Intellectual Property in the Software Industry

Disclaimer: I am not a lawyer, nor do I play one on TV. I might have played one in a bit role in a high school play once, but I don’t really remember. Everything in here represents a layman’s understanding of intellectual property, employment, and any other kind of law touched upon. Don’t use this for anything more than ideas of what questions to ask when consulting a professional. This does not constitute legal advice, blah, blah, blah.

I’ve been interviewing. The interviews have resulted in job offers. Job offers come with a lot of documentation. That documentation includes intellectual property agreements. Intellectual property agreements look much the same from company to company but vary widely in some crucial ways.

Since the company I’m leaving is my own startup idea, I don’t have to hide it from my employer. That idea and my implementations of it represent intellectual property that while not patented, is potentially patentable and falls in under the umbrella of trade secrets. I expect to continue developing these ideas even though I don’t want to take investment money for them right now. I’ve also prepared training and presentation materials that are copyrighted, sometimes delivered for commercial and professional benefit. Additionally, I contribute my technical skills to several open source projects, which are covered by one or more of the various open source licenses defining the intellectual property rights of contributors and use rights. In all, I have three of the four forms of recognized intellectual property (IP) of concern to me.

Employer IP Agreements

The agreements companies ask us to sign as employees are often byzantine collections of clauses that violate programmer sensibilities of DRYness. For those of you who aren’t software developers, DRY is an acronym for don’t repeat yourself. But the legal profession in the U.S. is working with a highly ambiguous programming language, English, where repetition is an essential price to pay for clarity and precision. Add in precedence, a concise way of saying, “It worked and held up for someone in court before, so let’s keep doing that until it doesn’t,” and the language often comes off as bloated and archaic.

As a result, many software developers don’t read their agreements closely. In many cases, the agreements are not enforceable as broadly as they’re written. Companies have to discover that violations have occurred in order to pursue them. Companies then need to decide whether the violations represent something they care about. Regardless, you signed it, and it’s a legally binding contract.

However, if you knowingly violate the agreement you willingly signed, it doesn’t look good and any ambiguity may well go against you. Before we look at the consequences of a violation, let’s look at how the agreement might apply to what we do.

What, When, and How?

Broadly, these are the three major points I’ll talk about: what work is covered, when is work covered, and how the work is done. I’ll touch on a couple other things to watch out for at the end just to round out as assessment of these kinds of agreements, but for who owns what, these are the high points.

What Work Is Covered When

Traditionally, the answer to the what question has been “everything.” Pretty much all agreements come with a way for you to declare prior inventions for exclusion from the agreement. Most agreements also come with a process you can use to request something be excluded once you’ve joined the company.

The conservative answer to the when question is similarly “always.” They own whatever you do 24x7, including evenings, weekends, vacations, holidays, and other paid and unpaid time off.

The rationale behind the breadth of the traditional answers is that it’s difficult to separate your thinking about work-related problems from your performance of similar activities. The company doesn’t want any leakage of their secret sauce into your outside projects.

If you don’t do your profession as a hobby, have a profession with high overhead costs that are prohibitive, and don’t have side gigs, this isn’t very restrictive. Or rather, it doesn’t restrict you in any way you feel and care about. Let’s look at some scenarios where it is restrictive.

Scenario: You contribute to open source

Let’s say you want to contribute to an open source project. If your employer owns everything you do, then you are now contributing your company’s property to a project that almost certainly doesn’t allow corporations to own it. Use it? Usually. Modify it for their use? Sometimes. Have intellectual property claims on it? Nope. Which means you’ve now compromised the project, violated its license, and likely violated your IP agreement by not asking permission.

Scenario: You use your own presentation for company purposes

Say you have a presentation from a conference or maybe you delivered training in a prior phase of your career. These are covered under copyright. You may have declared these as prior IP. Some companies will say they don’t intend for their agreements to include copyright, only “inventions,” but the wording rarely supports that claim. Now let’s say you recognize a need for similar material for your employer. Why not just use your previous materials? Because anything you modify becomes theirs by being attached to your changes, at least the derived version of it. Yes, you could create the material from scratch as a way around it. Aside from having to be careful not to duplicate your prior work, anyone who has prepared any significant educational material knows that could be a lot of wasted effort. This one’s pretty easy to resolve, but inconvenient.

