Texas Law
Texas Arts, Entertainment & Sports Law
Arts, Entertainment & Sports Law
The primary concern of artists and entertainers is creating art, but making a living as an artist or entertainer is also a business. Artists, entertainers, and athletes must understand the legal aspects of the business relationships they enter into with agents, teams, sponsors, production companies, book publishers, managers, music clubs, and record companies. They also should know about the laws that regulate business relationships they form. An artist, entertainer, or athlete who ignores these laws or fails to get important business relationships defined in writing may encounter problems as his or her career advances.
This chapter describes arts and entertainment law, and outlines some of the elements of copyright and trademark law as they apply to artists who want to protect their rights to the artistic messages they create. Sports law includes athletes' contractual relationships with teams and sports agents, as well as the obligations of those who recruit college athletes for professional teams.
The Contract Law, Closely Held Business Law, and Intellectual Property & Computer Law Chapters provide additional information that may be useful to artists, entertainers, and athletes.
Arts and Entertainment Law
Arts and entertainment law is a broad area of legal specialization, so there is no typical arts and entertainment lawyer. An attorney practicing in this area can concentrate his or her practice in just a few or in many of the legal issues that an artist or entertainer may encounter. An arts and entertainment lawyer's practice may include helping artists set up corporations or partnerships, settling copyright infringement cases, negotiating business deals, and drafting contracts between artists and record companies, production companies, book publishers, or agents. This section outlines the areas of arts and entertainment law most likely to be encountered by an artist or performer.
Contracts
Artists and entertainers are constantly making contracts. The following are the most common types of contracts an artist or entertainer is likely to encounter in his or her career.
Shopping Agreement
A shopping agreement is an agreement that an artist or a group of artists (such as a music group) makes with an agent or manager, who then "shops around" trying to get the individual or group a contract. The agreement should spell out how long the contract is in effect, that is, how much time the agent will search on the artist's behalf. The time period should be long enough to give the parties time to evaluate their ability to work together, but not so long that they are stuck with an unsuitable arrangement. This agreement also should indicate how the agent or manager is paid (usually a 10 to 20 percent commission), and which party pays expenses. If the agreement stipulates that payment is on a commission basis, the document should clearly specify the terms.
Management or Booking Contract
When an individual artist or group wants to be managed and/or promoted by another party, a written contract should be entered into to spell out each party's rights and responsibilities. The artist should carefully scrutinize all aspects of such a contract, especially if it is a long-term contract, to ensure that its terms are of value and that his or her rights are protected. The contract should include specific commitments by the agency to protect and respect the artist's artistic freedom, promote the artist's career, and provide the artist with income or employment. The contract also should address how the agency will settle disputes over booking deals, and how the contract will be modified if the group changes its members, name, or artistic style.
Performance Agreement
Texas law stipulates that if the terms of a contract last for more than one year, the contract must be in writing. A performance agreement--an agreement between a performer and the organization or person who produces and pays for the performance--need not be written if the performance is for one night or one week. However, to make sure both parties fully understand their rights and obligations, even an agreement for one show should be written. A performance agreement may only need to state the basics: who performs; location, date, and hours of performance; manner of performance; amount of compensation for the performance; and the manner and form of promotion of the performance. A more detailed agreement may include who will pay attorneys' fees for any disputes and the manner in which disputes will be settled (such as arbitration or mediation). A performer also should make certain that the person signing the contract is the authorized representative of the person responsible for paying the artist after the performance.
Mutual Release Agreement
Mutual release agreements outline how to manage the legal and financial aspects of a group's breakup. A mutual release agreement is especially important if the departure of a member is not voluntary. Elements that should be clearly specified in the agreement include whether the departing member has any right to use the group's material, whether the departing member receives any future royalties, and which party, if any, has the right to continue using the group's name.
Consignment Agreement
A consignment agreement is an agreement between an artist and an art dealer or gallery owner for the artist to deliver a work of art to the dealer to sell. Upon selling the artwork, the art dealer or gallery owner usually receives a commission or some other form of compensation. In order to protect artists from bankrupt or unscrupulous gallery owners or art dealers, all consignment agreements should be in writing and include the following provisions:
- The schedule for delivering of the proceeds of the sale
- The stated value of the artwork so the artist can be compensated in the event of loss or damage while the artwork is in the art dealer's possession
- The minimum price for which the artwork will be sold
- Whether the artist must consent to use or display of the art work
Talent Agencies
Texas statutes require that any person who obtains or attempts to obtain employment for artists or groups of artists must be registered as a talent agency by the Texas Department of Licensing and Regulation. Every talent agency is required to submit to the Department a registration statement that includes a description of the type of services offered and a disclosure of any litigation relating to the operation of the talent agency. Each talent agency must keep a copy of its registration so that artists can inspect it on request. Texas talent agencies may not charge a registration or advance fee as a condition of representing an artist and may not require an artist to use the services of any specific photographer, advertising service, or training program.
