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Are NDA 'Prior Inventions' Clauses Safe to Sign?
BenderMan asks: "I own a small consulting company. Today I was asked by yet another corporate customer to sign an NDA with the increasingly popular 'Prior Inventions' clause. The gist of it is they want you to provide a list of all your past and current inventions and/or ideas so they can define and protect the intellectual property that they have hired you to build. Like many of us that lay awake at night, whilst the hamster wheel spins new ideas, I've got a number of un-patented works in various stages of development. Given that mutual NDAs only provide one year of protection, I don't feel obligated, nor do I have sufficient time and energy, to fully and properly document my inventions for an NDA. While these clauses are written with good intentions, the reality is that these valuable ideas would be placed in the hands of people that could potentially profit with impunity (Have you priced patents lately?). Unfortunately many companies are not willing to strike this clause from their contracts. Does Slashdot agree that this is a concern, and how have you dealt with these situations?"
IANAL, but the document itself would be proof of Prior Art, allowing for easy invalidation of their patent... right? But then again, not everyone has laywers, time, and money to chase patents with... :(
I asked my would-be employer about it, and they pointed to the sentence that constrained the clause to inventions applicable to what the company produced. Since the company sold health care software I didn't feel threatened. My personal inventions don't deal in that area.
IANAL - and that's really the crux of the matter, neither are you, neither are 95% (ass pluck statistic) of Slashdot. If you're worried, take the contract to a lawyer (preferably experienced in intellectual property things), explain to them your concerns, have them examine and make any proposed alterations they think would be necessary.
Don't be pressured into signing something you're not satisfied with, in most civilised countries a (potential) employer cannot hand you a contract and say sign now or sign out, you can and should take the time you need to properly examine the contract, by professionals if necessary.
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I ran in to this situation. The company made me the offer, we negotiated and I said yes. They handed me the contract to sign. I read it. The employment contract had some wording about helping them secure intellectual property rights following the end of my employment. It was badly worded: as spelled out it created an indefinate obligation to do work for free following employment. So I said, "Look, I see what you're getting at here but this is bad wording. We should tweak it a bit." They said, "No, everybody signs it."
Not everybody. I didn't. And a month later I got a much better job at a much better salary.
My advice to you is this: If you're not important enough that they're willing to negotiate the contract then you're not important enough and while you work there you'll never be important enough. Walk away. Its a bad deal.
Moderating "-1, Disagree" is simple censorship. Have the guts to post your opinion.
If you're really consulting, not becoming a psuedo-employee, you definitely don't want to sign that. That's an employee kind of thing, where the assumption is that you have no other customers. If you do have multiple clients, you don't want to limit the areas in which you can work. Such NDAs must be very narrowly drawn. You can work this out. Ask them what NDAs they ask from, say, McKinsey people.
I once turned down consulting at Xerox PARC for that reason. They wanted an overreaching agreement for a part time deal.
Your good ideas are your lifeblood. If you have been honing and developing methods and techniques over the years, then you've been building a priceless (or at least highly valuable) personal resource, to be metered out in small, controlled, and non-exclusive amounts to your clients.
For any single client to want the whole lot, nicely gift-wrapped and handed to them on a plate, is the height of impertinence, even if they say that they are going to use the document merely as reference and to give you proper accreditation. This is the real world --- that won't happen. And you probably don't want to spend 6 figures in court to enforce it.
By all means produce such a comprehensive document. I suggest that the MINIMUM price under which you would offer it to a client should be US$50,000, under non-exclusive NDA and with all your rights reserved. And that would be utter peanuts for this kind of thing.
You might like to consider the lengths to which companies go in search of valuable advice or ideas, in the form of hiring consultancies or even industrial espionage. Useful information is not cheap, so don't undersell your own.
"The question of whether machines can think is no more interesting than [] whether submarines can swim" - Dijkstra
1) Find lawyer that deals with such things.
2) Give said lawyer some money to deal with it for you.
3) Profit?
I've seen such contracts frequently. In every case, I simply rule-out (scratch through) those lines. And sign the resulting contract. I have NEVER had it become an issue or come back for negotiation; it has always been accepted.
You'll never know until you try.
