From the 2012 Script to Screen Conference.

New Line’s film had its world premiere in Wellington, New Zealand, on November 28, 2012 and has been the subject of intense promotion and advertising. I was in Wellington right before the world premiere and was surprised at the massive and ubiquitous nature of the promotion across the city. Not only were Hobbit characters placed on buildings, but museum stores and numerous other outlets carried movie merchandise. Tourism New Zealand spent $10 million dollars promoting the trilogy. The promotion began when I boarded my Air New Zealand flight to Wellington and was delighted to watch the most entertaining in-flight safety video I have ever seen. It starred Tolkien elves, dwarves, Hobbits, and a wizard. The video has become an online hit viewed by millions. The carrier has even rebranded itself the “Airline of Middle Earth,” and plastered a plane with images from the film.

Asylum’s film, on the other hand, is a low budget indie film reportedly made for $2 million dollars. Asylum claimed that the word “Hobbits” as used in its film did not refer to the fictional Tolkien creatures, but to a human sub-species whose skeletons were discovered in Indonesia in 2003. In Indonesia, archaeologists discovered a human sub-species with the Latin name Homo Floresiensis, which they nicknamed “hobbits” because of their small stature.

The legal dispute, in its simplest terms, comes down to this. Asylum claimed it had the right, under the First Amendment, to make a movie about ancient Indonesian people and refer to a name commonly used to describe the short-statured ancients in its movie title. Plaintiffs, on the other hand, asserted that Asylum infringed on their trademarks and tried to ride on the coattails of its massive promotional campaign and trick moviegoers to purchase the Asylum movie, thinking they are buying the Warner/New Line film.

On August 31, 2012, Plaintiffs sent Asylum a cease-and-desist letter demanding that it refrain from using the “Hobbit” Marks. The parties then discussed Asylum’s asserted fair use defense and possible changes to the title, design, and promotional materials. Asylum changed the design of its promotional materials, but refused to remove the word “Hobbit” from the film title for the domestic release of the picture.

On November 7, 2012, Plaintiffs filed a complaint against Asylum for trademark infringement, false designation of origin, trademark dilution, false advertising, and unfair competition. Then, approximately three weeks before the scheduled release of the Asylum picture, Plaintiffs filed an application seeking a temporary restraining order stopping the release of the Asylum film.

As most movie aficionados know, there is a long history of independent filmmakers trying to cash in on viewer interest in topics made popular by the major studios. Roger Corman produced Black Scorpion, which imitated the Batman movies, Forbidden World, a knockoff of Alien, and Piranha, which borrows liberally from JAWS. Asylum has produced a number of low- budget films that resemble major studio releases. The company made a low-budget version of H.G. Wells’ The War of the Worlds, which was released the same year as Steven Spielberg’s film based on the same 1898 public domain book. Blockbuster reportedly ordered 100,000 copies of the Asylum film, far more than it had for any of Asylum’s previous titles.   Seeing how profitable such films can be, Asylum produced several low-budget knockoffs, sometimes called mockbusters, including Transmorphers, Almighty Thor, Abraham Lincoln vs. Zombies, Snakes on a Train, and Paranormal Entity.

The major studios were not amused, but it was questionable whether they could legally stop Asylum. 20th Century Fox threatened legal action over the release of The Day the Earth Stopped, a film similar to The Day the Earth Stood Still.  Last May, Universal Studios filed suit against Asylum over their film American Battleship, claiming infringement of their movie Battleship. Asylum then changed the title to American Warships.

For the most part, Asylum has been successful in releasing its pictures and defending them from legal assault. The company claims that it has released more than 150 films and has only been sued twice for trademark infringement. One case was settled, and Asylum prevailed in the other.

Asylum’s legal success involved the film Haunting of Winchester House. Asylum was sued by the owners of the Winchester Mystery House, a popular tourist attraction in San Jose that consists of a 160-room Victorian-style mansion as well as a museum, gift shop, and café. The attraction is billed as the world’s most haunted house. Sarah Winchester, according to legend, created this mansion to fend off ghosts.

