Intellectual Property 7

[crunchie12268]

Hello. I recently left a company where I was doing machine design work for a piece of equipment that would give the company a competitive advantage in their market. I did sign a confidentiality agreement also.

I believe I could make several improvements to the machine that would make it safer and easier to use. If I did this would there be any liability to selling the design to another company? I would first take it to the company I worked for and explain that it is faster, better quality, safer etc. and give them the opportunity to buy the design. If they say no, and I bring it elsewhere would it be illegal?

 

[MintJulep]

The questions that you need to ask are:

Would doing this violate the confidentiality agreement or other agreements you signed?

Would the company that you left think that you violated the agreements?

Would the company that you left sue you for the actual or perceived violation?

Can you afford to defend yourself in court if you are sued? More so if you lose.

Do you have in place, and are you willing to maintain appropriate liability insurance for the lifetime of all equipment that might incorporate your design?

Do I really want to rely on legal advice from random engineers on the internet, or do I want to consult a lawyer?

 

[glass99]

There is an interesting discussion in the IT world about who owns the IP of work an engineer does outside of work hours. There are some who claim that the work an engineer does off hours is owned by their employer if they start with company IP an an input and use company resources in the development. What's legal is hard to say. I don't think you will even get a good read on this if you speak to a lawyer because it depends on factors such as how much you changed the design, that your agreement doesn't fully address this situation etc. Lawyers are conservative and will probably advise that you should not get out of bed in the morning because it will create a liability.

In reality its not a legal question, but a question of fairness and power. If you feel as though your employer is failing, you will be doing the world a favor by making sure this technology is not lost. If they are on the verge of bankruptcy, they will not have the resources to sue you. Alternatively, it could work if you take this invention to a customer who does not compete with your employer. For example, if your employer is targeting big automotive customers and you find a niche in the industrial vacuum market, I could see them not bothering to pursue you. If on the other hand your employer is strong and your actions cost them money, you are toast. If your employer is Apple and you even speak of an internal invention to outsiders, they will crucify you.

 

[KENAT]

Going back to your original company is there a chance they can take just your description and run with it without paying you anything? Maybe they can even make an argument that you really came up with this as part of your duties with them and they own the IP already.

That said, we have a former employer that we consult with now and again and a lot of what he comes up with falls into this category.

He has also at times worked for competitors.

Depending who you ask etc. there is a bit of bad blood but every now and then he comes back into the picture.

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[stevenal]

In reality its not a legal question, but a question of fairness and power. If you feel as though your employer is failing, you will be doing the world a favor by making sure this technology is not lost. If they are on the verge of bankruptcy, they will not have the resources to sue you.

Interesting to have power come up in the ethics forum. I would submit that the ethical answer should have very little to do with power. And where do the creditors of this failing company come in? Don't they have an interest in the IP? If the bankruptcy trustee sees a payoff, he can generally find the resources he needs to sue. Sometimes lawyers will take a case on contingency.

 

[glass99]

stevenal: Most of the time I would agree that the person who paid for the development of the IP has a moral right to do what they want with it. Obviously in a bankruptcy a creditor would have moral right to whatever assets existed. Where the ethics become interesting is where you have a big idea which the inventor is not using to its fullest extent. If I am a greedy and conceited patent troll holding the patent on penicillin and I use my legal protection to refuse access to the billions of people with bacterial infections globally, it would be ethical if someone circumvented my patent.

Legal questions revolve around idiotic details of what can be realistically proven in court. Crunchie will of course want to to see themselves as honest. I could see crunchie letting factors other than purely who funded the development of the IP factor into the moral decision. For example, if I worked 80 hour weeks developing this technology and my old boss effectively stole from me by firing me on Christmas day right before the large promised performance bonus was due, I might not feel so bad about taking some IP with me.

 

[MacGyverS2000]

if I worked 80 hour weeks developing this technology and my old boss effectively stole from me by firing me on Christmas day right before the large promised performance bonus was due, I might not feel so bad about taking some IP with me.

To be fair, that would still be unethical. You took the risk of working those heavy hours with no contract that guaranteed a bonus at the end (or a piece of the IP pie). You took a risk and the risk didn't pay off... but that doesn't entitle you to steal.

But I feel for your decision. Well, maybe up until I'm chosen for jury duty on your case... then I have to go with the law.

