Case :

John worked as an employee for McGraw-Hill Publishing Company for fifteen years and had worked his way up'to the position of production designer at a salary of $5000 per month. John's job was to design the layout for art books, and one day his boss informed him that the company was going to initiate a new line of mathematics textbooks of innovative design according to Ministry of Education standards and that they were going to devote all their efforts to producing and marketing this new and special form of mathematics textbooks, and that they would discontinue their art books as they were not big moneymakers. John was informed that if he wanted to stay with the company, he would have to take a job in a new production design department assembling the work of freelance artists' designs in preparation for the actual pUblication. His pay rate would be unchanged, although the job was far less demanding and was not the level of work which he had currently been doing as an art designer. Over the years, John had acquired quite a reputation as a production designer in the industry, and he informed his boss that he was not interested in doing anything else but production design work. He was then told that he would be paid until the end of the month but would not have a job after that time.

A tenn of John's employment contract prohibited him from working for any other publishing company anywhere for a period of five years after leaving the employment of McGraw-Hill. John ignored this provision and immediately went to work for one of McGraw-Hill's competitors, Nelson Thomson Publishing. John sued for wrongful dismissal. As McGraw-Hill prepared its case, it discovered that during the last seven years of his employment, John had been freelancing (working part-time) and using his production design skills for another company, Pronk Publishing, which published' a wide variety of books out sourced from other publishers. [They were a production and design house, but did not publish books of their own.] Upon looking at many of the books that John had worked on at Pronk, it became clear that many of the books produced by Pronk bore a startling resemblance to the production designs which John had produced for McGraw-Hill. The copyright pages of the books clearly stated that John had been the production designer. McGraw-Hill then counter-sued John. Explain the legal positions and legal obligations of each of the parties. Would it make any difference to know that almost all the editors and production designers at McGraw-Hill did freelance work?