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Mar 24 2014

Court Rules Publisher Owns E-Book Rights Based on 1967 Contract Language

In 1971, Jean George wrote the popular children’s novel Julie of the Wolves and conveyed publishing rights to HarperCollins to publish the book in exchange for a $2,000 advance and royalty payments of between ten and fifteen percent, depending on number of copies sold.

Her literary agency Curtis Brown, negotiated the terms of the contract for her and insisted with HarperCollins on using certain language Curtis Brown had inserted in other HarperCollins’ contracts going back to 1967.

The popularity of Julie and the Wolves never waned particularly since it is always on the list of 100 most-banned books in America due to its depiction of an attempted rape of its young protagonist. Ms. George, who passed away in May 2012, published two popular sequels, one in 1994 and another in 1997.

Julie of the WolvesE-book publisher Open Road approached Curtis Brown with a proposal to publish an e-book edition of Julie of the Wolves in exchange for a 50 percent royalty to Ms. George. Preferring initially to pursue an e-book publication with her longtime publisher HarperCollins, Ms. George authorized her agent to contact HarperCollins and suggest the e-book publication, with the proviso that HarperCollins match Open Road’s 50 percent royalty offer. HarperCollins expressed interest in electronic publication; however, they counter-offered only a 25 percent royalty. Dissatisfied with that offer and expressing her belief that she — not HarperCollins — owned the e-book rights, Ms. George instead contracted in April 2011 with Open Road to publish Julie of the Wolves as an e-book. The e-book has sold about 1,600 copies to date.

HarperCollins was having none of that and brought suit to force Open Road to disgorge its profits and hand over the e-book. In addition to the standard parts of the publishing agreement, like Paragraph 1 which conveyed to HarperCollins “the exclusive right to publish [Julie of the Wolves] in book form,” the publisher was relying on Paragraph 20 of the contract which granted HarperCollins the exclusive right to “issue licenses, subject to the author’s permission, to use the work in ‘in storage and retrieval and information systems, and/or whether through computer, computer-stored, mechanical or other electronic means now known or hereafter invented.'”

The court found that this language was clear and covered e-books so that it did not need to delve too deeply into cases that talk about “new uses” and whether they were foreseeable or covered by old contracts. It noted that Open Road’s lawyers largely “chose to ignore” this paragraph in their brief. What else could they do? They tried to go on the angle of author’s rights and that the clause was vague and unenforceable because it did not contain a royalty rate. They also tried to rely on prior case law that said the “right to print” did not necessarily include the right to “digitize” the book. But here, the court noted, the language was broader than “print” as it gave HarperCollins the right to “publish.”

What is unusual is that this language was inserted into the contract at the request of Curtis Brown, Ms. George’s agent. HarperCollins did not have this language in its standard contract agreement with any other agency; Curtis Brown drafted the language. This was incredibly forward-thinking in 1967 when computers took up the better part of a large room and even paperbacks were considered second-class to hardcovers. But why would an agent insist on including language that gave the publisher more rights than it wanted? I can bet that this was the easiest contract negotiation HarperCollins ever handled.”You want to give us more rights for the same advance and royalty? OK you twisted our arm.” Well at the time, Curtis Brown was probably only trying to protect Ms. George by including digital media as one of the uses for which HarperCollins had to first obtain Ms. George’s approval. They did not foresee how HarperCollins could use this shield as a sword 46 years later.

Now, if Ms. George’s estate wants to continue the publication of the e-book version of Julie of the Wolves it must agree to HarperCollins’ agreed-upon royalty rate (half what Open Road was willing to give) or shelve the e-book. HarperCollins of course had all the time in the world to try and put out a digital version and before Open Road came along. Ms. George may have well accepted her trusted publisher’s lower rate if HarperCollins had come up with the idea first and approached her. Instead, HarperCollins seems content to just disgorge Open Road’s profits and pursue statutory damages for copyright infringement. I hope the court will not reward Harper with a large award here as they showed no effort in exploiting the book to its fullest.

It’s a cautionary tale about making sure you try and retain as many rights as you can when you sign a publishing deal. The case hopefully will not have too large an impact as most contracts from back-in-the-day will not have a clause foreseeing e-books. But for the George family, the battle is lost. Sometimes even when you think you are protected in the frozen tundra of the publishing world, it can be impossible to keep the wolves at bay.

Read more: http://www.newyorklawjournal.com/id=1202647703185/Harpercollins-Pub.-LLC-v.-Open-Road-Integrated-Media%2C-LLP%2C-11-Civ.-9499#ixzz2wtGs3tUl

3 comments

  1. Matthew S. Chan

    I have no love for most traditional publishers and their ilk. In this day and age, they provide little value to most entrepreneurial authors today. They take too much and provide too little so they can support expensive offices and staff so far removed from the original works.

  2. Alvaro Guevara y Vazquez

    Being a composer, I learned the hard way…about shyster publishers…..In the old days, when you needed your worked shopped and promoted…..which generally took some doing….you needed a Publisher. In the digital world, where you can publish and sell your work online, publishers are obsolete…. The bottomline is, an artist must be well informed about publishing rights, he or she must treat them as any other capital asset…..or commodity…. Generally, this requires the aid of an Entertainment Lawyer, since entertainment contracts can be as complicated with their legal jargon and such, than the expanding universe! lol I always tell my friends and people in general, that being an artist…..especially one that promotes “Serious Art”….you must have a pot of gold…..since Art! is a King’s Sport! The less resources you have, the less chances you’ll have to get your name out there….Art isn’t about Art….in this Capitalist jungle! It’s business! and business requires great attention to detail….or you’ll wind up like the Beatles….who had no concept of Business or Publishing Rights, the rights to their hit songs were owned by others….and later were sold for about $150,000,000+ u.s.d. to Michael Jackson….. The most famous case of Publishing Piracy, is Franz Schubert….the Austrian composer, who wrote the famous “Ave Maria” and many other gems, who would sell his songs to publishing parasites for the price of a meal! and they in turn made thousands….. Thanks for sharing this story Oscar Michelen…..

  3. Oscar Michelen

    Thanks for the comment. Good luck in your career!

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