Chain of Title - what do I need to be thinking about? | One Stop Business

Chain of Title - what do I need to be thinking about? | One Stop Business

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hi everyone welcome and thank you for joining us today for two days one-stop business workshop which is about chain of title so chain of title is sounds a bit mysterious but we're going to clear up all the mystery today and it's something that's really important to get right from the start we are super grateful to have Rachel hiruzen joining us currently rachel is the CEO and the Manitoba film the film Commissioner for Manitoba and Manitoba filming music and as part of her job she meets the provinces current corporation which is charged with driving Manitoba's dynamic film industry prior to joining them at hello filming music Rachel was a partner with MLT Aikens LP so she's been practicing entertainment and general commercial law since 1997 and we're so pleased to have you here today Rachel to help fill us in and and get us started on chain of title thank you thank you so much Marcia and thank you to the CBC and the CMP a and everyone for putting the session on I'm delighted to be here chain and title is such an important an important concept for a production to understand and it's something that needs to be dealt with early on so I'm thrilled that you're joining me today if we could go to the next slide please what I want to talk about is why chain of title is so important and what you'll see as we get into the deck is that you should not wait until you're about to sell the property to really give some thought to your chain of title and making sure all rights are owned by production before exploiting obviously the sooner you do it the less stressed you are of course but as you're about to sell a piece of copyright or a piece of property it becomes more expensive to negotiate with any other rights holders if you haven't bundled those rights ahead of time so when I was practicing law I always advise my clients deal with your chain of title right as early as inception as you can next slide please so what is chain of title and why does it matter that's the big question chain of title in essence it is your paper trail it is what establishes rights with respect to property and it is can be owned by a person or any entity and it's called the chain because it's linked and it starts with inception or creation right through until the present owner what determines copyright of course can be in literary Musical dramatic or artistic work and so documents or contracts can establish the clear chain of title and that will help identify who owns or who controls rights necessary to produce any kind of production based on material next slide please so chain of title documents I get asked that a lot and when I was practicing and I would say to my clients I'm putting together your chain of title opinion they would say what do you need so what I need are any documents that establish any rights to a particular piece of work so copyright registrations if any not always required or at all required underlying rights which can be ideas life stories book rights they can be underlying rights agreements with the broadcaster they can be Option agreements or the purchase agreements which exercise the right of an option they are your co-production agreements joint venture agreements next slide please there are also any type of composer lyricist agreements transfer agreements assignment agreements that happen over the course of a property starting with shop agreements through your option right forward contracts with any key creatives performers and releases and what's important to note is just what I would always say to my clients anytime you have an agreement where somebody touches upon or modifies or could have obtained rights to your property you want to make sure that document has automatic assignment clauses and make sure it's owned by production so production would want to make sure that any type of a contract or deal memo it has indicates that all rights are the exclusive ownership of the production next slide please what's important is to have a clean chain of title no kinks in the chain which is the complete timeline to show a hundred percent original ownership or rights are owned by the person who wishes to exploit them at the time and again I I want to comment about the fact that anytime somebody touches upon rights that could add any creative or other elements that could cause a dispute you want to make sure you have a clear chain of title because I can tell you that in my practice I was not just acting for independent producers but I acted for banks lenders and agencies with respect to financing and they want to know you have clear chain of title and if there's any dispute right or wrong those who are gonna purchase the work or lend or collateralize based on it are gonna pause until production establishes a clear chain of title so that's really really important because the risk liability wants to be mitigated by all those who are going to help exploit it and invest in it next slide please so what can go wrong lots can go wrong deal memos which we are all aware of which often haunt entertainment lawyers but the truth is entertainment law clients are very sophisticated and they know what they need to do so very often deal mammals are just written down and they're very brief but they're not always comprehensive to deal with issues like chain of title they don't often deal with other things which is my second point which is reversion of Rights so by way of example if there's an option agreement out there and work is optioned you want to make sure potentially you deal with what happens at the end of the option who owns that piece of work does it revert to the owner is it have to be purchased