Gerdes Law

If David Letterman were an attorney who represented multimedia producers, he might present the following Top Ten list of things a multimedia producer should do in preparing a multimedia production.

1. An oral contract is not worth the paper it's printed on, unless Kim Basinger is involved.

The message here is: get it in writing. Unless producers create and produce every element on their own, any interactive multimedia property will require the license or purchase of the work product or the likeness of others. Depending on the type and scope of the project, producers will need agreements with writers, directors, other producers, composers, computer programmers, graphic artists and others.

The written contract must define the business relationship of the parties and transfer ownership of the intellectual work product. The recent case involving Basinger points out the need to have a clear written understanding of the business relationship between the parties. The last thing a producer needs is a judge or a jury deciding what the parties intended the agreement to be. Although an oral agreement was recognized in that case, its terms were culled from numerous written but unsigned drafts of an agreement that were passed back and forth between the parties and their lawyers. A second very important reason for getting an agreement in writing is that transfers of certain intellectual property rights - under copyright law, for example - are invalid unless made in writing.

In negotiating and drafting a contract for a multimedia production, new terms and concepts have been added to the discussion including:

• Media. Will this product be distributed on a single platform, such as CD-ROM, or can it be ported or translated so that it can be distributed on all media, such as CDI, 3DO, Sega, Nintendo, old-fashioned video cassette and the on-line systems like CompuServe and Prodigy?
• Future Products. Who has the right to produce derivative works or sequels?
• Bugs. Who is responsible for getting the kinks out of the program?
• Technical Support. Will a customer-support number be set up to answer questions about the product after its release?
• Bundling. This is a practice common in the computer industry where software is packaged and sold with the hardware whose manufacturer pays a minimal price for the software.
    
2. It is much better to own than it is to rent.

Anyone who has been tricked into watching a Saturday afternoon infomercial while channel surfing knows the number-one lesson of those real estate seminars: owning a property is far better than renting one. Wherever possible, acquire ownership of the elements in the production. Intellectual property rights, like other property rights, can be bought and sold. Common sense dictates that what you own you can completely control. If you have a musical composition created for the production that you own there is no one to pay royalties to nor is there a concern about a license that may expire or a need to worry about rights not acquired that you may want to exploit in the future.

Works can be acquired by assignment or as a work "made-for-hire" if created for a particular production. The basic premise is that if a producer "hires" an individual to create a work that is created under his direction and control, the producer becomes the copyright owner of the work. The requirements necessary to qualify for a work made-for-hire are complex and still evolving (see the article on page 35). The preferred method is to remember tip number one: get it in writing.

3. Create a license plan: look for rights that must be licensed.

There are two categories or rights: likeness rights and property rights. Property rights must be acquired for the use of copyrighted works such as books, plays, music, films and photographs. Likeness rights, also called publicity rights, are needed for the use of a person or the use of non-public information about a person. In some instances, as in film clips and photographs, both likeness and property rights must be licensed or cleared.

Make a list of these items and mark off the ones that are essential to the creative integrity of the project. Be ruthless when making these decisions. The priority list will be a useful tool to help you eliminate items when you begin to negotiate the licenses and find that some rights may be difficult or too expensive to obtain. This process is much more effective if done early in the production process so you can eliminate items while it is least expensive to do so. Taking a film clip out in the development and script stage is certainly much cheaper than if it is done in final edit or after 5,000 CDs have been produced.

4. Kick the tires: do your own "due diligence."

Before you buy a used car you kick the tires and you call up the owner to see whether he spent his days driving to the grocery store or training for the Indy 500. If a certain property is crucial for a project, do your own due diligence. If a licensor is not the original owner, make sure he owns the rights intend to exploit. Order a copyright chain-of-title report and ask for the underlying agreements by which the licensor obtained his rights. He must have the ability to exploit the interactive-multimedia rights you intend to exploit. A copyright is made up of divisible rights that can be sold to many people in different ways. The individual you are acquiring rights from may only have certain specific rights, such as free television or video that will be of no use to you.

