Does my company really own every idea I come up with?

If you live in California then your employer's agreement is not enforceable for inventions that fall under Sections 2780-2782 of the California Labor Code.

See http://law.justia.com/california/codes/lab/2870-2872.html

This and unenforceable noncompetes are probably the two biggest things in California's favor.

It's amusing how much lip service politicians give to the importance of small business, when protecting these two rights would promote them more effectively than any tax break.

+1.

And likely if you live in another state this would not be upheld, especially if you were building something wholly unrelated to your employer's product / service.

I'm no lawyer though, so do some research regarding your state's labor laws.

That would be entirely incorrect. Without specific state protections these clauses are quite enforceable (and have been routinely enforced for decades). The relationship between what you do at work and at home is irrelevant.

Disclaimer: I'm not a lawyer, but I've been directly involved in issues pertaining to these clauses in the past.

So if I had a house painting business on the side, they could take it over if they wanted to? Seems a little far fetched. I don't think "The relationship between what you do at work and at home is irrelevant" is correct, from what I've been able to gather in my research. It definitely plays a role. It may be minor, but its not irrelevant.

Of course they cannot take over the house painting business! You did not invented any of paint, brushes, ladders or walls.

If, on the other hand, your painting business is about creating works of art rather than home improvement... they will leave you alone until some magazine labels you as "the next Picasso" or something. Then they come and sue you into oblivion, since they will out-spend you 50x in court, regardless of who is "right".

They can't take over your house painting business, because that's outside-of-work labor, which they don't own under that clause (some businesses do forbid side gigs for money).

But if you patented something related to house painting, they would own that, even if their business is completely unrelated to painting.

I'm not claiming you're making this up, and I did say I'm not a lawyer and the asker should check their own state laws, but since you object, I'd appreciate for everyone's sake if you provided some proof of precedence backing up your claim.

Edits below:

Here's at least one interesting quote from the Copyright act of 1976 (assuming we're talking about copyrights not patents):

"A “work made for hire” is a work prepared by an employee within the scope of his or her employment, or a work specially ordered or commissioned for certain uses (including use as a contribution to a collective work), if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. The employer is the author of a work made for hire."

http://www.copyright.gov/register/se-hire.html

The contract language is pretty clear. The company owns all IP invented by the employees in any time during employment. In the absence of state or Federal labor laws making exception, the agreement is cut and dry. It is an enforceable contract, signed by the employees.

You might say it's not fair. Yes, it's entirely written for the employers. That's why there's needs for state or Federal labor laws to help the little guys.

I don't know why you want to get around it and trying to give false hope to people. If you want to claim the contract is not enforceable, then you should provide citations for the claim.

I don't think anyone is trying to get around anything or cheat the system. Obviously, everyone's situation is slightly different. I have never been in this specific situation before, so I was curious how others might interpret the language or how they might approach it. Its not iron-clad. Businesses owners are not heartless beasts. I think if approached correctly, many would be willing to sign a waiver. Also, I don't think it is cut and dry. There is room for interpretation (I didn't post every word of the agreement, so how would you know for sure?). That's what the court system is for, if it comes down to it.

There are other alternatives as well, such as working somewhere else (if you think that is the right move), or just couching the idea for awhile.

I think hope is good anyway. Nobody here really wants to be a mindless drone for some company for the rest of their lives. We're all learning here.

I ran into this trouble just recently, in taking a job while still in grad school in California. The school has pretty broad language about owning all my ideas, but does reference Section 2870. On reading Section 2870, there are exceptions about ideas which relate to the employer's business (or anticipated business)... but what does this mean for the University of California?

My take is that the code doesn't specifically limit the exception to my job function; it's broadly worded to cover the whole of the business. And the UC works on so many areas of research that this essentially means that you can't work anywhere else at the same time if that other work requires any kind of confidentiality.

I tried to engage the IP department at my school about this, but got shuffled around and basically told that there are no exceptions or clarifications. They essentially supported this interpretation I have, and referred me to memos that explain the policy in more detail.

