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Businesses often state that anything made during work time or with work resources becomes property of the company.

What if the things worked on belong to another company? For example:

People at company A do stuff on their work time for an unrelated-to-business company B. Does company A have the rights to whatever their employees produce, even though it was for another business? How would this be resolved?

Another example: Bob, at an IT firm, makes software in his free work time for another (non-related) company, which now uses the software that Bob made for their day-to-day activities. Can the IT firm that Bob fully works for take the software back? Or charge for use? Would the company care?

Bonus: What if he only did 10% of the software, then quit and finished the software after quitting? Does the original IT firm own the whole project? Or a part of it? Or something else?

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  • How would business "A" feel if business "B" came in and started using the "surplus" copy machine and office supplies?
    – Mr. A
    Nov 21, 2015 at 23:30
  • This will depend heavily on location and what any contract or agreement says. Some contracts specify that the employer owns anything the employee does, but these contracts are not enforceable everywhere. Feb 4, 2019 at 22:12

3 Answers 3

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If you work on "work time" i.e. you're being paid by employer "A", then the work product belongs to "A." if you are working for "A" and in your non-compensated personal time do work for company "B", then your work for "B" is your own business and "A" doesn't have anything to say. Unless, of course, the work for "B" encompasses "trade secret" or "core business function" assets that relate strongly to "A."

It's a wet, soggy minefield these days, because so much software is about "the business of doing business" and conceptually unrelated to actual trade advantage. This to say: Don't take some internet punter's argument for granted, show the opinion to someone who practices law in your jurisdiction.

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  • The important part of this answer is Unless, of course, the work for "B" encompasses "trade secret" or "core business function" assets that relate strongly to "A." which arguably needs a lot more explanation. Probably easy to understand example, you can't work for Apple and be building a competing phone/tablet/computer/music service/streaming service on the side. But you could probably run a coffee shop or a flower shop or sell furniture. Hopefully those examples are self explanatory. The first set of examples are Apple's business, the 2nd aren't. Things in the middle require lawyers
    – gman
    Sep 26, 2022 at 21:34
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The general answer to this (in the United States) is "check the non-disclosure and non-compete agreements you signed when you joined the company." Even that may not be enough to know the full answer, as certain states, notably California, strictly limit non-compete agreements.

A lawyer with experience in this type of law is probably the only person that can answer this for sure for you; however, in my experience, the non compete/non disclosure agreements are written in pretty clear terms. You can at least get an idea of what the company thinks it owns from reading those documents yourself.

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  • Note that non-disclosure and non-compete agreements are only part of the story. Neither address ownership of patentable and copyrightable ideas.
    – ohwilleke
    Sep 26, 2022 at 20:17
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There are several kinds of intellectual property, each of which have their own rules. And, some of these rules are not uniform internationally, even though intellectual property laws tend to be more similar from country to country than many other kinds of legislation.

There is also no one answer. This issue of what ideas and intellectual property are owned by the employee v. the firm is governed in practice mostly on a case by case basis by the agreements in place between a firm and its employees and independent contractors.

Copyright

In the absence of an express agreement to the contrary (generally, but not always in writing), all natural persons who help create a particular unit of intellectual property protectable by copyright are its authors unless it is "work for hire" for which the employer is the legal author (under U.S. law, contrary to the law in many non-U.S. jurisdictions) when it is:

(1) a work prepared by an employee within the scope of his or her employment; or

(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

For the purpose of the foregoing sentence, a “supplementary work” is a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes, and an “instructional text” is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities.

17 USC 101 (a further paragraph directs courts to disregard language in a repealed statute notwithstanding canons of statutory instruction that would otherwise make that repealed statute relevant to interpreting the language above).

In many countries, unlike the U.S., natural persons who author a copyrightable work have "moral rights" in the work and are the only allowable authors, even though the firm that they work for can own the copyrights to works that the natural persons author (a situation quite similar to U.S. law regarding patents).

Patents

Inventor status for patent law purposes works differently than it does in the copyright setting:

U.S. copyright law allows corporations to be authors while U.S. patent law does not allow them to be inventors. To be sure, both copyright law and patent law allow corporations to own copyrights and patents as assignees. But only copyright law, through its work-made-for-hire doctrine, provides for the nonnatural person of the corporation to “be” the author in an almost metaphysical sense. Under patent law, the natural-person inventors must always be listed in the patent documents, even if they pre-assigned the title to inventions they develop.

From Sean M. O'Connor, "Hired to Invent vs. Work Made For Hire: Resolving the Inconsistency Among Rights of Corporate Personhood, Authorship, and Inventorship", 35 Seattle U. L. Rev. 1227 (2012).

Typical Copyright And Patent Ownership Contract Terms

Most businesses in the intellectual property creation field specifically provide that some work of the employee to create a work intended to be protected by copyright (which are governed by federal law) is "work for hire" which belongs to the employer or its client, rather than to the employee, and the ownership of patents (which are also governed by federal law) developed on the job by an employee who is an inventor or co-inventor of a patentable invention must be assigned to the employer.

But the scope of those clauses and other details related to them varies materially from firm to firm. Agreements with some firms count only intellectual property done in furtherance of a specific job at the firm as "work for hire", while other firms more expansively claim that all intellectual property created while the employee works for them is "work for hire".

Confidential Information, And On The Job Connections And Insights

In the absence of an express agreement to the contrary, the duty to maintain confidentiality of employer information and to use employer information only in the employer's best interests flows from a common law duty of loyalty that is only in force while the employee is employed by a firm. But the firm and its employees and independent contractors can agree otherwise to protect trade secrets either as actual trade secrets, or though non-competition agreements (i.e. agreements not to work for certain competing firms for a certain period of time in a certain territory) and non-solicitation agreements (i.e. agreements not to try to lure away co-workers and clients of the firm encountered while working with the firm).

Trade secrets are typically protected by non-disclosure agreements (NDAs) that are sometimes bolstered by non-competition and non-solicitation agreements. In these situations, the NDA typically defines with more or less specificity what constitutes confidential information that cannot be disclosed. But some kinds of information can't validly be protected by an NDA, a non-compete, or a non-solicitation agreement as a matter of statute and the case law interpreting it.

Likewise, non-competition agreements that are valid in some states may be treated as void because they are contrary to public policy in others. Generally speaking, non-competition agreements are enforced more strictly in New England and the Mid-Atlantic states, and are more often invalidated or restricted on public policy grounds in the Western states.

Trademarks and Trade Names

Usually trademarks, service marks are treated as belonging to the firm that used them in commerce, rather than the individual employee who came up with the marks.

Trade names, of course, belong to the firm that they describe unless they are licensed from another firm that already owns the trade names (this usually happens in a franchise business situation like a Burger King which is a trade name that the small business owner who owns the local business is authorized to do business under in connection with a franchise agreement with the franchising headquarters business for the chain).

Trademarks, service marks, and trade names would belong to employees only in the rare cases where the employee was or is an owner of the current firm or a former firm that used those brands and trade names.

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  • Serveral parts of this answer are not quite correct. In the absence of any explicit agreement,17 USC 101 defines "work for hire" as including work done by a regular employee (not a contractor) "in the course of employment" as work for hire. The employer, not the employee, is the legal author of all works for hire in the US. If a work does not fit the statutory def it is not a work for hire, whatever a contract says, but a contract may transfer copyrights automatically. Sep 26, 2022 at 16:55
  • @DavidSiegel Thanks. I have substantially revised my answer to reflect your comments.
    – ohwilleke
    Sep 26, 2022 at 19:29

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