Company Ownership of Employee Ideas

Anonymous Coward writes "Alcatel USA Inc. filed a lawsuit, and won, in a bid to claim proprietary rights for a software idea of one of its former employees, Evan Brown. Evan signed a invention disclosure agreement with his former employers but what makes this case unusual is that Evan never wrote anything down with regards to his idea, meaning that Alcatel seems to be claiming rights to an idea in his head. Does this mean your thoughts may belong to your company? Maybe...." This story has been kicking around for a few days but this is the first legal analysis I've seen of it. Watch what you sign! J adds: see also recent TR story and our 1999 story.

Comments

Well, this guy's first mistake....

[deanj]

...was that he represented himself in court. This had to be a HUGE disadvantage for himself.

That said, I think he got screwed. Where's the EFF for this guy? Shouldn't they take up his cause?

Selling more than your soul...

[Lurgen]

At my last three jobs, I have conveniently "forgotten" to submit a signed copy of the document that lets them own everything I create. For years now I've hated the idea that anything I do while employed (even if it's not work related) could be taken away from me.

I write (or should say, wrote) magazine articles as a freelance writer in my spare time. Despite the fact that I always wrote these from home, the current Intelectual Property contracts in Australia would have meant that my employer owned my words - not ideal.

Despite having failed to submit signed copies of these contracts for 3 jobs in a row (over a 4 year period, no less), I've never been hassled over it.

I guess my point is this: don't sign it if you don't agree with it. Sure, you might not get the job, but think of the implications if your "hobby" becomes an overnight hit!

As a side point, imagine how the guys from id would have felt if they had been forced to hand over their revolutionary 3D game engines to their employer at the time, simply because they thought of the ideas while sitting on the toilet at the office.

Re:Selling more than your soul...

[the eric conspiracy]

At my last three jobs, I have conveniently "forgotten" to submit a signed copy of the document that lets them own everything I create. For years now I've hated the idea that anything I do while employed (even if it's not work related) could be taken away from me.

If your idea is work related, it proabably doesn't matter if you signed the contract or not. If the idea isn't work related, many states prohibit the company from claiming rights to it,

So the effect of your not signing the contract is probably zero.

you really think so?

[Anonymous Coward]

You honestly think the contract he signed said "we own the rights to all inventions and THOUGHTS you may create during your employment here, even if you have created no inventions during your employment and only THOUGHT about creating said invention and actually did so only AFTER leaving the company"...?

I really doubt that occurred.

If he CREATED something, that's one thing. By your logic, any business I created after leaving employment somewhere would actually belong to my former employer. Say, I work for Intel... and I decide to start a coffee shop that specializes in cookies and donuts too... I started dreaming about doing that since about two years into my employment with intel... but now that I've left the company and started my business, all of my products and business belong to them becuase I dreamt/thought/planned it during my employment?

What about industry? Certainly you shouldn't be excepted to adhere to the contract if you work for Advance Micro Devices making motherboards and your invention has to do with a way to improve lipstick - your employer should have NO claim to your invention since it in no way had anything whatsoever to do with your employment or even your employers industry.

Further, what if you wrote a book and published it? Say a mystery novel...

Re:you really think so?

[DDX_2002]

If he CREATED something, that's one thing.

Ah, so one doesn't create ideas according to you. Interesting. Sort of a platonic, everything ever thought was just the recognition of a pre-existing concept not previously given form sort of thing. Interesting.

You're confusing copyright law (embodiments protected), patent law (idea protected) and a simple covenant assigning the inventor's rights to his employer. If the idea was never actually put into concrete form, I seriously doubt they'd have bothered going to court. The idiot should have written down the idea when he had it so he could prove it predated the contract. And he should have gotten a lawyer.

Fool

[smack.addict]

As they say, the man who represents himself has a fool for a client.

Guard yourself, but don't quit tinkering!

[cybermace5]

First of all, if you signed that agreement, everything you do at work is theirs.

If you want to do something on your own time, you have to take precautions. It might not be convenient, but you'll thank yourself when your old company can't come after the business you just started.

1) Keep a detailed journal. In fact, keep two journals, one for the things you do at work and another for the things you do at home. There shouldn't be much common between them.

