Financier Got Bona Fide Right To Screenplay Copyright

The U.S. District Court for the Southern District of New York decided that an investor obtained the copyright to a film screenplay, even if the finance advisor for the production company in which the screenplay author had an equity interest fraudulently induced the author to assign the copyright to the production company. McDonald v. Brown, 12 Civ. 7109.

Christian McDonald wrote the screenplay Remnants and co-formed Res Ipsa Loquitur Productions to produce an independent film. Barry Jay Weiss was hired to arrange the film financing. Res Ipsa then joined with Cine Globe Productions to form Remnant Productions LLC. Meanwhile, McDonald assigned his screenplay copyright to Res Ipsa, then to Remnant Productions. McDonald claimed Reiss promised that the author would serve as the film's director and retain the screenplay copyright until his film directing and writing services were fulfilled. Thomas V. Conigliaro was among those who provided the financing for the Remnants film project.

However, a different director was hired to complete the movie. In addition, a dispute arose between Conigliaro and the Remnant parties. Conigliaro filed suit (though not against McDonald) alleging misrepresentation and breach of fiduciary obligation. That case was settled in 2011 with the assets of Remnant Productions, including the screenplay copyright, transferred to Conigliaro. McDonald later filed his own suit, including against Barry Jay Reiss (though McDonald and Reiss settled) and for copyright infringement, including against Conigliaro.

Granting summary judgment for the Conigliaro defendants, District Judge William H. Pauley III noted: 'McDonald has presented no evidence that Conigliaro or his attorney had notice of Reiss['s] ' purported fraudulent promises that McDonald would serve as director and retain the screenplay copyright. Because Conigliaro knew only of McDonald's compensation under the [Remnant Productions] operating agreement ', no reasonable jury could find that Conigliaro was on notice of Reiss's purported fraud.'

But McDonald argued the 2011 Conigliaro/Remnant parties' settlement voided his earlier copyright assignment for which he argued he had now received no legal 'consideration.' District Judge Pauley found, however, that 'when McDonald's business partner executed the [Remnant Productions] operating agreement, McDonald's partnership received a 49.5% ownership interest in a production company with the capacity to turn McDonald's screenplay into a film that could be distributed commercially. That represents valid consideration.'

Stan Soocher is Editor-in-Chief of Entertainment Law & Finance and a tenured Associate Professor of Music & Entertainment Industry Studies at the University of Colorado's Denver Campus. He can be reached at [email protected] or via www.stansoocher.com.

The U.S. District Court for the Southern District of New York decided that an investor obtained the copyright to a film screenplay, even if the finance advisor for the production company in which the screenplay author had an equity interest fraudulently induced the author to assign the copyright to the production company. McDonald v. Brown, 12 Civ. 7109.

Christian McDonald wrote the screenplay Remnants and co-formed Res Ipsa Loquitur Productions to produce an independent film. Barry Jay Weiss was hired to arrange the film financing. Res Ipsa then joined with Cine Globe Productions to form Remnant Productions LLC. Meanwhile, McDonald assigned his screenplay copyright to Res Ipsa, then to Remnant Productions. McDonald claimed Reiss promised that the author would serve as the film's director and retain the screenplay copyright until his film directing and writing services were fulfilled. Thomas V. Conigliaro was among those who provided the financing for the Remnants film project.

However, a different director was hired to complete the movie. In addition, a dispute arose between Conigliaro and the Remnant parties. Conigliaro filed suit (though not against McDonald) alleging misrepresentation and breach of fiduciary obligation. That case was settled in 2011 with the assets of Remnant Productions, including the screenplay copyright, transferred to Conigliaro. McDonald later filed his own suit, including against Barry Jay Reiss (though McDonald and Reiss settled) and for copyright infringement, including against Conigliaro.

Granting summary judgment for the Conigliaro defendants, District Judge William H. Pauley III noted: 'McDonald has presented no evidence that Conigliaro or his attorney had notice of Reiss['s] ' purported fraudulent promises that McDonald would serve as director and retain the screenplay copyright. Because Conigliaro knew only of McDonald's compensation under the [Remnant Productions] operating agreement ', no reasonable jury could find that Conigliaro was on notice of Reiss's purported fraud.'

But McDonald argued the 2011 Conigliaro/Remnant parties' settlement voided his earlier copyright assignment for which he argued he had now received no legal 'consideration.' District Judge Pauley found, however, that 'when McDonald's business partner executed the [Remnant Productions] operating agreement, McDonald's partnership received a 49.5% ownership interest in a production company with the capacity to turn McDonald's screenplay into a film that could be distributed commercially. That represents valid consideration.'

Stan Soocher is Editor-in-Chief of Entertainment Law & Finance and a tenured Associate Professor of Music & Entertainment Industry Studies at the University of Colorado's Denver Campus. He can be reached at [email protected] or via www.stansoocher.com.