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HarperCollins vs. Open Road Media – Oddities and Queries

4 January 2012

On December 23, 2011, HarperCollins Publishers filed a copyright infringement lawsuit against Open Road Integrated Media based upon a publishing contract dated July 1, 1971, with Jean Craighead George, author of a popular children’s book, Julie of the Wolves. Pursuant to a much more recent agreement with Ms. George, Open Road published an ebook version of Julie in 2011. HC said this violated its exclusive rights to publish ebooks under the publishing contract.

Passive Guy has no inside knowledge of any of the facts in this case and has no affiliation with either of the parties or their counsel. His opinions are based solely upon the Complaint filed by HC with the Federal District Court in New York City.

PG found some aspects of the Complaint a bit strange. The Federal Rules of Civil Procedure provide that a complaint should include “a short and plain statement of the claim showing that the pleader is entitled to relief.” While PG is not expressing any opinion about the legal sufficiency of the Complaint, some aspects of it raise more questions than it answers. A link to the entire Complaint is provided at the end of this post.

Hide the Ball

One of the strange characteristics of the Complaint is that, while the publishing contract between George and HC’s predecessor is the core of HC’s lawsuit, a copy of the contract is not included with the Complaint and only tiny portions of the contract are quoted in the Complaint.

PG hasn’t seen the elusive contract, but those sorts of things would have run 8-12 pages back in 1971.

Only 17 words from the contract are included in the Complaint, none of them constituting a complete sentence. Counsel for HC holds forth at great length about what the rights the contract granted HC, but is exceptionally parsimonious with the contract language itself.

This immediately triggers PG’s spidey sense. The spidey sense says the publishing contract as a whole is not nearly as supportive of HC’s claims as counsel suggests.

Ebooks in 1971

HC is contending that the 1971 contract gave it an exclusive right to publish Julie as an ebook in English in the US and Canada.

Here’s the only contract language HC quotes in support of this contention:

  1. HC has exclusive rights to publish Julie “in book form” within the territory; and
  2. HC’s rights included rights to “exploitation” (counsel’s word) of the Work “through computer, computer-stored, mechanical or other electronic means now known or hereafter invented.”

A fundamental proposition of contract law is that the intent of the parties as reflected in the contract language will govern interpretation of the contract.

A general proposition of copyright law is that an author cannot give a license to rights in technologies that do not exist or are not contemplated by the parties at the time the contract is signed.

HC has a steep hill to climb to support the proposition that both HC and the author contemplated ebooks or anything remotely approaching ebooks in 1971, when they signed the contract.

As indicated by the brief quotes above, HC contends that “in book form” includes not only hardcover and paperbacks, but also ebooks. This is a variation on the logical fallacy described in a lovely Latin phrase, cum hoc ergo propter hoc (with this, therefore because of this).

Essentially, counsel contends that because we call ebooks ebooks and because ebooks can include the same words as hardcover and paperback books, “in book form” in a 1971 contract includes ebooks rather than being limited to the only forms of books commercially available, the old-fashioned printed kind.

HC tries to use “computer, computer-stored, mechanical or other electronic means” for a second bite of the ebook apple. As indicated earlier, PG suspects other words before or after the quoted phrase substantially undercut its utility for HC’s purposes.

In 1971, what sort of computer technology could be used to create an ebook experience?

PG suspects the Complaint was drafted by attorneys who have no first-hand knowledge of what computers were like during that period. Absent knowledge, they have extended their understanding of today’s computers back into a largely pre-computer dark age.

In the first place, computer monitors that displayed text were quite rare in 1971. The standard way of interacting with computers was to feed in punch cards or paper tape and receive a printout on paper minutes or hours later. Can the parties to the publishing contract contemplate an ebook without a screen on which to display text?

Because of the astronomical expense, private ownership of computers by individuals was unheard of in 1971. PG can’t say nobody owned one, but this was the era when computers lived in special rooms behind glass walls and were tended by a select few people 24/7. Ordinary mortals never touched computers. Access to computers was strictly regulated by every organization with which PG was familiar and, on time-sharing computers, which were relatively new in 1971, you got charged by how much time it took your program to run. Those charges were high. The idea of using computer time to read a book would have seemed positively bizarre.

So, no screen, no individual ownership of computers, but HC asked for Ms. George’s ebook rights and she intended to grant them?

