[NEohioPAL] Legally Obtaining Music for Your Film - Installment #6, Errors & Omissions and other Insurance

Tue Jun 7 14:44:36 PDT 2011

*Legally Obtaining Rights to Music for Your Film *

*Installment #6 – Errors & Omissions and other Insurance*

*by Mary Ellen Tomazic*

        Errors and Omissions insurance protects filmmakers, their licensees
and assigns from third party claims for copyright or trademark infringement,
as well as defamation, privacy and right of publicity violations. Music
rights are a large part of the clearances required, as the enforcement by
the rights holders is often diligent and wide-ranging. Distributors,
television networks, broadcasters and direct to video markets require Errors
and Omissions insurance before they will exhibit or make available a film.
They require a film producer to indemnify them for claims that might result
from the content of their production. In turn, an insurance company will
require proper clearance of all rights before issuing a policy to a
filmmaker. Written agreements must be made between the producer, creators,
authors, writers, performers and any other persons providing material for
the film. Written releases should be obtained for faces and likenesses of
any recognizable living persons. All releases must provide the producer with
the rights to edit, modify, add to or delete material, change the sequence
of events or fictionalize persons or events. All necessary synchronization
and performance licenses from the copyright proprietors for pre-existing or
original music included in the film must be obtained as
well.[1]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftn1>Experts
also recommend that clearance work begin at the film’s inception,
continue during filming and be finalized at final cut.

        The process of securing Errors and Omissions insurance takes at
least 3 to 5 days to accomplish and even longer if certain rights or
releases, title report and music clearances have not been
obtained.[2]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftn2>The
producer completes and application for the insurance company,
determines
the limits and deductibles the distributor requires, with standard limits $1
million to $3 million with a deductible of $10,000. Your distributor should
be included as an additional insured. The applicant for an E & O policy must
follow written procedures for the clearance of material used in the
production, and must sign a written declaration stating that the detailed
information required in the application for insurance is in all respects
true, and that no information has been omitted, suppressed or misstated.
Additionally, the insurance application form usually must be signed by an
attorney who is familiar with the clearance procedures of the insurance
company, and also signs a declaration that the attorney will use best
efforts to insure that the specific clearance procedures contained in the
application are followed, and that the attorney believes that the statements
in the application are
correct.[3]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftn3>

        Specifically for music, the producer must obtain written agreements
that authorize the synchronization and performance of songs and recordings
(including the music contained in any clips from other films used in the
film) in the production. He or she must also obtain the right to distribute
the production for the proper duration (now usually in perpetuity) in all
media and markets, including digital uses as previously mentioned such as
wireless devices (AMXT clauses), unless specific media or markets are
excluded from insurance
coverage.[4]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftn4>Errors
& Omissions insurance provides other benefits, covering a producer
for libel, slander, invasion of privacy, copyright infringement, plagiarism,
piracy and misappropriation of ideas, and also any form of defamation,
product disparagement, trade libel, infliction of emotional distress, right
of publicity, outrage and outrageous conduct, false light publicity,
wrongful entry, false arrest or malicious prosecution. In our litigious
society, many claims do come up against producers and production companies,
but upon notification of a claim the insurance company will assist in
vindicating you and will pay for your defense
costs.[5]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftn5>

        Another type of insurance for films is business interruption
insurance, which covers risks from natural disasters such as earthquakes,
hurricanes, fires and floods. It is often included as part of an ”all risk”
insurance policy. Experienced filmmakers often purchase coverage that
protects against possible business interruption resulting from causes
ranging from weather-related filming delays to equipment failure to the loss
of a cast member or other key film
personnel.[6]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftn6>An
actor’s death or injury can significantly impact a film’s production,
so
cast insurance is typically considered an essential component of coverage
when an irreplaceable cast member is involved. Cast insurance generally
covers additional expenses to complete principal photography, or in certain
cases, costs resulting from the necessary abandonment of the
production.[7]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftn7>

        There are several cases of filmmakers obtaining business
interruption insurance, but ending up in court anyway. In October 2009, Fox
Entertainment Corp. filed suit in relation to an insurance claim made after
the delayed production of “Hide and Seek”, a film starring Robert DeNiro.
Fox sought coverage under its motion picture/ television producers portfolio
insurance policy when Robert DeNiro was diagnosed with prostate cancer
shortly before principal photography was to begin. The diagnosis came two
days after DeNiro underwent a medical exam and signed a related medical
certificate and affidavit in connection with Fox’s insurance application for
the film. DeNiro’s request for surgery resulted in a several month delay of
the production and a multi-million dollar loss to Fox. Fox’s insurer paid
the loss but sued DeNiro to recoup the amounts paid, alleging he failed to
disclose that he had undergone a prostate biopsy when he executed the
medical certificate. DeNiro prevailed in the lawsuit, but Fox filed against
the insurer for reimbursement of the amounts Fox incurred defending DeNiro
in the lawsuit.[8]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftn8>
 The case raises questions about an insurer’s remedies if an actor provides
a materially fraudulent response to an insurer in connection with an
application for cast insurance. Policies usually contain a
“misrepresentation and fraud” provision which voids the policy if the named
insured knowingly conceals or misrepresents any material fact or
circumstances concerning the insurance. Cases have also been brought against
insurance brokers for not securing the proper coverage for injuries to cast
members who are an “essential element” of their film. This happened when
Samuel L. Jackson was case to star in the film “Black Water Transit” but
suffered a back injury requiring surgery prior to the commencement of
principal photography. Capitol Films alleged in their lawsuit against their
insurance broker that the company would rather abandon the project than
recast or delay the film until Jackson recovered. The insurance policy did
not cover pre-production injury, even though Jackson was declared an
“essential element” of the film, and even though pre-production coverage is
standard in the insurance industry, as testified to by a senior insurance
employee.[9]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftn9>

        In view of these complex issues in insurance coverage, a filmmaker
should research and review policy terms carefully, and chooses his or her
insurance broker wisely. Asking for an explanation from your insurance agent
of what policies cover before purchase, with examples and scenarios as well
as scope of the duty to defend, will help identify gaps in coverage.

Mary Ellen Tomazic is an attorney in Cleveland specializing in entertainment
issue such as copyright, trademarks, contracts and licenses for musical
groups and filmmakers.

------------------------------

[1]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftnref1>Winnie
Wong,
*Lights, Cameras, Insurance: I need Errors & Omissions coverage N OW! *Film
Independent (July 28, 2009)
www.filmindependent.org/content/lights-cameras-insurance-i-need-errors-omissions-coverage-now
.

[2]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftnref2>Id.

[3]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftnref3>Clearing
House, Inc.,
*A Guide to Clearing Music in Audio/Visual Multimedia Products*, 467 PLI/PAT
783, 788 (1997).

[4]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftnref4>Id.

[5]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftnref5>Winnie
Wong,
*Lights, Cameras, Insurance: I need Errors & Omissions coverage N OW! *Film
Independent (July 28, 2009)
www.filmindependent.org/content/lights-cameras-insurance-i-need-errors-omissions-coverage-now
.

[6]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftnref6>Deborah
L. Stein,
*Hollywood’s Spin on Business Interruption Insurance, *L.A. Daily Journal
(1-20-2010).

[7]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftnref7>Id.

[8]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftnref8>Id.

[9]<file:///C:/Users/Maryellen/Documents/Indieclub%20article%20%236%20-%20Errors%20&%20Omissions%20and%20other%20Insurance.docx#_ftnref9>Id.
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