| Author contracts | 5 |
In this chapter we will look at contracts generally – what they are, legally, and how they are made – and then examine in some detail the contract which is in many ways the most important contract in publishing – the publisher’s initial contract with the author. Whether publication is to be in print or digital form, or for a book, e-book or journal article, or for other web-based content, this will raise a number of important issues, such as ownership and control of rights, which we will need to come back to again and again, so we will spend some time on these. In Chapter 6 we will go on to look at some other key publishing contracts, such as contracts with contributors, and co-publishing and subsidiary rights deals, including digital rights.
WHAT IS A CONTRACT?
A contract is an agreement that the law will enforce. That sounds rather simple, and it is: contracts are in essence very simple things. You do not need to sign a 20-clause standard form document in order to have a binding contract with someone – indeed in most cases you do not need any writing at all. The 20-clause document may be important later on, in granting rights and confirming your agreement on a number of detailed points, and we will look at such important details in the second half of this chapter. But you may well find you have an agreement that the law will enforce long before you get to that stage. There are two separate elements to consider:
(1) ‘An agreement’. There must actually be an agreement between the parties concerned; all that this means is that the parties:
• must have reached a clear agreement on a specific matter; and
• must have intended ‘to enter into legal relations’ – intended, in other words, to make a binding legal commitment to each other on the matter.
(2) ‘That the law will enforce’. The agreement must be legally enforceable – so the parties must be capable of entering into binding contracts (which will not, for example, be declared void because one of them is under age, insane or incapable through drink), the bargain must not itself be illegal or contrary to public policy, and must either be under seal or in writing (for certain types of contract) or – more usually – must be supported by some ‘consideration’: something (almost anything) of value must be given or promised in return for the promises made.
We will look at these various criteria below, but assuming that most authors and publishers are over 18, not insane or (completely) drunk, and that their agreement is (on the whole) legal and decent, the most important requirements for an enforceable publishing contract are likely to be these:
• a clear agreement;
• an intention to be legally bound by it;
• some valuable consideration to seal the bargain.
We now know, following the 1991 decision of the Court of Appeal in Malcolm v. OUP (see below) that these simple key requirements can be met long before a formal written contract is signed, or even discussed, and that a publisher may become bound contractually to publish a book, even during what have traditionally been thought of as mere ‘pre-contract negotiations’.
CLEAR AGREEMENTS: OFFER AND ACCEPTANCE
For a contract to exist, a clear agreement must be reached, with no significant misunderstandings: the parties must not be at cross-purposes. One side must make an offer in clear terms, and the other side must accept that offer on basically the same terms, otherwise no contract can come about. Let us suppose that Routledge makes an offer to two authors (who shall be nameless) to publish at a (fairly) reasonable royalty a fifth edition of a 350-page book by them on publishing law, to be delivered by 15th September 2015. That is a fairly clear ‘offer’. If accepted, they clearly intend it to be legally binding, and the provision for a royalty means there will be valuable ‘consideration’. Suppose then, however, that the authors reply: ‘Thank you for your offer; we are happy to confirm that we will write a 1,288-page loose-leaf text, including precedents, on publishing law on the terms you have set out.’ Is there a contract? No – because the offer, to publish a 350-page book, has not been accepted: what has happened is that the authors have made a counter-offer, to deliver something altogether different and more ambitious. Routledge may like this new offer, and decide to accept it, or the parties may continue negotiating, and reach agreement sooner or later, either on the original terms or on revised terms, but until the offer and acceptance match each other no contract exists.
Acceptance by conduct, and offers to treat
Silence does not imply acceptance (even if the offer attempts to provide that it will) but offers may be accepted by conduct as well as by written or spoken words. Suppose that an author and publisher are discussing a draft contract but for one reason or another never actually sign it. The basic terms of the offer contained in the proposed contract may still be accepted or confirmed by either or them if they start to act on the basis of those terms – for example, by delivering the book on time, or by commencing production. If publisher and author both continue to ‘perform’ the terms of the contract, even though it was never signed, it will increasingly bind them, on those terms. However, if it is left unsigned, and there is no separate agreement on these points, the publisher may well find that it has no more than an implied licence to publish (and perhaps deal with certain subsidiary rights) on a non-exclusive basis, and would not have been granted an assignment of copyright, or any exclusive publishing licence (both of which must be in writing, and signed).
Does a bookshop make an offer when it displays a book in the window at a certain price? Suppose the price label is out of date: can a customer ‘accept’ the offer and claim there is a binding contract at the old price? No – because shops in those circumstances are not making binding offers, but merely offers to come in and enter into negotiations – what the law calls ‘offers to treat’. So if our canny customer takes the book to the till and offers the old price, it is then open to the bookseller to reject that offer and instead make a counter-offer to sell it at the correct price.
INTENTION TO BE LEGALLY BOUND
Both parties must intend to enter into legal relations, and intend that their agreement will bind them legally. An agreement to meet in the Festival Hall Bar at 7 p.m. is not usually intended to be legally binding, and if one party is late and as a result they both miss the first half of the concert (because the late one has the tickets) there may be a serious row but there will be no breach of any contract. An agreement by an office syndicate to share in National Lottery winnings, however, or an agreement by an author to deliver a manuscript on disk or as an email attachment to a publisher by a specified date are both normally intended to be contractually binding. It will be a question of fact in each case.
If one or other party wishes to negotiate but avoid any binding legal commitment for the time being, it is possible to achieve this by marking all correspondence ‘Subject to Contract’, so that it is clear that the necessary intention to conclude a contract is not yet present. However, this may require greater clarity later on about exactly what was or wasn’t finally agreed.
CONSIDERATION
So that there is no doubt that the parties mean what they say, an agreement is not generally binding under English law unless:
• it is signed and witnessed as a Deed, or made under seal (for some formal assignments, or certain transactions involving land); or
• it is supported by some valuable ‘consideration’.
For most publishing contracts therefore – even informal, verbal ones – this means that there must be consideration – either consideration now, or a promise of future consideration to come. An upfront fee or an advance would be present consideration – an undertaking to pay future royalties would count as future consideration. Sometimes of course both exist, but both are equally valid in the eyes of the law.
Although money normally features somewhere, ‘consideration’ does not actually need to be in the form of convertible currency, provided it is of some economic value. It also does not have to represent an adequate commercial price – it can be purely nominal, for example £1. A promise by a magazine publisher to publish in book form articles by the athletes Harold Abrahams and Eric Liddell (later made famous in the film, Chariots of Fire) for a payment of ‘4d per copy’ was held by the Court of Appeal in 1922 to be sufficient consideration to form the basis of a binding publishing contract, even though virtually no other details had been settled. Despite the reservations of the Court (‘I cannot but wonder that publishers and authors enter into agreements as indefinite as this’), ‘4d per copy’ is perfectly clear, and sufficient, consideration.
Mutual promises can be good consideration for each other, provided that both of them have an economic value to the party to whom they are made: arguably, a publishing agreement which is not signed as a Deed and which makes no mention of fees or royalties or anything else of economic value – even free author’s copies or offprints – might well lack the necessary consideration to be binding, even if it contains a firm commitment to publish, since although the act of publishing will cost the publisher money it may not in itself convey anything of economic value to the author (except perhaps for academics whose promotion or even tenure may depend on it). Most publishing agreements, however, are quite clearly of economic value to the author.
VERBAL CONTRACTS
A publishing agreement does not need to be in writing (although it helps) and a publisher can be bound by even a purely verbal agreement, provided it has the necessary ingredients listed above. This has been clear since the case of Malcolm v. OUP in 1991, when a number of verbal assurances, made over the telephone to an author, Mr Malcolm, by OUP’s then editor, Mr Hardy, were held by the Court of Appeal to constitute a binding contract.
Mr Malcolm submitted a manuscript to Oxford University Press. Their in-house editor, a Mr Hardy, and an outside reader, both liked it, but thought it too long, and Mr Hardy suggested substantial cuts. Mr Malcolm made it clear to Mr Hardy he was looking for a firm publishing commitment before embarking on any more revisions, which he estimated could well take up to six months’ work. There followed two telephone conversations, both of which Mr Malcolm – with unusual foresight – tape recorded. In the second telephone conversation Mr Hardy made some crucial remarks, which should be required reading in every editorial department:
we would like to do it. That is to say, I mean I know you want a commitment sufficient to take you through the last stage of revision and that’s what I am offering.
It seems to me that because it’s such a risky venture I am not going to be terribly generous financially, erm . . . I mean what I think we should agree is that you have a fair royalty.
The Court of Appeal – reversing an earlier decision by the High Court – found that in these circumstances all the necessary elements were present to create a binding contract, and therefore found that OUP’s refusal to publish after all was indeed a breach of contract.
The Court made a number of important findings:
• No special formalities are required for publishing contracts, and it does not matter if further contract details are all left to be agreed later; an agreement is not incomplete in law simply because it calls for further agreement on some key points later on, as long as the parties have settled the essential elements of the bargain.
• In this case, there was a clear agreement – that Mr Malcolm would deliver, and OUP would publish, a specific book (indeed the author was busily revising it to OUP’s own specifications).
• There was a sufficiently clear intention on both sides to enter into legal relations: Mr Malcolm had made clear his need for a firm commitment and Mr Hardy had offered that commitment. As Lord Justice Leggatt put it: ‘It is difficult to know what was meant by “a firm commitment” other than an intention to create legal relations’.
• There was also sufficient ‘consideration’ for the contract, in Mr Hardy’s promise to pay a ‘fair royalty’. This vague phrase (like ‘4d per copy’) is not a recommended method of settling consideration for a publishing contract, but it is (just) sufficient in law.
On this basis Lord Justice Leggatt and a majority of the Court concluded that OUP did enter into a binding contract to publish Mr Malcolm’s book, for a fair royalty.
A final finding by the court was that specific performance of a publishing contract – e.g. that the publisher should be ordered to publish the book – might be ordered in appropriate cases and it is important to bear this in mind. In most cases, however, such orders will be difficult, if not impossible, for the court to enforce. If (as here) an award of damages for breach of contract is a viable alternative, courts will normally prefer to award damages (on damages generally, see Chapter 10).
In the more recent case of Sadler v. Reynolds (2005), involving a verbal agreement with a ghost writer for an autobiography, the High Court similarly found that a prominent football chairman who told a well-known sports reporter that he wanted him to write his autobiography, for a 50:50 split of a £70,000 advance which the reporter had negotiated, was in breach of contract when he subsequently gave the ghost-writing contract to someone else. The Court awarded the reporter his £35,000 half of the deal by way of damages, plus a further £1,000 for loss of opportunity. Many publishers and agents now use ‘deal memos’, which may go into some detail on rights to be offered, but which are marked ‘subject to contract’ specifically to avoid a binding contract being inadvertently created before the parties intend it to.
PARTICULAR CONTRACTS AND LEGAL CAPACITY
CONTRACTS WHICH NEED WRITING
Although verbal contracts are binding in most publishing situations, there are some kinds of contracts which must be in writing. Others do not need to be in writing themselves, but some written evidence must exist to support them. In addition, some specific assignments or grants or licences must be written.
