COMPILATION RIGHTS IN BOOK CONTRACTS

IVAN HOFFMAN, B.A., J.D.


        The Internet and print on demand technology including the coming use of in-store kiosks, has given the reading consumer the power to create his or her own book or compilation of printed materials.  That consumer is no longer bound by the bound version of the book as originally published but can take sections from one book and combine it with sections from another book and so on. The very definition of a “book” is being redefined even as I write and you read.

        There are sites on the Internet that are “aggregators” of content, subject to a license from the owners of the materials, and those sites may in turn further sublicense that aggregated content.  That content can be combined and recombined in infinite ways.  As we move into the wireless world, content appearing on “traditional” web sites will have to be reformatted to fit the new technology and in that regard, may be compressed and combined with other content.  Perhaps we will one day see, as we do in the record business, the “greatest hits” of a particular author, featuring only segments of that author’s writings.  A consumer can create a new format that contains only “Call me Ishmael” or “It was the best of times; it was the worst of times;”  The possibilities, like the Internet itself, appear boundless.

        Are you as a publisher or author ready for the future?  Do your contracts allow for this flexibility not only in terms of rights but accounting procedures?  Or are you following the “copy a form from a book to ‘save’ money” format and thus will not be able to profit from the current already happening revolution?

        Let me explore some of the contractual issues the publisher and the author granting rights to the publisher must face.

The Grant of Rights

        When a publisher acquires rights to publish a book, the publisher must be careful that it also acquires the right to make or license compilations of that book.  This is *not* the same as serialization rights which only allow the publisher to authorize another party to print sections of or the entire book, in serial or sequential format.  Instead, this compilation right is the right to take portions of the book and combine them with portions of other materials, whether or not published by this same publisher and in some defined media.  Thus, in defining the rights granted to the publisher, the agreement must not be limited to a grant to sell, market and distribute the book *as a whole* but must include the right to make these compilations.

        It is well to remember that a copyright is not a singular, discrete thing but is, as the law frequently says, a bundle of rights.  The contents of that bundle of rights changes as technology changes.  Many years ago, there may not have been any “electronic rights” included in the bundle and then only a few years ago, the term “electronic rights” may have been sufficient.  Today however, there are a myriad of electronic rights and the definition of those rights must be stated with specificity. (Read “Electronic Issues In Publishing Contracts”)

        In addition, the contract should include a waiver of so-called “moral rights.”  These are rights, recognized mostly in the European Union, that allow an artist to restrict changes in his or her work.  It is not clear whether it applies to books but since many publishers will be licensing their books for foreign publication and because the Internet has created opportunities for publishing throughout the world, it is wise to include such a waiver in the contract to attempt to cover this compilation set of issues.  And even if the changes do not rise to the level of offending legal and moral rights, the author may have negotiated a provision restricting the publisher’s use of only a portion of the book unless the author shall have consented.  Thus the publisher must check the agreement in these respects as well.

        Moreover, there should be a specific provision allowing the publisher to sublicense some or all of the publisher’s rights to third parties since some of these compilation rights are likely to be better exercised by others in the business of recombining content to suit the needs of their particularized audiences.

        And finally, if the author retains the copyright in the work, there must be a clause stating that such copyright is subject to the rights granted the publisher in the contract, including all of the above rights and provisions.

The Accounting Procedures

        Assuming now that the contract has been drafted to reflect the grant of rights to the publisher, the contract should also address the issues of compilation and how they relate to royalties.

        Generally speaking, an author is paid a royalty for sales of “the book” and without more, that royalty is payable for all sales of that book, the implication being that the book would always be sold as a book.  Thus the inappropriateness of “old” and form book contracts, “old” being defined as a contract drafted only a few months ago.

        However, compilations are not entire books, at least not entire books written by this author.  Thus, there must be accounting provisions that set out what the author will be paid in the event that the “book” is sold in part and combined with sections of other books, whether or not published by publisher.  There should be a proration of the royalty otherwise payable to the author in the same ratio as the proportion of the compiled work bears to the section contributed by this author or in some other fashion.  Without such a provision, the publisher may find itself obligated to pay the full royalty to the author as though the book were sold as a whole even though the publisher is only receiving a fraction of the amounts otherwise received by that publisher.

        If, on the other hand, the publisher licenses the content for combination with other content by a third party, the agreement should provide for the author receiving a certain percentage of that licensed income but based only on the amounts actually received by the publisher related to this particular use.

Conclusion

        Publishers should be well advised to review their publishing agreements to cover the issues raised by compilations.  They are here to stay and publishers and authors alike should be in a position to profit from the new technology.

        In today’s ever-changing world, a failure to stay current in your contracts may amount to a loss of income.

© 2000 Ivan Hoffman

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This article is not intended as a substitute for legal advice.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  You should consult with an attorney familiar with the issues and the laws.
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No portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written approval of the author.


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