A Contract Primer: Term and Territorial Rights
[Originally published in the magazine Romance Writers Report, November 2010.]
Setting the Scene
The time: 1999, one year before I sold my first novel.
The place: My office, where I practiced trademark and copyright law as an associate in a large Washington, D.C. law firm.
The action: A senior partner, knowing that I was an aspiring writer, asked me to review a publishing contract received by his wife’s best friend. I took out my red pen and sliced through page after page of contract boilerplate, insisting that no right-minded author would ever sign such an agreement.
The come-uppance: I received my own publishing contract less than a year later and discovered that most of the terms I had so lovingly rewritten were industry-standard “boilerplate”, clauses that are standardized and repeated from contract to contract, often with little discussion or specific thought to the details of a particular book.
The disclaimer: This article does not constitute specific legal advice for your situation. It does not create an attorney-client relationship or any other expectation of confidentiality, nor is it an offer of representation.
How Long is Too Long?
Typically, publishing contracts begin with some basic factual information about the parties, including names and addresses. Those data are often followed by a few “recitals”, clauses that start with the lawyerly word “whereas”, explaining that the parties want to make an agreement because the author has written a book and the publisher is in the business of publishing books.
Then, the fun begins.
Most publishing contracts address the term of the contract as one of the initial matters. “Term” refers to how long the agreement will last between the parties. Typically, the term is for the duration of the copyright, but it might be for some other time period, especially if the contract addresses electronic publication of reprints.*
Typical term language might be phrased:
- “The author hereby grants to the Publisher during the full term of copyright and any renewals, continuations and extensions thereof [various rights] …” or
- “Author grants an exclusive license to Publisher to distribute the [electronic] Content for ten years from the date that Publisher commences distribution of Content. At the end of the term, this Agreement shall automatically be extended on a year to year basis as long as Publisher pays to Author an extension fee of $X before the end of the tenth year of the original term.”
Other contract terms will provide “escape hatches” for specific situations – e.g., nonperformance, bankruptcy, or reversion of rights once a book has gone out of print. The goal of the main term clause is to define coverage for the longest possible time period that the parties are likely (or willing) to be bound.
Where in the World?
Most contracts then move on to define which specific actions the publisher can take in which specific territories. “Territory” indicates a specific geographic region. Territorial geographic descriptions (e.g., “in the United States”) are often teamed up with language restrictions (e.g., “in the English language”).
Typical territory language might be phrased:
- “Author hereby grants to Publisher the exclusive right to print, publish, and sell the Work in the English language in the United States of America, its territories and possessions, the Philippine Republic, and Puerto Rico…” or
- “Author grants and assigns to Publisher the exclusive license to utilize all copyright rights in and to the Work throughout all countries in the world…” or
- “Author grants and assigns to Publisher [various rights] in the Work in the English language in all British Commonwealth countries, as defined in Attachment A…”
Easy Route is Not Always the Best Route
Publishers typically try to grab rights to as many languages in as many territories as possible. Authors occasionally do not fight such a rights grab because they believe that it will be difficult, if not impossible, to find buyers for the rights they reserve. Authors should evaluate “taking the easy route”, though, to make certain that the resulting contracts are in their best interest.
Problems might arise because publishers are likely to ignore rights that they have no means of using. For example, if a publisher has no foreign distribution system, it is not likely to launch large-scale overseas sales, even for a title that has appeal to an international audience.
When publishers do not have their own international publishing arms (e.g., Random House (in the United States) and Verlagsgruppe Random House GmbH (in Germany)), then those publishers typically sell their rights to an unrelated third party. Those sales might be made for any variety of business reasons, none of which have the author’s career and finances as a priority. For example, the publisher might decide to sell all French language and geographic rights for a paltry sum. In the alternative, it might agree to do business with a disreputable Spanish publisher who fails to bring the book to market. In either of these instances (or the dozens of others nightmares authorly brains can devise), authors have no recourse if they have not reserved their rights.
Divide and Conquer
In fact, authors should always strive to limit the rights that they grant in their publishing contracts. Reserving rights creates the possibility of selling a single work multiple times.
For example, the ten-year time limitation discussed above, provides for the author to earn an extension fee if she renews the contract after its original term. That extension fee is “found money” for the author; she does not need to do any additional work to earn it.
While negotiation room is often limited on time periods, authors frequently have more latitude with regard to language and geographic restrictions. If a publisher only publishes English language books that it markets solely in the United States, then an author should press hard to retain foreign-language and foreign-territory rights.
An author’s ideal contract arrangement would result in multiple contracts with multiple publishers, each of which is best positioned to print, distribute, and promote the author’s works. For example, an author who negotiates shrewdly might find herself with the following contracts, among many others:
- English language rights in the United States
- English language rights in Great Britain
- English language rights in Australia and New Zealand (two countries which are rarely separated by publishers)
- Portuguese language rights in Portugal
- Portuguese language rights in Brazil
- Mandarin language rights in China
- Cantonese language rights in China
Ultimate Goal: Informed Consent
Not every author will have the negotiation power to obtain the time and territory restrictions that she desires. Every author, though, can study the terms of her contracts and know precisely which rights she is granting her publisher. That knowledge will ultimately provide power to stabilize a burgeoning writing career.
* As a general rule, for works created after January 1, 1978, copyright protection lasts for the life of the author plus an additional 70 years. Works created on or after January 1, 1978, are not subject to renewal registration.