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.

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?)

Re:Legal limits to such contracts

[Rohan427]

I have seen many that do not (have the clause). In fact, every company I've ever worked for in 15+ years in California had no such disclaimer. I also refused to sign ANY such agreement. I have worked for several companies throughout the years that had such IP agreements and I have either not signed them, or had them changed to suit me and abide by CA law. I even had a couple companies thank me for pointing out the incorrect contracts and change them appropriately company wide.

I have no problem with allowing a comapny to own any idea I come up with on their time and/or with their equipment, but they do NOT own me on MY time and they certainly have no rights to what I do on/with MY equipment.

I couldn't get to the article to read it (it requires cookies which I refuse to allow in most cases). I wouldn't be surprised if the person in this case failed to research the applicable laws in his state and address the contract appropriately before he signed it.

People really need to learn to pay attention and know their rights and the law.

PGA

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...

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.

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?

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!

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: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).

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?

Solution: Move to California

[adam_megacz]

California Labor Code, section 2870 states that no matter what you signed, your employer cannot claim ownership of intellectual property which:

• you created entirely on your own time
• you created entirely with your own equiptment
• is not directly related to your employer's business, or demonstrable future business plans (ie ideas currently in development).

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.

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

Will

[EvanED]

He should stipulate in his will that when he dies, the part of his brain that contains the idea be cut out and sent to that company with a letter stating "pursuant to court ruling blah blah blah, here is the idea I thought of."

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.

Re:They own my thoughts?

[Graspee_Leemoor]

"So, just out of curiousity, what does Alcatel actually *make*, so I can advise people to start avoiding them?"

Shitty USB ADSL "modems", and everyone already is.

graspee

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

If I was an Alcatel employee about to leave...

[xelph]

... I would claim that I just had some idea about a new kind of porn site, then I would contact the media to let them know that Alcatel was considering entering the porn business any day...

Speak your mind about IP agreements

[signe]

IEEE has an Intellectual Property Committee that researches and investigates IP laws and agreements and such. They often propose policy to the government (US, specifically).

One of the things they're working on right now is collecting information and opinions on pre-assignment agreements (these are the agreements that you're asked to sign at the start of employment, or a contract, which assign all rights to the company you're working for. I highly suggest that everyone who has a strong view go to http://ieeeusa.org/committees/IPC/ and read the information they have and make comments using the form on that page.

-Todd

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.