Legal Stuff

MacAdam Cage Authors Look to Resolve E-book Dispute

24 April 2014

From Publishers Weekly:

Despite complaints from former MacAdam Cage authors that they have not received e-book royalties or regular statements for years, Mark Pearce, publisher of MP Publishing, the publisher and e-book distributor that controls their e-book rights, claims all royalties have been paid and all statements are up to date. Pearce blames the legacy of problems at MacAdam Cage on its late publisher, David Poindexter, although he is urging former MacAdam Cage authors to contact him to resolve disputes over post-bankrutpcy e-book rights to their titles.

At the same time, Jan Constantine, general counsel at the Authors Guild, who has examined the e-book agreement, told PW that the e-book rights agreement negotiated between Poindexter and Pearce in 2009—Pearce purchased the e-book rights to the bulk of the MC list for the life of copyright—is legitimate and survives the MacAdam Cage bankruptcy.

. . . .

Constantine urged former MacAdam Cage authors to immediately demand “back dated and current royalty statements” from Pearce and to “make sure he is in compliance.” The Authors Guild is also circulating copies of the original MC/MP Publishing e-book agreement and amendment to authors and urging them to examine the licensing agreements.

. . . .

Constantine questioned whether the e-book licensing agreement would survive a court challenge. She pointed to the nature of the licensing agreement—the bulk sale of rights, the length of the agreement (life of copyright), the apparent lack of notification or provisions for authors to reclaim rights and the ongoing complaints of nonpayment—and said “if authors banded together for a legal challenge to this agreement, I think a good legal expert could figure out a way to attack it.”

. . . .

Pearce said publishing is a labor of love for him and that “I look for payment over the long term, so the rights I bought were for the length of copyright.”

Pearce said he is “surprised” at author complaints and charges of nonpayment: “our contracts are with the publisher and not the writers. We paid our advance to MacAdam Cage so you deal with the publisher. The money goes to the publisher to distribute to their authors. I now know that MacAdam Cage [wasn't] doing that. It’s unfair to say we haven’t sent out statements and or paid royalties. We contact writers regularly.”

Surprisingly, Pearce also said he didn’t know that MacAdam Cage had filed for bankruptcy.

. . . .

MacAdam Cage authors in contact with PW remain angry and baffled about why they never received royalty statements and payment. Novelist Dayne Sherman has contacted Pearce looking to reclaim all his rights. He said Pearce has offered to pay royalties direct to him dating from the bankruptcy reversion of print rights. Other MC authors, such as Edward Cline, author of the Sparrow Hawk series, were able to get his titles reverted before the 2009 e-book agreement. In some cases reverted titles have been included in the disputed e-book agreement anyway.

Link to the rest at Publishers Weekly and thanks to Glinda for the tip.

PG says this won’t be the last publisher bankruptcy nor the last shotgun merger or acquisition in which the works of authors are bought and sold like sides of beef and end up in the investment portfolios of people who understand nothing about publishing.

Authors who relied upon the promises of MacAdam Cage to pay the royalties that comprise the means of supporting themselves have discovered those promises have not been kept and may not be kept in the future. And the fruits of labors covering ten, twenty, thirty of the best creative years of their lives may be gone forever.

We have one more very concrete reason for authors to refuse life-of-copyright contract terms.

PG is proud to be an attorney, but not proud of the things that some attorneys and the people who hire them do. This story reminds him of part of a Woody Guthrie song:

Yes, as through this world I’ve wandered
I’ve seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.

Amazon Sales Take a Hit in States With Online Tax

23 April 2014

From Bloomberg:

In one of the first efforts to quantify the impact of states accruing more tax revenue from Web purchases, researchers at Ohio State University published a paper this month that found sales dropped for Amazon when the online charge was introduced. In states that have the tax, households reduced their spending on Amazon by about 10 percent compared to those in states that don’t have the levy. For online purchases of more than $300, sales fell by 24 percent, according to the report titled “The Amazon Tax.”

