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The New eRights Battle

December 14, 2009
By Michael Cader

As many readers know by now, last Friday Random House ceo Markus Dohle wrote to agents with the twofold purpose of summarizing some of the publisher’s ebook and electronic marketing initiatives, and reasserting their view that “the vast majority of [their] backlist contracts grant us the exclusive right to publish books in electronic format.” Since many agents disagree with that view, the letter was quickly interpreted as a warning shot to Jane Friedman’s start-up Open Road and any others who would aspire to electronic rights to legacy titles still active in the marketplace. And some saw the possibility that Random House might return to court, to fully litigate the issues left not fully resolved when they sued Rosetta Books in 2001.

But Random House spokesman Stuart Applebaum tells us the letter “was written and is put forward in the spirit of collaboration, not confrontation, with the agent community.” Regarding backlist titles by William Styron (whose works had been licensed earlier to Rosetta as well), Applebaum says “Random House is having ongoing discussions with the Styron estate representatives and we are confident we will will have a mutually agreeable publishing arrangement for Mr. Styron’s backlist e-book titles and that our promotion of them will benefit his  Random House print editions as well.” Applebaum underscores the publisher’s intention to publish ebooks of authors’ classic titles “with as great creativity, vigor, and care as we devote to their print editions.” (Open Road has emphasized the marketing plans and platform they intend to bring to ebooks.)

The NYT reported that there is “resistance” from Simon & Schuster to the announced electronic license of Joseph Heller’s Catch-22 to Open Road. Amanda Urban at ICM “believes the e-book rights reside with the author,” the Times writes, but she indicates “discussions were continuing” with Open Road and a deal has not been signed yet.

Agent and owner of E-Reads (which only licenses fully reverted works) Richard Curtis opines to the WSJ, “Someone would have to have a lot at stake to be willing to spend hundreds of thousands of dollars to go up against Random House in court. I don’t know whether anybody will feel they want those rights so badly they are willing to spend like that to prosecute a claim right up to what could be the Supreme Court.”

The arguments Dohle makes in his letter are similar to those asserted by Random House in court in 2001. “Random House considers contracts that grant the exclusive right to ‘publish in book form’ or ‘in any and all editions’ to include the exclusive right to publish in electronic book publishing formats. Our agreements also contain broad non-competition provisions, so that the author is precluded from granting publishing rights to third parties that would compromise the rights for which Random House has bargained.”

When Judge Sidney Stein ruled on these arguments in 2001, he found that “that
the most reasonable interpretation of the grant in the contracts at issue to ‘print, publish and sell the work in book form’ does not include the right to publish the work as an ebook.” He did not “opine” on the non-competition argument since he concluded “the remedy is a breach of contract action against the authors, not a copyright infringement action.” But Stein was not deciding the case itself; he only ruled against Random’s request for a preliminary injunction blocking Rosetta from issuing eight disputed works as ebooks.

Stein wrote in his conclusion–later supported by the Court of Appeals–that “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. This is neither a victory for technophiles nor a defeat for Luddites. It is merely a determination, relying on neutral principles of contract interpretation, that because Random House is not likely to succeed on the merits of its copyright infringement claim and cannot demonstrate irreparable harm, its motion for a preliminary injunction should be denied.”

Michael Boni, attorney for the Authors Guild in the Google Books case, represent Rosetta as lead counsel. At the time, Penguin, Simon & Schuster, Time Warner Trade Publishing, and Perseus filed a joint brief in support of Random House, and when Random House appealed, it was supported by a brief from the AAP. The Authors Guild and the AAP filed a brief with the Court of Appeals on behalf of Rosetta.

See the full letter from Random House here.

Filed Under: eNews, Free

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