The Blurred Law Behind The Languishing E-Book Industry

Originally published in BNA International Piracy and Brand Awareness, May 20071

Copyright Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

Predictions for the success of e-books abounded when the technology first appeared in the late 1990s. E-books became the rage at book publishing conferences2 and society was on the verge of entering "the e-book age".3 But books in electronic format clearly have not taken off and may not do so any time soon. What is the problem with e-books?

Disappointing progress of e-books maybe partially due to the legal uncertainty surrounding the ownership of e-book rights. Where a book contract exists but does not mention electronic rights, ownership of those rights may depend on whether e-books are really "books". Only one district court has weighed in on the matter, and held that a right to publish "in book form" did not encompass e-book rights. E-books, according to that court, constitute a separate medium from printed books. Strong arguments support the proposition that e-books are "books," however, and ongoing lawsuits undoubtedly will refine the definition of e-book rights.

1. Background on E-books

   Practical problems associated with e-books are plentiful. Many people find it more difficult to read from an electronic display than from paper. E-book displays typically show a smaller amount of text than a page in a printed book, resulting in frequent page turning. And publishers simply have not provided many titles in e-book format, making readers wary of investing inexpensive e-book reading devices.4 Also, other technologies have leapfrogged the e-book, offering interactive, interlinking information on media such as DVDs.5 E-books pose an additional problem for publishers, for whom piracy is a much bigger concern with digital e-book content than with printed content.6

   While the e-book market can largely blame these practical problems for its bust, another explanation lurks beneath the surface: copyright law blurs the rights of authors and publishers in the electronic realm. Not surprisingly, publishing agreements executed before the existence of e-books failed to mention which party owns the right to publish works in e-book form.7 Does the author retain the rights not explicitly granted to the publisher or does the publisher inherit the benefit of technological advancements like the e-book?

   Until either courts or legislatures resolve the tension between authors' rights and publishers' rights, e-books will likely continue to languish. But once e-books are decisively included or excluded from the "new use" category, publishers and authors will feel less vulnerable to legal uncertainty when investing resources into electronic publishing. Case law is sure to develop quickly, especially following the current lawsuits against Google for its Google Book Search project. Authors and publishers would be prudent to follow the developing law closely.This article summarizes the issues behind the recent and current electronic book cases and the impact that their outcomes may have on the future of electronic publishing.

   2. The Copyright "New Use" Issue and E-Book Rights

   The e-book rights controversy boils down to how copyright law handles the application of developing technology to old copyright licenses. Courts have struggled to reach consistent results when dealing with "new use" problems. In some cases, courts have interpreted licenses broadly, finding that it is the author's job to exclude rights to new uses.8 For example, Stravinsky's license of "The Rite of Spring" to the Walt Disney Co. for use "in a motion picture" allowed Disney to distribute "Fantasia" on the later developed videocassette and laser disc formats.9 Those in favor of the broad interpretation prefer depriving the author of profits from unforeseen technological developments to depriving the licensee from the reasonable terms of the contract.10 In other cases, courts have interpreted licenses narrowly, finding that grants encompass only those rights that are explicitly listed.11 For example, a grant of the right to use a song in a film exhibited in motion picture theaters and by "means of television" did not allow the licensee to distribute the film on videocassette when videocassette players for home use were not known at the time of the agreement.12 The narrow approach favors the authors, reasoning that a licensee should not reap the entire windfall associated with a new medium.13

   Courts in both schools of thought typically consider at least three factors when approaching a "new use" problem: the language of the grant, the foresee ability of the new medium, and the similarity between the new medium and the old medium. While generally probative of the intent to grant either broad or narrow rights, the language of the grant may not lend much insight into the precise scope of the grant; after all, ambiguous language creates the "new use" problem in the first place.14 In the case of e-books, a typical license may give the publisher the right to publish "in book form".15 Whether e-book rights are literally included in such a grant depends on whether e-books count as books.16 Inquiring into the foresee ability of the new medium also fails to provide much insight into the scope of the grant. In fact, it is difficult to imagine what is...