Invention Assignment Clauses — What They Actually Claim (And What They Don't)

What Engineers Think the Clause Says vs. What It Actually Says

Most engineers read their invention assignment clause the way they read a terms-of-service agreement: quickly, charitably, and with the assumption that it means something narrower than it says. The common mental model is that the company owns what you build for them, on company time, with company tools. That is a reasonable-sounding rule. It is also significantly narrower than what nearly every modern Proprietary Information and Invention Assignment Agreement (PIIA) actually covers.

The assignment provision in a PIIA is not a sentence. It is typically a multi-part clause with four independently sufficient triggers, any one of which is enough to transfer ownership to your employer. Understanding what you signed — before you start your next side project — is not a legal formality. It is the difference between owning your work and having a contractual obligation to hand it over.

The other thing engineers consistently underestimate is the scope of the word "inventions" in these agreements. You do not need a patent to have an "invention" under a PIIA. The agreements typically define the term to include anything you conceive, develop, discover, or work on — whether or not patentable, whether or not disclosed, whether or not commercially developed. That weekend project, the GitHub repo you started in a hotel room at a conference, the prototype in your garage — all of it can fall within scope depending on how the clause is drafted and which state you work in.

The Four Categories Most Invention Assignment Clauses Sweep In

Modern PIIAs tend to use some combination of four distinct assignment triggers. Each is independently sufficient — you don't need to satisfy all four for the assignment to apply. A representative clause from an actual employment agreement filed with the SEC reads as follows: the employee assigns all inventions that (a) are developed using company equipment, supplies, facilities, or trade secrets; (b) result from work performed by the employee for the company; or (c) relate to the company's current or anticipated research and development.

That is three triggers in a single sentence. Other agreements add a fourth: anything conceived or reduced to practice during the term of employment. Together, the four categories look like this:

• Work-time inventions. Anything you create during your working hours. This one maps to the intuitive mental model — if you build it on the clock, the company owns it. The problem is that most people's working hours are less defined than they think, especially in remote or hybrid environments where the line between work time and personal time is genuinely blurry.
• Company-resources inventions. Anything created using company equipment, facilities, networks, supplies, or trade secret information. This category is broader than it sounds. Using a work laptop — even for five minutes to test something — can bring a project within scope. So can using the company VPN, running code on a corporate AWS account, or consulting internal technical documentation. "Company resources" in many agreements extends to trade secrets, which means your general familiarity with confidential company technology can potentially satisfy this trigger even when no physical resource was used.
• Related-to-business inventions. Inventions that relate to the company's current business or its anticipated research and development. This is the most legally contested category and the one that creates the most exposure for engineers at platform companies and diversified tech firms. The scope of "anticipated" business is a question courts have wrestled with, and the answers are not always favorable to employees.
• Conceived-during-employment inventions. Some agreements go further still, claiming anything conceived or reduced to practice during the period of employment, period — regardless of timing, resources, or relation to the company's business. This is the broadest formulation, and it is the one most likely to be challenged or limited by state statute. Outside of states with protective legislation, however, courts have sometimes enforced it.

The "Related to Anticipated Business" Trap

Of the four categories, the "related to anticipated business" formulation is the one that catches engineers most by surprise. Platform companies, diversified tech firms, and companies that describe themselves as operating "at the intersection of" multiple industries use this category to stake claims far beyond their current product lines.

The logic is straightforward from the company's perspective: we're exploring AI, hardware, fintech, and consumer software, so anything in those spaces during your employment relates to our anticipated business. An engineer at a cloud infrastructure company who builds a database management tool on weekends is working in an area the employer might credibly argue relates to their anticipated R&D. An engineer at a social media company who builds a content moderation tool faces the same argument. The more diversified the employer's portfolio of actual and stated strategic interests, the harder it is to find a personal project that clearly falls outside.

