Film Distributors, Indemnity and Struggling Artists

Dear Rich: Struggling Artist makes an anti-establishment film, which is mostly original material. In one segment, with a satirical intent, he deliberately shows McDonalds' "golden arches" and uses a Hannah Montana song on the soundtrack. Struggling Artist knows the material is copyrighted and trademarked, but he believes that he has a fair use defense and that it's OK to use it. Distributor picks up Struggling Artist's film for DVD distribution. In the contract he signs with Distributor, Struggling Artist guarantees that he owns all the copyrights to the material he supplies. Distributor takes the masters Struggling Artist gives him and sends them to a third party to be duplicated onto DVD. A month later, McDonalds and Hannah Montana file lawsuits against Distributor for trademark and copyright infringement (as Struggling Artist has no money). Is Distributor liable for any judgment in favor of the plaintiffs? Does the contract clause where Struggling Artist assures Distributor he owned the rights to the material help him? The short answer is that the distributor will be liable for infringement and the contract clause will only help if the distributor can obtain some payment from the artist. By the way, we're not sure where you fit in - as distributor or artist - so as Joni Mitchell says, we'll look at this from both sides now. 

Indemnity. The Dear Rich Staff  believes that the clause you're referring to is either a warranty - in which the artist promises the film does not infringe -- or an indemnity clause - in which the artist agrees to pay for any damages resulting from any claim of infringement. Either way the distributor can likely go after the artist for reimbursement if someone sues. Some distributors don't just rely on these contractual promises; they ask to see the documentation verifying the licenses and permissions. 

Fair Use and Other Defenses. The concept of "fair use" is primarily for copyrighted works - the Hannah Montana song -- and not for trademarks (the golden arches). Trademark fair use applies to a different type of defense. As noted above, even if the distributor prevailed, the distributor would most likely have to pay its own attorney fees. So being right doesn't mean that the artist and distributor are free of financial liabilities. Also, you didn't mention if the anti-establishment film is a documentary or feature film. A documentary is likely to provide stronger defenses. (BTW, in today's completely co-opted world does the term "anti-establishment" have any meaning anymore?) 

Insurance and Other Odds and Ends. Does the distributor have insurance? If so, you can be sure that the insurer will proceed after the artist and obtain a judgment (and the distributor may do the same on its own). The artist may not have anything of value right now but a judgment will last for many years should the artist earn or inherit anything in the future.

Struggling Artist? We're not sure why the term "struggling artist" bugs us. But really, everyone's struggling to some extent -- even Lindsay Lohan -- and the artist in your question just got a distribution deal which means he or she is way ahead of the game, at least in the struggle-reduction department. Ennyway, just a thought ... and we'll try and get over ourselves.