxedos.

Lucrative payments, brushes with celebrity, bragging rights over having your house immortalized in film - all very enticing, but what should a homeowner think about building into the "location agreement" which they are going to be asked to sign by the producers of the project?  Here is a list of considerations:

• security deposit - actual cash is always handy to have in hand when something breaks or is otherwise damaged
• pre- and post-filming inspections - the homeowner and an authorized representative of the producer should conduct inspections of the property, documenting the state of pre-filming conditions and identifying any pre-existing damage so that the possibility of disputes over what was or was not damaged by the film crew is minimized
• scheduling - homeowners will want to specify the date(s) and time(s) when film crews are entitled to enter onto the premises and do their filming; extra time should come at an extra cost
• power/utility costs - running klieg lights and providing bathroom facilities for dozens (or hundreds) can add a serious chunk of change to monthly hydro bills - homeowners may want to consider requiring the producer to provide their own source of power generation, portable washroom facilities or otherwise taking responsibility for power costs
• cleaning - most houses aren't designed or equipped to accommodate the constant stream of personnel which accompany a film shoot - homeowners will want to ensure that cleaning up after themselves is an express obligation of the producer
• insurance - getting added as an additional insured on the producer's insurance policies should be explored (and homeowners should also check with their own insurance broker to make sure that the commercial activity involved in filming does not somehow void the homeowner's insurance
• movement of objects - if the filmmakers will be moving objects, or altering structural elements (maybe your kitchen island will block the cameras), removal and restoration should be specifically spelled out in the contract
• on-screen credit - if it's given, it'll be in tiny print at the end of the credit roll, but it might be worth asking for
• condo corporation approval - if you live in a condominium, approval from the board of directors may be required (and we can't imagine they, or the property manager, will be thrilled about how many people are going to be trooping through the building's common elements)

There are other issues which can arise depending on the particulars of a film ("what do you mean you're going to be shooting off fireworks in the living room?") - having their lawyer review any location agreement should be a homeowner's priority.

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Let's imagine someone wants to use a photograph of a very old painting in their movie or television show (or, what the heck, in a book) - under Canadian law, do they need permission from the photographer or other owner of the photograph?

I sometimes wonder whether lawyers in other practice areas get questions that can be answered with a simple "yes" or "no".  I envy those lawyers.  Let's say you come across a great photograph of an Old Master (say, the Mona Lisa) or even something more ancient (say, a Roman fresco).  And you want to use that photograph in your movie, TV show or even in a book you're planning on publishing.  The thinking might go like this: the original work of art itself is in the public domain, so how can a photograph of it be subject to copyright?  The argument becomes especially acute if the photograph is simply an exact reproduction of the original work of art (i.e., the photograph simply reproduces the entire work of art, from border to border).

So, what's the answer? Well... it's complicated.

Certainly many museums around the world take the position that they own copyright in the photographs they have arranged to be taken of various pieces of art in their collection.  (See, for example, this photograph of a 1505 painting, on the website of the UK's National Portrait Gallery (the "NPG"), which bears the annotation "© National Portrait Gallery, London"; or this detail of the Mona Lisa from the Louvre, which bears the annotation "© Musée du Louvre / A. Dequier - M. Bard"; or this photograph of a Rubens painting at the Art Gallery of Ontario, which bears the annotation "The Thomson Collection © Art Gallery of Ontario").  As an example, the AGO's website has a Copyright page which states "Reproductive uses are prohibited without the express written authorization of the Art Gallery of Ontario or the copyright owner. ... Any commercial or publication use is strictly prohibited. Copying, redistribution, or exploitation for personal or corporate gain is not permitted."  A few years back, the UK's NPG threatened legal action against a US-resident individual who had download thousands of images from their website (see also coverage by Howard Knopf).  (Unfortunately, I was not able to find any further information about whether there was any final resolution in the NPG matter.)

There certainly doesn't seem to be any obvious reason why a Canadian court would conclude that a photograph of a piece of public domain artwork is not protected by copyright.  Canadian courts have held that photos of everything from the Queen at a press conference (Dobran v Bier, [1959] Que. KB 154] to a photograph of a bed in a sales brochure (Slumber-Magic Adjustable Bed Co. v Sleep-King Adjustable Bed Co. (1984), 3 CPR (3d) 81 (BCSC) are photographs protected by copyright.  In the 1930s, the Ontario courts (affirmed by the Privy Council) held that copyright subsisted in photographs of fine art, and that the copyright had been infringed when the photographs were reprinted in a newspaper (Mansell v Star Printing & Publishing Co. of Toronto, [1937] 4 DLR 1).  An old English case (Re Graves (1869), LR 4 QB 715) is usually cited as authority for the proposition that a photograph of a pre-existing artwork is itself protected by copyright, irrespective of the copyright status of the artwork being photographed.

It's a little unclear whether those decisions are incorrect in light of the Supreme Court of Canada's 2004 decision in CCH Canadian Limited v. Law Society of Upper Canada, [2004] 1 S.C.R. 339, 2004 SCC 13, wherein the Supreme Court of Canada set out the current meaning of the term "original" in Canadian copyright law (a work needs to be "original" in order to attract copyright protection).  At para. 16, the Court said the following:

For a work to be “original” within the meaning of the Copyright Act, it must be more than a mere copy of another work.  At the same time, it need not be creative, in the sense of being novel or unique.  What is required to attract copyright protection in the expression of an idea is an exercise of skill and judgment.  By skill, I mean the use of one’s knowledge, developed aptitude or practised ability in producing the work.  By judgment, I mean the use of one’s capacity for discernment or ability to form an opinion or evaluation by comparing different possible options in producing the work. This exercise of skill and judgment will necessarily involve intellectual effort. The exercise of skill and judgment required to produce the work must not be so trivial that it could be characterized as a purely mechanical exercise.  For example, any skill and judgment that might be involved in simply changing the font of a work to produce “another” work would be too trivial to merit copyright protection as an “original” work.

That formulation of originality is tough to apply when we're talking about photographs of fine art.  On the one hand, a photograph of fine art is arguably just a "mere copy" of another work - indeed, short of a photocopy produced by a photocopier or a downloaded file, it's difficult to envision something which is more of a "copy" than a photograph of fine art - since the whole point of a photograph of fine art is to be an exact reproduction of the artwork in question.  However (you knew that was coming, right?), the Court goes on to say "[w]hat is required to attract copyright protection in the expression of an idea is an exercise of skill and judgment.  By skill, I mean the use of one’s knowledge, developed aptitude or practised ability in producing the work".  Whatever else someone wants to say about the photography of fine art of the calibre necessary for use on a museum website, it certainly requires the "exercise of skill and judgment" and the use of "knowledge, developed aptitude or practised ability" - these are professional photographers who are hired to create the photographs (by comparison, feel free to request a copy of my various out of focus, off-kilter, lopsided attempts to photograph artwork in various musuems).  The professional photographers hired to create the photographs in question definitely make use of their "capacity for discernment or ability to form an opinion or evaluation by comparing different possible options" when creating the photographs - issues ranging from lighting to distance to filters to lenses come in to play in making the decision of how to photograph artwork.   And Canadian courts certainly have not been shy about finding that a "work" has copyright protection when an "author" has expended time and effort in creating it - on my reading, it appears often that Canadian courts are more than willing to protect "effort", and certainly don't require that there be much "creativity".

Not everyone agrees, however, with the notion that photographs of fine art can be protected by copyright.  In Bridgeman Art Library, Ltd. v Corel Corp., 36 F. Supp. 2d 191 (SDNY 1999), a US district court, applying both English and US copyright law, held that photos of public domain artwork were not capable of being protected by copyright law as they lacked the requisite "originality" - with respect to English law, the court examined a number of English cases and commentators and concluded that the Re Graves decision was no longer good law in light of subsequent evolution of the notion of "originality".  Having read the district court's reasoning, I'm not entirely convinced they got that correct - it seems that a number of the authorities they cited argue at least as strongly for finding copyright in a photograph of fine art as they argue against it.

So... where does that leave us?  It appears that under US law a photo of public domain fine art is not susceptible of being protected by copyright (maybe - the decision in Alfred Bell & Co. v. Catalda Fine Arts, Inc., 191 F.2d 99 (2d Cir. 1951), which was not mentioned by the Bridgeman decision, seems to go the other way).  Under Canadian and English law, the matter seems, at best, uncertain, with gusts towards "protected by copyright law".  For more detailed consideration of the matter under English law (with particular reference to the National Portrait Gallery matter mentioned above) see Francis Davey, Andreas Guadamuz-Gonzalez and Simon Bradshaw.  The fact that the underlying work is in the public domain probably won't have any impact on the analysis: translations of public domain literary are protected by copyright, as are new arrangements of public domain musical works.

So, if a producer or publisher came to me and asked whether they needed permission to reproduce a photograph of a piece of art in the public domain, assuming that the photograph itself was not so old that it was itself in the public domain, I'd be inclined to say that such permission was required.  It's possible that they'd have a plausible "fair dealing" argument, but that requires an analysis even more contorted and contingent than the one set out in this post for the question of whether copyright exists at all in the photograph.  Ultimately, the producer's/publisher's choice would come down to this: what's going to be cheaper - trying to get permission to reproduce the photograph upfront, or defending a copyright infringement claim if everything goes wrong?

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I was speaking at a conference earlier this week when the discussion turned to the issue of "pay or play" (sometimes rendered "pay-or-play") clauses in film- and TV-related contracts, particularly contracts entered into by actors or other participants in the creative process (such as directors).  While everyone on the panel seemed fairly comfortable that "pay or play" has a relatively settled meaning in the film and TV industries, I thought it might be useful to review some definitions of the term which had been proposed by others.

First up, Wikipedia has a surprisingly detailed entry on the topic which includes multiple examples (under the heading "Guarantee (filmmaking)").  According to Wikipedia, "pay-or-play" is an "informal" term referring to "a term of an actor or director's contract that guarantees remuneration if, through no fault of their own, the artist is released from the contract".  That seems to be broadly consistent with what many people in the industry might use, though it is a bit imprecise from a legal standpoint: I'm a little troubled by the notion that it is a "guarantee" and that the payment obligation is binding so long as "through no fault of their own" an artist is "released from the contract".  A "guarantee" is actually a legal obligation imposed on a third party to perform contractual obligations if the party whose performance is being guaranteed fails to perform; I can't meaningfully guarantee my own obligations, only someone else can.  A contract can have both a pay-or-play clause and be guaranteed - but a pay-or-play clause isn't itself a guarantee.  The phrase "through no fault of their own" seems a little too narrow (i.e., if I'm acting for the producer I think there are other situations in which the artist should not be paid, even if they are pay-or-play) and "released from the contract" also seems too narrow (i.e., if I'm acting for the performer, the payment obligation should be triggered even in situations where the performer is not technically "released" from the contract).

Matt Galsor at Law Law Land wrote Q&A: So...What Exactly Is "Pay or Play?", which seems like a promising source of information - and indeed the promise is fulfilled, but so well that the post is difficult to summarize.  Here's an attempt: the notion of a pay-or-play obligation is impossible to understand without first appreciating that the obligation of a producer under a performer's contract will often be subject to certain conditions precedent being met (for example: the producer being able to obtain sufficient financing for the project; the performer proving that they are legally able to work (by proving citizenship or holding a visa, for example); other performers being available for the project, etc.).  But performers don't want their deals (and their entitlement to payment) to be subject to conditions - they want their money whatever happens.  Hence, the demand that they be made "pay or play" - which translates, as Matt writes, into

"when everyone wants to be pay or play, what they really mean or should mean is that they want no conditions to their deal so that the money will be owed whether or not the movie actually happens"

That's a bit more nuanced than the Wikipedia entry, and raises a concern: people, even individuals who have extensive industry experience, seem to be using a three word phrase to describe a concept which is pretty darn complicated (Matt spent more than 700 words explaining it).  Language "shortcuts" like that tend to (or should) give lawyers the willies.  People are using the phrase to mean something, but it's not always entirely clear that everybody means the same thing.  Our next source seems to indicate that the "pay or play" concept is fairly slippery, and that what at first seemed to be a pretty open-and-shut entails a fairly involved analysis.  Do the words "pay or play" in a contract mean that the money is owed irrespective of whether the movie is made or not?  It might - particularly if the phrase "pay or play" is not qualified or modified by any other language - but then again, it might not.

John Yudelson has written a pair of informative articles which also happen to shed some light on what "pay or play" means: "Hot bodies or cool heads?: actors versus producers in feature film deals" and "The impact of actors and producers in studio-financed movie deals".  In "Hot bodies..." Yudelson describes a pay-or-play deal as one "under which the studio is obliged to pay their full fee irrespective of whether a film is produced or not, depending on certain contingencies".  That starts to sounds interesting: what are the "certain contingencies"?  It's beginning to seem like "pay or play" is not so much a binary switch (i.e., once a deal is "pay or play" the producer is obliged to make payment come hell or high water) but instead is an obligation based on the obtaining of a number of different states of affairs.

Tony Duarte's masterful Canadian Film & Television Business & Legal Practice offers some further insight into the matter.  In section 9:50.70(c), Tony states that a "pay-or-play" agreement is one in which the performer's "compensation is earned in full under any and all circumstances other than the performer's own default and, in some cases, force majeure" [emphasis added].  Now we're getting somewhere.

