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SUBMISSIONS AGREEMENTS AND PROTECTING MATERIAL UNDER IMPLIED CONTRACT
AND OTHER LEGAL PRINCIPALS

Outline for Seminar Given by Harris Tulchin at University of California, Los Angeles, and at Beverly Hills, CA Interactive Finance Meeting of International Interactive Communications Society


SUBMISSIONS AGREEMENTS AND PROTECTING MATERIAL UNDER IMPLIED CONTRACT AND OTHER LEGAL PRINCIPALS

A. BASIC PROVISIONS OF A SUBMISSION AGREEMENT

  • 1. PARTIES: Identify the parties in detail.
  • 2. MATERIAL SUBMITTED: Identify the material being submitted in detail.
  • 3. NUMEROUS SUBMISSIONS; OTHER PROJECTS: Statement indicating that the multimedia company receives numerous submissions that such submissions may be similar, or identical to the developer's submission, or that the company, and its employees may have developed a similar project internally.
  • 4. REFUSAL OF SUBMISSION: An acknowledgement that the multimedia company would refuse to accept and evaluate the submission in absence of the submission agreement.
  • 5. DEVELOPER RETAINS ALL RIGHTS: A statement that the developer retains all rights to the submission.
  • 6. NO FIDUCIARY OR CONFIDENTIAL RELATIONSHIP: An acknowledgement that no fiduciary or confidential relationship exists between the developer, and the multimedia company.
    a. This is an extremely dangerous provision, especially if the developer wants to maintain the position that the material submitted is confidential or a trade secret.
    b. If there is one item that the developer can get the multimedia company to change, this would be it.
    c. Get the multimedia company to acknowledge that the material is confidential and a trade secret and will not be disclosed to any third party.
    d. Also try to insert some of the other important clauses protecting use and disclosure of the material that is generally incorporated into non-disclosure agreements.
  • 7. PROMISE TO READ MATERIAL: An undertaking to read, and evaluate the material by the multimedia company.
  • 8. MATERIAL IS ORIGINAL: A representation and warranty that the material is original to the developer, and that the developer owns all rights, title, and interest in and to the material.
  • 9. INDEMNITY FROM DEVELOPER: An indemnity by the developer to the multimedia company from and against any claims, expenses, losses, and liabilities that may be asserted against the company in connection with the material, or any use thereof, including without limitation, those claims arising from breach of warranties and representations given by the developer.
    a. This is a very broad provision. It is almost unconscionable, particularly with respect to the indemnity for use of the material.
  • 10. USE OF UNPROTECTED MATERIAL: An acknowledgement that the multimedia company may use, without obligation to the developer any material which is not protectable as literary property under the laws of plagiarism, copyright, or which a member of the general public, or a third party would be free to use, or which is in the public domain. This material is normally referred to as unprotected material.
  • 11. USE OF SUBMITTED MATERIAL: The multimedia company agrees that if they use, or cause to be used, any of the protected material so long as it has not been obtained from, or independently created by another source, the multimedia company will pay, or cause to be paid to the developer an amount which is comparable to the compensation customarily paid for similar material.
    a. This provision may or may not be included in a submission agreement.
    b. I've seen agreements where it's limited to something like Writers Guild minimum scale.
    c. I've seen other provisions where the parties agreed to negotiate a reasonable price.
    d. This particular paragraph allows the use of the material subject to a payment. This is a very dangerous provision, because you as a developer may not want any such use. This is another area where you, as a developer have to be very careful in regard to these submission agreements.
  • 12. WRITTEN NOTICE OF CLAIMS: The developer is generally required to give written notice of any claim within 60 days in which the developer learns of a claim, or has facts sufficient to have knowledge of a claim, or a breach of failure to perform under the submission agreement.
    a. The failure to give notice is deemed a waiver of any rights that the developer may have for such claim, breach, or failure to perform.
    b. The multimedia company then has 60 days in which to cure a breach of failure to perform, at which point the developer can file a demand for arbitration.
    c. Again, this provision is very burdensome. It places time limits, and dates on the developer which can easily be missed.
  • 13. ARBITRATION PROVISION: This particular agreement has an arbitration provision which provides that disputes would be resolved not in the courts, but by arbitration for the American Arbitration Association.
    a. Generally, you provide that the arbitrator will be familiar with the computer, entertainment, and multimedia industries.
    b. There should be one arbitrator.
    c. Many companies, particularly major companies, do not favor arbitration because generally a claim is not going to be brought by the company, but by the submitter, and it is much more costly and expensive to resolve a dispute in the court system.
    d. The well capitalized companies can bury individuals in the costs and expenses of a 5 year litigation. So, in many of these agreements you won't see arbitration provisions.
