John Andrade is an articling student at the Toronto law firm of McMillan Binch.

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Industry players often find themselves devoting more time these days to the world of dealmaking than to the art of filmmaking. This theme comes alive in an award-winning book written by Mark Litwak entitled Dealmaking in the Film and Television Industry From Negotiations to Final Contracts. The book captured the high-profile business category prize at the Krazna-Krausz Moving Image Book Awards in England in February as one of the best books on film and television, and it’s the focus of this week’s column.

A players’ guide

Litwak’s book is designed for non-lawyers, and it is particularly helpful to newcomers to the film and television industry. It offers a straightforward introduction to the complex legal issues in the entertainment business. Another major benefit of Dealmaking is that it provides producers, writers, directors and actors with an easy-to-follow discussion of basic legal principles which may assist them to communicate more effectively when talking to their own lawyers.

In his introduction, Litwak explains that dealmaking has become more complicated over time as a result of structural developments in the film and television business. Specifically, modern methods of film financing such as intricate investment schemes, prerelease deals with cable and home video companies, and negotiations over foreign coproductions have increased the complexity of getting a project off the ground and onto the screen.

Dealmaking provides many practical insights and real-life examples concerning the twists and turns of negotiating different types of film and television deals at the development, preproduction and post-production stages. At each stage, various agreements, releases, forms of insurance, and permissions may become necessary.

Litwak also offers a valuable discussion of merchandising deals, location releases, and the important and often confusing matter of errors and omissions insurance.

Dealmaking is effective in emphasizing that it is often advisable to have agreements deal with other potential sources of revenue from spin-offs which may be generated as a result of a film. Movie soundtracks, merchandising, home video, syndication, network sales, and foreign sales agreements may need to be settled before the first reel of film is ever shot.

The licensing of music for film and tv soundtracks, for example, has become big business. Just look at the mega-hits produced by the Bodyguard soundtrack or the string of Disney animated picture theme songs which have won major awards and enjoyed enormous commercial success.

In contemplating the development of a movie soundtrack, Litwak explains that a filmmaker must decide whether to obtain the right to use existing music or choose to commission an original musical score. Specifically, he pinpoints two fundamental issues – first you must determine which parties possess ownership interests in each song, and then you must take the steps to license the appropriate rights. All of this takes time and money.

Dealmaking boldly encourages readers to think strategically about how to proceed with distribution once the film has been produced. In particular, the book includes a checklist of ideas concerning how to more creatively orchestrate the release of a film. Litwak’s pragmatic approach recognizes that your distribution strategy is often just as essential to the success of a film as is the content of the film itself.

Avoiding legal pitfalls

While Dealmaking focuses on the American film and television business, there are still numerous parallels to the Canadian entertainment industry.

However, there are also important legal differences between Canadian and American law which readers must bear in mind.

For example, a common defense against copyright infringement in Canada arises out of what is known as the doctrine of ‘fair dealing.’

In Canada, a fair dealing defense against a claim of copyright infringement will only succeed when the use of the work is fair and reasonable, and if it is for one of a number of specified uses, namely – private study, research, criticism, review or newspaper summary.

In contrast, American copyright legislation generally allows for broader uses of a copyrighted work where permission is not obtained under a somewhat less stringent concept of ‘fair use.’

Another important respect in which our law differs from that of our American counterparts is in relation to the recognition of moral rights. Moral rights is a concept which is well entrenched in Canada, but that enjoys little presence in the u.s. Moral rights include the right of authors to be credited as the authors of their work and the right to prevent others from making harmful changes to their work.

There are also some key aspects of u.s. defamation law which differ significantly from our own, especially with respect to the greater latitude permitted to filmmakers in depicting public figures.

Finally, employment law in Canada tends to differ from that of the u.s., as do the requirements of the writers, actors and directors guilds in the two countries.

Given that there are important exceptions and subtle differences between the laws and industry structure in Canada and the u.s., Dealmaking readers should consult with an expert before entering into legally binding arrangements.

Dealmaking at the festival

Litwak appeared in Toronto recently as a speaker at the Trade Forum sponsored by the Toronto International Film Festival. He is a Beverly Hills-based entertainment and multimedia lawyer, and he maintains a Web site called Entertainment Legal Resources: //www.laig.com/law/entlaw. His book, Dealmaking in the Film and Television Industry, is published by Silman-James Press.

(This article contains general comments only. It is not intended to be exhaustive and should not be considered as advice on any particular situation.)