Oops, you just gave your invention to Telkom

“UPDATE, 8 Nov 2013: Telkom have now changed the rules of the competition, and no longer require entrants to cede or licence their IP. Here’s the media release [http://www.telkom.co.za/about_us/mediacentre/press_release/articles/2013/article_1216.html] It’s not clear yet whether Telkom will cede IP back to entrants where they’ve already ceded IP to Telkom. I’d encourage anyone who entered the competition under the previous rules to get a signed cession of your IP from Telkom, since the new rules can’t reverse existing, signed IP cessions.”

For an entrepreneur, a great way to earn some cash and media coverage is to win innovation competitions. And luckily there are a lot of these competitions around. They’re meant to encourage entrepreneurship and problem-solving, and I think most of them achieve that. At Paperight, we enter them all the time. We’ve won several around the world.

Right now, Telkom is running one, an “innovation challenge” at the South African Innovation Summit. In this case, you enter your business or product proposal and stand a chance to win R120 000.

I very nearly entered a business process I developed. It would have been catastrophic.

Just by entering, I would have assigned all copyright, patents, trademarks and more to Telkom. I’d have essentially given them my process and any right I had to build or sell it in future. To get it back, I’d have had to go to court to argue the issue.

How could that be? Telkom have included a powerful condition in the competition T&Cs: the rules of this competition involve ceding all your intellectual-property rights in your proposal to Telkom upon entry. Here are the relevant clauses:

AND WHEREAS Telkom SA SOC Limited […] (“Assignee”) has acquired the invention from me/us/the company during the registration and entry to the Mega Challenge Competition;
NOW THEREFORE:
1. I/We hereby cede and assign the right, title, interest and invention to the Assignee with the right to apply for patents, registration of trademarks or any other Intellectual Property Right (“IPR”) in the Republic of South Africa and in any other country in the name of the Assignee.

(Read it here in full. If that link gets taken down or changed, download the original PDF here.)

Neither the original media release nor the the competition’s ostensible homepage (PDF version here, too) make it clear that entrants will be giving their work to Telkom, entirely, forever.

It saddens me to think that inventors and entrepreneurs may have already entered without understanding the consequences of what they’ve agreed to.

I contacted Telkom in the hope I’d misunderstood, and their reply is reproduced in full below. I had not misunderstood: entering does require that you give everything to Telkom (even the use of equipment you may own that is part of your proposal).

Telkom is a Company that operates directly in the Broadband innovation space. The organisation has many experts on the very subject matter that forms the essence of what competitors are asked to innovate on. Telkom does believe that there is an enormous possibility that entries received may resemble, wholly or in part, ideas and products that are already in development or existence within the organisation but not yet implemented or registered. Also, the likelihood that our group of experts would have already conceptualised many of the ideas that will come forth from participants in this competition is quite high.

In order to mitigate against any possible litigation matters that may arise from non-winning entrants pursuing compensation for products that may already exist or in development in the Company, we had to ensure that the legal requirements are quite stringent for the competition. The rule pertaining to the ceding of the IP rights is required to prevent a situation where a person/group/organisation submits an idea that we already have thought of, claims ownership, and then expects to be paid for it.

Telkom takes exception to the remarks that refer to the competition as “a deeply unethical IP land grab”. The Company hopes that competition entrants were not “unsuspecting” and that they, like the commentator in question, have accessed and gone through the rules thoroughly before participating. Telkom would also like to state that its media release served the purpose of drawing media’s attention to the initiative it was sponsoring and was never intended to supply the competition entrants with the rules.

So, to protect themselves from fights with disappointed inventors in future as they describe, did Telkom have an alternative? Certainly. One option is to be explicit that the competition is only for ideas, and make it clear that ideas submitted are in the public domain. Anyone can use them, and no one owns them. (This is the default legal status of any idea.) FNB did this recently with their “Ideas Can Help” competition. Alternatively, the conditions could have required a license that allows Telkom to use the idea in future without payment or attribution, but does not restrict the entrant from using it themselves.

They believe that entrants will read the terms and decide whether the prize is worth their giving Telkom their intellectual property. I don’t think that’s reasonable. Even if entrants do read the terms carefully, how many people really understand the legal meaning of words like “cede” and “assign”? Or appreciate that, even if they win nothing in the competition, they lose forever the opportunity to use their concept again, anywhere? In the world of goods and services, this is the kind of thing the Consumer Protection Act aims to prevent — a pity it doesn’t apply to prizes like this one.

We’re going to see more and more of these concept-harvesting prizes. Hopefully, people will get wise to them soon. For now, I hope this one is exposed widely so that entrants know what they’re doing, and that anyone who’s entered so far gets a formal, written retraction of the clauses they’ve agreed to.