The owners objected to Asylum’s plan to produce and market its movie, which allegedly was based on a “terrifying true story.” When Asylum asked for permission to film at the Winchester Mystery House, the owners informed Asylum that they had signed a contract with another producer for exclusive rights to the Winchester story.

The Asylum movie begins with a shot of a Victorian-style structure, but not the actual Winchester Mystery House. The movie includes the ghost characters of Sarah Winchester, her adolescent daughter, and her brother, who was deaf and could not speak. These characters, as well as the ghosts of those killed by Winchester guns, haunt Sarah Winchester’s home. However, the real Sarah Winchester did not have an adolescent daughter or a brother who was deaf and unable to speak.

The trial court dismissed the case against Asylum on summary judgment. On appeal, the appellate court agreed, stating that in trademark infringement cases involving First Amendment concerns, the finding of likelihood of confusion must be particularly compelling to outweigh the First Amendment interests of filmmakers. The owner of a trademark does not have the right to quash an unauthorized use of its mark by another who is communicating ideas or expressing points of view.

However, with its Hobbit movie, Asylum apparently crossed the line. So the question arises, where exactly is that line? How closely can a filmmaker imitate another work or title without having a judge halt its distribution?

It is rare for a court to restrain distribution of a film especially when copies have already been shipped. Films, like newspapers and books, are protected expression under the First Amendment. A party seeking a preliminary injunction must show that it is likely to succeed on the merits and will suffer irreparable harm if the relief is not granted.

A basic principle of copyright law is that ideas, themes, facts, subject matter, and historical incidents cannot be copyrighted. Anyone can write a book about George Washington, and they can even borrow facts from prior books without infringing those authors’ copyrights. Moreover, film titles generally cannot be registered as trademarks. Only a distinctive title to a series of books, periodicals, newspapers, or television programs like Bonanza could be registered. The reason is that trademarks are used to identify the origin of goods or services. Single books or films are one-offs. Their titles describe that particular work, not a series of works. Courts can, however, protect titles from confusingly similar uses, under the law of unfair competition, if the title has acquired a secondary meaning. A secondary meaning is when the title is sufficiently well known, that consumers associate it with a particular author’s work.

While courts are very protective of filmmaker’s First Amendment rights, the law is also concerned about protecting consumers from being misled about the origin of products, which is what the laws of unfair competition and trademark address.

There have been a number of cases in which courts have wrestled with a conflict between the freedom of expression of a filmmaker and the owners of trademarks and other rights. A commonly cited case is Rogers v. Grimaldi, which Asylum relied upon in its defense.  In that case, Federico Fellini conceived, co‑wrote, and direct­ed a film entitled “Federico Fellini’s `Ginger and Fred’.” The movie was a fictional work about two re­tired dancers. The dancers made a living in Italian cabarets imitating Fred Astaire and Ginger Rogers, thus earning the nickname “Ginger and Fred.” The story was a satire about the world of television. According to Fellini, the characters did not resemble or portray Fred Astaire and Ginger Rogers. However, Ginger Rogers brought suit, claiming that Fellini violated her rights of privacy and publicity. Her complaint alleged that the defendants violated her rights by creating the false impression that the film was about her or that she sponsored, endorsed, or was involved in the film, and that it violated her right of publicity, and defamed her by depicting her in a false light.

The district court decided that Fellini’s movie was a work protected under the First Amendment, and that a trademarked term could be used in the title of an artistic work if the use of the term has some artistic relevance to the work and does not explicitly mislead consumers as to the source and content of the work.

The Court of Appeals affirmed the lower court, explaining that movies, plays, books, and songs are all works of artistic expression and deserve protection, even though they are also sold in the commercial marketplace and thus can be the subject of consumer deception. Consequently, when the title of a movie or a book has acquired secondary meaning—that is, when the title is sufficiently well-known, that consumers associate it with a particular author’s work—the holder of the rights to that title can prevent the use of the same or confusingly similar titles by other authors.