The findings add to concerns about how much the world’s largest online retailer can expand. The Seattle-based company, which reports quarterly earnings on April 24, has been grappling with decelerating revenue growth amid heavy spending by Chief Executive Officer Jeff Bezos on new initiatives. Amazon has enjoyed an edge against brick-and-mortar retailers because consumers didn’t have to pay a sales tax for purchases from the e-commerce site, yet that has eroded as states including California and Texas have unveiled the levies.

. . . .

The push by states to collect taxes on Internet purchases has gathered momentum in the past few years. Amazon collects sales tax in 20 states, according to its website. More are set to follow as the company has become a popular target to help state governments generate more revenue to cover budget shortfalls; Florida is set to begin charging a tax on May 1. States lose an estimated $23 billion a year in uncollected sales taxes from Web retailers.

“As analysts have noted, Amazon offers the best prices with or without sales tax,” Ty Rogers, a spokesman for Amazon, said in an e-mail.

. . . .

In total, brick-and-mortar retailers enjoyed a 2 percent bump in purchases in states that introduced an online sales tax, while competing online retailers got a 20 percent increase, the study found.

The biggest sales uptick — 61 percent for big-ticket items — went to merchants that use Amazon Marketplace. These outfits pay Amazon a fee to offer products through the Amazon website, yet don’t collect taxes. The products are typically available alongside Amazon’s own listings.

That means Amazon still indirectly benefits, since it collects a fee from merchants on its marketplace.

Link to the rest at Bloomberg

PG would note that, in fact, Amazon doesn’t pay these sales taxes. Amazon customers pay these taxes. That’s why customer behavior (as usual) changes to avoid paying taxes when there’s a tax-free alternative that is less expensive.

The online sales taxes (which have to be based on some sort of physical presence Amazon has within the state) are an effective tax increase on the citizens of the states that impose them.

Yes, there are already use taxes on the books that Amazon customers are supposed to pay in lieu of sales taxes, but use taxes are effectively ignored by state taxing authorities for non-wealthy individuals. Making Amazon collect sales taxes is easier than requiring the state to collect use taxes itself.

The Amazon marketplace sellers are an interesting sales tax angle. Many of them will be more difficult to tag with a physical presence in the state than Amazon is.

Suing e-book reviewers and being a public jerk: Two bad ideas in one

21 April 2014

From TeleRead:

On said book, a reviewer going by the moniker “Biology Book Worm” had posted a one-star review indicating that some facts were incorrect. Joe Nobody had replied, intending to straighten out the reviewer’s misapprehensions, but ended up getting into an argument. The reviewer also expressed the belief that some of the five-star reviews that had “tricked” him into buying the book were sock puppets for Nobody himself.

In the end, Joe Nobody felt he felt he could prove he owed a $23,000 drop in sales to that review (given that, as the voted “most helpful” review, it ended up at the top of his reviews list), and was wondering about the feasibility of suing the reviewer (who, he had determined, was “a 23 year-old recent college graduate who never severed (sic) anything but a hamburger”). He posted to KBoards wondering whether he should consider suing. (The article includes a screencap of the original post; the thread itself seems to have been deleted from the site or otherwise protected from casual viewing even from someone with a KBoards account.)

Strandberg suggests that it’s more likely that drop in sales could be attributed to Nobody showing a fairly ugly side of himself in arguing with the reviewer. Seriously, that’s something you don’t ever want to do; when you get down in the mud with someone like that, you end up getting more mud on you than him. Strandberg points out that engaging with negative reviewers is almost always a big mistake.

First, that reviewer doesn’t care about you. Second, anyone who wants to buy your book can read those comments. I’m willing to bet a large chunk of that $23,000 Joe Nobody is pissing and moaning about was lost due to his own misguided comments.

The idea of suing over a bad review is frankly ridiculous, For one thing, the lawyer fees would eat up that $23,000 in about fifteen minutes. Even if he won the suit, he’d never see the $23,000, let alone compensation for his legal fees—where’s a 23-year-old college grad going to get that kind of money? It would be purely an exercise in dumping money down the drain in order to assuage his own ego, while driving someone who had the temerity to post a bad review into dire financial straits for life. (And that’s assuming that he won, which is not exactly assured.)

