Is Apple’s Dismal iBooks Author Software License Even Enforceable?

[UPDATE, February 3, 2012: Adam Reid points out via Twitter that Apple has substantially re-written their EULA addressing the concerns raised in my post. (Reid characterizes them as merely "clarifying" the EULA). Now, the EULA asserts that "If you want to charge a fee for a work that includes files in the .ibooks format generated using iBooks Author, you may only sell or distribute such work through Apple, and such distribution will be subject to a separate agreement with Apple." That puts Apple on far steadier ground — they no longer claim an exclusive license to author's works at all, but rather restrict use of iBooks-formatted files.]

It seems Dan Wineman was the first to sound the alarm, with Ed Bott using his soapbox at ZDNet to shout it from the rooftops: Apple’s new “free” iBooks Author program, which allows authors to create their own professional layouts while they write books, includes an astonishingly greedy and overbearing clause in its end-user license agreement (“EULA”):

B. Distribution of your Work. As a condition of this License and provided you are in compliance with its terms, your Work may be distributed as follows:

  •  (i) if your Work is provided for free (at no charge), you may distribute the Work by any available means;
  • (ii) if your Work is provided for a fee (including as part of any subscription-based product or
    service), you may only distribute the Work through Apple and such distribution is subject to the following limitations and conditions: (a) you will be required to enter into a separate written agreement with Apple (or an Apple affiliate or subsidiary) before any commercial distribution of your Work may take place; and (b) Apple may determine for any reason and in its sole discretion not to select your Work for distribution.
Apple will not be responsible for any costs, expenses, damages, losses (including without limitation lost business opportunities or lost profits) or other liabilities you may incur as a result of your use of this Apple Software, including without limitation the fact that your Work may not be selected for distribution by Apple.

As Bott explains, “The nightmare scenario under this agreement? You create a great work of staggering literary genius that you think you can sell for 5 or 10 bucks per copy. You craft it carefully in iBooks Author. You submit it to Apple. They reject it. Under this license agreement, you are out of luck. They won’t sell it, and you can’t legally sell it elsewhere. You can give it away, but you can’t sell it.”

Jason Gilbert at Huffington Post considers the problems in enforcing the EULA as a “contract of adhesion” (because it’s included in the license and you have no ability to negotiate it) and as including “unconscionable” terms (a rare legal doctrine that courts virtually never apply). But there’s a more fundamental problem: the terms are unenforceable under the Copyright Act.

There are two types of licenses under copyright law, an exclusive license and a nonexclusive license. Here’s how they differ:

In an exclusive license, the copyright holder permits the licensee to use the protected material for a specific use and further promises that the same permission will not be given to others. The licensee violates the copyright by exceeding the scope of this license. …

By contrast, in the case of an implied nonexclusive license, the licensor-creator of the work, by granting an implied nonexclusive license, does not transfer ownership of the copyright to the licensee. The copyright owner simply permits the use of a copyrighted work in a particular manner.

IAE, INC. v. Shaver, 74 F.3d 768, 775 (7th Cir. 1996).

The iBooks Author EULA plainly tries to create an exclusive license: Apple claims, in essence, the copyright holder [that's the author] permits the licensee [that's Apple] to use the protected material for a specific use [the iBooks store] and further promises that the same permission will not be given to others [that's the 'you may only distribute the Work through Apple' part].

Here’s the problem: under the Copyright Act, an exclusive license is defined by 17 U.S.C. § 101 as a “transfer of copyright ownership,” and under 17 U.S.C. § 204 such a transfer “is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed.”

Of course, Apple doesn’t ask anyone to sign anything before using iBooks Author. There’s a lot of debate over whether a “shrink-wrap” or “click-wrap” license is enforceable (here’s an older post of mine, too), with most courts evaluating them on a case-by-case basis, but there’s no doubt that ‘using a program’ isn’t the same thing as ‘signing a written document granting an exclusive license in a copyrighted work.’

Apple seems to have recognized that problem: the EULA demands “you will be required to enter into a separate written agreement with Apple (or an Apple affiliate or subsidiary) before any commercial distribution of your Work may take place.” They’re probably relying on the Eden Toys line of court holdings, which agree that an exclusive license can’t be granted without a signed, written document, but also permit copyright holders to subsequently ratify in writing an informally granted exclusive license:

Under the pre-1978 copyright law, exclusive licenses could be granted orally or by conduct. Id., § 10.03[B][1], at 10-37 (1980). Under the new Copyright Act, however, Eden’s claim of an informal grant of an exclusive license seemingly must fail in light of the statute of frauds provision of the new Act, which states that an exclusive license “is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed….” 17 U.S.C. § 204(a) (Supp. IV 1980). However, since the purpose of the provision is to protect copyright holders from persons mistakenly or fraudulently claiming oral licenses, the “note or memorandum of the transfer” need not be made at the time when the license is initiated; the requirement is satisfied by the copyright owner’s later execution of a writing which confirms the agreement.

Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F. 2d 27 (2d Cir. 1982).

Which means that, in the end, the iBooks Author EULA leaves both Apple and the author in a strange stand-off: Apple doesn’t actually have the right to tell the author not to take their work somewhere else, but the author can’t do that without breaching the EULA — even though they retain full rights in their copyright.

But Apple has been too clever by half here: if an author does breach the EULA (by not subsequently signing the written agreement after having used the “free” software) and distributes their iBooks-created-work elsewhere, what are Apple’s damages? Because Apple doesn’t have a copyright interest in the book (like an exclusive license), they can’t claim lost royalties as the damage. Instead, they have to claim that an author breached the EULA of a program that users did not have to pay for in money.

[Update: Some readers have opined, in essence, that breaching a EULA is copyright infringement. Not necessarily so; see the Glider World-of-Warcraft case I wrote about. (The court opinion itself is available here.) Is the iBooks Author exclusive licensing provision a "condition" or a "covenant?" I'm going with covenant, because it's a promise to do something in the future, i.e. sign the subsequent written exclusive licensing agreement.]

How did this happen? By Apple stupidly overreaching. The Copyright Act includes § 204 for the precise purpose of preventing companies like Apple from trying to swindle creators of their works out from under of them, but Apple apparently has such low confidence in their own iBooks store that they don’t think any author will use it unless they believe, mistakenly, that they have to.

Frankly, I hope this incident causes some people to re-evaluate their opinion of Apple, if they still have a positive opinion of the company after the negative media attention following Steve Jobs’ death. As the New York Times recently reported, iPhones and iPads are made in China, not America, for two simple reasons: because Apple relies on labor conditions of the sort our great-grandparents fought at great personal risk to make illegal and because the Chinese government subsidizes their manufacturer’s infrastructure. That’s not “thinking differently,” as Apple mischaracterizes itself in its advertising. It is greed, pure and simple.

[Update: A good discussion in the comments. See, in particular, John William Nelson's comments and his follow-up post to mine (which also links to his earlier post). We agree any exclusive license would be unenforceable, but disagree over whether the EULA tries to claim one or not. His comments raise another ambiguity — the rest of the EULA disclaims ownership of works created with the program, but the clause in question undoubtedly claims an exclusive license, which is, as mentioned above, defined by 17 U.S.C. § 101 as a “transfer of copyright ownership." In my humble opinion, courts would interpret that ambiguity against Apple, and might disregard the exclusive license claim entirely. See our exchange here and on his site for more.]

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  • Guest

    Apple should have charged a reasonable fee to start with instead of promoting a product as “free” with such unjust terms. The image of The Little Mermaid’s Ursula, who contrived a similarly unfair and unenforceable contract with Ariel, comes to mind (I have preschool age children). I would have hated being one of the lawyers tasked with drafting Apple’s contract. Can you imagine waking up in the morning and thinking, “What a beautiful day to screw over a bunch of aspiring writers?” I’ve learned to hate Apple after a lifetime of loyalty to its products, which I now know were produced by the equivalent of slave labor under the leadership of an unlikeable, paternity-denying a-hole. I doubt other companies are much better, but I feel duped by Apple’s advertising into thinking it was the progressive choice when it was not. I’m done with them.

  • http://themacmob.com/author/adamreid/ Adam Reid

    As an law student I can’t believe someone who is an admitted member of the bar wrote this. You actually tried to say this is an adhesion contract!!?! I assume you forgot that an adhesion contract requires a lack of choice, more simply put it requires necessity. As there are several other ways to create books for sale in the iBookstore, the argument instantly falls flat. Even further, its not a necessity for a book to be sold on the iPad at all. Even if we somehow argue it is, there are several competing bookstores in which to sell one’s works further obviating the need to use iBooks Author. Its a free, robust tool for creating interactive books not currently demonstrated on any other platform. Its a mutually beneficial exchange, aka consideration less you forgot that concept too. In exchange for free use of a tool that would otherwise cost hundreds, the creator gives Apple exclusive distribution of the work. That is nowhere near the situation described in your article.

    • http://www.litigationandtrial.com/ Max Kennerly

      It appears you didn’t actually read my article, which only mentions adhesion contracts while linking to a discussion somewhere else.
      It also seems you have the overwhelming confidence about your interpretation of the law found only in law students.

