Copyright: Its History and Its Law

Long price and "net" price

Equities

The publisher usually sells to the public through the retail trade at a stated retail price, which may be either long price, in which case the high price and large trade discount permit a discount to the public, or "net" price, a lower price with less discount, which the bookseller is expected to maintain. The practice of issuing books at "net" price is growing, in the belief that through this policy larger sales are made and the publisher's gains and the author's royalties fairly balance. On the average, the publisher probably gets less per volume than the author, and the system is essentially on an equitable basis. The publisher's larger returns come from the fact that he handles more books than any one author writes. The publisher has usually, in bargaining with the author, the advantage of larger experience and superior business ability, and of the fact that the author seeks him rather than he the author; but no law can better the author in these respects. As a matter of practice, the better publishing houses treat with new authors on the same basis as with old, through a standard form of contract.

The literary agent

The author sometimes employs the "literary agent" as an intermediary in finding a publisher, especially for a first book, and in making arrangements with the publisher, for which the agent expects a stated payment or a proportion of the author's returns. The advantages of such intermediaries are offset by many disadvantages, and the best publishing houses treat an author as liberally and fairly in direct as through intermediate relations. In any event, the contract should be made and signed directly between author and publisher, as a third-party contract, or a double contract between author and agent and agent and publisher, presents serious complication in the event of future differences. The agent should not be given any lien on future works by the author. The literary agent cannot accept conditions or make sale beyond the authority given him by the author, and an innocent publisher may be held responsible for acts beyond that authority, as in the English case of Heinemann v. Smart Set Pub. Co., in 1909, where the defendants had bought "serial rights" with leave to condense into one number, which the agent had no authority to grant.

Usual American contract

In the publishing contract usual in America, the author "grants and assigns" to the publishers the stated work, undertaking either to copyright it himself or authorizing the publishers to enter copyright in their name, or as his attorneys in his name. The contract usually includes all translations, abridgments, selections, dramatizations, etc., or specifically reserves those to the author, the publishers in the first case agreeing to share profits or otherwise remunerate the author on such special forms. The author is expected to guarantee that he is sole owner of the work and has full power to make the grant, that the work is not a violation of any other copyright and that it is free from scandalous or libelous matter.

Publishers' obligations

The publishers undertake to publish the work in such style as they deem best suited to its sale, at their own expense, unless the author contracts to pay for the plates or for other publishing costs, and usually agree to account for sales semi-yearly or yearly and to make payments within four months thereafter. The royalty is usually based on the trade-list (retail) price, on the cloth or ordinary binding, or the style of binding in which the largest number of copies shall have been sold. It is frequently stipulated that on paper-bound copies, or editions or copies for schools or subscription sale, or a foreign market, or otherwise sold at a reduced price, the royalty shall be reduced, and that on press and other free copies no royalty shall be paid. When an author pays the cost of the edition or pays for making the plates, he may contract to pay a commission to the publisher and obtain the balance for himself, or he may contract for a larger percentage of return to him than the usual royalty percentage. The publishers are usually authorized to permit the printing of selections and to arrange for translations, etc., subject to the arrangement indicated above. The author is expected to pay for alterations either in full or above a stated sum, as fifty dollars, and to provide any index or like equipment if required.

Reversion of contract

Insurance is not usually required from the publishers, but in case of fire or loss, the publishers have the option of reproducing the work, and if they decline to do so, the contract usually provides for reconveyance of the copyright to the author and the termination of the agreement after the sale of copies remaining on hand. A publishing contract sometimes provides that after a specified time from date of publication, as two or five years, if the publishers consider that the public demand does not justify continuing publication, or for other reasons, they may offer to surrender their publishing rights on compensation for the plates, as at half cost, and remaining copies, as at cost, and if the author does not elect to accept this offer, then the publishers may sell copies on hand free from royalty and terminate the agreement, the copyright reverting to the author. The publishers are usually authorized, in their discretion, to protect the copyright by legal proceedings at their expense or at joint expense of publishers and author.

Scope of contract

The contract may be for the full term of copyright, with or without obligation on the part of the author to provide for renewal, or for a stated number of years and thereafter until terminated on stated notice, or it may be for a specified number of editions or copies. It is often stipulated that on discontinuance, the author shall have the right to take over the plates at cost or half cost and remaining copies at cost, in default of which the publishers may sell copies free of royalty, – but not continue to use the plates. If the book contains illustrations not made originally for the work, the contract may provide that electrotypes of them shall be transferred to the author for use solely in connection with the work in case of reversion of the copyright to him. The contract is usually drawn subject to assignment by either party, but only as a whole; but the author may require that the work shall not be transferred, to another publisher or otherwise, without his consent.