Contracts which must be in writing
• Bills of exchange, promissory notes, and bills of sale;
• Regulated consumer credit agreements;
• Hire purchase and consumer hire agreements.
Contracts for which written evidence must exist
• Marine insurance contracts;
• Contracts of guarantee;
• Contracts for the sale (or other disposition) of an interest in land.
Assignments or grants which must be written
• Assignments of copyright (under section 90(3) of the 1988 Act);
• Grants of Exclusive Licences (under section 92 of the 1988 Act).
In both of these last two cases, the assignment or grant must not only be in writing, but also signed by, or on behalf of, the copyright owner. If it is not, it will be unenforceable as a legal right (although an equitable interest may in some cases exist). Note that since the Electronic Communications Act 2000 electronic signatures have been recognised as valid evidence of authenticity.
ILLEGALITY
The law will not enforce a contract to do something which is legally wrong, such as the commission of a crime, or a tort (such as a libel), or which is otherwise contrary to public policy. Thus contracts which promote sexual immorality or which pervert the course of justice are void and unenforceable, as are certain kinds of gaming and wagering contracts. Contracts to finance other people’s litigation in return for a share in the proceeds (formerly an offence known as ‘champerty’) are unenforceable (although at the time of writing conditional fee arrangements are still permitted in the UK for libel cases, despite their undoubted chilling effect on freedom of speech). Also illegal are contracts in restraint of trade, and contracts the purpose of which is to procure the breach of an existing contract: so that publisher B, wishing to entice an author away from publisher A, cannot sign the author up to a more attractive deal knowing it to involve the breach of the author’s existing contract – the new contract will be unenforceable, and publisher B will probably be liable to an action in tort from publisher A for procuring a breach of contract.
Not everyone is legally capable of entering into binding contracts. Those who might not have the necessary legal capacity at the relevant times, and whose contracts would therefore be liable to be declared voidable (i.e. where the parties have the power to avoid the legal relationship by invalidating the contract or to avoid the contract and continue), include the following.
Minors
The age of legal capacity was reduced from 21 to 18 by the Family Law Reform Act 1969. Until people have reached their eighteenth birthday, they are not fully capable of entering into binding legal contracts – they are known as minors (previously ‘infants’). This is designed to protect the young from unwise contracts – particularly from contracts which (as in the case of many young pop singers or sports stars) might involve very large sums of money and which would significantly restrict their future freedom. On the other hand, those who do business with minors in good faith may also need protection – if for example they supply valuable goods to them on credit, or pay them advances. In order to balance these two objectives, the law will as a general rule uphold minors’ contracts if they are for ‘necessaries’, or are otherwise – on the whole – for the minors’ benefit. In a well-known publishing case in 1966 (Chaplin v. Leslie Frewin (Publishers) Limited) Charlie Chaplin’s son – who was then a minor – was held to be bound by a book publishing contract under which he had already been paid significant advances, since the contract was itself for his benefit and also enabled him to make a start as an author; equally, it would have been unfair to deprive the publisher of the opportunity to recoup his advances.
Mental patients
If you are insane, you are considered by the law to be ‘incapable of intelligent consent’. However, insanity is not always a permanent state and those suffering from insanity often have lucid intervals during which they are quite capable of entering into rational agreements. A contract made by a mental patient is therefore not void from the outset, but may be declared void by the patient later if it is not for his or her benefit, particularly if the other party knew of the insanity and took advantage of it. Equally, a beneficial contract made while insane can be affirmed later on.
Rather like the insane, those who enter into contracts while their faculties are completely incapacitated through drink (or, by analogy, drugs) may plead their extreme drunkenness or incapacity as a defence in any subsequent actions under those contracts. But they may do this only if:
• their condition completely prevented them from understanding the transaction; and
• the other party knew this.
Most publishing lunches nowadays would be unlikely to have the necessary effect. In any event, if the drunkard ratifies the contract later on, when sober, he or she will become liable in the normal way.
Convicted prisoners
There seems no reason why a convicted criminal should not be as capable of entering into a binding contract as anyone else, but following the Coroners and Justice Act 2009, in order to prevent criminals ‘profiting from the proceeds of crime’, any profits (such as fees or royalties) derived from memoirs or other publications by criminals convicted of serious crimes may be recovered directly from them via Exploitation Proceeds Orders. These are directed exclusively at the assets of the prisoner concerned, without imposing any liability on the publisher.
Those acting beyond their authority
Until October 2009, companies which entered into contracts for activities which were not within the objects set out in their Memoranda and Articles of Association may well have been acting ultra vires, or beyond their authority, and such contracts may be open to challenge, for example by the shareholders. For this reason, most Memoranda and Articles are drafted as widely as possible, but something clearly ultra vires may still be declared void. One way of avoiding this risk is to provide that the object of the company is to carry on business as ‘a general commercial company’ – since 1991 this has authorised a company ‘to carry on any trade or business whatsoever’. The Companies Act 2009 abolished the ultra vires rule, so that companies incorporated after 1 October 2009 are not required to have such an objects clause.
Similarly, partners may not always have authority to bind a partnership in contracts unconnected with the partnership – such contracts may need to be ratified later on.
Employees who are allowed regularly to negotiate contracts such as publishing directors, or commissioning editors may, however, often be considered to have apparent authority to do so, and a contract made in good faith with such employees may well bind the company. Publishers should therefore bear in mind that if they give employees business cards describing them as ‘Publisher’ or ‘Commissioning Editor’ and send them off to the Frankfurt and Bologna book fairs and on commissioning tours around universities, they may well be bound by any apparently reasonable contract they may make (however strenuously the board or publishing committee may object later on).
Similarly, agents – such as commercial or literary agents – may in some circumstances also go beyond the scope of their authority, but (depending on their particular terms of appointment) most agents will have considerable implied authority to enter into reasonable contracts on behalf of their principals.
Finally, contracts entered into by bankrupts may not always be enforceable, unless affirmed by their trustee in bankruptcy. However, a contract – such as a royalty agreement – which produced income for a bankrupt (or his or her creditors) would almost certainly be affirmed.
THIRD PARTIES
Until 1999, there was an established legal doctrine (known as privity of contract) that contracts could not be enforced against or enforced by third parties (those not party to the contract). Therefore, pre-1999, if a publisher contractually agreed with an author to pay all royalties to a friend of the author, the friend could not compel the publisher to pay the royalties to him, because he was not a party to the contract. However, the Contracts (Rights of Third Parties) Act 1999 now provides (subject to exemptions such as employment contracts) that a clearly identified third party can acquire rights under a contract, if the parties to the contract so intend.
The effect of this legislation is that the ‘friend’ in the example above may now use the Act to enforce his or her contractual right to payment against the publisher, as could any other third party promised a contractual benefit. This would clearly apply to literary agents who are entitled to a percentage of earnings in any publishing contract, although most agents have their own contracts under which they benefit directly as parties.
SUMMARY CHECKLIST: BINDING CONTRACTS
• Are both parties legally capable of entering into contracts?
• Has a clear agreement been reached between them?
• Has a specific offer been accepted (in substantially the same terms)?
• Did both parties intend the agreement to bind them legally?
• Is there valuable ‘consideration’ (however nominal)?
• Is the contract one which needs to be in writing (for example, if it is to include an assignment of copyright)?
• Might it be illegal, or against public policy?
• Might it be voidable, for example if entered into by a minor or someone acting beyond their authority?
• Is a specified third party entitled to a benefit under the contract, and, if so, is this what the contractual parties intended?
STANDARD FORM AGREEMENTS
After all the discussions and pre-contract negotiations (and, possibly, the lunch) there will come a point of decision, yes or no: either the author or the publisher (or both) will decide they do not wish to take the idea any further after all, or both of them will decide that they are ready and willing to go ahead, and to commit themselves to do so by signing a formal publishing contract. They may already have agreed the basis of a deal (indeed, as we have seen above, they may already have a binding contract) but now they will want to confirm in legally binding terms what they have already agreed, and settle a number of other detailed matters at the same time. They will want an agreement that enables them to do two key things:
• to make mutual undertakings to each other (‘I will write the book or supply the content if you publish it’);
• to acquire rights (in the publisher’s case, all the rights it needs to publish and exploit the work, and in the author’s case the right – amongst other things – to a reasonable share in the proceeds).
Most publishers with any experience will have some kind of standard author agreement; in the case of a large publishing company it is likely to be a detailed printed or word-processed document of 20 or more clauses. It will, however, reflect that publisher’s own experience: every clause will be there for a good reason, but it will – of course – be drafted from the publisher’s point of view. This does not necessarily mean that it is unfair or unreasonable, but authors need to bear its origins in mind, and also the possibility that it was not drafted for the particular work (or even type of work) concerned. The Publishers Association maintains a Code of Practice on Author Contracts, which contains useful guidelines for publishers and since 2015 (for trade publishers, jointly with the Association of Authors Agents) good practice guidelines on contract negotiations (see below). Equally, most major literary agencies have their own standard author–publisher contracts, which not surprisingly are drafted much more with the author’s interest in mind: for example, fewer rights are normally granted to the publisher, and the financial terms to the author are usually better. Whose version is used depends entirely on the relative negotiating strengths of the parties. A literary agent representing a successful author is likely to be in a strong position to deal on its own standard terms, whereas a publisher taking the risk of publishing an unknown author will prefer to use its own standard contract initially.
Dealing on the other side’s standard terms can still represent a serious negotiating disadvantage, especially if detailed terms are not properly explained or understood. If in doubt, ask. If no satisfactory explanation is forthcoming, get a second opinion from your professional body, or from an independent lawyer with experience of publishing contracts. And, when dealing with any standard form contract, bear the following points always in mind:
• The law will enforce most reasonable agreements which reflect what both parties want (for the few exceptions, see above).
• From a legal point of view, most clauses of most contracts are therefore fully negotiable.
THE STANDARD AUTHOR–PUBLISHER AGREEMENT
Most good publishing contracts deal with the same basic points, although sometimes in a different order and sometimes (as we have seen) from very different points of view. Some academic (particularly journal) authors (many of whom often don’t receive any payment) prefer to license their works on ‘Open Access’ terms, using Creative Commons licences which grant more liberal rights of ‘non-commercial’ use and re-use, and some UK and US academic and funding institutions demand that funded articles should be published, or made available via repositories, on primarily Open Access terms, at least initially. Needless to say, this may have a significant effect on the publisher’s commercial market, although there is sometimes room for initial embargoes. Some scientific, technical and medical (STM) publishers now offer ‘hybrid’ agreements, with Open Access elements, with authors paying to make their work more widely accessible than usual, although the take-up of Open Access licences as a whole has been relatively small (for more on Open Access, see Chapter 3).
