BY:Neil J. Rosini, Michael I. Ruddell
(Originally published in the Entertainment Law column in the New York Law Journal on Friday, December 27, 2013)
The agreements authors make with companies that publish their books, and with the production companies that make films based on those books, have changed significantly over the past several years. Due in part to the kind of films currently being produced and to available new technologies (particularly for books), these changes have introduced conflicting overlaps between the two types of contracts.
Before these developments, literary publishing agreements focused on the publication of books in print form and motion picture agreements focused on the exploitation of audiovisual works. Film agreements would tread lightly in the domain of print publication rights, such as by providing that the producer could use up to 7,500 words of text from the underlying work for advertising, promotion and publicity purposes. Publishing agreements generally stayed out of the audiovisual domain.
Now, motion picture companies trying to derive new sources of revenue from the films they make, look to complement film rights with wider literary publishing rights. This is especially the case with “franchise” or “tent-pole” films that not only tend toward higher budgets — which raise the bar on recoupment of production and marketing costs — but also lend themselves to ancillary exploitation by a film studio in print and electronic book media that include images from the films.
In book publishing, the technology of electronic books offers not only a less costly means to deliver the text of the work to readers but also the opportunity to supplement it with audio, photos, graphics, and moving images. Book publishers increasingly ask authors to grant expanded rights that allow for these enhancements.
The result is that authors and their representatives can be caught between the demands of a film producer and a book publisher for text and audiovisual rights. Addressing that potential conflict requires foreknowledge of what book publishers and filmmakers are likely to demand and negotiation of agreements that balance their respective interests.
The definition of print rights in publishing agreements has changed little over time but the definition of electronic books still is evolving. A typical publisher will want not only the right to display a book on an electronic screen, but also the right to enhance the reading experience with supplementary material.
If the author’s work is heavily illustrated, as in the case of an illustrated children’s book, the publisher may want the right to animate the illustrations. Publishing agreements often are broadly worded as to what form that animation might take, referring for example to the right to enhance e-books with “incidental moving images.” Should those animations include walking, talking characters or dramatized scenes, they are likely to conflict with the exclusive rights required by a film production company.
Even in the case of adult books without much illustration, a publisher may want the right to create supplementary materials not only for advertising and promotion but also in connection with publication of e-books. A publisher’s creation of audiovisual TV or web ads such as “book trailers” that depict the characters and events of a book may trouble a filmmaker who wants to transform textual descriptions into moving images for the first time using actors of his own choice. And the scope of rights sought by publishers to enhance e-books increasingly includes unrestricted use of sound recordings and audiovisual works. These too may tread on ground that filmmakers wish to reserve for themselves.
Publishing agreements traditionally have allowed authors the use of a pre-determined number of words drawn from the book (e.g., 7,500-10,000, or 10% of the total) for use in connection with the advertising and promotion of motion pictures produced pursuant to the author’s reserved motion picture rights, provided that any such publication including this text is not made available for sale. Publishing agreements also tend to restrict the author’s exercise of reserved rights with a clause that forbids competition with the publisher’s rights in any way that would diminish the value of those rights. Both of these clauses may conflict with the set of rights that a producer is likely to want should the book be adapted for film.
A film production contract with the author of a book usually takes the form of an option coupled with a purchase agreement that takes effect when the option is exercised. As in the case of publishing agreements, film production contracts are drafted by the purchaser of rights and the extent to which they are negotiable varies with the value of the book and the bargaining clout of the author. For the majority of book authors, however, film producers detail a set of rights to be acquired that are not easy to modify including various forms of literary publication rights.
Those rights may include the right to publish either in print or digitally, a novelization based on the film – even if the film is based on a novel to begin with. Literary publication rights requested by the producer also may include screenplays, picture books, graphic novels, fan magazines and coffee table books that include elements from the film production. The right to publish “making of” books about the production of the film itself often joins the list. The form production agreement does not necessarily limit the number of words from the book that may be used for these purposes, which may place it in conflict with the author’s agreement with a book publisher. But even more significantly, such forms of exploitation that use the story, dialogue, characters, and other elements of the author’s book could be found to breach the exclusive grant of book rights to the publisher; or even the non-competition clause of the publisher agreement that prohibits uses of reserved rights in ways that diminish rights acquired by the publisher.
Depending on the form of the producer’s agreement, literary publishing rights alternatively may appear in the merchandising rights clause. Film producers may expect merchandising rights from authors that include not only apparel, toys and games but also the right to publish souvenir books, “making-of” books, comic books, and activity books, with no limit on the number of words drawn from the book. This form of merchandising rights clause similarly may conflict with the word count limit and the non-competition clause of the author’s publishing agreement for the book.
A word count limit that corresponds with the requirements of the publishing agreement is more likely found in the clause of the film production agreement that relates to advertising and publicity of the film. Here, production companies may seek the right to exercise “in any form of publishing now or hereafter known” a range of literary rights that include serializations, dramatizations, and “other adaptations and selections” from the book to be combined with elements from the film made by the producer. The scope of these rights, too, may place the grant in conflict with the book publisher’s rights. But even if that hurdle is surmounted, the maximum count of words allowed to be taken from the book in the production company’s form may exceed what the book publisher permitted for those purposes by thousands of words.
Although a producer’s form agreement may permit the author to reserve a bundle of rights that include “all print publication rights,” those rights will be subject to the rights granted to the producer in the general rights clauses and the merchandising rights clause.
A producer’s form agreement for the acquisition of film rights also is likely to include a requirement that the author obtain a “publisher’s release” – the book publisher’s sign-off on the rights being transferred to the producer. These documents are treated as a mere formality when the rights being granted to the producer are reserved by the author and comply with any limitations in the publishing agreement on the author’s exercise of those rights. However, if the rights demanded by the producer conflict with the author’s agreement with the publisher, a difficult negotiation may ensue with the publisher on one side, the producer on the other, and the author in the middle.
The circumstances of that negotiation have obvious disadvantages for the author. A refusal – or even a delay– by the publisher to release rights that the producer considers essential may put a pending film deal at risk.
Another Way Out
A prudent approach for the representative of the author of a book is to attempt to balance the rights of publisher and producer when the publishing agreement (usually the first of the two documents to be signed) is in negotiation. At that time, often before any filmmaker has shown an interest, the publisher may be asked to modify its form agreement in anticipation of the reasonable needs of a film production agreement, but perhaps not as broadly as a filmmaker may ideally want. If the book publishing agreement goes most of the distance toward satisfying the requirements of a producer’s form agreement, the author is in a better position to ask the producer to abandon the balance — but there is no guarantee that it will.
The authors gratefully acknowledge the assistance of their partner, Eric S. Brown, in the preparation of this article.
 This is not to say that producers did not request rights to publish screenplays and certain types of “making of” books, but the intensity of these demands was not particularly great.