Does my company really own every idea I come up with?
I work for a large company that owns a website with a couple million members that allows them to get answers to their technical questions, read blogs, network with their peers, etc from that website. I am a salaried mid-level .NET developer at work during the day.
I came up with an idea for a web app that could really take off. I've been working on it at home, on my own machine, on my own time. Its written in Python using the Google App Engine SDK (super awesome, BTW). I can see needing Angel or VC funding at some point, or selling it if it really does take off (that would be my ultimate goal, of course -- selling it to a larger company and cashing out).
My concern is, since I work for this larger company and signed an "Employer Protection Agreement" when I was hired, do they own my "invention" (web app), even though it was developed on my own time, with my own resources? Where is the line between whether a web app relates to my current employer's site or not. Without going into too many details at this point, it would essentially be an aggregator of my user's personal contacts.
The exact wording in the agreement I signed says:
"The Company will own (a) any inventions, trade secrets, ideas, original works of authorship or confidential information that Employee conceives, develops, discovers or makes in whole or in part during Employee's employment by the Company that relate to the Company's business or the Company's actual or demonstrably anticipated research or development"...
That part I think is fine, because my idea does not really directly relate to their website. What worries me is this blanket catch-all statement at the end:
"...To the extent any of the foregoing is not deemed to be a work made for hire, Employee hereby irrevocably assigns all copyrights, patent rights, and other ownership to the Company...and Employee will not at any time contest the validity of such rights".
Does that mean they own ANYTHING I invent that relates to any subject matter? Do I need to quit my job just to be able to work on this idea? I have three kids and a wife at home and work full time just to make ends meet. I work on my ideas for as long as I can at night, until I'm about to collapse. I'm making progress, but is it worth it?
69 comments
[ 1132 ms ] story [ 2018 ms ] threadTo the extent any of the foregoing is not deemed to be a work made for hire, Employee hereby irrevocably assigns all copyrights, This part just says that if what you do in your free time doesn't already transfer to them by work for hire laws that you will explicitly grant it to them.
Note: I am not a lawyer.
So I'm left debating whether I have anything to worry about in the first place, or whether I should start working through all that bureaucracy.
Thanks guys! Looking forward to any more insight or if anyone else has been through this situation before.
I recently went through similar debates myself. Let's say you're working on a dating app. If they have one meeting about how their current infra could be used for dating and record the minutes of the meeting, then that is demonstrably anticipated development. These laws are really a pain in the ass. You really need to spend a few hundred bucks on a qualified lawyer. Here's a link that may be helpful : www.calbar.ca.gov/ipsection
All comments are certainly appreciated!
I'm not sure how litigious they are, and in the end I don't think they'd care about me and my idea. It wouldn't compete directly at all. I guess I'm more concerned about what a VC or Angel investor would think or if that would hold up the process or scare of other potential investors. Or if I beat the odds and did end up selling it one day, I'm worried that any company like mine might see an opportunity to snaggle things up in order to cash in on the winnings. Its a good company, and I enjoy it here, but I just want to keep things clean.
When we were getting started, my cofounder and I held off on putting a single word to paper until we were out of our full-time jobs, on the advice of our lawyers.
I'd just go and talk with your employers about it. "Hey, I'm really happy here, but I've been thinking about a side project - I wanted to arrange with HR that it was my own invention and belonged to me, of course it won't interfere with my job which is my first priority..." Employers want to keep good people so if your side project is truly unrelated to your current company it hopefully won't be a problem.
The problem with mine was that the company was a fairly large one which had completed numerous acquisitions in the last decade or so. Every little company they acquired had some product that was "out in left field" relative to what their core business was. So as these smaller firms were consolidated, this company ended up with all sorts of little businesses out there that I could never account for. I couldn't confidently say what was or was not related to their business or R&D, so I just stayed out of doing side projects out of fear of getting sued and felt pretty unfulfilled.
I ended up just quitting that job and going to work somewhere that I didn't have to sign any assignment agreement.
So. It's complicated.
The company can sue you for the ownership of the work, but until that lawsuit is lost you own the work. In practice they won't sue you unless you really tick them off (don't do that) or you become successful.
