Should I Sign an Intellectual Property Agreement?

Updated on December 31, 2018
joepotter profile image

I've worked in the IT field for over 35 years having worked with Sprint, IBM, & Boeing.

Know Your Rights Before You Sign

Companies invest millions in developing trade secrets, copyrights, and patents. As such most take great strides to safeguard and protect these assets from outsiders, competitors, and especially foreign nations in the case of military secrets. Many workers are glad to be offered a job at a widely known or extremely "important" business and usually take these jobs without consideration of what they are giving up. Individuals must also consider every employment opportunity carefully to protect their rights and potential ownership of their proprietary data.

Companies' first line of defense usually starts with the application for employment for workers who approach them through a means other than a resume or referral service. Many times the application either has forthright or small print indications of the company's right or claims to any specific types or classes of proprietary data. For example, just out of high school I went with friends to apply at Eastern Airlines.

Before you apply

While my friends applied for the jobs, I threw the application out because it had universal language indicating they had a right to any and all inventions pertaining to the airline industry. It designated not only those invented during employment, but any future developments in that industry.

Such an all-encompassing agreement could relieve you of rights, even twenty years later, to an invention or processes derived entirely separate from your employment with this company. Though many inventors can see their potential at an early age, many also discover their talent many years into their careers. Without careful consideration, a young worker might give away rights to something of great value in future years.

Another way companies strive to protect themselves is through pre-employment agreements, or intellectual capital agreements (ICAs). These have historically been used with workers of a more senior nature, especially scientists, researchers, and top management. However, the recent trends are to include anyone who has or might have access to proprietary data.

With the advent of computers, networks, and migration of large amounts of proprietary data to electronic media on these networks, companies are expanding the requirement for ICAs to all employees. The task of tracking everyone's possible access to information in companies like IBM with hundreds of thousands of workers would likely take nearly half as many workers and resources to do so. Theirs is a hope that the ICAs will give them legal recourse to halt use of improperly obtained information or to be compensated where damages have occurred.

ICAs typically include a section for currently owned copyrights, patents, or other obligations to other companies (i.e. other patents already assigned or given to former employers or sold and licensed to manufacturers) to be excluded from the agreement. Forget to include even one, and you run the risk of loosing ownership to your new, or previous employer. Luckily these agreements can be, and in the case of IBM, or are limited in duration to the time that the company employs you.

Working for the military or companies providing services and products for it can also place you under special obligations, scrutiny, and screening. For example, I worked nearly two years with Boeing, a year and a half of which was on the B-2 Stealth Bomber project. Prior to staring my employment, I went through fingerprinting, pages of personal history, and had to endure a three-month wait till my security clearance was approved. This was even after having just left active duty Air Force and was still in the National Guard, where I still had a clearance.

Next, upon hiring and approval of the clearance, I had to sign papers that obligated me not to divulge any information I was privy to for life or fifty years after its declassification. Scrutiny. Even twelve years after leaving Boeing, you can bet anyone on such a project is still tracked, and at least periodically checked to ensure no classified information is leaked, or sold to interested parties.

This is one form of a post employment obligation, but is not limited to top secret military projects. Companies can impose no compete clauses which prevents you from starting your own competing business or working for one for a specified period of time. This could be as short as a few weeks, likely to be months, but could be years.

A small example was the originator of Gatorade, I heard, was prevented from creating or at least marketing a similar product for a period of years after selling the formula. A follow up that I've heard is that he is also the creator of the competing Powerade product now that the agreement has expired. (Unsubstantiated)

I have already touched upon how one company's (Eastern Airlines) attempt to protect themselves could have impaired a worker with a great idea from profiting in the future. Though the legality of such a universal clause may be subject to repeal, most individuals can barely afford attempting to obtain a patent that can cost nearly $20,000, much less combat the financial might and lawyers of a major corporation. What recourse do individual workers have to protect their ideas, patents, and copyrights?

Again, it often begins with the employment process. The individual must carefully screen the employment application for verbiage indicating the abdication of any right (not just proprietary data) before signing and submitting it. The application in many cases is a form of contract, so if in doubt, try to afford a lawyer to explain obscure wording to you.

