Random House, Inc. v. Rosetta Books LLC, 01 CIV. 1728(SHS).

• Decision Date: 11 July 2001
• Docket Number: No. 01 CIV. 1728(SHS).,01 CIV. 1728(SHS).
• Citation: 150 F.Supp.2d 613
• Parties: RANDOM HOUSE, INC., Plaintiff, v. ROSETTA BOOKS LLC and Arthur M. Klebanoff, in his individual capacity and as principal of Rosetta Books LLC, Defendants.
• Court: U.S. District Court — Southern District of New York

150 F.Supp.2d 613

RANDOM HOUSE, INC., Plaintiff, v. ROSETTA BOOKS LLC and Arthur M. Klebanoff, in his individual capacity and as principal of Rosetta Books LLC, Defendants.

No. 01 CIV. 1728(SHS).

United States District Court, S.D. New York.

July 11, 2001.

OPINION

STEIN, District Judge.

In this copyright infringement action, Random House, Inc. seeks to enjoin Rosetta Books LLC and its Chief Executive Officer from selling in digital format eight specific works on the grounds that the authors of the works had previously granted Random House—not Rosetta Books— the right to "print, publish and sell the work[s] in book form." Rosetta Books, on the other hand, claims it is not infringing upon the rights those authors gave Random House because the licensing agreements between the publisher and the author do not include a grant of digital or electronic rights.¹ Relying on the language of the contracts and basic principles of contract interpretation, this Court finds that the right to "print, publish and sell the work[s] in book form" in the contracts at issue does not include the right to publish the works in the format that has come to be known as the "ebook." Accordingly, Random House's motion for a preliminary injunction is denied.

BACKGROUND

In the year 2000 and the beginning of 2001, Rosetta Books contracted with several authors to publish certain of their works—including The Confessions of Nat Turner and Sophie's Choice by William Styron; Slaughterhouse-Five, Breakfast of Champions, The Sirens of Titan, Cat's Cradle, and Player Piano by Kurt Vonnegut; and Promised Land by Robert B. Parker—in digital format over the internet. (Def. Ex. 21-23; http://www.rosetta-books.com/pages/about_us.html.) On February 26, 2001 Rosetta Books launched its ebook business, offering those titles and others for sale in digital format. (Cantos Aff. ¶ 2, Ex. A; http://www.rosetta-books.com). The next day, Random House filed this complaint accusing Rosetta Books of committing copyright infringement and tortiously interfering with the contracts Random House had with Messrs. Parker, Styron and Vonnegut by selling its ebooks. It simultaneously moved for a preliminary injunction prohibiting Rosetta from infringing plaintiff's copyrights.

A. Ebooks

Ebooks are "digital book[s] that you can read on a computer screen or an electronic device." (Hrg. at 13;² http://www.rosetta-books.com/pages/about_ebooks.html) Ebooks are created by converting digitized text into a format readable by computer software. The text can be viewed on a desktop or laptop computer, personal digital assistant or handheld dedicated ebook reading device. (Van Dam Decl. ¶ 9.) Rosetta's ebooks can only be read after they are downloaded into a computer that contains either Microsoft Reader, Adobe Acrobat Reader, or Adobe Acrobat eBook Reader software. (Dwyer Decl. ¶ 11; Hrg. at 15.)

Included in a Rosetta ebook is a book cover, title page, copyright page and "eforward" all created by Rosetta Books. Although the text of the ebook is exactly the same as the text of the original work, the ebook contains various features that take advantage of its digital format. For example, ebook users can search the work electronically to find specific words and phrases. They can electronically "highlight"³ and "bookmark"⁴ certain text, which can then be automatically indexed and accessed through hyperlinks. They can use hyperlinks in the table of contents to jump to specific chapters.

Users can also type electronic notes which are stored with the related text. These notes can be automatically indexed, sorted and filed. Users can also change the font size and style of the text to accommodate personal preferences; thus, an electronic screen of text may contain more words, fewer words, or the same number of words as a page of the original published book. In addition, users can have displayed the definition of any word in the text. (Dwyer Decl. ¶¶ 6(g), 7.) In one version of the software, the word can also be pronounced aloud.⁵ (Dwyer Decl. ¶ 7.)

Rosetta's ebooks contain certain security features to prevent users from printing, emailing or otherwise distributing the text. Although it is technologically possible to foil these security features, anyone who does so would be violating the licensing agreement accompanying the software. (Hrg. at 12; Dwyer Decl. ¶ 7.)

B. Random House's licensing agreements

While each agreement between the author and Random House differs in some respects, each uses the phrase "print, publish and sell the work in book form" to convey rights from the author to the publisher. (Sarnoff Aff. Ex. A ¶ 1(a)(i), Ex. B, ¶ 1(a)(i), Ex. C ¶ 1(a), Ex. D ¶ 1(a), Ex. E ¶ 1(a).)

