In its response to the Plaintiffs' amended complaint, Harlequin has nothing new to say

I've had a copy of the Harlequin response to the Plaintiffs' amended complaint in their motion for a class action in the e-books litigation, and I haven't been able to motivate myself to write about it for one simple reason: they had nothing new to say.

I've only found one item that even bears mentioning, and even that one can be dealt with quickly.

Two reasons museums charge for reproductions (and one consequence)

By way of The Digital Reader, I've just read an interesting article that I think misses a very important point. That point leads to two of the bigger and related themes I'll be exploring here in 2013, as well as one of their consequences.

The article, linked below, laments that many famous works of art aren't available in high-res and so they can't be used in teaching. It sets forth the reason for this as being because museums are overreaching, using their legal rights of control over the environment where these works are stored, or the license terms of their own photos and the websites where they are displayed, as a way to stop otherwise-permitted reproductions of works that would be in the public domain. (I'm oversimplifying but I don't think I'm changing the thrust of the piece; read it and make your own decisions.)

Yes, if it wasn't for copyright and the control it gives over images and reproductions the museums wouldn't be able to stop this kind of thing. But that's putting the cart before the horse.

Harlequin plaintiffs bring new allegations, improve their case

[NOTE TO READERS: It's been a while since I've posted. Thanks for coming back.]

On November 2, 2012, the authors(*) in the Harlequin class action upped their game against Harlequin. If they're wrong, they will lose their class certification request. But if they win, they will find themselves making a point that will have repercussions far beyond just e-publishing and authors.

A bunch of travel recently

I've been on the road but have some interesting topics. Hang tight...

How does the HathiTrust book-scanning judgment affect e-books and audiobooks?

Scanning copyrighted works and making them searchable on the Internet sounds to many authors like it shouldn't be legal. But on October 10, a Federal Court in New York released a judgment holding that may be. That judgment raises significant issues for authors, publishers, and consumers, giving new scope to fair use of copyrighted materials in the USA.

"Is this the worst paragraph in your publishing agreement?"

The Passive Voice, a blog I follow that has tons of information for authors, has a really important post today entitled "Is this the worst paragraph in your publishing agreement?"

The advice in here is good for not just authors. App developers and film/TV producers should know about it too.

Three reasons Harlequin shouldn't get to have the e-books litigation dismissed

On October 19, Harlequin filed a motion seeking to have the e-books litigation dismissed. They make a lot of interesting arguments. Their lawyers are earning their money. But ultimately these arguments collapse onto themselves. This motion should lose.

Why is it so hard to stop patent trolls?

In the right hands, patents are good for inventors and for society. The monopoly they give allows for companies to do R&D work and commercialize that work, creating things that are a net gain for all of us.

The problem is, there are also companies out there that never make anything. They just see an issue, think about what kinds of things might somehow be related that issue, and then file patents based just on the description of how something should work rather than on something they've actually done. They never manufacture anything using that patent. They never even have any intention of doing it. Their definition of "doing business" with their patent is to find people who they think are doing something similar to the things described in their patent, contact them, and offer to license or even sell the patent. Meanwhile the companies that license or buy the patent just keep doing what they were doing, making things to try to help the world.

I have, of course, just described startup pharmaceutical companies.

A 3-step guide to basing fictional characters on real people

In a previous post, I've given a high-level overview of the issues involved in using real people as the basis for your characters. But this raises a very technical issue called libel in fiction. And that can be just as bad as libel in fact.

Here's three steps to consider if you want to take a real person and use them as the basis for a character in your fictional universe:

A checklist of 5 things creators could do at the beginning of each month

I like to set various habits at the beginning of the month to get myself in the practice of checking things that bear checking on a fairly frequent basis. If you're a creator, especially an author, here's 5 things that might help you in your work as well as in protecting your work.

Look and feel of your apps and games: two important cases on copycat apps

What's so special about Angry Birds or Tetris that makes them so lucrative? Why can't someone just create their own versions of these games? Or can they? Two recent judgments on copycat games shed some light on a fast-breaking area of the law that's important for developers to understand.

Video games are almost unique among copyrightable materials because they can be simultaneously protected under copyright law in multiple ways: the source code in which they are written is protected by literary copyright, and the look and feel are a protected audiovisual work. But there's another interesting issue about video games, which is that they simultaneously have creative and functional content: the art and music vs. the rules that make the game work. This matters: creative content can be copyrighted, but functional content can't.

At least that used to be the case.

Three reasons the ex-Register of Copyrights doesn't like change (and one reason he's wrong)

"[Aereo] appears to have been designed by a copyright lawyer peering over the shoulder of an engineer to exploit what appeared to Aereo to be a loophole in the law and shoehorn the Aereo business model into the Cablevision decision"

Designed by a copyright lawyer... He says that like it's bad!

Okay, maybe I'm kidding. And some background may be helpful.

Ralph Oman, the retired Register of Copyrights (the person who runs the office that handles copyright registrations), has filed a brief in the ongoing Aereo litigation. Aereo, as you may know, is a service that uses thousands of little antennas to capture over-the-air TV broadcasts and stream them. One stream per subscriber. Why not have one big antenna? Well, that takes some explaining too.

Penguin sues authors to recover advances

On Tuesday, Penguin decided it was finished with the book publishing business.

That's the only way I can interpret recent litigation developments from Penguin, which decided to sue a group of authors to recover advances paid for books that were never published.

The list of authors as reported includes some pretty significant names, such as Elizabeth Wurtzel, author of "Prozac Nation", and Ana Maria Cox, ex-editor in chief of the Wonkette political blog.

I've previously written a series of posts on book publishing (links below) and whether a publisher can sue authors to recover an advance is actually pretty well-traveled ground. The rules are pretty clear:

• If the author fails to deliver an acceptable manuscript the publisher can get the money back.
• If the publisher decides not to publish for other reasons even though the manuscript was acceptable the publisher can't get the money back.

(I'm trying to get a copy of the Complaint because I also can't figure out how Penguin can sue all of these same people, who would appear to have nothing in common with each other, in one lawsuit. For technical reasons that's usually not possible.)

