Entertainment Law – Fall 2011- Rosenthal

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
i. Criteria for reasonable fee:
1. Time & labor required
2. Novelty & difficulty of the Qs involved
3. Skill requisite to perform the legal service
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
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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
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
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
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
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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
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
d. TAA does not expressly exempt procurement where no comp is
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’
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
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
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
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
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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
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
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
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
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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
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
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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
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
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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
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
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,
k. New royalty model – 50/50 net split with artist – mainly indie
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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
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
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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
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
i. Inno device turns a radio broadcast into a digital
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
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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;
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)
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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
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
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
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 &
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
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
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
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
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”
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
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
3. In b/w signing & filming, BeeGees go up in popularity & Frampton goes
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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employer’s business, or perhaps when the employer is exposed
to special harm b/c of the unique nature of the employee’s
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
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2. Substantive element: overly harsh or one-sided
iii. Price may be unconscionable, but courts look to the basis
& justification for the price