1. Styron Agreements

Forty years ago, in 1961, William Styron granted Random House the right to publish The Confessions of Nat Turner. Besides granting Random House an exclusive license to "print, publish and sell the work in book form," Styron also gave it the right to "license publication of the work by book clubs," "license publication of a reprint edition," "license after book publication the publication of the work, in whole or in part, in anthologies, school books," and other shortened forms, "license without charge publication of the work in Braille, or photographing, recording, and microfilming the work for the physically handicapped," and "publish or permit others to publish or broadcast by radio or television ... selections from the work, for publicity purposes ...." (Sarnoff Aff. Ex. A ¶ 1(a)(ii)-(vi).) Styron demonstrated that he was not granting Random House the rights to license publication in the British Commonwealth or in foreign languages by crossing out these clauses on the form contract supplied by Random House. (Id. ¶ 1(b), (c); Hrg. at 44; Def. Mem. at 8.)

The publisher agreed in the contract to "publish the work at its own expense and in such style and manner and at such a price as it deems suitable." (Sarnoff Aff. Ex. A ¶ 2.) The contract also contains a non-compete clause that provides, in relevant part, that "[t]he Author agrees that during the term of this agreement he will not, without the written permission of the Publisher, publish or permit to be published any material in book or pamphlet form, based on the material in the work, or which is reasonably likely to injure its sale." (Id. at ¶ 8.) Styron's contract with Random House for the right to publish Sophie's Choice, executed in 1977, is virtually identical to his 1961 contract to publish The Confessions of Nat Turner. (Sarnoff Aff. Ex. B.)

2. Vonnegut Agreements

Kurt Vonnegut's 1967 contract granting Random House's predecessor-in-interest Dell Publishing Co., Inc. the license to publish Slaughterhouse-Five and Breakfast of Champions follows a similar structure to the Styron agreements. Paragraph # 1 is captioned "grant of rights" and contains those rights the author is granting to the book publisher. Certain rights on the publisher's form contract are crossed out, indicating that the author reserved them for himself. (Sarnoff Aff. Ex C, ¶ 1(b), (e); Hrg. at 44; Def. Mem. at 10.) One of the rights granted by the author includes the "[e]xclusive right to publish and to license the Work for publication, after book publication ... in anthologies, selections, digests, abridgements, magazine condensations, serialization, newspaper syndication, picture book versions, microfilming, Xerox and other forms of copying, either now in use or hereafter developed." (Sarnoff.Aff.Ex. C. ¶ 1(d).)

Vonnegut specifically reserved for himself the "dramatic ... motion picture (silent and sound) ... radio broadcasting (including mechanical renditions and/or recordings of the text) ... [and] television" rights. (Sarnoff Aff. Ex. C ¶ 5.) Unlike the Styron agreements, this contract does not contain a non-compete clause.

Vonnegut's 1970 contract granting Dell the license to publish The Sirens of Titan, Cat's Cradle, and Player Piano contains virtually identical grants and reservations of rights as his 1967 contract. However, it does contain a non-compete clause, which provides that "the Author... will not publish or permit to be published any edition, adaptation or abridgment of the Work by any party other than Dell without Dell's prior written consent." (Sarnoff Aff. Ex. D ¶ 10(e).)

3. Parker Agreement

Robert B. Parker's 1982 contract granting Dell the license to publish Promised Land is similar to the 1970 Vonnegut contract. (Sarnoff Aff. Ex. E ¶ 1; Hrg. at 44; Def. Mem. at 12.) Paragraph # 1 contains the "grant of rights," certain of which have been crossed out by the author. The contract does grant Random House the right to "Xerox and other forms of copying of the printed page, either now in use or hereafter developed." (Sarnoff Aff. Ex. E ¶ 1(d).) Parker also reserved the rights to the "dramatic ... motion picture (silent and sound) ... radio broadcasting ... television ... mechanical or electronic recordings of the text ...." (Sarnoff. Aff. Ex. E ¶ 5.) There is also a non-compete clause that provides, in relevant part, that "[t]he Author ... will not, without the written permission of Dell, publish or permit to be published any material based on the material in the Work, or which is reasonably likely to injure its sale." (Sarnoff Aff. Ex. E ¶ 18.)

DISCUSSION

A. Preliminary Injunction Standard for Copyright Infringement

Random House seeks a preliminary injunction against Rosetta Book's alleged infringing activity pursuant to 17 U.S.C. § 502(a) of the Copyright Act. In order to obtain a preliminary injunction, Random House must demonstrate "(1) irreparable harm and (2) either (a) a likelihood of success on the merits or (b) sufficiently serious questions about the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting relief." ABKCO Music, Inc. v. Stellar Records, Inc., 96 F.3d 60, 64 (2d Cir.1996); see also Consumers Union of U.S., Inc. v. General Signal...