Fox partner Jeffrey Kravitz was quoted extensively on the controversy surrounding actor Thomas Gibson, who was recently let go from ABC drama Criminal Minds following an alleged physical altercation with a writer on set. We invite you to read the full piece featuring Jeff’s comments.
It looks like virtual reality (VR) has found its killer app, and it’s not VR at all.
Pokémon Go is an augmented reality (AR) application that has exploded in popularity since its recent release. AR differs from VR in that it offers a live view of the physical environment augmented by a digital overlay. The game is based on a Nintendo Game Boy game that dates back to 1995. The object is to capture and train a variety of creatures called Pokémon. Pokémon Go takes the gameplay off the computer and into the world. The app uses a map of the player’s actual location and adds digital landmarks to which the player can travel in order to engage in gameplay. As players move within their real world surroundings, their avatar moves within the game’s map. At certain points in the game, players can switch out of map mode to view the digital characters in AR mode, using their phone’s camera and gyroscope to display an image of a Pokémon as though it were in the real world.
Although VR has been getting a lot a buzz, it hasn’t yet broken out. The success of Pokémon Go may be a signal that developers should be shifting their focus, at least for the short term. A great deal of the game’s success is no doubt due to the developer’s creative reimagining of a beloved classic, but it also says something about the market. VR is an immersive experience. At its most advanced, viewers wear goggles that shut off the outside world completely. AR offers the excitement of participation in a digital universe, while also permitting social interaction. Users can also experience AR using only their cell phones, with no other equipment required.
Perhaps not surprisingly, the popularity of Pokémon Go has raised some interesting legal issues. We’ll be posting on some of those over the next week.
The biggest takeaway from VidCon this year is the increasing presence of companies with no direct relationship to online video. Sure, it’s not a big surprise to see movie promotions, such as the big booth for Secret Life of Pets, but there were also booths hawking products from candy to cars. The marketers who have been flocking to ComicCon for years know that engaged superfans have the power to build buzz for their goods. VidCon is another powerful venue to find those fans, a further testament to the growing importance of online video in the entertainment ecosystem.
Monica Bral writes:
The rights to “This Land is Your Land”, one of America’s most famous folk songs, is in dispute. The outcome of a dispute about whether the song is in the public domain could change forever how this and potentially other historic songs are used.
On June 14, 2016, Plaintiffs James Saint-Amour and Alena Ileva, doing business as Satorii, a New York band, filed a class action lawsuit against Defendants, The Richmond Organization, Inc. and Ludlow Music, Inc. Satorii seeks a determination that “This Land is Your Land” is in the public domain. Once a work’s copyright term expires, it enters into the public domain and the public is free to use the song without obtaining permission from the prior copyright holders.
The melody of “This Land is Your Land” is based on a Baptist gospel hymn. Satorii alleges that Songwriter Woody Guthrie heard the hymn and copied the melody for “This Land is our Land.” Guthrie wrote the song’s lyrics in 1940 and copyrighted the song in 1945. Folkways Records published and copyrighted the lyrics in 1951.
Satorii brought this lawsuit to release a cover, create a derivative work, and produce a music video of “This Land is Your Land” without obtaining permission or providing compensation to Defendants. In its Complaint, Satorii ultimately alleges that the song is in the public domain. To prove this, Satorii asserts several different claims. First, Satorii alleges the song was never registered with the Copyright Office. Second, Satorii alleges that the song’s 28 year copyright term started in 1945 when Guthrie published the song and since it was never renewed, the song’s copyrighted term has long expired. Third, according to the Complaint, Folkway Records released a record player, which included a recording of “This Land is Your Land.” The lyrics were printed on the album notes and were published without the notice required under the law then in effect. Lastly, Ludlow applied for several other copyright claims including claims for an unpublished work, a derivative work, a published musical composition, and some words in the song. Satorii asserts that these claims are invalid because Ludlow 1) failed to disclose the song was published by Guthrie in 1945 and the lyrics were published by Folkways in 1951; and 2) wrongfully identified Guthrie as the author of the song’s composition.
This lawsuit is brought by the same law firm, Wolf Haldenstein Adler Freeman & Herz LLP, that fought for “Happy Birthday to You” to be in the public domain. Last year, the judge presiding over the “Happy Birthday To You” lawsuit held that the song was not legally owned by Warner/Chappell. On June 28, 2016, the three year lawsuit finally ended when the judge approved the settlement between the parties. Warner/Chappell Music settled to refund $14 million in royalties and will no longer collect fees for others to use the renowned song.
