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A typical IP clause in an employment contract says that works created "during the course of your employment" belong to your employer.

This is essentially echoing the "work for hire" principle in UK employment law.

The notion of during the course of your employment looks to be open to interpretation.

It seems to mean:

  • while you are on company time

but it can also mean:

  • while you are employed to do something of a particular nature for us you can only do it for us.

I am explicitly concerned about software development, which falls under copyright law in the UK.

Many software developers have several side projects which they want to keep independent from work for their employers.

An oft quoted example is that its okay for you to do something completely different like write a novel but not okay for you do something similar to your employer, like say software development.

There are many kinds of software development. Some which might overlap with work for an employer and some that might not. Before everything was software this was less recognised but it could still be an issue.

Further as many are now in remote / flexible working environments, It is less clear which hours are "employee hours" and which are "company hours" unless someone keeps a very strict logbook (which is desirable and challenging by not impossible).

It is also assumed that you would keep your work on an entirely separate computer system from your employers.

I have heard of many contracts which unfairly favour the employer, for example:

Any rights in Intellectual Property belong to the Company. This will apply whether you make, discover or create Intellectual Property in the course of the duties of your employment, on the Company premises, at home or elsewhere, and whether you carry out the work in the Company’s time or in your own time.

This is clearly a red flag which needs to be negotiated if you care about your side projects.

If you successfully negotiated away the "or in your own time" clause would evidence of that negotiation be sufficient to demonstrate the intent of the contract as in the employees favour?

This example suggests:

Products resulting from the Employee’s duties according to the terms of employment – individual or joint, including ideas, software development, inventions, improvements, formulas, designs, modifications, trademarks and any other type of intellectual property are the exclusive property of Employer, no matter if patentable.

This does not explicitly mention an employees right to their own side projects. Is it sufficient?

Is an extra clause explicitly stating your rights to side projects necessary?

Does anyone have an example of contracts that provide some kind of explicit protection for employees own work (perhaps like the CA law) or where this has been negotiated successfully?

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    A thought. Would this question be better placed on workplace than law?
    – Bruce Adams
    Commented Nov 10, 2022 at 1:20
  • 2
    "Would this question be better placed on workplace than law?" No. LawSE is the right place even if some users rush to close your posts. On WorkplaceSE your post would either (1) get answers that hardly cover the legal standpoint, or (2) be moved to LawSE.
    – Iñaki Viggers
    Commented Nov 11, 2022 at 17:14

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Is an extra clause explicitly stating your rights to side projects necessary?

No. The samples you provide already contain semantics to limit the scope of the clause to the "duties or terms of the employment".

In the first sample clause, the element of "carry[ing] out the work [...] in your own time" is premised on "the course of the duties of your employment". The clause reflects awareness that the employee might do work in his free time, but only the IP pursuant to the duties of employment becomes employer's IP.

The interpretation that "whether you carry out the work in the Company’s time or in your own time" encompasses any and all work regardless of being within the scope of duties of employment is wrong because it purports to treat the conjunctions "and" and "or" as synonyms. This position contravenes the principle formulated in Restatement (Second) of Contracts at §203(a), and which most likely has its equivalent under UK law: "[A]n interpretation which gives a[n] [...] effective meaning to all the terms is preferred to an interpretation which leaves a part [...] of no effect" (emphasis added). Treating "and" and "or" as synonyms inevitably renders one of these conjunctions without effect.

The second clause is more straight-forward because it hardly delves in the alternative circumstances under which an employee might perform work. The clause unequivocally provides that it refers to "[e]mployee's duties according to the terms of employment".

It is important to ensure that other language in the contract does not supersede the rationale developed here, though. For instance, some crafted definition of "course of employment" could lead to a different conclusion, and hence the need to clarify any intended exceptions for side projects.

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  • law.stackexchange.com/a/86483/8883 provides some good information what an extra protection clause could look like but does not comment on the necessity. I interpret this answer as meaning the extra clause is not strictly necessary. So would you agree that an extra clause would add clarity even so or is it really not worth worrying about?
    – Bruce Adams
    Commented Nov 23, 2022 at 20:52
  • @BruceAdams Additional clarity tends to help, but it also heightens the need for careful drafting lest the developer/employee inadvertently shoots himself in the foot. For instance, identifying what constitutes "area of business" might be too broad, and thus detrimental to the developer. Penhallurick at para. 34 showcases the effect of choosing key terms (example: "bonus, rather than a royalty or licence fee"). Para. 38 ("Secondly, [...]") is arbitrary unless the court's conclusion is premised on VFC being clearly related to employer's business (the court should have been clearer there).
    – Iñaki Viggers
    Commented Nov 23, 2022 at 22:22
  • The MD5 case you refer to is a case where there is a clear overlap in business and the side project isn't really a side-project anymore. But yes the wording of at least their Nov 2008 agreement clearly favours the employer. To me the critical line is ", that the software developed at MD5 Ltd by yourself and sold as VFC is the sole property of MD5 Ltd," the bonus vs license fee seems irrelevant as this agrees ownership.
    – Bruce Adams
    Commented Nov 24, 2022 at 8:25
  • @BruceAdams "To me the critical line is ", that the software developed at MD5". Absolutely, I agree. The "bonus vs license fee" was not decisive in that controversy. I mentioned it only because that illustrates how a term the developer likely overlooked in that agreement reinforced his adversary's position. In the absence of crucial statements like the one you pointed out, a choice of terms like that could be decisive in other controversies.
    – Iñaki Viggers
    Commented Nov 24, 2022 at 11:39
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Something like “The employee's right to work on unrelated side projects is protected”

Contracts aren’t complicated: say what you mean.

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  • This answer seems to contradict the other one law.stackexchange.com/a/86533/8883 (by suggesting an additional clause is desirable), which I interpret as meaning " during the course of your employment " is sufficient if that term has its normal meaning.
    – Bruce Adams
    Commented Nov 23, 2022 at 20:31
  • @BruceAdams there’s no inconsistency between those answers.
    – Dale M ♦
    Commented Nov 23, 2022 at 21:46
  • Right. So the clause isn't strictly necessary by may help a case in court if there is ambiguity.
    – Bruce Adams
    Commented Nov 24, 2022 at 8:34

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