      —– Reply message —–

      • http://themacmob.com/author/adamreid/ Adam Reid

        Further reasons your “article” is wrong:

        -ProCD established that copyright claims do not supersede contract claims, so if they breach the EULA, Apple is entitled to damages
        -The quoted passage doesn’t prove anything. The separate written agreement would satisfy the SOF and thus putting the agreement in compliance w/ the Copyright Act, making that section moot
        -Damages aren’t exclusively based on lost royalties. Since this is a contract claim they can pursue any number of theories not limited to unjust enrichment, lost earnings, etc.
        -What author believes they have to use the iBookstore? That line makes no sense. It makes even less sense in light of the fact these terse would DETER people from using it if they are as “dismal” as you claim.

        Finally your bias makes this all make more sense. If you want to be taken seriously, at least try to hide your disdain. You can’t possibly be objective when you use phrases like “swindle” and “greed”.

        • http://www.litigationandtrial.com/ Max Kennerly

          Indeed, the subsequent agreement could make everything right. What if the author refuses to sign it? You seem to believe that, under ProCD, that retroactively converts the author’s authorized creation of the work into copyright infringement. It doesn’t.

          You mention “unjust enrichment.” If an author refuses to sign the exclusive license for Apple, how are they “unjustly enriched?” By virtue of a utilizing a work they undisputably created themselves?

          ________________________________

        • http://gdgt.com/profile/ayejay85/ Adam Reid

          If the author refuses to sign it, there is no contract. He’s free to do whatever he likes. Issue over. And again, under ProCD the issue is not copyright, its breach of contract.

          And they are unjustly enriched by using software thats far beyond what is currently available when it comes to e-book authoring. The software requires no programming knowledge to create fully interactive e-books. Software that requires programming knowledge to achieve a similar result retails for several hundred dollars. You seem to think that all this does is format text, which couldn’t be further from the truth. It enables authors to create like they are coders which is worth the thousands saved by not hiring a coder and telling them where to insert their scripts and fiddling with the formatting. Thats unjust enrichment, getting the value of the k, namely the use of software which is potentially worth thousands, for free.

        • Cory

          The link to “themacmob” in your profile confirmed what your comments hinted. You’re not pissed because this article is wrong, you’re pissed because it doesn’t hold Apple up on the pedestal you do. Have some objectivity. The EULA sucks, and authors should avoid this software because of it. Lastly, I’m also a practicing lawyer, and I couldn’t agree more that your confidence and bravado in your knowledge of the law will vanish within a month of getting your degree. Enjoy the delusion of superiority now, it will not last.

        • http://themacmob.com/author/adamreid/ Adam Reid

          The contention of the article isn’t that the EULA “sucks” its that it’s “unenforceable”. A huge difference. And, riddle me this…if the EULA “sucks” then why would 90% of the textbook industry consent to such terms? Its simple, this is much ado about nothing. The EULA covers works created in iBooks author, which are interactive textbooks. If you create something different, its not covered by copyright. A textbook largely escapes copyright law in the first place because facts aren’t copyrightable. So you can create a book for sale elsewhere using the same facts if you so choose as long as you eschew the interactive elements you don’t run afoul to copyright or the EULA.

          And if you aren’t doing that use case, why use the software at all? Again its not forced. Its not the only means of distribution. Its not even necessary to publish books for the iPad at all. Its all willing. This is the most fundamental example of contract law, its a bargained for exchange. You can easily make a great product for free in exchange for exclusivity, or you can forge your own solution. What you ”sky-is-falling” prognosticators fail to explain is why anyone NEEDS to se the software. Its simple, b/c you don’t. Don’t like it, no harm going elsewhere.

          FInally, this is all so funny because if you properly use the tool, you couldn’t distribute this elsewhere if you wanted to. The tools are proprietary, exporting your work into Epub and attempting to use it elsewhere will only result in useless code between your text. Simply put, beyond basic text, the tool is only useful for creating iBooks. So at worst the provision in the EULA is redundant.

        • http://www.litigationandtrial.com/ Max Kennerly

          You’ve made a long argument about how you think, as a policy matter, this EULA is appropriate given how great iBooks Author is. That’s not relevant to the point of my post, which is that the EULA’s attempt to grab an exclusive license to the works created with the program through a shrinkwrap software license is unenforceable under the Copyright Act.
          If a user created a work with iBooks, but then didn’t want to use Apple to distribute it, Apple wouldn’t have much power to compel them to do otherwise. The real question is why they even tried to do so in the first place; why not simply hand the program out, free, as a means of inducing writers to distribute their works through the iBooks store?

        • Site Administrator

          Ok, Seriously?
          You’re right, nobody needs to use this, and if they know about the EULA and believe it’s enforceable, I doubt many will. (Perhaps they will paste the text of a completed book into it, and then insert a few movies). Most books are basic text, and the tool allows output into ePub and PDF, which would mean that one would be able to read books on other platforms. That Apple is using open standards like ePub and PDF leads people that it would work, and this should be ok. Then they hide nasty provisions in the EULA.

