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Does a company own your thoughts? Maybe. On July 26, Alcatel USA Inc., based in Plano, Texas, prevailed in a suit against former employee Evan Brown, who claimed that he — rather than the company — owned rights to a software idea that he asserts had long existed in his head. After 5 1/2 years in litigation, DSC Communications Corp., n/k/a Alcatel USA Inc. v. Evan Brown has companies, employees and legal pundits wondering who owns an idea if it hasn’t been expressed in a tangible form but an employee has signed an employment contract making no exclusions under the “inventions” clause. Alcatel’s attorney Eric Pinker of Dallas’ Lynn Tillotson & Pinker says he’s pleased but not surprised that the court upheld the agreement. It affirms “very well-understood and very well-accepted legal doctrines,” Pinker says, adding that “invention disclosure agreements are enforceable in the state of Texas.” Brown, representing himself pro se, alleged in a response to the company’s motion for summary judgment that at the time the suit was filed, his thoughts were not in a tangible form and “did not meet the definition of either ‘invention’ or ‘conceived’ as defined in Webster’s dictionary.” “What we said was, ‘This isn’t complicated at all — if he had written a formula or program or some copyrighted piece and put it in a vault somewhere, the court wouldn’t have hesitated to compel him to produce it under some sort of confidentiality order.’ ” The fact that he said it’s not in writing doesn’t change the law, Pinker says, although it does make the case a little unusual. “Does the company own the ideas in this guy’s head before he commits them to paper?” asks intellectual property lawyer Veronica Smith Lewis, who’s not involved in the suit. “That’s the issue at the heart of the case that employers and employees will be most concerned with.” Judge Curt B. Henderson of Collin County, Texas’ 219th District Court granted Alcatel summary judgment on its breach of contract and declaratory judgment claims. Henderson concluded that the company’s contract with Brown was valid and enforceable. The court also held that, pursuant to the contract, the company owned full legal right, title and interest to what Henderson called Brown’s “solution,” which he defined as the process and method developed by Brown for converting machine-executable binary code into high-level source code; reverse-engineering the intelligence from existing programs and recoding it into high-level language; and converting certain machine code into C language source. Henderson further noted that, pursuant to the employment agreement, Brown was obligated to disclose the solution to Alcatel and only to Alcatel. In addition, Brown was ordered to pay Alcatel’s legal fees, which exceed $330,000. The suit began when DSC Communications Corp. (which later merged into Alcatel USA) sued Brown in April 1997 for allegedly withholding an idea for software. The company alleged that it owned Brown’s idea because of a signed employment agreement requiring him to disclose any inventions he conceived of or developed while at the company. DSC employed Brown for 10 years. In an interview, Brown alleges he was led to believe by a personnel director that ideas not in the area in which he worked wouldn’t count. Moreover, Brown asserts that he began developing the idea in 1975, well before his employment with DSC began in 1987, and had achieved about 80 percent of the solution. In March 1996, Brown claims, he mentally solved the remaining 20 percent while vacationing. In April 1996, Brown sought a release from DSC to pursue his idea. Brown alleges that he asked several managers at DSC whether the company would be interested in helping him develop the idea. According to Brown, DSC and Brown began negotiating an agreement whereby DSC would pay Brown a percentage of savings realized by the company if the idea was successful and a percentage of income from third-party sales, but the company later halted negotiations. Brown says when he refused to reveal his idea, DSC fired him and sued him. “What I had at the time I was fired and sued was an idea,” Brown says in an interview. “It was not along the line of their business or the work I did for the company. This suit was solely an attempt by their legal department to … seize something to which they were not entitled,” he alleges. Pinker flags such ownership issues as an important area of concern for employers. “They have to have comfort that the people they hire, pay and foster, once they develop an invention, are going to turn that invention over,” Pinker says. Technology companies are in the business of inventing, and if people are doing it on their own behalf and take it for themselves from the company, the company is not going to stay in business long, he says. Lewis, a partner in Vinson & Elkins’ Dallas office, agrees: “The fact that it [an idea] hasn’t yet been committed to paper can’t be something that precludes a company that has paid you, arguably, to develop this idea, to have an ownership interest in it. It would be too convenient an out for an employee and too rigid a rule — no one could actually pay an employee to develop anything with any confidence if that were the rule,” she says. SEEKING BRIGHT LINES The company wants to say that every idea you have while you work for it belongs to the company, and the employee wants to say that everything I do on your time may belong to you, but once I leave and go home at night, it belongs to me, says David L. Burgert, an IP partner in Houston’s Porter & Hedges. But courts are looking for bright lines, he says. “To get caught up in the whole concept of trying to figure out how an idea came to someone — whether it was at 5:01 p.m. or 4:59 — is something no court is going to be eager to do.” Burgert sees the case as a cautionary tale for people asked to sign agreements that come back and bite them 10 years later. Lewis and Burgert believe that the signed agreement and the fact that Brown asked for a release may have undermined his credibility. A major asset for a high-tech company is its intellectual property, and the only way a company acquires intellectual property is by hiring smart people to come up with inventions, Burgert says. And the only way a company can protect that asset is by using agreements like the one Brown signed. But this case lies in a gray area, he notes, because until the idea is reduced to practice, it’s not an invention and you can’t patent it. One argument companies could make to support their claims that such ideas belong to them is that the idea is a trade secret entitled to protection. But the problem with that argument is that if the employee never disclosed to the company what the idea was and how to implement the solution and if the company never knew what it was, how can it be a trade secret since the company didn’t know what it had to protect? Burgert asks. Richard A. Sayles of Dallas’ Sayles, Lidji & Werbner represented Brown in the case until June 2001. His motion to withdraw notes the relationship was terminated voluntarily by Brown and counsel. The uniqueness of Brown’s case was that his idea never had been reduced to writing, and Alcatel was claiming ownership of it, says Sayles. “I thought it was really a very … novel and groundbreaking case. Otherwise I would never have gotten involved in the first place.” Sayles believes Brown should have prevailed. “It sure did seem different to me and almost everyone else who heard about it. Public opinion was definitely on Brown’s side,” says Sayles. But Burgert and Lewis, like Pinker, find the court’s ruling consistent with Texas law. Nonetheless, they lament the fact that more people don’t take the time to meet with a lawyer and have employment agreements explained to them before they sign them. “Nobody likes to pay a lawyer, but if you sit down with one for an hour and really understand what you are signing, maybe you’d go back and say, ‘I’m not going to sign this … without adding this language,’” Burgert says. Lewis believes Brown could have helped his case had he kept an idea log, as inventors do in the patent arena. Establishing that Brown had the idea years before coming to DSC would have contradicted the signed agreement and gone a long way toward establishing Brown’s credibility, possibly helping defeat a summary judgment motion, Lewis notes. Brown plans to appeal. According to his bio on his Web site — www.unixguru.com/ — “Despite his termination from DSC, huge legal bills, and the forced sale of his home and other assets, the Texas computer genius is sticking to his guns.”

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