| Other contracts | 6 |
ACADEMIC/PROFESSIONAL/STM AUTHORS
CONTRACTS FOR SPECIALISTS
Some trade authors write for a living; specialist authors more often earn their living primarily doing other things, but can sometimes be encouraged to write on topics connected with their work or their research. They are often experts in their fields, with established (often international) reputations, and their names as authors, or as members of an editorial team, will sell all kinds of publications and services to what are often highly profitable specialist markets. The works they create tend to have distinctive features, and these need to be reflected in the publishing contracts which they sign. We will highlight these features in this section: bear in mind, however, that most of the general legal principles set out in Chapter 5 will still apply as well.
For convenience, we will use the abbreviation ‘specialist works’ throughout this section to refer to all academic, professional or STM works, and we will call their authors ‘specialist authors’.
PUBLISHING IN A DIGITAL AGE
Like society itself, publishing as a whole is increasingly digital, via Internet platforms such as smartphones, iPads and mobile phone apps. Although e-book publishing in the UK was initially slow to develop commercially, sales of specialist publications such as STM journals, however, have been primarily digital and online for many years. This has important implications for contracts for specialist authors, where conditions for making content available online, authorised users and access restrictions, often assume greater importance. It also often involves licensing aggregators and other intermediaries to distribute content and make it available on the publisher’s behalf, which involves new contractual relationships and licensing terms.
COPYRIGHT: TEAMS AND INSTITUTIONS
Specialist works are often highly detailed and complex, and may require contributions from several different authors: indeed, a major work may need hundreds of contributors all over the world and an international editorial board. More straightforwardly, two colleagues may co-author a text, or co-host a website, or jointly write up some research. At both ends of the scale, it is equally important:
• to ensure that all those involved in the project are under contract;
• to be clear who is doing what;
• to agree who owns the copyright (and other rights) in all the work(s) which result;
• to make sure that the publishing activities envisaged are fully licensed by all those owners.
To make absolutely sure, a publisher investing in a major project may wish to seek a full assignment of copyright from all the contributors involved (including editors): such assignments will give the publisher complete control of the material, but they must be in writing and signed by or on behalf of each contributor (see Chapter 5). The contributors may in most cases be allowed to re-use their material elsewhere, such as within a university intranet, or on their own websites or for professional lecturing purposes, but it is advisable to confirm the details of this. In other cases a sole and exclusive publishing licence may be sufficient (provided it is wide enough to cover all forms of exploitation envisaged, including making available and online access), but it is still essential to make sure that all the relevant copyrights and other rights are covered by the licence(s) given, so that no rights will be infringed.
Copyright
Depending on the publication, a number of different copyright works might be created, including a range of literary, artistic and other works: for the full list, see Chapter 2. As well as the obvious ones, such as text and illustrations, do not forget copyright in any overall compilation or database, and also – if it is available in digital form – copyright in any computer software. All these copyrights will probably be owned by the people who created the works, but with specialist writing or research teams there may be joint authors to consider – in which case, if there is a risk they might fall out, it may be advisable to legislate for this in the contract since, as joint authors, neither will have the right to publish (or license) the work without the consent of the other. Also, it may well be that some employee authors will have created the works in the course of their employment, in which case their employer (which may be their university or company) might own copyright in the works they create, not them (see Chapter 2). They might also have been persuaded to assign their copyright to the institution or company concerned, and some institutions such as universities are increasingly requiring this.
Other rights
Many collective works nowadays might amount to a database (for the conditions, see Chapter 4). Assuming – as is likely – that the publisher, or other ‘maker’, of the database has made a ‘substantial investment in obtaining, verifying or presenting the contents of the database’, that person will be entitled to a statutory database right to prevent unauthorised extraction or re-utilisation. It is highly advisable to make it clear in each case whether the right is to be owned by the publisher, or any other ‘maker’ of the database concerned. The right lasts for 15 years, but is renewable thereafter. For more on this see Chapter 4.
With collaborative works, there may also be issues of confidentiality to consider – if draft research findings (say) are circulated confidentially, it may be a breach of a duty of confidence to publish them without consent (see Chapter 9). Such a duty might be owed to a fellow researcher, or to an institute or other employer.
Also, for material created after 1 August 1989, do not overlook authors’ moral rights, which are likely to be more than usually significant for specialist writing, where academic or professional reputations are at stake. Moral rights may not apply to certain ‘collective works’ such as dictionaries and encyclopaedias (see Chapter 4) but if they do there will be at least three moral rights to consider:
• the right for each author to be identified
• their right to object to derogatory treatment of their work
• the right to prevent false attribution.
(For moral rights generally, see Chapter 4). These rights may not apply to any acts done with the author’s (or in some cases, the copyright owner’s) consent, and will also not apply where the rights have been waived. For smaller contributions or for major works, complete waivers may be appropriate; for others, it may be necessary to rely on partial waivers or contractual consents.
WARRANTIES
For specialist works, warranties may need to be revised to take account of joint authorship, or limiting to the author’s particular contributions to the work, rather than applying to the work as a whole – clearly, a specialist author cannot be expected to make warranties about other people’s work. However, the personal warranty against plagiarism which amounts to copyright infringement may be particularly important in an academic work, and the warranty against libel may prove useful to protect the publisher against academic vendettas carried on in the footnotes. This is particularly true if the work is going to be made available worldwide online. The usual warranty against previous publication is particularly important in an online world, given the damage to normal sales and exploitation that can be done by undeclared prior publication or making available of the work (or a version of it) via the Internet or even a restricted intranet – such things should always be declared at the outset, so that whatever commercial market is left can be assessed properly. This includes any requirement by academic institutions that material produced by their staff – which could include research reports, articles or data sets – should be available on Open Access terms, often in designated repositories.
The warranties should ideally also include negligent mis-statement (although negligence will be hard to prove – see Chapter 8) and should cover statements of fact, and the reliability and safety of formulae or instructions. It may also be advisable to require the author to provide for safety warnings, to put users on notice of any hazards arising out of dangerous experiments or procedures, and refer to any appropriate safety precautions or standards or codes of practice.
Some specialist authors may only feel able to warrant that statements of fact are true ‘to the best of their knowledge’ – the publisher may be willing to accept this risk, particularly if adequate insurance is in place. On warranties generally, see Chapter 5.
QUOTATIONS, ILLUSTRATIONS AND PERMISSIONS
These are likely to be important in all specialist works, particularly source books or anthologies. Some textual quotations may freely be used, for example if they count as fair dealing for the purposes of quotation for criticism or review (see Chapter 3), but otherwise permission to reproduce all quoted extracts and illustrations must be obtained from the copyright owners. Most publishers will place responsibility for this – including, where appropriate, paying any permissions fees – on the author, but for a major project where permissions are likely to be a significant item, many publishers may be willing (in fact, may prefer) to undertake clearance work themselves, and cover costs up to an agreed amount. If the author is required to clear permissions, they will need a detailed brief on the range of rights needed (including languages, formats and territories, and any rights to sub-license).
Where the author is responsible for permissions, it may be advisable to specify an agreed financial limit. It is also advisable for the publisher to have copies of any permissions correspondence, for future reference. Where the rights owner cannot be found in order to grant permission, even after diligent search, seven-year non-exclusive licences to use such ‘orphan works’ for commercial purposes are now available under 2014 UK legislation (for more on this, see Chapter 3).
CORRECTIONS
In specialist works, last-minute corrections may be essential to take account of recent research or knowledge, or legal or technical changes. The work may be unsaleable without them, if it becomes dangerously unreliable or out of date. It is advisable for the publisher to be alerted well in advance if there is a risk of significant corrections. It is also important to agree who will pay for them; otherwise, the authors may find themselves paying substantial sums for dealing with changes which the book needs, but which were totally outside their control.
ROYALTIES AND FEES
One-off fees may be more appropriate for a multi-author work, or where the copyright is assigned: many specialist authors are happy to write for money upfront (or at least on delivery and acceptance), especially where there is some academic or professional kudos involved as well. The timing of the fee payment may be crucial – most contributors will prefer to be paid when they have delivered their own work, and not wait until the last (and slowest) contribution comes in, still less until publication. Advance payments may get round this problem. There should also be provision for fee payments and reversion of rights if for some reason the project collapses and the work is never published.
Consider, also, any reprints or further exploitation of the work, including digital exploitation and whether further fees or royalties may be appropriate then, if the contribution is a significant proportion of the whole work (or the part of it to be exploited). If the material later proves suitable for digital exploitation, such as inclusion in an online database, or for website or search engine access or local site licensing, the contract will need to allow room for a suitable new payment structure for such use in due course, including aggregator or subscription services. Ideally, this should allow for exploitation by the publishers themselves, as well as any exploitation or access sub-licensed to others.
Another factor to consider in contracts for specialist works is the need to phase out royalty payments in a realistic manner where an original author or editor retires or dies. In order to keep the work up to date, and maintain its reputation against rivals, it will be necessary for co-authors to take over, or for new editors to be brought in, and to be paid at realistic rates. As they prune old text and contribute new original material of their own, each edition or update for which they are responsible will contain a smaller and smaller proportion of the original author’s copyright material, so it is reasonable that the royalty rates payable to the author or author’s estate should decline also. Many specialist contracts now provide for the original author’s royalties to continue for one, or perhaps two, further editions but then to cease; an alternative method is to agree a gradually declining percentage, perhaps over a longer period. Where use of the initial author’s name remains valuable (such as Grove’s Dictionary of Music, or Wisden), it may be justifiable to pay a continuing share of the royalty to the author or the author’s estate.
REVISIONS
A publisher who has taken full assignments of copyright will normally have complete freedom to revise and update a work, although in many cases the publisher will still prefer to give the author first option to make any revisions. The fact that the publisher owns the copyright will normally mean that the author’s moral right of integrity will also not apply to any changes the publisher authorises unless the author is identified, and even then not if there is a sufficient disclaimer. In the case of a publishing licence, however, this will probably not be the case, and provision should be made in the contract for revised editions. In any event, many specialist authors will want to retain at least a first option to make any required revisions themselves.
Non-competition clauses may have particular significance for specialist authors whose reputations often depend on their writing. They must not be drafted so widely as to amount to an unreasonable restraint of trade (see Chapter 5) and specialist authors must not be so prevented from writing in their own field that they cannot develop their work properly or earn a living. If such clauses are to be enforceable, it is advisable to be as clear as possible about the level of competition restricted: a blanket ban on a whole subject is unlikely to be upheld, but directly competing works at the same level in the same market may well be prevented. To avoid any doubt, it may help to list some or all of the activities which may be undertaken, such as limited website or intranet access, journal articles, conference papers or anthologies.
REMAINDERS
As we saw in Chapter 5, the courts are willing to enforce an author’s contractual right to be consulted before any remaindering. Where the contract contains such a right, damages may be payable to an academic author (for example) who could have sold the remaining copies to students had he or she known the remaindering was about to take place.