          What is MS Word had a provision in the EULA that said everything you write in MS Word will be property of Microsoft for them to use as they see fit? I agree with the terms are simply unconscionable, as no reasonable person would sign away the copyright of their work for use of a program.

        • Guest

          You’re hilarious, Adam Reid. Based on your comments and the link to your profile, I can tell the veins in your neck were popping when you saw this article and when you commented without even reading it. Then, I bet you nearly had a stroke when you finally read the piece. Ha! It’s funny that you think Litigation and Trial has a bias. Perhaps he’s one of the many Mac users who have seen behind Apple’s curtain. There are many of us. It’s even funnier that you think YOU can be taken seriously considering your blind devotion to the corporation. Ha ha ha!

    • Hellamoet

      Burned! Haha

  • Andrew Shields

    It is your opinion, then, that ‘any book or other work you generate using this software [iBooks Author] (a “Work”)’ refers not only to the output .ibooks file, but also the literary or graphical content of such a file?

    I am far from an expert about the legal meaning of the word “generate”, but it seems very unlikely that this verb includes the process of writing or drawing.

    If the legal question became not one of the licensing of the content of the .ibooks file, but of the licensing of the compiled file itself, it seems like the question would be a very different one.

    • http://www.litigationandtrial.com/ Max Kennerly

      “Generate” could mean a lot of different things; the program certainly “generates” every output it creates, including PDF, TXT, and anything else. Truth is, their license could be interpreted as extending a claim to an exclusive license over any form of the “Work” – and this is part of why it is both evil and stupid.

      If they wanted to limit themselves to specifically to distribution of any iBooks-formatted output, they *maybe* could have done so, although that still creates its own copyright problems. They didn’t: they claimed an exclusive license to any distribution of the “Work,” broadly defined.

      ________________________________

      • Andrew Shields

        It seemed to me that this was the most likely answer you would give, and I agree that even in common speech “generate” extends to this meaning quite easily. However, I should have phrased my point more narrowly: it seemed to me that in your article, you took the position that Apple laid claim to an exclusive license to the content of the work, i.e., to the words and images which could be distributed as an .ibooks package (or PDF or anything else iBooks Author can export). It seems to me most unlikely that the wording can be construed to cover this material, since the software plays no role in generating these works: they are generated by the author or illustrator.

        Now, as I said originally, the legal meaning of “generate” may allow Apple to argue that this material is covered as well—I don’t know. But I doubt it, based on my argument that such an interpretation would be contrary to the meaning of the English. So, suppose for a minute that I’m right, and that an author, having slaved over the composition of a work, having hired an illustrator to illustrate it, and having bundled it up in an .ibooks file, submits it to Apple and the work is rejected from the iBookstore. Clearly, the author is in a fix: the effort he has put into formatting the book in iBooks Author has been wasted unless he can satisfy Apple’s (possibly quite unreasonable) requirements for sale in that venue. If I am right, however, he can take the written and illustrated content of his book and, in some other program which lays out books, lay out a book and then sell it in whatever venues accept the resulting file.

        It also seems to me like the meaning of the word “Work” in the EULA could conceivably depend on the meaning of the word “book” the sentence quoted above. I can think of two “common” meanings which are relevant. The first refers to the actual, physical manifestation of a piece of literature, printed on leaves which are bound between covers. This meaning is evolving because of digital publishing to include the file or files which contain literary content and instructions for its display. The second meaning is the literary content itself, in use in such situations as “he wrote a book”. (“He” clearly didn’t write the physical manifestation.) If Apple were to assert that it was this latter meaning that was employed in their EULA, I would struggle to take their claim seriously without evidence of a similar, well-defended license that uses the word “book” (or a parallel word) in this way. I thus read ‘any book or other work you generate using this software (a “Work”)’ to mean ‘any files or packages you generate using this software (a “Work”)’.

        Again, I’m not a lawyer, I have no legal experience, and I may be inclined to take interpretation too far. But to my layman’s eye, it seems like the EULA in its current form is better criticized for being vague or indefinite (a criticism that could be leveled against many EULAs I have read) rather than oppressive or overreaching. Could Apple’s lawyers, in their greed, be seeking to capture the largest ground they can get away with through vagueness? Sure. Should we assume they are? I think to do so leads us in the direction of condemning lawyers as a class.

        • http://www.litigationandtrial.com/ Max Kennerly

          I would be inclined to believe sloppy drafting was the culprit, except: (1) Apple isn’t filled with bumbling fools, and their lawyers aren’t fools either and (2) the second component of it, the requirement you sign a later written agreement, demonstrates knowledge of just how far-reaching their demands are, because it shows knowledge of the requirements of the Copyright Act.

