In our recent report on HarperCollins lawsuit against e-book publisher Open Road Media (See Can Open Road Beat the Harper Lawsuit Rap?) we wrote: “Our own guess is that this case will never go the distance and will instead be settled.”

Shows how wrong one can be, and it proves once again that when great principles are involved, litigants will fight harder than they will over mere money.

Today Publishers Weekly reports that Open Road has decided to lawyer up. The e-book publisher recently launched by former Harper CEO Jane Friedman, accused by Harper of infringing on the latter’s rights, has retained the team of attorneys that represented the Authors Guild in its class action case against Google.  Open Road Chief Operating Officer Chris Davis said “It appears to us that HarperCollins is trying to intimidate authors, overturn established law and grab rights that were not in existence when the contracts were signed many years ago. We are confident that we will successfully defend authors’ rights and we look forward to filing our response in court.”

Considering that copyright authority Lloyd J. Jassin calls it “The Court Battle that Could Determine the Fate of the Book Industry,” authors and publishers may get their wish to see contradictions and ambiguities in book contracts, respecting digital rights, resolved once and for all.

But at what fearful price? The cost of litigating the issues to the max, including appeals that could rise as high as the Supreme Court, will be millions. Both parties have deep pockets. The whole world will be watching.

For Jassin’s superb analysis of the issues and potential legal strategies, read Who Controls eBook Rights?

Richard Curtis

Simon van Meygaarden, a friend and correspondent based in the Netherlands, holds some views about illegal downloading that diverge from our own (including the term “illegal downloading”). In particular he believes that financial losses due to such downloads are an infinitesimal fraction of the potential legitimate revenues.  He has actually demonstrated mathematically that for every $1000 of potential to be made by an authorized content provider, only $1.40 ends up in the pocket of an unauthorized user.

Read Simon’s calculations.  Then I’ll have a few of my own.

Richard Curtis

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Illegal Downloads – What are we talking about?

Let’s start with a term that is misused more than “piracy” and “crisis” together, the illustrious and infamous – turning on my hollow voice – “Illegal Downloads”.

A download is the transfer of data from a server or host computer to one’s own computer or device. Let’s define my number of downloads as “N”.

Now, not every download gets transmitted error-free, and if one bit goes wrong the download is unusable, so let’s define the Corruption Factor “CF” as an error-percentage. If 10% of my downloads is corrupt and unusable, CF = .1

My number of error-free download now is N * ( 1 – CF )

Some error-free downloads are password-protected, and they usually contain viruses or point to infected websites, so let’s define the Viral Factor “VF” also as an error-percentage. If 10% of the downloads is password protected, VF = .1

My number of safe downloads now is N * ( 1 – CF ) * ( 1 – VF )

Some of my safe downloads are never played (or watched or read), so here we have the Play Factor “PF”.

My number of played downloads is N * ( 1 – CF ) * ( 1 – VF ) * PF

Now I have played the download and I am finally aware of the product itself. Clearly, some products are copyright free or public domain. So here is the Infringement Factor “IF”, the percentage which is actually illegal, by American law.

My number of illegal downloads is N * ( 1 – CF ) * ( 1 – VF ) * PF * IF

Some of my illegal downloads are crap, and I would never have bought them anyway. The rest are good, I might have actually bought them, and that’s the Buy Factor “BF”.

The number of product I might have actually bought is N * ( 1 – CF ) * ( 1 – VF ) * PF * IF * BF

So let’s put some numbers to this formula, from my own experience.

50% of my downloads are corrupt, so CF = .5
25% is password-protected, VF = .25

The Play Factor is more difficult, as it varies with the type of product. I have downloaded about 2.000 movies, and I have actually tried to watch about half of them, so PF_movie = .5. Being a D.J., I have downloaded perhaps 20,000 albums, but honestly, I have only tried to listen to about 5% of those, so PF_album = .05. I also like books, my entire house is filled with them, I can’t actually store anymore, but, I shamefully admit I have about 250.000 ebooks, and I only tried to read a fraction of them. Let’s say one in a thousand, so PF-ebook = .001.

For the sake of simplicity, let’s say 75% is illegal (IF = .75), and 50% is crap (BF = .5).

Now imagine a publisher, who sells a million ebooks a year, and fears that for every ebook he sells, ten others are downloaded, so N = 10 million. His loss in revenue, in terms of numbers of books, would be:

10,000,000 * ( 1 – .5 ) * ( 1 – .25 ) * .001 * .75 * .5 ==
10,000,000 * .5 * .75 * .001 * .75 * .5 ==
1,406.25 ebooks == about 0.14% of his turnover

Here’s a question: how much money would it cost (advertisement, improving product quality, reducing production costs) to raise one’s turnover with 0.2%?