How do you obtain ebooks? Over the Internet? There were 15 nodes on something called ARPANET by the end of 1971, after Ms. George signed her contract. All were university or government computers. Realistically, the Internet wasn’t really invented until the development of the TCP/IP protocol in 1982.

Here are some free interrogatory or deposition questions for Open Road’s counsel:

  1. On July 1, 1971, the date of the publishing contract, how many computer terminals that displayed text did the editors of Harper & Row use?
  2. On July 1, 1971, how many Harper & Row books could be read in their entirety on a computer screen?
  3. What is the date of the first document created by HC that uses the term, “ebook?”
  4. What is the publication date of the first HC ebook?

You get the idea.

The Project Gutenberg Distraction

In a return to cum hoc ergo propter hoc, somebody in HC’s law firm came up with the factoid that Project Gutenberg was started in 1971:

“Illustratively, in 1971, the year before Julie of the Wolves was published, what is often considered the first digital library Project Gutenberg, a collection of the full electronic texts of books – was created.”

Dude, don’t depend on Wikipedia.

Here’s the brief story of the beginning of Project Gutenberg:

  1. On July 4, 1971, (three days after the publishing contract was signed) Michael Hart, the founder of Project Gutenberg, typed the United States Declaration of Independence into the mainframe he was privileged to access while he was a student at the University of Illinois.
  2. In 1972, he typed in the Bill of Rights and in 1973, the United States Constitution.
  3. The 10th book, the King James Bible, was added to Project Gutenberg in 1989.

And because a student would type type the Declaration of Independence into a computer in Illinois three days after HC and Mrs. George signed their publishing contract, they foresaw that ebooks would be a big thing and agreed HC should have those rights?

Here’s another discovery item for Open Road’s counsel:

  1. Produce the first document created by Harper & Row that includes the term, “Project Gutenberg.”

Evincing an Intent

HC says it’s sold 3.8 million “units” of the Work.

Why would HC not want to release an ebook edition of such a big-selling book?

Paragraph 26 of the Complaint reads:

“In late 2010, HarperCollins was advised by George’s literary agent that George had received an offer from an unidentified publisher to publish Julie of the Wolves in ebook format. HarperCollins responded that HarperCollins alone controlled the ebook publishing rights and evinced its intent, consistent with its rights under the Agreement, to pursue publishing Julie of the Wolves in ebook format itself.”

Open Road published the ebook in August, 2011.

So, HC “evinced its intent” to publish an ebook in 2010, but didn’t manage to publish anything by August, 2011. This is a back-list book with no editing necessary for which most publishers would probably want to use the existing cover.

Who knew evincing took such a long time? Perhaps a clue lies in mysterious Paragraph 20 of the publishing agreement.

Limitations on Licensing

One of the many unquoted contract provisions is discussed in passing in Paragraph 21 of the Complaint:

“The stated limitation of paragraph 20 that HarperCollins must seek George’s consent to license rights in the Work enumerated in that paragraph simply conditions HarperCollins’ exercise of its exclusive rights in the limited circumstance in which, rather than itself commercially publishing and marketing the Work as an ebook, HarperCollins licenses a third party to do so.”

The omission of this contract language engenders another Spidey-sense moment. “What about retained rights?” you ask. The Complaint is silent about whether the publishing contract includes any language indicating that Ms. George retained rights to the Work not granted to HC.

The licensing issue is particularly relevant to ebooks, in part because of a court case called FBT Productions LLC v. Aftermath Records, 621 F.3d 958 (9th Circ. 2010).

Although FBT relates to music downloads, it is potentially applicable to HC because of the question of licensing. The FBT case involved the rapper, Eminem. For iTunes downloads, Eminem’s publisher was paying the same royalties as would have been due upon the sale of CD versions of the songs. Eminem contended that the relationship between the publisher and iTunes was a license of a subsidiary right, for which a much higher royalty was due.

Purely speculating on the contents of the publishing contract involved in the suit, it appears likely that HC believes ebooks would require a subsidiary rights license fee, possibly 50% of the amount it receives, rather than a standard ebook royalty.

Some publishers contend that the agency pricing agreements, possibly illegal, in place with Amazon, Barnes & Noble, Apple, etc., mean no ebook license is involved when Amazon, et al, sell an ebook.

