My partner Nancy Yaffe has just posted a blog with disturbing implications for California entertainment lawyers. As young practitioners we  all were taught that every agreement with a person providing services on a film or TV show must include a provision that the results and proceeds of the person’s services are a “work made for hire” under copyright law.  This language is as important for entertainment lawyers as the Prime Directive is for Capt. Kirk on Star Trek. It now appears that the California EDD takes the position that the presence of those four words in a contract creates a presumption that the service provider is an employee, not a contractor. The Department will take this position even if none of the other indicia of employment are present, and regardless of the plain intent and structure of the Copyright Act.

Law concept: circuit board with  copyright icon, 3d render

Producers can still obtain copyright ownership using assignment language, but this has drawbacks, including that the assignor can terminate the assignment after 35 years. This presents producers with a difficult choice. Proceed as usual and run the risk of being assessed for back taxes and penalties, or engage all cast and crew as employees, with the inconvenience and cost that can entail.

Read Nancy’s enlightening blog here.

44883775 – scyther5

Former American icon Bill Cosby has been accused of sexually assaulting at least sixty women over five decades, according to Time Magazine.  But the Carsey-Werner Company, which produced Cosby’s hit sitcom “The Cosby Show”, claims the program still has “inherent entertainment value” that the British Broadcasting Corporation (BBC) wrongfully capitalized when it used eight clips and music from the show in its documentary “Bill Cosby – Fall of an American Icon.”  Carsey-Werner filed for copyright infringement in the U.S. District Court for the Central District of California last Friday.

Of the documentary’s one hour of running time, Carsey-Werner alleges that 234 seconds, or 6.5%, of the content derives from “The Cosby Show,” which the BBC had no permission to use.  But permission is not necessary if the use was fair.  When determining fair use, the court considers 1) whether the unlicensed use of the original work transformed the material taken by using it for a different purpose; 2) the nature of the copyrighted work; 3) the amount and substantiality of the work taken; and 4) the effect of the use on the potential market for the original work.

As to the first factor, use of material for purposes of criticism and comment is recognized by statute as transformative and fair.  Carsey-Werner could argue the documentary pertains to Bill Cosby and offers no comment or criticism of “The Cosby Show,” but the BBC could claim the program is arguably what made Cosby a household name and, ironically, branded him as “America’s Dad.”

The second factor tends to be the least important in the analysis since most copyrighted works are inherently original, but this prong would favor Carsey-Werner as fictional works like “The Cosby Show” are judged to be more original than factual ones such as an autobiography or news report.

The third factor comes down to whether the BBC used more of “The Cosby Show” than what was reasonable to adequately document Cosby’s descent.  Carsey-Werner claims if the BBC wanted to draw “The Cosby Show” to the viewers’ attention, it could have done so without using copyrighted material, but the BBC could argue its use of less than four minutes of show content scattered throughout the documentary was more than reasonable given the pivotal role the program played in building Cosby’s legacy.

The fourth factor requires Carsey-Werner to prove the BBC’s documentary served as a market substitute of the “The Cosby Show,” which will be a tall hill to climb given that the market for the program has arguably been irreversibly damaged amidst Cosby’s scandal.  Plus, the BBC can contend the market for light-hearted sitcoms is entirely different than that for sobering documentaries.

The BBC has yet to file a formal response to the matter but could pursue a shortcut to dismissal since the documentary was never broadcast or made publicly available online in the United States.  The documentary aired just twice in June of 2017 and has not been broadcast since.

Here in the Hollywood bubble, it’s easy to get wrapped up in our own tales of heartbreak, victory and scandal and forget that events outside of LA can also impact the entertainment business. One of these is that the FCC is now Republican-controlled. The new FCC chair Ajit Pai has already signaled that we can expect significant policy shifts. Here are two to watch.

Copyright: scanrail / 123RF Stock Photo

Net Neutrality: This blog has been following the net neutrality saga, most recently here in an article posted after the Presidential election. Net neutrality is the principle that internet service providers (ISPs) must treat all content in their pipes equally, without speeding or slowing transmission for favored or disfavored providers. In 2015, the FCC reclassified ISPs as a common carrier equivalent to telephone companies in order to impose strict neutrality rules. FCC chair Pai has expressed his opposition to the rules, but the issue is not on the FCC’s published November docket. There is no reason to assume, however, that Pai’s stance has altered, only that he is deferring for the present what will be a very hotly contested change.