Duarte goes on in the notes to his Form 8 to say that "pay or play contracts allow the production company to terminate services for any reason provided that the entire fee expected by the contractor for the engagement is paid to the contractor in full ... such guarantees are generally drafted to make clear that certain named events of force majeure may excuse the production company from performing the contract or that the contract is terminated and no payment made in the event of the contractor's death or defined events of disability or default" [again, emphasis added].  Excellent - more details.

Before going further, we should also note that Duarte's comments add an important element to the analysis: "pay or play" status can be beneficial for the producer as well as the talent, since it means that the producer is able to terminate a performer for any reason whatsoever, so long as the fee is paid - that can come in handy if an actor is disruptive or even if for purely creative or personal relationship reasons the engagement simply isn't productive.

Adding together the foregoing, we can see that simply using the phrase "pay or play" in a contract, without anything further, could be a recipe for confusion: on its own, the phrase can mean anything from "payment is owed no matter what" (favourable to the performer) to "payment is owed in certain circumstances" (favourable to the producer).  Because of the variation in understandings of the "meaning" of the term "pay or play", resort to contractual language will be important in the event of a dispute.  As usual, precision in drafting is required.   If acting as producer's counsel, I suggest that a pay or play clause should be made expressly subject to the following:

• termination of the performer "for cause" (such as default)
• termination of the performer as a result of death or disability
• the occurrence of an event of force majeure (or at least certain events of force majeure)
• the performer's signing of documents which contain at least a grant of rights in favour of the producer
• the performer qualifying for insurance coverage
• the performer qualifying for any necessary immigration or job eligibility conditions (for example, if the film is being shot in Canada (or any other country), and the performer is not eligible to enter Canada because of an undisclosed prior criminal conviction, why should the performer enjoy a windfall payment?)

The film and TV industries are industries replete with their own terms of art - only in limited circumstances should trade "understandings" of those terms of art be relied on.

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Ricardo Cestero over at Law Law Land remarks on the inherent tensions in the relationship between talent and talent agents (Agents vs. Talent: Money For Nothing?) - Ricardo's post prompted this quick review of the regulation of Canadian talent agents.  (This post will ignore general laws and regulations which are generally applicable to business activity.)

Only the Province of British Columbia expressly regulates the activities of talent agents.  The British Columbia Ministry of Labour offers information on their website about the relevant provincial regulations and maintains a list of licensed talent agencies.  As the Ministry website notes, the basic elements of the BC regulatory regime are as follows:

• Talent agents in B.C. must be licensed by the Director of Employment;

• Talent agencies fees may not be more than 15 percent of wages;

• Photo fees (up to $25 annually) may only be deducted from actual earnings;

• No other fees may be charged by a talent agency.

As the FAQ on the site notes, any talent agency who is "recruiting talent in British Columbia" is required to be licensed by the BC Ministry of Labour.  For purposes of the regulation, the following definitions apply: 

"Talent agency" means a person or company who, for a fee, engages in the occupation of offering to procure, promising to procure, attempting to procure or procuring employment for actors, performers, extras or technical creative film persons.

"Technical creative film person" includes film directors, directors of photography, production designers, art directors, persons involved in writing or rewriting scripts, hair stylists, make-up artists, costume designers, or animal coordinators involved in the production of a film, video, television show or television commercial.

Sections 38 and 38.1 of the Regulation to the BC Employment Standards Act set out the details of the relevant regulatory scheme, including details about records which must be kept, how quickly payments must be remitted to talent after being received by the agent, and a prohibition on "payola" payments (ie payments made "to a person for obtaining or assisting in obtaining employment for someone").

In addition to government regulation, the talent agency industry has formed a number of associations in an effort at self-regulation.  The EICAA (Entertainment Industry Coalition Agency Association) has crafted a Code of Ethical Conduct for Talent and Background Agents.  Other associations include TAMAC (Talent Agents and Managers Association of Canada) and AMIS (Acting and Modelling Information Service).

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The Copyright Act (Canada) extends copyright protection to "architectural works" (a subset of "artistic works") - does a filmmaker need permission to film the exterior of a building in a film or TV project?

Probably not, at least with respect to the building itself - but as with most matters which involve legal analysis, the answer is probably better phrased as "it depends".  Let's start with some basic principles: Yes, buildings, as architectural works, can be protected by copyright.  Some buildings will be in the public domain (because their author passed away more than fifty years ago, causing the building to have passed beyond the limits of the term of copyright protection in Canada, being life of the author plus fifty years), and so no claim of copyright infringement could plausibly be brought, and so no permission would be required.

If we're talking about buildings which are still under copyright protection, of particular use for filmmakers is Section 32.2(1)(b)(i) of the Copyright Act (Canada), which identifies certain "permitted acts" - the section states the following:

It is not an infringement of copyright ... for any person to reproduce, in a painting, drawing, engraving, photograph or cinematographic work (i) an architectural work, provided the copy is not in the nature of an architectural drawing or plan;

In short: filming a building for use in a film or TV project (each of which would qualify as a "cinematographic work") does not constitute copyright infringement of the copyright in that building.  However, things are rarely quite that simple.  The clearance procedures of most film and TV errors and omissions insurance policies will require that clearance be obtained if the filmed footage will include elements which are separately copyrightable or trade-marked.  Thus, consideration must also be given to any items which are attached to the building in question - such as signs containing business names or logos, or artwork (such as an advertisement consisting of a large poster).  

It's also worth considering whether artistic works which are part of the building itself require a separate clearance (imagine a statute or gargoyle which is attached to a building, or a mosaic or frieze which add decorative elements); while there do not appear to be any Canadian cases on point, there is a US 9th Circuit decision which discusses the matter in the context of a film project (in Leicester v. Warner Bros., 232 F.3d 1212 (9th Cir. 2000) the court concluded that towers attached to a building shown in the film Batman Forever did not require separate clearance, as they fell within the ambit of 17 U.S.C. § 120(a), the US analogue to the Canadian provision we're discussing).

Other non-copyright matters which require consideration include the need to obtain permissions for the location of cameras and lighting which may be required in order to obtain the desired footage (i.e., if you need to get onto private or municipal property in order to set up your shot, permission will be required), and any potential defamation concerns (it's not terribly difficult to, imagine a scene showing the exterior of a building and attributing nefarious activities to the residents of that building - which, if the building and its tenants are readily identifiable, could give rise to a claim).

Thus, what at first appears to be a fairly simple question to answer refracts into a fairly nuanced analysis which could require some timely legal analysis by producer's counsel.  In closing, I should also note that I while researching this post I came across my favourite German word for today: Panoramafreiheit, a German legal concept (which apparently translates as "Freedom of Panorama") which appears roughly analogous to the exception to Canadian copyright discussed in this post. 

[Inspiration for this post was provided by Dear Rich: Does travel photographer need property release?, Dear Rich: Do you need permission to publish pictures of buildings? and by Gordan P. Firemark's Asked and Answered: Using public buildings as setting for a film.]

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When a celebrity (or anyone else) walks down a red carpet, what are they consenting to in terms of the use of their image?  That issue was recently considered in the US district court decision Shirley Jones v Corbis Corporation (Case No 10-8668 SVW (CW)) (hat tip: THR, Esq.) - the decision is noteworthy because, while the layperson's response (or even a prima facie legal response) might be simple ("she's walking down a red carpet - of course she consented to the use of her photograph!") the District Court's reasons illustrate just how narrowly construed legal conclusions can be.

The facts of the case are relatively simple: Shirley Jones (perhaps best known for her role on the 1970s TV show The Partridge Family asserted that Corbis had violated her rights of publicity by displaying "sample" photographs of Jones on their website; Corbis, a stock photo company, maintains multiple websites via which potential customers can search Corbis' library for photographs.  If a user types a term into the search function, low-quality "sample" photographs matching the searched terms will appear.  Corbis often does not own copyright in the photographs, but instead has entered into license agreements with the copyright owners, and in turn offers licenses in the photographs to Corbis' customers. In the case of Jones, when someone typed in "Shirley Jones" a series of sample photos would appear, indicating the inventory of relevant photographs that Corbis had available; some of those photos were of Jones at various "red carpet" events.  Jones asserted that her right of publicity was being infringed by the act of showing those sample photographs.

The District Court rejected Jones' claim.  The court noted that "celebrities who walk down the red carpet generally pose for photographers and respond to their requests to smile, or to look in their direction"; at some red carpet events, notices are posted "stating that the celebrities entering the red carpet consent to being photographed and recorded, and also to having their name or likeness used in connection with the event".  It was undisputed that Jones had consented to the taking of the photographs.  Indeed, Jones even acknowledged that the photographers who took the photos would be selling those photos and would need to show those photos to prospective buyers in order to secure sales of them (in days of yore, photographers would carry around books with copies of the photographs).  The court further noted that "it is custom and practice in the entertainment industry that red carpet photographs are widely used and disseminated".  At this point, it is worth noting just how finely-crafted is the "implied consent" that Jones was deemed to have given: she did not sign any documents granting consent, nor did she even verbally agree to certain uses - instead, the parameters of her consent (taking the photograph, selling the photograph, offering samples of the photograph to prospective buyers) were all implied from her actions and the context in which those actions took place.

As the court described it, Jones' "only argument" could be that "she did not consent to [Corbis'] placement of sample images on its websites for the purpose of soliciting customers".  But such an argument had no cogency: she knew the photographers would be selling their photos, and that they would need to show the photos to others; the fact that the photographers had, in turn, authorized Corbis to show the photos in order to facilitate sales was entirely consistent with the scope of the consent Jones had given - she therefore had no claim against Corbis.  Her follow-up argument that her consent was limited to allow only the individuals photographers to show the photographs was completely unsupported by any evidence.

Again, though, what is remarkable about the decision is how narrow it is - in closing its reasoning, the court expressly states that its holding is "limited to the fact that Plaintiff consented to the display of her likeness for the purpose of distributing the images themselves ... [the] reasoning does not address whether Plaintiff's consent encompasses any other type of display" [emphasis added]; in particular, "the Court's holding leaves Plaintiff's rights of publicity undisturbed in cases where a defendant uses Plaintiff's image to advertise an unrelated product ... or if a defendant transforms Plaintiff's image into a separate product".

Because the court found for the defendant on the issue of consent, the court did not need to consider the defendant's other arguments (that there was First Amendment protection or that the claim was pre-empted by the Copyright Act).

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About a year ago, we posted about Tattoos On Screen, offering a brief overview about the errors and omissions clearance issues posed by reproducing tattoos inked on actors bodies in film and TV projects.  Our early adopter status didn't much help, though: little did we know that, during the recent, er, period of repose that this blog experienced, there would be a major news story talking about, what else, tattoos on screen and that we wouldn't have time to weigh in on the matter.  Rather than do a poor job of attempting to rehash what others have already written about the topic, we offer a selection of some of the best pieces from the legal blogosphere over the last few weeks about The Hangover Part II and the replication of Mike Tyson's facial tattoo:

• Brent Randall wrote an excellent and detailed post at IPilogue - Legal “Hangover” For Warner Bros. Over Mike Tyson Tattoo - which also features further discussion in the comments from David Vaver which is well worth reading
• Gordon P. Firemark offers an interesting take on the need for people with tattoos (tattooees?) to ensure they have obtained copyright in their designs: Getting a tattoo? If you’re in the media you need to get the copyright too!
• Simon Fodden at slaw offers his alliterative thoughts on the topic: The Tyson Tattoo Turmoil
• Rachel Valadez at Law Law Land wrote the seminal blog post on the topic: The Hangover 2 and the Tyson Tattoo: Lessons in Copyright, Contract, and Clearance

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A relatively rare event recently occurred: the Federal Court of Canada delivered a decision regarding a "Canadian content" certification decision made by CAVCO (the Canadian Audio-Visual Certification Office).  With a hat tip to Tara Parker, the decision in Tricon Television29 Inc. v Minister of Canadian Heritage (2011 FC 435) provides an opportunity to confirm a number of matters regarding the certification of "Canadian content" projects.

In Tricon, the producers created a television series entitled Beautiful People, which chronicled the Canadian launch of the "BeautifulPeople Network", an online community for, well, beautiful people.  The Canadian producers of the show hoped to have the series certified as "Canadian content", which would entitle them to receive certification as "Canadian content" which would entitle them to claim what are colloquially referred to as "content" tax credits (such as the federal government's Canadian Film or Video Production Tax Credit (CPTC)) - "content" credits are more lucrative than the lower "services" credits (for full details about the tax credits available for financing film and television projects, see Heenan Blaikie's Producing in Canada guide).

To qualify as "Canadian content", a live action production must obtain six out ten possible "points" (see Article 4 of the CAVCO's CPTC Guidelines for details).  Two points are available for "lead performers" - and, crucially, at least one "lead performer" must be Canadian in order for a project to qualify as "Canadian content".

And there's where the quirks started popping up in the analysis.  Beautiful People followed the exploits of two non-Canadians (one British, one Danish) in their efforts to expand their business into Canada.  Measured by screen time, those two non-Canadians (Greg Hodge and Robert Hintze) would, in the absence of any other information, appear to be the "lead performers" - they occupy the bulk of the screen time, and, according to CAVCO, they "also act as hosts of the production, as their performances regularly link or introduce segments of the production to enable the storyline to progress".  But things in film/TV production are never quite that simple. 

