Can my employer use an NDA to claim ownership of side projects built on my own time?

Can my employer claim ownership of side projects built on my own time?

Whether your employer owns your side project depends on the specific language in your employment agreement and the state in which you reside. While many jurisdictions provide statutory protections for work done on your own time, broad 'Invention Assignment' clauses can legally grant your employer ownership of everything you create during your employment, regardless of when or where it was built.

Key takeaway: Never assume your side project is safe. If your contract contains an overly broad IP assignment clause, your employer may have a legal claim to your intellectual property even if you built it on a personal laptop at midnight.

The Anatomy of an Invention Assignment Clause

Most employment contracts contain an 'Invention Assignment' or 'Proprietary Information and Inventions Agreement' (PIIA). These clauses are designed to ensure that the company owns the intellectual property (IP) you create for them. However, poorly drafted clauses often capture 'all inventions conceived or reduced to practice during the term of employment,' which is dangerously broad.

Common Red Flags in Your Contract

• Lack of 'Own Time' Exclusions: The clause fails to distinguish between work done during business hours and work done on your own time.
• Broad Business Scope: The definition of 'Company Business' is so vague that it could encompass almost any software or creative project.
• Equipment Usage Clauses: The contract claims ownership if you use 'any company equipment,' which can be interpreted to include a company-issued laptop, email account, or even a Slack login.
• 'Related to' Language: The clause claims ownership of anything 'related to' the company's current or anticipated business, which is often a catch-all for any tech-related side project.

Action Item: Search your contract for the word 'Inventions' or 'Assignment.' If you see language that does not explicitly exclude work done on your own time without company resources, you are at risk.

Jurisdictional Protections: The State-by-State Reality

Several states have enacted laws that act as a 'safety valve' for employees. These statutes generally invalidate employment contract provisions that attempt to claim ownership of inventions developed entirely on your own time, provided specific criteria are met.

If you live in a state without these specific protections, you are governed strictly by the four corners of your contract. In these jurisdictions, the employer's claim to your IP is significantly stronger.

How to Protect Your Work

If you are planning to build a side project, you must take proactive steps to ensure your ownership remains undisputed.

1. Use Personal Hardware: Never use a company-issued laptop, tablet, or phone. Use your own machine and your own personal cloud storage.
2. Maintain Strict Separation: Do not use company email, Slack, or internal communication tools to discuss or work on your side project.
3. Document Everything: Keep a log of your development hours. If you are ever challenged, you need proof that the work occurred outside of your 9-to-5 schedule.
4. Negotiate a 'Prior Inventions' List: If you already have a project in progress, list it in an 'Excluded Inventions' exhibit attached to your employment contract before you sign it.

Key takeaway: If you are building a project that competes with your employer, no amount of 'own time' work will protect you. Most contracts contain non-compete or duty-of-loyalty clauses that can be triggered regardless of who owns the IP.

The Role of TermScore in Contract Analysis

Navigating the legal jargon of an employment agreement is difficult, and missing a single clause can cost you the rights to your own innovation. TermScore uses advanced AI to instantly scan your employment contracts for aggressive IP assignment clauses, restrictive covenants, and non-compete language that could threaten your side projects. By identifying these risks before you sign, TermScore empowers you to negotiate better terms and protect your future work.