Equity-only moonlighting: Why do it?

Submitted by johnlogic on Sat, 09/05/2009 - 11:33am.
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A recent anonymous job listing, Web Designer (start-up, for equity), (at least in my mind) raises some red flags.

Consider paragraph 3 (of 4):

"No initial salary. This is ideal for a developer who currently has a paying job and wants to take the sweat equity route to a principal position. A full salary is included in the deal once revenue is satisfactory."

Moonlighting (whether paid or not) always caries with it the potential for conflicts of interest with a current employer. Two organizations that use an individual for his/her skills set are likely in similar businesses, and might be (or become) direct competitors. Most of my employers would actually require me to disclose to and consult with them before taking on such a side project.

Obviously, my (paying) employer might ask about my motives; disclosing that I'd jump ship if the new venture succeeded should be enough to limit my future with my employer, if it doesn't get me fired on the spot.

Then comes the matter of working for free. Sure, as a professional I promote good will toward potential clients by providing free initial consultations (usually about 1-2 hours), but working unpaid for extended durations probably runs afoul of federal and state minimum wage laws. Surely we can make the case that the moonlighter invests unseen revenue into the venture (as "sweat equity"), but then he or she technically becomes not only an employee, but an investor as well, and the transaction becomes the subject of even more regulation.

We also must consider the deal itself. The Statue of Frauds (part of the Uniform Commercial Code) dictates that a written contract is required for any agreement valued at $500 or more. Anyone willing to work for or set up such a venture should first consult an attorney. Even paying an attorney a few hundred dollars to review contracts is likely worthwhile, as it might protect your interest in thousands (hopefully even millions), or even your day job.

The poster dangles a carrot, though effectively expects any takers to trade a salary for a salary. Just out of curiosity, who might take such an offer? Isn't it better to have a bird in the hand, than one in the bush?

- John

Submitted by NY2TX on Thu, 09/10/2009 - 8:36pm.

Virtually everyone on my team has at one point or another worked solely for equity. Some did their work at night (I never asked if they were permitted to do so by their employer). As our agreements with consultants all require assignment of IP to the company, there was never an issue there.

I am not at all familiar with the Statute of Frauds, but as a general rule, there should always be a piece of paper to define roles, responsibilities, expectations and compensation. Currently, I have two associates who bill their standard hourly rate. The agreement is that until full funding, their accrued compensation is converted to options at the value of the next investor's price per share. Their risk is that the company never gets funded.

Probably forgetting some stuff here, but then again its Labor Day weekend, and my brain is supposed to be shut down.

Submitted by jeteye on Mon, 09/07/2009 - 10:28am.

Wow, what you just described is essentially a way that employers can keep any talented person from ever working for another company. Companies may "try" to keep talent in house, but they only "buy" your talent for 40 hours per week. What you do with the rest of your time is totally up to you!

As an employer, I have to ALWAYS assume that my talent will be working on something of there own and it is my responsibility to create an environment where they feel valued and their work is challenging.

Submitted by NY2TX on Mon, 09/07/2009 - 11:13am.

What you do with the rest of your time is totally up to you!

NO, that is not entirely true. There are plenty of employment agreements and such that keep someone from moonlighting; further, what is a 40 hour per week job? Most people who work a strict 40 hours per week job...etc.

Working on something of their own (like a novel or a blog article) is different from working on a project as a consultant or writing software for someone else "after hours." Some companies could claim rights to a "widget" developed by a key employee in his/her after hours based on the premise that expertise gained from the 40+ hour per week job contributed to its development. This position of management becomes even more stern if the "after hours" endeavor is competitive to the so-called 40 hour per week job.

Submitted by threew on Tue, 09/08/2009 - 12:02pm.

Agree: For any employee, what you do with the rest of your time is never totally up to you!

Working for a competitor was mentioned previously and a start-up in the same industry/sector certainly qualifies in that department. Even if an employee is a writer or blogger "on their own time," there are constraints. Penning a book based on the author's work experience (even if somewhat disguised) is risky territory. Ditto blogging about employers or clients -- past or present. Use of free time is only "totally up to you" as long as you don't expect to have a job in the morning ;~)

Revisiting John's original question: "Just out of curiosity, who might take such an offer? Isn't it better to have a bird in the hand, than one in the bush?"