DON’T FORGET THE EDITOR
As we saw in the last section, major projects often require whole teams of contributors, and the General Editor – there usually is one – will probably be a contributor too. He or she will probably need a quite different type of contract from that of the typical contributor, however, because there are two quite different legal matters to sort out:
• the Editor’s practical duties and responsibilities in relation to the team and the project as a whole;
• the Editor’s rights (including copyright) in the material produced, and any associated warranties or liabilities.
COMMISSIONING AND DELIVERY
It is essential that the Publisher and the Editor should agree on the scope of the Editor’s role, and set this out as clearly as possible in their contract. Does the Editor commission the work – and the contributors – from scratch, or is the publisher doing this? If the Editor does it, it will be advisable for the agreement to settle:
• the overall scope of the work, including length and schedule;
• the management of contributors, and responsibility for ensuring each of them is put under contract with the Publisher;
• any responsibility the Editor has for negotiating fees or other payments and budgets for these;
• who is responsible for clearing and paying for permissions;
• the Editor’s duty to review and edit each contribution, and powers of acceptance, amendment or rejection;
• who decides on any extra text (is this entirely at the Editor’s discretion, or only as necessary in the Publisher’s opinion?).
The schedule itself is (of course) usually crucial – note that time will not normally be regarded as being of the essence unless the Editor’s contract (and those of contributors) expressly makes it so.
COPYRIGHT AND MORAL RIGHTS
The Editor is likely to own copyright in:
• his or her own contributions as a contributor;
• any other original material he or she creates (such as introductions, forewords and so forth);
• the overall scheme and plan of the work as a whole, as a compilation.
If the Editor does the work, and creates the works, in the scope of employment (by a university or research institute, for example) it may well be that the employer will own the copyright – in which case any publishing contract should be with them (but preferably including the Editor in his or her personal capacity too). The Publisher may wish to secure a full assignment of all the relevant copyrights – in which case this should be in writing and signed by or on behalf of the assignor – or may seek a sole and exclusive licence in terms wide enough to cover all forms and media envisaged.
If the work amounts to a database (see Chapter 4) it is likely that the Publisher or ‘maker’ will have a database right to prevent unauthorised extraction or re-use, for 15 years.
The Editor is likely to have the same statutory moral rights as individual contributors over his or her work. These are likely to include the right to be credited as the Editor, the right to object to derogatory treatment and the right to prevent false attribution. On moral rights generally, see Chapter 4.
If the Editor is responsible for procuring assignments of copyright and waivers of moral rights from contributors, the contract should make this clear, although it will probably be more appropriate for the Publisher to negotiate for these.
WARRANTIES
The Publisher will want the usual warranties (see Chapter 5) covering at least the Editor’s own contributions and (crucially) any amendments, alterations or additions which are made to the contributor’s text or other material. It is important that there should be no gaps in libel cover (for example) – libels can be introduced just as much by editorial additions (or deletions) as by original text.
Does the Editor get an extra correction allowance, or is there one overall percentage? Ideally, the Editor will share with the Publisher the responsibility for keeping corrections under control.
BUDGET, FEES AND EXPENSES
All fees and other expenses payable to the Editor, or on his or her behalf, should be settled at the outset. These may include royalty payments (and any advances) or fees, and also any honorarium. In particular, a budget for expenses such as travel and any overheads such as secretarial support should be agreed.
It may be advisable to clarify in the agreement whether the Editor has any responsibility at all for negotiating fees with contributors (or even paying them) and, if not, to confirm that the Publisher will do this and hold the Editor harmless against any liability for such payments.
REVISIONS AND NEW EDITIONS
It is desirable to agree who initiates revisions and new editions, and what happens if Publisher and Editor cannot agree. If the Editor is unwilling or unable to edit a revision or new edition, the Publisher will need the right to bring in someone else and pay them for the work they do out of any royalties or fees which might otherwise have been paid to the Editor, or the Editor’s estate.
Remember that any moral right of integrity (to object to derogatory treatment) the Editor might have, and which has not been waived, will last for as long as the work remains in copyright, as will the Editor’s right of paternity (to be credited as the Editor). In the event of a dispute, the converse right – to prevent false attribution – might also be important, and may stop the Publisher putting out a new edition under the Editor’s name if it contains substantial amounts of material which the Editor did not write or of which the Editor disapproves. This right lasts for 20 years after the Editor’s death.
Finally, remember that any substantial investment of time, skill or money in a database will trigger a renewed 15-year term of database right (owned by the publisher or other ‘maker’).
CONTRIBUTORS (TEXT AND ILLUSTRATIONS)
COMMISSIONED WORKS
Commissioned work (literary or artistic) has distinctive features which any contract will need to reflect, but it is otherwise substantially the same as any other original work. Contrary to what many people think, the copyright position in the UK is also now fundamentally the same, so that the author, artist or photographer usually owns the copyright (but see below on the US position). Much of what was said in Chapter 5 about author–publisher agreements will thus apply here too, as will the comments about specialist authors at the beginning of this chapter.
The illustrations in some works can be more valuable than the words – indeed some publications (children’s books, for example) may consist almost entirely of pictures. In such cases the illustrator will for contractual purposes become the primary author. In others, the publisher will probably need two separate contracts, with author and illustrator, reflecting the contribution the illustrator has made and granting the publisher the necessary rights in what the illustrator has produced. For the important issue of ownership of the artwork (and resale right) see below and Chapter 5.
DELIVERY AND ACCEPTANCE
Where a project depends on many contributions, the schedule and delivery requirements for each one are likely to be much less flexible. Time may well be of the essence – if so, this must be expressly stated, so that if the work doesn’t come in the publisher will have the option of cancelling the contributor’s contract and recommissioning the work from someone else.
There should be provision for what happens if the contribution is delivered but is unacceptable. For text, most General Editors will want considerable freedom to require alterations, or reject the contribution altogether – this should be agreed in advance, and set out in the contract. It is common in contributors’ contracts for hard-copy works for the contribution – if it comes in at all – to be accepted for one edition only. For digital or online works, a more realistic future timetable may be necessary. If a contributor is dropped, there should of course be appropriate arrangements for reversion or reassignment of his or her rights.
Since so many decisions about illustrations are matters of suitability and taste, most delivery schedules allow for submission and approval of roughs, as well as finished artwork.
It also makes sense to provide for the possibility that illustrations will not be felt to be suitable after all. A termination fee (known as a ‘kill fee’) is often agreed in advance to cover such an eventuality. If rights are to revert to the illustrator, this should be made clear as well.
EDITORIAL CHANGES AND MORAL RIGHTS
For text, it is important to agree in the contract whether and how far the publisher, and any editor, can make the editorial changes which they may consider necessary, since these may well involve quite heavy revisions in the interests of uniformity or overall style. Although for some projects it may be appropriate to have a proviso that no substantial alterations may be made without the contributor’s prior written approval, it is probably more usual for the editor to be given a free hand.
In these circumstances it is essential either to secure a full or partial waiver of the contributor’s moral right of integrity, or at least to include a clear consent to such alterations in the contract (since moral rights will not apply to any acts which are done with the author’s consent).
Otherwise, there will be a danger that significant editorial changes to the contribution may amount to derogatory treatment, and thus infringe the contributor’s moral rights (unless one of the ‘collective work’ exceptions applies – on all this generally, see Chapter 4.
COPYRIGHT
Generally speaking, in the UK the fact that work is commissioned makes no difference to copyright ownership (which is normally vested in the author). In the absence of any agreement to the contrary a UK contributor of commissioned literary or artistic work will almost certainly own the copyright, unless:
• there are joint authors; or
• the contributor is an employee, and wrote the work in the course of that employment.
However, the position is different for ‘Works for Hire’ in the USA, where the commissioner may own copyright provided there is a signed document making clear that this is the intention of the parties.
Copyright generally is dealt with fully in Chapter 2. Whoever owns the copyright, the publisher will want to secure a sufficient grant of exclusive publishing rights to cover all likely exploitation of the work, including digital and online access, and possibly – in the case of commissioned text – a full assignment of the copyright. Full copyright assignments must be in writing and signed by or on behalf of the copyright owner in order to be effective.
Not all contributors will be willing to assign copyright in their work, so a publisher embarking on a major project would be well advised to raise the question with each contributor at an early stage and not, for example, leave exchange of formal commissioning letters until right at the end, when it may be too late to recommission someone else. Without a signed written assignment, the publisher will not acquire the copyright, and indeed if there is no agreement at all the best that the publisher will get is an implied non-exclusive publishing licence, probably for one edition only.
If a contributor is unwilling to assign his or her copyright, the publisher will need to decide whether that particular contributor is crucial to the project, and if so whether a sole and exclusive licence will suffice. In that case, it will be highly desirable for the publisher to obtain an undertaking that the contributor will not assign the copyright elsewhere without giving the assignee written notice of the publisher’s exclusive licence.
With illustrations (particularly of characters), bear in mind any merchandising potential including sale of photographs as posters, animated cartoon, film and TV rights, and any possible digital or smartphone exploitation, including apps, and the scope of permissions required.
Bear in mind also the desirability of registering characters and logos with merchandising potential as registered trade marks – and consider who should be the proprietor of the marks. For more on trade marks, see Chapter 11.
OWNERSHIP OF ARTWORK
Do not forget that ownership of copyright in something is quite different from ownership of the physical material on which it is recorded. An illustrator may assign copyright in illustrations but still own the original artwork – which may of course have a substantial value of its own, for resale or exhibition purposes (particularly in view now of the artist’s resale right – see below). It is also probably useful for publishers and illustrators to agree on a reasonable level of mutual access, so that the publisher can have access to the material for publicity or promotion purposes, even after it has been returned, and the artist can include the work if required in exhibitions. Particularly valuable artwork, or negatives, may need to be specially insured while under the publisher’s control: if so, it will be necessary to agree a valuation, and decide who is paying the premium or whether this is to be shared.
ARTIST’S RESALE RIGHT (DROIT DE SUITE)
From 1 January 2006, there has been an artist’s resale right in the UK and in most countries throughout the EU, giving artists a percentage royalty of between 4 per cent and 0.25 per cent on all subsequent commercial sales of their works above a value of €1,000. For more on this, see Chapter 4.
WARRANTIES
The usual warranties will be needed (see Chapter 5) but relating of course only to that contributor’s particular contribution(s). The warranties that the work is original, has not been published or made available before and contains nothing defamatory are particularly important for text. In the case of scientific or technical material, the warranties may also need to cover safety warnings and refer to appropriate codes and standards. Where recognisable likenesses of identifiable human beings are included, it may be advisable (as in many medical texts) to block out faces, or to ask an artist or photographer for an undertaking that they will secure a form of release, or written consent, from any such identifiable people. The UK has a rapidly developing law of privacy (on which see Chapter 9).
