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Sunday, 11 April 2010

The Nanny Court and Bad Faith Negotiations in a Publishing Contract

Can an author be in breach of any duty to his publisher if the author composes two works on the same biographical topic, in a situation whether the second work is not deemed to be unauthorized copy of the first work and there is no explicit contractual undertaking on this point with the first publisher? My initial reaction would be "no" but, in reviewing an Israeli decision given last year, there is some pause for uncertainty.

The case, Beit Shocken Publishing Ltd v Prof. Dan Laor et al., involved the biography of the 1966 Nobel laureate for Literature, Shmuel Agnon. The first biography was published in 1998; the second, a much shorter and more popular biography of the Nobel laureate, was published in 2006 for effectively a non-profit entity. The publisher of the first biography brought suit against the common author of the works, alleging copyright infringement.

The court considered whether the defendant had created an unauthorized reproduction or derivative work of the first published biography. Emphasizing the thin copyright protection given for a factual work such as a biography, it ruled that no copyright infringement had taken place. Nor was there any clause in the first publishing contract that prohibited the writing of a second biography.

One would have thought that this would be the end of the matter. Not so, however--the plaintiff then alleged that the defendant author was in breach of the statutory obligation under the Israel Contract Law to negotiate in good faith. It turns out that the author had been negotiating with the first publisher to bring out a new edition of the first book while in parallel he was negotiating the publication of the second biography of Agnon. That was true, but it was also true that the plaintiff had not responded in eight years to the defendant's request to publish a new edition of the first biography.

Under these "special circumstances", therefore, the court rejected the claim that the defendant had acted in bad faith. But then came the judicial kicker:
"In the absence of these special circumstances, it seems that I would have been inclined to the view, on the basis of the duty of good faith, that the author of a biography or guidebooks is not permitted to write in parallel two biographies of the same person, or two guidebooks about the same country, for two competing publishers, even if the matter is not explicitly prohibited in the agreement."
Stated otherwise, the default would seem be that a claim for "bad faith" would be appropriate, in the absence of special circumstances.

This seems like an overreach by the "nanny state" or, in this case, the "nanny court." First, even if one accepts the court's position in the situation described in its dictum, it still leaves a broad swathe of possibilities between the facts of the dictum and those of the case itself. How one would advise in these intermediate situations is totally unclear. It is tough enough to evaluate a claim of copyright infringement or a breach of contract, but at least there are ground rules. When it comes to whether there has been bad faith in negotiations, all legal bets are off.

Second, I don't understand why the court should come to the rescue of a publisher that has not taken upon itself to protect its commercial interests. Whether the reason for the absence of an appriopriate clause in the publishing agreement is carelessness by the publisher, or superior negotiating power by the author, does not matter. The end result is the same: if the author can meet his obligations and deadines under the two contracts, that is all that he is required to do. To ask him to defend himself in court against a claim of bad faith negotiations seems misguided and undesirable.

4 comments:

Michael Factor said...

Neil,

The problem is uniquely Israeli. Former President of Israel Supreme Court Aharon Barak decided that Good Faith is THE underlying principle of Israeli Law, and extended this from contract law (sections 9 and 17) to all other areas of Israeli Civil Law. Consequently, if there is bad faith, one has grounds for compensation for unregistered designs and trademarks rights (See A.Sh.I.R. decision).

This gives rise to absurd Israeli patent office decisions such as allowing two energy drinks to register the same name "XO" where there is apparently no issue of bad faith, and to the Jerusalem district court to allow two wines to use the name Halel where there was no proven bad faith.
There are realms of Israel decisions that put good faith over and above any other issue including public good, freedom of occupation and other rights.

Neil Wilkof said...

Michael,

I am not so sure that it is a uniquely Israeli issue. As I understand it, "good faith" plays an important major role in the codex of a number of countries under the Continential system, and I believe that the Israeli provision was based on the German law.

Anonymous said...

Could the honourable author advise in which country this decision was rendered and by which court exactly?

Thanks in advance

Neil Wilkof said...

Anonymous,

Oops! Somehow I neglected that. Israel, the District Court of Tel-Aviv.

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