The Copyright Act of 1976 decrees that the author shall have a right exercisable only once for each separate literary work under exclusive license and for a brief window of time after 35 years from the date of a work’s publication to terminate a license. (There are some qualifications to this, but not necessary to explain the concept). There are two provisions concerning statutory termination, one [Section 304(c)] relates to literary works published prior to January 1, 1978; the other [Section 203] relates to literary works published after January 1, 1978. Both sections can be thought of as gifts from Congress to authors, or their estates, or spouses and children to renegotiate with the licensee of an economically valuable work or terminate licenses entered into at the beginning of an author’s career when he or she was in an unequal bargaining position with the licensee. We are going to confine our comments to Section 203, for post-1978 publications. The procedures for exercising the right are complicated.
If your literary work was published in 1978, 2013 is an important (in fact, the opening) year because if you acted properly in accordance with the time requirements for notice you are either in the process of renegotiating the license or taking steps to terminate an exclusive license for further exploitation with another licensee. If you started publishing in 1988, to take a random subsequent year, your important year is 2023, which means that this year, 2013 is the opening year for giving notice. Notice can be served at anytime between 2013 and 2021.
What was the purpose of the Act and how does it work? In its Report on the passage of the Copyright Act of 1976 the House of Representatives stated that “The purpose of the Act was to “safeguard[ ] authors against unremunerative transfers” [that is, transfers at the beginning of their careers] and address “the unequal bargaining position of authors, resulting in part from the impossibility of determining a work’s value until it has been exploited.” H.R. Rep. No. 94-1476, at 124 (1976). Section 203 reads in pertinent part:
In the case of any work other than a work made for hire, the exclusive or nonexclusive grant
of a transfer or license of copyright or of any right under a copyright, executed by the author
on or after January 1, 1978 … is subject to termination.
In other words, you have to own the copyright to be eligible to terminate the license. This issue has come up in some cases involving the superman character. There are no termination rights because the cartoonists created the superman stories and character as works made for hire.
You are familiar I know with the standard grant of rights provision in a publishing contract. It states that the grant is exclusive to the Publisher for “the term of copyright and all renewals thereof.” Well, this is not exactly accurate because 35 years from publication of a literary work is likely to be less than halfway through the current term of copyright which is life of the author plus 70 years. Nothing in the grant of rights language takes away the author’s statutory termination right which is non-waivable. In order to receive the benefit of the Act the author has to give notice to the licensee at least 2 years before the date of termination. The notice can be served anytime within a 10 year window preceding the anniversary date of the publication year. In other words, for a termination to be effective in 2013, notice had to have been given between 2003 and 2011. If notice was given in 2012, the earliest date for termination would be 2014.
The problem is that there is another window, a 5 year window. In other words, if the critical year is 2013 the window closes in 2018 so that if the notice is not served between 2008 and 2016 the right is irretrievably lost. Who benefits? The author if he or she is still living, the author’s estate if there is no living spouse and children, or living spouse and children if there are any. If there are only children and grandchildren, the termination interest can only be exercised by the action of a majority of them. Very, very complicated particularly if the family is at odds with each other.
The publishing world is a vortex of change. There has been a steady flow of news reports, court filings by the Department of Justice, judicial decisions followed by settlements, merger announcements, controversial contract terms for new digital imprints and much more besides. We find publishers, brick and mortar bookstores, and distributors all trying to adjust their business models to respond to revolutionary changes in the production and distribution of literary material. All these changes have immense consequences for authors. It appears that the Kindle reader introduced in 2007 was as upsetting to the marketplace as the change from manuscript books to print books in the 15th century. Before Kindle, readers bought print on paper books; now paper and ebook sales are close to equal in fiction genres and gradually approaching equality in non-fiction.
