Agreement made at hire is unenforceable due to a technicality, employer refuses to make new agreement to correct

Question

I'm an engineer based in the US. Last year, I received a new job offer. The new job offer had an intellectual property (IP) agreement which was far broader than what my previous job had, so I spent several weeks negotiating an addendum to protect some existing IP rights. On my own time, when I was unemployed, I developed an invention that I intend to get a patent on and believe will make enough profit to at least break even. I can't quote the new job's IP agreement specifically, but it has language like "The employee shall assign any and all inventions they develop to the company regardless of whether the inventions were developed on company time or with company resources or not." There is no limitation to inventions developed after starting, so I take the agreement to also include inventions before starting. It also has a few exceptions for work done on my own time but still requires assignment if the invention is "related" to anything the company is doing or plans to do. I consider that sufficiently vague to justify a separate agreement. (I don't think what I specifically want to protect is related to their business in any way at present, but that doesn't mean they might not decide it's related at some point. This company does a wide variety of things.)

The company resisted agreeing to much anything. But I did eventually get a letter signed by the president of the company stating that my previous IP is my own and not owned by the company. The letter specifically names what I wanted to protect, which they required me to disclose to them (I sent an abbreviated draft patent application specification, clearly marked as confidential). I would not have signed the employment agreement if they had not made such an agreement. Once I received the letter, I signed the employment agreement, which included over 100 pages of documents, many of which required separate signatures. I tried my best to read the documents, most of which appeared to be boilerplate, but I wasn't sure I hadn't missed anything important. More on that shortly.

After that, I got settled into my new job. My direct supervisor is very happy with my work, but it's clear to me that they have no control over or even input into upper management's decisions.

Flash-forward to last week, when I was looking through the employee handbook for something unrelated to this. I had to sign the employee handbook stating that I agreed with its contents. I read a lot of the handbook before joining (probably more than any other employee to be honest), but I had missed something: The employee handbook states in one part that any deviation from standard company policy requires the signature of the CEO of the company. At this point, I checked the letter I received and noticed that it was signed by the president of the company.

I emailed the company attorney who I corresponded with before joining. I asked whether I understood the paragraph in the employee handbook correctly. I asked for a new letter that is properly executed if the previous agreement was null and void. The attorney agreed that my understanding of the paragraph was correct. However, they stated that no new agreement is necessary because the letter does not differ from company policy; it merely restates company policy. That's absurd because the letter clearly states things not in company policy. And if it just restated company policy, why did they resist so much (it took weeks of negotiation by email to get this letter) and why did the letter have to be signed by anyone in upper management?

I started drafting a response to that effect and reiterating my request for a new valid agreement, but I'm realizing now that I should get some advice about what to do before taking any other action.

I don't believe the company knowingly sent me a null and void agreement. I think they were just as ignorant of their own rules as I was. I also don't believe that they intend to try to take my previous IP, but their unwillingness to unambiguously state that makes me suspicious. And, even if I hired an attorney before taking the job, the requirement that any change needs to be signed by the CEO probably would still have been missed given the large quantity of documents I had to sign.

• How should I proceed in general from here? And some more specific questions:
• Should I talk with an attorney of my own? I actually have hired an attorney before for some contract negotiations, but it was very expensive.
• Should I quit? I wouldn't have taken the job without a separate agreement. I can afford quitting, but it's not something I should take lightly.

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To clarify some misconceptions I'm seeing in the answers and comments:

• My concerns were brought up before starting. I didn't start working or sign any agreements with them until I had the mentioned letter stating that my previous IP is my own.
• I do not have a patent on my invention and I have not filed a patent application. I didn't have the time or resources when I conceived the invention to finish all of that. The company has a brief description of the invention that was sent to them (and dated) before I started working for them or signed any agreements with them. And I have dated documentation of my own, particularly my version control repository for the engineering designs and the patent application draft. So I think that the invention predates my employment could not be doubted.

Answer 1

In the circumstances, it's quite unlikely that something buried in the handbook will counteract a specific assurance from the company president, following a specific discussion of the point prior to the employment, as well as advice from the company solicitor/attorney.

All relevant evidence is in writing - it's not like a written term against a mere verbal assurance.

Also, you have no real idea whether anything is or isn't company policy. It's not reasonable to think the entire policy is only that which is written down, or even that what is written down in legal bumpf corresponds with actual policy.

If someone in suitable authority declares what the policy is as it applies to your case, then in general you'd be entitled to rely on that, to their prejudice.

Their resistance to providing the letter was more likely to be a reflection of a company policy against providing special letters, than a company policy inconsistent with the content of the letter you did in fact extract from them.

I seriously doubt it is or ever was their policy to try and absorb small amounts of IP belonging to new starters and developed before the employment began.

