Thursday, November 24, 2011

Lesson 11: Borrowing Can Cost You

You love the sentiment in a popular love song written last year, and you want your hero to sing it to your heroine. If you include the lyrics, you probably need permission to use them. And if your autobiography says terrible things about your brother, those things had better be true.

But this is a post on book contracts, not on copyrights or defamation. So what's the point?

The point is the representations and warranties clause in your contract. Actually, the difference between representations and warranties is minimal and too technical to worry about here, so I will lump them together as "warranties." A warranty is a promise that you have or haven't done something (or will or won't do something in the future). For practical purposes, the warranties clause makes you promise that nothing in your book is likely to get the publisher sued.

The main warranties promise that:
  • You own the copyright and nobody else has a legal interest in it;
  • You didn't plagiarize or infringe on anyone else's copyright; and
  • The book doesn't defame people or violate their privacy rights.

If you are selling a previously self-published book to a traditional publisher, you don't want to warrant that it has never been published. But even if the publisher knows it has been, the publisher may forget to remove the warranty from its standard contract. So make sure you point it out and get it deleted.

Be sure to read all of the warranties and make sure they are true--or at least that you honestly believe they are. But what if the publisher gets sued anyway?

The indemnification clause in your contract says you will reimburse the publisher for any legal fees and judgments it has to pay.

If you were at fault, it's only fair that you be the one to pay. But here are some things to watch out for in the indemnification clause.
  • A provision that covers any lawsuit, including one that is the publisher's fault. Indemnification should be limited to claims on matters you have warranted and should exclude any material added by the publisher.
  • Wording that allows the publisher to settle the case without your approval. As an author, a good clause requires your approval of the settlement and says that the publisher will pay half (since a settlement isn't a determination that you did anything wrong).
  • Language that says you have to pay the publisher's legal fees even if you and the publisher win the case. Publishers may argue--with some validity--that this provision is fair since the publisher is defending you, too, and the case was about what you did, not what the publisher did. Still, the publisher has more incentive to keep legal fees reasonable if it bears some responsibility for them. A clause that says you don't have to reimburse the publisher for legal fees if you win the case is best, but one that splits the fees in half is better than making you pay them all.
  • A provision that allows the publisher to withhold all royalties from all contracts until the lawsuit is over. Try to limit it to the contract for the book involved in the lawsuit and to no more than a reasonable estimate of the expected damages and legal fees.
"Can't I get insurance to cover this?" you ask. You can, but it's expensive. On the other hand, the publisher may be able to add you to its liability insurance for little extra cost. If your publisher agrees to do that, get it included in your contract. Insurance isn't a perfect fix since you will still be responsible for the deductible (which may be quite high) and any amount over the limit, but you want it if you can get it.

Let's go back to the warranty clause for a minute. You have probably warranted that you will not use copyrighted material without permission. "Fine," you say, "I'll use it with permission."

But whose responsibility is it to get permission, and at whose expense? That's the function of a permissions clause. The typical clause requires the author to get the permissions and to pay any related costs. But what if you have to give that famous songwriter $1,000 to quote his lyrics? If your book is illustrated or contains photographs, maps, and charts that you didn't create, that can get expensive, too. So make sure you know the expenses before you sign the contract (and calculate a generous overrun for the unexpected). Then decide whether the royalty is high enough to make it worthwhile. Or maybe you can live without the lyrics to that popular love song.

Because borrowing without permission can cost you a lot more.

Kathryn Page Camp

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