When paper was King, there were two publishing models: traditional for the general reading public and vanity for the family. Splitting production and delivery has triggered a variety of new models. Just as movable type replaced the quill, electronic production is impinging on the market for print books. Traditional publishers pay a premium up front in the form of an advance against royalties for the right to publish and distribute an author’s work. Vanity publishing is essentially an arrangement in which authors pay for printing and other services. There are two models for ebooks: self-publishing for a fee is a vanity like model in which authors keep a significant portion of proceeds; or licensing to an epublisher such as Open Road or RosettaBooks for a royalty (but no advance) based on a percentage of net proceeds.
Traditional publishers have expanded their business models over the past few years. They are already publishing ebooks under the advance and royalties formula and they are also searching for new relationships with authors. We can see this with the recent introduction by Random House of the Hydra, Alibi, Loveswept and Flirt digital imprints. When Random House announced contract terms for these imprints there was an uproar. Science fiction and other authors and literary agents were horrified. This brouhaha was reported by Victoria Strauss in her Writer Beware Blog of March 7, 2013. She later reported on March 12 that “Based on strong criticism from writers’ groups, authors, and agents, Random House has decided to make major changes in its digital contract.” The Hydra Model is essentially a collaborative or partnership relationship in which the author agrees to license a literary work to a publisher for a share in the net proceeds from ebook sales. In the Hydra contract initially proposed there was no advance. After the response from authors and agents Random House posted a “Special Message” on March 12. The Hydra initiative has now been subdivided: there is a profit sharing model and a traditional advance and royalties model.
Two further points about changes in the publishing industry. First, in the Business Day section of Friday March 8, 2013, the New York Times reported that attempts are under way to create a marketplace for secondhand digital books. This is an extraordinary development. We all know about the market for print books; they are owned by the purchaser who can resell them. The “first sale” doctrine has been reaffirmed in the past week by the U.S. Supreme Court in Kirtsaeng v. John Wiley & Sons, Inc. At the present time electronic books are not owned because downloading is a license rather than a purchase in the traditional sense. Amazon and Apple have created algorithms for setting up an exchange for digital material. Amazon in fact received a patent for its algorithm in January of this year.
The second point concerns the domain name extension dot book. I’m quoting from a PW report of March 11: “In a filing with ICANN … the Association of American Publishers came out against a bid by Amazon to buy the .book domain name for its exclusive use, saying such an application would be counter to public interest.” To permit a company like Amazon to own a registrar for the dot book domain name would be equivalent to Citibank or Bank of America becoming the registrar for dot bank.
All this is playing out along with disputes between Barnes & Noble and Simon & Schuster about paying for shelf space (Report in the New York Times) and Amazon’s announced purchase of the social site Goodreads (from the same source). None of this suggests the demise of print publishing, but it disproportionately impacts authors whose works are less and less available in physical formats.
Productive authors increase in status and over time become recognized by the general public as the source of their literary works. At the beginning of a career authors simply start out as names. They become brands when readers recognize them as sources for goods and services in a trademark sense. Names can acquire value separate from the individuals who answer to them. Authors who have achieved “brand” recognition qualify for trademark registration, as exemplified by J.K. Rowling whose licensees own a host of trademarks in a variety of jurisdictions and Classes. Domain names are different from trademarks in that anyone can purchase a domain name, even the name of an author who has become a brand. There is no gatekeeper to say “you can’t do that!” If challenged in a proceeding under the Uniform Domain Name Resolution Policy (UDRP) the purchaser will most likely forfeit the domain name, but he cannot have been prevented from registering the domain name that is identical or confusingly similar to the author’s name. Again taking J.K. Rowling as an example: in 2004 a Uruguayan domiciliary purchased and . Joanne Rowling (the owner of the trademark) filed a complaint and the domain name registrations were transferred to her.
Many authors do not have trademark registrations but own domain names corresponding to their “brand” which is either their persona (“J.K. Rowling,” not Joanne Rowling) or personal name. Some authors have been chagrined to learn that someone has beaten them to their “names” on the Internet. I will name names in a moment. Other authors may not realize that their names have been registered as domain names. For example, Joyce Carol Oates is a distinguished author who does not own her domain name. The domain name is “owned” by Alberta Hot Rods. Alberta Hot Rods is a serial cybersquatter. Among the names this cybersquatter has purchased and then forfeited in UDRP proceedings are authors Michael Crichton and Jeffrey Archer, Pamela Anderson and Amber Smith (models and actresses), Tom Cruise and Kevin Spacey (actors) and Larry King (television personality). Ms. Oates has not (yet) challenged the bad faith use of her name. She is not alone.
