IP Assignment Clause Explained: Who Owns What You Create at Work
An IP assignment clause transfers ownership of everything you create to your employer or client. Here's what it covers, what state law protects, and what to document before you sign.
IP Assignment Clause Explained: Who Owns What You Create at Work
Quick summary: An IP assignment clause transfers ownership of intellectual property you create — code, designs, inventions, writing, processes — to your employer or client. Most employment contracts include one. Most people sign without reading it. The clause determines who legally owns work you may have spent years creating, and in some cases it reaches beyond your working hours into your personal projects.
You've built a tool at work. You've written code on weekends. You've filed a patent application. You've created a design system that has real commercial value.
Who owns it?
The answer is almost entirely determined by one clause in your employment contract — and most people don't know what theirs says.
Have an employment contract with an IP clause? Upload it to Contrivox for a plain-English breakdown of exactly what it claims and what state law protects — in under a minute.
What an IP Assignment Clause Claims
The typical IP assignment clause reads something like:
"Employee hereby assigns to Company all right, title, and interest in any and all inventions, discoveries, developments, improvements, works of authorship, and other intellectual property that Employee conceives, develops, or reduces to practice during Employee's employment, whether or not related to Company's business."
That last phrase — "whether or not related to Company's business" — is the reach that matters.
A narrowly drafted clause assigns IP you create on company time, using company resources, for company purposes. A broadly drafted one reaches into everything you make, anywhere, at any time.
What's Typically Covered
| What You Create | Covered by Standard IP Clause? |
|---|---|
| Code written for work projects | Yes |
| Inventions developed for the company's product | Yes |
| Internal tools you built to do your job | Yes |
| Personal app built on your own time, different industry | Depends on clause language |
| Side project in the same field, built on weekends | Often yes, if clause lacks carve-out |
| Work you created before employment | Should be excluded — see Schedule below |
| Open-source contributions made on your own time | Depends on clause and company policy |
The State Law Carve-Out
Several US states have passed laws that limit what an employer can claim through an IP assignment clause:
| State | Protection |
|---|---|
| California | Lab. Code § 2870 — employer cannot claim IP made entirely on own time, without company resources, unrelated to current or anticipated business |
| Illinois | 765 ILCS 1060/2 — same protection as California |
| Delaware | Title 19, § 805 — same |
| Minnesota | Minn. Stat. § 181.78 — same |
| North Carolina | N.C. Gen. Stat. § 66-57.1 — same |
| Washington | RCW 49.44.140 — same |
If you're in one of these states, your employer cannot enforce an IP clause that claims work you did entirely on your own time, without company equipment or resources, in an area unrelated to the company's actual or planned business.
But you must invoke these protections. The law doesn't automatically exclude your side projects — you need to document them and, if the clause doesn't include the required carve-out language, know that the clause is limited by state law.
The Schedule of Prior Inventions
Most well-drafted IP assignment clauses include a Schedule A (or similar) for employees to list pre-existing IP they want to exclude from the assignment.
If your contract has one: fill it out thoroughly before you sign. List every personal project, patent application, open-source repository, or invention you've created that has any potential commercial relevance. This creates a clear record that these items existed before your employment.
If your contract doesn't include one: ask for it. If the employer refuses, document your pre-existing IP independently with timestamped notes, commits, or other records.
For Freelancers and Independent Contractors
The IP clause works differently for contractors than for employees.
Under US copyright law, work created by an independent contractor is owned by the contractor — not the client — unless there is a written assignment or the work qualifies as "work made for hire" under one of nine specific statutory categories.
This means: if your freelance contract doesn't include an explicit IP assignment clause, you may retain ownership even after you deliver the work. The client has no IP rights unless the contract says otherwise.
Conversely: many client contracts include IP assignments that reach further than the specific deliverables — claiming ownership of your tools, templates, reusable code components, and background IP. See Freelance Contract Red Flags for the full breakdown.
The right approach: ensure the contract assigns only the specific deliverable, with an explicit carve-out for your pre-existing tools and background IP.
Red Flags in IP Assignment Clauses
| Red Flag | What It Means |
|---|---|
| "Any and all inventions, whether or not related to business" | Claims side projects in any field |
| No Schedule of Prior Inventions | You have no mechanism to document exclusions |
| Assignment includes IP created before employment start | Retroactive claim — typically unenforceable |
| No state law carve-out language in a state that requires it | Clause is over-broad but employer may not know it |
| "Work made for hire" applied to contractor deliverables | May be legally invalid for work outside the nine statutory categories |
| Broad "improvements to prior inventions" language | Can capture later personal work that builds on earlier projects |
Not sure what your IP clause claims? Upload your contract to Contrivox for an instant analysis — every provision flagged and scored.
What to Do Before Signing
- Read the definition of what's assigned. Is it limited to work done for the company, or does it reach your personal time?
- Check for a state law carve-out. If you're in California, Illinois, or another protective state, verify the clause includes the required carve-out language. If it doesn't, it's limited by law — but better to have it explicit.
- Fill out the Prior Inventions Schedule. Document every personal project, repo, or invention that has commercial relevance. Be thorough.
- Ask for the carve-out if it's missing. "Can we add a carve-out for inventions I develop entirely on my own time, without company resources, and unrelated to the company's business?" is a reasonable, professional ask.
- Check the time scope. The assignment should cover your employment period, not extend forward indefinitely after you leave.
FAQ: IP Assignment Clauses
If I'm in California, am I fully protected for my side projects? Largely, yes — but the protection has limits. It doesn't apply if you used company resources (even incidentally), or if the project is related to the company's current or anticipated business. The law protects genuinely separate work, not work adjacent to your job.
What if I didn't fill out the Prior Inventions Schedule? The absence of a listed invention doesn't automatically mean the employer owns it — especially in protected states. But it removes the clearest evidence that the work predated your employment. Document what you can retroactively with timestamps.
Can my employer claim my open-source contributions? Possibly, if they were made during employment and are related to the company's business. Many companies have specific open-source policies that govern this — check if yours does.
Does "work made for hire" mean the same as an IP assignment? No. Work made for hire is a copyright doctrine that makes the hiring party the author from inception. An IP assignment transfers ownership after creation. Both result in the employer owning the work, but through different legal mechanisms with different implications (particularly around the 35-year termination right for assignments).
I left my job and want to commercialise something I built there. What should I check? Review your employment contract's IP clause for scope, your state's protective statute, whether you used company resources in the work, and whether the invention was related to the company's business at the time. An IP attorney consultation is worth the cost before you invest further.
Related guides
- IP Assignment Clauses: Does Your Employer Own Your Side Projects?
- 10 Employment Contract Red Flags You Should Never Ignore
- Freelance Contract Red Flags: 9 Warning Signs Before You Start Work
Know What You're Assigning
An IP assignment clause is one of the most consequential things you sign. It affects your ability to commercialise your own work, retain rights to personal projects, and benefit from inventions you may spend years developing.
Read it. Understand it. Fill out the schedule. And if the language is overbroad, ask for the carve-out before you sign.
Upload your employment contract to Contrivox → Get a plain-English analysis of exactly what your IP clause claims — flagged, explained, and scored — in under a minute.
Contrivox provides AI-powered contract explanations, not legal advice. For IP disputes or high-value invention assignments, consult a licensed IP or employment attorney.
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