GBS: Matthew Sag’s Predictions for Monday

He writes:

The most desirable change from an antitrust perspective would be to allow Google’s competitors to exploit orphan works on the same terms as Google. The problem with this solution is that it further strains the boundaries of class action law and looks more and more like private legislation. This should not, in my view, be enough to derail the deal if the parties can show that all of the relevant sub-class interests were adequately represented.

The Author-Publisher Procedures enhance the coordinating function of the Settlement by streamlining the incorporation of existing author-publisher contractual terms into the framework of the Google Book universe. However, where an existing author-publisher contract gives both parties some control over electronic exploitation, or simply fails to make any provision for electronic rights, the Author-Publisher Procedures effectively overwrite those contracts. These new terms do not appear to systematically disadvantage either authors or publishers, but they strike me as a one size fits all solution that could be substantially improved upon.

Finally, I expect the revenue sharing aspects of the deal to become more complicated.

It’s hard to argue with that last one.

Only someone completely unfamiliar with (or completely disregarding) the existing norms of author-publisher contracts could say of the the Proposed Settlement 1.0 Author-Publisher Procedures thta, “These new terms do not appear to systematically disadvantage either authors or publishers”.

I won’t rehash the analysis here, but as numerous authors have made clear in our objections, the overwhelming bias of the proposed procedures, and of the BRR as a whole, would be in favor of publishers against authors, amounting to a massive transfer of rights, revenue share, and control from authors to publishers.

That such claims are (still) being made reflects how thoroughly disconnected most of the scholarly legal analysis has been from the current norms of contracts and business practices.

I agree with Edward absolutely.

Yes. Edward has hit the nail on the head. There is a profound disconnect with the way contracts are negotiated, with the publisher on one side of the table, and the writer and agent or attorney on the other.

It seems that my comments on the APP have drawn some fire. The point, that perhaps I could make more clearly, is as follows. The agreement alters existing author-publisher contracts in ways that will disadvantage some publishers and some authors. The deal is neither entirely pro-author, nor is it entirely pro-publisher.

I can see that many authors think that the deal is “overwhelmingly” pro-publisher, but there are many small publishing houses that would disagree.

Example 1. Article IV of the APP gives authors an alternative mechanism under which to exercise their contractual rights of reversion. Prior to the Settlement an author would have had to rely solely on his or her contractual remedies, under the APP authors now have the option of sending a petition through the Registry. If the publisher fails to respond, the author automatically prevails.

Example 2. Under the APP, if the rights in an out-of-print book have not reverted to the author, and the work is not deemed to be Author-Controlled under Article IV, both the author and the publisher shall be considered rightsholders. APP § 6.1(c). This more than a lot of authors get from their current contracts.

I will do Edward the courtesy of not attributing his perspective to total ignorance or willful blindness. His view of the settlement is reasonable, but it is not the only reasonable assessment.

With respect to Matthew Sag’s examples:

In his Example 1, the current right of an author — individually or collectively with other authors of books published by the same publisher — can sue the publisher for copyright infringment, including statutory damages, attorneys’ fees, and costs of litigation, if the publisher exercises “rights” that the publisher no longer owns because those rights were never granted or have reverted under the terms of the contract.

It is no “benefit” to the author to eliminate the substantive and due process rights of the courts, and replace them with individualized secret arbitration before an entity and under procedures that have yet to be determined by another future entity (the BRR) likely because of its even-number-of-members constitution to be disfunctional at best, vulnerable to publisher capture at best.

Similarly, if publishers object to authors’ exercise of the authors’ reverted or never assigned electronic rights, the author currently has the procedural due process rights of the courts in defending their exercise of their rights. (See Random House v. Rosetta Books.) That would be replaced under Proposed Settlement 1.0 with the ability of publishers to suppress authors’ exercise of reverted rights through capture of the BRR and/or the arbitration system.

But in most actual contracts for “out of print” books, no electronic rights were ever assigned to the print publisher, which brings us to Example 2. The settlement creates, as Matthew Sag’s framing of his Example 2 appears to concede, a default presumption that where the contract is silent on electronic rights, those rights are jointly held by the author and publisher, unless they have “reverted”. But the current legal default, in light of NYT v. Tasini and Random House v. Rosetta Books, is that where the contract is silent, no assignment of any electronic rights can be presumed.

Imposing a presumption that both the publisher and author are (electronic) rightsholders, and a default requirement for “reversion” before authors can exercise their rights — even where no rights were ever assigned and thus there is no requirement for “reversion” in the contract — is a huge shift that is unequivocally in favor of print publishers amd against authors.

Thank you for clarifying your point, Professor Sag.

‘Example 2’ would, if I am not mistaken, cover the case of the specialist academic publisher whose standard contract is one in which the author assigns the publisher some kind of perpetual exclusive licence.

Some of these operations are quite small, and financially marginal, which they sometimes claim as a pretext for not only not paying their authors but (much more questionably in my view) tying their authors’ rights up in very restrictive contracts. Of course, some big academic publishers do the same thing, with even less justification.

I can see that, depending on the wording of their standard contracts, some of these publishers might have their own reasons for not being happy with the Author-Publisher Procedures laid down in GBS mark one.

Their case would highlight yet again the way the Author-Publisher Procedures, along with other provisions in GBS agreement mark one, tend to favour the interests of large commercial publishers over everyone else in the book publishing industry.

To return to a point that Edward made earlier: he stated that ‘most of the scholarly legal analysis’ of the GBS has been ‘disconnected … from the current norms of contracts and business practices’. I think this is perfectly true.

Moreover, I am not sure that any of the academic lawyers who have commented on the GBS have adequately discussed the mess that the GBS agreement mark one makes of contract law. (If I am wrong, please point me to the relevant work; I’d like to read it/be reminded of it.)

If the GBS were allowed to set a precedent for the effective redrafting of existing contracts by third parties engaged in private civil law suits, it seems to me that no one in the US, or doing business in the US, would ever be able to depend that the contracts they sign might not be drastically altered by the decision of a district court, at the behest of parties unconnected to them, without their consent or even knowledge.

Contract law underpins the whole of commercial life.