          Stated more succiently, though, if they didn’t mean to grab everything, they didn’t have to. They could have, for example, have said that no claim is made to non-iBooks outputs of the program. But they didn’t. I wouldn’t give them the benefit of the doubt on that: after all, they’re the ones who wrote this EULA.

          ________________________________

        • JohnA

          Whats your analysis on the following in relation to the EULA.

          You create your text in another program. And generate a “work” (PDF, text file whatever), possibly even distirbuting this work. You then subsequently create an iBook using this content (a derivative work?) possibly expanding it with images, layout, etc.

          Is this likely to cover you in the case of the rejection scenario you describe?

        • http://www.litigationandtrial.com/ Max Kennerly

          Consider it by analogy: Stephen King hastily drafts a book, then signs an exclusive license with a publishing house that cleans the book up and sells it. If Stephen King then tried to sell his original on the sly, then, depending on how similar the works were, the publishing house could sue King for breaching the exclusive license/
          Back to your scenario, at least as I read the EULA, Apple would claim an exclusive license to the second formatted work, which means Apple could, at least under the EULA, preclude you from distributing the first version of the work.
          That’s part of why I raise these issues: the Copyright Act is very strict about the conditions under which these effective transfers of ownership are granted, and Apple’s EULA tries to use a shrinkwrap or clickwrap to accomplish what the Copyright Act demands be done through a written, signed document. These are thorny issues, ones that Apple could resolve by following even the advice of its most ardent supporters, like John Gruber: “Apple should treat the output of iBooks Author as it does Mac apps: allow authors and publishers to choose to sell them through the iBookstore and/or to sell them on their own. I could even see Apple requiring books made with iBooks Author to be submitted to the iBookstore if they’re going to be made available for sale anywhere — just remove the exclusivity clause.” Source:

        • http://twitter.com/nelsonjohnw John William Nelson

          You are correct that the Copyright Act is very strict on the transfer of copyright ownership. However, I think you are reading too much into the EULA.

          There is a section at the beginning of the contract that begins “IMPORTANT NOTE” and further defines the meaning of a “Work” in the EULA as “any book or other work you generate using this software.”

          Based on this portion of the contract, and the fact that the Copyright only allows copyright transfers if they are in writing, then it is clear Apple only intends to control how the outputted file is distributed and makes no claims to the user’s copyrighted works.

          In fact, in Section 2.D, the EULA further states that “[t]itle and intellectual property rights in and to any content displayed by or accessed through the Apple Software belongs to their respective content owners.” This clearly indicates that Apple is not attempting to co-opt anyone else’s copyright, but merely trying to control the distribution of outputted iBooks Author files to keep up their walled-garden.

        • http://www.litigationandtrial.com/ Max Kennerly

          All correct — but the EULA further claims that users cannot distribute the work except through Apple. That is, in sum and substance, an exclusive license. Exclusive licenses, however, are defined by Section 101 of the Copyright Act as the type of transfer of ownership (just like a full-fledged assignment) that has to pass Section 204 scrutiny.

        • http://twitter.com/nelsonjohnw John William Nelson

          You’re right about exclusive licenses needing to be in writing. As I said before, the EULA fails to meet the requirements for an exclusive license if that was Apple’s intent. I simply disagree that was the intent.

          As for the work, the “Work” is defined as the output. The restriction is a EULA restriction based on the iBooks Author copyright, not the copyright in the Work.

          (And “Work” is defined at the beginning of the license as the output, not as the more general copyright term. A good contract drafter probably would not have chosen a term pregnant with copyright law meaning, but used another term such as “File or “Output” instead.)

          An interesting question is what happens when the EULA is breached. Apple does not (and cannot) have a copyright interest in the Work, so what remedies does it have for breach?

          The breach would end the license, and the user could not theoretically continue to use iBooks Author. This seems the extent of Apple’s ability to recover.

          Then again, because of the click-wrap nature of the EULA, what would happen if the breaching user simply re-accepted a license on another download? It may be argued that this was an additional offer and acceptance, allowing the user to continue under the new EULA and only ending if a second breach occurs.

          Another interesting question is why this term is even in the EULA? You can’t use the iBooks-formatted file in anything other than an iPad/iPhone/iPod. Why not just let the software ecosystem enforce this rule?

          Doing this, and moving the whole disclaimer of damages for non-distribution to the agreement that must be entered into when you publish something through the iBooks store, would seem to be a better approach.

