1. I have done transactional work and litigation in and about these areas for nearly 30 years in Silicon Valley. Based on that experience, in practical terms, the risk you deal with in doing side work boils down to this: it is rare that an employer will make a claim to IP you develop on your own time and using your own resources but, when it does happen, its effect is pretty horrific.
2. California gives you more scope only because it has a law on the books that generally prohibits employers, on public policy grounds, from making claims to IP generated by employees working on their own time and using their own resources.
3. Even in California, however, an employee owes duties to his employer and one of those is that you don't misappropriate your employer's IP for your own use. This is why the California law says that you don't keep your side-project IP for yourself if it is in your employer's line of business or anticipated line of business. You can imagine the chaos that would result if any employee could state that, "no, that valuable IP that I came up with might have directly concerned what my employer was paying me to develop, but, in fact, I developed that particular key piece on my own time, etc."
4. In this sense, there is a common sense element to this area of law as applied in California. You typically will sense, without being told, whether the work you are doing on the side is capitalizing on the things your employer is doing or if it is truly unrelated.
5. That said, don't mess around with this sort of thing. It is both contract-specific and local-law-specific. That means general statements you hear from time to time (including those I just made) may or may not apply to you. If what you are planning to do has commercial value, then make sure to get it checked by a good local lawyer who can guide you through the pitfalls and explain alternatives. This is particularly so if you are not in California.
Is being no-longer-employed by your employer an absolute defense, assuming that you can prove that any IP in question was created after the end of your employment?
I'm thinking of the case where an employee does something that's either not of commercial value or lets it revert to his employer's ownership, but then quits and founds a startup (with an entirely new codebase) afterwards.
For example, Marc Andreesen writes a web browser under the terms of his employment with UIUC. He then drops out, moves to Silicon Valley, and founds a company with Jim Clark, presumably with a from-scratch codebase. They get sued for trademark infringement because they name it Mosaic Communications Corp, but UIUC has no legal claim to any of their source code or inventions developed after the end of Andreesen's employment, right, even though he gained quite a lot of experience working on web browsers there?
Or Larry and Sergey start Backrub at Stanford. It becomes Google before they leave Stanford grad school. Stanford obviously owns the PageRank patent because it was developed while they were still students, and they licensed it for a good chunk of shares. However, would Stanford own the original Google logo, forcing Google to redo it when they incorporated as a separate company? How about code - presumably Google licensed the codebase from Stanford, but if they hadn't and had started fresh instead, would Stanford have any claims on the grounds that Larry and Sergey had built an essentially identical product under their employment?
Short answer: there is no absolute defense in the fact of your no longer being employed when you do the allegedly offending activity.
BTW, I don't know enough about the Andreessen or Google examples to comment intelligently on the specifics there.
The copy on your site needs correcting.
The company has an even bigger fear: the employee will see where the market is heading, or where the company is heading, get there first in their spare time, and spin out a competitor. Or get a patent.
Owning spare-time IP that's related to the business seems reasonable to me. Of course, that assumes a good defintion of "related"...
* All software development work you ever do while employed by the company.
* All software development work you do using in any way any resource of the company, from computer to network connection.
* All software development work you do related to the business of the company that employs you.
* All software development work you do that isn't explicitly listed in an exhibit of exceptions you, the employee, fill out.
Before you start asking how enforceable this stuff is, note that unlike with noncompetes (which usually aren't practically enforceable), the way this issue is going to come up is, you're going to try to start a company, and your first official act of business is going to be to start defending yourself against legal actions from your employer that will torpedo any chance you have of getting funding for the year or so it takes for those actions to resolve themselves.
So, 'grellas may chime in and say "don't worry about this", in which case ignore me, but I wouldn't dick around with this issue. If my IP contract precluded me from working on my next company project, I'd get a clarified official path to working on it from my employer, and leave if one wasn't provided.
If your day job is Oracle DBA and your startup is iPhone apps or web design that still equals the same "computer stuff" to a judge.
A friend of mine became an Oracle employee when the company he worked for got acquired, and ended up needing to get approval from a long way up the org chart to be able to continue doing his phd, since the university had existing claims on ip in his phd research.
