Signing Away Your Rights: Arbitration Clauses in Book Contracts

19 November 2015

From Victoria Strauss:

Recently, the New York Times published a fascinating three-part series of articles on arbitration clauses, and how such clauses “buried in tens of millions of contracts have deprived Americans of one of their most fundamental constitutional rights: their day in court.”

. . . .

The articles deal mainly with consumer and employment contracts, in which, according to the Times, arbitration clauses have created “an alternate system of justice” where “rules tend to favor businesses, and judges and juries have been replaced by arbitrators who commonly consider the companies their clients.” But arbitration clauses are increasingly common in publishing contracts, too–as well as in the Terms of Use of some major self-publishing platforms. And most authors don’t understand their implications.

. . . .

How Arbitration Clauses Limit Your Rights

Arbitration is often portrayed as an easier, more friendly method of dispute settlement, allowing the parties to avoid the hassle and expense of litigation. But as the Times points out, this reasonable-sounding explanation leaves out some darker truths.

Arbitration clauses are binding, and supersede your right to go to court to settle a dispute. If you sign a contract with an arbitration clause, you are waiving your right to legal action. Many people don’t realize this.

People often assume that arbitration is similar to appearing before a judge. But, says the Times, “arbitration…often bears little resemblance to court….Winners and losers are decided by a single arbitrator who is largely at liberty to determine how much evidence a plaintiff can present and how much the defense can withhold.”

Arbitrators–many of whom are retired judges–are supposed to be impartial, but often they’re not. Plaintiff and defendant choose an arbitrator from a list supplied by the arbitration company; for obvious reasons, defendants prefer to choose arbitrators with a history of defendant-friendly rulings, and plaintiffs, who may not have that inside knowledge, may not know enough to object. In turn, arbitrators feel pressure to favor defendants, since this makes it more likely they’ll be chosen–and paid.

Arbitrators’ decisions are hard to challenge. Courts have proved reluctant to reverse them, even where they are obviously unfair.
Arbitration can cost you, even beyond any judgment that may go against you. In addition to travel and filing fees, you may have to pay the arbitrator.

Christian organizations sometimes require Christian arbitration, such as that provided by Peacemaker Ministries. Prayer and scripture may be given preference over law and evidence. (I’ve seen publishing contracts with Christian arbitration clauses.)

Increasingly, arbitration clauses include bans on class actions. “By banning class actions,” says the Times, “companies have essentially disabled consumer challenges to practices like predatory lending, wage theft and discrimination….Corporations said that class actions were not needed because arbitration enabled individuals to resolve their grievances easily. But court and arbitration records show the opposite has happened: Once blocked from going to court as a group, most people dropped their claims entirely.”

Link to the rest at Victoria Strauss and thanks to Stephen for the tip.

PG says don’t believe everything you read in The New York Times.

Arbitration clauses are common in contracts between two businesses. Unlike most attorneys, PG has taken some business disputes through arbitration hearings and his clients have generally been satisfied with the results. PG has also inserted fair arbitration clauses into business contracts he’s drafted.

Most of the problems PG has heard about in arbitration practices involve arbitration organizations he has never heard of that are presumably established by the industries or, perhaps, large companies, that designate these arbitration organizations to hear disputes about their contracts. If you’re the arbitrator for the McDonalds Dispute Resolution Organization, then you may be inclined to worry about your job if you rule against McDonalds.

However, there are a couple of large, nationally respected arbitration agencies, The American Arbitration Association and JAMS (Judicial Arbitration and Mediation Services, Inc.).  These agencies are the named arbitrators in at least hundreds of thousands of business-to-business contracts and their reputation for fairness and competence is essential to their survival. If the word gets out that the AAA or JAMS is playing favorites, their future business would drop through the floor. Many companies, large and small, are relying upon them to fairly resolve disputes that often involve many millions of dollars.

