In a ruling that may have enormous impact on the digital repackaging of print material, the Second Circuit Court of Appeals has unanimously reversed a 1997 district court ruling that publishers have the right to reuse material produced by freelance writers in online databases or CD-ROMs without securing explicit permission from those writers. The ruling falls most heavily on periodical and newspaper publishers, but could also affect publishers of encyclopedias and reference works, and it may force the defendants to pay damages to writers whose work has been used without permission.
The original suit was filed in 1994 by Jonathan Tasini, president of the National Writers Union, and nine co-plaintiffs against the New York Times, Newsday, Time Warner, Mead Data (which formerly owned Lexis-Nexis, the online database that figures prominently in the decision and is now owned by Reed Elsevier, which also owns PW), University Microfilms and other media companies.
At a press conference at the New York headquarters of the National Writers Union, which represents freelance writers and book authors, Tasini was ebullient over his victory and called on publishers to negotiate licenses with freelance writers "to avoid further litigation and possible liabilities." Although he declined to cite a figure, Tasini claimed that financial liability for publishers could be "huge. There could be thousands of claims. The use of the Web has expanded greatly since the suit was filed, and damages could be staggering."
Other author groups also applauded the ruling. Kay Murray, general counsel and assistant director of the Authors Guild, told PW, "We're delighted with the affirmation and the scope of the ruling." Samuel Greengard, president of the American Society of Journalists and Authors, said the ruling was a "commonsense recognition of the strict and explicit" requirements that govern the use of a freelancer's work.
The original suit charged that the practice of making articles by freelance writers available through online databases such as Lexis-Nexis without negotiating explicit agreements for payment or permission is a violation of the writer's copyright. The appellate court's ruling overturned a district court decision based on an obscure section of the Copyright Act of 1976 that allows publishers to produce "revisions" of a collective work without seeking permission.
Tasini was quick to offer a solution for acquiring permissions and making payments to writers, noting that the NWU has established the Publication Rights Clearinghouse. The PRC, said Tasini, is a transaction-based system maintained in conjunction with the Copyright Clearance Center that can digitally process permissions payments. The Authors Guild and the ASJA pointed to the Authors Registry, a nonprofit system they have established for disbursing reuse fees.
Outside of its possible effect on digital products, Web sites or databases created by reference book and encyclopedia publishers, the ruling's impact on book publishers is less clear. Agent Vicky Bijur of the Vicky Bijur Literary Agency, told PW that the ruling is "a victory," more likely to affect "old deals rather than new ones," since most current contracts include provisions for electronic rights.
Agent Robert Gottlieb of the William Morris Agency noted that the ruling will send "publishers back to the drawing board instead of relying on assumptions." Gottlieb attributed the "aggressive" pursuit of electronic rights by publishers to the Tasini suit, noting that after 1994 publishers began to "want everything and didn't want to pay for anything." He also pointed to efforts by some large publishers to "eviscerate out-of-print clauses if the book is in print electronically." Gottlieb told PW he expects the ruling to lead to even more "aggressive behavior by publishers on e-rights because of the changing nature of publishing. They're all in the online business now."
Patsy Felch and Emily Bass, lawyers for Tasini and the co-plaintiffs, both told PW that the district court must now determine damages, which will be based on "a percentage of defendants' profits" from the use of the infringing material. The court must also decide whether to issue injunctions to force publishers to cease using the material and to stop the databases from displaying them.
In published reports, lawyers for the New York Times and the other defendants said that they have not yet decided whether to appeal the decision. Lawyers contacted by PW noted that the publishers have the option of appealing for a review of the decision by the entire second circuit judiciary; they may also seek to appeal to the U.S. Supreme Court.
