OLD WINE IN NEW BOTTLES—DOES A PUBLISHING AGREEMENT BETWEEN AN AUTHOR AND A BOOK PUBLISHER GRANTING THE RIGHT TO PUBLISH A WORK “IN BOOK FORM” INCLUDE THE RIGHT TO PUBLISH THE WORK AS AN E-BOOK? Throughout most of the Twentieth Century, standard form publishing agreements between authors and book publishers granted the publisher the exclusive right to publish the work “in book form” without elaborating on the meaning or scope of a “book” or “book form.” With the digital revolution, starting in earnest after the turn of the Twenty-first Century, electronic publishing and distribution of works previously published only as traditionally printed books became a commercial reality. This development raised questions for many authors and publishers concerning whether their contracts gave the printed book publisher the exclusive right to publish the work in e-book form, or whether the author, who typically retains ownership of the copyright in the work subject to the rights of the publisher, had the right to license another firm to distribute an e-book version of the work. The question can have significant economic implications. A publisher, which has invested money in distributing and popularizing a work in book form, would not like to have another firm usurp the benefit of its investment by capitalizing on the demand for the work as an e-book, an increasingly important part of the market for reading material. Conversely, an author, if free to license e-book rights to another publisher, is likely to be able to receive a higher royalty rate for a work from an e-book publisher than that provided for in an older standard form publishing contract signed before e-books became a reality. In part because the marginal cost of publishing e-books is negligible, the e-book royalty rate in a new agreement is typically 25%. The royalty rate under an older publishing agreement that does not set a separate royalty for e-books is more likely in the range of 10% (although, of course, e-books are typically less expensive than printed books). known authors such as William Styron and Kurt Vonnegut. Their original publishing contracts from the 1960s through the early 1980s in general granted the exclusive right to publish the works in “book form.” Random House sought to stop the venture cold in its tracks with a preliminary injunction. However, Judge Sidney Stein denied the injunction, Random House, Inc. v. Rosetta Books LLC, 150 F. Supp. 2d 613 (S.D.N.Y. 2001), and the appellate court affirmed, 283 F.2d 490 (2d Cir. 2002). Random House argued, not implausibly, that “book form” meant something with printed words that was read like a traditional book and included an ebook. However, the court disagreed. Relying on New York state court cases taking a restrictive view of the extent to which new uses were included in old licenses that did not expressly contemplate the new uses, the court held that “book form” did not include the right to publish an e-book version. The issue of whether “book form” in a publishing agreement included e-books was raised early on, in 2001, in a case that Random House brought in New York federal court for copyright infringement against the nascent e-book venture known as Rosetta Books LLC. Rosetta Books sought to publish e-versions of works by well The Rosetta Books decision has been the leading case on the issue for almost ten years. However, in December 2011, another publisher, HarperCollins, decided to take another run at the issue based on slightly better contract language for the publisher in a 1971 contract. The new case, HarperCollins Publishers LLC v. Open © 2012 TANNENBAUM HELPERN | 900 THIRD AVENUE, NEW YORK, NY 10022 | 212.508.6700 | WWW.THSH.COM This article is not legal advice and may constitute attorney advertising in some jurisdictions. Road Integrated Media, LLP, 11 Civ 9499 (NRB) (S.D.N.Y.), concerns the book Julie of the Wolves by Jean Craighead George, a children’s novel originally published in 1972. According to the Complaint, the 1971 agreement grants the exclusive right to publish the work “in book form” in the first paragraph, but elsewhere in the agreement (paragraph 20) makes clear that the scope of the right extends to exploitation of the Work “through computer, computer-stored, mechanical or other electronic means now known or hereafter invented.” The strength of the new case is difficult to evaluate because HarperCollins curiously chose not to attach the publishing agreement to the complaint. This could mean that HarperCollins’ interpretation of the agreement is a stretch. However, the additional language could also be all it takes to expand “book form” to include e-books. If you have questions about e-book rights, or author’s rights generally, please contact Donald Prutzman at (212) 508-6739, email: [email protected], or the Tannenbaum Helpern partner with whom you usually deal. The HarperCollins case bears watching, as the result could significantly affect the relative rights of authors and publishers under pre-2001 publishing agreements. After the Rosetta Books decision in 2001, publishers generally changed their standard form agreements to include ebooks and other new forms expressly. However, authors and their heirs should take a look at their pre-2001 agreements to see what light they shed on who, as between author and publisher, has the right to publish the work in ebook form. Even if the language is ambiguous, the result in the HarperCollins case may give the author or their heirs leverage to negotiate a better royalty rate for e-books, more in line with the going rate under today’s agreements that expressly contemplate e-book versions of published works. 2 © 2012 TANNENBAUM HELPERN | 900 THIRD AVENUE, NEW YORK, NY 10022 | 212.508.6700 | WWW.THSH.COM This article is not legal advice and may constitute attorney advertising in some jurisdictions.