What are the benefits of arbitration vs. taking your dispute to court? Here’s a not-comprehensive list:

  1. Cost. In civil litigation, the panoply of procedural roadblocks and discovery tools are available to the wealthiest party to the lawsuit. Common defense practice is to delay, delay, delay. In some cases, an individual may simply be unable to afford the attorneys fees necessary to make it through the preliminaries to trial. In a complex case, arbitration can take time and cost money, but arbitration is intended to be a faster and less-expensive alternative to litigation. The arbitrator is able to cut through the preliminaries and move to a hearing on the merits in ways a judge can’t.
  2. Expertise. The judges that hear contract disputes of the type that are likely to occur between authors and publishers or authors and etailers are generalists. Your judge may handle a hearing on a drug case in the morning and your contract dispute in the afternoon. There are no judges that only handle contract disputes involving books. Very few Intellectual Property attorneys ever become judges (PG doesn’t know any who have). One of the reasons for the rise and continued success of AAA and JAMS is that they offer arbitrators with substantial knowledge and expertise in a variety of specialized areas. In an author/publisher dispute, it would be reasonable to expect that the arbitrator might be a practicing or retired IP attorney who comes to the case knowing 95% of what an attorney would have to explain about copyright and publishing practices to a judge in a civil trial.
  3. Time. Big Publishing contracts always specify New York state or federal courts as the place where an author must go to pursue his/her legal claims. PG is not familiar with detailed backlog statistics for New York courts, but he feels confident in saying if you file a suit against a publisher today and the publisher wants to delay, it will be several years before you actually get to trial. Federal judges are overwhelmed with criminal cases, primarily drug cases. Because of constitutional requirements for speedy trial, etc., in criminal matters, etc., the drug cases will bump civil cases down the calendar over and over. 99% of arbitration hearings are completed months or years before the same matter would be resolved by the courts.
  4. Privacy. Unlike courts, which are open to the public, arbitration hearings and files are private. During the recent litigation between Ellora’s Cave and Jane Litte of Dear Author, several different blogs followed the court filings and commented about what they said. Indeed, for many, the Ellora’s Cave suit revealed Jane’s identity as the person behind Dear Author. In some cases, PG has used publicity or the threat of publicity to the advantage of his clients, but a great many authors don’t necessarily want to see their names and faces associated with a court case and spread all over the internet.

Can arbitration be abused and result in unjust outcomes? Yes, it can, particularly when shady arbitration agencies are involved. Can litigation be abused and result in unjust outcomes? Yes, it can, particularly when a rich publisher and a poor author are involved.

In a perfect world, courts would be fast, fair, efficient and cost-effective for disputes large and small. Arbitration exists because it’s not a perfect world.

Below, PG has embedded a document from the American Bar Association that discusses arbitration in more detail.


Benefits of Arbitration (Text)

Click to Tweet/Email/Share This Post

End the Discount Double-Cross

16 November 2015

From The Authors Guild:

In our last installment of the Fair Contract Initiative, we detailed how publishers’ outdated accounting practices consistently delay and minimize authors’ royalty payments. But that’s not the end of the story. In another common practice, publishers routinely use contract provisions to slash authors’ royalties to mere pennies per copy sold.

Standard trade royalties are based on a percentage of the publisher’s list price. But publishers have come up with a variety of clever methods to base royalties on the much lower net amounts they actually receive from booksellers and wholesalers. Then they add insult to injury by cutting the royalty rate itself by as much as two-thirds. When an author gets paid on less than half the list price, that’s bad enough. When an author gets paid only one-third the normal rate on that reduced price, the word “pittance” seems appropriate.

So-called “deep discount” clauses let publishers offer titles to booksellers and wholesalers at big markdowns. They stipulate that a publisher’s sale at a discount of over 55%, for example (a number that appears to be the new standard), the author’s royalty suddenly drops from, say, 15% of list price to 15% of the far smaller amount the publisher actually receives. A standard deep discount clause looks something like this: “On copies of the Work sold by the Publisher at a discount of greater than 55% from the publisher’s retail price through channels outside of ordinary retail trade channels, the author will be paid a royalty of 15% of the Publisher’s net proceeds.” (Many smaller publishers, which pay royalties on net proceeds to begin with, often slash the royalty rate in half on discounts from 50–70%, and by 2/3 for greater discounts.) Thanks to that drop in royalty payments the publisher makes out like a—well, the word “bandit” springs to mind.