Dan - Owner

http://www.Hi-TecDesigns.com

 

[glass99]

MacGyver: Ok, two wrongs don't make a right, but they kind of do if my boss lied to me about paying a $100k bonus and I steal $100k of his IP. A verbal promise to pay a bonus may or may not be legal to break, but its not ethical. As noted before, the law is a whole other animal quite apart from ethics. Has a patent been filed? What exactly are the terms of my confidentiality agreement? How much have I changed the design? Do you have the legal resources to actually pursue this?

Of course, this kind of "bush justice" is a bit rough, but its how business works in the real world.

 

[zdas04]

God you are mixing a lot of concepts there glass. First, did you use ANY company resources to develop it? Company phone? Company desk? Lights? Restroom? Software? Computer? Printer? Time you were being paid? If so you are going to find that the company owns it. If they suggested that you would get a bonus for some bit of IP that didn't come through, you are unlikely to ever prevail on taking the IP as compensation. You took the risk to work the extra hours on the project without anything in writing. Sometimes risks fail. If you steal the IP because they didn't live up to your perception of their commitments, you personally will go to jail. There is no way you can win that one.

David Simpson, PE
MuleShoe Engineering

In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. ùGalileo Galilei, Italian Physicist

 

[glass99]

zdas: If a firm promises a bonus but does not pay, how is that ethical? What if they did not pay the bonus because the engineer's work on the IP was complete and felt that not paying the bonus was a good way of goading the engineering into quitting?

If I engineer a machine for my company using their resources creating IP worth $1MM, and they screw me out of a $100k bonus and I then screw them out of $100k of IP, that seems fair to me! They have paid for the office space and phone resources I used out of the $900k I did not steal from them.

I think this kind of thing happens in Silicon Valley startups quite a bit. I work on an algorithm for a website, its awesome but I leave on bad terms, I get a job for a competitor as a contractor and I get paid for my "specialized knowledge". Its difficult for my old boss to prove in a court of law that I have stolen IP from him because I have changed the algorithm significantly whilst working for my new client. My new client is Google, so my old boss has to spend $500k on lawyers to get his $100k of IP back so doesn't bother. I buy a new Ferrari and do not go to jail.

 

[MacGyverS2000]

if my boss lied to me about paying a $100k bonus and I steal $100k of his IP. A verbal promise to pay a bonus may or may not be legal to break, but its not ethical.

You can't fight unethical behavior with more of the same. If your boss lied, that was unethical of him... but to respond with equally unethical behavior says more about you than your boss.

I think this kind of thing happens in Silicon Valley startups quite a bit. I work on an algorithm for a website, its awesome but I leave on bad terms, I get a job for a competitor as a contractor and I get paid for my "specialized knowledge". Its difficult for my old boss to prove in a court of law that I have stolen IP from him because I have changed the algorithm significantly whilst working for my new client. My new client is Google, so my old boss has to spend $500k on lawyers to get his $100k of IP back so doesn't bother. I buy a new Ferrari and do not go to jail.

Again, it may happen, but it doesn't make it right. When you start thinking such behavior is justified, you're no different than the original perpetrator. Just because the risk for unethical behavior pays off...

Dan - Owner

http://www.Hi-TecDesigns.com

 

[TenPenny]

"Where the ethics become interesting is where you have a big idea which the inventor is not using to its fullest extent"

Doesn't the OWNER of the idea have a right to decide what to do with it?

 

[glass99]

Macgyver: If one party behaves unethically, the age old solution is that they should be punished and that they should be made to pay restitution to the damaged party. If I steal your car, I should have to give it back and spend a night in jail. When you live in a world where policing does not really exist such as the world of IP, you kind of have to take matters into your own hands. People are much more likely to behave ethically if there are consequences to being unethical.

TenPenny: Only in relatively extreme circumstances does the IP owner not have the moral right to what they please with it, but the moral right is not absolute. An example of ethical abuse of IP are patent trolls. Buying up obscure patents and using them to shake down small businesses is not ethical.

 

[MintJulep]

Stating an intent to commit a crime on a public internet forum rarely works out well.

Perhaps you haven't been paying attention to the news recently, but an anonymous handle is exactly zero assurance of actual anonymity.

 

[glass99]

Back to the OP's question: How much do you have to change something to get around a patent or to not violate a confidentiality agreement? Is adding a safety feature enough? I suspect not.

MintJulep: We are talking in the abstract about the limits of legal and ethical conduct for the purpose of avoiding committing a crime.

