On this day in 2001, a New York federal court held that Random House could not prevent Rosetta Stone from selling some of the publisher’s works in ebook format. In Random House, Inc. v. Rosetta Books, LLC, Random House had sought to enjoin Rosetta Stone from selling eight works by Kurt Vonnegut, William Styron, and Robert B. Parker in ebook format. Random House claimed that the authors had already granted it these digital rights. The District Court for the Southern District of New York disagreed. The Court said that the contractual language in the licenses granting Random House the right to “print, publish and sell the work[s] in book form” was understood to be a limited grant within the industry, and therefore did not include the right to publish the works as ebooks.
The Court distinguished this case from two other important Second Circuit “new use” cases involving technologies developed after the licensing contract was made: Bartsch v. Metro-Goldwyn-Mayer, Inc. and Boosey & Hawkes v. Walt Disney Co. (In Bartsch, the Second Circuit held that the motion picture rights to “Maytime” were broad enough to cover television broadcast. In Boosey, the court found that the motion picture rights to use Igor Stravisnky’s “Rite of Spring” in “Fantasia” were broad enough to cover the release in video format.) First, the Court found that the grant language in the previous cases was far broader than the language used in the Random House licenses. Second, the Court reasoned that the “new uses” in Boosey and Bartsch fell within the same medium, whereas the “new use” of an ebook constitutes an entirely different medium than the traditional paper book:
Ebooks take advantage of the digital medium’s ability to manipulate data by allowing ebook users to electronically search the text for specific words and phrases, change the font size and style, type notes into the text and electronically organize them, highlight and bookmark, hyperlink to specific parts of the text, and, in the future, to other sites on related topics as well, and access a dictionary that pronounces words in the ebook aloud. The need for a software program to interact with the data in order to make it usable, as well as the need for a piece of hardware to enable the reader to view the text, also distinguishes analog formats from digital formats.
Third, the Court noted that in the motion picture cases the licensees created new works based on the licensed material. In contrast, the book publisher merely edits and publishes the material created by the author. Lastly, the Court found that the policy rationale for encouraging development in new technology was just as well-served by finding that the authors retained the rights: “In the 21st century, it cannot be said that licensees such as book publishers and movie producers are ipso facto more likely to make advances in digital technology than start-up companies.”
The Second Circuit affirmed on appeal.