IANAL, but this sounds like "no." If you've signed an agreement with EmploymentCorp that any IP you create will be owned by EmploymentCorp, you can't create MyLLC and sign an agreement with MyLLC that the IP you're creating will be owned by MyLLC.

You can't sign two simultaneous agreements assigning your IP to two different companies. Imagine Amazon hires you and has you agree to assign any IP to them. You then get a second (simultaneous) job with Apple and you agree to assign any IP to them. At some point, a court is going to step in if there's a problem and figure out how to unwind the mess. If the second company is an LLC that's owned by you, the court isn't going to be amused and say "well, it's clearly not a scheme by the owner to get out of an assignment clause."

If you've signed away your IP as part of your employment, there isn't going to be One Simple Trick™ to get around that. Even if the court decided "yes, we have to treat this as if you were employed by two companies that have no relation to you," EmploymentCorp could simply sue you for not assigning them the IP, win, and then take your assets as compensation - including your ownership of the LLC.

You personally are still liable for complying with your agreement. If you violate that, your employer might sue you for breaching the agreement. Given that one of your assets is the LLC that "owns" the IP you didn't assign to your employer, that kinda makes it easy. If lots of other people owned a part of the other LLC/company, that makes it harder to unwind, but that doesn't let you or the LLC off the hook. Did the LLC's management know that you had an agreement with EmploymentCorp to give them the IP you were creating? Assuming you're the majority shareholder and/or otherwise in charge, yes. So the LLC knowingly entered into an agreement to "steal" EmploymentCorp's IP (using the word steal a bit loosely here, but it fits enough).

You're basically talking about signing an agreement with your LLC that you know violates your employment agreement and signing the agreement as an officer of the LLC that the LLC knows violates the employment agreement of the person (you). Seems like that creates plenty of liability on both sides of the coin.

> You're basically talking about signing an agreement with your LLC that you know violates your employment agreement and signing the agreement as an officer of the LLC that the LLC knows violates the employment agreement of the person (you). Seems like that creates plenty of liability on both sides of the coin.

Not only that, but it very quickly moves the nature of the liability from civil to criminal, which then has potential further impact on you in the future.

Op should really consult a lawyer. That said I don't think your draconian conclusions necessarily hold. If you are a neurointerface engineer and generate neurointerface IP that you'd prefer to commercialize on your own, probably thats an issue. But if you write an unrelated javascript framework, author a podcast or invent genetically modified corn that makes your hair grow back surely that would not be covered. An agreement that covers any and all intellectual output will not hold in court.

So it really depends on details about what exactly the agreement says and what domain they work & generate IP on.

How far do you want to go? If you are really worried about lawsuits. You can create a shell company registered in Cayman Islands and pay to have someone run it as CEO. Extract royalities to cryto.

My guess is your company will never know just use different github accounts. If they find out they may fire you but to bring a lawsuit to take the ip would be costly and rarely worth it.

I'll take this opportunity to plug my own question to the folks on HN - does anybody know how much protection an LLC generally provides you w.r.t. lawsuits and such? I'm currently looking at doing software consulting for a startup, but indemnification clauses have been touchy for the people I've talked to (and I'm paranoid about losing more than I gain in an unfortunate situation). My lawyer has told me that "piercing the corporate veil" is difficult and an LLC should protect me relatively well, but a good friend told me that I should basically always limit my liability to the amount I've been paid as in his opinion the LLC would be of questionable utility. I know HN isn't the place for legal advice, just wondering if anyone has friendly opinions.

I tried googling this, but the SEO spam is so bad I always converge to the same damn sites. Maybe google search for legal layperson questions is the next big thing?

Generally speaking, an LLC is going to protect you from debt that your company owes. So, you won’t lose your personal assets if your company goes out of business. However, it doesn’t protect you from criminal harm, nor does it protect you if you mix business and personal expenses. (e.g. if you personally guarantee a loan for your company, you’re still on the hook)

I’m just someone who has taken law courses in undergrad, not a lawyer, and you really should talk to one if you are seriously considering this. They will have much better feedback for your particular situation and questions like this will not be expensive to have answered.

My guess is the scenario they're worried about is neither debts nor criminal harm, but civil liability. Like say the counterparty claims you had an implicit warranty regarding X, but in fact you didn't, and that they suffered damages as a result. Then can they go after your personal funds to recover damages (if they win)?

According to this [0] I wouldn’t rely on an LLC to protect me from torts, especially if it’s a single member LLC. It also says that it varies by state, so this is an even better reason to chat with a lawyer about the particular issues you’re concerned about and how your state would treat it.

[0]: https://www.nolo.com/legal-encyclopedia/limited-liability-pr...

This is a fantastic question. I would love an informed answer to this question from someone who's actually been on the other side of a lawsuit in a 1-person company.

