Random House, the New York-based publishing house, sought an injunction against Rosetta Books, whose entire business is the sale of "e-books." E-books are digital copies of books readable on computer screens or other electronic devices. Rosetta had signed up certain authors' works for its e-books, some of whom had already signed contracts with Random House, which granted it the exclusive right to publish, print and sell their copyrighted works in "book form." According to Random House, the contract phrase "in book form" gave it the exclusive right to publish e-books. Rosetta and the authors, who included William Styron and Kurt Vonnegut, argued otherwise.
The district court disagreed with Random House. The court applied New York law, which has a restrictive view of the kinds of new uses to which an exclusive license may apply unless the license expressly provides for coverage of future forms of the work. But the court's analysis could well be characterized as "If it looks like a duck, walks like a duck, and quacks like a duck, it's a duck," - and in this case the court did not see any feathers or waddling or hear any quacking. The court found significant the following factors that distinguish e-books from traditional paper version books:
- e-books are usable only because an underlying software program allows their display and manipulation
- e-books permit users to search the work electronically to find specific words and phrases
- e-books permit users to electronically highlight and bookmark text, and then automatically index and access those portions through hyperlinks
- e-books contain hyperlinks in the table of contents allowing readers to jump to specific chapters
- the font size and style of the text in an e-book can be changed to meet the user's preferences
- e-books display definitions of works in the text, and in some instances, e-books will read the work out loud to the users.
For the court, these many features, which are missing in the printed version of the works, distinguish the two forms of publication.
Contract Language Crucial to Ruling
More critical to its ruling, however, was the language used in the contracts between the authors and Random House with respect to the grant of publication rights. The paragraph entitled "grant of rights" did not use language to expressly permit publication in future forms based upon new technologies. In fact, the grant allowed Random House the right to "print, publish and sell the work in book form" rather than a broader grant, such as the right to publish, print and market the book. The court then considered the additional language in the grant clause that conveyed the right to publish book club additions, reprint editions, abridged forms and editions in Braille. The court reasoned that all of this additional grant language would not be necessary if the phrase "in book form" was intended by the parties to encompass all types of books. Additionally, the authors reserved rights to themselves by striking out phrases, sentences and whole paragraphs in the publisher's form contract. To the court, those actions evidenced the authors' intent not to grant the publisher the broadest rights to their books.
The court concluded that an e-book might not be a book under the contracts in question, and denied Random House's request for an injunction. On appeal, the Second Circuit affirmed the district court's decision. However, the Second Circuit did not adopt all the reasoning of the lower court, and, in fact, noted that there is some appeal to Random House's argument that an e-book is simply one form of a book.
The case may have given us one answer to the question, "When is a book not a book?" It also demonstrates once again the importance of using very clear, precise language in the granting clause of any license. New technology, such as hand-held computers, and other digital, wireless technologies will continue to create new uses for and new forms of conveying content. The grant clause of a license should explicitly address whether such new uses are within the scope of the grant.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.
