Tuesday, April 19, 2011

No Competing Works: The Third Nastiest Clause in Book Publishing Agreements

Do you remember Harry Lorayne? If you ever met him, odds are he would remember you.  Lorayne is a memory-training specialist and performer who authored How To Develop a Super Power Memory.  He is also the poster child for the perils of the "no competing works" clause in publishing contracts.

In 1956, Lorayne signed a contract with publisher Frederick Fell for Super Power Memory, which contained a clause that prohibited Lorayne from "participating in the publication of any similar work which would tend to interfere with or injure sales of the book under contract."  Eighteen years later, when Super Power Memory was still in print, Lorayne wrote another book on memory (together with, improbably enough, basketball star Jerry Lucas) entitled The Memory Book, which was published with great success by Stein & Day.  Fell sued -- archly accusing Lorayne of "an apparent moment of forgetfulness" in disregarding the "no competing works" clause.  

A preliminary decision in the Lorayne case is reported here (but it doesn't really tell you much about the contractual issues).  I do not know how the Lorayne case was ultimately resolved; I do know that The Memory Book continued to be sold without interruption.  But, to me, the fundamental question in the case has always been: what in the world would Harry Lorayne ever write about except memory training?  If a court were to enforce a broad "no competing works" clause against him, it would essentially be saying that Lorayne could never write another book as long as Super Power Memory was available in any edition.

Specialists Beware

Like Harry Lorayne, many academicians and textbook writers spend their entire professional lives researching and writing about the same general subject matter.  Take, for example, a professor who authors a textbook on mycology or evolutionary psychology early in her career.  Strictly construed, a "no competing works" clause might mandate that she forever remain a one-book author.  Fortunately, as with covenants not to compete, the courts tend to construe such clauses narrowly, seeking to limit them in time, subject matter, or geographical scope so as not to interfere with an expert's ability to practice her profession and earn a living.

Consider the case of the late Justin Wilson, who was the author of Louisiana Outdoor Cookin'.   When Wilson later tried to publish a book with another publisher entitled Homegrown Louisiana Cookin', his first publisher sued, arguing that the "no competing works" clause barred such a sequel.  Surely, if you are a Cajun chef, living and working in Louisiana, it is unsurprising that you might aspire to write more than one book on Louisiana cookin'.  And a Louisiana court, ruled that Wilson had the right to do so, despite the contractual prohibition.  The judge's decision noted that "non-competition clauses are not favored in the law and are strictly construed against the person attempting to limit the competition."  Because the clause was not limited to a specific time period or restricted area, the non-compete was held to be "too vague and broad to be enforceable."

The essential legal treatise Perle & Williams on Publishing Law mentions another case in California is which the author went on the warpath and sued his publisher, arguing that the "no competing works" clause was an unreasonable restraint on trade in violation of the antitrust laws. (Perle and Williams don't report the outcome; if you happen to know, please send me an email.)

A Typical Clause

To be fair, a publisher is entitled to be protected against the author simply repackaging his book and publishing it a second time with another publisher. But many "no competing works" clauses go farther than they need to, as in this fairly typical example
During the term of this agreement the Author shall not, without prior written consent of the Publisher, participate in the publication of or be otherwise connnected with any work that might, in the Publisher's opinion, directly or indirectly interfere with or diminish the sale of the Work.
This provision is particularly aggressive because (1) it restricts for an indefinite period of time any "participation" in a conflicting work, even as a co-author or contributor; (2) it introduces the vague notion of "indirect" interference with the sale of a work; (3) it is not limited in the types of competing works (e.g., book-length) that it prohibits; and (4) the test of whether book two "interferes" with the sales of book one is subjective, turning entirely on the "opinion" of the publisher.

In contracts with academic writers, it is fairly common for publishers to include an additional clause along these lines:
The Author may, however, draw on and refer to material contained in the Work in preparing articles for publication in scholarly and professional journals and papers for delivery at professional meetings, provided that credit is given to the Work and the Publisher.
Helpful, but it really doesn't give you any protection when it comes to your next full-length work.

