Showing posts with label non-compete clause. Show all posts
Showing posts with label non-compete clause. Show all posts

Sunday, April 20, 2014

Toward a Fair Non-Compete Clause

@jamesscottbell

Recently, a friend sent me the text of a non-compete clause to have a look at. It was from the contract of a New York publishing company. My gob, as they say, was smacked. If there was a contest for the most one-sided non-compete clause ever, this would take the crown.

I say this in love. Truly. I love traditional publishing and want it to survive. But contracts that contain clauses like this one are not going to aid the old cause.

Due to confidentiality I am not at liberty to reproduce the text verbatim, but I can give you the gist:

The clause prohibits the author from publishing "material" that is "similar" to the Work. So what if your crime novel is coming out from Publisher, and you want to self-publish a mystery short story? Or sell it to Alfred Hitchcock's Mystery Magazine?

Too bad. Because a short story is "material." And a mystery usually has a crime in it, so it's "similar."

Or suppose you've had the foresight to reserve audio rights. You have a mellifluous voice, and spend twenty hours recording the audio version of your book for ACX, Amazon's platform for indie audio works.

No go, because the clause in question prohibits the author from "exploiting" any reserved rights that may "conflict" with sale of the book. And who gets to decide if there is such a conflict? Not you.

And there isn't even language in the clause suggesting the author might seek the "prior written consent" of Publisher! Message: Don't even ask, dude.

Further, how long do all these restrictions last? There is no time limit (though the overall agreement is for "life of copyright.") Which leads me to believe that the wet-behind-the-ears law grad who drafted this needs to be flogged with a hardcover copy of Calamari and Perillo on Contracts. This clause is clearly unenforceable without a time limit. Courts will not allow a company to tie up someone's economic future ad infinitum.

But the burden of challenging the clause is, of course, on the author. Or, should the author go ahead and publish a work the publisher deems to be "competing," the publisher may task some associate at their retained law firm to put down his coffee and make life difficult for the author.

Who is going to be the big dog in that fight? Let's compare the status of our respective parties:

Publisher = deep pockets.

Author = pockets with holes.

Now, before I move on, let me emphasize that the traditional publisher absolutely deserves to have a fair non-compete clause in the contract. Here's why.

The publisher takes a risk with an author, puts up capital (in the form of advance and production costs) with the hope of return. A significant part of the return is from bookstores (remember those?) Bookstores do not want to stock competing titles from the same author during the same season.

Thus, the standard non-compete was to keep John Grisham from publishing The Firm with one publisher and The Pelican Brief with another, and having them both come out at the same time. The books would "cannibalize" each other, so the saying goes. One, or more likely both, publishers would be harmed by this.

Here's another reason publishers need the clause. Suppose Publisher is coming out with your debut thriller, and pricing it as a $14.99 trade paperback, and a $9.99 ebook. But, at the same time, you bring out a self-published thriller and price it at $3.99 in digital and the same $14.99 in POD. And then you unleash your social media marketing efforts to emphasize the book that's brining you more money per unit (i.e., your self-pubbed effort).

That's not cricket. You are hurting Publisher's investment in you. That's why the non-compete clause exists.

But by now that clause should have morphed into something more equitable than the specimen I reviewed. Publishers have to realize that the times are not a-changin'––they're a-changed. Permanently. They should not play hardball with contracts as if it's still 1995.

Authors (and agents) should not accede to a "standard" non-compete clause. One like this should be a deal breaker. 

Here's an idea: negotiate! 

So what is a fair non-compete clause? Very simple: a time-limited clause that specifically defines the type of material covered. For example:

For one year from the date of publication of the Work, Author will not publish or authorize to be published, in either print or digital media, any work greater than thirty-thousand words in the thriller, mystery or crime genres.

This leaves open the publishing of short-form work which, I might add, the publisher should encourage. This is how the writer attracts more readers, many of whom will then seek out the author's trad-published books. It's a classic win-win.

In this era of suspicion, vituperation and even paranoia, here is a way for publishers and authors to actually do what is in their mutual interest.

Imagine that.