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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?"
Either bend over backwards to please your customers or bend over forwards to be pleased by your customers.
How will you decide?
Film at 11!
(Every time someone puts you in a position where you have to choose between two lesser evils, take the third one or make one up yourself.)
"All you have to do is be fragile and grateful. So stay the underdog." Chuck Palahniuk, Choke
It's tough to say without seeing the clause whether you really have the problem you imagine. And, ob. disclaimer, IANAL. TINLA.
I've solved this in the past by making sure that their ownership of my ideas is restricted to items produced in the course of (as opposed to during the term of) working for them. This gives them ownership of IP created as a result of executing their project and no more. In terms of the "Prior Inventions" clause, I'd attempt to rename it "Prior published inventions" and give them a good list if they won't strike it. If they really want a list of unpublished inventions as well, maybe you could extend the term of their NDA to something insane like 10 years?
If your ideas are valuable, they won't strike the prior inventions clause and won't amend it as I describe, and they won't restrict the IP transfer clause to items produced in the course of your contract, you may be dealing with a client that you should turn down. Those exist, and, though it's painful to turn away business, sometimes it's good sense to do so.
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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.
Odds are they are using boilerplate language and have even less desire to hear about your velcro detachable sideburns than you have to tell them. Just ask them if they're wedded to having that clause in the contract, and if not strike it. Alternately, specify that the clause only applies to a certain problem domain (e.g. "With respect to image processing, we warrant that the following is an exhaustive list of our IP: blah blah blah" and then your Sideburns 2.0 get to remain your own secret.)
IANAL, DTAYROS (don't trust anything you read on Slashdot).
Help poke pirates in the eyepatch, arr.
I was co-owner of a small company that was bought by a larger company for some technology we designed. They hired us to further develop it. I had to sign one of these prior inventions things.
The main thing I was worried about was that these guys were going to buy our company to get our techology then fire us. The project we were working on before we were bought was based off some hobbyist stuff I had built before starting the company. In fact, the core valuable parts remained exactly the same in both the hobby projects and the project we were selling.
Without going into details, I listed the hobby projects as prior inventions. They never really thought twice about it because they looked so inocuous.
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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If my memory of Patent Practice and Procedures serves correct, only publicly disclosed inventions can be prior art. Inventions disclosed under an NDA would likely not be considered public and, thus, could not constitute prior art.
There was Cowboy Neal at the wheel of a bus to never-ever land.
Just add a similar clause for them on to the contract and see them groan... why should you bear the burden of discovery alone? You've got ideas you want to develop later right? So they need to disclose ALL of their ongoing development efforts in all areas of their business and don't let them off easy... if it looks like they're skimping on areas you know they're doing work in call them out.
Or you could follow the letter of the law and disclose a bunch of dumb ideas you had when you were ten and let them know that it might take you a while to get up to the present day.
Hmmm I once had this idea about how to train a monkey by dipping his feet in red paint so he'd know not to climb on the table anymore, then there was my GIJOE para-glider apparatus... it almost worked too!
A fool throws a stone into a well and a thousand sages can not remove it.
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.
The customer does not have ownership of anything not directly applicable to the work they are paying for. They acknowledge that they have no IP rights to anything you may invent on your own time, with your own equipment.
I have had customers demand ownership and license of all our prior work. After I stopped laughing, which really pissed off the purchasing agent, I pointed out that they really didn't want to test that in court, so that clause was declined. They try other ways as well.
Each customer will do their best to stake out territory in your mind. My approach has been to define for them what they may stake out, and what the limits are on it. If you control that conversation, they need to negotiate your terms. They claim they won't, but most reasonable ones will at the end of the day.
For this reason, we don't sign non-competes, and we require mutual NDAs. We have been burned a number of times with others NDA documents, so if we find them insufficient, we force the customer to sign one of ours, or we simply refuse to discuss confidential material with them. Non-competes between organizations are funny, but some customers try to require this. Our response is uniformly that we will sign the non-compete under the requirement that the customer requesting the non-compete execution pay full wages, business expenses, etc. for the entire duration of the non-compete. When they tell you how ludicrous that is, it lets you tell them how ludicrous it is to request that your company not work in its field for a period of time, and if they are going to demand it, they are going to need to pay for what they ask for.
We have had customers steal from us, "partners" lie to us and stab us in the back. It is part of business. Ethics and morality take a back seat to egos, and the pursuit of the almighty dollar.
Your job is to demand certain core rights, and stick to your guns. Have a few you can negotiate away and get something in return for this, but if the customer understands that there are some red lines not to be crossed, well, they will either respect you for it and negotiate, or leave you for some other pushover.
You create something outside of the contract domain, scope, with your own stuff, even if it was during the contract, as long as you did it on your own time and with your own stuff, you own it. You need to demand that. If you don't they are going to insist on owning everything in your head. If you let them push you around here, well, your compensation is going to suck as well.
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
No other company is going to sign something that one-sided. Where are they going to find staff? It's not going to end until NDA's and assorted silliness get to the point no one wants the job. I have slid piles of paper like that back at customers and said we're either going to trust each other or we're not doing business. Surprisingly effective, but not 100%. If they're that stupid about their paperwork, how are they going to be smart about development? YMMV but I've never seen a contract worth having that had that much paperwork involved.
Drug tests are another one. One company I interviewed with, a telecom in Arkansas, wanted one and I said it was no problem if I could have access to the drug test results of everyone on the management team all the way up to the CEO. That was a head scratcher, no one had asked for that before. I responded that if they wanted to look behind my kimono, I wanted to see behind theirs. Then they had to fess up that the execs didn't get drug tested. Ha! No tickey, no washy buddy. If they didn't, I didn't. Told them to call me when the CEO decided to get tested. They went out of business a couple years later...see what happens when you don't hire me? ;)
It's all really quite insane. I mean I'm sorry that somewhere back in the past you got burned by some former employee but I'm not paying that tab. And if you let lawyers run your life you're not someone I want to work for anyway. People leveraged to the hilt and desperate for a job may have to eat shit like that, but, fortunately, I don't.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
Dear Bender,
Take the advice of my good friend Gary Kildall and refuse to sign anything like an NDA. Nothing good can ever come from it.
Sincerely,
Bill Gates III Esq.
I would never specify in a contract what my prior art is. My contracts always specify that anything belonging to the client prior to the contract remains theirs and anything belonging to me prior to the contract--or that I come up with during the contract but not materially related to the contract--remains mine. No lists are necessary. If there's a dispute over who owned what when, that's what courts are for. I'm not going to enumerate my property because it then implies nothing else was mine. No way. Let the contract stipulate the spirit of the contract (that no-one is trying to rob anyone else's idea) and if someone believes that spirit was violate, take it to court and let it get worked out there.
So, find a couple clients that both want that NDA executed.
Execute with both of them.
Do some work, foment a crisis, get them both
hammering on each other, stand aside a watch
the fireworks.
I have a patent on this, by the way.
emt 377 emt 4
That's just not a tenable position for an external contractor. The corporate machine knows what it's doing and that you will not likely give up a lucrative contract because of some 'iffy' terminology or the almost boilerplate NDA. Regardless of what your 'indespensible' skills are, there's someone else out there that's willing to take up the crumbs that you leave lying about.
It's one thing to have your ethics and sense of what's right and wrong displayed proudly on your sleeve, and it's another altogether to be able to make money and support your family...
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