If you cannot afford a lawyer, you may dare what I did on my Sprint application, which was to strike out or modify wording that limits or eliminates your rights. Either by luck, or their determination that the changes were acceptable I enjoyed nearly eight years with them and still had the original copy to back me up in case of a court battle over my possible patents. You do risk, however, them deciding not to hire you, or requiring you to fill out another multi-page application if you wish to work with them.

Before you sign

If a company requires you to sign an ICA, you have several possible approaches depending upon the company. With E-Invest Group Inc., a now defunct dot-com company, I simply asked for the agreement in electronic format (word processor) and modified the provisions as a counter proposal. Upon consideration, the executives chose to accept my modified agreement.

The details would be too long to divulge here, but the heart of it separated work time from personal time, and detailed the contrast between use of company assets and resources versus mine. This allowed me to use my spare time at home to continue documenting ideas and inventions, make prototypes, and even apply for a patent if I had chose to do so.

This approach is less likely to succeed with a larger company. IBM legal department wholeheartedly rejected this concept. As indicated, they had no way of tracking which employees had casual or hacked access to their proprietary data. They made no exceptions. Since I have no formal patent on any of the ideas I have documented, I contacted a lawyer specializing in business law before signing the ICA.

His recommendation was to make copies of all materials relating to my ideas, to number each page consecutively and seal them in an envelope or package. I was to include at a minimum a table of contents on the outside with classifications of the material (i.e. power generation instead of a revealing title) and to have someone I trusted or had under contractual agreement (I would always recommend the latter, you never know who you can trust) to witness the contents and notarize the table of contents.

In this way, IBM would have a weaker claim to any ideas I had prior to being employed with them. I chose to accept his offer to store the package in his records, my file, to separate the originals from the copies. Depending upon the attorney there may be a charge for storage or not.

You could lose it all

Patents aren't the only proprietary data one could loose. If you have every written a poem, song, book, procedures, or even composed music being careless could cost you the ownership. Though most large companies would balk at using the ICA as a method to take something unrelated to their business, the technical legal wording of ICAs could allow them to do so.

I owned a computer value added reseller business in the late eighties. During that time I wrote many reference manuals and published excerpts in a Washington state computer paper. I now create and operate several websites which use programming that I originate or obtain from the web and modify. Both being related to IBM interests, IBM could have claimed ownership of them, in whole or part, if I had not included their description on the ICA.

My poetry, songs, and other writings were also referenced on the ICA. Who's to say that one of your poems or songs wont become extremely popular and make large royalties. A company like IBM would probably not try to take advantage of your omission of it on an ICA, but a smaller company might. When large sums of money are involved, anything is possible, so protect yourself and include everything you can think of.

Proprietary data is a two way street. It is not only the right of the corporation or business to protect its intellectual capital, but that of the individual as well. A company can and will assume your creation is theirs if you do not take steps to document and protect it from their claims. They do not reciprocate the same obligation to protect your proprietary data as you do theirs as an employee.

Your best protection is always to have complete legal ownership established before entering into employment. Patent that idea, register your copyright, or follow some of the ideas outlined here to document your creativity. Where possible, obtain legal advice. And whatever you do, be thorough!

Don't forget that action figure you sketched out as a kid, or that new electronic game you thought of a few years ago. Did you create a cute dollhouse for your daughter, or did you modify a tool to do a job better? What about granny's secret recipe given to just you, or that mixture of stuff that cleans a little better than store bought cleaners!

All have potential for greatness, rewards, and profit. Unless you don't really care that your current or former employer can be the one to earn the profit…or even sue you and legally take the profit away from you…then don't bother. Otherwise, tread carefully, and protect yourself.

One last follow up...

This article was written years ago, but is quite relevant even today. In the last few years I was in need of additional income and interviewed and was offered a job at one of the big orange box stores. This was a part time job, mind you, doing warehouse type work, not management or R&D. This company has the most intrusive and blatant ICA as a requirement of work that the local store nor corporate would back down from. Even though I needed the money and it was well over minimum wage, I walked away. Their blanket ICA stated they owned everything you have or will create. So watch yourself, even on part time jobs that might cost you everything you were hoping to achieve.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

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