What I can't figure out is this: the policy requires that all students submit potential IP to them for evaluation. That includes IP from summer internships. Why are companies okay with this? In practice, I don't believe many (any?) students do this, but the Director stopped answering my emails when I tried to probe this question more deeply.

I've always thought that if a company claims rights over what you do outside worktime, they should do it not only for your genial ideas, but for the bad ones too. So, if you incur in a stupid debt it must belong to the company. Your newborn baby? The company mus pay alimony. It's all or nothing!

Of course I am not a lawyer (but I am an English major!), but I think many are misreading the last part quoted.

"any of the foregoing" means "anything we talked about earlier" not "anything whatever".

They need the last part because copyright is a sticky thing. All copyrights stick with the owner unless they are a "work for hire" or very explicitly granted in exchange for some good consideration, and you can't simply declare something to be a "work for hire", even by contract--it has its own meaning in law and (even more so) judicial interpretation of law. In (a) they try to define what they'd like to be included in "work for hire", but if it came down to it, a judge might not agree, so they require you to explicitly assign rights to everything in (a) (and possibly b, c,... don't know what's omitted) just in case they don't have them already.

If there's nothing important between the two sections you quoted, then I believe the ownership of your invention would hinge on the judgment of whether your invention relates to the company's business. Also any applicable state laws, etc..

I'm not qualified to answer completely, and even a relevantly trained lawyer would need to know the state, but I think there's good reason for hope.

I thought the "for hire" part meant to cover cases where the copyrights are transferable to a customer of the company. So in that case the customer owns the rights, and in all other cases that are discussed in the foregoing (I agree with you there) the company owns the rights.

But, I'm not a lawyer either...

Unlikely. "work for hire" is standard terminology in copyright law, and it means (roughly) work done while an employee as part of the normal course of your job. So that's why they need to add an explicit copyright and patent grant for non-work-for-hire cases: an invention related to the company's business might not be ruled a work for hire if it relates to a part of the business you don't work on or if you only worked on it on the weekends, etc..

And even if the company does transfer IP to its customers sometimes, that detail wouldn't be in an employment contract. You assign your IP to the company, the company does whatever it pleases with it. The alternative is every employee that works on a project for a customer executes a separate agreement with the customer to assign IP.

I had the same questions when my employer developed an employee handbook that all employees must sign. I didn't like the part that said "during employment" because that could be interpreted as off hours. I've always been honest with my manager about side projects, so I just asked him to modify the text before I signed it and he was fine with that.

I have never signed a contract/non-compete/IP agreement without making a number of edits to it first. So far I've always been able to get it changed to something that works for me.

I second that. Some of these IP agreements are down right ridiculous and unenforceable but totally skewed towards the employer. If you have an entrepreneurial bone in your body you should make friends with an IP lawyer and have them go through any employment agreement before you sign. Have them make edits and resend it back.

I'm not a lawyer, this is not a legal advice. Treat this text as preparation to a conversation with an actual lawyer.

So. It's complicated.

The company can sue you for the ownership of the work, but until that lawsuit is lost you own the work. In practice they won't sue you unless you really tick them off (don't do that) or you become successful.

There are also mitigating tactics for the upcoming lawsuit:

1. Promptly notify your manager in writing about what you do, print the email and keep it. If you can get a proof that s/he read it, print that too. They key here is that you don't want this to be a surprise to your manager later on when you quit and you don't want to come across as deceptive. It's best to keep good relationships. There is a method to writing this sort of emails - your claims must be broad as to encompass your entire work, and not too specific as to allow you to change things as you work. On the other hand an overly broad claim can attract a lot of undue attention, so strive for balance.

2. When you leave your day job, notify them again in writing about what you do. Ideally get your manager to respond and and print that response, or find other way to have proof. Again, it shouldn't be a surprise to them (see point #1).