5. Real people file real lawsuits.

Whenever the name or likeness of a real person is used, you encounter the possibility of defamation or an invasion of privacy. If you have a signed name-and-likeness release from that individual, which includes the right to fictionalize and dramatize, you have resolved the issue. If not, make certain the statement or portrayal of that person is true and verifiable by a reliable source. This will minimize potential defamation claims but not privacy claims.

Privacy rights can be actionable even if the facts used are true. Privacy issues are separated into four categories: 1) public disclosure of embarrassing facts; 2) publicity that places a person in a false light in the public eye; 3) intrusion into someone's privacy or solitude; and 4) appropriation of a person's name or likeness.

6. Murphy's Law applies to multimedia: always have alternatives.

Don't paint yourself into a rights corner. If your project depends on the use of a film clip from Gone With The Wind or a Lennon and McCartney composition, you may be amazed at the cost of a license. You may also get an out-and-out refusal to grant a license. A copyright holder has no obligation to grant you a license. As the studios who own these properties increase their awareness of multimedia, they may refuse to license certain classic and valuable works. Some property owners are deliberately holding back the licensing of their works in the new media until licensing terms and fees stabilize and technical safeguards are devised to minimize piracy and the unwanted manipulation of their work. Always have alternatives.

7. It's a Wonderful Life: public domain is not always what it appears to be.

Just because someone tells you a work is in the public domain, or it is "old," don't assume that you are in the clear without verification. Works that are public domain in the U.S. may still retain protection in countries where your project may be distributed. Also, a work such as a film may be public domain, yet the underlying basis for that film, such as a book or story, may not. The music may be still protected. Republic Pictures was successful last Christmas in regaining some control of the licensing of Frank Capra's classic film It's a Wonderful Life, which had fallen into the public domain, because some of the music was still protected. Remember tip number 4: do your own due diligence.

8. Imitation may be flattery, but it can be expensive.

Don't replicate a work you were not able to acquire or afford the rights. A parody can be done without a license but it must be legitimate. Conjuring up a film or composition to save a license fee does not fall within the definition of a parody. Be aware that the legal prohibition against sound-alikes and look-alikes is expanding. Imitation may be the greatest form of flattery, but this type of flattery can result in litigation.

9. Look for the union label.

If you use union talent for your project, you will have to adhere to the standards set by the appropriate collective bargaining organizations (SAG, AFTRA, DGA, WGA, AFM). If you are reusing the performance or efforts of union talent in a film or television clip, you need to check with the appropriate unions as residual or reuse payments maybe required to be paid to the actors or composers. Most of the unions now have staff who are responsible for new technologies and who can be very helpful to a producer.

10. Don't treat music as merely a part of the post-production process.

Music licensing can be a nightmare. In using music, you must acquire a license from the copyright owner of the composition or his representative for reproduction or "sync" rights, public performance rights, distribution rights and possibly adaptation rights. If you are using an existing master, a license must be obtained from the owner of the recording and reuse payment may be due the musicians through the American Federation of Musicians.

Licensing music can become a very complex process. Don't let it go till the last minute.

This Top Ten list of tips is only a beginning.

As the computer lawyers continue to clash with the Hollywood lawyers and the boundaries of intellectual property law are tested, the standards and practices of the multimedia industry will evolve and emerge. The litigation has already begun: a music publisher recently sued the CompuServe on-line service for contributory copyright infringement of a composition transmitted through the computer network from one subscriber to another.

Just as a flurry of litigation ensued over the right to show movies on television and later to distribute them on videocassette, it is likely that disputes will occur to determine the right to distribute property on the various forms of new media - especially as these properties begin to make a profit. Legal history will repeat itself and a new round of interpretations of grant-of-rights language in contracts will commence: for example, is the widely used phrase "all media now known or hereinafter devised" sufficient to convey all future rights? Hopefully, these decisions will be consistent and practical.

In the interim these tips are intended to make a producer's journey down the information superhighway a smoother ride.

SHELLEY DUVAL
Portrait of a Multimedia Pioneer

"Multimedia was a promise," recalls writer, actress, producer and entertainment executive Shelley Duval. "I wanted to be on the cutting edge. I was fascinated by the combination of art and technology."

