‘From time to time over the last 35 years, the US Congress has considered legislation that would shift the “balance of power” somewhat on ownership rights. None of the legislation has passed. Congress has typically left employment matters that do not directly affect Constitutional rights to the state legislatures – which in turn have left it to the marketplace to sort out rights between employers and employees.’

- Kenneth R Allen, partner, Townsend and Townsend and Crew, 1978

As a result of the situation that Allen described 34 years ago, intellectual property (IP) ownership in US companies has – until just recently – been unambiguous: workers are encouraged to harness novel ideas in their efforts to spawn marketable inventions; but employers contractually own the rights generated by their workers’ labour. Those terms have settled around the employer-employee relationship like a comfortable mould.

In April, though, social network Twitter dramatically broke that mould. In a special announcement that took far longer than 140 characters to explain, it unveiled plans to give its engineers and designers more power and control over the IP they generate under a new pact with employees called the Innovators Patent Agreement (IPA). Echoing Google’s corporate motto ‘don’t be evil’, Twitter has promised to use patents created under the agreement for purely ‘defensive’ purposes (to protect itself from litigation) and not ‘offensive’ ones (to launch lawsuits against other companies) – at least not without consulting those employees first.

‘What’s more,’ said Twitter vice president of engineering Adam Messinger, ‘this control flows with the patents. So if we sold them to others, they could only use them as the inventor intended.’ Details of the IPA are awaiting finalisation – pending consultation with Twitter staff – but it is planned to come into force later this year. Once in place, said Messinger, it would have retroactive effect, applying to all patents past and present.

Scepticism over broken ground

Standard employer-employee agreements on IP – typically contained in workers’ contracts – tend to be widely disliked in the open-source community, in which the source code for software products is freely exchanged for modification and reinvention. Key internet-based beneficiaries of this system include the WordPress blogging platform and Firefox browser. Twitter’s IPA could help the organisation find a happy medium between standard agreements and the open-source movement by leaving patents in the hands of their creators, even though it will incorporate those patents into its services. At any rate, it will surely make for uniquely high levels of IP engagement among Twitter’s workforce.

But if reaction to the IPA is any gauge, the scheme may not be quite as simple as Twitter’s management has claimed. Indeed, some IP experts are unconvinced by Twitter’s promises to wield its cache of employee-owned patents responsibly. And although Twitter’s move may be well intentioned – and is likely to yield positive publicity – debate has flourished over whether the agreement really will empower inventors.

One of the most thought-provoking assessments of the IPA has emerged from US technology expert Marco Arment, inventor of Instapaper: a web tool that enables busy people to log web pages for later reading – almost like a customised journal. In a blog post, Arment said that the IPA places no restrictions on Twitter from launching countersuits in any instance where it is sued itself. As an example, Arment highlighted pull-to-refresh, a technical feature of numerous smartphone apps that enables users to update content by simply scrolling to the top of a page and flicking an onscreen icon. Twitter recently purchased a pending patent application for pull-to-refresh, and will own IP Rights in the tool if it is approved.

‘Suppose I implemented pull-to-refresh in Instapaper, then Twitter released a new read-things-later product called Instasaver, and I sued them for trademark infringement,’ Arment conjectured. ‘They could countersue me for patent infringement on pull-to-refresh.’ In other words, Twitter may – in theory – still be free to launch offensive countersuits, if it can demonstrate that they are for defensive purposes.

A question of flexibility

Arment further speculated that, even if those ‘defensive purposes’ were restricted to patent litigation, ‘what if it’s your perfectly valid, innovative patent that Twitter has wilfully infringed upon, then you sue them, and they countersue with other patents that you didn’t even know about that seem obvious and invalid?’ Arment therefore concluded that the IPA is a ‘nice sentiment’ – but the ‘loophole potential’ is too great.

In a statement reacting to Twitter’s announcement, Karl Barnfather – patent attorney at UK law firm Withers & Rogers – argued that the IPA could harm Twitter’s commercial development and flexibility in the business landscape. ‘In taking this decision,’ he said, ‘Twitter is sending a message to the marketplace that it is committed to sharing IP Rights; however this could lead to a number of problems.

‘For example, the company could find it more difficult to draw up inter-company commercial agreements in the future because, in certain circumstances, the inventor would need to be included as a party – and this individual may not even still be employed by the business.’ Barnfather added: ‘The fact that the inventor owns the patent rights could also impact on the perceived value of the business if it is later seeking financial investment, or wants to dispose of some assets.’

And are employees really interested in patent rights? Not according to Barnfather, who argues that most inventors are more interested in the ‘kudos’ of being credited for their innovations than they are in the paperwork. (Although NewLegal Review thinks that Trevor Baylis would have one or two things to say about that.)

So, how could Twitter’s IPA affect the technology industry as a whole? US lawyer and businessman Dale B Halling – author of The Decline and Fall of the American Entrepreneur: how little-known laws are killing innovation – said in a statement that the pact could yield the unintended consequence of forcing bosses to rely upon trade secrets as a more airtight means of IP protection. ‘Trade secrets decrease innovation, because the information is not shared,’ he said. ‘Inventors cannot build on the work of previous inventors and they are more likely to waste resources rediscovering other people’s work – ie, reinventing the wheel.’

For previous NewLegal Review coverage of Twitter’s IPA, click here