There are also mitigating tactics for the upcoming lawsuit:
1. Promptly notify your manager in writing about what you do, print the email and keep it. If you can get a proof that s/he read it, print that too. They key here is that you don't want this to be a surprise to your manager later on when you quit and you don't want to come across as deceptive. It's best to keep good relationships. There is a method to writing this sort of emails - your claims must be broad as to encompass your entire work, and not too specific as to allow you to change things as you work. On the other hand an overly broad claim can attract a lot of undue attention, so strive for balance.
2. When you leave your day job, notify them again in writing about what you do. Ideally get your manager to respond and and print that response, or find other way to have proof. Again, it shouldn't be a surprise to them (see point #1).
By doing this you have established a paper trail proving that they knew but chose not to act. If they fail to act within reasonable time, but chose to bring a lawsuit later after you become successful this paper trail will serve to undermine their claims of you being unfair. I was told that after 3 years of inaction they practically lose their stance. The clock starts ticking at the moment they were notified, and it resets every time there is a new violation (i.e. you create new work while still employed).
Your more immediate problem is that many investors will look at this and either pass or say that they need a letter from a lawyer that assures them nothing can go wrong. Lawyers will tell you that this is complicated. One way to resolve complexity is to ask your current employer to sign a piece of paper that gives you all the rights to this particular work back. They usually don't as there is nothing for them to gain and maybe something to lose. On the bright side there will be investors who will invest despite this, it's just a smaller number. Those are more likely to be true believers, so there is a positive side to this filter as well.
Lastly the law in most states puts restrictions on what kind of claims by employer are enforceable. There are clear-cut cases (like operating a lawnmower service while working at Facebook), but technology cases are complicated. This will cost a lot of money to get a definitive letter from a lawyer, and I don't think it's worth the expense in your case.
Pretty much everything that you do on company time and company hardware (office, laptop, network) is owned by them (and can be monitored). There are multiple legal precedents for company ownership/monitoring.
Example of Lucite Mini Patent: http://www.recognizinginnovation.com/miva/merchant.mvc?Scree...
See http://law.justia.com/california/codes/lab/2870-2872.html
And likely if you live in another state this would not be upheld, especially if you were building something wholly unrelated to your employer's product / service.
I'm no lawyer though, so do some research regarding your state's labor laws.
Disclaimer: I'm not a lawyer, but I've been directly involved in issues pertaining to these clauses in the past.
But if you patented something related to house painting, they would own that, even if their business is completely unrelated to painting.
If, on the other hand, your painting business is about creating works of art rather than home improvement... they will leave you alone until some magazine labels you as "the next Picasso" or something. Then they come and sue you into oblivion, since they will out-spend you 50x in court, regardless of who is "right".
Edits below:
Here's at least one interesting quote from the Copyright act of 1976 (assuming we're talking about copyrights not patents):
"A “work made for hire” is a work prepared by an employee within the scope of his or her employment, or a work specially ordered or commissioned for certain uses (including use as a contribution to a collective work), if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. The employer is the author of a work made for hire."
http://www.copyright.gov/register/se-hire.html
You might say it's not fair. Yes, it's entirely written for the employers. That's why there's needs for state or Federal labor laws to help the little guys.
I don't know why you want to get around it and trying to give false hope to people. If you want to claim the contract is not enforceable, then you should provide citations for the claim.
There are other alternatives as well, such as working somewhere else (if you think that is the right move), or just couching the idea for awhile.
I think hope is good anyway. Nobody here really wants to be a mindless drone for some company for the rest of their lives. We're all learning here.
It's amusing how much lip service politicians give to the importance of small business, when protecting these two rights would promote them more effectively than any tax break.
My take is that the code doesn't specifically limit the exception to my job function; it's broadly worded to cover the whole of the business. And the UC works on so many areas of research that this essentially means that you can't work anywhere else at the same time if that other work requires any kind of confidentiality.
I tried to engage the IP department at my school about this, but got shuffled around and basically told that there are no exceptions or clarifications. They essentially supported this interpretation I have, and referred me to memos that explain the policy in more detail.
What I can't figure out is this: the policy requires that all students submit potential IP to them for evaluation. That includes IP from summer internships. Why are companies okay with this? In practice, I don't believe many (any?) students do this, but the Director stopped answering my emails when I tried to probe this question more deeply.
From a legal standpoint from what I understand (not a lawyer here) you have grounds to fight for the IP but if your company cares enough it will fight you back and bankrupt you pretty quickly. What you signed would be their silver bullet and you would fight a tough uphill battle.
