Can an ex-employer sue ex-employees for using work experience gained for future endeavours? In this bloomberg article, 5 ex-employees of a hedge fund were sued by their ex-employer for starting a trading outfit. https://www.bloomberg.com/news/features/2018-11-19/the-triple-jeopardy-of-ke-xu-a-chinese-hedge-fund-quant At around that time, de Putron got involved in another legal dispute that foreshadowed his companies’ campaign against Xu. The year before, a group of five programmers and managers had left G-Research, then known as GR Software &amp; Research Ltd., to start their own trading outfit. The company responded by first threatening a lawsuit, then, in 2011, by filing one. None of the filings suggested anything had been stolen, but G-Research argued that the five had developed their quant-trading skills at the company, and so any new platform would have to be similar and an infringement of its intellectual property. As a layman, I find it extremely unreasonable. Which ex-employee will not use his past knowledge and experience gained from working for a past employer in his future endeavours? Is using knowledge gained from working for an ex-employer for future profit considered stealing from the ex-employer ??!!! Is this reasonable legal argument from an ex-employer? There was no stealing of physical property or technological design documents. Any lawyers here can enlighten me? This is a risk that all employees should be aware in case they encounter an employer as depicted in the Bloomberg article.
I'm not familiar with the case you're citing, but it sounds like this may be an application of the doctrine of &quot;inevitable disclosure&quot; or &quot;inevitable use.&quot; A classic case would go something like this. WonderWidgets has discovered that by treating its widget molds with a teaspoon of ground cinnamon, it can create a superpowerful widget that is impervious to normal wear and tear, and will last forever, with very little additional expense. To protect its competitive advantage, WonderWidget takes all sorts of measures to ensure that AAA Widgets never learns about the benefits of the cinnamon additive. WonderWidgets hires Jane, an engineer with a PhD in cinnamonology to make improvements to the additive. She signs a confidentiality agreement promising to protet the company's trade secrets. After a year with WonderWidgets, Jane is recruited by AAA Widgets. WonderWidgets sues them both to prevent them from consummating an employment relationship. Assuming that the information Jane acquired from WonderWidgets is a protected trade secret, the idea here is that everyone knows exactly why AAA is hiring Jane, and that it would basically be impossible for Jane to work for them without applying the knowledge she acquired from WonderWidgets, i.e., there her employment would lead to an inevitable disclosure of WonderWidgets' trade secrets. I think most people would agree that there's at least a reasonable argument to be made in favor of WonderWidgets, there are also efforts to apply this doctrine in much shakier circumstances. For instance, WonderWidgets might try to prevent its janitor from going to work for AAA because it taught him how to mop floors, and it has cleaner floors than AAA, and therefore its cleaning techniques must be superior, and therefore those techniques must be protected. There are some states in which WonderWidgets would win the cinnamon case, and some where Jane would win, because the state doesn't recognize inevitable-disclosure at all. I don't know of any states where WonderWidgets would win the janitor case. Of course, most cases are not as clean-cut as either of these hypotheticals, but I'd say the one you're asking about is closer to the second one than the first.
You don't say what jurisdiction's patent laws you're interested in, and priority dates can differ in different schemes. I'm answering as to U.S. law only. In the United States, under the current hybrid "first-inventor-to-file" system, the priority date--the date that determines who "wins" if there are multiple claims to a specific invention--is, with some exceptions that I won't go into, the date of your first application. In other words, the date that the PTO got it in the mail. Once your application is submitted, it is--again, with some limitations I won't get into--prior art for the purposes of any later-submitted application. They can't get another application later, grant it first, and then deny your application based on the later-submitted application. Your application date would still win out. Could someone in the USPTO slip your application out of the stack, fudge the dates, and convince some other company to submit a similar application to get priority over you? Not as a practical matter, no. The USPTO isn't one guy in a room; it's a large organization, and the person who opens the mail, types in your application details, and sends you a receipt, isn't the same guy who knows whether your invention is any good or not. And, frankly, very few patentable inventions are going to be worth someone risking their job and/or jail time over--especially when there would be significant evidence of the misconduct--for example, your patent agent's files. So what are the chances that the examiner on your patent: 1) Is a nefarious character who has lived a life of public service long enough and wants to go rogue; 2) Has a friend in the mailroom who is also an expert in the field of your invention; and 3) Has a conduct in industry who is willing to break the law for the rights to your invention? Slim to none. And if you have an invention that is really so revolutionary that it's going to be worth so many people risking so much to steal it, odds are there will be other evidence that you were the inventor.