2) Buy your own equipment and development tools. You can't use their computer, their copy of Visual Studio, their ciruit fab machine, whatever. Anything you make, that you want to be totally yours, must be done on your own dollar. Don't even use their workspace, or their email system, or their internet pipe.

3) Make sure you fully understand the intellectual property agreements, and have a copy of the one you signed. If you break any part of the contract, you don't have a leg to stand on.

I know everyone wants to be friends with their old company, happy memories etc., but this is business. If they think you are taking a chunk out of their dollar, they will come after you. Play it safe, or be sorry.

Re:Guard yourself, but don't quit tinkering!

[plierhead]

All absolutely correct.

Lets face it, for SURE he developed this while he was working as an employee under a crytal clear agreement, so all his bases are belong to them. He was dead in the wrong, whether the idea was in his head, on paper or on a CD.

He could still have got away with it though - he should have quit his job, sat in the mountains for 3 weeks or so, pretending to dream the whole thing up, and then gone back and tried to sell it to his old company. Where he went wrong was being too chicken and trying to keep his safe day job while at the same time trying to sell this to his bosses. Trying to have it both ways and finishing up losing his house as a result.

Its a lesson for anyone out there who's got a great idea. With great rewards come great risks - if you've got a $10M idea, at least have the balls to take a few weeks out, change to another day job, then declare it in your "prior inventions" at the new place, leaving your free to sell it around.

Re:Guard yourself, but don't quit tinkering!

[Anonymous Coward]

I'm not saying its easy. But lots of people face this problem when they start out on their own. This guy just went about it in a particularly stupid way.

From best to worst outcomes:

1) Save hard, sit in the mountains, live on credit cards/loans/friend's couches. Sell your idea and make it big. Pay back your loans and chill by the pool in your mansion.

2) Stay where you are. Keep your day job. No risk (apart from getting axed in an act of random corporate savagery).

3) Try and keep your day job, but at the same time tell your boss that you've been building up an intellectual asset in plain defiance of your agreement. Don't back down. Take on the corporate in court, representing yourself. Lose your house.

I'd just say the guy should have taken one of the first two options. And as you point out, 2 is easiest.

Typical, but not right

[Junks Jerzey]

I strongly disagree with this sort "we own your mind" nonsense, but it is common. Every company I've worked for, in several fields, has made me sign the same kind of document.

This is a good ruling

[HEbGb]

The courts rightly recognized that employees should not be able to withhold potentially valuable ideas from their employer, specifically against their employee agreement. Whether the ideas are committed to practice, or written on paper, is irrelevant. He had an idea valuable to his employer, tried to get extra money from it, and when he didn't get an offer good enough, he refused to disclose the idea. What a horrible precedent it would set if Brown had won.

Pinker was absolutely right when he said:

Technology companies are in the business of inventing, and if people are doing it on their own behalf and take it for themselves from the company, the company is not going to stay in business long.

Also vital is this passage:

Lewis believes Brown could have helped his case had he kept an idea log, as inventors do in the patent arena. Establishing that Brown had the idea years before coming to DSC would have contradicted the signed agreement and gone a long way toward establishing Brown's credibility.

Heed his warning. Brown has a tough case to fight, but kudos to him for 'sticking to his guns'. I predict, however, he will lose.

Re:This is a good ruling

[Salamander]

Not only was the idea developed on his own time, it was developed before his employment there began. That's the part that's so noxious about this. Basically they're claiming rights to an idea that had nothing to do with them or their business, just because someone happened to work for them somewhere along the way, and that's nothing but the rawest kind of opportunism. How, one must ask, does that fit into the supposed theory behind intellectual-property law, which is to foster innovation and creativity for the public good?

Re:This is a good ruling

[infra-red]

I'm not sure how this is really relevant though. The courts had to decide who owned the idea. IANAL, but it seems to me that his only basis for ownership of the idea was that he started this idea years before he was hired.

There are really 3 issues that I see.

1. Evan Brown defended himself. This was probably for financial reasons. Still, if you go to his personal page, it seems like he was quite overwhelmed by the legal system (Thats probably another discussion right there)
2. He tried to turn his idea into financial gain inside the company. One interpretation of this is "Give me money and royalties or I take my idea and start my own company". This may not have been his intention, but I suspect that Alcatel interpreted the situation as this.
3. He didn't document his idea.
   To quote from the site:

   "Brown asserts that he began developing the idea in 1975, well before his employment with DSC began in 1987, and had achieved about 80 percent of the solution. In March 1996, Brown claims, he mentally solved the remaining 20 percent while vacationing."