Courts have grappled with how far "anticipated business" can stretch. In Whitewater West Industries, Ltd. v. Alleshouse, 981 F.3d 1045 (Fed. Cir. 2020), the Federal Circuit examined an assignment clause covering inventions "in any way connected to any subject matter within the existing or contemplated business of Company." The court reversed a district court judgment that would have required the employee to assign three patents for surfing attraction designs. The Federal Circuit held the assignment provision void under California law — specifically California Labor Code § 2870 — because the inventions were developed on the employee's own time with personal resources and were not sufficiently tied to the employer's core business operations. The case illustrates both how aggressive assignment language can be drafted and that state law sometimes provides a ceiling on it.

The more dangerous scenario is the engineer who is not in California. In states without statutory protection — Texas and most of the remaining states — an "anticipated business" provision drafted broadly enough can sweep in almost any technology work. The defense is structural: you can either operate in a protected state, build your project to be clearly outside the employer's space, or negotiate a carve-out before signing.

State Law: Where Statutory Carve-Outs Actually Exist

Eight states have enacted statutes that limit what employers can require employees to assign. The protections vary, but the core principle is consistent: an employer generally cannot claim ownership of inventions you developed entirely on your own time, without company resources, and that do not relate to the employer's actual or reasonably anticipated business. Knowing which side of this line you are on requires knowing which state's law applies to your agreement.

California (Labor Code § 2870). California's statute is the most protective and the most litigated. It provides that an employment agreement cannot require assignment of an invention that an employee "developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information" and which does not "(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." The protection is real — but notice the carve-outs. If your invention relates to the employer's "demonstrably anticipated" research, California does not protect it. The statute also requires the employer to notify employees of its existence (Labor Code § 2872), which most California employment agreements satisfy by attaching the text of § 2870 as an exhibit.

Washington (RCW 49.44.140). Washington's statute tracks California's language closely. It prohibits assignment of inventions developed on the employee's own time with their own resources, where the invention does not relate to the employer's business or actual or anticipated R&D and does not result from work performed for the employer. Washington also imposes a disclosure requirement: employees must disclose all inventions they "make" during employment, which the employer then has 30 days to assert a claim over. The disclosure obligation creates a procedural hook that California's statute lacks.

Minnesota (Minn. Stat. § 181.78). Minnesota's statute covers inventions that do not relate to the employer's business or anticipated research and development, were not aided by the employer's resources, and were not developed during work time. Minnesota explicitly requires the employer to notify the employee when it claims ownership under the statute.

North Carolina (G.S. § 66-57.1). North Carolina's law uses similar three-part criteria: own time, own resources, unrelated to employer business or R&D. It also requires the employer to provide a written copy of the statute at the time any invention assignment agreement is signed.

Other states with statutory protection include Delaware (Del. Code tit. 19 § 805), Illinois (765 ILCS 1060/2), Kansas (Kan. Stat. § 44-130), New Jersey (N.J. Rev. Stat. § 34:1B-265), New York (Labor Law § 203-F, effective September 2023), and Utah (Utah Code § 34-39-3). As Wilson Sonsini documented in a 2024 analysis, New York's statute prohibits assignment of inventions developed entirely on an employee's own time without employer resources, as long as the invention is unrelated to the employer's business or anticipated R&D — tracking the California and Washington model.

Texas, and most other states have no statutory carve-out. The contractual terms control, subject only to general contract law doctrines. An assignment clause in a Texas employment agreement that purports to claim all inventions conceived during employment is enforceable against the employee to the extent courts find it reasonable — and Texas courts have not been particularly restrictive on this point. Engineers in Texas, Florida, Georgia, and other unprotected states who want to preserve rights to personal projects need to build those protections into the agreement at signing, or simply never use company resources and keep the work clearly outside the employer's field.