Without speaking specifically to the job posting mentioned, I certainly consider "sweat equity" a genuine offer. It is a special situation requiring more than usual due diligence and legal footwork... Nonetheless, worthy of consideration. Of course I may assess risk a little differently and my appetite for it may be different than most. As they say, "Your mileage may vary."

As far as the birds and the bushes go, I think two in the hand beat one in the hand or any number in the bush any day... especially in these cactus and mesquite infested badlands ;~)

Oh wait! I think I hear a mockingbird...

William W. (Woody) Williams
Project Management Consultant
| Blog | Twitter |
w3src Consulting

Submitted by jeteye on Tue, 09/08/2009 - 12:24pm.

OK, so essentially you have become an indentured servant of the company? I thought that was outlawed some time ago? I agree, maybe you cannot work for a competitor, but something of your own creation? Hey, what if I "produce" a baby. Does that belong to the company? Ridiculous, yes, but based on your definition, not really.

Submitted by NY2TX on Tue, 09/08/2009 - 1:37pm.

There is nothing indentured about anything.

Every idea developed by someone under contract or agreement with my company is assigned to the company in return for $1 (plus anything else, including options that we determine appropriate). Everyone who becomes part of the team,does so understanding that all IP is owned by the Company.

"You" can do anything that you want to do on your time. If it has anything to do with what you've learned on my time, you can't do it.

Your example of giving birth to a baby holds no water. So let's get back to reality.

If "you" have a contract or employment agreement that prohibits "you" from working for anyone else, then, too bad! If "you" choose to take a chance, and do it anyway, I'd fire "you" immediate, no notice, for cause.

Submitted by threew on Tue, 09/08/2009 - 2:09pm.

Making babies does not in any way fit with my definition ;~)

There is no point in arguing from extremes; it isn't all or nothing and does nothing to increase understanding.

  • The statement "What you do with the rest of your time is totally up to you!" is false.
  • The statement "so essentially you have become an indentured servant of the company" is equally false.

There are constraints on what actions an employee may or may not undertake outside business hours. Some are contractual; some are company policy. A felony conviction, in this scenario, may result in dismissal just as much as stealing client lists or IP means dismissal. If an employee libels their manager in a Twitter or blog post, they may be dismissed... and, there are more examples of work related constraints that apply to employee "free time."

However, not every possible action outside working hours is under constraint, only some and those are strictly defined. It is highly unlikely that painting your home a particular color (or not painting it at all) results in dismissal.

For purposes of this subject, the statement "There are constraints on what actions an employee may or may not undertake outside business hours." is true. However, even though true, it may or may not apply (depends on contracts and policies) to working part-time for sweat equity in a start-up.

William W. (Woody) Williams
Project Management Consultant
| Blog | Twitter |
w3src Consulting

Submitted by johnlogic on Mon, 09/07/2009 - 12:47pm.

Here's where things get interesting: Most employment agreements (in technology fields, at least) usually have clauses regarding the assignment of intellectual property (as "work for hire") and conflicts of interests (including non-competition). If an employee creates intellectual property either related to the company's business or materially using the company's resources, the company may (and usually does) claim ownership of that intellectual property. (Note that "material" use part; laser printing or photocopying a few pages is generally immaterial, though bad practice. Using specialized equipment--such as that in laboratories--is usually considered "material".)

One fine example is a sequence from The Pirates of Silicon Valley in which Steve Wozniak tells his friend Steve Jobs that, because he designed and built his computer while working (a summer job?) for Hewlett-Packard (probably, in my opinion, using parts that Jobs pilfered through his job at Atari), that he needed to disclose the invention to HP, and that HP may claim ownership. Woz made the disclosure, but HP did not assert its "first right of refusal". The rest, as we say, is history...

Another of the few great counterexamples involves someone who invented a new helicopter rotor while working for IBM. (This story was told to me by my boss while I worked there.) In addition to the typical assignment clauses in its employment contracts, IBM has an army of lawyers. However, both are pretty reasonable; deciding it didn't want to get into the helicopter business, IBM released any claim of ownership of the invention.

