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Do employees own their ideas?

Starting a new company with a great new idea can be exciting, but there needs to be some clear boundaries if the founder is jumping from a job as an employee in the same field. While the idea may be a good one with lots of promise, many employees sign Confidentiality and Invention Assignment Agreements. This could mean that an idea created or developed while working for someone else is owned by that employer, even if the employee created the idea during off hours at home.

Some employers do allow employees to work on side projects without claiming ownership, but the aspiring entrepreneur needs to be careful about their current obligations.

Tips to the aspiring entrepreneur

There are a number of issues to look at when determining ownership of an idea. Some of these include:

  • Look at that employment agreement and see what the employer claims rights to.
  • Examine other agreements signed after the initial hiring to see if they are applicable.
  • Document the genesis of the idea; keep records of personal funds and equipment used to develop it.
  • Examine the non-compete agreement to see if it is reasonable under the circumstances and whether the employer has a legitimate reason claiming ownership.
  • Was or is the employment defined as an independent contractor or full time employee?
  • Was there a clause in the initial contract that allowed the employee to pursue ideas privately under their own initiative?

Contracts can be complicated or unclear

A lawyer with a background in employment law, contracts and intellectual property can be a tremendous asset in determining the obligation and rights of the employee or former employee. They cannot only examine the agreements on past work, but also can help founders, entrepreneurs and creators protect ideas to ensure that others do not unfairly claim ownership.

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