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Ask HN: Is it legally enforceable for your company to own your IP?
41 points by adambutler on Jan 27, 2014 | hide | past | web | favorite | 54 comments
I work for a company that claims it owns all development work that I do in my spare time. I don't use any office equipment, software or accounts for this work. Is this legally enforceable?

Note: I work and live in England

I can actually answer this decisively.

Don't take legal advice from anyone but a lawyer that you are paying.

Seriously, this depends on a variety of factors and is especially dependent on your local laws, the specifics of the contract and most importantly, precedent.

Find a lawyer, give them your contract, detail your side project and get an opinion.

Don't take legal advice from anyone but a lawyer that you are paying.

Yes. I’m in the UK and I’ve dealt with this issue more than once, including taking formal legal advice. I’m not going to add fuel to the fire by sharing exactly what happened in my specific circumstances, but this issue has subtleties and in some cases proposed contracts did get changed after the advice I received.

Seriously, if you’re talking an employment contract, or a side project with enough personal value or potential that this question is relevant, you could be talking about many thousands of pounds if things go wrong. You’d be crazy not to spend a hundred or two taking proper advice on it. A single session with any decent employment lawyer will probably be all you need — and if it isn’t, that’s even more reason not to rely on random advice from HN.

Give this man a cigar, he knows how the game is played.

First principles tell us that any work created in the course of employment is automatically owned by the employer (s.11(2) CDPA '88) except where there is an agreement to the contrary.

Unfortunately the phrase 'course of employment' has been held to have a broad meaning. The 1989 UK case of Missing Link Software v Magee held that where an employer could show that the work created was one that could be reasonably contemplated as part of the employee's duties, the employee would not have a claim to it. So if you're creating software programs in your spare time and your job description includes writing software programs, then the potential is that you wouldn't have a claim on them (although it depends on how closely the outside work is aligned to the work duties by the looks of things).

All the above doesn't require there to be any explicit clause in the agreement covering all IP rights. If there is such a clause, then I don't immediately see any reason why it would not be enforceable (although http://www.dyoung.com/article-ownership suggests the clause would be unenforceable).

All in all, I'd see a lawyer. If you want me to look at the agreement feel free to get in touch. I'm an in-house lawyer but will be able to give you some initial pointers and suggest a lawyer (I know a good firm in London who will provide an initial consultation for free).

> So if you're creating software programs in your spare time and your job description includes writing software programs, then the potential is that you wouldn't have a claim on them (although it depends on how closely the outside work is aligned to the work duties by the looks of things).

"Creating software programs" seem infinitely broad though, almost to the point of abstracting physical labor down to the "builds things with tools" level.

At the same time, I doubt that a carpenter, under UK law, would have to give up the house that he built in his spare time to the company that he works for, right? How does this not extend to software?

I've seen agreements before that attempted to lay claim to all work that you have done in the past and all work that you will do in the future. At the very least, I think that those are not enforceable.

I'm afraid I can't access the judgment in the case so only have a brief summary but it would provide more detail on the specifics of the case and how close an employee's duties have to be to the employee's activities in their spare time. I'll try to get hold of a copy though. I am only really interpreting the above case on the basis of a brief summary and I suspect there were aggravating/extenuating circumstances in the case.

However, the law doesn't operate in a vacuum. I suspect an employer is far more likely to lay claim to a piece of software which an employee claims was produced solely in his spare time than to lay claim to a house built by a carpenter it employs.

Further, for it to become a problem the employer has to become aware of the employee's work in their spare time. I suspect many problems arise where an employee creates a useful tool in their spare time, then uses it in their day job. The employee then leaves, but wishes to revoke rights in the tool, whereupon the employer then asserts that it owns the tool in question.

If however, the carpenter produced house plans as part of their work, then produced a separate plan in their spare time, the employer could potentially lay claim to that plan on the basis of the above case. If the carpenter produced a house to those plans they would likely be protected by s.51 CDPA '88 (but then unregistered design right infringement becomes an issue) but the underlying infringement of the employer's copyright would be still be an issue.

At the same time, the activities of the carpenter may breach other obligations in the employment contract, such as to not to be engaged by a third party whilst they are employed (this is of course irrelevant if for example the carpenter is constructing their own property to live in).

On your final point, an employee is not a consumer who has protections from unfair terms. If I as an employee are able to negotiate a remuneration package which reflects an assignment of all prior/future work then I can do so. As an employer I would have doubts as to whether such a transfer was possible/viable but that is not the same as saying it would not be enforceable.

