I completed a difficult task using a tool I developed before joining my employer. What is my obligation?

Question

I am an employee at a Fortune 100 company. I just started at this job two months ago. Prior to this I was a consultant.

Today I had a meeting to start off multiple projects...the last project, which this post is about, is considered a bonus: it was "thrown out there" "in case you can do it."

To give some context, this is almost a "pipe dream" project for them. I am the third person they hired into this role since they created it. My two predecessors, my peer with a similar job role, our manager (who also managed the predecessors), our manager's manager, and our manager's manager's manager - who are all smart and capable, as far as I can tell so far - have so far been unable to complete this task.

They told me at the meeting that "We would really like to be able to do this, but so far, we've tried every which way and we can't seem to do it. It would be amazing if you could do it, but it's a plus, not an expectation." They gave details about what they tried, of course, but I'll leave those out here.

As they were describing it to me, I had some ideas of what to try- namely there was a project I worked on as a consultant, several months before I took this job, where I took an approach (both in terms of the method and the actual code) that seemed like it would work here.

When I got home, I tested it, not expecting much; after all, people much smarter than myself weren't able to do this. Since this is all on publicly available sources, I was able to do it from home without using company data or resources in any way. (Also, I'm salaried, so there are no "off hours" per se.)

It worked immediately. Some tweaking will be needed, but it's basically working already- I'm already at a stage that my leadership and peers claimed earlier today was not possible for us to accomplish.

Ordinarily, I would tell my bosses- but the method and code I used is proprietary- property of me, because I developed it when I was an independent consultant- nobody else was involved in its development and no one else has seen the code (my then-client saw and used the resulting data, not the code itself- the product was actually the data- not the same data as needed by my current employer but data that was collected in the same way).

Currently my employer is paying a 3rd-party vendor for the data. I don't know how much they are paying the vendor exactly but I've deduced it is at least $600,000 a year.

Right now, my plan is to just pretend I too couldn't figure out how to do this task (remember this is a bonus "would be nice" task), because I don't want to provide my employer with my proprietary method and code that is worth, based on my past earnings from this former client alone, about USD $45k/year, and evidently more in some applications. I do want my employer to have access to this data so they don't have to pay the vendor, but I don't want to screw myself out my work prior to this employer, either. One day I will leave this job, or who knows I may be laid off, and I would need to get back into consulting using everything I did before and more.

The argument could be made that my employer already paid for my skills when they hired me- but they did not pay for my proprietary tools I developed before joining them.

As far as I can tell, my options are: pretend I don't know how to do the (bonus) task; give my employer my proprietary tool for them to keep using even after I leave or they lay me off; ??? sell my employer the data but not the tool, same as the former client.

What are the risks and tradeoffs to consider when making this decision? What other options are there?

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Update:

I told my boss about the solution and he laughed at me, saying that I must be mistaken and there is no way that anyone, especially me, would have been able to accomplish this task. So I guess my company doesn't want a solution anyway. oh well.

Answer 1

Talk to a lawyer first

Make sure you understand the legal ramifications of any actions before talking with your employer. Do this ASAP.

Research applicable company policies

Does your company have a conflict of interest policy that prohibits employees from acting as vendors to the company? Make sure you know the rules.

Decide what you're personally ok with

Don't give away the code to your employer unless you're ok with that. Don't sell it to them (to use forever without further fees) unless you're ok with that. Decide what your boundaries are before talking to them. Above all else, decide whether you're willing to quit over this issue. You can't fully negotiate unless you're willing to walk away (in this case quit). You have to decide if you're willing to do so. If not, then it may be best to just give your employer the software (if they ask) rather than risk souring the relationship.

Do your homework quickly

If your employer expects you to be working on the project in question already, then try your best to expedite investigating your legal options and the process of deciding what you want to do. Days are better than weeks. Hours are the best if feasible. You don't want your employer to be able to accuse you of not performing. It won't help your case if a legal battle ensues, and could get you fired. In addition, saying "I can solve this problem today" makes your story of having already developed the software more credible than if you wait a month to bring it up.

Don't try to take advantage of your employer

Don't lie and don't try to gouge them for exorbitant sums of money just because you can. While you might be able to charge a client X dollars, do remember that your employer is your employer, so the relationship isn't, and never will be identical to a contractor/client relationship. That doesn't mean they have a right to your proprietary code or methods, but it does mean that you still need to treat them with respect and loyalty within moral, legal, and ethical bounds.

Do protect yourself from being taken advantage of

Above all, talk to a lawyer if you haven't yet. Get everything in legally-enforceable writing when negotiating this with your employer. Don't give away the product and then demand a signed contract after the fact--protect yourself legally upfront before releasing any products or performing any services. This is for your protection and your employer's.

After all this, then talk with your employer

Once you've protected yourself legally and decided what options you're ok with, explain the situation and all options to your employer. Discuss your understanding based on legal and policy implications, and decide together what option to select from the options that you've decided to put on the table. As mentioned before, do not put any options on the table that you're not comfortable with.

Aim for a win-win

Do only what benefits both parties. If you can't reach a win-win, don't do the deal. Remember, at the end of the day you still have to work there, and you might want to be able to continue selling your product at some point in the future. Don't do anything that jeopardizes either.

