Publishing Law

(redirected from the Publisher Satisfaction Clause)

Publishing Law

The body of law relating to the publication of books, magazines, newspapers, electronic materials, and other artistic works.

Publishing law is not a discrete legal topic with its own laws. It is a collection of often disparate legal areas, such as contracts, intellectual property, torts, and the First Amendment.

Publishing is the act of distributing or otherwise making public a visual or literary work. The key players in publishing are publishers and authors. Publishers are those persons or organizations that dispense information to the public. The term author commonly describes writers and journalists, but where publishing is concerned, the term also describes photographers, filmmakers, video artists, and other artists whose work is published. Most publishers designate a lawyer to review a publishable work and identify its potential legal pitfalls. This person, called a legal liaison, may confer with outside legal counsel to ensure that the publication does not ensnare the publisher or author in legal conflict. A legal liaison should be familiar with the many legal issues peculiar to publishing, including Copyright and trademark infringement, sales, advertising, distribution policies, subscription agreements, special sales arrangements, insurance, free speech, tax matters, and antitrust concerns stemming from the publisher's membership in trade associations. Other employees of publishers, such as editors, also should be trained to spot potential legal problems with a publishable work and bring them to the attention of the legal liaison before publication.

Publishers may be held liable for omissions, mistakes, and transgressions of their authors, as well as their own omissions, mistakes, and transgressions. One of the first and foremost concerns of publishers is copyright and trademark issues. Publishers should conduct thorough research on copyright and trademark issues before publishing a work. Among other things, publishers should ensure that copyrights are properly registered; the appropriate copyright notice is placed in each work; copyrights for work published prior to the effective date of the most recent federal copyright act, the Copyright Amendments Act of 1992 (2 U.S.C.A. § 179 et seq.), are renewed; the work does not violate the copyrights or trademark rights of another publisher or author; all copyrights are duly affixed to the work; all copyrights from source materials have been released or paid for; the work does not defame anyone; the work does not invade a person's right of privacy; all obligations to authors, creators, and illustrators under the contract are being met; information from sources can be verified or has been confirmed; and any material derived from a dialogue between real people that is placed in quotation marks correctly sets forth the actual words spoken.

Failure to confirm quotations can lead to lengthy litigation if the quotations defame the speaker. In Masson v. New Yorker Magazine Inc., 686 F. Supp. 1396 (N.D. Cal. 1987), aff'd, 881 F.2d 1452 (9th Cir. 1989), and superseded, 895 F.2d 1535 (9th Cir. 1990), and rev'd, 501 U.S. 496, 111 S. Ct. 2419, 115 L. Ed. 2d 447 (1991), on remand 832 F. Supp. 1350 (N.D. Cal. 1993), 85 F.3d 1394 (9th Cir. 1996), psychoanalyst Jeffrey M. Masson sued New Yorker magazine, its publisher Alfred A. Knopf, Inc., and freelance writer Janet Malcolm after Malcolm wrote a quite unflattering article about Masson for the New Yorker that included quotations by Masson that Malcolm could not substantiate. The defendants ultimately prevailed but only after more than a decade of litigation.

Some publishable works run the risk of invading a person's right of privacy. A person whose privacy is invaded may recover damages for the loss of privacy, for mental and emotional distress suffered as a result of the intrusion, and for any specific injuries or financial losses stemming from the intrusion. The four basic types of privacy invasion are public disclosure of private and embarrassing facts, publicity that places an individual in a false light, intrusion into seclusion, and misappropriation of a person's name or likeness for commercial advantage. Generally, public figures do not receive as much privacy protection as do private individuals.

Publishers also must ensure that a work does not infringe upon a person's right of publicity. The right of publicity protects a person's exclusive right to control the exploitation of his name, likeness, or persona for commercial purposes. Generally, to qualify for this protection, the person must have commercially exploited his persona. A publisher violates a person's right of publicity by publishing, without consent, the person's performance, name, or likeness for advertising or trade purposes.

"I Can't Get No": The Publisher Satisfaction Clause

Of all the provisions in a book contract, the satisfaction clause is the most controversial. Under the satisfaction clause, a publisher may refuse to publish an author's work and demand reimbursement for any advance payments if the publisher is not satisfied with the final product.

