Legal Stuff

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.

Amazon Distributing Antitrust Settlement Proceeds

25 March 2014

Amazon customers in the US are receiving emails today announcing credits being applied to their Amazon accounts.

Here’s an excerpt from the email:

The credit results from legal settlements reached with publishers Hachette, HarperCollins, Simon & Schuster, Macmillan, and Penguin in antitrust lawsuits filed by State Attorneys General and Class Plaintiffs about the price of eBooks.

You don’t have to do anything to claim your credit, we have already added your credit to your Amazon account.

The amount of the credit will depend upon how many ebooks the Amazon customer purchased and whether those ebooks were New York Times bestsellers or not. The settlement provides for payment of $3.17 for NYT bestsellers and $0.73 for all other ebooks.

Here’s more on the settlements:

You are included in the Settlements if:
1. You purchased an E-book that was published by one of the five Publishers (all of the Publishers publish books under many different names, called imprints, See Question 6), and
2. Your purchase was made from April 1, 2010 through May 21, 2012, and
3. You were a resident of 1) a U.S. state or commonwealth, 2) the District of Columbia, or 3) one of the five U.S. Territories at the time of purchase. The billing address of the credit card you used to buy the included E-book(s) will be used to determine your residency.

The following people or entities are not included in the Settlements:
1. Residents of countries other than the United States and its territories and commonwealths are not included in the Settlements.
2. Only individuals are included.  Business, governments, libraries, non-profits, and other entities are not included.
3. Rental E-books, free E-books, and E-books received as gifts only are not included. (Only purchased E-books are included in the Settlements.  If you received an E-book as a gift, your gift is not included.  The person who purchased it for you may be included.)

For more settlement information, you can go to a website created by the state attorneys general who pursued the antitrust lawsuit against the big publishers and Apple. Here’s a link to the FAQ.

To avoid any confusion, Amazon is not paying any money to its customers because it was not charged with any antitrust violation. The money being distributed to Amazon customers is coming from:

  • Holtzbrinck Publishers, LLC, known as Macmillan (“Macmillan”);
  • Penguin Group (USA) Inc. (“Penguin).
  • Hachette Book Group, Inc. (“Hachette”);
  • HarperCollins Publishers LLC (“HarperCollins”); and
  • Simon & Schuster, Inc. and Simon & Schuster Digital Sales, Inc. (“Simon & Schuster”).

Apple is still fighting this antitrust case and has not settled.

Judge Rules for HarperCollins in Open Road E-Book Dispute

18 March 2014

From Publishers Weekly:

In a significant ruling regarding backlist e-book rights, a New York court this week held that e-book publisher Open Road infringed HarperCollins’ copyright with its e-book edition of Jean Craighead George’s 1973 bestselling children’s book Julie of the Wolves.

“Having accordingly relied on the words of the contract, this Court holds that, by its language, the contract grants to HarperCollins the exclusive right to license electronic publications, a right which was infringed by Open Road in its unlicensed e-book publication of Julie of the Wolves,” held judge Naomi Reice Buchwald.

While some have viewed the case as a follow-up to the 2001 landmark ruling in Rosetta vs. Random House, the judge acknowledged that her ruling “dependent as it is on antiquated language,” could be of “limited applicability beyond the confines of this contract and this case.”

The suit was filed by HarperCollins in December of 2011, after George had agreed to publish an e-book edition of her 1973 Newbery Award-winning book with Open Road. HarperCollins argued that two clauses in its contract (signed in 1971) gave it the exclusive right to license an electronic edition—albeit, only to be executed with the permission of George.

Open Road, however, believed there to be no explicit grant of e-book rights in the contract, and offered to publish the digital edition, even agreeing to indemnify George and her agency, Curtis Brown.

. . . .

In 2001, Random House sued Rosetta Books, arguing that contracts for three works signed by Rosetta included the rights to publish the works in e-book editions. In July, 2001, district court judge Sidney Stein ruled that Random House’s language to “print, publish and sell the works in book form” did not include the format “that has come to be known as the e-book.” In March, 2002, the Second Circuit unanimously upheld Stein’s opinion. In 2002, Random House settled the case.