Link to the rest at TeleRead

PG will add that the process of proving damages in a lawsuit is way more complex than saying, “This person did this, then I lost money.”

As far as suing someone who wrote a bad review, doing so will guarantee the widest possible exposure for the contents of the bad review. Plus a lot of people who think the suit is a bad idea will create additional one-star reviews of a great many of the author’s books with nasty comments. And somebody else will start an online campaign to boycott the author’s books.

And no author, no matter how wealthy, can sue the whole online world.

New “Twibel” Defamation Opinion Suggests Online Speech May Be Special After All

19 April 2014

From Trademark and Copyright Law:

Many lawyers smirked and scoffed a few months ago when the popular press began touting the Courtney Love “Twibel” trial as a “landmark” case that would set a “major precedent.” In fact, as discussed further elsewhere, it was nothing of the kind. In case you don’t already know, “Twibel” is just a silly concatenation of “Twitter” and “libel,” coined by the media to overhype a case which, apart from the involvement of a celebrity, was just a run-of-the-mill defamation claim that happened to involve Twitter. The excessive attention paid to the matter was premised on the notion that Twitter speech is somehow legally different than other speech, and the consensus among most attorneys was that this notion was nonsense.

However, an opinion issued on April 14, 2014 by Judge Dennis Saylor of the District of Massachusetts may cause some to rethink — not whether the Courtney Love trial was important (it wasn’t) — but whether defamation claims based on internet speech may be treated a little bit differently than claims based on traditional speech.

. . . .

In November 2010, Mara Feld sent her retired racehorse away to become a companion horse. For reasons unknown, the horse disappeared en route and likely was slaughtered. The fate of the horse became the subject of online discussion.  In the context of that discussion, Christine Conway posted the following Tweet: “Mara Feld . . . you are fucking crazy!”

In 2013, Feld filed a complaint against Conway alleging that the Tweet was defamatory. Conway brought a motion to dismiss, arguing that the Tweet was protected opinion as a matter of law, and thus could not be the subject of a defamation claim.

. . . .

Accusations of mental instability are often the basis for defamation claims, but many of them end up getting dismissed. This is because, in most cases, a court determines as a matter of law that the statement is not an assertion of fact, but rather a pure opinion protected by the First Amendment. Making this critical fact/opinion distinction requires that the court examine the statement in its totality and in the context in which it was published.

. . . .

Judge Saylor disagreed, and held that the proper context was the entire “heated internet debate.”  In that context, Judge Saylor wrote, it was obvious that the Tweet was an opinion, and therefore the case should be dismissed.

Fair enough, but exactly how did the Court defined the scope of this “heated internet debate”? Neither the allegations nor the parties’ briefs provide any information about where on the internet this debate was taking place, or how and by whom it was being read.  Was it all on Twitter, or did it take place in part on other social media or in some obscure equine discussion forum?

Link to the rest at Trademark and Copyright Law and thanks to Glinda for the tip.

Norway pursues possible publisher cartel favoring own book chains

16 April 2014

From TeleRead:

After the reports of Amazon entering the Swedish market amid possible restricted competition, now Scandinavian neighbor Norway has reportedly seen a crackdown on anti-competitive practices in the local book trade. According to the Norwegian press reports, the Norwegian Competition Authority (Konkurransetilsynet) has raided the offices of the country’s big four publishing houses – Aschehoug, Cappelen, Gyldendal, and Schibsted – to investigate a possible cartel designed to restrict book supply to supermarkets and other outlets in favor of the publishers’ own-branded book chains.

Norway has a highly restricted publishing and book market that might facilitate such abuse. As per research in Regionalism and the Reading Class, by Wendy Griswold, the Norwegian state buys 1000 copies of every book published by a Norwegian publisher, and pays an annual subsidy to every member of the Authors Union.

