In a 1997 Seinfeld episode, Elaine Benes casually tells a former boss a “million-dollar idea”—selling the tastiest part of muffins, the tops, without the stumps. Later, she accuses him of stealing her idea when he starts such a business.
“Elaine, these ideas are all in the air,” Mr. Lippman says. “They’re in the air.”
“Well,” she says, “if that air is coming out of this face, then it is my air and my idea.”
Louisiana continues shaping more of an information economy, where ideas can have substantial value. Employers are often unpleasantly surprised to learn relevant ownership laws aren’t what they assumed.
Lawyers who specialize in intellectual property, a broad term for a complex arena, say problems await those people who begin a collaboration without clearly defined agreements.
“If there’s a common thread to all of the preventive advice for a client, it’s to get your relationship in writing,” says Warner Delaune, a lawyer in Baker Donelson’s intellectual property group. “More often than not, when we are presented with cases, it’s often because of a failure to get something in writing.”
Russel Primeaux of Kean Miller recalls commercials touting relatively inexpensive oil filters to avoid the major expense of an engine overhaul.
“You can pay me now, or you can pay me later,” Primeaux says, quoting the mechanic in the commercial.
“Someone could spend $1,000 getting key agreements with all the employees in place,” Primeaux says, “or they could not—and have a huge dispute three years into their company’s growth and spend hundreds of thousands of dollars in litigation.”
Copyrights, patents, trademarks and trade secrets are distinct areas of intellectual property laws. They affect many Louisiana enterprises.
Universities generate ideas. The oilfield and related service industries feature innovation, some of which goes hand in hand with green technology.
The default ownership rule varies based on the type of intellectual property. Within copyright, if written material is created by an employee within the scope of his or her employment, the employer owns it.
Elaine Benes worked for Mr. Lippman in book publishing, but her idea wasn’t written material within the scope of her job. She would have been free to pursue her muffin-tops idea while working for him, but the point is moot because she didn’t act on her idea or disclose the idea in confidence.
Lee Ann Lockridge, an associate professor at LSU’s Paul M. Hebert Law Center, often had to deliver bad news to legal clients who hired independent contractors to develop software for them and later assumed they owned the completed work.
“That’s wonderful you paid them to write the software,” she’d say. “You now have an implied license to use the software, but you don’t own it.”
Using an independent contractor instead of an employee has advantages—saving on taxes and benefits come to mind—but can bite an employer on the back end if the nature of the relationship and what it will create isn’t spelled out in a legal document.
Ward Bond, an inventor and developer of ideas, says there is no protection for intellectual property if you can’t afford to pay a lawyer.
“You can only play so much defensive ball, particularly when you’re young and poor,” Bond says. “The trade secret thing is only as valuable as you can pay a lawyer to enforce.”
Delaune says it’s not very expensive—ranging from free for online research to as much as $250 or $350 for an hour with an experienced intellectual property lawyer—to receive a simple understanding of the relevant laws.
Rick Mekdessie is CEO and president of e-Gov Systems, which specializes in providing government agencies ways to collect taxes and license fees and work more efficiently. One of his lead developers left to work for an outsource company whose clients are government agencies.
Mekdessie says placing developers on site with a client can be risky.
“The client,” he says, “can tell the developer, ‘Look, I’ll pay you half of what I’m paying your employer, and you’ll still make more than you’re making [now].’ I decided it would be smart to look for new markets.”
Mekdessie also developed noncompetes to protect his application code. That’s the valuable commodity now, he says, whereas early in his career as a small-business owner, he was more prone to protect the labor.
Mekdessie filed a lawsuit against the former employee, which was settled without going to trial.
“There wasn’t any meat left on the bone,” he says. “It’s not like they were going to be my client anymore. You’re also dealing with someone’s livelihood. Basically, I just walked away from it.”
Mekdessie says he wants staff members to be creative and generate ideas, but he doesn’t want someone to leave and begin competing with him with knowledge gained while his employee.
Often, an employee leaves and starts a competing business, and only then does the former employer explore relevant laws. Why do so many leave themselves vulnerable?
“When you enter into a new hire, everyone’s in love,” Lockridge says. “Most employees don’t get into an employment relationship thinking, ‘I wonder who’s going to own what when I leave.’ The people who hire employees aren’t thinking about when inevitably the employment relationship ends.”
Lawyers encourage proactive steps, the gathering of information and signing of agreements. Investigation can uncover layers of relationships in which work is subcontracted out so often, the company doing the initial hiring isn’t aware of everyone involved.
“The phrase I use sometimes with clients or colleagues,” Delaune says, “is ‘Some people don’t know what they don’t know,’ so occasionally we will conduct what’s called intellectual property audits.”
Sometimes the client isn’t aware employees are creating things worthy of patent protection. Information gathered in such audits can be useful for that project and help create licensing revenue for others.
Lawyers recommend documenting and saving everything, including informal notes between parties.
“If it’s not written down,” Delaune says, “it doesn’t exist.”
PROTECTING PROPERTY
Warner Delaune of Baker Donelson says, “No one area of intellectual property ?protects ideas.” Russel Primeaux of Kean Miller highlights the four types of ?intellectual property, each of which has specific laws and exceptions:
Copyright: “Protects the expression of the idea,” one expressed in some kind of tangible medium.
Patent: “Protects a method or a device that might have initially been an idea but now has turned into a method or a thing.” It must be novel, nonobvious and useful.
Trade secret: “It’s what you think it is: It’s a secret.” The legal definition boils down to something that has value by not being generally known and is the subject of reasonable efforts to keep it secret. A trade secret is a trade secret to the extent that you keep it a trade secret.
Trademark: “The ‘who’ it is, not the ‘what’ it is. A Kleenex brand tissue paper. A Barq’s brand root beer.” Rarely comes up in idea-protection cases.
NOTE: Contract law can also provide protection for ideas.
