So about a week (or so) ago, I posted part 1 of this topic which covered how to not get screwed when quitting your job to start a business.
How might you be screwed?
By overly broad non-compete agreements hanging out in that employment agreement you signed with your soon-to-be-former employer.
You can read all about that in Part 1 right over here.
Now, its time to move on to part deux!
Invention Assignment …. or The One Where Your Employer Owns Anything & Everything You Created While Working For Them
Yes, sadly, you did read that right. It is not uncommon for an employment agreement to include some mumbo jumbo about how your former employer owns anything you created during the course of your employment. This is sometimes called an Inventions Assignment Agreement but may just be slinking around in an employment agreement with an innocuos heading like Inventions or Intellectual Property.
I know I just called it mumbo jumbo but that was just for entertainment purposes. In reality, it makes perfect sense that your employer would want to protect the stuff they’ve hired you to create. There is nothing wrong with that. Would you hire a designer to create a logo and then not expect to have complete rights and ownership over the resulting logo? Of course not! That would be poppycock!
In fact, once your new business is up and running, it would be wise for you to have your employees and independent contractors sign similar invention assignments to ensure you own what you are paying your people to produce for the business.
Here’s Where It Gets Froggy
Where it gets a little froggy is when employers create overreaching invention assignments that include anything that you worked on during the term of your employment. That may very well include the stuff you’ve been making after hours in your secret lair (read: at your kitchen table). This is particularly true if you have used your employer’s offices (instead of your secret lair), computers, software, and/or confidential information to create that invention, intellectual property, product, business, etcetera.
I’ve also seen invention assignments where the employer requires the employee to disclose any inventions already established/created by the employee before ever working for the employer and then include a clause stating that the employee grants the employer an irrevocable, unlimited license to use all those prior inventions to advance the employer’s business. (Did you catch all that?) That’s pretty cray!
Some states have laws to prevent employers from owning every idea an employee comes up with during the duration of employment. For example, California’s labor code prevents an employer from owning the inventions of employees when said invention
- does not relate to the business of the employer,
- is made during employee’s personal time,
- not using company equipment,
- and the invention does not result from work performed by the employee for the employer.
So What Should You Do If You Signed One of These Bad Boys?
Well for starters, while continuing to work there
- don’t use your employer’s equipment, software, confidential information etc. to work on your side hustle (or if you’ve already done that, stop),
- and never work on your side hustle during work hours or at your employer’s offices,
- don’t even send or receive emails regarding your side hustle from a work computer or take side hustle phone calls from a work phone,
- if possible, consider asking your employer to agree that inventions made on your own time, even if related to your employer’s business, are owned by you and you alone (you may want to talk to a lawyer before trying this method).
Be sure to read through the employment agreement and any accompanying documents you signed when you started your job. If there is an invention assignment in there and you have created IP that you want to use in your new business while working there, consult with an attorney to help you navigate this issue. The intellectual property in your business is extremely valuable so its worth it to take steps to protect it.
Stay tuned for part 3 of this topic. I’ll be talking about the remaining clauses of concern that may be in the employment agreement you signed.