Advertising, Marketing & Promotions Alert ... - Davis & Gilbert LLP

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rarely encountered in the company's own internal business operations or its client projects. Advertising, PR and consult
APRIL 2013

ADVERTISING, MARKETING & PROMOTIONS

>> ALERT BUSINESS BOOKS AND BRAND BUILDING: RIGHTS AND PERMISSIONS More companies are recognizing the value of creating and publishing, both to the trade book public and to a more limited group of business contacts and prospects, what we view as “books,” be they print or electronic. In doing this, companies hope both to increase reputation in a broad group of readers, which likely includes clients and prospective clients, and to build brand recognition for the company’s own name. The companies which have embarked on this type of promotional activity are not confined to a single industry. Rather, several of them have identified this as a cost effective (and occasionally profitable) form of brand building, with advertising, public relations and consulting companies having pursued these opportunities for the longest amount of time. Launching a publishing program requires business and legal planning if it is to succeed and avoid the pitfalls of legal risks. How does the company identify the risks and avoid or diminish them? It takes advance planning and new business models put in place before the launch of the publishing program, not after legal claims and related business problems arise. Issues that companies should consider include: 1) Book Subject Matter

THE BOTTOM LINE No single overview can adequately address all book-related risks for company books. However, as described in this Alert, there are several issues to be considered in advance of company book projects to avoid costly crises later in the course of the project. The avoidance of such crises and any third-party claims requires thoughtful advance planning by all parties involved and a clear understanding of their duties and legal responsibilities to achieve the company’s aim, no matter what it is.

2) Author/Co-Author/ Acknowledgements and Credits 3) Copyright Ownership and Permissions 4) Trademark and Trade Dress Ownership, Licenses, and Permissions 5) Publishing Business Model — Trade Publisher, Subsidy Publisher and Self-Publishing 6) Public Relations, Talent and Literary Agents 7) Indemnities, Claims and Insurance If publishing books has never been a company’s business, it likely has never had to do the analysis required to properly address these issues,

because these book-related issues are rarely encountered in the company’s own internal business operations or its client projects. Advertising, PR and consulting companies are just different businesses from publishing companies. With the warning that all these subjects of consideration are complicated, the most important considerations are identified below.

BOOK SUBJECT MATTER Can your company write and publish this book? If your company is not working for a governmental entity client where there are specific and strict prohibitions and regulations, the

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Attorney Advertising 1194

APRIL 2013

ADVERTISING, MARKETING & PROMOTIONS >> ALERT considerations start with provisions in the company’s contracts with third parties – principally clients, but also licensors, suppliers, freelancers and others who produce content, but are not company employees. Virtually every client contract in certain industries will have extensive ownership, confidentiality and nondisclosure requirements that need to be reviewed, preferably in advance of investing in the creation of any book which is based on the company’s work with those third parties. Without doubt, client work is the most difficult to deal with if the company wishes to use or disclose the work in its book, but does not wish to lose or alienate the client. The third party involved may grant or refuse permission or require the right to review those parts of the book that deal with it prior to book publication. Although some third parties will always require review of the final manuscript, it is usually better to discuss permissions before beginning to create a book which may end up being unpublishable or require extensive review and revision prior to publication. Even if the client is not identified in the book in question, the company’s name can be linked to the client as a result of the book’s subject matter. For example, it is rare for advertising and public relations companies to represent more than one client in any industrial sector. As a result, the subject matter of the book may identify clearly the

client whose projects are included in contents as case studies; for this content, permission should be sought even if the client is not named.

AUTHOR ISSUES Professional Authors Some of the issues are resolved early if the people who create or contribute to the book are professional thirdparty writers. These people usually have agents and/or form contracts in place. These contracts must be reviewed for adequacy, or the company must present its own form contract and insist on its use with few (or no) revisions. The professional author usually receives development payments or advances and may receive a percentage of royalties and success fees paid by the publisher after the book is published. The company should take the position that the author’s contributions to the book constitute work for hire, copyright and all rights in which are owned by the company (and, for added protection, the contract should contain an assignment of all rights of any kind in the book in all media). The company is usually the best choice as the party to the publishing contract; the author(s) and their subject matter are best specified in the contract’s description of the book. Issues regarding authorship and other credits should also be agreed in advance in regard to whether, where and in what format they will appear in the book.

Employee Authors In many cases, the use of the company’s employees as authors creates more legal issues, and these issues are more often overlooked by the company. The company does not own all rights in employee books or contributions to books automatically as a result of the employment relationship. There are complex issues to be resolved about whether the creation of the book is within the scope of the employee’s employment, as well as whether its creation involves use of company time, money and support services or equipment. Relying on existing company employee policies may not be adequate. Before an employee is asked to assist a writing project or given permission to do so, these issues should be addressed in a separate agreement signed by both parties dealing with ownership of rights and royalties, writing and publishing obligations, ownership of intellectual property and responsibility for warranties and indemnities in the event of third-party claims. From the company’s perspective, it should own all rights in book contents, and the points of negotiation with employees should be limited to authorship or co-authorship credits, shares of advances and royalties, availability for media and promotion events, termination provisions, and/or names to be included in acknowledgements printed within the book. It should be made clear whether the company or the author is responsible for obtaining

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APRIL 2013

ADVERTISING, MARKETING & PROMOTIONS >> ALERT and/or paying for the permissions needed if the book is to include thirdparty (non-client) contents. Regardless of who is named as the author of the book, the company should normally undertake to deal with client issues. Permissions and license fee payments (if any) may well benefit from the assistance of the author and the company might best turn over to the author the issues of dealing with any third-party permissions for materials the author wishes to include in the book. Finally, it must be accepted that employee authors may no longer be with the company at times when the book needs further work for completion, revision or promotion. The best approach is for the company to contract with the publisher and have the freedom under the contract to substitute another suitably skilled employee or team to perform and complete all such work during the contract term.

