What makes an invention assignment clause unenforceable?

In states like California, Washington, and Illinois, clauses are unenforceable if the work was developed entirely on your own time, without employer equipment or trade secrets, and does not relate to the employer's current or anticipated business.

How can I protect my side projects?

Review your contract for IP assignment language, document your development process, avoid using company hardware, and request a written carve-out or 'Prior Inventions' disclosure before starting.

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Can an employment NDA legally prevent me from working on personal side projects during off-hours?

Q: Can an employment NDA legally prevent me from working on personal side projects?

An NDA alone typically protects confidential information, but most employment contracts include 'Invention Assignment' clauses that claim ownership of your side work. Whether these are enforceable depends on state law, specifically whether the work relates to your employer's business or uses their resources.

Can an employment NDA legally prevent me from working on personal side projects?

An NDA typically protects confidential information, but it is rarely the primary legal barrier to side projects. Instead, 'Invention Assignment' clauses in your employment agreement often grant your employer ownership of any intellectual property you create, even on your own time. Whether these are enforceable depends heavily on state-specific labor laws.

Understanding the Difference: NDAs vs. Invention Assignment Clauses

Employees often confuse NDAs with IP assignment agreements. While they frequently appear in the same document, they serve different legal functions.

Non-Disclosure Agreements (NDAs): These prevent you from sharing your employer's proprietary data, trade secrets, or client lists. They do not inherently stop you from building your own products, provided you do not use their protected information.
Invention Assignment Agreements: These are the "side-project killers." They state that any work, invention, or code created during your employment belongs to the company.

Key takeaway: An NDA restricts what you say, but an Invention Assignment clause restricts what you own. Always check your contract for a section titled "Proprietary Information and Inventions Agreement" (PIIA).

Action Item: Search your contract for the word "Inventions" or "Intellectual Property." If you find a broad clause claiming ownership of "all work created during employment," you are at risk.

State-Specific Protections for Side Projects

Several states have enacted statutes that limit how broadly an employer can claim ownership of your personal work. If you live in one of these jurisdictions, your contract may contain "overbroad" language that is legally unenforceable.

State	Key Protection Criteria
California	Labor Code 2870: Protects work done on own time, without company equipment, and unrelated to employer business.
Washington	RCW 49.44.140: Similar to CA; prohibits assignment of inventions unrelated to employer's business.
Illinois	Employee Patent Act: Protects inventions developed on own time without employer resources.

The "Three-Prong" Test for Enforceability

In most jurisdictions with protective laws, an employer cannot claim your side project if you meet these three criteria:

No Company Resources: You did not use company laptops, servers, software licenses, or proprietary data.
No Relation to Business: The project does not compete with your employer's current business or anticipated research and development.
Off-Hours Development: The work was performed entirely outside of your contracted working hours.

Action Item: Document your development process. Keep a log of hours worked and ensure you are using personal hardware and software licenses for all side projects.

Red Flags in Your Employment Contract

When reviewing your contract, look for these specific red flags that indicate an overreaching policy:

"All Work" Clauses: Language that claims ownership of "any and all ideas, concepts, or inventions" without limitation.
"Related to Business" Ambiguity: Phrases like "related to the company's actual or demonstrably anticipated business" are often interpreted broadly by courts to favor the employer.
Lack of "Prior Inventions" Disclosure: If the contract does not allow you to list existing projects you started before joining the company, you may be forced to hand over your pre-existing work.

Key takeaway: If your contract lacks a "Prior Inventions" schedule, you should create a written disclosure and have your employer sign off on it before you begin any new work.

How to Protect Your Side Projects

Review the PIIA: Identify the specific scope of the Invention Assignment clause.
Disclose Early: If you have an existing project, disclose it in writing to your HR or legal department.
Use Personal Equipment: Never use your work laptop, company-provided cloud storage (like a work Google Drive), or company-licensed software for personal projects.
Keep it Separate: Ensure your side project does not overlap with your professional responsibilities.

Action Item: If you are unsure about the language in your contract, do not sign it until you have requested a carve-out for your specific side projects.

Simplify Contract Analysis with TermScore

Navigating the legal nuances of invention assignment and NDAs can be overwhelming. TermScore uses advanced AI to instantly scan your employment agreements, flagging overbroad IP assignment clauses and identifying potential risks to your personal projects. Stop guessing about your legal rights and get the clarity you need to innovate with confidence.