Category: Fashion

November 5, 2018

Negotiating Subsidiary Rights in Book Publishing Deals

The right to publish a book isn’t the only right that authors can grant to a publisher or retain for themselves. Authors may also grant or retain subsidiary rights in the book. A subsidiary right is the right to publish or produce the book in other formats, such as e-books, audiobooks, films or television shows, and more. This post details some of those rights and gives authors and literary agents insights on how and when to negotiate those clauses of a book publishing deal.

In reality, it is often very hard for an author to retain these rights for himself or herself entirely. As such, the author may be more successful negotiating for a larger split in the profits from these rights.

Television and Film Rights

Any author in this day and age knows that there is just as much, if not more, money to be made in adaptations than there is in book sales alone. As such, authors generally want to retain as many adaptation rights as possible, and the publisher will generally propose broad language that grants them a broad right to sell all the adaptation rights.

In particular, movie and television adaptations have a strong potential to earn authors a lot of money on top of their book royalties. Because these adaptations have such high earning potential, most publishers will want this right. However, some authors are successful in arguing that they should retain this right, especially if the publisher has never licensed a book to a production company or network before or if the author is represented by a literary agency with connections to movie and television producers, studios, or networks.

An author with a skillful literary agent may be better poised to exploit these rights than a publisher with little experience in the film and television industry. Many reputable literary agencies have special agents specifically charged with exploiting the subsidiary rights of the authors represented by those agencies. That being said, reputable publishing houses often have similar employees who are specifically charged with exploiting the subsidiary rights of the books they publish. It is important for authors to discuss this topic with their literary agent and their publisher to determine what arrangement is best.

E-books, Audiobooks, and Other Formats

There is also a large market for e-books and audiobooks that can be easily exploited as a secondary source of income for authors. As such, book publishing contracts will also regulate whether the author grants or retains the right to exploit the book as an e-book, audiobook, or in some other format.

Audiobook services like Audible are eager to increase the size of their audiobook library and are generally willing to buy almost any published book they can. However, many large publishers are allocating resources to exploiting audiobook rights in-house. These publishers may demand that the derivative right in audiobooks be granted, so the publisher can produce the audiobook in-house and distribute it within existing channels. In such cases, it is likely in the author’s best interest to allow the publisher to do so. Alternatively, an author may be represented by a literary agency with expertise and experience in the area of licensing books to e-book and audiobook companies. In such instances, it may be in the author’s best interest to retain these rights, so his or her literary agent can exploit those rights on his or her behalf. It is important for authors to discuss this topic with their literary agent and their publisher to determine what arrangement is best.

Merchandising

T-shirts, bobbleheads, posters, trading cards, bookmarks, and stationary are all common items on the shelves of bookstores. Frequently, these items feature characters and trademarks licensed from popular books. The authors of these books receive royalties on the sale of those items.

Successful authors that have retained the right to license their characters and trademarks to third parties may seek representation by a licensing agency. Licensing agents have a role similar to literary agents in that they receive a portion of the profits earned on deals that the licensing agent locates and negotiates on the author’s behalf. Licensing agents have connections to retailers, designers, developers, and other merchandisers that are looking for the latest craze to put on their t-shirts, video games, board games, and other products. These relationships make the licensing process easier to execute.

Similarly, many literary agencies and publishers have in-house teams that are tasked with locating interested merchandisers and negotiating merchandise licensing deals on the author’s behalf. Others may rely on third-party licensing agencies. Authors should discuss this matter with their literary agent and publisher to determine who is best suited to exploit these rights in a way that maximizes the author’s potential profits.

Drafting Subsidiary Rights Clauses

From a copyright law standpoint, all these licensing opportunities are considered derivative works. The right to make an adaptation is known as a derivative right. Here is an example of a broad adaptation clause that most benefits the publisher:

Author grants Publisher the exclusive right to sell, license, and otherwise exploit the derivative rights in the Work throughout the world during the full term of copyright and any renewals and extensions thereof except as provided herein.

