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

Legal limits to such contracts

[Daetrin]

Every contract i've ever signed with a company has a clause like that. However in California there are state laws that state that regardless of any contract you sign, any ideas that you come up with in your own time (not at work and not using company resources) remain your own.

They even seem to be legally required to state that such is the case, or at least every contract i've signed has a footnote after the clause describing the state law.

Reverse-engineering techniques?

[Cutriss]

The court also held that, pursuant to the contract, the company owned full legal right, title and interest to what Henderson called Brown's "solution," which he defined as the process and method developed by Brown for converting machine-executable binary code into high-level source code; reverse-engineering the intelligence from existing programs and recoding it into high-level language; and converting certain machine code into C language source.

Excellent! Alcatel won the right to violate the DMCA!

There is a good reason

[www.sorehands.com]

You come up with an idea, but only work on it in your head. And it is related to your employment, who should own it?

Now it could also hurt the company too. The when I became afflicted with tendinitis, the WC insurance company tried to avoid responsiblity by claiming it is from my computing at home. Since the company had the same type of inventions agreement, I argued that since they owned all I worked on, then they had liability for all injuries from what I worked on. MSI took possesion of what I worked on at home, then claimed, in the WC hearing, claimed that program they took was not related to my employment which means they took my work by fraud.

The knife cuts both ways.

Re:There is a good reason

[j7953]

You come up with an idea, but only work on it in your head. And it is related to your employment, who should own it?

You should own it.

Of course, if it is directly related to the project you're currently working on, then you'd better make use of your idea by implementing it for your current employer. But that's not because the idea is owned by the employer -- it's because if you don't make use of your idea, you won't be able to complete your project. And completing the project is your job.

If the company owns all ideas that you have while working for them, you can never safely start an independent business. People don't sit in their office and then, one day, decide that they have no ideas whatsoever but should quit their job, go home and try getting ideas. How it actually works is that while you're at work, you have an idea that is not directly related to your current task, or you're not satisfied with your payment or your company's management or something like that. And then you decide "I can do better than this," and start your own business.

It even used to be the case that you could not just start a new business with something related to your previous job. You could even do almost exactly the same thing. Think about people who invented a groupware solution, then decided that they could do better, and invented another groupware solution.

What if, while working for your company, you have a great idea, tell your employer about it and they believe the idea won't work? Don't tell me this doesn't happen, it happens all the time. So you decide to quit and start your own business. One or two years later, your business is a big success. Should it be possible for your previous employer to claim ownership over your business because you developed the idea for them?

I hope not. It would mean you take the risk, they take the profit -- without any investments. Capitalism, huh?

Re:Welcome to the new feudalism.

[_Sprocket_]

And if you work for NASA... they will help you file a patent under your own name. Even if it was something you developed as part of your job. Of course, NASA gets a royalty-free licence to use the patented technology. But the inventor gets to exploit the patent if it has commercial application.

One nice little perk to being a NASA engineer (assuming you're not a contractor hired by Boing, Lockheed/Martin, Northrup/Grumman, etc).

I work at Alcatel in Plano, and most people here

[slashbrent]

I work at Alcatel in Plano, and most people here agree that while Evan is a nice guy, he pretty much slit his own throat from day one.

This is really not as simple as "Alcatel (DSC, really) owning soandso's idea", although it makes great headlines.

What happened was:
1. He signed an agreement (which most of us do not have to, BTW) giving DSC rights to anything he invented - gee whiz, Cisco, Sun, Nortel, Oracle - pretty much eveyone does this with the few choosen employees who get to sit around and dream up these things.
2. He made the big mistake of telling his supervisors about this great idea of his when there was no written documentation (duh.)
3. DSC offered to give him a big $$$ check for his idea, but, he decided to "fight the man" (read: gamble) for his idea and he lost.
4. Even Evan himself admits that he could have excluded this idea (that he has always said he starting working on in 1975) from the legal agreement (doh!). Maybe he would have stood a better chance in court if he had some prior documentation or at least a mention of it.

Whats the real lesson here? Common sense always applies. If you've got a million dollar idea - dont sign an intellectual prop agreement! Or how about, Dont listen to lawyers who want you to go to court so they can get rich from you (my personal favorite).

I truly like Evan Brown, and i hate to see him get slammed by our legal guys (i've watched this case since 1999), but for the most part we all believe he just made bad decisions as opposed to being victimized.

BTW, we have running joke at Alcatel that our legal department is a profit center - we've sued many more people and corps... :-)

I was asked to sign one of these at an interview

[Skapare]

I interviewed with a technology development company and was asked to sign one of these forms right there at the interview. It was made clear to me that if I didn't sign it right then and there, the interview could not continue. Most of it involved non-disclosure. But some of it did sign over all my invention rights to them.