TRADEMARK AND TRADE DRESS ISSUES Quite apart from client confidentiality issues, the company will likely need the permissions of its clients (current and former) to use or depict company names, logos, word marks and package designs. The more difficult issues involve the use of third-party word marks, product and package designs in the contents of the book and/or on its cover. If the book is published by a trade publisher, a better

case can be made that such use is fair use or criticism and comment and does not require permission. If the book is self-published and selfserving, the legal issues are more difficult and usage rights may be more limited because the book may be regarded as a form of advertising of the company and its products. For example, corporate and brand histories underwritten by companies may have little or no fair use rights, and permissions are the prudent approach to use of third-party copyrighted materials, trademarks and trade dress, as well as names and images of recognizable people who have not yet given their consent in addition to the normal third-party content licenses and permissions. Book contents that include titles, subject headings and other terms usually capitalized when used by third parties to describe their business and its products and services should be cleared by lawyers. The company should seek specific legal advice including a complete legal review of book contents prior to publication or distribution. Regardless of who is identified as author of the book, once cleared for publication, the company should consider obtaining its own trademark registrations for its own book titles and book series titles. For single books, this may not be possible unless these books are part of a series or licensed in multiple forms and media which may facilitate obtaining trademark registrations.

PUBLISHING MODELS All contracts with third-party publishers should be reviewed by counsel who is familiar with the conventions of the publishing industry and with the differences between the different publishing models, and who can negotiate what rights the company holds and what obligations the company has versus the rights and obligations of the publisher. A point as simple as “author copies” can mean limited free copies and discounted pricing for additional copies when speaking of trade publishing contracts. Subsidy publishing defines that point, by contrast, as a required initial purchase and regular series of further purchase requirements by the company named as the author. Companies need to understand and accept that the publisher may want the company and the individual author(s) to provide marketing support for the book; the best approach is for all such support to be agreed in advance and included in the publishing contract with minimum and maximum commitments clearly defined. In addition, the publisher may expect the company to solicit bulk purchase commitments from its clients; the company should decide whether or not to agree based on its client relations issues. The company should consider whether it wishes to retain any rights to portions of the book or its subject matter for use on its website and in client advisories; of course, the publisher

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ADVERTISING, MARKETING & PROMOTIONS >> ALERT may be less willing to permit exercise of reserved rights before the book’s publication date, as opposed to after the book is on sale.

ROLE OF AGENTS AND TYPES OF AGENTS Publishing or “Literary Agents” may not be absolutely necessary in any type of publishing, but they can play an important role in getting the book the best publisher and the best business deal, particularly in trade publishing. Indeed, some large companies hire or retain their own literary agents to handle some or all of their business books, thereby having an expert oversee this area for the entire company. Some books may sell more copies if there is a talent agent or public relations agent for the company author, but company authors in many businesses have adequate promotional resources within their own companies (e.g., advertising and PR agencies) since it is what they do for their own clients. Needless to say, professional publishers have their own internal and external agents representing public relations and subsidiary rights for their books. It is important to keep in mind that all literary agents charge commissions on book revenues (usually 15% of all income), and this can add up. Talent or public relations agents either work on commission or on a fee basis. While the rare book (e.g., David Ogilvy’s classic books on advertising) will make profits over long term publishing contracts in all languages worldwide, the revenue or lack thereof may well be

irrelevant to the company, especially if the goal is creating a glossier name for the company and its client services. In order to operate and support a thoughtful publishing program, the company needs to set its expectations with reasonable criteria for success. Does it matter whether the book is costly to create and may not sell enough copies to generate a profit or break even? For the right book that results in one or more new clients of the company, the answer is yes. Books that establish the company’s reputation for specific subject matter expertise in the industry can generate clients over long periods of time.

THIRD-PARTY CLAIMS, TYPES OF INSURANCE Despite serious vetting by editors and lawyers, legal issues can arise after publication of company books. As between the company and the individual independent (non-employee) author, responsibility needs to be dealt with in the contract since any publisher will require indemnification against such claims. The type of insurance available is Publishing Professional Liability Insurance (often referred to as E&O or “errors and omissions” insurance) specific to all publishing risks. Trade publishers generally have this insurance and may extend its coverage to the person identified as “Author” in the publishing contract. Any company embarking on publishing should carry its own insurance if it plans on publishing multiple books or if it deems the standard errors and omissions insurance to be

inadequate. Professional writers can and do in some cases carry their own insurance to assure that their warranty and indemnity obligations can be met, and this insurance is available to freelancers, bloggers and writers working with larger companies for premiums of a few hundred dollars covering claims within the policy deductibles and limits. Companies can and do require that individual writers carry such insurance when books deal with critical issues and claims against the company could easily escalate. Companies usually cover their employees under company policies while still requiring the company author to agree to make representations and warranties in regard to book content created in his or her role as the author (or even to carry additional, personal insurance). Basically, all parties involved in a book project need to understand and agree to accept their respective liability risks allocated among the parties whether or not they insure against their risks.

FOR MORE INFORMATION Mary M. Luria Partner 212.468.4813 [email protected] or the D&G attorney with whom you have regular contact.

Davis & Gilbert LLP T: 212.468.4800 1740 Broadway, New York, NY 10019 www.dglaw.com © 2013 Davis & Gilbert LLP