ILLUSTRATIONS AND PERMISSIONS
In the case of contributors writing text to order, so to speak, it is important to be clear about any other, non-text, material which may also be required and which the contributor might wrongly assume is being commissioned by the publisher from somewhere else. This would include not only quoted text, illustrations and photographs, but also charts, graphs, diagrams and maps. If these are not created by the contributor, and they are still in copyright, then permission to reproduce them will be needed from the copyright owners, and the contract will need to specify who is responsible for getting those permissions and who pays for them.
It is not uncommon for the contract to give the editor the right to correct and pass text proofs on the contributor’s behalf if the schedule requires this.
FEES AND EXPENSES
It is customary for a one-off fee payment to cover all uses of the work, and all future exploitation, but it is advisable to check this. If an older contract refers to ‘existing’ (i.e. pre-digital) formats and media only, or is not clear on the point, it will probably be necessary to agree additional fees for any digital exploitation, including site licence or website access licensed by the publisher, as well as online search, aggregator or subscription services.
For artistic works, if the agreed fee does not clearly cover exploitation in all forms and media, it may be necessary to agree additional fees for some kinds of exploitation, such as merchandising or digital (including smartphone) exploitation. It is also desirable to agree in advance how any extra payments are to be split between the author and illustrator if (as is likely) the words and illustrations are exploited together.
Expenses should also be clarified – for a major commissioned work the publisher may be willing to meet (allowed) expenses, but in general artists and illustrators are expected to meet the costs of materials and roughs, and photographers are expected to pay for their own developing, printing and enlarging, and also for the hire of any studios, props or other equipment, as well as assistants and staff. If separate budgets need to be fixed for these items, this should be clearly agreed.
TRANSLATORS AND TRANSLATIONS
There is a substantial international trade in translation rights – for physics and computing textbooks as much as great literature. We shall look at translation rights contracts later: in this section we will look first at the equally important contract with the translator (whose skill – or lack of it – can make or break a work).
COPYRIGHT AND TRANSLATIONS
Under UK law, if you translate someone’s work into another language you are making an adaptation of that work. Since adaptation is one of the restricted acts which only copyright owners can do or authorise (see Chapter 10) you will need the copyright owner’s permission; otherwise, you will be in danger of infringing their copyright (for this reason, a translator might need some assurance that the publisher actually has the relevant translation rights, and may seek a warranty to cover this risk – see below).
At the same time, creating a translation (even an unauthorised one) creates a new original copyright work, and as with most copyright works – apart from employee works – the copyright in that is owned by the person who created it: in this case, the translator. A publisher commissioning a translation will not own the copyright simply by virtue of having commissioned the work – if the publisher wants to own the copyright, it will have to be assigned by the translator in a written, signed document. Publishers often do seek a full assignment of copyright, particularly for reference or STM works; alternatively, they will need an exclusive licence in terms at least as wide as the translation rights deal, including any digital or online exploitation.
Whether or not the translator retains the copyright, there will need to be two separate copyright claims on the title pages: one relating to the original work, the other covering the translation.
MORAL RIGHTS
Even if copyright has been assigned, it is important to remember that the translator may still have statutory moral rights of paternity (to be credited) and integrity (to object to derogatory treatment) – and so, indeed, may the original author. See generally, on all this, Chapter 4, but note that section 80 of the 1988 Act expressly excludes translations from the definition of a ‘treatment’, so by definition even the most appalling translation cannot be a derogatory treatment of the original work under UK law (because it is not a treatment at all).
DELIVERY AND ACCEPTANCE
One of the key undertakings a translator will be asked to make is to render a ‘faithful and accurate’ translation, not only in reasonably good and accurate English but also true to the style, spirit and character of the original work. This is usually accompanied by a specific undertaking to translate the whole work, and not to make any alterations, additions or omissions without the publisher’s (and probably the original author’s) consent.
Since the publisher is often required under the translation rights contract to submit the translation, or specimen sections of it, to the original foreign publisher for approval, there is usually a requirement to this effect in the translator’s contract too. Given the difficulties of checking work in another language, the material may only be given a fairly cursory structural check, but the original author may be entitled under the contract (or under a more informal agreement resulting from the licensing correspondence) to examine the work, and it is therefore advisable to allow a reasonable period of time for approval. Needless to say, it is also advisable to provide for what happens if amendments are required, and who pays for them, and also what happens if the translation for some reason is rejected altogether – specifically, do the rights in that particular translation revert to the translator (see below), and is he or she paid a proportion of the agreed fee, or merely allowed to keep any advances? All this should be spelt out as clearly as possible.
The publisher will want a warranty that the translator will not introduce any objectionable new material, particularly nothing that is misleading, defamatory, in breach of privacy or otherwise illegal, and nothing that infringes the copyright or other rights of anyone else (which may result from inaccurate translation as much as any new material). In return, the translator may often seek a counter-warranty and indemnity from the publisher that the original work being translated does not itself carry any such legal risks, since these would put the translator at risk too.
Since the work is not the publisher’s own, any such warranties are unlikely to go beyond those given by the original publisher of the work, and the best warranty the publisher of the translation may feel able to give is ‘to the best of the publisher’s knowledge and belief’.
FEES
Fees – normally at a rate per thousand words – are more common than royalties, but translators are increasingly being regarded as secondary authors and in some cases a royalty may be more appropriate. Payment of fees is usually preferred on delivery – for obvious reasons – although the publisher may wish to hold some instalments of the payment back until final approval or even publication. Some payments might be made to the translator on signature of the contract, some on delivery and acceptance, and some on publication.
TERMINATION
Normal termination provisions will usually apply – on rejection, breach or insolvency, for example (see Chapter 5) – but it is important to make clear what rights, if any, will revert to the translator in these circumstances. Since the publisher is likely to have exclusive translation rights for that work in a relevant language, then as long as those rights are still in force the publisher is not going to want the translator to publish or exploit the original translation or any part of it without its consent (particularly if it was rejected and the publisher has had to go to the trouble and expense of commissioning a new one).
RIGHTS DEALS
As we saw in the last chapter, it may be important for a publisher to have the right not only to produce and publish the work itself, but also to sub-license others in different areas to do so too. There may be a market for digital or online exploitation or a Russian translation, or a film or TV version, in which case the relevant subsidiary rights will need to be licensed (see below). Indeed, the revenue from rights deals may well mean the difference between overall profit and loss for a publisher, and may even exceed that derived from the publisher’s own publishing. Some authors and agents will prefer to retain and exploit subsidiary rights – or some of them – themselves; in other cases a publisher with an experienced rights manager will probably prefer to control such exploitation itself (in which case the publisher must make sure it has the rights in the first place – see Chapter 5 and Lynette Owen’s Selling Rights).
In the rest of this section we will concentrate on the legal issues arising out of agreements for some of the key subsidiary rights.
PAPERBACK RIGHTS
In these days of ‘vertical publishing’, it is increasingly common for one publisher (particularly major trade publishers) to undertake both hardback and paperback editions (although mass-market paperback rights may still be licensed to a separate paperback house). Not all publishers are in a position to undertake both, however, and sub-licensing paperback rights to another publisher is still often done, at Frankfurt and elsewhere. In the case of authors with proven sales records, there may be some competition for the paperback rights, with considerable sums changing hands by way of advance.
Grant of rights
As with the original publisher’s main grant of rights from the author (which must be checked, see above), it is essential that the rights then granted by the original publisher to others – and their limitations – are clearly spelt out. The roles are of course reversed for such sub-licensing: the original publisher, having up until now been the author’s (and others’) licensee of the head rights, now becomes a licensor of individual subsidiary rights to others. The original publisher will usually now become ‘the Grantor’, and ‘the Publisher’ will now be the paperback publisher acquiring the rights.
The Publisher will almost certainly want exclusive rights to produce and publish the work in all paperback formats or editions: if this is not possible, the Publisher will at least want to know which other paperback editions already exist, or are planned. Has the Grantor already published its own trade or educational paperback, or e-book, or is the work available online? If any competing paperbacks exist (or may), a licence for ‘all paperback editions’ will not be possible and it will be advisable to specify as clearly as possible exactly which paperback rights are being granted. It may be necessary to refer to markets (such as mass-market) or to specific formats (such as A or B format). The Publisher may also wish to seek an undertaking from the Grantor that it will not license any book club editions without the publisher’s prior consent. Similar considerations may apply to low-cost editions or reprints for major export markets such as India or (increasingly) China.
Although it is unlikely that a paperback publisher would acquire translation rights, the grant of rights should also specify the language(s) covered (English-language only, or in other, or all languages) and the territories included – specific territories (such as the USA), lists of territories (such as the EU or EEA, which should be clearly set out, preferably in a Schedule) or the whole world. Any ‘open’ territories should also be carefully considered, bearing in mind the EU’s free movement of goods rules within Europe (see Chapter 14).
Paperback licences are normally granted for a limited term rather than for the full term of copyright; it is therefore essential to specify what the term is going to be. Eight years from the date of the contract is the most common minimum period: in some cases, such as an encyclopaedia or dictionary or other non-fiction title which is likely to be revised regularly, paperback rights are granted edition by edition. There is usually provision for renewal of the licence thereafter, on terms to be agreed.
It is also advisable to agree well in advance – and as clearly as possible – what the timing of the licensed paperback edition is going to be. Since the appearance of a cheaper paperback is bound to affect sales of the hardback and other existing editions, it is normal to provide a breathing space of at least six months or a year before the paperback may be published: earliest and latest dates are often specified. There may also be external events to consider, such as film or TV tie-ins which may be a reason to allow for early release of the paperback with a tie-in cover.
Timing may be particularly crucial in the case of US paperback editions, whose larger home markets and print-runs may lead to highly competitive prices in a number of open markets around the world. Beware, in particular, of leaving Europe (specifically the EU and EEA) as an ‘open’ territory if you wish to retain UK exclusivity (see Chapter 14) and, equally, the problems of parallel importation into territories such as Australia: it may be worth the original publisher considering a simultaneous (or earlier) export edition of its own in order not to lose some open markets completely. US publishers increasingly seek exclusivity in other world markets, such as India, Australia and Singapore, in return for complete exclusivity in Europe.
Finally, the timing of an English-language paperback may be highly relevant to markets which are already (or may be) served by a foreign-language translation. A Dutch or Swedish translation (for example) could be killed stone dead by the untimely appearance of an English paperback in either territory, since in both places there are substantial English-language markets.
Warranties
Any warranties given by the Grantor should ideally match those it has itself received from the author, although the new Publisher will usually require a warranty that the work has not previously been published in a particular format in the territory concerned. If any new or additional warranties are required the Grantor should carefully consider whether it is willing (or able) to bear the risk.
Given that the author (probably) has a moral right of integrity, it is now even more important to keep amendments to the work itself under control; to be on the safe side, no abridgements, expansions or alterations to the work should be allowed without at least the Grantor’s consent, and the author’s consent (or waiver) may also be necessary in order to avoid any claim of derogatory treatment (see Chapter 7). Exceptions are sometimes allowed for alterations made on the advice of the paperback publisher’s lawyers, on giving due notice to the Grantor (the Grantor – and its own lawyers – will then need to consider whether its own editions are at risk).
