Technology companies often worry about ownership of ideas they hear. If a contractor or partner gives us an idea, do we need a license to use it? What if it’s an idea about our own product or service? The concern often prompts a “feedback license”: a sentence or two tacked onto a contract about professional services or co-marketing or something like that, granting a license to “any idea Contractor may develop related to Company’s products.”
The good news is that you don’t have worry about ownership of feedback or other ideas. You don’t need a feedback license, and in fact, they don’t even make sense. In the United States (and most other countries), ideas belong to everyone—at least to everyone who hears them legally.
The confusion stems from a misunderstanding of intellectual property: from the belief that IP covers every product of the human brain. IP actually covers a very narrow set of brain products. To be considered intellectual property, an asset has to fit into one of the following four categories.
- Copyrights protect written expression. If your contractor or partner writes down an idea, he may have a copyright in the writing. In other words, he may have the right to keep you from copying his words. But he can’t keep you from reading those words and using the idea they describe. You can even write up the idea in your own words (provided your words are truly original).
- Trademarks protect brand names, slogans, logos, and other words and symbols that distinguish commercial offerings. Trademark rights belong to the person or company that uses the mark in commerce (among other requirements), not to the person who developed the idea for the mark.
- Trade secrets law actually can protect ideas, but only “stolen” ideas. The law forbids use of a business secret by someone who got the information without authorization or through a confidential relationship. If a contractor or partner tells you her idea, without an NDA, it’s obviously not a trade secret.
- Patents protect products and processes, not ideas. To get a patent, the would-be patent-holder has to invent a product or develop a process (and that’s only the first step). A mere idea for improving your product or service doesn’t qualify.
Of course, it’s always possible someone will invent a real product or process that improves your offering, then file a patent application, struggle through the Patent and Trademark Office, get a patent, and block you from using the invention. But that’s a risk you can’t avoid. And your partners and contractors aren’t any more likely to file that patent than anyone else—unless they have the advantage of secret information about your offering. In that case, you should consider a nondisclosure agreement, not a feedback license. An NDA will forbid filing a patent application based on your secrets.
In any case, a patent won’t (or shouldn’t) issue for an obvious improvement to your product or service: for something you could easily have thought up yourself. You don’t have to worry about your contractor saying, “Hey, why don’t you add a flange here?” and then running off to the PTO. That’s not patentable.
So you don’t need a feedback license. Nor should you rely on a feedback license to protect you. It’s hard to guess whether or how a court will enforce a broad, general license to ideas: to something the law doesn’t recognize as property. An NDA will protect you much better where you’ve got confidential information at stake. And if your deal really is about IP—your contractor’s doing R&D, for instance—you need something more extensive and more enforceable than a feedback license. For an R&D relationship, you should put together a development agreement with a detailed license or assignment clause, transferring IP rights.
[Since writing this post, I've posted an additional suggestion regarding feedback clauses.]
Can you lose your right to an idea? Yes, but only by signing an NDA or some other type of contract that says you won’t use it. If you don’t sign away your rights to an idea, it’s yours—and everyone else’s.
- The Tech Contracts Handbook addresses feedback licenses in footnote 1 of Appendix 2, and IP in general in Appendix 2.
© 2011 by David W. Tollen. All rights reserved.