The series is a type of show sometimes referred to as "reality TV" - an imprecise term which covers a fair bit of ground.  The producers' position was that the show was a "documentary" (they identified it as such when they applied for certification of their project).  When it comes to documentaries, it's not immediately clear that they have "lead performers".  Tricon's position was that Beautiful People did not have "lead performers" because the two principals of the BeautifulPeople Network (who were prominently featured in the series) were not "acting", their activities were simply being filmed - they were "being themselves", to use an inelegant phrase.  But if a show does not have "lead performers", how can it satisfy the requirement that at least one "lead performer" be Canadian?  The regulations to the Income Tax Act (Canada) contemplate precisely that situation. Section 1106(9) provides that:

A documentary production that is not an excluded production, and that is allotted less than six points because one or more of the positions referred to in paragraph 5(a) is unoccupied, is a Canadian film or video production if all of the positions described in that paragraph that are occupied in respect of the production are occupied by individuals who are Canadians.

In other words, if you are producing a documentary and you have no "lead performers" so long as the other positions on the points list (director, screenwriter, art director, director of photography, composer, editor) are filled by Canadians, you can still qualify as "Canadian content".

But note the condition there: 1106(9) only applies if the project is a documentary.  If Beautiful People is not a documentary then one of the two lead performers must be Canadian in order to qualify for "Canadian content" tax credits.  Unfortunately for the producers of the show, CAVCO concluded that the show was not a documentary, and thus denied certification as Canadian content.  That decision, which meant that the more lucrative content credits were not available for the show,l would have been devastating for the financing of the show's production.

Tricon requested judicial review of CAVCO's decision, raising a number of different arguments, all of which were rejected by the Federal Court.   To make a long story short (and keep this post to manageable lengths for both writer and reader), the Court held that no duty of fairness had been breached by CAVCO, CAVCO's reasons for making their decision were reasonable and transparent, CAVCO's decision was reasonable and did not constitute an error in law.  Indeed, the Court was rather emphatically more sympathetic to CAVCO than to the producers.

The decision (indeed the entire story) provides a cautionary tale for producers who seek Canadian content certification: where any doubt might exist about eligibility, early discussions with CAVCO are advisable in order to identify threats to certification and permit sufficient time to re-fashion the structure of a project in order to meet CAVCO's concerns.

All that being said, the decision made by CAVCO remains troubling: the decision was made under a previous iteration of the CAVCO Guidelines, which, as noted by internal CAVCO memoranda quoted in the Federal Court's decision, were written for a television environment which did not have nearly as much emphasis on "reality TV" as the current one.  As a result, those earlier guidelines did not contain the fine variegations of program type that the 2010 CAVCO Guidelines contain - previously, when it came to eligible genres of live action productions, you had "documentaries" and then everything else; the current Guidelines not only provide a definition of "documentary", but clarify that "lifestyle / human interest" programs are a separate type of non-documentary programming (subject to the same requirements as other non-documentary programming). 

But the producers of Beautiful People did not have the benefit of the new, clearer, guidelines: there was at least a cogent argument to be made that some "reality TV" programs were documentaries - and they proceeded on that basis.  CAVCO obviously disagreed, identifying the program as a "'docu-soap' reality-based television series" (the term "docu-soap" appears to have originated in an agreement that Tricon entered into with Hodge and Hintze).  Whatever else one might think of the accuracy of the description, "docu-soap" is not a recognized category of production for CAVCO purposes - and, at least based on the materials reproduced in the Federal Court decision, CAVCO did not provide any explanation of how it determined that Beautiful People was not a documentary - in other words, what criteria of "documentary"-ness was Beautiful People measured against and found wanting?

The new Guidelines contain about as cogent a definition for "documentary" as you're going to find (and they should be commended for that):  "An original work of non-fiction, primarily designed to inform but which may also educate and entertain, providing an in-depth critical analysis of a specific subject or point of view".  But it's unclear whether that definition was what CAVCO used to to assess Beautiful People (and, in any event, it's not clear that the producers were ever provided with that definition, since it did not appear in the previous guidelines).  For producers operating under the new CAVCO Guidelines, while there are inevitably going to be infelicities of expression and ambiguities in language, the Guidelines do an admirable job of providing guidance as to how different programs will be treated.  Unfortunately, it's not clear that the producers of Beautiful People had that advantage.

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Filming currency can arise in a variety of circumstances: from filming actors exchanging money to using images of money in the opening titles of a film (e.g., a fan of bills of various denominations or a shower of coins in an opening montage to illustrate gambling or some kind of monetary success) to filming close-ups for purposes of illustrating a point in a documentary.  Is anybody's permission required to film Canadian currency?

The basic answer is that if you are filming Canadian paper currency for use in a film or TV project you generally do not need permission.  The Bank of Canada helpfully publishes a Policy on the Reproduction of Bank Note Images, which states the following:

Exception

It is not necessary to request the Bank's permission to use bank note images for film or video purposes, provided that the images are intended to show a general indication of currency, and that there is no danger that the images could be misused.

The corollary of that exception is that in other circumstances (i.e., if the images are intended to show something other than a general indication of currency or where there is a danger that the images could be misused), then permission is required - and that permission can be obtained from the Bank of Canada, which owns copyright in Canadian currency. (An online request form is available from the BoC here.)  The Bank's policy states that "The Bank will usually consent if there is no counterfeiting risk and if the intended use is in good taste."  It is possible to imagine uses which may run afoul of the policy (e.g., a close-up image of a bank note which is then defaced with crude imagery or writing, or an animated treatment which starts with a real bank note but then is modified to incorporate offensive imagery), but those will presumably arise infrequently.

One matter not expressly covered by the Bank's policy is whether permission is required to film Canadian coin currency - the Bank's policy covers only paper notes.  And the reason for that is because the Bank of Canada does not own the intellectual property rights in Canadian coin currency - the Royal Canadian Mint does.  The Mint has its own policies regarding the use of the Mint's intellectual property (which includes "coin images", "drawings" and "creative designs"), including an application form.  The Mint's policies, unlike those of the Bank, do not start with the premise that no permission is required for purposes of filming, and so technically permission should be sought in order to avoid a potential infringement claim.

[Inspiration for this post was provided by David Albert Pierce, Esq., writing at the MovieMaker blog: Cinema Law: Can I Film U.S. Currency?, which provides a detailed explanation of US law on the matter.  Dan Ciraco's "The Money Shot: The Law Surrounding the Reproduction of Bank Note Images" (Ontario Bar Association Entertainment Media and Communications Section Newsletter 15(1) (Nov 2005)) is an invaluable resource of Canadian law on the topic.]

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Reports about Warren Beatty's recent court victory in respect of the film and television rights to the Dick Tracy property offer a chance to reflect on the wording of reversion clauses.  Grants or transfers of rights in entertainment properties are sometimes subject to a reversion clause which obliges the grantee to exploit the rights within a certain period of time or else the rights "revert" to the grantor. 

In Beatty's case, though details are somewhat sparse, it appears that when he obtained the rights to the Dick Tracy property, his continued enjoyment of the rights was subject to a reversion clause: if Tracy failed to produce a new Tracy-based film or TV project by a certain deadline, the rights would revert to Tribune Co. (the owner of the underlying rights in the franchise).  Beatty had produced the 1990 movie Dick Tracy, but Tribune evidently was interested in producing a new TV series.  The most comprehensive coverage of the dispute between Beatty and Tribune is offered by Phil Rosenthal writing at the Chicago Tribune's Tower Ticker blog:

Beatty, who acquired rights to the character from Tribune Co.'s Tribune Media Services in 1985 and made the 1990 movie “Dick Tracy” starring himself and Madonna, filed suit in Los Angeles federal court in 2008 after Tribune Co.'s Tribune Media Services said those rights had reverted back to it. ...

Tribune Co. argued that Beatty was required to produce another Tracy television or movie project to retain the rights before a use-it-or-lose-it deadline TMS had established two years earlier. Beatty countered that, after his request to extend the rights to 2013 was denied, he had begun work on a "Tracy" special before the deadline.

Turner Classic Movies subsequently scheduled a half-hour movie chat between film critic Leonard Maltin and Tracy (as played by Beatty) discussing various portrayals of the comic detective for July 2009, but it's the special didn't run on the cable channel.

Judge Dean D. Pregerson of the Central District of California decided in Beatty's favour: Beatty's commencement of work on the half-hour movie was sufficient to meet the condition he had to satisfy in order to retain the rights.  In short (although this is necessarily speculative without having the benefit of the contractual language or the court's reasons), it would appear that Beatty abided by the terms of the reversion clause, though interpreted strictly: the reversion clause obliged him to commence production on some kind of film/TV project within a certain time frame in order to retain the rights - he did so, and so retains the rights.  Tribune's argument was presumably something along the lines of "to meet the condition, it couldn't just be a perfunctory production - it was supposed to be a real production - something with a big budget, something with stars, something that was intended to be theatrically released or broadcast on a major network or pay/subscription channel - not some rinky-dink 30 minute special which never even got aired".

The court was inclined to prefer Beatty's approach:

"(Tribune Co.) may be frustrated that (Beatty) has not used his rights to Dick Tracy for more profitable ends," Judge Pregerson wrote in his ruling, noting he saw nothing in the contract between the two requiring such a project to make money.

The upshot for practitioners?  Reversion clauses should be drafted with precision: if the grantor of rights intends that only a "real" production will qualify to vest rights in the grantee, then the clause should expressly state a minimum budget amount that is required to be actually spent by a particular date - or require broadcast on particular outlets or theatrical release in a minimum number of theatres by a particular date or require that distribution/license agreement(s) worth a particular dollar amount (paid as a minimum guarantee) be entered into by a specific date.  Other specific provisions can be envisioned, but the primary point to bear in mind is that contractual language needs to be as detailed as possible in order to ensure that performance by the parties can be measured against an express, identifiable standard.

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Over the last couple of weeks a number of articles have come to my attention which, in different measures, I thought provided some great background information on how the business facets of the film and television industries work and what types of arguments can be made for and against the types of copyright reform which many think are necessary to facilitate the continued survival of the entertainment industries in light of digital technology:

• The Economist wrote about Hollywood's disc problem: video nasty, highlighting how innovative business models and delivery systems have undercut the gargantuan DVD/Blu-ray cash behemoth
• in a longer, much more detailed piece, The Economist looked at Hollywood and home entertainment: unkind rewind, a brilliant little explanation of the economics of the film/TV industries and how the increasingly rapid closing of different "windows" of exploitation (eg theatrical, pay-per-view, home video) is impacting different elements of the distribution chain (how unhappy do you think theatre owners are that movies will soon be available for home consumption in as little as eight weeks from their initial theatrical release?)
• with a hat tip to Lon Sobel, Peter Yu's Digital Copyright and Confuzzling Rhetoric offers an enjoyable read on the various arguments being advanced by many parties in the ongoing struggles for copyright reform - he covers four arguments in favour of stronger protection and enforcement, four arguments against it, and offers five strategies for making more convincing the arguments of the entertainment industries

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UPDATED BELOW

The Ontario Superior Court of Justice recently confirmed, in emphatic an unambiguous terms, that Ontario law does not recognize a common law tort of "invasion of privacy".  In Jones v. Tsige, 2011 ONSC 1475, Whitaker J. framed the question began his judgment as follows:

The central issue in this case is whether there is a tort for invasion of privacy.

He concluded as follows:

I conclude that there is no tort of invasion of privacy in Ontario.

That conclusion was made with reference to the Ontario Court of Appeal's decision in Euteneier v. Lee, 2005 CanLII 33024 (ON C.A.) wherein one of the justices noted that the appellant had "properly conceded in oral argument before this court that there is no “free standing” right to dignity or privacy under the Charter or at common law".

As Whitaker J. noted, there are four statutes which apply in Ontario which speak to the protection of an individual's privacy:  Personal Information Protection and Electronic Documents Act; Personal Health Information Protection Act, 2004;  Freedom of Information and Protection of Privacy Act; and Municipal Freedom of Information and Protection of Privacy Act.  Outside the ambit of those pieces of legislation, there is no protection of privacy in Ontario (or at least none which would be encompassed within a tort of "invasion of privacy".  As the judge also noted, other provinces already have in place various statutory regimes which provide more protection for privacy rights than is afforded by the four statutes mentioned above.

What is the relevance of the Jones v Tsige court's conclusion for entertainment and media lawyers?  The ambiguous concept of "privacy rights" is often engaged (or at least brought up) as a concern when dealing with documentaries, news reports, "reality" TV - really any sort of printed or audio-visual content which involves some kind of depiction of an actual person.  Further confirmation that there is no "invasion of privacy" tort in Ontario means that the universe of potential claims is that much narrower - when we advise our clients about "privacy" concerns raised by their activities we have a finite set of sources to assess from which such a claim could arise.  (I canvassed some of the issues could arise from the Personal Information Protection and Electronic Documents Act (more commonly referred to as PIPEDA) in this earlier post: PIPEDA and Filming/Photographing Individuals for Film and TV Projects.)

UPDATE (April 17, 2011): David Vaver has stridently argued that the decision of the court in Jones v Tsige is incorrect, and that other Ontario courts have seen fit to award remedies for invasion of privacy: Jones v. Tsige: Snooping and Privacy in Ontario.

UPDATE II (January 19, 2012): The Ontario Court of Appeal decision in the case has reversed and confirmed that an invasion of privacy tort (or "intrusion upon seclusion") does exist - see here for coverage.