I say that it's not enforceable because:

- There has to be a meeting of the minds for a contract. If a contract is tipped too far to one side, it can be said that there is no consideration. In this example, if the employee is only getting what could be considered standard market rate for their employment as a software developer, the idea that all future work in software development (even past the term of employment) will belong to the company is absurd. The company is basically saying, "after you work for us, you are no longer allowed to work for anyone else as a software developer, ever."

- It may not be possible to grant copyright over all past work because it may be owned by a previous employer.

I agree to an extent. If I'm offered standard market rate then this will be very different to a situation where a developer has factored into the price the assignment of all IP. I agree that in your case, the developer would be well positioned to argue that an attempt by the employer to enforce should be thrown out as a restraint on trade (at least under UK law).

On the second point, the contract isn't unenforceable as a consequence of one party fraudulently/mistakenly attempting to give away something they are not in a position to.

If I'm the company, I take an indemnity from the developer which means I will be covered (well subject to the insurance/assets of the developer) if a previous employer attempts to assert its rights over IP I'm using. In the same way as it's the employee's decision to assign all rights, it's the company's decision to accept the assurances of the employee that the employee is in a position to assign.

You're talking about this as if employee contracts are usually a negotiation. In many cases, you either sign "The Contract" / "The Agreement" or you don't get hired.

If a company asserts that all employees must sign such a contract, I feel that it's pretty obvious that said company is just trying to make their contract as broad as possible to "cover all of the bases." They want to (attempt to) close all possible loopholes by essentially claiming "all your base are belong to us." How many software developers could even sign a contract that assigned over all IP rights to all IP that they ever created?

Regardless of legality the question you really should have asked is "how much will it cost me to purchase my freedom via the legal system, and am I willing and able to pay it".

If you're only willing to pay $100 for your freedom, and they're willing to put up $500 worth of nuisance legal roadblocks in your way, they won. On the other hand, if they're only willing to spend $5000 max to own you as their property, and you're willing you spend $10000 to gain your freedom, you've won. Doesn't matter if its objectively legal or not, its shouldn't even be part of your decision. Now its very important to your lawyer and his strategy and the related costs, but figuring that stuff out is his specialty. Every slave has a sale price, the legal system will figure it out. Might be a lot more or a lot less than you think. Your legal rep will let you know.

It strikes me as a dumb idea from a liability standpoint to want to own a developer as a slave, thinking of malware and the like, or even just innocent bugs.

Good luck.

OP is in the UK. Parties to a court case should show reasonable attempts to sort that out before going to court. Costs can be awarded.

Your advice seems to fit a US, not UK, situation.

(But obviously IANAL).

I would agree for normal employment disputes you have to use the "approved" procedures not quite sure if this applys for disputes over IP.

For example if an employer ignores the rules on sacking /redundancy they can get additional fines on top of the normal penalty - courts do not like people taking this piss

I'm well aware OP is in .uk but is there anything fundamentally different about their legal and economic system that blocks my basic argument of:

They want to put X amount of roadblock in your way, and you are willing to put Y amount of effort to move the roadblock and all that matters is X<Y or X>Y. And depending on the strategy of the hired guns aka lawyers doing the fighting that effort could be measured in all manner of things, money, labor time, clock time, paperwork, nuisances, things of that nature. But fundamentally if they decide they own you, you need to figure out how much it'll cost to gain your freedom, and are you willing to pay it. And HN won't be able to estimate better than perhaps 4 orders of magnitude how much it'll cost, but your paid legal representation can probably figure it out pretty well.

Lets consider the rules about sacking, if the company knows the court will fine them $100K but they've got $150K worth of hate to dispose of you, well, you're gone because 100 < 150. Your employer probably being much bigger than you are, they likely have better legal representation, and likely have an excellent idea how much it will cost them to provide a certain level of annoyance to you.

My point still stands.. The legalities don't matter unless you're one of the hired guns working on your strategy, what matters is how much they're willing to spend to mess with you, vs how much you are willing to spend, vs what kind of deal and trades you're willing to make.

It may very well be next to nothing if they don't really care. Or maybe if you're going into direct opposition with a better product, they'll spend their entire net worth, which likely exceeds yours.

Tell that to Imarsat who went through 3 HR directors over one case that I know of.

I doubt may senior CEO's would find having their company and personal integrity ripped to shreds by a £1k a day barrister - who normally make Malcom Tucker seem like a nice little mommy's boy.