But put aside the legalities for a second and let's just focus on the craziness. Any time a publisher pays an author an advance, the publisher is taking a risk. In one view, a publisher paying an advance is basically making the following bets:

• This person will be able to produce a manuscript that we will want to publish.
• The advance we will pay (using a calculation similar to the one I've set out in a previous post) will not exceed the amount of money we should have paid.
• If the advance does exceed the amount of money we should have paid, it's still worth it to have this person for other reasons (e.g. we become popular with authors).

Focus on that last bullet for a second. Paying good advances makes a publisher popular with authors. The more popular a publisher is with authors, the more other authors want to publish with them. So question: why would any publisher risk its reputation with the author community? Especially, as Elizabeth Wurtzel pointed out when contacted by Above the Law for comment on this litigation, when the amounts at issue are relatively small?

It just doesn't seem to make any sense.

I'll be back with more updates in the coming days and weeks, no doubt.

(Thanks to Nate Hoffelder of The Digital Reader for the tip)

LINKS:
Legal Minimum posts on book publishing including: publishers rejecting manuscripts, whether authors have to give back advances, etc.
http://bit.ly/LjV4MC
Legal Minimum post on calculating royalties and determining the right advance:
http://bit.ly/Nwz9F3
The Digital Reader (follow this!):
www.the-digital-reader.com
Smoking Gun article about Penguin lawsuit:
http://www.thesmokinggun.com/buster/penguin-group/book-publisher-sues-over-advances-657390
Above The Law article including responses from Elizabeth Wurtzel and analysis:
http://abovethelaw.com/2012/09/lawsuit-of-the-day-penguin-v-wurtzel-and-other-authors/

By settling in Europe, did Apple and the e-book publishers admit liability in the USA?

I've written a fair bit about the Apple e-books litigation, but I've focused on the US mostly. But that's not been the only place they've been called to the carpet. The EU Competition Commission had its own concerns and launched its own inquiry.

On September 19, Apple and 4 e-book publishers reached a settlement to resolve the EU issues. Similarly to the USA, the EU has opened the proposal up to public comments. And the terms of that proposed settlement are telling for what will happen in the USA as well, for one very important reason:

Four things app developers need to know about the new FTC mobile app marketing guide

On September 5, the FTC published its new guide to marketing mobile apps, and although it may not make any changes to the law, it will probably come as quite a surprise to many app developers.

The first points in the Guide deal with the general issue of misrepresentations. And although the language in the Guide is chatty, the points in there are all business. But they're also not hard to comply with, boiling down to one simple one: don't say things about your app that you can't prove to be true. This seems like common sense. Amazingly it's not. The FTC points to an app whose developers claimed it could cure acne. I'm not even sure how that could be possible. Apparently the FTC agreed, because they took action to shut it down.

But that much is easy. Where it gets a bit more involved is when the FTC turns its attention to privacy issues. The FTC is very concerned about privacy in the mobile app space. I'm even told they have mystery shoppers downloading apps and testing them out for privacy compliance issues. No surprise then that most of the Guide is dedicated to privacy. And the Guide contains three additional big points on privacy issues that app developers should consider:

Siri: is this lawsuit too clever by half? Maybe, but maybe not.

"Siri: Tell me whether you're in sales."

That may be a question that no one with an iPhone 4S has ever asked. But for at least one plaintiff in San Francisco, it's a question that Siri should answer honestly.

Three basic questions about using real people as inspirations for your characters

Authors, filmmakers, and other creatives have always built their stories from their own experiences. Being inspired by real events and real people is almost impossible to avoid. But sometimes people go a step further and build their creations directly from reality, including real people or real events that can be traced back to real people. And, when done right, this can lead to increased interest translating into increased sales. As a wise gnome once said, Step 3 is Profit!

But doing it wrong can lead to real problems.

Although there's more than just four things to consider when using real people in your creations, the questions I've gotten have revolved around three big issues.

Two easy ways to succeed on Kickstarter (and two reasons you should look for these kinds of projects)

Over the weekend, Ars Technica put up a quick post on old games getting rebooted through Kickstarter. They talk about how it's fertile ground for rebooting old games. Unfortunately, at least for creative endeavors, revisiting well-trodden ground may be one of the only profitable uses for it. But surprisingly this might be a really good thing for people looking to back Kickstarter projects.

As someone who is mentioned twice (obliquely) in the promotional video for one of the most successful Kickstarter reboots (when at Microsoft I worked on Shadowrun), I have a bit of a sentimental interest in this topic. It would seem that if you want to succeed on Kickstarter, try for one of two things:

Author's "Carnival of Souls" mark takes reviewers on a not-so-fun, and unnecessary, ride

I've spent some time this afternoon reviewing the Complaint in Jazan Ward's claim against HarperCollins over the Carnival of Souls and Enter the Carnival trademarks. And although I'm not sure he'll succeed, it's by no means the craziest thing I've ever seen. As for his complaints against the bloggers, there I'm not so convinced, and it's quite possible he may wish he had never tried anything.

For those of you who don't know what I'm talking about, an author of graphic novels named Jazan Ward has brought a claim against HarperCollins claiming that HarperCollins' new series of novels called Carnival of Souls infringes a trademark he has registered in those same words. Using various legal theories he wants to have HarperCollins change the name of the series and pay him damages for infringing his mark. Recently Ward has also started to send cease and desist (C&D) letters to various book bloggers and other reviewers telling them that they can't review the Carnival of Souls books because by doing so they're promoting a property that infringes his mark.

This claim may sound like it's crazy. It's not. At least not necessarily. And in fact, there's one particular part of the lawsuit that should be very interesting to small developers or indie authors who may find themselves up against a big media enterprise. But going after the reviewers is a different story.

A fresh analogy for file-sharing: the tomato

Sometimes a cigar is just a cigar, but sometimes a tomato is a piece of music. Did that make any sense? After reading the article linked below, it just might. And even though I think the analogy doesn't work perfectly, it leads to some very interesting perspectives on digital downloads and content creation.

The instructive comparison in the article is this: people say that digital content is a totally new type of thing because it can be reproduced forever without depriving the original owner of the original item. (The technical name for this type of copying is "lossless".) But that's not true. There's another type of thing that can be copied forever in a lossless fashion.

One simple reason I've ignored the paid reviews scandal

Reputation is an idle and most false imposition; oft got without merit, and lost without deserving.

(Othello, Act II, Scene 3)

Shakespeare could make an entire tragedy out of what happens when you're so focused on your reputation that you lose sight of what's really important. It seems that at least some authors may have fallen for the same trap, buying their way to a good name without earning it.

