Monday, January 3, 2011

Do You Have to Get Paid to Create a Work For Hire?

Dear Rich: Thanks for your answer to my question about ownership rights for a documentary film. I wanted to add a couple of things after reading your response: First, we are listed as "company" and the subject of the documentary as "owner" and the language specifically says 50% copyright of the documentary with no mention of source materials or materials created as a result of the production of the documentary. There is a clause that says we will return to "owner" whatever materials they gave us (photographs, video tapes, etc.) but nothing about our mini-DV tapes, edit files, etc. This was NOT a work made for hire as the "owner" has not spent any money nor offered to give us money over the three years we've been in production. We spent over $7,000 out of our pocket during production and were not paid an hourly rate of any kind (this is actually stipulated in the contract, that neither party would be paid except to split revenue generated by the sale of the movie on DVD or other means). Second we've resolved ourselves to the fact that in light of the "owner's" unwillingness to offer us a reasonable buy out of our source tapes we will simply do nothing, as has been suggested to us. Our concern however, is that since they have an attorney that they will look for a way to return to the issue of our breach of contract and attempt to sue us for some alleged damages - damages we are unclear on since aside from their attorney they have not paid for anything. Could they sue us for damages of lost potential revenue of the sale of the DVD? Did anybody miss us? We missed you and thanks for bearing with us as our hosting service retrofitted itself with some highly technical IT stuff all of which forced us into an extended hiatus. Anyway, we're back and we may have more exciting technical information to report soon ... then again, maybe not. It could be that kind of year.
Right, you had a question. Because you never got paid, you assume your arrangement can't be a work made for hire. That’s not necessarily true. There are two ways to create a work made for hire. The first way is irrelevant since you're not an employee. The second way -- for independent contractors -- occurs if the following three criteria are met:
(1) the film is specially ordered or commissioned (check)
(2) the work falls into one of the enumerated categories (check, it's an audio-visual contribution), and
(3) “if the parties expressly agree in a written document signed by them that the work will be considered a work made for hire” (Hmmm …. Notice there’s no mention of getting paid). As a general rule, courts presume that the above-referenced “written document” is a contract of some sort. In order to be a legally valid contract, there must be consideration.
What's consideration? It can be anything that one party does (or doesn’t do) for the other, and vice versa. Typically it's a payment but it can also be a promise to be paid in the future, even if it is speculative. (We recently signed a speculative arrangement like this when we wrote a book and got no advance). We’re not concluding that your document is a work made for hire arrangement (after all, we haven't seen it), but it could be even if you never received a dime from the other party.
Should you fork over the raw footage. None of this really helps your decision about whether you should fork over the raw footage and files. A lot depends on what is (and what's not in) the agreement. An argument might be made that the parties only intended to share copyright in the completed project. Even if it is implied that the shared-copyright extends to all footage, it's still not clear whether you are required to furnish that footage to the other copyright owner. We start to get into a slippery area as an intangible right is used to claim rights over tangible elements. If it's not spelled out in the agreement, this type of battle sometimes ends up in the courts.
What about damages? As for damages, keep in mind that although your payment for a contract can be speculative, damages in a lawsuit usually cannot. Courts are often hesitant to award financial damages if the person claiming damages cannot say with some certainty how much the film would have earned. There are ways to demonstrate damages in film cases but they are often confusing and when litigated can go on for years-- for example the Kim Basinger/Boxing Helena lawsuit (the judgment for which was later voided) (BTW, Kim, you did the right thing). In other words, the aggrieved party needs to show the court why they’re entitled to the dough, not just ask for it. We wish there was a volunteer lawyers for the arts group in your area to help you get some low cost arts advice. To learn more, here’s a recent podcast we did with the folks who run California Lawyers for the Arts.