Written by Lucy Diggle and Principal, Jennifer Tutty.
In the wide world of entertainment, creatives producing for the screen wear many hats.
From responding to shifting schedules and resources, leading creative development and managing administrative responsibilities, it’s not uncommon for conversations of ‘production legals’ and ‘rights’ to be deferred (or downright avoided) in favour of more pressing priorities.
However, one phrase that should remain front of mind for producers, throughout the entire process (from the birth of a project right up until its realisation on screen) is the pivotal concept of ‘chain of title’.
In this blog, we break down the concept of chain of title, as well as its relevance to producers and the entertainment industry.
What is Chain Of Title?
When used in an entertainment context, chain of title refers to the documents that prove ownership rights (including copyright) in any underlying material relevant to a particular project. For example: a film, tv series, video game, etc.
For the purposes of this article, let’s assume the project in question is a film! To get started, let’s look at the origins of the phrase to better understand its purpose.
The words ‘chain of title’ find its legal origins in a property law context.
From a land ownership perspective, chain of title is commonly used to describe the series of documents that trace the transfer of land ownership of any given parcel of land all the way back to the original grant of property from the crown.
In the entertainment context, the relevant property is not tangible property (ie. land) but intangible property rights (ie. intellectual property and related rights and interests)!
Example: A script used in a tv series
Let’s take the example of a script for a film.
As part of the development process, a production company may buy the rights in a writer’s script. The terms of engagement are likely to be outlined in some form of purchase agreement or writers’ agreement (the Agreement).
Any such Agreement should (hopefully!) outline which party owns the intellectual property in the script produced.
This could include the provision, for example, that upon its creation, all intellectual property existing in the script will be assigned (transferred!) from the writer to the production company.
Once the film reaches the production phase, the production company may wish to apply for funding to produce the series.
When providing evidence of clean chain of title to any funding body or agency, the Agreement will form a key document in the chain of title. This is because it will prove the production company has the necessary rights in the underlying literary work (the script) used to create the film.
Without this document, there is no guarantee that the underlying rights in the film (including the script, as a literary work) have been validly exercised by the production company.
Other examples of key chain of title documents:
It’s important to remember that chain of title is about ownership and use. Therefore, any document which grants necessary authorisation, consents or other rights will be relevant to consider.
Other documents which typically contribute to the chain of title for a film include:
– Producer Agreements.
– Director Agreements.
– Script Editor Agreements.
– Trade Mark Clearances.
– Copyright Licences.
– Location Releases.
– Talent Agreements.
IP Ownership and the Employee vs Contractor Distinction
In the absence of a written agreement, the legal nature of a relationship between two parties often indicates how certain rights (such as intellectual property rights) are held.
For example, under Australian law, the default position is that employers own the IP their employees create in the course of their employment with the business. On the other hand, a contractor retains ownership of all IP arising during their contractual relationship (unless there is a written agreement stating otherwise).
Therefore, it can be helpful to consider whether a producer is engaging a creative (ie. cast or crew) as an independent contractor or an employee.
Unsurprisingly, best practice involves the creation of written agreements, in order to avoid ambiguity and misunderstandings later on.
Tip: If you’re hiring employees…
Luckily for producers that engage their cast and crew as employees, a range of industry agreements (as negotiated by the Media and Entertainment Arts Alliance and Screen Producers Australia) contain clear provisions surrounding copyright ownership, performer releases and moral rights waivers.
It is important that producers read and clearly interpret these clauses, including having an entertainment lawyer review, interpret and populate these agreements.
Tip: If you’re hiring contractors…
On the other hand, if you’re a producer engaging your collaborators as contractors, be wary of the default legal position surrounding IP ownership.
Make sure you have clearly drafted contractor agreements in place (for the sake of your chain of title… and future sanity).
Relevance to the Screen Process…
A clean chain of title means there are no gaps or other issues in the chain in ownership in a film.
It is important for production companies and independent producers to have a clean chain of title so the final project can be legally developed, produced and marketed.
Show me the money: Funding and investment.
Additionally, a clean chain of title is an important surety for investors, financiers and distributors if you are seeking financial backing for your film.
These sorts of bodies will want confirmation that you have the rights you claim to have, so their return on their investment is not hindered in any way either during its production journey from script to screen, or down the track following the film’s release.
Remember, any agreement you enter into in order to obtain funding of any sort, from production grants to private investment to pre-sale financing will likely require you to make certain assurances that you are not infringing any third parties’ rights, including intellectual property rights in producing and distributing your project.
Typically, these agreements will require producers to give several assurances in the form of warranties or undertakings. These contracts often specify that if the assurances regarding the ownership of rights and interests in the project are found to be false, this will constitute a breach of the agreement, and the financial backer will have the right to terminate the contract.
Because of this, we recommend engaging an entertainment lawyer to conduct a chain of title review, as well as a review of your financing agreement before you sign on any dotted line!
Taking cover: Insurance
Clear chain of title is also a crucial qualifier when approaching insurance brokers, particularly when applying for professional liability cover (more commonly known as errors and omissions insurance). E&O cover is a crucial safeguard against legal issues including claims of defamation, invasion of privacy, copyright infringement and so forth!
It is a routine part of an insurance brokers risk management to require proof from producer’s that your production has the rights you claim it has in order to mitigate its own potential losses in providing this cover.
Solicitor’s Opinion Letters
Nowadays, many investment agreements across the entertainment industry insist on a producer providing a Solicitor’s Opinion Letter.
A Solicitor’s Opinion Letter is …a letter prepared by a solicitor (what gave it away?) that certifies a production company has acquired all necessary rights for a project’s development or production.
These letters are typically a conditions precedent of funding agreements, meaning the funding body requires the letter before funding is disbursed.
Government screen agencies, like Screen Australia and VicScreen require this letter for their funding programs and offer pro-forma letters to make the process easier.
In order to provide this letter, a lawyer will need to review all relevant chain of title documents to confirm you have acquired all necessary rights to make and exploit your project.
- Remember that chain of title establishes ownership rights of intellectual property and related rights and interests in a project.
- When entering into agreements with contractors and employees who will contribute to your project, ensure you have clear clauses around ownership and use.
- Keep the receipts! Ensure you retain detailed records of all documents, agreements, and transactions related to your project.
- Confirm there are no gaps or issues in your ownership in your chain of title by having your key documents reviewed by an entertainment lawyer.
- Beware of entering into finance agreements or insurance arrangements for your project before having your chain of title reviewed.
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Written by Lucy Diggle and Principal, Jennifer Tutty.
Published 27 November 2023.
The information in this article is of a general nature. It does not constitute formal legal advice and should not be relied on as such. Please see the full disclaimer in our website terms. Please contact Studio Legal if you are seeking advice about a specific legal matter.