The Grantor is more likely to supply duplicates rather than originals of artwork or prints, or other supplementary material, but it is vital to check that any original copyright permissions granted for this do actually extend to paperback publication by a licensee rather than the original publisher in the territories covered: it may well be necessary to renew many (or even all) of the permissions if they do not include the re-use of the material in sub-licensed editions (for example, under different imprints or in different formats).
Copyright and credits
The Grantor will want to ensure that its original copyright claim, including its name and the date of first publication, are included in all subsequent paperback editions (for UCC copyright notices, see Chapter 5). This is also an opportunity to ensure that the author’s name appears in its customary form with due prominence, and (if necessary) to include an assertion of the author’s moral right of paternity, to be identified as the author (for the wording of assertions, see Chapter 4). The Grantor usually supplies duplicate production material to cover this.
Royalties and accounts
The normal considerations will apply (see Chapter 5); royalties under paperback licences are usually paid twice a year. A percentage of this (normally 50 per cent or more), although different percentages may apply to home and export sales, will of course go to the author. It is common for a paperback publisher to wish to make some reserve against returns, and there may be a small reprint clause (although this may make less sense in an age of print on demand).
Termination and reversion
Apart from the normal termination provisions – for breach or insolvency, for example – the Grantor will want the right to terminate the licence if the Publisher allows the paperback edition to go out of print or fails to put it back on the market within, say, 9 or 12 months of formal notice to do so (although print on demand has nowadays reduced this risk). Conversely, when the licence expires or comes to an end for other reasons, the Publisher will probably want a reasonable sell-off period to clear remaining stocks.
Britain used to have a substantial book club market, with clubs such as Book Club Associates (BCA) claiming well over a million members, but the UK book club market has almost disappeared now that bookshops, supermarkets and online retailers like Amazon can offer substantial discounts. There are still important book club markets elsewhere, however, such as the USA and Europe. All book clubs operate primarily by mail order. Members are regularly recruited via national press advertising, often being induced to join with loss-leading ‘premium’ offers at a nominal price, with in most cases a modest annual purchasing obligation thereafter, but may be an attractive proposition for readers not within easy reach of a good bookshop, or who prefer a club’s guided or suggested reading.
Although the larger clubs will demand substantial discounts (often over 80 per cent), there can be significant economies of scale on both sides: not only to the club’s members, in reduced prices, but also to the licensing publisher, in increased print-runs and lower unit costs. For licensing and rights issues relating to book clubs now, see Lynette Owen’s Selling Rights.
SAME LANGUAGE RIGHTS: CO-EDITIONS AND JOINT VENTURES
As we have seen, even in the English language, there may be forms and media of exploitation which publishers (apart from large multinationals), authors or agents cannot develop alone; there may also be key English-language markets (such as the USA, Australia and Canada) where the market may require local promotion and distribution and may best be serviced by a local publisher with daily hands-on contact and goodwill. In many such cases, a straightforward licensing deal may be sufficient, but in others a more collaborative co-edition agreement may be preferred. For newer or more complex products, a formal division of functions, responsibilities and profits (or losses) may be necessary, usually best set out in a co-publication or joint venture agreement.
CO-EDITIONS
Unlike a standard licence, where the proprietor simply grants a publisher a licence to print its own local edition in return (usually) for a royalty on sales, a co-edition normally features a combined printing operation in which the local publisher will buy copies (or flat or folded sheets) in its own imprint at an agreed price per copy (although Americanised text may be required in some cases). This requires more of an upfront payment from the local publisher, but can give a realistic price – provided exchange rates are not adverse – and provides economies of scale to the proprietor, who can print more copies and thereby reduce the unit cost. It also gives the proprietor more control over the production process which is often an important factor, for example for illustrated or children’s books using four-colour printing.
Whoever’s standard terms are used – a US co-publisher will often propose its own version – the following points should be covered.
Rights granted and territories
Local publishers will normally want exclusive rights in their home territory, but that territory will usually need careful definition, as will any ‘open markets’ in which either publisher’s edition may sell, particularly Europe. The European Union’s rules on free movement of goods (see Chapter 14) mean that an open market edition lawfully on sale in any EU or EEA member state cannot be prevented from entering the UK, despite licensing terms to the contrary – so that making the UK an ‘exclusive’ territory may in effect be unenforceable if, say, Belgium or Germany are open. Of particular importance is whether the proprietor or local publisher is to make the work available digitally, and if so how – either downloadable as an e-book, or accessible in some other form – and when. The parties should be very clear about this, since any such exploitation may have a dramatic effect on sales expectations. If e-book rights are being included in addition to bound copies at a royalty-inclusive price, provision will need to be made in the contract for regular sales and royalty accounting for e-book sales.
The other forms and media in which territorial rights may be exploited also need careful definition: are only volume rights granted, or may the local publisher sell e-book or digital versions in that territory, or exploit subsidiary rights such as film, TV, paperback, serial and book club rights? E-book rights in the USA are important, since it is by far the largest market). Can the rights be sub-licensed or assigned? (Not normally without consent, but if so this must be stated.) It is advisable for the proprietor to reserve all rights not expressly granted.
Term of licence
A US licensee may expect to be granted a licence for the full duration of copyright. However, this may sometimes be resisted if inappropriate (or impossible, if the UK publisher only has a limited term of rights from the author), in which case a five- or seven-year licence is more usual, or perhaps a restriction to the number of copies supplied, with termination to take place when copies are exhausted. For major educational and academic works, it is often preferable to limit licences to the life of a single edition. It is customary to provide for the term to be extended, if required, by mutual agreement, together with an option to take further copies of a reprint or new edition.
Delivery and timing
If time is of the essence, say so – equally, specify any mutually agreed publication dates. The proprietor will be expected to undertake shipment of the publisher’s copies by a certain date – often in agreed stages – but this may need to be conditional upon the publisher’s timely supply of film or digital files for any permitted local amendments: both sets of dates should be clearly set out. Final delivery details will also need to be specified: which shipping agent, who will supply documentation, whether advance copies by air are required, and time limits for any complaints.
Payment should be in an agreed currency, if necessary at an agreed exchange rate, (perhaps providing for a 5 per cent or other fluctuation either way, any excess to be borne equally). The price is often held for a limited period only. Payment is often staged, for example with one-third payable on signature, one-third on delivery, and one-third 30 or 60 days later. Is there an advance? Is the price royalty-inclusive or royalty-exclusive? Does it include freight and insurance, and are the terms ex works, CIF or FOB, or delivered to the licensee’s warehouse? (See Glossary in Appendix A.)
Even though the price may be a royalty-inclusive price per copy, it may still make sense to specify annual sales statements and accounting and the usual provisions for audit, if only to monitor any subsidiary rights exploitation and be forewarned of any need to re-order or reprint.
Local alterations
Where the proprietor is producing copies, the publisher will usually be required to provide film or digital files of any permitted amendments or alterations (in good time within the schedule). Consider carefully any substantial amendments proposed, and bear in mind the author’s moral right of integrity (see Chapter 4) and the similar rights of illustrators and other contributors: ideally, no amendments should be permitted without consent.
Permissions
It is crucial to check that any copyright permissions apply to all the territories and media to be exploited: some may need to be re-cleared if the original clearance was restricted to publication in the original language in print form only, for a limited market, and/or under the original publisher’s imprint. For a major reference or illustrated work permissions can be very expensive indeed, so it is best to agree as early as possible who will undertake the task of securing necessary permissions, and also who will pay, or how costs will be shared.
Copyright notice and credits
The proprietor will need to ensure that its own copyright credit appears and any assertion of the author’s right of paternity. It is also advisable to require the publisher to take all necessary and reasonable steps to protect the copyrights (and any trade marks) locally, including local registration where required.
Warranties and indemnities
Make sure that any warranties match those already given by the author, or (if not) that it is safe or reasonable for the proprietor to give them. Often this may be a matter for the insurers on either side – it may not be possible for a UK publisher, for example, to warrant with any certainty that nothing in a book will infringe US law (although a warranty about UK law may be perfectly reasonable). It is normal to limit warranties to the licensor’s own national law.
As with all licences, any co-edition agreement should provide clearly for termination under specified conditions: normally breach, insolvency or change of control, or allowing the work to go out of print (with no reprint order in hand with the proprietor). It may be advisable to provide for arbitration in the event of any dispute – particularly if the applicable law is not English law.
JOINT VENTURES
For more ambitious or elaborate projects (such as a large series of illustrated books or a major multimedia product), one publisher may not have all the skills – or finance – necessary. It may make sense in such circumstances to enter into a formal joint venture agreement with another publisher or with a film or TV company or software house – there may often be several parties involved. Joint venture agreements may be entered into at the outset, with all participants sitting down well in advance to plan the contributions – and profit shares – each will make, or sometimes relatively late in a project’s development, for example to bring in extra finance, or distribution skills. As a general rule however, the earlier such agreements can be reached the better.
There are a number of key points to watch.
Define the product
It may be a single book such as an encyclopaedia or a series or online database or a multimedia product involving several partners: however many partners are involved, agree as soon as possible on your mutual aims, on the form and the scope of the enterprise, and define any product(s) as clearly as you can, including delivery media. A detailed specification for the product attached as a schedule might be advisable. Include any agreed details such as a General Editor or particular contributors, or intended price or format.
Decide who does what
Agree what each of you brings to the party – be it text, illustrations, other copyright material, software or simply finance, and how the various publishing functions will be split up – how any research will be tackled, who will undertake editorial, design and production, who will be responsible for clearing permissions and underlying rights, who will do the promotion, marketing and distribution and who will account for the proceeds and distribute any profits (or losses).
If there are specific launch targets, write them in. Agree in particular when the joint venture agreement starts to run and, if it has a fixed term, when it will terminate.
Budget
Budget – and re-budget – carefully, bearing in mind that for a new project in an unfamiliar medium cashflow may be crucial. Agree on allowable costs – what each party may claim back from the project before any profits are shared out. Include any administrative overheads if necessary (such as subsidiary rights management), and distribution costs such as freight and insurance. Needless to say, agree clearly how any profits will be shared out and what will happen in the event of losses.
Ownership of rights
Assuming all necessary permissions have been granted and underlying rights secured, it is important to specify clearly who owns which copyrights and also how any new copyrights which are created – for example in a new compilation or database – are owned: it may be necessary for a joint venture company to acquire the rights. Do not forget other key rights, such as trade marks in any names or logos: will these be registered, and who will be the proprietor and licensed users?
Termination
Don’t forget to provide a get-out route in case it all goes horribly wrong, and allow for individual opt-outs if necessary. Agree initial terms, grounds for early termination and suitable notice periods, with arbitration provisions if necessary. Most importantly, agree who will own which rights post-termination in the joint venture product itself, including work in progress, roughs and artwork. Agree the applicable law which will govern any disputes which cannot be settled by arbitration and which country’s courts will have jurisdiction (see Chapter 5).
