Production Lawyer's Guide to Obtaining E&O Insurance, Preventing Litigation

The producer's lawyer should always review plans and contracts for publicity and promotional materials, as well as Web site contents, DVD extras and other companion materials. In more sensitive projects, an insurer may specifically require that the lawyer fully vet every bit of those materials. You can avoid problems later if you include your client's publicity approval rights in distribution contracts for all projects (or at least for docudramas, investigative programs and parody shows).

Also, be careful that your client's publicity campaign does not mislead the public into wrongly believing that a production is related to another show, book, etc., or that it is endorsed by a person or company. Sometimes this is done by direct references to the earlier project, but more often it is accomplished by using similar slogans, visual images, titles, etc. Even if done jokingly, most tie-ins to other projects are risky.

Clear the Music

This is an obvious point, but often production personnel start the process later than they should, or they don't realize how many rights they may need to obtain.

' Watch out for music that is incorporated into the scene while it is being shot. For example, an actor hums or whistles a part of a tune during an important scene. The song that is already part of a key scene will inevitably be the one your client cannot license or only at an exorbitant price.

' Do not let your clients rely on the myth that they can use a certain number of bars of a song for free because it is “fair use.” No matter what they have been told, there is no magic line between the number of notes that can be used as “fair use'” and the number that constitutes copyright infringement. It is an expensive roll of the dice to go to court to find out where a judge would draw that line in your client's case.

' Watch out for sampling. Though the law in this area is not fully resolved, warn your clients that all unlicensed sampling should be considered copyright infringement.

Do not let your clients assume that certain songs are in the public domain. Some songs (like the lyrics to “Happy Birthday”) seem like they must be public domain, but they are not. Also, the best-known version of an old public domain song may be copyrighted, as with nursery rhymes and holiday songs.

' The E&O application asks if the producer has obtained both synchronization and performance licenses on all music. Make sure your clients take care of both. Since music is often one of the last items finished in a show, producers and lawyers need to have an effective tickler system to be certain that the lawyer can review and sign off on music clearances.

' If the client uses pre-recorded music, you need to obtain not only a license from the publisher of the composition (“synch license”), but also one from the copyright owner of the “master recording” (“master license”). You may also have to obtain permission from each artist or musician on the recording, unless you can get a worthwhile indemnity from the master recording owner that the owner's contracts with the musicians and performers on the album gives the master licensor authority to grant this kind of license on their behalf.

' If the client contracts for original music, get full warranties and representations of originality from the composer. Even then, talk to your client about possible similarities to other music. A producer may have requested that the composer provide a song that “sounds like” some specific piece of music. Be careful that what the composer gives your client is not too much like that other piece. Substantial similarity in music can be difficult to disprove, and therefore those cases can be very expensive to litigate.

Think Twice Before Using Clips

While clips sometimes add significantly to a production's quality, the time and expense involved in clearing all needed rights is frequently not worth it. (Note: The term “film clip” or “clip” is used to refer to a preexisting excerpt from other shows or sources that is incorporated into a new production.) These “film clips” may have been recorded on film, tape, kinescope, digitally or any other technological format.

Our industry is filled with confusing information and misleading rumors about clips. Don't let your client succumb to wishful thinking about how easy or cheap it can be to use clips. If the footage pricing seems like a surprisingly good bargain, beware of what your client is getting.

Some clips aren't hard to license. For example, it is fairly simple to get rights to stock shots of wildlife or news footage of heads of state meeting in London. Even with stock shots, make sure that there are good representations and warranties from the source of the clips. Too many clip operations are careless about where they get their footage ' and they rarely have deep pockets. Tell your client that he or she is the one who will get sued for copyright infringement, no matter what the stock house says. Also, some clients need a reminder that the clip source's ownership of physical copies of footage is not the same as ownership of the copyright to that footage. Finally, check out the vendor's licensing form before your client relies too heavily on the footage. Some vendors hide until the last moment that they will warrant little or nothing about the rights to the footage that the producer has already painstakingly chosen and edited into his project.

For American news footage that includes a reporter or anchor, your client will probably have to negotiate with and pay that person separately, unless there are warranties from the broadcaster otherwise. In other countries, consent for such reuses may be part of the reporter's contract with the original broadcaster.

