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Electronic Rights: What is a Book?

Lloyd L. Rich

Introduction

While the Tasini and Greenberg electronic rights decisions may be more relevant for publishers of collective works (see "Electronic Rights: Copyright Law & Collective Works", Lloyd L. Rich, December 2001) the Random House, Inc. v. Rosetta Books, LLC decision in 2001 should have greater importance since it may have ramifications for many publishing contracts pre-dating the mid-1990s. One of the reasons for the broader impact resulting from the Rosetta Books decision is because it is based upon the interpretation of a publishing contract's "grant of rights", "publication" and "non-compete" clauses while the Tasini and Greenberg decisions were primarily founded upon an interpretation of the collective work clauses in the Copyright Act. The appeal Rosetta Books was heard in late January 2002 and a future update or article will keep you informed of the results of this appeal and any additional ramifications that may unfold based upon that decision.

Random House v. Rosetta Books

Rosetta Books, a start-up e-book publisher, entered into e-book contracts with several well-known authors -- William Styron, Kurt Vonnegut and Robert Parker -- who had previously entered into agreements with Random House or Dell Publishing between 1961 and 1982 to publish certain of their works "in book form". In early 2001 Rosetta Books launched its e-book business by offering these authors' works, along with those of other authors, for sale in digital format over the Internet.

Random House believing that it controlled these authors' e-book rights filed a legal action against Rosetta Books, but not against the authors, alleging that (1) the digital publication of these authors' works constituted copyright infringement and (2) Rosetta Books tortiously interfered with the existing contractual relationship between Random House and its authors. By bringing this action Random House sought to prevent Rosetta Books from selling these authors' works in digital format.

Random House based its copyright infringement allegation upon the phrase to "print, publish and sell the work[s] in book form" that was incorporated in each of the author's contracts. Random House interpreted this phrase to mean the faithful reproduction of the author's text in print and electronic form and therefore since Random House already controlled the author's e-book rights, that Rosetta Books could not also possess these same rights. Random House also cited the non-compete clause in the contract as further evidence that the authors had granted Random House broad, exclusive rights in their work that encompassed e-book rights.

Relying on the language of the publishing contracts and basic principles of contract interpretation, the District Court found that the right to "print, publish and sell the work[s] in book form" does not include the right to publish the works in the format that has become known as the "e-book." The court furthermore stated that the right "to print, publish and sell the work in book form" is understood in the publishing industry as a "limited" and not a broad grant of rights.

In reaching this decision the court also relied upon additional language that was included in the grant of rights clause that specifically conveyed to Random House the right to publish book club editions, reprint editions, abridged forms and Braille editions of the authors' work. The court reasoned that the grant of these specific rights would not have been necessary if the term "in book form" meant all types of books. Therefore, it was held that the grant of rights clause specified "exactly" those rights that the author granted to the publisher and that the grant in the Random House contract did not permit Random House the right to publish e-books of the authors' works.

The court also rejected Random House's argument that the court should broadly interpret the grant of rights clause to include the technology of e-book publishing as a new and permitted use of the authors' works. For this argument, Random House relied upon previous decisions that had permitted a broader interpretation of the grant of right clause for new technological uses of the original work but in this instance the court ruled that the prior decisions were not applicable since they contained conveying rights language that was far broader than the language incorporated in the Random House contract and that the rights at issue in the prior cases "fell squarely within the same medium as the original grant" while those in this instance did not.

The court in analyzing the technology of e-books recognized that the use of hardware and software by electronic publishers was a significant factor that was not present in print publications. It then went on to distinguish e-books as a "new use" (electronic digital signals sent over the Internet) that was a different medium from the original use -- printed words on paper, in that e-books provided a reader with additional capabilities that were not possible with the print publication such as the ability to manipulate data, search the text, change font and type style and type notes into the text and organize them electronically.

With respect to the non-compete clause in the Random House contracts that prohibited an author from publishing "any material in book or pamphlet form, based on material in the work, or which is reasonably likely to injure its sale", the court ruled that this clause was not relevant in interpreting the grant of rights clause. The court then stated that if it were found that an author's contract with Rosetta Books violated this clause then Random House's remedy would be a breach of contract claim against the author and not a copyright infringement action against Rosetta Books.

The District Court ruled in favor of Rosetta Books and denied Random House a preliminary injunction to stop Rosetta Books' distribution of the Random House titles. This is the decision that is currently under appeal.

Conclusion

The ramifications of the Rosetta Books decision may have greater significance for print and electronic book publishers than the Tasini and Greenberg decisions that are of primary importance for magazine and newspaper publishers.

Despite the guidance forthcoming from the Tasini, Greenberg and Rosetta Books decisions it may still not be easy to determine who controls the e-rights of a particular work but a "road-map" is evolving. Therefore, it would be wise for a publisher to review its standard publishing agreement as well as any pre-existing publishing agreements to ascertain whether it is the publisher or author who controls the e-rights of a particular work. This evaluation should focus upon the grant of rights clause as well as looking at some of the following issues:

How broad or restrictive is the language in the grant of rights clause?

Is there any reference in the grant of rights clause to electronic rights?

Does the grant of rights clause include a "future technology clause" permitting future forms of publication that may not have existed at the time the contract was executed?

Is there specific granting language for different types of books such as the language included in the Random House agreements discussed in the Rosetta Books decision?

Has the author specifically reserved certain rights for the author's use?

Will the proposed electronic version of the author's work add new electronic features that distinguish it from its traditional print publication and if yes, was this new right granted to the publisher by the author?

The publishing agreement review should also include an analysis of the non-compete clause especially if it has been determined that the author had retained the e-rights in his/her work. In doing this review the publisher should decide whether the publication of an e-book and/or exploitation of other types of e-rights would violate the terms of this clause.

While the publishing industry continues to move forward with new electronic publishing models that augment the existing print publishing models one must recognize and take into consideration that it is currently not possible to predict with certainty how an individual court may interpret a particular grant of rights or non-compete clause. However, by using caution, taking into consideration the guidance provided by the Tasini, Greenberg and Rosetta Books decisions and obtaining advice from publishing legal counsel one should be better prepared to meet the legal challenges that result from e-rights and electronic publishing.

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