TRANSLATION RIGHTS
Not all works have the potential to sell in translation, but many UK works do – nonfiction as well as fiction. For most UK publishers and agents, selling translation rights can therefore be a major source of revenue and a significant way of extending the market for an author’s work. Although compulsory non-exclusive translations for limited terms of years may be possible in the copyright laws of some developing countries and under the Paris (1971) Revision to the Berne Convention (particularly where no authorized translation in the local language is available), a translation licensed by the original publisher can be an effective way of combatting unauthorised local translations, and piracy of the English edition, in the territory concerned.
Not surprisingly, most publishers and agents who regularly sell translation rights will have one or more standard-form contracts, either for a straightforward sale of rights, or for a co-edition deal. We will deal here with sales of translation rights: co-edition deals are dealt with above.
Rights granted
Before translation rights are granted to others, it is highly advisable to check that the person who wants to grant them – usually the publisher, or the agent on the author’s behalf – owns or controls them in the first place. Publishers often assume that they control foreign language translation rights when in fact their publishing licence from the author covers English-language volume rights only. If this happens, any accidental omissions can usually be remedied by a quick phone call to the author or agent and a simple exchange of letters, but this is not always possible. The author or agent may well have plans of their own, and indeed may already have sold the relevant rights to someone else. If in doubt, check.
Once the rights are secured, unless a co-edition is justified (see above), they will normally be sub-licensed to individual foreign publishers for separate languages and territories. Most local publishers will want exclusive rights in their territory; this is usually acceptable, provided that (within Europe) it does not fall foul of EU competition law (see Chapter 14) and provided that the territory, formats covered and the length of time the licence lasts are clearly defined. Should a Portuguese translation licence cover the whole world (so that it may therefore sell in Brazil, and former colonies like Macau), or just Portugal itself? Licensees should not as a rule be granted territories which they have no facilities to handle. Does the licence cover print editions only, or e-book or online versions as well? Most importantly, how long does the licence last? Five to eight years from signature is fairly common, depending on the work and the local publisher’s plans; licences are normally renewable thereafter. In the case of major reference works and non-fiction works which are likely to be revised, a grant of rights may extend to one edition only, rather than a fixed term of years. All rights not expressly granted should be reserved to the Proprietor.
Publisher’s responsibility to publish
Once the rights are granted, the Proprietor will want to ensure that an accurate translation appears reasonably promptly. The local publisher is normally required to undertake that it will commission a faithful and accurate translation by a competent translator (from the original language, based on the latest edition, and with no unauthorised alterations, omissions or additions – see above) and will publish it at its own risk and expense within a specified number of months. If publication does not take place within the given time-scale, the licence will normally terminate and the rights revert, so it is advisable to allow reasonable time for the translation itself (especially if approval is required) as well as local production. The Proprietor will normally wish to be informed of the actual publication date. To assist with production (and accuracy) the Proprietor may supply film or digital files, or otherwise may wish to see samples of any illustrations to be reproduced directly from the original edition in order to assess their quality.
The local publisher will normally seek the standard English law warranties from the Proprietor: that the work is not, for example, an infringement of someone else’s copyright and has not previously been published or made available in that territory before – any warranties outside the Proprietor’s own control should ideally match, and not exceed, those originally given by the author (see Chapter 5). The publisher may want the right (on notifying the Proprietor) to remove passages which on local legal advice may be actionable in the territory concerned.
Permissions and illustrations
Copyright permissions for extracts and illustrations may need to be re-sought for foreign language editions; it is important to agree who is going to undertake this (and who will pay any new fees). For a major work, it may be a complex and time-consuming task, and the Proprietor may prefer to arrange it and charge the publisher the cost plus an administration fee. If the local publisher is going to do it, it may be advisable for the Proprietor to ask for written proof that it has been done.
Illustrations may present unique problems for foreign translations of children’s books: pictures that are perfect for one country may not be acceptable in another (for example, on grounds of racial mix, or on cultural, social or religious grounds). Some pictures may need to be omitted or replaced; in some cases, a complete set of fresh illustrations better adapted to the local market may need to be commissioned by the local publisher, in which case they will need to be costed in.
Copyright notice
As the making of a translation creates a new copyright work (see above) there will normally be two separate copyright lines – one for the original author, or whoever now owns copyright in the original work, and one for the translator, or whoever owns copyright in the translation. The Proprietor will also probably require details to be included of the Proprietor’s original edition, so that it is clear the translation is an authorised arrangement.
In some territories, there may be local registration or other legal formalities before copyrights can be protected; the local publisher should be obliged to make the necessary arrangements, and also undertake to comply with any local copyright regulations.
Advance and royalties
Sometimes a lump sum fee is agreed for a limited print-run, but royalties are probably more common. It is important to be clear what price is to be used as the basis for calculation – local selling price, retail or recommended retail price (minus any VAT) or average wholesale price (used in most central and East European countries). An advance is normally required, with part at least of the payment due immediately on signature of the agreement; there is often a provision that if the agreement is not signed, and the first tranche of the advance paid, within a given period (such as 60 days of the contract date), the licence will terminate and the rights revert to the Proprietor.
The usual detailed accounting information should be required (see above), and it is also wise to agree the currency in which royalties are to be paid; not all local currencies are fully convertible, and many markets, such as Asia, Latin America and Eastern Europe, often prefer to pay in US dollars.
Publishers in most countries without fully convertible currencies now find it easier to hold hard currency accounts or to purchase hard currency in order to make licence payments.
If e-book rights are being granted as well as print rights, there will need to be separate provision in the contract for reporting sales and royalties on e-books – these will almost certainly be calculated on net receipts while royalties on the print edition may be on retail sales as usual.
Updates/new editions
The publisher will normally want an option on any new or revised editions, on the understanding that all changes notified will be incorporated. The licensor would normally require a new contract to cover any new edition.
Termination and reversion of rights
The normal provisions for termination of the licence will apply, for example for insolvency or breach (see Chapter 5), but special attention may need to be paid to the terms on which rights may revert if a translation ceases to be available or goes out of print. Does ‘out of print’ mean only in the local publisher’s home territory, or in all territories (so that a Spanish edition, say, might still be ‘in print’ if it is available in South America)? Consider also what the position will be if the bound stock is exhausted but the publisher wishes to keep the translation available via print on demand or as an e-book (if these rights have been granted). There may also be a need for a provision that the licence will terminate and rights will revert if sales of the translation fall below a certain minimum level, or generate a certain minimum revenue, in any single accounting period (or perhaps any two periods in succession).
MERCHANDISING RIGHTS
Some publications – particularly children’s books – may contain names, characters, designs or illustrations which are popular enough in their own right to be exploited not only via the medium of books or e-books but also on T-shirts, stationery, mugs and other merchandise (hence the label ‘merchandising rights’). Film and TV exposure usually helps. The characters of Beatrix Potter were early examples of successful merchandising, widely licensed now for a range of merchandise such as children’s crockery and other nursery goods; other examples are A.A. Milne’s Winnie-the-Pooh, Harry Potter and The Hobbit. If handled properly, such exploitation, across a wide range of goods, can add very considerably to the earning potential of the original work (and in some cases exceed it).
Where a work has merchandising potential, the author or agent may grant the merchandising rights to the publisher, together with other publishing rights, or they may retain them for separate exploitation. They may be a key element, for example, of film or TV deals. Exploitation may be bit by bit, product by product, in which case the publisher or agent may end up dealing with multiple licences for a whole range of goods; alternatively (and increasingly nowadays), the rights might be licensed in one go to a specialist merchandising company which, in return for a commission on revenue, will then take on the task of seeking out, and sub-licensing, suitable manufacturers and products. Whoever handles the rights, there are a number of key points to bear in mind, two of the most important of which are:
• protection of rights;
• quality control.
Grant of rights
Before granting any merchandising rights, the first and most essential thing to do is check the contract to make sure that you own or control the rights yourself. Also, make sure that merchandising rights have not already been granted elsewhere. And if you want to use original illustrations as well as names of characters, make sure that the illustrator, or other rights owner, has granted you merchandising rights in them too (otherwise – if agreement cannot be reached – you may need to recommission new illustrations).
Assuming – subject to all the above – that you do have the relevant rights, you will need to consider the terms on which you are going to sub-license them (or some of them) to others.
In particular:
• Will the rights granted be exclusive or non-exclusive? (This may depend on your view of the market, and the status of the particular licensee.)
• Will the licence cover the world, or a specific territory or territories? (Merchandising rights are often licensed country by country.) Will it cover Internet or other digital exploitation?
• How long will the licence last? (Three- or five-year terms are common, usually renewable, and often with a sell-off period at the end.)
Product specifications and approval
Unless an overall licence is being granted, the products on which the names or images may be exploited by that licensee must be clearly specified and described in as much detail as possible (for example, T-shirts or different sizes of greetings card or items of breakfast crockery). They are usually set out in an appendix. Any products that the licensor wishes to exploit itself (such as DVDs, or digital publishing, games and apps) should be expressly reserved.
The licensee should have a clear obligation to seek out (actively) potential sub-licensees and, in some cases, distributors and propose the most suitable ones for particular products to the licensor; once selected, the licensee should be responsible for their regular supervision and control. All sub-licences should be in a form approved by the licensor, and should not exceed the term of the original licence. If there is not already an agreed plan, it is advisable in the interests of quality control to set out a regular procedure for submission and approval of product proposals, within set timetables. It should be clear that the products selected should in no way reflect adversely on the image, reputation or goodwill of the licensor, and the licensor should at all times retain a right of rejection or veto. This quality control should not only apply to initial prototypes or mock-ups and packaging, but also continue after the products have been launched, with regular samples submitted for approval, either at random or on demand. The licensor needs to be satisfied at all times that the products are suitable in themselves, and manufactured to a high enough standard. Some rightsholders with popular characters may produce a style guide to indicate how each character should be portrayed. They must also be safe; the licensee must take legal responsibility for any product liability, for example for defective goods, or for breach of any safety standards (and insure where necessary). Needless to say, once approved, there should be no changes without consent.
Promotion and marketing
The licence will normally specify merchandise to be on the market within a given timetable. There is often a launch deadline, within a given number of months or by a particular deadline (for example to tie in with a film or TV series). Thereafter, the licensee should undertake to continue advertising, marketing and distributing the licensed products within the agreed territory. All packaging and promotional material should conform to samples – the licensor may also wish to specify the choice of media used. It is customary for the licensee to undertake to sell only to reputable wholesalers or retail outlets, and the licensor may exclude certain kinds of sales (for example premium sales, or door to door) and retain the right to order the suspension of sales to any particular outlet of which it disapproves.
There will usually be agreed sales targets: quarterly targets are common. If targets are not met (sometimes two or more in succession) the licence will normally terminate, and the rights revert to the licensor.