The court concluded that filmmakers can use a celebrity’s name in the title of an artistic work where the title does not explicitly denote authorship, sponsorship, or endorsement by the celebrity or explicitly mislead as to its content. The court also held that Oregon law on the right of publicity does not bar the use of a celebrity’s name in a movie title, unless the title was “wholly unrelated” to the movie or was “simply a disguised commercial advertisement for the sale of goods or services.”

Other cases have given less weight to the First Amendment rights of filmmakers. In American Dairy Queen Corp. v. New Line Productions, Inc., the defendant produced and was preparing to release a film entitled Dairy Queens, which was described as a mockumentary satirizing Minnesota beauty contests. The plaintiff was the Dairy Queen ice-cream chain, which claimed trademark infringement and dilution of its trademark. The district court found that the likelihood-of-confusion factors weighed in favor of the plaintiff. Then, it considered whether the defendant’s First Amendment interests were sufficient to outweigh the plaintiff’s trademark interests in its Dairy Queen trademark. Ultimately, the court found that because other alternative titles like Dairy Princesses or Milk Maids were available, “the balance between the public’s interest in free expression and its interest in avoiding consumer confusion and trademark dilution tilts in favors [sic] of avoiding confusion and dilution.” Dairy Queen Corp. won because the court distinguished  Rogers v. Grimaldi on the grounds that the Rogers case involved a title that directly referred to the content of the film – performers known as Ginger and Fred. On the other hand, defendant’s film was about beauty pageants in Minnesota, without any  connection to plaintiff’s ice cream stores. The Dairy Queen decision has been widely criticized.  Moreover, there are many cases that stand for the principle that filmmakers can refer to trademarks in their film, provided they do not do so in such a manner as to mislead moviegoers that the trademark owner is somehow affiliated or endorsing the picture.

In Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., the defendant exhibited a pornographic movie, “Debbie Does Dallas,” which portrayed a “Texas Cowgirl” engaged in sex acts. The character wears a uniform strikingly similar to that worn by the Dallas Cowboys Cheerleaders. Ads for the movie showed the character in the uniform, and included such captions as “Starring Ex-Dallas Cowgirl Cheerleader Bambi Woods.” In fact, Bambi Woods had never been a Dallas Cowboys Cheerleader.

The Dallas Cowboy Cheerleaders brought suit, alleging that they had a trademark in the particular combination of colors and the design of their uniforms. The uniform in which they appear and perform consists of a blue bolero blouse, a white vest decorated with three blue five-pointed stars on each side of the front of the vest and white fringe at the bottom of the vest, tight white shorts with a belt decorated with blue stars, and white boots. The trademark was not registered at the time, although Plaintiff contended that it was protected as a common law trademark.

The defendant contended that the film was a parody or satire on female cheerleaders and was protected expression under the First Amendment. Moreover, the defendant claimed that no one could rationally believe that the film originated or was associated with the actual Dallas Cowboy Cheerleaders.

The court disagreed and issued an injunc­tion against further distribution of the film. The court found that the association with the Dallas Cowboy Cheerleaders, both in the film and in the advertising, had the single purpose of exploiting the Dallas Cowboy Cheerleaders’ popularity in order to attract an audience to view sex acts in the movie.

Then there is the Agatha Christie case. Casablanca Records produced a film titled “Agatha” about the famous mystery writer Agatha Christie. The story is a fictionalized account of an 11-day disappearance of Christie in 1926. Christie is portrayed as an emotionally unstable woman who engaged in a sinister plot to murder her husband’s mistress. The heir to Christie’s estate brought suit to enjoin Casablanca from distributing the movie, alleging unfair competition and infringement of the right of publicity.

During her life, Agatha Christie agreed to have her name used in connection with various motion pictures and plays based on her books. Her heir alleged that Casablanca’s use of the name “Agatha” and “Agatha Christie” would cause confusion in the minds of the public in general, and Agatha Christie readers in particular, by creating the impression that the movie and novel were authorized or even written by Ms. Christie. The court, however, summarily dismissed this claim, without much explanation other than finding that the heir “can prove no set of facts in support of [this] claim which would entitle [them] to relief.”

