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I suggested an idea* to my boss. He didn't show much much interest to build it**, so I did it on my own. Now it is on the verge of getting funded with venture capital. My boss is now interested in executing the project.

Would there be any IP violation filed by my employer (against me) since the idea was originally pitched to him during my employment with the company?

I don't want to damage my relation with my employer.

My contract says any research or work done by an employee during his tenure with the company belongs to the company.

* Just a simple idea about a new business model; no research, code or anything else are involved in it.

** I suggested it verbally, then shared the idea in writing and prepared some layouts that he wanted to see. After I shared those with him, he never responded to it and has shown no interest for over a month after several followups from me.

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    I feel like a non-compete agreement is more likely relevant here than actual IP. Again does your contract state anything in this regard? – user85135 Jun 2 at 13:41
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    Oh also - the contract may not explicitly state "all your stuff are belong to us", but may be worded along lines of during your employment ... and elsewhere state you may not work for anyone else. I'm paraphrasing, obviously. – Justin Jun 2 at 20:37
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    @DavidSchwartz some contracts, especially for knowledge workers, contain IP properties that absolutely could include "ideas". OP needs a lawyer. – Malisbad Jun 2 at 23:36
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    @Daemon That would probably not cover a simple idea, but you'll probably need to get an attorney to research the law in your jurisdiction and the exact terms of your contract. It is probably simply not possible for an idea to belong to a company. It is the same way they cannot own your sense of satisfaction in a job well done as that is also something that cannot be owned. – David Schwartz Jun 3 at 4:14
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    @Christian Because he wrote so. After editing comment answers in, I flag them for deletion to reduce the comment stream. You can now mark our little sub-conversation as "no longer necessary" ;-) – user8036 Jun 3 at 16:34
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You can't retract work done while being employed at X. Your pitched ideas, I assume under your current laws, are part of this work.

That being said, talk to a lawyer. If the law says you own 100% of your invention, you can approach your boss notifying them about that. And get ready to lose your job.

If the law says your employer have special rights (e.g. can embargo any movement forward) then you have to approach that as such:

Hey boss there is a situation. I think I made a mistake by not talking to lawyers earlier, but how can we resolve this? I want X and Y to happen and want not to go to court.

Most importantly:

Talk to a lawyer. If your VC investor discovers there are extra "wrinkles" attached to the company you started, you will lose a lot of money. Maybe end up in court for hiding important information from investor

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  • Since when ideas can be owned? – akostadinov Jun 4 at 5:44
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    @akostadinov OP: " I suggested it verbally, then shared the idea in writing and prepared some layouts that he wanted to see" – aaaaa says reinstate Monica Jun 4 at 13:06
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Would there be any IP violation filed by my employer since the idea was originally pitched to him during my employment with the company?

You don't state where you are located, but very probably. The company may claim it as "work product", even if you did it on your own time with your own equipment. It really comes down to what your employment contract says on the matter (and to an extent any company handbook / rules etc). Many contracts have an explicit clause which states that any product created whilst employed by them belongs to the company.

Of course, they can claim and file suit for anything at all; that doesn't mean it will succeed, but doing so has been known to be used to mire a small competitor in legal delays and costs until they go out of business.

I don't want to damage my relation with employer.

Who does? But you can't make an omelette without breaking eggs. Try to minimise the damage without conceding too much of your new product.

Advice (and take your time to think this over, maybe with lawyer, because I'm really just guessing).

You need to remind your employer that they should focus on their business, rather than just one little part which may contribute towards it. They buy in stationary and tech equipment; They buy in (lease) their operating systems rather than write them. Your product should be just another line item on their quarterly outgoings.

Of course, if there's real money involved (and I'm guessing so if you're looking at funding), they will probably want to own it to add that to their own revenues.

This could be a good opportunity to suggest that they become an investor; Point out that if they own a stake in the business, they have a degree of control over it and can take a share in the profits. As the main customer they can also request features and changes (all customers will do this anyway, of course).

Give them the opportunity to buy in now at $$ for x%, with the option to buy a larger amount / all later, when the company is worth tens of millions.

This won't be easy if they think they can get your product by simply laying claim to it, or threatening your job, but nobody wins that way; You need to pitch this such that everybody wins.

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  • i like the point "They buy in stationary and tech equipment..." They already sorta invested in the product. By training the OP, for example. Also OP can use employer's resources to raise more $ in exchange of something. OP should negotiate, not try to sneak past current boss – aaaaa says reinstate Monica Jun 2 at 16:31
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    I don't believe a mere idea can be work product. – David Schwartz Jun 2 at 22:16
  • Then you've never read an NDA closely enough... most clearly state that code, business practises and ideas belong to the employer. – vikingsteve Jun 3 at 14:42
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    @vikingsteve: sure, although that alone doesn't mean they're enforceable. Contracts can say any crazy thing they like! – Paul D. Waite Jun 3 at 14:45
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    Well it depends also on where you are. Lawyer-ness stuff is crazy in USA. In other parts of the world it might not mean so much. – vikingsteve Jun 3 at 15:58
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Ideas are worthless, execution is what matters. And the company might have a claim to the execution.

