Thursday, April 04, 2013

Judge Throws Out Class Action Suit Against Harlequin Alleging eBook Royalty Deprivation


PublishersLunch

On Tuesday a federal court class-action lawsuit against Harlequin for allegedly depriving authors of ebook royalties was dismissed, with Judge Harold Baer ruling that Harlequin had abided by the terms of their contracts and that the plaintiff authors -- Barbara Keiler, Mona Gay Thomas, and Linda Barrett - did not sufficiently state a claim that they had lost significant ebook royalties between 1990 and 2004.
The original complaint alleged that Harlequin improperly licensed ebook rights to their own Switzerland-based subsidiaries, yielding authors a small royalty--"3 to 4 percent of the ebook cover price"--as their 50 percent share of proceeds, rather than half of all gross ebook revenues. But Judge Baer ruled that Harlequin acted as the "contracts themselves" allow: indicating "that the 'Publisher' may assign or delegate publishing duties 'to any related legal entity,' including 'to its parent company or to an affiliate [or] subsidiary.'" He added: "Under the contracts, Plaintiffs' royalties are properly based on the receipts of the defined 'Publisher' —here, the Harlequin subsidiaries."
Judge Baer also found the plaintiffs had not "adequately pled...contract breach" and more importantly, failed to state a claim as to what constituted unreasonable license fees. He characterized their assertions of a lack of reasonable compensation as "little more than speculation." In addition, the judge ruled, "parties dispute neither the contracts'validity nor that HEL's 'sale' of e-books was a right exercised 'by Publisher or its Related Licensees' under the contracts."
Harlequin president and ceo Donna Hayes said in a statement the company was "pleased" with Judge Baer's decision.  "Harlequin prides itself on being a place where over 1,200 authors find opportunities to publish. As the publishing industry evolves, we look forward to developing our author agreements further in ways that serve both of our interests."
Ruling

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