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I was offered a new position as software developer. The new contract would require me to get a letter of agreement from my new employer in case I develop software in my spare time and want to sell this software. It would be necessary even if the developed software is not related to my work field. Furthermore my new employer requests a list of all software that I possess the copyright of that I developed so far.

I am a bit irritated by these clauses. None of the contracts for software developers I have read so far included such clauses. However I have seen only a few. Is it common practice to have such requirements in a contract of a software developer?

The company stated that these clauses are only to protect the knowledge gained with techniques, protocols and the like closely related to my work. For example, knowledge on how to access certain hardware components.

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    I suppose that giving a list of software copyrights that you own now makes it easy to solve any problems that might arise in the future. – gnasher729 May 24 '16 at 9:28
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    "my new employer requests a list of all software that I possess the copyright of that I developed so far" - this sounds pretty odd. Technically every single file of every program you develop has copyright protection the moment you put it to disk (or any other fixed physical medium). – Brandin May 24 '16 at 10:06
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    Why bother? Ask them to drop it and they don't, withdraw from consideration. I wouldn't recommend starting a job when you're irritated before you've even signed anything. Software devs are still highly employable and have the luxury of self-selecting out of positions. – Lilienthal May 24 '16 at 11:24
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    The list of software you have already developed is actually designed to protect your rights. It prevents them from contesting the intellectual property rights of something they may claim you developed after you were hired. – Laconic Droid May 24 '16 at 13:17
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    That list of all software that I possess the copyright of that I developed so far is quite nasty (really handy for the company, though). It would take me many hours to describe each and every program and script I ever made. And still that wouldn't be complete. – Ángel May 25 '16 at 2:19
15

As a freelancer I see this clause a lot. It's very common. It's usually a misguided attempt at a non-compete clause.

What the company usually wants is assurance that you're not going to go run off and build a similar app using the internal "secret" knowledge you gained from them, or that you're going to be charging them to work on a different project while they "foot the bill".

I would strongly suggest breaking this down into pieces and negotiating those pieces. As you start to work on more interesting projects you're going to have to deal with this more and more.

Tell Me all the software you own. This one is a bit odd. You need to find out the reason for it. I would have no problems answering this informally, but I would not want it as part of a contract, unless I owned something close to what they want me doing. That is exactly what I would tell them too. "I don't own rights on anything that would compete with you, but if you want a full list, we can go over that off the record". I personally would not work for someone that would not budge on this requirement. Really Important Note: Companies do this because you may have something of interest that you need to exclude or divulge. From time to time I do work for a company that I need to say "Ok I am building you a widget, but I also own a very similar widget. I am not giving you my widget."

You have to get my written consent to work on new projects Super huge red flag to me. But I am a freelancer. I work on many projects. Some very long term, some very short term. I would not give up that control to anyone. You may have a different value that part of the agreement. Specially if your working full time for a company, then it may not matter. To me this part of the clause would need to be removed totally. '

You can not work on competing stuff This seems to be what they are after. Give them this 100% It's only fair. But set some kind of time restriction, and make sure to define it's scope. "I will not work on another web site that sells blue hats for the next 3 years". Otherwise you could find your self in some kind of problem if they feel you agreed not to work on any web sites, or any websites that sell things for the rest of your life. Note:: IANAL but these "won't work on competing products" clauses are usually not enforceable unless they have a really small, clearly defined scope. That won't stop the company in starting a legal mess if they think they are justified in doing so.

In short a clause like this is very common in some circumstances, but it's also very common to negotiate these clauses to something more reasonable (to you). Look at, or ask about, what they really want, and be willing to give that to them. At the same time, think about what you don't want, or won't give up and don't.

Super important tip from a freelancer: "There's always another job." Don't get sucked into this one, because it's the only one. If things aren't to your liking keep on looking.

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    +1. Note that in many countries (including most of the US states) clauses like "I will not work on another web site that sells blue hats for the next 3 years" are either unenforceable, or only legal if you're compensated for them. – Dmitry Grigoryev May 25 '16 at 11:28
  • @DmitryGrigoryev, agreed, but the "point" is not so much that you would loose the case as the fact that you would have to deal with the case for an extended period of time. Then the decision comes down to "what is compensation?" Usually it needs to be spelled out clearly, "Here is $10 don't do this for 3 years", but that's not always the case. – coteyr May 25 '16 at 11:55
  • @coteyr - The company would more than likely seek legal action against a contractor if they took an proprietary intellectual property to another company with deeper financial pockets or if the contractor became a competitor. It starts with cease and desist letter from their attorney and could escalate from there especially if they have agreement in writing. – user8365 May 25 '16 at 15:17
  • I would think it would be in the companies best interest to NOT have this list. That way they keep the option to sue you for everything on list. Saying you created or updated them on company time. – Dan Shaffer May 26 '16 at 17:22
  • @DanShaffer, maybe, but most "people" try to do the right thing. And you do remove a bit of ambiguity if the thing in question is not on the list. – coteyr May 26 '16 at 17:35
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It is quite common. But it is also quite common to negotiate such an agreement so that it doesn't burden either side unfairly.

