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Preparing for Reversion at Contract Inception

Co-author Gerald M. Levine

Publishers typically offer an unsatisfactory reversion of rights clause so it is prudent to negotiate for an even playing field on this issue. Assuring author has a genuine right of reversion in the event her work goes out of print must be a high priority, particularly in an electronic environment where it could be argued that nothing ever goes out of print. In consideration for publishing and distributing an author’s work and for the risk that revenues from publication will fall short of expenses publishers take an exclusive license for the term of copyright subject to two forms of termination and reversion: by statute and by contract. We have discussed statutory termination in an earlier Note. Under that right authors have an opportunity within a window of time to give notice of termination and, failing the original publisher bidding anew for the copyright, can license the work (or arrange for its publication) to another publisher. Contractual reversion of literary property by notice of termination is typically built into the publishing agreement in an “out of print” clause that gives the author the right to terminate the exclusive license under stipulated circumstances.

The “out of print” clause in words or substance opens with the following words:

If, at any time after the expiration of [stipulated time] from the publication date, the Publisher allows the Work to go out of print [or no print or electronic version is available for sale] and such status continues in effect for [a stipulated time] after the Author shall have given Publisher [a first] written notice to put the Work back into print, then the Author by a [a second] notice in writing may terminate this Agreement ….

The term “out of print” means both availability for sale and actual sales. Inventory is not determinative although it may be important if the agreement provides for post-termination sales to the author. Thus,

The Work will be considered available for sale only if the total number of copies of any edition of the Work sold in the [licensed territory] on which the Author is paid royalties exceeds a total of [number of copies] in the aggregate in the two most recent royalty periods and the Work is included in the Publisher’s then recent print and/or electronic catalog.

Implicit in “available” is “unavailable.” A work is unavailable if unit sales fail to reach a stipulated level. For digital or print on demand books “out of print” is typically measured by the amount of earnings over an agreed number of royalty periods: if the author receives less for a stipulated number of royalty periods than a stipulated number of dollars the work is considered “out of print.” Being dropped from the catalog is a powerful indicator that the publisher has no further interest in the work.

If the publisher responds to author’s notice by reissuing the work timely as provided in the “out of print” clause, there can be no termination since the condition for its exercise has been preempted. The stipulated periods for exercising a right, number of units sold and dollar amounts should be carefully considered before executing the publishing agreement. This is so because most trade books fall into the mid-list category and (apologies for uttering an unpleasant truth) tend to have a short shelve life. If works go out of print, and the publisher has no interest in reissuing them, authors should be able to regain control over their copyrights. There is no rule that says that works out of print are incapable of revival.

Particular care should be given to text books or books published by textbook publishers for which publishers are more than mere licensees: they register and own the copyright in their own names. In these agreements, authors assign and transfer their copyright rights in exchange for a small advance and “royalties.” An “out of print” clause in this kind of agreement is the only way to re-capture copyright via a reassignment (reversion) to the author.

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