1

I'm looking at an MSA for software services that reads, in part, emphasis mine:

Contractor agrees that all of the work product produced under this Agreement, including without limitation all notes, designs, specifications, technical information, ideas, processes, … or modifications, and other data relating to the work done under this Agreement by Contractor, and all Intellectual Property with respect to the work product (collectively, the “Work Product”), is solely and exclusively the property of CUSTOMER and Contractor hereby conveys, transfers and assigns all Intellectual Property in the Work Product to CUSTOMER.

What struck me as odd is that "ideas" are supposedly amongst the items that are being exclusively surrendered and assigned; is that even legally binding, as ideas are protected by neither patents nor copyright?

3
  • 3
    Patent or copyright protection is irrelevant to whether the transfer may be required by contract. – David Thornley Feb 6 '19 at 18:42
  • @DavidThornley, so, you think it could be enforced / is enforceable? – cnst Feb 8 '19 at 3:41
  • 3
    Ideas can be protected as "trade secrets". The advantage is that you don't have to publish them (so the protection can be longer than that of a patent); the disadvantage is that if the idea leaks, you can't stop someone using it - unless they are implicated in the leak. – Martin Bonner supports Monica Sep 25 '19 at 7:20
2

Yes. It definitely can be enforced.

"An assignment agreement is a contract that transfers the rights to the intellectual property from the creator to another entity, such as a company. Individuals being hired into research and development or other technical areas sign the agreements to assign to the company, in advance, any ideas, work products, or inventions related to the company business."

https://info.vethanlaw.com/blog/why-are-intellectual-property-assignment-agreements-important-to-tech-startups

1
  • I don't think that's a good source; I fail to see how it could be qualified as a definitive answer, either. How do you even define an idea? An "idea" is basically just a state of mind. – cnst Sep 27 '19 at 22:33
2

Note: As a jurisdiction is not specified, this answer assumes United States law throughout. OP's profile says they are in California, so this is hopefully correct.

Copyright law

You cannot transfer a copyright in an idea, because ideas are expressly excluded from copyright protection in 17 USC 102(b). So you can't have such a copyright in the first place.

By itself, this does not invalidate the provision, because the provision is not exclusive to copyright and explicitly extends to any and all forms of ownership.

Patent law

Patents do not explicitly exempt ideas in 35 USC 101, but they do require that patentable subject matter be a "new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof" - and it's hard to argue that an "idea" fits any of those criteria per se. However, if the idea is precise and detailed enough to enable a "person of ordinary skill in the art" to actually build it, then it might well qualify for patent protection (subject to the restrictions in sections 102, 103, and the rest of the whole of US patent law - see particularly Alice v. CLS Bank and its progeny in the CAFC).

Trade secrets

Under 18 USC 1839(3), trade secrets are much broader than patents or copyrights and can include "all forms and types of financial, business, scientific, technical, economic, or engineering information, including..." and it then goes on to list many different types of information in greater detail. While the word "idea" is not specifically listed, I think it would be difficult to argue that ideas can never be trade secrets given how expansive this wording is. As with patents, there are other requirements which must also be satisfied, particularly relating to the economic value of the information as well as its secrecy. If an idea is highly vague, has never been written down, has been shared or published in some form, and/or is worthless, then it's probably not eligible for protection.

Chattels

The wording of this contract seems to include both physical property and intellectual property:

Contractor agrees that all of the work product produced under this Agreement, including without limitation all notes, designs, specifications, technical information, ideas, processes, … or modifications, and other data relating to the work done under this Agreement by Contractor, and all Intellectual Property with respect to the work product (collectively, the “Work Product”), is solely and exclusively the property of CUSTOMER and Contractor hereby conveys, transfers and assigns all Intellectual Property in the Work Product to CUSTOMER.

This is not one provision, it's two separate provisions stuck together:

  1. One provision requiring the contractor to physically hand over all of the "work product" to the customer.
  2. A second provision stating that the customer also owns the intellectual property.

Therefore, if the contractor is in physical possession of an "idea" (which has been written down or recorded in some other tangible medium), then the customer can demand either a copy or the original (depending on how the rest of the contract is worded and the surrounding circumstances), because such writings are the chattel property of the customer under the terms of this contract. Chattel property rights do not have the sorts of scope limitations which we find in intellectual property rights, so it is entirely fair and valid for a contract to demand this.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.