Q&A FAQ - Law Offices of Greg S. Bernstein (2024)

Characters from someone else’s film or comic book, or dialogue orlyrics from another film, book or song, or a painting,poster, t-shirt, car emblem, logo, or even a website (all thedesigns you see) etc violates the copyright or trademark ofthe owner. Just because you can buy the poster, book, can of co*ke, orother item does not mean you can just use it in your film.

There are even some landmarks that are trademarked, like the Hollywoodsign, Beverly Hills sign and even the Empire State building.

Also, be careful about use of film clips. Besides getting permissionfrom the owner of the clip, you might also need to get permission fromthe people who appear in the clip, the owners of the music in the clip,and maybe the owners of trademarks or other works that are in theclip. Sometimes the owner of the clip has the ability togrant all these permissions, but most of the time they don’t have thatright. (same thing for a person in a photograph or work of art).

Use of a living person's name, likeness or voicealso requires a license. Generally, the use of a deceasedperson may not require a license.

Websites are trademarked or tradenames. Moreover, how you use the URLcan be an issue too. So you cannot use anything (free or paywebsite does not matter) that shows the website name or URL without alicense. In addition, most of the artwork (style, design, pictures,layout) is protected by copyright. So you need a license again. Theonly exception would be if nothing is readily identifiable (meaning youcannot tell which website or the photos, graphics etc.) Same thing rethe operating system on a computer. The Windows logos is trademarked,as is Apple, Dell ,etc.

Most art, music, film clips, lyrics and the like will cost for alicense to use it in your movie.

The good news is that most products will let you use their logos in amovie, for free, as long as the scene does not bad mouth their productor put it in a bad light. All the big brands have special offices thathandle these licensing requests.

So why if they will give you a free license do you still needone? If you don’t have permission, and they find out, theycan sue to have you to remove it from the film, as well as for damagesfor unauthorized use. Of course, you can also digitally alter the sceneto remove the logo and make it something else.

Finally, clearances are a complicated legal analysis. Hire anexperienced lawyer or clearance specialist to review and advise.

As for the DGA low budget agreement, if you go DGA, they are a good wayto go, and unlike the WGA low budget agreement (see below), is truly adeal for low budget filmmakers. The DGA has different rulesand rates of pay that apply at about 10 different budgetlevels. So if you are going DGA, understand each level andhow spending an extra $100,000 on your film might push you to anotherlevel and that cost you a lot more than simply another $100,000.

If DGA low budget applies, and your film is under $3.6 mil, DGA lowbudget minimum is $75,000 (scale is quite a bit higher but the rule isyou can pay as little as $75,000). If its under about $2.5 mil there isno required minimum pay).

Putting aside DGA scale, the rule of thumb for a director is 5% of thebudget, but with a ceiling based on what they have earned before, theirtrack record, etc. With no track record, most directors will cap out ontheir first film between $50-100k. The 5% rule also onlyapplies up to a budget of about $5 million. After that, it depends onthe prior success and track record of the director.

The director also usually gets 5% of the profits.

In general, there is no such thing as fair use in a fictional film. Adocumentary MAY have parts of it that are “fair use” and a film aboutreal life events may also have certain elements that would be “fairuse.”

But just because it’s a documentary does not mean that everything canbe used without permission. For example, if youwalk into McDonald’s in your film “Super Size Me” and there is musicplaying in the background, that would likely be fair use, but add somemusic over the scenes for dramatic effect and that is not fairuse.

Whether something qualifies for fair use depends on legal analysis andreview of the actual use in context. In general, if what you areshowing is integral to the documentary (as opposed to entertainmentvalue), then its ok.

One other area that is use of material in the background. Sayyou are shooting a scene of the actor driving down the street and inthe back of the shot there are all kinds of signs, billboards, and aBudweiser sign in a window. The question here becomes howprominent the item is and whether it’s the focus of the shot ornot. Once again, only a lawyer can really make thedetermination of whether the use is “innocuous” or “fleeting” and truly“background.” I have had some clientstell me something is just in the background and the item takes up halfthe screen or the actor is holding or talking about the item!

Producershave to be real careful about finders. There are tons out there, ofwhich few really can get the funds for your film. Before youmakea deal with them, try to confirm other films that they helped raise thefinancing on. Second, make sure the deal you have is inwritingand clearly says they have to bring you the cash, in the bank, by adate certain, or they get nothing. Be very very careful of deals thateither are open ended, or give them a period of time beyond the end tostill earn a commission on anyone they contacted. Whathappens isthat years later you find a financier, and through no help of them getyour financing, then they come asking for their commission.Because the contract did not say they had to bring the financing by acertain time, or because they sent the guy an email but nothing came ofit, the contract may not be clear enough to avoid paying them to goaway.

