IP Assignment Clauses: Does Your Employer Own Your Side Projects?

Most employment contracts include an IP assignment clause. You probably glanced at it and moved on. Before you sign your next offer letter, here's what that clause can actually cover.

The standard version

A typical IP assignment clause says: anything you create in the scope of your employment belongs to the company. Software you write. Designs you produce. Reports, processes, improvements. This is expected and generally reasonable — the company is paying you to create things.

The broad version

Some contracts go further. The clause reads something like:

"Employee agrees to assign all right, title, and interest in any invention, work of authorship, or improvement made during the term of employment that relates to the Company's current or anticipated business activities, products, or research."

The key phrase: "current or anticipated business activities." Companies often define their anticipated business expansively. If you build a personal finance app in your spare time and your employer is a fintech company, they may claim that app falls within their "anticipated business activities."

What this covers beyond your day job

Depending on how broadly your contract is written, an IP assignment clause can potentially reach:

• Side projects built in your free time with personal equipment
• Open source contributions in adjacent technology areas
• Freelance work for clients in related industries
• Personal tools you build to solve problems in your professional life

The company doesn't automatically get these — but they may have a contractual claim to them, which creates legal risk and costs money to fight.

The carve-out

The fix is a written carve-out — an amendment to the agreement that explicitly excludes your personal projects by name. The addendum language looks like:

"Notwithstanding the foregoing, the IP assignment provisions do not apply to the following projects developed by Employee on personal time without use of Company resources: [list your projects]."

Get this in writing before you sign. A verbal assurance from a recruiter is not enforceable.

State law protections

Several states limit employer IP claims by law:

California, Delaware, Illinois, Minnesota, North Carolina, Washington: These states prohibit or limit employer ownership of inventions created on the employee's own time, without company resources, and unrelated to the company's actual business. Check your state's specific statute — "related to the company's business" is still often debated.

Even with state protections, a written carve-out is better than relying on litigation.

Warning signs in the clause

"Anticipated business activities" — any product the company might build someday, which can be interpreted extremely broadly.

"Including any time outside of normal working hours" — explicitly extending to personal time removes any ambiguity that it covers your nights and weekends.

No carve-out for pre-existing work — your projects existed before you were hired, but without a written carve-out, the company may still claim them if they fall within the assignment scope.