If you've been living in a cave for the past couple of weeks you may not know what I'm talking about. I'll explain.

Could you do me a favor?

I'm trying to get a sense for new topics that you'd like to see covered and other related things. SurveyMonkey is my friend. Could you go here and give me some info? I'd be much obliged... I don't have anything free to give in part because I don't know what would be enticing!

http://svy.mk/Qy8V7o

Judgment in the Apple e-books settlement: DOJ 1, Publishers 0

On September 5, 2012, Judge Denise Cote entered an order approving the settlement between the DOJ and 3 of the 5 publishers in the Apple e-books litigation: Hachette, Simon & Schuster, and HarperCollins. And on every count, it was a clear win for the DOJ. Maybe not just for today.

Bob Kohn submits brief #2 in Apple e-books litigation. It's comical

Literally. Having been limited to 5 pages by the Court, he prepared a 5-page comic that summarizes his position frankly better than any text could have. I still don't know that I agree with his assessment, but it's worth a read.

EDIT: Apparently the link is 403 so I'll link to the American Bar Association Journal story on this and you can go from there.


LINKS:
Link to the brief:
http://www.abajournal.com/files/AppleAmicusBrief.pdf
Link to ABA Journal:
http://www.abajournal.com/news/article/faced_with_a_five-page_limit_lawyer_files_cartoon_amicus_brief_with_proper_/Thanks

Avoiding option clauses and cross-collateralization by using LLCs

A short post today, but hopefully a helpful one.

I've recently seen people complaining of two standard problems with traditional publishing contracts:

• Option clauses: where publishers require you to give them an option on your next book.
• Cross-collateralization: where publishers won't pay you royalties on your first book until you've paid back the advance on your second.

It seems to me that there's a very easy way around each of these problems.

Why tied selling rules give the DOJ a knotty problem in the Apple e-books litigation

Do you have to sell me your house just because I asked? If you think the answer is yes, you may have something in common with a problem the Department of Justice will have in the Apple e-books litigation.

Although price-fixing gets all the headlines, another antitrust issue called "tied selling" is pretty important too. Tied selling occurs when you link two items together into a single transaction. There's nothing wrong with that in principle, but intellectual property raises all sorts of complicated issues because of the exclusive rights of an owner.

Why is it okay for you to set your own price but not for Apple or a publisher?

Setting your own price for your books seems like the most logical thing in the world. The $0.99 and $2.99 book price points are widely-used by authors to make money, and the free promotion days are like gold. But the Department of Justice has sued Apple and the e-book publishers for making this possible.

Why are these companies being charged with a criminal offence for doing something that thousands of authors now do every day?

Five questions that may explain some aspects of the Apple e-books litigation

As I've been reviewing the documents and the posts around the Web on the Apple e-books price-fixing litigation, I've seen a few things that it seems people don't understand. To help give some background I'll explain so that you can have an easier time following this important litigation.

First a summary for those of you who don't know the full allegations. The Department of Justice is alleging that 5 major publishing firms: Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster, along with Random House who isn't charged, all wanted to break Amazon's $9.99 pricing for e-books. At the same time Apple wanted to get into the e-books market, and offered to the publishers that it would allow them to set their own pricing for e-books so long as the publishers ensured the same e-books wouldn't be available cheaper elsewhere. According to an email from Steve Jobs quoted by the DOJ in its Complaint: "yes, the customer pays a little more, but that's what you want anyway." The DOJ has brought charges against these six companies for violating the US antitrust laws.

1DollarScan, Cablevision, and two reasons you can't always get what you want

Books are portable. But one company wants to make your books even more portable than they already are. So why is the Authors' Guild so angry about it, and do they have any right to be?

In an interesting deal announced last week, a service called 1DollarScan has closed a partnership with Evernote to take your physical books, scan them, drop them into your Evernote account, and then destroy the original copy you sent them (it would appear that it actually gets destroyed as part of the scanning process). 1DollarScan apparently already had deals with services like Dropbox and some others. But linking to Evernote, one of the most widely-used note-taking services out there, appears to have brought a lot of attention to 1DollarScan, including some it may wish it had never attracted.

According to Publishers' Weekly, the Authors' Guild has made some statements that 1DollarScan is violating copyright law and infringing the author's right to choose whether their book should be made available digitally. Unpacking this statement gives me a chance to look at two often-misunderstood issues around content creation: whether making copies breaks the law, and why media companies don't think like people.

DOJ says: Apple's objections to the e-book price-fixing settlement are rotten to the core

Especially after its recent success against Samsung, Apple may well think its interests in the e-book price-fixing lawsuit are best-served by taking its chances in court. It may come to regret this.

For those of you who need to catch up... In April the US Department of Justice brought price-fixing claims against Apple and 5 publishers: Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster. Even though 3 of the 5 publishers were willing to settle (Hachette, HarperCollins, and Simon & Schuster), the DOJ still brought the claims against all 5 of them.

Under a US law called the Tunney Act, any settlement of claims in an antitrust lawsuit requires the court to receive comments from the public and other interested parties. Those comments are in, and the DOJ has filed the papers to get the settlement enforced. Apple and various other entities replied, and on August 24 the DOJ responded. And this response makes one thing very clear:

If Apple wants a fight, the DOJ will give it one.

It's not okay just because it's free: three myths (and two truths) about fair use

[Note: this is part 4 of a 4-part series on fair use.]

The last portion of the fair use test, the effect on the original market for the work, is one of the most commonly-misunderstood elements of copyright law.

The test itself seems like it should be fairly straightforward but in fact it's not. The relevant text, "the effect of the use upon the potential market for or value of the copyrighted work", looks like it only addresses the specific use made in the specific context. But that's not what courts will actually look for: they will ask both whether the specific use that you're making of someone else's work is going to affect the potential market for or value of the work, but also what would happen if everyone started doing it.

That's right, judges are just like your mom.

Correcting two common mistakes about how much fair use is too much

[Note: This is part 3 of a 4-part series on fair use.]

Plagiarism makes the news all the time, and rightly so. When an author borrows from another author or a musician from another musician, this feels wrong if it happens without permission and it's a ripoff, but okay if it leads to something fresh and new. How can a creator know how much is too much to take?