1. Quit, if I really believe in an idea, and work on it somehow without any income or by working with a company that doesn't require such an agreement (which I have yet to encounter around here). I'm not quite confident enough in the idea to do that... but I would like to be able to work on it to see what it turns out to be.
2. Get a waiver, somehow, by wading through all the bureaucracy. If they would sign such a thing, it would obviously be worth it, but I worry about all the fuss this could cause by trying to go up the chain to the appropriate level, for an idea still in its infancy.
"Ask a lawyer" aside, are there any other options? Has anyone ever been to the point where their company actually showed interest in what they were working on, on the side?
IANAL, but I would be concerned that even this would be insufficient if your employer can show that you had the idea while working for them.
Speak to an attorney before posting a question like this to HN, or anywhere else for that matter.
Seems a little silly to have to consult a lawyer before posting to HN. Thanks for your thoughts though (seriously)
http://mattmaroon.com/2008/08/27/one-inviolable-rule/
Then go consult an actual attorney.
You will hear from people who have been in this sort of situation, but not the same situation. For example, their employment contracts likely differ from yours.
In other words, take the specificity language from the first paragraph you're OK with and add it to the second one.
This is unrelated and may not apply to your situation, but depending on how much work you're doing, I'd also be sure to let them know that you think it's in the interest of both parties if you have a stake in the company, and propose a more of less token (depending on involvement) amount of stock options in addition to other compensation.
I'm neither a lawyer, nor ANAL. WTFBBQFTW.
Now, perhaps they are benevolent and are willing to allow you do your thing in the spare time. But, if you really think there is money to be made, spend some money on actual legal advice.
Btw, if I were your boss and would read this message I would be kinda conflictual about granting you an exception from the contract for another reason: you seem to over-work yourself. Now, when you hire somebody for a full-time job you assume a given productivity. If the person is spending another 6-8 hours a day doing his side project until he's about to collapse -- how much productivity is the company losing ? Just another angle to look at it.
"any of the foregoing" means "anything we talked about earlier" not "anything whatever".
They need the last part because copyright is a sticky thing. All copyrights stick with the owner unless they are a "work for hire" or very explicitly granted in exchange for some good consideration, and you can't simply declare something to be a "work for hire", even by contract--it has its own meaning in law and (even more so) judicial interpretation of law. In (a) they try to define what they'd like to be included in "work for hire", but if it came down to it, a judge might not agree, so they require you to explicitly assign rights to everything in (a) (and possibly b, c,... don't know what's omitted) just in case they don't have them already.
If there's nothing important between the two sections you quoted, then I believe the ownership of your invention would hinge on the judgment of whether your invention relates to the company's business. Also any applicable state laws, etc..
I'm not qualified to answer completely, and even a relevantly trained lawyer would need to know the state, but I think there's good reason for hope.
But, I'm not a lawyer either...
And even if the company does transfer IP to its customers sometimes, that detail wouldn't be in an employment contract. You assign your IP to the company, the company does whatever it pleases with it. The alternative is every employee that works on a project for a customer executes a separate agreement with the customer to assign IP.
Does your idea relate to your employers business in any way?
There is your answer. For anything more specific, talk to a lawyer.
I had this exact same situation recently. My day job was in mechanical engineering and I had a website that I did on my own time/computer. My lawyer said that since there was no connection between my day job and my website that I was fine. The agreement I signed was very similar to yours in that it had catch-all phrase like that, but my lawyer didn't seem concerned.
I also emailed my boss and legal counsel at the day job to review my website and I asked if they thought there were any overlaps or conflicts of interest. Both said no, so I have documentation they they disclaimed rights to my website, just in case something ever came up.
YMMV though. Just call a lawyer and get it over with.
Write an spec of what your idea is. Find a friend or relative you trust. Have him/her "hire" you to implement "his/her" idea. Pay taxes on the "fee" you "charged" for your work. Better off, have the friend write checks to "pay" you. Actually cash those and and keep the bank tickets.
Later, when you are no longer working for that company, "buy" back the rights of your works. And don't forget to pray for the friend does not stab you in the back. Good luck!
Note: You should trust your wife well for that solution, or it'll work against you when it takes off (without a job + without your startup).