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How a Lawyer Beat Darth Vader

Added on by Gamal Hennessy.

By Gamal Hennessy

Star Wars is one of the most well-known franchises in modern entertainment. Return of the Jedi holds a special place in the mythology of the Jedi saga. But the film that gave us Darth Vader’s last moment of redemption is also the film that continues to disappoint at least one actor.

Several news sites reported on a recent interview with David Prowse, the actor inside the Darth Vader suit for Return. According to letters received from Lucasfilm to Mr. Prowse, Return of the Jedi has never made enough money to trigger a net royalty payment for his performance. In spite of the film making more than five hundred and seventy million dollars in the box office since its initial release over thirty years ago, Mr. Prowse, and actors like him, are not in a position to get paid beyond their initial salary for the project.

Gross vs Net

While the story is notable for the popularity of the character and the prestige of the film, the elements of it are fairly common in contracts of all types, not just entertainment related ones. The difference between gross and net in the calculation of revenues can be the difference between being paid indefinitely and not being paid at all.

A while back, I wrote a piece about the difference between gross and net payments in creative contracts (See Your Slice of the Pie: Part 1). I explained Gross revenue or gross profits as the pure income that a product or service generates while Net revenue or net profits is the income that a product or service generates minus certain expenses. Taking a very simple example, if you acted in a film and were promised a cut of the gross revenue, you’d get paid based on how much money the movie made. If you agree to take a cut of the net revenue, you get paid based on how much is left after all the expenses for the film are paid. If the expenses of the film are never paid off, then you never get any royalty, even if you are the most dread Sith in the galaxy.

Hollywood Accounting

The film industry is often blamed for manipulating accounting methods to avoid paying artists. The term “Hollywood accounting” refers to concepts like using net profits instead of gross to pay creatives and then extending expenses out forever to ensure a film never gets to a stage where royalties need to be paid. Hollywood might use these tactics in the most spectacular ways, but they are by no means the only entertainment industry with this practice. In fact, it is not just the entertainment industry. Any type of contract where payments are based on future earnings can be manipulated by the gross vs. net concept.

Eyes Wide Shut

People may mock actors like Mr. Prowse who agree to net profits, but these deals have to be considered in context to be understood. In many cases, a creative person is so eager to cash in on his big break that they agree to bad terms just to get the deal done (See You Signed the Contract, but Do You Know What It Says?). In other instances, an artist often doesn’t have the negotiating power to push for the best terms. (See David and Goliath in Contract Negotiations) Sometimes, an artist doesn’t have any legal advice when signing a contract. This often leads to situations far worse than Mr. Prowse (See Why Artists Need Lawyers)

One word or concept can make a world of difference to a contract. If you’re not trained to find it, not even The Force will be able to help you.

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PLEASE NOTE: THIS EMAIL IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSEING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT  gamalhennessy@gmail.com FOR A FREE CONSULTATION.

Have fun.

Gamal

Before You Sign on the Dotted Line.

Added on by Gamal Hennessy.

by Gamal Hennessy

When an artist, writer or other creative person gets a contract from a publishing or distribution company, it can be a confusing and stressful situation. Many artists work for years, dreaming of the day when a large company is ready to give them a contract, but very few of them understand the language in contracts and how that language will affect their ownership of their creation or the money they can make. This is the point where an artist needs professional advice from someone who understands how contracts are written.

This is the service that I provide. The main specialty of C3 is providing legal analysis of contracts for artists and creators. I break down and explain each paragraph of the contract in straightforward terms, so you can make an informed business decision on what conditions you can and can't agree to. This will give you the confidence you need to discuss the agreement with your potential business partner and sign a contract that protects your rights and puts you in a position to profit from your creativity now and in the future.

There is a long list of creators in music, publishing, television and film who signed away all the rights to their original work because they didn't understand the contracts they signed. The analysis I provide is designed to prevent that. Of course, there are many situations where the main goal of the artist is upfront payment or exposure. There are times when you might be willing to accept a deal that is not set up in your favor. But even in those cases, it is better to know what you are signing and how it will affect your rights and income going forward.