For context, as a layman, when I Googled this a while ago, the understanding I came away with was that while there can be some benefit to form an LLC in this regard, in reality it's Very Hard (TM) for a 1-person company to truly avoid the risk of the corporate veil getting pierced (regardless of the kind—LLC or whatever). The way I understood it, the entity suing you will look for any and all excuses in your records to try to pierce the corporate veil—and these can include anything from "mixed personal & corporate funds" to "did not properly keep detailed minutes of corporate actions", to other things I'm not aware of. And when there's only 1 person in the company, it's generally more difficult to abide by all the formalities in practice and keep proper documentation of them and convince others that you are indeed keeping doing things properly, whereas with 2+ people, it's much easier, and as a result of that fact (IIRC) judges are apparently much less likely to pierce the corporate veil when there are multiple people in a company.

But as I mentioned, I'm a total layman here, and I would love more info from someone who actually has any legal experience with this kind of concern.

> he way I understood it, the entity suing you will look for any and all excuses in your records to try to pierce the corporate veil—and these can include anything from "mixed personal & corporate funds" to "did not properly keep detailed minutes of corporate actions", to other things I'm not aware of.

It's not just a question of formalities, it's a question of general intent.

The Wikipedia article on "Piercing the corporate veil"[1] provides this example:

> A simple example would be where a businessman has left his job as a director and has signed a contract to not compete with the company he has just left for a period of time. If he sets up a company which competed with his former company, technically it would be the company and not the person competing. But it is likely a court would say that the new company was just a "sham" or a "cover"; and that as the new company is completely owned and controlled by one person that the former employee is deliberately choosing to compete, and so is in breach of that non-competing contract.

[1] https://en.wikipedia.org/wiki/Piercing_the_corporate_veil

I don’t think you should be signing indemnification clauses at all. Think what you’re agreeing to - you’re going to defend the company in court on your own dime when they get sued?

Some states "specialize" in different things

States like Wyoming, Nevada, and New Mexico generally have a good reputation as private and good for asset protection.

Of course, it's always a challenge to incorporate out of state, and do everything "remote".

An IP agreement with an employer typically has the employee assign rights in any IP the employee develops to the employer. That gives the employer ownership of anything the employee personally develops. Creating an LLC wouldn’t change that since the employee is the one creating the IP, not the LLC. If others are involved in the LLC, the LLC could own IP developed by them (assuming they haven’t assigned their rights away to a different company), but not to IP (even IP yet to be developed) already assigned to a different company.

Ideally, the IP agreement with the employer is limited in scope so that the only IP assigned is that which relates to the employer’s products (e.g., a company that develops medical records software might not claim IP rights to a game the employee develops on the weekend). Unfortunately, many employers use overly-broad agreements, so it’s important to review the agreement. Even if the agreement is broad, the employer may be willing to amend it if the employee is working on something unrelated to the employer’s business and the work won’t affect the employee’s performance. Talk to an attorney in your state before you do anything that jeopardizes something of value to you, and definitely talk to an attorney before you concoct a scheme that opens you up to legal problems ;-)

Source: Attorney / software developer.

You should consult a lawyer on this. They'll be able to give advice tailored for your specific situation.

For example, some states have laws saying IP assignments in employment contracts aren't enforceable for work done on your own time and equipment if it's unrelated to your employer's business (e.g., California[0], North Carolina[1]). Depending on your situation, you'll want a professional to assess whether your plan qualifies for that.

A lawyer can also help assess your risk level. Just because your employer would probably lose a lawsuit doesn't mean they couldn't cause you a lot of trouble suing you anyway.

In my IANAL opinion, the answer by @greenyoda[2] indicates an LLC is probably not appropriate protection for this specific concern. An LLC only protects you if you don't "pierce the veil"; that is, if you can show in court that you as a person and you as a company deserve to be treated as legally separate entities. There are lots of ways to mess that up, especially for one-person LLCs.

I'd expect that if you work for a small company, your risk level is low in any case unless you're directly competing. A tiny company has better things to do than pay for lawyers trying to seize an app that has nothing to do with their business. But BigCo, with an on-staff legal team, may be less reluctant.

You can also consider just asking your boss if the company would agree agree, in writing, that the company releases all claims to your side project.

[0] https://law.justia.com/codes/california/2011/lab/division-3/... [1] https://law.justia.com/codes/north-carolina/2005/chapter_66/... [2] https://news.ycombinator.com/item?id=30660160

Some assignment clauses are absurdly wide like "any IP you create belongs to us". This would imply absurd outcomes like when a software engineer signed that clause as part of their work contract for software company X, but also records music on weekends or reads audiobooks for librivox or stuff like that, and it's now unclear whether the IP in that music or those audiobooks might also belong to company X.

