Reference no: EM131119709

Writing assignment

The CEO of UNFinished Business has discovered that one of his employees, a software developer, has been working on a software application. Although the employee swears that he has only worked on his application on his own time, the CEO wants to know if there is any legal precedent to support

UNFinished Business claiming ownership of the employee's Intellectual Property.

You are to complete the following tasks:

1. Search for an article that discusses a legal case involving an Intellectual Property dispute between an employee and his or her employer

A. An article relating to Employee working on a personal project (not necessarily software) while working for a company in a similar capacity

B. Provide a reference to the article found

2. Summarize the facts of the case including any decision by a judge or jury

3. Recommend a course of action for the CEO based on your findings

A. The company should claim ownership of the Intellectual Property

Or

B. The employee should maintain ownership of his or her Intellectual Property

Requirement

-1000 words total

-Flesch-Kincaid readability level must be 14+

Information regarding this writing assignment

Who Is an Employee?

Based on the definitions for an employee and an independent contractor the only real difference between the two is that an employee is directly employed by thebusiness they work for while an independent contractor is not. In fact, this difference is often so subtlethat it can be difficult to distinguish the employees from the independent contractors. In reality,however, there are a number of significant differences between employees and independentcontractors, but these differences are not always easily recognized.An unscrupulous business may take advantage of these subtle differences in an attempt to blur the linebetween employee and independent contractor for its own benefit. For this reason, the courts use 10non-exclusive factors to determine whether a worker is acting as an employee or as an independentcontractor when an Intellectual Property dispute arises between the two parties.

Non-exclusive factors for determining whether a worker is an employee or an independent contractor:

1. Level of Skill Required

Employee: Some direct supervision is required (hourly, daily, task1 completion, etc.)

Contractor: Little or no supervision is required (periodic checks, job2 completion)

2. Supply of Tools and Materials

Employee: Business supplies all the tools and materials needed to perform a task

Contractor: Contractor supplies all the tools and materials needed to perform a job

3. Duration of Relationship

Employee: Usually long-term (years), open-ended relationship with the business

Contractor: Usually short-term (months), closed-ended relationship with the business

4. Task Assignment

Employee: Note 1

• Tasks are assigned by the business or one of its representatives (supervisor)
• Assigned tasks outside the his or her area of expertise (sweep the floor)
• Has an assigned schedule (9am to 5pm)
• Completes tasks in the location specified by the business (office, cubicle, lab, etc.)

Contractor: Note 2

• Selects the order in which the tasks of a job are completed
• Only works on the assigned job and its related tasks
• No assigned schedule (freedom to set his or her own schedule)
• Completes tasks at a location of his or her choosing (home, office, at the business, etc.)

5. Method of Payment

Employee: Paid by the hour

Contractor: Paid by the job

6. Hiring and Paying Additional Personnel

Employee: Business hires and pays for additional personnel to assist with task completion

Contractor: Contractor hires and pays for additional personnel to assist with job completion

7. Licensing Requirements

Employee: No licensing requirements exist

Contractor: May be required to hold a business or independent contractor license

8. Benefits (insurance, vacation, company car, gym membership, etc.)

Employee: Business provides these benefits

Contractor: Contractor provides his or her own benefits

9. Taxes (Social Security, federal and state)

Employee: Business automatically deducts appropriate taxes from paycheck

Contractor: Contractor must track and pay his or her own taxes

10. Intellectual Property within Scope of Employment (deals with employees only)

Yes: Business automatically owns the rights to the Intellectual Property created

No: Business may still obtain the rights if the employee violated any employment policies

Note 1: A task is a small, single step in completing a job.

Note 2: A job consists of a number of smaller, individual tasks.

Of the 10 factors, Taxes is the most important in determining Intellectual Property ownership. An unscrupulous business attempting to blur the line between employee and independent contractor may classify a worker as an independent contractor to avoid paying taxes and benefits such as insurance while treating the worker as an employee to obtain the rights to any Intellectual Property created. By placing importance on who is responsible for paying taxes, courts prevent an unscrupulous business from taking advantage of independent contractors in such a way.