A C3 review will give you that.

If this is something you are interested in, please leave a comment below or contact me at gamalhennessy@gmail.com and we can set up a free call to discuss the specifics of your situation.

Best

Gamal

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

Opportunities and Obstacles

Added on by Gamal Hennessy.

by Gamal Hennessy 

I hope the weather is warm or at least warmer, where you live. I also hope your business prospects are warming up as well. Before the spring hits and productions of all types get under way, consider these three essays on the state of entertainment contracts. 

What the Valiant Movie Deal Means for Movies, Comics and You: Is the reported nine-figure development deal a desperate money grab or a new avenue for creative artists? 

Your Exclusive Engagement: Can you afford to put all your creative eggs in one basket?

The Cautionary Tale of A Wheel of Time: Franchises like Harry Potter, The Hobbit and Game of Thrones show the potential of bringing fantasy books to a wider audience, but what happens when a deal like that goes wrong?

Contact C3: If you have a contract you need reviewed or help protecting your art and your career, please contact C3 for a free consultation. 

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

Have fun.

Gamal

What the Valiant Movie Deal Means for Comics, Movies and You

Added on by Gamal Hennessy.

By Gamal Hennessy

One of the bigger pieces of entertainment industry news this week focused on the deal between Valiant Comics and a Chinese based company called DMG. The details of the deal haven’t been made clear, but the initial reports suggest DMG has pledged to invest “a nine figure sum” in creating a film and TV universe for Valiant properties. (See Valiant Entertainment Gets Nine Figure Funding for Movie Division)

Paying the Money

In any licensing or production deal, there are at least two sides to the story. On one hand, you have DMG who appears to be trying to get a slice of the lucrative shared universe pie, but it is hard to understand their motives at this point. Why would a Chinese company, with access to potentially billions of creative minds invest so much effort into intellectual property with limited cache? Why not create an original shared universe with less baggage, complications and cost? I understand properties like Iron Man and Guardians of the Galaxy didn’t have mainstream cache before their films came out, but Marvel focused on those properties because they already owned the rights to them. They didn’t have to shell out big money to a third party and then dump more money into bringing them to the big screen. DMG appears to have overpaid to join the connected universe wars.

It could be DMG is using Valiant as a future landing spot for talent it plans to lure away from Disney/Marvel and Warner/DC. Once the established creators see a former minor player as a new deep pocket, they might be willing to jump at the chance to join Valiant’s roster. A move along those lines could shift the balance of power away from Marvel’s dominance in film and DC’s leadership on TV and make the entire industry more competitive.

Getting the Money

No matter what DMG plans to do, the other side of the story is the important piece for producers, writers and creative people of all types. This deal, to the extent it comes to fruition, elevates an unknown independent comic publisher into an international entertainment force. But this transformation didn’t happen overnight. Valiant has been publishing since 1989. Its titles and roster have changed over the years, but their story is a classic example of three concepts I tell all my clients:

Of course, the DMG/ Valiant deal could be a complete disaster. It might be the beginning of the end of the golden age of comic book based entertainment (See Can We Have Too Many Comic Book Movies?) But I don’t think so. Film, television, books and interactive media can all share in the windfall of increased interest in new properties. You can get a piece of the pie too, but only if you’re rights are protected.

Have fun.

Gamal

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSEING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

Your Exclusive Engagement

Added on by Gamal Hennessy.

 

By Gamal Hennessy

Many people don’t read the contracts they sign. Even fewer people read the “boilerplate” language often found at the end of the agreement. People want to know things like when they’ll get paid, how much they’ll get paid, and what they have to do to get paid. Avoiding so-called “boilerplate” might be a natural response to getting a contract, but the clauses at the end of an agreement have a significant effect on, and could completely alter where and how the money flows.

Over the next few weeks, I plan to shed some light on typical boilerplate clauses in entertainment contracts. This isn’t going to be a definitive treatise on legal concepts or the final word on the current status of contract provisions. This also isn’t going to be a replacement for actual legal advice about your specific contract. My goal here is to help artists, writers and other creative people become better informed about various aspects of contracts they might be confronted with.

