Let’s Talk Tax Credits

OK, taxes, boring I know, but it’s a pressing matter for animators in the UK. It’s also a topic that’s come up from time to time over here in the States, as places like next door neighbour Canada create incentives to get studios to move up north.

So the reason for this latest round of noise-making is that the British government is considering a tax break for “drama productions” that cost a certain minimum per hour of screen time. The thinking goes that with such a break, more productions will begin shooting in the UK thus contributing to the economy.

Animators contend that their industry would be more effective at keeping jobs in the country and, according to the Guardian article, would keep content on a more local level.

There’s nothing wrong with this, except that the reasoning is a bit flawed.

Basically, Ireland, the UK’s neighbour, offers tax incentives for animation production. The reasoning is is simple for this one: Ireland didn’t have an animation industry, so in order to get one jump-started, the government offered companies a tax break in return for taking the risk of setting up in a relatively unknown country (animation-wise).

The UK already has an established animation industry. It doesn’t need to effectively subsidies companies’ risk in setting up production there.

So what’s the real issue here?

Well, why set up shop in the UK, when you can go next door to Ireland, write off some taxes and get you series done for less. Right?

Will tax incentives in the UK change this scenario?

The answer is maybe.

Tax incentives will bring the cost of production in the UK down, but that is not a guarantee that productions will move there. It also creates another problem in that it hides the real issue: costs.

Naturally with their tax incentive, Ireland can operate on a lower cost basis, but, can you continue to operate on an incentive-based structure forever?

NO!

Incentives are meant to be temporary, or rather, short term. Long term reliance on tax-breaks and incentives can defeat the purpose. For example, let’s say you introduce a tax break for animation. After a while, another country introduces a tax break that brings their costs below yours. Now what do you do? Another tax break? Suffer the consequences? Give up?

Tax incentives mask the real cost of doing business. Yes, taxes may be higher here or there, but at the end of the day, they should be factored into the cost of doing business in the first place. Exchange rates will also factor into the equation, and depending on where you go, they may have a bigger bearing on costs than taxes.

If costs are your problem, then perhaps it is wiser to try and bring them down first, no? By doing so you will increase your competitiveness and not have to worry about it running out.

Besides, if you operate as a low-cost producer, you will always have to be the low-cost producer. Ireland has shown that they can move beyond low-cost with through their superb, home-grown content. Britain has a great track record in creating content. Perhaps they need to rediscover that talent.

What do you think? IS the UK really in need of a tax credit, or should it try other things first?

 

“Visual Creator” Sues the BBC for £2m for Copyright Infringement

Images (with apologies) via the UK Daily Mail

Here we go again. This time from the UK, where Michael Mitchell is suing the BBC for copyright infringement over a show called Kerwhizz, which he claims is based on his idea, Bounce Bunch. From the Guardian article:

 Michael Mitchell told the high court on Thursday that he was shocked in 2009 when his daughter noticed that three characters in the CBeebies show Kerwhizz bore “striking similarities” to his own cartoons.

Mitchell suggested that the BBC copied the characters – known in the show as Ninka, Twist and Kit – after they were uploaded to his own personal website in 2004…….

……Mitchell claims the Kerwhizz character “Ninki” was derived from a combination of his two characters Simrita and Jomo, that “Twist” was copied from his character Charlie and that “Kit” is a version of his character Yana. Outside court he told journalists that he had sent the characters to the BBC directly as a proposal package in October 2007, but had been rejected.

So, judging from the two pictures at the top, is there a case for infringement, bearing in mind that it focuses only on the three human characters in Kerwhizz?

The similarities are obvious:

  • they’re human
  • they’re kids
  • wearing brightly coloured spacesuits of some kind
  • wearing headband microphone
  • of multiple ethnicity

The only problem is that these traits can’t be considered under infringement. Why? They’re too ubiquitous and easily conceivable. The closest thing would be the brightly coloured suits but even then giving characters their own coloured clothing is nothing new.

Presuming that the similarities are generic enough to be precluded from the case, the next avenue open to Mitchell is to prove that the BBC used his show as a direct influence for creating Kerwhizz.

Now this is where it gets interesting, because Mitchell sent an unsolicited package that was rejected. As most studios will tell you, they send any unsolicited idea back unopened to eliminate precisely this scenario. The BBC should have been smart enough to do this, so this route can probably be rejected.