        • Lorenz Gude

          Max you are biased against Apple and that is as it should be. I’m biased against them too and I want the opinions of a lawyer who is very suspicious of this license. It feels like a roach motel to me as an author. You can check out anytime you like, but you can never leave.’ I downloaded Author right away and am going to put non critical content into it and see what I can accomplish all the while looking for software from Google or Amazon to publish work on their platforms. It is going to be harder to do that programming because the devices are m0re varied and therefore more complicated to program for. But I think it will happen. I’ve rough formatted colleagues papers from Word files for the Kindle to make them usable – not pretty. All I can say I’m glad Apple doesn’t claim copyright in my photos that I have stored in Aperture! Jobs was a genius and an over controlling OCD prat. Bottom line in my view is that it will accelerate the production of easy to use multimedia publishing software just like the iPad accelerated to production of Android and other tablets. The EULA’s unfair terms will, I believe, prevent them from cornering the interactive textbook market.

  • M Diasdullois

    Apple is not the only company, using the cheap labour in China.. Actually almost all big tech brands do, so just bashing apple on this is not fair: i bet the kindle has the famous sentence ‘made in China’ on most of its parts…:

    ‘Foxconn manufactures consumer electronics for a number of well-known companies, including:
    Acer Inc., Amazon.com, Apple Inc., ASRock, Asus, Barnes & Noble, Cisco, Dell, EVGA Corporation, Hewlett-Packcard, Intel, IBM, Lenovo, Logitech, Microsoft, MSI, Motorola, Netgear, Nintendo, Nokia, Panasonic, Philips, Samsung, Sharp, Sony Ericsson, Toshiba, Vizio’.

    And as long we do not want to pay over 1000 usd for an ipad, this will continue.

    • http://www.litigationandtrial.com/ Max Kennerly

      A fair point, but one that doesn’t absolve Apple.

      ________________________________

    • Brian Shipman

      My understanding of the cost savings isn’t even that significant for the consumer. It’s only around 21%. So your looking at paying closer to $500 for an iPad. If that means more jobs in the USA then I’ll pay it.

  • Myk Dinis

    Apple will still have the upper hand. When the author willingly signs the contract to provide their text for consideration to be published, that contract will have the necessary language to enter the author into an exclusive license with Apple.
    So, word to the wise. If you’re gonna use iBook Author (sp), don’t publish with Apple.

  • Anon Y. Mous

    As with most things Apple, it’s rotten to the core. Don’t use it, ever.
    Don’t buy Apple products. Don’t borrow Apple products. Don’t rent Apple products.
    Let Apple die in peace, broken and bereft of value.

  • http://www.litigationandtrial.com/ Max Kennerly

    You’ve lost the thread somewhere in there. If you are saying that, if an author creates a work in iBooks Author and then refuses to sign the exclusive license, that dispute is governed by contract law, then you’re making my argument.

    • http://themacmob.com/author/adamreid/ Adam Reid

      No, I’m saying if the author creates the work in iBooks Author, then refuses to sign, there was no contract, and thus the author can take his work elsewhere. Apple controls the means of acceptance, and its clear that w/ for profit works created in iBooks acceptance is not made until AFTER signing the exclusive license. So by not signing the agreement the author never agrees to the terms and never accepts, thus he’s free to take his work elsewhere.

      • http://www.litigationandtrial.com/ Max Kennerly

        I think that’s how it should work, but that’s not what the EULA says. The EULA attempts to require the author grant Apple an exclusive license even before signing the second document; that’s why Ed Botts and the rest were upset.

        • http://twitter.com/nelsonjohnw John William Nelson

          The EULA does not grant Apple an exclusive license in the work. Rather, the EULA restricts the use of the outputted file—i.e., the iBooks formatted eBook.

          The author is still free to take his content and put it into another eBook format, such as the Kindle format.

          The real question is whether a court will enforce a EULA such as this when it comes down to how the outputted file is used.

          This is not settled law. Some courts view licensing restrictions such as this, and such as those in the Microsoft EULA for Office Home & Student, with great skepticism.

          Finally, you don’t have to sign a contract to accept it in many cases—EULAs being one of them. The question is whether the terms of the contract are enforceable based on the form of acceptance used.

          You can read my own analysis of why folks are making mountains out of molehills on this issue here:
          http://www.lextechnologiae.com/2012/01/21/the-ibooks-author-eula-what-does-it-really-mean/

        • http://www.litigationandtrial.com/ Max Kennerly

          You’re right about the law being unsettled as it relates to EULAs in general, and about some contract terms being enforceable in EULAs, but those are separate issues from this specific instance in which a EULA claims an exclusive license in a work.
          The EULA’s terms are not as kind as you believe; the EULA claims an exclusive license in “the Work,” not solely the iBooks-formatted copy. Even if the EULA was limited to the iBooks-formatted copy, that copy would still be a “work” and the EULA would still assert an exclusive license — and thus would violate Section 204 of the Copyright Act by not being signed.