By doing this you have established a paper trail proving that they knew but chose not to act. If they fail to act within reasonable time, but chose to bring a lawsuit later after you become successful this paper trail will serve to undermine their claims of you being unfair. I was told that after 3 years of inaction they practically lose their stance. The clock starts ticking at the moment they were notified, and it resets every time there is a new violation (i.e. you create new work while still employed).

Your more immediate problem is that many investors will look at this and either pass or say that they need a letter from a lawyer that assures them nothing can go wrong. Lawyers will tell you that this is complicated. One way to resolve complexity is to ask your current employer to sign a piece of paper that gives you all the rights to this particular work back. They usually don't as there is nothing for them to gain and maybe something to lose. On the bright side there will be investors who will invest despite this, it's just a smaller number. Those are more likely to be true believers, so there is a positive side to this filter as well.

Lastly the law in most states puts restrictions on what kind of claims by employer are enforceable. There are clear-cut cases (like operating a lawnmower service while working at Facebook), but technology cases are complicated. This will cost a lot of money to get a definitive letter from a lawyer, and I don't think it's worth the expense in your case.

Does your employer know about your project? They don't have to know. In fact, when I was in your position, I was advised to keep my side project as secret as possible to avoid warranting a lawsuit. Like DenisM says, they have nothing to gain by OK'ing your project, so no need to even tell them about it.

There is a VERY good reason to tell them, and document the fact. If you commit a violation and they know about it they must act within 3 years or lose their case. However if they don't know about the violation they can go after you 15 years later. Don't do it in secret. If you afraid they'll kick you out line up another job just in case.

Please read the following for your answer:

http://mattmaroon.com/2008/08/27/one-inviolable-rule/

Then go consult an actual attorney.

I want to be clear that I'm not asking legal advice. I would never make a decision based solely on advice from friends.. but your opinions matter. Many of you have been in the same situation, so aside from the "ask a lawyer" suggestion I knew I'd get, I'd love to hear from people who have been in this situation. :)

Perhaps you are not asking for legal advice... but I think the point is that you should be... if want assurance that the answer you receive is correct.

You will hear from people who have been in this sort of situation, but not the same situation. For example, their employment contracts likely differ from yours.

Have a lawyer (in IP/contract/employment law) look at the document and your situation before you quit your job. It'll probably only take him a few minutes to review it. A couple hundred bucks and you'll know for sure.

I had this exact same situation recently. My day job was in mechanical engineering and I had a website that I did on my own time/computer. My lawyer said that since there was no connection between my day job and my website that I was fine. The agreement I signed was very similar to yours in that it had catch-all phrase like that, but my lawyer didn't seem concerned.

I also emailed my boss and legal counsel at the day job to review my website and I asked if they thought there were any overlaps or conflicts of interest. Both said no, so I have documentation they they disclaimed rights to my website, just in case something ever came up.

YMMV though. Just call a lawyer and get it over with.

The catch-all statement seems pretty clear -- they own it (unless you dispute it in a court of law -- but who will invest in your thing in the meantime ?).

Now, perhaps they are benevolent and are willing to allow you do your thing in the spare time. But, if you really think there is money to be made, spend some money on actual legal advice.

Btw, if I were your boss and would read this message I would be kinda conflictual about granting you an exception from the contract for another reason: you seem to over-work yourself. Now, when you hire somebody for a full-time job you assume a given productivity. If the person is spending another 6-8 hours a day doing his side project until he's about to collapse -- how much productivity is the company losing ? Just another angle to look at it.

My day job is not suffering in the least. I have to provide for my family, and I make sure to clearly separate the two. I take pride in what I do. I think my boss would agree, so I'm not worried there.

If you have a good relationship with your boss and your work is not influenced by your side-project by all means talk directly to him/her. Nothing like having actual management support to get things moving quickly.

That's pretty standard wording, but I would ask them to clarify that "inventions/works of authorship" that don't fall under the "work for hire" category only will be assigned to the company to the extent that they are part of "the Company's actual or demonstrably anticipated research or development."

