Filmmaker’s Bill of Rights by Mark Litwak on December 5, 2014 in Legal

A reputable distributor should be willing to accept terms that protect a filmmaker’s interests. Many such provisions do not cost the distributor anything as long as the distributor lives up to the terms of its contract. A provision for interest on late payments, for example, costs the distributor nothing as long as payments are made on time. Such provisions are important because they encourage a distributor to live up to its commitments, and provide the filmmaker with a viable remedy in case the distributor defaults. Here is a list of some of the most critical ways for filmmakers to protect their interests.

This list should not be considered exhaustive. There are other items a filmmaker may want to include such as clauses dealing with advances, guarantees and reservation of rights.

NO CHANGES: The film should not be edited, nor the title changed, without the filmmaker’s approval. Editing for censorship purposes, television broadcast and changes made for a foreign release, such as translating the title, is permissible. MINIMUM ADVERTISING SPECIFIED: The contract should specify in writing the minimum amount the distributor will spend on advertising and promotion of the film. The distributor should make a commitment to pay for the creation of a poster, one-sheet and trailer if these items have not been created. EXPENSES LIMITED: There should be a floor and a ceiling on expenses. Market expenses (the cost to attend film markets) should be limited to the first year of release and capped per market. Promotional expenses should be limited to direct out-of-pocket costs spent to promote the film and should specifically exclude the distributor’s general overhead and staff expenses. TERM: The term should be a reasonable length, perhaps up to ten years, but not in perpetuity. The filmmaker should be able to regain rights to the film if the distributor gives up on it. Thus, it is best to have a short initial term, such as two years, and a series of automatic rollovers if the distributor returns a certain amount of revenue to the filmmaker. If these performance milestones are not met, all rights would automatically revert to the filmmaker. INDEMNITY: Filmmaker should be indemnified (receive reimbursement) for any losses incurred by filmmaker as a result of distributor’s breach of the terms of the agreement, violation of third party rights, and for any changes or additions made to the film. POSSESSION OF NEGATIVE: Distributor should receive a lab access letter rather than possession of the original negative and other original elements. Distributor should not be permitted to remove masters from the laboratory. ERRORS AND OMISSIONS (E&O) POLICY: While it is generally the filmmaker’s responsibility to purchase an E & O insurance policy, distributors are often willing to advance the cost of this insurance and recoup the cost from gross revenues. In such an event, the filmmaker should be added as an additional named insured on the policy. TERMINATION CLAUSE: If the distributor defaults on its contractual obligations, filmmaker should have the right to terminate the contract, and regain rights to license the film in unsold territories as well as obtain money damages for the default. Filmmaker should give distributor fourteen days prior written notice of default before exercising the right to termination. RIGHT TO INSPECT BOOKS AND RECORDS: Distributor should maintain complete books and records with regard to all sales and rental of the film. Filmmaker should receive quarterly (or monthly) producer statements with any payment due filmmaker. Filmmaker should have the right to examine the books and records of distributor during reasonable business hours on ten days notice. LATE PAYMENTS/LIEN: All monies due and payable to filmmaker should be held in trust by distributor for filmmaker. Filmmaker should be deemed to have a lien on filmmaker’s share of revenue. Distributor should pay filmmaker interest on any amounts past due. LIMITATION ON ACTION: Filmmaker should have at least three years from receipt of any financial statement, or discovery of any accounting irregularity, whichever is later, to contest accounting errors and file a Demand for Arbitration. ASSIGNMENT: It is best to prohibit assignment unless Filmmaker consents. If assignment is permitted, Distributor should not be relieved of its obligations under the original contract. FILMMAKER DEFAULT: Distributor should give Filmmaker fourteen days written notice of any alleged default by filmmaker, and an additional ten days to cure such default, before taking any action to enforce its rights. WARRANTIES: Filmmaker’s warranties in regard to infringement of third party rights should be to the best of the filmmaker’s knowledge and belief, not absolute. SCHEDULE OF MINIMUMS: For distributors who license foreign rights (known as foreign sales agents) there should be a schedule of minimum acceptable license fees per territory. The distributor is not permitted to license the film in each territory for less than the minimum without the prior approval of the Filmmaker. ARBITRATION CLAUSE: Every contract should contain an arbitration clause ensuring that all contractual disputes are subject to binding arbitration with the prevailing party entitled to reimbursement of legal fees and costs. The arbitration award should be final, binding and non-appealable. IFTA will now arbitrate entertainment industry disputes involving non-IFTA companies. The IFTA personal guarantee Rider can be used to bar a company’s chief executive from attending future American Film Markets if the company refuses to pay an arbitration award.