Section 2870 of the California Labor Code - Can former employer claim ownership of former employee's project?

Question

Silicon Valley tech companies in California require employees to sign a contract that assigns all inventions to the employer. The only protection employees have are in the form of Section 2870 of the California Labor Code that states the following:

(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.

If an employee quits and then launches their own product that relates to the former employer's business, can that former employer sue the former employee and try to claim rights to the product solely on the grounds that the invention relates to their business? Even if the former employer has no evidence that the former employee used company equipment or developed it on company time?

For example, could the former employer claim the former employee could not have come up with such a product unless they did it while working at their company and place the burden of proof on the employee to prove they came up with the product either before or after the time of employment?

What if the former employee did not know that their company had a similar project in the works while employed there?

I am worried about large aggressive Silicon Valley style former employers overstepping their bounds to try and claim ownership of former employee's post-employement projects.

Answer 1

Yes

If the invention,

(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;

If your ex-employer can show the relation with what their business was or what they were or were considering researchers then the IP belongs to the employer.

So if you work for say, Google, and write software that is related to the things that Google’s software does (or might do in the near future) on your own computer in your own time, it belongs to Google. If you write a novel based on your experiences, it doesn’t because that’s not related to their business.

Answer 2

Dale is absolutely right. This longish comment explains that your second question misconstrues the statute.

In your second question, you ask if the company can claim rights to your invention:

Even if the former employer has no evidence that the former employee used company equipment or developed it on company time?

This question misconstrues the statute: These are exactly the conditions under which the statute applies! The statute says any clause that requires an employee to assign rights to an invention to his employer "shall not apply to an invention that the employee:"

1. developed entirely on his or her own time

2. without using the employer’s equipment, supplies, facilities, or trade secret information.

The statute goes on to lay out two exceptions to this general rule. These exceptions, inventions that do not belong to the employee, even if he developed them on his own time and with his own dime, are of two types, those that:

1. Are related, either when conceived or when reduced to practice, to "the employer’s business, or actual or demonstrably anticipated research or development of the employer."

2. "Result from any work performed by the employee for the employer."

To be effective, these exceptions cannot have time limits. If these exceptions had a time limit, an employee could simply wait until the time limit passed and then claim rights to the invention. That would obviously defeat the purpose of the statute.

Answer 3

In addition to Dale's answer:

Even if the former employer has no evidence that the former employee used company equipment or developed it on company time?

Answer lies in Section 2872:

... In any suit or action arising thereunder, the burden of proof shall be on the employee claiming the benefits of its provisions.