Should I agree to a clause that says I can only sue the publisher where it’s located?

Q. I am considering signing a contract directly with an overseas publisher, but it refuses to change the clause that says any lawsuits —whether brought by it or me— must be conducted exclusively in its country. If it sues me, even spuriously, there is no way I could travel there to defend myself. Any suggestions?

A. This is a provision that publishers frequently refuse to budge on, but here are several alternatives you can try.

  1. Provide that any suit by you against it has to be in the publisher’s country but any suit by it against you has to be where you live. This should discourage spurious lawsuits while not preventing a local lawyer (in whichever country) from being hired to pursue valid claims.
  2. Choose a third location that is convenient for both of you or one that is mutually inconvenient. Either would put you and the publisher on equal footing, which is what you are presumably trying to accomplish.
  3. Keep the clause but delete “exclusively.” It gives the publisher a significant part of what it wants but, from your viewpoint, doesn’t make it exclusive so any lawsuit can still take place in your home court (subject to getting jurisdiction over the publisher by properly serving it with a complaint).
  4. Omit the clause altogether, which leaves the dispute for another day (which may never come). The publisher may consider this a satisfactory way to resolve the impasse. Although omitting an important clause is not something I typically recommend, having it would be worse for you since you’re dealing with an overseas situation.

Each of these approaches (or at least the first three) deals with the issue head-on. What may also be helpful — whether or not one of those alternatives is accepted — is what computer-savvy people call a “workaround,” viz., getting to the place you want but by different means. Consider the following:

  • Accede to the publisher’s position but require that before a lawsuit can be brought by either side, both must mediate the dispute or attempt to do so (diligently and in good faith) for a specified period (e.g., 90 days). Mediation is a non-binding procedure in which a skilled third party seeks to work out a compromise acceptable to both sides. Giving both sides the opportunity to air complaints and suggest solutions can help to dampen emotions and overcome the kind of misunderstandings that frequently accompany seemingly irreconcilable disputes. It can be done long distance through 3-way phone calls or by the mediator speaking (or corresponding) separately with each party and then proposing solutions s/he thinks might be satisfactory to both. This alone may resolve the problem without your being required to travel abroad and without the publisher retreating from its position on location of litigation.
  • If you do decide to sign the publisher’s clause (with or without the “exclusive” language) and are eventually sued, be aware that in some jurisdictions contractual provisions requiring suits to be brought in a foreign court may not be enforced unless the clause also says that you 1) accept or consent to that court’s jurisdiction, and 2) waive rights relating to an “inconvenient forum” (often expressed as forum non conveniens). Because of this, if language indicating either of those things is in the contract you are asked to sign, delete them since it is possible the publisher will be satisfied with the clause without either.

By the way, you say that the publisher refuses to change its position. Is that truly so? Have you walked away from the deal and the publisher not called you back? In real hardball negotiating, only if you are truly willing to walk away do you have a chance of succeeding when there’s an impasse on a key issue and all attempts at compromise have failed. The downside of that, of course, is that you have to be prepared to abandon the deal.

Whether this particular clause should be that issue is a separate question. Many people would not consider it one to kill a deal for. However, if your publisher refuses to accept any of the above alternatives or the workaround option, you may want to consider how reasonable your publisher is in general. And if the answer is “not very”—which would be a valid conclusion since the alternatives are reasonable and certainly the workaround causes no harm other than to delay hauling you into court —then you may not want that company or person to be your publisher in any event.

(Originally published in the Winter 2010 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

Can I sue my publisher? What about the company that bought foreign rights?

Q. My contract for a medical how-to book has a clause which grants me full cover approval. I designed the cover, which includes powerful back cover endorsements from prominent doctors. When it came out in paperback, a year after the first hardcover run, the publisher had changed all the cover endorsements to industry praise as opposed to those I had included. They did this without my permission or knowledge. Is there any recourse? Can I sue them?

This same publisher allowed a foreign language house that bought Spanish-language rights for Mexico and Central America to edit the book to within 1/4 of its original content, thereby making it dangerous to the public. While this hack job was underway, they deliberately did not let me know since they knew I would not agree.

