- There is before
the court an application by the Claimant, Psychology Press Ltd, for an interim
injunction against the Second Defendant (Nelson Thornes Ltd) to restrain the
company from printing, editing or publishing a book co-authored by the First
Defendant (Cara Flanagan) and a Mr Michael Cardwell. The nature of that work
is to some extent a matter of controversy between the parties, but broadly
its purpose is to help students pass the Psychology AS Level Examinations.
Its title is provisionally "Psychology AS – The Complete Companion".
- On 11 June 2002
I granted the injunction, as prayed, and ordered an expedited hearing to be
fixed between 8 July and the end of the current term. I was able to indicate
that such a window was available at the outset of the hearing but Mr Barnes,
appearing for the Second Defendant, nevertheless sought to resist an injunction
even over that short period for the purposes of maintaining the status quo.
It was his submission that the Claimant company has no real prospect of succeeding
in a claim for a permanent injunction, at the end of the trial, or indeed
of establishing its cause of action against his Client. It is pleaded that
it induced or procured a breach of Ms Flanagan’s prior contract with the Claimant
in respect of another work for Psychology AS Level students, which she wrote
with Mr Michael W. Eysenck under the title "Psychology for AS Level".
I am told that this has proved to be the best selling psychology textbook
aimed at that market, with total sales since its original publication in 2000
in the region of 35,000.
- The background
is as follows. The Claimant entered into a publishing agreement with Ms Flanagan
on 29 August 1999, whereby she was to prepare and deliver the work in question.
It is said that she is in breach of that agreement, and indeed that she would
be in further breach in the event of the Second Defendant’s proposed publication,
and that such breaches have been, or are about to be, procured or induced
by the Second Defendant.
- For the purposes
of the present application, it is necessary only to set out two of the clauses
in the 1999 agreement:
"COMPETING
WORKS
11.
The author agrees that he or she will not, during the continuance of this
agreement, without the consent in writing of the Publisher, print, edit or
publish, or cause to be printed, edited or published, any other edition of
the Work, revised, corrected, enlarged, abridged, or otherwise, or any work
of character which might interfere with or injure the sale of this Work.
. . . . . . . . .
OUT-OF-PRINT
PROVISION
13.
When, in the judgment of the Publisher the demand for the Work is no longer
sufficient to warrant its continued manufacture, the Work may be allowed to
go ‘out-of-print’. In the event that the Work is not in print and for sale
in at least one edition (including any reprint or inexpensive edition) published
by the Publisher or under licence from the Publisher and, within eight months
after written demand by the Author, the Publisher fails to reprint the Work
or again offer it for sale, then this Agreement shall terminate and all rights
granted to the Publisher herein shall revert to the Author (except as to artwork
and illustrations, which shall remain the property of the Publisher for its
own use and benefit) subject to the Publisher’s continuing right to sell all
remaining bound copies and sheets of the Work on hand at the date of termination.
Such termination shall not affect any licence or other grant of rights made
to third parties or to the Publisher prior to the termination date to use
material from the Work in other works, or the rights of either party in proceeds
of such agreements. In the case of multiple Authors they shall take ownership
as Joint Owners, their interests being in proportion to their respective shares
of the royalties".
- It is part of
the Claimant’s case that the Second Defendant’s proposed work falls within
the wording of Clause 11 of its agreement with Ms Flanagan, in that it is
of such a character as might interfere with or injure the sale of the work
she co-authored with Mr Eysenck.
- Moreover, it
is said that such a provision, or one to substantially similar effect, is
a standard feature of publishing agreements (although by no means universal)
and that the Second Defendant must have been aware, during or prior to its
association with Ms Flanagan, that she was at least likely to have been subject
to the restrictions of such a "non-compete" term. The state of the
Second Defendant’s knowledge is, of course, a material factor in assessing
the strength or weakness of the Claimant’s cause of action.
