From: rpw3@rigden.wpd.sgi.com (Rob Warnock)
Subject: Re: Intellectual Property - Your employer's position?
Organization: Silicon Graphics, Inc.  Mountain View, CA
Date: Mon, 13 Apr 1992 13:25:31 GMT

bsmith@ecst.csuchico.edu (Charles Bennett Smith) writes:
+---------------
| >But in general, if you get a salary (and a W2, etc.) everything you do
| >is "work for hire", and the company owns all rights to it.
| 
| That is everything you do WHILE WORKING FOR THEM, right?  I mean, if I work
| in the computer industry and there is no termination date on the agreement,
| and the agreement has very broad interpretations, it sounds like I cannot
| continue my line of work any longer.  Is this right?
+---------------

Well, the ownership of work you do for them is just while you're working for
them, yes. But whatever confidential information they provided you in order
to do your job remains theirs. You can't use it when working for someone else.
Basically, when you leave, you get to take "your head as it was when you came",
and nothing else.

And yes, they can't keep you from *completely* forgetting your experience of
working their, but they can sue you if you later use anything they claim was
a proprietary "method, procedure, trade secret", etc., of theirs... unless
you can show that you knew it before you came or learned it from public
sources after you left.

There have been some really nasty lawsuits over cases like this. Two that
come to mind were guys that left one company [a chip company in one case and
a disk drive company in another] and immediately went to work for a competitor.
The first company in each case sued because they claimed that the person *could
not* be performing his job adequately for the second company without disclosing
proprietary information from the first company. [I don't know how it ended.]

On the other hand, as someone else pointed out, most states have laws which
make illegal contracts so restrictive that they prevent you from "practicing
your trade" when you quit -- so-called "yellow dog contracts".

It's a fine line between "practicing your trade" and "stealing trade secrets".

+---------------
| >| 	1.  They intend to attempt to Patent the product...
| >If your state defaults to a "work for hire" posture, that's correct.
+---------------

It was pointed out to me that what happens in the absence of a written
agreement is a matter of *Federal* law, not state. But you can give up
most of your Federal patent rights by signing an assignment agreement.

+---------------
| >Generally the agreement will also require you to assist them in such patent
| >applications, even for a period of time (~2 years) after leaving the company
| >[and for consulting you will be compensated at a "reasonable" rate].
| 
| I have seen patents which are held on algorithms developed at Bell Labs
| (I think) where they are held by the designer, not the company.  I would
| assume that the company footed the bills for the lawers, etc.  It seems to
| me that if I come up with a zip bang new algorithm to solve a problem it
| belongs to me.  What belongs to the employeer is the particular
| IMPLEMENTATION that was coded for the work I was doing. Is this not the case?
+---------------

Nope. Your employment agreement (if the company lawyer wasn't asleep) will
contain language in which you agree to *assign* to the company all patents
developed while working for the company. The patent is still in the inventor's
name (there's no getting around that), but the rights to *use* that patent
are -- as a result of the agreement you sign(ed) -- entirely the company's.
They pay you some nominal fee ("$1.00 and other considerations") for the use
of the patent, for the life of the patent and any extension thereof.

+---------------
| If it is the case, then doesn't the FIRST programming job you take 
| also have to be the LAST one you take?  
+---------------

Hey, that's why you have to be careful! Suppose you invent a particular
zip-bang new algorithm, but the patent they write (and you, by agreement,
are obligated to help them write!) is super-broad in its claims. The patent
is granted. It's assigned to them (per agreement). Then you leave the company.
Well, now you're just another Joe Schmoe out in the world. You have no more
rights to use *any* of the claimed invention than anyone else! Including
the other applications that you were hoping to establish a start-up company
with (that happen to infringe the broadened claims on *their* patent).

Of course, the patent still has your name on it, and a major patent is
still a *very* nice touch to have on the end of your resume, for when you're
job-hunting later...

+---------------
| This all sounds like a very sticky business.
+---------------

It is.

+---------------
| What rights do they have to what is in my mind?
+---------------

Only what you've agreed to bring out of your mind for pay... but once you
do, the employment agreement gives them the right to nail it down. [And if
you *don't* bring anything out, well, being fired for non-performance isn't
a great thing to have on your resume during a recession.]

+---------------
| The work (actual applications code, etc) I do is theirs.
| No disputing that.  Afterall, that is what they are paying me for.  But the
| ideas are not theirs, they are mine.  Where's the line drawn?
+---------------

The problem is that "ideas in your head" has no legal standing. You can have
all the ideas you want. The line is drawn with things that will show up in
a lawsuit: documents, source code, schematics, prototypes, minutes of meetings,
what's in your lab notebook -- which they definitely own. Even notes you made
to yourself at home, if it bears on work you were doing for them. [Oh, and if
a search warrant finds any of them, they can file *criminal* theft charges,
too. You were supposed to turn those in when you quit.]

+---------------
| What about without the agreement?  Currently there is no agreement.
+---------------

Without an agreement, federal law rules the patent implications, but state
law controls most of the rest. You may have patent rights which put you
in an interesting negotiating position. Demand an opportunity for you to
consult with an attorney *before* signing their agreement, and to take a
copy of the proposed agreement with you to the attorney. [If they won't
do this, run! You don't want to work there.]

Also ask your attorney about the pre-agreement situation.

+---------------
| The problem I am having is determining what is related.  If the company is 
| a programming shop, and I program for a living, then it would seem that
| EVERYTHING I do is related to that first job.
+---------------

Everything except whatever the state considers "experience in practicing
your trade", or some such protective language. As noted above, blatent
"yellow-dog" contracts are illegal, but the degree of permitted restraint
varies from state to state.

I *have* seen employment agreements that *did* prohibit particular key
employees (generally, founders of a start-up) from "practicing their trade".
But to avoid the anti-yellow-dog laws, these contracts gave the company the
right to buy one's silence. That is, the person agreed that the company had the
option -- if it (and not the employee) so chose -- to pay $x/month (typically
50-80% of base salary) for the person *not* to work for any competing company
for a period of up to "y" months (typically 1 to 3 years). But even these
"voluntary" yellow-dogs are illegal in some states.


-Rob

-----
Rob Warnock, MS-9U/510		rpw3@sgi.com
Silicon Graphics, Inc.		(415)335-1673
2011 N. Shoreline Blvd.
Mountain View, CA  94039-7311


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