Finders should only be paid based on success; an successis cash in the bank, not simply an introduction, or even a signedcontract. They are NEVER paid before receipt of funds from the investor(usually they are paid out of the investor funds current withdisbursem*nt to the production). A word of warning: to the extent youhave a finder who is asking for an upfront payment, whether that be acost advance or fee advance, run, don’t walk, away.

Findersusually earn 5% of the cash investment made for under $1 millioninvested. That said, many times it’s a negotiation and more often thannot ends up being somewhat less than 5%. The rate drops as more moneyis raised. Typically a finder fee will cap out at $250,000 regardlessof the amount raised.

So why bother to get a life rights agreement?The issue is not permission to use the story or name, but to make sureyou don’t get sued for defaming the person by fictionalizing as mostfilms fictionalize aspects of the story. The more the person is apublic figure, the standards of what constitutes defamation get evenharder to sue on. And dead people don’t have rights of defamation. Infact, in most states you can use the name, image and voice of a deadperson in a film without permission (keep in mind that if you use aphoto or film clip you need persmission from the owner of thephoto/film).

Regarding deceased people, generally, you can make afilm about someone who is deceased without concern (of course, othersincluded in the story may still be alive, such as a spouse or children,and you have to be careful to not fictionalize in a negativeway). Note: generally the law of the state where the persondiedcontrols the rights to their name, likeness, voice etc. Many states donot recognize any special rights once a person dies, while others, likeCalifornia, do recognize the value in a person’s name, likeness etc forcommercial exploitation, but exempt the requirement to get permissionto use the name, likenesses etc in films and works of art. Also, somemajor deceased celebrities have turned into trademarks, such as Elvisor Chaplin. So you always have to have a little legal research done ifthe person was a celebrity.)

Forsome reason, people think that if you only use a few seconds of a songthat is ok, that using music in their documentary is “fair use” or ifyour performers are playing the song or that if the song is old it canbe used.

The first mistake producers make is not understandingthat no matter how small the use of the song is, if its at allidentifiable (2-3 notes) you need a license. And you need a license forany use, including festivals, and , technically, even as a temp track.

Thesecond mistake is not realizing that for existing recordings, you needTWO licenses (sometimes more). The underlyingmusicalcomposition has rights, and so does the owner of the recording of thatmusic. The lyrics may also be owned by a different party.

Thenext mistake is assuming a song can be used without permission becauseits old, or you think its public domain, or the use is permitted as“fair use” (see discussion above re fair use). Even if a songisvery old, some parts of it may not be public domain, or the recordingmay not be. See the discussion above about publicdomain.

Also, songs that people think might be public domain, arenot. Like the song happy birthday.

Anothermistake is shooting a scene with the actors singing or playing the songor in some fashion that you cannot change it, WITHOUT having gotten thelicense first. (the problem here is the licensor will get many timesthe normal price because they know how much it will cost you to changeit. Even be careful with a festival license that does not have a setprice to pay for full rights).

You need ALWAYS need a licensefrom the owner of the composition. Whether you play an existingrecording, have the music performed and recorded by your own musicans,have the actor whistle the tune, sing it, or simply say thewords, You will need a license. The license iscalled async license. Usually the owner of the lyrics is the same person, butnot always. And sometimes the owner ship of the composition is dividedamong several people.

If you are using a pre-existingrecording, you also need permission from the owner of therecording. That is called a master use license.Usually theowner of the recording and owner of the underlying composition are NOTthe same.

Sometimes however, only part of a work is public domain. For example,take a recording of Beethoven’s Fifth. Obviouslythe composition is public domain as its way too old for copyrightprotection. But the recording of that music you want to usemay still be protected. Say it was recorded by the New YorkPhilharmonic Orchestra in 1995. TheOrchestra owns its recording. Ever wonder why thefilm “it’s a Wonderful Life” was public domain and now is not? Well,the film (recording) is public domain but the underlying story isnot. So you cannot exploit the film if you don’t own theunderlying rights. There are even satiations where some musicor films are public domain in some countries but not in others, becauseof differences in copyright laws or war time extensions etc.