In the rest of this chapter we will follow the sequence of topics in the standard author–publisher agreement which is probably in most widespread use, the first precedent in Charles Clark’s admirable source book, Publishing Agreements (ninth edition, 2013). Comparisons with other versions, such as agent’s contracts, will be made as we go along. You may find it useful to refer to your own version at the same time. The latest (third) edition of the Publishers Association Code of Practice on Author Contracts (2010) also deals with a number of e-publishing issues.
THE PREAMBLE: THE PARTIES AND THE WORK
It may sound rather obvious, but it is a good idea to say clearly right at the beginning of any publishing contract who you are and which precise publication you are talking about. Both sides are taking on significant legal obligations, so it is necessary to know who it is exactly who will be bound by those obligations. It is also essential to know how far those responsibilities extend, so ‘the Work’ needs to be clearly defined; whether it is a traditional book or journal, e-book or online service, it is often sensible to set out a precise specification (content, format, number of illustrations, etc.) in a separate appendix to the contract. Finally, although strictly speaking it is not legally necessary, if the contract is not already pre-dated it is highly desirable if the last person to sign the contract also dates it clearly so that everyone knows when the rights and obligations start to run (and, in some cases, when they finish). There might be difficult problems of evidence later on, otherwise.
The parties need to be carefully defined. In the case of ‘the Author’ (sometimes the ‘Proprietor’; for example, where there is a literary estate) it is normal for the term to be defined to include the author’s executors and (sometimes) administrators, where the author dies or becomes incapacitated, and many contracts also include the parties’ ‘assigns’: we will deal with assignments below. An increasing number of authors nowadays write in the capacity of a limited company, and if so this should be made clear (perhaps supported by letters of inducement if appropriate).
In the case of ‘the Publisher’ it is customary to include the publisher’s successors in business, should the company be taken over, and often also other related publishing imprints, so that a publisher will retain the option to publish the work under another imprint if that seems more appropriate at the time, but limited (usually) to subsidiaries, or imprints elsewhere in the same group.
‘Assigns’ and assignment
The parties are often defined to include their respective ‘assigns’. As a general rule of law, either party to a contract may freely assign their rights under that contract (unless there is a specific provision in it to the contrary) but not their duties. The person to whom the rights are assigned (called ‘the Assignee’) may take over the entire benefit of the contract from the person doing the assigning (‘the Assignor’): it is also possible, of course, to assign specific rights separately, such as the copyright. The author may wish to assign the benefit of the contract to a spouse or relative, or to a separate company (perhaps for tax reasons). Equally, the publisher may wish to assign copyrights or publishing licences under individual contracts, or whole lists of contracts, as part of a sale to another publisher in due course. If this is envisaged – or might be – rather than relying solely on general wording in the Preamble it is strongly advisable also to make sure that the wording of the contract itself specifically allows for this, and there should be no ban or undue restriction on assignments later on in the contract, unless this is what both parties want. A separate clause permitting (or prohibiting) assignment is usually the clearest solution.
Any continuing duties and obligations of either party may not generally be assigned without at least the implied consent of the other – particularly in a contract involving continuing skill and judgment on both sides, as with many publishing contracts. Either party may quite justifiably have reservations about the possibility of future assignment of continuing obligations by the other. The publisher may be unhappy about the author assigning any remaining personal obligations – for example, to take part in publicity or serial interviews, or to keep a reference work up to date – to a third party, or a company, less able to meet these obligations, and may require a letter of inducement from the author beforehand by way of reassurance. The author may have equal fears that any continuing obligations of the publisher – to promote and exploit the work effectively, for example, and pay royalties – may be assigned to a different company altogether, with less feel for the market or the work concerned and about which the author quite possibly has strong views. Where such personal obligations remain, it is always advisable (and may be essential) to obtain the express consent of the other party before any assignment, if this is possible. In many cases – such as the sale of a list – it is usually advisable to arrange for relevant contracts to be ‘novated’ (newly executed, and signed by the new parties), so that:
• the relevant rights are re-affirmed;
• the new publisher clearly takes over both the benefit and the burden of the contract.
Some agents’ contracts include non-assignment clauses, usually towards the end of the contract, banning assignment by the publisher without the prior written consent of the author, sometimes with a proviso that such consent shall not unreasonably be withheld. This can make sense, but both parties should think carefully whether such restrictions on their future activities are in their long-term interests, particularly if the proposed restriction is not mutual, but affects only one side.
Acquisition of an entire company – usually by a purchase of shares – will not normally involve any individual assignments, and will therefore probably not be prevented by non-assignment clauses in individual author contracts.
From a publisher’s point of view, one of the main objectives of an author contract is to acquire rights. By far the greatest part of a typical publisher’s business consists in exploiting other people’s copyright works, and that exploitation may cover many languages, forms and media and involve publishing activities in all corners of the globe: it is essential therefore that it should all be clearly licensed by the copyright owner. Every author contract should therefore make it clear who owns the copyright (is it the author, or the author’s employer?), what publishing rights that owner grants to the publisher, which may be freely sub-licensed (there may be arguments, for example, about print on demand or e-books), and which formats (such as film or audio) may be subject to reversions if not exercised within a set period. Ownership of digital publishing rights, including the right to make the work available online, is of course very important, even if at first sight the work may not appear to have much immediate scope for digital exploitation. It is prudent to consider at the outset who will be best placed to exploit such rights in due course, together with other key rights. Whether they are granted to the publisher, or reserved by the author or agent, the contract should make the position as clear as possible. This will ensure:
• that author and publisher (and the rest of the world) clearly know who controls which rights;
• that the publisher can safely sub-license individual rights to others;
• that rights can effectively be assigned or transferred;
• that all licensed activities can be protected legally against copyright infringers (around the world if necessary).
There are two ways for a publisher to acquire the publishing rights it needs:
(1) by obtaining an assignment of the entire copyright from the copyright owner; or
(2) by being granted a publishing licence – in terms wide enough to cover all the publishing ‘activities’ envisaged.
Full copyright or a licence?
It is more common in the UK for authors to retain their copyrights and for most publishers to be their exclusive licensees, but there may be areas of publishing where an assignment of the full copyright makes sense if both sides agree – such as major works of reference, multimedia works or journals, often with hundreds of different contributors, where the publisher will want to retain overall long-term control. It may also be an issue in some territories in protecting the work against international piracy. In most other cases, however, a sole and exclusive publishing licence for agreed territories, drafted in wide terms if necessary (including a very robust clause allowing the publisher to take legal action if necessary), will probably meet most publishers’ needs. It has been likened by a number of commentators to taking a lease of a house rather than buying the freehold – a long lease for all practical purposes will probably be just as valuable. Although the image is helpful, the analogy is not entirely accurate, since a freehold should last forever whereas copyright in most cases expires 70 years after the end of the year the author dies. While the copyright lasts, however, a full assignment of it is the closest to a freehold a purchaser can get. And an assignment is generally irrevocable, while a licence can usually be revoked (for example for breach of its terms). If copyright is assigned, the author’s moral rights should not be forgotten (since they will not protect against anything done with the new copyright owner’s consent), and it may be advisable to re-affirm key moral rights (such as the right to be credited, and to object to derogatory treatment of the text) separately.
If a full assignment of copyright is needed, remember that in order to be effective under the 1988 Act it must be in writing, and signed by or on behalf of the copyright owner. Do not assume that just because an assignment letter has been sent off to the author a valid assignment has somehow magically taken place – it hasn’t. Copyright will not be assigned until the author or their representative actually signs.
If you grant someone the ‘sole’ right and licence to do something you are undertaking not to grant a similar licence to anyone else, but you are not necessarily ruling out the possibility that you may continue to do it yourself (although this has usually been implied). An ‘exclusive’ licence, on the other hand, is defined under the 1988 Act and clearly excludes not only other potential licensees but also the person granting the licence. An author granting both a sole and an exclusive licence to a publisher is therefore granting complete control of all the publishing activities listed, either worldwide or for an agreed range of markets. It is by far the most powerful right to have, short of a complete assignment, and under the 1988 Act gives such licensees in the UK the same rights and remedies against copyright infringers as if they were full assignees (we will look at remedies further in Chapter 10). Like assignments, however, exclusive licences must be in writing and signed by or on behalf of the licensor.
Scope of the licence
The activities licensed
In the process of publishing, the publisher will need to do a number of things which UK law treats as ‘restricted acts’, and which may only be done with the copyright owner’s licence or permission. We will look at restricted acts more fully in Chapter 10, but – in due course – bearing in mind the 2001 EU Copyright Directive, a publishing licence now probably needs to include:
• the right to reproduce (which would cover copying);
• the right to communicate and make available to the public (which would include online access);
• the right to distribute (in hard copy form); and
• the right to license others to do the same.
Arguably, the traditional grant of rights to ‘produce and publish’ would cover at least the first and third of these, but in the light of recent case-law there may be some doubt about whether the second was fully included. It may be advisable to adopt a belt and braces approach and grant ‘the right to reproduce, publish and distribute, communicate and make available to the public’. (Alternatively, if appropriate, the right to communicate and make available to the public could be left to a separate grant of subsidiary rights later on, and subject to different terms – see below.)
The right to make an ‘adaptation’ in forms specifically licensed may also be needed if, for example, translation rights are included. It is important that the licence should cover not only the work as a whole, but also any ‘substantial part’ of the work to be used, for example, in catalogues, advertising or on websites, since otherwise this may also be a copyright infringement. Again, we will discuss this more fully in Chapter 10.
There are other restricted acts, such as public performance of the work and rental and lending rights which are normally covered – if appropriate – under subsidiary rights (see below).
Formats
The licence may cover ‘all forms and media’, which although not very specific at least makes the intention clear, or it may be restricted to ‘volume’ form or ‘print rights’ only (excluding audio or e-books, for example). ‘Volume’ rights normally include all the publisher’s own hardback and paperback editions, including promotional, mail order and premium sales and book club sales, together with royalty-inclusive export sales of bound copies or sheets. Although there is no unanimously agreed definition of volume rights, the term quite probably also includes anthology, digest book and condensation rights, and may include other rights too which relate to exploitation of the verbatim text of the work as a whole (but see next paragraph).
All this must be considered in the light of digital methods of delivery, such as e-books and downloadable text or hand-held devices such as mobile phone apps and (for trade books) even video gaming. If the complete verbatim text is published or made available in this form, such exploitation might arguably be considered as part of the main volume rights, but publishers, authors and agents generally agree nowadays that it is necessary in such cases to have an express grant of rights, and even then perhaps only for a limited term. This is very likely to be an issue if the publisher wishes to license audio downloads, or to make the work available for online searching via Amazon’s Search Inside or Google – this may be highly beneficial for both author and publisher, but it is very unlikely that such use (often involving digital access to the entire text) would fall under ‘volume rights’ without express wording making this clear.
At the time of writing, there have been no UK cases on this point, although two US cases may still be instructive. In Tasini v. The New York Times (2001) the US Supreme Court held that publishers of ‘collective works’, such as newspapers and magazines who were publishing articles by freelance writers – usually without any signed contract or grant of rights – did not have the right to go on to exploit those articles in electronic databases. And in Random House v. Rosetta Books (2001), even where the publisher did have exclusive rights to publish a number of long-established authors ‘in book form’ it was held that this did not give exclusive rights over e-book exploitation of the same text.
