IP Assignment Clauses in Tech: Do You Own Your Side Projects?

You're a software engineer with a side project. Maybe it's an open source library. Maybe it's a SaaS app you're building on weekends. Maybe it's just an idea you've been prototyping. Then you sign an employment agreement with a clause that says the company owns all intellectual property you create "during the term of your employment."

Does that include your side project?

The answer depends on three things: the specific language of your IP assignment clause, the state you work in, and whether your side project relates to your employer's business.

How IP Assignment Clauses Work

Most tech employment agreements include what's called an "invention assignment" or "IP assignment" clause. At its core, this clause transfers ownership of things you create to the company. The question is how broadly it's written.

Narrow (more protective of you): "Employee assigns to Company all inventions and works of authorship created within the scope of Employee's employment and using Company resources."

Broad (less protective of you): "Employee assigns to Company all inventions, works of authorship, ideas, and intellectual property created during the term of Employee's employment, whether or not related to Company's business, and whether or not created during working hours or using Company equipment."

The narrow version is straightforward — you're assigning the work you do for them on the job. The broad version could capture anything you build while employed, including work that has nothing to do with the company.

State Law Protections

Several states have laws that limit how broad these clauses can be, regardless of what the contract says:

California (Labor Code Section 2870): An employer cannot require assignment of inventions that are developed entirely on your own time, without using the employer's equipment or trade secrets, unless the invention relates to the employer's business or anticipated research/development. This is the strongest protection.

Delaware, Illinois, Minnesota, Washington, North Carolina, and others have similar (though not identical) statutory protections.

If you work in one of these states, your IP clause may be legally narrower than its language suggests. But relying on state law protections is different from having a well-drafted contract — it means you'd need to assert your rights if a dispute arises, which costs time and money.

The Pre-Existing IP Schedule

Most employment agreements include an exhibit or schedule where you can list IP you've already created before starting employment. This is your opportunity to formally carve out your existing side projects from the assignment clause.

Take this seriously. List everything: your side projects, your open source contributions, your personal websites, any patents or patent applications, any code repositories you maintain. If it's not on the list, it's harder to argue it was excluded later.

Some agreements also include a process for disclosing new inventions during employment and getting written confirmation that they're outside the scope of the assignment. If yours includes this, use it.

What To Do If the Clause Is Too Broad

If your IP clause captures side projects and you work in a state without statutory protections, you have a few options:

Ask for a narrower clause before signing. This is more common than people think, especially for engineers who come in with existing projects. A simple amendment limiting assignment to work related to the company's business, created using company resources or during work hours, is reasonable and most companies will agree.

Document your pre-existing IP thoroughly in the schedule.

Keep your side project development clearly separated — different equipment, different time, different subject matter from your job. If a dispute ever arises, clear separation makes your case stronger.

Analyze Your IP Clause

Paste your employment agreement into dott.legal and the AI will specifically evaluate the IP assignment clause — flagging whether it's limited to scope-of-employment work or captures broader IP, whether state-specific protections apply, and whether there's a pre-existing IP carve-out.