In a ruling handed down July 11, Judge Sidney Stein of the U.S. District Court for the Southern District of New York denied Random House's bid for a preliminary injunction that would have prohibited RosettaBooks from continuing to sell e-book editions of eight titles to which Random holds print rights. Random filed the lawsuit in late February after Rosetta published two books by William Styron, five by Kurt Vonnegut and one by Robert Parker in e-book form; Random claimed that its contracts gave it the exclusive rights to publish books not only in print editions but also as e-books. In his decision, Stein found that the clause to "print, publish and sell the work(s) in book form... does not include the right to publish the works in the format that has come to be known as the ebook." He noted that the phrase itself distinguishes between the pure content—"the work"—and the format display—"the book."
Stein ruled that based on the contractual language, "Random House is not the beneficial owner of the right to publish the eight works at issue as ebooks." Stein wrote that he was denying the injunction in part because Random failed to show that the publication of the e-books was causing the company "irreparable harm" and that Random was unlikely to succeed on the merits of its infringement case.
Arthur Klebanoff, founder of Rosetta, lauded the decision as a victory for all authors and agents and said that in what was a test case over who controls e-book rights, the court found that the rights rested with authors and agents. Rosetta attorney Michael Boni added that the decision makes it clear that Rosetta "can continue to negotiate e-book contracts." Klebanoff speculated that the decision would speed the publication of e-books. "I imagine many authors and agents were in a wait-and-see environment over what the decision would be," he told PW.
Stephen Pendergast, cofounder of e-book publisher Fictionwise.com, echoed Klebanoff's remarks, noting that the ruling will "certainly reduce the amount of caution we've had to exercise in buying rights." He noted that many agents had been slow to sell rights in marginal cases. "They would tell us, 'it's a Rosetta case,' and that we'd have to wait until the decision," Pendergast said.
In a prepared statement, Random House said, "We will review the judge's decision very carefully as we decide what the next appropriate steps might be." The company said that while it was disappointed with the ruling, "we stand by our view that an e-book is a book and that Random House's backlist contracts grant us the rights to publish the works in e-book form. Our concern is that this decision will hinder rather than help the development of this new technology." Random general counsel Harriette Dorsen told PW that the company will decide early this week if it will appeal Stein's decision or ask for a trial. "This is a setback for today, but it's just the first step in a long process," Dorsen said.
The Authors Guild, which filed a brief in support of Rosetta, was thrilled with the decision. "We're delighted," said Paul Aiken, executive director of the guild. "The court has ruled that book contracts mean just what authors, agents and indeed publishers thought they meant when they were signed in the 1960s, 1970s and 1980s." Don Maas, president of the Association of Authors Representatives, which filed a similar brief, said he thought the ruling couldn't have been more favorable to Rosetta. "It seems to me he read Rosetta's arguments chapter and verse. It left very little room for Random House to maneuver." He said the ruling carried implications not only for past work but for the future determination of rights. "The judge has effectively said: 'When a new technology comes along, sorry, Random House, you don't automatically get the rights.' "
Adam Rothberg, spokesperson for Simon & Schuster, one of several publishers to back Random's position, said the decision "isn't going to deter us from publishing e-books in any way, shape or form." But he also noted that "the ruling applies only to certain Random House contracts, and every publisher's contract is different."
Richard Curtis, president of the literary agency Richard Curtis Associates and publisher of e-Reads (www.ereads.com), which publishes e-book editions of out-of-print titles, hailed the ruling but agreed with Rothberg: "We're skeptical that this ruling will open the gates. Many older contracts have a 'storage and retrieval provision'—for microfiche or crude photocopying—and a court could extend those provisions to mean computer memory. The vague definition of a book in the RH contracts may not be prevalent throughout the industry. Authors, agents and lawyers need to look at every contract."
And despite the court's ruling, Curtis was unconvinced that authors and agents will know what to do with their e-rights: "Authors and agents are still on the sidelines uncertain about who will be a player, and who will be around tomorrow."