Intellectual Property is arguably the most important bedrock in the media and entertainment ecosystem. In success, an IP has the ability to grow and expand across media, into film and television, merchandising, videogames, live and experiential, and other avenues. However, in order for an entertainment property to be able to capitalize on new commercial opportunities, the rightsholder must be able to demonstrate a clean chain-of-title to the IP – in layman’s terms, that the rightsholder owns and controls the necessary rights in order to enter into contracts and permit investment in the growth of the IP without the significant risk of a dispute over ownership.
 

Accordingly, any existing property that is soliciting offers or contemplating expansion may want to consider engaging experienced counsel to review and audit chain-of-title – while rightsholders developing new IPs should consider chain-of-title and demonstrating clean ownership from inception.

Here are a few of the points to consider:

1. Corporate Structure. It is important that there is clarity with respect to the entity that owns and controls the rights, and consistency with respect to the party(ies) that contract on behalf of the rights. Individual creators such as authors and solo developers must determine whether they will retain rights as an individual, or consolidate them in a separate company such as an LLC or corporation (a determination that should be made with regard to cost and tax implications). If an individual creator determines that an entity is necessary or preferable, then there must be consistency in contracting – the IP must be exclusively assigned to the company, and the company must enter into all agreements with third parties. Note that if rights are merely licensed from the individual to the company (as opposed to assigned), many counterparties will still want the individual (as copyright owner) to sign any applicable rights agreement to confirm the validity of the grant.
   
   Large companies with multiple subsidiaries may have a different issue – it is imperative that the corporate structure is clear and that the company can clearly demonstrate which entity owns the rights. Accordingly, it may be prudent to establish a separate holding company to own and administer IP rights. In all circumstances, rightsholders must be able to demonstrate that the company is validly formed and in good standing in the jurisdiction of its formation.
2. Work-For-Hire. Rightsholders need to be able to demonstrate exclusive and unambiguous ownership of all rights. That means that in the United States, all agreements with third party contractors must be on a “work made for hire” basis, which means that the party engaging the contractor owns the work of the contractor from inception as the copyright owner. For foreign jurisdictions, contracts should be under the local equivalent – noting that there may be moral rights and “fair pay” considerations that you should consult local counsel about.
   
   For collaborative projects, it is beneficial to have a conversation early about ownership and control so there is no confusion. Many independent projects have hit roadblocks due to poorly drafted paperwork (or lack entirely of paperwork), when it became clear that the contributing parties were not aligned as to who actually owns and controls the project.
3. Copyright Registration and Recordation; Trademark. Major US companies such as movie studios and streamers will expect copyrights in the work to be registered. This can be done with the US Library of Congress relatively inexpensively, and requires completing a form, depositing a copy of the work, and paying a small fee. Per point 1 above, the registration should be made in the name of the individual or entity that is supposed to be the copyright owner.
   Additionally, where rights have been assigned (e.g., they were acquired from a previous owner), the assignment should be recorded with the copyright office, which requires submitting a copy of the applicable documents so that third parties are put on notice.
   
   Trademark registration is generally not required as part of chain-of-title due diligence, but it may be advisable for other reasons. Rightsholders who are exploiting their IP in commerce (e.g., they are distributing merchandising) should consult with trademark counsel as to whether it is necessary to register trademarks. Those rightsholders who do have registered trademarks will need to be able to provide the relevant information concerning those trademarks to counterparties.
4. Proof of Payments. Where rights have been acquired from a previous owner (e.g., the acquisition of an original screenplay), the rightsholder should be able to provide proof of payment – typically in the form of a wire transfers confirmation or copy of a check. 
5. Approval Rights, First Opportunities, Security Interests, and Other Encumbrances. As part of chain-of-title review, a company will request and review every single significant agreement relating to the IP (with the definition of what is “significant” perhaps being circumstance specific). In reviewing those agreements, they are looking for anything that could potentially create an obligation to a third party or otherwise interfere with exploitation. Approval rights, first opportunities to acquire rights or render services, security interests, and contingent payment obligations are some of the things that could raise questions – especially if previously undisclosed. It is quite common for chain-of-title review to uncover contractual provisions that place the IP under a cloud and could jeopardize a potential deal. Thus, rightsholders anticipating a big deal on the horizon or seeking to invest in their IP may want to conduct their own chain-of-title audit so they can uncover and address possible issues ahead of time. Moreover, it is critical on a forward-looking basis that deals are negotiated and contracts are drafted with a view to future implications. Communication between rightsholders and counsel is paramount.
6. Drafting Conventions and Boilerplate. Additionally, as part of chain-of-title review, attorneys will expect agreements to be drafted in a standardized and unambiguous way. Unusual or unclear phrasing, or non-standard clauses could raise questions. Moreover, there are certain standard boilerplate provisions that must be included – such as a waiver of injunctive relief, and the right to assign. Additionally, pay attention to the choice of law – typically we draft entertainment-adjacent agreements under California or New York law, because there is an established body of related law there. Of course, agreements under the jurisdiction of foreign territories may require the input of local counsel. Agreements in languages other than English will also raise questions, and may require a verified translation. 
7. Things You Don’t Own. The expectation of rightsholders will be that they own every aspect and element of their intellectual property. However, it may be the case that an intellectual property includes or is built upon elements or technology that is licensed or otherwise not owned by the IP rightsholder. Rightsholders should be aware of this, and should disclose any “excluded elements” up front.
   
   For example, if the underlying IP is a short film or videogame that includes music that was licensed (as opposed to created on a work-for-hire basis), then that should be explained to the counterparty and the relevant agreements shared. A videogame built using third party assets (e.g., licensed Unreal assets) or built on UEFN or Roblox will also require a specific discussion. In the past couple of years, we have represented multiple clients with IP that included such third party elements. The best policy is disclosure and discussion – which is usually collaborative if the other party is sophisticated and dedicated to understanding evolving technology and platforms. A similar analysis should be made with respect to any potentially public domain elements, including any “meme” type characters.
8. AI Use. Generative AI usage is becoming increasingly common in multiple facts of entertainment development and production – but not without consequence. For example, there have been some high profile examples recently of deals going awry due to potential undisclosed AI usage (including book manuscripts that were pulled from publication over concerns over AI).
   
   Rightsholders must be prepared to explain how generative AI was used in the creation of the work (if at all), and which tools were used. Major companies are becoming extremely vigilant about this issue so it must be considered at the outset. An AI policy may be advisable for rightsholders that are operating companies, so it is very clear to contractors and employees how they may use generative AI – and how they must document such use. In the videogame industry, for example, AI usage is becoming quite standard in certain aspects of development, but companies need to be able to explain exactly how AI is used and defend the protectability of their work.