Like the plaintiffs in the “Happy Birthday to You” lawsuit, Satorii in the “This Land is Your Land” lawsuit alleges that the song is not legally owned by Ludlow and is in the public domain. Since the judge ruled in favor of the plaintiffs in the “Happy Birthday To You” lawsuit, Satorii hopes to obtain a similar ruling – that the song is not legally owned by Ludlow and is thus in the public domain. Will the “Happy Birthday to You” lawsuit heavily sway the decision in the “This Land is Your Land” lawsuit?
Monica Bral is a summer associate in the firm’s Los Angeles office.
As we reflect on our experiences from the past couple of years, the following are six general trends that transactional attorneys should consider when making their next deal with distributors:
- New Media: With the tremendous growth of New Media, including VOD, Subscription VOD (such as Netflix and Amazon) and other digital revenue streams, there is an ongoing debate as to whether these new forms of revenue streams represent television or home video. So far, it appears that the trend by distributors is to classify them as “home video,” now more appropriately termed as “home entertainment,” subject to a royalty. It is important for you to consider this issue as you negotiate the next deal, especially as more and more consumers are moving away from traditional television to new devices.
- Outsourcing: As more and more of the underlying work traditionally performed by distributors is moving to third parties due to cost-cutting measures and other efficiency initiatives, such trending could ultimately result in reducing your clients’ participations. This is because distributors could charge you for the underlying additional third-party costs and/or fees, plus still charge you the contractual distribution fees and/or overheads. You may want to consider clarifying, in the underlying agreement, how third-party fees should be handled and whether the distribution fees charged by the distributor are appropriate considering the level of outsourcing. For example, you could negotiate that any third-party fees should be subsumed within the distribution fee.
- Direct vs. Allocated Indirect Costs: You may be bearing general costs allocable among many films and television series which are not directly related to your program. They could be related to distribution and/or production and include areas such as wardrobe, computer and security allocations, general marketing, publicity, research, legal, data processing, computers and maintenance and other costs. While there may be a rationale for including such costs, make sure you consider if there is clarity as to whether or not you are bearing such costs (or if such costs should be subsumed within the distribution fees and/or overheads charged by the distributor) as part of your next deal.
- Production Tax Credits and Vendor Rebates/Credits Consideration for Breakevens: As more and more deals require a breakeven to be achieved by the distributor before participants get a share of the net profits of the program, it is important to also understand how such breakevens are calculated. Overall: the sooner the break is achieved, the sooner the participants would see payments made. And, once the breakeven is achieved, numerous costs become excluded, such as print, advertising and participations payments. This increases the overall profit participation to your clients. While breakevens can be complex, one important thing to remember is to ensure that the underlying agreement clearly stipulates that any reductions to costs (such as production tax credits/incentives and vendor rebates and credits) are reflected timely in the calculation of the breakeven for your program. Ultimately, regardless of when the credits and rebates are received, they should be included within the calculation of the breakeven since the original costs to which the credits and rebates apply are charged within the breakeven.
- Related Parties: Through industry consolidation trends, more and more vertical integration issues are present and, therefore, it is important to ensure that such relationships with affiliates are understood during the negotiation of your deal, and that accounting for such transactions are clearly delineated in the underlying agreement (arms-length and comparable sales provisions). For example, you may wish to add to the agreement that the studio should be required to provide supporting documentation verifying the arms-length provisions were properly upheld, such as emails, etc., proving that the studio did attempt to sell to other third parties.
- Product Placement and Reporting Thereof: As consumers continue to avoid commercials at all costs, advertisers are increasingly looking to distributors to promote their brands. Studios, however, may be classifying product placement receipts as revenues (subject to up to 50 percent in “distribution fees”) as opposed to crediting the production costs, which would decrease the 10-15 percent production overhead. You should consider clarifying in the underlying agreement how product placement receipts should be reported on your clients’ statements.
This post was originally published on the Green Hasson Janks Media Clips blog.
Senate Majority Leader Mitch McConnell has called on FCC Chair Tom Wheeler to reconsider his proposal to unlock cable and satellite set-top boxes. McConnell cited concerns over copyright, consumer costs and the impact on cable providers and customers in rural areas.
This is a further escalation of the broad opposition to the plan from all sides of the political spectrum. At least 150 Congressmembers, mostly Democrats, have voiced their opposition to the plan.
The controversy has not deterred Wheeler so far. In a letter to Congress posted on the FCC website, Wheeler asserted that the proposed rules would foster competition, innovation and consumer choice.
The DC Circuit issued a decision today broadly upholding the FCC’s net neutrality rules. Those rules defined internet service providers (ISPs) as utilities, subjecting them to the same high level of regulation as landline telephone companies. The rules in question require ISPs to treat all content equally as it passes through their pipes to consumers. The ruling also opens the door to further regulation of ISPs, on privacy issues, for example.
The decision was hailed by consumer advocacy groups, as well content providers such as Netflix. The story isn’t quite over yet, however. The cable and telcom industry continues to oppose the rules, and AT&T has announced its intention to take this to the Supreme Court.