Organizing the Business
Probably the most important agreements that artists sign are documents outlining their relationships with each other. Some of the legal options artists have when creating formal relationships with each other are the topic of this section.
General Partnership
For both artists and business people, a common arrangement is a general partnership in which all partners share in managing the partnership. A general partnership agreement should include the name of the partnership and whether the name is protected or protectable by trademark, the names of the partners, the partnership's location and duration, each partner's investment and participation in profits and losses, the amount of time to be contributed by each partner, and each partner's managerial and other responsibilities. The general partnership agreement also should address how to deal with change in the partnership by naming a managing partner, setting a method for resolving disputes, defining procedures for admitting a new partner and liquidating the interest of a departing member, setting conditions under which a partner may withdraw from the partnership, defining the grounds for expelling a partner, and specifying a period of time during which a departing partner may not compete with the remaining partners.
A major drawback of a general partnership is that each partner can be held personally liable for the losses of the entire partnership. This means that if the partnership accumulates a large business debt, or if the partnership loses a large lawsuit, each partner may be forced to contribute some of his or her own money to help pay off the debt. Artists and entertainers can avoid this drawback by forming one of the different types of legal corporations.
Corporation
Although forming a general partnership agreement is a very common choice of a group of artists who perform or create together, artists also have the option of organizing as a corporation. To do this requires a little more organization and commitment by the group, because managing even a simple corporation requires more time and paperwork. Incorporating may be the best route to take, however, because of the possible advantages of lower taxes and reduced liability.
A corporation is a legal entity that operates separately from its owners, the shareholders. For most groups of entertainers or artists, all of the shareholders are also officers of the corporation. In such closely held corporations, the officers of the corporation (president, vice president, secretary, and treasurer) hold all the stock issued by the corporation. This is in contrast to public corporations with shares that can be traded on a public stock market. Artists rarely form public corporations. The corporation may be structured so as to qualify as an S corporation, which gives significant tax advantages to the owners of the corporation. Simply put, an S corporation is not taxed, although any profits distributed to owners are taxed as personal income. In some other types of corporations, the corporation's profits are taxed and the earnings passed along to shareholders are taxed again.
Unlike a general partnership, the owners of a corporation generally are not liable for the debts of the corporation because of the legal separation between a corporation and its owners. Thus, if a corporation goes heavily into debt, bill collectors generally may not try to collect from the personal accounts of the corporation's shareholders. This exemption from liability disappears, however, if it is proven in court that the shareholders engaged in fraud or otherwise seriously mismanaged the corporation.
Protecting Creative Work
A creative work can be protected by copyright or trademark. Copyright protects works of art and literature, and trademark protects business identities. The following is an overview of these legal tools.
Trademark
A trademark is a word, name, symbol, or design used by a manufacturer or merchant to identify its products and distinguish them from other products. Music groups, theater groups, and individual artists and entertainers also have significant investments in their names as a way to distinguish their work from the work of other artists. A trademark protects the owner of a product from others trying to sell a similar product using the owner's good name and reputation.
For an artist or group of artists, this protection is very valuable; a fact perhaps best illustrated by the fact that the name "Picasso" is a trademark. To make sure that the value in a name--value that an artist creates through hard work and talent--is not appropriated by someone else, the artist can register the name with the state or the federal government. Filing with the federal government protects the mark beyond the state's borders.
Although anyone can do an informal, preliminary search to determine whether a particular name is available to be registered as a trademark, it is best to hire a lawyer experienced in trademark law to do a comprehensive search and to properly register the mark. A search by an attorney affords financial and legal protection. Although it costs money to hire an attorney to conduct the search, it is much better to know before spending money to promote and use a mark whether that mark belongs to someone else.
A name does not have to be registered in order to claim it as a trademark. This is so because a trademark automatically arises from repeated, regular use of a name. However, if the owner ever wants to claim that someone else is infringing on the use of a name, he or she will have a harder time doing so if the name was not previously registered as a trademark.