- The Second Defendant
does not dispute that clauses along those lines are common in agreements of
this type. On the other hand, arguments have been canvassed, variously, along
the following lines:
- There is no
reason to suppose that the Second Defendant had actual knowledge of such
a restriction;
- Even if Ms
Flanagan’s agreement with the Claimant contained such a provision, there
was no reason to assume that the Claimant would object to her involvement
in the Second Defendant’s project;
- The Second
Defendant’s proposed work would not fall within the provisions of Clause
11, since there was no reason to suppose that it might interfere with or
injure the sale of the Claimant’s publication; in particular, it could not
be classified as being a "like for like" publication (i.e. a "textbook").
- Mr Barnes has
argued that the relevant legal principles are clear in the light of American
Cyanamid Co v. Ethicon Ltd [1975] A.C. 396, Imutran Ltd v. Uncaged
Campaigns Ltd [2001] 2 All E.R. 385 and B & P v. A, C.A.,
11 March 2002. He submits that it is necessary for the Claimant to establish
that its claim is "likely" to succeed at trial and that, not least
because the grant of any injunction would constitute an infringement of rights
of free expression, the hurdle to be surmounted is somewhat higher than that
as traditionally expressed since their Lordships’ decision in American
Cyanamid. My attention was invited, in particular, to the words of the
Vice-Chancellor in Imutran, at paragraphs 15–19. His Lordship’s attention
was focused in those passages upon the significance of the provision in s.12(3)
of the Human Rights Act 1998 to the effect that no interlocutory relief is
to be granted so as to restrain publication before trial "unless the
court is satisfied that the applicant is likely to establish that that publication
should not be allowed". Counsel had argued before him as to the difference
between that test and the one promulgated for such applications in the years
following American Cyanamid (i.e. "a serious question to be tried"
or "a real prospect of succeeding in the claim to a permanent injunction
at trial"). The Vice-Chancellor expressed his view in the following words:
"Theoretically
and as a matter of language likelihood is slightly higher in the scale of
probability than a real prospect of success. But the difference between the
two is so small that I cannot believe that there will be many (if any) cases
which would have succeeded under the American Cyanamid test but will
now fail because of the terms of s.12(3) of the 1998 Act".
- The Vice-Chancellor
commented that the importance of freedom of expression had been given considerable
emphasis long before the enactment of the 1998 statute: see e.g. Bonnard
v. Perryman [1891] 2 Ch. 269; Coulson v. Coulson (1887) 3 T.L.R.
846; Bestobell Paints v. Bigg [1975] F.S.R. 421 and Holley v. Smyth
[1998] Q.B. 726. He made clear, however, that the requirement in s.12(4) of
the 1998 Act, to the effect that the court must "have particular regard
to the importance of the Convention right to freedom of expression",
while not rendering freedom of speech paramount on such applications, nevertheless
contemplates specific consideration being given to this factor.
- It is to be
noted that the Court of Appeal followed and approved the test of the Vice-Chancellor
in B & P v. A ("the Flitcroft case").
- It is Mr Barnes’
primary submission that the Claimant cannot establish that its cause of action
can surmount any of these hurdles; that is to say, it could not demonstrate
that it was likely to establish inducement or procurement to breach of contract
– nor yet that there was any serious question to be tried or realistic prospect
of success.
- In any event,
it is Mr Barnes’ case that damages would be an adequate remedy for the Claimants
and, moreover, that the balance of convenience (or "the balance of justice",
as preferred by Sir John Donaldson M.R. in Francome v. Mirror Group Newspapers
Ltd [1984] 1 W.L.R. 892) lies firmly in favour of permitting his Client
to publish. He developed an argument also, in the context of free expression,
that there was a public interest in permitting the new product into the market
place, largely because of the need to make the widest possible choice available
for educational purposes.
- Finally, Mr
Barnes argues that the present application has been delayed from the "deadline"
which his solicitors sought to impose in April and that, if the application
had been made earlier, his Client would not have been so prejudiced as to
the possible date of publication.
