Disney: "Royalties for creators? That's optional, right?"

[DGuller]

Lucasfilm still exists, doesn't it?

So they still exists and they're the ones owing royalties?  The writers should just redirect their "where's my money" requests to Lucasfilm?  If so, then that was the part that I was missing, and that made it sound implausible.

[The Brain]

Lucasfilm still exists, doesn't it?

So they still exists and they're the ones owing royalties?  The writers should just redirect their "where's my money" requests to Lucasfilm?  If so, then that was the part that I was missing, and that made it sound implausible.

My understanding is that Disney's position is that Lucasfilm no longer owes royalties (from before they bought it). I don't know if the royalty obligations were kept by the previous owner of Lucasfilm (and if so, where he put them), generously donated to the public domain, or simply taken out back and shot. None of them seems very likely, but rumor has it that Disney's legal team is better even than the President's, so who knows.

[grumbler]

My understanding is that everything we know about this we only know through ADF and the SFWA, none of whom are lawyers and thus none of whom may understand Disney's actual position.

That doesn't make Disney's position any better; in fact, it makes it worse.  Disney's position is apparently that they don't even need to publicly address the issue of very public non-payment of debts.

[The Minsky Moment]

Okay, let's get back to the actual entities in the article.  Disney acquired Lucasfilm.  Some writers were owed royalties by Lucasfilm.  Disney says "tough shit, the royalties were owed by a company called Lucasfilm, it's Disney now, Disney owes you bupkis".  The first question is, are the writers now fucked out of royalties which they used to get, and the only reason they will stop getting them is because one company was acquired by another?  If the answer to the first question is yes, then how is this different from my latest example, whether it involves three or four parties?

The answer is I don't know because I don't know what the contracts look like. I don't know what the royalty obligation is or who or what entity owes it.
If Lucasfilm LLC owes royalties and Disney stripped assets out of Lucasfilm LLC without fair comp to defraud creditors, then Disney could be held liable., But I don't know if those are the facts.
In a case like this the first thing a lawyer does on intake is look at ALL the relevant contracts and the facts,

[grumbler]

By the way, the "assets but not liabilities" purchase thing is familiar to me because I was a subscriber (a lifetime subscriber, in fact) to Strategy and Tactics magazine way back when dinosaurs roamed the earth.  TSR "bought" SPI by loaning money while demanding that SPI put up all of it's intellectual and physical property as collateral.  Facing bankruptcy, SPI took the loan and paid the most pressing of its creditors.  Eleven days after making the loan, TSR foreclosed and took possession of all of SPI's properties, but none of its assets.  Subscribers to S&T were just out of luck (as were the businesses that SPI owed money to).  SPI itself filed for bankruptcy and apparently no one considered the TSR move as illegal asset stripping.  Business creditors got a couple of pennies, and customer creditors got bupkis.

But that's not what happened here with the acquisition of Lucasfilm.  Lucasfilm was bought by Disney, not foreclosed on.

[crazy canuck]

Okay, let's get back to the actual entities in the article.  Disney acquired Lucasfilm.  Some writers were owed royalties by Lucasfilm.  Disney says "tough shit, the royalties were owed by a company called Lucasfilm, it's Disney now, Disney owes you bupkis".  The first question is, are the writers now fucked out of royalties which they used to get, and the only reason they will stop getting them is because one company was acquired by another?  If the answer to the first question is yes, then how is this different from my latest example, whether it involves three or four parties?

I suspect the main reason the writers are not getting paid by Disney is because the writers waived their rights as creators of the IP when they contracted with LucasFilm.  That leaves them with only those contractual rights.

If you can share the relevant contractual terms of the deal the writers had then we would all be in a better position to answer your question.

The answer to your question is almost certainly not the one you asserted as being because "one company was acquired by another".  If that was the case and this was a share sale then nothing would have changed.  The writers would still need to rely on their contractual rights.  You keep missing the distinction between an asset sale and a share purchase.

I strongly suspect you are playing dumb so we no longer accuse you of being an accountant.   

[celedhring]

I suspect the main reason the writers are not getting paid by Disney is because the writers waived their rights as creators of the IP when they contracted with LucasFilm.  That leaves them with only those contractual rights.