What's happening is that they're just writing so much crap and boilerplate into their contract and documents that as a whole it no longer makes any sense or even corresponds to their own intentions.

Answer 2

Should I talk with an attorney of my own?

Unless you are an attorney specializing in IP yourself, the obvious answer is yes.

Answer 3

Unfortunately, a technicality is still technically valid.

My father lost a considerable amount of money because he made the mistake of letting his customer's lawyer write the contract and they did write it to protect their client. Pop has insisted on a payment for time spent if the contract was terminated early, and the lawyer included a penalty clause ... knowing full well that a penalty clause would be unenforceable in that case. If Pop had his own lawyer they would have insisted on a clause for "liquidated damages", which would have been enforceable.

If you are concerned, pay for a lawyer to look over the contract and tell you whether there really is a hazard. But I will tell you that (a) what you describe sounds like it is probably the standard language every company hiring knowledge workers uses, and (2) that the best time to nail this down would have been when you were signed by the contract; it is often possible to get clarifications written in at that time.

I wouldn't quit until you were sure there was actually a problem. If you really think the language gives the company ownership of work you did in the past, quitting now may not undo that. And if this is the usual boilerplate language, that isn't what it means.

Be concerned. Get expert advice, which an online group if amateurs is not But I would say don't panic yet.

Answer 4

I'd argue you are covered either way

One of these two scenarios are true:

1. The company president has authority to sign contracts. You're fine, and the letter stands.
2. The company president does not have proper authority, and has improperly signed on behalf of the company, and the company lawyer has backed them up on this.

Companies can be bound by contracts if signed by someone without authority, if there's a reasonable assumption that the person has this authority - this is "Apparent Authority". It would be hard to argue that a letter signed by the company president, and with its terms backed up by general counsel does not at least appear to be valid.

Take copies of the email chain. I'd be tempted to reply to counsel something like "Glad this clears it up, it is useful to have confirmation from the legal department that this letter is signed by someone with the appropriate authority, and that this patent will remain my personal property" - and then save everything to do with this somewhere external.

It's then a problem for the company, not you. If they receive losses, they can probably go after the president/possibly their attorney in court.

https://www.law.cornell.edu/wex/apparent_authority#:~:text=Apparent%20authority%20is%20the%20power,not%20expressly%20or%20impliedly%20granted.

Answer 5

This comes down to a somewhat complicated Risk Assessment.

You need to try to estimate a few things:

1. What's the likelihood that the company will ever engage in a business that's "related"?
2. If they do: what's the likelihood they will have use for your patent and actually try to absorb it?
3. What's the likelihood that a court would rule in their favor?

The likelihood of all these three things happening is very small but not zero.

Should I talk with an attorney of my own?

A lawyer can help with question 3 but you need to be careful here. Lawyers tend to give answers and advice that's legally correct but not necessarily the best course of action. Lawyers have different incentives then you. If you can spend $10k more to reduce a risk from 0.12% to 0.11% they will often advise you to do so. That's clearly in their best interest but not really in yours.

Should I quit?

I don't think that would help in any way. The invention has been made and all contracts have been signed. Quitting may affect ownership of future inventions but is unlikely to make a difference to things that have already happened.

How should I proceed in general from here?

My advice would be to write a letter back that you interpret their refusal to redraft the addendum as agreement that the existing addendum is valid as is and that you are the sole owner of your existing IP as disclosed.

Then ignore it and move on with your career.

Reasoning: The chances that this ever becomes controversial are small to start with. This was just administrative sloppiness. If this actually results in any legal action, it's highly unlikely that a court would side with the company. The agreement is overly broad to start with and you have a signed letter from the President in your possession.

Answer 6

I wouldn't have taken the job without a separate agreement.

If you are that concerned about a separate agreement, you should have engaged an attorney to craft the letter that the president of the company signed.

And you should have engaged an attorney before signing the employee handbook agreement.

You certainly should have a lawyer guide you now, given your level of concern.

Answer 7

Ah, another typical engineer thought process. (It's okay, I'm an engineer).

In the handbook, cross out the word "CEO" and write "executive" or "president", and initial next to it. Problem solved. (Make sure you keep a photocopy.) There's a high chance that no one will notice, but if they do, show them the signed letter. If there's pushback at that point, don't take the job.

Answer 8

You are right that you don't want to sign a newer document that includes language that you are disagreeing with. Don't think that older documents will outweigh newer documents. In fact, the controversially-interpreted rights to Tetris were taken away from Stein because he didn't realize that an updated document added a clarification that retroactively applied (and he signed the new document).

But don't seek to quit, either.

Do proceed with (re-)requesting that the right signature gets on the right paperwork.

