Mongolian Death Worm Concept Assignment Agreement

The original concept was created by a producer (owner) who was a resident of Canada. A Concept Assignment Agreement was the first document in the chain, in which the owner, through his company, sold all rights to his entertainment company:

Without quoting the entire agreement, the owner of the concept had to further represent and warrant that: They were the author and creator of the concept throughout the world and all rights in and to the concept, that it was not in the public domain in any country anywhere in the world where copyright protection is available, and that there were no outstanding legal claims or litigations pending against or involving the title or the ownership and or copyright in the concept; that the owner had the full right and authority to enter into the agreement and convey the rights granted; that no motion picture or any dramatic version of the concept or any part of it had been manufactured or produced in any media; that nothing had been omitted in the transfer of rights and that to the best of owner’s knowledge they had not committed or performed any act that in any way could diminish, encumber, or impair the rights being granted; that the owner had not adapted the concept from any other dramatic or other literary material of any kind, unless it was in the public domain, and that the owner had not copied or used the concept, the plot, any scenes, sequences, or story of any other literary or dramatic material; that the concept does not infringe on any common law; and that nothing contained in the material is libelous or in violation of the rights of privacy to any person, firm, or corporation.

Formation of Production Services Company

It was intended that the picture was to be financed by procuring a bank loan. Every bank loan requires collateral, and as we’ve covered, entertainment loans are no exception. Collateral could be in the form of one or multiple foreign pre-sales, a domestic pre-sale, a combination of foreign and domestic pre-sales, tax credit or subsidy, and, if there is still a gap or shortfall, perhaps an equity component. To recap, banks require completion bonds, and both banks and bond companies require that collateral for the funding of the entire budget and associated costs of financing the picture (the strike price) must be in place prior to closing of the prospective loan. Also, loan and security agreements are meticulously contracted with the bank, which factors in loan fees, interest reserve, bank legal fees, a legal reserve, plus a fully executed contract with a completion guarantor (who generally charges 3% of the film’s budget as a bond fee), in order for the bank to close financing and make funds available for production. A bank requires that a “clean” corporation, with no liens or encumbrances, act as the borrower and rights holder until the loan is repaid in full and the lien is removed, and requires what is known as a “notice and acknowledgement of assignment” (NOA) to be executed with each foreign and domestic buyer or distributor. This is essentially a direction to pay, which obviates the sales agent and legally requires the distributor to pay the bank directly upon delivery of the film.

A single purpose corporation (“Producer”) was formed under the laws of Canada, expressly for the purpose of the production of the film Mongolian Death Worm, with the intent of using both foreign and domestic pre-sale contracts, as well as Canadian and British Columbian subsidies as the total required to meet the strike price for the film.

First Writer Agreement

Producer entered into a writer agreement with the loan out corporation (Lender) of a Canadian writer, which provided the services of the writer. The agreement was a step deal, which engaged the Writer to write an Outline based on the Concept with payment due upon receipt and acceptance by the Company of the Outline, and was a non-union agreement, which was not subject to the terms and conditions of any guild or labor organization. Thereafter at Producer’s sole discretion (if the Producer chose not to terminate the Writer’s services after the Outline and exercise its option for additional steps), Producer could further engage the Writer to write a first draft of a screenplay based on the approved Outline, with payment upon commencement of the first draft and an additional payment upon receipt and acceptance of the completed first draft by the Producer. Subject to the Producer exercising its option for a second draft, the Producer could engage the Writer to write a second draft of a screenplay, with payment upon commencement of the second draft and an additional payment upon receipt and acceptance of the completed second draft by Producer. Subject to Producer exercising its option for a polish, Producer could engage the Writer to write a polish of the screenplay, with payment upon commencement of the polish and an additional payment upon receipt and acceptance of the completed polish by the Producer. The grant of rights mirrored the grant of rights in the Concept Assignment Agreement with the Writer granting and assigning all rights of every nature (including all literary material, the picture, and the copyright), as well as all results and proceeds, to the Producer throughout the universe in perpetuity. A concurrent requirement was the execution of a Certificate of Authorship, which includes the following provisions: The engagement of the Writer is a “work made for hire” for Producer pursuant to the U.S. copyright act and a “work made in the course of employment” pursuant to the copyright act (Canada). Producer shall be deemed the sole and exclusive author of the material, and accordingly shall and does own all right, title, and interest therein, including without limitation the entire copyright therein throughout the universe in perpetuity. Producer shall have the unrestricted right to add to, subtract from, and/or revise the material and/or combine the same with the writings of others in such a manner and to such extent company or any of its successors, licensees, or assignees may suffer or incur by reasons of the breach or alleged breach of any representations or warranties made herein.