Publishers insist on including a satisfaction clause in book contracts to protect their own interests. A publishing company typically uses the clause when it has signed a deal with an author for a book that has not been completed. Such speculative deals are common in the world of book publishing. Many authors do not write books unless they receive an advance payment, and few publishers receive completed books that need no additional work from the author.

If a publisher is interested in a book or an idea for a book, it may seek an agreement with the author to gain the copyrights to the final product. The agreement may include an advance payment for the expected final product. When the publisher makes an advance payment, it must have a way out of the contract if the author submits a final product that is unsatisfactory. Without a satisfaction clause, authors would have less incentive to submit quality work, and publishers could be faced with manuscripts requiring an unreasonable amount of editing and rewriting.

For authors, the satisfaction clause is a potential trap. Some authors have argued that a publisher may use the clause as camouflage to reject a book for an invalid reason. For example, a publisher might reject a manuscript and claim it was unsatisfactory when the real reason for the publisher's rejection was that another publisher had beaten it to press with a book on the same subject. Such a rejection would be a bad faith rejection and would give the author a Cause of Action against the publisher. However, bad faith is notoriously difficult to prove in court.

For decades, courts refused to examine the motives of publishers when they invoked the satisfaction clause to terminate a book contract. The first sign of a more stringent standard of review came in 1979 in Random House v. Gold, 464 F. Supp. 1306 (S.D.N.Y. 1979). In Gold, Random House rejected author Herbert Gold's novel Swiftie the Magician after learning that Gold's first two books had fallen short of commercial expectations. Gold had agreed to write four books for Random House in exchange for advance payments against royalties.

When Random House offered to renegotiate Gold's contract, Gold sold Swiftie the Magician to McGraw-Hill. Random House sued and won back the advance payments to Swiftie the Magician, but in its opinion the court observed that broad discretion for publishers in their predictions of commercial success "may permit overreaching by publishers attempting to extricate themselves from bad deals."

The case of Harcourt Brace Jovanovich v. Goldwater, 532 F. Supp. 619 (S.D.N.Y. 1982), created a new approach to author-publisher contracts. In Goldwater, author Stephen Shadegg and politician barry m. goldwater contracted with Harcourt Brace Jovanovich to publish Goldwater's memoirs. In return for the book rights, Harcourt paid to Shadegg and Goldwater a $65,000 advance. Harcourt rejected the final manuscript nineteen months after the agreement was reached without giving the authors an opportunity to make revisions and without giving them editorial assistance. Harcourt demanded a return of the advance. Shadegg and Goldwater refused, and Harcourt sued.

The court acknowledged that the law must afford a publisher "very considerable discretion," but it also noted that a publisher does not have an "absolutely unfettered license to act or not to act in any way it wishes and to accept or reject a book for any reason whatever." The Gold court had said nearly as much, but the Goldwater court made new law when it declared that "there is an implied obligation in a contract of this kind for the publisher to engage in appropriate editorial work with the author." Goldwater therefore created a publisher's duty to provide editorial assistance to prevent its wanton use of the satisfaction clause. An additional duty, the duty to give an author the opportunity to make a revision, was established shortly thereafter in Dell Publishing v. Whedon, 577 F. Supp. 1459 (S.D.N.Y. 1984).

The satisfaction clause is likely to remain a standard provision in author-publisher contracts. Under the clause, authors will be held to their obligation to produce a satisfactory manuscript—that is, one the publisher can publish. Publishers, on the other hand, must be fair in their use of the clause against an author. Courts will no longer allow publishers to walk away from any author agreement just by reciting the word "unsatisfactory."

Several other torts may be committed in the publication of a work. Among other torts, publishers should be on guard for intentional or negligent infliction of emotional distress, incitement and negligent publication, breach of confidentiality, Trespass, assault, and Battery. Trespass, assault, and battery are most common in news-gathering situations, where the competition to break stories can lead writers, photographers, and video artists to engage in questionable behavior. Battery, for example, can occur if a photographer or interviewer intentionally touches a subject in an offensive way. An assault occurs if a person puts another person in reasonable fear of a harmful or offensive physical contact, and a person commits trespass by entering on land without permission of the legal occupant.

