Harlequin Wins Dismissal in Lawsuit Over eBook Royalties
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  • April 4, 2013
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6329753373_c76c25cb87[1]The world’s largest romance publisher is celebrating today. They won a lawsuit this week that, if it had gone to trial, could have cost Harlequin hundreds of thousands of dollars.

District Court Judge Harold Baer granted Harlequin’s motion for summary judgement yesterday, ending the class action suit Barbara Keiler v. Harlequin Enterprises Limited. This lawsuit was filed last year by 3 Harlequin authors who had alleged that Harlequin had deprived the authors of their ebook royalties.

The authors alleged that between 1990 and 2004 (their dates and not mine) Harlequin was engaged in what was basically a shell game. The publisher had licensed the ebook rights from one Harlequin subsidiary to another at a license fee of 6% to 8% of retail. The authors received the half  of the 6% to 8% that they were due under their contracts with Harlequin.

The authors believed that they should have received 50% of the net revenue of the other Harlequin subsidiary, not the 3% to 4% they actually got.  The judge disagreed.

Before I get to the ruling, let me share a couple historical footnotes.

One, the authors didn’t have ebook rights spelled out in the contract; instead they were getting the ebook payments under a subsidiary rights clause.Two, the ebook market was so small in 2004 and in earlier years that if the disputed revenues amounted to more than a million dollars I would be surprised. I can’t find any reports on Harlequin’s digital revenues for that year but IDPF stats pegged the US ebook market at $9.6 million or so in 2004.

Neither footnote is all that important but I thought they added a useful perspective.

The decision is only 4 pages long and leaves little to be argued. Judge Baer found that Harlequin acted within the scope of the contract that the authors signed, and that the plaintiffs did not adequately explain what they meant by unreasonable license fees. He described their claims of a lack of reasonable compensation as “little more than speculation”.

All in all there does not seem to be much left to argue here. Unlike the ongoing lawsuit between HarperCollins and Open Road Media, this lawsuit hinged on whether the authors were adequately paid for a right that (at the time) was probably expensive to exploit and had an undefined value. Sure, authors are now getting a better cut of ebook rights than for paper books, but in the early, early days of the ebook market I doubt anyone would have considered the 6% to 8% an unreasonable compensation.

Edit: Paul Durrant points out that I missed a hugely important detail. The authors are alleging that they are being underpaid for their current royalties, not asking for money from years ago. I can’t believe I missed that detail. It changes everything.

source, ruling

image by Ron Coleman

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