First and foremost, you’ll need to form an entity to distinguish yourself—and your personal activities—from the business aspects of making your film. An entity can take many forms—including a partnership, a corporation, or a limited liability company (LLC). There are pros and cons to each. An LLC is most common, but you should weigh different factors: whether you’re working solo or with others (individuals or entities); how you want to structure ownership; if you want to share decision-making or call all the shots; and how you’ll pay taxes.

Filmmakers secures funds for their film in several ways. Beware of the potential pitfalls of each. Credit cards allow you to withdraw funds, essentially buying cash. This is relatively easy but not always prudent. You can take out a loan: individuals can get a personal loan from a bank; a production company can borrow from lenders (usually with a promissory note that involves repaying the principal and interest); or you can borrow from friends and family. Filmmakers can also offer equity in their production; if it does well, so do those with an equity stake. Crowdfunding is another option, but beware of potentially strict SEC requirements.

Entities can also seek fiscal sponsorship from tax exempt organizations; they’ll accept donations on your behalf, manage your money, and issue reports to funders and tax agencies—for a fee.

While you’re busy getting money, remember that certain states want to give it to you—in the form of tax credits. The three types—refundable (the most valuable), transferable (can be sold), and non-refundable and non-transferrable (can only be used by you)—all help cut costs.

We engage in negotiation—the process of reaching an acceptable agreement with another party—all our lives. For example, your partner prefers romantic comedies but you love thrillers so ultimately agree on a third genre for date night. Filmmakers engage in countless negotiations—about cast member salaries, distribution deals, and budgets.

There are different negotiation styles and approaches—should you be assertive or accommodating?—and it can be helpful to determine which best suits your needs. Remember: this is a process, with several stages. You should determine what your unilateral options are, and reflect on what you really care about versus what you can forego. Understanding the other side’s interests can help you approximate the arrangement you really want. Generate a list of questions: what do you really want to know about the other side’s needs? What assumptions need to be confirmed? Utilize your time at the negotiation table to ask your questions, confirm your beliefs, and suss out areas of compromise. Then try to make sure all of that gets reflected in your agreements.

Every industry has its jargon. Here are some terms you may hear when working with your FLC team.

 

Intellectual Property Terms

 

Intellectual Property: Intellectual property (IP) refers to works that are a result of human creativity. Examples include literary works, music, art, films, software, and other forms of creative expression such as sculptures, designs, symbols, names, and images. In the media industry, Intellectual property is protected by law through copyrights and trademarks, which enable creators and owners to benefit from their work or investment in various ways.

Copyright: Copyright is a type of intellectual property that gives the creator of an original work a “bundle of rights” to control the use and distribution of their work. The rights provided by copyright typically include the right to reproduce the work, distribute copies, perform or display the work publicly, and create derivative works based on the original work. These various rights can be retained by the creator or transferred to another party, either as a whole bundle or as separate rights. Copyright protection is automatic and immediate upon the creation of a work in a “fixed form” (e.g., writing it down or recording it) and generally lasts for the author’s lifetime plus a certain number of years thereafter, depending on the jurisdiction and other factors. Copyright Infringement: Copyright infringement refers to the unauthorized use, reproduction, distribution, display, or performance of copyrighted material without the permission of the copyright owner or a legal defense (such as fair use). Examples of copyright infringement in filmmaking include unauthorized distribution of films online, plagiarism in screenwriting, adapting copyrighted works without permission, using copyrighted music without licensing, and replicating visual elements from other films without authorization.

Fair Use: Fair use is a legal doctrine that allows for the limited use of copyrighted material without obtaining permission from the copyright holder. It is a flexible concept that must be applied on a case- by-case basis and serves as a defense to claims of copyright infringement. To determine whether a particular use is “fair,” courts consider factors such as the purpose and character of the use, the nature of the copyrighted work, the amount and substantiality of the portion used, and the effect of the use on the potential market for or value of the copyrighted work.

Work Made for Hire: A “work made for hire” refers to a type of legal arrangement under copyright law in which an employer, or person commissioning a work, is considered the sole legal author and owner of the work, rather than the individual who actually created it. This concept, in turn, affects who has the legal right to use and exploit the copyright to the original work. In the context of filmmaking, examples of works made for hire could include many things, including commissions for screenplays and soundtracks, editing services, and the creation of special effects.

