Legal Question in Intellectual Property in California

Creating my own version/design of software being developed for employer

I am currently employed (full time, professional) by a non-profit organization. I am a programmer, and have been working on a specific software program to support one of their internal processes. It is nearly complete, and in the course of the development, I have learned much about this specific area of the industry. I have additional ideas and believe that with the knowledge I've gained, I can put something together that is quite stunning and can be marketed to other organizations in this industry.

The code, layout, and ''look and feel'' would be completely different. It would also be worked on exclusively outside of work hours and not using work facilities or resources.

However, does the ''knowledge and experience'' that I've gained in working with co-workers here, and in what I've learned about the industry, equate to the resources of my employer? I'm not sure how that would be interpreted.

Do you think that it's ok to work on this program and ultimately try to market it down the line? I would also document the time well.

My employer is not in the software-selling business. Also, I am in California.

Thanks for any advice you might have on this matter.

Asked on 10/10/07, 12:31 pm

4 Answers from Attorneys

Cathy Cowin Law Offices of Cathy Cowin
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Re: Creating my own version/design of software being developed for employer

You very well may be able to do so; however, there are a number of pitfalls you will want to avoid. There are numerous things not contained in your statement that are important to evaluate. Please call or email your number and I will talk to you briefly about your specific situation.

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10/10/07, 12:41 pm
Gordon Firemark Law Offices of Gordon P. Firemark
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Re: Creating my own version/design of software being developed for employer

I;m afraid I must disagree with my colleague Ms. Cowin. If you are an employee of this nonprofit, and your job is to create software, then it's likely that any software you create while an employee (whether or not created while AT the work premises), will be deemed to belong to the employer. While this might not be true if the home-developed software was of a completely different type, industry, etc., it is is even more the case when the software is intended as a competitor product of the one created for the employer.

Tread very lightly here. You could be accused of more than merely moonlighting. By creating a product the employer's competition can use, you could be accused of fraud, bad-faith, and perhaps even unfair business practices, industrial espionage, etc.

Of course, much will depend on the terms of your employment agreement, the company's policy manuals, etc., and whether you signed any noncompete clauses.

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10/10/07, 1:34 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law
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Re: Creating my own version/design of software being developed for employer

After reading your question carefully a second time after peeking at both of the prior answers, I would take a somewhat different position.

While it is true that the code you wrote as an employee belongs to the employer, the industry knowledge you gained is your own. The only exception would be knowledge of true trade secrets of the employer; these are defined as information that has independent economic value because it is not widely known, and that the owner-employer has taken reasonable steps to keep secret. Common examples of trade secrets are secret formulas and recipes, customer lists that go beyond what can be found in trade journals and the Yellow Pages, and proprietary methods including internally-developed software routines. Trade secrets are a fourth kind of intellectual property, along with copyrights, trademarks and patents. Check out the Uniform Trade Secrets Act at Civil Code sections 3426 to 3426.11.

California has a strong policy against restraints on people being able to pursue the trade, occupation or business of their choice. Non-compete agreements are void except in connection with the sale of the goodwill of a business (see Business and Professions Code sections 16600, 16601 and perhaps 16602 for the law and the exceptions).

The general principle is that you can start a competing business, but you can't do it with stolen property.

I'd say that creating new code based on your having gained an insider's perspective on the unmet needs of a particular industry does not violate any right of the former employer.

I'd add that there cannot be any assurance you won't be sued, although it seems very unlikely; further, if you are sued, although defending would be expensive and a hassle, I'd say based on the information you provided, you'd probably win.

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10/10/07, 2:15 pm
Johm Smith tom's
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Re: Creating my own version/design of software being developed for employer

I hope you see that you will need a written legal opinion to CYA on this before you invest time/money into it. Our CA attorneys can assist you if you wish.

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10/10/07, 5:45 pm

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