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Hidden Perils of Publishing Contracts

Co-author Gerald M. Levine

There are a number of hidden perils of publishing contracts that are essentially terms to control the licensed property. Authors should not fixate on the myth of “standard” terms, but there are terms that publishers are adamant about that may have to be adjusted to accommodate particular circumstances. One such term is the non-competition clause.  It means what the publisher says it means when the term is dusted off and invoked. Here is a sample provision from a “big-6 ” publisher:

COMPETITIVE WORKS

(a) The Author will not authorize or arrange for the publication, distribution or sale in the Exclusive Territory, otherwise than by the Publisher, of any work by the Author (or anyone who receives an author’s credit on the Work) that will directly compete with the work or diminish the value of any rights granted to the Publisher by this Agreement where such publication, distribution or sale will take place at any time during the term of this Agreement.

This provision has been in the news and is worth reflecting on.  The New York Times reported recently that “Amazon Signs Up Authors, Writing Publishers Out of Deal” (David Streitfeld). This is what Mr. Streitfeld noted:

For a sense of how rattled publishers are by Amazon’s foray into their business, consider the case of Kiana Davenport, a Hawaiian writer whose career abruptly derailed last month.

In 2010 Ms. Davenport signed with Riverhead Books, a division of Penguin, for “The Chinese Soldier’s Daughter, a Civil War love story. She received a $20,000 advance for the book, which was supposed to come out next summer [2012]”. Ms. Davenport picks up the story in her Blog of August 26, 2011:

Recently [the] publisher discovered I had self-published two of my story collections as electronic books…. The editor shouted at me repeatedly on the phone. I was accused of breaching my contract … [and] of blatantly betraying them with Amazon….

Upshot? Based on the non-compete provision, Riverhead terminated the contract and demanded return of the advance. The standard no-competition term contains no objective standards for measuring what is meant by “competitive.” For a publisher to assert that story collections would “diminish the value” of the Work is totally subjective, of course and perhaps unreasonable. There are several points of interest in the case if it were to proceed to a lawsuit.

One question is, Is it reasonable for the publisher to believe that short story collections would be competitive with a novel (after all, it could argued contra that the collections would enhance rather than diminish value by giving additional weight to the brand). The subjective element of the provision creates ambiguity. What standard is to be applied? If ambiguous, contracts are read against the draftsman and in favor of the other party. Further, if termination and demand for return of the advance were found to be out of pique with the author for having the gumption to package the collections with Amazon for self e-publication it would not sit well with the jury.

Terms are not set in stone, however. They can be negotiated, or if refused a business decision would then have to be made to go along or look elsewhere. Authors having published works they want to return to market should negotiate for the publisher’s approval.

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