Public Domain: The public domain refers to a category of creative works to which no one owns the intellectual property rights, either because the rights have expired, been forfeited by the owner, or been expressly waived by the owner. Works in the public domain are significant because the works can be used without obtaining anyone’s permission. Examples of works in the public domain include literary classics like “Moby-Dick,” artworks such as Leonardo da Vinci’s “Mona Lisa”; and iconic cartoon characters like Winnie the Pooh and Mickey and Minnie Mouse (as depicted in Steamboat Willie).

Creative Commons: Creative Commons is a nonprofit corporation which grants copyright licenses that allow creators to retain copyright while permitting others to copy, distribute, and make certain uses of their work. There are several types of Creative Commons licenses, each of which provide for different conditions of use and distribution, so it is important to pay attention to which Creative Commons license applies to a particular work.

Derivative Work: A derivative work is a new creation that is based on or derived from an existing work. Examples include adaptations, remixes, visual collages, sequels, prequels, and spin-offs. Typically, the creation of derivative works requires permission from the copyright holder of the original work. In filmmaking, examples of derivative works might include adaptations or modern retellings of classic novels and plays, as well as documentaries based on true events like Martin Luther King’s “I Have A Dream”; speech (which is not expected to enter the public domain until 2038, 70 years after King’s death).

Moral Rights: Moral rights are a set of rights granted to creators or authors of creative works that are separate from economic or financial rights, such as copyright. Moral rights are recognized in various legal systems around the world, although the scope and extent of these rights often varies from one jurisdiction to another. In the United States, moral rights are recognized for certain works of “visual art” under the Visual Artists Rights Act of 1990 (VARA). These rights are the “Right of Attribution” (meaning the right of the original creator to claim authorship of their work whenever the work is published or displayed publicly) and the “Right of Integrity” (meaning the right of the original creator to prevent any modifications, distortions, or alterations to their work that could be prejudicial to their honor or reputation). Crucially, VARA applies only to works of visual art, which are defined as paintings, drawings, prints, sculptures, and certain types of photographs, and not literary works, music compositions, or films.

 

Contract Terms

 

Permit: A permit is an official authorization or license typically granted by a governing body that allows filmmakers to carry out specific activities, such as filming in a particular location. For example, depending on the scope or timing of a production, a filmmaker might need a permit from a city government to shoot scenes in a public park or on city streets.

Release: A release is a legal document signed by individuals or entities granting permission for their likeness, property, or other rights to be used in a film. For instance, documentary filmmakers often strive to obtain appearance releases from key individuals to ensure they have the right to use footage of them in their documentary.

Indemnification: Indemnification refers to a contractual obligation where one party agrees to compensate the other (“indemnify”) for any losses, damages, or liabilities incurred as a result of certain actions or situations. For example, in a film production, a filmmaker might agree to indemnify a location owner against any damages caused during filming.

Distribution Agreement: A distribution agreement is a contract between a filmmaker and a distributor outlining the terms and conditions under which the distributor will distribute the filmmaker’s film. For instance, an independent filmmaker might enter into a distribution agreement with a streaming
platform to release their movie to a wider audience.

Option Agreement: An option agreement is a contract where a filmmaker pays for the exclusive right to purchase the rights to a creative work, such as a screenplay or book, within a specified timeframe. Crucially, an option agreement does not obligate either party to complete the purchase or turn the creative work into a film.

Non-Disclosure Agreement (NDA): An NDA is a legal contract that prohibits parties from disclosing confidential information shared between them. Independent filmmakers sometimes use NDAs when discussing project details with potential collaborators, such as investors or crew members, to protect sensitive information about their film.

Force Majeure Clause: A force majeure clause is a contractual provision that excuses parties from fulfilling their obligations under the agreement due to unforeseen circumstances beyond their control, such as natural disasters or government actions. For example, a force majeure clause in a production contract might protect filmmakers from liability if filming is disrupted by a hurricane.

