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ELECTRONIC PUBLISHING RIGHTS:
AN INTERVIEW WITH LLOYD J. JASSIN


Reprinted from "Managing Publishing Rights" by Jack McHugh


McHUGH: Let's first discuss the subject of "electronic rights." "Electronic publishing tends to be a loosely defined term. How do you define "electronic publishing"?

JASSIN: Electronic publishing is hard to define because it is changing so rapidly. It's technology driven. Simply stated, "electronic publishing" is the process of turning two-dimensional works into digital code, and distributing that information electronically to consumers. That takes many forms. For example, interactive educational or entertainment CD-ROM products, DVDs, online databases, electronic books, even game cartridges. Bits are replacing paper as the storage media of choice for certain types of information. Instead of turning pages, we can access information using a mouse or computer touch screen. With the arrival of "virtual reality," before long, you'll even be able to strap on a helmet and glove and take a virtual stroll through the corridors of the Louvre, which, exists, not in Paris, but in your mind.


McHUGH: From the publisher's standpoint, is it best to use a work for hire to get all rights from an author, including electronic?

JASSIN: As I discuss in my book, there are two fundamental ways in which publishers can obtain rights. One way is through a license. However, with a license you do not obtain ownership of the final work -- only certain limited rights, defined by contract. Your standard author-publisher agreement is nothing more than a license. Under copyright law, any right not expressly granted to the publisher, is retained by the author. Therefore, if you do not get an express grant of electronic rights, you do not have the right to exploit those rights. If you look at older publishing agreements, you'll see that many of them did not contemplate electronic rights. There's been much litigation over whether entertainment contracts -- some drafted in the 1930s -- contemplated new uses such home video. These cases are instructive for electronic and multimedia publishers. What they illustrate, is that the burden of negotiating for electronic rights falls on the publisher's shoulders. Electronic rights are not automatically part of the package when you acquire rights.

Where appropriate, publishers should consider obtaining rights on a work for hire basis. With a "work for hire," the publisher steps into the shoes of the creator and becomes the author of the work for copyright purposes. However, not all works qualify as works for hire. A work for hire can only arise in two situations: (i) a work created by an employee within the scope of his or her employment; and (ii) a work created by an independent contractor upon special request of the hiring party. For the second type of work to qualify as a work for hire, it must also fall into one of nine narrow categories listed in the Copyright Act. For example, a novel can never be a work for hire, since it's not on the short list of nine works eligible for work for hire status. Therefore, merely stating a work is a work for hire is not enough. Copyright law is very formalistic when it comes to work for hire agreements. For example, there's controversy among courts over whether a work for hire agreement signed after work has begun is valid. Consequently, it's important that all work for hire agreements contain a back up copyright assignment. With a properly drafted assignment, the original creator remains the author, but the publisher gets all the rights. A sophisticated rights holder, however, will resist any attempt acquire rights on a work for hire, or buy-out, basis.

McHUGH: Is there specific language that a publisher should use to secure the electronic rights in publishing agreements with authors?

JASSIN: To anticipate future advances in technology, the rights grant should give the publisher the sole and exclusive right to use and adapt, and to authorize others to use and adapt, the work by any means, "whether now known, or hereinafter invented." For instance, if fifty years from now the storage device of choice was no longer paper, or digital in form, but holographic, provided the granting clause was drafted properly, it wouldn't matter what medium or method was used to record or exploit the work. Since one of the rights afforded by copyright is the right to authorize derivative works -- or adaptations -- a publisher would also want to obtain the right to combine the work with other works. Publishers should work closely with their legal counsel in drafting broad rights grants favorable to their interests.


McHUGH: What suggestions do you have for publishers posting material on the Web to protect their rights to their work?

JASSIN. The first thing publishers should do before putting anything on the Net is to register their works with the U.S. Copyright Office. Similarly, they should consider registering their domain name as a service mark with the United States Patent and Trademark Office (www.uspto.gov). If your domain name is used to identify and distinguish your services, it most likely qualifies as a service mark. Publishers should also add appropriate copyright and trademark notices to their materials. Unfortunately, high-speed, high-quality digital copying systems, make it easy to flout copyright law. However, if your menus, text and graphics have proper copyright notices, it makes it difficult for someone to raise a good faith infringer defense -- which is not a defense at all, since ignorance is not a defense to copyright infringement. In addition, publishers should state exactly what their policy is with respect to copying by posting usage notices. (E.g., "Copying for personal archival purposes only. This data may not be distributed, sold or licensed to third parties."). It's also a good idea to include contact information to steer potential licensees toward you. The more accessible you are, the less likely someone will steal your material. Ultimately, technology will come to the rescue. In the not so distant future, information will be tagged with digital license plates, allowing copyright owners to track uses of their work electronically. Using "smart" licensing technologies, the digital distribution of information will result in automatic debits and credits to users' digital cash accounts.