Realize that you might have to head for the door

If the negotiation sours and you're not willing to work under your employer's terms, you may find yourself in a situation where it is better for you to quit your current job. It's up to you to decide, before beginning negotiations whether you're willing to sacrifice your current job if it comes to it to protect your software.

Answer 2

Right now, my plan is to just pretend I too couldn't figure out how to do this task (remember this is a bonus "would be nice" task), because I don't want to provide my employer with my proprietary method and code that is worth, based on my past earnings from this former client alone, about USD $45k/year, and evidently more in some applications.

Don't start what will be a business negotiation with dishonesty. Instead, prepare yourself properly for it.

I do want my employer to have access to this data so they don't have to pay the vendor, but I don't want to screw myself out my work prior to this employer, either.

So, be honest. Make a detailed writeup of what your tool does (without giving the code away), outline the amount and complexity of work you've performed to make this, and outline that it is currently your own proprietary code from before you were hired.

State and outline how much this data was worth to your client, and outline how much customization you think this would need to fit your company's use case. Then ask them to make you an offer for the existing product.

As far as I can tell, my options are: pretend I don't know how to do the (bonus) task; give my employer my proprietary tool for them to keep using even after I leave or they lay me off; ??? sell my employer the data but not the tool, same as the former client.

There's a fourth and preferable option. You are honest with your employer and enter into a business negotiation for them to license the tool from you and make space in your schedule for you to code any customizations they need from it.

It's your code, under your ownership, built in your time and prior to any sort of assignment clauses you have signed for your current employer. This is no different then licensing a tool that provides this data from a vendor, only that you are the vendor now in this negotiation.

Answer 3

You have three routes open to you.

1. Say you don't know how to solve the problem.
2. Solve the problem and become a hero at your new company. Explain to your manager how you solved it, using your previous experience. Ask for advice about how to make sure you get corporate brownie point credit for it (patent application, recognition, promotion, bonus, that sort of thing.)
3. Do number 2, and ask for them to recognize that the code is yours and you want to retain ownership of it.
4. Negotiate with them to license your code to them and get a yearly fee.

If it were me I'd go for item 3. Solve their problem.

The corporate brownie points can be worth a great deal long term, even if you return to being a consultant. It's worth considering.

Answer 4

They are paying you for your skills and experience (Unless you join as fresher). So as per your experience, you should design and build the tool for them from scratch and don't give the code and your proprietary tool to them.

That's how it happens when you leave an organization right, you take the experience and skills with you, not the code and tool which you have worked on.

Or just tell them that you already have a solution ready and it cost you this much time and money ask the money to them if they are happy win-win for both, but this can go horribly wrong.

Answer 5

Since you used your previous work to do the job and you own copyright for it,

• Tell them honestly about your findings, and
• Offer them to buy your previous work for an appropriate value.
• If you are/were planning to keep profiting from your knowledge, either
  • Set the price to include
    • your projected earnings from this data-as-a-service within a reasonable time (if you are not planning to provide the service the same way you did), or
    • the estimated risk for your independent business from the potential of them becoming your competitors or from related work for them jeopardizing your business e.g. due to non-competition clauses (if you still plan to provide it)
    • (See e.g. freelancing - My customer wants me to record a video of how I develop his software product - Software Engineering Stack Exchange for a suggestion how to evaluate the price for a trade secret); and, as the other option,
  • Offer the same service to them like to your previous clients, for an appropriate price
• Of course, they may be angry, but if the knowledge is worth so much more than what they would pay you for the time it would take you to complete this particular job, they will not be able to argue with the fact that their salary is not an adequate compensation for it.

The 2nd option would put you into an ambiguous position: you will be providing this service as a contractor but do the rest as an employee. But if it's as valuable to them as you said, they would almost certainly choose the first option -- since it's cheaper in the long run, would be easier for everyone and they would not alienate such a valuable employee as you are.

The price won't include your further tweaking done for hire but given its immense value for the company, that shoudn't make a difference.

It doesn't matter if the components are open-source and probably under free software licenses (but of course you need to mention any encumberances, if they apply, in the offer). Your job picking and combining them is what adds key value here.

If the first option is chosen and you will keep providing your expertise on this project, this may also be a reason to renegotiate your salary at the company since your value to it has just risen considerably. But if working on that project further does not require the likes of scientist-level domain expertise (i.e. something that can't be taught to an employee within a reasonable time), or if the work you were hired to do already requires that level of expertise (so your value didn't actually rise, you just saved your company a tremendous amount of time and effort), a one-time sale transaction would likely be a better deal for everyone since otherwise, they could prefer to rather teach it to someone cheaper.

Answer 6

Be careful. I don't know where you live but I believe here in California anything related to your employer that you come up with, even if done on your own time, belongs to that employer. On several jobs I have started I have been required to list "previous inventions" so they know that anything I created while employed with them belongs to them. I once left a job because it was in a similar vague field to work some friends asked me to do for their startup, so any product could legally have been claimed by my current employer.

I would immediately go and say "I have a solution to this, the solution belongs to me.". You can then negotiate whether they will give you some reward/bnus for that or tell you to re-invent it on their dime. But if you suddenly come up with the solution while you are employed by the company without telling them beforehand, then it belongs to them and you will get nothing and lose the right to use it in any other situation.