IP Agreements - Safe to launch a startup while still working? | Hacker News Reader

IP Agreements - Safe to launch a startup while still working?

9 pointsjsjenkins16812 comments

This is something Ive been wondering about for several months now. I figured the group here might have some useful advice.

Like most other tech companies, the company I work for required I sign an Intellectual Property agreement stating that any ideas or work that I produce while an employee is property of the company. So this clause would include any work related to a startup. I know, this really sucks.

PG talks about this in several essays. Basically what it sounds like is that if there is ANY indication that you started work on a startup while under an IP agreement, VCs and acquirers will simply not touch you. Has any one else found this to be the case?

From what it looks like so far, my options are:

1) Jump ship and not look back. This puts big financial strain on us though as we don't have funding yet.

2) Leave as an employee, and rejoin as a part time contractor without signing an IP agreement. This would pay the bills and rent in the early stages but would probably be pretty draining physically. I also lose my unvested shares in the company but meh.

3) The CEO will sign a document releasing our specific idea from the IP Agreement. Has anyone heard of this happening with success before??

Or we could probably just start working in secret and building the product, but this is probably not a good idea because we wouldn't have early customer feedback. I definitely believe in "release early, release often". Or an easy solution would be to get accepted into YC but I know chances of that are pretty slim :(

Any advice is appreciated.

Typically, employers just don't care about ideas that are outside their line of business. After all, if I come up with a great social networking site but my employer is a financial software company, stealing my social networking IP will just be a distraction from their business activities. They're worse off for taking ownership of the IP.

Do tell your employer what you're doing and clear it with them. Aside from being the honest thing to do, it also sets you up to get formal legal permission. If they're not willing to do so, you know that immediately and can weigh your options from there, including quitting or giving up the startup.

In some cases, your employer may even give you money, advice, and customers. I once worked for a company whose CEO was the former CTO of Cybersmith (the gaming cafe company that went bust around 1999). She came up with an idea that was useful for Cybersmith's business but was not something Cybersmith was willing to put resources into. Cybersmith became her first (and only, it turned out) customer and gave them significant resources to fund development.

"3) The CEO will sign a document releasing our specific idea from the IP Agreement. Has anyone heard of this happening with success before??"

This happens more often than you think. The most prominent example is Apple Computer - Steve Wozniak was on HP's payroll when it was founded, and needed HP to sign away their rights to the Apple I. One of my cofounders is in the process of getting a similar release from Sony Entertainment, and I'll probably need something similar from my employer (I have verbal permission already).

I think this is all very good advice.

I think the best answer though is probably the one you don't want to hear--option #1 (quitting and doing the startup only) is going to be best. Read Paul's comments about the need for focus and determination. If a startup isn't 100% focused on success then it probably won't get it.

You could try your option of going back as a contractor or doing part time work. Part time consulting though is tough. Keep that in mind. If you're on a tough project and you're only supposed to do a few hours here and there one of two things will typically happen: 1) you'll get sucked into more work, 2) they'll find somebody else that can give 40+ hours a week.

I've got the same issue now so we're in the same boat.

Thanks for the info nostrademons.

The company I'm currently at is actually really cool about stuff like this, so getting permission shouldn't be a problem. My concern was more the legal aspect, if the startup ever got the point of being considered for VC funding or being acquired. I wouldn't worry about my company taking legal action as much as scaring away investors or a company. I just want to sort out the legal issues before diving in full force...

agree with above, and just went through this a week or two ago. i got a letter from my company saying they have no ownership stake in what i'm doing (an extra complication was that i'm working part time in the office and part time on my idea as part of an agreement we struck.) it cost me like $1,000 out of pocket to get an attorney and a letter drafted saying my employer has no "right, title, or interest" in my new venture and related patents/applications/copyrights/etc., but in the grand scheme of things it's a no-brainer to make sure the IP around the idea/new business is clean.

if you have questions about this shoot me an email at houston at alum.mit.edu ... it was a pretty straightforward process.

-drew

Depending on the employer, they may be quite happy to amend your contract to lay no claim on anything done in your own time and outside their product domain. Mine did.

Take a look at your employment agreement. It should have a clause in there detailing exactly how the IP is appropriated. Some companies' agreements say that they own ALL the IP while you're working for them, even the work done in after-work hours. Some say that only the work done on their computers belongs to them. Some agreements are ambiguous on purpose so they can come after you if you leave and they think you came up with stuff while working for them (which is very common... you see something your current customers need and you decide to go solo). Also, where do your customers come from? Are they the same as your employer's customers? They'll come after you. Are you competing with your employer? They'll come after you! Have you signed a non-compete? If you're in a similar/same area as your current employer, they'll come after you.

Anyway, this can become a huge mess... talk to your lawyer.

IP agreements are the least of your worries. They don't matter that much and are really really hard to enforce. Basically it matters if you steal some kind of trade secret of a lot of existing clients/contacts.

Not having enough time to properly do your startup should be your main concern.

this is dangerous advice -- regardless of whether or not enforcement on these agreements is likely or possible, you will spook investors/acquirers if you don't do your due diligence in this area and don't have the necessary documents to prove ownership of your IP.

-drew

Aren't you the guy that emailed me? Sorry I wasn't able to meet up with you at startup school.

I still don't think its that dangerous of advice. Sure, if somebody is working in a similar industry, doing actual work on the start up in the work place, then that'd be a problem. Businesses often do have large portfolios of IP, many having not much to do with their business, but I don't think somebody is going to have a problem working on something totally different, at home, on their own machines, on their own time.

right -- but if your employment docs say, for example, that your employer owns all IP you create including stuff you do on your own time and out of the office (yes, a draconian clause, but not that uncommon!), you can be in big trouble if your startup takes off and your former employer is legally entitled to (i.e. you don't own) the IP you created -- either your employer can try to lay claim to what you've built or your investors/acquirer will find out during the due diligence process and not move forward as a result.

that said, i'm not a lawyer, and i'm sure others can provide related nightmare stories -- but everything i've heard indicates it's really better to not screw around, and to have a paper trail indicating that you own your IP.

-drew

In California at least there are really good laws about this. No matter what your contract says, it's important to remember that you cannot sign away your rights.

The key is to not utilize _any_ employer resources. That means no using the company-provided laptop, servers, office space, bandwidth, and especially time (even lunch).

The other way to protect yourself is by keeping a work journal. Blogs are nice, but it's best if it's handwritten and dated. This is what will save you if it ever ends up in court.

Obviously I'm about as far from a lawyer as it gets, but this is what I know.

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