Article by Nicola Solomon published in The Author of Winter 1998. Leading literary lawyer Nicola Solomon, a Deputy District Judge and Partner of Finers Stephens Innocent (179 Great Portland Street, London W1W 5LS, tel. 020-7344-7652) has kindly given AKME permission to reproduce this article. She can be e-mailed at nsolomon@fsilaw.co.uk.
The article is reproduced without any comment or editing by AKME.
What happens if your publisher, or one of its imprints, is sold?
A glance at The Bookseller's 'Who Owns Whom in British Book Publishing' shows the tremendous shake-up in ownership of publishing houses over the last few years. Companies that have been proudly independent for centuries have been bought, sold, merged or liquidated. Many authors are not sure of their rights when their publisher or imprint is reorganised. The law in this area is technical and complicated: a brief guide is set out below but if you have any queries you should contact a solicitor or the Society of Authors.
Legal Personality
A company is, in law, not simply an object or asset but a separate personality. Changes of ownership or of the name of the company are irrelevant to your publishing agreement if the company itself remains in existence. If your highbrow publishing company Small Ltd is bought by Big plc there is very little you can do, even if Small is now Giant Ltd and publishes pulp fiction. Your agreement remains with Small Ltd and the fact its shares are now owned by Big plc rather than its previous owners (either individuals or companies) is of no legal relevance, whatever the practical or ideological differences. If you don't like Big plc, all you can do is go elsewhere for your next book (subject to any option clause in your publishing agreement).
Accordingly, if the identity of your publisher is important to you, try to sign your publishing agreement with the head company. This may not be possible. Publishers often own many separate limited companies and have different policies on which one enters agreements. Some make all agreements with the head company, others make them with smaller subsidiaries. Alternatively, you can ask that your rights revert if the ownership of the company changes. You are only likely to be able to negotiate such a clause if you have strong bargaining power; a publisher is unlikely to wish to reduce its value to a potential buyer.
Sometimes a publisher (usually independent) issues a publishing agreement in which only the imprint is named and not the company that owns it. This does not guarantee that you will be published under that imprint; because an imprint is not a legal person your agreement would be with the company that owns the imprint. Always insert the proper name of the company to avoid later disputes about who was the owner at the time you signed the agreement.
If you want to be published under a particular imprint try to make that a condition of your publishing agreement. A publisher will sometimes agree to this; and then if that imprint disappears in the reshuffle, your rights will revert to you.
Transfer of Rights
While you have no redress if Small Ltd is sold, there may be more you can do if it wants to sell your agreement or parts of its list or one of its imprints.
(i) Copyright Assignment.
If you have assigned copyright to Small Ltd it can validly assign that copyright to Big plc without your consent although if there is a specific clause forbidding assignment in the original agreement you could sue Small Ltd for breach of contract. You could not in law prevent Big plc from publishing your work. Further, if Big plc does not pay you royalties or breaches your agreement, you have no right to sue it, only Small Ltd, who by then may have disappeared or no longer have any assets. You could be in the unenviable position of seeing your books sold or reprinted without you receiving a penny profit. This is one reason we and the Society of Authors always advise authors not to assign copyright (for some other reasons, see Copyright - What's the Use?)
(ii) Licence
If, as is more usual, you have granted a licence of your rights, whether Small Ltd can assign your agreement to Big plc depends on the wording of the original agreement. When negotiating agreements, try to ensure that your publisher cannot assign without your consent. Many publishers will agree to such a clause if you will allow a transfer to any other company in the same group. Even then, you should think carefully before agreeing to this as it would allow your publisher to switch your agreements to a subsidiary and then sell the subsidiary (and your agreement) to another publisher.
Do not panic if your publishing agreement doesn't contain a specific refusal to assign. Publishing licences are, by their nature, personal, and Small Ltd cannot assign your agreement without your consent. However, it or Big plc may claim that there has been a proper assignment, relying on your ignorance of the law or the unlikelihood of you taking legal action. Your difficulty if they take this position is that you do not want to have to rely on legal niceties if you don't want to be published by Big plc. You may wish to take your book elsewhere, to a publisher you like, perhaps one more like Small Ltd was when you started out - say Friendly Ltd. You can tell Friendly Ltd the law, and even show them this article. But publishers are notoriously conservative and Friendly Ltd may refuse to take on your book if your agreement with Small Ltd didn't specifically forbid assignment, unless it can obtain an unequivocal confirmation from Big plc that the agreement is at an end. You can then be left in deadlock: Big plc will not publish your work for fear of legal action or adverse publicity, but will not give clearance to Friendly Ltd. Even if Friendly Ltd agrees to publish, you will probably be asked to warrant that you own all rights to the work and indemnify it in respect of any claims that you have breached that warranty. If you find yourself in this unenviable situation you should tell Friendly Ltd the problem and insist that the standard warranties and indemnities are amended so that Friendly Ltd, rather that you, takes responsibility should Small Ltd or Big plc make any claim.
(iii) 'Assigns'.
A further complication arises if the agreement with Small Ltd does not contain any specific clauses allowing the publisher to assign but in the title refers to Small Ltd 'or its assigns'. Small Ltd may argue that a reference to 'assigns' in the title implies that you must have meant that the agreement could be assigned. Legally this argument is wrong but it might cause enough uncertainty to frighten off Friendly Ltd. So ideally, try to strike out the word 'assigns' before entering into any publishing agreement.
(iv) Novation Agreements.
If your consent to assignment is needed, you will normally be asked to sign a letter of agreement. Either Small Ltd or Big plc may ask you to sign this 'for the avoidance of doubt'. This usually means that they have been advised that your approval is necessary and your bargaining position may be much stronger than they say. If you refuse to sign, the rights and obligations will remain with Small Ltd. If Small Ltd is by then in liquidation or unable to publish, in due course you can normally terminate for breach of contract, either for failure to pay royalties or because the work is out of print. Alternatively, when asked to sign a novation agreement you could try to negotiate to obtain improved terms or payment of royalties owed by Small Ltd. Under no circumstances sign such letters of agreement without obtaining legal advice or advice from the Society of Authors.
In short, although you cannot prevent your publisher being swallowed by a larger company, you are not powerless. Your position is stronger if you can agree some or all of the following matters when negotiating your original agreement - how far you can negotiate such changes will, of course, depend on your bargaining power.
Forethought and advice at the contract stage can sometimes help to ensure that you are published by a company or imprint of which you approve, and can prevent you from finding yourself in the unenviable and sadly all too common position of whistling for royalties from a defunct company while seeing your work on sale by another.
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