Scott R. Hansen

Your startup may not own what it built. Engineer turned IP and business attorney. Daily posts on IP and AI law for founders.

[Scott R. Hansen @ScottHansenIP]

Good morning from #Irvine

[Scott R. Hansen @ScottHansenIP]

In California, your employer cannot claim everything you invent on nights and weekends.

Many employment agreements assign your inventions to the employer. BUT...California Labor Code 2870 limits that. The assignment clause does not apply to an invention you developed entirely on your own time, without the employer’s equipment, supplies, facilities, or trade secret information.

Two exceptions: One covers inventions that Relate to the Employer’s Business or the business's actual or demonstrably anticipated research or development. The other covers inventions that result from Any Work You Did For The Employer.

Building a startup while still employed? Map your idea against those exceptions before you vibe code, build a prototype, make engineering drawings, or the like. Don't use the company laptop to do it!

Tomorrow: your LLC filing did not give you a trademark.

Source: Cal. Labor Code 2870(a).

[Scott R. Hansen @ScottHansenIP]

Sources: 17 U.S.C. 201(a), 204(a), 101; 35 U.S.C. 261; Stanford v. Roche, 563 U.S. 776, 780 (2011); Cal. Labor Code 3351.5(c).

[Scott R. Hansen @ScottHansenIP]

Paying the contractor did not buy you what they built.

Copyright in code and engineering drawings starts with whoever made them. Patent rights in an invention start with the inventor. Either way, ownership moves only by a signed writing. Payment alone is not that writing.

Many contracts try to fix this by calling the work a "work made for hire." That label is a copyright rule and does nothing for inventions. Even for copyright, it covers only nine listed kinds of commissioned work from a contractor, and software is not one of them.

In California the label can also backfire. A contractor who signs a work-for-hire agreement can count as an employee for workers' compensation (Cal. Labor Code 3351.5(c)).

Use a signed assignment in which the contractor "hereby assigns" all rights, inventions included.

Tomorrow: in California, your employer cannot claim everything you invent on nights and weekends.

[Scott R. Hansen @ScottHansenIP]

Two words in your invention agreement decide who owns the invention. They cost Stanford its patent case against Roche.

A Stanford researcher's agreement with the university used the words "agree to assign." A later agreement with a company called Cetus used "do hereby assign."

The Federal Circuit held the first was "a mere promise to assign rights in the future." The second "effected a present assignment" of his future inventions. Stanford could not establish ownership and lost its standing to sue Roche. The Supreme Court affirmed on other grounds and left that contract reading untouched.

Check your invention assignment. If it says "agree to assign," your company holds a promise, not the invention.

Tomorrow: paying the contractor did not buy you what they built.

Reply: Sources: Bd. of Trustees of Leland Stanford Junior Univ. v. Roche Molecular Systems, 583 F.3d 832 (Fed. Cir. 2009), aff'd, 563 U.S. 776 (2011).

[Scott R. Hansen @ScottHansenIP]

Your startup may not own its own code.

Copyright in code belongs to the person who wrote it (17 U.S.C. 201(a)). Code your cofounder wrote before you incorporated stays with your cofounder until a signed writing moves it to the company (17 U.S.C. 204(a)).

If your cofounder had a day job and wrote the code as part of that job, the employer may own it instead (17 U.S.C. 201(b)).

Patent rights work the same way. They transfer only by a written instrument (35 U.S.C. 261).

The fix is a "founder technology assignment," signed when you form the company. Signed later, it still works, but an investor will ask why it was late.

Tomorrow: two words that cost Stanford its patent case.

[Scott R. Hansen @ScottHansenIP]

Most startup IP problems are born in the first 90 days.

They show up later, in diligence, when an investor's lawyer asks who owns the code. By then the fix costs more and you have less room to negotiate.

For the next 30 days I will post one a day on where IP and AI law meet startup money.

I am an engineer turned IP and business attorney. I also invent and run a record label, so I live under these rules as well as advise on them.

Tomorrow: the code your cofounder wrote before you incorporated may not belong to your company.

[Scott R. Hansen @ScottHansenIP]

@stephmui 😆 Word.

[Scott R. Hansen @ScottHansenIP]

Among my favorite photos of 2023. The young man next to me became my technology law firm's clerk in Irvine. #fwd #commonsenseparty @AndrewYang

[Scott R. Hansen @ScottHansenIP]

@maleahyang418 Thank you for replying!

[Scott R. Hansen @ScottHansenIP]

Good couple weeks speaking w/members of most Irvine commissions/major committees & councilmembers. Pro Tip: go to campaign kick-offs. You'll bump into officials, community leaders in a good atmosphere for chatting.

[Scott R. Hansen @ScottHansenIP]

my last mtg as president of our homeowners association. great 4 yr run. focusing on hands-on community service & my businesses now. No plans to run for office in 2024. Thank you, Sierra Bonita HOA.

[Scott R. Hansen @ScottHansenIP]

We've created Viking Innovations: inventing & patenting in medtech, microelectronics, and AI. We have 2 patents so far, several applications pending. Exit likely to be sale of the patents. Entirely bootstrapped. pls wish us luck! 💪🇺🇸🙏 #startups

[Scott R. Hansen @ScottHansenIP]

@alliekmiller That AI has potential to help them govern better.

[Scott R. Hansen @ScottHansenIP]

@BrandaLinIrvine @DrTreseder appointed Chair @BrandaLinIrvine . Mayor @FarrahNK appointed Commissioner Steve Huang

[Scott R. Hansen @ScottHansenIP]

A shoutout to our Irvine Planning Commission. Irvine is a master planned city. So Planning Comm is key. Friends such as former Chair Steven Huang and current Chair @BrandaLinIrvine do an excellent job in a critical role. I say this as a former commissioner myself. #irvine

[Scott R. Hansen @ScottHansenIP]

@jnkyrdmddg @BrandaLinIrvine Agreed. Rents are too high. Planning Commission and City Council talk about that often. Some good news is State of California requires Irvine (and other cities) to plan for significant affordable housing over the next few years.

[Scott R. Hansen @ScottHansenIP]

I feel the Irvine City Council is accomplishing a lot this term. Resolving the AAA Asphalt matter, helping to improve/reform OCPA, breaking ground on Great Park projects. Don't know inner dynamics, but big projects are moving forward imo. #irvine

[Scott R. Hansen @ScottHansenIP]

A great example of what the #Irvine Botanical Park can be like! Here in St. Louis, they have an entire tropical rainforest in a big glass dome!

[Scott R. Hansen @ScottHansenIP]

Attention young Non-profit startups in Irvine & Orange County! Here's a chance to accelerate growth. If selected, will get 12 weeks of high-level coaching, resources. Thanks to @EdwardsLifesci for funding it. Apply at @OctaneOC: https://t.co/7xnWUP4aH9