I admit, my actual numbers are personal, and they are most certainly wrong as a reliable average. But my analysis, I think, is right. Morally, and emotionally, I completely understand and support the fight against piracy, however, rationally, and economically, it is a whole different ball game, and it all boils down to how much money (energy, time and resources) one is currently spending on fighting piracy, and how much it would take to estimate the right numbers and raise one’s turnover accordingly.

Simon van Meygaarden

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Richard here again.

Let’s concede the correctness of every one of Simon’s calculations and grant his conclusion: that illegal downloading is siphoning off a mere $1.40 out of every $1000. My question for him is simple: Suppose you keep $1000 on your night table and a dozen burglars enter your home, but they remove only $1.40 of it, will you feel as benignly about your loss as you do about mine?

Richard Curtis

For a complete archive of articles about piracy, visit Pirate Central.

Copyright authority Lloyd J. Jassin calls it “The Court Battle that Could Determine the Fate of the Book Industry”, and that’s no exaggeration. The principles are of the very highest order, and every author, publisher and agent has a major stake in the outcome.

We are referring to HarperCollins’s infringement lawsuit against Open Road Media about which we reported the other day. Open Road, the independent e-book publisher started by former Harper CEO Jane Friedman, issued an e-book edition of Julie of the Wolves, a children’s book classic that is still in print with HarperCollins.

In his masterful analysis, posted on his “Copylaw” blog, Jassin cites a number of key arguments in Harper’s brief. Principal among them:

1. Does the “exclusive right to publish in book form” – the phrase in Harper’s original contract – cover digital formats undreamed of when that contract was originally framed?

2. Similarly, does contractual language like “computer storage and retrieval,” “future technologies” and “now known or hereinafter” apply to a medium three decades over the horizon?

3.Does Open Road’s e-book violate the noncompetition language of HarperCollins’s contract?

Significantly, Jassin doesn’t see a knockout punch for either contender. The publishing establishment could either score “an unfair competition protection windfall, or meet their digital Waterloo.”

One huge factor he doesn’t mention is the expense of staging this legal battle. If litigated to the max, including appeals that could take the issue to the highest court in the land, the costs could run into the millions of dollars. In an earlier lawsuit brought by Random House against another indie e-book publisher, RosettaBooks, the parties settled after Rosetta won early rounds in the court system and the price tag for both parties started to get prohibitive. If Open Road decides to fight it out, it will look at the arguments presented by Rosetta. But it will also look at the expense.

One other interesting note is that Harper has elected not to sue the author.  As she signed the Harper contract she is the logical party to go after for the infringement.  But suing authors is bad public relations. What about Open Road? They too have a contract with the author, one that relies on the author’s warranties.  Open Road has the option to claim that the author breached those warranties and licensed rights she didn’t clearly own.  But that doesn’t look so hot either. So, looking to the author for satisfaction is simply not an option for either Harper or Open Road.

Our own guess is that this case will never go the distance and will instead be settled.  Though that’s the prudent thing to do, it will just leave the issues hanging for another day.  Too bad. We’d all like to know where we stand. Thousands of contracts containing language as ambiguous as the old Julie contract hang in the balance.

Read Lloyd J. Jassin’s The Court Battle that Could Determine the Fate of the Book Industry:A Review & Analysis

Richard Curtis

Towards the end of the twentieth century just about every book contract contained language granting the publisher computer storage and retrieval rights. Though the first people to employ the term probably did not envision e-books, the advent of digital technology sent publishing lawyers scurrying to their contracts to make sure they contained some variant of that term. For, in their opinion, the ownership of e-book rights stood firmly upon it. And when at the turn of the 21st century authors examined those same contracts, the existence of “Computer Storage and Retrieval” loomed like a snarling guard dog warning them to step no further across the owner’s line.

Though there have been some probes by authors, agents and startup e-book publishers of this and similarly ambiguous phrases in book contracts, none has ever been fully litigated. That may now change if a just-announced lawsuit is carried out to the max.

Over the Christmas holiday Publishers Lunch‘s Michael Cader broke the news that HarperCollins has sued Open Road, the independent e-book publisher founded by Jane Friedman (former CEO of HarperCollins incidentally), for infringing on Harper’s digital rights to a classic work of children’s literature, Julie of the Wolves by Jean Craighead George. The author was not named in the suit, however.

Key to Harper’s position is the phrase in its contract with the author that “makes clear that the scope of HarperCollins’ publishing rights extends to exploitation of the work ‘through computer, computer-stored, mechanical or other electronic means now known or hereafter invented’ — language that serves only to reinforce HarperCollins’ exclusive rights to publish the Work as an e-book.”