Other works of author

The contract may also reserve to the author a right to discontinue the agreement in case the publishers elect not to publish other works, which he may offer to them, or it may bind the author to offer subsequent works to the same publishers. This keeps in view the ultimate publication of a uniform collected edition of the author's works, which may also be covered by a provision giving the author right to include his work in a collected edition after a stated time.

Standard contract

The above summary gives the pith of a standard form of contract which has been adopted, in more or less detail, by many American publishers, and is usually kept in printed form by them. Owing to the careful specifications in the American type of contract, there are fewer cases in the American than in the English court records referring to the relation between authors and publishers; and the English "half profits" custom naturally leaves many more open questions of law and equity.

Serial rights

Where there are serial rights to be considered, as in the case of a novel, the agreement between author and publisher should be very clear. If an author contracts for a serial with periodical publishers who are also book publishers, that contract should state whether rights for book publication are involved or whether the author is left free to arrange for book publication independently. Conversely, where an author contracts for book publication, the contract should be explicit as to whether the author or the publishers shall exercise or arrange for serial publication, either before or after book publication.

Republication of periodical articles

Where an author furnishes an article or series of articles for a periodical, it should be made clear, by letter or contract, whether the periodical publisher also obtains the right to republish such articles in other shape or whether such right reverts to the author, and if so, how soon after publication of the periodical.

Foreign markets

In these days of increasing international relations, it is important that the author should have a clear understanding as to whether he retains the rights in other markets, whether in English speaking or foreign countries; or conveys them to the publishers as within the agreement, but to be separately accounted for; or assigns them as an integral part of the transaction. As between America and England, many publishing firms have branch houses or representatives in the other country or are in special relations with an independent firm therein. If the English market is conveyed, there should be a clear-cut understanding as to whether this includes the Canadian, Australian and South African rights. It is usual that a lower royalty is paid to the author on sheets sold for another than the home market.

Contract to do work

The contract of an author with a publisher that he will write a specified book or work, is not usually enforceable by the courts through specific performance, for the simple reason that a court has no means of compelling an author to use his brain for a certain purpose, and the remedy against the author in this event is rather a suit for loss by failure to perform the contract, which loss is difficult to prove. If any remedy is to be provided, it should be stated in the contract as a specified penalty to be paid by the author, – a provision seldom included in publishing contracts. That an author may be held liable for a breach of contract if he declined without good cause to complete a work already partly delivered, was indicated in the early English case of Gale v. Leckie in 1817. An agreement to write a book may stand as an equitable assignment on the completion of the book, as was held in Ward, Lock & Co. v. Long, in 1906 in the Chancery Division by Justice Kekewich.

Contract not to write

An author who has contracted not to write on a stated subject or for other publishers, may be enjoined from such act. This was decided by early English precedents, as when in the case of Morris v. Colman, in 1812, Lord Chancellor Eldon held that Colman, in virtue of his contract to write plays for the Haymarket Theatre and for no other, could be restrained from furnishing plays to another theatre, though he could not be compelled to write plays; the same judge, in Clarke v. Price, held in 1819 that he could neither compel Price to continue to furnish Exchequer reports to the plaintiff publisher nor restrain him from furnishing such reports to another publisher, because the contract contained no specific provision to the latter effect. It is probable that the undertaking of an author not to prejudice the sale of his book by writing another of like subject, though under a different title, may be enforced even against a succeeding publisher who had no knowledge of that undertaking, as was indicated in Barfield v. Nicholson in 1824. Thus publishers were granted equitable relief against an author who had sold to other publishers modifications of an arithmetical series of which the copyright had been sold to the plaintiffs, in Wooster v. Crane in the U. S. Circuit Court of Appeals, in 1906. In Brooke v. Chitty, however, in 1831, Lord Brougham declined to restrain Chitty from writing a certain book, on the ground that the court could not act until there was actual printing and publication. The publisher, vice versa, cannot be restrained from publishing a rival work, even though it competes directly with a work already published or contracted for, unless that is distinctly forbidden in the contract with the first author.

Implied obligations

If a publisher prints without special agreement a manuscript submitted for approval, the courts will enforce reasonable payment; and in 1893, in Macdonald v. National Review, in an English county court, it was held that printer's proof sent by the publisher to the author, implied acceptance for publication. That the publisher may be held responsible for loss of a manuscript by the negligence of his employees, was held in Stone v. Long, in the King's Bench Division, by Master Chitty in 1903. An implied obligation to publish an accepted work was recognized in the Canadian case of Le Sueur v. Morang, where the Canadian Supreme Court affirmed in 1911 the decision that if a publisher withholds from publication a work of which he had bought the copyright "outright," the author might claim the work on return of the purchase money.

