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 only wants out. What happens now?
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 right by the terms of the publishing agreement to reacquire those books. There may exist a statutory right of termination of a transfer that is provided in the Copyright Act, as amended, but those rights arise only after many years. The statute 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. Read the numerous articles on my site under the link “Terminations of Transfers.”
Keep in mind that this “out of print” set of issues should also apply as to digital versions including those situations in which there is a digital only publishing agreement. The agreement should have covered what constitutes “out of print” as to a digital edition.
Assuming that there is some right of reacquisition set forth in the agreement, there are a number of issues that present themselves at this point, some of which may be resolved by the agreement and some may not. Usually, these issues are kicked off when the publisher declares the book to be “out of print.” [You should read “Out of Print Provisions in Book Contracts.” ] 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 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 provisions in the publisher-author agreement.
If not covered in specifics by the publishing agreement, the author and publisher should, in their discussions, seek to reach agreement on the following provisions:
A. The Cost of Reacquisition.
1. 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 including digital files from which the book was printed?
2. What is the “cost to manufacture” a digital book?
B. The Reversion of the Copyright.
1. Was the book registered for copyright (in the United States or elsewhere) when first published? And if so, in whose name? If in the name of the publisher or even if the book was never registered for copyright, the parties should sign an assignment of all rights from publisher to author and that assignment should be registered. If the book was copyrighted in the name of the author, another version of this reversion of copyright or some form of release of all rights on the part of the publisher should be prepared and registered. These documents are complicated for a number of reasons including but not limited to that the publisher may have made deals on the book (foreign, book clubs etc.) and thus the parties have to cover issues related to the rights of these licensees (see more below).
2. 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 (read "Next Book Provisions in Book Contracts." ), restrictions on what other books the author can write (i.e. what the author can or cannot do), warranties and indemnities, rights to revised editions, 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.
C. Representations and Warranties.
1. 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, digital files etc. The publisher must positively state that there are no liens on the materials, such as storage charges, bank liens (meaning that they have not been pledged as security for any loans) or anything else. If appropriate, there should be a side letter from any warehouseman stating that although they have possession of the plates, digital files etc., all storage and other charges have been paid and there are no liens on the goods.
2. What about the digital versions? What are all the sites in which the book was listed? The publisher should be required to notify all those sites to remove the listing. (see more below about third party licenses)
D. Who Owns the Cover and Other Art?
1. This is related to the previous topic since a significant portion of the value of the book may be in its cover and other art. The author should get a representation from the publisher that the publisher owns all exclusive rights to 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. Read “The Cover Artist/Illustrator Agreement.”
E. A List of Any Back Orders.
1. 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.
F. A List of All Outstanding Third Party Licenses.
1. 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 (see above). 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. (see above as to digital versions as well)
G. Continuation of Obligation.
1. There must be a statement that the publisher will continue to pay any royalties that may have accrued prior to the discontinuance of sale. There are often goods in the pipeline as discussed above.
Copyright © 1996, 2019 Ivan Hoffman. All Rights Reserved.
This article is not legal advice and is not intended as legal advice. This article is intended to provide only general, non-specific legal information. This article is not intended to cover all the issues related to the topic discussed. You should not rely on this article in any manner whatsoever and you should not draw any conclusions of any sort from this article. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. This article is based on United States laws but the laws of other countries may be different. You should consult with an attorney familiar with the issues and the laws of your country. This article does not create any attorney client relationship and is not a solicitation.
No portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written approval of the author.