Get an Expert

The real headaches begin if your client decides to use clips from dramatic television or film productions. Lawyers experienced in clip clearances have wryly, but accurately, commented that a producer who wants to use film clips must have “an unlimited budget and an iron stomach.” A single clip from a dramatic film can easily involve a dozen or more releases, each costing a few hundred to a few thousand dollars. Save yourself some brain damage and your client some money; unless the producer's staff has lots of clip experience, convince the producer to hire an outside expert who specializes in clip clearances. Regardless of who clears the clips, you should require a detailed chart that covers all the various rights to be checked and cleared for each clip. Shows with multiple clip clearances need high levels of organization and record keeping.

Many people mistakenly believe that it is “legal” to use certain kinds of clips without permission (or with only some of the many permissions needed). They are told stories of how others have used “X” amount of footage without permission and there was no problem. This does not mean what they did was legal, just that they didn't get caught.

Adding to the confusion are rules in the clip-licensing arena that have changed over time (especially in ambiguous areas around guild payments) and also technical copyright law issues that have never been resolved in the courts. Unfortunately, some sellers of clips and footage make matters worse by giving false reassurances to producers about just how safe or legal it is to use their footage (especially regarding trailers). There are many highly reputable archives and stock footage businesses, but this is an area where “caveat emptor” rules.

Copyright's fair use doctrine may justify unlicensed use of a brief clip in very limited circumstances. However, fair use determination is a case-by-case matter. Therefore it is quite unpopular with E&O insurers, who must weigh their premiums against significant potential defense costs.

Rights Needed

The following is a list of rights that the producer will generally have to obtain for each clip, regardless of its length or prominence in the scene. (Remember that even the use of audio only, as from an unseen TV set, is still clip usage.) If you are dealing with a non-American clip, your client has to consider each of the following rights, but some guilds in other countries allow the original producer to have bought out these reuse rights already.

' To start with, producers need a release from the copyright holder of the clip. Make sure they have the correct owner. This can be especially hard to determine with older films, whose ownership may well have changed several times. Get a warranty and indemnification that this owner has the necessary rights to grant your client a license. (Note: Getting a warranty from the large studios is very difficult.) Standard form clip licenses commonly require the licensee to be responsible for all other licenses and fees for that clip (music, actors, etc.) as a condition of the license, so cutting corners on other licenses can invalidate this essential release.

Be wary of using a clip from a film that is supposedly in the public domain. A copyright expert's advice may be necessary. Also, there are numerous tricks and loopholes that a disgruntled owner will use to make your client pay for what you thought was a public domain film. For example, the owners of the classic film “It's a Wonderful Life” accidentally let the U.S. copyright lapse under the old U.S. system that required copyright renewals after 28 years. A few years ago, the film's owners managed to reassert their control by obtaining a new license to the still-protected music in the film. Now the film itself is still in the public domain, but it can't be broadcast without infringing those secondary music copyrights.

Another area of public-domain problems involves the use of U.S. film trailers (i.e., previews). The peculiarities of old U.S. copyright law have made it hard to know what is safe to use and what isn't. Most American film trailers from before 1960 are probably (note the use of the word “probably”) in the public domain, and are relatively safe to use. They usually failed to carry the copyright notices required by American law of the era (and the owners failed to rectify this error by registering the trailers in the U.S. copyright office). However, each individual trailer may contain pre-existing copyrighted elements such as music or dialogue from an underlying book, and this material may still be protected. Trailers made in 1960-1977 may possibly be in the public domain, assuming that they had no copyright notice and no copyright registration. From 1978 on, assume that all trailers are protected. Despite what some stock houses claim, after 1977 the changes in U.S. copyright laws made it extremely unlikely that a trailer would lose copyright protection even if it lacked a copyright notice. By 1989, notice became optional and thus irrelevant to protection.

' Watch out for the possibility that the film or television show is based on a separately copyrighted underlying work. Use of a clip from that production often involves use of the underlying work as well. You will need to get the permission of the owner of the underlying work if the original producer's contract with the underlying work's owner was not broad enough to cover this kind of reuse.

' For American film and television clips, your client will likely need to make payments to each actor appearing in the clip. SAG and AFTRA provide rules for the amount to be paid for use of an actor's performance in a clip. For pre-1960 clips, SAG has been waiving the permission and payment requirements for theatrical feature films, but only if the film's name is “billboarded” as a voiceover or chyron while the clip is on the screen. According to AFTRA, this waiver does NOT apply to pre-1960 television clips. For 1960 and later clips, SAG requires current consents from ' and payments to ' its members. SAG will allow a star to waive the required scale payments, but your production client must obtain consents and make payments to each of the non-stars in the clip. AFTRA's rules for consents, payments and scales are different from SAG's.

