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.

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...

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.

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?

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!

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.

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.

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.

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).

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).

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...

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.