Can I Successfully Litigate Against This Former Employee?

[Philip T]

sponger, I have to tell you the whole approach looks sleazy from both sides. I do not mean that as any condemnation of you or your wife in that, just trying to give you what it looks like from sitting back on the outside. That is sort of what you are looking for, correct?

I follow you are doing some "gaming" analysis -- but even this whole pretend reverse roles looks sort of sleazy.

In the real world, straight up people act straight up. I and probably most of us have been around enough to know that much of the real is not straight up, of course. But no one has sympathy or wants to support sleaze -- especially when things hit court.

Your side has enough loose ends that look sleazy that you do not really want this going to court.

If your wife was smart enough to do all this -- she was smart enough to find out and figure what was valid IC status. If your wife had the business foresight to be able to market this product, she could have reasonably anticipated that that her employer/customer may have taken some offense, and could have sought to mitigate that problem in advance.

Not saying her employer/customer was not sleazy -- or at least looked that way, as well. They appear to have been dodging employment taxes. That is a sleaze factor thing. I have never ran across anyone having problems with the IRS who did not have some sleaze problems.

You are clearly smart folks, and may prevail in all this -- but really life is much easier and pleasant when you straighten up and fly right. Again, not trying to dog you -- just give an outside perspective of how all this looks.

[pghquest]

Originally Posted by sunsprit

pgh ... again, if you read the OP's background on this situation through both threads, the OP asserted that there was no proprietary information created or used by his wife for her new business start-up.

Actually he did. Let me quote what he said exactly.

Recieved a threat letter from the company's attourney demanding that she turn over all assets relating to her independant company, claiming she copied proprietary designs (that she produced for them), and reserving the right to sue for punitive damages.

He fully admits that she is using a modified copy of this "proprietary designs" that she producted. He never stated that the items are not proprietary. Furthermore, if your going to state that she "produced this for them".. AS AN EMPLOYEE.. the company is entitled to ALL designs. Look at it this way.

Even though the "copy" she is using, is not "exactly" the same as the original design.. the question comes down to, are they similar enough that a jury will believe that ANY PART of what she is using... was developed while "on the clock" as an employee.. Who knows.. we dont know what this "product" is, but based upon the fact that this poster is even here.. I'm betting they are prety darn close..

Found this, Inventions Made by Employees: Legal Rights - (http://smallbusiness.findlaw.com/employment-employer/employment-employer-other/employment-employer-other-ip-inventions.html - broken link)

Patents and the Employment Relationship: Who Owns Them?
The general rule is that, in the absence of an agreement to the contrary, an employer is entitled to a nonexclusive license to use an invention devised by an employee while he or she was working for the employer. As the U.S. Supreme Court has said, "where an [employee] during his hours of employment, working with his [employer's] materials and appliances, conceives and perfects an invention for which he obtains a patent, he must accord his master a nonexclusive right to practice the invention." In the context of patents, the foregoing rule is referred to as the "shopright doctrine." Although the employer is afforded a nonexclusive license to use the invention without paying royalties to the employee, the invention actually is owned by the employee, who has the right to exploit it commercially, such as by selling or licensing it to other users. Even where the employee works on the invention on his own time, if the employer's resources are used to any significant extent, this rule usually applies.

A wholly different situation is presented, however, where the employee is engaged by the employer to develop and work on the invention that later becomes the subject of a patent. In one case, an employee was engaged by his employer to work on a device that later became the subject of the employee's patent. The employer sought to obtain an assignment and transfer of the patent, arguing that the employee had invented the device in question while employed precisely to work on the device that became the subject of the patent. The court agreed with the employer, concluding that, while the employment relationship itself does not preclude an employee from making improvements in his employer's processes and obtaining patents for those improvements, if an employee's job involves inventing or devising such improvements, any resulting patents belong to the employer. Basically, in such a situation the employee is merely doing what he or she was hired to do.

Was she or was she not, hired to create this "proprietary" item.. we dont know.. I'm betting the employer here though knows what they are doing.. Hire someone to create the item.. then make them an independent contractor after the product is created for the purpose of turning them over to "sales".

[sunsprit]

pgh ... I think you're still playing exclusively in the land of intellectual property creation and venturing far astray from sponger's threads when you now bring forth patent laws and patentable work product.

At no time has sponger brought this situation to that type or level of product value.

Indeed, in sponger's original posts on the "use of company computer" threads ... posts 1 and 6 clearly identify that the employee used company computers and equipment to "create a product similar, but not copied, from what my company sells. Sponger also stated that he "didn't have a computer useage policy" for the employees.

Sponger's concerns were that the employee's sideline design(s) were still on the company computers and wanted to know if the company could use those competing designs since they were created on their computers and still resided there. He also wanted to know if the employee could derive full benefit from all of the work product on the company computers without paying any fees to the employer.

IMO, that all well qualifies as a non-exclusive "right" for the company to use those product designs that were created on ... well, we're not sure not from all the conflicting reports ... company time, or maybe not on company time ... but for sure, on the company's computers.

It well justifies the firing of the employee.

But it simply doesn't confer exclusive ownership and use rights to one party or the other.

As another poster pointed out above, both sides of this situation are pretty scummy for many incidental reasons. In the aftermath, I'd bet that either one would spend far more money in legal costs than the whole matter is worth ... just for the principle of their viewpoint. Can the employer successfully litigate against the employee? If a successful outcome is to come up with a net income benefit when the dust clears ... I doubt it. All of these people will be losers ....

Ethically, it wasn't sharp on the employee's part to (mis)use the employer's facilities. It wasn't a well run business on the employer's part, either.

And it still remains that the employer is on the hook for all of the appropriate taxes resulting from the employee's earnings. The employee, of course, is liable for their personal income taxes and portion of FICA ... but not the WC and UI taxes owed by the employer.

It's a sorry mess at best, and both parties would be well advised to get together with their accountants and settle up as needed with the respective tax agencies.