Addressing the Special Concerns of Companies That Use Co-Working Spaces

By Sujata Yalamanchili, Esq. and Elizabeth A. Holden, Esq.

Co-working spaces look like cool, hip, innovative spaces, so you may have wondered if you can do your job in one of those spaces. Could a law firm or just an individual attorney sit at a table for a day, type away, and drink the free coffee or beer?

A recent article in the Oregon State Bar Bulletin considered this topic (“Risk Management Issues When Sharing Coworking Space,” by Mark J. Fucile, July 2018). It focused on two specific rules of professional conduct: the rule on confidentiality and the rule on conflicts of interest. These issues—and a third, protecting intellectual property—may concern attorneys as well as other professionals and potential co-working clients. Depending on the nature of the business, these issues may present significant loopholes that will need to be plugged before the individual or company will sign an agreement to license co-working space.

Confidentiality

The rule of confidentiality states that an attorney must make reasonable efforts to prevent the inadvertent or unauthorized disclosure or use of, or unauthorized access to, confidential information. In a co-working environment, physical space and even Internet access isn’t as secure as in a long-term tenant’s dedicated office space. Attorneys, however, often share office space; multiple practices may occupy a single a suite of offices and share a secretary or printers. But in this new collaborative space, without walls, consider how the professional is going to protect the information that she’s working on. How might she disclose information inadvertently? Is she sharing Internet access with other people in the space? Or does she have a private VPN? Also, when she’s on the phone, can she be overheard by other people?

The author of the Oregon State Bar Bulletin article encouraged attorneys to make a careful assessment of the space to make sure that conversations can’t be overheard and computer screens could be shielded from other people in the co-working space.

Conflict of Interest

If you’re working in a collaborative space, you’re supposed to be sharing ideas and information. Sometimes these collaborative spaces want industry advisors to be there routinely—maybe a marketing guru comes in every Tuesday from 1 p.m. to 2 p.m. Why not have an attorney come in and provide general guidance for other co-working “members” at some point during the day?

An attorney could be chatting with people and providing them with legal commentary, but they may think that the attorney is actually forming an attorney-client relationship. If the attorney is trying to create an attorney-client relationship, has she actually done a conflict check before providing information? Or is she, in every other sentence, saying, “I am not your attorney and you should obtain your own attorney, but generally speaking these are the things I would be careful of”?

Intellectual Property

Some co-working space has been designed specifically to encourage technology companies to collaborate. For example, some university space and government-sponsored space is designed so that the neural scientist and the electrical engineer can get together and develop the next great medical device. Sounds great, but this presents some pitfalls regarding intellectual property.

Patents. Technology that’s patentable or ideas that could evolve to become patentable are highly valuable for tech companies and engineering firms. In co-working space, people may be working on different technologies at one long desk. According to U.S. patent law, if you publicly disclose your invention or technology without a nondisclosure agreement, you might later lose the right to seek a patent. So, if an engineer is chatting at the coffee machine and telling a colleague, a partner, or anybody else who’s in the space, “I’m developing this whatchamacallit,” she may lose the ability to patent that later. And that can be worth huge amounts of money and have major consequences, especially with startup businesses whose intellectual property is their biggest asset. Therefore, the company that allows employees to work in such spaces may want to have special nondisclosure agreements in place.

A provision in the WeWork membership agreement says that no member will take, copy, or use any information or intellectual property belonging to other member companies or their members or guests, etc., including without limitation any confidential proprietary information. But that’s not an actual nondisclosure or confidentiality agreement. It just says the member won’t take the information and do something with it—that is, the member won’t steal the idea. But in the patent law merely disclosing the idea to somebody else may prevent the member from seeking a patent later. So the WeWork agreement probably isn’t sufficient to protect a member or his company in the patent world. Also, the agreement is between WeWork and the member—not between one member and another member.

Trade secrets. Let’s say you’re a company that sells widgets, and you have 500 customers. That customer list isn’t a patent, but it’s very valuable to you and you consider it proprietary. You don’t want your competitors to have that information. That’s a trade secret.

Under the laws of New York and some other states, in order to claim trade secret protection, you have to show that you took reasonable precautions to protect your trade secrets. If you’re in a co-working space sitting a few spaces down from someone who, unbeknownst to you, works for your competitor, and you’re on the phone with your customer, calling him by name and talking about this issue or that, or you tell someone at the coffee machine, Oh, I’m working late tonight on something for this specific customer, you have now disclosed that information. And you may have lost trade secret protection under the law.

Ironically, the purpose of co-working space is to promote collaboration and get those synergies that happen when really smart and energetic people are working across the table from one other. But the intellectual property law hasn’t caught up with what’s happening in reality. The WeWork-type agreements are probably going to become a lot more restrictive, and there will be a lot more control over how the space is used—or the law is going to have to catch up.