And yet book publishers themselves are not wholly innocent of the practices that attracted the attention of the Justice Department. The scale of their malfeasances may be infinitely smaller (a Wall Street Journal writer described publishers as “plankton”) and the issues more prosaic, but there are occasions when “C” might stand for something more ominous than Coincidence.

Did you ever wonder for example where it is written that the “standard” hardcover royalty for a trade book is 10% of the retail price on the first 5,000 copies, 12 1/2% on the next 5,000, and 15% on all copies sold thereafter?  Why the “standard” e-book royalty offered by all major American publisher is 25% of net receipts?  Why the “standard” division of territories in the English-speaking publishing market is US and Canada for American publishers and the United Kingdom for British publishers?  Is it not wonderful how the same terms just seem to pop up on everybody’s boilerplate, and if one publisher changes its terms, the changes magically spring up overnight on everybody else’s, like mushrooms?

Of course, we recognize that boilerplate is made to be negotiated, and though almost all major publishers seem to be marching in lockstep, we know that many of their standard terms are flexible if you ask and if you have the clout to alter them. Nevertheless, a conspiracy theorist with a taste for the flesh of publishers (stringy fare at best) might be tempted to go after some if he thought a cabal was afoot.

In fact this very thing happened in 1974 when our old friend the United States Department of Justice brought suit again against twenty-one American publishers for their tacit consent to what appeared to be an unwritten treaty among British publishers to carve up the English-speaking book distribution market.

As the University of Chicago’s Library Quarterly explains it, “Claiming a group of about seventy countries as their ‘traditional market,’ signatories agreed to neither buy nor sell publication and distribution rights to American publishers unless the rights for that market remained intact in British hands. In effect, the worldwide English language book market became divided into two spheres, the British and the American. While this division worked reasonably well for many years, by the 1970s the system was crumbling under the pressure of worldwide changes in book production, distribution, and consumption.”

As a result of the DoJ’s antitrust suit, the so-called Traditional Market Agreement was ended.

Or was it?  Though the Consent Decree will be found in the legal archive of the 21 American publishers that signed it, if you negotiate a book deal with an American publisher today and ask for the traditional territory, I guarantee it will be identical to the one that prevailed until the DoJ threw a spanner in the works in 1974.

But maybe that’s just a Coincidence.

Richard Curtis

This blog post was originally published on Digital Book World as C for Coincidence?  Or Conspiracy?

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

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

**************************************

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

Book contract boilerplate commonly has language warranting that the book does not contain any harmful formulas, recipes or instructions. At the time of the book’s original publication all medical claims should have been completely valid.  Yet there are innumerable examples of foods and medicines considered safe and efficacious ten or twenty years ago that turned out to be the very opposite after research upended assumptions or discredited earlier findings. Margarine once recommended as a substitute for butter was discovered to contain harmful trans-fats. Some artificial sweeteners that seemed like a perfectly safe alternative to sugar have come to be suspected of being potentially carcinogenic. A diet heavy in certain kinds of fish may now also be heavy in mercury, and even the popular food pyramid that dominated dietary thinking for decades was heavy in carbohydrates and a serious contributor to today’s obesity crisis and has been reformulated.

Assuming that the publishers of those older titles have the right to put them into e-book format, the easy option is to reprint the content in its original form.  I’m not a lawyer and can’t say whether or not a publisher incurs liability for reissuing a book that contains debunked information.  But that would not prevent an aggrieved plaintiff from making a claim that the publisher should have known better than to promote a food or drug demonstrated to have adverse health effects.

I can personally testify to several instances where a publisher, contemplating an e-book edition of an old health book, asked the author to revise it but offered no compensation. When the author said he or she would not or could not update the book without being paid, the publisher asserted its right to release the original  edition, putting itself and the author in legal jeopardy. This is a disservice to author and reader alike.

If medical information is stale or has been disproved it is the publisher’s obligation to pay for an update. If it can’t afford to do so, it should let the book go out of print and give the rights back to the author.

Richard Curtis

A confidentiality agreement, also known as nondisclosure agreement (NDA for short) is a commitment by a party entering into a legal relationship to refrain from disclosing confidential or proprietary information without the express permission of the other party. Because valuable trade secrets are involved, violation of the terms of an NDA can lead to serious liability. For the reason we urge you to study this specimen NDA and consult with an attorney before entering into one.

But you don’t have to be a lawyer to identify some troubling aspects in the document. Foremost is the exclusivity of the information that is being shared with you. How do you know that the party asking you to sign an NDA has not also disclosed the same information to dozens of other parties? If there’s a leak that you did not cause, will you be blamed for it? Will you be sued for it?

NDAs cover an extended period of time. But when do they expire? When does the protected information become so public that your commitment is meaningless? If you have signed an NDA as an employee of a company and are then hired by another company that makes the same products, are you in danger of being accused of stealing trade secrets? And the information you’re being asked to protect – is it really confidential or can is it well known? What’s a trade secret and what’s garbage or gossip?

By the nature of the relationship between authors and publishers, it’s clear that confidentiality doesn’t sit comfortably. For one thing, a publisher’s contract boilerplate is general if not public knowledge. And as for specific terms, though there is seldom any legal obligation to hold them confidential, it often serves publisher, author, or both not to disclose them. An author who reveals that his publisher granted him an exception to an ironclad policy, or paid him an unprecedented advance, will embarrass his publisher. Thus there is a natural inhibition about spilling the beans about genuinely significant information.

