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When Does “In Book Form” Include Grant of EBook Rights?

Co-author Gerald M. Levine

In agreeing to publish a work publishers typically demand author “grant and assign” an exclusive license to “print, publish and sell” the work for the “term of copyright and all continuations, extensions, and renewals thereof” in stipulated languages and territories. In modern publishing agreements the language is clear that the grant extends to digital rights. However, the grant of right in 1970’s contracts typically used the phrase “print, publish and sell the work in book form.” E-books were not imagined at that time (or, if they were) their form was not realized until the late 1990’s. There are two questions. First, did the author intend (could it have intended?) to grant publisher more than print rights? If she did not then she can separately grant ebook rights to an ebook publisher. Second – an interrogative conundrum – is an e-book a book “in book form”?

It appeared that the questions were answered in Random House, Inc. V. Rosetta Books, 150 F. Supp.2d 613 (S.D.N.Y. 2001), aff’d 283 F.3d 490 (2nd Cir. 2002). In that case, the district court denied a preliminary injunction against Rosetta Books which the Second Circuit Court of Appeals affirmed. Because the parties thereafter settled the dispute the ultimate questions were never answered. But, the district court held (citing New York contract cases) that the phrase “print, publish and sell in book form” did not “include the right to publish the works in the format that has come to be known as the ‘e-book’.” The court held that it did not because “in the publishing industry” the phrase “is understood … to be a ‘limited’ grant.” The phrase “limited grant” is anathema to publishers who believe they acquired an exclusive license to “publish” an author’s work in every conceivable format “now known or hereafter invented” for the term of copyright.

The unresolved issue of “in book form” has now returned to court with differences in the grant language. In HarperCollins Publishers LLC. v. Open Road Integrant Media, LLP., 11 Civ 9499 (S.D.N.Y complaint filed December 23 2011) the plaintiff alleges that “[n]otwithstanding the … grant of rights … Open Road, a digital publisher … seeks illicitly to capitalize on HarperCollins’ four decades of publication and promotion of Julie of the Wolves [by] … publishing an electronic version of that book.” The complaint continues:

The rights that HarperCollins acquired from George plainly encompass such electronic means of distribution, which is but a technology-enabled variant for how consumers can read the Work. Open Road’s unlawful exploitation of those rights is directly competitive with sales of the Work in paper format and HarperCollins’ own plans to publish Julie of the Wolves as an e-book.

The Random House case was decided under New York contract law. In affirming the district court, the Second Circuit Court of Appeals added that “New York … has arguably adopted a restrictive view of the kinds of ‘new uses’ to which an exclusive license may apply when the contracting parties do not expressly provide for coverage of such future forms.” New York being the capital of book publishing in the United States it is not surprising that the issue are not been litigated in any of the other Circuits.

Given how the Random House case ended HarperCollins is in a position to test “whether the license extends to ebooks” by exploring the “‘evolving’ technical processes and uses of an ebook … and the reasonable expectations of the contracting parties,” Random House, 150 F.Supp.2d at 615 n. 5. Random House had argued that “the phrase ‘in book form’ means to faithfully reproduce the author’s text in its complete form as a reading experience and that, since ebooks concededly contain the complete text of the work, Rosetta cannot also possess those rights.” The court did not see it that way:

While Random House’s definition distinguishes “book form” from other formats that require separate contractual language — such as audio books and serialization rights — it does not distinguish other formats specifically mentioned in paragraph # 1 of the contracts, such as book club editions and reprint editions….

The Court continued:

Not only does the language of the contract itself lead almost ineluctably to the conclusion that Random House does not own the right to publish the works as ebooks, but also a reasonable person “cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business” … would conclude that the grant language does not include ebooks.

The Court concluded:

Employing the most important tool in the armamentarium of contract interpretation — the language of the contract itself — this Court has concluded that Random House is not the beneficial owner of the right to publish the eight works at issue as ebooks.

The grant of rights language in the HarperCollins’ agreement is not identical to the Random House’s agreement and therein lies an interesting question. The next substantive step in the HarperCollins litigation will be an application for a declaration that the language in its contract is not a limited grant.  Instead of “print, publish and sell in book form” the HarperCollins contract formulates the grant of rights as “publish … in book form.” The question will be whether “publish” will be construed differently than “print, publish and sell.” Only if the author agreed to a “limited grant” (harking back to Random House) would she legally assign her right to a digital publisher to publish her work in e-book format.

HarperCollins alleges that Open Road is seeking “to reap where … it has not sown by seeking to divert sales of the Work from HarperCollins in the rapidly expanding e-books market.” It complains that “[t]his fundamental impairment of rights ensured to HarperCollins by contract and copyright law should be enjoined and Open Road’s unlawfully gotten gains therefrom disgorged.”

One can hardly wait for the next installment on this issue. Until the grant formula “print, publish and sell in book form” and “publish … in book form” were abandoned for a more inclusive grant of rights (which is now “standard”) digital rights for works contracted for in the 1970s and into the 90s may very well be under authors’ control.

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