  • 14. RELEASE FROM LOSS OR DAMAGE: There is generally a provision that provides that the multimedia company is released from all liability for loss, or other damage to the copies and materials submitted.
    a. This also can be a dangerous provision, particularly if the material winds its way up into the hands of a third party, and the clause can be construed as a waiver of liability for release of the material to a third party.
  • 15. NO ORAL AGREEMENTS: There is generally a provision regarding no oral agreements between the parties concerning the ideas, formats, plots, characters, or other materials submitted, and that the submission agreement is the entire agreement between the parties.
  • 16. WRITTEN FORMAL AGREEMENT: There is also a provision which indicates that no obligations exist, or shall be deemed to exist between the parties until a more formal written agreement has been prepared, and outlines all of the rights and obligations between the parties.
  • 17. UNENFORCEABLE PROVISIONS: The agreement generally contains a provision which provides that if any term, or provision is void, or unenforceable, the balance of the terms will remain in full force and effect.
  • 18. CHOICE OF LAW: Generally, the agreements provide that California law will apply regardless of where the agreement was executed or entered into.
  • 19. AMENDMENTS IN WRITING: Finally, any modification to the agreement must be signed by both parties in writing.
B. POSSIBLE REMEDIES
  • 1.ADHESION CONTRACTS: These agreements are generally adhesion contracts. Normally, there is no negotiation on them. If you want to submit your material, generally, you are going to have to sign one of these agreements as is.
    a. NO MODIFICATION: Only once in a while have I ever seen any of the terms (which are generally prepared by a law firm) modified. The executives are advised that the terms can't be changed.
    b. EXPENSIVE TO NEGOTIATE: As a practical matter, it's very expensive to have a lawyer contact the legal department of a studio, or multimedia company and engage in negotiation of a submission agreement just for the simple right to submit material. So, generally, these agreements, if they're signed, are signed as is.
  • 2. NO BARGAINING POWER: There is a principal of law called the Adhesion Contract where a contract can be held unenforceable when one party has absolutely no bargaining power, and has no ability to change the terms and conditions of the agreement as submitted.
    a. The principal is similar to the parking ticket that you get at the parking garage, which essentially says "this contract limits our liability." There is no bargaining on that agreement, and courts have held that certain over-reaching provisions in such agreements are contracts of adhesion -- and therefore unenforceable.
    b. Although I don't have any specific case law to support it in the film business, or multimedia business, it is my opinion that notwithstanding any signature, a provision of a submission agreement which is overreaching, unconscionable, against public policy, and where there is no reasonable opportunity to bargain regarding terms and conditions, a good argument can be made that these submission agreements are unenforceable where you can show that your material has actually been misappropriated.
  • 3. THE LANHAM ACT: There is also another area of law that has become widely litigated in the past few years known as the Lanham Act, which is a federal statute which protects against unfair competition, misappropriation, passing off, and false advertising -Section 43 of 15 USC 1125.
    a. Section 43(a) provides:
    Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any work, term, name, symbol or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact which --
    1. is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such with another person, or as to the origin, sponsorship or approval of his or her goods, services, or commercial activities by another person, or
    2. in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or another person's goods, services or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
  • 4. MORAL RIGHTS: Another area of law in which there is increasing litigation, particularly internationally, is the issue of moral rights. Moral rights are essentially the right of the author to maintain certain control over his or her work, even after it is used or sold to another. These rights include:
    a. Right of Paternity: The right to claim authorship of or credit for the work (the right of paternity), and
    b. Right of Integrity: The right to object to any distortion or mutilation, or the modification of the work (the right of integrity).
    c. Moral rights are considered separate and distinct from the economic rights that a copyright bestows on its owner.
    d. Generally, moral rights cannot be waived, are perpetual, and are not subject to the work-for-hire doctrine, and may be inherited by the author's heirs. They may even exist in foreign countries, even though the work was created in the United States by a U.S. citizen.
    e. Under these principles, an author, perhaps living in a foreign country where moral rights are more readily recognized, or even in the United States, where indeed, under these submission agreements it's arguable whether the moral rights have been waived, one could conceivably bring a claim under a theory that the right of paternity, and the right of integrity of the author have been breached notwithstanding the signing of a submission agreement.

