[Commons-Law] Idea in Former Employee's Head Belongs to Alcatel

[Mrinalini Kochupillai]

Interesting ruling - "Idea in Former Employee's Head Belongs to Alcatel"
Erica Lehrer Goldman
Texas Lawyer
08-12-2002


Does a company own your thoughts? Maybe. 

On July 26, Alcatel USA Inc., based in Plano, Texas, prevailed in a
suit against former employee Evan Brown, who claimed that he -- rather
than the company -- owned rights to a software idea that he asserts
had long existed in his head.

After 5 1/2 years in litigation, DSC Communications Corp., n/k/a
Alcatel USA Inc. v. Evan Brown has companies, employees and legal
pundits wondering who owns an idea if it hasn't been expressed in a
tangible form but an employee has signed an employment contract making
no exclusions under the "inventions" clause.

Alcatel's attorney Eric Pinker of Dallas' Lynn Tillotson & Pinker says
he's pleased but not surprised that the court upheld the agreement. It
affirms "very well-understood and very well-accepted legal doctrines,"
Pinker says, adding that "invention disclosure agreements are
enforceable in the state of Texas."

Brown, representing himself pro se, alleged in a response to the
company's motion for summary judgment that at the time the suit was
filed, his thoughts were not in a tangible form and "did not meet the
definition of either 'invention' or 'conceived' as defined in
Webster's dictionary."

"What we said was, 'This isn't complicated at all -- if he had written
a formula or program or some copyrighted piece and put it in a vault
somewhere, the court wouldn't have hesitated to compel him to produce
it under some sort of confidentiality order.' " The fact that he said
it's not in writing doesn't change the law, Pinker says, although it
does make the case a little unusual.

"Does the company own the ideas in this guy's head before he commits
them to paper?" asks intellectual property lawyer Veronica Smith
Lewis, who's not involved in the suit. "That's the issue at the heart
of the case that employers and employees will be most concerned with."

Judge Curt B. Henderson of Collin County, Texas' 219th District Court
granted Alcatel summary judgment on its breach of contract and
declaratory judgment claims. Henderson concluded that the company's
contract with Brown was valid and enforceable. The court also held
that, pursuant to the contract, the company owned full legal right,
title and interest to what Henderson called Brown's "solution," which
he defined as the process and method developed by Brown for converting
machine-executable binary code into high-level source code;
reverse-engineering the intelligence from existing programs and
recoding it into high-level language; and converting certain machine
code into C language source. Henderson further noted that, pursuant to
the employment agreement, Brown was obligated to disclose the solution
to Alcatel and only to Alcatel. In addition, Brown was ordered to pay
Alcatel's legal fees, which exceed $330,000.

The suit began when DSC Communications Corp. (which later merged into
Alcatel USA) sued Brown in April 1997 for allegedly withholding an
idea for software. The company alleged that it owned Brown's idea
because of a signed employment agreement requiring him to disclose any
inventions he conceived of or developed while at the company. DSC
employed Brown for 10 years.

In an interview, Brown alleges he was led to believe by a personnel
director that ideas not in the area in which he worked wouldn't count.
Moreover, Brown asserts that he began developing the idea in 1975,
well before his employment with DSC began in 1987, and had achieved
about 80 percent of the solution. In March 1996, Brown claims, he
mentally solved the remaining 20 percent while vacationing.

In April 1996, Brown sought a release from DSC to pursue his idea.
Brown alleges that he asked several managers at DSC whether the
company would be interested in helping him develop the idea. According
to Brown, DSC and Brown began negotiating an agreement whereby DSC
would pay Brown a percentage of savings realized by the company if the
idea was successful and a percentage of income from third-party sales,
but the company later halted negotiations. Brown says when he refused
to reveal his idea, DSC fired him and sued him.

"What I had at the time I was fired and sued was an idea," Brown says
in an interview. "It was not along the line of their business or the
work I did for the company. This suit was solely an attempt by their
legal department to ... seize something to which they were not
entitled," he alleges.

Pinker flags such ownership issues as an important area of concern for
employers. "They have to have comfort that the people they hire, pay
and foster, once they develop an invention, are going to turn that
invention over," Pinker says. Technology companies are in the business
of inventing, and if people are doing it on their own behalf and take
it for themselves from the company, the company is not going to stay
in business long, he says.

Lewis, a partner in Vinson & Elkins' Dallas office, agrees: "The fact
that it [an idea] hasn't yet been committed to paper can't be
something that precludes a company that has paid you, arguably, to
develop this idea, to have an ownership interest in it. It would be
too convenient an out for an employee and too rigid a rule -- no one
could actually pay an employee to develop anything with any confidence
if that were the rule," she says.