Registering a name as a trademark is the first step in protecting exclusive rights to it. Whether a person registers a trademark with the state or with the federal government, he or she gets a certificate of registration that is valid for ten years. The registration can be renewed after ten years; however, if an artist stops regular, repeated use of a trademark, someone else can begin legally using it. Also, the holder of the trademark must police the mark to make sure that others who try to use it are notified of the holder's exclusive rights to the trademark. If the holder does not act to stop others from infringing on a trademark, he or she can lose the exclusive right to use the trademark.
Copyright
A copyright is a federal protection that affords the creator of an original work the exclusive right to reproduce, distribute, sell, perform, or publicly display the copyrighted work. If someone creates a play, book, song, picture, artwork, computer program, movie, or photograph, he or she already has the copyright to that work by virtue of having created it. Registering the work with the United States Copyright Office is mostly a legal formality, but there are reasons for doing so anyway. The most important reason is that if the creator registers a copyright on a work within three months of its creation or at any time before an alleged infringement of the work, he or she may be able to collect statutory damages and attorneys' fees in addition to actual damages in an infringement lawsuit.
A copyright owner has the exclusive right to control the reproduction, distribution, performance, and display of his or her work, and the creation of derivative works. However, the "fair use doctrine" permits the limited use of a copyrighted work without the owner's permission. Courts use four factors to determine whether use is fair use:
- Purpose and character of the use, including whether the use is of a commercial nature or for nonprofit educational purposes
- Nature of the copyrighted work
- Amount of the work used in relation to the copyrighted work as a whole
- Effect of the use upon the potential market or value of the copyrighted work
While a lawyer usually is not needed simply to register a copyright, an attorney should be consulted in any sort of copyright infringement matter. A copyright holder also may want to engage an attorney if he or she is hired to create a work of art for someone else. The attorney can ensure that an employment contract clearly states who has the copyright for the work.
Freedom of Expression
Despite the long and distinguished history of the First Amendment of the United States Constitution, freedom of expression is not absolute. To adequately protect themselves from possible litigation, artists and entertainers should be cognizant of the limits of free expression. Speech and other forms of expression that are obscene or that defame others are not protected.
Defamation
Defamatory speech is speech that injures another's reputation or character. Defamation, which can be the basis for a civil lawsuit, is either written (called "libel") or spoken (called"slander"). In defamation lawsuits, private citizens are treated differently than public figures. A private citizen simply must prove that the defendant conveyed false information to make a case of defamation. A public figure must prove not only that the information was false, but that the speaker or publisher knew the information was false and spoke or published it anyway, or that the speaker or publisher released the information with a reckless disregard for the truth. There are two principal defenses to defamation: truth and consent. Generally, if a statement is true it is not actionable, even though it may have harmed someone's reputation. Similarly, if a person consented to the transmission or publication of defamatory information, he or she cannot sue for damages. Opinions cannot ordinarily be the basis for a defamation suit.
When determining damage awards in defamation cases, courts tend to take into account the number of persons who heard or read the defamatory information. Because damage to reputation is the basis for the award, the greater the number of persons, the greater the damage award. Usually, it is not possible to preempt the release of potentially defamatory information (a person cannot go to court to stop the publication of a magazine article, for example). However, the threat of a lawsuit upon release of defamatory information tends to encourage the release of only truthful material.
Obscenity
Material that has been deemed obscene may not be produced or distributed. It also is illegal to participate in an obscene performance if a person knows or should know that the performance material is obscene. State law imposes criminal penalties for possession, creation, or distribution of obscene materials. Determining just what is obscene, however, has long been a difficult task. In 1973, in the case of Miller v. California, the United States Supreme Court settled upon the following test to determine obscenity: (1) the average person applying contemporary standards would find that the work, taken as a whole, appeals to a prurient interest in sex; (2) the work portrays sexual conduct in a patently offensive way; and (3) the work, taken as a whole, lacks serious literary, artistic, political, or scientific value. Many people find this test vague. Experience has shown that whether a particular work is found to be obscene often depends upon the judge or jury deciding the case. AS a result, the line between acceptable sexual material and obscenity remains somewhat blurred. Artists and entertainers should be aware that what they consider "art" may, in some instances, be considered obscene material under the law.
Sports Law
Sports law covers a wide range of legal areas, and good sports lawyers will be well-versed in many areas of the law. This section describes some of the contracts and relationships that professional athletes may encounter in their careers.
Standard Player's Contract
Contracts in sports define the rights of the players, the teams, and the leagues or commissioners of various sports. The standard player's contract specifies the rights, duties, and obligations of the player. Despite the name, most such contracts favor teams, not players. A standard player's contract allows teams to terminate players "for cause." This may mean a player can be let go if he or she is injured, out of shape, or no longer fits with the needs of the team. The contract may further specify that the league or commissioner can fine, suspend, or discharge a player for violation of league rules.