By using the broad term “derivative rights,” the publisher receives the right to exploit the book as a motion picture, radio play, television show, audiobook, theatrical play, and any other possible format. Thus, it would benefit the author to negotiate this broad “derivative rights” language down to more specific, narrower terms that exclude specific adaptations which the author hopes to exploit himself or herself. If the author seeks to retain certain derivative rights for himself or herself, it is best to explicitly state that in the contract. If the author and the publisher will split the profits obtained from exploiting certain derivative rights, it is best to also explicitly state that in the contract. For example:

Author shall retain the exclusive right to sell, license, or otherwise exploit the Work as an e-book and an audiobook throughout the world during the full term of the copyright and any renewals and extensions thereof except as provided here.

Author grants Publisher the exclusive right to sell, license, or otherwise exploit all other derivative rights in the Work in all other formats, excluding e-books and audiobooks, throughout the world during the full term of the copyright and any renewals and extensions thereof except as provided herein. All sums from the sale of these rights or materials produced under those rights shall be divided so that the Author receives fifty percent (50%) of the net amount received.

It is important for the author to negotiate who has control over these rights and what the author’s royalty will be. Typically, the publisher will seek the sole right to negotiate and sign contracts in regard to subsidiary rights. However, a skilled literary agent will negotiate terms more favorable to the author.

This series informs authors, literary agents, lawyers, publishers, and other interested readers about the basics of book deals. It provides tactics and tips to be used when negotiating a book deal. It consists of three parts that cover negotiating the following topics:

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About: DJ turned JD highlights the latest legal updates in the entertainment and media industries, intellectual property, the internet and social media. The blawg is compiled and curated by Bobby Desmond. After working as a radio personality, Bobby attended the University of Florida Levin College of Law in order to pursue an in-house legal career at an entertainment or media corporation. He has interned at PBS with America’s Public Television Stations in Arlington, VA and at AMC Networks in New York, NY. He graduated in May 2018 and passed the New York Bar Exam in July 2018.

