Internet Book Publishing Ruling on Random House v RosettaBooks Breaks New Ground

Judge has ruled that traditional publishing houses do not have an automatic right to print their authors in an electronic format.
On July 11,2001 Sydney H Stein, U.S. District judge denied Random Houses request that the court enjoin RosettaBooks from selling eight titles for which it has contractually acquired the electronic rights directly from their author. In his ruling the judge found "....that Random House is not the beneficial owner of the right to publish the eight works at issue as ebooks."

RosettaBooks has contractually acquired and paid for the electronic-publishing rights to nearly 100 titles, including several works by William Styron, Kurt Vonnegut and Robert Parker. On February 27, 2001, Random House, Inc., a wholly owned subsidiary of Bertlesmann, filed suit against RosettaBooks LLC and Arthur Klebanoff, individually, in federal court in the Southern District of New York. The suit alleges that Random House owns exclusive electronic rights to the titles by William Styron, Kurt Vonnegut and Robert Parker and that Rosetta is infringing Random House´s rights by publishing these titles electronically. Fundamentally, Random House argues that the limited grants it received 20-to-40 years ago to "print, publish and sell in book form" should now be interpreted to include e-books.

Random House had sought injunctive relief including an order which would prevent Rosetta from approaching the authors of the nearly 21,000 Random House backlist titles. Random House claimed to own the electronic rights to its entire backlist whether there is a specific electronic rights grant in the contract or not.

Rosetta retained Michael J. Boni of Kohn, Swift & Graf, P.C. of Philadelphia as its lead counsel. The firm represents, among many others, The Authors Guild in another electronic publishing rights matter. On April 6, 2001, Rosetta filed its answer, brief and fifteen supporting affidavits in opposition to Random House´s preliminary injunction motion.

Because of the gravity of Random House´s suit over authors´ rights, an Amicus Brief was filed by The Authors Guild (7,800 author members) and joined by the Association of Authors Representatives (representing over 350 literary agencies). This is the first time that these two organizations have joined in an amicus brief.

Rosetta´s responsive papers made clear that:

1. Publishing-contract interpretation and trade custom have long established that rights grants are limited, and rights not specifically granted are withheld by authors. Also, e-book rights could not have been contemplated as part of the rights granted by backlist authors to publishers decades ago.

2. Random House has known since the early 1990´s that it does not have electronic rights and therefore amended in 1994 its standard publishing contracts to include express electronic rights clauses in order to acquire the rights it did not otherwise have.

3. Technology developments have only made the e-book a foreseeable and viable product in recent years, certainly much later than the agreements Random House relies upon. This fact is supported by an affidavit by a pre-eminent expert in telecommunications who was one of the government´s experts in the Microsoft case, and confirmed by depositions from Random House´s own employees and experts.

4. E-book platforms have a range of features which enable a totally different experience for the consumer than print books do. E-books can adjust the font size of a book, permit searches throughout the text, permit the reader to look up a word in the dictionary, add notes or underlinings, and many features to come.

From Rosetta´s perspective, its competition with Random House culminating with this lawsuit is a David and Goliath saga. Random House wanted a court to impose: (a) a retroactive grant to Random House of the authors´ electronic rights; and (b) the extinction of Random House´s nascent but more nimble competitors, such as Rosetta, for the acquisition and marketing of literature in electronic form.

On July 11, 2001 Judge Stein denied Random House´s request for an injunction.

Read related article in The Register.