certain things have to be dealt with to try to get as much certainty in the contract as possible so it's not that a deal memo in and of itself is wrong it's just what is the contents and the meat and potatoes of that Oh memo other things that can go wrong very often in a collaboration stage right at the beginning I see this a lot friends or colleagues who have long-term relationships sit together and spitball ideas and write it on paper and because of the relationship they don't always document who owns what or how are these rights dealt with and then issues can come around and one person wants to capitalize on it and they have something in their back pocket to sell and now it's an issue about getting that sign off of the rights holder so I always say deal with that upfront and I used to always say you know blame your lawyer throw me under a bus say you know hey I I want to document this my lawyer says I need to best protect us both soja mind entering into a collaboration agreement with me as some sort of a writers agreement to deal with issues like ownership of rights so that there's a clean chain of title going forward moral rights moral rights become an issue too because they are the natural and inherent rights of a creator and so you want to make sure as production that when you're dealing with assignment of rights waiver of moral rights are included in that it's pretty pretty standard we see that more often than not and a lot of sophisticated producers just know to throw that cause in those deal memos whether they have counsel or not but occasionally I've come across situations where that was not present other things that can go wrong are issues like book rights when when rights are shared with publishers as well as authors same with music and publishers and as well as incomplete documents you want to make sure that those who are assigning or transferring rights are doing so in the proper way if it's from an entity or corporation to another corporation you need to make sure it's authorized by the proper authority there's corporate authority to do so and it's enforceable in binding and then we want to be mindful of issues like bankruptcy and insolvency and because those do those do affect those do affect rights you know when we when we deal with chain of title and I just want to pause and speak a little generally we're dealing with protection of rights issues like I mentioned before copyright it's not required a person's right exists in the creation of work but sometimes a registration of a copyright is helpful in the event of a problem it helps build a case and show evidence of that and and and so what I always try to deal with is is recognizing that clients need to understand what they're looking to protect so if it's a script you don't necessarily have to register it with the Canadian Intellectual Property Office it is an option you don't have to register it necessarily with writers guilt it is an option but copyright does exist upon upon creation before I think our next slide is the questions is it not but before before we go to that slide I I wanted to just talk a little bit about some other things about council for instance you don't need a lawyer to help you with Train of title it's highly recommended because as I've been trying to focus on the concept of making sure those rights are dealt with are really really important and missing something along the chain can become incredibly costly chain of title is not expensive to protect with a lawyer there's there tends to be a bit of an investment in the beginning but I can tell you that in my experience making sure and investing upfront in a proper chain of title will mitigate loss will save money in the end and establish is a good protocol for business on a going-forward basis um I mean that is sort of the essence of what chain of title is and and how it needs to be protected I I think what's also important to know is that that chain of title that you start to work on is never it's a dynamic situation it grows it's a live document because as we know works are often created and then they sit and then they're sold and then they revert and somebody adds to it and then it gets changed and so you always have to revisit your chain of title and I would always tell my clients it's like writing your will you want to look at it every couple of years and see what's changed who's added who's not so you know it's very easy to start with the creation of the work sometimes you have to go backwards if it's gone through a long process but chains of title can become a situation where you actually need to graph it out and do a road map because there's been so much involvement along the way so my my long-standing advice is start early if you haven't done it yet go back create it and let it sit and every now and again when you're dealing with your property prior to it being sold and even after it's sold because the territory or the timeline of the duration of a sale reverts back and then you have to deal with it yet so constantly revisit your chain of title and see where where it takes you Marshall you have any questions in particular you want to deal with at this time sure and actually we've been getting lots of questions from our audience which is really exciting so um thank you so why don't we actually off the top I'll just ask you one quick question which i think is really simple and it's just is there any difference in chain of title for different kinds of works so some people might be making a film or someone might be making a web series or a documentary so just wondering if there's any difference in that or this is a universal approach that needs to be taken a good question it's not so much that there's a difference in what is required it's just the documents themselves might be different so you know examples for instance I