What happens if a studio or production company buys your script with the "secret" sole intention of killing the project?

Question: What happens if a studio or production company buys your script with the "secret" sole intention of killing the project to avoid conflict in the marketplace with one of their own similar productions? Is this legal? Do screenwriters have some kind of protection against this?

One of the best ways to prevent a studio, broadcaster or production company from acquiring the rights to a script and then putting it on the proverbial shelf is to have a reversion provision included in the rights purchase agreement. A reversion provision generally states that if a motion picture feature does not commence principal photography or is not completed by a certain time (such as anywhere from three years to ten years after the production company, broadcaster or studio acquired the screenplay rights), then the writer would have the right to reacquire the rights in and to the script.

However, there are several forms of reversion. The type of reversion which most writers prefer would be a reversion in which the rights in and to the script would be reacquired by the writer, and the writer and the production company, broadcaster or studio part company. However, most production companies, broadcasters and studios would insist that at a minimum that the writer repay or cause a third party (that is interested in financing and producing a project based on the writer’s script) to repay the purchase price for the script’s rights so that the production company, broadcaster or studio is not out of pocket for paying the purchase price for a script that it no longer owns.

The most problematical form of reversion which a writer may encounter is a reversion provision in which the writer must pay or causes a third party to not only repay the purchase price of the script to the initial purchaser of the rights but also repay or cause the repayment of any development costs incurred by the initial purchaser of the script’s rights. Such development expenses can include the fees paid by a production company, broadcaster or studio for the writing services provided by the writer or third party writers during the development of the script. Production companies, broadcasters and studios can charge interest on such expenses which would have to be repaid with the original purchase price and the development expenses incurred by the initial purchaser of the script’s rights.

One of the reasons that many scripts stay on a production company’s, broadcaster’s or studio’s shelf is that it is often too expensive for the writer to pay or get a third party to pay for these expenses which often can be in the six figure range.

The Writers Guild of America (WGA) has a provision in its Minimum Basic Agreement (MBA) which permits a writer member or a "professional writer" (as defined by the WGA) to reacquire the rights to his or her original script or rewrites to a writer’s script rendered during the option period of the original script under certain conditions which are stated in the WGA MBA.

Robert L. Seigel

Robert L. Seigel ([email protected]) is a NYC entertainment attorney and a partner in the Cowan DeBaets Abrahams & Sheppard LLP law firm which specializes in the representation of clients in the entertainment and media areas.

DISCLAIMER: The information provided here is intended to provide general information and does not constitute legal advice. You should not act or rely on such information without seeking the advice of an attorney and receiving counsel based on your particular facts and circumstances. Many of the legal principles mentioned might be subject to exceptions and qualifications, which are not necessarily noted in the answers. Furthermore, laws are subject to change and vary by jurisdiction.