Creating and Maintaining a Clean Chain of Title for a Feature Film
 
By John W. Cones, Attorney
 
            The phrase “chain of title” within the context of the film industry refers to a series of documents or agreements that establish proprietary (ownership) rights in a motion picture and all its parts. It is a collection of all of the documents that relate to the creation of and transfers of title to any property used in the making of the film.
 
            The chain of title seeks to protect all original works used in the film, while also establishing that there is appropriate documentation in relation to rights assigned or licensed by third parties to the filmmaker. The ownership rights may include copyrights, trademarks and/or rights of publicity. The so-called “chain” runs from the current owner at any given time, back to the original owner of such property rights. Thus, this collection of documents may continue to grow over time.  It is typically maintained in chronological order and contained within some flexible file folder, portfolio, briefcase, banker’s box or other suitable carrying case. Typically, the chain of title presented to others for their review would consist of copies of the original documents.    
 
            A “clean” chain of title is that same sequence of documents without gaps in time or other issues that may cloud the title (i.e., raise unresolved questions regarding ownership). For filmmakers, a clean chain of title is essential. No matter whether the filmmaker is approaching a studio executive seeking to obtain a production-financing/distribution deal (P-F/D), approaching another production company seeking a co-production deal, approaching a distribution executive seeking to obtain a negative pickup, split rights or foreign pre-sale agreement or ultimately approaching a distributor for the purpose of negotiating an acquisition distribution agreement, all of these transactions will require a clean chain of title (for further discussion of these various forms of film finance or distribution see my book 43 Ways to Finance Your Feature Film, Southern Illinois University Press).
 
            In other words, when a filmmaker is seeking some form of film finance or distribution, each of the individuals representing a major studio/distributor, an independent production company or an independent distributor, will at some point ask “Who owns the rights”? or “What is the state of your chain of title?” If the filmmaker does not even know what the phrase chain of title means, or does not have a clean chain of title, the odds of closing that deal are quite severely limited (not to mention the likelihood that the filmmaker will be viewed as unprofessional or uninformed). It is part of the independent filmmakers job to know about chain of title. The preferred response to that inevitable question is to say: “Sure, here it is.”
 
            In a hypothetical situation, let’s say Filmmaker A and Filmmaker B both produce an independent film with investor financing, with no obligation to any particular distributor. Filmmaker A’s film is slightly more commercial in the view of the distributors and is well made. Filmmaker B’s film is slightly less commercial but still well made. The distributor is trying to acquire the rights to a film to complete its annual slate, and it just has the one additional slot to fill. Unless the distributor’s representatives believe that whatever chain of title problems associated with Filmmaker A’s film can be easily and quickly resolved to their satisfaction, it is more likely that the distributor will acquire the rights to distribute Filmmaker B’s film, since it has a clean chain of title. Another way to say this is, unless the filmmaker is just making a home movie, he or she must be able to present a clean chain of title to film financiers and distributors.
 
            Filmmakers should not wait until the film is completed to begin assembling the film’s chain of title. This activity should be ongoing throughout the process of creating both the script and the subsequent film. In other words, copies of whatever documents relating to the ownership of rights in the script or film should be added to the chain of title documents as they are created.  
 
            So let’s be more specific regarding what documents should be included in a film’s chain of title:
 
            Acquisition of Underlying Rights – A film script may be based on a copyrighted story that has already been published in some form. This story may come from an existing book, article, essay, short story, life story, poem, song, comic book, stage play, television show or prior film. In any event, the filmmaker will need to acquire the rights to the story. This is usually done by way of an option/acquisition agreement. This is effectively an agreement that gives the filmmaker the option to purchase the rights to that underlying material for a specific period of time, after which the filmmaker may purchase the motion picture rights to the work for an agreed price. The filmmaker should also ensure that the agreement by which he or she acquires the motion picture rights includes a warranty from the author that he or she is the true owner and an indemnity that he or she will he will be liable for any loss the filmmaker may incur in the event of a breach of this warranty. These agreements relating to the acquisition of the underlying rights should be included with the film’s chain of title documents.
 