worked on television series that were being licensed by CBC that were a co-creation for instance between CBC in a production and so there's an example a broadcaster would give an underlying rights agreement that becomes a chain of title document because there's rights in there and so it really only depends on what the original owner or creator of the work has done with their property from the time they created it to the time that they exploit it so all of those types of events happen so it's not so much specific to whether it's film or whether it is television it's just any document that purports to establish rights and of work need to be documented and assigned to production so that production can then enter into its form of agreements and and I follow up to that based on what you just said so if you had another season of your production is that a new chain or title or is it more like what you were saying it's a living document so you're adding on to it and all the documents from the previous season become part of it you will add to it sometimes you you don't you know if you're doing a series you don't need to contain the underling rights agreements necessarily in the past for that new piece of work but you always need to keep adding to it again every time something changes but usually what happens is if you're dealing with the second season then all of the rights to the first season will be assigned to that prod foe that's now dealing with season two and so they in capsule what has already existed and then they build upon it from there but everything that underlined you can't have season two if you don't have rights to season one so the season one would have to be assigned and transferred to that new entity that it's producing the next season because as you know there's always a new Prada that's taking over that next season and so they need to have all of the rights to the first and then they build upon that and then that gets taken to the next one and the next one and the next one it continues to build and that's why it's called the chain um all right could you explain a little bit what an option is and the option agreement and then maybe what the difference might be between an option agreement and the shopping agreement great question shop agreement doesn't purport to give rights other than the right to shop it and the right to and determine if there's interest within the marketplace so it is a limited right for that purpose in an option agreement a producer would purport to have the option to purchase a piece of work so they option it and then once they then they have that right and an option can either be exclusive or non-exclusive but if production took an exclusive option for instance to a writer that option could exist for several periods a time there could be separate option periods so say option the first option period could be a period of six months it's all negotiated option two could be an additional six months you can have a couple of options periods in there and the way it would work is at the end of that option period the producer would have the irrevocable right to purchase it based on the purchase price within that option or the option lapses so it's it's basically like a standstill for the owner while that option is exercised and producer has enough time within that option period to purchase it where option agreements can go wrong is if they don't have a purchase price or a mechanism for purchase it's a faulty option so again I always advise production to at least work with Council on establishing baseline documents we as lawyers always caution about precedents they should never be something that you look at totally in isolation but it's a good building block to make sure that you have the basis upon what you want to put in there but the option agreement is the it has within it that transfer of Rights and very often the case is is that upon making the purchase payment from producer to rights holder the rights are automatically assigned and transferred and it becomes an irrevocable option and is there a minimum purchase price like how do you figure out what that purchase price should be it really depends if it's writers guild so you know there there are certain minimums like a 10% option price when you're dealing with guilds and unions but if you're dealing with it a non-union member it can be a negotiated amount I've seen options for ten dollars and I seems options for a hundred thousand dollars it depends there is rights of negotiation but of course collective agreements do determine minimum standards when they are covered by that so another question we've had is what do you need to think about in terms of documentaries so when does the chain of titles start there and and what sorts of agreements do you need to factor in from very early on from dark or documentaries life rights are among the most difficult to secure in because they're very sensitive it's somebody's right to their story and their voice and yet as producer counsel you understand that producers actually need to have the ability to create their production with with certain approval rights and it's very awkward sometimes to negotiate and discuss with an owner their story and yet say but I have the right to modify that and fictionalize that and do what I want but please tell me your life rights so when you're dealing with situations like a documentary that might be about somebody's rights your chain of title starts upon negotiating right so you want to make sure that that assignment of those life rights from that person are dealt with immediately and that document you would want to make sure that it covers what producer can do because the worst thing in those situations if midway through production or prep or upon selling something producer has to go back to that rights and try to secure