The foreign language house was told to “tear covers.” They then reprinted the same butchered book two years later, with another title slapped on it. They have been selling it in the United States, not their territory, and I have not been getting proper royalties. I have been phoning, emailing and faxing my publisher about this for 10 years ….to no avail. Can I sue my publisher and the foreign one?

A. One of the first things law students learn in law school is that the proper question is not “Can I sue?” but “Can I win?” Virtually anyone can sue. Just have a lawyer draft the proper papers (or — not recommended — do it yourself) and pay the relatively low court filing fee.

Even though the proper question contains the same three words as yours and the law student’s, the answer is far from simple. And even if a columnist, friend or your lawyer says, “Yes, you can win,” it doesn’t mean that you will. Though people wanting to sue often refuse to believe it (I’m not saying that this is the case in your situation), there are frequently good factual or legal arguments on both sides of the issue and, even if you or your lawyer think you have the better case, a judge or jury could well side with your opponent in any dispute about the facts of the case (often depending on “he said/she said” testimony), the judge could find your opponent’s legal arguments more persuasive, or the lawyer for the other side could just do a better, more persuasive and effective job than the lawyer (s) you have hired. Even when you have citations to previous, analogous cases that appear to support your position, there may be one or two facts in your situation that differ somewhat from those in the case(s) you and your lawyer are relying on, or facts in that case that are missing from your situation or that exist in your situation but are not in the case you are relying on. These differing fact patterns could suffice from a legal viewpoint to distinguish your case from the ones you are relying on, enough to give a judge sufficient reason not to rely on the precedents you cite.

The cost of lawyers and related expenses, the amount of time it will take for the case to get to trial and through any possible appeals, the emotional toll and inconvenience of being involved in litigation, the possibility of the publisher filing counterclaims or related lawsuits against you in retaliation, and what you will win if victorious are all factors you need to consider in deciding whether to bring a lawsuit. You will also need to consider the effect that bringing a lawsuit will likely have on the publisher — its analysis for itself of the same factors listed above and such other factors as its reputation, the amount of management time the litigation will take up, the distraction the case might cause for the publisher, and the likelihood of it staunchly opposing the suit or deciding it’s better to settle and at what point in the process it might do so.

People often significantly underestimate the cost of litigation. To lawyers or sophisticated businesspeople, it is not surprising that lawsuits that non-lawyers think are “simple” can end up costing a plaintiff $100,000 or so in legal fees if the company being sued has its own lawyer (or can afford to hire one), decides to contest the suit vigorously, and the case goes to trial and is appealed. Even without realizing this, expense-conscious individuals considering a lawsuit often ask lawyers if they will represent them on a contingency basis. The reality is that virtually no knowledgeable lawyer who has a for-profit practice will take a publishing case or similar litigation on a contingency basis. The results in most of those cases are uncertain, the time and cost in properly preparing a case significant, and the amount on which the contingency percentage would be based likely much too small.

That being said, I would love it if someone with the funds, top-notch lawyers, perseverance, intelligence and emotional stamina would sue publishers like the ones you describe (and even some more reputable) who often ignore provisions in their author-publisher contracts because they assume that authors won’t have the money, lawyers or fortitude to sue and the amount apt to be won by the author not worth the investment involved.

(Originally published in the Winter 2008 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

Do I have cover approval for the paperback edition of my hardcover book?

Q. My contract grants me cover approval but the paperback publisher never sent me the cover to look at. It’s totally different from the dust jacket on the hardcover, which was fabulous. I’m told that paperback publishers have the right to design their own covers. Is that true?

A. The contract between you and your publisher essentially covers only copies of your work published by that publisher, whether hardcover, paperback or electronic. With very limited exceptions, its provisions do not apply to copies of your work published by licensees of your publisher. If there are particular provisions in your contract that you want carried over to an edition published by any of its licensees, you should list those provisions, by repeating them or by cross-reference to the clauses containing them, in a section of the contract which says that the publisher must include them in its contract with the licensee. Another way would be to say, each time one of those provisions appears in the contract, that the provision must also be contained in any agreement the publisher signs with a licensee for another edition of the book.

