
Your Invention Assignment Clause Is Killing Your Company - acknickulous
http://ralphbarbagallo.com/2011/09/12/your-invention-assignment-clause-is-killing-your-company/
======
danshapiro
I admire the poster's idealism, but the advice is poor and the title is pure
linkbait.

The problem is this: it is difficult bordering on impossible to get a company
funded or acquired without IP assignment in place. It's the first check in due
diligence. That means you'd be a fool to work at a company like the one the
poster describes, since it is clearly run by amateurs and has grave, self-
inflicted problems in its future. There are always exceptions - maybe an
idealistic consulting firm could pull this off - but this is very dangerous
stuff.

If you're dubious, ask your favorite startup attorney what the #1 killer in
due diligence is - it's nearly always IP assignment. Someone wrote some code
without having it in place, and you have to either excise the contribution
(not always possible) or try to buy the IP retroactively - and since the
entire company is likely on the line, you won't be paying market rates. It's
more like extortion at that point than a purchase.

Long story short: if you're not assigning your IP, then you're not working
_for_ the company; you're working _at_ the company. Don't try this one at
home.

~~~
psykotic
I think you're misreading him. He's not saying the company shouldn't own
inventions developed by the employee for the company on company time. He's
talking about the all-encompassing agreements that make employees sign over
all rights to anything conceived by them in their professional field for the
duration of their employment.

------
buff-a
Most companies will have (and should have) a clause saying that unless its
totally unrelated to the company's business, then they own it.

If you quit a job and start a company that is unrelated to your ex-employers
business then you are in the clear provided you can demonstrate that you
didn't start generating ideas until you after you left.

If you quit a job and start something that competes, then you need to take at
least 6 months off and go travel the world. Otherwise they can sue you, and
probably win. Getting sued at this stage is probably enough to destroy your
business. Getting sued by someone who is probably going to win is guaranteed
to destroy your business. Unless you can demonstrate the 6 months off, very
compellingly, you will get sued when you launch at the latest. Your source
code and the equipment its on will be sought as evidence. IANAL, but this was
the advice I was given by someone who would know.

One thing you can do is have an attachment to the contract that lists all IP
that you already own, and further, get it agreed that this IP is unrelated to
the company's business so you can keep working on it.

------
Joakal
IBM's invention policy is: first patent: $1500 when it's filed, another $500
if the patent is awarded any patents after that: $750, +$500 if patent
awarded.

Every 4 patents you hit a "plateau" and get a bonus $1250 or so on top of
everything else.

\- Random post in a thread where people apparently get $1 for developing
patents for the company
[http://ask.slashdot.org/story/03/10/28/0055253/Employee-
Pate...](http://ask.slashdot.org/story/03/10/28/0055253/Employee-Patent-
Compensations)

But I also saw that IBM even demands former employee's patents filed after
employment: [http://www.goodwinprocter.com/News/Press-
Releases/2011/Court...](http://www.goodwinprocter.com/News/Press-
Releases/2011/Court-Rules-IBM-Owns-Patents-Obtained-by-Former-Employee.aspx)

Is the above good or bad for a company encouraging creativity? What's the
right balance?

~~~
psykotic
It's not encouraging creativity. It's encouraging employees to file for
bullshit patents to make some extra money and get a bump in their next
performance review.

~~~
wes-exp
Now it all makes sense how IBM is one of the most patent-producing companies
and yet the patents don't seem to generate returns commensurate with their
number (vaguely recall a study about this, could be wrong).

~~~
wisty
Business Method for Swinging Sideways on a Swing, anyone?

------
qeorge
Joel Spolsky's answer here is an excellent primer on why companies have IP
assignment clauses:

[http://answers.onstartups.com/questions/19422/if-im-
working-...](http://answers.onstartups.com/questions/19422/if-im-working-at-a-
company-do-they-have-intellectual-property-rights-to-the-stu)

------
wmeredith
This whole article is based on a line in the second to last paragraph:

>>The fact is the smartest and most creative employees won’t offer up a single
decent idea if they know it’s company property whether or not it’s used.

It's an argument that I find pretty weak and it's presented with no backing at
all. The smartest employees will kick ass for their employer and expect to be
remunerated in kind. If I wasn't I would move on. And if I never offered up a
single decent idea at my job I probably wouldn't be there very long.

~~~
psykotic
Ralph is using hyperbole to make a valid point. A company shouldn't put its
employees in a position where they squirrel away their best ideas for their
own future use in an imagined startup.

A company can help avoid that by properly rewarding their employees. That's
basic. But suppose you give your company a great idea but it doesn't run with
it for some reason. Do you think you're going to be rewarded? Not likely. And
yet now your company owns that idea insofar as it qualifies as an invention if
it has such a clause in its employment agreement.

That's not even getting into the invention assignment agreements many
companies ask you to sign where in principle you have to list all inventions
you have ever conceived prior to joining the company. The reasoning is that if
you reuse an older idea of yours at the company and it wasn't listed on that
disclosure form, they can now lay claim to it. I'm not sure if that's
enforceable, but it's an unfortunately commonplace piece of legal boilerplate.

~~~
gyardley
Because it doesn't want the distraction and/or doesn't have the resources to
pursue them, your employer's unlikely to ask for or want ideas unrelated to
its business.

Because you're an ethical person and/or have a good appreciation of the legal
risks, you're unlikely to try and implement ideas related to your employer's
business.

Because of the above, 'squirreling away ideas for a future startup' should
only very rarely be an issue. Certainly not a company-breaker.

Having to explain why you've abandon a standard and uncontroversial bit of IP
protection to your potential investors - now _there's_ a potential company-
breaker.

~~~
psykotic
It's your choice what you put in your employment agreements. If you want to
include jus primae noctis, go for it! Just don't expect people like me to work
for you.

------
LukeShu
A certain company has an agreement that they own any invention you invent
while at the company and 1 year after, whether it relates to their business or
not.

Now, it did say invention, not all IP. Also, it didn't define invention, which
was weird because in another place it said, "invention, as defined in this
document" or something to that effect.

------
squirrel
We spent some solid time (and lawyer fees) getting this right, after
inheriting a draconian agreement from our long-ago corporate parent. Now you
own anything you do on your own time, so long as isn't directly relevant to
our business.

By the way this didn't stand in the way of investment at all, as some
commentators here suggest.

~~~
buff-a
Define "directly relevant". Sometimes that is the extent of the clause.

Jury: well its computer software, and your business states right there in the
business code classification that your company is a software company, so we
say its owned by the business.

So, no, if I invent a new elephant feeder, it'll be pretty clear its not
directly relevant to my employer. But since I spend all of my spare time
coding, I'd need "directly relevant" spelled out pretty thoroughly.

~~~
squirrel
There's a disclosure process; if you're concerned someone might in future
define your project as relevant, you submit a description of what you're doing
and the company has a limited time to claim the project is indeed relevant -
if it doesn't do so, then it gives up the right and the project is yours.

(Disclaimer: I'm the CTO not a lawyer, so this is just my opinion and doesn't
represent the official legal position of my company.)

