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Non-Compete Agreement Beyond Term of Employment?
stellar7 writes "I work in IT for a large company. They have recently asked me to sign a new non-compete and confidentiality agreement. I signed an agreement when I began employment, but now they want me to sign an updated one. Behind the link are a few paragraphs from the new agreement. It states that the company has a royalty-free license to any 'Invention' I create including up to six months after leaving (and the company fully owns any Invention that relates to the company in this same period). Has anyone signed a similar agreement that reaches beyond the end of employment and includes things not related to the business?"
A. Employee shall promptly and fully disclose in writing to [Company] any inventions, improvements, discoveries, operating techniques, or "know-how", whether patentable or not (hereinafter referred to as "Inventions"), conceived or discovered by Employee, either solely or jointly with others, during the course of Employee's employment with [Company], or within six (6) months thereafter.
B. Employee shall, on the request of [Company], and hereby does, assign to [Company] all of Employee's right, title and interest in any of the Inventions which relate to, or are useful in connection with, any aspect of the business of [Company], as carried on or contemplated at the time the Invention is made, whether or not Employee's duties are directly related thereto. [Company] shall be the sole and absolute owner of any of the Inventions so assigned. Employee shall perform any further acts or execute any papers, at the expense of [Company], which it may consider necessary to secure for [Company] or its successors or assigns any and all rights relating to the Inventions, including patents in the United States and foreign countries.
C. [Company] shall be the sole judge as to whether the Inventions are related to or useful in connection with any aspect of the business of [Company] as earned on or contemplated at the time the Invention is made and as to whether patent applications should be filed in the United States or in foreign countries.
D. [Company] shall have the option of taking a permanent, royalty-free license to manufacture, use, and sell any of the Inventions conceived or discovered by Employee during the course of Employee's employment with [Company], or within six (6) months thereafter, that are not assigned to [Company] under paragraph B. of this Agreement.
A. Employee shall promptly and fully disclose in writing to [Company] any inventions, improvements, discoveries, operating techniques, or "know-how", whether patentable or not (hereinafter referred to as "Inventions"), conceived or discovered by Employee, either solely or jointly with others, during the course of Employee's employment with [Company], or within six (6) months thereafter.
B. Employee shall, on the request of [Company], and hereby does, assign to [Company] all of Employee's right, title and interest in any of the Inventions which relate to, or are useful in connection with, any aspect of the business of [Company], as carried on or contemplated at the time the Invention is made, whether or not Employee's duties are directly related thereto. [Company] shall be the sole and absolute owner of any of the Inventions so assigned. Employee shall perform any further acts or execute any papers, at the expense of [Company], which it may consider necessary to secure for [Company] or its successors or assigns any and all rights relating to the Inventions, including patents in the United States and foreign countries.
C. [Company] shall be the sole judge as to whether the Inventions are related to or useful in connection with any aspect of the business of [Company] as earned on or contemplated at the time the Invention is made and as to whether patent applications should be filed in the United States or in foreign countries.
D. [Company] shall have the option of taking a permanent, royalty-free license to manufacture, use, and sell any of the Inventions conceived or discovered by Employee during the course of Employee's employment with [Company], or within six (6) months thereafter, that are not assigned to [Company] under paragraph B. of this Agreement.
Seriously, ask a lawyer, not slashdot. I highly doubt a contract like that is enforceable (seriously, they own work you create for your next employer?) but I would talk to a lawyer. And I wouldn't even think of signing it.
Do you have ESP?
Take it home.
Cross out the parts you think are ridiculous.
Sign it.
Return it.
Contracts must be a two way street to be legally binding. What do you get in return for signing this? More money? I'd guess not. If you want to see an interesting blank look on your boss' face, ask him what you're getting in return.
Ask if you'll be fired if you don't sign it. That'd be interesting, too. Contracts made under duress are also not binding.
I would say that I'm not a lawyer, but I'm not a fucking lawyer and so I don't have to put stupid legalese into my posts!
expandfairuse.org
"Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void."
The rest of the relevant chapter addresses mainly those instances where one sells an interest in a business. In those cases noncompetes are enforceable.
California courts routinely void noncompetes under B&P 16600.
No Inflation Taxation without Representation
If you lived in Illinois, these paragraphs would be completely null and void. I can't speak for other states.
"To those who are overly cautious, everything is impossible. "
The 9th circuit court (California, Oregon, Washington, etc.) has ruled these sort of agreements as void. They are deemed to be prior restraint and hence the agreement is unenforceable. Outside of the 9th? Unknown. Either way talk to a lawer. Most likely her/she will laugh at this agreement. However, what ever work you do on your own time, make sure you do not do it on company time or equipment.
