Should an employer own everything their developers do?

Over the weekend I inadvertantly sparked off an interesting debate on Twitter about the clauses in developer employment agreements which transfer ownership of the IP in their work to their employer (which was originally raised in this Ars Technica post). There’s different flavours of this kind of clause of course, from simple clauses that ensure the employer retains the IP in a game that the developer is building for the employer (e.g. ‘I’m Nintendo, I own all the IP in the Super Mario game you build for me’), to more onerous clauses that require the developer to give up the IP in effectively all his/her work – including work done in their spare time (e.g. using employer facilities/know-how/support).

I thought it might be interesting to circulate some of the comments made during that debate, which really reflect the differing opinions it raises:

“The sole value [of a game] is in the execution. Anyone can think up the best game in the world. Few can make it.”

“So few companies train their staff, so coding on your own project is broadening your skills. If a contract prohibits that then they are just being stupid for the sake of it.”

“If someone is doing their job in the hours they are paid for it is my opinion they can do what they like in their spare time”

“It’s atrocious, this was a huge catalyst for me to leave and start up on my own. Too big a risk to lose your own creative output.”

“At all my employers it’s been in there. Always made me feel put-upon. Never invoked tho.”

“If I make a hobby project with commercial potential, I’d *love* to work with an employer’s expertise…”

“If you don’t like, either get your contract changed, or quit?”

“As a games co, I’m paying for my designers’ etc ideas for future games as well, not just the docs they make”

“Our clients would be concerned if we didn’t have this [clause in contracts]”

As you can see, opinions really varied – from it being an entirely normal/acceptable approach to it being completely unacceptable to the point of refusing the job.

Thoughts

• Employers will normally want this kind of clause in employment agreements. The comments above show that it can be a real sticking point with developers however – so treat it sensitively rather than just demanding everything.
• On the other hand, developers needs to understand that employers have a legitimate desire to protect their business by ensuring they retain ownership of IP in the games that generate their revenues.
• Obviously, both parties therefore need to protect their interests.
• A well drafted contract and sensible discussions about what that contract means are therefore key to ensuring IP ownership doesn’t become a real problem.
• There was some discussion about whether these clauses are just there to frighten developers but can’t ever be used. Answer: they are enforceable (provided they’re well drafted). The issue for employers is not so much legal validity of these clauses, it’s whether they’d actually ever enforce them given the potential cost/adverse PR etc involved in litigation, especially against one of your own developers.  On the other hand, that doesn’t mean that developers can ignore these clauses.

So (because I feel like giving you some more bullet-points on this topic, because I love ’em), here’s some practical tips the next time this issue comes up:

• DO discuss IP ownership before you accept a job (whether employment or contractor – more on that in a second).
• DON’T just ignore/agree to agree later/just drift along without discussing it – that just leads to problems down the line.
• DO think about what you can live with and what the other side can live with – that’s the key to a good negotiation. You won’t get far as an employer or employee by making completely draconian demands.
• Be careful about using the contractor route to side-step around this. If in practice a company treats a contractor as an employee (and demanding ownership of everything they do is just one factor in that test), then there is a danger that in law they will be held to be an employee, not a contractor.

Anyway, what do you think about all this? Let me know in the comments or via Twitter…