Many filmmakers have a vague understanding of the term “Chain of Title.” Often they don’t focus on this phrase until production has been completed and a distributor expresses interest in their film. They quickly discover that they must secure E&O insurance in order to make delivery to the distributor, and they cannot obtain such insurance without having a clean chain of title. So, what exactly is chain of title?
One reason for the confusion about chain of title is that it is not a single document, but many documents. Moreover, the documents that comprise a satisfactory chain of title for one film are different for another. Chain of title is essentially all those documents needed to show that the filmmaker owns his or her film and has secured all the rights necessary to distribute it. If the filmmaker does not possess the necessary rights, they cannot grant those rights to a distributor. A distributor may be quite enthusiastic about a film; however, that enthusiasm will dissipate quickly if they think that distributing the film will subject them to a lawsuit because the filmmaker did not secure his/her rights. And, yes, distributors can be liable for a filmmaker’s negligence even if the distributor did nothing wrong.
It is often said that a copyright is “infinitely divisible.” That means that you can divide your copyright in any number of ways. For example, you could split the rights by time. One party could have the rights for one year followed by a different party having rights thereafter. You can also allocate rights geographically by giving one party rights to distribute a film in Belgium and another in Canada. Likewise, you could separate rights by media. One company could have the right to exhibit the film in theaters while another has the right to show the film on television. In other words, you can put your copyrighted work in the Veg-O-Matic and slice and dice it in an infinite number of different ways.
If a filmmaker wants to adapt a novel into a film, chain of title needs to include a document giving the filmmaker the motion picture adaptation rights to the novel. But, if the script is an original work not based on a book, such a document is irrelevant.
In examining chain of title, one has to determine exactly which rights are being granted and which are reserved. The grant of rights to adapt a book into a movie could be to make a single movie or it could be for an unlimited number of movies. It could include the right to make a television series based on the book, or not. Authors, who grant movie adaptation rights to their books, often reserve radio rights, live television rights, and dramatic rights, which is the right to turn the book into a play. They also may reserve author-written sequel rights, which would allow the author to write subsequent books using the same characters as the original book. At the same time, the producer may have the right to produce sequel motion pictures. Thus, allocating rights can get complicated. Moreover, if the paperwork does not precisely describe what rights are being granted, this ambiguity could cause problems later.
To obtain a clean chain of title, a filmmaker will also need to secure copyright ownership of any work performed by the cast and crew that make a creative contribution to the film. This is typically accomplished with employment agreements that producers, directors, screenwriters, actors, and other crew members sign. These agreements should have an explicit “work for hire” clause, which states that the production company owns the copyright to the work product created by the employee. Just because the filmmaker paid an actor, does not mean there is an enforceable agreement in place granting the producer the right to depict the actor in the movie or in related works such as trailers and advertising.
Some films are based on actual events, and for those people who are portrayed in the movie, it may be necessary to secure life story rights. However, life story rights are not always needed because the First Amendment generally permits filmmakers, like journalists, to write or portray other people without their permission. And, for those persons who are not identifiable to moviegoers, it may not be necessary. On the other hand, when a filmmaker takes creative liberties with a true story and changes facts and scenarios for dramatic purposes, it is often advisable to obtain life story rights. Nevertheless, these may not be needed if the persons depicted are dead or are public figures.
Many films have music on their soundtrack. The right to use this music can be acquired in different ways. A producer could hire a composer to create an original soundtrack under a “work for hire” employment agreement vesting ownership in the producer. Or the producer could license pre-existing music from a record label or publisher. The rights needed for music used on a soundtrack include the right to synchronize the music to the filmed images and if an existing recording is used, master use rights to that recording.
Chain of title also includes other permission to use still photos, stock footage, or artwork included in a film. The title of a motion picture should also be cleared before it is locked. A trademark search should be performed to see if any other motion pictures have similar titles, although a similar title does not necessarily preclude the use of the title.
Even filmmakers who produce scripts that they have written will need certain documents. If the filmmaker has set up a corporation or LLC to produce the film, the filmmaker will need to assign rights to their company, which is considered a separate legal entity from the filmmaker, even if the filmmaker is the sole owner.
There cannot be any gaps in the chain of title, and all documents should be signed. One needs to show continuous uninterrupted assignment of rights from one to party to another. And all assignments of rights need to be in writing. Under American copyright law one cannot transfer exclusive rights in a copyrighted work orally. Transfer documents should be recorded at the U.S. Copyright Office.
There are a few items that you may not need to secure any rights to. Any material that is clearly in the public domain or considered a fair use under copyright law may be used without any permission. Then again, it is not always clear whether an item is in the public domain or whether an excerpt from a copyright work would be considered a fair use.
Filmmakers are well advised to pay attention to securing documents that will comprise their chain of title before production is complete. If you produce a wonderful film that wins all kinds of awards and accolades and numerous distributors are competing to acquire rights in your film, you might not be able to conclude a deal if critical paperwork is missing. And, if an actor who did not sign an employment agreement cannot be located, your film may never be released.
Below you can watch a video of Litwak explaining chain of title at a Volunteer Lawyers for the Arts seminar:
Mark Litwak is a veteran entertainment attorney and producer’s rep based in Los Angeles, California. He is an adjunct professor at USC Gould School of Law and the creator of the Entertainment Law Resources website with lots of free information for filmmakers. He is the author of six books including: Dealmaking in the Film and Television Industry, Contracts for the Film and Television Industry and Risky Business: Financing and Distributing Independent Film. He can be reached at firstname.lastname@example.org.