Does an employment NDA cover proprietary systems developed on my own time?

Does an employment NDA cover proprietary systems developed on my own time?

An employment NDA typically does not grant your employer ownership of your personal projects, as NDAs are designed to protect trade secrets, not assign intellectual property. However, most employment contracts include a separate Invention Assignment Agreement that may claim ownership of anything you create, even on your own time, if it relates to the company's business or uses their resources.

Key takeaway: Never assume that because you worked on a project at home, you own it. The legal definition of 'scope of employment' is often broad enough to capture personal side projects.

The Critical Distinction: NDA vs. Invention Assignment

It is a common misconception that an NDA is the primary tool for company ownership of employee work. In reality, these are two distinct legal instruments:

• NDA (Non-Disclosure Agreement): Focuses on confidentiality. It prevents you from sharing company secrets. It does not inherently transfer ownership of your personal inventions.
• Invention Assignment Agreement: This is the "ownership" clause. It explicitly states that any intellectual property (IP) created during your employment belongs to the employer.

Action Item: Locate your employment contract and search for the section titled "Proprietary Information and Inventions Agreement" (PIIA). This is where the actual ownership claims reside.

The "Scope of Employment" Trap

Employers often use broad language to define what they own. If your contract states that the company owns any invention that "relates to the company's business or actual or demonstrably anticipated research or development," you are at risk. If you build a system that solves a problem your employer also solves, they may claim it is a derivative work of your job duties.

Factors that increase employer ownership risk:

• Company Resources: Using a company laptop, software licenses, or servers.
• Company Time: Working on the project during business hours or while on company premises.
• Business Relevance: The project competes with or complements the company's existing product roadmap.
• Trade Secret Usage: Incorporating any proprietary code, algorithms, or data you accessed through your employment.

Action Item: Keep a strict "air-gap" between your work and personal projects. Use separate hardware and never store personal code on company-managed cloud repositories like GitHub Enterprise or internal servers.

Jurisdiction-Specific Protections

Some states provide statutory protections for employees. For example, California Labor Code Section 2870 prevents employers from claiming ownership of inventions developed entirely on an employee's own time without using company resources, provided the invention does not relate to the employer's business.

• California/Washington/Illinois: Have specific statutes limiting the scope of invention assignments.
• Other States: Often rely entirely on the "four corners" of the contract, meaning the language in your signed agreement is the final word.

Key takeaway: If you live in a state like California, your contract cannot override state law regarding inventions created on your own time. Check your state's labor code for "Invention Assignment" protections.

How to Negotiate "Carve-Outs"

If you are a developer or engineer with active side projects, you should negotiate an "Excluded Inventions" list before signing your employment agreement. This is an addendum that explicitly lists projects you own and intend to continue working on.

1. Identify: List all existing side projects by name and brief description.
2. Disclose: Provide this list to HR or legal during the onboarding process.
3. Document: Ensure the employer signs off on this list as an attachment to your employment contract.
4. Update: Periodically update this list if you start new, unrelated ventures.

Action Item: If you have not already, create a written record of your personal projects and send them to your manager or HR via email to establish a "prior art" timeline.

Using Technology to Mitigate Risk

Manually parsing dense legal jargon is prone to error. TermScore uses advanced AI to scan your employment agreements, identifying aggressive invention assignment clauses and flagging potential ownership traps that could jeopardize your personal intellectual property. By running your contract through TermScore, you can instantly see if your employer’s language is standard or if it contains "overreach" provisions that threaten your side projects. This allows you to approach negotiations with the clarity of a senior legal expert, ensuring your personal work remains yours.