Business Law · Employment · Intellectual Property

Does Your Employer Own Your Side Project? Pennsylvania IP Assignment Agreements Explained

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IP assignment agreements in Pennsylvania are governed by general contract law principles developed through Pennsylvania common law decisions. Unlike California, Pennsylvania has no statute limiting what employers can require employees to assign. California Labor Code § 2870 explicitly protects inventions developed on personal time unrelated to the employer’s business. Pennsylvania employees have no equivalent statutory protection — the agreement language controls.

What an IP Assignment Clause Actually Says

Most IP assignment clauses assign to the employer all inventions, software, and creative works conceived or developed during employment — regardless of when or where the work was done.

The broadest clauses assign everything conceived during the employment period, full stop. If you thought of the idea while employed, the employer claims it — even if you developed it entirely on your own time, with your own equipment, with no connection to your employer’s business. Slightly narrower clauses limit the assignment to inventions that relate to the employer’s business or that were developed using employer resources. The narrowest clauses carve out personal projects explicitly — work unrelated to the employer’s field, developed entirely on personal time and equipment, with no use of company resources. Which version you signed determines the analysis. Most technology employees have never read the specific language. The clause is buried in an employment agreement signed on the first day of work, often presented alongside an I-9, a benefits enrollment form, and a direct deposit authorization. Nobody explains it. Most people sign without reading it.

The Three Questions That Determine Who Owns Your Side Project

Three questions determine the strength of an employer’s claim to your side project under a Pennsylvania IP assignment clause.

First: does the work relate to your employer’s field of business? An autonomous vehicle engineer who builds a restaurant inventory tool has a strong argument that the work falls outside the employer’s field. An autonomous vehicle engineer who builds a sensor calibration tool has a much weaker one. The closer the connection between your project and what your employer actually does, the stronger the employer’s claim. Second: did you use any employer resources? A single use of your work laptop, your work email, your employer’s software licenses, or your employer’s AWS account can create a connection that strengthens the employer’s claim even if everything else was done on personal time. Documentation matters. If you can show the development history was entirely on personal equipment with no employer resources involved, the argument for exclusion is stronger. Third: what does the agreement actually say? Some agreements include explicit carve-outs for personal projects. Some include a list of prior inventions that the employee preserves by listing them at the time of signing. If you listed your project as a prior invention when you signed the agreement, you may have preserved it. If the carve-out exists and your project qualifies, the employer’s claim may be limited or eliminated entirely by the agreement’s own terms.

What Pennsylvania Law Actually Limits

Pennsylvania has no statute limiting IP assignment clauses the way California does. Enforceability depends on the contract language and general contract principles.

California Labor Code § 2870 explicitly prohibits employers from requiring assignment of inventions developed entirely on the employee’s own time without using employer resources, unless the invention relates to the employer’s business or results from work performed for the employer. Pennsylvania has no equivalent statute. That means a Pennsylvania employer can draft a clause broad enough to claim your weekend project — and if you signed it, Pennsylvania courts may enforce it. The limits that exist in Pennsylvania come from contract law, not employment statutes. An assignment clause that is unconscionably broad, that was obtained through fraud or misrepresentation, or that lacks consideration may be challenged. The absence of a carve-out in the agreement does not mean the employer automatically wins — it means the analysis depends on the specific facts and how a Pennsylvania court would interpret the specific language. Most technology employees assume they are protected by California-style limits. They are not. The agreement they signed, and what it actually says, is the starting point for any analysis.

What Actually Happens: The Side Project and the Former Employer

Three questions determine the strength of an employer’s claim to your side project under a Pennsylvania IP assignment clause.