Ownership Rules: For decades, the FCC has maintained rules governing ownership of broadcast stations in order to encourage local news coverage and diversity in programming. That may be about to change. On October 25, Pai announced proposed rulemaking that would radically overhaul this regulatory scheme. The proposals under discussion include:

  • Permitting one company to own a daily newspaper and a radio or TV station in the same market.
  • Eliminating a rule that requires at least eight independently owned TV stations to remain in a market after two stations combine ownership.
  • Loosening restrictions on the number of television and radio stations that can be owned by a single entity in a market.

These moves have received the support of trade groups representing both broadcast stations and newspaper groups, who argue that they need economies of scale to compete in the 21st century marketplace with giant digital media outlets such as YouTube and Facebook.

These steps follow an FCC action earlier this year lifting the cap on the total number of stations that a single company can own. This opened the door for Sinclair Broadcast Group to pursue its intended purchase of Tribune Media, which would result in Sinclair’s ownership of stations covering 70% of all US television viewers.

The FCC also plans to eliminate a rule that required broadcast stations to have a physical studio in or near the communities they serve. While not a change in ownership rules, it will make it easier for large station groups to centralize their operations.

After eight years of a Democratic administration, it’s not surprising to see the regulatory pendulum swing back to favor free market forces. There is also no doubt that FCC commissioners of all political stripes must address the radical changes in the media landscape brought on by the explosion of the internet. Time will tell whether Chairman Pai’s approach is the right one.

10066940 – super hero and a ninja doing battle.

I’ve blogged here and here about the pending trademark infringement case brought by SDCC, the registered owners of the San Diego Comic-Con mark, against the producers of Salt Lake Comic Con. The Utah group had launched an aggressive social media campaign to draw moral and financial support from fans and organizers of other Comic Cons around the country. The plaintiff persuaded the trial judge, Anthony Battaglia, to issue a gag order to halt against this campaign on the ground that the extensive posts would taint the San Diego jury pool.

The Utahans appealed to the Ninth Circuit, which ruled in an order issued on October 26 that the gag order was unconstitutional. The court noted that prior restraints on speech are highly disfavored except in the most extreme circumstances, such as a clear and present danger to safety or a serious and imminent threat to SDCC’s interest in a fair trial. The defendants’ social media campaign did not, the court held, rise to this level. The court compared the defendant’s Twitter following of 35,000 against the jury pool of nearly 2 million and concluded that the plaintiff would certainly be able to find 12 unbiased jurors out of that large group. Moreover, Judge Battaglia should have recognized that less restrictive and routine procedures such as voir dire, jury sequestration and jury instructions would be sufficient to protect SDCC’s rights. The court also expressed raised the specter of a slippery slope, in that allowing the order to stand would justify similar orders “in almost any situation where an article is written or a statement is made in a public forum.”

This interesting but collateral issue having been disposed of, the parties can resume their progress toward what will presumably be a well-publicized trial.

Developing a piece of theatre from the ground up, especially an original work, is an expensive exercise. A producer will rarely have the opportunity to review and assess the combined production elements of a work prior to significant capital outlay, thus leaving a big question mark as to a particular work’s commercial viability. One way in which a producer may test a piece of theatre in a (comparatively) inexpensive manner is the 29-Hour Reading. The 29-Hour Reading is a concept created by Actors Equity Association (“AEA”) which allows commercial producers to engage AEA talent for the sole purpose of presenting a reading of a work; i.e. allowing producers to put a work its feet – to test the rhythm of the piece with live actors in front of a live audience.

The AEA Staged Reading Guidelines provide for the limited use of AEA talent outside of an AEA contract. It’s important to note that the Guidelines are not a class of AEA contract in and of themselves, but rather serve as a narrow exception that operates alongside AEA’s standard commercial contracts.

The perks of the 29-Hour Reading are clear; the producer is not required to make pension, health and welfare contributions on behalf of talent, nor is there a prescribed equity minimum to pay talent. Nevertheless, the concessions made by AEA pursuant to the Guidelines do not come without significant restrictions, which I have itemized below.