Scenario: You have a prior invention you want to advance

If you declared it as a prior invention, the state of it at your hiring date is yours. But any work you continue to do on it belongs to your employer. In my case, I have work that was the basis for a startup I was considering. I decided not to start a company over it due to market considerations, but it’s technically feasible and I would like to continue developing it, perhaps releasing it as an open source project at some point. I can’t do that under a conservative agreement, and I don’t want to leave the idea on the shelf for the duration of my tenure.

Another risk on this one occurs when the company identifies a similar or overlapping need of your invention in the course of your work. You could say, “No” to protect your IP; that might not go over so well. You could try to negotiate licensing terms, awkward at best and usually considered a conflict of interest. And then there’s the question of the ownership of the continued work. Hint: it’s not yours by default.

Scenario: You do work to help your partner’s business

Even without moonlighting clauses, this is still work that your employer owns if you don’t get an exemption and clarity around ongoing contributions. If you’re a web developer and develop the company’s web site, it’s technically your employer’s. Unless it’s a competitive business, you could argue that the likelihood of your employer taking action against you on this is low. With moonlighting clauses, it’s potentially grounds for dismissal. That’s your calculated risk.

Scenario: Spelling matters

You get an agreement. You’re fine with the terms as you understand them in broad strokes, but the agreement has a typo. I once worked for a company whose agreement, in the enumeration of what qualified as Confidential Information, specified “personal lists” rather than the intended “personnel lists.” Does this mean your grocery lists and honey-do lists are owned by the company? That may be silly, but what about your list of candidate next employers or future career options?

Scenario: Who pays the price?

A typical clause of IP agreements requires the employee to cooperate in upholding the enforcement and validity of future IP claims, litigation, and so forth. What happens if your employer from Atlanta needs you to testify in a trial after you’ve relocated to that dream job in Seattle or Tokyo? Are you obligated to take time off to testify? If you have the luxury and desire to do so, who pays the travel costs? I typically make sure the phrase “at Company’s expense” is appropriately located in that paragraph even if I have to write it in. Often companies will have wording in which you grant them limited power of attorney in the event of unresponsiveness or non-compliance, but that only covers signing authority, not any information retained in your brain.

How Matters

Consider for a moment the possibility that you’ve negotiated IP exemptions that allow you to work on the things you want to work on. You’re free and clear, right? Maybe not.

Usually, the agreement also has language that says you can’t use company computers, time, and other resources for non-company work. If you use your company computer to do any of the things you’ve negotiated, you may have undermined your negotiations. That means you need to have your own computer. (I’ve seen professional developers who didn’t own a computer of their own figuring it was a waste of money since their employer supplied one!)

What I Look For

This is my personal list of things I look for. Again, your mileage may vary, this is not legal advice, and consult a professional.

While this post was being worked on, GitHub announced a very permissive IP agreement. Even if you’re working for a progressive company like GitHub, you should read your IP agreement closely. I’ve seen great, well-intentioned companies with sloppy legal documents. Here are the points I look for:

• What does the company claim and is it reasonable? Does it distinguish between the IP that is the company’s business and the IP that simply enables the company’s business? What does it say about the when, where, and how of what’s owned?
• Are there additional exceptions against the initial claim? Paraphrased, does it say, “We own all of this, BUT not this other stuff or under these other conditions.” This can depend heavily on the local jurisdiction’s precedents. Remember, law can be arcanely and archaically formulaic.
• Does it meet the legal standards of the jurisdiction for which it’s written?
• Does it provide a way for you to declare exemptions?
• Does it make provisions for open source?
• Does it or the framework for the exemptions allow you to continue work on these things while retaining ownership?
• Does it have a framework for using licensing as a means of resolution?
• Is everything spelled correctly?
• Who pays for costs associated with IP defense after you leave, what is your obligation, and what happens if you can’t or don’t comply?
• How long does the company claim confidentiality or ownership?
• Does it make provisions if you need to contradict the terms in the course of your work?
• Does it explicitly acknowledge forms of IP other than patents and trade secrets?

Wrapping Up

If you’re in an industry where your brain is your tool, your ability to protect your ideas and creations is critical to your success. Understanding what to look for in the tug of war over intellectual property impacts your reputation, employability, and prosperity. Guard it carefully.