These cases were decided by different judges, under different state laws, and federal and state laws have evolved over time. Still, it is difficult to distinguish how the use of the word “Agatha,” is not likely to confuse moviegoers about the origin of the film about her, but the use of the word “Hobbit” is likely to confuse moviegoers about the source of Asylum’s movie.

The judge in the Asylum case seemed to be greatly influenced by Plaintiffs’ data showing that Asylum’s title was likely to mislead moviegoers about its movie. Plaintiffs presented evidence from a weekly tracking study conducted by Nielsen National Research Group (“Nielsen”) in which 30 to 40 percent of survey respondents indicated confusion about the source of “Age of Hobbits.” The survey included 1200 respondents divided into two groups. The Test Group was shown an image of the “Age of Hobbits” poster while the Control Group was shown the same poster with an alternative title. Thirty percent of those in the Test Group who had an opinion about the source of “Age of Hobbits” (about 200 respondents) said they believed the movie was made or distributed by Plaintiffs. On the other hand, only 6 to 14 percent of the respondents in the Control Group, who were shown the movie poster “Age of Java Men,” associated the film with Plaintiffs.

The court also mentioned that Asylum’s release of its film three days before the release of the Plaintiff’s film demonstrated intent to capitalize on the publicity surrounding Plaintiffs’ film, and its similar artwork and prominent use of the trademark showed intent to deceive.

Still from “Brave New Wild”

And no sooner do you get used to the fact that people will watch your private work and have their public opinions about it, good or bad, than you begin the proverbial dog-and-pony show: distribution.  Despite all this internal dialogue, the IFP Distribution session left me hopeful about the process because it empowered us with smart, creative, satisfying options.  If you are about to get to distribution on a film, here are a few things that I thought were worth thinking about:

• No seriously, what is your film festival strategy?

Sure, it’s gotta be really useful if you can premiere your film at a top-tier festival because maybe this will put you on the radar of industry who might make your dreams come true.  But the honest truth is that every year, really wonderful films don’t make it in to the top tier festivals.  Some become wildly successful regardless.  Some films premiere at a top tier festival and disappear without nary a buzz.  So ‘get in to a top tier festival’ should not be the extent of your strategy.  Start considering your film festival run as a bonafide theatrical run where you get to show your film in theaters to audiences across the country (or world).  For many films, it will be the extent of your theatrical distribution, and you might want to harness the press and connections with audiences at festivals to launch your film.  Are you going to sell festival DVDs?  What’s going to be on your website during the fest that people can look at from their smartphones?  Are you going to ask for screening fees? When and how and why?

• You gotta fight for your (Split) Rights.

When you’re making your first film, the hazy distribution ‘plan’ sorta starts out as two imaginary steps: 1) get into the Film Festival of your dreams 2) next thing you know, a deus-ex-machina distributor swoops in and your film is screening nationwide at Big Shot Megaplex 2000.  But in this [rare] traditional model, one distributor gets all your rights for a long, long time.  And because it costs a lot of money for a theatrical run, cross-collateralization means unless you get money upfront, you’re not going to see any.  Not to mention, you don’t have any say in how your film is put out there.

If there’s anything that Jon Reiss (Think Outside the Box Office) won me over on during the Labs, it’s that forgetting about the traditional model and splitting up rights may be the best thing for your film.  When you split your rights up, for example, you can sell your broadcast rights to whatever TV channel you can book, sell your digital rights to a digital aggregator who can get you on iTunes, and then sell DVDs and merch off your website/ via a fulfillment company, etc.  You can tailor strategies that you think will work for your particular film and audience.  A few things to keep in mind when you actually get down to parceling these off:  don’t give rights to an entity that doesn’t have a history of making money off those rights, don’t give exclusivity unless you’re getting paid extra for it, and think about a clawback clause – where you get your rights back if a certain amount of time (6 months, 1 year) has elapsed and a minimum amount hasn’t been earned on those rights. It sounds a little daunting as a filmmaker to go in and negotiate these things, so if you don’t know if you’ll have the chops, hire a lawyer to negotiate for you.