For quite a long time he described himself as " technically not being allowed to think anything..."
But they might not understand that being a sysadmin is as different to being a web designer in the evening.
As I understand it, Oracle's standard employment agreement includes language saying you agree that Oracle owns every idea you have while employed by them, whether on "paid hours" or not, whether related to databases or software in general or not - if you're a database engineer for Oracle and you invent a better tap washer, Oracle seem to think they'll own your plumbing related invention. There's workarounds for at least limited exceptions to that standard rule, but it's apparently unusual and required signoff at many levels above the typical workers management.
* Does my employer own this?
* Will they make me prove that in court?
The damnable thing is that, even if you really do own your work, having to prove that you own it in court may kill your startup by making you run out of money.
Copyrightable works are not included, and so software isn't.
Reason for edit: Fixed typos.
But the point is that most large companies will, on general principle, have you sign a piece of paper giving them everything they can imagine getting from you. Then it's up to you to figure out what existing laws says you can take back.
California is one state where their policy is NOT enforceable as far as their ownership. They may fire you over it but they won't own your work.
Then read your employment contract that you may have signed. It often contains legal terms like "work for hire", etc. that have explicit definitions. Make sure you read your contract after understanding these definitions.
The portions that are not easily enforceable include the following:
You contract may state that the agreement will continue to apply up to six months or one year after you terminate your employment. This provision is generally included by employers so as to prevent employees from coming up with patentable ideas or creating copyrightable works (like software) and "then" terminating their employment pretending none of that happened. Under that scenario, the IP you generate does indeed belong to the company.
On the other hand, if you start your work and develop IP strictly after terminating your employment, court will not honor "non-compete" clauses. This are designed to protect employees who are most likely to continue working in areas of their expertise, which is likely the same as what they were working on while they were employed.
Reason for edit: Fixed some typos.
Under that scenario, the IP you generate does indeed belong to the company.
Only if the "IP" falls under very specific guidelines. Writing an MMORPG at home while working at Zynga? No, Zynga can't claim squat. You don't need to wait to terminate employment in order to work on projects at home.
I'd love to hear cdibona's views on that.
On the one hand, it's not unreasonable that a company paying an employee to work for them should expect a certain degree of loyalty as long as they are taking a company pay cheque. That would reasonably include the employee not directly competing with their employer.
On the other hand, some employers are vast companies, and no one employee can possibly know everything that is going on. Is it really fair to penalise someone who creates a side project completely independently of work, just because it happens to relate to a company project of which the employee had no knowledge? If you allow that, without imposing a corresponding duty on the company to disclose everything they do to every restricted employee so that employees can understand the mutual obligations before making decisions that might be affected by them, doesn't that conflict with the most basic principles of contract law?
I'm not ready to give up my employment over this (though it does significantly lower the bar for what another organization would need to offer me in order for me to consider switching jobs :-().
When employment terminated and I intended to go work for a competitor, I was given a letter explaining that the business of my employer was "software and hardware" and was told verbally they would aggressively pursue that claim. The also notified the company I was going to work for who then withdrew the employment offer. Probably wouldn't have stood up in court if I had a few million to pay attorneys. As it was it cost me around $30,000 in legal fees to deal with and I was unemployable for a full year during a time when my expertise, which I had gained on my own time before working for these people, was very hot.
In the end it doesn't matter one whit what the law says because to maintain your rights you will have to fund lawyers longer than their staff attorneys are willing to harass you. In practice, you run out of money pretty fast.
You must not sign these sorts of contracts or work for these people in any way shape or form if you want to avoid big trouble. When they inform you of these clauses, regardless of what the state law says, they are warning you they intend to create legal problems for you if you ever try to work for anyone else.
Remember this one thing. If you do not have unlimited pockets you have no legal rights in a contest against a better funded party.
That sort of thing used to be called barratry, and it was illegal in a lot of jurisdictions (indeed, a felony in at least one state in the US).
It's also worth pointing out that this kind of abuse is less of a threat in jurisdictions that don't default to everyone paying their own fees. The behaviour seems particularly common to the US, where to an outsider the legal system can seem obviously flawed in this respect.