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Nellie Andreeva, writing at Deadline | Hollywood, offers a detailed account of how Canadian cities are losing out on pilot productions this year, in part because of increasingly lucrative tax credit incentives available in US states: PILOT SEASON LOCATIONS: New York Production Booming, Canada Loses Ground.  As Andreeva notes,

Part of the reason for more TV studio executives to consider keeping drama pilot production in the U.S. is that the current currency exchange rate makes production in Canada less appealing than in years past. But also key are tax incentives offered in the states. On a standard hourlong pilot budget of $3 million, 10%-25% in tax rebates represents a nice saving. For instance, two of the three CW pilots shooting in the U.S., Hart of Dixie and Cooper & Stone, are being produced in states with tax incentives, North Carolina and Illinois. The locations also happen to fit the settings of the shows, which producers always wish for but only get when economics allow.

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A recent Canadian Radio-Television Telecommunications Commission (CRTC) decision finding that MTV Canada's broadcast of the show Bully Beatdown did not violate the Canadian Association of Broadcasters’ Violence Code offers a good opportunity to review the relationship between the Canadian Broadcast Standards Council (CBSC) and the CRTC - a useful reminder as we await the outcome of the CBSC's review of its earlier decision on the radio airing of the Dire Straits' song Money for Nothing (see here and here for earlier Signal coverage of the matter; also worth reading is the CBSC release entitled Some Important Clarifications about the CBSC’s Dire Straits Decision, which is not just informative, but fascinating reading from a public relations standpoint).

 Some background on the Bully Beatdown decision.  In April 2009 the CBSC received a complaint about MTV's broadcast of the show - this file contains the original complaint, the response from MTV and some subsequent correspondence from both sides.  The complaint asserted that the broadcast of the show, in which a victim of bullying is afforded the opportunity to see his or her bully engage in mixed martial arts combat with a professional MMA fighter (there's a monetary component to the show which is, frankly, entirely besides the point), violated the Canadian Association of Broadcasters’ Violence Code.

In April 2010, the CBSC released its decision in the matter (CBSC Decision 08/09-1667), in which it concluded that the broadcast of the show did not violate the CAB Violence Code:

In the end, although sympathetic to the complainant’s concerns about the best societal solution to the bullying problem, the Panel finds no breach of any of the foregoing standards as a result of the type, timing, or advisory choices regarding the violent content of the challenged episode of Bully Beatdown.

The complainant requested that the CRTC review the CBSC's decision (an explanation of the relationship between the CBSC and the CRTC as it relates to CBSC decisions can be found here).  The complainant wanted the CRTC to review the decision particularly with respect to the fact that the CBSC did not find that there was a violation of Section 3.1.1 of the CAB Violence Code - the so-called "watershed" provision which requires that programming containing scenes of violence intended for adult audiences be aired only after 9pm.

In March 2011, the CRTC released its decision in the matter (

).  The CRTC confirmed the CBSC's decision that the broadcast of Bully Beatdown did not violate the CAB Violence Code, and in particular, that the scenes of violence contained in the program "were not of such an explicit or graphic nature as to necessitate relegation of the broadcast of the program to post-watershed hours".

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A slew of interesting materials have recently been posted relating to developments in the United States law relating to the "right of publicity" (for Canadians, the closest analogue would be the rights protected by the tort known as "appropriation of personality" - for some Canadian-specific academic treatment of the topic, see the resources listed in this earlier Signal post):

• Aaron Moss's When It Comes to the Right of Publicity, Yes Doubt, looks at some recent California cases revolving around the use of celebrity images, particularly in the context of videogames
• Mark Litwak provides a short but information-packed post discussing theJimi Hendrix Right of Publicity Suit - meaning the recent decision of the US District Court for the Western District of Washington in Experience Hendrix, LLC vs Hendrixlicensing.com, Ltd., a case which examined the post-mortem treatment of publicity rights, particularly where there are conflicting state laws which might be applied
• Mark A. Fischer and Franklin H. Levy have written a lengthy discussion on Privacy Rights and Celebrities: Truth, Fiction and Biopics, examining the right of publicity as modulated by free expression concerns in the context of "biopics" or "docudramas" - with a focus on the recent movie The Social Network

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The efficacy of tax credits for the videogame industry, has been the subject of a variety of coverage recently:

• No Go for UK Tax Breaks for Video Games Industry (includes details on why the UK government has thus far declined to introduce credit incentives for the industry)
• notwithstanding the foregoing, "Hollywood" continues lobbying efforts with the UK government - Hollywood Lobbying UK Government Over Gaming Tax Breaks
• the State of Michigan has also made moves towards eliminating its videogame tax credits - Michigan Gov. Seeks to Scale Back Game Incentives - Do Tax Credit Plans Work?

That last link (written by Drew Boortz and from Reed Smith's Developing Concerns blog) contains some very thoughtful commentary on the topic of videogame tax incentive programs, of which I'll only excerpt this:

One final though on this issue - it is possible that a straight cost-benefit analysis is not the only appropriate way to measure the success of a tax incentive program.  There are other considerations, including the revitalization of underprivileged areas, promoting education and STEM skills in the area's schools, etc., that may not lend themselves to a "hard cash" analysis, but are nevertheless worthy goals. 

In sum, the bottom line is that tax credits and incentives are tricky, complex beasts, and can cut for the better or for the worse.  I for one would like to see more study of this, but based on the limited information available from a comparison of two state systems (Texas and Michigan), it seems to me that games projects are well-suited for tax credit financing, and that treating games as their own form of media, both for the purposes of project approval and payouts, is a strategy worth considering.

For the current state of play on videogame tax incentives in Canada, PwC's The Big Table series of publications is invaluable: the most recent Big Table of Digital Media and Animation Incentives in Canada — August 2010 can be downloaded at the link.

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Eriq Gardner at THR, Esq. reported earlier this month about a recent lawsuit filed in the United States: CBS Sued Over 63-Year-Old Song Used in 'Family Ties'.  A copy of the complaint can be found here.  The facts of the claim, as set out in the complaint, are fairly straightforward: in 1985, the producers of the sitcom Family Ties entered into a license agreement with the owners of copyright in a song entitled "The Texaco TV Star Theatre Theme Song".  The license agreement authorized use of the song in the television broadcast.  In 2008, the current owners of the rights in the sitcom decided to release episodes of the show on DVD - and only subsequently released that they had undertaken an activity which lay beyond the scope of the license they had entered into twenty-three years previously.  Attempts to enter into a retroactively effective license were unsuccessful, and the plaintiffs elected to bring the copyright infringement claim.

The dispute highlights the dangers, for producers of film, TV and other audio-visual content, of the dangers of entering into licenses for content which have a limited duration or a limited scope of authorized media.  It would have been a remarkably prescient individual in 1985 who could have foreseen that popular television shows would have an economically valuable afterlife as home video products - but bargaining for rights "in perpetuity, in all media whether now known or hereafter devised" would have saved some headaches down the line.

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Back in April of 2010, we posted about efforts in the UK undertaken by the producers of Coronation Street to protect their interest in a fictional brand of beer featured on the show (Trade-mark Protection for a Fictional Beer).  With a hat tip to the indispensable Lon Sobel at Entertainment Law Reporter, Benjamin Arrow has written a great article on protecting fictional trade-marks: "Real-Life Protection for Fictional Trademarks" (21 Fordham Intell. Prop. Media & Ent. L.J. 111). 

Assessing the question from the point of view of US law, Arrow looks at trade-mark and copyright issues relating to the protection of fictional brands, with nods to the case where DC Comics sought (and obtained) an injunction against someone publishing a newspaper called The Daily Planet, and the seminal Australian case on the topic, wherein the producers of The Simpsons, sought to prevent use of the word "Duff" in connection with the sale of beer (Twentieth Century Fox Film Corporation and Matt Groening Productions Inc v the South Australian Brewing Co Ltd and Lion Nathan Australia Pty Ltd [1996] FCA 1484).

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As we've discussed previously here at the Signal (Title Dispute - Similar or Identical Titles for Film and TV Projects) the extent to which the "title" of a motion picture or television project can function as a trade-mark involves a fairly detailed analysis.  Leonard Glickman has published "What's In a Title?" (hat tip: Entertainment Law Reporter), which offers a lengthy consideration of the matter, including a discussion of the possibility of a title which would otherwise be unprotectable as a trade-mark acquiring a "secondary meaning".  As Leonard notes in his conclusion:

In light of the foregoing restrictions with respect to the protection and registration of titles, what options are available to producers of films or other single work titles? In Canada, an applicant could apply on a proposed use basis for a series of works and stretch out the application process by extending the time frame for filing a declaration of use. In the interim, the applicant could produce and release a sequel thereby creating a series and removing obstacles to registration and enforceability. Even if a sequel is not produced and the application is abandoned, the producer can start to build secondary meaning in the title and attempt to enforce its rights in the title against third parties. When filing the application, the applicant must have a bona fide intent that it will produce a series of productions. Otherwise, the application or registration may be open to challenge under Section 30(i) of the Canadian Trade-marks Act.

US commentators have suggested there is merit to registering single work titles under the state registration system. Although the registrations have little substantive value, they will be disclosed in title search reports and potentially deter a third party from adopting the title. Another method used to protect titles is to register proposed titles with the Motion Picture Association of America’s Title Registration Bureau, the members of which are the Hollywood studios and hundreds of independent production companies. Once a title is so registered, other members of the Bureau are bound by the Bureau’s rules which impose restrictions on their ability to adopt and use the same title or a confusingly similar title.

On a slightly tangential (but related, really!) point, Samuel M. Duncan's article "Protecting Nominative Fair Use, Parody, and Other Speech-Interests by Reforming the Inconsistent Exemptions from Trademark Liability", while bearing a bit of a mouthful of a title, offers an excellent overview of US trademark law and, of particular value for entertainment lawyers, provides the tools to assess when the use of a trademark in an audio-visual project is shielded from claims of infringement.

Finally, with a hat tip to the Dear Rich blog, an interesting little tidbit about depicting trademarked tobacco products in movies.  As readers of the Duncan article, linked to above, will know, the mere depiction of a trademarked product in a film or TV project may not give rise to a viable infringement claim (though often E&O policy clearance requirements will nevertheless prohibit such a depiction) - notwithstanding that, however, Philip Morris has made this rather polite request to film and TV producers:

Unfortunately, the fact that we do not engage in product placement does not mean that our brands are never shown. Some producers and directors choose to depict our brands in their work without our permission. But we are limited in our ability to stop all displays of our brands because federal and state trademark laws, as well as the U.S. Constitution, protect freedom of expression and the "fair use" of trademarks in works such as movies and television shows. Our position is clear – we do not want our brands or brand imagery depicted in movies and television shows. The unauthorized use of our brands and brand imagery perpetuates the misunderstanding among some that we pay or are otherwise responsible for these depictions, which is simply not the case. We strongly encourage the movie studios to eliminate references to or depictions of our brands.

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The recent premiere of MTV's show Skins (which was shot in Toronto, and is based on a show of the same name originally broadcast in the UK by E4) has ignited a minor controversy: multiple media outlets have reported that some advertisers are pulling from the show and TV watchdog groups have raised the spectre of a violation of US child pornography laws (see Brian Stelter reporting in the New York Times, Nellie Andreeva at Deadline Hollywood, and Raju Mudhar in the Toronto Star).  An allegation of creating or distributing child pornography is one of the most incendiary statements that can be made - and I'll leave it to others (like, say, lawyers in the US) to assess whether the allegation has any legal basis in the United States - what I'd like to take a look at is what Canadian law says about "child pornography" in the context of artistic works.  As we'll see, it would be exceedingly unlikely that Skins would be found to constitute "child pornography" for purposes of Canadian criminal law.

Section 163.1 of the Criminal Code (Canada) sets out various offences relating to child pornography (such as making, transmitting, possessing and accessing).  As compared to the United States, the analysis in Canada as to whether something constitutes "child pornography" is greatly simplified by the fact that we have a single criminal code which governs the entire country - whereas each US state also has its own idiosyncratic criminal laws, Canadian provinces do not have constitutional authority to legislate in respect of criminal activity (though they can legislate "regulatory" offences, and, of particular relevance to the issue under consideration, they can and do legislate in respect of the classification, theatrical exhibition and sale of films and television programs - but that's for another post).  In short, in Canada, we have only one definition of "child pornography" about which to worry.  The definition encompasses visual representations of a person who is under 18 (or who is depicted as being under 18) engaged in (or depicted as engaged in) "explicit sexual activity".  The definition also includes visual materials of which the "dominant purpose" is the depiction, for a sexual purpose, of the sexual organs of a person under 18.

Section 163.1(6) sets out a "legitimate purposes" defence to a charge under the section:

(6) No person shall be convicted of an offence under this section if the act that is alleged to constitute the offence

(a) has a legitimate purpose related to the administration of justice or to science, medicine, education or art; and

(b) does not pose an undue risk of harm to persons under the age of eighteen years.

