Can my employer claim ownership of personal side projects under an employment NDA?

Can my employer claim ownership of personal side projects under an employment NDA?

Yes, your employer can often claim ownership of your side projects if your employment agreement includes an 'Invention Assignment' clause. While an NDA focuses on confidentiality, these assignment clauses legally transfer the rights to any intellectual property you create during your employment, regardless of whether it was developed on company time or equipment.

Key takeaway: An NDA is not the same as an IP assignment agreement. Always check your contract for 'Inventions,' 'Work Product,' or 'Proprietary Rights' sections, as these are the primary vehicles for employer ownership claims.

The Anatomy of IP Assignment Clauses

Most employment contracts bundle confidentiality (NDA) with intellectual property assignment. These clauses are designed to ensure that the value you create belongs to the entity paying your salary. Understanding the scope of these clauses is critical to protecting your personal work.

Common Red Flags in Contracts

• Broad Definitions: Phrases like 'any and all work created during the term of employment' are dangerously broad.
• 'Related to Business' Clauses: If your side project touches upon your employer's current or anticipated research, they may claim ownership.
• Resource Usage: Clauses that claim ownership if you use 'any company equipment, supplies, or facilities'—including your company-issued laptop.
• Time-Based Claims: Language that asserts ownership over work created 'during working hours or otherwise.'

Action Item: Search your contract for the word 'Inventions' or 'Assignment.' If you find a clause that covers work created 'during the term of employment' without a specific carve-out for personal projects, you are at risk.

State-Specific Protections (The 'California Rule')

In certain jurisdictions, state law provides a safety net for employees. These laws generally prevent employers from claiming ownership of inventions developed entirely on your own time, without using company resources, and that do not relate to the employer's business.

Action Item: If you live in a state with these protections, ensure your side project is strictly documented as being developed outside of business hours and on personal hardware.

How to Protect Your Side Project

If you are planning to launch a side project, you must take proactive steps to insulate your work from your employer's potential claims.

1. Audit Your Contract: Identify if you signed an IP assignment agreement.
2. Use Personal Hardware: Never use your company laptop, cloud storage, or software licenses for your side project.
3. Document Everything: Keep a log of hours worked on your project to prove it was done outside of your 9-to-5.
4. Request a Carve-Out: If your project is significant, ask your employer for a written waiver or 'IP carve-out' that explicitly excludes your project from the assignment clause.
5. Avoid Conflicts: Ensure your project does not compete with your employer's business, as this can trigger 'Duty of Loyalty' claims regardless of contract language.

Key takeaway: A verbal agreement with your manager is insufficient. Always obtain a written, signed document from your employer’s legal or HR department confirming they have no interest in your specific side project.

The Risk of 'Duty of Loyalty'

Even if your contract is silent on IP assignment, common law 'Duty of Loyalty' can still be used against you. If your side project competes directly with your employer or uses their proprietary data, they may sue for breach of fiduciary duty or misappropriation of trade secrets. Always maintain a strict separation between your professional duties and your personal ventures.

Action Item: Before starting, perform a 'conflict of interest' check. If your project uses the same technology stack or targets the same customer base as your employer, the risk of litigation is significantly higher.

Navigating the intersection of employment law and intellectual property is complex, but you don't have to do it alone. TermScore uses advanced AI to automatically analyze your employment contracts, flagging aggressive IP assignment clauses and potential ownership risks in seconds. Upload your agreement to TermScore today to gain clarity on your rights and protect your hard work.