Independent, or “Indie”, filmmaking has become extremely popular as more emerging filmmakers prefer to use this route to tell their stories. Some people choose indie filmmaking because the process allows them to maintain more control over their stories and how they tell them. Indie filmmakers also don’t face the initial and almost impossible barriers to breaking into the movie industry. However, before beginning an indie film production, Indie filmmakers must be aware of indie film legal issues that may arise. From protecting intellectual property, to hiring people for production, and to the financing and distribution of a project, an entertainment lawyer can help indie filmmakers avoid costly legal issues.

Why Indie Films Face Greater Risk

However, without a studio’s support, indie film legal issues can be greater than traditional productions. Studios have in-house legal teams and consult with outside counsel throughout the entire process. With indie films, the budget is often low and indie film legal issues are often overlooked.

Among the legal issues to consider as an independent filmmaker are:

  • Copyright law
  • Trademark law
  • Film contracts
  • Securing the underlying rights
  • Financing
  • Hiring
  • Choosing the right business entity for the film

This article discusses some of the most important indie film legal issues that can arise that indie filmmakers should be aware of.

The Importance of Avoiding Intellectual Property Indie Film Legal Issues

The entertainment industry’s products are considered intellectual property. Both federal copyright and trademark laws protect this intellectual property. Independent filmmakers face some unique intellectual property issues.

Copyright Laws

In the United States, federal copyright laws protect the owners’ and creators’ rights by preventing others from using their creative works without their permission. Copyright protections apply to screenplays, motion pictures, sound recordings, etc.

Copyright laws protect every aspect of film production, beginning with the initial screenplay for a film. Copyrights automatically attach to creation, and the copyright gives the owner the right to reproduce, arrange, adapt, perform, display, distribute, and sell copies of the work.

It is nonetheless important to always register a copyright with the U.S. Copyright Office. You must register the work with the U.S. Copyright Office to bring a copyright infringement lawsuit against another person. To register a copyright, it is always a good idea to consult with a copyright lawyer to avoid these types of indie film legal issues.

Trademark Laws

Trademark laws also figure prominently in filmmaking. A trademark is a distinct marking, including a recognizable sign, design, or expression identifying a certain product or service and distinguishing it from others. Movie titles, such as Jaws and Star Wars, are protected by trademarks. Unlike copyrights, trademark owners must register the mark with the U.S. Trademark Office. Trademark issues are crucial for filmmakers to avoid because trademark lawsuits can end up being costly.

Film Contracts that Independent Filmmakers Often See

During the making of a film, legal contracts will define the rights and obligations of each person involved in making a film—including the writers, producers, production team, actors, and others. Creating a film normally includes addressing the following types of legal agreements:

  • Employment Agreements
  • Production Agreements
  • Licensing Agreements
  • Intellectual Property Agreements
  • Real Estate Agreements
  • Leasing and Rental Agreements
  • Environmental Agreements (sometimes)
  • Financing Agreements
  • Distribution Agreements
  • Independent Contractor Agreements
  • Release Agreements

This non-exhaustive list shows the extensiveness that legal counsel is involved in creating a film. Contractual issues are common in film production, so filmmakers need to get legal help on the front end so they can avoid those issues and prevent costly delays in their filmmaking process.

Other Issues That Independent Filmmakers Face

In the digital age, independent filmmakers face various challenges. First, with the advent of digital technology, the market has been flooded with entertainment products. This makes competition among independent filmmakers especially fierce. It’s tougher than ever for indie filmmakers to find buyers for their films.

Indie filmmakers also face more obstacles than big Hollywood studios in properly handling indie film legal issues. As mentioned, major Hollywood production companies have in-house lawyers reviewing the production each step of the way, ensuring compliance with intellectual property laws and drafting legal contracts.

Securing the Rights to Create

Indie filmmakers are often creative types with little to no legal expertise in contracts and intellectual property laws. Before even starting a project, indie filmmakers face various challenges. For example, they need to ensure they have the legal right to produce a film based on an underlying work such as a book, screenplay, or other creative work.

Financing

Financing and funding issues have always been the primary roadblock for people wanting to make films outside a major Hollywood studio. One of the most difficult aspects of indie filmmaking is getting initial funding.

Additionally, the rules related to financing and investing can be complicated. As an indie film producer raising funds, you must clarify whether the funds are a loan, a gift, or an investment. If a third party provides funds as an investment, you need legal contracts setting out the investment terms.