  1. Duration: Talent can only be engage for a period of 29 hours (inclusive of the readings themselves) during a 14-day period. Producers must remain cognizant of the fact that this leaves little time to work through a substantive amount of material, particularly in the case of 2 act musicals. Securing a lead creative team who can work in a thorough and efficient manner in the rehearsal room is key to maximizing the value of the presentation.
  2. Presentation: A producer may present a maximum of three (3) readings pursuant to the Guidelines. The presentation cannot contain any production elements, including costume, sets, make-up, wigs, or props. Furthermore, the presentation cannot contain any choreography and may only incorporate minimal staging. Actors must not be required to memorize any material, and thus must present the work ‘book in hand’. In practice, 29-Hour Readings largely take place in rehearsal rooms with non-theatrical lighting, and in front of music stands – no bells – no whistles.
  3. Travel & Expenses: Producers must cover any and all travel and expenses incurred by AEA talent in connection with the 29-Hour Reading. In my experience, a stipend of no less than One Hundred Dollars ($100.00) is paid to each actor in connection therewith.
  4. Audience: the audience must be invite only and cannot be charged for admission. Most importantly, the purpose of the 29-Hour reading cannot be to solicit investors for the project. I’ll type it again in bold underline; the presentation of a 29-Hour reading cannot be to solicit investors for the project. Remember – the sole purpose of a 29-Hour Reading is to propel the creative development of a particular work, not to garner interest from third-party financiers.
  5. No Recording: the presentation of the piece cannot be recorded for any reason, including archival purposes.
  6. The Asterisk: AEA talent must be identified on a billing page that is made available to all audience members. An asterisk must appear alongside each actor’s name indicating that said AEA talent is are appearing courtesy of AEA.

Finally, a producer must register the project with AEA during the six (6) months prior to the reading and must notify AEA of the AEA talent engaged on the project. The registration process if largely simple, however it’s always advised to register as early as possible in the event AEA has additional questions and/or concerns.

Adhering to the aforementioned restrictions is essential to not only a successful reading, but the continued commercial success of a project. Used correctly, the 29-Hour Reading can be a fantastic vehicle for creative development, often allowing creatives to experience the work in a live setting for the first time. On the flipside, failure to adhere to the Guidelines can land you in hot water with AEA and may significantly impinge on your ability to engage AEA talent for future engagements.

We blogged recently about criminal proceedings brought by the LA City Attorney against numerous defendants accused of operating pay-for-play casting workshops in which actors allegedly paid for the opportunity to audition in front of casting directors. These cases are working thei

Man in handcuffs covering face
Copyright: ratru / 123RF Stock Photo

r way through the justice system, as some defendants pled guilty. Two more casting directors have taken guilty pleas, while some twenty-five are still awaiting trial.

Read more about it in the Deadline Hollywood story here.

46927072 – Aleksandr Smaglov

After the outspoken conservative commentator Milo Yiannopoulos sued Simon & Schuster this summer for allegedly breaching their contract to publish his autobiography Dangerous, Simon & Schuster threw the book at Yiannopoulos with a motion to dismiss.  But New York Supreme Court Judge Barry Ostrager was not convinced Yiannopoulos’ suit is ready for its final chapter.  Last week, the Court denied the motion and opened the door to discovery of evidence Yiannopoulos vows will show the publishing company breached the contract in bad faith to appease left-wing critics.

When news broke that Simon & Schuster agreed to publish Yiannopoulous’ work in December of 2016, droves of left-leaning celebrities and well-known authors decried the arrangement as promoting “hate speech” and called for a widespread boycott.  However, it was not until a podcast surfaced two months later in which Yiannopoulos purportedly condoned pedophilia that Simon & Schuster backed out, citing a clause within the contract that empowers Simon & Schuster to refuse publication of the work “if in its sole good faith the Work is not acceptable to it.”  That Yiannopoulos vociferously denied the accusation claiming his remarks were sarcastic and taken out of context is irrelevant, argued the publisher.

