Impact of Foreign Tax Credits On Composer's Royalties
There has long been a dispute between songwriters and publishers as to whether songwriters are entitled to a proportional share of a publisher's savings resulting from foreign tax credits. A recent decision of New York's highest court, the Court of Appeals, resolved this issue in favor of the publisher. Under the ruling, absent express contractual language to the contrary, a songwriter is not entitled to share in the benefit of foreign tax credits taken by his or her publisher. Drafters and negotiators should take particular note of this development.
Attorney Fees Update
Depending on the circumstances and the law, parties on either side of an entertainment suit may ask a court for an award of attorney fees. Following are recent court rulings that deal with this and related concerns. In this and future issues, <i>Entertainment Law & Finance</i> will report on such relevant rulings in Attorney-Fee Updates.
Selecting Defense Counsel and Controlling the Defense: Who Makes the Call When Rights are Reserved?
Where an insurer accepts a tender of defense unconditionally, the insurer generally has the right to select counsel to defend the policyholder. There, the policyholder and the insurer share identical interests in seeing the matter resolved in their favor. Logic suggests that that even if a reservation of rights letter were issued to a policyholder, the insurer would still be able to select counsel to defend the policyholder. This is so because the attorney enrolling as counsel for the policyholder, although paid by the insurer, would be ethically obligated to represent the interests of the policyholder — his client — to the best of his abilities and to place the interests of the policyholder first. However, many courts have found that when an insurer offers a defense under a reservation of rights, a conflict of interest exists between the insurer and the insured relating to the defense of a suit against the insured. Therefore, the insured may, if he so elects, select independent counsel whose reasonable fees are to be paid by the insurance company. <i>See</i> Todd R. Smyth, <i>Duty of Insurer to Pay for Independent Counsel When Conflict of Interest Exists Between Insured and Insurer,</i> 50 A.L.R. 4th 932.
Bit Parts
Recent developments in entertainment law.
Clause & Effect: <b>'Recoupment' Defined In Agreements for Theatre Productions</b>
In theatre, "recoupment" is a term of art that all knowledgeable persons in the business understand to have a specific meaning. Simply stated, the concept is that the author, director or others involved in the play can be paid more after the play has started making a profit, which is the time when the investors could have recovered their respective investments. It has always been a good negotiation tactic, for example, to offer the author more after the play is making a profit. This tactic has saved many deals that could have fallen through.
Inferring Dishonesty: The Fifth Amendment and Fidelity Coverage
Dishonest employees always have posed a problem for businesses. The average business may lose 6% of its annual revenues to employee fraud, and cumulatively the impact of employee theft on the economy is estimated to be $600 billion annually. <i>See</i> Association of Certified Fraud Examiners ("ACFE"), 2002 Report to the Nation on Occupational Fraud & Abuse, at ii, 4 (2002), available at <i>www.cfenet.com/publications/rttn.asp.</i> Although the average loss through employee embezzlement is $25,000, where computerized financial records or transactions are involved, the average loss increases nearly twentyfold. <i>See</i> National White Collar Crime Center, <i>WCC Issue: Embezzlement/Employee Theft,</i> at 2 (2002), available at <i>http://nw3c.org/downloads/Computer_Crime_Weapon.pdf.</i>
Courthouse Steps
Recently filed cases in entertainment law, straight from the steps of the Los Angeles Superior Court.
Decision of Note: <B>CA's USPA Covers Computer-Altered Likeness</B>
The Court of Appeal of California, Second Appellate District, Division Seven, decided that claims over the use of computer-altered likenesses of the plaintiffs in children's television programming were covered by the Uniform Single Publication Act (USPA), Calif. Civ. Code Sec. 3425.1 <i>et seq.</i> Thus, the claims were barred by California's relevant two-year statute of limitations. <i>Long v. The Walt Disney Co.</i>, B164750.