Link to the rest at TeleRead

The HarperCollins Lawsuit: Keeping Authors Aboard As Traditional Publishing Sinks

3 April 2014

From The Misfortune of Knowing:

In March, the U.S. District Court for the Southern District of New York, sitting in Manhattan, handed a victory to HarperCollins in its lawsuit against Open Road Integrated Media over the e-book publishing rights of Jean Craighead George’s award-winning children’s novel, Julie of the Wolves (1972). This “victory” for HarperCollins, however, highlights for authors one of the perils of pursuing the traditionally published route: desperate publishing corporations will stop at nothing to make sure “its” authors go down with the ship.

. . . .

  • In 1971, author Jean Craighead George signed a contract with HarperCollins (then Harper & Row) to publish Julie of the Wolves “in book form” for a $2,000 advance (just over $11,000 in today’s dollars) and royalty payments between 10-15%.
  • Although the grant of publishing rights was in Paragraph 1, the contract also contained a provision (Paragraph 20) that said: “the Publisher shall grant no license without the prior written consent of the Author with respect to the following rights in the work: use thereof in storage and retrieval and information systems, and/or whether through computer, computer-stored, mechanical or other electronic means now known or hereafter invented … and net proceeds thereof shall be divided 50% to the Author and 50% to the Publisher …” (Emphases mine.)
  • The contract between George and HarperCollins also had a “reserved rights” clause that reserved to George “[a]ll rights in the Work now existing, or which may hereafter come into existence, not specifically herein granted.”
  • In 2010, Open Road, an e-book publisher founded in 2009, offered to publish the e-book of Julie of the Wolves for a 50-50 royalty split with George. George approached HarperCollins to see if they would match the royalty. HarperCollins wanted to publish the e-book, but insisted on giving George a meager 25% royalty for the Newbery-award winning novel.
  • In 2011, George contracted with Open Road to publish Julie of the Wolves in e-book form, which sold around 1,600 copies.

Spurned, HarperCollins filed a lawsuit against Open Road forcopyright infringement on December 23, 2011.* George, who passed away in 2012 at nearly age 93, was never a party to this lawsuit, even though interpretation of the contract between George and Harper Row—whether it assigned e-book publication rights (in 1971!) and whether it was breached—was key to this dispute.

Clearly, through the 1971 contract, George had granted HarperCollins the right to exploit the copyright through printed publication. But now a federal court in Manhattan, in granting the Plaintiff-HarperCollins’ motion for summary judgment, has determined that the 1971 contract also covered later-developed ways of exploiting the copyright (“new uses”).

. . . .

In law school, property rights are often referred to as “a bundle of sticks.” When you own something, you can grant another person some rights to that property while keeping others, or you can give them the whole bundle. There’s a big difference between grantingall of the rights in the Work — which would be the whole bundle — and granting the right to publish a Work in book form. So, when a 1971 publishing contract gives rights to the Work “in book form,” that does not necessarily include the right to publish an e-book decades later.

Back in 2001, another judge in the same New York federal court found that a very similar contract (the publishing contract for a variety of works, including Kurt Vonnegut’s Slaughterhouse-Five) that granted a publisher the right to “print, publish and sell the work in book form” did not grant e-book rights.

. . . .

To me, those two points largely answer the question in this case: the “book form” referred to in George’s contract meant printed versions of the Work, and nothing more. Rights to everything else were “reserved.”

But the Court held exactly the opposite, concluding “the e-book format constitutes a permissible extension of ‘book form’ via ‘storage and retrieval and information systems, and/or whether through computer, computer-stored, mechanical or other electronic means.’” That language comes much later in the agreement, in Paragraph 20 of the contract (see “facts section” above).

. . . .

To me, regardless of how the “and/or whether” question is resolved, the overall point of Paragraph 20 remains clear, particularly when viewed in the context of the technology available in 1971. HarperCollins’ memorandum of law gives some examples of what those “storage and retrieval and information systems” could be: in 1969, MIT created “an experimental computer system for accessing the full text of 10,000 journals,” and in 1971, Project Gutenberg was set up to “create electronic books of public domain works that would be stored, retrieved and read on computers.”