Both of these examples are rare and extreme. I think that most employers today (even those in the examples) are now much less naive in recognizing the value of intellectual property.

Employers don't own you, but you do sell your time and skills, and the fruit that they bear--hopefully for a fair price.

- John

Submitted by NY2TX on Tue, 09/08/2009 - 11:27am.

And here's another interesting point, John. Everyone on my team signs an agreement assigning the IP, whether I pay them W-2, 1009 or stock options. If they don't want to do it, then they're not on the team. Most of the instances in the past, the "employee" received bonus options in compensation.

Your example of materially using resources or related to the company's business...depending on how specialized the company, the more likely that there are more derivative spin-offs. How so? To get to a complicated or sophisticated end product, the chances are that there are less sophisticated steps that must be passed. As the employee, "you" have learned as a result of working for the company.

Now, I am pretty certain that an IP attorney or IP specialist could dicker here and there with what I've just written. Basic is that especially in technology, the word "derivative" is pretty important.

Do I own my employees or team members? Certainly not! Slavery was abolished ~150 years ago (depending on which state you're in)...but the company does own the ideas developed and things that are derived from that work. My team learns stuff they'd never learn anywhere else (that is material).

Good discussion point though.

And by the way: No one should ever take an equity/option position in place of cash deal unless they have bought into the vision of the entrepreneur. Simply taking equity for transitory services is ridiculous. But you may well become very wealthy if you are compensated by stock and options in lieu of cash in a company that actually "makes it," though they are very few and far between. One of my original partners currently owns about 10% of the fully diluted company (pre-investment). He's made a significant contribution to the effort. He stands to make alot more money from the venture IF we make it than he's ever made from anything else in his long career.

Submitted by johnlogic on Wed, 09/09/2009 - 12:35pm.

Having your workers assign their IP to you is very good, Jay (NY2TX). But, what happens when one of your moonlighters invents something and you find out that he or she has simultaneously assigned rights of ownership to (at least) one other employer?

If the worker is technically proficient enough to create "the next big thing" but has assigned 100% of its ownership to two or more parties (knowingly or not), the companies could face years of protracted litigation. For having caused it, the worker gets embroiled in lengthy depositions and could be fired from one or both/all jobs, loose any equity stakes accrued, and perhaps become an unemployable pariah.

As a long-time full-time professional independent contractor, part of the value I bring to my clients is the legal capacity to assign to them any IP I generate, and thus avoid creating legal liabilities that are often caused by moonlighters.

(By the way, I agree with you completely in that all workers should "buy in": a team with a shared vision can do much more than just a group of people coming to their jobs to collect paychecks. As one old Texan gambler once explained to me: some people play the cards, others play the money.)

- John

Submitted by NY2TX on Wed, 09/09/2009 - 1:03pm.

If the invention made by a "moonlighter" is based on work done on my company's dime, or is derivative of the work done by the "moonlighter" when not "moonlighting," then by contract and by definition he/she has assigned the IP to my company, whether or not the "moonlighter" has been directly involved in that work. This position (mine) is made even more strigent if the "moonlighter" holds equity of any color in my company.

If the IP has nothing to do with the work of my company, then we couldn't care less.

Again, a patent counsel or someone whose business it is to make definitive judgments about IP could well disagree with the positions just stated.

Submitted by johnlogic on Wed, 09/09/2009 - 1:47pm.

I respect your assertion that you claim ownership of what is created by your workers, as you should. However, their other employers likely make similar assertions.

To avoid conflicts of commitments (not just conflicts of interests), your attorney(s) should review the contracts between your workers' and their other employers.

If a worker already assigns IP rights to another employer, that worker no longer has the legal capacity to assign them to you when you enter into a contract with that worker. So, your contract with that worker could easily become unenforceable (and branded an "unlawful bargain"), to the detriment of both you (loosing IP rights) and your worker (loosing equity in your project, and thus most or all compensation for work performed).

- John

Submitted by NY2TX on Thu, 09/10/2009 - 8:38pm.

