Copyright Creating an IP/NDA contract with one's spouse

[Jeremiah Fletcher]

Jurisdiction

US Federal Law

I've been a freelance software developer for quite a while now. I have had to go through my fair share of IP/NDA contracts, conflict of interest clauses, you name it. I'm going to just call them collectively IPC for simplicity.

One that I found particularly entertaining attempted to reach as far as spouse and children without actually having the spouse and children sign the contract which of course isn't even legally binding to them and possibly not at all to me technically.

In any case, I've been pondering the possibility of actually working for a software company rather than continuing freelance because personal reasons.

However, this means I will almost certainly have to sign one of those annoying 100% IPCs. In other words, one where the company owns ALL copyrights or the like. I know those don't work in California, but I don't live there. Also as a freelance developer I have potential clients from essentially anywhere and I don't want a day-job to prevent me from being available.

Therefore, I was wondering if I could legally sign an IPC with my spouse stating that anything I create with "marital resources" belongs to my spouse. (Don't worry I trust him). We could then, if necessary, put in writing that he grants the copyright to my clients on a one-off basis so they retain IP they purchase.

Then, if I sign an IP/NDA with a software company, it will not be able to reach as far as anything I create at home since I have a preexisting contract with my spouse. I would NOT try to create any software that falls under the scope of the company.

I suppose my questions are:
1. Is this possible?
2. In the worst-case scenario, could the spousal IPC win if the company tries to steal my home-brew IP on the basis of their IPC?
3. Are there any legal issues with not notifying the software company of my spousal IPC?
4. If it cannot be done with a spouse, could it potentially be done by having me or my spouse create an LLC and sign the IPC with the LLC? (Up until now I've been operating as a sole-proprietor, filing Schedule C's, blah blah blah).

The two most relevant states here would be New York and Georgia (why those two states? You wouldn't believe me if I told you), but again my clients could potentially be from anywhere.

I'm essentially trying to allow myself to work for a software company while also defending myself against their draconian IPCs.

 

[adjusterjack]

Your idea is a non-starter. For one thing, any contract between you and your wife is not binding on your employer. For another, your obvious intent is to defraud your employer and no judge is going to allow you to hide behind that contract with your wife.

If you don't believe me, hire yourself an IP attorney and have him review the idea.

PS: If you are an exceptionable software developer you ought to be able to negotiate an IPC more to your liking.

 

[Jeremiah Fletcher]

Your idea is a non-starter. For one thing, any contract between you and your wife is not binding on your employer. For another, your obvious intent is to defraud your employer and no judge is going to allow you to hide behind that contract with your wife.

If you don't believe me, hire yourself an IP attorney and have him review the idea.

PS: If you are an exceptionable software developer you ought to be able to negotiate an IPC more to your liking.

I appreciate the feedback. By "your obvious intent is to defraud your employer" do you mean that's what you think or that's what you think the judge will think?

Suppose I get hired onto a software company and a different small business wants me to write a POS app for them, and I do that. If my hypothetical employer wants that app, they could sue the small business for it or generally make their life more annoying.

The reason I ask is that I'm actually thinking more about protecting my freelance clients. I'm trying to do as much of "the right thing" here in a world where all software companies are copy-pasting the same 100% IPCs and I have no idea how ethical these companies are or aren't.

It sounds like you think it would be a better idea to have someone draft an IPC that I would negotiate the employer into signing that allows me to keep home-brew IP while still producing IP for the employer.

The only issue I see with that is it might make it more difficult for me to get hired if I make such a demand.

 

[adjusterjack]

do you mean that's what you think or that's what you think the judge will think?

A judge.

Suppose I get hired onto a software company and a different small business wants me to write a POS app for them, and I do that. If my hypothetical employer wants that app, they could sue the small business for it or generally make their life more annoying.

You would also be named in the lawsuit for breach of contract. Your hypothetical employer would go after the app and lots of your money for claimed loss of profits that resulted from your breach of the IPC.

I'm actually thinking more about protecting my freelance clients.

That's commendable. But you ultimately may have to make a choice between being self employed or corporate employed.

A corporate employer is likely to want you to devote all your efforts to the corporation and not compete against the corporation by developing software for others.

I'm trying to do as much of "the right thing" here in a world where all software companies are copy-pasting the same 100% IPCs and I have no idea how ethical these companies are or aren't.

Ethics have nothing to do with it. The software companies have a right to protect their businesses and their profits just as you have the right to protect yours.

It sounds like you think it would be a better idea to have someone draft an IPC that I would negotiate the employer into signing that allows me to keep home-brew IP while still producing IP for the employer.

Exactly. Whether you and the company can see eye to eye on that depends on what you are worth to each other. You always have the option of walking away from the deal.

The only issue I see with that is it might make it more difficult for me to get hired if I make such a demand.

That's the risk you take if you want to wear two hats.

The point I'm trying to make is that honesty about what you want might not get you the job but subterfuge has far reaching consequences when you get caught and end up getting fired for misconduct (breach of the IPC), no unemployment compensation, lawsuit, loss of reputation among other software companies.

Not worth the risk.

 

[Jeremiah Fletcher]

That's commendable. But you ultimately may have to make a choice between being self employed or corporate employed.

A corporate employer is likely to want you to devote all your efforts to the corporation and not compete against the corporation by developing software for others.

If I did become hired by a software company, then I would not take on clients who could potentially be in competition with them. That should be common sense, but I guess if everyone had that we wouldn't need contracts at all.