IANAL, never played one on TV, nor even dated one, but I think that what you are describing is a cartel, "prohibited by antitrust laws in most countries"... Not that I would not suggest to you, nor to the original poster, organizing in this particular way with your competitors, but maybe it is not entirely wise to post your intentions on /. ? :)
Paul B.
They aren't under any obligation to hire you, just as you aren't under any obligation to work for them. In general though, it doesn't matter. The main reason being that they probably WON'T say that is they are honestly interested in you. Taking a hard line with new recruits is an excellent way to not get the people you want. Now maybe they have a ton of people lined up and you are just here because your name came first in the stack, but usually it's because they like you best. Also you'd have to ask yourself if you really want to work for someone who says "Do this now with no thought or we fire you"? If they are going to give you such shitty treatment in the hiring process, it's not likely to get any better later.
I think you'll find most job offers have a bit of shelf life to them. You can say "Sounds pretty good, I just need a couple days to think about it," and the offer will probably be valid after those couple of days. If it's not, chances are that you probably didn't want the job. Either they are colossal assholes, or they are hiring you as a replaceable cog and they intend to use you up and throw you out.
Now of course the situation may be different if you are desperate for work, however in that case perhaps you are willing to put up with the crap so perhaps you are also willing to put up with the crappy contract with no thought. However if that's not the case you should ask for time to think and review it, and if they won't allow that, it's a pretty good sing you didn't want that job anyhow.
A "prior inventions" list is normally just a list of invention titles and a brief description of what the invention does. For example: "Invention: A method for exercising rodents via a wheel constructed from rigid wires. Description: The device is in the shape of a wheel. The rodent climbs inside the wheel and runs, spinning the wheel."
When signing a legal document, it's important to know why the company wants you to sign it. In this case, it's not so that they can take all the inventions you've thought of. Instead, it's to limit their liability to you. What they are trying to protect against is the scenario where you work for them on a contract, and without their knowledge, embed one of your prior inventions into their product, and four years later, when they've become the next Google, you step up and ask for a massive amount of money because they are infringing on something that you wound up patenting.
With that in mind, I suggest that this one isn't worth fighting over. The best way to deal with it is to list everything you've ever thought of, and let their lawyer decide whether he really wants to spend hours going over each one with you. In the end, the lawyer will probably decide that it's not worth while to do so, and you can get on with your work.
--Pat
Of course no one here knows the specifics of your case, but this type of clause is in place not to steal your inventions, but to protect both parties.
The company's side: They pay you to help them develop a widgit or process that the company hopes to commercialize. During the process of your helping some valuable intellectual property is developed. Hopefully before the relationship you both decided who "owns" that property and how the company will get to use it - either by taking ownership from you or by getting a license from you for a reasonable cost. Now, what the company doesn't want to happen is to get that far and then have you pull dominating prior Invention #2 from your ass that you've kept hidden from them that prevents the company from practicing the art you've developed with them. This will gum up the whole commercialization process. - this happens a lot and several companies have been burned by it. Thus the company wants you to document related art up front so that the company can take into account that they'll have to negotiate the license of dominating prior Invention #2 in the work contract.
Your side: You have lots of stuff running around in your head or in progress, but it's not protected by a patent or copyright or whatever. You are now entering a relationship with a company that could use those ideas, but are paying you for something else, i.e., the *field* of the NDA does not cover the field of these ideas. If you never disclose these other ideas, there's no issue. But if you do disclose them - they aren't covered by the NDA and you could be screwed. However, if those ideas are specifically stated in the NDA, even if they are outside the field, then you'll be OK as identifying them as covered - the ideas will still be "yours".
