Can an employer claim ownership of side projects developed on personal time?

Generally, no, provided the project does not relate to the employer's business, use company resources, or result from work performed for the employer. However, overly broad IP assignment clauses in employment contracts can legally grant employers ownership of your personal inventions.

What makes an IP assignment clause unenforceable?

Clauses are often unenforceable if they are overly broad, lack reasonable geographic or temporal scope, or violate state-specific labor codes, such as California Labor Code Section 2870, which protects inventions developed entirely on an employee's own time without company equipment.

How can I protect my side projects?

Use personal hardware, avoid company time, ensure the project is outside the scope of your employer's business, and negotiate an 'Excluded Inventions' list or a formal IP carve-out before signing your employment agreement.

A TermScore is an AI-generated risk rating from 0 to 100 that evaluates the fairness and risk level of any legal document. A score of 86-100 means the contract is highly favorable, while 0-30 indicates dangerous terms you should walk away from.

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Can an employer use an NDA to claim ownership of side projects developed on personal time?

Generally, an employer cannot claim ownership of side projects developed entirely on your own time, using your own equipment, provided the work does not relate to the employer's business or result from your assigned duties. However, broad IP assignment clauses in employment contracts can legally override these protections.

The Mechanics of IP Assignment Clauses

Most employment contracts include an "Inventions Assignment" clause, which is distinct from a standard Non-Disclosure Agreement (NDA). While an NDA protects trade secrets, an assignment clause dictates who owns the intellectual property (IP) you create during your employment term.

The Scope of "Work Made for Hire"

Under the U.S. Copyright Act, the "work made for hire" doctrine automatically grants employers ownership of works created within the scope of your employment. The legal battleground occurs when an employer attempts to expand this scope to include anything you create while employed, regardless of whether it relates to your job description.

Scope of Business: Does the project compete with your employer's current or anticipated products?
Resource Usage: Did you use company laptops, servers, proprietary software, or office space?
Time Allocation: Was the work performed during your contracted working hours?

Key takeaway: Never use company-issued hardware or software for personal projects. Even a minor use of company resources can provide a legal foothold for an employer to claim ownership of your entire project.

State-Specific Protections

Your rights vary significantly depending on your jurisdiction. Several states have enacted statutes that explicitly limit an employer's ability to claim ownership of employee inventions.

State	Key Protection
California	Labor Code 2870 protects inventions made on personal time without company resources.
Washington	RCW 49.44.140 prevents employers from requiring assignment of personal inventions.
Illinois	Employee Patent Act limits assignment to inventions related to the employer's business.

If you live in a state without these specific protections, you are largely governed by the "four corners" of your signed employment contract. Always check if your state has an "Inventions Assignment" statute before assuming your side project is safe.

How to Protect Your Side Projects

To ensure your side projects remain yours, you must establish a clear "paper trail" of separation between your professional duties and your personal innovation.

Review Your Contract: Identify the specific "Inventions Assignment" or "Proprietary Information" section.
Negotiate Exclusions: If you have an existing project, list it in an "Excluded Inventions" exhibit attached to your contract.
Maintain Strict Separation: Use a personal computer, personal email, and personal cloud storage for all side work.
Document Your Time: Keep a log of when you work on your personal projects to prove they were done outside of company hours.

Red Flags in Employment Contracts

Be wary of language that includes phrases like "any and all inventions conceived during the term of employment." This is a "catch-all" clause that is often legally overreaching. If you see language that claims ownership of inventions "whether or not related to the business of the Company," consult with an attorney immediately.

Key takeaway: If your contract contains an overly broad assignment clause, request an amendment or a side letter clarifying that your specific side project is excluded from the scope of your employment.

Assessing Your Risk

The risk of an employer claiming your work is highest when the project is in the same industry as your employer. If you are a software engineer at a fintech company, building a personal finance app on the side creates a high risk of litigation. If you are building a gardening app, the risk is significantly lower.

Before you commit significant time or capital to a side project, you should have your employment contract audited to identify potential IP conflicts. TermScore can automatically analyze your employment agreement to flag overly broad IP assignment clauses and identify whether your contract contains language that puts your personal projects at risk, allowing you to negotiate from a position of strength before you sign.