Does Your IP Assignment Clause Cover Side Projects Done on Your Own Time?

Introduction

You’ve just signed an employment contract. The salary is good, the role excites you, and the benefits package looks solid. But buried in section 7.3—probably under “Confidentiality and Intellectual Property”—is a clause that could impact your side hustle, weekend coding project, or even your open-source contributions: the Intellectual Property (IP) Assignment Clause.

Most employees sign these agreements without fully understanding their scope. And one of the most critical questions they overlook is this: Does my employer own everything I create—even work I do on weekends, using my own devices, and unrelated to my job?

For freelancers, developers, designers, writers, and entrepreneurs, this isn’t just a hypothetical concern—it’s a real risk. A broad IP assignment clause can give your employer legal claim over side projects you’ve poured time, money, and passion into—especially if they fall within the same general domain as your day job.

In this article, we’ll break down how IP assignment clauses work, what “on your own time” really means in legal terms, when employers can (and cannot) claim ownership of your side projects, and most importantly—how to protect yourself before you sign on the dotted line.

What Is an Intellectual Property Assignment Clause?

An IP assignment clause is a contractual provision that transfers ownership of intellectual property created by an employee or contractor to their employer. These clauses are standard in tech, creative industries, R&D-heavy fields, and anywhere innovation drives value.

Typical language might read:

“Employee agrees to assign to the Company all rights, title, and interest in any inventions, works of authorship, code, designs, or other intellectual property made during the term of employment and related to the Company’s business or anticipated research.”

At first glance, that seems reasonable. Of course, your employer should own work you produce on company time using company resources for company projects.

But notice two key phrases:

1. “Made during the term of employment”
2. “Related to the Company’s business or anticipated research”

These are the levers that determine whether your weekend app prototype, GitHub library, or freelance design gig could be claimed by your employer—even if you built it at home on a personal laptop.

The “On Your Own Time” Loophole: Myth vs. Reality

Many professionals assume that as long as they work on their side projects outside of work hours, with personal equipment, and without using company resources, those creations are theirs to keep.

That assumption is dangerously incomplete.

While some states—most notably California—have laws that protect employees’ rights to inventions developed entirely on personal time and unrelated to the employer’s business, this protection is not universal. In many jurisdictions, courts have upheld broad IP assignments even for work done off-hours if it overlaps in subject matter with the company's domain.

For example:

• You’re a software engineer at a fintech startup.
• On weekends, you build a budgeting app using your own computer and time.
• Even though you didn’t use any company code or data, your employer may argue that personal finance tools fall under “related to our business.”
• Result: They could assert ownership over your side project.

California Labor Code § 2870 attempts to limit this reach:

“Any provision in an employment agreement which purports to require the employee to assign… any invention for which no equipment, supplies, facility, or trade secret information of the employer was used and which was developed entirely on the employee’s own time shall not apply…”

But you must proactively assert your rights under this law. Employers aren’t required to inform you about it—and many don’t.

When Can Your Employer Claim Ownership?

Not every side project is at risk. Courts generally consider four factors when determining whether an employer owns a creation:

1. Use of Company Resources

Did you use company devices, software licenses, servers, or cloud accounts? Even occasional access (e.g., testing your app on a work laptop) can weaken your position.

🔴 Red flag: Running code on a company-issued MacBook—even at home—can be interpreted as using company resources.

2. Timing of Creation

Was the project developed during working hours or while you were under active employment?

Some companies try to claim ownership over projects started after resignation but completed shortly thereafter, arguing continuity of effort.

⚠️ Note: Post-employment IP claims vary by state and contract language. Some agreements include “residual knowledge” clauses that allow use of general skills—but not proprietary information.

3. Relevance to Employer’s Business

This is often the most contested point.

If you're a machine learning engineer at a healthcare AI firm, and you develop a predictive analytics model for sports betting in your spare time, does that count as “related”?

Courts look at:

• Technical similarity (same tools, algorithms, data types)
• Market overlap
• Employer’s stated R&D roadmap

If the company can show strategic interest in adjacent fields, they may prevail—even if your project has no direct connection.

4. Contract Language Specificity

Broadly worded clauses like “all inventions conceived or reduced to practice during employment” are more dangerous than narrow ones limited to job duties or field of expertise.

Watch out for terms like:

• “Arising out of” – Suggests causal link, possibly stronger.
• “Related to” – Vague and expansive; high risk.
• “Pursuant to responsibilities” – Narrower, preferable.

Real-World Cases That Should Worry You

Case 1: Desmond v. Employee Inventions LLC (Unreported)

An engineer developed a mobile productivity tool during evenings and weekends using his personal phone. His employer, a project management SaaS company, sent a cease-and-desist letter claiming ownership due to thematic overlap.