' Watch out for stunts in clips. The acting guilds' rates for reuse of a stunt are high. Many stunts involve multiple performers at once, and each of them must be paid. Contacting that film's stunt coordinator may be the only way to identify a stunt person. If your client is thinking about not paying for a stunt (or any other actor's performance), remember that SAG requires a penalty of triple the scale rate for not trying to locate and pay one of its members in advance for clip usages.

' Your client will need to contact the Directors Guild of America to arrange for payments to the director of the show from which you are getting the clip.

' Likewise, the producer will also need to arrange with the Writers Guild of America to pay the writer(s) of the clip show. The entertainment industry is still working its way through various guild contract negotiations. Reuse issues in these negotiations have focused on new media uses, and it is not yet clear whether there will be a noticeable impact on recent clip rules for use in film and TV when the dust settles.

' If the clip contains any music, the producer will need to pay the copyright owner of that music. Also, if the music in the clip was from a pre-recorded source (a “master recording”), probably a new license will have to be obtained from the owner of the master recording. Regardless of the source of the music, the American Federation of Musicians will require that your client pay each of the musicians who performed the music in that clip. (If the music in the clip you have chosen was performed by a full orchestra, this last element can be quite expensive.) Some clip users will avoid this expense by removing all music from the original clip and then inserting their own music.

' Watch out for separately copyrighted or trademarked items in the clip, such as photographs, magazine covers, artwork, etc. Clip licensing could be outside the scope of any releases obtained for the original production.

Conclusion

A final note on clearance procedures: The best way to minimize problems is to look for them early, before they become difficult or expensive to fix. Push your clients to get you and their insurance brokers involved early in any projects with special issues. And remember that if you do run up against clearance problems in a project, a little flexibility and creativity go a long way toward fixing almost anything.

Previous installments of this article discussed errors and omissions insurance coverage and clearance guidelines for vetting dramatic works. This final segment will wrap up the clearance guidelines discussion, including music and film clips.

Show Elements Used in
Promotion or Publicity
May Create Problems

Some material might be acceptable within the context of the show as a whole, but might not be when seen out of context. For example, fair use of copyrighted material in the show itself may no longer be fair use when used in an ad for the show. Or a reference to a celebrity might be innocuous in a comedy show, but in ads it might falsely suggest that this star endorses or participated in the show. Also, documentaries and docudramas often include scenes or statements that invite defamation claims if seen outside of the more balanced contents of the full show. When there are problem areas, your client needs to provide pre-vetted promotional materials to distributors, or contractually put those distributors on notice that they may not include specific problem materials in publicity.

The producer's lawyer should always review plans and contracts for publicity and promotional materials, as well as Web site contents, DVD extras and other companion materials. In more sensitive projects, an insurer may specifically require that the lawyer fully vet every bit of those materials. You can avoid problems later if you include your client's publicity approval rights in distribution contracts for all projects (or at least for docudramas, investigative programs and parody shows).

Also, be careful that your client's publicity campaign does not mislead the public into wrongly believing that a production is related to another show, book, etc., or that it is endorsed by a person or company. Sometimes this is done by direct references to the earlier project, but more often it is accomplished by using similar slogans, visual images, titles, etc. Even if done jokingly, most tie-ins to other projects are risky.

Clear the Music

This is an obvious point, but often production personnel start the process later than they should, or they don't realize how many rights they may need to obtain.

' Watch out for music that is incorporated into the scene while it is being shot. For example, an actor hums or whistles a part of a tune during an important scene. The song that is already part of a key scene will inevitably be the one your client cannot license or only at an exorbitant price.

' Do not let your clients rely on the myth that they can use a certain number of bars of a song for free because it is “fair use.” No matter what they have been told, there is no magic line between the number of notes that can be used as “fair use'” and the number that constitutes copyright infringement. It is an expensive roll of the dice to go to court to find out where a judge would draw that line in your client's case.

' Watch out for sampling. Though the law in this area is not fully resolved, warn your clients that all unlicensed sampling should be considered copyright infringement.

Do not let your clients assume that certain songs are in the public domain. Some songs (like the lyrics to “Happy Birthday”) seem like they must be public domain, but they are not. Also, the best-known version of an old public domain song may be copyrighted, as with nursery rhymes and holiday songs.

