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12 THINGS ARTISTS SHOULD KNOW ABOUT LEGAL CONTRACTS

Music Articles - 31 Jul 2020

 

Pooja Kapadia is the Head of Legal and Business Affairs at Tulsea, a leading strategic talent and content management company based in Mumbai and Los Angeles that represents India’s leading content creators (actors and directors)  who are a part of Pataal Lok, Sacred Games, Leila, Ghoul, Betaal, Mirzapur, Made in Heaven, Metro Park, Brown Nation, Lipstick Under My Burkha, Udta Punjab, NH10, Masaan and Uri: The Surgical Strike. In addition to working on domestic and international talent (writer, director, actor), production services contracts etc., she is also involved in advising on intellectual property issues and disputes and negotiating key commercial deal terms. Simren Mehra is a recent graduate from the University of Mumbai and is currently working as a Legal Trainee at Tulsea.

Perhaps one of the most frustrating part of getting a new project is dealing with the contract! But, if negotiated well, contracts can be a game-changer. While it may be daunting to read through the legalese like “agreed hereto and notwithstanding all of the above”, it is imperative to carefully read it (or get it carefully read) before you sign it! Some artists may feel confident signing a contract based on the relationship with the other party and their verbal assurance, or reading only the consideration and credit clauses. However, it is prudent to educate yourself on the finer details in order to avoid surprises, and in the event of a dispute, to avoid protracted court litigation. Importantly, you want to avoid feeling cheated!

Summarised below are some essential points (a quick cheat sheet if you will!) to keep in mind before signing a contract.

  1. What kind of document is it?

Depending on the deal stage, different types of contracts may be needed. Examples of some contracts which artists generally sign are:

a) Term Sheet/Letter of Intent (LOI)/Memorandum of Understanding (MOU): A document which generally lists some key commercials and terms e.g. term, services, consideration, confidentiality obligations, exclusivity and dispute resolution. This document is then translated into a long form agreement (LFA). The difference between a term sheet and a LOI/MOU is that the term sheet skips most of the formalities and lists the deal terms in bullet-points or similar simpler format, whereas the LOI/MOU is typically in a letter/agreement form and describes the commercial terms and some legal clauses in greater detail. Depending on the negotiation and the circumstances under which the LOI/MOU are being signed, you may want to specifically mention if the terms agreed under the document are binding on the parties or not (i.e. open to renegotiations).

b) Long Form Agreement (LFA): An agreement which details all the terms and conditions of the deal, the legal obligations such as representations and warranties, indemnity, termination and a dispute resolution mechanism.

c) Option Agreement/Shopping Agreement: An agreement wherein an artist gives the other party (producer/studio/individual) the exclusive right to pitch the artist’s work (or an audio/visual adaptation of it) for a specific period of time, after which the rights to such work can be purchased. This exclusive window of time would help the party seeking the rights to pitch the project around and get a sense of the market demand for the project or bring together other key elements for the project. The primary difference between an Option and a Shopping Agreement is that generally for optioning intellectual property, the third party needs to pay a specific amount upfront and the final cost of acquisition of the intellectual property can be paid within a specific period of time. Whereas, under a Shopping Agreement, generally no payment is required for pitching the project and once the other party has decided to take the project forward or has a potential buyer on board, an agreed amount can be paid for acquiring the intellectual property.

d) Non-Disclosure Agreement (NDA): An agreement wherein either one or both parties are required to maintain the confidentiality of the material shared with one another. As an artist, if you are sharing any ideas or material, it is always helpful to sign an NDA whereby the party receiving the confidential information is required to maintain its secrecy. [Pro-Tip – The Screen Writer’s Association website has a Model NDA template, do check it out!]

e) Release Letter/Form: A letter agreement in which a writer relieves the party receiving the writer’s material from any legal responsibility if they end up creating similar work not necessarily based on the artist’s submission. If you must sign the release letter in order for discussions to continue, ensure you are well-protected, especially from the perspective of confidentiality. It is always prudent to register your work with the relevant association (in India, presently it is the Screenwriter’s Association) or copyright it through the copyright office before sharing your material with anyone.

f) Certificate of Authorship (COA): A declaration by an author that all literary work relating to the material provided by the author was written by the author and is completely original.

As mentioned above, there are different types of legal documents; therefore, it is always essential to know the purpose of signing a document and based on the purpose, the type of document and its contents may be determined. For example, if a writer is involved in a project then the writer may

a) at the time of pitching the project sign a release letter or NDA or both.

b) at the time of disclosing commercials, first sign a term sheet/LOI/MOU (in some instances); and

c) finally, enter into an LFA.