 In this second installment, we look at the concept of exclusivity.

The word “exclusive” is often used in entertainment marketing to trumpet some special event or limited time offer. We hear about exclusive engagements in theaters, exclusive releases in video games and exclusive production deals in film and television. While the word designates a special event in ad copy, the term exclusive has even more impact when it comes to creative contracts. The restrictions and the costs of exclusivity are important considerations for any artistic professional.

Concept

Exclusivity is a concept modifying a grant of rights or access to goods and services. You are in essence, excluding everyone else from the right, good or service. The opposite of exclusive is non-exclusive.

The easiest real world example I can offer is a car vs. a cab. When you buy a car, you and the people you designate are the only people who can use the vehicle, until it is repossessed, stolen or destroyed. When you hail a cab, you can use the vehicle for a little while, but before you got in and after you get out anyone can use that vehicle, assuming the cabbie will stop for them.

The entertainment industry is filled with examples of exclusivity. When I worked at Marvel, we often signed A-List writers and artists to exclusive deals to keep them from working with DC. Film distribution companies always push for exclusive domestic distribution rights to a film. Publishers can obtain exclusive rights to an image used in a cover. An actor or director could be retained on an exclusive basis for a period of time for a particular project. Almost every avenue of entertainment and media has some relationship with exclusivity, so understanding its impact is important to everyone.

Economic Impact

In any exclusive agreement, there are at least two parties who need to deal with the scope and the cost of the contract: at least one side gives exclusive rights and at least one side gets them. The side you’re on dictates what your goals and obstacles are and how you can massage them in your favor.

The person or company giving away exclusivity limits their ability to generate revenue based on the rights granted. For example, if you release a book through Amazon’s KDP select program, you can’t publish the book on any other platform for at least 90 days. Likewise, a screenwriter who has an exclusive deal with a production company gives up the ability to generate multiple streams of revenue by writing for other artists. Parties in this position naturally try to charge more to get into an exclusive deal to cover the lost revenue streams. At the same time, they try to limit the length or term of the exclusivity to reduce the financial impact of the arrangement (See Eternity is a Long Time in Creative Contracts)

The person or company getting exclusivity limits competition in the market. If only one company can show a movie, release a game or throw a concert, that entertainment is perceived as more valuable because of its scarcity. Exclusivity doesn’t always work directly. In video games, an exclusive PS4 title still sells at the same price as a multi-platform game, but if the system has more high-quality exclusives compared to the competition, the value of the PS4 system increases, not just the value of the game. To maximize the benefits of an exclusive, the side who gets it often tries to keep their rights forever.

The Shell Game

Like most legal concepts in contracts, there are situations where the impact of a word changed its initial meaning. Under certain circumstances, the grant of an exclusive license in certain media can amount to a change in overall ownership and control, especially if the rights granted are broad and the term is forever. For example, I’ve reviewed graphic novel licenses for my clients where the publishers wanted exclusive print publishing, film, television, video game, internet, stage play and other rights everywhere, forever, amen. In this case, a simple deal for print publishing is an attempt to tie up the property in every conceivable form. I try to advise my clients to avoid these types of deals, especially when there is no compensation. (See Get What You Give: Rights and Revenue for Creators)

Even parties who get exclusive rights need to be careful, especially when services are involved. Hiring an independent contractor is easier from a legal perspective than hiring an employee, but getting the exclusive rights to a person’s services might change your legal relationship with them depending on the nature of your working relationship. Producers in film, television, music and even publishing should be familiar with their state’s labor laws and withholding requirements whenever they consider bringing in exclusive talent, or they could find themselves on the hook for several unforeseen costs.

Exclusivity is a powerful aspect of entertainment law. Like fire, nuclear energy and love, it should be handled carefully to make sure no one gets hurt.

Have fun.

Gamal

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

The Wheel of Time Offers a Cautionary Lesson for Turning Novels into Film

Added on by Gamal Hennessy.

