By Thomas A. Crowell Esq., June 12, 2007
We all like to make films with our friends. Creative partners help each other over writer’s block, share the workload of producing and divide up the financial strain of funding a movie. But before you start down the road of making a film with your best buddy, take heed: working with a partner can create legal problems—especially if certain issues are not dealt with before they start creating together. Who owns the copyright to the film? How do you split the profits? And, most importantly, who pays the expenses before the project makes money? Without a contract between the collaborators that lays out clear answers to these questions, the law will supply the answers—and they may not be the answers you want.
Collaborators typically face problems in two broad categories: their working relationship and the ownership of the film property they create.
The working relationship
If you plan to make money from your film, you should treat your production company like the business it is. The best route when making a film for profit is to establish a limited liability company or other business entity. Forming a business may seem like overkill for a few friends who just want to write a script or shoot a fun project over a couple of weekends. But, believe it or not, collaborating filmmakers can find themselves members of a business entity called a general partnership—and bound by partnership law—without ever having officially formed a partnership!
Being a member of a general partnership is risky: because each partner must answer for the debts of the others made during the scope of the business, choosing the wrong partner can get you into personal financial trouble.
Example: Carlos and Kim are collaborators working on their first picture, Broken Beer Bottle Blues. For the film, Kim decides that she needs to do extensive research on the effects of drinking and depression. Over a two-month period, she lives in a neighborhood bar, pounding back expensive imported beer and videotaping herself with the latest HD camera, purchased with an eye toward using it for the film. Needless to say, she runs up quite a bar tab and electronics
bill. Because they share the film’s expenses and hope to make money from their combined efforts, the law may see Kim and Carlos as partners. If so, when Kim’s creditors come knocking, they can attempt to collect the debt from Carlos as well.
As a result, it is critical to have a contract in place which lays out each person’s rights and duties with respect to the business of creating and managing the film property.
Ownership of the film property
Who owns the film property? Who can decide whether to sell or license it? Ownership and control are two problems that constantly plague collaborators.
Even if you come up the idea for a movie and bring everybody else in to work on “your” film, you still may end up sharing the ownership of the film’s copyright if you’re not careful. Unless they have a written and signed contract that says otherwise, script writers and co-directors who work together to create the film may be considered joint authors under copyright law—and, therefore, co-owners of the copyright to that work.
Where there is no contract governing the relationship between the joint authors, the law will supply the default provision that governs the ownership of the copyright in the work they create. These default provisions often run counter to the expectations of one or more of the creators. For instance, without a contract between the collaborators, when the film is sold, copyright law requires that all joint authors share the profits equally—even if only one of the creators originated the idea and did 95% of the work.
The agreement
Before drafting an agreement—and before you start to create together—it may be helpful to sit down with your friends to discuss the following issues:
Ownership of rights
Who will own the copyright to the screenplay or film? Are the rights shared equally among the collaborators? If the collaborators don’t want to be joint authors, the agreement should say this.
Are any rights held by only one person—such as the “idea person” who retains the exclusive rights to create a television show, video game or comic book based on the film property?
Who gets the rights in the event the collaborators can no longer work together? Does the idea person retain the exclusive right to turn the concept into another screenplay or film? If so, does he/she have to pay the other collaborators under this agreement?
Doing business
How do the collaborators decide when and to whom to sell the work? It is typical for an agreement to require the written permission of all or of the majority of the collaborators before the film property can be licensed or sold. Are all business decisions decided by a majority vote?
How is the income from exploiting the work divided?
When and how is the work scheduled to be finished?
If any collaborator withdraws from the agreement before the script or movie is finished, how is the withdrawing collaborator’s ownership interest affected?
How will the collaborators pay for the expenses of shopping the screenplay or making the film?
How will each collaborator be credited? How will collaborators be credited if they withdraw from the collaboration?
The Rights of Joint Authors
Joint authors have certain rights under copyright law. If the authors want to change these rights, they need to do so by a written and signed contract between them. Unless the contract says otherwise, joint authors may have the following rights and duties:
Each joint author is entitled to an equal and undivided interest in the copyright with the other joint authors. Note: Their contributions do not have to be equal for them to share equally in the copyright!
Joint authors may grant nonexclusive licenses to the joint work. But ALL joint authors must agree to grant an exclusive copyright license to the joint work.
Any joint author who sells or licenses the joint work must pay other joint authors an equal share of the money.
Shaking on it
Remember, creating a movie is more than just a labor of love—it’s also an investment of time and money. But while countless hours are spent setting up shots and editing footage, many collaborators spend too little time taking care of the business and legal aspects of their productions. You will save yourself headache, heartache and a heap of legal bills if you have a well-written agreement in place before you start creating with your buddies. Choose your collaborators carefully: not only are they your creative partners, they’re also your business partners.
This article has been prepared for educational and information purposes only and is not legal advice or a legal opinion. Only your attorney can advise you which laws are applicable to your specific case and situation.
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