Key Takeaways

  • Employers generally own intellectual property created by employees in the course of their job duties or with company resources.
  • "Work for hire" laws and employment agreements heavily influence IP ownership.
  • State laws may offer exceptions that protect employees' rights to IP developed outside of work.
  • Employees should carefully document their side projects to help prove ownership.
  • Negotiating clear terms in employment contracts can help prevent future disputes.
  • Independent contractors and university employees are subject to different IP rules.
  • Confidentiality and nondisclosure agreements (NDAs) often reinforce employer IP rights.

The idea of employee intellectual property can raise a lot of questions for both employees and employers. If you are employed in a creative field where you are creating literary or artistic content, a college professor at a university, or work in research and development for a company, you may be confused as to what is considered your intellectual property versus what is that of the company. These questions become particularly pertinent when if and when you seek other employment. (Think prospective employers asking for writing samples, or a rival employer wanting to know the secret ingredient in something.)

How to Know When What’s Yours Is Yours

So, as an employee, how do you know if you own the rights to your intellectual property?

If you signed something called an assignment agreement upon being hired, depending upon the verbiage, there is a very real possibility that not only does your employer own the intellectual property you create while at the office, they may also have a claim on projects that you create in your free-time, even if they have nothing to do with the job for which you were hired. Depending upon where you live, however, there may be a silver lining, as several states, including California and North Carolina, have passed laws making it more difficult for companies to take ownership of an employees creativity.

So, what if you did not sign an assignment agreement, or you are lucky enough to live in a state that has a strong appreciation of employee rights? You may still be in a situation where your employer owns the intellectual property to anything you created using company resources, on company time. You will want to consult all of the paperwork you signed when you were hired.

If you are working on side projects on your own time, you can protect yourself by keeping thorough records of everything you are working on, progress that you have made, dates, etc. By then mailing these records to yourself, the postmark will serve as a copyright.

Anything that was created during work hours, using company resources, and otherwise in the regular course of your day and work, is the intellectual property of the employer, by default. As such, you may want to steer clear of using company time or resources for your side projects. Save your side projects for evenings and weekends, when you are at home, just to err on the side of caution.

Factors That Influence Intellectual Property Ownership

Intellectual property (IP) ownership is often determined by a combination of federal law, state law, and the specific terms of your employment contract. Here are some common influencing factors:

  • Scope of Employment: If the creation of IP is part of your job duties, your employer likely owns it—even if not explicitly stated.
  • Use of Company Resources: Using company equipment, time, or tools often gives the employer a stronger claim to the IP.
  • Work for Hire Doctrine: Under this legal concept, works created by an employee within the scope of employment are considered the property of the employer by default.
  • Employment Agreements: Contracts may include clauses that extend employer ownership to creations made outside work hours if they relate to the company's business.
  • State Laws: Certain states, like California and Illinois, limit how far employers can extend claims over IP created outside of work hours and without company resources.

It’s Not All Bad News

While it may seem as though your employer is going to have rights to everything in your head, that is not true, either. Intellectual property that came about throughout the course of your regular work day (in the absence of an agreement stating otherwise) also has to be applicable to the job for which you are hired. For example, if you are hired as a marketing expert who is expected to create marketing plans, social media strategy and content, then sequence of code that you wrote for that computer science class you are taking at night, may be off-limits.

Exceptions That Favor Employees

While employers often retain ownership of employee-created IP, several exceptions and legal protections favor employees:

  • State Law Protections: States like California (under California Labor Code Section 2870) protect employee inventions developed entirely on personal time without using employer equipment or trade secrets.
  • Outside Scope of Employment: If your invention or creation is unrelated to your job duties, your employer is less likely to have a claim to it.
  • No Written Agreement: In the absence of a written IP assignment clause, default ownership can fall to the creator, especially for independent contractors.
  • Academic Exceptions: University faculty and researchers often retain rights to scholarly articles and some inventions, depending on the institution’s policy.

To strengthen your position as an employee, it's wise to:

  • Keep records showing you developed the work on your own time.
  • Avoid using any company tools or software.
  • Maintain a clear boundary between job responsibilities and personal projects.

Sign on the Dotted Line

You may be thinking that the last thing an employee should do is sign anything regarding their intellectual property, for fear that they may be signing over their brain. While it’s certainly important, especially if you work in a field or profession in which intellectual property is of concern, to have a lawyer review any employment documentation before you sign it, you can be protecting yourself and your intellectual property rather than losing it.

By carefully reviewing what you are signing, you can ensure that side projects that you create on your time, with your own resources, are not the property of your employer. You can ensure that they only have rights to the intellectual property that you created that is within the scope of the job for which you were hired.

It can also save both you and your employer a lot of headaches, if and when the time comes for you to move, if everyone has always been on the same page regarding who owns what.

Intellectual Property and Independent Contractors

Independent contractors are not employees, so the default rule is that they retain ownership of the IP they create—unless a contract states otherwise. However, companies frequently include IP assignment clauses in contractor agreements to secure rights to the work product.

Key points to consider:

  • Work for Hire Exceptions: Most independent contractor creations are not considered “work for hire” unless they are specifically commissioned types of works (like contributions to collective works or certain audiovisual works).
  • Contract Language Is Critical: Without a written agreement assigning IP, the contractor may retain ownership.
  • Licensing vs. Assignment: Some contracts grant the employer a license to use the IP rather than assigning full ownership.

The Role of NDAs and Trade Secrets

Even if employees do not own certain intellectual property, they may still be legally restricted from using or sharing it due to nondisclosure agreements and trade secret protections.

  • NDAs (Non-Disclosure Agreements): Legally bind employees to confidentiality about sensitive information.
  • Trade Secrets: Protected under federal and state laws, including the Defend Trade Secrets Act, which allows employers to take legal action if confidential IP is misused.

Violating these agreements can lead to lawsuits or injunctions—even if the employee was involved in creating the protected IP.

Common IP Clauses in Employment Agreements

Employment contracts often include various clauses that affect employee intellectual property rights. Understanding these clauses is essential before signing:

  • IP Assignment Clause: Transfers ownership of any IP created during employment (and sometimes beyond) to the employer.
  • Invention Disclosure Requirement: Requires employees to inform the employer of any inventions made while employed, even if created on their own time.
  • Non-Compete and Non-Solicit Clauses: Can restrict the ability to commercialize IP even after leaving the company.
  • Confidentiality Agreements (NDAs): Prevent the disclosure of sensitive information and often indirectly reinforce employer ownership over related IP.

If a clause is overly broad or unclear, seek legal advice before signing. You can find experienced employment attorneys on UpCounsel to help protect your IP rights.

Frequently Asked Questions

  1. Can my employer claim ownership of my side project?
    Yes, if your employment agreement includes broad IP assignment clauses or if you used company time/resources, your employer may have a claim.
  2. What happens if I didn’t sign an IP agreement?
    In many cases, default legal rules apply, which often favor the employer for work created within job scope. However, creations made entirely off-hours and unrelated to your job may remain yours.
  3. Do independent contractors keep their IP rights?
    Generally, yes—unless the contract assigns the IP to the company. It’s essential to review contractor agreements carefully.
  4. Can I negotiate my IP rights before taking a job?
    Yes, especially for roles involving innovation or creative work. It's best to clarify IP ownership before signing any employment documents.
  5. Are there laws that protect employees’ IP rights?
    Yes. Some states, like California, have laws that limit employer claims on inventions developed during off-hours with personal resources.

If you need help with employee intellectual property, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.