II.CONTRACT LAW AS A REMEDY FOR INTELLECTUAL PROPERTY THEFT

A. There are a few cases involving the motion picture industry that illustrate how one can protect a treatment or story idea by either oral, or implied contracts.

  • 1. There are many situations in which submission agreements are never signed.
  • 2. It was probably as a result of these decisions that submission agreements became more universally used by various companies involved in the film, television, and multimedia business.
  • 3. While ideas may not be protected under copyright law, they may be protected under express, or implied contract law. The submitter needs to get the recipient to agree to pay for the material.
  • 4. Obviously, the best way to protect oneself is to have a written agreement covering all of the terms regarding use of your material. However, due to the impracticality of negotiating these agreements before decisions are made, many times no written agreements are used.
B. CREATING AN IMPLIED CONTRACT:
  • 1. STATE YOU EXPECT TO BE PAID: Whenever pitching an idea, it is important to start off a meeting, and hopefully have a witness, where you say, essentially, "Before I tell you my idea, I want to make sure you understand I'm telling you this idea with the understanding that if you decide to use it, I expect to receive reasonable compensation."
  • 2. GET AN ACKNOWLEDGEMENT: The producer, or multimedia executive will generally nod his head, and say, "Of course." If the executive does not indicate that he or she agrees to the terms, it's probably not a good idea to pitch the idea. You should probably leave.
  • 3. CREATE A PAPER TRAIL: Once the pitch is made, obviously a confirming, non-threatening letter should be written confirming the meeting, confirming the fact that the project was pitched, and something like, "As we agreed, if you decide to exploit this material, we will negotiate in good faith reasonable compensation."
  • 4. CONFIDENTIALITY: With respect to trade secrets, and non-disclosure, it's also important to say in this meeting, and confirm in writing, that, "I am telling you my idea, or pitch, or project with the understanding that you will keep it confidential, and not expose it to anyone else without my express written permission."
C. DESNEY v. WILDER: The first case in this area is the Billy Wilder case known as Desney v. Wilder (1956). In 1949, the Plaintiff telephoned the famous director Billy Wilder's office at the Paramount lot, and spoke to his secretary. The Plaintiff had a story idea based upon the life of a boy named Floyd Collins, who had been trapped in a cave. The incident had been subject to widespread news coverage for several weeks back in the 1920's.
  • 1. The Plaintiff told the secretary he had a 65 page treatment, and wanted it submitted to Wilder, and the secretary said, "Look, Wilder isn't going to read this." She offered to have the script department put it in synopsis form.
  • 2. The Plaintiff said he'd prefer to condense it himself. He did so, and called back 2 days later.
  • 3. The secretary asked him to read his 3 page outline over the phone, and he did so.
  • 4. She took down the story in shorthand, and said she would discuss it with Wilder.
  • 5. The Plaintiff then told her that he expected to be paid for the story if Wilder used it.
  • 6. Later the Plaintiff discovered that Paramount had made a movie about the Floyd Collins, which included a fictionalized incident that the Plaintiff had created himself.
  • 7. The Plaintiff sued, and won, based upon the theory of breach of implied contract.
  • 8. He did not sue on the basis of copyright infringement simply because the story was based largely upon true historical events in the public domain.
D. BLAUSTEIN v. BURTON: The next case involves Richard Burton and Elizabeth Taylor, and is known as Blaustein v. Burton (1970).
  • 1. In that case, the Plaintiff/Producer conceived of the idea of producing a movie based on Shakespeare's play, THE TAMING OF THE SHREW, starring Richard Burton and Elizabeth Taylor, with Franco Zefferelli as the director.
  • 2. The Plaintiff approached the Burtons' agent about their availability, and suggested he had something in mind for them.
  • 3. The agent said he would like to hear the Plaintiff's idea, and the Plaintiff disclosed it.
  • 4. The agent liked the idea, and the Plaintiff met with the Burtons, who said they would like to do the movie.
  • 5. Later, the Burtons made the movie with Zefferelli, but without the Plaintiff's participation.
  • 6. The Plaintiff sued, alleging that the circumstances surrounding disclosure of idea were such that would imply a contract.
  • 7. The Court held that the circumstances, including the disclosure, created an implied, in fact contract.
  • 8. Analysis - here the Plaintiff didn't have a story idea, he simply had a public domain story, some casting ideas, and a suggestion for a director. Shakespeare's story is in the public domain, and the Burtons had just as much right to it as the Plaintiff.
  • 9. There was never even an explicit agreement between and among the parties that the Plaintiff would get to produce the project.
  • 10. In this particular case, because the Producer was a very experienced Producer, the court construed an implied contract between the parties that if the Burtons got together with Zefferelli to make a TAMING OF THE SHREW, that the Producer would be entitled to produce and receive a fee.
  • 11. This is a very special ruling. If the Producer was not experienced, and didn't have the kind of clout and relationships that this particular Producer had, the Court probably would not have found that an implied agreement existed.
  • 12. The Producer had a reasonable expectation that if he disclosed his story idea, casting suggestions, and suggested director, and the movie was actually made, he would benefit by being the Producer of the project.
  • 13. The point is that under certain special circumstances a court might construct an implied contract between the parties depending on the special facts and circumstances.

 

 

 

harris tulchin About Harris Tulchin & Associates

Harris Tulchin & Associates is an international entertainment, multimedia & intellectual property law firm created to provide legal and business services for all phases of the development, financing, production and distribution of entertainment products and services and multimedia software on a timely and cost effective basis to its clients in the motion picture, television, music, multimedia and online industries.
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