License Agreement

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The rights holder, typically a studio, will issue a nonexclusive license to the filmmaker for the rights to use a particular film clip in the filmmaker's movie.

THE PARTIES

• Production Company. The production company should seek the broadest possible grant of rights in perpetuity. Additionally, the production company should ask for assurances from the studio/rights holder that all of the rights needed to use the clip are being granted.

• Studio/Rights Holder. The studio/rights holder may attempt to limit its liability by quitclaiming any warranties (see earlier). It may also require certain restrictions over how the film clip is used.

GRANT OF LICENSE/RIGHTS

• The license will almost always be nonexclusive.

• As is true for any license, the territory, duration, media, and fee will be specified, as well as a description of the particular clip. The fee should be a one-time flat fee. These requirements are often detailed in a separate exhibit or rider.

• The studio/rights holder may also require the filmmaker to provide a script and assurances that the clip will be used only in the manner depicted by the screenplay. Because the studio/rights holder may be bound by its own contractual restrictions regarding the footage, it may specify that the clip may not be used in commercials, may not be used in a derogatory manner, and that the filmmaker may not edit or change the clip in any way, other than editing it for time.

• The studio/rights holder will explicitly reserve for itself any rights not granted under the agreement. This means that the filmmaker may not reuse the clip for other purposes, such as inclusion in a sequel.

COPY OF FINISHED FILM

The studio/rights holder will often require the filmmaker to send it a copy of the filmmaker's finished film.

REPRESENTATIONS AND WARRANTIES

The filmmaker should seek representations and warranties from the studio/rights holder that all rights in the clip have been cleared. Conversely, the studio/rights holder may want to quitclaim any rights.

GUILD PAYMENTS, PERMISSIONS, AND MUSIC LICENSES

• As a condition for the grant, the studio/rights holder may require the filmmaker to obtain permissions from performers, directors, writers, and music rights holders whose work appears in the film clip. The filmmaker may be required to pay any union-mandated residuals to musicians and performers—even if the filmmaker is not a union signatory. (See SAG, p. 149.)

• The studio/rights holder will usually require copies of these permissions to be delivered to it.

CREDIT

• As is true for all credit provisions, the production company should try to insert a clause in the contract that says that "inadvertent failure to accord the contracting party credit shall not be actionable." This clause should also require the injured party to waive the right to injunctive relief, leaving an obligation on the production company's part to correct the problem on all future prints as the only remedy for the production company's credit mistakes.The clause should further state that a mistake of this nature is NOT a breach of the Agreement.

• The studio/rights holder may not agree to letting the production company have complete discretion over how the clip is credited. Be prepared to give a little on the wording of your credit clause.

COPYRIGHT NOTICE

The studio/rights holder will require that its copyright notice be placed on the film. This does not transfer the copyright in the filmmaker's work, but it will serve to protect the copyright in the clip itself, reserving it for the studio/rights holder.

REMEDIES

• The studio/rights holder may insist on an equitable relief clause, giving it the right to seek an injunction against the filmmaker for breaches of the License Agreement. (See Appendix C: No Injunction, p. 302.) The filmmaker, on the other hand, should try to eliminate any equitable remedies, leaving the studio/rights holder's only remedy the right to sue for money damages.

• The studio/rights holder will probably want an automatic termination provision, which cancels the License for any breach of the Agreement.The filmmaker, on the other hand, should attempt to negotiate a cure provision, creating a mechanism for remedying any default before it becomes a breach of the Agreement.

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