Navigating IP Ownership Disputes with Employment Agreements: A Comprehensive Guide

When it comes to intellectual property (IP) that employees develop during their tenure at a company, the issue of ownership can be complex and contentious. Many companies include clauses in their employment agreements that require employees to assign or offer to assign any rights in an invention to the employer. However, laws such as California Labor Code Section 2870 provide some protection for employees under certain conditions.

Common IP Ownership Clauses

Most companies structure their employment agreements to capture any IP developed by their employees that relates in any way to the company's business. This includes:

Inventions and creations that are related to the company's business activities Inventions and creations that result from an employee's use of company resources Inventions and creations that are developed during working hours

These agreements often extend their reach to unrelated IP that is generated through the employee's use of company resources. While these clauses can be seen as a preventative measure for companies, they can also be challenging for employees who might develop personal projects or ideas that fall outside their job responsibilities.

California Labor Code Section 2870

California stands out with its protection for employees, particularly when it comes to developing intellectual property (IP) on their own time. California Labor Code Section 2870 states:

A Any provision in an employment agreement which provides that an employee shall assign or offer to assign any of his rights in an invention to his employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information, except for those inventions that either:

Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer, or Result from any work performed by the employee for the employer.

Explanation: This statute protects employees from having to transfer ownership of IP they create in their free time, except in cases where the IP relates to their employer's business or their work for the employer. This offers valuable protection to employees who wish to develop their own ideas and creations without fear of IP infringement.

But be cautious: Even with the protection of California Labor Code 2870, it is crucial to consult a legal expert to fully understand the implications of any employment agreement you sign.

Real-World Examples and Considerations

One illustrative example comes from a friend of mine. She worked for a big gaming company as a consultant and never signed any IP assignment agreement. She emphasizes the importance of thoroughly reviewing all contracts and understanding the terms before committing.

Some employees have found themselves in situations where their IP rights were contested by their employers. For instance, an engineer might develop a song or a photo app in their spare time, but still find themselves in legal disputes if the work falls within a realm tangentially related to their job. The risks increase when the IP is linked to information or resources they had access to at their current (or previous) job.

Conclusion and Final Recommendations

While employment agreements can be restrictive, understanding the legal landscape, including California's IP law, is crucial. Always seek the guidance of an attorney to ensure you are fully informed and protected. By taking a proactive approach, you can safeguard your intellectual property and avoid potential legal issues.

Disclaimer: This guide does not provide substitute professional legal advice. Always consult with a legal expert for specific and personalized advice.