Those operating in the growing film-making sector need to be aware of the legal rights involved in adaptations, writes LOUISE PURDIE
The legal side of any business activity rarely takes centre stage, but is always fundamental to its success, and the film and screen production business is no exception. With the exciting news that Edinburgh’s Filmhouse has been saved and the city’s 77th Film Festival soon to open, there are good reasons to be confident that the screen industry will be an increasingly significant contributor to the economy, locally and nationally, over and above all the cultural benefits which flow from it.
As a legal services firm we expect increased activity in this area over the coming years, and for those involved in film-making it is essential to obtain the best possible legal advice from experts experienced in screen production.
All film projects start from an initial concept or idea, which may be original or adapted from a third party’s creative work. Among the adaptations at at this year’s Edinburgh Film Festival is The Outrun, directed by Nora Fingscheidt, set in Orkney and based on Amy Liptrot’s best-selling memoir of the same name. For such work it is crucial for producers to secure the necessary rights.
This is typically done through an option agreement under which the producer is granted the option to buy the rights to produce a film based on the underlying work, and the owner of that work agrees not to grant equivalent rights to a third party for a specified period.
This allows producers time to develop the film and seek financing without making a substantial up-front payment. If the producer decides to proceed, they can exercise the option, triggering the transfer of rights.
There are five key things to consider within Option Agreements
1. Due Diligence
Ensuring that you obtain the option from the correct party—the rightful owner of the rights to the underlying work. While this is typically the author, the rights may have been transferred to another party. Therefore, it is essential to verify ownership through proper documentation, especially if the original rightsholder has died or transferred their rights.
2. Scope of Rights
Clearly defining the rights included in the option. This should cover the adaptation of the work, the development and production of the film (including the screenplay), and the exploitation of the film in any form. If sequels, prequels, or spin-offs are being considered, these should be explicitly addressed and, of course, ancillary rights such as merchandising and soundtrack rights.
3. Financial Terms
Determining the fees payable at various stages. The initial option fee is typically paid on signing and is deductible from the purchase price if the option is exercised and there will usually be further fees due if the option period is extended. The final purchase price may be a specific fee, or a percentage of the film’s budget and the rights holder may also want a share of net profits.
4. Scheduling: Option agreements are usually granted for 12-18 months, with possible extensions. Keeping track of the expiration dates is important to prevent unintentional lapses and sometimes there may be turnaround clauses, where the rights are re-assigned if filming has not started within a specified timeframe.
5. Development Activities: During the option period, producers will need to develop proposals, storyboards, treatments, and scripts to secure financing and commissioning and the option agreement should permit these activities without the need to exercise the option.
Louise Purdie is a senior legal adviser at Vialex
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