There is the second q is that losing a case sets precedent would you want to be that HR director/CEO who cost everyone a vast sum because you fucked up an IT - i bet you wont be popular at the IOD or the CBI if you lose.

Finally if you take the piss the government will take notice and clamp down - quite often hurting good company's because of one bad actor.

People claim damages. They have to show that these are reasonable damages. They can also apply to have costs of legal action awarded to them.

Thus a company could attempt to snow under someone bringing legal action, but that's just driving costs up so if they lose, and costs are awarded, they've just increased the amount they have to pay. Their lawyers + your lawyers + awarded monies.

Well, I can try one last time...

"Their lawyers + your lawyers + award" < "what the company is willing to spend as a roadblock" then the company does it. Doesn't matter if they'll win or not, just is the roadblock worth the cost? Or if its not, then it doesn't.

Or, a slightly different formula for calculating costs doesn't change the rules of the game.

Or an analogy... imagine taking the board game "monopoly" to the .uk, would changing the $ to pound-symbol and swapping the costs of houses -n- hotels really fundamentally change the game? No.

Very poor analogy the rules of monopoly stay the same but US and UK Law is very different once you get down to details and for some employment cases the fines are "unlimited"

Also company directors reputations and some times entire careers are on the line if they lose.

For the employer, especially, the cost would extend beyond a direct financial one. It would be difficult to pursue such a legal path against a current/former employee without other current and potential future employees catching wind of it.

I imagine it would be a massive blow to the reputation and hence recruiting power of any organization that was perceived as unfairly penalizing an employee for working on something unrelated to his day job in his own spare time.

I dont think UK lawyers take $ its £ and for the really posh ones they still bill in Guineas (21 Sillings in old money)

I was responsible for hiring a development team for a company in England some years ago.

The boilerplate contract we got from our solicitors[1] had this clause in. I fed back that this would be a barrier to hiring quality staff and was told that it would likely be unenforceable anyway and was only in there to intimidate people if the company needed to force something through later.

The clause was removed for the hiring I did but I understand that at the next annual legal review it was reinserted as a "standard contact term" by the solicitors for all new hires :(

[1] Halliwells - who I apparently no longer exist - http://en.wikipedia.org/wiki/Halliwells

I fed back that this would be a barrier to hiring quality staff

When I worked as an employee, that kind of clause was one of my "gut feel" tests for whether I wanted to work somewhere. Even proposing it was a warning sign about the company culture, though because of the kind of situation you described I tended to give the benefit of the doubt if it was readily removed. I have never signed an employment contract that actually had this kind of heavyweight clause in it, and always had something that was explicitly more restrictive.

I think management and particularly lawyers sometimes ignore the possibility that terms they propose to a generally intelligent and detail-oriented workforce are going to have consequences. Maybe it's just standard legal CYA manoeuvres and wouldn't stand up anyway or would be the default in law even if the clause weren't there explicitly, but the potential employee doesn't necessarily know that. The contract is probably the first detailed, formal document that person ever sees from a prospective employer, and it can betray a great deal about an employee-hostile culture and create toxic bad feeling before they've even started, which is absurd if the employer and employee were otherwise a good enough fit to have reached that stage!

I've come up against this before (Scotland, but broadly the same employment law).

My understanding is that this term would not be considered reasonable, and as a result would not be enforceable. However, you'd need to either opt out or discuss this with a solicitor if you were planning to do anything which might come under that umbrella, as it would likely be expensive and messy if you had to fight, regardless of who's actually correct.

In most cases, I've found this has simply been thrown into an employment contract as part of a lawyer's off-the-shelf documentation, and will be removed upon request.

[Disclaimer] I am not a lawyer, this is only from professional experience and personal culture, and may not apply if you are from another planet. Feel free to insert enough "maybe" for your own convenience.

[TL;DR] This is only enforceable if explicitly written black-on-white in a contract you willingly signed.

I have seen similar clauses in engineering contracts before: this is rare but it exists, and you should beware. I would advise not to sign anything like that — except maybe when you really trust the company's shareholders. At least, make it clear that you do work on your spare time, and show them that it is clearly unrelated.

So check your employment contract. In case it confirms your company's claims, you can still try to go to court: in some cases, a judge may consider that an abusive clause.

Alternatively, there is no chance this is an implicit argument: any IP renunciation must be explicit, so if you never signed anything like that, I think you should be safe.