' The E&O application asks if the producer has obtained both synchronization and performance licenses on all music. Make sure your clients take care of both. Since music is often one of the last items finished in a show, producers and lawyers need to have an effective tickler system to be certain that the lawyer can review and sign off on music clearances.

' If the client uses pre-recorded music, you need to obtain not only a license from the publisher of the composition (“synch license”), but also one from the copyright owner of the “master recording” (“master license”). You may also have to obtain permission from each artist or musician on the recording, unless you can get a worthwhile indemnity from the master recording owner that the owner's contracts with the musicians and performers on the album gives the master licensor authority to grant this kind of license on their behalf.

' If the client contracts for original music, get full warranties and representations of originality from the composer. Even then, talk to your client about possible similarities to other music. A producer may have requested that the composer provide a song that “sounds like” some specific piece of music. Be careful that what the composer gives your client is not too much like that other piece. Substantial similarity in music can be difficult to disprove, and therefore those cases can be very expensive to litigate.

Think Twice Before Using Clips

While clips sometimes add significantly to a production's quality, the time and expense involved in clearing all needed rights is frequently not worth it. (Note: The term “film clip” or “clip” is used to refer to a preexisting excerpt from other shows or sources that is incorporated into a new production.) These “film clips” may have been recorded on film, tape, kinescope, digitally or any other technological format.

Our industry is filled with confusing information and misleading rumors about clips. Don't let your client succumb to wishful thinking about how easy or cheap it can be to use clips. If the footage pricing seems like a surprisingly good bargain, beware of what your client is getting.

Some clips aren't hard to license. For example, it is fairly simple to get rights to stock shots of wildlife or news footage of heads of state meeting in London. Even with stock shots, make sure that there are good representations and warranties from the source of the clips. Too many clip operations are careless about where they get their footage ' and they rarely have deep pockets. Tell your client that he or she is the one who will get sued for copyright infringement, no matter what the stock house says. Also, some clients need a reminder that the clip source's ownership of physical copies of footage is not the same as ownership of the copyright to that footage. Finally, check out the vendor's licensing form before your client relies too heavily on the footage. Some vendors hide until the last moment that they will warrant little or nothing about the rights to the footage that the producer has already painstakingly chosen and edited into his project.

For American news footage that includes a reporter or anchor, your client will probably have to negotiate with and pay that person separately, unless there are warranties from the broadcaster otherwise. In other countries, consent for such reuses may be part of the reporter's contract with the original broadcaster.

Get an Expert

The real headaches begin if your client decides to use clips from dramatic television or film productions. Lawyers experienced in clip clearances have wryly, but accurately, commented that a producer who wants to use film clips must have “an unlimited budget and an iron stomach.” A single clip from a dramatic film can easily involve a dozen or more releases, each costing a few hundred to a few thousand dollars. Save yourself some brain damage and your client some money; unless the producer's staff has lots of clip experience, convince the producer to hire an outside expert who specializes in clip clearances. Regardless of who clears the clips, you should require a detailed chart that covers all the various rights to be checked and cleared for each clip. Shows with multiple clip clearances need high levels of organization and record keeping.

Many people mistakenly believe that it is “legal” to use certain kinds of clips without permission (or with only some of the many permissions needed). They are told stories of how others have used “X” amount of footage without permission and there was no problem. This does not mean what they did was legal, just that they didn't get caught.

Adding to the confusion are rules in the clip-licensing arena that have changed over time (especially in ambiguous areas around guild payments) and also technical copyright law issues that have never been resolved in the courts. Unfortunately, some sellers of clips and footage make matters worse by giving false reassurances to producers about just how safe or legal it is to use their footage (especially regarding trailers). There are many highly reputable archives and stock footage businesses, but this is an area where “caveat emptor” rules.

Copyright's fair use doctrine may justify unlicensed use of a brief clip in very limited circumstances. However, fair use determination is a case-by-case matter. Therefore it is quite unpopular with E&O insurers, who must weigh their premiums against significant potential defense costs.

Rights Needed

The following is a list of rights that the producer will generally have to obtain for each clip, regardless of its length or prominence in the scene. (Remember that even the use of audio only, as from an unseen TV set, is still clip usage.) If you are dealing with a non-American clip, your client has to consider each of the following rights, but some guilds in other countries allow the original producer to have bought out these reuse rights already.

