Forced to sign intellectual property agreement or be terminated after 4 years of service


I have worked for a small 25 employee non-profit in the US for the past 4 years. About 9 months ago, I identified some deficiencies within the company in the areas of data management and collaboration. Since there were no services out there that provided a solution to this deficiency, I decided to contact a friend of mine who has about 12 years of experience of programming. As a side project, the two of us have been working for the past 9 months on building an online management system for professionals in my field that will greatly increase productivity. Before we began working on the project, I checked the employee handbook and any contracts that were signed when I was first hired. There was absolutely nothing about intellectual property and the handbook specifically said that outside jobs were allowed. About 3 months ago, I told my boss what I was working on outside of the office to help increase my productivity and told him my intention to eventually sell this service to others. We have since completed the first version of the online management service, established an LLC, and are ready to begin beta testing.

Here is my predicament... Yesterday, I was called into my boss's office and I was told that I would be asked to sign an intellectual property agreement next week. This agreement states that any product, service, or company developed by an employee with the use of any experience, knowledge, or relationship from their current job will belong to the non-profit. This effectively gives them ownership of my company, the service we have built, etc. If I refuse to sign this contract, they have threatened to terminate my employment.

Can they legally do this? If I have already established a side business and built the product, can they retroactively force me to sign an agreement giving them ownership of this business and the product we have built? As a side note, this new company and our product does not compete with the non-profit; rather it provides a service to the non-profit that will increase productivity. The non-profit also does not develop or sell products, so its not like they would have developed this on their own and sold it.

Any help anyone can provide would be great. I plan to contact a contract lawyer soon to further protect myself and my new business.

Legal Termination Non Profit Intellectual Property

asked Sep 30 '11 at 11:43
8 points
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  • In most states, the IP agreement would be illegal if it's retroactive, so you still own all of the IP for your company, and your employer will have no rights. If they try to make it retroactive, you can bring the agreement to your states department of labor, and likely your company will be fined. Also, telling you that you must sign the new agreement, or you will be terminated, is a form of duress, which invalidates agreements of this sort. IP agreements can be a condition of start of employment, but not continuance of. Consult a legal professional immediately. – Bwasson 12 years ago
  • @bwasson: why didn't you put that as an answer? – Chris Morgan 12 years ago
  • @Chris Morgan I don't honestly know Felt there were some good answers as well, so I figured I'd just throw it up here. I usually will just post a comment unless I think I can add something significant. – Bwasson 12 years ago
  • @bwasson thanks for the advice. That is what I thought, but its nice to get others thoughts on this as well. I will contact a lawyer immediately to see what my rights are in Ohio. – Jak 12 years ago

3 Answers


Get hold of the handbook that says "Outside projects are allowed".
For the contract you have to be very careful, they shouldn't be able to retrosepcitvely include "pre-existing work" may say "for all new projects created beyond the date i sign, I will agree, but any prior art to this date is not subject to the agreement".

Ask to get a copy of the agreement and find a lawyer to take it to, "I would like to get a professional opinion on this before signing, I will have it back to you 1 5 business days". Which means you haven't said no and they have a timeframe for you signing it.

Finally ask them what a not for profit organisation is going to need the ownership for, if they aren't aiming to make a profit out of it.

It sounds like one or two people (like your manager) have got the wrong end of the stick and are trying to either cover themselves or make themselves look good.

Lastly, I'm not a lawyer, I think its time you found one to have in your corner.

answered Sep 30 '11 at 14:26
Robin Vessey
8,394 points
  • Thanks for the advice. I will contact a lawyer soon. I'm glad to hear that everyone else believes this is illegal as well. I was shocked when presented with this ultimatum. – Jak 12 years ago
  • Yeah I think if you approach it professionally and it looks like it could "blow up in their face" they will reconsider quickly, especially as they don't have any true interest themselves and be sure to poitt out that they benefit more by getting use of the app, supported by you, otherwise it will just sit on the shelf – Robin Vessey 12 years ago


I highly doubt they can do this, but the sad reality is, most places in the US are at-will employment. So if you don't go along with it (even if legally correct) they may simply terminate your employment for some other reason. Obviously speaking to a lawyer would be the smart move here.

answered Sep 30 '11 at 12:35
Centurion Games
626 points


Talk to a lawyer. To the next meeting with your boss make an appointment and TAKE THE LAWYER WITH YOU. You wil be surprisd by the result.

At the current I would consider your boss borders extortion - the crime. At least he plays with it. You may loose your job, but you likely can sue the ass out of your former employee. Discrimination, contract fraud, extortion.

answered Sep 30 '11 at 14:23
Net Tecture
11 points
  • There's no need for him to blow this out of proportion yet. Bringing a lawyer in to see his boss immediately sets the tone going forward, and it sets it to hostile. – Alex 12 years ago
  • Yes and no - i normally forward all not totally clear stuff to a lawyer and I have been known to take a lawyer to signinf an insurance contract. He lawyer will not only know the facts (and have it researched), he can also dole out semi neutral advice (ie..e when the boss is in clear violation of laws). – Net Tecture 12 years ago
  • Companeis regularly send lawyers to meetings. Plus, in this case, I would send the lawyer ONLY who presents a court order - I consider the request extortion and would start crime investgations (via attorney general) before going to the next meeting. Asking someoen to hand over his IP or get termianted in clear one sided change of prior agreements is way beyond a contract dispute. – Net Tecture 12 years ago

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