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A few days ago, Sam Altman was fired from his position as OpenAI's CEO in a surprise move.

Altman has, as of now, accepted an offer by Microsoft to join the company as head of an AI lab. Microsoft has extended its offer to all OpenAI employees, and some have apparently already made the move.

I was wondering about the role of intellectual property here, and non-compete clauses. Given the increasing ubiquity of such clauses, I must assume that at least many engineers had to sign one, even though Altman, one of the founders, may have been exempt.

Additionally, typical work contracts transfer the ownership of the products of one's work to the employer.

How does that align with key personnel moving directly to a competitor? Does it play a role that Microsoft holds a 49% share in OpenAI? Can Altman and his engineers simply replicate and continue their product at another company? (Let us assume here that they would circumvent or properly license any patents etc. explicitly protecting intellectual property of OpenAI).

Edit Nov 22, 2023: Can a company have a non-compete clause against itself? ;-)

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    Non-compete clauses (usually) mean that the company you've left behind is still paying you to not work for the competition. If that company stops paying you (or if the non-compete clause you sign does not include reasonable monthly payments payed by the company after you've quit), the non-compete clause is unenforceable.
    – vsz
    Nov 22, 2023 at 6:09
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    What I was wondering before it became moot was how valuable Altman would be without OpenAI's IP? I assume much of their technology is protected by patents or trade secrets.
    – Barmar
    Nov 22, 2023 at 15:33
  • @Barmar Of course, if you are going to be a competitor it's great to have somebody with intimate knowledge of the other's IP so that you can work around it. Nov 22, 2023 at 15:39
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    Of course, this was also complicated by the fact that MS is a 49% shareholder in OpenAI and had licensing agreements with them -- OpenAI powers Bard.
    – Barmar
    Nov 22, 2023 at 15:47
  • The latest news is that Altman is going back to OpenAI after all, presumably along with the other employees, so in real life it's moot. Of course the question is still interesting in general. Nov 22, 2023 at 19:26

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Non-compete clauses are not enforceable in California unless it in conjunction with the purchase of a business. This has been true for a very long time. On top of that, this year (2023) a law was signed that prohibits employers from asking employees to sign a (already unenforceable) non-compete agreement.

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    Good point. I added the relevant tags. Nov 21, 2023 at 16:27
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    Note that three of the largest computer companies had to be >$100 million fines for having contracts that made it harder for employees to move.
    – gnasher729
    Nov 21, 2023 at 17:37
  • Is California law applicable? OpenAI is headquartered in California, and presumably that's where Altman works daily, but it's a Delaware corporation. So OpenAI couldn't sue Altman in California courts, but could they sue him in Delaware, or in Washington if Microsoft were to move him there, or somewhere else? Nov 22, 2023 at 19:29
  • @NateEldredge, In US contracts I see a clause of applicable law usually. We don't know what that is in his contract. I've been wondering whether such clauses are enforceable though. Nov 22, 2023 at 21:47
  • For reference, I believe this answer is referencing SB-699. California really hates non-competes, so they went a step further and added AB-1076, which requires employers with existing contracts to notify their employers in writing that the non-complete section is invalid.
    – Brian
    Dec 11, 2023 at 20:56

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