The company stated that these clauses are only to protect the knowledge gained with techniques, protocols and the like closely related to my work. For example knowledge on how to access certain hardware components.

Great. Then take them at their word and work with them to arrange terms that give them what they want but don't take away what you want.

For example, perhaps you could suggest a clause that says that upon your request they must evaluate any such software to determine whether it involves things closely related to your work or competes with them and grant you permission to sell it if it does not. Or perhaps you can negotiate a carve out for the particular areas you want to work in or they can negotiate to carve out specifically things that compete with their core business.

The only time this usually becomes a real problem is if the company is unwilling to negotiate. Some companies are just not willing to be flexible on this issue.

I once just shrugged and accepted something similar, not wanting to make a fuss. I later found out that several other employees negotiated all kinds of small changes to those terms with no issues and the company had only included the clause in the first place because it "came with the form".

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    Does the clause have to be explicitly stated for the company to take action on discovery of personal projects? Or can they pursue you even without the clause? – camden_kid May 24 '16 at 13:39
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    @camden_kid The clause isn't required, but it makes a much, much stronger legal case. – HopelessN00b May 24 '16 at 15:31
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The reason you haven't come across this clause before is because the norm at most companies is:

We own everything you create while you work for us, even if it is on your own time and with your own equipment.

The law in some jurisdictions supports this position, too. Your employer is offering you:

If you tell us in advance, and we don't feel threatened by it or believe you're using our time, equipment, or intellectual property, we'll allow you to own it.

This is, depending on where you live, a gift, and one you can accept with gratitude. Give them the list and you own your side-line. If you want to be irritated, be irritated at the policies that take a blanket ownership of all you do, 24 hours a day. Try not to be irritated at a place that is offering a reasonable "out" to cover things that you clearly agree should be your own property. They are setting it up so that those things can be yours. Work with them on that.

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    In Germany, my jurisdiction, the copyright law contains a clause that explicitly grants the copyright of any software that was written in fulfilling ones contract as an employee is owned by the employing organization. Software that is written in ones spare time and not connected to work remains the employees. So without any additional clause in the contract your first statement should be false. I am, however, not a lawyer. – sigy May 24 '16 at 13:18
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    @sigy, the fiirst statement is very accurate to the extent that it reflects how the companies try to operate. That doesn't mean it will hold up in court, but many employees accept it without question. Recognizing of course that the forum you are posing the question in is not where "most" employees look for help. – cdkMoose May 24 '16 at 13:22
  • @cdkMoose Ok, agreed ;) – sigy May 24 '16 at 15:58
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    @KateGregory What I meant was, that here in Germany a claim of a company as in your first statement would not hold up in court. This might not be the case in other jurisdictions. That, despite of that, german companies try to impose such regulations on their employees and many employees don't bother to disagree is probably true. No offense was intended by my statement. – sigy May 24 '16 at 16:22
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    We own everything you create while you work for us, even if it is on your own time and with your own equipment. What....? How can any company claim to own everything you create, when it's not on their time. IF they want my shit, pay me for all of my dev time. I would never worfk for a company like this, and wondering where this information comes from? – XaolingBao May 31 '16 at 21:09
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I haven't yet heard of such a clause explicitly concerning the selling of software. But it is quite common for companies to add a clause to the contract regulating all kinds of secondary business (german: Nebentätigkeit).

The purpose of this clause is to prevent you from pursuing any kind of business, which is detrimental for the company. This would be the case if you tried to sell software which is in competition with a product of said company.

The demand, that you do this for any kind of software, presumably just means that they want to check themselves, whether it is related in any way with their own business. AFAIK this clause does not allow the company to prevent you from selling unrelated software (see here), but if this is important to you you should check with a lawyer.

  • Yes the secondary business clause (Nebentätigkeit) is common and I am okay with that clause. Thanks for the link, it was helpful and raised the question if the clause I am concerned about is valid at all. However, I am not a lawyer. – sigy May 24 '16 at 9:23
  • @sigy well the when you agree to any Terms they are legal untill proven otherwise. Also I have had this as well where I was limited to non Profit Projects, which were the only Projects i did on the side so :) – Raoul Mensink May 24 '16 at 10:34
  • "tried to sell software which is in competition with a product of said company" am I wrong in guessing that there are already laws protecting companies from this? If so why do you need a specific clause in the contract when unfair competition is already in the law? – Bakuriu May 24 '16 at 18:52
  • @Bakuriu: It's not necessarily unfair competition just because it's competition. – O. R. Mapper Aug 26 '16 at 9:56
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What they are asking is a good thing, and quite common. It is an opportunity for you to declare up front, "This is mine!", so there is no question about ownership later. Putting it in writing now, and also when you do future work of your own, makes it clear what you own. It is not asking the company's permission to do your own projects.

