Thursday, January 8, 2015

A Helpful Checklist for Book Contract Negotiations

In trade book publishing (books for a general readership) buying literary rights outright is widely condemned.   The common practice is to grant publishers an exclusive license to control certain rights in certain territories for the full term of copyright (i.e., the life of the author plus another 70-years). This method of acquiring rights is complex. The maze of details includes the calculation of royalties, non-competition, termination, next book option, and other considerations.

The following are the structural components of every book contract.  The topic heads match the section heads of most publishing agreements. 

Contract Negotiation Checklist

  I.   General Provisions


      1. Name/address of parties
         -Why kind of author?  Joint?  Single?  Corporate entity? 
      2. Description of work (synopsis)
          -Tentative title, # of words, # of photos, intended audience, fiction, non-fiction,

II.   Grant of Rights and Territory

      1. Is it an assignment of "all rights" or a license agreement?
      2. Term or time period (i.e., usually the life of the copyright)
      3. Geographic scope
           a)     World?
           b)     Limited?  (e.g., U.S., its possessions & Canada)
      4. Exclusive rights granted
           a)     Primary rights
                  -Hardcover
                  -Trade paperback
                  -Mass market
                  -eBook
          b)     Secondary (subsidiary rights)
                  -Periodical rights
                  1) First serial (i.e., prepublication excerpts)
                  2) Second serial
                  -Book club
                  -Dramatic rights
                  -Film/TV rights
                  -Video Recordings / Audio Recordings
                  -eBook
                  -Other digital versions (apps, enhanced eBooks)
                  -Radio rights
                  -Merchandising (commercial tie-in) rights
                  -New technologies
                  -Foreign translations rights
                  -British Commonwealth rights

III.   Manuscript Delivery

    1. Delivery requirements
          a) When due? Is the date realistic? Time is of the essence?
          b) What format? Specify size of paper, spacing, margins, etc.
          c) What to deliver?
                 -Number of manuscript copies, disks (what WP format?)
                 -Index (who pays?)
                 -Number of illustrations, charts, photos (who pays?)
          d) Copyright permissions and releases
                 -Scope of rights (does it parallel grant of rights?)
                 -Who pays?
      2. Manuscript Acceptance
          a) Criteria: Satisfactory in "form and content" or at "sole discretion" of the  
            publisher? (Note: Historically, this clause has been a litigation flashpoint)
          b) Termination for unsatisfactory manuscript
          c) Termination for changed market conditions
          d) How is notice of acceptance or dissatisfaction given
          e) Good faith duty to edit
          f) Return of the author advance
                 -First proceeds clause
                 -False first proceeds clause
  IV. Copyright Ownership

      1. In whose name will work be registered?
      2. Exclusivity
      3. When will work be registered? (Should be done within statutory period).
      4. Joint authors
      5. License versus assignment
      6. Independent Contractor or Work for hire
      7. Reserved rights
            -Film, television, live stage?
      8.  Copyright Office filing deadline & benefits of filing promptly

V. Author’s Representations & Warranties
      1. Author sole creator
      2. Not previously published; not in public domain
      3. Does not infringe any copyrights
      4. Does not invade right of privacy or publicity
      5. Not libelous or obscene
      6. No errors or omissions in any recipe, formula or instructions
      7. Limited only to material delivered by Author

VI. Indemnity & Insurance Provisions
      1. Author indemnifies publisher
      2. Does indemnity apply to claims and breaches?
      3. Can publisher withhold legal expenses? Is it held in an interest   
      bearing account
      4. Is author added as additional insured on publisher's insurance?
      5. Does publisher have ability to settle claims without prior approval of the
      author?  Author options. 