U.S. trademark law recognizes “common law [unregistered] rights” to a personal or persona name if it has acquired “secondary meaning” and is identified as the source of goods or services. In contrast to Joanne Rowling, authors Crichton and Archer owned common law unregistered rights to their names. Even if they never register their names as trademarks, productive authors have the right to maintain a proceeding under the UDRP and capture the domain names that infringe their rights. Unproductive authors are probably out of luck, unless their single works have achieved great success in the marketplace. Joyce Carol Oates and other distinguished authors have standing to maintain proceedings to police their names and ensure that only they can use them. At present, does not resolve to an active website; that is, held passively for the very good reason that any content would constitute an infringement of the author’s right to her personal or persona name.
The UDRP is an on-line arbitration regime available to trademark owners which includes unregistered (common law) rights. Rogue domain names for “Harry Potter” () have been successfully shut down. Titles for example that cannot be copyrighted can be trademarked if they are associated as the source of goods or services. “Harry Potter” has featured in a dozen or more domain names; all have been captured by licensees in UDRP proceedings. HARRY POTTER is a registered trademark for clothing; HARRY POTTER AND THE DEATHLY HALLOWS is a registered trademark for printed matter and paper goods (including notebooks, diaries, greeting cards, photographs and calendars).
Authors who have prevailed over the past year in capturing domain names corresponding to their personal names include Delia Ephron (bestselling author, screenwriter, and playwright), Louise Rennison (author of the Confessions of Georgia Nicolson series for teenage girls), Gary Regan (Cocktail Columnist for San Francisco Chronicle, host of gazregan.com, and publisher of newsletters for bartenders worldwide) and Nathaniel Branden (author, lecturer, therapist and corporate consultant focusing on self-esteem and personal development).
If Author has not already, she should make sure that her personal or persona name has not been appropriated and if it has to take action to recapture it.
A writer’s income generally comes from royalties and licensing revenues for works which are protected by copyright. Section 102(a) of the U.S. Copyright Act states that “original works of authorship fixed in any tangible medium of expression” are protected by copyright. By definition in Section 102(b) ideas and concepts do not have copyright protection. A writing known in the entertainment industry as a “series treatment” which embodies an idea developed for a television series is protected in part and unprotected in part. If there is no statutory copyright protection for “thought creations” the creator’s right to compensation must come from contract. Binding a party to whom an idea or concept has been disclosed does not necessarily require a written contract. An implied or quasi-contract may be sufficient.
Forest Park Pictures and others v. Universal Television Network, Inc. reached the Second Circuit Court of Appeals (which sits in New York) after a judgment dismissing the complaint. The case concerned the obligation of USA Network to pay for using a concept it received from the plaintiffs/creators for its television series. There was no written contract but plaintiffs alleged an implied promise to pay reasonable compensation if the concept was used (a quasi-contract). According to Forest Park Pictures, USA Network misappropriated its idea by producing its own television series based on the same concept.
After submitting the series treatment Forest Park met with USA Network’s representative. The complaint alleges defendant scheduled the meeting “for the express purpose of hearing Plaintiffs pitch their show.” Defendant knew “that writer-creat[o]rs pitch creative ideas to prospective purchasers with the object of selling those ideas for compensation” and “that it was standard in the entertainment industry for ideas to be pitched with the expectation of compensation in the event of use”…. And, at the meeting, “[i]t was understood that Plaintiffs were pitching those ideas with the object of persuading [defendant] to purchase those ideas for commercial development.” The parties exchanged further communications in the week following their meeting but then discussions ended and they had no further contact.