Volume rights do not include other subsidiary rights such as audio or serial rights or film rights, but these, like digital rights, are often the subject of additional specific grants of rights under the royalties and subsidiary rights sections (see below). It is absolutely crucial to make sure that all the forms and media in which publication is envisaged are included somewhere and that the parties agree who has the right to exploit the work in which formats; translation rights may be vital to travel books, for example, and merchandising rights to children’s books – neither of these are included in volume rights. It is increasingly important to be clear whether digital rights include exploitation via sale or licence (or both) and any payment implications. Publishers with experienced rights managers may be quite capable of exploiting such rights, but many agents prefer to retain them; it will be for the parties to decide who is best placed to control these rights. If in doubt, seek advice, or refer to Lynette Owen’s indispensable guide: Selling Rights.
Licences often cover the English language only, but sometimes include all languages. The restriction to English only would deprive the publisher of the right to publish (or more likely to license) translations, unless translation rights are granted later on (see below). Avoid confusing terms such as ‘French rights’ (which may be understood to mean France only) if what you want are (worldwide) French language rights. As in the section on Formats above, this should be clearly agreed.
Territories
Licences may be granted to publish worldwide (or even ‘throughout the Universe’, in order to remove any doubts about satellite broadcasting). Alternatively, they are often limited to specific territories of the world (ideally listed individually in a Schedule), but in some cases, of course, Internet publication may transcend such market divisions and worldwide licences may be more appropriate or even unavoidable. It is entirely for the parties to agree who is best placed to exploit the work in each part of the world – many publishers will have the capacity to exploit internationally, either online via the net or in hard copy, or the author or agent may prefer to retain some rights (for example North American or US rights) to exploit themselves. Note, now, that exclusive UK rights are no longer exclusive if the rest of Europe (specifically, the EU and EEA) are open territories shared with other publishers: under the Free Movement of Goods Provisions in Article 28 of the Treaty of Amsterdam (see Chapter 14) a US edition lawfully on sale in (say) Belgium cannot be prevented from entering the UK. There may be other territories whose local copyright laws may make exclusivity difficult to enforce, such as Australia or New Zealand (which allow for parallel importation of competing editions, eg from the USA): if these territories are likely to be important to you, it may be worth taking further advice.
Duration
Finally, it is very important to specify clearly for how long the licence granted lasts, and from which date it starts. Many publishers will seek a licence for the full term of copyright (now, in the EU and USA, 70 years after the author’s death), and in the case of some works, especially textbooks or major reference works, the publishers may well need the life of several editions before the work will truly come into profit. If the full term of copyright is agreed, it is advisable to include not only the current term, but also any extensions, renewals and revivals (on Duration generally, see Chapter 2).
Some contracts provide for reviews after a specified term, but any comparisons or yardsticks should be clear. It will be for the parties to agree what suits them (and that particular work) best, but a publisher accepting a licence for a limited period should be aware of the risks of investing heavily in establishing a work (and perhaps an author) only to find that the licence, or part of it such as the paperback rights, terminates after 10 or 20 years.
DELIVERY, APPROVAL AND ACCEPTANCE
Delivery of the work is the author’s primary responsibility under the contract, so the publisher will want to make sure:
• that it is actually delivered, in the required format and more or less on time;
• that, when it arrives, it accords with the contract;
• that any necessary revisions and improvements can be made, or – failing that – the contract can be terminated on a reasonable basis.
Equally, the author will want to see a fairly clear commitment to publish the work (and possibly within a given timetable) if it is delivered substantially as per contract, and that if things do go wrong there is a reasonable agreement about any advances and monies due and, particularly, that the rights can be reclaimed.
There are a number of other important considerations to bear in mind: not least, what amendments might be ‘reasonable’ in the light of what was agreed, and the author’s moral rights, and how both author and publisher can disentangle themselves from the contract if the work as originally agreed clearly isn’t going to happen. We will explore all these tricky issues – and some possible solutions – in more detail in Chapter 7, but when considering the contract wording itself, these are the points to bear in mind:
• In the event of a dispute, it is the wording of the contract which will prevail – so make it as clear and unambiguous as possible. In one 2011 case the publisher’s standard wording was found to be unclear by the court and had later to be revised.
• Agree clearly the time and method of delivery (for example on disk) and what happens if it is late.
• If time is of the essence, say so: otherwise it is unlikely the publisher will be able to terminate the contract simply because the work is not in bang on time.
• Agree in advance any acceptance criteria. Refer if possible to known yardsticks: a requirement that the work ‘shall conform to a reasonable extent to the specifications set out in the Appendix’ (or possibly the synopsis) is fairly easy to pin down in any subsequent dispute, but beware generalised phrases like ‘of a standard which might reasonably be expected’ (by whom?), or other question-begging adjectives such as ‘acceptable’ or ‘satisfactory’.
• Agree a specific procedure and a timetable for any revisions, and do not forget that the author will usually have a moral right of integrity (see Chapter 4).
• Consider the effects of termination: will the publisher retain an option, and will the author keep any advance (particularly if termination was not their fault)? The circumstances may be different, depending on whether the work was commissioned or not, and how much work in progress exists. It is also advisable to make it clear if (and how) the rights are to revert to the author; reversion is implied when a contract containing a licence is terminated, but the rights will not necessarily revert where there was an assignment, unless there is clear provision for this (probably by means of a formal re-assignment).
COMPETING WORKS
Many publishers’ contracts contain non-competition clauses under which the author promises as long as the contract lasts not to undertake any other works which might reasonably be considered either to compete directly with the contract work or to ‘affect prejudicially’ its sales or other exploitation. These are often expressed to cover not only directly competing works, but also abridgements or expansions of the same material, if done without the publisher’s consent. Such restrictions may be an obvious way of protecting the publisher’s investment, particularly in the case of STM or professional content (less so for fiction or children’s books, or perhaps works commissioned on a fee basis), but they must be drafted tightly and not so widely that they would amount to a total ban on any further writing in the area: that would almost certainly be an unreasonable restraint of trade (see Chapter 14) which the courts might refuse to enforce (particularly if the publisher already had the option of suing for breach of an exclusive licence). This will particularly be the case where the author is an acknowledged expert in the area concerned: such a ban might prevent the author not only from developing his or her reputation and career, but quite possibly from earning a living. Many contracts get round this problem by specifically allowing authors to use their material for professional purposes, e.g. for training or seminars, or similarly for academics in their own teaching. In some cases it may also be appropriate to limit the term to a given period after publication.
In publishing a work, a publisher takes a number of significant legal risks. If the work contains statements defamatory of other people, the publisher will be liable legally for publishing them just as much as the author; equally, if any material is obscene, it is the publisher who will be prosecuted, for publishing an obscene article. The wider the publication, the greater the risk, so a website or bulletin board accessible worldwide may require special vigilance. There are a number of other legal risks, which we will discuss fully in Chapters 8 and 10, and for this reason the publisher will normally require certain warranties and indemnities from the author to protect against them. This does not mean that the publisher should become complacent about the need for in-house vigilance and, if necessary, outside legal advice (such as libel reading), or the need for adequate insurance cover, but it is generally thought to be reasonable that the author (who after all knows the work better than anyone else) should either disclose any known risks or else warrant that the work is safe to publish.
Which warranties are sought, and which are given, is of course a matter for the parties to agree. Many publishers’ standard contracts contain full lists of warranties – an agent’s contract may contain only one or two. However few or however many there are, they should all be taken seriously. Breach of a warranty will probably not entitle the publisher to terminate the contract altogether, but it will provide an action for damages, so together with the indemnities which are usually required each warranty should give the author pause for thought. Indemnities are dealt with below.
The warranties most commonly given are these:
That the author has full power to make the agreement
Not everyone has full legal capacity to enter into binding contracts – for example the mentally ill, children under 18, or those acting beyond their authority (for a full treatment see above). The author’s warranty on this point will give the publisher some protection against the risk of the contract subsequently being declared void.
That the author is a qualifying person
Following the 1988 Act it is now common to seek a warranty that the author is at the material time a ‘qualifying person’ under section 154 of the Act. As we saw in Chapter 2 the work may qualify for copyright protection in the UK either on the basis of first publication here or in another qualifying country, or alternatively on the basis of the author’s nationality or other status. Clearly, the place of publication is outside the author’s control, but the author may be able to warrant that he or she is (for example) a British citizen or British subject, or domiciled or resident here, or a citizen of another EU member state: the full list of nationality and status qualifications is set out in Chapter 2.
That the author is the sole author of the work and owns the rights granted
It is important for a publisher that the author owns all the relevant rights, and that there are no rival claimants such as employers or joint authors. As a general rule, you cannot grant rights you do not own.
That the work is original to the author
A literary or artistic work will not be protected as a copyright work unless it is ‘original’. Under UK law the standard of originality required is not very high (see Chapter 2), but there must be some evidence of skill and judgment, and individual effort. The author will not own the copyright unless that effort is his or her own effort – if anyone else’s effort is involved there may be joint authors, or possibly a claim for copyright infringement (see below).
That the work has not previously been published, or any of the rights previously assigned or licensed
As we saw in Chapter 2, first publication can be one basis for copyright protection and also, as we saw in Chapter 4, a claim for publication right, so it is important to know that there will be no rival claims from any previous publications. The warranty against previous publication is usually limited to the exclusive territories covered by the agreement, and often to the specific formats covered (such as volume form) although sometimes it covers any forms. It may be particularly important for the publisher to be reassured that the work has not already appeared on the Internet, or perhaps under Open Access conditions required by a research funding agency, or even within a local intranet, or is not about to: for many STM or academic works, such prior publication, particularly if free of charge, might significantly reduce any commercial market.
It will also be important to the publisher to know that an assignment or exclusive licence has not previously been diluted by the grant of some particular rights elsewhere: for example US rights or French language rights. Such previous grants or licences will normally survive any new agreement, and the new publisher’s licence will be subject to them. So if it turns out that US rights have already been granted elsewhere, the new publisher will not have worldwide rights after all, but only worldwide rights minus the US rights previously granted. Authors (and agents) are usually therefore asked to warrant that no such previous grants have taken place.
That the work does not infringe any existing copyright or other right
Since printing and issuing copies of a work to the public may be just as much a copyright infringement as copying, the publisher will be just as much at risk of any legal action as the author: this is therefore a fairly crucial warranty to seek. Ideally it should cover not only copyright infringement as such (including failure to secure third-party permissions) but also infringements of any other rights of third parties, which would include for example any breaches of the terms of any previous licence, or contract, or any breaches of confidentiality, or moral rights, or database right or any trade mark infringement. For some specialised works, such as medical textbooks, there may be a need for specific warranties relating to the moral right of privacy in certain private photographs or films, or in some cases (particularly where US photographs are involved) that necessary consents or clearances or patient releases have been obtained. Don’t forget that there is now a developing law of privacy in the UK, and that there may be obligations of confidentiality, not just for revelations in celebrity books (ghost-written or otherwise) but also applicable more widely, e.g. to educational or academic authors. For more on this see Chapter 9.