At least in theory an end user could be sued for infringing on a patent, especially a method claim. Given the cost of a patent lawsuit, this strikes me as extremely unlikely to happen though, unless the user in question were an extremely large company, or something on that order. Theoretically, the only difference between open-source software and proprietary software would be that availability of the source code makes it easier to prove use of a patent in open-source software. Releasing the software as open-source doesn't confer any immunity from patent law or anything like that though. Realistically, however, the chances of being sued for infringement if you're basically giving away the software in question are fairly remote. It rarely makes sense for a patent holder to spend millions of dollars on a lawsuit where they stand no chance of even recovering their cost (but no, that certainly should not be taken as legal advice that you're free to infringe on patents, or anything similar--in fact, none of this should be taken as legal advice at all). If you can actually prove that a technique was published or publicly known and used (e.g., in a product that was offered for sale) well before the patent was applied for, the patent is probably invalid (and if proven so in court, the case would normally be dismissed with prejudice, which basically means the patent holder wouldn't be able to sue anybody else for infringement of that patent). I'd note, however, that in my experience this is much less common than most people imagine--many look at (for example) the title of a patent, and assume it lacks originality because it refers to some well-known technique, and ignore the claims where it details the precise differences between the previously known technique and what the patent really covers. Just for example, the EFF used to have a web page talking about a (now long-since expired) patent on how to draw a cursor on screen. In an apparent attempt at scaring the unwary, they showed code they claimed infringed in the patent--despite the fact that the patent's "background of the invention" specifically cited the technique they showed as being previously known, and not covered by the patent.
It may be useful to draw a distinction between the NFT and the Art referenced by this NFT. There is no intellectual property in an NFT itself because an NFT is not a creative work, invention, or trade secret. Ownership of the NFT. As far as I'm aware, no laws recognize the Ethereum blockchain as an arbiter of ownership. However, NFTs and other “crypto” assets seem to be recognized as property. Thus, it can be the case that lawful ownership diverges from the ownership records on the blockchain. In the referenced scenario, someone gained control over an NFT but likely did not receive the property rights in that NFT (i.e. stole it). License to use the Art. The “Bored Ape Yacht Club” terms define ownership of the NFT purely in terms of the Ethereum blockchain, and ignore legal ownership: Ownership of the NFT is mediated entirely by the Smart Contract and the Ethereum Network The blockchain-owner of the NFT is then granted a license to use the Art via these terms. This leads to the following conclusions: There are no intellectual property rights in the NFT. Any intellectual property rights in the Art are held by Yuga Labs LLC, the company behind the “Bored Ape Yacht Club”. Nothing in the terms transfers ownership in the Art. Yuga Labs LLC grants the blockchain-owner of the NFT a license to use the Art. Here, this means that the thief held the license, then after the sale the subsequent buyer. Yuga Labs LLC does not grant the legal owner of the NFT any rights, in case the legal owner and the blockchain-owner are distinct. Of course, nothing would prevent Yuga Labs LLC from also granting a license to the legal owner of the LLC. They can still do so retroactively, as their license grant to the blockchain-owner is probably not exclusive. But I would be surprised if they would do so, since it would shatter the “NFT = Art” and “Blockchain = Ownership” illusion that their business model relies on.
On what grounds would you sue? Contract Well, I think that you would struggle to find the necessary elements (see What is a contract and what is required for them to be valid?) In particular, you would struggle to prove that there was intention to create legal relations on their part and possibly on yours. Are you able to identify in your "back &amp; forth" a clear, unequivocal offer and acceptance? Without knowing the details of the "back &amp; forth": I was hoping that someone at $organization might be willing to write an article explaining what you do, the history of the organization and how it works appears on the face of it to be a request for a gift; not an offer to treat. Promissory Estoppel If you don't have a contract then it is possible (IMO unlikely) that they induced you by your actions to commit resources (your time in writing) in anticipation of a reward (them publishing what you wrote). To be estopped they would have to have known that you were writing the article in the expectation that it would have your organisation's name in it, that they did not intend for that to happen and that they allowed you to invest those resources notwithstanding. If you can prove all of that then you can require them to do what they promised. The big difficulty I see in this is did you tell them that a) you were writing the article, b) it would have your name in it and c) you expected it to be published in that form. Copyright If they publish the work or a derivative work without your permission you can sue for breach of copyright. As it stands, they probably have an implied licence to publish and you would need to explicitly revoke that. Options There are two reasons to go to court: Money Principle If you are going to court for money then this is at best a risky investment and at worst a gamble: balance your risk and reward carefully. If you are going to court for a principle then I simultaneously admire your principles and think you're an idiot. Make a deal Explain that the reason that you wrote the article was a) to support their fine publication and the fantastic work it does (even if you don't) and b) to garner good publicity for your organisation. You understand and admire their strong editorial stance (especially if you don't) but the article involved a considerable amount of work and could they see their way clear to give you a significant discount (~80%) on a full page ad facing the article.
