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Royalty disputes: Miami writers should understand the contract

For artists and writers in Miami, protecting their intellectual property and ensuring they receive appropriate and agreed-upon payments for their work is an important concern. When these creative entrepreneurs feel they are not receiving what they deserve, royalty disputes arise. These disputes often hinge on the original contract between artist and the business that distributes their work, where breaches may be discovered.

Three romance novelists have recently filed a class action lawsuit against Harlequin Books, claiming the company has cheated them as well as the company’s 1,000 romance writers of royalties for their novels. The lawsuit claims that Harlequin has used a “bogus” licensing agreement via a subsidiary of the company located in Switzerland. The suit concerns publishing contracts entered into between the years of 1990 and 2004.

The plaintiffs claim that although the subsidiary Harlequin Switzerland was involved in the publishing contract, the company has no part in the actual publishing process. Harlequin states that the Swiss subsidiary is involved for tax purposes and doesn’t affect the guidelines for royalty payment set out in the publishing contracts. The contract dictates that writers will receive 50 percent of the net receipts, and due to licensing with Harlequin Switzerland, Harlequin Enterprises argues the writers should receive 50 percent of the net receipts from Harlequin Switzerland rather than from Harlequin Enterprises.

Harlequin Switzerland nets a lesser receipt than Harlequin Enterprises, 6 to 8 percent of the cover price of the e-books rather than the 50 percent that Harlequin Enterprises receives. However, Harlequin Books claims that it was a part of the contract that Harlequin Switzerland held the rights to execute, sell, license or sublicense copyrights.

As Miami artists and writers may know, the details of a contract should be clearly read and understood prior to signing the contract in order to avoid any unnecessary and potentially costly royalty disputes later. As with most legal agreements, the right advice in negotiating and executing such agreements may go a long way toward protecting one’s legal interests, while freeing up time to concentrate on the creative energy necessary to produce the work contemplated by the contract.

Source: Courthouse News Service, “Bodice-Ripping Class Action Claims Harlequin Cheats Romance Writers,” Adam Klasfeld, July 23, 2012

· Our firm handles similar situations to the one discussed in this post. If you would like to learn more about our practice, please visit our Miami breach of fiduciary duty page.

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