I've previously addressed the first two parts of the fair use test: looking at whether the use is transformational and looking at the nature of the original work. The third element of the test requires you to consider the quantity and value of the portions of the original material that you're using in your new work.

The best way to explore what this means is to correct two commonly-made mistakes about this part of the test:

Two points on the nature of the original work and how they affect fair use

[NOTE: This is part 2 of a 4-part series on fair use.]

Determining the nature of the original work is the second element of the fair use test. It's a bit more straightforward than the transformational use test:

1. What kind of work is the original? Is it fiction, which has a creative element to it? Or non-fiction but containing lots of analysis? Or is it more like a phone book or a database? The less creativity or analysis that went into the work, the less likely a court would be to find infringement. It's difficult to infringe the copyright in a telephone listing.
2. Was the original work published? If it was unpublished then it will get a bit more protection, because it didn't have a chance to find its own market.

Transformational use: more than meets the eye?

[NOTE: This is part 1 of a 4-part series on fair use]

Other people have good ideas. Sometimes so good that you want to build on them yourself. That can get you in trouble, or get you a lot of money. It all depends on how you do it.

I've previously written about idea theft, and will return to the topic again. Fair use is in many ways the mirror image of idea theft: it's when you deliberately take someone else's work and use it as a basis for yours. It's permitted, but only under certain circumstances. The first thing to check is whether your proposed use is transformational.

The text of the statute is actually pretty short: step one of the fair use analysis requires you to determine "the purpose and character of the use, including whether such use is of a transformational nature or is for nonprofit educational purposes". But short doesn't necessarily mean easy to understand. I'll unpack it.

Fair use and unfair theft: how can a creator understand these rules?

It is a truth universally acknowledged that a single lawyer in possession of a great tort claim must be in want of a life.

If you've ever read a book in your life, you should recognize that statement as a riff on the first line of Jane Austen's "Pride and Prejudice". Am I allowed to use Jane Austen's work as a springboard for my own? Answering that question requires me to spend the next few posts (subject to interruptions by more newsworthy events) to explain one of the most commonly-invoked but least-understood aspects of copyright law: fair use.

In order to understand fair use, you need a quick overview of how copyright comes into existence in the first place:

Is Amazon a predator or prey? New developments in e-books litigation

It may be Shark Week on the Discovery Channel, but in the Apple e-books litigation at least one person is alleging that Amazon might be the biggest predator in the water. But unfortunately for him and fortunately for readers everywhere, he's wrong.

For those of you not keeping score at home: Apple and several major book publishers are in litigation with the FTC over price fixing to raise the price of e-books. At issue is something called a "hub and spoke" conspiracy. The FTC claims that Apple offered the e-book publishers the right to have agency pricing (where the publishers set the price and Apple just acts as an agent rather than a reseller), and the publishers agreed they would pull their books from Amazon. The "hub-and-spoke" name comes from the fact that the various spokes (the publishers) need the hub (Apple) to give effect to their conspiracy. I've previously written about the public comments on a settlement the FTC wants to bring for some of the publishers. Now the court has to decide whether to accept the settlement.

Do you know more about endorsements than large companies and law firms?

Bloggers and other reviewers all seem to know they need to pay attention to the FTC Endorsement Guides. Maybe large companies haven't quite gotten the message? That seems to be the suggestion of at least one Federal District Judge.

Some background. Google and Oracle have been going at it for a while about whether Android infringes on software copyrights patents owned by Oracle and implemented in Java. Google came out (mostly) the victor. But there's some post-trial matters still to be addressed and so the trial judge, Judge William Alsup in the Northern District of California, still has jurisdiction over the case.

In an order handed down on August 7, Judge Alsup ordered each of Google and Oracle to produce a statement "clear[ly] identifying all authors, journalists, commentators or bloggers who have reported or commented on any issues in this case and who may have received money (other than normal subscription fees) from the party or its counsel during the pendency of this action."

If you've read any comments on the FTC Endorsement Guides, these issues should sound familiar. (If not, I've helpfully put a link to a prior post in the footer.) But this goes far beyond bloggers, and it's not under the jurisdiction of the FTC. And it's likely to be much more important.

Lending and LendInk: six lessons on copyright from one big mess

LendInk: copyright infringer? Witchhunt victim? Both? Neither? More rhetorical questions?

What happened last week to LendInk, where hundreds of authors sent takedown notices to a site that matched people willing to lend e-books to people wanting to borrow them, seems to be an unfortunate artifact of two things:

1. Lots of creators don't know what the law actually permits and prohibits.
2. When they want to find out, they don't really know where to turn.

I can't do much about the first point. But I'll try to help with the second.

Three elements in a standard audit clause, and one non-standard one you should request

Unless you're taking cash from purchasers of your books or CDs at a county fair or equivalent, there is always someone standing between you and your money. Even if it's just VISA or Paypal for sales through your website. But much more often there's one, and sometimes as many as three, groups between money and you:

1. The retailer.
2. Your publisher, distributor, etc.
3. Your agent.

Naturally the retailer is in the chain of payment. In a traditionally-published product your publisher couldn't not be in the middle: they've got the relationship with the retailers. And your agent will want to be in the middle if they have any sense - that way they can make sure they get their cut.

Guest Post: One "man's" experience at Romance Writers of America

If you've ever thought about writing a novel, Romance Writers of America might be the conference for you. Read why.

http://bit.ly/O2UMx4

What you need to know about reversion of rights clauses

For many creators, one of the most exciting days of their lives is the day they find out they will be published. Another is the day they receive their first payment. And sometimes there's a third exciting day too: the day they get their rights back from their publisher.

Especially now that independent distribution of books and apps through things like the Kindle Marketplace and the Apple App Store isn't just possible but is also lucrative for many creators, getting your products back can increase your backlist and income.

It's not super-important to worry about reversion clauses in a non-exclusive deal. After all, if you can sell your creations in multiple channels then it's hardly a problem to be in as many as possible. But where anyone locks you into an exclusive deal then you may want to make sure you can get your rights back if they aren't actively trying to make you money with them.

And although every publisher has different reversion clauses, there are a few standard elements that you need to consider.

Slow posting for week of August 6

I'll be away at a conference the week of August 6, so posting may be sporadic.

Why optioning your characters may be a horrible idea

If anyone asks to take an option on your characters as opposed to on your next project of whatever type, you might be tempted to say yes. Think hard before you do.

