weblawg.net: Information Society through the Prism of Law Costin on IP, IT, Media, and Business Law

A couple of months ago, I wrote a post on the subject of over-reaching employment contracts.

Click here for it.

Anyway, I promised that I would have the next part up within days and well, it’s been kind of crazy. Between work, articling applications, and being not so well, I haven’t had the time I’ve wanted to blog properly. Resuming now. Apologies offered all around, especially since I’ve been hearing that there are people out there actually reading this! [Comment, please! It doesn't have to be a complete essay, Derek, although I do expect a witty title from you... Also, Diggs are greatly appreciated.]

In the first post, I talked about someone whose employer demands assignment of previous or future competitive IP products of the employee to the employer. Broad time span, but limited applicability.

Let’s look at another scenario:

Employers often extend the IP/non-comp in breadth. In other words, they remove the related/similar/competitive qualifier. Consider this example:

The employee waives or the employer acquires rights to all intellectual property created or developed by the employee during working hours.

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Posted under Business Law, Information Technology, Intellectual Property

I would like to write, today, about a murky subject I’ve been thinking about for a few weeks. The various forms the germ of this post has assumed over those weeks all stem from a particular type of clause – possibly all too common – in employment contracts: the IP/non-comp/we-own-you clause.

I’m not against these in principle, as for the most part, they started off as common sense non-competition agreements: the employee agrees to the usual loyalty/fiduciary duties that are generally assumed at common law, and he employer may extend it slightly – often with token compensation – but rarely beyond what common sense would allow.

For example, the following might be considered reasonable (especially if balanced with some consideration):

• The employee agrees not to work for a direct competitor in a similar capacity for a period of six months following leaving this company.

• This prevents the purchase of proprietary information and trade secrets through employee poaching, which is a lot cheaper than licensing.

• The employer acquires the IP rights to anything created by the employee during their tenure with the employer if that thing is related to the employer’s IP or industry.

• This helps to enforce the loyalty/fiduciary duties of the employee.

What bugs me is what we’re now seeing instead of those generally reasonable clauses. In some cases, the reach of the employer’s claim extends in terms of time, both forwards and backwards. For example:

The employee waives or the employer acquires rights to all IP that the employee creates or develops forever (or for some other unreasonably long time), or has ever created, that is related or similar or competitive to what the employer does.

Let’s see that in hypothetical action:

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Posted under Business Law, Information Technology, Intellectual Property, Video Games, Virtual Worlds

In part II, I identified two types of antisocial behaviour which we attempt to prevent, restrain, correct, punish, etc., with law: “those which harm the integrity of society, potentially leading to its collapse; and those which alter the dynamic of society, potentially changing it into a different one perceived as undesirable according to present goals and values.”

In an effort to curb these, we develop public policy, from which flow laws.

Well, not exactly. In parallel with policy are imperatives, both ethical and moral, which provide the force behind the laws.

In other words, we identify our fears – undesirable impact on the integrity or dynamic of society – and then we get specific. We state our intentions, reasons, and accountability with policy, and proclaim our ethics – our rules, the “musts” – with imperatives. We wrap the imperatives in the policies and create law.

We do this for each area of social law (i.e. policy-driven as opposed to regulatory law)

We have a simple equation:

Policy + Imperative = Law.

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Posted under Business Law, Legal Explorations

We ended the first post in this series with the question, “Whence comes the ethical imperative, ‘Don’t be a Shyster!’?”

Now we will get into it:

I would like to draw an ephemeral line between moral and ethical laws - just follow me for a minute (and I will try to be specific in how I draw a difference between “moral” and “ethical”, at least for the purposes of this enquiry) - and take a look at the social goal that is promulgated by mercantile law. The division I am going to attempt will be a very small part of this particular enquiry and if you were to accuse me of being philosophically expedient, aloof even, on such a fundamental issue, I would be the first to agree.

You see, I only want to make some moral versus ethical distinction to avoid the debate of whether mercantile laws are natural law or some other brand ostensibly the result of the artifice of man, such as positive law. Instead, I will start by telling you what I think the difference is between morals and ethics and how this might dichotomize law. Then, I plan to pretend that the ephemeral line I’ve drawn is a giant opaque wall, on one side of which I will make an attempt to show that mercantile law is founded upon some ethicist imperative of neighbourliness.

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Posted under Business Law, Legal Explorations

Contract law has, at its core, the ethical imperative, “Don’t be a Shyster!”

We impose a lot of positive duties with law in a complex “evolved” society. These are the things we tell people they are expected to do, in contrast with laws that tell people the things they are not to do. For example, most people think of the relationship between law and society in Biblical terms: Thou shalt not kill, and so on. A positive corollary to it would be, Thou shalt preserve life.

The first example of a positive duty that comes to mind is the Duty of Care, by which I mean, of course, the imposition by law of an obligation to be aware of foreseeable circumstances and therefore not to be negligent (not to be confused with the Standard of Care, which is a matter of fact; see Law of Torts, 2nd ed., Chapter 2, Section E(4) - “Formulating the Duty of Care”, by Philip Osborne (Irwin, 2003)). Thus the rule, Don’t be negligent, is actuated through a positive Duty of Care.

But the Duty of Care seems to apply to section seven type stuff; it operates to ensure, at a civil level, the sorts of basic freedoms that the Charter gives us in s.7 (security of the person, etc.). The Duty of Care gives us the freedom to walk down the street without breaking your ankle on unsalted ice, or not to have a piano fall on your head, or not to find snail remains in your ginger beer.

But there is no guarantee in the Charter, or any other magna carta kind of document, not to get duped. Yet we do have such a freedom generated in civil law by mercantile law, in particular, by the rules governing contracts.Why does mercantile law create a positive duty not to be a shyster? If you abuse a position of dominance to draft a lopsided contract that takes advantage of the other person’s lack of sophistication or or negotiation skill, the contract fails! Are sophistication and negotiation skills not elements of business acumen? In other words, isn’t such a contract merely an example of the better business person using their talents? Why do we demand that the playing field be levelled in contract law?

Whence comes the ethical imperative, “Don’t be a Shyster!”?

I hope, as we explore this question, to look at the roots of this duty - to see that it is not so much a matter of policy and social engineering, but rather a matter of a society - as a collective organism - having a survival instinct.

Posted under Business Law, Legal Explorations