In other words, take the specificity language from the first paragraph you're OK with and add it to the second one.

This is unrelated and may not apply to your situation, but depending on how much work you're doing, I'd also be sure to let them know that you think it's in the interest of both parties if you have a stake in the company, and propose a more of less token (depending on involvement) amount of stock options in addition to other compensation.

I'm neither a lawyer, nor ANAL. WTFBBQFTW.

A couple years ago I had to sign a similar agreement at a previous job.

The problem with mine was that the company was a fairly large one which had completed numerous acquisitions in the last decade or so. Every little company they acquired had some product that was "out in left field" relative to what their core business was. So as these smaller firms were consolidated, this company ended up with all sorts of little businesses out there that I could never account for. I couldn't confidently say what was or was not related to their business or R&D, so I just stayed out of doing side projects out of fear of getting sued and felt pretty unfulfilled.

I ended up just quitting that job and going to work somewhere that I didn't have to sign any assignment agreement.

Have you considered approaching the company over this? Unless you're certain enough in your idea to quit, I don't see the harm. You can either push it as a project that the company should partake in or get them to provide you a waiver to pursue it on your own.

I used to do this at IBM on a regular basis. "Hey manager, I'm working on a Twitter mashup for the Super Bowl. Pretty sure you guys aren't interested. Can I get that in writing?" It was never a problem in that respect. (in California and IANAL)

I dunno. I tried to do this at another big 4 consulting firm and basically got the runaround. Nobody wants to put that in writing because if your stuff does happen to take off, nobody wants to be the patsy who let that get away. Basically I lost 6 months of time because they stalled. In the end I didn't get anything in writing. My immediate managers just told me that it's a don't ask don't tell and not bother wasting your time.

they have no incentive to give him a waiver.

That's pretty much my concern. I have thought about approaching them, but we're talking about a huge amount of bureaucracy. I'm sure my managers would be totally cool with it, but my manager's manager's manager wouldn't even have the authority to approve it.

So I'm left debating whether I have anything to worry about in the first place, or whether I should start working through all that bureaucracy.

Thanks guys! Looking forward to any more insight or if anyone else has been through this situation before.

I've heard stories of employers who have told employees shut down your side project or you're fired. I don't mean to be pessimistic, just make sure your project is non-competing and in line with their standards of ethics and values.

Getting a signed piece of paper is probably the best thing you can do, and it's probably possible depending on the company you work for. But you probably need to be careful about the way you approach doing so.

that's not totally true. If you are a good contributing employee, your employer has every reason to keep you happy for as long as you are an employee. If your management is mature enough, they would be happy to extend a waiver. (I know people like to bash their management a-la Dilbert, but there are some good managers out there)

My mom has her name as co-inventor on several patents. The company owned everything - she got a nice hand-holdable little lucite commemorative award thingy that embedded the first page of the patent (printed small font) on a small metal plaque.

Pretty much everything that you do on company time and company hardware (office, laptop, network) is owned by them (and can be monitored). There are multiple legal precedents for company ownership/monitoring.

Example of Lucite Mini Patent: http://www.recognizinginnovation.com/miva/merchant.mvc?Scree...

OP explicitly states that he worked on his equipment and his time.

I work for a company that has pretty much the same rules. Yes, the company technically owns any IP that you create, even off the job. Most large companies have a system where you submit the idea and typically a VP of business strategy reviews the idea to see if it infringes on the company's market or current product offerings. If it doesn't, you get it signed off as OK and you keep it.

From a legal standpoint from what I understand (not a lawyer here) you have grounds to fight for the IP but if your company cares enough it will fight you back and bankrupt you pretty quickly. What you signed would be their silver bullet and you would fight a tough uphill battle.

So it sounds like my only options are:

1. Quit, if I really believe in an idea, and work on it somehow without any income or by working with a company that doesn't require such an agreement (which I have yet to encounter around here). I'm not quite confident enough in the idea to do that... but I would like to be able to work on it to see what it turns out to be.

