Untangling the web: Spider-Man lawsuit settlement highlights how to negotiate out of copyright collaboration agreements

The New York Times reports a final settlement in the long-running copyright and breach of contract battle between producers of “Spider-Man: Turn Off the Dark,” the musical’s original director Julie Taymor, which also involved composers, Bono and the Edge of U2 and Marvel Entertainment (which itself was acquired by Disney in 2009). The New York Times summarized the dispute as follows:

Ms. Taymor, the Tony Award-winning director of “The Lion King,” was fired from the $75-million “Spider-Man” production in March 2011 amid disputes over changes to the show’s script and staging. In November, Ms. Taymor filed a breach of contract suit against the musical’s lead producers, Michael Cohl and Jeremiah J. Harris, saying that they were continuing to profit from her creative contributions to the show without compensating her. Mr. Cohl and Mr. Harris filed a countersuit in January saying that she violated the terms of her contract and “could not and would not do the jobs” she was hired to do, and thus was not entitled to further royalties.

Last September, the parties “reached an agreement in principle,” according to a statement issued by the U.S. District Judge Katherine Forrest overseeing the trial. But the final agreement required an additional four months of negotiations. The delay likely comes from the conflicting nature of the parties’ interests and uncertainty over the value of the $75 million dollar property.

Although the stage musical has Spidermanachieved some weeks with grosses in excess of $1 million, it is unclear whether it is significantly profitable on most weeks. Assuming it is, at a profit of $150,000 per week (a considerable sum for Broadway), it would need to run over 9½ years to break even. For the investors, that is a monstrous timeline.

Royalty participants like Bono, the Edge earn income each week, so the length of the run matters more than its profitability, though complex formulae used in the Approved Production Contract for Musicals offsets some of this disparity.

More importantly, for the producers and investors, is the ability to restage and cut the musical so that its costs can be tamed and the production repackaged for other cities and for tours. The settlement of the copyright action by Ms. Taymor presumably allows the producers to use and to modify her material so that the show can be streamlined and packaged for other venues.

Despite the many accidents during development and the generally bad reviews, Spider-Man is reportedly a “fan favorite” according to the Times. Profitability will not likely come from Broadway, so the producers need this settlement to take their show on the road and lower their costs.

For other creators, seeking to learn from the settlement, what might such settlement negotiations entail?

1. Approval rights. A director may have approval rights over the use of various copyrighted elements in the production. A settlement agreement must terminate all future approvals.

2. Copyrighted elements. Generally a director does not contribute works that are protected by copyright. The Approved Production Contract provides very explicitly that the playwright (including the composer and lyricist for musicals) solely owns the copyright. General staging is not copyright protected, though choreography is protectable by copyright. All choreography and any staging should be licensed to the production to make the settlement effective.

The license must include both the right to publicly perform so that the productions can continue to be shown on stage; to reproduce so that any DVDs of the production can be sold; and to modify, so that the work can be changed as needed to accommodate new venues and new performers.

3. Contractually protected elements. The director of a play or musical will have protections provided by contract that go beyond copyright. Ideas on staging, conceptual approaches to the material and other elements that fall outside of copyright may still be covered by contract. The production contract should be superseded by the settlement agreement; all rights protected by the contract should be transferred; and any other claims waived.

4. Non-disparagement and credit.  There are two sides to every break up. Both parties are likely at fault and neither side is completely true. As such, the settlement agreement must protect both sides – particularly the individuals – from negative statements or efforts to paint the other side as unprofessional or wrong. A key component of this is affording credit to everyone involved. There may be an additional wrinkle because new participants have been hired to complete work started by those leaving the production. In some cases, the amounts of relative contribution are balanced by the applicable union and credit is arbitrated through the union agreement. In most cases, however, the settlement should itself provide some credit for everyone – with an effort to be generous to the leaving parties.

5. Payment. Ideally, the settlement of any creative dispute will include a payment of a fixed sum, so that the parties can be done interacting and so all future accounting obligations are avoided. If the future revenues (or profitability) are too uncertain, then future participation may be necessary. Even if the settlement provides for payments based on future revenues, the parties are better off with a royalty based on weeks performed or grosses earned than the more subjective definition of profits. Nothing will guarantee a return to the courtroom faster than a net profits settlement provision and a very successful run.

The actual settlement involving Spider-Man has not been disclosed. Still, these five key provisions are likely the topics identified by all the parties. Participants like Marvel needed to be sure the settlement did not change the producer’s obligations or harm its interests, while the producers and Ms. Taymor had a great deal of economic, professional and emotional issues to address. Does this mean Spider-Man will soon be coming to a town near you? It opens the possibility. Now the producers need to translate their $75 million enterprise into a smaller, simpler but audience-thrilling experience.

Like any creative endeavor, these projects always take time.

New article on entertainment law; no reminders to avoid brandishing guns in public

I recently had the opportunity to participate in writing an article for the Journal of Intellectual Property Rights, special issue on Leveraging IP for Business Advantage published in September 2012. The topics range from drug pricing to character licensing, enabling the reader to gain a great understanding of the breadth of intellectual property issues.

I was among the articles on entertainment law, with my paper The Heart of the Deal: Intellectual Property Aspects in the Law and Business of Entertainment, Journal of Intellectual Property Rights, Vol. 17, p. 443, 2012.

Abstract:

In the globalized media marketplace, intellectual property rights of copyright, trademark, trade secret and identity interests remain the critical building-blocks of property interests and business structures. At the same time, traditional media categories are blurring as projects are increasingly created as transmedia social audience engagement platforms.

The entire issue is fascinating and will be useful to lawyers across the globe.

My entertainment law article discusses a good many of the issues involved in negotiating intellectual property and production agreements. But it is not as complete as an entire book on filmmaking (see The Independent Filmmaker’s Law and Business Guide) since it did not remind filmmakers that they need appropriate film licenses to shoot on public streets.

While I have often taught this rule, I was reminded of it earlier this week when four St. Paul Minnesota filmmakers were arrested on “charges of terroristic threats for brandishing what appeared to be real weapons.” The story was reported by Chao Xion of the Minneapolis Star Tribune.

It wasn’t until after about nine squad cars screeched into the area and officers had arrested three men and a woman that they learned the truth — the group was filming a low-budget movie.

No camera was seen when officers arrived, but a small 35-millimeter camera was later found.

The comments made by the police should also raise some eyebrows:

Police recovered three guns: a BB gun, an Airsoft gun and a replica gun. [Sgt. Paul Paulos, a police spokesman] said that none of them carried the orange markings of a toy gun and that the situation could easily have turned dangerous.

“This could have been a very deadly scene,” he said.

Filmmakers are generally required to obtain film permits when shooting in public locations, and of course the making of a film does not give one the right to enter a neighbor’s private property without permission. The police reported that no film permit had been pulled for the filmmaking.

As ultra-low budget filming becomes increasingly popular more such incidents are likely to occur. Brandishing a weapon in a public place will raise alarms. Even in one’s own yard, the same scene that will look great on film could precipitate an emergency response. Planning remains one of the most important steps to successful filmmaking, as our local auteurs recently learned.