In any case, the advice to just not work for organisations that try to pull this kind of crap is sound. Even if this particular case doesn't apply, it's a good bet that they will try to screw you in other ways if this "we own your life" mindset is dominant in management/HR/legal at corporate level.
I once worked for a company here in the UK that got taken over by a US company, and one of the first things they tried to do was rewrite the contract so this sort of silly stuff was in it. To cut a long story short, I don't know what happened to the HR people who were originally responsible for the handover, because we never saw them again, but most of the original staff from the acquired company did stay and everyone had exactly the original IP clauses back in the contracts by the time we'd finished collectively re-educating the new owners about how much of our lives they were going to own.
I guess I'll mention the basic problem was I had a contract with them licensing one of my patents to them when I went to work there. They then told me they wanted me to transfer complete ownership of my patent to them when it became an issue that they wanted to license it to another company, which my license did not allow (non-transferable) and they didn't want to pay for. I said no, and so they fired me, but told me if I gave them the patent I could come back to work - blackmail!
The other company then wanted to hire me and deal with me directly, and that's when my former employer launched legal proceedings and sabotaged my new job offer.
That is when I found out that a qualified and experienced IP attorney who knows the law costs a lot more ($600/hr) than a regular family attorney ($100/hr). My attorneys were top guys nationally and were very clear that the company had absolutely no case whatsoever on any of their claims.
It soon became apparent though that the company attorney was scheduling meetings with my attorneys solely for the purpose of bleeding me dry. For example, company attorney would demand to meet with multiple members of my firm to discuss things, and then talk slow, fumble with papers and act stupid, at a cost of $2400/hr to me because there were 4 attorneys there. My attorneys told me straight up that that was what the deal was and they called the company on their BS but the company kept trying these tactics. Eventually the company got buried in their own bad karma and gave up, but it still cost me a fortune to deal with and stole a year from my life and caused incredible stress and dismay. Lesson learned was that it simply does not matter that the law is on your side and the other people don't have a case if they are acting in bad faith.
The good part was that I came out of it a lot wiser and since then I absolutely will not deal with any company that insists I agree to terms I don't feel are completely fair. That decision is still the right one, decades later, and completely changed the amount of BS I was dealing with in jobs. Any one who feels uncomfortable with any clause should not agree to it and be firm. If you have talent, you will find work for reasonable people and that work will be better paid and less stress than dealing with the jerks.
For example one person claims that by default what you do on your own time is owned by you. Sorry, that varies by jurisdiction and local laws. It is true in CA, but false in NY.
Several people claim that CA offers strong protections. That is true, but the protections are not nearly as strong as they are claiming.
And so on. If you, personally, care about this topic, talk to a good IP lawyer who knows the local laws for your state.
More precisely I was told that New York recognizes 3 types of employee relationships. They are hourly, contractor, and professional employee. The first two are obvious. You are aware if you have to punch in on a clock, or are a contractor. The default for software development is therefore the third.
As a professional employee there are no set place or hours for your employment. (That is why you don't get overtime.) Therefore anything that you do that could possibly relate to your employment is by default assumed to be a work for hire that took place during the course of your employment. There are admittedly some complications there. If a programmer writes a novel, that's going to not be a work for hire. If a programmer writes a program, that's likely going to be a work for hire. But there are gray areas. For instance a VB programmer by day who works a C device driver for Linux by night might have a case that their side project doesn't relate to their employment.
But just in case, virtually every New York company makes sure that employees sign contracts that clarifies any possible ambiguity..in favor of the employer. So the reality is that if you live in New York, you can't assume that you own your side project.
Incidentally this is the reason that the FSF (which is very careful on intellectual property) requires that they get copyright assignment both from contributers and from the contributers' employers. Because they don't want to get into a situation where they think they have copyright, but someone else has a legal claim to copyright that code.
He doesn't explicitly state if his open source work was entirely done on his own time and equipment or done during down time at work or such, but it might be the case in his post there.
