Q: What's the difference between a corporation and a limited liability company (LLC)?
A: Let's start with the similarity. Both corporations and LLCs offer limited liability. Limited liability means that your creditors can only pursue the assets of the company to satisfy a debt. If there is no limited liability, a creditor can also pursue the personal assets of each owner of the company. Sole proprietorships and general partnerships do not offer limited liability.
The principle differences between corporations and LLCs are tax treatment and the need to comply with organizational formalities. Depending on your circumstances, one form may provide greater tax advantages than the other. Corporations have more formalities (e.g., annual meetings, bylaws, election of directors, resolutions) with which owners must comply.
When deciding on how to organize your business, you should consult with an attorney or an accountant to determine the most advantageous form for your particular circumstances. Once you decide how to form your business, actually doing it is relatively simple. Formation requires filing Articles of Incorporation or Articles of Organization in the state in which you are organizing your business.
Q: I want to do a film based on a certain book. How do I acquire the rights to do so?
A: Acquiring rights in a book typically starts with an option. An option period typically runs from six months to two years. One year is most common. During the option period, you can pitch the project and determine its marketability. The option agreement should specify the amount you will pay if you decide to move forward with the project and purchase the rights. The option fee depends on a number of factors such as the popularity of the book, the length of the option period and the media in which you intend to use the rights. The ultimate purchase price for the rights depends on similar factors.
Q: How do I work with union actors?
A: As a general rule, a producer cannot use members of the Screen Actors Guild (SAG) in a film unless the producer is a SAG signatory. The current rate payable to SAG Actors under the Basic Agreement for Independent Producers is $678 per day or $2,352 per week. SAG offers six contracts for low-budget films which decrease or defer compensation for SAG actors and waive other SAG requirements. Additional information and summaries of the agreements are available online at http://www.sagindie.com.
Q: I'm using 8 bars of a song in my film. Is that fair use?
A: Not necessarily. The fair use exception allows you to use a reasonable portion of a copyrighted work without running afoul of copyright law. Unfortunately, the Copyright Act does not provide a standard test to determine what qualifies as fair use. Whether a specific use is a fair use depends on the circumstances. Using less than 8 bars of a song does not guarantee that your use is a fair use.
Q: Do I need to get permission to do a film based on actual events?
A: It depends. Consider whether the film contains any statements that might be considered defamatory, whether any of the characters are identifiable as real people, and whether the film is based on facts that are private as opposed to facts that are publicly available. If the answers to such questions are yes, there may be a risk of a legal claim in which case it's advisable to obtain clearance from the real people featured in your story (via a life story rights agreement).
Q: Do I need permission to shoot at a particular location?
A: Many local governments require producers to have a filming permit before shooting on public or private property. Contact the applicable state film commission for details on obtaining a permit. You may also need a location agreement from the owner of the property.
Q: Do I need agreements with my crew members?
A: Yes, as part of clearing the rights in a film, a producer should obtain releases from all performers, recognizable extras and behind-the-scenes contributors.
Q: Am I in trouble if a brand-name product appears in my production?
A: The conservative approach is to obtain authorization (through a prop release) for all products that appear in your production - or at least for all products that are featured in some way. However, there are court rulings that say the unauthorized appearance of a brand-name product is okay as long as (i) the producer is not using the brand or product in a way that promotes the film, (i.e., feeding off the reputation of the brand to increase awareness of the film - which would be trademark infringement), (ii) the appearance does not make people think that the film is sponsored or supported by the producer of the product, and (iii) the appearance does not dilute the brand name (i.e., tarnish its reputation or decrease its value as a brand name). Those are the principles but the application of these principles is highly subjective and depends on the circumstances relevant to your particular situation.
ABOUT THE WRITER:
Joy R. Butler is an attorney with a practice focusing on business, intellectual property and entertainment law.
No portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written permission of the author.