McHUGH: If material is downloaded off the Web and reproduced, is the reproduced material copyright protected?

JASSIN: Neither the ease with which users can upload or download information on the Internet, nor the fact that the information has been posted anonymously, places a work in the public domain. Unauthorized postings and republications of copyrighted materials, if not a fair use, is copyright infringement. Remember, the same rules that apply to authors, artists, creators and publishers outside cyberspace also apply on the World Wide Web. While digitization (i.e., turning books into bits), scanning, computer networks, and the Internet have made copying chapter-length excerpts from books quick and easy, that doesn't mean the material being copied isn't protected by copyright. Just as new technology has continued to adapt to our needs, what's protected under copyright law has also expanded. Congress, when they drafted the 1976 Copyright Act, made room for technological advances by allowing fixation of copies any tangible medium "now known or later developed."

McHUGH: How should publishers approach the licensing of electronic rights? What are the potential pitfalls in licensing electronic rights?

JASSIN: For example, electronic licensing of rights in Europe is problematic, because, unlike America, Europe respects an author's moral rights. "Moral rights" give authors the right to object to changes in their work and the right to claim ownership -- even after title to their work passes. I should note that moral rights persist even after copyright expires, and may be enforced by the original author's heirs after the death of the author. Important to authors and publishers is the fact that moral rights may be enforced outside the United States although the work was created here by a United States citizen. Another issue publishers face is where can they be sued. Traditionally, courts have asserted jurisdiction over persons physically present within their state. However, courts can also assert jurisdiction over nonresident defendants who intentionally engage in transactions with someone in their state. Since publishers come in contact with a multiplicity of jurisdictions, potentially, they can be forced to defend a lawsuit just about anywhere. Importantly, the Internet has made it increasingly easy for publisher defendants to be sued for copyright and trademark infringement, obscenity, defamation and invasion of privacy anywhere they cause injury. For example, in a recent criminal case, a California-based bulletin board service was hauled into a Tennessee court and convicted of violating federal obscenity laws. They obtained jurisdiction in Tennessee, because a government employee downloaded and ordered obscene materials, using a Tennessee-based computer and mailing address.

McHUGH: For the publisher, what are the key elements in an electronic licensing agreement?

JASSIN: The key elements in an electronic licensing agreement are similar to traditional licensing arrangements. When licensing rights to third parties to create and distribute electronic rights, the key issues are what platform (hardware or operating systems) or markets the work is being licensed for. Also, the agreement must address the territorial scope, length of the license term and compensation. Keep in mind that any of the exclusive rights that make up a copyright can be owned separately by one or more people. Just think about the way books are marketed. Besides hardcover rights, there are trade paperback, mass market and reprint rights. These are, in essence, different platforms. Each right is, as a rule, sold piecemeal to one or more publishers to maximize the author's return. Since digital technology (and business practice) is constantly changing, publishers should be reluctant to grant broad rights, too. If they are granted, it should be for a substantial fee and with restrictions attached. As a rule, titles are prepared for specific platforms (e.g., IBM or Macintosh compatible machines). Some licenses may contain a right of first negotiation for unsecured platforms, or an option under which the licensee obtains the right for a specific time to option further platforms rights. As a licensor, your goal is to grant limited licenses for limited durations for maximum compensation. The royalties and fees you receive will vary depending the terms of the deal. Remember, a license can cover the entire scope of copyright, or be limited to a particular media, market, language, territory or period. Clearly, there's much room for negotiation.

McHUGH: Many publishers now contract with outside companies to develop a Web site. What suggestions do you have for the publishers when dealing with a Web-site developer?

JASSIN: When working with outside website developers, publishers should be concerned about who owns the finished product. Unless there's a special kind of agreement in place before any work begins, the developer, not your company, owns the intellectual property developed for the site. A worse case scenario is that the developer could prevent you from adapting, or updating the website without their permission. This follows from the fact that under copyright law, copyrights vests initially in the author of a work. Therefore, the website development agreement should state that the developer is an independent contractor, and the finished product will be considered a "work for hire." Also, the agreement should make clear who is responsible for obtaining clearances. If the developer uses someone else's copyrighted material, you want to make certain you have the right to use that material without infringing that person's rights. Developers should warrant that the finished product does not infringe anyone's copyright, trademark, or invade anyone's right of privacy or other proprietary rights. They should also indemnify the publisher against intellectual property claims from third parties. Among the other issues that should be addressed are what services will be provided, when work will be completed, the payment schedule, and approvals. The agreement should also address design specifications, and how bugs, or service interruptions, will be handled. If you plan to link to other sites, your agreement should spell out who will be responsible for obtaining permission from the owners of the sites you plan to link with. The website development agreement should also specify who will be responsible for listing your site on on-line directories and search engines.


