Can an employment NDA or IP agreement legally claim ownership of side projects built on my own time?

Generally, no, provided the project is developed entirely on your own time, without using company equipment, and does not relate to the employer's actual or anticipated business. However, overly broad contract language can create significant legal risk.

What states have laws protecting employee inventions?

States including California, Washington, Illinois, Delaware, Kansas, Minnesota, New Jersey, and North Carolina have specific statutes that limit an employer's ability to claim ownership of inventions created on an employee's own time.

How can I protect my side projects from my employer?

Use personal hardware, avoid company networks, document your development timeline, and request a written 'carve-out' or 'prior inventions' disclosure before signing your employment agreement.

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Can an employment NDA legally claim ownership of side projects built on my own time?

In most jurisdictions, an employment agreement cannot legally claim ownership of side projects developed entirely on your own time, using your own resources, provided the work does not relate to your employer's business. However, poorly drafted "Invention Assignment" clauses often attempt to overreach, creating significant legal ambiguity.

The Legal Framework of IP Assignment

Most employment contracts include an "Invention Assignment" clause. This clause dictates that any intellectual property (IP) created during your employment belongs to the company. While standard, these clauses are subject to strict legal limitations, particularly regarding work performed outside the scope of your job description.

The Three-Pronged Test

Courts generally evaluate ownership claims based on whether the project meets these three criteria:

Time: Was the work performed entirely outside of your standard working hours?
Resources: Did you use any company equipment, proprietary data, or trade secrets?
Relevance: Is the project directly related to the employer's current business or anticipated research and development?

Key takeaway: If your side project uses company-owned software licenses, servers, or proprietary code, you have likely forfeited your claim to ownership, regardless of when you worked on it.

Action Item: Audit your current contract for the phrase "relates to the business of the Company." If this phrase is not defined, it is dangerously broad.

Jurisdictional Protections

Several states have enacted "Employee Invention Statutes" that explicitly protect your right to own your side projects. These laws typically override contract language that attempts to claim ownership of inventions created on your own time.

State	Key Protection
California	Labor Code 2870 protects inventions made entirely on your own time without company resources.
Washington	RCW 49.44.140 prevents employers from requiring assignment of inventions unrelated to their business.
Illinois	765 ILCS 1060/2 protects inventions developed on your own time without company equipment.
New Jersey	N.J.S.A. 34:1B-265 limits assignment to work related to the employer's business.

Action Item: If you reside in a state without these specific protections, your contract is the primary governing document. You must negotiate specific exclusions before signing.

Red Flags in Your Employment Contract

When reviewing your contract, watch for these common "overreach" tactics that attempt to claim your personal work:

"Any and all" language: Clauses that claim ownership of "any and all inventions conceived during the term of employment" without qualification.
Broad definitions of "Business": Definitions that include "any business the Company may enter in the future."
Lack of Disclosure Schedules: The absence of an "Excluded Inventions" or "Prior Inventions" exhibit where you can list your existing side projects.

Key takeaway: Never sign an agreement that lacks a "Prior Inventions" disclosure section. This is your only formal way to carve out your existing work from the company's grasp.

Action Item: If you have an existing side project, list it in an addendum to your contract immediately. If the company refuses to sign it, you are at risk.

Best Practices for Protecting Your IP

To ensure your side projects remain yours, follow these operational protocols:

Strict Separation: Never use a company laptop, email, or cloud storage for personal development.
Document Everything: Maintain a timestamped log of your development hours to prove the work was done outside of business hours.
Avoid Conflict: Do not build products that compete with your employer. Even if you own the IP, you could be terminated for "breach of duty of loyalty" or violating a non-compete.
Clear Communication: If you are unsure, ask for a written "IP Waiver" from your manager or HR department.

Action Item: Set up a dedicated personal GitHub repository and use a personal email address for all side project communications to maintain a clear audit trail.

How TermScore Simplifies Contract Analysis

Navigating the legalese of invention assignment clauses is complex and risky. TermScore uses advanced AI to instantly scan your employment agreements, flagging overreaching IP clauses and identifying missing protections that could jeopardize your side projects. By providing a clear, plain-English breakdown of your rights, TermScore helps you negotiate with confidence and ensure your personal work remains yours.