SEEKING BRIGHT LINES 

The company wants to say that every idea you have while you work for
it belongs to the company, and the employee wants to say that
everything I do on your time may belong to you, but once I leave and
go home at night, it belongs to me, says David L. Burgert, an IP
partner in Houston's Porter & Hedges. But courts are looking for
bright lines, he says. "To get caught up in the whole concept of
trying to figure out how an idea came to someone -- whether it was at
5:01 p.m. or 4:59 -- is something no court is going to be eager to
do."

Burgert sees the case as a cautionary tale for people asked to sign
agreements that come back and bite them 10 years later. Lewis and
Burgert believe that the signed agreement and the fact that Brown
asked for a release may have undermined his credibility.

A major asset for a high-tech company is its intellectual property,
and the only way a company acquires intellectual property is by hiring
smart people to come up with inventions, Burgert says. And the only
way a company can protect that asset is by using agreements like the
one Brown signed. But this case lies in a gray area, he notes, because
until the idea is reduced to practice, it's not an invention and you
can't patent it.

One argument companies could make to support their claims that such
ideas belong to them is that the idea is a trade secret entitled to
protection. But the problem with that argument is that if the employee
never disclosed to the company what the idea was and how to implement
the solution and if the company never knew what it was, how can it be
a trade secret since the company didn't know what it had to protect?
Burgert asks.

Richard A. Sayles of Dallas' Sayles, Lidji & Werbner represented Brown
in the case until June 2001. His motion to withdraw notes the
relationship was terminated voluntarily by Brown and counsel.

The uniqueness of Brown's case was that his idea never had been
reduced to writing, and Alcatel was claiming ownership of it, says
Sayles. "I thought it was really a very ... novel and groundbreaking
case. Otherwise I would never have gotten involved in the first
place."

Sayles believes Brown should have prevailed. "It sure did seem
different to me and almost everyone else who heard about it. Public
opinion was definitely on Brown's side," says Sayles.

But Burgert and Lewis, like Pinker, find the court's ruling consistent
with Texas law. Nonetheless, they lament the fact that more people
don't take the time to meet with a lawyer and have employment
agreements explained to them before they sign them.

"Nobody likes to pay a lawyer, but if you sit down with one for an
hour and really understand what you are signing, maybe you'd go back
and say, 'I'm not going to sign this ... without adding this
language,'" Burgert says.

Lewis believes Brown could have helped his case had he kept an idea
log, as inventors do in the patent arena. Establishing that Brown had
the idea years before coming to DSC would have contradicted the signed
agreement and gone a long way toward establishing Brown's credibility,
possibly helping defeat a summary judgment motion, Lewis notes.

Brown plans to appeal. According to his bio on his Web site --
www.unixguru.com/ -- "Despite his termination from DSC, huge legal
bills, and the forced sale of his home and other assets, the Texas
computer genius is sticking to his guns."