There have been some previous territorial quarrels over e-book rights based on vague contractual terminology such as the phrase “in book form” in some Random House contracts issued long before Kindle was a gleam in Jeff Bezos’s eye. If there was no such thing as an e-book when the original volume was acquired, can a publisher claim that e-book was meant by “in book form?”

The following piece was posted on our blog when Random House, feeling threatened by newly created independent e-book publishers, decided to assert its rights in no uncertain terms.  Anyone interested in the Harper-Open Road dispute will benefit from this backgrounder.

Richard Curtis

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Random Serves Notice on Would-Be E-Interlopers
Like a wolf marking its territory against rivals, Random House served unequivocal notice today on what it perceives as potential e-poachers seeking a loophole in Random’s definition of “book”.

The warning was embedded in a letter from Random CEO Markus Dohle mailed or emailed to literary agents describing the company’s plans and initiatives in the digital world. Authors were also put on notice that they are “precluded from granting publishing rights to third parties that would compromise the rights for which Random House has bargained.”

“The vast majority of our backlist contracts,” writes Dohle, “grant us the exclusive right to publish books in electronic formats. At the same time, we are aware there have been some misunderstandings concerning ebook rights in older backlist titles. Our older older agreements often give the exclusive rights to publish ‘in book form’ or ‘in any and all editions’. Many of those contracts also include enhanced language that references other forms of copying or displaying the text that might be developed in the future or other more relevant language that more specifically reflects the already expansive scope of rights. Such grants are usually not limited to any specific format, and indeed the “form” of a book has evolved over the years to include variations of hardcover, paperback and other written word formats, all of which have understood to be included in the grant of book publishing rights. Indeed, ebook retailers market, sell and merchandise ebooks as an alternate book format, alongside the hardcover, trade paperback and mass market versions of a given title. Whether physical or digital, the product is used and experienced in the same manner, serves the same function, and satisfies the same fundamental urge to discovery stories, ideas and information through the process of reading. Accordingly, Random House considers contracts that grant the exclusive right to publish ‘in book form’ or ‘in any and all editions’ to include the exclusive right to publish in electronic book publishing formats. Our agreements also contain broad non-competition provisions, so that the author is precluded from granting publishing rights to third parties that would compromise the rights for which Random House has bargained.”

If Random’s position sounded familiar to some, it’s the same one that the company used in 2001 when it sued Rosetta, an e-book startup that offered digital editions of books by Kurt Vonnegut Jr., William Styron and Robert B. Parker, having secured them directly from the authors. Random had published the books before there was such a thing as the Internet, but nevertheless considered a book to be a book no matter what form it took. Random’s request for an injunction was denied by the court, and Random then filed an appeal. It too was denied.

Random and Rosetta eventually settled, allowing Rosetta to continue publishing the books but leaving unresolved the issue of who controls e-rights to books where the language defining them is ambiguous.

By issuing its letter to agents today, Random House reasserted its position that, ambiguous or not, the publisher considers the language in its contracts to grant it ironclad control over e-rights. Anyone who believes otherwise is advised to take a good sniff before venturing over the perimeter of Random’s territory.

Richard Curtis

Where is Errol Flynn when we need him?

We long for a hero of his stature to deal with the pirates of the Spanish Main.  According to an author so abused by them that she has quit writing altogether, “We [Spain] come after China and Russia in the total number of illegal downloads but, obviously, there are a lot more of them so we win on a per capita measure.”

“Given that I have today discovered that more illegal copies of my book have been downloaded than I have sold,” declared Lucía Etxebarria in The Guardian, “I am announcing officially that I will not publish another book for a long time.”

She accuses her country’s politicians of being afraid to act.  In that regard her nation is far from isolated.  Few politicians in any country know or care about piracy, some benefit from it, and some are fully proactive in state-sponsored copyright theft.

Details in Spanish novelist Lucía Etxebarria quits writing in piracy protest

Richard Curtis

For a complete archive of E-Reads postings about piracy, visit Pirate Central.

Eric Pfanner of the New York Times writes that “The highest court in the European Union said on Thursday that Internet service providers could not be required to monitor their customers’ online activity to filter out the illegal sharing of music and other copyrighted material.”

The decision, handed down by the European Court of Justice, rebuffed a group of composers and musicians suing an Internet Service Provider facilitating file sharing. A lower court had compelled the file sharing outfit to filter out copyrighted songs. The higher court thought the lower court’s decision would violate  “the freedom to conduct business, the right to protection of personal data and the freedom to receive or impart information.” Or, to put it less elegantly, the license to steal.

