Legal Information - RosettaBooks®


Random House v. RosettaBooks ten years later

RosettaBooks launched its list of 100 ebooks in February 2001 and was sued the following day by Random House. The full litigation file can be found here.

The substance of the Random House claim was that the clause “print, publish and sell” in virtually all book contracts incorporated the right to create ebooks. Random House argued that it controlled electronic rights to every active contract for a title in copyright (i.e. published since 1923) in its vast catalog. The suit focused on titles of three Random House print authors whose ebook rights RosettaBooks had licensed from the authors: Kurt Vonnegut, William Styron and Robert B. Parker.

Random House was later joined in the litigation by other major publishers and the Association of American Publishers. RosettaBooks was supported by the Author’s Guild and the Association of Authors Representatives, the first time these leading author and agent groups had aligned in litigation.

Random House sought an injunction against RosettaBooks, the traditional first step in a copyright case. Had Random House succeeded, RosettaBooks’ business would have effectively been “suspended.” While losing on a motion for an injunction is not fatal to a copyright claim, it is a very negative development for the prospects of the plaintiff.

Random House spent seven figure money to put RosettaBooks out of business, achieve an injunction and send a message to the broader community that these backlist rights “belonged” to the publisher. Random House put forward every argument a well funded and well represented litigant possibly could to a federal judge.

In July, 2001, Judge Sidney H. Stein issued an opinion denying Random House’s request for an injunction. That decision is one of the most important author/publisher relations opinions ever issued, certainly so in electronic publishing. Random House appealed Judge Stein’s opinion to the Second Circuit Court of Appeals. In March, 2002 a three judge panel of the Second Circuit unanimously upheld Judge Stein’s opinion.

Ultimately, in December 2002, Random House and RosettaBooks settled the litigation with Random House licensing 50 prominent titles to RosettaBooks with permission of the authors (a tacit acknowledgement of the substantive position that authors controlled the rights). RosettaBooks was permitted to continue publishing the Styron, Vonnegut and Parker titles which were the subject of the litigation.
See Press Release 12-04-02.

So, where are we ten years later?

Random House has publicly stated recently that its 2001 position remains its position and has threatened, privately and publicly, to litigate with authors who license ebook rights to third parties. Meanwhile, the William Styron titles which were the subject of our litigation were licensed after the expiration of the RosettaBooks license by the Styron estate to Open Road uneventfully. In the last ten years, no litigation has been filed in the community by any party on the issues raised by our litigation. Many hundreds of prominent titles have been licensed to third parties or self published uneventfully. And the Big Six trade publishers have tried (usually unsuccessfully since their license terms are unattractive) repeatedly to obtain written permission from backlist authors to issue their titles as ebooks.

In England, the agent and author community has been clear for ten years that these backlist electronic rights are owned and controlled by the authors. British publishers which are sister companies to the US Big Six have largely acquiesced. In the US, agents and authors are increasingly becoming more committed to unlocking the value in backlist ebooks and obtaining fair value for those rights – which usually means third party licensing.

RosettaBooks stood up for authors and agents when it mattered. We are proud of that legacy. Since ebooks are disruptive to traditional trade publishing, perhaps it is appropriate that RosettaBooks emerged from a cauldron.

Today, RosettaBooks continues to lead the way for authors and their representatives to maximize value and control over backlist ebook rights. We have worked hard to become the leading independent ebook publisher and we will continue to work hard to maintain that position.

Full Litigation File

Random House v RosettaBooks – Round 2On September 13, 2001 Random House filed papers in Round 2 of this Goliath v David battle, seeking to have the Court of Appeals for the Second Circuit overturn Judge Sidney H. Stein´s July 12, 2001 strongly worded 20 page opinion which denied their request that RosettaBooks be enjoined form publishing electronically eight books for which it has acquired the electronic publishing rights directly from the books´ authors.

On March 8, 2002 the Court of Appeals for the Second Circuit rendered a unanimous decision in favor of RosettaBooks denying Random House´s request that the Appelate Court overturn Judge Stein´s July 11, 2001 ruling. In so doing the Court handed RosettaBooks its second victory in this landmark litigation which will prove that authors control electronic rights to their works.

In keeping with our policy that an informed public is our strongest supporter, we present below both sides´ papers along with supporting briefs.

