BY:STEVEN C. BEER
This Q&A was originally published in the Spring 2019 issue of Documentary magazine, a publication of the International Documentary Association, a nonprofit media arts organization based in Los Angeles.
As with any business relationship, there are instances when co-producing parties go separate ways prior to the completion of their documentary. The basis for discord could range from irreconcilable creative differences to a breakdown in communication relating to key production elements. With an international co-production, potential problems are amplified by differences in cultures, production styles and local laws and regulations.
In many instances, the originating producer enters a co-production with intellectual property it previously acquired or developed. This content often serves as the foundation of the co-production. What happens to the underlying creative materials when international co-productions dissolve can depend on what an originating production company does at the outset of the relationship to protect its intellectual property.
The possibility of divorce often motivates couples to enter into a pre-nuptial agreement that delineates the disposition of assets when the spouses split up. The originating producer should approach an international co-production with a similar mindset in order to safeguard its pre-existing materials and ensure reversion of the underlying intellectual property to the originating producer.
For one thing, the co-production agreement should contain unambiguous language that contemplates the possibility of a dissolution and the orderly disposition of assets. First and foremost, the co-production agreement should clearly identify the pre-existing intellectual property, perhaps in a detailed attachment to the agreement.
When a financial commitment from the international co-producer is involved, the agreement likely will require the formation of a single purpose production entity and an assignment of rights into that new entity. The prudent originating co-producer will seek to defer that assignment until a designated milestone is achieved. For example, the originating co-producer may want to tie the assignment of rights to the release of the co-producer’s funds or to a completion of its production services.
To facilitate the return of the underlying property to the originating producer, the co-production agreement should also consider language that triggers an immediate return of the property rights previously assigned. The objective of a reversion clause is to limit the possibility that the rights will be entangled by a complicated separation. This reversion language also should be incorporated within the co-production agreement’s termination provision. In an instance where the international co-producer materially breaches the agreement and fails to remedy the breach within a designated cure period, the right to exploit the underlying materials will immediately and automatically return to the originating co-producer.