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
Ruling
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