On Monday, May 11, 55-year-old Craig Stevens of Newport Beach pleaded not guilty in a scheme allegedly designed to bilk investors out of more than $4 million by selling ‘bogus’ In-N-Out Burger franchises in the Middle East, according to an LA Times article.

Stevens, who was in federal court in Santa Ana, pleaded not guilty to wire fraud. Prosecutors allege that in January of 2014, Stevens contacted potential investors via email, peddling the franchises for approximately $150,000 per location. Royalties would cost an added $250,000 annually, according to the article.

Charge documents filed by the U.S. attorney’s office claim that through his email scheme, Stevens solicited about $4.27 million. Court documents also allege that in June of last year, Stevens passed off a fake licensing agreement for an In-N-Out franchise via email to a Lebanese investor, who was not identified.

While Stevens made claims to investors of partnerships and franchise agreements, In-N-Out Burger Inc., based in Irvine, has been in business since 1948 and is privately owned. The company says it has no such agreements with third parties. Stevens is scheduled to go on trial on the wire fraud charge in July.

As seasoned Los Angeles business attorneys, it is sometimes difficult to believe how gullible some individuals are, particularly when it comes to email or other schemes on the Internet – but it happens every day.

Before you invest in any franchise, it is vital to have a skilled attorney review all agreements, restrictions, rights, purchase or sales agreements, and other relevant documentation regarding the purchase of a franchise. Franchise law is complex, particularly given the fact that so many businesses are crossing into countries outside of the U.S. today.   Franchises are also subject to numerous regulations, so it is essential to have every detail analyzed with a fine-tooth comb.

If you’re considering investing in a franchise opportunity, speak with the professionals at Spotora & Associates first.

Recently, it was announced that Twenty-First Century Fox and Walt Disney Co. would no longer run Verizon FiOS commercials in certain markets that advertise Verizon’s cable package, arguing that the company’s FiOS TV, a cable program that is said to be cheaper and slimmer than basic cable, violated existing agreements.

According to a news article at L.A. Biz, Verizon called the move made by the two companies, along with Comcast Corporation, an “anticompetitive tactic.” A spokeswoman for Verizon revealed to the New York Times that Disney would pull ads run for the cable program at television stations in New York including A & E and WABC, in addition to ESPN radio. In Philadelphia, the ABC affiliate pulled advertising for the FiOS custom TV stations. Fox has decided to pull the Verizon ads from WNYW, its New York affiliate, and YES, a sports cable channel.

According to another article at Reuters, Walt Disney Co. did run the Verizon ads in Pittsburgh, Boston, and Washington, D.C. last week. Disney declined to comment on the commercials, while a spokesperson for Fox told the Times that the company desired to keep the company’s discussions regarding commercials confidential.

Verizon’s FiOS Custom TV package makes it possible for customers to sign up for a basic package consisting of 36 channels; customers are also able to add on two news, sports, children’s program, or other genre-specific packages. With a cost of $55 per month, the package targets those who have chosen streaming services over cable due to cost.

On Wednesday, April 22, Disney notified Verizon via e-mail that the company would not run FiOS Custom TV ads on their channels, claiming that the ad violates contract agreements. Verizon maintains that the company, under current agreements with media companies to offer the slimmed-down service, is within its rights by giving subscribers their basic package of 36 fixed channels for the monthly charge.

Ultimately, at the bottom of the dispute is that while pay-TV providers desire to break up the large bundles of channels being offered by online companies and cable rivals at the current time, media companies are attempting to keep specific channels that are popular in the larger packages they offer in an effort to protect business.

At the time of news reports, Verizon and Disney had no comments on the pulled television ads.

The Los Angeles business attorneys at Spotora & Associates realize that the business and entertainment worlds are highly competitive, and the claims arising from television programming package agreements can be particularly complex. Whether your company is being accused of violating a contract or another entity is in breach of your agreement, contact us right away and our senior associates will identify and enforce your contractual rights to resolve the issue as efficiently as possible.