' To start with, producers need a release from the copyright holder of the clip. Make sure they have the correct owner. This can be especially hard to determine with older films, whose ownership may well have changed several times. Get a warranty and indemnification that this owner has the necessary rights to grant your client a license. (Note: Getting a warranty from the large studios is very difficult.) Standard form clip licenses commonly require the licensee to be responsible for all other licenses and fees for that clip (music, actors, etc.) as a condition of the license, so cutting corners on other licenses can invalidate this essential release.

Be wary of using a clip from a film that is supposedly in the public domain. A copyright expert's advice may be necessary. Also, there are numerous tricks and loopholes that a disgruntled owner will use to make your client pay for what you thought was a public domain film. For example, the owners of the classic film “It's a Wonderful Life” accidentally let the U.S. copyright lapse under the old U.S. system that required copyright renewals after 28 years. A few years ago, the film's owners managed to reassert their control by obtaining a new license to the still-protected music in the film. Now the film itself is still in the public domain, but it can't be broadcast without infringing those secondary music copyrights.

Another area of public-domain problems involves the use of U.S. film trailers (i.e., previews). The peculiarities of old U.S. copyright law have made it hard to know what is safe to use and what isn't. Most American film trailers from before 1960 are probably (note the use of the word “probably”) in the public domain, and are relatively safe to use. They usually failed to carry the copyright notices required by American law of the era (and the owners failed to rectify this error by registering the trailers in the U.S. copyright office). However, each individual trailer may contain pre-existing copyrighted elements such as music or dialogue from an underlying book, and this material may still be protected. Trailers made in 1960-1977 may possibly be in the public domain, assuming that they had no copyright notice and no copyright registration. From 1978 on, assume that all trailers are protected. Despite what some stock houses claim, after 1977 the changes in U.S. copyright laws made it extremely unlikely that a trailer would lose copyright protection even if it lacked a copyright notice. By 1989, notice became optional and thus irrelevant to protection.

' Watch out for the possibility that the film or television show is based on a separately copyrighted underlying work. Use of a clip from that production often involves use of the underlying work as well. You will need to get the permission of the owner of the underlying work if the original producer's contract with the underlying work's owner was not broad enough to cover this kind of reuse.

' For American film and television clips, your client will likely need to make payments to each actor appearing in the clip. SAG and AFTRA provide rules for the amount to be paid for use of an actor's performance in a clip. For pre-1960 clips, SAG has been waiving the permission and payment requirements for theatrical feature films, but only if the film's name is “billboarded” as a voiceover or chyron while the clip is on the screen. According to AFTRA, this waiver does NOT apply to pre-1960 television clips. For 1960 and later clips, SAG requires current consents from ' and payments to ' its members. SAG will allow a star to waive the required scale payments, but your production client must obtain consents and make payments to each of the non-stars in the clip. AFTRA's rules for consents, payments and scales are different from SAG's.

' Watch out for stunts in clips. The acting guilds' rates for reuse of a stunt are high. Many stunts involve multiple performers at once, and each of them must be paid. Contacting that film's stunt coordinator may be the only way to identify a stunt person. If your client is thinking about not paying for a stunt (or any other actor's performance), remember that SAG requires a penalty of triple the scale rate for not trying to locate and pay one of its members in advance for clip usages.

' Your client will need to contact the Directors Guild of America to arrange for payments to the director of the show from which you are getting the clip.

' Likewise, the producer will also need to arrange with the Writers Guild of America to pay the writer(s) of the clip show. The entertainment industry is still working its way through various guild contract negotiations. Reuse issues in these negotiations have focused on new media uses, and it is not yet clear whether there will be a noticeable impact on recent clip rules for use in film and TV when the dust settles.

' If the clip contains any music, the producer will need to pay the copyright owner of that music. Also, if the music in the clip was from a pre-recorded source (a “master recording”), probably a new license will have to be obtained from the owner of the master recording. Regardless of the source of the music, the American Federation of Musicians will require that your client pay each of the musicians who performed the music in that clip. (If the music in the clip you have chosen was performed by a full orchestra, this last element can be quite expensive.) Some clip users will avoid this expense by removing all music from the original clip and then inserting their own music.

' Watch out for separately copyrighted or trademarked items in the clip, such as photographs, magazine covers, artwork, etc. Clip licensing could be outside the scope of any releases obtained for the original production.

Conclusion

A final note on clearance procedures: The best way to minimize problems is to look for them early, before they become difficult or expensive to fix. Push your clients to get you and their insurance brokers involved early in any projects with special issues. And remember that if you do run up against clearance problems in a project, a little flexibility and creativity go a long way toward fixing almost anything.