Entertainment Law Outline 1 1. Representing Talent a. A business of intermediaries i. Agents focused on deals, personal mngrs on career development ii. Business mngrs (usually CPAs) focus on financial aspect of clients’ careers 1. Strong fiduciary obligation to client (ABKCO) iii. A lot of malpractice claims filed against enter’mt lawyers b. Attorneys i. Establishing an attorney-client relationship 1. Att’ys should not give advice unless prepared to accept responsibility for client’s reliance 2. Att’y is part of team of ppl representing a person a. Each type of att’y is differ: book att’y v. music att’y v. acting att’y 3. Retention agmt defines expectations 4. Att’y has highest level of fiduciary duty under the law ii. Duty of Competence 1. Legal knowledge, skill, thoroughness + preparation reasonably necessary for representation 2. Consultations w/ more experienced counsel highly advisable iii. Conflicts of Interest 1. Enter’mt business conducive to COI 2. Multiple client representation a. MRPC 1.7 i. (a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent COI. A concurrent COI exists if: 1. The representation of one client will be directly adverse to another client; or 2. There is a significant risk that the representation of one+ clients will be materially ltd by the lawyer’s responsibilities to another client, a former client or a 3d person or by a personal interest of the lawyer ii. (b) Notwithstanding the existence of a concurrent COI under paragraph (a), a lawyer may represent a client if: 1. Lawyer reasonably believes he will be able to provide competent + diligent representation to each affected client 2. Representation is not prohibited by law 3. Representation does not involve assertion of a claim by one client against another client represented by that lawyer in the same litigation or other proceeding before a tribunal & 4. Each affected client gives informed consent, confirmed in writing Entertainment Law Outline 2 iii. Designed to advance & protect confidentiality & undivided loyalty 3. Factors for assessing COIs: a. Duration & intimacy of lawyer’s relationship w/ client’s involved b. F(x)s being performed by lawyer c. Likelihood that disagreements will arise d. Likelihood of prejudice to client from conflict 4. Key to dealing w/ COI: a. Be super careful b. Go to bar and ask them Qs to see if there is a conflict iv. Music lawyer as mngr or agent 1. Musicians looks to att’y to get deals for them a. How do they get pd when young musicians don’t have $? i. Bar Ass’ns ltd % payments to personal injury att’ys 2. Most all att’ys in music industry get pd on % of deal –usually 5-10% a. Fee still has to be reasonable b. If want to be a mngr & att’y, increase commission to cover legal services, but exclude litigation services as part of the legal services covered in commission v. Special considerations re: lawyer conduct 1. Merging the roles of various enter’mt representation a. Lawyers who act as agent/mngr are still subject to states’ codes of PRE to extent any activities involve delivery of legal servs 2. Advertising & solicitation- MRPC 7.2 + 7.3 3. Compensation for att’y servs & retention agmts a. Customary contingent fee is 5-10% of defined compensation earned by the client b. Sunset provision- get a declining % after expiration of term of retention/contingency fee agmt c. Model rule 1.5 requires hourly & contingent fees to be reasonable i. Criteria for reasonable fee: 1. Time & labor required 2. Novelty & difficulty of the Qs involved 3. Skill requisite to perform the legal service properly 4. Fee customarily charged in the locality for similar legal servs 5. Amount involved & results obtained 6. Experience, reputation & ability of lawyer(s) performing the servs required 7. Fixed or contingent fee Entertainment Law Outline 3 d. Contingent fee agmts must be: i. In writing ii. Signed by client iii. State method by which fees are to be determined, % lawyer shall accrue in event of settlement, expenses to be deducted from recovery c. Agents & Personal Mngrs i. Agent is someone who procures employ’mt on behalf of the artist ii. CAVEAT: In CA, can be either a mngr or agent, but cannot be both iii. Agents want as many clients as possible, mngrs can only handle a few clients at a time iv. Union regulation of agents 1. Collective bargaining agmts negotiated b/w unions & producers a. Union Franchising System- gives the good housekeeping seal of approval for an agency deal i. Agents regulated by unions through franchising licenses ii. Keep licensing of agents from being a sham iii. Keep agent % down on deals v. State regulation of agents 1. NY & CA a. Agents must be licensed b. CA will accept almost any case that touches CA in some way 2. Labor Commission is generally the “state court” that determines whether you violated the law a. Violations: i. Mngr procured employ’mt for artist—even if just once 1. LC will declare K b/w mngr & artist null & void ab initio & make mngr give artist back all collected commission b. LC is pro-artist c. Won’t recognize arbitration clause if find K to be null & void 3. Minors? a. Certain amount of $ must be put away in trust b. Ct will appt a guardian ad litem for minors going into K deals to protect them from bad deals d. Mgmt Deal Components: i. Commission 1. Pd % of artist’s income (15-25%) 2. Net v. gross a. Net- cut out expenses artist pd before mngr gets pd % (Artist wants this) i. Records deals: most the $ coming from record pays for the actual recording Entertainment Law Outline 4 b. Gross- income before expenses (Mngr wants this) 3. Mngr can get portion of getting client a record deal, i.e. finder’s fee a. But if att’y, may not be allowed finder’s fee ii. Term 1. Generally 3 years, 2 for newer/younger mngr a. Irvine- 5 yrs (Owner of Frontline Mgmt- the most important mgmt co in world; he only works on a handshake deal) 2. Way to incentivize—longer term = need to get artist more work iii. After Term Income (“sunset” provision) 1. $ earned after agmt is over for deals that occurred during mngr’s term 2. Makes sure mngr gets pd for everything he worked on iv. Expenses 1. Dictates what mngr can spend w/o authority & still get reimbursed by artist a. Mngr still has to inform artist of all expenses on a regular basis v. Authority 1. Mngrs usually want: a. Power of att’y b. Ability to hire/fire ppl 2. Dictates what artist wants mngr to be able to do 3. On certain issues, will always need artist’s permission vi. Other: 1. Arbitration clause 2. Fiduciary duties a. Mngrs want reasonable efforts, artists want best efforts e. Cases—This is all CA Law i. Buchwald v. Superior Ct of San Fran (CA 1967) 1. Katz signed Jefferson Airplane 2. Katz not licensed a. Said he would procure shows for them & receive commission b. All mngr agmts disclaim: I’m not your agent even if I get you a job 3. Agmt says supposed to resolve disputes through AAA, instead referred to Labor Commiss’r under Talent Agency Act (TAA) 4. TAA K b/w unlicensed agent & artist void 5. Agmt b/w Katz + JA for personal rep advisor & mngr a. Does not promise to obtain employ’mt for JA i. JA says verbal promise ii. K misrepresented Katz as an agent 6. Katz refused to allow them to get own bookings; no payment for bookings they did perform 7. TAA remedial statute 8. Licensed or not, bound by Artists’ Mngrs Act Entertainment Law Outline 5 9. TAA LC empowered to hear disputes re: validity of agent-artist K 10. Doctrine of “exhaustion of administrative remedies” a. Must first seek relief from admin body before going to ct 11. Holding: LC has original jurisdiction to hear disputes arising under TAA, agmt invalid b/c it did not comply w/ Act a. Issue—form of the transaction (representing to JA that an agent) rather than substance (K saying not an agent) controls! 