During the past few years, electronic rights or “e-rights” have significantly increased in importance to
everyone involved in the publishing community. Today one cannot read
an industry publication, attend a conference, or engage in a lengthy
discussion with another publishing professional without encountering
e-rights publishing. Authors, agents, and (book, e-book and
print-on-demand) publishers are involved in a struggle to stake out
the scope of their e-rights territory.

E-rights have provided significant opportunities for new and
expanded revenue streams for the traditional printed word. Some of
these new opportunities include the following. Authors who have been
unable to have their work published by a book publisher now have the
ability to have their work originally published by an electronic
publisher or print-on-demand publisher. Agents are working with
authors to resurrect their “out-of-print” titles by
republishing them as e-books or through print-on-demand publishers.
Book publishers have realized that the licensing of e-rights to an
electronic publisher should be viewed as publishing the work in
another format, as for example the licensing of paperback rights.
E-book publishers are actively acquiring e-rights from book
publishers and authors as well as signing authors to publishing
contracts that provide for the first publication of an
author’s work in digital format. E-book publishers include
companies that (1) Sell individual titles to consumers who will read
them on hand-held devices, (2) License online collections to
libraries, and (3) Sell individual titles to consumers.
Print-on-demand publishers permit a book publisher of any size to
keep a backlist title available by manufacturing only minimal
quantities of that title, even only a single copy, at any given
time; this provides new opportunities for self-published authors.

As should be expected, e-rights and the dynamics of the
electronic publishing landscape have resulted in “new” and
modified business and legal issues that may no longer fit easily
into existing publishing models and traditional publishing and
distribution contracts. I will explore this dynamic e-rights market
in a series of articles that will focus on e-rights from the
perspective of publishers, authors, agents, and distributors. The
control of e-rights in a given work will be the subject of the
remainder of this article.

Authorship, Copyright Ownership, and the Assignment of Rights

Copyright ownership vests initially with the author of the work.
The author could be the individual who created the work or the
author could be the publisher if the work was prepared as a “work made for hire” and the requirements of the Copyright
Act’s “work made for hire” doctrine were satisfied.
The creator of the work, if the author, could also assign his/her
copyright ownership to the entire work or only particular rights,
such as publication rights, to a third-party such as a publisher or
distributor.

The 1976 Copyright Act for the first time embodied explicit
statutory recognition of the principle of divisibility in a
copyright. Section 201(d)(1) states that “the ownership of a
copyright may be transferred in whole or in part by any means of
conveyance or by operation of law” and Section 201(d)(2) states
that “any of the exclusive rights comprised in a copyright,
including any subdivision of any rights… may be transferred… and
owned separately.”

The “grant of rights” clause in a publishing agreement
enumerates those rights that are specifically granted by the author
to the publisher. An author’s grant could include all the
exclusive rights and interests in the author’s work, which
means that the publisher has complete control over the exploitation
of the work. On the other hand, the granting clause could be very
limited, such as only permitting the publisher to publish the
author’s work in a hardcover book edition. The importance of
the grant of rights clause is that the publisher may only exploit
those rights specifically granted to the publisher by the author.
Copyright infringement would occur if a publisher exploits a right
that was not granted to the publisher by the author.

Who Controls the E-Rights?

Today most grant of rights clauses specifically include a
reference to e-rights, but in addition, especially from the
publisher’s perspective, the granting clause should also
contain a “future technology clause.” The future
technology clause is important because it permits the publisher to
exploit a work in any future media that is not currently known of or
in existence at the time the publishing contract was executed. The
inclusion of the e-rights and future technology clauses are critical
in determining the rights of the publisher and author. In the event
that there is an e-rights dispute, the court will analyze the grant
of rights clause to ascertain whether the author or publisher
controls all or part of the e-rights. Therefore the publishing
contract should be very clear regarding the intent of the parties
concerning the exploitation of e-rights.

There have not been many judicial decisions involving the
ownership of e-rights. In the event the publishing agreement is not
clear on an e-rights grant or fails to address e-rights, then a
court will turn to the future technology clause if it exists;
however the courts do not the interpret the future technology clause
uniformly.