Yes, that's how every IP contract works. In the EU some IP rights (and the acompanying royalties) can't be legally waived by the authors but that's not the case in the US. That means that in practice (absent union contracts like the ones in the film industry) you only get the royalties that are covered in the contract (since there will be clause stating that you waive everything else).

But that means there has to be a clause allowing Lucasfilm to stiff the author after moving the license to Disney.

[celedhring]

FWIW, I went and checked and the books in question are still being published by the same publisher that published them pre-takeover (Random House). So that part of the chain hasn't changed.

[DGuller]

Okay, let's get back to the actual entities in the article.  Disney acquired Lucasfilm.  Some writers were owed royalties by Lucasfilm.  Disney says "tough shit, the royalties were owed by a company called Lucasfilm, it's Disney now, Disney owes you bupkis".  The first question is, are the writers now fucked out of royalties which they used to get, and the only reason they will stop getting them is because one company was acquired by another?  If the answer to the first question is yes, then how is this different from my latest example, whether it involves three or four parties?

I suspect the main reason the writers are not getting paid by Disney is because the writers waived their rights as creators of the IP when they contracted with LucasFilm.  That leaves them with only those contractual rights.

If you can share the relevant contractual terms of the deal the writers had then we would all be in a better position to answer your question.

The answer to your question is almost certainly not the one you asserted as being because "one company was acquired by another".  If that was the case and this was a share sale then nothing would have changed.  The writers would still need to rely on their contractual rights.  You keep missing the distinction between an asset sale and a share purchase.

I strongly suspect you are playing dumb so we no longer accuse you of being an accountant. 

I'm neither playing dumb nor asserting anything.  I'm trying to figure out what the legal situation is, because given what was said earlier in the thread, it sounded to me like that it was Wild West capitalism.  That's why I was trying to clarify in many different ways what the situation really was.  This wasn't a legal debate, this was me trying to understand something.

[Tonitrus]

Can't we just get past this law-talking mumbo jumbo and agree that Disney is scum, and the Mouse is really nothing more than an evil corporate mob boss?

[crazy canuck]

I'm neither playing dumb nor asserting anything.  I'm trying to figure out what the legal situation is, because given what was said earlier in the thread, it sounded to me like that it was Wild West capitalism.  That's why I was trying to clarify in many different ways what the situation really was.  This wasn't a legal debate, this was me trying to understand something.

It has been explained to you by at least three different people.  If you are not playing dumb you are tragically slow on the uptake.

[Sheilbh]

Can't we just get past this law-talking mumbo jumbo and agree that Disney is scum, and the Mouse is really nothing more than an evil corporate mob boss?

Yes - the most evil corporate mob boss

[crazy canuck]

I suspect the main reason the writers are not getting paid by Disney is because the writers waived their rights as creators of the IP when they contracted with LucasFilm.  That leaves them with only those contractual rights.

Yes, that's how every IP contract works. In the EU some IP rights (and the acompanying royalties) can't be legally waived by the authors but that's not the case in the US. That means that in practice (absent union contracts like the ones in the film industry) you only get the royalties that are covered in the contract (since there will be clause stating that you waive everything else).

But that means there has to be a clause allowing Lucasfilm to stiff the author after moving the license to Disney.

Perhaps.  That sort of clause may have seemed a tradeoff worth making for the writers at the time as it may have seemed that LucasFilms was here to stay.  It could also be that writers had a limited duration of compensation. 

Either way there is a contractual explanation for what is occurring.

[crazy canuck]

Can't we just get past this law-talking mumbo jumbo and agree that Disney is scum, and the Mouse is really nothing more than an evil corporate mob boss?

No way man.  Law is Life!

[DGuller]

I'm neither playing dumb nor asserting anything.  I'm trying to figure out what the legal situation is, because given what was said earlier in the thread, it sounded to me like that it was Wild West capitalism.  That's why I was trying to clarify in many different ways what the situation really was.  This wasn't a legal debate, this was me trying to understand something.

It has been explained to you by at least three different people.  If you are not playing dumb you are tragically slow on the uptake.

I guess I am tragically slow on the uptake then, but you know, you could be nicer in pointing that out.  People tragically slow on the uptake are also sometimes curious about how legal issues work.