The names, characters or illustrations being merchandised will probably be copyright works and quite possibly registered trade marks too (for more on trade marks, see Chapter 11). It is essential in any merchandising licence that all these copyrights and trade marks should be expressly acknowledged and recognised by the licensee and on the products themselves. A copyright claim in agreed form, with the name of the copyright owner (see Chapter 5) should normally appear on all relevant products and packaging, and a trade mark notice, in the UK usually ® or TM, next to all words, phrases or logos which are registered trade marks. If the merchandising licence is for an overseas territory, it may be necessary to make the licensee responsible for registering any copyrights or trade marks locally – this should be done in the licensor’s name, not the licensee’s. The licensee may, however, need to be recorded as a licensee at the Trade Marks Registry and the parties may need to supply details of the licensing agreement.
In addition, of course, it is very likely that the product itself will constitute a new copyright work, in which case it will be desirable in order to avoid any conflict for the new copyright to be acquired from the manufacturer or designer and assigned back to the licensor; it will normally be the licensee’s responsibility to see that this is done.
Infringements and insurance
Piracy of licensed merchandise is increasingly common, so it is customary to require the licensee to exercise vigilance on the licensor’s or proprietor’s behalf against any unauthorised copying or use, and notify them of any infringements at once so that any necessary legal action may be taken. The licensor will normally indemnify the licensee against any legal risks and costs arising from permitted use, provided any claims are notified at once, and the licensee will normally give a corresponding indemnity to the licensor for any activities outside the terms of the agreement. The licensee is normally well advised to arrange general liability insurance of its own, although mutual insurance, to spread the risk, is sometimes agreed.
Moral rights
Bear in mind that an illustrator might not only own copyright in original illustrations but also have personal moral rights in them, particularly a right of paternity – to be credited as the illustrator – and a right of integrity – to object to derogatory treatment (see Chapter 4). If the illustrator agrees, these rights may be waived, either unconditionally or insofar as necessary to exploit the particular merchandising rights concerned.
Royalties and commissions
There may be an initial one-off fee for permission to test the market over, say, a one-year trial. Thereafter fees or royalties entirely depend on the popularity and marketability of the character, design or name being licensed: the range is normally between 5 per cent and 15 per cent of the invoice price, but higher commissions – up to 45 per cent – are not unknown for major licensees with a proven track record. Any percentage commission should cease with the end of the licence agreement.
Quarterly sales figures and accounts are usual – the normal requirements to keep accurate accounts, and to allow inspection for errors, should apply. Payments should be made for all sales in the period, irrespective of whether the licensee has yet been paid.
Non-assignment and key men
A merchandising licence is normally non-transferable and non-assignable without the licensor’s prior consent in writing. There is also often a stipulation (called a ‘Key Man’ clause) that the licence will end, and the rights revert, if any key individual within the licensee’s organisation departs, or at least giving the licensor the option to terminate if this happens.
Termination
Termination is usually on the normal terms, for example, for breach or insolvency; merchandising licences may also terminate if a key man leaves the licensee, or if there is any other unacceptable change in the control or management of the licensee.
On termination, the licensee should arrange the termination of any sub-licences, with due notice, and arrange for any samples, artwork or other materials to be returned and any unsold stock to be delivered up (usually at cost) or certified as destroyed. Manufacturing equipment, such as moulds, may need to be destroyed. Needless to say, any outstanding payments should be paid forthwith.
FILM AND TV RIGHTS
Making a feature film or TV series is an immensely complex – and expensive – business, and negotiating rights with film and TV companies is not a recommended pastime for the faint hearted. For the right literary ‘property’, however, it can be a highly lucrative form of exploitation, not only in fees and royalties from the film itself but also in increased exposure and sales of the book. Sometimes film rights are optioned before the property is published, as happened in the case of the first Harry Potter book and the film adaptation of Lynn Barber’s memoir An Education. In other cases the film might appear many years after publication of the book, the most obvious recent example being The Lord of the Rings trilogy directed by Peter Jackson, which appeared more than 40 years after the publications of J.R.R. Tolkien’s novels, although the author had sold the film rights before his death in 1973 and an animated film had appeared in 1978. Film and TV rights often therefore need long-term management and, since the media involved are so different, control of them is often retained by the author’s agent rather than granted to the publisher of the book.
A film or TV producer or production company wishing to make a film based on a book which is still in copyright will need to clear the ‘underlying’ literary rights at the outset (and, equally, any artistic, musical, dramatic and other rights which may be involved). Initially, as a rule, clearing the rights does not involve actually acquiring them outright; at this stage the film is still an idea only and may never be made, so they may never be needed. What happens first almost invariably is that the producer will seek to secure an option.
Options
The advantage of an option, rather than an outright purchase of rights, is that it enables the film producer to reserve the underlying rights for a (comparatively) modest upfront fee whilst spending anything up to two years preparing a script, finding investors, putting together the necessary film finance, and finding a director, leading actors and suitable locations. It also limits the copyright owner’s risk, by avoiding a full grant of rights until it is certain that the film will actually be made and that the producer is able to pay for the rights.
Unless the subject is very topical, options are normally granted initially for a year or 18 months, for a non-returnable fee which is usually not more than 10 per cent of the total intended purchase price (for low-budget films, it may be lower). The option is usually extendable for one or two further 6- or 12-month periods, in case developing a satisfactory script and putting together the finance proves harder than expected (it often does). During the option period, the producer will need the right to make certain uses of the literary work concerned; specifically, to copy extracts and make an adaptation in the form of a screenplay to show potential investors, or even to make a pilot if TV rights are being acquired.
The exact rights (and media) over which the option is granted should be set out clearly: the usual way of doing this is to cross-refer to the intended final Acquisition document (see below) and attach it as an appendix to the option.
If the project falls through, and the option is not exercised within the option period, the rights owner should ideally have the right to buy back any new copyrights created in (for example) the screenplay or any other adaptations of the work – although a producer who does not own the underlying rights, and whose option has expired, will not be able to do much with scripts or other material without infringing existing rights.
Acquisition and assignment
If and when the option is exercised, the Acquisition agreement may then be signed, under which the balance of the purchase price is paid, and in which the necessary film rights are finally granted. This may be via an assignment of the copyright, but now often takes the form of a sole and exclusive licence of (specified) film rights, usually for the full term of copyright, although the period of exclusivity may be limited to 10 or 15 years, for example for made-for-TV films. ‘Quitclaims’ are often required at the same time, under which the relevant (usually English-language) publishers confirm that they have no conflicting interest in the film rights.
It is essential to set out clearly what rights are included (and which are not), and particularly whether TV rights are included. The definition of ‘film’ in the 1988 Act would normally include TV programmes, so it is important to be clear about this: if it is not the intention to grant TV rights, a narrower definition of films should be used, such as ‘theatrical feature films’. Most producers will want both the film and TV rights, for obvious reasons – a TV channel will, not surprisingly, usually seek to acquire unlimited film and TV rights, but even if the film is being made primarily for theatrical (that is, cinema) exploitation, the producer will still usually wish to show it on television. If, despite this, TV rights are not available the producer may require a ‘hold back’ clause, restricting the proprietor’s own exploitation of TV rights for an agreed number of years.
The rights granted will normally include most or all of the following:
• the right to make one or more films (including all forms of television) plus remakes, prequels, and sequels;
• the right to show the work in public;
• the right to broadcast the work (including excerpts or trailers, and including all forms of television, satellite, cable, high definition and whatever else);
• the right to make adaptations of the work (such as dramatisations and screenplays);
• the right to issue copies to the public (including DVD and Blu-ray rental);
• the right to distribute the work online;
• ‘publicity rights’: to create written synopses (usually of up to 5,000 or 10,000 words), and broadcast and publish extracts;
• the right to compose music to accompany the work, and the right to make sound recordings;
• the right to use the author’s name, likeness and biographical details for promotional purposes;
• the right to publish a ‘book of the film’ (often withheld by the rights owner);
• associated merchandising rights.
If the film is not made within a specified number of years (for example, five) the Acquisition agreement should provide that the rights revert to the owner, perhaps upon payment of an agreed sum. This is often calculated by reference to the sum originally paid by the producer and also possibly the further amounts the producer has spent in developing the project. During that period it is advisable for the rights owner to specify that the film rights should not be assigned without its consent, at least not without a full novation (see Chapter 5).
There will normally be warranties and indemnities on both sides: the producer will want the usual warranties covering the original work (see Chapter 5), and the owner will often seek a specific indemnity covering any liability arising out of changes made in the film.
Producers and production companies will normally insist on a full waiver of the author’s moral rights – at least insofar as they relate to film exploitation form. The right of paternity is not likely to be infringed, since specific on-screen credits are usually agreed in the Acquisition agreement, but the author’s right of integrity (to object to derogatory treatment) may become an issue unless the author is willing to consent to ‘treatments’, as defined in the 1988 Act, being made.
Payment of fees or royalties depends on the status of the author, and the nature of the adaptation. Usually, the purchase price will be a fixed sum, possibly with a further sum on top calculated by reference to a percentage of the film’s budget, up to a cap. Most rights owners will also be entitled to a share of the ‘net profits’. It is, however, essential to define ‘profits’ clearly – after deducting the cost of production, financing, distribution and deferments, there may not be very much ‘profit’ left at all. On top of this, there should be additional revenue from any re-makes, prequels and sequels. In acquiring the rights to a recent (or unpublished) book a producer is likely to require an option to acquire the rights to any sequels or prequels. The Acquisition agreement will set out the commercial terms on which such rights might be acquired. Recent film franchises such as those based on the Twilight and Hunger Games series of books, where the sequels would have been seen as presenting a much lower risk to the film’s producers and financiers than the first film, clearly demonstrate the rationale for this.
DVD and Blu-ray distribution and the like may in some (perhaps rare) cases entitle the rights owner to additional specific payments, but it is more likely that revenues from these sources will simply go into the general revenue stream, and, if the author is lucky, contribute to ‘profits’ in due course. Under the Copyright and Related Rights Regulations 1996, implementing the EU Directive on rental and lending rights, authors and screenwriters who have transferred their rental rights in films to the relevant producers have an unwaivable right to ‘equitable remuneration’ from any such rental exploitation, although this is normally bought out under the contract as part of the general payments receivable.
ELECTRONIC RIGHTS
Electronic rights is a somewhat dated and increasingly unhelpful term used in older publishing contracts, often used to cover two quite separate (and very different) rights:
• E-book rights, usually meaning exploitation by the original publisher of the whole verbatim text via the medium of a handheld device or iPad (and often treated as part of volume rights)
• E-version rights, usually meaning subsidiary e-rights or other forms of digital exploitation, often sub-licensed to someone else.
Publishers are increasingly licensing their works directly online, as e-books via platforms such as the Apple iPad, Kobo eReader or Amazon Kindle, via agreements with aggregators (see below), or often, in the case of journals, to groups of authorised users via site licences (e.g. for academic institutions, or library consortia). This latter raises specific access and security issues (see the following section on online access licences).