            Treatment – In many instances, a screenplay is not the first document relating to a film that may be copyrighted. A treatment may precede the drafting of the script, and the treatment may be the first document to be filed with the U.S. Copyright Office. In those situations where a screenplay is derived from a treatment, the screenplay is considered a derivative work of the treatment, and as such, the treatment could be the first element in the chain of title. Without the written permission of the author of the treatment to create a screenplay based on it, the chain of title would be clouded (i.e., not clean and/or broken).
 
            Copyright Registration of Script – If an original script is being written (i.e., no underlying rights are involved) and there is no treatment, a film’s chain of title may also begin with the screenwriter’s copies of the script’s registration with the U.S. Copyright Office, including both the registration form and the receipt sent back from the copyright office. Placement of such documents in the chain of title depends on the dating of such documents (i.e., again the documents in the chain of title should be placed in chronological order). 
 
            Certificate of Authorship – If there is no treatment that was copyrighted, another of the early documents to be found in a film’s chain of title may be a certificate of authorship signed by the script’s author. A certificate of authorship is a signed statement executed by the script’s author or authors attesting to the fact that the script was original with that writer or those writers. A sample copy of a certificate of authorship can be downloaded for a small fee at http://www.filmfinanceattorney.com in the “Film Industry Contracts” section under “Product Categories”.
 
            Option/Acquisition Agreements – Next, any option, option/acquisition or acquisition agreements relating to that script should be included, along with any associated short form copyright assignments filed with the copyright office. If, for any reason, the film was not produced pursuant to those agreements and rights revert back to the screenwriter, documentation reflecting that reversion of rights should also appear in the chain of title.
 
            Releases – Other documents that should be included in the chain of title for a specific film script may be generated in situations where many people have contributed to the project, thus potentially acquiring authorship rights. In such situations, the agreements with such persons should contain releases or some form of relinquishment of rights, so again the ownership question remains clear. And the document should be placed in the chain of rights folder in chronological order. Similarly, documents containing releases, licenses or permissions from other copyrighted materials used as a source for something written in a script should also be included.
 
            Title of Film – While there is generally no copyright in the title of a film, a filmmaker may also need to obtain a clearance to use a proposed film title. Where the title includes the name of a place, musical group or product the filmmaker should conduct or have conducted on his or her behalf, a search of the trademarks registry to ascertain whether the name is trademark protected. It will also be necessary to do searches of the trademark registries in other markets in which the film will be distributed. If the name is registered, then the filmmaker may need to contact the trademark owner and enter into a licensing agreement for use of the name, and that agreement should be included in the film’s chain of title.
 
            Talent agreements – Such agreements should include a release from the talent, whether actors, actresses, directors, cinematographers, costumers, set designers, illustrators, sketch artists, graphic designers, costume designers, choreographers, or others, to use their works, images, likeness and other personality rights in the film. For chain of title purposes it is important that employment agreements for talent include a legal release which ensures that the individual consents to his or her performance being used in the film. Then, of course, each of such agreements are included with the chain of title documents. 
 
            Crowd and extra releases -- Make sure that every individual appearing in the film has signed a release or show evidence of proper notice in crowd sequences.
 
            Music Clearances – Documentation relating to copyright clearances on music, including master use licenses from the owners of pre-recorded sound recordings, composer agreement, songwriter agreement and synchronization license. This last licence to synchronize music with visual images in the film is obtained from the owners of the copyright protected work and should be included in the chain of title folder.
 
            Film Clip Clearances – Copyright clearances on footage from other films used in the current film should be obtained from copyright owners. Film clips may also include music which needs to be cleared separately.
 
            Trademark Clearances -- Clearances or licenses from the owners of any trademarks appearing in the film.
 