  • RedNeck Tech

    And people don’t understand why I dislike Apple!

  • Chase Tettleton

    I assume there are other software packages available that will allow authors to create works in a format suitable for upload to he iBooks store. Authors interesting in selling their works elsewhere should use those alternatives.

    I suspect, however, that this Apple product is superior in many ways to those alternatives, price and relative ease of use being the most obvious. This will cause many – nay, most – self-publishers to adopt the iBooks Author.

    Bottom line: if you don’t agree with the terms of use, don’t use the product. If, on the other hand, you want to use software so easy to use to sell you wares on such a broad market, you have to expect to give something up.

    • http://www.litigationandtrial.com/ Max Kennerly

      That’s a pragmatic view, but the Copyright Act doesn’t have a pragmatic exception to it. What happens if an author writes a work in iBooks but Apple refuses to distribute it? Or if the author finds better royalty terms elsewhere? At that point, Apple claims an exclusive license in the work, but the Copyright Act says such claim is invalid because the exclusive license is not signed (and, I would argue, also not “written.”)

    • Site Administrator

      You think “most” self publishers will use iBooks Author? It’s certainly not likely that they will use it exclusively. If they want to publish on other platforms (Kindle, Smashwords, etc.), then they will have to use other tools if Apple gets their way. Since the other tools can also output to a format which iBooks can read, that leaves little advantage to using iBooks Author. Even if the tool is slick, doing the work twice isn’t exactly productive. So the only way most publishers would use iBooks Author would be if:
      A. They are producing a free book that they never plan to sell, or
      B. They plan to sell only via Apple’s iBookStore exclusively.

      Given that iBookStore has minuscule marketshare thus far (even more so outside the US), and limits sales to people who own Apple devices, no body even half-serious about selling their books would limit their market like that.

  • http://www.facebook.com/people/Eric-Desnoyers/710037410 Eric Desnoyers

    Hello. I have a question from someone who knows nothing about the law.

    Isn’t this clause in the EULA enforceable in a more indirect way, such as stopping other purveyors of tablet operating systems, such as Android, from selling and displaying contents made with iBooks Author?

    It seems to me that Apple wants to make sure that anything created with this particular software remains in their system, and not be found in their competitors’. How long would it take for the competition to come up with a software update that would allow them to use media created with iBooks Author if this clause wasn’t included?

    I believe that Apple wants to make it impossible for their competitors to use the output of iBooks Author, and, in this way, the EULA could be enforceable.

    • http://www.litigationandtrial.com/ Max Kennerly

      An astute observation, and that’s probably where everything went off the rails at Apple. Put aside the text of the work for a moment and focus on the formatting. Here’s the underlying problem: when an author uses iBooks to create a formatted final work, there are potentially two copyrighted works embedded in there: the creative work of the author in designing the format, and, whatever contribution iBooks’ software had to that final work. By analogy, think of a movie poster that includes the movie’s title in Helvetica font — the creator of the poster has full copyright in everything they designed, but the font itself is separately copyrighted by the font creator.
      Apple has a couple options of how to deal with that. The smart move, IMHO, would have been to abandon any hope of retaining much of a legal right to the final work, and instead using iBooks as free inducement for people to use the attached not-free store for distribution. Instead, Apple tries to lay a property claim to the final outputted work — the only that includes as its primary component the creative work of the author in designing it! That puts them on the wrong side of the Copyright Act: they grant authors a nonexclusive license to use their program (which is fine), but then tried to claim an exclusive license in the final work created (which is not fine without a signed, written transfer).

      • http://www.facebook.com/people/Eric-Desnoyers/710037410 Eric Desnoyers

        Ok, I see what you’re saying. What’s not clear to me, and was the point of my previous post, is if Apple can use or not the iBooks Author EULA to stop media created with it from being found on the competition’s platforms.

        If they can, then I can understand the need for such a clause. Maybe their phrasing leaves a lot to be desired, but anyone can understand that they offer this free software to add value to their computing environment.

        On the other hand, if said EULA can’t be used for this purpose, then Apple is going after the authors themselves, which can still be understandable (free software, other options available), but makes them look like a greedy corporation.

    • Site Administrator

      I think this would be a problem. For example, Acrobat reader for Windows (and other platforms) allows you to open PDF files. iBooks author allows you to make PDF files. First of all, it’s not Adobe’s job to worry about what some Apple user does with his software, and no court is going to make it their job. Secondly, Adobe would have no technical way to know that a certain PDF file should (according to Apple) be allowed to be distributed.