I think it's safe to assume that any such absurdly-wide assignment clause would end up unenforceable in a court of law and can thus be safely ignored.

If we interpret it literally; then it would seem that the employer would even own things like a birthday card you made for a friend. These clauses should definitely be outlawed!

> I think it's safe to assume that any such absurdly-wide assignment clause would end up unenforceable in a court of law and can thus be safely ignored.

Since you're apparently not a lawyer, you haven't read the employment contract and you don't even know what state this person lives in, telling them they can safely ignore a contract that they signed seems rather irresponsible.

The only reasonable advice to give here is the usual: Consult a lawyer who is licensed to practice in your local jurisdiction.

OP asked for exactly those thoughts, though?

> I apprecitate that this is probably one for a lawyer, but wanted to get some thoughts on this approach for protect one's side projects.

or even consult your employer to give you a exception on that clause/if they're willing to change that contract with that clause removed (limit it to company working hours or work done on company resources)

Is it common for employers to agree to your suggested limitations, or is there huge pushback? Anyone have experience?

Also, I wonder how useful "company working hours" is, when many companies push for more than 8 hours in a day.

Yes. (Yes they’ll grant exceptions, but they probably won’t want to change the terms in your employment contract - which is fine).

When starting my company (which started as a side project while working for another company), I sat down with my boss and asked if he would agree to acknowledge in writing that the company will claim no right to IP relating to my side project.

I drafted an email stating that, sent it to him, and he replied in agreement. That turned out to be sufficient enough for me. A few months later I quit when my side project turned into a full time job.

I'm curious. Have you consulted a lawyer to see if a commitment like that is sufficient? I mean, is your boss authorized to make such an arrangement?

If you asked a lawyer, they would probably say the agreement/exemption should be signed in writing (with more legalese) and not just an email agreement. That said:

There is a lot of subjectivity and interpretation when it comes to law and lawsuits.

If you went to trial, you would be showing the jury your employment agreement saying all IP belongs to the company, right before showing the jury a print out of the email saying the exact opposite. I think most jurors would side with the employee if the employer agreed to exclude IP assignment for a specific side project in writing.

That doesn’t mean your company can’t still sue you (anyone can sue anyone for nearly anything). But doing so costs everyone money (and reputation), so it’s rarely in the best interest of the company to sue employees - especially if you have a paper trail indicating your employer is aware of what you’re doing outside of work and has given you written permission.

All of the above assumes that the IP you’re creating is not something that would be competitive or damaging to your employer’s business. And that you’re acting in good faith and not misleading or somehow screwing over your employer in the process.

yeah the "company working hours" might not really work that well, cause it's not like people stop thinking about work outside of the company, if I come up with a solution outside my company hours does that mean suddenly i own the copyright to it?

IANAL but I feel like there must be a better solution here? Maybe something like how the FSF requires a CLA on some projects, so any commits with proper --sign-off count as me as me giving permission to the company?

I think that's an elegant addendum.

Without being a lawyer, and of course this is in no way to be construed as legal advice.

Most employers, especially ones with IP assignment rules, don't allow working for another company at the same time. So off the bat you're going to be having a bad time there.

Next if your employer has an IP assignment section in your contract, assuming you use none of their time (I'm going to bet lawyers will have fun with what that means), and none of their equipment, some states and some countries do not consider such terms enforceable. But in that case you don't need an LLC (and making an LLC puts you in the "don't work for another company" bucket)

The obvious question (for your lawyer, I am not your lawyer, this is not legal advice) would be whether you could even assign your IP to the LLC, if the terms of your contract are enforceable and say your spare time IP belongs to your employer, then that IP is not yours to give to the LLC.

Of course the real think you should be doing is talking to an actual lawyer rather than asking random people on the internet.

You can't assign something you don't own, and if you've signed an IP assignment agreement it's not yours anymore. Your best bet is to get a carve out for your specific side projects, or find a job somewhere that will accommodate you if you care enough.

*This like everything on this thread is terrible advice. You need a lawyer.

IANAL but it pays to discuss these clauses with your future employer prior to signing and to get what was discussed in writing. If you can't get it removed, modified or clarified to your satisfaction you might want to seek employment elsewhere.

If possible, make it opensource with AGPL license and invite few friends to send some initial contribution, viola now you are not the only one who owns all the IPs, also your employer will be most probably stay away from it due to licensing requirements of opensourcing all the changes made. Alternatively you can create a project with your friend as main owner and contribute to it with same AGPL license. You can also contribute to it as an anonymous contributor. flip side is you will have to get explicit full ownership of the code with MIT/BSD/WTFPL type license via documented way(verified Email works fine).

You can't license code you don't own to others, if in fact, you don't own it.

