Random House, Inc. v. Rosetta Books LLC, 283 F.3d 490, 62 U.S.P.Q.2d (BNA) 1063 (2d Cir. 2002) (full-text).
Random House had sued Rosetta Books, claiming that the defendant violated its right in publishing the digital editions of certain books. Authors William Styron, Kurt Vonnegut and Robert B. Parker had granted Random House exclusive licenses to publish their works "in book form." They then granted Rosetta Books the right to publish digital editions of their books (commonly called “eBooks”). The trial court had refused Random House’s request for a preliminary injunction and Random House appealed.
Appellate Court Proceedings
In a per curiam decision, the Court affirmed the denial of Random House's motion for a preliminary injunction. The Court acknowledged that "there is some appeal to [Random House's] argument that an 'eBook' . . . is simply a 'form' of a book, and therefore within the coverage of [those] licenses." But, the court added, "the law of New York, which determines the scope of Random House's contracts, has arguably adopted a restrictive view of the kinds of 'new uses' to which an exclusive license may apply when the contracting parties do not expressly provide for coverage of such future forms."
Moreover, "determining whether the licenses here in issue extend to eBooks depends on fact-finding regarding . . . the 'evolving' technical processes and uses of an eBook, and the reasonable expectations of the contracting parties 'cognizant of the customs, practices, usages and terminology as generally understood in the . . .trade or business' at the time of contracting." For these reasons, " . . . we cannot say the district court abused its discretion in the preliminary way it resolved these mixed questions of law and fact."
In addition, ". . . the balance of hardships tips . . . in [Rosetta Books'] favor. For while Random House expresses fears about harm to its goodwill if Rosetta is allowed to proceed with its sale of eBooks, Rosetta, whose entire business is based on the sale of eBooks, raises a reasonable concern that the proposed preliminary injunction will put it out of business or at least eliminate its business as to all authors who have executed similar contracts. As the district court found, such legitimate concerns outweigh any potential hardships to Random House, which, if it ultimately prevails on the merits, can recover money damages for any lost sales."