European Court Overturns Rule on Illegal File Sharing

Richard Curtis

Of the many ways for publishers to combat copyright infringement, the one they have been loath to employ is  to sue the end user.  Because some downloaders may be ignorant kids or confused old people, going after them can be a public relations disaster, making the righteous plaintiffs look like corporate bullies and turning the defendants into  folk heroes. But there’s a limit to restraint, and after Bit Torrent users on the demonid.me website illegally downloaded a Dummies book almost 75,000 times, the publisher of the series reached it.

“John Wiley & Sons ,” reports Publishers Weekly, “filed a copyright infringement suit last week in the U.S. District Court for the Southern District of New York involving 27 ‘John Does’ the publisher claims are illegally copying and distributing its For Dummies books through the use of Bit Torrent file sharing software. At present, Wiley only knows the IP addresses and names of the information services providers of the John Does, but a company spokesperson said the intent of the lawsuit is to learn the names of the infringers so the company can contact them to work out a settlement.”

Though Wiley hasn’t actually sued anyone yet, that is clearly an option if one of the John Does becomes a John Screw You.  Lawsuits against end users have been brought by music and movie companies after they exhausted more moderate measures. (See Fileshare This) And though those actions have provoked great outrage by the victims and their libertarian defenders, some pirates have been put out of business and many end users have thought twice before clicking on Download.  But Wiley seems to be a rare instance of such an action in the book industry. For details read Wiley Goes After Bit Torrent Pirates.

For the full archive of E-Reads piracy postings, visit Pirate Central, especially Curtis Agency, E-Reads Launch Program to Neutralize Pirates

Richard Curtis

Are you an artist? Time to pack up and move to California. There, you can take advantage of their droit de suite law.

Vous ne parlez pas français? It’s worth money, maybe a lot of it, to bone up. The closest we can translate is The Law of Followup, and here’s what it means: if the buyer of your picture or sculpture resells it for a profit, you are entitled to 5% of the resale price.

It’s a law in France and will probably be adopted by all the nations in the European Common Union. Except for California no US state has such a law, and of  course its not on the US statute books.  But some big-name artists  like Chuck Close hope to change that, starting with lawsuits against auction baronies Sotheby’s and Christie’s as well as eBay, the Internet auction website. The class action plaintiffs claim they’ve been stiffed.

“The suits do not specify damages, nor do they list particular sales of art by California residents,” reports the New York Times‘s Patricia Cohen. “Rather, as Eric George, the lawyer who filed them, explained, the complaints seek to force the auction houses to reveal the identities or locations of sellers, information that is often kept secret.”

Cohen says that “Most artists and galleries either don’t know about the law or ignore it.” Too bad: those that do have collected over $300,000 in the 34 years since it was passed.

Would droit de suite work for authors? Since most authors get royalties, it’s hard to see an analogy to resale of artworks – with one exception: library use.  In many foreign countries lending libraries are required to pay a fee or royalty to the author every time a copy is borrowed. It’s called the Public Lending Right, and it’s the law in Canada, the UK, Netherlands, Israel, Scandinavia and other lands. The chances of that happening in the US are slim to none, but it’s nice to know there are some enlightened nations that honor writers and artists.

Artists File Lawsuits, Seeking Royalties

Richard Curtis

If you laughed at the question you obviously haven’t heard that Warner Bros. banned a Harry Potter theme dinner in London because  the studio considered it an infringement of copyright.

Telegraph.co.uk‘s Amy Willis writes that “The not-for-profit event, which has been renamed ‘Generic Wizard Night’, was to have a menu of dandelion wine, pumpkin soup and Dumbledore’s favourite – mint humbugs. Guests would have been led down ‘Diagon Alley’ by the side of the house and been met by a portrait of the ‘Fat Lady’ who would have demanded a password before they could be let in.”

It can be argued that J. K. Rowling’s lawsuit against the person who produced The Harry Potter Lexicon had some merit. But Warner’s action is hard to understand and almost impossible for reasonable people to condone. Does Rowling even know about the studio’s grinchy* pettiness?

Whether she does or not, parents had better start rethinking their children’s Halloween costume and trading those Dumbledore outfits for pirate and fairy princess garb.

Trick or Treat, Tiffany and Johnny! You have thirty days to answer this subpoena.

Read about it here.

*And be careful about saying “Grinch” publicly – you may be infringing MGM’s copyright.