12. Case stands for principle behind power of LC a. Jurisdiction of LC should be interpreted broadly ii. Pryor v. Franklin (CA 1982) 1. F mng-d P from 1975-1980 2. 1981 hearing said K void b/c F acted as unlicensed agent a. F to repay P 3. F promise to: a. Procure employ’mt b. Negotiate agmts c. Held out as agent to 3d party 4. P’s “sole & exclusive negotiator” 5. Holding: “Broadest remedy of restitution”—F solely culpable for all violations of law, P shared no blame or guilt a. K ruled void ab initio b/c F not licensed so F turns over all $ made to P b. Rosenthal: Ct didn’t like Δ & develop draconian rule against Δ c. Rule: Can’t be in room during negotiations iii. Barr v. Rothberg (CA 1992) 1. Oral agmt for R to represented B 2. R induced B to sign written agmt as an agent a. R not licensed 3. B was w/ Triad Agency—terminates agmt w/ TA shortly after meeting w/ R a. Prior to 1988-1990, B hired William Morris Agency b. WMA commission on all except ‘Roseanne’ show b/c TA procured that i. R part of renegotiations, B received more as part of success of show 4. Holding: R acted as a personal mngr during renegotiations, which was a joint effort, relief to B denied a. Agent must find engaged in procuring, offering, promising or attempting to procure employ’mt or engagements b. New Rule: Can be in negotiation room as long as not the one procuring the work i. Statutory exception: if agent asks mngr to lead negotiations, does not mean mngr procured work Entertainment Law Outline 6 iv. Center of Gravity test: 1. Against the mngr 2. Must look at entire business of representation v. Bright Line test: right to void Ks that secured any type of work vi. Park v. Deftones (CA 1999) 1. Δ terminates personal mngr K w/ w/o paying ’s commissions 2. got deal w/ Maverick, whose agent, Gary Oscary, interfered w/ & Δ’s K-ual relationship 3. sued for commission, Δ countersued saying mngr procured work for them 4. said that showcase was an incidental booking in order for the band to get paying work 5. Holding: K void b/w & Δ b/c secured performance engagements for Δ w/o being licensed as a talent ag’y a. Personal mngrs primarily advise, counsel, direct & coordinate development of artist’s career b. Waisbren even incidental activity in procuring employ’mt is subject to TAA c. Even though rec’d no comp, the 1993 + 1994 agmts provide for comp d. TAA does not expressly exempt procurement where no comp is made i. Ct says abuses should apply equally where deferred benefits from obtaining recording K e. Act requires license even if commission not rec’d vii. Chinn v. Tobin 1. C + Wampole sign agmt w/T to record & publish music 2. C + W gave exclusive recording services to T 3. T would be exclusive personal mngr & advisor 4. Only songwriting services for T employing an artist does not = procuring employ’mt for an artist 5. Holding: nothing in TAA says employers of artists must be licensed under TAA viii. Marathon Entertainment v. Blessing 1. Actor on Lifetime Show, Strong Medicine, trying to not pay commission to mngr who got her show 2. New Test: a. Apply doctrine of severability i. Look at what mngr did ii. Not going to declare K null & void ab initio even though was not licensed Entertainment Law Outline 7 iii. Sever commissions--$ that came from show goes back to artist, but other mngr-related commissions mngr keeps 3. Recognition that voiding Ks ab initio was too inequitable on mngrs’ behalves 2. Entertainment Rights a. Personal Rights: Publicity i. Right of publicity- right of each individual to control & profit from the commercial value of his or her own ID (property) 1. Rationale: protection of a celebrity’s proprietary interest in the development of a marketable image 2. Serve societal interests: a. Guard against unjust enrichment (K) b. Financ’l incentive to those who cultivate a unique persona (copyright) 3. “Name & Likeness” ii. No CL right of publicity in NY iii. Issues: 1. Is the right of publicity descendible? a. Conditional? i. Commercially exploited during person’s lifetime? 2. If yes, how long does right last? iv. Exception for parodies and satires v. Zacchini v. Scripps-Howard Broadcasting, Co. (SCOTUS 1977) 1. TV reporter tapes Z’s act—being shot from a cannon—and shows it on TV a. Act is only 15 seconds long 2. Rule: Right to publicity value of his performance a. May not use for own benefit the name or likeness of another b. Liable for appropriation over artist’s objection & in absence of license or privilege 3. Ohio Supreme Ct said freedom of press requires some breathing room 4. Holding: Z not looking for injunction, just wants to be paid—neither the public nor respondent will be deprived of the benefit of petitioner’s performance as long as his commercial stake in his act is appropriately recognized a. SCOTUS looking to protect entertainer’s incentive to encourage protection of this type of work b. Emphasis on the fact that news station showed Z’s entire act c. Powell’s Dissent: report part of an ordinary news program, a total of 15 seconds, which is a routine portion vi. Elvis 1. When died, most states did not recognize descendibility for right of publicity Entertainment Law Outline 8 vii. MLK Center for Social Change v. American Heritage Products (11th Cir. 1983) 1. Center sued Δ for selling plastic busts of MLK as an “exclusive memorial” a. Set aside 3% of purchase as contribution to Center, but trust fund for Center was never executed 2. District Ct found Δs had infringed MLK’s copyrights and ordered to discontinue use of Center’s name in promoting busts 3. Issue: Did District Ct err in finding that not necessary to determine devisability of right of publicity b/c MLK never commercially exploited this right during his lifetime? 4. Holding: appropriation of another’s name and likeness for financial gain is a tort in GA & measure of damages is the value of the appropriation to the user, the right is inheritable and devisable, & exploitation beyond the activity which made him famous is not now required a. As long as could have exploited, does not matter that he chose not to b. Invasion of privacy loose collection of 4 torts: i. Intrusion upon ’s seclusion or solitude ii. Public disclosure of embarrassing private facts iii. Publicity placing in false light in public’s eye iv. Appropriation for Δ’s advantage of ’s name or likeness c. Justice Weltner saw no reason to create a new right – right to publicity, he felt case could have been adjudicated based on unjust enrichment 5. This case is pretty one of a kind—most cts say commercial exploitation is necessary for devisability viii. “Sound alike” Cases 1. Midler v. Ford Motor Company (9th Cir. 1990) a. Bette Midler declined to participate in Ford commercial b. Ford chooses to use a former backup single to imitate Midler’s voice & style making it appear like Midler is actually in commercial c. Media’s use of a person’s ID: i. Informative or cultural—immune from suit ii. Exploitative—not immune d. Holding: a voice is distinctive & personal & only when a distinctive professional voice is deliberately imitated to sell a product have the sellers misappropriated what is not theirs & committed a tort i. A voice is not copyrightable, so not a copyright infringement Entertainment Law Outline 9 ii. Also defrauded the public 2. Waits v. Frito Lay a. Waits sued Frito Lay for using a sound alike recording to advertise Doritos b. Used an impersonator c. Holding: invaded a personal property right i. Damages for peace, happiness & feelings ix. Can’t take an artist’s persona & use