2. Get a waiver, somehow, by wading through all the bureaucracy. If they would sign such a thing, it would obviously be worth it, but I worry about all the fuss this could cause by trying to go up the chain to the appropriate level, for an idea still in its infancy.

"Ask a lawyer" aside, are there any other options? Has anyone ever been to the point where their company actually showed interest in what they were working on, on the side?

Quit, if I really believe in an idea...

IANAL, but I would be concerned that even this would be insufficient if your employer can show that you had the idea while working for them.

An idea for a web app is really no big deal. They're a dime a dozen. I think it's really the execution that counts. I'm not concerned about that

Unfortunately what counts to the law and what really counts may be two different things altogether. Be careful, especially if you think your employer might try to pull something here.

...which this article on HN would surely establish.

Start your idea (or your little company) with your wife as an owner/founder. It'll be like if she's the one that built it (make it seem so). If the idea takes off, leave the company and work full-time on yours. Any way, it's your wife idea/company/product, so no legal issues about it. Until your idea become successful your company/friends won't know about it (just don't talk about it and they won't know). If it gets successful and you get fired, it doesn't matter, since they can't sue you :)

Note: You should trust your wife well for that solution, or it'll work against you when it takes off (without a job + without your startup).

I'm curious. Why all the downvotes? Those comments are very reasonable. It seems all the comments stating the fact - the OP is screwed with his IP - are downvoted. Why? You can't bear the straight truth?

Not sure. Sure wasn't me. I think we all tend to hope that the answer is simple

Yes, your company owns all the inventions you come up, including off-hour work, during your employment with them. And companies are not hesitant to sue to get your IP. There were cases before and they won. That's why people moved to states like California where protect innovation by individuals. For your current situation, you should keep quiet and keep working on your project. When it's ready, quit your job. Continue to work on it quietly for two months before going public. Good luck.

I think that the comments are confusing work for hire in the context of being an employee v. a contract worker. Your contract seems to say that if you do subcontract work it will be considered produced for the company (see Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730). The question in re your case is whether the app falls within your scope of employment. If you really think it is worth something, you should talk to a copyright attorney.

to any subject matter? No just the subject matter they claim rights to made explicit in The Company will own (a) any inventions...

To the extent any of the foregoing is not deemed to be a work made for hire, Employee hereby irrevocably assigns all copyrights, This part just says that if what you do in your free time doesn't already transfer to them by work for hire laws that you will explicitly grant it to them.

Note: I am not a lawyer.

IANAL

I recently went through similar debates myself. Let's say you're working on a dating app. If they have one meeting about how their current infra could be used for dating and record the minutes of the meeting, then that is demonstrably anticipated development. These laws are really a pain in the ass. You really need to spend a few hundred bucks on a qualified lawyer. Here's a link that may be helpful : www.calbar.ca.gov/ipsection

IANAL but AFAIK in EVERY state with the exception of Nevada, this is true. I used to work there and one of my colleagues, a brilliant engineer, had moved there just so he could work at a job he enjoyed AND invent and patent devices. Ask a lawyer. You should be able to get an initial consultation for free.

States with applicable statutes (that I know of):

    * California  Cal. Lab. Code 2870-72 - http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&group=02001-03000&file=2870-2872
    * Delaware    Del. Code Ann. tit. 19  805 - http://delcode.delaware.gov/title19/c008/index.shtml
    * Illinois    765 Ill. Comp. Stat 1060/2 - http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2238&ChapAct=765%26nbsp%3BILCS%26nbsp%3B1060%2F&ChapterID=62&ChapterName=PROPERTY&ActName=Employee+Patent+Act.
    * Kansas      Kan. Stat. Ann. 44-1306 - http://www.kslegislature.org/legsrv-statutes/getStatuteFile.do?number=/44-130.html
    * Minnesota   Minn. Stat.  181.78 - https://www.revisor.leg.state.mn.us/bin/getpub.php?pubtype=STAT_CHAP_SEC&year=2006&section=181.78
    * NorthCarolina       N.C. Gen. Stat.  66-57.1-.2 - http://www.ncga.state.nc.us/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_66/Article_10A.html
    * Washington  Wash. Rev. Code Ann.  49.44.140, .150 - http://apps.leg.wa.gov/RCW/default.aspx?cite=49.44.140

California has explicit law protecting invention by workers created in their own time.