RC

Start 'em young

The following article was originally published in October 2010.
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The ability of the human mind to rationalize is extraordinary. Take piracy. Among the many comments we have received in response to our postings on the subject, we have heard every rationalization under the sun, ranging from “I didn’t know it was copyrighted” to “I don’t know what copyright is” to “DRM sucks” to “The e-book wasn’t available on legitimate retail sites” to “Information wants to be free” to “I’m not reselling, just sharing with friends” to “The percentage of pirated books is an insignificant fraction of sales through legitimate channels” etc. etc.

Piracy is something that other people do. When we do it there’s always a good excuse. When other people do it, it’s as heinous as grand theft auto.

Clearly, there is a disconnect between the phenomenon of rampant piracy and the scarcity of perpetrators, and the reason seems to be semantic. If we can develop better definitions we may be able to develop better solutions.

Towards that end we offer the following categories of pirate:

1. The Innocent

Young children, technologically inexperienced individuals and others who know nothing about copyright law or Internet etiquette and don’t realize they may be stealing when they download music or e-books. People who simply don’t know better.

2.The Ignorant

These are downloaders who know enough about copyright law to understand the difference between right and wrong, but choose to ignore or flout it.

Though many who fall into this category are young, the classification includes adults, some of whom are highly educated – business people, computer engineers and other professionals who should know better.

We’re giving Innocents/Ignorants the benefit of the doubt by describing their acts of downloading as “inadvertent” or “improper” rather than “illegal.” But if nothing else they must be aware of the legal principle that ignorance of the law is no excuse. If an aggrieved publisher decides to sue you for illegally downloading e-books – as has been done in the music and movie fields – your case will not be automatically dismissed because you didn’t know it was against the law.

3. The Customer

These are people who paid for one version of a book and feel entitled to acquire other versions without paying for them. A good example is the case of a consumer who buys a hardcover edition of a bestselling novel and feels justified in downloading a pirated e-book because the publisher’s legitimate e-book version has not yet been released. No less a personage than the New York Times‘s own ethical arbiter felt that a customer has the right to do this. (See NY Times Ethicist Condones Ripping Off E-Books). In other cases, consumers impatient with DRM restrictions will download a ripped off version of a file instead of paying for it and dealing with customer support.

4. The Philosopher

The Internet era has spawned a generation possessing a strong sense of entitlement, including entitlement to online content whether is is copyright-protected or not. Some members of this generation have rationalized their sense of entitlement and promote it not merely as an abstract concept but as a template for action. (See When Did “Free” Become a Four Letter Word?)

These philosophers collectively march under the banner “Information Wants To Be Free.” Others, taking Robin Hood as their role model, deliberately and defiantly hack protected files or download pirated content to get around the law, asserting their right to liberate it from capitalist exploiters.

What these philosopher-pirates don’t seem to understand is that, in capitalism as in Newtonian physics, for every action there is an equal and opposite reaction. If you’re getting something free, someone else is paying for it.

5. The Recreational Thief

For some people acquiring and sharing files is more of a sport than a business or criminal activity. Since filesharing is technically not illegal, it’s a way of belonging to a community. Recreational pirates gain acceptance from peers and notoriety from sharing files. Some forums even have a “thank you” module where other members encourage sharing,. Thank-You’s are displayed like battle ribbons by prolific uploaders.

Another form of recreational pirating is file-hoarding. Like hoarders of material things, digital hoarders collect and save terabytes of pirated files. Their motivation? “Hey, you never know when you’ll need 10,000 fonts.”

6. The Facilitator

This type is analogous to the owner of a head shop that sells bongs, cigarette papers and drug paraphernalia – everything but the drugs themselves – and thus skirt the law. Similarly, many IT professionals knowingly link to pirated material for a variety of reasons that fall short of hardcore criminality.

A common example are webmasters seeking to boost traffic for their websites. They attract traffic from customers looking for stolen files or seeking links to hot pirate sites. Savvy webmasters load up on as many ads as possible to cash in on that traffic. They are well versed in the ways of piracy but aren’t active in file sharing.

7. The Professional

Professional pirates don’t merely steal and sell software. They use pirated files as bait to smuggle phishing software into the computers of their victims. These programs then steal personal information like credit card numbers and bank account logins. Some of these pirates have been linked to organized crime groups. They employ software hackers to crack DRM, program key generators and penetrate security systems.

You can always tell who the professional pirates are: they’re the only ones who don’t mind being called pirates.

Like any community, the ecology of piracy is complex and interwoven, but it’s clear from a glance that the activities of innocents and amateurs enable the sharks to feast on stolen material and prey on the public. By defining each type we can immediately see what sanctions are in order – who needs a tap on the wrists, who needs to be educated and who needs to be tried in civil or criminal court.

For more postings about piracy visit E-Reads’ Pirate Central.

Richard Curtis and Anthony Damasco