it to your benefit w/o permission 1. No clear line—ct has to decide whether person is famous enough or voice is distinctive enough a. BUT you can always get an injunction to stop someone from using it, the issue is that the more famous you are, the greater damages you get 3. Trademark a. Can be: i. Name ii. Logo iii. Symbol b. Purpose: i. Origin of the goods or services being sold ii. Makes sure the public knows who the originator is c. Can ID as: i. The Company that creates the work 1. Dreamworks, Columbia Records ii. Service Mark 1. Band’s name iii. Trade name 1. Business & good will associated w/ company d. TM can’t be descriptive, but may be suggestive i. Can’t TM “car,” but may be able to TM “gas mobile” e. Lanham Act i. Prohibits false representation likely to cause public confusion about the origin or sponsorship of the goods/services/trade name ii. 3 factors for COA: 1. Must involve goods or service 2. Must deal w/ interstate commerce 3. False designation or description iii. Remedies: 1. Legal fees 2. Punitive damages 3. Injunctive relief iv. Example of John Doe Warrant for merchants who sell stuff outside of a concert: Entertainment Law Outline 10 1. Lawyer goes to court the day before the show asking for John Doe Warrant saying they have probable cause to believe bootleg merchandise will be sold outside of show by ppl whose ID cannot be specifically named f. People- can’t get TM in your name until ppl know who you are & name creates designation that mention of brings to mind a certain kind of service g. Can TM: i. Title of movies, albums, books ii. Title of song?—highly debatable h. First user of name wins on TM i. Geographic strength i. Limitations: Can’t TM geographic area i. Supermarts- McDonald’s, Burger King, Etc. j. TM very important for bands to determine who owns rights to the band name w/in the band 4. Sound Recordings a. Four multinat’l companies: i. Warner Music Group ii. EMI iii. Sony/BMG Music iv. Universal Music Group b. Music-two types of copyrights: i. Sound recording 1. Capturing of the performance w/ some kind of technology that can capture the performance to be played back at another time 2. Author is the performer a. Anyone can do a cover song if secure a § 115 license ii. Underlying musical compositions 1. Words and music a. Sometimes the music itself 2. Author is the songwriter, but usually transfer rights to the music publishing company that hired them a. Music publishing deal is usually split 50-50 b. About 70% of artists are also the songwriter c. Terrestrial sound recording bills creates way for artists to get paid for performance on radio i. Terrestrial radio does not have to pay recording artists d. Compulsory license: gov’t sets price for use of song so that song being performed/published/recorded can be used by anyone e. Statutory: i. Telecommunications Act of 1933 1. Made pay only practice illegal Entertainment Law Outline 11 ii. Digital Performance in Sound Recordings Act (1995) – provided an exclusive right wrt interactive & subscription service which gave listener ability to select or to predict what would be broadcast iii. Digital Millennium Composition Act (1995): Compulsory license for other digital broadcast services of a non-interactive, non-predictable nature f. Contracts in the Recording Industry i. Only officers of record co. have authority to sign artists to what is usually an exclusive recording agmt ii. Artist revenues: 1. Recording 2. Publishing 3. Touring 4. Merchandise sales iii. Definitions: 1. Masters- recordings from which replications can be made iv. Material Terms in a Recording Agmt 1. ASK: a. What leverage does the artist have? b. What does the artist ask for during the negotiation? 2. Record Company Commitment a. Demo – only in “no-guaranteed option” agreement b. Single - used to promo – now required because of digital downloads c. Album – usually one album is guaranteed, up to six or seven optioned - label must exercise options to get additional albums 3. Term, Record Company Options and Recording Obligations a. Number of Option Periods i. Major Label: 6-8 album cycles ii. Independent Label: 3-5 album cycles b. Minimum Recording Obligation – One LP (vinyl record) for each album cycle c. For a group—leaving member clauses d. Pay or play clauses 4. Territory a. North America, World, Universe b. Split Territory deals 5. Advances a. Advance plus Recording Cost Budget i. Promotions are considered costs, i.e., deficit tour funding b. All-in Recording Fund - must pay advance and recording budget from this fund c. Recoupment – No royalties paid to artist until all costs and advances are recouped by record label Entertainment Law Outline 12 i. Costs could be recording/video costs, tour support, promotion, indie radio promotion ii. One of the biggest problems with record deals iii. When artist signs deal, gets small advance & record label pays for everything recoupable $ comes from artist’s royalties not the gross record sale iv. Biggest charge against the artist was Payola v. $500K advance w/ 15% royalty, usually takes 250K copies sold to break even d. First Album vs. Subsequent Albums i. If artist does not sell/license a promising # of recordings, label has right not to exercise option to make further recordings & may therefore terminate K e. 360 Deal i. Now record label takes any $ earned by artist in other areas (movies, merchandise, etc.) & puts against recoupment costs 6. Royalties a. Retail vs. Wholesale b. All-In vs. Net (Minus Producer) i. All in includes the artist’s royalty as well as the producer’s c. Royalty Rate (All-In) i. Singles ii. Albums: 10 – 14 points for new artist iii. CD’s – same as albums iv. Cross-Collateralization - recoupment against other streams of incomes – e.g., mechanical royalties if artist is a songwriter – and live performance in 360 deals d. Normal Retail Channels in U.S. vs. Other e. Royalty Base - 100% vs. 90% or Other Base f. Packaging Deductions/Container Charges g. “Free Goods” and Special Programs – 15% h. Reserves for Returns – 35% liquidated over 4-8 accounting periods i. Escalations i. First Album vs. Subsequent Albums ii. Sales Thresholds – Bumps at Gold and Platinum iii. Other Uses j. Digital issues – sales v. license – digital single download, ringtones k. New royalty model – 50/50 net split with artist – mainly indie deals Entertainment Law Outline 13 l. THE 360 DEAL – additional streams of income are taken by the labels first – e.g., live performance, merchandise, endorsements m. Third party digital exploitation (downloads, limited downloads, streaming)—second biggest problem i. Eminem Case: Court ruled in favor of Eminem’s producers who said this is a license agmt, not a record sale 1. Catch all phrase saying that label and artist split all revenue from licenses 50-50 7. Controlled Compositions—third biggest problem a. Mechanical Copyright Licenses and Royalties i. If you are artist & songwriter, subject to control composition clause lowering your royalty b/c you are both the performer & writer ii. Royalty is pd for the performance and for the writing of the song b. Percent of Statutory Rate – 75% Deal i. Will not give you the statutory 9.9 cents c. Limit on Number of Compositions – 10-12 cap (even if you write all 20 songs for your album) d. Some with no caps or reduction e. DMCA – post-95 digital downloads – application of controlled comp clause is prohibited i. Only mandates full statutory rate for all digital sales, can still reduce for non-digital sales 8. Rights Granted to Record Company a. Sound Recording - Work Made for Hire b. Merchandising c. Management i. Technically & commercially satisfactory: label wants