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Danger! Amazon’s Inside the Book Programs Pose Legal Risks for Publishers

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Not long ago, I was invited to deliver a keynote address at a conference titled “The Literature of Los Angeles.” To prepare my remarks, I needed to select some appropriate passages from the works of important L.A. writers, including Carolyn See, James Ellroy, and Mike Davis. But I did not need to visit a bookstore or a library in order to do so. I did not even have to get up from my desk and go to my own bookshelf. Rather, I spent a few minutes at Amazon.com and found everything I needed by using Amazon’s Look Inside the Book and Search Inside the Book features.

Is that good news or bad news for authors and publishers?

In terms of marketing, both authors and publishers benefit from the Amazon programs, at least in theory, because of the vastly increased visibility of their books. On the other hand, some authors and publishers may lose sales to the Amazon programs. Cookbooks are the favorite examples of the programs’ downside–would-be cookbook purchasers might find the recipes they need at the Amazon site, copy them out or capture and print the screens on which they appear, and forego the purchase of the books themselves. The same risk of selective use affects formbooks, poetry and song collections, and other books.

But the risks associated with Inside the Book options don’t relate just to marketing. A publisher who participates in the Amazon programs may unwittingly expose itself to some serious legal risks. Here are some frequently asked questions–and some answers–about the legal workings of Amazon’s Look Inside the Book and Search Inside the Book programs. (Both terms, by the way, are claimed as trademarks by Amazon.com.)

Is the Amazon Program Legal?

The Amazon programs are based on a request–and not a requirement – that publishers make their books available for use in Look Inside the Book and Search Inside the Book. Any publisher is free to decline to participate in the two programs. Indeed, as discussed below, some publishers must decline to participate because they did not acquire digital rights in the books they publish in conventional book formats.

Amazon, of course, is such a dominant player in the book industry that many publishers, and especially independent publishers, feel compelled to participate even though they fear that it might not be in their best interest to do so. Under the right combination of circumstances, a business may be liable for a violation of antitrust law if it uses its dominant market position in a way that limits competition in the marketplace.

Although there has been much grumbling among both authors and publishers about the Amazon programs–and Amazon has accommodated the concerns of the publishing industry by disabling the print function when copyrighted material is displayed on screen–no one has gone so far as to test the legality of the programs in court.

What Rights Does Amazon Acquire?

Amazon’s Look Inside the Book and Search Inside the Book programs are governed by the terms of participation agreements that publishers are asked to sign. The documents have been carefully drafted to secure some wide-ranging rights for Amazon in the books that are submitted for the two programs. Any author or publisher who takes the time to read the fine print may be unsettled by what Amazon is entitled to do with submitted books.

For example, according to the participation agreement for the Search Inside program that I was able to review, Amazon enjoys the right “[t]o reproduce the entirety of each Book in digital form” and “to display portions of each Book on any Web site owned or otherwise controlled by Amazon.com,” including foreign sites and “co-branded” sites such as Waldenbooks.com and Target.com. Although the publisher is obliged to provide a free copy of each book for scanning, Amazon does not oblige itself to actually include every book in its entirety.

Under the Search Inside program, visitors to Amazon sites are able to use search terms to “locate, select and display short excerpts of approximately 2 or 3 sentences that include the search terms.” A visitor with an Amazon account “will be able to view everypage within a Book, not to exceed 20% of the textual pages of a particular Book during any calendar month,” and to display the two pages preceding and following each page that is being viewed.

Although Amazon promises to “employ commonly available technologies in order to hinder downloading” and to “watermark all images to indicate that the material is under copyright,” a sophisticated computer-user may still be able to “capture” and print out the pages of the book that are displayed on the screen.

Once a publisher gives permission to use a book, Amazon may continue to include the book in the Search Inside program unless and until the publisher gives formal notice of termination and provides Amazon with a list of books to be removed.

What Legal Risks Does the Publisher Take?

Aside from the risk that participation in the Look Inside and Search Inside programs may actually hurt the sales of a book, the publisher takes a distinct legal risk in giving permission to Amazon unless the publisher is sure that it has obtained the right to participate in the Amazon programs from the author of the book.

Amazon asks the publisher to give the following assurances, which are known in legalese as “representations, warranties and indemnities,” and which oblige the publisher to protect Amazon from any legal claims that may arise from Amazon’s use of the book, including claims by the author of the book:

You warrant that you have full authority to grant the permission described herein. You agree to indemnify, defend, and hold harmless Amazon.com from all claims, judgments, damages, and expenses (including reasonable attorneys’ fees) that may arise out of any alleged breach of this warranty.

To give these assurances to Amazon, a publisher must first satisfy itself that the author has given the publisher the same digital rights that the publisher is giving to Amazon. If that is not the case, the publisher’s decision to participate in the Amazon programs may expose both it and Amazon to a claim of copyright infringement. And, if such a claim is made, Amazon will be entitled to hold the publisher responsible.

Thus, the cautious publisher must make sure that its signed contract with the author entitles it to exploit the digital rights in the author’s work in the manner described in the Look Inside and Search Inside agreements. Essentially, both programs are a form of electronic publishing, and the publisher that does not own or control electronic rights in a given book is not entitled to submit the book to Amazon for participation in these programs.

One effective approach to securing the necessary digital rights is including a clause in the author-publisher agreement by which the author grants all digital rights to the publisher. The grant of digital rights, of course, would usually be in addition to the customary grant of book publishing rights and other subsidiary rights.

Another approach is including a more limited clause by which the author specifically grants the publisher all digital rights that may be “necessary or convenient” to permit the publisher to submit the author’s work for use by Amazon in its Look Inside the Book and Search Inside the Book programs. Such a clause, if properly drafted, would be effective even if the author otherwise reserved e-book and other electronic publishing rights.

“Digital rights” and “electronic rights,” by the way, are roughly equivalent in meaning, but a well-drafted contract will make it clear what rights are being conveyed by the author to the publisher when either term is used. It’s most important, though–no matter which phrase is used–for publishers to acquire the proper rights from authors before signing a contract with Amazon for participation in the Look Inside the Book and Search Inside the Book programs.

Jonathan Kirsch, an attorney specializing in copyright, trademark, and publishing law, is pro bono general counsel of PMA and can be reached at www.jonathankirsch.com. His latest book is the bestselling God Against the Gods: The History of the War Between Monotheism and Polytheism (Viking). His publishing-law books, Kirsch’s Handbook of Publishing Law and Kirsch’s Guide to the Book Contract, will be reissued in an expanded and updated single-volume edition by Silman-James Press in fall 2004.

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