The Decision that started it all...
Now,let's look at this quote...
"Curtner [the attorney for the publisher] said Albert stepped over the line by signing contracts and obtaining copyrights under the phony name."
This guy is kidding, right? He's an attorney, dealing with the industry, and he's THAT clueless? Let's start at the beginning.
I see two sides to this story. On one hand, she wrote what was supposed to be autobiographical information that is obviously untrue. IN THAT MANNER, she did defraud the company that believed the male persona was real. However skillfully done, she perpetrated a lie. The court was right in its decision, on that point of law, IMO.
However, the attorney that stated she'd gone over the line by signing CONTRACTS and getting COPYRIGHTS in a pen name is clearly not versed in what the industry regularly supports, surprising considering the fact that he's representing an industry member.
If you read the copyright site, it is perfectly permissible to get copyrights in the pen name. In fact, more than a few authors out there do it...and for good reasons.
It's also permissible, if you have followed whatever guidelines your locality has for either a name change or legal alias...or if you have incorporated or made the pen name an LLC, to sign contracts AS the pen name. If she hadn't done any of that, you're on shaky ground, admittedly. My contracts tend to say, LEGAL NAME writing as PEN NAME, and that's the way I prefer it, but it's not illegal to use a pen name on contracts, if you've jumped through the right legal hoops.
Neither is it illegal to have a bank account that lists your pen name and to sign checks/money orders written to your pen name without ever affixing your legal name to it. I do it, because I've taken the proper steps to do so. I still get ROYALTY checks in my legal name, mainly because I choose to do so. I trust my publishers with my legal name.
In fact, even the USPS allows you to get a PO Box in a pen name.
In either case, USPS or bank, all you have to do is prove that you are both names. That's not hard to do. The USPS calls this sort of thing "a legal alias taken not for nefarious means." The bank calls it "a business name." Either way, you can receive mail addressed to the pen name at a PO Box and sign checks/money orders with the pen name and deposit them to your account, further protecting your legal identity.
Some people mistakenly believe that a pen name has no legal status, beause it doesn't have a SS#. That is not correct. You see, though you might choose to get an EIN for an incorporated or LLC pen name, and the bank will take that and give you a business account, even someone without that can list the pen name as a sole proprietorship on a bank account, using their own SS#. Banks may be rigid in their dealings, but they are usually so only when you are withholding information from them. In the case of a pen name, as long as they have your legal name and SS#, they do not care what business names you attach to the account. They have all they need to track you, in the case you do perpetrate fraud.
It's not illegal to have impersonators of the opposite sex pen name, either. A gentleman I met at NCP related that he'd been published in NY for many years (in romance) and had been forced to take a female pen name there. When signings were arranged, he would accompany his wife, who would sign books in the guise of the pen name author. He'd be on hand to field questions, because he was in the guise of the supportive husband, author's biggest fan. You see how brilliant that was? Now, in indie/e, he has to decide whether to use the pen name he'd established in NY, because it has an audience, or to use his real name and "come out of the closet" about the fact that he's been the female pen name all these years. It's a thrilling time for him. The only difference? In his case, the publisher knew he was man, writing as a woman. It was their choice to hide it, not his.
I don't think this decision will limit the author's right to use a pen name, in the least, since the case was not about whether or not one can use a pen name but on the legality of fraudulently presenting autobiographical materials to a publisher. However, I do think authors should have their affairs in order, if they are going to sign a contract in a pen name. And, I don't think they should LIE to the publisher about the nature of the book.
I will note here that I'm not including James Frey and A Million Little Pieces here. From what I've heard, he told the publisher it was fictionalized on the truth, and they wanted to call it nonfiction. He might have been complicit and an idiot to allow them to do it, but he'd gone to THEM with the truth, from what I've heard, which at least means the publisher did this will full knowledge of what they were doing.
Happy pen naming!