Multimedia is the latest buzzword in Hollywood. Many are talking about it but few are actually working on multimedia projects. Duvall is an exception to the hype; she is a multimedia pioneer. Her children's story, It's a Bird's Life, was released at the Mac World Expo in January 1993, long before most people knew what interactive multimedia was; even before Al Gore and others began staking claims to the information superhighway. It was the first product ported to the new 3DO platform.

It's a Bird's Life is an original story written and narrated by Duvall. The story follows a group of zany parrots on an odyssey from Los Angeles to the Amazon forest and back again. Along the journey, a child can read along with a word-for-word synched narration; look up more than 400 words in a customized dictionary, learn fascinating details on the clouds, the Amazon rain forest and birds; sing along with 11 original songs and use the activities section, which includes a coloring book, connect-the-dots puzzles, object search and a shell game.

" It's a Bird's Life is really much more," Duvall says. "It's about growing up and learning how to survive. It's an intermediary tool to introduce kids to the new medium of interactive multimedia. Video games provided them with the step between school books and the television set, and computer games gave them familiarity with the technology that will bring them education." Duvall sees the interactive compact disc as an additional and more sophisticated link between technology and education.

Duvall is enthusiastic about the possibilities this medium has for children and for education: "It allows children to learn at their own pace. They can access the material at their own speed. If you want to learn a lot, you can. If you want to just play and explore, you can do that as well." The key is to be able to engage the user, Duvall says. "If you can interest someone in something, they will thrive."

Through fact, fiction, games, text, audio and video, including the ability to instantaneously interact with the program, children have the opportunity to learn on their own, Duvall explains. "They learn much faster with a combination of audio and video."

Duvall is no stranger to the art of creating captivating programming for children. Her popular and award-winning television programs include Faerie Tale Theatre, Tall Tales and Legends, and Mother Goose Rock 'N' Rhyme. She doesn't take the task of creating children's programming lightly. One of the keys to her success with children is that she treats them with respect and "doesn't condescend" to them. "You must be completely honest with children," she says, because they are more likely to "notice things" than most adults give them credit for.

Also paramount to her success is her ability to make the programs fun, interesting and, above all, entertaining. Duvall's reputation for quality and her powers of persuasion have aided her in attracting some of Hollywood's finest talent to work on her productions: Mick Jagger, Robin Williams, Vanessa Redgrave, Billy Crystal, Tim Burton, Liza Minnelli, Gregory Hines, Francis Coppola, Mary Steenburgen and Jules Feiffer, to name a few.

It is easy to see why Duvall has won a multitude of awards for her programming efforts, including the first Golden ACE award, the prestigious George Foster Peabody Award and no less than seven ACE awards for cable excellence.

Duvall also is no stranger to law or lawyers. Her father, Robert Duvall, is a lawyer still practicing in Palestine, Texas. She remembers reading his law books at an early age. His office, with its huge red leather chair and walls of "good smelling" books, fascinated her. Her love of books continues and she now maintains a large collection of children's books.

Her fascination with law has become part of her job description as chairman and chief executive of Think Entertainment. She uses her attorneys as a preventative tool "to keep me out of problem areas" she says. In Duvall's opinion, the development of interactive multimedia means a difficult time for lawyers as their task is "defining what the rules are and setting the standards." To her, the most difficult - and most important - legal task is to "retain ownership of your material to allow you to exploit it in other markets, cross-promote it in other media." For example, she is still interested in making a film version of It's a Bird's Life, which originally was conceived as a feature film.

Duvall's next interactive multimedia title, It's a Dog's Life, currently is in production. It is the second in a planned series of It's a .Life presentations. "It's a Dog's Life shows kids how to use the talents they have," Duvall says. "The kids have to help the dog use the talents it has" and in doing so, they learn to utilize their own talents. "These concepts are too difficult to explain to kids," she adds, "but they can pick them up by way of example."

