All Your Work Are Belong to Us

I recently had the idea that if you develop a technology while working on a project specifically endorsed by your employer, you should be able to do whatever you want with the technology, if the company abandons the project. I posted this idea as a comment on danariely.com. DaveyNC wrote a reply to my comment, but I completely disagree. Here’s how I would respond:

Most technology that companies develop is not under patent. This is especially true of technology that never sees the light of day. Why patent a thing that’s protected by a non-disclosure agreement i.e. a thing that the rest of the world is never going to know about?

The other thing is that you can’t just walk away from the company and start using stuff that you created, even if it’s not patented, because just about every job where there’s a remote chance that you’ll come up with some innovation requires you to sign a “all your work are belong to us” contract when you start working for the company. These contracts cover “trade secrets”, which as far as I can tell, it just a catch-all term for stuff that’s not patented. Even Starbucks barristas have to sign these things (in case they find a faster, better, and/or cheaper way to brew coffee). If the company uses your idea, these contracts make sense; otherwise, they are completely stupid, and serve only to piss off employees.

Even if your work is patented, taking ownership of it is not exactly a walk in the park. My whole point is that people should be able to walk away with technology at any time, if the company sanctions the original project, but abandons it later. You are never going to win if you have to negotiate for the technology before you leave, because from the company’s point of view, they’d rather keep you, but if they can’t, they’re not going to give away technology as a parting gift, no matter how worthless they think it is (this is oddly inconsistent with the practice of giving away golden parachutes to executives, but I digress).

There’s also the matter of the non-compete agreement that you almost certainly signed. These things also have their rightful place in some situations, but they are mostly bunk (I believe not all states in the US recognize these types of contracts). Most likely, your technology is related to something that the company does. That means that if you go off and start your own company with it, they’ll probably claim that you’re now competing against them before the non-compete expires. Gee, how convenient!

I’ve already mentioned three types of agreements, each of which would probably prevent you from doing what I said, but another one just occurred to me: the non-solicit agreement. You’ll probably want the other people who developed the tech at the old firm to join your new venture. These contracts would prevent you from trying to convince these people to help you with that. This makes things very difficult for you, because these are the very people that you’ll need to be successful.

In short, your notion that you can easily do what I’m suggesting is the opposite of true. By design, everything is stacked against you i.e. in favor of the companies. As far as I can tell, the only way to make this work legally is to create some kind of protection for people who would otherwise have the entrepreneurship to do this kind of thing.

Advertisements
This entry was posted in Uncategorized. Bookmark the permalink.

3 Responses to All Your Work Are Belong to Us

  1. DaveyNC says:

    Thanks to the power of email notification, I have found your post here, allyourcode.

    You have completely misunderstood what I said over at danariely.com. Here is the whole thread:

    February 5, 2011 at 6:12 am
    allyourcode says:
    There should be a clause in their employment agreements (or in the law) that allow them to take technology from the cancelled project, and start their own company with it, since the company where they originally developed the tech didn’t think it was valuable at all anyway.

    Reply

    February 5, 2011 at 10:31 am
    DaveyNC says:
    There are thousands of instances where former employees have done just that. No special clause needed; just get together and make an offer.

    Reply

    February 5, 2011 at 9:48 pm
    Tim Rosen says:
    I believe most companies like that insist on owning all rights whether implemented for that project or not.

    Reply

    February 5, 2011 at 10:16 pm
    DaveyNC says:
    I believe that any company will sell anything for the right price. If they don’t think it has value, they might sell it cheaply. Today, Nortel Networks has put a few thousand patents up for sale: http://online.wsj.com/article/SB10001424052748703960804576120463615113454.html

    February 13, 2011 at 3:58 pm
    allyourcode says:
    @DaveyNC I completely disagree:

    https://allyourcode.wordpress.com/2011/02/13/all-your-work-are-belong-to-us/

    If I understand your point here, you believe that if you work on something and it is later abandoned by the company, then those who worked on it should be able to simply pick up the pieces, leave with those pieces and do whatever with them. I can’t imagine how you think this would be ethical. After all, the company paid for and owns your work product, whether they implement it or not. Once paid for, they can do with it as they choose and if the company chooses to abandon, well, it is their asset and they will have to explain to their shareholders why they got no return on that investment.

