I Want to Tell your Story, Now Gimme the Rights!
August 6, 2014 by Katherine Imp
Unless your screenplay is based on a story of your own creation, you’ll need to acquire the story rights from somebody else. And that acquisition better be one of the first 5 bullet points on your “To Do” list. So where do you begin?
If your screenplay is based on a life story, you’ll need to acquire the “life story rights” from the individual (or the entity that represents that individual). If your screenplay is based on a book, you’ll want to option or purchase the film rights from the author (or the owner of the book). If your screenplay is based on a story in the news, you may be able to claim ‘fair use,’ but I’d play it safe and acquire the rights anyway.
Once you find the person or entity responsible for the story rights you wish to acquire, you will need to negotiate the deal terms before your attorney can draft the contract.
- The Option
Most producers prefer to negotiate an “option to purchase” rather than a straightforward purchase agreement because it’s cheaper. As stated earlier, the acquisition of story rights is one of your first steps. So, it just doesn’t make economical sense to purchase rights before you have a screenplay, financing, and talent attached to your project. There are too many things that can go wrong, and the option allows you change your mind about the acquisition without too much damage to your wallet.
If you decide to negotiate an option, you’ll have 2 payments: the option payment, which will likely be payable upon signing of the agreement, and the purchase payment, payable only if you decide to exercise your option. Note that if you don’t exercise your option within the time period set forth in the agreement (usually 2 years, with a 1-year extension), all rights revert back to the owner and that owner has the right to option the story rights to someone else.
If you do exercise your option, the purchase payment will likely take the form of a fixed compensation (e.g., 10% of the final locked budget with a floor and ceiling), or “back-end points” (e.g., 5% of the Producer’s adjusted gross income), or a combination of the two. Don’t forget that this is Hollywood: while there are some standard industry practices, at the end of the day everything is negotiable and nothing is set in stone.
- Other Provisions
Though every negotiation is different, these story rights agreements tend to have, at the very least, the following provisions: rights granted, rights reserved, credits, name and likeness, representation and warranties, remedies, indemnification, assignment, and an arbitration and choice of law clause. The ‘rights granted’ provision is particularly important in that, typically, only a limited bundle of rights are sold. For example, film and television rights may be sold, but the theatrical and merchandising rights are reserved. Or certain rights are sold on an exclusive basis, while others are sold on a non-exclusive basis. Figure out what you want before the negotiation, so that these types of questions don’t take you by surprise.
Katherine (Kate) Imp is an entertainment attorney at Ramo Law PC and Chicago native. She specializes in film finance, production and distribution for clients in Illinois and across the country. Contact Kate at @KatherineImp or firstname.lastname@example.org.
Disclaimer: The information in this column is intended for general information purposes only and should not be construed as legal advice.