At some point, you may be asked to just sign the document for convenience. Simply state that you prefer to protect your rights, and want things done right, and want to get the paperwork you need.

If there is a deadline for getting your signature, that deadline can probably just be extended with you being granted an official exception pending the result of the legal matter getting resolved. (If I recall correctly, that's what happened to me once.) Not that this is a guranteed result, but it is likely. Basically, if bureaucracy seems to be threatening, one way that might be able to effectively handle that threat is to interfere with some other bureaucracy that works more in your favor...

Once everything is resolved correctly, people might remember that you were a bit more problematic than most staff, but intelligent people will be more likely to honor you protecting your legitimate rights than how likely they will condemn you for the past inconvenience.

Naturally, anything I say based on speculation or experience is likely up for interpretation by someone who has an opinion that actually matters, such as your company's leadership, and/or a judge actually prosiding over an actual case. (Remember that judges are human and can often sort through what is reasonable and intended. So can company leadership, at times. Then again, apparently sometimes a person in either category may feel restricted to honor what is in writing, even if it does seem senseless.) (Best of luck to you in your circumstances.)

Answer 9

I was in a situation similar to yours which backfired to a degree, and then in one or two other ones where the same approach worked well. I am similar to you in the tendency to actually read all the paperwork and to err on the side of clarity.

I joined a newly formed company with pre-existing IP (copyrighted, not patented) of my own that was actually a strong part of the decision to start that business. We signed a non-exclusive software license for the pre-existing work and my job contract in clear enough language as to which was which, on the same day. I was receiving fair compensation on both contracts as agreed, but then the company issued me a confirmation of taxable income which included also the lump payment license fee in the amount taxable as work for hire; they claimed that they were legally obligated to do so, which was nonsense as the work being licensed existed and had generated unrelated income for me and for my co-author years before my employer was even founded. This gave me an immediate unfavorable tax treatment. I disagreed with the tax document but chose to not fight this point within the tax process. A bigger potential issue appeared to be that this could have been a step toward the company trying to expropriate the pre-existing work including its independent (non-competing) implementations from me and from my co-author. My co-author, fortunately, wasn't an employee of the company, which made me assess this risk as moderate to low; and those fears never materialized. It is likely that the company was genuinely acting on the (questionable) advice of their tax advisor and not trying to trick me at any stage.

My subsequent employments were unrelated to that same IP and I took care to obtain specific written acknowledgements of that (in my case, directly within each contract, but any written down, sufficiently specific acknowledgement would have provided me with sufficient evidence in my jurisdiction).

From my perspective, your employer is primarily trying to make sure that you'll be spending the majority of your time while employed with them on their company's business, and not trying to "spin off" a business of your own from what you created or learned while in their employment, or using your compensated hours to foster any business of your own. It's up to you to maintain that line, now that you have a letter from the president evidencing that there is a potential line. Your concern that the company might eventually start to compete in your "private" business area is a valid one, but if that happens, you'll have to re-assess your options anyway. Is your IP such a gold mine that it alone could make your employer pretend pivoting into "your" business area in order to get their hands on your property? Would they perhaps be happy to commit fraud by attempting to patent your invention as their own before you finalized your own patent application in your free time? You be the judge of that; but you'd notice the former coming, because it would then be important for the company to create a case that you were involved in company business in that area, and the second, unlikely scenario either already happened or it can never happen because of patent application priority.

I think that the company solicitor is being straightforward with you. You negotiated what you negotiated and they were not trying to trick you, nor it is likely that they currently are. Don't let that technicality sour your current employment, but be watchful for the company ever going into "your" business area, and especially if you learn of that through being asked to provide "an expert opinion" on projects considered by the company. Should that ever happen, it could still be entirely honest on the part of the company, but that would be the point to reassess the value of your employment versus that of your IP and choose one or the other.

The letter from the president isn't what protects your ownership of your invention. Your patent application is that. You use that letter primary toward the company themselves, should they forget that they are okay with your capitalizing on your patent.

Your own risk tolerance may vary.

Answer 10

If you believe that your invention is that valuable, then it may make sense to take the risks and quit.

The risks are that few inventions are actually valuable. Most inventions do not make any money. For most patents, the most money comes from patent use fees (and lawyers get much of that). Few inventions break even on the costs of getting a patent (thousands of $ in patent attorney fees). Far fewer make a profit.

Most inventions are valuable only in building a company to produce the invention or to use that invention to produce something else. The money "is in the implementation, not the invention."

The question here is whether or not your invention is valuable enough to you to justify pushing for a new agreement letter with this company or to justify quitting, getting the salespeople needed to build a company, and pursuing your own dream. The answer is within you, not here on a forum.

Edit: I have the one dollar I made from getting a patent.