final approval to determine whether recorded content is also commercially viable as a financial & artistic matter d. Internet Site e. New 360 deal – live performance, publishing, endorsements, movies, etc. 9. Relationship to Music Publishing a. Co-Publishing b. Effect on Mechanical Royalties c. Controlled Composition Clause 10. Approvals – coupling, singles, videos, greatest hits 11. Release Commitment – Release Guarantee Entertainment Law Outline 14 12. Exclusivity - Sideman Exclusion: allows an artist to do studio work on the side so artist can still perform with other bands or labels despite being exclusive to one label 13. Videos – 50% recoupable against audio, 100% against video 14. Tour Support – Recoupable 15. Accountings – Every six months 16. Cross-Collateralization a. Multiple Albums b. Music Publishing c. 360 Deal – most income streams cross-collateralized 17. Representations, Warranties and Indemnities 18. Sampling 19. Re-Recording Restriction a. Restricts artist from making another recording of a song that artist recorded for company, usually for at least 2 years following end of term or 5 years from release of original recording 20. Coupling – approval rights reserved by label. 21. Name and Likeness Rights - Rights of Privacy and Publicity 22. Group Clauses - Leaving Member 23. Label and “P&D” Deals 24. Internet and Satellite Distribution Issues a. Digital Performance Right in Sound Recordings Act of 1995 b. Container Charges c. Control of Website – Promotional Downloads d. Control of Content e. Ownership rights over Domain Name Address f. Sale v. license – digital download, ring tone – how is the company treating all new income streams – e.g., Inno device royalty i. Inno device turns a radio broadcast into a digital download g. SoundExchange – other compulsory license systems 25. 360 Deal: a. Label gets a percentage of all income streams of artist, they seek new sources of income because of the decrease in sales of physical product – everything is cross collateralized – record royalties, mechanical royalties, live performance income (labels get perhaps 10% of live performance income), endorsements, merchandise, TV, etc. v. Reversion Rights 1. Under copyright law, 35 years after grant of right, artist can seek reversion of work regardless of whether they’re recouped Entertainment Law Outline 15 a. 2013: First year records can be returned 2. Record label says does not apply b/c work for hire, so artist does not have right to termination—fourth biggest problem 3. Will end up being a renegotiation tool 4. If artist can take records back, it devalues the records meaning the record labels may be overvalued vi. Material Terms in a Music Publishing Agmt 1. Music Publishing - Music Publishing is the activity of a. promoting and licensing the performance and publication of musical compositions; b. administering the legal protection of the compositions and the collection of income arising from such promotion and licensing; and c. paying the songwriters their share of the collected income 2. History a. ASCAP/BMI/SESAC - Performing Rights Societies b. The Harry Fox Agency - Mechanical Rights Society c. New CRB Ruling – Sec. 115 – Late Fee, physical product, digital downloads and limited downloads, streaming, ringtones i. 24 cents for each ringtone subject to license ii. 9.9 cents is statutory rate for all others 3. Music Publishers a. Major worldwide publishing companies b. Independent music publishers c. The self-publishing songwriter d. Administration arrangements 4. Sources of Music Publishing Income a. Sound recordings b. Public Performances c. Theatrical motion pictures d. Television programs e. Videocassettes and video laser discs f. Advertising g. Printed music h. Foreign sub-publishing i. Radio programs j. Music boxes and other consumer musical products k. Non-theatrical motion pictures l. Non-theatrical videocassettes and laserdiscs m. Dramatic performances n. Dramatic adaptations o. Computer software, multimedia, and new media products p. Electronic distribution (cyberspace) Entertainment Law Outline 16 q. Ringtones r. Webcasting s. Advertising based service t. XM and Sirius devices 5. Songwriter Agreements a. Type of Agreement i. Single Song Agreement ii. Exclusive Term Songwriter Agreement iii. Writer's share vs. Publisher's Share - the ASCAP b. Basic Terms i. Grant of Rights ii. Exclusive or non-exclusive iii. Territory – world iv. Term – 3 years – less than a record deal v. Reversion of Rights – Right of Termination vi. Advances – recouped against royalty vii. Cross-collateralization - When artist is the writer c. Royalties i. Performance royalties – 50/50 ii. Mechanical, synchronization and other royalties - 50/50 iii. Sheet Music iv. Foreign royalties – 1/3 to ½ less than domestic v. Promotional copies vi. Split royalties – more than one writer – must equal 100% vii. Publishing expenses - the "Net" deal d. Accounting i. Statements – quarterly or semi-annually ii. Reserves against returns – usually less than on record deal iii. Objections – must object within a certain amount of time iv. Audit rights e. Other Provisions i. Creative controls ii. Restrictions on mechanical licensing 1. Statutory rates 2. The Controlled Composition Clause iii. Restrictions on synchronization and print licensing f. Specific Issues with Exclusive/Long Term Arrangements i. Exclusive Employment ii. Compositions covered iii. Advances iv. Term 6. Co-Publishing and Administration Agreements Entertainment Law Outline 17 a. Co-Publishing i. Writer retains a copyright interest ii. Writer usually takes a portion of the publisher's share iii. Sole administration iv. Administration fee b. Administration Agreement i. Writer retains copyright ii. Administrator collects money and distributes iii. Administration fee 7. Music Licensing a. Formalities - Written, oral and implied licenses b. Types of Licenses i. Print ii. Mechanical iii. Synchronization iv. Videogram v. Multimedia vi. Public performance vii. Compulsory license - Doing a "Cover" version of a song. viii. NDMAs ix. Compulsory License – Sec. 115 – CRB rulings x. Rate courts – for ASCAP, BMI xi. CRB – for mechanicals c. Basic Considerations i. Fee Structure ii. Value of the Song iii. Importance of the Song in Relation to Its Intended Use 8. The Scope of the Intended Use a. Common Terms b. Advances c. Cross-collateralization d. Bonus payments e. Payment and accounting f. Audit g. Reserves against returns h. Most Favored Nations 5. Film a. Conglomerates: i. Universal ii. Sony Pictures iii. Warner Brothers iv. Paramount Pictures v. The Walt Disney Corp’n Entertainment Law Outline 18 b. Producing films i. Movie projects began w/ just a pitch 1. Factors that determine value of “pitch” or storyline: a. Past record of writer b. Marketability of idea c. Whether a major actor or director is interested in it ii. Producer wants broadest possible rights, including right to distribute film in all forms presently known and to be invented iii. Literary option/purchase agmt terms for underlying rights to a film: 1. Length of initial option period & any extensions 2. Price of option periods & any extensions, & whether those payments are applicable against the purchase price 3. “set up bonuses” 4. Purchase price for rights, or if based on %, the budget, floors & ceilings 5. Additional writing services to be rendered? What writing steps will be commissioned & fees 6. Rights granted, rights reserved, reversion of rights 7. Rights of first negotiation & matching rights 8. Credit iv. CA’s 7 Year Rule created a limitation on the Studio system (actors signed w/ studio & had no authority to choose movies) c. Production/Finance/Distribution Deal (PF&D deal) i. Pre-Production: producer wants assurances that it can take idea somewhere else if studio chooses to abandon it 1. Need to acquire rights to go on the property & film ii. Principal photography: when the film is actually shot iii. Post-Production: reshoot scenes, create and enhance effects and beginning of promotion d. Writers, Directors & Performers Agmts i. Basic terms of a writer’s agmt: 1. Writing services to be performed 2. Writing and reading periods a. Supposed to get certain amount of $ on 1st draft, producer then comments, writer makes next draft 3. Payments for each writing step & guarantees, if any, of certain steps 4. Sole & shared screenplay credit bonuses, if any 5. 