To satisfy the elements of the definition of child pornography, then, Skins would have to depict individuals who are under 18 (or who are over 18 but are portrayed as being under 18) engaged in "explicit sexual activity".  For greater verisimilitude, the producers of Skins elected to hire age-appropriate actors - so there are no 25-year olds playing the part of 10th-grade 15-year olds.  But what constitutes "explicit sexual activity"?  The Supreme Court of Canada, in the R. v. Sharpe (2001 SCC 2, [2001] 1 S.C.R. 45) decision, held that the phrase is to be interpreted in a "restrained" manner, meaning that only "acts which viewed objectively fall at the extreme end of the spectrum of sexual activity – acts involving nudity or intimate sexual activity, represented in a graphic and unambiguous fashion" would qualify.  Of the possibly problematic scenes in Skins which have been mentioned in the news reports, only one would appear to be of any concern under the Canadian Criminal Code definition: according to the Deadline Hollywood report, one scene depicts "a 17-year-old girl who appears to be having sex".  Even there, we should note that the reporter has qualified the description ("appears to be"), whereas the Supreme Court has indicated that off-side depictions must be "graphic and unambiguous".

Imagine for a moment, though, that the Skins depiction was deemed to be "explicit sexual activity" - what then?  There would still be a defence available under Section 163.1(6).  What are the contours of that defence?  Section 163.1(6) has an interesting history: prior to 2005, it used very different language, stating that an accused was to be found not guilty if the material in question had "artistic merit or an educational, scientific or medical purpose".  The R v Sharpe decision noted above, which considered the constitutionality of the entire section, including the "artistic merit" defence, and upheld it, was hugely controversial - and led to the amendment of 163.1(6) into the form in which we find it today, which contemplates a defence where the act alleged to constitute the offence has a "legitimate purpose" (which may include "art") and does not "pose an undue risk of harm" to persons under 18 years of age.

When the Supreme Court considered the earlier version of the defence (the "artistic merit" version), the majority held that the defence "must be construed broadly".  In expanding on that point, Chief Justice McLachlin stated the following:

“artistic merit” should be interpreted as including any expression that may reasonably be viewed as art.  Any objectively established artistic value, however small, suffices to support the defence.  Simply put, artists, so long as they are producing art, should not fear prosecution under s. 163.1(4).

The Supreme Court has not yet reviewed the new "legitimate purpose" defence, but the Ontario Court of Appeal did so last year in R v Katigbak (2010 ONCA 411 (CanLII)).  In Katigbak, the Court of Appeal stated that the post-2005 version of the defence was deliberately narrower than the previous "artistic merit" version, and held

While the shape of that defence has changed with the November 2005 amendments, it remains still an important statutory bulwark against the unconstitutional infringement of the s. 2(b) Charter value.  At the same time, though, Parliament has determined that not all acts relating to education or the arts (or the other enumerated spheres of valued activity) in this context will be immune from prosecution in the interests of buttressing freedom of thought and expression – only those that serve a legitimate purpose will be, and then, only those that do not pose an undue risk of harm to minors. [para. 62]

In para. 63 of the Katigbak decision, the court notes that "while [the defence] is to be liberally construed, [it] must not be construed in a manner that renders the child pornography offences essentially inoperative".  

In assessing whether the creation and broadcast of Skins has a "legitimate purpose" related to art, it would be difficult to conclude otherwise: any of the scenes which are purportedly pornographic exist fleetingly in the context of an episodic television series which contains multiple characters and story arcs - such long-form expression, irrespective of whether it is "good" or "bad" or "high" or "low", is indisputably "art".  The original UK version of the show has, in addition to garnering respectable ratings, received considerable critical praise and has been nominated for and received numerous awards - though those facts are merely indicative (and of the source material only, not the actual US version of Skins), they are indicative of some kind of purpose "related" to artistic activity.

The second step of the Section 163.1(6) defence, that the activity "not pose an undue risk of harm" to persons under 18, is also relatively easy to meet in these circumstances.  If the concern is with the actors themselves, few workplaces are as controlled as the television set of a big-budget production, particularly where underage actors are involved.  The risk of harm to other minors (such as viewers of the show) is, at best, speculative, and such an analysis would need to show multiple causal links which would be difficult in the extreme to demonstrate.

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THR, Esq. reports on news that the US Congress has renewed a federal tax incentive program through 2011: Production Tax Incentives Extended, but Should Hollywood Care?  (The text of Section 181 of the US Internal Revenue Code can be found here.)  Unlike Canadian tax incentives for film and television productions, which are structured as tax credits (meaning that the eligible applicant receives an actual payment from the government), the US federal incentive is structured as a tax deduction -  meaning that it can be used only to lower taxes which would otherwise be payable.  The THR, Esq. article includes an interesting debate between various entertainment lawyers, some of whom laud the federal credit and others who question its practical utility:

At the most basic level, cautions tax counsel Bernard Topper of New York entertainment law firm Frankfurt Kurnit Klein & Selz, people confuse tax deductions with tax credits. Credits reduce taxes dollar for dollar: a $100 tax credit reduces your taxes by $100.

In contrast, a deduction comes off of taxable income. That results in a lower savings. For instance, if you’re being taxed at 30%, then a $100 tax deduction saves just $30 in taxes.

Many state and foreign production incentives are tax credits, whereas Section 181 provides a deduction, which is less valuable. Still, says Topper, the combination of federal and state incentives is “fairly powerful.” He asserts that Section 181 has helped reduce foreign runaway production – the flight of film production to foreign countries.  ...

[Schuyler Moore] couldn’t disagree more. Where Selz sees a provision that’s “very valuable” to investors and has been used “fairly aggressively,” Moore sees “kind of a hill of beans” for the independent world.

Why the difference in opinion? Section 181 provides investors with “passive losses,” since most don’t actively participate in making the movie. Those passive losses can only be offset against passive income, such as income from the movie itself or from certain other investments, such as real estate or oil and gas wells.

For previous Signal discussion about US and Canadian tax incentives for film and TV projects, see here.

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Following up on an earlier post, it appears that cast negotiations for all of the lead roles in the hit comedy The Big Bang Theory have been completed.  Simon Helberg, who plays Howard Wolowitz, was reported by Deadline Hollywood to have secured a salary bump from around $40,000 per episode to in the range of $100,000 per episode.  Kunal Nayyar, who plays Rajesh Koothrappali, is also reported by Deadline Hollywood to have closed a deal for a salary bump to around $75,000 per episode (headliners Sheldon, Leonard and Penny are reported to be in the $200,000 per episode range).  At twenty-two episodes per season, that means that Nayyar would be grossing north of $1.5 million.

As discussed in the earlier post, these negotiations (and their reported results) are fascinating from a variety of standpoints, but particularly because of the dynamic at play amongst the various actors.  It appears from reports that the three leads closed their deals either simultaneously or around the same time - and that either the offers extended to them or the demands they made were on a "favoured nations" basis (that is, all three were getting the same terms).  Interestingly, Wolowitz and Koothrappali (sorry, I have trouble using their real names) evidently elected not to take a favoured nations approach, at least vis-a-vis each other - which seems to have worked out particularly well for one of them.

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Mark Litwak points towards a useful resource: the Independent Film and Television Alliance (IFTA) website, in particular the portion of the website which includes summaries of recent arbitral decisions.  While the summaries are generally quite abstract, the names of the parties are included, so it could prove useful when doing due diligence on potential participants in a project.  The website also contains sample arbitration clauses for use in agreements, and the text of the IFTA rules for international arbitrations.

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The Nova Scotia government has announced changes, effective December 1, 2010, to its Film Tax Credit and Digital Media Tax Credit:

Residency requirements for both credits were changed so that someone only has to so be a resident in the province during the production period. The total production cap for the Film Industry Tax Credit was also removed.

Film Nova Scotia has additional details, and the government's own websites for the credits can be found here (Film Tax Credit and Digital Media Tax Credit).

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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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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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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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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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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 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 CRTC has issued a revised Broadcasting Regulatory Policy (BRP) setting out standard conditions of licence and expectations for new “Category B” pay and specialty services. The term “Category B” service is the new terminology introduced by the CRTC in 2008.  All existing Category 2 services and any new services that the Commission may choose to license without access rights will be referred to as Category B services.  This terminology will be incorporated into the revised distribution regulations to be enacted on or before September 1, 2011.

Here are the highlights of the revised Category B standard licence conditions:

Maximum of five applications from any one applicant: The CRTC will only be prepared to consider five applications for new Category B services, in any language, from any one applicant at a given time, that is, at any stage in the process during which such applications are considered. 

Deadline for approved Category B services to commence operations: An approved Category B service will be required to launch within four years of the date of the decision in which the proposed service is approved. 

New streamlined procedures:  Any application deemed incomplete by Commission staff will be returned to the applicant. This practice would only apply to applications that are clearly deficient (for example, those for which the nature of service definitions contain insufficient detail or are incomprehensible). Staff will continue to ensure that applicants are provided with sufficient guidance so that they may determine, for example, what constitutes a “complete” application or a “sufficiently specific” nature of service definition. 

Filing of program supply agreements and/or licence or trademark agreements:  The Commission has amended its standard condition of licence to require that licensees submit copies of the programming supply agreement and/or licence or trademark agreement it has entered into with a non-Canadian party within 30 days of its execution, for the Commission’s review. The Commission may also request any additional document(s) that could affect control of the programming or management of the service. 

Continued consideration of Category B pay services: The CRTC will continue to license Category B pay television services with specific standard conditions of licence, expectations and encouragements for such services. Unlike Category B speciality services, Category B pay services will be expected to propose Canadian content exhibition and expenditure commitments comparable to those of existing pay services. The Commission will also expect such applicants to demonstrate why a licence for a pay service would be more appropriate than a licence for a specialty service.

Length of Broadcast Day:  Applicants for Category B services will continue to be given the option of choosing either an 18- or 24-hour broadcast day. 

Accessibility: In Broadcasting Regulatory Policy 2010-355, the CRTC established standard conditions of licence, expectations and an encouragement concerning accessibility of programming for Category 2 services, which include a condition of licence relating to the closed captioning of advertising, sponsorship messages and promos. These standard conditions will remain unchanged. However, In regard to audio description, the Commission recognized that it may be difficult to ensure that all news and information programming, in particular, programming acquired from non-Canadians, is audio described. Therefore, the requirement of Category B licensees to provide audio description for all the key elements of information programs, including news programming, has been limited to Canadian programs. 

The complete and updated standard conditions of licence, expectations and encouragements for Category B specialty and pay services are found in Appendix 1 and Appendix 2, respectively, to the BRP.

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Shaw Communications Inc.’s purchase of the Canwest Global Communications Corp. television properties was approved by the CRTC on October 22, 2010. On the same day, the CRTC announced that it will hold a public process in 2011 to review its regulatory framework relating to “vertical integration”. The CRTC’s rationale for the policy review is what it refers to as “growing trend of industry consolidation and vertical integration taking place in the Canadian broadcasting industry”. The CRTC cited acquisitions that have taken place over the last decade, including the transfer of control of TVA to Quebecor Media Inc. in 2001, the transfer of the Citytv stations to Rogers Media Inc. in 2007 and the 2010 Shaw-Canwest acquisition. The CRTC also pointed to the announcement by BCE on September 10, 2010 that it would acquire sole control of CTVglobemedia Inc.

What’s interesting is that the transactions cited by the CRTC represent consolidation of programming and distribution undertakings (with the exception perhaps of Quebecor which also has a significant production arm). However for the purposes of its policy review, the CRTC has defined “vertical integration” to include the combination of programming undertakings and production companies. This is somewhat puzzling given that the broadcaster-producer integration is no longer as prevalent as it was in the last decade when entities such as Canwest-Fireworks and Alliance Atlantis were vertically integrated into production.  Both of these companies ultimately ceased their production activities to become pure play broadcasters.  

Is the Commission just being thorough here or are there winds of change blowing in the ownership structure of the independent production sector?  

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The Canadian Audio-visual Certification Office (CAVCO) has announced a new policy (CAVCO Public Notice 2010-01) relating to the submission and retention of documentation required to prove that an individual is Canadian for purposes of obtaining "Canadian content" tax credits.  Instead of producers being required to collect and retain copies of documents (such as passports or birth certificates), CAVCO will be maintaining a central database of documents submitted directly to CAVCO by individuals.

From the text of the CAVCO public notice:

1. To be eligible to receive a tax credit under the CPTC program, production companies must, among other things, staff "Canadians" as producers and in a minimum number of key creative positions.  "Canadian" is defined in subsection 1106(1) of the Income Tax Regulations (Regulations) to include Canadian citizens and permanent residents.

2. In her report tabled to the House of Commons on November 22, 2005 (Chapter 5 - Support to Cultural Industries), the Auditor General of Canada concluded that CAVCO's former practice of having producers and key creative personnel sign a "Declaration of Citizenship or Permanent Residency" form was not rigorous enough to ensure that Canadian content requirements were being met under the CPTC.

3. In response, CAVCO implemented its "Policy on Documentation Demonstrating that Certain Individuals are Canadian" (Public Notice 2009-01).  The policy, effective June 1, 2009, made the applicant responsible and accountable for ensuring that the producers and key creative positions identified for Canadian content points were Canadian by retaining a copy of documentation, e.g. valid passport or permanent resident card, sufficient to demonstrate that each individual satisfied the Regulations' definition of Canadian.  Documents were subject to audit by CAVCO on a random basis.

4. Because of concerns raised by the industry regarding the security of personal information that was being retained by production companies, CAVCO is amending its citizenship policy.

