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Wednesday, December 21, 2016

Prenups, Millenials, IP & Gender

Should prenups assigning ideas and inventions not yet born be enforced? In my book Talent Wants to be Free I analyze the vast expansion of pre-innovation assignment agreements in employment relations -- generic employment contracts that assign in advance any idea, whether patentable or not, whether copyrightable or not, whether it was conceived during work hours or not, whether it builds on company R&D or not -- to the employer. In related research, including The New Cognitive Property, Driving Performance, and Enforceability TBD: From Status to Contract in IP, I warn that these developments can have negative effects on innovation as well as problematic distributional effects. 

A related trend is the rise of couples signing prenups which pre-assign ideas and not-yet-developed IP --  films, songs, software, brands and apps - to the partner who plans to develop them. Today in the New York Times I write about this rising trend and in particular raise the question about potential gender inequities. Are millennial-dominated start-up communities prone to the following pattern: The wife holds a steady job while the husband works on his app. They share the risk now, but if they divorce, the husband reaps the rewards of his intellectual property, and the prenup ensures his ex-wife, often wife # 1, gets nothing.

Would love to hear your thoughts - comment here or in the comments section of the NYT.

Posted by Orly Lobel on December 21, 2016 at 11:11 PM in Gender, Information and Technology, Intellectual Property, Orly Lobel, Workplace Law | Permalink


I don't know enough to say much about the effect of non-compete agreements generally, but I can say that I doubt there is much to fear from covenants handing over IP. Simply put, IP isn't worth much by itself, and it isn't worth anything to an individual inventor anymore. High-profile suits between big players in a growing industry (Samsung vs Apple vs Microsoft) may make the headlines, but nowadays the patent office serves mostly as a graveyard for market failures and a measurable (albeit irrelevant) output metric for researchers and start-ups. Even when a patent-holder wins in court, the process takes too long to be much help. Armstrong died before he could enforce his patents on FM radio. The Altrex fishing reel design (the first to commercialize stationary spools) never sold much much until someone else improved it in 1954 when the patents expired. Polaroid collected billions from Kodak for patent infringement, but went bankrupt anyway even before digital photography became universal. Samsung's losses at trial haven't slowed their market ascendancy much or stopped Apple's marketshare decline. I have worked at a company that bought a portfolio of 30 patents for $375,000 and built with it a business that was bought back by the previous patent holder for $50 million; that captial gain didn't come from passive gains on the patents, I can attest.

Posted by: M. Rad. | Dec 25, 2016 7:08:50 PM

Suppose we agree that there's unfairness in those circumstances -- given that prenups have to have extensive procedural mechanisms to ensure they are voluntary or otherwise been unenforceable, does it matter?

This isn't a circumstance of an industry that universally puts bad contract terms in and refusing to accept those terms means significant hardship (e.g. credit card arbitration clauses). Most people get married without prenuptial agreements, if a man or a woman doesn't want to sign any sort of prenuptial agreement, much less when with an IP clause, there are millions of potential partners out there for them.

Posted by: brad | Dec 22, 2016 12:17:31 PM

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