REVERSIONARY RIGHTS IN BOOK CONTRACTS
IVAN HOFFMAN, B.A., J.D.
The 5 most painful words
in the universe are not: "I don't love you anymore."
The 5 most painful words in the universe are:
"Your book's out of print."
Let's suppose that the love affair between
publisher and author is over. The book has stopped selling, if indeed it
ever did. The publisher has had its way with the book and is now done with
it. Like lovers in other situations, the publisher only wants OUT. What
Depending upon the terms of the agreement between
author and publisher, the author may have the right to reacquire the rights
to the book along with any copies of the book then in existence. If, on
the other hand, the author made an outright grant of all rights without
reserving these reacquisition rights, the author may not have the contractual
right to reacquire those books. There may exist a statutory right of termination
of a transfer that is provided in the Copyright Act, as amended. It is
complicated in its operation and you should consult with an attorney if
you feel this is your situation. It is, however, not something I wish to
cover in this article.
Assuming that there is some contractual right
of reacquisition, there are a number of issues that present themselves
at this point, some of which may be resolved by the contract and some may
not. Usually, these issues are kicked off when the publisher declares the
book to be "out of print." At that time, there is usually some window of
time during which the author must exercise her or his rights to reacquire
the book and the rights in that book. If the author fails to exercise such
rights, the publisher may then sell any remaining inventory to a remainder
dealer, someone who buys the out of print books and then finds a cheap
market to dispose of that inventory. The author may or may not be entitled
to receive a royalty on such remainder sales. It depends upon the contractual
If not covered in specifics by the publishing
agreement, the author and publisher should, in their discussions, reach
agreement on the following provisions:
The Cost of Reacquisition.
The Reversion of the Copyright.
At what price? Usually the contract refers to
something called the "cost of manufacture" as the purchase price. How is
this defined? And exactly what is being reacquired? Is it merely the unsold
inventory or is it the actual plates and other devices from which the book
Representations and Warranties.
Was the book copyrighted when first published?
And if so, in whose name? If in the name of the publisher, the parties
should prepare an assignment of all rights from publisher to author and
it should be registered. If the book was copyrighted in the name of the
author, another version of this reversion of copyright should be prepared
Keep in mind however, that a reversion of rights
is not the same as a termination of the agreement. There
are often many provisions in a publishing agreement that have nothing whatsoever
to do with which party owns the rights to a work and such provisions can
remain in effect even though a publisher may revert the rights to the said
work to the author. Such provisions can include rights to the
next book, restrictions on competition (i.e. what the author can or cannot
do), warranties and indemnities, rights to revised editions, confidentiality
provisions etc. etc. Thus, provisions that merely provide that upon
the happening of certain events, such as for example, a declaration of
out of print, the rights to the work shall revert to the author, do not
mean or even imply that the publisher is giving up its rights in the agreement.
If the intention of the parties is to terminate the agreement and all of
the publisher's rights in the agreement if the book goes out of print,
that has to be clearly specified.
Who Owns the Cover and Other Art?
The transferring publisher must represent and
warrant to the acquiring author that it has the right to enter into this
agreement, meaning that the publisher still owns the rights to the work,
including all the plates etc. One of the things that could have happened
is that a publisher may have made some sort of assignment for the benefit
of creditors at some earlier date and some trustee somewhere may actually
own the material. Also, the publisher must positively state that there
are no liens on the material, such as storage charges, bank liens (meaning
that they have not been pledged as security for any loans) or anything
else. If appropriate, a side letter from any warehouseman (called a bailee
in legal terms) stating that although they have possession of the plates
etc., all storage and other charges have been paid and there are no liens
on the goods.
A List of Any Back Orders.
This is related to the previous topic since a
significant portion of the value of the book may lie in its cover and other
art. The author should get a representation from the publisher that the
publisher owns this art. Often what occurred at the time of publishing
was that the publisher merely had a license to use the art as a cover or
in the book as published but not otherwise, the balance of the rights remaining
with the artist. This can create a marketing as well as a legal issue down
the road for the acquiring author.
A List of All Outstanding Third Party Licenses.
Publishers may have some outstanding back orders
for the book but not a sufficient amount, in their estimation, to have
warranted reprinting the book. In such event, it may be valuable for the
author to have this information so that the author may supply those customers
and so get a running start on a reprint.
Continuation of Obligation.
This is a significant issue since, during the
life of the book the publisher may have entered into one or more supplemental
agreements for the book. These could be foreign deals, either for reprint
or translation rights; book club deals; deals for merchandising or other
non-book exploitation, to name but a few. Some of these deals may have
a duration that extends beyond the term of the publishing deal that is
now being terminated. Thus the parties must negotiate who now accedes to
these deals. In other words, who gets the continued income from these deals?
If the publisher remains as the recipient, the author must be certain to
retain all rights to be paid on these continuing deals. If the author acquires
all these rights, the licensees must all be notified.
There must be a statement that the publisher will
continue to pay any royalties that may have accrued prior to the discontinuance
of sale. Don't forget that there are always goods in the pipeline.
These are some but not all of the open and negotiable
items to be covered when the parties stop working together as publisher
and author. Care should be paid to each of these issues from both parties'
standpoint since both parties stand to win and lose from the transaction.
Under any circumstances however, the author
ought not to mistake "Your book's out of print" for "I don't love you anymore."
They do not mean the same thing.
© 1996 Ivan Hoffman
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.
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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