Error & Omissions（E&O） Insurance Producers

Due Diligence of Intellectual Property(IP) Rights in a Movie

Lawsuits surrounding movies often arise from copyright infringement or defamation which can have dire consequences. In the worst-case scenario, the audience does not get to see the movie and producers may also be liable to damages. There are a few things that producers and distributors may do to minimise their exposure to litigation risks and potential losses relating to use of IP rights:

1. Title Report

Choosing a movie title is an important decision. Imagine that you receive a letter telling you to cease and desist any use of a particular title after your first big wave of promotion, the money used to promote the movie would become a waste.

In determining whether you can use a certain movie title, you can obtain a title report from research companies. Research companies would search various databases, including trademark registries, domain name records and the Internet etc. and list all the films, books, songs and productions that bear the same or similar title you propose to use. Based on the report, experienced attorneys can determine whether the title is clear to use and issue a title opinion. If a certain title is not available, you may consider adopting a different title or attempting to negotiate a license to use the title from the third party owner of any prior rights.

2. Copyright Report

If the movie you are making is your original work, the issue of copyright ownership is more straight-forward. But if the movie you are making is based on another work, such as a book or another film, you should acquire, obtain written permission or license to use the relevant work before making your movie.

A copyright report is search of the records of copyright and other databases. Such report will assist you in identifying the owner of the underlying work and whether there may be any conflicting assignments that may affect you from using the underlying work. After acquiring the rights to use the underlying work, you are recommended to record the transaction with copyright offices. Such transaction will then be reflected on the copyright report to prove that you have the right to proceed with the project.

However, there are limitations in the information that can be revealed since there are some jurisdictions which do not provide registration of copyright and not all works are registered even if registration is available. If there are any ambiguities, gaps or problems in the chain of title of the copyrights, you should seek legal advise from experienced entertainment lawyer to ascertain if you have the right to commence a project.

3. Script Clearance

Contents arising from a movie are often the subject of lawsuits against movies. Before the commencement of principal photography, you should carefully review the script for the following:

►   if anything in the script may contain defamatory statements about a person or an entity;

►  check the names, telephone numbers, addresses, business names used in the script against the internet and phone book of the locate in case it may violate any rights of privacy;

►   if any props/ scenes may contain third parties’ trademarks or copyrighted works(such as a product, a photogragh or a film clips etc.)

which may give rise to infringement issues.

it is useful to sit down with your writers to go through the script or to obtain an annotated guide. The aim is to identify ever character, location and event, and state where the inspiration for each item originated, whether they are original or whether they can be connected to events, people or places in the real world. It is possible to obtain script clearance report from third party service providers, but your attorney may also conduct the clearance before the commencement of production.

4. Music Rights

Obtain permissions to use the music in your film. Using a compose to write original music throughout your production helps avoid music clearance provided that you have proper agreements with the composer and other contributors to ensure you have all the necessary rights assigned to you(see (5)below). If you use pre-existing music in your production, the basic rule is to ask for permission from the composers or copyright owner, usually the music publishers and/ or the record companies for the pre-existing music, which would include all necessary synchronization and performance licenses.

5. Assignment and Releases from all contributors

Every production involves numerous parties, such as writers, directors, performers, set and costume designers, sound mixers etc. The work created by these contributors to make sure appropriate clauses are in place to assign all IP rights to the production company, to include a warranty that their work dose not infringe a third party’s IP and to indemnify the filmmakers in the event of infringement is found. Distributors will often require specific language to appear in all agreements before it agrees to the distribution of the production, such as clauses granting the right to publish, distribute, edit or delete the works by these contributors.

Even if you have completed the above due diligence, it is impossible to prevent someone from suing you. It is impractical for filmmakers to deal with all these aspects while also focusing on their creative work. A common practice in the industry is to purchase errors and omissions(E%O) insurance, a form of professional liability insurance which protects movie producers and distributors from lawsuits arising from contents of the production such as copyright and trademark infringement, defamation, unauthorised use or misappropriation of title, characters or ideas etc. Apart from getting peace of mind, E&O coverage is often a pre-requisite for distribution deals (particularly in the US) with studios, television, cable networks and, nowadays, the internet as the distributors would also want to have the same protection for themselves against lawsuits.