I’ve blogged previously on the push by FCC chair Tom Wheeler to compel cable and satellite providers to permit consumers to use third-party set top boxes. Despite opposition from across the political spectrum, Wheeler is sticking to his guns to get the regulations passed before his tenure ends, which will likely be after the next President takes office.
The pay-TV providers are naturally among the leading voices lobbying against the proposed rules, but opposition has come from a number of other sources as well. At least 150 members of Congress,
both Democrat and Republican, have sent letters to the Commission expressing concern that the change would harm copyright owners and increase risks of piracy. The chairman and CEO of BET has asked for assurances that minority programmers would not be adversely affected. Even the National Telecommunications & Information Agency and the FTC, the FCC’s sister agencies, have urged the Commission to take into account all sides of the issue.
Whatever the outcome, this rulemaking is a rare instance of the political process actually working. Competing interests on all sides are promoting their positions in a sincere debate over policy with both business and public interests arrayed on both sides.
Richard Prince is a well-known artist who has been sued for appropriating others’ photos. In an oft-cited previous case, he was sued in the Second Circuit (in New York) for taking photos of indigenous people in Jamaica, and modifying them with such things as guitars placed in their hands.
The Second Circuit found the bulk of these works to be “fair use” , which is a finding that the works were “transformative,” that is, artistically different in content and message. (The case later settled.) The Ninth Circuit has been perhaps a little more restrictive in making such findings, but not by much. In a matter involving the iconic band Green Day, the California-based circuit court found that a concert backdrop containing a copyrighted image with added spray paint also constituted “fair use” due to its transformative nature.
Our hunch is that plaintiff sued here in Southern California (based on photos of Sid Vicious) hoping to get a more favorable forum. Stay tuned.
A clash between Netflix and Relativity Media in bankruptcy court has made public some interesting behind-the-scenes business dealings between the two companies, and in the process shed some light on the evolution of Netflix’s business and of online distribution generally.
In 2010, Netflix entered into a licensing agreement with Relativity under which the studio would deliver 12 features per year for release on Netflix’s subscription streaming service. The agreement provided for payment of seven-figure minimum guarantees, plus additional payments based on theatrical box office performance. The guarantees are partially refundable if the pictures are not released in theaters.
When Relativity declared Chapter 11 bankruptcy, Netflix asked to be released from this agreement. This effort was unsuccessful. The agreement was affirmed and Relativity emerged from bankruptcy with the Netflix deal among its assets.
The latest dispute involved two forthcoming Relativity releases, a Zach Galifianakis comedy called Masterminds, and The Disappointments Room, a horror film starring Kate Beckinsale. Netflix’s deal with Relativity specified the dates on which Netflix could begin streaming them, but those streaming dates were set based on particular theatrical release dates. When the theatrical releases were postponed, Relativity approached Netflix for what it characterized as a “routine” extension of the streaming date. Netflix turned down this request. It took the position that it could stand on the letter of the agreement and begin streaming on the dates originally agreed. This raised concern on Relativity’s part that theatrical revenues would be seriously compromised if the movies were available for streaming before their theatrical release. Relativity interpreted this move as a pretext to evade its payment obligations, and so back the parties went into bankruptcy court.
The bankruptcy judge, Michael Wiles, sided with Relativity, issuing an injunction against Netflix’s plan to start streaming in June. He ruled that the Netflix plan would undermine the integrity of the bankruptcy process. Noting that Netflix had been an active participant in the February, 2016 confirmation hearings for Relativity’s reorganization, Judge Wiles stated that Netflix had an “obligation” to resolve any issues then. The terms under which Relativity was able to emerge from bankruptcy included deals with its lenders predicated on projected revenues from theatrical releases and also from Netflix and other downstream exploitation. All this, Judge Wiles held, would risk being overturned if Netflix were permitted to jump the gun on its streaming rights.
The hearing on Netflix’s motion revealed some intriguing information on history of the two parties’ dealings. Linda Benjamin, who was Relativity’s VP of business and legal affairs at the time, testified that it was quite a coup when Netflix made its deal with Relativity in 2010. Netflix was then still mostly a DVD by mail company, and the Relativity deal was its first shot at acquiring the right to stream first-class motion pictures in the pay-tv window, for which, according to Benjamin, it paid a premium license fee. Netflix soon became concerned that Relativity was slipping sub-prime third party content into the deal, at which point it paid Relativity an enhanced license fee to insure it would only receive prime content, and added the requirement that the pictures receive a theatrical release.
Netflix is still considering its next legal moves, but regardless of the final outcome, the dispute casts a light on the effect that streaming services such as Netflix have had and will continue to have on the motion picture business.