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Does the company that I am working for own the IP from the startup that I am working on spare time?

A friend is asking this same question. If he is working for a large corporation does this corporation have any type of ownership on the startup that he is building on the side during his spare time?

10 Replies

Michael Barnathan
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Michael Barnathan Entrepreneur • Advisor
Co-Founder of The Mountaintop Program, Google Alum
Read your employment agreement carefully for the answer to this question.
Clive Butkow
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Clive Butkow Entrepreneur
Chief Executive Officer at Grotech Venture Capital Company
If your friends employment agreement specifies that any IP that is created during their tenure at the company, irrespective when it it created, the IP would belong to the company. He/she would need to specifically exclude in their employment contract that any IP that is created in their own time is owned by the author, themselves. If the matter is silent in the employment contract the law in most countries would be that the IP is owned by the employer.
Ulrik Horn
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Ulrik Horn Entrepreneur
Project Manager at Watty
These laws vary by country and I see that you are based in Greece. You should check the general law in Greece in addition to the contract.

One good place to ask for advice is from government-backed (is there anything public left in Greece!?) incubators. Call up people at the incubator; most of them are probably super willing to help you understand what applies in Greece. Other sources are employment lawyers, IP lawyers and HR professionals and of course fellow Greek entrepreneurs...
Doug Winter
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Doug Winter Entrepreneur
Founder and Director of Isotoma
Depends on your employment contract. Loads of employment contracts include these clauses, and they are generally enforceable.
Andrea Raimondi
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Andrea Raimondi Entrepreneur
Computer Software Consultant and Contractor
If you have to ask the question, then chances are it is. I say this because, generally, in "good" companies this wouldn't really even be an issue :) if it's an issue, chances are it's not a good company, and therefore their contract is restrictive of employee's freedoms. I negotiate this bit very hard when I have a new employer.
Ziv Rotenberg
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Ziv Rotenberg Entrepreneur
Founder and managing partner at Group8 Consultants
As others mentioned, you need to start by looking at the employment agreement. Most likely it says that all IP conceived by the employee belongs to the employer regardless of whether they conceived it at the workplace or during work hours. If this is the case and your friend is in the US, then that is it. If your friend is not in the US, e.g. if he is in one of many EU countries that have mandatory statutory ownership clauses, possibly the invention will not belong to the employer if it is not related to what your friend is doing for the employer, and in some countries an agreement to the contrary would not be enforceable if it is regarded as unreasonably derogating from employees' proprietary rights in their inventions. Your friend should check the contract and the law in the country in which she/he is located (that would be the patent law). In the unlikely event that the contract does not say anything about IP ownership than in most countries the law will have clauses to decide who owns what, whereas under the US patent law I believe that the inventor (that is your friend I presume) will be regarded as the owner of the invention. In short, in most cases in the US it is likely that the employer will own the IP, in most other countries the employer will own the IP only if it is connected to the duties and obligations your friend has towards his employer and to the employer's field of business.
Joseph Wang
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Joseph Wang Entrepreneur
Chief Science Officer at Bitquant Research Laboratories
In the US and in HK and there is no agreement otherwise, then no, but the trouble is that often there is a clause in the fine print of the employment agreement that you signed.

This is one reason that you need to read very carefully any document that an employer has you sign, and be prepared to bargain with the employer over "standard documents." It turns out that most companies that hire programmers have reasonable conditions, because they realize that they can't get programmers if they impose unreasonable conditions.

One thing that you should absolutely do is to make sure that you do not use company resources to do anything related to the startup.

Also since you are doing a startup. One thing that you will have to think about is what conditions *you* put on your employees when you have them sign your employee agreements. The golden rule works pretty well in this situation, don't force your employees to agree to any conditions that you think would be unfair for a company to impose on you.

Finally, YMMV, but I've never seen a situation in which a company wanted actual rights to the IP that was generated, because that turns out to be pretty hard to do. A far more common situation is that the employee goes off and works on a startup that the employer sees as competition. At that point the companies lawyers try to make as much trouble as possible for the startup, and claiming IP infringement is a way of getting the startup to waste time and money so that it cannot compete. It can get messy because since they are trying to make trouble for you, IP can be only one of several arguments they throw at you.

Knowing the situation turns out to be highly useful, because even bogus arguments can achieve the purpose of causing you to waste time and money.

Martin Omansky
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Martin Omansky Entrepreneur
Independent Venture Capital & Private Equity Professional
Usually the employer has a defensible claim, but it all depends on the wording of the employment contract. It gets even trickier if the employer is a university or a hospital, and/or if money for your work comes from the government. I would talk to an IP lawyer about your specific circumstance.
Alan Sack
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Alan Sack Entrepreneur
Founding member of SACK IP Law p.c., Intellectual Property Law and related Matters.
There are a number of issues that need to be looked at.
1. Does your employment Agreement cover such a situation?
2. Have you been developing IP in the same area that you have been hired to work on for your present employer; and
3. Have you been using your employer's facilities andequipment o work on your innovation, and
4. Have you been working on your IP/Venture on company time.

I strongly suggest that you consult with an experienced Intellectual Property attorney who can look at your materials and counsel you confidentially. This is important, since you don't want to face a claim orlawsuit from your employer when you launch your new business.
Scott McGregor
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Scott McGregor Entrepreneur • Advisor
Advisor, co-founder, consultant and part time executive to Tech Start-ups. Based in Silicon Valley.
Any employment agreement you have may claim ownership. That might mean that your employer does own the IP. However, not every agreement is enforceable in every jurisdiction. You should speak to an attorney to determine if there are any such clauses, and if so, whether they are enforceable in your jurisdiction, and if there are any limits. For instance, in California, if you do the work entirely on your own time, and without using any of youremployer's resources, and if your invention is not in a business that your employer is in, or is planning to enter, the courts may choose to deny your employer rights to your invention. So there are special cases that you should rely on a knowledgable attorney to advise you.


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