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The feedback license appears in many tech contracts. It usually gives the vendor a broad, perpetual license to any “feedback” from the customer’s staff: any suggestion about the vendor’s products and services. Sometimes the clause goes further, assigning ownership of feedback to the vendor. (Click here for a full-length example.) The problem is, no one can actually own an idea or suggestion. There’s no such thing as a patent or copyright on an idea. And if no one would own feedback, what does the clause license or assign? What does the feedback clause actually do?
What does it mean?
There are three possible interpretations:
- No Impact: The feedback clause has no impact whatsoever. That’s possible, but it seems likely a court would try to find some meaning.
- No Trade Secrets: The clause means feedback is not the customer’s trade secret. So if the customer would’ve had trade secret rights in a suggestion about the vendor’s product, those rights don’t apply. But that’s far-fetched because it’s hard to imagine a customer trade secret covering a suggestion about the vendor’s product.
- Real IP License: The clause grants rights to IP somehow related to the feedback. So if the customer invents something related to its staff-member’s suggestion about the vendor’s product, and it patents that invention, the vendor owns the patent or has a license. Or if the customer writes software related to the feedback, the vendor owns the copyright or has a license. But that’s also far-fetched because it’s hard to imagine the customer meant to transfer a copyright or patent through such a short, casual clause, with no royalties, accounting, etc. It’s also hard to guess at the connection necessary between the feedback and the patent or copyright. Feedback is an idea, which again can’t be patented or protected by copyright. So the patent or copyright would have to cover some other asset created by the customer, possibly loosely related to the idea.
None of these interpretations is fully convincing, but that’s all we’ve got.
If you’re the vendor, you might hope interpretation #3 applies (giving you some kind of IP license). And you might feel satisfied with #2 (no trade secrets) and cross your fingers that it’s not #1 (no impact at all). And maybe you don’t worry about it much if you’re well-informed about IP, since the apparent purpose of the clause – securing rights to the customer’s idea – isn’t necessary anyway. You can risk a meaningless clause. And if it’s not meaningless, you got something from the customer, though you might not know what.
The customer’s big feedback problem
If you’re the customer, however, the feedback clause could really hurt you. What if it’s interpretation #3? You’ve granted a license to a patent or copyright or possibly multiple patents and copyrights, though you have no idea which ones or whether you’ve given rights to present or future IP. Or, Heaven forbid, you’ve given the vendor ownership of company IP, in a feedback assignment – and again, you have no idea which IP. You’ve cast a shadow over your company’s future IP development, and you don’t know how bad it is, because you don’t know what feedback your staff might give.
For customers, the solution is, don’t give a feedback license or a feedback assignment.
You might be able to convince the vendor, since the feedback clause request probably rests on a misunderstanding. Most vendors who want the clause think the customer would own IP in any feedback it provides. It won’t. There is no IP, since no one can own an idea. It might also help to offer the vendor an alternate clause: one that should satisfy any lingering doubts about “ownership” of feedback without casting a shadow over your IP. I call it a Feedback Disclaimer:
Nothing in this Agreement or in the parties’ dealings arising out of or related to this Agreement will restrict Vendor’s right to use, profit from, disclose, publish, keep secret, or otherwise exploit Feedback (as defined below), without compensating or crediting Customer or the individual providing such Feedback, except to the limited extent that Section __ (Confidential Information) governs Feedback that constitutes Customer’s Confidential Information. Notwithstanding the provisions of Section __ (Confidential Information), Customer may not designate Feedback as its Confidential Information to the extent that such Feedback relates to Vendor’s products or services. (“Feedback” refers to any suggestion or idea for improving or otherwise modifying Vendor’s products or services.)
That’s it. That clause confirms that the agreement doesn’t limit the vendor’s rights to feedback. Not even the confidentiality clause limits the vendor’s rights. The clause also confirms that the customer knows the vendor will use feedback and has that right. And of course, it puts aside any trade secret concerns. But it doesn’t transfer IP in unknown assets that might not exist yet.
Even vendors should consider using the feedback disclaimer, since it’s clearer than a feedback license or assignment. And you don’t risk a meaningless clause.
David Tollen is the author of The Tech Contracts Handbook, the American Bar Association’s bestseller on IT agreements, as well as a lecturer at U.C. Berkeley Law School. He is an attorney and the founder of Sycamore Legal, P.C., a boutique IT, IP, and privacy law firm in San Francisco. His practice focuses on software licenses, cloud computing agreements, and privacy. And he serves as an expert witness in litigation about those same topics. Finally, David is the founder of Tech Contracts Academy and our primary trainer.
This post updates a series we published in 2011 and 2013. See, The Anti-NDA for Idea Submissions.
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