Moonlighting: who owns what?

Moonlighting and side hustles – whatever you want to call them – come up frequently in the games space. However, it is important to keep in mind some potential issues that can arise – both from an employer’s perspective and from an employee’s perspective.

An employer will generally want (and likely needs) to own all intellectual property created by its employees related to its work. 

An employee, on the other hand, may want to retain ownership of work the employee created outside of their typical duties for their employer. These potentially competing interests have the potential to cause big problems for both sides if not properly navigated.

Employee’s Burden

If an employee creates work for their side hustle during normal work hours or uses equipment provided to them by their employer, there is a risk that the employee will lose ownership of that work. This includes using hardware or software that the employee received from the employer. The work may be considered as created in the scope of their employment, and the employer may own it instead. To avoid this issue, an employee needs to be extremely careful about keeping all of the work from their employer and all of their own independent work completely separate.

Not only that, but an employee needs to understand exactly what their employment agreement says about moonlighting. There may be consent or approval requirements for the employee to engage in independent work. There may also be non-competition provisions that could prevent the employee from creating certain types of works.

Employer’s Burden

Retaining ownership of the IP created by employees is an important part of any creative, inventive or innovative business. Not just in the creation and exploitation of company products, but also for seeking funding from potential investors or commercial partners who might (justifiably) get antsy if it looks like the company may have any gaps in the right to use work created by its employees.

One way employers can and should protect themselves is by requiring all employees to enter into some type of Invention Assignment Agreement or a similar agreement. This type of agreement may include confidentiality requirements, assignment (or exclusion) of any inventions the employee made prior to being hired, non-solicitation or non-competition clauses. Be aware, however, that non-competition clauses (including certain types of non-solicitation clauses) are not enforceable in every jurisdiction, so this may not be a reliable way to prevent an employee from competing against the company in their personal time.

If an employer is fine with employees seeking their own work, the employer may still want to require an employee to seek the employer’s consent or approval before beginning a side job.

How and where to draw lines between acceptable and unacceptable moonlighting is often an exercise in risk tolerance and balancing the interests of the company with the flexibility potentially demanded by certain workers.

Laura Yanka

Laura's practice focuses on independent developers and startups. She endeavors to make every client feel welcome, important, heard, and respected.

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