Profit/Revenue Participation: Profit or revenue participation is a contractual arrangement where individuals or entities receive a percentage of the profits or revenues generated by a film. For instance, independent filmmakers with limited funds at the beginning of a production might offer profit participation to investors or key crew members as an incentive to contribute to the project’s success.

Distribution Rights: Distribution rights refer to the rights granted to a distributor to distribute and exploit a film in specific territories or markets. These rights can be as broad or as narrow as the parties want. For example, a filmmaker might grant a distributor the exclusive distribution rights for their film in North America, but not Europe. Alternatively, a filmmaker might grant a distributor the exclusive distribution rights for their film worldwide, but only for a limited period of time.

Licensing Agreement: In the context of filmmaking, a licensing agreement typically refers to a contract where the owner of a creative work grants permission to a filmmaker to use the creative work in their film. For example, a music artist and filmmaker might use a licensing agreement to outline the terms by which the filmmaker can use songs in a film soundtrack.

Exclusivity Clause: An exclusivity clause typically refers to a contractual provision that grants one party exclusive rights or privileges while prohibiting the other party from engaging in similar activities with competitors. For example, a distribution agreement might include an exclusivity clause preventing the
filmmaker from distributing their film through other channels or distributors during the term of the agreement.

Festival Rights: Festival rights generally refer to the right to exhibit a film at a film festival. Independent filmmakers often strive to secure festival rights to showcase their films to production companies, studios, critics, and other audiences, which can potentially lead to distribution deals and awards.

Assignment: Assignment refers to the transfer of rights or obligations under a contract from one party to another, typically in exchange for something else. For example, an independent filmmaker might assign their copyright to a film to a production company in exchange for financing or distribution support. Similarly, a music artist might assign their copyright to a soundtrack to a filmmaker in exchange for a profit participation.

Representations and Warranties: Representations and warranties are statements made by one party in a contract regarding certain facts or conditions, often relating to the validity of rights and ownership to certain materials. For example, in a distribution agreement, a distributor will typically expect the filmmaker to “represent and warrant” that they own the film and that there are no third-parties who have a claim to the film. It is crucial that representation and warranties be true when a contract is executed, as these statements of fact often serve as the basis for the entire agreement and there can be legal repercussions if a representation and warranty is not true.

 

Other Terms

 

Defamation: Defamation refers to the act of making false statements that harm the reputation of an individual. For example, if a filmmaker inserts untrue statements about an individual in their documentary, it could lead to a defamation lawsuit, depending on the circumstances and the filmmaker’s intent when they inserted the untrue statements in the film. To avoid defamation claims, filmmakers should be cautious and thoroughly vet content containing statements about others to mitigate the risk of legal repercussions.

Libel: Libel refers specifically to defamation through written or published materials, such as newspapers, magazines, or online articles. For instance, if a filmmaker falsely accuses someone of criminal activity in a published script, it could be considered libelous.

Slander: Slander is defamation that occurs through spoken words or gestures rather than through written or published materials. An example of slander in filmmaking might be if a character in a movie makes false accusations against another character during dialogue.

Errors and Omissions Insurance (E&O): Errors and Omissions Insurance (E&O) is a type of insurance that protects filmmakers against legal claims arising from unintentional mistakes or omissions in their work. For example, if a filmmaker inadvertently uses copyrighted material without proper clearance, E&O insurance may cover any resulting legal expenses. E&O insurance will not protect filmmakers against legal claims arising from reckless or intentional mistakes or omissions, however, so it is crucial that filmmakers still exercise due diligence when using copyrighted materials.

Chain of Title: Chain of title refers to the chronological history of ownership rights to a film, including all transfers and assignments of those rights. For example, a distributor will often require a clear chain of title before acquiring distribution rights to a film to ensure that there are no disputes over ownership. Ascertaining chain of title is a very complex process, so a specialist should be consulted if you have concerns about a particular work.

Rights Clearance: Rights clearance refers to the process of obtaining permission or licenses for the use of copyrighted material, trademarks, and other intellectual property in a film. For example, if a filmmaker wants to include a famous song in their movie, they would likely need to obtain rights clearance from the rights holder of the song.