more rights so you want to try to be as broad and encompassing from producer standpoint as possible but broadcasters and distributors are going to be very mindful of making sure that life rights are properly secured in a manner because they are so sensitive they do become issues for dispute later down the road and in terms of mitigating mitigating liabilities those buyers want to make sure that it's bidden that it's been dealt with so when you're dealing with documentaries everybody if you're dealing with true events or if you're basing it upon another work you want to make sure that all of those rights are there and that um leads to a different question a little bit and I think you covered it in your presentation but you know you talked about events or real stories so often you find things like that on the internet or in a newspaper or whatever I guess I know the answer to this question but is everything on the internet free like what do we need to think about when it's always a free no it's not you know there are certain things like you know Creative Commons where you can go and buy and purchase right that is either public domain or where you don't approach it you can use it or whether certain creators are creating a platform in which a non-exclusive way you can you can purchase but again you have to be very very careful about those licenses that you're not just purchasing and paying them but you are doing so within the confines of that license how you can utilize it because I've seen clients get into trouble where they say look I purchased this I paid 150 dollars to use this why am I being sued and I say because you purchased to use it in one fashion however you used it in another that violated the license you exposed it or you didn't credit the author of that work and so I always caution people when buying licenses it's a really good opportunity to speak to counsel and say anything I need to worry about because the terms of the license need to be really understood before saying yes I can go and do that so I'm more cautious about purchasing through the internet than I am dealing with chain of title in what you've controlled and the people that you've brought in so from a writer and creator perspective what are things that you should be thinking through just sort of start I don't know collecting or show chain of title that's something based on your own original writing especially and then you know similar to that if you are self developing a project you've already written the script do you have to option your own work no copyright is inherent upon creation you own it and if you've solely created it you're okay that is your chain if you have had it polished edited somebody's contributed it to it that's where I get concerned so before a writer parts with their work to get input from somebody else that's where I establish or try to help them establish a writer agreement a form of collaboration agreement something that says I mean in Canada we don't use expression work for hire but something that says I am writing this and all rights of every nature kind whatsoever in perpetuity now heretofore our own production and it is an inherent transfer and that's what you pay for I mean there has to be consideration and that's that's what you pay for you know works that are not protected from copyright are facts ideas it's the expression of the idea that is protected so you know I would give the example there's a million in one medical shows whether you're watching Grey's Anatomy as it was or Chicago Hope as it used to be or the good doctor anything so the concept of a television series within a hospital is not what's protected but it's the expression and how that is created that is what is protecting and and what about if there's a joint owner of the worker or if you had a co-writer what do you need to think about looking both parties potentially license or exploited on a non-exclusive basis how does it work when there are multiple owners or Co writers can become an issue in terms of what happens right it's a marriage and so what happens upon divorce what happens if somebody wants to go in a different direction from their writing partner those are all things that should together work with how that right ear writer agreement is it should contemplate it because if you have two writers and you equally only work and one wants to sell and the other is not interested you have a kink in the chain you don't have clear chain of title and so when one writer goes and tries to sell that piece of work and the the buyer says so fantastic I need your co-writer to sign off and the writer says well they won't purchaser is gonna say great idea clean up your chain I can't take that on because I can't risk that that co-writer is gonna sue us for exploiting work that we didn't have consent to do so those are the things that need to be thought of um getting lots of questions which is good in terms of documentary life rights there's a personal release is that enough like how do you actually purchase life rights so that you can get sign up for the main subject of the film you have to talk about what those rights are so you know look at it like as a person in appearance release for instance if you have a release that says you get to use somebody's name and voice but you don't get to but you don't write in their likeness or biography or image you don't have those rights you would then have to go back and get those rights so when working on b-roll or or marketing or your promotion and you want to write something about somebody you know you have to go back and negotiate those rights in the eyes of a sale going back to a rights holder that you might have been able to get those rights for five dollars who now see that you're gonna make some money off them they're gonna maybe consider saying you know what