Who Owns Hackathon Inventions?

Harvard Business Review

I recently served as a mentor at a hackathon and came away shaking my head. In hackathons, teams compete intensively, typically for just a day or two, to create software (and sometimes hardware) solutions. What struck me was that most of the participants — young, tech-savvy programmers, engineers, and others — seemed largely uninformed or unconcerned about intellectual property. Participants tend to come from many different organizations, and often view hackathons as recreational social events, so perhaps they can be forgiven for not focusing on IP. But the companies they come from need to pay attention — or risk losing valuable IP.

Hackathons have tremendous potential to create disruptive technologies, attract young talent, and identify leaders. Twitter and GroupMe both originated in hackathons. A savvy, forward-thinking business might therefore run its own hackathons internally. Whatever inventions come out of an internal hackathon are clearly owned by the firm and go into its win column.

But suppose those same creative, talented employees like to relax by participating in public, external hackathons. They are going to form teams with people they may have never met before, brainstorm together, generate at least a proof-of-concept prototype product, and then publically disclose it, all in the course of one weekend. The disclosure may torpedo any chance of patenting, at least outside the US, whatever they invent. Short of that, it may be unclear who contributed what, and who has proper claim to the invention.

So in addition to, or in lieu of, running internal hackathons, a savvy business will take a proactive approach to its employees' participation in external hackathons.

One option is simply to prohibit employees from participating in external hackathons. This approach probably makes the most sense for certain types of businesses, such as those concerned with software development. But for many businesses the danger of such a strict policy is that it can alienate talented employees interested in participating in hackathons on their own time.

An alternative is to be proactive and reasonably liberal about employees' participation in external hackthons while still managing potential IP risks and opportunities of the business. For example:

Prior to participation

  • Review employment agreements to be sure they include confidentiality and post-employment non-compete provisions that would extend to hackathon participation, as well as an obligation to assign inventions to the firm;

  • Make clear that the firm has a right to know or be informed in advance of participation in any external hackathon, including identities of the organizer and sponsor of the hackathon, and its official rules;

  • Offer or require training by IP counsel concerning the IP risks associated with public disclosure. For example, IP counsel can advise participants regarding the absolute novelty requirement for patentability outside the US, whereby certain types of public disclosure made prior to filing for patent protection preclude entitlement to patent protection in those countries;

  • Determine whether the hackathon's focus is likely to be related, possibly related, or unrelated to the firm's business interests, and limit participation to hackathons in the "likely to be unrelated" category; and

  • Determine if the hackathon organizer and/or sponsor has expressly disavowed any claim to ownership of, and any compulsory license to, inventions made in the course of the hackathon. If not, consider barring participation.

Following participation

  • Review whether the new technology is in fact related, possibly related, or unrelated to business interests;

  • For new technology that is deemed to be related or possibly related to the firm's business interests, IP counsel should record the date, mode, and content of any public disclosure, as well as the identities, affiliations, and intellectual contributions of each of the team members. This may be very difficult to accomplish if the participant was not trained and engaged to gather this information; and

  • Consider further development and/or filing for patent protection; or consider making formal release to the participant of any IP interests the firm may have in the invention. This is the point at which issues of ownership and control of new IP get really interesting, for example when co-inventors have different affiliations and obligations. Firms will have to approach further development and IP protection strategically. The firm may not want to disclose its interest in the technology to another party; it may then seek to design around or improve upon the initial invention so that it can take full or effective control of the IP. Alternatively, it may be necessary to investigate inventorship and obligations of co-inventors outside the firm. Such investigation will likely signal to outside co-inventors, and the firms to which they may be obligated to assign their inventions, that the firm views the technology as valuable. There may be paths forward to collaborate, such as a cross-licensing agreement or joint research/development agreement, or a real party in interest (outside co-inventor or assignee) may choose to let another such party take the lead in investment of energy and resources. In yet another scenario, a real party in interest may be unwilling or unable to cooperate, thereby complicating protection of IP. A formal release of interest by the firm to the participant may seem distasteful, but it may be beneficial to the firm-participant relationship, and such release will, of course, be subject to employment agreement provisions alluded to above.

Internal hackathons may be one way to focus and exploit, in a highly productive way, the phenomenon of "stealth innovation" — in which employees develop solutions to problems outside of formal channels. See the HBR blogs "The Case for Stealth Innovation" and "Stealth Innovation Is Not a Solution." This approach is attractive and rewarding for both the organization and its innovator employees. The message of internal hackathons is: We're interested in what you are thinking and we value your creative drive.

The challenge is to maintain such goodwill when it comes to managing participation in external hackathons. Whereas internal hackathons may generate a credit in goodwill for employees who are forbidden to participate in outside hackathons, if internal hackathons are not feasible, then a well-thought-out and well-communicated hackathon policy is crucial to managing corporate intellectual property interests and employee relations.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.