Capturing ideas so you own them can limit the damage a key employee might inflict when they go to a competitor.
A company-wide strategy for patents can have ancillary benefits when dealing with employee issues.
Let’s say your company is in a highly competitive market for talent, and a key inventor/employee announced that they are going to leave or has just left for a competitor.
In many states, non-compete agreements are being less and less enforceable, with the policy that we do not want to restrict a person’s ability to put food on their table. The theory is that if a person has a non-compete agreement, they have less opportunity to jump from one company to another.
As a company owner/shareholder/investor, talent that walks out the door has two major implications. First, we are losing a contributing member of the team – someone who has been with us for a long time, knows the market, knows the product, and this person represents our competitive advantage. Second, and even more importantly, our competitor is getting the benefit of all that learning for free. They did not have to pay for the time, energy, and effort it took to get the team member up to speed.
How can you handle this problem?
Documenting and reviewing inventions is a best practice.
A best practice is to periodically review patentable aspects of the business. This sets the tone that the company is aware of its trade secrets and their value. This has a benefit of putting employees on notice that there is value in the intellectual property.
But it also documents the ideas. Having a written record of ideas and the earliest date that those ideas existed is critical to documenting that the company, indeed, owned the ideas then and there.
How it affects employees
Periodically reviewing employee’s ideas has many great benefits.
First, it acknowledges each employee’s contribution to the company and its products. Personally, I would recommend giving a cash incentive for every contributed idea, no matter how small – so long as the person writes up a description and signs it.
Most employees want to feel good about their worth to the company, so acknowledging their contributions goes a long way.
Second, it documents the person’s contributions to the company. These contributions put the employee on notice that the company owns the ideas. After all, the point of so-called “knowledge workers” is to produce “knowledge” and ideas.
Reviewing inventions for patenting or keeping as a trade secret.
In the normal course of business, the idea submissions may be evaluated for patenting. Some inventions may not be developed far enough to justify patenting, or they may be undetectable or give away too many trade secrets.
As a new product may be readied for launch, the ideas associated with that product may be gathered together to generate a group of patents. The ideas may be sorted to identify those ideas that give the company a competitive advantage with their customer, and patents might be written around those ideas.
In many cases, the ideas may be kept as a trade secret.
If you decide to keep ideas as a trade secret, it is critical to give as much – or even more – reward to the inventor. Getting a patent is a huge reward in itself, and finding out that your invention will not be patented can be a tremendous let down, so it is critical that you manage these inventors appropriately and reward them accordingly.
There is another key benefit of this process: the employee knows what ideas are owned by the company. This puts them on notice when they leave the company.
Doing a special review when an inventor leaves the company.
When an inventor leaves a company to go to a competitor, a special IP audit and review should be performed.
The question to ask is whether that person’s contributions should be patented, and whether those patents would protect the ideas the company previously kept as trade secrets.
If there are documented ideas that were not patented, it may be a competitive advantage to write patents on those ideas to prevent the competitor from claiming them.
Maybe those ideas were too early for product development, maybe they were minor improvements that – at the time – were not worth the investment of a patent, or maybe they were features that gave a competitive advantage but were undetectable.
When an inventor is leaving for a competitor, the calculus for determining patentability changes.
No longer do you look at the long term effects of whether a patent matters. You need to look for whether a short term patent can prevent a competitor from getting patents in your space.
If you get a patent on the last invention an inventor submitted before they left the company, you can prevent that idea from being further developed by the competitor. Whether or not you actually implement the invention, you would create a barrier that prevents a competitor from operating in that space.
Let’s say you get a patent on the invention, but then the inventor winds up at a competitor to work on that invention in more detail. 18 months later, as your patents begin to publish, the competitor will have an earlier patent that might prevent them from launching a product.
This scenario presents an opportunity for you to negotiate a licensing arrangement, joint venture, cross licensing situation, or other opportunity with the company who ‘stole’ your employee.
Yes, you can file a patent after an inventor leaves your company.
Every employee, especially employees who are expected to invent, must have signed a Proprietary Information and Inventions Agreement. A properly designed agreement will allow the company to file patents in the name of the inventor even if the inventor refuses to sign the paperwork.
I would recommend having a group of inventors get together and further flesh out the invention based on the original inventor’s ideas. It is critical to think through all of the permutations and options for the invention and document them thoroughly. Prepare a patent application within a month or two of the inventor’s termination date, file the patent application with the USPTO, and send the documents to the inventor to sign afterwards.
Whether the inventor refuses to sign is immaterial. The purpose of asking them to sign puts them on notice that the invention is owned by their previous employer. Because the document is filed with the USPTO before notifying the inventor, they (or their new employer) do not have the opportunity to rush to the Patent Office and file ahead of you.
I would recommend offering a small amount of money to have the inventor sign the patent paperwork as an acknowledgement. Something on the order of $100, but certainly not thousands of dollars.
If the inventor refuses to sign, the inventor’s signed PIIA and a statement from the company is sufficient to sign on the inventor’s behalf.
Do not file patents on the former employee’s invention without listing the proper inventor.
Improper inventorship is the easiest way to invalidate a patent. It is absolutely critical not to mess it up, especially when an inventor may be adverse to the company.
By giving the inventor an opportunity to sign the patent documents, you are acknowledging their contributions and not going around them. You are also putting the competitor company on notice that these are your ideas, your inventions, and that you intend to protect them.
If you file a patent for their idea but do not give them credit, you awaken an angry inventor, who may pop out of the woodwork decades later to try to invalidate the patent when it is in litigation.