That the work contains nothing defamatory (or libellous)
This is a key warranty, and possibly now the most important of all, if only because of substantial damages awarded for libel by some juries (see Chapter 8). As with copyright infringement, the publisher will be equally at risk with the author for publishing any defamatory statement, and so might anyone else involved in the publication, such as editors, printers and distributors, as well as Internet service providers (although there may be defences of innocent dissemination, or temporary and transient copying). Defamation (which includes libel) is therefore a very serious risk indeed and should be actively borne in mind at all stages by author and publisher alike. A sober reading of Chapter 8 might be a useful starting point. Above all, if either of them has any reason to suspect that a particular passage may be defamatory – the author when writing, or the editor when editing – it cannot be stressed too strongly that the safest policy is to tell someone. If there is any doubt, it may make sense to have some passages (or the whole work) read for libel by a lawyer who knows about such things, and share the cost if appropriate. It is infinitely better to do this at an early stage than to run the risk of going ahead regardless and hoping no one will notice. Even though authors may rightly be concerned about the costs of libel reading, a good libel read is infinitely cheaper than the damages (and costs) risked by a libel action.
Is it reasonable that the author should bear the risk? The author knows better than anyone else whether (and where) there might be defamatory passages and is in the best possible position to do something about them. If they are not disclosed at the outset then it seems fair for the author to bear the resulting legal risk. Some agents’ agreements seek to limit the author’s liability to passages ‘unknown to the publishers’ – this very significantly dilutes the value of the author’s warranty, and rather begs the question: ‘When?’ There might well be an argument for sharing the risk if a libel is disclosed during the course of writing, or at least between delivery and proofs – when it still might be said the publisher has a realistic opportunity to do something about it – but if a libel only comes to light after the work has gone for press it may be thought that the author, not the publisher, should bear the risk.
It is, of course, possible to insure against the risk of libel (and other associated risks such as malicious falsehood), and many publishers now have comprehensive libel policies. It is also possible in some cases to add specific authors to the policy as coinsured. However, insurance premiums are increasingly expensive, and the level of cover is usually subject to a substantial excess and may not cover the largest awards. It seems likely that an author’s warranty will be required for some time to come.
That it contains no obscene, blasphemous or otherwise unlawful material
Obscenity, like defamation, is a real risk in publishing and is not solely restricted to illustrated sex manuals: text can be obscene if it encourages drugs, or violence, for example, and the criminal penalties, including fines and imprisonment, can be severe (see Chapter 8). Consider also the risk of publishing ‘indecent’ material, particularly photographs of children. Blasphemy was abolished as an offence in the UK by the Criminal Justice and Immigration Act 2008 (although it may still exist in other key territories) but there are other possible offences such as seditious libels, incitement to hatred on the grounds of race, religion or sexual orientation, or offences under the Official Secrets Acts which may well pose a serious legal threat to a published work. All these topics are dealt with fully in Chapter 8.
That all statements are true and that no formula, recipe or instruction will harm the user
This is a fairly wide-ranging warranty, but is particularly common in contracts relating to STM and consumer books. The warranty is normally restricted to all statements ‘purporting to be facts’ but is still quite a wide guarantee; authors often insert a proviso ‘to the best of their knowledge and belief’. This may be acceptable in some circumstances: it still gives the publisher some reassurance that the author will at least have checked. Similarly, there is often a proviso that the warranty will only apply to recipes, formulae or instructions ‘if followed accurately’ (and perhaps also ‘reasonably’).
Indemnities
In most contracts, apart perhaps from those where a publisher commissions an author for what is known to be a high-risk venture, the warranties given are normally accompanied by an indemnity, under which the author undertakes to indemnify the publisher against any legal actions or claims, including associated costs and expenses, caused by breach of any of the warranties given (indeed, there is often a separate warranty that the book has not been and is not the subject of any claim, complaint or proceeding). Many contracts also provide for costs associated with claimed (as opposed to actual, or proved) breaches, which may equally involve significant costs and possibly out-of-court settlements. This may require some discussion between authors and publishers, since there may be cases where credible prima facie claims are made – but not proved – which the author may wish strenuously to resist but which the publisher (who has a publication to get out) will want to settle as quickly and cheaply as possible. It may also be a condition of some insurance policies – such as libel insurance – that the underwriter’s views on whether to settle should prevail. Authors may feel that their publishers should defend them – and their honour – to the hilt in such circumstances, but sooner or later more commercial considerations may well prevail. It is usually wise to make express provision for alterations to be made on the advice of the publisher’s legal advisers.
Finally, it is important that any warranties and indemnities should last for as long as the legal risks may continue to exist – which may be long after the book has gone out of print or the agreement itself has terminated. A sentence or a clause to the effect that ‘the warranties and indemnities shall survive the termination of this agreement’ will achieve this.
THE PUBLISHER’S RESPONSIBILITY TO PUBLISH
If the author’s main responsibility under the contract is to deliver the work, the publisher’s is to publish it (at the publisher’s expense). A legal commitment to publish may arise even out of an informal, verbal contract (see Malcolm v. OUP above) and a failure to publish may lead to an action for breach of contract. Most authors, for obvious reasons, will look for a written commitment before signing a publishing contract, although there may be circumstances in which author and publisher agree that the work will be delivered but not considered for publication until some later date – such agreements are probably not publishing agreements at all, but merely options.
Where a firm undertaking to publish is given, it is normal to include a proviso that this shall be unless prevented by circumstances beyond the publisher’s control. A contract for a tie-in publication linked to a specific event, such as a TV series or a royal wedding, might also have a proviso giving the publisher the option not to publish if the event is called off – the payment clause, including the terms of any advances, will need to provide for this. It is also advisable to specify whether publication depends on timely delivery and what happens if the author fails to deliver on time, or if what is delivered is not ‘acceptable’ under the terms of the contract (see above). Many contracts nowadays specify initial formats, such as hardback and paperback, unless otherwise agreed.
A crucial issue may be whether the publisher undertakes to publish within a particular time-scale, and if so when. Topicality may be a key issue not only for current affairs publications but also for many professional or scientific texts, where the area covered is constantly changing (the law is a good example). On the other hand, the publisher will want some reasonable flexibility to launch new works at optimum times, and also to allow for necessary changes to the publishing programme. Twelve or 18 months from delivery (and perhaps ‘acceptance’ – see above) are both common undertakings, sometimes with a maximum period running from the date of the contract. Phrases not linked to any specific timetable, such as ‘with reasonable promptitude’ or (worse) ‘within a reasonable period of acceptance’ are not generally of very much effect, and it may be advisable to include a provision for the author to put the publisher on notice to publish after the author considers a ‘reasonable period’ has elapsed and terminate the contract and reclaim the rights if publication does not then take place within, say, six to nine months.
PERMISSIONS, ILLUSTRATIONS AND INDEX
Most publishing contracts contain provisions covering the inclusion of necessary extra materials, such as quoted extracts or illustrations, which the author may have taken from elsewhere and copyright in which is likely to be owned by other people. It is absolutely essential to make sure that copyright permission to reproduce such material is obtained before publication, and preferably before the work is delivered (if a realistic amount of time for the necessary – and frequently delayed – correspondence has been allowed), otherwise there may be a serious risk of copyright infringement. It cannot be assumed that material available on the Internet is free for anyone to use, and even unpublished material (such as letters and diaries) is still protected by copyright until 2039 (see Chapter 2). Note, however, that defences such as fair dealing may sometimes be available for quoted extracts (see Chapter 3).
It is equally important to ensure that the permission given actually covers all the formats, territories and languages in which the publisher intends to exploit the work, particularly online – the wording of any permission obtained should therefore follow as closely as possible the wording of the author’s own grant of rights to the publisher (see above). With some copyright owners, this may require some negotiation, so allow plenty of time. If the permission offered falls short of what is required – a picture agency may only be prepared to grant rights to reproduce their image of a painting or a photograph in certain territories or language editions, for example, and there may also be a hire fee – then both author and publisher may need to reconsider whether that material can be used at all. It is not enough to write off to the copyright owners and then simply assume that permission will be given in due course: copyright owners are not obliged to license their material for use by others if they do not wish to. Bear in mind also that many permissions may extend only to one edition of the work, or even to a designated print quantity – if a reprint, new edition or e-book version is planned, it may be necessary to renew the permissions. Note, finally, that adapting a copyright work, e.g. re-drawing ‘after X’s picture’, is also likely to require permission.
Responsibility for arranging, and sometimes paying for, permissions is almost always the author’s, although this is entirely a matter for agreement, and in appropriate cases (such as major works, anthologies or highly illustrated works) the publisher may often share the cost up to an agreed amount or sometimes take over full responsibility for clearance and payment altogether. This may be particularly necessary if the publisher wants to acquire permission for digital use, or to clear broader permissions (e.g. to cover sub-licensed editions) where the negotiations may be harder (and more expensive).
What, however, do you do if, despite diligent search, you cannot find the copyright owner to grant the permission you need? The strict legal answer used to be that you could not use the material concerned at all (unless your use may be covered by an exception such as fair dealing, dealt with in Chapter 3), which was not exactly helpful. Under the Enterprise and Regulatory Reform Act 2013, however, it is now possible to obtain non-exclusive UK orphan works licences for seven-year terms from the UK Intellectual Property Office on evidence of diligent search, acknowledgment of the source, and payment of a licence fee (see Chapter 3). Additionally, non-commercial uses by certain non-profit cultural or educational organisations may now be permitted under a copyright exception introduced by the EU Orphan Works Directive 2012 (implemented in the UK under 2014 Regulations). For more on orphan works, see Chapter 3.
As to indexes, some authors prefer to do their own, but good indexing is a professional skill in itself, and a tired author is not always the best indexer. Where the index is particularly important to the success of the work (as for example with a major work of reference) the contract should provide expressly for the kind of index required, when it should be supplied and who should do the work (and – if an outside indexer is required – who should pay their fee).
PRODUCTION, PROMOTION AND PROOFS
All matters relating to physical production, promotion and sale of the work are normally reserved for the publisher’s sole discretion and control, although in many cases a publisher will be willing to consult authors on matters of taste or style such as illustrations or jacket design. If the contract includes specific author promotion commitments, often for a set number of days, expenses are normally met by the publisher. The key commercial issue of the price is usually for the publisher alone to decide, although the author may wish to be consulted on this as well as on the publication date itself, perhaps with a provision that the publisher’s decision shall be final or that consent will not unreasonably be withheld.
