Friday, September 28, 2012

Class Action Lawsuit Against PublishAmerica Dismissed

Posted by Victoria Strauss for Writer Beware

On June 11 of this year, a class action lawsuit was filed against PublishAmerica by a Baltimore, MD law firm, in association with high-profile litigators Hagens Berman Sobol Shapiro.

Among other things, the complaint alleged that PA makes money off its authors while billing itself as a traditional publisher, requires authors to pay for "usual and customary marketing that any reputable publisher would do as a matter of course," offers "services that are not reasonably designed to promote book sales," and "duped" the three plaintiffs in the lawsuit with, among other things, "bogus services" and books "riddled with errors." The complaint sought "a declarative judgment that defendant's publishing contracts violate the Maryland Consumer Protection Act," including the MCPA's prohibition against deceptive trade practices.

PA, not surprisingly, filed a motion to dismiss for "failure to state a claim," arguing that the author-PA relationship is not protected under the MCPA:
The Court should dismiss the claims brought by Plaintiffs under the Maryland Consumer Protection Act (“CPA”) because Plaintiffs are not consumers; they have entered into a commercial enterprise with PA pursuant to which they split the proceeds from sales of their literary work made by PA. This profit sharing relationship is not a relationship that is protected by the (“CPA”). Plaintiffs’ declaratory judgment count should also be dismissed since the underlying CPA claim is defective.
Responses and counter-responses ensued. A hearing was held in August with arguments by counsel. On September 4, PA's motion to dismiss was granted by Judge Marvin J. Garbis--without prejudice, with the plaintiffs given the option of filing an amended complaint by the end of the month.

This past Wednesday, however, PA authors who'd sought to join the suit received a letter from Hagens Berman indicating that they did not intend to re-file.
In speaking and e-mailing with many of you what you wanted was out of your contract. That is also what we had hoped for when we filed this class action. We thought we had a good shot at this when we filed our first complaint. We claimed that Publish America’s representations about itself as a traditional publisher misled authors and led them to give away the publication rights to their books and that this violated the Maryland Consumer Protection Act. But the court concluded that the statute has a narrower scope and that the complaints we asserted against Publish America are not really consumer complaints, but more like business complaints.
For long-time watchers of the PA saga, the "it's not a consumer matter, but a business matter" response may seem familiar. It's the reason cited by the Maryland Attorney General's Office for not taking action on authors' complaints (of which, we've been told by various sources, the AG's office has received a goodly number). For the Maryland AG, it's straightforward: the author-PA relationship isn't between a consumer and a business (the area the AG handles) but between a business and a business.

That's not Judge Garbis's position, however. The problem, in his opinion, is that the original complaint simply doesn't provide enough facts to determine whether it's a consumer matter or not.
For present purposes, it suffices to state that the Maryland Consumer Protection Act, Md. Code Ann., Com. Law § 13-101 et seq. (“MCPA”) provides relief with regard to deceptive trade practices relating to consumer goods and service....

The MCPA defines the term “consumer” to include “an actual or prospective purchaser . . . or recipient of . . . consumer services.” Id. § 13-101(c)(1). The term “consumer services” is defined as “services which are primarily for personal, household, family, or agricultural purposes.” Id. § 13-101(d). The Complaint does not clearly, if at all, enable the Court to determine the particular factual allegations upon which Plaintiffs base the contention that the claims in Count Two would be covered by the MCPA. Indeed, Plaintiffs do not specify which of the alleged deceptive trade practices are the subjects of the MCPA claims....

Each Plaintiff simply alleges his/her name, place of residence and that he/she contracted with PA to publish a book. Plaintiffs do not allege facts relating to their pertinent background and cannot – on the face of the pleading – be assumed to be seeking publication “primarily for personal,” as distinct from commercial, purposes.

Moreover, a particular good or service cannot be said, in the absence of a particular context, to be a consumer good or service. For example, a can of beans bought for home consumption would be a consumer good. However, the same can of beans bought by the owner of a restaurant for sale to customers may not be. Similarly, a house cleaning service for a resident homeowner would be a consumer service but the same service for the landlord owner of a rented house may not be.

Also, PA contends that at least some of the alleged “consumer services” are services that cannot plausibly be considered primarily for personal purposes, e.g., services relating to the sales, rather than literary aspects, of a book. The Court is not now addressing the question of whether any such services necessarily are non-consumer services. However, in an Amended Complaint, Plaintiffs should allege facts sufficient to present a plausible claim that the services in issue are consumer services.