   Personally, I would doubt that someone could develop an idea for 21 years and not have any documentation to prove it. I will not say that its impossible, but I think it would be highly improbable.

All this said, I am curious what would have been the ruling (or are there any) if he had a partner in his idea? What if this partner worked for another large intrested company? Who would have had ownership?

Re:Legal limits to such contracts

[einhverfr]

The company I work for has a clause like that.

However, I am an hourly employee. They can claim what they want as far as my ideas go, but if they want to claim my work, they had better be prepared to pay overtime for a Very Large number of hours.

I also have negotiated my way out of this clause, but still :)

For those that are not in hourly positions, try to get permission to moonlight on something unrelated. This causes legal headaches for people wanting to claim your IP you created in your own time (who gets rights to it, anyway?)

Welcome to the new feudalism.

[g4dget]

If you work for a company, the company basically owns everything you invent. If you work for a university, the university claims ownership of your ideas. You might be able to work for yourself, independently, but that's getting harder and harder, too. Software companies are putting out a minefield of patents, getting your own patents is enormously expensive (basically, it's affordable only if you become your own patent attorney), commercial software and services you use may come with requirements to transfer intellectual property, etc.

One lesson from this is: if you do something "on your own time", don't talk about it to your company; you can always publish it after quitting and nobody can prove anything. Furthermore, in certain special circumstances, if you do need an exception from a company's IP policy, get it in writing before you sign the employment contract.

Why companies get away with forcing these contracts on workers is hard to understand. They hire consultants that do not fall under such restrictions and pay them more to boot. Furthermore, in many states and countries, there are limitations on such claims by employers, but this is in Texas.

Re:Of course?

[Anonymous Coward]

"If you don't like the terms of a contract then DON'T SIGN IT! "

The problem with this simplistic advice is that these days many people simply do not have the option, financially, of refusing to sign employment contracts. In these times of hard-to-find jobs, the last thing someone who has been unemployed for a year and is now desperate for work is going to do is quibble over the terms of the contract. With tech jobs scarce, it is once again very much an employers market, and employers can get away with just about anything (legal) in the contract. For most jobs, employers can just say "don't like it? Fine, we'll hire someone else."

If you ask me, the real issue is, what should employers be legally allowed to put in employment contracts in the first place?

Not IP. Contractual Obligations.

[Chris Canfield]

The article seems to brush across a major point of this dispute. Previously, if you had written down an idea on a napkin, flushed it out on toilet paper, or jotted notes in a notebook, the company had the copyright on, and trade secret protection for, the notebook.

The error of the court, and IANAL, is that there is no law defining ownership of ideas, only protection of expressions from copying and the protection of potentially useful or damaging secrets. In defiance of 200 years of patent law, the court claimed the ideas were property of Alcatel, and QED must be turned over.

We have the RIAA to thank for that incorrect interpretation of the wording of the contract. Now he is stealing the company's "Intellectual Property," as if he walked out of his office with a stapler, rather than the arguably correct interpretation.

What he did do, and the option which the courts have overlooked, is violate his contract. If he wrote down his idea, the company would have the copyright on the paper and, quite correctly, the court would award ownership of the medium to the company. But he didn't. He's required by the terms of his contract to disclose something to the company, and he hasn't. He is in breach of contract, not breach of property law.

Maybe it is just the Law.com article which is misframing the judgement as a property issue in order to goad slashdot. We would need to see the judgement directly to know whether the judges decided he should hand over the information in order to fulfill his contractual obligations, or because the ideas in his head weren't his property. Is any lawyer (or law student) present that knows what the difference in punishments would be if this were a property issue as opposed to fulfilling contractual obligations?

-Chris

From my reading of it, it seems it was his fault.

[Xoron]

Read this paragraph again:

"In April 1996, Brown sought a release from DSC to pursue his idea. Brown alleges that he asked several managers at DSC whether the company would be interested in helping him develop the idea. According to Brown, DSC and Brown began negotiating an agreement whereby DSC would pay Brown a percentage of savings realized by the company if the idea was successful and a percentage of income from third-party sales, but the company later halted negotiations. Brown says when he refused to reveal his idea, DSC fired him and sued him."

