Question

You graduated as a mechanical engineer five years ago, taking a job as a trainee engineer with a major automotive manufacturer. Since you were not happy with this company, you left three years ago to work for Hallmark, a large UK-based engineering consultancy company with several important offices worldwide. Hallmark commonly contract-out their employees to other companies (many consultancies do this). These often involve Hallmark engineers working for many months (sometimes years) at the other company, forming close working relationships with the company's engineers and other staff, and being party to information and data that are confidential to the company.

Soon after you started at Hallmark, they contracted you to work for PartCo Ltd, a large company that designs and manufactures automotive parts (PartCo often contract with Hallmark for engineers when PartCo has important work that requires extra staff). PartCo is a worldwide organisation and does business with most UK, European and Japanese automobile manufacturers. You joined a group doing relatively routine, but highly demanding, work on clarifying the design details for a new range of constant velocity (CV) joints for front-wheel drives. This required computer-based

engineering simulations of the parts, testing of prototypes, and final assurance of the products before the designs were released for manufacturing.

Whilst you have been doing this, you got a really good idea for a completely new type of CV joint. You have worked on the idea at week-ends and now believe that it could revolutionise vehicle propulsion. You have continued to work privately on this idea after returning to Hallmark to work on other, non-automotive, jobs.

You have told no-one at either PartCo or Hallmark of your private activities on the new CV joints.

Questions

(i) What intellectual property (IP) is involved here?

(ii) Who owns it?

(iii) If you wished to secure and exploit rights to the new CV joint, how would you go about it?

(iv) Could you justify your actions ethically?

Answer 1

(i)The IP present in this case is:
• Design of CV joints for PartCo (including drawings, calculations etc.)
• Data concerned with testing of these joints (e.g. methods, data, models, assurance methods etc.)
• ‘New’ design of CV joint (including drawings, calculations etc.)

(ii) The design for the CV joints that you are working on is owned by PartCo. Whether considering the design as
protected by copyright or design right, the design belongs to the employer.
The data concerned with the testing etc. of the CV joints is not protected under IP law. However, morally, one would
argue that this data belongs to PartCo unless it is in the public domain.
Legally, the issue of who owns the new idea is dependent on the nature of the contract between you, Hallmark &
PartCo. The contract between PartCo and Hallmark (and therefore PartCo and you, as an employee of Hallmark) may
state that any of your output related to the job in hand belongs to PartCo, irrespective of whether it was completed in
work hours or not. In this case, PartCo could argue that the new idea belongs to them. However, a contract which
takes away people’s ‘natural rights’ cannot be legally binding- if it can be argued that this contract takes away your
natural right then PartCo cannot claim a legal right to the new idea.
It will be useful to share this legal information with students to lead them on to a discussion of what one’s ‘natural
rights’ are. ‘Natural rights’ are usually construed as those rights that one has automatically, simply in virtue of being a
member of the human race (e.g. right to life, liberty and the pursuit of happiness) Perhaps one has the natural right to
the fruit of one’s own labour and this cannot be forfeited simply by taking a job with a particular company. However,
you signed the contract and so must have been fully aware of this at the time- does this mean that you are bound by
its terms even if those terms are unfair?
However, the contract may not contain such a clause. In this case, the idea belongs to you, as long as you have not
used PartCo resources to help your design (this would mean that it was effectively developed while ‘at work’) and only
if the design is sufficiently different to the ones you are working on for PartCo (if not, this would breach design right
and possibly copyright).
Morally, it is not clear who owns the new idea. This is really dependent upon whether the idea really is a new one, and
whether you coming up with the idea can be deemed as and act independent from your work. This issue can be
explored further when discussing question (d).
(iii) There are two choices here really: Go it alone, or approach a company (PartCo/Hallmark/other) and get the financial
backing to make the design a commercial success. There will be legal and practical considerations related to each
choice:
Go it alone: The chances of you having enough money to exploit the design are very small, unless you are a multi-
millionaire. Also, PartCo are likely to try and claim that the design is theirs (either by arguing that you developed it at
work or by arguing that it is sufficiently similar to their existing designs). Pursuing this will probably lead to a lengthy
and expensive court case.
Approach a company: Approaching anyone other than PartCo may have the same result as going it alone: Although
another backer will have the financial resources to pursue a court case, they are unlikely to be willing to do so unless
they are assured of winning (which they should not be for the reasons given above) or that they are convinced that
the design is going to be so lucrative that it is worth them taking a chance and fighting it out in court (again, a bit
risky). Taking it to Hallmark might work- they may be able to argue that as the design was being worked on after the
contract with PartCo had ended that they were your employer and that the design therefore legitimately belongs to
them. However, it seems most prudent to approach PartCo and sell them the design.

(iv) Whether going it alone or approaching a company, if you regard the
idea for the new CV joint as your own, then it looks like you have every right to use the idea as you see fit, including
the right to profit from it financially. However, this would involve having to defend and prove the claim that the idea
was genuinely your own, and that it had been completed during your own time and this is difficult. If the new idea is
not your own then both going it alone and approaching another company is an act of betrayal. PartCo has trusted you
with knowledge and information and you have used this to your own financial gain. In fact, if the new idea belongs to
PartCo or Hallmark then you really have a moral obligation to hand it over.
It also might be worth discussing whether any of the above actions can be regarded as unprofessional, whether or not they are immoral.