Hackers code of collaboration

Hackers Code of Collaboration WORKSHOP SPONSORS

1

Hackers Code of Collaboration Presents

Presented by: Matthew Herd & Elizabeth Rosenthal

2

Expert  Panel    •  Louis  Rappaport  

•  Attorney  from  Blank  Rome,  LLP,  concentrating  his  practice  on  business  and  corporate  matter  

•  Speci?ically  emphasizes  emerging  and  middle  market  businesses  

•  Fred  Wilf  •  Attorney  from  Wilftek,  LLC,  concentrating  his  practice  in  the  ?ields  of  

technology,  intellectual  property,  business  and  commercial  law  

•  Rick  Nucci    •  More  than  15  years  experience  as  an  entrepreneur,  Chief  Technology  

Of?icer,  and  President  of  the  Philly  Start  up  Leaders  

4

Introduction  

•  How  many  people  have  been  involved  in  an  entrepreneurial  project?  

•  How  many  people  have  been  to  a  hackathon  or  start-­‐up  weekend?  

•  Does  anyone  know  the  difference  between  hackathon  and  startup  weekend?  

Survey  of  Entrepreneurs    •  Assume  someone  carries  on  a  

project  started  at  one  of  these  events    •  Who  can  use  the  materials?    •  Who  cannot  use  the  materials?  •  What  are  the  restrictions?  •  Who  has  the  right  to  participate  in  a  

future  company?  •  When  should  you  form  a  legal  

entity?  

SnapChat  Story      

•  One  founder  with  idea  who  brought  in  a  business  focused  co-­‐founder  who  in  turn  brought  in  a  coder    

•  The  2  newer  co-­‐founders  then  proceeded  to  force  out  the  initial  idea  founder  

•  The  2  newer  co-­‐founders  changed  the  name  to  snapchat  &  developed  the  company  to  what  it  is  today  

•  Initial  idea  founder  suing  the  2  newer  co-­‐founders  for  ownership  for  his  part  in  the  initial  company    

Facebook,    Part  I  •  Winklevoss  twins  allege  that  they  hired  Mark  Zuckerberg  

to  code  the  project  •  Zuckerberg  took  the  project  and  made  it  his  own,  cutting  

the  Winklevoss  twins  out  •  The  Winklevoss  twins  sued  because  Zuckerberg  stole  the  

idea  and  ultimately  settled  their  claim  

Facebook,  Part  II  •  Eduardo  Saverin  served  as  Facebook’s  Chief  Financial  

Of?icer  and  business  manager  during  the  website’s  launch  in  2004  

•  Later,  Saverin  appears  to  have  been  removed  from  the  company  and  his  ownership  interest  diluted  

•  Saverin  sued  Facebook  and  won  a  settlement  worth  approximately  $2.2  bn  as  of  the  Co’s  IPO  

Thoughts?  •  How  would  you  suggest  we  avoid  this  issue  in  the  future?    •  What  happens  if  you  work  with  a  couple  people  during  a  

weekend  event  and  create  an  idea,  but  then  you  go  off  and  start  a  company  that  ends  up  being  really  successful?    

•  Any  suggestions?    

Intellectual  Property  Breakdown  •  Patents  =  right  to  exclude  others  from  making,  using,  or  

selling  your  invention  •  Copyrights  =  any  original  work  of  authorship  •  Trademarks  =  any  words,  logos,  or  symbols  which  

identify  the  source  of  goods    •  Ideas  =  not  protected  on  their  own  

•  Just  because  you  thought  of  an  idea,  doesn’t  mean  you  are  entitled  to  ownership  of  the  company    

•  However,  if  you  do  work  on  something,  you  may  have  intellectual  property  

Default  Law  I    

•  Absent  an  agreement,  the  creators  of  a  patentable  idea  must  join  together  to  ?ile  for  a  patent.    Once  issued,  any  inventor  can  use  or  license  (non-­‐exclusively)  for  their  own  pro?it  

•  Copyrightable  works  also  owned  by  creators  and  can  be  licensed,  but  they  must  account  to  each  other  for  pro?its  

Default  Law  II  •  By  default,  the  company  has  no  rights  to  the  intellectual  property  created  

•  Must  be  assigned  by  the  creators  to  the  company  •  No  requirement  that  creators/founders  keep  information  and  inventions  con?idential  

•  Intellectual  property  is  not  the  company!  •  Ideas  ≠  ownership  of  the  company      •  Thus,  participants  have  no  right  to  participate  in  the  company  

Possible  Solutions  •  Unanimous  /  Majority  Consent  by  Creators  

•  Absent  unanimous/majority  consent,  the  Founders  shall  not  engage  in  any  of  the  following  activities:  •  Make  any  website  or  code  or  services  available  to  the  public  for  a  fee;  •  Accept  paid  advertising  on  any  website;    •  Accept  revenues  of  any  kind;  •  Incur  any  debt  or  seek  or  accept  any  outside  ?inancing;  or    •  Incur  any  ?inancial  or  contractual  obligations  or  liabilities  of  any  kind      

Possible  Solutions  •  Free  Use  by  all  Creators    

•  The  agreement  is  between  Hacker01  and  Hacker02.  We  agree  as  follows:  

•  Each  of  us,  individually,  is  free  to  use  any  programming  concept  shared,  discovered,  or  created  during  the  _________  project.    

•  Each  of  us  hereby  grants  a  full,  non-­‐exclusive,  free  license  to  the  other  to  use  any  code  or  binaries  from  the  above  project.  This  means  that  each  of  us,  individually,  is  free  to  use  anything  we  create  for  the  project  above  as  part  of  a  separate  larger  project  with  a  signi?icant  amount  of  additional  functionality.    

•  In  the  event  that  the  project  above  is  successful,  we’ll  take  reasonable  efforts  to  come  to  a  new  agreement  with  the  goal  of  creating  a  separate  entity  to  manage  and  develop  the  project  further.    

Possible  Solutions  •  Idea  creator  owns  all  intellectual  property  

•  Absent  consent  by  the  project  originator,  the  Founders  shall  not  engage  in  any  of  the  following  activities:  

•  Make  any  website  or  code  or  services  available  to  the  public  for  a  fee;  •  Accept  paid  advertising  on  any  website;    •  Accept  revenues  of  any  kind;  •  Incur  any  debt  or  seek  or  accept  any  outside  ?inancing;  or    •  Incur  any  ?inancial  or  contractual  obligations  or  liabilities  of  any  kind      

Proposed  Approach    •  To  avoid  the  ?ight  down  the  road  between  the  original  

creator  of  the  code  project,  business  idea  etc,  we  propose  some  rules  of  thumb:    

•  When  this  is  an  evolving  idea,  agree  that  all  participants  are  free  to  use  the  IP  •  When  starting  to  narrow  it  down  to  a  ‘real’  business  venture,  assign  all  

IP  to  the  venture  •  In  any  event,  there  is  no  right  for  participation  in  the  company    •  Remember  that  IP  assignments  are  defensive  &  not  offensive  

Hackers Code of Collaboration WORKSHOP SPONSORS

20

The ELC is accepting client applications for Fall 2014 drexel.edu/law/ELC

21