It seems to me, that while still employed he tried to negotiate an agreement with them, for them to pay him for this idea he had (Which he had not stated in his inventions). They started negotiating, and then a lawyer of theirs realized that "Wait, we own this, don't we?" So they asked him to turn it over. I'd say if he was negotiating to sell it, it was damn well concieved already. Only when he then refused to disclose, they fired him (under breach of contract) and sued his sorry butt.

This is not a precedent to them owning ideas in your head. It's a precedent saying, don't try to sell inventions to your employer, who was employing you when you came up with it. (Which really is rather fair).

Bull.

[achurch]

The courts rightly recognized that employees should not be able to withhold potentially valuable ideas from their employer, specifically against their employee agreement.

Against the agreement, yes. But no employer should be able to require that employees do anything when they are not on company time. Otherwise how is the relationship any different from "master and slave"? Slavery was (at least in the U.S.) outlawed a long time ago . . .

He had an idea valuable to his employer, tried to get extra money from it, and when he didn't get an offer good enough, he refused to disclose the idea.

And just where is the problem in this? Assuming, of course, that Brown really did invent it on his own time, he should have every right to sell it to the highest bidder, or not sell it at all if he wants. The company certainly shouldn't have the right to take something from him that they never paid him to create in the first place.

HOW THE HELL

[madman2002]

are they going to get the idea now that they've won it? Pry it out of his head with a crowbar? The article says the idea is only in his head, does the court expect him to spend his time finishing developing it? If I was him I'd appeal and if I lost again, I'd delete any portion of the code (or at least encrypt it and say I deleted it) and refuse to write the code. Basically say "Well, if it's YOUR idea then YOU code it", then I'd probably move because you can be damned sure I wouldn't be paying those legal fees.

If a company owns the ideas in our head, shouldn't they own the bad ones too? What about postal workers who had the idea to kill their co-workers? Is this idea property of the USPS?

Re:From my reading of it, it seems it was his faul

[gamorck]

I would like to thank you for pointing this out. Like everybody else on here I was getting ready to make a mess in my pants - but after reading your statement it suddenly dawned on me:

If this idea really had nothing to do with the company's business and couldn't be applied to anything they were doing - why in the heck did this guy try to sell his idea back to them?

I've had discussions along these lines before - but I have to admit my sympathy for the guy disappeared when I realized that he was trying to sell an idea back to a company that he admittedly finalized while working for them. While he may be innocent of any intentional "wrongdoing" he's still guilty of being an idiot.

Personally I still think this story is interesting based on the fact that the court ordered him to pay the companies legal fees. I believe this is practiced in Europe (at least as far as civil court is concerned) and I've long supported its use here. This says to me the court/judge seemed to feel that went beyond a mere misunderstanding into the "gross negligence" category of dispute.

And considering the circumstances in a fair and rational manner - I would have to say I agree with them.

J

Re:From my reading of it, it seems it was his faul

[miffo.swe]

But he should be paid if he came up with something useful.

Imagine a clerk coming up with a way to shave 10% of off a companys expenses yearly. Shouldnt that guy have compensatione for that? Its not like he gets any money for it on his montly paycheck.

This kind of behavior is just self damaging to the company. They should encourage their employees to think more and give them bonuses when ther ideas are working.

The message they are sending out is shut your mouth, dont think about thinking!

Re:I work at Alcatel in Plano, and most people her

[Anonymous Coward]

Yup. Mod this as +1, The Truth.

I work at AlcaHell too, and while I didn't know Evan personally, some of this colleagues still remain here and they shake their heads in shame. It's a shame Alcatel ran Evan into the ground (he lives in a metal barn west of Ft. Worth, last I heard), and its an even bigger shame that Evan 'didn't play the game' right.

He wanted more blingbling than DSC was willing to pay. Then DSC morphed into an even bigger legal giant (Alcatel), and he didn't have a prayer.

So unfortunate.

What's even more ironic is the very code he wanted to reverse engineer was farmed out to India to be redone. Been finished for over a year now, and is already employed in the switches OS. A day late and a dollar short...