The general rule of entertainment contracts is that buyers want to buy as much as possible and sellers want to sell as little as possible. So a character license may seem like the best of both worlds: if you work with the same characters then the publisher/studio/whatever gets a first pass (I'll use publisher to keep things simple), but if you don't work with those characters then the publisher has no claim on whatever you do and you can take it wherever you'd like.

Or so you may think.

Want to make a million dollars from fan fiction? Three reasons that maybe you could

First "50 Shades of Grey" and now "Gabriel's Inferno". Another author gets a seven-figure advance for a book they've converted from Twilight fan fiction. This maybe doesn't feel like it should be legal.

It is, and here's three reasons why.

How Osama bin Laden's death created litigation for an NFL star

Loose lips sink ships, as the Cincinnati Bengals have recently discovered when their coach banned use of Twitter by players so they wouldn't give out secrets like details about their injuries. But sometimes they sink endorsement deals and launch litigation. Rashard Mendenhall of the Pittsburgh Steelers found that out the hard way, and his situation has some lessons for people who sign deals to endorse products.

By the way, you may not think that you've got anything to worry about here. But do you run a blog? And do you have a deal with publishers or other companies to supply you with content to review? If so, then these tips apply especially to you.

In 2011, after Osama bin Laden was killed in Pakistan by the US military, Mendenhall took to Twitter. And unlike many people whose comments were positive, Mendenhall went a different direction:

What kind of person celebrates death? It's amazing how people can HATE a man they have never even heard speak. We've only heard one side...

Endorsements and Twitter: a precautionary tale from Kim Kardashian

Kim Kardashian and Rashard Mendenhall aren't just two names you never thought you'd see in the same sentence. They are also involved in two of the more unusual (to date) lawsuits involving endorsements and Twitter. And each of these situations has implications for people who use Twitter. And if you don't think you make endorsements: do you review products online? Do you get free review copies of anything? Recommend people's books on Twitter?

If yes, keep reading

First, let's talk about Kim Kardashian. (It's what she'd want.) In 2009 a company promoting something called Dr. Siegal's Cookie Diet delivered a package of cookies and shakes to her publicist.

This kind of thing isn't as rare as you might think. Once, I was at the home of a minor celebrity and he had cases of Coors Light everywhere. I asked him what's up with the Silver Bullet and he said he has no idea, they just show up every now and then. I mentioned it to a marketer I know and he told me about the practice of seeding, where companies just send their products to celebrities in hope that the celebrities will talk about using them and give them free PR.

Siegal's claimed that they delivered the package because an article had said Kardashian had tried their products and liked them. Let's assume that's true, even though Siegal's never did provide evidence of what article this was. Presumably they were hoping she would tell people she liked them (again?). If so, that's not quite what happened. Instead she never talked about them, but Siegal's did: they put up a link on their website to the article I mentioned above.That got Kardashian's lawyers attention, eventually, and they sent a letter to Siegal's requiring them to take down the link. Siegal's did take down the link, but afterward they found out that Kardashian had tweeted about their product twice:

• “Dr. Siegal’s Cookie Diet is falsely promoting that I’m on this diet. NOT TRUE! I would never do this unhealthy diet! I do Quick Trim!”
• “If this Dr. Siegal is lying about me being on this diet, what else are they lying about? Not cool!”

Noting that she hadn't disclosed that she is a paid representative for Quick Trim in those tweets, Siegal's promptly sued Kardashian for defamation. And although the file settled in 2011, this situation teaches several lessons that are important today:

1. If someone seeds you with product, find out where it came from. And if you don't want to take the risk of a fight later, send it back today. You're always at risk of being sued if you say the wrong thing in today's America, but be especially careful when you're dealing with products from someone who was obviously hoping to get good press.
2. If you review product that you got for free, make sure your readers know about it. I've discussed the FTC Endorsement Guides in some prior posts; look there if you'd like more information about when you do and don't need to disclose.
3. If you keep the product and give it a negative review, make sure you've been 100% accurate in everything you say. Truth is a complete defense to libel in America, and you'll want to make sure you've done everything to take advantage of that. (It's not a complete defense everywhere by the way; more on that in a future post.)

But can endorsing a product get you in trouble when you're not even talking about a product? It did for one NFL player. I'll talk about that tomorrow.

LINKS:
Siegal's Complaint:
http://www.citmedialaw.org/sites/citmedialaw.org/files/2009-12-28-Siegal%20Complaint.pdf

How big companies make big mistakes

"How can such a big company be so stupid?"

Maybe it's because I was just at Romance Writers of America 2012, but a lot of the conversations I had around the Harlequin litigation turned on that question. And every time I gave my answer, the amazed looks I got spoke volumes about what my next post should be about.

My answer: "What they did isn't stupid. It's just stupid to you and me."

I'll use the Harlequin facts to explain, but the principles apply far beyond. If you're creating content for distribution by a large company, I'm afraid you'll have to deal with these kinds of situations pretty often in your career.

New format for LegalMinimum

Based on some feedback I've gotten, I'm trying to find a more workable format for the blog. Starting here. Thoughts etc. requested in the comments, or by email, or Twitter (@LegalMinimum). Or you could dispatch a raven, I guess.

I'll also take suggestions on content, by the way...

If you review content on the Internet, don't forget one thing

Do you take review comments from blogs or from Amazon and use them to promote your work? If so, do you feel you have a good sense for when people are trying to be sarcastic or ironic? And if you think reviews are sarcastic or ironic, do you avoid using them in your promotional materials?

Unless you've answered all of these with yes, you need to know about one aspect of the FTC Endorsement Guides that might come as a surprise.

Below, I've embedded and linked to the trailer for a film called Birdemic. Watch the whole thing if you like (and if you can) but in any event fast forward to 2:08 where you start to see review comments like:

Three facts you may not have known about e-books, and two questions they raise

First, the facts.

1. E-book distributors are tracking reading patterns in e-books. Do readers read through the book in one sitting? Do they start it and put it aside? When they do that, do they pick it back up again? The e-book sellers know these answers and more.

2. They are sharing this information with publishers. To give some examples:
- Readers of genre fiction (sci-fi, romance, etc.) read through their books more quickly than readers of literary fiction
- Long non-fiction books are more frequently dropped than short ones.
- People who get the first book in a series frequently continue on to get all of them.