1st opportunity to write on subsequent productions based on source material 6. Passive royalties 7. Credit a. Writers Guild requires that first writer gets credit if write part of script, then producer fires writer & gets another writer to finish ii. Basic terms of a life story rights agmt: producer buys rights to your life story Entertainment Law Outline 19 1. Length of the initial option period & any extensions 2. Price for the options periods & any extensions & whether these payments are applicable against the purchase price 3. Set up bonuses, if any 4. Purchase price for the rights, & if based on % of budget, floors, ceilings 5. Rights granted—more a Q of scope of the release granted 6. Control over the screenplay & degree of fictionalization permissible a. Want to also get client approval of actor playing them & maybe approval of final script 7. Use of copyrighted works created by subject iii. Screenwriter of screenplay K issues: 1. Grant of rights 2. Representations & warranties 3. Indemnities 4. Producer’s control 5. Remedies 6. Suspensions & terminations 7. Insurance 8. Immigration/naturalization 9. Publicity iv. Actors can be contractually required to say my movie is great—even if they think it is awful v. Deals are generally 3-5 years b/w alliance, motion pictures & actors 1. Residual payments a. Putting on TV or DVD b. Production through ancillary markets not yet known vi. Credit 1. Above the line: what more prominent players in the creation process get, i.e., actors, producers, directors a. Usually also get a piece of net profits 2. Below the line: lessors that are generally pd a flat fee, i.e., technicians & extras e. Insurance i. Completion bond: motion picture producer enters into this w/ insurance company to ensure they will be paid off if something happens preventing completion of movie, i.e. force majeure ii. Errors & omissions insurance: covers all of the clearances & authorizations that you are supposed to get, insurance company clears & pays off claims if you miss one 1. Does not cover permissions sought that were not granted 2. Does not cover if you purposefully just did not clear 3. Requirement that missed needed authorization in good faith f. Franchising, i.e., sequels Entertainment Law Outline 20 i. Not always the same director, not always the same actor ii. Actors want to guarantee they will always be used if the movie they are acting in has the potential to be a franchise 6. Television a. Four major networks: i. ABC ii. CBS iii. NBC iv. Fox b. Broadcast TV i. Network affiliation agmts w/ local stations—network compensation, or amount network has to pay affiliate depends on: 1. # of commercial minute in the hour 2. Ratio of commercial time sold nationally v. locally 3. Relative strength of the station v. other stations in market 4. Amount of time that the program occupies 5. Size & demographic profile of audience 6. Size of market ii. Size of the market is most important element c. Cable & Satellite TV i. FCC restrictions on cable companies: 1. Required to carry all the broadcast networks, which are shown in their local markets 2. Required to carry public TV stations 3. Must carry a certain number of public access channels a. Three groups w/in cable system: i. Providers w/ less than 12 channels must carry at least 3 local commercial & one public station ii. Providers w/ 12 to 36 channels all local + public iii. Providers w/ more than 36 channels all local + public 4. Regulates rates as well ii. “Pay” cable contains higher-cost programming & is not advertiser supported d. Creating & Acquiring programming i. First step for a TV series is writing the overall “treatment” for the series, and “treatment” for the first episode –“pilot” 1. Treatment is a description of the characters, central theme of the series, & brief description of future episodes ii. If pilot is successful, enter into deficit financing agmt in which producer gets almost all the $ needed to finance the show e. Syndication: selling a program individual to the affiliates in local markets or to a cable network i. Cash-plus-barter system: in exchange for the lower cash payment, syndicator also gets the right to sell some commercial spots in the program Entertainment Law Outline 21 ii. Negligible costs iii. After 5 years, generally turn main actor into an owner of the show f. Ratings i. Used to determine where to place commercial spots ii. Advertisers buy spots during the shows based on the specific # it takes to reach one thousand viewers cost per thousand (CPT) iii. Leading company in ratings is Nielsen Company monitors houses in 2 ways: 1. PeopleMeter collects minute-by-minute viewing info 2. Diary entries, where certain households agrees to make written entries 3. Performs “sweeps” in Nov, Feb, March & July, which set the advertising rates for the next few months g. FCC’s functions are rule-making, licensing & registration, adjudication & enforcement i. Governs broadcast TV in 3 ways: 1. Involved in network affiliate relations a. Rules regarding network-affiliate relationship: i. Networks cannot force affiliates to take their programming ii. Affiliate can take programs from any source with which it can reach an agmt iii. Network may not control the affiliate’s advertising 2. Limits the # of stations that one entity can own 3. Limits the broadcast hours of networks through the primetime access rule (limits the network programming to 3 hours of the 4-hour primetime slot in the top 50 markets) ii. Censorship 7. Talent Ks a. Trends i. Innovation ii. Consolidation iii. Internationalization iv. Inflation b. Basic types of ks: i. Personal service Ks that secure the talent 1. Deal Memo- preliminary K that is enforceable until a true K can be fleshed out addressing the material points: a. Payment b. Credit c. Line at end: “Until a more formal agmt is entered into by the parties, if ever, this memo will be binding on the parties.” 2. Issues of enforcing a personal services K (and things to include in a deal memo or the K): a. Existence of a formal k b/w the parties b. Whether such K is in writing Entertainment Law Outline 22 c. Whether the services are exclusive or nonexclusive i. Trend in film industry towards short-duration, nonexclusive personal service Ks; most enter into Ks on a film-by-film basis d. Term of agmt e. Applicable statutory restrictions on term f. Provisions for options or extension of the term g. Consideration flowing to the artist h. Services to be performed by the artist i. Effect & nature of a breach of the K by the artist or company j. Availability & type of injunctive relief k. Controlling state laws & possible exclusivity of the forum hearing any disputes concerning the K 3. In TV deals, often include a “pay or play” clause for long-term Ks ii. Ones that acquire the necessary underlying rights 1. Clearing rights, i.e., trademarks, copyright c. Ks w/ Minors i. Both CA & NY have enacted minors’ entertainment K statutes 1. Ct is authorized under these statutes to either approve or disapprove a minor’s entertainment K, if approved, minor loses right to disaffirm 2. This system was created b/c producers fear putting $ & time into a show & having minor turn around & rescind K 3. Cts may appoint a guardian ad litem to assess whether K is fair & reasonable to minor 4. In CA, if K is approved (ratified) by ct, approval applies to all of the K’s option periods ii. Minors right to disaffirm is inapplicable to a situation where a parent has executed a valid release iii. Protection of $ earned by child performers under CA Family Code § 6752 = “Coogan Law” 1. 