Editorial changes to the work itself (beyond ‘house-style’ amendments already agreed, or specified in the contract) may not normally be made without the author’s consent, particularly if they might amount to derogatory treatment and thus infringe the author’s moral right of integrity (see Chapter 4). Where individual authors do not have the final say over editing (e.g. as part of a multi-author team) it will be advisable for the publisher (or, more likely, the work’s editor) to make sure each author is credited appropriately (for more on these moral rights issues, see Chapter 4). Publishers will usually provide proofs, but will want an undertaking from the author that they will be returned within a reasonable time (14 or 21 days are typical) and, if not (if the author is away, or ill, for example), that the publishers may pass them for press themselves.
Alterations to proofs made by the author above an agreed level (usually 10 to 15 per cent of the cost of composition) are usually charged to the author or deducted from royalties.
ROYALTIES AND ADVANCES
As we have seen, unless a contract is made under seal, or executed as a Deed, it must be supported by valuable ‘consideration’ (see above). Although the publisher’s undertaking to publish may in some circumstances count as adequate consideration, the consideration most authors want to see is money. This may be in the form of a one-off fee but is more often expressed as a royalty on sales. This has the advantage for the publisher of minimising the upfront risk (if no sales are made, no royalties will be paid) and it has the potential advantage for the author of a direct financial link with any success the work might have: the better it sells, the greater the rewards the author will get (particularly if the royalty rate itself increases, via a sliding scale). There is often provision for a payment on account, in the form of an advance.
Needless to say, money can be a fertile source of author–publisher disputes (particularly where the contract is not as clear as it should be) but such commercial issues are matters for the parties to negotiate, in circumstances which may vary widely. From a purely legal point of view, there are perhaps only two golden rules:
• Be sure both sides fully understand all the terms being proposed (including the likely effect of discounts, and the meaning of phrases like ‘net receipts’).
• Be absolutely clear about what is finally agreed.
For good specialist commentaries see Clark’s Publishing Agreements or Lynette Owen’s Selling Rights. Issues which tend to crop up most frequently include the following:
Advances
Publishers are not legally obliged to give advances (unless they have contracted to do so, of course) but many do. Advances are normally regarded as payments on account of all future earnings (both from royalty and subsidiary rights income), and are recoupable from the author’s royalty account in due course; a large advance may therefore take some time to be earned back, before positive royalties start being paid – 50 per cent of the author’s anticipated royalty earnings from the publisher’s first printing is not untypical, although of course advances vary widely depending on the type of publication, the status of the author and the presence or absence of a literary agent. Advances are often paid in instalments, e.g. on contract signature, delivery of the work, or publication.
It is advisable to make it clear in the agreement whether outstanding advances already paid are to be repaid by the author if, for example, the work is never delivered (or is delivered but rejected) or, in some cases, as a prerequisite to reversion of rights.
The editions and sales avenues covered
Make sure all likely editions and routes to market are covered somewhere. The most common categories for volume sales are:
• ‘Home’ full-price hardback: the publisher’s own hardback. ‘Home’ may mean the UK and Ireland, or possibly now the EU and EEA (see Chapter 14). This is the ‘base royalty’ and is often calculated on a sliding scale.
• Home cheap hardback: a publisher’s hardback at two-thirds or less of the full price: usually with a lower royalty.
• Home trade paperback: the publisher’s own paperback: royalties are normally lower, but print-runs can be much higher. Again, sliding scales might apply.
• Home mass-market paperback: either issued by the publishers or licensed to a paperback house – smaller format, lower price, and even lower royalties – but even bigger print-runs. The author’s consent may be required for this kind of sale, perhaps not unreasonably to be withheld.
• Export editions: export versions of all four home categories above – usually based on net receipts, often sold at discounts of 60 per cent or more, and with correspondingly lower royalty rates.
• Small reprints: usually 1,000 to 1,500 or less (or 5,000 to 7,500 for paperbacks). Since small reprints are often uneconomic (especially for highly illustrated works), the publisher often reserves the right to offer a lower royalty – often the lowest of the above rates. In order to prevent regular small reprinting, some contracts provide that the publisher may only do this once in any 12-month period, and not less than two years after publication. However, modern print-on-demand technology is making small reprints less necessary or reasonable, and authors and publishers may often have issues about appropriate royalties for print-on-demand sales, and what relation the price should bear to the main editions.
• Promotional and premium sales: special editions, often under a different imprint, as part of someone else’s promotion or special offer: this could mean corn-flake packets, so the quantities may be high but royalties will be at low rates. The author may have strong views about this kind of sale: prior consent is advisable.
• Book club sales: normally regarded as ‘volume’ sales, although not usually in the publisher’s imprint. Discounts given to book clubs can be very high indeed, but they are generally felt to be a positive extension to the publisher’s own market. Authors may well have views about book club editions, and consent (or at least prior consultation) is often written into the contract.
• E-book sales: sales in e-book format are now dealt with under volume rights, involving delivery of the complete verbatim text directly (or via a website) to an individual purchaser in digital form, downloadable on to a PC or a handheld device such as an iPad or smartphone. It is wise for any contract to define what is or is not an e-book sale. They should be contrasted, for example, with e-versions (such as adaptations), which are usually not like for like reproductions. Royalties are under continuing discussion in the industry. For other digital exploitation, see subsidiary rights, below.
The basis of royalty calculation
It is essential to be clear in the contract how each given royalty percentage is calculated: are home hardback sales at 10 per cent (say) based on the UK published price, or are they 10 per cent of the net receipts (which normally means income actually received, or recommended retail price less any discount)? This can make a large difference to the sums the author will get if a significant proportion of the publisher’s sales are likely to be at high discounts. Export sales are often at 60 per cent to 70 per cent discounts: bear this in mind if, say, the US market is going to be important. Equally important: is Europe home or export? Home sales may often also be at comparatively high discounts, if via major chains of bookshops: 50 per cent to 60 per cent is not unusual. Mail-order sales are sometimes at discount, but often at a heavily reduced retail price.
Both publisher and author need to be clear about the likely markets and the probable basis of sales to each; it is infinitely better to sit down and talk about it, and eliminate any misunderstanding, at the outset, rather than wait for unpleasant surprises in the first royalty statement.
Free copies
Royalties are not usually paid on copies given away in the interests of promoting the work (such as review copies), or lost or damaged copies. It may be necessary to seek author consent for copies sold at cost or less in the first year, and copyright owners often ask for a voucher copy.
What are they?
Non-volume rights, such as TV or merchandising rights, are usually grouped together in a publishing contract under the generic heading of ‘subsidiary rights’. A typical full list is given below. The division is not very precise, and many of the rights (such as electronic and digital rights) may appear confusingly under both volume and subsidiary rights: perhaps the most useful distinction to keep in mind is that, generally speaking:
• Volume rights license the publisher’s own publishing (usually in return for royalties).
• Subsidiary rights give the publisher the right to sub-license exploitation by others (for a share of proceeds).
So in the case of digital rights, the publisher might want both: the right to sell its own e-book or online versions, and also the right to license digital use by others, for example as part of a database, or to be accessed as part of search engines such as Amazon and Google. In all such cases, express author consent is very likely to be needed.
The grant of rights
As with the main grant of rights clause (see above), the first and most important thing to check in a subsidiary rights clause is: does it actually grant the rights required? This may be crucial, because the main grant of rights clause may cover volume rights only, and may make no mention of subsidiary rights – so unless the particular rights the publisher wants are separately granted here, the publisher may not get them. The actual words ‘the Author hereby grants’ (the rights concerned) should ideally appear, preferably shortly followed by ‘to the Publisher’. Simply listing some subsidiary rights, with some agreed percentages, may not be enough (although a limited grant of rights may be implied).
Ensure that the rights are granted in the correct terms – so that they cover the required formats, territories, languages (where appropriate) and period of time, and (crucially) that they are expressly stated to be ‘exclusive’ if that is what author and publisher want. A grant of rights will be regarded as non-exclusive unless it is expressly stated to be exclusive (and signed by the author).
Authors’ consent
Some grants of subsidiary rights may be conditional upon the publisher first securing the author’s consent before exploitation can take place, or at least consulting him or her; this may apply to the whole list of rights, or be a specific requirement of certain rights only – digital rights, digest and condensation rights are frequent examples. To get round the publisher’s need to do some deals quickly in the author’s absence, some contracts require consent only ‘wherever practicable’; in other cases, where the author is available but they can’t agree, there may be a provision that the author’s consent ‘shall not unreasonably be withheld’. Ultimately, it is a question of bargaining position, and who wants to retain effective control – and who is best qualified to use it, particularly where the whole or majority of the text is involved. Author consent is not normally required for low-income exploitation, such as anthology and quotation use, or use by print-impaired people (see later).
Waivers of moral rights
Contracts now often include a conditional waiver of the author’s moral right of integrity (or an agreement to waive it in the future), insofar as it may be required in order to exploit certain key subsidiary rights. Film and TV deals often require this flexibility. On moral rights generally, see Chapter 4.
The list of rights
Subsidiary rights most frequently dealt with include the following:
• First serial rights: the right to publish an extract or series of extracts in a newspaper or magazine on or before (or commencing on or before) publication of the book itself – despite falling newspaper revenues these can still be extremely valuable, both to sales of the work and to the circulations of the periodicals concerned, and are often optioned. If a newspaper wishes to offer access to the work via its website the terms – and timing – for this should be specifically agreed.
• Second and subsequent serial rights: serial rights exercised after publication of the book has taken place – these are normally less valuable (whenever the licence was signed).
• Anthology and quotation rights: some quotations may count as fair dealing for the purposes of quotation for criticism and review, if accompanied by sufficient acknowledgement, and copyright permission need not therefore be sought (see Chapter 3) – these rights cover all other substantial quotations and extracts.
• Digest rights/digest book condensation rights: these are, respectively, the right to publish an abridgement of the work in a single issue of a newspaper or periodical, and the right to publish an abridgement in separate volume form, although the key player, Reader’s Digest, has now ceased to publish condensed books in the UK. They are sometimes grouped together under ‘condensation rights’, for both magazines and books.
• One-shot periodical rights: the right to publish the complete work in a single issue of a newspaper or periodical. These are also now regarded as part of volume rights, following Jonathan Cape Ltd v. Consolidated Press Ltd (1954).
• Licensed paperback rights: for paperback editions sub-licensed to another publisher.
• Hardcover and educational reprint rights: the rights to publish straight hardback reprints (in someone else’s library series, for example) and educational reprints, usually annotated.
• Book club rights: for dealings with book clubs, see Chapter 6, although the book club market has almost disappeared with the ability of bookshops, supermarkets and online retailers to offer large discounts.
• US rights: the USA may be a major market: these rights may be sold directly or via a sister company or an agent. They will usually take the form of a straightforward licence enabling the US publisher to manufacture their own edition, usually paying an advance and a royalty on the local US price to the UK publisher, or will accompany a sale of bound stock or sheets (or a co-edition) and be dealt with under volume rights (see above,, and Chapter 6), It may be advisable to clarify what percentage of net receipts the author will receive. Permissions may need to be re-cleared for US editions.
