Sometimes even standard “boring” language in a legal contract can become a point of contention in litigation.
Every legal contract – whether it’s an intellectual property transaction or a real estate deal – has some contract terms that are subject to extensive negotiation and other terms that are simply standard language that “everyone” uses.
Such standard language is often called “boilerplate,” harking back to printers in the late 19th century who would put texts that were frequently reprinted on stainless steel plates instead of the less durable lead. The steel plates were called “boilerplate,” after the steel identification plates bolted on to boilers, and the name has come to be used for any text that is not changed frequently.
Such boilerplate serves a useful purpose in crafting contracts – it can save lawyers on both sides time if they can agree on standard terminology and clauses without having to debate each small item on its own.
Such language often appears at the end of a contract and can include things such as notice provisions, choice of law, choice of venue, etc. In some cases the “substance” may be subject to negotiation, such as which state or country’s laws govern the contract, but the language describing it is pretty standard.
An important “behind the scenes” task that lawyers do on behalf of their clients is staying up to date on the “state of the art” in such standard language, because even standard, widely accepted language is subject to periodic challenge and change.
For example, a recent court case in the US District Court for the Southern District of New York, HarperCollins Publishers LLC v. Open Road Integrated Media LLP, saw a challenge to a piece of “boilerplate” that has been in use since at least 1967 and is still in use today.
In 1971 author Jean George signed a publishing contract with Harper Collins for her well-known children’s book “Julie of the Wolves.” Contracts that convey the right to use copyrighted material specify how the material may be used.
The contract stipulated that Harper Collins has the exclusive right to publish the material “in book form.” It also stated that Harper Collins had the right to issue licenses (with the author’s permission) to use the material “in storage and retrieval and information systems, and/or whether through computer, computer-stored, mechanical or other electronic means now known or hereafter invented.”
Nearly 40 years after the book was first published, Open Road approached the author about publishing an eBook version – offering a 50% royalty. George contacted Harper Collins, but they were only willing to pay a 25% royalty, so George went with Open Road (with an indemnification clause in the contract should Harper Collins protest). Open Road claimed that the language in the contract did not include eBook publication.
In a ruling on a motion for summary judgment the judge, Naomi Reice Buchwald, sided with Harper Collins. The contract did not specifically say “print,” so “book form” could be construed to include an eBook, and the “boilerplate language” of “or other electronic means now known or hereafter invented” was intended to cover exactly such an eventuality as eBooks and it stands.
In this case, the court challenge affirmed the “boilerplate” language. The potential applications of this specific boilerplate language are much broader than book publishing contracts. Many websites and apps make use of copyrighted material, either words or pictures. If companies using copyrighted material want to make sure they can continue to use it other ways on other platforms not yet anticipated they would be well served to make sure the contract includes permission to use the material not just with today’s technology, but with those “electronic means now known or hereafter invented.” Of course, if you are the party granting the rights you might NOT want to grant such broad permission – you may prefer to impose some limits; that’s why it’s important to review ALL of the language in a contract. One shouldn’t skip over the “fine print” at the end of a contract because it looks like standard “boilerplate” language. The right approach is to make sure the entire contract reflects the circumstances of your company and the intentions behind the transaction and protects your interests – current and future.
At Shaked & Co. we pay close attention to the evolution of not just broad legal concepts, but also to the details represented by evolving case law on “boilerplate” standard language. Sometime millions of dollars can ride on the “fine print.”