Players are not totally defenseless, however. Leagues usually have players' unions that negotiate collective bargaining agreements on the players' behalf. In addition, many players are represented by agents who attempt to get the best deals possible for their clients. Athletes who are uniquely skilled or have attained "star" status have a greater ability to negotiate and to modify standard contracts, adding provisions that increase income and job security.
Sports Agents and the Standard Representation Contract
There are a number of areas in which sports agents can assist an athlete. An agent may negotiate benefits for his or her clients such as signing bonuses, performance incentive clauses, and the right not to be traded without the player's consent. In addition to contract negotiation, an agent might also contract to be a client's money manager or financial planner. An agent also usually handles product endorsements and public appearances and may serve as a career adviser and personal development counsel. Sometimes, an athlete's agent also is the athlete's attorney.
The standard representation contract establishes the rights and responsibilities between the player and the agent. Most such contracts contain language concerning disclosure of any conflict of interest, good faith negotiation, and arbitration, as well as a clause stating which state law controls the interpretation of the contract. When the athlete is a college student, the standard representation contract may require additional provisions and usually is subject to further regulation. For example, both the agent and a college athlete recruited by the agent must notify the athletic director of the student's college within 72 hours of signing a standard representation contract. Texas law requires that all sports agents register with the Texas Secretary of State. Registration is valid for one year and may be renewed. In addition, Texas law requires that all agent contracts be in a form approved by the Secretary of State and include the fees and percentages paid by the athlete and a conspicuous notice that the agent is registered with the Secretary of State.
Resources
To order copyright application forms from the United States Copyright Office, call (202) 707-9100. To speak to a copyright specialist, call the Copyright Pubic Information Office at (202) 707-3000 between 8:30 a.m. and 5:00 p.m., Eastern time, Monday through Friday, except federal holidays. In addition, frequently requested Copyright Office circulars, announcements, and regulations now are available on the Internet. These documents may be examined and downloaded through the Library of Congress campus-wide information system LC MARVEL, which can be reached through Telnet (marvel.loc.gov), Gopher (marvel.loc.gov), and the World Wide Web (http://www.lcweb.loc.gov/copyright). The mailing address is Copyright Office, Library of Congress, Washington, DC 20559.
For state trademark information, contact the Texas Secretary of State's Office, P.O. Box 13697, Austin, TX 78711, (512) 463-5701, fax (512) 475-2761.
To verify that a prospective talent agent or agency is licensed, contact the Texas Department of Licensing and Regulation, 920 Colorado #301, P.O. Box 12157, Austin, TX 78711-2157, (512) 463-6599 or (800) 803-9202.
To verify that a prospective sports agent is registered, contact the Texas Secretary of State, P.O. Box 13697, Austin, TX 78711, (512) 463-5770.
Volunteer Lawyers for the Arts (VLA) maintains an Art Law Line to assist artists with legal problems and provide lawyer referrals at (212) 319-2910. VLA also produces numerous publications and can be contacted at 1 East 53rd Street, New York, NY 10022, (212) 319-2787 ext. 23. Publications include: The Musician's Business and Legal Guide, The Writer's Legal Companion, Copyright for the Performing Arts, Copyright for Musicians and Composers, A writer's Guide to Copyright, The Rights of Authors, Artists, and Other Creative People, Copyright for Visual Artists, Trademark: How to Name a Business or Product, and Licensing Art and Design.
Numerous other organizations and resources exist for artists, entertainers and athletes, including:
- Lawyers for the Creative Arts, 213 Institute Place West #411, Chicago, IL 60610- 3125, (312) 944-ARTS or (800) 525-ARTS.
- Song Writers' Guild of America, 1500 Harvard Boulevard, Weehawken, NJ 07087, (201) 867-7603.
- Films Inc., PMI, 547 North Ravenswood Avenue, Chicago, IL 60640, (800) 878- 4222, (312) 878-2600.
- Visual Artists and Galleries Association, 521 Fifth Avenue #800, New York, NY 10175, (212) 808-0616.
- Arts Council, 1300 I Street #930, Sacramento, CA 95814, (916) 322-6555.
- John M. Fotiades, You're the Judge!: How to Understand Sports, Torts and Courts (Edgeworth & North Books 1989).
- Gary A Uberstine, Law of Professional and Amateur Sports (Clark Boardman Co. 1988).