Filmmaking is a popular art form that can be the basis for an entire career for many talented filmmakers. Whether as a small side project or a commercial production, it is important for all filmmakers to consider the business structure behind their productions to protect not only their assets, but also their intellectual property. Below, the article sets out copyright considerations and the main business structures for filmmakers, discussing the key advantages and disadvantages for each.
Copyright for Filmmakers
Copyright is the legal ownership of a work that automatically subsists once the work has been created. Determining who owns the copyright in a film is complicated by the fact that film productions can often involve many different parties from directors, producers, screenwriters, camera directors and editors.
Under the Copyright Act 1968 (Cth), a film’s first owner of copyright is the person who made it unless the film has been commissioned or an agreement has been made stating otherwise. The ‘maker’ of a film is the person who undertook the necessary arrangements for the production. When one person is responsible for all aspects of a film, this is easily determined. Otherwise, the strongest claim is often the director or producer.
A formal business structure with a written agreement in place is the most effective way to establish who owns copyright. It is possible for copyright to be jointly owned when produced by two or more people. In this situation, it is common for people to have an agreement in place establishing the rights of each when the film has been created.
Sole Trader Structure for Filmmakers
A sole trader is an independent individual who is carrying on a business as the proprietor, or main owner of the business. In the filmmaking industry, it will typically involve one person who is responsible for the entire production i.e. producing, filming and editing, though it is worth noting that this structure does not preclude other people from being employed to assist with the production or management of the business.
Setting up a sole trader involves registration of an ABN (Australian Business Number) and a business name.
- Simple and relatively inexpensive to set up
- Full control of the production or business
- Ability to decide how to allocate profits
- Unlimited and personal liability for debts and negligence
- Any personal assets could be claimed for the purpose of meeting any successful legal claim against the filmmaking business
- Limited resources to fund the production; their reliance is on personal savings or loans or business profits to finance growth
Due to the unlimited and personal liability attached to the sole trader structure, filmmakers considering these structures should assess the risks of something going wrong before going ahead with either. However, for most novice filmmakers who want full ownership of copyright in the film, a sole trader is an ideal structure that involves minimal legal costs.
Partnerships for Filmmakers
A partnership is a legal structure whereby two or more people can operate a business with a common view to sharing profits. A common filmmaking partnership could be between the director, screenwriter and/or producer. This structure is recommended for a group of people working, who want to share of ownership of copyright in the film.
It is advisable to draft a Partnership Agreement to set out the roles, liabilities and ownership of copyright throughout the project. Otherwise, the relevant state or territory partnerships legislation (i.e. Partnerships Act 1982 (NSW)) may imply terms and conditions which could contradict expectations. Similar to sole traders, you will also need to register an ABN and a TFN (Tax File Number).
- Relatively inexpensive to set up and maintain
- Shared creative skills and resources
- Partners have full control of the production but must make joint decisions
- Unlimited and personal liability for each partner, except for limited liability partnerships
- Ease of finance usually limited to the partners’ resources.
Company Structure for Filmmakers
The Australian film industry is highly fragmented, largely made of up of small companies. Often when a film is being produced, a company is formed for that production only. This means employees are only employed for the duration of the production such as set or costume designers, actors and editors.
A limited liability company structure limits the personal liability of the shareholders. All the financial and legal obligations are taken on by the company will be separated at law from the shareholders, directors and managers. Due to the limited liability of a company structure it also a useful structure for single filmmakers who want to avoid the level of personal liability attached to setting up a sole trader. Registering a company with the Australian Securities Investment Commission (ASIC) will cost $497 with an annual renewal fee of $243.
- Liability is limited to the extent of issued shareholder’s equity, meaning shareholders are not liable for the debts of the business
- Directors usually the same persons as shareholders, giving them full control
- Expensive to register compared to other structures and difficult to set up
Before deciding on the business structure of your film, it’s important to think about the size of your production, risks of things going wrong, any legal costs and who you intend on owning copyright in a film. For larger film productions involving numerous producers and employees, it is advisable you seek legal advice on your business structure and any written agreement in place to set out who owns the copyright in a film. Questions? Call us on 1300 544 755 or fill out the form on this page.