As an actress, Duvall recently appeared in an episode of L.A. Law and has a part in a Steven Soderberg suspense thriller entitled The Underneath, now being filmed in Texas. As a producer, she just finished her latest children's programming effort, Mrs. Piggle-Wiggle, based on the books by Betty MacDonald. The series is Duvall's fifth for the Showtime cable channel. It stars Jean Stapleton as an eccentric woman who lives in an upside-down house and gives uncommon cures for common problems. Guest stars include Ed Begly Jr., Joan Cusak and Christopher Lloyd. Duvall appears in it as well. -T.F.G.

CLEARING MUSIC FOR MULTIMEDIA PRODUCTS
By Ron Gertz

In the old days, consumers bought their favorite songs and recordings on records and cassettes and bought or rented their favorite movies on video tapes. In today's world of technological change, CD's, DCC's, CD-Rom's, CDI's and laser discs are replacing traditional entertainment formats.

The methods of delivering entertainment and educational, informative and promotional material are changing rapidly, but the fundamental legal framework for using music in products distributed in new formats remains the same. The music used in these new media is subject to federal copyright protection. The U.S. Copyright Act and copyright laws around the world require producers desiring to use protected musical material in their productions to secure proper permission to do so.

The right commonly required in order to use musical material in an audio-visual production may be divided into the following categories:

• Public Performing Rights: A music publisher has the right to control the playing, singing, dancing, reciting acting out or broadcasting of a composition in public. However, there is a vast difference between the rights required to simply sing a song on a bare stage and the rights to dramatize or tell the story of a song using sets, costumes, props, animation and graphics. An explanation of "dramatic" and "non-dramatic" rights requires a separate discussion, but remember that the rights required and the complexity of their clearance will depend upon the way the song is to be performed. The U.S. Copyright Act currently does not allow record companies to control the public performance of their recordings. Therefore, a record may be performed in public without the permission of the record company.
  
  
• Reproduction Rights: A music publisher has the right to control the reproduction (recording) of a composition. In audio/visual production, these rights are referred to as synchronization rights because the protected material is recorded as part of a soundtrack in synchronization with visual images. Sync rights, as they are called, should not be confused with so-called mechanical rights, which historically have referred to the reproduction of music on audio-only records, CD's and tapes for distribution to the general public. Record companies also have the right to control the reproduction of their recordings. A license to reproduce a record in an audio/visual work generally is referred to as a master use license.
  
  
• Distribution Rights: This refers to the right to distribute lawfully manufactured copies to the public.
  
  
• Adaptation Rights: A copyright owner has the right to control the alteration or adaptation of musical compositions including arrangements, parodies, comedic uses, lyric changes and translations. If a composition is to be used in an adapted form, specific permission from the copyright owner may be required before exhibition or distribution. Some copyright owners, while open to the use of their material as it was written originally, will not grant permission for any adaptations.

The way a song is performed or used and how it is distributed (CDI, CD-ROM, laser disc, in-house or public distribution, etc) will determine the applicability of these various rights and will significantly affect how these rights are negotiated and how much they will cost.

There is no established pattern for the fees that music publishers charge for audio/visual multimedia rights. They vary from composition to composition and from recording to recording. Fees must be computed separately for each project's specific rights and releasing requirements. However, in flat fee situations, the rate for a five-year license generally will be less than the fee for a license in perpetuity; a license for distribution rights for the U.S. and Canada generally will cost less than for worldwide rights.

Music publishers and record companies can charge whatever they think the market will bear. Every negotiation is unique. A background use of one song might be more expensive than an on-camera performance of another. Obscure songs may be more costly than famous ones, and new songs may be cheaper than old ones.

In situations where copies are made for distribution to the general public, music publishers generally require: 1) a fixed royalty per unit sold; 2) a pro-rata percentage of the wholesale sales price per unit sold; or 3) a combination of both. These royalty arrangements usually require that the producer or distributor account to the publishers quarterly or semi-annually. In addition, some publishers may seek fixing fees (one-time flat fee payments similar to synchronization fees), advances or both. The distinction between fixing fees and advances is that advances are recoupable out of royalties earned while fixing fees are not.

In non-theatrical, educational, corporate, motivational projects and entertainment programs using little music, it is common to work out arrangements similar to flat-fee licenses or buyouts, thereby avoiding costly accounting procedures. However, the up-front cost of such licenses may be financially burdensome.