It seems fair that when a publisher sells a book at a deep discount, the author’s take might be reduced proportionally. But there’s no proportionality in many standard “deep discount” clauses.

. . . .

We’ve seen these discount double-crosses applied for sales to book clubs and book fairs, for “special sales” in bulk outside the usual book trade, for large-print editions, for export editions. Let’s say the publisher sells our sample book in bulk for just $2.00. The discount double-crossed author would get one thin dime per copy, a royalty cut of an astounding 93%—even though the net to the publisher would decline by less than 33%.

. . . .

Even crazier, some reductions can apply even to direct sales from publishers to readers, despite the fact that the publisher gets to keep the share of the transaction that would normally go to a retailer or wholesaler. If anything, an author’s royalty rate on such direct sales should be higher than normal.

. . . .

The documented decline in authors’ incomes stems in part from these unconscionable reductions in royalty payments. Unless publishers begin to see authors as partners rather than patsies, many authors will no longer be able to afford to deliver publishers the quality work the industry was built on.

Link to the rest at The Authors Guild and thanks to Jacqueline for the tip.

PG says some authors get excited when they see their books in Costco. Unfortunately, it’s almost certain that their Costco sales will fall under the deep discount royalty structure, generating only tiny royalties.

Then, there are publishers who sell virtually everything at “deep discount” so the author never receives the royalty rates that are listed first and most prominently in their publishing contract.

PG has mentioned this before, but perhaps it bears repeating. During PG’s legal career, he has helped clients with a wide range of business contracts, including agreements prepared by many of the largest and most successful companies in the world.

Standard publishing contracts from large traditional publishers stand out in the constellation of business contracts for their one-sidedness and, in some cases, outright duplicity for anyone who fails to read them very carefully. The way that Randy Penguin and its cohorts write their standard contracts is not the way that Apple, Microsoft, Morgan Stanley, Bank of America, Disney, Intel, Hewlett-Packard, American Express, Merrill Lynch and similar entities write their contracts.

PG doesn’t agree with many initiatives undertaken by the Authors Guild, but he’s pleased to see their latest efforts to shine a light on some of the most abusive contract provisions routinely employed by Big Publishing.

However, the cynic in PG holds little hope that AG’s efforts will bring about any meaningful reform. Treating authors badly is too much a part of the corporate and cultural DNA of traditional publishing to change. These dinosaurs will die before they evolve.

SFWA Releases a New Model Magazine Contract

18 September 2015

Under the heading of industry guidance…

Science Fiction and Fantasy Writers of America is pleased to announce that their Contracts Committee has released an updated Model Magazine Contract. The Model Contract not only contains a sample contract that magazines can use, but also glosses each clause so writers can understand what rights are affected and why they matter.

Michael Capobianco says, “The Model Magazine Contract is our attempt to draw up a fair agreement that respects the concerns of both authors and publishers. It should not only be helpful to SFWA members and others in evaluating the terms of their short fiction agreements, but sets a standard for all short fiction licenses into the future, strongly supporting the idea that short story rights, even non-exclusive rights, are only licensed for a limited period of time after which they revert to their authors, who then become free to sell exclusive rights once again. Drawing this line has become crucial for digital publication, where it is rapidly becoming the standard that publishers retain non-exclusive rights of the length of the copyright with no additional payments due the author.”

The announcement, with links to the sample contracts, can be found here, and thanks to Lynn for the tip.

Vacation blogger Karen Myers is no lawyer, but she has negotiated a lot of business contracts in the software trade, and she has never before encountered the point of view that says a court judgement (bench trial) is to be preferred to arbitration, having always understood that the entire point of arbitration is to minimize costs and delays on both sides, and thus to help equalize the disparate economic impact of an actual trial, with lawyers. Software contracts between tiny firms and giants of industry are often of the marmoset vs 800-lb gorilla variety, something familiar to all traditionally-published authors.

UMG Poised to Settle Major iTunes Royalty Case with Artists

5 September 2015

From Music Business Worldwide:

Universal Music Group ‘shortly’ expects to settle a major US class action lawsuit with a group of artists, having made a significant offer of monetary compensation.

The suit dates back to 2011, when a group of recording artists filed a claim seeking additional royalties for the online sale of downloads and master ringtones.

