Opposition briefs were filed this week in HarperCollins’ lawsuit against Open Road over the digital publisher’s e-book edition of Jean Craighead George’s 1973 bestselling children’s book Julie of the Wolves. While both sides seek to bolster their cases for who owns the e-book rights, the filings further suggest that the case is more about e-book royalties.
“Harper had its opportunity to publish an e-book edition of Julie of the Wolves,” the Open Road brief states, adding that fact is not contested by HarperCollins. “George, who was certain she retained the e-book publication rights, would have preferred to publish with Harper because of their long print association. Harper, however, would not meet Open Road's 50% royalty offer, insisting Ms. George accept just [number redacted], which she deemed fundamentally unfair to authors given the low costs and high efficiencies of e-book publishing. Therefore, Ms. George chose to publish with Open Road. Having lost in the marketplace, Harper then turned to the Federal Court, asking it to save Harper from its bad business decision.”
Contract questions aside, that contention certainly raises a business question: having published and sold more than 3.8 million copies, did HarperCollins choose to litigate over a contested phrase in a contract drafted more than 40 years ago, before e-books were invented, rather than negotiate a higher e-book royalty rate for a bestselling author? And if so, why? While the case will almost certainly now turn on how the court interprets the 1971 contract, the filings suggest that Harper could've been making money on an e-book edition, rather than spending money on lawyers.
The case was filed in late December, 2011, by HarperCollins, after George agreed to publish an e-book edition of her 1973 Newbery Award-winning book with Open Road. HarperCollins argues that two clauses in its contract (signed in 1971) give it the exclusive right to license an electronic edition—albeit, only to be executed with the permission of George.
Specifically, paragraph 20 of the 1971 contract states that HarperCollins “shall grant no license without the prior written consent of the Author… including uses in storage and retrieval and information systems, and/or whether through computer, computer-stored, mechanical or other electronic means now known or hereafter invented…”
The case harks back to 2001, when Random House sued Rosetta Books, arguing that it owned e-book rights for three pre-digital era works signed by Rosetta.
In its opposition to Open Road’s motion for summary judgment, HarperCollins reiterates its argument that this case is not Rosetta. “Open Road has opted…to treat this case as if it were simply a reprise of the 2001 Rosetta Books litigation, contract language and all,” Harper attorneys argue. “But of course it is not.” Harper concedes that “the core question here is the interpretation of the Agreement,” but argues that just because Open Road contests the meaning of the contract language does not render the contract ambiguous. “Based upon a reading of ‘the four corners of the instrument’ alone, it is clear—and unambiguous—that the right to license third parties to publish an e-book version of Julie of the Wolves rests exclusively with HarperCollins, not George.”
Open Road, however, argues that the contested language in Paragraph 20 has nothing to do with e-books. Rather, Open Road argues, the terms on which HarperCollins seizes—“computer, computer-stored, mechanical or other electronic means now known or hereafter invented”— pertains solely to systems for indexing, classifying, abstracting, and searching for information about books and periodicals, and is not a publishing grant at all.
Meanwhile, the clause in question, both sides acknowledge, was inserted by George’s agent, Curtis Brown, and a significant part of the Open Road brief is spent explaining that HarperCollins’ reading of the contract is only enabled because Brown’s clause is poorly written and contans a grammatical error. But the simple fact that it was Brown that inserted the clause in the first place raises questions: would an agent ever seek to insert a clause giving away an exclusive publishing right to a lucrative medium not yet imagined? And, even if HarperCollins prevails, how applicable would the decision be in settling other questions about backlist e-book rights? After all, the language at issue is not HarperCollins boilerplate.
Although HarperCollins claims the case is not like the Rosetta case, in some respects it obviously is: once again, a court is being asked to interpret a pre-digital era contract as it pertains to e-book editions. In that sense, Rosetta looms large over this action. But unlike Rosetta, this case is less about who owns e-book rights and is unlikely to clarify the question much further, given the specific, non-boilerplate language at issue.
What this case does show, fundamentally, is how deep the divide remains over digital royalty rates—so deep that a major publisher has chosen to pay lawyers to litigate terms from a 1971 contract, rather than negotiate a higher e-book royalty.
Another round of briefs is expected, and the court could then decide the case based on the filings, or it could schedule oral argument on the matter, as requested. Or, as with Rosetta, the two parties could eventually settle on a license arrangement to end the litigation.