Judicial interpretation of future technologies and whether a “new use” was contemplated at the time the publisher and
writer signed the contract is not a recent phenomenon. Courts for
many years have interpreted entertainment industry contracts to
decide whether a grant of rights for an existing use of the work
covers the right for a new use of the work. On other occasions, a
court will look beyond the future technology clause and evaluate the
entire contract to determine the intent of the parties. It must also
be remembered that it is a general rule of law that any ambiguity in
a contract is usually construed against the party that prepared the
contract, which in the case of publishing contracts is normally the
publisher.

In the most significant e-rights case through the end of 1999, Tasini v. The New York Times Co., the court went further then
interpreting the grant of rights clause to reach its decision. This
decision, at least temporarily, may have ended speculation about the
control of e-rights when an author did not explicitly grant the
e-rights to a publisher. Before we look at the latest 1999 ruling,
let’s first review an earlier court decision on the same
case.

Tasini v. The New York Times Co.

(District Court Decision -1997)

In Tasini, the District Court for the Southern District of New
York was asked to decide whether a publisher could include in their
electronic database and/or CD-ROM an article that was written by a
freelance writer for newspaper or magazine publication without first
securing the permission of the writer. The freelance writers
contended that permission was required because the e-rights had not
been granted to the publisher. On the other hand, the publishers,
among other arguments, contended that the writer’s permission
was not required since the publisher by including the print article
in an electronic database and/or CD-ROM was only exercising the
right of revision that is held by copyright owners of “collective works.” Thus the substantive issue in this
case focused upon e-rights that were not specifically granted to the
publisher by an author and yet were exploited by the publisher in
electronic media.

The court ruled in favor of the publishers and decided that even
though a freelance writer failed to grant a publisher the e-rights
in an article that copyright infringement did not occur when the
publisher republished the article in an electronic database and/or
CD-ROM. The court held that a publisher in republishing the article
in an electronic format was lawfully exercising the right of
revision for a collective work. A more detailed analysis of this
decision can be found in my article titled “Electronic Rights:
Going beyond the Grant of Rights Clause,” which can be found at
http://www.publaw.com.

Tasini v. The New York Times Co.

(Court of Appeals Decision -1999)

On appeal, the US Court of Appeals for the Second Circuit ruled
in favor of the writers, overturned the district court ruling, and
found that the New York Times and the other publishers had
not been granted e-rights by the writers and were not protected
under the privilege afforded publishers of collective works under
Section 201(c) of the 1976 Copyright Act. The Court of Appeals
concluded that the publishers’ contention and district
court’s decision that the electronic databases were only
revised, digital copies of their newspaper or magazine went beyond
the scope of the revision right privilege in Section 201(c).
Therefore copyright infringement occurred when a publisher, without
obtaining permission from the writer, included a writer’s
article in an electronic database, such as the New York Times database (which is an anthology of multiple editions of the New York Times), or granted a license to include a
writer’s article in a CD-ROM, such as the General Periodicals
OnDisc database (which contained materials from multiple publishers
and was considered by the court to be “at best a new
anthology.”)

Conclusion

We have certainly not heard the end of e-rights controversies as
only as recently as December 1999 two new copyright infringement
lawsuits were filed by authors and photographers against the
National Geographic Society. These lawsuits alleged that authors and
photographers did not grant the e-rights in their works to the
National Geographic Society, and therefore the National Geographic
Society could not include their works in a CD-ROM. The National
Geographic Society is currently faced with five pending legal
actions that involve e-rights.

What lessons should publishers and authors learn from the Tasini
decision as it relates to the control of e-rights? First, it must be
recognized that we may not as yet heard the end of Tasini since
there is a pending request for a rehearing of the case by the full
Court of Appeals, and even after that rehearing, if it occurs, there
could be an appeal to the US Supreme Court.

However, if we disregard these pending judicial matters, a
publisher should realize that without having obtained the
author’s specific agreement to grant the publisher e-rights,
that any exploitation of the e-rights by the publisher could be a
copyright infringement of the author’s work.

Therefore, a publisher and an author should fully negotiate the
e-rights issue at the time they enter into a publishing agreement,
and they should include with as much detail and clarity their intent
as it concerns these important rights.

This article is not legal advice. You should consult an attorney
if you have legal questions that relate to your specific publishing
issues and projects.

Lloyd L. Rich is an attorney practicing publishing, cyberspace,
and intellectual property law. He can be reached at 1163 Vine
Street, Denver, CO 80206. Phone 303/388-0291, fax 303/388-0477,
e-mail rich@sni.net, Web Site http://www.publaw.com.