What everyone misunderstands about the FTC endorsement guides

If you're on Twitter, or run a blog, or do any self-promotion whatsoever, you may have become aware of the FTC Endorsement Guides. If not, you should.

There are people out there suggesting that you should end every blog post, every email, every everything by disclosing whether you have received anything free or below cost that you've mentioned in your post. That's certainly one way to be safe. Far be it from a lawyer to recommend against over-disclosing. But I think there's some confusion around what exactly is and isn't required, and I think there's a lot of overkill going on.

The actual text of the relevant section of the Guides (255.5) says:

When agents are better than lawyers, and vice versa

Agents and lawyers both negotiate contracts. They both seem to fill very similar roles. And they both want your money.

So how are you supposed to know whether you need one, the other, or both?

Oversimplifying the role of each of an agent and a lawyer:

If I were Harlequin, part 2: two more potential defenses they could use

In the last post, I gave two arguments that I could see Harlequin bringing up in the e-books litigation: at the relevant time these didn't seem like unreasonable rates, and that inter-company deals are standard to the entertainment industry.

But these aren't the only defenses I could see Harlequin bringing up... I promised four, I've delivered two, so here's the others.

Quick thoughts on the Apple-Publishers public comments and proposed settlement

I've been following this case with some interest, in part because the US filed its case the morning that I was scheduled to teach the Book Publishing Law class in my Entertainment Law course - it was one of those days that you take the slides you've prepared and throw them aside for the last 15 minutes of class - and in part because I was an antitrust litigator in a previous life. But also because, if you're interested in books and publishing or really any part of the entertainment industry, this litigation is huge.

Right before filing, the DOJ made it clear that it had reached a settlement agreement with 3 defendants: Hachette, HarperCollins, and Simon & Schuster. But they filed the lawsuit against them anyway. You might wonder why they would do this: it's to make sure the settlement agreement has the power of a court judgment. This way if the publishers break the settlement the DOJ doesn't have to sue them: they already have a judgment, so they can just go to the judge and get contempt of court proceedings. Much quicker and much cheaper.

Under US law, where the government wants to settle antitrust class actions it needs to solicit comments from the public to make sure that it has considered the public interest before acting. Today it publicized all of the 868 comments it received and response to them.

I've read the response (link below) and skimmed a selection of the comments. Here's my (admittedly not very orderly) thoughts.

If I were Harlequin... potential defenses to the e-books class action

I've spent a couple of posts talking about the reasons why I think Harlequin has a tough burden in the e-books lawsuit. But they're not going to concede defeat. As the last posts I'll do on this for a while I'll give four arguments I could envisage being in their defense.

Note: I'm not saying I agree with these. I'm just saying they are defenses that a company in Harlequin's situation could raise and that would pass the "fall down laughing" test: would you fall down laughing in court if you heard them.

To break this up a bit I'll give two today and two tomorrow.

Why Superman might be a hero in the Harlequin e-books litigation

Superman is faster than a speeding bullet, more powerful than a locomotive, and able to leap tall buildings in a single bound. And for authors in the Harlequin e-books class action, he may also be their biggest hero.

On July 19, three authors filed a request for a class action lawsuit against Harlequin for its e-book publishing deals. For those of you keeping score at home: based on the Complaint, here's how the contracts look to work. (Note: I'm paraphrasing and omitting some not-so-relevant details to keep the flow going.)

Contract between Author and Harlequin Switzerland (HQS):

First responses to Harlequin litigation post

Thanks to Twitter, I got some interesting thoughts on last night's post from a person tweeting under the handle @DearAuthor. (I can pull her real name but that's the handle she uses so I'll respect that and use it here).

Although I don't agree with everything she's said, just as she doesn't agree with everything I've said (or anything I've said, it seems), they are definitely instructive. They will definitely inform my thinking as I spend more time on this topic leading up to RWA 2012.


Anyway, Twitter is a tough place to give people props because of the 140-character limit, but if you see this thanks for the read and the thoughts.

Four quick thoughts on the Harlequin e-books class action

To catch up people who haven't read the complaint: a group of authors are suing Harlequin for their business practices in the e-books space. Important note: I'm basing this on a review of the Complaint. Although it's not usually the case that plaintiffs get things grossly wrong in drafting these things, keep in mind that Harlequin hasn't answered any of these points and we're a long way from judgment (or settlement, which I think is way more likely). So Harlequin will probably not agree with the way I'm characterizing things below.

Weasel words out of the way, let's look at the Complaint.

Four last things to remember for now about net profits clauses

1. If your publisher is doing deals with related parties, they have to charge what are called "arm's length" rates. A good way to show this is with an example. If your publisher is charging you a marketing fee  is using a marketing firm in the same corporate family, there's a really strong incentive for them to make the fee as high as possible. The "arm's length" rule says that they can only charge you the same fee that a company not in their corporate family would charge. If your publisher is charging fees against your book that you think are totally crazy, look for some industry data to see if you can use this to change their position.

Three common deductions that publishers and studios take, and tips on what to do in response

Here's three of the most popular or egregious deductions from book and film deals:

1. Distribution fees. Although there are always costs involved in shipping product, many times the distribution fee in a contract is determined as a fixed fee or percentage, such as "20% of gross profits". I'll let you decide whether this kind of calculation is based on actual costs of distribution. If it helps to figure this out: often the distribution company is a related party to the publisher. By the way, the same thing often happens with marketing fees: they are calculated as a percentage of profits and aren't usually tied to actual spending.
2. Overhead. Basically this represents salaries and other internal costs to your publisher. Publishers often try to pass through the cost of editors, accounting staff, lawyers, and other employees. Some even want to charge a fee for things like photocopies, long distance phone calls, and office rent. You'll see this as a percentage of your profits, which is a clear signal that it's nothing to do with the work they've actually done on your project.
3. Interest. If your publisher is paying you an advance, then that's money out of their pockets. If you read the advances and royalties post then you may recall that you don't get paid any royalties until your publisher recoups the advances. Some publishers also charge you interest on the advance; most film and TV studios will do this. So if you get a $15,000 advance and 10% royalties with a book whose wholesale price is $10 but 10% interest, then you don't get paid on copy 15,001. It takes another 1,500 units: you get paid at unit 16,501. Same thing for the marketing and distribution charges: some publishers allocate money to a project and then charge a interest against it even though the money isn't spent yet.