I'd like you to pay me for those rights so when you're dealing with someone's story um you know there was there used to be a joke and Entertainment Law we used to say you want to own somebody's story their dreams their past their present their future you want to try to see what are you going to need prequel sequel modification adapt tation make sure it's all forms of media do you want to make sure that you capture potentially it's going to become animated or not so you want to try to be as broad as you can and the the issues that you were to face later down the road that will ruin your chance of exploring your production do with that upfront be absolutely transparent with the rights holder into how you acquire them and see what what you're going to be dealing with because if you have a right told ur who says and I've had this happen a lot with with life rights and documentaries and they say you can have my life rights but I want final approval of script I want full and final approval of everything I would caution production that's very dangerous because if a buyer is often the case sometimes we know a broadcaster or a studio or a buyer might say fabulous idea we want to change the name fabulous idea we want to modify this if that life rights holder has only negotiated with production that they get full and final approval they're basically at every meeting with you maybe that works but I would not recommend that I always want to make sure that production appropriately and responsibly has the greatest amount of flexibility to be able to exploit and commercialize their product that they have invested in that they have taken the risk for and so making sure that they maintain it so I would always as an example with that I would say you know why don't you go back to the rights holder and ask and tell them that they can have meaningful consultation but they cannot have final approvals so again it's sort of it touches upon chain of title it's not your chain but it does interfere in rights so try to negotiate that upfront and and try to look into as much of a crystal ball as you can to say and that's where counsel comes into play what do I need to do to protect my rights so that I can comfortably invest in development and funding and try to sell my property without knowing that everybody I acquired it from could raise their hand and say oh that's mine you didn't do that properly so follow-up to that and I'm gonna have kind of two questions that are linked and just say I think this will probably be our last questions and thank you so much and we'll take the other questions that we've gotten today that we haven't gotten to you and we'll figure way to get back to everyone sure um so following that more more from the producer perspective if they're trying to purchase something how would you advise that they could look at the sort of chain of tow that might already exist like art should they ask for underlying rights or coaching rights and then lastly are there any resources or things that we can point to your post later potentially that might be good examples of chain of title or where to look so that people who are interested can get they can get into this one questions um in the option agreements that producers are going to sign with respect to a rights holder I always make sure that they have comprehensive representations and warranties from the owner of the work so by example I would want to make sure that the owner of the work represents and warrants to production that they are the right folder they own all each and every write necessary to entitled production to exploit commercialize and modify adapt assign all rights and and so forth and so forth and while that option agreement is being sent to the rights holder they have to sign and represent that listen nobody wants to go into something knowing that they have a right to sue but at the same time production needs to be able to make those reps and warranties because when the broadcaster or buyer then comes to production production has to make those same representations and warranties to them so production can't say to a buyer I production have every right necessary because unless those that came before them told them that they own those rights to give to produce a producer won't know he she or it have chain of title so that's part of the chain is the representations and the warranties and the certification from the rights holder and a sophisticated production if they're bought if they're authorizing rights and they're trying to option rights by sorry my apologies if they're trying to option right they're gonna want to say to that rights creator eight do you own all of those rights if it's a book if your optioning a book you're gonna want to be able to say do you own those rights versus your publisher who owns the rights to give the option I have on occasion had to have the publisher also an option agreement to make sure rights are owned but those representations and warranties are absolutely essential in any type of a document excellent well believe it or not we've run out of time and there are tons more questions but again maybe um well we'll circle back with those of you who sent direct questions and we'll see if we can find some resources that we can point people to but as Rachel has so aptly pointed out on the Coe it's complicated and and you want to think about who you might need to help you through this to make sure that you've got what you need in order to move forward and not only get your work maybe but get it seen so thank you so very much Rachel reason and to CMC and to caf-co and to all of you and I believe the next session will be Monday at 2 p.m. Eastern and you can't wait to see there thank you thank you I'm delighted to be here good luck

2021-01-22 01:35

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