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A few thoughts on this:

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.




"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."

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?


An employer can easily find grounds to chase you for your strictly post-employment work if it can argue that such work misappropriates its proprietary rights (usually but not necessarily trade secret), whether or not the work you originally did for the employer had commercial value at the time you first did it. Starting with a from-scratch codebase may or may not offer you a shield but likely not - this is because the concept of "trade secrets" is much broader than the code itself and a former employer can (normally) easily argue that you are gaining an unfair competitive advantage from your superior knowledge of the confidential information relating to its proprietary product and that you would be misusing such knowledge (which, by law, belongs to the employer exclusively) in using it to do an allegedly independent implementation. The employer might find it hard to win such a case but this would not stop them from making your life hell for several years as you try to defend yourself from such an assault.

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.


(sidenote) http://www.grellas.com/acquisitions.html "We are sophisticated enough to help buyers and sellers in such deals valued at many millions of dollars and flexible ENOUGHT to provide cost-effective help for small business deals as well."

The copy on your site needs correcting.


> 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."

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"...




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