But what caught Ostrager’s eye was Yiannopoulos’ counterargument citing Simon & Schuster’s contractual obligation to permit Yiannopoulos to revise any manuscript the company deemed unsatisfactory and to provide specific reasons for rejection.  Yiannopoulos contends not only did Simon & Schuster fail to provide any reasons for rejection, but it also used the podcast as a pretext for terminating the contract to diffuse widespread left-wing backlash.

Regardless, the publisher reasoned Yiannopoulos should still lose because he kept his $80,000 advance and thereby triggered the defense of accord and satisfaction.  However, Ostrager held Yiannopoulos’ rebuttal that Simon & Schuster told him he had 18 months to return the funds was enough to defeat this argument at the pleading stage.

Yiannopoulos ultimately self-published Dangerous three days before filing suit, strongly suggesting, in Simon & Schuster’s words, the case is nothing more than a “publicity stunt.”  Regardless, the publishing company must answer Yiannopoulos’ verified complaint and engage in costly discovery if a settlement cannot be reached.

Closeup of earbuds and smartphoneLos Angeles-based IP lawyer Erin M. Jacobson recently penned a piece describing the ongoing dispute between members of the music industry and music streaming service Spotify, and arguing against Spotify’s attempts to limit the type of licenses it must obtain from copyright holders in order to maintain the service. She outlines the series of copyright infringement cases brought against the company and notes the ramifications for songwriters and publishers of a potential precedent-setting court decision in favor of Spotify’s argument that its streaming does not require a mechanical license.

To read the full piece, visit Erin’s blog. It was also published on the Forbes website on September 22.

The stakes just raised in an imminent trial over the validity of the San Diego Comic-Con trademark. What started out as a straightforward trademark dispute has now implicated First Amendment free speech issues.

10066940 – super hero and a ninja doing battle.

The underlying case involves an action by SDCC, which owns a trademark registration for San Diego Comic-Con, against Dan Farr and Bryan Brandenburg, organizers of a Utah convention named Salt Lake Comic Con. Among Farr’s and Brandenburg’s defenses is that “Comic Con” has become a generic description of fan conventions of that type. I recently blogged about this here.

Springing into action outside the courtroom as well as in, Farr and Brandenburg made numerous posts on their website and social media accounts, including by posting court documents, painting themselves as plucky Davids against the mighty San Diego Goliath. In addition to the trademark arguments, their posts also included accusations of fraud against SDCC, but these claims were dismissed last month on summary judgement. Ultimately, over 200,000 media articles were written on the case.

Anthony Battaglia, the US District Judge in San Diego, became concerned that the extensive coverage would taint the local jury pool. He issued a series of gag orders requiring both sides to refrain from discussing the issues publicly or from posting court documents. He also ordered Farr and Brandenburg to post a disclaimer on the Salt Lake Comic Con website specifically stating that they were under court order to make no comments on the case.

Farr and Brandenburg petitioned the Ninth Circuit Court of Appeals for a writ of mandamus overturning the District Court order on First Amendment grounds. They assert that they order constitutes a prior restraint on free speech, which is highly disfavored under First Amendment jurisprudence. They claim that, contrary to Judge Battaglia’s point that the imminence of trial justified his order, “the nearness of trial weighs at least as heavily against prior restraints … because that is the ‘precise time when public interest in the matters discussed would naturally be at its height.'”

They argue further that the gag order is overbroad. The judge could, for example, have prohibited comment only on the fraud claims that had already been dismissed without also barring comment on the genericness of SDCC’s trademark, which is the critical issue in the case. The ban on posting court documents also aroused Farr’s and Brandenburg’s ire. They claim that a prior restraint on truthful publication of official court records is “unprecedented.”

They had this to say in opposition to the mandated disclaimer:  “[T]he petitioners should not be forced to make the Hobson’s choice between (1) acquiescing in the continued infringement of their right to remain silent, by retaining the unduly intrusive disclaimer mandate, or (2) saying nothing, not even that they have been suppressed, when they want to explain their silence.”

The Ninth Circuit agreed on October 3 to hear the petition and gave SDCC until October 6 to file its answering brief. In a rare move, the appeals court also invited Judge Battaglia to respond to Farr’s and Brandenburg’s petition.