2003 amendments now require parents to establish trust accounts for their children (Coogan Trust Accounts) in which employers are required to set aside & deposit 15% of the child’s gross earnings into those trust accounts iv. Oftentimes parents are asked to signed guarantees when a minor is just starting a project, if minor disaffirms, minor can get out of K but producer gets $ from parents v. NY: Prinze v. Jonas: Court found that a K w/ minor, even before it could be approved by ct, could still be found to be “reasonable & provident” to minor & thus enforceable judicial approval not necessarily a condition precedent to an enforceable K w/ a minor Entertainment Law Outline 23 vi. Scott Eden Mgmt v. Andrew Kavovit (NY) 1. Scott Eden became exclusive mngr for Andrew in 1984 when he was 12 receiving 15% commission of his gross compensation 2. Andrew signs an agency K in 1986 for an additional 10% commission 3. Secured a role on a long-running TV soap opera 4. Week before K set to expire in 1990, Andrew’s att’y notifies Scott Eden that Andrew disaffirms the K—no further commissions sent 5. Issue: Can Andrew disaffirm the K and get back the commissions he paid? 6. Holding: Andrew must continue to pay all commissions to which Scott & agency would be entitled to under K & have right to annually inspect Andrew’s books (to ensure they are being paid the proper commissions) a. Disaffirmance does not entitle minor to be put in a position superior to the one he occupied before the agmt b. If a minor cannot return the benefits obtained, he is effectively precluded from disaffirming the K to get back his consideration d. CA’s 7-Year Rule (§ 2855 of the Labor Code) i. Statute limits a personal service agmt to 7 years, meaning a person can enter an agmt for longer, but it can only be enforce against them for 7 years ii. Does not apply to record deals 1. If recording artist terminates K after 7 years, label has right to recover for each record not yet delivered that was included in the deal iii. Artist must make a clean break from K for 7 year period to start again 1. Sometimes just a new K w/ a new signing bonus will work iv. De Haviland v. Warner Brothers Pictures (CA) 1. K for seven year, but K gave producer right to suspend actress for periods of time, in which she would receive no compensation until she resumed work 2. Producer says he has right to extend K for a “full 7 years” for a time equal to the period of suspensions 3. Issue: did the legislature mean 7 calendar years or seven “actual” years? 4. Holding: If the legislature had meant seven “actual” years, they would have included actual in the statute, but there decision not to indicates that they meant seven years of a fixed time a. Employee cannot waive the 7 year requirement b/c that would defeat purpose of statute 5. Note Cases: a. Foxx v. Williams: Employer tried to say that artist was an independent contractor so 7 year rule did not apply, but Court said no Entertainment Law Outline 24 e. Credit i. First position: actor’s name to the left above the title ii. Second actor’s name appears to the right but just above first name iii. Third actor’s name appears on the far right & slightly below the name of the first actor iv. Questions re: credit: 1. Whether K requiring that credit be given exists 2. What remedies are available if the credit provisions of individually negotiated Ks are breached 3. Whether there is a right to judicial review of credit determinations made by arbitrators pursuant to collective bargaining agmts v. Two theories: 1. Economic right a. Akin to copyright b. Lanham Act: used when someone who deserves credit is not given credit b/c do not want to confuse public as to the origin of the service 2. Moral right (recognized in Europe) a. Right of integrity: to not be distorted b. Right of disclosure: when & in what form your work will be presented to the public c. Right of attribution recognized in US in the Visual Artists Rights Act i. Ensured by K ii. Credit in ads 1. Placement of names iii. Credit in actual work iv. Most favored nations clause: clause in K that says if someone is offered a type of credit, you also must get that type of credit vi. Third way of getting credit is through unions or guilds 1. They have rules as to what kind of credit is given to each type of player vii. Cleary v. News Corp. 1. Cleary signed a ltr saying he would be credited in new edition of book plus the one he was working on as well as ¾ of 1% royalties on sales 2. Credited in 1970 and 1980 editions, but not 1990 3. Still received royalties on 1990 4. Issue: Should he be credited in 1990 edition? 5. Holding: parole evidence excluded oral evidence of credit & K did not mention any title credit for any of the editions, if he wanted credit, he should have made sure it was included in the K Entertainment Law Outline 25 a. under a valid work for hire arrangement, a publisher is under no obligation to provide attribution, unless such a right has been specifically reserve in K viii. Gold Leaf Group Ltd. V. Stigwood Group Ltd. (NY) 1. Frampton & BeeGees signed to appear in film version of Sgt. Pepper’s 2. At time of signing, Frampton was the biggest artist & promised 1st billing 3. In b/w signing & filming, BeeGees go up in popularity & Frampton goes down 4. Frampton seeking injunction to prevent Stigwood from violating K & giving BeeGees top billing 5. Issue: Does Frampton have the right to have his name appear above the BeeGees on billing of the film, the advertising of the film, artwork on cover of record, advertising for record, & merchandising & subsidiary rights? 6. Holding: K explicit that F get sole star billing on movie, in the same way as other artists for other rights & the K is silent as to merchandising & subsidiary rights—injunction granted for movie, but not for sound recording ix. Dastar Corp’n v. 20th Century Fox Film Corp’n (SCOTUS 2003) 1. Fox had exclusive rights to TV series called, Crusade in Europe, but did not renew copyright 2. Dastar released a video set entitled World War II Campaigns in Europe and edited and used some of the footage from Crusade in Europe 3. Fox sued b/c Dastar did not credit them w/ original work a. Reverse passing off: remove the original name/likeness and misrepresent as your own 4. Issue: Did Dastar violate the Lanham Act? 5. Holding: “origin of goods” refers to the producer of the tangible foods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods. To state otherwise would be asking to find that § 43(a) created a species of perpetual patent & copyright, which Congress may not do a. Ultimate test for both Lanham Act and state law unfair competition, is “whether the public is likely to be deceived or confused” i. This was why District Ct found for Fox x. Right to disclaim credit 1. King v. Innovation Books a. King sold motion picture & TV rights for his short story, “The Lawnmower Man,” allowing them to do with it what they “think fit” b. When they made the movie, they called it his