The threshold issue was whether dismissal of the complaint on the ground of preemption by the Copyright Act was premature. The District Court held in dismissing the complaint that the subject matter of plaintiffs’ breach of contract claim – the character biographies, plots, and story lines it pitched to defendant “fall within the subject matter of the copyright laws” and concluded
Plaintiffs’ breach-of-implied-contract claim based on his alleged right to be compensated for the use of his idea for a television series is equivalent to the exclusive rights protected by the copyright law and is therefore preempted by the Copyright Act.
The Court of Appeals viewed the preemption issue differently. It held in a decision in June 2012 that the complaint “adequately alleged the breach of a contract that included an implied promise to pay” and plaintiffs’ rights to compensation “are not equivalent to those protected by the Copyright Act.”
An enforceable implied-in-fact-contract is an alternative theory for compensation that does not rest on the Copyright Act. Misappropriation is not equivalent to copyright infringement. The question is “whether the Complaint actually pleads an enforceable implied-in-fact contract.” Defendant argued that the “Complaint falls short because there was no meeting of the minds over the price term.” But under California law where the contract was to be performed the absence of a specific price term is not fatal. “[A]n implied-in-fact contract can have an open price term to be filled in by industry standards.”
A disclosure expressly conditioned on a promise of payment is actionable against a party who knew or should have known that such a condition was implied. The Circuit Court pointed out that California has long recognized that an implied-in-fact contract may be created where the plaintiff submits an idea (the offer) that the defendant subsequently uses (the acceptance) without compensating the plaintiff (the breach). Of course, Forest Park will still have to prove at trial that such an industry standard price exists and that both parties implicitly agreed to it. That Forest Park may fail to prove its claim, however, does not render the contract unenforceable as a matter of law.
The traditional publishing process begins with an editor’s enthusiastic response to an author’s outline, proposal, and sample chapter, followed by an offer and contract from the publisher. Once the contract is signed the focus shifts to the quality of the final manuscript. The publishing contract includes a “d & a” (abbreviation for delivery and acceptance) clause, which requires the author to deliver a manuscript that is complete and satisfactory to the publisher in form and content. If the manuscript is unacceptable to the publisher for any reason it can terminate the contract and demand return of the portion of the advance already paid.
Both Federal and state courts have interpreted the unsatisfactory manuscript clause to allow publishers wide discretion to terminate contracts provided that the termination is made in good faith. Determination of the publisher’s good or bad faith is tricky. In a federal lawsuit for return of a $350,000. advance paid by Random House the judge noted that “evaluations of editorial acceptability are based on the subjective judgment of the publisher” and “[what] in good faith may be acceptable to one publisher may be, in equal good faith, not acceptable to a different publisher.” (By paying a large advance Random House had taken a calculated risk that the author’s next work would be as commercially successful as his earlier books.). At the same time, to properly reject a manuscript the publisher must demonstrate that it did not “arbitrarily change its mind.” There must be good reason other than a change of market conditions for the publisher’s decision to terminate the contract.
Following guidelines set out in several important cases, “good faith” is arrived at by examining the publisher’s efforts to provide editorial assistance to the author to produce a book the publisher believes can be profitably sold. Even if the publisher has accepted and paid for portions of the manuscript it may only terminate a book contract on the basis that the completed manuscript is unsatisfactory if it has provided editorial assistance to the author and reasonable time for the author to make revisions.
New York courts have ruled that there is an implied good faith obligation in publishing contracts “for the publisher to engage in appropriate editorial work with the author of a book”. This means giving the author editorial suggestions and an opportunity to make revisions. In a lawsuit by the publisher Harcourt Brace Jovanovich against Senator Barry Goldwater [Harcourt Brace Jovanovich, Inc. v. Goldwater, 532 F. Supp. 619, 624 (S.D.N.Y. 1982)] for return of the advance after delivery of a memoir the publisher rejected as unsatisfactory, the judge concluded
It cannot be … that the publisher has absolutely unfettered license to act or not to act in any way it wishes and to accept or reject a book for any reason whatever. If this were the case, the publisher could simply make a contract and arbitrarily change its mind and that would be an illusory contract. It is no small thing for an author to enter into a contract with a publisher and be locked in with that publisher and prevented from marketing the book elsewhere..