- The Claimant’s
counsel, Mr Flynn, submits that justice requires the grant of an interim injunction
over the relatively short period before the expedited trial, in order to maintain
the status quo. He contends that there is a very good chance in the light
of the information at present available of establishing that there was an
inducement or procurement of a breach of Ms Flanagan’s contract prior to her
committing herself to the Second Defendant’s new project; alternatively, that
the act of printing and publishing the new work via the Second Defendant will
constitute a fresh breach by Ms Flanagan of Clause 11 (and, incidentally,
well after the time when the Claimant brought the Second Defendant’s attention,
indisputably, to the existence of the Clause 11 restriction on 28 March).
- For reasons
explained in the witness statement of Mr Michael Forster, the Claimant’s Managing
Director, dated 14 May 2002, it is also part of the Claimant’s case that damages
would not be an adequate remedy in the event of their establishing the commission
of the tort. The argument was developed along the following lines. If the
competing work were published, it would be difficult to say which of its sales
were at the expense of the Claimant’s product, which were at the expense of
other competing titles, and which of its sales would be to people who would
buy both the Claimant’s and the Second Defendant’s product. An additional
factor relied upon is that it would be difficult to estimate the damage inflicted
by the competing work upon the sales prospects of a future revised edition
of the Claimant’s book. It may seem a little curious at first sight, but it
appears that Ms Flanagan is quite prepared to participate, in accordance with
her 1999 contract, in the production of a new edition of the Claimant’s book,
with a view to publication in the Summer of 2003.
- Mr Flynn also
drew an analogy with the facts of American Cyanamid itself, in that
if the Claimant’s product loses its current market dominance because of teachers
moving to the Second Defendant’s competing work, it would be difficult to
assess the problems of regaining that dominance. In American Cyanamid
the corresponding "special factor" (for consideration on the issue
of balance of convenience) was the practical and commercial difficulties for
the Claimant if it found itself having to insist upon the withdrawal of Ethicon’s
suture after doctors had become used to it in the run up to trial. It is,
of course, a factor relevant both to the status quo and the adequacy, or otherwise,
of financial compensation.
- Having summarised
the issues canvassed before me, I should now turn to the factual background.
Mr Forster reminded Ms Flanagan of her obligation not to participate in the
publication of a competing work by e-mail dated 25 September 2000:
"I
notice in the Amazon listing that you are producing an AS book for Phillip
Allan updates. I hope this would not be competitive with our book. Revision
Aids are OK, but another text would be a problem."
- She replied:
"No,
I’m doing a ‘Unit Guide’ which is essentially a set of questions and answers.
Don’t worry!
Cara".
- I was told by
Mr Forster, that Ms Flanagan was given several other reminders of this restriction
in the course of telephone conversations in the period leading up to February
2002.
- He explained
also why he was relaxed about revision guides. As far as he is concerned,
such works are used for the purpose of revision in the immediate run up to
the examinations and they tend to be bought in addition to text books.
The evidence is that they also have a different selling season, in accordance
with this separate function. Most are bought in the April period, whereas
most textbook sales would take place in the July – September period in readiness
for a new academic year.
- According to
Mr Forster, Ms Flanagan mentioned to him in January of this year that she
was writing a book with Mr Cardwell but described it as a "diagram book"
which would not compete with the Claimant’s product. Mr Forster’s evidence
is that he took this to be referring to a title in the Oxford University Press
Diagrams series of revision guides, and thus he accepted that such a work
would in its nature not be competitive.
- He discovered,
however, in March that Ms Flanagan was in fact co-authoring what he perceived
to be a directly competitive text (namely, the Second Defendant’s proposed
work). The information came to him from another publisher, Hodder Arnold,
which is a division of Hodder & Stoughton.
