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Ask HN: What's a fair policy for employee-generated IP?

5 points by bhb ↗ HN
My cofounder and I have long agreed that most big company IP agreements suck (we've written about it at http://devver.net/blog/2008/08/looking-for-your-first-cs-job-be-sure-to-own-your-ideas/). Many of them state that employee IP, no matter when it's created, is owned by the company (whether or not that's enforceable is another state-specific question).

Now we're hiring (http://devver.net/jobs) and are trying to figure out a reasonable agreement for the IP employees generate in their free time.

On the one hand, we want to encourage our employees to work on what they want outside of work. They'll be happier, they'll increase their breadth of knowledge, and we want to support open source.

On the other hand, we do want to make sure we own the IP that directly relates our business (no matter when it's created). And since we want to hire full-time employees who are free to work from home, there won't always be a clear distinction between "company time" and "personal time."

Have any of you founders come up with an agreement that both encourages outside work yet protects your company adequately (and doesn't completely freak out investors)? I'd love to what different companies are doing in this regard.

5 comments

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jwilliams
In the past I've requested explicit opt-in and out.

Usually there is a blanket IP clause, but if I say "I'm going to work on ABC in my spare time" - and we all agree this isn't core the business - then it's added as a schedule exclusion.

You need to be specific, but it works just fine if all the parties are operating in good faith (which you'd hope with a good employee relationship).

sunir
California law has a pretty good balance. If it's related to the job, it's the company's. If you use the company's resources (hardware, software, customer list, employees, ideas) it's the company's. Otherwise, if it is on your own time, with your own resources, and unrelated to your job, then it's yours.
newy
"(and doesn't complete freak out investors [and their lawyers doing due diligence])" is the key here.

I totally get where you're coming from in trying to be reasonable with your new hires. Unfortunately, everything-you-do-belongs-to-us is pretty much the standard for IP ownership in employment contracts. Whether you enforce it is a different matter, and this is where your "goodwill" towards your employees will come into play.

jwilliams is correct though, if a guy comes to you with a specific project that he's working on, perhaps you can have a specific carveout -- but even that's a little awkward (may be hard to define the scope of that side project).

At the end of the day, as a company you'll want to be making the call of whether IP created by an employee should be considered company property, and not the other way around. So it might be wise to be a little selfish up front and have a blanket clause.

Just my two cents.

whichdokta
What is a fair price for permanently giving up a piece of the only brain you're ever going to have in your career in exchange for a job from which you can be laid off at a moment's notice without, it must be noted, getting back that piece of your brain you had to sign away?

If I were (which I am not) gullible enough to buy into the kind of rules that applies the same logic to ideas as fixed property [1] I would certainly start the conversation by asking what kind of rental you think you can afford!

[1] ...and then everyone acts surprised when both the market for ideas and fixed property suffers!

rdrimmie
My current agreement requires that I explicitly seek company exclusion for any ip I work on at home. The key to this sort of implementation is that it is ridiculously simple. I write up a sentence or a paragraph or so, I bring it to the CTO (it is a small company so he is a desk away) and he signs it.

The easy way to think of it is sort of a right of first refusal, with the company being extremely likely to refuse anything. Basically I am going to him and saying "hey can I spend my work time on this?" and he says "no we don't want any part of that" and then it's all official and documented with signatures and good stuff like that.

I bristle at IP contracts, but the simple fact of the matter is that as an employee (especially of a somewhat mature funded company, bootstrappers may have a little bit more flexibility) I know that I'm going to be subject to them. Being up front about it and making it possible and simple to exclude my IP from the company's means that every few months I bring a list of fairly early-stage ideas to get signed off.

The other option is just to start with a "Hey, your IP is your IP and our IP is our IP." policy and wait until you're actually screwed over to change. There's value in protecting yourself, but building a giant wall around you for a problem that may never occur can also be extremely restrictive.