Thursday, January 8, 2015

Book Contract Negotiation Checklist

Book Contract Negotiation Checklist

The key to a good contract is clarity and an understanding of the business (not just legal) issues endemic to the publishing industry.

The common practice is to grant publishers an exclusive license to control certain

rights in certain territories for the full term of copyright. To put that in perspective, the full term of copyright is the life of an author plus another 70-years. This method of acquiring rights is complex. The maze of details and terms include advances, royalties, non-competition, out-of-print, subsidiary rights, next book option, and other provisions.

The following are the structural components of every book contract. Use it as checklist, or to focus on key clauses. Bear in mind, that while publishing contracts are drafted by publishing attorneys for the benefit of their publisher clients, they are not chiseled in stone. While some clauses are difficult to negotiate (representations and warranties), be aware the that publishers regularly revise their contract when requested to do so. They key, however, is knowing what is negotiable and what is not. Understanding both the legal jargon and publishing industry argot, and the long-term impact your contract will have on your business and business relationship is invaluable.   

-- Lloyd Jassin

Contract Negotiation Checklist


  I.   The Basics

      1. In whose name is the contract? Author?  A legal entity?
      2. If a legal entity, you will be asked to sign an inducement letter; a form of 
          personal guarantee.  
      3. Description of work (synopsis)
          -Tentative title, # of words, # of photos, intended audience, fiction, non-fiction

II.   Grant of Rights and Territory

      1. Is it a license of certain rights or an assignment of all rights? 
      2. Term or time period (term or years or in perpetuity?)
      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., pr-publication excerpts)
                  2) Second serial
                  -Book club
                  -Dramatic rights
                  -Film/TV rights
                  -Video Recordings / Audio Recordings
                  -eBook
                  -Other digital versions (apps, enhanced eBooks)
                  -Podcast / Radio rights
                  -Merchandising (commercial tie-in) rights
                  -Future technologies
                  -Foreign translations rights
                  -British Commonwealth rights
        c)    Rights Reserved by Author - Often omitted from contracts.  

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) When must publisher either accept or reject? 
          e) Good faith duty to edit
          f) Return of the author advance
                 -First proceeds clause
                 -False first proceeds clause
 
  IV. Copyright Ownership / Title

      1.  Who is responsible for registering the work with the Copyright Office?
      2.  Registration should be done within 3-months of publication.
      3.  Joint author or work-for-hire?
      4.  Reserved rights
            -Film, television, live stage = Author?
      5.  Copyright clearances / permissions
      6.  If a series, who owns the series title?
     

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 collateralize (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 = Reversion of Rights
      1. How defined? (number of 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 XIII)
      2. Survival of Author's representations and warranties
      3. Do licenses granted prior to termination survive
 
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

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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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