            Design rights – Clearances or  licences relating to any rights associated with the design of any property that appears in the film should be included with the film’s chain of title documents.
 
            Other agreements, that may have an impact on the ownership of rights relating to the production of a movie and copies of which may appear among a film’s chain of title documents include the following, samples of which are available at the “Film Industry Contracts” section on the http://www.filmfinanceattorney website:
 
Life Rights Consent and Release
Literary Acquisition Agreement
Literary Assignment
Literary Property Acquisition Letter of Intent
Quit Claim Agreement
Screenwriter Services Agreement
Script Option and Development Agreement
Shopping Agreement
Waiver of Limited Use of Characters
Actor Loanout Agreement
Casting Director Agreement
Director Agreement
Producer Agreement
Writer/Director Agreement
Composer Employment Agreement
Consultant Agreement
Crew/Cast Agreement
Crew Employment Agreement
Extras Release
Film Clip License
Group Release
Location Agreement
Makeup and Special Effects Agreement
Master Recording License
Minor Release
Model Release
Music Co-Administration Agreement
Personal Release
Property Release
Recording Artist Agreement
Recording Producers Agreement
Stills and Excerpts License Agreement
Stunt Performers Agreement
Synchronization and Master Use Licenses
Trademark Clearance Letter
 
            This discussion makes it clear there may be a significant number of documents involved with a film’s chain of title (i.e., a film project is document intensive). It is thus important that someone on the film producer’s team be assigned primary responsibility for seeing that all copies of the appropriate documents are placed in the chain of title folder, in chronological order, and that all of the language in such documents clearly show that the production company has all of the necessary ownership rights with respect to that movie.
 
            It is essential that filmmakers take the necessary steps to ensure that they have obtained the requisite licences and permissions for all copyright and trademark protected material used in their film. Creating and clearing copyrights and trademarks represents the very essence of protecting the property rights associated with the production of motion pictures. The final step associated with such protection and clearance, is creating and maintaining that collection of chain of title documents in an orderly format. 
 
            Errors and Omissions Insurance – To further protect a film financier and/or distributor, the filmmaker will be required to show proof of errors and omission insurance coverage on the project. E&O insurance is a special form of insurance for motion picture producers which covers omissions in obtaining adequate chain of title.
 
            As noted above, one of the most important reasons why independent film producers want to create and maintain a clean chain of title is to avoid the situation where they have a great film but no distributor will touch it for fear of ending up in a dispute or litigation over some of the rights involved in making the film. Distributors will want the producer to provide assurances in writing (i.e., in the distribution agreement) that all rights to the film have been properly secured. Distributors will also require the film’s producer to make specific representations and warranties relating to the ownership of the film. In other words, the distributor will likely require the producer to represent and warrant that the film does not violate or infringe, among other things, any agreement with any third party, trade-mark, trade name, copyright, moral right, patent, literary right, dramatic right or rights of privacy and publicity. If any of these representations and warranties turn out to be untrue, the producer may have to indemnify and hold harmless the distributor for any breach of the such representations, warranties or any covenants under the distribution agreement.


            Much of the work associated with creating and maintaining a clean chain of title falls within the expertise of an entertainment attorney, thus all along the way the filmmaker may want to at least consult with an experienced entertainment attorney regarding chain of title questions and what to include in the collection of documents. It may also prove helpful to have the entertainment attorney review any such documents to make sure the appropriate language is contained therein. In some instances, the entertainment attorney will be asked to negotiate and/or draft the documents.
 
            These chain of title documents form part of the clearance process, one of the important legal services an entertainment attorney provides for independent filmmakers. For a better understanding of the clearance process see www.gerdeslaw.com/practice-areas/clearance/.  For a more comprehensive listing of this and the many other business and legal tasks (not creative) associated with the production of a feature film, go to www.filmfinanceattorney.com under the heading “Legal Affairs Checklist”.
Copyright 2011 by John W. Cones
ALL RIGHTS RESERVED
jwc6774@gmail.com