Some of you may recall the brouhaha that erupted in 2001 when Random House sued Rosetta Books over the sale of e-books from Random House’s backlist. Random House took the position — which it still asserts, incidentally — that despite the fact that its archaic contracts with writers failed to predict the rise of e-books and thus were silent as to as-yet-uninvented-concept of electronic rights, it nevertheless owned those rights. Rosetta Books (and the Author’s Guild) took issue with this assertion, as it seemed to presage a Big Brother-like claim by the publishing house that it owned all rights, express or implied, real or inchoate, imaginary or otherwise. The position of most authors was that their contracts assigned the right to sell “books,” which were defined by Webster’s at the time as actual physical objects that one could pick up and read by physically turning inked pages with one’s hands. This was not an unreasonable interpretation of the word, given that it reflected the reality of books since the invention of the printing press by Gutenberg. In denying Random House’s request for an injunction, the district court ascribed to this generally accepted definition of the word “book,” and found that the grant of e-book rights was not contemplated by contracts which preceded the invention of e-books themselves.
The court of appeal subsequently upheld the lower court’s decision, but noted in passing that “there is some appeal to Random House’s argument that an ‘ebook’ – a digital book that can be read on a computer screen or an electronic device . . . is simply a ‘form’ of a book, and therefore within the coverage of Random House’s licenses.” Before the issue could reach final resolution, the parties settled, leaving open the ultimate question of whether the phrase “works in book form” embraces e-books or not. Though one might have expected the question to arise again (or over and over again, frankly) the publishing industry has danced around the question for the last 10 years, putting out fires as they arise by private agreement, hoping that it will simply go away as the backlist fades into the mists of time, authors pass away, and their heirs and estates are mired in bureaucratic molasses.
This past July, however, the issue threatened to come to a head when intergalactic superstar agent Andrew Wylie announced that he was forming a company to grant Amazon exclusive e-book rights to twenty novels written by Wylie’s clients, including such classics as Philip Roth’s Portnoy’s Complaint and Ralph Ellison’s Invisible Man. Wylie, never shy about pushing the envelope, was said to be reacting to low e-book royalties offered to his clients by traditional publishers. According to Publisher’s Weekly, Wylie’s new company (Odyssey Books) would retain only 10% of receipts after Amazon took its share — the same amount that Wylie would receive acting simply as an agent — and pay the balance to the authors. The battle lines were drawn up as one might expect, with publishers screaming bloody murder about Wylie’s ambush, the authors applauding, and the usual smattering of weird dissenters (e.g., the Author’s Guild chiming in that it was against the deal because it granted Amazon monopoly power to decide pricing). Behind the furor created by a direct deal between a novelist’s agent and Amazon lay the salient question raised but not settled by Rosetta Books: did Odyssey have e-book rights to grant? Random House did not immediately sue Wylie, as it did Rosetta Books, but it disputed Amazon’s right to legally sell titles that it said were subject to active Random House print publishing agreements. And Random House announced (a bit vindictively) that “on a worldwide basis it will not be entering into any new English-language business agreements with The Wylie Agency until this situation is resolved.”
That resolution arrived late last month in the form of this joint statement from Odyssey and Random House:
We are pleased to announce that The Wylie Agency and Random House have resolved our differences over the disputed Random House titles which have been included in the Odyssey Editions e-book publishing program. These titles are being removed from that program and taken off-sale. We have agreed that Random House shall be the exclusive e-book publisher of these titles for those territories in which Random House U.S. controls their rights. The titles soon will be available for sale on a non-exclusive basis through all of Random House’s current e-book customers. Random House is resuming normal business relations with the Wylie Agency for English-language manuscript submissions and potential acquisitions, and we both are glad to be able to put this matter behind us.
What the announcement did not disclose, of course, was the terms of the settlement between Wylie and Random House. Undoubtedly, Wylie got a better deal for his clients than they had been offered theretofore, but market speculation as to whether Wylie helped ignite a global resolution of e-book rights (or royalty rates, anyway) goes both ways, with some pundits applauding him for his verve and insouciance and others saying that his grandstanding nearly derailed the sub rosa talks that were already underway (see PW article here). Whatever Wylie’s role, lost in the sound and fury of populist musing the central question — the most important question — still remains unanswered: Who owns the e-book rights to books published before the advent of e-books?
Right now the answer appears to be “Who knows?”
I am a commercial litigator and intellectual property lawyer in Orange County. Although my practice encompasses a wide variety of business disputes, I have a particular fondness for, and am prone to wax philosophical on, the subjects of copyright and trademark infringement in music, literature, art, and film.