Like the Rosetta case, the heart of the issue in the HarperCollins suit is a disputed contract clause. But unlike the Rosetta case, HarperCollins argued that its contract with George included both a standard subsidiary rights grant (paragraph 23), which taken with another clause (paragraph 20), gave HarperCollins e-book rights.

Specifically, paragraph 20 of the 1971 contract stated that HarperCollins “shall grant no license without the prior written consent of the Author… including uses in storage and retrieval and information systems, and/or whether through computer, computer-stored, mechanical or other electronic means now known or hereafter invented…”

. . . .

In her reading, Buchwald held that the HarperCollins contract at issue “differs significantly” from its counterpart in Rosetta Books. First, while the governing grant in both contracts convey the right to publish “in book form,” the Rosetta contract grant is “to print, publish and sell in book form.” The word “print” does not appear in the HarperCollins contract. The inclusion of the word “print,” Buchwald ruled, “has a limiting effect and a strong connotation of paper copy,” distinguishing the case from Rosetta Books.

. . . .

“This language, encompassing as it does the forward-looking reference to technologies ‘now known or hereafter invented,’ is sufficiently broad to draw within its ambit e-book publication,” Buchwald ruled. “Although no commercial market for e-books existed at the time of its drafting, e-book technology comprises a later-invented version of the very computer, computer-stored, mechanical or other electronic means provided by Paragraph 20.”

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

PG says this is another reason for authors to be very careful about the contracts they sign with publishers.

And a reminder that contracts for the life of the copyright really are essentially forever. The author in this case died while litigation was in process.

Please Help Me Pay My Wonderful Authors the Royalties Owed Them!

15 March 2014

From IndieGoGo:

I am Vera Nazarian, two-time Nebula Award Nominee author, award-winning artist, publisher of Norilana Books. In 2006 I singlehandedly started a small independent press Norilana Books, with about 300 paper print POD (Print-on-Demand) titles in print, mostly classics of world literature (about 90% of the complete catalog), and a few of my favorite contemporary genre authors.

. . . .

Things were going well the first few years, and I was promptly and happily paying royalties to all my wonderful authors, and releasing handsome paper print editions of their works in hardcover and trade paperback. And then the economy crashed, while at the same time, a series of personal misfortunes struck.

Within a very short period of time I was faced all at once with the cancer of my mother, death of my father, the loss of my home to foreclosure, bankruptcy, a cross-country move from California to Vermont, and having to start my life over on a severely reduced income, after having to undergo major life-saving surgery myself.

At the same time, the publishing industry started to change rapidly, with the advent of ebooks and ereaders, and paper print sales dropped considerably, so that my already inadequate income was reduced to about one third of what it had been.

. . . .

But this fundraiser is not about me…

It’s about the wonderful Norilana Books authors who need to be paid their long overdue royalties. As months went by and I was struggling just to survive, I was no longer able to pay my authors the royalties owed them.

My authors have understood my dire situation and have waited patiently throughout all this—are still waiting. All rights to their books are theirs, and some of them chose to exercise their reversion, while others are still with me and my tiny press because they prefer for their books to stay in print in their current editions.

Regardless, they all need to be paid as soon as possible—all the back royalties, down to a cent.

Link to the rest at IndieGoGo and thanks to Devin for the tip.

Allow PG to translate: “I spent all the money that I should have paid to authors and now I would like the nice people who come to IndieGoGo to give me more money so I can pay the authors (unless something else comes up in the meantime).”

PG strongly recommends that if you want to help any of the Norliana Book authors, you track the author down and send them a payment directly rather than trusting someone who has already stiffed the author to make that payment.

At least in the US, if a publisher runs into financial problems, authors stand at the end of the bankruptcy line with other unsecured creditors, likely receiving little, if any, of the royalties owed to them. To add insult to injury, the authors’ publishing contracts may be purchased for a pittance by some third party who may not be any better at paying royalties than the bankrupt publisher was.

The most common early danger signs are delayed royalty payments caused by “accounting problems” or “bank errors.”

Unfortunately, with the shakeout underway in traditional publishing, PG predicts more publisher collapses in the future. Small publishers are like other small businesses – some are very well managed and others are not. Large publishers are like other large businesses – some are very well managed and others are not.

Unfortunately, in the middle of a major technology disruption like ecommerce and ebooks, even well-managed businesses can be taken down.

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