Normally, employees are forbidden from competing with their employer during their free time, and there are already arguments that go both ways:

  • By making the pitch, you implicitly admitted the idea is something your employer would pursue.
  • By initially rejecting the idea your employer implicitly admitted the idea isn't something they would pursue.

Additionally, sometimes there are clauses that state anything you created while employed belongs to the company. Those are not always enforceable, and never unrestricted - and even if they apply, they might allow you to claim vast amounts of overtime.

As you can see this does get complicated, and you need a lawyer. But don't worry, these kinds of conflicts are usually resolved in negotiation, not court. This does not have to end up damaging your relationship.

One approach is to offer the current company to buy your work, or enter into a joint venture - an offer you will need to discuss with your lawyer before you make it.

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  • Unless it's stated in writing, forbidding employees from competing isn't something that would "stand up in court". It's normally understood that competing with your day job is bad, but not illegal without a clause stating so. The employee could still be fired for it in a "right to work state". Also, by making the pitch, it's an explicit, not implicit, suggestion to the employer. – computercarguy Jun 3 at 20:13
  • @computercarguy And, by the boss "not responding," it's an implicit, not an explicit admission of lack of interest. That could be a wrinkle. – employee-X Jun 3 at 21:23
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There is no intellectual property in ideas. Ideas on their own are worthless. Only ideas plus effort create value. Whatever work you did, plus getting close to funding, that's value.

That said, you told the boss your idea, and now nobody can stop him from using it. As I said, ideas have no protection at all. You can leave the company and run with your idea if that is what you want. But if you want to stay, and if your boss asks you to work on that idea, there's not much you can do about that.

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    ideas are not IP'd, but work done during employment might be regulated. – aaaaa says reinstate Monica Jun 2 at 20:27
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    True @aaaaaa. Also, how to get round the "Now implement this idea for us" (or lose your job). – Justin Jun 2 at 20:29
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You can't. Your contract (as described) means they own it all.

By your contract ("any research or work done by an employee during his tenure with the company belongs to the company") they own all of the work you've done on it to date, and not just the part that you've showed them. It was done during the time you were employed, it was work or research, so they own it. The thing that you were putting up in front of the VC? Your company owns that. You could conceivably discuss it with your boss and have him give you specific permission to continue with it on your own dime, but given that he's showed interest in it already, that seems super-unlikely.

Given this level of company ownership of the IP, even having contacted a VC starts looking seriously sketchy, both from the company's perspective and the VC's. You can contact a lawyer, but it's looking like you won't get anything out of it even if you do.

  • If the VC had any idea that your company had as much right to this as they do, or even remotely close, they'd never touch it. At this point, any path that winds up with the VC actually giving you any money for anything probably involves fraud on your part.

  • If your company knew you were in talks with a VC, they'd conclude (correctly) that you were intending to make extra money off of IP that they owned. At that point, they'd have cause to sue you. That's regardless of whether or not they intended to pursue it themselves. (It appears that they do, which doesn't make this better.)

At this point, a lawyer might be able to tell you how to get out from under your contract with a chance of moving forward, but it'd likely get ugly and, again, if you've been at all honest with the VC, they're unlikely to want to be a part of it. I am not a lawyer, but if I were in your situation, and a lawyer told me that I could get away with it clean, I'd assume they were lying to me.

Worth noting that the VC will be able to hire better lawyers than you will.

For that matter, your desired end-state is a bit confusing to me. Were you intending to work a full-time job with your company and then also run your own business (with VC) based on this idea at the same time? Did the VC know that you were only intending to work on this in your off-hours?

Your position with respect to making this your own business looks like it's basically untenable, unless you're lucky enough to live in a jurisdiction where the "we own all of your work" clause is entirely unenforceable (ask a lawyer). At this point, you can probably salvage the work you've done as being a super-proactive awesome employee for your company, if you spin it right with your boss (and maybe don't mention the VC). You should probably be aiming your attention in that direction, though... and be thankful that this came up before you dug yourself any deeper into the legal liability pit you were making for yourself.

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  • What do you think it means to own an idea? Do you think that means you can prevent other people from executing it? – David Schwartz Jun 4 at 20:22
  • @DavidSchwartz if it's based on work done during OP's time of employment (ie, everything he's done to date), a sufficiently restrictive contract means that they can use legal means to prevent him from executing it, and that's all that really matters here. – Ben Barden Jun 6 at 13:14
  • Typically, only a non-compete agreement would do that, and even then only if his idea was competitive to what his employer is doing. I've never seen an agreement that had terms like you're describing and I can't imagine what such terms would look like. An idea you have while working is like a skill you acquire while working, it is not capable of being owned. – David Schwartz Jun 7 at 6:40

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