The Policy

5. The CPTC applicant (the producer) is no longer required to retain a copy of an individual's Canadian citizenship or permanent residency documentation.  Under the amended policy, individual producers and key creative personnel eligible for Canadian content points under the CPTC must send a copy of their proof of Canadian citizenship or permanent residency, e.g. valid passport, birth certificate or permanent resident card, directly to CAVCO using the secure CAVCO Online application system or by mail.  Further details on the process are attached in the annex.

6. Each person confirmed by CAVCO as a Canadian citizen or permanent resident will be assigned a unique CAVCO personnel number.  Canadian citizens do not need to resubmit proof of citizenship for future productions. Permanent residents will need to resubmit proof of permanent residency status only when their permanent resident card expires.

Privacy concerns, which appear to have informed the new CAVCO policy, and particularly federal and provincial statutory obligations, are an area of law which could use more attention from independent producers and their counsel.  I provided some additional background on this in a paper I wrote a few years back entitled We Know Where You Live – BC Privacy Commissioner Provides Guidance to Producers on How to Collect Residency Information from Cast and Crew [originally published in Ontario Bar Association Entertainment, Media and Communications Section Newsletter, Vol. 16, No. 2, November 2006].

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Diane Krausz has posted a valuable item: Whose Life is it Anyway? Clearance of Life Story Rights in Film.  The article is particularly interesting for her concise provision of this heuristic, which I think nicely articulates what many entertainment lawyers reflexively do when analyzing clearance issues for projects based on real people or events:

specifically, to classify the characters of a script into the "living" or "dead", "private" or "public” citizen, and the specific issues in a scene (“newsworthy”, “private matter” or “public matter”), as this can make all the difference when determining whether the depiction of a particular individual in a specific scene constitutes infringement on someone’s ”right to publicity” or is permissible because of “fair use.” Note that a right to privacy is a protected right of an individual to non-interference by others, while the right of publicity is an individual’s right to exploit and profit from the exploitation of the exact things he or she is entitled to protect under the right of privacy

While Krausz's article is written with reference to US law, it provides, in addition to the quoted paragraph, additional practice points and guidance for Canadian lawyers who need to navigate the life story rights matrix.  Among the notable ones:

• the creation of "composite" characters which enable the depiction of aspects or actions of various actual individuals without the need for obtaining clearance
• the importance of analyzing/clearing the rights of "ancillary" individuals (ie those are depicted but who are not the "main" characters)
• being aware of when contested versions of the truth have been made publicly available (eg when depicting the events which are the subject of litigation, each party to the litigation may have filed public documents which offer a different account of various events)
• finally, this gem of an observation: "ultimate resolution is often an imperfect combination of financial, practical, creative, legal and business considerations unique to the particular project in question"

Also worth tracking down in this context is Nghia Nguyen's "Lights, camera, fiction! : Analyzing the Legal Framework for Protecting the Docudrama in Canada" (1995) 9 Intellectual Property Journal 127, which explores many of the clearance issues relating to the depiction of real people.

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How much would it cost a reality show participant who revealed a secret storyline twist before the episode was broadcast?  If the show in question is Survivor, the tattle-taler (tattle-teller?) could be looking at lawsuit from the producers for $5 million.

Eriq Gardner at THR, Esq. points out some of the highlights in his report on the matter: 'Survivor' Contestants Owe $5 Million If They Spill Secrets.  The website reality blurred has uploaded a copy of the Survivor participant agreement (it was first uploaded back in May, then taken down due to a copyright infringement claim, but is currently back online), and offers a detailed look at its provisions, including releases for infliction of severe mental stress and the granting of an option to enter into a talent agreement following the show (which makes perfect sense: if the network is going expend capital in turning someone into a "star", they're going to want to realize on that investment). 

While Survivor is a celebrated legend in the world of reality TV, readers may also be interested in the participant agreement from the 2007 series Kid Nation - a sort of ersatz Lord of the Flies.

Finally, Rachel Wilkes at Law Law Land provides some details about The Reality of Court-Themed "Reality" Shows:

To participate in the show, the parties must sign an agreement to dismiss their court claims and submit the case to binding arbitration. ...  in The People’s Court the show pays any judgment, and pays both parties a nominal amount for their time regardless of the outcome.

So, not only is The People's Court not really a court, the parties aren't even obligated to pay the awards?  Colour me disillusioned...

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Matt Galsor (writing at Law Law Land) answers the question:  I Want to Write a Screenplay About a Guy Who Uses a Particular, Published Book. Do I Still Need to Option the Book?  The question relates to using a book as the basis for a movie - not using a novel, however, but using a non-fiction instructional book (let's pretend it's Seven Steps to Becoming the Best Entertainment Lawyer You Could Possibly Be).  Let's pretend someone writes a screenplay featuring a character who buys 7STBTBELYCPB, a screenplay which chronicles the character's inspiring implementation of those seven steps.   What rights would the screenwriter (or producer) need from the author of the book?  Matt's answer, which he offers from a US perspective, is one with which every entertainment lawyer should be able to agree:

while you may not need to option the book (which would give you the ability to acquire the exclusive right to turn the book into a movie), what you do need is an agreement, akin to a release, in which the author grants you permission to use the book in the manner in which you want to use it (e.g., to use it as a plot point, to reproduce certain quotes, to use the title)

What's of particular interest is how Matt reaches his conclusion and the slight (but important) differences between US and Canadian copyright law which the analysis exposes.  Matt's conclusion is of course informed in part by a practical, E&O-based concern (ie E&O insurers will want to see some kind of release even if, strictly speaking, the copyright law basis for that requirement isn't completely clear-cut) - and that concern is shared north of the border as well.  In focusing just on the copyright analysis, however, Matt says the following:

One of the most important rights held by a copyright owner is the exclusive right to create derivative works based on her original copyrighted material. Derivative works are new original works that contain copyright-protected elements from a pre-existing copyrighted work. A movie based on a book is considered a derivative work because it will share with that book many of its copyright-protected elements (like characters and scenes). Therefore, at the outset, every author of a book owns the exclusive right to create a movie based on that book. ...

The question here is whether a movie about a guy following an instructional guide is a derivative work of that book. Unlike a typical situation in which the movie is going to contain many of the copyright-protected elements of the book on which it is based, your movie is simply using the book as a plot point and likely won’t be making use of elements such as the plot and characters (since such elements likely don’t even exist). Therefore, you may not need to acquire the movie rights to the book like you would in the traditional sense.

Matt's analysis hinges on the question of whether a movie which depicts the steps contained in an instructional book is a "derivative work" (he concludes that it might be, but even if it's not, given the aforementioned E&O-driven practical concerns, obtaining a release is still advisable).  It's the "derivative work" question where Canadian and US copyright law diverge.  Canadian copyright law does not have a distinct "derivative work" concept (unlike the US, where "derivative work" is defined in the US Copyright Act) - instead, the ability of our purported author to claim infringement would rest on two alternative theories: first, the author could claim that the screenplay/movie copies a substantial part of his original work in a material form (and the right to make a copy of a substantial part in a material form is an exclusive right of the copyright owner, per Section 3(1) of the Copyright Act (Canada)); alternatively, the author could claim that the movie infringes the author's sole right (found in Section 3(1)(e)) to reproduce, adapt and publicly present a "literary work" as a movie (or "cinematographic work").  (It's worth noting, parenthetically, that a "literary work" need not be "literary" in any meaningful sense - so long as it is in writing, it qualifies as "literary" - and so our imaginary instructional book would qualify.)

In short, I think under Canadian law we can more easily conclude that the screenplay and/or resulting movie would be an infringement of the author's copyright in the instructional book - and so obtaining a release or license would be imperative, rather than being subject to a cost/benefit analysis.

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Writing at the NYSBA's The Entertainment, Art and Sports Law Blog, Bennett Liebman reports on the recent expansion of New York State's film and TV production (and post-production) tax credits - and also offers, among other things, a snapshot of tax credit programs across the US, a handy capsule history of film/TV tax credits in the United States, and references to studies on the economic benefits of film/TV tax credits.

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You can say that weaving through the system at the CMF can be a frustrating process, but you can't say the staff at the CMF aren't helpful. After coming across a question regarding the CMF's eligibility requirements for distribution fees and having difficulty in finding an answer on their website, a staff member with the CMF was more than willing to help me with my task. In fact, this staff member seemed almost excited at the prospect of helping me. I think the staffer's motivation came from the fact that I would become one less person confused about the new rules with the CMF and therefore, one less person inclined to call their offices for assistance.

Well, friendly CMF staffer - I've decided to help you out and pass on the information.

When submitting a distribution agreement for CMF's approval, if the distributor in question is taking a distribution commission of anything more than 15%, the distribution terms will be rejected. The CMF will only allow non-eligible distributors to receive 15% of revenues. So, in order to receive distribution fees in excess of 15%, one must either be an eligible distributor or a broadcast-affiliated eligible distributor. Distribution fees for such entities include 30% of gross revenues for television (conventional, pay) and 35% for television (syndicated).

According to the CMF, an eligible distributor must demonstrate the following to the CMF:

• A level of experience and expertise
• Sufficient volume of business and financial viability
• That it regularly attends international television markets
• That it has distributed productions of a similar size and nature
• That it is Canadian-controlled within the meaning of the Investment Canada Act (for the projects it will distribute in Canada)

According to the CMF, an eligible distributor affiliated with a broadcaster, may distribute a project if it meets certain requirements of the CMF and follows various "safeguards", which include the following: 

• The negotiation for traditional distribution rights are conducted separately from the negotiation for a broadcaster license fee
• There is a delay after the producer and broadcaster have completed a short form broadcast agreement and before the broadcaster-affiliated distributor and producer commence negotiations of a distribution commitment
• The broadcaster-affiliated distribution company is prohibited from accessing information from its affiliated broadcaster that would give it an advantage in negotiating with the producer.

Attached is the CMF Eligible Distributor questionnaire and checklist, which is used by the CMF to evaluate those distributors that want to be included on the CMF’s list of eligible distributors. It usually takes about 4 weeks for the CMF to review the form.

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Last week's news story about the FBI demanding that Wikipedia remove from its website a high-quality image of the FBI's logo offers a timely reminder of the need to obtain permission for the use of official logos and crests when conducting errors and omissions (E&O) reviews of film and TV productions.

E&O insurance policies will generally stipulate that permission is required for the on-screen depiction of the logo, crest or uniform of a government agency such as a police force.  The agencies themselves may have their own explicit policy stating that their permission is required for any such depiction - thus, for example, the US Department of Justice has a policy on seals, logos and other official insignia, and the LAPD has its own Entertainment and Trademark Unit which producers can contact.

As the KWIKA Entertainment Law Blog points out in the post Police Departments and Public Domain, US caselaw on the issue of whether government agencies have a protectable interest (be it copyright or trade-mark) in their logos is "surprisingly unsettled" - suffice it to say that Canadian caselaw is even more sparse (for purposes of comparison, I was unable to find any mention on either the RCMP website or the Toronto Police Service website of any contact information for reproduction of their respective logos).  And where the law is unsettled, E&O insurance providers are loath to tread: better safe than sorry is the guiding principle when it comes to obtaining (and issuing) E&O coverage.

As the Wikipedia entry for the film The Departed notes:

Martin Scorsese asked the [Massachusetts State Police] if he could use actual logos, badges, and color schemes on the uniforms and the cruisers, but was denied. As a result, the uniforms, police cruisers, and logos in the film are slightly different from the real ones.

General tip: when Martin Scorsese and Warner Bros. (the studio which distributed The Departed) aren't willing to run the risk of a claim based on infringing reproduction of a logo, other producers should probably shy away as well.

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Last week's promulgation by the United States' Librarian of Congress of a rule which creates an exemption for certain classes of works from the prohibition (in the US Copyright Act, first introduced by the Digital Millennium Copyright Act, or DMCA) against circumventing technological measures that control access to copyrighted works - which is rather a mouthful (or eyeful) - is noteworthy for a number of reasons which are of immediate relevance to Canadian entertainment lawyers and copyright enthusiasts.

First, the background (hat tip to Barry Sookman for providing a number of the relevant links): the US Copyright Office announced that it had made certain recommendations (here is the full text of the June 11, 2010 recommendation) to the Librarian of Congress regarding the Librarian's rulemaking power under the US Copyright Act, which recommendations had been accepted.   The DMCA modified the US Copyright Act to prohibit circumvention of certain technological measures employed by or on behalf of copyright owners to protect their works.  In particular, Section 1201(a)(1)(A) of the US Copyright Act provides that “[n]o person shall circumvent a technological measure that effectively controls access to a work protected under this title.”  However, the DMCA also created, in Section 1201(a)(1)(B), a mechanism which permits the Librarian to make rules which modify the application of the prohibition by identifying particular classes of work whose users would be "adversely affected" by the operation of the prohibition in their ability to make non-infringing uses of the works in question.  In short, if the Librarian determines that the prohibition on breaking technological measures would unduly and negatively interfere with the ability of users to engage in non-infringing uses, then the prohibition could be circumscribed by a rule so as to eliminate that negative impact.

And that's precisely what the Librarian did last week (Statement of the Librarian; Determination of the Librarian and Text of the Regulation as set out in the US Federal Register). The Librarian determined that the fair use rights of documentary filmmakers were adversely affected by a strict prohibition on circumventing technological protection measures used on things like DVDs. 