VII. Publication
      1. Duty to publish within [X] months of delivery & acceptance?
          a) Force majeure (acts of G-d)
                 - Any cap on delays?
      2. Advertising and promotion
      3. Right to use author's approved name and likeness
      4. Bound galleys/review copies
      5. Style or manner of publication
          a) Title consultation or approval?
          b) Book jacket
                 - Right of consultation? Approval?
          c) Changes in manuscript
      6. Initial publication by specific imprint or publisher may sublicense?
VIII. Advances & Royalties
      1. Advance against future royalties
      2. When payable? (in halves, thirds, etc.)
      3. Royalties and subsidiary rights:
          a) Primary rights
                 -Hardcover royalties
                 -Trade paperback royalties
                 -Mass market royalties
                 -eBook royalties
                 -Royalty escalation(s)
                 -Bestseller bonus
                 -Royalty reductions
                  1) deep discount and special sales
                  2) mail order sales
                  3) premium sales
                  4) small printing
                  5) slow moving inventory
                  6) bundling with other works
          b) Secondary (subsidiary) rights royalty splits
                 -Book club (sales from publisher’s inventory v. licensing rights)
                 -Serialization (first serial, second serial)
                 -Anthologies, selection rights
                 -Large print editions
                 -Hardcover
                 -Trade paperback
                 -Mass market
                 -Foreign translation
                 -British Commonwealth
                 -Future technology rights
.                 -Audio rights
                 -Motion picture/TV/live stage
                 -Merchandising
                 -Advertising
     4. Reasonable reserve for returns
          a) What percentage is withheld?
          b) When liquidated?
      5. What is royalty based on? (Retail price? wholesale price? net price?)
          a) At average discount of 50%, 20% of net is same as 10% of list
          b) At average discount of 40%, 16-2/3% of net is same as 10% of list
          c) At average discount of 20%, 12-1/2% of net is the same as 10% of list
       6. Recoupment of advances

IX. Accounting Statements
      1. Annual, semiannual, or quarterly statements
      2. Payment dates
      3. Cross-collateralization (good for publishers, bad for authors)
      4. Audit rights
      5. Limit on time to object to statements
      6. Limit on time to bring legal action
      7. Examination on contingency basis
      8. Pass through clause for subsidiary rights income
      9. Reversion of rights for failure to account

X. Revised Editions
      1. Frequency
      2. By whom?
      3. Royalty reductions if done by third party
      4. Sale of revised edition treated as sale of new book?
      5. Reviser/Author credit

XI. Option
      1. Definition of next work
      2. When does option period start?
      3. Definiteness of terms (i.e., is option legally enforceable?)
      4. What type of option? (e.g., first look, matching, topping)

XII. Competing Works      
      1. How is competing work defined?      
      2. How long does non-compete run?
      3. Any reasonable accommodations?
      4. Special issues for fiction writers

XIII. Out-of-Print
      1. How defined? (Eg, __ copies sold over __ accounting periods)
      2. Notice requirements
      3. Author's right to purchase digital files, inventory

XIV. Termination
      1. What triggers reversion of rights?
          a) Failure to publisher within ___ months of manuscript acceptance
          b) Failure to account to author after due notice
          c) Failure to keep book in print (see Section X)
      2. Survival of Author's representations and warranties
      3. Licenses granted prior to termination survive
      4. First proceeds clause

XII. Miscellaneous
      1. Choice of governing law
      2. Mediation / Arbitration?
      3. Bankruptcy
      4. Modification
      5. Literary agency clause
      6. Personal guarantee if the author is a business entity, not a human being.
      7. Reversion of unexploited rights (e.g., audiobook)
      8. Insertion of agency clause



Resources Beyond the Blog

Author Guild
Dramatists Guild
Independent Book Publishers Association (IBPA)
National Writers Union (NWU)
Romance Writers of America (RWA)
Science Fiction Writers of American (SFWA)
Society of Authors (UK)
Society of Children's Book Writers and Illustrators (SCBWI)
Text and Academic Authors Association (RWA)

 Lloyd J. Jassin has his own private practice where he concentrates on business and legal issues affecting authors, literary agents and publishers. He began his career in book publishing working for companies such as Prentice Hall / Simon & Schuster and St. Martin's Press, in publicity and marketing, which perhaps explains his affinity for trademark law. Later in his career he worked in the law department of Viacom International, the world's largest syndicator of television programs.  He is co-author of The Copyright Permission and Libel Handbook (John Wiley & Sons).

Contact:

Law Offices of Lloyd J. Jassin
The Paramount Building
1501 Broadway, Floor 12
New York, NY 10036
212-354-4442 (tel.)
jassin@copylaw.com (email)



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