Yes I would reach the same conclusion as DaleM, i.e. that the arbitration clause still applies to the dispute in the question, but for a different reason.&lt;1&gt; While the severability principle is indeed a concept in arbitration law, I don't believe that is the relevant doctrine here.&lt;2&gt; Termination Of Employment v. Termination Of An Employment Contract What terminates when a period of employment ends is the employment itself, not the contract of employment. The contract remains effective as to rights and obligations arising during the course of the employment covered by the contract. (This concept would also sometimes be described in terms along the lines of &quot;the right to a remedy for the workplace injury and the right to have disputes related to that resolved in arbitration are vested rights&quot; that are not modified when the contract term of employment ends.) This concept isn't particular to the arbitration obligation. For example, if contract of employment that did not contain an arbitration clause provided that the employee was paid $200 an hour for the first six months and $220 an hour for the second six months of a one year fixed term employment agreement, but the employer failed to adjust paychecks according after the first six months and continued paying the employee at $200 an hour instead (assume to avoid the issue of waiver that this wasn't readily apparent on the face of the paystubs provided to the employee), the employee could bring suit thirteen months after the employee's employment terminated for the $20 an hour not paid as agreed during the last six months of the contract even though the employment period had ended. The contract still remains in force to govern the rights and obligations of the parties arising during the period of employment. Examples Of Termination Of The Contract Itself In contrast, sometimes one contract is replaced, even retroactively, with another contract, in what is called a &quot;novation&quot; of the original contract. This truly does terminate the old contract, so that only the replacement contract remains. So, if, for example, the original employment contract contained an arbitration clause, but this was replaced by a new employment contract without an arbitration clause three months later (in the sample case, before the worker was injured&lt;3&gt;), then the arbitration clause would not apply because the contract, and not just the employment was terminated. Similarly, support that the workplace injury was the second dispute between the employer and employee that had come up. The first was a dispute over the rate of pay received which was resolved by a settlement agreement negotiated by lawyers for the parties before either arbitration or litigation in court was commenced, which expressly terminated all rights, known and unknown, of the parties arising under the contract, and the second was the workplace injury for which the relationship of the injury to work was only discovered later on. In this case, the contract and not just the employment had been expressly terminated, and so the arbitration clause would not apply to the workplace injury dispute (which would be barred by the settlement agreement and which may or may not have had an arbitration clause of its own). End Notes &lt;1&gt; At least assuming that the dispute would have been subject to arbitration if a dispute were litigated while the employee was still employed. There can be circumstances when a workplace injury is not subject to arbitration even if the employer and employee undoubtedly agreed to an arbitration clause that applies to the dispute in question. For example, workplace injuries arising from sexual assault are not subject to arbitration in the United States. See 9 U.S.C. §§ 401-402. &lt;2&gt; The severability principle usually concerns a determination of the enforceability of an arbitration clause in the face of certain kinds of arguments that the entire contract as a whole is voidable. It also does not apply in cases where there is a dispute over whether any contract of any kind was formed in the first place. For example, if someone presented the court with a contract containing an arbitration clause and sought to compel arbitration, and the defense to a motion to compel arbitration was that the defendant had never met or had any connection with or communication with the defendant or anyone related to the alleged contract. &lt;3&gt; The hard case, where the novation takes place after the injury, is complicated by legal doctrines regarding the conditions under which a vested legal right can be waived, which may or may not be met depending upon the circumstances under which the novation was entered into by the parties and presents conceptually distinct legal questions in addition to the legal questions already present in the simple case where the injury takes place after the novation.
The UK Government released an article last year that explains some of the issues relating to ownership of copyright This article is informative. The headline point: Ownership of literary, dramatic, musical, artistic and film works created by an employee during the course of their employment, automatically vests in their employer by virtue of section 11(2) of the Copyright, Designs and Patents Act 1988. The meaning of during the course of their employment has been interpreted by the courts to mean during the course of normal or specifically assigned duties, and that these duties include the creation of intellectual property for the employer. Patents are similarly affected - if the role does not specify or would not imply the creation of patents and other IP, it may not vest in the company automatically. This is a standard clause and is designed to protect the interests of the company, in the event that you create intellectual property as part of your role. Bear in mind here that there's no real need for this property to be created during work hours. That is, if part of your role is to design new software, ownership of that software vests in the company, whether you spent substantial amounts of work hours making it or not. Conversely, if your role does not include, or would be expected to include, the creation of intellectual property, then if you do so - even if it is during work hours - ownership may not necessarily vest in the company. IP you create in the course of your employment will vest in the company in the course of your employment will probably mean: if you are employed to create IP generally, all any IP resulting from your work, or; if you are employed to create a specific work, that work and possibly related works. This is a fairly standard clause, for most companies - I have had several jobs (though none of them technology-related) and they all include some clause to this effect
First of all, this is not insider trading: insider trading is using non-public information to trade a publicly tradable security. What this could be is misuse of confidential information - a civil tort. The disclaimer does not create a legally binding contract for a number of reasons but it does alert the recipient that the information is confidential: if they use it then they can be sued for damages (probably successfully). However, given the nature of the information, it is almost impossible for your friend not to act on it and Company B should realise this. Legally he is doing the right thing, consulting a lawyer and informing Company B of its colossally massive stuff up. Ethically he may need to withdraw from the negotiations.