For 11 days in January-February 2021 a group of college friends from the class of 2020 each purchased a $350 all access pass to the virtual Sundance Festival so they might text and share video chats around their passion for theater. Since graduation, they were now scattered across the country, one in a new job with few accrued vacation days, one still seeking his first post-college job and another beginning his second semester in graduate school. Only one had the extra cash or the foresight and connections to have traveled to Utah for the Sundance Festival had it been held there this year. But the silver lining of the pandemic was they could all share the experience virtually. Each watched as many as 30 films, after work and school into the wee hours of the morning and all weekend long. No travel expenses required. According to the Sundance website these first-time participants were not alone. The 2021 Festival reached a total audience 2.7 times larger than at the typical 11-day Utah edition, despite the shorter duration and with fewer features. Audiences participated from all 50 states and 120 countries. Industry and press participation also increased 5%. Now that we are hopefully emerging from the worst of the pandemic, will the experience of these young men be just a story they share about a once-in-a-lifetime opportunity? Or will this remain an option for others to enjoy in the years ahead?

Here we look at the adaptations by the creative, technical and business minds behind theater and film that should be worth preserving and the ongoing intellectual property concerns that were successfully addressed in pivoting to new distribution channels.

Copyright Basics for Theatrical Releases

We start from the basics that films are protected by copyright. Under Title 17 of the United States Code, only copyright holders have the exclusive right to perform the copyrighted work publicly. According to the legislative history of Title 17, even performances in “semipublic” places such as clubs, lodges, factories, summer camps and schools are “public performances” subject to copyright control. Moreover, both for-profit organizations and nonprofit institutions must secure a license to show copyrighted works, even in cases where no admission fee is charged. Unlicensed public performances are subject to a damage award of $750 to $30,000 (and in willful cases up to $150,000) per exhibition and other penalties. It is also worth noting that, while the technology has evolved dramatically since the Copyright Act was first passed in 1976, and even since the most recent updates in 2016, these rules still apply to downloaded or streamed content through an online streaming service subscription, or via broadcast, cable or satellite TV.

Additionally, if you promote theatrical exhibitions on a website, on a social media account or via any publicly accessible means without a license, you cannot use the title, character names or rights holder name. You can however provide this information in response to a call, text or email.

A public performance license for a film has historically been a relatively straightforward process, typically obtained from a movie distributor, but sometimes directly from the copyright holder. While the licenses are typically granted, the issue becomes what fee will be charged for the use. This is dependent on a number of factors, such as how recently the film was released, how many times it is going to be shown and how large the audience will be. Non-theatrical markets, such as college campuses are also given special licenses. Some of the larger agents for public performance licenses include Swank Motion Pictures, Inc. or Movie Licensing USA (a division of Swank) and Criterion Pictures USA, Inc.

Digital Rights Management (“DRM”)

Digital rights management (“DRM”) is not new, but the transition to widespread use of the technology for limited release film distribution has been slow to develop. During the pandemic performing arts venues have been forced to accelerate their efforts to reach new and existing audiences virtually while complying with existing licensing agreements and protecting the intellectual property rights of the content creators. Film distributors, including in-person theaters and virtual film festivals are contractually liable for film piracy, so they are incentivized to employ strict methods of protecting the distribution rights in a film. Technology has provided several mechanisms that can be employed to meet the challenges of these new distribution methods.

Watermarking

Watermarking, for example, has continued to evolve to meet new challenges. A watermark is a DRM system which appears in the video images or in the movie soundtrack or both. The embedded information is normally not perceptible, but copyright holders may choose to make users aware of the watermarking as a deterrent. Film owners have been using various watermark techniques on their films to protect piracy pre-release and in theatrical release for decades. A watermark can identify the theater where an unauthorized copy was made and, combined with other information, such as the ticket number and credit card information, can help identify the actual infringer. For virtual screenings of films, watermarking provides a reliable way to identify infringers, whether capturing the content for personal viewing at a later time or for wider distribution.

Anti-Capture Software

Piracy by screen recording can be accomplished either by a screen recording application which saves the content to a video file or a camera to capture the recording. While it is not illegal to use a screen recording application, using the recording function to capture protected content is illegal. Encrypted content with multi-DRM (digital rights management) plus other anti-capture software solutions can together block screen recording on most platforms.

Limited Screening Windows

Another method used across many industries, but particularly for virtual theatrical screening, is limited screening windows. This means that a film is only accessible during a limited time period set by the distributor. Subscribers to the screening cannot record the performance or otherwise time shift their viewing. Even in the event a viewer begins to doze off or is temporarily distracted, there is no ability to “rewind” the performance to catch the minutes that were missed. For audiences accustomed to watching their favorite movie or television show on demand, this may take some getting used to, but on balance the access to limited releases via appointment viewing is worth it.

Limited Geographic Access

In addition to limited screening windows, some film festivals are contractually limited in other ways. For example, only a limited number of tickets may be available for each film, much as there would be for live venues. Another contractual restriction for regional film festivals may mean that films are only available to viewers in the geographic area where the attendees to the physical festival are likely to be located. Other films are only available for viewing in certain countries.

Criminal Liability Warnings

In addition to the civil liability for copyright infringement, there are also criminal consequences. The following warning can be attached to any movie or television screening:

Warning: The unauthorized reproduction or distribution of this copyrighted work is illegal. Criminal copyright infringement, including infringement without monetary gain, is investigated by the FBI and is punishable by up to five years in federal prison and a fine of $250,000.

Another deterrent is the Federal Bureau of Investigations (FBI) Anti-Piracy Warning Seal (“APW Seal”). The APW seal has been in use since December 2003, when the FBI authorized its use through a Memorandum of Understanding with entertainment and software industry associations such as the Recording Industry Association of America (RIAA), the Motion Picture Association of America (MPAA) and others. The purpose of the APW Seal is to remind media users of the serious consequences of pirating copyrighted works. Use of this seal does not indicate that the FBI has reviewed or validated the copyright interests in the particular work and does not provide greater legal protection to the work. It simply serves as a widely recognizable reminder of the FBI’s authority and mission with respect to the protection of intellectual property rights.

Conclusion

In Anne Washburn’s 2012 play Mr. Burns, A Post-Electric Play, she tells the story of a group of survivors remembering and telling an episode of “The Simpsons” shortly after the apocalypse, and how the same story evolves seven and then 75 years later. In the months and years to come, live theater and film viewing in traditional non-socially distanced venues will return, hopefully stronger than ever. With the right DRM and the virtual platforms that have been developed internally and by third parties, there is an opportunity for digital viewing to remain part of a hybrid model that will result in lower distribution costs and broader access. After a yearlong plus experiment and continued refinement of DRM to protect valuable copyright interests, let’s hope that an engaging creative, accessible hybrid story emerges.

Lutzker & Lutzker is ready to apply its decades-long experience in film, copyright and nonprofit advising to assist content creators and for-profit and nonprofit content distributors in navigating the challenges and opportunities ahead.