 

  1. What are your obligations?

The legal document you sign should clearly define your obligations as an artist. Some points to look out for are:

a) What is the exact scope of services? Will you be writing/ directing/ consulting/ show running? Are your services exclusive/ non-exclusive or on first priority basis?

b) If it’s a series, are you providing services for all episodes or a specific number of episodes?

c) What are the timelines for delivery of the material? What is the timeline within which the other side will revert with their comments? Is there a cap on the number of rewrites?

d) Will you be the only writer/ director/ consultant/ showrunner on the project? Post greenlighting, will you be unconditionally attached to the project?

e) Is there any non-compete obligation?

f) Will you be required to keep the material confidential? If so, what material is required to be kept confidential?

g) Can you post pictures on your social media regarding the project when you are shooting for it?

Obligations pertaining to the services and deliverables should be clearly articulated to protect the interests of all parties involved and avoid conflicts or litigation later. Hence, if you have any doubt with respect to what you are agreeing to, then, BEFORE signing the contract ASK all the questions you need to! 

  1. Intellectual Property is the new gold!

Intellectual Property (IP) in any audio-visual work includes the copyright in the written concept, the screenplay, treatment, dialogues, music and the audio-visual work itself. If you have created your material on your time and dime, you may either assign or license the copyright and other IP rights in such work. Alternatively, in some instances, you may be creating the IP for a third party, at their cost. Such work is generally referred to as “work for hire/commissioned work”.

It is essential that the IP is transferred subject to payment of consideration as agreed under the contract. An IP assignment clause could require you to waive your moral rights[i]. While the courts have not allowed assignment of moral rights, if the artist agrees, he could waive his claim to such rights.

Further, under an IP assignment clause, several rights in the works you create are being assigned. Therefore, be careful if you want to retain any rights. Specifically, for derivative[ii] and merchandising rights, it is important you either negotiate your involvement in such derivative work (such as ask for a right of first refusal) or ensure you are adequately compensated for such assignment (example passive royalties).

 

  1. Exclusive or not?

Before signing an agreement that requires you to be exclusive, you need to think through any previous commitments you may have made, your expected role in the present deal, and any additional work you are expecting in the near future. If you agree to exclusivity, then you must ensure that the scope of exclusive services and the time lines are clearly defined. While you can leave it to your agents to ensure you receive the appropriate compensation for such exclusive dedication of your time, you should ensure that at the very least your monthly expenses are taken care of!

Many non-exclusive deals also require a lot of time and commitment that limit your ability to work on other projects. Hence, it is essential to understand the feasibility of the timelines and required deliverables before signing the agreement. If you are ready to provide exclusive services you will be limiting the limiting the number of projects you will ultimately work on. So be sure about whether and why you want to be exclusive before you sign the contract!

  1. Due Compensation is a must!

Since money is a key component of any contract, be sure of how much you are getting paid and the terms of payment. Being clear about payment doesn’t only mean clarity about receiving X amount for Y work. It also means that you need to discuss the terms of payment such as the tranches in which the payment will be made (e.g. the writer will be paid X% of total renumeration when he/she submits the first draft and Y% for approval of second draft), if the fee is inclusive or exclusive of the GST component, and number of days within which the payment will made. Ideally, it is always recommended that the signing amount under a contract is paid to you before the work commences. For writers, a major part of their service is completed prior to commencement of pre-production; thereafter, generally only some revisions are required. Therefore, your payment tranches should be balanced accordingly. It is always prudent to ensure that royalties if any, are payable to you as per applicable law.

  1. You can’t skip these Representations and Warranties.

These are statements of facts or promises which relate to the services you provide or the materials submitted by you. Some standard representations and warranties are: you have the right to sign the contract and that your entering into such a contract will not be in breach of obligations under another contract, or that the material submitted by you will not infringe on the rights of any third party. It is extremely important to understand the representations you make and the warranties you provide under a contract. Breach of the representation and warranties could lead to termination of the contract, refund of fees or in some circumstances, the other side filing a suit against you! Thus, you should know exactly what you agree to under this clause.