If you see these things, try these responses:

Why net profits can mean no profits: learn how to protect your money

Net profits clauses are almost a dirty word these days, but they didn't start that way and they don't have to be. It really comes down to the way they're written.

Taking net profits used to be something only big names got. One of the first people to take a net profits clause in a contract, if not the first one, was Jimmy Stewart in 1950. His version of the net profits clause would have worked similarly to the way these work today: talent and creators agree to take less money in advance but they get additional funds if the project makes money. The thinking is: if the project is a success then everybody wins, and if not then everyone loses less.


But as time went on that last statement became less and less true. Today there are often clear winners and losers in a net profits situation. And the publishers and studios do their best to make sure they're not the losers.

Understanding advances and royalties clauses, and two things to think about when deciding to take them

Getting paid is great, but getting paid over and over is even better. Or is it? Payments over time are a bit more complex, sometimes a lot more, than a flat fee. But at the end of the day they break down into two buckets:

• Royalties
• Advances on the royalties

You might see a contract say that you'll get $1,500 advance on signing against 10% net royalties. Let's use that as an example. Here's what that means:

1. On the day you sign the contract, your publisher/studio/whatever will give you a check for $1,500. You can cash that, it's yours. But...
2. Effectively, you've borrowed money from yourself. That $1,500 will be paid back from your royalties. If your book (for example) wholesales for $10, let's assume there are no deductions (which is a HUGE assumption and I'll come back to that), then you're making $1.50 per unit sold. So you don't get paid until you've sold at least 1,000 units ($1.50 x 1,000 units = $1,500).
3. At unit 1,001, you start getting $1.50 per unit sold.

Four steps in determining whether a flat fee is right, and three things to consider

In a previous post (http://bit.ly/P4CUUb if you missed it) I discussed the issues that might lead people to take flat fee deals. Now it's time to talk about how to calculate flat fees and whether a flat fee structure is right for you. I'm sorry, but there will be math today...

In the book world it's actually pretty easy to figure out whether a flat fee is a good deal:

Eight basic posts for authors in understanding book publishing deals

If you're an author looking for information on your rights and obligations under publishing contracts: you might be interested in some of these posts:

• The one (or more) steps to knowing when you're done writing under your contract: http://bit.ly/NfTuPf
• Knowing whether you've delivered what you were "supposed to" (and two tips if you didn't): http://bit.ly/LW5Oou
• Three issues for publishers in accepting manuscripts: http://bit.ly/M9gbHq
• Four better ways to determine whether your manuscript is "finished": http://bit.ly/Na0RHD
• Three facts you may not have known about e-books (and two issues they raise): http://bit.ly/NOH2m5
• Three tips if your publisher says your book isn't worth paying for (and one suggestion for what to do next): http://bit.ly/Ok9g9u
• What kind of help is your publisher legally obligated to give: http://bit.ly/Rlkxtq
• Your publisher is asking for the advance back: three things not to do (and one to try): http://bit.ly/N55Nxu

More new content to come. This week I'll continue with tips to help you understand some of the financial terms in your contracts.

Show me the money: what you need to know about getting paid

If you're creating valuable content, you may someday want to get paid. And that means you'll need to know something about how payments are structured in entertainment contracts. I know, this could be tedious. But when we get to talking about money, and especially in future posts when I go into net profits clauses, knowing the basics will be really important.

Oversimplifying drastically, there are two basic types of payments:

• Flat fees
• Payments over time (royalties and advances)

First I'll talk about flat fees. Then I'll cover royalties and advances.

Before you do anything with your new idea, know these two things

So you've come up with the greatest new idea. Before you do anything with it, you need to know these two points.

1. You can't protect your idea.

An idea itself is totally impossible to protect. There are 4 major types of intellectual property: copyright, trademark, patent, and trade secret. (There are outliers too: Canada protects circuit board designs for some weird reason for example. We'll focus on the big 4.) And in a nutshell:

If you think you're creating a parody, read this post

"What distinguishes the unhappiest person? Smoky eyes and chic up-do. Evening glam."
@KimKierkegaard

Someone, somewhere, has come up with the idea of putting together two completely disparate sources: the philosophy of Søren Kierkegaard and the tweets of Kim Kardashian. One example of the result is above: it combines a reference to Kierkegaard's "The Unhappiest Man" with one of Kardashian's July 9, 2012 tweets.  And I'll let you decide whether @KimKierkegaard's use of them is genius or banal, but it's definitely a perfect example of a parody.

Let's look at why.

How to attack content scrapers

I have to start this post with a truism: if someone wants to steal your content on the Web there's nothing you can do to stop them. That's the unfortunate truth of the online world and it's not really a surprise to anyone. The real questions are: what can you do to make it clear they've stolen from you, and what can you do when you find out they've stolen from you.

Three myths (and two truths) about idea theft

MYTH #1: Idea theft never happens, people who think that are paranoid.
Actually, it does. One of the most famous cases on "Hollywood accounting" is Buchwald v. Paramount, in which Art Buchwald sued Paramount and got a judgment saying that Paramount stole the idea for "Coming to America" from him. And studios aren't the only people who can steal ideas...

MYTH #2: Idea theft happens all the time, people who don't think that are crazy.
This is even less true than #1, for three reasons.

Your publisher is asking for the advance back? Three things not to do (and one thing to try)

1. Unless your contract says you have to: don't give back the money. If your publisher chooses not to publish that's their right, but if you did what you were supposed to do and delivered an acceptable manuscript (you did read those prior posts, right?) then you're very likely entitled to keep your advance. You may be afraid of being blacklisted, but you're just as likely to be thought of as a sucker if you give back money you could have kept.

What kind of help does your publisher have to give?

Today, one editor could have dozens or even hundreds of authors to manage. In that kind of environment it's important for you to be clear on the kind of assistance you should expect from your publisher. And your contract is going to contain clues, both by what it says and by what it doesn't say, about how much help you should expect.

Notwithstanding what your publisher might want you to think, courts have held that a publisher has a duty to provide an author with some guidance and assistance in delivering an acceptable manuscript. That's the case both for fiction works and for non-fiction.

That works to your advantage and disadvantage at the same time. Does your contract spell out exactly how many check-in meetings are required during the writing process? This is why: if things go bad the publisher is going to use these check-ins as proof that they were providing you with assistance. So use these to your advantage too:

App developers: if you sell into the EU and don't think about these four things, you'll hate yourself in the morning

For European app purchasers, July 4, 2012 may be their software independence day. (Okay, I admit that was horrible. I couldn't resist.)