Prior Inventions Schedules: The Most Under-Used Protection Tool

Every PIIA contains an exhibit — typically the last page, sometimes labeled "Exhibit A," "Schedule 1," or "Prior Inventions Schedule" — where you can list inventions, works, and projects you already own and want to exclude from the assignment. This schedule is the most consistently under-used protection tool in employment law, and engineers leave it blank at a rate that strongly suggests most don't realize what it's for.

The schedule works like this: any item listed there is expressly excluded from the assignment. The company acknowledges it existed before your employment and cannot later claim it as work product covered by the PIIA. The PIIA itself often includes language providing that anything not listed may be deemed a company invention if it later becomes relevant to the business — making the blank schedule a tacit concession that you had nothing worth disclosing, which is rarely true.

Why do engineers skip it? Multiple reasons: the schedule appears at the end of a long document, it's presented as optional, HR is pressing for a quick signature, and engineers often assume their half-built ideas don't qualify as "inventions." That last assumption is wrong. The PIIA's definition of "inventions" typically includes anything conceived or reduced to practice — ideas you've sketched, code you've started, concepts you've discussed with potential co-founders, domain names you've registered, GitHub repositories in any state of completion. All of it is fair game to list.

What happens when you don't disclose? The dispute that arises at acquisition or departure becomes substantially harder to win. An undisclosed prior invention is ambiguous: did it exist before employment, or was it created during employment and therefore covered by the assignment? In the absence of documentation — timestamped commits, dated design documents, domain registration records predating your start date — your word against the company's record is a difficult position. As the Corpora legal blog documents, during financing and M&A due diligence, investors' counsel check for excluded inventions specifically, and a blank schedule is treated as clean — but that cleanliness may not reflect reality.

The disclosure does not require you to reveal implementation details. List the name of the project, its general nature, and an approximate date. "Mobile application for real-time audio mixing — personal project, begun approximately January 2024" is sufficient to put the employer on notice. If you have significant prior IP — a startup you've been building, a patent application you've filed, an open-source project with commercial potential — get attorney guidance on how to structure the disclosure before you sign.

Promise Legal's PIIA template includes a prior inventions schedule specifically for this reason: the schedule creates a clear pre-employment boundary and reduces the risk of later disputes about what the employee brought in versus what the company funded.

What Happens at Acquisition

The stakes of invention assignment ambiguity become concrete at acquisition. When an acquirer's legal team conducts IP due diligence on a startup, one of their primary tasks is tracing the chain of title from inventor to company. Every engineer who contributed to the core technology should have a PIIA on file, and the PIIA should cover the relevant inventions without gaps, ambiguities, or problematic listed exclusions.

Any deficiency in that chain can slow the deal, reduce the purchase price, or require indemnification representations that increase deal risk for the company's founders and investors. Lando & Anastasi's analysis of patent assignments in employment agreements notes the direct consequence: "weaknesses in assignment provisions may affect the perceived value of the IP assets and/or business being considered." In a competitive acquisition, a question mark over a core patent or technology is not a minor issue — acquirers price uncertainty, and ambiguous IP chains show up as adjustments to deal value.

The problem compounds with side projects that management tolerated informally. An engineer who spent 20% of their time on a project the team knew about but never formally addressed via a separate IP agreement is a liability. If the engineer listed that project on the prior inventions schedule, the acquirer's counsel needs to understand the exclusion and whether the startup still has adequate rights. If the project was never listed, there's ambiguity about who owns what — and the fact that management knew about it doesn't resolve the ambiguity in the company's favor under the written agreement.

Startup employment agreements often contain more aggressive assignment language than agreements at large established companies. The reason is straightforward: startups exist largely because of their IP, and their agreements are drafted to capture everything. Engineers who join early-stage companies and sign aggressive PIIAs without pushing back on scope are making a choice that can matter years later at exit.

When Company-Funded Becomes Yours (and When It Doesn't)

The cases where invention assignment can unwind in an employee's favor are narrow. Understanding them matters less as an exit strategy and more as a guide to which scenarios actually provide genuine protection.

