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Former employer claiming copyright on new idea

 
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Oldhollow
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PostPosted: Wed Jul 30, 2014 8:02 am    Post subject: Former employer claiming copyright on new idea Reply with quote

Hi all: my first time here...

This is a little convoluted, so I'll try to be as succinct as possible. While he was working for someone else, a friend wrote a paper (which he shared with me for comment / input) on a particular aspect of education, which included a set of 8 suggested metrics and their definitions. He's now left that employment and I have had a business idea based on assessment of those metrics, which I want to include him in for his further development and input of those ideas. The former employer is correctly claiming the copyright for the paper itself, but is also demanding a 25% stake in any business which we start up using the ideas expressed. This feels unfair, so I'm trying to work out: would he have a case if the business takes off and there's serious money to be fought over?

Thanks in anticipation.
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AndyJ
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PostPosted: Wed Jul 30, 2014 9:42 am    Post subject: Reply with quote

Hi Oldhollow
Thanks for being brief. I'm not sure I can promise to respond in the same way!
As far as copyright is concerned, this involves the idea/expression dichotomy. Ideas themselves cannot be protected by copyright, only the way they are expressed in some permanent form, such as in writing.
So what the employer owns (if indeed they own any copyright - I won't cover that for the sake of succinctness) is the literary copyright, namely the sequence of words your friend wrote in his paper.
From what you say, you wish to develop the underlying idea put forward in the paper, and so you would not need to copy the text which is the subject of copyright. That would not infringe copyright. Just be careful when, later, you are writing up your business model, not to copy verbatim any substantial part of the original paper. Paraphrase or completely recast and you should be fine as far as copyright is concerned. And it follows that the employer has no rights to any remuneration with regard to copyright.
However there are two other areas of intellectual property to be considered. The first is patents.
A patent can be obtained for any invention which is novel and can be applied to an industrial process. 'Industrial' has a fairly wide meaning here, but I think applying it to education might be stretching it a bit too far. Patents cannot be obtained for discoveries, theories, or business methods; there must be something tangible at the heart of the patentable idea.At this stage, I don't think the idea you wish to develop would be patentable. Since, I assume, the employer has not mentioned the subject of patents, they probably haven't tried applying for one. So at first sight, there doesn't appear to be any problem on that front.
The next area is confidential information or trade secrets. The idea your friend came up with may be classed as confidential information or a trade secret if a number of conditions applied when he was working for the company. Did he sign any sort of confidentiality agreement (like a Non Disclosure Agreement) or did his contract include a clause binding him not to disclose information obtained in the course of his employment? Were special precautions taken to limit the number of people who were given access to his paper? Was there any reason at the time for believing that the company thought this was confidential information? If the answer to any of those is yes, then there may be grounds for the company starting a case for breach of confidentiality, if you and your friend go ahead. What's more, even though you personally are not bound by any confidentiality agreement (implied or otherwise) with the company, they might be able to obtain an injunction to prevent you using the information to develop the idea. However if the paper or its ideas were published or made available to a wider audience than just company employees, then the confidentiality issue falls away.
As you can see this is the most significant threat to what you propose to do. There are generally accepted to be three tests which are applied in breach of confidence cases: the information must have a necessary quality of confidence attached to it; (how important is the idea, especially to a competitor, eg you). The information must have been imparted in a way which implies an obligation of confidence (a reasonable person would have realised that the information was confidential) and lastly there must be an unauthorised use of the information which is to the detriment of the owner of the information (in a way, this relates back to the first test). It is worth mentioning that where an employer/employee relationship exists or existed, a court will take much less convincing that information the employee came by during their employment meets criterion number two.
Since you don't mention that the company talked about confidentiality, it may be something they have not yet considered, and indeed maybe they don't believe it applies. But if they seek legal advice about the copyright aspect, I feel sure the matter of breach of confidence will be raised by their advisers.
On that basis it may be advisable for you to get your own legal advice, before committing any (more) finances to this project. Alternatively you could accept their proposal that you share the proceeds from your development with them. Obviosuly you would need to get such an agreement put into writing, and this would then protect you against a breach of confidence suit.
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Oldhollow
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PostPosted: Wed Jul 30, 2014 12:21 pm    Post subject: Reply with quote

Many thanks for this response: much appreciated. My friend was working for an individual essentially consulting on a variety of issues, so I'll have to find out about the details regarding confidentiality. I would be amazed if he had signed an NDA since he was willing to share it with me. It sounds like that aside we don't have a great deal to worry about. There does appear to be something of a paradox here where we can subvert copyright restrictions by crediting the original author (rather than the employing individual holding the copyright itself), so as long as my friend credits himself we're OK...?
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AndyJ
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PostPosted: Wed Jul 30, 2014 6:37 pm    Post subject: Reply with quote

Hi again Oddhollow,
I'm not sure where the subverting of copyright comes into this. If you merely develop the idea which was first expounded in your friend's paper, then there are unlikely to be any implications for the copyright in the paper itself, and hence there is no need to credit him as the author, just to meet a legal requirement.
However if you think it will be necessary to quote from the paper, make sure that you use only the bare minimum and that the part quoted can't readily be described as a substantial part of the paper. This then might fall within the fair dealing exceptions for the purposes of research, and after 1 October, for quotation more generally.
There is also a specific exception (found in Section 60) to quote the entirety of an abstract of an academic paper which has been published. However as you have not mentioned it being published, I suspect this will not be of any use here.
In any case, your friend is the author and that means he has the moral right, at the very least, to cite his own paper.
You mentioned that the work he did for the company was as a consultant. That may well change the dynamics as far as confidentiality is concerned. By definition, consultants bring expertise and ideas into a company, and so it is conceivable that the company will be unable to claim ownership of such confidential information imparted to them in this way unless the contract on which he was engaged was tightly drawn to make this clear. There may well be an ethical or professional duty on him to respect confidentiality, much as there is between lawyers and their clients, but that will depend on whether his profession is in any way regulated through a code of conduct or similar rules.
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AndyJ
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PostPosted: Wed Jul 30, 2014 6:45 pm    Post subject: Reply with quote

Just an afternote as I see you are currently on line.
If your friend was not bound by an explicit clause in his contract concerning confidentiality of his advice, then I think he would have a strong defence that expecting him not to be able to share his knowledge and expertise with any future client (eg you) would amount to restraint of trade
.
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Last edited by AndyJ on Wed Jul 30, 2014 6:50 pm; edited 1 time in total
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Oldhollow
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PostPosted: Wed Jul 30, 2014 6:49 pm    Post subject: Reply with quote

Great: thanks again. It was educational consultancy, but on a full-time contract which is unusual, so little or no precedent for professional confidentiality I would have thought, other than the business confidentiality of independent schools.

I think we're going to let the dust settle, quote his assessment metric headings and paraphrase the definitions of those headings, and everything else will be original. Out of a 25,000 word thesis, hopefully no-one could consider this "substantial"...

The only downside is we can't use his considerable work on the thesis verbatim to support the product, but that's life.

Many thanks again for all your help.
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Oldhollow
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PostPosted: Wed Jul 30, 2014 6:52 pm    Post subject: Reply with quote

Re: your afternote. Yes, this had occurred to me too: if you weren't allowed to take what you have learned with you when you leave a job, then people would have to be paid less as they get more experienced, as they would be running out of ideas...
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