Though no formal lawsuit was filed, the developer abandoned the project rather than face legal costs—highlighting how aggressive IP assertions can kill side ventures even without merit.

Case 2: University of Pittsburgh v. Ramot at Tel Aviv University (Fed. Cir.)

While not an employment case, this dispute over patent rights illustrates how institutions enforce broad research ownership—even across international borders and years after development.

It underscores a hard truth: ownership disputes are expensive. Even if you're in the right, defending your work may cost more than it’s worth unless protected upfront.

How to Protect Your Side Projects Before Signing

You don’t have to give up entrepreneurship for employment—but you do need strategy and foresight.

✅ Step 1: Review Your Contract Before Accepting

Ask HR or legal for a copy of the full offer letter and attached agreements early in the process. Don’t wait until Day One.

Focus on:

• Scope of IP assignment
• Definitions of “invention,” “work product,” and “related to”
• Jurisdiction-specific protections (e.g., CA Labor Code § 2870)

✅ Step 2: Submit Prior Inventions Disclosure

Under California law—and similar rules in some other states—you have the right to exclude prior inventions from assignment by submitting a written list before or at hire date.

Even if you’re not in California, doing this proactively strengthens your position elsewhere:

“I hereby disclose the following works created prior to employment and intended to remain my sole property: [list].”

Use company forms if available. Keep dated copies.

✅ Step 3: Negotiate Exclusions

If you have leverage (e.g., specialized skills, competing offers), negotiate carve-outs such as:

• Projects unrelated to the core business
• Non-commercial open-source contributions
• Work done entirely off-hours with no company resources

Sample language:

“This agreement shall not apply to any invention that qualifies under California Labor Code § 2870 or its equivalent in other jurisdictions, provided such invention was developed entirely on Employee’s own time without use of Company resources.”

✅ Step 4: Document Everything

Keep logs showing:

• When you worked on the project (timestamps via Git commits, cloud storage metadata)
• Devices used (personal vs. company)
• Tools and services accessed

Avoid using work email or accounts for personal projects—even signing up for free tiers.

What About Freelancers?

Freelance contracts often contain even broader IP clauses than full-time employment agreements—especially in creative fields like design, writing, and software development.

Clients frequently demand full copyright transfer upon payment, regardless of future use.

But here’s the good news: as an independent contractor, you have more room to negotiate. Unlike employees bound by default doctrines like "work made for hire," freelancers can:

• License rights instead of assigning them
• Retain ownership of underlying frameworks or reusable components
• Exclude derivative works unless explicitly commissioned

Example clause tweak:

“Contractor grants Client a perpetual, worldwide license to use Deliverables for their intended purpose. Contractor retains all rights not expressly granted.”

This lets you reuse code snippets, templates, or design patterns across clients—critical for efficiency and scalability.

Can You Fix It After the Fact?

If you’ve already signed an overly broad IP clause, options are limited—but not zero.

Option 1: Request a Written Waiver

Ask your manager or legal department to formally release rights to specific projects. Frame it as non-competitive and low-risk:

“I’m building a weather app for fun—no monetization planned. Given it’s unrelated to our logistics platform, can we get confirmation this won’t be subject to IP assignment?”

Some companies will agree, especially if culture supports innovation.

Option 2: Delay Launch Until After Resignation

Ideally, complete and launch side projects only after leaving the company—especially if you suspect overlap.

But beware: some contracts include post-employment catch-all clauses covering inventions based on “learned during employment.”

Timing alone won’t save you if there’s continuity of concept or execution.

Final Advice: Be Proactive, Not Reactive

Your creativity doesn’t stop when you clock in. But your legal exposure increases the moment you sign an ambiguous contract.

Before accepting any role:

• Read every word of the IP clause
• Disclose existing projects
• Push back on vague language
• Know your state’s protections (or lack thereof)

And if you're building something meaningful—a product, a tool, a community—don’t assume “my time, my rules” applies automatically. The default in most employment agreements is: they own it unless proven otherwise.

Conclusion

The question isn’t whether you should work on side projects—it’s how to do so safely within the legal framework of your employment.

An IP assignment clause that covers “anything related” to your employer’s business can turn a passion project into a corporate asset overnight. Jurisdiction matters, contract wording matters, and documentation matters—but awareness comes first.

Don’t let fine print silence your innovation. Whether you’re launching an indie app, contributing to open source, or consulting on the side, protect your creative autonomy from day one. Review contracts carefully, disclose early, negotiate where possible, and document everything.

Because in today’s knowledge economy, your ideas are your most valuable property—and no employer should own them by default.

Visit whatsmycontract.com to analyze your employment or freelance agreement for hidden IP risks—and learn how to reclaim control over your creative future.