 

[IRstuff]

"Doesn't the OWNER of the idea have a right to decide what to do with it?"

If you are doing work for hire, then any idea you come up with is ostensibly the property of the person that hired you; that's pretty standard contract law.

As for patentability, see:

http://www.uspto.gov/patents/resources/general_info_concerning_patents.jsp#heading-4

and

http://www.uspto.gov/patents/resources/general_info_concerning_patents.jsp#heading-5

Of course, a poorly written patent application is a bad thing. The level of "improvement" on prior art is somewhat subjective, so you'd need to present a strong case that your invention is a solid "improvement" and that it's non-obvious.

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[moltenmetal]

Crunchie, unless you had a contract with your employer giving you rights to any IP you develop while working for them (that would be most unusual but does happen sometimes!), your only ethical "market" for these ideas is your former employer, since your innovation CLEARLY derives directly from THEIR work which they paid you to contribute to- work that was done for them in what sounds like the recent past. They may feel that they own whatever you have come up with, but since it resides currently only in YOUR head, and you no longer work there, the only way they're going to get that stuff out of your head and into theirs is by paying you for it- they cannot legally or ethically compel you to reveal it to them. There is nothing unethical in asking them for money for it, now that you've left their employ, nor is there anything unethical with you letting it rot in your own head if you don't like them much. It IS unethical to attempt to market this kind of innovation either directly or to a competitor, even after giving them first right of refusal, and it is also very likely impractical legally for you to profit from it regardless of the ethics.

Does that situation persist forever, or at least for the entire 20 year life of a patent? If I suddenly have a fresh thought about the business I was in for a former employer 5 or 10 years ago, and come up with something new that builds on work I did when I was there, who owns it? That's a more interesting question, both from a legal and an ethical perspective. Clearly your employer doesn't own your mind, nor can they possibly own your life's worth of thinking about a particular subject. But where and when does that relationship end? I honestly have no idea! But it's clear that there MUST be some kind of limitation on this, in both directions.

 

[IRstuff]

A typical non-compete term is on the order of 1 to 2 years. So if you are free to compete after two years, anything you come up with at that time MIGHT be fair game. However, non-disclosure agreements may have a longer term, so if you used their intellectual property to develop your own IP, then they may have a case.

We once went through a rather silly, in hindsight, experience where our company developed a product that was "commercial," yet, it clearly had at least dual use capabilities. We got slapped with a security violation, and in retrospect, it was pretty obvious that it would have been impossible to develop the product without using classified information, so how could the end product be unclassified?

So, if your IP is clearly dependent on IP or trade secrets from your previous company, it would most likely be unethical to market the your IP without giving them both the right of refusal, and without getting approval to use their IP, regardless of the term of any non-competes, unless the company specifically releases that IP into the public domain.

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[glass99]

My understanding of the way patents work is that you can't just bolt something onto the side of a patented machine and call it new, you have to change something fundamental about the way it performs. It does not have to necessarily be a big change though. Patents are in some ways easier to get around than confidentiality agreements where your responsibility is to not reveal valuable information in a more general way.

I signed a confidentiality agreement with a client a while back that says I am not allowed to use the know-how derived from the IP rights of my client to create, develop, or enable others to develop products or services similar to that of my client. It is quite a broad restriction, and I suspect it is typical of confidentiality agreements. In my case I feel ethically bound to not go and sell my services to my client's competitors because I went into the agreement on the understanding that they really did value their IP. The language does seem pretty air tight, but I'm sure a sharp legal mind could find loopholes.

Another related legal issue for we consultants is copyright. In the construction world and I suspect beyond, your drawings are your "instruments of service" which you hold copyright on and you grant your client an exclusive license for the use. This is quite different legally from your client owning the IP, particularly with respect to liability.

 

[1gibson]

Can you start from scratch right now, using only publicly available information, and develop the same concept? If you do, and document that process, then I imagine you'd be fine* after any non-compete dust settles.

*If you hadn't already posted about it, that is. Being vague might get you in the safe zone legally, but there is still the appearance of an ethical problem.


Glass, you shouldn't "feel" ethically bound, you either are or aren't. You can feel morally obligated, which is different. If you steal my car and get away with it, can I steal yours later? Ethically of course not, morally it's not so clear. I wouldn't lose any sleep over it, so it's clearer than I am suggesting, but I won't come right out and say that it's acceptable.