These artists – including Public Enemy’s Chuck D, Rob Zombie, the Rick James Estate, Whitesnake (pictured) and Ron Tyson of The Temptations – wish to have their backdated iTunes royalties paid in ‘licence’ terms.

That’s because a ‘licence’ payout typically involved a 50/50 split between label and artist – while just 6-20% of a ‘sale’ transaction ends up with performers.

In 2012, the production company who discovered Eminem, FBT Productions, settled with Universal out of court in a similar case.

UMG isn’t alone in facing such class action claims: in February this year, MBW discovered that Warner concluded an $11.5m settlement with 2,000 artists making claims on the same basis.

Link to the rest at Music Business Worldwide

PG says the distinction between a license and a sale of digital media can be significant.

Delete the Non-Compete

29 August 2015

From The Authors Guild:

Authors must be free to publish the works they want to write. But publishers often insist on terms that can make that impossible. In attempting to restrict authors from competing against their own works, publishers craft broad, harsh non-compete clauses that can unfairly impede authors from making a living. These clauses have to go.

Don’t get us wrong: We get the basic concept. An author shouldn’t be able to take a book under contract with Publisher X, rework it a little, walk it across the street, and sell essentially the same book to Publisher Y. That’s what non-compete clauses were designed to prevent, and when that’s all they actually do, we’re fine with them—although other provisions in publishing agreements accomplish the same thing.

Unfortunately, many standard publishing agreements contain sweeping non-compete terms that can be used to restrict what else an author publishes and when. That’s an unacceptable restriction on authors’ livelihoods in an era when many writers are struggling just to make ends meet.

No publisher would agree, at an author’s request, to forgo publishing another author’s book on a particular subject. So why should an author assume a similar obligation? But it happens all the time. Authors are routinely asked to agree not to publish other works that might “directly compete with” the book under contract or “be likely to injure its sale or the merchandising of other rights.” Even more broadly, they may be asked not to “publish or authorize the publication of any material based on the Work or any material in the Work or any other work of such a nature such that it is likely to compete with the Work.”

. . . .

Academics and textbook writers who spend their careers studying and writing about a particular area of expertise are especially vulnerable. They should not be limited to one book on that subject during their entire careers. But that’s what can happen if the author agrees to a broad non-compete. Take the economist who published a dissertation on oil in the Middle East and soon became a professor and an expert on the topic. Decades later, he came to us when he received an offer from another publisher for a book on—you guessed it—oil in the Middle East. But the publishing contract for his dissertation stipulated that he needed to obtain permission to publish a totally new book on the subject—even though, in the intervening years, the field had completely changed. For an author to have to ask for permission to write about what he or she knows best is outrageous.

Link to the rest at The Authors Guild and thanks to Dave for the tip.

Texas judge orders $10 million set aside for ‘Fifty Shades’ settlement

27 August 2015

From Reuters:

An Australian woman who helped publish “Fifty Shades of Grey” was ordered by a Fort Worth judge on Wednesday to set aside $10 million for a Texas woman a jury said was defrauded out of her share of the royalty rights for the steamy best-selling novel.

Jennifer Pedroza of Arlington could be awarded about $10.7 million once attorneys for her and former business partner Amanda Hayward of Australia settle on the amount she is owed, including attorney fees, court officials said.

. . . .

Pedroza was part of The Writers Coffee Shop, a small independent publisher of ebooks that originally published the “Fifty Shades” trilogy as an e-book and print-on-demand book, according to court papers.

. . . .

The rights to the books written by British author E.L. James were sold to Random House and the deal led to the sale of more than 100 million copies worldwide. A film based on the first book, “Fifty Shades of Grey,” took in more $570 million in the United States and abroad, according to tracking site Box Office Mojo.

A Fort Worth jury decided in February that Pedroza was defrauded out of her share of royalties by Hayward, who tricked Pedroza into signing an agreement that cut her out of her share of the royalties after Hayward signed the deal with Random House.

The jury determined that Pedroza was one of the four original owners of The Writers Coffee Shop and Hayward fraudulently presented the restructuring arrangement so she could keep the Random House money for herself.