I know "ask a lawyer" is the safest choice, and I REALLY appreciate all your comments. I'm curious if anyone here has actually been in this situation, or better yet, further down the line where they were trying to get funding and the VC or Angel saw it as a problem.

All comments are certainly appreciated!

You won't be able to raise money from experienced investors if your intellectual property is disputed or could potentially be disputed. When you do go to raise money, you'll have to make a number of representations about your company, and one of those representations will be that all the IP belongs to the company. (As an aside, you'll also have a hard time raising money if you're still at your full-time job, unless your app has some serious traction. Investors like to see commitment.)

When we were getting started, my cofounder and I held off on putting a single word to paper until we were out of our full-time jobs, on the advice of our lawyers.

I'd just go and talk with your employers about it. "Hey, I'm really happy here, but I've been thinking about a side project - I wanted to arrange with HR that it was my own invention and belonged to me, of course it won't interfere with my job which is my first priority..." Employers want to keep good people so if your side project is truly unrelated to your current company it hopefully won't be a problem.

Just the kind of advice based on experience I was hoping to see. Thanks

What state do you work/live in, and "how litigious" is your company?

I work in AZ, but the company is headquartered in DC. They acquired our company a few years back, and they're pretty new to the dealing with the web. They pretty much let us do our thing, since we do it pretty well, but in the end they still own us.

I'm not sure how litigious they are, and in the end I don't think they'd care about me and my idea. It wouldn't compete directly at all. I guess I'm more concerned about what a VC or Angel investor would think or if that would hold up the process or scare of other potential investors. Or if I beat the odds and did end up selling it one day, I'm worried that any company like mine might see an opportunity to snaggle things up in order to cash in on the winnings. Its a good company, and I enjoy it here, but I just want to keep things clean.

Also, since you posted this before leaving the company, you've also given them documented discovery of your idea that was developed while you were under employment with them.

Speak to an attorney before posting a question like this to HN, or anywhere else for that matter.

I'm not trying to be sneaky or hide anything. Like I said, I want to do this in a clean way. If I can't do it, I'll come up with another idea later if/when I don't work for them.

Seems a little silly to have to consult a lawyer before posting to HN. Thanks for your thoughts though (seriously)

That's like saying it's silly to ask a doctor why you have chest pain before you ask Reddit. This is not an area where you want the opinions of a bunch of non-experts. Pay the relatively small amount of money to find out the answer from some who actually understands the relevant law.

Do you always run to the doctor at the first sign of chest pain? I would bet you, or most everyone, does just a little bit of research/asking around first. That's all I'm doing.

I don't know. I'm still just shy of 30 so I don't have any experience there. But if I got any that was recurring, hell yeah.

Read what you posted: "that relate to the Company's business or the Company's actual or demonstrably anticipated research or development"

Does your idea relate to your employers business in any way?

There is your answer. For anything more specific, talk to a lawyer.

you have to be very careful here, but in a nutshell: if you are hired for "inventive job" than probably yes. If you are hired for "non inventive" job (this is not typical for hackers) than it yours. But the details are hard.

The clue is here... ""...To the extent any of the foregoing is not deemed to be a work made for hire, ..."

Write an spec of what your idea is. Find a friend or relative you trust. Have him/her "hire" you to implement "his/her" idea. Pay taxes on the "fee" you "charged" for your work. Better off, have the friend write checks to "pay" you. Actually cash those and and keep the bank tickets.

Later, when you are no longer working for that company, "buy" back the rights of your works. And don't forget to pray for the friend does not stab you in the back. Good luck!