- I have been
shown a copy of the work Ms Flanagan co-authored with Mr Eysenck and a folder
containing proofs of the Second Defendant’s work. Arguments have been addressed
to me, some more semantic than others, as to the similarities and differences
between the two works. It is the Second Defendant’s case that its draft would
not fall within the category of being a "textbook" (although it
is to be noted that Clause 11 of the 1999 agreement is not limited in scope
to "textbooks" as such, but is wide enough to embrace any work likely
to compete).
- The Second Defendant
has put its case in various ways at different times, and its arguments are
not always easy to reconcile. Obviously, for the sake of the present application,
it is convenient to allege that its draft is closely analogous to a revision
guide or companion. On the other hand, the intention is to publish as soon
as possible and, presumably, in order to make an impact in the market place
in time for the new academic year. The draft is described in various places,
including on the front page, as "The Complete Companion". I had
some difficulty in grasping what a "complete companion" would be.
There is an argument to the effect that the phrase is directed towards having
the best of both worlds. While it may serve the purpose of being a "companion"
(i.e. a companion to a fuller textbook), the implication that it is a "complete
companion" might suggest that it is directed towards supplanting existing
textbooks and fulfilling all the student’s (and teachers’) needs. This is
vehemently disputed on the Second Defendant’s behalf, but it seems to me an
argument that may very well succeed at trial – not least against the background
of the Second Defendant’s own internal documents exhibited (with commendable
frankness) to the witness statement of Mr Rick Jackman, the List Development
Manager of the Second Defendant, having responsibility for vocational and
further educational publishing.
- In his witness
statement, at paragraph 12, Mr Jackman told me that at no time did he ask
Ms Flanagan or Mr Cardwell whether they were in breach of their contracts
with their existing publishers. He added "It never occurred to me to
do so as I was clear that our book was not a textbook". I found this
passage difficult to reconcile with a document exhibited as "RJ1"
and described as a "Project Investment Appraisal". This was apparently
tabled at a meeting on 11 September 2001 and it was generated as part of the
Second Defendant’s internal procedures for obtaining authorisation for a new
publication. The proposed work is described at various points as being a "textbook",
although I am now told that this was for want of any more appropriate expression
in the Second Defendant’s existing vocabulary. More significantly, however,
there are passages within the document which strongly suggest that the Second
Defendant, as indeed would be apparent to anyone who attended the 11 September
meeting or who was subsequently sent a copy of the appraisal, was intending
that the new project should be aimed at competing with existing textbooks.
- Under the heading
"Market research undertaken", it was said that feedback strongly
suggested that there was scope for this new "resource" for the following
reasons:
1) Current
AS books for this course contain too much detail and breadth for AS level.
2) Some
AS students are de-motivated and overloaded with too much exam work. They
do not always see Psychology as their main subject and require more hand holding
than current resources provide.
3) Course
material is required at a level between GCSE and A Level (closer to the former).
- On the same
page reference is made both to Mr Cardwell’s existing textbook, published
by Collins, and to Ms Flanagan’s book co-authored with Mr Eysenck. These are
described in such a way as to suggest that the new work proposed by the Second
Defendant might very well replace them, or at least compete with them to a
significant extent.
- In the same
document one of the "unique selling points" was said to be that
it would be the first AQA ‘A’ AS Level Psychology book to be specifically
written at a level appropriate for AS candidates. It was added, "It contains
only what the students need to know for the course". In other words,
the claim being made was not that it would be a suitable revision guide, or
a companion to an existing textbook, but that it would serve the student’s
needs because it was, as it were, shorn of all unnecessary "flab".
- In my judgment,
however, the most significant passage of all was under the heading "Competition".
This contained the sentence:
"The
difficulty with all these texts is that they supply too much content at to
[sic] high a level for average AS level students. There are no bespoke
textbooks written purely with the new AQA AS level in mind".
- There is then
a section making the following claims:
"Why
we will be better
We
are offering a bespoke resource for this course, written by the Chief Examiner
and Principal Examiner, with the aim of providing only what the students needs
to know for success. The content is supported by a range of supporting features
including worked exam questions by the authors. The material is presented
in a lively and engaging, spread by spread fashion, and in full colour to
make it accessible and stimulating. Each spread will equate to roughly an
hour study plus homework, and this approach will help new teachers to the
subject plan their workload".