  • There are two clauses. One is to provide a full list with all of my prior work. The second is to get written permission in case I want to sell any kind of software written in my spare time. I agree with you regarding that first clause. However, I would feel a bit silly listing every single one-line script I wrote when I was 15. On the other hand, if one time I reuse that piece of code in a bigger project I might run into problems if I didn't list it. – sigy May 24 '16 at 13:22
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    Good point. I don't list every little thing, either. There are very things I would have considered valuable enough to fight for later, had they not been disclosed up front. If your bigger project is listed/disclosed, then small stuff you incorporate into it could be covered. – donjuedo May 24 '16 at 15:07
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I was offered a new position as software developer. The new contract would require me to get a letter of agreement from my new employer in case I develop software in my spare time and want to sell this software.

Such clauses are quite common. The intention is to stop employees from competing with their employer. Another justification you can or can not agree with is that a full-time employer has the right to the full creative output of their full-time employees.

Furthermore my new employer requests a list of all software that I possess the copyright of that I developed so far.

This, however, is not common. Are you aware that you hold the copyright to every single program you ever written, published or not? This also includes any "hello-world" program you wrote when you were just learning. It also includes every single code snippet you posted on Stackoverflow or anywhere else on the Internet.

And when you forget any of these, that would in theory be a fireable offence. I would really recommend you to renegotiate that clause and at least get them to restrict it to programs you sold.

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    Sorry, have to disagree with "full-time employer has the right to the full creative output of their full-time employees". An employer only has the right to the "creative output" of an employee when s/he is on the clock. If that employee creates something off the clock with out the use of company resources they have no right to it. I would also say the employer is limited in the type of creation. If I am a software developer but I create a painting on the weekend your logic says my employee now owns my painting? – Matthew Verstraete May 24 '16 at 14:49
  • @MatthewVerstraete At least here in Germany one has to differentiate between software and other creative work. The german copyright law explicitly states that software written in fulfillment with your contract (no matter if "off the clock") is owned by the employer. For other creative work this does not hold and the copyright stays with the employee (as long as the contract does not state otherwise). It also includes work you did "on the clock" in fulfillment with your contract. – sigy May 24 '16 at 15:55
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    @sigy I am not a lawyer but in my experience "in fulfillment" of a contract does not give the your employee copyright ownership of software developed in your own time that has nothing to do with the contract. I once was in a fight with an employer over the copyright ownership of my personal website. I was a web developer for the company and they claimed that even though I wrote it on my own computer on my own time since they built and designed websites they owned it. They lost that battle, but I am in the USA so in Germany maybe your gov does not care about your own stuff like that. – Matthew Verstraete May 24 '16 at 16:30
  • @Matthew Ok maybe "in fulfillment" is the wrong term then. English is not my native language ;) What usually makes a difference here in Germany is work for your company that you do during work time as contracted and (unpaid) over hours. Those (unpaid) over hours are considered spare time even if the work you do is for your employer. But you execute this kind of work to fulfill your contract so from the german copyright law point of view your employer owns the results afterwards. In the end it is a legal dodge. And of course I might got it wrong due to my amateur knowledge of this legal stuff. – sigy May 24 '16 at 17:27
  • @sigy Right any work you do for your employer is by default there copyrighted material but in an example like my last my work does not become them. No what really matters is if you did a bunch of work for them and they never paid you. Here in the US you can take the work back as compensation in some cases. – Matthew Verstraete May 24 '16 at 17:53
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I've run into these clauses a few times. On one notable occasion the contract the company gave me to sign basically claimed ownership of everything I created (whether short stories, stack exchange answers, artwork, anything) while employed with them whether or not any company time or materials were used or not.

In other words I could spend my holiday writing a novel on my own computers and in my own time and the company would own it!

In every case I've refused to sign a contract with any clause beyond a simple "no direct competition" one and had no problem getting that. In one case they kept saying "yes we'll sort that out" and after two weeks they still hadn't so I crossed out the relevant clauses, initialed the crossing out. Signed it with a note saying "except for crossed out clauses" and gave them that as my signed contract.

They accepted it although I'm not sure what the legal standing of it is and whether that would vary from country to country so if in doubt talk to a lawyer.

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Yes it's common and it also protects you.

I don't think it's to do with "non-compete": I think it's to do with copyright/ownership, work for hire, as well as protection of trade secrets.

I think it's common to say that you assign intellectual property rights to your employer for "all software developed in the course of your employment". That's a bit ambiguous, if you develop something then theoretically the employer might say, "you wrote that while you were employed by us, therefore it's ours".

So to be clear, if you have a personal project, you write to your employer saying, "I am developing such-and-such software for such-and-such purpose, and I want you to disclaim any interest in it", and ideally they write back to you saying something like, "We disclaim interest in such-and-such software, if it's written in your own time and not using our equipment."

If they want that clause in the contract, and it's important to you, ask whether they would actually give permission (and/or test their policy before you sign the contract or as a condition of your signing the contract, by actually asking permission, for whatever you're currently working on).

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