E-war and peace

Digital books are finally making their mark, and a happy ending to the long IP tussle between authors and traditional publishers may just be in sight

Last month literary super-agent Andrew Wylie and publishing giant Random House appeared to reach a truce in a long-running tussle regarding the exploitation of Wylie’s works as e-books.

For the uninitiated, e-books are “digital books that you can read on a computer screen or an electronic device”, according to a New York court in 2001 when hearing a case involving another of Random House’s battles, against e-book publisher Rosetta Books (Random House Inc v Rosetta Books LLC, (2001)).

E-books offer readers features that take advantage of the digital format, such as the ability to search electronically for words and phrases, use highlights and bookmarks, add electronic notes and hyperlinks and obtain, at the click of a mouse, definitions of any word appearing in the text.

The technology first appeared in the late 1990s when it was the black sheep of publishing conferences around the world. We were told that society was about to enter the e-book age, yet the new format did not take off as rapidly as expected. One of the main reasons for the slow start was the legal uncertainty surrounding e-book rights.

When is a book not a book?

The crux of the argument rests in the definition of the word ‘book’, and whether or not it encompasses e-books. This question becomes relevant for publishing contracts made more than 15 years ago, which make no allusion to electronic rights.

Such contracts were considered by the court in the US case mentioned above, where several authors whose printed books were published by Random House had subsequently, and without Random House’s authority, signed up to separate ‘e-publishing’ deals with Rosetta. Most of the Random House contracts in question had been drawn up more than 40 years previously.

In each the author granted Random House the right to “print, publish and sell the work in book form”. Some also contained non-compete clauses in which the author undertook “not to publish, or permit to be published, any material in book form based on the material in the work, or which is reasonably likely to injure its sale”. Random House sought a preliminary injunction against Rosetta for copyright infringement and the tort of interference with its publishing contracts. The court, however, held that a right to publish ‘in book form’ did not encompass e-books. It concluded that e-books are a different medium from printed books and not one envisaged by the contract.

The stance taken by the US courts supports the narrow interpretation of the exploitation of copyright licences. Good news for authors, who thereby retain

‘e-book rights’ and are free to grant separate licences for them. In this light, the heightened tension between writers and traditional print publishers in the past decade is understandable.

The controversy becomes even more relevant for publishers wishing to publish their back catalogues in e-book format. For many, ‘backlist’ is another word for ‘crown jewels’ – it can be a lucrative business.

Authors, on the other hand, are realising that, if their current publishing deals do not cover e-books, they can achieve a much more handsome royalty rate from Amazon, Apple or Kobo if they self-publish.

Amazon currently pays authors and publishers 35 per cent each from the net profits of digital book sales. If an author were to self-publish their work in a digital format they would receive 70 per cent of the sales. In comparison with hardback books, where authors only generally receive between 7 and 15 per cent of royalty cuts, and with digital book sales up by 177 per cent

last year, it is easy to see why authors are embracing the e-book culture. However, this also risks bypassing the publicity, marketing and distribution expertise of the publisher. It is arguable that self-publishing is workable only for established authors.

It certainly worked for Stephen King in 2000, when he released his novella Riding the Bullet solely in digital format. The

e-book achieved a hit rate of 400,000 downloads on the first day and King pocketed $450,000 (£377,700) in just three days.

Like the online music business, the

e-book industry faces another challenge – digital piracy. Although some critics have suggested that the e-book industry will not be hit as badly as the music industry, this

is yet to be seen. Hopefully, if the truce between Random House and Wylie is followed by the rest of the world, publishers and authors will work together to maximise the exploitation of works and control unauthorised copying and distribution too – a tough job in the e-book age.

Rebecca Swindells is a partner in Field Fisher Waterhouse’s IP and IT dispute resolution group