That
is the passage which I find most difficult to reconcile with the evidence
of Mr Jackman.
- On the same
page, again under the heading "Competition", the competition expressly
listed is that of "Flanagan & Eysenck". It is not, of course,
for me at this stage to decide the merits of the claim in tort, but I can
at least conclude that there is a powerfully arguable case that the Second
Defendant was fully aware that the project, as initially conceived in the
latter part of 2001, was intended to compete with the Claimant’s product and
serve the function of a "textbook" rather than that of being merely
a revision "aid", "guide", or "companion". The
fact that it is now being described as a "companion" does
not seem to me to meet that point of substance.
- Further support
is added to the Claimant’s case by the original claim on the Second Defendant’s
website that "this book contains everything the AS student needs: a textbook,
revision guide, questions and answers and a dictionary".
- Another interesting
passage in Mr Jackman’s witness statement, contained in paragraph 8, is that
in which he describes a meeting between him, Ms Flanagan and Mr Cardwell on
4 September 2001:
"I
believe that at this meeting I asked both of them how they were planning to
broach the plans for the new book with their existing textbook publishers.
Their response was that they would mention it at a convenient time. They made
it clear that they did not consider it a concern because they did not consider
this project in competition with their main textbook. I felt entirely comfortable
with this as I was not interested in yet another AQA A textbook, and the three
of us were discussing an entirely different and complementary resource concept".
- That, again,
I find difficult to reconcile with internal appraisal and website entry which
I have just described. Apart from that, however, it seems to me potentially
significant that Mr Jackman thought it appropriate to ask Ms Flanagan and
Mr Cardwell how they were planning to "broach the plans for the new book"
with their existing publishers. He plainly thought there was a need to do
so. In the light of the acceptance that "non-compete" provisions
are common in the publishing world, it seems to me that he must have been
contemplating a need for the authors to obtain "clearance" through
consultation with those publishers.
- It is also difficult
to understand how Mr Jackson could feel "entirely comfortable" with
the proposed co-authors’ assurances that they did not consider the
new project to be in competition, since it is quite apparent from the appraisal
that the Second Defendant’s staff clearly thought it was in competition.
It is hardly likely that the proposed co-authors and the personnel within
the Second Defendant’s organisation were working at cross-purposes on this
fundamental issue.
- It is true that
the Second Defendant obtained warranties from Ms Flanagan to the effect that
she had no prior inconsistent contractual obligations, and reliance is placed
on those. But, in the circumstances I have summarised, Mr Flynn argues that
these cannot have been relied upon.
- This background
naturally throws into relief the bland assurances which, according to Mr Forster
at least, Ms Flanagan was giving him in January 2002. It is true that there
is a dispute between them as to exactly what was said, but that conflict can
only be resolved in the light of cross-examination. Suffice to say for present
purposes, there is in my judgment a clearly arguable case to the effect both
that Ms Flanagan was in breach of contract and that the Second Defendant was
aware of this and encouraging it. I noted the Second Defendant’s evidence
that the first approach came from Ms Flanagan, rather than from the Second
Defendant, but I cannot regard that as determinative on the tort of inducement
– and certainly not at this stage.
- Tentatively
raised by the Second Defendant in argument was the unusual defence of "justification",
as to which a convenient summary of the principles is to be found in Clerk
& Lindsell (18th Edn.), at paras. 24-63 and 24-64. I was
unimpressed by this argument, which would appear to be predicated upon a "moral"
obligation on the Second Defendant for which I could find no evidence.