Documents are presented in Adobe PDF Format. The free PDF Reader is available here.

Posted March 20th 2002 – Round 2 to RosettaBooks
U.S. Court of Appeals for the Second Circuit
Decision – On March 8, 2002, Judges Newman, Kearse and Rakoff, writing for the Second Circuit, rendered a unanimous decision in favor of RosettaBooks denying Random House´s request that the Appelate Court overturn Judge Stein´s July 11, 2001 ruling which had denied Random House´s request for an injunction. The three judge panel concluded that contrary to Random House´s assertions, ‘…..the district court did not abuse its discretion in denying Random House´s motion for a preliminary injunction, and consequently the judgment is affirmed.’ (Full text 3 pages)
Posted Nov 1st 2001
Random House RosettaBooks
Appeal – On September 13, Random House filed a brief with the Appellate Court seeking to have the the three judge appeals court overturn Judge Stein´s July 12th Opinion. (64 pages)

AAP Amicus Brief – On September 19 The Association of American Publishers, Inc. the national association representing most of the major commercial book publishers in the United States filed a brief in support of Random House´s Appeal. Note: RosettaBooks is not an member of the AAP (24 pages)

Reply to Appeal – On October 19, RosettaBooks filed a reply to Random House´s Appeal of Judge Stein´s July 12th Opinion. (64 pages)

Joint Amicus Brief – On October 26, The Authors Guild and Association of Authors? Representatives filed A joint ‘Friends of the court’ Amicus Brief in support of RosettaBooks which questions the arguments put forth in Random House´s and the AAP´s appeal to overturn Judge Stein´s July 12Opinion. (31 pages)

Random House v RosettaBooks – Round 1

On July 11,2001 Sidney H Stein, U.S. District judge denied Random Houses request that the court enjoin RosettaBooks from selling eight titles for which it has contractually acquired the electronic rights directly from their author. In his ruling the judge found ‘….that Random House is not the beneficial owner of the right to publish the eight works at issue as ebooks.’ a full text of the ruling can be viewed here: Opinion

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

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

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

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

Rosetta´s responsive papers made clear that:

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

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

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

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

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

On July 11, 2001 Judge Stein denied Random House´s request for an injunction. The full text of the judges opinion is available here: Opinion

Posted July 12th 2001 – Round 1 to RosettaBooks
Judge Stein – U.S. District Court – Southern District of NY
Opinion – On July 11, 2001, Judge Sidney H. Stein of the US District Court, Southern District of New York issued his opinion denying Random House´s request for a preliminary injunction and concluding ‘Employing the most important tool in the armamentarium of contract interpretation – the language of the contract itself – this Court has concluded that Random House is not the beneficial owner of the right to publish the eight works at issue as ebooks.’ (20pages)
Posted May 9th 2001
Random House RosettaBooks
Reply – On April 30, Random House filed a Reply to RosettaBooks response to the Random House Complaint. (29 pages)

Publisher´s Request for Permission to File Amicus Brief – On April 30, Penguin Putnam Inc., Simon And Schuster, Inc., Time Warner Trade Publishing Inc., And The Perseus Books Group filed papers with the court seeking permission to file a joint Amicus Brief in support of the Random House position. (10 pages)

Publisher´s Amicus Brief – On April 30, Penguin Putnam Inc., Simon And Schuster, Inc., Time Warner Trade Publishing Inc., And The Perseus Books Group a joint Amicus Brief in support of the Random House position. (23 pages)

Sur-Reply – On May 3, RosettaBooks filed a Sur-Reply to the Random House Reply Brief. If you can only read one document to get a feel for the litigation, read this one. (18 pages)
Klebanoff Deposition – Deposition of Arthur Klebanoff, CEO of RosettaBooks with questions from attorneys for Random House. (168 pages)

Dwyer Deposition – Deposition of Leo Dwyer, COO of RosettaBooks with questions from attorneys for Random House. (115 pages)

Posted April 11th 2001
Random House RosettaBooks
Summons – A summons to appear in court to defend against the complaint (2 pages)
Complaint – Random House puts forward its claim that RosettaBooks has infringed on its rights and interfered with its contracts and asks the court for relief. (24 pages) Answer – RosettaBooks´ responds to each of the charges. (11 pages)
Support of Motion for Preliminary Injunction – A memorandum of Law in Support of Plaintiff´s Motion for a Preliminary Injunction. (41 pages) Response – RosettaBooks´ response in opposition to Random House´s motion for a preliminary injunction. (50 pages)