If an employer fails to obtain a written assignment — using future tense language like "will assign" rather than "hereby assigns" — courts have held this creates only a promise to assign, not an actual transfer of ownership. As Lando & Anastasi explains, an assignment clause deemed ineffective to automatically transfer ownership "can create significant problems for an employer" — requiring separate litigation to enforce the assignment obligation, and potentially leaving the employer without standing to sue for patent infringement in the interim. This is a drafting failure that can benefit employees, but it's not something you can plan around — well-drafted agreements use present-tense assignment language specifically to prevent it.

The shop rights doctrine provides another narrow protection. Where an employee develops an invention using company resources but without a written assignment, the employer typically acquires a "shop right" — a non-exclusive, royalty-free, non-transferable license to practice the invention. The employee retains the patent, but the company has the right to use it without paying royalties. Critically, as Brooks Kushman IP's analysis notes, shop rights "cannot be transferred or licensed to a third party" — which means they do not help a startup demonstrate clean title at acquisition. The engineer retains the patent, but with a permanent non-exclusive license burdening it.

"Company resources" in the shop rights context and in the assignment clause context means physical and digital assets: work computers, phones, internal networks, company VPN access, internal training data, development environments provisioned by the employer. It does not mean your general skills and expertise. An employer can own the specific code you write at work; they cannot prevent you from being a skilled engineer who builds similar systems using general knowledge on personal equipment.

Practical Checklist Before Starting Any Personal Project

If you have a personal project you want to own, the time to act is before you start — not after you've built something valuable. The steps below apply to engineers in employment and equally to hardware founders or software developers at early-stage companies with aggressive IP agreements.

1. Re-read your PIIA assignment clause. Identify which of the four categories your agreement uses. Count how many independent triggers exist. Note whether the clause uses "hereby assigns" (automatic assignment) or "agrees to assign" (promise to assign). If you're not sure what you signed, retrieve a copy from HR or your offer letter file.
2. Map your project against every trigger before writing any code. Does it use company resources in any way? Does it relate to any business your employer currently operates or has publicly stated plans to pursue? Would a reasonable reading of your job description connect the work to your employment? If any answer is "possibly yes," address it before starting.
3. Check your state law. If you're in California, Washington, Minnesota, North Carolina, Delaware, Illinois, New Jersey, New York, Kansas, or Utah, statutory protection may apply. Verify that your project satisfies the full three-part test: own time, own resources, unrelated to employer's actual or demonstrably anticipated business. All three parts must be met.
4. Fill out the prior inventions schedule — even now. If you've already signed a PIIA and left it blank, raise it with your employer before the project progresses. Retroactive disclosure is better than no disclosure; it creates a contemporaneous record. For projects you haven't started yet, list the concept before you sign anything or begin work.
5. Keep dated, auditable records. Use personal accounts and personal hardware exclusively. Commit code to a personal GitHub account from a personal computer on a personal network. Document conception dates. Keep notes. If litigation ever arises, the question of when you conceived the invention and on what resources matters enormously.
6. Consider whether to notify your employer proactively. Disclosure creates a paper trail that can both protect you and create risk. Whether to notify is context-dependent. An attorney can help you think through the tradeoffs for a project with real commercial value.
7. Get a legal review before significant investment. If you're building something that could be acquired, licensed, or spun out, a one-hour employment attorney consultation costs far less than the litigation or deal uncertainty that arises from unclear assignment rights. The time to understand your position is before you have something worth fighting over.

Invention assignment clauses are not designed to be fair — they are designed to be comprehensive. The defaults heavily favor the employer. Every protection available to you is opt-in: you have to invoke the state statute, you have to fill out the schedule, you have to document the timeline, and you have to do it before the dispute arises. Engineers who treat these agreements as boilerplate are making a considered bet that nothing they build will ever matter enough for the company to come after. That bet has a poor expected value.