That determination resulted in the following class designation [emphasis added]:  

"Motion pictures on DVDs that are lawfully made and acquired and that are protected by the Content Scrambling System [CSS] when circumvention is accomplished solely in order to accomplish the incorporation of short portions of motion pictures into new works for the purpose of criticism or comment, and where the person engaging in circumvention believes and has reasonable grounds for believing that circumvention is necessary to fulfill the purpose of the use in the following instances:

• Educational uses by college and university professors and by college and university film and media studies students;
• Documentary filmmaking;
• Noncommercial videos."

In short, when someone circumvents CSS protection on a lawfully-acquired DVD for the purposes of incorporating a short portion of a motion picture into a new documentary film (or other non-commercial video) for the purpose of critiquing or offering commentary on that short portion, then that circumvention does not itself violate the US Copyright Act.

The explanatory notes of the Librarian in its Determination are of particular interest [emphasis added]:

"The justification for designating this class of works is that some criticism and/or commentary requires the use of high–quality portions of motion pictures in order to adequately present the speech–related purpose of the use. Where alternatives to circumvention can be used to achieve the noninfringing purpose, such non–circumventing alternatives should be used. Thus, this limitation seeks to avoid an overly broad class of works given the limited number of uses that may require circumvention to achieve the intended noninfringing end.

The class has also been limited to include only motion pictures rather than all audiovisual works. Because there was no evidence presented that addressed any audiovisual works other than motion pictures, there was no basis for including the somewhat broader class of audiovisual works (which includes not only motion pictures, but also works such as video games and slide presentations)."

Thus, only where the type of high quality image made possible by CSS circumvention is required can the exception be relied upon - for example, if using screen capture software to obtain a still image will suffice, then that must be used.  It is also worth noting that only motion pictures are covered by the class designation - if a videogame or slide presentation is protected by CSS, then the class designation cannot be relied upon.

Of even more importance is how narrow the exception is - the Librarian's commentary makes it clear that the class designation is intended to permit circumvention only for criticism or commentary of the motion picture itself [emphasis added]:

"What the record does demonstrate is that college and university educators, college and university film and media studies students, documentary filmmakers, and creators of noncommercial videos frequently make and use short film clips from motion pictures to engage in criticism or commentary about those motion pictures, and that in many cases it is necessary to be able to make and incorporate high–quality film clips in order effectively to engage in such criticism or commentary. In such cases, it will be difficult or impossible to engage in the noninfringing use without circumventing CSS in order to make high–quality copies of short portions of the motion pictures."

So the class designation is not intended to allow circumvention for the purpose of using the clip for offering a broader social critique (eg taking a clip from Avatar to emphasize the need for environmentally conscious development policies), or for the purpose of trying to illustrate some kind of historical development (eg taking a clip from Titanic to show the maturation of ship-building technology).

The Librarian was particularly emphatic on these points:

"there was no evidence in the record to support the conclusion that anything more than incorporating relatively short portions of motion pictures into a new work for purposes of criticism or commentary would be a fair use."

The announcement of the class designation resulted in a flurry of commentary, some of it focusing on the impact for US documentary filmmakers (Finally, a DMCA Exception for Documentary Filmmaking by Dan Nabel) and some focusing on the relevance of this change for Canadian copyright law (U.S. Move to Pick Digital Locks Leaves Canadians Locked Out by Michael Geist; Exit Strategy for Digital Locks Dilemma of Canada's Bill C-32 by Howard Knopf).  I think there are a few aspects of the Librarian's decision which are of particular relevance to the Canadian context:

First, the enviable power and flexibility which is accorded by the triennial rulemaking power of the Librarian of Congress.  That mechanism assists in keeping the US Copyright Act current, and thus not as susceptible to the ossification of the Canadian Copyright Act which only gets amended once every decade or so.  Bill C-32 (the Copyright Modernization Act) keeps alive the concept of a quincennial (just a great word, by the way) review of the Act by a Parliamentary committee (also found in the current Section 92 of the Canadian Copyright Act) - but the political realities of legislative copyright reform mean that actual modification of the Act would likely, as it has in the past, take place only on a much more telescoped time frame.  Fine tunings of copyright law may be better-served by a dedicated agency (such as the Copyright Board) rather than the blunt instrument of legislative committees.

Second, even in light of the Librarian of Congress' seemingly-far reaching powers, we should note just how incremental this type of change ends up being: what might at first blush seem like an expansive accommodation of documentary filmmakers' concerns is in fact a relatively narrowly-cast exception.

Finally, it will be interesting to see how the documentary filmmaking exception is interpreted by the US Courts - whether the prima facie breadth of the exception (ie covering all forms of commentary and criticism) will be "read down" in light of the Librarian's commentary (ie indicating that the exception is meant to address commentary and criticism of the motion picture being excerpted).  This bears on the point made by others - namely that the fact of the class designation itself should inform an assessment of Bill C-32 - since it will indicate just how flexibly and broadly the US fair use device will be in addressing the wants/needs of documentary filmmakers.

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Given the volume of material available, we've decided to make our round-up of entertainment law questions posed and answered a recurring feature.  Readers should heed the usual caveat that many of the links are to US-based blogs, and so the answers provided may be different than what would obtain under Canadian law.

• I'm in the WGA, But Can't I Write for a Friend Even if He Can't Pay the WGA Minimum? (Law Law Land)
• Do I need to clear rights for a historical film set in the 1700s? (Gordon P. Firemark)
• That Movie Is Just Like My Movie - Who Do I Sue? (THR, Esq.)

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Never let it be said that entertainment lawyers are unwilling to give freely of their time and advice (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):

• How Do I Stop Someone From Spreading Lies Online? (THREsq.)
• When Are Friends and Family Co-Authors? (Gordon P. Firemark)
• How Do I Attach, Benefit, and Protect Myself With a Script Brought to My Attention to Help With Funding? (Law Law Land)
• How Do You Make a Biopic and Avoid Getting Sued? (Law Law Land)
• We Started It Together, But I Want to Move Forward Alone... What Do I Owe Him? (yep, Law Law Land again)
• Real Events Reported in the Media - What Rights Do I Need? (Gordon P. Firemark)

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Nellie Andreeva, writing at Deadline: Hollywood (Coming This Summer To CBS And WBTV: 'The Big Bang Theory' Cast Renegotiations), provides some insight into the negotiation strategies used by agents and lawyers when a sitcom becomes a sizable hit:

One of the signature moves of the Friends cast was that they negotiated their deals together in an all-for-one, one-for-all fashion, getting to $100,000 per episode each in their first go-around with producer Warner Bros. TV after two seasons and eventually to $1 million per episode. Now, the cast of Big Bang is facing their first salary renegotiation with WBTV following a record-breaking syndication deal for the show, that netted the studio $2+M per episode. But I hear one of the three leads, Jim Parsons, is considering negotiating separately from co-stars Johnny Galecki and Kaley Cuoco.

... Parsons has already gotten recognition on the show with larger salary bumps early on. Since the trio’s initial salaries were based on their quotes, Galecki and Cuoco, both sitcom veterans, started off with bigger paychecks than Parsons who was less known. Going into season 4, all three have reached parity, each making around $60,000 per episode. ... And, whether the three renegotiate in coordination or not, I hear WBTV is looking to give them “favorite nations” deals, meaning all would get the best terms any of them was able to negotiate. “The studio has to do it that way,” one insider said. “They will have an unhappy set otherwise.”

The dynamic highlighted by the article is a challenging one when dealing with an ensemble of actors: while it may be prudent for "less valuable" members to try and yoke themselves to stars perceived to have more bargaining power, it is also difficult to avoid the conclusion that the bigger star may be better served by negotiating on their own and avoiding the dilution of their leverage.  That being said, financial considerations aren't the entire story: wide differentials in cast payments and perquisites can result in on-set tension (which can lead to a distinct lack of on-screen chemistry).

The dynamics at play are further complicated by the way in which actors on TV series are usually contracted: their first contract for the show will include a number of consecutive options which the producers can exercise to bring the actor back on subsequent seasons with pre-determined increases in salary (so, for example, the actor signs a contract to appear in the first season, and the agreement allows the producers to obligate the actor (assuming the show is renewed) to appear in a second, third, fourth, fifth or even sixth season, with the salary increasing by, say, 10% each season).  When a show, such as The Big Bang Theory, is a sizable hit, actors can get their salaries increased above the pre-determined bumps in at least two ways: first, savvy agents and lawyers can argue for increased salaries based on merit and in an effort to develop a congenial relationship with breakout stars; second, if producers need to engage the actor for seasons beyond the sixth, and wish to secure that agreement prior to, say, season four, then, as is expected to be the case with Big Bang, the producers will sweeten the deal by increasing the salary bumps on pending seasons.

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Marie-Andree Weiss wrote an interesting post recently comparing the treatment of post-mortem rights of publicity in California and New York (Marie-Andree's post was prompted by the then-pending enactment of California Assembly Bill 585, which extended publicity rights to deceased persons who were not famous during their lifetime, but became famous as a result of their death).

The Canadian analogue to the right of publicity is the tort of appropriation of personality.  Ad Idem (the Canadian Media Lawyers Association) hosts Mitchell A. Flagg's article Star Crazy: Keeping the Right of Publicity out of Canadian Law, which offers a lengthy treatment of US, Commonwealth and Canadian law on the topic.  Anna Shahid, writing at IPilogue, provides a very handy short overview on the tort of appropriation of personality, which includes this conclusion about post-mortem rights in Canada:

Furthermore, the personality rights of an individual survive the individual’s death and allows for his or her heirs to protect the unauthorized use of such rights. It is unclear whether the rights expire after some time has lapsed since the death of the individual. However, ‘it seems reasonable to conclude that whatever the durational limit, if any, it is unlikely to be less than 14 years’ (Glen Gould Estate v. Stoddart Publishing Co. Ltd., 1998 CanLII 5513 (ON CA)).

Additional short-form sources include Rob McDonald and Chad Zima's “I am the Greatest” - The Use of Celebrity Endorsements and Images and Daniel Anthony's Got Personality? How Can You Protect It?.  Lengthier academic treatment is available in Susan Abramovitch's “Misappropriation of Personality” (33 Canadian Business Law Journal 230 (2000)), and David Vaver's “What’s mine is not yours: Commercial appropriation of personality under the Privacy Acts of British Columbia, Manitoba and Saskatchewan” (15 UBCL Rev 241 (1981))

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Further to earlier mention of the release by the Documentary Organization of Canada (DOC) of its Guidelines to Fair Dealing Practices for Documentary Filmmakers, Vincent Doré has written a brief comment on the Guidelines at IP Osgoode's IPilogue:

The Copyright Act thus adequately considers user rights and the public interest by allowing documentary filmmakers in Canada to bring to viewers a true depiction of reality without prohibitive and unnecessary copyright clearance costs. For instance, the Guidelines state that the use of copyrighted material “for the purpose of critiquing or reviewing the composition of the material, or the views expressed in the material,” does not require copyright clearance if the use meets the requirements of “fair dealing,” and the source and author of the material are mentioned (it is noteworthy that U.S. law does not require the mentioning of source and author). Therefore, the use of copyrighted material may not require clearance, even if it undermines the market of the original work. However, the creator of the original work can be comforted by the fact that a documentary that is a substitute for or competes with the market for the original work without copyright clearance is less likely to be held to be “fair”.

As alluded to in the earlier post here at the Signal, the DOC Guidelines themselves require some close interrogation as they tend to (understandably, given the DOC's mandate for its members) adopt the most producer-favourable interpretation of various provisions in the Copyright Act and court decisions - hopefully Doré's post will be the start of a wide-ranging discussion about the Guidelines and their efficacy.

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Is television a thing of the past; an outmoded delivery system on its way to scrap heap?  Not according to an article in this weekend's Toronto Star.  The editorial is written by Douglas Barrett, formerly an Entertainment partner with McMillan Binch and now, among other things, the CTV Professor in Broadcast Management at the Schulich School of Business at York University.  

Barrett makes the point that the critics of television are mistaken in declaring it dead.  As compelling evidence for his position, Barrett cites a 2009 study by the Council for Research Excellence, a research think-tank based in the United States.  The results of the study may surprise many who believe that viewers are leaving the tube in droves for other on-line viewing options.  According to the findings of the study, television continues to dominate the media landscape and by quite a significant margin.

On the business side of things, Barrett raises two points which he believes lend credence to the continuing importance of television.  First,  the persistent difficulties with monetizing Internet exploitation  which need to be addressed before the real on-line rush begins.  Second, the recent purchase by Shaw Communications of the Canwest television assets which seems to indicate that the shrewd folks at Shaw may share Barrett's views on the relevance of television.

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The film version of The Girl With the Dragon Tattoo was released in North America on March 19, 2010 - for entertainment lawyers, it raises the question: what do you do about a girl with a dragon tattoo who appears on-screen?

The errors and omissions "clearance" process requires producers of audio-visual projects to obtain licenses for all copyrighted materials which appear recognizably on-screen.  A tattoo is, at least at some level, simply a drawing or painting rendered on a somewhat unusual canvas (ie the human body).  At first glance, then, the tattoo should be the subject of copyright protection - but who should you approach to request permission to reproduce the image?  The actor who has the tattoo imprinted on their body, or the tattoo artist who originally drew the tattoo (and what about a tattoo which is itself simply a reproduction of a pre-existing artwork or trade-mark)?