It's strange. As you probably know, the work for hire exception to copyright comes from the 1976 Federal Copyright Act. It doesn't extend to times when you are not at work, or have a 24/7 idea for professionals. It's also the case that nearly every state has hourly, contract and salary/overtime exempt employment categories, yet no other states I know of extend work for hire to off hours in the absence of a contract. If this doctrine can indeed be found in NY State Law, it would seem to be a state regulating something that only Congress has a right to regulate, which is copyright law (Article I, Section 8, Clause 8).
It would be really interesting to see the text of the NY state law on this, maybe I'll be able to find it some time.
I am intimately familiar with that case. :-)
Now that I am doing substantial freelance and collaborative projects - my strategy is to work on either a) side projects with diffuse ownership b) pro-bono projects or c) projects where we don't own the product - the client does - while I plot my eventual jumping ship. I hope they won't go after me.
Going to another company is kind of ridiculous because they tell you in the interview that 'as long as you don't use any of the code that you work on during the day'. Any good coder knows that reusing code is part of the job - and it would be difficult if not insane to pretend that you can keep code out of side projects. My strategy, if I were to take such a job, would be to open source the code I do on my own time that I might use at the company - and get permission to use my own open source library.
However, I've done enough freelance hours to know freelancing isn't a bed of roses - a bed of roses with thorns. There is no concept of weekends or holidays with client deadlines...
Ah, health care...
I was worrying about being red-flagged just like you. But a lawyer told me that I should not be worried about this at all, and should just politely tell them something like, "I am missing copy of so-and-so contract from my file, can I get a copy." It proved to be even easier in my case.
Make sure to tell them why you didn't take the job.
 I suppose if it's clearly and completely unenforceable little harm is done
On the other hand, if the outside work provably used no employer resources, and provably is unrelated, then you can probably defend yourself against an action. But you really, really don't want to depend on that.
Get it sorted up front. Get an explicit agreement with your employer that non-competing work done without their resources and without impacting your work, belongs to you.
Otherwise it's murky and dangerous.
I've been told by a professional that "unrelated" generally means work that might be in a different profession - and that to a court, "computers" could be considered a single profession in this sort of case. Work done in the field of "computers" outside of work, and you work for a "computer" firm? Related. Ergo your employer owns the IP.
So yeah, don't depend on it. At all.
This is the advice I was given when verifying that I had the IP relating to my startup. To avoid any doubt, I got the IP signed over with a contract I paid a solicitor for. This cost money, but more importantly it helped that my former employer was willing to do this.
Thinking about it, this default is the sort of thing that stifles innovation. If the Government wants to promote innovation, perhaps they should change the rules.
Edited to add: I'm in the UK.
Cite, please. Your claim directly contradicts formal advice I have received from multiple employment law specialists in the UK, on several occasions over the past few years, most recently last year.
You're right that it's always better to be clear in the contract anyway, though.
Then it depends what your relation is to the company. Do you want to tell them you have more ambitions than being a loyal employee ? If your bosses are a 'general' management and not a founder etc., I very much doubt you will achieve anything positive yourself. I believe these contracts are a norm here from what I heard as well. (I quit in the end before starting my venture).
But I agree it's better to just get it agreed upfront.
The company owns any IP I produce, and I'm forbidden from working on side projects... without permission from my manager. So given permission (in writing) to start a project, it'd then be all mine.
Agreeing these sorts of things prior to spending time/money on your own stuff should avoid most of these legal haggles.
If the company won't accept your changes, then that is your signal that not only do they intend to own IP rights to perhaps everything you have done or will do, they also intend to litigate for those rights which you will have signed over to them with the agreement.
That is a good time to decide if you want to work there or not.
For folks who are thinking about changing companys but have yet to make the jump, ask your future employer to give you a copy of the employment agreement before you accept their offer. Have it reviewed by a lawyer. That way you can find out before you give notice that you weren't going to work there anyway.
At least for tech employees there is enough demand on the hiring side to give you an advantage.
Managing a contracted worker in your field of expertise, within the creative restriction that you cannot perform their work for them, is itself a highly educational exercise for someone with entrepreneurial interests.
Be sure to document well, though.
I get what you're saying from a financial and legal perspective, but it definitely does not solve the greater problem.
And yet everywhere they are treated with suspicion.
Let me know if you figure something out!