• Strip cartoon rights (also known as picturisation rights): the right to make such visual adaptations may be highly valuable, particularly for children’s books and for Manga adaptations (graphic novels).
• Translation rights: these may be licensed on the basis that the foreign language licensees manufacture their own editions, usually paying an advance and royalty which will be shared with the author. In some cases, payment may be in the form of a lump sum for an agreed print quantity. Alternatively, the UK publisher may undertake a co-edition and print bound copies in the foreign language concerned on a royalty-inclusive or exclusive basis: this type of licence can be beneficial for books heavily illustrated in colour as costs are spread over a larger combined print run. In either case, the foreign publisher will be responsible for arranging a translation of a satisfactory standard, and will normally pay an advance and a royalty (see Chapter 6). Note that the territories covered should be made clear: a Portuguese translation may sell more copies in Brazil than in Portugal.
• Dramatisation and documentary rights: usually cover theatrical, radio and TV rights to the work in dramatised form.
• Single-voice readings: the right to read extracts directly from the work, either on radio or TV or as part of other public performances. A Book at Bedtime is a good example. These rights may need to be cleared separately with the author.
• Film rights: if Hollywood is likely to be interested, it is important to ensure that these rights are effectively exploited, including DVD and film-for-Internet as well as cinema or TV versions. If the publisher is not best placed to do this, the author or agent may wish to reserve these rights themselves (for exploitation of film rights, see Chapter 6).
• Audio and video rights: audio rights have migrated away from cassettes to CDs and now to digital downloads such as Amazon’s Audible, and there is increasing demand for e-books with full-blown audio (not just text to speech). Often spoken by famous actors, audiobooks may be abridged or unabridged. Video rights were often dealt with separately from the film rights, but nowadays also more often refer to licensed downloads. Given the speed with which formats are replaced nowadays, such clauses now usually extend the right not only to formats known at the time but also to ‘those hereafter invented’.
• Merchandising rights: the right to exploit titles or characters from a successful work can be as profitable, if not more profitable, than the work itself. It is therefore worth making sure that these rights are included if required, particularly for children’s books, although agents may often prefer to withhold these. They may be a crucial component of TV or film deals; indeed, merchandising rights achieved some kind of apotheosis in the first film of Jurassic Park when the T-shirts and other merchandise actually featured in the film itself. Exploitation via apps and computer gaming may also be important. On the exploitation of merchandising rights, see Chapter 6. Titles, logos and characters with merchandising potential should also normally be registered as registered trade marks (see Chapter 11).
• Electronic and digital rights: it is important to distinguish between the publisher’s own digital exploitation of the work (for example, as an e-book) and other, sub-licensed, exploitation (such as an e-version). Older contracts may not make this distinction, and may group ‘electronic rights’ together (although that phrase has little meaning today). Until recently, the publisher’s own e-book exploitation of the verbatim text of the complete work might have been dealt with under volume rights (on this, see the section on ‘Formats’, above), while digital exploitation, use or access sublicensed to others such as via an online database, aggregator or search engine, or access via a site licence might fall under subsidiary rights (although arrangements with library aggregators such as Proquest are more likely to be treated as sales). Online preview rights (to allow access to snippets via search engines) may also need consideration. It is likely now that in both cases author consent will be highly desirable, and possibly essential. At the time of writing, there have been few (if any) UK cases on this issue, although two salutary US cases are noted in the section on Formats, above.
Exploitation and uses which may need to be considered separately are set out in Chapter 6. Whatever form of digital use or access is required, or envisaged, it cannot be stressed too strongly that there is no substitute for a clear grant of specific rights each time. The author’s, or agent’s, consent is likely to be required (or at least be strongly advisable) for some forms of exploitation, particularly digital, and care should be taken to ensure that the author’s moral rights are not infringed. Some digital rights may only be available for limited terms, or may require renegotiation after, say, three years. Financial terms currently vary widely.
• Reprographic reproduction rights: photocopying is still a fertile source of copyright infringement in the UK, but collective licensing schemes run by bodies such as the Copyright Licensing Agency are increasingly including digital rights. Collective licensing is dealt with more fully in Chapter 3.
• Non-commercial rights for print-impaired people: Braille, or digital ‘accessible’ copies for the Royal National Institute for the Blind and other registered blind users have usually been licensed free of charge by the publisher. Under 2014 Disability Regulations the previous (2002) exception for visually impaired people – and organisations such as the RNIB acting for them – was extended to all disabled people with relevant disabilities (including, for example, dyslexics), so in some cases licences may no longer be required. For more on this, see Chapter 3.
All other rights are reserved
Any rights not expressly set out in the agreement are normally taken to be retained by the author: there is often an express provision making this clear. This used to include public lending right, which under the Public Lending Right Act 1979 is given solely to the author (on PLR generally, see Chapter 4). Under the Digital Economy Act 2010 PLR was extended to audio and e-book versions downloaded on library premises. This specifically excluded remote e-lending off-site, although a pilot project into the viability of e-lending reported in 2015 (see Chapter 4).
SALES STATEMENTS, ACCOUNTING AND VAT
Publishers’ royalty statements have been the subject of grim humour for as long as anyone can remember, but most publishers now have computerised royalty systems to keep track of royalties and other rights revenue, and many now pay their authors twice a year rather than the traditional annual payment. Some educational and academic publishers still tend to pay annually, however, as do some professional imprints, although most large houses now pay twice a year. Payment – when it comes – should normally be no longer than three months after the relevant accounting date (usually 30 June and/or 31 December).
Small credits, say £50 or less, are often carried over to the next accounting period, although this may not be necessary where the author is paid via electronic transfer. It is also common for the publisher to keep a reserve against returns on the first account – stock apparently sold to bookshops, but then returned under normal sale or return terms later on. The publisher normally then evens out the account on the third or fourth account. Ten per cent to 25 per cent for hardbacks and 15 per cent for audio is not unusual, and some reserves (usually for paperbacks) can be as high as 30 per cent, but returns are lower in children’s publishing. However, there is often provision, particularly in agents’ contracts, that any significant subsidiary rights revenue should be paid out as agreed to the author within 30 days of receipt, provided any advance has been earned back. This may be subject to a minimum, such as £200, and may be dependent on request.
Royalty statements themselves should be as clear and informative (and accurate) as possible: avoid (hopefully, ironic) contracts that say ‘The Publisher will make up statements of sales’. With the best will in the world, however, computer errors can still occur (as anyone who has a bank account will know) so most contracts provide that the author – or his or her appointed representative – may examine the publisher’s accounts in person during normal business hours. Who bears the costs of this normally depends on whether, and to what extent, errors are actually found. Five per cent is normally the maximum error allowable.
Authors who are registered for VAT will be required to notify the publishers and supply them with their VAT number: by agreement with HM Revenue and Customs (which collects VAT), royalty statements can be treated as the author’s tax invoices and VAT is added in the normal way.
There is sometimes provision for interest to be payable to the author on late payment by the publisher – it is worth bearing in mind now that interest (currently at 8 per cent) may sometimes be claimed under the Late Payment of Commercial Debts (Interest) Act 1998, and may apply from the day after the agreed payment date, or the date of the contract. However, this applies only to a ‘contract for the supply of goods and services’ under which the parties are acting ‘in the course of business’, either as a ‘purchaser’ or a ‘supplier’, so while it is not impossible that this may apply to some author/publisher contracts it may be more applicable in practice to commercial publishing deals.
COPYRIGHT
Where the author assigns the full copyright to the publisher, this should be set out in clear wording under the main grant of rights clause (see above). But even where the author retains the copyright, this should still be made clear here, and some special words are still advisable. As we have seen (above) the Berne Convention forbids formal registration requirements of any kind, but it is still advisable for copyright protection under the Universal Copyright Convention (UCC) that a copyright claim should be printed on all copies (or included in all versions) of the work, and all licensed editions, containing the following information:
• The letter C in a circle (©) now a worldwide copyright symbol;
• The name of the copyright owner;
• The year of first publication.
There is no stipulation in the UCC that the information should be printed in any particular order but it is customary to print it thus:
© Hugh Jones and Christopher Benson 2016
The word ‘copyright’ is sometimes also printed before the ©, although this is not strictly necessary.
UK works have carried the UCC symbol for many years, because prior to its joining the Berne Convention in 1989 the USA belonged to the UCC but not Berne: the printed notice above was therefore essential to secure copyright protection in the USA. Since 1989 this has no longer been necessary for US protection, but there are still some countries which belong only to the UCC, and UK works should therefore keep the notice. It is also convenient to combine it with any assertion of the author’s moral right of paternity (see Chapter 4) and a contractual undertaking to print such an assertion is now common. For the fullest protection of the right of paternity it is also advisable to include a term to the effect that such assertions will also be a condition of any sub-licences, together with the copyright notice itself.
COPYRIGHT INFRINGEMENT
We will deal with this more fully in Chapter 10; suffice it to say here that the publisher will necessarily bear the burden of protecting the work, once published, against pirates and other copyright infringers around the world, and where the author retains the copyright the publisher will therefore need clear authority from the author, as copyright owner, to do so. Exclusive licensees under the 1988 Act have the right to take legal action and join the copyright owner as a party to any action in the UK (on giving an indemnity against costs), but it is still advisable to confirm this in the contract. It also gives the author and publisher the opportunity to agree on the practical control of any such legal action (including the terms of any compromise or settlement), whether the author is required in any way to contribute to the costs and, if so, whether the author will receive a corresponding share of any net damages.
Most publishers will give authors at least six personal copies of their works, plus one or two copies of each sub-licensed edition (such as translations or US editions). Different arrangements may apply for audio and e-books. Some are more generous than others; it is usually a question of publishing economics. Additional copies, not for resale, are usually available at a discount (but like any trade customer, the author may need to haggle over these). Agents may also require copies.
REVISION OF THE WORK
With some kinds of works, such as educational, academic, professional and reference texts, keeping the work up to date once published is almost as important as publishing it in the first place. In such cases author contracts will usually contain a clause requiring the author to prepare new editions when they become necessary. Some works may also require one-off updates, for example on publication of a paperback edition of an autobiography, in which specific agreement will need to be reached on this. It may be appropriate to provide for a fresh advance to be agreed at that time or indeed to draw up a completely new contract for the new edition. It is prudent also to give the publisher the option of commissioning some other (competent) person to do the work of updating, should the author be unwilling or unable to do so (for example, through illness or death). The fees payable to such persons will then be deducted from the royalties payable to the author, or the author’s estate – quite reasonably. It may be worth considering alternative revisers, if time – and cost – allow. The question of whether the original author’s name may continue to be used on the book – often very important in textbooks known by the author’s name – should be covered in the contract, perhaps with a small ongoing royalty to the original author or estate.
Who decides when new editions are required? This may be an important issue, and it is worth checking the wording of the contract to see what it says. Often the decision is for the publisher alone to make, or sometimes dependent upon mutual agreement – the author is unlikely to be in a position to insist. This perhaps is fair enough (it would be unreasonable to force a publisher to publish against its will and arguably unenforceable anyway), but if more regular new editions (or a more flexible system) are likely to be needed this should be agreed at the outset.
