The Arts, Communications, Entertainment, & Sports Law Section of the State Bar of Michigan (ACES) is hosting a roundtable discussion on documentary filmmaking on Thursday, March 5th, 5:30 p.m., at Ringside Creative in Oak Park, MI.  The discussion will focus on legal issues relevant to documentary filmmakers, most notably copyright law’s “fair use” doctrine and its application to documentary art.  We’ll review an extended trailer for the soon-to-be-released documentary film “It Came From Detroit” (see below), and discuss with the filmmakers their attempt, and struggle, to stay within fair use guidelines.

About the film and the filmmakers:

James R. Petix: Director/Camera/Editor.  After graduating from the Savannah College of Art and Design in 2001, Director James R. Petix was inspired to move back home to the Detroit area for the sole purpose of documenting the city’s exploding “Garage Rock” scene. Shot over nights and weekends for over five years, “It Came From Detroit” is his first feature length film.   James is also a Creative Editor at RingSide Creative in Oak Park where he has worked on television commercials for clients such as GM, Chrysler, Ford, USPS, Navy, Big Boy, and the Detroit Tigers and Red Wings.

Sarah Babila: Producer.  Creative, organized, and always motivated, producer Sarah Babila is a Dearborn native and honor graduate from Henry Ford Community College.  Having no formal film training other than an extensive knowledge of horror movies, she jumped in head first to assist James with all forms of production, business matters, and scheduling.

It Came From Detroit is the ultimate fan’s look at the city’s internationally renowned “garage rock” scene. Produced over five years, the documentary chronicles the scene before and after the spotlight that came to town as the White Stripes rose to fame.

Starting with the hugely influential band The Gories in the 1980s, the bands of the garage scene are known for two things: an impeccable knowledge of the history of rock and roll and a raucous live show. It Came From Detroit documents the evolution of the scene from underground obscurity to an international trend. As bands such as the White Stripes, The Von Bondies, and the Electric Six started to develop a following overseas, journalists around the world started to hype Detroit as “The Next Seattle”.

We discover how unexpected popularity impacts the musician’s lives as more and more bands sign to major labels and tour the world and find out what happens to the small group of friends when not everyone has the same opportunities.

Underneath the shell of Detroit there is a pulse, and a community of passionate musicians that dug back into the roots of rock and roll and made it relevant again.

More on the film can be found here.

Building on the success of ACES’ last roundtable discussion at the Hilberry Theatre on the copyrightability of stage directions, ACES is proud to present yet another discussion involving the arts and copyright issues.  If you are interested in attending, please contact me at mbower@saffordbaker.com.

-Matt

PS- Special thanks (once again) to ACES member Rick Herman for organizing this event, and also to ACES member Les Schefman for providing the location.

Businesses’ have a multitude of financing options available to them, from commercial bank loans to venture capital to asset-based financing.  However, few options provide high-growth companies the flexibility and control that private placements, otherwise known as private investment capital, can offer.

What is “private placement”?

Private placement is the investment of capital – usually in the form of stock but can involve other types of securities – by private investors, sometimes referred to as “angel” investors or accredited investors.  Unlike public stock offerings, private placements are exempt from the rigorous, and costly, registration requirements imposed by the Securities and Exchange Commission for securities offerings.

Nevertheless, private placements are not totally free from legal obstacles.  And securities offered or sold improperly, or with incorrect documentation, can incur serious consequences for the issuer and other involved parties.  To issue private placements, most companies rely on the exemptions provided in Regulation D promulgated under the federal Securities Act, and the limited offering exemptions provided under state law.

Why private placement?

First, private placement investors tend to be more patient and less demanding than venture capitalists, who often demand terms and control that can be burdensome to a new business venture.  Secondly, private placements are relatively easy, less costly, and less time-consuming than approaching venture capitalists or undertaking an initial public offering (IPO).

Finally, Regulation D allows for an unlimited amount of fundraising, depending on the specific exemption relied on, without the need for registration.  Although the legal requirements become more complex under Regulation D as the amount of money raised increases, these requirements are nevertheless often less burdensome than the alternatives.

When should a company consider private placement?