Another day closer to redwood heaven
Never give up an idea unless you will own a percentage, otherwise keep them to yourself and try to implement them at home in secret, and then launch your website/product/business the minute your non-compete expires.
Camping on quad since 1996.
One of the companies I used to work for tried to get me to sign an "updated" contract.
I told them, "I already have a contract and I'm happy with it. There are termination measures in the contract, but I don't think any of the issues apply (gross incompetance, etc)."
Legal freaked out. They told me I must sign the new contract or else my employment would end. I said, "The contract I am working under has no expiration date and I don't see any provisions for updating it. As I said, I'm happy with this contract, so unless you offer me large concessions I don't really feel it's in my best interest to sign another one".
Legal freaked out again. They said, "Everyone has signed this contract. You are the last person. You must sign it."
I asked, "Are you saying that you will fire me if I don't sign this contract?"
"Well, no."
"Good because I like the old contract better."
End of story. Never heard from them again.
I know a lot of people will advise you to consult a lawyer, but my advice, as one who has consulted lawyers far more often than I'd wish to have had, is not to.
First of all, the law is not nearly as clear-cut as geeky programmer types think it is. As a rule, the law is roughly speaking some mash-up of what the legislature wrote, what the judge thinks ought to be so, and what a jury of random folks majoring in theater and journalism at the local community college think it ought to be. Hence a good lawyer is probably not going to be able to give you an precise and definitive answer on all your what-if scenarios. Instead, he'll probably agree with you on general grounds that the contract is evil, vicious, and you are a noble person dreadfully wronged blah blah (this is just advertising, an appeal to your vanity, so you won't forget him when you someday need a lawyer). If you press him on specifics, the most he's likely to do is tell you roughly how he would argue the case against the contract if he needed to, but he's unlikely to guarantee it will work.
Secondly, aside from satisfying your injured pride, what would be the result of asking a lawyer and setting yourself back $500 or so? Suppose the lawyer agrees it's a smelly contract, and a court might rule this or that aspect unenforceable, if push came to shove? What are you going to do with this information? Go to your boss and say Ha! All your base are belong us! and he's just going to say Curses! Foiled again! and tear up the NDA, maybe give you a raise for showing initiative and helpfully pointing out the folly of the company's ways? I mean, as opposed to marking you down as a pain in the ass who needs to be shitcanned at the first opportunity, like maybe right now? Your feelings would probably be more effectively soothed if you spent that $500 buying pretty girls drinks in a club.
Finally, if you just have enough mental discipline to keep your mouth shut when you need to, this doesn't matter anyway. Suppose you do have some kick-ass wonderful idea while you're working for this bunch, and you decide you want to take it elsewhere. All you need to do is not keep notes on your idea in your office (duh), not work on it using company computers and networks (duh), not talk boastfully about it around the water cooler -- this is the hard part -- and just generally keep your thoughts to yourself as long as you work there and for six months afterward. When your killer idea takes the world by storm it's going to be up to your former employers to prove in court that you had the idea eight months earlier, when you still worked for them. But without the evidence you've carefully avoided providing, they're screwed. They can't read your mind.
As for the ethics involved: anyone who gives you a contract like that to sign has made their lack of morals completely clear. You owe them no consideration in return whatsoever. Indeed, if you used them to pay your rent while secretly working out your brilliant idea at home, they'd have only gotten what they deserve.
BEFORE YOU SIGN AN AGREEMENT:
( obl: Ask a lawyer, not slashdot )
If you are involved in solving any problems creatively,
and have to do any SOP work for the company in question:
1. Get a stamp, ( DATE: NAME: WITNESS, in boxes )
2. Get a notebook, and STAMP EVERY PAGE.
3. Write down EVERY IDEA YOU HAVE HAD THAT RELATES TO THEIR WORK.
4. DOCUMENT EVERYTHING, AND WHEN YOU TALK TO THE LAWYER, have him initial all the pages. ( EVEN BLANK PAGES)
5. have a copy made, and send one to yourself, and one to the relative nearist you. Make sure you completely cover the entire package with clear tape.
Note: This is from the 'how to protect intellilectial property' book by Nolo press.
Then when something comes up at your work, that you already have invented. You mearly state that its prior art, but you own the idea.
