In last week’s post, I addressed the myth of idea ownership. I explained that no one can own an abstract idea. I also argued that, therefore, no one needs a “feedback license.” In a feedback license, a company’s contractors or partners give it a license to any suggestions they provide about the company’s products or services. Since no one can own an abstract idea, the premise behind a feedback license makes no sense. There’s nothing to license. But some companies still worry about receiving feedback; they worry that rights of the contractor or partner will keep them from using the idea. (A few worry about the Supreme Court’s failure to define “abstract” with any clarity in Bilski v. Kappos.) I think the concern is far-fetched in a relationship with another business (perhaps less so in a consumer relationship), but it’s not nonsensical. The main worry is that some sort of unwritten contract will restrict use of feedback. Fortunately, there’s a solution so easy that it’s worth the effort, even if the concern is far-fetched. Instead of a feedback license, draft a disclaimer of any obligation not to use feedback.

In other words, insert something like the following into your agreement with a contractor or partner:
“Company has not agreed to and does not agree to treat as confidential any suggestion or idea provided by Contractor (any ‘Feedback’), and nothing in this Agreement or in the parties’ dealings arising out of or related to this Agreement will restrict Company’s right to use, profit from, disclose, publish, or otherwise exploit any Feedback, without compensation to Contractor.”

Of course, if the agreement includes confidentiality obligations, you should carve them out of the clause: “Feedback does not include Confidential Information, as defined in Section __ of this Agreement.”

This disclaimer has two advantages over the feedback license. First, it’s not based on a false premise: on the idea that the contractor owns the feedback and therefore can license it. So parties and courts shouldn’t have trouble interpreting it. Second, a disclaimer won’t create messy problems for the contractor. In a feedback license, the contractor licenses something to the company. It’s hard to say what, but the contractor will ever after have to worry about the rights it’s given up. What if it someday creates technology related to the feedback: has it lost the right to exploit the technology? With a disclaimer, the contractor isn’t giving up any rights. It’s just agreeing that the parties’ relationship doesn’t impose any restrictions on the company regarding the feedback.

To put it another way, a feedback license creates a set of vague and confusing contract rights that probably can’t be sorted out without litigation, if they ever matter. A disclaimer avoids the creation of contract rights. It ensures that everyone keeps the right we all enjoy to exploit whatever abstract ideas we happen to hear (so long as we hear them legally).

[Since publication of this post, similar language has gone into the second edition of The Tech Contracts Handbook, in Chapter II.N. And you can find those terms in our forms library, ready for copying and pasting.]

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Special thanks to Professor Eric Goldman of the Santa Clara University School of Law, whose pesky comments led me to write this post.

© 2011, 2016 by David W. Tollen. All rights reserved.