In sum, Count Two must be redrafted to clearly and unambiguously indicate the factual allegations on which Plaintiffs contend they have made a plausible claim for
treatment of themselves as consumers and treatment of the services at issue as consumer services.
Judge Garbis, in other words, isn't confirming PA's argument that the author-PA relationship is not a consumer matter--rather, he's saying that the plaintiffs haven't sufficiently demonstrated that it is. He makes a similar determination with regard to the plaintiffs' claim of unjust enrichment, breach of contract, and fraud.

Though PA will likely dispute this, the dismissal doesn't vindicate their business practices or endorse their counter-claims. Rather, it leaves the door open for the plaintiffs to return with stronger arguments to bolster their case. Obviously I can't reach into the minds of the lawyers to see why they decided not to do so. But I have to be honest--it seems shoddy to me. If they felt they had sufficient grounds to base the original complaint on the MCPA, and to make claims of fraud, why would they not re-file? (Or, perhaps, more adequately state their argument in the first place?) It makes the lawsuit seem like some sort of blue-sky effort, launched without adequate commitment and folding at the first roadblock.

At any rate, I think this illustrates yet again the extremely ambiguous position a writer occupies vis-a-vis a vanity publisher, whether or not the vanity publisher actively misrepresents itself. In every meaningful way, vanity publishing is analogous (to use Judge Garvis's example) to the can of beans bought for home consumptio. But because it masquerades as "real" publishing--in part by adopting a few of real publishing's components, such as offering the book for sale--this is very hard to demonstrate.

Monday, September 10, 2012

Writer Beware is on Vacation

Posted by Victoria Strauss for Writer Beware

Actually, I'm on staycation, but I'll be cutting way back on the Web stuff for the next two weeks. I'll be back the week of September 24.

I'll still be checking messages and answering email, so if you need to reach me, message me on Facebook, DM me on Twitter, or email me: beware [at] sfwa [dot] org.

In the meantime, I wish you all great reading, great writing, and a minimum of scams. See you in two weeks!

Friday, September 07, 2012

Guest Blog Post Writers Be-Wary: Electronic Distribution and Control of Creative Material

Posted by Victoria Strauss for Writer Beware

Today: another guest blog post of relevance to freelance writers. This one covers content aggregators, and the pitfalls that may be lurking in their Terms of Use.

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Writers Be-Wary: Electronic Distribution and Control of Creative Material
Sheila J. Levine, Esq. and Gerald M. Levine, Esq.

Authors create the content blog aggregators need for their web collections. Each gains in different ways. Greater variety of material and steadier receipt of content make the aggregator’s website more valuable. Because aggregating content is a business, licensing agreements will primarily reflect the aggregator’s interests. Benefits to authors are more readers and (possibly) recognition.

This may be a fair exchange even if the author is un- or minimally compensated monetarily for her work. However, productive authors who wish to retain control over their contributions may find aggregators’ “Terms of Use” or “Submission Guidelines” unacceptable. It is a fair question: What does an author give up in exchange for granting a license to have her content aggregated and accessible to the searching public?

The aggregator’s license should acknowledge the author’s copyright ownership as part of the grant of rights. The Copyright Act states that “Copyright protection subsists ... in original works of authorship fixed in any tangible medium of expression” (§ 102). Content submitted for aggregation is protected by copyright but the remedies for copyright infringement require registration. There is no immediate remedy for unauthorized publication of unregistered content however egregious the taking. Copyright registration is not expensive but it may be (or is thought to be) uneconomical and time-consuming.

The questions concerning aggregators’ “Terms of Use” are more than academic because they can affect an author’s income and future. Active content creators produce original material which can be collected and reworked into other formats. One of the exclusive rights an author has under the Copyright Act is the right “to prepare derivative works based upon the copyrighted work”(§ 106(2)). It is one thing to grant limited rights of publication and distribution to an aggregator on a nonexclusive basis, and another to cede control of statutory rights even in exchange for payment. The difference between exclusive and nonexclusive licenses is significant. A nonexclusive license is usually terminable at will and can be granted to multiple publishers and distributors. An exclusive license limits and controls how an author can exploit her own original work.

It is prudent before granting rights for the author to carefully examine the terms under which the aggregator accepts content in exchange for publication. Not all terms are equally beneficial to the author. There are different business models, all of which have the ultimate purpose of creating revenue for the aggregator. Some aggregators create libraries of material which are accessed for payment. Other aggregators generate revenue from the advertising on their websites. Some models share revenue with authors.

The potential problems are illustrated by several examples. In drawing attention to terms in the following agreements, we are not suggesting deliberate attempts to benefit at the author’s expense. Rather, we are pointing out that the agreements are presented on a “take it or leave it” basis, which is always a sign for caution.

