Publisher Loses Ruling on E-Books

A traditional book publishing contract does not automatically cover the rights to issue the work electronically, a federal judge ruled Wednesday.

In denying a request from Random House for a preliminary injunction against upstart electronic publisher RosettaBooks, U.S. District Judge Sidney Stein in New York delivered a major setback to established publishers and a modest victory to writers.

“This decision says that authors own the e-book rights to their works,” RosettaBooks lawyer Michael Boni said. “We’re quite pleased.”

RosettaBooks, based in New York, began selling e-books Feb. 26. Among its initial offerings were eight titles by Kurt Vonnegut Jr., William Styron and Robert B. Parker. RosettaBooks got the rights from the authors’ agents.

On Feb. 27, RosettaBooks was sued for contract interference and copyright infringement by Random House, which had issued the eight novels back when electronic texts were pure science fiction.

It was not until recently that traditional publishing houses added clauses in contracts to cover electronic rights to authors’ works.

Those older contracts, however, gave Random House the right to publish the works “in book form.” Because an e-book reproduces the whole work, faithfully presenting the tale just as the author intended, Random House argued in court that it controlled those rights as well.

Judge Stein disagreed, but he emphasized at the conclusion of his 20-page ruling that “this is neither a victory for technophiles nor a defeat for Luddites. . . . Because Random House is not likely to succeed on the merits of its copyright infringement claim and cannot demonstrate irreparable harm, its motion for a preliminary injunction should be denied.”

A spokesman for Random House, the country’s largest book publisher, couldn’t be reached for comment. Random House is owned by German media giant Bertelsmann.

Letty Cottin Pogrebin, president of the Authors Guild, told Bloomberg News, “We’re overjoyed. It’s not a final decision, but it seems that it verifies and affirms our rights, and we hope other publishers take note.”

The decision was the second in a row to go against traditional purveyors of content. The Supreme Court ruled last month that freelancers own the electronic rights to their stories. The decision means electronic databases must either pay the freelancers for their archived material or excise it.

For five years or so, publishing contracts have specifically addressed the question of electronic rights. But there are many works that are still in print that depend on contracts written before 1996, and these “backlists” are a steady source of revenue for publishing houses.

The eight works at issue in this case included Vonnegut’s “Player Piano,” which was published half a century ago, as well as his “Breakfast of Champions” and Styron’s “Sophie’s Choice,” both of which appeared in the ‘70s.

Michael Cader, who publishes a daily electronic newsletter about publishing, said both sides of the case had a reasonable point. From the authors’ point of view, he recognized that the only rights granted in contracts were the ones specifically listed and that if a right wasn’t granted it was withheld. So authors should control e-book rights.

But Cader also noted that contracts usually have clauses saying the author won’t compete with the publisher by issuing any versions of the work himself or allowing anyone else to do so.

“A successful version of an e-book is potentially dead-on competitive with the traditional book,” Cader said. In that sense, he said, Random House’s argument will only sharpen with time. “The closer e-books come to being a viable product, the less distinction there is to be drawn between book publication and e-book publication.”

In the last few years, as Internet usage has surged, there has been much hype about e-books but minimal action in the marketplace. Random House’s own AtRandom.com, which was announced a year ago as a digital-only emporium, debuted in February to sales that reportedly didn’t exceed more than a few dozen per title. The publisher quickly announced that the books would be issued in the traditional form as well.

Such disappointments are likely to temper the immediate consequences of Wednesday’s decision. But Boni, RosettaBooks’s lawyer, said there now would be “less trepidation” among writers and agents in selling electronic rights to other literary classics.