That seems to be what the contract was getting at: if the publisher wanted to put the text of the book in some sort of electronic database (either then known or later invented)— which under copyright law would require its own separate license — then George had the option of saying “no” or of receiving 50/50 royalty.

. . . .

At the end of the day, this case suggests that one of the ways big publishers are trying to stay afloat in the current market is by holding e-books of popular authors for ransom, a strategy that has now been blessed by the Southern District of New York.

The shaky legal reasoning in the HarperCollins v. Open Road Mediacourt opinion will likely do nothing but encourage publishing corporations to threaten authors with years of litigation if they dare to try to bargain for even equal treatment (such as a 50-50 split) for “new uses.”

. . . .

Well, if authors have any bargaining power at all, it may be worth it to consider the possibility of limiting copyright grants to ways of distribution known at the time of the contract. However, a better course of action may be to avoid traditional publishing entirely.

Link to the rest at The Misfortune of Knowing

U.S. judge OKs class action in e-book suit against Apple

29 March 2014

From Reuters:

A federal judge in New York granted class certification on Friday to a group of consumers who sued Apple Inc for conspiring with five major publishers to fix e-book prices in violation of antitrust law.

U.S. District Judge Denise Cote said the plaintiffs had “more than met their burden” to allow them to sue as a group. She rejected Apple’s contentions that the claims were too different from each other, or that some plaintiffs were not harmed because some e-book prices fell.

“This is a paradigmatic antitrust class action,” wrote Cote, who has scheduled a trial later this year to determine damages, which could reach hundreds of millions of dollars.

. . . .

Cote on Friday also denied Apple’s motion to exclude the opinions of the plaintiffs’ damages expert. In a separate ruling, Cote largely threw out the opinions of Apple’s two damages experts, saying they were not based on “rigorous application of economic methods.”

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

Canadian Judge Explains Why Agency eBook Pricing is Still Alive North of the 49th Parallel

29 March 2014

From The Digital Reader:

No one was surprised when Kobo objected to the end of Agency pricing in Canada, but when the Canadian Competition Tribunal granted them an initial delay it did come as a shock.

The Tribunal has since laid out their reasons for the delay, and for hearing Kobo’s objection, and for the most part they make sense. According to the summary written by Justice Donald J. Rennie, the chairperson of the Competition Tribunal, Kobo was granted the initial delay because without it Kobo would have been harmed even if they won their case.

Rennie notes that “In my view, the balance of convenience favours granting the stay. While maintaining the status quo might have the effect of depriving consumers of lower e-book prices in the short term, not granting the stay will certainly have a profound impact on the usefulness of Kobo’s application. In the event that Kobo is successful in its application and the Tribunal finds that the Consent Agreement ought to be rescinded or varied, Kobo would have already suffered loss and there would be no way to wind back the clock.”

But that’s not all. The summary goes on to indicate that the Tribunal might rule in Kobo’s favor. Apparently it is reasonable to listen to Kobo’s objections because there is no evidence that any collusion or anti-competitive activities occurred.

The consent agreement, which was negotiated by the Canadian Competition Bureau and 4 publishers (Hachette, Harpercollins, S&S, and Macmillan), says that the publishers don’t admit to any wrongdoing. There was also no evidence in the consent agreement to show the existence of an anti-competitive agreement or arrangement between the consenting publishers.

It was for those two reasons that the Tribunal decided that the consent agreement might not be enforceable: “Can the Tribunal make an order prohibiting a person from doing anything under a putative 90.1 agreement where it has not identified any terms of such an agreement or is not satisfied that such an agreement exists or is proposed?”

Link to the rest at The Digital Reader

PG is not in any way knowledgeable about Canadian law, but it certainly sounds like whoever negotiated the consent agreement for the Competition Bureau really screwed up.

