Content Clashes and the Netflix Effect: Hollywood Lawyers Discuss the Decade Ahead

8:38 AM 1/2/2020

by Ashley Cullins

Illustration by: Julia Yellow

Several iPhone models ago, video industry giant Blockbuster refused to buy a fledgling DVD-rental-by-mail company for $50 million. A decade later, there's one Blockbuster store left in existence, while that startup is worth about $142 billion. Netflix has rocked Hollywood in ways most insiders couldn't have imagined at the start of the decade, but its meteoric rise is certainly not the only thing to significantly impact the industry in the 2010s.

As the year and decade come to an end, The Hollywood Reporter asked attorneys across various sectors of entertainment to weigh in on the most impactful events of the past decade and make predictions for the industry's next 10 years. 

  • The Most Significant Entertainment Industry Event of the 2010s Was...

    LISA ALTER
    Alter Kendrick & Baron

    The single most important legal development of the past decade has been the response of the creative community to the changing digital landscape. The passage of the Music Modernization Act was hands down the most significant legislative development for our industry of the past 10 years. While elements of the MMA arguably did not go far enough in protecting creative interests, the implementation of the act will hopefully pave the way for broader protection for the rights of songwriters and music publishers — the authors and gatekeepers of perhaps our greatest national treasure, our songs.

    ANDREW BRETTLER
    Lavely & Singer

    I don’t know if all entertainment lawyers would agree, but I can tell you one change in the state law that has a substantial impact on my business is the California legislature’s recent prohibition of confidential settlements in certain matters involving sexual harassment and sexual assault. Preventing parties from entering into confidential settlements hurts both sides in a dispute and discourages prompt and fair resolution of legal claims. Not only does it make it less likely that defendants will agree to settle such cases, but also it discourages plaintiffs from seeking redress in the first place because they may not want their personal grievances aired publicly. I think it’s one issue that both the defense bar and the plaintiff’s bar can (or should) agree on. Unfortunately, as of January 2018, the rules changed. I believe the California statute is unconstitutional, as it prohibits parties from entering into arms’-length agreements with one another.

    ILENE FARKAS
    Pryor Cashman

    One of the biggest legal developments of the past decade may be the inevitable and necessary recognition of streaming as the main way people enjoy music, and the need for an improved, more transparent way to compensate songwriters and their publishers for digital streaming and downloads. The Music Modernization Act, which was signed into law in October 2018, is intended to modernize copyright issues related to the digital distribution of music and more fairly compensate songwriters, while also creating a federal public performance right (and related compensation) for pre-1972 recordings. This is a significant change for songwriters, users of music and for record labels and recording artists.

    JAMIE FELDMAN
    Lichter Grossman Nichols Adler Feldman & Clark

    I would say the story of the decade is in many ways a return to a much older model — a handful of giant, powerful companies seeking to lock up talent in long-term contracts with total buyouts, as opposed to treating talent as true partners. The numbers are bigger, but the concept is paying a salary rather than going into business together.

    BERT FIELDS
    Greenberg Glusker

    The rise and evolution of new and different ways of watching dramas, e.g., streaming and serialized mini-watching. I ask my Stanford Law School class each year how they primarily view films. This year, no one in the class said “in theaters.”

    PATRICIA GLASER
    Glaser Weil

    The #MeToo movement including innocent as well as guilty people. That needs to be examined and each case needs to rise or fall on its merits. Also, we're in a new age in terms of the volume of resources for the creation of product. There are a tremendous number of distribution outlets and a tremendous number of people who are able to get paid for producing meaningful product.

    SHAWN HOLLEY
    Kinsella Weitzman Iser Kump & Aldisert

    The plethora of #MeToo cases — civil and criminal, filed and unfiled — which arose out of the Harvey Weinstein allegations are at the top of my list of noteworthy legal developments. As far as the criminal law is concerned, the Los Angeles County District Attorney’s Office established a Hollywood Task Force, made up of seasoned DAs and police detectives who thoroughly investigated, seriously reviewed and carefully considered each and every allegation of sexual impropriety against a celebrity — no matter how long ago the conduct allegedly occurred or how implausible the allegation. As far as the civil law is concerned, plaintiffs' lawyers representing those making such allegations relied upon a climate which favored their clients — even when they didn’t have the facts or the statute of limitations on their side. Also, amendments in the statutory law — arising out of the Weinstein scandal — made it much more difficult to resolve these cases, notwithstanding the desire of both parties to do so. 

    ELEANOR LACKMAN
    Mitchell Silberberg & Knupp

    In my view, the most important litigation of the past decade has involved the application of the Copyright Act at the critical intersection of entertainment and technology. The long-running Viacom v. YouTube case, for example, helped shape the law around user-posted content, while the landmark Aereo and ReDigi cases grappled with how the law applied to new means of consuming content, revisiting decades-old provisions related to public performance, the first-sale doctrine and statutory licenses. These rulings show that, as content delivery continues to expand and technology rapidly evolves, providers must maintain a deep understanding of copyright law and policy.