Yes you can, if owner(All owners with code contributions) gives you full ownership explicitly. Find contributors section on open-source projects like mysql, they only accepts pull accepts with dual licensing. also, you can use WTFPL. You get it, you own it.

The OP says they have:

> signed an assignments clause

Only the entity with a copyright to a work can license it.

If that assignment clause is valid for this work, then whoever they assigned it to (i.e. their employer) has the right to license it.

Thanks guys for your responses. Some great discussion. I definitely need a lawyer or alternatively might just develop my idea in secret and leave on completion for clarity.

I have established a LLC before I was employed by another company. The company was fine with me having both a job with them plus running my LLC after checking with legal. The IP assignments clause was a little murky hence the original question.

I knew I should have requested a contract amendment but I was desperately trying to get a job at the start of the pandemic.

No, that does not work. IP you create is currently governed by a contract with Company A. Signing a different contract with Company B will only make you more liable as both contracts must be adhered to, and if they both claim all IP then the only valid move is to never create any IP.

Get your current employer to approve your project through an addendum or find other employment, and in the future do not sign contracts you do not want to follow by the letter.

There are structures you could set-up which could shield you. For example, a LLC within a S-corp, where you are share holder of the s-corp (as person, trust, or with another LLC), but not owner of the first LLC. Then the LLC holds the IP, and you are now entitled to part or full ownership through shares. However, that does not shield you from lawsuits if anyone would find out.

No that will not work. In fact, it makes it look like you’re trying to give them the run around.

The best thing you could do to protect IP for your side project is to talk to your employer and tell them what you want to work on and get a written exception for it.

I don’t think that working for two companies somehow changes a contract that you have with the first company.

If it were me, I’d simply speak with the first company to get my side project exempted.

No. In court your single member LLC is going to be treated as being effectively you.

Said with an air of authority despite plenty of evidence that single person LLCs have a veil that is not pierced by the law.

The proper answer is, consult the precedent of prior cases in your state, that will tell you how strong the LLC holds up in any particular jurisdiction. A lawyer in your area will also know this better than a lawyer in other areas. It’s not a one-size-fits-all answer, and in general the LLC typically holds up well. Regardless of the number of members.

What if say i involved a few family members (or other trusted people) to be "partners"? Will the law still treat it as me the individual?

Courts take a very dim view of smart ass or "technically [X]" nonsense. It's one of the advantages of actual courts and law vs. crypto "contracts"

You seem to be looking for a lawyer. Asking concrete legal questions on a public forum is not a substitute.

A similarly brusque response could be written to many, many questions on a forum.

> You seem to be looking for a doctor/lawyer/teacher/statistician/psychologist/sysadmin/_____. Asking concrete _____ questions on a public forum is not a substitute.

Does that really have a positive effect, though? In my opinion, it's not a good thing for people, especially those who aren't wealthy to enough to pay every time there's something they want to learn.

They probably know that paying someone hundreds of dollars an hour is the surest way to get a good answer but lack either the ability or the will to pay it.

> They probably know that paying someone hundreds of dollars an hour is the surest way to get a good answer but lack either the ability or the will to pay it.

And getting a shit answer on an anonymous forum that is not remotely tailored to personal circumstances is an acceptable substitute ?

Especially as the answer will no doubt come from some John Doe who isn't even qualified in the topic at hand but is just regurgitating some heresy they read on the internet or heard from "a friend".

I mean, nobody here has said "I can't comment until I've seen your contract with your employer, can you email it to me ?" .

There are some things that require the services of a professional and tailoring to personal circumstances.

Sure you can go watch videos for free on YouTube that show you how to do open heart surgery, and you can probably buy medical scalpels cheaply on eBay.

But frankly I'd rather pay up and get an experienced surgeon to do it for me.

> But frankly I'd rather pay up and get an experienced surgeon to do it for me.

Most ailments don't require a surgeon and most people don't have access to one.

Medical advice is one of the most frustrating things to google for. Far too often, the only advice to be found is to "see a physician". This is often good advice but not everyone can and I'm pretty sure that the lack of additional advice results in people improperly treating injuries, misdiagnosing ailments more often than necessary and sometimes dying.

I don't say this out of a dislike of medicine! My mother is a doctor and spent years working in Kenya a couple of decades ago and saw many, many instances of suffering that could have been avoided with today's wireless internet and some good online medical advice.

It's not worth nerfing free online advice for the benefit of people can afford to spend on advice tailored perfectly for their own situation.

This seems to a case analogous to “I have this new, fast-growing, irregular-shaped mole on my forehead and I’m thinking of using Compound W on it. As long as I don’t get any in my eye, I should be OK, right?” and then someone suggesting “you really ought to see a doctor”.

Hundreds of dollars per hour over the course of 15 minutes isn’t too bad of a bill.