If you are serious about the music you create as a composer, you should be serious about music licensing.

Music is everywhere in the world of entertainment: Movies, television, radio advertisements and commercials. There is always a need for top-notch songs and artists.

“For an upcoming composer, licensing music is a vital step in growing a career,” said Anthony Spotora, a Los Angeles-based entertainment and business lawyer. “Licensing music means that your creation is not only protected from illegal use but can also bring a source of income and bigger name recognition. If the people behind a commercial or feature film like your composition, for instance, they will request a music license for the piece.”

While music licensing can be lucrative, it is important to become educated about the process and to receive adequate representation to secure the best deals for oneself.

There are several options for music licensing. One of the best-known options is to register and become a member of ASCAP, BMI or SESAC, which are also known as performing rights organizations (“PRO”).

Such companies collect millions of dollars annually for composers and publishers for so-called performance royalties, but you must be registered as a member to see this income.

“Performing rights organizations act as middlemen, essentially,” Spotora said. “When a song is  ‘performed’ – this includes usage in commercials, airplay, etc. – the user pays the PRO rather than the copyright holder directly. The copyright holder is then paid a royalty by the PRO.”

A separate option is to connect with a publishing company. The publisher will handle issues such as music licensing, collecting royalties and negotiating licensing figures. If your publisher works hard and is well-connected, it can generate serious income for you as a composer and catapult your career to new heights.

If you are a composer, it is important you understand how to properly protect your music as well as secure the most desirable music licensing deals. For questions about legal matters pertaining to music licensing, contact an experienced entertainment attorney.

Anthony Spotora is a Los Angeles entertainment lawyer and Los Angeles business attorney. To learn more, visit Spotoralaw.com.

This past spring, one of the Department heads we work with at FremantleMedia invited us to attend the live performance of an “American Idol” taping. This taping, or rather, pop-hysteria, led to conversations relating to the management of those that do not win the title of the next “American Idol”.

Now we all know that the winner is locked into a contract with Music Label/Management Company, “19”, but what of the other near-Idols? Who gets to run their proverbial show? This question, in accompaniment to some of the surrounding conversations and eager talent managers, reminded us of a piece of legalese that has come up time and time again in our practice. The issue: Managers vs. Agents.

Whether you are a bona fide Talent Manager, a Stage Mom, or the girlfriend who listened to her boyfriend’s band play one night at the local pub and decided to serve as its manager, you should understand the differences between the roles that managers and agents are legally entitled to play. . . for your own good!

For starters, agents are licensed by the state they work in and most commonly earn their money by negotiating deals for their clients. Typically, they also enter into a client agreement which is, in pertinent part, regulated by industry labor unions such as, the Screen Actors Guild (SAG), the Writers Guild of America (WGA) and, the Directors Guild of America (DGA). Through these regulated agreements, the commissions that agents charge their clients are legally bound to a prescribed percentage. Furthermore, it should be noted that agents may not serve as a producer on their clients’ projects.

On the other hand, managers are not commission-regulated, do not need a license to ‘manage’ and, can charge their clients 15% or more. . . and often do. Moreover, managers may produce film or television if they wish to and so of course, they are also afforded the ‘glamour’ element in that they might find themselves in the spotlight one Award evening with an Emmy or an Oscar in tow.

In light of these representative differences, and as you might imagine, the ever-evolving entertainment industry has shifted gears over the years to accommodate and benefit from both of these roles. Without surprise to anyone, these specialty services have impacted not only the way talent pursues work, but the manner in which movies and television are actually made.

So what’s the big deal!? We all have a job to do, right!?

Well, one common issue arises from infuriated agents who argue that managers who attach themselves to their clients’ projects as producers are not legitimate producers and are consequently driving up production costs. Subsequent to such a contention, agents have put pressure on industry guilds by lobbying to either deregulate agents, or regulate managers. And, while no exact resolution has been reached to date, SAG has begun to pay closer attention to the black letter law and has consequently cracked down on the procurement of employment by managers for their clients. On the what you ask? On getting the talent a gig!