Link to the rest at Reuters and thanks to Adam for the tip.

PG says 99% of business contracts are put in a drawer and forgotten after they’re signed.

The other 1% are very minutely examined at some later time.

Is ‘out of print’ running out of time?

15 August 2015

From Futurebook:

To a layman’s ear, it sounds great: Digital means never having to say you’re “out of print,” right? Ebooks are forever. Great.

No, not so great. Not if the rights to produce your book and sell it are held by a company that’s not doing anything commercially worthwhile with it — and not letting you do the job, yourself, as a self-publisher, either.

. . . .

[The [Authors] Guild writes:

Publishers have cleverly managed to craft “out of print” clauses that make it almost impossible for authors to recapture their rights.

. . . .

‘Book contracts are assets’

Robert Gottlieb’s comment is telling:

The Guild raises many valuable points…

Why do publishers resist term contracts in the U.S.? Outside of the U.K. publishers do licenses rights from authors on a term basis. The funny thing is most American publishers are now owned by foreign entities.

The answer is that book contacts are assets for U.S. publishers. Author’s books are on the ledgers of U.S. publishers as assets and their financial statements. Therefore their assets which are under contact can’t leave them easily. That is why out of print clauses often include the work in print under licenses. So even if there is a $200 deal in a Baltic state the publisher will tell the author the book is still in print. Even though no physical and/or eBooks sell at a level that justifies the publisher holding on to the book rights. Any license gives the publisher the grounds to hold onto all rights if they wish.

This adds value to the corporation’s worth.

. . . .

In the #UK, parallel evocations of the problem by the Society of Authors (SoA) are just as damning:

The ACLS study showed that 70 percent of authors who relied on a reversion clause went on to earn more money from the work in question.

Link to the rest at Futurebook and thanks to Jacqueline for the tip.

What Traditional Publishing Says It Does Best

14 August 2015

From Kristine Kathryn Rusch:

Last week, Steve Hamilton utterly destroyed his career—or would have, if it were 2005. Steve, a New York Times bestseller and two-time Edgar winner, pulled his novel, The Second Life of Nick Mason, from St. Martins Press less than two months before the book’s release.

Steve didn’t just pull the book; he canceled the entire four-book contract. His agent repaid the monies that St Martins had already paid on that contract.

Why would a writer do such a thing? According to the articles I saw, Hamilton claims that the book, which had received excellent pre-publication reviews, was getting no support from the publisher.

To be clear, I should add two things here as a former St. Martins author that might color my perspective:

  1. Like Steve, I got excellent prepublication reviews before all of my Smokey Dalton books were published, as well as promises of huge promotions on those books. The promotion never happened; the books were dumped. St. Martins is the company that sent me on a book tour and refused to supply books. So…
  2. In all things here, my sympathies and my experience lead me to believe Steve. You might see me as biased. Go ahead. Because I am. :-)

What St Martins promised on the back of the galleys sent to reviewers and places like Publishers Weekly was this:

A 75,000 copy first printing, and a lot of national marketing, including a national author tour and a national ad campaign for the book.

But not even Publishers Weekly, an industry trade journal, was buying that. In an article about Hamilton’s parting with St Martins, Rachel Deahl of PW wrote, “It is an open secret in the publishing industry that claims made on galleys and other material for the trade–about everything from first printings to marketing budgets and efforts–can be gross exaggerations.”

In that article, Steve says he’s canceled the contract because of a lack of publisher support. Since he’s been with St Martins for 17 years, he knows what he’s talking about.

. . . .

In the past eight years, I’ve canceled two book contracts because publishers didn’t fulfill their promises. I felt relief both times.

But I had options, even before the changes in publishing. Steve had options as well. It looks like his agent had talked with other publishers before pulling the book from St. Martins. After the book’s rights were freed up, over 10 publishers bid on the book.

G.P. Putnam’s Sons (part of Penguin Group USA) won the bid for “substantially more than the near-seven figures Hamilton was to have received from St. Martin’s,” according to the AP report on the new sale.

The world has changed. Back in the day, no publisher would have bid on a book already in production, no matter what was going on. And no agent would have tried this, no matter how bad things got.