I have no idea if you are right or not (I'm not a laywer either), but the fact that you provide a clear black and white answer (when the law is often not so black and white), without any citations to background reading or cases supporting your interpretation of the law (so we can learn more about it and verify your interpretation, especially important since you of course aren't a lawyer giving us legal advice), and without assuring the readers that you are indeed familiar with relevant UK law (on a site such as HN where US is often assumed default)...

...makes me a lot less credible.

I'm not sure what leads people to ask for legal advice on HN, but hopefully the askers are looking for citations to further background reading on the topic rather than a legal opinion, and are cautious of simply believing everything they read.

It makes them less credible, you less credulous.

credulous, that's the word!

Thanks for the advice, I added a disclaimer.

I understand the Wikipedian urge to render everything credible by referencing authoritative material, I just did not take the time to do it here. I am confident my advice remains helpful nonetheless.

Also, a craving for references can present undesirable effects [1,2].

[1] http://xkcd.com/906/ [2] http://xkcd.com/978/

So, something I'd personally want to know anyway, since laws often vary between countries, is if your professional and cultural experience in the UK specifically?

If it is in the contract it could become complicated (expensive time in court) to confirm it unenforceable.

My previous employer changed contracts to one that stated that they would own any IP created "in the course of employment" and I got confirmation by email that it only covered work related to my job before I accepted the new terms.

Duck Duck Going for the term now produces a guide[1] on IP created at work from Unite (a major British Union) that looks quite useful.

[1] http://archive.unitetheunion.org/member_services/legal_help/...

The main reason for these clauses is not to steal employee's personal IP, which in reality wouldn't be worth much according to expected value. The main purpose is to prevent employees suing their (past) employers for copyright and for companies to assert full ownership of their IP in situations such as acquisitions and IPOs. It removes doubt that any critical IP might belong to employees.

A contract is just an initial template to speed up the negotiation. You can often request exemptions as long as you're specific about it. I've seen this clause plenty in the UK and I've also seen it amended.

Difficult one.

Basically these are put in place to stop you stealing source code improving it and releasing it as yours.

The best thing to do is ask for an exception for particular pieces of work if you are worried about it. Any half decent company will be more than willing to let you work on code outside of work so long as:

1. It does not affect your companies work.

2. The code you write at work will not be included in the projects you are working on.

Although not directly applicable this judgement is worth a read - http://www.nakedlaw.com/2010/01/software-developers-who-owns...

"Under statute, copyright is only automatically owned by an employer if it is created by the employee in the course of his employment. On that basis, code written in an employee's spare time and outside of the scope of what he is doing for his job would belong to the developer. However, many employment contracts (particularly for jobs that are centred around the development of IP for the company to exploit - such as software development) include the transfer of ownership to the company in much broader cases. This might capture any code developed that relates to the business of the company (eg. any computer games), whether written entirely at home and not using company resources."

I get written waivers for all work that I don't want my employer to own.

+1 to "it depends upon your contract"

It also depends upon your role. If you are hired to invent new things then it is no good claiming that an invention you seek to sell on your own account does not belong to your employer of the time - even if you only worked on it at home.

I'm in England and also see this contract clause a lot. Personally I've always assumed that it would be unenforceable if it was work unrelated to the business, but I've not yet had reason to hire a solicitor to find out.

I'd suggest you ask a solicitor rather than an internet though.

p.s. To everyone saying "It depends if it's in the contract" that's not very helpful, as it likely is in the contract but that doesn't make it necessarily enforceable. Plenty of contract terms aren't enforceable when you actually get a lawyer to look at them. In UK contract law, contracts cannot have unfair clauses.

The difficult part is "related" if for example you wrote songs as a hobby and wrote a top 10 hit you woudl be safe - the difficulty comes when your employed as a "developer" its a lot harder (and expensive) to prove your work is not "related" to your employment.

Also based in the UK, and as far as I know you're right. To reiterate, speak to the a solicitor, but I've been told informally by several solicitor acquaintances they're usually unenforceable.

Um so where these solicitors a specialist in employment law?

Unfortunately a lot of people in the uk take advice on employment from the same solicitor's who did their house legal work and come badly unstuck.

The Q is can could you afford to defend a claim on your IP - you wont get legal Aid

"Unfortunately a lot of people in the uk take advice on employment from the same solicitor's who did their house legal work and come badly unstuck."

In that case you would have a serious professional negligence claim against the law firm and possibly the solicitor who gave you the advice.

Years and years ago I worked for office supplies retailer and they had a clause in their contract that said the usual "we own anything you do outside of work blah blah".

I struck a line through it and got my line manager to initial it before I signed the contract.