Among the clauses that an author is most apt to want included are a prohibition against material by anyone else (whether advertising, the work of another author or anything else) being included in your book; the right for you to purchase copies of the reprint edition at a discount for resale; and cover approval. The most important provision—no changes to what you wrote—is generally covered by the publisher’s contract with the reprint publisher and not something you typically have to worry about.

If your publisher balks at including certain provisions you request because it thinks they might limit its ability to license the book for reprint, you have three alternatives. One is to agree with the publisher and omit them from the contract. The second is to remind the publisher that if the relevant provision in fact turns out to be an impediment to signing the license, it can ask you at that time to waive the requirement, so the provisions should be left in as mandatory. The third, for the arguably problematic provisions only, is to change the operative language in the section from “the publisher shall include the following provisions in the reprint contract” to “the publisher shall use its best efforts to include the following provisions….” I’m generally a fan of the second alternative.

(Originally published in the Winter 2009 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

Are e-books sold or licensed when bought online?

Q. My publisher wants to include this sentence in my new contract: ”Sales of e-books, whether by Publisher or by a licensee, shall be considered sales by Publisher for purposes of the royalty provisions of this Agreement.” It’s not in my earlier contract. Is it okay to include?

A. While I am sympathetic to a publisher wanting to include this or similar language in new contracts and would likely recommend to a client that, as a business matter, he or she accept it, I would definitely not recommend that you or anyone else amend any previous contracts to include the provision.

But before you agree to include the requested language in your new contract, be sure the contract requires your publisher, whenever it increases its standard e-book royalty rate, to automatically increase your e-book royalty rate to that higher rate. This is important because the so-called “standard” rate that most of the major publishers are paying now is half of what most author advocates believe it should be.

The reason your publisher wants to include the new language is likely because of a September 2010 California case. In F.B.T. Productions v Aftermath Records, a federal appeals court ruled that the rap artist Eminem should have received royalties on iTunes downloads of his songs equal to 50 percent of what his music company received from iTunes rather than the far smaller “per recording” royalty payable on sales of his recordings (e.g., as CDs).

The court ruled this way on the grounds that the arrangement between his music company and iTunes was a license of the right to duplicate and distribute his songs (which it was) and that, accordingly, the subsidiary rights provisions of his contract – which provided for a 50/50 split of all licensing revenue — applied. It said that the “per copy” royalty based on the price of the song applied only when the song was sold by the publisher, not by a licensee.

Although the application of this case to any particular contract (book or music) is uncertain—much depends on the exact language in several different sections of that contract and how those provisions interrelate—the reasoning clearly applies to book publishing contracts and e-books.

Unlike print-on-paper books, e-books are not individually sold by publishers to online booksellers which in turn sell the book to their own customers. The transaction is essentially accomplished through a license between the publisher and the online seller whereby the online bookseller gets a master copy of the e-book and duplicates it for transmission to its customer. As a license by the book publisher, it should be treated the way other licenses are treated under your earlier contracts (assuming they even have the right to publish and license e-books), which is a division of the proceeds received by the publisher between author and publisher. Except for movies and foreign translations, this split is generally 50/50. Many contracts even have a clause in the subsidiary rights section, “For all other rights: 50 percent to author and 50 percent to publisher.” No wonder your publisher wants to put the clause you mention into its new contracts.

For new contracts, where you and the publisher are agreeing in advance that sales by third-parties under e-book licenses will be treated as sales of individual copies by the publisher for royalty purposes, that reflects the current commercial reality in book publishing; most authors wishing to sign with traditional publishers have little leeway here. That said, there is no reason to let the publisher off the hook on prior contracts. For one thing, there may well be a question of whether the publisher has e-book rights at all. For another, the e-book royalty offered by most major publishers today is half what author advocates believe it should be. Third, the publisher drew up the original contract and, under a general rule of contract law, ambiguities in a contract are resolved against the drafter. So don’t agree to any suggestion from your publisher to amend earlier contracts and make sure that it doesn’t sneak a clause to that effect into your new contract, amending the prior ones without you even being aware of it. You’re entitled to a 50 percent royalty on e-book contracts, and if the law will give it to you on existing contracts despite publishers’ obstinacy, you shouldn’t sign that right away.

