Lampack's complaint alleges a whole bunch of theories for why Grimes — and her publisher, as a purported matter of fiduciary duty3 — breached the contract. (n.b. the exact wording of the previous sentence both hides and reveals the Missing Document.) Lampack's theory basically boiled down to variations on the following theme:
- Lampack represented Grimes, properly, in a 2005 licensing transaction with Penguin;
- The 2005 licensing transaction established a right of Lampack to commissions on that license;
- The 2005 licensing transaction included an option on next work, worded as follows:
[T]he Author hereby grants to the Publisher the exclusive right and option to publish … her next book-length work of fiction…. The Publisher shall have a period of thirty (30) days after receipt by the Publisher of the notification from the Author or her agent of the Author's desire to commence negotiation concerning such next book-length work of fiction within which to notify the Author whether it desires to publish such work and to negotiate the terms and conditions of such publication.
Lampack Doc. 44 (08 Oct 2010) (PDF image) (Fried, J.), slip op. at 3 (redactions in original).
- Therefore, the commission requirement extended to any work later licensed pursuant to that option — even if, as in this instance, Lampack had been fired by Grimes before submitting that option work.
Justice Fried of the Supreme Court of the State of New York for the County of New York rejected this chain of reasoning for three different reasons. First, the commission language itself was limited to the 2005 book, not to anything covered under the option clause. Justice Fried emphasized that for a commission to be earned by an agent (the legal variety of agent, not only "literary agent"), the agent must actually procure a benefit for the principal (in this instance, the author)... and since Lampack had nothing to do with procuring a benefit for Grimes, in the form of a license for the later book, the agent had no right to compensation for what it did not procure.4 Second, the contract between Penguin and Grimes did not create an interest for Lampack in the underlying property — the classic "coupled with an interest" language that, as Justice Fried also points out, is probably not sufficient to create such an interest in the first place.5 Third, Justice Fried rightly rejected the fiduciary-duty theories on the ground that whatever duties a principal owes to the agent, they are not fiduciary — they are merely matters of contract, which his earlier analysis showed did not apply here.
This decision means both less and more than it seems. It means less because it is a single decision by a single trial-court judge in New York County, and is not binding on any other party (or any other judge). It is certainly subject to appeal! Further, the particular language used for the option clause appears to have been specifically negotiated with Penguin — it is not the same as more-recent Penguin contracts I've seen, even allowing for the redactions — and would be irrelevant to other publishers' agreements. It means more than it seems, though, because it points out the Missing Document.
Nowhere in the exhibits available on line, nor referenced in Justice Fried's opinion, nor referenced in the motions and briefs on line, is there an agreement between Grimes and Lampack that covers this subject.
And that is precisely where one would expect these matters to be spelled out. This reflects poorly upon the business and legal sophistication of both the author and her then-literary agent. There is no excuse for not spelling out, in a private agreement between the author and the agent that never need cross the publisher's desk (and thereby tend to reveal the author's private business affairs to the publisher), whether option books fall within commission rights; what the basis for commissions is on later-renegotiated contracts, as were also at issue in this case; how disputes will be resolved; etc., etc., etc. Lampack could, and indeed should, have prevented this entire case from arising by having an author-agent agreement that covered these easily forseeable circumstances. Instead, this Missing Document determined the result of everything else, because if there is one thing that a publisher's boilerplate license agreement is not going to do, it is enforceably obligate the publisher to compensate the literary agent for later transactions in which the literary agent has no involvement. (Hell, publishers try not to compensate anyone.)
So, in the end, this is the Case of the Missing Document... and yet another example of why literary agents need to be licensed and regulated: Under any competent licensing and regulation system, the Missing Document would not be missing.
- Peter Lampack Associates, Inc. v. Martha Grimes et al., No. 603525/09 (Sup. Ct. N.Y. Cty.). You will need to accept a cookie and respond to a Captcha to actually see the docket; that link will take you to the case docket.
- No, that language is not accidental. Under the Copyright Act of 1976, every publishing transaction that is not for a work made for hire or explicit transfer of the entire copyright interest from the author to the publisher is, by definition, a license... even though the Act never uses the term "license." I am sick of hearing purportedly knowledgeable people misusing the term "sale" as shorthand for these transactions. I understand why publishers continue to do so — it's in their best interest to mislead the author into thinking that she has "sold" something, with the implication of irrevocability and straitjacket of the common law of contracts. I also understand why the literary agent and author communities continue to do so — they have never truly inquired into the nature of what they're doing, plus they're really not sophisticated enough to recognize that the law of licensing is more favorable to the licensor than the law of sales is to the seller.
In any event, get used to seeing "license" in the rest of this entry.
- This was handled in a separate motion; Justice Fried dismissed the claims against the various Penguin entities in an oral ruling on 01 November 2010 (Doc. 46), presumably relying on the same reasoning as in the last part of his decision concerning the author.
- One might argue that the option clause was a detriment to the principal (author), not a benefit, because it prevented Grimes from freely auctioning her "next book-length work of fiction" on an open market to the highest (or at least most satisfactory) bidder. OTOH, I also believe that option clauses are generally a bad idea for everyone involved for much more fundamental reasons.
- Interestingly, nobody reached the question of whether such language might violate the Copyright Act for a not-yet written work in any event. A book-length work of fiction is not one of the proper subjects of a work-for-hire agreement (see 17 U.S.C. § 101), and one cannot transfer a copyright interest in any work not yet fixed by any means except through the work for hire provision (see 17 U.S.C. § 201(b)). At most, one can transfer an interest in the income stream arising from such a to-be-created work... which leads us back to the first point made by Justice Fried.