I worked for a company that did the same thing. I had an agreement in place for non-competition. They asked for 7 years, I told them that they had aready agreed to others for 5, and a few instances where they were starting to get the swing of things 2 years. I told them I would sign for 1 year. I had heard that a lot of discussion went on behind the scenes, and after three days, they accepted the 1 year limit. They asked about 'Prior art' and I gave them the business card of the lawyer.
When the eventual day came up that I had to tell them there was prior art, they screamed and yelled at me for about 1/2 hour, and had a vice-president come and give me the soft talk. I asked for 10,000 stock options. The Chairman of the board came and talked to me. I asked him for 10,000 stock options. He said no. I then told him 'Why is the founding and running of this company predicated on not paying people what they are worth?' "Ahh Eee Ohh? Can I get back to you on that?" And I told everyone at the monday morning meeting about it. Monday afternoon, the first person who had asked me for the agreement, said 'One year is acceptable, and we are granting you 7,500 stock options for use of these three ideas.' I ran into the VP years later. He thold me that they had a boardmeeting about this, and someone said, "Were screwed, if we dont do this, we will esaily loose most of the loyah staff. And if we do this, we are actually rewarding the best of the best. Its going to cost us a lot of money, but how much money are we going to make on this? Actually on all of it?"
( That is what happened Monday when they heard about the morning meeting! )
Later on, two of the ideas turned out to be total duds, and were actually based upon other prior work. The one idea that paid off, got me $25,000 in cash, $2,500 for the patent application, and paid for the lawyer ten times over. I PATENT MY IDEAS NOW! THe patent hangs on the wall beside my degrees. Not worth much now, but it was fun.
Another Patent I have seen hang on a wall is the Gene Amplification Patent owned by a guy at Chiron. He said "Its worth about 4.3 billion dollars over the life of the patent" He of course is a multi-multi-millionaire. Drives a toyota station wagon.
You just have to judge... What is your idea really worth?
( HA! The Capatia is 'fr**tf*l' Best fortune cookie this month!
"Warner, never hesitate to sign a vague, badly drafted employment agreement."
... you lose even if you win.
... you lose even if you win.
Yeah, legal fees galore.
Look I recently dealt with a dickhead that screwed me out of ~$30k. And ~10 others out various amounts ranging from $10-$90k. We were all contractors. We all signed the same contracts. All of the contracts are mostly unenforceable.
But here is the deal, if your opponent is irrational and has lots of money
let me repeat that.
If your opponent is irrational and has lots of money
This guy was willing to play hundreds of thousands of dollars to make sure none of us collected a dime. He has a mental problem with admitting he is wrong. He would counter-sue for millions of dollars. Claims that were probably losers (you can never be 100% sure in litigation) but would have still cost $100k in attorney fees to defend. And it isn't just attorney fees it is your time. And in a profession where I bill by the hour, my time is my money.
The $90k guy and the $20k guy sued (separately) and all of us waited to see what happened. The suits settled for a waiver of claims and no money. Basically the $90k, and more so the $20k guy, decided it wasn't worth risking their house to win. Plus even if they won it would have cost more in attorney fees (especially for the $20k guy) then they would have won.
It is like in poker when you are forced to fold, despite your winning hand, because you don't have enough money to match the bet.
This dickhead had enough money to piss away a good deal of it on making everyone miserable.
If in the 6 year statute of limitations I win the lottery and can play on equal footing with him, I'll sue the bastard, but until then it isn't worth my trouble to be right.
But keep this in mind if one party is rational and the other isn't and has money to afford to be irrational, the irrational party wins.
If it is a big company they will either do (a) be rational, settle and walk away or (b) be irrational and fight forever because they have the money to do so.
I had the same type of agreement when I was at MSI. When the workers comp. insurance turned me down -- claiming that the injury was not solely from work, I used that agreement to argue that all computer related work belongs to my employer, therefore work related.
Fight Spammers!
I was once asked to sign a new contract to replace my old one. This new contract contained very broadly worded IP ownership clauses that stated among other things:
I felt the first two demands were way to broadly worded. The first one seemed to extend to anything I coded in my spare time even if it didn't compete with my employer's products in any way shape or form. The second point was so broadly worded it forbad me to contribute to any Open Source projects at all even though the company it self was only to happy to use open source software. This is a brand of hypocrisy that really pisses me off. The last point was simply outrageous since seemed to clash with freedom of employment laws in my country, an EU Nation. At the time they presented me with the contract this hadn't been tested in court. I refused to sign the contact along with several other developers. Eventually the PHBs and their legal weasels came back with a revised contract. After much arguing and several revisions it stated something along the lines of the following:
Only to idiots, are orders laws.
-- Henning von Tresckow