Christopher Harkins has written what appears to be the only currently-available long-form consideration of the question: "Tattoos And Copyright Infringement: Celebrities, Marketers, And Businesses Beware Of The Ink" (10 Lewis & Clark Law Review 314) (hat tip: Simon Chester at slaw), which opens with a discussion about a case involving a tattoo artist suing the NBA for copyright infringement when the NBA created advertisements depicting player Rasheed Wallace and a close-up (and animation) of the tattoo on his right forearm (the case was eventually settled with no public disclosure of the settlement terms).  Harkins analyzes the matter from the perspective of US copyright law, and Jordan S. Hatcher also offers some thoughts on the matter (including an interesting sidebar on the intersection of tattoos and moral rights).  The answers are not straightforward, regardless of the jurisdiction: Harkins offers an apposite closing thought when considering tattoos on-screen: "a veritable gauntlet of copyright issues may lurk".

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The Documentary Organization of Canada (DOC) has announced the release of its Guidelines to Fair Dealing Practices for Documentary Filmmakers.  Documentaries, by their very nature (ie because they seek to depict and reproduce the world as it actually is, and generally are not filmed on controlled and artificial sets), face greater "clearance" challenges when it comes to obtaining errors and omissions insurance - permission must be obtained for, among other things, the on-screen reproduction of any copyright or trade-marked materials, such as songs, posters or film clips.  The DOC Guidelines aim to provide guidance on when "fair dealing" may be relied upon to avoid having to obtain clearances.

The issue of the extent to which Canada's "fair dealing" mechanism can be used to ease the clearance process is a contentious one, with producers (and their counsel) squaring off against E&O providers (and their counsel) - and is ultimately a subset of the larger debate regarding the efficacy of "fair dealing" itself.  As DOC notes in their press release, the Guidelines are intended as a stop-gap measure on the way to DOC's goal of achieving a more wide-ranging reform of fair dealing.

Of particular interest is the role to be played by efforts to create industry-standard guidelines.  Cogent arguments have been advanced, including those by Giuseppina D'Agostino, that reforming the law of fair dealing will not prove as constructive as creating "fair dealing best practices" (see D'Agostino, "Healing Fair Dealing? A Comparative Copyright Analysis of Canadian Fair Dealing to UK Fair Dealing and US Fair Use", 53 McGill Law Review 309, available for download from SSRN).  In other words, perhaps the most productive way forward is by developing, informed by the positions and (competing) preferences of all stakeholders in the relevant industry sector, precisely the sort of guidelines and standards which the DOC Guidelines are a first step in creating.  (The Center for Social Media at American University has promulgated a Documentary Filmmakers’ Statement of Best Practices in Fair Use which is an effort similar in ambition to that of DOC.)  Though such guidelines do not have the force of law, there is the hope that, to quote D'Agostino, courts will see fit to treat them "as 'soft law' when interpreting fair dealing cases". 

The DOC Guidelines will almost certainly not be the final word on the matter - they do not appear to have been endorsed by E&O providers, for example.  There will be elements of the Guidelines which prove contentious (as an example, as I touched on in this short piece at IP Osgoode on the "incidental inclusion" exception in Canadian copyright law, the DOC Guidelines adopt the most aggressive, and producer-favourable, interpretation of the "incidental inclusion" exception).  But the DOC Guidelines will hopefully serve as a welcome first step in the ongoing process of clarifying and simplifying how Canada's copyright laws can, and should, interface with day-to-day film and television production activities.

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The UK's Intellectual Property Office (IPO) has issued a trade-mark decision (Trademark Inter-partes Decision O/359/09 [.pdf] - hat tip to Harbottle & Lewis LLP) of significance for the creators of fictional brands: the IPO refused a trade-mark application on the basis that a protectable goodwill interest had arisen in a fictional brand of beer.

Viewers of the long-running English soap opera Coronation Street will recognize the name at the centre of the matter: Newton & Ridley.  N&R is a fictional brewery and brand of beer which is depicted in the fictional Coronation Street world - it is served in the fictional pubs which populate the fictional world, a world replete with N&R bar taps, beer mats, delivery vans and even a fictional history of the business dealings of the N&R brewery.

A company, evidently unaffiliated with ITV (the producer and broadcaster of Coronation Street), called itself Newton & Ridley Beer Company Limited, and filed an application for registration of "Newton & Ridley" in connection with the sale of certain alcoholic beverages (namely, "Beer; ale; lager; stout and porter").  ITV opposed the application, relying on its own registered mark for N&R in the "printed matter" category (which included beer mats), and the goodwill which had accrued to the mark by virtue of ITV's continuous visual use of the mark in the show since the 1960s.  ITV had also evidently for a number of years sold an actual beer using the name Newton & Ridley until a change in the Ofcom Broadcasting Code earlier this decade made it untenable for ITV to continue such sales.  It was also pointed out by ITV that allowing the third party company to sell the beer using the mark would, because the Ofcom Broadcasting Code prohibits giving "undue prominence" to a product or service, have the perverse result of effectively preventing ITV from continuing to show the N&R brand, which it had created, on its own show.

The IPO accepted the arguments of ITV, recognizing that goodwill had accrued to ITV in respect of the mark not from the sale of beer by ITV (which had stopped in 2005) but from "the exposure of NEWTON & RIDLEY on Coronation Street itself".  The creation and depiction of a fictional brand, in short, can have real world impact and value.  That goodwill and "attractive force" meant that purchasers of the unauthorized Newton & Ridley beer would be confused into thinking it had some connection with the television show.  Accordingly, the mark was not registered.

The IPO took note of a similar decision reached by the Federal Court of Australia (Twentieth Century Fox Film Corporation and Matt Groening Productions Inc v the South Australian Brewing Co Ltd and Lion Nathan Australia Pty Ltd [1996] FCA 1484) in connection with the sale by a brewery attempting to register a trade-mark for Duff Beer.  Regrettably, no reported cases appear to address the possibility of using Elsinore Beer.

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The good folks at IP Osgoode's IPilogue blog have published a short article I wrote which explores the "incidental inclusion" exception to copyright infringement, an exception which, depending on who you talk to, could be of major significance for film and TV producers facing errors and omissions clearance problems: "Cindy, Incidentally – The “Incidental Inclusion” Exception in Canadian Copyright Law".  The opening paragraph:

A filmmaker films an individual walking down a city street, past a convenience store.  The camera captures, among others, two things: an advertisement consisting of the familiar, stylized Coca-Cola symbol hanging in the window, and the faint, but audible, strains of a popular song drifting from inside the store as an unseen customer opens the door.  Concerned, the filmmaker speaks with an entertainment lawyer and asks whether there’s anything to worry about.  From such a simple fact scenario rises one of the more vexing questions in Canadian intellectual property law.

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CBC is reporting that the planned closing of the Saskatchewan Communications Network, the province's public educational broadcaster, could jeopardize nearly $1 million of Canada Media Fund money that had been allocated to the province.  That amount, according to SCN Matters (which describes itself as "an ad-hoc group of viewers, voters and television industry personnel concerned with the government’s decision to terminate the operations of SCN"), could be distributed between around 20 different programs.

The SCN Matters website includes links to a variety of different news stories covering the announced closure of SCN and the reaction, including this story in The La Ronge Northerner:

The government’s decision to eliminate the Saskatchewan Communications Network (SCN) met with dismay among local filmmakers.

“It limits our opportunities for production. I’m not sure who will fill the gap of Saskatchewan- based production,” Randy Johns, of Keewatin Career Development Corporation (KCDC), a La Ronge-based production company, said in an interview with The Northerner.

The SCN website includes an annual report, which provides detailed information on the revenue and expenses of the network.

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David T.S. Fraser muses on the privacy law issues raised by photographing or filming individuals in public places:

It's an issue that has come up in all the discussions about Google Street View and other street imaging products out there on the 'net. ... Obviously, taking photos of people raises privacy issues but I don't have much of a problem when photos are taken in public places. People simply have diminished expectations of privacy on a public street ... when the images are being taken primarily of places and the people are incidental, I don't think this is what privacy laws were designed to protect us against.

The matter can be of particular significance when filming movie and television projects in public spaces where identifiable individuals (who are not hired performers or extras) are clearly depicted in the background.  The traditional approach counsels getting all identifiable individuals to sign a release (and, generally, preventing people who don't sign a release from appearing on camera); failing that, the posting of clearly-marked signs advising pedestrians that they are entering a filming location where they may be photographed can be an acceptable alternative. 

Fraser points to Section 4(2) of the primary federal privacy statute, the Personal Information Protection and Electronic Documents Act (PIPEDA), which excludes from the application of PIPEDA uses of personal information for "journalistic, artistic or literary purposes".  However, as he notes in the comments, even if PIPEDA does not apply, there are still common law "appropriation of personality" tort concerns (for a discussion, see, eg, Robert G. Howell, "Publicity Rights in the Common Law Provinces of Canada" 18 Loyola of Los Angeles Entertainment Law Journal 487) and also invasion of privacy tort concerns.  To that we can add, at least in the Province of Quebec, concerns arising under the Quebec Charter of Human Rights and Freedoms, as outlined in the Supreme Court of Canada decision in Aubry c. Éditions Vice‑Versa, [1998] 1 SCR 591, wherein the Court held that an individual's right of privacy was violated by the publication of a photograph of the individual when she was seated on the steps of a public library.

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Peter Howell writes in the Toronto Star about how "Canadian films don't have to 'look Canadian' any more" - describing the aesthetic improvement resulting from increased production budgets.  On the one hand, Howell notes, Canadian locations, particularly films shot in Canadian urban centres, seem increasingly capable of functioning as "every place and anyplace".  On the other hand, some directors are increasingly willing to expressly set their movies in identifiably Canadian locales (Atom Egoyan's recent work Chloe is set in Toronto).

One item which Howell touches on warrants further attention:

[Kari] Skogland presents a pragmatic truth that all filmmakers must accept, Canadian or not: financing often determines your setting. Tax incentives are often doled out on the proviso that a film be shot in a certain location...

The bolded portion deserves to be unpacked a little.  When financing a Canadian film, there are generally two different types of "tax incentives" a producer can try to obtain: tax credits, which are payments made by the government (federal and/or provincial) on the basis of how much money has been spent on paying "production" or "labour" costs to Canadians in a given jurisdiction (eg if you film a movie in Toronto, you can qualify for federal tax credits and for Ontario tax credits); and "direct incentives", such as equity investments or (recoupable) grants made by a government agency such as Telefilm Canada or the Canada Media Fund.  (Heenan Blaikie's publication Producing in Canada, available here, offers a comprehensive guide to the various types of incentives available.)

 Tax credits, whether the somewhat confusingly named "Canadian content" credits (which are for projects which include a sufficient number of individuals who are Canadian working in creative roles, such as directors, screenwriters and actors, as measured by the Canadian Audio-Visual Certification Office (CAVCO)) or (the less lucrative) "production services" credits (which are for projects shot in Canada, but which do not have the required Canadian nationals fulfilling the required creative roles), are not required to be set in Canada or to be "about" Canada or Canadians.  A sci-fi movie such as Resident Evil: Apocalypse, which was shot in Toronto, can qualify to obtain tax credits just as Passchendaele can.

Direct government incentives, on the other hand, where the government is effectively using taxpayer money to directly invest in a movie, generally do require that a project, in addition to qualifying as "Canadian content" due to the nationality of the people working on it, have some kind of "Canadian content" in respect of the story itself.  Thus, the Canada Feature Film Fund guidelines state that, when considering which projects to invest in, they will prioritize projects which

"present a distinctly Canadian point of view (for example: Canadian characters, setting, themes, talent and stories reflecting Canadian society and cultural diversity)"

The basic requirement is that a project be filmed in Canada and make payments to Canadian residents - but that bare minimum entitles a producer only to receive the bare minimum of available incentives (the "production services" tax credits).  The more "Canadian" a project is, in terms of Canadians working in creative roles, and in terms of being "about" Canada, the more incentives for which it can potentially qualify.

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For some, we're entering "a golden age of TV product placement" (Seth Abramovitch writing in the Globe, describes some of the more recent examples, including an iPad-centric episode of Modern Family).  For others, though, necessity, and not virtue, are the driving forces behind the increasing prevalence of prominently branded products appearing on your TV and theatre screens - as Stefania Moretti writes in "Canadian TV takes product placement further than Hollywood",

Cash-strapped Canadian television shows are increasingly integrating brand-name products into their scripts, according to the president of the Writers Guild of Canada.

Moretti's article nicely covers many of the commercial issues relating to product placement: the increased revenues for producers which can go towards paying for budgeted costs, as well as the attraction for advertisers of having an embedded "ad" which can't be skipped over by fast-forwarding on your DVR.  The New York Times also recently had a nice piece on product placement, focusing on theatrical releases, and highlighting the economic imperatives which drive the increased use of branded products.  The Times piece also alludes to some of the elements which go into the drafting of contracts for product placements: ensuring a positive and prominent depiction of the brand, and negotiating fess which (for studio films, at least), can range "from a few hundred thousand dollars to several million a film".

The increased use of product placement has, however, led to some concerns about its impact on the creative elements of the craft of film and TV production.  Though a judicious use of product placement can be beneficial for everyone involved (not least because the revenues it brings in or discounts it generates can ensure that a project gets made), over-reliance might jeopardize creativity (or at least result in self-censorship for fear of being less palatable to potential advertisers) - hence the Writers Guild of Canada is organizing a meeting for later in April to discuss the matter.

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