There might also be different versions of something. Saysomeone takes Beethoven’s fifth and changes some of thenotes. Or takes an old church hymn and changes some of thewords. Those new versions are copyright protected as to the new/changedaspects.

I once had a film where the filmmaker tried to convince me that thePeriodic Table he had on the wall on the scene in the lecturehall was public domain. I pointed out to him that the design around theedges of this particular copy was copyrighted in 2000!

Once again, only a lawyer or clearance specialist can really make thedetermination of what is or is not public domain because they know thevarious nuances to look for.

Originally, movies where shown in theaters, and what was called“non-theatrical” (ships, hotels, schools, military basesetc). Residuals came about when movies started to be shown onTV. The actor, writer and director unions said , “hey, wemade these films for theaters but now you are getting moneyfrom other areas, and we want a piece of it”. Then when videocame about, it expanded, and further for all other media.

Because residuals are based on gross receipts, its important to try toget the distributor to agree to pay them. That said, fewdistributors of independent films will do so. Unfortunately,because most residuals are based on the distributor’s gross receipts,you can find yourself in a situation of owing residuals when you arenot getting any distributions from the distributor.

SAG residuals are calculated differently based on whether a film wasmade under the theatrical agreement or the TV agreement, and what mediais being exploited. For example, if a film was made under thetheatrical agreement, there are no residuals due for theatricalexploitation, but if the film was made under the TV agreement there areresiduals due for theatrical exploration. This discussion is aboutfilms made under the theatrical agreement.

The residuals rate varies by media, and by union. If you haveWGA, DGA, SAG and IATSE, you could find yourself paying more than 10%of gross receipts (other than from theatrical and non-theatrical) inresiduals.

Generally, residuals are calculated based on the distributor’s grossreceipts, except for video (DVD), whichare based on the producer’sgross receipts from video (the amount the distributor pays theproducer), not the distributor’s gross from exploitation. There areother rules is the producer is also the distributor (like a studio forits own films).

If the producer sells “all rights” and receives an up front payment,that payment has to be allocated to the different media to calculatethe residuals. But it gets tricky, as TV would be on the distributor’sgross. So the amount allocated for TV is treated as an advance againstthe future residuals from TV. But the producer could findthemselves obligated to pay residuals on TV exploitation by thedistributor without receiving any more money from the distributor. Andremember, residuals have nothing to do with whether the film made aprofit or not.

If you fail to pay residuals, not only can they foreclose onthe film (usually they have a lien), but they can put you on theirstrike list; meaning any film you try to make in the future the unionwon’t let their actors work for you.

One last point is what if your films is part union and part not (thishas to do with SAG mainly. Say you have a foreignproduction where some actors are SAG and some are not or you do yourfilm under the ultra low budget agreement where you can have SAG andnon-SAG actors. There is a formula to allocate the residuals. Eachactor is assigned a point for how many days they work and how much theyget paid (there is a maximum number of days and rate of pay so a bigstar wont get allocated all the residuals). The number anactor has relative to the total points is that actor’s share ofresiduals. The residuals that would have gone to the non-SAGactors are just not paid. Say for example that the residuals rate is 4%and 60% of the points are SAG actors, so the effective residuals ratewould be 60% of 4% which is 2.4%. So you would pay residuals at the2.4% rate instead of 4% because not all your actors were SAG.

If you are a foreign producer, shooting your film outside of the US,and want to use one or more SAG actors in your film, you are going tohave to do a partial registration (its actually a full registration butit* called GR1 application and is not quite as intense). Essentially,you will have to pay all the SAG actors who are not local residents SAGminimum (although if you are hiring name actors you probably will paymore anyway), and treat them according to the SAG rules (work hours,accommodations, travel minimums, etc). You will also have topay pension, health and welfare contributions on the SAG salaries, and,later, residuals (see above). All payroll and PHW for SAG actors willhave to be escrowed before they cantravel. The local cast can behired and treated as you would if SAG was not involved.

If you are a foreign producer who wants to shoot part or all of yourfilm in the US, then you will have to do the full registration like anyother US production must.

SAG registration takes at least 3 weeks, so start early.There is a lot of paperwork and documents to sign.SAG will review the chain of title and they must be satisfied, so theymay ask you to have new documents prepared and many documents recordedwith the copyright office. They will take a lien on the film.They will also take a deposit on wages (40% of the estimated wages,with adjustment for salaries that have been escrowed). Theywill also require collateral for residuals, in addition to the lien.This may be an additional deposit, a guarantee, a collection account orall of the foregoing or other forms of collateral.