By Gamal Hennessy

            Imagine you wrote a story. It’s a popular story, selling forty-four million copies over 14 connected novels spanning from 1990 to 2013. Now imagine your type of story is popular, because stories in the same fantasy genre, like The Hobbit and Game of Thrones, have been cleaning up in movies, TV and video games. Finally, imagine you’ve licensed your story to a production company created just to produce your work and they signed a distribution deal with Universal to distribute your story to the masses.

            Are you excited? Can you see yourself inviting J.K. Rowling and George R.R. Martin to your castle in Davos for a poker game with solid gold chips? Hold that thought.

What if I told you there is such a story, The Wheel of Time written by Robert Jordan? What if I also told you the only TV or movie adaptation ever made of this story in thirteen years was a half hour TV show that aired on FXX at 1:30 am without any advertising, marketing or official notice? What if I told you the show was thrown together weeks before without the knowledge or consent of Jordan’s estate? (See The Sad Lesson of The Wheel of Time) It’s not as exciting now, is it?

The Wheel of Time problem stems from two related contract concepts. The first is the loss of control a writer gives up in exchange for optioning his book, play or comic to be made into a movie (See Losing Control and Loving It). This is a normal aspect of film licensing. Most of the time, a competent production company can adapt a written story to the aesthetics of the screen in a way that makes money. The production company in this case seems unwilling or unable to bring the book to life.

The second problem revolves around the retention of rights. Many licenses for literary properties only last a certain number of years. This is known as the term. The term can be extended as long as the company holding the license continues to release work based on the story. You can see quite a few examples of this in modern film. To a certain extent, the Spider-Man, Fantastic Four and X-Men franchises all get new films every few years to prevent Disney/Marvel from becoming even more of an entertainment juggernaut than it already is (See Is the New Marvel Universe a Secret War on Fox Super Hero Films?). But in the case of Fox and Sony, the source material gets a big budget treatment and star power put behind it. The movies aren’t thrown on to a third tier cable station in the middle of the night without anyone knowing about it.

Hope isn’t lost for an authentic Wheel of Time TV franchise. Many popular characters, including Superman, Terminator, James Bond and Spiderman had to fight in court before they could fight on screen. But creative professionals need to learn from the Wheel of Time debacle. Not every deal is a good deal. Time frame and control of rights matter, even when you’re a novelist or comic author thinking about movie rights. You might not be in the best position to make a deal (See David vs. Goliath), but you and your attorney should strive to give your property the best chance for success (See Treat Your Art as an Investment)

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

Entertainment Contracts 101: Creator Owned vs. Work for Hire Deals

Added on by Gamal Hennessy.

 

by Gamal Hennessy

In the creative marketplace, one of the first things that an artist needs to learn is the difference between a license agreement and a work for hire agreement. These are fundamentally different animals and signing the wrong one at the wrong time could be devastating to your future.

Definitions

work for hire (WFH) is an agreement where you offer your creative services to intellectual property that you do not own in exchange for a fee.

license is an agreement where you give someone else the right to distribute your intellectual property in exchange for various types of payments.

Example

WFH: You are an artist. Marvel Comics hires you to draw an issue of Spider-Man. You do the pencils. They give you money.  You walk away. You don’t own Spider-Man. You don’t even own the pages you created. Your name will appear as the artist, but that’s as far as it goes. This is pure mercenary work.

Creator Owned License: You are an artist. You have an idea for a new story. Dark Horse likes it and gives you a CO deal. You create the book. You might even eat the cost of creation. They sell the book. You get a cut, they get a cut. When you walk away, you walk away with the property. You can do whatever you want with it because you own it.

Historical Example

Frank Miller offers one of the best examples of the difference between these two types of deals. In 1986, Miller signed on with DC to release The Dark Knight Returns. That book reanimated the Batman franchise, solidified a darker vision of comics across the board and was instrumental in redefining the genre of super hero movies. But at no point could Miller claim to own Batman. He had no rights to any of the subsequent film, video game or merchandise revenue that came out of the Batman property. To the best of my knowledge, he got a page rate and he got credit for doing the work. That’s it.