• Consider your own damn theatrical run. 

Creating a month or two tour of one-off special event screenings can turn your film into an amazing theater-going experience.  Use the network you’ve been growing while making your film to get a full house where the audience is engaged, excited, asks questions, talks to people in the film, maybe even dances and drinks a beer with you, and thinks about it all week afterwards.  All the while, spread the word of your film, sell some DVDs, special merch, and promote for your digital release.

Map of future screenings

As Dylan Marchetti from Variance Films pointed out, if you call a theater and let them know that you sold out your last screening, and want to book their theater for a Tuesday night for your next one, odds are they will be interested.    The world is your oyster, as long as you are willing to put in the time and effort.  If you’re trying to move on to your next film as part of your goals or have a rigid work schedule, this probably won’t sound as desirable, but as for my Producer Alex and I, we’re looking forward to packing the ’76 VW van we filmed our doc in, and living the er, dream for a month with the film.  Of course, you often barely break even on a theatrical run like this – but independent film has always been a pretty lousy get-rich-quick scheme to say the least.  At least this way, you can make a film, build an audience, work on the ancillary market, and have some bargaining power when you start on your next film.

From the 2012 Script to Screen Conference.

From the IFP’s recent Industry Connect Event with DCTV and the NYTVF

From the 2011 Independent Filmmaker Conference.

From the 2011 Independent Filmmaker Conference.

From the 2011 Independent Filmmaker Conference.

A “Joint Venture Agreement” is just another way of referring to a partnership agreement usually formed just for one project. This agreement specifies the parties’ rights and obligations pertaining to the project. It is a sort of business relationship “pre-nuptial agreement” in which the parties understand what is expected of them and what happens if a problem should occur between or amongst the parties. (A Joint Venture Agreement can be between two parties or among three or more parties.) If the Joint Venture Agreement addresses key issues comprehensively, the parties often can sign it, place it in a drawer and only look at it when the need arises.

The joint venture often is a preliminary step prior to forming a production entity such as a limited liability company or a corporation once a project’s funding begins to fall into place. Its term can be for a few months or years with six months to two years serving as the norm. If one of the parties wrote or otherwise controls the right in a project’s script, that party’s contribution to the joint venture would include the “optioning” of the script by the venture with the venture having the right to acquire the script’s rights before the end of the venture’s term. If the venture’s term should end and the venture (or a subsequently formed production entity) has not acquired such rights, the option would be deemed to have lapsed and the script’s rights would remain with the party that wrote or otherwise controls the script’s rights without any encumbrances. However, if the venture or one of the parties to the venture spent any development or otherwise related monies concerning the script or the project, the party who owns the rights to the script would be free to work with other persons or entities to produce the project once the venture’s term has ended, subject to that party either repaying or having a third party repay the other joint venture party any of that party’s share of the Venture’s direct, verifiable “out-of-pocket” expenses. The joint venture parties sometimes will permit such expenses to be excused without any right to repayment to a party. This point is a matter of negotiation between or among the parties.

There should be a provision in the Joint Venture Agreement which states what is expected of the parties. A party’s contribution to a venture can include the project’s script (or any underlying rights to a script), funding, development, production, marketing or distribution resources or skills or the promise to use best efforts by each party to secure such financing, to locate such resources or to render such services.

One of the most important provisions in a Joint Venture Agreement is the one that addresses how the parties make decisions regarding the venture. The parties can separate the types of decisions made on behalf of a venture into purely creative and business (i.e., economic) decisions. Although creative and business decisions often overlap, creative decisions can be separated into two categories: those creative decisions which require the additional allocation and expenditure of funds and those creative decisions which do not affect (i.e., increase) a project’s budget.

