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"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 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.
©
GLENN T. LITWAK, 1998. ALL RIGHTS RESERVED
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