Apple, Publishers Battle New E-book Antitrust Claims

28 March 2014

From Publishers Weekly:

In two January motions, Apple and the five major publishers involved in a 2010 e-book price-fixing conspiracy asked Judge Denise Cote to dismiss a follow-up suit from an Australian e-book retailer that claimed its business was destroyed by the 2010 agency switch. But since March 14, two new plaintiffs have joined the action, raising the possibility of another legal front opening in the e-book antitrust battle—this one involving aggrieved retailers.

In DNAML vs. Apple Inc. et al, filed in September, 2013, the upstart Australian e-book retailer alleges the company was harmed “directly and as a proximate result” of the 2010 price-fixing scheme executed by Apple and the five agency publishers (Hachette, HarperCollins, Simon & Schuster, Macmillan and Penguin). Now, this month, two related cases have been accepted by Cote: one filed by Lavoho, LLC, a “successor” to the Diesel eBook Store; and another from Abbey House Media, formerly BooksonBoard.

The most recent suits offer virtually identical claims to DNAML’s 2013 suit—that the 2010 agency switch destroyed the retailers’ ability to compete on price.

. . . .

The suits contain nearly identical preambles detailing Apple’s liability finding by Judge Cote, and they press nearly identical claims: that the illegal collusion between Apple and the publishers ended the retailers’ ability to bundle, discount, promote or otherwise engage in retail price competition, thus destroying each nascent e-book business. In each complaint, the plaintiffs were said to have business models “predicated on aggressive price competition.”

. . . .

The Diesel e-bookstore (now Lovoho), was founded in 2005 by Scott Redford. It claims to have offered over three million titles and “the cornerstone” of its business model was also discounted bundling, including “proprietary software that would allow its e-bookstore to ‘shrink wrap’ up to six digital e-books and sell them as a bundle to the consumer.” Diesel also offered a rewards program. Diesel had enjoyed steady growth “every single year,” the suit claims, with “modest profits” and a “large expansion” planned for 2011.

Everything suddenly changed, however, after the agency switch in 2010. Each suit claims the plaintiffs “did not want to agree to the agency agreements,” but “had virtually no choice but to sign them” if they wanted to sell the publishers’ books.

. . . .

Just as Amazon was forced to raise prices, the suits claim, each of the plaintiffs was “forced to stop discounting its prices and cease using its already developed discount-driven promotional tools.”

Link to the rest at Publishers Weekly and thanks to Russell for the tip.

The bone-headed scheme hatched by the leaders of Big Publishing just keeps on rolling along.

PG says Amazon Derangement Syndrome is an expensive affliction.

The absurd ebook case: Apple fights on as consumers spend settlement money at Amazon

26 March 2014

From GigaOm:

The high-fives must have been flying at Amazon this morning: millions of the company’s customers got notices to spend credits at its Kindle store, and Amazon didn’t have to pay a cent. Meanwhile, rival Apple will likely underwrite aneven bigger shopping spree for Amazon customers sometime yet year.

Welcome to the ironic denouement of l’affaire ebooks, which reached a climax in 2013 when a federal judge found that Apple had brokered a conspiracy with book publishers to fix prices. The legal tussle resulted in the publishers settling their cases — which is what paid for the customer credits that went out today — while Apple fought on alone.

For now, the biggest winner is Amazon, which already dominated the ebook market at the time of the price-fixing scheme in 2010. Today, as a result of lawsuits brought by the Justice Department and state governments, Amazon is in an even stronger position with the publishers; it will also get a healthy cut of the $160 million or so that the publishers agreed to pay under a settlement.

. . . .

For Apple, which chose to fight rather than settle, it’s a whole different story. Right now, the company is in the midst of high legal torture at the hands of a hostile judge, class action lawyers, state attorneys general and the Justice Department.

Recent court records show that the class action lawyers and the states want Apple to pay damages of $280,254,374; they will then seek to triple that amount under special penalty provisions — which would result in a final bill close to $1 billion. The damages trial is set to start in May and, if Apple loses, consumers (and indirectly Amazon) can expect to receive another bushel of ebook credits next year.

Link to the rest at GigaOm and thanks to Matthew for the tip.

Next Page »

Page optimized by WP Minify WordPress Plugin