July 19 (Bloomberg) -- The relationship between novelists and romance-book publisher Harlequin Enterprises has soured over royalty fee contracts for electronic books.
Three authors sued Toronto-based Harlequin Enterprises, the world’s largest publisher of romance novels, today in federal court in Manhattan, alleging the company has exploited a technicality in their contracts to pay them 21 percent less in royalties.
At issue is whether Harlequin Enterprises, a unit of newspaper and book publisher Torstar Corp., is the publisher of the books, or whether it has licensed its Fribourg, Switzerland-based subsidiary, Harlequin Switzerland, to distribute the e-books, according to the complaint.
The agreement with Harlequin specifies that the authors are entitled to 50 percent of the publisher’s net receipts from both the e-books and the hard copies, according to the complaint. The publisher receives 50 percent of proceeds from the sales, meaning the authors would receive 25 percent of the cover price in royalties, according to the complaint.
Instead, the writers alleged, Harlequin claims to have licensed the publishing rights to Harlequin Switzerland, entitling the writers to only 50 percent of what the Swiss company receives -- 6 to 8 percent, which reduces the writers’ fee to 3 to 4 percent for each book.
The writers have asked the court to certify a class action on behalf of what they estimate is 1,000 similarly affected authors worldwide.
“Harlequin Enterprises’ domination and control of Harlequin Switzerland has been used to commit wrongs and unjust acts that have injured plaintiffs and the other class members,” the authors said in the complaint.
David B. Wolf, the attorney representing the authors, declined to comment on the suit or give an estimated amount of lost royalties.
“Our authors have been recompensed fairly and properly for their work, and we will be defending ourselves vigorously,” Donna Hayes, publisher and chief executive officer of Harlequin, said in a statement.
Harlequin publishes more than 110 titles monthly and has more than 1,200 authors around the world, it said in its statement.
The case is Barbara Keiler v. Harlequin Enterprises Limited, 12cv5558, U.S. District Court, Southern District of New York (Manhattan).
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