Beware Disclosure of “Prior Inventions” and “Great Ideas”

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We have always been shameless about stealing great ideas.”

– Steve Jobs

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ACTUAL CASE HISTORIESWhen assisting employees with new contracts or offer letters in the “high tech” fields, quite often we come across a required agreement, exhibit, or clause called a “Prior Inventions” agreement or “Existing Inventions” clause or similar title. They require that the prospective employee disclose in writing if he or she has had any great idea, creative thought, or legally unprotected “inventions” that he or she came up with prior to this new job.

The rationale offered for this requirement is: “If you created it before you started working here, let us know now; otherwise we may later conclude you came up with it on this job, and for that reason we may claim ownership of it.” The rationale seems to make some sense.

The problem is this: nowhere will it also provide “And, we promise we won’t (a) use it, (b) share it with others, or (c) later claim we own it.” So, you might think, “All I need to do is ask them to put that in writing.” In our 40 years of experience, employers won’t put that into writing, even if asked. More likely, they may reconsider hiring you. It’s for this reason that we usually recommend not disclosing it, without either (a) having a good reason to risk it, and (b) having in place strong legal safeguards.

LESSON TO LEARN: When it comes to a “Great Idea” or invention you may have, one thing is certain: if you share it with others . . . without first getting written safeguards in place. . . you only increase the odds that your idea will be “stolen,” claimed and/or taken from you by others. It’s a competitive world, and everyone has their “ears open” for really good ideas. If the “thief” is an employer, you may have a very difficult and expensive lawsuit to reclaim what should be yours.

The lesson is that “Prior Inventions” clauses and agreements are good for employers, but not good for employees.

  1. First, clients have reported having their “disclosed” ideas taken advantage of, and ownership of them disputed, by employers.
  2. Second, provisions found in offer letters and employment contracts, especially in “high-tech” fields, often require that employees “assist in the filing of documents needed to protect Inventions claimed by employers. That is another way of saying, “Give it up, be fired, or face a lawsuit.”
  3. Third, laws in many states locales actually provides that any “idea” or “invention” that is incorporated into its products are presumptively the property of employers, called “works for hire.”
  4. And what employee has the financial resources to afford such a legal fight?

The overall lesson to learn and bear in mind: wherever and whenever you are asked to share your “legally unprotected” idea(s) – especially in the hi-tech fields – think real hard and try not to do it. When great ideas are concerned, recall Steve Jobs’ famous words, above: “We have always been shameless about stealing great ideas.”

WHAT YOU CAN DO: Consider these four (4) thoughts:

1. First, a few “working definitions.” By “high-tech” we mean anything and everything that is new, innovative or groundbreaking in any industry, including among others, telecommunications, data science, pharmaceuticals, hardware and software, specialty chemicals, and biomedical fields. By “safeguards,” we mean patent, copyright, trademark, non-disclosure agreement, commonly referred to as “NDA,” or other measure suggested by an experienced Intellectual Property (“IP”) attorney. By “ownership,” we mean the exclusive legal right to use, license, transfer or otherwise exploit the idea or invention.

2. Without both (a) a solid reason to do so, and (b) appropriate legal safeguards in place, it may be unwise to share with an employer any “prior invention” or “great idea.” Without the “safeguards” we refer to above, you would need something in writing that clearly says (a) your ownership of your idea is acknowledged, and (b) it will not be claimed, used or shared by anyone without your prior written approval, at your sole discretion, which you can also grant or withhold – or set a price – in your sole discretion.

In our view, any such “clear writing” means “carefully reviewed and approved by an experienced Intellectual Property (“IP”) attorney.” As to any “Prior Inventions” form or clause, we usually recommend it be left blank, or “none” be written. (This is not recommended for everyone, as each person and “Great Idea,” though, may require otherwise.)

3. You can at least start protecting your “Great Idea” by emailing a detailed description of it – from your personal email to your personal email – to, in effect, “time stamp” it prior to your new job’s start date. Is this foolproof or a guarantee that your Great Idea will be safe from others’ claims? No, but it might be helpful if an issue arises. You should, too, never mention it at work, and never put it to use in the course of your work, as this would tend to give its ownership away to your employer.

4. Next, consider gaining the assistance of an experienced Intellectual Property (“IP”) lawyer to get your patent, copyright, trademark, “patent pending” designation or other acceptable legal protection. The nature of the protection you need, the level of protection, and the needed documentation and/or Patent Office or similar agency protection, is something only an attorney who does little else can provide. In fact, attorneys who work on Patents of inventions with the U.S. Patent Office need to be both knowledgeable and experienced in that field and certified as such by that agency.

Understand that most IP attorneys will offer to do a “search” for you to find out if your idea or invention has been thought of or put together by someone else. It’s a very good idea to find out before devoting time, effort and expense to try to protect what is legally unprotectable.

In Summary . . .

Society makes progress through new ideas, new applications, and new ways of doing things. There are many examples of people who have become wealthy by means of building a “better mousetrap.” Unfortunately, there are many stories, too, of people who lost control or ownership of an invention of great idea through guile, manipulation or dishonesty of others. When it comes to “Prior Invention” disclosure to a new employer, we generally suggest you do not do so. That’s because they never state that the employer will not try to steal your ideas or inventions. Rather, you need to be careful not to be vulnerable to such loss. It may require prudence, patience and even incurring some upfront expense. You will be the judge of the worth of doing so, but bear in mind, once lost, always gone, when it comes to rights to and ownership of inventions and great ideas.

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             Best, Al Sklover

 

 

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SkloverWorkingWisdom™ emphasizes smart negotiating – and navigating – for yourself at work. Negotiation and navigation of work and career issues requires that you think “out of the box,” and build value and avoid risks at every point in your career. We strive to help you understand what is commonly before you – traps and pitfalls, included – and to avoid the likely bumps in the road. Not losing rights to future ownership or use to a “Great Idea” or “Prior Invention” is one part of doing that.

Always be proactive. Always be creative. Always be persistent. Always be vigilant. And always do what you can to achieve for yourself, your family, and your career. Take all available steps to increase and secure employment “rewards” and eliminate or reduce employment “risks.” That’s what SkloverWorkingWisdom™ is all about.

*A note about our Actual Case Histories: In order to preserve client confidences, and protect client identities, we alter certain facts, including the name, age, gender, position, date, geographical location, and industry of our clients. The essential facts, the point illustrated and the lesson to be learned, remain actual.

Please Note: This Email Newsletter is not legal advice, but only an effort to provide generalized information about important topics related to employment and the law. Legal advice can only be rendered after formal retention of counsel and must take into account the facts and circumstances of a particular case. Those in need of legal advice, counsel or representation should retain competent legal counsel licensed to practice law in their locale.

Sklover Working Wisdom™ is a trademarked newsletter publication of Alan L. Sklover, of Sklover & Company, LLC, a law firm dedicated to the counsel and representation of employees in matters of their employment, compensation and severance. Nothing expressed in this material constitutes legal advice. Please note that Mr. Sklover is admitted to practice in the State of New York, only. When assisting clients in other jurisdictions, he retains the assistance of local counsel and/or obtains permission of local Courts to appear. Results obtained by some clients have no bearing on results obtained by other clients. Copying, use and/or reproduction of this material in any form or media without prior written permission is strictly prohibited. All rights reserved. For further information, contact Sklover & Company, LLC, 45 Rockefeller Plaza, Suite 2000, New York, New York 10111 (212) 757-5000.

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