Amicus Brief – A joint ‘Friends of the court’ filing by The Authors Guild and Association of Authors´ Representatives in support of RosettaBooks. (25 pages)

Affidavit of Richard Sarnoff – Richard Sarnoff, as Executive Vice President Random House, President of Random House New Media and Corporate Development Group, and President Random House Ventures, LLC. (15 pages) Declaration of Arthur M. Klebanoff – Chief Executive Officer of RosettaBooks, Inc. (12 pages)
Expert Declaration of Andries Van Dam – Andries Van Dam, Thomas J. Watson , Jr. Professor of Technology and Education and a Professor of Computer Science at Brown University as technology expert. (7 pages) Declaration of David Farber – Professor of Telecommunications, University of Pennsylvania. (4 pages)
Expert Affidavit of Edward A. Miller – Edward A. Miller, as attorney with experience in publishing contracts and general industry experience, as publishing contract expert. (5 pages)

Affidavit of Ashbel Green – Ashbel Green as Vice President and Senior Editor for Alfred A. Knopf imprint, part of Random House´s Knopf Publishing Group, as industry expert experienced with publishing contracts. (4 pages)

Affidavit of Adam Smith – Adam Smith as Director of New Media, Random House, as authority on eBook devices, purchasing and future. (7 pages)

Affidavit of Lisa Cantos – Lisa Cantos, as attorney with Weil, Gotshal & Manges, as experienced purchaser of RosettaBooks eBooks. (4 pages)

Declaration of Georges Borchardt – President of Georges Borchardt, Inc. (8 pages)

Declaration of Helen Brann – President of The Helen Brann Agency, Agent to Robert B. Parker. (5 pages)

Declaration of Donald K. Congdon – President of Don Congdon Associates, Inc., Agent to William Styron. (9 pages)

Declaration of Leo David Dwyer – Chief Operating Officer of RosettaBooks, LLC. (10 pages)

Declaration of Donald C. Farber – Esquire Of Counsel to Jacob Mendiger & Finnegan LLC, Agent to Kurt Vonnegut. (10 pages)

Declaration of Catherine Fowler – Former Associate Publisher of Reference and Electronic Publishing Division of Random House. (11 pages)

Declaration of Leon Friedman – Charles Kushner Distinguished Professor of Law at Hofstra Law School. (4 pages)

Declaration of Tara Harper – Author. (5 pages)

Declaration of Dorothy Kauffman – Chief Marketing and Editorial Officer of RosettaBooks, Inc. (9 pages)

Declaration of Ellen Levine – President of Ellen Levin Literary Agency, Inc. and Co-Chair of the Contract Committee of the Association of Authors Representatives, Inc. (8 pages)

Declaration of Donald Maass – President of the Association of Authors´ Representatives, Inc., President of the Donald Maass Literary Agency. (9 pages)

Declaration of Eugene H. Winick – Esquire, President of McIntosh and Otis. (6 pages)

Declaration of Robert J. LaRocca – Esquire attaching affidavits from Field v. True Comics. (7 pages)

Random House Scaling Back e-Books – Exhibit 3 to Deposition of Adam Michael Smith

Vitale Letter – March 28, 1994 letter from Alberto Vitale of Random House with contract revisions regarding electronic rights (1 page)

Random House Sealed Exhibit – Sealed exhibit – October, 2000 Random House eBook Discussion Executive Update – Not Available.

Random House Sealed Exhibit – Sealed exhibit – Deposition of Richard Sarnoff, April 4, 2001, pp. 73-79 – Not Available.

Deposition of Ashbel Green – Deposition of Ashbel Green 3/29/2001. (32 pages)

Deposition of Edward A. Miller – Deposition of Edward A. Miller 3/29/2001. (96 pages)

Deposition of Richard Sarnoff – Deposition of Richard Sarnoff April 4, 2001, (public record) (all pages except 73-79)

Deposition of Andries van Dam – Deposition of Andries van Dam 3/28/2001 (109 pages)