Infliction of emotional distress is tortious conduct that causes severe emotional distress to the subject of a work. For example, a publisher could be held liable under this theory of recovery for printing a photograph in a pornographic magazine and incorrectly identifying the person in the picture if the identified person experiences work interruptions, nightmares, terror, humiliation, or other emotional distress as a result. A plaintiff in such an action may recover for both physical and mental harm resulting from the tort. A subject need not suffer physical or bodily injury to recover damages for this tort; emotional damage is sufficient. The main issue in such torts is whether the conduct by the author or publisher was so extreme and outrageous as to permit recovery for the subject's emotional distress.

The tort of incitement is speech directed to inciting or producing imminent lawless action that is likely to incite or produce such action. Such speech must be explicit to constitute incitement. Publishers generally will not be held liable if warnings are included in the work or the publication does not produce a Clear and Present Danger of imminent injury. Negligent publication is the unintentional publication of incorrect facts that results in injury. This tort requires that the publisher owe a specific duty of care toward the injured party. This duty is difficult, but not impossible, to establish. If, for example, a publisher markets a flight manual to airplane pilots and the manual contains errors, the publisher may be liable for injuries if an airplane crashes because its pilot followed the faulty information.

Breach of confidentiality generally arises from an individual's assertion that the publisher had a duty not to disclose certain information about her. The duty may be expressed in a written or oral agreement between the parties. It also may be implied or required by law. Such statutes are designed to protect an individual's general privacy interest, protect certain sensitive information, or shield certain government information or functions from public knowledge. For example, some states maintain statutes that prohibit the publication of the full name of a juvenile accused of a crime. Another example is the federal statute that creates a Cause of Action against persons who tape conversations without consent for criminal or tortious purposes (title III of the Omnibus Crime Control and Safe Streets Act, 18 U.S.C.A. § 2520 [1997]). If a publisher or author breaches confidentiality, she may be liable to the exposed party for injuries and financial losses stemming from the publication. In some states breach of confidentiality does not itself constitute a cause of action, but aggrieved plaintiffs may seek recovery under a breach of contract or invasion of privacy action.

The First Amendment guarantee of free speech, and free press is a frequent refuge for publishers. Publishers assert the First Amendment as a defense to claims for invasion of privacy, breach of confidentiality, intentional or negligent infliction of emotional distress, incitement and negligent publication, breach of confidentiality, and right of publicity claims.

Starstruck Strikes Out

On September 7, 1977, actor Tony Curtis, inspired by the success of his first novel, Kid Cody, agreed with Doubleday & Company to write a "rags to riches story of a lascivious Hollywood starlet" called Starstruck (Doubleday & Company v. Curtis, 763 F.2d 495 [2d Cir. 1985], rev'g, 599 F. Supp. 779 [S.D.N.Y. 1984], and cert. denied, 474 U.S. 912, 106 S. Ct. 282, 88 L. Ed. 2d 247 [1985]). On the strength of negotiations by his agent, Irving Paul ("Swifty") Lazar, Curtis received an advance of $50,000, which would be offset against the future royalties expected from sales of the Starstruck novel. The contract specified that Curtis should submit a satisfactory manuscript by October 1, 1978, but Curtis submitted nothing until April 1980, when he delivered a partial first draft.

In August 1981, Doubleday editor Elizabeth Drew concluded that the Starstruck manuscript was "junk, pure and simple, " and concurred with editor Adrian Zackheim, who was "appalled at the product," that Curtis's contract should be terminated under the contract's satisfaction clause. Doubleday asked Curtis to return the advance, but Curtis refused. Doubleday then sued for recovery in the Southern District of New York, and Curtis counterclaimed for third-party payments that Doubleday had received for Kid Cody.

At trial, Curtis argued that Doubleday had breached the contract in bad faith. According to Curtis, Doubleday had provided inadequate editorial assistance, and it had canceled the contract to avoid the terms of a related printing contract. The trial court dismissed Doubleday's claim on the theory that it had waived its right to reject the manuscript under the satisfaction clause by waiving deadlines. The trial court also dismissed Curtis's counterclaims.