Part of this mentality I do not understand. If they want "all my efforts" then they should be paying me for 168 hours per week (I have literally dreamed of code before). But this may be beyond the scope of the original post.

Ethics have nothing to do with it. The software companies have a right to protect their businesses and their profits just as you have the right to protect yours.

This is where I would disagree. It would be rather unethical for a multi-billion dollar corporation to sue Joe's Pizza because I wrote their POS app especially when Joe's Pizza had no idea about the IP drama that I would have hypothetically gotten myself into. Why should Joe's Pizza have to deal with that if, from their point of view, they bought some software from some guy? The whole thing sounds like a mess, so I guess I'm making your point for you in a lot of ways.

I've done some homework and asked around, and I know there are a lot of smaller family-owned software companies with 100% IPCs where the owners swear up-and-down they wouldn't try to rip ideas people come up with in their spare time. But they still have the power to do it on paper.

Exactly. Whether you and the company can see eye to eye on that depends on what you are worth to each other. You always have the option of walking away from the deal.

Well I'm leaning a lot more towards coming armed with my own IPC. It definitely seems like the most honorable option overall.

The point I'm trying to make is that honesty about what you want might not get you the job but subterfuge has far reaching consequences when you get caught and end up getting fired for misconduct (breach of the IPC), no unemployment compensation, lawsuit, loss of reputation among other software companies.

This whole thing would really only be a Hail Mary in the case that an employer actually went after me or my clients for "small fish" IP.

Let's think of this another way (more on the flavor of using an LLC).

Suppose I sign an IPC as a contractor with Sparkles, LLC dated starting 1-1-2020 with no end date that is limited to IP produced on any resources belonging to Sparkes, LLC. Then I sign an IPC with Juggernaut, Inc. dated starting 3-1-2020 that is a 100% we-own-everything IPC without disclosing to Juggernaut that I signed with Sparkles.

If I write an app after 3-1-2020 on Sparkles resources ONLY and on my own time, and worst-case-scenario, Juggernaut sues Sparkles and names me in the suit, would Sparkles keep the IP?

 

[army judge]

I've been a freelance software developer for quite a while now. I have had to go through my fair share of IP/NDA contracts, conflict of interest clauses, you name it. I'm going to just call them collectively IPC for simplicity.

If signing an IPC concerns you, in fact if you're smart, you'll request time to have the document reviewed by an attorney you hire or retain to review the document and provide you with a legal written opinion about the impact signing the document(s) could have upon you.

To opine about IPCs in general, or anything for that matter without reading the document is an exercise in speculation.

That said, if you are asked to sign such a document, request time to have the document reviewed by your attorney.

You'll learn a great deal about the prospective employer by the reaction to a simple request.

I have never had one employer deny me the necessary time to have any document(s) reviewed by my counsel.

In fact, quite to the contrary, I've been told that such a request is most prudent.

That said, YMMV.

I wish you continued success in all of your future endeavors and life pursuits.

 

[adjusterjack]

Part of this mentality I do not understand. If they want "all my efforts" then they should be paying me for 168 hours per week

That statement implies some naivete about the working world.

It would be rather unethical for a multi-billion dollar corporation to sue Joe's Pizza because I wrote their POS app especially when Joe's Pizza had no idea about the IP drama that I would have hypothetically gotten myself into.

It's you who would be sued for breach of the IPC. Adding Joe's Pizza as a defendant would be more to punish you than to punish Joe.

If you don't want things like that to happen, then don't sign any IPC's that mandate your exclusivity for any particular employer. You can complain about the "system" all you want but it's your choice to work within it and obey the contract, or avoid working for companies that require that exclusivity.

the owners swear up-and-down they wouldn't try to rip ideas people come up with in their spare time. But they still have the power to do it on paper.

That's right. And when push comes to shove it's what's on the paper that will count, not what anybody said outside the 4 corners of the contract.

If I write an app after 3-1-2020 on Sparkles resources ONLY and on my own time, and worst-case-scenario, Juggernaut sues Sparkles and names me in the suit, would Sparkles keep the IP?

I think I made this point twice already. It's YOU who will be sued for breach of contract. It's YOUR money that your employer will be coming after. Any other co-defendant would just be icing on the cake.

I agree with Army Judge's comments.

 

[Michael Wechsler]

Having performed work in intellectual property law for companies on the employer side, your plan isn't going to work for a couple of reasons.

1) If the IP lawyer is borderline competent, standard IP contracts make it manifestly clear that (a) the company/developer is the provider of the services and (b) grants all necessary licenses from the start and the company warrants and represents that it has the power to grant those licenses, and (c) that includes any contractors and subcontractors. And what exactly IS your "home brew IP" that you think you own? Often this is all covered in the agreement.

2) If any of your clients are in what you consider a breach of your intellectual property rights, how does the intellectual property copyright owner propose taking action? You'd have to send a cease and desist letter explaining why some unknown third party has the rights to enforce its IP rights. While you may wish to keep the subterfuge in the background, it's all going to come out when you try to enforce your rights.

3) Are you sure that you fully understand intellectual property law as it pertains to developers? Simply because you're not an employee and are an independent contractor doesn't mean that the company doesn't have an ownership interest in what it pays you well to perform. If you look at many standard contracts they address IP ownership and copyright to cover situations just like you describe. You may be best served in actually speaking to an IP attorney as @army judge and @adjusterjack suggest. I'd also suggest you speaking to an accountant about your business and also considering incorporating and the benefits it provides.