In an action by Random House against the novelist Herbert Gold [HBJ, Random House, Inc. v. Gold, 464 F. Supp. 1306 (S.D.N.Y.), aff'd mem., 607 F.2d 998 (2d Cir. 1979)] another judge held that “allowing unfettered license to publishers to reject a manuscript submitted under contract would permit overreaching by publishers attempting to extricate themselves from bad deals.”
The major unsatisfactory manuscript cases have had varied outcomes: Senator Goldwater was permitted to keep his $65,000. advance. In that case the publisher simply rejected the manuscript and did not work with the author. In the Random House case the publisher terminated the contract after two rewrites and the author had to return $350,000. A fundamental rule emerges: the party that breaches the contract pays, either the publisher who fails to give the author editorial guidance or the author who fails to submit an acceptable final manuscript. Both parties have rights and obligations which should be clearly expressed and acknowledged in their contract.
The legal issues I discuss are the underpinning of the delivery and acceptance clauses in publishing contracts. If you or your lawyer or literary agent is negotiating a contract, try to include the following protective provisions:
1. All communications from the publisher relating to acceptance or rejection of the manuscript will be in writing.
2. The publisher is required to either accept the manuscript or direct the author to make editorial revisions by a specified time after delivery of the complete manuscript.
3. The editor’s suggestions for revisions will be reasonably detailed and specific.
4. The author will have a reasonable time to deliver a revised manuscript; and
5. The publisher is required to make a final decision about the revised manuscript within a specified time after delivery.
6. A “first proceeds” provision. If the final manuscript is unsatisfactory the author is permitted to defer repayment of the advance until she resells the book and receives another advance. In the past some publishers would agree to limit repayment to the amount of the second advance, even if it was smaller. Most traditional publishers’ contracts now require the author to repay the entire first advance within a stipulated period after the contract is terminated, even if the author fails to resell the book.
A final point: By both industry custom and most literary agents’ agreements, if the contract is terminated the agent does not repay the 10% or 15% commission she received for making the sale to the publisher.
Revised and re-posted September 4, 2012.
Fair use presupposes expressive material that is both copyrightable and copyrighted. (I leave for another day the issue of misappropriation of material previously submitted to defendant under contractual terms). Uncopyrightable material in copyrighted work is not protected so there is no issue of unfair taking. Scenes a fair discussed in a recent note are generic elements, as are character types and common expressions. They are not “owned” by any one person, but are infinitely exploitable common property; part of the creator’s culture’s inheritance. They are as much in the public domain as works no longer under copyright created prior to 1923. All clay! Court decisions are instructive in separating protected from common property. The question is, What has the creator done with her clay?
In Alexander v. Murdoch, an unpublished decision from the Southern District of New York (May 27, 2011) plaintiff complained that defendants plundered plot, characters and locale. (Masters also plunder their cultural artifacts, but this is the province of literary critics, not lawyers). The dispute in Alexander involved plot and characters in a television script. The basic concept of copyright is that ideas, themes, characters and locale are not protected; expression is. “[W]here a copyrighted work contains both protectable and unprotectable elements, courts apply “a more discerning observer test, which requires substantial similarity between those elements, and only those elements, that provide copyrightability to the allegedly infringed [work].” In a police drama, it is expected that there are policemen and suspects and perpetrators. In a family drama there are interactions among family members. Similarities are unavoidable whether or not the accused is familiar with the creator’s work.
The two works in Alexander are comedic family dramas. “[T]he comedic devices shared by both works and identified by the plaintiff — characters driving recklessly, men slapping each other on the backside, people drinking alcohol as a means to cope with a stressful family situation — are common plot elements and thus are not subject to copyright protection.” (I am omitting citations, but emphasize that there is a pedigree of cases). When you abstract fictional plots to a sufficient level of generalization they will be found similar to other plots in the same genre. “Copyright protection does not extend to stock themes commonly linked to a particular genre.” Thus, “basic plot ideas involving voodoo as a dramatic exposition of culture or a missing body as a comedic prop are not protectable.” The Court found that the “remaining plot similarities identified by the plaintiff are alleged at an overly-abstract level of generality.” At that level of generality, plots do not merit copyright protection.