    JEREMIAH REYNOLDS
    Eisner

    I think the most important case is Petrella v. Metro-Goldwyn-Mayer, Inc., where the Supreme Court ruled that the doctrine of laches cannot bar a plaintiff alleging copyright infringement from seeking damages for infringements falling within the three-year limitations period of the Copyright Act. This ruling has allowed copyright plaintiffs who have sat on claims for many, many years to nonetheless bring claims, like the claim for infringement based on “Stairway to Heaven.” You’re going to see many similarly old claims be brought in the next decade, particularly claims based on older musical recordings and compositions.

    ROMAN SILBERFELD
    Robins Kaplan

    The most important entertainment decision or case of the last decade is, unquestionably, the Celador v. Disney case. [Editor's note: Silberfeld represented Celador.] Tried in 2010 and affirmed on appeal in 2013, Celador remains today the largest profit participation verdict in Hollywood history. The damages paid were $319 million. The issues tried were essentially whether, given the tremendous success of the television show Who Wants to be a Millionaire?, the studio’s accounting practices had unfairly cheated the creators of the show. The jury found that this did in fact occur, that the accounting practices were suspect, that the interpretation of contract terms offered by the studio were unreasonable and not consistent with industry norms. Celador has spawned a number of later-filed cases which have used the ‘playbook’ first developed in Celador, and these other cases have done so successfully. Today, profit participation disputes continue and studios are well aware of what a jury is likely to find if reasonable settlement offers and negotiations are not pursued to resolve these disputes.

    BRYAN SULLIVAN
    Early Sullivan Wright Gizer & McRae

    The “Blurred Lines” case opened the door for plaintiffs’ attorneys, sometimes representing completely unknown artists, to take on cases against music behemoths for common chord progressions. All of the #MeToo cases have been pretty important, as well.

  • What to Expect in the 2020s...

    ALTER

    We will witness an escalation of the struggle between the creative community seeking to secure its constitutionally mandated protection for intellectual property and the digital service providers and other businesses seeking to grow their bottom line at the expense of the creators. I am hopeful that the passage of the MMA is reflective of an increased awareness of the importance of ensuring that creators are afforded fair market value for their works, but that will remain to be seen.

    On the transactional front, the Golden Age of Music Publishing will continue well into the next decade, as music catalogs — both legacy and recent — trade at increasingly high multiples and new players continue to enter the music market.

    BRETTLER

    I can foresee a big change in defamation jurisprudence, in particular the overreach of the libel laws. Under the current law, libel cases on behalf of public figures are very hard to win because of the malice standard. I think there’s a good chance that the U.S. Supreme Court will revisit New York Times v. Sullivan at some point over the next decade. A change would make it tougher on the press, but it would provide so-called public figures with tools to protect their reputations.

    GLASER

    The world is changing in Hollywood in terms of the Netflix deals: paid upfront, no backend. Those horrible royalty lawsuits we’ve seen will diminish if the business changes in that regard, and I think it will.

    FARKAS

    I expect to see the music industry continue to expand, attracting new investors as the immediate accessibility of music and its utilization in social media continue to expand. There will continue to be disputes as to how the revenue pie is shared between content creators and owners and those whose business includes distributing the music. There will also be disputes as to how to value music when it is provided as part of a collection of services and benefits provided to the consumer, something that has already been foreshadowed by such services as Amazon Prime.

    As far as the courts, the tension between inspiration and copying seems likely to continue as the courts grapple with the boundaries of what is protectable expression and what is unlawful appropriation, particularly given that, under the Constitution, copyright protection is intended to protect creative expression in order to promote the progress of science and useful arts. This same tension exists, for much the same reason, in fair use cases. I expect to see courts to continue to be asked to decide what expression is protectable and what is not, what is fair use and what is infringing, and we expect to be in the forefront of those battles protecting creators, both whose works are alleged to have infringed prior works and creators whose works have been used by others under claims of fair use.

    FELDMAN

    The big question heading into the next decade will be whether talent will ally themselves with smaller independent companies that still offer true partnership.

    LACKMAN

    For the next decade, as new ways of consuming entertainment emerge, not only will we see more litigation and licensing challenges, but those challenges will be more international in scope as the cost of creation and barriers for entry into distribution drop. In other words, there are going to be more players in the game and more markets for consumption of content across numerous platforms. As branded content and other brand collaborations increase (particularly via the use of influencers) and the race to get content in front of new eyeballs intensifies, we may see a proliferation of licensing, trademark and advertising litigation.

    SILBERFELD

    The decade ahead will likely be dominated by the clash between traditional exploitation methodologies and the newer streaming services, and their consequent effects on talent and creative personnel who wish to share in the fruits of their creativity. Both the development of content, the sharing of profits and the exhibition avenues are in flux and the new rules are yet to be fully written. Another area of interest will be the evolution of the new rules of engagement prompted by the Writers Guild suit against talent agencies over package commissions.

    SULLIVAN

    Streaming will continue to usurp traditional media for the way consumers consume content. The companies with the most money will swallow up smaller content creators and leverage content to boost their brands — and there will be tons of IP, patent and other litigation resulting from the content and the companies that create it.

    KEN ZIFFREN
    Ziffren Brittenham

    We’re just in the third inning of transformation of linear TV to digital media. The next decade should take us to the seventh inning stretch!