Paper ID
1709
Paper Type
short
Description
Working on side projects outside their work hours is a growing trend for IT professionals. While employees might believe that everything they create in their spare time belongs to themselves, it is not always the case. In the legal case of Alcatel v. Brown, the court ruled that the employer owned rights to employees’ intellectual property including ideas of their side projects. Relatively little is known about how innovation activities are affected when employees are not allowed to retain the ownership of their intellectual property. We leverage the Alcatel v. Brown case as an exogenous shock and apply a difference-in-difference model to examine how the legal case affects innovation activities in different counties. We find that following Alcatel v. Brown, both patent counts and entrepreneurial activities decrease in counties where employees’ ownership of their intellectual property is not legally protected. We also find that the dampening effect is more pronounced in IT-related industries. Our work contributes to the literature on innovation management while providing practical implications for policy makers on intellectual property law.
Recommended Citation
Wu, Xi and Pang, Min-Seok, "That’s Mine! Employee Side Projects, Intellectual Property Ownership, and Innovation" (2019). ICIS 2019 Proceedings. 5.
https://aisel.aisnet.org/icis2019/innov_entre/innov_entre/5
That’s Mine! Employee Side Projects, Intellectual Property Ownership, and Innovation
Working on side projects outside their work hours is a growing trend for IT professionals. While employees might believe that everything they create in their spare time belongs to themselves, it is not always the case. In the legal case of Alcatel v. Brown, the court ruled that the employer owned rights to employees’ intellectual property including ideas of their side projects. Relatively little is known about how innovation activities are affected when employees are not allowed to retain the ownership of their intellectual property. We leverage the Alcatel v. Brown case as an exogenous shock and apply a difference-in-difference model to examine how the legal case affects innovation activities in different counties. We find that following Alcatel v. Brown, both patent counts and entrepreneurial activities decrease in counties where employees’ ownership of their intellectual property is not legally protected. We also find that the dampening effect is more pronounced in IT-related industries. Our work contributes to the literature on innovation management while providing practical implications for policy makers on intellectual property law.