There was one clause that specified that if I was not hired, then the contract only applied to information made available to me during the interview. It was not entirely clear how well that applied to the parts about me handing over all my rights to my own intellectual property.

The really stupid part of this wasn't that they wanted me to sign such a contract, but that they barely gave me enough time to read the whole thing (I actually did). Due to it being in the circumstance of an interview, it wasn't possible to go consult an attorney, much less find one that practiced in both employment law and intellectual property law (we're probably talking a week or two at least). When I asked the HR guy about it, he indicated they had interviewed 3 other candidates for the position and were looking to make the hiring decision within the week, and that such a delay would probably mean the position would no longer be open.

What made me decide to walk out wasn't so much the fact that the situation existed (though I might well have because of it), but rather, the fact that the HR guy was so perfectly prepared in his answer to me. Whether he was telling me the truth or not wasn't even relevant. Later, I found the same job was posted again. Who knows how many walkouts they had.

Later, a recruiter was trying to get me in to interview for a position at an entirely different company. On Monday he was saying they had people from their New York headquarters in for the week to do the interviewing and they were booked up very tight. By Wednesday, he had an appointment for me for a Friday interview. Then the surprise. He wanted to send me the non-disclosure and non-compete contract. His explanation was because the schedule was so tight, they wanted people to be coming in with the contract already signed. At first we had an issue with the fact that he was sending it to me in Microsoft Word format (whee, I get to see all the revisions they ever made to it). I pointed out to him that I was a Unix person, this was a Unix job, and he was a recruiter doing more than half his work with Unix positions, and he wanted me to run Microsoft crap? So I ended up having him pull up a copy and asked him about some clauses in it (he was patient enough to do this, surprisingly). I focused on the non-compete and asked him if there were any clauses that made it only apply if I got the job. There were none. So I explained to the recruiter that "If I interview there having signed this, find out what this secret area of business is that they are doing, them I'm no longer allowed to work for anyone else in the same line of business, or even related, even if I don't get this job?" He paused for a minute and then said "I guess not". now I wished I had gone ahead and let him send me a copy of that.

The immoral of the stories here are that companies will try to take advantage of you one way or another. And it's probably even worse during this current economic downturn (equivalent to a full blown depression if you look just at the high-tech businesses by themselves). Watch out for what you sign.

Things must be different in Tex-ASS

[oliphaunt]

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"...?

yeah, i think it probably says something very similar to that. I was offered a job by a company with HQ in Texas, and as part of the package along with health and medical and drug test (don't even get me started on THAT) info, is the standard IP and confidentiality agreemnet. It reads, in part:

" D. Disclosure of Inventions to the Company. I will promptly disclose in writing to my immediate supervisor or to
such other person designated by the Company all 'Inventions,' which includes, without limitation, all software
programs or subroutines, source or object code, algorithms, improvements, inventions, works of authorship, trade
secrets, technology, designs, formulas, ideas, processes, techniques, customer reports, and report formulas,
know-how and data, whether or not patentable, made or discovered or conceived or reduced to practice or developed
by me, either alone or jointly with others, during the term of my employment. "

Section D also extends the term for 6 months following termination of employment.

Section E.1. covers assignment of inventions. It reads,

" E. Right to New Ideas
" 1. Assignment of Inventions to the Company. I agree that all Inventions which I make, discover, conceive, reduce
to practice or develop (in whole or in part, either alone or jointly with others) during my employment shall be the sole
property of the Company to the maximum extent permitted by law. "

Obviously I can't sign that. But that doesn't change the fact that several people have asked me to do so, with a straight face even. I live in CA, so "the maximum extent permitted by law" is apparently less than what passes for employment in Texas. One more reason we should bulldoze the state and give it back to the Mexicans.

So what did I do? I said, "This isn't enforcable in CA." They said, "You're right." I said, "So, how about we just strike it out?" They said, "Uhhh..." but they watched me do it, and I signed and dated the change, and they signed and dated it too, and that was that.

Re:Solution: Move to California

[Animats]

That provision is famous in Silicon Valley. It's considered partly responsible for much of the growth of the semiconductor industry. If you have a new idea, and your employer doesn't like it, then it must not be "related to your employer's business" and you can take it elsewhere.

As for the decompilation problem this guy spent 25 years thinking about, there's a open source C decompiler, although it's rather dated. Commercial decompilers go back a long way; the first one translated IBM 1401 assembler programs into COBOL. The COBOL orientation continues; see Source Recovery. Recovering long-lost business applications seems to be the big market for these things. Decompilation is tough, and the output code is usually ugly (because decompilers tend to lose idioms), but it's certainly been done.

It's a neat problem, and somewhat under-studied. Of course, today a good decompiler would probably be considered a DMCA violation.