Judge Naomi Reice Buchwald has denied HarperCollins’ bid to recover more than $1 million in attorney fees from Open Road, months after finding that the upstart digital publisher had infringed HarperCollins’ copyright with an unauthorized e-book edition of Jean Craighead George’s classic 1971 children's book Julie of the Wolves.
The ruling comes after HarperCollins attorneys in June claimed that because the judge's "plain reading" of the contract ultimately found that HarperCollins held a controlling interest in George’s digital rights, Open Road’s decision to publish their e-book edition was “objectively unreasonable," and the fee award justified. Buchwald, however, rejected that argument.
“The mere fact that the Court was able to interpret the contract as a matter of law does not mean that [Open Road’s] argument was clearly unmeritorious or patently devoid of support,” Buchwald wrote, adding that the dispute “arose in the context of a developing, and still somewhat uncharted, area of copyright law.”
Specifically, HarperCollins had asked the court to grant them attorneys’ fees in the amount of $1,089,371.50 and costs in the amount of $7,040.62, about 70% of HarperCollins’ total fees of $1,556,245.
The judge did award HarperCollins’ the statutory maximum of $30,000 in damages (plus $7,040 in costs) and issued a narrow final injunction barring Open Road from further exploiting its unauthorized e-book edition. In awarding damages, Buchwald noted Open Road’s total revenue from sales of Julie of the Wolves was just $39,207.76, "half of which was shared as a royalty with Ms. George and her estate.”
The closely-watched suit was filed by HarperCollins in December of 2011. In it, HarperCollins argued that two clauses in its 1971 contract gave them the exclusive right to license an electronic edition of George's book—albeit, only with the permission of the author. Open Road, however, along with George, believed there was no grant of e-book rights in the contract, arguing that the language in question (which was inserted by George’s agent, Curtis Brown) did not envision e-books, and pertained to things like emerging abstracting services.
In March, 2014, Buchwald granted summary judgment for HarperCollins, finding the contract language was "sufficiently broad to draw within its ambit e-book publication."
After the liability ruling, settlement talks to potentially turn Open Road’s unlicensed edition into a licensed one broke down, and Harper attorneys, hoping to “send an appropriately strong message to digital publishers,” filed their request for an injunction and more than $1.1 million in damages and attorneys fees.
Open Road assailed HarperCollins’ request as “extreme” and argued that such a large fee award would "skew the balance further" against authors, who, with limited funds, might seek to assert their rights against large publishers and "the threat of million dollar attorneys' fee awards.”
While ostensibly a copyright matter, the case was always more about e-book royalties. In court filings, it was revealed that HarperCollins had offered to do an e-book edition with George, but refused to budge from its standard 25% net royalty, which George, before her death in May 2012, deemed fundamentally unfair (Open Road pays a standard 50% e-book royalty).
In the final analysis, given the specific contract language at issue in the case, HarperCollins’ legal victory offers no real clarity to other digital rights disputes. But HarperCollins' decision to litigate certainly shows its commitment to keeping e-book royalties at current levels. The publisher spent over $1.5 million to litigate a narrow case, rather than increase its e-book royalty and make money with George—even though Julie of the Wolves had already sold over 3.8 million print books, on a $2,000 advance.
In a statement, Open Road COO Chris Davis said the company looked forward to "moving on," and said Buchwald's injunction would have "virtually no impact on any other titles in Open Road's growing catalog of more than 8,000 e-books." A spokesperson for HC said the final decision "reinforced [the court's] ruling that we clearly have the e-book rights. While we would have preferred an award of attorney’s fees, we are nonetheless very pleased."