And when the beans are spilled, such as releasing the price paid for a book, it’s done deliberately with the consent of both author and publisher.  And, as everyone knows, such information is not only unreliable but as often as not grossly exaggerated.

A publisher who requires confidentiality of an author may have valid reasons for doing so, but if you’re presented with an NDA it’s a good idea to scrutinize it and ask a lot of questions.

Richard Curtis

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

Richard Curtis

This article was originally written for Locus, The Newspaper of the Science Fiction Field. It’s reprinted in Mastering the Business of Writing. Copyright © 1990 by Richard Curtis. All Rights Reserved.

I appreciate your asking my advice.  You won’t like what I have to say but I am going to tell it to you straight.

You are a brilliantly gifted draughtsman and the superhero you’ve created is absolutely unique.  You look like a very nice person and I don’t want to see your heart broken.  So, before you take the job with that comic book company I want to make it absolutely clear that if you accept it you will NEVER, EVER own the rights to your work.  Your employer will be free to create $100 million movies with ten sequels. Your precious creations will be works for hire and your only compensation will be the salary they pay you.

Consider that job a life sentence from which there is no appeal.  No appeal whatever. Have I made myself plain? Do you want to let that sink in before you accept their invitation to draw for them?

But don’t take my word for it. Read Michael Cieply’s New York Times article reporting on the ruling by a federal judge: Court Ruling Says Marvel Holds Rights, Not an Artist. If you feel my caveat was ambiguous, read the judge’s statement about the merits of the suit brought against Marvel: “In Thursday’s ruling, Judge McMahon provided a detailed review of the disputed Marvel works, and concluded that the Kirbys’ evidence did not make ‘so much as a dent’ in the assertion that Mr. Kirby had worked for hire, and thus did not own the copyrights.” Courts have taken similar positions in lawsuits concerning Superman and Stan Lee-created characters.

By the way, your brother, the author who’s just been hired by a book publisher to novelize a video game? The same rule applies. In the neighborhood I grew up in the rule was called “Tough Noogies.”

Richard Curtis

In a newsletter sent to Dorchester authors and agents the company described the course set by CEO Robert Anthony and his financial and editorial team.  Among the highlights are: bringing royalties up to date, improved e-book and trade paperback royalties, shift from mass market to print on demand trade paperbacks, more responsive royalty accounting including a clear statement of reserves against returns, and provisions for recovering rights in the event of Dorchester’s failure to report and pay royalties on a timely basis.

For the summary statement click here, and for the actual terms of the amendment, click here.

Anthony and his staff have expressed their determination to create a streamlined new company responsive to conditions of the 21st century. We hope this is the beginning of a turnaround for an excellent genre publisher that, like every other publisher today, is reinventing itself in the Digital Era.

Richard Curtis

But B&N’s stock value has been climbing back spearheaded by its own digital strategy built around its Nook E-Reader.  It may be the entertainment potential of the Nook that attracted John Malone.

RC

The United States Supreme Court has refused to hear an appeal of a lower court’s ruling that digital music royalties should be treated as a license.  Given the similarities between music and book contracts, the implications for authors are significant. Below is our original article on the subject published in October 2010.

Don’t just stand there. Look at the royalty language in your book contract.

RC

*********************

Is there a reason why publishers are not wailing, gnashing their teeth and rending their garments over the Eminem decision?

Maybe they haven’t heard about it. Maybe they don’t understand it. Maybe they don’t think it applies to them. Maybe they just don’t want to think about it at all.

They really must think about it and so must you. The case heard by the Ninth Circuit Court of Appeals was ostensibly about music but you can bet it won’t be long before it’s about e-books, and it could throw the publishing industry’s royalty structure into chaos.

Ethan Smith of the Wall Street Journal explains the issues (the italics are ours): “Under most recording contracts, artists are entitled to 50% of revenue from licensed uses of their music. That usually means soundtracks for movies, TV shows and ads. Sales, on the other hand generate royalties for the artist at a much lower rate—generally in the low teens, and rarely more than 20%.”

For “recording contracts” read “publishing contracts”. Under current book industry standards publishers pay authors a 25% royalty for e-book sales. Their contracts also call for a 50% share of e-book licenses made with third parties. But publishers do not consider e-book revenue to be license revenue. If they did they’d have to pay authors 50% of what they receive rather than half of that amount.

In the case in question, Eminem’s producers F.B.T. Productions brought a lawsuit against Aftermath Records claiming that what Aftermath defined as sales were really license revenues and Aftermath therefore owed them the difference between the low royalty they were being paid and the much higher share of license money. The three judge panel of the San Francisco Federal court agreed:

Pursuant to its agreements with Apple and other third parties…, Aftermath did not “sell” anything to the download distributors. The download distributors did not obtain title to the digital files. The ownership of those files remained with Aftermath, Aftermath reserved the right to regain possession of the files at any time, and Aftermath obtained recurring benefits in the form of payments based on the volume of downloads . . . Under our case law interpreting and applying the Copyright Act, too, it is well settled that where a copyright owner transfers a copy of copyrighted material, retains title, limits the uses to which the material may be put, and is compensated periodically based on the transferee’s exploitation of the material, the transaction is a license.

For a cogent analysis of the case and its implications for the book industry, read Copyright Alert: 9th Circuit Holds Digital Downloads are Licenses Not Sales by copyright authority Lloyd J. Jassin, to whom we’re indebted for bringing the case to our attention.

It will not surprise us to find a flurry of amendment letters from publishers in the next few months saying “Wherever we refer to ‘royalty’ we mean ‘license’ but we’re still going to pay you 25% of what we receive.”

Richard Curtis