Legal, Tax, and Accounting May 19, 2020

Employer claiming my on and off hours' IP

KongSharp

Hi guys,

I'm currently in my first year of a CS course and I've heard that most developer employment contracts include a clause that says that the employer owns any IP you create during your employment, on and off hours.

As I would probably enjoy building things to monetise while working for someone else, do you think it'd be realistic to assume I can ask employers to change the contract so it doesn't include off hours' IP created.

Have any of you not been able to change this clause in your contract? And if so, did you still moonlight?

If I assume worse case, it feels like I have a countdown on the freedom of creating new IP - that ends when I 'need' a developer job to earn money. I'm even considering working in another kind of role once I graduate that doesn't feature this kind of clause in their employment contracts.

  1. 2

    As others have said, it's fairly common. I think it's a pretty reasonable clause for employers to have in your contact. I believe it's mostly to cover their ass if you start moonlighting with a non-competing business and it starts effecting your work. I've seen people do this before, but I've never seen a company actually use that clause.

    Most companies don't care about your side projects, so long as it's non-competing and it's not negatively effecting your work. At my current company (a FAANG company), there is even a formal approval process for side projects so that you can retain ownership and they can stay protected. Open source projects, I think, are automatically approved in my contact. Even if a company doesn't have such a process, it should be fine so long as you get written approval (where they sign off property rights.)

    Definitely don't take a non-programming role for fear of this. You can easily just get a job at a company that has a more lax policy.

  2. 2

    This is fairly common but there’s a subtle context I believe you’re missing. The clause usually only applies to ip that exists in a competing space with your employer.

    If the contract actually states All ip then you should probably avoid that employer or get it changed.

  3. 1

    thank you for all of your guys' advice - it's put my concerns to rest

  4. 1

    It's a very tricky situation if you already have the IP clause in your contract. Here's how you can tackle it though:

    IF your side project is:

    • something different than the primary job,
    • doesn't compete with the primary job product,
    • doesn't rely on "secret information", insider data, etc. that you obtained from your primary job,
    • doesn't affect your performance at your primary job,
      THEN you can use these as arguments to negotiate annex or at least a handshake deal that "you don't tell, they don't ask". Some companies are overly paranoid, so unless you already negotiated it in the first place, it will be hard to change this clause.

    IF, on the other hand, your side project:

    • uses any information, data, concept, design, from your primary job product,
    • enters a competitive market with your primary job,
    • affects your performance (like you must do pauses to provide user support during the day job),
      THEN your employer is right to claim the IP.

    For example, from my own area: I have a few personal projects, but they never compete with the primary job. Like I worked for an HR company, and had a cooking website. Worked for a recruitment company, and had a communication tool. I was always very upfront about having my own project and always refused the clause on this ground: "I have my own ideas and these are unrelated to my day job, I will inform you if needed, but it's my sole discretion on working on them after work".

    Hope that helps!

  5. 1

    If by 'off hours' you mean hours after work when you do not work on your employer's projects, it is very unreasonable for the employer to claim IP on that work of yours.
    The employer has IP over the work you do for their projects, no matter what time of the day you do it. They cannot claim IP over your personal side projects you create in off hours unless you agree to that in the contract. Make sure you read the contract and, if there is such a clause, ask them to remove it. It is unreasonable and unfair.

  6. 1

    It does depend on your employer. Some employers will reach as far as they can and others will be more reasonable. I'd suggest reading your employment contract (most people don't). If it includes such clause try and get an amendment that says anything outside of your employment that doesn't compete is exempt. Any good employer would be ok with that.

    As someone with little experience, you probably won't be in a great negotiating position, unfortunately. Do your best and know that currently, software engineers have a lot of opportunities (even in the current climate). If you can't get a favorable contract, know that you will have more opportunities.

  7. 1

    It's common practice unfortunately. If you have a specific project that you are working on, you can exclude that project specifically from that contract as well. When in doubt, ask an attorney. These things dramatically vary by legal jurisdiction.

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