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The right to print, publish and sell works in book form does not include the right to publish a work in digital form, a federal judge ruled Wednesday. Denying a preliminary injunction to Random House Inc., Judge Sidney H. Stein of the U.S. District Court for the Southern District of New York said that so-called “e-books” do not fall within the company’s exclusive rights to publish written works. The ruling came in the closely watched copyright case Random House Inc. v. Rosetta Books, 01 Civ. 1728, in which Rosetta Books argued it could not be blocked from publishing, in digital format, several works by major authors such as William Styron and Kurt Vonnegut. The decision will be published Tuesday. Stein, after interpreting Random House’s contract language for the two authors, as well as for writer Robert B. Parker, said there were myriad differences between traditional book publishing and publishing in digital form. “Random House’s own expert concludes that the media are distinct because information stored digitally can be manipulated in ways that analog information cannot,” he said. “E-books take advantage of the digital medium’s ability to manipulate data by allowing e-book users to electronically search the text for specific words and phrases, change the font size and style, type notes into the text and electronically organize them, highlight and bookmark, hyperlink to specific parts of the text, and, in the future, to other sites on related topics as well, and access a dictionary that pronounces words in the book aloud.” After Rosetta contracted with the authors to publish their works in a digital format that could be read using computer software, Random House brought suit for copyright infringement and tortious interference with contracts. Styron granted publishing rights to Random House for “The Confessions of Nat Turner” in 1961, and for “Sophie’s Choice” in 1977. Vonnegut did the same in 1967, signing a contract with Random House’s predecessor-in-interest Dell Publishing Co. for “Slaughterhouse Five” and “Breakfast of Champions.” Styron gave Random House the exclusive right to publish the works in book form, as well as the right to “publish or broadcast by radio or television … selections from the work for publicity purposes.” Styron also signed a noncompete clause and reserved the rights to license publications in the British Commonwealth or in foreign languages. Vonnegut’s agreement granted Random House exclusive publishing and licensing rights, following book publication, for anthologies, selections and digests as well as “picture book versions” and “other forms of copying, either now in use or hereafter developed.” But Vonnegut’s agreement did not include a noncompete clause. And he also reserved dramatic, motion picture and radio rights “including mechanical renditions and/or recordings of the text.” Parker’s 1982 contract with Dell for the work “Promised Land” was similar to the Vonnegut agreement, except that he signed a noncompete clause. A NEW USE PROBLEM Judge Stein said the 2nd U.S. Circuit Court of Appeals, in dealing with cases involving new marketing channels made possible by developments in technology that occur after the licensing contract, called them “new use problems.” The circuit, he said, has settled on a “neutral” approach that relies on interpreting the contract in light of two policy considerations: the desire to encourage publishers “to develop new technologies that will enable all to enjoy the creative work in a new way,” and the “purpose underlying federal copyright law — to encourage authors to create literary works.” “Manifestly, paragraph #1 of each contract — entitled either ‘grant of rights’ or ‘exclusive publication’ right’ — conveys certain rights from the author to the publisher,” Stein said. “In that paragraph, separate grant language is used to convey the rights to publish book club editions, reprint editions, abridged forms and editions in Braille. This language would not be necessary if the phrase ‘in book form’ encompassed all types of books.” And Stein said, “Indeed, many of the rights set forth in the publisher’s form contracts were in fact not granted to the publisher, but rather were reserved by the authors to themselves.” Random House had argued that the words “in book form” meant a faithful reproduction of the work, and because e-books contain the complete text of the work, Rosetta could not simultaneously own the book rights. But Stein said that because sections of the contract cannot be read in isolation, and instead must be interpreted in the context of the whole agreement, “Random House’s definition cannot be adopted.” Moreover, he said, language concerning photocopying “either now in use or hereafter developed,” when viewed in context, “clearly refers only to new developments in xerography and other forms of photocopying.” “Stretching it to include new forms of publishing, such as e-books, would make the rest of the contract superfluous because there would be no reason for authors to reserve rights to forms of publishing ‘now in use,’ ” he said. “ This interpretation also comports with the publishing industry’s trade usage of the phrase.” Under “new use” case law, Stein said that the “use” here, “electronic digital signals sent over the Internet — is a separate medium from the original use — printed words on paper.” NO INJUNCTION Finally, Judge Stein said Random House had failed to meet the standard for the granting of a preliminary injunction. “Random House fears that Rosetta’s e-books will harm its goodwill with its customers and cause direct competition in Random House’s own efforts to establish its e-book business,” he said. “Rosetta worries that a preliminary injunction will effectively put its new company out of business because it will impede its ability to publish any works previously licensed to other publishers.” In the end, he said, “the balance of hardships does not tip decidedly in Random House’s favor.” Bruce Rich of Weil, Gotshal & Manges represented Random House. Michael Boni of Kohn, Swift & Graf represented Rosetta Books.

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