Who owns the rights to customer suggestions?

Suppose a customer suggests an improvement to the software or SaaS offering of a company. The company likes the suggestion so much that it integrates it into its next upgrade. The question becomes, who owns the intellectual property rights associated with the suggestion that is integrated into the software or SaaS offering?

As a general rule in the U.S., the person who creates an idea, authored work, invention, process, mark, materials, etc. owns the related intellectual property. There are exceptions to the general rule. But, in the software and SaaS arena, absent a written agreement to the contrary, the general rule applies in most circumstances.

With ownership established by law, there are several ways to handle the intellectual property rights related to customer feedback through contracts and policies. Here are some of the approaches companies take:

"We don’t want your ideas"

One approach is to not solicit or accept customer feedback. I am not kidding. This is the approach that McDonald’s has taken with regard to its Customer E-mail Center Terms and Conditions. A rationale for this approach is to avoid confusion or conflict of ownership if a customer has the same idea as someone within the organization. As is the case for other organizations that have adopted this approach, McDonald’s policy is that if customers ignore McDonald’s request not to send ideas or suggestions to McDonald’s, the customers grant McDonald’s a license to use, copy, and display whatever the customers provide to McDonald’s. For a variety of reasons, such as the negative public relations associated with not wanting customer suggestions or ideas, most SaaS and software companies do not choose this approach. "We own your ideas"

At the other end of the spectrum, the recipient of the customer feedback can take the position that, “yes, we want your ideas and feedback and when you provide them to us, we own them.” One sees this approach in a variety of contexts, especially when either contracts or terms of service are not heavily negotiated or when the relevant idea, authored work, invention, process, mark, material, etc. created has little value to the creator. Radiant Systems is an example of a company that has taken this approach.

"We can use your ideas"

Somewhere in between the above two alternatives is the concept that while the customer retains ownership of the feedback, the recipient obtains a royalty-free right to use, copy, and display it. Adobe, Hewlett Packard, Amazon, YouTube, and others take this approach with at least some of their offerings and general public feedback.

Ignoring the issue

Sometimes contracts and terms of service ignore the customer feedback issue. Presumably, this is just an oversight or the companies are taking the position that they at least have some sort of an implied license to the feedback.

For many businesses, listening to and incorporating customer feedback into the product or service improvement process not only is good for sound customer relationships, but it just makes good business sense. Similarly, for software and SaaS companies, ensuring that the companies’ contracts adequately address intellectual property ownership and license rights to that customer feedback makes good legal sense.