    On the other hand, if the employees value the project so highly, they should pool their resources and make an offer for the project. Did they value the project for its intrinsic or potential value or merely because having that project to work on ensured them a steady income? If they think it has commercial value, buy it, get to work and bring it to market. Take the risk. Remember, the CEO is responsible for gaining a return on that investment. If you offer him a chance to get something back for it, why wouldn’t he do it?

    It’s a business transaction, pure and simple. Whenever you hear of a company’s management buying out their division or whatever, this is what has happened. It’s not uncommon. Ridiculous to think that a group of people should be able to take something of value, no matter how small, from anyone simply because they worked on it.

    If a mechanic at the local car dealer works on a car that is subsequently abandoned, should the mechanic be able to take the car, despite his having already been paid for the work he did? Or should the dealer get it? The answer is that the dealer gets it because he is the one who is out the cost of repair.

    • allyourcode says:

      re me completely misunderstanding what you said: Which part? After reading your comment (and rereading the original thread on danariely.com), my understanding of what you said hasn’t changed at all.

      re “the power of email notification”: I’m not sure if you realize this, but that was my “evil” plan all along. If I didn’t want you to see this, I wouldn’t have published this post for the world to see, and I certainly wouldn’t have replied on danariely.com with a back link.

      I believe your premise is that if an employee develops some technology under the auspices of his or her employer, then it legally and/or ethically belongs the company (by default?). I am very familiar with this concept. I am _very consciously_ challenging that notion; furthermore, I am suggesting how this could be changed legally.

      I believe there is an ethical basis for a company to claim ownership of such technology. The company pays employees for the very purpose of developing technology that the company can use for business purposes; however, if the company does not actually use the technology, we can conclude that the company places negligible value on the technology. In that case, the company suffers no wrongful material loss if a bunch of employees walk off with the technology. Of course, the company loses (valuable?) employees, but they always have the right to up and leave (in at-will employment jurisdictions), so their departure is not a *wrongful* loss to the company; just an unfortunate, self-inflicted one.

      As far as I know, there is no law that implements company ownership by default. I believe this is why it is such a common practice for companies to require all employees to sign such (imho onerous) contracts; moreover, this is almost certainly why such contracts use the term “assignment”:

      http://en.wikipedia.org/wiki/Assignment_(law)

      Regardless of the legal reason for such contracts, my whole point is that in case of “abandoment”, employees should be allowed to claim ownership; furthermore, contract provisions that bar such claims should not be recognized (on the ethical basis that I outlined earlier). Such laws would be analogous to those pertaining to abandoned (physical) property:

      http://en.wikipedia.org/wiki/Mislaid#Abandoned_property

      As that article describes, there are various ways that ownership can legally be lost, including abandonment. This could (and in my opinion should) be extended to the realm of technology. Here’s how it would work (roughly):

      1. Employee signs a contract that says that technology developed while at work belongs to the company. Fair enough.
      2. The company abandons the technology, creating the opportunity for employees (and contractors?) to claim ownership.
      3. Employee claims abandoned technology.

      Currently, this is not how the law actuallys works. As far as I know, any US court would recognize the company as the legal owner per contracts that an employees typically sign at the start of employment. Regardless, laws are subject to change (rightfully so), and as I’ve argued, there is reasonable (and sound?) basis for the changes that I’m describing.

      Such a change would end legal recognition of onerous contract provisions that prevent technology from seeing the light of day. Such a law would not be at all unusual. There are all sorts of contracts and provisions that courts do not recognize. On the other hand, employees walking away with abandoned technology as I’ve described practically never happens.*

      * I wouldn’t call negotiating the purchase of technology as “walking away with (abandoned) technology”; therefore, the “thousands” of cases that you describe are not very relevant to me. My whole point is that if they abandon the technology, it is not theirs to sell.

      • allyourcode says:

        Here’s quote from the Journal of High Technology Law:

        Mr. Hyde acknowledges that a flexible labor market requires, “severe restrictions on (the) freedom of contract” because of the liquidity of employment. In such a market, employers are not free to require employees to abide by non-competition agreements or broad restrictions concerning the conveyance of trade secrets.

        Not sure if professor Hyde is saying that “broad restrictions concerning the conveyance of trade secrets” should be disallowed, but it certainly isn’t very practical for the Silicon Valley labor market.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s