  1. Indemnity: What is it and why do I care?

An indemnity clause if drafted correctly would be an “I’ll protect your back” clause, which means that in the event of breach by one party, the party breaching the agreement will take care of the litigation and any monetary or other claims with respect to the breach. More often than not this clause is completely overlooked by artists due to its complex language and it not pertaining to fees or credit. However, an indemnification clause is extremely important in the event of litigation. This clause generally intends to cover each parties’ liability and responsibility (legally and financially) in two specific instances a) in the event of breach of the terms by either party to the contract and b) in the event of a third party filing a suit or sending a notice against either the artist and/or the producer/platform. In some instances, you may also limit your monetary liability to the extent of fees paid to you under the contract.

This clause is extremely important if you are sued, particularly in the event of frivolous litigation, which is fairly common in the media and entertainment industry. Thus, negotiate this clause very well!   

  1. Lights, Camera, Credit!

The excitement of seeing your name on the big screen never wears away. No matter what your role is, it is always important that you receive due credit. It is critical for your agreement to specifically state what credit will be accorded to you; for example, if you have written the screenplay for a few episodes, you should be given a “Written by” credit on those specific episodes. Further, the credit clause could also detail the positioning of your credit, publicity/promotional material credit, credit in the event of early termination of the contract, etc. In some cases, where the final rights to accord credits vest with a platform, an artist can consider adding a Most Favoured Nation clause i.e. the artist should receive credits in the same manner or not less favourable as other artists providing same/similar services. 

  1. What is this Act of God (Force Majeure)?

Contracts generally have a clause which pertains to special circumstances which are beyond human control commonly known as “Act(s) of God”. This force majeure clause generally details various events which are beyond human control; for example. strikes, pandemics (such as the present one we are in!), sudden death of the actors involved in the project, etc. Generally, this clause only gives the production house/platform to terminate however, the artist should also have the right to suspend/terminate its liabilities if such an event occurs and he cannot provide his(er) services. Due to the present COVID-19 pandemic, this clause has become extremely essential to evaluate very carefully.

Further, if a contract is exclusive, and is suspended due to a force majeure event, you should ensure that you should have a right to take up other projects to help manage your financial requirements! Hence, depending on the agreement/services being provided, this clause should be negotiated carefully (especially in these times) to ensure that neither are you stuck with unfavourable deal terms nor are you in breach of the terms of the contract if such event occurs.

  1. All Good Things Come to an End.

One of the most important clauses in an agreement is the termination clause. The termination clause is important in order to safeguard the rights of both parties. Make sure you can exit the relationship as well! Try ensuring that the exit is as clean as possible. The termination clause should be carefully examined to account for the possible exit options (e.g. non-payment, creative misalignment, etc.). After all, no one wants to be forced to remain in a relationship in which they cannot work.

  1. You’ve Got to Deal with the Consequences.

Another important aspect of an agreement is the consequences of termination. In case the agreement is terminated, will you have to refund your fee or any part of your fee? Will the producer/company pay you for the work you have already done? What happens in case the agreement is terminated before any commencement of work? Will you get credit? All these consequences need to be jotted down clearly. There should be no room for ambiguity or uncertainty here.

  1. Look out for yourself!

Whether it is a writer agreement, agreement for developmental works, director agreement or any other such agreement, always remember that the terms and conditions need to be balanced. Quite often, agreements tend to be framed in a manner which favours one party over the other; in such cases always ask yourself, “if this is applicable to me, does it need to be applicable to them as well?” Even though may not be investing the money, you are investing your time, hence it’s only fair to ask for reasonable balance.

To conclude, what we will leave you with is that legal agreements are ALWAYS negotiable! Hence ask for what you truly deserve. Gone are the days where an artist had to sign without any leverage because there was “no other option” It’s just a matter of educating yourself about your rights and honing the ability to justify reasonable and mutually beneficial terms.

END NOTES:

[i] The Copyright Act, 1957 (“Act”) provides for special rights of an author under Section 57 of the Act. These rights are:

  1. To claim authorship of the work;
  2. To restrain or claim damages in respect of any distortion, mutilation, modification or other act in relation to the work which is done before the expiration of the term of copyright, if such distortion etc., would be prejudicial to his honour or reputation.

[ii] Derivative rights are rights in the works created based on the original works. For example, prequel, sequel adaptation or remake of the original work could be a derivative work and the rights in such derivative works are referred to as derivative rights.

 

 

Courtesy:http://iprmentlaw.com/guest-column/guest-post-pooja-kapadia-and-simren-mehra-tulsea-12-things-artists-should-know-about-legal-contracts/

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