• By Ashe Lockhart
• June 23, 2011
>> Every day across America, the spirit of innovation plays itself out as budding entrepreneurs hand in their resignations (sometimes jubilantly!) from regular employment and a steady paycheck to strike out on their own with grand ideas about the next big thing. Probably most ground-breaking business concepts had their roots in someone’s work for another company where the individual acquired skills, experience and situational awareness that led to a flash of brilliance that spawned a new company and sometimes a complete paradigm shift in a business sector or the national/global economy.
But that dynamic begs the question: whose idea is it anyway? Who cares,” you ask?
Consider this, if a lab manager at Hewlett-Packard had been more interested in the work Steve Wozniak was doing while employed at HP in 1975, Apple Computer, the Mac and the iPhone might not have been born or, worse yet, we would be buying them with HP labels on the box rather than the über-slick Apple logo. “So what,” you say? Well, maybe you will be interested to know that if Honeywell had thought much of the work Paul Allen was doing on building an operating system for the MITS Altair 8800 in 1975 when he was working for Honeywell, then we might be using computers running on Honeywell Windows rather than Microsoft Windows.
So who is this Steve Wozniak fellow anyway? And wasn’t Paul Allen a comedian on Hollywood Squares? Well, Steve “the Woz” Wozniak co-founded Apple Computer with Steve Jobs, and Paul Allen was not as funny as he was brilliant as the co-founder of Microsoft with Bill Gates. And both Woz and Allen were employees at large, well-established tech companies when they were hard at work germinating the seeds that would grow into Apple and Microsoft. One could almost view HP and Honeywell as parent companies of Apple and Microsoft.
So you might be asking “what’s the point of all this,” as you yawn through this dusty reading of recent-ancient history?
It’s simple: under basic principles of the law of intellectual property and employment, those “parent” companies could have asserted claims of ownership on the work Woz and Allen were doing, which could have toasted the seeds of Apple and Microsoft before they were even planted. That is not to say that the parent companies’ legal claims would have succeeded or that their claims were ethically valid, but it is to say that if a large, well-financed employer is determined to take an ownership interest in the work of an employee, then the golden rule may apply. Here’s how it works – he who has the gold makes the rules.
In other words, if the deep-pocketed employer would like to own your idea because it believes you developed the idea on the employer’s dime (on company time or using company resources and equipment or the idea is related to company business), then regardless of whether you or your idea have any legal or contractual obligations to your now former employer, chances are good that your former employer can afford to pay lawyers to cause great weeping an gnashing of teeth. And if you’re a startup company with a good idea, a meager budget, some nervous investors, and no room for error in the pre-revenue phase or shortly after going to market, the last thing you need is a former employer who feels jilted and who might send its lawyer to get biblical on you.
Now in fairness to the truth, it is worth pointing out that a premise stated at the beginning of this article may need to be examined carefully if you really know the history of Apple and Microsoft. I stated up front that “most ground-breaking business concepts had their roots in someone’s work for another company.” However, in the cases of Woz and Allen, it might be more accurate to say that “their concepts were developed while they were employed by another company.” It’s a subtle distinction, but it could make a big difference in analyzing whose idea is it anyway. But here’s the clincher, if you’re a startup company or planning a startup, and especially if your startup is going to place heavy reliance on any kind of novel concept, intellectual property or trade secret, you should get squared away on who owns what before your former employer sends its attorney to serve as the angel of death for your company – regardless of whether your business concepts had their roots in your work for another company or whether they were merely developed while you were employed by another company.
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