Long story short: in the USA, if you download software, the developer has the right to restrict you from passing your download to someone else. Your app can be tied to your phone or your tablet and it's a violation of the license to sell the app to someone else. Until today, that was the case in Europe too. But after a lawsuit brought by Oracle against a company called UsedSoft, a sort of marketplace for buying and selling licenses for downloaded software, things are different in the EU. And for everyone from app developers to authors to musicians, this is a big change.

Three tips if your publisher says your book isn't worth the money (and one on what to do next)

When a publisher says they can't justify making the investment in publishing your book, of course it's crushing. You've put weeks, months, sometimes even years into producing the best work you can deliver, and it's reduced to a question of money: they don't think they will sell enough copies to make back their investment.

This is called rejecting the manuscript for financial reasons, and it happens more often than anyone wants to admit. It's often nothing personal and not a comment on your work product.

You need to think about how you'll respond to this. Even if your contract may not have any of the sections discussed in the previous post about accepting the manuscript there are rules about rejecting manuscripts for financial reasons that you should know.

Four better ways to determine whether your manuscript is finished

As I mentioned in the last post, your publisher will have pretty much unfettered discretion to determine whether to accept or reject your manuscript. Unless you put in some criteria to govern the decision.

Much though your publisher might not want you to know it, there are ways to do this that can give you some assistance in the event that your publisher tries to reject and take away the fee that you would be paid on acceptance. There's as many ways to do this as there are to write down words in a contract, but here's four methods that have been used in reported cases or in contracts that I've seen.

Three issues for publishers in accepting manuscripts

Now that you've submitted your manuscript to your publisher, it's nail-biting time. Will there be changes? How many? How deep will the cuts go? Of course there's nothing you can do about this part of the process: it's entirely out of your hands. Or is it?

If you've been keeping in touch with your editor this should be a less painful process than if you haven't. Both because you'll have a better idea of what your publisher actually wants and because there's less that your publisher will be allowed to insist that you change. Remember when I said that if you're making changes to your content you should reach out to your editor and make sure they're okay with your plans? This is why: a publisher who has been kept informed of your progress has far less leeway to reject your final work than one who sees it for the first time at the end.

Let's look at some of the criteria; we'll explore them in detail over the coming days.

Knowing whether you've delivered what you were "supposed to" (and two tips in case you didn't)

Now that you know it's up to you to decide when you're finished, there's another element to consider: did you write what you were "supposed to" write?


This is an easier question with non-fiction than fiction. For non-fiction, if you're assigned to do a travel piece on the wineries of Italy and you come back with a story about traveling on a fishing trawler in the Barents Sea, you haven't delivered what you promised. In that case your publisher has an easy time saying they won't pay. (Believe it or not, even this isn't always a slam dunk, but that's another topic for another day.)


It gets a bit harder when your writing has some leeway. If you're writing a memoir, profile, or biography, your own impressions and streams of consciousness might be a relevant way to investigate the topic. But the further you get from your designated subject, the easier you're making it for your publisher to decide not to pay you and push you to make your own choice about what happens next.


For fiction it's a much more difficult situation.

The one (or more) step(s) to knowing when you're done writing

You're finished when you say you're finished.

That's it. Pretty easy, no? Ever since slavery was abolished, no one can force you to work. The technical term is a "contract of personal service" and that's what a writing contract is: you're not allowed to subcontract the job, it's you who has to do it yourself.

But it's not that simple. The issue isn't in deciding when you're done, the issue is in determining what are the consequences.

Let's start with an easy scenario: your contract says you'll deliver a 35,000-word manuscript and you deliver 25,000. You haven't performed under the contract. Clearly, you haven't performed. We'll discuss in more detail in a future post what that means, but for now you should assume you'll be asked to give back your advances and the publisher won't accept the manuscript. But if you really don't want to write anything more, you don't have to.

The writing is over: now what?

For the next few posts, I'll talk about what happens when you've finished writing your manuscript. To make things easy I'll break it into a few parts.

1. How do you know when you're really finished under your contract?
2. Is it really you who gets to decide what goes into the manuscript?
3. On what basis can the publisher reject your manuscript?
4. What do you do if the publisher rejects your manuscript?
5. Once they've accepted your manuscript, do they have to publish the book?

Note: even though I'm talking about books and manuscripts, the rule applies for pretty much any creative content: films, video games, works of art, etc.

The hidden cost of exotic locations

Paris... Rome... Athens... some names just conjure up images of romance and adventure. For many people creating stories and setting their locations, one of the fastest ways to do it is with an establishing shot: show the Eiffel Tower and your audience doesn't need to see another word to know they're looking at Paris. But put that in your screenplay and you're raising a hidden cost.

Three things that didn't change last week about nudity on TV

In 2002 at the Billboard Music Awards, in response to comments that she was on her way out, Cher's response to her critics was clear: "f*** em". In 2003 at the same awards show Nicole Richie described getting "cow s*** out of a Prada purse" as "not so f***ing simple." And also in 2003 ABC showed an episode of NYPD Blue with 5 seconds of naked butt and 7 of sideboob. And in 2012 the US Supreme Court finally handed down a ruling saying that because Fox and ABC didn't have advance warning that fleeting instances of cursing or nudity would put them at risk of fines, the FCC couldn't fine them.

There are people out there saying this judgment means short bursts of cursing and nudity are fair game for US TV networks and that creators should be making more edgy content. There are other people saying nothing has changed. They can't both be right. If you're preparing content containing this type of content, keep 3 things in mind.

Four things not to forget when posting photographs on the Web

1. Don't forget to watermark. Yes, your photograph is copyrighted, and if you find someone using it without permission you might (*might*) have grounds to insist that they compensate you. But you make it a lot harder for them to pretend they didn't know whom to contact if you take a simple step: watermarking your images. You don't have to make them ugly: a chyron in the bottom corner is enough for you to make the argument later that if someone wanted to use your photo, they needed to get your permission first.

Three good reasons to read Legal Minimum

You've got a lot of things to do and not a lot of time to do them. Why should you follow one more blog, and especially one about law? Here's three good reasons for creatives and creators like you to make Legal Minimum a part of your day.