1. ODP (Open Directory Project) is a comprehensive directory of Web resources.

In exchange for ODP’s agreement to include an author’s work, the author “[grants] AOL LLC. Corporation a non-exclusive, royalty-free license to use, publish, copy, edit, modify, or create derivative works from my submission.”

The catch is “edit, modify or create derivative works from my submission.” Although the ODP license is nonexclusive, the author grants AOL extensive rights to the blog content. The author can terminate the license but derivative works created from the author’s submission are owned by the aggregator “royalty-free.”

2. BLOGLINES is an aggregator of syndicated news feeds operated by the broadcaster WYBS.

The Bloglines Terms of Service assert that “WYBS does not claim ownership of the Content you place on your Private Page or Public Page,” but “[b]y uploading, submitting or otherwise disclosing or distributing content of any kind on the WYBS website or otherwise through the Bloglines Service,” – here comes the kicker –

“[You] Grant to WYBS, its affiliates and their assignees the perpetual, irrevocable, non-exclusive, royalty-free right to use, reproduce, display, perform, adapt, modify, distribute, make derivative works of and otherwise exploit such content in any form for the purpose of providing the Bloglines Service, including without limitation, any concepts, ideas or know-how embodied therein....”

Even though Bloglines disclaims ownership of blog content, the author has lost control of her work. She has granted WYBS the right to “exploit such content in any form” on a “perpetual [and] irrevocable” basis that includes the right “without limitation ... to exploit such content ... and any concepts, ideas or know-how embodied therein.” The “non-exclusive” grant is meaningful only to the extent that the author is in a position to exploit her work in the same fashion as the aggregator.

3. CURATA is a content curator for businesses which describes itself as “how smart marketers produce a consistent stream of high-quality content.”

Curata’s Terms of Use state that: “By submitting, posting or displaying Content you give us an irrevocable, worldwide, royalty-free, and non-exclusive license to reproduce, adapt, modify, translate, publish, publicly perform, publicly display and distribute any Content which you submit, post or display on or through, the Website. You represent and warrant to us that you have all the rights, power and authority necessary to grant the above license. You agree that you are solely responsible for (and that we have no responsibility to you or to any third party for) any Content that you create, transmit or display or permit to be created, transmitted or displayed while using the System and for the consequences of such actions (including any loss or damage which we may suffer) by doing so.”

Although Curata does not include the right to “derivative works,” the license effectively grants it if the aggregator can “adapt, modify ... publicly perform [and] publicly display” any content the author creates, transmits or displays.

In each of these examples the author licenses rights to an aggregator who can exploit her work without her approval of how the work is used. If the license is nonexclusive the author can exercise the same rights as the aggregator and is not prevented from licensing to others. However, without approval or consultation the author effectively loses control of many copyright rights and potential revenues. Productive authors have to be particularly careful because their original content can be collected or packaged in different formats by aggregators or reworked into books for traditional or e-publishers.

All authors should assess the benefits of aggregator sites and consider how much they are prepared to give up in exchange for dissemination of their work to audiences larger than they themselves can attract.
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Levine Samuel, LLP is a New York firm providing personal legal services for a variety of litigation, including publishing law. Sheila J. Levine and Gerald M. Levine are co-authors of a blog on publishing law and copyright, Legal Corner For Authors.

Tuesday, September 04, 2012

Guest Blog Post: 7 Freelance Writing Scams and How to Fight Them

Posted by Victoria Strauss for Writer Beware

It's freelance week at Writer Beware! In this week's blog posts, two guest bloggers will be discussing issues of interest and importance to freelance writers.

In today's post, freelancer and marketing professional Patrick Icasas identifies common scams that target freelancers, and provides advice on how to avoid them.

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7 Freelance Writing Scams and How to Fight Them

If you’re a freelance writer, you’re probably under constant pressure to get the next paying gig and to keep the money flowing. This can override your caution and leave you vulnerable to scammers. I know, because I’ve been there myself.

Scammers come in many flavors: unscrupulous clients, shysters selling bogus/worthless services, and thieves who want to steal your money/information. All of them are counting on you being too eager to work to ignore the warning signs.

But freelance writers can’t afford to be careless and ignorant. As lone operators, we don’t have agents or attorneys or accounting departments backing us up. It’s just us. We need to be educated. We need to be prepared. We need to be aware.

Below I’ve listed seven types of scams a freelancer is likely to encounter. Some of these are just unscrupulous clients, while others are downright illegal.

