Can an employer legally claim ownership of side projects built on personal equipment?

In many jurisdictions, employers cannot claim ownership of side projects if they were developed entirely on your own time, without using company equipment or trade secrets, and do not relate to the employer's actual or anticipated business.

What is the 'Shop Right' doctrine?

The Shop Right doctrine is a common law principle that may grant an employer a non-exclusive, royalty-free license to use an invention created by an employee if the employee used company resources or time to develop it.

How do I challenge an overbroad IP assignment clause?

You can challenge it by proving the project falls under statutory protections (like California Labor Code 2870), negotiating an IP carve-out, or obtaining a written waiver from your employer.

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.

What types of documents can TermScore analyze?

TermScore analyzes any legal document including freelance contracts, employment agreements, residential leases, NDAs, brand sponsorship deals, SaaS vendor agreements, and rental applications. Upload PDFs, Word documents, or images.

How much does TermScore cost?

TermScore offers a free plan with 3 scores per month. The Team plan is $15/month for 30 scores, and the Professional plan is $50/month for 500 scores with team collaboration features.

Is my document data secure?

Yes. Documents are processed in memory and analysis results are stored encrypted. TermScore never shares your document data with third parties and you can delete your data at any time from your dashboard.

Legal steps to challenge an employment NDA that claims ownership of side projects built on personal equipment

To challenge an employment NDA claiming ownership of side projects, you must prove the work was created entirely on your own time, without company resources, and does not relate to your employer’s business. Many states, such as California, Illinois, and Washington, provide statutory protections that invalidate overbroad assignment clauses.

Understanding the Legal Framework for IP Ownership

Employment contracts often include "Invention Assignment Agreements" that are intentionally drafted to be overly broad. However, these clauses are not absolute. Courts generally look at three primary factors to determine if an employer has a legitimate claim to your side project:

Time: Was the work performed during your contracted working hours?
Resources: Did you use company-owned hardware, software licenses, or proprietary data?
Relevance: Does the project compete with or directly relate to the employer's current or anticipated business operations?

Key takeaway: If you used a company-issued laptop to write a single line of code for your side project, you have potentially created a legal "hook" for your employer to claim ownership. Always maintain a strict physical and digital separation between work and personal projects.

Action Item: Audit your current contract for "Assignment of Inventions" sections. Highlight any language that claims ownership of "all work created during the term of employment" without qualifying the scope.

State-Specific Protections

Several states have enacted legislation to protect employee innovation. If you work in one of these jurisdictions, your employer’s contract may be unenforceable to the extent it conflicts with state law.

State	Key Statute	Protection Scope
California	Labor Code 2870	Protects inventions made on own time without company resources.
Illinois	Employee Patent Act	Prevents assignment of inventions developed without company equipment.
Washington	RCW 49.44.140	Limits assignment of inventions unrelated to employer business.
New Jersey	N.J.S.A. 34:1B-265	Protects inventions developed entirely on personal time.

Action Item: Check if your employment contract includes a "Choice of Law" clause. If you live in a protective state but your contract specifies a state with weaker protections, consult with local counsel to determine if that clause is enforceable.

Step-by-Step Process to Challenge Overbroad Clauses

Document Everything: Maintain a log of hours spent on your project and a list of all personal equipment used.
Review the "Carve-Out" List: Check if your contract includes an "Excluded Inventions" section. If it does, ensure your project is listed there.
Request a Written Waiver: If you are concerned about a specific project, approach your HR or legal department to request a formal "IP Release" or "Carve-Out" letter.
Negotiate at Hiring: The best time to challenge these clauses is before signing. Request an amendment that explicitly excludes personal projects that do not compete with the company.
Seek Legal Counsel: If your employer asserts ownership, do not sign any documents acknowledging their claim without a review by an employment attorney.

Key takeaway: Never admit to using company resources for personal projects in writing. If you are challenged, focus on the lack of nexus between your project and the employer's business interests.

Action Item: Draft a "Personal Project Disclosure" document that lists your current side projects and explicitly states they were developed without company resources. Keep this in your personal files.

The Risks of Ignoring Overbroad NDAs

Ignoring an overbroad NDA can lead to "IP clouding," where potential investors or buyers of your side project will refuse to engage because they fear a future lawsuit from your employer. Even if you believe you are in the right, the cost of defending a "breach of contract" or "misappropriation of trade secrets" claim can exceed the value of your project.

Action Item: If you are planning to monetize your side project, perform a "clean room" audit to ensure no company code or proprietary methodologies were inadvertently included.

How TermScore Simplifies Contract Analysis

Navigating the dense legal jargon of employment agreements is difficult, but you don't have to do it alone. TermScore uses advanced AI to instantly scan your employment contracts, identifying overbroad IP assignment clauses and flagging language that puts your personal side projects at risk. By providing clear, actionable insights, TermScore helps you understand your rights before you sign, ensuring your creative work remains yours.