Acquiring electronic rights
As explained above, in order to license electronic rights (however that phrase may be defined) you first need to own them or acquire them. From the publisher’s point of view, this means acquiring a specific grant of the necessary rights from the copyright owner, usually the author. However, most publishing contracts more than 20 or so years old make no mention of electronic rights, and even more recent agreements may be somewhat vague on the two key issues of:
• what rights exactly are granted; and
• what will be paid for them.
(Often the second of these is left ‘to be agreed’, although arguably this reduces the ‘grant’ to a mere option.)
The golden rule is: never assume. A publishing contract decades old, which granted ‘all rights’, or ‘publishing rights’ (even ‘including all subsidiary rights’) at a time when the relevant type of digital exploitation – such as e-books – could not possibly have been in the minds of the parties, cannot safely be assumed to grant those specific digital exploitation rights now. A slightly more recent phrase such as volume rights (or even ‘electronic rights’) might be sufficient to cover straightforward exploitation of the verbatim text in digital form, but it might not be specific enough to license more general Internet use or access. In today’s online world, it cannot be stressed strongly enough that a specific platform for e-publication must be supported by an equally specific grant of rights – especially if (as is often the case) substantial investment is proposed. If it isn’t clearly provided for in the contract already, it is highly advisable to secure an additional, specific, grant of rights from the rights owner(s). (There may be more than one – in the case of a children’s book, for example, a fresh grant of rights may well be required from the illustrator as well as the author. A simple exchange of letters will normally suffice.)
The initial grant of rights: author–publisher licensing
Some publishers (especially reference and periodical publishers) may be in a sufficiently strong bargaining position with their authors and contributors to be able to insist on a full buy-out of electronic rights, but in other cases the author may want some evidence that the publisher actually intends to exploit those rights, and has the skill and capacity to do so. If all the publisher is doing is acquiring rights pre-emptively, just in case they may be needed later on, authors – particularly those with agents – may feel it unwise to do more than grant a first option, reserving the rights generally until a firm proposal can be made which refers to a defined platform and product, and offers specific payment terms. A publisher who controls all other publishing rights in a work, however, will at least want some reassurance by way of undertaking that the author or agent is not going to exploit the work electronically elsewhere without prior consultation.
If electronic rights are granted, it is advisable to specify as far as possible what rights exactly this rather vague and dated phrase includes. There will be particular types of exploitation which the publisher may wish to see expressly included, or which an author equally may wish to withhold. In this context it is important to distinguish and deal separately with the ‘products’ which can be based on, include or be derived from the text being licensed (such as enhanced e-books), and the ‘distribution media’ for those products. For example:
Product categories
• original text in digital form including e-books and journals available online;
• online versions or editions of major works, e.g. OED and the Grove music dictionaries;
• information databases and multimedia products, which include the text;
• entertainment/leisure software (such as computer games, mobile or smartphone apps and DVD) derived from the text or its characters;
• recordings of performances/readings of the text; film based on text.
Distribution media
• Internet and online access;
• distribution media for home or office use;
• broadcast (including digital and Internet use)/public performance
• open/closed network distribution rights including site licensing;
• pay-per-view and payment for use.
These distribution media options may vary in relation to each of the various product categories being licensed. Also, of course, the appropriate royalty structure and percentages may vary. It is important to define (and license) each market sector separately, and avoid overlapping (and conflicting) grants of rights.
The following points should generally be borne in mind:
• Is the licence exclusive or non-exclusive?
• Are the rights limited to electronic use of the (unaltered) verbatim text? Does this include e-book and online delivery?
• May the work only be used complete, or may it be condensed or abridged, manipulated or altered?
• May it be used in a compilation with other works? Does this include an interactive/multimedia version?
• Is the licence limited to delivery platforms currently in existence or is the intention to include ‘any other devices hereafter invented’?
• Is the licence for all languages (human and machine) and all territories? (Bear in mind that territorial limits may be of limited effect with Internet use.)
• What payment methods are available (fees, payments per use, subscriptions, royalties based on net receipts, or dealer price?) and what proportion will the author/contributor get?
• Does the licence last for the full term of copyright, or only for a limited term of years?
• Do (or should) the rights revert to the author if they are not being exploited (or if a product is launched, but then allowed to go ‘out of promotion’)?
Major publishers planning (or investing in) ambitious online works may prefer to commission authors, illustrators and other contributors specifically for those projects, and take full assignments of copyright from them in their work – or at least sole and exclusive licences for all such exploitation for the full term of copyright. In other cases, where a full buy-out does not seem appropriate, authors and agents may prefer to grant electronic rights for limited periods at a time (perhaps for as little as three or five years) with provision for the rights to revert if the publisher or other licensee concerned has not exploited them within a given period. Following the EU Rental and Lending Directive, it will also be important to deal with authors’ rights to ‘equitable remuneration’ on the rental of films based on their work.
The author’s moral rights – particularly of paternity and integrity (see Chapter 4) should also not be forgotten, where they apply (for exceptions, see Chapter 4). Unless moral rights are going to be completely waived, it will be necessary to make sure that authors who have asserted their paternity rights are credited adequately, and also that the works are not subjected to derogatory treatment, and – ideally – are not subjected to any significant ‘treatment’ at all, without the author’s consent.
Electronic licensing and joint ventures
Owners or licensees of electronic rights – such as publishers – may seek to exploit those rights in a number of different ways. Some will have the experience and resources to develop electronic products themselves in-house – but this may be difficult initially for a smaller publisher. Some will acquire electronic publishing expertise by bolt-ons or buy-ins of existing teams from outside, but again this can be expensive. Most will rely on straightforward licensing or sub-licensing to service providers or aggregators already in the market, or – where more active collaboration is required – joint ventures. As with all such licensing, however, many legal constraints are imposed; at the end of the day it is largely a question of who has (or is perceived to have) the relevant expertise, and who you trust.
Key issues which should be covered in any such licence include the following:
• Is the licence exclusive or non-exclusive? Bear in mind any possible conflict with existing e-rights, or film or TV rights.
• Define the languages (computer as well as human) and the territories (where appropriate) in which exploitation may take place.
• Define the permitted platforms (for example Internet, or online, or use on a hand-held device, including not only dedicated e-book readers but also iPads and mobile phone apps) if necessary; in some cases it may be advisable to license only a specific format or product.
• Agree on (and cost in) any necessary back-up facilities, helplines or other support overheads: who will provide for these, and how will any costs be shared, or deducted? Will the author(s) need to be involved in regular revisions or updates, and on what terms?
• If necessary, specify permitted kinds of use, any restrictions on authorised or permitted users and in appropriate cases consider a site licence, restricting use to particular geographical sites (such as offices or university campuses – for more on this, see online access licences, below).
• May the work be altered or adapted in any way, and may it – or parts of it – be ‘bundled’ with other works? Think seriously about the integrity of the work (including the author’s moral rights): will you retain a right of consultation (or even veto) over any changes? With a new product in a new medium, quality control may be crucial – don’t leave approval until it’s too late. Agree, if necessary, a staged consultation/approval procedure as the product develops, and retain the right to withdraw approval and terminate the licence as and when necessary.
• How long will the licence last (three to five years is common)? Is there a launch deadline or specified release date? Consider the circumstances in which you might wish to terminate the licence early and regain the rights: breach of key terms (such as non-payment, or unauthorised use), unsatisfactory sales performance or failure to meet agreed targets, and the usual termination and reversion provisions, for example, on insolvency.
• Be clear about ownership of all relevant copyrights, and any other relevant intellectual property rights such as any trade marks. In the case of a joint venture, the joint venture company may need to acquire the rights. Do not forget to renew any necessary copyright permissions (and agree who will do this – and pay any fees).
• Provide adequately for any moral rights of all relevant authors, and any required waivers (see Chapter 4). If possible ensure that any sub-licences are also made subject to the author’s moral rights. Agree specific credits, not only to the authors but to the licensing publisher, and ensure that this covers advertising and packaging as well as the product itself. Be particularly careful about any permitted use of brand names, logos or trade marks.
• Agree clearly what is to happen about money – who gets what and when. For a compilation or multimedia work, this may involve agreeing on the comparative ‘value’ of each work included: bear in mind that text occupies far less space on a CD than pictures, yet may be far more valuable in selling the product. Allow for the value of any digital amendments which individual rights owners may need to make, but equally bear in mind the high upfront development costs a software house may incur. Agree a payment system appropriate for the product and medium concerned – this may be a familiar royalty structure, or payments per-use, or a proportion of agreed profits (as in the film and TV industries). In each case be clear about the method of calculation to be used. It may be wise to provide for a review of financial terms after three to five years, and perhaps minimum revenue in a given period.
In an online world, many people have effectively become self-publishers, via pod-casts, blogs and tweets, and much of such ‘user-generated content’ is intended to be freely used and read, with no access or re-use restrictions at all. However, there are many copyright issues (on which, see Chapter 2). For authors and publishers in particular, access conditions for copyright content usually need more serious thought. Given that ‘digital is different’, and that digital access enables unlimited perfect copying at the click of a mouse, online licences need considerable care. However, for most publishers the demand for online access represents a major publishing market.
Licences for online access raise a number of key issues. The notes which follow reflect a variety of current experience, including site licences for academic or library use.
THE LICENSEE
Be specific, not just in defining the licensee itself, but also in listing all addresses or sites which the licence is to cover. This may most easily be done in an appendix or schedule to the licence, which can then be updated if necessary without having to amend the main contract. It is useful to require contact details, e.g. of a licence administrator or technical contact.
AUTHORISED USERS
It is important to identify as precisely as possible which categories of users will be entitled to access. In the case of an academic institution, will this cover full-time faculty staff, researchers and librarians only, or include temporary, contract or visiting staff? All students, or only those registered full-time at that institution? Some flexibility is usually needed, e.g. to allow for joint degrees and linked research teams (and even walk-in users, if agreed), provided all those concerned are made subject to the relevant terms and conditions, and can gain access only via the licensee’s secure network or intranet, either via designated and supervised terminals or from an authenticated IP address.
LICENSED MATERIAL
Set out clearly what is licensed and what isn’t – if necessary title by title, but at least which online services and electronic products, and any other content available (and for which, obviously, the publisher owns or controls the necessary electronic rights). Detailed listings may be done more easily in appendices or schedules.
Online licences are normally non-exclusive and non-transferable – it is highly advisable to spell this out – and it is clearer if they refer to specific licensed activities or permitted uses, and are made subject to any other terms and conditions (such as payment of the fee). Be clear about the dates on which the licence will commence and end, and what happens at the end of the term – will it automatically terminate (unless renewed) or will it continue from year to year? Many institutions ask for ‘perpetual’ access to be included in the contract, and although this may initially sound unrealistic, continuing access may often be feasible via digital repositories or archives such as Portico or LOCKSS.
INTELLECTUAL PROPERTY
It is advisable to confirm on both sides that the works licensed are copyright works, and confirm any other intellectual property or other rights, such as trade marks. Licensees are often required to use reasonable endeavours to protect relevant IP rights, or at least to notify any breaches. It is common to reserve to the publisher all rights not specifically granted in the licence, for the avoidance of doubt, and to prohibit removal of, or interference with, authors’ names or the publisher’s copyright notices or trade marks.
