Who Owns Your Ideas?

In the early 2000’s, Mattel, the manufacturer of Barbie dolls sued MGA Entertainment, which makes the Bratz dolls. (I’ll get away from dolls in a minute, so stay with me.) In a legal battle that took about four years to get to a jury, Mattel alleged a former employee designed the Bratz dolls and took the designs to a competitor, MGA. The jury decided that designer Carter Bryant developed the idea for the Bratz dolls while employed by Mattel. You can find details on many web sites. Just use Google to search for Mattel Bratz lawsuit.

Image courtesy of babble.com.

An appeals court recently stayed the jury’s ruling and let MCA continue to sell the Bratz dolls, although income goes into an escrow account. According to an article in the 14 December 2009 Wall Street Journal:

The appellate judges on Wednesday questioned whether the trial judge went too far by awarding MGA’s Bratz doll franchise to Mattel and wondered why he didn’t instead award Mattel a royalty or ownership stake in the company. The judges also questioned whether Mattel’s “inventions agreement” at the center of the dispute gave the toy company ownership of all ideas the designer came up with, even when he was not at work.

“The agreement states that any “inventions,” including designs, that a person creates at any time during employment at Mattel “will be owned by the company.”

According to MGA’s lawyer, “Mattel is laying claim to every idea in an employee’s head.”

I don’t know the Mattel employee’s motive for taking a design to a competitor, but bet it involved ego, advancement, money, and recognition. Too bad Mattel didn’t encourage innovation within the company and reward it well enough to discourage this sort of action. Or perhaps it did offer employees incentives for new ideas. Who knows?

I’d bet some technology companies also want every idea in an employee’s head. Some people might want “the government” to address this inequity, but it’s best left to companies and prospective employees. I recommend employees request an employment agreement before they accept a new job. Then they’ll know what they can and cannot do with their ideas.

If a company makes servers and an engineer comes up with an idea for an enhancement, a direct relation exists between work product and the company’s livelihood. But if the server-company employee comes up with a design for a better lawn sprinkler, he or she should have the freedom to explore this during non-business time.

Solutions to the who-owns-what problem come down to flexibility on the part of employer and employee. In my opinion, an employee should offer related ideas to his or her employer as a matter of course. In return, the employer should agree to pursue the idea within a set period or invest a set amount of money in it over a given time. If the employer fails to pursue an idea, the employee can do with it as he or she wishes. But, if a company decided to use an employee’s idea, perhaps it should share profits. Even though a company pays its employees a salary to use their expertise, sometimes a “flash of genius” results in such a compelling idea that the inventor/employee should get more than a new $100 bill, a mention on a patent application, and an atta-boy from the boss.

Thankfully I never had to sign away any rights to new ideas.

I welcome opinions on the who-owns-what situation. –Jon Titus