(Interestingly, the “agency model” for e-book sales being used by Apple with major publishers could undercut this argument on sales made through Apple since that business structure treats the publisher as the seller and Apple merely as its agent. Whether a court would look through that arrangement and say that, in practice, it is nonetheless a license is a separate issue, and not for today or this column.)

(Originally published in the Spring 2011 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

Is there a standard definition of “electronic rights”?

Q. Is there a standard definition of “electronic rights”?

A. No, not for “electronic rights” nor for the many different rights encompassed in that term. (Some contracts use “multimedia rights” instead of “electronic rights,” but there is no agreement on what that term means either.)

Most electronic rights definitions used in publishers’ contracts are too vague or too broad or both. As a result, authors and agents must negotiate appropriate definitions for these subsidiary rights on a case-by-case basis.

Authors should define each electronic right they are granting narrowly and specifically. Properly done, this will enable authors to know precisely what rights they are granting to their book publishers and which they are free to license to software companies, electronics and games companies, apps and educational developers, and other non-book companies in order to exploit non-e-book electronic rights to their work.

If, despite negotiations, the contract you sign with your publisher still contains broader definitions than you’d like, be sure to add a provision that any rights not exercised by your publisher or one of its licensees (as to any language, medium, format or territory) within x years after initial publication of your manuscript (in any form) shall revert to you upon written notice to your publisher. Such a reversion clause should always be included by authors when agented rights (e.g., translations and movie rights) have been granted to the publisher. But it is particularly important when dealing with broad electronic rights clauses because no one—not the publisher, the author or the agent – can anticipate all the possible uses of rights granted in such broad clauses. As recent history suggests, many have yet to be invented.

(Originally published in the Spring 2011 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

What are “derivative rights”? Should I grant them to my publisher?

Q. My publisher just sent me its new contract for my next book. Among the rights I’m being asked to grant are “derivative rights” in my book. The term is not defined in the contract but my editor tells me that it is defined in the copyright law. Is that okay?

A. Definitions are a crucial part of contracts and can be negotiated like everything else. If “derivative rights” are included in the grant of rights, the term should certainly be defined. Unfortunately, the most accurate lay definition I can suggest, and one which is consistent with the copyright law, is “everything under the sun.”

I don’t recommend that any author include “derivative rights” — with or without a proper definition — in the grant of rights section, subsidiary rights section or anywhere else in a contract. It’s as bad as saying you’re granting “all rights” in your work to the publisher. That’s what Murray Burnett and Joan Alison, the authors of the unpublished play Everybody Comes to Rick’s, did in 1942 and, as a result, they were never able to write a sequel or any other work containing the characters that Humphrey Bogart, Ingrid Bergman and Paul Henreid portrayed in Casablanca (as it was retitled). If your publisher wants certain rights (derivative or not), it should specify what each one is, and provide clear definitions. You can then decide which rights to grant and, for those you do, what the appropriate royalties (if the publisher exercises the specified right directly) and subsidiary rights splits (if it intends to license them) should be. You can also decide whether you should have any approval rights for the new work and what the appropriate reversion period should be if the publisher doesn’t exercise them within an agreed-upon time.

Movie rights, dramatizations and translations are traditional examples of derivative rights and are even listed as examples in the term’s definition in the copyright law, viz. “a work based upon one or more preexisting works, such as a … dramatization, fictionalization, motion picture version … or any other form in which a work may be recast, transformed, or adapted.” The definition is broad enough to cover interactive video games, mobile phone “apps” and a host of other derivative works, including ones yet to be invented or even thought of. Just as parents shouldn’t send their children to camp without knowing what activities the camp provides, authors should not license their works without knowing what will happen to them when the rights leave their control.

(Originally published in the Summer 2010 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.