Actually, that’s not it. Because he got so much exposure and critical acclaim for the work he did on Batman (as well as other properties) it was much easier for him to land creator owned deals later on. Frank Miller owns most if not all of the Sin City and 300 franchises. He had major input, control and license fees from those books and subsequent films. That was money he was entitled to because he owned the rights to that intellectual property.

Take Away

There are several successful writers and artists who have done work for hire deals first to establish themselves in the industry and then done creator owned deals once they had the right leverage. Many of them jump back and forth from one type of deal to the other depending on the project. Jim Lee, Todd McFarlane and Greg Rucka are all good examples of this. I’m not suggesting that an artist should never sign a WFH. I am suggesting that you need to know the difference between the two and make sure you are not signing a WFH for your own property because then you are signing away all your rights for little or no money.

And keep in mind, just because a contract says Creator Owned Agreement or License Agreement on the top doesn’t make it a creator owned agreement. It is the language in the agreement and the way the rights are divided that is the key to the contract. When you analyze your agreements (or ask me to do it) always keep in mind who has control over the property. This will be vital when your idea becomes a movie.

Best

Gamal

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSEING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

Is the New Marvel Universe a Secret War on Fox Super Hero Films?

Added on by Gamal Hennessy.

 

by Gamal Hennessy

In the comics industry, the death and resurrection of characters is a fairly common occurrence. Marvel killed Wolverine a few months ago and ended Fantastic Four as an ongoing series a couple months later. DC recently killed Robin and we’re now in his rebirth phase. The death of characters is an accepted element of post-industrial mythology and the business of creativity.  Every so often, something has to be taken away so it can come back with renewed energy.

Killing a comic character is common, but Marvel is doing something a bit more daring with today’s announcement of Secret Wars (See The Marvel Universe is Ending). In essence, Marvel is dismantling all of its various continuities to create a single overarching narrative. This event appears to be in the same creative vein as other universe destroying events like Crisis on Infinite Earths, Heroes Reborn and the New 52. Rather than shake things up with a reimagined world like the Ultimate Universe I saw launch when I was at Marvel, the stakes are being raised, or at least the goal posts are being moved.

But how much of this is the product of business as opposed to art? There’s already been plenty of speculation about the impact Marvel’s recent creative moves in comics will have on the superhero movie industry. Marvel has poured more creative and marketing energy towards the movie properties it owns (Avengers, Guardians, etc.) and has downplayed, muddled or destroyed  properties licensed out to other studios (X-Men, Spider-Man, Punisher). Conspiracy theorists suggest Marvel of using the tail to help wag the dog.

If the comics are the root of the money making movie tree, killing the root might weaken the tree. When any licensed product becomes more trouble than its worth, a movie studio might decide they’re better off giving up the rights. When Marvel reacquired the movie rights to titles like Daredevil and Hulk, the conspiracy theorists saw this as a Marvel’s success. The recent rumors of Spider-Man appearing in the Civil War film also fuels the conspiracy fire. The death of Wolverine and the cancelation of Fantastic Four could be considered a more aggressive move, designed to lower the potential success of the upcoming films, assuming other factors remain constant.

So what will the industry impact be of reconfiguring the entire Marvel mythology? It could be nothing or it may be everything. It all depends on which titles and characters emerge from Secret Wars. If most (or none) of the Fox or Sony characters survive the slaughter, I’d say there was a strong case for the conspiracy theory. But I doubt Marvel will be so blatant. A lot of factors go into the success or failure of a film franchise. Killing off a character in the comics isn’t a magic bullet, Kryptonite or a mystic hammer, but it can provide insight into the mind of the character’s owner.

The insight independent creators should have for their own characters is the same no matter how Secret Wars plays out. You need to treat your characters and stories as business assets. Make your decisions and focus your energy on the properties that work for you. If they don’t, consider shaking things up, even if some of your babies have to die. (See Treat Your Art Like an Investment)

Have fun.
Gamal