Twitter is an innovative company, and today’s introduction of the Innovator’s Patent Agreement shows that their legal department can be innovative too. The Innovator’s Patent Agreement, a draft of which was released on GitHub, will allow inventors to retain control of their inventions to make sure that they are only used for defensive purposes. This new agreement is a clear PR and recruiting win for Twitter, but whether it will be anything more is debatable.
A PR and Recruiting Win
At first glance, the Innovator’s Patent Agreement is a huge derivation from the standard assignment model, where an employee assigns all of their rights in an idea to their employer. In today’s climate, where many developers openly dislike the patent system, this new agreement may be a game changer. Recently, a Yahoo developer openly lamented the use of his technology in Yahoo’s lawsuit against Facebook. The Innovator’s Patent Agreement appears to be Twitter’s direct response to that mindset. Thus, the most likely initial result will be the use of this agreement as a recruitment tool. Indeed, in Twitter’s blog post Twitter asks interested developers to #Jointheflock.
The Innovator’s Patent Agreement may at first set Twitter apart from other Silicon Valley technology companies like Google and Facebook, with which Twitter competes for developers if these companies do not provide a similar agreement. However, the end result for Twitter and for the engineer is not as obvious.
What does “Defensive” Really Mean?
While Twitter retains the right to use these patents for defensive purposes, what is and what is not a defensive purpose is not always obvious. The draft agreement defines defensive purposes as follows:
Company, on behalf of itself and its successors, transferees, and assignees (collectively “Assignee”), agrees not to assert any claims of any Patents which may be granted on any of the above applications unless asserted for a Defensive Purpose. An assertion of claims of the Patents shall be considered for a “Defensive Purpose” if the claims are asserted:
(a) against an Entity that has filed, maintained, threatened, or voluntarily participated in an intellectual property lawsuit against Assignee or any of Assignee’s users, affiliates, customers, suppliers, or distributors;
(b) against an Entity that has filed, maintained, or voluntarily participated in a patent infringement lawsuit against another in the past ten years, so long as the Entity has not instituted the patent infringement lawsuit defensively in response to a patent litigation threat against the Entity; or
(c) otherwise to deter a patent litigation threat against Assignee or Assignee’s users, affiliates, customers, suppliers, or distributors.
The final element of the definition is incredibly broad and allows for Twitter to interpret almost anything as a defensive use. For example, could Facebook have sued Yahoo for patent infringement before being sued itself and call it a defensive use? If so, I am not sure what would not be a defensive use short of a pure non-practicing entity asserting a patent or a litigation against a company that has no patents of its own. With such a broad catch-all clause, Twitter may be put into an uncomfortable position with current or former employees when deciding to assert its IP assets.
Management vs. Employees
The draft agreement further states that:
If Assignee needs to assert any of the Patent claims against any entity for other than a Defensive Purpose, Assignees must obtain prior written permission from all of the Inventors without additional consideration or threat. An “Entity” includes any related entities, where the entities are related by either ownership, control, financial interest, or common purpose.
This clause requires Twitter to seek approval of the inventor for any assertion that is not for a defensive purpose. I commend Twitter for explicitly stating that this approval must be without additional consideration or threat. However, the reality is that while an inventor remains an employee of the company, management has significant control over the actions of the employee, especially if the employee is looking to advance their career. It appears unlikely that employees would be able to deny the use of the assets if management feels it is in the best interests of the company to do so.
While this initial draft appears to be an interesting first step to a new assignment system, I expect this draft to change significantly as Twitter begins implementation. It will be worth monitoring what effect this new agreement has other than giving Twitter some good press and a recruiting boost in the short-term.
It’s definitely unclear if this agreement will work exactly as imagined in all situations, but it is surely a step in the right direction. It’s not hard to imagine this becoming the standard for invention assignment in Silicon Valley, as engineers love this idea and engineers ultimately hold the cards as the hot commodity right now. That could lead to proliferation of this sort of clause, and over time the weaknesses in section c that you’ve highlighted may be hammered out by custom.
One thing the current form of the agreement definitely does is give an engineer the power to veto aggressive use of a patent by a patent troll/NPE. That’s surely an admirable goal, and Twitter is making a strong statement about their stance on patents by being the first to offer this to engineers.
A fair point, but I haven’t seen many stats that say patents asserted by NPEs originate from companies like Twitter.
However, companies like Twitter can go bankrupt and be bought by an NPE. Since the inventors keep their veto even when the patent is sold, they can still stop the litigation. Correct?
This clause, if worked out effectively, will have a massive effect I suspect. It will be about execution, but the theory is there. This is brilliant application of game theory.
Upon closer inspection this agreement seems to be carefully drafted to give the Inventor very little – if any – ability or financial incentive to enforce it. The operative assignment language is tucked into Paragraph 1 and isn’t conditioned upon the Assignees’ compliance with other portions of the agreement. The Paragraph 2 language that says all Inventors must approve of non-Defensive Uses “without additional consideration” essentially eliminates any Inventor argument for monetary damages in instances where the Assignees don’t obtain Inventor approval. There’s also no provision that allows the Inventors to specifically enforce any portion of the agreement. Instead, the “sublicense” remedy in Paragraph 4 must also be without additional consideration, so the Inventors don’t have much financial incentive to cooperate with defendants who find themselves facing a non-Defensive Use infringement action.
I think there are a number of ways Twitter could have structured this differently if it truly wanted to tie its hands (rather than just creating that appearance).