For those of you contemplating investing in commercial theatre, you are bound to hear of the phrase “One for One”, “One for Two” or “One for Three” bandied about in co-producer negotiations. These are deal terms accorded to co-producers or early investors to induce them to come onboard in a more meaningful way than a standard investment. You might hear a lead producer rattling off these deal terms like footy scores (I’m Australian, I can say footy) or categorizing groups of investors as “the one for three pool.” For first timers these terms are confusing, but the truth is they describe a very simple concept.


Set your stopwatch to 190 seconds – let me explain.

  1. A traditional financing structure for commercial theatre (be it musical or legitimate stage play) divides a production’s net profits as follows: (i) 50% becomes the Producer Share; and (ii) 50% becomes the Investor Share.
  2. So, if the production makes $50 worth of net profits, $25.00 will be allocated to the producers, and $25.00 will be divided among the investors, pro rata in the proportion that each investor’s investment bears to the aggregate of all investments.
  3. But what about investors who are early adopters of the production and take the greatest amount of risk (i.e. front money investors) or those co-producers who bring a cohort of investors to the table? How are they compensated for their contributions to the production?
  4. Enter, the One for One/One for Two concept.
    1. THE ONE FOR ONE: An individual receiving 1:1 terms has the strongest deal. This means that for every 1% of the net profits they receive from the Investor Share, they will receive 1% from the Producer Share. ONE – FOR – ONE.
    2. THE ONE FOR TWO: second best to the One for One. For every 1% of the net profits an investor receives from the Investor Share, they will receive 1/2% from the Producer Share.
    3. THE ONE FOR THREE: third in line but a Metziah* nonetheless. For every 1% of the net profits the investor receives from the Investor Share, they will receive 1/3% from the Producer Share, and so on…
  5. Let’s play with an example:

Fox Rothschild: the Musical tells the inspirational story of a Philadelphia-based law firm set to 70’s disco hits. The production capitalizes on Broadway at $8 million. Ms. Fox is the lead producer on the project and brings in two investors, Devyn and Veronica. Mr. Rothschild is an associate producer, and brings in one investor, Yvette.

  • Like many productions, Fox Rothschild: the Musical distributes net profits in accordance with the following: 50% to the Producers and 50% to the Investors
  • Devyn invests $4 million in the project and negotiates a 1:1 deal for her investment.
  • Veronica invests $2 million in the project and receives a 1:4 deal.
  • Mr. Rothschild does not raise any money, but is accorded 1:2 terms on all the money he brings in.
  • Yvette invests $2 million in the project but does not receive any special deal terms.


The production is a runaway hit and starts distributing net profits. How are these divided?

  • At $4 Million, Devyn invested 50% of the total capital for the production and is therefore eligible to receive 25% of net profits in her capacity as an investor. However, owing to the fact that she was accorded 1:1 deal terms, she will receive her standard 25% from the Investor Share in addition to a full 25% from the Producer Share. Devyn’s aggregate net profit participation is 50%.
  • At $2 million Veronica has invested One-Quarter of the total capital for the production and is therefore eligible to receive 12.5% of net profits in her capacity as an investor. However, owing to the fact that she has received 1:4 terms, she will receive her standard 12.5% from the Investor Share, and 3.125% from the Producer Share. Veronica’s aggregate net profit participation is 15.625%.
  • At $2 million Yvette has invested One-Quarter of the total capital for the production and is therefore eligible to receive 12.5% of net profits in her capacity as an investor. Remember, Yvette did not receive any special deal terms. Yvette’s aggregate net profit participation is 12.5%.
  • Mr. Rothschild did not raise any money, but is accorded 1:2 terms on all the money he brings in, i.e. Yvette’s share. As such, Mr. Fox will receive 6.25% from the Investor Share. Mr. Fox’s aggregate net profit participation is 6.25%.
  • But what about Miss Fox? While Miss Fox did not invest any money herself, she will receive the remainder of the Producer Share, less those percentages allocated to investors/producers from the Producers share, i.e. 15.625%. Miss Fox’s aggregate net profit participation is 15.625%.
  • Double checking our math: 50% + 15.625% + 12.5% + 6.25% +15.625% = 100%


See? Not as hard as you thought.

*Metziah – Yiddish. “A good deal.”