Opinion ID: 699542
Heading Depth: 2
Heading Rank: 1

Heading: The Negotiations and Agreement

Text: 3 The ensuing negotiations between TOR and Saban concerned both TOR's immediate publication of six titles and the contours of a long-term relationship between the parties. The present dispute concerns that long-term relationship and TOR's right to publish additional children's books based on Saban properties. However, because Saban claims that the negotiations and agreement as to the first six titles informs the interpretation of provisions governing additional publications, we will review the negotiations and view the contract as a whole. 4 The negotiations principally involved four individuals: L. Spencer Humphrey, a consultant for Saban who initially suggested TOR as a potential publisher; William Josey, Saban's general counsel; Kathleen Doherty, director of educational sales at TOR and the individual in charge of its children's book publishing; and Lotte Meister, associate general counsel for both TOR and its corporate parent, St. Martin's Press. Neither Josey nor Meister, the two attorneys involved, had ever previously negotiated a licensing agreement for publication rights to children's books. 5 Children's books are published in a variety of formats, shapes, sizes, and reading levels, each designed to appeal to different segments of the juvenile market. More popular properties are licensed in several formats, while less popular properties may be published in a single format. Where multiple formats are used, it is not uncommon for an author to license rights to more than one publisher, with each publishing only one or two formats. 6 One format of relevance to the present dispute is the so-called 8 X 8, a term of art for a children's book that measures 8' X 8' and includes many illustrations and limited text. In seeking a publisher, Saban had circulated a brochure that was accompanied by a sample that was an 8 X 8 entitled The Rollicking Adventures of Robin Hood. 7 The negotiating process involved the marking up of a TOR form contract. The final contract (the Agreement) thus contains numerous black-outs, wholesale deletions, amendments typed in the margin, and riders. The contract authorized immediate publication by TOR of six books based on Saban properties, and the Agreement's terms primarily concern the rights and obligations of the parties with respect to these six titles. The Agreement does not use the term 8 X 8, nor does it prescribe a particular format for the six books other than that they will, according to Paragraph 3(a), contain approximately 2500 words. Indeed, Paragraph 13 provides that publication of the six works shall be in a format determined by [TOR] acting in its sole discretion. 8 The Agreement also gives TOR exclusive English language book publication and subsidiary rights to the Work, meaning the six Saban videos or cartoon series. Under Paragraph 9(e), Saban thus agrees not to authorize ... the publication in any printed form of a novelization, adaptation or other version of either the Work or a work in another medium based on the Work. However, under a rider to Paragraph 9(e), Saban reserves the right to publish or license the publishing rights to comic books, coloring books and activity books based on the characters and/or stories on which the Work is based. Redundantly, Paragraph 21 forbids Saban from authorizing the publication of any book based on any of the characters or stories contained in the Work (except as provided in Rider to Paragraph 9(e)). 9 The present dispute arose over the portion of the Agreement that contemplates the possibility of TOR's future publication of additional books based on Saban properties. The Agreement replaced TOR's standard option paragraph--Paragraph 16--with a rider (the Rider) that, both parties agree, was the subject of negotiation. Because of its importance, we set forth its full text in the margin. 1 10 In essence, the Rider gives TOR a right of first refusal over the publication of additional juvenile story books based on Saban properties. If TOR chooses, after an invitation from Saban, to publish a juvenile story book of approximately 2,500 words, the terms of the Agreement, including those permitting publication in any format (Paragraph 13), and granting exclusive rights to characters and stories (Paragraphs 9(e) (with rider) and 21), govern that publication. The additional juvenile story books to be published by TOR would, in short, become the Work under the Agreement. The record indicates that the term juvenile picture books was originally used in the Rider. This term was replaced by additional juvenile story books in a draft of the Rider submitted by Josey, Saban's general counsel.