Protection of Intellectual Property in Technology Startup
Aside from competence of management team, control of intellectual property is a major focus of investor scrutiny. The ability to identify and protect intellectual property directly reflects on investor confidence and the resulting access to capital available to technology start-up. Protection of intellectual property assets is available through the law of copyright, trade secrets, patents and trademarks.
Financing Technology Startup
Many startup companies, particularly in technology sector, require capital beyond the means of their founders in order to finance continued growth. Expenses quickly add up, and a business that cannot manage its cash flow will not survive. Because startup companies typically have a limited operating history and are considered to be risky ventures, obtaining even simple financing arrangements can be a difficult task.
Motion Picture Contracts
The low-budget horror flick The Texas Chainsaw Massacre (TCM) was greeted by shocked audiences and astounded critics upon its release in 1974. The film's ultraviolent scenes and gruesome plot (constructed around a family of psychopathic cannibals) created controversy that served to further publicize the film. The movie ultimately grossed over thirty million dollars - two hundred and fourteen times the film's budget. TCM should have returned significant profits to its creators. It didn't. In fact, the filmmakers didn't receive a cent from the film's initial release. They ended up with a long and futile legal battle with the film's distributor - Bryanston - instead. And the battle to recoup their money ultimately led TCM's investors to name their profits corporation the "Trail of Tears."
At the most basic level, the investors and filmmakers' problem flowed from its soured licensing agreement. Ron Bozman, the production manager, and Warren Skaaren, who cut a deal to represent the film's writer (Kim Henkle) and director (Tobe Hopper) in exchange for partnership in their company, Vortex Inc., were offered a contract from Louis "Butchie" Periano, President of Bryanston Distribution. The agreement stated that the filmmakers would receive two hundred and twenty-five thousand dollars up front and thirty-five percent of the worldwide distribution profits. After the investors, lawyers, accountants, and Skaaren (who collected a "monitoring fee") had taken their share of the initial payment, the twenty cast and crew members, who had been convinced to take a percentage of the movie's profits in lieu of a flat fee, were left with just over eighth thousand dollars to divide amongst themselves. This pitiful sum was only the first of many disappointments to come.
In early 1975, Bryanston released the film's earnings report, which stated that, so far, the thirty-five percent take that the filmmakers agreed on amounted only to about six thousand dollars. The licensing agreement became a further source of complications when rumors surfaced about Louis Periano's reputed mafia ties and the filmmakers lawyers advised them (perhaps wisely) not to sue Bryanston Distribution. One of the original investors later convinced the cast and crew to file suit against Bryanston, but by this time the distribution company had sold most of the rights to other distributors around the world. Bryanston and the filmmakers settled out of court for four hundred thousand dollars and control of the film. Bryanston later dissolved, hounded by creditors and the IRS, and Louis Periano was convicted on obscenity charges for an infamous porn film he had produced and from which he had made most of his money - Deep Throat. The filmmakers had finally regained control of the film, but they also inherited its debt. The total debt of thirty-three thousand dollars was eventually paid to the distributors and theater chains owed. Up to this point, the filmmakers have been paid a total of forty-five thousand dollars from the profits of a film that grossed twenty million dollars in the states alone.
Motion picture licensing agreements represent an important aspect of the contractual negotiations for rights on which the filmmaking process ultimately depends. At the embryonic stage, a writer uses copyright to secure his rights in the script. He later sells these rights to the filmmakers and production team who will bring the script to life on the screen. In addition to copyright, the filmmaker also deals with contractual rights and restrictions governing agreements with those active during the film's production, including agreements with writers, actors, directors, producers and other key creative crew members.
After the completion of production, the postproduction phase begins, during which the film is edited and, after the final cut, prints are made. Lastly the film is distributed and released. The licensing agreement governs both the producers and distributors rights over the release of the film. Licensing becomes more complicated if the producer chooses to sell the film in the international marketplace. International licenses of motion pictures involving minimum guarantee payments for territorial rights are typically used as security and collateral for bank loans required to obtain motion picture production financing. In order to protect their often competing interests in the rights and revenue streams of motion pictures internationally financed, institutions, talent guilds, and important creative personnel (such as "A list" stars and directors themselves) have had a major impact on the special terms, conditions, and restrictions that must be included in international motion picture licensing agreements.
These contracts, restrictions, customs, practices, and traditions have resulted in the special and unique way in which motion pictures are customarily licensed to enter the international marketplace. The Firm can provide a full spectrum of motion picture production and licensing contracts for protection and exploitation of intellectual property in the motion picture industry. We can assist our clients on business and marketing issues and strategies (including risk management), the protection and exploitation of creative works (including trademarks and copyrights) litigation management, and other intellectual property.
|© 2012 Pinsky Law