Fairness in Employee Intellectual Property Rights

Silicon Valley is still in the Jurassic age when it comes to employee intellectual property rights.  It’s not that Silicon Valley has lagged behind others in this regard, but there has been no innovative leadership while there is ample opportunity to set an example for fair employee policies.

Before I was the CEO of IMVU, I was SVP Engineering, and in 2011 I drove an initiative to change the company’s policy regarding the ownership of employee side projects. At the time my basic argument was we were actively looking to hire employees that are builders, creators, tinkerers and then had a policy (like every other company) that oppresses the same qualities we actively sought.  The new policy created a path for employees to have guaranteed ownership of their side projects and be protected against any future claims from the company.  I detailed the outcome in my article IMVU’s Employee-Friendly Policy on Side Projects.  My hope was other companies would embrace and improve on this first step.

6 Years of Progress!

In the 6 years that followed,  there has been a massive wave of companies acknowledging that some of the best employees they can recruit are passionate builders that actively contribute to open source and hack on pet projects to feed their creativity and passion for learning new skills.  These same companies have changed their culture and employment agreements to support these employees by recognizing that traditional intellectual property assignment agreements are over-reaching.  Actually, none of that happened.

For the most part, the state of employment agreements and employee intellectual property rights hasn’t changed.  Many companies still have policies with far-reaching claims on anything the employee creates, at any time, even if not directly related to the business and whether or not company resources were utilized.  It doesn’t matter that some of these claims are not enforceable (in particular, California has much more employee-friendly laws), many employees would simply give up rather than incur the legal costs to defend their rights.

The result of the continued inconsistency between company policies and employee behavior is an awkward cultural and legal situation, where employees have side projects and sometimes kind of keep them secret and the company sort of doesn’t acknowledge the side work when it knows about it… a wink wink, nudge nudge arrangement until it isn’t, and the company decides it owns the employee’s thoughts.

I’ll take a moment to call out (and praise) a recent exception… GitHub recently introduced a policy to let employees keep their intellectual property.  GitHub’s policy is called Balanced Employee IP Agreement (BEIPA) and recognizes that the employee has rights to projects that are not related to the company business, and also that “free time” and “company time” is fuzzy (the policy doesn’t explicitly state that employees can use company resources, but it also doesn’t claim rights either).

The Challenge of Change

As I went through the process of changing an industry-standard policy, I gained a much better understanding of the challenges. Ultimately the challenge of innovation in these policies comes down to no perceived upside for the company with fear of embarrassing failures from the innovation

Standard Employee Agreements (which include assignment of intellectual property) are heavily weighted in favor of the employer and, since they are pretty much the same at every company, there is no competitive market and little reason to change. The company’s fear of losing out on an amazing invention can also come into play, with concerns that the company will forfeit rights to what could have been a game-changing development (who wants to be the idiot that let go of the billion dollar idea?). And finally, lawyers… corporate counsel provides tried-and-true boilerplate Employee Agreements, and the same corporate counsel that reviews the policy change is typically risk-averse, seeing rights-releasing changes as mostly downside with unknown benefits.

I found that most of the challenges in changing this policy were key stakeholders taking a “why we can’t” approach instead of a “how can we” attitude.  Now having 6 years of experience with the policy, I can unequivocally state that it resulted in no downside for the company and only goodwill for the employees.

Getting to Fair Employee IP Rights

I believe the first critical step in getting to fair employee intellectual property rights is bringing awareness that change is desired and possible.  Without a push from employees, it’s too easy for employers to just keep doing things the way they’ve always been done.

If you are an employee that would value a more equitable arrangement around intellectual property rights, let your employer know!  As a starting point for what is possible, point them to the improvements made at IMVU or GitHub.  Make an offer to your employer to promote the company’s leadership in this area and use it as a recruiting tool for creative talent.  If you are interviewing with a company, ask about employee IP rights – if this becomes a common topic from candidates, HR (recruiting) will see the value in making a fair policy be a benefit.

We’re seeing progress in other areas that have similar challenges around change… I am excited that some Silicon Valley companies are establishing or updating their policies to consider employee fairness around stock option plans that actually help employees keep the rewards from their contributions.  As these companies intentionally make the choice to not just do the same thing every company has done before, I encourage them to use that same open-minded process to examine their employment agreements and create policies that are fair to the employees they strive to attract.

This guy wrote your boilerplate IP Agreement

As a leader in a company, consider whether the policy you have today was intentional, reflecting the culture and values of what you are trying to build, or if the policy is just a generic hand-me-down from the corporate dinosaurs of the past. If you experience too many challenges around making sweeping changes, at least make incremental changes and try to use them as a differentiator for your company (really, go on Quora or Hacker News – potential employees looking for companies with fair IP policies are left with almost no good examples… your company could stand out).

As more companies show that employee fairness is a differentiator that attracts and retains great talent, it will push others to do improve their policies to be competitive.

 

Know of other companies that have great Employee IP rights?  Think Brett is crazy and giving away all of a company’s value?  Leave a comment!

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