      Also, even if the distributor broke the EULA by distributing works made by iBooks for a profit (and said EULA was enforceable), the person who distributed the files would be culpable. The person who receives and views the file is not bound by the EULA, and almost certainly doesn’t know about it. (The same, of course, applies to the makers of eBook reading software).

  • Guest

    Max, I noticed the ABA Journal’s “Blawgwhisperer” talked about your Apple EULA post. Next to it was a huge advertisement for the ABA Blawg 100. It’s amusing that Litigation and Trial is significant enough for all of this attention and to be listed on the blawgwhisperer, but isn’t listed as a top 100 blog by that very same journal. Just more evidence that the ABA Journal blawg list is a joke/scam, and it makes me wonder what other great blogs it’s missing. Most of the blogs it listed aren’t up to much these days. It’s sad, really.

  • Site Administrator

    I agree that what Apple is trying to do here is reprehensible, and that EULAs in general should not be enforceable. I think Apple has the right to charge whatever they want, including “free” for their software, but they don’t have the right to expect works created with that software can be controlled. Even Microsoft hasn’t tried to propose or enforce such terms.

    But the paranoia about China? It seems a lot of people have no idea about what really goes on in China, and so spout misinformation instead. Are the wages in China lower than in the US for manufacturing work? Yes. Is the legal working age lower? Yes. Are working conditions worse? Sometimes. Then again, China is still developing, and developing countries have a different set of priorities than developed ones, and the cost of living in China is lower. What’s more, the average wage there has risen markedly over the past few years. As China matures, their safety standards and wages will catch up, as has happened in other countries – however they need their export economy to make that happen. It’s somewhat disingenuous to attempt to take social standards accepted in one culture and try to apply them to a totally different culture.

    • http://www.litigationandtrial.com/ Max Kennerly

      What’s wrong with American consumers wanting products made according to the “social standards accepted in [their] culture?” Further, there are numerous reports of Foxconn violating Chinese labor laws as well, which would sink your “social standards” argument.

  • Musicbizmoses

    This is a great discussion with very smart points on both sides. Im hoping that one or more of you could address my theory of why all this is kinda mute.

    It seems that most here agree that the Apple contract is not a conveyance of the copyright but rather a hybrid type of exclusive license. If that is true, then the right to create derivative works still stays with the author.

    So then, can’t the author give a free version to Apple and then export the file to a different software and then create a slightly derivative work say, one with illustrations and expanded chapters and distribute that elsewhere free of Apple’s yoke?

  • http://www.litigationandtrial.com/ Max Kennerly

    A “slightly derivative work” constitutes infringement. Even if we assume Apple’s claimed right is solely to the iBooks-formatted version, then other similar works may constitute infringement. That’s one of the reasons why the Copyright Act is so strict about transfers of ownership, to avoid these problems.

    • Musicbizmoses

      But “slightly” is a subjective standard that must be resolved by trial. For Apple to prove infringment they would have to sue the author and i dont see them doing that over something like this. If they did they can kiss all that positive glowing PR goodby.

      Besides, adding photos, illistratinsnc additional text i dont think would be considered by a federal judge as “slightly” derivitve. It would be enterily derivirtve, just as a new edition of an exisiting book is a derviitive work.

      However are ther non-compeate clasues implied in Apples aggrement that could sue for?

      • http://www.litigationandtrial.com/ Max Kennerly

        Who wants to even risk getting sued by Apple? If you’re not, say, Google, then Apple suing you is likely enough to make you cave immediately. The point is that Apple shouldn’t be trying for this control anyway, and, indeed, is prohibited by the Copyright Act from obtaining it.

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    • Musicbizmoses

      One more thought: if an author tried this, they should send Apple a notice. If Apple does not object are they giving tacet aproval? If they do object and the author published anyway and Apple does not seek an injuction within say, a few months, again is Apple in essence giving tacet aproval?

      • http://www.litigationandtrial.com/ Max Kennerly

        Copyright owners and licensees don’t have a duty to respond to any notices, although that can limit damages in eventual lawsuits if the copyright owner doesn’t tell them to stop. Their claims remain the same, though.

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  • http://stephenrice.eu Stephen Rice

    Is it actually a copyright issue at all? The limit was where you can sell the finished work, not who owns it. It seems like a form of restrictive covenant to me.

    The non-digital version would be a blacksmith letting you use their special anvil to make a kind of knife as long as you only sell the knife you made in their shop. They’re not saying they own the design (IP) of your knife because it was made on their anvil but they are limiting your sales.

    • http://www.litigationandtrial.com/ Max Kennerly

      As explained in the post, a contractual agreement limiting an author from using their work except in one fashion is an exclusive license, which is deemed a transfer of copyright ownership by the Copyright Act, and so all the same restrictions apply as to formal transfers of ownership.