Termination and Reversion Rights

Termination and Reversion Of Rights In A Publishing Contract – Why you want it and how to use it


Bad publishing contracts, dishonest publishers, out of print books, low book sales, mismanaged marketing – as unwanted as these things are for an author, these things unfortunately happen. Hence the need for a termination and reversion rights clause in your publishing contract. But not just any language will do.

Why?

Because the termination and reversion rights clause is the door for stepping out of an unwanted or unworkable contract and taking with you the rights you licensed to your publisher. Once the rights are in your control again, you can sell your book to another publisher, self-publish, or exploit other subsidiary rights like film and foreign rights.

The Termination and Reversion Rights Clause

Typically, each party to a publishing contract has the right to terminate the agreement if the other party fails to perform certain obligations or if certain conditions arise. For the publisher, termination tends to be triggered when the author fails to deliver the manuscript by a specified due date, or the manuscript is not acceptable to the publisher in content and form, or changes in the manuscript are required by legal counsel to avoid potential litigation and the author fails to make those changes. For the author, termination tends to be triggered when the publisher fails to publish the book by a deadline, the book is out of print, or the contract term has expired.

If you are currently negotiating your publishing contract, read the termination and reversion rights clause carefully. It should not be one-sided or onerous for the author. If so, negotiate better language. Here are a few points to consider when negotiating a termination and reversion rights clause that will provide an author with more flexibility to achieve what is best for their creative endeavors.

  1. Publisher Fails To Publish
    • Common sense, but make sure the publisher has a deadline for publishing the book (e.g., twelve to eighteen months after the publisher accepts the manuscript). Typically, if the publisher fails to publish, the author must make a written demand on the publisher to publish. The publisher then has a specified time with which to remedy the problem (e.g., 60-90 days). If the publisher still fails to publish, the rights revert back to the author so she can find another publisher or self-publish. An author should not have to pay back advances paid prior to termination.
  2. Expiration Of The Contract Term
    • For centuries, publishing contracts lasted for the life of the book’s copyright. Currently, that would be the author’s life plus seventy years. Seeing how egregious that term is for an author and her estate, the copyright laws allow authors (and their heirs) to terminate publishing contracts 35 years after the contract date (see the U.S. Copyright Act, 17 U.S.C. Sections 203 and 304). These termination rights trump any written agreements regarding termination.
    • Still, 35 years is a heck of a long time to be committed to a contract. And to initiate such a termination, the author has to jump through a series of legal notices that can be confusing to most authors. You can, however, require that the contract and license to the book rights therein expire after a specified time period from the date of publication making the contract term shorter than the 35-year mark.
  3. Book Is Out Of Print
    • Publishing contracts usually allow an author to terminate the contract if the book is “out of print.” The question an author should know the answer to before signing is: how is “out of print” defined?
    • If “out of print” is defined as when the book is no longer “available for sale in any edition by the publisher or any of its licensees” then an author will be hard-pressed to terminate a contract because e-book and print-on-demand editions are always available. Such language allows a publisher to hold the rights to a book almost indefinitely.
    • A better way to define “out of print” is use income as the yardstick. For example, “out of print” could be defined as “when the book fails to generate no more than $250 in one year.” The term could also be defined by using annual sales as the yardstick, but this can be risky. Why? Because the publisher could drop the book price in order to hit the required sales number and avoid termination (as opposed to hitting the annual sales number at the original price). Just saying…some publishers may attempt to game the system.
    • The author typically must give the publisher notice of termination when the book is out of print. Such notice then triggers a grace period (e.g. 60-90 days) to allow the publisher to remedy the problem (i.e., put the book back in print). If not, the agreement terminates and the rights revert back to the author.
  4. Publisher Fails To Exploit Subsidiary Rights
    • Sometimes a publisher will license the subsidiary rights, but fail to exploit them. Subsidiary rights could include anything from foreign to film and dramatic rights (see my earlier article on the top publishing contract deal points for more information about subsidiary rights).
    • A termination and reversion rights clause should provide for the reversion of subsidiary rights back to the author if the publisher fails to exploit those rights within a specified time (e.g., twelve to twenty-four months of publication). Such contract language will prevent an author from losing out on potential income should the publisher mismanage the rights.
  5. Termination Fees
    • If the contract requires the author to pay a termination fee, sometimes called an “early release fee” or “kill fee,” then strike the language from the contract. Such language is onerous. Authors should never be required to pay to terminate. Even asking the author to pay a termination fee that includes fees for editing services, cover art, and other publishing costs is unacceptable. These are costs the publisher absorbs for taking the risk to publish the book.

How To Terminate A Publishing Contract

If you find yourself in the unpleasant place of needing to terminate your contract, then read the termination clause and follow the process. Most contracts outline the process for termination. Usually, an author is required to send written notice (certified mail) to the publisher, which outlines the reasons for termination. For example, the publisher failed to publish with in the publishing deadline. The publisher usually has a specified time to remedy the problem. For example, if the book is out of print, the publisher may have the right before you terminate to reissue the book.

If the contract does not include a termination and reversion rights clause or if your circumstances do not trigger termination, then ask the publisher if they are willing to release you from the contract. If both parties agree, termination can be legally binding. Of course, make sure you have the termination in writing.

Depending on the circumstances, the publisher might agree to terminate. I recently listened to an interview with Hugh Howey on Mark Dawson’s podcast. Howey signed the first publishing contract he was offered. It was with a small press (NorLights Press). At some point during the publishing process, Howey decided he wanted to self-publish, which meant terminating his publishing contract and recapturing his book rights. So he asked the publisher to terminate his contract. While the publisher agreed to terminate the contract, Howey did have to buy the book rights back from the publisher.

If the publisher will not agree to terminate, you are no worse off than before you asked. You could still consult a publishing lawyer or your agent because there maybe other grounds that trigger termination, like breach of contract (e.g., for not paying royalties). This route will require you take legal action against your publisher if the publisher refuses to terminate willingly. If you need a literary lawyer, see my earlier article with options for finding legal representation for writers.

 


Photo Credit:  AK Rockefeller | Visualhunt | CC BY

 

Legal Disclaimer: This information is provided for educational purposes only. Consult a qualified lawyer in your jurisdiction for all legal opinions for your specific situation.

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