First: does the work relate to your employer’s field of business? An autonomous vehicle engineer who builds a restaurant inventory tool has a strong argument that the work falls outside the employer’s field. An autonomous vehicle engineer who builds a sensor calibration tool has a much weaker one. The closer the connection between your project and what your employer actually does, the stronger the employer’s claim. Second: did you use any employer resources? A single use of your work laptop, your work email, your employer’s software licenses, or your employer’s AWS account can create a connection that strengthens the employer’s claim even if everything else was done on personal time. Documentation matters. If you can show the development history was entirely on personal equipment with no employer resources involved, the argument for exclusion is stronger. Third: what does the agreement actually say? Some agreements include explicit carve-outs for personal projects. Some include a list of prior inventions that the employee preserves by listing them at the time of signing. If you listed your project as a prior invention when you signed the agreement, you may have preserved it. If the carve-out exists and your project qualifies, the employer’s claim may be limited or eliminated entirely by the agreement’s own terms.

The Leo Reality: What Actually Happens

A Carnegie Mellon software engineer spent eighteen months building a machine learning tool for restaurant inventory management. His employer was an autonomous vehicle company. He used his own laptop, his own AWS account, his own time. His employment agreement assigned all inventions conceived during employment that related to the employer’s field of business or that used employer resources. The restaurant tool had nothing to do with autonomous vehicles. He had used his work laptop once to push a commit. His attorney analyzed the agreement. The work laptop usage was a problem. The field of business exclusion was a strong argument. He documented the development history, established that 99 percent of the work was done on personal equipment, and negotiated a written release from his employer before he left. The release cost one conversation. The alternative was a lawsuit over a company he had not yet launched.

The same employment agreement contained a non-compete clause and an RSU vesting schedule. Leaving before the four-year cliff meant forfeiting $180,000 in unvested equity. The IP analysis, the non-compete review, and the RSU forfeiture calculation were the same conversation. None of those answers were on the agreement’s cover page. All of them affected the decision about when and how to leave.

Independent Contractor Agreements and IP Assignment

Independent contractor agreements frequently contain IP assignment clauses that are broader than employment agreement clauses — and less scrutinized.

A contractor who builds software for a client under an IC agreement with a work-for-hire clause may be assigning ownership of everything they create for that client — including architectural decisions, reusable code libraries, and development approaches that the contractor uses across multiple engagements. Work-for-hire under federal copyright law means the hiring party is treated as the author. An IP assignment clause goes further, capturing inventions and trade secrets in addition to copyrightable works. Contractors who use the same tools, frameworks, or approaches across multiple client engagements need to understand what each agreement captures and what it leaves available for future use. A contractor who builds a reusable authentication module for one client and then uses it for another may have transferred ownership of the module to the first client without realizing it. For a full discussion of IP protection in contractor agreements, see our page on independent contractor agreements and IP protection in Pennsylvania.

What to Do Before You Leave or Launch

The time to address an IP assignment issue is before you give notice — not after your former employer sends a cease and desist letter to your launch-day investors.

Read the agreement. Find the IP assignment clause — it may be labeled “assignment of inventions,” “intellectual property,” “work product,” or “proprietary information.” Read it carefully, including any carve-outs or prior invention schedules. Document your development history. If you have been building something on personal time, establish a clear record showing what resources were used and when the work was done. Consider negotiating a release. If your employer has a plausible claim and you want certainty before you launch, a written release from the employer eliminates the uncertainty. Employers are sometimes willing to release claims on projects clearly outside their business in exchange for a clean departure. Consult an attorney before you resign. The IP analysis, the non-compete review, and the RSU forfeiture calculation are the same conversation. None of them should happen after you have already given notice.

What the Employment Agreement Review Actually Covers

A technology employment agreement review is not just the IP assignment clause. It is the full document — because the clauses interact.

The IP assignment clause determines what your employer can claim. The non-compete clause determines where you can work next. The RSU vesting schedule determines how much equity you forfeit if you leave before the cliff. The arbitration clause determines where any dispute gets resolved and whether you have a jury. These provisions were drafted to work together — and they need to be read together before you make any decision about leaving, launching, or negotiating a exit. One appointment covers all four. The analysis is specific to your agreement, your project, and your situation. The output is a clear answer to the question you actually need answered: can I leave, can I launch, and what does it cost me if I do it now versus later. The cost of not knowing is a cease and desist letter addressed to your launch-day investors. That conversation is harder to have than this one.