John, you and I are having an interesting discussion here. But remember two things:

(1) I wrote very clearly, "If the IP has nothing to do with the work of my company, then we couldn't care less." Thus if this brilliant employee/consultant who has signed an agreement or contract with my company that requires assignment of IP, then it is what it is...IP related to my company's business is mine. If he/she invents something totally unrelated to my business then I couldn't care less.

(2) This entire train of discussion came about over someone else's assertion that there should be no IP rights, or that if someone had a baby who was under contract with my company, then my company would have some sort of ludicrous rights to that baby.

And by the way, and I guess (3), if the worker is under contract, works full-time and is paid W-2, then I'll bet that I'd fire he/she or she/he if they were distracted by an outside job (especially if the person owned equity in the company, even if that equity was in the form of options), because it would be a defacto violation of the agreement.

Submitted by johnlogic on Thu, 09/10/2009 - 8:39pm.

Yes, this is certainly an interesting discussion.

(I seem to recall arguments in favor of abolishing IP rights--your item #2--in another thread, which is where I'd like to keep that discussion.)

I thought that I had written clearly, also. Although I feel a bit like I am about to pour gasoline onto an open fire, perhaps I should restate my point:

If an individual has already assigned ownership of IP that he or she generates--as is the case with most employment contracts--and you subsequently enter into a similar contract with that person, yours is trumped by the first. This is so because, when the person entered into the contract with you, he or she no longer had the legal capacity to assign IP to you, because he or she had already assigned it to another. You can claim to own the IP all you want, but--once you bring in the lawyers--those claims won't be worth a fart in a whirlwind.

If the worker's other employer wouldn't use the IP, that employer will likely see the value of its property and might be willing to sell it to you.

(Your only recourse might be to sue the worker for fraudulently misrepresenting that he or she had the capacity to assign the IP to you, but both the argument and chance of financial recovery are pretty weak. Conversely, if you contract with someone before that person enters a similar agreement with another employer, you're the one in the catbird seat.)

Either way, if the worker generates IP--competently doing what engineers do--then the first employer wins, subsequent employer(s) loose, and so does the worker.

This gets even stickier when we talk about collaborative efforts. Let's say you hire five people who already have jobs elsewhere. When at least one of the other employers catches wind of your project (which happens; see the legal doctrine of inevitable disclosure) and asserts its rights of ownership over a worker's IP--e.g. all the software that person developed--you might not be able to ship your product. What's even worse: if three of your five engineers work for one employer--e.g. IBM--guess who owns "your" product...

- John

Submitted by NY2TX on Thu, 09/10/2009 - 9:25pm.

There's no fire, so no gasoline needed.

I'm not sure that I'm following you here. If a worker has previously assigned "all IP developed" to another company, then are you suggesting that if that person is moonlighting from job #1 to work with my company that the person cannot assign IP to my company while they are working for and being paid my company?

I didn't realize that there is a blanket rule of assignment, as far as I know. It covers work performed on behalf of the company for which to person is working and being paid. Frankly, if that is the case (still uncertain of the validity of this), I would not engage that consultant, no matter how much that person might contribute. I suspect from this discussion that in future dealings with new consultants or part-time engineers, I will ensure that I ask about previous agreements that would inhibit assignment of IP. Further, it would appear that if the person entering into an engagement with my company was enjoined by previous agreement to assign IP to a second company (mine) than signing my company's agreement that requires assignment would be a fraudulent signing.

If what you are suggesting happened, then company #1 (the company for which the moonlighter usually works) now has rights to IP in a field totally unrelated to its business. I suspect that my patent counsel would disagree, as I do. However, even if company #1 maintained IP rights (which I do not agree they would have if the person working for my company under a consulting agreement was being paid by my company), they would have few choices available. They couldn't reduce it to practice without infringing on my patent rights. In fact, given my company's priority position, they would have a hard time filing for the claims. If money was no object, my company might file "competing claims" action with the USPTO and essentially move to stop company #1 from even filing. If, on the otherhand, they did file and recieve a patent, their choices would be to infringe (knowingly), or to try to extort a licensing fee from my company.