Contract personal and mutual

The contract between author and publisher is of a personal nature and therefore not assignable, in the absence of specific provision, except with consent of the other party. As it is with a particular author that a publisher contracts for a book, so an author contracts with a publisher of his choice and cannot be required to accept another. This is especially true where, on a profit-sharing or royalty arrangement, the author relies on the skill of the publisher for his market. Where E. V. Lucas had arranged with Grant Richards to publish a work on half profit, it was held in the Chancery Division in 1905 by Justice Warrington in a suit against the publishers' trustee in bankruptcy, that the contract was terminated by bankruptcy and that Mr. Lucas on fair purchase of the remaining copies, might contract with another publisher. There is more question when the contract is for a specified sum; and where the copyright is assigned by outright purchase the rule would not hold good, for the publisher then becomes the copyright proprietor. But even when a publisher has bought a copyright "outright," he may not do the author the wrong of printing the work in such altered shape as to injure the author's reputation, as was held in 1832 in the English case of Archbold v. Sweet, where a third edition of Archbold's legal work printed "with very considerable additions," which the plaintiff showed to contain gross blunders, was enjoined. But when work is done, to be published under the name of another, the actual writer may not prevent alteration by the employer, as was decided in Cox v. Cox in 1853, by the Vice Chancellor. Such a personal contract cannot be transferred as a bankruptcy asset, and on the bankruptcy of the publisher the rights revert to the author, except that stock on hand may perhaps be sold to another, who may not, however, distribute it to the disadvantage of the author. The personal contract involves personal guarantee by each party to the other of good faith and coöperative support, and neither party may act to the disadvantage of the other. The author, during the continuance of a publishing contract, must not permit the use of his work otherwise, to the prejudice of the original publisher, and the publisher must not sell copies to the injury of the future market of the author.

English development of this doctrine

This general doctrine was worked out in a chain of early English cases, the first of which was that of Sweet v. Cater, in 1841, where Vice Chancellor Shadwell decided that the plaintiff publisher who had contracted with Sir Edward Sugden to publish a tenth edition of 2500 copies of his legal work, could, until the specified copies were sold, prevent the publishing of another edition by the defendant publisher, despite any arrangements between the author and the latter. It was strongly upheld by Vice Chancellor Page Wood in the case of Stevens v. Benning, in 1854, affirmed on appeal by the Lords Justices, and Reade v. Bentley, in 1857. In the first case Forsyth contracted for the publication of his legal work, undertaking to make future revision for subsequent editions, with the publishing firm of the elder Benning, and on its bankruptcy, four hundred copies of the second edition were sold to Stevens & Norton, which firm sued to prevent the younger Benning from publishing a third edition as revised by Forsyth. The Vice Chancellor held that though the plaintiffs might presumably sell the copies, if done without disadvantage to the author, the original contract was not an assignment, but a personal contract which could not pass to the plaintiffs, and therefore denied an injunction. In the second case, where Charles Reade sought to resume his rights in "Peg Woffington" and "Christie Johnstone," from his publisher Bentley, after all expenses had been paid and profits on several editions accounted for, the Vice Chancellor held that the contract, as of a personal nature, could be terminated by the author when that did not involve loss to the other party. Copies printed to replace others destroyed by fire were decided in the case of Blackwood v. Brewster, in 1860, in the Scotch Court of Session, not to constitute a new edition. In the later case of Hole v. Bradbury, in 1879, a joint author and the heir of a deceased joint author of "A little tour in Ireland" were adjudged by Justice Fry to be entitled to resume their rights and to recover the illustrations from publishers who had succeeded to the business of the original publishing firm.

Author's transfer to other publishers

In Warne v. Routledge, in 1874, where Mrs. Cook sought to transfer from one publisher to another without notice a book of which 44,000 copies had been printed and 42,000 sold, the plaintiff publisher sought to restrain the defendant from issuing a new edition until the remaining copies had been sold. Sir George Jessel, M. R., held that the right of publishing was an exclusive one for the time of the contract, though the word exclusive was not used, but that the author could provide for publication by another publisher immediately on terminating a contract, – a decision which has been criticized as not compatible with other decisions nor sound law.