August 13, 2017

New Lawsuits from the Internet invoking IP and Media Law

Another Rich Man Sues a Website after Bad Press. In a case that is reminiscent of billionaire Peter Thiel financing Hulk Hogan’s suit against Gawker after the site outed Theil as gay, game developer Jonathan Monsarrat is suing Encyclopedia Dramatica for publishing a wiki-page which cited to stories accusing the millionaire of creating a dating service to collect information on women and allegedly distributing alcohol to teenagers. (This is not the first time Monsarrat has sued a site that published unflattering stories about him. He previously sued a LiveJournal blogger that posted a story about his arrest in 2010. Monsarrat later dropped that case after it became clear that it was brought in bad faith.) The newest suit claims Encyclopedia Dramatica infringed on Monsarrat’s copyright in quotes from forum posts and a photo of Monsarrat in a beaver costume. Encyclopedia Dramatica believes this suit was also brought in bad faith. Follow this case for potential anti-SLAPP litigation, for insight on the recent trend of websites being sued by the rich for publishing unbecoming stories and on the recent trend of websites crowdfunding legal defenses.
Spotify Sued after Struggling to Obtain All Necessary Music Licenses. Amongst rumors that the company plans to launch on the NYSE, Spotify was recently hit with two copyright infringement lawsuits (here and here). Spotify has deals to license the sound recordings and other licenses to publicly perform the songs, but songwriters and music publishers are suing for unauthorized use of the song compositions. The streaming service sends out notice of intention letters as required to attain Section 115 compulsory licenses from the songwriters and publishers, but argues that finding each of the co-authors of their entire catalog is too hard a task. Spotify has settled similar cases in the past for tens of millions of dollars. Keep up with these cases to remain fully aware of the development of mechanical licenses in the age of the internet and for insight on class action lawsuits that involve IP infringement.
Requesting Access to Social Media Accounts in the Hiring Process. A new lawsuit alleges NBC demanded prospective employees share their personal social media accounts before being offered an interview. Half the states ban prospective employers and universities from requesting access to a prospective employee’s personal social media accounts. Although requesting social media access is not prohibited during the hiring process in New York, providing access to personal social media accounts could potentially reveal protected Equal Employment Opportunity information such as age, religion, and medical information.
Sci-Hub Sued Again for Providing Free Access to Scholarly Works. Hoping to mimic a $15 million award for a similar plaintiff in the Southern District of New York, the American Chemical Society is suing Sci-Hub under copyright and trademark law for spoofing the ACS’s website and provided access to over 62 million academic publications (which are published by a collection of sites including ACS, Elsevier, Springer, and more.) Some academics believe the publishing sites are unlikely to receive any of the awarded damages, since Sci-Hub is run out of Russia under a variety of domain names and IP addresses. Other academics, however, intend to use these case as inspiration in their protests against the publishing sites for affordable access to academic publications. Follow this string of cases for insight on collecting damages from defendants overseas and for trends in the licensing of scholarly works.
Jenner Shirts Inspire Social Media Outrage, Lawsuits, and Satirical Copycats. Kendall and Kylie Jenner received a cease and desist letter for use of The Doors’ likenesses, after the reality star sisters released a line of $125 t-shirts with the images of the band and other musical icons including Tupac Shakur, Metallica, Pink Floyd, Ozzy Osbourne, and Biggie Smalls. The family of the Notorious B.I.G. took to Instagram to declare that the shirts had no affiliation with or approval from the rapper’s estate, while Sharon Osbourne sent out a tweet critical of the girls’ decision to include her husband in their fashion line. After only two shirts were sold, the line was pulled, and Kendall Jenner tweeted an apology. The photographer behind the Tupac Shakur images is now suing the sisters for copyright infringement, but the Jenner sisters claim to have a valid license for the images. (Shortly thereafter, the rock band Arcade Fire satirized the shirts by making their own versions to mock the Jenner sisters, followed by an apology tweet that mimicked Kendall’s own tweet.) Separately, Kylie Jenner is being sued for copying an artists’ painting of biting lips for an advertisement promoting her upcoming show, Life of Kylie. Keep up with these case for more tweets from celebrities attempting to sound like lawyers.
@realDonaldTrump Faces a #realLawSuit after Blocking Twitter Users. The Knight First Amendment Institute at Columbia University is representing a flock of Twitter users who have been blocked by the President’s account. The suit claims @realDonaldTrump is a constitutionally protected public forum and that blocking users unconstitutionally prohibits access to government statements and unconstitutionally prevents petitions for redress of grievances. In a similar case, the United States District Court for the Eastern District of Virginia ruled that a Facebook user’s constitutional rights were violated when a county official blocked his account. Separately, a photographer is suing the Trump Organization for copyright infringement after the company posted the photographer’s copyrighted work on its site and the @realDonaldTrump Instagram account. Follow these cases for insight on how Trump critics are using the First Amendment and IP law as a check and balance against the President.

July 9, 2017

New Case Law in Entertainment, Media, and IP Law

SCOTUS declined to hear two Digital Millennium Copyright Act cases:

Lenz v. Universal Music Corp. After receiving a DMCA takedown request from Universal Music Group, YouTube removed a video of a baby dancing to Prince’s “Let’s Go Crazy” that fell within the fair use defense. The Ninth Circuit held that copyright owners must reach a “good faith belief” that the material is infringing before filing a takedown request. Advocates against DMCA abuse hoped the Supreme Court would raise the easy, subjective standard to a more rigorous “objectively reasonable” belief in order to prevent censorship, but the court passed on reviewing the case.

EMI Christian Music Grp., Inc. v. MP3tunes, LLC. Record companies and music publishers sued a digital music storage site for copyright infringement. The jury awarded $48 million to the plaintiffs, despite the district court finding that the site had a reasonably implemented repeat infringer policy as required for safe harbor protection under 17 U.S.C. § 512. The district court then partially granted the site’s post-trial motion for judgment as a matter of law, reducing the award to $12 million by reasoning that the site did not have red flag knowledge or willful blindness regarding two categories of pirated songs. Upon review, the Second Circuit reinstated the original verdict holding that a reasonable jury could find that the site did not have a reasonable repeat infringer policy, because the site did not connect takedown notices to users who repeatedly created links to that pirated content or to users who repeatedly copied that pirated content. Some copyright experts argued the Supreme Court should have taken the case, since the ruling directly conflicts with the DMCA’s “no duty to monitor” rule.