You must ensure that the investment contracts comply with federal and state securities laws. You also need to set out the legal obligations and rights for funding investors, such as determining who will own the distribution rights, how you will calculate the profits, etc. These are some of the biggest indie film legal issues that can arise. Therefore, an entertainment attorney can help you immensely when seeking financing.

Hiring

Finally, when hiring actors and production crew, you must comply with employee and wage laws. Indie films differ from big Hollywood productions because low-budget filmmakers often defer compensation for actors and crew. It would be best if you had contracts for actors and crew setting out all aspects of employment and compensation.

The contracts used for crew members are called deal memos, which address the agreement regarding compensation, payment, services rendered, etc. Some contracts state that the filmmaker will not make payments unless a distributor commercially distributes the film. Indie filmmakers must ensure that all payment terms are clear from the outset. You also need to obtain personal releases from all cast and crew that give you the right to use their image, voice, and likeness in your film.

Possible Business Entities for Independent Filmmakers

Like all other entrepreneurs, indie filmmakers need to consider how they structure their business entity for their film production. The type of business entity you set up for your film will have various implications, including, but not limited to:

  • tax implications; and
  • liability implications for whether someone can hold you personally responsible for paying any liabilities and debts your film company owes.

You can set up your company differently, with each entity formation having its advantages and disadvantages.

Sole proprietorship

A sole proprietorship is a business where a single person is responsible for running the business. The upside is you have complete control over your project. The government taxes you individually rather than at the company level.

In a sole proprietorship, the person running the business can be held personally liable for any debts or liabilities of the business. For example, suppose you run your indie film company as a sole proprietor, and someone sues you under copyright laws for stealing their script for your movie. If a court finds you violated copyright laws, you’ll be personally responsible for paying the other party for their damages. Another drawback of running your indie film company as a sole proprietor is related to fundraising. As a sole proprietor, you can take out a personal loan for your project, but raising outside investor funds may not be easy.

Partnership or Limited Partnership

Any business entity owned by two or more people is considered a general partnership. You don’t have to file any papers to form a general partnership. A partner in a general partnership can be held personally liable for the business’s debt and obligations. Therefore, running your indie film business through a general partnership may not be the smartest option.

A limited partnership differs from a general partnership in that one person serves as the general partner and assumes personal liability for the partnership’s debts and obligations. The other limited partners have only limited liability. With sole proprietorships, raising funds from outside investors may be difficult if you operate your film company as a partnership.

Limited Liability Company

A limited liability company, or LLC, is a business entity owned by either one or more of its individual members. An LLC can be taxed either as a corporation (the business has its own tax return) or on an individual level (the LLC members file their own tax returns). One advantage of an LLC is the members are not liable for the debts and obligations of the LLC.

Another advantage of LLCs is it’s relatively easy to use this business entity to raise capital from third parties. Finally, the LLC is a good choice for filmmakers who want to take on multiple projects but want to keep the profits separate. The filmmaker creates a so-called “umbrella” LLC, which serves as the sole manager for another LLC formed to make a particular film. For these reasons, LLCs are indie filmmakers’ most popular type of business entity.

Corporation

Some indie filmmakers choose to set up C or S corporations as the business entity for their filmmaking. With corporations, shareholders own the corporation, a board of directors manages the corporation, and officers operate the corporation. The board must comply with the corporate bylaws.

Owners of a corporation are generally not personally liable for the corporation’s obligations and debts. C corporations are taxed on corporate and individual levels, whereas the government taxes S corporations on an individual level.

The major downside of running an indie film company as a corporation is that you must comply with numerous corporate formalities. These formalities can be more expensive to operate than other business entities.

However, given the formal structure and the ability for investors to purchase shares in the corporation, you may be able to raise more outside capital with a corporation than with other types of business entities.

How an Entertainment Lawyer Can Help Independent Filmmakers

As these examples make clear, from pre-development to post-production, film production implicates numerous indie film legal issues. As an indie filmmaker, you will most likely need to hire an experienced entertainment law attorney to advise you on these issues. Entertainment lawyers can also assist with drafting the numerous legal documents you will need. Among other things, an experienced entertainment attorney can help you:

  • Choose the right business entity,
  • Conduct title searches,
  • Register copyrights and trademarks,
  • Prepare production agreements,
  • Draft employment contracts and advise you on employment matters,
  • Negotiate distribution agreements,
  • Obtain permits for film locations,
  • Prepare liability release forms, and
  • Negotiate option agreements relating to underlying story rights.

Questions?

Are you an indie filmmaker seeking to create your next film? Contact us today to learn how we can help you.

Let’s Get Started

Let's see how we can help your creative business grow.