Proprietary name

Where a proprietary name becomes identified with a publication, an assignment of the work may estop the person named from use of his name or advertisement of his service elsewhere, as in the English case of Ward v. Beeton, in 1875, where the originator of "Beeton's Christmas Annual," who had been dismissed by the publishers of that work, was restrained from advertising that he would edit a similar publication for another publisher. But the editor's name is not necessarily part of the title, and an editor may not restrain its omission from the title-page, as was held in the English case of Crookes v. Petter, in 1860.

Copies remaining unsold

It was decided in the English case of Howitt v. Hall, in 1862, by Vice Chancellor Page Wood, that where a publisher had procured from an author the copyright for a limited term, in that case four years, he had the right to sell, after the expiration of the contract term, copies printed in good faith within the term, though the court indicated that if there had been an excessive printing of the work with the evident purpose of stocking up for sale after expiration of the contract, such course would not be permitted. This precedent indicates that a publisher would have the right to sell copies printed during the original term of copyright and remaining in stock, even if an author under the renewal provision of the American code exercised the right to make arrangements with another publisher for the renewal term. To like effect it was decided in the English case of Taylor v. Pillow, in 1869, by Vice Chancellor James, that a copyright proprietor assigning the copyright might thereafter dispose of copies of a song remaining unsold, in the absence of stipulations to the contrary. These questions are usually decided in advance in American publishing practice by provision in the contract between author and publisher that copies remaining unsold at the end of the contract term may be reclaimed by the author at a stated price – and some such provision is always desirable.

American confirmation

The same doctrine was upheld in the American case of Pulte v. Derby, in 1852, in the U. S. Circuit Court by Judge McLean, who held that where the contract for publishing a second edition provided that the publishers might print as many copies as they could sell, the publishers might make successive printings in that edition, and that the use of the words "third edition" on the title-page did not terminate the arrangement. The author could not meantime publish otherwise, but the publishers, who held legal title to the copyright within the terms of the contract, could not exercise rights beyond the second edition, nor could they assign their rights.

Renewal term

American publishers usually expect the author to make a contract for the entire copyright period, and to make application in their behalf for the renewal term. It is true that the very large percentage of books lose their value long before the close of the original term, and that the percentage where renewal is desirable is very small.

It was a thought to which "Mark Twain's" mind often recurred that a long copyright term was not desirable, because so few books were of value at the end of one or two decades, and he frequently put forward a scheme for extending copyright from period to period, based on the issuance of a cheap edition under the author's sanction. This scheme, which he presented in some detail at the time of the Congressional copyright hearings, did not receive support from other students and advocates of copyright.

License not assignment

A contract giving publishers the "whole and exclusive right of publication," was decided In re Clinical Obstetrics by the Chancery Court, through Justice Warrington, in 1908, to be a personal contract and license, not an assignment of copyright, and the assignment entries were ordered to be expunged, in line with the decision in 1907 by the Court of Appeal in Re "The Liedertafel series" et al.

Author's and publisher's profits

The publication of a book involves many indirect expenses, in addition to the direct cost of manufacture, such as the share of general office expenses, the large item of advertising and the like. These are difficult to allot, and this helps to make the "half profits" system a fruitful occasion of disagreements. On this system or on the commission basis, the nature and proportion of these indirect charges should be clearly set forth in the publishing agreement. On a "half profit" or similar plan, the publisher is not considered to be entitled to make his own profit on paper, printing, etc., but must account for these at the cost to him; and in any event the publishers' accounts must be fully open to the author. On the whole, the payment of royalty, on the usual American plan, is more satisfactory. The customary royalty is ten per cent, or in the case of authors of established reputation whose works have large sale, as high as fifteen or twenty per cent, when the publishers cover all expenses, except that on school books and "subscription" editions the royalty is usually five per cent. When an author pays for the plates or for the edition, the return is substantially higher, as fifteen or twenty per cent to the ordinary author. The royalty is usually reckoned on ordinary cloth binding, unless otherwise stated in the contract, and almost invariably not on copies printed, but on copies sold. A royalty on "all copies sold" was construed in the King's Bench Division by Justice Walton, in Neufeld v. Chapman in 1901, to cover all forms of publication, including royalty on a proportionate part of the sales price of a periodical.

The publisher's share

The publisher does not, as is sometimes assumed, get the other ninety per cent as profit; he gets the difference between the receipts from the trade or public on copies actually sold– averaging perhaps two thirds of the "retail price," on which the author's ten per cent (really thus fifteen per cent) is reckoned – and the cost of making the entire edition and of advertising and marketing the book. The author, in any event, gets a return proportioned to the success of his book. If its sales are small, the publisher makes a loss; if large, the publisher makes a profit increasing proportionately after the initial outlay for publication has been covered.