Brain drain
- Article 55 of 77
- Information Age, November 2002
What's to stop IT staff leaving to turn their innovative project work into a commercial venture?
Page 1 | Page 2 | Page 3 | All 3 Pages
Employer response
Some organisations are more sensitive to employee defections than others. Simon East, CEO and founder of software start-up Cognima, resigned from Symbian, a developer of an operating system for mobile devices, after a disagreement over strategy. After leaving Symbian, he decided that one neglected area in the market was mobile device user interfaces. Since his departure, Symbian has paid almost no attention to Cognima, says East. “I really haven't heard anything from them. The mass market is not a space they're playing in.” While the inspiration for Cognima comes in part from East's time at Symbian, Symbian has not chosen to go after a non-competitor.
By contrast, Nigel King, CTO of radio broadband system developer PipingHot Networks, has heard a great deal from his former employer Nortel, where he worked for 15 years before being made redundant. “We were working on broadband radio access. For various reasons, Nortel had to get rid of about 90% of the workforce of a particular unit. It had no room for the project so I was out.” After consulting for eight to nine months, he was invited to join a start-up, PipingHot Networks.
Nortel executives were angry - even though PipingHot Networks does not directly compete with Nortel. “Nortel claimed we had stolen its intellectual property. But how could it show we were working on the same thing as it had been? They had sacked everyone who understood it - and I hired them as Nortel made them redundant.” As a result, the best Nortel could do was to make general claims - it was unable even to specify what IP PipingHot might have stolen. “I built PipingHot using the knowledge in my head. I've been in the business 30 years. They aren't able to claim they own everything in my head,” argues King.
Like King, employees may argue that intellectual property actually belongs to them, not their former employer - and in some cases, they may be right. While common law states that any intellectual property developed by someone in the “normal course of their duties” at a company belongs to the employer, Ann Bevitt of Morrison and Foerster warns that relying on those rights to ensure ownership is not a wise decision.
“There are so many significant questions about what 'normal duties' are. What if the employee worked at weekends or in their own home on the project? They could argue that was outside of their normal duties. It's far better to sort it out in the contract, so that the employee agrees to assign any IP to the employer and disclose promptly any inventions,” she says.
She advises that companies state these restrictions clearly in employees' initial contracts. “It's always harder to [enforce this kind of agreement] when people already in the company, because you have to renegotiate and they resent any new restrictions. When people first join a company, they accept some restrictions as normal.”
Patently obvious
Intellectual assets can be protected in other ways - either through copyright or patent law. Software is automatically copyrighted, so if an employee takes and reuses any section of internally developed code, they have infringed the owning company's copyright. However, if they simply re-create what the software does using different code, copyright no longer applies. The only way to prevent this kind of IP infringement is to do what few organisations have yet considered - apply for a patent on their 'invention'.
According to Derwent's Brocklehurst, “a patent is indisputable. Either you have it or you don't. Even if [employees] do leave, taking their knowledge with them, and work for a competitor or for themselves, if you have the patent, they can't use that knowledge without risk of being sued.”
A patent, he points out, applies from the date of application, not the point when it is allocated to a creator, so an organisation can file for a patent as soon as it conceives of an innovation. But Brocklehurst warns that filing for a patent is a public process and may alert rivals about potential business plans. “It's like a game of chess,” he explains. “If you file too early, your competitors will know what you're doing and where you're going to be doing it, and will be able to plan accordingly. Leave it too late, and someone else might patent the idea before you.”
While software patenting per se is not permitted in Europe, software and business process patenting is still possible, providing the process involves a “technical advance”. In contrast, in the US, Amazon.com was able to patent its '1-click' ordering system because it was a “new and innovative approach” - if a customer clicks the 'buy' button for a product on the Amazon site, unless he or she cancels the purchase within 90 minutes, the order will proceed using default delivery and credit card settings.
Page 1 | Page 2 | Page 3 | All 3 Pages