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Authors Guild Supports FTC’s Proposed Ban on Non-Compete Clauses

Front facade of the Federal Trade Commission building in Washington, DC

On April 19, the Authors Guild submitted comments in support of a new rule proposed by the Federal Trade Commission (FTC) that would make non-compete clauses illegal. Our comments discussed how non-competes are used in writing agreements and underscored the negative impact they have not only on author incomes but also on the ability for authors to publish the works they want to write. The Authors Guild conducted a survey of authors to better understand the impact of non-competes on their careers. We thank all of the authors who took part in our survey and gave us further insight into the professional impact of non-competes.

The FTC’s proposed rule would deem clauses that prohibit workers (including independent contractors) from working with others after the conclusion of their current engagements to be a violation of Section 5 of the FTC Act. Clauses that prevent authors and journalists from publishing similar works with others, or from working with competitors, are common in writing agreements, including book, journalism, and freelance contracts. In most cases, courts have found these clauses to be invalid, but authors often lack the resources or desire to get into a legal battle with their publishers and are unlikely to sue. If the FTC’s rule is enacted, authors could simply reject such clauses as invalid, pointing to the FTC rule.

Why Non-Competes Harm Authors

The Authors Guild has long objected to non-compete clauses and advised their removal in our contract reviews. These clauses, which are purportedly designed to protect publishers’ investments by preventing authors from selling the same or substantially similar work to another publisher, are often too broad. Authors are routinely asked to agree not to publish other works that might “directly compete with” the book under contract or “be likely to injure its sale or the merchandising of other rights.” Even more broadly, they may be asked not to “publish or authorize the publication of any material based on the Work or any material in the Work or any other work of such a nature such that it is likely to compete with the Work.”

Such open-ended non-compete clauses can prevent authors from pursuing other writing opportunities. If a new project even arguably deals with the same “subject” as the book under contract, the non-compete can be invoked to prevent an author from publishing elsewhere. For writers specializing in a particular subject, this could be career-derailing.

Results from the AG’s Survey on Non-Competes

Our survey showed that authors generally feel hindered by the restrictive nature of non-compete clauses. Out of the 630 respondents, 19.2 percent (121 authors) reported that non-compete clauses had prevented them from publishing a similar or competing book; 38.6 percent (243 authors) stated that they were forced to take a new book to the publisher of their last book before offering it to another publisher that might have been a better fit; and 15.7 percent (99 authors) reported that non-compete clauses had prevented them from writing and publishing articles or stories for other outlets or media.

Authors also reported feeling trapped in their contracts, unable to pursue other writing opportunities, fearful of potential legal repercussions if they attempted to publish elsewhere, or worried about losing the contract if they insisted on removing the non-compete clause.

Next Steps

The FTC’s high-profile proposed rulemaking notice elicited more than 22,000 comments, with a large number in support. Once the agency reviews these comments, we expect the announcement of a final rule, and are hopeful of the enactment of the ban on non-competes. We will update you when that happens.