While PG has not seen the contracts in question, it is difficult for him to believe that there is not some sort of license incorporated in the relationship between the publisher and the ebook seller. At a minimum, the seller would seem to require a license to make duplicate copies of an ebook from a master copy received from the publisher. Features like Look Inside on Amazon would also seem to require a license. Additionally, Amazon’s text-to-speech feature and Apple’s built-in speech recognition function would seem to require a license from the publisher.

Without such a license to make copies from the publisher, Amazon and others might be sued by an author for making unauthorized copies of the author’s work.

The FBT court found a key distinction between the sale by a retailer of CD’s the publisher created and the replication of digital copies from a single master recording whenever a digital sale occurred.

Perhaps the lengthy period of “evincing” took place because, even for a best-selling author, HC did not wish to set any sort of ebook precedent by agreeing to a 50-50 split instead of paying the now-standard 25% of net.

All of this brings us back to the question of whether the 17 words of the contract language upon which HC bases its claim really anticipated ebooks or not.

Publishing contracts of this era typically included royalty rates for hardcover, mass-market paperback, trade paperback, audio books, book club editions and many other types of books. PG posits that the lack of any stated ebook royalty is strong evidence that neither HC nor the author was really thinking about ebooks back in 1971. Had they been contemplating them, PG suggests a specific ebook royalty rate would have been included in the contract.

But PG could be wrong.

Where is the Author?

In Paragraph 24 of the Complaint, HC claims that it is the “beneficial owner” of the copyrights to Julie of the Wolves. That is a contention which will certainly catch the interest of experienced authors who have learned never to let go of their copyrights.

However some sort of allegation like this is necessary for HC to pursue a copyright infringement suit.

PG is not privy to any reasons HC did not take a much more straightforward approach to this problem and sue the author for violation of the publishing agreement. After all, the author did sign a contract with Open Road to publish the ebook. Open Road is acting under the authority of the real owner of the copyright.

Some publishing agreements include a paragraph that allows the publisher to enforce copyrights against infringing parties. Often these provisions allow an author to join in as a co-plaintiff. No explanation is given for the absence of the author in this case.

It is also common for publishing agreements to include a provision by which the author indemnifies the publisher for lawsuits brought against the publisher by third parties based upon a claim the author does not have the proper authority to grant the copyright license. If this is the case with the Open Road publishing agreement, then Ms. George may be brought into the litigation, paying both her own attorneys fees and Open Road’s attorneys fees. That would certainly give Ms. George a warm feeling toward HC.

The Public Relations Paragraphs

The HC Complaint includes several paragraphs that seem to have little to do with “a short and plain statement of the claim.”

In Paragraph 4, we learn that HC (or, given the structure of modern media conglomerates, the publisher that merged with another publisher that was acquired by another publisher that eventually became HarperCollins) has been around for almost 200 years and published some famous people. Therefore, it should win its lawsuit.

Among others, Harpers published Charles Dickens and the Brontë sisters. The Complaint does not mention that Dickens frequently accused American publishers of stealing his work without payment. We know Emily died young, but are not certain whether a Harpers royalty statement was involved.

Other paragraphs tell us that HC currently employs over 750 editors and other “publishing professionals” and spent more than $70 million in 2011 promoting its works. Promotions included trade and consumer advertising, sending review copies, in-store displays, author tours and “postings on websites.”

Since HC does not mention how many promotions featured Julie of the Wolves, the relevance of all this is questionable. Since Ms. George is over 90 years of age, presumably she doesn’t have to go to book signings any more.

This is a lot of fluff and nonsense and PG suggests it does not belong in the complaint and only serves to make HC look silly.

In Conclusion

This is all the idlest speculation by Passive Guy and could be a bunch of nothing. A surprising number of lawyers stop by The Passive Voice and PG is happy to hear contrary and/or clarifying views from them or anyone else.

Here is a link to the Complaint as filed.

Big Publishing, Contracts, Ebooks, Legal Stuff

20 Comments to “HarperCollins vs. Open Road Media – Oddities and Queries”

  1. That would certainly give Ms. George a warm feeling toward HC.

    Warm as in, “A rage burning with the heat of a thousand suns,” perhaps?

  2. We know Emily died young, but are not certain whether a Harpers royalty statement was involved.

    Good one, PG.

    Since Emily Brontë died of tuberculosis rather than starvation, I supposed we can reasonably assume that publishers’ royalty statements weren’t implicated.

  3. Hang on, K. W. — remember that the contemporary term for what we now call TB was “consumption”.


  4. There is no silly argument that will not be deployed in extremis. I am constantly reminded of why I don’t sign anything.

