A lawsuit that raises questions both about electronic rights as well as the ability of publishers' accounting and royalty systems to track the sale of electronic materials has begun winding its way through the California court system.
Late last year, Frederic Martini, the author of several textbooks now published by Pearson Education, filed a suit charging that Pearson was selling electronic editions of his works for which it did not own electronic rights. The complaint also alleges that Pearson was not paying him the full royalty on sales of electronic products, particularly the sale of online products, for which the company does own the rights. A motion by Pearson to dismiss the case was rejected in February, and the case is now in the early phases of discovery in front of Judge Susan Illston in the U.S. District Court for the Northern District of California in San Francisco.
Martini began writing textbooks for Prentice-Hall/Simon & Schuster in the 1980s (Pearson acquired the S&S education unit in 1998), and while a number of Martini's contracts have been amended over the years to give electronic rights to Pearson, not all agreements were updated, the complaint charges. While disputes over electronic rights are not new, the suit further charges that Pearson has published products, both in print and electronic form, for which it has the rights, but for which it failed to pay royalties to Martini or for which it improperly reduced royalties. For example, in the case of a CD-ROM, the complaint states, Martini received a 1% royalty when the contract called for a 12% payment.
Michael Lennie, attorney for Martini, said the author filed suit after months of discussions with Pearson failed to produce a full accounting of what products Pearson has published that were derived from Martini's works but were released without his knowledge. Lennie noted that the suit does not include a specific amount for damages "because we have no idea how much was sold."
Industry members have long been concerned that the sale of online products could be difficult to track, and Lennie said the Pearson case "points to the lack of adequate royalty and accounting systems" at many publishers. James Lichtenberg, president of the consulting firm Lightspeed, said that while he wasn't aware of the specifics in the Pearson case, the publishing industry has known for about a decade that it had a problem with older systems that cannot record revenue from electronic products.
A Pearson spokesperson said the company doesn't comment on pending litigation.