But Steve’s agent, Shane Salerno, is not a New York based agent. He’s an author himself, as well as a filmmaker, and screenwriter. He runs a company in Los Angeles called the Story Factory. He’s not playing by the old rules at all, which is good, because large corporate publishers aren’t either.

But let’s assume that Steve had done all of this without having other publishers in his back pocket. These days, he still had options. If no one had offered on the book, he could have published it himself.

If he handled it right, it would have sold better than it would have through St Martins, which has a lot of trouble selling most of its hardcovers to places other than libraries.

Books get canceled all the time. Often they get canceled because the writer fails to deliver. But sometimes there are other problems, as there were with me and my two publishers above. One of those publishers had assigned me the editor from hell. (Wait, that’s being unfair to editors from hell. She was and is a demon spawn, a hell native who makes hell hellish for anyone who is there. [yeah, you guessed it. I think she’s a terrible editor and an even worse person.]) I refused to work with her, and that ultimately led to the cancellation of the contract.

. . . .

In addition to the monies paid to Steve, St Martins had probably invested $100,000 in actual costs and overhead on the book, if not more.

Pulling the book two months before publication guarantees that St Martins lost money on the deal. Other publishers know that. In this instance, they didn’t care.

. . . .

[I]n the old days, the days before the indie publishing revolution, Steve Hamilton’s byline would have vanished.

Oh, he would have kept writing, and he probably would have had a frustrating few years. He might’ve tried to write under his own name, and except for the short fiction magazines, probably not sold anything. Then he would have moved to a pen name, and maybe used the cover of his agent to keep his real name out of the loop until the book was accepted (and maybe not even then).

That kind of secrecy revolving around a pen name happened all of time back then. I know of several writers whose real names are still hidden from their publishers because the writer did something to get blacklisted under that name.

. . . .

Force the publisher to keep promises? Force the publisher to honor a contract? Horrors! Better to get some naïve young writer to write books than an old pro who knows what he’s doing.

. . . .

Dean’s asked me more than once what it would take for me to sell another novel into traditional publishing. (I sell other projects to traditional publishers—nonfiction, editing, short stories.)

If the novel contracts change, maybe, I would sell a novel to traditional publishing again. If I’m offered 7-figures and the contract change, and…

Probably not even then. As Elizabeth Spann Craig says, I’ve done all of this myself with better financial results.

Plus, as she says, I like the control.

. . . .

Writers are the brand. We always have been. And because of that, traditional publishers are slowly beginning to realize that indie published writers are cutting into the bottom line.

Link to the rest at Kristine Kathryn Rusch and thanks to Vivian for the tip.

Here’s a link to Kristine Kathryn Rusch’s books. If you like an author’s post, you can show your appreciation by checking out their books.

Authors, Keep Your Copyrights. You Earned Them.

14 August 2015

From The Authors Guild:

Authors should not assign their copyrights to publishers. As our Model Contract emphasizes:

“CAUTION: Do not allow the publisher to take your copyright or to publish the copyright notice in any name other than yours. Except in very unusual circumstances, this practice is not standard in the industry and harms your economic interests. No reputable publisher should demand that you allow it to do so.”

Most trade publishers do not ask for an outright assignment of all exclusive rights under copyright; their contracts usually call for copyright to be in the author’s name. But it’s another story in the world of university presses. Most scholarly publishers routinely present their authors with the single most draconian, unfair clause we routinely encounter, taking all the exclusive rights to an author’s work as if the press itself authored the work: “The Author assigns to Publisher all right, title and interests, including all rights under copyright, in and to the work…”

. . . .

The problem is that most academic authors—particularly first-time authors feeling the flames of “publish or perish”—don’t even ask. They do not have agents, do not seek legal advice, and often don’t understand that publishing contracts can be modified. So they don’t ask to keep their copyrights—or for any changes at all. Many academic authors tell us they were afraid to request changes to the standard agreements for fear that the publisher would pull the plug on their books. One said that when his first book was published in 1976, he never even read the contract and would (and did) sign anything to get published.