McHUGH: During the lifetime of a book, there comes a time when a book is no longer in demand, and therefore, the publisher wants to declare the book out of print. What is a workable contract definition for out of print in the book contract? Is a book out of print if physically no copies, in book form, are available and yet there are CD or audio versions available?

JASSIN: When a book goes out-of-print, rights generally revert to the author. However, in the current digital environment, where copying of chapter-length excerpts from books is cheap and easy, the fact that a work is currently out-of-print in someone's warehouse is becoming irrelevant. Digital storage of information as bits, and the demise of static media as the format of choice for certain types of information, means that books never have to go out-of-print. For example, "publishing on demand", allows consumers to purchase printed material from remote locations connected to electronic databases. There's no inventory. Similarly, "ultra short run printing" allows publishers to electronically store books, and, again, print on demand. When an order is received, the printer is turned on. Since electronic uses are not like print uses, reversion of rights tied to the number of books in the warehouse, may no longer make sense. If an author is getting royalties for "electronic" sales of the work, then rights should not revert unless royalties fall below a certain level. As for drafting point (favorable to publishers), an out-of-print clause might prohibit the reversion of rights if the author's advance has not earned out. Also, if there's a reprint edition planned, or arrangement with another publisher to reprint the work within a reasonable period after the author gives the publisher notice of her intention to terminate the agreement, then, despite the fact royalties have slowed to a trickle, rights should not revert. It's worth noting, that most normal out-of-print clauses require that the author notify the publisher that she wants the publisher to reprint the book. Failure to reissue the work within, say, six (6) months of notice, gives the author the right, but not obligation, to terminate the agreement. The Authors Guild position on electronic rights is that for purposes of "out-of-print" clauses, electronic and print rights should be treated separately, since a work can remain available in an electronic database indefinitely. That is, electronic rights, just like print rights, should revert when usage falls below a certain level. This is reasonable, provided, rights don't revert automatically.

McHUGH: Do you have any other suggestions or thoughts for authors and their publisher partners in the areas of rights management?

JASSIN: Yes. In a nutshell, your goal, when acquiring rights is to win as many rights as possible for the least amount of compensation. When selling rights, your goal is grant limited licenses for limited durations for maximum gain. In other words, buy low, and sell high.


McHUGH: Tell us about your book; what's the book's purpose and who is the audience:

JASSIN: I' very excited about the new book, which the Publishers Marketing Association (PMA) has endorsed. Briefly, The Copyright Permission and Libel Handbook: A Step-by-Step Guide for Authors, Editors and Publishers ($15.95, trade paperback) (John Wiley and Sons, Inc.) provides information and techniques that will help authors and publishers navigate the murky legal waters of preparing a manuscript, or multimedia work, for publication. Written in a question and answer format, it's really two books in one. Part One, "The Copyright Permission Handbook" provides step-by-step instructions on how to determine when permission is needed, as well as details on locating the party with authority to grant you permission. There are also separate chapters on copyright law fundamentals, "fair use" quoting, what's not protected by copyright, using public domain works, working with collaborators and clearing multimedia permissions. It's really a handbook for the information age. Part Two, "The Libel Handbook," is designed to minimize your risk of getting sued for libel or invasion of privacy. The book is available at all Barnes and Noble stores, as well as through amazon.com, and at my website (www.copylaw.com).

NOTICE: This article represents copyrighted material and may only be reproduced in whole for personal or classroom use. It may not be edited, altered, or otherwise modified, except with the express permission of the author. This article discusses general legal issues of interest and is not designed to give any specific legal advice pertaining to any specific circumstances. It is important that professional legal advice be obtained before acting upon any of the information contained in this article.

LLOYD J. JASSIN is a New York-based publishing and entertainment attorney in private practice. He is coauthor of the bestselling Copyright Permission and Libel Handbook: A Step- by-Step Guide for Writers, Editors and Publishers (John Wiley & Sons, Inc.), available at bookstores or at www.copylaw.com. Mr. Jassin has written extensively on negotiating contracts in the publishing and entertainment industries, and lectures frequently on contract and copyright issues affecting creators. He is counsel to the Publishers Marketing Association and Vice Chair of the Small Press Center. He may reached at Jassin@copylaw.com or at (212) 354-4442. His offices are located at 1560 Broadway, Suite 400, New York, NY 10036.

JOHN B. McHUGH is a publishing management consultant and industry commentator. He has held management positions at Houghton Mifflin, Richard D. Irwin, and Wadsworth, Inc. At the American Society for Quality, McHugh serv ed as Publisher and Director of Programs. His office is located at: 5747 N. Ames Terrace, Glendale, WI 53209, (414) 351-3056 (t), (414) 351-0666 (f).



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DISCLAIMER: This article discusses general legal issues of interest and is not designed to give any specific legal advice pertaining to any specific circumstances. It is important that professional legal advice be obtained before acting upon any of the information contained in this article.

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Co-author of The Copyright Permission & Libel Handbook (John Wiley & Sons)


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