If the film is shot entirely in the US, and is under $2.5 million inbudget, there are various low budget agreements that apply with reducedrates and some reduced work rules (all of the deposits, security,residuals rates, etc still apply). There is theUltra Low (up to $200,000 budget), modified low (up to $625,000although this limit can be increased to $937,500 with diversity incasting), and low budget (up to $2.5 million budget, but can beincreased to $3.75 million with diversity in casting). If yougo over the applicable limit (you have to certify to SAG the final costand they have audit rights), then you have to pay the actorsretroactively at the higher pay level. The modified low andlow budget agreements also require that the film be theatricallyreleased somewhere in the world before its released in any other media,otherwise all actors get retroactive pay to the full SAG rates.

One agreement to note for many first time filmmakers is the Ultra Lowagreement. Under the Ultra Low budget agreement you can hire SAG andnon-SAG actors. All SAG actors have to be paid the minimum of $100 perday. If you pay a non-sag actor more or less is irrelevant. PHW is onlydue on SAG actors.

One last point on SAG is what is called CORE. SAGcalls it financial core and makes it seem like its only for actors infinancial trouble. That is not the case. Coreactually came from a court case not involving SAG and applies to everyunion. A union member can decide to elect core at theirchoice. Core allows an actor to work onunion and non-union films, with no penalty by SAG. You cannotbe fined or suspended from the union for electing core or working onnon-SAG films as a core actor. So what is the negative side?You pay reduced union dues (what is called by the court the “core”dues, which are the dues less amounts allocated for lobbying activitiesand other such things, and cannot vote as a member of theunion. When you go core, you become a non-votingmember of the union and pay lower union dues. You get all the benefitsof being in the union, including health and welfare etc. You justcannot vote. You also can work on non-union films. SAG makes a big dealout of someone going core, and last I heard wont let you go back onceyou go core, but I don’t know if they can do that.

Sales agents on the other hand are much more active in the sale offilms. They go to the various film markets, have a booth, setup screenings, and sell the film territory by territory, media bymedia. Most can also sell domestic rights too, just like a producerrep. The commission rate for sales agents range based on howmuch they think they can sell. If they feel they can sell severalhundred thousand dollars, the rate is typically in the 15-20%range. If they feel they will sell less, then the rate goesup, and if they feel they can sell millions, the rate drops.Sales agents also advance the costs they incur to make a trailer,artwork, do screenings, take out ads, and delivery the picture. Theyrecoup these costs from revenues only. Most will also chargean overhead fee to cover the costs of going to the markets. This canrun from a few thousand dollars per market to tens of thousands,depending on the sales agent.

Do you need a sales agent? Absolutely. There is just no wayfor you to compete and make sales. Sales are made mostlybecause of relationships. The relationship the sales agenthas with the buyers. The sales agent also knows what prices are right,and can get paid too. Distributors wont always payon a one off sale, and many times wont even buy, because theyknow the seller wont be around in thefuture.

Do you need a producer rep? Probably. Just like the salesagents know the buyers, the producer reps know the salesagents. You wont know who is good or bad, who is honest ornot, who is right for your film, etc. Just like the salesagents with their buyers, producer reps know the sales agents and haverelationships with them.

Options for a script usually are 10% of the likely purchase price for a12-18 month option period. The purchase price might be WGA minimum, orit might be a percentage of budget with a floor

The probem is, once you become a WGA signatory, you can only hire WGAwriters and only by scripts from WGA writers and must pay WGA minimumsfor both. So most producers have one company that is theirWGA company and one that is not.

WGA registration is similar to that of the other guilds, although a biteasier.

WGA also has various low budget agreements, although the benefits arenot quite as good as theysound. The WGA low budgetagreement only allows deferment of part of the fee, in certain cases.It applies to films under $1.2 million and PURCHASES and first rewriteonly. It does not apply to normal writing services. Also, it does notchange the rate of pay, it provides for limited deferment. For filmsunder $500k, the amount deferred is whatever is agreed. For filmsbetween $500k and $1.2 mil, you must pay $10k on start of principal andthe balance is deferred. That deferment is not what you think. Thedeferred portion is due at the moment you have revenue after recoupmentOR , and this is the biggie, first distribution. So even if you havenot recouped a dime on your film, the full deferment is due when youhave any distribution on the film.