That leaves only the fact that Mitchell posted the Bounce Bunch online at some point prior to the launch of Kerwhizz. What form this took is not specified. Was it development art or full animation? Does it make a difference? Probably not. There seems to be enough difference between the shows themselves that Mitchell focuses only on the characters.

The really tricky aspect to this development is whether or not Mitchell can prove conclusively that someone from the BBC in the same department that created Kerwhizz saw or had access to the Bounce Bunch page.

This could be next to impossible to prove and the details are still sealed in court documents so we won’t know for sure until judgement, but I would hazard a guess that Mitchell doesn’t have the substantial proof he needs.

It’s always disheartening when you feel that someone else has copied your design (not idea, remember you can’t copyright those), especially a corporation as large as the BBC, but that does not preclude them from coming up with similar designs, although I would argue that even then, substantial differences exist.

In this particular case, if there really was any chance that the BBC ripped Mitchell off, then a settlement would have been reached by now.

It’s unfortunately just another example of why animators and developers need to be aware of the nature of copyright and what it does and does not cover.

Apparently Lady Gaga Doesn’t Like Animation

Lady GoogooVia: TBI

This just in, yesterday, The Hollywood Reporter among others posted that Lady Gaga has won an injunction against a parody creation from Mind Candy called Lady Goo Goo. The reason?

“Lady Gaga argued that the character would confuse consumers.”AWN

There’s a couple of different aspects to this decision but all spell potential trouble for animators or studios so they are well worth being aware of.

Firstly, there’s the issue of confusion with the real Lady Gaga and secondly there’s the issue of parody works and whether or not they are legal. Before you carry on reading though, here’s a video of Lady Goo Goo herself:

http://www.youtube.com/watch?v=v53lmd5URQQ

Starting with the confusion, Gaga relied on trademark law and its reliance on the famed tests which essentially boil down to the “moron in a hurry” scenario. The court ruled that consumers and fans of Gaga would be susceptible to confusion between Gaga and Goo Goo and thus the latter should not be permitted .

Anyone with half a brain would conclude that this is a clear admission from Gaga that her fans are clearly idiots but as Mike Masnick at Techdirt put it:

Unfortunately, Lady Gaga doesn’t have a sense of humor about the situation and it appears that neither do the UK courts.

Michael Action Smith of Mind Candy puts it fairly bluntly:

“It’s pretty obvious that kids will be able to tell the difference between the two characters.” I can certainly tell the difference, but Lady Gaga and the courts couldn’t

The shame is that millions of kids fell in love with Lady Goo Goo’s debut single on YouTube and now won’t be able to enjoy her musical exploits. It was all done in the name of fun and we would have thought that Lady Gaga could have seen the humor behind this parody.

This leads us nicely into the second aspect of the ruling, which is that parody works are not strictly legal in the UK, where the lawsuit was filed.

The importance of this aspect? Well, in the US, parody works are considered legally distinct from the original material and as a result, do not require prior approval from the copyright holder. This is not the case in the UK, which has no laws regarding parody works. The result is that Gaga was legally able to sue over a parody featuring an animated baby and some Eurotrash music.

Why is this a concern for animators and studios? Because animation has relied on parody and making fun of things since almost the day it was invented! Imagine if all the classic Warner Bros. shorts couldn’t have parodied the political and entertainment figures of the day? Imagine if the Simpsons couldn’t send up films like Citizen Cane? Imagine if Weird Al Yankovic couldn’t release a video to go with his parody of a song? (Side note, Al had is own run-in with Lady Gaga but because he’s in the US, he could release his single anyway).

Our ability to create would be seriously hindered wouldn’t it? The world would be a much more serious place in the absence of all this comedy and poking of fun.

Animation has delighted in being one of the prime candidates when it comes to sources of parody. Nevertheless, this lawsuit simply proves that you have to be on your toes when it comes to this kind of thing, because as bad of a control freak as it makes Lady Gaga look (and all the increased attention the lawsuit has garnered as a result), it ultimately forces a studio to write off an investment it made and to swallow the costs of the project with no hope of getting them back.

Small studios and animators cannot be expected to be effective economic units if they face the prospects of lawsuits like this. There is no reason why Lady Goo Goo had to be yanked in the UK, the decision hurts everyone, including Gaga herself.