SCOTUS rules on the disparagement clause and copyright separability:

Matal v. Tam. The U.S. Patent and Trademark Office invoked §2(a) of the Lanham Act to deny “The Slants” trademark registration, since the band’s name was deemed to be disparaging to Asians. The disparagement clause prohibited registration of terms that bring persons, institutions, beliefs, or national symbols into contempt or disrepute. The band, which sought to end the disparaging connotation by reclaiming the racial slur and using it in a positive and empowering way, asserted a free speech defense. Justice Alito agreed that the disparagement clause violated the First Amendment, since “speech may not be banned on the ground that it expresses ideas that offend.” The case also ended decades of Native American activism to strip the Washington Redskins of trademark protection.

Star Athletica LLC v. Varsity Brands Inc. Venturing into fashion law to address the widespread disagreement among the circuits, SCOTUS reviewed the separability of unprotected useful items (such as clothing) from their protected expressive elements. The fashion industry hoped for a broad definition that would protect their products under copyright, while consumer advocates hoped a narrower approach would increase competition. Clarence Thomas wrote the new test: copyright protects expression that can “be perceived as a two- or three-dimensional work of art separate from the useful article” so long as it qualifies as protectable expression when “imagined separately from the useful article into which it is incorporated.” Some experts questioned whether this ruling would have the unintended consequence of expanding copyright protection to basic fashion tropes such as frequently used colors, stripes, and shapes.

Intellectual property and media law decisions from the lower courts:

Elliott v. Google, Inc. Google filed a cybersquatting complaint under the Uniform Domain Name Dispute Resolution Policy (UDRP) when Elliott registered 763 domain names inclusive of the word “google.” After the arbitrator sided with the tech giant, Elliott filed a claim to have the trademark cancelled, arguing that it had succumbed to genericide. Genericide occurs when a trademarked brand loses protection, because it has become the generic name for the product or services it protects (e.g. aspirin). This often occurs because the trademark owner has failed to police the mark and prevent others from using its mark to identify competitor’s products or services. Although “google” is used as a verb meaning “to search the internet,” the Ninth Circuit held that Google will not lose trademark protection, because the use of “google” as a verb did not necessarily constitute generic use. The brand passed the “who-are-you/what-are-you” test, since the use of “google” as a verb is used to describe searching the internet but not to describe all search engine services as a category of products or services.

Corbello v. Devito. The District Court for the District of Nevada overturned a jury verdict against the Broadway musical “Jersey Boys” for copyright infringement of an unpublished autobiography, since a fair use analysis of the copying showed that only a quarter of a percent was copied from the source content. Most similarities, the court explained, were due to the fact that both works were based on actual historical events, which are not copyrightable.

Jordan-Benel v. Universal City Studios, Inc. Douglas Jordan-Benel sued Universal City Studios for allegedly using substantial parts of his screenplay for the basis of “The Purge” film series. The implied-in-fact contract claim was based on Universal City Studios’ failure to pay Jordan-Benel. Universal City Studios filed an anti-SLAPP motion, which was denied by the district court because the contract claim did not arise from conduct in furtherance of the right of free speech. The Ninth Circuit affirmed, and the case is expected to continue at a lower court and potentially go to trial.

Virginia Citizens Def. League v. Katie Couric. Katie Couric was sued for defamation in relation to a nine second pause after the reporter asked gun rights advocates a question in a documentary. The gun rights advocates claimed the footage was manipulated to falsely inform viewers that the subjects had been stumped by the question and had no basis for their opinions. The district court granted Couric’s motion to dismiss, because the interview scene was not false, since the gun rights advocates did not answer the question and “the editing simply dramatizes the sophistry” of the gun rights advocates.