“A Filmmaker's Guide to Avoiding Litigation”
By Glenn T. Litwak
Everyone would like to avoid litigation and the time, expense and stress it entails. This article specifies 23 points to assist filmmakers in avoiding or minimizing lawsuits, or maximizing their position if litigation is unavoidable.
GET CONTRACTS IN WRITING
Although most oral contracts are enforceable, their existence is more difficult to prove in court. Written contracts help avoid misunderstandings and force the parties to clarify potential disagreements. Some of the problems associated with alleged oral agreements were recently addressed in the Frank Dux v. Jean-Claude Van Damme trial which aired on the Court T.V. channel. Mr. Dux claimed he had an oral agreement with Van Damme whereby Dux would receive 2.5% of the gross profits from the film "The Quest." Van Damme denied the existence and terms of the alleged oral agreement. The jury's verdict was in Van Damme's favor.
INSURANCE
Make sure you understand what kind of insurance you have, the deductible, the limits of liability, exclusions, etc. Motion picture insurance will cost approximately 2-4% of the total budget. In addition, state law requires worker's compensation insurance. In a recent case I handled, a filmmaker did not obtain insurance for his negative. Four rolls of film were misplaced by a post production facility. The post production facility had insurance but the carrier denied coverage since loss of film was excluded by their policy (because it is usually covered by the filmmaker's policy).
HAVE AN ARBITRATION CLAUSE
Include an arbitration clause in most contracts. Usually, if the case is arbitrated, the attorney's fees will be reduced, and you will get a quicker resolution.
HAVE AN ATTORNEY'S FEES PROVISION
Have your contract provide that the prevailing party in any dispute will be entitled to recover their reasonable attorney's fees and costs. This type of provision will usually be beneficial if a dispute arises.
INDEMNITY CLAUSE
Make sure you have a clause indemnifying you for breach of any warranties by the other party to the contract.
VENUE
Try to make sure that the venue is in California if you live and work in California.
CHOICE OF LAW
Make sure California law applies if you reside and work in California.
INVESTIGATE PARTIES
Check out the people you are dealing with. For instance, if you are considering a distributor for your film, research their reputation. Some distributors have a reputation for understating income and overstating expenses.
HAVE AN ATTORNEY REVIEW YOUR CONTRACT
Use an experienced attorney to review and negotiate your contract.
MAKE SURE YOU HAVE A CLEAR CHAIN OF TITLE TO ALL INTELLECTUAL PROPERTY
Make sure you clear any and all rights, including music rights.
DOCUMENT AS MUCH AS POSSIBLE
For instance, if you are a writer, a non-disclosure agreement will provide that the person you pitch your project to will keep the story or script confidential. You can also send a letter confirming what was discussed at a meeting or bring a witness with you to important meetings.
KEEP COPIES
Keep copies of all pertinent agreements, letters, notes, phone messages, etc. This will help your attorney in the event of litigation.
BE AWARE OF THE STATUTE OF LIMITATIONS
The statute of limitations for a written contract is four years; for an oral contract, two years; for fraud, three years; and for personal injury, one year. If you fail to file your lawsuit within the required time, you will lose the right to recover for your damages.
WARRANTIES AND REPRESENTATIONS
Try to limit your own warranties and representations. For instance, add the phrase "to the best of my knowledge and ability after a reasonable inquiry" to any warranties you agree to.
UNDERSTAND THE CONTRACT
Make sure you understand all terms and conditions of the contract including terms such as net profit participation, etc.
COPYRIGHTS
Registration with the Copyright Office is not necessary to be entitled to a copyright, but additional remedies are available if you register your copyright (such as attorney's fees and statutory damages).
AVOID GIVING ANYONE THE RIGHT TO INJUNCTIVE RELIEF
For instance, an injunction could stop the production or distribution of your film
EMPLOYEE PROBLEMS
Employee problems may include harassment, disability, wrongful termination, etc. If you are an employer, have written procedures for employees and follow them. Do not tolerate discrimination or harassment of employees.
COMPLIANCE WITH UNION RULES
Make sure you comply with SAG rules, etc.
AVOID CLAIMS OF COPYRIGHT INFRINGEMENT
An idea is not copyrightable. However, the expression of an idea is copyrightable. Recently, there has been a proliferation of story theft claims. For instance, Barbara Chase Riboud sued Dreamworks claiming the movie "Amistad" was based on her novel Echo of Lions.
ALWAYS BE OPEN TO SETTLEMENT
A settlement will cut off your attorney's fees and you will have a definite resolution of the dispute.
OBTAIN A WRITTEN CONTRACT WITH YOUR LAWYER
Have a retainer agreement with your lawyer.
CLIENT'S EXPECTATIONS
Define your expectations. Are you pursuing litigation for the principle? Can you afford to spend money to enforce a principle? You don't want to spend $50,000.00 litigating a case to recover only $10,000.00. Also, don't rely too much on high profile cases when evaluating your own potential lawsuit. Many times, cases that were front page news when big verdicts were returned get less press attention when they are reduced or overturned on post trial motions or appeal.
