Who Owns Your Idea?

INTRODUCTION

If you work for a company, especially a technology company, you likely signed an employment agreement which assigns all of your inventions to the company. Many creative people devote much of their lives to thinking, solving problems, and working to make their companies better; however, it may come to pass that an employee begins to wonder what it would be like to be an entrepreneur based on their own ideas and inventions. Understanding the proper time to exit your current employer, or not, is critical if you intend to ideate and invent for your own personal gain or for a company you may start.

IDEATION AND INVENTION NOT IN YOUR EMPLOYER’S AREA OF BUSINESS

Unless you have signed a very unusual agreement with your employer any ideas you develop on your own time, in your own place, and with your own resources that DO NOT involve the employer’s area of business are almost certainly yours. However, if there are any questions about potential ownership you should consult an attorney who has specific knowledge of employment law. In these situations, which are not at all unusual, you can continue working for your current employer.

PROBLEM DISCOVERY IN YOUR EMPLOYER’S AREA OF BUSINESS

Often the discovery of problems with existing technology or products occurs from a person’s employment activities (current or past). As the company typically “owns” an employee’s ideas, innovations,[1] and inventions by virtue of an employment agreement, the person intending to intellectually pursue his or her own new innovations and products in the area of the current employer’s business should immediately quit that company, lest the issues of idea ownership and conflict of interest arise. You can then continue following the guidelines below.

INVENTION IN YOUR FORMER EMPLOYER’S AREA OF BUSINESS

A departed employee is well advised to allow some period of time to lapse between his/her date of resignation and any subsequent invention activity that may be documented (and discoverable) in writing or the verbal expressions to others.[2]

Many types of discoverable records may be purposefully or inadvertently created. For instance, even months prior to departure, the employee may be tempted to copy digital files, send e-mail information home, etc. These are all discoverable records after the fact and may create problems for the former employee if he/she continues to work in the areas of the former employer. Even notes compiled by the former employee after leaving the company may inadvertently include trade secrets and data of the former employer that would be revealing of the new entrepreneur’s intentions.

To avoid the issues that are presented by a person’s anticipated future departure, the best policy is to not copy or transmit any information to external devices before departure and refrain from immediately creating written records after departure. Essentially, take nothing when you leave.  Of course, your future plans are your business and need not be revealed to any current employer.

In conducting further thinking and work, the would-be entrepreneur must painstakingly avoid any prior employer’s intellectual property (IP) in process, trade secrets, product and marketing strategies, and business implementations. Failure to avoid any actual or perceived theft of the prior company’s underlying technology and prospective IP places the entrepreneur at great risk for being sued.

As what constitutes theft is based on the prior employer’s judgment and suspicions, it is dangerous territory for the former employee to venture anywhere near the former company’s technology and nascent patent positions.

FREEDOM TO INVENT AND INVESTORS

From an inventor’s or entrepreneur’s perspective, the goal is to avoid any conflicts or gray areas with a former employer that could obstruct the entrepreneur’s eventual search for, and securitization of, investment. Even better is for the former employee to leave on good terms with the former employer.

The issue of being free to invent can become an important issue for future investors; indeed, if there is even a hint of potential impropriety on the part of the inventor or entrepreneur, investors will quickly disappear. However, once the inventor or entrepreneur is “free,” so to speak, of the former employer, the entrepreneur has the freedom to pursue his/her own ideas and intellectual thoughts.

After a reasonable period of time has elapsed, an inventor can and should establish a record of independent research, investigation, and invention for his/her ideas and innovations. And, of course, patent applications should properly acknowledge the patents and products of others and claims should scrupulously avoid infringing on the claims of others.

FINAL THOUGHTS

It may seem paranoid to have to think so carefully about the issue of who owns an idea. Inventors and entrepreneurs, however, should have a keen awareness of the debilitation affects of legal conflicts with past employers in regards to intellectual property. They also need to realize the impact on future investors by improperly exiting from a prior employer . Properly handled in accordance with law and ethical propriety and with a little patience, inventors can establish a clean starting point for their new venture.

Footnotes

[1] An employee’s ideas and innovations not related to the employer’s business are solely owned by the inventor provided they are not developed on company time or in company facilities or with company resources.

[2] Consult a corporate attorney if there is even the slightest concern or potential for conflict with a former employer.

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Rocky Richard Arnold provides strategic corporate and capital acquisition advice to early-stage companies founded by entrepreneurs wishing to successfully commercialize high-value-creation opportunities, ideas, and/or technologies. More information about Rocky can be found at www.rockyrichardarnold.com. His book, The Smart Entrepreneur: The book investors don’t want you to read, is available for purchase on Amazon at http://tinyurl.com/pv248qq. Financial software for use by startups can be purchased on Amazon at http://www.amazon.com/gp/product/B00K2KPSI2. He posts articles about entrepreneurship on his blog at http://thesmartentrepreneur.blogspot.com. Connect with Rocky on Twitter @Rocky_R_Arnold; Facebook at www.facebook.com/rocky.r.arnold; Google+ at www.google.com/+RockyArnold01.