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iBooks Author Requires Selling Original Books Through iBookstore, Says Apple's Controversial Contract

Apple Ibooks Author Law Legal Illegal

First Posted: 01/22/2012 8:52 am Updated: 02/ 3/2012 4:15 pm

UPDATE, January 3: With its newest release of iBooks, Apple has updated its End User License Agreement and clarified some of the more controversial language in the contract. Authors now own the content outright, but if the author chooses to distribute his or her work in the .ibooks format, he or she can only sell through the Apple store. Via ZDNet, here is the old language:

If you charge a fee for any book or other work you generate using this software (a “Work”), you may only sell or distribute such Work through Apple (e.g., through the iBookstore) and such distribution will be subject to a separate agreement with Apple.

And the new language:

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. This restriction does not apply to the content of such works when distributed in a form that does not include files in the .ibooks format.

The simple version: If you export your content in another format -- .epub, for example -- you can sell it anywhere you'd like. If you choose to save your work in .ibooks, you will be restricted to the Apple store.

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PREVIOUSLY: At its big media event in New York City on Thursday morning, Apple introduced iBooks Author, a free new application in the iTunes store that allows users to create eBooks using Apple's editing tools.

Though the software is getting largely positive reviews for its ease of use and its free download cost, iBooks Author has also brewed a controversy over what some view as an overly audacious user agreement, one that asks the user to agree that any original books created with it be sold only in Apple's iBookstore.

This, of course, means that Apple gets a cut from the profits of the content the user created with its (otherwise free) software, a reasonable desire for any profit-seeking company. But the severity of the language -- the ironclad stipulation that iBooks Author-created content only be sold in the iBookstore and nowhere else -- has raised the ire of several tech commentators, who find the terms insultingly restrictive. Dan Wineman of Venomous Porridge compares Apple's iBookstore requirement to Microsoft's attempting to restrict where people can sell documents created on Word.

The offending clause from the end-user license agreement (EULA) that one must agree to before using iBooks Author, first found by Wineman, states twice that anyone using the program is locked into selling in the iBookstore. First it is stated here:

IMPORTANT NOTE: If you charge a fee for any book or other work you generate using this software (a “Work”), you may only sell or distribute such Work through Apple (e.g., through the iBookstore) and such distribution will be subject to a separate agreement with Apple.

And the language appears again here:

(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 is unambiguously requiring that if someone creates any content in iBooks Author, he or she can sell it only in its own iBookstore. This binding condition has many wondering, Is this contract legal? Is it enforceable? Would Apple enforce it? And if Apple did enforce it, would the contract hold up to scrutiny in court?

Maybe -- and maybe not. Legal experts agree that none of the objections to this controversial contract would result in slam-dunk victories for Apple in court. But because we are largely sailing in uncharted waters with this software contract, it just might take a courtroom confrontation to say for sure.

Here is what's being argued and what might render the contract illegal: Apple's EULA is what's called a contract of adhesion, which is a kind of contract written by a more powerful party that requires the signing party to explicitly agree to all parts of the contract, with no opportunity for negotiation. (Think about your contract with cell phone carrier or cable company.)

There is nothing inherently illegal about contracts of adhesion; but for these one-sided contracts to hold up in court, there are essentially two tests they must pass: First, the user who signs the contract must understand and be presented with the terms of the contract in a clear, reasonable, unobstructed way; and second, the terms must pass something called the "doctrine of unconscionability," which means that a judge must not feel that he or she is being scummy or doing anything morally objectionable in enforcing the contract.

It is not clear whether Apple's EULA passes either of these tests. Professor Bob Hillman of Cornell Law School raised doubts about the way the contract is presented, writing in an email to HuffPost that because the user must browse around to separate screens to find all the terms, it "is very controversial as to whether an enforceable contract is formed." (He did note, however, "Some courts have enforced such contracts.")

And Hillman's unease with the presentation of the contract doesn't end there:

"I have qualms about the term that says 'you will be required to enter a separate agreement.' This sounds to me like an end run around disclosing terms before a user has committed to a a contract. The user is stuck, then Apple can dictate terms in a separate agreement before the user can distribute. I doubt the terms in the separate agreement would be enforceable."

Michael Carroll of the American University Law School, told HuffPost in a phone interview that although he believes the contract passes the presentation test, he is not as sure it would pass unconscionability:

"Basically, unconscionability says that if you want the court to enforce your agreement -- generally, we enforce a contract even if it's a bad deal -- but at their outer limits, there are terms that are so unfair where the court says I'm not doing justice if I enforce this law," he said. "A court is not going to enforce the terms of a contract if it would shock the conscience if it enforced the term."

"More and more, courts are uncomfortable about declaring contract terms to be unfair," Carroll added. "If someone had a good reason for wanting to sell their book somewhere other than the iBookstore, and Apple actually went after them ... then there would be a close case."

There are a couple things to consider about a potential legal skirmish, Carroll said. First, it is not necessarily incumbent upon the author to sue for the right to sell books elsewhere; it could just be that authors will quietly export their iBooks in a different file format, sell their works as they please and fly under Apple's too-large radar.

And Carroll isn't totally convinced that Apple will find it worthwhile to allocate resources -- the time, lawyers and money -- to finding and prosecuting small-scale authors who have used iBooks Author, especially since copyright cases are difficult to prove and breach of contract cases don't bring much monetary award.

Plus there's the potential public relations disaster of attacking an artist in court. Carroll predicted that it would take a monster hit created within iBooks that's sold elsewhere to put the Apple law machine in motion, if that.

"It might get tested in the marketplace, with authors just going their own ways, and the EULA only gets tested if there's a blockbuster and then Apple goes after them," Caroll said.

Second, for the court to rule that Apple is being unconscionable in forcing its users to sell through only the iBookstore, the case has to raise some kind of sympathy in the presiding judge, he said. An author suing Apple simply for the right to sell his or her novel on Amazon would not make a very sympathetic plaintiff. But someone suing Apple for the right to sell original work at a charity event, with all proceeds going to the cause, would appear much more sympathetic and a judge would feel much worse about ordering the contract upheld. The judge would essentially have to order that all proceeds from a book sale be taken from a charity and given to Apple -- not so conscionable.

This type of thing would probably give the judge moral pause, and one would think it would give Apple pause as well. Again, Apple probably does not want the publicity of being a company that wins a courtroom battle ending with money taken from a charity and put in its (already huge) bank account.

Of course, Apple might never hunt down those authors who run afoul of its EULA, and an author might never bring a case against Apple to court. Authors might just go their own ways, and Apple might turn a blind eye to the contract breaking.

For now, until either side takes action, there is a legal conundrum at the center of Apple's iBooks Author -- one that has many different interests, viewpoints and judicial terms interweaving, a conundrum so intriguing that one might be tempted to write an e-Book about it.

Apple did not return a call for comment before publication.

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