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I have heard of companies that require their developers to sign agreements that say any code developed by that developer while they are employed there belongs to the company. I am extremely uncomfortable with that kind of agreement. How common is this practice?

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depends on the country you live. –  free_easy Apr 2 '11 at 5:24
    
Yes, whether you do it on your own time or the company's . –  Aditya P Apr 2 '11 at 19:53
    
I have one of the kinder no-compete act which applies to anything I do at work, or anything I do on my own which would have come directly from my work. It lasts for 6 months after a leave and I think it's pretty fair. I wouldn't sign anything that included things I did unrelated to my work. –  WuHoUnited Apr 3 '11 at 1:55
    
It also depends on the state you live and work in, if you're in the US. Laws vary, and an agreement that's legal in Texas might not be in Minnesota. –  David Thornley Apr 4 '11 at 13:39

4 Answers 4

up vote 7 down vote accepted

It s not unheard of, and some companies try to stretch that to any intellectual property you generate. In many countries it's not binding (it's an unconscionable contract). In my experience most companies don't really care - what they want is to avoid you either working for someone else when you're getting paid by them, or setting up in competition with them. This clause is to make it explicit that when they're paying you, what you produce is theirs. And easier to fire you when they find you coding for someone else at work.

The overreach is rarely negotiable in my experience. Mostly the people making the offer are not in a position to renegotiate that clause, and you insisting on it will cost you the job. On the other hand, it's quite likely that you can get an exemption written in for any specific projects you are working on, even if that means having to get written permission for each project you want to get involved in.

If the overreach is the "anything you do" one it is sometimes easier to fight, especially if you have a record of selling IP. Even ads on your personal website will be enough, since it makes the point that you earn money from activities unrelated to your day job.

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I've seen both kinds, personally (that is, the "anything you produce with a computer" kind and the "anything that directly competes with us" kind). In both cases, I just got a written agreement from my manager that what I did in my spare time was OK. In reality, it's unlikely your boss (or even your boss's boss) will care: it's likely a clause that was added by the lawyers to cover themselves in case you quit and start selling a competing product. –  Dean Harding Apr 4 '11 at 0:27

This is very common for a variety of reasons. Assuming the employer does not have any ill intentions, they are just trying to protect themselves from you producing a competitive product, making intellectual property claims on something you did for them, etc. In some states, this is not enforceable. Regardless, the employer would have to take legal action against the employee to enforce these clauses, so if they have nothing to gain by suing you / nothing to lose by leaving you alone, you're probably fine.

Now, some states have specific laws protecting employees from employers trying to enforce these types of agreements unjustly. If you don't live in one of those states, you could probably ask for an amendment to your employee agreement with a copy-paste of one of those laws. If they say no, then be careful. I would personally not trust an employer unwilling to waive intellectual property rights to something I produce on my own time, on my own equipment, and having nothing to do with their realm of business.

This is the text from California's labor code, which addresses this and is concise enough for most people to understand (emphasis mine):

CALIFORNIA LABOR CODE SECTION 2870
INVENTION ON OWN TIME-EXEMPTION FROM AGREEMENT

(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

(1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or
(2) Result from any work performed by the employee for the employer. (b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

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This is standard practice.

First one disclaimer: I am not a lawyer. I see only one caveat to the way you expressed it: this should apply to any code developed at the workplace or with information you have access to by virtue of your position (be it intellectual property, business knowledge...). It should not extend to code you write totally independently of your employer in a separate business area. But you must be able to prove that if they challenge you.

They pay your salaries, you have access to their customers, their business plans, their project management, their sales force, their human resources, their equipment, their network, their IT support, their lawyers, their finance people, their accountants, you get paid to produce code for them.

Seems like pretty normal to me. In fact I would go so far as saying that an employer would be pretty foolish not to protect themselves thus.

If you want to own your code, you must be your own boss and pay for all the ancillary costs around that (can be over 80%).

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"It should not extend to code you write totally independently of your employer in a separate business area".. that's exactly the sort of contract the OP is asking about. How common is a clause like that? I can't say. I know I've read about such things on the internets, but I've certainly never seen it myself. But I'm in Australia, and this is surely a country-by-country issue. –  Carson63000 Apr 2 '11 at 6:20
    
The employer MUST protect their IP,and ensure they retain the copyright on code they pay you to write. It's by far easier for them to ensure this with a blanket agreement. A good employer should have a mechanism so that you can identify ahead of time projects that you work on with your own time and resources so that you can retain the IP for it. –  KJAWolf Apr 2 '11 at 12:58
    
@Carson63000: I agree (to an extent) it should not, but most employers will have such a clause. Weather it is legal or not is a question for lawyers. If you write something that directly competes with your employer than you are going to be in hotter water (and in my opinion belongs to the employer) than if you make something completely unrelated (which in my opinion should be yours (as long as you did not use company resources)). But either way the cost of taking the company on in court will be prohibitive so it may be worth asking permission first (most companies have a moonlighting policy). –  Loki Astari Apr 4 '11 at 0:20

Altought, I agree that a company must protect its "assests", (I have seen developers taking source code from previous employers and sell it as its own), sometimes it can be a problem, when making libraries, visual controls, or code that by itself its not an application, and been sued for that.

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