- I turn to the
matter of the adequacy of damages. There was something of an irony attaching
to the Second Defendant’s submission that damages would indeed be an adequate
remedy for the Claimant, in the light of the fact that Mr Barnes was arguing
that the cross-undertaking proffered by the Claimant would not afford adequate
protection to his client. Their positions are not entirely on all fours, however,
because it is true to say that there is no established pattern of sales or
demand for the Second Defendant’s proposed project, whereas there is a two
year track record available for that of the Claimant. Nevertheless, for the
reasons advanced by Mr Flynn, which I have already summarised, I have come
to the conclusion that damages would not be an adequate remedy for the Claimant.
- It is obvious,
although also important for me to take into account, that the grant of an
injunction on the present application will not be determinative, finally,
of the Second Defendant’s rights (as can sometimes happen on interlocutory
applications), since there is the prospect of an imminent trial for that very
purpose. I am being asked to grant temporary protection purely for the purpose
of maintaining the status quo. Mr Barnes described the status quo as being
"dynamic", in the sense that his client is trundling on with preparations
and expenditure with a view to publication. Mr Flynn characterised the status
quo, on the other hand, and in my view correctly, as being simply that the
Second Defendant’s work has not yet been published. I am quite satisfied that
in the light of the history I have described the balance of convenience (or
of justice) lies firmly in favour of granting this interim protection.
- I should now
address "specifically" the matter of freedom of expression. The
prospect of any restriction imposed by the court upon freedom of expression
must, of course, be taken seriously. That is especially so when the court
is being asked to restrain the fruits of investigative journalism, particularly
with regard to matters of public interest, or in relation to ephemeral matters
where newsworthiness may quickly fade. Here, I must ask myself whether there
is any countervailing public interest which renders it necessary (in accordance
with the considerations identified in Article 10(2) of the European Convention)
to restrict the Second Defendant’s freedom of expression (or indeed, for that
matter, the rights of Mr Cardwell and Ms Flanagan).
- In my judgment,
there is such a countervailing interest. It may be identified in general terms
as relating to the sanctity of contract or, more specifically, to the public
policy exemplified in the law of contract whereby the court regularly enforces
provisions for the restriction of unfair competition (provided always that
they are reasonable and proportionate).
- As for delay,
I was told that there had been discussions between the parties with a view
to reaching an accommodation. That is to be encouraged rather than penalised.
Moreover, the deadline which the Second Defendant sought to impose unilaterally
in mid-April appears to have involved a change of heart, since greater leeway
had been contemplated two days earlier. Ironically, because of the vagaries
of listing, had the application been heard three weeks earlier the July trial
window would not have been available. The trial could not have been listed
at that stage until October. In the event, therefore, the matter can be resolved
before the end of July. This would, I gather, allow publication to take place
in September, if appropriate.
- In the circumstances,
I do not believe that the period of delay relied upon was in any way to be
criticised as wasteful, since the Claimant was obtaining five "expert
opinions" with a view to supporting its position in the negotiations
(albeit to no avail). Nor, as it happens, has the Second Defendant been prejudiced.
- Another factor
prayed in aid was the impact the grant of an injunction would have on a third
party, namely Mr Cardwell. My attention was drawn in the context to Spry
on Specific Performance (6th Edn.) at pp. 153-4. I accept that
it is a factor to be weighed in the balance, and that the court should take
into account any unfairness or hardship he might be caused. That has to be
assessed, of course, in the light of the particular circumstances, which here
would include Mr Cardwell’s close involvement in the discussion of the project
from an early stage and its potential impact upon existing textbooks (for
example, on 4 September 2001). I am not persuaded that any effect upon Mr
Cardwell is such as to justify the refusal of an order which would otherwise
be appropriate.
- No point is
taken on the cross-undertaking to the effect that the Claimant may not have
the resources to meet it but, as I have said, the Second Defendant does suggest
it would not be possible to calculate their lost sales sufficiently accurately
for it to be of practical value. Since it appears that the impact of the injunction
would be a maximum of two months delay in the launch of the product, I am
not persuaded that a realistic assessment could not, in due course, be made
once a track record is established.
- For all these
reasons, I decided that it was right to grant the Claimant the interim injunction
sought against the Second Defendant.