
IP Agreements - Safe to launch a startup while still working? - jsjenkins168

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jsjenkins168
This is something Ive been wondering about for several months now. I figured
the group here might have some useful advice.

Like most other tech companies, the company I work for required I sign an
Intellectual Property agreement stating that any ideas or work that I produce
while an employee is property of the company. So this clause would include any
work related to a startup. I know, this really sucks.

PG talks about this in several essays. Basically what it sounds like is that
if there is ANY indication that you started work on a startup while under an
IP agreement, VCs and acquirers will simply not touch you. Has any one else
found this to be the case?

From what it looks like so far, my options are:

1) Jump ship and not look back. This puts big financial strain on us though as
we don't have funding yet.

2) Leave as an employee, and rejoin as a part time contractor without signing
an IP agreement. This would pay the bills and rent in the early stages but
would probably be pretty draining physically. I also lose my unvested shares
in the company but meh.

3) The CEO will sign a document releasing our specific idea from the IP
Agreement. Has anyone heard of this happening with success before??

Or we could probably just start working in secret and building the product,
but this is probably not a good idea because we wouldn't have early customer
feedback. I definitely believe in "release early, release often". Or an easy
solution would be to get accepted into YC but I know chances of that are
pretty slim :(

Any advice is appreciated.

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nostrademons
Typically, employers just don't care about ideas that are outside their line
of business. After all, if I come up with a great social networking site but
my employer is a financial software company, stealing my social networking IP
will just be a distraction from their business activities. They're _worse_ off
for taking ownership of the IP.

 _Do_ tell your employer what you're doing and clear it with them. Aside from
being the honest thing to do, it also sets you up to get formal legal
permission. If they're not willing to do so, you know that immediately and can
weigh your options from there, including quitting or giving up the startup.

In some cases, your employer may even give you money, advice, and customers. I
once worked for a company whose CEO was the former CTO of Cybersmith (the
gaming cafe company that went bust around 1999). She came up with an idea that
was useful for Cybersmith's business but was not something Cybersmith was
willing to put resources into. Cybersmith became her first (and only, it
turned out) customer and gave them significant resources to fund development.

"3) The CEO will sign a document releasing our specific idea from the IP
Agreement. Has anyone heard of this happening with success before??"

This happens more often than you think. The most prominent example is Apple
Computer - Steve Wozniak was on HP's payroll when it was founded, and needed
HP to sign away their rights to the Apple I. One of my cofounders is in the
process of getting a similar release from Sony Entertainment, and I'll
probably need something similar from my employer (I have verbal permission
already).

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dhouston
agree with above, and just went through this a week or two ago. i got a letter
from my company saying they have no ownership stake in what i'm doing (an
extra complication was that i'm working part time in the office and part time
on my idea as part of an agreement we struck.) it cost me like $1,000 out of
pocket to get an attorney and a letter drafted saying my employer has no
"right, title, or interest" in my new venture and related
patents/applications/copyrights/etc., but in the grand scheme of things it's a
no-brainer to make sure the IP around the idea/new business is clean.

if you have questions about this shoot me an email at houston at alum.mit.edu
... it was a pretty straightforward process.

-drew

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nickb
Take a look at your employment agreement. It should have a clause in there
detailing exactly how the IP is appropriated. Some companies' agreements say
that they own ALL the IP while you're working for them, even the work done in
after-work hours. Some say that only the work done on their computers belongs
to them. Some agreements are ambiguous on purpose so they can come after you
if you leave and they think you came up with stuff while working for them
(which is very common... you see something your current customers need and you
decide to go solo). Also, where do your customers come from? Are they the same
as your employer's customers? They'll come after you. Are you competing with
your employer? They'll come after you! Have you signed a non-compete? If
you're in a similar/same area as your current employer, they'll come after
you.

Anyway, this can become a huge mess... talk to your lawyer.

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zkinion
IP agreements are the least of your worries. They don't matter that much and
are really really hard to enforce. Basically it matters if you steal some kind
of trade secret of a lot of existing clients/contacts.

Not having enough time to properly do your startup should be your main
concern.

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dhouston
this is dangerous advice -- regardless of whether or not enforcement on these
agreements is likely or possible, you will spook investors/acquirers if you
don't do your due diligence in this area and don't have the necessary
documents to prove ownership of your IP.

-drew

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zkinion
Aren't you the guy that emailed me? Sorry I wasn't able to meet up with you at
startup school.

I still don't think its that dangerous of advice. Sure, if somebody is working
in a similar industry, doing actual work on the start up in the work place,
then that'd be a problem. Businesses often do have large portfolios of IP,
many having not much to do with their business, but I don't think somebody is
going to have a problem working on something totally different, at home, on
their own machines, on their own time.

~~~
dhouston
right -- but if your employment docs say, for example, that your employer owns
all IP you create _including_ stuff you do on your own time and out of the
office (yes, a draconian clause, but not that uncommon!), you can be in big
trouble if your startup takes off and your former employer is legally entitled
to (i.e. you don't own) the IP you created -- either your employer can try to
lay claim to what you've built or your investors/acquirer will find out during
the due diligence process and not move forward as a result.

that said, i'm not a lawyer, and i'm sure others can provide related nightmare
stories -- but everything i've heard indicates it's really better to not screw
around, and to have a paper trail indicating that you own your IP.

-drew

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staunch
In California at least there are really good laws about this. No matter what
your contract says, it's important to remember that you cannot sign away your
rights.

The key is to not utilize _any_ employer resources. That means no using the
company-provided laptop, servers, office space, bandwidth, and especially time
(even lunch).

The other way to protect yourself is by keeping a work journal. Blogs are
nice, but it's best if it's handwritten and dated. This is what will save you
if it ever ends up in court.

Obviously I'm about as far from a lawyer as it gets, but this is what I know.