The term of the NDA can be longer than 1 yr. That's negotiable. There's also usually two terms - one term during which you both can disclose info (if it's a two-way)- this usually is 1yr with some renewing mechanism. But there's a second term that is the length of time both of you need to hold the information secret - which is usually 5 yrs, sometimes as long as 10 yrs. The company cannot "steal" your ideas after the term. If you disclosed these ideas to the company *properly* you have now forever "poisoned" the company with respect to that idea. Proper disclosure should be explicitely defined in the NDA but usually means in writing on paper (not electronically) with CONFIDENTIAL written on the page and you keeping a copy. If the company tries to patent it without including you, you can go after them. However if you never patent the idea in a reasonable period, the company can, of course practice it - but they can't ever get a patent on it to exclude others without you being named as an (or the only) inventor. I work in R&D in a big company and we are paranoid at getting poisened in this fashion. It's one of the risks that needs to be managed before entering a relationship with smart people like you who can often greatly shorten development time. Of course, if the NDA is two-way the company can "poison" you in the same way - although this is rare since companies don't like disclosing anything outside of the NDA's field.
Disclosure through an NDA does not start the clock ticking for getting a patent - it's a private disclosure, not a public disclosure. However, you do have the risk that the company will publically disclose the idea - they've violated the NDA and can be sued, but you will now not get a patent unless you apply within a year.
In the end, the NDA is just a piece of paper - a good working relationship requires trust on both sides. If you feel the company is going to screw you, don't work with them. If the big company thinks you won't hold their disclosed IP confidential, or will not be upfront in disclosing potentially blocking ideas or art, they won't work with you.
Keep in mind the "do it yourself" route is a perfectly fine way to get a U.S. patent if your idea meets the requirements of the patent process. You'll be able to put it on your resume, on your product, your web-page, your blog, and a nice plaque for your wall. All very nice things. If your ideas and patents are commercially valuable ones, you might even be able to show them to vulture, er, venture capitalists as part of your pitch to get funding.
What you are paying the patent lawyers for is, in principle, their ability to help you craft the claims so as to maximize the coverage of the patent to include as full a conception of your invention as possible, properly using the peculiar jargon specific to patents, while avoiding making it so broad as to be invalidated by prior art. You are also paying for their experience in recognizing how other competitors might try to invalidate, circumvent, bypass, or otherwise make your patent useless in practice, and for advice on what to keep as trade secret rather than disclose in the patent. Finally, you are paying them for their experience or international partners to get through the foreign patent process, which has different rules and processes for each jurisdicition.
That said, even if you get a patent, all it does is give you the right to sue someone who is using your patented invention. It does not guarantee that someone will not just use it anyway, and it does not guarantee your suit will succeed in preventing more grief than it causes.
Unless you are, or are planning to become, a corporation using a patent portfolio as part of its strategy, or doing it for marketing/vanity purposes, it's probably a waste of money and time to patent anything on your own.
ANAL but I have 5 patents. I am also in the same situation with many patentable ideas that existed before my employment NDA was signed, and my company has a similar line of products. It is a sticky minefield but here is what has worked for me:
1. Thoroughly document your ideas even if they haven't been reduced to practice yet. Have hard copies notarized to establish the date of invention. Remember the US patent system works on a "first to invent" basis.
2. Do not disclose your ideas to ANYONE in the company.
3. If you believe your idea has significant market value (worth fighting for), write up a provisional patent application. This is cheap ($100 app fee I think) and it gives you one year to refine and submit your final application (~$700 in fees). Use the format from other patents as a template. You don't need a lawyer unless you want to fight with someone you think has infringed.
HTH
mAC
Because you signed it. If you sign a contract, it is presumed you understood what you were doing and becomes your burden to proove otherwise. This is a difficult, expensive, and time-consuming level of proof to meet. You can't just say, "I didn't understand it" and expect a court to rule in your favor.
Can the employers insist that you sign it without giving you time to properly review it (even without a lawyer)?
They can. They shouldn't, but they do. And if you give in to that pressure you might have an argument in court, but you'd still have a hell of a time proving it. And the deck would begin stacked against you because you had signed.
Because I would consider an employer insisting I sign a contract and denying me the opportunity to review it an abusive employer. But moreso, such conduct would seem to render the contract unenforceable. Can such employment contracts signed under such conditions be upheld by US courts?
Yes. Don't work for sleazebags. You are correct that some kinds of high-pressure tactics can render a contract unenforceable, but the person breaking the contract has to prove their case. How do you think you'll be able to prove it if it's just your word against theirs, and they have a contract you signed?
I am a lawyer. This is not legal advice. If you have a legal problem, discuss your situation with your own lawyer.