by AMI FOGER, member, and KEVIN COUGHLIN, associate, Saiber LLC

You hear the familiar ding as a notification pops up on your screen. You see an email from an external sender pitching a new toy line — and you are struck when you realize the idea is similar to a new concept your team hatched at last week’s informal lunch meeting. What should you do? Better yet, what steps should your organization have taken before this email appeared in your inbox?

Increasingly, many companies are adopting “unsolicited ideas” policies so they are prepared for this type of scenario. These relatively simple policies can help organizations minimize considerable litigation and liability risk. They provide clarity to individuals considering submitting an unsolicited business idea to the organization and provide clear guidance to employees on how to act when receiving such an idea.

What are Unsolicited Ideas?

An “unsolicited idea” is an idea that is transmitted to an organization without a request or encouragement by the organization. A common example of an unsolicited idea is an email pitching a business idea (for example, a new toy concept, character, slogan, or ad campaign) that a a toy company receives from a member of the public, but was not originally requested by the company.

Legal Risks Associated With Unsolicited Ideas

Unsolicited ideas are fraught with risk. A person might submit an idea to an organization with an expectation that he or she will be compensated if the idea is used. If the organization ever markets a product that bears a resemblance to the idea, the person who submitted the idea could assert a number of claims against the business, such as infringement of intellectual property rights, breach of implied contract, and unjust enrichment. Even if the organization launched a product without knowing about or using the submitted idea, the organization might incur significant legal expenses defending against these and similar claims.

Creating and Implementing an Unsolicited Ideas Policy

Companies can mitigate much of the risk by creating and implementating a comprehensive unsolicited ideas policy. An unsolicited ideas policy should have two components: an external policy that notifies the public of how the company handles unsolicited ideas, and an internal policy that directs company personnel to proper procedures to follow when receiving unsolicited ideas.

External Policy

The external policy is typically included on a company’s website and is intended to notify the public of the company’s practices when receiving unsolicited ideas. The contents of the policy will depend on an organization’s general approach to unsolicited ideas. Some organizations encourage the public to submit ideas and their policies may outline specific procedures for submissions. Organizations taking this approach should consider implementing a policy that governs the process of submission, review, and eventual utilization of any submitted ideas.

On the other hand, many organizations prefer to discourage the public from submitting ideas and adopt policies stating that the organization does not accept or consider unsolicited ideas. An organization that seeks to limit submissions of unsolicited ideas might adopt a policy that includes the following terms:

1. The organization will be under no obligation with respect to the submission, including an obligation to review it;

2. The organization will not consider any submission to be confidential or proprietary; and

3. The organization may use or share the submission without compensation to the person who submitted the idea.

While there may be questions regarding the enforceability of these terms (as there is no way to ensure they will be reviewed prior to submission of an unsolicited idea), adoption and publication of such a policy will serve as a first line of defense against many of the risks associated with unsolicited ideas.

Internal Policy

The second component of a comprehensive, unsolicited ideas strategy is adopting an internal company policy that directs company personnel on the appropriate steps to take when receiving unsolicited ideas. For example, the policy might require personnel who receive an unsolicited idea to respond with an email directing the person who submitted the idea to read the company’s policies regarding submissions of unsolicited ideas. The policy might also seek to limit the sharing of such ideas within the organization until a binding agreement is executed between the organization and the submitter.

Regardless of an organization’s philosophy and culture, toy companies should adopt internal and external unsolicited ideas policies to manage the legal risks that arise from ideas submitted by individuals outside of the company.

Ami Foger is a member of Saiber LLC’s business services practice group. Foger provides counsel to businesses in a variety of industry sectors, including consumer products, on a wide range of corporate matters, including commercial contracts, licensing, mergers and acquisitions, advanced technologies, and corporate governance.
Kevin Coughlin is an associate in Saiber LLC’s business services practice group. Coughlin represents businesses and individuals in a broad range of commercial transactions.

This article originally appeared in the May/June 2019 issue of the Toy Book.