I'm not very clear on the condition that you are presenting. But I am also glad that I am not a lawyer.

Submitted by johnlogic on Thu, 09/10/2009 - 11:44pm.

I'm not a lawyer, either, but have had these issues pounded into me through many years of business school (which really ought to be about half law classes these days), professional experience (as both an employee and a contractor), and a bit of litigation. (By the way, thanks for the preface!)

I base my assertion upon the enforceability of contracts between the worker and the two (or more) employers, and the assumption that employers claim ownership (or at least "first right of refusal") to any IP created by their employees, which appears to be common practice for about the last 15 years. I think that this is what you mean by "blanket" assignment, and that this is generally enforceable, even without regard to the nature of the IP or which company's assets were used to develop it, who paid more, etc. From this point of view, the only material factor is which contract was in force first.

In employment contracts (in whatever form), this "assignment" clause is now often accompanied by one that requires the employee to disclose all other organizations for which they work, volunteer, or are otherwise contractually bound. (As someone that hires contractors, I think that you might do well to include a similar "disclosure" clause to your contracts.)

With that, I'd like to share a story from relatively early in my career (about 20 years ago): One of my clients grew a bit suspicious of someone he had contracted with to work evenings and weekends. Though this person clearly possessed the requisite skills and background to do the work, he didn't disclose much (if anything) about his day job. I hired investigators, who found that this contractor was working during the day for a direct competitor. My client and his attorneys then contacted and met with the other employer and its attorneys. My client mitigated his liability by catching the conflict and potential for unwanted technology transfer before the worker made a substantial contribution to his project. During the meeting, they brought in the worker to explain the extent of the liability caused by his actions. With the severity of the situation, I believe the worker was immediately terminated "for cause".

- John

Submitted by NY2TX on Fri, 09/11/2009 - 4:25am.

"...the worker was terminated for cause." And so he should have been.

As for the contract/agreement, no question that the addendum clause of disclosure of any conflicting disclosure will be included.

I still question the premise, and while I certainly do not have the time, I'd be interested in reading at least one brief supporting the assertion.

Submitted by threew on Fri, 09/11/2009 - 6:36am.

John: I find the "premise" here, while well reasoned and closely argued, disturbing.

While I have never seen contract language precisely as described, I can certainly see how organizations could feel "protected" to a greater extent by adopting it. That said, crafting a few "what if" scenarios leads to obviously ludicrous and legally untenable positions.

For example: If a software or hardware engineer is employed (contract or W2) under these terms, and is also an artist or musician on their own time, the idea that their employer owns all rights to those works is simply preposterous.

Surely you don't mean to imply that's the case here, do you?

Example

There is a great deal of assignment language ahead of this section but this is the pertinent sample:

f. EXCEPTION TO ASSIGNMENTS. I understand that the provisions of this Agreement requiring assignment of Inventions to the Company do not apply to any invention which qualifies fully under the provisions of California Labor Code Section 2870 (attached hereto as Exhibit B). I will advise the Company promptly in writing of any inventions that I believe meet the criteria in California Labor Code Section 2870 and not otherwise disclosed on Exhibit A.

4. CONFLICTING EMPLOYMENT. I agree that, during the term of my
employment with the Company, I will not engage in any other employment,
occupation, consulting or other business activity directly related to the business in which the Company is now involved or becomes involved during the term of my employment, nor will I engage in any other activities that conflict with my obligations to the Company.

Emphasis added.

California Code

The reference above is to this:

CALIFORNIA CODES
LABOR CODE
SECTION 2870-2872

2870. (a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either:

1. Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or

2. Result from any work performed by the employee for the employer.

This is the "typical" language, in my experience, found in most employment contracts.

William W. (Woody) Williams
Project Management Consultant
| Blog | Twitter |
w3src Consulting

Submitted by johnlogic on Fri, 09/11/2009 - 12:07pm.

Excellent point and research, Woody!

(Please note that the law cited doesn't apply outside of California, though I believe it provides an excellent template for behavior everywhere. As a native and former Californian, I may be somewhat biased.)

