Today I wanted to revisit a topic I’ve discussed in the past…”Moonlighting.” Moonlighting being when a party has a second job, or side project, in addition to their regular employment.
Now, don’t get me wrong, I am not in the “you aren’t really committed if you don’t quit your day job” camp, in fact, I think keeping the cash flow pressure off of a new project until it is ready is a sign of good thinking. However, I have had situations where new company founders did a lot of work moonlighting on the front end only to realize that they had broad intellectual property (“IP”) transfer provisions in their employment agreements. What a disaster…and those provisions are very common for technical employees.
Now, don’t get me wrong, I am not in the “you aren’t really committed if you don’t quit your day job” camp, in fact, I think keeping the cash flow pressure off of a new project until it is ready is a sign of good thinking. However, I have had situations where new company founders did a lot of work moonlighting on the front end only to realize that they had broad intellectual property (“IP”) transfer provisions in their employment agreements. What a disaster…and those provisions are very common for technical employees.
Of course, there are arguments that can be made and the founders may end up succeeding in court, but the cost/risk is significant and probably more damaging, the cloud from potential litigation can (and often does) run off any would be investors.
So, with that in mind… PLEASE, if you have a great idea, make sure and read your employment contract before you spend a bunch of time/money developing that idea. Furthermore, if you find out that you do have language in your contract that is problematic, go see a proper business or employment law firm and talk to them about it because you may be able to fix it or at least help design a strategy to mitigate the potential damage.