A similar course of analysis is applied to characters. The plaintiff in Alexandra first alleges that Loony Ben (its creation) and Modern Family (defendants’ creation) are substantially similar because both (one example among a full list) depict characters singing off color songs at family gatherings. “Yet the details of these scenes render them significantly different.” Transformations from “dowdy” to “beautiful” are off the shelf elements. “There is simply no similarity between Kelly’s transformation from a librarian with ‘glasses, no make-up and dowdy, unflattering, spinster clothes’ into a stripper who provides entertainment at bachelor parties and Claire’s decision to change from pajamas into street clothes and put on lipstick upon learning that handsome firefighters are coming to her house.” “[L]ists of ‘similarities,’” (citing cases) “like the one that plaintiff has provided, ‘are inherently subjective and unreliable, particularly where the list emphasizes random similarities scattered throughout the works’.”
In comparing characters, courts “consider the totality of their attributes and traits.” Thus, “[n]o character infringement claim can succeed unless [the] plaintiff’s original conception sufficiently developed the character, and [the] defendants have copied this development and not merely the broader outlines.’” Hogan v. DC Comics, 48 F. Supp. 2d 298, 310 (S.D.N.Y. 1999) (quoting Smith v. Weinstein, 578 F. Supp. 1297, 1303 (S.D.N.Y.), aff’d, 738 F.2d 419 (2d Cir. 1984)); see also Lewinson v. Henry Holt & Company, LLC., 659 F. Supp. 2d 547, 574 (“‘[T]he less developed the characters, the less they can be copyrighted; that is the penalty an author must bear for marking them too indistinctly.’” (quoting Nichols v. Universal Pictures Corp., 45 F.2d 119, 121 (2d Cir. 1930) (Hand, J.)). As a result, “basic character types” and “stock characters” are not copyrightable. Lewinson at 567-68, 574; Jones v. CBS, Inc., 733 F. Supp. 748, 753 (S.D.N.Y. 1990). Similarities among “less developed … characters” are understandable because they are essentially types: simply colors on the palette, not the painting. There are different ways in which characters, themes and scenes can be developed, so that in comparing one with the other, dissimilarities (age, gender, psychology, occupation) undercut infringement. “Copying which is infringement must be something ‘which ordinary observation would cause to be recognized as having been taken from’ the work of another.” Dymow v. Bolton, 11 F.2d 690, 692 (2nd Cir. 1926).
A number of Guild members have asked me about the Google Settlement. Those who opted in saw an opportunity for revenue. Those who did nothing probably did not understand that by letting the deadline pass amounted to an opting out. Opt outers are part of a larger class that includes orphan works whose authors (after a reasonable search) cannot be found. As written, under the Amended Settlement Agreement (ASA) Google stands to gain a significant market advantage for orphan works. The question before Judge Chin (Southern District of New York) was whether the ASA was “fair, adequate and reasonable.”
By decision posted on March 22 he concluded that it was not, although he suggested ways in which the ASA could be improved. I quote from the decision:
While the digitization of books and the creation of a universal digital library would benefit many, the ASA would simply go too far. It would permit this class action — which was brought against defendant Google Inc. to challenge its scanning of books and display of “snippets” for on-line searching — to implement a forward-looking business arrangement that would grant Google significant rights to exploit entire books, without permission of the copyright owners. Indeed, the ASA would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case.
The decision concludes,
In the end, I conclude that the ASA is not fair, adequate, and reasonable. As the United States and other objectors have noted, many of the concerns raised in the objections would be ameliorated if the ASA were converted from an “opt-out” settlement to an “opt-in”s entitlement…. I urge the parties to consider revising the ASA accordingly.
Google is said not to be happy with an “opt in” model and there have been suggestions that as an alternative to settling the case with the Authors Guild it would support an amendment to the Copyright Act to deal with orphan works. Stay tuned.