I believe that many (perhaps even most) companies tend to make the language of their employment contracts a bit overzealous, by effectively claiming a first right of refusal on all IP generated by a worker.

In practice, this should cause the worker to disclose the creation of all IP to their employers in writing. The employer then has the option of acting upon it. Ideally, the employer should respond within a few days by providing a short memorandum acknowledging receipt of (and thanking the worker for making) the disclosure, and whether the company wishes to assert a claim of ownership.

If an engineer creates some thing (e.g. song, painting, etc.) unrelated to his or her work, making the disclosure of the thing's creation demonstrates (to the employer) the engineer's diligence (that he or she has read and understands the employment contract) and good will. Plus, having these records in his or her personnel file (and perhaps a few other places) can help to protect the engineer's interests in his or her creation against piracy, plagiarism, etc.

As a related example, when entering into a contract to take on a new job, I am (and, as employees, we are) often asked to provide a list of prior inventions. Most of my work creates "trade secrets" (vs. patents, which are public records), and my duty to protect those secrets continues after my employment ends, so briefly describing the nature of the invention helps to protect my interests and those of my new and prior employers. It's not a contemporaneous record of creations, as above, but it's a good place to start with a new employer.

- John

Submitted by threew on Sat, 09/12/2009 - 4:43am.

As a point of reference, the example cited was a contract with a corporation in the Cayman Islands, not California. When something like this (California statute) is included in a contract, it becomes binding on the parties to the contract. California is not expected to enforce it, it would be enforced in whatever court has jurisdiction over the contract.

I have seen many similar examples where something is borrowed in a like manner. In fact all the contracts I used back in the advertising and graphic design days had assignment or rights language borrowed from or based on New York law. I can say from experience that no one and nothing in or from New York was required to enforce those contract terms. It's not a problem; it's a contract not a law.

On the other point: I have never personally seen nor can I find any (not one) example to support that premise while there are numerous (a plethora) of examples to the contrary.

The idea that a software engineer who is a spare time musician, painter, or furniture maker must or should provide recordings, copies of paintings, or furniture designs to their employer is ludicrous. I expect anyone doing so would be laughed out of the office or requested to "seek treatment."

Reserving judgment ;~)

Later Note: I realize after posting this that I did not call out one point I'm making specifically and it may not be intuitive to the casual reader.

The examples I've used (music, painting, and the like) are things that copyright applies to -- "work for hire" or "works made for hire" in contract language. They are quite different from "shop rights" or patent rights and the two things are handled differently in contracts.

The point is, when a claim is made that the employer "owns all IP" of an employee and I say "not the musical compositions of a software engineer," this is one distinction to which I am referring. "Shop Rights," no matter how broadly drawn, do not grant copyright. The obverse is also true regarding "works made for hire" -- they do not grant patent rights. Two entirely different things involved.

I have never seen a copyright provision - or language suggesting ownership of music or paintings - in a software engineer's employment contract ;~)

It's also worth noting that since late last year (court ruling) all "shop rights" under employee contracts come under Federal, not state, law.

William W. (Woody) Williams
Project Management Consultant
| Blog | Twitter |
w3src Consulting

Submitted by NY2TX on Fri, 09/11/2009 - 8:39pm.

A point of clarification. There is no "first refusal" in our agreements. It is an obligatory assignment of IP rights (don't agree, don't do it, don't work for us). Note that we are evaluating an overall shift to trade secrets.

I understand (mostly) and respect (alot) the discussion that you and Woody are having.

Submitted by jeteye on Tue, 09/08/2009 - 12:27pm.

Actually, these are good examples, but in the extreme. What about the guy who invented the delayed wind-shield wiper and the idea was stolen from him? Yes, again in the extreme. I guess you have to go case by case and figure out how you stand with your employer? Interesting topic though.

Submitted by NY2TX on Tue, 09/08/2009 - 1:26pm.

There is nothing extreme about it. I don't care about the wind shield wiper guy. I care about my company and its IP. If "you" don't like the concept, then "you" don't work for my company.

An employment agreement in almost every tech company cedes the IP to the company. Know of one that doesn't do it?

