Spotting Hidden IP Assignment Clauses That Steal Your Work

Intellectual property assignment clauses are the most consequential legal language that most professionals never read carefully. The result, in the worst cases, is that the side project you built on weekends, the app you developed in your spare time, or the content you created outside of work hours is legally owned by your employer — because you signed a contract that said so.

This isn't a hypothetical risk. Companies have successfully asserted ownership over employee side projects, open source contributions, and even personal YouTube channels under overly broad IP assignment clauses.

How IP Assignment Clauses Are Supposed to Work

In a standard employment or contractor agreement, IP assignment gives your employer or client ownership of work you create in the scope of your employment or engagement. That's reasonable and expected. You're paid to create something, they own it.

The scope qualifiers are what should limit the assignment:

• Work created using company resources (company devices, software, time)
• Work that is within the scope of your duties
• Work created during working hours

All three of these qualifiers are meaningful limitations. The problem is when one or more is removed.

The Four Dangerous Expansions

1. "Related to the Company's Business"

This is the most common overreach. Language like "all inventions relating to the Company's business or reasonably anticipated business" can expand to cover virtually anything you create if the company has a broad enough business definition. A software company that says its business includes "AI and machine learning applications" just claimed ownership of the ML side project you built on your own laptop.

2. "During the Term of Employment"

When the assignment covers everything created during employment — not in the course ofemployment — it removes the scope limitation entirely. Under this language, the timing of creation (while you work there) is the only trigger, not whether the work had anything to do with your job.

3. Works-Made-For-Hire Expansion

The Works Made for Hire doctrine under U.S. copyright law automatically assigns copyright of certain works to the employer. Some contracts try to expand this beyond its statutory limits with language that deems all work product a "work made for hire" — including categories (like general works of authorship) that don't qualify under the statute.

4. Prospective Assignment of Future Inventions

Some agreements include a blanket pre-assignment of all future inventions you create while employed — a "present assignment of future rights." Courts treat these differently by jurisdiction; some enforce them broadly, others require that a specific nexus to employment be shown.

Protecting Yourself: The Exhibit Method

The standard professional practice when negotiating an employment agreement with a broad IP assignment clause is to attach an exhibit — commonly called an "Exhibit A" or "Excluded IP Schedule" — that lists your existing inventions, side projects, and creative works that are explicitly carved out of the assignment.

This exhibit should include:

• Any existing business ventures or side projects you own
• Any IP, patents, or copyrights you already hold
• Open source projects you maintain
• Content channels (YouTube, podcast, newsletter) you own

Get this exhibit signed as part of the agreement. Without it, you're relying on verbal assurances that will not hold up legally.

State Law Protections

Several states have enacted statutes that limit IP assignment in employment contracts: California (Labor Code §2870), Delaware, Illinois, Minnesota, North Carolina, and Washington all provide employees with varying degrees of protection for inventions made on personal time with personal resources unrelated to the employer's business.

But "protected by statute" and "protected in practice" are different things. Even in California, overly broad clauses slip through and create disputes.

Common Negotiation Outcomes by Company Type

The response you get when you push back on a broad IP assignment clause varies significantly by the stage and type of employer:

• Early-stage startups: Generally the most flexible. They often used a standard lawyer-drafted template that they haven't thought carefully about. A specific, reasonable carve-out request is often accepted without pushback. The founder or hiring manager usually has authority to modify the agreement directly.
• Series B–D startups: HR departments have emerged and company-standard agreements are firmer. The IP clause may be non-negotiable as a blanket policy, but a specific Exhibit A (carve-out list) is often approved without requiring a legal change to the boilerplate clause itself.
• Public companies and large enterprises: Employment agreements are standardized company-wide. The IP assignment clause is almost never individually negotiated. The Exhibit A approach — listing your existing projects upfront — is your most practical path to protection. Some companies have a formal process for this; others require you to propose it.
• Consulting firms and professional services: IP assignment is often more nuanced in these environments because the firm itself builds its business on deliverables. The assignment is usually limited to client-facing work. Examine whether internal IP (tools, frameworks, methodologies you develop) is also assigned.

Protecting Your Open Source Contributions

Open source contributors face a specific IP assignment risk that is often overlooked. If you maintain or contribute to open source projects while employed, and the company's IP clause covers work "related to our business or technology," your open source contributions may fall within that definition.

Protective steps for open source contributors:

• Explicitly list all active open source projects in your Exhibit A before employment begins
• Use clearly separated personal hardware and accounts for open source contributions — avoid using company laptops, accounts, or development environments for OSS work
• Document contribution timestamps that show open source work occurred outside business hours
• Review the specific licenses of projects you contribute to — some licenses (like GPL) may affect the employer's claim even if the IP assignment technically applies

Several high-profile disputes have emerged when employees contributed to popular open source projects while employed by companies whose IP clauses were broadly drafted. Even when the company ultimately didn't assert a claim, the dispute created reputational and legal complications.

Run your employment or contractor agreement through WhatsMyContract to get the IP assignment clause extracted, translated, and flagged for scope overreach — with specific language recommendations for the Exhibit A carve-out.