Protecting one's Intellectual Property

One should always, always, always read all contracts and agreements prior to signing anything (this includes offer letters of employment). One should not allow any representative of the business topressure one (even with the threat of termination) into signing any document, regardless of how benign it may seem, until one fully understands the concessions, obligations and promises contained within the document. If necessary, one should seek legal advice from an attorney that is not affiliated with the business to review and explain the contract or agreement.

Those who already own Intellectual Property should take special precautions when entering into any contract or agreement with another person or business to ensure that they do not unintentionally relinquish their existing Intellectual Property to the other person or business. The best way to prevent this from occurring is to ensure that all contracts and agreements entered into with another person or business contain a clause stipulating that all Intellectual Property remains the possession of its original owner.

Although a business automatically owns the rights to any Intellectual Property created by its employees, this power only last during the duration of employment; however, a business often has its employees sign a non-compete agreement, which prevents an employee from performing work that competes with the business either with another business or for oneself for a specific period of time (usually 12 to 24 months) and geographic region (usually any U.S. state or other country where the business has an office). Any Intellectual Property created by a former employee during the non-compete period or in the non-compete geographic region automatically becomes the property of the former employer.

Therefore, if one plans to terminate his or her employment with a business prior to creating a work ofIntellectual Property, he or she should review any contracts or agreements entered into with the business to ensure the business cannot claim ownership over any Intellectual Property created after terminating employment.

Moonlighting

It is important to remember that any Intellectual Property an employee creates during his or her employment automatically becomes the property of the employer unless the employment contract contains a clause stating otherwise. To protect its Intellectual Property, a business often requires its employees to sign non-compete and non-moonlighting agreements, and any employee who violates either of these agreements will likely have his or her employment with the business terminated, especially if the employee performs the same type of work he or she performs for the employer.

Furthermore, an employee that performs work on his or her own time (even in his or her own home), and using his or her own equipment and supplies, may violate the non-moonlighting agreement, which may result in his or her Intellectual Property becoming the property of the employer. This is especially true if the employee is performing work that is similar to the work he or she performs for the employer.

Not all moonlighting may be considered a violation, however. For example, Tom is an accountant with major insurance company. If Tom creates a game app for the Android mobile operating system on his own time, his employer cannot make a claim against his Intellectual Property because it does not fall within the scope of the accounting work he performs for the insurance company. A similar, but different example, Karen is an accountant with a major insurance company. If Karen creates a game app for the Android mobile operating system during normal work hours in her office, her employer can makea claim against her Intellectual Property because even though it does not fall within the accounting work she performs for the insurance company, it was created on company time, and possibly with company tools and supplies. A final example, Peter is a software developer with a major software developmentcompany. If Peter creates a game app for the Android mobile operating system on his own time, hisemployer can make a claim against his Intellectual Property because it falls within the scope of the software development work he performs for the software company.

To avoid violating a moonlighting agreement, an employee should always obtain a written acknowledgement from a director or higher official within the business the employee works before he or she begins moonlighting for another business or for him or herself. Furthermore, to avoid losing one's Intellectual Property rights to an employer, an employee should obtain a written release of the business's rights to the employee's Intellectual Property. A famous example of protecting one's Intellectual Property rights is Steve Wozniak, creator of the Personal Computer and co-founder of AppleComputer, Inc. Steve Wozniak created the Apple 1 computer in 1976; however, Steve started working as an engineer at Hewlett-Packard designing calculators in the early 1970's. Before Steve could produce and sell the Apple 1, he went to Hewlett-Packard to obtain a release to build his computer. Fortunately for Steve, Apple Computer, Inc., and the rest of the world, Hewlett-Packard did not realize what Steve Wozniak had created, and released any claim they had to his creation. And the rest is history.

Independent Contractor and Commissioned Worker

Although independent contractors automatically own the rights to any Intellectual Property created while working for a business (unless the Intellectual Property falls into one of the nine categories listed in the Works Made for Hire: Independent Contractor section above), independent contractors should demand a contract that clearly defines the relationship between the contractor and the business, as well as who owns any Intellectual Property created during the relationship. It is important to remember that a business cannot simply claim that it owns all of the Intellectual Property created by an independent contractor; the independent contractor must clearly state in a contract that he or she relinquishes to the business rights to any Intellectual Property created during the relationship.