Submitted by jeteye on Tue, 09/08/2009 - 12:20pm.

Honestly, the best way around this is that EVERYONE should be a 1099 employee and charge for the "knowledge" they have. In a knowledge based economy (which the US is moving very quickly to), people should be free to bid out their expertise. Wow, imagine a bidding war for certain skill sets (sort of like NFL drafts)? Hum, wonder if this would ever happen?

You would keep all your IP and be able to determine what you are worth by market forces.

Just thinking out of the box (maybe out of this world?)!

Submitted by NY2TX on Tue, 09/08/2009 - 1:24pm.

You are not thinking clearly. In a knowledge based economy, knowledge generated while under contract to me, and for some time to come into the future, belongs to my company.

Its not "your" IP if it was developed working for my company.

Submitted by threew on Tue, 09/08/2009 - 2:16pm.

Simply: An equity stake in a successful company enables the owner to participate in the success of the IP. No regular employee without an equity stake can.

If anyone wishes to own their own IP, form a company and do it.

William W. (Woody) Williams
Project Management Consultant
| Blog | Twitter |
w3src Consulting

Submitted by NY2TX on Tue, 09/08/2009 - 3:19pm.

Although I have differences of opinion re: Bayh-Dole, my own position regarding IP is quite literal. If "you" are being paid in any way by my company, the IP is owned by the company.

IP developed that is unrelated to the company's technolgies is "some else's business." But most people who insist on owning IP don't necessarily know how to be an entrepreneur.

Submitted by threew on Tue, 09/08/2009 - 5:46pm.

Triple, mega dittos.

William W. (Woody) Williams
Project Management Consultant
| Blog | Twitter |
w3src Consulting

Submitted by NY2TX on Tue, 09/08/2009 - 5:54pm.

Triple, mega dittos???

Submitted by threew on Wed, 09/09/2009 - 8:27pm.

Triple

  1. If "you" are being paid in any way by my company, the IP is owned by the company.
  2. IP developed that is unrelated to the company's technolgies is "some else's business."
  3. most people who insist on owning IP don't necessarily know how to be an entrepreneur.

William W. (Woody) Williams
Project Management Consultant
| Blog | Twitter |
w3src Consulting

Submitted by NY2TX on Wed, 09/09/2009 - 8:30pm.

Maybe we should do a show together :)

Submitted by threew on Wed, 09/09/2009 - 8:49pm.

I believe we are ;~)

William W. (Woody) Williams
Project Management Consultant
| Blog | Twitter |
w3src Consulting

Submitted by NY2TX on Wed, 09/09/2009 - 9:05pm.

Maybe we should do a show together?

I believe we are ;~)

Submitted by NY2TX on Wed, 09/09/2009 - 4:20am.

Why does it always "end" this way?

Submitted by johnlogic on Wed, 09/09/2009 - 11:59am.

The Bayh-Dole Act of 1980 is tangential, but worthy of clarification. The Act was meant to increase technology transfer from colleges and universities to the private sector.

When I was a student at St. Edward's University, I wrote a major senior research paper regarding the assignment of IP students generate to their colleges, and found that the Bayh-Dole Act has caused some rather perverse consequences. The most egregious problem with the Act (at least to me) is that money flows the other way: students pay their colleges and those colleges may claim ownership of their students' IP.

Fortunately, Austin's schools seem to be a bit better than most. In a nutshell: Austin Community College doesn't claim ownership. Nor does St. Edward's University, though students who engage in company-sponsored give up their IP rights; the University of Texas has a similar policy for undergraduates, but may claim ownership of its graduate students' IP.

- John

Submitted by NY2TX on Wed, 09/09/2009 - 12:06pm.

Its not really tangential. Why? The concept of who owns the IP is very relevant. Recent contract experience with USG had 3 DoE labs as subcontractors. Federal funds flowed through my company to all subcontractors. One lab claimed that since it was federal $, they owned any by products (IP or reports etc.) because of B-D. Yet the 2 other labs recognized the funds as my company paying them, thus, a different interpretation of B-D. Universities play the B-D card, especially with industry alot.

I'd be interested in reading that paper though.