In California, Labor Code Sec. 1700.4(a) defines “talent agency” as “a person or corporation who engages in the occupation of procuring, offering, promising, or attempting to procure employment of engagements for an artist.” Moreover, Sec. 1700.5 provides that “[n]o person shall engage in or carry on the occupation of a talent agency without first procuring a license…from the Labor Commissioner.”

Therefore, ATTENTION ALL MANAGERS: Be Weary of The Services You Provide!

Procuring employment for your artist-client is not only illegal without proper licensing but, should you attempt to collect any unpaid fees, you can rightfully not only be denied those monies for having performed a service you were not licensed to perform but, you can also be ordered to return any fees already received!

So what’s the bottom-line? Both forms of talent reps are still widely used and widely needed in the ‘industry’. However, it is important that Managers know their role in their clients’ professional lives and also know the potential consequences they may face if they knowingly (or even unknowingly) provide services reserved for licensed Agents.

Music publishing is a complex process that requires extensive knowledge of proper business practices and copyright law. A music publisher can help songwriters reap the benefits of their creativity.

While publishing their own music is a viable option for artists, the legal issues involved can be messy and complex. In order to avoid dealing with these issues, many artists turn to music publishers for help. Music publishers perform a variety of different functions for songwriters, as they have the expertise required to manage licenses and collect royalties.

One of the most important functions of a music publisher is to help an artist collect royalties. Royalties fall into two main categories: mechanical royalties and public performance royalties. Mechanical royalties are those fees paid to the copyright owner, usually the songwriter and the publisher, for the right to reproduce the song on some type of recording. Under the U.S. Copyright Act, once a song has been commercially released, any other artist can record and release their own version of the song, provided that they pay the copyright owner the minimum statutory royalty rate for every single copy of their version that is pressed or distributed.  This rate increases periodically and is calculated differently for songs that are over five minutes in length.

Public performance royalties are collected when a song gets played in public at a concert, in a nightclub, on television or the radio, etc. The copyright owner of the work is entitled to payment for each performance of the song. However, in order to collect this money, the songwriter will need to register as a member of a performance rights society which will collect royalties from those playing the songwriter’s music.

Not only do music publishers handle the collection of royalties, they also help songwriters manage the licensing of their songs to record companies and other interested parties. There are two main types of licenses that generate income for songwriters: synchronization licenses and print licenses. Any time the performance of a song is accompanied by a visual, a synchronization license is required. These licenses are issued when a song is used in a movie, television show, video game, or other type of visual medium, and the fee varies based on the usage and importance of the song.

A final way of earning income is through print licenses. While sheet music is not as popular as it once was, many songs are still available in print form. A music publisher will issue print licenses and collect income from the sheet music company, and the songwriter will receive a small royalty derived from the sale of his or her song.

Navigating these four possible sources of income can be difficult for an artist to do alone, and the knowledge a music publisher possesses in these areas can be a great benefit to artists. Entertainment and intellectual property lawyer Anthony Spotora commented, “Whereas music publishing seems to exist somewhere in the shadows of the music industry, good music publishers can be worth their weight in gold to songwriters.  In fact, hidden behind many of the ‘majors’ commonly lies a publishing division which often generates more annual revenue than does its label cohort.  And yet, even those who have been cast deep into the music industry itself often do not fully realize the role that a music publisher can play in the life of a songwriter and, more importantly, in the life of his or her music.  A good music publisher satisfies 5 primary duties: exploitation, administration, collection, protection and acquisition.  When they do their job well, many songwriters can finally begin to appreciate what it means to receive ‘pennies from heaven.’ ”

Music publishers can be a great asset to artists, but it is important that songwriters know their rights before entering into an agreement.  As a full-services business law firm Spotora and Associates provides exceptional guidance to songwriters considering entering into a publishing agreement, and has specialized in advising entertainment artists of their legal rights in the areas of intellectual property and entertainment law for over 15 years.

For more information, contact us.