First Director Agreement

The Producer entered into an agreement with the loan out company (Lender) for the services of a Canadian Director to further develop the screenplay and to direct the Picture, in accordance with the DGA basic agreement and the terms and conditions of the applicable DGA low-budget motion picture agreement. The Director was to perform services customarily required of directors in the motion picture industry and “consulting services” and “screenplay polish services” (writing), as reasonably required by Producer, but to “exert diligent good faith efforts to shoot the script as delivered to Director by Producer” and “not to make any substantive changes in the script or shooting schedule without the express prior written consent of Producer.” The Director was also contractually bound to a litany of duties and obligations, including using good faith efforts to insure that the Picture was produced at a cost that did not exceed the budget as established by Producer and in accordance with the production schedule and cash flow as established by Producer, and to cooperate with the Editor to complete and deliver a first assemblage of the Picture immediately following the completion of principal photography. All representations and warranties, indemnities, and transfer of any and all rights in and to any material created or contributed to the Picture were the sole and exclusive property of the Producer in language that mirrored all of the rights granted in the other two agreements. An initial payment was paid to the Director, which constituted full and final consideration for all rights in and to any Director’s polishes of the screenplay for the Picture. The rest of the Director’s compensation was to be paid in increments: on the first day of prep, on the first day of principal photography, on the final day of principal photography, upon delivery and acceptance of the Director’s cut of the Picture.

The Director warranted and agreed that all material, works, writings, ideas, “gags,” or dialogue written, composed, prepared, submitted, or interpolated by Director in connection with the Picture or its preparation or production “shall be wholly original with Director and shall not be copied in whole or in part from any other work, except that which has been submitted to Director by Producer as a basis for such material” or material in the public domain.

First Director #1 Quitclaim and Release

When the production plans changed and it was decided to finance and shoot the Picture in U.S., in consideration of a flat payment to the Director, a Quit-claim and Release agreement was executed between the Owner, Producer, and the Director Lender. In this document, the Director and Lender, for a onetime flat payment, granted and quitclaimed

Lender and Director further acknowledged that they had no rights or claim in and to the Picture and/or to any screenplay to be used in the creation of the Picture or any other screenplay otherwise using or incorporating the Story in any manner, and/or any further compensation under any contract between Producer and Lender or Director or otherwise in connection with the Picture. The Lender and Director also released and discharged Producer, Guarantor, and the Related Parties from any and all actions, claims, demands, “whatsoever, which may have existed from the beginning of time” through the execution of the quitclaim and release, with all of the releases, indemnities, representations, and warranties that mirror the language in the other documents.

Proof of Quitclaim and Release Payment to First Director

Where intellectual property rights are concerned, irrefutable proof of payment such as a wire transfer or cancelled check are critical components of chain of title. In this instance, the evidence of payment was a copy of the wire transfer instructions from the Producer’s Production Services Company to the Lender and Director, along with the date and time of the transfer.

Evidence of Payment to First Writer

The First Writer wrote the Outline and First Draft and was then terminated under the terms of the step deal. Cancelled checks, as evidence of payments for the Outline and the delivery and acceptance of the first draft, were required as part of the chain of title.

Canadian Production Services Agreement Termination

Under the laws of Canada, and for good and valuable consideration, the receipt and sufficiency of which was acknowledged, the agreement between Company and Producer was terminated in its entirety and “are of no force or effect. All rights in and to the film remained vested with Company” and “in the event that any statutory rights of Producer are now or in the future created by law, then any and all such rights are hereby assigned by Producer to Company.”

Assignment and Assumption Agreement to U.S. Production Company

This agreement was between both the original Canadian Company (“Assignor”), which acquired the concept rights from the owner (“Creator”), the Canadian production services company that was formed with the original intent to produce the film in Canada (“Prodco”), and the newly formed U.S. production services entity (“Producer”). The document essentially commemorated in writing, step-by-step, the chain of title from inception of the Concept to that point: Pursuant to a Concept Assignment, Assignor acquired all of creator’s right, title, and interest in and to that certain motion picture entitled Mongolian Death Worm (“The Project”) and any copyrights and registrations in connection there with and including all right, interest, choices in action, titles, elements, stories, plots, incidents, dialogue, characters, character names, dramatizations, and spinoffs; all components, parts, and manuscripts; all versions and translations thereof; and all renewals in extensions of copyright and all of the results and proceeds thereof (collectively the “Initial Property”); Pursuant to a Writer Agreement between Assignor and Lender f/s/o Writer, Assignor engaged the services of Writer to write a complete screenplay based on the Initial Property. Pursuant to a Production Services Agreement between Assignor and Prodco, Assignor engaged Prodco to provide certain production services in connection with the Project. Pursuant to a director Loan-Out agreement between Prodco, acting as agent for Assignor, and Lender f/s/o Director, Prodco engaged the services of Director to provide a rewrite of the script and to direct the project.

