Does an employment NDA allow my company to claim intellectual property rights over my weekend side projects?

Does an employment NDA allow my company to claim intellectual property rights over my weekend side projects?

An employment NDA is primarily designed to protect trade secrets, not to claim ownership of your personal inventions. However, most employment contracts include a separate 'Invention Assignment Agreement.' Your company can only claim your side projects if they were developed using company resources, relate directly to the company’s business, or fall under specific contractual language that you signed upon hiring.

The Distinction Between NDAs and Invention Assignment Agreements

It is a common misconception that an NDA (Non-Disclosure Agreement) grants an employer ownership of your intellectual property. An NDA is a restrictive covenant meant to prevent the unauthorized sharing of proprietary data. Intellectual property ownership, conversely, is governed by an Invention Assignment Agreement (IAA).

When the Company Owns Your Work

Employers generally have a legal claim to your work if it meets the following criteria:

• Scope of Employment: The work was created within the scope of your job duties.
• Company Resources: You utilized company hardware, software, proprietary data, or paid work hours to develop the project.
• Direct Relation: The invention relates directly to the company’s current or demonstrably anticipated business, research, or development.

Key takeaway: If you are coding a side project on your company-issued laptop, you have likely provided your employer with a strong legal argument for ownership, regardless of whether you worked on it during the weekend.

Action Item: Audit your current project environment. Ensure your side projects are developed on personal hardware, using personal software licenses, and stored on private cloud accounts.

State-Specific Protections for Employees

Several states have enacted legislation to prevent employers from overreaching into the personal lives of their employees. These statutes typically render any employment agreement provision that requires an employee to assign rights to an invention developed on their own time unenforceable.

Action Item: Check your employment contract for a 'Choice of Law' provision. If you live in a state like California, your employer’s attempt to claim your side projects may be void as a matter of public policy.

Red Flags in Your Employment Contract

When reviewing your contract, look for language that attempts to bypass these protections. If you see the following, you are at risk:

• 'All Inventions' Clauses: Language that claims ownership of 'any and all inventions conceived during the term of employment' without qualification.
• Broad Definitions of 'Business': Definitions that include 'any field related to technology' or 'any business the company may enter in the future.'
• Lack of Exclusions: The absence of a schedule or appendix where you can list your pre-existing intellectual property.

1. Review your contract for an 'Excluded Inventions' section.
2. If one exists, document your side projects and provide the list to your employer immediately.
3. If no such section exists, consult with an attorney to draft a formal disclosure letter to protect your work.

Key takeaway: Silence is not your friend. If you do not disclose your side projects, you leave the door open for the company to claim them later if they become commercially successful.

Action Item: Create a 'Prior Inventions' document today. List your side projects, the date they were conceived, and a brief description. Keep this as a dated record of your independent work.

How to Protect Your Future Projects

To ensure your side projects remain yours, you must maintain a strict separation between your professional and personal work. This is not just about legal clauses; it is about operational hygiene.

• Hardware Separation: Never use company-issued devices for personal projects.
• Network Isolation: Do not use company VPNs or internal servers to host or develop personal code.
• Time Management: Ensure your side projects are developed strictly outside of your contracted work hours.
• Disclosure: If your side project is in a similar industry to your employer, obtain a written waiver or 'no-conflict' letter from your HR department.

TermScore provides an automated way to analyze your employment contracts for these exact risks. By uploading your agreement, TermScore identifies overly broad IP assignment clauses and highlights potential conflicts with state law, giving you the clarity you need to protect your intellectual property before you sign or as you build your next venture.