Can my employer claim intellectual property rights over side projects built on my own time?

Can my employer claim intellectual property rights over side projects built on my own time?

Yes, your employer can claim ownership of side projects if your employment contract includes a broad Intellectual Property (IP) assignment clause. Even without a contract, common law "shop rights" or "work-made-for-hire" doctrines may grant your employer rights if you used company resources, time, or if the project relates to their business.

Key takeaway: Never assume that "own time" equals "own property." If your side project overlaps with your employer's business scope, the contract language almost always favors the employer.

Understanding Invention Assignment Agreements

Most employment contracts for tech and creative roles include an Invention Assignment Agreement. These clauses are designed to ensure that anything you create that is relevant to the company's business belongs to the company. These clauses often define "Inventions" broadly to include software, designs, processes, and even business ideas.

Common Red Flags in Contracts

• Broad Definitions: Clauses that define inventions as anything "related to the company's actual or anticipated business."
• No Exclusions: The absence of a "Prior Inventions" schedule where you can list projects you owned before joining the company.
• Resource Clauses: Language stating that any work involving company equipment, software, or proprietary data is automatically assigned to the employer.
• Non-Compete Overlap: Clauses that prohibit you from working on projects that compete with the employer, effectively giving them a claim to your output.

Action Item: Review your employment contract for an "Exclusions" or "Prior Inventions" section. If it is blank, you may have inadvertently assigned your future side projects to your employer.

The Legal Framework: Statutory vs. Common Law

The extent of an employer's claim depends heavily on your jurisdiction. For example, California Labor Code Section 2870 provides significant protection for employees, stating that an employer cannot claim an invention developed entirely on your own time without using company resources, provided it does not relate to the employer's business or actual/anticipated research.

The Shop Right Doctrine

Even if you own the copyright or patent, the Shop Right doctrine allows an employer to use your invention without paying royalties if you used their resources. This is a non-exclusive license, meaning you still own the IP, but you cannot stop your employer from using it.

How to Protect Your Side Projects

To minimize the risk of your employer claiming your work, you must maintain a strict separation between your professional and personal output.

1. Use Personal Hardware: Never use a company-issued laptop, phone, or tablet for your side project.
2. Avoid Company Networks: Do not push code to personal repositories using company VPNs or Wi-Fi.
3. Document Everything: Keep a log of hours worked on your project to prove it was done outside of your 9-to-5 schedule.
4. Avoid Conflict: Ensure your project does not compete with your employer's current or future business roadmap.
5. Get a Waiver: If you are building something significant, ask your employer for a written waiver or a "clearance letter" confirming they have no interest in the project.

Key takeaway: If you are working on a project that could become a startup, consult an attorney to negotiate an IP carve-out before you start, not after you have built a valuable product.

Analyzing Your Risk

Determining whether your contract is overly restrictive is difficult for the average employee. Many contracts contain "boilerplate" language that is actually unenforceable in certain states, yet companies include them to discourage side projects. Understanding the specific nuances of your "Invention Assignment" clause is the first step in protecting your career and your intellectual property.

TermScore can automatically analyze your employment contract to identify aggressive IP assignment clauses, hidden restrictive covenants, and potential conflicts of interest. By uploading your agreement, you can receive a clear, plain-English breakdown of your rights and risks, ensuring you know exactly where you stand before you start your next big project.