A Better Alternative

With works of non-fiction in particular, publishers will often refuse to eliminate the "no competing works" clause entirely.  However, when possible, you should at least try to negotiate a more even-handed clause. The Writer's Legal Guide recommends that the contract describe the type of successor work you are prohibited from writing
as specifically as possible as to subject matter, market, and format. Do not give the publisher the discretion to decide whether a work will compete with the contracted book -- limit the restriction to works that will actually compete with the primary work.
For example, if you are writing a textbook, you might try to limit the non-compete to another textbook on the identical subject directed to a similar academic level (e.g., high school biology students), clearly reserving the right to publish scholarly monographs or works for a general audience on the same subject.  You could also seek to make clear that a competing "work" must be book-length, and that the clause therefore has no application to articles, etc.  A somewhat better clause might look like this:
For a period of four years, Author shall not publish any book-length work on the same subject as the Work, namely [inserting here a detailed description of the "subject"], directed to the same audience, that will diminish sales of the Work.
And, if you have an idea for a subsequent work on a related subject, you can attempt to expressly carve out that work from the scope of the "no competing works" clause, e.g.:
Publisher agrees that Author may continue to write and publish books and other works dealing with mycology and may expand chapters from the Work to new full-length works.  For the avoidance of doubt, this clause is not intended to prohibit Author's publication of such works.
Of course, whether you can obtain changes of this kind will depend upon your bargaining power.  If you have an agent, she can be a godsend, advising you what's realistic and achievable under your particular circumstances.  For many authors, the language of the "no competing works" clause may not be a deal breaker, but for some specialists it ought to be.

The "No-Competing Works" Clause and Works of Fiction

The "no competing works" clause is primarily a concern in contracts for works of non-fiction. Ordinarily two novels by the same author, published by two different publishers, will not interfere with each other's sales. Neverthless, in rare instances, publishers have taken the dubious position that the "no competing works" clause prohibits re-use of the characters from a novel in a sequel. The "no competing works" clause has little genuine commercial application to fiction, and it is not unreasonable to ask that it be stricken entirely from a contract for a novel or a book of short stories.  At the very least, the publisher should be willing to clarify that the clause does not prohibit you from publishing sequels or re-purposing characters in other works.

What If Your Contract Does Not Contain a "No Competing Works" Clause?

If you do not have a "no competing works" clause in your publishing contract, then you are ordinarily free to write a book on the same topic for another publisher. That's the lesson of Wolf v. Illustrated World Encyclopedia.  But watch out for the "option clause," which may require you to offer your next book to your old publisher.  And remember that, if you granted exclusive publishing rights to Publisher X, it became an owner of a "copyright interest" in the work.  As a result, Publisher X could sue you and your new publisher for copyright infringement, if you cannibalize a meaningful amount of text from the book you published with Publisher X.  Yes, you can be sued for infringing a copyright in a work that you yourself created; do-it-yourself infringement was alleged in the case involving John Fogerty of Creedence Clearwater fame and (more or less) in the arbitration involving The Hunt for Red October, described in this earlier post.

Can Your Publisher Issue Another Work that Competes with Yours?

What about the flip side?  Can a book publisher publish two or more books on the same subject by different authors?  The answer is:  ordinarily yes.  For example, Harry Lorayne's publisher could probably publish two or even twenty books on memory without breaching its duties to Lorayne, unless, as described in Van Valkenburgh v. Hayden Publishing, the publisher promised to use its best efforts to promote one author's book and allegedly did not act in good faith in publishing books by other authors on the same topic.  Suffice it to say that publishers will seldom sign a "best efforts" clause.

More Resources

I suggested that the "no competing works" clause may be the third "nastiest" clauses in a book publishing agreement.  What are number one and number two?  Depending upon the phrasing, of course, they are often the option clause and the grant of rights clause.  More about these extremely important terms in later posts.

1 comment:

  1. Great article. The non-complete clause is, alas, pretty standard in fiction, too. And, in fact, I have bumped up against that clause myself.