So without further ado:

1. The Bait and Switch

You and the client will agree on a project amount. The client will ask you to sign her contract, with the admonition that she needs the work started ASAP. You trust your new client, sign, and get to work. But they end up paying you a much lower amount.

Why? Because you didn’t read your contract and see that they had lowered the project fee. You might be able to take it to court, but they’re banking on the fact that a) you signed it without reading it, therefore it’s your fault, and b) many freelancers don’t have the money for lawyers.

A common variation on this is the client not wanting to use a contract at all, instead relying on verbal agreements that will always be “misremembered”. This is even worse, because the client will be savvy enough not to have anything in writing that can prove your side of the story.

The solution: Always use a contract. Always. And use your own, not someone else’s. If that’s not possible, then go over the client’s contract with a fine-toothed comb. Don’t be afraid to raise questions.

2. Empty Promises 

Some clients request projects for ridiculously low fees, but will try to smooth things over by promising more projects at a higher rate later on (in fact, some amateur novelists claim they will “share the profits” with freelance editors once their book has made it big on the NYT bestseller list).

But what’s really going to happen is that the client will disappear after the first project and find another freelancer who’ll fall for the same line, leaving you grossly underpaid.

The solution: Stick to your rates. If you do give a discount, keep it reasonable.

3. Eternal Editors

No work is perfect right out of the gate. Clients are always going to ask for changes, but eternal editors take it to the extreme. The client will always find something wrong with your latest draft (after taking their sweet time reviewing it.) They will question your work and your worth even as they ask for another version.

Their objective is to be so unpleasant, demanding, and frustrating that you give them a huge discount to close the project, or, even better, give up and walk away. They will then get the project for free (or close to it), and they will still have the original, untouched draft of your work.

The solution: Set limits. Example: 2 rounds of revisions per project, with subsequent edits billed per hour. Make sure these terms are spelled out in your contract.

4. Runners

Businesses are always trying to save money, and runners do it by not paying. They’ll hedge, delay, make excuses, ignore you, and everything else in the hopes that you’ll write the project off as a loss and leave them alone. Online freelance writers have it the worst, because it’s much easier to ignore an email than a person standing in your office.

The solution: Get half your money up front. Aside from that, the best you can do is to keep following up in the hope that they’ll get a conscience and pay. Some freelancers have taken it to a small claims court, with varied success.

5. Paid Job Databases

Some freelance job sites charge a fee to access their database of “premium” and “verified” freelance job listings, but what they really do is just repost job listings from craigslist, freelancewritinggigs.com, and other free job sites.

The solution: Most legit job sites offer free access to their list of jobs. If they do charge money, it’s for premium membership, additional bids, and a cut of the project fee. Never to view the jobs themselves.

6. Overpayment Scheme

This scam isn’t exclusive to writers, but writers are tapped as victims. The client will pay the contractor by check and “overpay” them by thousands of dollars. They will then ask the writer to cash the check, take out the agreed-upon project amount, and wire the balance back to the client’s account (which will be under another name.) The check will then bounce, and the gullible writer will have paid the scammer good money in exchange for a bad check.

The solution: Only take checks from customers you trust. Once again, money should never flow out of a writer’s pocket. If the client claims a mistake, ask them to cancel the check and resend, or visit the bank to have the check verified.

If the situation smells funny, don’t submit the work until the first check clears.

7. Samplers

Have you ever seen a job posting that asked for custom-written samples? What they’re really doing is collecting all those samples from different writers and then using them as free content. Or, if they’re trying to avoid accusations of plagiarism, the scammer will hire another writer to reword these articles a little differently.

The solution: Don’t send it in. As a freelancer, you should already have your own samples from previous work, and these should be enough. If the client insists, either walk away or ask them to pay for it (and get the agreement in writing).

Not every client is out to get you. Most aren’t, as a matter of fact. There’s a big difference between a businessman wanting to save their money and a scammer wanting to get yours (although it may be hard to tell sometimes.)

Set some firm precautionary rules for client dealings and stick to them. Read your contract. Get paid up front. Say no. Ask around. Writers' forums like AbsoluteWrite’s “Freelance and Work for Hire” section are an excellent place to get advice. Freelancers may work alone, but we compensate by having a strong sense of community.

If you stick to your guns, many of the scammers will make themselves scarce. This leaves you with the real clients, who value your work and pay you accordingly.

Have you ever encountered a scam? Comment and share your experience!

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Patrick Icasas is a veteran marketing professional and freelance writer who has helped businesses market their products and services through judicious use of the written word. He is also an aspiring author, and currently volunteers as a slush reader at Flash Fiction Online. His blog chronicles his attempts to balance multiple careers while raising an energetic toddler.