1. "Not work related" gives you an incomplete picture (not related to who's work?). That it is not related to your work is not enough. It must not be related to the employer's line of work, or anticipated line of work. Even if one person in the company is working on a related item, the your work may belong to the company. Even if one person in the company is anticipating the same, you have a potential issue. (See item 3 below for a related issue.)
2. The normal meaning of "related" also should not be taken at face value. If you are making burgers for MacDonald's while making a software side project, you are likely to be OK (and I am guessing that McDonald's would make you sign an employment agreement for these issues also). If you are in sales for a technical company and are making a software, they can easily be considered to be "related" by your company or the court.
3. Keep in mind that in any case the onus of proving is on you, so you the legal costs of proving you are clean would fall on you. That also means that in case of trouble, the court may initially side the employer and wait for you to prove you are clean to turn to your side.
Unless I'm reading this wrong: if you work on it solely on your time, with your equipment, it's yours (in California, anyway).
UPDATE: Oh, also it can't compete with their business.
If you invent something while adhering to the statutes stated here, and write software implementing that invention, then the invention would belong to you. But the software doesn't! Software is subject to copyrights, not inventions.
I started writing an application 10 years before the formation of a UK Ltd company, and when I joined them I let them use it.
I ended up having to negotiate and buy said software from the liquidator when it failed because it was cheaper than fighting the claim in court to prove ownership.
As many have said, get everything in writing.
Some companies try to put it in the contract, but it has no base in law and holds no legal obligations. I.e. you can ignore the clause safely.
Does this sound like I'm exempt having to hand over my IP for non-work related coding?
"All Intellectual Property developed, created or used by you or with your assistance during your employment with the Company in the context of the business of <Company Group> or any related activities shall be and at all times remain the property of the Company."
It feels like anything that is done outside of work that is not related to the company is exempt, but I'm not sure.
If that fails, write an addendum that neuters the document. "Nothing in this agreement precludes posting online, writing, blogging, coding, or contributions to open source software provided that no code or technology specific to company XYZ is disclosed." Most employers won't pay their lawyer to review your addendum and bang, you have your rights back.
Flow chart for analyzing employer rights: http://www.ontechnologylaw.com/2010/12/diagramming-a-legal-i....
I have different hobbies besides coding, so if I create a painting masterpiece my employer owns it? How about my latest culinary invention? The new can opener I just invented? Or my one month old daughter conceived in my spare time?
I call retardedness, but that's the law and we must obey it or fight to change it.
Suppose I make porn videos featuring animals and very old people - the company owns them, so I should put "A XYZ corporation" production on the title card?
(Point being that it depends on where you live.)
Specific to Canada - and Alberta - would be nice. :)
I'm trying to find more info on this, and can't find any relevant info on Google...
While this has "open source" in the title, it's still an excellent book related to this topic.
Another good thing about this book is that it draws analogies between software source code and law statutes, making it very easy for software folks to understand these legal issues.
1) Virtually every major technology company includes intellectual property assignment agreements in the paperwork they require new hires to sign. Most startups probably have the same policy, many perhaps without even knowing it, since its part of plenty of standard paperwork. Y Combinator's standard paperwork includes such a clause.
2) For all of the ones I've seen (and I imagine most respectable companies, and probably every company in California, for reasons to be mentioned), the paperwork claims ownership over anything developed a) during work hours, or b) using company owned equipment, resources, or IP, or c) anything that doesn't fall into the first two categories but that involves an area of business the company is active in, or has plans to be active in.
3) The reason California companies all have roughly the same language, is because those restrictions are what are specified in California state law. Given the nature of California in the tech industry, I would guess that influences what a lot of tech companies use as a general policy. The language is somewhat complicated by the third part of the equation, but generally I believe the company has to be able to show damages in such an instance.
4) There are no such general protections on the federal level, and I believe a majority of states do not offer those protections, meaning that in many states all work, and even in some cases all ideas, that you generate during your employment belong to your employer (if you signed a contract to that effect with the employer).
If it ever came to a dispute, id follow the guidance of mark zuckerberg and fight it out for the rights to my work.
Is the reason I just get sick of S.O. sometimse.