August 11th, 2017

What to Look for in “Out of Print” Termination Clauses

Susan Spann

Susan SpannThe “out of print” clause is often one of an author’s only ways to terminate a publishing contract unilaterally (a legal term that means “one-sided”—and, in this case, means the author’s right to terminate without the publisher’s consent).

 Out of print clauses are not relevant to self-publishing, and should never appear in self-publishing terms of use.

 Author-publishers (i.e., self-published authors) should always have the right to terminate their contracts any time (subject to payment of money owed to the printer or distributor). Out of print status is not an issue, and should not appear, in self-publishing terms of use because the author-publisher should have the exclusive right to decide when the work is available, when to take it out of print, and when to terminate contracts with service providers.

Traditional publishing contracts should give the author the right to terminate if the work goes out of print AND should tie out-of-print status to royalty-bearing sales.

Traditional publishing contracts should state that the author may terminate the contract unilaterally if the publisher fails to sell a stated number of royalty-bearing copies of the work within a specified period.

(Note: this is not the only circumstance when authors should have unilateral termination rights – but the other contract terms are topics for another day.)

Beware: many older publishing contracts allow the author to terminate if the work goes out of print, but define “out of print” by availability to purchase rather than by sales numbers. This is dangerous for the author.

Older publishing contracts often tie out-of-print status to “availability” of the work (or, worse, give the publisher the sole and exclusive right to decide when the work is—and is not—out of print). Some publishers still use contracts containing this older language, so read the out-of-print language carefully—and negotiate so that out of print status is defined by a specified minimum number of royalty-bearing sales instead of “availability”—before you sign a publishing deal. This is important because a work is “available” as long as even an ebook version is listed for sale anywhere—meaning that works almost never become “unavailable.”

Here are three critical components to look for in out-of-print clauses:

  1. Is “out of print” defined according to stated sales thresholds?

The contract should declare the work “out of print” if the publisher fails to meet a stated sales threshold during every year (or every six months) after publication; if possible, the sales should be defined as royalty-bearing sales. (This prevents publishers from keeping a work in print by holding a temporary deep-discount sale of the work, below the royalty threshold, just to keep the contract in force.)

Look for language like: “The Work will be “out of print” if the Publisher fails to sell at least 250 royalty-bearing copies, in the aggregate, during any twelve (12) consecutive months after the Work’s initial publication.”

Beware of clauses that say the work is out of print:

  • When “no longer available” for sale.
  • When “the publisher determines” the work is out of print.
  • When “no copies of the Work remain in the Publisher’s warehouse.”

These clauses can trap an author in a contract that never ends.

  1. Understand what happens after the work goes out of print.

 Most publishing contracts require the author to notify the publisher of the author’s desire to terminate an out of print work. Often, the publisher then has a stated period of time (commonly, 6-12 months) to bring the work back to “in print” status before termination actually occurs.

Rarely, a contract automatically terminates when the work goes out of print—but this isn’t the best option for the author. Sometimes, it’s more advantageous to keep a backlist work “in print” despite low sales.

What you want is the right to terminate if sales fall below the out-of-print threshold.

  1. Look for a non-ambiguous statement that all rights revert to the author automatically upon termination.

It isn’t enough for the contract to give the author termination rights. You also want language similar to:

“All rights granted to the publisher revert to the author automatically upon termination of this agreement, regardless of the reason for termination.”

Without a clear statement of rights reversion, rights to the work could remain in limbo—or worse, with the publisher. Non-responsive publishers can hold an author’s work hostage by refusing to send a written reversion of rights or acknowledgement of contract termination. While not a complete solution, unambiguous language stating that rights revert automatically upon termination can help prevent a number of legal problems.

Remember to consult an attorney or agent about reviewing your contract BEFORE you sign. Once the contract is executed, the law and the contract limit your legal rights.

And remember: never sign a contract that doesn’t (at a minimum!) comply with current industry standards.

It’s better to have no contract at all than a contract you regret.

 

Do you have questions or comments on the three critical components of an “out of print” clause? What about a response to “It’s better to have no contract at all than a contract you regret”?

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About Susan

Susan Spann is a California transactional attorney whose practice focuses on publishing law and business, and is also the author of the Hiro Hattori (Shinobi) mysteries, featuring ninja detective Hiro Hattori and Portuguese Jesuit Father Mateo. Her fourth novel, THE NINJA’S DAUGHTER, released from Seventh Street Books in August 2016. Susan was the Rocky Mountain Fiction Writers’ 2015 Writer of the Year, and when not writing or practicing law, she raises seahorses and rare corals in her marine aquarium.

Find her online at http://www.SusanSpann.com, on Twitter (@SusanSpann), and on Facebook (/SusanSpannBooks).

Susan’s new release this summer!

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