Almost any company is a candidate for private placement, whether a start-up or a mid-level company looking to take the leap to the next level. Ideal candidates for private placement should have a solid business plan, and enough product development and market analysis to offer an attractive investment.

However, the exemptions available under Regulation D are not available if any interested party has been subject to certain state administrative actions, court orders, judgments, decrees, or convictions principally concerning wrongful acts involving the sale of securities, such as fraud.

What is required for private placement?

Although Regulation D exempts an issuer from registration, it does not exempt it from the anti-fraud or civil liability provisions of federal securities laws.  It also does not exempt an issuer from complying with state laws, which might, depending on the jurisdiction, require the issuer to file a notice of sale with the state or even apply for a state exemption prior to the sale.  So, to undertake a private placement offering, the issuer is required to comply with both federal and state requirements. The contemplated sale, therefore, can become more complicated if multiple investors hail from multiple jurisdictions.

To meet the requirement of Regulation D, and other federal and state law, the issuer is almost always required to make extensive disclosures regarding the nature, character and risk factors relating to the offering.  The disclosure document is often referred to as an “Offering Memorandum” or “Private Placement Memorandum” and in the normal course is drafted by the issuer’s counsel.  Because the offering is not exempt, as mentioned above, from anti-fraud provisions of federal securities law, the completeness and accuracy of this Memorandum is crucial, and one of the most important documents provided in the offering.

Other documents common to a private placement offering include a stock or membership interest purchase agreement, investor rights agreement, right of first refusal and co-sale agreement, and restated articles of the issuing entity.  Whether any of these documents might be employed, and the sophistication of each, is dependent on the terms of the offering.

No matter the sophistication of the offering, however, a private placement should never be undertaken before consulting with an attorney who can provide the advice and documentation the specific circumstances demand.  If your company is considering a private placement or a public offering, the attorneys of Safford & Baker can provide you with the documentation you will need for your fundraising program.

–Matt

A tech startup lawyer provides legal counsel to entrepreneurs in the technology, software, and Internet industries.  Emerging companies in these fields face unique and challenging legal and business issues.  Some of these issues may include entity choice and formation, intellectual property protection and exploitation, capital structure, and operating or shareholder agreements, to name a few.  If not properly addressed at the outset, neglected legal needs can come back to haunt a new enterprise.  The entrepreneur turns to the startup lawyer for more than mere legal documents, however, as good counsel will educate his clients on the multitude of legal and business issues that inevitably arise for early-stage companies.

At Safford & Baker PLLC we specialize in representing early-stage companies in the tech industry.  If you are an entrepreneur with a business idea, a piece of technology or software, and are ready to launch your new enterprise, you need the right legal counsel for your new business.  Please contact us for a free consultation.

–Matt

The mission of a2geeks “is to make Ann Arbor a better place for geeks to live and work through tech culture and community.”  The group organized its first “New Tech Meetup” at the Google-plex in Ann Arbor.  The Meetup featured presentations by five companies in the Healthcare 2.0, Sales 2.0, Non-Profit 2.0, Medicine 2.0, and Web 2.0 industries.  Networking at Bar Louis downstairs followed.  Over 120 people attended.  Safford & Baker, along with Google and the Center for Entrepreneurship, was a proud sponsor of the event.

Learn more about a2geeks here.

Their next event with TechCocktail in March promises to be even better.  Details to follow.  You’ll find more information about TechCocktail here.

–Matt

I’ve previously written about the fine line between copyright infringement and First Amendment protection here.  A recent case illustrates the quandary even further.

Shepard Fairey, commonly referred to as a street artist, is the creator of a famous campaign poster featuring President Obama.  The basis for the poster was a news photo taken by an Associated Press photographer.  After several weeks of public claims of copyright infringement by the AP, Mr. Fairey, with the help of lawyers from the Stanford Fair Use Project, filed a lawsuit seeking a declaration that Mr. Fairey ’s use of the AP image is a fair use; and, therefore, not an infringement of the AP photo.

To complicate matters, the original photographer claims that he owns the copyright, and not the AP, based on his contract at the time.

More on the case can be found in this New York Times article.

–Matt