movie Entertainment Law Outline 26 c. King informed them that he did not like the possessory credit d. Later, he again informed them & requested a copy of the movie e. Four days before the release of the movie, he viewed it, still voiced his objection to the credit, but said he would not go for an injunction for the time being f. He sued for an injunction + damages prohibiting the use of a possessory credit and a “based upon” credit i. Possessory credit is usually given to someone who plays a major role in the production, such as producers, directors, or writers ii. Based upon credit is given to the creator of a derivative work g. Issue: Was the court correct in granting an injunction for both the possessory credit & the based upon credit? h. Holding: Possessory credit violated Lanham Act, but the based upon credit did not i. King repeatedly objected and the delay, about 8 months, from the time of finding out about the credit does not rebut the presumption of irreparable harm b/c his name & reputation are his assets regardless 8. K Performance & Exploitation Obligations a. Delivery Standards i. Record industry: technically & commercially satisfactory for the manufacture & sale of phonograph records 1. Recordings must comply w/ audio stds established [objective] 2. Company must believe that public will buy records manufactured from the masters [subjective] 3. Timely delivery: Delivery pertains to delivery of all Ks to give label authority/rights to album along with actual delivery of the record a. Deliver each master in digital form b. Detailed list or any and all samples c. Written clearances or licenses d. Any & all info pertaining to credit e. Record industry can’t “legally” release the record until it gets all of these! 4. Artists try to negotiate in “release guaranty,” meaning that if label accepts record, it must release it 5. Payments at signing, maybe midway, final at delivery ii. Book industry: satisfactory in form & content to publisher 1. Payments: writing, after editing, final copy, and final back end % (net profits) iii. Film & TV industry: approval over all key personnel, budget & script 1. Film delivery— Entertainment Law Outline 27 a. Physical delivery is delivery of the technical elements b. Legal delivery refers to delivery of all documents (clearances, insurance, ratings, licenses, etc.) i. Differ from record industry in that movies won’t get funded until all insurances/assurances are provided c. Running time: usually b/w 95 and 115 minutes d. Must give alternate scenes & dialogues so as to make suitable for TV 2. Payment stages: a. Writing—payment at first draft, after doing substantial edits, and largest payment at final script screenplay delivery b. Green Light status: movie is written, screenplay accepted, can now start casting & determining the film’s location c. Filming begins i. Actors usually get paid on a weekly basis 3. Actors have postproduction obligations to promote the movies they star in iv. General Rule: degree of subjectivity w/ which delivery standards are infused increases in more or less direct proportion to the relative level of investment b. Fiduciary duty i. Fiduciary is a person holding the character of a trustee or a character analogous to that of a trustee, in respect to the trust and confidence involved in it and the scrupulous good faith and candor which it requires, a person has the duty, created by his undertaking, to act primarily for another’s benefit in matters connected with such undertaking ii. Record company not normally a fiduciary, usually a debtor-creditor relationship 1. Some states bridge gap by implying good faith & fair dealing iii. Rodgers v. Roulette Records (NY) 1. Rodgers sued for failing to account and pay royalties 2. Signed K in 1957, claims did not receive any acct’g stmts until 1981 3. 6 year SOL 4. Now claiming that record company underreported sales 5. Issue: when discovered or reasonably should have discovered the fraud? 6. Holding: inconceivable that & his agents did not notice his songs were being released & that royalties were understated giving the sheer number of songs he recorded & his apparent popularity—no acct’g b/c no fiduciary relationship a. To establish a right to an accounting: i. Existence of a fiduciary relationship; or ii. Existence of a joint venture; or Entertainment Law Outline 28 iii. Other special circumstances warranting equitable relief b. Even best efforts clause will not create fiduciary relationship i. EXCEPTION: if book author give works to publisher & publisher knows another book company is infringing that work, courts will apply a fiduciary duty for failure to protect the copyright iv. Obligation to exploit 1. Zilg v. Prentice-Hall, Inc. a. Author about the historical family, the DuPonts b. PH accepts the manuscript, decides on $12.95/copy with initial print of 15,000 and $15K to advertise c. Member of DuPont family received an advanced copy, outraged by its harshness of the family d. Fortune Book Club decides that it is no longer a suitable selection to offer e. PH tries to correct and tone down the book, but cuts initial print to 10,000 books and $5.5K to advertise f. Issue: Was PH required to use its “best efforts” to promote the book? g. Holding: Nowhere in the K does it say “best efforts,” but there is implied a good faith effort to promote the book—so long as the initial promotional efforts are adequate, a publisher’s printing & advertising decisions do not breach a K unless the proves that the motivation underlying those decisions was not a good faith business judgment (reasonable efforts std) 2. Parker v. 20th Century Fox Films (CA) a. was cast as lead actress of a musical, but studio decided not to produce picture & offered her a role in a western b. She turns down the offer & now seeks to recover her salary that was agreed upon for the original role c. Issue: Is an actress in a musical comparable, or substantially similar, to an actress in a western so as to make the studio justified in not compensating her after turning down the alternative employment? d. Holding: Lead in western was both different and inferior i. Rule: Measure of recovery by a wrongfully discharged employee is the amount of salary agreed upon for the period of service, less the amount which the employer affirmatively proves the employee has earned or with reasonable effort might have earned from other employment Entertainment Law Outline 29 e. Dissent: the vehicles for the display of the star’s talents are differ but it does not prove that her employment as a star in such vehicles is of necessity different in kind & either inferior or superior v. “final cut”- the right to determine what will ultimately be shown to the public 1. Absent qualifying language in the personal services agmt, a director w/ final cut has ultimate decision-making authority over creative & artistic decisions about the final version of the picture vi. Gilliam v. ABC 1. BBC license Monty Python series to ABC & allows them to cut to allow for insertion of commercials, & applicable censorship 2. BBC’s agmt w/ Monty Python however did not grant BBC cutting rights 3. Holding: edited version broadcast by ABC impaired the integrity of the group’s work & represented to the public as the product of appellants what was actually a mere caricature of their talents 4. Moral rights (not recognized in US): a. Paternity: right to be acknowledged as the creator of the work b. Integrity: right to have the work represented as the author created it 9. Remedies for Termination of K a. Exit strategy—how do you get out of a lousy deal? i. Rescission of K (Nolan) ii. Injunctions iii. Claiming