So we asked several university press representatives “Why is a clause granting copyright to the publisher the default language in university press agreements?” Here’s what they said (sometimes after consulting with their lawyers):

  • “We are a non-profit press and we can’t do things that commercial trade presses do.”
  • “The press is better positioned than the author to defend the copyright by use of premium outside counsel, as well as by use of an anti-piracy service to curb piracy.”
  • “Having the copyright in the press’s name allows us to work freely to maintain the integrity of the work and maximize its publishing life.”
  • “We’re close enough to the work to do the best job and we have incentive to protect the publishing mission.”
  • “It makes it easier for the press because it doesn’t have to ask for an author’s approval when permission uses are granted.”
  • “It eliminates any confusion as to which party should be contacted regarding re-use and sub-rights, etc. and it simplifies things in regards to piracy as well. Trade authors are more likely to have agents who may retain certain sub-rights and exploit them independent of any publisher relationship.”

Not one of these rationalizations passes the giggle test.

Link to the rest at The Authors Guild and thanks to Melinda for the tip.

Making Sense of Collaboration Agreements

12 August 2015

From CopyLaw:

Nearly everyone has heard the oft-repeated statistic that 50% of all marriages end in divorce. But what about creative partnerships?  The odds are no better.   Pity the poor expert, celebrity, author, playwright or screenwriter who enters into a creative partnership without thinking about the financial, emotional and practical challenges ahead of them.  If the relationship falters, a well-drafted collaboration agreement (written during the romance stage of the relationship) can be consulted.   If the relationship fails, that agreement will help for a clean break-up.

Like marriage, the key reasons most authors cite for failed collaborations are lack of commitment, lack of communication, lack of equality, unrealistic expectations, and, surprisingly, lack of mutual respect.  While trust is an important element of any relationship, without a written agreement you are ill equipped to deal with these and other conflicts.  Contracts define rights and remedies, and thus help avoid misunderstandings.

. . . .

The formation (and dissolution) of a creative partnership is governed by federal copyright law and state contract law. When authors blend their talents to create a unitary work, each collaborator is presumed to co-own the copyright, and share equally in the  money the copyright generates – whether profits or royalties. Further, under the default rules of the Copyright Act – which can be altered by a written agreement — each collaborator can license the nonexclusive rights to the work to a third party, provided they fairly account for the profits to the other.

Problems between collaborators commonly arise when there are multiple offers for the work or requests for exclusive rights and no agreement exists between the collaborators. If your collaboration is not working, and your agreement doesn’t delegate the right to make business decisions to one of the partners, a recalcitrant collaborator can prevent the other collaborator from licensing or selling film or other rights in the work.  For this reason, you might consider changing the default rules of equal control and ownership, if the book is memoir, or an extension of one author’s business or brand.  Relinquishing control, however, does not necessarily mean a smaller financial interest or lack of transparency.

. . . .

If you can’t hold it together long enough to see the work published, the impact of a literary breakup can be devastating.  One such disaster scenario is the unilateral termination of “as told to” collaborations, such as the failed collaboration between Fay Vincent, the former commissioner of baseball, and writer David Kaplan.  After 90% of Vincent’s memoir was completed, Vincent withdrew the project from his publisher, and thwarted Kaplan’s efforts to publish the book under Kaplan’s own name. See, Kaplan v. Vincent, 937 F. Supp. 307 (SDNY 1996).  If the parties had a well-written agreement – as opposed to an oral understanding — likely, costly , time consuming and psychologically draining litigation would have been avoided.
If you are a writer who has been approached to help write a memoir, your agreement needs to address: (i) access to pertinent documents; (ii) reasonable access to the subject; and (iii) the subject’s good faith effort to secure the writer’s access to interviews with other individuals as may be needed to prepare the proposal or complete the book. From the subject’s perspective, confidentiality is a key issue.

If you are assisting with a memoir, are you delivering a “warts and all” portrait? Alternatively, is your role to put the best face on your subject’s life story, without resorting to blatant deception? A property drafted collaboration agreement will address these issues.  The greater you detail what is to be delivered, the less arbitrary the acceptance standards will be.  Since progress payments are the norm, if the subject is unhappy, you may not see anything beyond your initial payment or advance.

Link to the rest at CopyLaw

Next Page »