Second Writer Agreement—Certificate of Ownership of Results and Proceeds

The second Writer (in addition to the writing contributions made by the first and second Directors), was a staff employee of one of the U.S. companies who acted as a broker of the deal from Canada to the U.S., and was the liaison with the SyFy channel for network notes and performed writing services to adjust the screenplays accordingly. His agreement was a one-page Certificate of Ownership of Results and Proceeds, which stated that for a fee of $1.00, all of his services in connection with the “Work” were being rendered pursuant to this agreement between him and Producer. All results and proceeds of his writing work constituted within the meaning of copyright laws in the United States, a “work-made-for-hire” for Producer “with Producer and/or its assignees owning all rights in the universe in perpetuity, mirroring the grant of rights and ownership language in the other agreements, with identical representations, warranties, and indemnities made by Writer. Further,

Producer was also irrevocably appointed Writer’s “attorney-in-fact for the execution of any future documents that may require Writer’s signature.”

Second Director Agreement

The (now U.S.) Producer entered into an agreement with a new Director to further develop the screenplay and to direct the Picture. His agreement was non-DGA and upon execution of the agreement and a Certificate of Authorship, he was paid a percentage of his overall fee, “which amount shall also constitute full and final consideration for any and all writing services performed by Director hereunder.” The rest of the Director’s compensation was to be paid in increments: in six weekly installments commencing on the first day of principal photography for six consecutive weeks a final payment on delivery to Producer of the Director’s cut of the Picture. The Director was to be paid a bonus “in the event that the weekly cost report for the week ending three (3) weeks following the wrap of principal photography shows that an amount equal to fifty percent (50%) of the budgeted contingency remains unspent.”

The Director’s services became exclusive during the period four weeks prior to the commencement of principal photography and continuing until delivery of the Producer’s cut, and thereafter on an as needed basis through the completion of the final video master of the Picture. During subsequent non-exclusivity, Director “shall refrain from rendering services elsewhere which would interfere in any way with the services of Director in connection with the Picture or interfere with the completion of the Picture in accordance with the post-production schedule mutually approved by Producer and Director.” The Director specifically agreed to “deliver his Director’s cut, with a running time of not less than ninety-three (93) minutes excluding main and end titles, nor more than one hundred and ten (110) minutes including main and end titles, no later than three (3) weeks following the completion of principal photography and further agreed to complete the Picture in conformity to the budget as established by Producer and in accordance with the production schedule and cash flow as established by Producer.” All representations and warranties, indemnities, and transfer of any and all rights in and to any material created or contributed to the Picture were the sole and exclusive property of the Producer in language that mirrored all of the rights granted in all other agreements.

The Director warranted and agreed that all material, works, writings, ideas, “gags,” or dialogue written, composed, prepared, submitted, or interpolated by Director in connection with the Picture or its preparation or production, which “shall be wholly original with Director and shall not be copied in whole or in part from any other work, except that which has been submitted to Director by Producer as a basis for such material” or material in the public domain. Director was obligated to deliver a cut of the Picture that would be “suitable for the Motion Picture Association of America (MPAA) for a rating no more restrictive the ‘R,’ and additionally meet the standards applicable to and acceptable for network television primetime licensing and usage.” The Director was responsible for a Picture that did not contain any graphic violence, sexual content or implication of sexual content, or foul language without the prior written consent of Producer, and to provide Producer with “cover shots” necessary for the release of the Picture on television based on network continuity standards in existence at the time of principal photography of the Picture. Producer retained all final approvals of all aspects of the pre-production, production, budget, schedule, post-production and post-production schedule, editing, distribution, release title, publicity and marketing, and release of the Picture, and all other artistic and production in connection with the Picture.

Certificate of Authorship

In this one-page document, the Director certified that he contributed to the screenplay as a “work for hire” and “subject to the terms and conditions of the Agreements,” and that Producer and/or its assignees own(s) all rights in the universe in perpetuity, mirroring the grant of rights language in the other agreements, with identical representations, warranties, and indemnities made by Director.

Evidence of the United States Copyright Registration

A copy of the U.S. copyright application and registration number was provided, as the actual copyright certificate had not yet been received by from the Copyright Office.

As you can see, voluminous amounts of paperwork and documentation were required to prove the fairly complex linear chain of title, for this very small film. In a much less complicated scenario, a script would be purchased, or commissioned as a work for hire, by a production company with financing in place, and a writer agreement and certificate of authorship, and a director’s agreement, may constitute the complete chain of title.