I wasn't hired as a programmer but no way was I signing over the rights to any of my personal projects because "that's what we always do".

I've always wondered, how does that work? The contact is presumably between you and the company, not between you and the line manager. Just because you cross it out, and your line manager initials it, is that binding? What if the line manager didn't have authority to do that, and did it against the wishes of the company -- what would the outcome be then?

It's straightforward enough for a person to sign a contract, but what are the legal principles regarding a corporation signing a contract, and "rogue employees"?

My understanding (and I'm not a lawyer) is that a contract with a company is binding if that person was authorised to sign such a contract (i.e. manager or director) also known as "apparent authority" which basically relies on "a reasonable person would assume that the person was authorised".

i.e. Head of IT signing 200,000 contract for computer equipment no problem, Part time office cleaning signing, big problem.

I'm sure someone who was a legal professional could state it better than that :).

The concept is known as ostensible authority under UK law so if someone holds themselves out as having authority regardless of whether they do or don't, the company cannot then disclaim the agreement they signed on that the basis that the person wasn't authorised.

In India, it is not. The law is silent. When filling a copyright, if the employee owns the IP, the company has to get a NOC from him for using it.

And Even if the company owns the IP, it has to get a NOC, when filling.

Which in short means, that while filling for copyright, one of the parties is the developer, a company can't obviously be a developer.

NOC= No Objection Certificate

Whether it's enforceable or not is irrelevant; what matters is whether or not you can prove that the IP was completely developed on your own time if the company does decide to sue (and whether or not you can afford to prove it). Make sure you keep a time log of when you worked on personal projects, do frequent checkins to GitHub or a similar service (even if you're not working on code), and make sure you don't use company resources in any way to work on it (especially a company computer, even if you're just doing a Google search).

Christ, who on earth do you work for?

That sounds horrific...

I work for a ftse 35 company as a dev and there's nothing close to that, just the usual "Work done on our time or our equipment is ours"

I'd check your contract of employment - and "custom and practice " may imply this sort of term.

I'm in the UK too, and have never seen a contract as onerous as that. If I did, I wouldn't sign it. Every contract I've signed have set up very clearly the conditions under which the employer claims ownership, and they've always been reasonable and pretty much restated what most people would find fair. The only variation I've had have been whether or not I've had a duty to disclose and ask for a waiver for certain types of code (effectively stuff that is close to competing with my employer).

Trouble is if the contract is silent then I suspect that legal precedent will still stand.

I think it depends on the contract you signed, you should go over that and check if it says something about it.

IANAL, etc. Ask a lawyer if you want any reliable answer.

IANAL. First, get legal advice from a lawyer. Some law schools offer free or inexpensive clinics with law professors and law students.

It does depend on your contract, common law, and legal precendent. Contracts can be modified. Some companies and organization require that you get outside activities or employment approved by management and human resources or ethics.

This is quite unusual - it's usual for the employment contract for a developer to include a clause dictating whatever you create in the course of your employment is owned by your company but as far as what you do outside the course of your employment - this is pretty odd.

You should check what your contract says, but regardless of what it says, if you aren't using your company's source code, equipment and designs etc I think this would be hard to enforce (without knowing the facts here). Even if you did sign an employment contract including this, if you are not developing anything that builds on top of your company's work, this could be seen as restriction of your trade (or a similar concept) and be unenforceable but whether this is the case or not is really depends on the specific facts here.

I think your best bet is to take a look at your contract and if it does include wording to the effect that whatever you develop (whether this be in work or not) then you should talk to an IP lawyer who has some experience with employment issues like this.

By way of my background - I'm an ex corporate M&A lawyer based in London so IP/employment isn't my specialist area and it can be quite tricky so I would recommend you try and find one to make sure you get this right.

I should also add that I'm currently building a UK based platform to help people with legal issues find good lawyers at fair prices which will be launched in the next month, but if you need assistance before this get in touch and maybe I can help find the right lawyer for you (this will be free to you - charges are deducted from the lawyer).

In the UK the employer by default does own work at all "related" to you day job - this is direct from a senior contact in HR/IR who is a lawyer.

You might be able to negotiate an rider on your contract but most companies would probably not do this.

UK employment law is based of an old act referred to as the "Master and Servants Act" - guess what Servants don't get a very good deal

Ask a lawyer. The condition is very common, but I don't know if it is enforceable.

From my experience, it also helps to have a dialogue with your employer. Many are willing to alter the clause if given enough reason

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