Work performed by an employee during the course of operations is considered 'work for hire', and is the intellectual property of the employer. If he then goes on to replicate a large quantity of that work 'on his own time', he is most likely infringing on that work that he previously did (unless he's very careful about it. Since he didn't seem aware that it was a potential issue, he probably was not).
Now, it's not obvious that the employer would have won such a suit, but it's not a frivolous and un-winnable case either. It's generally best to talk to your employer about this sort of thing before releasing it - if they had been real jerks, they could have sued him for infringement despite his taking it back down when they asked.
Wouldn't company had no right to use the code that he wrote for them because it would mean infringing on his copyright, or copyright of his mom if he sold the rights to the original software to her?
Personally, I would write that 'previous work' as a library, open-source it, and then use the library at the company later. That's clearly safe.
And yes, the entire concept of IP is on the strange side and needs some dramatic revisions, I'd agree.
Technically, this means that they own the bedtime stories that I make up for my kids. And certainly any open-source code that I may write in my free time, even if I used absolutely NO company resources and worked only on evenings and weekends.
But this story has a happy ending: I signed it (I like getting paid), then went to the company lawyers and raised the issue. I used the "you own my kid's bedtime stories" example and provided alternate language they could consider. (My alternate language said they owned it only if it was written using company time or company resources or if it related to the line of business the company was in.) The next year, they changed it to a variant of my proposed wording (actually, they used "only if written on company time or using company resources" which was an even more expansive exception).
Of course then a few years later we got bought by a new company, and they had a different clause. So I started a conversation with THIS company's lawyers. . .
You know how practically every contract you sign anymore has something to the effect of 'invalidating some portion of this contract does not invalidate the rest of it'? The courts have held that an unenforceable clause in a contract that is not indicated as 'severable' will make the entire contract unenforceable. Instead of doing the pleasant thing, and making contracts that stay within in the bounds they are allowed by law, companies started claiming that every portion of every contract was severable.
What this means is that they can throw any kind of crap in there, whether they could actually invoke it or not. Add that to the fact that the majority of the population of the US doesn't even read the contracts they sign (seriously, they don't), and companies are incentivized to throw the kitchen sink into their documents, and leave the decisions about what is enforceable until later.
Specifically, the region of your work that they can claim ip rights over is tightly limited by the definition of 'work for hire', regardless of what they try to claim in your contract.
They do, but not until it exists. You can't sign away work until you've done it, unless it fits the work-for-hire definition.
Now, you can write a contract agreeing to transfer the IP afterward, but then you have to actually perform that transfer, and if you don't you can get sued for breach of contract, but not for infringement.
It's possible that there's case-law interpreting this type of contract to imply a commitment to transfer IP, but I don't think it's very likely.
Is that the same manual that starts with the statement: Nothing in here should be construed as a contract?
That is a good point. I know we all want to get out the pitchforks and torches, but they may have a legit reason for needing him to take the project down. I can say that I could not open source ANYTHING that was remotely related to work right now, and my current employer has no say in the matter.
Nick seemed to be sad, and disheartened, but not upset at his company and I think he is in the most informed person we have here, so lets take his advice and not form a mob.
The problem is simply that its too hard to challenge if such an issue ever arose. Any decent business wouldn't just claim everything under the sun. It is a worrying grey area though.
[1]: http://en.wikipedia.org/wiki/Work_for_hire
[2]: http://answers.onstartups.com/questions/19422/if-im-working-...