REMAINDERS
Remaindering is a sensitive issue, but most publishers know when a book has ceased to have any further sales potential and may want the power to remainder their remaining stock. Some agents’ contracts forbid this within a specified period without the author’s prior written consent: where this is not practicable it may be equally effective to ensure that, while the publisher retains the option to remainder, the author will at least have (say) 30 days’ notice, and the right to purchase part or all of the remaining stock at the expected remainder price (which will probably be fairly low, as will any royalty). Advance notice is increasingly important given the speed with which remainder stock can nowadays appear on sites such as Amazon. Publishers should bear in mind that such a clause is fully enforceable, like any other clause of the contract, so if they fail to notify the author and remainder the book regardless they may face an action for damages for breach of contract. This was confirmed in one case, where a lecturer won damages against Cassell for breach of such a clause, on the grounds that she had been deprived of the (very real) chance to sell the books cheaply herself to her own students.
TERMINATION OF THE CONTRACT, AND REVERSION OF RIGHTS
Just as it is essential that rights granted should be granted for a specific period of time, so it is equally important that any grounds for early termination should be clearly set out. In the early clauses governing delivery and acceptance (see above) the publisher is normally given grounds for termination of the contract if the work does not come in at all, or is unacceptable when it does – it is therefore in the author’s interests to have similar grounds for termination if the publisher breaches any terms of the contract later on – for example, by not paying royalties on time, or allowing the work to go out of print or cease to be available.
All rights granted should revert to the author. However, termination of the head contract, and reversion of rights, are usually without prejudice to any sub-licences or other contracts properly entered into while the agreement was in force, or any outstanding claims or monies owing. It may seem reasonable for the publisher to continue to benefit from remaining sub-licensing income where termination results from the work ceasing to be available, but less so where termination results from breach of key terms such as royalty payment.
The most common grounds for termination and reversion are:
• Material breach by the publishers of any terms of the contract (such as failure to publish or pay royalties), and failure to remedy the breach within a specified period (one to three months is normal).
• Insolvency of the publisher’s business (or a substantial part of it) – including administration, receivership, winding-up and (in some cases) arrangements with creditors.
• Failure by the publishers to keep the work from going out of print (and failure to reprint after a given period of notice). It is important to agree what ‘out of print’ means – does this refer only to the publisher’s hard copy edition? With e-books and print-on-demand technology, works may effectively be available and ‘in print’ for ever. For some specialist, slow-moving works this may suit both parties well; in other cases it may be advisable to consider termination and reversion of rights when sales fall below a certain level (for, say, two successive years) or when works available digitally cease to be available to the public.
There is a school of thought that no option clause is enforceable. This is not strictly true – but a future option for no fixed consideration (‘on terms to be agreed’, for example) may be difficult to enforce. Generally speaking, the more specific the option, the easier it will be to enforce legally. A sweeping option over the author’s next six works may be extremely difficult to enforce, and may well be in restraint of trade if it unduly restricts the author’s future writing (see above), but an option on the next one or two defined works (of fiction, say, or for children) and on specified terms (such as ‘the same terms’, or ‘terms no less favourable’) may well be enforceable and bind the author.
It makes sense to provide a clear timetable for the publishers to exercise the option, and provide for the author’s freedom to go elsewhere if they do not (or if they cannot agree terms).
MORAL RIGHTS
This may be a suitable place to include an assertion of the author’s moral right of paternity, as required under section 78 of the 1988 Act. The paternity right – the right to be credited as the author – is the only moral right which (at present) needs to be asserted (in writing) under UK law before it can be enforced (although there have been proposals to abolish this formality): on this generally, see Chapter 4. The author’s right of integrity – to prevent derogatory treatment – must also be borne in mind when arranging abridgments or adaptations, and prior consent may be advisable, in the absence of a waiver.
AGENCY
Where an author is represented by a literary agent, the agent’s standard contract will usually contain a clause authorising the agent to receive all monies payable under the contract on behalf of the author. Even if an agent’s contract is not used (under which the agent will either be a party or expressly entitled to payments) it is still possible for agents to benefit under author–publisher contracts, following the Contracts (Rights of Third Parties) Act 1999. Since authors and agents do occasionally fall out, any contract should also specifically provide that payment to the agent would be a good and valid discharge of the debt – so that the publisher, having paid royalties to the agent in good faith, will not then get embroiled in arguments about payment of the agent’s commission later on. It is not generally necessary or advisable to sign an irrevocable appointment or authorisation: if an author wishes to revoke that particular payment arrangement, and be paid direct, he or she should be perfectly entitled to do so. There may then be a separate contractual dispute between author and agent about the agent’s commission, but there is no reason why the publisher should become involved in that. There is a long-standing trade practice among literary agents that an agent will expect commission on all monies payable to the author under contracts which that agent negotiated – even long after the agent’s appointment has been terminated. Such matters are entirely dependent on the author’s contract with the agent: see Chapter 6.
Although this is implied, it is advisable to make it clear that no rights or licences or other interests are granted to the publisher other than those specifically set out and granted in the contract. A provision to this effect is often usefully included at the end of subsidiary rights clauses.
ASSIGNMENT OR NON-ASSIGNMENT
Many agents’ contracts contain non-assignment clauses, which forbid any assignment of the benefit and burden of the contract to any third party without the author’s consent: sometimes the objection is waived in the case of third parties who are at the same time acquiring the whole or a substantial part of the publisher’s business. Non-assignment clauses may seriously restrict the future value of the rights granted and the publisher’s capacity to deal with them commercially, and should be carefully considered. The (significant) implications are discussed above.
ARBITRATION OR DISPUTE RESOLUTION
Many publishing contracts contain provisions for arbitration or dispute resolution in the event of any disputes. It is important to recognise that because such provisions are deemed to be distinct and separate from the main contract (even if they are contained in a clause embedded in the contract), generally such clauses will survive the termination of the contract. Therefore, both author and publisher will continue to be bound by an arbitration clause, even after the contract itself has come to an end. If one party unilaterally terminates the contract, the other party may (equally unilaterally) invoke the arbitration clause. Both parties should therefore consider how they would actually want any disputes to be resolved before agreeing to such a clause.
The Arbitration Act 1996 has consolidated the previous legislation (Acts of 1950 and 1979) and applies to all arbitration proceedings commenced after 31 January 1997. References to arbitration are of two kinds: conventional (where the parties agree to refer any dispute to a mutually agreeable tribunal and not to a court) and statutory (where the Act lays down default provisions where the parties have not decided on the mechanics of the arbitration procedure). The Act encourages the former approach and generally will not interfere where the parties make their own arrangements by written agreement.
There are a number of arbitration methods. In some cases each party will appoint their own arbitrator, and agree to be bound by the decision of those two people, or (if they cannot agree either) a third arbitrator who they appoint (called their ‘referee’ or ‘umpire’). Where the dispute can be reduced to written submissions, without any (or much) need for oral hearings, such arbitrations can be relatively quick and inexpensive. A full-scale arbitration including hearings with lawyers on both sides, can however be just as expensive as a High Court action – indeed, more so, since the parties will have to pay for the arbitrators whereas judges are free. Following the civil justice reforms under Lord Woolf, even High Court actions are now expedited so that there is more pressure on the parties to settle (and there may be costs penalties if they do not), and small claims in the County Court can be relatively straightforward.
The Publishers Association, with the support of the Society of Authors, offers a confidential informal disputes settlement procedure, which can be quick and inexpensive, except in very complex cases, but this scheme depends on both parties agreeing a joint referral (or independent referrals) – for reasons of practicality and natural justice it cannot be triggered by a reference from one party alone. There is as yet no industry-wide arbitration scheme for publishing as a whole. The Publishers Association’s scheme is specifically not an arbitration under the Arbitration Act, and does not exclude later arbitration, mediation or litigation if necessary.
GOVERNING LAW AND JURISDICTION
It is essential to make it clear which country’s laws will govern the interpretation and enforcement of the contract. For most UK publishing contracts it will be advisable for this to be English law: note that Scots law is a separate legal system and may require separate advice.
Bear in mind that a contract offered by a foreign publisher to a UK publisher is likely to specify their law as the applicable law – in the case of a US co-edition, for example, this may mean that the relevant state law (such as Delaware, or New York) will govern the contract, and any disputes arising under it.
If no applicable law is specified in the contract itself, the ‘Rome 1 Regulation’ 2008 provides that the applicable law would be the country where, for example, the service provider or seller of goods is habitually resident. For companies, ‘habitual residence’ is taken to be the place where the company is centrally administered. If the contract is for a UK-based publisher to (say) supply sheet stock to New York, UK law will prevail. In the context of a publishing contract, the service provider is likely to be the publisher, so the applicable law is likely to be the law of the country in which the publisher is centrally published. If the applicable law cannot be established via this rule then the principle of ‘closest connection’ applies, and the courts are given discretion when deciding on a practical basis which country is most closely connected to the contract.
It is important to note that whose law applies is a different issue from whose courts have jurisdiction to hear the case. UK courts regularly hear cases involving issues of New York or other foreign laws. A good contract should always therefore provide for whose courts will have jurisdiction; in most cases, preferably UK (or English) courts.
In the absence of any express provision, there are complex rules governing the right of UK courts to assume jurisdiction over a dispute. These vary, depending among other things on whether the defendant is based inside or outside the EU.
The Brussels Convention on Jurisdiction (which was not binding Community law) was replaced in December 2000 with a binding EU Regulation on Jurisdiction, Recognition and Enforcement (‘the Brussels 1 Regulation’) to ensure that rules of jurisdiction and enforcement of judgments are dealt with consistently in the EU. The Regulation broadly confirmed the ‘country of origin’ principle embodied in the E-Commerce Directive that persons (including companies) domiciled in member states must be sued in their own courts. However, this was subject to certain exceptions. For example, in contracts for the sale of goods or delivery of services (including website services), consumers (or others) could sue in the courts of the place of performance of the contract. This would usually be in their home courts in a sale of goods case (place of performance is deemed to be where the goods were or should have been delivered). The same will probably apply in a provision of services case (place of performance is deemed to be where the services were or should have been provided).
For more on this highly complex question, see Chapter 12.
STAMP DUTY
Until the Chancellor’s Budget of March 2000, intellectual property rights were considered to be types of ‘property’ for stamp duty purposes and therefore transfers attracted stamp duty. From 28 March 2000, transactions in intellectual property are exempted from stamp duty, in order to foster an environment in which innovation and invention are encouraged. The exemption applies to transfers and licences of patents, trade marks, registered designs and copyrights.
Note that where property sold under a transfer instrument for more than £125,000 (at the time of writing) consists partly of intellectual property (IP) and partly of other property chargeable to duty, an apportionment of the sale price will be made to determine the amount chargeable to duty. If the value of the transaction (involving both IP and non-IP transfers) is below £125,000, it is necessary to include at the end of the contract a clause in approved form saying so.