On Fri, 20 Aug 2004 12:00:06 +0530 (IST),
commons-law-request at sarai.net <commons-law-request at sarai.net> wrote:
> Send commons-law mailing list submissions to
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> than "Re: Contents of commons-law digest..."
> 
> Today's Topics:
> 
>   1. Re: Mysore Silk to get Geographical Indication Tag
>      (sudhir at circuit.sarai.net)
>   2. Re: Mysore Silk to get Geographical Indication Tag (Mahesh T. Pai)
>   3. MGM v. Grokster - Ninth Circuit (Shyamkrishna  Balganesh)
> 
> ----------------------------------------------------------------------
> 
> Message: 1
> Date: Thu, 19 Aug 2004 17:04:09 +0530 (IST)
> From: sudhir at circuit.sarai.net
> Subject: Re: [Commons-Law] Mysore Silk to get Geographical Indication
>        Tag
> To: "Rohan George" <rohangeorge at gmail.com>
> Cc: commons-law at sarai.net
> Message-ID: <2223.202.142.94.114.1092915249.squirrel at 202.142.94.114>
> Content-Type: text/plain;charset=iso-8859-1
> 
> And there's more to be patented, copyrighted, TMarked and GI registered -
> if possible all of these simultaneously! All in the 'national interest' of
> course!
> 
> Sudhir
> 
> http://timesofindia.indiatimes.com/articleshow/820103.cms
> MPs wake up to McDosa threat
> MAHENDRA VED
> 
> TIMES NEWS NETWORK[ THURSDAY, AUGUST 19, 2004 05:42:47 AM ]
> NEW DELHI: As India fights on to patent basmati and other exclusive farm
> products, Parliament has posed a query to the government on processed
> food: How about copyrighting dosa, vada, upma, dhokla and golgappa on the
> lines of the "pizza"?
> 
> This must be done "in right earnest", says the Standing Committee on
> Agriculture headed by SP�s Ram Gopal Yadav, to avoid patenting of "our
> food items" by "unscrupulous multinational corporations".
> 
> In many patent-related disputes, locational identification � for instance,
> basmati � India has been cited as a ground.
> 
> While considering the demands for grants for 2004-05 of the food
> processing ministry, the committee has not exactly listed the delicacies
> that have become part of the international "curry culture".
> 
> But it wants the ministries concerned to coordinate among themselves for
> global patenting of processed foods.
> 
> Attempts were made in the US to patent the famed basmati rice some years
> ago. Earlier, a pharma MNC had tried to patent turmeric and neem.
> 
> > Mysore Silk to get Geographical Indication Tag
> >
> > http://www.deepikaglobal.com/ENG3_sub.asp?ccode=ENG3&newscode=67350
> >
> > Mysore Silk to get intellectual property protection
> > Bangalore, Aug 17 (UNI) Intellectual property protection in the form
> > of a Geographical Indication (GI) tag will soon be accorded to the
> > exquisite Mysore Silk sarees.
> >
> > The GI mark, testifying to the uniqueness of the product in relation
> > to the area of its origin, would prevent the infringement of the
> > reputation of Mysore Silk by producers from other parts of the world,
> > Patents, Designs and Trademarks Controller-General S N Maity told
> > reporters here today.
> >
> > ''The GI mark will serve as an identifier of the area of origin of the
> > product -- in this case Mysore -- and let customers know that its
> > unique quality is attributable to a particular territory'', he said.
> >
> > Intellectual property protection would also be given in the form of GI
> > marks to Kolhapur Chappals and Kancheepuram Silks within the next few
> > weeks, he said.
> >
> > So far, only eight Indian commodities have been stamped with the GI
> > tag -- Darjeeling Tea, Pochampalli Sarees, Salem Fabric, Goa Fenny,
> > Solapur Fabric, Pavitra Modaram (Ring) from Payyanur in Kerala,
> > Chanderi Silks and Aranmulai Kannadi (Mirror) from Kerala.
> > _______________________________________________
> > commons-law mailing list
> > commons-law at sarai.net
> > https://mail.sarai.net/mailman/listinfo/commons-law
> >
> 
> ------------------------------
> 
> Message: 2
> Date: Thu, 19 Aug 2004 18:15:29 +0530
> From: "Mahesh T. Pai" <paivakil at yahoo.co.in>
> Subject: Re: [Commons-Law] Mysore Silk to get Geographical Indication
>        Tag
> To: commons-law at sarai.net
> Message-ID: <20040819124529.GC2799 at nandini.home>
> Content-Type: text/plain; charset="iso-8859-1"
> 
> sudhir at circuit.sarai.net said on Thu, Aug 19, 2004 at 05:04:09PM +0530,:
> 
> > This must be  done "in right earnest", says  the Standing Committee
> > on  Agriculture  headed  by  SP�s  Ram  Gopal  Yadav,  to  avoid
> > patenting  of  "our  food  items"  by  "unscrupulous  multinational
> > corporations".
> 
> Da**it. Does  not *patenting*  mean that this  thing passes  back into
> public domain after N years?
> 
> --
>         Mahesh T. Pai    <<>>   http://paivakil.port5.com
> Buy Free Software -- It gives you freedom!
> 
> ------------------------------
> 
> Message: 3
> Date: 19 Aug 2004 17:07:25 -0000
> From: "Shyamkrishna  Balganesh" <skbalganesh at rediffmail.com>
> Subject: [Commons-Law] MGM v. Grokster - Ninth Circuit
> To: commons-law at sarai.net
> Message-ID: <20040819170725.6349.qmail at webmail31.rediffmail.com>
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> �
> The U.S. Court of Appeals for the Ninth Circuit just handed down its opinion in MGM v. Grokster, affirming the holding of the District Court finding that the defendants are not liable for vicarious and contributory copyright infringement. Great news indeed! The full text of the opinion is available at:
> 
> http://www.ca9.uscourts.gov/ca9/newopinions.nsf/E9CE41F2E90CC8D788256EF400822372/$file/0355894.pdf?openelement
> 
> - Shyam.
> 
> ------------------------------
> 
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