adhesion K or unconscionability (Buchwald) b. Rescission i. Nolan v. Williamson Music (NY) 1. sues over royalties owed for song “Tumbling Tumbleweeds” 2. had sold song to Fox in return for 50% of royalties received, Fox then assigned that right to Williamson where Fox would receive 2/3 of everything received by Williamson 3. Fox in turn was really only paying 1/3 instead of ½ the royalties he Kd for a. Known as the at source problem 4. Deal was for 50% overall, not 50% of 2/3 5. Claims: a. Nonpayment of foreign royalties b. Nonpayment of domestic performing income (radio) c. Nonpayment of ancillary income d. Assignment of copyright to Williamson e. At-source claim: Payment of royalties 6. Issue: was breach of paying essentially only 74% of the royalties due to substantial enough to warrant rescission of the K? Entertainment Law Outline 30 7. Holding: No, rescission can be permitted only when the complaining party has suffered breaches of so material & substantial a nature that they affect the very essence of the K & serve to defeat the object of the parties. a. The assignment was not a breach b/c the K allowed Fox to license rights to a secondary publishers 8. Appellate Case: Nolan v. Sam Fox— In the absence of outright fraud, rescission will be granted only in cases where a publisher has made no royalty payments ii. Peterson v. Highland Music, Inc. (CA) 1. Band, Kingsmen, rescinds K that called for them to receive 9% royalties of any profits of licensing fees generated from their song, “Louie, Louie” 2. No payment for 30 years, but only bring claim now 3. District Ct granted the rescission, but Δ disagrees b/c there is a 4 year SOL for rescission 4. Issue: Can rescission be granted or has the SOL expired? 5. Holding: every instance of nonpayment renews the SOL b/c there is no fixed amount to be paid out but rather a continuing obligation to pay a portion of the profits & royalties. However, only granting royalties for last 4 years, but K is rescinded based on nonpayment & right to “Louie Louie” reverts back to the Kingsmen c. Injunction i. Negative injunction is to prevent a party from working elsewhere 1. Court will not issue a negative injunction if it feels it will be unduly burdensome or harsh, court will consider: a. Length of time injunction is to run i. General rule: only allowed for time period left in original K ii. Very rare for injunction to be granted if K period is over b. Extent of geographical area in which the Δ is to be prohibited from seeking alternative work i. More inclined to grant injunctions for ltd areas c. The types of work prohibited by the requested injunction i. Must be the same or very comparable d. Likelihood that injunction will produce positive results 2. Performer must be performing exclusive services of such a unique nature that it would make it difficult to obtain those services from another a. Showing great difficulty & inconvenience is usually enough ii. Machen v. Johansson (NY) 1. M wants injunction to prevent J from engaging in a boxing match w/ Floyd Patterson before J engages in a rematch w/ M 2. J had beat M, supposed to do a rematch before Feb. 14th Entertainment Law Outline 31 3. It’s not the 14th yet, but J has now agreed to fight Patterson before M 4. Issue: can M get injunctive relief? 5. Holding: just b/c a K is valid, does not mean you can get an injunction as the right to this relief must be clear, reasonable & well defined a. K does not define time and geographic area specifically enough to warrant an injunction as M basically requested an indefinite injunction to prevent J from boxing anywhere in the world i. Unreasonable restraint on J’s livelihood if injunction granted iii. ABC v. Wolf (NY) 1. Wolf had an employment w/ ABC as a sportscaster from 1979-80 to terminate on March 5 2. K gave a renewal option & held Wolf to good faith negotiation w/ ABC for renewal & granted ABC right of first refusal 3. 90 days prior to expiration, agmt called for W to enter into good faith negotiations, this was to be exclusive for first 45 days, after that can negotiate w/ others but must for 3 months following expiration (June 5) give ABC an opportunity to employ W for similar terms 4. Began to discuss in September, but could not come to agmt, when contacted again in Jan., ABC said they would meet all demands but Wolf wanted to wait to see what his options were (he had already started communicating w/ CBS in Oct in violate of good faith negotiation clause) 5. In Feb, W enters into a production agmt w/ CBS w/ agmt to hold option open until June 4 for sportscaster 6. W gives ABC 45 days notice of intent not to renew 7. ABC commenced action in May seeking injunction against W’s employment w/ CBS 8. Issue: Did W breach agmt and can ABC get an injunction? 9. Holding: W breached K—specifically good faith negotiation and first refusal provisions, but K period is over, so specific performance is not appropriate a. Where an employee refuses to render services to an employer in violation of an existing K & the services are unique, an injuction may be issued to prevent the employees from furnishing those services to another person for the duration of the K b. An injunction is warranted b/c the employee either expressly or by clear implication agrees not to work elsewhere & irreparable harm will befall the employer should the employee be permitted to labor for a competitor c. Court will normally not decree specific enforcement of an employee’s anticompetitive covenant unless necessary to protect the trade secrets, customer lists or good will of the Entertainment Law Outline 32 employer’s business, or perhaps when the employer is exposed to special harm b/c of the unique nature of the employee’s services d. An otherwise valid covenant will not be enforced if it is unreasonable in time, space, or scope or would operate in a harsh or oppressive manner d. Auditing i. Can’t see manufacturing records, only sale records ii. Art Buchwald v. Paramount Pictures (CA) 1. Definition of net profit literally meant ZERO profits for Buchwald 2. They never used his script, except Eddie Murphy does a film using the same storyline as Buchwald’s screenplay so Buchwald demands profits for the use of his work 3. K is split into 4 differ sections: a. Loan out and advances and rights (6 pages) i. This was negotiated b. Turnaround provision i. What happens if Paramount never went into production ii. Meaning Buchwald could now and go shop the movie to someone else c. Terms and conditions – boilerplate i. This was not negotiated, take it or leave it d. Standard net profit formula (23 pages!! w/ 2 appendices) i. This was not negotiated ii. Saying the calculation was illusory and there is no way it could have ever 4. Issue: was this a K of adhesion or was the K unconscionable? 5. Holding: there were unconscionable terms (see list on page 812) a. Adhesion K: standardized K which imposed & drafted by the party of superior bargaining strength relegates to the subscribing party only the opportunity to adhere to the K or reject it b. Unconscionability i. Absence of surprise does not render the doctrine of unconscionability inapplicable 1. Surprise involves the extent to which the supposedly agreed-upon terms of the bargain are hidden in a prolix printed form drafted by the party seeking to enforce the disputed terms ii. Oppression arises from an inequality of bargaining power which results in no real negotiation & an absence of meaningful choice 1. Procedural element Entertainment Law Outline 33 2. Substantive element: overly harsh or one-sided iii. Price may be unconscionable, but courts look to the basis & justification for the price e.