

Ask HN: Does my IP assignment contract kill all side projects? - b3nman

I'm currently in the process of co-founding a company that will be in the field of language learning software. I often have lots of ideas for projects and tinker with different things. I'm worried that some project that i believe is totally unrelated to my company will actually be owned by the company due to the ambiguous language in the IP Assignment contract supplied to us by our lawyers.<p>The part that worries me reads like this:
(Inventions are assigned to the company)
"regardless of whether they are conceived or made during regular working hours or at my place of work, (that) are directly or indirectly related to the Company’s business or potential business, result from tasks assigned to me by the Company, or are conceived or made with the use of the Company’s resources, facilities or materials."<p>Would this apply to a something like a birdwatching app i made on my own time on the weekend? Our lawyer says that is a possibility. Aren't there tons of people who work on multiple projects at the same time, how do they manage? Our lawyer says that investors would not look favorably on any narrowing of this contract. Why can't i just say that anything i work on that is directly related to the company is owned by the company? Why does the language need to be so broad?<p>Any and all opinions are greatly appreciated. Thanks!!!!
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nostrademons
Probably yes.

I've heard that some people have had success at negotiating down the scope of
their IP assignments to "Anything directly related to the company is yours,
anything not directly related is mine", but it comes down to negotiating
leverage. Basically, you need to be a bigshot in your industry and they need
to be a relatively small, desperate company for this to work. They have to
want you more than you want them, because otherwise they know that everyone
else will require equally restrictive IP agreements.

As for how people manage to work on side projects - usually, if they become
companies, the employee has to negotiate an explicit agreement with their
employer to retain ownership. For the Apple I, Woz initially believed that HP
owned the rights to it, and then some middle-manager at HP signed it away. For
Viaweb, I believe there was a panic at some point where some Yahoo pointed out
that it was quite possible that Altavista owned the rights to their code
(since RTM worked there one summer) and they needed to get some manager there
to sign off on it. PG may be able to tell you more if he's reading this.

Another common strategy founders do is write the prototypes and perform market
research while still employed, and then throw everything away and start fresh
when they form the company. Usually the scope of IP only extends to code (&
design docs & other written descriptions), because if it's not written down,
you can't prove when they dreamed it up. This was the Netscape strategy: write
Mosaic, quit and rewrite it as Netscape. They got sued for it anyway, but I
think it was for trademark infringement and not copyright infringement.

~~~
b3nman
This is my own company. I feel like i should be able to have my own side
projects later, but will investors get squeamish if they see I have a non-
standard agreement?

~~~
nostrademons
I dunno; I'd imagine that it depends on the investor. One of my previous
employers had the California clause ("except for inventions developed entirely
on their own time on their own machines" blah blah) even though they weren't a
California company, perhaps because their law firm was more familiar with
that.

One thing they probably _will_ get squeamish with is if the founders have
different IP agreements than the employees. They'll probably also wonder how
committed you are to the company if you're already thinking about side
projects...

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jmount
For correct legal advice you need to go to a lawyer or good law source (like
Nolo press). But in general unless you are in a state like California which I
think makes this kind of assignment of rights impossible you are correct in
reading this contract as killing all of your rights. Even in California most
of the employment contracts I have seen lay out some limits (like on company
time, machines or directly related to the business). Overall you may or may
not have rights (depending on what state or country you are in) and on top of
that you may or may not have lost your rights depending on what sort of
contract you have signed.

~~~
b3nman
so are basically all startup founders' IP locked into their own companies for
as long as they are with them?

~~~
jmount
Only if you sign a contract like that in founding or funding the company. Most
entrepreneurs I know actually start many things as once- so I would guess they
don't let set a clause get in and/or they set up another shell entity to own
their other work.