On appeal, the Second Circuit Court of Appeals reversed the dismissal of Doubleday's claim. The appeals court examined the case history and found that Curtis had refused editorial assistance offered by Doubleday, including the suggestion that Curtis consult a "novel doctor." The court also held that Doubleday had not waived its rights under the satisfaction clause, that Doubleday's editors, "who were forced to harmonize an inferior manuscript, a lucrative reprint agreement and a recalcitrant author," had acted in Good Faith, and that Doubleday was entitled to a return of its $50,000 advance, plus interest. Curtis appealed to the United States Supreme Court, but the High Court refused to hear the appeal.

In some situations the First Amendment also provides members of the press a right of access to information. If the press has historically been granted access to a certain proceeding, and if press access would further societal interests, journalists may have a right to be present at a proceeding or to gain access to certain information (Richmond Newspapers v. Virginia, 448 U.S. 555, 100 S. Ct. 2814, 65 L. Ed. 2d 973 [1980]). In Richmond, the Supreme Court held that a First Amendment right of access prohibited trial courts from excluding journalists and the public from criminal trials.

The Supreme Court has recognized a journalist's right to access judicial documents, but it has yet to recognize a constitutional right to access all government records. However, most states, as well as the federal government, have enacted so-called sunshine laws, which, with some exceptions, give the general public access to public records.

Most publishers maintain insurance against risks of loss. In-house or outside insurance specialists may negotiate coverage for an assortment of risks, ranging from personal injury and property damage to media perils such as invasion of privacy, copyright and trademark infringement, Unfair Competition, injuries related to faulty advertising, errors and omissions in the published product, and Defamation, an intentionally false communication that injures another person's reputation or good name.

Only a handful of insurers protect against media perils because of the large potential losses involved. The few insurers that do protect against media perils do not provide coverage for all forms of media liability, and some do not offer coverage for both damage awards and legal defense costs. It is common for insurers to automatically cover authors of books in blanket policies for book publishers, but software, newspaper, and magazine publishers usually must obtain coverage for their writers by negotiating their inclusion in blanket policies.

Publishers often find that they are in legal conflict with their own authors. The conflicts between authors and publishers are usually contractual in nature, and courts use ordinary contract law principles to resolve the cases. One of the most common complaints of authors is that a publisher did not sufficiently promote their books. In deciding such a claim, a court generally looks at the facts surrounding the case to determine whether the publisher used its best efforts to market the book. Another point of conflict for authors is the satisfaction clause, a boilerplate clause in book contracts that allows publishers to reject a final manuscript and demand the return of any advances if the work is not satisfactory to the publisher.

Further readings

Balkin, Richard. 1994. A Writer's Guide to Book Publishing. 3d ed. New York: Plume.

Bunnin, Brad, with Peter Beren. 1998. The Writer's Legal Companion. 3d ed. Reading, Mass.: Perseus.

Fischer, Mark A., Gabriel Perle, and John Taylor Williams. 1999. Perle & Williams on Publishing Law. 3d ed. Gaithersburg, Md.: Aspen Law & Business.

Fishman, Stephen. 2003. The Copyright Handbook: How to Protect and Use Written Works. 7th ed. Berkeley, Calif.: Nolo.

Polking, Kirk, and Leonard S. Meranus, eds. 1985. Law and the Writer. 3d ed. Cincinnati: Writer's Digest.

Sitarz, Daniel. 1989. The Desktop Publisher's Legal Handbook: A Comprehensive Guide to Computer Publishing Law. Carbondale, Ill.: Nova.

Strauch, Bruce, ed. 2001. Publishing and the Law: Current Legal Issues. New York: Haworth. Information Press

Cross-references

Art Law; Censorship; Entertainment Law; Evidence "Journalists' Privilege" (In Focus); First Amendment; Freedom of Speech; Freedom of the Press; Intellectual Property; Libel and Slander; Literary Property; Music Publishing; New York Times Co. v. Sullivan; New York Times Co. v. United States; Roth v. United States; Royalty; Trademarks; Tort Law.