Rights of Employees and Employers

Rights of Employees and Employers

Employers hire employees to generate ideas and make products. The protection offered by copyrights, patents, and trade secrets appeals to employers because it applies to the ideas and products. However, the issue of who owns the ideas and products is complex. Ownership is a computer security concern because it relates to the rights of an employer to protect the secrecy and integrity of works produced by the employees. In this section we study the respective rights of employers and employees to their computer products.

Ownership of Products

Suppose Edye works for a computer software company. As part of her job, she develops a program to manage windows for a computer screen display. The program belongs to her company because it paid Edye to write the program: she wrote it as a part of a work assignment. Thus, Edye cannot market this program herself. She could not sell it even if she worked for a non-software-related company but developed the software as part of her job. Most employees understand this aspect of their responsibilities to their employer.

Instead, suppose Edye develops this program in the evenings at home; it is not a part of her job. Then she tries to market the product herself. If Edye works as a programmer, her employer will probably say that Edye profited from training and experience gained on the job; at the very least, Edye probably conceived or thought about the project while at work. Therefore, the employer has an interest in (that is, owns at least part of) the rights to her program. However, the situation changes if Edye's primary job does not involve programming. If Edye is a television newscaster, her employer may have contributed nothing that relates to her computer product. If her job does not involve programming, she may be free to market any computer product she makes. And if Edye's spare-time program is an application that tracks genealogy, her employer would probably not want rights to her program, since it is far from its area of business. (If you are in such a situation yourself, you should check with your employer to be sure.)

Finally, suppose Edye is not an employee of a company. Rather, she is a consultant who is self-employed and, for a fee, writes customized programs for her clients. Consider her legal position in this situation. She may want to use the basic program design, generalize it somewhat, and market it to others. Edye argues that she thought up, wrote, and tested the program; therefore, it is her work, and she owns it. Her client argues that it paid Edye to develop the program, and it owns the program, just as it would own a bookcase she might be paid to build for the station.

Clearly, these situations differ, and interpreting the laws of ownership is difficult. Let us consider each type of protection in turn.

Ownership of a Patent

The person who owns a work under patent or copyright law is the inventor; in the examples described earlier, the owner is the programmer or the employer. Under patent law, it is important to know who files the patent application. If an employee lets an employer patent an invention, the employer is deemed to own the patent and therefore the rights to the invention.

The employer also has the right to patent if the employee's job functions included inventing the product. For instance, in a large company a scientist may be hired to do research and development, and the results of this inventive work become the property of the employer. Even if an employee patents something, the employer can argue for a right to use the invention if the employer contributed some resources (such as computer time or access to a library or database) in developing the invention.

Ownership of a Copyright

Owning a copyright is similar to owning a patent. The author (programmer) is the presumed owner of the work, and the owner has all rights to an object. However, a special situation known as work for hire applies to many copyrights for developing software or other products.

Work for Hire

In a work for hire situation, the employer, not the employee, is considered the author of a work. Work for hire is not easy to identify and depends in part on the laws of the state in which the employment occurs. The relationship between an employee and employer is considered a work for hire if some or all of the following conditions are true. (The more of these conditions that are true, the more a situation resembles work for hire.)

The employer has a supervisory relationship, overseeing the manner in which the creative work is done.

The employer has the right to fire the employee.

The employer arranges for the work to be done before the work was created (as opposed to the sale of an existing work).

A written contract between the employer and employee states that the employer has hired the employee to do certain work.

In the situation in which Edye develops a program on her job, her employer will certainly claim a work for hire relationship. Then, the employer owns all copyright rights and should be identified in place of the author on the copyright notice.

Licenses

An alternative to a work for hire arrangement is licensed software. In this situation, the programmer develops and retains full ownership of the software. In return for a fee, the programmer grants to a company a license to use the program. The license can be granted for a definite or unlimited period of time, for one copy or for an unlimited number, to use at one location or many, to use on one machine or all, at specified or unlimited times. This arrangement is highly advantageous to the programmer, just as a work for hire arrangement is highly advantageous to the employer. The choice between work for hire and license is largely what the two parties will agree to.

Trade Secret Protection

A trade secret is different from either a patent or a copyright in that there is no registered inventor or author; there is no registration office for trade secrets. In the event a trade secret is revealed, the owner can prosecute the revealer for damages suffered. But first, ownership must be established because only the owner can be harmed.

A company owns the trade secrets of its business-confidential data. As soon as a secret is developed, the company becomes the owner. For example, as soon as sales figures are accumulated, a company has trade secret right to them, even if the figures are not yet compiled, totaled, summarized, printed, or distributed. As with copyrights, an employer may argue about having contributed to the development of trade secrets. If your trade secret is an improved sorting algorithm and part of your job involves investigating and testing sorting algorithms, your employer will probably claim at least partial ownership of the algorithm you try to market.

Employment Contracts

An employment contract often spells out rights of ownership. But sometimes the software developer and possible employer have no contract. Having a contract is desirable both for employees and employers so that both will understand their rights and responsibilities.

Typically, an employment contract specifies that the employee be hired to work as a programmer exclusively for the benefit of the company. The company states that this is a work for hire situation. The company claims all rights to any programs developed, including all copyright rights and the right to market. The contract may further state that the employee is receiving access to certain trade secrets as a part of employment, and the employee agrees not to reveal those secrets to anyone.

More restrictive contracts (from the employee's perspective) assign to the employer rights to all inventions (patents) and all creative works (copyrights), not just those that follow directly from one's job. For example, suppose an employee is hired as an accountant for an automobile company. While on the job, the employee invents a more efficient way to burn fuel in an automobile engine. The employer would argue that the employee used company time to think about the problem, and therefore the company was entitled to this product. An employment contract transferring all rights of inventions to the employer would strengthen the case even more.

An agreement not to compete is sometimes included in a contract. The employee states that simply having worked for one employer will make the employee very valuable to a competitor. The employee agrees not to compete by working in the same field for a set period of time after termination. For example, a programmer who has a very high position involving the design of operating systems would understandably be familiar with a large body of operating system design techniques. The employee might memorize the major parts of a proprietary operating system and be able to write a similar one for a competitor in a very short time. To prevent this, the employer might require the employee not to work for a competitor (including working as an independent contractor). Agreements not to compete are not always enforceable in law; in some states the employee's right to earn a living takes precedence over the employer's rights.