PERMITTED AND PROHIBITED USES
The more clearly these can be set out, the better – two separate lists is the clearest method. Consider what proportion of the licensed material may be stored, viewed, downloaded, copied and printed, and for what purposes. Can it be copied or linked to other authorised users, or even more widely? Commercial use or re-use is usually prohibited, as is uploading to any network other than the designated intranet or secure network – if so, it is wise to be very clear about this.
UNDERTAKINGS AND OBLIGATIONS
These are often stated to be mutual, so that the licensee clearly undertakes not only to pay any fees and charges but also, for example, to make access available only via the secure network, to promote the terms and conditions to all authorised users, to take reasonable steps to terminate any unauthorised access and deal with any copyright infringement reasonably under its control. On the publisher’s side, the licensee may look for a continuing (or even ‘perpetual’) obligation for availability and uninterrupted online access (see above), at least as far as reasonably possible and as far as can be predicted.
It is usual for either side to have the right to give written notice to terminate, subject to an agreed period of notice, as well as the usual provisions for termination due to insolvency or material breach. It is sensible to specify how long access may continue after termination, and whether any licensed material should be returned, or whether local files should be destroyed or deleted.
While the trade paperback in printed form is still comparatively popular, user-friendly and cheap, handheld devices are progressively becoming smaller, lighter and cheaper, with easier on-screen reading, and e-book platforms such as the Amazon Kindle and Kobo eReader, and mobile phones and iPads, are an increasingly user-friendly route to market. Many publishers are entering into contracts with aggregators, suppliers of conversion, storage and distribution services, to make their titles available via this route (see below) but, equally, many publishers are entering into direct e-book licences themselves.
The following notes deal with some of the key issues often raised by such licences.
TITLES AND E-VERSIONS
It is important to define carefully:
• The titles to be included (usually in an appendix, and often with a delivery timetable for key titles); and
• The e-versions to be created, in which formats, and usually for which titles (depending on the particular features of each one), and any approval requirements.
RIGHTS GRANTED
The publisher will need to grant the specific rights necessary for conversion into digital versions, usually using the licensee’s own conversion processes and software, incorporating codes and metadata as required, and if necessary to store, sell, distribute, make available and offer access (perhaps including rental) on the publisher’s behalf; such grants of rights are normally non-exclusive and non-transferable. The licensee may require confirmation from the publisher that the publisher does actually own or control (or have cleared) the relevant digital rights, not only to each title but also to any third party material included (or, if not, that such material will have been removed).
ACCESS
It is normally wise to limit access to servers controlled by the distributor, with no permanent hosting on any other server without the publisher’s prior consent. It is also common to require the distributor to maintain the highest industry standards to protect the e-products from unauthorised access or use, and to notify the publisher promptly if any products are accessed or used without a valid licence agreement. Distributors may also be expected to maintain a helpline for subscribers or customers in the event of software or hardware malfunction. On requests for ‘perpetual’ access, which may at first sight appear impossible, see the section on aggregator licences, below.
TERM OF LICENCE
Given the speed at which technology is developing, licences are currently short: three to five years is fairly usual.
COPYRIGHT AND IP RIGHTS
It is advisable to confirm that copyright in the titles concerned (including the final e-versions) rests with the publisher, and there is usually a provision that the licensee should credit the copyright on every version. There may also be a need to make provision for protecting or crediting the authors’ moral rights. However, although it is customary to specify that the licensee acquires no copyright rights in the licensed content, or rights in any of the publisher’s trade marks, the licensee will often need the right to make use of relevant trade marks, subject usually to a right of approval, and a proviso that no alterations will be made without consent.
CHARGES AND PAYMENTS
There may be conversion charges, or charges for any of the services bought in (which should be set out clearly), but there are normally royalty arrangements for e-versions sold. These may be based on list price or in some cases, net price received, depending on whether, for example, the titles are trade or professional titles. It is advisable to be clear about the timetable for any payments, e.g. quarterly or monthly, and audit arrangements – it is important to ensure that complete and accurate records of sales are kept, and regular sales reports are supplied.
WITHDRAWAL AND TERMINATION
It is sensible to provide for withdrawal of any individual title or titles, on reasonable notice, as well as for termination of the entire licence (on the usual terms, e.g. breach of a material provision, or insolvency), again on reasonable notice. It may be necessary to specify arrangements for return or deletion of any material or files held in digital form.
As mentioned above, publishers may license their e-content directly themselves or they may prefer to use the services of intermediary hosters, service providers and distributors with an established place in the e-market, known as aggregators, who (as the name implies) may offer the works of a number of different publishers. Licence agreements with aggregators will have many features in common with other e-publishing agreements, but since they themselves will usually have their own licence agreements with end-users there may be an added layer of access and use to manage.
CONTENT
As with all such agreements, it is essential to be very precise about which of the publisher’s titles are included, and which are not – the usual solution is detailed listing in a schedule or appendix. Is there to be provision for new titles, or series, to be added later on, usually by mutual consent? An opt-in clause to cover this may be advisable. It may also be appropriate to specify that the aggregator will offer a minimum number of titles (or percentage of the total) at any one time, during the term of the Agreement.
DELIVERY
It is usually necessary to specify the format in which titles should be delivered, and also whether direct to the aggregator or to a specified conversion house.
RIGHTS GRANTED
In return for the usual duty to market the works effectively, the aggregator will need a clear grant of rights, including (usually) a non-exclusive and non-transferable licence to reproduce the content, display, distribute, make available and provide access to it, advertise and sell it (and possibly rent it out), ideally on a designated platform or platforms. It is highly advisable to be specific about the territories in which (and into which) the content may be sold (unless the licence is worldwide). It may be necessary to provide for pay-per-view, as appropriate. They may also need a right to adapt the works, as far as necessary for compatibility in the conversion process, but (usually) not otherwise without prior consent. It is also sensible to specify whether the aggregator may sub-license to authorised agents, re-sellers or affiliates (preferably named), and whether there is any restriction on permitted user groups (e.g. consortia or organisations with more than one site), at least without consent. It may also be wise to specify whether or not (usually not) the aggregator is permitted to integrate the licensed content with any other works, or create derivative works based on it, without consent.
Controlling access in an Internet age is a constant problem, so it is usually advisable to limit access exclusively to servers controlled by the aggregator, and provide that there should be no hosting or access from elsewhere without express consent. An aggregator is usually also expected to provide as much system security as reasonably possible to protect the content from unauthorised access, other than authenticated IP address or password, and to notify the publisher if any unauthorised use or access comes to light.
Some end-users (such as libraries) often demand ‘perpetual’ access, which may often be feasible via digital repositories or archives (see above)
ROYALTIES AND SALES REPORTING
Financial details are always best set out in a Schedule, and how calculated (e.g. a percentage of online only price). Different royalties may of course apply to different classes of users. Timetable for payment is important, often monthly or quarterly, and if appropriate (for example with some journals) there may be a guaranteed or minimum annual royalty. Timetables – and format – for sales reports should also be detailed, together with any audit provisions (often once per year, during normal business hours), and on what notice.
TERM AND TERMINATION
Most licences are for relatively short periods initially (three or five years is common), or sometimes, for journals, the subscription period. A provision for regular review may be wise, and any renewal terms. Normal termination for breach or insolvency is common, but aggregators may have their own supply contracts with their own customers, so termination provisions will need some care. It is also usual to provide that digital files are deleted or returned on termination of the contract.
EXHAUSTION OF RIGHTS AND PARALLEL IMPORTATION
It is important to recognise that licensing an intermediary to distribute or make available your works may in some circumstances lead to exhaustion of exclusive distribution rights in some territories. It is very important that delivery to aggregators or other retailers should only be done under very clear conditions relating to sales and territories covered, otherwise the necessary ‘consent’ for putting the works concerned onto the relevant market may not exist. For more on this, see the final section on Exhaustion of Rights in Chapter 14.
Given the developing nature of digital exploitation and licensing in the publishing trade, and the rapid pace of change, it is impossible – and probably invidious – in a book like this to do more than try to highlight a few key principles, which we have tried to do in the preceding sections. Meanwhile, for other kinds of electronic licences in current use, see the growing list of precedents in Clark’s Publishing Agreements (ninth edition, 2013).
AGREEMENTS BETWEEN AUTHORS AND AGENTS
We looked in some detail in Chapter 5 at literary agents’ own standard publishing contracts, in the context of the author–publisher agreement. In the final section of this chapter we will take a quick look at the legal relationship between agents and authors themselves.
Most established literary agencies now enter into some kind of written agreement with authors who they take on, usually in the form of an extended letter. It is possible in some circumstances for an agent to acquire actual or implied authority to represent someone else (called their ‘principal’) without entering into a written agreement, but this is not generally recommended as a long-term business practice, and it is always advisable to record such agreements in writing as soon as possible – if only to confirm the extent of the agent’s authority, and (the source of most disputes) what payment or commission they will be entitled to receive.
Where there is an agreement, the terms of that agreement will govern the relationship; there is, however, probably also an overriding obligation on all agents to perform their duties in good faith and with reasonable care and skill. Contracts with all commercial agents within the EU are regulated by the Commercial Agents Directive, implemented in the UK in the shape of the Commercial Agents (Council Directive) Regulations 1993 (as amended). Some of the key criteria include the following:
• there should be no conflicts of interest;
• the agent’s powers or duties should not be delegated without consent;
• agents should not make secret profits or undeclared commissions;
• agents have a right to be indemnified by their principals when acting within their authority;
• all agents have a right to reasonable remuneration.
The entitlement to reasonable remuneration normally comes to an end straightaway when the agency is terminated, unless the contract provides otherwise. However, although this makes sense for most commercial agencies, it does not allow for agents (such as literary agents) who – apart from a share of any advance – are paid substantially by means of a commission on long-term future earnings. Most literary agency agreements therefore expressly provide that the agent’s agreed commission will be paid on all future earnings, from all sources, which derive from agreements which that agent actually negotiated (or, in some cases, agreements signed by the author while the agency was in force, even if the agent was not directly involved). If the author accepts this, it means that many agents will continue to be paid commission on their former author’s titles long after the agency arrangement itself has been terminated. For this reason, most agents’ standard publishing agreements include a clause irrevocably appointing them as the author’s authorised recipient for all monies payable on that particular title. Some authors may not be willing to make an irrevocable appointment – there is no legal reason why agency appointments should not be revoked at any time if the author wishes later to be paid direct, or via some other agent, but there will then be a separate contractual issue between the author and the agent about outstanding commission. There is, however, no reason why the publisher should become involved in this: it is entirely a matter between author and agent.
For authors wishing to enter into an agreement with an agent, the Association of Authors’ Agents maintains a professional code of conduct. Some general guidance, and comparison of commission rates, may be found in various annual publications such as the Writers’ and Artists’ Yearbook. Carole Blake’s book From Pitch to Publication has a sample letter.