  5. I suspect the reason they don’t sue the author is that, if you look into it, they have probably been breaking the contract regularly since they signed it. Most publishers do at one stage or another: from not paying immediately on completion, to sending inaccurate royalty statements or failing in their marketing duties.

    A contact this old? The chances of them not being in breach of contract is slim.

  6. This is a demonstration of how much publishers care about authors–that they would sue a 90 year old woman creating chaos, agitation, upset and distress in what surely are her last years. Perhaps even shortening her life. For a couple bucks. These people are despicable.

  7. I’m not entirely sure why, PG, but every time you do a post like this, I then smirk and snigger for at least an hour.

    Another way to look at the HC complaint is as very creative writing.

  8. So how long till HC drops another two or three notches and just starts mugging writers in the dark of night? “Hand over the manuscript and nobody gets hurt! No contract, no calling out, no fuss…ya hear?”

  9. If Michael Hart had somehow been able to get a meeting with executives at HC back in 1971, and shared with them the idea of Project Gutenberg, they would have laughed him out of the room.

  10. I had time over lunch to reflect on this complaint a little more.

    From the complaint, PG, did you get any sense of how a finding against HC in this case could have the potential to set precedent for other publishers? It seems like a pretty weak case for the publisher on an issue that could have major implications for the industry.

    (Or maybe contract law isn’t quite like that. I’m more familiar with companies messing up each others’ lives in regulatory situations.)

    • Maril – A lot of the commentary about this case has described it as a potentially important one. That would assume it is tried and goes to a verdict instead of being settled.

  11. When I see something like this, one of the questions I like to ask is who picked the battlefield. Why this book and why this author? I checked Open Road’s website. They sell a dozen of Ms. George’s books. Most of them from the ’50s. But they also sell “Going to the Sun”, published originally in 1976 by Harper. Why are they going after “Julie of the Wolves” and not “Going to the Sun”? Also, George wrote two sequels to “Julie of the Wolves” that were published in by Harper in 1994 and 1997. Neither of those books is available in e-book format. Presumably the contracts actually give HarperCollins the e-book rights to those books. Searching for “Jean Craighead George books” on Amazon’s Kindle store returns only the books published by Open Road.

    So, we have a 92 year old author of over 100 children’s books. “Julie of the Wolves” is one of her most famous works. HarperCollins is doing absolutely zilch with her backlist (they seem to have most of it, although she is now publishing through Dutton/Penguin). I think HarperCollins picked this battle and chose poorly.

    • William – Good points.

      It’s possible the HC contract for “Julie” is stronger for HC’s litigation stance than the “Going” contract is.

  12. HC is the “beneficial owner of the copyright”?????

    I may have been a probate attorney, not contracts or IP, but even I know that’s a load of cow patties.

    If I were Ms. George, I’d sue HC on that claim alone. But then I’ll just as bitchy at 90 as I am at 29.

  13. In regards to “In Paragraph 24 of the Complaint, HC claims that it is the “beneficial owner” of the copyrights to Julie of the Wolves.” Be reminded that, under Section 101, an exclusive license constitutes a “transfer of copyright ownership.” And, under Section 201(d)(2), “The owner of any particular exclusive right is entitled, to the extent of that right, to all of the protection and remedies accorded to the copyright owner by this title.” Ergo: HC is an owner of the copyright.

    I suspect HC is not suing Ms. George for one simple reason: It would look bad. But who is it that runs Open Road? Why what a coincidence, it’s Jane Friedman, former president and chief executive of HarperCollins Publishers! Also, IMHO, HC has begun to take an EXTREMELY aggressive stance on electronic media. I wonder if HC’s counsel have read Random House v. Rosetta Books…

    • Abe – Actually, the WSJ says counsel for both sides of this fight are the same people who litigated Rosetta Books.

  14. Not to be nitpicky, but Julie was the sequel to Julie of the Wolves. 😀 Two different books, there. Disoriented me as I read your post.

    As for the topic… Maybe something’s going on quietly about the e-book versions for the other books in the Julie series, like HC is being pressured to release them, or they’re trying to get them ready for release so they can benefit from Open Books’ release of the e-book version, and due to the produce model they assume they have to come out with them at around the same time?

    *shrug* Just trying to come up with a possible line of reasoning that differs from what’s already been brought up.

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