If none of the parties is to be a project’s director, the selection of a director may require the parties’ unanimous approval (although this decision and other decisions may be subject to the approval of a project’s financier in certain cases). If one of the parties shall be designated as the project’s director or a third party is to be engaged as the director, the parties would attempt initially to reach some sort of consensus; however, there should be some mechanism to address those times when consensus cannot be reached by the parties. The parties have several options regardless of the nature of such decisions. First, the parties can agree that a decision must be unanimous or a decision is not made. This method of decision-making works well concerning such issues as the selection of cast, crew and director, but it can result in a deadlock by the parties if they are unable to agree. Second, the parties could agree to choose a third party approved by the parties whose decision would govern. This option can be avoided if there is an odd number of parties in a joint venture but issues may arise if the parties have difficulty deciding who should be designated as the third party “tie-breaker.” Third, a party or parties can agree to defer to a party whose decision shall govern since that party may have expertise in a certain area or that party has secured financing or distribution for a project and this type of decision-making may be a condition to forming the venture and to producing the project.

Regarding expenditures made on behalf of the venture, the agreement can state that expenditures which are at a certain monetary level or greater require the (usually written) approval of the venture’s parties. This provision can be problematic if one of the parties may be unavailable or inaccessible during the venture’s term or the production of the project. The parties can select a third party as an alternative signatory for the purpose of paying for expenditures of a certain amount or higher or the agreement can provide a grace period in which the unavailable party must get in contact with the venture’s other party or parties or his, her or their right to approve such expenses would be deemed waived. Still, if a party accesses monies to pay for an unauthorized expenditure, the agreement would acknowledge that such party would be personally responsible for repaying such expense. But in this age of e-mail, faxes and overnight delivery, this situation is becoming less and less of an issue.

In the area of compensation, the Joint Venture Agreement may state the specific figures reflecting how much money would be paid to a party for certain services, or the parties may agree to equal compensation, whether such compensation is upfront, deferred or contingent in nature (i.e., “on the backend”). One of the troublesome issues regarding compensation in which the parties have to address in a Joint Venture Agreement is how to address the scenario when one of the parties leaves the project whether voluntarily or otherwise. There should be a pro rating of a departing party’s compensation that is tied to when the party departs the project. If a party departs from the project at an early stage, that party should receive less compensation that if the party would leave at a later stage of the project. This point is a highly contested issue.

The parties address a similar issue concerning the allocation of the parties’ credits regarding the project. A party’s credit should be subject to that party’s substantial or full compliance of the Venture’s terms and the rendering of services as designated in the Joint Venture Agreement. This credit provision should state how the credits should read and appear on all positive copies of the project and in its promotional and advertising materials. The parties also can deal with this issue by stating in the Joint Venture Agreement that a party’s credit shall appear whenever another party’s or parties’ credit(s) shall appear. Once again, this can be a highly negotiated provision.

A joint venture can be terminated for reasons other than the expiration of its term (which usually can be extended by the parties’ unanimous consent) such as by operation of law which may occur when the venture has not complied with certain laws which may result in the venture’s dissolution or when the venture may be compelled to seek bankruptcy protection.

If a joint venture’s parties are from different locations, there should be a provision that acknowledges which country’s or state’s laws should govern disputes by the parties. Other common provisions in a Joint Venture Agreement address such issues as how monies should be allocated by the venture in terms of repaying any loans, repaying any investments made by the parties in the Venture or to third parties, that each party is free to pursue other business opportunities which are unrelated to the venture without having to ask if the other parties wish to participate in such new business opportunities and that a party’s offers assurances that the party has the rights (or, at least, the right to acquire) the rights in a project’s property which may include its underlying rights.

It is a part of human nature to avoid dealing with difficult issues regarding any relationship, whether the relationship is personal or business in nature. Still the Joint Venture Agreement serves as a means of clarifying many misunderstandings at an early stage and decreasing the chances of growing animosity among the parties later in the heat of developing, producing or distributing a project. The parties who wish to work together ultimately should realize that if they can weather the storm of dealing with the issues addressed in a Joint Venture Agreement, they probably have just as good as or a better chance of dealing effectively with the often difficult issues which arise when the parties are in the production and distribution trenches together.